[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2019 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          
          
          Title 12

Banks and Banking


________________________

Parts 300 to 346

                         Revised as of January 1, 2019

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2019
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as 
                    Special Edition of the Federal Register

[[Page ii]]

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[[Page iii]]







As of January 1, 2019

Title 12, Parts 300 to 499

Revised as of January 1, 2018

Is Replaced by

Title 12, Parts 300 to 346



[[Page v]]





                            Table of Contents



                                                                    Page
  Explanation.................................................     vii

  Title 12:
          Chapter III--Federal Deposit Insurance Corporation         3
  Finding Aids:
      Table of CFR Titles and Chapters........................     659
      Alphabetical List of Agencies Appearing in the CFR......     679
      List of CFR Sections Affected...........................     689

[[Page vi]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 12 CFR 303.0 refers 
                       to title 12, part 303, 
                       section 0.

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

[[Page vii]]



                               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 
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    To determine whether a Code volume has been amended since its 
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EFFECTIVE AND EXPIRATION DATES

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Code a note has been inserted to reflect the future effective date. In 
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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.

[[Page viii]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
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PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
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for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
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this volume.

[[Page ix]]

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    The e-CFR is a regularly updated, unofficial editorial compilation 
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available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register
    January 1, 2019







[[Page xi]]



                               THIS TITLE

    Title 12--Banks and Banking is composed of ten volumes. The parts in 
these volumes are arranged in the following order: Parts 1-199, 200-219, 
220-229, 230-299, 300-346, 347-599, 600-899, 900-1025, 1026-1099, and 
1100-end. The contents of these volumes represent all current 
regulations codified under this title of the CFR as of January 1, 2019.

    For this volume, Gabrielle E. Burns was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                       TITLE 12--BANKS AND BANKING




                  (This book contains parts 300 to 346)

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

chapter iii--Federal Deposit Insurance Corporation..........         303

[[Page 3]]



           CHAPTER III--FEDERAL DEPOSIT INSURANCE CORPORATION




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

              SUBCHAPTER A--PROCEDURE AND RULES OF PRACTICE
Part                                                                Page
300-302

[Reserved]

303             Filing procedures...........................           5
304             Forms, instructions, and reports............          50
305-306

[Reserved]

307             Certification of assumption of deposits and 
                    notification of changes of insured 
                    status..................................          52
308             Rules of practice and procedure.............          54
309             Disclosure of information...................         141
310             Privacy Act regulations.....................         155
311             Rules governing public observation of 
                    meetings of the Corporation's Board of 
                    Directors...............................         161
312

[Reserved]

313             Procedures for corporate debt collection....         165
       SUBCHAPTER B--REGULATIONS AND STATEMENTS OF GENERAL POLICY
323             Appraisals..................................         185
324             Capital adequacy of FDIC-Supervised 
                    institutions............................         193
325             Annual stress test..........................         402
326             Minimum security devices and procedures and 
                    Bank Secrecy Act compliance.............         408
327             Assessments.................................         410
328             Advertisement of membership.................         493
329             Liquidity risk measurement standards........         496
330             Deposit insurance coverage..................         524
331

[Reserved]

332             Privacy of consumer financial information...         540
333             Extension of corporate powers...............         567
334             Fair credit reporting.......................         569
335             Securities of State nonmember banks and 
                    State savings associations..............         576
336             FDIC employees..............................         584
337             Unsafe and unsound banking practices........         589
338             Fair housing................................         595

[[Page 4]]

339             Loans in areas having special flood hazards.         598
340             Restrictions on sale of assets of a failed 
                    institution by the Federal Deposit 
                    Insurance Corporation...................         606
341             Registration of securities transfer agents..         609
342

[Reserved]

343             Consumer protection in sales of insurance...         611
344             Recordkeeping and confirmation requirements 
                    for securities transactions.............         615
345             Community reinvestment......................         623
346             Disclosure and reporting of CRA-related 
                    agreements..............................         644

[[Page 5]]



              SUBCHAPTER A_PROCEDURE AND RULES OF PRACTICE



                        PARTS 300	302 [RESERVED]



PART 303_FILING PROCEDURES--Table of Contents



Sec.
303.0 Scope.

                Subpart A_Rules of General Applicability

303.1 Scope.
303.2 Definitions.
303.3 General filing procedures.
303.4 Computation of time.
303.5 Effect of Community Reinvestment Act performance on filings.
303.6 Investigations and examinations.
303.7 Public notice requirements.
303.8 Public access to filing.
303.9 Comments.
303.10 Hearings and other meetings.
303.11 Decisions.
303.12 Waivers.
303.13 [Reserved]
303.14 Being ``engaged in the business of receiving deposits other than 
          trust funds.''
303.15 Certain limited liability companies deemed incorporated under 
          State law.
303.16-303.19 [Reserved]

                       Subpart B_Deposit Insurance

303.20 Scope.
303.21 Filing procedures.
303.22 Processing.
303.23 Public notice requirements.
303.24 Application for deposit insurance for an interim institution.
303.25 Continuation of deposit insurance upon withdrawing from 
          membership in the Federal Reserve System.
303.26-303.39 [Reserved]

 Subpart C_Establishment and Relocation of Domestic Branches and Offices

303.40 Scope.
303.41 Definitions.
303.42 Filing procedures.
303.43 Processing.
303.44 Public notice requirements.
303.45 Special provisions.
303.46 Financial education programs that include the provision of bank 
          products and services.
303.47-303.59 [Reserved]

                      Subpart D_Merger Transactions

303.60 Scope.
303.61 Definitions.
303.62 Transactions requiring prior approval.
303.63 Filing procedures.
303.64 Processing.
303.65 Public notice requirements.
303.66-303.79 [Reserved]

                  Subpart E_Change in Bank Control Act

303.80 Scope.
303.81 Definitions.
303.82 Transactions that require prior notice.
303.83 Transactions that require notice, but not prior notice.
303.84 Transactions that do not require notice.
303.85 Filing procedures.
303.86 Processing.
303.87 Public notice requirements.
303.88 Reporting of stock loans and changes in chief executive officers 
          and directors.
303.89-303.99 [Reserved]

        Subpart F_Change of Director or Senior Executive Officer

303.100 Scope.
303.101 Definitions.
303.102 Filing procedures and waiver of prior notice.
303.103 Processing.
303.104-303.119 [Reserved]

               Subpart G_Activities of Insured State Banks

303.120 Scope.
303.121 Filing procedures.
303.122 Processing.
303.123-303.139 [Reserved]

          Subpart H_Activities of Insured Savings Associations

303.140 Scope.
303.141 Filing procedures.
303.142 Processing.
303.143-303.159 [Reserved]

                  Subpart I_Mutual-to-Stock Conversions

303.160 Scope.
303.161 Filing procedures.
303.162 Waiver from compliance.
303.163 Processing.
303.164-303.179 [Reserved]

                     Subpart J_International Banking

303.180 Scope.
303.181 Definitions.
303.182 Establishing, moving or closing a foreign branch of a state 
          nonmember bank; Sec.  347.103.

[[Page 6]]

303.183 Investment by insured state nonmember banks in foreign 
          organizations; Sec.  347.108.
303.184 Moving an insured branch of a foreign bank.
303.185 Merger transactions involving foreign banks or foreign 
          organizations.
303.186 Exemptions from insurance requirement for a state branch of a 
          foreign bank; Sec.  347.206.
303.187 Approval for an insured state branch of a foreign bank to 
          conduct activities not permissible for federal branches; Sec.  
          347.213
303.188-303.199 [Reserved]

                   Subpart K_Prompt Corrective Action

303.200 Scope.
303.201 Filing procedures.
303.202 Processing.
303.203 Applications for capital distribution.
303.204 Applicationsfor acquisitions, branching, and new lines of 
          business.
303.205 Applications for bonuses and increased compensation for senior 
          executive officers.
303.206 Application for payment of principal or interest on subordinated 
          debt.
303.207 Restricted activities for critically undercapitalized 
          institutions.
303.208-303.219 [Reserved]

   Subpart L_Section 19 of the FDI Act (Consent to Service of Persons 
                 Convicted of Certain Criminal Offenses)

303.220 Scope.
303.221 Filing procedures.
303.222 Service at another insured depository institution.
303.223 Applicant's right to hearing following denial.
303.224-303.239 [Reserved]

                         Subpart M_Other Filings

303.240 General.
303.241 Reduce or retire capital stock or capital debt instruments.
303.242 Exercise of trust powers.
303.243 Brokered deposit waivers.
303.244 Golden parachute and severance plan payments.
303.245 Waiver of liability for commonly controlled depository 
          institutions.
303.246 Conversion with diminution of capital.
303.247 Continue or resume status as an insured institution following 
          termination under section 8 of the FDI Act.
303.248 Truth in Lending Act--Relief from reimbursement.
303.2490 Management official interlocks.
303.250 Modification of conditions.
303.251 Extension of time.
303.252-303.259 [Reserved]

Subpart N [Reserved]

    Authority: 12 U.S.C. 378, 1464, 1813, 1815, 1817, 1818, 1819(a) 
(Seventh and Tenth), 1820, 1823, 1828, 1831a, 1831e, 1831o, 1831p-1, 
1831w, 1835a, 1843(l), 3104, 3105, 3108, 3207, 5414, 5415 and 15 U.S.C. 
1601-1607.

    Source: 67 FR 79247, Dec. 27, 2002, unless otherwise noted.



Sec.  303.0  Scope.

    (a) This part describes the procedures to be followed by both the 
FDIC and applicants with respect to applications, requests, or notices 
(filings) required to be filed by statute or regulation. Additional 
details concerning processing are explained in related FDIC statements 
of policy.
    (b) Additional application procedures may be found in the following 
FDIC regulations:
    (1) 12 CFR part 327--Assessments (Request for review of assessment 
risk classification);
    (2) 12 CFR part 328--Advertisement of Membership (Application for 
temporary waiver of advertising requirements);
    (3) 12 CFR part 345--Community Reinvestment (CRA strategic plans and 
requests for designation as a wholesale or limited purpose institution);



                Subpart A_Rules of General Applicability



Sec.  303.1  Scope.

    Subpart A prescribes the general procedures for submitting filings 
to the FDIC which are required by statute or regulation. This subpart 
also prescribes the procedures to be followed by the FDIC, applicants 
and interested parties during the process of considering a filing, 
including public notice and comment. This subpart explains the 
availability of expedited processing for eligible depository 
institutions (defined in Sec.  303.2(r)). Certain terms used throughout 
this part are also defined in this subpart.



Sec.  303.2  Definitions.

    Except as modified or otherwise defined in this part, terms used in 
this part that are defined in the Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.) have the meanings provided in the

[[Page 7]]

Federal Deposit Insurance Act. Additional definitions of terms used in 
this part are as follows:
    (a) Act or FDI Act means the Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.).
    (b) Adjusted part 324 total assets means adjusted 12 CFR part 324 
total assets as calculated and reflected in the FDIC's Report of 
Examination.
    (c) Adverse comment means any objection, protest, or other adverse 
written statement submitted by an interested party relative to a filing. 
The term adverse comment shall not include any comment concerning the 
Community Reinvestment Act (CRA), fair lending, consumer protection, or 
civil rights that the appropriate regional director or designee 
determines to be frivolous (for example, raising issues between the 
commenter and the applicant that have been resolved). The term adverse 
comment also shall not include any other comment that the appropriate 
regional director or designee determines to be frivolous (for example, a 
non-substantive comment submitted primarily as a means of delaying 
action on the filing).
    (d) Amended order to pay means an order to forfeit and pay civil 
money penalties, the amount of which has been changed from that assessed 
in the original notice of assessment of civil money penalties.
    (e) Applicant means a person or entity that submits a filing to the 
FDIC.
    (f) Application means a submission requesting FDIC approval to 
engage in various corporate activities and transactions.
    (g) Appropriate FDIC region and appropriate regional director mean, 
respectively, the FDIC region and the FDIC regional director which the 
FDIC designates as follows:
    (1) When an institution or proposed institution that is the subject 
of a filing or administrative action is not and will not be part of a 
group of related institutions, the appropriate FDIC region for the 
institution and any individual associated with the institution is the 
FDIC region in which the institution or proposed institution is or will 
be located, and the appropriate regional director is the regional 
director for that region; or
    (2) When an institution or proposed institution that is the subject 
of a filing or administrative action is or will be part of a group of 
related institutions, the appropriate FDIC region for the institution 
and any individual associated with the institution is the FDIC region in 
which the group's major policy and decision makers are located, or any 
other region the FDIC designates on a case-by-case basis, and the 
appropriate regional director is the regional director for that region.
    (h) Associate director means any associate director of the Division 
of Supervision and Consumer Protection (DSC) or, in the event such title 
become obsolete, any official of equivalent authority within the 
division.
    (i) Book capital means total equity capital which is comprised of 
perpetual preferred stock, common stock, surplus, undivided profits and 
capital reserves, as those items are defined in the instructions of the 
Federal Financial Institutions Examination Council (FFIEC) for the 
preparation of Consolidated Reports of Condition and Income for insured 
banks.
    (j) Comment means any written statement of fact or opinion submitted 
by an interested party relative to a filing.
    (k) Corporation or FDIC means the Federal Deposit Insurance 
Corporation.
    (l) CRA protest means any adverse comment from the public related to 
a pending filing which raises a negative issue relative to the Community 
Reinvestment Act (CRA) (12 U.S.C. 2901 et seq.), whether or not it is 
labeled a protest and whether or not a hearing is requested.
    (m) Deputy director means the deputy director of the Division of 
Supervision and Consumer Protection (DSC) or, in the event such title 
become obsolete, any official of equivalent or higher authority within 
the division.
    (n) Deputy regional director means any deputy regional director of 
the Division of Supervision and Consumer Protection (DSC) or, in the 
event such title become obsolete, any official of equivalent authority 
within the same FDIC region of DSC.
    (o) Appropriate FDIC office means the office designated by the 
appropriate regional director or designee.

[[Page 8]]

    (p) DSC means the Division of Supervision and Consumer Protection 
or, in the event the Division of Supervision and Consumer Protection is 
reorganized, such successor division.
    (q) Director means the Director of the Division of Supervision and 
Consumer Protection (DSC) or, in the event such title become obsolete, 
any official of equivalent or higher authority within the division.
    (r) Eligible depository institution means a depository institution 
that meets the following criteria:
    (1) Received an FDIC-assigned composite rating of 1 or 2 under the 
Uniform Financial Institutions Rating System (UFIRS) as a result of its 
most recent federal or state examination;
    (2) Received a satisfactory or better Community Reinvestment Act 
(CRA) rating from its primary federal regulator at its most recent 
examination, if the depository institution is subject to examination 
under part 345 of this chapter;
    (3) Received a compliance rating of 1 or 2 from its primary federal 
regulator at its most recent examination;
    (4) Is well-capitalized as defined in the appropriate capital 
regulation and guidance of the institution's primary federal regulator; 
and
    (5) Is not subject to a cease and desist order, consent order, 
prompt corrective action directive, written agreement, memorandum of 
understanding, or other administrative agreement with its primary 
federal regulator or chartering authority.
    (s) Filing means an application, notice or request submitted to the 
FDIC under this part.
    (t) General Counsel means the head of the Legal Division of the FDIC 
or any official within the Legal Division exercising equivalent 
authority for purposes of this part.
    (u) Insider means a person who is or is proposed to be a director, 
officer, organizer, or incorporator of an applicant; a shareholder who 
directly or indirectly controls 10 percent or more of any class of the 
applicant's outstanding voting stock; or the associates or interests of 
any such person.
    (v) Institution-affiliated party shall have the same meaning as 
provided in section 3(u) of the Act (12 U.S.C. 1813(u)).
    (w) NEPA means the National Environmental Policy Act of 1969 (42 
U.S.C. 4321 et seq.).
    (x) NHPA means the National Historic Preservation Act of 1966 (16 
U.S.C. 470 et seq.).
    (y) Notice means a submission notifying the FDIC that a depository 
institution intends to engage in or has commenced certain corporate 
activities or transactions.
    (z) Notice to primary regulator means the notice described in 
section 8(a)(2)(A) of the Act concerning termination of deposit 
insurance (12 U.S.C. 1818(a)(2)(A)).
    (aa) Regional counsel means a regional counsel of the Legal Division 
or, in the event the title becomes obsolete, any official of equivalent 
authority within the Legal Division.
    (bb) Regional director means any regional director in the Division 
of Supervision and Consumer Protection (DSC), or in the event such title 
become obsolete, any official of equivalent authority within the 
division.
    (cc) [Reserved]
    (dd) Standard conditions means the conditions that the FDIC may 
impose as a routine matter when approving a filing, whether or not the 
applicant has agreed to their inclusion. The following conditions, or 
variations thereof, are standard conditions:
    (1) That the applicant has obtained all necessary and final 
approvals from the appropriate federal or state authority or other 
appropriate authority;
    (2) That if the transaction does not take effect within a specified 
time period, or unless, in the meantime, a request for an extension of 
time has been approved, the consent granted shall expire at the end of 
the specified time period;
    (3) That until the conditional commitment of the FDIC becomes 
effective, the FDIC retains the right to alter, suspend or withdraw its 
commitment should any interim development be deemed to warrant such 
action; and
    (4) In the case of a merger transaction (as defined in ] 303.61(a) 
of this part), including a corporate reorganization, that the proposed 
transaction not

[[Page 9]]

be consummated before the 30th calendar day (or shorter time period as 
may be prescribed by the FDIC with the concurrence of the Attorney 
General) after the date of the order approving the merger transaction.
    (ee) Tier 1 capital shall have the same meaning as provided in Sec.  
324.2 of this chapter.
    (ff) Total assets shall have the same meaning as provided in Sec.  
324.401(g) of this chapter.

[67 FR 79247, Dec. 27, 2002, as amended at 68 FR 50459, Aug. 21, 2003; 
78 FR 55470, Sept. 10, 2013; 83 FR 17739, Apr. 24, 2018]



Sec.  303.3  General filing procedures.

    Unless stated otherwise, filings should be submitted to the 
appropriate FDIC office. Forms and instructions for submitting filings 
may be obtained from any FDIC regional director. If no form is 
prescribed, the filing should be in writing; be signed by the applicant 
or a duly authorized agent; and contain a concise statement of the 
action requested. For specific filing and content requirements, consult 
the appropriate subparts of this part. The FDIC may require the 
applicant to submit additional information.



Sec.  303.4  Computation of time.

    For purposes of this part, and except as otherwise specifically 
provided, the FDIC begins computing the relevant period on the day after 
an event occurs (e.g., the day after a substantially complete filing is 
received by the FDIC or the day after publication begins) through the 
last day of the relevant period. When the last day is a Saturday, Sunday 
or federal holiday, the period runs until the end of the next business 
day.

[67 FR 79247, Dec. 27, 2002, as amended at 68 FR 50459, Aug. 21, 2003]



Sec.  303.5  Effect of Community Reinvestment Act performance on filings.

    Among other factors, the FDIC takes into account the record of 
performance under the Community Reinvestment Act (CRA) of each applicant 
in considering a filing for approval of:
    (a) The establishment of a domestic branch;
    (b) The relocation of the bank's main office or a domestic branch;
    (c) The relocation of an insured branch of a foreign bank;
    (d) A transaction subject to the Bank Merger Act; and
    (e) Deposit insurance.



Sec.  303.6  Investigations and examinations.

    The FDIC may examine or investigate and evaluate facts related to 
any filing under this chapter to the extent necessary to reach an 
informed decision and take any action necessary or appropriate under the 
circumstances.



Sec.  303.7  Public notice requirements.

    (a) General. The public must be provided with prior notice of a 
filing to establish a domestic branch, relocate a domestic branch or the 
main office, relocate an insured branch of a foreign bank, engage in a 
merger transaction, initiate a change of control transaction, or request 
deposit insurance. The public has the right to comment on, or to 
protest, these types of proposed transactions during the relevant 
comment period. In order to fully apprise the public of this right, an 
applicant shall publish a public notice of its filing in a newspaper of 
general circulation. For specific publication requirements, consult 
subparts B (Deposit Insurance), C (Branches and Relocations), D (Merger 
Transactions), E (Change in Bank Control), and J (International Banking) 
of this part.
    (b) Confirmation of publication. The applicant shall mail or 
otherwise deliver a copy of the newspaper notice to the appropriate FDIC 
office as part of its filing, or, if a copy is not available at the time 
of filing, promptly after publication.
    (c) Content of notice. (1) The public notice referred to in 
paragraph (a) of this section shall consist of the following:
    (i) Name and address of the applicant(s). In the case of an 
application for deposit insurance for a de novo bank, include the names 
of all organizers or incorporators. In the case of an application to 
establish a branch, include the location of the proposed branch or, in 
the case of an application to relocate a branch or main office, include

[[Page 10]]

the current and proposed address of the office. In the case of a merger 
application, include the names of all parties to the transaction. In the 
case of a notice of acquisition of control, include the name(s) of the 
acquiring parties. In the case of an application to relocate an insured 
branch of a foreign bank, include the current and proposed address of 
the branch.
    (ii) Type of filing being made;
    (iii) Name of the depository institution(s) that is the subject 
matter of the filing;
    (iv) That the public may submit comments to the appropriate FDIC 
regional director;
    (v) The address of the appropriate FDIC office where comments may be 
sent (the same location where the filing will be made);
    (vi) The closing date of the public comment period as specified in 
the appropriate subpart; and
    (vii) That the nonconfidential portions of the application are on 
file in the appropriate FDIC office and are available for public 
inspection during regular business hours; photocopies of the 
nonconfidential portion of the application file will be made available 
upon request.
    (2) The requirements of paragraphs (c)(1)(iv) through (vii) of this 
section may be satisfied through use of the following notice:

Any person wishing to comment on this application may file his or her 
comments in writing with the regional director of the Federal Deposit 
Insurance Corporation at the appropriate FDIC office [insert address of 
office] not later than [insert closing date of the public comment period 
specified in the appropriate subpart of part 303]. The non-confidential 
portions of the application are on file at the appropriate FDIC office 
and are available for public inspection during regular business hours. 
Photocopies of the nonconfidential portion of the application file will 
be made available upon request.

    (d) Multiple transactions. The FDIC may consider more than one 
transaction, or a series of transactions, to be a single filing for 
purposes of the publication requirements of this section. When 
publishing a single public notice for multiple transactions, the 
applicant shall explain in the public notice how the transactions are 
related. The closing date of the comment period shall be the closing 
date of the longest public comment period that applies to any of the 
related transactions.
    (e) Joint public notices. For a transaction subject to public notice 
requirements by the FDIC and another federal or state banking authority, 
the FDIC will accept publication of a single joint notice containing all 
the information required by both the FDIC and the other federal agency 
or state banking authority, provided that the notice states that 
comments must be submitted to the appropriate FDIC office and, if 
applicable, the other federal or state banking authority.
    (f) Where public notice is required, the FDIC may determine on a 
case-by-case basis that unusual circumstances surrounding a particular 
filing warrant modification of the publication requirements.



Sec.  303.8  Public access to filing.

    (a) General. For filings subject to a public notice requirement, any 
person may inspect or request a copy of the non-confidential portions of 
a filing (the public file) until 180 days following final disposition of 
a filing. Following the 180-day period, non-confidential portions of an 
application file will be made available in accordance with ' 303.8(c). 
The public file generally consists of portions of the filing, supporting 
data, supplementary information, and comments submitted by interested 
persons (if any) to the extent that the documents have not been afforded 
confidential treatment. To view or request photocopies of the public 
file, an oral or written request should be submitted to the appropriate 
FDIC office. The public file will be produced for review not more than 
one business day after receipt by the appropriate FDIC office of the 
request (either written or oral) to see the file. The FDIC may impose a 
fee for photocopying in accordance with Sec.  309.5(f) of this chapter 
at the rates the FDIC publishes annually in the Federal Register.
    (b) Confidential treatment. (1) The applicant may request that 
specific information be treated as confidential. The following 
information generally is considered confidential:

[[Page 11]]

    (i) Personal information, the release of which would constitute a 
clearly unwarranted invasion of privacy;
    (ii) Commercial or financial information, the disclosure of which 
could result in substantial competitive harm to the submitter; and
    (iii) Information, the disclosure of which could seriously affect 
the financial condition of any depository institution.
    (2) If an applicant requests confidential treatment for information 
that the FDIC does not consider to be confidential, the FDIC may include 
that information in the public file after notifying the applicant. On 
its own initiative, the FDIC may determine that certain information 
should be treated as confidential and withhold that information from the 
public file.
    (c) FOIA requests. A written request for information withheld from 
the public file, or copies of the public file following closure of the 
file 180 days after final disposition, should be submitted pursuant to 
the Freedom of Information Act (5 U.S.C. 552) and part 309 of this 
chapter to the FDIC, Attn: FOIA/Privacy Group, Legal Division, 550 17th 
Street, NW., Washington, DC 20429.



Sec.  303.9  Comments.

    (a) Submission of comments. For filings subject to a public notice 
requirement, any person may submit comments to the appropriate FDIC 
regional director during the comment period.
    (b) Comment period--(1) General. Consult appropriate subparts of 
this part for the comment period applicable to a particular filing.
    (2) Extension. The FDIC may extend or reopen the comment period if:
    (i) The applicant fails to file all required information on a timely 
basis to permit review by the public or makes a request for confidential 
treatment not granted by the FDIC that delays the public availability of 
that information;
    (ii) Any person requesting an extension of time satisfactorily 
demonstrates to the FDIC that additional time is necessary to develop 
factual information that the FDIC determines may materially affect the 
application; or
    (iii) The FDIC determines that other good cause exists.
    (3) Solicitation of comments. Whenever appropriate, the appropriate 
regional director may solicit comments from any person or institution 
which might have an interest in or be affected by the pending filing.
    (4) Applicant response. The FDIC will provide copies of all comments 
received to the applicant and may give the applicant an opportunity to 
respond.



Sec.  303.10  Hearings and other meetings.

    (a) Matters covered. This section covers hearings and other 
proceedings in connection with filings and determinations for or by:
    (1) Deposit insurance by a proposed new depository institution or 
operating non-insured institution;
    (2) An insured state nonmember bank to establish a domestic branch 
or to relocate a main office or domestic branch;
    (3) Relocation of an insured branch of a foreign bank;
    (4)(i) Merger transaction which requires the FDIC's prior approval 
under the Bank Merger Act (12 U.S.C. 1828(c));
    (ii) Except as otherwise expressly provided, the provisions of this 
Sec.  303.10 shall not be applicable to any proposed merger transaction 
which the FDIC Board of Directors determines must be acted upon 
immediately to prevent the probable failure of one of the institutions 
involved, or must be handled with expeditious action due to an existing 
emergency condition, as permitted by the Bank Merger Act (12 U.S.C. 
1828(c)(6));
    (5) Nullification of a decision on a filing; and
    (6) Any other purpose or matter which the FDIC Board of Directors in 
its sole discretion deems appropriate.
    (b) Hearing requests. (1) Any person may submit a written request 
for a hearing on a filing:
    (i) To the appropriate regional director before the end of the 
comment period; or
    (ii) To the appropriate regional director, pursuant to a notice to 
nullify a decision on a filing issued pursuant to Sec.  303.11(g)(2)(i) 
or (ii).


(2) The request must describe the nature of the issues or facts to be 
presented and the reasons why written

[[Page 12]]

submissions would be insufficient to make an adequate presentation of 
those issues or facts to the FDIC. A person requesting a hearing shall 
simultaneously submit a copy of the request to the applicant.

    (c) Action on a hearing request. The appropriate regional director, 
after consultation with the Legal Division, may grant or deny a request 
for a hearing and may limit the issues that he or she deems relevant or 
material. The FDIC generally grants a hearing request only if it 
determines that written submissions would be insufficient or that a 
hearing otherwise would be in the public interest.
    (d) Denial of a hearing request. If the appropriate regional 
director, after consultation with the Legal Division, denies a hearing 
request, he or she shall notify the person requesting the hearing of the 
reason for the denial. A decision to deny a hearing request shall be a 
final agency determination and is not appealable.
    (e) FDIC procedures prior to the hearing--(1) Notice of hearing. The 
FDIC shall issue a notice of hearing if it grants a request for a 
hearing or orders a hearing because it is in the public interest. The 
notice of hearing shall state the subject and date of the filing, the 
time and place of the hearing, and the issues to be addressed. The FDIC 
shall send a copy of the notice of hearing to the applicant, to the 
person requesting the hearing, and to anyone else requesting a copy.
    (2) The presiding officer shall be the regional director or designee 
or such other person as may be named by the Board or the Director. The 
presiding officer is responsible for conducting the hearing and 
determining all procedural questions not governed by this section.
    (f) Participation in the hearing. Any person who wishes to appear 
(participant) shall notify the appropriate regional director of his or 
her intent to participate in the hearing no later than 10 days from the 
date that the FDIC issues the Notice of Hearing. At least 5 days before 
the hearing, each participant shall submit to the appropriate regional 
director, as well as to the applicant and any other person as required 
by the FDIC, the names of witnesses, a statement describing the proposed 
testimony of each witness, and one copy of each exhibit the participant 
intends to present.
    (g) Transcripts. The FDIC shall arrange for a hearing transcript. 
The person requesting the hearing and the applicant each shall bear the 
cost of one copy of the transcript for his or her use unless such cost 
is waived by the presiding officer and incurred by the FDIC.
    (h) Conduct of the hearing--(1) Presentations. Subject to the 
rulings of the presiding officer, the applicant and participants may 
make opening and closing statements and present and examine witnesses, 
material, and data.
    (2) Information submitted. Any person presenting material shall 
furnish one copy to the FDIC, one copy to the applicant, and one copy to 
each participant.
    (3) Laws not applicable to hearings. 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 FDIC's Rules of Practice and Procedure (12 CFR part 308) 
do not govern hearings under this Sec.  303.10.
    (i) Closing the hearing record. At the applicant's or any 
participant's request, or at the FDIC's discretion, the FDIC may keep 
the hearing record open for up to 10 days following the FDIC's receipt 
of the transcript. The FDIC shall resume processing the filing after the 
record closes.
    (j) Disposition and notice thereof. The presiding officer shall make 
a recommendation to the FDIC within 20 days following the date the 
hearing and record on the proceeding are closed. The FDIC shall notify 
the applicant and all participants of the final disposition of a filing 
and shall provide a statement of the reasons for the final disposition.
    (k) Computation of time. In computing periods of time under this 
section, the provisions of Sec.  308.12 of the FDIC's Rules of Practice 
and Procedure (12 CFR 308.12) shall apply.
    (l) Informal proceedings. The FDIC may arrange for an informal 
proceeding with an applicant and other interested parties in connection 
with a

[[Page 13]]

filing, either upon receipt of a written request for such a meeting made 
during the comment period, or upon the FDIC's own initiative. No later 
than 10 days prior to an informal proceeding, the appropriate regional 
director shall notify the applicant and each person who requested a 
hearing or oral presentation of the date, time, and place of the 
proceeding. The proceeding may assume any form, including a meeting with 
FDIC representatives at which participants will be asked to present 
their views orally. The regional director may hold separate meetings 
with each of the participants.
    (m) Authority retained by FDIC Board of Directors to modify 
procedures. The FDIC Board of Directors may delegate authority by 
resolution on a case-by-case basis to the presiding officer to adopt 
different procedures in individual matters and on such terms and 
conditions as the Board of Directors determines in its discretion. The 
resolution shall be made available for public inspection and copying in 
the Office of the General Counsel, Executive Secretary Section under the 
Freedom of Information Act (5 U.S.C. 552(a)(2)).



Sec.  303.11  Decisions.

    (a) General procedures. The FDIC may approve, conditionally approve, 
deny, or not object to a filing after appropriate review and 
consideration of the record. The FDIC will promptly notify the applicant 
and any person who makes a written request of the final disposition of a 
filing. If the FDIC denies a filing, the FDIC will immediately notify 
the applicant in writing of the reasons for the denial.
    (b) Authority retained by FDIC Board of Directors to modify 
procedures. In acting on any filing under this part, the FDIC Board of 
Directors may by resolution adopt procedures which differ from those 
contained in this part when it deems it necessary or in the public 
interest to do so. The resolution shall be made available for public 
inspection and copying in the Office of the General Counsel, Executive 
Secretary Section under the Freedom of Information Act (5 U.S.C. 
552(a)(2)).
    (c) Expedited processing. (1) A filing submitted by an eligible 
depository institution as defined in Sec.  303.2(r) will receive 
expedited processing as specified in the appropriate subparts of this 
part unless the FDIC determines to remove the filing from expedited 
processing for any of the reasons set forth in paragraph (c)(2) of this 
section. Except for filings made pursuant to subpart J (International 
Banking), expedited processing will not be available for any filing that 
the appropriate regional director does not have delegated authority to 
approve.
    (2) Removal of filing from expedited processing. The FDIC may remove 
a filing from expedited processing at any time prior to final 
disposition if:
    (i) For filings subject to public notice under Sec.  303.7, an 
adverse comment is received that warrants additional investigation or 
review;
    (ii) For filings subject to evaluation of CRA performance under 
Sec.  303.5, a CRA protest is received that warrants additional 
investigation or review, or the appropriate regional director determines 
that the filing presents a significant CRA or compliance concern;
    (iii) For any filing, the appropriate regional director determines 
that the filing presents a significant supervisory concern, or raises a 
significant legal or policy issue; or
    (iv) For any filing, the appropriate regional director determines 
that other good cause exists for removal.
    (3) For purposes of this section, a significant CRA concern 
includes, but is not limited to, a determination by the appropriate 
regional director that, although a depository institution may have an 
institution-wide rating of satisfactory or better, a depository 
institution's CRA rating is less than satisfactory in a state or multi-
state metropolitan statistical area, or a depository institution's CRA 
performance is less than satisfactory in a metropolitan statistical area 
as defined in 12 CFR 345.12 (MSA) or in the non-MSA portion of a state 
in which it seeks to expand through approval of an application for a 
deposit facility as defined in 12 U.S.C. 2902(3).
    (4) If the FDIC determines that it is necessary to remove a filing 
from expedited processing pursuant to paragraph (c)(2) of this section, 
the FDIC promptly will provide the applicant with a written explanation

[[Page 14]]

    (d) Multiple transactions. If the FDIC is considering related 
transactions, some or all of which have been granted expedited 
processing, then the longest processing time for any of the related 
transactions shall govern for purposes of approval.
    (e) Abandonment of filing. A filing must contain all information set 
forth in the applicable subpart of this part. To the extent necessary to 
evaluate a filing, the FDIC may require an applicant to provide 
additional information. If information requested by the FDIC is not 
provided within the time period specified by the agency, the FDIC may 
deem the filing abandoned and shall provide written notification to the 
applicant and any interested parties that submitted comments to the FDIC 
that the file has been closed.
    (f) Appeals and requests for reconsideration--(1) General. Appeal 
procedures for a denial of a change in bank control (subpart E), change 
in senior executive officer or board of directors (subpart F) or denial 
of an application pursuant to section 19 of the FDI Act (subpart L) are 
contained in 12 CFR part 308, subparts D, L, and M, respectively. For 
all other filings covered by this chapter for which appeal procedures 
are not provided by regulation or other written guidance, the procedures 
specified in paragraphs (f) (2) and (3) of this section shall apply. A 
decision to deny a request for a hearing is a final agency determination 
and is not appealable.
    (2) Filing procedures. Within 15 days of receipt of notice from the 
FDIC that its filing has been denied, any applicant may file a request 
for reconsideration with the appropriate regional director.
    (3) Content of filing. A request for reconsideration must contain 
the following information:
    (i) A resolution of the board of directors of the applicant 
authorizing filing of the request if the applicant is a corporation, or 
a letter signed by the individual(s) filing the request if the applicant 
is not a corporation;
    (ii) Relevant, substantive information that for good cause was not 
previously set forth in the filing; and
    (iii) Specific reasons why the FDIC should reconsider its prior 
decision.
    (4)-(5) [Reserved]
    (6) Processing. The FDIC will notify the applicant whether 
reconsideration will be granted or denied within 15 days of receipt of a 
request for reconsideration. If a request for reconsideration is granted 
pursuant to Sec.  303.11(f), the FDIC will notify the applicant of the 
final agency decision on such filing within 60 days of its receipt of 
the request for reconsideration.
    (g) Nullification, withdrawal, revocation, amendment, and suspension 
of decisions on filings--(1) Grounds for action. Except as otherwise 
provided by law or regulation, the FDIC may nullify, withdraw, revoke, 
amend or suspend a decision on a filing if it becomes aware at anytime:
    (i) Of any material misrepresentation or omission related to the 
filing or of any material change in circumstance that occurred prior to 
the consummation of the transaction or commencement of the activity 
authorized by the decision on the filing; or
    (ii) That the decision on the filing is contrary to law or 
regulation or was granted due to clerical or administrative error.
    (iii) Any person responsible for a material misrepresentation or 
omission in a filing or supporting materials may be subject to an 
enforcement action and other penalties, including criminal penalties 
provided in title 18 of the United States Code.
    (2) Notice of intent and temporary order. (i) Except as provided in 
Sec.  303.11(g)(2)(ii), before taking action under this Sec.  303.11(g), 
the FDIC shall issue and serve on an applicant written notice of its 
intent to take such action. A notice of intent to act on a filing shall 
include:
    (A) The reasons for the proposed action; and
    (B) The date by which the applicant may file a written response with 
the FDIC.
    (ii) The FDIC may issue a temporary order on a decision on a filing 
without providing an applicant a prior notice of intent if the FDIC 
determines that:
    (A) It is necessary to reevaluate the impact of a change in 
circumstance prior to the consummation of the transaction or 
commencement of the activity authorized by the decision on the filing; 
or

[[Page 15]]

    (B) The activity authorized by the filing may pose a threat to the 
interests of the depository institution's depositors or may threaten to 
impair public confidence in the depository institution.
    (iii) A temporary order shall provide the applicant with an 
opportunity to make a written response in accordance with Sec.  
303.11(g)(3) of this section.
    (3) Response to notice of intent or temporary order. An applicant 
may file a written response to a notice of intent or a temporary order 
within 15 days from the date of service of the notice or temporary 
order. The written response should include:
    (i) An explanation of why the proposed action or temporary order is 
not warranted; and
    (ii)(A) Any other relevant information, mitigation circumstance, 
documentation, or other evidence in support of the applicant's position. 
An applicant may also request a hearing under Sec.  303.10.
    (B) Failure by an applicant to file a written response with the FDIC 
to a notice of intent or a temporary order within the specified time 
period, shall constitute a waiver of the opportunity to respond and 
shall constitute consent to a final order under this paragraph (g). The 
FDIC shall consider any such response, if filed in a timely manner, 
within 30 days of receiving the response.
    (4) Effective date. All orders issued pursuant to this section shall 
become effective immediately upon issuance unless otherwise stated 
therein.

[67 FR 79247, Dec. 27, 2002, as amended at 68 FR 50459, Aug. 21, 2003]



Sec.  303.12  Waivers.

    (a) The Board of Directors, of the FDIC (Board) may, for good cause 
and to the extent permitted by statute, waiver the applicability of any 
provision of this chapter.
    (b) The provisions of this chapter may be suspended, revoked, 
amended or waived for good cause shown, in whole or in part, at any time 
by the Board, subject to the provisions of the Administrative Procedure 
Act and the provisions of this chapter. Any provision of the rules may 
be waived by the Board on its own motion or on petition if good cause 
thereof is shown.

[68 FR 50459, Aug. 21, 2003]



Sec.  303.13  [Reserved]



Sec.  303.14  Being ``engaged in the business of receiving deposits 
other than trust funds.''

    (a) Except as provided in paragraphs (b), (c), and (d) of this 
section, a depository institution shall be ``engaged in the business of 
receiving deposits other than trust funds'' only if it maintains one or 
more non-trust deposit accounts in the minimum aggregate amount of 
$500,000.
    (b) An applicant for federal deposit insurance under section 5 of 
the FDI Act, 12 U.S.C. 1815(a), shall be deemed to be ``engaged in the 
business of receiving deposits other than trust funds'' from the date 
that the FDIC approves deposit insurance for the institution until one 
year after it opens for business.
    (c) Any depository institution that fails to satisfy the minimum 
deposit standard specified in paragraph (a) of this section as of two 
consecutive call report dates (i.e., March 31st, June 30th, September 
30th, and December 31st) shall be subject to a determination by the FDIC 
that the institution is not ``engaged in the business of receiving 
deposits other than trust funds'' and to termination of its insured 
status under section 8(p) of the FDI Act, 12 U.S.C. 1818(p). For 
purposes of this paragraph, the first three call report dates after the 
institution opens for business are excluded.
    (d) Notwithstanding any failure by an insured depository institution 
to satisfy the minimum deposit standard in paragraph (a) of this 
section, the institution shall continue to be ``engaged in the business 
of receiving deposits other than trust funds'' for purposes of section 3 
of the FDI Act until the institution's insured status is terminated by 
the FDIC pursuant to a proceeding under section 8(a) or section 8(p) of 
the FDI Act. 12 U.S.C. 1818(a) or 1818(p).

[[Page 16]]



Sec.  303.15  Certain limited liability companies deemed incorporated 
under State law.

    (a) For purposes of the definition of ``State bank'' in 12 U.S.C. 
1813(a)(2) and this Chapter, a banking institution that is chartered as 
a limited liability company (LLC) under the law of any State is deemed 
to be ``incorporated'' under the law of the State, if
    (1) The institution is not subject to automatic termination, 
dissolution, or suspension upon the happening of some event (including, 
e.g., the death, disability, bankruptcy, expulsion, or withdrawal of an 
owner of the institution), other than the passage of time;
    (2) The exclusive authority to manage the institution is vested in a 
board of managers or directors that is elected or appointed by the 
owners, and that operates in substantially the same manner as, and has 
substantially the same rights, powers, privileges, duties, 
responsibilities, as a board of directors of a bank chartered as a 
corporation in the State;
    (3) Neither State law, nor the institution's operating agreement, 
bylaws, or other organizational documents provide that an owner of the 
institution is liable for the debts, liabilities, and obligations of the 
institution in excess of the amount of the owner's investment; and
    (4) Neither State law, nor the institution's operating agreement, 
bylaws, or other organizational documents require the consent of any 
other owner of the institution in order for an owner to transfer an 
ownership interest in the institution, including voting rights.
    (b) For purposes of the Federal Deposit Insurance Act and this 
Chapter,
    (1) Each of the terms ``stockholder'' and ``shareholder'' includes 
an owner of any interest in a bank chartered as an LLC, including a 
member or participant;
    (2) The term ``director'' includes a manager or director of a bank 
chartered as an LLC, or other person who has, with respect to such a 
bank, authority substantially similar to that of a director of a 
corporation;
    (3) The term ``officer'' includes an officer of a bank chartered as 
an LLC, or other person who has, with respect to such a bank, authority 
substantially similar to that of an officer of a corporation; and
    (4) Each of the terms ``voting stock,'' ``voting shares,'' and 
``voting securities'' includes ownership interests in a bank chartered 
as an LLC, as well as any certificates or other evidence of such 
ownership interests.

[68 FR 7308, Feb. 13, 2003]



Sec. Sec.  303.16-303.19  [Reserved]



                       Subpart B_Deposit Insurance



Sec.  303.20  Scope.

    This subpart sets forth the procedures for applying for deposit 
insurance for a proposed depository institution or an operating 
noninsured depository institution under section 5 of the FDI Act (12 
U.S.C. 1815). It also sets forth the procedures for requesting 
continuation of deposit insurance for a state-chartered bank withdrawing 
from membership in the Federal Reserve System and for interim 
institutions chartered to facilitate a merger transaction. Each bank 
that results from the conversion of a Federal savings association into 
multiple banks pursuant to section 5(i)(5) of the Home Owners' Loan Act, 
12 U.S.C. 1464(i)(5), is treated as a proposed depository institution or 
a de novo institution, as appropriate, for purposes of this subpart.

[67 FR 79247, Dec. 27, 2002, as amended at 73 FR 2145, Jan. 14, 2008]



Sec.  303.21  Filing procedures.

    (a) Applications for deposit insurance shall be filed with the 
appropriate FDIC office. The relevant application forms and instructions 
for applying for deposit insurance for an existing or proposed 
depository institution may be obtained from any FDIC regional director.
    (b) An application for deposit insurance for an interim depository 
institution shall be filed and processed in accordance with the 
procedures set forth in Sec.  303.24, subject to the provisions of Sec.  
303.62(b)(2) regarding deposit insurance for interim institutions. An 
interim institution is defined as a state-

[[Page 17]]

or federally-chartered depository institution that does not operate 
independently but exists solely as a vehicle to accomplish a merger 
transaction.
    (c) A request for continuation of deposit insurance upon withdrawing 
from membership in the Federal Reserve System shall be in letter form 
and shall provide the information prescribed in Sec.  303.25.



Sec.  303.22  Processing.

    (a) Expedited processing for proposed institutions. (1) An 
application for deposit insurance for a proposed institution which will 
be a subsidiary of an eligible depository institution as defined in 
Sec.  303.2(r) or an eligible holding company will be acknowledged in 
writing by the FDIC and will receive expedited processing unless the 
applicant is notified in writing to the contrary and provided with the 
basis for that decision. An eligible holding company is defined as a 
bank or thrift holding company that has consolidated assets of at least 
$150 million or more; a BOPEC rating of at least ``2'' for bank holding 
companies or an above average or ``A'' rating for thrift holding 
companies; and at least 75 percent of its consolidated depository 
institution assets comprised of eligible depository institutions. The 
FDIC may remove an application from expedited processing for any of the 
reasons set forth in Sec.  303.11(c)(2).
    (2) Under expedited processing, the FDIC will take action on an 
application within 60 days of receipt of a substantially complete 
application or 5 days after the expiration of the comment period 
described in Sec.  303.23, whichever is later. Final action may be 
withheld until the FDIC has assurance that permission to organize the 
proposed institution will be granted by the chartering authority. 
Notwithstanding paragraph (a)(1) of this section, if the FDIC does not 
act within the expedited processing period, it does not constitute an 
automatic or default approval.
    (b) Standard processing. For those applications that are not 
processed pursuant to the expedited procedures, the FDIC will provide 
the applicant with written notification of the final action when the 
decision is rendered.

[67 FR 79247, Dec. 27, 2002, as amended at 68 FR 50459, Aug. 21, 2003]



Sec.  303.23  Public notice requirements.

    (a) De novo institutions and operating noninsured institutions. The 
applicant shall publish a notice as prescribed in Sec.  303.7 in a 
newspaper of general circulation in the community in which the main 
office of the depository institution is or will be located. Notice shall 
be published as close as practicable to, but no sooner than five days 
before, the date the application is mailed or delivered to the 
appropriate FDIC office. Comments by interested parties must be received 
by the appropriate regional director within 30 days following the date 
of publication, unless the comment period has been extended or reopened 
in accordance with Sec.  303.9(b)(2).
    (b) Exceptions to public notice requirements. No publication shall 
be required in connection with the granting of insurance to a new 
depository institution established pursuant to the resolution of a 
depository institution in default, or to an interim depository 
institution formed solely to facilitate a merger transaction, or for a 
request for continuation of federal deposit insurance by a state-
chartered bank withdrawing from membership in the Federal Reserve 
System.



Sec.  303.24  Application for deposit insurance for an interim institution.

    (a) Application required. Subject to Sec.  303.62(b)(2), a deposit 
insurance application is required for a state-chartered interim 
institution if the related merger transaction is subject to approval by 
a federal banking agency other than the FDIC. A separate application for 
deposit insurance for an interim institution is not required in 
connection with any merger requiring FDIC approval pursuant to subpart D 
of this part.
    (b) Content of separate application. A letter application for 
deposit insurance for an interim institution, accompanied by a copy of 
the related merger

[[Page 18]]

application, shall be filed with the appropriate FDIC office. The letter 
application shall briefly describe the transaction and contain a 
statement that deposit insurance is being requested for an interim 
institution that does not operate independently but exists solely as a 
vehicle to accomplish a merger transaction which will be reviewed by a 
federal banking agency other than the FDIC.
    (c) Processing. An application for deposit insurance for an interim 
depository institution will be acknowledged in writing by the FDIC. 
Final action will be taken within 21 days after receipt of a 
substantially complete application, unless the applicant is notified in 
writing that additional review is warranted. If the FDIC does not act 
within the expedited processing period, it does not constitute an 
automatic or default approval.



Sec.  303.25  Continuation of deposit insurance upon withdrawing 
from membership in the Federal Reserve System.

    (a) Content of application. To continue its insured status upon 
withdrawal from membership in the Federal Reserve System, a state-
chartered bank shall submit a letter application to the appropriate FDIC 
office. A complete application shall consist of the following 
information:
    (1) A copy of the letter, and any attachments thereto, sent to the 
appropriate Federal Reserve Bank setting forth the bank's intention to 
terminate its membership;
    (2) A copy of the letter from the Federal Reserve Bank acknowledging 
the bank's notice to terminate membership;
    (3) A statement regarding any anticipated changes in the bank's 
general business plan during the next 12-month period; and
    (4)(i) A statement by the bank's management that there are no 
outstanding or proposed corrective programs or supervisory agreements 
with the Federal Reserve System.
    (ii) If such programs or agreements exist, a statement by the 
applicant that its Board of Directors is willing to enter into similar 
programs or agreements with the FDIC which would become effective upon 
withdrawal from the Federal Reserve System.
    (b) Processing. An application for deposit insurance under this 
section will be acknowledged in writing by the FDIC. The FDIC shall 
notify the applicant, within 15 days of receipt of a substantially 
complete application, either that federal deposit insurance will 
continue upon termination of membership in the Federal Reserve System or 
that additional review is warranted and the applicant will be notified, 
in writing, of the FDIC's final decision regarding continuation of 
deposit insurance. If the FDIC does not act within the expedited 
processing period, it does not constitute an automatic or default 
approval.



Sec. Sec.  303.26-303.39  [Reserved]



 Subpart C_Establishment and Relocation of Domestic Branches and Offices



Sec.  303.40  Scope.

    (a) General. This subpart sets forth the application requirements 
and procedures for insured state nonmember banks to establish a branch, 
relocate a branch or main office, and retain existing branches after the 
interstate relocation of the main office subject to the approval by the 
FDIC pursuant to sections 13(f), 13(k), 18(d) and 44 of the FDI Act.
    (b) Merger transaction. Applications for approval of the acquisition 
and establishment of branches in connection with a merger transaction 
under section 18(c) of the FDI Act (12 U.S.C. 1828(c)), are processed in 
accordance with subpart D (Merger Transactions) of this part.
    (c) Insured branches of foreign banks and foreign branches of 
domestic banks. Applications regarding insured branches of foreign banks 
and foreign branches of domestic banks are processed in accordance with 
subpart J (International Banking) of this part.
    (d) Interstate acquisition of individual branch. Applications 
requesting approval of the interstate acquisition of an individual 
branch or branches located in a state other than the applicant's home 
state without the acquisition of the whole bank are treated as

[[Page 19]]

interstate bank merger transactions under section 44 of the FDI Act (12 
U.S.C. 1831a(u)), and are processed in accordance with subpart D (Merger 
Transactions) of this part.



Sec.  303.41  Definitions.

    For purposes of this subpart:
    (a) Branch, except as provided in this paragraph, includes any 
branch bank, branch office, additional office, or any branch place of 
business located in any State of the United States or in any territory 
of the United States, Puerto Rico, Guam, American Samoa, the Trust 
Territory of the Pacific Islands, the Virgin Islands, and the Northern 
Mariana Islands at which deposits are received or checks paid or money 
lent. A branch does not include an automated teller machine, an 
automated loan machine, a remote service unit, or a facility described 
in section 303.46. The term branch also includes the following:
    (1) A messenger service that is operated by a bank or its affiliate 
that picks up and delivers items relating to transactions in which 
deposits are received or checks paid or money lent. A messenger service 
established and operated by a non-affiliated third party generally does 
not constitute a branch for purposes of this subpart. Banks contracting 
with third parties to provide messenger services should consult with the 
FDIC to determine if the messenger service constitutes a branch.
    (2) A mobile branch, other than a messenger service, that does not 
have a single, permanent site and uses a vehicle that travels to various 
locations to enable the public to conduct banking business. A mobile 
branch may serve defined locations on a regular schedule or may serve a 
defined area at varying times and locations.
    (3) A temporary branch that operates for a limited period of time 
not to exceed one year as a public service, such as during an emergency 
or disaster situation.
    (4) A seasonal branch that operates at various periodically 
recurring intervals, such as during state and local fairs, college 
registration periods, and other similar occasions.
    (b) Branch relocation means a move within the same immediate 
neighborhood of the existing branch that does not substantially affect 
the nature of the business of the branch or the customers of the branch. 
Moving a branch to a location outside its immediate neighborhood is 
considered the closing of an existing branch and the establishment of a 
new branch. Closing of a branch is covered in the FDIC Statement of 
Policy Concerning Branch Closing Notices and Policies. 1 FDIC Law, 
Regulations, Related Acts 5391; see Sec.  309.4 (a) and (b) of this 
chapter for availability.
    (c) De novo branch means a branch of a bank which is established by 
the bank as a branch and does not become a branch of such bank as a 
result of:
    (1) The acquisition by the bank of an insured depository institution 
or a branch of an insured depository institution; or
    (2) The conversion, merger, or consolidation of any such institution 
or branch.
    (d) Home state means the state by which the bank is chartered.
    (e) Host state means a state, other than the home state of the bank, 
in which the bank maintains, or seeks to establish and maintain, a 
branch.

[67 FR 79247, Dec. 27, 2002, as amended at 73 FR 35338, June 23, 2008; 
73 FR 55432, Sept. 25, 2008]



Sec.  303.42  Filing procedures.

    (a) General. An applicant shall submit an application to the 
appropriate FDIC office on the date the notice required by Sec.  303.44 
is published, or within 5 days after the date of the last required 
publication.
    (b) Content of filing. A complete letter application shall include 
the following information:
    (1) A statement of intent to establish a branch, or to relocate the 
main office or a branch;
    (2) The exact location of the proposed site including the street 
address. With regard to messenger services, specify the geographic area 
in which the services will be available. With regard to a mobile branch 
specify the community or communities in which the vehicle will operate 
and the manner in which it will be used;
    (3) Details concerning any involvement in the proposal by an insider 
of

[[Page 20]]

the bank as defined in Sec.  303.2(u), including any financial 
arrangements relating to fees, the acquisition of property, leasing of 
property, and construction contracts;
    (4) A statement on the impact of the proposal on the human 
environment, including, information on compliance with local zoning laws 
and regulations and the effect on traffic patterns for purposes of 
complying with the applicable provisions of the NEPA and the FDIC 
Statement of Policy on NEPA (1 FDIC Law, Regulations, Related Acts 5185; 
see Sec.  309.4 (a) and (b) of this chapter for availability);
    (5) A statement as to whether or not the site is eligible for 
inclusion in the National Register of Historic Places for purposes of 
complying with applicable provisions of the NHPA and the FDIC Statement 
of Policy on NHPA (1 FDIC Law, Regulations, Related Acts 5175; see Sec.  
309.4 (a) and (b) of this chapter for availability) including 
documentation of consultation with the State Historic Preservation 
Officer, as appropriate;
    (6) Comments on any changes in services to be offered, the community 
to be served, or any other effect the proposal may have on the 
applicant's compliance with the CRA;
    (7) A copy of each newspaper publication required by Sec.  303.44 of 
this subpart, the name and address of the newspaper, and date of the 
publication;
    (8) When an application is submitted to relocate the main office of 
the applicant from one state to another, a statement of the applicant's 
intent regarding retention of branches in the state where the main 
office exists prior to relocation.
    (c) Undercapitalized institutions. Applications to establish a 
branch by applicants subject to section 38 of the FDI Act (12 U.S.C. 
1831o) also should provide the information required by Sec.  303.204. 
Applications pursuant to sections 38 and 18(d) of the FDI Act (12 U.S.C. 
1831o and 1828(d)) may be filed concurrently or as a single application.
    (d) Additional information. The FDIC may request additional 
information to complete processing.



Sec.  303.43  Processing.

    (a) Expedited processing for eligible depository institutions. An 
application filed under this subpart by an eligible depository 
institution as defined in Sec.  303.2(r) will be acknowledged in writing 
by the FDIC and will receive expedited processing, unless the applicant 
is notified in writing to the contrary and provided with the basis for 
that decision. The FDIC may remove an application from expedited 
processing for any of the reasons set forth in Sec.  303.11(c)(2). 
Absent such removal, an application processed under expedited processing 
will be deemed approved on the latest of the following:
    (1) The 21st day after receipt by the FDIC of a substantially 
complete filing;
    (2) The 5th day after expiration of the comment period described 
inSec.  303.44; or
    (3) In the case of an application to establish and operate a de novo 
branch in a state that is not the applicant's home state and in which 
the applicant does not maintain a branch, the 5th day after the FDIC 
receives confirmation from the host state that the applicant has both 
complied with the filing requirements of the host state and submitted a 
copy of the application with the FDIC to the host state bank supervisor.
    (b) Standard processing. For those applications which are not 
processed pursuant to the expedited procedures, the FDIC will provide 
the applicant with written notification of the final action when the 
decision is rendered.



Sec.  303.44  Public notice requirements.

    (a) Newspaper publications. For applications to establish or 
relocate a branch, a notice as described in Sec.  303.7(c) shall be 
published once in a newspaper of general circulation. For applications 
to relocate a main office, notice shall be published at least once each 
week on the same day for two consecutive weeks. The required publication 
shall be made in the following communities:
    (1) To establish a branch. In the community in which the main office 
is located and in the communities to be served by the branch (including 
messenger services and mobile branches).
    (2) To relocate a main office. In the community in which the main 
office is

[[Page 21]]

currently located and in the community to which it is proposed the main 
office will relocate.
    (3) To relocate a branch. In the community in which the branch is 
located.
    (b) Public comments. Comments by interested parties must be received 
by the appropriate regional director within 15 days after the date of 
the last newspaper publication required by paragraph (a) of this 
section, unless the comment period has been extended or reopened in 
accordance with Sec.  303.9(b)(2).
    (c) Lobby notices. In the case of applications to relocate a main 
office or a branch, a copy of the required newspaper publication shall 
be posted in the public lobby of the office to be relocated for at least 
15 days beginning on the date of the last published notice required by 
paragraph (a) of this section.



Sec.  303.45  Special provisions.

    (a) Emergency or disaster events. (1) In the case of an emergency or 
disaster at a main office or a branch which requires that an office be 
immediately relocated to a temporary location, applicants shall notify 
the appropriate FDIC office within 3 days of such temporary relocation.
    (2) Within 10 days of the temporary relocation resulting from an 
emergency or disaster, the bank shall submit a written application to 
the appropriate FDIC office, that identifies the nature of the emergency 
or disaster, specifies the location of the temporary branch, and 
provides an estimate of the duration the bank plans to operate the 
temporary branch.
    (3) As part of the review process, the FDIC will determine on a case 
by case basis whether additional information is necessary and may waive 
public notice requirements.
    (b) Redesignation of main office and existing branch. In cases where 
an applicant desires to redesignate its main office as a branch and 
redesignate an existing branch as the main office, a single application 
shall be submitted. The FDIC may waive the public notice requirements in 
instances where an application presents no significant or novel policy, 
supervisory, CRA, compliance or legal concerns. A waiver will be granted 
only to a redesignation within the applicant's home state.
    (c) Expiration of approval. Approval of an application expires if 
within 18 months after the approval date a branch has not commenced 
business or a relocation has not been completed.



Sec.  303.46  Financial education programs that include the provision 
of bank products and services.

    No branch application or prior approval is required in order for a 
state nonmember bank to participate in one or more financial education 
programs that involve receiving deposits, paying withdrawals, or lending 
money if:
    (a) Such service or services are provided on school premises, or a 
facility used by the school;
    (b) Such service or services are provided at the discretion of the 
school;
    (c) The principal purpose of each program is financial education. 
For example, the principal purpose of a program would be considered to 
be financial education if the program is designed to teach students the 
principles of personal financial management, banking operations, or the 
benefits of saving for the future, and is not designed for the purpose 
of profit-making; and
    (d) Each program is conducted in a manner that is consistent with 
safe and sound banking practices and complies with applicable law.

[73 FR 35338, June 23, 2008]



Sec. Sec.  303.47-303.59  [Reserved]



                      Subpart D_Merger Transactions



Sec.  303.60  Scope.

    This subpart sets forth the application requirements and procedures 
for transactions subject to FDIC approval under the Bank Merger Act, 
section 18(c) of the FDI Act (12 U.S.C. 1828(c)). Additional guidance is 
contained in the FDIC ``Statement of Policy on Bank Merger 
Transactions'' (1 FDIC Law, Regulations, Related Acts 5145; see Sec.  
309.4(a) and (b) of this chapter for availability).



Sec.  303.61  Definitions.

    For purposes of this subpart:
    (a) Merger transaction includes any transaction:

[[Page 22]]

    (1) In which an insured depository institution merges or 
consolidates with any other insured depository institution or, either 
directly or indirectly, acquires the assets of, or assumes liability to 
pay any deposits made in, any other insured depository institution; or
    (2) In which an insured depository institution merges or 
consolidates with any noninsured bank or institution or assumes 
liability to pay any deposits made in, or similar liabilities of, any 
noninsured bank or institution, or in which an insured depository 
institution transfers assets to any noninsured bank or institution in 
consideration of the assumption of any portion of the deposits made in 
the insured depository institution.
    (b) Corporate reorganization means a merger transaction that 
involves solely an insured depository institution and one or more of its 
affiliates.
    (c) Interim merger transaction means a merger transaction (other 
than a purchase and assumption transaction) between an operating 
depository institution and a newly-formed depository institution or 
corporation that will not operate independently and that exists solely 
for the purpose of facilitating a corporate reorganization.
    (d) Resulting institution refers to the acquiring, assuming or 
resulting institution in a merger transaction.

[67 FR 79247, Dec. 27, 2002, as amended at 71 FR 20526, Apr. 21, 2006; 
73 FR 2145, Jan. 14, 2008]



Sec.  303.62  Transactions requiring prior approval.

    (a) Merger transactions. The following merger transactions require 
the prior written approval of the FDIC under this subpart:
    (1) Any merger transaction, including any corporate reorganization, 
interim merger transaction, or optional conversion, in which the 
resulting institution is to be an insured state nonmember bank; and
    (2) Any merger transaction, including any corporate reorganization 
or interim merger transaction, that involves an uninsured bank or 
institution.
    (b) Related provisions. Transactions covered by this subpart also 
may be subject to other provisions or application requirements, 
including the following:
    (1) Interstate merger transactions. Merger transactions between 
insured banks that are chartered in different states are subject to the 
provisions of section 44 of the FDI Act (12 U.S.C. 1831u). In the case 
of a merger transaction that consists of the acquisition by an out of 
state bank of a branch without acquisition of the bank, the branch is 
treated for section 44 purposes as a bank whose home state is the state 
in which the branch is located.
    (2) Deposit insurance. An application for deposit insurance will be 
required in connection with a merger transaction between a state-
chartered interim institution and an insured depository institution if 
the related merger application is being acted upon by a federal banking 
agency other than the FDIC. If the FDIC is the federal banking agency 
responsible for acting on the related merger application, a separate 
application for deposit insurance is not necessary. Procedures for 
applying for deposit insurance are set forth in subpart B of this part. 
An application for deposit insurance will not be required in connection 
with a merger transaction (other than a purchase and assumption 
transaction) of a federally-chartered interim institution and an insured 
institution, even if the resulting institution is to operate under the 
charter of the federal interim institution.
    (3) Branch closings. Branch closings in connection with a merger 
transaction are subject to the notice requirements of section 42 of the 
FDI Act (12 U.S.C. 1831r-1), including requirements for notice to 
customers. These requirements are addressed in the ``Interagency Policy 
Statement Concerning Branch Closings Notices and Policies'' (1 FDIC Law, 
Regulations, Related Acts (FDIC) 5391; see Sec.  309.4(a) and (b) of 
this chapter for availability.)
    (4) Undercapitalized institutions. Applications for a merger 
transaction by applicants subject to section 38 of the FDI Act (12 
U.S.C. 1831o) should also provide the information required by Sec.  
303.204. Applications pursuant to sections 38 and 18(c) of the FDI Act 
(12

[[Page 23]]

U.S.C, 1831o and 1828(c)) may be filed concurrently or as a single 
application.
    (5) Certification of assumption of deposit liability. An insured 
depository institution assuming deposit liabilities of another insured 
institution must provide certification of assumption of deposit 
liability to the FDIC in accordance with 12 CFR part 307.

[67 FR 79247, Dec. 27, 2002, as amended at 71 FR 20526, Apr. 21, 2006]



Sec.  303.63  Filing procedures.

    (a) General. Applications required under this subpart shall be filed 
with the appropriate FDIC office. The appropriate forms and instructions 
may be obtained upon request from any FDIC regional director.
    (b) Merger transactions. Applications for approval of merger 
transactions shall be accompanied by copies of all agreements or 
proposed agreements relating to the merger transaction and any other 
information requested by the FDIC.
    (c) Interim merger transactions. Applications for approval of 
interim merger transactions and any related deposit insurance 
applications shall be made by filing the forms and other documents 
required by paragraphs (a) and (b) of this section and such other 
information as may be required by the FDIC for consideration of the 
request for deposit insurance.

[67 FR 79247, Dec. 27, 2002, as amended at 73 FR 2145, Jan. 14, 2008]



Sec.  303.64  Processing.

    (a) Expedited processing for eligible depository institutions--(1) 
General. An application filed under this subpart by an eligible 
depository institution as defined in Sec.  303.2(r) and which meets the 
additional criteria in paragraph (a)(4) of this section will be 
acknowledged by the FDIC in writing and will receive expedited 
processing, unless the applicant is notified in writing to the contrary 
and provided with the basis for that decision. The FDIC may remove an 
application from expedited processing for any of the reasons set forth 
in Sec.  303.11(c)(2).
    (2) Under expedited processing, the FDIC will take action on an 
application by the date that is the latest of:
    (i) 45 days after the date of the FDIC's receipt of a substantially 
complete merger application; or
    (ii) 10 days after the date of the last notice publication required 
under Sec.  303.65 of this subpart; or
    (iii) 5 days after receipt of the Attorney General's report on the 
competitive factors involved in the proposed transaction; or
    (iv) For an interstate merger transaction subject to the provisions 
of section 44 of the FDI Act (12 U.S.C. 1831u), 5 days after the FDIC 
receives confirmation from the host state (as defined in Sec.  
303.41(e)) that the applicant has both complied with the filing 
requirements of the host state and submitted a copy of the FDIC merger 
application to the host state's bank supervisor.
    (3) Notwithstanding paragraph (a)(1) of this section, if the FDIC 
does not act within the expedited processing period, it does not 
constitute an automatic or default approval.
    (4) Criteria. The FDIC will process an application using expedited 
procedures if:
    (i) Immediately following the merger transaction, the resulting 
institution will be well-capitalized pursuant to subpart H of part 324 
of this chapter (12 CFR part 324); and
    (ii)(A) All parties to the merger transaction are eligible 
depository institutions as defined in Sec.  303.2(r); or
    (B) The acquiring party is an eligible depository institution as 
defined in Sec.  303.2(r) and the amount of the total assets to be 
transferred does not exceed an amount equal to 10 percent of the 
acquiring institution's total assets as reported in its report of 
condition for the quarter immediately preceding the filing of the merger 
application.
    (b) Standard processing. For those applications not processed 
pursuant to the expedited procedures, the FDIC will provide the 
applicant with written notification of the final action taken by the 
FDIC on the application when the decision is rendered.

[67 FR 79247, Dec. 27, 2002, as amended at 78 FR 55470, Sept. 10, 2013; 
83 FR 11739, Apr. 24, 2018]

[[Page 24]]



Sec.  303.65  Public notice requirements.

    (a) General. Except as provided in paragraph (b) of this section, an 
applicant for approval of a merger transaction must publish notice of 
the proposed transaction on at least three occasions at approximately 
equal intervals in a newspaper of general circulation in the community 
or communities where the main offices of the merging institutions are 
located or, if there is no such newspaper in the community, then in the 
newspaper of general circulation published nearest thereto.
    (1) First publication. The first publication of the notice should be 
as close as practicable to the date on which the application is filed 
with the FDIC, but no more than 5 days prior to the filing date.
    (2) Last publication. The last publication of the notice shall be on 
the 25th day after the first publication or, if the newspaper does not 
publish on the 25th day, on the newspaper's publication date that is 
closest to the 25th day.
    (b) Exceptions--(1) Emergency requiring expeditious action. If the 
FDIC determines that an emergency exists requiring expeditious action, 
notice shall be published twice. The first notice shall be published as 
soon as possible after the FDIC notifies the applicant of such 
determination. The second notice shall be published on the 7th day after 
the first publication or, if the newspaper does not publish on the 7th 
day, on the newspaper's publication date that is closest to the 7th day.
    (2) Probable failure. If the FDIC determines that it must act 
immediately to prevent the probable failure of one of the institutions 
involved in a proposed merger transaction, publication is not required.
    (c) Content of notice--(1) General. The notice shall conform to the 
public notice requirements set forth in Sec.  303.7.
    (2) Branches. If it is contemplated that the resulting institution 
will operate offices of the other institution(s) as branches, the 
following statement shall be included in the notice required in Sec.  
303.7(b):

It is contemplated that all offices of the above-named institutions will 
continue to be operated (with the exception of [insert identity and 
location of each office that will not be operated]).

    (3) Emergency requiring expeditious action. If the FDIC determines 
that an emergency exists requiring expeditious action, the notice shall 
specify as the closing date of the public comment period the date that 
is the 10th day after the date of the first publication.
    (d) Public comments. Comments must be received by the appropriate 
FDIC office within 30 days after the first publication of the notice, 
unless the comment period has been extended or reopened in accordance 
with Sec.  303.9(b)(2). If the FDIC has determined that an emergency 
exists requiring expeditious action, comments must be received by the 
appropriate FDIC office within 10 days after the first publication.



Sec. Sec.  303.66-303.79  [Reserved]



                    Subpart E_Change in Bank Control

    Source: 80 FR 65899, Oct. 28, 2015, unless otherwise noted.



Sec.  303.80  Scope.

    This subpart implements the provisions of the Change in Bank Control 
Act of 1978, section 7(j) of the FDI Act (12 U.S.C. 1817(j)) (CBCA), and 
sets forth the filing requirements and processing procedures for a 
notice of change in control with respect to the acquisition of control 
of a State nonmember bank, a State savings association, or certain 
parent companies of either a State nonmember bank or a State savings 
association.



Sec.  303.81  Definitions.

    For purposes of this subpart:
    (a) Acting in concert means knowing participation in a joint 
activity or parallel action towards a common goal of acquiring control 
of a covered institution whether or not pursuant to an express 
agreement.
    (b) Company means a company as defined in section 2 of the Bank 
Holding Company Act of 1956, as amended (12 U.S.C. 1841 et seq.) and any 
person that is not an individual including for example, a limited 
liability company.
    (c) Control means the power, directly or indirectly, to direct the 
management or policies of a covered institution or to vote 25 percent or 
more of

[[Page 25]]

any class of voting securities of a covered institution.
    (d) Convertible securities mean debt or equity interests that may be 
converted into voting securities.
    (e) Covered institution means an insured State nonmember bank, an 
insured State savings association, and any company that controls, 
directly or indirectly, an insured State nonmember bank or an insured 
State savings association other than a holding company that is the 
subject of an exemption described in either section 303.84(a)(3) or 
(a)(8).
    (f) Immediate family means a person's parents, mother-in-law, 
father-in-law, children, step-children, siblings, step-siblings, 
brothers-in-law, sisters-in-law, grandparents, and grandchildren, 
whether biological, adoptive, adjudicated, contractual, or de facto; the 
spouse of any of the foregoing; and the person's spouse.
    (g) Person means an individual, corporation, limited liability 
company (LLC), partnership, trust, association, joint venture, pool, 
syndicate, sole proprietorship, unincorporated organization, voting 
trust, or any other form of entity; and includes each party to a voting 
agreement and any group of persons acting in concert.
    (h) Management official means any officer, LLC manager, director, 
partner, or trustee of an entity, or other person with similar functions 
and powers with respect to a company.
    (i)(1) Voting securities means shares of common or preferred stock, 
general or limited partnership shares or interests, membership 
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, managers of an 
LLC, partners, or other persons exercising similar functions of the 
issuing entity; or
    (ii) To vote on, or to direct, the conduct of the operations or 
significant policies of the issuing entity.
    (2) Nonvoting shares: Shares of common or preferred stock, limited 
partnership shares or interests, membership interests, or similar 
interests are not ``voting securities'' if:
    (i) Any voting rights associated with the shares or interests are 
limited solely to the type customarily provided by State statute with 
regard to matters that would significantly and adversely affect the 
rights or preference of the security or other interest, such as the 
issuance of additional amounts or classes of senior securities, the 
modification of the terms of the security or interest, the dissolution 
of the issuing entity, or the payment of dividends by the issuing entity 
when preferred dividends are in arrears;
    (ii) The shares or interests represent an essentially passive 
investment or financing device and do not otherwise provide the holder 
with control over the issuing entity; and
    (iii) The shares or interests do not entitle the holder, by statute, 
charter, or in any manner, to select, or to vote for the selection of, 
directors, trustees, managers of an LLC, partners, or persons exercising 
similar functions of the issuing entity.
    (3) Class of voting securities: Voting securities issued by a single 
issuer are deemed to be the same class of voting securities, regardless 
of differences in dividend rights or liquidation preference, if the 
securities are voted together as a single class on all matters for which 
the securities have voting rights other than matters described in 
paragraph (i)(2)(i) of this section that affect solely the rights or 
preferences of the securities.



Sec.  303.82  Transactions that require prior notice.

    (a) Prior notice requirement. (1) Except as provided in Sec. Sec.  
303.83 and 303.84, no person, acting directly or indirectly, or through 
or in concert with one or more persons, shall acquire control of a 
covered institution unless the person shall have given the FDIC prior 
notice of the proposed acquisition as provided in the CBCA and this 
subpart, and the FDIC has not disapproved the acquisition within 60 days 
or such longer period as may be permitted under the CBCA; and
    (2) Except as provided in Sec. Sec.  303.83 and 303.84, and unless 
waived by the FDIC, no person who has been approved to acquire control 
of a covered institution and who has maintained that control shall 
acquire, directly or indirectly, or through or in concert with one or 
more

[[Page 26]]

persons, voting securities of such covered institution if that person's 
ownership, control, or power to vote will increase from less than 25 
percent to 25 percent or more of any class of voting securities of the 
covered institution, unless the person shall have given the FDIC prior 
notice of the proposed acquisition as provided in the CBCA and this 
subpart, and the FDIC has not disapproved the acquisition within 60 days 
or such longer period as may be permitted under the CBCA.
    (b) Rebuttable presumptions--(1) Rebuttable presumptions of control. 
The FDIC presumes that an acquisition of voting securities of a covered 
institution constitutes the acquisition of the power to direct the 
management or policies of that institution requiring prior notice to the 
FDIC, if, immediately after the transaction, the acquiring person will 
own, control, or hold with power to vote 10 percent or more of any class 
of voting securities of the institution, and if:
    (i) The institution has registered securities under section 12 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78l); or
    (ii) No other person will own, control or hold the power to vote a 
greater percentage of that class of voting securities immediately after 
the transaction.
    (2) Rebuttable presumptions of acting in concert. The following 
persons who own or control, or propose to own or control voting 
securities in a covered institution, shall be presumed to be acting in 
concert for purposes of this subpart:
    (i) A company and any controlling shareholder or management official 
of the company;
    (ii) An individual and one or more members of the individual's 
immediate family;
    (iii) Companies under common control or a company and each company 
it controls;
    (iv) Two or more persons that have made, or propose to make, a joint 
filing related to the proposed acquisition under sections 13 or 14 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78n), and the 
rules promulgated thereunder by the Securities and Exchange Commission;
    (v) A person and any trust for which the person serves as trustee or 
any trust for which the person is a beneficiary; and
    (vi) Persons that are parties to any agreement, contract, 
understanding, relationship, or other arrangement, whether written or 
otherwise, regarding the acquisition, voting, or transfer of control of 
voting securities of a covered institution, other than through revocable 
proxies as described in Sec.  303.84(a)(5).
    (3) Convertible securities, options, and warrants. The acquisition 
of convertible securities, or options or warrants to acquire voting 
securities is presumed to constitute the acquisition of voting 
securities.
    (4) Rebuttal of presumptions. The FDIC will afford any person 
seeking to rebut a presumption in this paragraph (b) an opportunity to 
present its views in writing.
    (c) Acquisition of loans in default. An acquisition of a loan in 
default that is secured by voting securities of a covered institution is 
deemed to be an acquisition of the underlying securities for purposes of 
this subpart. Before acquiring a loan in default that upon foreclosure 
would result in the acquiring person owning, controlling, or holding 
with the power to vote a controlling amount of a covered institution's 
voting securities, the potential acquirer must give the FDIC prior 
written notice as specified in this subpart.



Sec.  303.83  Transactions that require notice, but not prior notice.

    (a) Notice within 90 days after the acquisition. The following 
acquisitions of voting securities of a covered institution, which 
otherwise would require prior notice under this subpart, instead require 
the acquirer to provide to the appropriate FDIC office within 90 
calendar days after the acquisition all relevant information requested 
by the FDIC:
    (1) The acquisition of voting securities as a bona fide gift;
    (2) The acquisition of voting securities in satisfaction of a debt 
previously contracted in good faith, except as provided in Sec.  
303.82(c); and
    (3) The acquisition of voting securities through inheritance.

[[Page 27]]

    (b) Notice within 90 days after receiving notice of the event giving 
rise to the acquisition of control. The following acquisitions of 
control of a covered institution, which otherwise would require prior 
notice under this subpart, instead require the person acquiring control 
to provide to the appropriate FDIC office, within 90 calendar days after 
receiving notice of the event giving rise to the acquisition of control, 
all relevant information requested by the FDIC:
    (1) The acquisition of control resulting from a redemption of voting 
securities by the issuing covered institution; and
    (2) The acquisition of control as a result of any event or action 
(including without limitation the sale of securities) by any third party 
that is not within the control of the person acquiring control.
    (c) The FDIC may disapprove a notice filed after an acquisition of 
control, and nothing in this section limits the authority of the FDIC to 
disapprove a notice pursuant to Sec.  303.86(c).
    (d) The relevant information that the FDIC may require under this 
section may include all information and documents routinely required for 
a prior notice as provided in Sec.  303.85.
    (e) If the FDIC disapproves a Notice filed under this Sec.  303.83, 
the notificant(s) must divest control of the covered institution which 
may include, without limitation, disposing of some or all of the voting 
securities so that the notificant(s) is no longer in control of the 
covered institution, within such period of time and in the manner that 
the FDIC may determine.



Sec.  303.84  Transactions that do not require notice.

    (a) Exempt transactions. The following transactions do not require 
notice to the FDIC under this subpart:
    (1) The acquisition of additional voting securities of a covered 
institution by a person who:
    (i) Held the power to vote 25 percent or more of any class of voting 
securities of the institution continuously since the later of March 9, 
1979, or the date that the institution commenced business; or
    (ii) Is presumed, under Sec.  303.82(b) to have controlled the 
institution continuously since March 9, 1979, if the aggregate amount of 
voting securities held does not exceed 25 percent or more of any class 
of voting securities of the institution or, in other cases, where the 
FDIC determines that the person has controlled the institution 
continuously since March 9, 1979;
    (2) The acquisition of additional voting securities of a covered 
institution by a person who has lawfully acquired and maintained control 
of the institution (for purposes of Sec.  303.82) after obtaining the 
FDIC's non-objection under the CBCA and the FDIC's regulations or the 
OTS's non-objection under the repealed Change in Savings and Loan 
Control Act, 12 U.S.C. 1730(q), and the regulations thereunder then in 
effect, to acquire control of the institution, unless a notice is 
required for an increase in ownership described in 12 CFR 303.82(a)(2);
    (3) Acquisitions of voting securities subject to approval under 
section 3 of the Bank Holding Company Act (12 U.S.C. 1842(a)), section 
18(c) of the FDI Act (12 U.S.C. 1828(c)), or section 10 of the Home 
Owners' Loan Act (12 U.S.C. 1467a);
    (4) Any transaction described in sections 2(a)(5), 3(a)(A), or 
3(a)(B) of the Bank Holding Company Act (12 U.S.C. 1841(a)(5), 
1842(a)(A), or 1842(a)(B)) by a person described in those provisions;
    (5) A customary one-time solicitation of a revocable proxy;
    (6) The receipt of voting securities of a covered institution 
through a pro rata stock dividend or stock split if the proportional 
interests of the recipients remain substantially the same;
    (7) The acquisition of voting securities in a foreign bank that has 
an insured branch in the United States. (This exemption does not extend 
to the reports and information required under paragraphs 9, 10, and 12 
of the CBCA (12 U.S.C. 1817(j)(9), (10), and (12)); and
    (8) The acquisition of voting securities of a depository institution 
holding company for which the Board of Governors of the Federal Reserve 
System reviews a notice pursuant to the CBCA (12 U.S.C. 1817(j)).



Sec.  303.85  Filing procedures.

    (a) Filing notice. (1) A notice required under this subpart shall be 
filed with

[[Page 28]]

the appropriate FDIC office and shall contain all the information 
required by paragraph 6 of the CBCA, section 7(j) of the FDI Act, (12 
U.S.C. 1817(j)(6)), or prescribed in the designated interagency forms 
which may be obtained from any FDIC regional director.
    (2) The FDIC may waive any of the informational requirements of the 
notice if the FDIC determines that it is in the public interest.
    (3) A notificant shall notify the appropriate FDIC office 
immediately of any material changes in the information contained in a 
notice submitted to the FDIC, including changes in financial or other 
conditions.
    (4) When the acquiring person is an individual, or group of 
individuals acting in concert, the requirement to provide personal 
financial data may be satisfied by a current statement of assets and 
liabilities and an income summary, as required in the designated 
interagency form, together with a statement of any material changes 
since the date of the statement or summary. The FDIC may require 
additional information if appropriate.
    (b) Other laws. Nothing in this subpart shall affect any obligation 
which the acquiring person(s) may have to comply with the federal 
securities laws or other laws.



Sec.  303.86  Processing.

    (a) Acceptance of notice, additional information. The FDIC shall 
notify the person or persons submitting a notice under this subpart in 
writing of the date the notice is accepted as substantially complete. 
The FDIC may request additional information at any time.
    (b) Commencement of the 60-day notice period: consummation of 
acquisition. (1) The 60-day notice period specified in Sec.  303.82 
shall commence on the day after the date of acceptance of a 
substantially complete notice by the appropriate regional director. The 
notificant(s) may consummate the proposed acquisition after the 
expiration of the 60-day notice period, unless the FDIC disapproves the 
proposed acquisition or extends the notice period as provided in the 
CBCA.
    (2) The notificant(s) may consummate the proposed transaction before 
the expiration of the 60-day period, including any extensions, if the 
FDIC notifies the notificant(s) in writing of its intention not to 
disapprove the acquisition.
    (c) Disapproval of acquisition of control. Subpart D of 12 CFR part 
308 sets forth the rules of practice and procedure for a notice of 
disapproval.



Sec.  303.87  Public notice requirements.

    (a) Publication--(1) Newspaper announcement. Any person(s) filing a 
notice under this subpart shall publish an announcement soliciting 
public comment on the proposed acquisition. The announcement shall be 
published in a newspaper of general circulation in the community in 
which the home office of the covered institution to be acquired is 
located.
    (2) Timing of publication. The announcement shall be published as 
close as is practicable to the date the notice is filed with the 
appropriate FDIC office, but in no event more than 10 calendar days 
before or after the filing date. If the filing is not filed in 
accordance with the CBCA and this subpart within the time periods 
specified herein, the acquiring person(s) shall, within 10 days of being 
directed by the FDIC to file a Notice, publish an announcement of the 
acquisition of control.
    (3) Contents of newspaper announcement. The newspaper announcement 
shall conform to the public notice requirements set forth in Sec.  
303.7. If the filing is not filed in accordance with the CBCA and this 
subpart within the time periods specified herein, the announcement shall 
also include the date of the acquisition and contain a statement 
indicating that the FDIC is currently reviewing the acquisition of 
control.
    (b) Delay of publication. The FDIC may permit delay in the 
publication required by this section if the FDIC determines, for good 
cause, that it is in the public interest to grant such a delay. Requests 
for delay of publication may be submitted to the appropriate FDIC 
office.
    (c) Shortening or waiving public comment period, waiving 
publications; acting before close of public comment period. The FDIC may 
shorten the public comment period to a period of not less than 10 days, 
or waive the public comment or

[[Page 29]]

newspaper publication requirements of paragraph (a) of this section, or 
act on a notice before the expiration of a public comment period, if it 
determines in writing either that an emergency exists or that disclosure 
of the notice, solicitation of public comment, or delay until expiration 
of the public comment period would seriously threaten the safety and 
soundness of the State nonmember bank or State savings association to be 
acquired.
    (d) Consideration of public comments. In acting upon a notice filed 
under this subpart, the FDIC shall consider all public comments received 
in writing within 20 days following the required newspaper publication 
or, if the FDIC has shortened the public comment period pursuant to 
paragraph (c) of this section, within such shorter period.



Sec.  303.88  Reporting of stock loans and changes 
in chief executive officers and directors.

    (a) Requirements of reporting stock loans. (1) Any foreign bank or 
affiliate of a foreign bank that has credit outstanding to any person or 
group of persons, in the aggregate, which is secured, directly or 
indirectly, by 25 percent or more of any class of voting securities of a 
covered institution, shall file a consolidated report with the 
appropriate FDIC office.
    (2) Any voting securities of the covered institution held by the 
foreign bank or any affiliate of the foreign bank as principal must be 
included in the calculation of the number of voting securities in which 
the foreign bank or its affiliate has a security interest for purposes 
of this paragraph (a).
    (b) Definitions. For purposes of paragraph (a) of this section:
    (1) Foreign bank shall have the same meaning as in section 1(b) of 
the International Banking Act of 1978 (12 U.S.C. 3101).
    (2) Affiliate shall have the same meaning as in section 1(b) of the 
International Banking Act of 1978 (12 U.S.C. 3101).
    (3) Credit outstanding includes any loan or extension of credit; the 
issuance of a guarantee, acceptance, or letter of credit, including an 
endorsement or standby letter of credit; and any other type of 
transaction that extends credit or financing to the person or group of 
persons.
    (4) Group of persons includes any number of persons that the foreign 
bank or any affiliate of a foreign bank has reason to believe:
    (i) Are acting together, in concert, or with one another to acquire 
or control voting securities of the same covered institution, including 
an acquisition of voting securities of the same covered institution at 
approximately the same time under substantially the same terms; or
    (ii) Have made, or propose to make, a joint filing under section 13 
or 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78n), and 
the rules promulgated thereunder by the Securities and Exchange 
Commission regarding ownership of the voting securities of the same 
covered institution.
    (c) Exceptions. Compliance with paragraph (a) of this section is not 
required if:
    (1) The person or group of persons referred to in paragraph (a) has 
disclosed the amount borrowed and the security interest therein to the 
appropriate FDIC office in connection with a notice filed under the 
CBCA, an application filed under either 12 U.S.C. 1841, et seq. or 12 
U.S.C. 1467a, or any other application filed with the FDIC as a 
substitute for a notice under Sec.  303.82 of this subpart, including an 
application filed under section 18(c) of the FDI Act (Bank Merger Act, 
12 U.S.C. 1828(c)) or section 5 of the FDI Act (12 U.S.C. 1815); or
    (2) The transaction involves a person or group of persons that has 
been the owner or owners of record of the stock for a period of one year 
or more; or, if the transaction involves stock issued by a newly 
chartered bank, before the bank is opened for business.
    (d) Report requirements for purposes of paragraph (a) of this 
section. (1) The consolidated report must indicate the number and 
percentage of voting securities securing each applicable extension of 
credit, the identity of the borrower, the number of voting securities 
held as principal by the foreign bank and any affiliate thereof, and any 
additional information that the FDIC may require in connection with a 
particular report.

[[Page 30]]

    (2) A foreign bank, or any affiliate of a foreign bank, shall file 
the consolidated report in writing within 30 days of the date on which 
the foreign bank or affiliate first believes that the security for any 
outstanding credit consists of 25 percent or more of any class of voting 
securities of a covered institution.
    (e) Foreign bank or affiliate not supervised by FDIC. If the foreign 
bank, or any affiliate thereof, is not supervised by the FDIC, it shall 
file a copy of the report filed under paragraph (a) of this section with 
its appropriate Federal banking agency.
    (f) Reporting requirement. After the consummation of a change in 
control, a covered institution must notify the FDIC in writing of any 
changes or replacements of its chief executive officer or of any 
director occurring during the 12-month period beginning on the date of 
consummation. This notice must be filed within 10 days of such change or 
replacement and must include a statement of the past and current 
business and professional affiliations of the new chief executive 
officers or directors.



Sec. Sec.  303.89-303.99  [Reserved]



        Subpart F_Change of Director or Senior Executive Officer



Sec.  303.100  Scope.

    This subpart sets forth the circumstances under which an insured 
state nonmember bank must notify the FDIC of a change in any member of 
its board of directors or any senior executive officer and the 
procedures for filing such notice. This subpart implements section 32 of 
the FDI Act (12 U.S.C. 1831i).



Sec.  303.101  Definitions.

    For purposes of this subpart:
    (a) Director means a person who serves on the board of directors or 
board of trustees of an insured state nonmember bank, except that 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 board of trustees or any committee thereof;
    (3) Solely provides general policy advice to the board of directors 
or board of trustees and any committee thereof; and
    (4) Has not been identified by the FDIC as a person who performs the 
functions of a director for purposes of this subpart.
    (b) Senior executive officer means a person who holds the title of 
president, chief executive officer, chief operating officer, chief 
managing official (in an insured state branch of a foreign bank), chief 
financial officer, chief lending officer, or chief investment officer, 
or, without regard to title, salary, or compensation, performs the 
function of one or more of these positions. Senior executive officer 
also includes any other person identified by the FDIC, whether or not 
hired as an employee, with significant influence over, or who 
participates in, major policymaking decisions of the insured state 
nonmember bank.
    (c) Troubled condition means any insured state nonmember bank that:
    (1) Has a composite rating, as determined in its most recent report 
of examination, of 4 or 5 under the Uniform Financial Institutions 
Rating System (UFIRS), or in the case of an insured state branch of a 
foreign bank, an equivalent rating; or
    (2) Is subject to a proceeding initiated by the FDIC for termination 
or suspension of deposit insurance; or
    (3) Is subject to a cease-and-desist order or written agreement 
issued by either the FDIC or the appropriate state banking authority 
that requires action to improve the financial condition of the bank or 
is subject to a proceeding initiated by the FDIC or state authority 
which contemplates the issuance of an order that requires action to 
improve the financial condition of the bank, unless otherwise informed 
in writing by the FDIC; or
    (4) Is informed in writing by the FDIC that it is in troubled 
condition for purposes of the requirements of this subpart on the basis 
of the bank's most recent report of condition or report of examination, 
or other information available to the FDIC.

[[Page 31]]



Sec.  303.102  Filing procedures and waiver of prior notice.

    (a) Insured state nonmember banks. An insured state nonmember bank 
shall give the FDIC written notice, as specified in paragraph (c)(1) of 
this section, at least 30 days prior to adding or replacing any member 
of its board of directors, employing any person as a senior executive 
officer of the bank, or changing the responsibilities of any senior 
executive officer so that the person would assume a different senior 
executive officer position, if:
    (1) The bank is not in compliance with all minimum capital 
requirements applicable to the bank as determined on the basis of the 
bank's most recent report of condition or report of examination;
    (2) The bank is in troubled condition; or
    (3) The FDIC determines, in connection with its review of a capital 
restoration plan required under section 38(e)(2) of the FDI Act (12 
U.S.C. 1831o(e)(2)) or otherwise, that such notice is appropriate.
    (b) Insured branches of foreign banks. In the case of the addition 
of a member of the board of directors or a change in senior executive 
officer in a foreign bank having an insured state branch, the notice 
requirement shall not apply to such additions and changes in the foreign 
bank parent, but only to changes in senior executive officers in the 
state branch.
    (c) Waiver of prior notice--(1) Waiver requests. The FDIC may permit 
an individual, upon petition by the bank to the appropriate FDIC office, 
to serve as a senior executive officer or director before filing the 
notice required under this subpart if the FDIC finds that:
    (i) Delay would threaten the safety or soundness of the bank;
    (ii) Delay would not be in the public interest; or
    (iii) Other extraordinary circumstances exist that justify waiver of 
prior notice.
    (2) Automatic waiver. In the case of the election of a new director 
not proposed by management at a meeting of the shareholders of an 
insured state nonmember bank, the prior 30-day notice is automatically 
waived and the individual immediately may begin serving, provided that a 
complete notice is filed with the appropriate FDIC office within two 
business days after the individual's election.
    (3) Effect on disapproval authority. A waiver shall not affect the 
authority of the FDIC to disapprove a notice within 30 days after a 
waiver is granted under paragraph (c)(1) of this section or the election 
of an individual who has filed a notice and is serving pursuant to an 
automatic waiver under paragraph (c)(2) of this section.
    (d)(1) Content of filing. The notice required by paragraph (a) of 
this section shall be filed with the appropriate FDIC office and shall 
contain information pertaining to the competence, experience, character, 
or integrity of the individual with respect to whom the notice is 
submitted, as prescribed in the designated interagency form which is 
available from any FDIC regional director. The FDIC may require 
additional information.
    (2) Modification. The FDIC may modify or accept other information in 
place of the requirements of paragraph (d)(1) of this section for a 
notice filed under this subpart.



Sec.  303.103  Processing.

    (a) Processing. The 30-day notice period specified in Sec.  
303.102(a) shall begin on the date substantially all information 
required to be submitted by the notificant pursuant to Sec.  
303.102(c)(1) is received by the appropriate FDIC office. The FDIC shall 
notify the bank submitting the notice of the date on which the notice is 
accepted for processing and of the date on which the 30-day notice 
period will expire. If processing cannot be completed within 30 days, 
the notificant will be advised in writing, prior to expiration of the 
30-day period, of the reason for the delay in processing and of the 
additional time period, not to exceed 60 days, in which processing will 
be completed.
    (b) Commencement of service--(1) At expiration of period. A proposed 
director or senior executive officer may begin service after the end of 
the 30-day period or any other additional period as provided under 
paragraph (a) of this section, unless the FDIC disapproves the notice 
before the end of the period.

[[Page 32]]

    (2) Prior to expiration of period. A proposed director or senior 
executive officer may begin service before the end of the 30-day period 
or any additional time period as provided under paragraph (a) of this 
section, if the FDIC notifies the bank and the individual in writing of 
the FDIC's intention not to disapprove the notice.
    (c) Notice of disapproval. The FDIC may disapprove a notice filed 
under Sec.  303.102 if the FDIC finds that the competence, experience, 
character, or integrity of the individual with respect to whom the 
notice is submitted indicates that it would not be in the best interests 
of the depositors of the bank or in the best interests of the public to 
permit the individual to be employed by, or associated with, the bank. 
Subpart L of 12 CFR part 308 sets forth the rules of practice and 
procedure for a notice of disapproval.



Sec. Sec.  303.104-303.119  [Reserved]



               Subpart G_Activities of Insured State Banks



Sec.  303.120  Scope.

    This subpart sets forth procedures for complying with notice and 
application requirements contained in subpart A of part 362 of this 
chapter, governing insured state banks and their subsidiaries engaging 
in activities which are not permissible for national banks and their 
subsidiaries. This subpart sets forth procedures for complying with 
notice and application requirements contained in subpart B of part 362 
of this chapter, governing certain activities of insured state nonmember 
banks, their subsidiaries, and certain affiliates. This subpart also 
sets forth procedures for complying with the notice requirements 
contained in subpart E of part 362 of this chapter, governing 
subsidiaries of insured state nonmember banks engaging in financial 
activities.



Sec.  303.121  Filing procedures.

    (a) Where to file. A notice or application required by subpart A, 
subpart B, or subpart E of part 362 of this chapter shall be submitted 
in writing to the appropriate FDIC office.
    (b) Contents of filing. A complete letter notice or letter 
application shall include the following information:
    (1) Filings generally. (i) A brief description of the activity and 
the manner in which it will be conducted;
    (ii) The amount of the bank's existing or proposed direct or 
indirect investment in the activity as well as calculations sufficient 
to indicate compliance with any specific capital ratio or investment 
percentage limitation detailed in subpart A, B, or E of part 362 of this 
chapter;
    (iii) A copy of the bank's business plan regarding the conduct of 
the activity;
    (iv) A citation to the state statutory or regulatory authority for 
the conduct of the activity;
    (v) A copy of the order or other document from the appropriate 
regulatory authority granting approval for the bank to conduct the 
activity if such approval is necessary and has already been granted;
    (vi) A brief description of the bank's policy and practice with 
regard to any anticipated involvement in the activity by a director, 
executive office or principal shareholder of the bank or any related 
interest of such a person; and
    (vii) A description of the bank's expertise in the activity.
    (2) [Reserved]
    (3) Copy of application or notice filed with another agency. If an 
insured state bank has filed an application or notice with another 
federal or state regulatory authority which contains all of the 
information required by paragraph (b) (1) of this section, the insured 
state bank may submit a copy to the FDIC in lieu of a separate filing.
    (4) Additional information. The FDIC may request additional 
information to complete processing.



Sec.  303.122  Processing.

    (a) Expedited processing. A notice filed by an insured state bank 
seeking to commence or continue an activity under Sec.  
362.3(a)(2)(iii)(A)(2), Sec.  362.4(b)(3)(i), or Sec.  362.4(b)(5) of 
this chapter will be acknowledged in writing by the FDIC and will 
receive expedited processing, unless the applicant is notified in 
writing to the contrary

[[Page 33]]

and provided a basis for that decision. The FDIC may remove the notice 
from expedited processing for any of the reasons set forth in Sec.  
303.11(c)(2). Absent such removal, a notice processed under expedited 
processing is deemed approved 30 days after receipt of a complete notice 
by the FDIC (subject to extension for an additional 15 days upon written 
notice to the bank) or on such earlier date authorized by the FDIC in 
writing.
    (b) Standard processing for applications and notices that have been 
removed from expedited processing. For an application filed by an 
insured state bank seeking to commence or continue an activity under 
Sec.  362.3(a)(2)(iii)(A)(2), Sec.  362.3(b)(2)(i), Sec.  
362.3(b)(2)(ii)(A), Sec.  362.3(b)(2)(ii)(C), Sec.  362.4(b)(1), Sec.  
362.4(b)(4), Sec.  362.5(b)(2), or Sec.  362.8(b) or seeking a waiver or 
modification under Sec.  362.18(e) or Sec.  362.18(g)(3) of this chapter 
or for notices which are not processed pursuant to the expedited 
processing procedures, the FDIC will provide the insured State bank with 
written notification of the final action as soon as the decision is 
rendered. The FDIC will normally review and act in such cases within 60 
days after receipt of a completed application or notice (subject to 
extension for an additional 30 days upon written notice to the bank), 
but failure of the FDIC to act prior to the expiration of these periods 
does not constitute approval.



Sec. Sec.  303.123-303.139  [Reserved]



          Subpart H_Activities of Insured Savings Associations



Sec.  303.140  Scope.

    This subpart sets forth procedures for complying with the notice and 
application requirements contained in subpart C of part 362 of this 
chapter, governing insured state savings associations and their service 
corporations engaging in activities which are not permissible for 
federal savings associations and their service corporations. This 
subpart also sets forth procedures for complying with the notice 
requirements contained in subpart D of part 362 of this chapter, 
governing insured savings associations which establish or engage in new 
activities through a subsidiary.



Sec.  303.141  Filing procedures.

    (a) Where to file. All applications and notices required by subpart 
C or subpart D of part 362 of this chapter are to be in writing and 
filed with the appropriate FDIC office.
    (b) Contents of filing--(1) Filings generally. A complete letter 
notice or letter application shall include the following information:
    (i) A brief description of the activity and the manner in which it 
will be conducted;
    (ii) The amount of the association's existing or proposed direct or 
indirect investment in the activity as well as calculations sufficient 
to indicate compliance with any specific capital ratio or investment 
percentage limitation detailed in subpart C or D of part 362 of this 
chapter;
    (iii) A copy of the association's business plan regarding the 
conduct of the activity;
    (iv) A citation to the state statutory or regulatory authority for 
the conduct of the activity;
    (v) A copy of the order or other document from the appropriate 
regulatory authority granting approval for the association to conduct 
the activity if such approval is necessary and has already been granted;
    (vi) A brief description of the association's policy and practice 
with regard to any anticipated involvement in the activity by a 
director, executive officer or principal shareholder of the association 
or any related interest of such a person; and
    (vii) A description of the association's expertise in the activity.
    (2) [Reserved]
    (3) Copy of application or notice filed with another agency. If an 
insured savings association has filed an application or notice with 
another federal or state regulatory authority which contains all of the 
information required by paragraph (b)(1) of this section, the insured 
state bank may submit a copy to the FDIC in lieu of a separate filing.
    (4) Additional information. The FDIC may request additional 
information to complete processing.



Sec.  303.142  Processing.

    (a) Expedited processing. A notice filed by an insured state savings 
association

[[Page 34]]

seeking to commence or continue an activity under Sec.  362.11(b)(2)(ii) 
of this chapter will be acknowledged in writing by the FDIC and will 
receive expedited processing, unless the applicant is notified in 
writing to the contrary and provided a basis for that decision. The FDIC 
may remove the notice from expedited processing for any of the reasons 
set forth in Sec.  303.11(c)(2). Absent such removal, a notice processed 
under expedited processing is deemed approved 30 days after receipt of a 
complete notice by the FDIC (subject to extension for an additional 15 
days upon written notice to the bank) or on such earlier date authorized 
by the FDIC in writing.
    (b) Standard processing for applications and notices that have been 
removed from expedited processing. For an application filed by an 
insured state savings association seeking to commence or continue an 
activity under Sec.  362.11(a)(2)(ii), Sec.  362.11(b)(2)(i), Sec.  
362.12(b)(1) of this chapter or for notices which are not processed 
pursuant to the expedited processing procedures, the FDIC will provide 
the insured state savings association with written notification of the 
final action as soon as the decision is rendered. The FDIC will normally 
review and act in such cases within 60 days after receipt of a completed 
application or notice (subject to extension for an additional 30 days 
upon written notice to the bank), but failure of the FDIC to act prior 
to the expiration of these periods does not constitute approval.
    (c) Notices of activities in excess of an amount permissible for a 
federal savings association; subsidiary notices. Receipt of a notice 
filed by an insured state savings association as required by Sec.  
362.11(b)(3) or Sec.  362.15 of this chapter will be acknowledged in 
writing by the FDIC. The notice will be reviewed at the appropriate FDIC 
office, which will take such action as it deems necessary and 
appropriate.



Sec. Sec.  303.143-303.159  [Reserved]



                  Subpart I_Mutual-To-Stock Conversions



Sec.  303.160  Scope.

    This subpart sets forth the notice requirements and procedures for 
the conversion of an insured mutual state-chartered savings bank to the 
stock form of ownership. The substantive requirements governing such 
conversions are contained in Sec.  333.4 of this chapter.



Sec.  303.161  Filing procedures.

    (a) Prior notice required. In addition to complying with the 
substantive requirements in Sec.  333.4 of this chapter, an insured 
state-chartered mutually owned savings bank that proposes to convert 
from mutual to stock form shall file with the FDIC a notice of intent to 
convert to stock form.
    (b) General. (1) A notice required under this subpart shall be filed 
in letter form with the appropriate FDIC office at the same time as 
required conversion application materials are filed with the 
institution's state regulator.
    (2) An insured mutual savings bank chartered by a state that does 
not require the filing of a conversion application shall file a notice 
in letter form with the appropriate FDIC office as soon as practicable 
after adoption of its plan of conversion.
    (c) Content of notice. The notice shall provide a description of the 
proposed conversion and include all materials that have been filed with 
any state or federal banking regulator and any state or federal 
securities regulator. At a minimum, the notice shall include, as 
applicable, copies of:
    (1) The plan of conversion, with specific information concerning the 
record date used for determining eligible depositors and the 
subscription offering priority established in connection with any 
proposed stock offering;
    (2) Certified board resolutions relating to the conversion;
    (3) A business plan, including a detailed discussion of how the 
capital acquired in the conversion will be used, expected earnings for 
at least a three-year period following the conversion, and a 
justification for any proposed stock repurchases;

[[Page 35]]

    (4) The charter and bylaws of the converted institution;
    (5) The bylaws and operating plans of any other entities formed in 
connection with the conversion transaction, such as a holding company or 
charitable foundation;
    (6) A full appraisal report, prepared by an independent appraiser, 
of the value of the converting institution and the pricing of the stock 
to be sold in the conversion transaction;
    (7) Detailed descriptions of any proposed management or employee 
stock benefit plans or employment agreements and a discussion of the 
rationale for the level of benefits proposed, individually and by 
participant group;
    (8) Indemnification agreements;
    (9) A preliminary proxy statement and sample proxy;
    (10) Offering circular(s) and order form;
    (11) All contracts or agreements relating to solicitation, 
underwriting, market-making, or listing of conversion stock and any 
agreements among members of a group regarding the purchase of 
unsubscribed shares;
    (12) A tax opinion concerning the federal income tax consequences of 
the proposed conversion;
    (13) Consents from experts to use their opinions as part of the 
notice; and
    (14) An estimate of conversion-related expenses.
    (d) Additional information. The FDIC, in its discretion, may request 
any additional information it deems necessary to evaluate the proposed 
conversion. The institution proposing to convert from mutual to stock 
form shall promptly provide such information to the FDIC.
    (e) Acceptance of notice. The 60-day notice period specified inSec.  
303.163 shall commence on the date of receipt of a substantially 
complete notice. The FDIC shall notify the institution proposing to 
convert in writing of the date the notice is accepted.
    (f) Related applications. Related applications that require FDIC 
action may include:
    (1) Applications for deposit insurance, as required by subpart B of 
this part; and
    (2) Applications for consent to merge, as required by subpart D of 
this part.



Sec.  303.162  Waiver from compliance.

    (a) General. An institution proposing to convert from mutual to 
stock form may file with the appropriate FDIC office a letter requesting 
waiver of compliance with this subpart or Sec.  333.4 of this chapter:
    (1) When compliance with any provision of this section or Sec.  
333.4 of this chapter would be inconsistent or in conflict with 
applicable state law, or
    (2) For any other good cause shown.
    (b) Content of filing. In making a request for waiver under 
paragraph (a) of this section, the institution shall demonstrate that 
the requested waiver, if granted, would not result in any effects that 
would be detrimental to the safety and soundness of the institution, 
entail a breach of fiduciary duty on part of the institution's 
management or otherwise be detrimental or inequitable to the 
institution, its depositors, any other insured depository 
institution(s), the Deposit Insurance Fund, or to the public interest.

[67 FR 79247, Dec. 27, 2002, as amended at 71 FR 20526, Apr. 21, 2006]



Sec.  303.163  Processing.

    (a) General considerations. The FDIC shall review the notice and 
other materials submitted by the institution proposing to convert from 
mutual to stock form, specifically considering the following factors:
    (1) The proposed use of the proceeds from the sale of stock, as set 
forth in the business plan;
    (2) The adequacy of the disclosure materials;
    (3) The participation of depositors in approving the transaction;
    (4) The form of the proxy statement required for the vote of the 
depositors/members on the conversion;
    (5) Any proposed increased compensation and other remuneration 
(including stock grants, stock option rights and other similar benefits) 
to be granted to officers and directors/trustees of the bank in 
connection with the conversion;

[[Page 36]]

    (6) The adequacy and independence of the appraisal of the value of 
the mutual savings bank for purposes of determining the price of the 
shares of stock to be sold;
    (7) The process by which the bank's trustees approved the appraisal, 
the pricing of the stock, and the proposed compensation arrangements for 
insiders;
    (8) The nature and apportionment of stock subscription rights; and
    (9) The bank's plans to fulfill its commitment to serving the 
convenience and needs of its community.
    (b) Additional considerations. (1) In reviewing the notice and other 
materials submitted under this subpart, the FDIC will take into account 
the extent to which the proposed conversion transaction conforms with 
the various provisions of the mutual-to-stock conversion regulations of 
the Office of Thrift Supervision (OTS) (12 CFR part 563b), as currently 
in effect at the time the notice is submitted. Any non-conformity with 
those provisions will be closely reviewed.
    (2) Conformity with the OTS requirements will not be sufficient for 
FDIC regulatory purposes if the FDIC determines that the proposed 
conversion transaction would pose a risk to the bank's safety or 
soundness, violate any law or regulation, or present a breach of 
fiduciary duty.
    (c) Notice period. (1) The period in which the FDIC may object to 
the proposed conversion transaction shall be the later of:
    (i) 60 days after receipt of a substantially complete notice of 
proposed conversion; or
    (ii) 20 days after the last applicable state or other federal 
regulator has approved the proposed conversion.
    (2) The FDIC may, in its discretion, extend the initial 60-day 
period for up to an additional 60 days by providing written notice to 
the institution.
    (d) Letter of non-objection. If the FDIC determines, in its 
discretion, that the proposed conversion transaction would not pose a 
risk to the institution's safety or soundness, violate any law or 
regulation, or present a breach of fiduciary duty, then the FDIC shall 
issue to the institution proposing to convert a letter of non-objection 
to the proposed conversion.
    (e) Letter of objection. If the FDIC determines, in its discretion, 
that the proposed conversion transaction poses a risk to the 
institution's safety or soundness, violates any law or regulation, or 
presents a breach of fiduciary duty, then the FDIC shall issue a letter 
to the institution stating its objection(s) to the proposed conversion 
and advising the institution not to consummate the proposed conversion 
until such letter is rescinded. A copy of the letter of objection shall 
be furnished to the institution's primary state regulator and any other 
state or federal banking regulator and state or federal securities 
regulator involved in the conversion.
    (f) Consummation of the conversion. (1) An institution may 
consummate the proposed conversion upon either:
    (i) The receipt of a letter of non-objection; or
    (ii) The expiration of the notice period.
    (2) If a letter of objection is issued, then the institution shall 
not consummate the proposed conversion until the FDIC rescinds such 
letter.



Sec. Sec.  303.164-303.179  [Reserved]



                     Subpart J_International Banking



Sec.  303.180  Scope.

    This subpart sets forth procedures for complying with application 
requirements relating to the foreign activities of insured state 
nonmember banks, U.S. activities of insured branches of foreign banks, 
and certain foreign mergers of insured depository institutions.



Sec.  303.181  Definitions.

    For the purposes of this subpart, the following additional 
definitions apply:
    (a) Board of Governors means the Board of Governors of the Federal 
Reserve System.
    (b) Comptroller means the Office of the Comptroller of the Currency.
    (c) Eligible insured branch. An insured branch will be treated as an 
eligible depository institution within the meaning of Sec.  303.2(r) if 
the insured branch:

[[Page 37]]

    (1) Received an FDIC-assigned composite ROCA supervisory rating 
(which rates risk management, operational controls, compliance, and 
asset quality) of 1 or 2 as a result of its most recent federal or state 
examination, and the FDIC, Comptroller, or Board of Governors have not 
expressed concern about the condition or operations of the foreign 
banking organization or the support it offers the branch;
    (2) Received a satisfactory or better Community Reinvestment Act 
(CRA) rating from its primary federal regulator at its most recent 
examination, if the depository institution is subject to examination 
under part 345 of this chapter;
    (3) Received a compliance rating of 1 or 2 from its primary federal 
regulator at its most recent examination;
    (4) Is well-capitalized as defined in subpart H of part 324 of this 
chapter; and
    (5) Is not subject to a cease and desist order, consent order, 
prompt corrective action directive, written agreement, memorandum of 
understanding, or other administrative agreement with any U.S. bank 
regulatory authority.
    (d) Federal branch means a federal branch of a foreign bank as 
defined by Sec.  347.202 of this chapter.
    (e) Foreign bank means a foreign bank as defined by Sec.  347.202 of 
this chapter.
    (f) Foreign branch means a foreign branch of an insured state 
nonmember bank as defined by Sec.  347.102 of this chapter.
    (g) Foreign organization means a foreign organization as defined by 
Sec.  347.102 of this chapter.
    (h) Insured branch means an insured branch of a foreign bank as 
defined by Sec.  347.202 of this chapter.
    (i) Noninsured branch means a noninsured branch of a foreign bank as 
defined by Sec.  347.202 of this chapter.
    (j) State branch means a state branch of a foreign bank as defined 
by Sec.  347.202 of this chapter.

[67 FR 79247, Dec. 27, 2002, as amended at 78 FR 55470, Sept. 10, 2013; 
83 FR 17739, Apr. 24, 2018]



Sec.  303.182  Establishing, moving or closing a foreign branch 
of an insured state nonmember bank.

    (a) Notice procedures for general consent. Notice in the form of a 
letter from an eligible depository institution establishing or 
relocating a foreign branch pursuant to Sec.  347.117(a) of this chapter 
must be provided to the appropriate FDIC office no later than 30 days 
after taking such action. The notice must include the location of the 
foreign branch, including a street address, and a statement that the 
foreign branch has not been located on a site on the World Heritage List 
or on the foreign country's equivalent of the National Register of 
Historic Places (National Register), in accordance with section 402 of 
the National Historic Preservation Act Amendments of 1980 (NHPA 
Amendments Act) (16 U.S.C. 470a-2). The FDIC will provide written 
acknowledgment of receipt of the notice.
    (b) Filing procedures for other branch establishments--(1) Where to 
file. An applicant seeking to establish a foreign branch other than 
under Sec.  347.117(a) of this chapter shall submit an application to 
the appropriate FDIC office.
    (2) Content of filing. A complete letter application must include 
the following information:
    (i) The exact location of the proposed foreign branch, including the 
street address, and a statement whether the foreign branch will be 
located on a site on the World Heritage List or on the foreign country's 
equivalent of the National Register, in accordance with section 402 of 
the NHPA Amendments Act;
    (ii) Details concerning any involvement in the proposal by an 
insider of the applicant, as defined in Sec.  303.2(u) of this part, 
including any financial arrangements relating to fees, the acquisition 
of property, leasing of property, and construction contracts;
    (iii) A brief description of the applicant's business plan with 
respect to the foreign branch; and
    (iv) A brief description of the proposed activities of the branch 
and, to the extent any of the proposed activities are not authorized by 
Sec.  347.115 of this chapter, the applicant's reasons why they should 
be approved.

[[Page 38]]

    (3) Additional information. The FDIC may request additional 
information to complete processing.
    (c) Processing--(1) Expedited processing for eligible depository 
institutions. An application filed under Sec.  347.118(a) of this 
chapter by an eligible depository institution as defined in Sec.  
303.2(r) of this part seeking to establish a foreign branch by expedited 
processing will be acknowledged in writing by the FDIC and will receive 
expedited processing, unless the applicant is notified in writing to the 
contrary and provided with the basis for that decision. The FDIC may 
remove the application from expedited processing for any of the reasons 
set forth in Sec.  303.11(c)(2) of this part. Absent such removal, an 
application processed under expedited processing is deemed approved 45 
days after receipt of a substantially complete application by the FDIC, 
or on such earlier date authorized by the FDIC in writing.
    (2) Standard processing. For those applications that are not 
processed pursuant to the expedited procedures, the FDIC will provide 
the applicant with written notification of the final action when the 
decision is rendered.
    (d) Closing. Notices of branch closing under Sec.  347.121 of this 
chapter, in the form of a letter including the name, location, and date 
of closing of the closed branch, shall be filed with the appropriate 
FDIC office no later than 30 days after the branch is closed.

[70 FR 17558, Apr. 6, 2005]



Sec.  303.183  Investment by insured state nonmember banks 
in foreign organization.

    (a) Notice procedures for general consent. Notice in the form of a 
letter from an eligible depository institution making direct or indirect 
investments in a foreign organization pursuant to Sec.  347.117(b) of 
this chapter shall be provided to the appropriate FDIC office no later 
than 30 days after taking such action. The FDIC will provide written 
acknowledgment of receipt of the notice.
    (b) Filing procedures for other investments--(1) Where to file. An 
applicant seeking to make a foreign investment other than under Sec.  
347.117(b) of this chapter shall submit an application to the 
appropriate FDIC office.
    (2) Content of filing. A complete application shall include the 
following information:
    (i) Basic information about the terms of the proposed transaction, 
the amount of the investment in the foreign organization and the 
proportion of its ownership to be acquired;
    (ii) Basic information about the foreign organization, its financial 
position and income, including any available balance sheet and income 
statement for the prior year, or financial projections for a new foreign 
organization;
    (iii) A listing of all shareholders known to hold ten percent or 
more of any class of the foreign organization's stock or other evidence 
of ownership, and the amount held by each;
    (iv) A brief description of the applicant's business plan with 
respect to the foreign organization;
    (v) A brief description of any business or activities which the 
foreign organization will conduct directly or indirectly in the United 
States, and to the extent such activities are not authorized by subpart 
A of part 347, the applicant's reasons why they should be approved;
    (vi) A brief description of the foreign organization's activities, 
and to the extent such activities are not authorized by subpart A of 
part 347, the applicant's reasons why they should be approved; and
    (vii) If the applicant seeks approval to engage in underwriting or 
dealing activities, a description of the applicant's plans and 
procedures to address all relevant risks.
    (3) Additional information. The FDIC may request additional 
information to complete processing.
    (c) Processing--(1) Expedited processing for eligible depository 
institutions. An application filed under Sec.  347.118(b) of this 
chapter by an eligible depository institution as defined in Sec.  
303.2(r) of this part seeking to make direct or indirect investments in 
a foreign organization will be acknowledged in writing by the FDIC and 
will receive expedited processing, unless the applicant is notified in 
writing to the contrary and provided with the basis for that decision. 
The FDIC may remove the application from expedited processing for any of 
the reasons set forth

[[Page 39]]

in Sec.  303.11(c)(2) of this part. Absent such removal, an application 
processed under expedited processing is deemed approved 45 days after 
receipt of a substantially complete application by the FDIC, or on such 
earlier date authorized by the FDIC in writing.
    (2) Standard processing. For those applications which are not 
processed pursuant to the expedited procedures, the FDIC will provide 
the applicant with written notification of the final action when the 
decision is rendered.
    (d) Divestiture. If an insured state nonmember bank holding 50 
percent or more of the voting equity interests of a foreign organization 
or otherwise controlling the foreign organization divests itself of such 
ownership or control, the insured state nonmember bank shall file a 
notice in the form of a letter, including the name, location, and date 
of divestiture of the foreign organization, with the appropriate FDIC 
office no later than 30 days after the divestiture.

[67 FR 79247, Dec. 27, 2002, as amended at 70 FR 17558, Apr. 6, 2005]



Sec.  303.184  Moving an insured branch of a foreign bank.

    (a) Filing procedures--(1) Where and when to file. An application by 
an insured branch of a foreign bank seeking the FDIC's consent to move 
from one location to another, as required by section 18(d)(1) of the FDI 
Act (12 U.S.C. 1828(d)(1)), shall be submitted in writing to the 
appropriate FDIC office on the date the notice required by paragraph (c) 
of this section is published, or within 5 days after the date of the 
last required publication.
    (2) Content of filing. A complete letter application shall include 
the following information:
    (i) The exact location of the proposed site, including the street 
address;
    (ii) Details concerning any involvement in the proposal by an 
insider of the applicant, as defined in Sec.  303.2(u), including any 
financial arrangements relating to fees, the acquisition of property, 
leasing of property, and construction contracts;
    (iii) A statement of the impact of the proposal on the human 
environment, including information on compliance with local zoning laws 
and regulations and the effect on traffic patterns, for purposes of 
complying with the applicable provisions of the NEPA, and the FDIC 
``Statement of Policy on NEPA'' (1 FDIC Law, Regulations, Related Acts 
5185; see Sec.  309.4(a) and (b) of this chapter for availability).
    (iv) A statement as to whether or not the site is eligible for 
inclusion in the National Register of Historic Places for purposes of 
complying with the applicable provisions of the NHPA, and the FDIC 
AStatement of Policy on NHPA'' (1 FDIC Law, Regulations, Related Acts 
5175; see Sec.  309.4(a) and (b) of this chapter for availability), 
including documentation of consultation with the State Historic 
Preservation Officer, as appropriate.
    (v) Comments on any changes in services to be offered, the community 
to be served, or any other effect the proposal may have on the 
applicant's compliance with the CRA; and
    (vi) A copy of the newspaper publication required by paragraph (c) 
of this section, as well as the name and address of the newspaper and 
the date of the publication.
    (3) Comptroller's application. If the applicant is filing an 
application with the Comptroller which contains the information required 
by paragraph (a)(2) of this section, the applicant may submit a copy to 
the FDIC in lieu of a separate application.
    (4) Additional information. The FDIC may request additional 
information to complete processing.
    (b) Processing--(1) Expedited processing for eligible insured 
branches. An application filed by an eligible insured branch as defined 
in Sec.  303.181(c) of this part will be acknowledged in writing by the 
FDIC and will receive expedited processing if the applicant is proposing 
to move within the same state, unless the applicant is notified to the 
contrary and provided with the basis for that decision. The FDIC may 
remove an application from expedited processing for any of the reasons 
set forth in Sec.  303.11(c)(2) of this part. Absent such removal, an 
application processed under expedited processing will be deemed approved 
on the latest of the following:

[[Page 40]]

    (i) The 21st day after the FDIC's receipt of a substantially 
complete application; or
    (ii) The 5th day after expiration of the comment period described in 
paragraph (c) of this section.
    (2) Standard processing. For those applications that are not 
processed pursuant to the expedited procedures, the FDIC will provide 
the applicant with written notification of the final action as soon as 
the decision is rendered.
    (c) Publication requirement and comment period--(1) Newspaper 
publications. The applicant shall publish a notice of its proposal to 
move from one location to another, as described in Sec.  303.7(b), in a 
newspaper of general circulation in the community in which the insured 
branch is located prior to its being moved and in the community to which 
it is to be moved. The notice shall include the insured branch's current 
and proposed addresses.
    (2) Public comments. All public comments must be received by the 
appropriate regional director within 15 days after the date of the last 
newspaper publication required by paragraph (c)(1) of this section, 
unless the comment period has been extended or reopened in accordance 
with Sec.  303.9(b)(2).
    (3) Lobby notices. If the insured branch has a public lobby, a copy 
of the newspaper publication shall be posted in the public lobby for at 
least 15 days beginning on the date of the publication required by 
paragraph (c)(1) of this section.
    (d) Other approval criteria. (1) The FDIC may approve an application 
under this section if the criteria in paragraphs (d)(1)(i) through 
(d)(1)(vi) of this section is satisfied.
    (i) The factors set forth in section 6 of the FDI Act (12 U.S.C. 
1816) have been considered and favorably resolved;
    (ii) The applicant is at least adequately capitalized as defined in 
subpart H of part 324 of this chapter;
    (iii) Any financial arrangements which have been made in connection 
with the proposed relocation and which involve the applicant's 
directors, officers, major shareholders, or their interests are fair and 
reasonable in comparison to similar arrangements that could have been 
made with independent third parties;
    (iv) Compliance with the CRA, the NEPA, the NHPA and any applicable 
related regulations, including 12 CFR part 345, has been considered and 
favorably resolved;
    (v) No CRA protest as defined in Sec.  303.2(l) has been filed which 
remains unresolved or, where such a protest has been filed and remains 
unresolved, the Director or designee concurs that approval is consistent 
with the purposes of the CRA and the applicant agrees in writing to any 
conditions imposed regarding the CRA; and
    (vi) The applicant agrees in writing to comply with any conditions 
imposed by the FDIC, other than the standard conditions defined in Sec.  
303.2(dd) which may be imposed without the applicant's written consent.
    (e) Relocation of insured branch from one state to another. If the 
foreign bank proposes to relocate an insured state branch to a state 
that is outside the state where the branch is presently located, in 
addition to meeting the approval criteria contained in paragraph (d) of 
this section, the foreign bank must:
    (i) Comply with any applicable state laws or regulations of the 
states affected by the proposed relocation; and
    (ii) Obtain any required regulatory approvals from the appropriate 
state licensing authority of the state to which the insured branch 
proposes to relocate before relocating the existing branch operations 
and surrendering its existing license to the appropriate state licensing 
authority of the state from which the branch is relocating.

[67 FR 79247, Dec. 27, 2002, as amended at 70 FR 17559, Apr. 6, 2005; 78 
FR 55470, Sept. 10, 2013; 83 FR 17739, Apr. 24, 2018]



Sec.  303.185  Merger transactions involving foreign banks 
or foreign organizations.

    (a) Merger transactions involving an insured branch of a foreign 
bank. Merger transactions requiring the FDIC's prior approval as set 
forth in Sec.  303.62 include any merger transaction in which the 
resulting institution is an insured branch of a foreign bank which is 
not a federal branch, or any merger transaction which involves any 
insured branch and any uninsured institution. In such cases:

[[Page 41]]

    (1) References to an eligible depository institution in subpart D of 
this part include an eligible insured branch as defined in Sec.  
303.181;
    (2) The definition of a corporate reorganization in Sec.  303.61(b) 
includes a merger transaction between an insured branch and other 
branches, agencies, or subsidiaries in the United States of the same 
foreign bank; and
    (3) For the purposes of Sec.  303.62(b)(1) on interstate mergers, a 
merger transaction involving an insured branch is one involving the 
acquisition of a branch of an insured bank without the acquisition of 
the bank for purposes of section 44 of the FDI Act (12 U.S.C. 1831u) 
only when the merger transaction involves fewer than all the insured 
branches of the same foreign bank in the same state.
    (b) Certain merger transactions with foreign organizations outside 
any State. Merger transactions requiring the FDIC's prior approval as 
set forth in Sec.  303.62 include any merger transaction in which an 
insured depository institution becomes directly liable for obligations 
which will, after the merger transaction, be treated as deposits under 
section 3(l)(5)(A)(i)-(ii) of the FDI Act (12 U.S.C. 1813(l)(5)(A)(i)-
(ii)), as a result of a merger or consolidation with a foreign 
organization or an assumption of liabilities of a foreign organization.



Sec.  303.186  Exemptions from insurance requirements for a state branch 
of a foreign bank.

    (a) Filing procedures--(1) Where to file. An application by a 
foreign bank for consent to operate as a noninsured state branch, as 
permitted by Sec.  347.215(b) of this chapter, shall be submitted in 
writing to the appropriate FDIC office.
    (2) Content of filing. A complete letter application shall include 
the following information:
    (i) The kinds of deposit activities in which the state branch 
proposes to engage;
    (ii) The expected source of deposits;
    (iii) The manner in which deposits will be solicited;
    (iv) How the activity will maintain or improve the availability of 
credit to all sectors of the United States economy, including the 
international trade finance sector;
    (v) That the activity will not give the foreign bank an unfair 
competitive advantage over United States banking organizations; and
    (vi) A resolution by the applicant's board of directors, or evidence 
of approval by senior management if a resolution is not required 
pursuant to the applicant's organizational documents, authorizing the 
filing of the application.
    (3) Additional information. The FDIC may request additional 
information to complete processing.
    (4) Processing. The FDIC will provide the applicant with written 
notification of the final action taken.

[67 FR 79247, Dec. 27, 2002, as amended at 70 FR 17559, Apr. 6, 2005]



Sec.  303.187  Approval for an insured state branch of a foreign bank 
to conduct activities not permissible for federal branches.

    (a) Filing procedures--(1) Where to file. An application by an 
insured state branch seeking approval to conduct activities not 
permissible for a federal branch, as required by Sec.  347.212(a) of 
this chapter, shall be submitted in writing to the appropriate FDIC 
office.
    (2) Content of filing. A complete letter application shall include 
the following information:
    (i) A brief description of the activity, including the manner in 
which it will be conducted and an estimate of the expected dollar volume 
associated with the activity;
    (ii) An analysis of the impact of the proposed activity on the 
condition of the United States operations of the foreign bank in general 
and of the branch in particular, including a copy of the feasibility 
study, management plan, financial projections, business plan, or similar 
document concerning the conduct of the activity;
    (iii) A resolution by the applicant's board of directors, or 
evidence of approval by senior management if a resolution is not 
required pursuant to the applicant's organizational documents, 
authorizing the filing of the application;

[[Page 42]]

    (iv) A statement by the applicant of whether it is in compliance 
with sections 347.209 and 347.210 of this chapter;
    (v) A statement by the applicant that it has complied with all 
requirements of the Board of Governors concerning applications to 
conduct the activity in question and the status of each such 
application, including a copy of the Board of Governors' disposition of 
such application, if applicable; and
    (vi) A statement of why the activity will pose no significant risk 
to the Deposit Insurance Fund.
    (3) Board of Governors application. If the application to the Board 
of Governors contains the information required by paragraph (a) of this 
section, the applicant may submit a copy to the FDIC in lieu of a 
separate letter application.
    (4) Additional information. The FDIC may request additional 
information to complete processing.
    (b) Divestiture or cessation--(1) Where to file. Divestiture plans 
necessitated by a change in law or other authority, as required by Sec.  
347.212(e) of this chapter, shall be submitted in writing to the 
appropriate FDIC office.
    (2) Content of filing. A complete letter application shall include 
the following information:
    (i) A detailed description of the manner in which the applicant 
proposes to divest itself of or cease the activity in question; and
    (ii) A projected timetable describing how long the divestiture or 
cessation is expected to take.
    (3) Additional information. The FDIC may request additional 
information to complete processing.

[67 FR 79247, Dec. 27, 2002, as amended at 70 FR 17559, Apr. 6, 2005; 71 
FR 20526, Apr. 21, 2006]



Sec. Sec.  303.188-303.199  [Reserved]



                   Subpart K_Prompt Corrective Action



Sec.  303.200  Scope.

    (a) General. (1) This subpart covers applications filed pursuant to 
section 38 of the FDI Act (12 U.S.C. 1831o), which requires insured 
depository institutions that are not adequately capitalized to receive 
approval prior to engaging in certain activities. Section 38 restricts 
or prohibits certain activities and requires an insured depository 
institution to submit a capital restoration plan when it becomes 
undercapitalized. The restrictions and prohibitions become more severe 
as an institution's capital level declines.
    (2) Definitions of the capital categories referenced in this Prompt 
Corrective Action subpart may be found in subpart H of part 324 of this 
chapter.
    (b) Institutions covered. Restrictions and prohibitions contained in 
subpart H of part 324 of this chapter apply primarily to state nonmember 
banks and insured branches of foreign banks, as well as to directors and 
senior executive officers of those institutions. Portions of subpart H 
of part 324 of this chapter also apply to all insured depository 
institutions that are deemed to be critically undercapitalized.

[67 FR 79247, Dec. 27, 2002, as amended at 78 FR 55470, Sept. 10, 2013; 
83 FR 17739, Apr. 24, 2018]



Sec.  303.201  Filing procedures.

    Applications shall be filed with the appropriate FDIC office. The 
application shall contain the information specified in each respective 
section of this subpart, and shall be in letter form as prescribed in 
Sec.  303.3. Additional information may be requested by the FDIC. Such 
letter shall be signed by the president, senior officer or a duly 
authorized agent of the insured depository institution and be 
accompanied by a certified copy of a resolution adopted by the 
institution's board of directors or trustees authorizing the 
application.



Sec.  303.202  Processing.

    The FDIC will provide the applicant with a subsequent written 
notification of the final action taken as soon as the decision is 
rendered.



Sec.  303.203  Applications for capital distributions.

    (a) Scope. An insured state nonmember bank and any insured branch of 
a foreign bank shall submit an application for capital distribution if, 
after having made a capital distribution, the institution would be 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized.

[[Page 43]]

    (b) Content of filing. An application to repurchase, redeem, retire 
or otherwise acquire shares or ownership interests of the insured 
depository institution shall describe the proposal, the shares or 
obligations which are the subject thereof, and the additional shares or 
obligations of the institution which will be issued in at least an 
amount equivalent to the distribution. The application also shall 
explain how the proposal will reduce the institution's financial 
obligations or otherwise improve its financial condition. If the 
proposed action also requires an application under section 18(i) of the 
FDI Act (12 U.S.C. 1828(i)) as implemented by Sec.  303.241 of this part 
regarding prior consent to retire capital, such application should be 
filed concurrently with, or made a part of, the application filed 
pursuant to section 38 of the FDI Act (12 U.S.C. 1831o).



Sec.  303.204  Applications for acquisitions, branching, 
and new lines of business.

    (a) Scope. (1) Any insured state nonmember bank and any insured 
branch of a foreign bank which is undercapitalized or significantly 
undercapitalized, and any insured depository institution which is 
critically undercapitalized, shall submit an application to engage in 
acquisitions, branching or new lines of business.
    (2) A new line of business will include any new activity exercised 
which, although it may be permissible, has not been exercised by the 
institution.
    (b) Content of filing. Applications shall describe the proposal, 
state the date the institution's capital restoration plan was accepted 
by its primary federal regulator, describe the institution's status in 
implementing the plan, and explain how the proposed action is consistent 
with and will further the achievement of the plan or otherwise further 
the purposes of section 38 of the FDI Act. If the FDIC is not the 
applicant's primary federal regulator, the application also should state 
whether approval has been requested from the applicant's primary federal 
regulator, the date of such request and the disposition of the request, 
if any. If the proposed action also requires applications pursuant to 
section 18 (c) or (d) of the FDI Act (mergers and branches) (12 U.S.C. 
1828 (c) or (d)), such applications should be filed concurrently with, 
or made a part of, the application filed pursuant to section 38 of the 
FDI Act (12 U.S.C. 1831o).



Sec.  303.205  Applications for bonuses and increased compensation 
for senior executive officers.

    (a) Scope. Any insured state nonmember bank or insured branch of a 
foreign bank that is significantly or critically undercapitalized, or 
any insured state nonmember bank or any insured branch of a foreign bank 
that is undercapitalized and which has failed to submit or implement in 
any material respect an acceptable capital restoration plan, shall 
submit an application to pay a bonus or increase compensation for any 
senior executive officer.
    (b) Content of filing. Applications shall list each proposed bonus 
or increase in compensation, and for the latter shall identify 
compensation for each of the twelve calendar months preceding the 
calendar month in which the institution became undercapitalized. 
Applications also shall state the date the institution's capital 
restoration plan was accepted by the FDIC, and describe any progress 
made in implementing the plan.



Sec.  303.206  Application for payment of principal or interest 
on subordinated debt.

    (a) Scope. Any critically undercapitalized insured depository 
institution shall submit an application to pay principal or interest on 
subordinated debt.
    (b) Content of filing. Applications shall describe the proposed 
payment and provide an explanation of action taken under section 
38(h)(3)(A)(ii) of the FDI Act (action other than receivership or 
conservatorship). The application also shall explain how such payments 
would further the purposes of section 38 of the FDI Act (12 U.S.C. 
1831o). Existing approvals pursuant to requests filed under section 
18(i)(1) of the FDI Act (12 U.S.C. 1828(i)(1)) (capital stock reductions 
or retirements) shall not be deemed to be the permission needed pursuant 
to section 38.

[[Page 44]]



Sec.  303.207  Restricted activities for critically 
undercapitalized institutions.

    (a) Scope. Any critically undercapitalized insured depository 
institution shall submit an application to engage in certain restricted 
activities.
    (b) Content of filing. Applications to engage in any of the 
following activities, as set forth in sections 38(i)(2) (A) through (G) 
of the FDI Act, shall describe the proposed activity and explain how the 
activity would further the purposes of section 38 of the FDI Act (12 
U.S.C. 1831o):
    (1) Enter into any material transaction other than in the usual 
course of business including any action with respect to which the 
institution is required to provide notice to the appropriate federal 
banking agency. Materiality will be determined on a case-by-case basis;
    (2) Extend credit for any highly leveraged transaction. A highly 
leveraged transaction means an extension of credit to or investment in a 
business by an insured depository institution where the financing 
transaction involves a buyout, acquisition, or recapitalization of an 
existing business and one of the following criteria is met:
    (i) The transaction results in a liabilities-to-assets leverage 
ratio higher than 75 percent; or
    (ii) The transaction at least doubles the subject company's 
liabilities and results in a liabilities-to-assets leverage ratio higher 
than 50 percent; or
    (iii) The transaction is designated an highly leverage transaction 
by a syndication agent or a federal bank regulator.
    (iv) Loans and exposures to any obligor in which the total financing 
package, including all obligations held by all participants is $20 
million or more, or such lower level as the FDIC may establish by order 
on a case-by-case basis, will be excluded from this definition.
    (3) Amend the institution's charter or bylaws, except to the extent 
necessary to carry out any other requirement of any law, regulation, or 
order;
    (4) Make any material change in accounting methods;
    (5) Engage in any covered transaction (as defined in section 23A(b) 
of the Federal Reserve Act (12 U.S.C. 371c(b));
    (6) Pay excessive compensation or bonuses. Part 364 of this chapter 
provides guidance for determining excessive compensation; or
    (7) Pay interest on new or renewed liabilities at a rate that would 
increase the institution's weighted average cost of funds to a level 
significantly exceeding the prevailing rates of interest on insured 
deposits in the institution's normal market area. Section 337.6 of this 
chapter (Brokered deposits) provides guidance for defining the relevant 
terms of this provision; however this provision does not supersede the 
general prohibitions contained in Sec.  337.6.

[67 FR 79247, Dec. 27, 2002, as amended at 78 FR 55470, Sept. 10, 2013]



Sec. Sec.  303.208-303.219  [Reserved]



   Subpart L_Section 19 of the FDI Act (Consent to Service of Persons 
                 Convicted of Certain Criminal Offenses)



Sec.  303.220  Scope.

    This subpart covers applications under section 19 of the FDI Act (12 
U.S.C. 1829). Pursuant to section 19, any person who has been convicted 
of any criminal offense involving dishonesty, breach of trust, or money 
laundering, or has agreed to enter into a pretrial diversion or similar 
program in connection with a prosecution for such offense, may not 
become, or continue as, an institution-affiliated party of an insured 
depository institution; own or control, directly or indirectly, any 
insured depository institution; or otherwise participate, directly or 
indirectly, in the conduct of the affairs of any insured depository 
institution without the prior written consent of the FDIC.



Sec.  303.221  Filing procedures.

    (a) Where to file. An application under section 19 of the FDI Act 
shall be filed with the appropriate FDIC office.
    (b) Contents of filing. Application forms may be obtained from any 
FDIC regional director. The FDIC may require additional information 
beyond that sought in the form, as warranted, in individual cases.

[[Page 45]]



Sec.  303.222  Service at another insured depository institution.

    In the case of a person who has already been approved by the FDIC 
under this subpart or section 19 of the FDI Act in connection with a 
particular insured depository institution, such person may not become an 
institution affiliated party, or own or control directly or indirectly 
another insured depository institution, or participate in the conduct of 
the affairs of another insured depository institution, without the prior 
written consent of the FDIC.



Sec.  303.223  Applicant's right to hearing following denial.

    An applicant may request a hearing following a denial of an 
application in accordance with the provisions of part 308 of this 
chapter.



Sec. Sec.  303.224-303.239  [Reserved]



                         Subpart M_Other Filings



Sec.  303.240  General.

    This subpart sets forth the filing procedures to be followed when 
seeking the FDIC's consent to engage in certain activities or accomplish 
other matters as specified in the individual sections contained herein. 
For those matters covered by this subpart that also have substantive 
FDIC regulations or related statements of policy, references to the 
relevant regulations or statements of policy are contained in the 
specific sections.



Sec.  303.241  Reduce or retire capital stock or capital debt instruments.

    (a) Scope. This section contains the procedures to be followed by an 
insured state nonmember bank to seek the prior approval of the FDIC to 
reduce the amount or retire any part of its common or preferred stock, 
or to retire any part of its capital notes or debentures pursuant to 
section 18(i)(1) of the Act (12 U.S.C. 1828(i)(1)).
    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (c) Content of filing. The application shall contain the following:
    (1) The type and amount of the proposed change to the capital 
structure and the reason for the change;
    (2) A schedule detailing the present and proposed capital structure;
    (3) The time period that the proposal will encompass;
    (4) If the proposal involves a series of transactions affecting Tier 
1 capital components which will be consummated over a period of time 
which shall not exceed twelve months, the application shall certify that 
the insured depository institution will maintain itself as a well-
capitalized institution as defined in part 324 of this chapter both 
before and after each of the proposed transactions;
    (5) If the proposal involves the repurchase of capital instruments, 
the amount of the repurchase price and the basis for establishing the 
fair market value of the repurchase price;
    (6) A statement that the proposal will be available to all holders 
of a particular class of outstanding capital instruments on an equal 
basis, and if not, the details of any restrictions; and
    (7) The date that the applicant's board of directors approved the 
proposal.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the application.
    (e) Undercapitalized institutions. Procedures regarding applications 
by an undercapitalized insured depository institution to retire capital 
stock or capital debt instruments pursuant to section 38 of the FDI Act 
(12 U.S.C. 1831o) are set forth in subpart K (Prompt Corrective Action), 
Sec.  303.203. Applications pursuant to sections 38 and 18(i) may be 
filed concurrently, or as a single application.
    (f) Expedited processing for eligible depository institutions. An 
application filed under this section by an eligible depository 
institution as defined inSec.  303.2(r) will be acknowledged in writing 
by the FDIC and will receive expedited processing, unless the applicant 
is notified in writing to the contrary and provided with the basis for 
that decision. The FDIC may remove an application from expedited 
processing for any of the reasons set forth in Sec.  303.11(c)(2). 
Absent such removal, an application processed under expedited processing 
will be deemed approved 20 days after the FDIC's receipt

[[Page 46]]

of a substantially complete application.
    (g) Standard processing. For those applications that are not 
processed pursuant to expedited procedures, the FDIC will provide the 
applicant with written notification of the final action as soon as the 
decision is rendered.

[67 FR 79247, Dec. 27, 2002, as amended at 78 FR 55470, Sept. 30, 2013; 
83 FR 17739, Apr. 24, 2018]



Sec.  303.242  Exercise of trust powers.

    (a) Scope. This section contains the procedures to be followed by a 
State nonmember bank or State savings association that seeks to obtain 
the FDIC's prior written consent to exercise trust powers. The FDIC's 
prior written consent to exercise trust powers is not required in the 
following circumstances:
    (1) Where a State nonmember bank or State savings association 
received authority to exercise trust powers from its chartering 
authority prior to December 1, 1950; or
    (2) Where the institution continues to conduct trust activities 
pursuant to authority granted by its chartering authority subsequent to 
a charter conversion or withdrawal from membership in the Federal 
Reserve System.
    (b) Where to file. Applicants shall submit to the appropriate FDIC 
office a completed form, ``Application for Consent to Exercise Trust 
Powers.'' This form may be obtained from any FDIC regional director.
    (c) Content of filing. The filing shall consist of the completed 
trust application form.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the filing.
    (e) Expedited processing for eligible depository institutions. An 
application filed under this section by an eligible depository 
institution as defined in Sec.  303.2(r) will be acknowledged in writing 
by the FDIC and will receive expedited processing, unless the applicant 
is notified in writing to the contrary and provided with the basis for 
that decision. The FDIC may remove an application from expedited 
processing for any of the reasons set forth in Sec.  303.11(c)(2.). 
Absent such removal, an application processed under expedited procedures 
will be deemed approved 30 days after the FDIC's receipt of a 
substantially complete application.
    (f) Standard processing. For those applications that are not 
processed pursuant to the expedited procedures, the FDIC will provide 
the applicant with written notification of the final action when the 
decision is rendered.

[83 FR 60337, Nov. 26, 2018]



Sec.  303.243  Brokered deposit waivers.

    (a) Scope. Pursuant to section 29 of the FDI Act (12 U.S.C. 1831f) 
and part 337 of this chapter, an adequately capitalized insured 
depository institution may not accept, renew or roll over any brokered 
deposits unless it has obtained a waiver from the FDIC. A well-
capitalized insured depository institution may accept brokered deposits 
without a waiver, and an undercapitalized insured depository institution 
may not accept, renew or roll over any brokered deposits under any 
circumstances. This section contains the procedures to be followed to 
file with the FDIC for a brokered deposit waiver. The FDIC will provide 
notice to the depository institution's appropriate federal banking 
agency and any state regulatory agency, as appropriate, that a request 
for a waiver has been filed and will consult with such agency or 
agencies, prior to taking action on the institution's request for a 
waiver. Prior notice and/or consultation shall not be required in any 
particular case if the FDIC determines that the circumstances require it 
to take action without giving such notice and opportunity for 
consultation.
    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (c) Content of filing. The application shall contain the following:
    (1) The time period for which the waiver is requested;
    (2) A statement of the policy governing the use of brokered deposits 
in the institution's overall funding and liquidity management program;
    (3) The volume, rates and maturities of the brokered deposits held 
currently and anticipated during the waiver period sought, including any 
internal

[[Page 47]]

limits placed on the terms, solicitation and use of brokered deposits;
    (4) How brokered deposits are costed and compared to other funding 
alternatives and how they are used in the institution's lending and 
investment activities, including a detailed discussion of asset growth 
plans;
    (5) Procedures and practices used to solicit brokered deposits, 
including an identification of the principal sources of such deposits;
    (6) Management systems overseeing the solicitation, acceptance and 
use of brokered deposits;
    (7) A recent consolidated financial statement with balance sheet and 
income statements; and
    (8) The reasons the institution believes its acceptance, renewal or 
rollover of brokered deposits would pose no undue risk.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the application.
    (e) Expedited processing for eligible depository institutions. An 
application filed under this section by an eligible depository 
institution as defined in this paragraph will be acknowledged in writing 
by the FDIC and will receive expedited processing, unless the applicant 
is notified in writing to the contrary and provided with the basis for 
that decision. For the purpose of this section, an applicant will be 
deemed an eligible depository institution if it satisfies all of the 
criteria contained in Sec.  303.2(r) except that the applicant may be 
adequately capitalized rather than well-capitalized. The FDIC may remove 
an application from expedited processing for any of the reasons set 
forth in Sec.  303.11(c)(2). Absent such removal, an application 
processed under expedited procedures will be deemed approved 21 days 
after the FDIC's receipt of a substantially complete application.
    (f) Standard processing. For those filings which are not processed 
pursuant to the expedited procedures, the FDIC will provide the 
applicant with written notification of the final action as soon as the 
decision is rendered.
    (g) Conditions for approval. A waiver issued pursuant to this 
section shall:
    (1) Be for a fixed period, generally no longer than two years, but 
may be extended upon refiling; and
    (2) May be revoked by the FDIC at any time by written notice to the 
institution.



Sec.  303.244  Golden parachute and severance plan payments.

    (a) Scope. Pursuant to section 18(k) of the FDI Act (12 U.S.C. 
1828(k)) and part 359 of this chapter, an insured depository institution 
or depository institution holding company may not make golden parachute 
payments or excess nondiscriminatory severance plan payments unless the 
depository institution or holding company obtains permission to make 
such payments in accordance with the rules contained in part 359 of this 
chapter. This section contains the procedures to file for the FDIC's 
consent when such consent is necessary under part 359 of this chapter.
    (1) Golden parachute payments. A troubled insured depository 
institution or a troubled depository institution holding company is 
prohibited from making golden parachute payments (as defined in Sec.  
359.1(f)(1) of this chapter) unless it obtains the consent of the 
appropriate federal banking agency and the written concurrence of the 
FDIC. Therefore, in the case of golden parachute payments, the 
procedures in this section apply to all troubled insured depository 
institutions and troubled depository institution holding companies.
    (2) Excess nondiscriminatory severance plan payments. In the case of 
excess nondiscriminatory severance plan payments as provided by Sec.  
359.1(f)(2)(v) of this chapter, the FDIC's consent is necessary for 
state nonmember banks that meet the criteria set forth in Sec.  
359.1(f)(1)(ii) of this chapter. In addition, the FDIC's consent is 
required for all insured depository institutions or depository 
institution holding companies that meet the same criteria and seek to 
make payments in excess of the 12-month amount specified in Sec.  
359.1(f)(2)(v).
    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC regional director.
    (c) Content of filing. The application shall contain the following:

[[Page 48]]

    (1) The reasons why the applicant seeks to make the payment;
    (2) An identification of the institution-affiliated party who will 
receive the payment;
    (3) A copy of any contract or agreement regarding the subject matter 
of the filing;
    (4) The cost of the proposed payment and its impact on the 
institution's capital and earnings;
    (5) The reasons why the consent to the payment should be granted; 
and
    (6) Certification and documentation as to each of the points cited 
in Sec.  359.4(a)(4).
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the filing.
    (e) Processing. The FDIC will provide the applicant with a 
subsequent written notification of the final action taken as soon as the 
decision is rendered.

[67 FR 79247, Dec. 27, 2002, as amended at 68 FR 50461, Aug. 21, 2003]



Sec.  303.245  Waiver of liability for commonly controlled 
depository institutions.

    (a) Scope. Section 5(e) of the FDI Act (12 U.S.C. 1815(e)) creates 
liability for commonly controlled insured depository institutions for 
losses incurred or anticipated to be incurred by the FDIC in connection 
with the default of a commonly controlled insured depository institution 
or any assistance provided by the FDIC to any commonly controlled 
insured depository institution in danger of default. In addition to 
certain statutory exceptions and exclusions contained in sections 
5(e)(6), (7) and (8), the FDI Act also permits the FDIC, in its 
discretion, to exempt any insured depository institution from this 
liability if it determines that such exemption is in the best interests 
of the Deposit Insurance Fund. This section describes procedures to 
request a conditional waiver of liability pursuant to section 5 of the 
FDI Act (12 U.S.C. 1815(e)(5)(A)).
    (b) Definition. Conditional waiver of liability means an exemption 
from liability pursuant to section 5(e) of the FDI Act (12 U.S.C. 
1815(e)) subject to terms and conditions.
    (c) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (d) Content of filing. The application shall contain the following 
information:
    (1) The basis for requesting a waiver;
    (2) The existence of any significant events (e.g., change in 
control, capital injection, etc.) that may have an impact upon the 
applicant and/or any potentially liable institution;
    (3) Current, and if applicable, pro forma financial information 
regarding the applicant and potentially liable institution(s); and
    (4) The benefits to the appropriate FDIC insurance fund resulting 
from the waiver and any related events.
    (e) Additional information. The FDIC may request additional 
information at any time during the processing of the filing.
    (f) Processing. The FDIC will provide the applicant with written 
notification of the final action as soon as the decision is rendered.
    (g) Failure to comply with terms of conditional waiver. In the event 
a conditional waiver of liability is issued, failure to comply with the 
terms specified therein may result in the termination of the conditional 
waiver of liability. The FDIC reserves the right to revoke the 
conditional waiver of liability after giving the applicant written 
notice of such revocation and a reasonable opportunity to be heard on 
the matter pursuant to Sec.  303.10.

[67 FR 79247, Dec. 27, 2002, as amended at 71 FR 20526, Apr. 21, 2006]



Sec.  303.246  Conversion with diminution of capital.

    (a) Scope. This section contains the procedures to be followed by an 
insured federal depository institution seeking the prior written consent 
of the FDIC pursuant to section 18(i)(2) of the FDI Act (12 U.S.C. 
1828(i)(2)) to convert from an insured federal depository institution to 
an insured state nonmember bank (except a District bank) where the 
capital stock or surplus of the resulting bank will be less than the 
capital stock or surplus, respectively, of the converting institution at 
the time of the shareholders' meeting approving such conversion.

[[Page 49]]

    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (c) Content of filing. The application shall contain the following 
information:
    (1) A description of the proposed transaction;
    (2) A schedule detailing the present and proposed capital structure; 
and
    (3) A copy of any documents submitted to the state chartering 
authority with respect to the charter conversion.
    (d) Additional information. The FDIC may request additional 
information at any time during the processing.
    (e) Processing. The FDIC will provide the applicant with written 
notification of the final action when the decision is rendered.

[67 FR 79247, Dec. 27, 2002. Redesignated at 71 FR 20526, Apr. 21, 2006]



Sec.  303.247  Continue or resume status as an insured institution 
following termination under section 8 of the FDI Act.

    (a) Scope. This section relates to an application by a depository 
institution whose insured status has been terminated under section 8 of 
the FDI Act (12 U.S.C. 1818) for permission to continue or resume its 
status as an insured depository institution. This section covers 
institutions whose deposit insurance continues in effect for any purpose 
or for any length of time under the terms of an FDIC order terminating 
deposit insurance, but does not cover operating non-insured depository 
institutions which were previously insured by the FDIC, or any non-
insured, non-operating depository institution whose charter has not been 
surrendered or revoked.
    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (c) Content of filing. The filing shall contain the following 
information:
    (1) A complete statement of the action requested, all relevant 
facts, and the reason for such requested action; and
    (2) A certified copy of the resolution of the depository 
institution's board of directors authorizing submission of the filing.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the filing.
    (e) Processing. The FDIC will provide the applicant with written 
notification of the final action as soon as the decision is rendered.

[67 FR 79247, Dec. 27, 2002. Redesignated at 71 FR 20526, Apr. 21, 2006]



Sec.  303.248  Truth in Lending Act--Relief from reimbursement.

    (a) Scope. This section applies to requests for relief from 
reimbursement pursuant to the Truth in Lending Act (15 U.S.C. 1601 et 
seq.) and Regulation Z (12 CFR part 226). Related delegations of 
authority are also set forth.
    (b) Procedures to be followed in filing initial requests for relief. 
Requests for relief from reimbursement shall be filed with the 
appropriate FDIC office or within 60 days after receipt of the 
compliance report of examination containing the request to conduct a 
file search and make restitution to affected customers. The filing shall 
contain a complete and concise statement of the action requested, all 
relevant facts, the reasons and analysis relied upon as the basis for 
such requested action, and all supporting documentation.
    (c) Additional information. The FDIC may request additional 
information at any time during processing of any such requests.
    (d) Processing. The FDIC will acknowledge receipt of the request for 
reconsideration and provide the applicant with written notification of 
its determination within 60 days of its receipt of the request for 
reconsideration.
    (e) Procedures to be followed in filing requests for 
reconsideration. Within 15 days of receipt of written notice that its 
request for relief has been denied, the requestor may petition the 
appropriate FDIC office for reconsideration of such request in 
accordance with the procedures set forth inSec.  303.11(f).

[67 FR 79247, Dec. 27, 2002. Redesignated at 71 FR 20526, Apr. 21, 2006]



Sec.  303.249  Management official interlocks.

    (a) Scope. This section contains the procedures to be followed by an 
insured

[[Page 50]]

state nonmember bank to seek the approval of FDIC to establish an 
interlock pursuant to the Depository Institutions Management Interlocks 
Act (12 U.S.C. 3207), section 13 of the FDI Act (12 U.S.C. 1823(k)) and 
part 348 of this chapter (12 CFR part 348).
    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (c) Content of filing. The application shall contain the following:
    (1) A description of the proposed interlock;
    (2) A statement of reason as to why the interlock will not result in 
a monopoly or a substantial lessening of competition; and
    (3) If the applicant is seeking an exemption set forth in Sec.  
348.5 or 348.6 of this chapter, a description of the particular 
exemption which is being requested and a statement of reasons as to why 
the exemption is applicable.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the filing.
    (e) Processing. The FDIC will provide the applicant with written 
notification of the final action when the decision is rendered.

[67 FR 79247, Dec. 27, 2002. Redesignated at 71 FR 20526, Apr. 21, 2006]



Sec.  303.250  Modification of conditions.

    (a) Scope. This section contains the procedures to be followed by an 
insured depository institution to seek the prior consent of the FDIC to 
modify the requirement of a prior approval of a filing issued by the 
FDIC.
    (b) Where to file. Applicants should submit a letter application to 
the appropriate FDIC regional director.
    (c) Content of filing. The application should contain the following 
information:
    (1) A description of the original approved application;
    (2) A description of the modification requested; and
    (3) The reason for the request.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the filing.
    (e) Processing. The FDIC will provide the applicant with a written 
notification of the final action as soon as the decision is rendered.

[67 FR 79247, Dec. 27, 2002. Redesignated at 71 FR 20526, Apr. 21, 2006]



Sec.  303.251  Extension of time.

    (a) Scope. This section contains the procedures to be followed by an 
insured depository institution to seek the prior consent of the FDIC for 
additional time to fulfill a condition required in an approval of a 
filing issued by the FDIC or to consummate a transaction which was the 
subject of an approval by the FDIC.
    (b) Where to file. Applicants shall submit a letter application to 
the appropriate FDIC office.
    (c) Content of filing. The application shall contain the following 
information:
    (1) A description of the original approved application;
    (2) Identification of the original time limitation;
    (3) The additional time period requested; and
    (4) The reason for the request.
    (d) Additional information. The FDIC may request additional 
information at any time during processing of the filing.
    (e) Processing. The FDIC will provide the applicant with written 
notification of the final action as soon as the decision is rendered.

[67 FR 79247, Dec. 27, 2002. Redesignated at 71 FR 20526, Apr. 21, 2006]



Sec. Sec.  303.252-303.259  [Reserved]



PART 304_FORMS, INSTRUCTIONS, AND REPORTS--Table of Contents



Sec.
304.1 Purpose.
304.2 Where to obtain forms and instructions.
304.3 Reports.

    Authority: 5 U.S.C. 552; 12 U.S.C. 1817, 1831, 1867.

    Source: 67 FR 18793, Apr. 17, 2002, unless otherwise noted.



Sec.  304.1  Purpose.

    Part 304 informs the public where it may obtain forms and 
instructions for

[[Page 51]]

reports, applications, and other submittals used by the FDIC, and also 
describes certain forms that are not described elsewhere in FDIC 
regulations.



Sec.  304.2  Where to obtain forms and instructions.

    Forms and instructions used in connection with applications, 
reports, and other submittals used by the FDIC can be obtained by 
contacting the FDIC Public Information Center (801 17th Street, NW., 
Washington, DC 20434; telephone: 800-276-6003 or 202-416-6940), except 
as noted below in Sec.  304.3. In addition, many forms and instructions 
can be obtained from FDIC regional offices. A list of FDIC regional 
offices can be obtained from the FDIC Public Information Center or found 
at the FDIC's web site at http://www.fdic.gov, or in the directory of 
FDIC Law, Regulations and Related Acts published by the FDIC.



Sec.  304.3  Reports.

    (a) Consolidated Reports of Condition and Income, Forms FFIEC 031 
and 041. Pursuant to section 7(a) of the Federal Deposit Insurance Act 
(12 U.S.C. 1817(a)), every national bank, state member bank, and insured 
state nonmember bank is required to file Consolidated Reports of 
Condition and Income (also known as the Call Report) in accordance with 
the instructions for these reports. All assets and liabilities, 
including contingent assets and liabilities, must be reported in, or 
otherwise taken into account in the preparation of, the Call Report. The 
FDIC uses Call Report data to calculate deposit insurance assessments 
and monitor the condition, performance, and risk profile of individual 
banks and the banking industry. Reporting banks must also submit 
annually such information on small business and small farm lending as 
the FDIC may need to assess the availability of credit to these sectors 
of the economy. The report forms and instructions can be obtained from 
the Division of Supervision and Consumer Protection (DSC), FDIC, 
Washington, DC 20429.

(Approved by the Office of Management and Budget under control number 
3064-0052)

    (b) Report of Assets and Liabilities of U.S. Branches and Agencies 
of Foreign Banks, Form FFIEC 002. Pursuant to section 7(a) of the 
Federal Deposit Insurance Act (12 U.S.C. 1817(a)), every insured U.S. 
branch of a foreign bank is required to file a Report of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks in accordance 
with the instructions for the report. All assets and liabilities, 
including contingent assets and liabilities, must be reported in, or 
otherwise taken into account in the preparation of the report. The FDIC 
uses the reported data to calculate deposit insurance assessments and 
monitor the condition, performance, and risk profile of individual 
insured branches and the banking industry. Insured branches must also 
submit annually such information on small business and small farm 
lending as the FDIC may need to assess the availability of credit to 
these sectors of the economy. Because the Board of Governors of the 
Federal Reserve System collects and processes this report on behalf of 
the FDIC, the report forms and instructions can be obtained from Federal 
Reserve District Banks or through the web site of the Federal Financial 
Institutions Examination Council, http://www.ffiec.gov/.

(Approved by the Office of Management and Budget under control number 
7100-0032)

    (c) Summary of Deposits, Form FDIC 8020/05. Form 8020/05 is a report 
on the amount of deposits for each authorized office of an insured bank 
with branches; unit banks do not report. Reports as of June 30 of each 
year must be submitted no later than the immediately succeeding July 31. 
The report forms and the instructions for completing the reports will be 
furnished to all such banks by, or may be obtained upon request from, 
the Division of Supervision and Consumer Protection (DSC), FDIC, 550 
17th Street, NW., Washington, DC 20429.

(Approved by the Office of Management and Budget under control number 
3064-0061)

    (d) Notification of Performance of Bank Services, Form FDIC 6120/06. 
Pursuant to Section 7 of the Bank Service Company Act (12 U.S.C. 1867), 
as amended, FDIC supervised banks must notify the agency about the 
existence

[[Page 52]]

of a service relationship within thirty days after the making of the 
contract or the performance of the service, whichever occurs first. Form 
FDIC 6120/06 may be used to satisfy the notice requirement. The form 
contains identification, location and contact information for the bank, 
the servicer, and a description of the services provided. In lieu of the 
form, notification may be provided by letter. Either the form or the 
letter containing the notice information must be submitted to the 
regional director--Division of Supervision and Consumer Protection (DSC) 
of the region in which the bank's main office is located.

(Approved by the Office of Management and Budget under control number 
3064-0029)

                        PARTS 305	306 [RESERVED]



PART 307_CERTIFICATION OF ASSUMPTION OF DEPOSITS AND NOTIFICATION OF CHANGES 
OF INSURED STATUS--Table of Contents



Sec.
307.1 Scope and purpose.
307.2 Certification of assumption of deposit liabilities.
307.3 Notice to depositors when insured status is voluntarily terminated 
          and deposits are not assumed.

Appendix A to Part 307--Transferring Institution Letterhead
Appendix B to Part 307--Institution Letterhead

    Authority: 12 U.S.C. 1818(a)(6); 1818(q); and 1819(a) [Tenth].

    Source: 71 FR 8791, Feb. 21, 2006, unless otherwise noted.



Sec.  307.1  Scope and purpose.

    (a) Scope. This Part applies to all insured depository institutions, 
as defined in section 3(c)(2) of the Federal Deposit Insurance Act (FDI 
Act) (12 U.S.C. 1813(c)(2)).
    (b) Purpose. This Part sets forth the rules governing:
    (1) The time and manner for providing certification to the FDIC 
regarding the assumption of all of the deposit liabilities of an insured 
depository institution by one or more insured depository institutions; 
and
    (2) The notification that an insured depository institution shall 
provide its depositors when a depository institution's insured status is 
being voluntarily terminated without its deposits being assumed by one 
or more insured depository institutions.



Sec.  307.2  Certification of assumption of deposit liabilities.

    (a) When certification is required. Whenever all of the deposit 
liabilities of an insured depository institution are assumed by one or 
more insured depository institutions by merger, consolidation, other 
statutory assumption, or by contract, the transferring insured 
depository institution, or its legal successor, shall provide an 
accurate written certification to the FDIC that its deposit liabilities 
have been assumed. No certification shall be required when deposit 
liabilities are assumed by an operating insured depository institution 
from an insured depository institution in default, as defined in section 
3(x)(1) of the FDI Act (12 U.S.C. 1813(x)(1)), and that has been placed 
under FDIC receivership.
    (b) Certification requirements. The certification required by 
paragraph (a) of this section shall be provided on official letterhead 
of the transferring insured depository institution or its legal 
successor, signed by a duly authorized official, and state the date the 
assumption took effect. The certification shall indicate the date on 
which the transferring institution's authority to engage in banking has 
terminated or will terminate as well as the method of termination (e.g., 
whether by the surrender of its charter, by the cancellation of its 
charter or license to conduct a banking business, or otherwise). The 
certification may follow the form contained in Appendix A of this part. 
In a merger or consolidation where there is only one surviving entity 
which is the legal successor to both the transferring and assuming 
institutions, the surviving entity shall provide any required 
certification.
    (c) Filing. The certification required by paragraph (a) of this 
section shall be provided within 30 calendar days after the assumption 
takes effect, and shall be submitted to the appropriate Regional 
Director of the FDIC's Division of Supervision and Consumer Protection, 
as defined in 12 CFR 303.2(g).

[[Page 53]]

    (d) Evidence of assumption. The receipt by the FDIC of an accurate 
certification for a total assumption as required by paragraphs (a), (b) 
and (c) of this section shall constitute satisfactory evidence of such 
deposit assumption, as required by section 8(q) of the FDI Act (12 
U.S.C. 1818(q)), and the insured status of the transferring institution 
shall terminate on the date of the receipt of the certification. In 
appropriate circumstances, the FDIC, in its sole discretion, may require 
additional information, or may consider other evidence of a deposit 
assumption to constitute satisfactory evidence of such assumption for 
purposes of section 8(q).
    (e) Issuance of an order. The Executive Secretary, upon request from 
the Director of the Division of Supervision and Consumer Protection and 
with the concurrence of the General Counsel, or their respective 
designees, shall issue an order terminating the insured status of the 
transferring insured depository institution as of the date of receipt by 
the FDIC of satisfactory evidence of such assumption, pursuant to 
section 8(q) of the FDI Act and this regulation. Generally, no order 
shall be issued, under this paragraph, and insured status shall be 
cancelled by operation of law:
    (1) If the charter of the transferring institution has been 
cancelled, revoked, rescinded, or otherwise terminated by operation of 
applicable state or federal statutes or regulations, or by action of the 
chartering authority for the transferring institution essentially 
contemporaneously, that is, generally within five business days after 
all deposits have been assumed; or
    (2) If the transferring institution is an insured depository 
institution in default and for which the FDIC has been appointed 
receiver.



Sec.  307.3  Notice to depositors when insured status is 
voluntarily terminated and deposits are not assumed.

    (a) Notice required. An insured depository institution that has 
obtained authority from the FDIC to terminate its insured status under 
sections 8(a), 8(p) or 18(i)(3) of the FDI Act without its deposit 
liabilities being assumed by one or more insured depository institutions 
shall provide to each of its depositors, at the depositor's last known 
address of record on the books of the institution, prior written 
notification of the date the institution's insured status shall 
terminate.
    (b) Prior approval of notice. The insured depository institution 
shall provide the appropriate Regional Director of the FDIC's Division 
of Supervision and Consumer Protection, as defined in 12 CFR 303.2(g), a 
copy of the proposed notice for approval. After being approved, the 
notice shall be provided to depositors by the insured depository 
institution at the time and in the manner specified by the appropriate 
Regional Director.
    (c) Form of notice. The notice to depositors required by paragraph 
(a) of this section shall be provided on the official letterhead of the 
insured depository institution, shall bear the signature of a duly 
authorized officer, and, unless otherwise specified by the appropriate 
Regional Director, may follow the form of the notice contained in 
Appendix B of this part.
    (d) Other requirements possible. The FDIC may require the insured 
depository institution to take such other actions as the FDIC considers 
necessary and appropriate for the protection of depositors.



    Sec. Appendix A to Part 307--Transferring Institution Letterhead

[Date]

[Name and Address of appropriate FDIC Regional Director]

SUBJECT: Certification of Total Assumption of Deposits

    This certification is being provided pursuant to 12 U.S.C. 1818(q) 
and 12 CFR 307.2. On [state the date the deposit assumption took 
effect], [state the name of the depository institution assuming the 
deposit liabilities] assumed all of the deposits of [state the name and 
location of the transferring institution whose deposits were assumed]. 
[If applicable, state the date and method by which the transferring 
institution's authority to engage in banking was or will be terminated.] 
Please contact the undersigned, at [telephone number], if additional 
information is needed.

Sincerely,

By:

[Name and Title of Authorized Representative]

[[Page 54]]



           Sec. Appendix B to Part 307--Institution Letterhead

[Date]

[Name and Address of Depositor]

SUBJECT: Notice to Depositor of Voluntary Termination of Insured Status

    The insured status of [name of insured depository institution], 
under the provisions of the Federal Deposit Insurance Act, will 
terminate as of the close of business on [state the date] (``termination 
date''). Insured deposits in the [name of insured depository 
institution] on the termination date, less all withdrawals from such 
deposits made subsequent to that date, will continue to be insured by 
the Federal Deposit Insurance Corporation, to the extent provided by 
law, until [state the date]. The Federal Deposit Insurance Corporation 
will not insure any new deposits or additions to existing deposits made 
by you after the termination date.
    This Notice is being provided pursuant to 12 CFR 307.3.
    Please contact [name of institution official in charge of depositor 
inquiries], at [name and address of insured depository institution] if 
additional information is needed regarding this Notice or the insured 
status of your account(s).

Sincerely,

By:

[Name and Title of Authorized Representative]



PART 308_RULES OF PRACTICE AND PROCEDURE--Table of Contents



            Subpart A_Uniform Rules of Practice and Procedure

Sec.
308.1 Scope.
308.2 Rules of construction.
308.3 Definitions.
308.4 Authority of Board of Directors.
308.5 Authority of the administrative law judge.
308.6 Appearance and practice in adjudicatory proceedings.
308.7 Good faith certification.
308.8 Conflicts of interest.
308.9 Ex parte communications.
308.10 Filing of papers.
308.11 Service of papers.
308.12 Construction of time limits.
308.13 Change of time limits.
308.14 Witness fees and expenses.
308.15 Opportunity for informal settlement.
308.16 FDIC's right to conduct examination.
308.17 Collateral attacks on adjudicatory proceeding.
308.18 Commencement of proceeding and contents of notice.
308.19 Answer.
308.20 Amended pleadings.
308.21 Failure to appear.
308.22 Consolidation and severance of actions.
308.23 Motions.
308.24 Scope of document discovery.
308.25 Request for document discovery from parties.
308.26 Document subpoenas to nonparties.
308.27 Deposition of witness unavailable for hearing.
308.28 Interlocutory review.
308.29 Summary disposition.
308.30 Partial summary disposition.
308.31 Scheduling and prehearing conferences.
308.32 Prehearing submissions.
308.33 Public hearings.
308.34 Hearing subpoenas.
308.35 Conduct of hearings.
308.36 Evidence.
308.37 Post-hearing filings.
308.38 Recommended decision and filing of record.
308.39 Exceptions to recommended decision.
308.40 Review by Board of Directors.
308.41 Stays pending judicial review.

                  Subpart B_General Rules of Procedure

308.101 Scope of Local Rules.
308.102 Authority of Board of Directors and Executive Secretary.
308.103 Appointment of administrative law judge.
308.104 Filings with the Board of Directors.
308.105 Custodian of the record.
308.106 Written testimony in lieu of oral hearing.
308.107 Document discovery.

  Subpart C_Rules of Practice Before the FDIC and Standards of Conduct

308.108 Sanctions.
308.109 Suspension and disbarment.

  Subpart D_Rules and Procedures Applicable to Proceedings Relating to 
                  Disapproval of Acquisition of Control

308.110 Scope.
308.111 Grounds for disapproval.
308.112 Notice of disapproval.
308.113 Answer to notice of disapproval.
308.114 Burden of proof.

  Subpart E_Rules and Procedures Applicable to Proceedings Relating to 
 Assessment of Civil Penalties for Willful Violations of the Change in 
                            Bank Control Act

308.115 Scope.
308.116 Assessment of penalties.
308.117 Effective date of, and payment under, an order to pay.

[[Page 55]]

308.118 Collection of penalties.

Subpart F_Rules and Procedures Applicable to Proceedings for Involuntary 
                      Termination of Insured Status

308.119 Scope.
308.120 Grounds for termination of insurance.
308.121 Notification to primary regulator.
308.122 Notice of intent to terminate.
308.123 Notice to depositors.
308.124 Involuntary termination of insured status for failure to receive 
          deposits.
308.125 Temporary suspension of deposit insurance.
308.126 Special supervisory associations.

  Subpart G_Rules and Procedures Applicable to Proceedings Relating to 
                         Cease-and-Desist Orders

308.127 Scope.
308.128 Grounds for cease-and-desist orders.
308.129 Notice to state supervisory authority.
308.130 Effective date of order and service on bank.
308.131 Temporary cease-and-desist order.

  Subpart H_Rules and Procedures Applicable to Proceedings Relating to 
  Assessment and Collection of Civil Money Penalties for Violation of 
Cease-and-Desist Orders and of Certain Federal Statutes, Including Call 
                            Report Penalties

308.132 Assessment of penalties.
308.133 Effective date of, and payment under, an order to pay.

    Subpart I_Rules and Procedures for Imposition of Sanctions Upon 
    Municipal Securities Dealers or Persons Associated With Them and 
                  Clearing Agencies or Transfer Agents

308.134 Scope.
308.135 Grounds for imposition of sanctions.
308.136 Notice to and consultation with the Securities and Exchange 
          Commission.
308.137 Effective date of order imposing sanctions.

 Subpart J_Rules and Procedures Relating to Exemption Proceedings Under 
          Section 12(h) of the Securities Exchange Act of 1934

308.138 Scope.
308.139 Application for exemption.
308.140 Newspaper notice.
308.141 Notice of hearing.
308.142 Hearing.
308.143 Decision of Board of Directors.

 Subpart K_Procedures Applicable to Investigations Pursuant to Section 
                            10(c) of the FDIA

308.144 Scope.
308.145 Conduct of investigation.
308.146 Powers of person conducting investigation.
308.147 Investigations confidential.
308.148 Rights of witnesses.
308.149 Service of subpoena.
308.150 Transcripts.

 Subpart L_Procedures and Standards Applicable to a Notice of Change in 
 Senior Executive Officer or Director Pursuant to Section 32 of the FDIA

308.151 Scope.
308.152 Grounds for disapproval of notice.
308.153 Procedures where notice of disapproval issues pursuant to Sec.  
          303.103(c) of this chapter.
308.154 Decision on review.
308.155 Hearing.

Subpart M_Procedures and Standards Applicable to an Application Pursuant 
                        to Section 19 of the FDIA

308.156 Scope.
308.157 Relevant considerations.
308.158 Filing papers and effective date.
308.159 Denial of applications.
308.160 Hearings.

  Subpart N_Rules and Procedures Applicable to Proceedings Relating to 
     Suspension, Removal, and Prohibition Where a Felony Is Charged

308.161 Scope.
308.162 Relevant considerations.
308.163 Notice of suspension or prohibition, and orders of removal or 
          prohibition.
308.164 Hearings.

   Subpart O_Liability of Commonly Controlled Depository Institutions

308.165 Scope.
308.166 Grounds for assessment of liability.
308.167 Notice of assessment of liability.
308.168 Effective date of and payment under an order to pay.

Subpart P_Rules and Procedures Relating to the Recovery of Attorney Fees 
                           and Other Expenses

308.169 Scope.
308.170 Filing, content, and service of documents.
308.171 Responses to application.
308.172 Eligibility of applicants.

[[Page 56]]

308.173 Prevailing party.
308.174 Standards for awards.
308.175 Measure of awards.
308.176 Application for awards.
308.177 Statement of net worth.
308.178 Statement of fees and expenses.
308.179 Settlement negotiations.
308.180 Further proceedings.
308.181 Recommended decision.
308.182 Board of Directors action.
308.183 Payment of awards.

     Subpart Q_Issuance and Review of Orders Pursuant to the Prompt 
    Corrective Action Provisions of the Federal Deposit Insurance Act

308.200 Scope.
308.201 Directives to take prompt corrective action.
308.202 Procedures for reclassifying a bank based on criteria other than 
          capital.
308.203 Order to dismiss a director or senior executive officer.
308.204 Enforcement of directives.

Subpart R_Submission and Review of Safety and Soundness Compliance Plans 
   and Issuance of Orders To Correct Safety and Soundness Deficiencies

308.300 Scope.
308.301 Purpose.
308.302 Determination and notification of failure to meet a safety and 
          soundness standard and request for compliance plan.
308.303 Filing of safety and soundness compliance plan.
308.304 Issuance of orders to correct deficiencies and to take or 
          refrain from taking other actions.
308.305 Enforcement of orders.

Subpart S_Applications for a Stay or Review of Actions of Bank Clearing 
                                Agencies

308.400 Scope.
308.401 Applications for stays of disciplinary sanctions or summary 
          suspensions by a bank clearing agency.
308.402 Applications for review of final disciplinary sanctions, denials 
          of participation, or prohibitions or limitations of access to 
          services imposed by bank clearing agencies.

          Subpart T_Program Fraud Civil Remedies and Procedures

308.500 Basis, purpose, and scope.
308.501 Definitions.
308.502 Basis for civil penalties and assessments.
308.503 Investigations.
308.504 Review by the reviewing official.
308.505 Prerequisites for issuing a complaint.
308.506 Complaint.
308.507 Service of complaint.
308.508 Answer.
308.509 Default upon failure to file an answer.
308.510 Referral of complaint and answer to the ALJ.
308.511 Notice of hearing.
308.512 Parties to the hearing.
308.513 Separation of functions.
308.514 Ex parte contacts.
308.515 Disqualification of reviewing official or ALJ.
308.516 Rights of parties.
308.517 Authority of the ALJ.
308.518 Prehearing conferences.
308.519 Disclosure of documents.
308.520 Discovery.
308.521 Exchange of witness lists, statements, and exhibits.
308.522 Subpoenas for attendance at hearing.
308.523 Protective order.
308.524 Witness fees.
308.525 Form, filing, and service of papers.
308.526 Computation of time.
308.527 Motions.
308.528 Sanctions.
308.529 The hearing and burden of proof.
308.530 Determining the amount of penalties and assessments.
308.531 Location of hearing.
308.532 Witnesses.
308.533 Evidence.
308.534 The record.
308.535 Post-hearing briefs.
308.536 Initial decision.
308.537 Reconsideration of initial decision.
308.538 Appeal to the Board of Directors.
308.539 Stays ordered by the Department of Justice.
308.540 Stay pending appeal.
308.541 Judicial review.
308.542 Collection of civil penalties and assessments.
308.543 Right to administrative offset.
308.544 Deposit in Treasury of United States.
308.545 Compromise or settlement.
308.546 Limitations.

    Subpart U_Removal, Suspension, and Debarment of Accountants From 
                        Performing Audit Services

308.600 Scope.
308.601 Definitions.
308.602 Removal, suspension, or debarment.
308.603 Automatic removal, suspension, and debarment.
308.604 Notice of removal, suspension, or debarment.
308.605 Application for reinstatement.

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 1464, 
1467(d), 1467a, 1468, 1815(e),

[[Page 57]]

1817, 1818, 1819, 1820, 1828, 1829, 1829(b), 1831i, 1831m(g)(4), 1831o, 
1831p-1, 1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 4717, 
5412(b)(2)(C), 5414(b)(3); 15 U.S.C. 78(h) and (i), 78o(c)(4), 78o-4(c), 
78o-5, 78q-1, 78s, 78u, 78u-2, 78u-3, 78w, 6801(b), 6805(b)(1); 28 
U.S.C. 2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a; Pub. L. 104-134, 
sec. 31001(s), 110 Stat. 1321; Pub. L. 109-351, 120 Stat. 1966; Pub. L. 
111-203, 124 Stat. 1376; Pub. L. 114-74, sec. 701, 129 Stat. 584.

    Source: 56 FR 37975, Aug. 9, 1991, unless otherwise noted.



            Subpart A_Uniform Rules of Practice and Procedure



Sec.  308.1  Scope.

    This subpart prescribes 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 Federal Deposit 
Insurance Corporation (``FDIC''), 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 FDIC is the appropriate regulatory 
agency;
    (e) Assessment of civil money penalties by the FDIC against 
institutions, institution-affiliated parties, and certain other persons 
for which it is the appropriate regulatory agency for any violation of:
    (1) Sections 22(h) and 23 of the Federal Reserve Act (FRA), or any 
regulation issued thereunder, and certain unsafe or unsound practices or 
breaches of fiduciary duty, pursuant to 12 U.S.C. 1828(j) or 12 U.S.C. 
1468;
    (2) Section 106(b) of the Bank Holding Company Act Amendments of 
1970 (``BHCA Amendments of 1970''), and certain unsafe or unsound 
practices or breaches of fiduciary duty, pursuant to 12 U.S.C. 
1972(2)(F);
    (3) Any provision of the Change in Bank Control Act of 1978, as 
amended (the ``CBCA''), or any regulation or order issued thereunder, 
and certain unsafe or unsound practices, or breaches of fiduciary duty, 
pursuant to 12 U.S.C. 1817(j)(16);
    (4) Section 7(a)(1) of the FDIA, pursuant to 12 U.S.C. 1817(a)(1);
    (5) Any provision of the International Lending Supervision Act of 
1983 (``ILSA''), or any rule, regulation or order issued thereunder, 
pursuant to 12 U.S.C. 3909;
    (6) Any provision of the International Banking Act of 1978 
(``IBA''), or any rule, regulation or order issued thereunder, pursuant 
to 12 U.S.C. 3108;
    (7) Certain provisions of the Exchange Act, pursuant to section 21B 
of the Exchange Act (15 U.S.C. 78u-2);
    (8) Section 1120 of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (``FIRREA'') (12 U.S.C. 3349), or any order or 
regulation issued thereunder;
    (9) The terms of any final or temporary order issued under section 8 
of the FDIA or of any written agreement executed by the FDIC or the 
former Office of Thrift Supervision (OTS), the terms of any condition 
imposed in writing by the FDIC 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);
    (10) Any provision of law referenced in section 102(f) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or 
regulation issued thereunder; and
    (11) Any provision of law referenced in 31 U.S.C. 5321 or any order 
or regulation issued thereunder;
    (12) Certain provisions of Section 5 of the Home Owners' Loan Act 
(HOLA) or any regulation or order issued thereunder, pursuant to 12 
U.S.C. 1464(d)(1), (5)-(8), (s), and (v);

[[Page 58]]

    (13) Section 9 of the HOLA or any regulation or order issued 
thereunder, pursuant to 12 U.S.C. 1467(d);
    (14) Section 10 of HOLA, pursuant to 12 U.S.C. 1467a(a)(2)(D), (g), 
(i)(2)-(4) and (r); and
    (f) Remedial action under section 102(g) of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4012a(g));
    (g) Proceedings under section 10(k) of the FDIA (12 U.S.C. 1820(k)) 
to impose penalties for violations of the post-employment restrictions 
under that subsection; and
    (h) This subpart also applies to all other adjudications required by 
statute to be determined on the record after opportunity for an agency 
hearing, unless otherwise specifically provided for in the Local Rules.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996; 70 
FR 69639, Nov. 17, 2005; 80 FR 5011, Jan. 30, 2015]



Sec.  308.2  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.  308.3  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) Board of Directors or Board means the Board of Directors of the 
Federal Deposit Insurance Corporation or its designee.
    (d) Decisional employee means any member of the Federal Deposit 
Insurance Corporation'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 Board of Directors or the administrative law judge, 
respectively, in preparing orders, recommended decisions, decisions, and 
other documents under the Uniform Rules.
    (e) Designee of the Board of Directors means officers or officials 
of the Federal Deposit Insurance Corporation acting pursuant to 
authority delegated by the Board of Directors.
    (f) Enforcement Counsel means any individual who files a notice of 
appearance as counsel on behalf of the FDIC in an adjudicatory 
proceeding.
    (g) Executive Secretary means the Executive Secretary of the Federal 
Deposit Insurance Corporation or his or her designee.
    (h) FDIC means the Federal Deposit Insurance Corporation.
    (i) Final order means an order issued by the FDIC 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.
    (j) Institution includes:
    (1) Any bank as that term is defined in section 3(a) of the FDIA (12 
U.S.C. 1813(a));
    (2) Any bank holding company or any subsidiary (other than a bank) 
of a bank holding company as those terms are defined in the BHCA (12 
U.S.C. 1841 et seq.);
    (3) 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 (other than a bank) as those terms are defined in 
section 10(a) of the HOLA (12 U.S.C. 1467a(a));
    (4) Any organization operating under section 25 of the FRA (12 
U.S.C. 601 et seq.);
    (5) Any foreign bank or company to which section 8 of the IBA (12 
U.S.C. 3106), applies or any subsidiary (other than a bank) thereof; and
    (6) Any federal agency as that term is defined in section 1(b) of 
the IBA (12 U.S.C. 3101(5)).
    (l) Investigation means any investigation conducted pursuant to 
section

[[Page 59]]

10(c) of the FDIA or pursuant to section 5(d)(1)(B) of HOLA (12 U.S.C. 
1464(d)(1)(B)).
    (m) Local Rules means those rules promulgated by the FDIC in those 
subparts of this part other than subpart A.
    (n) Office of Financial Institution Adjudication (OFIA) means the 
executive body charged with overseeing the administration of 
administrative enforcement proceedings of the Office of the Comptroller 
of the Currency (OCC), the Board of Governors of the Federal Reserve 
Board (FRB), the FDIC, and the National Credit Union Administration 
(NCUA).
    (o) Party means the FDIC and any person named as a party in any 
notice.
    (p) 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 (j) of this section.
    (q) Respondent means any party other than the FDIC.
    (r) Uniform Rules means those rules in subpart A of this part that 
pertain to the types of formal administrative enforcement actions set 
forth at Sec.  308.1 and as specified in subparts B through P of this 
part.
    (s) 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.

[56 FR 37975, Aug. 9, 1991, as amended at 80 FR 5012, Jan. 30, 2015]



Sec.  308.4  Authority of Board of Directors.

    The Board of Directors 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.  308.5  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.  308.31;
    (7) To consider and rule upon all procedural and other motions 
appropriate in an adjudicatory proceeding, provided that only the Board 
of Directors 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 Board of Directors 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.  308.6  Appearance and practice in adjudicatory proceedings.

    (a) Appearance before the FDIC 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 FDIC 
if such attorney is not

[[Page 60]]

currently suspended or debarred from practice before the FDIC.
    (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 FDIC.
    (3) Notice of appearance. Any individual acting as counsel on behalf 
of a party, including the FDIC, 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 any adjudicatory proceeding may be 
grounds for exclusion or suspension of counsel from the proceeding.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec.  308.7  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.  308.8  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

[[Page 61]]

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.  308.6(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 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec.  308.9  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 FDIC (including such person's 
counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Board of Directors, 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 issued by the FDIC until the date that the Board of Directors issues 
its final decision pursuant to Sec.  308.40(c):
    (1) No interested person outside the FDIC shall make or knowingly 
cause to be made an ex parte communication to any member of the Board of 
Directors, the administrative law judge, or a decisional employee; and
    (2) No member of the Board of Directors, no administrative law 
judge, or decisional employee shall make or knowingly cause to be made 
to any interested person outside the FDIC any ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by the administrative law judge, any 
member of the Board of Directors 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 that they believe to be appropriate under the 
circumstances. The administrative law judge or the Board of Directors 
shall then determine whether any action should be taken concerning the 
ex parte communication in accordance with paragraph (d) of this section.
    (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 Board of Directors 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 FDIC 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.  308.40 except as witness or counsel in public 
proceedings.

[56 FR 37975, Aug. 9, 1991, as amended at 60 FR 24762, May 10, 1995]

[[Page 62]]



Sec.  308.10  Filing of papers.

    (a) Filing. Any papers required to be filed, excluding documents 
produced in response to a discovery request pursuant to Sec. Sec.  
308.25 and 308.26, shall be filed with the OFIA, except as otherwise 
provided.
    (b) Manner of filing. Unless otherwise specified by the Board of 
Directors 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 Board of Directors or the 
administrative law judge. All papers filed by electronic media shall 
also concurrently be filed in accordance with paragraph (c) of this 
section.
    (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.  308.7.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the FDIC 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 Board of 
Directors, or the administrative law judge, an original and one copy of 
all documents and papers shall be filed, except that only one copy of 
transcripts of testimony and exhibits shall be filed.



Sec.  308.11  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.  308.10(c).
    (c) By the Board of Directors. (1) All papers required to be served 
by the Board of Directors or the administrative law judge upon a party 
who has appeared in the proceeding in accordance with Sec.  308.6, 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.  308.6, the Board of Directors 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 party'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

[[Page 63]]

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) In such other manner as is 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 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec.  308.12  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 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;
    (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 Board of Directors 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 Board of Directors or the administrative law judge in the case of 
filing, or by agreement among the parties in the case of service.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec.  308.13  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 by any notice or order issued in the proceedings. After 
the referral of the case to the Board of Directors pursuant to Sec.  
308.38, the Board of Directors may grant extensions of the time limits 
for good cause shown. Extensions may be

[[Page 64]]

granted at the motion of a party or of the Board of Directors after 
notice and opportunity to respond is afforded all non-moving parties, or 
on the administrative law judge's own motion.



Sec.  308.14  Witness fees and expenses.

    Witnesses subpoenaed for testimony or depositions 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 FDIC is the 
party requesting the subpoena. The FDIC shall not be required to pay any 
fees to, or expenses of, any witness not subpoenaed by the FDIC.



Sec.  308.15  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 FDIC 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.  308.16  FDIC's right to conduct examination.

    Nothing contained in this subpart limits in any manner the right of 
the FDIC to conduct any examination, inspection, or visitation of any 
institution or institution-affiliated party, or the right of the FDIC to 
conduct or continue any form of investigation authorized by law.



Sec.  308.17  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.  308.18  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 FDIC.
    (ii) The notice must be served by the Executive Secretary 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 
FDIC.
    (b) Contents of notice. The notice must set forth:
    (1) The legal authority for the proceeding and for the FDIC's 
jurisdiction over the proceeding;
    (2) A statement of the matters of fact or law showing that the FDIC 
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) That the answer and/or request for a hearing shall be filed with 
OFIA.



Sec.  308.19  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

[[Page 65]]

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 Board of 
Directors a recommended decision containing the findings and the relief 
sought in the notice. Any final order issued by the Board of Directors 
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 required by law 
within the time provided, the notice of assessment constitutes a final 
and unappealable order.



Sec.  308.20  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 Board of Directors 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 20348, May 6, 1996]



Sec.  308.21  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 Board of Directors a recommended decision containing the findings 
and the relief sought in the notice.



Sec.  308.22  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.

[[Page 66]]

    (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.  308.23  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 judge, except that following the filing of the recommended decision, 
motions must be filed with the Executive Secretary for disposition by 
the Board of Directors.
    (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 
Executive Secretary, 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 
Sec. Sec.  308.29 and 308.30.



Sec.  308.24  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 subpart I 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

[[Page 67]]

in advance for the copying, in accordance with Sec.  308.25.
    (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. 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 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec.  308.25  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, 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 by 12 CFR part 309 implementing 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.  308.23 
to strike 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.  308.23 are waived.
    (2) The party who served the request that is the subject of a motion 
to strike 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

[[Page 68]]

accordance with the provisions of Sec.  308.23 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.
    (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 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996; 80 
FR 5011, Jan. 30, 2015]



Sec.  308.26  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.  308.24(d). 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.  308.25(d), and 
during the same time

[[Page 69]]

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.  308.27  Deposition of witness unavailable for hearing.

    (a) General rules. (1) If a witness will not be available for the 
hearing, a party desiring to preserve that witness' testimony for the 
record 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:
    (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

[[Page 70]]

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)(3) 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 comply with, a subpoena issued under this section.



Sec.  308.28  Interlocutory review.

    (a) General rule. The Board of Directors may review a ruling of the 
administrative law judge prior to the certification of the record to the 
Board of Directors only in accordance with the procedures set forth in 
this section and Sec.  308.23.
    (b) Scope of review. The Board of Directors may exercise 
interlocutory review of a ruling of, the administrative law judge if the 
Board of Directors 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.  308.23. Any party may 
file a response to a request for interlocutory review in accordance with 
Sec.  308.23(d). Upon the expiration of the time for filing all 
responses, the administrative law judge shall refer the matter to the 
Board of Directors for final disposition.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Board of Directors 
under this section suspends or stays the proceeding unless otherwise 
ordered by the administrative law judge or the Board of Directors.



Sec.  308.29  Summary disposition.

    (a) In general. The administrative law judge shall recommend that 
the Board of Directors 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) Filing 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.

[[Page 71]]

    (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 a 
recommended decision to that effect to the Board of Directors. 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.  308.30  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.  308.31  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

[[Page 72]]

proceeding. A party may obtain a copy of the transcript at his or her 
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.



Sec.  308.32  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.  308.33  Public hearings.

    (a) General rule. All hearings shall be open to the public, unless 
the FDIC, in its discretion, determines that holding an open hearing 
would be 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 Executive 
Secretary 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 Executive 
Secretary. The form of, and procedure for, these requests and replies 
are governed by Sec.  308.23. 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 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec.  308.34  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

[[Page 73]]

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 Sec.  
308.26(c).

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec.  308.35  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 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 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec.  308.36  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 
Administrative Procedure Act 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 be 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

[[Page 74]]

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 Board of Directors 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 an appropriate Federal financial 
institution regulatory agency 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 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 Board of Directors.
    (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.  308.37  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

[[Page 75]]

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 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec.  308.38  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.  
308.37(b), the administrative law judge shall file with and certify to 
the Executive Secretary, 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.
    (b) Filing of index. At the same time the administrative law judge 
files with and certifies to the Executive Secretary for final 
determination the record of the proceeding, the administrative law judge 
shall furnish to the Executive Secretary 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 20350, May 6, 1996]



Sec.  308.39  Exceptions to recommended decision.

    (a) Filing exceptions. Within 30 days after service of the 
recommended decision, findings, conclusions, and proposed order under 
Sec.  308.38, a party may file with the Executive Secretary 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 Board of Directors 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,

[[Page 76]]

and the legal authority relied upon to support each exception.



Sec.  308.40  Review by Board of Directors.

    (a) Notice of submission to Board of Directors. When the Executive 
Secretary determines that the record in the proceeding is complete, the 
Executive Secretary shall serve notice upon the parties that the 
proceeding has been submitted to the Board of Directors for final 
decision.
    (b) Oral argument before the Board of Directors. Upon the initiative 
of the Board of Directors or on the written request of any party filed 
with the Executive Secretary within the time for filing exceptions, the 
Board of Directors 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 Board of Directors' final decision. Oral argument before the Board 
of Directors must be on the record.
    (c) Final decision. (1) Decisional employees may advise and assist 
the Board of Directors in the consideration and disposition of the case. 
The final decision of the Board of Directors will be based upon review 
of the entire record of the proceeding, except that the Board of 
Directors 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 Board of Directors 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 later, 
unless the Board of Directors 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 Board of 
Directors shall be served upon each party to the proceeding, upon other 
persons required by statute, and, if directed by the Board of Directors 
or required by statute, upon any appropriate state or Federal 
supervisory authority.



Sec.  308.41  Stays pending judicial review.

    The commencement of proceedings for judicial review of a final 
decision and order of the FDIC may not, unless specifically ordered by 
the Board of Directors or a reviewing court, operate as a stay of any 
order issued by the FDIC. The Board of Directors 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 
that order.



                  Subpart B_General Rules of Procedure



Sec.  308.101  Scope of Local Rules.

    (a) Subparts B and C of the Local Rules prescribe rules of practice 
and procedure to be followed in the administrative enforcement 
proceedings initiated by the FDIC as set forth in Sec.  308.1 of the 
Uniform Rules.
    (b) Except as otherwise specifically provided, the Uniform Rules and 
subpart B of the Local Rules shall not apply to subparts D through T of 
the Local Rules.
    (c) Subpart C of the Local Rules shall apply to any administrative 
proceeding initiated by the FDIC.
    (d) Subparts A, B, and C of this part prescribe the rules of 
practice and procedure to applicable to adjudicatory proceedings as to 
which hearings on the record are provided for by the assessment of civil 
money penalties by the FDIC against institutions, institution-affiliated 
parties, and certain other persons for which it is the appropriate 
regulatory agency for any violation of section 15(c)(4) of the Exchange 
Act (15 U.S.C. 78o(c)(4)).

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999; 66 
FR 9189, Feb. 7, 2001; 80 FR 5012, Jan. 30, 2015]



Sec.  308.102  Authority of Board of Directors and Executive Secretary.

    (a) The Board of Directors. (1) The Board of Directors may, at any 
time during the pendency of a proceeding, perform, direct the 
performance of, or waive performance of, any act which

[[Page 77]]

could be done or ordered by the Executive Secretary.
    (2) Nothing contained in this part 308 shall be construed to limit 
the power of the Board of Directors granted by applicable statutes or 
regulations.
    (b) The Executive Secretary. (1) When no administrative law judge 
has jurisdiction over a proceeding, the Executive Secretary may act in 
place of, and with the same authority as, an administrative law judge, 
except that the Executive Secretary may not hear a case on the merits or 
make a recommended decision on the merits to the Board of Directors.
    (2) Pursuant to authority delegated by the Board of Directors, the 
Executive Secretary and Assistant Executive Secretary, upon the advice 
and recommendation of the Deputy General Counsel for Litigation or, in 
his absence, the Assistant General Counsel, Trial Litigation Section, 
may issue rulings in proceedings under sections 7(j), 8, 18(j), 19, 32 
and 38 of the FDIA (12 U.S.C. 1817(j), 1818, 1828(j), 1829, 1831i and 
1831o concerning:
    (i) Denials of requests for private hearing;
    (ii) Interlocutory appeals;
    (iii) Stays pending judicial review;
    (iv) Reopenings of the record and/or remands of the record to the 
ALJ;
    (v) Supplementation of the evidence in the record;
    (vi) All remands from the courts of appeals not involving 
substantive issues;
    (vii) Extensions of stays of orders terminating deposit insurance; 
and
    (viii) All matters, including final decisions, in proceedings under 
section 8(g) of the FDIA (12 U.S.C. 1818(g)).

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999; 67 
FR 71071, Nov. 29, 2002]



Sec.  308.103  Appointment of administrative law judge.

    (a) Appointment. Unless otherwise directed by the Board of Directors 
or as otherwise provided in the Local Rules, a hearing within the scope 
of this part 308 shall be held before an administrative law judge of the 
Office of Financial Institution Adjudication (``OFIA'').
    (b) Procedures. (1) The Executive Secretary shall promptly after 
issuance of the notice refer the matter to the OFIA which shall secure 
the appointment of an administrative law judge to hear the proceeding.
    (2) OFIA shall advise the parties, in writing, that an 
administrative law judge has been appointed.



Sec.  308.104  Filings with the Board of Directors.

    (a) General rule. All materials required to be filed with or 
referred to the Board of Directors in any proceedings under this part 
308 shall be filed with the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
    (b) Scope. Filings to be made with the Executive Secretary include 
pleadings and motions filed during the proceeding; the record filed by 
the administrative law judge after the issuance of a recommended 
decision; the recommended decision filed by the administrative law judge 
following a motion for summary disposition; referrals by the 
administrative law judge of motions for interlocutory review; motions 
and responses to motions filed by the parties after the record has been 
certified to the Board of Directors; exceptions and requests for oral 
argument; and any other papers required to be filed with the Board of 
Directors under this part 308.



Sec.  308.105  Custodian of the record.

    The Executive Secretary is the official custodian of the record when 
no administrative law judge has jurisdiction over the proceeding. As the 
official custodian, the Executive Secretary shall maintain the official 
record of all papers filed in each proceeding.



Sec.  308.106  Written testimony in lieu of oral hearing.

    (a) General rule. (1) At any time more than fifteen days before the 
hearing is to commence, on the motion of any party or on his or her own 
motion, the administrative law judge may order that the parties present 
part or all of their case-in-chief and, if ordered, their rebuttal, in 
the form of exhibits and written statements sworn to by the witness 
offering such statements as

[[Page 78]]

evidence, provided that if any party objects, the administrative law 
judge shall not require such a format if that format would violate the 
objecting party's right under the Administrative Procedure Act, or other 
applicable law, or would otherwise unfairly prejudice that party.
    (2) Any such order shall provide that each party shall, upon 
request, have the same right of oral cross-examination (or redirect 
examination) as would exist had the witness testified orally rather than 
through a written statement. Such order shall also provide that any 
party has a right to call any hostile witness or adverse party to 
testify orally.
    (b) Scheduling of submission of written testimony. (1) If written 
direct testimony and exhibits are ordered under paragraph (a) of this 
section, the administrative law judge shall require that it be filed 
within the time period for commencement of the hearing, and the hearing 
shall be deemed to have commenced on the day such testimony is due.
    (2) Absent good cause shown, written rebuttal, if any, shall be 
submitted and the oral portion of the hearing begun within 30 days of 
the date set for filing written direct testimony.
    (3) The administrative law judge shall direct, unless good cause 
requires otherwise, that--
    (i) All parties shall simultaneously file any exhibits and written 
direct testimony required under paragraph (b)(1) of this section; and
    (ii) All parties shall simultaneously file any exhibits and written 
rebuttal required under paragraph (b)(2) of this section.
    (c) Failure to comply with order to file written testimony. (1) The 
failure of any party to comply with an order to file written testimony 
or exhibits at the time and in the manner required under this section 
shall be deemed a waiver of that party's right to present any evidence, 
except testimony of a previously identified adverse party or hostile 
witness. Failure to file written testimony or exhibits is, however, not 
a waiver of that party's right of cross-examination or a waiver of the 
right to present rebuttal evidence that was not required to be submitted 
in written form.
    (2) Late filings of papers under this section may be allowed and 
accepted only upon good cause shown.



Sec.  308.107  Document discovery.

    (a) Parties to proceedings set forth at Sec.  308.1 of the Uniform 
Rules and as provided in the Local Rules may obtain discovery only 
through the production of documents. No other form of discovery shall be 
allowed.
    (b) Any questioning at a deposition of a person producing documents 
pursuant to a document subpoena shall be strictly limited to the 
identification of documents produced by that person and a reasonable 
examination to determine whether the subpoenaed person made an adequate 
search for, and has produced, all subpoenaed documents.

[56 FR 37975, Aug. 9, 1991, as amended at 80 FR 5012, Jan. 30, 2015]



  Subpart C_Rules of Practice Before the FDIC and Standards of Conduct



Sec.  308.108  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed when any 
counsel or party has acted, or failed to act, in a manner required by 
applicable statute, regulations, or order, and that act or failure to 
act:
    (1) Constitutes contemptuous conduct;
    (2) Has in a material way injured or prejudiced some other party in 
terms of substantive injury, incurring additional expenses including 
attorney's fees, prejudicial delay, or otherwise;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has unduly delayed the proceeding.
    (b) Sanctions. Sanctions which may be imposed include any one or 
more of the following:
    (1) Issuing an order against the party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or

[[Page 79]]

contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning a 
late filing on any terms that are just; and
    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Limits on dismissal as a sanction. No recommendation of 
dismissal shall be made by the administrative law judge or granted by 
the Board of Directors based on the failure to hold a hearing within the 
time period called for in this part 308, or on the failure of an 
administrative law judge to render a recommended decision within the 
time period called for in this part 308, absent a finding:
    (1) That the delay resulted solely or principally from the conduct 
of the FDIC enforcement counsel;
    (2) That the conduct of the FDIC enforcement counsel is unexcused;
    (3) That the moving respondent took all reasonable steps to oppose 
and prevent the subject delay;
    (4) That the moving respondent has been materially prejudiced or 
injured; and
    (5) That no lesser or different sanction is adequate.
    (d) Procedure for imposition of sanctions. (1) The administrative 
law judge, upon the request of any party, or on his or her own motion, 
may impose sanctions in accordance with this section, provided that the 
administrative law judge may only recommend to the Board of Directors 
the sanction of entering a final order determining the case on the 
merits.
    (2) No sanction, other than refusing to accept late papers, 
authorized by this section shall be imposed without prior notice to all 
parties and an opportunity for any counsel or party against whom 
sanctions would be imposed to be heard. Such opportunity to be heard may 
be on such notice, and the response may be in such form, as the 
administrative law judge directs. The opportunity to be heard may be 
limited to an opportunity to respond orally immediately after the act or 
inaction covered by this section is noted by the administrative law 
judge.
    (3) Requests for the imposition of sanctions by any party, and the 
imposition of sanctions, shall be treated for interlocutory review 
purposes in the same manner as any other ruling by the administrative 
law judge.
    (4) Section not exclusive. Nothing in this section shall be read as 
precluding the administrative law judge or the Board of Directors from 
taking any other action, or imposing any restriction or sanction, 
authorized by applicable statute or regulation.



Sec.  308.109  Suspension and disbarment.

    (a) Discretionary suspension and disbarment. (1) The Board of 
Directors may suspend or revoke the privilege of any counsel to appear 
or practice before the FDIC if, after notice of and opportunity for 
hearing in the matter, that counsel is found by the Board of Directors:
    (i) Not to possess the requisite qualifications to represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have engaged in, or aided and abetted, a material and 
knowing violation of the FDIA; or
    (iv) To have engaged in contemptuous conduct before the FDIC. 
Suspension or revocation on the grounds set forth in paragraphs (a)(1) 
(ii), (iii), and (iv) of this section shall only be ordered upon a 
further finding that the counsel's conduct or character was sufficiently 
egregious as to justify suspension or revocation.
    (2) Unless otherwise ordered by the Board of Directors, an 
application for reinstatement by a person suspended or disbarred under 
paragraph (a)(1) of this section may be made in writing at any time more 
than three years after the effective date of the suspension or 
disbarment and, thereafter, at any time more than one year after the 
person's most recent application for reinstatement. The suspension or 
disbarment shall continue until the applicant has been reinstated by the 
Board of Directors for good cause shown or until, in the case of a 
suspension, the suspension period has expired. An applicant for 
reinstatement under this provision

[[Page 80]]

may, in the Board of Directors' sole discretion, be afforded a hearing.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has 
been and remains suspended or disbarred by a court of the United States 
or of any state, territory, district, commonwealth, or possession; or 
any person who has been and remains suspended or barred from practice 
before the OCC, Board of Governors, the OTS, the NCUA, the Securities 
and Exchange Commission, or the Commodity Futures Trading Commission; or 
any person who has been, within the last ten years, convicted of a 
felony, or of a misdemeanor involving moral turpitude, shall be 
suspended automatically from appearing or practicing before the FDIC. A 
disbarment, suspension, or conviction within the meaning of this 
paragraph (b) shall be deemed to have occurred when the disbarring, 
suspending, or convicting agency or tribunal enters its judgment or 
order, regardless of whether an appeal is pending or could be taken, and 
includes a judgment or an order on a plea of nolo contendere or on 
consent, regardless of whether a violation is admitted in the consent.
    (2) Any person appearing or practicing before the FDIC who is the 
subject of an order, judgment, decree, or finding of the types set forth 
in paragraph (b)(1) of this section shall promptly file with the 
Executive Secretary a copy thereof, together with any related opinion or 
statement of the agency or tribunal involved. Any person who fails to so 
file a copy of the order, judgment, decree, or finding within 30 days 
after the entry of the order, judgment, decree, or finding or the date 
such person initiates practice before the FDIC, for that reason alone 
may be disqualified from practicing before the FDIC until such time as 
the appropriate filing shall be made. Failure to file any such paper 
shall not impair the operation of any other provision of this section.
    (3) A suspension or disbarment under paragraph (b)(1) of this 
section from practice before the FDIC shall continue until the applicant 
has been reinstated by the Board of Directors for good cause shown, 
provided that any person suspended or disbarred under paragraph (b)(1) 
of this section shall be automatically reinstated by the Executive 
Secretary, upon appropriate application, if all the grounds for 
suspension or disbarment under paragraph (b)(1) of this section are 
subsequently removed by a reversal of the conviction (or the passage of 
time since the conviction) or termination of the underlying suspension 
or disbarment. An application for reinstatement on any other grounds by 
any person suspended or disbarred under paragraph (b)(1) of this section 
may be filed no sooner than one year after the suspension or disbarment, 
and thereafter, a new request for reinstatement may be made no sooner 
than one year after the counsel's most recent reinstatement application. 
The application must comply with the requirements of Sec.  303.3 of this 
chapter. An applicant for reinstatement under this provision may, in the 
Board of Directors' sole discretion, be afforded a hearing.
    (c) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under the Uniform Rules, provided that in proceedings to 
terminate an existing FDIC suspension or disbarment order, the person 
seeking the termination of the order shall bear the burden of going 
forward with an application and with the burden of proving the grounds 
supporting the application, and that the Board of Directors may, in its 
sole discretion, direct that any proceeding to terminate an existing 
suspension or disbarment by the FDIC be limited to written submissions.
    (d) Summary suspension for contemptuous conduct. A finding by the 
administrative law judge of contemptuous conduct during the course of 
any proceeding shall be grounds for summary suspension by the 
administrative law judge of a counsel or other representative from any 
further participation in that proceeding for the duration of that 
proceeding.
    (e) Practice defined. Unless the Board of Directors orders 
otherwise, for the purposes of this section, practicing before the FDIC 
includes, but is not limited to, transacting any business with the FDIC 
as counsel or agent for any other person and the preparation of

[[Page 81]]

any statement, opinion, or other paper by a counsel, which statement, 
opinion, or paper is filed with the FDIC in any registration statement, 
notification, application, report, or other document, with the consent 
of such counsel.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999; 68 
FR 48270, Aug. 13, 2003; 80 FR 5012, Jan. 30, 2015]



  Subpart D_Rules and Procedures Applicable to Proceedings Relating to 
                  Disapproval of Acquisition of Control



Sec.  308.110  Scope.

    Except as specifically indicated in this subpart, the rules and 
procedures in this subpart, subpart B of the Local Rules, and the 
Uniform Rules shall apply to proceedings in connection with the 
disapproval by the Board of Directors or its designee of a proposed 
acquisition of control of an insured nonmember bank.



Sec.  308.111  Grounds for disapproval.

    The following are grounds for disapproval of a proposed acquisition 
of control of an insured nonmember bank:
    (a) The proposed acquisition of control would result in a monopoly 
or would be in furtherance of any combination or conspiracy to 
monopolize or attempt to monopolize the banking business in any part of 
the United States;
    (b) The effect of the proposed acquisition of control in any section 
of the United States may be to substantially lessen competition or to 
tend to create a monopoly or 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;
    (c) Either the financial condition of any acquiring person or the 
future prospects of the institution might jeopardize the financial 
stability of the bank or prejudice the interest of the depositors of the 
bank.
    (d) The competence, experience, or integrity of any acquiring person 
or of any of the proposed management personnel indicates that it would 
not be in the interest of the depositors of the bank, or in the interest 
of the public, to permit such person to control the bank;
    (e) Any acquiring person neglects, fails, or refuses to furnish to 
the FDIC all the information required by the FDIC; or
    (f) The FDIC determines that the proposed acquisition would result 
in an adverse effect on the Deposit Insurance Fund.

[56 FR 37975, Aug. 9, 1991, as amended at 71 FR 20526, Apr. 21, 2006; 73 
FR 2145, Jan. 14, 2008]



Sec.  308.112  Notice of disapproval.

    (a) General rule. (1) Within three days of the decision by the Board 
of Directors or its designee to disapprove a proposed acquisition of 
control of an insured nonmember bank, a written notice of disapproval 
shall be mailed by first class mail to, or otherwise served upon, the 
party seeking acquire control.
    (2) The notice of disapproval shall:
    (i) Contain a statement of the basis for the disapproval; and
    (ii) Indicate that a hearing may be requested by filing a written 
request with the Executive Secretary within ten days after service of 
the notice of disapproval; and if a hearing is requested, that an answer 
to the notice of disapproval, as required by Sec.  308.113, must be 
filed within 20 days after service of the notice of disapproval.
    (b) Waiver of hearing. Failure to request a hearing pursuant to this 
section shall constitute a waiver of the opportunity for a hearing and 
the notice of disapproval shall constitute a final and unappealable 
order.
    (c) Section 308.18(b) of the Uniform Rules shall not apply to the 
content of the Notice of Disapproval.



Sec.  308.113  Answer to notice of disapproval.

    (a) Contents. (1) An answer to the notice of disapproval of a 
proposed acquisition of control shall be filed within 20 days after 
service of the notice of disapproval and shall specifically deny those 
portions of the notice of disapproval which are disputed. Those portions 
of the notice of disapproval

[[Page 82]]

which are not specifically denied are deemed admitted by the applicant.
    (2) Any hearing under this subpart shall be limited to those parts 
of the notice of disapproval that are specifically denied.
    (b) 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 
of disapproval. 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 a recommended decision containing 
the findings and relief sought in the notice. A final order issued by 
the Board of Directors based upon a respondent's failure to answer is 
deemed to be an order issued upon consent.



Sec.  308.114  Burden of proof.

    The ultimate burden of proof shall be upon the person proposing to 
acquire a depository institution. The burden of going forward with a 
prima facie case shall be upon the FDIC.



  Subpart E_Rules and Procedures Applicable to Proceedings Relating to 
 Assessment of Civil Penalties for Willful Violations of the Change in 
                            Bank Control Act



Sec.  308.115  Scope.

    The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings to assess civil 
penalties against any person for willful violation of the Change in Bank 
Control Act of 1978 (12 U.S.C. 1817(j)), or any regulation or order 
issued pursuant thereto, in connection with the affairs of an insured 
nonmember bank.



Sec.  308.116  Assessment of penalties.

    (a) In general. The civil money penalty shall be assessed upon the 
service of a Notice of Assessment which shall become final and 
unappealable unless the respondent requests a hearing pursuant to Sec.  
308.19(c)(2).
    (b) Amount. (1) Any person who violates any provision of the Change 
in Bank Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto, shall forfeit and pay a civil money penalty of not 
more than $5,000 for each day the violation continues.
    (2) Any person who violates any provision of the Change in Bank 
Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto; or recklessly engages in any unsafe or unsound 
practice in conducting the affairs of a depository institution; or 
breaches any fiduciary duty; which violation, practice or breach is part 
of a pattern of misconduct; or causes or is likely to cause more than a 
minimal loss to such institution; or results in pecuniary gain or other 
benefit to such person, shall forfeit and pay a civil money penalty of 
not more than $25,000 for each day such violation, practice or breach 
continues.
    (3) Any person who knowingly violates any provision of the Change in 
Bank Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto; or engages in any unsafe or unsound practice in 
conducting the affairs of a depository institution; or breaches any 
fiduciary duty; and knowingly or recklessly causes a substantial loss to 
such institution or a substantial pecuniary gain or other benefit to 
such institution or a substantial pecuniary gain or other benefit to 
such person by reason of such violation, practice or breach, shall 
forfeit and pay a civil money penalty not to exceed:
    (i) In the case of a person other than a depository institution--
$1,000,000 per day for each day the violation, practice or breach 
continues; or
    (ii) In the case of a depository institution--an amount not to 
exceed the lesser of $1,000,000 or one percent of the total assets of 
such institution for each day the violation, practice or breach 
continues.
    (4) Adjustment of civil money penalties by the rate of inflation 
pursuant to the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015. After January 15, 2018, for violations that 
occurred on or after November 2, 2015:
    (i) Any person who has engaged in a violation as set forth in 
paragraph

[[Page 83]]

(b)(1) of this section shall forfeit and pay a civil money penalty of 
not more than $9,819 for each day the violation continued.
    (ii) Any person who has engaged in a violation, unsafe or unsound 
practice or breach of fiduciary duty, as set forth in paragraph (b)(2) 
of this section, shall forfeit and pay a civil money penalty of not more 
than $49,096 for each day such violation, practice or breach continued.
    (iii) Any person who has knowingly engaged in a violation, unsafe or 
unsound practice or breach of fiduciary duty, as set forth in paragraph 
(b)(3) of this section, shall forfeit and pay a civil money penalty not 
to exceed:
    (A) In the case of a person other than a depository institution--
$1,963,870 per day for each day the violation, practice or breach 
continued; or
    (B) In the case of a depository institution--an amount not to exceed 
the lesser of $1,963,870 or one percent of the total assets of such 
institution for each day the violation, practice or breach continued.
    (c) Mitigating factors. In assessing the amount of the penalty, the 
Board of Directors or its designee shall consider the gravity of the 
violation, the history of previous violations, respondent's financial 
resources, good faith, and any other matters as justice may require.
    (d) 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 
of disapproval. 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 a recommended decision containing 
the findings and relief sought in the notice. A final order issued by 
the Board of Directors based upon a respondent's failure to answer is 
deemed to be an order issued upon consent.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 57990, Nov. 12, 1996; 65 
FR 64887, Oct. 31, 2000; 69 FR 61305, Oct. 18, 2004; 73 FR 73157, Dec. 
2, 2008; 77 FR 75477, Dec. 17, 2012; 81 FR 42239, June 29, 2016; 81 FR 
95416, Dec. 28, 2016; 83 FR 1522, Jan. 12, 2018]

    Effective Date Note: At 83 FR 61114, Nov. 28, 2018, Sec.  308.116 
was amended by revising paragraph (b), effective Jan. 15, 2019. For the 
convenience of the user, the revised text is set forth as follows:



Sec.  308.116  Assessment of penalties.

                                * * * * *

    (b) Maximum penalty amounts. Under 12 U.S.C. 1817(j)(16), a civil 
money penalty may be assessed for violations of change in control of 
insured depository institution provisions in the maximum amounts 
calculated and published in accordance with Sec.  308.132(d).

                                * * * * *



Sec.  308.117  Effective date of, and payment under, an order to pay.

    If the respondent both requests a hearing and serves an answer, 
civil penalties assessed pursuant to this subpart are due and payable 60 
days after an order to pay, issued after the hearing or upon default, is 
served upon the respondent, unless the order provides for a different 
period of payment. Civil penalties assessed pursuant to an order to pay 
issued upon consent are due and payable within the time specified 
therein.



Sec.  308.118  Collection of penalties.

    The FDIC may collect any civil penalty assessed pursuant to this 
subpart by agreement with the respondent, or the FDIC may bring an 
action against the respondent to recover the penalty amount in the 
appropriate United States district court. All penalties collected under 
this section shall be paid over to the Treasury of the United States.

[[Page 84]]



Subpart F_Rules and Procedures Applicable to Proceedings for Involuntary 
                      Termination of Insured Status



Sec.  308.119  Scope.

    (a) Involuntary termination of insurance pursuant to section 8(a) of 
the FDIA. The rules and procedures in this subpart, subpart B of the 
Local Rules and the Uniform Rules shall apply to proceedings in 
connection with the involuntary termination of the insured status of an 
insured bank depository institution or an insured branch of a foreign 
bank pursuant to section 8(a) of the FDIA (12 U.S.C. 1818(a)), except 
that the Uniform Rules and subpart B of the Local Rules shall not apply 
to the temporary suspension of insurance pursuant to section 8(a)(8) of 
the FDIA (12 U.S.C. 1818(a)(8)).
    (b) Involuntary termination of insurance pursuant to section 8(p) of 
the Act. The rules and procedures in Sec.  308.124 of this subpart F 
shall apply to proceedings in connection with the involuntary 
termination of the insured status of an insured depository institution 
or an insured branch of a foreign bank pursuant to section 8(p) of the 
FDIA (12 U.S.C. 1818(p)). The Uniform Rules shall not apply to 
proceedings under section 8(p) of the FDIA.



Sec.  308.120  Grounds for termination of insurance.

    (a) General rule. The following are grounds for involuntary 
termination of insurance pursuant to section 8(a) of the FDIA:
    (1) An insured depository institution or its directors or trustees 
have engaged or are engaging in unsafe or unsound practices in 
conducting the business of such depository institution;
    (2) An insured depository institution is in an unsafe or unsound 
condition such that it should not continue operations as an insured 
depository institution; or
    (3) An insured depository institution or its directors or trustees 
have violated an applicable law, rule, regulation, order, condition 
imposed in writing by the FDIC in connection with the granting of any 
application or other request by the insured depository institution or 
have violated any written agreement entered into between the insured 
depository institution and the FDIC.
    (b) Extraterritorial acts of foreign banks. An act or practice 
committed outside the United States by a foreign bank or its directors 
or trustees which would otherwise be a ground for termination of insured 
status under this section shall be a ground for termination if the Board 
of Directors finds:
    (1) The act or practice has been, is, or is likely to be a cause of, 
or carried on in connection with or in furtherance of, an act or 
practice committed within any state, territory, or possession of the 
United States or the District of Columbia that, in and of itself, would 
be an appropriate basis for action by the FDIC; or
    (2) The act or practice committed outside the United States, if 
proven, would adversely affect the insurance risk of the FDIC.
    (c) Failure of foreign bank to secure removal of personnel. The 
failure of a foreign bank to comply with any order of removal or 
prohibition issued by the Board of Directors or the failure of any 
person associated with a foreign bank to appear promptly as a party to a 
proceeding pursuant to section 8(e) of the FDIA (12 U.S.C. 1818(e)), 
shall be a ground for termination of insurance of deposits in any branch 
of the bank.



Sec.  308.121  Notification to primary regulator.

    (a) Service of notification. (1) Upon a determination by the Board 
of Directors or its designee pursuant to Sec.  308.120 of an unsafe or 
unsound practice or condition or of a violation, a notification shall be 
served upon the appropriate Federal banking agency of the insured 
depository institution, or the State banking supervisor if the FDIC is 
the appropriate Federal banking agency.


The notification shall be served not less than 30 days before the Notice 
of Intent to Terminate Insured Status required by section 8(a)(2)(B) of 
the FDIA (12 U.S.C. 1818(a)(2)(B)), and Sec.  308.122, except that this 
period for notification may be reduced or eliminated with the agreement 
of the appropriate Federal banking agency.

[[Page 85]]

    (2) Appropriate Federal banking agency shall have the meaning given 
that term in section 3(q) of the FDIA (12 U.S.C. 1813(q)), and shall be 
the OCC in the case of a national bank, a District bank or an insured 
Federal branch of a foreign bank; the FDIC in the case of an insured 
nonmember bank, including an insured State branch of a foreign bank; the 
Board of Governors in the case of a state member bank; or the OTS in the 
case of an insured Federal or state savings association.
    (3) In the case of a state nonmember bank, insured Federal branch of 
a foreign bank, or state member bank, in addition to service of the 
notification upon the appropriate Federal banking agency, a copy of the 
notification shall be sent to the appropriate State banking supervisor.
    (4) In instances in which a Temporary Order Suspending Insurance is 
issued pursuant to section 8(a)(8) of the FDIA (12 U.S.C. 1818(a)(8)), 
the notification may be served concurrently with such order.
    (b) Contents of notification. The notification shall contain the 
FDIC's determination, and the facts and circumstances upon which such 
determination is based, for the purpose of securing correction of such 
practice, condition, or violation.



Sec.  308.122  Notice of intent to terminate.

    (a) If, after serving the notification under Sec.  308.121, the 
Board of Directors determines that any unsafe or unsound practices, 
condition, or violation, specified in the notification, requires the 
termination of the insured status of the insured depository institution, 
the Board of Directors or its designee, if it determines to proceed 
further, shall cause to be served upon the insured depository 
institution a notice of its intention to terminate insured status not 
less than 30 days after service of the notification, unless a shorter 
time period has been agreed upon by the appropriate Federal banking 
agency.
    (b) The Board of Directors or its designee shall cause a copy of the 
notice to be sent to the appropriate Federal banking agency and to the 
appropriate state banking supervisor, if any.



Sec.  308.123  Notice to depositors.

    If the Board of Directors enters an order terminating the insured 
status of an insured depository institution or branch, the insured 
depository institution shall, on the day that order becomes final, or on 
such other day as that order prescribes, mail a notification of 
termination of insured status to each depositor at the depositor's last 
address of record on the books of the insured depository institution or 
branch. The insured depository institution shall also publish the 
notification in two issues of a local newspaper of general circulation 
and shall furnish the FDIC with proof of such publications. The 
notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)_____.
    1. The status of the _____, as an (insured depository institution) 
(insured branch) under the provisions of the Federal Deposit Insurance 
Act, will terminate as of the close of business on the ____ day 
of______, 19__.
    2. Any deposits made by you after that date, either new deposits or 
additions to existing deposits, will not be insured by the Federal 
Deposit Insurance Corporation.
    3. Insured deposits in the (depository institution) (branch) on the 
____ day of______, 19__, will continue to be insured, as provided by 
Federal Deposit Insurance Act, for 2 years after the close of business 
on the ____ day of ______, 19__. Provided, however, that any withdrawals 
after the close of business on the ____ day of ______, 19__, will reduce 
the insurance coverage by the amount of such withdrawals.
________________________________________________________________________
(Name of (depository institution or branch)
________________________________________________________________________
(Address)

The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec.  308.124  Involuntary termination of insured status for failure 
to receive deposits.

    (a) Notice to show cause. When the Board of Directors or its 
designee has evidence that an insured depository institution is not 
engaged in the business

[[Page 86]]

of receiving deposits, other than trust funds, the Board of Directors or 
its designee shall give written notice of this evidence to the 
depository institution and shall direct the depository institution to 
show cause why its insured status should not be terminated under the 
provisions of section 8(p) of the FDIA (12 U.S.C. 1818(p)). The insured 
depository institution shall have 30 days after receipt of the notice, 
or such longer period as is prescribed in the notice, to submit 
affidavits, other written proof, and any legal arguments that it is 
engaged in the business of receiving deposits other than trust funds.
    (b) Notice of termination date. If, upon consideration of the 
affidavits, other written proof, and legal arguments, the Board of 
Directors determines that the depository institution is not engaged in 
the business of receiving deposits, other than trust funds, the finding 
shall be conclusive and the Board of Directors shall notify the 
depository institution that its insured status will terminate at the 
expiration of the first full semiannual assessment period following 
issuance of that notification.
    (c) Notification to depositors of termination of insured status. 
Within the time specified by the Board of Directors and prior to the 
date of termination of its insured status, the depository institution 
shall mail a notification of termination of insured status to each 
depositor at the depositor's last address of record on the books of the 
depository institution. The depository institution shall also publish 
the notification in two issues of a local newspaper of general 
circulation and shall furnish the FDIC with proof of such publications. 
The notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)_____.
    The status of the _____, as an (insured depository institution) 
(insured branch) under the Federal Deposit Insurance Act, will terminate 
on the ____ day of______, 19__, and its deposits will thereupon cease to 
be insured.
________________________________________________________________________
(Name of depository institution or branch)
________________________________________________________________________
(Address)


The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec.  308.125  Temporary suspension of deposit insurance.

    (a) If, while an action is pending under section 8(a)(2) of the FDIA 
(12 U.S.C. 1818(a)(2)), the Board of Directors, after consultation with 
the appropriate Federal banking agency, finds that an insured depository 
institution (other than a special supervisory association to which Sec.  
308.126 of this subpart applies) has no tangible capital under the 
capital guidelines or regulations of the appropriate Federal banking 
agency, the Board of Directors may issue a Temporary Order Suspending 
Deposit Insurance, pending completion of the proceedings under section 
8(a)(2) of the FDIA (12 U.S.C. 1818(a)(2)).
    (b) The temporary order shall be served upon the insured institution 
and a copy sent to the appropriate Federal banking agency and to the 
appropriate State banking supervisor.
    (c) The temporary order shall become effective ten days from the 
date of service upon the insured depository institution. Unless set 
aside, limited, or suspended in proceedings under section 8(a)(8)(D) of 
the FDIA (12 U.S.C. 1818 (a)(8)(D)), the temporary order shall remain 
effective and enforceable until an order terminating the insured status 
of the institution is entered by the Board of Directors and becomes 
final, or the Board of Directors dismisses the proceedings.
    (d) Notification to depositors of suspension of insured status. 
Within the time specified by the Board of Directors and prior to the 
suspension of insured status, the depository institution shall mail a 
notification of suspension of insured status to each depositor at the 
depositor's last address of record on the books of the depository 
institution. The depository institution shall also publish the 
notification in two issues of a local newspaper of general circulation 
and shall furnish the FDIC with

[[Page 87]]

proof of such publications. The notification to depositors shall include 
information provided in substantially the following form:

                                 Notice

    (Date)______.
    1. The status of the _____, as an (insured depository institution) 
(insured branch) under the provisions of the Federal Deposit Insurance 
Act, will be suspended as of the close of business on the ____ day of 
______, 19__, pending the completion of administrative proceedings under 
section 8(a) of the Federal Deposit Insurance Act.
    2. Any deposits made by you after that date, either new deposits or 
additions to existing deposits, will not be insured by the Federal 
Deposit Insurance Corporation.
    3. Insured deposits in the (depository institution) (branch) on the 
____ day of ______, 19__, will continue to be insured for ______ after 
the close of business on the_____ day of _____, 19__. Provided, however, 
that any withdrawals after the close of business on the ____ day 
of______, 19__, will reduce the insurance coverage by the amount of such 
withdrawals.
________________________________________________________________________
(Name of depository institution or branch)
________________________________________________________________________
(Address)


The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec.  308.126  Special supervisory associations.

    If the Board of Directors finds that a savings association is a 
special supervisory association under the provisions of section 
8(a)(8)(B) of the FDIA (12 U.S.C. 1818(a)(8)(B)) for purposes of 
temporary suspension of insured status, the Board of Directors shall 
serve upon the association its findings with regard to the determination 
that the capital of the association, as computed using applicable 
accounting standards, has suffered a material decline; that such 
association or its directors or officers, is engaging in an unsafe or 
unsound practice in conducting the business of the association; that 
such association is in an unsafe or unsound condition to continue 
operating as an insured association; or that such association or its 
directors or officers, has violated any law, rule, regulation, order, 
condition imposed in writing by any Federal banking agency, or any 
written agreement, or that the association failed to enter into a 
capital improvement plan acceptable to the Corporation prior to January, 
1990.



  Subpart G_Rules and Procedures Applicable to Proceedings Relating to 
                         Cease-and-Desist Orders



Sec.  308.127  Scope.

    (a) Cease-and-desist proceedings under sections 8 and 50 of the 
FDIA. The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings to order an 
insured nonmember bank or an institution-affiliated party to cease and 
desist from practices and violations described in section 8(b) of the 
FDIA, 12 U.S.C. 1818(b), and section 50 of the FDIA, 12 U.S.C. 1831aa.
    (b) Proceedings under the Securities Exchange Act of 1934. (1) The 
rules and procedures of this subpart, subpart B of the Local Rules and 
the Uniform Rules shall apply to proceedings by the Board of Directors 
to order a municipal securities dealer to cease and desist from any 
violation of law or regulation specified in section 15B(c)(5) of the 
Securities Exchange Act, as amended (15 U.S.C. 78o-4(c)(5)) where the 
municipal securities dealer is an insured nonmember bank or a subsidiary 
thereof.
    (2) The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings by the Board of 
Directors to order a clearing agency or transfer agent to cease and 
desist from failure to comply with the applicable provisions of section 
17, 17A and 19 of the Securities Exchange Act of 1934, as amended (15 
U.S.C. 78q, 78q-l, 78s), and the applicable rules and regulations 
thereunder, where the clearing agency or transfer agent is an insured 
nonmember bank or a subsidiary thereof.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999; 72 
FR 67235, Nov. 28, 2007]

[[Page 88]]



Sec.  308.128  Grounds for cease-and-desist orders.

    (a) General rule. The Board of Directors or its designee may issue 
and have served upon any insured nonmember bank or an institution-
affiliated party a notice, as set forth in Sec.  308.18 of the Uniform 
Rules for practices and violations as described in Sec.  308.127.
    (b) Extraterritorial acts of foreign banks. An act, violation or 
practice committed outside the United States by a foreign bank or an 
institution-affiliated party that would otherwise be a ground for 
issuing a cease-and-desist order under paragraph (a) of this section or 
a temporary cease-and-desist order under Sec.  308.131 of this subpart, 
shall be a ground for an order if the Board of Directors or its designee 
finds that:
    (1) The act, violation or practice has been, is, or is likely to be 
a cause of, or carried on in connection with or in furtherance of, an 
act, violation or practice committed within any state, territory, or 
possession of the United States or the District of Columbia which act, 
violation or practice, in and of itself, would be an appropriate basis 
for action by the FDIC; or
    (2) The act, violation or practice, if proven, would adversely 
affect the insurance risk of the FDIC.



Sec.  308.129  Notice to state supervisory authority.

    The Board of Directors or its designee shall give the appropriate 
state supervisory authority notification of its intent to institute a 
proceeding pursuant to subpart G of this part, and the grounds thereof. 
Any proceedings shall be conducted according to subpart G of this part, 
unless, within the time period specified in such notification, the state 
supervisory authority has effected satisfactory corrective action. No 
insured institution or other party who is the subject of any notice or 
order issued by the FDIC under this section shall have standing to raise 
the requirements of this subpart as grounds for attacking the validity 
of any such notice or order.



Sec.  308.130  Effective date of order and service on bank.

    (a) Effective date. A cease-and-desist order issued by the Board of 
Directors after a hearing, and a cease-and-desist order issued based 
upon a default, shall become effective at the expiration of 30 days 
after the service of the order upon the bank or its official. A cease-
and-desist order issued upon consent shall become effective at the time 
specified therein. All cease-and-desist orders shall remain effective 
and enforceable, except to the extent they are stayed, modified, 
terminated, or set aside by the Board of Directors or its designee or by 
a reviewing court.
    (b) Service on banks. In cases where the bank is not the respondent, 
the cease-and-desist order shall also be served upon the bank.



Sec.  308.131  Temporary cease-and-desist order.

    (a) Issuance. (1) When the Board of Directors or its designee 
determines that the violation, or the unsafe or unsound practice, as 
specified in the notice, or the continuation thereof, is likely to cause 
insolvency or significant dissipation of assets or earnings of the bank, 
or is likely to weaken the condition of the bank or otherwise prejudice 
the interests of its depositors prior to the completion of the 
proceedings under section 8(b) of the FDIA (12 U.S.C. 1818(b)) and Sec.  
308.128 of this subpart, the Board of Directors or its designee may 
issue a temporary order requiring the bank or an institution-affiliated 
party to immediately cease and desist from any such violation, practice 
or to take affirmative action to prevent such insolvency, dissipation, 
condition or prejudice pending completion of the proceedings under 
section 8(b) of the FDIA (12 U.S.C. 1818(b)).
    (2) When the Board of Directors or its designee issues a Notice of 
charges pursuant to 12 U.S.C. 1818(b)(1) which specifies on the basis of 
particular facts and circumstances that a bank's books and records are 
so incomplete or inaccurate that the FDIC is unable, through the normal 
supervisory process, to determine the financial condition of the bank or 
the details or purpose of any transaction or transactions that may have 
a material effect on the

[[Page 89]]

financial condition of the bank, then the Board of Directors or its 
designee may issue a temporary order requiring:
    (i) The cessation of any activity or practice which gave rise, 
whether in whole or in part, to the incomplete or inaccurate state of 
the books or records; or
    (ii) Affirmative action to restore such books or records to a 
complete and accurate state, until the completion of the proceedings 
under section 8(b) of the FDIA (12 U.S.C. 1818(b)).
    (3) The temporary order shall be served upon the bank or the 
institution-affiliated party named therein and shall also be served upon 
the bank in the case where the temporary order applies only to an 
institution-affiliated party.
    (b) Effective date. A temporary order shall become effective when 
served upon the bank or the institution-affiliated party. Unless the 
temporary order is set aside, limited, or suspended by a court in 
proceedings authorized under section 8(c)(2) of the FDIA (12 U.S.C. 
1818(c)(2)), the temporary order shall remain effective and enforceable 
pending completion of administrative proceedings pursuant to section 
8(b) of the FDIA (12 U.S.C. 1818(b)) and entry of an order which has 
become final, or with respect to paragraph (a)(2) of this section the 
FDIC determines by examination or otherwise that the bank's books and 
records are accurate and reflect the financial condition of the bank.
    (c) Uniform Rules do not apply. The Uniform Rules and subpart B of 
the Local Rules shall not apply to the issuance of temporary orders 
under this section.



  Subpart H_Rules and Procedures Applicable to Proceedings Relating to 
  Assessment and Collection of Civil Money Penalties for Violation of 
Cease-and-Desist Orders and of Certain Federal Statutes, Including Call 
                            Report Penalties



Sec.  308.132  Assessment of penalties.

    (a) Scope. The rules and procedures of this subpart, subpart B of 
the Local Rules, and the Uniform Rules shall apply to proceedings to 
assess and collect civil money penalties.
    (b) Relevant considerations. In determining the amount of the civil 
penalty to be assessed, the Board of Directors or its designee shall 
consider the financial resources and good faith of the institution or 
official, the gravity of the violation, the history of previous 
violations, and any such other matters as justice may require.
    (c) Authority of the Board of Directors. The Board of Directors or 
its designee may assess civil money penalties under section 8(i) of the 
FDIA (12 U.S.C. 1818(i)), and Sec.  308.1(e) of the Uniform Rules (this 
part).
    (d) Maximum civil money penalty amounts. Pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015, after 
January 15, 2018, for violations that occurred on or after November 2, 
2015, the Board of Directors or its designee may assess civil money 
penalties in the maximum amounts as follows:
    (1) Civil money penalties assessed pursuant to 12 U.S.C. 1464(v) for 
late filing or the submission of false or misleading certified 
statements by State savings associations. Pursuant to section 5(v) of 
the Home Owners' Loan Act (12 U.S.C. 1464(v)), the Board of Directors or 
its designee may assess civil money penalties as follows:
    (i) Late filing--Tier One penalties. In cases in which an 
institution fails to make or publish its Report of Condition and Income 
(Call Report) within the appropriate time periods, a civil money penalty 
of not more than $3,928 per day may be assessed where the institution 
maintains procedures in place reasonably adapted to avoid inadvertent 
error and the late filing occurred unintentionally and as a result of 
such error; or the institution inadvertently transmitted a Call Report 
that is minimally late. For penalties assessed after January 15, 2018, 
for violations of this paragraph (d)(1)(i) that occurred on or after 
November 2, 2015, the following maximum Tier One penalty amounts 
contained in paragraphs (d)(1)(i)(A) and (B) of this section shall apply 
for each day that the violation continues.
    (A) First offense. Generally, in such cases, the amount assessed 
shall be $538

[[Page 90]]

per day for each of the first 15 days for which the failure continues, 
and $1,078 per day for each subsequent day the failure continues, 
beginning on the sixteenth day. For institutions with less than 
$25,000,000 in assets, the amount assessed shall be the greater of $180 
per day or 1/1000th of the institution's total assets (1/10th of a basis 
point) for each of the first 15 days for which the failure continues, 
and $359 or 1/500th of the institution's total assets, \1/5\ of a basis 
point) for each subsequent day the failure continues, beginning on the 
sixteenth day.
    (B) Subsequent offense. Where the institution has been delinquent in 
making or publishing its Call Report within the preceding five quarters, 
the amount assessed for the most current failure shall generally be $897 
per day for each of the first 15 days for which the failure continues, 
and $1,795 per day for each subsequent day the failure continues, 
beginning on the sixteenth day. For institutions with less than 
$25,000,000 in assets, those amounts, respectively, shall be 1/500th of 
the bank's total assets and 1/250th of the institution's total assets.
    (C) Lengthy or repeated violations. The amounts set forth in this 
paragraph (d)(1)(i) will be assessed on a case-by-case basis where the 
amount of time of the institution's delinquency is lengthy or the 
institution has been delinquent repeatedly in making or publishing its 
Call Reports.
    (D) Waiver. Absent extraordinary circumstances outside the control 
of the institution, penalties assessed for late filing shall not be 
waived.
    (ii) Late-filing--Tier Two penalties. Where an institution fails to 
make or publish its Call Report within the appropriate time period, the 
Board of Directors or its designee may assess a civil money penalty of 
not more than $39,278 per day for each day the failure continues.
    (iii) False or misleading reports or information--(A) Tier One 
penalties. In cases in which an institution submits or publishes any 
false or misleading Call Report or information, the Board of Directors 
or its designee may assess a civil money penalty of not more than $3,928 
per day for each day the information is not corrected, where the 
institution maintains procedures in place reasonably adapted to avoid 
inadvertent error and the violation occurred unintentionally and as a 
result of such error; or the institution inadvertently transmits a Call 
Report or information that is false or misleading.
    (B) Tier Two penalties. Where an institution submits or publishes 
any false or misleading Call Report or other information, the Board of 
Directors or its designee may assess a civil money penalty of not more 
than $39,278 per day for each day the information is not corrected.
    (C) Tier Three penalties. Where an institution knowingly or with 
reckless disregard for the accuracy of any Call Report or information 
submits or publishes any false or misleading Call Report or other 
information, the Board of Directors or its designee may assess a civil 
money penalty of not more than the lesser of $1,963,870 or 1 percent of 
the institution's total assets per day for each day the information is 
not corrected.
    (iv) Mitigating factors. The amounts set forth in this paragraph 
(d)(1) may be reduced based upon the factors set forth in paragraph (b) 
of this section.
    (2) Civil money penalties assessed pursuant to 12 U.S.C. 1467(d) for 
refusal by an affiliate of a State savings association to allow 
examination or to provide required information during an examination. 
Pursuant to section 9(d) of the Home Owners' Loan Act (12 U.S.C. 
1467(d)), civil money penalties may be assessed against any State 
savings association if an affiliate of such an institution refuses to 
permit a duly-appointed examiner to conduct an examination or refuses to 
provide information during the course of an examination as set forth 12 
U.S.C. 1467(d), in an amount not to exceed $9,819 for each day the 
refusal continues.
    (3) Civil money penalties assessed pursuant to 12 U.S.C. 1817(a) for 
late filings or the submission of false or misleading reports of 
condition. Pursuant to section 7(a) of the FDIA (12 U.S.C. 1817(a)), the 
Board of Directors or its designee may assess civil money penalties as 
follows:
    (i) Late filing--Tier One penalties. In cases in which an 
institution fails to make or publish its Report of Condition and Income 
(Call Report) within

[[Page 91]]

the appropriate time periods, a civil money penalty of not more than 
$3,928 per day may be assessed where the institution maintains 
procedures in place reasonably adapted to avoid inadvertent error and 
the late filing occurred unintentionally and as a result of such error; 
or the institution inadvertently transmitted a Call Report that is 
minimally late. For penalties assessed after January 15, 2018, for 
violations of this paragraph (d)(3)(i) that occurred on or after 
November 2, 2015, the following maximum Tier One penalty amounts 
contained in paragraphs (d)(3)(i)(A) and (B) of this section shall apply 
for each day that the violation continues.
    (A) First offense. Generally, in such cases, the amount assessed 
shall be $538 per day for each of the first 15 days for which the 
failure continues, and $1,078 per day for each subsequent day the 
failure continues, beginning on the sixteenth day. For institutions with 
less than $25,000,000 in assets, the amount assessed shall be the 
greater of $180 per day or 1/1000th of the institution's total assets 
(1/10th of a basis point) for each of the first 15 days for which the 
failure continues, and $359 or 1/500th of the institution's total 
assets, (\1/5\ of a basis point) for each subsequent day the failure 
continues, beginning on the sixteenth day.
    (B) Subsequent offense. Where the institution has been delinquent in 
making or publishing its Call Report within the preceding five quarters, 
the amount assessed for the most current failure shall generally be $897 
per day for each of the first 15 days for which the failure continues, 
and $1,795 per day for each subsequent day the failure continues, 
beginning on the sixteenth day. For institutions with less than 
$25,000,000 in assets, those amounts, respectively, shall be 1/500th of 
the bank's total assets and 1/250th of the institution's total assets.
    (C) Lengthy or repeated violations. The amounts set forth in this 
paragraph (d)(3)(i) will be assessed on a case-by-case basis where the 
amount of time of the institution's delinquency is lengthy or the 
institution has been delinquent repeatedly in making or publishing its 
Call Reports.
    (D) Waiver. Absent extraordinary circumstances outside the control 
of the institution, penalties assessed for late filing shall not be 
waived.
    (ii) Late-filing--Tier Two penalties. Where an institution fails to 
make or publish its Call Report within the appropriate time period, the 
Board of Directors or its designee may assess a civil money penalty of 
not more than $39,278 per day for each day the failure continues.
    (iii) False or misleading reports or information--(A) Tier One 
penalties. In cases in which an institution submits or publishes any 
false or misleading Call Report or information, the Board of Directors 
or its designee may assess a civil money penalty of not more than $3,928 
per day for each day the information is not corrected, where the 
institution maintains procedures in place reasonably adapted to avoid 
inadvertent error and the violation occurred unintentionally and as a 
result of such error; or the institution inadvertently transmits a Call 
Report or information that is false or misleading.
    (B) Tier Two penalties. Where an institution submits or publishes 
any false or misleading Call Report or other information, the Board of 
Directors or its designee may assess a civil money penalty of not more 
than $39,278 per day for each day the information is not corrected.
    (C) Tier Three penalties. Where an institution knowingly or with 
reckless disregard for the accuracy of any Call Report or information 
submits or publishes any false or misleading Call Report or other 
information, the Board of Directors or its designee may assess a civil 
money penalty of not more than the lesser of $1,963,870 or 1 percent of 
the institution's total assets per day for each day the information is 
not corrected.
    (iv) Mitigating factors. The amounts set forth in this paragraph 
(d)(3) may be reduced based upon the factors set forth in paragraph (b) 
of this section.
    (4) Civil money penalties assessed pursuant to 12 U.S.C. 1817(c) for 
late filing or the submission of false or misleading certified 
statements. Tier One civil money penalties may be assessed pursuant to 
section 7(c)(4)(A) of the FDIA (12 U.S.C.

[[Page 92]]

1817(c)(4)(A)) in an amount not to exceed $3,591 for each day during 
which the failure to file continues or the false or misleading 
information is not corrected. Tier Two civil money penalties may be 
assessed pursuant to section 7(c)(4)(B) of the FDIA (12 U.S.C. 
1817(c)(4)(B)) in an amount not to exceed $35,904 for each day during 
which the failure to file continues or the false or misleading 
information is not corrected. Tier Three civil money penalties may be 
assessed pursuant to section 7(c)(4)(C) in an amount not to exceed the 
lesser of $1,795,216 or 1 percent of the total assets of the institution 
for each day during which the failure to file continues or the false or 
misleading information is not corrected.
    (5) Civil money penalties assessed pursuant to section 8(i)(2) of 
the FDIA. Tier One civil money penalties may be assessed pursuant to 
section 8(i)(2)(A) of the FDIA (12 U.S.C. 1818(i)(2)(A)) in an amount 
not to exceed $9,819 for each day during which the violation continues. 
Tier Two civil money penalties may be assessed pursuant to section 
8(i)(2)(B) of the FDIA (12 U.S.C. 1818(i)(2)(B)) in an amount not to 
exceed $49,096 for each day during which the violation, practice or 
breach continues. Tier Three civil money penalties may be assessed 
pursuant to section 8(i)(2)(C) (12 U.S.C. 1818(i)(2)(C)) in an amount 
not to exceed, in the case of any person other than an insured 
depository institution $1,963,870 or, in the case of any insured 
depository institution, an amount not to exceed the lesser of $1,963,870 
or 1 percent of the total assets of such institution for each day during 
which the violation, practice, or breach continues.
    (i) Pursuant to 7(j)(16) of the FDIA (12 U.S.C. 1817(j)(16)), a 
civil money penalty may be assessed for violations of change in control 
of insured depository institution provisions pursuant to section 8(i)(2) 
of the FDIA (12 U.S.C. 1818(i)(2)) in the amounts set forth in this 
paragraph (d)(5).
    (ii) Pursuant to the International Banking Act of 1978 (IBA) (12 
U.S.C. 3108(b)), civil money penalties may be assessed for failure to 
comply with the requirements of the IBA pursuant to section 8(i)(2) of 
the FDIA (12 U.S.C. 1818(i)(2)), in the amounts set forth in this 
paragraph (d)(5).
    (iii) Pursuant to section 1120(b) of the Financial Institutions 
Recovery, Reform, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. 
3349(b)), where a financial institution seeks, obtains, or gives any 
other thing of value in exchange for the performance of an appraisal by 
a person that the institution knows is not a state certified or licensed 
appraiser in connection with a federally related transaction, a civil 
money penalty may be assessed pursuant to section 8(i)(2) of the FDIA 
(12 U.S.C. 1818(i)(2)) in the amounts set forth in this paragraph 
(d)(5).
    (iv) Pursuant to the Community Development Banking and Financial 
Institution Act (Community Development Banking Act) (12 U.S.C. 4717(b)) 
a civil money penalty may be assessed for violations of the Community 
Development Banking Act pursuant to section 8(i)(2) of the FDIA (12 
U.S.C. 1818(i)(2)), in the amount set forth in this paragraph (d)(5).
    (v) Civil money penalties may be assessed pursuant to section 
8(i)(2) of the FDIA in the amounts set forth in this paragraph (d)(5) 
for violations of various consumer laws, including, but not limited to, 
the Home Mortgage Disclosure Act (12 U.S.C. 2804 et seq. and 12 CFR 
203.6), the Expedited Funds Availability Act (12 U.S.C. 4001 et seq.), 
the Truth in Savings Act (12 U.S.C. 4301 et seq.), the Real Estate 
Settlement Procedures Act (12 U.S.C. 2601 et seq.), the Truth in Lending 
Act (15 U.S.C. 1601 et seq.), the Fair Credit Reporting Act (15 U.S.C. 
1681 et seq.), the Equal Credit Opportunity Act (15 U.S.C. 1691 et 
seq.), the Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), 
the Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) and the Fair 
Housing Act (42 U.S.C. 3601 et seq.).
    (6) Civil money penalties assessed pursuant to 12 U.S.C. 1820(e) for 
refusal to allow examination or to provide required information during 
an examination. Pursuant to section 10(e)(4) of the FDIA (12 U.S.C. 
1820(e)(4)), civil money penalties may be assessed against any affiliate 
of an insured depository institution that refuses to permit a duly-
appointed examiner to conduct an examination or to provide information 
during the

[[Page 93]]

course of an examination as set forth in section 20(b) of the FDIA (12 
U.S.C. 1820(b)), in an amount not to exceed $8,977 for each day the 
refusal continues.
    (7) Civil money penalties assessed pursuant to 12 U.S.C. 1820(k) for 
violation of one-year restriction on Federal examiners of financial 
institutions. Pursuant to section 10(k) of the FDIA (12 U.S.C. 1820(k)), 
the Board of Directors or its designee may assess a civil money penalty 
of up to $323,027 against any covered former Federal examiner of a 
financial institution who, in violation of section 10(k) of the FDIA (12 
U.S.C. 1820(k)) and within the one-year period following termination of 
government service as an employee, serves as an officer, director, or 
consultant of a financial or depository institution, a holding company, 
or of any other entity listed in section 10(k) of the FDIA (12 U.S.C. 
1820(k)), without the written waiver or permission by the appropriate 
Federal banking agency or authority under section 10(k)(5) of the FDIA 
(12 U.S.C. 1820(k)(5)).
    (8) Civil money penalties assessed pursuant to 12 U.S.C. 1828(a) for 
incorrect display of insurance logo. Pursuant to section 18(a)(3) of the 
FDIA (12 U.S.C. 1828(a)(3)), civil money penalties may be assessed 
against an insured depository institution that fails to correctly 
display its insurance logo pursuant to that section, in an amount not to 
exceed $122 for each day the violation continues.
    (9) Civil money penalties assessed pursuant to 12 U.S.C. 1828(h) for 
failure to timely pay assessment--(i) In general. Subject to paragraph 
(d)(9)(iii) of this section, any insured depository institution that 
fails or refuses to pay any assessment shall be subject to a penalty in 
an amount of not more than 1 percent of the amount of the assessment due 
for each day that such violation continues.
    (ii) Exception in case of dispute. Paragraph (d)(9)(i) of this 
section shall not apply if--
    (A) The failure to pay an assessment is due to a dispute between the 
insured depository institution and the Corporation over the amount of 
such assessment; and
    (B) The insured depository institution deposits security 
satisfactory to the Corporation for payment upon final determination of 
the issue.
    (iii) Special rule for small assessment amounts. If the amount of 
the assessment that an insured depository institution fails or refuses 
to pay is less than $10,000 at the time of such failure or refusal, the 
amount of any penalty to which such institution is subject under 
paragraph (d)(9)(i) of this section shall not exceed $122 for each day 
that such violation continues.
    (iv) Authority to modify or remit penalty. The Corporation, in the 
sole discretion of the Corporation, may compromise, modify, or remit any 
penalty that the Corporation may assess or has already assessed under 
paragraph (d)(9)(i) of this section upon a finding that good cause 
prevented the timely payment of an assessment.
    (10) Civil money penalties assessed pursuant to 12 U.S.C. 1829b(j) 
for recordkeeping violations. Pursuant to section 19b(j) of the FDIA (12 
U.S.C. 1829b(j)), civil money penalties may be assessed against an 
insured depository institution and any director, officer or employee 
thereof who willfully or through gross negligence violates or causes a 
violation of the recordkeeping requirements of that section or its 
implementing regulations in an amount not to exceed $20,521 per 
violation.
    (11) Civil money penalties pursuant to 12 U.S.C. 1832(c) for 
violation of provisions regarding interest-bearing demand deposit 
accounts. Pursuant to 12 U.S.C. 1832(c), any depository institution that 
violates the prohibition regarding interest-bearing demand deposit 
accounts shall be subject to a fine of $2,852 per violation.
    (12) Civil penalties for violations of security measure requirements 
under 12 U.S.C. 1884. Pursuant to 12 U.S.C. 1884, an institution that 
violates a rule establishing minimum security requirements as set forth 
in 12 U.S.C. 1882, shall be subject to a civil penalty not to exceed 
$285 for each day of the violation.
    (13) Civil money penalties assessed pursuant to 12 U.S.C. 1972(2)(F) 
for prohibited tying arrangements. Pursuant to the Bank Holding Company 
Act of 1970, Tier One civil money penalties may be

[[Page 94]]

assessed pursuant to 12 U.S.C. 1972(2)(F)(i) in an amount not to exceed 
$9,819 for each day during which the violation continues. Tier Two civil 
money penalties may be assessed pursuant to 12 U.S.C. 1972(2)(F)(ii) in 
an amount not to exceed $49,096 for each day during which the violation, 
practice or breach continues. Tier Three civil money penalties may be 
assessed pursuant to 12 U.S.C. 1972(2)(F)(iii) in an amount not to 
exceed, in the case of any person other than an insured depository 
institution $1,963,870 for each day during which the violation, 
practice, or breach continues or, in the case of any insured depository 
institution, an amount not to exceed the lesser of $1,963,870 or 1 
percent of the total assets of such institution for each day during 
which the violation, practice, or breach continues.
    (14) Civil money penalties assessed pursuant to 12 U.S.C. 3909(d). 
Pursuant to the International Lending Supervision Act (ILSA) (12 U.S.C. 
3909(d)), civil money penalties may be assessed against any institution 
or any officer, director, employee, agent or other person participating 
in the conduct of the affairs of such institution is an amount not to 
exceed $2,443 for each day a violation of the ILSA or any rule, 
regulation or order issued pursuant to ILSA continues.
    (15) Civil money penalties assessed for violations of 15 U.S.C. 78u-
2. Pursuant to section 21B of the Securities Exchange Act of 1934 
(Exchange Act) (15 U.S.C. 78u-2), civil money penalties may be assessed 
for violations of certain provisions of the Exchange Act, where such 
penalties are in the public interest. Tier One civil money penalties may 
be assessed pursuant to 15 U.S.C. 78u-2(b)(1) in an amount not to exceed 
$9,239 for a natural person or $92,383 for any other person for 
violations set forth in 15 U.S.C. 78u-2(a). Tier Two civil money 
penalties may be assessed pursuant to 15 U.S.C. 78u-2(b)(2) in an amount 
not to exceed--for each violation set forth in 15 U.S.C. 78u-2(a)--
$92,383 for a natural person or $461,916 for any other person if the act 
or omission involved fraud, deceit, manipulation, or deliberate or 
reckless disregard of a regulatory requirement. Tier Three civil money 
penalties may be assessed pursuant to 15 U.S.C. 78u-2(b)(3) for each 
violation set forth in 15 U.S.C. 78u-2(a), in an amount not to exceed 
$184,767 for a natural person or $923,831 for any other person, if the 
act or omission involved fraud, deceit, manipulation, or deliberate or 
reckless disregard of a regulatory requirement; and such act or omission 
directly or indirectly resulted in substantial losses, or created a 
significant risk of substantial losses to other persons or resulted in 
substantial pecuniary gain to the person who committed the act or 
omission.
    (16) Civil money penalties assessed pursuant to 15 U.S.C. 1639e(k) 
for appraisal independence violations. Pursuant to section 1472(a) of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Appraisal 
Independence Rule) (15 U.S.C. 1639e(k)), civil money penalties may be 
assessed for an initial violation of the Appraisal Independence Rule in 
an amount not to exceed $11,279 for each day during which the violation 
continues and, for subsequent violations, $22,556 for each day during 
which the violation continues.
    (17) Civil money penalties assessed for false claims and statements 
pursuant to 31 U.S.C. 3802. Pursuant to the Program Fraud Civil Remedies 
Act (31 U.S.C. 3802), civil money penalties of not more than $11,181 per 
claim or statement may be assessed for violations involving false claims 
and statements.
    (18) Civil money penalties assessed for violations of 42 U.S.C. 
4012a(f). Pursuant to the Flood Disaster Protection Act (FDPA) (42 
U.S.C. 4012a(f)), civil money penalties may be assessed against any 
regulated lending institution that engages in a pattern or practice of 
violations of the FDPA in an amount not to exceed $2,133 per violation.

[77 FR 75477, Dec. 17, 2012, as amended at 81 FR 42239, June 29, 2016; 
81 FR 95416, Dec. 28, 2016; 83 FR 1522, Jan. 12, 2018]

    Effective Date Note: At 83 FR 61114, Nov. 28, 2018, Sec.  308.132 
was amended by revising paragraph (d) and adding paragraph (e), 
effective Jan. 15, 2019. For the convenience of the user, the added and 
revised text is set forth as follows:



Sec.  308.132  Assessment of penalties.

                                * * * * *

[[Page 95]]

    (d) Maximum civil money penalty amounts. Under the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, the Board 
of Directors or its designee may assess civil money penalties in the 
maximum amounts using the following framework:
    (1) Statutory formula to calculate inflation adjustments. The FDIC 
is required by statute to annually adjust for inflation the maximum 
amount of each civil money penalty within its jurisdiction to 
administer. The inflation adjustment is calculated by multiplying the 
maximum dollar amount of the civil money penalty for the previous 
calendar year by the cost-of-living inflation adjustment multiplier 
provided annually by the Office of Management and Budget and rounding 
the total to the nearest dollar.
    (2) Notice of inflation adjustments. By January 15 of each calendar 
year, the FDIC will publish notice in the Federal Register of the 
maximum penalties that may be assessed after each January 15, based on 
the formula in paragraph (d)(1) of this section, for conduct occurring 
on or after November 2, 2015.
    (e) Civil money penalties for violations of 12 U.S.C. 1464(v) and 12 
U.S.C. 1817(a)--(1) Late filing--Tier One penalties. Where an 
institution fails to make or publish its Report of Condition and Income 
(Call Report) within the appropriate time periods, but where the 
institution maintains procedures in place reasonably adapted to avoid 
inadvertent error and the late filing occurred unintentionally and as a 
result of such error, or where the institution inadvertently transmitted 
a Call Report that is minimally late, the Board of Directors or its 
designee may assess a Tier One civil money penalty. The amount of such a 
penalty shall not exceed the maximum amount calculated and published 
annually in the Federal Register under paragraph (d)(2) of this section. 
Such a penalty may be assessed for each day that the violation 
continues.
    (i) First offense. Generally, in such cases, the amount assessed 
shall be an amount calculated and published annually in the Federal 
Register under paragraph (d)(2) of this section. The Federal Register 
notice will contain a presumptive penalty amount per day for each of the 
first 15 days for which the failure continues, and a presumptive amount 
per day for each subsequent days the failure continues, beginning on the 
16th day. The annual Federal Register notice will also provide penalty 
amounts that generally may be assessed for institutions with less than 
$25,000,000 in assets.
    (ii) Subsequent offense. The FDIC will calculate and publish in the 
Federal Register a presumptive daily Tier One penalty to be imposed 
where an institution has been delinquent in making or publishing its 
Call Report within the preceding five quarters. The published penalty 
shall identify the amount that will generally be imposed per day for 
each of the first 15 days for which the failure continues, and the 
amount that will generally be imposed per day for each subsequent day 
the failure continues, beginning on the 16th day. The annual Federal 
Register notice will also provide penalty amounts that generally may be 
assessed for institutions with less than $25,000,000 in assets.
    (iii) Lengthy or repeated violations. The amounts set forth in this 
paragraph (e)(1) will be assessed on a case-by-case basis where the 
amount of time of the institution's delinquency is lengthy or the 
institution has been delinquent repeatedly in making or publishing its 
Call Reports.
    (iv) Waiver. Absent extraordinary circumstances outside the control 
of the institution, penalties assessed for late filing shall not be 
waived.
    (2) Late-filing--Tier Two penalties. Where an institution fails to 
make or publish its Call Report within the appropriate time period, the 
Board of Directors or its designee may assess a Tier Two civil money 
penalty for each day the failure continues. The amount of such a penalty 
will not exceed the maximum amount calculated and published annually in 
the Federal Register under paragraph (d)(2) of this section.
    (3) False or misleading reports or information--(i) Tier One 
penalties. In cases in which an institution submits or publishes any 
false or misleading Call Report or information, the Board of Directors 
or its designee may assess a Tier One civil money penalty for each day 
the information is not corrected, where the institution maintains 
procedures in place reasonably adapted to avoid inadvertent error and 
the violation occurred unintentionally and as a result of such error, or 
where the institution inadvertently transmits a Call Report or 
information that is false or misleading. The amount of such a penalty 
will not exceed the maximum amount calculated and published annually in 
the Federal Register under paragraph (d)(2) of this section.
    (ii) Tier Two penalties. Where an institution submits or publishes 
any false or misleading Call Report or other information, the Board of 
Directors or its designee may assess a Tier Two civil money penalty for 
each day the information is not corrected. The amount of such a penalty 
will not exceed the maximum amount calculated and published annually in 
the Federal Register under paragraph (d)(2) of this section.
    (iii) Tier Three penalties. Where an institution knowingly or with 
reckless disregard for the accuracy of any Call Report or information 
submits or publishes any false or misleading Call Report or other 
information, the Board of Directors or its designee may assess a Tier 
Three civil money penalty for each day the information is not corrected. 
The

[[Page 96]]

penalty shall not exceed the lesser of 1 percent of the institution's 
total assets per day or the amount calculated and published annually in 
the Federal Register under paragraph (d)(2) of this section.
    (4) Mitigating factors. The amounts set forth in paragraphs (e)(1) 
through (e)(3) of this section may be reduced based upon the factors set 
forth in paragraph (b) of this section.



Sec.  308.133  Effective date of, and payment under, an order to pay.

    (a) Effective date. (1) Unless otherwise provided in the Notice, 
except in situations covered by paragraph (a)(2) of this section, civil 
penalties assessed pursuant to this subpart are due and payable 60 days 
after the Notice is served upon the respondent.
    (2) If the respondent both requests a hearing and serves an answer, 
civil penalties assessed pursuant to this subpart are due and payable 60 
days after an order to pay, issued after the hearing or upon default, is 
served upon the respondent, unless the order provides for a different 
period of payment. Civil penalties assessed pursuant to an order to pay 
issued upon consent are due and payable within the time specified 
therein.
    (b) Payment. All penalties collected under this section shall be 
paid over to the Treasury of the United States.



    Subpart I_Rules and Procedures for Imposition of Sanctions Upon 
    Municipal Securities Dealers or Persons Associated With Them and 
                  Clearing Agencies or Transfer Agents



Sec.  308.134  Scope.

    The rules and procedures in this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings by the Board of 
Directors or its designee:
    (a) To censure, limit the activities of, suspend, or revoke the 
registration of, any municipal securities dealer for which the FDIC is 
the appropriate regulatory agency;
    (b) To censure, suspend, or bar from being associated with such a 
municipal securities dealer, any person associated with such a municipal 
securities dealer; and
    (c) To deny registration, to censure limit the activities of, 
suspend, or revoke the registration of, any transfer agent or clearing 
agency for which the FDIC is the appropriate regulatory agency. This 
subpart and the Uniform Rules shall not apply to proceedings to postpone 
or suspend registration of a transfer agent or clearing agency pending 
final determination of denial or revocation of registration.



Sec.  308.135  Grounds for imposition of sanctions.

    (a) Action under section 15(b)(4) of the Exchange Act. The Board of 
Directors or its designee may issue and have served upon any municipal 
securities dealer for which the FDIC is the appropriate regulatory 
agency, or any person associated or seeking to become associated with a 
municipal securities dealer for which the FDIC is the appropriate 
regulatory agency, a written notice of its intention to censure, limit 
the activities or functions or operations of, suspend, or revoke the 
registration of, such municipal securities dealer, or to censure, 
suspend, or bar the person from being associated with the municipal 
securities dealer, when the Board of Directors or its designee 
determines:
    (1) That such municipal securities dealer or such person
    (i) Has committed any prohibited act or omitted any required act 
specified in subparagraph (A), (D), or (E) of section 15(b)(4) of the 
Exchange Act, as amended (15 U.S.C. 78o);
    (ii) Has been convicted of any offense specified in section 
15(b)(4)(B) of the Exchange Act within ten years of commencement of 
proceedings under this subpart; or
    (iii) Is enjoined from any act, conduct, or practice specified in 
section 15(b)(4)(C) of the Exchange Act; and
    (2) That it is in the public interest to impose any of the sanctions 
set forth in paragraph (a) of this section.
    (b) Action under sections 17 and 17A of the Exchange Act. The Board 
of Directors or its designee may issue, and have served upon any 
transfer agent or clearing agency for which the FDIC is the appropriate 
regulatory agency, a written Notice of its intention to deny

[[Page 97]]

registration to, censure, place limitations on the activities or 
function or operations of, suspend, or revoke the registration of, the 
transfer agent or clearing agency, when the Board of Directors or its 
designee determines:
    (1) That the transfer agent or clearing agency has willfully 
violated, or is unable to comply with, any applicable provision of 
section 17 or 17A of the Exchange Act, as amended, or any applicable 
rule or regulation issued pursuant thereto; and
    (2) That it is in the public interest to impose any of the sanctions 
set forth in paragraph (b) of this section.



Sec.  308.136  Notice to and consultation with 
the Securities and Exchange Commission.

    Before initiating any proceedings under Sec.  308.135, the FDIC 
shall:
    (a) Notify the Securities and Exchange Commission of the identity of 
the municipal securities dealer or associated person against whom 
proceedings are to be initiated, and the nature of and basis for the 
proposed action; and
    (b) Consult with the Commission concerning the effect of the 
proposed action on the protection of investors and the possibility of 
coordinating the action with any proceeding by the Commission against 
the municipal securities dealer or associated person.



Sec.  308.137  Effective date of order imposing sanctions.

    An order issued by the Board of Directors after a hearing or an 
order issued upon default shall become effective at the expiration of 30 
days after the service of the order, except that an order of censure, 
denial, or revocation of registration is effective when served. An order 
issued upon consent shall become effective at the time specified 
therein. All orders shall remain effective and enforceable except to the 
extent they are stayed, modified, terminated, or set aside by the Board 
of Directors, its designee, or a reviewing court, provided that orders 
of suspension shall continue in effect no longer than 12 months.



 Subpart J_Rules and Procedures Relating to Exemption Proceedings Under 
          Section 12(h) of the Securities Exchange Act of 1934



Sec.  308.138  Scope.

    The rules and procedures of this subpart J shall apply to 
proceedings by the Board of Directors or its designee to exempt, in 
whole or in part, an issuer of securities from the provisions of 
sections 12(g), 13, 14(a), 14(c), 14(d), or 14(f) of the Exchange Act, 
as amended (15 U.S.C. 781, 78m, 78n (a), (c) (d) or (f)), or to exempt 
an officer or a director or beneficial owner of securities of such an 
issuer from the provisions of section 16 of the Exchange Act (15 U.S.C. 
78p).



Sec.  308.139  Application for exemption.

    Any interested person may file a written application for an 
exemption under this subpart with the Executive Secretary, Federal 
Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 
20429. The application shall specify the exemption sought and the reason 
therefor, and shall include a statement indicating why the exemption 
would be consistent with the public interest or the protection of 
investors.



Sec.  308.140  Newspaper notice.

    (a) General rule. If the Board of Directors or its designee, in its 
sole discretion, decides to further consider an application for 
exemption, there shall be served upon the applicant instructions to 
publish one notification in a newspaper of general circulation in the 
community where the main office of the issuer is located. The applicant 
shall furnish proof of such publication to the Executive Secretary or 
such other person as may be directed in the instructions.
    (b) Contents. The notification shall contain the name and address of 
the issuer and the name and title of the applicant, the exemption 
sought, a statement that a hearing will be held, and a statement that 
within 30 days of publication of the newspaper notice, interested 
persons may submit to the FDIC written comments on the application

[[Page 98]]

for exemption and a written request for an opportunity to be heard. The 
address of the FDIC must appear in the notice.



Sec.  308.141  Notice of hearing.

    Within ten days after expiration of the period for receipt of 
comments pursuant to Sec.  308.140, the Executive Secretary shall serve 
upon the applicant and any person who has requested an opportunity to be 
heard written notification indicating the place and time of the hearing. 
The hearing shall be held not later than 30 days after service of the 
notification of hearing. The notification shall contain the name and 
address of the presiding officer designated by the Executive Secretary 
and a statement of the matters to be considered.



Sec.  308.142  Hearing.

    (a) Proceedings are informal. Formal rules of evidence, the 
adjudicative procedures of the APA (5 U.S.C. 554-557), the Uniform Rules 
and Sec.  308.108 of subpart B of the Local Rules shall not apply to 
hearings under this subpart.
    (b) Hearing Procedure. (1) Parties to the hearing may appear 
personally or through counsel and shall have the right to introduce 
relevant and material documents and to make an oral statement.
    (2) There shall be no discovery in proceeding under this subpart J.
    (3) The presiding officer shall have discretion to permit 
presentation of witnesses within specified time limits, provided that a 
list of witnesses is furnished to the presiding officer prior to the 
hearing. Witnesses shall be sworn, unless otherwise directed by the 
presiding officer. The presiding officer may ask questions of any 
witness and each party may cross-examine any witness presented by an 
opposing party.
    (4) The proceedings shall be on the record and the transcript shall 
be promptly submitted to the Board of Directors. The presiding officer 
shall make recommendations to the Board of Directors, unless the Board 
of Directors, in its sole discretion, directs otherwise.



Sec.  308.143  Decision of Board of Directors.

    Following submission of the hearing transcript to the Board of 
Directors, the Board of Directors may grant the exemption where it 
determines, by reason of the number of public investors, the amount of 
trading interest in the securities, the nature and extent of the 
issuer's activities, the issuer's income or assets, or otherwise, that 
the exemption is consistent with the public interest or the protection 
of investors. Any exemption shall be set forth in an order specifying 
the terms of the exemption, the person to whom it is granted, and the 
period for which it is granted. A copy of the order shall be served upon 
each party to the proceeding.



 Subpart K_Procedures Applicable to Investigations Pursuant to Section 
                            10(c) of the FDIA



Sec.  308.144  Scope.

    The procedures of this subpart shall be followed when an 
investigation is instituted and conducted in connection with any open or 
failed insured depository institution, any institutions making 
application to become insured depository institutions, and affiliates 
thereof, or with other types of investigations to determine compliance 
with applicable law and regulations, pursuant to section 10(c) of the 
FDIA (12 U.S.C. 1820(c)) or section 5(d)(1)(B) of HOLA (12 U.S.C. 
1464(d)(1)(B)). The Uniform Rules and subpart B of the Local Rules shall 
not apply to investigations under this subpart.

[80 FR 5013, Jan. 30, 2015]



Sec.  308.145  Conduct of investigation.

    An investigation shall be initiated only upon issuance of an order 
by the Board of Directors; or by the General Counsel, the Director of 
the Division of Risk Management Supervision, the Director of the 
Division of Depositor and Consumer Protection, or their respective 
designees. The order shall indicate the purpose of the investigation and 
designate FDIC's representative(s) to direct the conduct of the 
investigation. Upon application and for good cause shown, the persons 
who issue the order of investigation may limit, quash,

[[Page 99]]

modify, or withdraw it. Upon the conclusion of the investigation, an 
order of termination of the investigation shall be issued by the persons 
issuing the order of investigation.

[80 FR 5013, Jan. 30, 2015]



Sec.  308.146  Powers of person conducting investigation.

    The person designated to conduct the investigation shall have the 
power, among other things, to administer oaths and affirmations, to take 
and preserve testimony under oath, to issue subpoenas and subpoenas 
duces tecum and to apply for their enforcement to the United States 
District Court for the judicial district or the United States court in 
any territory in which the main office of the bank, institution, or 
affiliate is located or in which the witness resides or conducts 
business. The person conducting the investigation may obtain the 
assistance of counsel or others from both within and outside the FDIC. 
The persons who issue the order of investigation may limit, quash, or 
modify any subpoena or subpoena duces tecum, upon application and for 
good cause shown. The person conducting an investigation may report to 
the Board of Directors any instance where any attorney has engaged in 
contemptuous, dilatory, obstructionist, or contumacious conduct or has 
otherwise violated any provision of this part during the course of an 
investigation. The Board of Directors, upon motion of the person 
conducting the investigation, or on its own motion, may make a finding 
of contempt and may then summarily suspend, without a hearing, any 
attorney representing a witness from further participation in the 
investigation.

[80 FR 5013, Jan. 30, 2015]



Sec.  308.147  Investigations confidential.

    Investigations shall be confidential. Information and documents 
obtained by the FDIC in the course of such investigations shall not be 
disclosed, except as provided in part 309 of this chapter and as 
otherwise required by law.

[80 FR 5013, Jan. 30, 2015]



Sec.  308.148  Rights of witnesses.

    In an investigation:
    (a) Any person compelled or requested to furnish testimony, 
documentary evidence, or other information, shall upon request be shown 
and provided with a copy of the order initiating the proceeding;
    (b) Any person compelled or requested to provide testimony as a 
witness or to furnish documentary evidence may be represented by a 
counsel who meets the requirements of Sec.  308.6 of the Uniform Rules. 
That counsel may be present and may:
    (1) Advise the witness before, during, and after such testimony;
    (2) Briefly question the witness at the conclusion of such testimony 
for clarification purposes; and
    (3) Make summary notes during such testimony solely for the use and 
benefit of the witness;
    (c) All persons testifying shall be sequestered. Such persons and 
their counsel shall not be present during the testimony of any other 
person, unless permitted in the discretion of the person conducting the 
investigation. Neither attorney(s) for the institution that is the 
subject of the investigation, nor attorney(s) for any other interested 
persons, shall have any right to be present during the testimony of any 
witness not personally represented by such attorney;
    (d) In cases of a perceived or actual conflict of interest arising 
out of an attorney's or law firm's representation of multiple witnesses, 
the person conducting the investigation may require the attorney to 
comply with the provisions of Sec.  308.8 of the Uniform Rules; and
    (e) Witness fees shall be paid in accordance with Sec.  308.14 of 
the Uniform Rules.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999; 80 
FR 5013, Jan. 30, 2015]



Sec.  308.149  Service of subpoena.

    Service of a subpoena shall be accomplished in accordance with Sec.  
308.11 of the Uniform Rules.

[[Page 100]]



Sec.  308.150  Transcripts.

    (a) General rule. Transcripts of testimony, if any, shall be 
recorded by an official reporter, or by any other person or means 
designated by the person conducting the investigation. A witness may, 
solely for the use and benefit of the witness, obtain a copy of the 
transcript of his or her testimony at the conclusion of the 
investigation or, at the discretion of the person conducting the 
investigation, at an earlier time, provided that the witness submits a 
written request for the transcript and the transcript is available. The 
witness requesting a copy of his or her testimony shall bear the cost 
thereof.
    (b) Subscription by witness. The transcript of testimony shall be 
subscribed by the witness, unless the person conducting the 
investigation and the witness, by stipulation, have waived the signing, 
or the witness is ill, cannot be found, or has refused to sign. If the 
transcript of the testimony is not subscribed by the witness, the 
official reporter taking the testimony shall certify that the transcript 
is a true and complete transcript of the testimony.

[56 FR 37975, Aug. 9, 1991, as amended at 80 FR 5013, Jan. 30, 2015]



 Subpart L_Procedures and Standards Applicable to a Notice of Change in 
 Senior Executive Officer or Director Pursuant to Section 32 of the FDIA



Sec.  308.151  Scope.

    The rules and procedures set forth in this subpart shall apply to 
the notice filed by a state nonmember bank pursuant to section 32 of the 
FDIA (12 U.S.C. 1831i) and Sec.  303.102 of this chapter for the consent 
of the FDIC to add or replace an individual on the Board of Directors, 
or to employ any individual as a senior executive officer, or change the 
responsibilities of any individual to a position of senior executive 
officer where:
    (a) The bank is not in compliance with all minimum capital 
requirements applicable to it as determined by the FDIC on the basis of 
such institution's most recent report of condition or report of 
examination or inspection;
    (b) The bank is in a troubled condition as defined in Sec.  
303.101(c) of this chapter; or
    (c) The FDIC determines, in connection with the review of a capital 
restoration plan required under section 38(e)(2) of the FDIA (12 U.S.C. 
1831o(e)(2)) or otherwise, that such prior notice is appropriate.

[64 FR 62100, Nov. 16, 1999]



Sec.  308.152  Grounds for disapproval of notice.

    The Board of Directors or its designee may issue a notice of 
disapproval with respect to a notice submitted by a state nonmember bank 
pursuant to section 32 of the FDIA (12 U.S.C. 1831i) where:
    (a) The competence, experience, character, or integrity of the 
individual with respect to whom such notice is submitted indicates that 
it would not be in the best interests of the depositors of the state 
nonmember bank to permit the individual to be employed by or associated 
with such bank; or
    (b) The competence, experience, character, or integrity of the 
individual with respect to whom such notice is submitted indicates that 
it would not be in the best interests of the public to permit the 
individual to be employed by, or associated with, the state nonmember 
bank.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec.  308.153  Procedures where notice of disapproval issues pursuant to 
Sec.  303.103(c) of this chapter.

    (a) The Notice of Disapproval shall be served upon the insured state 
nonmember bank and the candidate for director or senior executive 
officer. The Notice of Disapproval shall:
    (1) Summarize or cite the relevant considerations specified in Sec.  
308.152;
    (2) Inform the individual and the bank that a request for review of 
the disapproval may be filed within fifteen days of receipt of the 
Notice of Disapproval; and
    (3) Specify that additional information, if any, must be contained 
in the request for review.

[[Page 101]]

    (b) The request for review must be filed at the appropriate regional 
office.
    (c) The request for review must be in writing and should:
    (1) Specify the reasons why the FDIC should reconsider its 
disapproval; and
    (2) Set forth relevant, substantive and material documents, if any, 
that for good cause were not previously set forth in the notice required 
to be filed pursuant to section 32 of the FDIA (12 U.S.C. 1831i).

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec.  308.154  Decision on review.

    (a) Within 30 days of receipt of the request for review, the Board 
of Directors or its designee, shall notify the bank and/or the 
individual filing the reconsideration (hereafter ``petitioner'') of the 
FDIC's decision on review.
    (b) If the decision is to grant the review and approve the notice, 
the bank and the individual involved shall be so notified.
    (c) A denial of the request for review pursuant to section 32 of the 
FDIA shall:
    (1) Inform the petitioner that a written request for a hearing, 
stating the relief desired and the grounds therefore, may be filed with 
the Executive Secretary within 15 days after the receipt of the denial; 
and
    (2) Summarize or cite the relevant considerations specified in Sec.  
308.152.
    (d) If a decision is not rendered within 30 days, the petitioner may 
file a request for a hearing within fifteen days from the date of 
expiration.



Sec.  308.155  Hearing.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 30 days after receipt of a request for a hearing 
filed pursuant to Sec.  308.154. Upon request of the petitioner or the 
FDIC, the presiding officer or the Executive Secretary may order a later 
hearing date.
    (b) Burden of proof. The ultimate burden of proof shall be upon the 
candidate for director or senior executive officer. The burden of going 
forward with a prima facie case shall be upon the FDIC.
    (c) Hearing procedure. (1) The hearing shall be held in Washington, 
DC or at another designated place, before a presiding officer designated 
by the Executive Secretary.
    (2) The provisions of Sec. Sec.  308.6 through 308.12, 308.16, and 
308.21 of the Uniform Rules and Sec. Sec.  308.101 through 308.102, and 
308.104 through 308.106 of subpart B of the Local Rules shall apply to 
hearings held pursuant to this subpart.
    (3) The petitioner may appear at the hearing and shall have the 
right to introduce relevant and material documents and make an oral 
presentation. Members of the FDIC enforcement staff may attend the 
hearing and participate as representatives of the FDIC enforcement 
staff.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the petitioner afforded the hearing.
    (6) In the course of or in connection with any hearing under 
paragraph (c) of this section the presiding officer shall have the power 
to administer oaths and affirmations, to take or cause to be taken 
depositions of unavailable witnesses, and to issue, revoke, quash, or 
modify subpoenas and subpoenas duces tecum. Where the presentation of 
witnesses is permitted, the presiding officer may require the attendance 
of witnesses from any state, territory, or other place subject to the 
jurisdiction of the United States at any location where the proceeding 
is being conducted. Witness fees shall be paid in accordance with Sec.  
308.14 of the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or the 
members of the FDIC enforcement staff, the record shall remain open for 
five business

[[Page 102]]

days following the hearing for the parties to make additional 
submissions to the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors or its designee, where possible, within fifteen days after the 
last day for the parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors or its designee. 
The Executive Secretary's certification shall close the record.
    (d) Written submissions in lieu of hearing. The petitioner may in 
writing waive a hearing and elect to have the matter determined on the 
basis of written submissions.
    (e) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the order shall be final and unappealable, and shall remain in 
full force and effect.
    (f) Decision by Board of Directors or its designee. Within 45 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected individual whether the denial of the 
notice will be continued, terminated, or otherwise modified. The 
notification shall state the basis for any decision of the Board of 
Directors or its designee that is adverse to the petitioner. The Board 
of Directors or its designee shall promptly rescind or modify the denial 
where the decision is favorable to the petitioner.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Subpart M_Procedures and Standards Applicable to an Application Pursuant 
                        to Section 19 of the FDIA



Sec.  308.156  Scope.

    The rules and procedures set forth in this subpart shall apply to an 
application filed pursuant to section 19 of the FDIA (12 U.S.C. 1829) by 
an insured depository institution and/or an individual, who has been 
convicted of any criminal offense involving dishonesty or a breach of 
trust or money laundering or who has agreed to enter into a pretrial 
diversion or similar program in connection with the prosecution of such 
offense, to seek the prior written consent of the FDIC to become or 
continue as an institution-affiliated party with respect to an insured 
depository institution; to own or control directly or indirectly an 
insured depository institution; or to participate directly or indirectly 
in any manner in the conduct of the affairs of an insured depository 
institution.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999; 64 
FR 72913, Dec. 29, 1999]



Sec.  308.157  Relevant considerations.

    (a) In proceedings under Sec.  308.156 on an application to become 
or continue as an institution-affiliated party with respect to an 
insured depository institution; to own or control directly or indirectly 
an insured depository institution; or to participate directly or 
indirectly in any manner in the conduct of the affairs of an insured 
depository institution, the following shall be considered:
    (1) Whether the conviction or entry into a pretrial diversion or 
similar program is for a criminal offense involving dishonesty or breach 
of trust or money laundering;
    (2) Whether participation directly or indirectly by the person in 
any manner in the conduct of the affairs of the insured depository 
institution constitutes a threat to the safety or soundness of the 
insured depository institution or the interests of its depositors, or 
threatens to impair public confidence in the insured depository 
institution;

[[Page 103]]

    (3) Evidence of the applicant's rehabilitation;
    (4) The position to be held by the applicant;
    (5) The amount of influence and control the applicant will be able 
to exercise over the affairs and operations of the insured depository 
institution;
    (6) The ability of the management at the insured depository 
institution to supervise and control the activities of the applicant;
    (7) The level of ownership which the applicant will have at the 
insured depository institution;
    (8) Applicable fidelity bond coverage for the applicant; and
    (9) Additional factors in the specific case that appear relevant.
    (b) The question of whether a person, who was convicted of a crime 
or who agreed to enter a pretrial diversion or similar program, was 
guilty of that crime shall not be at issue in a proceeding under this 
subpart.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec.  308.158  Filing papers and effective date.

    (a) Filing with the regional office. Applications pursuant to 
section 19 shall be filed by in the appropriate regional office. Unless 
a waiver has been granted pursuant to paragraph (c) of this section, 
only an insured depository institution may file an application. Persons 
meeting the de minimis criteria set forth in the FDIC's Statement of 
Policy on Section 19 of the FDIA (63 FR 66177 (1998)) need not file an 
application.
    (b) Effective date. An application pursuant to section 19 may be 
made in writing at any time more than one year after the issuance of a 
decision denying an application pursuant to section 19. The removal and/
or prohibition pursuant to section 19 shall continue until the 
individual has been reinstated by the Board of Directors or its designee 
for good cause shown.
    (c) Waiver applications. If an institution does not file an 
application regarding an individual, the individual may file a request 
for a waiver of the institution filing requirement for section 19 of the 
FDIA. Such a waiver application shall be filed with the appropriate 
regional office and shall set forth substantial good cause why the 
application should be granted. The Director of the Division of 
Supervision and Consumer Protection (DSC) and, where confirmed in 
writing by the director, a deputy director or an associate director may 
grant or deny applications requesting waivers of the institution filing 
requirement. The authority delegated under this section shall be 
exercised only upon the concurrent certification of the General Counsel 
or his designee that the action to be taken is not inconsistent with 
section 19 of the FDIA.

[64 FR 62101, Nov. 16, 1999]



Sec.  308.159  Denial of applications.

    A denial of an application pursuant to section 19 shall:
    (a) Inform the applicant that a written request for a hearing, 
stating the relief desired and the grounds therefor and any supporting 
evidence, may be filed with the Executive Secretary within 60 days after 
the denial; and
    (b) Summarize or cite the relevant considerations specified in Sec.  
308.157 of this subpart.



Sec.  308.160  Hearings.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 60 days after receipt of a request for hearing on an 
application filed pursuant to Sec.  308.159. Upon the request of the 
applicant or FDIC enforcement counsel, the presiding officer or the 
Executive Secretary may order a later hearing date.
    (b) Burden of proof. The ultimate burden of proof shall be upon the 
person proposing to become or continue as an institution-affiliated 
party with respect to an insured depository institution; to own or 
control directly or indirectly an insured depository institution; or to 
participate directly or indirectly in any manner in the conduct of the 
affairs of an insured depository institution. The burden of going 
forward with a prima facie case shall be upon the FDIC.
    (c) Hearing procedure. (1) The hearing shall be held in Washington, 
DC, or at another designated place, before a presiding officer 
designated by the Executive Secretary.

[[Page 104]]

    (2) The provisions of Sec. Sec.  308.6 through 308.12, 308.16, and 
308.21 of the Uniform Rules and Sec. Sec.  308.101 through 308.102 and 
308.104 through 308.106 of subpart B of the Local Rules shall apply to 
hearings held pursuant to this subpart.
    (3) The applicant may appear at the hearing and shall have the right 
to introduce relevant and material documents and oral argument. Members 
of the FDIC enforcement staff may attend the hearing and participate as 
a party.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the applicant afforded the hearing.
    (6) In the course of or in connection with any hearing under this 
subsection, the presiding officer shall have the power to administer 
oaths and affirmations, to take or cause to be taken depositions of 
unavailable witnesses, and to issue, revoke, quash, or modify subpoenas 
and subpoenas duces tecum. Where the presentation of witnesses is 
permitted, the presiding officer may require the attendance of witnesses 
from any state, territory, or other place subject to the jurisdiction of 
the United States at any location where the proceeding is being 
conducted. Witness fees shall be paid in accordance with Sec.  308.14 of 
the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or FDIC 
enforcement staff, the record shall remain open for five business days 
following the hearing for the parties to make additional submissions to 
the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors, where possible, within 20 days after the last day for the 
parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors or its designee. 
The Executive Secretary's certification shall close the record.
    (d) Written submissions in lieu of hearing. The applicant or the 
bank may in writing waive a hearing and elect to have the matter 
determined on the basis of written submissions.
    (e) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the person shall remain barred under section 19.
    (f) Decision by Board of Directors or its designee. Within 60 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected person whether the person shall 
remain barred under section 19. The notification shall state the basis 
for any decision of the Board of Directors or its designee that is 
adverse to the applicant.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



  Subpart N_Rules and Procedures Applicable to Proceedings Relating to 
     Suspension, Removal, and Prohibition Where a Felony ls Charged

    Source: 72 FR 67235, Nov. 28, 2007, unless otherwise noted.



Sec.  308.161  Scope.

    The rules and procedures set forth in this subpart shall apply to 
the following:
    (a) Proceedings to suspend an institution-affiliated party of an 
insured State nonmember bank, or an insured State savings association, 
or to prohibit such party from further participation in the conduct of 
the affairs of any depository institution, if continued service or 
participation by such

[[Page 105]]

party posed, poses, or may pose a threat to the interests of the 
depositors of, or threatened, threatens, or may threaten to impair 
public confidence in, any relevant depository institution (as defined at 
section 1818(g)(1)(E) of Title 12), where the individual is the subject 
of any state or federal information, indictment, or complaint, involving 
the commission of, or participation in:
    (1) A crime involving dishonesty or breach of trust punishable by 
imprisonment exceeding one year under state or federal law; or
    (2) A criminal violation of section 1956, 1957, or 1960 of title 18 
or section 5322 or 5324 of title 31.
    (b) Proceedings to remove from office or to prohibit an institution-
affiliated party from further participation in the conduct of the 
affairs of any depository institution without the consent of the Board 
of Directors or its designee where:
    (1) A judgment of conviction or an agreement to enter a pre-trial 
diversion or other similar program has been entered against such party 
in connection with a crime described in paragraph (a)(1) of this section 
that is not subject to further appellate review, if continued service or 
participation by such party posed, poses, or may pose a threat to the 
interests of the depositors of, or threatened, threatens, or may 
threaten to impair public confidence in, any relevant depository 
institution (as defined at section 1818(g)(1)(E) of title 12); or
    (2) A judgment of conviction or an agreement to enter a pre-trial 
diversion or other similar program has been entered against such party 
in connection with a crime described in paragraph (a)(2) of this 
section.

[56 FR 37975, Aug. 9, 1991, as amended at 80 FR 5013, Jan. 30, 2015]



Sec.  308.162  Relevant considerations.

    (a)(1) In proceedings under Sec.  308.161(a) and (b) for a notice of 
suspension or prohibition, or a removal or prohibition order, the 
following shall be considered:
    (i) Whether the alleged offense is a crime which is punishable by 
imprisonment for a term exceeding one year under state or federal law 
and which involves dishonesty or breach of trust; and
    (ii) Whether the alleged offense is a criminal violation of section 
1956, 1957, or 1960 of title 18 or section 5322 or 5324 of title 31; and
    (iii) Whether continued service or participation by the institution-
affiliated party posed, poses, or may pose a threat to the interests of 
the depositors of, or threatened, threatens, or may threaten to impair 
public confidence in, any relevant depository institution (as defined at 
section 1818(g)(1)(E) of title 12).
    (b) The question of whether an institution-affiliated party is 
guilty of the subject crime shall not be tried or considered in a 
proceeding under this subpart.



Sec.  308.163  Notice of suspension or prohibition, 
and orders of removal or prohibition.

    (a) Notice of suspension or prohibition.
    (1) The Board of Directors or its designee may suspend or prohibit 
from further participation in the conduct of the affairs of any 
depository institution an institution-affiliated party by written notice 
of suspension or prohibition upon a determination by the Board of 
Directors or its designee that the grounds for such suspension or 
prohibition exist. The written notice of suspension or prohibition shall 
be served upon the institution-affiliated party and any depository 
institution that the subject of the action is affiliated with at the 
time the notice is issued.
    (2) The suspension or prohibition shall be effective immediately 
upon service on the institution-affiliated party, who shall immediately 
comply with the requirements thereof, and shall remain in effect until 
final disposition of the information, indictment, complaint, or until it 
is terminated by the Board of Directors or its designee under the 
provisions of Sec.  308.164 or otherwise.
    (b) Order of removal or prohibition.
    (1) The Board of Directors or its designee may issue an order 
removing or prohibiting from further participation

[[Page 106]]

in the conduct of the affairs of any depository institution an 
institution-affiliated party, when a final judgment of conviction not 
subject to further appellate review is entered against the institution-
affiliated party for a crime referred to in Sec.  308.161(a)(1) and 
continued service or participation by such party posed, poses, or may 
pose a threat to the interests of the depositors of, or threatened, 
threatens, or may threaten to impair public confidence in, any relevant 
depository institution (as defined at section 1818(g)(1)(E) of title 
12).
    (2) An order of removal or prohibition shall be entered if a 
judgment of conviction is entered against the institution-affiliated 
party for a crime described in Sec.  308.161(a)(2).
    (c) The notice of suspension or prohibition or the order of removal 
or prohibition shall:
    (1) Inform the institution-affiliated party that a written request 
for a hearing, stating the relief desired and grounds therefore, and any 
supporting evidence, may be filed with the Executive Secretary within 30 
days after service of the written notice or order; and
    (2) Set forth the basis and facts in support of the notice or order 
and address the relevant considerations specified in Sec.  308.162.
    (d) To obtain a hearing, the institution-affiliated party shall file 
with the Executive Secretary a written request for a hearing within 30 
days after service of the notice of suspension or prohibition or the 
order of removal or prohibition, which shall:
    (1) Admit or deny specifically each allegation in the notice or 
order, or state that the institution-affiliated party is without 
knowledge or information, which statement shall have the effect of a 
denial. Any allegation not denied shall be deemed to be admitted. When 
an institution-affiliated party 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; and
    (2) Shall state whether the institution-affiliated party is 
requesting termination or modification of the notice or order, and shall 
state with particularity how he intends to show that his continued 
service to or participation in the conduct of the affairs of the 
depository institution would not, or is not likely to, pose a threat to 
the interests of its depositors or to impair public confidence in the 
depository institution.

[56 FR 37975, Aug. 9, 1991, as amended at 80 FR 5014, Jan. 30, 2015]



Sec.  308.164  Hearings.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 30 days after receipt of a request for hearing filed 
pursuant to Sec.  308.163. Upon the request of the institution-
affiliated party, the presiding officer or the Executive Secretary may 
order a later hearing date.
    (b) Hearing procedure. (1) The hearing shall be held in Washington, 
DC, or at another designated place, before a presiding officer 
designated by the Executive Secretary.
    (2) The provisions of Sec. Sec.  308.6 through 308.12, 308.16, and 
308.21 of the Uniform Rules and Sec. Sec.  308.101 through 308.102 and 
308.104 through 308.106 of subpart B of the Local Rules shall apply to 
hearings held pursuant to this subpart.
    (3) The institution-affiliated party may appear at the hearing and 
shall have the right to introduce relevant and material documents. 
Members of the FDIC enforcement staff may attend the hearing and 
participate as representatives of the FDIC enforcement staff. Following 
the introduction of all evidence, the applicant and the representative 
of the FDIC enforcement staff 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.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be

[[Page 107]]

furnished, upon request and payment of the cost thereof, to the 
institution-affiliated party afforded the hearing. 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.
    (6) In the course of or in connection with any hearing under 
paragraph (b) of this section, the presiding officer shall have the 
power to administer oaths and affirmations, to take or cause to be taken 
depositions of unavailable witnesses, and to issue, revoke, quash, or 
modify subpoenas and subpoenas duces tecum. Where the presentation of 
witnesses is permitted, the presiding officer may require the attendance 
of witnesses from any state, territory, or other place subject to the 
jurisdiction of the United States at any location where the proceeding 
is being conducted. Witness fees shall be paid in accordance with Sec.  
308.14 of the Uniform Rules.
    (7) Upon the request of the institution-affiliated party afforded 
the hearing, or the members of the FDIC enforcement staff, the record 
shall remain open for five business days following the hearing for the 
parties to make additional submissions to the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors, where possible, within 10 days after the last day for the 
parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors. The Executive 
Secretary's certification shall close the record.
    (10) The institution-affiliated party 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 a depository institution 
does not, or is not likely to, pose a threat to the interests of the 
depository institution's depositors or threaten to impair public 
confidence in the depository institution.
    (c) Written submissions in lieu of hearing. The institution-
affiliated party may in writing waive a hearing and elect to have the 
matter determined on the basis of written submissions.
    (d) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the order shall be final and unappealable, and shall remain in 
full force and effect pursuant to Sec.  308.163.
    (e) Decision by Board of Directors or its designee. Within 60 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the institution-affiliated party whether the 
notice of suspension or prohibition or the order of removal or 
prohibition will be continued, terminated, or otherwise modified. The 
notification shall state the basis for any decision of the Board of 
Directors or its designee that is adverse to the institution-affiliated 
party. The Board of Directors or its designee shall promptly rescind or 
modify a notice of suspension or prohibition or an order of removal or 
prohibition where the decision is favorable to the institution-
affiliated party.

[56 FR 37975, Aug. 9, 1991, as amended at 80 FR 5014, Jan. 30, 2015]



   Subpart O_Liability of Commonly Controlled Depository Institutions



Sec.  308.165  Scope.

    The rules and procedures in this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings in connection 
with the assessment of cross-guaranty liability against commonly 
controlled depository institutions.



Sec.  308.166  Grounds for assessment of liability.

    Any insured depository institution shall be liable for any loss 
incurred or reasonably anticipated to be incurred by the corporation, 
subsequent to August 9, 1989, in connection with the default of a 
commonly controlled insured depository institution, or any loss incurred 
or reasonably anticipated to be

[[Page 108]]

incurred in connection with any assistance provided by the Corporation 
to any commonly controlled depository institution in danger of default.



Sec.  308.167  Notice of assessment of liability.

    (a) The amount of liability shall be assessed upon service of a 
Notice of Assessment of Liability upon the liable depository 
institution, within two years of the date the Corporation incurred the 
loss.
    (b) Contents of Notice. (1) The Notice of Assessment of Liability 
shall set forth:
    (i) The basis for the FDIC's jurisdiction over the proceeding;
    (ii) A statement of the Corporation's good faith estimate of the 
amount of loss it has incurred or anticipates incurring;
    (iii) A statement of the method by which the estimated loss was 
calculated;
    (iv) A proposed order directing payment by the liable institution of 
the FDIC's estimated amount of loss, and the schedule under which the 
payment will be due;
    (v) In cases involving more than one liable institution, the 
estimated amount of each institution's share of the liability.
    (2) The Notice of Assessment of Liability shall advise the liable 
institution(s):
    (i) That an answer must be filed within 20 days after service of the 
Notice;
    (ii) That, if a hearing is requested, a request for a hearing must 
be filed within 20 days after service of the Notice;
    (iii) That if a hearing is requested, such hearing will be held 
within the judicial district in which the liable institution is found, 
or, in cases involving more than one liable institution, within a 
judicial district in which at least one liable institution is found;
    (iv) That, unless the administrative law judge sets a different 
date, the hearing will commence 120 days after service of the Notice of 
Assessment of Liability; and
    (v) That failure to request a hearing shall render the Notice of 
Assessment a final and unappealable order.



Sec.  308.168  Effective date of and payment under an order to pay.

    (a) Unless otherwise provided in the Notice of Assessment of 
Liability, payment of the assessment shall be due on or before the 21st 
day after service of the Assessment of Liability, under the terms of the 
schedule for payment set forth therein.
    (b) All payments collected shall be paid to the Corporation.
    (c) Failure to request a hearing as prescribed herein shall render 
the order to pay final and unappealable.



Subpart P_Rules and Procedures Relating to the Recovery of Attorney Fees 
                           and Other Expenses



Sec.  308.169  Scope.

    This subpart, and the Equal Access to Justice Act (5 U.S.C. 504), 
which it implements, apply to adversary adjudications before the FDIC. 
The types of adjudication covered by this subpart are those listed in 
Sec.  308.01 of the Uniform Rules. The Uniform Rules and subpart B of 
the Local Rules apply to any proceedings to recover fees and expenses 
under this subpart.



Sec.  308.170  Filing, content, and service of documents.

    (a) Time to file. An application and any other pleading or document 
related to the application shall be filed with the Executive Secretary 
within 30 days after service of the final order of the Board of 
Directors in disposition of the proceeding whenever:
    (1) The applicant seeks an award pursuant to 5 U.S.C. 504(a)(1) as 
the prevailing party in the adversary adjudication or in a discrete 
significant substantive portion of the proceeding; or
    (2) The applicant, in an adversary adjudication arising from an 
action to enforce compliance with a statutory or regulatory requirement, 
asserts pursuant to 5 U.S.C. 504(a)(4) that the demand by the FDIC is 
substantially in excess of the decision of the administrative law judge 
and is unreasonable when compared with such decision under the facts and 
circumstances of the case.

[[Page 109]]

    (b) Content. The application and related documents shall conform to 
the requirements of Sec.  308.10(b) and (c) of the Uniform Rules.
    (c) Service. The application and related documents shall be served 
on all parties to the adversary adjudication in accordance with Sec.  
308.11 of the Uniform Rules, except that statements of net worth shall 
be served only on counsel for the FDIC.
    (d) Upon receipt of an application, the Executive Secretary shall 
refer the matter to the administrative law judge who heard the 
underlying adversary proceeding, provided that if the original 
administrative law judge is unavailable, or the Executive Secretary 
determines, in his or her sole discretion, that there is cause to refer 
the matter to a different administrative law judge, the matter shall be 
referred to a different administrative law judge.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec.  308.171  Responses to application.

    (a) By FDIC. (1) Within 20 days after service of an application, 
counsel for the FDIC may file with the Executive Secretary and serve on 
all parties an answer to the application. Unless counsel for the FDIC 
requests and is granted an extension of time for filing or files a 
statement of intent to negotiate under Sec.  308.179 of this subpart, 
failure to file an answer within the 20-day period will be treated as a 
consent to the award requested.
    (2) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of the FDIC's 
position. If the answer is based on any alleged facts not already in the 
record of the proceeding, the answer shall include either supporting 
affidavits or a request for further proceedings under Sec.  308.180.
    (b) Reply to answer. The applicant may file a reply with regard to 
an application filed pursuant to 5 U.S.C. 504 (a)(1), if the FDIC has 
addressed in its answer any of the following issues: that the position 
of the FDIC was substantially justified, that the applicant unduly 
protracted the proceedings, or that special circumstances make an award 
unjust. The applicant may file a reply with regard to an application 
filed pursuant to 5 U.S.C. 504 (a)(4), if the FDIC has addressed in its 
answer any of the following issues: that the applicant has committed a 
willful violation of law or otherwise acted in bad faith, that the 
FDIC's demand is reasonable when compared to the decision of the 
administrative law judge or that special circumstances make an award 
unjust. The reply shall be filed within 15 days after service of the 
answer. If the reply is based on any alleged facts not already in the 
record of the proceeding, the reply shall include either supporting 
affidavits or a request for further proceedings under Sec.  308.180.
    (c) By other parties. Any party to the adversary adjudication, other 
than the applicant and the FDIC, may file comments on an application 
within 20 days after service of the application. If the applicant is 
entitled to file a reply to the FDIC's answer under paragraph (b) of 
this section, another party may file comments on the answer within 15 
days after service of the answer. A commenting party may not participate 
in any further proceedings on the application unless the administrative 
law judge determines that the public interest requires such 
participation in order to permit additional exploration of matters 
raised in the comments.
    (d) Additional response. Additional filings in the nature of 
pleadings may be submitted only by leave of the administrative law 
judge.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec.  308.172  Eligibility of applicants.

    (a) Genera1 rule. To be eligible for an award under this subpart, an 
applicant must have been named or admitted as a party to the proceeding. 
In addition, the applicant must show that it meets all other conditions 
of eligibility set out in paragraph (b) of this section.
    (b) Types of eligible applicant. The types of eligible applicant 
are:
    (1) An individual with a net worth of not more than $2,000,000 at 
the time the adversary adjudication was initiated; or
    (2) Any owner of an unincorporated business, or any partnership, 
corporation, associations, unit of local government or organization, the 
net worth of which did not exceed $7,000,000 and

[[Page 110]]

which did not have more than 500 employees at the time the adversary 
adjudication was initiated.
    (3) For purposes of an application filed pursuant to 5 U.S.C. 
504(a)(4), a small entity as defined in 5 U.S.C. 601.
    (c) Factors to be considered. In determining the types of eligible 
applicants:
    (1) An applicant who owns an unincorporated business shall be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which he or she prevails are 
related to personal interests rather than to business interests.
    (2) An applicant's net worth includes the value of any assets 
disposed of for the purpose of meeting an eligibility standard and 
excludes the value of any obligations incurred for this purpose. 
Transfers of assets or obligations incurred for less than reasonably 
equivalent value will be presumed to have been made for this purpose.
    (3) The net worth of a bank shall be established by the net worth 
information reported in conformity with applicable instructions and 
guidelines on the bank's Consolidated Report of Condition and Income 
filed for the last reporting date before the initiation of the adversary 
adjudication.
    (4) The employees of an applicant include all those persons who were 
regularly providing services for remuneration for the applicant, under 
its direction and control, on the date the adversary adjudication was 
initiated. Part-time employees are included as though they were full-
time employees.
    (5) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. The 
aggregated net worth shall be adjusted if necessary to avoid counting 
the net worth of any entity twice. As used in this subpart, affiliates 
are individuals, corporations, and entities that directly or indirectly 
or acting through one or more entities control a majority of the voting 
shares of the applicant; and corporations and entities of which the 
applicant directly or indirectly owns or controls a majority of the 
voting shares. The Board of Directors may, however, on the 
recommendation of the administrative law judge, or otherwise, determine 
that such aggregation with regard to one or more of the applicant's 
affiliates would be unjust and contrary to the purposes of this subpart 
in light of the actual relationship between the affiliated entities. In 
such a case the net worth and employees of the relevant affiliate or 
affiliates will not be aggregated with those of the applicant. In 
addition, the Board of Directors may determine that financial 
relationships of the applicant other than those described in this 
paragraph constitute special circumstances that would make an award 
unjust.
    (6) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec.  308.173  Prevailing party.

    (a) General rule. An eligible applicant who, following an adversary 
adjudication has gained victory on the merits in the proceeding is a 
``prevailing party''. An eligible applicant may be a ``prevailing 
party'' if a settlement of the proceeding was effected on terms 
favorable to it or if the proceeding against it has been dismissed. In 
appropriate situations an applicant may also have prevailed if the 
outcome of the proceeding has substantially vindicated the applicant's 
position on the significant substantive matters at issue, even though 
the applicant has not totally avoided adverse final action.
    (b) Segregation of costs. When a proceeding has presented a number 
of discrete substantive issues, an applicant may have prevailed even 
though all the issues were not resolved in its favor. If such an 
applicant is deemed to have prevailed, any award shall be based on the 
fees and expenses incurred in connection with the discrete significant 
substantive issue or issues on which the applicant's position has been 
upheld. If such segregation of costs is not practicable, the award may 
be based on a fair proration of those fees and expenses incurred in the 
entire proceeding which would be recoverable under Sec.  308.175 if 
proration were not performed, whether separate or prorated treatment is 
appropriate, and the appropriate proration percentage, shall

[[Page 111]]

be determined on the facts of the particular case. Attention shall be 
given to the significance and nature of the respective issues and their 
separability and interrelationship.



Sec.  308.174  Standards for awards.

    (a) For applications filed pursuant to 5 U.S.C. 504(a)(1), a 
prevailing applicant may receive an award for fees and expenses unless 
the position of the FDIC during the proceeding was substantially 
justified or special circumstances make the award unjust. An award will 
be reduced or denied if the applicant has unduly or unreasonably 
protracted the proceedings. Awards for fees and expenses incurred before 
the date on which the adversary adjudication was initiated are allowable 
if their incurrence was necessary to prepare for the proceeding.
    (b) For applications filed pursuant to 5 U.S.C. 504(a)(4), an 
applicant may receive an award unless the demand by the FDIC was 
reasonable when compared with the decision of the administrative law 
judge, the applicant has committed a willful violation of law or 
otherwise acted in bad faith, or special circumstances make an award 
unjust.

[64 FR 62102, Nov. 16, 1999]



Sec.  308.175  Measure of awards.

    (a) General rule. Awards will be based on rates customarily charged 
by persons engaged in the business of acting as attorneys, agents, and 
expert witnesses, even if the services were made available without 
charge or at a reduced rate, provided that no award under this subpart 
for the fee of an attorney or agent may exceed $125 per hour. No award 
to compensate an expert witness may exceed the highest rate at which the 
FDIC pays expert witnesses. An award may include the reasonable expenses 
of the attorney, agent, or expert witness as a separate item, if the 
attorney, agent, or expert witness ordinarily charges clients separately 
for such expenses. Fees and expenses awarded under 5 U.S.C. 504(a)(4) 
related to defending against an excessive demand shall be paid only as a 
consequence of appropriations paid in advance.
    (b) Determination of reasonableness of fees. In determining the 
reasonableness of the fee sought for an attorney, agent, or expert 
witness, the administrative law judge shall consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fee for like services, or, if he or she 
is an employee of the applicant, the fully allocated cost of the 
services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) Awards for studies. The reasonable cost of any study, analysis, 
test, project, or similar matter prepared on behalf of an applicant may 
be awarded to the extent that the charge for the service does not exceed 
the prevailing rate payable for similar services, and the study or other 
matter was necessary for preparation of the applicant's case and not 
otherwise required by law or sound business or financial practice.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec.  308.176  Application for awards.

    (a) Contents. An application for an award of fees and expenses under 
this subpart shall contain:
    (1) The name of the applicant and an identification of the 
proceeding;
    (2) For applications filed pursuant to 5 U.S.C. 504(a)(1), a showing 
that the applicant has prevailed, and an identification of each issue 
with regard to which the applicant believes that the position of the 
FDIC in the proceeding was not substantially justified;
    (3) For applications filed pursuant to 5 U.S.C. 504(a)(4), a showing 
that the demand by the FDIC is substantially in excess of the decision 
of the administrative law judge and is unreasonable when compared with 
such decision under the facts and circumstances of the case;

[[Page 112]]

    (4) A statement of the amount of fees and expenses for which an 
award is sought;
    (5) For applications filed pursuant to 5 U.S.C. 504(a)(4), a 
statement of the amount of fees and expenses which constitute 
appropriations paid in advance;
    (6) If the applicant is not an individual, a statement of the number 
of its employees on the date the proceeding was initiated;
    (7) A description of any affiliated individuals or entities, as 
defined in Sec.  308.172(c)(5), or a statement that none exist;
    (8) A declaration that the applicant, together with any affiliates, 
had a net worth not more than the ceiling established for it by Sec.  
308.172(b) as of the date the proceeding was initiated;
    (9) For applications filed pursuant to 5 U.S.C. 504(a)(1), a 
statement whether the applicant is a small entity as defined in 5 U.S.C. 
601; and
    (10) Any other matters that the applicant wishes the FDIC to 
consider in determining whether and in what amount an award should be 
made.
    (b) Verification. The application shall be signed by the applicant 
or an authorized officer or attorney of the applicant. It shall also 
contain or be accompanied by a written verification under oath or under 
penalty of perjury that the information provided in the application and 
supporting documents is true and correct.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec.  308.177  Statement of net worth.

    (a) General rule. A statement of net worth must be filed with the 
application for an award of fees. The statement shall reflect the net 
worth of the applicant and all affiliates of the applicant.
    (b) Contents. (1) The statement of net worth may be in any form 
convenient to the applicant which fully discloses all the assets and 
liabilities of the applicant and all the assets and liabilities of its 
affiliates, as of the time of the initiation of the adversary 
adjudication. Unaudited financial statements are acceptable unless the 
administrative law judge or the Board of Directors otherwise requires. 
Financial statements or reports to a Federal or state agency, prepared 
before the initiation of the adversary adjudication for other purposes, 
and accurate as of a date not more than three months prior to the 
initiation of the proceeding, are acceptable in establishing net worth 
as of the time of the initiation of the proceeding, unless the 
administrative law judge or the Board of Directors otherwise requires.
    (2) In the case of applicants or affiliates that are not banks, net 
worth shall be considered for the purposes of this subpart to be the 
excess of total assets over total liabilities, as of the date the 
underlying proceeding was initiated, except as adjusted under Sec.  
308.172(c)(2). Assets and liabilities of individuals shall include those 
beneficially owned within the meaning of the FDIC's rules and 
regulations.
    (3) If the applicant or any of its affiliates is a bank, the portion 
of the statement of net worth which relates to the bank shall consist of 
a copy of the bank's last Consolidated Report of Condition and Income 
filed before the initiation of the adversary adjudication. In all cases 
the administrative law judge or the Board of Directors may call for 
additional information needed to establish the applicant's net worth as 
of the initiation of the proceeding. Except as adjusted by additional 
information that was called for under the preceding sentence, net worth 
shall be considered for the purposes of this subpart to be the total 
equity capital (or, in the case of mutual savings banks, the total 
surplus accounts) as reported, in conformity with applicable 
instructions and guidelines, on the bank's Consolidated Report of 
Condition and Income filed for the last reporting date before the 
initiation of the proceeding.
    (c) Statement confidential. Unless otherwise ordered by the Board of 
Directors or required by law, the statement of net worth shall be for 
the confidential use of counsel for the FDIC, the Board of Directors, 
and the administrative law judge.



Sec.  308.178  Statement of fees and expenses.

    The application shall be accompanied by a statement fully 
documenting the fees and expenses for which an award is sought. A 
separate itemized statement

[[Page 113]]

shall be submitted for each professional firm or individual whose 
services are covered by the application, showing the hours spent in work 
in connection with the proceeding by each individual, a description of 
the specific services performed, the rate at which each fee has been 
computed, any expenses for which reimbursement is sought, the total 
amount claimed, and the total amount paid or payable by the applicant or 
by any other person or entity for the services performed. The 
administrative law judge or the Board of Directors may require the 
applicant to provide vouchers, receipts, or other substantiation for any 
expenses claimed.



Sec.  308.179  Settlement negotiations.

    If counsel for the FDIC and the applicant believe that the issues in 
a fee application can be settled, they may jointly file with the 
Executive Secretary with a copy to the administrative law judge a 
statement of their intent to negotiate a settlement. The filing of this 
statement shall extend the time for filing an answer under Sec.  308.171 
for an additional 30 days, and further extensions may be granted by the 
administrative law judge upon the joint request of counsel for the FDIC 
and the applicant.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec.  308.180  Further proceedings.

    (a) General rule. Ordinarily, the determination of a recommended 
award will be made by the administrative law judge on the basis of the 
written record. However, on request of either the applicant or the FDIC, 
or on his or her own initiative, the administrative law judge may order 
further proceedings such as an informal conference, oral argument, 
additional written submissions, or an evidentiary hearing. Such further 
proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application and will be 
conducted promptly and expeditiously.
    (b) Request for further proceedings. A request for further 
proceedings under this section shall specifically identify the 
information sought or the issues in dispute and shall explain why 
additional proceedings are necessary.
    (c) Hearing. Ordinarily, the administrative law judge shall hold an 
oral evidentiary hearing only on disputed issues of material fact which 
cannot be adequately resolved through written submissions.



Sec.  308.181  Recommended decision.

    The administrative law judge shall file with the Executive Secretary 
a recommended decision on the fee application not later than 90 days 
after the filing of the application or 30 days after the conclusion of 
the hearing, whichever is later. The recommended decision shall include 
written proposed findings and conclusions on the applicant's eligibility 
and its status as a prevailing party and an explanation of the reasons 
for any difference between the amount requested and the amount of the 
recommended award. The recommended decision shall also include, if at 
issue, proposed findings on whether the FDIC's position was 
substantially justified, whether the applicant unduly protracted the 
proceedings, or whether special circumstances make an award unjust. The 
administrative law judge shall file the record of the proceeding on the 
fee application and, at the same time, serve upon each party a copy of 
the recommended decision, findings, conclusions, and proposed order.



Sec.  308.182  Board of Directors action.

    (a) Exceptions to recommended decision. Within 20 days after service 
of the recommended decision, findings, conclusions, and proposed order, 
the applicant or counsel for the FDIC may file with the Executive 
Secretary written exceptions thereto. A supporting brief may also be 
filed.
    (b) Decision of Board of Directors. The Board of Directors shall 
render its decision within 60 days after the matter is submitted to it 
by the Executive Secretary. The Executive Secretary shall furnish copies 
of the decision and order of the Board of Directors to the parties. 
Judicial review of the decision and order may be obtained as provided in 
5 U.S.C. 504(c)(2).

[[Page 114]]



Sec.  308.183  Payment of awards.

    An applicant seeking payment of an award made by the Board of 
Directors shall submit to the Executive Secretary a statement that the 
applicant will not seek judicial review of the decision and order or 
that the time for seeking further review has passed and no further 
review has been sought. The FDIC will pay the amount awarded within 30 
days after receiving the applicant's statement, unless judicial review 
of the award or of the underlying decision of the adversary adjudication 
has been sought by the applicant or any other party to the proceeding.



     Subpart Q_Issuance and Review of Orders Pursuant to the Prompt 
    Corrective Action Provisions of the Federal Deposit Insurance Act

    Source: 57 FR 44897, Sept. 29, 1992, unless otherwise noted.



Sec.  308.200  Scope.

    The rules and procedures set forth in this subpart apply to banks, 
insured branches of foreign banks and senior executive officers and 
directors of banks that are subject to the provisions of section 38 of 
the Federal Deposit Insurance Act (section 38) (12 U.S.C. 1831o) and 
subpart H of part 324 of this chapter.

[83 FR 17739, Apr. 24, 2018]



Sec.  308.201  Directives to take prompt corrective action.

    (a) Notice of intent to issue directive--(1) In general. The FDIC 
shall provide an undercapitalized, significantly undercapitalized, or 
critically undercapitalized bank prior written notice of the FDIC's 
intention to issue a directive requiring such bank to take actions or to 
follow proscriptions described in section 38 that are within the FDIC'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 bank shall 
have such time to respond to a proposed directive as provided by the 
FDIC under paragraph (c) of this section.
    (2) Immediate issuance of final directive. If the FDIC finds it 
necessary in order to carry out the purposes of section 38 of the FDI 
Act, the FDIC may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue a directive requiring a bank immediately 
to take actions or to follow proscriptions described in section 38 that 
are within the FDIC'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 bank that is subject to such an immediately effective directive may 
submit a written appeal of the directive to the FDIC. Such an appeal 
must be received by the FDIC within 14 calendar days of the issuance of 
the directive, unless the FDIC permits a longer period. The FDIC 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 FDIC, 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 bank's capital measures and capital levels;
    (2) A description of the restrictions, prohibitions or affirmative 
actions that the FDIC 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 bank subject to the directive may file 
with the FDIC a written response to the notice.
    (c) Response to notice--(1) Time for response. A bank may file a 
written response to a notice of intent to issue a directive within the 
time period set by the FDIC. The date shall be at least 14 calendar days 
from the date of the notice unless the FDIC determines that a shorter 
period is appropriate in light of the financial condition of the bank or 
other relevant circumstances.
    (2) Content of response. The response should include:
    (i) An explanation why the action proposed by the FDIC is not an 
appropriate exercise of discretion under section 38;

[[Page 115]]

    (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 bank 
regarding the proposed directive.
    (d) FDIC consideration of response. After considering the response, 
the FDIC may:
    (1) Issue the directive as proposed or in modified form;
    (2) Determine not to issue the directive and so notify the bank; or
    (3) Seek additional information or clarification of the response 
from the bank or any other relevant source.
    (e) Failure to file response. Failure by a bank to file with the 
FDIC, 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 bank 
that is subject to a directive under this subpart may, upon a change in 
circumstances, request in writing that the FDIC reconsider the terms of 
the directive, and may propose that the directive be rescinded or 
modified. Unless otherwise ordered by the FDIC, the directive shall 
continue in place while such request is pending before the FDIC.



Sec.  308.202  Procedures for reclassifying a bank 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.  324.403(d) of this 
chapter, the FDIC may reclassify a well-capitalized bank 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 FDIC determines that the bank is in unsafe or unsound 
condition; or
    (2) The FDIC, pursuant to section 8(b)(8) of the FDI Act (12 U.S.C. 
1818(b)(8)), deems the bank 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.  324.403(d) of this chapter, the FDIC shall issue and serve on the 
bank a written notice of the FDIC's intention to reclassify it.
    (2) Contents of notice. A notice of intention to reclassify a bank 
based on unsafe or unsound condition shall include:
    (i) A statement of the bank's capital measures and capital levels 
and the category to which the bank would be reclassified;
    (ii) The reasons for reclassification of the bank;
    (iii) The date by which the bank subject to the notice of 
reclassification may file with the FDIC 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 FDIC 
determines that a shorter period is appropriate in light of the 
financial condition of the bank or other relevant circumstances.
    (3) Response to notice of proposed reclassification. A bank may file 
a written response to a notice of proposed reclassification within the 
time period set by the FDIC. The response should include:
    (i) An explanation of why the bank is not in an 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 bank 
regarding the reclassification.
    (4) Failure to file response. Failure by a bank to file, within the 
specified time period, a written response with the FDIC 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 FDIC under this section. If the bank desires to present oral 
testimony or witnesses at the hearing, the bank shall include a request 
to do so with the request for an

[[Page 116]]

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 FDIC shall issue an 
order directing an informal hearing to commence no later than 30 days 
after receipt of the request, unless the bank requests a later date. The 
hearing shall be held in Washington, DC or at such other place as may be 
designated by the FDIC, before a presiding officer(s) designated by the 
FDIC to conduct the hearing.
    (7) Hearing procedures. (i) The bank shall have the right to 
introduce relevant written materials and to present oral argument at the 
hearing. The bank may introduce oral testimony and present witnesses 
only if expressly authorized by the FDIC 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 the Uniform Rules of Practice and Procedure in this part 
apply to an informal hearing under this section unless the FDIC orders 
that such procedures shall apply.
    (ii) The informal hearing shall be recorded, and a transcript shall 
be furnished to the bank 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 FDIC 
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 FDIC will decide whether to reclassify the 
bank and notify the bank of the FDIC's decision.
    (b) Request for rescission of reclassification. Any bank that has 
been reclassified under this section, may, upon a change in 
circumstances, request in writing that the FDIC 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 
FDIC, the bank shall remain subject to the reclassification and to any 
directives issued in connection with that reclassification while such 
request is pending before the FDIC.

[57 FR 44897, Sept. 29, 1992, as amended at 78 FR 55470, Sept. 10, 2013; 
83 FR 17739, Apr. 24, 2018]



Sec.  308.203  Order to dismiss a director or senior executive officer.

    (a) Service of notice. When the FDIC issues and serves a directive 
on a bank pursuant to Sec.  308.201 of this part requiring the bank to 
dismiss from office any director or senior executive officer under Sec.  
38(f)(2)(F)(ii) of the FDI Act, the FDIC shall also serve a copy of the 
directive, or the relevant portions of the directive where 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 FDIC at the request of the 
Respondent.
    (2) Contents of request; informal hearing. The request for 
reinstatement shall include reasons why the Respondent should be 
reinstated, and may include a request for an informal hearing before the 
FDIC under this section. If the Respondent desires to present oral

[[Page 117]]

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 FDIC, 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 bank to dismiss from office any director or senior 
executive officer, the FDIC 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 
FDIC, before a presiding officer(s) designated by the FDIC 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 FDIC 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 the 
Uniform Rules of Practice and Procedure in this part apply to an 
informal hearing under this section unless the FDIC orders that such 
procedures shall apply.
    (2) The informal hearing shall be recorded, and a transcript shall 
be 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 bank would materially strengthen the bank's ability:
    (1) To become adequately capitalized, to the extent that the 
directive was issued as a result of the bank'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 bank 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 FDIC 
concerning the Respondent's request for reinstatement with the bank.
    (g) 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 FDIC shall grant or deny the request for 
reinstatement and notify the Respondent of the FDIC's decision. If the 
FDIC denies the request for reinstatement, the FDIC shall set forth in 
the notification the reasons for the FDIC's action.



Sec.  308.204  Enforcement of directives.

    (a) Judicial remedies. Whenever a bank fails to comply with a 
directive issued under section 38, the FDIC may seek enforcement of the 
directive in the appropriate United States district court pursuant to 
section 8(i)(1) of the FDI Act (12 U.S.C. 1818(i)(1)).
    (b) Administrative remedies--(1) Failure to comply with directive. 
Pursuant to section 8(i)(2)(A) of the FDI Act, the FDIC may assess a 
civil money penalty

[[Page 118]]

against any bank 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 
bank to implement a capital restoration plan required under section 38, 
or subpart H of part 324 of this chapter, or the failure of a company 
having control of a bank to fulfill a guarantee of a capital restoration 
plan made pursuant to section 38(e)(2) of the FDI Act shall subject the 
bank 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 FDIC may seek enforcement 
of the provisions of section 38 or subpart H of part 324 of this chapter 
through any other judicial or administrative proceeding authorized by 
law.

[57 FR 44897, Sept. 29, 1992; 57 FR 48426, Oct. 23, 1992; 78 FR 55471, 
Sept. 10, 2013; 83 FR 17739, Apr. 24, 2018]



Subpart R_Submission and Review of Safety and Soundness Compliance Plans 
   and Issuance of Orders To Correct Safety and Soundness Deficiencies

    Source: 80 FR 65906, Oct. 28,2015, unless otherwise noted.



Sec.  308.300  Scope.

    The rules and procedures set forth in this subpart apply to insured 
state nonmember banks, to state-licensed insured branches of foreign 
banks, that are subject to the provisions of section 39 of the Federal 
Deposit Insurance Act (section 39) (12 U.S.C. 1831p-1), and to state 
savings associations (in aggregate, bank or banks and state savings 
association or state savings associations).



Sec.  308.301  Purpose.

    Section 39 of the FDI Act requires the FDIC to establish safety and 
soundness standards. Pursuant to section 39, a bank or 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 established under section 39, the 
bank or savings association fails to submit an acceptable compliance 
plan or fails in any material respect to implement an accepted plan. 
This subpart establishes procedures for requiring submission of a 
compliance plan and issuing an enforceable order pursuant to section 39.



Sec.  308.302  Determination and notification of failure to meet a safety 
and soundness standard and request for compliance plan.

    (a) Determination. The FDIC may, based upon an examination, 
inspection or any other information that becomes available to the FDIC, 
determine that a bank or state savings association has failed to satisfy 
the safety and soundness standards set out in part 364 of this chapter 
and in the Interagency Guidelines Establishing Standards for Safety and 
Soundness in appendix A and the Interagency Guidelines Establishing 
Information Security Standards in appendix B to part 364 of this 
chapter.
    (b) Request for compliance plan. If the FDIC determines that a bank 
or state savings association has failed a safety and soundness standard 
pursuant to paragraph (a) of this section, the FDIC may request, by 
letter or through a report of examination, the submission of a 
compliance plan and the bank or state savings association shall be 
deemed to have notice of the request three days after mailing of the 
letter by the FDIC or delivery of the report of examination.



Sec.  308.303  Filing of safety and soundness compliance plan.

    (a) Schedule for filing compliance plan--(1) In general. A bank or 
state savings association shall file a written safety and soundness 
compliance plan with the FDIC within 30 days of receiving a request for 
a compliance plan pursuant to Sec.  308.302(b), unless the FDIC

[[Page 119]]

notifies the bank or state savings association in writing that the plan 
is to be filed within a different period.
    (2) Other plans. If a bank or state 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 or report of inspection, it may, with the permission of the 
FDIC, 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 bank or state 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 FDIC shall provide written notice to the bank or state 
savings association of whether the plan has been approved or seek 
additional information from the bank or state savings association 
regarding the plan. The FDIC may extend the time within which notice 
regarding approval of a plan will be provided.
    (d) Failure to submit or implement a compliance plan--(1) 
Supervisory actions. If a bank or state savings association fails to 
submit an acceptable plan within the time specified by the FDIC or fails 
in any material respect to implement a compliance plan, then the FDIC 
shall, by order, require the bank or state savings association to 
correct the deficiency and may take further actions provided in section 
39(e)(2)(B). Pursuant to section 39(e)(3), the FDIC may be required to 
take certain actions if the bank or state savings association commenced 
operations or experienced a change in control within the previous 24-
month period, or the bank or state savings association experienced 
extraordinary growth during the previous 18-month period.
    (2) Extraordinary growth. For purposes of paragraph (d)(1) of this 
section, extraordinary growth means an increase in assets of more than 
7.5 percent during any quarter within the 18-month period preceding the 
issuance of a request for submission of a compliance plan, by a bank or 
state savings association that is not well capitalized for purposes of 
section 38 of the FDI Act. For purposes of calculating an increase in 
assets, assets acquired through merger or acquisition approved pursuant 
to the Bank Merger Act (12 U.S.C. 1828(c)) will be excluded.
    (e) Amendment of compliance plan. A bank or state savings 
association that has filed an approved compliance plan may, after prior 
written notice to and approval by the FDIC, amend the plan to reflect a 
change in circumstance. Until such time as a proposed amendment has been 
approved, the bank or state savings association shall implement the 
compliance plan as previously approved.



Sec.  308.304  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 FDIC shall 
provide a bank or state savings association prior written notice of the 
FDIC's intention to issue an order requiring the bank or state 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 bank or state savings association shall have such time to respond to 
a proposed order as provided by the FDIC under paragraph (c) of this 
section.
    (2) Immediate issuance of final order. If the FDIC finds it 
necessary in order to carry out the purposes of section 39 of the FDI 
Act, the FDIC may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue an order requiring a bank or state savings 
association immediately to take actions to correct a safety and 
soundness deficiency or take or refrain from taking other actions 
pursuant to section 39. A bank or state savings association that is 
subject to such an immediately effective order may submit a written 
appeal of the order to the FDIC. Such an appeal must be received by the 
FDIC within 14 calendar days of the

[[Page 120]]

issuance of the order, unless the FDIC permits a longer period. The FDIC 
shall consider any such appeal, if filed in a timely matter, within 60 
days of receiving the appeal. During such period of review, the order 
shall remain in effect unless the FDIC, 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 bank or state savings 
association;
    (2) A description of any restrictions, prohibitions, or affirmative 
actions that the FDIC 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 bank or state savings association subject 
to the order may file with the FDIC a written response to the notice.
    (c) Response to notice--(1) Time for response. A bank or state 
savings association may file a written response to a notice of intent to 
issue an order within the time period set by the FDIC. Such a response 
must be received by the FDIC within 14 calendar days from the date of 
the notice unless the FDIC determines that a different period is 
appropriate in light of the safety and soundness of the bank or state 
savings association or other relevant circumstances.
    (2) Contents of response. The response should include:
    (i) An explanation why the action proposed by the FDIC is not an 
appropriate exercise of discretion under section 39;
    (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 bank 
or state savings association regarding the proposed order.
    (d) Agency consideration of response. After considering the 
response, the FDIC may:
    (1) Issue the order as proposed or in modified form;
    (2) Determine not to issue the order and so notify the bank or state 
savings association; or
    (3) Seek additional information or clarification of the response 
from the bank or state savings association, or any other relevant 
source.
    (e) Failure to file response. Failure by a bank or state savings 
association to file with the FDIC, 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 of rescission of order. Any bank or 
state savings association that is subject to an order under this subpart 
may, upon a change in circumstances, request in writing that the FDIC 
reconsider the terms of the order, and may propose that the order be 
rescinded or modified. Unless otherwise ordered by the FDIC, the order 
shall continue in place while such request is pending before the FDIC.



Sec.  308.305  Enforcement of orders.

    (a) Judicial remedies. Whenever a bank or state savings association 
fails to comply with an order issued under section 39, the FDIC may seek 
enforcement of the order in the appropriate United States district court 
pursuant to section 8(i)(1) of the FDI Act.
    (b) Failure to comply with order. Pursuant to section 8(i)(2)(A) of 
the FDI Act, the FDIC may assess a civil money penalty against any bank 
or state savings association that violates or otherwise fails to comply 
with any final order issued under section 39 and against any 
institution-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 FDIC may seek enforcement 
of the provisions of section 39 or this part through any other judicial 
or administrative proceeding authorized by law.

[[Page 121]]



Subpart S_Applications for a Stay or Review of Actions of Bank Clearing 
                                Agencies

    Source: 61 FR 48403, Sept. 11, 1996, unless otherwise noted.



Sec.  308.400  Scope.

    This subpart is issued by the Corporation pursuant to sections 
17A(b)(3)(g), 17A(b)(5)(C), 19 and 23 of the Securities Exchange Act of 
1934 (Exchange Act), as amended (15 U.S.C. 78q-1 (b)(3)(g), (b)(5)(C), 
78s, 78w). It applies to applications by banks insured by the 
Corporation (other than members of the Federal Reserve System) for a 
stay or review of certain actions by clearing agencies registered under 
the Exchange Act, for which the Securities and Exchange Commission 
(Commission) is not the appropriate regulatory agency under section 
3(a)(34)(B) of the Exchange Act (bank clearing agencies).



Sec.  308.401  Applications for stays of disciplinary sanctions 
or summary suspensions by a bank clearing agency.

    Applications to the Corporation for a stay of disciplinary action 
imposed by registered clearing agencies pursuant to section 17(b)(3)(G) 
of the Exchange Act, or summary suspension or limitation or prohibition 
of access under section 17(b)(5)(C) of the Exchange Act shall be made 
according to the rules adopted by the Commission (17 CFR 240.19d-2). 
References to the ``Commission'' in 17 CFR 240.19d-2 are deemed to refer 
to the ``Corporation.''



Sec.  308.402  Applications for review of final disciplinary sanctions, 
denials of participation, or prohibitions or limitations of access to services 
imposed by bank clearing agencies.

    Proceedings on an application to the Corporation under section 
19(d)(2) of the Exchange Act for review of any final disciplinary 
sanctions, denials of participation, or prohibitions or limitations of 
access to services imposed by bank clearing agencies shall be conducted 
according to the procedures set forth in rules adopted by the Commission 
(17 CFR 240.19d-3). References to the ``Commission'' in 17 CFR 240.19d-3 
are deemed to refer to the ``Corporation.''



          Subpart T_Program Fraud Civil Remedies and Procedures

    Source: 66 FR 9189, Feb. 7, 2001, unless otherwise noted.



Sec.  308.500  Basis, purpose, and scope.

    (a) Basis. This subpart implements the Program Fraud Civil Remedies 
Act, Pub. L. 99-509, sections 6101-6104, 100 Stat. 1874 (October 21, 
1986), codified at 31 U.S.C. 3801-3812, (PFCRA) and made applicable to 
the Federal Deposit Insurance Corporation (FDIC) by section 23 of the 
Resolution Trust Corporation Completion Act (Pub. L. 103-204, 107 Stat. 
2369). 31 U.S.C. 3809 of the statute requires each Authority head to 
promulgate regulations necessary to implement the provisions of the 
statute.
    (b) Purpose. This subpart:
    (1) Establishes administrative procedures for imposing civil 
penalties and assessments against persons who make, submit, or present 
or cause to be made, submitted, or presented false, fictitious, or 
fraudulent claims or written statements to the FDIC or to its agents; 
and
    (2) Specifies the hearing and appeal rights of persons subject to 
allegations of liability for such penalties and assessments.
    (c) Scope. This subpart applies only to persons who make, submit, or 
present or cause to be made, submitted, or presented false, fictitious, 
or fraudulent claims or written statements to the FDIC or to its agents 
acting on behalf of the FDIC in connection with FDIC employment matters, 
FDIC contracting activities, and the FDIC Asset Purchaser Certification 
Program. It does not apply to false claims or statements made in 
connection with programs (other than as set forth in the preceding 
sentence) related to the FDIC's regulatory, supervision, enforcement, 
insurance, receivership or liquidation responsibilities. The FDIC is 
restricting the scope of applicability of this subpart because other 
civil and administrative remedies are adequate to redress fraud in the 
areas not covered.



Sec.  308.501  Definitions.

    For purposes of this subpart:

[[Page 122]]

    (a) Administrative Law Judge (ALJ) means the presiding officer 
appointed by the Office of Financial Institution Adjudication pursuant 
to 12 U.S.C. 1818 note and 5 U.S.C. 3105.
    (b) Authority means the Federal Deposit Insurance Corporation 
(FDIC).
    (c) Authority head or Board means the Board of Directors of the 
FDIC, which is herein designated by the Chairman of the FDIC to serve as 
head of the FDIC for PFCRA matters.
    (d) Benefit means, in the context of ``statement'' as defined in 31 
U.S.C. 3801(a)(9), any financial assistance received from the FDIC that 
amounts to $150,000 or less. The term does not include the FDIC's 
deposit insurance program.
    (e) Claim means any request, demand, or submission:
    (1) Made to the FDIC for property, services, or money (including 
money representing grants, loans, insurance, or benefits);
    (2) Made to a recipient of property, services, or money from the 
FDIC or to a party to a contract with the FDIC;
    (i) For property or services if the United States:
    (A) Provided such property or services;
    (B) Provided any portion of the funds for the purchase of such 
property or services; or
    (C) Will reimburse such recipient or party for the purchase of such 
property or services;
    (ii) For the payment of money (including money representing grants, 
loans, insurance, or benefits) if the United States:
    (A) Provided any portion of the money requested or demanded; or
    (B) Will reimburse such recipient or party for any portion of the 
money paid on such request or demand; or
    (3) Made to the FDIC that has the effect of decreasing an obligation 
to pay or account for property, services, or money.
    (f) Complaint means the administrative complaint served by the 
reviewing official on the defendant under Sec.  308.506 of this subpart.
    (g) Corporation means the Federal Deposit Insurance Corporation.
    (h) Defendant means any person alleged in a complaint under Sec.  
308.506 of this subpart to be liable for a civil penalty or assessment 
under Sec.  308.502 of this subpart.
    (i) Government means the United States Government.
    (j) Individual means a natural person.
    (k) Initial decision means the written decision of the ALJ required 
by Sec.  308.509 or Sec.  308.536 of this subpart, and includes a 
revised initial decision issued following a remand or a motion for 
consideration.
    (l) Investigating official means the Inspector General of the FDIC, 
or an officer or employee of the Inspector General designated by the 
Inspector General. The investigating official must serve in a position 
that has a rate of basic pay under the pay scale utilized by the FDIC 
that is equal to or greater than 120 percent of the minimum rate of 
basic pay for grade 15 under the federal government's General Schedule.
    (m) Knows or has reason to know, means that a person, with respect 
to a claim or statement:
    (1) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (2) Acts in deliberate ignorance of the truth or falsity of the 
claim or statement; or
    (3) Acts in reckless disregard of the truth or falsity of the claim 
or statement.
    (n) Makes, wherever it appears, includes the terms ``presents'', 
``submits'', and ``causes to be made, presented, or submitted.'' As the 
context requires, ``making'' or ``made'' likewise includes the 
corresponding forms of such terms.
    (o) Person means any individual, partnership, corporation, 
association, or private organization, and includes the plural of that 
term.
    (p) Representative means an attorney, who is a member in good 
standing of the bar of any state, territory, or possession of the United 
States or of the District of Columbia or the Commonwealth of Puerto 
Rico, and designated by a party in writing.
    (q) Reviewing official means the General Counsel of the FDIC or his 
designee who is:
    (1) Not subject to supervision by, or required to report to, the 
investigating official;

[[Page 123]]

    (2) Not employed in the organizational unit of the FDIC in which the 
investigating official is employed; and
    (3) Serving in a position that has a rate of basic pay under the pay 
scale utilized by the FDIC that is equal to or greater than 120 percent 
of the minimum rate of basic pay for grade 15 under the federal 
government's General Schedule.
    (r) Statement means any representation, certification, affirmation, 
document, record, or accounting or bookkeeping entry made:
    (1) With respect to a claim or to obtain the approval or payment of 
a claim (including relating to eligibility to make a claim); or
    (2) With respect to (including relating to eligibility for):
    (i) A contract with, or a bid or proposal for a contract with; or
    (ii) A grant, loan, or benefit received, directly or indirectly, 
from the FDIC, or any state, political subdivision of a state, or other 
party, if the United States government provides any portion of the money 
or property under such contract or for such grant, loan, or benefit, or 
if the government will reimburse such state, political subdivision, or 
party for any portion of the money or property under such contract or 
for such grant, loan, or benefit.



Sec.  308.502  Basis for civil penalties and assessments.

    (a) Claims. (1) A person who makes a false, fictitious, or 
fraudulent claim to the FDIC is subject to a civil penalty of up to 
$5,000 per claim. A claim is false, fictitious, or fraudulent if the 
person making the claim knows, or has reason to know, that:
    (i) The claim is false, fictitious, or fraudulent; or
    (ii) The claim includes, or is supported by, a written statement 
that asserts a material fact which is false, fictitious or fraudulent; 
or
    (iii) The claim includes, or is supported by, a written statement 
that:
    (A) Omits a material fact; and
    (B) Is false, fictitious, or fraudulent as a result of that 
omission; and
    (C) Is a statement in which the person making the statement has a 
duty to include the material fact; or
    (iv) The claim seeks payment for providing property or services that 
the person has not provided as claimed.
    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim.
    (3) A claim will be considered made to the FDIC, recipient, or party 
when the claim is actually made to an agent, fiscal intermediary, or 
other entity, including any state or political subdivision thereof, 
acting for or on behalf of the FDIC, recipient, or party.
    (4) Each claim for property, services, or money that constitutes any 
one of the elements in paragraph (a)(1) of this section is subject to a 
civil penalty regardless of whether the property, services, or money is 
actually delivered or paid.
    (5) If the FDIC has made any payment (including transferred property 
or provided services) on a claim, a person subject to a civil penalty 
under paragraph (a)(1) of this section will also be subject to an 
assessment of not more than twice the amount of such claim (or portion 
of the claim) that is determined to constitute a false, fictitious, or 
fraudulent claim under paragraph (a)(1) of this section. The assessment 
will be in lieu of damages sustained by the FDIC because of the claims.
    (6) The amount of any penalty assessed under paragraph (a)(1) of 
this section will be adjusted for inflation in accordance with Sec.  
308.132(d)(17) of this part.
    (7) The penalty specified in paragraph (a)(1) of this section is in 
addition to any other remedy allowable by law.
    (b) Statements. (1) A person who submits to the FDIC a false, 
fictitious or fraudulent statement is subject to a civil penalty of up 
to $5,000 per statement. A statement is false, fictitious or fraudulent 
if the person submitting the statement to the FDIC knows, or has reason 
to know, that:
    (i) The statement asserts a material fact which is false, 
fictitious, or fraudulent; or
    (ii) The statement omits a material fact that the person making the 
statement has a duty to include in the statement; and

[[Page 124]]

    (iii) The statement contains or is accompanied by an express 
certification or affirmation of the truthfulness and accuracy of the 
contents of the statement.
    (2) Each written representation, certification, or affirmation 
constitutes a separate statement.
    (3) A statement will be considered made to the FDIC when the 
statement is actually made to an agent, fiscal intermediary, or other 
entity, including any state or political subdivision thereof, acting for 
or on behalf of the FDIC.
    (4) The amount of any penalty assessed under paragraph (a)(1) of 
this section will be adjusted for inflation in accordance with Sec.  
308.132(d)(17) of this part.
    (5) The penalty specified in paragraph (a)(1) of this section is in 
addition to any other remedy allowable by law.
    (c) Failure to file declaration/certification. Where, as a 
prerequisite to conducting business with the FDIC, a person is required 
by law to file one or more declarations and/or certifications, and the 
person intentionally fails to file such declaration/certification, the 
person will be subject to the civil penalties as prescribed by this 
subpart.
    (d) Civil money penalties that are assessed under this subpart are 
subject to annual adjustments to account for inflation as required by 
the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (Pub. L. 114-74, sec. 701, 129 Stat. 584) (see also 12 CFR 
308.132(d)(17)).
    (e) Liability. (1) In any case in which it is determined that more 
than one person is liable for making a claim or statement under this 
section, each such person may be held jointly and severally liable for a 
civil penalty under this section.
    (2) In any case in which it is determined that more than one person 
is liable for making a claim under this section on which the FDIC has 
made payment (including transferred property or provided services), an 
assessment may be imposed against any such person or jointly and 
severally against any combination of such persons.

[66 FR 9189, Feb. 7, 2001, as amended at 81 FR 42242, June 29, 2016]

    Effective Date Note: At 83 FR 61115, Nov. 28, 2018, Sec.  308.502 
was amended by revising paragraphs (a)(6) and (b)(4), effective Jan. 15, 
2019. For the convenience of the user, the revised text is set forth as 
follows:



Sec.  308.502  Basis for civil penalties and assessments.

    (a) * * *
    (6) The amount of any penalty assessed under paragraph (a)(1) of 
this section will be adjusted for inflation in accordance with Sec.  
308.132(d).

                                * * * * *

    (b) * * *
    (4) The amount of any penalty assessed under paragraph (a)(1) of 
this section will be adjusted for inflation in accordance with Sec.  
308.132(d).

                                * * * * *



Sec.  308.503  Investigations.

    (a) If an investigating official concludes that a subpoena pursuant 
to the authority conferred by 31 U.S.C. 3804(a) is warranted:
    (1) The subpoena will identify the person to whom it is addressed 
and the authority under which the subpoena is issued and will identify 
the records or documents sought;
    (2) The investigating official may designate a person to act on his 
or her behalf to receive the documents sought; and
    (3) The person receiving such subpoena will be required to provide 
the investigating official or the person designated to receive the 
documents a certification that the documents sought have been produced, 
or that such documents are not available, and the reasons therefor, or 
that such documents, suitably identified, have been withheld based upon 
the assertion of an identified privilege.
    (b) If the investigating official concludes that an action under the 
PFCRA may be warranted, the investigating official will submit a report 
containing the findings and conclusions of such investigation to the 
reviewing official.
    (c) Nothing in this section will preclude or limit an investigating 
official's discretion to refer allegations directly to the United States 
Department of Justice (DOJ) for suit under the False Claims Act (31 
U.S.C. 3729 et

[[Page 125]]

seq.) or other civil relief, or to preclude or limit the investigating 
official's discretion to defer or postpone a report or referral to the 
reviewing official to avoid interference with a criminal investigation 
or prosecution.
    (d) Nothing in this section modifies any responsibility of an 
investigating official to report violations of criminal law to the 
Attorney General.



Sec.  308.504  Review by the reviewing official.

    (a) If, based on the report of the investigating official under 
Sec.  308.503(b) of this subpart, the reviewing official determines that 
there is adequate evidence to believe that a person is liable under 
Sec.  308.502 of this subpart, the reviewing official will transmit to 
the Attorney General a written notice of the reviewing official's 
intention to issue a complaint under Sec.  308.506 of this subpart.
    (b) Such notice will include:
    (1) A statement of the reviewing official's reasons for issuing a 
complaint;
    (2) A statement specifying the evidence that supports the 
allegations of liability;
    (3) A description of the claims or statements upon which the 
allegations of liability are based;
    (4) An estimate of the amount of money or the value of property, 
services, or other benefits requested or demanded in violation of Sec.  
308.502 of this subpart;
    (5) A statement of any exculpatory or mitigating circumstances that 
may relate to the claims or statements known by the reviewing official 
or the investigating official; and
    (6) A statement that there is a reasonable prospect of collecting an 
appropriate amount of penalties and assessments. Such a statement may be 
based upon information then known, or upon an absence of any information 
indicating that the person may be unable to pay such amount.



Sec.  308.505  Prerequisites for issuing a complaint.

    (a) The reviewing official may issue a complaint under Sec.  308.506 
of this subpart only if:
    (1) The DOJ approves the issuance of a complaint in a written 
statement described in 31 U.S.C. 3803(b)(1); and
    (2) In the case of allegations of liability under Sec.  308.502(a) 
of this subpart with respect to a claim (or a group of related claims 
submitted at the same time as defined in paragraph (b) of this section) 
the reviewing official determines that the amount of money or the value 
of property or services demanded or requested does not exceed $150,000.
    (b) For the purposes of this section, a group of related claims 
submitted at the same time will include only those claims arising from 
the same transaction (e.g., grant, loan, application, or contract) that 
are submitted simultaneously as part of a single request, demand, or 
submission.
    (c) Nothing in this section will be construed to limit the reviewing 
official's authority to join in a single complaint against a person 
claims that are unrelated or were not submitted simultaneously, 
regardless of the amount of money, or the value of property or services, 
demanded or requested.



Sec.  308.506  Complaint.

    (a) On or after the date the DOJ approves the issuance of a 
complaint in accordance with 31 U.S.C. 3803(b)(1), the reviewing 
official may serve a complaint on the defendant, as provided in Sec.  
308.507 of this subpart.
    (b) The complaint will state:
    (1) The allegations of liability against the defendant, including 
the statutory basis for liability, or identification of the claims or 
statements that are the basis for the alleged liability, and the reasons 
why liability allegedly arises from such claims or statements;
    (2) The maximum amount of penalties and assessments for which the 
defendant may be held liable;
    (3) Instructions for filing an answer and to request a hearing, 
including a specific statement of the defendant's right to request a 
hearing by filing an answer and to be represented by a representative; 
and
    (4) That failure to file an answer within 30 days of service of the 
complaint will result in the imposition of the maximum amount of 
penalties and

[[Page 126]]

assessments without right to appeal, as provided in Sec.  308.509 of 
this subpart.
    (c) At the same time the reviewing official serves the complaint, he 
or she will provide the defendant with a copy of this subpart.



Sec.  308.507  Service of complaint.

    (a) Service of a complaint will be made by certified or registered 
mail or by delivery in any manner authorized by rule 4(c) of the Federal 
Rules of Civil Procedure (28 U.S.C. App.). Service is complete upon 
receipt.
    (b) Proof of service, stating the name and address of the person on 
whom the complaint was served, and the manner and date of service, may 
be made by:
    (1) Affidavit of the individual serving the complaint by delivery;
    (2) A United States Postal Service return receipt card acknowledging 
receipt; or
    (3) Written acknowledgment of receipt by the defendant or his or her 
representative.



Sec.  308.508  Answer.

    (a) The defendant may request a hearing by filing an answer with the 
reviewing official within 30 days of service of the complaint. An answer 
will be deemed to be a request for hearing.
    (b) In the answer, the defendant:
    (1) Must admit or deny each of the allegations of liability made in 
the complaint;
    (2) Must state any defense on which the defendant intends to rely;
    (3) May state any reasons why the defendant contends that the 
penalties and assessments should be less than the statutory maximum; and
    (4) Must state the name, address, and telephone number of the person 
authorized by the defendant to act as defendant's representative, if 
any.
    (c) If the defendant is unable to file an answer meeting the 
requirements of paragraph (b) of this section within the time provided:
    (1) The defendant may, before the expiration of 30 days from service 
of the complaint, file with the reviewing official a general answer 
denying liability and requesting a hearing, and a request for an 
extension of time within which to file an answer meeting the 
requirements of paragraph (b) of this section.
    (2) The reviewing official will file promptly with the ALJ the 
complaint, the general answer denying liability, and the request for an 
extension of time as provided in Sec.  308.510 of this subpart.
    (3) For good cause shown, the ALJ may grant the defendant up to 30 
additional days within which to file an answer meeting the requirements 
of paragraph (b) of this section.



Sec.  308.509  Default upon failure to file an answer.

    (a) If the defendant does not file an answer within the time 
prescribed in Sec.  308.508(a) of this subpart, the reviewing official 
may refer the complaint to the ALJ.
    (b) Upon the referral of the complaint, the ALJ will promptly serve 
on defendant in the manner prescribed in Sec.  308.507 of this subpart, 
a notice that an initial decision will be issued under this section.
    (c) If the defendant fails to answer, the ALJ will assume the facts 
alleged in the complaint to be true, and, if such facts establish 
liability under Sec.  308.502 of this subpart, the ALJ will issue an 
initial decision imposing the maximum amount of penalties and 
assessments allowed under the statute.
    (d) Except as otherwise provided in this section, by failing to file 
a timely answer, the defendant waives any right to further review of the 
penalties and assessments imposed under paragraph (c) of this section, 
and the initial decision will become final and binding upon the parties 
30 days after it is issued.
    (e) If, before such an initial decision becomes final, the defendant 
files a motion with the ALJ seeking to reopen on the grounds that 
extraordinary circumstances prevented the defendant from filing an 
answer, the initial decision will be stayed pending the ALJ's decision 
on the motion.
    (f) If, in the motion to reopen under paragraph (e) of this section, 
the defendant can demonstrate extraordinary circumstances excusing the 
failure to file a timely answer, the ALJ will

[[Page 127]]

withdraw the initial decision in paragraph (c) of this section, if such 
a decision has been issued, and will grant the defendant an opportunity 
to answer the complaint.
    (g) A decision of the ALJ denying a defendant's motion to reopen 
under paragraph (e) of this section is not subject to reconsideration 
under Sec.  308.537 of this subpart.
    (h) The decision denying the motion to reopen under paragraph (e) of 
this section may be appealed by the defendant to the Board by filing a 
notice of appeal with the Board within 15 days after the ALJ denies the 
motion. The timely filing of a notice of appeal will stay the initial 
decision until the Board decides the issue.
    (i) If the defendant files a timely notice of appeal with the Board, 
the ALJ will forward the record of the proceeding to the Board.
    (j) The Board will decide whether extraordinary circumstances excuse 
the defendant's failure to file a timely answer based solely on the 
record before the ALJ.
    (k) If the Board decides that extraordinary circumstances excuse the 
defendant's failure to file a timely answer, the Board will remand the 
case to the ALJ with instructions to grant the defendant an opportunity 
to answer.
    (l) If the Board decides that the defendant's failure to file a 
timely answer is not excused, the Board will reinstate the initial 
decision of the ALJ, which will become final and binding upon the 
parties 30 days after the Board issues such decision.



Sec.  308.510  Referral of complaint and answer to the ALJ.

    Upon receipt of an answer, the reviewing official will file the 
complaint and answer with the ALJ. The reviewing official will include 
the name, address, and telephone number of a representative of the 
Corporation.



Sec.  308.511  Notice of hearing.

    (a) When the ALJ receives the complaint and answer, the ALJ will 
promptly serve a notice of hearing upon the defendant in the manner 
prescribed by Sec.  308.507 of this subpart. At the same time, the ALJ 
will send a copy of such notice to the representative of the 
Corporation.
    (b) The notice will include:
    (1) The tentative time, date, and place, and the nature of the 
hearing;
    (2) The legal authority and jurisdiction under which the hearing is 
to be held;
    (3) The matters of fact and law to be asserted;
    (4) A description of the procedures for the conduct of the hearing;
    (5) The name, address, and telephone number of the representative of 
the Corporation and of the defendant, if any; and
    (6) Other matters as the ALJ deems appropriate.



Sec.  308.512  Parties to the hearing.

    (a) The parties to the hearing will be the defendant and the 
Corporation.
    (b) Pursuant to the False Claims Act (31 U.S.C. 3730(c)(5)), a 
private plaintiff under the False Claims Act may participate in these 
proceedings to the extent authorized by the provisions of that Act.



Sec.  308.513  Separation of functions.

    (a) The investigating official, the reviewing official, and any 
employee or agent of the FDIC who takes part in investigating, 
preparing, or presenting a particular case may not, in such case or a 
factually related case:
    (1) Participate in the hearing as the ALJ;
    (2) Participate or advise in the initial decision or the review of 
the initial decision by the Board, except as a witness or a 
representative in public proceedings; or
    (3) Make the collection of penalties and assessments under 31 U.S.C. 
3806.
    (b) The ALJ will not be responsible to, or subject to the 
supervision or direction of, the investigating official or the reviewing 
official.
    (c) Except as provided in paragraph (a) of this section, the 
representative for the FDIC will be an attorney employed in the FDIC's 
Legal Division; however, the representative of the FDIC may not 
participate or advise in the review of the initial decision by the 
Board.

[[Page 128]]



Sec.  308.514  Ex parte contacts.

    No party or person (except employees of the ALJ's office) will 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec.  308.515  Disqualification of reviewing official or ALJ.

    (a) A reviewing official or ALJ in a particular case may disqualify 
himself or herself at any time.
    (b) A party may file with the ALJ a motion for disqualification of a 
reviewing official or an ALJ. An affidavit alleging conflict of interest 
or other reason for disqualification must accompany the motion.
    (c) Such motion and affidavit must be filed promptly upon the 
party's discovery of reasons requiring disqualification, or such 
objections will be deemed waived.
    (d) Such affidavit must state specific facts that support the 
party's belief that personal bias or other reason for disqualification 
exists and the time and circumstances of the party's discovery of such 
facts. The representative of record must certify that the affidavit is 
made in good faith and this certification must accompany the affidavit.
    (e) Upon the filing of such a motion and affidavit, the ALJ will 
proceed no further in the case until he or she resolves the matter of 
disqualification in accordance with paragraph (f) of this section.
    (f)(1) If the ALJ determines that a reviewing official is 
disqualified, the ALJ will dismiss the complaint without prejudice.
    (2) If the ALJ disqualifies himself or herself, the case will be 
reassigned promptly to another ALJ.
    (3) If the ALJ denies a motion to disqualify, the Board may 
determine the matter only as part of the Board's review of the initial 
decision upon appeal, if any.



Sec.  308.516  Rights of parties.

    Except as otherwise limited by this subpart, all parties may:
    (a) Be accompanied, represented, and advised by a representative;
    (b) Participate in any conference held by the ALJ;
    (c) Conduct discovery;
    (d) Agree to stipulations of fact or law which will be made part of 
the record;
    (e) Present evidence relevant to the issues at the hearing;
    (f) Present and cross-examine witnesses;
    (g) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (h) Submit written briefs and proposed findings of fact and 
conclusions of law.



Sec.  308.517  Authority of the ALJ.

    (a) The ALJ will conduct a fair and impartial hearing, avoid delay, 
maintain order, and assure that a record of the proceeding is made.
    (b) The ALJ has the authority to:
    (1) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of discovery;
    (8) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (9) Examine witnesses;
    (10) Receive, rule on, exclude, or limit evidence;
    (11) Upon motion of a party, take official notice of facts, decide 
cases, in whole or in part, by summary judgment where there is no 
disputed issue of material fact;

[[Page 129]]

    (12) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (13) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under this subpart.
    (c) The ALJ does not have the authority to make any determinations 
regarding the validity of federal statutes or regulations or of 
directives, rules, resolutions, policies, orders or other such general 
pronouncements issued by the Corporation.



Sec.  308.518  Prehearing conferences.

    (a) The ALJ may schedule prehearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ will schedule at least one 
prehearing conference at a reasonable time in advance of the hearing.
    (c) The ALJ may use prehearing conferences to discuss the following:
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to the pleading, 
including the need for a more definite statement;
    (3) Stipulations and admissions of fact as to the contents and 
authenticity of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;
    (5) Whether a party chooses (subject to the objection of other 
parties) to waive appearance at an oral hearing and to submit only 
documentary evidence and written argument;
    (6) Limitation of the number of witnesses;
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits;
    (8) Discovery;
    (9) The time, date, and place for the hearing; and
    (10) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.
    (d) The ALJ may issue an order containing all matters agreed upon by 
the parties or ordered by the ALJ at a prehearing conference.



Sec.  308.519  Disclosure of documents.

    (a) Upon written request to the reviewing official, the defendant 
may review any relevant and material documents, transcripts, records, 
and other materials that relate to the allegations set out in the 
complaint and upon which the findings and conclusions of the 
investigating official under Sec.  308.503(b) of this subpart are based, 
unless such documents are subject to a privilege under federal law. Upon 
payment of fees for duplication, the defendant may obtain copies of such 
documents.
    (b) Upon written request to the reviewing official, the defendant 
also may obtain a copy of all exculpatory information in the possession 
of the reviewing official or investigating official relating to the 
allegations in the complaint, even if it is contained in a document that 
would otherwise be privileged. If the document would otherwise be 
privileged, only that portion containing exculpatory information must be 
disclosed.
    (c) The notice sent to the Attorney General from the reviewing 
official as described in Sec.  308.504 of this subpart is not 
discoverable under any circumstances.
    (d) The defendant may file a motion to compel disclosure of the 
documents subject to the provisions of this section. Such a motion may 
only be filed with the ALJ following the filing of an answer pursuant to 
Sec.  308.508 of this subpart.



Sec.  308.520  Discovery.

    (a) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying;
    (2) Requests for admission of the authenticity of any relevant 
document or of the truth of any relevant fact;
    (3) Written interrogatories; and
    (4) Depositions.
    (b) For the purpose of this section and Sec. Sec.  308.521 and 
308.522 of this subpart, the term documents includes information, 
documents, reports, answers, records, accounts, papers, and other data 
or documentary evidence. Nothing contained in this subpart will be 
interpreted to require the creation of a document.
    (c) Unless mutually agreed to by the parties, discovery is available 
only as ordered by the ALJ. The ALJ will regulate the timing of 
discovery.

[[Page 130]]

    (d) Motions for discovery. (1) A party seeking discovery may file a 
motion with the ALJ and a copy of the requested discovery, or in the 
case of depositions, a summary of the scope of the proposed deposition, 
must accompany such motions.
    (2) Within 10 days of service, a party may file an opposition to the 
motion and/or a motion for protective order as provided in Sec.  308.523 
of this subpart.
    (3) The ALJ may grant a motion for discovery only if he or she finds 
that the discovery sought:
    (i) Is necessary for the expeditious, fair, and reasonable 
consideration of the issues;
    (ii) Is not unduly costly or burdensome;
    (iii) Will not unduly delay the proceeding; and
    (iv) Does not seek privileged information.
    (4) The burden of showing that discovery should be allowed is on the 
party seeking discovery.
    (5) The ALJ may grant discovery subject to a protective order under 
Sec.  308.523 of this subpart.
    (e) Dispositions. (1) If a motion for deposition is granted, the ALJ 
will issue a subpoena for the deponent, which may require the deponent 
to produce documents. The subpoena will specify the time, date, and 
place at which the deposition will be held.
    (2) The party seeking to depose must serve the subpoena in the 
manner prescribed in Sec.  308.507 of this subpart.
    (3) The deponent may file with the ALJ a motion to quash the 
subpoena or a motion for a protective order within 10 days of service.
    (4) The party seeking to depose must provide for the taking of a 
verbatim transcript of the deposition, and must make the transcript 
available to all other parties for inspection and copying.
    (f) Each party must bear its own costs of discovery.



Sec.  308.521  Exchange of witness lists, statements, and exhibits.

    (a) At least 15 days before the hearing or at such other time as may 
be ordered by the ALJ, the parties must exchange witness lists, copies 
of prior statements of proposed witnesses, and copies of proposed 
hearing exhibits, including copies of any written statements that the 
party intends to offer in lieu of live testimony in accordance with 
Sec.  308.532(b) of this subpart. At the time such documents are 
exchanged, any party that intends to rely on the transcript of 
deposition testimony in lieu of live testimony at the hearing, if 
permitted by the ALJ, must provide each party with a copy of the 
specific pages of the transcript it intends to introduce into evidence.
    (b) If a party objects, the ALJ will not admit into evidence the 
testimony of any witness whose name does not appear on the witness list 
or any exhibit not provided to the opposing party as provided in 
paragraph (a) of this section unless the ALJ finds good cause for the 
failure or that there is no prejudice to the objecting party.
    (c) Unless another party objects within the time set by the ALJ, 
documents exchanged in accordance with paragraph (a) of this section 
will be deemed to be authentic for the purpose of admissibility at the 
hearing.



Sec.  308.522  Subpoenas for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
individual at the hearing may request that the ALJ issue a subpoena.
    (b) A subpoena requiring the attendance and testimony of an 
individual may also require the individual to produce documents at the 
hearing.
    (c) A party seeking a subpoena must file a written request not less 
than 15 days before the date fixed for the hearing unless otherwise 
allowed by the ALJ for good cause shown. Such request must specify any 
documents to be produced and must designate the witnesses and describe 
the address and location thereof with sufficient particularity to permit 
such witnesses to be found.
    (d) The subpoena must specify the time, date, and place at which the 
witness is to appear and any documents the witness is to produce.
    (e) The party seeking the subpoena must serve it in the manner 
prescribed in Sec.  308.507 of this subpart. A subpoena on a party or 
upon an individual under

[[Page 131]]

the control of a party may be served by first class mail.
    (f) A party or the individual to whom the subpoena is directed may 
file with the ALJ a motion to quash the subpoena within 10 days after 
service or on or before the time specified in the subpoena for 
compliance if it is less than 10 days after service.



Sec.  308.523  Protective order.

    (a) A party or a prospective witness or deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may make any order which 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, including one or 
more of the following:
    (1) That the discovery will not be conducted;
    (2) That the discovery will be conducted only on specified terms and 
conditions, including a designation of the time or place;
    (3) That the discovery will be conducted only through a method of 
discovery other than that requested;
    (4) That certain matters not be inquired into, or that the scope of 
discovery be limited to certain matters;
    (5) That discovery be conducted with no one present except persons 
designated by the ALJ;
    (6) That the contents of discovery or evidence be sealed or 
otherwise kept confidential;
    (7) That a deposition after being sealed be opened only by order of 
the ALJ;
    (8) That a trade secret or other confidential research, development, 
commercial information, or facts pertaining to any criminal 
investigation, proceeding, or other administrative investigation not be 
disclosed or be disclosed only in a designated way; or
    (9) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as directed by the 
ALJ.



Sec.  308.524  Witness fees.

    The party requesting a subpoena must pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage must accompany the subpoena when served, 
except that when a subpoena is issued on behalf of the FDIC, a check for 
witness fees and mileage need not accompany the subpoena.



Sec.  308.525  Form, filing, and service of papers.

    (a) Form. (1) Documents filed with the ALJ must include an original 
and two copies.
    (2) Every pleading and paper filed in the proceeding must contain a 
caption setting forth the title of the action, the case number assigned 
by the ALJ, and a designation of the paper (e.g., motion to quash 
subpoena).
    (3) Every pleading and paper must be signed by, and must contain the 
address and telephone number of the party or the person on whose behalf 
the paper was filed, or his or her representative.
    (4) Papers are considered filed when they are mailed by certified or 
registered mail. Date of mailing may be established by a certificate 
from the party or its representative or by proof that the document was 
sent by certified or registered mail.
    (b) Service. A party filing a document with the ALJ must, at the 
time of filing, serve a copy of such document on every other party. 
Service upon any party of any document other than those required to be 
served as prescribed in Sec.  308.507 of this subpart must be made by 
delivering a copy or by placing a copy of the document in the United 
States mail, postage prepaid, and addressed to the party's last known 
address. When a party is represented by a representative, service must 
be made upon such representative in lieu of the actual party. The ALJ 
may authorize facsimile transmission as an acceptable form of service.
    (c) Proof of service. A certificate by the individual serving the 
document by personal delivery or by mail, setting

[[Page 132]]

forth the manner of service, will be proof of service.



Sec.  308.526  Computation of time.

    (a) In computing any period of time under this subpart or in an 
order issued thereunder, the time begins with the day following the act, 
event, or default, and includes the last day of the period, unless it is 
a Saturday, Sunday, or legal holiday observed by the federal government, 
in which event it includes the next business day.
    (b) When the period of time allowed is less than 7 days, 
intermediate Saturdays, Sundays, and legal holidays observed by the 
federal government will be excluded from the computation.
    (c) Where a document has been served or issued by placing it in the 
mail, an additional 5 days will be added to the time permitted for any 
response.



Sec.  308.527  Motions.

    (a) Any application to the ALJ for an order or ruling must be by 
motion. Motions must state the relief sought, the authority relied upon, 
and the facts alleged, and must be filed with the ALJ and served on all 
other parties. Motions may include, without limitation, motions for 
summary judgment.
    (b) Except for motions made during a prehearing conference or at the 
hearing, all motions must be in writing. The ALJ may require that oral 
motions be reduced to writing.
    (c) Within 15 days after a written motion is served, or any other 
time as may be fixed by the ALJ, any party may file a response to such 
motion.
    (d) The ALJ may not grant a written motion before the time for 
filing responses thereto has expired, except upon consent of the parties 
or following a hearing on the motion, but may overrule or deny such 
motion without awaiting a response.
    (e) The ALJ will make a reasonable effort to dispose of all 
outstanding motions prior to the beginning of the hearing.



Sec.  308.528  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative for:
    (1) Failing to comply with an order, rule, or procedure governing 
the proceeding;
    (2) Failing to prosecute or defend an action; or
    (3) Engaging in other misconduct that interferes with the speedy, 
orderly, or fair conduct of the hearing.
    (b) Any such sanction, including but not limited to, those listed in 
paragraphs (c), (d), and (e) of this section, must reasonably relate to 
the severity and nature of the failure or misconduct.
    (c) When a party fails to comply with an order, including an order 
for taking a deposition, the production of evidence within the party's 
control, or a request for admission, the ALJ may:
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, deem each matter of which 
an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with such order from 
introducing evidence concerning, or otherwise relying upon, testimony 
relating to the information sought; and
    (4) Strike any part of the related pleading or other submissions of 
the party failing to comply with such request.
    (d) If a party fails to prosecute or defend an action under this 
subpart commenced by service of a notice of hearing, the ALJ may dismiss 
the action or may issue an initial decision imposing penalties and 
assessments.
    (e) The ALJ may refuse to consider any motion, request, response, 
brief, or other document which is not filed in a timely fashion.



Sec.  308.529  The hearing and burden of proof.

    (a) The ALJ will conduct a hearing on the record in order to 
determine whether the defendant is liable for a civil penalty or 
assessment under Sec.  308.502 of this subpart, and, if so, the 
appropriate amount of any such civil penalty or assessment considering 
any aggravating or mitigating factors.
    (b) The FDIC must prove defendant's liability and any aggravating 
factors by a preponderance of the evidence.

[[Page 133]]

    (c) The defendant must prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (d) The hearing will be open to the public unless otherwise ordered 
by the ALJ for good cause shown.



Sec.  308.530  Determining the amount of penalties and assessments.

    (a) In determining an appropriate amount of civil penalties and 
assessments, the ALJ and the Board, upon appeal, should evaluate any 
circumstances that mitigate or aggravate the violation and should 
articulate in their opinions the reasons that support the penalties and 
assessments they impose. Because of the intangible costs of fraud, the 
expense of investigating such conduct, and the need to deter others who 
might be similarly tempted, ordinarily double damages and a significant 
civil penalty should be imposed.
    (b) Although not exhaustive, the following factors are among those 
that may influence the ALJ and the Board in determining the amount of 
penalties and assessments to impose with respect to the misconduct 
(i.e., the false, fictitious, or fraudulent claims or statement) charged 
in the complaint:
    (1) The number of false, fictitious, or fraudulent claims or 
statements;
    (2) The time period over which such claims or statements were made;
    (3) The degree of the defendant's culpability with respect to the 
misconduct;
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed;
    (5) The value of the government's actual loss as a result of the 
misconduct, including foreseeable consequential damages and the costs of 
investigation;
    (6) The relationship of the amount imposed as civil penalties to the 
amount of the government's loss;
    (7) The potential or actual impact of the misconduct upon national 
defense, public health or safety, or public confidence in the management 
of government programs and operations, including particularly the impact 
on the intended beneficiaries of such programs;
    (8) Whether the defendant has engaged in a pattern of the same or 
similar misconduct;
    (9) Whether the defendant attempted to conceal the misconduct;
    (10) The degree to which the defendant has involved others in the 
misconduct or in concealing it;
    (11) Where the misconduct of employees or agents is imputed to the 
defendant, the extent to which the defendant's practices fostered or 
attempted to preclude such misconduct;
    (12) Whether the defendant cooperated in or obstructed an 
investigation of the misconduct;
    (13) Whether the defendant assisted in identifying and prosecuting 
other wrongdoers;
    (14) The complexity of the program or transaction, and the degree of 
the defendant's sophistication with respect to it, including the extent 
of the defendant's prior participation in the program or in a similar 
transaction;
    (15) Whether the defendant has been found, in any criminal, civil, 
or administrative proceeding to have engaged in similar misconduct or to 
have dealt dishonestly with the Government of the United States or of a 
state, directly or indirectly; and
    (16) The need to deter the defendant and others from engaging in the 
same or similar misconduct.
    (c) Nothing in this section will be construed to limit the ALJ or 
the Board from considering any other factors that in any given case may 
mitigate or aggravate the offense for which penalties and assessments 
are imposed.
    (d) Civil money penalties that are assessed pursuant to this subpart 
are subject to adjustment on a four-year basis to account for inflation 
as required by section 4 of the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended (codified at 28 U.S.C. 2461, note) 
(see also 12 CFR 308.132(c)(3)(xv)).

    Effective Date Note: At 83 FR 61115, Nov. 28, 2018, Sec.  308.530 
was amended by revising paragraph (d), effective Jan. 15, 2019. For the 
convenience of the user, the revised text is set forth as follows:



Sec.  308.530  Determining the amount of penalties and assessments.

                                * * * * *

[[Page 134]]

    (d) Civil money penalties that are assessed under this subpart are 
subject to annual adjustments to account for inflation as required by 
the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (Pub. L. 114-74, sec. 701, 129 Stat. 584) (see also Sec.  
308.132(d)).



Sec.  308.531  Location of hearing.

    (a) The hearing may be held:
    (1) In any judicial district of the United States in which the 
defendant resides or transacts business;
    (2) In any judicial district of the United States in which the claim 
or statement at issue was made; or
    (3) In such other place as may be agreed upon by the defendant and 
the ALJ.
    (b) Each party will have the opportunity to present argument with 
respect to the location of the hearing.
    (c) The hearing will be held at the place and at the time ordered by 
the ALJ.



Sec.  308.532  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing will be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. The party offering a written 
statement must provide all other parties with a copy of the written 
statement along with the last known address of the witness. Sufficient 
time must be allowed for other parties to subpoena the witness for 
cross-examination at the hearing. Prior written statements and 
deposition transcripts of witnesses identified to testify at the hearing 
must be exchanged as provided in Sec.  308.521(a) of this subpart.
    (c) The ALJ will exercise reasonable control over the mode and order 
of interrogating witnesses and presenting evidence so as to:
    (1) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (2) Avoid needless consumption of time; and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The ALJ will permit the parties to conduct such cross-
examination as may be required for a full and true disclosure of the 
facts.
    (e) At the discretion of the ALJ, a witness may be cross-examined on 
matters relevant to the proceeding without regard to the scope of his or 
her direct examination. To the extent permitted by the ALJ, cross-
examination on matters outside the scope of direct examination will be 
conducted in the manner of direct examination and may proceed by leading 
questions only if the witness is a hostile witness, an adverse party, or 
a witness identified with an adverse party.
    (f) Upon motion of any party, the ALJ will order witnesses excluded 
so that they cannot hear the testimony of other witnesses. This rule 
does not authorize exclusion of:
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of the party appearing for the entity pro se or designated by 
the party's representative; or
    (3) An individual whose presence is shown by a party to be essential 
to the presentation of its case, including an individual employed by the 
Corporation engaged in assisting the representative for the Corporation.



Sec.  308.533  Evidence.

    (a) The ALJ will determine the admissibility of evidence.
    (b) Except as provided in this subpart, the ALJ will not be bound by 
the Federal Rules of Evidence (28 U.S.C. App.). However, the ALJ may 
apply the Federal Rules of Evidence where appropriate, e.g., to exclude 
unreliable evidence.
    (c) The ALJ will exclude irrelevant and immaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence may be excluded if it is privileged 
under federal law.
    (f) Evidence concerning offers of compromise or settlement will be 
inadmissible to the extent provided in rule 408 of the Federal Rules of 
Evidence.

[[Page 135]]

    (g) The ALJ will permit the parties to introduce rebuttal witnesses 
and evidence.
    (h) All documents and other evidence offered or taken for the record 
must be open to examination by all parties, unless otherwise ordered by 
the ALJ pursuant to Sec.  308.523 of this subpart.



Sec.  308.534  The record.

    (a) The hearing will be recorded by audio or videotape and 
transcribed. Transcripts may be obtained following the hearing from the 
ALJ at a cost not to exceed the actual cost of duplication.
    (b) The transcript of testimony, exhibits, and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for the decision by the ALJ and the 
Board.
    (c) The record may be inspected and copied (upon payment of a 
reasonable fee) by anyone, unless otherwise ordered by the ALJ pursuant 
to Sec.  308.523 of this subpart.



Sec.  308.535  Post-hearing briefs.

    The ALJ may require the parties to file post-hearing briefs. In any 
event, any party may file a post-hearing brief. The ALJ will fix the 
time for filing such briefs, not to exceed 60 days from the date the 
parties receive the transcript of the hearing or, if applicable, the 
stipulated record. Such briefs may be accompanied by proposed findings 
of fact and conclusions of law. The ALJ may permit the parties to file 
reply briefs.



Sec.  308.536  Initial decision.

    (a) The ALJ will issue an initial decision based only on the record, 
which will contain findings of fact, conclusions of law, and the amount 
of any penalties and assessments imposed.
    (b) The findings of fact will include a finding on each of the 
following issues:
    (1) Whether the claims or statements identified in the complaint, or 
any portions of such claims or statements, violate Sec.  308.502 of this 
subpart; and
    (2) If the person is liable for penalties or assessments, the 
appropriate amount of any such penalties or assessments considering any 
mitigating or aggravating factors that he or she finds in the case, such 
as those described in Sec.  308.530 of this subpart.
    (c) The ALJ will promptly serve the initial decision on all parties 
within 90 days after the time for submission of post-hearing briefs and 
reply briefs (if permitted) has expired. The ALJ will at the same time 
serve all parties with a statement describing the right of any defendant 
determined to be liable for a civil penalty or assessment to file a 
motion for reconsideration with the ALJ or a notice of appeal with the 
Board. If the ALJ fails to meet the deadline contained in this 
paragraph, he or she will notify the parties of the reason for the delay 
and will set a new deadline.
    (d) Unless the initial decision of the ALJ is timely appealed to the 
Board, or a motion for reconsideration of the initial decision is timely 
filed, the initial decision will constitute the final decision of the 
Board and will be final and binding on the parties 30 days after it is 
issued by the ALJ.



Sec.  308.537  Reconsideration of initial decision.

    (a) Except as provided in paragraph (d) of this section, any party 
may file a motion for reconsideration of the initial decision within 20 
days of receipt of the initial decision. If service is made by mail, 
receipt will be presumed to be 5 days from the date of mailing in the 
absence of proof to the contrary.
    (b) Every motion for reconsideration must set forth the matters 
claimed to have been erroneously decided and the nature of the alleged 
errors. The motion must be accompanied by a supporting brief.
    (c) Responses to the motions will be allowed only upon order of the 
ALJ.
    (d) No party may file a motion for reconsideration of an initial 
decision that has been revised in response to a previous motion for 
reconsideration.
    (e) The ALJ may dispose of a motion for reconsideration by denying 
it or by issuing a revised initial decision.
    (f) If the ALJ denies a motion for reconsideration, the initial 
decision will constitute the final decision of the FDIC and will be 
final and binding on all parties 30 days after the ALJ denies the 
motion, unless the final decision is

[[Page 136]]

timely appealed to the Board in accordance with Sec.  308.538 of this 
subpart.
    (g) If the ALJ issues a revised initial decision, that decision will 
constitute the final decision of the FDIC and will be final and binding 
on the parties 30 days after it is issued, unless it is timely appealed 
to the Board in accordance with Sec.  308.538 of this subpart.



Sec.  308.538  Appeal to the Board of Directors.

    (a) Any defendant who has filed a timely answer and who is 
determined in an initial decision to be liable for a civil penalty or 
assessment may appeal such decision to the Board by filing a notice of 
appeal with the Board in accordance with this section.
    (b)(1) No notice of appeal may be filed until the time period for 
filing a motion for reconsideration under Sec.  308.537 of this subpart 
has expired.
    (2) If a motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ denies the motion or 
issues a revised initial decision, whichever applies.
    (3) If no motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ issues the initial 
decision.
    (4) The Board may extend the initial 30-day period for an additional 
30 days if the defendant files with the Board a request for an extension 
within the initial 30-day period and shows good cause.
    (c) If the defendant files a timely notice of appeal with the Board, 
the ALJ will forward the record of the proceeding to the Board.
    (d) A notice of appeal will be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions.
    (e) The representative for the Corporation may file a brief in 
opposition to exceptions within 30 days of receiving the notice of 
appeal and accompanying brief.
    (f) There is no right to appear personally before the Board.
    (g) There is no right to appeal any interlocutory ruling by the ALJ.
    (h) In reviewing the initial decision, the Board will not consider 
any objection that was not raised before the ALJ unless a demonstration 
is made of extraordinary circumstances causing the failure to raise the 
objection.
    (i) If any party demonstrates to the satisfaction of the Board that 
additional evidence not presented at such hearing is material and that 
there were reasonable grounds for the failure to present such evidence 
at such hearing, the Board will remand the matter to the ALJ for 
consideration of such additional evidence.
    (j) The Board may affirm, reduce, reverse, compromise, remand, or 
settle any penalty or assessment determined by the ALJ in any initial 
decision.
    (k) The Board will promptly serve each party to the appeal with a 
copy of the decision of the Board and a statement describing the right 
of any person determined to be liable for a penalty or an assessment to 
seek judicial review.
    (l) Unless a petition for review is filed as provided in 31 U.S.C. 
3805 after a defendant has exhausted all administrative remedies under 
this subpart and within 60 days after the date on which the Board serves 
the defendant with a copy of the Board's decision, a determination that 
a defendant is liable under Sec.  308.502 of this subpart is final and 
is not subject to judicial review.



Sec.  308.539  Stays ordered by the Department of Justice.

    If at any time the Attorney General or an Assistant Attorney General 
designated by the Attorney General transmits to the Board a written 
finding that continuation of the administrative process described in 
this subpart with respect to a claim or statement may adversely affect 
any pending or potential criminal or civil action related to such claim 
or statement, the Board will stay the process immediately. The Board may 
order the process resumed only upon receipt of the written authorization 
of the Attorney General.



Sec.  308.540  Stay pending appeal.

    (a) An initial decision is stayed automatically pending disposition 
of a motion for reconsideration or of an appeal to the Board.
    (b) No administrative stay is available following a final decision 
of the Board.

[[Page 137]]



Sec.  308.541  Judicial review.

    Section 3805 of title 31, United States Code, authorizes judicial 
review by an appropriate United States District Court of a final 
decision of the Board imposing penalties or assessments under this 
subpart and specifies the procedures for such review.



Sec.  308.542  Collection of civil penalties and assessments.

    Sections 3806 and 3808(b) of title 31, United States Code, authorize 
actions for collection of civil penalties and assessments imposed under 
this subpart and specify the procedures for such actions.



Sec.  308.543  Right to administrative offset.

    The amount of any penalty or assessment which has become final, or 
for which a judgment has been entered under Sec.  308.541 or Sec.  
308.542 of this subpart, or any amount agreed upon in a compromise or 
settlement under Sec.  308.545 of this subpart, may be collected by 
administrative offset under 31 U.S.C. 3716, except that an 
administrative offset may not be made under this section against a 
refund of an overpayment of federal taxes, then or later owing by the 
United States to the defendant.



Sec.  308.544  Deposit in Treasury of United States.

    All amounts collected pursuant to this subpart will be deposited as 
miscellaneous receipts in the Treasury of the United States, except as 
provided in 31 U.S.C. 3806(g).



Sec.  308.545  Compromise or settlement.

    (a) Parties may make offers of compromise or settlement at any time.
    (b) The reviewing official has the exclusive authority to compromise 
or settle a case under this subpart at any time after the date on which 
the reviewing official is permitted to issue a complaint and before the 
date on which the ALJ issues an initial decision.
    (c) The Board has exclusive authority to compromise or settle a case 
under this subpart any time after the date on which the ALJ issues an 
initial decision, except during the pendency of any review under Sec.  
308.541 of this subpart or during the pendency of any action to collect 
penalties and assessments under Sec.  308.542 of this subpart.
    (d) The Attorney General has exclusive authority to compromise or 
settle a case under this subpart during the pendency of any review under 
Sec.  308.541 of this subpart or of any action to recover penalties and 
assessments under 31 U.S.C. 3806.
    (e) The investigating official may recommend settlement terms to the 
reviewing official, the Board, or the Attorney General, as appropriate. 
The reviewing official may recommend settlement terms to the Board, or 
the Attorney General, as appropriate.
    (f) Any compromise or settlement must be in writing.



Sec.  308.546  Limitations.

    (a) The notice of hearing with respect to a claim or statement will 
be served in the manner specified in Sec.  308.507 of this subpart 
within 6 years after the date on which such claim or statement is made.
    (b) If the defendant fails to file a timely answer, service of 
notice under Sec.  308.509(b) of this subpart will be deemed a notice of 
a hearing for purposes of this section.
    (c) The statute of limitations may be extended by agreement of the 
parties.



    Subpart U_Removal, Suspension, and Debarment of Accountants From 
                        Performing Audit Services

    Source: 68 FR 48270, Aug. 13, 2003, unless otherwise noted.



Sec.  308.600  Scope.

    This subpart, which implements section 36(g)(4) of the FDIA (12 
U.S.C. 1831m(g)(4)), provides rules and procedures for the removal, 
suspension, or debarment of independent public accountants and 
accounting firms from performing independent audit and attestation 
services required by section 36 of the FDIA (12 U.S.C. 1831m) for 
insured depository institutions for which the FDIC is the appropriate 
Federal banking agency.

[[Page 138]]



Sec.  308.601  Definitions.

    As used in this subpart, the following terms shall have the meaning 
given below unless the context requires otherwise:
    (a) Accounting firm means a corporation, proprietorship, 
partnership, or other business firm providing audit services.
    (b) Audit services means any service required to be performed by an 
independent public accountant by section 36 of the FDIA and 12 CFR part 
363, including attestation services.
    (c) Independent public accountant (accountant) means any individual 
who performs or participates in providing audit services.



Sec.  308.602  Removal, suspension, or debarment.

    (a) Good cause for removal, suspension, or debarment--(1) 
Individuals. The Board of Directors may remove, suspend, or debar an 
independent public accountant under section 36 of the FDIA from 
performing audit services for insured depository institutions for which 
the FDIC is the appropriate Federal banking agency if, after service of 
a notice of intention and opportunity for hearing in the matter, the 
Board of Directors finds that the accountant:
    (i) Lacks the requisite qualifications to perform audit services;
    (ii) Has knowingly or recklessly engaged in conduct that results in 
a violation of applicable professional standards, including those 
standards and conflicts of interest provisions applicable to accountants 
through the Sarbanes-Oxley Act of 2002 (Pub. L. 107-204, 116 Stat. 745 
(2002)) (Sarbanes-Oxley Act) and developed by the Public Company 
Accounting Oversight Board and the Securities and Exchange Commission;
    (iii) Has engaged in negligent conduct in the form of:
    (A) A single instance of highly unreasonable conduct that results in 
a violation of applicable professional standards in circumstances in 
which an accountant knows, or should know, that heightened scrutiny is 
warranted; or
    (B) Repeated instances of unreasonable conduct, each resulting in a 
violation of applicable professional standards, that indicate a lack of 
competence to perform audit services;
    (iv) Has knowingly or recklessly given false or misleading 
information, or knowingly or recklessly participated in any way in the 
giving of false or misleading information, to the FDIC or any officer or 
employee of the FDIC;
    (v) Has engaged in, or aided and abetted, a material and knowing or 
reckless violation of any provision of the Federal banking or securities 
laws or the rules and regulations thereunder, or any other law;
    (vi) Has been removed, suspended, or debarred from practice before 
any Federal or state agency regulating the banking, insurance, or 
securities industries, other than by an action listed in Sec.  308.603, 
on grounds relevant to the provision of audit services; or
    (vii) Is suspended or debarred for cause from practice as an 
accountant by any duly constituted licensing authority of any state, 
possession, commonwealth, or the District of Columbia.
    (2) Accounting firms. If the Board of Directors determines that 
there is good cause for the removal, suspension, or debarment of a 
member or employee of an accounting firm under paragraph (a)(1) of this 
section, the Board of Directors also may remove, suspend, or debar such 
firm or one or more offices of such firm. In considering whether to 
remove, suspend, or debar an accounting firm or an office thereof, and 
the term of any sanction against an accounting firm under this section, 
the Board of Directors may consider, for example:
    (i) The gravity, scope, or repetition of the act or failure to act 
that constitutes good cause for the removal, suspension, or debarment;
    (ii) The adequacy of, and adherence to, applicable policies, 
practices, or procedures for the accounting firm's conduct of its 
business and the performance of audit services;
    (iii) The selection, training, supervision, and conduct of members 
or employees of the accounting firm involved in the performance of audit 
services;
    (iv) The extent to which managing partners or senior officers of the 
accounting firm have participated, directly, or indirectly through 
oversight

[[Page 139]]

or review, in the act or failure to act; and
    (v) The extent to which the accounting firm has, since the 
occurrence of the act or failure to act, implemented corrective internal 
controls to prevent its recurrence.
    (3) Limited scope orders. An order of removal, suspension (including 
an immediate suspension), or debarment may, at the discretion of the 
Board of Directors, be made applicable to a limited number of insured 
depository institutions for which the FDIC is the appropriate Federal 
banking agency.
    (4) Remedies not exclusive. The remedies provided in this subpart 
are in addition to any other remedies the FDIC may have under any other 
applicable provision of law, rule, or regulation.
    (b) Proceedings to remove, suspend or debar--(1) Initiation of 
formal removal, suspension, or debarment proceedings. The Board of 
Directors may initiate a proceeding to remove, suspend, or debar an 
accountant or accounting firm from performing audit services by issuing 
a written notice of intention to take such action that names the 
individual or firm as a respondent and describes the nature of the 
conduct that constitutes good cause for such action.
    (2) Hearings under paragraph (b) of this section. An accountant or 
firm named as a respondent in the notice issued under paragraph (b)(1) 
of this section may request a hearing on the allegations contained in 
the notice. Hearings conducted under this paragraph shall be conducted 
in the same manner as other hearings under the Uniform Rules of Practice 
and Procedure (12 CFR part 308, subpart A) (Uniform Rules).
    (c) Immediate suspension from performing audit services--(1) In 
general. If the Board of Directors serves a written notice of intention 
to remove, suspend, or debar an accountant or accounting firm from 
performing audit services, the Board of Directors may, with due regard 
for the public interest and without a preliminary hearing, immediately 
suspend such accountant or firm from performing audit services for 
insured depository institutions for which the FDIC is the appropriate 
Federal banking agency if the Board of Directors:
    (i) Has a reasonable basis to believe that the accountant or 
accounting firm has engaged in conduct (specified in the notice served 
upon the accountant or accounting firm under paragraph (b)(1) of this 
section) that would constitute grounds for removal, suspension, or 
debarment under paragraph (a) of this section;
    (ii) Determines that immediate suspension is necessary to avoid 
immediate harm to an insured depository institution or its depositors or 
to the depository system as a whole; and
    (iii) Serves such respondent with written notice of the immediate 
suspension.
    (2) Procedures. An immediate suspension notice issued under this 
paragraph will become effective upon service. Such suspension will 
remain in effect until the date the Board of Directors dismisses the 
charges contained in the notice of intention, or the effective date of a 
final order of removal, suspension, or debarment issued by the Board of 
Directors to the respondent.
    (3) Petition to stay. Any accountant or accounting firm immediately 
suspended from performing audit services in accordance with paragraph 
(c)(1) of this section may, within 10 calendar days after service of the 
notice of immediate suspension, file a petition with the Executive 
Secretary for a stay of such immediate suspension. If no petition is 
filed within 10 calendar days, the immediate suspension shall remain in 
effect.
    (4) Hearing on petition. Upon receipt of a stay petition, the 
Executive Secretary will designate a presiding officer who will fix a 
place and time (not more than 10 calendar days after receipt of the 
petition, unless extended at the request of petitioner) at which the 
immediately suspended party may appear, personally or through counsel, 
to submit written materials and oral argument. Any FDIC employee engaged 
in investigative or prosecuting functions for the FDIC in a case may 
not, in that or a factually related case, serve as a presiding officer 
or participate or advise in the decision of the presiding officer or of 
the FDIC, except as witness or counsel in the proceeding. In the sole 
discretion of the presiding officer, upon a specific showing of 
compelling

[[Page 140]]

need, oral testimony of witnesses also may be presented. Enforcement 
counsel may represent the agency at the hearing. In hearings held 
pursuant to this paragraph there shall be no discovery, and the 
provisions of Sec. Sec.  308.6 through 308.12, Sec.  308.16, and Sec.  
308.21 of the Uniform Rules will apply.
    (5) Decision on petition. Within 30 calendar days after the hearing, 
the presiding officer will issue a decision. The presiding officer will 
grant a stay upon a demonstration that a substantial likelihood exists 
of the respondent's success on the issues raised by the notice of 
intention and that, absent such relief, the respondent will suffer 
immediate and irreparable injury, loss, or damage. In the absence of 
such a demonstration, the presiding officer will notify the parties that 
the immediate suspension will be continued pending the completion of the 
administrative proceedings pursuant to the notice of intention. The 
presiding officer will serve a copy of the decision on, and 
simultaneously certify the record to, the Executive Secretary.
    (6) Review of presiding officer's decision. The parties may seek 
review of the presiding officer's decision by filing a petition for 
review with the Executive Secretary within 10 calendar days after 
service of the decision. Replies must be filed within 10 calendar days 
after the petition filing date. Upon receipt of a petition for review 
and any reply, the Executive Secretary will promptly certify the entire 
record to the Board of Directors. Within 60 calendar days of the 
Executive Secretary's certification, the Board of Directors will issue 
an order notifying the affected party whether or not the immediate 
suspension should be continued or reinstated. The order will state the 
basis of the Board's decision.



Sec.  308.603  Automatic removal, suspension, and debarment.

    (a) An independent public accountant or accounting firm may not 
perform audit services for insured depository institutions for which the 
FDIC is the appropriate Federal banking agency if the accountant or 
firm:
    (1) Is subject to a final order of removal, suspension, or debarment 
(other than a limited scope order) issued by the Board of Governors of 
the Federal Reserve System, the Office of the Comptroller of the 
Currency, or the Office of Thrift Supervision under section 36 of the 
FDIA;
    (2) Is subject to a temporary suspension or permanent revocation of 
registration or a temporary or permanent suspension or bar from further 
association with any registered public accounting firm issued by the 
Public Company Accounting Oversight Board or the Securities and Exchange 
Commission under sections 105(c)(4)(A) or (B) of the Sarbanes-Oxley Act 
(15 U.S.C. 7215(c)(4)(A) or (B)); or
    (3) Is subject to an order of suspension or denial of the privilege 
of appearing or practicing before the Securities and Exchange 
Commission.
    (b) Upon written request, the FDIC, for good cause shown, may grant 
written permission to such accountant or firm to perform audit services 
for insured depository institutions for which the FDIC is the 
appropriate Federal banking agency. The written request must comply with 
the requirements of Sec.  303.3 of this chapter.



Sec.  308.604  Notice of removal, suspension, or debarment.

    (a) Notice to the public. Upon the issuance of a final order for 
removal, suspension, or debarment of an independent public accountant or 
accounting firm from providing audit services, the FDIC will make the 
order publicly available and provide notice of the order to the other 
Federal banking agencies.
    (b) Notice to the FDIC by accountants and firms. An accountant or 
accounting firm that provides audit services to any insured depository 
institution for which the FDIC is the appropriate Federal banking agency 
must provide the FDIC with written notice of:
    (1) any currently effective order or other action described in 
Sec. Sec.  308.602(a)(1)(vi) through (a)(1)(vii) or Sec. Sec.  
308.603(a)(2) through (a)(3); and
    (2) any currently effective action by the Public Company Accounting 
Oversight Board under sections 105(c)(4)(C) or (G) of the Sarbanes-Oxley 
Act (15 U.S.C. 7215(c)(4)(C) or (G)).
    (c) Timing and place of notice. Written notice required by this 
paragraph shall

[[Page 141]]

be given no later than 15 calendar days following the effective date of 
an order or action, or 15 calendar days before an accountant or 
accounting firm accepts an engagement to provide audit services, 
whichever date is earlier. The written notice must be filed by the 
independent public accountant or accounting firm with the FDIC, 
Accounting and Securities Disclosure Section, 550 17th Street, NW., 
Washington, DC 20429.

[68 FR 48270, Aug. 13, 2003, as amended at 74 FR 32245, July 7, 2009; 74 
FR 35745, July 20, 2009]



Sec.  308.605  Application for reinstatement.

    (a) Form of petition. Unless otherwise ordered by the Board of 
Directors, an application for reinstatement by an independent public 
accountant, an accounting firm, or an office of a firm that was removed, 
suspended, or debarred under Sec.  308.602 may be made in writing at any 
time. The application must comply with the requirements of Sec.  303.3 
of this chapter.
    (b) Procedure. An applicant for reinstatement under this section 
may, in the sole discretion of the Board of Directors, be afforded a 
hearing. In reinstatement proceedings, the person seeking reinstatement 
shall bear the burden of going forward with an application and proving 
the grounds asserted in support of the application, and the Board of 
Directors may, in its sole discretion, direct that any reinstatement 
proceeding be limited to written submissions. The removal, suspension, 
or debarment shall continue until the Board of Directors, for good cause 
shown, has reinstated the applicant or until the suspension period has 
expired. The filing of an application for reinstatement will not stay 
the effectiveness of the removal, suspension, or debarment of an 
accountant or firm.



PART 309_DISCLOSURE OF INFORMATION--Table of Contents



Sec.
309.1 Purpose and scope.
309.2 Definitions.
309.3 Federal Register publication.
309.4 Publicly available records.
309.5 Procedures for requesting records.
309.6 Disclosure of exempt records.
309.7 Service of process.

    Authority: 5 U.S.C. 552; 12 U.S.C. 1819 ``Seventh'' and ``Tenth.''

    Source: 60 FR 61465, Nov. 30, 1995, unless otherwise noted.



Sec.  309.1  Purpose and scope.

    This part sets forth the basic policies of the Federal Deposit 
Insurance Corporation regarding information it maintains and the 
procedures for obtaining access to such information, including 
disclosure of information transferred to Federal Deposit Insurance 
Corporation from the Office of Thrift Supervision pursuant to section 
312 and 323 of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203. Section 309.2 sets forth definitions applicable 
to this part 309. Section 309.3 describes the types of information and 
documents typically published in the Federal Register. Section 309.4 
explains how to access public records maintained on the Federal Deposit 
Insurance Corporation's World Wide Web page and in the Federal Deposit 
Insurance Corporation's Public Information Center or ``PIC,'' and 
describes the categories of records generally found there. Section 309.5 
implements the Freedom of Information Act (5 U.S.C. 552). Section 309.6 
authorizes the discretionary disclosure of exempt records under certain 
limited circumstances. Section 309.7 outlines procedures for serving a 
subpoena or other legal process to obtain information maintained by the 
FDIC.

[76 FR 35965, June 21, 2011]



Sec.  309.2  Definitions.

    For purposes of this part:
    (a) The term depository institution, as used in Sec.  309.6, 
includes depository institutions that have applied to the Corporation 
for federal deposit insurance, closed depository institutions, presently 
operating federally insured depository institutions, foreign banks, 
branches of foreign banks, and all affiliates of any of the foregoing.
    (b) The terms Corporation or FDIC mean the Federal Deposit Insurance 
Corporation.

[[Page 142]]

    (c) The words disclose or disclosure, as used in Sec.  309.6, mean 
to give access to a record, whether by producing the written record or 
by oral discussion of its contents. Where the Corporation employee 
authorized to release Corporation documents makes a determination that 
furnishing copies of the documents is necessary, the words disclose or 
disclosure include the furnishing of copies of documents or records. In 
addition, disclose or disclosure as used in Sec.  309.6 is synonymous 
with the term transfer as used in the Right to Financial Privacy Act of 
1978 (12 U.S.C. 3401 et seq.).
    (d) The term examination includes, but is not limited to, formal and 
informal investigations of irregularities involving suspected violations 
of federal or state civil or criminal laws, or unsafe and unsound 
practices as well as such other investigations as may be conducted 
pursuant to law.
    (e) The term record means:
    (1) Any information that would be an agency record subject to the 
requirements of this section when maintained by the FDIC in any format, 
including an electronic format; and
    (2) Any information described under paragraph (e)(1) of this section 
that is maintained for the FDIC by an entity under Government contract, 
for purposes of records management.
    (f) The term report of examination includes, but is not limited to, 
examination reports resulting from examinations of depository 
institutions conducted jointly by Corporation examiners and state 
banking authority examiners or other federal financial institution 
examiners, as well as reports resulting from examinations conducted 
solely by Corporation examiners. The term also includes compliance 
examination reports.
    (g) The term customer financial records, as used in Sec.  309.6, 
means an original of, a copy of, or information known to have been 
derived from, any record held by a depository institution pertaining to 
a customer's relationship with the depository institution but does not 
include any record that contains information not identified with or 
identifiable as being derived from the financial records of a particular 
customer. The term customer as used in Sec.  309.6 refers to individuals 
or partnerships of five or fewer persons.
    (h) The term Director of the Division having primary authority 
includes Deputies to the Chairman and directors of FDIC Divisions and 
Offices that create, maintain custody, or otherwise have primary 
responsibility for the handling of FDIC records or information.

[60 FR 61465, Nov. 30, 1995, as amended at 63 FR 16404, Apr. 3, 1998; 81 
FR 83646, Nov. 22, 2016]



Sec.  309.3  Federal Register publication.

    The FDIC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Descriptions of its central and field organization and the 
established places at which, the officers from whom, and the methods 
whereby, the public may secure information, make submittals or requests, 
or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the FDIC;
    (e) Every amendment, revision or repeal of the foregoing; and
    (f) General notices of proposed rule-making.



Sec.  309.4  Publicly available records.

    (a) Records available on the FDIC's World Wide Web page--(1) 
Discretionary release of documents. The FDIC encourages the public to 
explore the wealth of resources available on the FDIC's World Wide Web 
page, located at: http://www.fdic.gov. The FDIC has elected to publish a 
broad range of materials on its World Wide Web page, including consumer 
guides; financial and statistical information of interest to the

[[Page 143]]

banking industry; and information concerning the FDIC's responsibilities 
and structure.
    (2) Documents required to be made available for inspection in an 
electronic format. (i) The following types of documents created on or 
after November 1, 1996, and required to be made available for inspection 
in an electronic format, may be found on the FDIC's World Wide Web page 
located at: http://www.fdic.gov:
    (A) Final opinions, including concurring and dissenting opinions, as 
well as final orders and written agreements, made in the adjudication of 
cases;
    (B) Statements of policy and interpretations adopted by the Board of 
Directors that are not published in the Federal Register;
    (C) Administrative staff manuals and instructions to staff that 
affect the public;
    (D) Copies of all records released to any person under Sec.  309.5:
    (1) That, because of the nature of their subject matter, the FDIC 
determines have become or are likely to become the subject of subsequent 
requests for substantially the same records; or
    (2) That have been requested 3 or more times; and
    (E) A general index of the records referred to in paragraph 
(a)(2)(i)(D) of this section.
    (ii) To the extent permitted by law, the FDIC may delete identifying 
details when it makes available or publishes a final opinion, final 
order, statement of policy, interpretation or staff manual or 
instruction. If redaction is necessary, the FDIC will, to the extent 
technically feasible, indicate the amount of material deleted at the 
place in the record where such deletion is made unless that indication 
in and of itself will jeopardize the purpose for the redaction.
    (b) Public Information Center. The FDIC maintains a Public 
Information Center or ``PIC'' that contains Corporate records that the 
Freedom of Information Act requires be made available for regular 
inspection and copying, as well as any records or information the FDIC, 
in its discretion, has regularly made available, to the public. The PIC 
has extensive materials of interest to the public, including many 
Reports, Summaries and Manuals used or published by the Corporation that 
are made available, by appointment, for inspection and copying. The PIC 
is open from 9 a.m. to 4 p.m., Monday through Friday, excepting Federal 
holidays. It is located at 3501 North Fairfax Drive, Room E-1005, 
Arlington, VA 22226. The PIC may be reached during business hours by 
calling 1(877) 275-3342 or 1-(703) 562-2200.
    (c) Applicable fees. (i) If applicable, fees for furnishing records 
under this section are as set forth in Sec.  309.5(f) except that all 
categories of requesters shall be charged duplication costs.
    (ii) Information on the FDIC's World Wide Web page is available to 
the public without charge. If, however, information available on the 
FDIC's World Wide Web page is provided pursuant to a Freedom of 
Information Act request processed under Sec.  309.5, then fees apply and 
will be assessed pursuant to Sec.  309.5(f).

[63 FR 16404, Apr. 3, 1998, as amended at 76 FR 35965, June 21, 2011; 81 
FR 83646, Nov. 22, 2016]



Sec.  309.5  Procedures for requesting records.

    (a) Definitions. For purposes of this section:
    (1) Commercial use request means a request from or on behalf of a 
requester who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. In determining whether a request falls 
within this category, the FDIC will determine the use to which a 
requester will put the records requested and seek additional information 
as it deems necessary.
    (2) Direct costs means those expenditures the FDIC actually incurs 
in searching for, duplicating, and, in the case of commercial 
requesters, reviewing records in response to a request for records.
    (3) Duplication means the process of making a copy of a record 
necessary to respond to a request for records or for inspection of 
original records that contain exempt material or that cannot otherwise 
be directly inspected. Such copies can take the form of paper copy,

[[Page 144]]

microfilm, audiovisual records, or machine readable records (e.g., 
magnetic tape or computer disk).
    (4) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, an institution of professional education, and 
an institution of vocational education, which operates a program or 
programs of scholarly research.
    (5) Noncommercial scientific institution means an institution that 
is not operated on a commercial basis as that term is defined in 
paragraph (a)(1) of this section, and which is operated solely for the 
purpose of conducting scientific research, the results of which are not 
intended to promote any particular product or industry.
    (6) Representative of the news media means any person or entity that 
gathers information of potential interest to a segment of the public, 
uses its editorial skills to turn the raw materials into a distinct 
work, and distributes that work to an audience. The term news means 
information that is about current events or that would be of current 
interest to the public. Examples of news-media entities are television 
or radio stations broadcasting to the public at large and publishers of 
periodicals (but only if such entities qualify as disseminators of news) 
who make their products available for purchase by or subscription by or 
free distribution to the general public. These examples are not all-
inclusive. Moreover, as methods of news delivery evolve (for example, 
the adoption of the electronic dissemination of newspapers through 
telecommunications services), such alternative media will be considered 
to be news-media entities. A freelance journalist will be regarded as 
working for a news-media entity if the journalist can demonstrate a 
solid basis for expecting publication through that entity, whether or 
not the journalist is actually employed by that entity. A publication 
contract would present a solid basis for such an expectation; the FDIC 
may also consider the past publication record of the requester in making 
this determination.
    (7) Review means the process of examining records located in 
response to a request for records to determine whether any portion of 
any record is permitted to be withheld as exempt information. It 
includes processing any record for disclosure, e.g., doing all that is 
necessary to excise them or otherwise prepare them for release.
    (8) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.
    (b) Making a request for records. (1) The request shall be submitted 
in writing to the Freedom of Information Act/Privacy Act Group (``FOIA/
PA Group''), Legal Division :
    (i) By completing the online request form located on the FDIC's 
World Wide Web page, found at: http://www.fdic.gov;
    (ii) By facsimile clearly marked Freedom of Information Act Request 
to the FOIA/PA Group: (703) 562-2797; or
    (iii) By sending a letter to: Federal Deposit Insurance Corporation, 
Attn: FOIA/PA Group, 550 17th Street, NW., Washington, DC 20429.
    (2) The request shall contain the following information:
    (i) The name and address of the requester, an electronic mail 
address, if available, and the telephone number at which the requester 
may be reached during normal business hours;
    (ii) Whether the requester is an educational institution, 
noncommercial scientific institution, or news media representative;
    (iii) A statement agreeing to pay the applicable fees, or a 
statement identifying a maximum fee that is acceptable to the requester, 
or a request for a waiver or reduction of fees that satisfies paragraph 
(f)(1)(x) of this section; and
    (iv) The preferred form and format of any responsive information 
requested, if other than paper copies.
    (3) A request for identifiable records shall reasonably describe the 
records in a way that enables the FDIC's staff to identify and produce 
the records with reasonable effort and without unduly burdening or 
significantly interfering with any of the FDIC's operations.
    (c) Defective requests. The FDIC need not accept or process a 
request that

[[Page 145]]

does not reasonably describe the records requested or that does not 
otherwise comply with the requirements of this part. The FDIC may return 
a defective request, specifying the deficiency. The requester may submit 
a corrected request, which will be treated as a new request.
    (d) Processing requests--(1) Receipt of requests. Upon receipt of a 
request that satisfies paragraph (b) of this section, the FOIA/PA Group 
will acknowledge receipt of the request in writing to the requester and 
provide the requester with an individualized tracking number for the 
request. The date of receipt for such request, including one that is 
addressed incorrectly or that is referred by another agency, is the date 
the FOIA/PA Group actually receives the request.
    (2) Multitrack processing. (i) The FDIC provides different levels of 
processing for categories of requests under this part. Requests for 
records that are readily identifiable by the FOIA/PA Group, and that 
have already been cleared for public release may qualify for fast-track 
processing. All other requests shall be handled under normal processing 
procedures, unless expedited processing has been granted pursuant to 
paragraph (d)(3) of this section.
    (ii) The FDIC will make the determination whether a request 
qualifies for fast-track processing. A requester may contact the FOIA/PA 
Group to learn whether a particular request has been assigned to fast-
track processing. If the request has not qualified for fast-track 
processing, the requester will be given an opportunity to refine the 
request in order to qualify for fast-track processing. Changes made to 
requests to obtain faster processing must be in writing.
    (3) Expedited processing. (i) Where a person requesting expedited 
access to records has demonstrated a compelling need for the records, or 
where the FDIC has determined to expedite the response, the FDIC shall 
process the request as soon as practicable. To show a compelling need 
for expedited processing, the requester shall provide a statement 
demonstrating that:
    (A) The failure to obtain the records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (B) The requester can establish that they are primarily engaged in 
information dissemination as their main professional occupation or 
activity, and there is urgency to inform the public of the government 
activity involved in the request; and
    (C) The requester's statement must be certified to be true and 
correct to the best of the person's knowledge and belief and explain in 
detail the basis for requesting expedited processing.
    (ii) The formality of the certification required to obtain expedited 
treatment may be waived by the FDIC as a matter of administrative 
discretion.
    (4) A requester seeking expedited processing will be notified 
whether expedited processing has been granted within ten (10) working 
days of the receipt of the request. If the request for expedited 
processing is denied, the requester may file an appeal pursuant to the 
procedures set forth in paragraph (i) of this section, and the FDIC 
shall respond to the appeal within ten (10) working days after receipt 
of the appeal.
    (5) Priority of responses. Consistent with sound administrative 
process the FDIC processes requests in the order they are received in 
the separate processing tracks. However, in the agency's discretion, or 
upon a court order in a matter to which the FDIC is a party, a 
particular request may be processed out of turn.
    (6) Checking status of request. A requester may check on the status 
of a request using the tracking number assigned to the request to obtain 
information about the request including the date on which the FDIC 
originally received the request and an estimated date on which the FDIC 
will complete action on the request. The status of a request may be 
obtained:
    (i) Online at the FDIC's FOIA Service Center, at http://
www.fdic.gov, if the request was submitted electronically using the 
FDIC's online FOIA request form; or
    (ii) By calling the FDIC's FOIA Service Center at (202) 898-7021, if 
the request was submitted by email, facsimile or regular mail.

[[Page 146]]

    (7) Notification. (i) The time for response to requests will be 
twenty (20) working days except:
    (A) In the case of expedited treatment under paragraph (d)(3) of 
this section;
    (B) Where the running of such time is suspended for the calculation 
of a cost estimate for the requester if the FDIC determines that the 
processing of the request may exceed the requester's maximum fee 
provision or if the charges are likely to exceed $250 as provided for in 
paragraph (f)(1)(v) of this section;
    (C) Where the running of such time is suspended for the payment of 
fees pursuant to the paragraphs (d)(6)(i)(B) and (f)(1) of this section; 
or
    (D) In unusual circumstances, as defined in 5 U.S.C. 552(a)(6)(B) 
and further described in paragraph (d)(6)(iii) of this section.
    (ii) In unusual circumstances as referred to in paragraph 
(d)(6)(i)(D) of this section, the time limit may be extended for a 
period of:
    (A) Ten (10) working days as provided by written notice to the 
requester, setting forth the reasons for the extension and the date on 
which a determination is expected to be dispatched; or
    (B) Such alternative time period as agreed to by the requester or as 
reasonably determined by the FDIC when the FDIC notifies the requester 
that the request cannot be processed in the specified time limit.
    (iii) Unusual circumstances may arise when:
    (A) The records are in facilities, such as field offices or storage 
centers, that are not located at the FDIC's Washington office;
    (B) The records requested are voluminous or are not in close 
proximity to one another; or
    (C) There is a need to consult with another agency or among two or 
more components of the FDIC having a substantial interest in the 
determination.
    (8) Response to request. In response to a request that satisfies the 
requirements of paragraph (b) of this section, a search shall be 
conducted of records maintained by the FDIC in existence on the date of 
receipt of the request, and a review made of any responsive information 
located. The FDIC shall notify the requester of:
    (i) The FDIC's determination of the request;
    (ii) The reasons for the determination;
    (iii) The right of the requester to seek assistance from the FDIC's 
FOIA Public Liaison; and
    (iv) If the response is a denial of an initial request or if any 
information is withheld, the FDIC will advise the requester in writing:
    (A) If the denial is in part or in whole;
    (B) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (C) The exemptions relied on for the denial;
    (D) The right of the requester to appeal the denial to the FDIC's 
General Counsel within 90 calendar days following receipt of the 
notification, as specified in paragraph (i) of this section; and
    (E) The right of the requester to seek dispute resolution services 
from the FDIC's FOIA Public Liaison and/or the Office of Government 
Information Services (OGIS).
    (e) Providing responsive records. (1) Copies of requested records 
shall be sent to the requester by regular U.S. mail to the address 
indicated in the request, unless the requester elects to take delivery 
of the documents at the FDIC or makes other acceptable arrangements, or 
the FDIC deems it appropriate to send the documents by another means.
    (2) The FDIC shall provide a copy of the record in any form or 
format requested if the record is readily reproducible by the FDIC in 
that form or format, but the FDIC need not provide more than one copy of 
any record to a requester.
    (3) By arrangement with the requester, the FDIC may elect to send 
the responsive records electronically if a substantial portion of the 
request is in electronic format. If the information requested is made 
pursuant to the Privacy Act of 1974, 5 U.S.C. 552a, it will not be sent 
by electronic means unless reasonable security measures can be provided.

[[Page 147]]

    (f) Fees--(1) General rules. (i) Persons requesting records of the 
FDIC shall be charged for the direct costs of search, duplication, and 
review as set forth in paragraphs (f)(2) and (f)(3) of this section, 
unless such costs are less than the FDIC's cost of processing the 
requester's remittance.
    (ii) Requesters will be charged for search and review costs even if 
responsive records are not located or, if located, are determined to be 
exempt from disclosure.
    (iii) Multiple requests seeking similar or related records from the 
same requester or group of requesters will be aggregated for the 
purposes of this section.
    (iv) If the FDIC determines that the estimated costs of search, 
duplication, or review of requested records will exceed the dollar 
amount specified in the request, or if no dollar amount is specified, 
the FDIC will advise the requester of the estimated costs (if greater 
than the FDIC's cost of processing the requester's remittance). The 
requester must agree in writing to pay the costs of search, duplication, 
and review prior to the FDIC initiating any records search.
    (v) If the FDIC estimates that its search, duplication, and review 
costs will exceed $250.00, the requester must pay an amount equal to 20 
percent of the estimated costs prior to the FDIC initiating any records 
search.
    (vi) The FDIC shall ordinarily collect all applicable fees under the 
final invoice before releasing copies of requested records to the 
requester.
    (vii) The FDIC may require any requester who has previously failed 
to pay the charges under this section within 30 calendar days of mailing 
of the invoice to pay in advance the total estimated costs of search, 
duplication, and review. The FDIC may also require a requester who has 
any charges outstanding in excess of 30 calendar days following mailing 
of the invoice to pay the full amount due, or demonstrate that the fee 
has been paid in full, prior to the FDIC initiating any additional 
records search.
    (viii) The FDIC may begin assessing interest charges on unpaid bills 
on the 31st day following the day on which the invoice was sent. 
Interest will be at the rate prescribed in section 3717 of title 31 of 
the United States Code and will accrue from the date of the invoice.
    (ix) The time limit for the FDIC to respond to a request will not 
begin to run until the FDIC has received the requester's written 
agreement under paragraph (f)(1)(iv) of this section, and advance 
payment under paragraph (f)(1) (v) or (vii) of this section, or payment 
of outstanding charges under paragraph (f)(1)(vii) or (viii) of this 
section.
    (x) As part of the initial request, a requester may ask that the 
FDIC waive or reduce fees if disclosure of the records is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester. 
Determinations as to a waiver or reduction of fees will be made by the 
FOIA/PA Group, Legal Division (or designee) and the requester will be 
notified in writing of his/her determination. A determination not to 
grant a request for a waiver or reduction of fees under this paragraph 
may be appealed to the FDIC's General Counsel (or designee) pursuant to 
the procedure set forth in paragraph (i) of this section.
    (2) Chargeable fees by category of requester. (i) Commercial use 
requesters shall be charged search, duplication and review costs.
    (ii) Educational institutions, non-commercial scientific 
institutions and news media representatives shall be charged duplication 
costs, except for the first 100 pages.
    (iii) Requesters not described in paragraph (f)(2) (i) or (ii) of 
this section shall be charged the full reasonable direct cost of search 
and duplication, except for the first two hours of search time and first 
100 pages of duplication.
    (3) Fee schedule. The dollar amount of fees which the FDIC may 
charge to records requesters will be established by the Chief Financial 
Officer of the FDIC (or designee). The FDIC may charge fees that recoup 
the full allowable direct costs it incurs. Fees are subject to change as 
costs change.
    (i) Manual searches for records. The FDIC will charge for manual 
searches for records at the basic rate of pay of

[[Page 148]]

the employee making the search plus 16 percent to cover employee benefit 
costs. Where a single class of personnel (e.g., all clerical, all 
professional, or all executive) is used exclusively, the FDIC, at its 
discretion, may establish and charge an average rate for the range of 
grades typically involved.
    (ii) Computer searches for records. The fee for searches of 
computerized records is the actual direct cost of the search, including 
computer time, computer runs, and the operator's time apportioned to the 
search. The fee for a computer printout is the actual cost. The fees for 
computer supplies are the actual costs. The FDIC may, at its discretion, 
establish and charge a fee for computer searches based upon a reasonable 
FDIC-wide average rate for central processing unit operating costs and 
the operator's basic rate of pay plus 16 percent to cover employee 
benefit costs.
    (iii) Duplication of records. (A) The per-page fee for paper copy 
reproduction of documents is the average FDIC-wide cost based upon the 
reasonable direct costs of making such copies.
    (B) For other methods of reproduction or duplication, the FDIC will 
charge the actual direct costs of reproducing or duplicating the 
documents.
    (iv) Review of records. The FDIC will charge commercial use 
requesters for the review of records at the time of processing the 
initial request to determine whether they are exempt from mandatory 
disclosure at the basic rate of pay of the employee making the search 
plus 16 percent to cover employee benefit costs. Where a single class of 
personnel (e.g., all clerical, all professional, or all executive) is 
used exclusively, the FDIC, at its discretion, may establish and charge 
an average rate for the range of grades typically involved. The FDIC 
will not charge at the administrative appeal level for review of an 
exemption already applied. When records or portions of records are 
withheld in full under an exemption which is subsequently determined not 
to apply, the FDIC may charge for a subsequent review to determine the 
applicability of other exemptions not previously considered.
    (v) Other services. Complying with requests for special services, 
other than a readily produced electronic form or format, is at the 
FDIC's discretion. The FDIC may recover the full costs of providing such 
services to the requester.
    (4) Publication of fee schedule and effective date of changes. (i) 
The fee schedule is made available on the FDIC's World Wide Web page, 
found at http://www.fdic.gov.
    (ii) The fee schedule will be set forth in the ``Notice of Federal 
Deposit Insurance Corporation Records Fees'' issued in December of each 
year or in such ``Interim Notice of Federal Deposit Insurance 
Corporation Records Fees'' as may be issued. Copies of such notices may 
be obtained at no charge from the Federal Deposit Insurance Corporation, 
FOIA/PA Group, 550 17th Street NW., Washington, DC 20429, and are 
available on the FDIC's World Wide Web page as noted in paragraph 
(f)(4)(i) of this section.
    (iii) The fees implemented in the December or Interim Notice will be 
effective 30 days after issuance.
    (5) Use of contractors. The FDIC may contract with independent 
contractors to locate, reproduce, and/or disseminate records; provided, 
however, that the FDIC has determined that the ultimate cost to the 
requester will be no greater than it would be if the FDIC performed 
these tasks itself. In no case will the FDIC contract out 
responsibilities which the Freedom of Information Act (FOIA) (5 U.S.C. 
552) provides that the FDIC alone may discharge, such as determining the 
applicability of an exemption or whether to waive or reduce fees.
    (g) Exempt information. A request for records may be denied if the 
requested record contains information which falls into one or more of 
the following categories. \1\ If the requested record contains both 
exempt and nonexempt information, the nonexempt portions which may 
reasonably be segregated

[[Page 149]]

from the exempt portions will be released to the requester. If redaction 
is necessary, the FDIC will, to the extent technically feasible, 
indicate the amount of material deleted at the place in the record where 
such deletion is made unless that indication in and of itself will 
jeopardize the purpose for the redaction. The categories of exempt 
records are as follows:
---------------------------------------------------------------------------

    \1\ Classification of a record as exempt from disclosure under the 
provisions of this paragraph (g) shall not be construed as authority to 
withhold the record if it is otherwise subject to disclosure under the 
Privacy Act of 1974 (5 U.S.C. 552a) or other federal statute, any 
applicable regulation of FDIC or any other federal agency having 
jurisdiction thereof, or any directive or order of any court of 
competent jurisdiction.
---------------------------------------------------------------------------

    (1) Records that are specifically authorized under criteria 
established by an Executive Order to be kept secret in the interest of 
national defense or foreign policy and are in fact properly classified 
pursuant to such Executive Order;
    (2) Records related solely to the internal personnel rules and 
practices of the FDIC;
    (3) Records specifically exempted from disclosure by statute, 
provided that such statute:
    (i)(A) Requires that the matters be withheld from the public in such 
a manner as to leave no discretion on the issue; or
    (B) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld; and
    (ii) if enacted after the date of enactment of the OPEN FOIA Act of 
2009, specifically cites to 5 U.S.C. 552(b)(3);
    (4) Trade secrets and commercial or financial information obtained 
from a person that is privileged or confidential;
    (5) Interagency or intra-agency memoranda or letters that would not 
be available by law to a private party in litigation with the FDIC;
    (6) Personnel, medical, and similar files (including financial 
files) the disclosure of which would constitute a clearly unwarranted 
invasion of personal privacy;
    (7) Records compiled for law enforcement purposes, but only to the 
extent that the production of such law enforcement records:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a state, local, or foreign agency or 
authority or any private institution which furnished records on a 
confidential basis;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) Records that are contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the FDIC or any agency responsible for the regulation or 
supervision of financial institutions; or
    (9) geological and geophysical information and data, including maps, 
concerning wells.
    (h) Dispute resolution. A requester seeking to engage in dispute 
resolution may make a request to the FOIA Public Liaison and/or OGIS by 
following the procedures set forth online in the FDIC's FOIA Service 
Center at http://www.fdic.gov.
    (i) Appeals. (1) Appeals should be addressed to the Federal Deposit 
Insurance Corporation, Attn: FOIA/PA Group, FDIC, 550 17th Street, NW., 
Washington, DC 20429.
    (2) A person whose initial request for records under this section, 
or whose request for a waiver of fees under paragraph (f)(1)(x) of this 
section, has been denied, either in part or in whole, has the right to 
appeal the denial to the FDIC's General Counsel (or designee) within 90 
calendar days after receipt of notification of the denial. Appeals of 
denials of initial requests or for a waiver of fees must be in writing 
and include any additional information relevant to consideration of the 
appeal.
    (3) Except in the case of an appeal for expedited treatment under 
paragraph (d)(3) of this section, the FDIC will notify the appellant in 
writing within 20 business days after receipt of the appeal and will 
state:

[[Page 150]]

    (i) Whether it is granted or denied in whole or in part;
    (ii) The name and title of each person responsible for the denial 
(if other than the person signing the notification);
    (iii) The exemptions relied upon for the denial in the case of 
initial requests for records; and
    (iv) The right to judicial review of the denial under the FOIA.
    (4) If a requester is appealing for denial of expedited treatment, 
the FDIC will notify the appellant within 10 business days after receipt 
of the appeal of the FDIC's disposition.
    (5) Complete payment of any outstanding fee invoice will be required 
before an appeal is processed.
    (j) Records of another agency. If a requested record is the property 
of another federal agency or department, and that agency or department, 
either in writing or by regulation, expressly retains ownership of such 
record, upon receipt of a request for the record the FDIC will promptly 
inform the requester of this ownership and immediately shall forward the 
request to the proprietary agency or department either for processing in 
accordance with the latter's regulations or for guidance with respect to 
disposition.

[63 FR 16404, Apr. 3, 1998, as amended at 67 FR 71071, Nov. 29, 2002; 76 
FR 35965, June 21, 2011; 76 FR 63818, Oct. 14, 2011; 81 FR 83647, Nov. 
22, 2016]



Sec.  309.6  Disclosure of exempt records.

    (a) Disclosure prohibited. Except as provided in paragraph (b) of 
this section or by 12 CFR part 310, \2\ no person shall disclose or 
permit the disclosure of any exempt records, or information contained 
therein, to any persons other than those officers, directors, employees, 
or agents of the Corporation who have a need for such records in the 
performance of their official duties. In any instance in which any 
person has possession, custody or control of FDIC exempt records or 
information contained therein, all copies of such records shall remain 
the property of the Corporation and under no circumstances shall any 
person, entity or agency disclose or make public in any manner the 
exempt records or information without written authorization from the 
Director of the Corporation's Division having primary authority over the 
records or information as provided in this section.
---------------------------------------------------------------------------

    \2\ The procedures for disclosing records under the Privacy Act are 
separately set forth in 12 CFR part 310.
---------------------------------------------------------------------------

    (b) Disclosure authorized. Exempt records or information of the 
Corporation may be disclosed only in accordance with the conditions and 
requirements set forth in this paragraph (b). Requests for discretionary 
disclosure of exempt records or information pursuant to this paragraph 
(b) may be submitted directly to the Division having primary authority 
over the exempt records or information or to the FOIA/PA Group for 
forwarding to the appropriate Division having primary authority over the 
records sought. Such administrative request must clearly state that it 
seeks discretionary disclosure of exempt records, clearly identify the 
records sought, provide sufficient information for the Corporation to 
evaluate whether there is good cause for disclosure, and meet all other 
conditions set forth in paragraph (b)(1) through (10) of this section. 
Information regarding the appropriate FDIC Division having primary 
authority over a particular record or records may be obtained from the 
FOIA/PA Group. Authority to disclose or authorize disclosure of exempt 
records of the Corporation is delegated as follows:
    (1) Disclosure to depository institutions. The Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may disclose to any director or authorized officer, 
employee or agent of any depository institution, information contained 
in, or copies of, exempt records pertaining to that depository 
institution.
    (2) Disclosure to state banking agencies. The Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may in his or her discretion and for good cause, disclose 
to any authorized officer or employee of any state banking or securities 
department or agency, copies of any exempt records to the extent the 
records pertain to a state-chartered depository institution supervised 
by the agency or authority, or where the exempt records are requested in 
writing

[[Page 151]]

for a legitimate depository institution supervisory or regulatory 
purpose.
    (3) Disclosure to federal financial institutions supervisory 
agencies and certain other agencies. The Director of the Corporation's 
Division having primary authority over the exempt records, or designee, 
may in his or her discretion and for good cause, disclose to any 
authorized officer or employee of any federal financial institution 
supervisory agency including the Comptroller of the Currency, the Board 
of Governors of the Federal Reserve System, Bureau of Consumer Financial 
Protection, the Financial Stability Oversight Council, the Securities 
and Exchange Commission, the National Credit Union Administration, or 
any other agency included in section 1101(7) of the Right to Financial 
Privacy Act of 1978 (12 U.S.C. 3401 et seq.) (RFPA), any exempt records 
for a legitimate depository institution supervisory or regulatory 
purpose. The Director, or designee, may in his or her discretion and for 
good cause, disclose exempt records, including customer financial 
records, to certain other federal agencies as referenced in section 1113 
of the RFPA for the purposes and to the extent permitted therein, or to 
any foreign bank regulatory or supervisory authority as provided, and to 
the extent permitted, by section 206 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 3109). Finally, the 
Director, or designee, may in his or her discretion and for good cause, 
disclose reports of examination or other confidential supervisory 
information concerning any depository institution or other entity 
examined by the Corporation under authority of Federal law to: Any other 
Federal or State agency or authority with supervisory or regulatory 
authority over the depository institution or other entity; any officer, 
director, or receiver of such depository institution or entity; and any 
other person that the Corporation determines to be appropriate.
    (4) Disclosure to prosecuting or investigatory agencies or 
authorities. (i) Reports of Apparent Crime pertaining to suspected 
violations of law, which may contain customer financial records, may be 
disclosed to federal or state prosecuting or investigatory authorities 
without giving notice to the customer, as permitted in the relevant 
exceptions of the RFPA.
    (ii) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may disclose to the 
proper federal or state prosecuting or investigatory authorities, or to 
any authorized officer or employee of such authority, copies of exempt 
records pertaining to irregularities discovered in depository 
institutions which are believed to constitute violations of any federal 
or state civil or criminal law, or unsafe or unsound banking practices, 
provided that customer financial records may be disclosed without giving 
notice to the customer, only as permitted by the relevant exceptions of 
the RFPA. Unless such disclosure is initiated by the FDIC, customer 
financial records shall be disclosed only in response to a written 
request which:
    (A) Is signed by an authorized official of the agency making the 
request;
    (B) Identifies the record or records to which access is requested; 
and
    (C) Gives the reasons for the request.
    (iii) When notice to the customer is required to be given under the 
RFPA, the Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may disclose customer 
financial records to any federal or state prosecuting or investigatory 
agency or authority, provided, that:
    (A) The General Counsel, or designee, has determined that disclosure 
is authorized or required by law; or
    (B) Disclosure is pursuant to a written request that indicates the 
information is relevant to a legitimate law enforcement inquiry within 
the jurisdiction of the requesting agency and:
    (1) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, certifies pursuant to 
section 1112(a) \3\ of

[[Page 152]]

the RFPA that the records are believed relevant to a legitimate law 
enforcement inquiry within the jurisdiction of the receiving agency; and
---------------------------------------------------------------------------

    \3\ The form of certification generally is as follows. Additional 
information may be added:
    Pursuant to section 1112(a) of the Right to Financial Privacy Act of 
1978 (12 U.S.C. 3412), I, ___ [name and appropriate title] hereby 
certify that the financial records described below were transferred to 
(agency or department) in the belief that they were relevant to a 
legitimate law enforcement inquiry, within the jurisdiction of the 
receiving agency.
---------------------------------------------------------------------------

    (2) A copy of such certification and the notice required by section 
1112(b) \4\ of the RFPA is sent within fourteen days of the disclosure 
to the customer whose records are disclosed. \5\
---------------------------------------------------------------------------

    \4\ The form of notice generally is as follows. Additional 
information may be added:
    Dear Mr./Ms. ___:
    Copies of, or information contained in, your financial records 
lawfully in the possession of the Federal Deposit Insurance Corporation 
have been furnished to (agency or department) pursuant to the Right to 
Financial Privacy Act of 1978 for the following purpose: ___. If you 
believe that this transfer has not been made to further a legitimate law 
enforcement inquiry, you may have legal rights under the Right to 
Financial Privacy Act of 1978 or the Privacy Act of 1974.
    \5\ Whenever the Corporation is subject to a court-ordered delay of 
the customer notice, the notice shall be sent immediately upon the 
expiration of the court-ordered delay.
---------------------------------------------------------------------------

    (5) Disclosure to servicers and serviced institutions. The Director 
of the Corporation's Division having primary authority over the exempt 
records, or designee, may disclose copies of any exempt record related 
to a depository institution data center, service corporation, or any 
other data center that provides data processing or related services to 
an insured institution (hereinafter referred to as ``data center'') to:
    (i) The examined data center;
    (ii) Any insured institution that receives data processing or 
related services from the examined data center;
    (iii) Any state agency or authority which exercises general 
supervision over an institution serviced by the examined data center; 
and
    (iv) Any federal financial institution supervisory agency which 
exercises general supervision over an institution serviced by the 
examined data center. The federal supervisory agency may disclose any 
such examination report received from the Corporation to an insured 
institution over which it exercises general supervision and which is 
serviced by the examined data center.
    (6) Disclosure to third parties. (i) Except as otherwise provided in 
paragraphs (c) (1) through (5) of this section, the Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may in his or her discretion and for good cause, disclose 
copies of any exempt records to any third party where requested to do so 
in writing. Any such written request shall:
    (A) Specify, with reasonable particularity, the record or records to 
which access is requested; and
    (B) Give the reasons for the request.
    (ii) Either prior to or at the time of any disclosure, the Director 
or designee shall require such terms and conditions as he deems 
necessary to protect the confidential nature of the record, the 
financial integrity of any depository institution to which the record 
relates, and the legitimate privacy interests of any individual named in 
such records.
    (7) Authorization for disclosure by depository institutions or other 
third parties. (i) The Director of the Corporation's Division having 
primary authority over the exempt records, or designee, may, in his or 
her discretion and for good cause, authorize any director, officer, 
employee, or agent of a depository institution to disclose copies of any 
exempt record in his custody to anyone who is not a director, officer or 
employee of the depository institution. Such authorization must be in 
response to a written request from the party seeking the record or from 
management of the depository institution to which the report or record 
pertains. Any such request shall specify, with reasonable particularity, 
the record sought, the party's interest therein, and the party's 
relationship to the depository institution to which the record relates.
    (ii) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may, in his or her 
discretion and for good cause, authorize any third party, including a 
federal or state agency,

[[Page 153]]

that has received a copy of a Corporation exempt record, to disclose 
such exempt record to another party or agency. Such authorization must 
be in response to a written request from the party that has custody of 
the copy of the exempt record. Any such request shall specify the record 
sought to be disclosed and the reasons why disclosure is necessary.
    (iii) Any subsidiary depository institution of a bank holding 
company or a savings and loan holding company may reproduce and furnish 
a copy of any report of examination of the subsidiary depository 
institution to the parent holding company without prior approval of the 
Director of the Division having primary authority over the exempt 
records and any depository institution may reproduce and furnish a copy 
of any report of examination of the disclosing depository institution to 
a majority shareholder if the following conditions are met:
    (A) The parent holding company or shareholder owns in excess of 50% 
of the voting stock of the depository institution or subsidiary 
depository institution;
    (B) The board of directors of the depository institution or 
subsidiary depository institution at least annually by resolution 
authorizes the reproduction and furnishing of reports of examination 
(the resolution shall specifically name the shareholder or parent 
holding company, state the address to which the reports are to be sent, 
and indicate that all reports furnished pursuant to the resolution 
remain the property of the Federal Deposit Insurance Corporation and are 
not to be disclosed or made public in any manner without the prior 
written approval of the Director of the Corporation's Division having 
primary authority over the exempt records as provided in paragraph (b) 
of this section;
    (C) A copy of the resolution authorizing disclosure of the reports 
is sent to the shareholder or parent holding company; and
    (D) The minutes of the board of directors of the depository 
institution or subsidiary depository institution for the meeting 
immediately following disclosure of a report state:
    (1) That disclosure was made;
    (2) The date of the report which was disclosed;
    (3) To whom the report was sent; and
    (4) The date the report was disclosed.
    (iv) With respect to any disclosure that is authorized under this 
paragraph (b)(7), the Director of the Corporation's Division having 
primary authority over the exempt records, or designee, shall only 
permit disclosure of records upon determining that good cause exists. If 
the exempt record contains information derived from depository 
institution customer financial records, disclosure is to be authorized 
only upon the condition that the requesting party and the party 
releasing the records comply with any applicable provision of the RFPA. 
Before authorizing the disclosure, the Director (or designee) may 
require that both the party having custody of a copy of a Corporation 
exempt record and the party seeking access to the record agree to such 
limitations as the Director (or designee) deems necessary to protect the 
confidential nature of the record, the financial integrity of any 
depository institution to which the record relates and the legitimate 
privacy interests of any persons named in such record.
    (8) Disclosure by General Counsel. (i) The Corporation's General 
Counsel, or designee, may disclose or authorize the disclosure of any 
exempt record in response to a valid judicial subpoena, court order, or 
other legal process, and authorize any current or former officer, 
director, employee, agent of the Corporation, or third party, to appear 
and testify regarding an exempt record or any information obtained in 
the performance of such person's official duties, at any administrative 
or judicial hearing or proceeding where such person has been served with 
a valid subpoena, court order, or other legal process requiring him or 
her to testify. The General Counsel shall consider the relevancy of such 
exempt records or testimony to the litigation, and the interests of 
justice, in determining whether to disclose such records or testimony. 
Third parties seeking disclosure of exempt records or testimony in 
litigation to which the FDIC is not a party shall

[[Page 154]]

submit a request for discretionary disclosure directly to the General 
Counsel. \6\ Such request shall specify the information sought with 
reasonable particularity and shall be accompanied by a statement with 
supporting documentation showing in detail the relevance of such exempt 
information to the litigation, justifying good cause for disclosure, and 
a commitment to be bound by a protective order. Failure to exhaust such 
administrative request prior to service of a subpoena or other legal 
process may, in the General Counsel's discretion, serve as a basis for 
objection to such subpoena or legal process. Customer financial records 
may not be disclosed to any federal agency that is not a federal 
financial supervisory agency pursuant to this paragraph unless notice to 
the customer and certification as required by the RFPA have been given 
except where disclosure is subject to the relevant exceptions set forth 
in the RFPA.
---------------------------------------------------------------------------

    \6\ This administrative requirement does not apply to subpoenas, 
court orders or other legal process issued for records of depository 
institutions held by the FDIC as Receiver or Conservator. Subpoenas, 
court orders or other legal process issued for such records will be 
processed in accordance with State and Federal law, regulations, rules 
and privileges applicable to FDIC as Receiver or Conservator.
---------------------------------------------------------------------------

    (ii) The General Counsel, or designee, may in his or her discretion 
and for good cause, disclose or authorize disclosure of any exempt 
record or testimony by a current or former officer, director, employee, 
agent of the Corporation, or third party, sought in connection with any 
civil or criminal hearing, proceeding or investigation without the 
service of a judicial subpoena, or other legal process requiring such 
disclosure or testimony, if he or she determines that the records or 
testimony are relevant to the hearing, proceeding or investigation and 
that disclosure is in the best interests of justice and not otherwise 
prohibited by Federal statute. Customer financial records shall not be 
disclosed to any federal agency pursuant to this paragraph that is not a 
federal financial supervisory agency, unless the records are sought 
under the Federal Rules of Civil Procedure (28 U.S.C. appendix) or the 
Federal Rules of Criminal Procedure (18 U.S.C. appendix) or comparable 
rules of other courts and in connection with litigation to which the 
receiving federal agency, employee, officer, director, or agent, and the 
customer are parties, or disclosure is otherwise subject to the relevant 
exceptions in the RFPA. Where the General Counsel or designee authorizes 
a current or former officer, director, employee or agent of the 
Corporation to testify or disclose exempt records pursuant to this 
paragraph (b)(8), he or she may, in his or her discretion, limit the 
authorization to so much of the record or testimony as is relevant to 
the issues at such hearing, proceeding or investigation, and he or she 
shall give authorization only upon fulfillment of such conditions as he 
or she deems necessary and practicable to protect the confidential 
nature of such records or testimony.
    (9) Authorization for disclosure by the Chairman of the 
Corporation's Board of Directors. Except where expressly prohibited by 
law, the Chairman of the Corporation's Board of Directors may in his or 
her discretion, authorize the disclosure of any Corporation records. 
Except where disclosure is required by law, the Chairman may direct any 
current or former officer, director, employee or agent of the 
Corporation to refuse to disclose any record or to give testimony if the 
Chairman determines, in his or her discretion, that refusal to permit 
such disclosure is in the public interest.
    (10) Limitations on disclosure. All steps practicable shall be taken 
to protect the confidentiality of exempt records and information. Any 
disclosure permitted by paragraph (b) of this section is discretionary 
and nothing in paragraph (b) of this section shall be construed as 
requiring the disclosure of information. Further, nothing in paragraph 
(b) of this section shall be construed as restricting, in any manner, 
the authority of the Board of Directors, the Chairman of the Board of 
Directors, the Director of the Corporation's Division having primary 
authority over the exempt records, the Corporation's General Counsel, or 
their

[[Page 155]]

designees, or any other Corporation Division or Office head, in their 
discretion and in light of the facts and circumstances attendant in any 
given case, to require conditions upon and to limit the form, manner, 
and extent of any disclosure permitted by this section. Wherever 
practicable, disclosure of exempt records shall be made pursuant to a 
protective order and redacted to exclude all irrelevant or non-
responsive exempt information.

[60 FR 61465, Nov. 30, 1995, as amended at 63 FR 16408, Apr. 3, 1998; 67 
FR 71071, Nov. 29, 2002; 73 FR 2146, Jan. 14, 2008; 76 FR 35965, June 
21, 2011]



Sec.  309.7  Service of process.

    (a) Service. Any subpoena or other legal process to obtain 
information maintained by the FDIC shall be duly issued by a court 
having jurisdiction over the FDIC, and served upon either the Executive 
Secretary (or designee), FDIC, 550 17th Street, NW., Washington, DC 
20429, or the Regional Director or Regional Manager of the FDIC region 
where the legal action from which the subpoena or process was issued is 
pending. A list of the FDIC's regional offices is available from the 
Office of Public Affairs, FDIC, 550 17th Street, NW., Washington, DC 
20429 (telephone 202-898-6996). Where the FDIC is named as a party, 
service of process shall be made pursuant to the Federal Rules of Civil 
Procedure, and upon the Executive Secretary (or designee), FDIC, 550 
17th Street NW., Washington, DC 20429, or upon the agent designated to 
receive service of process in the state, territory, or jurisdiction in 
which any insured depository institution is located. Identification of 
the designated agent in the state, territory, or jurisdiction may be 
obtained from the Executive Secretary or from the Office of the General 
Counsel, FDIC, 550 17th Street NW., Washington, DC 20429. The Executive 
Secretary (or designee), Regional Director or designated agent shall 
immediately forward any subpoena, court order or legal process to the 
General Counsel. The Corporation may require the payment of fees, in 
accordance with the fee schedule referred to in Sec.  309.5(c)(3), prior 
to the release of any records requested pursuant to any subpoena or 
other legal process.
    (b) Notification by person served. If any current or former officer, 
director, employee or agent of the Corporation, or any other person who 
has custody of records belonging to the FDIC, is served with a subpoena, 
court order, or other process requiring that person's attendance as a 
witness concerning any matter related to official duties, or the 
production of any exempt record of the Corporation, such person shall 
promptly advise the General Counsel of such service, of the testimony 
and records described in the subpoena, and of all relevant facts which 
may be of assistance to the General Counsel in determining whether the 
individual in question should be authorized to testify or the records 
should be produced. Such person should also inform the court or tribunal 
which issued the process and the attorney for the party upon whose 
application the process was issued, if known, of the substance of this 
section.
    (c) Appearance by person served. Absent the written authorization of 
the Corporation's General Counsel, or designee, to disclose the 
requested information, any current or former officer, director, 
employee, or agent of the Corporation, and any other person having 
custody of records of the Corporation, who is required to respond to a 
subpoena or other legal process, shall attend at the time and place 
therein specified and respectfully decline to produce any such record or 
give any testimony with respect thereto, basing such refusal on this 
section.

[60 FR 61465, Nov. 30, 1995, as amended at 67 FR 71071, Nov. 29, 2002]



PART 310_PRIVACY ACT REGULATIONS--Table of Contents



Sec.
310.1 Purpose and scope.
310.2 Definitions.
310.3 Procedures for requests pertaining to individual records in a 
          system of records.
310.4 Times, places, and requirements for identification of individuals 
          making requests.
310.5 Disclosure of requested information to individuals.
310.6 Special procedures: Medical records.
310.7 Request for amendment of record.

[[Page 156]]

310.8 Agency review of request for amendment of record.
310.9 Appeal of adverse initial agency determination on access or 
          amendment.
310.10 Disclosure of record to person other than the individual to whom 
          it pertains.
310.11 Fees.
310.12 Penalties.
310.13 Exemptions.

    Authority: 5 U.S.C. 552a.

    Source: 40 FR 46274, Oct. 6, 1975, unless otherwise noted.



Sec.  310.1  Purpose and scope.

    The purpose of this part is to establish regulations implementing 
the Privacy Act of 1974, 5 U.S.C. 552a. These regulations delineate the 
procedures that an individual must follow in exercising his or her 
access or amendment rights under the Privacy Act to records maintained 
by the Corporation in systems of records, including information 
transferred to Federal Deposit Insurance Corporation from the Office of 
Thrift Supervision pursuant to sections 312 and 323 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act, Public Law 111-203.

[76 FR 35965, June 21, 2011]



Sec.  310.2  Definitions.

    For purposes of this part:
    (a) The term Corporation means the Federal Deposit Insurance 
Corporation;
    (b) The term individual means a natural person who is either a 
citizen of the United States or an alien lawfully admitted for permanent 
residence;
    (c) The term maintain includes maintain, collect, use, disseminate, 
or control;
    (d) The term record means any item, collection or grouping of 
information about an individual that contains his/her name, or the 
identifying number, symbol, or other identifying particular assigned to 
the individual;
    (e) The term system of records means a group of any records under 
the control of the Corporation from which information is retrieved by 
the name of the individual or some identifying number, symbol or other 
identifying particular assigned to the individual;
    (f) The term designated system of records means a system of records 
which has been listed and summarized in the Federal Register pursuant to 
the requirements of 5 U.S.C. 552a(e);
    (g) The term routine use means, with respect to disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was created;
    (h) The terms amend or amendment mean any correction, addition to or 
deletion from a record; and
    (i) The term system manager means the agency official responsible 
for a designated system of records, as denominated in the Federal 
Register publication of ``Systems of Records Maintained by the Federal 
Deposit Insurance Corporation.''

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec.  310.3  Procedures for requests pertaining to individual records 
in a system of records.

    (a) Any present or former employee of the Corporation seeking access 
to, or amendment of, his/her official personnel records maintained by 
the Corporation shall submit his/her request in such manner as is 
prescribed by the United States Office of Personnel Management in part 
297 of its rules and regulations (5 CFR part 297). For access to, or 
amendment of, other government-wide records systems maintained by the 
Corporation, the procedures prescribed in the respective Federal 
Register Privacy Act system notice shall be followed.
    (b) Requests by individuals for access to records pertaining to them 
and maintained within one of the Corporation's designated systems of 
records should be submitted in writing to the Federal Deposit Insurance 
Corporation, Attn: FOIA/PA Group, 550 17th Street, NW., Washington, DC 
20429. Each such request should contain a reasonable description of the 
records sought, the system or systems in which such record may be 
contained, and any additional identifying information, as specified in 
the Corporation's Federal Register ``Notice of Systems of Records'' for 
that particular system,

[[Page 157]]

copies of which are available upon request from the FOIA/PA Group.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 61 
FR 43419, Aug. 23, 1996; 67 FR 71071, Nov. 29, 2002; 76 FR 35965, June 
21, 2011]



Sec.  310.4  Times, places, and requirements for identification of individuals 
making requests.

    (a) Individuals may request access to records pertaining to 
themselves by submitting a written request as provided in Sec.  310.3 of 
these regulations, or by appearing in person on weekdays, other than 
official holidays, at the Federal Deposit Insurance Corporation, Attn: 
FOIA/PA Group, 550 17th Street, NW., Washington, DC 20429, between the 
hours of 8:30 a.m. and 5 p.m.
    (b) Individuals appearing in person at the Corporation seeking 
access to or amendment of their records shall present two forms of 
reasonable identification, such as employment identification cards, 
driver's licenses, or other identification cards or documents typically 
used for identification purposes.
    (c) Except for records that must be publicly disclosed pursuant to 
the Freedom of Information Act, 5 U.S.C. 552, where the Corporation 
determines it to be necessary for the individual's protection, a 
certification of a duly commissioned notary public, of any state or 
territory, attesting to the requesting individual's identity, or an 
unsworn declaration subscribed to as true under the penalty of perjury 
under the laws of the United States of America, at the election of the 
individual, may be required before a written request seeking access to 
or amendment of a record will be honored. The Corporation may also 
require that individuals provide minimal identifying data such as full 
name, date and place of birth, or other personal information necessary 
to ensure proper identity before processing requests for records.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 61 
FR 43419, Aug. 23, 1996; 67 FR 71071, Nov. 29, 2002; 76 FR 35966, June 
21, 2011]



Sec.  310.5  Disclosure of requested information to individuals.

    (a) Except to the extent that Corporation records pertaining to an 
individual:
    (1) Are exempt from disclosure under Sec. Sec.  310.6 and 310.13 of 
this part, or
    (2) Were compiled in reasonable anticipation of a civil action or 
proceeding, the Corporation will make such records available upon 
request for purposes of inspection and copying by the individual (after 
proper identity verification as provided in Sec.  310.4) and, upon the 
individual's request and written authorization, by another person of the 
individual's own choosing.
    (b) The FOIA/PA Group will notify, in writing, the individual making 
a request, whenever practicable within ten business days following 
receipt of the request, whether any specified designated system of 
records maintained by the Corporation contains a record pertaining to 
the individual. Where such a record does exist, the FOIA/PA Group also 
will inform the individual of the system manager's decision whether to 
grant or deny the request for access. In the event existing records are 
determined not to be disclosable, the notification will inform the 
individual of the reasons for which disclosure will not be made and will 
provide a description of the individual's right to appeal the denial, as 
more fully set forth in Sec.  310.9. Where access is to be granted, the 
notification will specify the procedures for verifying the individual's 
identity, as set forth in Sec.  310.4.
    (c) Individuals will be granted access to records disclosable under 
this part 310 as soon as is practicable. The FOIA/PA Group will give 
written notification of a reasonable period within which individuals may 
inspect disclosable records pertaining to themselves at the offices of 
the FOIA/PA Group during normal business hours. Alternatively, 
individuals granted access to records under this part may request that 
copies of such records be forwarded to them. Fees for copying such 
records will be assessed as provided in Sec.  310.11.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 67 
FR 71071, Nov. 29, 2002]

[[Page 158]]



Sec.  310.6  Special procedures: Medical records.

    Medical records shall be disclosed on request to the individuals to 
whom they pertain, except, if in the judgment of the Corporation, the 
transmission of the medical information directly to the requesting 
individual could have an adverse effect upon such individual. In the 
event medical information is withheld from a requesting individual due 
to any possible adverse effect such information may have upon the 
individual, the Corporation shall transmit such information to a medical 
doctor named by the requesting individual for release of the patient.

[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec.  310.7  Request for amendment of record.

    The Corporation will maintain all records it uses in making any 
determination about any individual with such accuracy, relevance, 
timeliness and completeness as is reasonably necessary to assure 
fairness to the individual in the determination. An individual may 
request that the Corporation amend any portion of a record pertaining to 
that individual which the Corporation maintains in a designated system 
of records. Such a request should be submitted in writing to the Federal 
Deposit Insurance Corporation, Attn: FOIA/PA Group, 550 17th Street, 
NW., Washington, DC 20429 and should contain the individual's reason for 
requesting the amendment and a description of the record (including the 
name of the appropriate designated system and category thereof) 
sufficient to enable the Corporation to identify the particular record 
or portion thereof with respect to which amendment is sought.

[76 FR 35966, June 21, 2011]



Sec.  310.8  Agency review of request for amendment of record.

    (a) Requests by individuals for the amendment of records will be 
acknowledged by the FOIA/PA Group, and referred to the system manager of 
the system of records in which the record is contained for 
determination, within ten business days following receipt of such 
requests. Promptly thereafter, the FOIA/PA Group will notify the 
individual of the system manager's decision to grant or deny the request 
to amend.
    (b) If the system manager denies a request to amend a record, the 
notification of such denial shall contain the reason for the denial and 
a description of the individual's right to appeal the denial as more 
fully set forth in Sec.  310.9.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 67 
FR 71071, Nov. 29, 2002; 76 FR 35966, June 21, 2011]



Sec.  310.9  Appeal of adverse initial agency determination on access 
or amendment.

    (a) A system manager's denial of an individual's request for access 
to or amendment of a record pertaining to him/her may be appealed in 
writing to the Corporation's General Counsel (or designee) within 30 
business days following receipt of notification of the denial. Such an 
appeal should be addressed to the Federal Deposit Insurance Corporation, 
Attn: FOIA/PA Group, 550 17th Street, NW., Washington, DC 20429, and 
contain all the information specified for requests for access in Sec.  
310.3 or for initial requests to amend in Sec.  310.7, as well as any 
other additional information the individual deems relevant for the 
consideration by the General Counsel (or designee) of the appeal.
    (b) The General Counsel (or designee) will normally make a final 
determination with respect to an appeal made under this part within 30 
business days following receipt by the Office of the Executive Secretary 
of the appeal. The General Counsel (or designee) may, however, extend 
this 30-day time period for good cause. Where such an extension is 
required, the individual making the appeal will be notified of the 
reason for the extension and the expected date upon which a final 
decision will be given.
    (c) If the General Counsel (or designee) affirms the initial denial 
of a request for access or to amend, he or she will inform the 
individual affected of the decision, the reason therefor, and the right 
of judicial review of the decision. In addition, as pertains to a 
request for amendment, the individual

[[Page 159]]

may at that point submit to the Corporation a concise statement setting 
forth his or her reasons for disagreeing with the Corporation's refusal 
to amend.
    (d) Any statement of disagreement with the Corporation's refusal to 
amend, filed with the Corporation by an individual pursuant to Sec.  
310.9(c), will be included in the disclosure of any records under the 
authority of Sec.  310.10(b). The Corporation may in its discretion also 
include a copy of a concise statement of its reasons for not making the 
requested amendment.
    (e) The General Counsel (or designee) may on his or her own motion 
refer an appeal to the Board of Directors for a determination, and the 
Board of Directors on its own motion may consider an appeal.

[52 FR 34290, Sept. 10, 1987, as amended at 61 FR 43420, Aug. 23, 1996; 
67 FR 71071, Nov. 29, 2002; 76 FR 35966, June 21, 2011]



Sec.  310.10  Disclosure of record to person other than the individual 
to whom it pertains.

    (a) Except as provided in paragraph (b) of this section, the 
Corporation will not disclose any record contained in a designated 
system of records to any person or agency except with the prior written 
consent of the individual to whom the record pertains.
    (b) The restrictions on disclosure in paragraph (a) of this section 
do not apply to any of the following disclosures:
    (1) To those officers and employees of the Corporation who have a 
need for the record in the performance of their duties;
    (2) Which is required under the Freedom of Information Act (5 U.S.C. 
552);
    (3) For a routine use listed with respect to a designated system of 
records;
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13 U.S.C.;
    (5) To a recipient who has provided the Corporation with advance 
adequate written assurance that the record will be used solely as a 
statistical research or reporting record, and the record is to be 
transferred in a form that is not individually identifiable;
    (6) To the National Archives and Records Administration as a record 
which has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Archivist of the United States or his or her designee to determine 
whether the record has such value;
    (7) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity if the activity is authorized 
by law, and if the head of the agency or instrumentality has made a 
written request to the Corporation specifying the particular portion 
desired and the law enforcement activity for which the record is sought;
    (8) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual if, upon such 
disclosure, notification is transmitted to the last known address of 
such individual;
    (9) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (10) To the Comptroller General, or any of his or her authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office;
    (11) Pursuant to the order of a court of competent jurisdiction.
    (12) To a consumer reporting agency in accordance with section 
3711(f) of title 31.
    (c) The Corporation will adhere to the following procedures in the 
case of disclosure of any record pursuant to the authority of paragraphs 
(b)(3) through (b)(12) of this section.
    (1) The Corporation will keep a record of the date, nature and 
purpose of each such disclosure, as well as the name and address of the 
person or agency to whom such disclosure is made; and
    (2) The Corporation will retain and, with the exception of 
disclosures made pursuant to paragraph (b)(7) of this section, make 
available to the individual

[[Page 160]]

named in the record for the greater of five years or the life of the 
record all material compiled under paragraph (d)(1) of this section with 
respect to disclosure of such record.
    (d) Whenever a record which has been disclosed by the Corporation 
under authority of paragraph (b) of this section is, within a reasonable 
amount of time after such disclosure, either amended by the Corporation 
or the subject of a statement of disagreement, the Corporation will 
transmit such additional information to any person or agency to whom the 
record was disclosed, if such disclosure was subject to the accounting 
requirements of paragraph (c)(1) of this section.

[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec.  310.11  Fees.

    The Corporation, upon a request for records disclosable pursuant to 
the Privacy Act of 1974 (5 U.S.C. 552a), shall charge a fee of $0.10 per 
page for duplicating, except as follows:
    (a) If the Corporation determines that it can grant access to a 
record only by providing a copy of the record, no fee will be charged 
for providing the first copy of the record or any portion thereof;
    (b) Whenever the aggregate fees computed under this section do not 
exceed $10 for any one request, the fee will be deemed waived by the 
Corporation; or
    (c) Whenever the Corporation determines that a reduction or waiver 
is warranted, it may reduce or waive any fees imposed for furnishing 
requested information pursuant to this section.

[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec.  310.12  Penalties.

    Subsection (i)(3) of the Privacy Act of 1974 (5 U.S.C. 552a(i)(3)) 
imposes criminal penalties for obtaining Corporation records on 
individuals under false pretenses. The subsection provides as follows:

    Any person who knowingly and willfully requests or obtains any 
record concerning an individual from an agency under false pretenses 
shall be guilty of a misdemeanor and fined not more than $5,000.



Sec.  310.13  Exemptions.

    The following systems of records are exempt from Sec. Sec.  310.3 
through 310.9 and Sec.  310.10(c)(2) of these rules:
    (a) Investigatory material compiled for law enforcement purposes in 
the following systems of records is exempt from Sec. Sec.  310.3 through 
310.9 and Sec.  310.10(c)(2) of these rules;

    Provided, however, That if any individual is denied any right, 
privilege, or benefit to which he/she would otherwise be entitled under 
Federal law, or for which he/she would otherwise be eligible, as a 
result of the maintenance of such material, such material shall be 
disclosed to such individual, except to the extent that the disclosure 
of such material would reveal the identity of a source who furnished 
information to the Government under an express promise that the identity 
of the source would be held in confidence, or, prior to September 27, 
1975, under an implied promise that the identity of the source would be 
held in confidence:

    30-64-0002--Financial institutions investigative and enforcement 
records system.
    30-64-0010--Investigative files and records.

    (b) Investigatory material compiled solely for the purpose of 
determining suitability, eligibility, or qualifications for Corporation 
employment to the extent that disclosure of such material would reveal 
the identity of a source who furnished information to the Corporation 
under an express promise that the identity of the source would be held 
in confidence, or, prior to September 27, 1975, under an implied promise 
that the identity of the source would be held in confidence, in the 
following systems of records, is exempt from Sec. Sec.  310.3 through 
310.9 and Sec.  310.10(c)(2) of these rules:

    30-64-0001--Attorney-legal intern applicant system.
    30-64-0010--Investigative files and records.

    (c) Testing or examination material used solely to determine or 
assess individual qualifications for appointment or promotion in the 
Corporation's service, the disclosure of which would compromise the 
objectivity or fairness of the testing, evaluation, or examination 
process in the following system of

[[Page 161]]

records, is exempt from Sec. Sec.  310.3 through 310.9 and Sec.  
310.10(c)(2) of these rules:

    30-64-0009--Examiner training and education records.

[42 FR 6797, Feb. 4, 1977, as amended at 42 FR 33720, July 1, 1977; 54 
FR 38507, Sept. 19, 1989; 61 FR 43420, Aug. 23, 1996]



PART 311_RULES GOVERNING PUBLIC OBSERVATION OF MEETINGS OF THE CORPORATION'S 
BOARD OF DIRECTORS--Table of Contents



Sec.
311.1 Purpose.
311.2 Definitions.
311.3 Meetings.
311.4 Procedures for announcing meetings.
311.5 Regular procedure for closing meetings.
311.6 Expedited procedure for announcing and closing certain meetings.
311.7 General Counsel certification.
311.8 Transcripts and minutes of meetings.

    Authority: 5 U.S.C. 552b and 12 U.S.C. 1819.

    Source: 42 FR 14675, Mar. 16, 1977, unless otherwise noted.



Sec.  311.1  Purpose.

    This part implements the policy of the ``Government in the Sunshine 
Act'', section 552b of title 5 U.S.C., which is to provide the public 
with as much information as possible regarding the decision making 
process of certain Federal agencies, including the Federal Deposit 
Insurance Corporation, while preserving the rights of individuals and 
the ability of the agency to carry out its responsibilities.



Sec.  311.2  Definitions.

    For purposes of this part:
    (a) Board means Board of Directors of the Federal Deposit Insurance 
Corporation and includes any subdivision of the Board authorized to act 
on behalf of the Corporation.
    (b) Meeting means the deliberations (including those conducted by 
conference telephone call, or by any other method) of at least three 
members where such deliberations determine or result in the joint 
conduct or disposition of agency business but does not include:
    (1) Deliberations to determine whether meetings will be open or 
closed or whether information pertaining to closed meetings will be 
withheld;
    (2) Informal background discussions among Board members and staff 
which clarify issues and expose varying views;
    (3) Decision-making by circulating written material to individual 
Board members;
    (4) Sessions with individuals from outside the Corporation where 
Board members listen to a presentation and may elicit additional 
information.
    (c) Member means a member of the Board.
    (d) Open to public observation and open to the public mean that 
individuals may witness the meeting, but not participate in the 
deliberations. The meeting may be recorded, photographed, or otherwise 
reproduced if the reproduction does not disturb the meeting.
    (e) Public announcement and publicly announce mean making reasonable 
effort under the particular circumstances of each case to fully inform 
the public. This may include posting notice on the Corporation's public 
notice bulletin board maintained in the lobby of its offices located at 
550 17th Street, NW., Washington, DC 20429, issuing a press release and 
employing other methods of notification that may be desirable in a 
particular situation.

[42 FR 14675, Mar. 16, 1977, as amended at 42 FR 59494, Nov. 18, 1977; 
54 FR 38965, Sept. 22, 1989; 61 FR 38357, July 24, 1996]



Sec.  311.3  Meetings.

    (a) Open meetings. Except as provided in paragraph (b) of this 
section, every portion of every meeting of the Corporation's Board will 
be open to public observation. Board members will not jointly conduct or 
dispose of Corporation business other than in accordance with this part.
    (b) When meetings may be closed and announcements and disclosures 
withheld. Except where the Board finds that the public interest requires 
otherwise, a meeting or portion thereof may be closed, and announcements 
and disclosure pertaining thereto may be withheld when the Board 
determines that such meeting or portion of the meeting or the disclosure 
of such information is likely to:

[[Page 162]]

    (1) Disclose matters that are: (i) Specifically authorized under 
criteria established by an Executive order to be kept secret in the 
interests of national defense or foreign policy and (ii) in fact 
properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practices of 
the Corporation;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than the Freedom of Information Act, 5 U.S.C. 552): 
Provided, That such statute: (i) Requires that the matters be withheld 
from the public in such a manner as to leave no discretion on the issue, 
or (ii) establishes particular types of matters to be withheld;
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would: (i) Interfere with enforcement proceedings, (ii) 
deprive a person of a right to a fair trial or an impartial 
adjudication, (iii) constitute an unwarranted invasion of personal 
privacy, (iv) disclose the identity of a confidential source, (v) 
disclose investigative techniques and procedures, or (vi) endanger the 
life or physical safety of law enforcement personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the Corporation or any other agency responsible for the 
supervision of financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to:
    (i)(A) Lead to significant financial speculation in currencies, 
securities, or commodities, or
    (B) Significantly endanger the stability of any financial 
institution; or
    (ii) Significantly frustrate implementation of a proposed 
Corporation action, except that this paragraph (b)(9)(ii) shall not 
apply in any instance where the Corporation has already disclosed to the 
public the content or nature of its proposed action, or where the 
Corporation is required by law to make such disclosure on its own 
initiative prior to taking final action on such proposal; or
    (10) Specifically concern the Corporation's issuance of a subpoena, 
or the Corporation's participation in a civil action or proceeding, an 
action in a foreign court or international tribunal, or an arbitration, 
or the initiation, conduct, or disposition by the Corporation of a 
particular case of formal agency adjudication pursuant to the procedures 
in 5 U.S.C. 554 or otherwise involving a determination on the record 
after opportunity for a hearing.



Sec.  311.4  Procedures for announcing meetings.

    (a) Scope. Except to the extent that such announcements are exempt 
from disclosure under Sec.  311.3(b), announcements relating to open 
meetings, and meetings closed under the regular closing procedures of 
Sec.  311.5, will be made in the manner set forth in this section.
    (b) Time and content of announcement. The Corporation will make 
public announcement at least seven days before the meeting of the time, 
place, and subject matter of the meeting, whether it is to be open or 
closed to the public, and the name and telephone number of the official 
designated by the Corporation to respond to requests for information 
about the meeting. This announcement will be made unless a majority of 
the Board determines by a recorded vote that Corporation business 
requires that a meeting be called on lesser notice. In such cases, the 
Corporation will make public announcement of the time, place, and 
subject matter of the meeting, and whether it is open or closed to the 
public, at the earliest practicable time, which may be later than the 
commencement of the meeting.
    (c) Changing time or place of meeting. The time or place of a 
meeting may be

[[Page 163]]

changed following the public announcement required by paragraph (b) of 
this section only if the Corporation publicly announces the change at 
the earliest practicable time, which may be later than the commencement 
of the meeting.
    (d) Changing subject matter or nature of meeting. The subject matter 
of a meeting, or the determination to open or close a meeting or a 
portion of a meeting, may be changed following the public announcement 
only if:
    (1) A majority of the entire Board determines by recorded vote that 
agency business so requires and that no earlier announcement of the 
change was possible; and,
    (2) The Corporation publicly announces the change and the vote of 
each member upon such change at the earliest practicable time, which may 
be later than the commencement of the meeting.
    (e) Publication of announcements in Federal Register. Immediately 
following each public announcement under this section, such announcement 
will be submitted for publication in the Federal Register by the 
Executive Secretary.

[42 FR 14675, Mar. 16, 1977, as amended at 67 FR 71071, Nov. 29, 2002]



Sec.  311.5  Regular procedure for closing meetings.

    (a) Scope. Unless Sec.  311.6 is applicable, the procedures for 
closing meetings will be those set forth in this section.
    (b) Procedure. (1) A decision to close a meeting or portion of a 
meeting will be taken only when a majority of the entire Board votes to 
take such action. In deciding whether to close a meeting or portion of a 
meeting, the Board will consider whether the public interest requires an 
open meeting. A separate vote of the Board will be taken with respect to 
each meeting which is proposed to be closed in whole or in part to the 
public. A single vote may be taken with respect to a series of meetings 
which are proposed to be closed in whole or in part to the public, or 
with respect to any information concerning such series of meetings, so 
long as each meeting in the series involves the same particular matters 
and is scheduled to be held no more than thirty days after the initial 
meeting in the series. The vote of each Board member will be recorded 
and no proxies will be allowed.
    (2) Any individual whose interests may be directly affected may 
request that the Corporation close any portion of a meeting for any of 
the reasons referred to in paragraph (b) (5), (6), or (b)(7) of Sec.  
311.3. Requests should be directed to the Executive Secretary, Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429. After receiving notice that an individual desires a portion of a 
meeting to be closed, the Board, upon request of any one of its members, 
will vote by recorded vote whether to close the relevant portion of the 
meeting. This procedure will apply even if the individual's request is 
made subsequent to the announcement of a decision to hold an open 
meeting.
    (3) The Corporation's General Counsel will make the public 
certification required by Sec.  311.7.
    (4) Within 1 day after any vote taken pursuant to paragraphs (b)(1) 
or (2) of this section, the Corporation will make publicly available a 
written copy of the vote, reflecting the vote of each Board member. 
Except to the extent that such information is exempt from disclosure, if 
a meeting or portion of a meeting is to be closed to the public, the 
Corporation will make publicly available within 1 day after the required 
vote a full written explanation of its action, together with a list of 
all persons expected to attend the meeting and their affiliation.
    (5) The Corporation will publicly announce the time, place, and 
subject matter of the meeting, with determinations as to open and closed 
portions, in the manner and within the time limits prescribed in Sec.  
311.4.

[42 FR 14675, Mar. 16, 1977; 42 FR 16616, Mar. 29, 1977, as amended at 
42 FR 59494, Nov. 18, 1977; 67 FR 71071, Nov. 29, 2002]



Sec.  311.6  Expedited procedure for announcing and closing certain meetings.

    (a) Scope. Since a majority of its meetings may properly be closed 
pursuant to paragraph (b)(4), (8), (9)(i), or (b)(10) of Sec.  311.3, 
subsection (d)(4) of the Government in the Sunshine Act (5 U.S.C. 552b) 
allows the Corporation to

[[Page 164]]

use expedited procedures in closing meetings under these four 
subparagraphs. Absent a compelling public interest to the contrary, 
meetings or portions of meetings that can be expected to be closed using 
these procedures include, but are not limited to: Administrative 
enforcement proceedings under section 8 of the Federal Deposit Insurance 
Act (12 U.S.C. 1818); appointment of the Corporation as conservator of a 
depository institution, or as receiver, liquidator or liquidating agent 
of a closed depository institution or a depository institution in danger 
of closing; and certain management and liquidation activities pursuant 
to such appointments; possible financial assistance by the Corporation 
under section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823); 
certain depository institution applications including applications to 
establish or move branches, applications to merge, and applications for 
insurance; and investigatory activity under section 10(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1820(c)). In announcing and closing 
meetings or portions of meetings under this section, the following 
procedures will be observed.
    (b) Announcement. Except to the extent that such information is 
exempt from disclosure under the provisions of Sec.  311.3(b) the 
Corporation will make public announcement of the time, place and subject 
matter of the meeting and of each portion thereof at the earliest 
practicable time. This announcement will be published in the Federal 
Register if publication can be effected at least 1 day prior to the 
scheduled date of the meeting.
    (c) Procedure for closing. (1) The Corporation's General Counsel 
will make the public certification required by Sec.  311.7.
    (2) At the beginning of a meeting or portion of a meeting to be 
closed under this section, a recorded vote of the Board will be taken. 
The Board will determine by its vote whether to proceed with the 
closing. If a majority of the entire Board votes to close, the meeting 
will be closed to public observation. Even though a meeting or portion 
thereof could properly be closed under this section, a majority of the 
entire Board may find that the public interest requires an open session 
and vote, reflecting the vote of each Board member, will be made 
available to the public.

[42 FR 14675, Mar. 16, 1977; 42 FR 16616, Mar. 29, 1977, as amended at 
54 FR 38965, Sept. 22, 1989]



Sec.  311.7  General Counsel certification.

    For every meeting or portion thereof closed under Sec.  311.5 or 
Sec.  311.6, the Corporation's General Counsel will publicly certify 
that, in the opinion of such General Counsel, the meeting may be closed 
to the public and will state each relevant exemptive provision. In the 
absence of the General Counsel, the next ranking official in the Legal 
Division may perform the certification. If the General Counsel and such 
next ranking official in the Legal Division are both absent, the 
official in the Legal Division who is then next in rank may provide the 
required certification. A copy of this certification, together with a 
statement from the presiding officer of the meeting setting forth the 
time and place of the meeting, and the persons present, will be retained 
in the Board's permanent files.

[42 FR 14675, Mar. 16, 1977, as amended at 61 FR 38357, July 24, 1996]



Sec.  311.8  Transcripts and minutes of meetings.

    (a) When required. The Corporation will maintain a complete 
transcript, identifying each speaker, to record fully the proceedings of 
each meeting or portion of a meeting closed to the public, except that 
in the case of a meeting or portions of a meeting closed to the public 
pursuant to paragraph (b)(8), (9)(i), or (10) of Sec.  311.3, the 
Corporation may, in lieu of a transcript, maintain a set of minutes.
    (b) Content of minutes. If minutes are maintained, they will fully 
and clearly describe all matters discussed and will provide a full and 
accurate summary of any actions taken, and the reasons for taking such 
action. Minutes will also include a description of each of the views 
expressed by each person in attendance on any item and the record of any 
roll call vote, reflecting the vote of each member. All documents 
considered in connection with any action will be identified in the 
minutes.

[[Page 165]]

    (c) Available material. The Corporation will maintain a complete 
verbatim copy of the transcript or minutes of each meeting or portion of 
a meeting closed to the public for a period of at least 2 years after 
the meeting, or until 1 year after the conclusion of any proceeding with 
respect to which the meeting or portion was held, whichever occurs 
later. The Corporation will make promptly available to the public the 
transcript, identifying each speaker, or minutes of items on the agenda 
or testimony of any witness received at the closed meeting except that 
in cases where the Privacy Act of 1974 (5 U.S.C. 552a) does not apply, 
the Corporation may withhold information exempt from disclosure under 
Sec.  311.3(b). For the convenience of members of the public who may be 
unable to attend open meetings of the Board, the Corporation will 
maintain for at least 2 years a set of minutes of each meeting of the 
Board or portion thereof open to public observation.
    (d) Procedures for inspecting or copying available material. (1) An 
individual may inspect materials made available under paragraph (c) of 
this section at the offices of the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429, 
during normal business hours. If the individual desires a copy of such 
material, the Corporation will furnish copies at a cost of 10 cents per 
page. Whenever the Corporation determines that in the public interest a 
reduction or waiver is warranted, it may reduce or waive any fees 
imposed under this section.
    (2) An individual may also submit a written request for transcripts 
or minutes, reasonably identifying the records sought, to the Executive 
Secretary, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
    (e) Procedures for obtaining documents identified in minutes. Copies 
of documents identified in minutes or considered by the Board in 
connection with any action identified in the minutes may be made 
available to the public upon request, to the extent permitted by the 
Freedom of Information Act, under the provisions of 12 CFR part 309, 
Disclosure of Information.

[42 FR 14675, Mar. 16, 1977, as amended at 61 FR 38357, July 24, 1996; 
67 FR 71071, Nov. 29, 2002]

                           PART 312 [RESERVED]



PART 313_PROCEDURES FOR CORPORATE DEBT COLLECTION--Table of Contents



   Subpart A_Scope, Purpose, Definitions and Delegations of Authority

Sec.
313.1 Scope.
313.2 Purpose.
313.3 Definitions.
313.4 Delegations of authority.
313.5-313.19 [Reserved]

                     Subpart B_Administrative Offset

313.20 Applicability and scope.
313.21 Definitions.
313.22 Collection.
313.23 Offset prior to completion of procedures.
313.24 Omission of procedures.
313.25 Debtor's rights.
313.26 Interest.
313.27 Refunds.
313.28 No requirement for duplicate notice.
313.29 Requests for offset to other federal agencies.
313.30 Requests for offset from other federal agencies.
313.31-313.39 [Reserved]

                         Subpart C_Salary Offset

313.40 Scope.
313.41 Notice requirement where FDIC is creditor agency.
313.42 Procedures to request a hearing.
313.43 Failure to timely submit request for hearing.
313.44 Procedure for hearing.
313.45 Certification of debt by FDIC as creditor agency.
313.46 Notice of salary offset where FDIC is the paying agency.
313.47 Voluntary repayment agreements as alternative to salary offset 
          where the FDIC is the creditor agency.
313.48 Special review of repayment agreement or salary offset due to 
          changed circumstances.
313.49 Coordinating salary offset with other agencies.
313.50 Interest, penalties, and administrative costs.
313.51 Refunds.
313.52 Request from a creditor agency for services of a hearing 
          official.

[[Page 166]]

313.53 Non-waiver of rights by payments.
313.54 Exception to due process procedures.
313.55 Salary adjustments.
313.56-313.79 [Reserved]

                Subpart D_Administrative Wage Garnishment

313.80 Scope and purpose.
313.81 Notice.
313.82 Debtor's rights.
313.83 Form of hearing.
313.84 Effect of timely request.
313.85 Failure to timely request a hearing.
313.86 Hearing official.
313.87 Procedure.
313.88 Format of hearing.
313.89 Date of decision.
313.90 Content of decision.
313.91 Finality of agency action.
313.92 Failure to appear.
313.93 Wage garnishment order.
313.94 Certification by employer.
313.95 Amounts withheld.
313.96 Exclusions from garnishment.
313.97 Financial hardship.
313.98 Ending garnishment.
313.99 Prohibited actions by employer.
313.100 Refunds.
313.101 Right of action.
313.102-313.119 [Reserved]

                       Subpart E_Tax Refund Offset

313.120 Scope.
313.121 Definitions.
313.122 Notification of debt to FMS.
313.123 Certification and referral of debt.
313.124 Pre-offset notice and consideration of evidence.
313.125 No requirement for duplicate notice.
313.126 Referral of past-due, legally enforceable debt.
313.127 Correcting and updating referral.
313.128 Disposition of amounts collected.
313.129-313.139 [Reserved]

      Subpart F_Civil Service Retirement and Disability Fund Offset

313.140 Future benefits.
313.141 Notification to OPM.
313.142 Request for administrative offset.
313.143 Cancellation of deduction.
313.144-313.159 [Reserved]

          Subpart G_Mandatory Centralized Administrative Offset

313.160 Treasury notification.
313.161 Certification of debt.
313.162 Compliance with 31 CFR part 285.
313.163 Notification of debts of 180 days or less.
313.164-313.180 [Reserved]

    Authority: 12 U.S.C. 1819(a); 5 U.S.C. 5514; Pub. L. 104-143; 110 
Stat. 1321 (31 U.S.C. 3701, 3711, 3716).

    Source: 67 FR 48527, July 25, 2002, unless otherwise noted.



   Subpart A_Scope, Purpose, Definitions and Delegations of Authority



Sec.  313.1  Scope.

    This part establishes FDIC procedures for the collection of certain 
debts owed to the United States.
    (a) This part applies to collections by the FDIC from:
    (1) Federal employees who are indebted to the FDIC;
    (2) Employees of the FDIC who are indebted to other agencies; and
    (3) Other persons, organizations, or entities that are indebted to 
the FDIC, except those excluded in paragraph (b)(3) of this section.
    (b) This part does not apply:
    (1) To debts or claims arising under the Internal Revenue Code of 
1986 (Title 26, U.S. Code), the Social Security Act (42 U.S.C. 301 et 
seq.), or the tariff laws of the United States;
    (2) To a situation to which the Contract Disputes Act (41 U.S.C. 601 
et seq.) applies; or
    (3) In any case where collection of a debt is explicitly provided 
for or prohibited by another statute.
    (c) This part applies only to:
    (1) Debts owed to and payments made by the FDIC acting in its 
corporate capacity, that is, in connection with employee matters such as 
travel-related claims and erroneous overpayments, contracting activities 
involving corporate operations, debts related to requests to the FDIC 
for documents under the Freedom of Information Act (FOIA), or where a 
request for an offset is received by the FDIC from another federal 
agency; and
    (2) Criminal restitution debt owed to the FDIC in either its 
corporate capacity or its receivership capacity.
    (3) With the exception of criminal restitution debt noted in 
paragraph (c)(2) of this section, this part does not apply to debts owed 
to or payments made by the FDIC in connection with

[[Page 167]]

the FDIC's liquidation, supervision, enforcement, or insurance 
responsibilities, nor does it limit or affect the FDIC's authority with 
respect to debts and/or claims pursuant to 12 U.S.C. 1819(a) and 
1820(a).
    (d) Nothing in this part 313 precludes the compromise, suspension, 
or termination of collection actions, where appropriate, under: 
standards implementing the Debt Collection Improvement Act (DCIA) (31 
U.S.C. 3711 et seq.), the Federal Claims Collection Standards (FCCS) (31 
CFR chapter IX and parts 900 through 904); or any other applicable law.

[67 FR 48527, July 25, 2002, as amended at 71 FR 75661, Dec. 18, 2006]



Sec.  313.2  Purpose.

    (a) The purpose of this part is to implement federal statutes and 
regulatory standards authorizing the FDIC to collect debts owed to the 
United States. This part is consistent with the following federal 
statutes and regulations:
    (1) DCIA at 31 U.S.C. 3711 (collection and compromise of claims); 
section 3716 (administrative offset), section 3717 (interest and penalty 
on claims), and section 3718 (contracts for collection services);
    (2) 5 U.S.C. 5514 (salary offset);
    (3) 5 U.S.C. 5584 (waiver of claims for overpayment);
    (4) 31 CFR chapter IX and parts 900 through 904 (Federal Claims 
Collection Standards);
    (5) 5 CFR part 550, subpart K (salary offset);
    (6) 31 U.S.C. 3720D, 31 CFR 285.11 (administrative wage 
garnishment);
    (7) 26 U.S.C. 6402(d), 31 U.S.C. 3720A and 31 CFR 285.2 (tax refund 
offset); and
    (8) 5 CFR 831.1801 through 1808 (U. S. Office of Personnel 
Management (OPM) offset).
    (b) Collectively, these statutes and regulations prescribe the 
manner in which federal agencies should proceed to establish the 
existence and validity of debts owed to the federal government and 
describe the remedies available to agencies to offset valid debts.



Sec.  313.3  Definitions.

    Except where the context clearly indicates otherwise or where the 
term is defined elsewhere in this subpart, the following definitions 
shall apply to this subpart.
    (a) Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of government, including government corporations.
    (b) Board means the Board of Directors of the FDIC.
    (c) Centralized administrative offset means the mandatory referral 
to the Secretary of the Treasury by a creditor agency of a past due debt 
which is more than 180 days delinquent, for the purpose of collection 
under the Treasury's centralized offset program.
    (d) Certification means a written statement transmitted from a 
creditor agency to a paying agency for purposes of administrative or 
salary offset, to FMS for offset or to the Secretary of the Treasury for 
centralized administrative offset. The certification confirms the 
existence and amount of the debt and verifies that required procedural 
protections have been afforded the debtor. Where the debtor requests a 
hearing on a claimed debt, the decision by a hearing official or 
administrative law judge constitutes a certification.
    (e) Chairman means the Chairman of the FDIC.
    (f) Compromise means the settlement or forgiveness of a debt under 
31 U.S.C. 3711, in accordance with standards set forth in the FCCS and 
applicable federal law.
    (g) Creditor agency means an agency of the federal government to 
which the debt is owed, or a debt collection center when acting on 
behalf of a creditor agency to collect a debt.
    (h) Debt means an amount owed to the United States from loans 
insured or guaranteed by the United States and all other amounts due the 
United States from fees, leases, rents, royalties, services, sales of 
real or personal property, overpayments, penalties, damages, interest, 
restitution, fines and forfeitures, and all other similar sources. For 
purposes of this part, a debt owed to the FDIC constitutes a debt owed 
to the United States.

[[Page 168]]

    (i) Debt collection center means the Department of the Treasury or 
other government agency or division designated by the Secretary of the 
Treasury with authority to collect debts on behalf of creditor agencies 
in accordance with 31 U.S.C. 3711(g).
    (j) Director means the Director of the Division of Finance (DOF), 
the Director of the Division of Administration (DOA), or the Director of 
the Division of Resolutions and Receiverships (DRR), as applicable, or 
the applicable Director's delegate.
    (k) Disposable pay means that part of current adjusted basic pay, 
special pay, incentive pay, retired pay, retainer pay, and, in the case 
of an employee not entitled to adjusted basic pay, other authorized pay, 
remaining for each pay period after the deduction of any amount required 
by law to be withheld. The FDIC shall allow the following deductions in 
determining the amount of disposable pay that is subject to salary 
offset:
    (1) Federal employment taxes;
    (2) Federal, state, or local income taxes to the extent authorized 
or required by law, but no greater than would be the case if the 
employee claimed all dependents to which he or she is entitled and such 
additional amounts for which the employee presents evidence of a tax 
obligation supporting the additional withholding;
    (3) Medicare deductions;
    (4) Health insurance premiums;
    (5) Normal retirement contributions, including employee 
contributions to the Thrift Savings Plan or the FDIC 401(k) Plan;
    (6) Normal life insurance premiums (e.g., Serviceman's Group Life 
Insurance and ``Basic Life'' Federal Employee's Group Life Insurance 
premiums), not including amounts deducted for supplementary coverage;
    (7) Amounts mandatorily withheld for the United States Soldiers' and 
Airmen's Home;
    (8) Fines and forfeiture ordered by a court-martial or by a 
commanding officer.
    (l) Division of Administration (DOA) means the Division of 
Administration of the FDIC.
    (m) Division of Finance (DOF) means the Division of Finance of the 
FDIC.
    (n) Division of Resolutions and Receiverships (DRR) means the 
Division of Resolutions and Receiverships of the FDIC.
    (o) Federal Claims Collection Standards (FCCS) means standards 
published at 31 CFR chapter IX and parts 900 through 904.
    (p) Garnishment means the process of withholding amounts from the 
disposable pay of a person employed outside the federal government, and 
the paying of those amounts to a creditor in satisfaction of a 
withholding order.
    (q) Hearing official means an administrative law judge or other 
individual authorized to conduct a hearing and issue a final decision in 
response to a debtor's request for hearing. A hearing official may not 
be under the supervision or control of the Chairman or FDIC Board when 
the FDIC is the creditor agency.
    (r) Notice of Intent to Offset or Notice of Intent means a written 
notice from a creditor agency to an employee, organization, entity, or 
restitution debtor that claims a debt and informs the debtor that the 
creditor agency intends to collect the debt by administrative offset. 
The notice also informs the debtor of certain procedural rights with 
respect to the claimed debt and offset.
    (s) Notice of Salary Offset means a written notice from a paying 
agency to its employee informing the employee that salary offset to 
collect a debt due to the creditor agency will begin at the next 
officially established pay interval. The paying agency transmits this 
notice to its employee after receiving a certification from the creditor 
agency.
    (t) Paying agency means the agency of the federal government that 
employs the individual who owes a debt to an agency of the federal 
government. The same agency may be both the creditor agency and the 
paying agency.
    (u) Salary offset means an administrative offset to collect a debt 
under 5 U.S.C. 5514 by deduction(s) at one or more officially 
established pay intervals from the current pay account of an employee 
without his or her consent.
    (v) Waiver means the cancellation, remission, forgiveness or non-
recovery of a debt allegedly owed by an employee

[[Page 169]]

to an agency, as authorized or required by 5 U.S.C. 5584 or any other 
law.
    (w) Withholding order means any order for withholding or garnishment 
of pay issued by an agency, or judicial or administrative body. For 
purposes of administrative wage garnishment, the terms ``wage 
garnishment order'' and ``garnishment order'' have the same meaning as 
``withholding order.''

[67 FR 48527, July 25, 2002, as amended at 71 FR 75661, Dec. 18, 2006]



Sec.  313.4  Delegations of authority.

    Authority to conduct the following activities to collect debt, other 
than criminal restitution debt, on behalf of the FDIC in its corporate 
capacity is delegated to the Director of DOA or Director of DOF, as 
applicable; and authority to collect criminal restitution debt on behalf 
of the FDIC in either its receivership or corporate capacity is 
delegated to the Director of DRR; or to the applicable Director's 
delegate; to:
    (a) Initiate and carry out the debt collection process on behalf of 
the FDIC, in accordance with the FCCS;
    (b) Accept or reject compromise offers and suspend or terminate 
collection actions to the full extent of the FDIC's legal authority 
under 12 U.S.C. 1819(a) and 1820(a), 31 U.S.C. 3711(a)(2), and any other 
applicable statute or regulation, provided, however, that no such claim 
shall be compromised or collection action terminated, except upon the 
concurrence of the FDIC General Counsel or his or her designee;
    (c) Report to consumer reporting agencies certain data pertaining to 
delinquent debts, where appropriate;
    (d) Use administrative offset procedures, including salary offset, 
to collect debts; and
    (e) Take any other action necessary to promptly and effectively 
collect debts owed to the United States in accordance with the policies 
contained herein and as otherwise provided by law.

[67 FR 48527, July 25, 2002, as amended at 71 FR 75661, Dec. 18, 2006]



Sec. Sec.  313.5-313.19  [Reserved]



                     Subpart B_Administrative Offset



Sec.  313.20  Applicability and scope.

    The provisions of this subpart apply to the collection of debts owed 
to the United States arising from transactions with the FDIC. 
Administrative offset is authorized under the DCIA. This subpart is 
consistent with the FCCS on administrative offset issued by the 
Department of Justice.



Sec.  313.21  Definitions.

    (a) Administrative offset means withholding funds payable by the 
United States to, or held by the United States for, a person to satisfy 
a debt.
    (b) Person includes a natural person or persons, profit or nonprofit 
corporation, partnership, association, trust, estate, consortium, or 
other entity which is capable of owing a debt to the United States 
Government except that agencies of the United States, or any state or 
local government shall be excluded.



Sec.  313.22  Collection.

    (a) The Director may collect a claim from a person by administrative 
offset of monies payable by the Government only after:
    (1) Providing the debtor with due process required under this part; 
and
    (2) Providing the paying agency with written certification that the 
debtor owes the debt in the amount stated and that the FDIC, as creditor 
agency, has complied with this part.
    (b) Prior to initiating collection by administrative offset, the 
Director should determine that the proposed offset is within the scope 
of this remedy, as set forth in 31 CFR 901.3(a). Administrative offset 
under 31 U.S.C. 3716 may not be used to collect debts more than 10 years 
after the federal government's right to collect the debt first accrued, 
except as otherwise provided by law. In addition, administrative offset 
may not be used when a statute explicitly prohibits its use to collect 
the claim or type of claim involved.
    (c) Unless otherwise provided, debts or payments not subject to 
administrative offset under 31 U.S.C. 3716 may be collected by 
administrative offset

[[Page 170]]

under common law, or any other applicable statutory authority.



Sec.  313.23  Offset prior to completion of procedures.

    The FDIC may collect a debt by administrative offset prior to the 
completion of the procedures described in Sec.  313.25, if:
    (a) Failure to offset a payment would substantially prejudice the 
FDIC's ability to collect the debt; and
    (b) The time before the payment is to be made does not reasonably 
permit completion of the procedures described in Sec.  313.25. Such 
prior offsetting shall be followed promptly by the completion of the 
procedures described in Sec.  313.25.



Sec.  313.24  Omission of procedures.

    The FDIC shall not be required to follow the procedures described in 
Sec.  313.25 where:
    (a) The offset is in the nature of a recoupment (i.e., the FDIC may 
offset a payment due to the debtor when both the payment due to the 
debtor and the debt owed to the FDIC arose from the same transaction); 
or
    (b) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993), which 
provides that procedural protections under administrative offset do not 
supplant or restrict established procedures for contractual offsets 
accommodated by the Contracts Disputes Act; or
    (c) In the case of non-centralized administrative offsets, the FDIC 
first learns of the existence of a debt due when there would be 
insufficient time to afford the debtor due process under these 
procedures before the paying agency makes payment to the debtor; in such 
cases, the Director shall give the debtor notice and an opportunity for 
review as soon as practical and shall refund any money ultimately found 
not to be due to the U.S. Government.



Sec.  313.25  Debtor's rights.

    Unless the procedures described in Sec.  313.23 are used, prior to 
collecting any claim by administrative offset or referring such claim to 
another agency for collection through administrative offset, the 
Director shall provide the debtor with the following:
    (a) Written notification of the nature and amount of the claim, the 
intention of the Director to collect the claim through administrative 
offset, and a statement of the rights of the debtor under this 
paragraph;
    (b) An opportunity to inspect and copy the records of the FDIC with 
respect to the claim, unless such records are exempt from disclosure;
    (c) An opportunity to have the FDIC's determination of indebtedness 
reviewed by the Director:
    (1) Any request by the debtor for such review shall be in writing 
and shall be submitted to the FDIC within 30 calendar days of the date 
of the notice of the offset. The Director may waive the time limit for 
requesting review for good cause shown by the debtor;
    (2) Upon acceptance of a request for review by the debtor, the FDIC 
shall provide the debtor with a reasonable opportunity for an oral 
hearing when the determination turns on an issue of credibility or 
veracity, or the Director determines that the question of the 
indebtedness cannot be resolved by review of the documentary evidence 
alone. Unless otherwise required by law, an oral hearing under this 
section is not required to be a formal evidentiary hearing, although the 
Director shall document all significant matters discussed at the 
hearing. In cases where an oral hearing is not required by this section, 
the Director shall make his determination based on a documentary hearing 
consisting of a review of the written record; and
    (d) An opportunity to enter into a written agreement for the 
voluntary repayment of the amount of the claim at the discretion of the 
Director.



Sec.  313.26  Interest.

    Pursuant to 31 U.S.C. 3717, the FDIC shall assess interest, 
penalties and administrative costs on debts owed to the United States. 
The FDIC is authorized to assess interest and related charges on debts 
that are not subject to 31 U.S.C. 3717 to the extent authorized under 
the common law or other applicable statutory authority.

[[Page 171]]



Sec.  313.27  Refunds.

    Amounts recovered by administrative offset but later found not to be 
owed to the Government shall be promptly refunded. Unless required by 
law or contract, such refunds shall not bear interest.



Sec.  313.28  No requirement for duplicate notice.

    Where the Director has previously given a debtor any of the required 
notice and review opportunities with respect to a particular debt, the 
Director is not required to duplicate such notice and review 
opportunities prior to initiating administrative offset.



Sec.  313.29  Requests for offset to other federal agencies.

    The Director may request that a debt owed to the FDIC be 
administratively offset against funds due and payable to a debtor by 
another federal agency. In requesting administrative offset, the FDIC, 
as the creditor agency, will certify in writing to the federal agency 
holding funds payable to the debtor:
    (a) That the debtor owes the debt;
    (b) The amount and basis of the debt; and
    (c) That the FDIC has complied with the requirements of its own 
administrative offset regulations and the applicable provisions of 31 
U.S.C. 3716 with respect to providing the debtor with due process, 
unless otherwise provided.



Sec.  313.30  Requests for offset from other federal agencies.

    Any federal agency may request that funds due and payable to its 
debtor by the FDIC be administratively offset by the FDIC in order to 
collect a debt owed to such agency by the debtor. The FDIC shall 
initiate the requested offset only upon:
    (a) Receipt of written certification from the creditor agency 
stating:
    (1) That the debtor owes the debt;
    (2) The amount and basis of the debt; and
    (3) That the agency has complied with its own administrative offset 
regulations and with the applicable provisions of 31 CFR 901.3, 
including providing any required hearing or review.
    (b) A determination by the creditor agency that collection by offset 
against funds payable by the FDIC would be in the best interest of the 
United States and that such offset would not otherwise be contrary to 
law.



Sec. Sec.  313.31-313.39  [Reserved]



                         Subpart C_Salary Offset



Sec.  313.40  Scope.

    These salary offset regulations are issued in compliance with 5 
U.S.C. 5514 and 5 CFR part 550, subpart K, and apply to the collection 
of debts owed by employees of the FDIC or other federal agencies. These 
salary offset procedures do not apply where an employee consents to the 
recovery of a debt from his current pay account. These procedures do not 
apply to debts arising under the Internal Revenue Code, the tariff laws 
of the United States or to any case where collection of a debt by salary 
offset is explicitly provided for or prohibited by another statute 
(e.g., travel advances under 5 U.S.C. 5705 and employee training 
expenses under 5 U.S.C. 4108). These procedures do not preclude an 
employee from requesting waiver of an erroneous payment under 5 U.S.C. 
5584, or in any way questioning the amount or validity of a debt, in the 
manner specified by law or these agency regulations. This section also 
does not preclude an employee from requesting waiver of the collection 
of a debt under any other applicable statutory authority. When possible, 
salary offset through centralized administrative offset procedures 
should be attempted before seeking salary offset from a paying agency 
different than the creditor agency.



Sec.  313.41  Notice requirement where FDIC is creditor agency.

    Where the FDIC seeks salary offset under 5 U.S.C. 5514 as the 
creditor agency, the FDIC shall first provide the employee with a 
written Notice of Intent to Offset at least 30 calendar days before 
salary offset is to commence. The Notice of Intent to Offset shall 
include the following information and statements:
    (a) That the Director has determined that a debt is owed to the FDIC 
and intends to collect the debt by means of

[[Page 172]]

deduction from the employee's current disposable pay account until the 
debt and all accumulated interest is paid in full or otherwise resolved;
    (b) The amount of the debt and the factual basis for the debt;
    (c) A salary offset schedule stating the frequency and amount of 
each deduction, stated as a fixed dollar amount or percentage of 
disposable pay (not to exceed 15%);
    (d) That in lieu of salary offset, the employee may propose a 
voluntary repayment plan to satisfy the debt on terms acceptable to the 
FDIC, which must be documented in writing, signed by the employee and 
the Director or the Director's designee, and documented in the FDIC's 
files;
    (e) The FDIC's policy concerning interest, penalties, and 
administrative costs, and a statement that such assessments must be 
made, unless excused in accordance with the FCCS;
    (f) That the employee has the right to inspect and copy FDIC records 
not exempt from disclosure relating to the debt claimed, or to receive 
copies of such records if the employee or the employee's representative 
is unable personally to inspect the records, due to geographical or 
other constraints:
    (1) That such requests be made in writing, and identify by name and 
address the Director or other designated individual to whom the request 
should be sent; and
    (2) That upon receipt of such a request, the Director or the 
Director's designee shall notify the employee of the time and location 
where the records may be inspected and copied;
    (g) That the employee has a right to request a hearing regarding the 
existence and amount of the debt claimed or the salary offset schedule 
proposed by the FDIC, provided that the employee files a request for 
such a hearing with the FDIC in accordance with Sec.  313.42 that such a 
hearing will be conducted by an impartial official who is an 
administrative law judge or other hearing official not under the 
supervision or control of the Board;
    (h) The procedure and deadline for requesting a hearing, including 
the name, address, and telephone number of the Director or other 
designated individual to whom a request for hearing must be sent;
    (i) That a request for hearing must be received by the FDIC on or 
before the 30th calendar day following receipt of the Notice of Intent, 
and that filing of a request for hearing will stay the collection 
proceedings;
    (j) That the FDIC will initiate salary offset procedures not less 
than 30 days from the date of the employee's receipt of the Notice of 
Intent to Offset, unless the employee files a timely request for a 
hearing;
    (k) That if a hearing is held, the administrative law judge or other 
hearing official will issue a decision at the earliest practical date, 
but not later than 60 days after the filing of the request for the 
hearing, unless the employee requests a delay in the proceedings which 
is granted by the hearing official;
    (l) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5 
CFR part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729 through 
3731, or under any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
under any other applicable statutory authority;
    (m) That the employee also has the right to request waiver of 
overpayment pursuant to 5 U.S.C. 5584, and may exercise any other rights 
and remedies available under statutes or regulations governing the 
program for which the collection is being made; and
    (n) That amounts paid on or deducted from debts that are later 
waived or found not to be owed to the United States will be promptly 
refunded to the employee, unless there are applicable contractual or 
statutory provisions to the contrary.



Sec.  313.42  Procedures to request a hearing.

    (a) To request a hearing, an employee must send a written request to 
the Director. The request must be received by the Director within 30 
calendar days

[[Page 173]]

after the employee's receipt of the Notice of Intent.
    (b) The request must be signed by the employee and must fully 
identify and explain with reasonable specificity all the facts, 
evidence, and witnesses, if any, that the employee believes support his 
or her position. The request for hearing must state whether the employee 
is requesting an oral or documentary hearing. If an oral hearing is 
requested, the request shall explain why the matter cannot be resolved 
by a review of documentary evidence alone.



Sec.  313.43  Failure to timely submit request for hearing.

    If the Director does not receive an employee's request for hearing 
within the 30-day period set forth in Sec.  313.42(a), the employee 
shall not be entitled to a hearing. However, the Director may accept an 
untimely request for hearing if the employee can show that the delay was 
the result of circumstances beyond his or her control or that he or she 
failed to receive actual notice of the filing deadline.



Sec.  313.44  Procedure for hearing.

    (a) Obtaining the services of a hearing official. When the FDIC is 
the creditor agency and the debtor is an FDIC employee, the FDIC shall 
designate an administrative law judge or contact any agent of another 
agency designated in appendix A to 5 CFR part 581 to arrange for a 
hearing official. When the FDIC is the creditor agency and the debtor is 
not an FDIC employee (i.e., the debtor is employed by another federal 
agency, also known as the paying agency), and the FDIC cannot provide a 
prompt and appropriate hearing before an administrative law judge or a 
hearing official furnished pursuant to a lawful arrangement, the FDIC 
may contact an agent of the paying agency designated in appendix A to 5 
CFR part 581 to arrange for a hearing official. The paying agency must 
cooperate with the FDIC to provide a hearing official, as required by 
the FCCS.
    (b) Notice and format of hearing--(1) Notice. The hearing official 
shall determine whether the hearing shall be oral or documentary and 
shall notify the employee of the form of the hearing. If the hearing 
will be oral, the notice shall set forth the date, time, and location of 
the hearing, which must be held within 30 calendar days after the 
request is received, unless the employee requests that the hearing be 
delayed. If the hearing will be documentary, the employee shall be 
notified to submit evidence and written arguments in support of his or 
her case to the hearing official within 30 calendar days.
    (2) Oral hearing. The hearing official may grant a request for an 
oral hearing if he or she determines that the issues raised by the 
employee cannot be resolved by review of documentary evidence alone 
(e.g., where credibility or veracity are at issue). An oral hearing is 
not required to be an adversarial adjudication, and the hearing official 
is not required to apply rules of evidence. Witnesses who testify in 
oral hearings shall do so under oath or affirmation. Oral hearings may 
take the form of, but are not limited to:
    (i) Informal conferences with the hearing official in which the 
employee and agency representative are given full opportunity to present 
evidence, witnesses, and argument;
    (ii) Informal meetings in which the hearing examiner interviews the 
employee; or
    (iii) Formal written submissions followed by an opportunity for oral 
presentation.
    (3) Documentary hearing. If the hearing official determines that an 
oral hearing is not necessary, he or she shall decide the issues raised 
by the employee based upon a review of the written record.
    (4) Record. The hearing official shall maintain a summary record of 
any hearing conducted under this section.
    (c) Rescheduling of the hearing date. The hearing official shall 
reschedule a hearing if requested to do so by both parties, who shall be 
given reasonable notice of the time and place of this new hearing.
    (d) Failure to appear. In the absence of good cause, an employee who 
fails to appear at a hearing shall be deemed, for the purpose of this 
subpart, to admit the existence and amount of the debt as described in 
the Notice of Intent. If the representative of the creditor agency fails 
to appear, the hearing

[[Page 174]]

official shall proceed with the hearing as scheduled, and issue a 
decision based upon the oral testimony presented and the documentation 
submitted by both parties.
    (e) Date of decision. The hearing official shall issue a written 
decision based upon the evidence and information developed at the 
hearing, as soon as practicable after the hearing, but not later than 60 
calendar days after the date on which the request for hearing was 
received by the FDIC, unless the hearing was delayed at the request of 
the employee. In the event of such a delay, the 60-day decision period 
shall be extended by the number of days by which the hearing was 
postponed. The decision of the hearing official shall be final.
    (f) Content of decision. The written decision shall include:
    (1) A summary of the facts concerning the origin, nature, and amount 
of the debt;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of the repayment schedule, if applicable.
    (g) Official certification of debt. The hearing official's decision 
shall constitute an official certification regarding the existence and 
amount of the debt for purposes of executing salary offset under 5 
U.S.C. 5514. Where the FDIC is the creditor agency but not the current 
paying agency, the FDIC may make a certification regarding the existence 
and amount of the debt owed to the FDIC, based on the hearing official's 
certification. The FDIC may make this certification to: the Secretary of 
the Treasury so that Treasury may offset the employee's current pay 
account by means of centralized administrative offset (5 CFR 550.1108); 
or to the current paying agency (5 CFR 550.1109). If the hearing 
official determines that a debt may not be collected through salary 
offset but the FDIC as the creditor agency determines that the debt is 
still valid, the FDIC may seek collection of the debt through other 
means, including administrative offset of other federal payments or 
litigation.



Sec.  313.45  Certification of debt by FDIC as creditor agency.

    The Director may also issue a certification of the debt where there 
has not been a hearing, if the employee has admitted the debt, or failed 
to contest the existence and amount of the debt in a timely manner 
(e.g., by failing to request a hearing). The certification shall be in 
writing and shall state:
    (a) The amount and basis of the debt owed by the employee;
    (b) The date the FDIC's right to collect the debt first accrued;
    (c) That the FDIC's debt collection regulations have been approved 
by OPM pursuant to 5 CFR part 550, subpart K;
    (d) If the collection is to be made by lump-sum payment, the amount 
and date such payment will be collected;
    (e) If the collection is to be made in installments through salary 
offset, the number of installments to be collected, the amount of each 
installment, and the date of the first installment, if a date other than 
the next officially established pay period; and
    (f) The date the employee was notified of the debt, the action(s) 
taken pursuant to the FDIC's regulations, and the dates such actions 
were taken.



Sec.  313.46  Notice of salary offset where FDIC is the paying agency.

    (a) Upon issuance of a proper certification by the Director for 
debts owed to the FDIC, or upon receipt of a proper certification from a 
creditor agency, the Director shall send the employee a written notice 
of salary offset. Such notice shall advise the employee:
    (1) That certification has been issued by the Director or received 
from another creditor agency;
    (2) Of the amount of the debt and of the deductions to be made; and
    (3) Of the initiation of salary offset at the next officially 
established pay interval or as otherwise provided for in the 
certification.
    (b) Where appropriate, the Director shall provide a copy of the 
notice to the creditor agency and advise such agency of the dollar 
amount to be offset and the pay period when the offset will begin.

[[Page 175]]



Sec.  313.47  Voluntary repayment agreements as alternative to 
salary offset where the FDIC is the creditor agency.

    (a) In response to a Notice of Intent, an employee may propose to 
voluntarily repay the debt through scheduled voluntary payments, in lieu 
of salary offset. An employee who wishes to repay a debt in this manner 
shall submit to the Director a written agreement proposing a repayment 
schedule. This proposal must be received by the Director within 30 
calendar days after receipt of the Notice of Intent.
    (b) The Director shall notify the employee whether the employee's 
proposed voluntary repayment agreement is acceptable. It is within the 
discretion of the Director whether to accept or reject the debtor's 
proposal, or whether to propose to the debtor a modification of the 
proposed repayment agreement:
    (1) If the Director decides that the proposed repayment agreement is 
unacceptable, he or she shall notify the employee and the employee shall 
have 30 calendar days from the date he or she received notice of the 
decision in which to file a request for a hearing on the proposed 
repayment agreement, as provided in Sec.  313.42; or
    (2) If the Director decides that the proposed repayment agreement is 
acceptable or the debtor agrees to a modification proposed by the 
Director, the agreement shall be put in writing and signed by both the 
employee and the Director.



Sec.  313.48  Special review of repayment agreement or salary offset 
due to changed circumstances.

    (a) An employee subject to a voluntary repayment agreement or salary 
offset payable to the FDIC as creditor agency may request a special 
review by the Director of the amount of the salary offset or voluntary 
repayment, based on materially changed circumstances, including, but not 
limited to, catastrophic illness, divorce, death, or disability. A 
request for special review may be made at any time.
    (b) In support of a request for special review, the employee shall 
submit to the Director a detailed statement and supporting documents for 
the employee, his or her spouse, and dependents indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Monthly expenses for food, housing, clothing, and 
transportation;
    (6) Medical expenses; and
    (7) Exceptional expenses, if any.
    (c) The employee shall also file an alternative proposed offset or 
payment schedule and a statement, with supporting documents, showing why 
the current salary offset or payments result in extreme financial 
hardship to the employee.
    (d) The Director shall evaluate the statement and supporting 
documents and determine whether the original salary offset or repayment 
schedule imposes extreme financial hardship on the employee, for 
example, by preventing the employee from meeting essential subsistence 
expenses such as food, housing, clothing, transportation, and medical 
care. The Director shall notify the employee in writing within 30 
calendar days of his or her determination.
    (e) If the special review results in a revised salary offset or 
repayment schedule, the Director shall provide a new certification to 
the paying agency.



Sec.  313.49  Coordinating salary offset with other agencies.

    (a) Responsibility of the FDIC as the creditor agency. Upon 
completion of the procedures established in Sec.  313.40 through Sec.  
313.45, the Director shall take the following actions:
    (1) Submit a debt claim to the paying agency, containing the 
information described in paragraphs (a)(2) and (a)(3) of this section, 
together with the certification of debt or an installment agreement (or 
other instruction regarding the payment schedule, if applicable).
    (2) If the collection must be made in installments, inform the 
paying agency of the amount or percentage of disposable pay to be 
collected in each installment. The Director may also inform the paying 
agency of the commencement date and number of installments to be paid, 
if a date other than the next officially established pay period is 
required.

[[Page 176]]

    (3) Unless the employee has consented to the salary offset in 
writing or has signed a statement acknowledging receipt of the required 
procedures and the written consent or statement is forwarded to the 
paying agency, the Director must also advise the paying agency of the 
actions the FDIC has taken under 5 U.S.C. 5514 and state the dates such 
action was taken.
    (4) If the employee is in the process of separating from employment, 
the Director shall submit the debt claim to the employee's paying agency 
for collection by lump-sum deduction from the employee's final check. 
The paying agency shall certify the total amount of its collection and 
furnish a copy of the certification to the FDIC and to the employee.
    (5) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, the Director may, unless 
otherwise prohibited, request that money due and payable to the employee 
from the federal government, including payments from the Civil Service 
Retirement and Disability Fund (5 CFR 831.1801), be administratively 
offset to collect the debt.
    (6) In the event an employee transfers to another paying agency, the 
Director shall not repeat the procedures described in Sec.  313.40 
through Sec.  313.45 in order to resume collecting the debt. Instead, 
the FDIC shall review the debt upon receiving the former paying agency's 
notice of the employee's transfer and shall ensure that collection is 
resumed by the new paying agency. The FDIC must submit a properly 
certified claim to the new paying agency before collection can be 
resumed.
    (b) Responsibility of the FDIC as the paying agency--(1) Complete 
claim. When the FDIC receives a properly certified claim from a creditor 
agency, the employee shall be given written notice of the certification, 
the date salary offset will begin, and the amount of the periodic 
deductions. The FDIC shall schedule deductions to begin at the next 
officially established pay interval or as otherwise provided for in the 
certification.
    (2) Incomplete claim. When the FDIC receives an incomplete 
certification of debt from a creditor agency, the FDIC shall return the 
debt claim with notice that procedures under 5 U.S.C. 5514 and 5 CFR 
550.1104 must be followed and that a properly certified debt claim must 
be received before action will be taken to collect from the employee's 
current pay account.
    (3) Review. The FDIC is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (4) Employees who transfer from one paying agency to another agency. 
If, after the creditor agency has submitted the debt claim to the FDIC, 
the employee transfers to a different paying agency before the debt is 
collected in full, the FDIC must certify the total amount collected on 
the debt. One copy of the certification shall be furnished to the 
employee, and one copy shall be sent to the creditor agency along with 
notice of the employee's transfer. If the FDIC is aware that the 
employee is entitled to payments from the Civil Service Retirement and 
Disability Fund, or other similar payments, it must provide written 
notification to the agency responsible for making such payments that the 
debtor owes a debt (including the amount) and that the requirements set 
forth herein and in the OPM's regulation (5 CFR part 550, subpart K) 
have been fully met.



Sec.  313.50  Interest, penalties, and administrative costs.

    Where the FDIC is the creditor agency, it shall assess interest, 
penalties, and administrative costs pursuant to 31 U.S.C. 3717 and 31 
CFR parts 900 through 904.



Sec.  313.51  Refunds.

    (a) Where the FDIC is the creditor agency, it shall promptly refund 
any amount deducted under the authority of 5 U.S.C. 5514 when the debt 
is compromised or otherwise found not to be owing to the United States, 
or when an administrative or judicial order directs the FDIC to make a 
refund.
    (b) Unless required by law or contract, such refunds shall not bear 
interest.

[[Page 177]]



Sec.  313.52  Request from a creditor agency for services 
of a hearing official.

    (a) The FDIC may provide a hearing official upon request of the 
creditor agency when the debtor is employed by the FDIC and the creditor 
agency cannot provide a prompt and appropriate hearing before a hearing 
official furnished pursuant to another lawful arrangement.
    (b) The FDIC may provide a hearing official upon request of a 
creditor agency when the debtor works for the creditor agency and that 
agency cannot arrange for a hearing official.
    (c) The Director shall arrange for qualified personnel to serve as 
hearing officials.
    (d) Services rendered under paragraph (a) of this section shall be 
provided on a fully reimbursable basis pursuant to 31 U.S.C. 1535.



Sec.  313.53  Non-waiver of rights by payments.

    A debtor's payment, whether voluntary or involuntary, of all or any 
portion of a debt being collected pursuant to this section shall not be 
construed as a waiver of any rights that the debtor may have under any 
statute, regulation, or contract except as otherwise provided by law or 
contract.



Sec.  313.54  Exception to due process procedures.

    (a) The procedures set forth in this subpart shall not apply to 
routine intra-agency salary adjustments of pay, including the following:
    (1) Any adjustment to pay arising out of an employee's election of 
coverage or a change in coverage under a federal benefits program 
requiring periodic deductions from pay, if the amount to be recovered 
was accumulated over four pay periods or less;
    (2) A routine adjustment of pay that is made to correct an 
overpayment attributable to clerical or administrative errors or delays 
in processing pay documents, if the overpayment occurred within the four 
pay periods preceding the adjustment and, at the time of such adjustment 
or as soon thereafter as is practical, the individual is provided 
written notice of the nature and amount of the adjustment and the point 
of contact for contesting such adjustment; or
    (3) Any adjustment to collect a debt amount to $50 or less, if, at 
the time of such adjustment, or as soon thereafter as is practical, the 
individual is provided written notice of the nature and amount of the 
adjustment and the point of contact for contesting such adjustment.
    (b) The procedure for notice to the employee and collection of such 
adjustments is set forth in Sec.  313.55.



Sec.  313.55  Salary adjustments.

    Any negative adjustment to pay arising out of an employee's election 
of coverage, or a change in coverage, under a federal benefits program 
requiring periodic deductions from pay shall not be considered 
collection of a ``debt'' for the purposes of this section if the amount 
to be recovered was accumulated over four pay periods or less. In such 
cases, the FDIC shall not apply this subpart C, but will provide a clear 
and concise statement in the employee's earnings statement advising the 
employee of the previous overpayment at the time the adjustment is made.



Sec. Sec.  313.56-313.79  [Reserved]



                Subpart D_Administrative Wage Garnishment



Sec.  313.80  Scope and purpose.

    (a) These administrative wage garnishment regulations are issued in 
compliance with 31 U.S.C. 3720D and 31 CFR 285.11(f). The subpart 
provides procedures for the FDIC to collect money from a debtor's 
disposable pay by means of administrative wage garnishment. The receipt 
of payments pursuant to this subpart does not preclude the FDIC from 
pursuing other debt collection remedies, including the offset of federal 
payments. The FDIC may pursue such debt collection remedies separately 
or in conjunction with administrative wage garnishment. This subpart 
does not apply to the collection of delinquent debts from the wages of 
federal employees from their federal employment. Federal pay is subject 
to the federal salary offset procedures set

[[Page 178]]

forth in 5 U.S.C. 5514 and other applicable laws.



Sec.  313.81  Notice.

    At least 30 days before the initiation of garnishment proceedings, 
the Director will send, by first class mail to the debtor's last known 
address, a written notice informing the debtor of:
    (a) The nature and amount of the debt;
    (b) The FDIC's intention to initiate proceedings to collect the debt 
through deductions from the debtor's pay until the debt and all 
accumulated interest penalties and administrative costs are paid in 
full;
    (c) An explanation of the debtor's rights as set forth in Sec.  
313.82(c); and
    (d) The time frame within which the debtor may exercise these 
rights. The FDIC shall retain a stamped copy of the notice indicating 
the date the notice was mailed.



Sec.  313.82  Debtor's rights.

    The FDIC shall afford the debtor the opportunity:
    (a) To inspect and copy records related to the debt;
    (b) To enter into a written repayment agreement with the FDIC, under 
terms agreeable to the FDIC; and
    (c) To the extent that a debt owed has not been established by 
judicial or administrative order, to request a hearing concerning the 
existence or amount of the debt or the terms of the repayment schedule. 
With respect to debts established by a judicial or administrative order, 
a debtor may request a hearing concerning the payment or other discharge 
of the debt. The debtor is not entitled to a hearing concerning the 
terms of the proposed repayment schedule if these terms have been 
established by written agreement.



Sec.  313.83  Form of hearing.

    (a) If the debtor submits a timely written request for a hearing as 
provided in Sec.  313.82(c), the FDIC will afford the debtor a hearing, 
which at the FDIC's option may be oral or written. The FDIC will provide 
the debtor with a reasonable opportunity for an oral hearing when the 
Director determines that the issues in dispute cannot be resolved by 
review of the documentary evidence, for example, when the validity of 
the claim turns on the issue of credibility or veracity.
    (b) If the FDIC determines that an oral hearing is appropriate, the 
time and location of the hearing shall be established by the FDIC. An 
oral hearing may, at the debtor's option, be conducted either in person 
or by telephone conference. All travel expenses incurred by the debtor 
in connection with an in-person hearing will be borne by the debtor. All 
telephonic charges incurred during the hearing will be the 
responsibility of the agency.
    (c) In cases when it is determined that an oral hearing is not 
required by this section, the FDIC will accord the debtor a ``paper 
hearing,'' that is, the FDIC will decide the issues in dispute based 
upon a review of the written record.



Sec.  313.84  Effect of timely request.

    If the FDIC receives a debtor's written request for hearing within 
15 business days of the date the FDIC mailed its notice of intent to 
seek garnishment, the FDIC shall not issue a withholding order until the 
debtor has been provided the requested hearing, and a decision in 
accordance with Sec.  313.88 and Sec.  313.89 has been rendered.



Sec.  313.85  Failure to timely request a hearing.

    If the FDIC receives a debtor's written request for hearing after 15 
business days of the date the FDIC mailed its notice of intent to seek 
garnishment, the FDIC shall provide a hearing to the debtor. However, 
the FDIC will not delay issuance of a withholding order unless it 
determines that the untimely filing of the request was caused by factors 
over which the debtor had no control, or the FDIC receives information 
that the FDIC believes justifies a delay or cancellation of the 
withholding order.



Sec.  313.86  Hearing official.

    A hearing official may be any qualified individual, as determined by 
the FDIC, including an administrative law judge.

[[Page 179]]



Sec.  313.87  Procedure.

    After the debtor requests a hearing, the hearing official shall 
notify the debtor of:
    (a) The date and time of a telephonic hearing;
    (b) The date, time, and location of an in-person oral hearing; or
    (c) The deadline for the submission of evidence for a written 
hearing.



Sec.  313.88  Format of hearing.

    The FDIC will have the burden of proof to establish the existence or 
amount of the debt. Thereafter, if the debtor disputes the existence or 
amount of the debt, the debtor must prove by a preponderance of the 
evidence that no debt exists, or that the amount of the debt is 
incorrect. In addition, the debtor may present evidence that the terms 
of the repayment schedule are unlawful, would cause a financial hardship 
to the debtor, or that collection of the debt may not be pursued due to 
operation of law. The hearing official shall maintain a record of any 
hearing held under this section. Hearings are not required to be formal, 
and evidence may be offered without regard to formal rules of evidence. 
Witnesses who testify in oral hearings shall do so under oath or 
affirmation.



Sec.  313.89  Date of decision.

    The hearing official shall issue a written opinion stating his or 
her decision as soon as practicable, but not later than sixty (60) days 
after the date on which the request for such hearing was received by the 
FDIC. If the FDIC is unable to provide the debtor with a hearing and 
decision within sixty (60) days after the receipt of the request for 
such hearing:
    (a) The FDIC may not issue a withholding order until the hearing is 
held and a decision rendered; or
    (b) If the FDIC had previously issued a withholding order to the 
debtor's employer, the withholding order will be suspended beginning on 
the 61st day after the date the FDIC received the hearing request and 
continuing until a hearing is held and a decision is rendered.



Sec.  313.90  Content of decision.

    The written decision shall include:
    (a) A summary of the facts presented;
    (b) The hearing official's findings, analysis and conclusions; and
    (c) The terms of any repayment schedule, if applicable.



Sec.  313.91  Finality of agency action.

    Unless the FDIC on its own initiative orders review of a decision by 
a hearing official pursuant to 17 CFR 201.431(c), a decision by a 
hearing official shall become the final decision of the FDIC for the 
purpose of judicial review under the Administrative Procedure Act.



Sec.  313.92  Failure to appear.

    In the absence of good cause shown, a debtor who fails to appear at 
a scheduled hearing will be deemed as not having timely filed a request 
for a hearing.



Sec.  313.93  Wage garnishment order.

    (a) Unless the FDIC receives information that it believes justifies 
a delay or cancellation of the withholding order, the FDIC will send by 
first class mail a withholding order to the debtor's employer within 30 
days after the debtor fails to make a timely request for a hearing 
(i.e., within 15 business days after the mailing of the notice of the 
FDIC's intent to seek garnishment) or, if a timely request for a hearing 
is made by the debtor, within 30 days after a decision to issue a 
withholding order becomes final.
    (b) The withholding order sent to the employer will be in the form 
prescribed by the Secretary of the Treasury, on the FDIC's letterhead, 
and signed by the head of the agency or delegate. The order will contain 
all information necessary for the employer to comply with the 
withholding order, including the debtor's name, address, and social 
security number, as well as instructions for withholding and information 
as to where payments should be sent.
    (c) The FDIC will keep a stamped copy of the order indicating the 
date it was mailed.



Sec.  313.94  Certification by employer.

    Along with the withholding order, the FDIC will send to the employer 
a certification in a form prescribed by

[[Page 180]]

the Secretary of the Treasury. The employer shall complete and return 
the certification to the FDIC within the time frame prescribed in the 
instructions to the form. The certification will address matters such as 
information about the debtor's employment status and disposable pay 
available for withholding.



Sec.  313.95  Amounts withheld.

    (a) Upon receipt of the garnishment order issued under this section, 
the employer shall deduct from all disposable pay paid to the debtor 
during each pay period the amount of garnishment described in paragraphs 
(b) through (d) of this section.
    (b) Subject to the provisions of paragraphs (c) and (d) of this 
section, the amount of garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (2) The amount set forth in 15 U.S.C. 1673(a)(2). The amount set 
forth at 15 U.S.C. 1673(a)(2) is the amount by which the debtor's 
disposable pay exceeds an amount equivalent to thirty times the minimum 
wage. See 29 CFR 870.10.
    (c) When a debtor's pay is subject to withholding orders with 
priority, the following shall apply:
    (1) Unless otherwise provided by federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (b) of this section and shall have priority over other 
withholding orders which are served later in time. However, withholding 
orders for family support shall have priority over withholding orders 
issued under this section.
    (2) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section shall be the 
lesser of:
    (i) The amount calculated under paragraph (b) of this section; or
    (ii) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (3) If a debtor owes more than one debt to the FDIC, the FDIC may 
issue multiple withholding orders. The total amount garnished from the 
debtor's pay for such orders will not exceed the amount set forth in 
paragraph (b) of this section.
    (d) An amount greater than that set forth in paragraphs (b) and (c) 
of this section may be withheld upon the written consent of the debtor.
    (e) The employer shall promptly pay to the FDIC all amounts withheld 
in accordance with the withholding order issued pursuant to this 
section.
    (f) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (g) Any assignment or allotment by the employee of the employee's 
earnings shall be void to the extent it interferes with or prohibits 
execution of the withholding order under this section, except for any 
assignment or allotment made pursuant to a family support judgment or 
order.
    (h) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the FDIC to discontinue wage withholding. The 
garnishment order shall indicate a reasonable period of time within 
which the employer is required to commence wage withholding.



Sec.  313.96  Exclusions from garnishment.

    The FDIC will not garnish the wages of a debtor it knows has been 
involuntarily separated from employment until the debtor has been re-
employed continuously for at least 12 months. The debtor has the burden 
of informing the FDIC of the circumstances surrounding an involuntary 
separation from employment.



Sec.  313.97  Financial hardship.

    (a) A debtor whose wages are subject to a wage withholding order 
under this section, may, at any time, request a review by the FDIC of 
the amount garnished, based on materially changed circumstances such as 
disability, divorce, or catastrophic illness which result in financial 
hardship.

[[Page 181]]

    (b) A debtor requesting a review under this section shall submit the 
basis for claiming that the current amount of garnishment results in a 
financial hardship to the debtor, along with supporting documentation.
    (c) If a financial hardship is found, the FDIC will downwardly 
adjust, by an amount and for a period of time agreeable to the FDIC, the 
amount garnished to reflect the debtor's financial condition. The FDIC 
will notify the employer of any adjustments to the amounts to be 
withheld.



Sec.  313.98  Ending garnishment.

    (a) Once the FDIC has fully recovered the amounts owed by the 
debtor, including interest, penalties, and administrative costs 
consistent with the FCCS, the FDIC will send the debtor's employer 
notification to discontinue wage withholding.
    (b) At least annually, the FDIC will review its debtors' accounts to 
ensure that garnishment has been terminated for accounts that have been 
paid in full.



Sec.  313.99  Prohibited actions by employer.

    The DCIA prohibits an employer from discharging, refusing to employ, 
or taking disciplinary action against the debtor due to the issuance of 
a withholding order under this subpart.



Sec.  313.100  Refunds.

    (a) If a hearing official determines that a debt is not legally due 
and owing to the United States, the FDIC shall promptly refund any 
amount collected by means of administrative wage garnishment.
    (b) Unless required by federal law or contract, refunds under this 
section shall not bear interest.



Sec.  313.101  Right of action.

    The FDIC may sue any employer for any amount that the employer fails 
to withhold from wages owed and payable to its employee in accordance 
with this subpart. However, a suit will not be filed before the 
termination of the collection action involving a particular debtor, 
unless earlier filing is necessary to avoid expiration of any applicable 
statute of limitations. For purposes of this subpart, ``termination of 
the collection action'' occurs when the agency has terminated collection 
action in accordance with the FCCS (31 CFR 903.1 through 903.5) or other 
applicable standards. In any event, termination of the collection action 
will have been deemed to occur if the FDIC has not received any payments 
to satisfy the debt from the particular debtor whose wages were subject 
to garnishment, in whole or in part, for a period of one (1) year.



Sec. Sec.  313.102-313.119  [Reserved]



                       Subpart E_Tax Refund Offset



Sec.  313.120  Scope.

    The provisions of 26 U.S.C. 6402(d) and 31 U.S.C. 3720A authorize 
the Secretary of the Treasury to offset a delinquent debt owed to the 
United States Government from the tax refund due a taxpayer when other 
collection efforts have failed to recover the amount due. In addition, 
the FDIC is authorized to collect debts by means of administrative 
offset under 31 U.S.C. 3716 and, as part of the debt collection process, 
to notify the Financial Management Service (FMS), a bureau of the 
Department of the Treasury, of the amount of such debt for collection by 
tax refund offset.



Sec.  313.121  Definitions.

    For purposes of this subpart E:
    (a) Debt or claim means an amount of money, funds or property which 
has been determined by the FDIC to be due to the United States from any 
person, organization, or entity, except another federal agency.
    (b) Debtor means a person who owes a debt or a claim. The term 
``person'' includes any individual, organization or entity, except 
another federal agency.
    (c) Tax refund offset means withholding or reducing a tax refund 
payment by an amount necessary to satisfy a debt owed by the payee(s) of 
a tax refund payment.
    (d) Tax refund payment means any overpayment of federal taxes to be 
refunded to the person making the overpayment after the Internal Revenue 
Service (IRS) makes the appropriate credits.

[[Page 182]]



Sec.  313.122  Notification of debt to FMS.

    The FDIC shall notify FMS of the amount of any past due, legally 
enforceable non-tax debt owed to it by a person, for the purpose of 
collecting such debt by tax refund offset. Notification and referral to 
FMS of such debts does not preclude FDIC's use of any other debt 
collection procedures, such as wage garnishment, either separately or in 
conjunction with tax refund offset.



Sec.  313.123  Certification and referral of debt.

    When the FDIC refers a past-due, legally enforceable debt to FMS for 
tax refund offset, it will certify to FMS that:
    (a) The debt is past due and legally enforceable in the amount 
submitted to FMS and that the FDIC will ensure that collections are 
properly credited to the debt;
    (b) Except in the case of a judgment debt or as otherwise allowed by 
law, the debt is referred for offset within ten years after the FDIC's 
right of action accrues;
    (c) The FDIC has made reasonable efforts to obtain payment of the 
debt, in that it has:
    (1) Submitted the debt to FMS for collection by administrative 
offset and complied with the provisions of 31 U.S.C. 3716(a) and related 
regulations;
    (2) Notified, or has made a reasonable attempt to notify, the debtor 
that the debt is past-due, and unless repaid within 60 days after the 
date of the notice, will be referred to FMS for tax refund offset;
    (3) Given the debtor at least 60 days to present evidence that all 
or part of the debt is not past-due or legally enforceable, considered 
any evidence presented by the debtor, and determined that the debt is 
past-due and legally enforceable; and
    (4) Provided the debtor with an opportunity to make a written 
agreement to repay the debt; and
    (d) The debt is at least $25.



Sec.  313.124  Pre-offset notice and consideration of evidence.

    (a) For purposes of Sec.  313.123(c)(2), the FDIC has made a 
reasonable effort to notify the debtor if it uses the current address 
information contained in its records related to the debt. The FDIC may, 
but is not required to, obtain address information from the IRS pursuant 
to 26 U.S.C. 6103(m)(2), (4), (5).
    (b) For purposes of Sec.  313.123(c)(3), if evidence presented by a 
debtor is considered by an agent of the FDIC, or other entities or 
persons acting on behalf of the FDIC, the debtor must be accorded at 
least 30 days from the date the agent or other entity or person 
determines that all or part of the debt is past-due and legally 
enforceable to request review by an officer or employee of the FDIC of 
any unresolved dispute. The FDIC must then notify the debtor of its 
decision.



Sec.  313.125  No requirement for duplicate notice.

    Where the director has previously given a debtor any of the required 
notice and review opportunities with respect to a particular debt, the 
Director is not required to duplicate such notice and review 
opportunities prior to initiating tax refund offset.

[71 FR 75661, Dec. 18, 2006]



Sec.  313.126  Referral of past-due, legally enforceable debt.

    The FDIC shall submit past-due, legally enforceable debt information 
for tax refund offset to FMS, as prescribed by FMS. For each debt, the 
FDIC will include the following information:
    (a) The name and taxpayer identification number (as defined in 26 
U.S.C. 6109) of the debtor;
    (b) The amount of the past-due and legally enforceable debt;
    (c) The date on which the debt became past-due; and
    (d) The designation of FDIC as the agency referring the debt.

[67 FR 48527, July 25, 2002. Redesignated at 71 FR 75661, Dec. 18, 2006]



Sec.  313.127  Correcting and updating referral.

    If, after referring a past-due legally enforceable debt to FMS as 
provided in Sec.  313.125, the FDIC determines that an error has been 
made with respect to the information transmitted to FMS, or if the FDIC 
receives a payment or credits a payment to the account of the

[[Page 183]]

debtor referred to FMS for offset, or if the debt amount is otherwise 
incorrect, the FDIC shall promptly notify FMS and make the appropriate 
correction of the FDIC's records. FDIC will provide certification as 
required under Sec.  313.123 for any increases to amounts owed. In the 
event FMS rejects an FDIC certification for failure to comply with Sec.  
323.123, the FDIC may resubmit the debt with a corrected certification.

[67 FR 48527, July 25, 2002. Redesignated at 71 FR 75661, Dec. 18, 2006]



Sec.  313.128  Disposition of amounts collected.

    FMS will transmit amounts collected for past-due, legally 
enforceable debts, less fees charged under this section, to the FDIC's 
account. The FDIC will reimburse FMS and the IRS for the cost of 
administering the tax refund offset program. FMS will deduct the fees 
from amounts collected prior to disposition and transmit a portion of 
the fees deducted to reimburse the IRS for its share of the cost of 
administering the tax refund offset program. To the extent allowed by 
law, the FDIC may add the offset fees to the debt.

[67 FR 48527, July 25, 2002. Redesignated at 71 FR 75661, Dec. 18, 2006]



Sec. Sec.  313.129-313.139  [Reserved]



      Subpart F_Civil Service Retirement and Disability Fund Offset



Sec.  313.140  Future benefits.

    Unless otherwise prohibited by law, the FDIC may request that a 
debtor's anticipated or future benefit payments under the Civil Service 
Retirement and Disability Fund (Fund) be administratively offset in 
accordance with regulations at 5 CFR 831.1801 through 831.1808.



Sec.  313.141  Notification to OPM.

    When making a request for administrative offset under Sec.  313.140, 
the FDIC shall provide OPM with a written certification that:
    (a) The debtor owes the FDIC a debt, including the amount of the 
debt;
    (b) The FDIC has complied with the applicable statutes, regulations, 
and procedures of OPM; and
    (c) The FDIC has complied with the requirements of 31 CFR parts 900 
through 904, including any required hearing or review.



Sec.  313.142  Request for administrative offset.

    The Director shall request administrative offset under Sec.  
313.140, as soon as practical after completion of the applicable 
procedures in order to help ensure that offset be initiated prior to 
expiration of the applicable statute of limitations. At such time as the 
debtor makes a claim for payments from the Fund, if at least a year has 
elapsed since the offset request was originally made, the debtor shall 
be permitted to offer a satisfactory repayment plan in lieu of offset 
upon establishing that changed financial circumstances would render the 
offset unjust.



Sec.  313.143  Cancellation of deduction.

    If the FDIC collects part or all of the debt by other means before 
deductions are made or completed pursuant to Sec.  313.140, the FDIC 
shall act promptly to modify or terminate its request for such offset.



          Subpart G_Mandatory Centralized Administrative Offset



Sec.  313.160  Treasury notification.

    (a) In accordance with 31 U.S.C. 3716, the FDIC as a creditor agency 
must notify the Secretary of the Treasury of all debts that are 
delinquent (over 180 days past due), as defined in the FCCS, to enable 
the Secretary to seek collection by centralized administrative offset. 
This includes debts the FDIC seeks to recover from the pay account of an 
employee of another agency by means of salary offset.
    (b) For purposes of centralized administrative offset, a claim or 
debt is not delinquent if:
    (1) It is in litigation or foreclosure;
    (2) It will be disposed of under an asset sale program within one 
year after becoming eligible for sale;
    (3) It has been referred to a private collection contractor for 
collection;
    (4) It has been referred to a debt collection center;

[[Page 184]]

    (5) It will be collected under internal offset, if such offset is 
sufficient to collect the claim within three years after the date the 
debt or claim is first delinquent; and
    (6) It is within a specific class of claims or debts which the 
Secretary of the Treasury has determined to be exempt, at the request of 
an agency.



Sec.  313.161  Certification of debt.

    Prior to referring a delinquent debt to the Secretary of the 
Treasury, the Director must have complied with the requirements of 5 
U.S.C. 5514, and 5 CFR part 550, subpart K, governing salary offset, and 
the FDIC regulations. The Director shall certify, in a form acceptable 
to the Secretary, that:
    (a) The debt is past due and legally enforceable; and
    (b) The FDIC has complied with all due process requirements under 31 
U.S.C. 3716 and the FDIC's administrative offset regulations.



Sec.  313.162  Compliance with 31 CFR part 285.

    The Director shall also comply with applicable procedures for 
referring a delinquent debt for purposes of centralized offset which are 
set forth at 31 CFR part 285 and the FCCS.



Sec.  313.163  Notification of debts of 180 days or less.

    The Director, in his discretion, may also notify the Secretary of 
the Treasury of debts that have been delinquent for 180 days or less, 
including debts the FDIC seeks to recover by means of salary offset.



Sec. Sec.  313.164-313.180  [Reserved]

[[Page 185]]



        SUBCHAPTER B_REGULATIONS AND STATEMENTS OF GENERAL POLICY





PART 323_APPRAISALS--Table of Contents



                     Subpart A_Appraisals Generally

Sec.
323.1 Authority, purpose, and scope.
323.2 Definitions.
323.3 Appraisals required; transactions requiring a State certified or 
          licensed appraiser.
323.4 Minimum appraisal standards.
323.5 Appraiser independence.
323.6 Professional association membership; competency.
323.7 Enforcement.

       Subpart B_Appraisal Management Company Minimum Requirements

323.8 Authority, purpose, and scope.
323.9 Definitions.
323.10 Appraiser panel--annual size calculation.
323.11 Appraisal management company registration.
323.12 Ownership limitations for State-registered appraisal management 
          companies.
323.13 Requirements for Federally regulated appraisal management 
          companies.
323.14 Information to be presented to the Appraisal Subcommittee by 
          participating States.

    Authority: 12 U.S.C. 1818, 1819(a)(``Seventh'' and ``Tenth''), 
1831p-1 and 3331 et seq.

    Source: 55 FR 33888, Aug. 20, 1990, unless otherwise noted.



                     Subpart A_Appraisals Generally



Sec.  323.1  Authority, purpose, and scope.

    (a) Authority. This subpart is issued under 12 U.S.C. 1818, 
1819(a)(Seventh and Tenth), 1831p-1 and title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) 
(Pub. L. 101-73, 103 Stat. 183, 12 U.S.C. 3331 et seq. (1989)).
    (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 subpart implements the requirements of title XI and 
applies to all federally related transactions entered into by the FDIC 
or by institutions regulated by the FDIC (regulated institutions).
    (2) This subpart: (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 FDIC.

[55 FR 33888, Aug. 20, 1990, as amended at 80 FR 32684, June 9, 2015; 83 
FR 15036, Apr. 9, 2018]



Sec.  323.2  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 Institutions 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) Commercial real estate transaction means a real estate-related 
financial transaction that is not secured by a

[[Page 186]]

single 1-to-4 family residential property.
    (f) 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.
    (g) Federally related transaction means any real estate-related 
financial transactions entered into after the effective date hereof 
that:
    (1) The FDIC or any regulated institution engages in or contracts 
for; and
    (2) Requires the services of an appraiser.
    (h) 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.
    (i) 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 and similar rights in a tract of land, but 
does not include mineral rights, timber rights, growing crops, water 
rights and similar interests severable from the land when the 
transaction does not involve the associated parcel or tract of land.
    (j) 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 or investment, including mortgage-backed securities.
    (k) 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. In addition, the Appraisal Subcommittee must not 
have issued a finding that the policies, practices, or procedures of a 
State or territory are inconsistent with title XI of FIRREA. The FDIC 
may, from time to time, impose additional qualification criteria for 
certified appraisers performing appraisals in connection with federally 
related transactions within its jurisdiction.
    (l) 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 FDIC may, from time to time, impose additional 
qualification criteria for licensed appraisers performing appraisals in 
connection with federally related transactions within its jurisdiction.
    (m) Tract development means a project of five units or more that is 
constructed or is to be constructed as a single development.
    (n) Transaction value means: (1) For loans or other extensions of 
credit, the amount of the loan or extension of credit;

[[Page 187]]

    (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 33888, Aug. 20, 1990, as amended at 57 FR 9049, Mar. 16, 1992; 59 
FR 29501, June 7, 1994; 83 FR 15036, Apr. 9, 2018]



Sec.  323.3  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, or 
real property interest met FDIC 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;
    (12) The FDIC 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; or
    (13) The transaction is a commercial real estate transaction that 
has a transaction value of $500,000 or less.
    (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), (a)(7), or (a)(13) 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 FDIC 
reserves the right to require an appraisal under this subpart 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

[[Page 188]]

an appraisal prepared by a State certified appraiser.
    (2) Commercial real estate transactions of more than $500,000. All 
federally related transactions that are commercial real estate 
transactions having a transaction value of more than $500,000 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. Regulated institutions are required to use state 
certified or licensed appraisers as set forth in this section no later 
than December 31, 1992, unless otherwise required by law.

[55 FR 33888, Aug. 20, 1990, as amended at 57 FR 9050, Mar. 16, 1992; 59 
FR 29501, June 7, 1994; 80 FR 32684, June 9, 2015; 83 FR 15036, Apr. 9, 
2018]



Sec.  323.4  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;
    (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 subpart; and
    (e) Be performed by State licensed or certified appraisers in 
accordance with requirements set forth in this subpart.

[59 FR 29502, June 7, 1994, as amended at 80 FR 32684, June 9, 2015]



Sec.  323.5  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 appraisals 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

[[Page 189]]

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 subpart and is otherwise 
acceptable.

[55 FR 33888, Aug. 20, 1990, as amended at 59 FR 29502, June 7, 1994; 80 
FR 32684, June 9, 2015]



Sec.  323.6  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.



Sec.  323.7  Enforcement.

    Institutions and institution-affiliated parties, including staff 
appraisers and fee appraisers, 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.



       Subpart B_Appraisal Management Company Minimum Requirements

    Source: 80 FR 32684, June 9, 2015, unless otherwise noted.



Sec.  323.8  Authority, purpose, and scope.

    (a) Authority. This subpart is issued pursuant to12 U.S.C. 1818, 
1819 [``Seventh'' and ``Tenth''] and Title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act (FIRREA), as amended 
by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the 
Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376 (2010)), 12 U.S.C. 3331 
et seq.
    (b) Purpose. The purpose of this subpart is to implement sections 
1109, 1117, 1121, and 1124 of FIRREA Title XI, 12 U.S.C. 3338, 3346, 
3350, and 3353.
    (c) Scope. This subpart applies to States and to appraisal 
management companies (AMCs) providing appraisal management services in 
connection with consumer credit transactions secured by a consumer's 
principal dwelling or securitizations of those transactions.
    (d) Rule of construction. Nothing in this subpart should be 
construed to prevent a State from establishing requirements in addition 
to those in this subpart. In addition, nothing in this subpart should be 
construed to alter guidance in, and applicability of, the Interagency 
Appraisal and Evaluation Guidelines \1\ or other relevant agency 
guidance that cautions banks, bank holding companies, Federal savings 
associations, state savings association, and credit unions, as 
applicable, that each such entity is accountable for overseeing the 
activities of third-party service providers and ensuring that any 
services provided by a third party comply with applicable laws, 
regulations, and supervisory guidance applicable directly to the 
financial institution.
---------------------------------------------------------------------------

    \1\ https://www.fdic.gov/regulations/laws/rules/5000-4800.html.
---------------------------------------------------------------------------



Sec.  323.9  Definitions.

    For purposes of this subpart:
    (a) Affiliate has the meaning provided in 12 U.S.C. 1841.

[[Page 190]]

    (b) AMC National Registry means the registry of State-registered 
AMCs and Federally regulated AMCs maintained by the Appraisal 
Subcommittee.
    (c)(1) Appraisal management company (AMC) means a person that:
    (i) Provides appraisal management services to creditors or to 
secondary mortgage market participants, including affiliates;
    (ii) Provides such services in connection with valuing a consumer's 
principal dwelling as security for a consumer credit transaction or 
incorporating such transactions into securitizations; and
    (iii) Within a given 12-month period, as defined in Sec.  323.10(d), 
oversees an appraiser panel of more than 15 State-certified or State-
licensed appraisers in a State or 25 or more State-certified or State-
licensed appraisers in two or more States, as described in Sec.  323.12;
    (2) An AMC does not include a department or division of an entity 
that provides appraisal management services only to that entity.
    (d) Appraisal management services means one or more of the 
following:
    (1) Recruiting, selecting, and retaining appraisers;
    (2) Contracting with State-certified or State-licensed appraisers to 
perform appraisal assignments;
    (3) Managing the process of having an appraisal performed, including 
providing administrative services such as receiving appraisal orders and 
appraisal reports, submitting completed appraisal reports to creditors 
and secondary market participants, collecting fees from creditors and 
secondary market participants for services provided, and paying 
appraisers for services performed; and
    (4) Reviewing and verifying the work of appraisers.
    (e) Appraiser panel means a network, list or roster of licensed or 
certified appraisers approved by an AMC to perform appraisals as 
independent contractors for the AMC. Appraisers on an AMC's ``appraiser 
panel'' under this part include both appraisers accepted by the AMC for 
consideration for future appraisal assignments in covered transactions 
or for secondary mortgage market participants in connection with covered 
transactions and appraisers engaged by the AMC to perform one or more 
appraisals in covered transactions or for secondary mortgage market 
participants in connection with covered transactions. An appraiser is an 
independent contractor for purposes of this subpart if the appraiser is 
treated as an independent contractor by the AMC for purposes of Federal 
income taxation.
    (f) Appraisal Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (g) Consumer credit means credit offered or extended to a consumer 
primarily for personal, family, or household purposes.
    (h) Covered transaction means any consumer credit transaction 
secured by the consumer's principal dwelling.
    (i) Creditor means:
    (1) A person who regularly extends consumer credit that is subject 
to a finance charge or is payable by written agreement in more than four 
installments (not including a down payment), and to whom the obligation 
is initially payable, either on the face of the note or contract, or by 
agreement when there is no note or contract.
    (2) A person regularly extends consumer credit if the person 
extended credit (other than credit subject to the requirements of 12 CFR 
1026.32) more than 5 times for transactions secured by a dwelling in the 
preceding calendar year. If a person did not meet these numerical 
standards in the preceding calendar year, the numerical standards shall 
be applied to the current calendar year. A person regularly extends 
consumer credit if, in any 12-month period, the person originates more 
than one credit extension that is subject to the requirements of 12 CFR 
1026.32 or one or more such credit extensions through a mortgage broker.
    (j) Dwelling means:
    (1) A residential structure that contains one to four units, whether 
or not that structure is attached to real property. The term includes an 
individual condominium unit, cooperative unit, mobile home, and trailer, 
if it is used as a residence.
    (2) A consumer can have only one ``principal'' dwelling at a time. 
Thus, a vacation or other second home would

[[Page 191]]

not be a principal dwelling. However, if a consumer buys or builds a new 
dwelling that will become the consumer's principal dwelling within a 
year or upon the completion of construction, the new dwelling is 
considered the principal dwelling for purposes of this section.
    (k) Federally regulated AMC means an AMC that is owned and 
controlled by an insured depository institution, as defined in 12 U.S.C. 
1813 and regulated by the Office of the Comptroller of the Currency, the 
Board of Governors of the Federal Reserve System, or the Federal Deposit 
Insurance Corporation.
    (l) Federally related transaction regulations means regulations 
established by the Office of the Comptroller of the Currency, the Board 
of Governors of the Federal Reserve System, the Federal Deposit 
Insurance Corporation, or the National Credit Union Administration, 
pursuant to sections 1112, 1113, and 1114 of FIRREA Title XI, 12 U.S.C. 
3341-3343.
    (m) Person means a natural person or an organization, including a 
corporation, partnership, proprietorship, association, cooperative, 
estate, trust, or government unit.
    (n) Secondary mortgage market participant means a guarantor or 
insurer of mortgage-backed securities, or an underwriter or issuer of 
mortgage-backed securities. Secondary mortgage market participant only 
includes an individual investor in a mortgage-backed security if that 
investor also serves in the capacity of a guarantor, insurer, 
underwriter, or issuer for the mortgage-backed security.
    (o) States mean the 50 States and the District of Columbia and the 
territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin 
Islands.
    (p) Uniform Standards of Professional Appraisal Practice (USPAP) 
means the appraisal standards promulgated by the Appraisal Standards 
Board of the Appraisal Foundation.




Sec.  323.10  Appraiser panel--annual size calculation.

    For purposes of determining whether, within a 12-month period, an 
AMC oversees an appraiser panel of more than 15 State-certified or 
State-licensed appraisers in a State or 25 or more State-certified or 
State-licensed appraisers in two or more States pursuant to Sec.  
323.9(c)(1)(iii)--
    (a) An appraiser is deemed part of the AMC's appraiser panel as of 
the earliest date on which the AMC:
    (1) Accepts the appraiser for the AMC's consideration for future 
appraisal assignments in covered transactions or for secondary mortgage 
market participants in connection with covered transactions; or
    (2) Engages the appraiser to perform one or more appraisals on 
behalf of a creditor for a covered transaction or secondary mortgage 
market participant in connection with a covered transaction.
    (b) An appraiser who is deemed part of the AMC's appraiser panel 
pursuant to paragraph (a) of this section is deemed to remain on the 
panel until the date on which the AMC:
    (1) Sends written notice to the appraiser removing the appraiser 
from the appraiser panel, with an explanation of its action; or
    (2) Receives written notice from the appraiser asking to be removed 
from the appraiser panel or notice of the death or incapacity of the 
appraiser.
    (c) If an appraiser is removed from an AMC's appraiser panel 
pursuant to paragraph (b) of this section, but the AMC subsequently 
accepts the appraiser for consideration for future assignments or 
engages the appraiser at any time during the twelve months after the 
AMC's removal, the removal will be deemed not to have occurred, and the 
appraiser will be deemed to have been part of the AMC's appraiser panel 
without interruption.
    (d) The period for purposes of counting appraisers on an AMC's 
appraiser panel may be the calendar year or a 12-month period 
established by law or rule of each State with which the AMC is required 
to register.




Sec.  323.11  Appraisal management company registration.

    Each State electing to register AMCs pursuant to paragraph (b)(1) of 
this section must:

[[Page 192]]

    (a) Establish and maintain within the State appraiser certifying and 
licensing agency a licensing program that is subject to the limitations 
set forth in Sec.  323.12 and with the legal authority and mechanisms 
to:
    (1) Review and approve or deny an AMC's application for initial 
registration;
    (2) Review and renew or review and deny an AMC's registration 
periodically;
    (3) Examine the books and records of an AMC operating in the State 
and require the AMC to submit reports, information, and documents;
    (4) Verify that the appraisers on the AMC's appraiser panel hold 
valid State certifications or licenses, as applicable;
    (5) Conduct investigations of AMCs to assess potential violations of 
applicable appraisal-related laws, regulations, or orders;
    (6) Discipline, suspend, terminate, or deny renewal of the 
registration of an AMC that violates applicable appraisal-related laws, 
regulations, or orders; and
    (7) Report an AMC's violation of applicable appraisal-related laws, 
regulations, or orders, as well as disciplinary and enforcement actions 
and other relevant information about an AMC's operations, to the 
Appraisal Subcommittee.
    (b) Impose requirements on AMCs that are not owned and controlled by 
an insured depository institution and not regulated by a Federal 
financial institution regulatory agency to:
    (1) Register with and be subject to supervision by the State 
appraiser certifying and licensing agency;
    (2) Engage only State-certified or State-licensed appraisers for 
Federally regulated transactions in conformity with any Federally 
related transaction regulations;
    (3) Establish and comply with processes and controls reasonably 
designed to ensure that the AMC, in engaging an appraiser, selects an 
appraiser who is independent of the transaction and who has the 
requisite education, expertise, and experience necessary to competently 
complete the appraisal assignment for the particular market and property 
type;
    (4) Direct the appraiser to perform the assignment in accordance 
with USPAP; and
    (5) Establish and comply with processes and controls reasonably 
designed to ensure that the AMC conducts its appraisal management 
services in accordance with the requirements of section 129E(a)-(i) of 
the Truth in Lending Act, 15 U.S.C. 1639e(a)-(i), and regulations 
thereunder.




Sec.  323.12  Ownership limitations for State-registered 
appraisal management companies.

    (a) Appraiser certification or licensing of owners. (1) An AMC 
subject to State registration pursuant to this section shall not be 
registered by a State or included on the AMC National Registry if such 
AMC, in whole or in part, directly or indirectly, is owned by any person 
who has had an appraiser license or certificate refused, denied, 
cancelled, surrendered in lieu of revocation, or revoked in any State 
for a substantive cause, as determined by the appropriate State 
appraiser certifying and licensing agency.
    (2) An AMC subject to State registration pursuant to this section is 
not barred by Sec.  323.11(a)(1) from being registered by a State or 
included on the AMC National Registry if the license or certificate of 
the appraiser with an ownership interest was not revoked for a 
substantive cause and has been reinstated by the State or States in 
which the appraiser was licensed or certified.
    (b) Good moral character of owners. An AMC shall not be registered 
by a State if any person that owns more than 10 percent of the AMC--
    (1) Is determined by the State appraiser certifying and licensing 
agency not to have good moral character; or
    (2) Fails to submit to a background investigation carried out by the 
State appraiser certifying and licensing agency.


[[Page 193]]



Sec.  323.13  Requirements for Federally regulated 
appraisal management companies.

    (a) Requirements in providing services. To provide appraisal 
management services for a creditor or secondary mortgage market 
participant relating to a covered transaction, a Federally regulated AMC 
must comply with the requirements in Sec.  323.11(b)(2) through (5).
    (b) Ownership limitations. (1) A Federally regulated AMC shall not 
be included on the AMC National Registry if such AMC, in whole or in 
part, directly or indirectly, is owned by any person who has had an 
appraiser license or certificate refused, denied, cancelled, surrendered 
in lieu of revocation, or revoked in any State for a substantive cause, 
as determined by the ASC.
    (2) A Federally regulated AMC is not barred by Sec.  323.12(b) from 
being included on the AMC National Registry if the license or 
certificate of the appraiser with an ownership interest was not revoked 
for a substantive cause and has been reinstated by the State or States 
in which the appraiser was licensed or certified.
    (c) Reporting information for the AMC National Registry. A Federally 
regulated AMC must report to the State or States in which it operates 
the information required to be submitted by the State pursuant to the 
Appraisal Subcommittee's policies regarding the determination of the AMC 
National Registry fee, including but not necessarily limited to the 
collection of information related to the limitations set forth in Sec.  
323.12, as applicable.




Sec.  323.14  Information to be presented to the Appraisal Subcommittee 
by participating States.

    Each State electing to register AMCs for purposes of permitting AMCs 
to provide appraisal management services relating to covered 
transactions in the State must submit to the Appraisal Subcommittee the 
information required to be submitted by Appraisal Subcommittee 
regulations or guidance concerning AMCs that operate in the State.




PART 324_CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS--Table of Contents



                      Subpart A_General Provisions

Sec.
324.1 Purpose, applicability, reservations of authority, and timing.
324.2 Definitions.
324.3 Operational requirements for counterparty credit risk.
324.4 Inadequate capital as an unsafe or unsound practice or condition.
324.5 Issuance of directives.
324.6-324.9 [Reserved]

            Subpart B_Capital Ratio Requirements and Buffers

324.10 Minimum capital requirements.
324.11 Capital conservation buffer and countercyclical capital buffer 
          amount.
324.12-324.19 [Reserved]

                     Subpart C_Definition of Capital

324.20 Capital components and eligibility criteria for regulatory 
          capital instruments.
324.21 Minority interest.
324.22 Regulatory capital adjustments and deductions.
324.23-324.29 [Reserved]

          Subpart D_Risk-Weighted Assets_Standardized Approach

324.30 Applicability.

              Risk-Weighted Assets for General Credit Risk

324.31 Mechanics for calculating risk-weighted assets for general credit 
          risk.
324.32 General risk weights.
324.33 Off-balance sheet exposures.
324.34 OTC derivative contracts.
324.35 Cleared transactions.
324.36 Guarantees and credit derivatives: substitution treatment.
324.37 Collateralized transactions.

             Risk-Weighted Assets for Unsettled Transactions

324.38 Unsettled transactions.
324.39-324.40 [Reserved]

            Risk-Weighted Assets for Securitization Exposures

324.41 Operational requirements for securitization exposures.
324.42 Risk-weighted assets for securitization exposures.
324.43 Simplified supervisory formula approach (SSFA) and the gross-up 
          approach.

[[Page 194]]

324.44 Securitization exposures to which the SSFA and gross-up approach 
          do not apply.
324.45 Recognition of credit risk mitigants for securitization 
          exposures.
324.46-324.50 [Reserved]

                Risk-Weighted Assets for Equity Exposures

324.51 Introduction and exposure measurement.
324.52 Simple risk-weight approach (SRWA).
324.53 Equity exposures to investment funds.
324.54-324.60 [Reserved]

                               Disclosures

324.61 Purpose and scope.
324.62 Disclosure requirements.
324.63 Disclosures by FDIC-supervised institutions described in Sec.  
          324.61.
324.64-324.99 [Reserved]

   Subpart E_Risk-Weighted Assets_Internal Ratings-Based and Advanced 
                         Measurement Approaches

324.100 Purpose, applicability, and principle of conservatism.
324.101 Definitions.
324.102-324.120 [Reserved]

                              Qualification

324.121 Qualification process.
324.122 Qualification requirements.
324.123 Ongoing qualification.
324.124 Merger and acquisition transitional arrangements.
324.125-324.130 [Reserved]

              Risk-Weighted Assets for General Credit Risk

324.131 Mechanics for calculating total wholesale and retail risk-
          weighted assets.
324.132 Counterparty credit risk of repo-style transactions, eligible 
          margin loans, and OTC derivative contracts.
324.133 Cleared transactions.
324.134 Guarantees and credit derivatives: PD substitution and LGD 
          adjustment approaches.
324.135 Guarantees and credit derivatives: double default treatment.
324.136 Unsettled transactions.
324.137-324.140 [Reserved]

            Risk-Weighted Assets for Securitization Exposures

324.141 Operational criteria for recognizing the transfer of risk.
324.142 Risk-weighted assets for securitization exposures.
324.143 Supervisory formula approach (SFA).
324.144 Simplified supervisory formula approach (SSFA).
324.145 Recognition of credit risk mitigants for securitization 
          exposures.
324.146-324.150 [Reserved]

                Risk-Weighted Assets for Equity Exposures

324.151 Introduction and exposure measurement.
324.152 Simple risk weight approach (SRWA).
324.153 Internal models approach (IMA).
324.154 Equity exposures to investment funds.
324.155 Equity derivative contracts.
324.156-324.160 [Reserved]

                Risk-Weighted Assets for Operational Risk

324.161 Qualification requirements for incorporation of operational risk 
          mitigants.
324.162 Mechanics of risk-weighted asset calculation.
324.163-324.170 [Reserved]

                               Disclosures

324.171 Purpose and scope.
324.172 Disclosure requirements.
324.173 Disclosures by certain advanced approaches FDIC-supervised 
          institutions.
324.174-324.200 [Reserved]

               Subpart F_Risk-Weighted Assets_Market Risk

324.201 Purpose, applicability, and reservation of authority.
324.202 Definitions.
324.203 Requirements for application of this subpart F.
324.204 Measure for market risk.
324.205 VaR-based measure.
324.206 Stressed VaR-based measure.
324.207 Specific risk.
324.208 Incremental risk.
324.209 Comprehensive risk.
324.210 Standardized measurement method for specific risk.
324.211 Simplified supervisory formula approach (SSFA).
324.212 Market risk disclosures.
324.213-324.299 [Reserved]

                     Subpart G_Transition Provisions

324.300 Transitions.
324.301-324.399 [Reserved]

                   Subpart H_Prompt Corrective Action

324.401 Authority, purpose, scope, other supervisory authority, 
          disclosure of capital categories, and transition procedures.
324.402 Notice of capital category.
324.403 Capital measures and capital category definitions.

[[Page 195]]

324.404 Capital restoration plans.
324.405 Mandatory and discretionary supervisory actions.
324.406-324.999 [Reserved]

    Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 
1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233, 105 
Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 105 
Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160, 2233 
(12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386, as amended 
by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note); Pub. L. 
111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note).

    Source: 78 FR 55471, Sept. 10, 2013, unless otherwise noted.




                      Subpart A_General Provisions





Sec.  324.1  Purpose, applicability, reservations of authority, and timing.

    (a) Purpose. This part 324 establishes minimum capital requirements 
and overall capital adequacy standards for FDIC-supervised institutions. 
This part 324 includes methodologies for calculating minimum capital 
requirements, public disclosure requirements related to the capital 
requirements, and transition provisions for the application of this part 
324.
    (b) Limitation of authority. Nothing in this part 324 shall be read 
to limit the authority of the FDIC to take action under other provisions 
of law, including action to address unsafe or unsound practices or 
conditions, deficient capital levels, or violations of law or 
regulation, under section 8 of the Federal Deposit Insurance Act.
    (c) Applicability. Subject to the requirements in paragraphs (d) and 
(f) of this section:
    (1) Minimum capital requirements and overall capital adequacy 
standards. Each FDIC-supervised institution must calculate its minimum 
capital requirements and meet the overall capital adequacy standards in 
subpart B of this part.
    (2) Regulatory capital. Each FDIC-supervised institution must 
calculate its regulatory capital in accordance with subpart C of this 
part.
    (3) Risk-weighted assets. (i) Each FDIC-supervised institution must 
use the methodologies in subpart D of this part (and subpart F of this 
part for a market risk FDIC-supervised institution) to calculate 
standardized total risk-weighted assets.
    (ii) Each advanced approaches FDIC-supervised institution must use 
the methodologies in subpart E (and subpart F of this part for a market 
risk FDIC-supervised institution) to calculate advanced approaches total 
risk-weighted assets.
    (4) Disclosures. (i) Except for an advanced approaches FDIC-
supervised institution that is making public disclosures pursuant to the 
requirements in subpart E of this part, each FDIC-supervised institution 
with total consolidated assets of $50 billion or more must make the 
public disclosures described in subpart D of this part.
    (ii) Each market risk FDIC-supervised institution must make the 
public disclosures described in subpart F of this part.
    (iii) Each advanced approaches FDIC-supervised institution must make 
the public disclosures described in subpart E of this part.
    (d) Reservation of authority. (1) Additional capital in the 
aggregate. The FDIC may require an FDIC-supervised institution to hold 
an amount of regulatory capital greater than otherwise required under 
this part if the FDIC determines that the FDIC-supervised institution's 
capital requirements under this part are not commensurate with the FDIC-
supervised institution's credit, market, operational, or other risks.
    (2) Regulatory capital elements. (i) If the FDIC determines that a 
particular common equity tier 1, additional tier 1, or tier 2 capital 
element has characteristics or terms that diminish its ability to absorb 
losses, or otherwise present safety and soundness concerns, the FDIC may 
require the FDIC-supervised institution to exclude all or a portion of 
such element from common equity tier 1 capital, additional tier 1 
capital, or tier 2 capital, as appropriate.
    (ii) Notwithstanding the criteria for regulatory capital instruments 
set forth in subpart C of this part, the FDIC may find that a capital 
element may be included in an FDIC-supervised

[[Page 196]]

institution's common equity tier 1 capital, additional tier 1 capital, 
or tier 2 capital on a permanent or temporary basis consistent with the 
loss absorption capacity of the element and in accordance with Sec.  
324.20(e).
    (3) Risk-weighted asset amounts. If the FDIC determines that the 
risk-weighted asset amount calculated under this part by the FDIC-
supervised institution for one or more exposures is not commensurate 
with the risks associated with those exposures, the FDIC may require the 
FDIC-supervised institution to assign a different risk-weighted asset 
amount to the exposure(s) or to deduct the amount of the exposure(s) 
from its regulatory capital.
    (4) Total leverage. If the FDIC determines that the total leverage 
exposure, or the amount reflected in the FDIC-supervised institution's 
reported average total consolidated assets, for an on- or off-balance 
sheet exposure calculated by an FDIC-supervised institution under Sec.  
324.10 is inappropriate for the exposure(s) or the circumstances of the 
FDIC-supervised institution, the FDIC may require the FDIC-supervised 
institution to adjust this exposure amount in the numerator and the 
denominator for purposes of the leverage ratio calculations.
    (5) Consolidation of certain exposures. The FDIC may determine that 
the risk-based capital treatment for an exposure or the treatment 
provided to an entity that is not consolidated on the FDIC-supervised 
institution's balance sheet is not commensurate with the risk of the 
exposure or the relationship of the FDIC-supervised institution to the 
entity. Upon making this determination, the FDIC may require the FDIC-
supervised institution to treat the exposure or entity as if it were 
consolidated on the balance sheet of the FDIC-supervised institution for 
purposes of determining the FDIC-supervised institution's risk-based 
capital requirements and calculating the FDIC-supervised institution's 
risk-based capital ratios accordingly. The FDIC will look to the 
substance of, and risk associated with, the transaction, as well as 
other relevant factors the FDIC deems appropriate in determining whether 
to require such treatment.
    (6) Other reservation of authority. With respect to any deduction or 
limitation required under this part, the FDIC may require a different 
deduction or limitation, provided that such alternative deduction or 
limitation is commensurate with the FDIC-supervised institution's risk 
and consistent with safety and soundness.
    (e) Notice and response procedures. In making a determination under 
this section, the FDIC will apply notice and response procedures in the 
same manner as the notice and response procedures in Sec.  324.5(c).
    (f) Timing. (1) Subject to the transition provisions in subpart G of 
this part, an advanced approaches FDIC-supervised institution that is 
not a savings and loan holding company must:
    (i) Except as described in paragraph (f)(1)(ii) of this section, 
beginning on January 1, 2014, calculate advanced approaches total risk-
weighted assets in accordance with subpart E and, if applicable, subpart 
F of this part and, beginning on January 1, 2015, calculate standardized 
total risk-weighted assets in accordance with subpart D and, if 
applicable, subpart F of this part;
    (ii) From January 1, 2014 to December 31, 2014:
    (A) Calculate risk-weighted assets in accordance with the general 
risk-based capital rules under 12 CFR part 325, appendix A, and, if 
applicable appendix C (state nonmember banks), or 12 CFR part 390, 
subpart Z and, if applicable, 12 CFR part 325, appendix C (state savings 
associations) \1\ and substitute such risk-weighted assets for 
standardized total risk-weighted assets for purposes of Sec.  324.10;
---------------------------------------------------------------------------

    \1\ For the purpose of calculating its general risk-based capital 
ratios from January 1, 2014 to December 31, 2014, an advanced approaches 
FDIC-supervised institution shall adjust, as appropriate, its risk-
weighted asset measure (as that amount is calculated under 12 CFR part 
325, appendix A, (state nonmember banks), and 12 CFR part 390, subpart Z 
(state savings associations) in the general risk-based capital rules) by 
excluding those assets that are deducted from its regulatory capital 
under Sec.  324.22.
---------------------------------------------------------------------------

    (B) If applicable, calculate general market risk equivalent assets 
in accordance with 12 CFR part 325, appendix C, section 4(a)(3) and 
substitute

[[Page 197]]

such general market risk equivalent assets for standardized market risk-
weighted assets for purposes of Sec.  324.20(d)(3); and
    (C) Substitute the corresponding provision or provisions of 12 CFR 
part 325, appendix A, and, if applicable, appendix C (state nonmember 
banks), and 12 CFR part 390, subpart Z and, if applicable, 12 CFR part 
325, appendix C (state savings associations) for any reference to 
subpart D of this part in: Sec.  324.121(c); Sec.  324.124(a) and (b); 
Sec.  324.144(b); Sec.  324.154(c) and (d); Sec.  324.202(b) (definition 
of covered position in paragraph (b)(3)(iv)); and Sec.  324.211(b); \2\
---------------------------------------------------------------------------

    \2\ In addition, for purposes of Sec.  324.201(c)(3), from January 
1, 2014 to December 31, 2014, for any circumstance in which the FDIC may 
require an FDIC-supervised institution to calculate risk-based capital 
requirements for specific positions or portfolios under subpart D of 
this part, the FDIC will instead require the FDIC-supervised institution 
to make such calculations according to 12 CFR part 325, appendix A, and, 
if applicable, appendix C (state nonmember banks), or 12 CFR part 390, 
subpart Z and, if applicable, 12 CFR part 325, appendix C (state savings 
associations).
---------------------------------------------------------------------------

    (iii) Beginning on January 1, 2014, calculate and maintain minimum 
capital ratios in accordance with subparts A, B, and C of this part, 
provided, however, that such FDIC-supervised institution must:
    (A) From January 1, 2014 to December 31, 2014, maintain a minimum 
common equity tier 1 capital ratio of 4 percent, a minimum tier 1 
capital ratio of 5.5 percent, a minimum total capital ratio of 8 
percent, and a minimum leverage ratio of 4 percent; and
    (B) From January 1, 2015 to December 31, 2017, an advanced 
approaches FDIC-supervised institution:
    (1) Is not required to maintain a supplementary leverage ratio; and
    (2) Must calculate a supplementary leverage ratio in accordance with 
Sec.  324.10(c), and must report the calculated supplementary leverage 
ratio on any applicable regulatory reports.
    (2) Subject to the transition provisions in subpart G of this part, 
an FDIC-supervised institution that is not an advanced approaches FDIC-
supervised institution or a savings and loan holding company that is an 
advanced approaches FDIC-supervised institution must:
    (i) Beginning on January 1, 2015, calculate standardized total risk-
weighted assets in accordance with subpart D, and if applicable, subpart 
F of this part; and
    (ii) Beginning on January 1, 2015, calculate and maintain minimum 
capital ratios in accordance with subparts A, B and C of this part, 
provided, however, that from January 1, 2015, to December 31, 2017, a 
savings and loan holding company that is an advanced approaches FDIC-
supervised institution:
    (A) Is not required to maintain a supplementary leverage ratio; and
    (B) Must calculate a supplementary leverage ratio in accordance with 
Sec.  324.10(c), and must report the calculated supplementary leverage 
ratio on any applicable regulatory reports.
    (3) Beginning on January 1, 2016, and subject to the transition 
provisions in subpart G of this part, an FDIC-supervised institution is 
subject to limitations on distributions and discretionary bonus payments 
with respect to its capital conservation buffer and any applicable 
countercyclical capital buffer amount, in accordance with subpart B of 
this part.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 57448, Sept. 26, 2014]




Sec.  324.2  Definitions.

    As used in this part:
    Additional tier 1 capital is defined in Sec.  324.20(c).
    Advanced approaches FDIC-supervised institution means an FDIC-
supervised institution that is described in Sec.  324.100(b)(1).
    Advanced approaches total risk-weighted assets means:
    (1) The sum of:
    (i) Credit-risk-weighted assets;
    (ii) Credit valuation adjustment (CVA) risk-weighted assets;
    (iii) Risk-weighted assets for operational risk; and
    (iv) For a market risk FDIC-supervised institution only, advanced 
market risk-weighted assets; minus
    (2) Excess eligible credit reserves not included in the FDIC-
supervised institution's tier 2 capital.

[[Page 198]]

    Advanced market risk-weighted assets means the advanced measure for 
market risk calculated under Sec.  324.204 multiplied by 12.5.
    Affiliate with respect to a company, means any company that 
controls, is controlled by, or is under common control with, the 
company.
    Allocated transfer risk reserves means reserves that have been 
established in accordance with section 905(a) of the International 
Lending Supervision Act, against certain assets whose value U.S. 
supervisory authorities have found to be significantly impaired by 
protracted transfer risk problems.
    Allowances for loan and lease losses (ALLL) means valuation 
allowances that have been established through a charge against earnings 
to cover estimated credit losses on loans, lease financing receivables 
or other extensions of credit as determined in accordance with GAAP. 
ALLL excludes ``allocated transfer risk reserves.'' For purposes of this 
part, ALLL includes allowances that have been established through a 
charge against earnings to cover estimated credit losses associated with 
off-balance sheet credit exposures as determined in accordance with 
GAAP.
    Asset-backed commercial paper (ABCP) program means a program 
established primarily for the purpose of issuing commercial paper that 
is investment grade and backed by underlying exposures held in a 
bankruptcy-remote special purpose entity (SPE).
    Asset-backed commercial paper (ABCP) program sponsor means an FDIC-
supervised institution that:
    (1) Establishes an ABCP program;
    (2) Approves the sellers permitted to participate in an ABCP 
program;
    (3) Approves the exposures to be purchased by an ABCP program; or
    (4) Administers the ABCP program by monitoring the underlying 
exposures, underwriting or otherwise arranging for the placement of debt 
or other obligations issued by the program, compiling monthly reports, 
or ensuring compliance with the program documents and with the program's 
credit and investment policy.
    Assets classified loss means:
    (1) When measured as of the date of examination of an FDIC-
supervised institution, those assets that have been determined by an 
evaluation made by a state or Federal examiner as of that date to be a 
loss; and
    (2) When measured as of any other date, those assets:
    (i) That have been determined--
    (A) By an evaluation made by a state or Federal examiner at the most 
recent examination of an FDIC-supervised institution to be a loss; or
    (B) By evaluations made by the FDIC-supervised institution since its 
most recent examination to be a loss; and
    (ii) That have not been charged off from the FDIC-supervised 
institution's books or collected.
    Bank means an FDIC-insured, state-chartered commercial or savings 
bank that is not a member of the Federal Reserve System and for which 
the FDIC is the appropriate Federal banking agency pursuant to section 
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)).
    Bank holding company means a bank holding company as defined in 
section 2 of the Bank Holding Company Act.
    Bank Holding Company Act means the Bank Holding Company Act of 1956, 
as amended (12 U.S.C. 1841 et seq.).
    Bankruptcy remote means, with respect to an entity or asset, that 
the entity or asset would be excluded from an insolvent entity's estate 
in receivership, insolvency, liquidation, or similar proceeding.
    Call Report means Consolidated Reports of Condition and Income.
    Carrying value means, with respect to an asset, the value of the 
asset on the balance sheet of the FDIC-supervised institution, 
determined in accordance with GAAP.
    Central counterparty (CCP) means a counterparty (for example, a 
clearing house) that facilitates trades between counterparties in one or 
more financial markets by either guaranteeing trades or novating 
contracts.
    CFTC means the U.S. Commodity Futures Trading Commission.
    Clean-up call means a contractual provision that permits an 
originating FDIC-supervised institution or servicer to call 
securitization exposures before their stated maturity or call date.

[[Page 199]]

    Cleared transaction means an exposure associated with an outstanding 
derivative contract or repo-style transaction that an FDIC-supervised 
institution or clearing member has entered into with a central 
counterparty (that is, a transaction that a central counterparty has 
accepted).
    (1) The following transactions are cleared transactions:
    (i) A transaction between a CCP and an FDIC-supervised institution 
that is a clearing member of the CCP where the FDIC-supervised 
institution enters into the transaction with the CCP for the FDIC-
supervised institution's own account;
    (ii) A transaction between a CCP and an FDIC-supervised institution 
that is a clearing member of the CCP where the FDIC-supervised 
institution is acting as a financial intermediary on behalf of a 
clearing member client and the transaction offsets another transaction 
that satisfies the requirements set forth in Sec.  324.3(a);
    (iii) A transaction between a clearing member client FDIC-supervised 
institution and a clearing member where the clearing member acts as a 
financial intermediary on behalf of the clearing member client and 
enters into an offsetting transaction with a CCP, provided that the 
requirements set forth in Sec.  324.3(a) are met; or
    (iv) A transaction between a clearing member client FDIC-supervised 
institution and a CCP where a clearing member guarantees the performance 
of the clearing member client FDIC-supervised institution to the CCP and 
the transaction meets the requirements of Sec.  324.3(a)(2) and (3).
    (2) The exposure of an FDIC-supervised institution that is a 
clearing member to its clearing member client is not a cleared 
transaction where the FDIC-supervised institution is either acting as a 
financial intermediary and enters into an offsetting transaction with a 
CCP or where the FDIC-supervised institution provides a guarantee to the 
CCP on the performance of the client.\3\
---------------------------------------------------------------------------

    \3\ For the standardized approach treatment of these exposures, see 
Sec.  324.34(e) (OTC derivative contracts) or Sec.  324.37(c) (repo-
style transactions). For the advanced approaches treatment of these 
exposures, see Sec.  324.132(c)(8) and (d) (OTC derivative contracts) or 
Sec.  324.132(b) and 324.132(d) (repo-style transactions) and for 
calculation of the margin period of risk, see Sec.  
324.132(d)(5)(iii)(C) (OTC derivative contracts) and Sec.  
324.132(d)(5)(iii)(A) (repo-style transactions).
---------------------------------------------------------------------------

    Clearing member means a member of, or direct participant in, a CCP 
that is entitled to enter into transactions with the CCP.
    Clearing member client means a party to a cleared transaction 
associated with a CCP in which a clearing member acts either as a 
financial intermediary with respect to the party or guarantees the 
performance of the party to the CCP.
    Collateral agreement means a legal contract that specifies the time 
when, and circumstances under which, a counterparty is required to 
pledge collateral to an FDIC-supervised institution for a single 
financial contract or for all financial contracts in a netting set and 
confers upon the FDIC-supervised institution a perfected, first-priority 
security interest (notwithstanding the prior security interest of any 
custodial agent), or the legal equivalent thereof, in the collateral 
posted by the counterparty under the agreement. This security interest 
must provide the FDIC-supervised institution with a right to close-out 
the financial positions and liquidate the collateral upon an event of 
default of, or failure to perform by, the counterparty under the 
collateral agreement. A contract would not satisfy this requirement if 
the FDIC-supervised institution's exercise of rights under the agreement 
may be stayed or avoided.
    (1) Under applicable law in the relevant jurisdictions, other than:
    (i) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under 
any similar insolvency law applicable to GSEs, or laws of foreign 
jurisdictions that are substantially similar \4\ to the U.S. laws 
referenced in this paragraph (1)(i) in order to facilitate the orderly 
resolution of the defaulting counterparty;
---------------------------------------------------------------------------

    \4\ The FDIC expects to evaluate jointly with the Federal Reserve 
and the OCC whether foreign special resolution regimes meet the 
requirements of this paragraph.

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

[[Page 200]]

    (ii) Where the agreement is subject by its terms to, or 
incorporates, any of the laws referenced in paragraph (1)(i) of this 
definition; or
    (2) Other than to the extent necessary for the counterparty to 
comply with the requirements of part 382 of this title, subpart I of 
part 252 of this title or part 47 of this title, as applicable.
    Commitment means any legally binding arrangement that obligates an 
FDIC-supervised institution to extend credit or to purchase assets.
    Commodity derivative contract means a commodity-linked swap, 
purchased commodity-linked option, forward commodity-linked contract, or 
any other instrument linked to commodities that gives rise to similar 
counterparty credit risks.
    Commodity Exchange Act means the Commodity Exchange Act of 1936 (7 
U.S.C. 1 et seq.)
    Common equity tier 1 capital is defined in Sec.  324.20(b).
    Common equity tier 1 minority interest means the common equity tier 
1 capital of a depository institution or foreign bank that is:
    (1) A consolidated subsidiary of an FDIC-supervised institution; and
    (2) Not owned by the FDIC-supervised institution.
    Company means a corporation, partnership, limited liability company, 
depository institution, business trust, special purpose entity, 
association, or similar organization.
    Control. A person or company controls a company if it:
    (1) Owns, controls, or holds with power to vote 25 percent or more 
of a class of voting securities of the company; or
    (2) Consolidates the company for financial reporting purposes.
    Core capital means Tier 1 capital, as defined in Sec.  324.2 of 
subpart A of this part.
    Corporate exposure means an exposure to a company that is not:
    (1) An exposure to a sovereign, the Bank for International 
Settlements, the European Central Bank, the European Commission, the 
International Monetary Fund, a multi-lateral development bank (MDB), a 
depository institution, a foreign bank, a credit union, or a public 
sector entity (PSE);
    (2) An exposure to a GSE;
    (3) A residential mortgage exposure;
    (4) A pre-sold construction loan;
    (5) A statutory multifamily mortgage;
    (6) A high volatility commercial real estate (HVCRE) exposure;
    (7) A cleared transaction;
    (8) A default fund contribution;
    (9) A securitization exposure;
    (10) An equity exposure; or
    (11) An unsettled transaction.
    Country risk classification (CRC) with respect to a sovereign, means 
the most recent consensus CRC published by the Organization for Economic 
Cooperation and Development (OECD) as of December 31st of the prior 
calendar year that provides a view of the likelihood that the sovereign 
will service its external debt.
    Covered savings and loan holding company means a top-tier savings 
and loan holding company other than:
    (1) A top-tier savings and loan holding company that is:
    (i) A grandfathered unitary savings and loan holding company as 
defined in section 10(c)(9)(A) of HOLA; and
    (ii) As of June 30 of the previous calendar year, derived 50 percent 
or more of its total consolidated assets or 50 percent of its total 
revenues on an enterprise-wide basis (as calculated under GAAP) from 
activities that are not financial in nature under section 4(k) of the 
Bank Holding Company Act (12 U.S.C. 1842(k));
    (2) A top-tier savings and loan holding company that is an insurance 
underwriting company; or
    (3)(i) A top-tier savings and loan holding company that, as of June 
30 of the previous calendar year, held 25 percent or more of its total 
consolidated assets in subsidiaries that are insurance underwriting 
companies (other than assets associated with insurance for credit risk); 
and
    (ii) For purposes of paragraph 3(i) of this definition, the company 
must calculate its total consolidated assets in accordance with GAAP, or 
if the company does not calculate its total consolidated assets under 
GAAP for any regulatory purpose (including compliance with applicable 
securities laws),

[[Page 201]]

the company may estimate its total consolidated assets, subject to 
review and adjustment by the Federal Reserve.
    Credit derivative means a financial contract executed under standard 
industry credit derivative documentation that allows one party (the 
protection purchaser) to transfer the credit risk of one or more 
exposures (reference exposure(s)) to another party (the protection 
provider) for a certain period of time.
    Credit-enhancing interest-only strip (CEIO) means an on-balance 
sheet asset that, in form or in substance:
    (1) Represents a contractual right to receive some or all of the 
interest and no more than a minimal amount of principal due on the 
underlying exposures of a securitization; and
    (2) Exposes the holder of the CEIO to credit risk directly or 
indirectly associated with the underlying exposures that exceeds a pro 
rata share of the holder's claim on the underlying exposures, whether 
through subordination provisions or other credit-enhancement techniques.
    Credit-enhancing representations and warranties means 
representations and warranties that are made or assumed in connection 
with a transfer of underlying exposures (including loan servicing 
assets) and that obligate an FDIC-supervised institution to protect 
another party from losses arising from the credit risk of the underlying 
exposures. Credit-enhancing representations and warranties include 
provisions to protect a party from losses resulting from the default or 
nonperformance of the counterparties of the underlying exposures or from 
an insufficiency in the value of the collateral backing the underlying 
exposures. Credit-enhancing representations and warranties do not 
include:
    (1) Early default clauses and similar warranties that permit the 
return of, or premium refund clauses covering, 1-4 family residential 
first mortgage loans that qualify for a 50 percent risk weight for a 
period not to exceed 120 days from the date of transfer. These 
warranties may cover only those loans that were originated within 1 year 
of the date of transfer;
    (2) Premium refund clauses that cover assets guaranteed, in whole or 
in part, by the U.S. Government, a U.S. Government agency or a GSE, 
provided the premium refund clauses are for a period not to exceed 120 
days from the date of transfer; or
    (3) Warranties that permit the return of underlying exposures in 
instances of misrepresentation, fraud, or incomplete documentation.
    Credit risk mitigant means collateral, a credit derivative, or a 
guarantee.
    Credit-risk-weighted assets means 1.06 multiplied by the sum of:
    (1) Total wholesale and retail risk-weighted assets as calculated 
under Sec.  324.131;
    (2) Risk-weighted assets for securitization exposures as calculated 
under Sec.  324.142; and
    (3) Risk-weighted assets for equity exposures as calculated under 
Sec.  324.151.
    Credit union means an insured credit union as defined under the 
Federal Credit Union Act (12 U.S.C. 1751 et seq.).
    Current exposure means, with respect to a netting set, the larger of 
zero or the fair value of a transaction or portfolio of transactions 
within the netting set that would be lost upon default of the 
counterparty, assuming no recovery on the value of the transactions. 
Current exposure is also called replacement cost.
    Current exposure methodology means the method of calculating the 
exposure amount for over-the-counter derivative contracts in Sec.  
324.34(a) and exposure at default (EAD) in Sec.  324.132(c)(5) or (6), 
as applicable.
    Custodian means a financial institution that has legal custody of 
collateral provided to a CCP.
    Default fund contribution means the funds contributed or commitments 
made by a clearing member to a CCP's mutualized loss sharing 
arrangement.
    Depository institution means a depository institution as defined in 
section 3 of the Federal Deposit Insurance Act.
    Depository institution holding company means a bank holding company 
or savings and loan holding company.
    Derivative contract means a financial contract whose value is 
derived from the values of one or more underlying assets, reference 
rates, or indices of

[[Page 202]]

asset values or reference rates. Derivative contracts include interest 
rate derivative contracts, exchange rate derivative contracts, equity 
derivative contracts, commodity derivative contracts, credit derivative 
contracts, and any other instrument that poses similar counterparty 
credit risks. Derivative contracts also include unsettled securities, 
commodities, and foreign exchange transactions with a contractual 
settlement or delivery lag that is longer than the lesser of the market 
standard for the particular instrument or five business days.
    Discretionary bonus payment means a payment made to an executive 
officer of an FDIC-supervised institution, where:
    (1) The FDIC-supervised institution retains discretion as to whether 
to make, and the amount of, the payment until the payment is awarded to 
the executive officer;
    (2) The amount paid is determined by the FDIC-supervised institution 
without prior promise to, or agreement with, the executive officer; and
    (3) The executive officer has no contractual right, whether express 
or implied, to the bonus payment.
    Distribution means:
    (1) A reduction of tier 1 capital through the repurchase of a tier 1 
capital instrument or by other means, except when an FDIC-supervised 
institution, within the same quarter when the repurchase is announced, 
fully replaces a tier 1 capital instrument it has repurchased by issuing 
another capital instrument that meets the eligibility criteria for:
    (i) A common equity tier 1 capital instrument if the instrument 
being repurchased was part of the FDIC-supervised institution's common 
equity tier 1 capital, or
    (ii) A common equity tier 1 or additional tier 1 capital instrument 
if the instrument being repurchased was part of the FDIC-supervised 
institution's tier 1 capital;
    (2) A reduction of tier 2 capital through the repurchase, or 
redemption prior to maturity, of a tier 2 capital instrument or by other 
means, except when an FDIC-supervised institution, within the same 
quarter when the repurchase or redemption is announced, fully replaces a 
tier 2 capital instrument it has repurchased by issuing another capital 
instrument that meets the eligibility criteria for a tier 1 or tier 2 
capital instrument;
    (3) A dividend declaration or payment on any tier 1 capital 
instrument;
    (4) A dividend declaration or interest payment on any tier 2 capital 
instrument if the FDIC-supervised institution has full discretion to 
permanently or temporarily suspend such payments without triggering an 
event of default; or
    (5) Any similar transaction that the FDIC determines to be in 
substance a distribution of capital.
    Dodd-Frank Act means the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 (Pub. L. 111-203, 124 Stat. 1376).
    Early amortization provision means a provision in the documentation 
governing a securitization that, when triggered, causes investors in the 
securitization exposures to be repaid before the original stated 
maturity of the securitization exposures, unless the provision:
    (1) Is triggered solely by events not directly related to the 
performance of the underlying exposures or the originating FDIC-
supervised institution (such as material changes in tax laws or 
regulations); or
    (2) Leaves investors fully exposed to future draws by borrowers on 
the underlying exposures even after the provision is triggered.
    Effective notional amount means for an eligible guarantee or 
eligible credit derivative, the lesser of the contractual notional 
amount of the credit risk mitigant and the exposure amount (or EAD for 
purposes of subpart E of this part) of the hedged exposure, multiplied 
by the percentage coverage of the credit risk mitigant.
    Eligible ABCP liquidity facility means a liquidity facility 
supporting ABCP, in form or in substance, that is subject to an asset 
quality test at the time of draw that precludes funding against assets 
that are 90 days or more past due or in default. Notwithstanding the 
preceding sentence, a liquidity facility is an eligible ABCP liquidity 
facility if the assets or exposures funded under the liquidity facility 
that do not meet

[[Page 203]]

the eligibility requirements are guaranteed by a sovereign that 
qualifies for a 20 percent risk weight or lower.
    Eligible clean-up call means a clean-up call that:
    (1) Is exercisable solely at the discretion of the originating FDIC-
supervised institution or servicer;
    (2) Is not structured to avoid allocating losses to securitization 
exposures held by investors or otherwise structured to provide credit 
enhancement to the securitization; and
    (3)(i) For a traditional securitization, is only exercisable when 10 
percent or less of the principal amount of the underlying exposures or 
securitization exposures (determined as of the inception of the 
securitization) is outstanding; or
    (ii) For a synthetic securitization, is only exercisable when 10 
percent or less of the principal amount of the reference portfolio of 
underlying exposures (determined as of the inception of the 
securitization) is outstanding.
    Eligible credit derivative means a credit derivative in the form of 
a credit default swap, nth-to-default swap, total return swap, or any 
other form of credit derivative approved by the FDIC, provided that:
    (1) The contract meets the requirements of an eligible guarantee and 
has been confirmed by the protection purchaser and the protection 
provider;
    (2) Any assignment of the contract has been confirmed by all 
relevant parties;
    (3) If the credit derivative is a credit default swap or nth-to-
default swap, the contract includes the following credit events:
    (i) Failure to pay any amount due under the terms of the reference 
exposure, subject to any applicable minimal payment threshold that is 
consistent with standard market practice and with a grace period that is 
closely in line with the grace period of the reference exposure; and
    (ii) Receivership, insolvency, liquidation, conservatorship or 
inability of the reference exposure issuer to pay its debts, or its 
failure or admission in writing of its inability generally to pay its 
debts as they become due, and similar events;
    (4) The terms and conditions dictating the manner in which the 
contract is to be settled are incorporated into the contract;
    (5) If the contract allows for cash settlement, the contract 
incorporates a robust valuation process to estimate loss reliably and 
specifies a reasonable period for obtaining post-credit event valuations 
of the reference exposure;
    (6) If the contract requires the protection purchaser to transfer an 
exposure to the protection provider at settlement, the terms of at least 
one of the exposures that is permitted to be transferred under the 
contract provide that any required consent to transfer may not be 
unreasonably withheld;
    (7) If the credit derivative is a credit default swap or nth-to-
default swap, the contract clearly identifies the parties responsible 
for determining whether a credit event has occurred, specifies that this 
determination is not the sole responsibility of the protection provider, 
and gives the protection purchaser the right to notify the protection 
provider of the occurrence of a credit event; and
    (8) If the credit derivative is a total return swap and the FDIC-
supervised institution records net payments received on the swap as net 
income, the FDIC-supervised institution records offsetting deterioration 
in the value of the hedged exposure (either through reductions in fair 
value or by an addition to reserves).
    Eligible credit reserves means all general allowances that have been 
established through a charge against earnings to cover estimated credit 
losses associated with on- or off-balance sheet wholesale and retail 
exposures, including the ALLL associated with such exposures, but 
excluding allocated transfer risk reserves established pursuant to 12 
U.S.C. 3904 and other specific reserves created against recognized 
losses.

Eligible guarantee means a guarantee that:

    (1) Is written;
    (2) Is either:
    (i) Unconditional, or
    (ii) A contingent obligation of the U.S. government or its agencies, 
the enforceability of which is dependent upon some affirmative action on 
the part of the beneficiary of the guarantee

[[Page 204]]

or a third party (for example, meeting servicing requirements);
    (3) Covers all or a pro rata portion of all contractual payments of 
the obligated party on the reference exposure;
    (4) Gives the beneficiary a direct claim against the protection 
provider;
    (5) Is not unilaterally cancelable by the protection provider for 
reasons other than the breach of the contract by the beneficiary;
    (6) Except for a guarantee by a sovereign, is legally enforceable 
against the protection provider in a jurisdiction where the protection 
provider has sufficient assets against which a judgment may be attached 
and enforced;
    (7) Requires the protection provider to make payment to the 
beneficiary on the occurrence of a default (as defined in the guarantee) 
of the obligated party on the reference exposure in a timely manner 
without the beneficiary first having to take legal actions to pursue the 
obligor for payment;
    (8) Does not increase the beneficiary's cost of credit protection on 
the guarantee in response to deterioration in the credit quality of the 
reference exposure;
    (9) Is not provided by an affiliate of the FDIC-supervised 
institution, unless the affiliate is an insured depository institution, 
foreign bank, securities broker or dealer, or insurance company that:
    (i) Does not control the FDIC-supervised institution; and
    (ii) Is subject to consolidated supervision and regulation 
comparable to that imposed on depository institutions, U.S. securities 
broker-dealers, or U.S. insurance companies (as the case may be); and
    (10) For purposes of Sec. Sec.  324.141 through 324.145 and subpart 
D of this part, is provided by an eligible guarantor.
    Eligible guarantor means:
    (1) A sovereign, the Bank for International Settlements, the 
International Monetary Fund, the European Central Bank, the European 
Commission, a Federal Home Loan Bank, Federal Agricultural Mortgage 
Corporation (Farmer Mac), a multilateral development bank (MDB), a 
depository institution, a bank holding company, a savings and loan 
holding company, a credit union, a foreign bank, or a qualifying central 
counterparty; or
    (2) An entity (other than a special purpose entity):
    (i) That at the time the guarantee is issued or anytime thereafter, 
has issued and outstanding an unsecured debt security without credit 
enhancement that is investment grade;
    (ii) Whose creditworthiness is not positively correlated with the 
credit risk of the exposures for which it has provided guarantees; and
    (iii) That is not an insurance company engaged predominately in the 
business of providing credit protection (such as a monoline bond insurer 
or re-insurer).
    Eligible margin loan means:
    (1) An extension of credit where:
    (i) The extension of credit is collateralized exclusively by liquid 
and readily marketable debt or equity securities, or gold;
    (ii) The collateral is marked to fair value daily, and the 
transaction is subject to daily margin maintenance requirements; and
    (iii) The extension of credit is conducted under an agreement that 
provides the FDIC-supervised institution the right to accelerate and 
terminate the extension of credit and to liquidate or set-off collateral 
promptly upon an event of default, including upon an event of 
receivership, insolvency, liquidation, conservatorship, or similar 
proceeding, of the counterparty, provided that, in any such case,
    (A) Any exercise of rights under the agreement will not be stayed or 
avoided under applicable law in the relevant jurisdictions, other than
    (1) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under 
any similar insolvency law applicable to GSEs,\5\ or laws

[[Page 205]]

of foreign jurisdictions that are substantially similar \6\ to the U.S. 
laws referenced in this paragraph (1)(iii)(A)(1) in order to facilitate 
the orderly resolution of the defaulting counterparty; or
---------------------------------------------------------------------------

    \5\ This requirement is met where all transactions under the 
agreement are (i) executed under U.S. law and (ii) constitute 
``securities contracts'' under section 555 of the Bankruptcy Code (11 
U.S.C. 555), qualified financial contracts under section 11(e)(8) of the 
Federal Deposit Insurance Act, or netting contracts between or among 
financial institutions under sections 401-407 of the Federal Deposit 
Insurance Corporation Improvement Act or the Federal Reserve Board's 
Regulation EE (12 CFR part 231).
    \6\ The FDIC expects to evaluate jointly with the Federal Reserve 
and the OCC whether foreign special resolution regimes meet the 
requirements of this paragraph.
---------------------------------------------------------------------------

    (2) Where the agreement is subject by its terms to, or incorporates, 
any of the laws referenced in paragraph (1)(iii)(A)(1) of this 
definition; and
    (B) The agreement may limit the right to accelerate, terminate, and 
close-out on a net basis all transactions under the agreement and to 
liquidate or set-off collateral promptly upon an event of default of the 
counterparty to the extent necessary for the counterparty to comply with 
the requirements of part 382 of this title, subpart I of part 252 of 
this title or part 47 of this title, as applicable.
    (2) In order to recognize an exposure as an eligible margin loan for 
purposes of this subpart, an FDIC-supervised institution must comply 
with the requirements of Sec.  324.3(b) with respect to that exposure.
    Eligible servicer cash advance facility means a servicer cash 
advance facility in which:
    (1) The servicer is entitled to full reimbursement of advances, 
except that a servicer may be obligated to make non-reimbursable 
advances for a particular underlying exposure if any such advance is 
contractually limited to an insignificant amount of the outstanding 
principal balance of that exposure;
    (2) The servicer's right to reimbursement is senior in right of 
payment to all other claims on the cash flows from the underlying 
exposures of the securitization; and
    (3) The servicer has no legal obligation to, and does not make 
advances to the securitization if the servicer concludes the advances 
are unlikely to be repaid.
    Employee stock ownership plan has the same meaning as in 29 CFR 
2550.407d-6.
    Equity derivative contract means an equity-linked swap, purchased 
equity-linked option, forward equity-linked contract, or any other 
instrument linked to equities that gives rise to similar counterparty 
credit risks.
    Equity exposure means:
    (1) A security or instrument (whether voting or non-voting) that 
represents a direct or an indirect ownership interest in, and is a 
residual claim on, the assets and income of a company, unless:
    (i) The issuing company is consolidated with the FDIC-supervised 
institution under GAAP;
    (ii) The FDIC-supervised institution is required to deduct the 
ownership interest from tier 1 or tier 2 capital under this part;
    (iii) The ownership interest incorporates a payment or other similar 
obligation on the part of the issuing company (such as an obligation to 
make periodic payments); or
    (iv) The ownership interest is a securitization exposure;
    (2) A security or instrument that is mandatorily convertible into a 
security or instrument described in paragraph (1) of this definition;
    (3) An option or warrant that is exercisable for a security or 
instrument described in paragraph (1) of this definition; or
    (4) Any other security or instrument (other than a securitization 
exposure) to the extent the return on the security or instrument is 
based on the performance of a security or instrument described in 
paragraph (1) of this definition.
    ERISA means the Employee Retirement Income and Security Act of 1974 
(29 U.S.C. 1001 et seq.).
    Exchange rate derivative contract means a cross-currency interest 
rate swap, forward foreign-exchange contract, currency option purchased, 
or any other instrument linked to exchange rates that gives rise to 
similar counterparty credit risks.
    Executive officer means a person who holds the title or, without 
regard to title, salary, or compensation, performs the function of one 
or more of the following positions: president, chief executive officer, 
executive chairman, chief operating officer, chief financial officer, 
chief investment officer, chief legal officer, chief lending officer, 
chief risk officer, or head of a major business

[[Page 206]]

line, and other staff that the board of directors of the FDIC-supervised 
institution deems to have equivalent responsibility.
    Expected credit loss (ECL) means:
    (1) For a wholesale exposure to a non-defaulted obligor or segment 
of non-defaulted retail exposures that is carried at fair value with 
gains and losses flowing through earnings or that is classified as held-
for-sale and is carried at the lower of cost or fair value with losses 
flowing through earnings, zero.
    (2) For all other wholesale exposures to non-defaulted obligors or 
segments of non-defaulted retail exposures, the product of the 
probability of default (PD) times the loss given default (LGD) times the 
exposure at default (EAD) for the exposure or segment.
    (3) For a wholesale exposure to a defaulted obligor or segment of 
defaulted retail exposures, the FDIC-supervised institution's impairment 
estimate for allowance purposes for the exposure or segment.
    (4) Total ECL is the sum of expected credit losses for all wholesale 
and retail exposures other than exposures for which the FDIC-supervised 
institution has applied the double default treatment in Sec.  324.135.
    Exposure amount means:
    (1) For the on-balance sheet component of an exposure (other than an 
available-for-sale or held-to-maturity security, if the FDIC-supervised 
institution has made an AOCI opt-out election (as defined in Sec.  
324.22(b)(2)); an OTC derivative contract; a repo-style transaction or 
an eligible margin loan for which the FDIC-supervised institution 
determines the exposure amount under Sec.  324.37; a cleared 
transaction; a default fund contribution; or a securitization exposure), 
the FDIC-supervised institution's carrying value of the exposure.
    (2) For a security (that is not a securitization exposure, an equity 
exposure, or preferred stock classified as an equity security under 
GAAP) classified as available-for-sale or held-to-maturity if the FDIC-
supervised institution has made an AOCI opt-out election (as defined in 
Sec.  324.22(b)(2)), the FDIC-supervised institution's carrying value 
(including net accrued but unpaid interest and fees) for the exposure 
less any net unrealized gains on the exposure and plus any net 
unrealized losses on the exposure.
    (3) For available-for-sale preferred stock classified as an equity 
security under GAAP if the FDIC-supervised institution has made an AOCI 
opt-out election (as defined in Sec.  324.22(b)(2)), the FDIC-supervised 
institution's carrying value of the exposure less any net unrealized 
gains on the exposure that are reflected in such carrying value but 
excluded from the FDIC-supervised institution's regulatory capital 
components.
    (4) For the off-balance sheet component of an exposure (other than 
an OTC derivative contract; a repo-style transaction or an eligible 
margin loan for which the FDIC-supervised institution calculates the 
exposure amount under Sec.  324.37; a cleared transaction; a default 
fund contribution; or a securitization exposure), the notional amount of 
the off-balance sheet component multiplied by the appropriate credit 
conversion factor (CCF) in Sec.  324.33.
    (5) For an exposure that is an OTC derivative contract, the exposure 
amount determined under Sec.  324.34;
    (6) For an exposure that is a cleared transaction, the exposure 
amount determined under Sec.  324.35.
    (7) For an exposure that is an eligible margin loan or repo-style 
transaction for which the FDIC-supervised institution calculates the 
exposure amount as provided in Sec.  324.37, the exposure amount 
determined under Sec.  324.37.
    (8) For an exposure that is a securitization exposure, the exposure 
amount determined under Sec.  324.42.
    FDIC-supervised institution means any bank or state savings 
association.
    Federal Deposit Insurance Act means the Federal Deposit Insurance 
Act (12 U.S.C. 1811 et seq.).
    Federal Deposit Insurance Corporation Improvement Act means the 
Federal Deposit Insurance Corporation Improvement Act of 1991 ((Pub. L. 
102-242, 105 Stat. 2236).
    Federal Reserve means the Board of Governors of the Federal Reserve 
System.
    Financial collateral means collateral:
    (1) In the form of:
    (i) Cash on deposit with the FDIC-supervised institution (including 
cash

[[Page 207]]

held for the FDIC-supervised institution by a third-party custodian or 
trustee);
    (ii) Gold bullion;
    (iii) Long-term debt securities that are not resecuritization 
exposures and that are investment grade;
    (iv) Short-term debt instruments that are not resecuritization 
exposures and that are investment grade;
    (v) Equity securities that are publicly traded;
    (vi) Convertible bonds that are publicly traded; or
    (vii) Money market fund shares and other mutual fund shares if a 
price for the shares is publicly quoted daily; and
    (2) In which the FDIC-supervised institution has a perfected, first-
priority security interest or, outside of the United States, the legal 
equivalent thereof (with the exception of cash on deposit and 
notwithstanding the prior security interest of any custodial agent).
    Financial institution means:
    (1) A bank holding company; savings and loan holding company; 
nonbank financial institution supervised by the Federal Reserve under 
Title I of the Dodd-Frank Act; depository institution; foreign bank; 
credit union; industrial loan company, industrial bank, or other similar 
institution described in section 2 of the Bank Holding Company Act; 
national association, state member bank, or state non-member bank that 
is not a depository institution; insurance company; securities holding 
company as defined in section 618 of the Dodd-Frank Act; broker or 
dealer registered with the SEC under section 15 of the Securities 
Exchange Act; futures commission merchant as defined in section 1a of 
the Commodity Exchange Act; swap dealer as defined in section 1a of the 
Commodity Exchange Act; or security-based swap dealer as defined in 
section 3 of the Securities Exchange Act;
    (2) Any designated financial market utility, as defined in section 
803 of the Dodd-Frank Act;
    (3) Any entity not domiciled in the United States (or a political 
subdivision thereof) that is supervised and regulated in a manner 
similar to entities described in paragraphs (1) or (2) of this 
definition; or
    (4) Any other company:
    (i) Of which the FDIC-supervised institution owns:
    (A) An investment in GAAP equity instruments of the company with an 
adjusted carrying value or exposure amount equal to or greater than $10 
million; or
    (B) More than 10 percent of the company's issued and outstanding 
common shares (or similar equity interest), and
    (ii) Which is predominantly engaged in the following activities:
    (A) Lending money, securities or other financial instruments, 
including servicing loans;
    (B) Insuring, guaranteeing, indemnifying against loss, harm, damage, 
illness, disability, or death, or issuing annuities;
    (C) Underwriting, dealing in, making a market in, or investing as 
principal in securities or other financial instruments; or
    (D) Asset management activities (not including investment or 
financial advisory activities).
    (5) For the purposes of this definition, a company is 
``predominantly engaged'' in an activity or activities if:
    (i) 85 percent or more of the total consolidated annual gross 
revenues (as determined in accordance with applicable accounting 
standards) of the company is either of the two most recent calendar 
years were derived, directly or indirectly, by the company on a 
consolidated basis from the activities; or
    (ii) 85 percent or more of the company's consolidated total assets 
(as determined in accordance with applicable accounting standards) as of 
the end of either of the two most recent calendar years were related to 
the activities.
    (6) Any other company that the FDIC may determine is a financial 
institution based on activities similar in scope, nature, or operation 
to those of the entities included in paragraphs (1) through (4) of this 
definition.
    (7) For purposes of this part, ``financial institution'' does not 
include the following entities:
    (i) GSEs;
    (ii) Small business investment companies, as defined in section 102 
of the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.);

[[Page 208]]

    (iii) Entities designated as Community Development Financial 
Institutions (CDFIs) under 12 U.S.C. 4701 et seq. and 12 CFR part 1805;
    (iv) Entities registered with the SEC under the Investment Company 
Act or foreign equivalents thereof;
    (v) Entities to the extent that the FDIC-supervised institution's 
investment in such entities would qualify as a community development 
investment under section 24 (Eleventh) of the National Bank Act; and
    (vi) An employee benefit plan as defined in paragraphs (3) and (32) 
of section 3 of ERISA, a ``governmental plan'' (as defined in 29 U.S.C. 
1002(32)) that complies with the tax deferral qualification requirements 
provided in the Internal Revenue Code, or any similar employee benefit 
plan established under the laws of a foreign jurisdiction.
    First-lien residential mortgage exposure means a residential 
mortgage exposure secured by a first lien.
    Foreign bank means a foreign bank as defined in Sec.  211.2 of the 
Federal Reserve's Regulation K (12 CFR 211.2) (other than a depository 
institution).
    Forward agreement means a legally binding contractual obligation to 
purchase assets with certain drawdown at a specified future date, not 
including commitments to make residential mortgage loans or forward 
foreign exchange contracts.
    GAAP means generally accepted accounting principles as used in the 
United States.
    Gain-on-sale means an increase in the equity capital of an FDIC-
supervised institution (as reported on Schedule RC of the Call Report) 
resulting from a traditional securitization (other than an increase in 
equity capital resulting from the FDIC-supervised institution's receipt 
of cash in connection with the securitization or reporting of a mortgage 
servicing asset on Schedule RC of the Call Report.
    General obligation means a bond or similar obligation that is backed 
by the full faith and credit of a public sector entity (PSE).
    Government-sponsored enterprise (GSE) means an entity established or 
chartered by the U.S. government to serve public purposes specified by 
the U.S. Congress but whose debt obligations are not explicitly 
guaranteed by the full faith and credit of the U.S. government.
    Guarantee means a financial guarantee, letter of credit, insurance, 
or other similar financial instrument (other than a credit derivative) 
that allows one party (beneficiary) to transfer the credit risk of one 
or more specific exposures (reference exposure) to another party 
(protection provider).
    High volatility commercial real estate (HVCRE) exposure means a 
credit facility that, prior to conversion to permanent financing, 
finances or has financed the acquisition, development, or construction 
(ADC) of real property, unless the facility finances:
    (1) One- to four-family residential properties;
    (2) Real property that:
    (i) Would qualify as an investment in community development under 12 
U.S.C. 338a or 12 U.S.C. 24 (Eleventh), as applicable, or as a 
``qualified investment'' under 12 CFR part 345, and
    (ii) Is not an ADC loan to any entity described in 12 CFR 
345.12(g)(3), unless it is otherwise described in paragraph (1), (2)(i), 
(3) or (4) of this definition;
    (3) The purchase or development of agricultural land, which includes 
all land known to be used or usable for agricultural purposes (such as 
crop and livestock production), provided that the valuation of the 
agricultural land is based on its value for agricultural purposes and 
the valuation does not take into consideration any potential use of the 
land for non-agricultural commercial development or residential 
development; or
    (4) Commercial real estate projects in which:
    (i) The loan-to-value ratio is less than or equal to the applicable 
maximum supervisory loan-to-value ratio in the FDIC's real estate 
lending standards at 12 CFR part 365, subpart A (state nonmember banks), 
12 CFR 390.264 and 390.265 (state savings associations);
    (ii) The borrower has contributed capital to the project in the form 
of cash or unencumbered readily marketable assets (or has paid 
development expenses out-of-pocket) of at least 15

[[Page 209]]

percent of the real estate's appraised ``as completed'' value; and
    (iii) The borrower contributed the amount of capital required by 
paragraph (4)(ii) of this definition before the FDIC-supervised 
institution advances funds under the credit facility, and the capital 
contributed by the borrower, or internally generated by the project, is 
contractually required to remain in the project throughout the life of 
the project. The life of a project concludes only when the credit 
facility is converted to permanent financing or is sold or paid in full. 
Permanent financing may be provided by the FDIC-supervised institution 
that provided the ADC facility as long as the permanent financing is 
subject to the FDIC-supervised institution's underwriting criteria for 
long-term mortgage loans.
    Home country means the country where an entity is incorporated, 
chartered, or similarly established.
    Identified losses means:
    (1) When measured as of the date of examination of an FDIC-
supervised institution, those items that have been determined by an 
evaluation made by a state or Federal examiner as of that date to be 
chargeable against income, capital and/or general valuation allowances 
such as the allowance for loan and lease losses (examples of identified 
losses would be assets classified loss, off-balance sheet items 
classified loss, any provision expenses that are necessary for the FDIC-
supervised institution to record in order to replenish its general 
valuation allowances to an adequate level, liabilities not shown on the 
FDIC-supervised institution's books, estimated losses in contingent 
liabilities, and differences in accounts which represent shortages); and
    (2) When measured as of any other date, those items:
    (i) That have been determined--
    (A) By an evaluation made by a state or Federal examiner at the most 
recent examination of an FDIC-supervised institution to be chargeable 
against income, capital and/or general valuation allowances; or
    (B) By evaluations made by the FDIC-supervised institution since its 
most recent examination to be chargeable against income, capital and/or 
general valuation allowances; and
    (ii) For which the appropriate accounting entries to recognize the 
loss have not yet been made on the FDIC-supervised institution's books 
nor has the item been collected or otherwise settled.
    Indirect exposure means an exposure that arises from the FDIC-
supervised institution's investment in an investment fund which holds an 
investment in the FDIC-supervised institution's own capital instrument 
or an investment in the capital of an unconsolidated financial 
institution.
    Insurance company means an insurance company as defined in section 
201 of the Dodd-Frank Act (12 U.S.C. 5381).
    Insurance underwriting company means an insurance company as defined 
in section 201 of the Dodd-Frank Act (12 U.S.C. 5381) that engages in 
insurance underwriting activities.
    Insured depository institution means an insured depository 
institution as defined in section 3 of the Federal Deposit Insurance 
Act.
    Interest rate derivative contract means a single-currency interest 
rate swap, basis swap, forward rate agreement, purchased interest rate 
option, when-issued securities, or any other instrument linked to 
interest rates that gives rise to similar counterparty credit risks.
    International Lending Supervision Act means the International 
Lending Supervision Act of 1983 (12 U.S.C. 3901 et seq.).
    Investing bank means, with respect to a securitization, an FDIC-
supervised institution that assumes the credit risk of a securitization 
exposure (other than an originating FDIC-supervised institution of the 
securitization). In the typical synthetic securitization, the investing 
FDIC-supervised institution sells credit protection on a pool of 
underlying exposures to the originating FDIC-supervised institution.
    Investment Company Act means the Investment Company Act of 1940 (15 
U.S.C. 80 a-1 et seq.)
    Investment fund means a company:
    (1) Where all or substantially all of the assets of the company are 
financial assets; and
    (2) That has no material liabilities.

[[Page 210]]

    Investment grade means that the entity to which the FDIC-supervised 
institution is exposed through a loan or security, or the reference 
entity with respect to a credit derivative, has adequate capacity to 
meet financial commitments for the projected life of the asset or 
exposure. Such an entity or reference entity has adequate capacity to 
meet financial commitments if the risk of its default is low and the 
full and timely repayment of principal and interest is expected.
    Investment in the capital of an unconsolidated financial institution 
means a net long position calculated in accordance with Sec.  324.22(h) 
in an instrument that is recognized as capital for regulatory purposes 
by the primary supervisor of an unconsolidated regulated financial 
institution and is an instrument that is part of the GAAP equity of an 
unconsolidated unregulated financial institution, including direct, 
indirect, and synthetic exposures to capital instruments, excluding 
underwriting positions held by the FDIC-supervised institution for five 
or fewer business days.
    Investment in the FDIC-supervised institution's own capital 
instrument means a net long position calculated in accordance with Sec.  
324.22(h) in the FDIC-supervised institution's own common stock 
instrument, own additional tier 1 capital instrument or own tier 2 
capital instrument, including direct, indirect, or synthetic exposures 
to such capital instruments. An investment in the FDIC-supervised 
institution's own capital instrument includes any contractual obligation 
to purchase such capital instrument.
    Junior-lien residential mortgage exposure means a residential 
mortgage exposure that is not a first-lien residential mortgage 
exposure.
    Main index means the Standard & Poor's 500 Index, the FTSE All-World 
Index, and any other index for which the FDIC-supervised institution can 
demonstrate to the satisfaction of the FDIC that the equities 
represented in the index have comparable liquidity, depth of market, and 
size of bid-ask spreads as equities in the Standard & Poor's 500 Index 
and FTSE All-World Index.
    Market risk FDIC-supervised institution means an FDIC-supervised 
institution that is described in Sec.  324.201(b).
    Money market fund means an investment fund that is subject to 17 CFR 
270.2a-7 or any foreign equivalent thereof.
    Mortgage servicing assets (MSAs) means the contractual rights owned 
by an FDIC-supervised institution to service for a fee mortgage loans 
that are owned by others.
    Multilateral development bank (MDB) means the International Bank for 
Reconstruction and Development, the Multilateral Investment Guarantee 
Agency, the International Finance Corporation, the Inter-American 
Development Bank, the Asian Development Bank, the African Development 
Bank, the European Bank for Reconstruction and Development, the European 
Investment Bank, the European Investment Fund, the Nordic Investment 
Bank, the Caribbean Development Bank, the Islamic Development Bank, the 
Council of Europe Development Bank, and any other multilateral lending 
institution or regional development bank in which the U.S. government is 
a shareholder or contributing member or which the FDIC determines poses 
comparable credit risk.
    National Bank Act means the National Bank Act (12 U.S.C. 1 et seq.).
    Netting set means a group of transactions with a single counterparty 
that are subject to a qualifying master netting agreement or a 
qualifying cross-product master netting agreement. For purposes of 
calculating risk-based capital requirements using the internal models 
methodology in subpart E of this part, this term does not cover a 
transaction:
    (1) That is not subject to such a master netting agreement; or
    (2) Where the FDIC-supervised institution has identified specific 
wrong-way risk.
    Non-significant investment in the capital of an unconsolidated 
financial institution means an investment in the capital of an 
unconsolidated financial institution where the FDIC-supervised 
institution owns 10 percent or less of the issued and outstanding common 
stock of the unconsolidated financial institution.

[[Page 211]]

    N\th\-to-default credit derivative means a credit derivative that 
provides credit protection only for the nth-defaulting reference 
exposure in a group of reference exposures.
    OCC means the Office of the Comptroller of the Currency, U.S. 
Treasury.
    Operating entity means a company established to conduct business 
with clients with the intention of earning a profit in its own right.
    Original maturity with respect to an off-balance sheet commitment 
means the length of time between the date a commitment is issued and:
    (1) For a commitment that is not subject to extension or renewal, 
the stated expiration date of the commitment; or
    (2) For a commitment that is subject to extension or renewal, the 
earliest date on which the FDIC-supervised institution can, at its 
option, unconditionally cancel the commitment.
    Originating FDIC-supervised institution, with respect to a 
securitization, means an FDIC-supervised institution that:
    (1) Directly or indirectly originated or securitized the underlying 
exposures included in the securitization; or
    (2) Serves as an ABCP program sponsor to the securitization.
    Over-the-counter (OTC) derivative contract means a derivative 
contract that is not a cleared transaction. An OTC derivative includes a 
transaction:
    (1) Between an FDIC-supervised institution that is a clearing member 
and a counterparty where the FDIC-supervised institution is acting as a 
financial intermediary and enters into a cleared transaction with a CCP 
that offsets the transaction with the counterparty; or
    (2) In which an FDIC-supervised institution that is a clearing 
member provides a CCP a guarantee on the performance of the counterparty 
to the transaction.
    Performance standby letter of credit (or performance bond) means an 
irrevocable obligation of an FDIC-supervised institution to pay a third-
party beneficiary when a customer (account party) fails to perform on 
any contractual nonfinancial or commercial obligation. To the extent 
permitted by law or regulation, performance standby letters of credit 
include arrangements backing, among other things, subcontractors' and 
suppliers' performance, labor and materials contracts, and construction 
bids.
    Pre-sold construction loan means any one-to-four family residential 
construction loan to a builder that meets the requirements of section 
618(a)(1) or (2) of the Resolution Trust Corporation Refinancing, 
Restructuring, and Improvement Act of 1991 (Pub. L. 102-233, 105 Stat. 
1761) and the following criteria:
    (1) The loan is made in accordance with prudent underwriting 
standards, meaning that the FDIC-supervised institution has obtained 
sufficient documentation that the buyer of the home has a legally 
binding written sales contract and has a firm written commitment for 
permanent financing of the home upon completion;
    (2) The purchaser is an individual(s) that intends to occupy the 
residence and is not a partnership, joint venture, trust, corporation, 
or any other entity (including an entity acting as a sole 
proprietorship) that is purchasing one or more of the residences for 
speculative purposes;
    (3) The purchaser has entered into a legally binding written sales 
contract for the residence;
    (4) The purchaser has not terminated the contract;
    (5) The purchaser has made a substantial earnest money deposit of no 
less than 3 percent of the sales price, which is subject to forfeiture 
if the purchaser terminates the sales contract; provided that, the 
earnest money deposit shall not be subject to forfeiture by reason of 
breach or termination of the sales contract on the part of the builder;
    (6) The earnest money deposit must be held in escrow by the FDIC-
supervised institution or an independent party in a fiduciary capacity, 
and the escrow agreement must provide that in an event of default 
arising from the cancellation of the sales contract by the purchaser of 
the residence, the escrow funds shall be used to defray any cost 
incurred by the FDIC-supervised institution;
    (7) The builder must incur at least the first 10 percent of the 
direct costs

[[Page 212]]

of construction of the residence (that is, actual costs of the land, 
labor, and material) before any drawdown is made under the loan;
    (8) The loan may not exceed 80 percent of the sales price of the 
presold residence; and
    (9) The loan is not more than 90 days past due, or on nonaccrual.
    Protection amount (P) means, with respect to an exposure hedged by 
an eligible guarantee or eligible credit derivative, the effective 
notional amount of the guarantee or credit derivative, reduced to 
reflect any currency mismatch, maturity mismatch, or lack of 
restructuring coverage (as provided in Sec.  324.36 or Sec.  324.134, as 
appropriate).
    Publicly-traded means traded on:
    (1) Any exchange registered with the SEC as a national securities 
exchange under section 6 of the Securities Exchange Act; or
    (2) Any non-U.S.-based securities exchange that:
    (i) Is registered with, or approved by, a national securities 
regulatory authority; and
    (ii) Provides a liquid, two-way market for the instrument in 
question.
    Public sector entity (PSE) means a state, local authority, or other 
governmental subdivision below the sovereign level.
    Qualifying central counterparty (QCCP) means a central counterparty 
that:
    (1)(i) Is a designated financial market utility (FMU) under Title 
VIII of the Dodd-Frank Act;
    (ii) If not located in the United States, is regulated and 
supervised in a manner equivalent to a designated FMU; or
    (iii) Meets the following standards:
    (A) The central counterparty requires all parties to contracts 
cleared by the counterparty to be fully collateralized on a daily basis;
    (B) The FDIC-supervised institution demonstrates to the satisfaction 
of the FDIC that the central counterparty:
    (1) Is in sound financial condition;
    (2) Is subject to supervision by the Federal Reserve, the CFTC, or 
the Securities Exchange Commission (SEC), or, if the central 
counterparty is not located in the United States, is subject to 
effective oversight by a national supervisory authority in its home 
country; and
    (3) Meets or exceeds the risk-management standards for central 
counterparties set forth in regulations established by the Federal 
Reserve, the CFTC, or the SEC under Title VII or Title VIII of the Dodd-
Frank Act; or if the central counterparty is not located in the United 
States, meets or exceeds similar risk-management standards established 
under the law of its home country that are consistent with international 
standards for central counterparty risk management as established by the 
relevant standard setting body of the Bank of International Settlements; 
and
    (2)(i) Provides the FDIC-supervised institution with the central 
counterparty's hypothetical capital requirement or the information 
necessary to calculate such hypothetical capital requirement, and other 
information the FDIC-supervised institution is required to obtain under 
Sec. Sec.  324.35(d)(3) and 324.133(d)(3);
    (ii) Makes available to the FDIC and the CCP's regulator the 
information described in paragraph (2)(i) of this definition; and
    (iii) Has not otherwise been determined by the FDIC to not be a QCCP 
due to its financial condition, risk profile, failure to meet 
supervisory risk management standards, or other weaknesses or 
supervisory concerns that are inconsistent with the risk weight assigned 
to qualifying central counterparties under Sec. Sec.  324.35 and 
324.133.
    (3) Exception. A QCCP that fails to meet the requirements of a QCCP 
in the future may still be treated as a QCCP under the conditions 
specified in Sec.  324.3(f).
    Qualifying master netting agreement means a written, legally 
enforceable agreement provided that:
    (1) The agreement creates a single legal obligation for all 
individual transactions covered by the agreement upon an event of 
default following any stay permitted by paragraph (2) of this 
definition, including upon an event of receivership, conservatorship, 
insolvency, liquidation, or similar proceeding, of the counterparty;

[[Page 213]]

    (2) The agreement provides the FDIC-supervised institution the right 
to accelerate, terminate, and close-out on a net basis all transactions 
under the agreement and to liquidate or set-off collateral promptly upon 
an event of default, including upon an event of receivership, 
conservatorship, insolvency, liquidation, or similar proceeding, of the 
counterparty, provided that, in any such case,
    (i) Any exercise of rights under the agreement will not be stayed or 
avoided under applicable law in the relevant jurisdictions, other than:
    (A) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under 
any similar insolvency law applicable to GSEs, or laws of foreign 
jurisdictions that are substantially similar \7\ to the U.S. laws 
referenced in this paragraph (2)(i)(A) in order to facilitate the 
orderly resolution of the defaulting counterparty; or
---------------------------------------------------------------------------

    \7\ The FDIC expects to evaluate jointly with the Federal Reserve 
and the OCC whether foreign special resolution regimes meet the 
requirements of this paragraph.
---------------------------------------------------------------------------

    (B) Where the agreement is subject by its terms to, or incorporates, 
any of the laws referenced in paragraph (2)(i)(A) of this definition; 
and
    (ii) The agreement may limit the right to accelerate, terminate, and 
close-out on a net basis all transactions under the agreement and to 
liquidate or set-off collateral promptly upon an event of default of the 
counterparty to the extent necessary for the counterparty to comply with 
the requirements of part 382 of this title, subpart I of part 252 of 
this title or part 47 of this title, as applicable;
    (3) The agreement does not contain a walkaway clause (that is, a 
provision that permits a non-defaulting counterparty to make a lower 
payment than it otherwise would make under the agreement, 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 
agreement); and
    (4) In order to recognize an agreement as a qualifying master 
netting agreement for purposes of this subpart, an FDIC-supervised 
institution must comply with the requirements of Sec.  324.3(d) with 
respect to that agreement.
    Regulated financial institution means a financial institution 
subject to consolidated supervision and regulation comparable to that 
imposed on the following U.S. financial institutions: Depository 
institutions, depository institution holding companies, nonbank 
financial companies supervised by the Federal Reserve, designated 
financial market utilities, securities broker-dealers, credit unions, or 
insurance companies.
    Repo-style transaction means a repurchase or reverse repurchase 
transaction, or a securities borrowing or securities lending 
transaction, including a transaction in which the FDIC-supervised 
institution acts as agent for a customer and indemnifies the customer 
against loss, provided that:
    (1) The transaction is based solely on liquid and readily marketable 
securities, cash, or gold;
    (2) The transaction is marked-to-fair value daily and subject to 
daily margin maintenance requirements;
    (3)(i) The transaction is a ``securities contract'' or ``repurchase 
agreement'' under section 555 or 559, respectively, of the Bankruptcy 
Code (11 U.S.C. 555 or 559), a qualified financial contract under 
section 11(e)(8) of the Federal Deposit Insurance Act, or a netting 
contract between or among financial institutions under sections 401-407 
of the Federal Deposit Insurance Corporation Improvement Act or the 
Federal Reserve's Regulation EE (12 CFR part 231); or
    (ii) If the transaction does not meet the criteria set forth in 
paragraph (3)(i) of this definition, then either:
    (A) The transaction is executed under an agreement that provides the 
FDIC-supervised institution the right to accelerate, terminate, and 
close-out the transaction on a net basis and to liquidate or set-off 
collateral promptly upon an event of default, including upon an event of 
receivership, insolvency, liquidation, or similar proceeding, of the 
counterparty, provided that, in any such case,

[[Page 214]]

    (1) Any exercise of rights under the agreement will not be stayed or 
avoided under applicable law in the relevant jurisdictions, other than
    (i) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under 
any similar insolvency law applicable to GSEs, or laws of foreign 
jurisdictions that are substantially similar \8\ to the U.S. laws 
referenced in this paragraph (3)(ii)(A)(1)(i) in order to facilitate the 
orderly resolution of the defaulting counterparty;
---------------------------------------------------------------------------

    \8\ The FDIC expects to evaluate jointly with the Federal Reserve 
and the OCC whether foreign special resolution regimes meet the 
requirements of this paragraph.
---------------------------------------------------------------------------

    (ii) Where the agreement is subject by its terms to, or 
incorporates, any of the laws referenced in paragraph (3)(ii)(A)(1)(i) 
of this definition; and
    (2) The agreement may limit the right to accelerate, terminate, and 
close-out on a net basis all transactions under the agreement and to 
liquidate or set-off collateral promptly upon an event of default of the 
counterparty to the extent necessary for the counterparty to comply with 
the requirements of part 382 of this title, subpart I of part 252 of 
this title or part 47 of this title, as applicable; or
    (B) The transaction is:
    (1) Either overnight or unconditionally cancelable at any time by 
the FDIC-supervised institution; and
    (2) Executed under an agreement that provides the FDIC-supervised 
institution the right to accelerate, terminate, and close-out the 
transaction on a net basis and to liquidate or set off collateral 
promptly upon an event of counterparty default; and
    (4) In order to recognize an exposure as a repo-style transaction 
for purposes of this subpart, an FDIC-supervised institution must comply 
with the requirements of Sec.  324.3(e) of this part with respect to 
that exposure.
    Resecuritization means a securitization which has more than one 
underlying exposure and in which one or more of the underlying exposures 
is a securitization exposure.
    Resecuritization exposure means:
    (1) An on- or off-balance sheet exposure to a resecuritization;
    (2) An exposure that directly or indirectly references a 
resecuritization exposure.
    (3) An exposure to an asset-backed commercial paper program is not a 
resecuritization exposure if either:
    (i) The program-wide credit enhancement does not meet the definition 
of a resecuritization exposure; or
    (ii) The entity sponsoring the program fully supports the commercial 
paper through the provision of liquidity so that the commercial paper 
holders effectively are exposed to the default risk of the sponsor 
instead of the underlying exposures.
    Residential mortgage exposure means an exposure (other than a 
securitization exposure, equity exposure, statutory multifamily 
mortgage, or presold construction loan):
    (1)(i) That is primarily secured by a first or subsequent lien on 
one-to-four family residential property; or
    (ii) With an original and outstanding amount of $1 million or less 
that is primarily secured by a first or subsequent lien on residential 
property that is not one-to-four family; and
    (2) For purposes of calculating capital requirements under subpart E 
of this part, managed as part of a segment of exposures with homogeneous 
risk characteristics and not on an individual-exposure basis.
    Revenue obligation means a bond or similar obligation that is an 
obligation of a PSE, but which the PSE is committed to repay with 
revenues from the specific project financed rather than general tax 
funds.
    Savings and loan holding company means a savings and loan holding 
company as defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 
1467a).
    Securities and Exchange Commission (SEC) means the U.S. Securities 
and Exchange Commission.
    Securities Exchange Act means the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.).
    Securitization exposure means:
    (1) An on-balance sheet or off-balance sheet credit exposure 
(including credit-enhancing representations and warranties) that arises 
from a traditional securitization or synthetic

[[Page 215]]

securitization (including a resecuritization), or
    (2) An exposure that directly or indirectly references a 
securitization exposure described in paragraph (1) of this definition.
    Securitization special purpose entity (securitization SPE) means a 
corporation, trust, or other entity organized for the specific purpose 
of holding underlying exposures of a securitization, the activities of 
which are limited to those appropriate to accomplish this purpose, and 
the structure of which is intended to isolate the underlying exposures 
held by the entity from the credit risk of the seller of the underlying 
exposures to the entity.
    Separate account means a legally segregated pool of assets owned and 
held by an insurance company and maintained separately from the 
insurance company's general account assets for the benefit of an 
individual contract holder. To be a separate account:
    (1) The account must be legally recognized as a separate account 
under applicable law;
    (2) The assets in the account must be insulated from general 
liabilities of the insurance company under applicable law in the event 
of the insurance company's insolvency;
    (3) The insurance company must invest the funds within the account 
as directed by the contract holder in designated investment alternatives 
or in accordance with specific investment objectives or policies; and
    (4) All investment gains and losses, net of contract fees and 
assessments, must be passed through to the contract holder, provided 
that the contract may specify conditions under which there may be a 
minimum guarantee but must not include contract terms that limit the 
maximum investment return available to the policyholder.
    Servicer cash advance facility means a facility under which the 
servicer of the underlying exposures of a securitization may advance 
cash to ensure an uninterrupted flow of payments to investors in the 
securitization, including advances made to cover foreclosure costs or 
other expenses to facilitate the timely collection of the underlying 
exposures.
    Significant investment in the capital of an unconsolidated financial 
institution means an investment in the capital of an unconsolidated 
financial institution where the FDIC-supervised institution owns more 
than 10 percent of the issued and outstanding common stock of the 
unconsolidated financial institution.
    Small Business Act means the Small Business Act (15 U.S.C. 631 et 
seq.).
    Small Business Investment Act means the Small Business Investment 
Act of 1958 (15 U.S.C. 681 et seq.).
    Sovereign means a central government (including the U.S. government) 
or an agency, department, ministry, or central bank of a central 
government.
    Sovereign default means noncompliance by a sovereign with its 
external debt service obligations or the inability or unwillingness of a 
sovereign government to service an existing loan according to its 
original terms, as evidenced by failure to pay principal and interest 
timely and fully, arrearages, or restructuring.
    Sovereign exposure means:
    (1) A direct exposure to a sovereign; or
    (2) An exposure directly and unconditionally backed by the full 
faith and credit of a sovereign.
    Specific wrong-way risk means wrong-way risk that arises when 
either:
    (1) The counterparty and issuer of the collateral supporting the 
transaction; or
    (2) The counterparty and the reference asset of the transaction, are 
affiliates or are the same entity.
    Standardized market risk-weighted assets means the standardized 
measure for market risk calculated under Sec.  324.204 multiplied by 
12.5.
    Standardized total risk-weighted assets means:
    (1) The sum of:
    (i) Total risk-weighted assets for general credit risk as calculated 
under Sec.  324.31;
    (ii) Total risk-weighted assets for cleared transactions and default 
fund contributions as calculated under Sec.  324.35;
    (iii) Total risk-weighted assets for unsettled transactions as 
calculated under Sec.  324.38;

[[Page 216]]

    (iv) Total risk-weighted assets for securitization exposures as 
calculated under Sec.  324.42;
    (v) Total risk-weighted assets for equity exposures as calculated 
under Sec. Sec.  324.52 and 324.53; and
    (vi) For a market risk FDIC-supervised institution only, 
standardized market risk-weighted assets; minus
    (2) Any amount of the FDIC-supervised institution's allowance for 
loan and lease losses that is not included in tier 2 capital and any 
amount of allocated transfer risk reserves.
    State savings association means a 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 
Corporation. It includes 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 determine to be operating substantially in the 
same manner as a state savings association.
    Statutory multifamily mortgage means a loan secured by a multifamily 
residential property that meets the requirements under section 618(b)(1) 
of the Resolution Trust Corporation Refinancing, Restructuring, and 
Improvement Act of 1991, and that meets the following criteria: \9\
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    \9\ The types of loans that qualify as loans secured by multifamily 
residential properties are listed in the instructions for preparation of 
the Call Report.
---------------------------------------------------------------------------

    (1) The loan is made in accordance with prudent underwriting 
standards;
    (2) The principal amount of the loan at origination does not exceed 
80 percent of the value of the property (or 75 percent of the value of 
the property if the loan is based on an interest rate that changes over 
the term of the loan) where the value of the property is the lower of 
the acquisition cost of the property or the appraised (or, if 
appropriate, evaluated) value of the property;
    (3) All principal and interest payments on the loan must have been 
made on a timely basis in accordance with the terms of the loan for at 
least one year prior to applying a 50 percent risk weight to the loan, 
or in the case where an existing owner is refinancing a loan on the 
property, all principal and interest payments on the loan being 
refinanced must have been made on a timely basis in accordance with the 
terms of the loan for at least one year prior to applying a 50 percent 
risk weight to the loan;
    (4) Amortization of principal and interest on the loan must occur 
over a period of not more than 30 years and the minimum original 
maturity for repayment of principal must not be less than 7 years;
    (5) Annual net operating income (before making any payment on the 
loan) generated by the property securing the loan during its most recent 
fiscal year must not be less than 120 percent of the loan's current 
annual debt service (or 115 percent of current annual debt service if 
the loan is based on an interest rate that changes over the term of the 
loan) or, in the case of a cooperative or other not-for-profit housing 
project, the property must generate sufficient cash flow to provide 
comparable protection to the FDIC-supervised institution; and
    (6) The loan is not more than 90 days past due, or on nonaccrual.
    Subsidiary means, with respect to a company, a company controlled by 
that company.
    Synthetic exposure means an exposure whose value is linked to the 
value of an investment in the FDIC-supervised institution's own capital 
instrument or to the value of an investment in the capital of an 
unconsolidated financial institution.
    Synthetic securitization means a transaction in which:
    (1) All or a portion of the credit risk of one or more underlying 
exposures is retained or transferred to one or more third parties 
through the use of one or more credit derivatives or guarantees (other 
than a guarantee that transfers only the credit risk of an individual 
retail exposure);

[[Page 217]]

    (2) The credit risk associated with the underlying exposures has 
been separated into at least two tranches reflecting different levels of 
seniority;
    (3) Performance of the securitization exposures depends upon the 
performance of the underlying exposures; and
    (4) All or substantially all of the underlying exposures are 
financial exposures (such as loans, commitments, credit derivatives, 
guarantees, receivables, asset-backed securities, mortgage-backed 
securities, other debt securities, or equity securities).
    Tangible capital means the amount of core capital (Tier 1 capital), 
as defined in accordance with Sec.  324.2, plus the amount of 
outstanding perpetual preferred stock (including related surplus) not 
included in Tier 1 capital.
    Tangible equity means the amount of Tier 1 capital, as calculated in 
accordance with Sec.  324.2, plus the amount of outstanding perpetual 
preferred stock (including related surplus) not included in Tier 1 
capital.
    Tier 1 capital means the sum of common equity tier 1 capital and 
additional tier 1 capital.
    Tier 1 minority interest means the tier 1 capital of a consolidated 
subsidiary of an FDIC-supervised institution that is not owned by the 
FDIC-supervised institution.
    Tier 2 capital is defined in Sec.  324.20(d).
    Total capital means the sum of tier 1 capital and tier 2 capital.
    Total capital minority interest means the total capital of a 
consolidated subsidiary of an FDIC-supervised institution that is not 
owned by the FDIC-supervised institution.
    Total leverage exposure is defined in Sec.  324.10(c)(4)(ii).
    Traditional securitization means a transaction in which:
    (1) All or a portion of the credit risk of one or more underlying 
exposures is transferred to one or more third parties other than through 
the use of credit derivatives or guarantees;
    (2) The credit risk associated with the underlying exposures has 
been separated into at least two tranches reflecting different levels of 
seniority;
    (3) Performance of the securitization exposures depends upon the 
performance of the underlying exposures;
    (4) All or substantially all of the underlying exposures are 
financial exposures (such as loans, commitments, credit derivatives, 
guarantees, receivables, asset-backed securities, mortgage-backed 
securities, other debt securities, or equity securities);
    (5) The underlying exposures are not owned by an operating company;
    (6) The underlying exposures are not owned by a small business 
investment company defined in section 302 of the Small Business 
Investment Act;
    (7) The underlying exposures are not owned by a firm an investment 
in which qualifies as a community development investment under section 
24 (Eleventh) of the National Bank Act;
    (8) The FDIC may determine that a transaction in which the 
underlying exposures are owned by an investment firm that exercises 
substantially unfettered control over the size and composition of its 
assets, liabilities, and off-balance sheet exposures is not a 
traditional securitization based on the transaction's leverage, risk 
profile, or economic substance;
    (9) The FDIC may deem a transaction that meets the definition of a 
traditional securitization, notwithstanding paragraph (5), (6), or (7) 
of this definition, to be a traditional securitization based on the 
transaction's leverage, risk profile, or economic substance; and
    (10) The transaction is not:
    (i) An investment fund;
    (ii) A collective investment fund (as defined in 12 CFR 344.3 (state 
nonmember bank), and 12 CFR 390.203 (state savings association);
    (iii) An employee benefit plan (as defined in paragraphs (3) and 
(32) of section 3 of ERISA), a ``governmental plan'' (as defined in 29 
U.S.C. 1002(32)) that complies with the tax deferral qualification 
requirements provided in the Internal Revenue Code, or any similar 
employee benefit plan established under the laws of a foreign 
jurisdiction;
    (iv) A synthetic exposure to the capital of a financial institution 
to the extent deducted from capital under Sec.  324.22; or
    (v) Registered with the SEC under the Investment Company Act or 
foreign equivalents thereof.

[[Page 218]]

    Tranche means all securitization exposures associated with a 
securitization that have the same seniority level.
    Two-way market means a market where there are independent bona fide 
offers to buy and sell so that a price reasonably related to the last 
sales price or current bona fide competitive bid and offer quotations 
can be determined within one day and settled at that price within a 
relatively short time frame conforming to trade custom.
    Unconditionally cancelable means with respect to a commitment, that 
an FDIC-supervised institution may, at any time, with or without cause, 
refuse to extend credit under the commitment (to the extent permitted 
under applicable law).
    Underlying exposures means one or more exposures that have been 
securitized in a securitization transaction.
    Unregulated financial institution means, for purposes of Sec.  
324.131, a financial institution that is not a regulated financial 
institution, including any financial institution that would meet the 
definition of ``financial institution'' under this section but for the 
ownership interest thresholds set forth in paragraph (4)(i) of that 
definition.
    U.S. Government agency means an instrumentality of the U.S. 
Government whose obligations are fully and explicitly guaranteed as to 
the timely payment of principal and interest by the full faith and 
credit of the U.S. Government.
    Value-at-Risk (VaR) means the estimate of the maximum amount that 
the value of one or more exposures could decline due to market price or 
rate movements during a fixed holding period within a stated confidence 
interval.
    Wrong-way risk means the risk that arises when an exposure to a 
particular counterparty is positively correlated with the probability of 
default of such counterparty itself.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20758, Apr. 14, 2014; 
79 FR 44124, July 30, 2014; 79 FR 57748, Sept. 26, 2014; 80 FR 41422, 
July 15, 2015; 81 FR 71354, Oct. 17, 2016; 82 FR 50260, Oct. 30, 2017]




Sec.  324.3  Operational requirements for counterparty credit risk.

    For purposes of calculating risk-weighted assets under subparts D 
and E of this part:
    (a) Cleared transaction. In order to recognize certain exposures as 
cleared transactions pursuant to paragraphs (1)(ii), (iii), or (iv) of 
the definition of ``cleared transaction'' in Sec.  324.2, the exposures 
must meet the applicable requirements set forth in this paragraph (a).
    (1) The offsetting transaction must be identified by the CCP as a 
transaction for the clearing member client.
    (2) The collateral supporting the transaction must be held in a 
manner that prevents the FDIC-supervised institution from facing any 
loss due to an event of default, including from a liquidation, 
receivership, insolvency, or similar proceeding of either the clearing 
member or the clearing member's other clients. Omnibus accounts 
established under 17 CFR parts 190 and 300 satisfy the requirements of 
this paragraph (a).
    (3) The FDIC-supervised institution must conduct sufficient legal 
review to conclude with a well-founded basis (and maintain sufficient 
written documentation of that legal review) that in the event of a legal 
challenge (including one resulting from a default or receivership, 
insolvency, liquidation, or similar proceeding) the relevant court and 
administrative authorities would find the arrangements of paragraph 
(a)(2) of this section to be legal, valid, binding and enforceable under 
the law of the relevant jurisdictions.
    (4) The offsetting transaction with a clearing member must be 
transferable under the transaction documents and applicable laws in the 
relevant jurisdiction(s) to another clearing member should the clearing 
member default, become insolvent, or enter receivership, insolvency, 
liquidation, or similar proceedings.
    (b) Eligible margin loan. In order to recognize an exposure as an 
eligible margin loan as defined in Sec.  324.2, an FDIC-supervised 
institution must conduct sufficient legal review to conclude with a 
well-founded basis (and maintain sufficient written documentation

[[Page 219]]

of that legal review) that the agreement underlying the exposure:
    (1) Meets the requirements of paragraph (1)(iii) of the definition 
of eligible margin loan in Sec.  324.2, and
    (2) Is legal, valid, binding, and enforceable under applicable law 
in the relevant jurisdictions.
    (c) Qualifying cross-product master netting agreement. In order to 
recognize an agreement as a qualifying cross-product master netting 
agreement as defined in Sec.  324.101, an FDIC-supervised institution 
must obtain a written legal opinion verifying the validity and 
enforceability of the agreement under applicable law of the relevant 
jurisdictions if the counterparty fails to perform upon an event of 
default, including upon receivership, insolvency, liquidation, or 
similar proceeding.
    (d) Qualifying master netting agreement. In order to recognize an 
agreement as a qualifying master netting agreement as defined in Sec.  
324.2, an FDIC-supervised institution must:
    (1) Conduct sufficient legal review to conclude with a well-founded 
basis (and maintain sufficient written documentation of that legal 
review) that:
    (i) The agreement meets the requirements of paragraph (2) of the 
definition of qualifying master netting agreement in Sec.  324.2; and
    (ii) In the event of a legal challenge (including one resulting from 
default or from receivership, insolvency, liquidation, or similar 
proceeding) the relevant court and administrative authorities would find 
the agreement to be legal, valid, binding, and enforceable under the law 
of the relevant jurisdictions; and
    (2) Establish and maintain written procedures to monitor possible 
changes in relevant law and to ensure that the agreement continues to 
satisfy the requirements of the definition of qualifying master netting 
agreement in Sec.  324.2.
    (e) Repo-style transaction. In order to recognize an exposure as a 
repo-style transaction as defined in Sec.  324.2, an FDIC-supervised 
institution must conduct sufficient legal review to conclude with a 
well-founded basis (and maintain sufficient written documentation of 
that legal review) that the agreement underlying the exposure:
    (1) Meets the requirements of paragraph (3) of the definition of 
repo-style transaction in Sec.  324.2, and
    (2) Is legal, valid, binding, and enforceable under applicable law 
in the relevant jurisdictions.
    (f) Failure of a QCCP to satisfy the rule's requirements. If an 
FDIC-supervised institution determines that a CCP ceases to be a QCCP 
due to the failure of the CCP to satisfy one or more of the requirements 
set forth in paragraphs (2)(i) through (2)(iii) of the definition of a 
QCCP in Sec.  324.2, the FDIC-supervised institution may continue to 
treat the CCP as a QCCP for up to three months following the 
determination. If the CCP fails to remedy the relevant deficiency within 
three months after the initial determination, or the CCP fails to 
satisfy the requirements set forth in paragraphs (2)(i) through (2)(iii) 
of the definition of a QCCP continuously for a three-month period after 
remedying the relevant deficiency, an FDIC-supervised institution may 
not treat the CCP as a QCCP for the purposes of this part until after 
the FDIC-supervised institution has determined that the CCP has 
satisfied the requirements in paragraphs (2)(i) through (2)(iii) of the 
definition of a QCCP for three continuous months.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20758, Apr. 14, 2014]




Sec.  324.4  Inadequate capital as an unsafe or unsound 
practice or condition.

    (a) General. As a condition of Federal deposit insurance, all 
insured depository institutions must remain in a safe and sound 
condition.
    (b) Unsafe or unsound practice. Any insured depository institution 
which has less than its minimum leverage capital requirement is deemed 
to be engaged in an unsafe or unsound practice pursuant to section 
8(b)(1) and/or 8(c) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(b)(1) and/or 1818(c)). Except that such an insured depository 
institution which has entered into and is in compliance with a written 
agreement with the FDIC or has submitted to the FDIC and is in 
compliance with a plan approved by the FDIC to increase its leverage 
capital ratio to such level as the FDIC deems appropriate and to

[[Page 220]]

take such other action as may be necessary for the insured depository 
institution to be operated so as not to be engaged in such an unsafe or 
unsound practice will not be deemed to be engaged in an unsafe or 
unsound practice pursuant to section 8(b)(1) and/or 8(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1818(b)(1) and/or 1818(c)) on account 
of its capital ratios. The FDIC is not precluded from taking action 
under section 8(b)(1), section 8(c) or any other enforcement action 
against an insured depository institution with capital above the minimum 
requirement if the specific circumstances deem such action to be 
appropriate.
    (c) Unsafe or unsound condition. Any insured depository institution 
with a ratio of tier 1 capital to total assets \10\ that is less than 
two percent is deemed to be operating in an unsafe or unsound condition 
pursuant to section 8(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(a)).
---------------------------------------------------------------------------

    \10\ For purposes of this paragraph (c), until January 1, 2015, the 
term total assets shall have the same meaning as provided in 12 CFR 
325.2(x). As of January 1, 2015, the term total assets shall have the 
same meaning as provided in 12 CFR 324.401(g).
---------------------------------------------------------------------------

    (1) An insured depository institution with a ratio of tier 1 capital 
to total assets of less than two percent which has entered into and is 
in compliance with a written agreement with the FDIC (or any other 
insured depository institution with a ratio of tier 1 capital to total 
assets of less than two percent which has entered into and is in 
compliance with a written agreement with its primary Federal regulator 
and to which agreement the FDIC is a party) to increase its tier 1 
leverage capital ratio to such level as the FDIC deems appropriate and 
to take such other action as may be necessary for the insured depository 
institution to be operated in a safe and sound manner, will not be 
subject to a proceeding by the FDIC pursuant to 12 U.S.C. 1818(a) on 
account of its capital ratios.
    (2) An insured depository institution with a ratio of tier 1 capital 
to total assets that is equal to or greater than two percent may be 
operating in an unsafe or unsound condition. The FDIC is not precluded 
from bringing an action pursuant to 12 U.S.C. 1818(a) where an insured 
depository institution has a ratio of tier 1 capital to total assets 
that is equal to or greater than two percent.

[78 FR 55471, Sept. 10, 2013, as amended at 81 FR 71354, Oct. 17, 2016]



Sec.  324.5  Issuance of directives.

    (a) General. A directive is a final order issued to an FDIC-
supervised institution that fails to maintain capital at or above the 
minimum leverage capital requirement as set forth in Sec. Sec.  324.4 
and 324.10. A directive issued pursuant to this section, including a 
plan submitted under a directive, is enforceable in the same manner and 
to the same extent as a final cease-and-desist order issued under 
section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)).
    (b) Issuance of directives. If an FDIC-supervised institution is 
operating with less than the minimum leverage capital requirement 
established by this regulation, the FDIC Board of Directors, or its 
designee(s), may issue and serve upon any FDIC-supervised institution a 
directive requiring the FDIC-supervised institution to restore its 
capital to the minimum leverage capital requirement within a specified 
time period. The directive may require the FDIC-supervised institution 
to submit to the appropriate FDIC regional director, or other specified 
official, for review and approval, a plan describing the means and 
timing by which the FDIC-supervised institution shall achieve the 
minimum leverage capital requirement. After the FDIC has approved the 
plan, the FDIC-supervised institution may be required under the terms of 
the directive to adhere to and monitor compliance with the plan. The 
directive may be issued during the course of an examination of the FDIC-
supervised institution, or at any other time that the FDIC deems 
appropriate, if the FDIC-supervised institution is found to be operating 
with less than the minimum leverage capital requirement.
    (c) Notice and opportunity to respond to issuance of a directive. 
(1) If the FDIC makes an initial determination that a directive should 
be issued to an FDIC-supervised institution pursuant to paragraph (b) of 
this section, the FDIC,

[[Page 221]]

through the appropriate designated official(s), shall serve written 
notification upon the FDIC-supervised institution of its intent to issue 
a directive. The notice shall include the current leverage capital 
ratio, the basis upon which said ratio was calculated, the proposed 
capital injection, the proposed date for achieving the minimum leverage 
capital requirement and any other relevant information concerning the 
decision to issue a directive. When deemed appropriate, specific 
requirements of a proposed plan for meeting the minimum leverage capital 
requirement may be included in the notice.
    (2) Within 14 days of receipt of notification, the FDIC-supervised 
institution may file with the appropriate designated FDIC official(s) a 
written response, explaining why the directive should not be issued, 
seeking modification of its terms, or other appropriate relief. The 
FDIC-supervised institution's response shall include any information, 
mitigating circumstances, documentation, or other relevant evidence 
which supports its position, and may include a plan for attaining the 
minimum leverage capital requirement.
    (3)(i) After considering the FDIC-supervised institution's response, 
the appropriate designated FDIC official(s) shall serve upon the FDIC-
supervised institution a written determination addressing the FDIC-
supervised institution's response and setting forth the FDIC's findings 
and conclusions in support of any decision to issue or not to issue a 
directive. The directive may be issued as originally proposed or in 
modified form. The directive may order the FDIC-supervised institution 
to:
    (A) Achieve the minimum leverage capital requirement established by 
this regulation by a certain date;
    (B) Submit for approval and adhere to a plan for achieving the 
minimum leverage capital requirement;
    (C) Take other action as is necessary to achieve the minimum 
leverage capital requirement; or
    (D) A combination of the above actions.
    (ii) If a directive is to be issued, it may be served upon the FDIC-
supervised institution along with the final determination.
    (4) Any FDIC-supervised institution, upon a change in circumstances, 
may request the FDIC to reconsider the terms of a directive and may 
propose changes in the plan under which it is operating to meet the 
minimum leverage capital requirement. The directive and plan continue in 
effect while such request is pending before the FDIC.
    (5) All papers filed with the FDIC must be postmarked or received by 
the appropriate designated FDIC official(s) within the prescribed time 
limit for filing.
    (6) Failure by the FDIC-supervised institution to file a written 
response to notification of intent to issue a directive within the 
specified time period shall constitute consent to the issuance of such 
directive.
    (d) Enforcement of a directive. (1) Whenever an FDIC-supervised 
institution fails to follow the directive or to submit or adhere to its 
capital adequacy plan, the FDIC may seek enforcement of the directive in 
the appropriate United States district court, pursuant to 12 U.S.C. 
3907(b)(2)(B)(ii), in the same manner and to the same extent as if the 
directive were a final cease-and-desist order. In addition to 
enforcement of the directive, the FDIC may seek assessment of civil 
money penalties for violation of the directive against any FDIC-
supervised institution, any officer, director, employee, agent, or other 
person participating in the conduct of the affairs of the FDIC-
supervised institution, pursuant to 12 U.S.C. 3909(d).
    (2) The directive may be issued separately, in conjunction with, or 
in addition to, any other enforcement mechanisms available to the FDIC, 
including cease-and-desist orders, orders of correction, the approval or 
denial of applications, or any other actions authorized by law. In 
addition to addressing an FDIC-supervised institution's minimum leverage 
capital requirement, the capital directive may also address minimum 
risk-based capital requirements that are to be maintained and calculated 
in accordance with Sec.  324.10, and, for state savings associations, 
the minimum tangible capital requirements set for in Sec.  324.10.

[[Page 222]]



Sec. Sec.  324.6-324.9  [Reserved]



            Subpart B_Capital Ratio Requirements and Buffers



Sec.  324.10  Minimum capital requirements.

    (a) Minimum capital requirements. An FDIC-supervised institution 
must maintain the following minimum capital ratios:
    (1) A common equity tier 1 capital ratio of 4.5 percent.
    (2) A tier 1 capital ratio of 6 percent.
    (3) A total capital ratio of 8 percent.
    (4) A leverage ratio of 4 percent.
    (5) For advanced approaches FDIC-supervised institutions, a 
supplementary leverage ratio of 3 percent.
    (6) For state savings associations, a tangible capital ratio of 1.5 
percent.
    (b) Standardized capital ratio calculations. Other than as provided 
in paragraph (c) of this section:
    (1) Common equity tier 1 capital ratio. An FDIC-supervised 
institution's common equity tier 1 capital ratio is the ratio of the 
FDIC-supervised institution's common equity tier 1 capital to 
standardized total risk-weighted assets;
    (2) Tier 1 capital ratio. An FDIC-supervised institution's tier 1 
capital ratio is the ratio of the FDIC-supervised institution's tier 1 
capital to standardized total risk-weighted assets;
    (3) Total capital ratio. An FDIC-supervised institution's total 
capital ratio is the ratio of the FDIC-supervised institution's total 
capital to standardized total risk-weighted assets; and
    (4) Leverage ratio. An FDIC-supervised institution's leverage ratio 
is the ratio of the FDIC-supervised institution's tier 1 capital to the 
FDIC-supervised institution's average total consolidated assets as 
reported on the FDIC-supervised institution's Call Report minus amounts 
deducted from tier 1 capital under Sec.  324.22(a), (c), and (d).
    (5) State savings association tangible capital ratio. (i) Until 
January 1, 2015, a state savings association shall determine its 
tangible capital ratio in accordance with 12 CFR 390.468.
    (ii) As of January 1, 2015, a state savings association's tangible 
capital ratio is the ratio of the state savings association's core 
capital (tier 1 capital) to total assets. For purposes of this 
paragraph, the term total assets shall have the meaning provided in 
Sec.  324.401(g).
    (c) Advanced approaches capital ratio calculations. An advanced 
approaches FDIC-supervised institution that has completed the parallel 
run process and received notification from the FDIC pursuant to Sec.  
324.121(d) must determine its regulatory capital ratios as described in 
paragraphs (c)(1) through (3) of this section. An advanced approaches 
FDIC-supervised institution must determine its supplementary leverage 
ratio in accordance with paragraph (c)(4) of this section, beginning 
with the calendar quarter immediately following the quarter in which the 
FDIC-supervised institution meets any of the criteria in Sec.  
324.100(b)(1).
    (1) Common equity tier 1 capital ratio. The FDIC-supervised 
institution's common equity tier 1 capital ratio is the lower of:
    (i) The ratio of the FDIC-supervised institution's common equity 
tier 1 capital to standardized total risk-weighted assets; and
    (ii) The ratio of the FDIC-supervised institution's common equity 
tier 1 capital to advanced approaches total risk-weighted assets.
    (2) Tier 1 capital ratio. The FDIC-supervised institution's tier 1 
capital ratio is the lower of:
    (i) The ratio of the FDIC-supervised institution's tier 1 capital to 
standardized total risk-weighted assets; and
    (ii) The ratio of the FDIC-supervised institution's tier 1 capital 
to advanced approaches total risk-weighted assets.
    (3) Total capital ratio. The FDIC-supervised institution's total 
capital ratio is the lower of:
    (i) The ratio of the FDIC-supervised institution's total capital to 
standardized total risk-weighted assets; and
    (ii) The ratio of the FDIC-supervised institution's advanced-
approaches-adjusted total capital to advanced approaches total risk-
weighted assets. An FDIC-supervised institution's advanced-approaches-
adjusted total capital is the FDIC-supervised institution's total 
capital after being adjusted as follows:
    (A) An advanced approaches FDIC-supervised institution must deduct 
from

[[Page 223]]

its total capital any allowance for loan and lease losses included in 
its tier 2 capital in accordance with Sec.  324.20(d)(3); and
    (B) An advanced approaches FDIC-supervised institution must add to 
its total capital any eligible credit reserves that exceed the FDIC-
supervised institution's total expected credit losses to the extent that 
the excess reserve amount does not exceed 0.6 percent of the FDIC-
supervised institution's credit risk-weighted assets.
    (4) Supplementary leverage ratio. (i) An advanced approaches FDIC-
supervised institution's supplementary leverage ratio is the ratio of 
its tier 1 capital to total leverage exposure, the latter which is 
calculated as the sum of:
    (A) The mean of the on-balance sheet assets calculated as of each 
day of the reporting quarter; and
    (B) The mean of the off-balance sheet exposures calculated as of the 
last day of each of the most recent three months, minus the applicable 
deductions under Sec.  324.22(a), (c), and (d).
    (ii) For purposes of this part, total leverage exposure means the 
sum of the items described in paragraphs (c)(4)(ii)(A) through (H) of 
this section, as adjusted pursuant to paragraph (c)(4)(ii)(I) for a 
clearing member FDIC-supervised institution:
    (A) The balance sheet carrying value of all of the FDIC-supervised 
institution's on-balance sheet assets, plus the value of securities sold 
under a repurchase transaction or a securities lending transaction that 
qualifies for sales treatment under U.S. GAAP, less amounts deducted 
from tier 1 capital under Sec.  324.22(a), (c), and (d), and less the 
value of securities received in security-for-security repo-style 
transactions, where the FDIC-supervised institution acts as a securities 
lender and includes the securities received in its on-balance sheet 
assets but has not sold or re-hypothecated the securities received;
    (B) The PFE for each derivative contract or each single-product 
netting set of derivative contracts (including a cleared transaction 
except as provided in paragraph (c)(4)(ii)(I) of this section and, at 
the discretion of the FDIC-supervised institution, excluding a forward 
agreement treated as a derivative contract that is part of a repurchase 
or reverse repurchase or a securities borrowing or lending transaction 
that qualifies for sales treatment under U.S. GAAP), to which the FDIC-
supervised institution is a counterparty as determined under Sec.  
324.34, but without regard to Sec.  324.34(b), provided that:
    (1) An FDIC-supervised institution may choose to exclude the PFE of 
all credit derivatives or other similar instruments through which it 
provides credit protection when calculating the PFE under Sec.  324.34, 
but without regard to Sec.  324.34(b), provided that it does not adjust 
the net-to-gross ratio (NGR); and
    (2) An FDIC-supervised institution that chooses to exclude the PFE 
of credit derivatives or other similar instruments through which it 
provides credit protection pursuant to paragraph (c)(4)(ii)(B)(1) of 
this section must do so consistently over time for the calculation of 
the PFE for all such instruments;
    (C) The amount of cash collateral that is received from a 
counterparty to a derivative contract and that has offset the mark-to-
fair value of the derivative asset, or cash collateral that is posted to 
a counterparty to a derivative contract and that has reduced the FDIC-
supervised institution's on-balance sheet assets, unless such cash 
collateral is all or part of variation margin that satisfies the 
following requirements:
    (1) For derivative contracts that are not cleared through a QCCP, 
the cash collateral received by the recipient counterparty is not 
segregated (by law, regulation or an agreement with the counterparty);
    (2) Variation margin is calculated and transferred on a daily basis 
based on the mark-to-fair value of the derivative contract;
    (3) The variation margin transferred under the derivative contract 
or the governing rules for a cleared transaction is the full amount that 
is necessary to fully extinguish the net current credit exposure to the 
counterparty of the derivative contracts, subject to the threshold and 
minimum transfer amounts applicable to the counterparty under the terms 
of

[[Page 224]]

the derivative contract or the governing rules for a cleared 
transaction;
    (4) The variation margin is in the form of cash in the same currency 
as the currency of settlement set forth in the derivative contract, 
provided that for the purposes of this paragraph, currency of settlement 
means any currency for settlement specified in the governing qualifying 
master netting agreement and the credit support annex to the qualifying 
master netting agreement, or in the governing rules for a cleared 
transaction;
    (5) The derivative contract and the variation margin are governed by 
a qualifying master netting agreement between the legal entities that 
are the counterparties to the derivative contract or by the governing 
rules for a cleared transaction, and the qualifying master netting 
agreement or the governing rules for a cleared transaction must 
explicitly stipulate that the counterparties agree to settle any payment 
obligations on a net basis, taking into account any variation margin 
received or provided under the contract if a credit event involving 
either counterparty occurs;
    (6) The variation margin is used to reduce the current credit 
exposure of the derivative contract, calculated as described in Sec.  
324.34(a), and not the PFE; and
    (7) For the purpose of the calculation of the NGR described in Sec.  
324.34(a)(2)(ii)(B), variation margin described in paragraph 
(c)(4)(ii)(C)(6) of this section may not reduce the net current credit 
exposure or the gross current credit exposure;
    (D) The effective notional principal amount (that is, the apparent 
or stated notional principal amount multiplied by any multiplier in the 
derivative contract) of a credit derivative, or other similar 
instrument, through which the FDIC-supervised institution provides 
credit protection, provided that:
    (1) The FDIC-supervised institution may reduce the effective 
notional principal amount of the credit derivative by the amount of any 
reduction in the mark-to-fair value of the credit derivative if the 
reduction is recognized in common equity tier 1 capital;
    (2) The FDIC-supervised institution may reduce the effective 
notional principal amount of the credit derivative by the effective 
notional principal amount of a purchased credit derivative or other 
similar instrument, provided that the remaining maturity of the 
purchased credit derivative is equal to or greater than the remaining 
maturity of the credit derivative through which the FDIC-supervised 
institution provides credit protection and that:
    (i) With respect to a credit derivative that references a single 
exposure, the reference exposure of the purchased credit derivative is 
to the same legal entity and ranks pari passu with, or is junior to, the 
reference exposure of the credit derivative through which the FDIC-
supervised institution provides credit protection; or
    (ii) With respect to a credit derivative that references multiple 
exposures, the reference exposures of the purchased credit derivative 
are to the same legal entities and rank pari passu with the reference 
exposures of the credit derivative through which the FDIC-supervised 
institution provides credit protection, and the level of seniority of 
the purchased credit derivative ranks pari passu to the level of 
seniority of the credit derivative through which the FDIC-supervised 
institution provides credit protection;
    (iii) Where an FDIC-supervised institution has reduced the effective 
notional amount of a credit derivative through which the FDIC-supervised 
institution provides credit protection in accordance with paragraph 
(c)(4)(ii)(D)(1) of this section, the FDIC-supervised institution must 
also reduce the effective notional principal amount of a purchased 
credit derivative used to offset the credit derivative through which the 
FDIC-supervised institution provides credit protection, by the amount of 
any increase in the mark-to-fair value of the purchased credit 
derivative that is recognized in common equity tier 1 capital; and
    (iv) Where the FDIC-supervised institution purchases credit 
protection through a total return swap and records the net payments 
received on a credit derivative through which the FDIC-supervised 
institution provides credit protection in net income, but

[[Page 225]]

does not record offsetting deterioration in the mark-to-fair value of 
the credit derivative through which the FDIC-supervised institution 
provides credit protection in net income (either through reductions in 
fair value or by additions to reserves), the FDIC-supervised institution 
may not use the purchased credit protection to offset the effective 
notional principal amount of the related credit derivative through which 
the FDIC-supervised institution provides credit protection;
    (E) Where an FDIC-supervised institution acting as a principal has 
more than one repo-style transaction with the same counterparty and has 
offset the gross value of receivables due from a counterparty under 
reverse repurchase transactions by the gross value of payables under 
repurchase transactions due to the same counterparty, the gross value of 
receivables associated with the repo-style transactions less any on-
balance sheet receivables amount associated with these repo-style 
transactions included under paragraph (c)(4)(ii)(A) of this section, 
unless the following criteria are met:
    (1) The offsetting transactions have the same explicit final 
settlement date under their governing agreements;
    (2) The right to offset the amount owed to the counterparty with the 
amount owed by the counterparty is legally enforceable in the normal 
course of business and in the event of receivership, insolvency, 
liquidation, or similar proceeding; and
    (3) Under the governing agreements, the counterparties intend to 
settle net, settle simultaneously, or settle according to a process that 
is the functional equivalent of net settlement, (that is, the cash flows 
of the transactions are equivalent, in effect, to a single net amount on 
the settlement date), where both transactions are settled through the 
same settlement system, the settlement arrangements are supported by 
cash or intraday credit facilities intended to ensure that settlement of 
both transactions will occur by the end of the business day, and the 
settlement of the underlying securities does not interfere with the net 
cash settlement;
    (F) The counterparty credit risk of a repo-style transaction, 
including where the FDIC-supervised institution acts as an agent for a 
repo-style transaction and indemnifies the customer with respect to the 
performance of the customer's counterparty in an amount limited to the 
difference between the fair value of the security or cash its customer 
has lent and the fair value of the collateral the borrower has provided, 
calculated as follows:
    (1) If the transaction is not subject to a qualifying master netting 
agreement, the counterparty credit risk (E*) for transactions with a 
counterparty must be calculated on a transaction by transaction basis, 
such that each transaction i is treated as its own netting set, in 
accordance with the following formula, where Ei is the fair 
value of the instruments, gold, or cash that the FDIC-supervised 
institution has lent, sold subject to repurchase, or provided as 
collateral to the counterparty, and Ci is the fair value of 
the instruments, gold, or cash that the FDIC-supervised institution has 
borrowed, purchased subject to resale, or received as collateral from 
the counterparty:


Ei* = max {0, [Ei-Ci] {time}  ]; and

    (2) If the transaction is subject to a qualifying master netting 
agreement, the counterparty credit risk (E*) must be calculated as the 
greater of zero and the total fair value of the instruments, gold, or 
cash that the FDIC-supervised institution has lent, sold subject to 
repurchase or provided as collateral to a counterparty for all 
transactions included in the qualifying master netting agreement 
([Sigma]Ei), less the total fair value of the instruments, 
gold, or cash that the FDIC-supervised institution borrowed, purchased 
subject to resale or received as collateral from the counterparty for 
those transactions ([Sigma]Ci), in accordance with the 
following formula:

E* = max {0, [[Sigma]Ei--[Sigma]Ci] -{time} 

    (G) If an FDIC-supervised institution acting as an agent for a repo-
style transaction provides a guarantee to a customer of the security or 
cash its customer has lent or borrowed with respect to the performance 
of the customer's counterparty and the guarantee is not limited to the 
difference between the fair value of the security or cash its customer 
has lent and the

[[Page 226]]

fair value of the collateral the borrower has provided, the amount of 
the guarantee that is greater than the difference between the fair value 
of the security or cash its customer has lent and the value of the 
collateral the borrower has provided;
    (H) The credit equivalent amount of all off-balance sheet exposures 
of the FDIC-supervised institution, excluding repo-style transactions, 
repurchase or reverse repurchase or securities borrowing or lending 
transactions that qualify for sales treatment under U.S. GAAP, and 
derivative transactions, determined using the applicable credit 
conversation factor under Sec.  324.33(b), provided, however, that the 
minimum credit conversion factor that may be assigned to an off-balance 
sheet exposure under this paragraph is 10 percent; and
    (I) For an FDIC-supervised institution that is a clearing member:
    (1) A clearing member FDIC-supervised institution that guarantees 
the performance of a clearing member client with respect to a cleared 
transaction must treat its exposure to the clearing member client as a 
derivative contract for purposes of determining its total leverage 
exposure;
    (2) A clearing member FDIC-supervised institution that guarantees 
the performance of a CCP with respect to a transaction cleared on behalf 
of a clearing member client must treat its exposure to the CCP as a 
derivative contract for purposes of determining its total leverage 
exposure;
    (3) A clearing member FDIC-supervised institution that does not 
guarantee the performance of a CCP with respect to a transaction cleared 
on behalf of a clearing member client may exclude its exposure to the 
CCP for purposes of determining its total leverage exposure;
    (4) An FDIC-supervised institution that is a clearing member may 
exclude from its total leverage exposure the effective notional 
principal amount of credit protection sold through a credit derivative 
contract, or other similar instrument, that it clears on behalf of a 
clearing member client through a CCP as calculated in accordance with 
part (c)(4)(ii)(D); and
    (5) Notwithstanding paragraphs (c)(4)(ii)(I)(1) through (3) of this 
section, an FDIC-supervised institution may exclude from its total 
leverage exposure a clearing member's exposure to a clearing member 
client for a derivative contract, if the clearing member client and the 
clearing member are affiliates and consolidated for financial reporting 
purposes on the FDIC-supervised institution's balance sheet.
    (5) State savings association tangible capital ratio. (i) Until 
January 1, 2014, a state savings association shall determine its 
tangible capital ratio in accordance with 12 CFR 390.468.
    (ii) As of January 1, 2014, a state savings association's tangible 
capital ratio is the ratio of the state savings association's core 
capital (tier 1 capital) to total assets. For purposes of this 
paragraph, the term total assets shall have the meaning provided in 12 
CFR 324.401(g).
    (d) Capital adequacy. (1) Notwithstanding the minimum requirements 
in this part, An FDIC-supervised institution must maintain capital 
commensurate with the level and nature of all risks to which the FDIC-
supervised institution is exposed.
    (2) An FDIC-supervised institution must have a process for assessing 
its overall capital adequacy in relation to its risk profile and a 
comprehensive strategy for maintaining an appropriate level of capital.
    (3) Insured depository institutions with less than the minimum 
leverage capital requirement. (i) An insured depository institution 
making an application to the FDIC operating with less than the minimum 
leverage capital requirement does not have adequate capital and 
therefore has inadequate financial resources.
    (ii) Any insured depository institution operating with an inadequate 
capital structure, and therefore inadequate financial resources, will 
not receive approval for an application requiring the FDIC to consider 
the adequacy of its capital structure or its financial resources.
    (iii) In any merger, acquisition, or other type of business 
combination where the FDIC must give its approval, where it is required 
to consider the adequacy of the financial resources of

[[Page 227]]

the existing and proposed institutions, and where the resulting entity 
is either insured by the FDIC or not otherwise federally insured, 
approval will not be granted when the resulting entity does not meet the 
minimum leverage capital requirement.
    (iv) Exceptions. Notwithstanding the provisions of paragraphs 
(d)(3)(i), (ii) and (iii) of this section:
    (A) The FDIC, in its discretion, may approve an application pursuant 
to the Federal Deposit Insurance Act where it is required to consider 
the adequacy of capital if it finds that such approval must be taken to 
prevent the closing of a depository institution or to facilitate the 
acquisition of a closed depository institution, or, when severe 
financial conditions exist which threaten the stability of an insured 
depository institution or of a significant number of depository 
institutions insured by the FDIC or of insured depository institutions 
possessing significant financial resources, if such action is taken to 
lessen the risk to the FDIC posed by an insured depository institution 
under such threat of instability.
    (B) The FDIC, in its discretion, may approve an application pursuant 
to the Federal Deposit Insurance Act where it is required to consider 
the adequacy of capital or the financial resources of the insured 
depository institution where it finds that the applicant has committed 
to and is in compliance with a reasonable plan to meet its minimum 
leverage capital requirements within a reasonable period of time.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20758, Apr. 14, 2014; 
79 FR 57748, Sept. 26, 2014; 80 FR 41422, July 15, 2015]



Sec.  324.11  Capital conservation buffer and countercyclical 
capital buffer amount.

    (a) Capital conservation buffer. (1) Composition of the capital 
conservation buffer. The capital conservation buffer is composed solely 
of common equity tier 1 capital.
    (2) Definitions. For purposes of this section, the following 
definitions apply:
    (i) Eligible retained income. The eligible retained income of an 
FDIC-supervised institution is the FDIC-supervised institution's net 
income for the four calendar quarters preceding the current calendar 
quarter, based on the FDIC-supervised institution's quarterly Call 
Reports, net of any distributions and associated tax effects not already 
reflected in net income.
    (ii) Maximum payout ratio. The maximum payout ratio is the 
percentage of eligible retained income that an FDIC-supervised 
institution can pay out in the form of distributions and discretionary 
bonus payments during the current calendar quarter. The maximum payout 
ratio is based on the FDIC-supervised institution's capital conservation 
buffer, calculated as of the last day of the previous calendar quarter, 
as set forth in Table 1 to Sec.  324.11.
    (iii) Maximum payout amount. An FDIC-supervised institution's 
maximum payout amount for the current calendar quarter is equal to the 
FDIC-supervised institution's eligible retained income, multiplied by 
the applicable maximum payout ratio, as set forth in Table 1 to Sec.  
324.11.
    (iv) Private sector credit exposure. Private sector credit exposure 
means an exposure to a company or an individual that is not an exposure 
to a sovereign, the Bank for International Settlements, the European 
Central Bank, the European Commission, the International Monetary Fund, 
an MDB, a PSE, or a GSE.
    (3) Calculation of capital conservation buffer. (i) An FDIC-
supervised institution's capital conservation buffer is equal to the 
lowest of the following ratios, calculated as of the last day of the 
previous calendar quarter based on the FDIC-supervised institution's 
most recent Call Report:
    (A) The FDIC-supervised institution's common equity tier 1 capital 
ratio minus the FDIC-supervised institution's minimum common equity tier 
1 capital ratio requirement under Sec.  324.10;
    (B) The FDIC-supervised institution's tier 1 capital ratio minus the 
FDIC-supervised institution's minimum tier 1 capital ratio requirement 
under Sec.  324.10; and
    (C) The FDIC-supervised institution's total capital ratio minus the 
FDIC-supervised institution's minimum total capital ratio requirement 
under Sec.  324.10; or

[[Page 228]]

    (ii) Notwithstanding paragraphs (a)(3)(i)(A)-(C) of this section, if 
the FDIC-supervised institution's common equity tier 1, tier 1 or total 
capital ratio is less than or equal to the FDIC-supervised institution's 
minimum common equity tier 1, tier 1 or total capital ratio requirement 
under Sec.  324.10, respectively, the FDIC-supervised institution's 
capital conservation buffer is zero.
    (4) Limits on distributions and discretionary bonus payments. (i) An 
FDIC-supervised institution shall not make distributions or 
discretionary bonus payments or create an obligation to make such 
distributions or payments during the current calendar quarter that, in 
the aggregate, exceed the maximum payout amount.
    (ii) An FDIC-supervised institution with a capital conservation 
buffer that is greater than 2.5 percent plus 100 percent of its 
applicable countercyclical capital buffer, in accordance with paragraph 
(b) of this section, is not subject to a maximum payout amount under 
this section.
    (iii) Negative eligible retained income. Except as provided in 
paragraph (a)(4)(iv) of this section, an FDIC-supervised institution may 
not make distributions or discretionary bonus payments during the 
current calendar quarter if the FDIC-supervised institution's:
    (A) Eligible retained income is negative; and
    (B) Capital conservation buffer was less than 2.5 percent as of the 
end of the previous calendar quarter.
    (iv) Prior approval. Notwithstanding the limitations in paragraphs 
(a)(4)(i) through (iii) of this section, the FDIC may permit an FDIC-
supervised institution to make a distribution or discretionary bonus 
payment upon a request of the FDIC-supervised institution, if the FDIC 
determines that the distribution or discretionary bonus payment would 
not be contrary to the purposes of this section, or to the safety and 
soundness of the FDIC-supervised institution. In making such a 
determination, the FDIC will consider the nature and extent of the 
request and the particular circumstances giving rise to the request.

     Table 1 to Sec.   324.11--Calculation of Maximum Payout Amount
------------------------------------------------------------------------
                                              Maximum payout ratio (as a
        Capital conservation buffer             percentage of eligible
                                                   retained income)
------------------------------------------------------------------------
Greater than 2.5 percent plus 100 percent    No payout ratio limitation
 of the FDIC-supervised institution's         applies.
 applicable countercyclical capital buffer
 amount.
Less than or equal to 2.5 percent plus 100   60 percent.
 percent of the FDIC-supervised
 institution's applicable countercyclical
 capital buffer amount, and greater than
 1.875 percent plus 75 percent of the FDIC-
 supervised institution's applicable
 countercyclical capital buffer amount.
Less than or equal to 1.875 percent plus 75  40 percent.
 percent of the FDIC-supervised
 institution's applicable countercyclical
 capital buffer amount, and greater than
 1.25 percent plus 50 percent of the FDIC-
 supervised institution's applicable
 countercyclical capital buffer amount.
Less than or equal to 1.25 percent plus 50   20 percent.
 percent of the FDIC-supervised
 institution's applicable countercyclical
 capital buffer amount, and greater than
 0.625 percent plus 25 percent of the FDIC-
 supervised institution's applicable
 countercyclical capital buffer amount.
Less than or equal to 0.625 percent plus 25  0 percent.
 percent of the FDIC-supervised
 institution's applicable countercyclical
 capital buffer amount.
------------------------------------------------------------------------

    (v) Other limitations on distributions. Additional limitations on 
distributions may apply to an FDIC-supervised institution under 12 CFR 
303.241 and subpart H of this part.
    (b) Countercyclical capital buffer amount--(1) General. An advanced 
approaches FDIC-supervised institution must calculate a countercyclical 
capital buffer amount in accordance with the following paragraphs for 
purposes of determining its maximum payout ratio under Table 1 to Sec.  
324.11.
    (i) Extension of capital conservation buffer. The countercyclical 
capital buffer amount is an extension of the capital conservation buffer 
as described in paragraph (a) of this section.
    (ii) Amount. An advanced approaches FDIC-supervised institution has 
a countercyclical capital buffer amount

[[Page 229]]

determined by calculating the weighted average of the countercyclical 
capital buffer amounts established for the national jurisdictions where 
the FDIC-supervised institution's private sector credit exposures are 
located, as specified in paragraphs (b)(2) and (3) of this section.
    (iii) Weighting. The weight assigned to a jurisdiction's 
countercyclical capital buffer amount is calculated by dividing the 
total risk-weighted assets for the FDIC-supervised institution's private 
sector credit exposures located in the jurisdiction by the total risk-
weighted assets for all of the FDIC-supervised institution's private 
sector credit exposures. The methodology an FDIC-supervised institution 
uses for determining risk-weighted assets for purposes of this paragraph 
(b) must be the methodology that determines its risk-based capital 
ratios under Sec.  324.10. Notwithstanding the previous sentence, the 
risk-weighted asset amount for a private sector credit exposure that is 
a covered position under subpart F of this part is its specific risk 
add-on as determined under Sec.  324.210 multiplied by 12.5.
    (iv) Location. (A) Except as provided in paragraphs (b)(1)(iv)(B) 
and (b)(1)(iv)(C) of this section, the location of a private sector 
credit exposure is the national jurisdiction where the borrower is 
located (that is, where it is incorporated, chartered, or similarly 
established or, if the borrower is an individual, where the borrower 
resides).
    (B) If, in accordance with subparts D or E of this part, the FDIC-
supervised institution has assigned to a private sector credit exposure 
a risk weight associated with a protection provider on a guarantee or 
credit derivative, the location of the exposure is the national 
jurisdiction where the protection provider is located.
    (C) The location of a securitization exposure is the location of the 
underlying exposures, or, if the underlying exposures are located in 
more than one national jurisdiction, the national jurisdiction where the 
underlying exposures with the largest aggregate unpaid principal balance 
are located. For purposes of this paragraph (b), the location of an 
underlying exposure shall be the location of the borrower, determined 
consistent with paragraph (b)(1)(iv)(A) of this section.
    (2) Countercyclical capital buffer amount for credit exposures in 
the United States--(i) Initial countercyclical capital buffer amount 
with respect to credit exposures in the United States. The initial 
countercyclical capital buffer amount in the United States is zero.
    (ii) Adjustment of the countercyclical capital buffer amount. The 
FDIC will adjust the countercyclical capital buffer amount for credit 
exposures in the United States in accordance with applicable law.\11\
---------------------------------------------------------------------------

    \11\ The FDIC expects that any adjustment will be based on a 
determination made jointly by the Board, OCC, and FDIC.
---------------------------------------------------------------------------

    (iii) Range of countercyclical capital buffer amount. The FDIC will 
adjust the countercyclical capital buffer amount for credit exposures in 
the United States between zero percent and 2.5 percent of risk-weighted 
assets.
    (iv) Adjustment determination. The FDIC will base its decision to 
adjust the countercyclical capital buffer amount under this section on a 
range of macroeconomic, financial, and supervisory information 
indicating an increase in systemic risk including, but not limited to, 
the ratio of credit to gross domestic product, a variety of asset 
prices, other factors indicative of relative credit and liquidity 
expansion or contraction, funding spreads, credit condition surveys, 
indices based on credit default swap spreads, options implied 
volatility, and measures of systemic risk.
    (v) Effective date of adjusted countercyclical capital buffer 
amount--(A) Increase adjustment. A determination by the FDIC under 
paragraph (b)(2)(ii) of this section to increase the countercyclical 
capital buffer amount will be effective 12 months from the date of 
announcement, unless the FDIC establishes an earlier effective date and 
includes a statement articulating the reasons for the earlier effective 
date.
    (B) Decrease adjustment. A determination by the FDIC to decrease the 
established countercyclical capital buffer amount under paragraph 
(b)(2)(ii) of this section will be effective on the day following 
announcement of the final

[[Page 230]]

determination or the earliest date permissible under applicable law or 
regulation, whichever is later.
    (vi) Twelve month sunset. The countercyclical capital buffer amount 
will return to zero percent 12 months after the effective date that the 
adjusted countercyclical capital buffer amount is announced, unless the 
FDIC announces a decision to maintain the adjusted countercyclical 
capital buffer amount or adjust it again before the expiration of the 
12-month period.
    (3) Countercyclical capital buffer amount for foreign jurisdictions. 
The FDIC will adjust the countercyclical capital buffer amount for 
private sector credit exposures to reflect decisions made by foreign 
jurisdictions consistent with due process requirements described in 
paragraph (b)(2) of this section.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20758, Apr. 14, 2014; 
81 FR 71354, Oct. 17, 2016]



Sec. Sec.  324.12-324.19  [Reserved]



                     Subpart C_Definition of Capital



Sec.  324.20  Capital components and eligibility criteria 
for regulatory capital instruments.

    (a) Regulatory capital components. An FDIC-supervised institution's 
regulatory capital components are:
    (1) Common equity tier 1 capital;
    (2) Additional tier 1 capital; and
    (3) Tier 2 capital.
    (b) Common equity tier 1 capital. Common equity tier 1 capital is 
the sum of the common equity tier 1 capital elements in this paragraph 
(b), minus regulatory adjustments and deductions in Sec.  324.22. The 
common equity tier 1 capital elements are:
    (1) Any common stock instruments (plus any related surplus) issued 
by the FDIC-supervised institution, net of treasury stock, and any 
capital instruments issued by mutual banking organizations, that meet 
all the following criteria:
    (i) The instrument is paid-in, issued directly by the FDIC-
supervised institution, and represents the most subordinated claim in a 
receivership, insolvency, liquidation, or similar proceeding of the 
FDIC-supervised institution;
    (ii) The holder of the instrument is entitled to a claim on the 
residual assets of the FDIC-supervised institution that is proportional 
with the holder's share of the FDIC-supervised institution's issued 
capital after all senior claims have been satisfied in a receivership, 
insolvency, liquidation, or similar proceeding;
    (iii) The instrument has no maturity date, can only be redeemed via 
discretionary repurchases with the prior approval of the FDIC, and does 
not contain any term or feature that creates an incentive to redeem;
    (iv) The FDIC-supervised institution did not create at issuance of 
the instrument through any action or communication an expectation that 
it will buy back, cancel, or redeem the instrument, and the instrument 
does not include any term or feature that might give rise to such an 
expectation;
    (v) Any cash dividend payments on the instrument are paid out of the 
FDIC-supervised institution's net income and retained earnings and are 
not subject to a limit imposed by the contractual terms governing the 
instrument. An FDIC-supervised institution must obtain prior FDIC 
approval for any dividend payment involving a reduction or retirement of 
capital stock in accordance with 12 CFR 303.241;
    (vi) The FDIC-supervised institution has full discretion at all 
times to refrain from paying any dividends and making any other 
distributions on the instrument without triggering an event of default, 
a requirement to make a payment-in-kind, or an imposition of any other 
restrictions on the FDIC-supervised institution;
    (vii) Dividend payments and any other distributions on the 
instrument may be paid only after all legal and contractual obligations 
of the FDIC-supervised institution have been satisfied, including 
payments due on more senior claims;
    (viii) The holders of the instrument bear losses as they occur 
equally, proportionately, and simultaneously with the holders of all 
other common stock instruments before any losses are borne by holders of 
claims on the FDIC-supervised institution with

[[Page 231]]

greater priority in a receivership, insolvency, liquidation, or similar 
proceeding;
    (ix) The paid-in amount is classified as equity under GAAP;
    (x) The FDIC-supervised institution, or an entity that the FDIC-
supervised institution controls, did not purchase or directly or 
indirectly fund the purchase of the instrument;
    (xi) The instrument is not secured, not covered by a guarantee of 
the FDIC-supervised institution or of an affiliate of the FDIC-
supervised institution, and is not subject to any other arrangement that 
legally or economically enhances the seniority of the instrument;
    (xii) The instrument has been issued in accordance with applicable 
laws and regulations; and
    (xiii) The instrument is reported on the FDIC-supervised 
institution's regulatory financial statements separately from other 
capital instruments.
    (2) Retained earnings.
    (3) Accumulated other comprehensive income (AOCI) as reported under 
GAAP.\12\
---------------------------------------------------------------------------

    \12\ See Sec.  324.22 for specific adjustments related to AOCI.
---------------------------------------------------------------------------

    (4) Any common equity tier 1 minority interest, subject to the 
limitations in Sec.  324.21(c).
    (5) Notwithstanding the criteria for common stock instruments 
referenced above, an FDIC-supervised institution's common stock issued 
and held in trust for the benefit of its employees as part of an 
employee stock ownership plan does not violate any of the criteria in 
paragraph (b)(1)(iii), paragraph (b)(1)(iv) or paragraph (b)(1)(xi) of 
this section, provided that any repurchase of the stock is required 
solely by virtue of ERISA for an instrument of an FDIC-supervised 
institution that is not publicly-traded. In addition, an instrument 
issued by an FDIC-supervised institution to its employee stock ownership 
plan does not violate the criterion in paragraph (b)(1)(x) of this 
section.
    (c) Additional tier 1 capital. Additional tier 1 capital is the sum 
of additional tier 1 capital elements and any related surplus, minus the 
regulatory adjustments and deductions in Sec.  324.22. Additional tier 1 
capital elements are:
    (1) Instruments (plus any related surplus) that meet the following 
criteria:
    (i) The instrument is issued and paid-in;
    (ii) The instrument is subordinated to depositors, general 
creditors, and subordinated debt holders of the FDIC-supervised 
institution in a receivership, insolvency, liquidation, or similar 
proceeding;
    (iii) The instrument is not secured, not covered by a guarantee of 
the FDIC-supervised institution or of an affiliate of the FDIC-
supervised institution, and not subject to any other arrangement that 
legally or economically enhances the seniority of the instrument;
    (iv) The instrument has no maturity date and does not contain a 
dividend step-up or any other term or feature that creates an incentive 
to redeem; and
    (v) If callable by its terms, the instrument may be called by the 
FDIC-supervised institution only after a minimum of five years following 
issuance, except that the terms of the instrument may allow it to be 
called earlier than five years upon the occurrence of a regulatory event 
that precludes the instrument from being included in additional tier 1 
capital, a tax event, or if the issuing entity is required to register 
as an investment company pursuant to the Investment Company Act. In 
addition:
    (A) The FDIC-supervised institution must receive prior approval from 
the FDIC to exercise a call option on the instrument.
    (B) The FDIC-supervised institution does not create at issuance of 
the instrument, through any action or communication, an expectation that 
the call option will be exercised.
    (C) Prior to exercising the call option, or immediately thereafter, 
the FDIC-supervised institution must either: Replace the instrument to 
be called with an equal amount of instruments that meet the criteria 
under paragraph (b) of this section or this paragraph (c); \13\ or 
demonstrate to the satisfaction of the FDIC that following

[[Page 232]]

redemption, the FDIC-supervised institution will continue to hold 
capital commensurate with its risk.
---------------------------------------------------------------------------

    \13\ Replacement can be concurrent with redemption of existing 
additional tier 1 capital instruments.
---------------------------------------------------------------------------

    (vi) Redemption or repurchase of the instrument requires prior 
approval from the FDIC.
    (vii) The FDIC-supervised institution has full discretion at all 
times to cancel dividends or other distributions on the instrument 
without triggering an event of default, a requirement to make a payment-
in-kind, or an imposition of other restrictions on the FDIC-supervised 
institution except in relation to any distributions to holders of common 
stock or instruments that are pari passu with the instrument.
    (viii) Any cash dividend payments on the instrument are paid out of 
the FDIC-supervised institution's net income and retained earnings and 
are not subject to a limit imposed by the contractual terms governing 
the instrument. An FDIC-supervised institution must obtain prior FDIC 
approval for any dividend payment involving a reduction or retirement of 
capital stock in accordance with 12 CFR 303.241.
    (ix) The instrument does not have a credit-sensitive feature, such 
as a dividend rate that is reset periodically based in whole or in part 
on the FDIC-supervised institution's credit quality, but may have a 
dividend rate that is adjusted periodically independent of the FDIC-
supervised institution's credit quality, in relation to general market 
interest rates or similar adjustments.
    (x) The paid-in amount is classified as equity under GAAP.
    (xi) The FDIC-supervised institution, or an entity that the FDIC-
supervised institution controls, did not purchase or directly or 
indirectly fund the purchase of the instrument.
    (xii) The instrument does not have any features that would limit or 
discourage additional issuance of capital by the FDIC-supervised 
institution, such as provisions that require the FDIC-supervised 
institution to compensate holders of the instrument if a new instrument 
is issued at a lower price during a specified time frame.
    (xiii) If the instrument is not issued directly by the FDIC-
supervised institution or by a subsidiary of the FDIC-supervised 
institution that is an operating entity, the only asset of the issuing 
entity is its investment in the capital of the FDIC-supervised 
institution, and proceeds must be immediately available without 
limitation to the FDIC-supervised institution or to the FDIC-supervised 
institution's top-tier holding company in a form which meets or exceeds 
all of the other criteria for additional tier 1 capital instruments.\14\
---------------------------------------------------------------------------

    \14\ See 77 FR 52856 (August 30, 2012).
---------------------------------------------------------------------------

    (xiv) For an advanced approaches FDIC-supervised institution, the 
governing agreement, offering circular, or prospectus of an instrument 
issued after the date upon which the FDIC-supervised institution becomes 
subject to this part as set forth in Sec.  324.1(f) must disclose that 
the holders of the instrument may be fully subordinated to interests 
held by the U.S. government in the event that the FDIC-supervised 
institution enters into a receivership, insolvency, liquidation, or 
similar proceeding.
    (2) Tier 1 minority interest, subject to the limitations in Sec.  
324.21(d), that is not included in the FDIC-supervised institution's 
common equity tier 1 capital.
    (3) Any and all instruments that qualified as tier 1 capital under 
the FDIC's general risk-based capital rules under 12 CFR part 325, 
appendix A (state nonmember banks) and 12 CFR part 390, subpart Z (state 
savings associations) as then in effect, that were issued under the 
Small Business Jobs Act of 2010 \15\ or prior to October 4, 2010, under 
the Emergency Economic Stabilization Act of 2008.\16\
---------------------------------------------------------------------------

    \15\ Public Law 111-240; 124 Stat. 2504 (2010).
    \16\ Public Law 110-343, 122 Stat. 3765 (2008).
---------------------------------------------------------------------------

    (4) Notwithstanding the criteria for additional tier 1 capital 
instruments referenced above:
    (i) An instrument issued by an FDIC-supervised institution and held 
in trust for the benefit of its employees as part of an employee stock 
ownership plan does not violate any of the criteria in paragraph 
(c)(1)(iii) of this section, provided that any repurchase is required 
solely by virtue of ERISA for an instrument of an FDIC-supervised 
institution that is not publicly-traded. In addition, an instrument 
issued by an

[[Page 233]]

FDIC-supervised institution to its employee stock ownership plan does 
not violate the criteria in paragraph (c)(1)(v) or paragraph (c)(1)(xi) 
of this section; and
    (ii) An instrument with terms that provide that the instrument may 
be called earlier than five years upon the occurrence of a rating agency 
event does not violate the criterion in paragraph (c)(1)(v) of this 
section provided that the instrument was issued and included in an FDIC-
supervised institution's tier 1 capital prior to the January 1, 2014, 
and that such instrument satisfies all other criteria under this 
paragraph (c).
    (d) Tier 2 Capital. Tier 2 capital is the sum of tier 2 capital 
elements and any related surplus, minus regulatory adjustments and 
deductions in Sec.  324.22. Tier 2 capital elements are:
    (1) Instruments (plus related surplus) that meet the following 
criteria:
    (i) The instrument is issued and paid-in;
    (ii) The instrument is subordinated to depositors and general 
creditors of the FDIC-supervised institution;
    (iii) The instrument is not secured, not covered by a guarantee of 
the FDIC-supervised institution or of an affiliate of the FDIC-
supervised institution, and not subject to any other arrangement that 
legally or economically enhances the seniority of the instrument in 
relation to more senior claims;
    (iv) The instrument has a minimum original maturity of at least five 
years. At the beginning of each of the last five years of the life of 
the instrument, the amount that is eligible to be included in tier 2 
capital is reduced by 20 percent of the original amount of the 
instrument (net of redemptions) and is excluded from regulatory capital 
when the remaining maturity is less than one year. In addition, the 
instrument must not have any terms or features that require, or create 
significant incentives for, the FDIC-supervised institution to redeem 
the instrument prior to maturity; \17\ and
---------------------------------------------------------------------------

    \17\ An instrument that by its terms automatically converts into a 
tier 1 capital instrument prior to five years after issuance complies 
with the five-year maturity requirement of this criterion.
---------------------------------------------------------------------------

    (v) The instrument, by its terms, may be called by the FDIC-
supervised institution only after a minimum of five years following 
issuance, except that the terms of the instrument may allow it to be 
called sooner upon the occurrence of an event that would preclude the 
instrument from being included in tier 2 capital, a tax event, or if the 
issuing entity is required to register as an investment company pursuant 
to the Investment Company Act. In addition:
    (A) The FDIC-supervised institution must receive the prior approval 
of the FDIC to exercise a call option on the instrument.
    (B) The FDIC-supervised institution does not create at issuance, 
through action or communication, an expectation the call option will be 
exercised.
    (C) Prior to exercising the call option, or immediately thereafter, 
the FDIC-supervised institution must either: Replace any amount called 
with an equivalent amount of an instrument that meets the criteria for 
regulatory capital under this section; \18\ or demonstrate to the 
satisfaction of the FDIC that following redemption, the FDIC-supervised 
institution would continue to hold an amount of capital that is 
commensurate with its risk.
---------------------------------------------------------------------------

    \18\ A FDIC-supervised institution may replace tier 2 capital 
instruments concurrent with the redemption of existing tier 2 capital 
instruments.
---------------------------------------------------------------------------

    (vi) The holder of the instrument must have no contractual right to 
accelerate payment of principal or interest on the instrument, except in 
the event of a receivership, insolvency, liquidation, or similar 
proceeding of the FDIC-supervised institution.
    (vii) The instrument has no credit-sensitive feature, such as a 
dividend or interest rate that is reset periodically based in whole or 
in part on the FDIC-supervised institution's credit standing, but may 
have a dividend rate that is adjusted periodically independent of the 
FDIC-supervised institution's credit standing, in relation to general 
market interest rates or similar adjustments.

[[Page 234]]

    (viii) The FDIC-supervised institution, or an entity that the FDIC-
supervised institution controls, has not purchased and has not directly 
or indirectly funded the purchase of the instrument.
    (ix) If the instrument is not issued directly by the FDIC-supervised 
institution or by a subsidiary of the FDIC-supervised institution that 
is an operating entity, the only asset of the issuing entity is its 
investment in the capital of the FDIC-supervised institution, and 
proceeds must be immediately available without limitation to the FDIC-
supervised institution or the FDIC-supervised institution's top-tier 
holding company in a form that meets or exceeds all the other criteria 
for tier 2 capital instruments under this section.\19\
---------------------------------------------------------------------------

    \19\ A FDIC-supervised institution may disregard de minimis assets 
related to the operation of the issuing entity for purposes of this 
criterion.
---------------------------------------------------------------------------

    (x) Redemption of the instrument prior to maturity or repurchase 
requires the prior approval of the FDIC.
    (xi) For an advanced approaches FDIC-supervised institution, the 
governing agreement, offering circular, or prospectus of an instrument 
issued after the date on which the advanced approaches FDIC-supervised 
institution becomes subject to this part under Sec.  324.1(f) must 
disclose that the holders of the instrument may be fully subordinated to 
interests held by the U.S. government in the event that the FDIC-
supervised institution enters into a receivership, insolvency, 
liquidation, or similar proceeding.
    (2) Total capital minority interest, subject to the limitations set 
forth in Sec.  324.21(e), that is not included in the FDIC-supervised 
institution's tier 1 capital.
    (3) ALLL up to 1.25 percent of the FDIC-supervised institution's 
standardized total risk-weighted assets not including any amount of the 
ALLL (and excluding in the case of a market risk FDIC-supervised 
institution, its standardized market risk-weighted assets).
    (4) Any instrument that qualified as tier 2 capital under the FDIC's 
general risk-based capital rules under 12 CFR part 325, appendix A 
(state nonmember banks) and 12 CFR part 390, appendix Z (state saving 
associations) as then in effect, that were issued under the Small 
Business Jobs Act of 2010,\20\ or prior to October 4, 2010, under the 
Emergency Economic Stabilization Act of 2008.\21\
---------------------------------------------------------------------------

    \20\ Public Law 111-240; 124 Stat. 2504 (2010)
    \21\ Public Law 110-343, 122 Stat. 3765 (2008)
---------------------------------------------------------------------------

    (5) For an FDIC-supervised institution that makes an AOCI opt-out 
election (as defined in Sec.  324.22(b)(2), 45 percent of pretax net 
unrealized gains on available-for-sale preferred stock classified as an 
equity security under GAAP and available-for-sale equity exposures.
    (6) Notwithstanding the criteria for tier 2 capital instruments 
referenced above, an instrument with terms that provide that the 
instrument may be called earlier than five years upon the occurrence of 
a rating agency event does not violate the criterion in paragraph 
(d)(1)(v) of this section provided that the instrument was issued and 
included in an FDIC-supervised institution's tier 1 or tier 2 capital 
prior to January 1, 2014, and that such instrument satisfies all other 
criteria under this paragraph (d).
    (e) FDIC approval of a capital element. (1) An FDIC-supervised 
institution must receive FDIC prior approval to include a capital 
element (as listed in this section) in its common equity tier 1 capital, 
additional tier 1 capital, or tier 2 capital unless the element:
    (i) Was included in an FDIC-supervised institution's tier 1 capital 
or tier 2 capital prior to May 19, 2010, in accordance with the FDIC's 
risk-based capital rules that were effective as of that date and the 
underlying instrument may continue to be included under the criteria set 
forth in this section; or
    (ii) Is equivalent, in terms of capital quality and ability to 
absorb losses with respect to all material terms, to a regulatory 
capital element the FDIC determined may be included in regulatory 
capital pursuant to paragraph (e)(3) of this section.
    (2) When considering whether an FDIC-supervised institution may 
include a regulatory capital element in

[[Page 235]]

its common equity tier 1 capital, additional tier 1 capital, or tier 2 
capital, the FDIC will consult with the OCC and the Federal Reserve.
    (3) After determining that a regulatory capital element may be 
included in an FDIC-supervised institution's common equity tier 1 
capital, additional tier 1 capital, or tier 2 capital, the FDIC will 
make its decision publicly available, including a brief description of 
the material terms of the regulatory capital element and the rationale 
for the determination.

[78 FR 55471, Sept. 10, 2013, as amended at 81 FR 71354, Oct. 17, 2016]



Sec.  324.21  Minority interest.

    (a) Applicability. For purposes of Sec.  324.20, an FDIC-supervised 
institution is subject to the minority interest limitations in this 
section if:
    (1) A consolidated subsidiary of the FDIC-supervised institution has 
issued regulatory capital that is not owned by the FDIC-supervised 
institution; and
    (2) For each relevant regulatory capital ratio of the consolidated 
subsidiary, the ratio exceeds the sum of the subsidiary's minimum 
regulatory capital requirements plus its capital conservation buffer.
    (b) Difference in capital adequacy standards at the subsidiary 
level. For purposes of the minority interest calculations in this 
section, if the consolidated subsidiary issuing the capital is not 
subject to capital adequacy standards similar to those of the FDIC-
supervised institution, the FDIC-supervised institution must assume that 
the capital adequacy standards of the FDIC-supervised institution apply 
to the subsidiary.
    (c) Common equity tier 1 minority interest includable in the common 
equity tier 1 capital of the FDIC-supervised institution. For each 
consolidated subsidiary of an FDIC-supervised institution, the amount of 
common equity tier 1 minority interest the FDIC-supervised institution 
may include in common equity tier 1 capital is equal to:
    (1) The common equity tier 1 minority interest of the subsidiary; 
minus
    (2) The percentage of the subsidiary's common equity tier 1 capital 
that is not owned by the FDIC-supervised institution, multiplied by the 
difference between the common equity tier 1 capital of the subsidiary 
and the lower of:
    (i) The amount of common equity tier 1 capital the subsidiary must 
hold, or would be required to hold pursuant to paragraph (b) of this 
section, to avoid restrictions on distributions and discretionary bonus 
payments under Sec.  324.11 or equivalent standards established by the 
subsidiary's home country supervisor; or
    (ii)(A) The standardized total risk-weighted assets of the FDIC-
supervised institution that relate to the subsidiary multiplied by
    (B) The common equity tier 1 capital ratio the subsidiary must 
maintain to avoid restrictions on distributions and discretionary bonus 
payments under Sec.  324.11 or equivalent standards established by the 
subsidiary's home country supervisor.
    (d) Tier 1 minority interest includable in the tier 1 capital of the 
FDIC-supervised institution. For each consolidated subsidiary of the 
FDIC-supervised institution, the amount of tier 1 minority interest the 
FDIC-supervised institution may include in tier 1 capital is equal to:
    (1) The tier 1 minority interest of the subsidiary; minus
    (2) The percentage of the subsidiary's tier 1 capital that is not 
owned by the FDIC-supervised institution multiplied by the difference 
between the tier 1 capital of the subsidiary and the lower of:
    (i) The amount of tier 1 capital the subsidiary must hold, or would 
be required to hold pursuant to paragraph (b) of this section, to avoid 
restrictions on distributions and discretionary bonus payments under 
Sec.  324.11 or equivalent standards established by the subsidiary's 
home country supervisor, or
    (ii)(A) The standardized total risk-weighted assets of the FDIC-
supervised institution that relate to the subsidiary multiplied by
    (B) The tier 1 capital ratio the subsidiary must maintain to avoid 
restrictions on distributions and discretionary bonus payments under 
Sec.  324.11 or equivalent standards established by the subsidiary's 
home country supervisor.
    (e) Total capital minority interest includable in the total capital 
of the FDIC-

[[Page 236]]

supervised institution. For each consolidated subsidiary of the FDIC-
supervised institution, the amount of total capital minority interest 
the FDIC-supervised institution may include in total capital is equal 
to:
    (1) The total capital minority interest of the subsidiary; minus
    (2) The percentage of the subsidiary's total capital that is not 
owned by the FDIC-supervised institution multiplied by the difference 
between the total capital of the subsidiary and the lower of:
    (i) The amount of total capital the subsidiary must hold, or would 
be required to hold pursuant to paragraph (b) of this section, to avoid 
restrictions on distributions and discretionary bonus payments under 
Sec.  324.11 or equivalent standards established by the subsidiary's 
home country supervisor, or
    (ii)(A) The standardized total risk-weighted assets of the FDIC-
supervised institution that relate to the subsidiary multiplied by
    (B) The total capital ratio the subsidiary must maintain to avoid 
restrictions on distributions and discretionary bonus payments under 
Sec.  324.11 or equivalent standards established by the subsidiary's 
home country supervisor.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20759, Apr. 14, 2014]



Sec.  324.22  Regulatory capital adjustments and deductions.

    (a) Regulatory capital deductions from common equity tier 1 capital. 
An FDIC-supervised institution must deduct from the sum of its common 
equity tier 1 capital elements the items set forth in this paragraph 
(a):
    (1) Goodwill, net of associated deferred tax liabilities (DTLs) in 
accordance with paragraph (e) of this section, including goodwill that 
is embedded in the valuation of a significant investment in the capital 
of an unconsolidated financial institution in the form of common stock 
(and that is reflected in the consolidated financial statements of the 
FDIC-supervised institution), in accordance with paragraph (d) of this 
section;
    (2) Intangible assets, other than MSAs, net of associated DTLs in 
accordance with paragraph (e) of this section;
    (3) Deferred tax assets (DTAs) that arise from net operating loss 
and tax credit carryforwards net of any related valuation allowances and 
net of DTLs in accordance with paragraph (e) of this section;
    (4) Any gain-on-sale in connection with a securitization exposure;
    (5)(i) Any defined benefit pension fund net asset, net of any 
associated DTL in accordance with paragraph (e) of this section, held by 
a depository institution holding company. With the prior approval of the 
FDIC, this deduction is not required for any defined benefit pension 
fund net asset to the extent the depository institution holding company 
has unrestricted and unfettered access to the assets in that fund.
    (ii) For an insured depository institution, no deduction is 
required.
    (iii) An FDIC-supervised institution must risk weight any portion of 
the defined benefit pension fund asset that is not deducted under 
paragraphs (a)(5)(i) or (a)(5)(ii) of this section as if the FDIC-
supervised institution directly holds a proportional ownership share of 
each exposure in the defined benefit pension fund.
    (6) For an advanced approaches FDIC-supervised institution that has 
completed the parallel run process and that has received notification 
from the FDIC pursuant to Sec.  324.121(d), the amount of expected 
credit loss that exceeds its eligible credit reserves; and
    (7) With respect to a financial subsidiary, the aggregate amount of 
the FDIC-supervised institution's outstanding equity investment, 
including retained earnings, in its financial subsidiaries (as defined 
in 12 CFR 362.17). An FDIC-supervised institution must not consolidate 
the assets and liabilities of a financial subsidiary with those of the 
parent bank, and no other deduction is required under paragraph (c) of 
this section for investments in the capital instruments of financial 
subsidiaries.
    (8) (i) A state savings association must deduct the aggregate amount 
of its outstanding investments, (both equity and debt) in, and 
extensions of

[[Page 237]]

credit to, subsidiaries that are not includable subsidiaries as defined 
in paragraph (a)(8)(iv) of this section and may not consolidate the 
assets and liabilities of the subsidiary with those of the state savings 
association. Any such deductions shall be from assets and common equity 
tier 1 capital, except as provided in paragraphs (a)(8)(ii) and (iii) of 
this section.
    (ii) If a state savings association has any investments (both debt 
and equity) in, or extensions of credit to, one or more subsidiaries 
engaged in any activity that would not fall within the scope of 
activities in which includable subsidiaries as defined in paragraph 
(a)(8)(iv) of this section may engage, it must deduct such investments 
and extensions of credit from assets and, thus, common equity tier 1 
capital in accordance with paragraph (a)(8)(i) of this section.
    (iii) If a state savings association holds a subsidiary (either 
directly or through a subsidiary) that is itself a domestic depository 
institution, the FDIC may, in its sole discretion upon determining that 
the amount of common equity tier 1 capital that would be required would 
be higher if the assets and liabilities of such subsidiary were 
consolidated with those of the parent state savings association than the 
amount that would be required if the parent state savings association's 
investment were deducted pursuant to paragraphs (a)(8)(i) and (ii) of 
this section, consolidate the assets and liabilities of that subsidiary 
with those of the parent state savings association in calculating the 
capital adequacy of the parent state savings association, regardless of 
whether the subsidiary would otherwise be an includable subsidiary as 
defined in paragraph (a)(8)(iv) of this section.
    (iv) For purposes of this section, the term includable subsidiary 
means a subsidiary of a state savings association that is:
    (A) Engaged solely in activities that are permissible for a national 
bank;
    (B) 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 state savings association's files;
    (C) Engaged solely in mortgage-banking activities;
    (D)(1) Itself an insured depository institution or a company the 
sole investment of which is an insured depository institution, and
    (2) Was acquired by the parent state savings association prior to 
May 1, 1989; or
    (E) A subsidiary of any state savings association existing as a 
state savings association on August 9, 1989 that--
    (1) Was chartered prior to October 15, 1982, as a savings bank or a 
cooperative bank under state law, or
    (2) 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.
    (9) Identified losses. An FDIC-supervised institution must deduct 
identified losses (to the extent that common equity tier 1 capital would 
have been reduced if the appropriate accounting entries to reflect the 
identified losses had been recorded on the FDIC-supervised institution's 
books).
    (b) Regulatory adjustments to common equity tier 1 capital. (1) An 
FDIC-supervised institution must adjust the sum of common equity tier 1 
capital elements pursuant to the requirements set forth in this 
paragraph (b). Such adjustments to common equity tier 1 capital must be 
made net of the associated deferred tax effects.
    (i) An FDIC-supervised institution that makes an AOCI opt-out 
election (as defined in paragraph (b)(2) of this section) must make the 
adjustments required under Sec.  324.22(b)(2)(i).
    (ii) An FDIC-supervised institution that is an advanced approaches 
FDIC-supervised institution, and an FDIC-supervised institution that has 
not made an AOCI opt-out election (as defined in paragraph (b)(2) of 
this section), must deduct any accumulated net gains and add any 
accumulated net losses on cash flow hedges included in AOCI that relate 
to the hedging of items that are not recognized at fair value on the 
balance sheet.
    (iii) An FDIC-supervised institution must deduct any net gain and 
add any net loss related to changes in the fair value of liabilities 
that are due to changes in the FDIC-supervised institution's own credit 
risk. An advanced

[[Page 238]]

approaches FDIC-supervised institution must deduct the difference 
between its credit spread premium and the risk-free rate for derivatives 
that are liabilities as part of this adjustment.
    (2) AOCI opt-out election. (i) An FDIC-supervised institution that 
is not an advanced approaches FDIC-supervised institution may make a 
one-time election to opt out of the requirement to include all 
components of AOCI (with the exception of accumulated net gains and 
losses on cash flow hedges related to items that are not fair-valued on 
the balance sheet) in common equity tier 1 capital (AOCI opt-out 
election). An FDIC-supervised institution that makes an AOCI opt-out 
election in accordance with this paragraph (b)(2) must adjust common 
equity tier 1 capital as follows:
    (A) Subtract any net unrealized gains and add any net unrealized 
losses on available-for-sale securities;
    (B) Subtract any net unrealized losses on available-for-sale 
preferred stock classified as an equity security under GAAP and 
available-for-sale equity exposures;
    (C) Subtract any accumulated net gains and add any accumulated net 
losses on cash flow hedges;
    (D) Subtract any amounts recorded in AOCI attributed to defined 
benefit postretirement plans resulting from the initial and subsequent 
application of the relevant GAAP standards that pertain to such plans 
(excluding, at the FDIC-supervised institution's option, the portion 
relating to pension assets deducted under paragraph (a)(5) of this 
section); and
    (E) Subtract any net unrealized gains and add any net unrealized 
losses on held-to-maturity securities that are included in AOCI.
    (ii) An FDIC-supervised institution that is not an advanced 
approaches FDIC-supervised institution must make its AOCI opt-out 
election in its Call Report filed for the first reporting period after 
the date required for such FDIC-supervised institution to comply with 
subpart A of this part as set forth in Sec.  324.1(f).
    (iii) With respect to an FDIC-supervised institution that is not an 
advanced approaches FDIC-supervised institution, each of its subsidiary 
banking organizations that is subject to regulatory capital requirements 
issued by the Federal Reserve, the FDIC, or the OCC \22\ must elect the 
same option as the FDIC-supervised institution pursuant to this 
paragraph (b)(2).
---------------------------------------------------------------------------

    \22\ These rules include the regulatory capital requirements set 
forth at 12 CFR part 3 (OCC); 12 CFR part 217 (Board); 12 CFR part 324 
(FDIC).
---------------------------------------------------------------------------

    (iv) With prior notice to the FDIC, an FDIC-supervised institution 
resulting from a merger, acquisition, or purchase transaction and that 
is not an advanced approaches FDIC-supervised institution may change its 
AOCI opt-out election in its Call Report filed for the first reporting 
period after the date required for such FDIC-supervised institution to 
comply with subpart A of this part as set forth in Sec.  324.1(f) if:
    (A) Other than as set forth in paragraph (b)(2)(iv)(C) of this 
section, the merger, acquisition, or purchase transaction involved the 
acquisition or purchase of all or substantially all of either the assets 
or voting stock of another banking organization that is subject to 
regulatory capital requirements issued by the Federal Reserve, the FDIC, 
or the OCC;
    (B) Prior to the merger, acquisition, or purchase transaction, only 
one of the banking organizations involved in the transaction made an 
AOCI opt-out election under this section; and
    (C) An FDIC-supervised institution may, with the prior approval of 
the FDIC, change its AOCI opt-out election under this paragraph (b) in 
the case of a merger, acquisition, or purchase transaction that meets 
the requirements set forth at paragraph (b)(2)(iv)(B) of this section, 
but does not meet the requirements of paragraph (b)(2)(iv)(A). In making 
such a determination, the FDIC may consider the terms of the merger, 
acquisition, or purchase transaction, as well as the extent of any 
changes to the risk profile, complexity, and scope of operations of the 
FDIC-supervised institution resulting from the merger, acquisition, or 
purchase transaction.

[[Page 239]]

    (c) Deductions from regulatory capital related to investments in 
capital instruments--\23\ (1) Investment in the FDIC-supervised 
institution's own capital instruments. An FDIC-supervised institution 
must deduct an investment in the FDIC-supervised institution's own 
capital instruments as follows:
---------------------------------------------------------------------------

    \23\ The FDIC-supervised institution must calculate amounts deducted 
under paragraphs (c) through (f) of this section after it calculates the 
amount of ALLL includable in tier 2 capital under Sec.  324.20(d)(3).
---------------------------------------------------------------------------

    (i) An FDIC-supervised institution must deduct an investment in the 
FDIC-supervised institution's own common stock instruments from its 
common equity tier 1 capital elements to the extent such instruments are 
not excluded from regulatory capital under Sec.  324.20(b)(1);
    (ii) An FDIC-supervised institution must deduct an investment in the 
FDIC-supervised institution's own additional tier 1 capital instruments 
from its additional tier 1 capital elements; and
    (iii) An FDIC-supervised institution must deduct an investment in 
the FDIC-supervised institution's own tier 2 capital instruments from 
its tier 2 capital elements.
    (2) Corresponding deduction approach. For purposes of subpart C of 
this part, the corresponding deduction approach is the methodology used 
for the deductions from regulatory capital related to reciprocal cross 
holdings (as described in paragraph (c)(3) of this section), non-
significant investments in the capital of unconsolidated financial 
institutions (as described in paragraph (c)(4) of this section), and 
non-common stock significant investments in the capital of 
unconsolidated financial institutions (as described in paragraph (c)(5) 
of this section). Under the corresponding deduction approach, an FDIC-
supervised institution must make deductions from the component of 
capital for which the underlying instrument would qualify if it were 
issued by the FDIC-supervised institution itself, as described in 
paragraphs (c)(2)(i)-(iii) of this section. If the FDIC-supervised 
institution does not have a sufficient amount of a specific component of 
capital to effect the required deduction, the shortfall must be deducted 
according to paragraph (f) of this section.
    (i) If an investment is in the form of an instrument issued by a 
financial institution that is not a regulated financial institution, the 
FDIC-supervised institution must treat the instrument as:
    (A) A common equity tier 1 capital instrument if it is common stock 
or represents the most subordinated claim in liquidation of the 
financial institution; and
    (B) An additional tier 1 capital instrument if it is subordinated to 
all creditors of the financial institution and is senior in liquidation 
only to common shareholders.
    (ii) If an investment is in the form of an instrument issued by a 
regulated financial institution and the instrument does not meet the 
criteria for common equity tier 1, additional tier 1 or tier 2 capital 
instruments under Sec.  324.20, the FDIC-supervised institution must 
treat the instrument as:
    (A) A common equity tier 1 capital instrument if it is common stock 
included in GAAP equity or represents the most subordinated claim in 
liquidation of the financial institution;
    (B) An additional tier 1 capital instrument if it is included in 
GAAP equity, subordinated to all creditors of the financial institution, 
and senior in a receivership, insolvency, liquidation, or similar 
proceeding only to common shareholders; and
    (C) A tier 2 capital instrument if it is not included in GAAP equity 
but considered regulatory capital by the primary supervisor of the 
financial institution.
    (iii) If an investment is in the form of a non-qualifying capital 
instrument (as defined in Sec.  324.300(c)), the FDIC-supervised 
institution must treat the instrument as:
    (A) An additional tier 1 capital instrument if such instrument was 
included in the issuer's tier 1 capital prior to May 19, 2010; or
    (B) A tier 2 capital instrument if such instrument was included in 
the issuer's tier 2 capital (but not includable in tier 1 capital) prior 
to May 19, 2010.

[[Page 240]]

    (3) Reciprocal cross holdings in the capital of financial 
institutions. An FDIC-supervised institution must deduct investments in 
the capital of other financial institutions it holds reciprocally, where 
such reciprocal cross holdings result from a formal or informal 
arrangement to swap, exchange, or otherwise intend to hold each other's 
capital instruments, by applying the corresponding deduction approach.
    (4) Non-significant investments in the capital of unconsolidated 
financial institutions. (i) An FDIC-supervised institution must deduct 
its non-significant investments in the capital of unconsolidated 
financial institutions (as defined in Sec.  324.2) that, in the 
aggregate, exceed 10 percent of the sum of the FDIC-supervised 
institution's common equity tier 1 capital elements minus all deductions 
from and adjustments to common equity tier 1 capital elements required 
under paragraphs (a) through (c)(3) of this section (the 10 percent 
threshold for non-significant investments) by applying the corresponding 
deduction approach.\24\ The deductions described in this section are net 
of associated DTLs in accordance with paragraph (e) of this section. In 
addition, an FDIC-supervised institution that underwrites a failed 
underwriting, with the prior written approval of the FDIC, for the 
period of time stipulated by the FDIC, is not required to deduct a non-
significant investment in the capital of an unconsolidated financial 
institution pursuant to this paragraph (c) to the extent the investment 
is related to the failed underwriting.\25\
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    \24\ With the prior written approval of the FDIC, for the period of 
time stipulated by the FDIC, a FDIC-supervised institution is not 
required to deduct a non-significant investment in the capital 
instrument of an unconsolidated financial institution pursuant to this 
paragraph if the financial institution is in distress and if such 
investment is made for the purpose of providing financial support to the 
financial institution, as determined by the FDIC.
    \25\ Any non-significant investments in the capital of 
unconsolidated financial institutions that do not exceed the 10 percent 
threshold for non-significant investments under this section must be 
assigned the appropriate risk weight under subparts D, E, or F of this 
part, as applicable.
---------------------------------------------------------------------------

    (ii) The amount to be deducted under this section from a specific 
capital component is equal to:
    (A) The FDIC-supervised institution's non-significant investments in 
the capital of unconsolidated financial institutions exceeding the 10 
percent threshold for non-significant investments, multiplied by
    (B) The ratio of the FDIC-supervised institution's non-significant 
investments in the capital of unconsolidated financial institutions in 
the form of such capital component to the FDIC-supervised institution's 
total non-significant investments in unconsolidated financial 
institutions.
    (5) Significant investments in the capital of unconsolidated 
financial institutions that are not in the form of common stock. An 
FDIC-supervised institution must deduct its significant investments in 
the capital of unconsolidated financial institutions that are not in the 
form of common stock by applying the corresponding deduction 
approach.\26\ The deductions described in this section are net of 
associated DTLs in accordance with paragraph (e) of this section. In 
addition, with the prior written approval of the FDIC, for the period of 
time stipulated by the FDIC, an FDIC-supervised institution that 
underwrites a failed underwriting is not required to deduct a 
significant investment in the capital of an unconsolidated financial 
institution pursuant to this paragraph (c) if such investment is related 
to such failed underwriting.
---------------------------------------------------------------------------

    \26\ With prior written approval of the FDIC, for the period of time 
stipulated by the FDIC, a FDIC-supervised institution is not required to 
deduct a significant investment in the capital instrument of an 
unconsolidated financial institution in distress which is not in the 
form of common stock pursuant to this section if such investment is made 
for the purpose of providing financial support to the financial 
institution as determined by the FDIC.
---------------------------------------------------------------------------

    (d) Items subject to the 10 and 15 percent common equity tier 1 
capital deduction thresholds. (1) An FDIC-supervised institution must 
deduct from common equity tier 1 capital elements the amount of each of 
the items set forth in this paragraph (d) that, individually, exceeds 10 
percent of the sum of the

[[Page 241]]

FDIC-supervised institution's common equity tier 1 capital elements, 
less adjustments to and deductions from common equity tier 1 capital 
required under paragraphs (a) through (c) of this section (the 10 
percent common equity tier 1 capital deduction threshold).
    (i) DTAs arising from temporary differences that the FDIC-supervised 
institution could not realize through net operating loss carrybacks, net 
of any related valuation allowances and net of DTLs, in accordance with 
paragraph (e) of this section. An FDIC-supervised institution is not 
required to deduct from the sum of its common equity tier 1 capital 
elements DTAs (net of any related valuation allowances and net of DTLs, 
in accordance with Sec.  324.22(e)) arising from timing differences that 
the FDIC-supervised institution could realize through net operating loss 
carrybacks. The FDIC-supervised institution must risk weight these 
assets at 100 percent. For an FDIC-supervised institution that is a 
member of a consolidated group for tax purposes, the amount of DTAs that 
could be realized through net operating loss carrybacks may not exceed 
the amount that the FDIC-supervised institution could reasonably expect 
to have refunded by its parent holding company.
    (ii) MSAs net of associated DTLs, in accordance with paragraph (e) 
of this section.
    (iii) Significant investments in the capital of unconsolidated 
financial institutions in the form of common stock, net of associated 
DTLs in accordance with paragraph (e) of this section.\27\ Significant 
investments in the capital of unconsolidated financial institutions in 
the form of common stock subject to the 10 percent common equity tier 1 
capital deduction threshold may be reduced by any goodwill embedded in 
the valuation of such investments deducted by the FDIC-supervised 
institution pursuant to paragraph (a)(1) of this section. In addition, 
with the prior written approval of the FDIC, for the period of time 
stipulated by the FDIC, an FDIC-supervised institution that underwrites 
a failed underwriting is not required to deduct a significant investment 
in the capital of an unconsolidated financial institution in the form of 
common stock pursuant to this paragraph (d) if such investment is 
related to such failed underwriting.
---------------------------------------------------------------------------

    \27\ With the prior written approval of the FDIC, for the period of 
time stipulated by the FDIC, a FDIC-supervised institution is not 
required to deduct a significant investment in the capital instrument of 
an unconsolidated financial institution in distress in the form of 
common stock pursuant to this section if such investment is made for the 
purpose of providing financial support to the financial institution as 
determined by the FDIC.
---------------------------------------------------------------------------

    (2) An FDIC-supervised institution must deduct from common equity 
tier 1 capital elements the items listed in paragraph (d)(1) of this 
section that are not deducted as a result of the application of the 10 
percent common equity tier 1 capital deduction threshold, and that, in 
aggregate, exceed 17.65 percent of the sum of the FDIC-supervised 
institution's common equity tier 1 capital elements, minus adjustments 
to and deductions from common equity tier 1 capital required under 
paragraphs (a) through (c) of this section, minus the items listed in 
paragraph (d)(1) of this section (the 15 percent common equity tier 1 
capital deduction threshold). Any goodwill that has been deducted under 
paragraph (a)(1) of this section can be excluded from the significant 
investments in the capital of unconsolidated financial institutions in 
the form of common stock.\28\
---------------------------------------------------------------------------

    \28\ The amount of the items in paragraph (d) of this section that 
is not deducted from common equity tier 1 capital pursuant to this 
section must be included in the risk-weighted assets of the FDIC-
supervised institution and assigned a 250 percent risk weight.
---------------------------------------------------------------------------

    (3) For purposes of calculating the amount of DTAs subject to the 10 
and 15 percent common equity tier 1 capital deduction thresholds, an 
FDIC-supervised institution may exclude DTAs and DTLs relating to 
adjustments made to common equity tier 1 capital under Sec.  paragraph 
(b) of this section. An FDIC-supervised institution that elects to 
exclude DTAs relating to adjustments under paragraph (b) of this section 
also must exclude DTLs and must do so consistently in all future

[[Page 242]]

calculations. An FDIC-supervised institution may change its exclusion 
preference only after obtaining the prior approval of the FDIC.
    (e) Netting of DTLs against assets subject to deduction. (1) Except 
as described in paragraph (e)(3) of this section, netting of DTLs 
against assets that are subject to deduction under this section is 
permitted, but not required, if the following conditions are met:
    (i) The DTL is associated with the asset; and
    (ii) The DTL would be extinguished if the associated asset becomes 
impaired or is derecognized under GAAP.
    (2) A DTL may only be netted against a single asset.
    (3) For purposes of calculating the amount of DTAs subject to the 
threshold deduction in paragraph (d) of this section, the amount of DTAs 
that arise from net operating loss and tax credit carryforwards, net of 
any related valuation allowances, and of DTAs arising from temporary 
differences that the FDIC-supervised institution could not realize 
through net operating loss carrybacks, net of any related valuation 
allowances, may be offset by DTLs (that have not been netted against 
assets subject to deduction pursuant to paragraph (e)(1) of this 
section) subject to the conditions set forth in this paragraph (e).
    (i) Only the DTAs and DTLs that relate to taxes levied by the same 
taxation authority and that are eligible for offsetting by that 
authority may be offset for purposes of this deduction.
    (ii) The amount of DTLs that the FDIC-supervised institution nets 
against DTAs that arise from net operating loss and tax credit 
carryforwards, net of any related valuation allowances, and against DTAs 
arising from temporary differences that the FDIC-supervised institution 
could not realize through net operating loss carrybacks, net of any 
related valuation allowances, must be allocated in proportion to the 
amount of DTAs that arise from net operating loss and tax credit 
carryforwards (net of any related valuation allowances, but before any 
offsetting of DTLs) and of DTAs arising from temporary differences that 
the FDIC-supervised institution could not realize through net operating 
loss carrybacks (net of any related valuation allowances, but before any 
offsetting of DTLs), respectively.
    (4) An FDIC-supervised institution may offset DTLs embedded in the 
carrying value of a leveraged lease portfolio acquired in a business 
combination that are not recognized under GAAP against DTAs that are 
subject to paragraph (d) of this section in accordance with this 
paragraph (e).
    (5) An FDIC-supervised institution must net DTLs against assets 
subject to deduction under this section in a consistent manner from 
reporting period to reporting period. An FDIC-supervised institution may 
change its preference regarding the manner in which it nets DTLs against 
specific assets subject to deduction under this section only after 
obtaining the prior approval of the FDIC.
    (f) Insufficient amounts of a specific regulatory capital component 
to effect deductions. Under the corresponding deduction approach, if an 
FDIC-supervised institution does not have a sufficient amount of a 
specific component of capital to effect the required deduction after 
completing the deductions required under paragraph (d) of this section, 
the FDIC-supervised institution must deduct the shortfall from the next 
higher (that is, more subordinated) component of regulatory capital.
    (g) Treatment of assets that are deducted. An FDIC-supervised 
institution must exclude from standardized total risk-weighted assets 
and, as applicable, advanced approaches total risk-weighted assets any 
item deducted from regulatory capital under paragraphs (a), (c), and (d) 
of this section.
    (h) Net long position. (1) For purposes of calculating an investment 
in the FDIC-supervised institution's own capital instrument and an 
investment in the capital of an unconsolidated financial institution 
under this section, the net long position is the gross long position in 
the underlying instrument determined in accordance with paragraph (h)(2) 
of this section, as adjusted to recognize a short position in the same 
instrument calculated in accordance with paragraph (h)(3) of this 
section.
    (2) Gross long position. The gross long position is determined as 
follows:

[[Page 243]]

    (i) For an equity exposure that is held directly, the adjusted 
carrying value as that term is defined in Sec.  324.51(b);
    (ii) For an exposure that is held directly and is not an equity 
exposure or a securitization exposure, the exposure amount as that term 
is defined in Sec.  324.2;
    (iii) For an indirect exposure, the FDIC-supervised institution's 
carrying value of the investment in the investment fund, provided that, 
alternatively:
    (A) An FDIC-supervised institution may, with the prior approval of 
the FDIC, use a conservative estimate of the amount of its investment in 
its own capital instruments or the capital of an unconsolidated 
financial institution held through a position in an index; or
    (B) An FDIC-supervised institution may calculate the gross long 
position for the FDIC-supervised institution's own capital instruments 
or the capital of an unconsolidated financial institution by multiplying 
the FDIC-supervised institution's carrying value of its investment in 
the investment fund by either:
    (1) The highest stated investment limit (in percent) for investments 
in the FDIC-supervised institution's own capital instruments or the 
capital of unconsolidated financial institutions as stated in the 
prospectus, partnership agreement, or similar contract defining 
permissible investments of the investment fund; or
    (2) The investment fund's actual holdings of own capital instruments 
or the capital of unconsolidated financial institutions.
    (iv) For a synthetic exposure, the amount of the FDIC-supervised 
institution's loss on the exposure if the reference capital instrument 
were to have a value of zero.
    (3) Adjustments to reflect a short position. In order to adjust the 
gross long position to recognize a short position in the same 
instrument, the following criteria must be met:
    (i) The maturity of the short position must match the maturity of 
the long position, or the short position has a residual maturity of at 
least one year (maturity requirement); or
    (ii) For a position that is a trading asset or trading liability 
(whether on- or off-balance sheet) as reported on the FDIC-supervised 
institution's Call Report, if the FDIC-supervised institution has a 
contractual right or obligation to sell the long position at a specific 
point in time and the counterparty to the contract has an obligation to 
purchase the long position if the FDIC-supervised institution exercises 
its right to sell, this point in time may be treated as the maturity of 
the long position such that the maturity of the long position and short 
position are deemed to match for purposes of the maturity requirement, 
even if the maturity of the short position is less than one year; and
    (iii) For an investment in the FDIC-supervised institution's own 
capital instrument under paragraph (c)(1) of this section or an 
investment in a capital of an unconsolidated financial institution under 
paragraphs (c)(4), (c)(5), and (d)(1)(iii) of this section:
    (A) An FDIC-supervised institution may only net a short position 
against a long position in the FDIC-supervised institution's own capital 
instrument under paragraph (c)(1) of this section if the short position 
involves no counterparty credit risk.
    (B) A gross long position in an FDIC-supervised institution's own 
capital instrument or in a capital instrument of an unconsolidated 
financial institution resulting from a position in an index may be 
netted against a short position in the same index. Long and short 
positions in the same index without maturity dates are considered to 
have matching maturities.
    (C) A short position in an index that is hedging a long cash or 
synthetic position in an FDIC-supervised institution's own capital 
instrument or in a capital instrument of an unconsolidated financial 
institution can be decomposed to provide recognition of the hedge. More 
specifically, the portion of the index that is composed of the same 
underlying instrument that is being hedged may be used to offset the 
long position if both the long position being hedged and the short 
position in the index are reported as a trading asset or trading 
liability (whether on- or off-balance sheet) on the FDIC-supervised

[[Page 244]]

institution's Call Report, and the hedge is deemed effective by the 
FDIC-supervised institution's internal control processes, which have not 
been found to be inadequate by the FDIC.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20759, Apr. 14, 2014; 
80 FR 41422, July 15, 2015; 81 FR 71354, Oct. 17, 2016; 83 FR 17740, 
Apr. 24, 2018]



Sec. Sec.  324.23-324.29  [Reserved]



          Subpart D_Risk-Weighted Assets_Standardized Approach



Sec.  324.30  Applicability.

    (a) This subpart sets forth methodologies for determining risk-
weighted assets for purposes of the generally applicable risk-based 
capital requirements for all FDIC-supervised institutions.
    (b) Notwithstanding paragraph (a) of this section, a market risk 
FDIC-supervised institution must exclude from its calculation of risk-
weighted assets under this subpart the risk-weighted asset amounts of 
all covered positions, as defined in subpart F of this part (except 
foreign exchange positions that are not trading positions, OTC 
derivative positions, cleared transactions, and unsettled transactions).

              Risk-Weighted Assets for General Credit Risk



Sec.  324.31  Mechanics for calculating risk-weighted assets 
for general credit risk.

    (a) General risk-weighting requirements. An FDIC-supervised 
institution must apply risk weights to its exposures as follows:
    (1) An FDIC-supervised institution must determine the exposure 
amount of each on-balance sheet exposure, each OTC derivative contract, 
and each off-balance sheet commitment, trade and transaction-related 
contingency, guarantee, repo-style transaction, financial standby letter 
of credit, forward agreement, or other similar transaction that is not:
    (i) An unsettled transaction subject to Sec.  324.38;
    (ii) A cleared transaction subject to Sec.  324.35;
    (iii) A default fund contribution subject to Sec.  324.35;
    (iv) A securitization exposure subject to Sec. Sec.  324.41 through 
324.45; or
    (v) An equity exposure (other than an equity OTC derivative 
contract) subject to Sec. Sec.  324.51 through 324.53.
    (2) The FDIC-supervised institution must multiply each exposure 
amount by the risk weight appropriate to the exposure based on the 
exposure type or counterparty, eligible guarantor, or financial 
collateral to determine the risk-weighted asset amount for each 
exposure.
    (b) Total risk-weighted assets for general credit risk equals the 
sum of the risk-weighted asset amounts calculated under this section.



Sec.  324.32  General risk weights.

    (a) Sovereign exposures--(1) Exposures to the U.S. government. (i) 
Notwithstanding any other requirement in this subpart, an FDIC-
supervised institution must assign a zero percent risk weight to:
    (A) An exposure to the U.S. government, its central bank, or a U.S. 
government agency; and
    (B) The portion of an exposure that is directly and unconditionally 
guaranteed by the U.S. government, its central bank, or a U.S. 
government agency. This includes a deposit or other exposure, or the 
portion of a deposit or other exposure, that is insured or otherwise 
unconditionally guaranteed by the FDIC or National Credit Union 
Administration.
    (ii) An FDIC-supervised institution must assign a 20 percent risk 
weight to the portion of an exposure that is conditionally guaranteed by 
the U.S. government, its central bank, or a U.S. government agency. This 
includes an exposure, or the portion of an exposure, that is 
conditionally guaranteed by the FDIC or National Credit Union 
Administration.
    (2) Other sovereign exposures. In accordance with Table 1 to Sec.  
324.32, an FDIC-supervised institution must assign a risk weight to a 
sovereign exposure based on the CRC applicable to the sovereign or the 
sovereign's OECD membership status if there is no CRC applicable to the 
sovereign.

[[Page 245]]



     Table 1 to Sec.   324.32--Risk Weights for Sovereign Exposures
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                                           Risk Weight
                                                           (in percent)
------------------------------------------------------------------------
CRC............................................    0-1                0
                                                     2               20
                                                     3               50
                                                   4-6              100
                                                     7              150
------------------------------------------------------------------------
OECD Member with No CRC................................               0
Non-OECD Member with No CRC............................             100
Sovereign Default......................................             150
------------------------------------------------------------------------

    (3) Certain sovereign exposures. Notwithstanding paragraph (a)(2) of 
this section, an FDIC-supervised institution may assign to a sovereign 
exposure a risk weight that is lower than the applicable risk weight in 
Table 1 to Sec.  324.32 if:
    (i) The exposure is denominated in the sovereign's currency;
    (ii) The FDIC-supervised institution has at least an equivalent 
amount of liabilities in that currency; and
    (iii) The risk weight is not lower than the risk weight that the 
home country supervisor allows FDIC-supervised institutions under its 
jurisdiction to assign to the same exposures to the sovereign.
    (4) Exposures to a non-OECD member sovereign with no CRC. Except as 
provided in paragraphs (a)(3), (a)(5) and (a)(6) of this section, an 
FDIC-supervised institution must assign a 100 percent risk weight to an 
exposure to a sovereign if the sovereign does not have a CRC.
    (5) Exposures to an OECD member sovereign with no CRC. Except as 
provided in paragraph (a)(6) of this section, an FDIC-supervised 
institution must assign a 0 percent risk weight to an exposure to a 
sovereign that is a member of the OECD if the sovereign does not have a 
CRC.
    (6) Sovereign default. An FDIC-supervised institution must assign a 
150 percent risk weight to a sovereign exposure immediately upon 
determining that an event of sovereign default has occurred, or if an 
event of sovereign default has occurred during the previous five years.
    (b) Certain supranational entities and multilateral development 
banks (MDBs). An FDIC-supervised institution must assign a zero percent 
risk weight to an exposure to the Bank for International Settlements, 
the European Central Bank, the European Commission, the International 
Monetary Fund, or an MDB.
    (c) Exposures to GSEs. (1) An FDIC-supervised institution must 
assign a 20 percent risk weight to an exposure to a GSE other than an 
equity exposure or preferred stock.
    (2) An FDIC-supervised institution must assign a 100 percent risk 
weight to preferred stock issued by a GSE.
    (d) Exposures to depository institutions, foreign banks, and credit 
unions--(1) Exposures to U.S. depository institutions and credit unions. 
An FDIC-supervised institution must assign a 20 percent risk weight to 
an exposure to a depository institution or credit union that is 
organized under the laws of the United States or any state thereof, 
except as otherwise provided under paragraph (d)(3) of this section.
    (2) Exposures to foreign banks. (i) Except as otherwise provided 
under paragraphs (d)(2)(iv) and (d)(3) of this section, an FDIC-
supervised institution must assign a risk weight to an exposure to a 
foreign bank, in accordance with Table 2 to Sec.  324.32, based on the 
CRC that corresponds to the foreign bank's home country or the OECD 
membership status of the foreign bank's home country if there is no CRC 
applicable to the foreign bank's home country.

  Table 2 to Sec.   324.32--Risk Weights for Exposures to Foreign Banks
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                                           Risk Weight
                                                           (in percent)
------------------------------------------------------------------------
CRC............................................    0-1               20
                                                     2               50
                                                     3              100
                                                   4-7              150
------------------------------------------------------------------------
OECD Member with No CRC................................              20
Non-OECD Member with No CRC............................             100
Sovereign Default......................................             150
------------------------------------------------------------------------


[[Page 246]]

    (ii) An FDIC-supervised institution must assign a 20 percent risk 
weight to an exposure to a foreign bank whose home country is a member 
of the OECD and does not have a CRC.
    (iii) An FDIC-supervised institution must assign a 100 percent risk 
weight to an exposure to a foreign bank whose home country is not a 
member of the OECD and does not have a CRC, with the exception of self-
liquidating, trade-related contingent items that arise from the movement 
of goods, and that have a maturity of three months or less, which may be 
assigned a 20 percent risk weight.
    (iv) An FDIC-supervised institution must assign a 150 percent risk 
weight to an exposure to a foreign bank immediately upon determining 
that an event of sovereign default has occurred in the bank's home 
country, or if an event of sovereign default has occurred in the foreign 
bank's home country during the previous five years.
    (3) An FDIC-supervised institution must assign a 100 percent risk 
weight to an exposure to a financial institution if the exposure may be 
included in that financial institution's capital unless the exposure is:
    (i) An equity exposure;
    (ii) A significant investment in the capital of an unconsolidated 
financial institution in the form of common stock pursuant to Sec.  
324.22(d)(iii);
    (iii) Deducted from regulatory capital under Sec.  324.22; or
    (iv) Subject to a 150 percent risk weight under paragraph (d)(2)(iv) 
or Table 2 of paragraph (d)(2) of this section.
    (e) Exposures to public sector entities (PSEs)--(1) Exposures to 
U.S. PSEs. (i) An FDIC-supervised institution must assign a 20 percent 
risk weight to a general obligation exposure to a PSE that is organized 
under the laws of the United States or any state or political 
subdivision thereof.
    (ii) An FDIC-supervised institution must assign a 50 percent risk 
weight to a revenue obligation exposure to a PSE that is organized under 
the laws of the United States or any state or political subdivision 
thereof.
    (2) Exposures to foreign PSEs. (i) Except as provided in paragraphs 
(e)(1) and (e)(3) of this section, an FDIC-supervised institution must 
assign a risk weight to a general obligation exposure to a PSE, in 
accordance with Table 3 to Sec.  324.32, based on the CRC that 
corresponds to the PSE's home country or the OECD membership status of 
the PSE's home country if there is no CRC applicable to the PSE's home 
country.
    (ii) Except as provided in paragraphs (e)(1) and (e)(3) of this 
section, an FDIC-supervised institution must assign a risk weight to a 
revenue obligation exposure to a PSE, in accordance with Table 4 to 
Sec.  324.32, based on the CRC that corresponds to the PSE's home 
country; or the OECD membership status of the PSE's home country if 
there is no CRC applicable to the PSE's home country.
    (3) An FDIC-supervised institution may assign a lower risk weight 
than would otherwise apply under Tables 3 or 4 to Sec.  324.32 to an 
exposure to a foreign PSE if:
    (i) The PSE's home country supervisor allows banks under its 
jurisdiction to assign a lower risk weight to such exposures; and
    (ii) The risk weight is not lower than the risk weight that 
corresponds to the PSE's home country in accordance with Table 1 to 
Sec.  324.32.

     Table 3 to Sec.   324.32--Risk Weights for non-U.S. PSE General
                               Obligations
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                                           Risk Weight
                                                           (in percent)
------------------------------------------------------------------------
CRC............................................    0-1               20
                                                     2               50
                                                     3              100
                                                   4-7              150
------------------------------------------------------------------------
OECD Member with No CRC................................              20
Non-OECD Member with No CRC............................             100
Sovereign Default......................................             150
------------------------------------------------------------------------


     Table 4 to Sec.   324.32--Risk Weights for non-U.S. PSE Revenue
                               Obligations
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                                           Risk Weight
                                                           (in percent)
------------------------------------------------------------------------
CRC............................................    0-1               50
                                                   2-3               50
                                                   4-7              150
OECD Member with No CRC................................              50

[[Page 247]]

 
Non-OECD Member with No CRC............................             100
Sovereign Default......................................             150
------------------------------------------------------------------------

    (4) Exposures to PSEs from an OECD member sovereign with no CRC. (i) 
An FDIC-supervised institution must assign a 20 percent risk weight to a 
general obligation exposure to a PSE whose home country is an OECD 
member sovereign with no CRC.
    (ii) An FDIC-supervised institution must assign a 50 percent risk 
weight to a revenue obligation exposure to a PSE whose home country is 
an OECD member sovereign with no CRC.
    (5) Exposures to PSEs whose home country is not an OECD member 
sovereign with no CRC. An FDIC-supervised institution must assign a 100 
percent risk weight to an exposure to a PSE whose home country is not a 
member of the OECD and does not have a CRC.
    (6) An FDIC-supervised institution must assign a 150 percent risk 
weight to a PSE exposure immediately upon determining that an event of 
sovereign default has occurred in a PSE's home country or if an event of 
sovereign default has occurred in the PSE's home country during the 
previous five years.
    (f) Corporate exposures. An FDIC-supervised institution must assign 
a 100 percent risk weight to all its corporate exposures.
    (g) Residential mortgage exposures. (1) An FDIC-supervised 
institution must assign a 50 percent risk weight to a first-lien 
residential mortgage exposure that:
    (i) Is secured by a property that is either owner-occupied or 
rented;
    (ii) Is made in accordance with prudent underwriting standards, 
including standards relating to the loan amount as a percent of the 
appraised value of the property;
    (iii) Is not 90 days or more past due or carried in nonaccrual 
status; and
    (iv) Is not restructured or modified.
    (2) An FDIC-supervised institution must assign a 100 percent risk 
weight to a first-lien residential mortgage exposure that does not meet 
the criteria in paragraph (g)(1) of this section, and to junior-lien 
residential mortgage exposures.
    (3) For the purpose of this paragraph (g), if an FDIC-supervised 
institution holds the first-lien and junior-lien(s) residential mortgage 
exposures, and no other party holds an intervening lien, the FDIC-
supervised institution must combine the exposures and treat them as a 
single first-lien residential mortgage exposure.
    (4) A loan modified or restructured solely pursuant to the U.S. 
Treasury's Home Affordable Mortgage Program is not modified or 
restructured for purposes of this section.
    (h) Pre-sold construction loans. An FDIC-supervised institution must 
assign a 50 percent risk weight to a pre-sold construction loan unless 
the purchase contract is cancelled, in which case an FDIC-supervised 
institution must assign a 100 percent risk weight.
    (i) Statutory multifamily mortgages. An FDIC-supervised institution 
must assign a 50 percent risk weight to a statutory multifamily 
mortgage.
    (j) High-volatility commercial real estate (HVCRE) exposures. An 
FDIC-supervised institution must assign a 150 percent risk weight to an 
HVCRE exposure.
    (k) Past due exposures. Except for a sovereign exposure or a 
residential mortgage exposure, an FDIC-supervised institution must 
determine a risk weight for an exposure that is 90 days or more past due 
or on nonaccrual according to the requirements set forth in this 
paragraph (k).
    (1) An FDIC-supervised institution must assign a 150 percent risk 
weight to the portion of the exposure that is not guaranteed or that is 
unsecured.
    (2) An FDIC-supervised institution may assign a risk weight to the 
guaranteed portion of a past due exposure based on the risk weight that 
applies under Sec.  324.36 if the guarantee or credit derivative meets 
the requirements of that section.
    (3) An FDIC-supervised institution may assign a risk weight to the 
collateralized portion of a past due exposure based on the risk weight 
that applies under Sec.  324.37 if the collateral meets the requirements 
of that section.
    (l) Other assets. (1) An FDIC-supervised institution must assign a 
zero percent risk weight to cash owned and

[[Page 248]]

held in all offices of the FDIC-supervised institution or in transit; to 
gold bullion held in the FDIC-supervised institution's own vaults or 
held in another depository institution's vaults on an allocated basis, 
to the extent the gold bullion assets are offset by gold bullion 
liabilities; and to exposures that arise from the settlement of cash 
transactions (such as equities, fixed income, spot foreign exchange and 
spot commodities) with a central counterparty where there is no 
assumption of ongoing counterparty credit risk by the central 
counterparty after settlement of the trade and associated default fund 
contributions.
    (2) An FDIC-supervised institution must assign a 20 percent risk 
weight to cash items in the process of collection.
    (3) An FDIC-supervised institution must assign a 100 percent risk 
weight to DTAs arising from temporary differences that the FDIC-
supervised institution could realize through net operating loss 
carrybacks.
    (4) An FDIC-supervised institution must assign a 250 percent risk 
weight to the portion of each of the following items that is not 
deducted from common equity tier 1 capital pursuant to Sec.  324.22(d):
    (i) MSAs; and
    (ii) DTAs arising from temporary differences that the FDIC-
supervised institution could not realize through net operating loss 
carrybacks.
    (5) An FDIC-supervised institution must assign a 100 percent risk 
weight to all assets not specifically assigned a different risk weight 
under this subpart and that are not deducted from tier 1 or tier 2 
capital pursuant to Sec.  324.22.
    (6) Notwithstanding the requirements of this section, an FDIC-
supervised institution may assign an asset that is not included in one 
of the categories provided in this section to the risk weight category 
applicable under the capital rules applicable to bank holding companies 
and savings and loan holding companies at 12 CFR part 217, provided that 
all of the following conditions apply:
    (i) The FDIC-supervised institution is not authorized to hold the 
asset under applicable law other than debt previously contracted or 
similar authority; and
    (ii) The risks associated with the asset are substantially similar 
to the risks of assets that are otherwise assigned to a risk weight 
category of less than 100 percent under this subpart.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20759, Apr. 14, 2014]



Sec.  324.33  Off-balance sheet exposures.

    (a) General. (1) An FDIC-supervised institution must calculate the 
exposure amount of an off-balance sheet exposure using the credit 
conversion factors (CCFs) in paragraph (b) of this section.
    (2) Where an FDIC-supervised institution commits to provide a 
commitment, the FDIC-supervised institution may apply the lower of the 
two applicable CCFs.
    (3) Where an FDIC-supervised institution provides a commitment 
structured as a syndication or participation, the FDIC-supervised 
institution is only required to calculate the exposure amount for its 
pro rata share of the commitment.
    (4) Where an FDIC-supervised institution provides a commitment, 
enters into a repurchase agreement, or provides a credit-enhancing 
representation and warranty, and such commitment, repurchase agreement, 
or credit-enhancing representation and warranty is not a securitization 
exposure, the exposure amount shall be no greater than the maximum 
contractual amount of the commitment, repurchase agreement, or credit-
enhancing representation and warranty, as applicable.
    (b) Credit conversion factors--(1) Zero percent CCF. An FDIC-
supervised institution must apply a zero percent CCF to the unused 
portion of a commitment that is unconditionally cancelable by the FDIC-
supervised institution.
    (2) 20 percent CCF. An FDIC-supervised institution must apply a 20 
percent CCF to the amount of:
    (i) Commitments with an original maturity of one year or less that 
are not unconditionally cancelable by the FDIC-supervised institution; 
and
    (ii) Self-liquidating, trade-related contingent items that arise 
from the movement of goods, with an original maturity of one year or 
less.

[[Page 249]]

    (3) 50 percent CCF. An FDIC-supervised institution must apply a 50 
percent CCF to the amount of:
    (i) Commitments with an original maturity of more than one year that 
are not unconditionally cancelable by the FDIC-supervised institution; 
and
    (ii) Transaction-related contingent items, including performance 
bonds, bid bonds, warranties, and performance standby letters of credit.
    (4) 100 percent CCF. An FDIC-supervised institution must apply a 100 
percent CCF to the amount of the following off-balance-sheet items and 
other similar transactions:
    (i) Guarantees;
    (ii) Repurchase agreements (the off-balance sheet component of which 
equals the sum of the current fair values of all positions the FDIC-
supervised institution has sold subject to repurchase);
    (iii) Credit-enhancing representations and warranties that are not 
securitization exposures;
    (iv) Off-balance sheet securities lending transactions (the off-
balance sheet component of which equals the sum of the current fair 
values of all positions the FDIC-supervised institution has lent under 
the transaction);
    (v) Off-balance sheet securities borrowing transactions (the off-
balance sheet component of which equals the sum of the current fair 
values of all non-cash positions the FDIC-supervised institution has 
posted as collateral under the transaction);
    (vi) Financial standby letters of credit; and
    (vii) Forward agreements.



Sec.  324.34  OTC derivative contracts.

    (a) Exposure amount--(1) Single OTC derivative contract. Except as 
modified by paragraph (b) of this section, the exposure amount for a 
single OTC derivative contract that is not subject to a qualifying 
master netting agreement is equal to the sum of the FDIC-supervised 
institution's current credit exposure and potential future credit 
exposure (PFE) on the OTC derivative contract.
    (i) Current credit exposure. The current credit exposure for a 
single OTC derivative contract is the greater of the mark-to-fair value 
of the OTC derivative contract or zero.
    (ii) PFE. (A) The PFE for a single OTC derivative contract, 
including an OTC derivative contract with a negative mark-to-fair value, 
is calculated by multiplying the notional principal amount of the OTC 
derivative contract by the appropriate conversion factor in Table 1 to 
Sec.  324.34.
    (B) For purposes of calculating either the PFE under this paragraph 
(a) or the gross PFE under paragraph (a)(2) of this section for exchange 
rate contracts and other similar contracts in which the notional 
principal amount is equivalent to the cash flows, notional principal 
amount is the net receipts to each party falling due on each value date 
in each currency.
    (C) For an OTC derivative contract that does not fall within one of 
the specified categories in Table 1 to Sec.  324.34, the PFE must be 
calculated using the appropriate ``other'' conversion factor.
    (D) An FDIC-supervised institution must use an OTC derivative 
contract's effective notional principal amount (that is, the apparent or 
stated notional principal amount multiplied by any multiplier in the OTC 
derivative contract) rather than the apparent or stated notional 
principal amount in calculating PFE.
    (E) The PFE of the protection provider of a credit derivative is 
capped at the net present value of the amount of unpaid premiums.

                                     Table 1 to Sec.   324.34--Conversion Factor Matrix for Derivative Contracts \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Credit    Credit (non-
                                                                                  Foreign   (investment  investment-               Precious
                      Remaining maturity \2\                         Interest    exchange      grade        grade       Equity      metals       Other
                                                                       rate      rate and    reference    reference                 (except
                                                                                   gold      asset) \3\     asset)                   gold)
--------------------------------------------------------------------------------------------------------------------------------------------------------
One year or less..................................................        0.00        0.01         0.05         0.10        0.06        0.07        0.10

[[Page 250]]

 
Greater than one year and less than or equal to five years........       0.005        0.05         0.05         0.10        0.08        0.07        0.12
Greater than five years...........................................       0.015       0.075         0.05         0.10        0.10        0.08        0.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For a derivative contract with multiple exchanges of principal, the conversion factor is multiplied by the number of remaining payments in the
  derivative contract.
\2\ For an OTC derivative contract that is structured such that on specified dates any outstanding exposure is settled and the terms are reset so that
  the fair value of the contract is zero, the remaining maturity equals the time until the next reset date. For an interest rate derivative contract
  with a remaining maturity of greater than one year that meets these criteria, the minimum conversion factor is 0.005.
\3\ An FDIC-supervised institution must use the column labeled ``Credit (investment-grade reference asset)'' for a credit derivative whose reference
  asset is an outstanding unsecured long-term debt security without credit enhancement that is investment grade. An FDIC-supervised institution must use
  the column labeled ``Credit (non-investment-grade reference asset)'' for all other credit derivatives.

    (2) Multiple OTC derivative contracts subject to a qualifying master 
netting agreement. Except as modified by paragraph (b) of this section, 
the exposure amount for multiple OTC derivative contracts subject to a 
qualifying master netting agreement is equal to the sum of the net 
current credit exposure and the adjusted sum of the PFE amounts for all 
OTC derivative contracts subject to the qualifying master netting 
agreement.
    (i) Net current credit exposure. The net current credit exposure is 
the greater of the net sum of all positive and negative mark-to-fair 
values of the individual OTC derivative contracts subject to the 
qualifying master netting agreement or zero.
    (ii) Adjusted sum of the PFE amounts. The adjusted sum of the PFE 
amounts, Anet, is calculated as Anet = (0.4 x Agross) + (0.6 x NGR x 
Agross), where:
    (A) Agross equals the gross PFE (that is, the sum of the PFE amounts 
as determined under paragraph (a)(1)(ii) of this section for each 
individual derivative contract subject to the qualifying master netting 
agreement); and
    (B) Net-to-gross Ratio (NGR) equals the ratio of the net current 
credit exposure to the gross current credit exposure. In calculating the 
NGR, the gross current credit exposure equals the sum of the positive 
current credit exposures (as determined under paragraph (a)(1)(i) of 
this section) of all individual derivative contracts subject to the 
qualifying master netting agreement.
    (b) Recognition of credit risk mitigation of collateralized OTC 
derivative contracts. (1) An FDIC-supervised institution may recognize 
the credit risk mitigation benefits of financial collateral that secures 
an OTC derivative contract or multiple OTC derivative contracts subject 
to a qualifying master netting agreement (netting set) by using the 
simple approach in Sec.  324.37(b).
    (2) As an alternative to the simple approach, an FDIC-supervised 
institution may recognize the credit risk mitigation benefits of 
financial collateral that secures such a contract or netting set if the 
financial collateral is marked-to-fair value on a daily basis and 
subject to a daily margin maintenance requirement by applying a risk 
weight to the exposure as if it were uncollateralized and adjusting the 
exposure amount calculated under paragraph (a)(1) or (2) of this section 
using the collateral haircut approach in Sec.  324.37(c). The FDIC-
supervised institution must substitute the exposure amount calculated 
under paragraph (a)(1) or (2) of this section for [sum]E in the equation 
in Sec.  324.37(c)(2).
    (c) Counterparty credit risk for OTC credit derivatives--(1) 
Protection purchasers. An FDIC-supervised institution that purchases an 
OTC credit derivative that is recognized under Sec.  324.36 as

[[Page 251]]

a credit risk mitigant for an exposure that is not a covered position 
under subpart F is not required to compute a separate counterparty 
credit risk capital requirement under Sec.  324.32 provided that the 
FDIC-supervised institution does so consistently for all such credit 
derivatives. The FDIC-supervised institution must either include all or 
exclude all such credit derivatives that are subject to a qualifying 
master netting agreement from any measure used to determine counterparty 
credit risk exposure to all relevant counterparties for risk-based 
capital purposes.
    (2) Protection providers. (i) An FDIC-supervised institution that is 
the protection provider under an OTC credit derivative must treat the 
OTC credit derivative as an exposure to the underlying reference asset. 
The FDIC-supervised institution is not required to compute a 
counterparty credit risk capital requirement for the OTC credit 
derivative under Sec.  324.32, provided that this treatment is applied 
consistently for all such OTC credit derivatives. The FDIC-supervised 
institution must either include all or exclude all such OTC credit 
derivatives that are subject to a qualifying master netting agreement 
from any measure used to determine counterparty credit risk exposure.
    (ii) The provisions of this paragraph (c)(2) apply to all relevant 
counterparties for risk-based capital purposes unless the FDIC-
supervised institution is treating the OTC credit derivative as a 
covered position under subpart F, in which case the FDIC-supervised 
institution must compute a supplemental counterparty credit risk capital 
requirement under this section.
    (d) Counterparty credit risk for OTC equity derivatives. (1) An 
FDIC-supervised institution must treat an OTC equity derivative contract 
as an equity exposure and compute a risk-weighted asset amount for the 
OTC equity derivative contract under Sec. Sec.  324.51 through 324.53 
(unless the FDIC-supervised institution is treating the contract as a 
covered position under subpart F of this part).
    (2) In addition, the FDIC-supervised institution must also calculate 
a risk-based capital requirement for the counterparty credit risk of an 
OTC equity derivative contract under this section if the FDIC-supervised 
institution is treating the contract as a covered position under subpart 
F of this part.
    (3) If the FDIC-supervised institution risk weights the contract 
under the Simple Risk-Weight Approach (SRWA) in Sec.  324.52, the FDIC-
supervised institution may choose not to hold risk-based capital against 
the counterparty credit risk of the OTC equity derivative contract, as 
long as it does so for all such contracts. Where the OTC equity 
derivative contracts are subject to a qualified master netting 
agreement, an FDIC-supervised institution using the SRWA must either 
include all or exclude all of the contracts from any measure used to 
determine counterparty credit risk exposure.
    (e) Clearing member FDIC-supervised institution's exposure amount. A 
clearing member FDIC-supervised institution's exposure amount for an OTC 
derivative contract or netting set of OTC derivative contracts where the 
FDIC-supervised institution is either acting as a financial intermediary 
and enters into an offsetting transaction with a QCCP or where the FDIC-
supervised institution provides a guarantee to the QCCP on the 
performance of the client equals the exposure amount calculated 
according to paragraph (a)(1) or (2) of this section multiplied by the 
scaling factor 0.71. If the FDIC-supervised institution determines that 
a longer period is appropriate, the FDIC-supervised institution must use 
a larger scaling factor to adjust for a longer holding period as 
follows:
[GRAPHIC] [TIFF OMITTED] TR10SE13.014


[[Page 252]]



where H equals the holding period greater than five days. Additionally, 
the FDIC may require the FDIC-supervised institution to set a longer 
holding period if the FDIC determines that a longer period is 
appropriate due to the nature, structure, or characteristics of the 
transaction or is commensurate with the risks associated with the 
transaction.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]



Sec.  324.35  Cleared transactions.

    (a) General requirements--(1) Clearing member clients. An FDIC-
supervised institution that is a clearing member client must use the 
methodologies described in paragraph (b) of this section to calculate 
risk-weighted assets for a cleared transaction.
    (2) Clearing members. An FDIC-supervised institution that is a 
clearing member must use the methodologies described in paragraph (c) of 
this section to calculate its risk-weighted assets for a cleared 
transaction and paragraph (d) of this section to calculate its risk-
weighted assets for its default fund contribution to a CCP.
    (b) Clearing member client FDIC-supervised institutions--(1) Risk-
weighted assets for cleared transactions. (i) To determine the risk-
weighted asset amount for a cleared transaction, an FDIC-supervised 
institution that is a clearing member client must multiply the trade 
exposure amount for the cleared transaction, calculated in accordance 
with paragraph (b)(2) of this section, by the risk weight appropriate 
for the cleared transaction, determined in accordance with paragraph 
(b)(3) of this section.
    (ii) A clearing member client FDIC-supervised institution's total 
risk-weighted assets for cleared transactions is the sum of the risk-
weighted asset amounts for all its cleared transactions.
    (2) Trade exposure amount. (i) For a cleared transaction that is 
either a derivative contract or a netting set of derivative contracts, 
the trade exposure amount equals:
    (A) The exposure amount for the derivative contract or netting set 
of derivative contracts, calculated using the methodology used to 
calculate exposure amount for OTC derivative contracts under Sec.  
324.34; plus
    (B) The fair value of the collateral posted by the clearing member 
client FDIC-supervised institution and held by the CCP, clearing member, 
or custodian in a manner that is not bankruptcy remote.
    (ii) For a cleared transaction that is a repo-style transaction or 
netting set of repo-style transactions, the trade exposure amount 
equals:
    (A) The exposure amount for the repo-style transaction calculated 
using the methodologies under Sec.  324.37(c); plus
    (B) The fair value of the collateral posted by the clearing member 
client FDIC-supervised institution and held by the CCP, clearing member, 
or custodian in a manner that is not bankruptcy remote.
    (3) Cleared transaction risk weights. (i) For a cleared transaction 
with a QCCP, a clearing member client FDIC-supervised institution must 
apply a risk weight of:
    (A) 2 percent if the collateral posted by the FDIC-supervised 
institution to the QCCP or clearing member is subject to an arrangement 
that prevents any losses to the clearing member client FDIC-supervised 
institution due to the joint default or a concurrent insolvency, 
liquidation, or receivership proceeding of the clearing member and any 
other clearing member clients of the clearing member; and the clearing 
member client FDIC-supervised institution has conducted sufficient legal 
review to conclude with a well-founded basis (and maintains sufficient 
written documentation of that legal review) that in the event of a legal 
challenge (including one resulting from an event of default or from 
liquidation, insolvency, or receivership proceedings) the relevant court 
and administrative authorities would find the arrangements to be legal, 
valid, binding and enforceable under the law of the relevant 
jurisdictions; or
    (B) 4 percent if the requirements of Sec.  324.35(b)(3)(A) are not 
met.
    (ii) For a cleared transaction with a CCP that is not a QCCP, a 
clearing

[[Page 253]]

member client FDIC-supervised institution must apply the risk weight 
appropriate for the CCP according to Sec.  324.32.
    (4) Collateral. (i) Notwithstanding any other requirements in this 
section, collateral posted by a clearing member client FDIC-supervised 
institution that is held by a custodian (in its capacity as custodian) 
in a manner that is bankruptcy remote from the CCP, the custodian, 
clearing member and other clearing member clients of the clearing 
member, is not subject to a capital requirement under this section.
    (ii) A clearing member client FDIC-supervised institution must 
calculate a risk-weighted asset amount for any collateral provided to a 
CCP, clearing member, or custodian in connection with a cleared 
transaction in accordance with the requirements under Sec.  324.32.
    (c) Clearing member FDIC-supervised institutions--(1) Risk-weighted 
assets for cleared transactions. (i) To determine the risk-weighted 
asset amount for a cleared transaction, a clearing member FDIC-
supervised institution must multiply the trade exposure amount for the 
cleared transaction, calculated in accordance with paragraph (c)(2) of 
this section, by the risk weight appropriate for the cleared 
transaction, determined in accordance with paragraph (c)(3) of this 
section.
    (ii) A clearing member FDIC-supervised institution's total risk-
weighted assets for cleared transactions is the sum of the risk-weighted 
asset amounts for all of its cleared transactions.
    (2) Trade exposure amount. A clearing member FDIC-supervised 
institution must calculate its trade exposure amount for a cleared 
transaction as follows:
    (i) For a cleared transaction that is either a derivative contract 
or a netting set of derivative contracts, the trade exposure amount 
equals:
    (A) The exposure amount for the derivative contract, calculated 
using the methodology to calculate exposure amount for OTC derivative 
contracts under Sec.  324.34; plus
    (B) The fair value of the collateral posted by the clearing member 
FDIC-supervised institution and held by the CCP in a manner that is not 
bankruptcy remote.
    (ii) For a cleared transaction that is a repo-style transaction or 
netting set of repo-style transactions, trade exposure amount equals:
    (A) The exposure amount for repo-style transactions calculated using 
methodologies under Sec.  324.37(c); plus
    (B) The fair value of the collateral posted by the clearing member 
FDIC-supervised institution and held by the CCP in a manner that is not 
bankruptcy remote.
    (3) Cleared transaction risk weight. (i) A clearing member FDIC-
supervised institution must apply a risk weight of 2 percent to the 
trade exposure amount for a cleared transaction with a QCCP.
    (ii) For a cleared transaction with a CCP that is not a QCCP, a 
clearing member FDIC-supervised institution must apply the risk weight 
appropriate for the CCP according to Sec.  324.32.
    (4) Collateral. (i) Notwithstanding any other requirement in this 
section, collateral posted by a clearing member FDIC-supervised 
institution that is held by a custodian in a manner that is bankruptcy 
remote from the CCP is not subject to a capital requirement under this 
section.
    (ii) A clearing member FDIC-supervised institution must calculate a 
risk-weighted asset amount for any collateral provided to a CCP, 
clearing member, or a custodian in connection with a cleared transaction 
in accordance with requirements under Sec.  324.32.
    (d) Default fund contributions--(1) General requirement. A clearing 
member FDIC-supervised institution must determine the risk-weighted 
asset amount for a default fund contribution to a CCP at least 
quarterly, or more frequently if, in the opinion of the FDIC-supervised 
institution or the FDIC, there is a material change in the financial 
condition of the CCP.
    (2) Risk-weighted asset amount for default fund contributions to 
non-qualifying CCPs. A clearing member FDIC-supervised institution's 
risk-weighted asset amount for default fund contributions to CCPs that 
are not QCCPs equals the sum of such default fund contributions 
multiplied by 1,250 percent, or an amount determined by the FDIC, based 
on factors such as size, structure and

[[Page 254]]

membership characteristics of the CCP and riskiness of its transactions, 
in cases where such default fund contributions may be unlimited.
    (3) Risk-weighted asset amount for default fund contributions to 
QCCPs. A clearing member FDIC-supervised institution's risk-weighted 
asset amount for default fund contributions to QCCPs equals the sum of 
its capital requirement, KCM for each QCCP, as calculated 
under the methodology set forth in paragraphs (d)(3)(i) through (iii) of 
this section (Method 1), multiplied by 1,250 percent or in paragraph 
(d)(3)(iv) of this section (Method 2).
    (i) Method 1. The hypothetical capital requirement of a QCCP 
(KCCP) equals:
[GRAPHIC] [TIFF OMITTED] TR10SE13.015

Where

(A) EBRMi equals the exposure amount for each transaction 
          cleared through the QCCP by clearing member i, calculated in 
          accordance with Sec.  324.34 for OTC derivative contracts and 
          Sec.  324.37(c)(2) for repo-style transactions, provided that:
(1) For purposes of this section, in calculating the exposure amount the 
          FDIC-supervised institution may replace the formula provided 
          in Sec.  324.34(a)(2)(ii) with the following: Anet = (0.15 x 
          Agross) + (0.85 x NGR x Agross); and
(2) For option derivative contracts that are cleared transactions, the 
          PFE described in Sec.  324.34(a)(1)(ii) must be adjusted by 
          multiplying the notional principal amount of the derivative 
          contract by the appropriate conversion factor in Table 1 to 
          Sec.  324.34 and the absolute value of the option's delta, 
          that is, the ratio of the change in the value of the 
          derivative contract to the corresponding change in the price 
          of the underlying asset.
(3) For repo-style transactions, when applying Sec.  324.37(c)(2), the 
          FDIC-supervised institution must use the methodology in Sec.  
          324.37(c)(3);
(B) VMi equals any collateral posted by clearing member i to 
          the QCCP that it is entitled to receive from the QCCP, but has 
          not yet received, and any collateral that the QCCP has 
          actually received from clearing member i;
(C) IMi equals the collateral posted as initial margin by 
          clearing member i to the QCCP;
(D) DFi equals the funded portion of clearing member i's 
          default fund contribution that will be applied to reduce the 
          QCCP's loss upon a default by clearing member i;
(E) RW equals 20 percent, except when the FDIC has determined that a 
          higher risk weight is more appropriate based on the specific 
          characteristics of the QCCP and its clearing members; and
(F) Where a QCCP has provided its KCCP, an FDIC-supervised 
          institution must rely on such disclosed figure instead of 
          calculating KCCP under this paragraph (d), unless 
          the FDIC-supervised institution determines that a more 
          conservative figure is appropriate based on the nature, 
          structure, or characteristics of the QCCP.

    (ii) For an FDIC-supervised institution that is a clearing member of 
a QCCP with a default fund supported by funded commitments, 
KCM equals:

[[Page 255]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.016

    (A) Subscripts 1 and 2 denote the clearing members with the two 
largest ANet values. For purposes of this paragraph (d), for 
derivatives ANet is defined in Sec.  324.34(a)(2)(ii) and for 
repo-style transactions, ANet means the exposure amount as 
defined in Sec.  324.37(c)(2) using the methodology in Sec.  
324.37(c)(3);
    (B) N equals the number of clearing members in the QCCP;
    (C) DFCCP equals the QCCP's own funds and other financial 
resources that would be used to cover its losses before clearing 
members' default fund contributions are used to cover losses;
    (D) DFCM equals funded default fund contributions from 
all clearing members and any other clearing member contributed financial 
resources that are available to absorb mutualized QCCP losses;
    (E) DF = DFCCP + DFCM (that is, the total 
funded default fund contribution);

[[Page 256]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.017

Where

(1) DFi equals the FDIC-supervised institution's unfunded 
          commitment to the default fund;
(2) DFCM equals the total of all clearing members' unfunded 
          commitment to the default fund; and
(3) K*CM as defined in paragraph (d)(3)(ii) of this section.

    (B) For an FDIC-supervised institution that is a clearing member of 
a QCCP with a default fund supported by unfunded commitments and is 
unable to calculate KCM using the methodology described in 
paragraph (d)(3)(iii) of this section, KCM equals:

[[Page 257]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.018

Where

(1) IMi = the FDIC-supervised institution's initial margin 
          posted to the QCCP;
(2) IMCM equals the total of initial margin posted to the 
          QCCP; and
(3) K*CM as defined in paragraph (d)(3)(ii) of this section.

    (iv) Method 2. A clearing member FDIC-supervised institution's risk-
weighted asset amount for its default fund contribution to a QCCP, 
RWADF, equals:


RWADF = Min {12.5 * DF; 0.18 * TE{time} 
Where
(A) TE equals the FDIC-supervised institution's trade exposure amount to 
          the QCCP, calculated according to Sec.  324.35(c)(2);
(B) DF equals the funded portion of the FDIC-supervised institution's 
          default fund contribution to the QCCP.

    (4) Total risk-weighted assets for default fund contributions. Total 
risk-weighted assets for default fund contributions is the sum of a 
clearing member FDIC-supervised institution's risk-weighted assets for 
all of its default fund contributions to all CCPs of which the FDIC-
supervised institution is a clearing member.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]



Sec.  324.36  Guarantees and credit derivatives: Substitution treatment.

    (a) Scope. (1) General. An FDIC-supervised institution may recognize 
the credit risk mitigation benefits of an eligible guarantee or eligible 
credit derivative by substituting the risk weight associated with the 
protection provider for the risk weight assigned to an exposure, as 
provided under this section.
    (2) This section applies to exposures for which:
    (i) Credit risk is fully covered by an eligible guarantee or 
eligible credit derivative; or
    (ii) Credit risk is covered on a pro rata basis (that is, on a basis 
in which the FDIC-supervised institution and the protection provider 
share losses proportionately) by an eligible guarantee or eligible 
credit derivative.
    (3) Exposures on which there is a tranching of credit risk 
(reflecting at least two different levels of seniority) generally are 
securitization exposures subject to Sec. Sec.  324.41 through 324.45.
    (4) If multiple eligible guarantees or eligible credit derivatives 
cover a single exposure described in this section, an FDIC-supervised 
institution may treat the hedged exposure as multiple separate exposures 
each covered by a single eligible guarantee or eligible credit 
derivative and may calculate a separate risk-weighted asset amount for 
each separate exposure as described in paragraph (c) of this section.
    (5) If a single eligible guarantee or eligible credit derivative 
covers multiple hedged exposures described in paragraph (a)(2) of this 
section, an FDIC-supervised institution must treat each hedged exposure 
as covered by a separate eligible guarantee or eligible credit 
derivative and must calculate a separate risk-weighted asset amount for 
each exposure as described in paragraph (c) of this section.
    (b) Rules of recognition. (1) An FDIC-supervised institution may 
only recognize the credit risk mitigation benefits of eligible 
guarantees and eligible credit derivatives.
    (2) An FDIC-supervised institution may only recognize the credit 
risk mitigation benefits of an eligible credit derivative to hedge an 
exposure that is different from the credit derivative's reference 
exposure used for determining the derivative's cash settlement value, 
deliverable obligation, or occurrence of a credit event if:
    (i) The reference exposure ranks pari passu with, or is subordinated 
to, the hedged exposure; and
    (ii) The reference exposure and the hedged exposure are to the same 
legal entity, and legally enforceable cross-default or cross-
acceleration clauses are in place to ensure payments under the credit 
derivative are triggered when the obligated party of the hedged

[[Page 258]]

exposure fails to pay under the terms of the hedged exposure.
    (c) Substitution approach--(1) Full coverage. If an eligible 
guarantee or eligible credit derivative meets the conditions in 
paragraphs (a) and (b) of this section and the protection amount (P) of 
the guarantee or credit derivative is greater than or equal to the 
exposure amount of the hedged exposure, an FDIC-supervised institution 
may recognize the guarantee or credit derivative in determining the 
risk-weighted asset amount for the hedged exposure by substituting the 
risk weight applicable to the guarantor or credit derivative protection 
provider under Sec.  324.32 for the risk weight assigned to the 
exposure.
    (2) Partial coverage. If an eligible guarantee or eligible credit 
derivative meets the conditions in paragraphs(a) and (b) of this section 
and the protection amount (P) of the guarantee or credit derivative is 
less than the exposure amount of the hedged exposure, the FDIC-
supervised institution must treat the hedged exposure as two separate 
exposures (protected and unprotected) in order to recognize the credit 
risk mitigation benefit of the guarantee or credit derivative.
    (i) The FDIC-supervised institution may calculate the risk-weighted 
asset amount for the protected exposure under Sec.  324.32, where the 
applicable risk weight is the risk weight applicable to the guarantor or 
credit derivative protection provider.
    (ii) The FDIC-supervised institution must calculate the risk-
weighted asset amount for the unprotected exposure under Sec.  324.32, 
where the applicable risk weight is that of the unprotected portion of 
the hedged exposure.
    (iii) The treatment provided in this section is applicable when the 
credit risk of an exposure is covered on a partial pro rata basis and 
may be applicable when an adjustment is made to the effective notional 
amount of the guarantee or credit derivative under paragraphs (d), (e), 
or (f) of this section.
    (d) Maturity mismatch adjustment. (1) An FDIC-supervised institution 
that recognizes an eligible guarantee or eligible credit derivative in 
determining the risk-weighted asset amount for a hedged exposure must 
adjust the effective notional amount of the credit risk mitigant to 
reflect any maturity mismatch between the hedged exposure and the credit 
risk mitigant.
    (2) A maturity mismatch occurs when the residual maturity of a 
credit risk mitigant is less than that of the hedged exposure(s).
    (3) The residual maturity of a hedged exposure is the longest 
possible remaining time before the obligated party of the hedged 
exposure is scheduled to fulfil its obligation on the hedged exposure. 
If a credit risk mitigant has embedded options that may reduce its term, 
the FDIC-supervised institution (protection purchaser) must use the 
shortest possible residual maturity for the credit risk mitigant. If a 
call is at the discretion of the protection provider, the residual 
maturity of the credit risk mitigant is at the first call date. If the 
call is at the discretion of the FDIC-supervised institution (protection 
purchaser), but the terms of the arrangement at origination of the 
credit risk mitigant contain a positive incentive for the FDIC-
supervised institution to call the transaction before contractual 
maturity, the remaining time to the first call date is the residual 
maturity of the credit risk mitigant.
    (4) A credit risk mitigant with a maturity mismatch may be 
recognized only if its original maturity is greater than or equal to one 
year and its residual maturity is greater than three months.
    (5) When a maturity mismatch exists, the FDIC-supervised institution 
must apply the following adjustment to reduce the effective notional 
amount of the credit risk mitigant: Pm = E x (t-0.25)/(T-0.25), where:
    (i) Pm equals effective notional amount of the credit risk mitigant, 
adjusted for maturity mismatch;
    (ii) E equals effective notional amount of the credit risk mitigant;
    (iii) t equals the lesser of T or the residual maturity of the 
credit risk mitigant, expressed in years; and
    (iv) T equals the lesser of five or the residual maturity of the 
hedged exposure, expressed in years.
    (e) Adjustment for credit derivatives without restructuring as a 
credit event. If

[[Page 259]]

an FDIC-supervised institution recognizes an eligible credit derivative 
that does not include as a credit event a restructuring of the hedged 
exposure involving forgiveness or postponement of principal, interest, 
or fees that results in a credit loss event (that is, a charge-off, 
specific provision, or other similar debit to the profit and loss 
account), the FDIC-supervised institution must apply the following 
adjustment to reduce the effective notional amount of the credit 
derivative: Pr = Pm x 0.60, where:
    (1) Pr equals effective notional amount of the credit risk mitigant, 
adjusted for lack of restructuring event (and maturity mismatch, if 
applicable); and
    (2) Pm equals effective notional amount of the credit risk mitigant 
(adjusted for maturity mismatch, if applicable).
    (f) Currency mismatch adjustment. (1) If an FDIC-supervised 
institution recognizes an eligible guarantee or eligible credit 
derivative that is denominated in a currency different from that in 
which the hedged exposure is denominated, the FDIC-supervised 
institution must apply the following formula to the effective notional 
amount of the guarantee or credit derivative: Pc = Pr x (1-
HFX), where:
    (i) Pc equals effective notional amount of the credit risk mitigant, 
adjusted for currency mismatch (and maturity mismatch and lack of 
restructuring event, if applicable);
    (ii) Pr equals effective notional amount of the credit risk mitigant 
(adjusted for maturity mismatch and lack of restructuring event, if 
applicable); and
    (iii) HFX equals haircut appropriate for the currency 
mismatch between the credit risk mitigant and the hedged exposure.
    (2) An FDIC-supervised institution must set HFX equal to 
eight percent unless it qualifies for the use of and uses its own 
internal estimates of foreign exchange volatility based on a ten-
business-day holding period. An FDIC-supervised institution qualifies 
for the use of its own internal estimates of foreign exchange volatility 
if it qualifies for the use of its own-estimates haircuts in Sec.  
324.37(c)(4).
    (3) An FDIC-supervised institution must adjust HFX 
calculated in paragraph (f)(2) of this section upward if the FDIC-
supervised institution revalues the guarantee or credit derivative less 
frequently than once every 10 business days using the following square 
root of time formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.019



Sec.  324.37  Collateralized transactions.

    (a) General. (1) To recognize the risk-mitigating effects of 
financial collateral, an FDIC-supervised institution may use:
    (i) The simple approach in paragraph (b) of this section for any 
exposure; or
    (ii) The collateral haircut approach in paragraph (c) of this 
section for repo-style transactions, eligible margin loans, 
collateralized derivative contracts, and single-product netting sets of 
such transactions.
    (2) An FDIC-supervised institution may use any approach described in 
this section that is valid for a particular type of exposure or 
transaction; however, it must use the same approach for similar 
exposures or transactions.
    (b) The simple approach. (1) General requirements. (i) An FDIC-
supervised institution may recognize the credit risk mitigation benefits 
of financial collateral that secures any exposure.
    (ii) To qualify for the simple approach, the financial collateral 
must meet the following requirements:
    (A) The collateral must be subject to a collateral agreement for at 
least the life of the exposure;

[[Page 260]]

    (B) The collateral must be revalued at least every six months; and
    (C) The collateral (other than gold) and the exposure must be 
denominated in the same currency.
    (2) Risk weight substitution. (i) An FDIC-supervised institution may 
apply a risk weight to the portion of an exposure that is secured by the 
fair value of financial collateral (that meets the requirements of 
paragraph (b)(1) of this section) based on the risk weight assigned to 
the collateral under Sec.  324.32. For repurchase agreements, reverse 
repurchase agreements, and securities lending and borrowing 
transactions, the collateral is the instruments, gold, and cash the 
FDIC-supervised institution has borrowed, purchased subject to resale, 
or taken as collateral from the counterparty under the transaction. 
Except as provided in paragraph (b)(3) of this section, the risk weight 
assigned to the collateralized portion of the exposure may not be less 
than 20 percent.
    (ii) An FDIC-supervised institution must apply a risk weight to the 
unsecured portion of the exposure based on the risk weight applicable to 
the exposure under this subpart.
    (3) Exceptions to the 20 percent risk-weight floor and other 
requirements. Notwithstanding paragraph (b)(2)(i) of this section:
    (i) An FDIC-supervised institution may assign a zero percent risk 
weight to an exposure to an OTC derivative contract that is marked-to-
market on a daily basis and subject to a daily margin maintenance 
requirement, to the extent the contract is collateralized by cash on 
deposit.
    (ii) An FDIC-supervised institution may assign a 10 percent risk 
weight to an exposure to an OTC derivative contract that is marked-to-
market daily and subject to a daily margin maintenance requirement, to 
the extent that the contract is collateralized by an exposure to a 
sovereign that qualifies for a zero percent risk weight under Sec.  
324.32.
    (iii) An FDIC-supervised institution may assign a zero percent risk 
weight to the collateralized portion of an exposure where:
    (A) The financial collateral is cash on deposit; or
    (B) The financial collateral is an exposure to a sovereign that 
qualifies for a zero percent risk weight under Sec.  324.32, and the 
FDIC-supervised institution has discounted the fair value of the 
collateral by 20 percent.
    (c) Collateral haircut approach--(1) General. An FDIC-supervised 
institution may recognize the credit risk mitigation benefits of 
financial collateral that secures an eligible margin loan, repo-style 
transaction, collateralized derivative contract, or single-product 
netting set of such transactions, and of any collateral that secures a 
repo-style transaction that is included in the FDIC-supervised 
institution's VaR-based measure under subpart F of this part by using 
the collateral haircut approach in this section. An FDIC-supervised 
institution may use the standard supervisory haircuts in paragraph 
(c)(3) of this section or, with prior written approval of the FDIC, its 
own estimates of haircuts according to paragraph (c)(4) of this section.
    (2) Exposure amount equation. An FDIC-supervised institution must 
determine the exposure amount for an eligible margin loan, repo-style 
transaction, collateralized derivative contract, or a single-product 
netting set of such transactions by setting the exposure amount equal to 
max {0, [([sum]E - [sum]C) + [sum](Es x Hs) + [sum](Efx x Hfx)]{time} , 
where:
    (i)(A) For eligible margin loans and repo-style transactions and 
netting sets thereof, [sum]E equals the value of the exposure (the sum 
of the current fair values of all instruments, gold, and cash the FDIC-
supervised institution has lent, sold subject to repurchase, or posted 
as collateral to the counterparty under the transaction (or netting 
set)); and
    (B) For collateralized derivative contracts and netting sets 
thereof, [sum]E equals the exposure amount of the OTC derivative 
contract (or netting set) calculated under Sec.  324.34 (a)(1) or (2).
    (ii) [sum]C equals the value of the collateral (the sum of the 
current fair values of all instruments, gold and cash the FDIC-
supervised institution has borrowed, purchased subject to resale, or 
taken as collateral from the

[[Page 261]]

counterparty under the transaction (or netting set));
    (iii) Es equals the absolute value of the net position in a given 
instrument or in gold (where the net position in the instrument or gold 
equals the sum of the current fair values of the instrument or gold the 
FDIC-supervised institution has lent, sold subject to repurchase, or 
posted as collateral to the counterparty minus the sum of the current 
fair values of that same instrument or gold the FDIC-supervised 
institution has borrowed, purchased subject to resale, or taken as 
collateral from the counterparty);
    (iv) Hs equals the market price volatility haircut appropriate to 
the instrument or gold referenced in Es;
    (v) Efx equals the absolute value of the net position of instruments 
and cash in a currency that is different from the settlement currency 
(where the net position in a given currency equals the sum of the 
current fair values of any instruments or cash in the currency the FDIC-
supervised institution has lent, sold subject to repurchase, or posted 
as collateral to the counterparty minus the sum of the current fair 
values of any instruments or cash in the currency the FDIC-supervised 
institution has borrowed, purchased subject to resale, or taken as 
collateral from the counterparty); and
    (vi) Hfx equals the haircut appropriate to the mismatch between the 
currency referenced in Efx and the settlement currency.
    (3) Standard supervisory haircuts. (i) An FDIC-supervised 
institution must use the haircuts for market price volatility (Hs) 
provided in Table 1 to Sec.  324.37, as adjusted in certain 
circumstances in accordance with the requirements of paragraphs 
(c)(3)(iii) and (iv) of this section.

                                   Table 1 to Sec.   324.37--Standard Supervisory Market Price Volatility Haircuts\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Haircut (in percent) assigned based on:
                                                              ------------------------------------------------------------------------
                                                                  Sovereign issuers risk weight     Non-sovereign issuers risk weight   Investment grade
                      Residual maturity                         under Sec.   324.32 (in percent)    under Sec.   324.32 (in percent)     securitization
                                                                               \2\                ------------------------------------   exposures (in
                                                              ------------------------------------                                          percent)
                                                                  Zero      20 or 50       100         20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than or equal to 1 year.................................         0.5         1.0        15.0         1.0         2.0         4.0                4.0
Greater than 1 year and less than or equal to 5 years........         2.0         3.0        15.0         4.0         6.0         8.0               12.0
Greater than 5 years.........................................         4.0         6.0        15.0         8.0        12.0        16.0               24.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Main index equities (including convertible bonds) and gold..........................15.0.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other publicly traded equities (including convertible bonds)........................25.0.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mutual funds....................................................Highest haircut applicable to any security in
                                                                         which the fund can invest.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cash collateral held................................................................Zero.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other exposure types................................................................25.0.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The market price volatility haircuts in Table 1 to Sec.   324.37 are based on a 10 business-day holding period.
\2\ Includes a foreign PSE that receives a zero percent risk weight.

    (ii) For currency mismatches, an FDIC-supervised institution must 
use a haircut for foreign exchange rate volatility (Hfx) of 8.0 percent, 
as adjusted in certain circumstances under paragraphs (c)(3)(iii) and 
(iv) of this section.
    (iii) For repo-style transactions, an FDIC-supervised institution 
may multiply the standard supervisory haircuts provided in paragraphs 
(c)(3)(i) and (ii) of this section by the square root of 1/2 
(which equals 0.707107).
    (iv) If the number of trades in a netting set exceeds 5,000 at any 
time during a quarter, an FDIC-supervised institution must adjust the 
supervisory haircuts provided in paragraphs (c)(3)(i) and (ii) of this 
section upward on the basis of a holding period of

[[Page 262]]

twenty business days for the following quarter except in the calculation 
of the exposure amount for purposes of Sec.  324.35. If a netting set 
contains one or more trades involving illiquid collateral or an OTC 
derivative that cannot be easily replaced, an FDIC-supervised 
institution must adjust the supervisory haircuts upward on the basis of 
a holding period of twenty business days. If over the two previous 
quarters more than two margin disputes on a netting set have occurred 
that lasted more than the holding period, then the FDIC-supervised 
institution must adjust the supervisory haircuts upward for that netting 
set on the basis of a holding period that is at least two times the 
minimum holding period for that netting set. An FDIC-supervised 
institution must adjust the standard supervisory haircuts upward using 
the following formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.020

(A) TM equals a holding period of longer than 10 business 
          days for eligible margin loans and derivative contracts or 
          longer than 5 business days for repo-style transactions;
(B) HS equals the standard supervisory haircut; and
(C) TS equals 10 business days for eligible margin loans and 
          derivative contracts or 5 business days for repo-style 
          transactions.

    (v) If the instrument an FDIC-supervised institution has lent, sold 
subject to repurchase, or posted as collateral does not meet the 
definition of financial collateral, the FDIC-supervised institution must 
use a 25.0 percent haircut for market price volatility (Hs).
    (4) Own internal estimates for haircuts. With the prior written 
approval of the FDIC, an FDIC-supervised institution may calculate 
haircuts (Hs and Hfx) using its own internal estimates of the 
volatilities of market prices and foreign exchange rates:
    (i) To receive FDIC approval to use its own internal estimates, an 
FDIC-supervised institution must satisfy the following minimum 
standards:
    (A) An FDIC-supervised institution must use a 99th percentile one-
tailed confidence interval.
    (B) The minimum holding period for a repo-style transaction is five 
business days and for an eligible margin loan is ten business days 
except for transactions or netting sets for which paragraph (c)(4)(i)(C) 
of this section applies. When an FDIC-supervised institution calculates 
an own-estimates haircut on a TN-day holding period, which is 
different from the minimum holding period for the transaction type, the 
applicable haircut (HM) is calculated using the following 
square root of time formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.021

(1) TM equals 5 for repo-style transactions and 10 for 
          eligible margin loans;
(2) TN equals the holding period used by the FDIC-supervised 
          institution to derive HN; and
(3) HN equals the haircut based on the holding period 
          TN.

    (C) If the number of trades in a netting set exceeds 5,000 at any 
time during a quarter, an FDIC-supervised institution must calculate the 
haircut using a minimum holding period of twenty business days for the 
following quarter except in the calculation of the exposure amount for 
purposes of

[[Page 263]]

Sec.  324.35. If a netting set contains one or more trades involving 
illiquid collateral or an OTC derivative that cannot be easily replaced, 
an FDIC-supervised institution must calculate the haircut using a 
minimum holding period of twenty business days. If over the two previous 
quarters more than two margin disputes on a netting set have occurred 
that lasted more than the holding period, then the FDIC-supervised 
institution must calculate the haircut for transactions in that netting 
set on the basis of a holding period that is at least two times the 
minimum holding period for that netting set.
    (D) An FDIC-supervised institution is required to calculate its own 
internal estimates with inputs calibrated to historical data from a 
continuous 12-month period that reflects a period of significant 
financial stress appropriate to the security or category of securities.
    (E) An FDIC-supervised institution must have policies and procedures 
that describe how it determines the period of significant financial 
stress used to calculate the FDIC-supervised institution's own internal 
estimates for haircuts under this section and must be able to provide 
empirical support for the period used. The FDIC-supervised institution 
must obtain the prior approval of the FDIC for, and notify the FDIC if 
the FDIC-supervised institution makes any material changes to, these 
policies and procedures.
    (F) Nothing in this section prevents the FDIC from requiring an 
FDIC-supervised institution to use a different period of significant 
financial stress in the calculation of own internal estimates for 
haircuts.
    (G) An FDIC-supervised institution must update its data sets and 
calculate haircuts no less frequently than quarterly and must also 
reassess data sets and haircuts whenever market prices change 
materially.
    (ii) With respect to debt securities that are investment grade, an 
FDIC-supervised institution may calculate haircuts for categories of 
securities. For a category of securities, the FDIC-supervised 
institution must calculate the haircut on the basis of internal 
volatility estimates for securities in that category that are 
representative of the securities in that category that the FDIC-
supervised institution has lent, sold subject to repurchase, posted as 
collateral, borrowed, purchased subject to resale, or taken as 
collateral. In determining relevant categories, the FDIC-supervised 
institution must at a minimum take into account:
    (A) The type of issuer of the security;
    (B) The credit quality of the security;
    (C) The maturity of the security; and
    (D) The interest rate sensitivity of the security.
    (iii) With respect to debt securities that are not investment grade 
and equity securities, an FDIC-supervised institution must calculate a 
separate haircut for each individual security.
    (iv) Where an exposure or collateral (whether in the form of cash or 
securities) is denominated in a currency that differs from the 
settlement currency, the FDIC-supervised institution must calculate a 
separate currency mismatch haircut for its net position in each 
mismatched currency based on estimated volatilities of foreign exchange 
rates between the mismatched currency and the settlement currency.
    (v) An FDIC-supervised institution's own estimates of market price 
and foreign exchange rate volatilities may not take into account the 
correlations among securities and foreign exchange rates on either the 
exposure or collateral side of a transaction (or netting set) or the 
correlations among securities and foreign exchange rates between the 
exposure and collateral sides of the transaction (or netting set).

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]

             Risk-Weighted Assets for Unsettled Transactions



Sec.  324.38  Unsettled transactions.

    (a) Definitions. For purposes of this section:
    (1) Delivery-versus-payment (DvP) transaction means a securities or 
commodities transaction in which the buyer is obligated to make payment 
only if the seller has made delivery of the securities or commodities 
and the seller is obligated to deliver the securities or commodities 
only if the buyer has made payment.

[[Page 264]]

    (2) Payment-versus-payment (PvP) transaction means a foreign 
exchange transaction in which each counterparty is obligated to make a 
final transfer of one or more currencies only if the other counterparty 
has made a final transfer of one or more currencies.
    (3) A transaction has a normal settlement period if the contractual 
settlement period for the transaction is equal to or less than the 
market standard for the instrument underlying the transaction and equal 
to or less than five business days.
    (4) Positive current exposure of an FDIC-supervised institution for 
a transaction is the difference between the transaction value at the 
agreed settlement price and the current market price of the transaction, 
if the difference results in a credit exposure of the FDIC-supervised 
institution to the counterparty.
    (b) Scope. This section applies to all transactions involving 
securities, foreign exchange instruments, and commodities that have a 
risk of delayed settlement or delivery. This section does not apply to:
    (1) Cleared transactions that are marked-to-market daily and subject 
to daily receipt and payment of variation margin;
    (2) Repo-style transactions, including unsettled repo-style 
transactions;
    (3) One-way cash payments on OTC derivative contracts; or
    (4) Transactions with a contractual settlement period that is longer 
than the normal settlement period (which are treated as OTC derivative 
contracts as provided in Sec.  324.34).
    (c) System-wide failures. In the case of a system-wide failure of a 
settlement, clearing system or central counterparty, the FDIC may waive 
risk-based capital requirements for unsettled and failed transactions 
until the situation is rectified.
    (d) Delivery-versus-payment (DvP) and payment-versus-payment (PvP) 
transactions. An FDIC-supervised institution must hold risk-based 
capital against any DvP or PvP transaction with a normal settlement 
period if the FDIC-supervised institution's counterparty has not made 
delivery or payment within five business days after the settlement date. 
The FDIC-supervised institution must determine its risk-weighted asset 
amount for such a transaction by multiplying the positive current 
exposure of the transaction for the FDIC-supervised institution by the 
appropriate risk weight in Table 1 to Sec.  324.38.

    Table 1 to Sec.   324.38--Risk Weights for Unsettled DvP and PvP
                              Transactions
------------------------------------------------------------------------
                                                          Risk weight to
                                                           be applied to
  Number of business days after contractual settlement       positive
                          date                                current
                                                           exposure (in
                                                             percent)
------------------------------------------------------------------------
From 5 to 15............................................           100.0
From 16 to 30...........................................           625.0
From 31 to 45...........................................           937.5
46 or more..............................................         1,250.0
------------------------------------------------------------------------

    (e) Non-DvP/non-PvP (non-delivery-versus-payment/non-payment-versus-
payment) transactions. (1) An FDIC-supervised institution must hold 
risk-based capital against any non-DvP/non-PvP transaction with a normal 
settlement period if the FDIC-supervised institution has delivered cash, 
securities, commodities, or currencies to its counterparty but has not 
received its corresponding deliverables by the end of the same business 
day. The FDIC-supervised institution must continue to hold risk-based 
capital against the transaction until the FDIC-supervised institution 
has received its corresponding deliverables.
    (2) From the business day after the FDIC-supervised institution has 
made its delivery until five business days after the counterparty 
delivery is due, the FDIC-supervised institution must calculate the 
risk-weighted asset amount for the transaction by treating the current 
fair value of the deliverables owed to the FDIC-supervised institution 
as an exposure to the counterparty and using the applicable counterparty 
risk weight under Sec.  324.32.
    (3) If the FDIC-supervised institution has not received its 
deliverables by the fifth business day after counterparty delivery was 
due, the FDIC-supervised institution must assign a 1,250 percent risk 
weight to the current fair value of the deliverables owed to the FDIC-
supervised institution.
    (f) Total risk-weighted assets for unsettled transactions. Total 
risk-weighted

[[Page 265]]

assets for unsettled transactions is the sum of the risk-weighted asset 
amounts of all DvP, PvP, and non-DvP/non-PvP transactions.



Sec. Sec.  324.39-324.40  [Reserved]

            Risk-Weighted Assets for Securitization Exposures



Sec.  324.41  Operational requirements for securitization exposures.

    (a) Operational criteria for traditional securitizations. An FDIC-
supervised institution that transfers exposures it has originated or 
purchased to a securitization SPE or other third party in connection 
with a traditional securitization may exclude the exposures from the 
calculation of its risk-weighted assets only if each condition in this 
section is satisfied. An FDIC-supervised institution that meets these 
conditions must hold risk-based capital against any credit risk it 
retains in connection with the securitization. An FDIC-supervised 
institution that fails to meet these conditions must hold risk-based 
capital against the transferred exposures as if they had not been 
securitized and must deduct from common equity tier 1 capital any after-
tax gain-on-sale resulting from the transaction. The conditions are:
    (1) The exposures are not reported on the FDIC-supervised 
institution's consolidated balance sheet under GAAP;
    (2) The FDIC-supervised institution has transferred to one or more 
third parties credit risk associated with the underlying exposures;
    (3) Any clean-up calls relating to the securitization are eligible 
clean-up calls; and
    (4) The securitization does not:
    (i) Include one or more underlying exposures in which the borrower 
is permitted to vary the drawn amount within an agreed limit under a 
line of credit; and
    (ii) Contain an early amortization provision.
    (b) Operational criteria for synthetic securitizations. For 
synthetic securitizations, an FDIC-supervised institution may recognize 
for risk-based capital purposes the use of a credit risk mitigant to 
hedge underlying exposures only if each condition in this paragraph (b) 
is satisfied. An FDIC-supervised institution that meets these conditions 
must hold risk-based capital against any credit risk of the exposures it 
retains in connection with the synthetic securitization. An FDIC-
supervised institution that fails to meet these conditions or chooses 
not to recognize the credit risk mitigant for purposes of this section 
must instead hold risk-based capital against the underlying exposures as 
if they had not been synthetically securitized. The conditions are:
    (1) The credit risk mitigant is:
    (i) Financial collateral;
    (ii) A guarantee that meets all criteria as set forth in the 
definition of ``eligible guarantee'' in Sec.  324.2, except for the 
criteria in paragraph (3) of that definition; or
    (iii) A credit derivative that meets all criteria as set forth in 
the definition of ``eligible credit derivative'' in Sec.  324.2, except 
for the criteria in paragraph (3) of the definition of ``eligible 
guarantee'' in Sec.  324.2.
    (2) The FDIC-supervised institution transfers credit risk associated 
with the underlying exposures to one or more third parties, and the 
terms and conditions in the credit risk mitigants employed do not 
include provisions that:
    (i) Allow for the termination of the credit protection due to 
deterioration in the credit quality of the underlying exposures;
    (ii) Require the FDIC-supervised institution to alter or replace the 
underlying exposures to improve the credit quality of the underlying 
exposures;
    (iii) Increase the FDIC-supervised institution's cost of credit 
protection in response to deterioration in the credit quality of the 
underlying exposures;
    (iv) Increase the yield payable to parties other than the FDIC-
supervised institution in response to a deterioration in the credit 
quality of the underlying exposures; or
    (v) Provide for increases in a retained first loss position or 
credit enhancement provided by the FDIC-supervised institution after the 
inception of the securitization;
    (3) The FDIC-supervised institution obtains a well-reasoned opinion 
from

[[Page 266]]

legal counsel that confirms the enforceability of the credit risk 
mitigant in all relevant jurisdictions; and
    (4) Any clean-up calls relating to the securitization are eligible 
clean-up calls.
    (c) Due diligence requirements for securitization exposures. (1) 
Except for exposures that are deducted from common equity tier 1 capital 
and exposures subject to Sec.  324.42(h), if an FDIC-supervised 
institution is unable to demonstrate to the satisfaction of the FDIC a 
comprehensive understanding of the features of a securitization exposure 
that would materially affect the performance of the exposure, the FDIC-
supervised institution must assign the securitization exposure a risk 
weight of 1,250 percent. The FDIC-supervised institution's analysis must 
be commensurate with the complexity of the securitization exposure and 
the materiality of the exposure in relation to its capital.
    (2) An FDIC-supervised institution must demonstrate its 
comprehensive understanding of a securitization exposure under paragraph 
(c)(1) of this section, for each securitization exposure by:
    (i) Conducting an analysis of the risk characteristics of a 
securitization exposure prior to acquiring the exposure, and documenting 
such analysis within three business days after acquiring the exposure, 
considering:
    (A) Structural features of the securitization that would materially 
impact the performance of the exposure, for example, the contractual 
cash flow waterfall, waterfall-related triggers, credit enhancements, 
liquidity enhancements, fair value triggers, the performance of 
organizations that service the exposure, and deal-specific definitions 
of default;
    (B) Relevant information regarding the performance of the underlying 
credit exposure(s), for example, the percentage of loans 30, 60, and 90 
days past due; default rates; prepayment rates; loans in foreclosure; 
property types; occupancy; average credit score or other measures of 
creditworthiness; average LTV ratio; and industry and geographic 
diversification data on the underlying exposure(s);
    (C) Relevant market data of the securitization, for example, bid-ask 
spread, most recent sales price and historic price volatility, trading 
volume, implied market rating, and size, depth and concentration level 
of the market for the securitization; and
    (D) For resecuritization exposures, performance information on the 
underlying securitization exposures, for example, the issuer name and 
credit quality, and the characteristics and performance of the exposures 
underlying the securitization exposures; and
    (ii) On an on-going basis (no less frequently than quarterly), 
evaluating, reviewing, and updating as appropriate the analysis required 
under paragraph (c)(1) of this section for each securitization exposure.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]



Sec.  324.42  Risk-weighted assets for securitization exposures.

    (a) Securitization risk weight approaches. Except as provided 
elsewhere in this section or in Sec.  324.41:
    (1) An FDIC-supervised institution must deduct from common equity 
tier 1 capital any after-tax gain-on-sale resulting from a 
securitization and apply a 1,250 percent risk weight to the portion of a 
CEIO that does not constitute after-tax gain-on-sale.
    (2) If a securitization exposure does not require deduction under 
paragraph (a)(1) of this section, an FDIC-supervised institution may 
assign a risk weight to the securitization exposure using the simplified 
supervisory formula approach (SSFA) in accordance with Sec. Sec.  
324.43(a) through 324.43(d) and subject to the limitation under 
paragraph (e) of this section. Alternatively, an FDIC-supervised 
institution that is not subject to subpart F of this part may assign a 
risk weight to the securitization exposure using the gross-up approach 
in accordance with Sec.  324.43(e), provided, however, that such FDIC-
supervised institution must apply either the SSFA or the gross-up 
approach consistently across all of its securitization exposures, except 
as provided in paragraphs (a)(1), (a)(3), and (a)(4) of this section.
    (3) If a securitization exposure does not require deduction under 
paragraph

[[Page 267]]

(a)(1) of this section and the FDIC-supervised institution cannot, or 
chooses not to apply the SSFA or the gross-up approach to the exposure, 
the FDIC-supervised institution must assign a risk weight to the 
exposure as described in Sec.  324.44.
    (4) If a securitization exposure is a derivative contract (other 
than protection provided by an FDIC-supervised institution in the form 
of a credit derivative) that has a first priority claim on the cash 
flows from the underlying exposures (notwithstanding amounts due under 
interest rate or currency derivative contracts, fees due, or other 
similar payments), an FDIC-supervised institution may choose to set the 
risk-weighted asset amount of the exposure equal to the amount of the 
exposure as determined in paragraph (c) of this section.
    (b) Total risk-weighted assets for securitization exposures. An 
FDIC-supervised institution's total risk-weighted assets for 
securitization exposures equals the sum of the risk-weighted asset 
amount for securitization exposures that the FDIC-supervised institution 
risk weights under Sec. Sec.  324.41(c), 324.42(a)(1), and 324.43, 
324.44, or 324.45, and paragraphs (e) through (j) of this section, as 
applicable.
    (c) Exposure amount of a securitization exposure--(1) On-balance 
sheet securitization exposures. The exposure amount of an on-balance 
sheet securitization exposure (excluding an available-for-sale or held-
to-maturity security where the FDIC-supervised institution has made an 
AOCI opt-out election under Sec.  324.22(b)(2), a repo-style 
transaction, eligible margin loan, OTC derivative contract, or cleared 
transaction) is equal to the carrying value of the exposure.
    (2) On-balance sheet securitization exposures held by an FDIC-
supervised institution that has made an AOCI opt-out election. The 
exposure amount of an on-balance sheet securitization exposure that is 
an available-for-sale or held-to-maturity security held by an FDIC-
supervised institution that has made an AOCI opt-out election under 
Sec.  324.22(b)(2) is the FDIC-supervised institution's carrying value 
(including net accrued but unpaid interest and fees), less any net 
unrealized gains on the exposure and plus any net unrealized losses on 
the exposure.
    (3) Off-balance sheet securitization exposures. (i) Except as 
provided in paragraph (j) of this section, the exposure amount of an 
off-balance sheet securitization exposure that is not a repo-style 
transaction, eligible margin loan, cleared transaction (other than a 
credit derivative), or an OTC derivative contract (other than a credit 
derivative) is the notional amount of the exposure. For an off-balance 
sheet securitization exposure to an ABCP program, such as an eligible 
ABCP liquidity facility, the notional amount may be reduced to the 
maximum potential amount that the FDIC-supervised institution could be 
required to fund given the ABCP program's current underlying assets 
(calculated without regard to the current credit quality of those 
assets).
    (ii) An FDIC-supervised institution must determine the exposure 
amount of an eligible ABCP liquidity facility for which the SSFA does 
not apply by multiplying the notional amount of the exposure by a CCF of 
50 percent.
    (iii) An FDIC-supervised institution must determine the exposure 
amount of an eligible ABCP liquidity facility for which the SSFA applies 
by multiplying the notional amount of the exposure by a CCF of 100 
percent.
    (4) Repo-style transactions, eligible margin loans, and derivative 
contracts. The exposure amount of a securitization exposure that is a 
repo-style transaction, eligible margin loan, or derivative contract 
(other than a credit derivative) is the exposure amount of the 
transaction as calculated under Sec.  324.34 or Sec.  324.37, as 
applicable.
    (d) Overlapping exposures. If an FDIC-supervised institution has 
multiple securitization exposures that provide duplicative coverage to 
the underlying exposures of a securitization (such as when an FDIC-
supervised institution provides a program-wide credit enhancement and 
multiple pool-specific liquidity facilities to an ABCP program), the 
FDIC-supervised institution is not required to hold duplicative risk-
based capital against the overlapping position. Instead, the FDIC-
supervised institution may apply to the overlapping position the 
applicable risk-based

[[Page 268]]

capital treatment that results in the highest risk-based capital 
requirement.
    (e) Implicit support. If an FDIC-supervised institution provides 
support to a securitization in excess of the FDIC-supervised 
institution's contractual obligation to provide credit support to the 
securitization (implicit support):
    (1) The FDIC-supervised institution must include in risk-weighted 
assets all of the underlying exposures associated with the 
securitization as if the exposures had not been securitized and must 
deduct from common equity tier 1 capital any after-tax gain-on-sale 
resulting from the securitization; and
    (2) The FDIC-supervised institution must disclose publicly:
    (i) That it has provided implicit support to the securitization; and
    (ii) The risk-based capital impact to the FDIC-supervised 
institution of providing such implicit support.
    (f) Undrawn portion of a servicer cash advance facility. (1) 
Notwithstanding any other provision of this subpart, an FDIC-supervised 
institution that is a servicer under an eligible servicer cash advance 
facility is not required to hold risk-based capital against potential 
future cash advance payments that it may be required to provide under 
the contract governing the facility.
    (2) For an FDIC-supervised institution that acts as a servicer, the 
exposure amount for a servicer cash advance facility that is not an 
eligible servicer cash advance facility is equal to the amount of all 
potential future cash advance payments that the FDIC-supervised 
institution may be contractually required to provide during the 
subsequent 12 month period under the contract governing the facility.
    (g) Interest-only mortgage-backed securities. Regardless of any 
other provisions in this subpart, the risk weight for a non-credit-
enhancing interest-only mortgage-backed security may not be less than 
100 percent.
    (h) Small-business loans and leases on personal property transferred 
with retained contractual exposure. (1) Regardless of any other 
provision of this subpart, an FDIC-supervised institution that has 
transferred small-business loans and leases on personal property (small-
business obligations) with recourse must include in risk-weighted assets 
only its contractual exposure to the small-business obligations if all 
the following conditions are met:
    (i) The transaction must be treated as a sale under GAAP.
    (ii) The FDIC-supervised institution establishes and maintains, 
pursuant to GAAP, a non-capital reserve sufficient to meet the FDIC-
supervised institution's reasonably estimated liability under the 
contractual obligation.
    (iii) The small-business obligations are to businesses that meet the 
criteria for a small-business concern established by the Small Business 
Administration under section 3(a) of the Small Business Act (15 U.S.C. 
632 et seq.).
    (iv) The FDIC-supervised institution is well capitalized, as defined 
in subpart H of this part. For purposes of determining whether an FDIC-
supervised institution is well capitalized for purposes of this 
paragraph (h), the FDIC-supervised institution's capital ratios must be 
calculated without regard to the capital treatment for transfers of 
small-business obligations under this paragraph (h).
    (2) The total outstanding amount of contractual exposure retained by 
an FDIC-supervised institution on transfers of small-business 
obligations receiving the capital treatment specified in paragraph 
(h)(1) of this section cannot exceed 15 percent of the FDIC-supervised 
institution's total capital.
    (3) If an FDIC-supervised institution ceases to be well capitalized 
under subpart H of this part or exceeds the 15 percent capital 
limitation provided in paragraph (h)(2) of this section, the capital 
treatment under paragraph (h)(1) of this section will continue to apply 
to any transfers of small-business obligations with retained contractual 
exposure that occurred during the time that the FDIC-supervised 
institution was well capitalized and did not exceed the capital limit.
    (4) The risk-based capital ratios of the FDIC-supervised institution 
must be calculated without regard to the capital treatment for transfers 
of small-business obligations specified in paragraph (h)(1) of this 
section for purposes of:
    (i) Determining whether an FDIC-supervised institution is adequately 
capitalized, undercapitalized, significantly

[[Page 269]]

undercapitalized, or critically undercapitalized under subpart H of this 
part; and
    (ii) Reclassifying a well-capitalized FDIC-supervised institution to 
adequately capitalized and requiring an adequately capitalized FDIC-
supervised institution to comply with certain mandatory or discretionary 
supervisory actions as if the FDIC-supervised institution were in the 
next lower prompt-corrective-action category.
    (i) Nth-to-default credit derivatives--(1) Protection provider. An 
FDIC-supervised institution may assign a risk weight using the SSFA in 
Sec.  324.43 to an n\th\-to-default credit derivative in accordance with 
this paragraph (i). An FDIC-supervised institution must determine its 
exposure in the nth-to-default credit derivative as the largest notional 
amount of all the underlying exposures.
    (2) For purposes of determining the risk weight for an nth-to-
default credit derivative using the SSFA, the FDIC-supervised 
institution must calculate the attachment point and detachment point of 
its exposure as follows:
    (i) The attachment point (parameter A) is the ratio of the sum of 
the notional amounts of all underlying exposures that are subordinated 
to the FDIC-supervised institution's exposure to the total notional 
amount of all underlying exposures. The ratio is expressed as a decimal 
value between zero and one. In the case of a first-to-default credit 
derivative, there are no underlying exposures that are subordinated to 
the FDIC-supervised institution's exposure. In the case of a second-or-
subsequent-to-default credit derivative, the smallest (n-1) notional 
amounts of the underlying exposure(s) are subordinated to the FDIC-
supervised institution's exposure.
    (ii) The detachment point (parameter D) equals the sum of parameter 
A plus the ratio of the notional amount of the FDIC-supervised 
institution's exposure in the nth-to-default credit derivative to the 
total notional amount of all underlying exposures. The ratio is 
expressed as a decimal value between zero and one.
    (3) An FDIC-supervised institution that does not use the SSFA to 
determine a risk weight for its nth-to-default credit derivative must 
assign a risk weight of 1,250 percent to the exposure.
    (4) Protection purchaser--(i) First-to-default credit derivatives. 
An FDIC-supervised institution that obtains credit protection on a group 
of underlying exposures through a first-to-default credit derivative 
that meets the rules of recognition of Sec.  324.36(b) must determine 
its risk-based capital requirement for the underlying exposures as if 
the FDIC-supervised institution synthetically securitized the underlying 
exposure with the smallest risk-weighted asset amount and had obtained 
no credit risk mitigant on the other underlying exposures. An FDIC-
supervised institution must calculate a risk-based capital requirement 
for counterparty credit risk according to Sec.  324.34 for a first-to-
default credit derivative that does not meet the rules of recognition of 
Sec.  324.36(b).
    (ii) Second-or-subsequent-to-default credit derivatives. (A) An 
FDIC-supervised institution that obtains credit protection on a group of 
underlying exposures through a nth-to-default credit derivative that 
meets the rules of recognition of Sec.  324.36(b) (other than a first-
to-default credit derivative) may recognize the credit risk mitigation 
benefits of the derivative only if:
    (1) The FDIC-supervised institution also has obtained credit 
protection on the same underlying exposures in the form of first-
through-(n-1)-to-default credit derivatives; or
    (2) If n-1 of the underlying exposures have already defaulted.
    (B) If an FDIC-supervised institution satisfies the requirements of 
paragraph (i)(4)(ii)(A) of this section, the FDIC-supervised institution 
must determine its risk-based capital requirement for the underlying 
exposures as if the FDIC-supervised institution had only synthetically 
securitized the underlying exposure with the nth smallest risk-weighted 
asset amount and had obtained no credit risk mitigant on the other 
underlying exposures.
    (C) An FDIC-supervised institution must calculate a risk-based 
capital requirement for counterparty credit risk according to Sec.  
324.34 for a nth-to-default credit derivative that does not meet the 
rules of recognition of Sec.  324.36(b).

[[Page 270]]

    (j) Guarantees and credit derivatives other than nth-to-default 
credit derivatives--(1) Protection provider. For a guarantee or credit 
derivative (other than an nth-to-default credit derivative) provided by 
an FDIC-supervised institution that covers the full amount or a pro rata 
share of a securitization exposure's principal and interest, the FDIC-
supervised institution must risk weight the guarantee or credit 
derivative as if it holds the portion of the reference exposure covered 
by the guarantee or credit derivative.
    (2) Protection purchaser. (i) An FDIC-supervised institution that 
purchases a guarantee or OTC credit derivative (other than an nth-to-
default credit derivative) that is recognized under Sec.  324.45 as a 
credit risk mitigant (including via collateral recognized under Sec.  
324.37) is not required to compute a separate counterparty credit risk 
capital requirement under Sec.  324.31, in accordance with Sec.  
324.34(c).
    (ii) If an FDIC-supervised institution cannot, or chooses not to, 
recognize a purchased credit derivative as a credit risk mitigant under 
Sec.  324.45, the FDIC-supervised institution must determine the 
exposure amount of the credit derivative under Sec.  324.34.
    (A) If the FDIC-supervised institution purchases credit protection 
from a counterparty that is not a securitization SPE, the FDIC-
supervised institution must determine the risk weight for the exposure 
according to general risk weights under Sec.  324.32.
    (B) If the FDIC-supervised institution purchases the credit 
protection from a counterparty that is a securitization SPE, the FDIC-
supervised institution must determine the risk weight for the exposure 
according to section Sec.  324.42, including Sec.  324.42(a)(4) for a 
credit derivative that has a first priority claim on the cash flows from 
the underlying exposures of the securitization SPE (notwithstanding 
amounts due under interest rate or currency derivative contracts, fees 
due, or other similar payments).

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]



Sec.  324.43  Simplified supervisory formula approach (SSFA) 
and the gross-up approach.

    (a) General requirements for the SSFA. To use the SSFA to determine 
the risk weight for a securitization exposure, an FDIC-supervised 
institution must have data that enables it to assign accurately the 
parameters described in paragraph (b) of this section. Data used to 
assign the parameters described in paragraph (b) of this section must be 
the most currently available data; if the contracts governing the 
underlying exposures of the securitization require payments on a monthly 
or quarterly basis, the data used to assign the parameters described in 
paragraph (b) of this section must be no more than 91 calendar days old. 
An FDIC-supervised institution that does not have the appropriate data 
to assign the parameters described in paragraph (b) of this section must 
assign a risk weight of 1,250 percent to the exposure.
    (b) SSFA parameters. To calculate the risk weight for a 
securitization exposure using the SSFA, an FDIC-supervised institution 
must have accurate information on the following five inputs to the SSFA 
calculation:
    (1) KG is the weighted-average (with unpaid principal 
used as the weight for each exposure) total capital requirement of the 
underlying exposures calculated using this subpart. KG is 
expressed as a decimal value between zero and one (that is, an average 
risk weight of 100 percent represents a value of KG equal to 
0.08).
    (2) Parameter W is expressed as a decimal value between zero and 
one. Parameter W is the ratio of the sum of the dollar amounts of any 
underlying exposures of the securitization that meet any of the criteria 
as set forth in paragraphs (b)(2)(i) through (vi) of this section to the 
balance, measured in dollars, of underlying exposures:
    (i) Ninety days or more past due;
    (ii) Subject to a bankruptcy or insolvency proceeding;
    (iii) In the process of foreclosure;
    (iv) Held as real estate owned;
    (v) Has contractually deferred payments for 90 days or more, other 
than principal or interest payments deferred on:

[[Page 271]]

    (A) Federally-guaranteed student loans, in accordance with the terms 
of those guarantee programs; or
    (B) Consumer loans, including non-federally-guaranteed student 
loans, provided that such payments are deferred pursuant to provisions 
included in the contract at the time funds are disbursed that provide 
for period(s) of deferral that are not initiated based on changes in the 
creditworthiness of the borrower; or
    (vi) Is in default.
    (3) Parameter A is the attachment point for the exposure, which 
represents the threshold at which credit losses will first be allocated 
to the exposure. Except as provided in Sec.  324.42(i) for n\th\-to-
default credit derivatives, parameter A equals the ratio of the current 
dollar amount of underlying exposures that are subordinated to the 
exposure of the FDIC-supervised institution to the current dollar amount 
of underlying exposures. Any reserve account funded by the accumulated 
cash flows from the underlying exposures that is subordinated to the 
FDIC-supervised institution's securitization exposure may be included in 
the calculation of parameter A to the extent that cash is present in the 
account. Parameter A is expressed as a decimal value between zero and 
one.
    (4) Parameter D is the detachment point for the exposure, which 
represents the threshold at which credit losses of principal allocated 
to the exposure would result in a total loss of principal. Except as 
provided in Sec.  324.42(i) for n\th\-to-default credit derivatives, 
parameter D equals parameter A plus the ratio of the current dollar 
amount of the securitization exposures that are pari passu with the 
exposure (that is, have equal seniority with respect to credit risk) to 
the current dollar amount of the underlying exposures. Parameter D is 
expressed as a decimal value between zero and one.
    (5) A supervisory calibration parameter, p, is equal to 0.5 for 
securitization exposures that are not resecuritization exposures and 
equal to 1.5 for resecuritization exposures.
    (c) Mechanics of the SSFA. KG and W are used to calculate 
KA, the augmented value of KG, which reflects the 
observed credit quality of the underlying exposures. KA is 
defined in paragraph (d) of this section. The values of parameters A and 
D, relative to KA determine the risk weight assigned to a 
securitization exposure as described in paragraph (d) of this section. 
The risk weight assigned to a securitization exposure, or portion of a 
securitization exposure, as appropriate, is the larger of the risk 
weight determined in accordance with this paragraph (c) or paragraph (d) 
of this section and a risk weight of 20 percent.
    (1) When the detachment point, parameter D, for a securitization 
exposure is less than or equal to KA, the exposure must be 
assigned a risk weight of 1,250 percent.
    (2) When the attachment point, parameter A, for a securitization 
exposure is greater than or equal to KA, the FDIC-supervised 
institution must calculate the risk weight in accordance with paragraph 
(d) of this section.
    (3) When A is less than KA and D is greater than 
KA, the risk weight is a weighted-average of 1,250 percent 
and 1,250 percent times KSSFA calculated in accordance with 
paragraph (d) of this section. For the purpose of this weighted-average 
calculation:

[[Page 272]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.022

    (e) Gross-up approach--(1) Applicability. An FDIC-supervised 
institution that is not subject to subpart F of this part may apply the 
gross-up approach set forth in this section instead of the SSFA to 
determine the risk weight of its securitization exposures, provided that 
it applies the gross-up approach to all of its securitization exposures, 
except as otherwise provided for certain securitization exposures in 
Sec. Sec.  324.44 and 324.45.
    (2) To use the gross-up approach, an FDIC-supervised institution 
must calculate the following four inputs:
    (i) Pro rata share, which is the par value of the FDIC-supervised 
institution's securitization exposure as a percent of the par value of 
the tranche in which the securitization exposure resides;

[[Page 273]]

    (ii) Enhanced amount, which is the par value of tranches that are 
more senior to the tranche in which the FDIC-supervised institution's 
securitization resides;
    (iii) Exposure amount of the FDIC-supervised institution's 
securitization exposure calculated under Sec.  324.42(c); and
    (iv) Risk weight, which is the weighted-average risk weight of 
underlying exposures of the securitization as calculated under this 
subpart.
    (3) Credit equivalent amount. The credit equivalent amount of a 
securitization exposure under this section equals the sum of:
    (i) The exposure amount of the FDIC-supervised institution's 
securitization exposure; and
    (ii) The pro rata share multiplied by the enhanced amount, each 
calculated in accordance with paragraph (e)(2) of this section.
    (4) Risk-weighted assets. To calculate risk-weighted assets for a 
securitization exposure under the gross-up approach, an FDIC-supervised 
institution must apply the risk weight required under paragraph (e)(2) 
of this section to the credit equivalent amount calculated in paragraph 
(e)(3) of this section.
    (f) Limitations. Notwithstanding any other provision of this 
section, an FDIC-supervised institution must assign a risk weight of not 
less than 20 percent to a securitization exposure.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]



Sec.  324.44  Securitization exposures to which the SSFA 
and gross-up approach do not apply.

    (a) General Requirement. An FDIC-supervised institution must assign 
a 1,250 percent risk weight to all securitization exposures to which the 
FDIC-supervised institution does not apply the SSFA or the gross-up 
approach under Sec.  324.43, except as set forth in this section.
    (b) Eligible ABCP liquidity facilities. An FDIC-supervised 
institution may determine the risk-weighted asset amount of an eligible 
ABCP liquidity facility by multiplying the exposure amount by the 
highest risk weight applicable to any of the individual underlying 
exposures covered by the facility.
    (c) A securitization exposure in a second loss position or better to 
an ABCP program--(1) Risk weighting. An FDIC-supervised institution may 
determine the risk-weighted asset amount of a securitization exposure 
that is in a second loss position or better to an ABCP program that 
meets the requirements of paragraph (c)(2) of this section by 
multiplying the exposure amount by the higher of the following risk 
weights:
    (i) 100 percent; and
    (ii) The highest risk weight applicable to any of the individual 
underlying exposures of the ABCP program.
    (2) Requirements. (i) The exposure is not an eligible ABCP liquidity 
facility;
    (ii) The exposure must be economically in a second loss position or 
better, and the first loss position must provide significant credit 
protection to the second loss position;
    (iii) The exposure qualifies as investment grade; and
    (iv) The FDIC-supervised institution holding the exposure must not 
retain or provide protection to the first loss position.



Sec.  324.45  Recognition of credit risk mitigants 
for securitization exposures.

    (a) General. (1) An originating FDIC-supervised institution that has 
obtained a credit risk mitigant to hedge its exposure to a synthetic or 
traditional securitization that satisfies the operational criteria 
provided in Sec.  324.41 may recognize the credit risk mitigant under 
Sec. Sec.  324.36 or 324.37, but only as provided in this section.
    (2) An investing FDIC-supervised institution that has obtained a 
credit risk mitigant to hedge a securitization exposure may recognize 
the credit risk mitigant under Sec. Sec.  324.36 or 324.37, but only as 
provided in this section.
    (b) Mismatches. An FDIC-supervised institution must make any 
applicable adjustment to the protection amount of an eligible guarantee 
or credit derivative as required in Sec.  324.36(d), (e), and (f) for 
any hedged securitization exposure. In the context of a synthetic

[[Page 274]]

securitization, when an eligible guarantee or eligible credit derivative 
covers multiple hedged exposures that have different residual 
maturities, the FDIC-supervised institution must use the longest 
residual maturity of any of the hedged exposures as the residual 
maturity of all hedged exposures.



Sec. Sec.  324.46-324.50  [Reserved]

                Risk-Weighted Assets for Equity Exposures



Sec.  324.51  Introduction and exposure measurement.

    (a) General. (1) To calculate its risk-weighted asset amounts for 
equity exposures that are not equity exposures to an investment fund, an 
FDIC-supervised institution must use the Simple Risk-Weight Approach 
(SRWA) provided in Sec.  324.52. An FDIC-supervised institution must use 
the look-through approaches provided in Sec.  324.53 to calculate its 
risk-weighted asset amounts for equity exposures to investment funds.
    (2) An FDIC-supervised institution must treat an investment in a 
separate account (as defined in Sec.  324.2) as if it were an equity 
exposure to an investment fund as provided in Sec.  324.53.
    (3) Stable value protection. (i) Stable value protection means a 
contract where the provider of the contract is obligated to pay:
    (A) The policy owner of a separate account an amount equal to the 
shortfall between the fair value and cost basis of the separate account 
when the policy owner of the separate account surrenders the policy; or
    (B) The beneficiary of the contract an amount equal to the shortfall 
between the fair value and book value of a specified portfolio of 
assets.
    (ii) An FDIC-supervised institution that purchases stable value 
protection on its investment in a separate account must treat the 
portion of the carrying value of its investment in the separate account 
attributable to the stable value protection as an exposure to the 
provider of the protection and the remaining portion of the carrying 
value of its separate account as an equity exposure to an investment 
fund.
    (iii) An FDIC-supervised institution that provides stable value 
protection must treat the exposure as an equity derivative with an 
adjusted carrying value determined as the sum of paragraphs (b)(1) and 
(3) of this section.
    (b) Adjusted carrying value. For purposes of Sec. Sec.  324.51 
through 324.53, the adjusted carrying value of an equity exposure is:
    (1) For the on-balance sheet component of an equity exposure (other 
than an equity exposure that is classified as available-for-sale where 
the FDIC-supervised institution has made an AOCI opt-out election under 
Sec.  324.22(b)(2)), the FDIC-supervised institution's carrying value of 
the exposure;
    (2) For the on-balance sheet component of an equity exposure that is 
classified as available-for-sale where the FDIC-supervised institution 
has made an AOCI opt-out election under Sec.  324.22(b)(2), the FDIC-
supervised institution's carrying value of the exposure less any net 
unrealized gains on the exposure that are reflected in such carrying 
value but excluded from the FDIC-supervised institution's regulatory 
capital components;
    (3) For the off-balance sheet component of an equity exposure that 
is not an equity commitment, the effective notional principal amount of 
the exposure, the size of which is equivalent to a hypothetical on-
balance sheet position in the underlying equity instrument that would 
evidence the same change in fair value (measured in dollars) given a 
small change in the price of the underlying equity instrument, minus the 
adjusted carrying value of the on-balance sheet component of the 
exposure as calculated in paragraph (b)(1) of this section; and
    (4) For a commitment to acquire an equity exposure (an equity 
commitment), the effective notional principal amount of the exposure is 
multiplied by the following conversion factors (CFs):
    (i) Conditional equity commitments with an original maturity of one 
year or less receive a CF of 20 percent.
    (ii) Conditional equity commitments with an original maturity of 
over one year receive a CF of 50 percent.
    (iii) Unconditional equity commitments receive a CF of 100 percent.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]

[[Page 275]]



Sec.  324.52  Simple risk-weight approach (SRWA).

    (a) General. Under the SRWA, an FDIC-supervised institution's total 
risk-weighted assets for equity exposures equals the sum of the risk-
weighted asset amounts for each of the FDIC-supervised institution's 
individual equity exposures (other than equity exposures to an 
investment fund) as determined under this section and the risk-weighted 
asset amounts for each of the FDIC-supervised institution's individual 
equity exposures to an investment fund as determined under Sec.  324.53.
    (b) SRWA computation for individual equity exposures. An FDIC-
supervised institution must determine the risk-weighted asset amount for 
an individual equity exposure (other than an equity exposure to an 
investment fund) by multiplying the adjusted carrying value of the 
equity exposure or the effective portion and ineffective portion of a 
hedge pair (as defined in paragraph (c) of this section) by the lowest 
applicable risk weight in this paragraph (b).
    (1) Zero percent risk weight equity exposures. An equity exposure to 
a sovereign, the Bank for International Settlements, the European 
Central Bank, the European Commission, the International Monetary Fund, 
an MDB, and any other entity whose credit exposures receive a zero 
percent risk weight under Sec.  324.32 may be assigned a zero percent 
risk weight.
    (2) 20 percent risk weight equity exposures. An equity exposure to a 
PSE, Federal Home Loan Bank or the Federal Agricultural Mortgage 
Corporation (Farmer Mac) must be assigned a 20 percent risk weight.
    (3) 100 percent risk weight equity exposures. The equity exposures 
set forth in this paragraph (b)(3) must be assigned a 100 percent risk 
weight.
    (i) Community development equity exposures. An equity exposure that 
qualifies as a community development investment under section 24 
(Eleventh) of the National Bank Act, excluding equity exposures to an 
unconsolidated small business investment company and equity exposures 
held through a consolidated small business investment company described 
in section 302 of the Small Business Investment Act.
    (ii) Effective portion of hedge pairs. The effective portion of a 
hedge pair.
    (iii) Non-significant equity exposures. Equity exposures, excluding 
significant investments in the capital of an unconsolidated financial 
institution in the form of common stock and exposures to an investment 
firm that would meet the definition of a traditional securitization were 
it not for the application of paragraph (8) of that definition in Sec.  
324.2 and has greater than immaterial leverage, to the extent that the 
aggregate adjusted carrying value of the exposures does not exceed 10 
percent of the FDIC-supervised institution's total capital.
    (A) To compute the aggregate adjusted carrying value of an FDIC-
supervised institution's equity exposures for purposes of this section, 
the FDIC-supervised institution may exclude equity exposures described 
in paragraphs (b)(1), (b)(2), (b)(3)(i), and (b)(3)(ii) of this section, 
the equity exposure in a hedge pair with the smaller adjusted carrying 
value, and a proportion of each equity exposure to an investment fund 
equal to the proportion of the assets of the investment fund that are 
not equity exposures or that meet the criterion of paragraph (b)(3)(i) 
of this section. If an FDIC-supervised institution does not know the 
actual holdings of the investment fund, the FDIC-supervised institution 
may calculate the proportion of the assets of the fund that are not 
equity exposures based on the terms of the prospectus, partnership 
agreement, or similar contract that defines the fund's permissible 
investments. If the sum of the investment limits for all exposure 
classes within the fund exceeds 100 percent, the FDIC-supervised 
institution must assume for purposes of this section that the investment 
fund invests to the maximum extent possible in equity exposures.
    (B) When determining which of an FDIC-supervised institution's 
equity exposures qualify for a 100 percent risk weight under this 
paragraph (b), an FDIC-supervised institution first must include equity 
exposures to unconsolidated small business investment companies or held 
through consolidated small business investment companies described in 
section 302 of the Small

[[Page 276]]

Business Investment Act, then must include publicly traded equity 
exposures (including those held indirectly through investment funds), 
and then must include non-publicly traded equity exposures (including 
those held indirectly through investment funds).
    (4) 250 percent risk weight equity exposures. Significant 
investments in the capital of unconsolidated financial institutions in 
the form of common stock that are not deducted from capital pursuant to 
Sec.  324.22(d) are assigned a 250 percent risk weight.
    (5) 300 percent risk weight equity exposures. A publicly traded 
equity exposure (other than an equity exposure described in paragraph 
(b)(7) of this section and including the ineffective portion of a hedge 
pair) must be assigned a 300 percent risk weight.
    (6) 400 percent risk weight equity exposures. An equity exposure 
(other than an equity exposure described in paragraph (b)(7) of this 
section) that is not publicly traded must be assigned a 400 percent risk 
weight.
    (7) 600 percent risk weight equity exposures. An equity exposure to 
an investment firm must be assigned a 600 percent risk weight, provided 
that the investment firm:
    (i) Would meet the definition of a traditional securitization were 
it not for the application of paragraph (8) of that definition; and
    (ii) Has greater than immaterial leverage.
    (c) Hedge transactions--(1) Hedge pair. A hedge pair is two equity 
exposures that form an effective hedge so long as each equity exposure 
is publicly traded or has a return that is primarily based on a publicly 
traded equity exposure.
    (2) Effective hedge. Two equity exposures form an effective hedge if 
the exposures either have the same remaining maturity or each has a 
remaining maturity of at least three months; the hedge relationship is 
formally documented in a prospective manner (that is, before the FDIC-
supervised institution acquires at least one of the equity exposures); 
the documentation specifies the measure of effectiveness (E) the FDIC-
supervised institution will use for the hedge relationship throughout 
the life of the transaction; and the hedge relationship has an E greater 
than or equal to 0.8. An FDIC-supervised institution must measure E at 
least quarterly and must use one of three alternative measures of E as 
set forth in this paragraph (c).
    (i) Under the dollar-offset method of measuring effectiveness, the 
FDIC-supervised institution must determine the ratio of value change 
(RVC). The RVC is the ratio of the cumulative sum of the changes in 
value of one equity exposure to the cumulative sum of the changes in the 
value of the other equity exposure. If RVC is positive, the hedge is not 
effective and E equals 0. If RVC is negative and greater than or equal 
to -1 (that is, between zero and -1), then E equals the absolute value 
of RVC. If RVC is negative and less than -1, then E equals 2 plus RVC.
    (ii) Under the variability-reduction method of measuring 
effectiveness:

[[Page 277]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.023

    (iii) Under the regression method of measuring effectiveness, E 
equals the coefficient of determination of a regression in which the 
change in value of one exposure in a hedge pair is the dependent 
variable and the change in value of the other exposure in a hedge pair 
is the independent variable. However, if the estimated regression 
coefficient is positive, then E equals zero.
    (3) The effective portion of a hedge pair is E multiplied by the 
greater of the adjusted carrying values of the equity exposures forming 
a hedge pair.
    (4) The ineffective portion of a hedge pair is (1-E) multiplied by 
the greater of the adjusted carrying values of the equity exposures 
forming a hedge pair.



Sec.  324.53  Equity exposures to investment funds.

    (a) Available approaches. (1) Unless the exposure meets the 
requirements for a community development equity exposure under Sec.  
324.52(b)(3)(i), an FDIC-supervised institution must determine the risk-
weighted asset amount of an equity exposure to an investment fund under 
the full look-through approach described in paragraph (b) of this 
section, the simple modified look-through approach described in 
paragraph (c) of this section, or the alterative modified look-through 
approach described paragraph (d) of this section, provided, however, 
that the minimum risk weight that may be assigned to an equity exposure 
under this section is 20 percent.
    (2) The risk-weighted asset amount of an equity exposure to an 
investment fund that meets the requirements for a community development 
equity exposure in Sec.  324.52(b)(3)(i) is its adjusted carrying value.
    (3) If an equity exposure to an investment fund is part of a hedge 
pair and the FDIC-supervised institution does not use the full look-
through approach, the FDIC-supervised institution must use the 
ineffective portion of the hedge pair as determined under Sec.  
324.52(c) as the adjusted carrying value for the equity exposure to the 
investment fund. The risk-weighted asset amount of the effective portion 
of the hedge pair is equal to its adjusted carrying value.
    (b) Full look-through approach. An FDIC-supervised institution that 
is able to calculate a risk-weighted asset amount for its proportional 
ownership share of each exposure held by the investment fund (as 
calculated under this subpart as if the proportional ownership share of 
the adjusted carrying value of each exposure were held directly by the 
FDIC-supervised institution) may set the risk-weighted asset amount of 
the FDIC-supervised institution's exposure to the fund equal to the 
product of:
    (1) The aggregate risk-weighted asset amounts of the exposures held 
by the fund as if they were held directly by the FDIC-supervised 
institution; and
    (2) The FDIC-supervised institution's proportional ownership share 
of the fund.

[[Page 278]]

    (c) Simple modified look-through approach. Under the simple modified 
look-through approach, the risk-weighted asset amount for an FDIC-
supervised institution's equity exposure to an investment fund equals 
the adjusted carrying value of the equity exposure multiplied by the 
highest risk weight that applies to any exposure the fund is permitted 
to hold under the prospectus, partnership agreement, or similar 
agreement that defines the fund's permissible investments (excluding 
derivative contracts that are used for hedging rather than speculative 
purposes and that do not constitute a material portion of the fund's 
exposures).
    (d) Alternative modified look-through approach. Under the 
alternative modified look-through approach, an FDIC-supervised 
institution may assign the adjusted carrying value of an equity exposure 
to an investment fund on a pro rata basis to different risk weight 
categories under this subpart based on the investment limits in the 
fund's prospectus, partnership agreement, or similar contract that 
defines the fund's permissible investments. The risk-weighted asset 
amount for the FDIC-supervised institution's equity exposure to the 
investment fund equals the sum of each portion of the adjusted carrying 
value assigned to an exposure type multiplied by the applicable risk 
weight under this subpart. If the sum of the investment limits for all 
exposure types within the fund exceeds 100 percent, the FDIC-supervised 
institution must assume that the fund invests to the maximum extent 
permitted under its investment limits in the exposure type with the 
highest applicable risk weight under this subpart and continues to make 
investments in order of the exposure type with the next highest 
applicable risk weight under this subpart until the maximum total 
investment level is reached. If more than one exposure type applies to 
an exposure, the FDIC-supervised institution must use the highest 
applicable risk weight. An FDIC-supervised institution may exclude 
derivative contracts held by the fund that are used for hedging rather 
than for speculative purposes and do not constitute a material portion 
of the fund's exposures.



Sec. Sec.  324.54-324.60  [Reserved]

                               Disclosures



Sec.  324.61  Purpose and scope.

    Sections 324.61-324.63 of this subpart establish public disclosure 
requirements related to the capital requirements described in subpart B 
of this part for an FDIC-supervised institution with total consolidated 
assets of $50 billion or more as reported on the FDIC-supervised 
institution's most recent year-end Call Report that is not an advanced 
approaches FDIC-supervised institution making public disclosures 
pursuant to Sec.  324.172. An advanced approaches FDIC-supervised 
institution that has not received approval from the FDIC to exit 
parallel run pursuant to Sec.  324.121(d) is subject to the disclosure 
requirements described in Sec. Sec.  324.62 and 324.63. Such an FDIC-
supervised institution must comply with Sec.  324.62 unless it is a 
consolidated subsidiary of a bank holding company, savings and loan 
holding company, or depository institution that is subject to these 
disclosure requirements or a subsidiary of a non-U.S. banking 
organization that is subject to comparable public disclosure 
requirements in its home jurisdiction. For purposes of this section, 
total consolidated assets are determined based on the average of the 
FDIC-supervised institution's total consolidated assets in the four most 
recent quarters as reported on the Call Report; or the average of the 
FDIC-supervised institution's total consolidated assets in the most 
recent consecutive quarters as reported quarterly on the FDIC-supervised 
institution's Call Report if the FDIC-supervised institution has not 
filed such a report for each of the most recent four quarters.



Sec.  324.62  Disclosure requirements.

    (a) An FDIC-supervised institution described in Sec.  324.61 must 
provide timely public disclosures each calendar quarter of the 
information in the applicable tables in Sec.  324.63. If a significant 
change occurs, such that the most recent reported amounts are no longer 
reflective of the FDIC-supervised institution's capital adequacy and 
risk profile, then a brief discussion of this change and its likely 
impact must be

[[Page 279]]

disclosed as soon as practicable thereafter. Qualitative disclosures 
that typically do not change each quarter (for example, a general 
summary of the FDIC-supervised institution's risk management objectives 
and policies, reporting system, and definitions) may be disclosed 
annually after the end of the fourth calendar quarter, provided that any 
significant changes are disclosed in the interim. The FDIC-supervised 
institution's management may provide all of the disclosures required by 
Sec. Sec.  324.61 through 324.63 in one place on the FDIC-supervised 
institution's public Web site or may provide the disclosures in more 
than one public financial report or other regulatory reports, provided 
that the FDIC-supervised institution publicly provides a summary table 
specifically indicating the location(s) of all such disclosures.
    (b) An FDIC-supervised institution described in Sec.  324.61 must 
have a formal disclosure policy approved by the board of directors that 
addresses its approach for determining the disclosures it makes. The 
policy must address the associated internal controls and disclosure 
controls and procedures. The board of directors and senior management 
are responsible for establishing and maintaining an effective internal 
control structure over financial reporting, including the disclosures 
required by this subpart, and must ensure that appropriate review of the 
disclosures takes place. One or more senior officers of the FDIC-
supervised institution must attest that the disclosures meet the 
requirements of this subpart.
    (c) If an FDIC-supervised institution described in Sec.  324.61 
concludes that specific commercial or financial information that it 
would otherwise be required to disclose under this section would be 
exempt from disclosure by the FDIC under the Freedom of Information Act 
(5 U.S.C. 552), then the FDIC-supervised institution is not required to 
disclose that specific information pursuant to this section, but must 
disclose more general information about the subject matter of the 
requirement, together with the fact that, and the reason why, the 
specific items of information have not been disclosed.



Sec.  324.63  Disclosures by FDIC-supervised institutions 
described in Sec.  324.61.

    (a) Except as provided in Sec.  324.62, an FDIC-supervised 
institution described in Sec.  324.61 must make the disclosures 
described in Tables 1 through 10 of this section. The FDIC-supervised 
institution must make these disclosures publicly available for each of 
the last three years (that is, twelve quarters) or such shorter period 
beginning on January 1, 2015.
    (b) An FDIC-supervised institution must publicly disclose each 
quarter the following:
    (1) Common equity tier 1 capital, additional tier 1 capital, tier 2 
capital, tier 1 and total capital ratios, including the regulatory 
capital elements and all the regulatory adjustments and deductions 
needed to calculate the numerator of such ratios;
    (2) Total risk-weighted assets, including the different regulatory 
adjustments and deductions needed to calculate total risk-weighted 
assets;
    (3) Regulatory capital ratios during any transition periods, 
including a description of all the regulatory capital elements and all 
regulatory adjustments and deductions needed to calculate the numerator 
and denominator of each capital ratio during any transition period; and
    (4) A reconciliation of regulatory capital elements as they relate 
to its balance sheet in any audited consolidated financial statements.

             Table 1 to Sec.   324.63--Scope of Application
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures.......  (a)..............  The name of the top
                                                    corporate entity in
                                                    the group to which
                                                    subpart D of this
                                                    part applies.

[[Page 280]]

 
                                (b)..............  A brief description
                                                    of the differences
                                                    in the basis for
                                                    consolidating
                                                    entities \1\ for
                                                    accounting and
                                                    regulatory purposes,
                                                    with a description
                                                    of those entities:
                                                   (1) That are fully
                                                    consolidated;
                                                   (2) That are
                                                    deconsolidated and
                                                    deducted from total
                                                    capital;
                                                   (3) For which the
                                                    total capital
                                                    requirement is
                                                    deducted; and
                                                   (4) That are neither
                                                    consolidated nor
                                                    deducted (for
                                                    example, where the
                                                    investment in the
                                                    entity is assigned a
                                                    risk weight in
                                                    accordance with this
                                                    subpart).
                                (c)..............  Any restrictions, or
                                                    other major
                                                    impediments, on
                                                    transfer of funds or
                                                    total capital within
                                                    the group.
Quantitative Disclosures......  (d)..............  The aggregate amount
                                                    of surplus capital
                                                    of insurance
                                                    subsidiaries
                                                    included in the
                                                    total capital of the
                                                    consolidated group.
                                (e)..............  The aggregate amount
                                                    by which actual
                                                    total capital is
                                                    less than the
                                                    minimum total
                                                    capital requirement
                                                    in all subsidiaries,
                                                    with total capital
                                                    requirements and the
                                                    name(s) of the
                                                    subsidiaries with
                                                    such deficiencies.
------------------------------------------------------------------------
\1\ Entities include securities, insurance and other financial
  subsidiaries, commercial subsidiaries (where permitted), and
  significant minority equity investments in insurance, financial and
  commercial entities.


               Table 2 to Sec.   324.63--Capital Structure
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures.......  (a)..............  Summary information
                                                    on the terms and
                                                    conditions of the
                                                    main features of all
                                                    regulatory capital
                                                    instruments.
Quantitative Disclosures......  (b)..............  The amount of common
                                                    equity tier 1
                                                    capital, with
                                                    separate disclosure
                                                    of:
                                                   (1) Common stock and
                                                    related surplus;
                                                   (2) Retained
                                                    earnings;
                                                   (3) Common equity
                                                    minority interest;
                                                   (4) AOCI; and
                                                   (5) Regulatory
                                                    adjustments and
                                                    deductions made to
                                                    common equity tier 1
                                                    capital.
                                (c)..............  The amount of tier 1
                                                    capital, with
                                                    separate disclosure
                                                    of:
                                                   (1) Additional tier 1
                                                    capital elements,
                                                    including additional
                                                    tier 1 capital
                                                    instruments and tier
                                                    1 minority interest
                                                    not included in
                                                    common equity tier 1
                                                    capital; and
                                                   (2) Regulatory
                                                    adjustments and
                                                    deductions made to
                                                    tier 1 capital.
                                (d)..............  The amount of total
                                                    capital, with
                                                    separate disclosure
                                                    of:
                                                   (1) Tier 2 capital
                                                    elements, including
                                                    tier 2 capital
                                                    instruments and
                                                    total capital
                                                    minority interest
                                                    not included in tier
                                                    1 capital; and
                                                   (2) Regulatory
                                                    adjustments and
                                                    deductions made to
                                                    total capital.
------------------------------------------------------------------------


               Table 3 to Sec.   324.63--Capital Adequacy
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures.......  (a)..............  A summary discussion
                                                    of the FDIC-
                                                    supervised
                                                    institution's
                                                    approach to
                                                    assessing the
                                                    adequacy of its
                                                    capital to support
                                                    current and future
                                                    activities.

[[Page 281]]

 
Quantitative disclosures......  (b)..............  Risk-weighted assets
                                                    for:
                                                   (1) Exposures to
                                                    sovereign entities;
                                                   (2) Exposures to
                                                    certain
                                                    supranational
                                                    entities and MDBs;
                                                   (3) Exposures to
                                                    depository
                                                    institutions,
                                                    foreign banks, and
                                                    credit unions;
                                                   (4) Exposures to
                                                    PSEs;
                                                   (5) Corporate
                                                    exposures;
                                                   (6) Residential
                                                    mortgage exposures;
                                                   (7) Statutory
                                                    multifamily
                                                    mortgages and pre-
                                                    sold construction
                                                    loans;
                                                   (8) HVCRE loans;
                                                   (9) Past due loans;
                                                   (10) Other assets;
                                                   (11) Cleared
                                                    transactions;
                                                   (12) Default fund
                                                    contributions;
                                                   (13) Unsettled
                                                    transactions;
                                                   (14) Securitization
                                                    exposures; and
                                                   (15) Equity
                                                    exposures.
                                (c)..............  Standardized market
                                                    risk-weighted assets
                                                    as calculated under
                                                    subpart F of this
                                                    part.
                                (d)..............  Common equity tier 1,
                                                    tier 1 and total
                                                    risk-based capital
                                                    ratios:
                                                   (1) For the top
                                                    consolidated group;
                                                    and
                                                   (2) For each
                                                    depository
                                                    institution
                                                    subsidiary.
                                (e)..............  Total standardized
                                                    risk-weighted
                                                    assets.
------------------------------------------------------------------------


          Table 4 to Sec.   324.63--Capital Conservation Buffer
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Quantitative Disclosures......  (a)..............  At least quarterly,
                                                    the FDIC-supervised
                                                    institution must
                                                    calculate and
                                                    publicly disclose
                                                    the capital
                                                    conservation buffer
                                                    as described under
                                                    Sec.   324.11.
                                (b)..............  At least quarterly,
                                                    the FDIC-supervised
                                                    institution must
                                                    calculate and
                                                    publicly disclose
                                                    the eligible
                                                    retained income of
                                                    the FDIC-supervised
                                                    institution, as
                                                    described under Sec.
                                                      324.11.
                                (c)..............  At least quarterly,
                                                    the FDIC-supervised
                                                    institution must
                                                    calculate and
                                                    publicly disclose
                                                    any limitations it
                                                    has on distributions
                                                    and discretionary
                                                    bonus payments
                                                    resulting from the
                                                    capital conservation
                                                    buffer framework
                                                    described under Sec.
                                                      324.11, including
                                                    the maximum payout
                                                    amount for the
                                                    quarter.
------------------------------------------------------------------------

    (c) General qualitative disclosure requirement. For each separate 
risk area described in Tables 5 through 10, the FDIC-supervised 
institution must describe its risk management objectives and policies, 
including: strategies and processes; the structure and organization of 
the relevant risk management function; the scope and nature of risk 
reporting and/or measurement systems; policies for hedging and/or 
mitigating risk and strategies and processes for monitoring the 
continuing effectiveness of hedges/mitigants.

[[Page 282]]



       Table 5 to Sec.   324.63--Credit Risk: General Disclosures
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures.......  (a)..............  The general
                                                    qualitative
                                                    disclosure
                                                    requirement with
                                                    respect to credit
                                                    risk (excluding
                                                    counterparty credit
                                                    risk disclosed in
                                                    accordance with
                                                    Table 6 to Sec.
                                                    324.63), including
                                                    the:
                                                   (1) Policy for
                                                    determining past due
                                                    or delinquency
                                                    status;
                                                   (2) Policy for
                                                    placing loans on
                                                    nonaccrual;
                                                   (3) Policy for
                                                    returning loans to
                                                    accrual status;
                                                   (4) Definition of and
                                                    policy for
                                                    identifying impaired
                                                    loans (for financial
                                                    accounting
                                                    purposes);
                                                   (5) Description of
                                                    the methodology that
                                                    the FDIC-supervised
                                                    institution uses to
                                                    estimate its
                                                    allowance for loan
                                                    and lease losses,
                                                    including
                                                    statistical methods
                                                    used where
                                                    applicable;
                                                   (6) Policy for
                                                    charging-off
                                                    uncollectible
                                                    amounts; and
                                                   (7) Discussion of the
                                                    FDIC-supervised
                                                    institution's credit
                                                    risk management
                                                    policy.
Quantitative Disclosures......  (b)..............  Total credit risk
                                                    exposures and
                                                    average credit risk
                                                    exposures, after
                                                    accounting offsets
                                                    in accordance with
                                                    GAAP, without taking
                                                    into account the
                                                    effects of credit
                                                    risk mitigation
                                                    techniques (for
                                                    example, collateral
                                                    and netting not
                                                    permitted under
                                                    GAAP), over the
                                                    period categorized
                                                    by major types of
                                                    credit exposure. For
                                                    example, FDIC-
                                                    supervised
                                                    institutions could
                                                    use categories
                                                    similar to that used
                                                    for financial
                                                    statement purposes.
                                                    Such categories
                                                    might include, for
                                                    instance:
                                                   (1) Loans, off-
                                                    balance sheet
                                                    commitments, and
                                                    other non-derivative
                                                    off-balance sheet
                                                    exposures;
                                                   (2) Debt securities;
                                                    and
                                                   (3) OTC
                                                    derivatives.\2\
                                (c)..............  Geographic
                                                    distribution of
                                                    exposures,
                                                    categorized in
                                                    significant areas by
                                                    major types of
                                                    credit exposure.\3\
                                (d)..............  Industry or
                                                    counterparty type
                                                    distribution of
                                                    exposures,
                                                    categorized by major
                                                    types of credit
                                                    exposure.
                                (e)..............  By major industry or
                                                    counterparty type:
                                                   (1) Amount of
                                                    impaired loans for
                                                    which there was a
                                                    related allowance
                                                    under GAAP;
                                                   (2) Amount of
                                                    impaired loans for
                                                    which there was no
                                                    related allowance
                                                    under GAAP;
                                                   (3) Amount of loans
                                                    past due 90 days and
                                                    on nonaccrual;
                                                   (4) Amount of loans
                                                    past due 90 days and
                                                    still accruing; \4\
                                                   (5) The balance in
                                                    the allowance for
                                                    loan and lease
                                                    losses at the end of
                                                    each period,
                                                    disaggregated on the
                                                    basis of the FDIC-
                                                    supervised
                                                    institution's
                                                    impairment method.
                                                    To disaggregate the
                                                    information required
                                                    on the basis of
                                                    impairment
                                                    methodology, an
                                                    entity shall
                                                    separately disclose
                                                    the amounts based on
                                                    the requirements in
                                                    GAAP; and
                                                   (6) Charge-offs
                                                    during the period.
                                (f)..............  Amount of impaired
                                                    loans and, if
                                                    available, the
                                                    amount of past due
                                                    loans categorized by
                                                    significant
                                                    geographic areas
                                                    including, if
                                                    practical, the
                                                    amounts of
                                                    allowances related
                                                    to each geographical
                                                    area \5\, further
                                                    categorized as
                                                    required by GAAP.
                                (g)..............  Reconciliation of
                                                    changes in ALLL.\6\
                                (h)..............  Remaining contractual
                                                    maturity delineation
                                                    (for example, one
                                                    year or less) of the
                                                    whole portfolio,
                                                    categorized by
                                                    credit exposure.
------------------------------------------------------------------------
\1\ Table 5 to Sec.   324.63 does not cover equity exposures, which
  should be reported in Table 9 to Sec.   324.63.
\2\ See, for example, ASC Topic 815-10 and 210, as they may be amended
  from time to time.
\3\ Geographical areas may consist of individual countries, groups of
  countries, or regions within countries. An FDIC-supervised institution
  might choose to define the geographical areas based on the way the
  FDIC-supervised institution's portfolio is geographically managed. The
  criteria used to allocate the loans to geographical areas must be
  specified.
\4\ An FDIC-supervised institution is encouraged also to provide an
  analysis of the aging of past-due loans.
\5\ The portion of the general allowance that is not allocated to a
  geographical area should be disclosed separately.

[[Page 283]]

 
\6\ The reconciliation should include the following: a description of
  the allowance; the opening balance of the allowance; charge-offs taken
  against the allowance during the period; amounts provided (or
  reversed) for estimated probable loan losses during the period; any
  other adjustments (for example, exchange rate differences, business
  combinations, acquisitions and disposals of subsidiaries), including
  transfers between allowances; and the closing balance of the
  allowance. Charge-offs and recoveries that have been recorded directly
  to the income statement should be disclosed separately.


  Table 6 to Sec.   324.63--General Disclosure for Counterparty Credit
                         Risk-Related Exposures
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures.......  (a)..............  The general
                                                    qualitative
                                                    disclosure
                                                    requirement with
                                                    respect to OTC
                                                    derivatives,
                                                    eligible margin
                                                    loans, and repo-
                                                    style transactions,
                                                    including a
                                                    discussion of:
                                                   (1) The methodology
                                                    used to assign
                                                    credit limits for
                                                    counterparty credit
                                                    exposures;
                                                   (2) Policies for
                                                    securing collateral,
                                                    valuing and managing
                                                    collateral, and
                                                    establishing credit
                                                    reserves;
                                                   (3) The primary types
                                                    of collateral taken;
                                                    and
                                                   (4) The impact of the
                                                    amount of collateral
                                                    the FDIC-supervised
                                                    institution would
                                                    have to provide
                                                    given a
                                                    deterioration in the
                                                    FDIC-supervised
                                                    institution's own
                                                    creditworthiness.
Quantitative Disclosures......  (b)..............  Gross positive fair
                                                    value of contracts,
                                                    collateral held
                                                    (including type, for
                                                    example, cash,
                                                    government
                                                    securities), and net
                                                    unsecured credit
                                                    exposure.\1\ An FDIC-
                                                    supervised
                                                    institution also
                                                    must disclose the
                                                    notional value of
                                                    credit derivative
                                                    hedges purchased for
                                                    counterparty credit
                                                    risk protection and
                                                    the distribution of
                                                    current credit
                                                    exposure by exposure
                                                    type.\2\
                                (c)..............  Notional amount of
                                                    purchased and sold
                                                    credit derivatives,
                                                    segregated between
                                                    use for the FDIC-
                                                    supervised
                                                    institution's own
                                                    credit portfolio and
                                                    in its
                                                    intermediation
                                                    activities,
                                                    including the
                                                    distribution of the
                                                    credit derivative
                                                    products used,
                                                    categorized further
                                                    by protection bought
                                                    and sold within each
                                                    product group.
------------------------------------------------------------------------
\1\ Net unsecured credit exposure is the credit exposure after
  considering both the benefits from legally enforceable netting
  agreements and collateral arrangements without taking into account
  haircuts for price volatility, liquidity, etc.
\2\ This may include interest rate derivative contracts, foreign
  exchange derivative contracts, equity derivative contracts, credit
  derivatives, commodity or other derivative contracts, repo-style
  transactions, and eligible margin loans.


          Table 7 to Sec.   324.63--Credit Risk Mitigation\1 2\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures.......  (a)..............  The general
                                                    qualitative
                                                    disclosure
                                                    requirement with
                                                    respect to credit
                                                    risk mitigation,
                                                    including:
                                                   (1) Policies and
                                                    processes for
                                                    collateral valuation
                                                    and management;
                                                   (2) A description of
                                                    the main types of
                                                    collateral taken by
                                                    the FDIC-supervised
                                                    institution;
                                                   (3) The main types of
                                                    guarantors/credit
                                                    derivative
                                                    counterparties and
                                                    their
                                                    creditworthiness;
                                                    and
                                                   (4) Information about
                                                    (market or credit)
                                                    risk concentrations
                                                    with respect to
                                                    credit risk
                                                    mitigation.
Quantitative Disclosures......  (b)..............  For each separately
                                                    disclosed credit
                                                    risk portfolio, the
                                                    total exposure that
                                                    is covered by
                                                    eligible financial
                                                    collateral, and
                                                    after the
                                                    application of
                                                    haircuts.
                                (c)..............  For each separately
                                                    disclosed portfolio,
                                                    the total exposure
                                                    that is covered by
                                                    guarantees/credit
                                                    derivatives and the
                                                    risk-weighted asset
                                                    amount associated
                                                    with that exposure.
------------------------------------------------------------------------
\1\ At a minimum, an FDIC-supervised institution must provide the
  disclosures in Table 7 in relation to credit risk mitigation that has
  been recognized for the purposes of reducing capital requirements
  under this subpart. Where relevant, FDIC-supervised institutions are
  encouraged to give further information about mitigants that have not
  been recognized for that purpose.
\2\ Credit derivatives that are treated, for the purposes of this
  subpart, as synthetic securitization exposures should be excluded from
  the credit risk mitigation disclosures and included within those
  relating to securitization (Table 8 to Sec.   324.63).


[[Page 284]]


                Table 8 to Sec.   324.63--Securitization
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures........  (a)...............  The general
                                                      qualitative
                                                      disclosure
                                                      requirement with
                                                      respect to a
                                                      securitization
                                                      (including
                                                      synthetic
                                                      securitizations),
                                                      including a
                                                      discussion of:
                                                     (1) The FDIC-
                                                      supervised
                                                      institution's
                                                      objectives for
                                                      securitizing
                                                      assets, including
                                                      the extent to
                                                      which these
                                                      activities
                                                      transfer credit
                                                      risk of the
                                                      underlying
                                                      exposures away
                                                      from the FDIC-
                                                      supervised
                                                      institution to
                                                      other entities and
                                                      including the type
                                                      of risks assumed
                                                      and retained with
                                                      resecuritization
                                                      activity;\1\
                                                     (2) The nature of
                                                      the risks (e.g.
                                                      liquidity risk)
                                                      inherent in the
                                                      securitized
                                                      assets;
                                                     (3) The roles
                                                      played by the FDIC-
                                                      supervised
                                                      institution in the
                                                      securitization
                                                      process \2\ and an
                                                      indication of the
                                                      extent of the FDIC-
                                                      supervised
                                                      institution's
                                                      involvement in
                                                      each of them;
                                                     (4) The processes
                                                      in place to
                                                      monitor changes in
                                                      the credit and
                                                      market risk of
                                                      securitization
                                                      exposures
                                                      including how
                                                      those processes
                                                      differ for
                                                      resecuritization
                                                      exposures;
                                                     (5) The FDIC-
                                                      supervised
                                                      institution's
                                                      policy for
                                                      mitigating the
                                                      credit risk
                                                      retained through
                                                      securitization and
                                                      resecuritization
                                                      exposures; and
                                                     (6) The risk-based
                                                      capital approaches
                                                      that the FDIC-
                                                      supervised
                                                      institution
                                                      follows for its
                                                      securitization
                                                      exposures
                                                      including the type
                                                      of securitization
                                                      exposure to which
                                                      each approach
                                                      applies.
                                 (b)...............  A list of:
                                                     (1) The type of
                                                      securitization
                                                      SPEs that the FDIC-
                                                      supervised
                                                      institution, as
                                                      sponsor, uses to
                                                      securitize third-
                                                      party exposures.
                                                      The FDIC-
                                                      supervised
                                                      institution must
                                                      indicate whether
                                                      it has exposure to
                                                      these SPEs, either
                                                      on- or off-balance
                                                      sheet; and
                                                     (2) Affiliated
                                                      entities:
                                                     (i) That the FDIC-
                                                      supervised
                                                      institution
                                                      manages or
                                                      advises; and
                                                     (ii) That invest
                                                      either in the
                                                      securitization
                                                      exposures that the
                                                      FDIC-supervised
                                                      institution has
                                                      securitized or in
                                                      securitization
                                                      SPEs that the FDIC-
                                                      supervised
                                                      institution
                                                      sponsors.\3\
                                 (c)...............  Summary of the FDIC-
                                                      supervised
                                                      institution's
                                                      accounting
                                                      policies for
                                                      securitization
                                                      activities,
                                                      including:
                                                     (1) Whether the
                                                      transactions are
                                                      treated as sales
                                                      or financings;
                                                     (2) Recognition of
                                                      gain-on-sale;
                                                     (3) Methods and key
                                                      assumptions
                                                      applied in valuing
                                                      retained or
                                                      purchased
                                                      interests;
                                                     (4) Changes in
                                                      methods and key
                                                      assumptions from
                                                      the previous
                                                      period for valuing
                                                      retained interests
                                                      and impact of the
                                                      changes;
                                                     (5) Treatment of
                                                      synthetic
                                                      securitizations;
                                                     (6) How exposures
                                                      intended to be
                                                      securitized are
                                                      valued and whether
                                                      they are recorded
                                                      under subpart D of
                                                      this part; and
                                                     (7) Policies for
                                                      recognizing
                                                      liabilities on the
                                                      balance sheet for
                                                      arrangements that
                                                      could require the
                                                      FDIC-supervised
                                                      institution to
                                                      provide financial
                                                      support for
                                                      securitized
                                                      assets.
                                 (d)...............  An explanation of
                                                      significant
                                                      changes to any
                                                      quantitative
                                                      information since
                                                      the last reporting
                                                      period.

[[Page 285]]

 
Quantitative Disclosures.......  (e)...............  The total
                                                      outstanding
                                                      exposures
                                                      securitized by the
                                                      FDIC-supervised
                                                      institution in
                                                      securitizations
                                                      that meet the
                                                      operational
                                                      criteria provided
                                                      in Sec.   324.41
                                                      (categorized into
                                                      traditional and
                                                      synthetic
                                                      securitizations),
                                                      by exposure type,
                                                      separately for
                                                      securitizations of
                                                      third-party
                                                      exposures for
                                                      which the FDIC-
                                                      supervised
                                                      institution acts
                                                      only as
                                                      sponsor.\4\
                                 (f)...............  For exposures
                                                      securitized by the
                                                      FDIC-supervised
                                                      institution in
                                                      securitizations
                                                      that meet the
                                                      operational
                                                      criteria in Sec.
                                                      324.41:
                                                     (1) Amount of
                                                      securitized assets
                                                      that are impaired/
                                                      past due
                                                      categorized by
                                                      exposure type; \5\
                                                      and
                                                     (2) Losses
                                                      recognized by the
                                                      FDIC-supervised
                                                      institution during
                                                      the current period
                                                      categorized by
                                                      exposure type.\6\
                                 (g)...............  The total amount of
                                                      outstanding
                                                      exposures intended
                                                      to be securitized
                                                      categorized by
                                                      exposure type.
                                 (h)...............  Aggregate amount
                                                      of:
                                                     (1) On-balance
                                                      sheet
                                                      securitization
                                                      exposures retained
                                                      or purchased
                                                      categorized by
                                                      exposure type; and
                                                     (2) Off-balance
                                                      sheet
                                                      securitization
                                                      exposures
                                                      categorized by
                                                      exposure type.
                                 (i)...............  (1) Aggregate
                                                      amount of
                                                      securitization
                                                      exposures retained
                                                      or purchased and
                                                      the associated
                                                      capital
                                                      requirements for
                                                      these exposures,
                                                      categorized
                                                      between
                                                      securitization and
                                                      resecuritization
                                                      exposures, further
                                                      categorized into a
                                                      meaningful number
                                                      of risk weight
                                                      bands and by risk-
                                                      based capital
                                                      approach (e.g.,
                                                      SSFA); and
                                                     (2) Exposures that
                                                      have been deducted
                                                      entirely from tier
                                                      1 capital, CEIOs
                                                      deducted from
                                                      total capital (as
                                                      described in Sec.
                                                       324.42(a)(1)),
                                                      and other
                                                      exposures deducted
                                                      from total capital
                                                      should be
                                                      disclosed
                                                      separately by
                                                      exposure type.
                                 (j)...............  Summary of current
                                                      year's
                                                      securitization
                                                      activity,
                                                      including the
                                                      amount of
                                                      exposures
                                                      securitized (by
                                                      exposure type),
                                                      and recognized
                                                      gain or loss on
                                                      sale by exposure
                                                      type.
                                 (k)...............  Aggregate amount of
                                                      resecuritization
                                                      exposures retained
                                                      or purchased
                                                      categorized
                                                      according to:
                                                     (1) Exposures to
                                                      which credit risk
                                                      mitigation is
                                                      applied and those
                                                      not applied; and
                                                     (2) Exposures to
                                                      guarantors
                                                      categorized
                                                      according to
                                                      guarantor
                                                      creditworthiness
                                                      categories or
                                                      guarantor name.
------------------------------------------------------------------------
\1\ The FDIC-supervised institution should describe the structure of
  resecuritizations in which it participates; this description should be
  provided for the main categories of resecuritization products in which
  the FDIC-supervised institution is active.
\2\ For example, these roles may include originator, investor, servicer,
  provider of credit enhancement, sponsor, liquidity provider, or swap
  provider.
\3\ Such affiliated entities may include, for example, money market
  funds, to be listed individually, and personal and private trusts, to
  be noted collectively.
\4\ ``Exposures securitized'' include underlying exposures originated by
  the FDIC-supervised institution, whether generated by them or
  purchased, and recognized in the balance sheet, from third parties,
  and third-party exposures included in sponsored transactions.
  Securitization transactions (including underlying exposures originally
  on the FDIC-supervised institution's balance sheet and underlying
  exposures acquired by the FDIC-supervised institution from third-party
  entities) in which the originating bank does not retain any
  securitization exposure should be shown separately but need only be
  reported for the year of inception. FDIC-supervised institutions are
  required to disclose exposures regardless of whether there is a
  capital charge under this part.
\5\ Include credit-related other than temporary impairment (OTTI).
\6\ For example, charge-offs/allowances (if the assets remain on the
  FDIC-supervised institution's balance sheet) or credit-related OTTI of
  interest-only strips and other retained residual interests, as well as
  recognition of liabilities for probable future financial support
  required of the FDIC-supervised institution with respect to
  securitized assets.


[[Page 286]]


Table 9 to Sec.   324.63--Equities Not Subject to Subpart F of This Part
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures.......  (a)..............  The general
                                                    qualitative
                                                    disclosure
                                                    requirement with
                                                    respect to equity
                                                    risk for equities
                                                    not subject to
                                                    subpart F of this
                                                    part, including:
                                                   (1) Differentiation
                                                    between holdings on
                                                    which capital gains
                                                    are expected and
                                                    those taken under
                                                    other objectives
                                                    including for
                                                    relationship and
                                                    strategic reasons;
                                                    and
                                                   (2) Discussion of
                                                    important policies
                                                    covering the
                                                    valuation of and
                                                    accounting for
                                                    equity holdings not
                                                    subject to subpart F
                                                    of this part. This
                                                    includes the
                                                    accounting
                                                    techniques and
                                                    valuation
                                                    methodologies used,
                                                    including key
                                                    assumptions and
                                                    practices affecting
                                                    valuation as well as
                                                    significant changes
                                                    in these practices.
Quantitative Disclosures......  (b)..............  Value disclosed on
                                                    the balance sheet of
                                                    investments, as well
                                                    as the fair value of
                                                    those investments;
                                                    for securities that
                                                    are publicly traded,
                                                    a comparison to
                                                    publicly-quoted
                                                    share values where
                                                    the share price is
                                                    materially different
                                                    from fair value.
                                (c)..............  The types and nature
                                                    of investments,
                                                    including the amount
                                                    that is:
                                                   (1) Publicly traded;
                                                    and
                                                   (2) Non publicly
                                                    traded.
                                (d)..............  The cumulative
                                                    realized gains
                                                    (losses) arising
                                                    from sales and
                                                    liquidations in the
                                                    reporting period.
                                (e)..............  (1) Total unrealized
                                                    gains (losses).\1\
                                                   (2) Total latent
                                                    revaluation gains
                                                    (losses).\2\
                                                   (3) Any amounts of
                                                    the above included
                                                    in tier 1 or tier 2
                                                    capital.
                                (f)..............  Capital requirements
                                                    categorized by
                                                    appropriate equity
                                                    groupings,
                                                    consistent with the
                                                    FDIC-supervised
                                                    institution's
                                                    methodology, as well
                                                    as the aggregate
                                                    amounts and the type
                                                    of equity
                                                    investments subject
                                                    to any supervisory
                                                    transition regarding
                                                    regulatory capital
                                                    requirements.
------------------------------------------------------------------------
\1\ Unrealized gains (losses) recognized on the balance sheet but not
  through earnings.
\2\ Unrealized gains (losses) not recognized either on the balance sheet
  or through earnings.


Table 10 to Sec.   324.63--Interest Rate Risk for Non-Trading Activities
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures.......  (a)..............  The general
                                                    qualitative
                                                    disclosure
                                                    requirement,
                                                    including the nature
                                                    of interest rate
                                                    risk for non-trading
                                                    activities and key
                                                    assumptions,
                                                    including
                                                    assumptions
                                                    regarding loan
                                                    prepayments and
                                                    behavior of non-
                                                    maturity deposits,
                                                    and frequency of
                                                    measurement of
                                                    interest rate risk
                                                    for non-trading
                                                    activities.
Quantitative disclosures......  (b)..............  The increase
                                                    (decline) in
                                                    earnings or economic
                                                    value (or relevant
                                                    measure used by
                                                    management) for
                                                    upward and downward
                                                    rate shocks
                                                    according to
                                                    management's method
                                                    for measuring
                                                    interest rate risk
                                                    for non-trading
                                                    activities,
                                                    categorized by
                                                    currency (as
                                                    appropriate).
------------------------------------------------------------------------


[[Page 287]]


[78 FR 55471, Sept. 10, 2013, as amended at 78 FR 62417, Oct. 22, 2013; 
79 FR 20760, Apr. 14, 2014]



Sec. Sec.  324.64-324.99  [Reserved]



   Subpart E_Risk-Weighted Assets_Internal Ratings-Based and Advanced 
                         Measurement Approaches



Sec.  324.100  Purpose, applicability, and principle of conservatism.

    (a) Purpose. This subpart E establishes:
    (1) Minimum qualifying criteria for FDIC-supervised institutions 
using institution-specific internal risk measurement and management 
processes for calculating risk-based capital requirements; and
    (2) Methodologies for such FDIC-supervised institutions to calculate 
their total risk-weighted assets.
    (b) Applicability. (1) This subpart applies to an FDIC-supervised 
institution that:
    (i) Has consolidated total assets, as reported on its most recent 
year-end Call Report equal to $250 billion or more;
    (ii) Has consolidated total on-balance sheet foreign exposure on its 
most recent year-end Federal Financial Institutions Examination Council 
(FFIEC) 009 Report equal to $10 billion or more (where total on-balance 
sheet foreign exposure equals total foreign countries cross-border 
claims on an ultimate-risk basis, plus total foreign countries claims on 
local residents on an ultimate-risk basis, plus total foreign countries 
fair value of foreign exchange and derivative products), calculated in 
accordance with the FFIEC 009 Country Exposure Report;
    (iii) Is a subsidiary of a depository institution that uses this 
subpart or the advanced approaches pursuant to subpart E of 12 CFR part 
3 (OCC), or 12 CFR part 217 (Federal Reserve) to calculate its total 
risk-weighted assets;
    (iv) Is a subsidiary of a bank holding company or savings and loan 
holding company that uses the advanced approaches pursuant to 12 CFR 
part 217 to calculate its total risk-weighted assets; or
    (v) Elects to use this subpart to calculate its total risk-weighted 
assets.
    (2) An FDIC-supervised institution that is subject to this subpart 
shall remain subject to this subpart unless the FDIC determines in 
writing that application of this subpart is not appropriate in light of 
the FDIC-supervised institution's asset size, level of complexity, risk 
profile, or scope of operations. In making a determination under this 
paragraph (b), the FDIC will apply notice and response procedures in the 
same manner and to the same extent as the notice and response procedures 
in Sec.  324.5.
    (3) A market risk FDIC-supervised institution must exclude from its 
calculation of risk-weighted assets under this subpart the risk-weighted 
asset amounts of all covered positions, as defined in subpart F of this 
part (except foreign exchange positions that are not trading positions, 
over-the-counter derivative positions, cleared transactions, and 
unsettled transactions).
    (c) Principle of conservatism. Notwithstanding the requirements of 
this subpart, an FDIC-supervised institution may choose not to apply a 
provision of this subpart to one or more exposures provided that:
    (1) The FDIC-supervised institution can demonstrate on an ongoing 
basis to the satisfaction of the FDIC that not applying the provision 
would, in all circumstances, unambiguously generate a risk-based capital 
requirement for each such exposure greater than that which would 
otherwise be required under this subpart;
    (2) The FDIC-supervised institution appropriately manages the risk 
of each such exposure;
    (3) The FDIC-supervised institution notifies the FDIC in writing 
prior to applying this principle to each such exposure; and
    (4) The exposures to which the FDIC-supervised institution applies 
this principle are not, in the aggregate, material to the FDIC-
supervised institution.

[78 FR 55471, Sept. 10, 2013, as amended at 80 FR 41423, July 15, 2015]



Sec.  324.101  Definitions.

    (a) Terms that are set forth in Sec.  324.2 and used in this subpart 
have the definitions assigned thereto in Sec.  324.2.

[[Page 288]]

    (b) For the purposes of this subpart, the following terms are 
defined as follows:
    Advanced internal ratings-based (IRB) systems means an advanced 
approaches FDIC-supervised institution's internal risk rating and 
segmentation system; risk parameter quantification system; data 
management and maintenance system; and control, oversight, and 
validation system for credit risk of wholesale and retail exposures.
    Advanced systems means an advanced approaches FDIC-supervised 
institution's advanced IRB systems, operational risk management 
processes, operational risk data and assessment systems, operational 
risk quantification systems, and, to the extent used by the FDIC-
supervised institution, the internal models methodology, advanced CVA 
approach, double default excessive correlation detection process, and 
internal models approach (IMA) for equity exposures.
    Backtesting means the comparison of an FDIC-supervised institution's 
internal estimates with actual outcomes during a sample period not used 
in model development. In this context, backtesting is one form of out-
of-sample testing.
    Benchmarking means the comparison of an FDIC-supervised 
institution's internal estimates with relevant internal and external 
data or with estimates based on other estimation techniques.
    Bond option contract means a bond option, bond future, or any other 
instrument linked to a bond that gives rise to similar counterparty 
credit risk.
    Business environment and internal control factors means the 
indicators of an FDIC-supervised institution's operational risk profile 
that reflect a current and forward-looking assessment of the FDIC-
supervised institution's underlying business risk factors and internal 
control environment.
    Credit default swap (CDS) means a financial contract executed under 
standard industry documentation that allows one party (the protection 
purchaser) to transfer the credit risk of one or more exposures 
(reference exposure(s)) to another party (the protection provider) for a 
certain period of time.
    Credit valuation adjustment (CVA) means the fair value adjustment to 
reflect counterparty credit risk in valuation of OTC derivative 
contracts.
    Default--For the purposes of calculating capital requirements under 
this subpart:
    (1) Retail. (i) A retail exposure of an FDIC-supervised institution 
is in default if:
    (A) The exposure is 180 days past due, in the case of a residential 
mortgage exposure or revolving exposure;
    (B) The exposure is 120 days past due, in the case of retail 
exposures that are not residential mortgage exposures or revolving 
exposures; or
    (C) The FDIC-supervised institution has taken a full or partial 
charge-off, write-down of principal, or material negative fair value 
adjustment of principal on the exposure for credit-related reasons.
    (ii) Notwithstanding paragraph (1)(i) of this definition, for a 
retail exposure held by a non-U.S. subsidiary of the FDIC-supervised 
institution that is subject to an internal ratings-based approach to 
capital adequacy consistent with the Basel Committee on Banking 
Supervision's ``International Convergence of Capital Measurement and 
Capital Standards: A Revised Framework'' in a non-U.S. jurisdiction, the 
FDIC-supervised institution may elect to use the definition of default 
that is used in that jurisdiction, provided that the FDIC-supervised 
institution has obtained prior approval from the FDIC to use the 
definition of default in that jurisdiction.
    (iii) A retail exposure in default remains in default until the 
FDIC-supervised institution has reasonable assurance of repayment and 
performance for all contractual principal and interest payments on the 
exposure.
    (2) Wholesale. (i) An FDIC-supervised institution's wholesale 
obligor is in default if:
    (A) The FDIC-supervised institution determines that the obligor is 
unlikely to pay its credit obligations to the FDIC-supervised 
institution in full, without recourse by the FDIC-supervised institution 
to actions such as realizing collateral (if held); or

[[Page 289]]

    (B) The obligor is past due more than 90 days on any material credit 
obligation(s) to the FDIC-supervised institution.\29\
---------------------------------------------------------------------------

    \29\ Overdrafts are past due once the obligor has breached an 
advised limit or been advised of a limit smaller than the current 
outstanding balance.
---------------------------------------------------------------------------

    (ii) An obligor in default remains in default until the FDIC-
supervised institution has reasonable assurance of repayment and 
performance for all contractual principal and interest payments on all 
exposures of the FDIC-supervised institution to the obligor (other than 
exposures that have been fully written-down or charged-off).
    Dependence means a measure of the association among operational 
losses across and within units of measure.
    Economic downturn conditions means, with respect to an exposure held 
by the FDIC-supervised institution, those conditions in which the 
aggregate default rates for that exposure's wholesale or retail exposure 
subcategory (or subdivision of such subcategory selected by the FDIC-
supervised institution) in the exposure's national jurisdiction (or 
subdivision of such jurisdiction selected by the FDIC-supervised 
institution) are significantly higher than average.
    Effective maturity (M) of a wholesale exposure means:
    (1) For wholesale exposures other than repo-style transactions, 
eligible margin loans, and OTC derivative contracts described in 
paragraph (2) or (3) of this definition:
    (i) The weighted-average remaining maturity (measured in years, 
whole or fractional) of the expected contractual cash flows from the 
exposure, using the undiscounted amounts of the cash flows as weights; 
or
    (ii) The nominal remaining maturity (measured in years, whole or 
fractional) of the exposure.
    (2) For repo-style transactions, eligible margin loans, and OTC 
derivative contracts subject to a qualifying master netting agreement 
for which the FDIC-supervised institution does not apply the internal 
models approach in Sec.  324.132(d), the weighted-average remaining 
maturity (measured in years, whole or fractional) of the individual 
transactions subject to the qualifying master netting agreement, with 
the weight of each individual transaction set equal to the notional 
amount of the transaction.
    (3) For repo-style transactions, eligible margin loans, and OTC 
derivative contracts for which the FDIC-supervised institution applies 
the internal models approach in Sec.  324.132(d), the value determined 
in Sec.  324.132(d)(4).
    Eligible double default guarantor, with respect to a guarantee or 
credit derivative obtained by an FDIC-supervised institution, means:
    (1) U.S.-based entities. A depository institution, a bank holding 
company, a savings and loan holding company, or a securities broker or 
dealer registered with the SEC under the Securities Exchange Act, if at 
the time the guarantee is issued or anytime thereafter, has issued and 
outstanding an unsecured debt security without credit enhancement that 
is investment grade.
    (2) Non-U.S.-based entities. A foreign bank, or a non-U.S.-based 
securities firm if the FDIC-supervised institution demonstrates that the 
guarantor is subject to consolidated supervision and regulation 
comparable to that imposed on U.S. depository institutions (or 
securities broker-dealers), if at the time the guarantee is issued or 
anytime thereafter, has issued and outstanding an unsecured debt 
security without credit enhancement that is investment grade.
    Eligible operational risk offsets means amounts, not to exceed 
expected operational loss, that:
    (1) Are generated by internal business practices to absorb highly 
predictable and reasonably stable operational losses, including reserves 
calculated consistent with GAAP; and
    (2) Are available to cover expected operational losses with a high 
degree of certainty over a one-year horizon.
    Eligible purchased wholesale exposure means a purchased wholesale 
exposure that:
    (1) The FDIC-supervised institution or securitization SPE purchased 
from an unaffiliated seller and did not directly or indirectly 
originate;
    (2) Was generated on an arm's-length basis between the seller and 
the obligor (intercompany accounts receivable and receivables subject to 
contra-accounts

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between firms that buy and sell to each other do not satisfy this 
criterion);
    (3) Provides the FDIC-supervised institution or securitization SPE 
with a claim on all proceeds from the exposure or a pro rata interest in 
the proceeds from the exposure;
    (4) Has an M of less than one year; and
    (5) When consolidated by obligor, does not represent a concentrated 
exposure relative to the portfolio of purchased wholesale exposures.
    Expected exposure (EE) means the expected value of the probability 
distribution of non-negative credit risk exposures to a counterparty at 
any specified future date before the maturity date of the longest term 
transaction in the netting set. Any negative fair values in the 
probability distribution of fair values to a counterparty at a specified 
future date are set to zero to convert the probability distribution of 
fair values to the probability distribution of credit risk exposures.
    Expected operational loss (EOL) means the expected value of the 
distribution of potential aggregate operational losses, as generated by 
the FDIC-supervised institution's operational risk quantification system 
using a one-year horizon.
    Expected positive exposure (EPE) means the weighted average over 
time of expected (non-negative) exposures to a counterparty where the 
weights are the proportion of the time interval that an individual 
expected exposure represents. When calculating risk-based capital 
requirements, the average is taken over a one-year horizon.
    Exposure at default (EAD) means:
    (1) For the on-balance sheet component of a wholesale exposure or 
segment of retail exposures (other than an OTC derivative contract, a 
repo-style transaction or eligible margin loan for which the FDIC-
supervised institution determines EAD under Sec.  324.132, a cleared 
transaction, or default fund contribution), EAD means the FDIC-
supervised institution's carrying value (including net accrued but 
unpaid interest and fees) for the exposure or segment less any allocated 
transfer risk reserve for the exposure or segment.
    (2) For the off-balance sheet component of a wholesale exposure or 
segment of retail exposures (other than an OTC derivative contract, a 
repo-style transaction or eligible margin loan for which the FDIC-
supervised institution determines EAD under Sec.  324.132, cleared 
transaction, or default fund contribution) in the form of a loan 
commitment, line of credit, trade-related letter of credit, or 
transaction-related contingency, EAD means the FDIC-supervised 
institution's best estimate of net additions to the outstanding amount 
owed the FDIC-supervised institution, including estimated future 
additional draws of principal and accrued but unpaid interest and fees, 
that are likely to occur over a one-year horizon assuming the wholesale 
exposure or the retail exposures in the segment were to go into default. 
This estimate of net additions must reflect what would be expected 
during economic downturn conditions. For the purposes of this 
definition:
    (i) Trade-related letters of credit are short-term, self-liquidating 
instruments that are used to finance the movement of goods and are 
collateralized by the underlying goods.
    (ii) Transaction-related contingencies relate to a particular 
transaction and include, among other things, performance bonds and 
performance-based letters of credit.
    (3) For the off-balance sheet component of a wholesale exposure or 
segment of retail exposures (other than an OTC derivative contract, a 
repo-style transaction, or eligible margin loan for which the FDIC-
supervised institution determines EAD under Sec.  324.132, cleared 
transaction, or default fund contribution) in the form of anything other 
than a loan commitment, line of credit, trade-related letter of credit, 
or transaction-related contingency, EAD means the notional amount of the 
exposure or segment.
    (4) EAD for OTC derivative contracts is calculated as described in 
Sec.  324.132. An FDIC-supervised institution also may determine EAD for 
repo-style transactions and eligible margin loans as described in Sec.  
324.132.
    Exposure category means any of the wholesale, retail, 
securitization, or equity exposure categories.

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    External operational loss event data means, with respect to an FDIC-
supervised institution, gross operational loss amounts, dates, 
recoveries, and relevant causal information for operational loss events 
occurring at organizations other than the FDIC-supervised institution.
    IMM exposure means a repo-style transaction, eligible margin loan, 
or OTC derivative for which an FDIC-supervised institution calculates 
its EAD using the internal models methodology of Sec.  324.132(d).
    Internal operational loss event data means, with respect to an FDIC-
supervised institution, gross operational loss amounts, dates, 
recoveries, and relevant causal information for operational loss events 
occurring at the FDIC-supervised institution.
    Loss given default (LGD) means:
    (1) For a wholesale exposure, the greatest of:
    (i) Zero;
    (ii) The FDIC-supervised institution's empirically based best 
estimate of the long-run default-weighted average economic loss, per 
dollar of EAD, the FDIC-supervised institution would expect to incur if 
the obligor (or a typical obligor in the loss severity grade assigned by 
the FDIC-supervised institution to the exposure) were to default within 
a one-year horizon over a mix of economic conditions, including economic 
downturn conditions; or
    (iii) The FDIC-supervised institution's empirically based best 
estimate of the economic loss, per dollar of EAD, the FDIC-supervised 
institution would expect to incur if the obligor (or a typical obligor 
in the loss severity grade assigned by the FDIC-supervised institution 
to the exposure) were to default within a one-year horizon during 
economic downturn conditions.
    (2) For a segment of retail exposures, the greatest of:
    (i) Zero;
    (ii) The FDIC-supervised institution's empirically based best 
estimate of the long-run default-weighted average economic loss, per 
dollar of EAD, the FDIC-supervised institution would expect to incur if 
the exposures in the segment were to default within a one-year horizon 
over a mix of economic conditions, including economic downturn 
conditions; or
    (iii) The FDIC-supervised institution's empirically based best 
estimate of the economic loss, per dollar of EAD, the FDIC-supervised 
institution would expect to incur if the exposures in the segment were 
to default within a one-year horizon during economic downturn 
conditions.
    (3) The economic loss on an exposure in the event of default is all 
material credit-related losses on the exposure (including accrued but 
unpaid interest or fees, losses on the sale of collateral, direct 
workout costs, and an appropriate allocation of indirect workout costs). 
Where positive or negative cash flows on a wholesale exposure to a 
defaulted obligor or a defaulted retail exposure (including proceeds 
from the sale of collateral, workout costs, additional extensions of 
credit to facilitate repayment of the exposure, and draw-downs of unused 
credit lines) occur after the date of default, the economic loss must 
reflect the net present value of cash flows as of the default date using 
a discount rate appropriate to the risk of the defaulted exposure.
    Obligor means the legal entity or natural person contractually 
obligated on a wholesale exposure, except that an FDIC-supervised 
institution may treat the following exposures as having separate 
obligors:
    (1) Exposures to the same legal entity or natural person denominated 
in different currencies;
    (2)(i) An income-producing real estate exposure for which all or 
substantially all of the repayment of the exposure is reliant on the 
cash flows of the real estate serving as collateral for the exposure; 
the FDIC-supervised institution, in economic substance, does not have 
recourse to the borrower beyond the real estate collateral; and no 
cross-default or cross-acceleration clauses are in place other than 
clauses obtained solely out of an abundance of caution; and
    (ii) Other credit exposures to the same legal entity or natural 
person; and
    (3)(i) A wholesale exposure authorized under section 364 of the U.S. 
Bankruptcy Code (11 U.S.C. 364) to a legal

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entity or natural person who is a debtor-in-possession for purposes of 
Chapter 11 of the Bankruptcy Code; and
    (ii) Other credit exposures to the same legal entity or natural 
person.
    Operational loss means a loss (excluding insurance or tax effects) 
resulting from an operational loss event. Operational loss includes all 
expenses associated with an operational loss event except for 
opportunity costs, forgone revenue, and costs related to risk management 
and control enhancements implemented to prevent future operational 
losses.
    Operational loss event means an event that results in loss and is 
associated with any of the following seven operational loss event type 
categories:
    (1) Internal fraud, which means the operational loss event type 
category that comprises operational losses resulting from an act 
involving at least one internal party of a type intended to defraud, 
misappropriate property, or circumvent regulations, the law, or company 
policy excluding diversity- and discrimination-type events.
    (2) External fraud, which means the operational loss event type 
category that comprises operational losses resulting from an act by a 
third party of a type intended to defraud, misappropriate property, or 
circumvent the law. Retail credit card losses arising from non-
contractual, third-party-initiated fraud (for example, identity theft) 
are external fraud operational losses. All other third-party-initiated 
credit losses are to be treated as credit risk losses.
    (3) Employment practices and workplace safety, which means the 
operational loss event type category that comprises operational losses 
resulting from an act inconsistent with employment, health, or safety 
laws or agreements, payment of personal injury claims, or payment 
arising from diversity- and discrimination-type events.
    (4) Clients, products, and business practices, which means the 
operational loss event type category that comprises operational losses 
resulting from the nature or design of a product or from an 
unintentional or negligent failure to meet a professional obligation to 
specific clients (including fiduciary and suitability requirements).
    (5) Damage to physical assets, which means the operational loss 
event type category that comprises operational losses resulting from the 
loss of or damage to physical assets from natural disaster or other 
events.
    (6) Business disruption and system failures, which means the 
operational loss event type category that comprises operational losses 
resulting from disruption of business or system failures.
    (7) Execution, delivery, and process management, which means the 
operational loss event type category that comprises operational losses 
resulting from failed transaction processing or process management or 
losses arising from relations with trade counterparties and vendors.
    Operational risk means the risk of loss resulting from inadequate or 
failed internal processes, people, and systems or from external events 
(including legal risk but excluding strategic and reputational risk).
    Operational risk exposure means the 99.9th percentile of the 
distribution of potential aggregate operational losses, as generated by 
the FDIC-supervised institution's operational risk quantification system 
over a one-year horizon (and not incorporating eligible operational risk 
offsets or qualifying operational risk mitigants).
    Other retail exposure means an exposure (other than a securitization 
exposure, an equity exposure, a residential mortgage exposure, a pre-
sold construction loan, a qualifying revolving exposure, or the residual 
value portion of a lease exposure) that is managed as part of a segment 
of exposures with homogeneous risk characteristics, not on an 
individual-exposure basis, and is either:
    (1) An exposure to an individual for non-business purposes; or
    (2) An exposure to an individual or company for business purposes if 
the FDIC-supervised institution's consolidated business credit exposure 
to the individual or company is $1 million or less.
    Probability of default (PD) means:
    (1) For a wholesale exposure to a non-defaulted obligor, the FDIC-
supervised

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institution's empirically based best estimate of the long-run average 
one-year default rate for the rating grade assigned by the FDIC-
supervised institution to the obligor, capturing the average default 
experience for obligors in the rating grade over a mix of economic 
conditions (including economic downturn conditions) sufficient to 
provide a reasonable estimate of the average one-year default rate over 
the economic cycle for the rating grade.
    (2) For a segment of non-defaulted retail exposures, the FDIC-
supervised institution's empirically based best estimate of the long-run 
average one-year default rate for the exposures in the segment, 
capturing the average default experience for exposures in the segment 
over a mix of economic conditions (including economic downturn 
conditions) sufficient to provide a reasonable estimate of the average 
one-year default rate over the economic cycle for the segment.
    (3) For a wholesale exposure to a defaulted obligor or segment of 
defaulted retail exposures, 100 percent.
    Qualifying cross-product master netting agreement means a qualifying 
master netting agreement that provides for termination and close-out 
netting across multiple types of financial transactions or qualifying 
master netting agreements in the event of a counterparty's default, 
provided that the underlying financial transactions are OTC derivative 
contracts, eligible margin loans, or repo-style transactions. In order 
to treat an agreement as a qualifying cross-product master netting 
agreement for purposes of this subpart, an FDIC-supervised institution 
must comply with the requirements of Sec.  324.3(c) of this part with 
respect to that agreement.
    Qualifying revolving exposure (QRE) means an exposure (other than a 
securitization exposure or equity exposure) to an individual that is 
managed as part of a segment of exposures with homogeneous risk 
characteristics, not on an individual-exposure basis, and:
    (1) Is revolving (that is, the amount outstanding fluctuates, 
determined largely by a borrower's decision to borrow and repay up to a 
pre-established maximum amount, except for an outstanding amount that 
the borrower is required to pay in full every month);
    (2) Is unsecured and unconditionally cancelable by the FDIC-
supervised institution to the fullest extent permitted by Federal law; 
and
    (3)(i) Has a maximum contractual exposure amount (drawn plus 
undrawn) of up to $100,000; or
    (ii) With respect to a product with an outstanding amount that the 
borrower is required to pay in full every month, the total outstanding 
amount does not in practice exceed $100,000.
    (4) A segment of exposures that contains one or more exposures that 
fails to meet paragraph (3)(ii) of this definition must be treated as a 
segment of other retail exposures for the 24 month period following the 
month in which the total outstanding amount of one or more exposures 
individually exceeds $100,000.
    Retail exposure means a residential mortgage exposure, a qualifying 
revolving exposure, or an other retail exposure.
    Retail exposure subcategory means the residential mortgage exposure, 
qualifying revolving exposure, or other retail exposure subcategory.
    Risk parameter means a variable used in determining risk-based 
capital requirements for wholesale and retail exposures, specifically 
probability of default (PD), loss given default (LGD), exposure at 
default (EAD), or effective maturity (M).
    Scenario analysis means a systematic process of obtaining expert 
opinions from business managers and risk management experts to derive 
reasoned assessments of the likelihood and loss impact of plausible 
high-severity operational losses. Scenario analysis may include the 
well-reasoned evaluation and use of external operational loss event 
data, adjusted as appropriate to ensure relevance to an FDIC-supervised 
institution's operational risk profile and control structure.
    Total wholesale and retail risk-weighted assets means the sum of:
    (1) Risk-weighted assets for wholesale exposures that are not IMM 
exposures, cleared transactions, or default fund contributions to non-
defaulted obligors and segments of non-defaulted retail exposures;

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    (2) Risk-weighted assets for wholesale exposures to defaulted 
obligors and segments of defaulted retail exposures;
    (3) Risk-weighted assets for assets not defined by an exposure 
category;
    (4) Risk-weighted assets for non-material portfolios of exposures;
    (5) Risk-weighted assets for IMM exposures (as determined in Sec.  
324.132(d));
    (6) Risk-weighted assets for cleared transactions and risk-weighted 
assets for default fund contributions (as determined in Sec.  324.133); 
and
    (7) Risk-weighted assets for unsettled transactions (as determined 
in Sec.  324.136).
    Unexpected operational loss (UOL) means the difference between the 
FDIC-supervised institution's operational risk exposure and the FDIC-
supervised institution's expected operational loss.
    Unit of measure means the level (for example, organizational unit or 
operational loss event type) at which the FDIC-supervised institution's 
operational risk quantification system generates a separate distribution 
of potential operational losses.
    Wholesale exposure means a credit exposure to a company, natural 
person, sovereign, or governmental entity (other than a securitization 
exposure, retail exposure, pre-sold construction loan, or equity 
exposure).
    Wholesale exposure subcategory means the HVCRE or non-HVCRE 
wholesale exposure subcategory.

[78 FR 55471, Sept. 10, 2013, as 81 FR 71354, Oct. 17, 2016]



Sec. Sec.  324.102-324.120  [Reserved]

                              Qualification



Sec.  324.121  Qualification process.

    (a) Timing. (1) An FDIC-supervised institution that is described in 
Sec.  324.100(b)(1)(i) through (iv) must adopt a written implementation 
plan no later than six months after the date the FDIC-supervised 
institution meets a criterion in that section. The implementation plan 
must incorporate an explicit start date no later than 36 months after 
the date the FDIC-supervised institution meets at least one criterion 
under Sec.  324.100(b)(1)(i) through (iv). The FDIC may extend the start 
date.
    (2) An FDIC-supervised institution that elects to be subject to this 
subpart under Sec.  324.100(b)(1)(v) must adopt a written implementation 
plan.
    (b) Implementation plan. (1) The FDIC-supervised institution's 
implementation plan must address in detail how the FDIC-supervised 
institution complies, or plans to comply, with the qualification 
requirements in Sec.  324.122. The FDIC-supervised institution also must 
maintain a comprehensive and sound planning and governance process to 
oversee the implementation efforts described in the plan. At a minimum, 
the plan must:
    (i) Comprehensively address the qualification requirements in Sec.  
324.122 for the FDIC-supervised institution and each consolidated 
subsidiary (U.S. and foreign-based) of the FDIC-supervised institution 
with respect to all portfolios and exposures of the FDIC-supervised 
institution and each of its consolidated subsidiaries;
    (ii) Justify and support any proposed temporary or permanent 
exclusion of business lines, portfolios, or exposures from the 
application of the advanced approaches in this subpart (which business 
lines, portfolios, and exposures must be, in the aggregate, immaterial 
to the FDIC-supervised institution);
    (iii) Include the FDIC-supervised institution's self-assessment of:
    (A) The FDIC-supervised institution's current status in meeting the 
qualification requirements in Sec.  324.122; and
    (B) The consistency of the FDIC-supervised institution's current 
practices with the FDIC's supervisory guidance on the qualification 
requirements;
    (iv) Based on the FDIC-supervised institution's self-assessment, 
identify and describe the areas in which the FDIC-supervised institution 
proposes to undertake additional work to comply with the qualification 
requirements in Sec.  324.122 or to improve the consistency of the FDIC-
supervised institution's current practices with the FDIC's supervisory 
guidance on the qualification requirements (gap analysis);
    (v) Describe what specific actions the FDIC-supervised institution 
will take to address the areas identified in the

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gap analysis required by paragraph (b)(1)(iv) of this section;
    (vi) Identify objective, measurable milestones, including delivery 
dates and a date when the FDIC-supervised institution's implementation 
of the methodologies described in this subpart will be fully 
operational;
    (vii) Describe resources that have been budgeted and are available 
to implement the plan; and
    (viii) Receive approval of the FDIC-supervised institution's board 
of directors.
    (2) The FDIC-supervised institution must submit the implementation 
plan, together with a copy of the minutes of the board of directors' 
approval, to the FDIC at least 60 days before the FDIC-supervised 
institution proposes to begin its parallel run, unless the FDIC waives 
prior notice.
    (c) Parallel run. Before determining its risk-weighted assets under 
this subpart and following adoption of the implementation plan, the 
FDIC-supervised institution must conduct a satisfactory parallel run. A 
satisfactory parallel run is a period of no less than four consecutive 
calendar quarters during which the FDIC-supervised institution complies 
with the qualification requirements in Sec.  324.122 to the satisfaction 
of the FDIC. During the parallel run, the FDIC-supervised institution 
must report to the FDIC on a calendar quarterly basis its risk-based 
capital ratios determined in accordance with Sec.  324.10(b)(1) through 
(3) and Sec.  324.10(c)(1) through (3). During this period, the FDIC-
supervised institution's minimum risk-based capital ratios are 
determined as set forth in subpart D of this part.
    (d) Approval to calculate risk-based capital requirements under this 
subpart. The FDIC will notify the FDIC-supervised institution of the 
date that the FDIC-supervised institution must begin to use this subpart 
for purposes of Sec.  324.10 if the FDIC determines that:
    (1) The FDIC-supervised institution fully complies with all the 
qualification requirements in Sec.  324.122;
    (2) The FDIC-supervised institution has conducted a satisfactory 
parallel run under paragraph (c) of this section; and
    (3) The FDIC-supervised institution has an adequate process to 
ensure ongoing compliance with the qualification requirements in Sec.  
324.122.



Sec.  324.122  Qualification requirements.

    (a) Process and systems requirements. (1) An FDIC-supervised 
institution must have a rigorous process for assessing its overall 
capital adequacy in relation to its risk profile and a comprehensive 
strategy for maintaining an appropriate level of capital.
    (2) The systems and processes used by an FDIC-supervised institution 
for risk-based capital purposes under this subpart must be consistent 
with the FDIC-supervised institution's internal risk management 
processes and management information reporting systems.
    (3) Each FDIC-supervised institution must have an appropriate 
infrastructure with risk measurement and management processes that meet 
the qualification requirements of this section and are appropriate given 
the FDIC-supervised institution's size and level of complexity. 
Regardless of whether the systems and models that generate the risk 
parameters necessary for calculating an FDIC-supervised institution's 
risk-based capital requirements are located at any affiliate of the 
FDIC-supervised institution, the FDIC-supervised institution itself must 
ensure that the risk parameters and reference data used to determine its 
risk-based capital requirements are representative of long run 
experience with respect to its own credit risk and operational risk 
exposures.
    (b) Risk rating and segmentation systems for wholesale and retail 
exposures. (1)(i) An FDIC-supervised institution must have an internal 
risk rating and segmentation system that accurately, reliably, and 
meaningfully differentiates among degrees of credit risk for the FDIC-
supervised institution's wholesale and retail exposures. When assigning 
an internal risk rating, an FDIC-supervised institution may consider a 
third-party assessment of credit risk, provided that the FDIC-supervised 
institution's internal risk rating assignment does not rely solely on 
the external assessment.

[[Page 296]]

    (ii) If an FDIC-supervised institution uses multiple rating or 
segmentation systems, the FDIC-supervised institution's rationale for 
assigning an obligor or exposure to a particular system must be 
documented and applied in a manner that best reflects the obligor or 
exposure's level of risk. An FDIC-supervised institution must not 
inappropriately allocate obligors or exposures across systems to 
minimize regulatory capital requirements.
    (iii) In assigning ratings to wholesale obligors and exposures, 
including loss severity ratings grades to wholesale exposures, and 
assigning retail exposures to retail segments, an FDIC-supervised 
institution must use all relevant and material information and ensure 
that the information is current.
    (iv) When assigning an obligor to a PD rating or retail exposure to 
a PD segment, an FDIC-supervised institution must assess the obligor or 
retail borrower's ability and willingness to contractually perform, 
taking a conservative view of projected information.
    (2) For wholesale exposures:
    (i) An FDIC-supervised institution must have an internal risk rating 
system that accurately and reliably assigns each obligor to a single 
rating grade (reflecting the obligor's likelihood of default). An FDIC-
supervised institution may elect, however, not to assign to a rating 
grade an obligor to whom the FDIC-supervised institution extends credit 
based solely on the financial strength of a guarantor, provided that all 
of the FDIC-supervised institution's exposures to the obligor are fully 
covered by eligible guarantees, the FDIC-supervised institution applies 
the PD substitution approach in Sec.  324.134(c)(1) to all exposures to 
that obligor, and the FDIC-supervised institution immediately assigns 
the obligor to a rating grade if a guarantee can no longer be recognized 
under this part. The FDIC-supervised institution's wholesale obligor 
rating system must have at least seven discrete rating grades for non-
defaulted obligors and at least one rating grade for defaulted obligors.
    (ii) Unless the FDIC-supervised institution has chosen to directly 
assign LGD estimates to each wholesale exposure, the FDIC-supervised 
institution must have an internal risk rating system that accurately and 
reliably assigns each wholesale exposure to a loss severity rating grade 
(reflecting the FDIC-supervised institution's estimate of the LGD of the 
exposure). An FDIC-supervised institution employing loss severity rating 
grades must have a sufficiently granular loss severity grading system to 
avoid grouping together exposures with widely ranging LGDs.
    (iii) An FDIC-supervised institution must have an effective process 
to obtain and update in a timely manner relevant and material 
information on obligor and exposure characteristics that affect PD, LGD 
and EAD.
    (3) For retail exposures:
    (i) An FDIC-supervised institution must have an internal system that 
groups retail exposures into the appropriate retail exposure subcategory 
and groups the retail exposures in each retail exposure subcategory into 
separate segments with homogeneous risk characteristics that provide a 
meaningful differentiation of risk. The FDIC-supervised institution's 
system must identify and group in separate segments by subcategories 
exposures identified in Sec.  324.131(c)(2)(ii) and (iii).
    (ii) An FDIC-supervised institution must have an internal system 
that captures all relevant exposure risk characteristics, including 
borrower credit score, product and collateral types, as well as exposure 
delinquencies, and must consider cross-collateral provisions, where 
present.
    (iii) The FDIC-supervised institution must review and, if 
appropriate, update assignments of individual retail exposures to 
segments and the loss characteristics and delinquency status of each 
identified risk segment. These reviews must occur whenever the FDIC-
supervised institution receives new material information, but generally 
no less frequently than quarterly, and, in all cases, at least annually.
    (4) The FDIC-supervised institution's internal risk rating policy 
for wholesale exposures must describe the FDIC-supervised institution's 
rating philosophy (that is, must describe how wholesale obligor rating 
assignments

[[Page 297]]

are affected by the FDIC-supervised institution's choice of the range of 
economic, business, and industry conditions that are considered in the 
obligor rating process).
    (5) The FDIC-supervised institution's internal risk rating system 
for wholesale exposures must provide for the review and update (as 
appropriate) of each obligor rating and (if applicable) each loss 
severity rating whenever the FDIC-supervised institution obtains 
relevant and material information on the obligor or exposure that 
affects PD, LGD and EAD, but no less frequently than annually.
    (c) Quantification of risk parameters for wholesale and retail 
exposures. (1) The FDIC-supervised institution must have a comprehensive 
risk parameter quantification process that produces accurate, timely, 
and reliable estimates of the risk parameters on a consistent basis for 
the FDIC-supervised institution's wholesale and retail exposures.
    (2) An FDIC-supervised institution's estimates of PD, LGD, and EAD 
must incorporate all relevant, material, and available data that is 
reflective of the FDIC-supervised institution's actual wholesale and 
retail exposures and of sufficient quality to support the determination 
of risk-based capital requirements for the exposures. In particular, the 
population of exposures in the data used for estimation purposes, the 
lending standards in use when the data were generated, and other 
relevant characteristics, should closely match or be comparable to the 
FDIC-supervised institution's exposures and standards. In addition, an 
FDIC-supervised institution must:
    (i) Demonstrate that its estimates are representative of long run 
experience, including periods of economic downturn conditions, whether 
internal or external data are used;
    (ii) Take into account any changes in lending practice or the 
process for pursuing recoveries over the observation period;
    (iii) Promptly reflect technical advances, new data, and other 
information as they become available;
    (iv) Demonstrate that the data used to estimate risk parameters 
support the accuracy and robustness of those estimates; and
    (v) Demonstrate that its estimation technique performs well in out-
of-sample tests whenever possible.
    (3) The FDIC-supervised institution's risk parameter quantification 
process must produce appropriately conservative risk parameter estimates 
where the FDIC-supervised institution has limited relevant data, and any 
adjustments that are part of the quantification process must not result 
in a pattern of bias toward lower risk parameter estimates.
    (4) The FDIC-supervised institution's risk parameter estimation 
process should not rely on the possibility of U.S. government financial 
assistance, except for the financial assistance that the U.S. government 
has a legally binding commitment to provide.
    (5) The FDIC-supervised institution must be able to demonstrate 
which variables have been found to be statistically significant with 
regard to EAD. The FDIC-supervised institution's EAD estimates must 
reflect its specific policies and strategies with regard to account 
management, including account monitoring and payment processing, and its 
ability and willingness to prevent further drawdowns in circumstances 
short of payment default. The FDIC-supervised institution must have 
adequate systems and procedures in place to monitor current outstanding 
amounts against committed lines, and changes in outstanding amounts per 
obligor and obligor rating grade and per retail segment. The FDIC-
supervised institution must be able to monitor outstanding amounts on a 
daily basis.
    (6) At a minimum, PD estimates for wholesale obligors and retail 
segments must be based on at least five years of default data. LGD 
estimates for wholesale exposures must be based on at least seven years 
of loss severity data, and LGD estimates for retail segments must be 
based on at least five years of loss severity data. EAD estimates for 
wholesale exposures must be based on at least seven years of exposure 
amount data, and EAD estimates for retail segments must be based on at 
least five years of exposure amount data. If the FDIC-supervised 
institution has relevant and material reference data that span a longer 
period

[[Page 298]]

of time than the minimum time periods specified above, the FDIC-
supervised institution must incorporate such data in its estimates, 
provided that it does not place undue weight on periods of favorable or 
benign economic conditions relative to periods of economic downturn 
conditions.
    (7) Default, loss severity, and exposure amount data must include 
periods of economic downturn conditions, or the FDIC-supervised 
institution must adjust its estimates of risk parameters to compensate 
for the lack of data from periods of economic downturn conditions.
    (8) The FDIC-supervised institution's PD, LGD, and EAD estimates 
must be based on the definition of default in Sec.  324.101.
    (9) If an FDIC-supervised institution uses internal data obtained 
prior to becoming subject to this subpart E or external data to arrive 
at PD, LGD, or EAD estimates, the FDIC-supervised institution must 
demonstrate to the FDIC that the FDIC-supervised institution has made 
appropriate adjustments if necessary to be consistent with the 
definition of default in Sec.  324.101. Internal data obtained after the 
FDIC-supervised institution becomes subject to this subpart E must be 
consistent with the definition of default in Sec.  324.101.
    (10) The FDIC-supervised institution must review and update (as 
appropriate) its risk parameters and its risk parameter quantification 
process at least annually.
    (11) The FDIC-supervised institution must, at least annually, 
conduct a comprehensive review and analysis of reference data to 
determine relevance of the reference data to the FDIC-supervised 
institution's exposures, quality of reference data to support PD, LGD, 
and EAD estimates, and consistency of reference data to the definition 
of default in Sec.  324.101.
    (d) Counterparty credit risk model. An FDIC-supervised institution 
must obtain the prior written approval of the FDIC under Sec.  324.132 
to use the internal models methodology for counterparty credit risk and 
the advanced CVA approach for the CVA capital requirement.
    (e) Double default treatment. An FDIC-supervised institution must 
obtain the prior written approval of the FDIC under Sec.  324.135 to use 
the double default treatment.
    (f) Equity exposures model. An FDIC-supervised institution must 
obtain the prior written approval of the FDIC under Sec.  324.153 to use 
the internal models approach for equity exposures.
    (g) Operational risk. (1) Operational risk management processes. An 
FDIC-supervised institution must:
    (i) Have an operational risk management function that:
    (A) Is independent of business line management; and
    (B) Is responsible for designing, implementing, and overseeing the 
FDIC-supervised institution's operational risk data and assessment 
systems, operational risk quantification systems, and related processes;
    (ii) Have and document a process (which must capture business 
environment and internal control factors affecting the FDIC-supervised 
institution's operational risk profile) to identify, measure, monitor, 
and control operational risk in the FDIC-supervised institution's 
products, activities, processes, and systems; and
    (iii) Report operational risk exposures, operational loss events, 
and other relevant operational risk information to business unit 
management, senior management, and the board of directors (or a 
designated committee of the board).
    (2) Operational risk data and assessment systems. An FDIC-supervised 
institution must have operational risk data and assessment systems that 
capture operational risks to which the FDIC-supervised institution is 
exposed. The FDIC-supervised institution's operational risk data and 
assessment systems must:
    (i) Be structured in a manner consistent with the FDIC-supervised 
institution's current business activities, risk profile, technological 
processes, and risk management processes; and
    (ii) Include credible, transparent, systematic, and verifiable 
processes that incorporate the following elements on an ongoing basis:
    (A) Internal operational loss event data. The FDIC-supervised 
institution must have a systematic process for capturing and using 
internal operational

[[Page 299]]

loss event data in its operational risk data and assessment systems.
    (1) The FDIC-supervised institution's operational risk data and 
assessment systems must include a historical observation period of at 
least five years for internal operational loss event data (or such 
shorter period approved by the FDIC to address transitional situations, 
such as integrating a new business line).
    (2) The FDIC-supervised institution must be able to map its internal 
operational loss event data into the seven operational loss event type 
categories.
    (3) The FDIC-supervised institution may refrain from collecting 
internal operational loss event data for individual operational losses 
below established dollar threshold amounts if the FDIC-supervised 
institution can demonstrate to the satisfaction of the FDIC that the 
thresholds are reasonable, do not exclude important internal operational 
loss event data, and permit the FDIC-supervised institution to capture 
substantially all the dollar value of the FDIC-supervised institution's 
operational losses.
    (B) External operational loss event data. The FDIC-supervised 
institution must have a systematic process for determining its 
methodologies for incorporating external operational loss event data 
into its operational risk data and assessment systems.
    (C) Scenario analysis. The FDIC-supervised institution must have a 
systematic process for determining its methodologies for incorporating 
scenario analysis into its operational risk data and assessment systems.
    (D) Business environment and internal control factors. The FDIC-
supervised institution must incorporate business environment and 
internal control factors into its operational risk data and assessment 
systems. The FDIC-supervised institution must also periodically compare 
the results of its prior business environment and internal control 
factor assessments against its actual operational losses incurred in the 
intervening period.
    (3) Operational risk quantification systems. (i) The FDIC-supervised 
institution's operational risk quantification systems:
    (A) Must generate estimates of the FDIC-supervised institution's 
operational risk exposure using its operational risk data and assessment 
systems;
    (B) Must employ a unit of measure that is appropriate for the FDIC-
supervised institution's range of business activities and the variety of 
operational loss events to which it is exposed, and that does not 
combine business activities or operational loss events with demonstrably 
different risk profiles within the same loss distribution;
    (C) Must include a credible, transparent, systematic, and verifiable 
approach for weighting each of the four elements, described in paragraph 
(g)(2)(ii) of this section, that an FDIC-supervised institution is 
required to incorporate into its operational risk data and assessment 
systems;
    (D) May use internal estimates of dependence among operational 
losses across and within units of measure if the FDIC-supervised 
institution can demonstrate to the satisfaction of the FDIC that its 
process for estimating dependence is sound, robust to a variety of 
scenarios, and implemented with integrity, and allows for uncertainty 
surrounding the estimates. If the FDIC-supervised institution has not 
made such a demonstration, it must sum operational risk exposure 
estimates across units of measure to calculate its total operational 
risk exposure; and
    (E) Must be reviewed and updated (as appropriate) whenever the FDIC-
supervised institution becomes aware of information that may have a 
material effect on the FDIC-supervised institution's estimate of 
operational risk exposure, but the review and update must occur no less 
frequently than annually.
    (ii) With the prior written approval of the FDIC, an FDIC-supervised 
institution may generate an estimate of its operational risk exposure 
using an alternative approach to that specified in paragraph (g)(3)(i) 
of this section. An FDIC-supervised institution proposing to use such an 
alternative operational risk quantification system must submit a 
proposal to the FDIC. In determining whether to approve an FDIC-
supervised institution's proposal to use

[[Page 300]]

an alternative operational risk quantification system, the FDIC will 
consider the following principles:
    (A) Use of the alternative operational risk quantification system 
will be allowed only on an exception basis, considering the size, 
complexity, and risk profile of the FDIC-supervised institution;
    (B) The FDIC-supervised institution must demonstrate that its 
estimate of its operational risk exposure generated under the 
alternative operational risk quantification system is appropriate and 
can be supported empirically; and
    (C) An FDIC-supervised institution must not use an allocation of 
operational risk capital requirements that includes entities other than 
depository institutions or the benefits of diversification across 
entities.
    (h) Data management and maintenance. (1) An FDIC-supervised 
institution must have data management and maintenance systems that 
adequately support all aspects of its advanced systems and the timely 
and accurate reporting of risk-based capital requirements.
    (2) An FDIC-supervised institution must retain data using an 
electronic format that allows timely retrieval of data for analysis, 
validation, reporting, and disclosure purposes.
    (3) An FDIC-supervised institution must retain sufficient data 
elements related to key risk drivers to permit adequate monitoring, 
validation, and refinement of its advanced systems.
    (i) Control, oversight, and validation mechanisms. (1) The FDIC-
supervised institution's senior management must ensure that all 
components of the FDIC-supervised institution's advanced systems 
function effectively and comply with the qualification requirements in 
this section.
    (2) The FDIC-supervised institution's board of directors (or a 
designated committee of the board) must at least annually review the 
effectiveness of, and approve, the FDIC-supervised institution's 
advanced systems.
    (3) An FDIC-supervised institution must have an effective system of 
controls and oversight that:
    (i) Ensures ongoing compliance with the qualification requirements 
in this section;
    (ii) Maintains the integrity, reliability, and accuracy of the FDIC-
supervised institution's advanced systems; and
    (iii) Includes adequate governance and project management processes.
    (4) The FDIC-supervised institution must validate, on an ongoing 
basis, its advanced systems. The FDIC-supervised institution's 
validation process must be independent of the advanced systems' 
development, implementation, and operation, or the validation process 
must be subjected to an independent review of its adequacy and 
effectiveness. Validation must include:
    (i) An evaluation of the conceptual soundness of (including 
developmental evidence supporting) the advanced systems;
    (ii) An ongoing monitoring process that includes verification of 
processes and benchmarking; and
    (iii) An outcomes analysis process that includes backtesting.
    (5) The FDIC-supervised institution must have an internal audit 
function or equivalent function that is independent of business-line 
management that at least annually:
    (i) Reviews the FDIC-supervised institution's advanced systems and 
associated operations, including the operations of its credit function 
and estimations of PD, LGD, and EAD;
    (ii) Assesses the effectiveness of the controls supporting the FDIC-
supervised institution's advanced systems; and
    (iii) Documents and reports its findings to the FDIC-supervised 
institution's board of directors (or a committee thereof).
    (6) The FDIC-supervised institution must periodically stress test 
its advanced systems. The stress testing must include a consideration of 
how economic cycles, especially downturns, affect risk-based capital 
requirements (including migration across rating grades and segments and 
the credit risk mitigation benefits of double default treatment).
    (j) Documentation. The FDIC-supervised institution must adequately 
document all material aspects of its advanced systems.

[78 FR 55471, Sept. 10, 2013, as amended at 80 FR 41423, July 15, 2015]

[[Page 301]]



Sec.  324.123  Ongoing qualification.

    (a) Changes to advanced systems. An FDIC-supervised institution must 
meet all the qualification requirements in Sec.  324.122 on an ongoing 
basis. An FDIC-supervised institution must notify the FDIC when the 
FDIC-supervised institution makes any change to an advanced system that 
would result in a material change in the FDIC-supervised institution's 
advanced approaches total risk-weighted asset amount for an exposure 
type or when the FDIC-supervised institution makes any significant 
change to its modeling assumptions.
    (b) Failure to comply with qualification requirements. (1) If the 
FDIC determines that an FDIC-supervised institution that uses this 
subpart and that has conducted a satisfactory parallel run fails to 
comply with the qualification requirements in Sec.  324.122, the FDIC 
will notify the FDIC-supervised institution in writing of the FDIC-
supervised institution's failure to comply.
    (2) The FDIC-supervised institution must establish and submit a plan 
satisfactory to the FDIC to return to compliance with the qualification 
requirements.
    (3) In addition, if the FDIC determines that the FDIC-supervised 
institution's advanced approaches total risk-weighted assets are not 
commensurate with the FDIC-supervised institution's credit, market, 
operational, or other risks, the FDIC may require such an FDIC-
supervised institution to calculate its advanced approaches total risk-
weighted assets with any modifications provided by the FDIC.



Sec.  324.124  Merger and acquisition transitional arrangements.

    (a) Mergers and acquisitions of companies without advanced systems. 
If an FDIC-supervised institution merges with or acquires a company that 
does not calculate its risk-based capital requirements using advanced 
systems, the FDIC-supervised institution may use subpart D of this part 
to determine the risk-weighted asset amounts for the merged or acquired 
company's exposures for up to 24 months after the calendar quarter 
during which the merger or acquisition consummates. The FDIC may extend 
this transition period for up to an additional 12 months. Within 90 days 
of consummating the merger or acquisition, the FDIC-supervised 
institution must submit to the FDIC an implementation plan for using its 
advanced systems for the acquired company. During the period in which 
subpart D of this part applies to the merged or acquired company, any 
ALLL, net of allocated transfer risk reserves established pursuant to 12 
U.S.C. 3904, associated with the merged or acquired company's exposures 
may be included in the acquiring FDIC-supervised institution's tier 2 
capital up to 1.25 percent of the acquired company's risk-weighted 
assets. All general allowances of the merged or acquired company must be 
excluded from the FDIC-supervised institution's eligible credit 
reserves. In addition, the risk-weighted assets of the merged or 
acquired company are not included in the FDIC-supervised institution's 
credit-risk-weighted assets but are included in total risk-weighted 
assets. If an FDIC-supervised institution relies on this paragraph (a), 
the FDIC-supervised institution must disclose publicly the amounts of 
risk-weighted assets and qualifying capital calculated under this 
subpart for the acquiring FDIC-supervised institution and under subpart 
D of this part for the acquired company.
    (b) Mergers and acquisitions of companies with advanced systems. (1) 
If an FDIC-supervised institution merges with or acquires a company that 
calculates its risk-based capital requirements using advanced systems, 
the FDIC-supervised institution may use the acquired company's advanced 
systems to determine total risk-weighted assets for the merged or 
acquired company's exposures for up to 24 months after the calendar 
quarter during which the acquisition or merger consummates. The FDIC may 
extend this transition period for up to an additional 12 months. Within 
90 days of consummating the merger or acquisition, the FDIC-supervised 
institution must submit to the FDIC an implementation plan for using its 
advanced systems for the merged or acquired company.

[[Page 302]]

    (2) If the acquiring FDIC-supervised institution is not subject to 
the advanced approaches in this subpart at the time of acquisition or 
merger, during the period when subpart D of this part applies to the 
acquiring FDIC-supervised institution, the ALLL associated with the 
exposures of the merged or acquired company may not be directly included 
in tier 2 capital. Rather, any excess eligible credit reserves 
associated with the merged or acquired company's exposures may be 
included in the FDIC-supervised institution's tier 2 capital up to 0.6 
percent of the credit-risk-weighted assets associated with those 
exposures.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20760, Apr. 14, 2014]



Sec. Sec.  324.125-324.130  [Reserved]

              Risk-Weighted Assets for General Credit Risk



Sec.  324.131  Mechanics for calculating total wholesale 
and retail risk-weighted assets.

    (a) Overview. An FDIC-supervised institution must calculate its 
total wholesale and retail risk-weighted asset amount in four distinct 
phases:
    (1) Phase 1--categorization of exposures;
    (2) Phase 2--assignment of wholesale obligors and exposures to 
rating grades and segmentation of retail exposures;
    (3) Phase 3--assignment of risk parameters to wholesale exposures 
and segments of retail exposures; and
    (4) Phase 4--calculation of risk-weighted asset amounts.
    (b) Phase 1--Categorization. The FDIC-supervised institution must 
determine which of its exposures are wholesale exposures, retail 
exposures, securitization exposures, or equity exposures. The FDIC-
supervised institution must categorize each retail exposure as a 
residential mortgage exposure, a QRE, or an other retail exposure. The 
FDIC-supervised institution must identify which wholesale exposures are 
HVCRE exposures, sovereign exposures, OTC derivative contracts, repo-
style transactions, eligible margin loans, eligible purchased wholesale 
exposures, cleared transactions, default fund contributions, unsettled 
transactions to which Sec.  324.136 applies, and eligible guarantees or 
eligible credit derivatives that are used as credit risk mitigants. The 
FDIC-supervised institution must identify any on-balance sheet asset 
that does not meet the definition of a wholesale, retail, equity, or 
securitization exposure, as well as any non-material portfolio of 
exposures described in paragraph (e)(4) of this section.
    (c) Phase 2--Assignment of wholesale obligors and exposures to 
rating grades and retail exposures to segments--(1) Assignment of 
wholesale obligors and exposures to rating grades. (i) The FDIC-
supervised institution must assign each obligor of a wholesale exposure 
to a single obligor rating grade and must assign each wholesale exposure 
to which it does not directly assign an LGD estimate to a loss severity 
rating grade.
    (ii) The FDIC-supervised institution must identify which of its 
wholesale obligors are in default.
    (2) Segmentation of retail exposures. (i) The FDIC-supervised 
institution must group the retail exposures in each retail subcategory 
into segments that have homogeneous risk characteristics.
    (ii) The FDIC-supervised institution must identify which of its 
retail exposures are in default. The FDIC-supervised institution must 
segment defaulted retail exposures separately from non-defaulted retail 
exposures.
    (iii) If the FDIC-supervised institution determines the EAD for 
eligible margin loans using the approach in Sec.  324.132(b), the FDIC-
supervised institution must identify which of its retail exposures are 
eligible margin loans for which the FDIC-supervised institution uses 
this EAD approach and must segment such eligible margin loans separately 
from other retail exposures.
    (3) Eligible purchased wholesale exposures. An FDIC-supervised 
institution may group its eligible purchased wholesale exposures into 
segments that have homogeneous risk characteristics. An FDIC-supervised 
institution must use the wholesale exposure formula in Table 1 of this 
section to determine the risk-based capital requirement for each segment 
of eligible purchased wholesale exposures.

[[Page 303]]

    (d) Phase 3--Assignment of risk parameters to wholesale exposures 
and segments of retail exposures. (1) Quantification process. Subject to 
the limitations in this paragraph (d), the FDIC-supervised institution 
must:
    (i) Associate a PD with each wholesale obligor rating grade;
    (ii) Associate an LGD with each wholesale loss severity rating grade 
or assign an LGD to each wholesale exposure;
    (iii) Assign an EAD and M to each wholesale exposure; and
    (iv) Assign a PD, LGD, and EAD to each segment of retail exposures.
    (2) Floor on PD assignment. The PD for each wholesale obligor or 
retail segment may not be less than 0.03 percent, except for exposures 
to or directly and unconditionally guaranteed by a sovereign entity, the 
Bank for International Settlements, the International Monetary Fund, the 
European Commission, the European Central Bank, or a multilateral 
development bank, to which the FDIC-supervised institution assigns a 
rating grade associated with a PD of less than 0.03 percent.
    (3) Floor on LGD estimation. The LGD for each segment of residential 
mortgage exposures may not be less than 10 percent, except for segments 
of residential mortgage exposures for which all or substantially all of 
the principal of each exposure is either:
    (i) Directly and unconditionally guaranteed by the full faith and 
credit of a sovereign entity; or
    (ii) Guaranteed by a contingent obligation of the U.S. government or 
its agencies, the enforceability of which is dependent upon some 
affirmative action on the part of the beneficiary of the guarantee or a 
third party (for example, meeting servicing requirements).
    (4) Eligible purchased wholesale exposures. An FDIC-supervised 
institution must assign a PD, LGD, EAD, and M to each segment of 
eligible purchased wholesale exposures. If the FDIC-supervised 
institution can estimate ECL (but not PD or LGD) for a segment of 
eligible purchased wholesale exposures, the FDIC-supervised institution 
must assume that the LGD of the segment equals 100 percent and that the 
PD of the segment equals ECL divided by EAD. The estimated ECL must be 
calculated for the exposures without regard to any assumption of 
recourse or guarantees from the seller or other parties.
    (5) Credit risk mitigation: credit derivatives, guarantees, and 
collateral. (i) An FDIC-supervised institution may take into account the 
risk reducing effects of eligible guarantees and eligible credit 
derivatives in support of a wholesale exposure by applying the PD 
substitution or LGD adjustment treatment to the exposure as provided in 
Sec.  324.134 or, if applicable, applying double default treatment to 
the exposure as provided in Sec.  324.135. An FDIC-supervised 
institution may decide separately for each wholesale exposure that 
qualifies for the double default treatment under Sec.  324.135 whether 
to apply the double default treatment or to use the PD substitution or 
LGD adjustment treatment without recognizing double default effects.
    (ii) An FDIC-supervised institution may take into account the risk 
reducing effects of guarantees and credit derivatives in support of 
retail exposures in a segment when quantifying the PD and LGD of the 
segment. In doing so, an FDIC-supervised institution must consider all 
relevant available information.
    (iii) Except as provided in paragraph (d)(6) of this section, an 
FDIC-supervised institution may take into account the risk reducing 
effects of collateral in support of a wholesale exposure when 
quantifying the LGD of the exposure, and may take into account the risk 
reducing effects of collateral in support of retail exposures when 
quantifying the PD and LGD of the segment. In order to do so, an FDIC-
supervised institution must have established internal requirements for 
collateral management, legal certainty, and risk management processes.
    (6) EAD for OTC derivative contracts, repo-style transactions, and 
eligible margin loans. An FDIC-supervised institution must calculate its 
EAD for an OTC derivative contract as provided in Sec.  324.132 (c) and 
(d). An FDIC-supervised institution may take into account the

[[Page 304]]

risk-reducing effects of financial collateral in support of a repo-style 
transaction or eligible margin loan and of any collateral in support of 
a repo-style transaction that is included in the FDIC-supervised 
institution's VaR-based measure under subpart F of this part through an 
adjustment to EAD as provided in Sec.  324.132(b) and (d). An FDIC-
supervised institution that takes collateral into account through such 
an adjustment to EAD under Sec.  324.132 may not reflect such collateral 
in LGD.
    (7) Effective maturity. An exposure's M must be no greater than five 
years and no less than one year, except that an exposure's M must be no 
less than one day if the exposure is a trade related letter of credit, 
or if the exposure has an original maturity of less than one year and is 
not part of an FDIC-supervised institution's ongoing financing of the 
obligor. An exposure is not part of an FDIC-supervised institution's 
ongoing financing of the obligor if the FDIC-supervised institution:
    (i) Has a legal and practical ability not to renew or roll over the 
exposure in the event of credit deterioration of the obligor;
    (ii) Makes an independent credit decision at the inception of the 
exposure and at every renewal or roll over; and
    (iii) Has no substantial commercial incentive to continue its credit 
relationship with the obligor in the event of credit deterioration of 
the obligor.
    (8) EAD for exposures to certain central counterparties. An FDIC-
supervised institution may attribute an EAD of zero to exposures that 
arise from the settlement of cash transactions (such as equities, fixed 
income, spot foreign exchange, and spot commodities) with a central 
counterparty where there is no assumption of ongoing counterparty credit 
risk by the central counterparty after settlement of the trade and 
associated default fund contributions.
    (e) Phase 4--Calculation of risk-weighted assets. (1) Non-defaulted 
exposures.
    (i) An FDIC-supervised institution must calculate the dollar risk-
based capital requirement for each of its wholesale exposures to a non-
defaulted obligor (except for eligible guarantees and eligible credit 
derivatives that hedge another wholesale exposure, IMM exposures, 
cleared transactions, default fund contributions, unsettled 
transactions, and exposures to which the FDIC-supervised institution 
applies the double default treatment in Sec.  324.135) and segments of 
non-defaulted retail exposures by inserting the assigned risk parameters 
for the wholesale obligor and exposure or retail segment into the 
appropriate risk-based capital formula specified in Table 1 to Sec.  
324.131 and multiplying the output of the formula (K) by the EAD of the 
exposure or segment. Alternatively, an FDIC-supervised institution may 
apply a 300 percent risk weight to the EAD of an eligible margin loan if 
the FDIC-supervised institution is not able to meet the FDIC's 
requirements for estimation of PD and LGD for the margin loan.

[[Page 305]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.024


[[Page 306]]


[GRAPHIC] [TIFF OMITTED] TR10SE13.025

    (ii) The sum of all the dollar risk-based capital requirements for 
each wholesale exposure to a non-defaulted obligor and segment of non-
defaulted retail exposures calculated in paragraph (e)(1)(i) of this 
section and in Sec.  324.135(e) equals the total dollar risk-based 
capital requirement for those exposures and segments.
    (iii) The aggregate risk-weighted asset amount for wholesale 
exposures to non-defaulted obligors and segments of non-defaulted retail 
exposures equals the total dollar risk-based capital requirement in 
paragraph (e)(1)(ii) of this section multiplied by 12.5.
    (2) Wholesale exposures to defaulted obligors and segments of 
defaulted retail exposures--(i) Not covered by an eligible U.S. 
government guarantee: The dollar risk-based capital requirement for each 
wholesale exposure not covered by an eligible guarantee from the U.S. 
government to a defaulted obligor and each segment of defaulted retail 
exposures not covered by an eligible guarantee from the U.S. government 
equals 0.08 multiplied by the EAD of the exposure or segment.
    (ii) Covered by an eligible U.S. government guarantee: The dollar 
risk-based capital requirement for each wholesale exposure to a 
defaulted obligor covered by an eligible guarantee from the U.S. 
government and each segment of defaulted retail exposures covered by an

[[Page 307]]

eligible guarantee from the U.S. government equals the sum of:
    (A) The sum of the EAD of the portion of each wholesale exposure to 
a defaulted obligor covered by an eligible guarantee from the U.S. 
government plus the EAD of the portion of each segment of defaulted 
retail exposures that is covered by an eligible guarantee from the U.S. 
government and the resulting sum is multiplied by 0.016, and
    (B) The sum of the EAD of the portion of each wholesale exposure to 
a defaulted obligor not covered by an eligible guarantee from the U.S. 
government plus the EAD of the portion of each segment of defaulted 
retail exposures that is not covered by an eligible guarantee from the 
U.S. government and the resulting sum is multiplied by 0.08.
    (iii) The sum of all the dollar risk-based capital requirements for 
each wholesale exposure to a defaulted obligor and each segment of 
defaulted retail exposures calculated in paragraph (e)(2)(i) of this 
section plus the dollar risk-based capital requirements each wholesale 
exposure to a defaulted obligor and for each segment of defaulted retail 
exposures calculated in paragraph (e)(2)(ii) of this section equals the 
total dollar risk-based capital requirement for those exposures and 
segments.
    (iv) The aggregate risk-weighted asset amount for wholesale 
exposures to defaulted obligors and segments of defaulted retail 
exposures equals the total dollar risk-based capital requirement 
calculated in paragraph (e)(2)(iii) of this section multiplied by 12.5.
    (3) Assets not included in a defined exposure category. (i) An FDIC-
supervised institution may assign a risk-weighted asset amount of zero 
to cash owned and held in all offices of the FDIC-supervised institution 
or in transit and for gold bullion held in the FDIC-supervised 
institution's own vaults, or held in another depository institution's 
vaults on an allocated basis, to the extent the gold bullion assets are 
offset by gold bullion liabilities.
    (ii) An FDIC-supervised institution must assign a risk-weighted 
asset amount equal to 20 percent of the carrying value of cash items in 
the process of collection.
    (iii) An FDIC-supervised institution must assign a risk-weighted 
asset amount equal to 50 percent of the carrying value to a pre-sold 
construction loan unless the purchase contract is cancelled, in which 
case an FDIC-supervised institution must assign a risk-weighted asset 
amount equal to a 100 percent of the carrying value of the pre-sold 
construction loan.
    (iv) The risk-weighted asset amount for the residual value of a 
retail lease exposure equals such residual value.
    (v) The risk-weighted asset amount for DTAs arising from temporary 
differences that the FDIC-supervised institution could realize through 
net operating loss carrybacks equals the carrying value, netted in 
accordance with Sec.  324.22.
    (vi) The risk-weighted asset amount for MSAs, DTAs arising from 
temporary timing differences that the FDIC-supervised institution could 
not realize through net operating loss carrybacks, and significant 
investments in the capital of unconsolidated financial institutions in 
the form of common stock that are not deducted pursuant to Sec.  
324.22(d) equals the amount not subject to deduction multiplied by 250 
percent.
    (vii) The risk-weighted asset amount for any other on-balance-sheet 
asset that does not meet the definition of a wholesale, retail, 
securitization, IMM, or equity exposure, cleared transaction, or default 
fund contribution and is not subject to deduction under Sec.  324.22(a), 
(c), or (d) equals the carrying value of the asset.
    (4) Non-material portfolios of exposures. The risk-weighted asset 
amount of a portfolio of exposures for which the FDIC-supervised 
institution has demonstrated to the FDIC's satisfaction that the 
portfolio (when combined with all other portfolios of exposures that the 
FDIC-supervised institution seeks to treat under this paragraph (e)) is 
not material to the FDIC-supervised institution is the sum of the 
carrying values of on-balance sheet exposures plus the notional amounts 
of off-balance sheet exposures in the portfolio. For purposes of this 
paragraph (e)(4), the notional amount of an OTC derivative contract that 
is not a credit derivative

[[Page 308]]

is the EAD of the derivative as calculated in Sec.  324.132.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014; 
80 FR 41424, July 15, 2015]



Sec.  324.132  Counterparty credit risk of repo-style transactions, 
eligible margin loans, and OTC derivative contracts.

    (a) Methodologies for collateral recognition. (1) Instead of an LGD 
estimation methodology, an FDIC-supervised institution may use the 
following methodologies to recognize the benefits of financial 
collateral in mitigating the counterparty credit risk of repo-style 
transactions, eligible margin loans, collateralized OTC derivative 
contracts and single product netting sets of such transactions, and to 
recognize the benefits of any collateral in mitigating the counterparty 
credit risk of repo-style transactions that are included in an FDIC-
supervised institution's VaR-based measure under subpart F of this part:
    (i) The collateral haircut approach set forth in paragraph (b)(2) of 
this section;
    (ii) The internal models methodology set forth in paragraph (d) of 
this section; and
    (iii) For single product netting sets of repo-style transactions and 
eligible margin loans, the simple VaR methodology set forth in paragraph 
(b)(3) of this section.
    (2) An FDIC-supervised institution may use any combination of the 
three methodologies for collateral recognition; however, it must use the 
same methodology for transactions in the same category.
    (3) An FDIC-supervised institution must use the methodology in 
paragraph (c) of this section, or with prior written approval of the 
FDIC, the internal model methodology in paragraph (d) of this section, 
to calculate EAD for an OTC derivative contract or a set of OTC 
derivative contracts subject to a qualifying master netting agreement. 
To estimate EAD for qualifying cross-product master netting agreements, 
an FDIC-supervised institution may only use the internal models 
methodology in paragraph (d) of this section.
    (4) An FDIC-supervised institution must also use the methodology in 
paragraph (e) of this section to calculate the risk-weighted asset 
amounts for CVA for OTC derivatives.
    (b) EAD for eligible margin loans and repo-style transactions. (1) 
General. An FDIC-supervised institution may recognize the credit risk 
mitigation benefits of financial collateral that secures an eligible 
margin loan, repo-style transaction, or single-product netting set of 
such transactions by factoring the collateral into its LGD estimates for 
the exposure. Alternatively, an FDIC-supervised institution may estimate 
an unsecured LGD for the exposure, as well as for any repo-style 
transaction that is included in the FDIC-supervised institution's VaR-
based measure under subpart F of this part, and determine the EAD of the 
exposure using:
    (i) The collateral haircut approach described in paragraph (b)(2) of 
this section;
    (ii) For netting sets only, the simple VaR methodology described in 
paragraph (b)(3) of this section; or
    (iii) The internal models methodology described in paragraph (d) of 
this section.
    (2) Collateral haircut approach--(i) EAD equation. An FDIC-
supervised institution may determine EAD for an eligible margin loan, 
repo-style transaction, or netting set by setting EAD equal to max {0, 
[([Sigma]E-[Sigma]C) + [Sigma](Es x Hs) + 
[Sigma](Efx x Hfx)]{time} , where:
    (A) [Sigma]E equals the value of the exposure (the sum of the 
current fair values of all instruments, gold, and cash the FDIC-
supervised institution has lent, sold subject to repurchase, or posted 
as collateral to the counterparty under the transaction (or netting 
set));
    (B) [Sigma]C equals the value of the collateral (the sum of the 
current fair values of all instruments, gold, and cash the FDIC-
supervised institution has borrowed, purchased subject to resale, or 
taken as collateral from the counterparty under the transaction (or 
netting set));
    (C) Es equals the absolute value of the net position in a 
given instrument or in gold (where the net position in a given 
instrument or in gold equals the

[[Page 309]]

sum of the current fair values of the instrument or gold the FDIC-
supervised institution has lent, sold subject to repurchase, or posted 
as collateral to the counterparty minus the sum of the current fair 
values of that same instrument or gold the FDIC-supervised institution 
has borrowed, purchased subject to resale, or taken as collateral from 
the counterparty);
    (D) Hs equals the market price volatility haircut 
appropriate to the instrument or gold referenced in Es;
    (E) Efx equals the absolute value of the net position of 
instruments and cash in a currency that is different from the settlement 
currency (where the net position in a given currency equals the sum of 
the current fair values of any instruments or cash in the currency the 
FDIC-supervised institution has lent, sold subject to repurchase, or 
posted as collateral to the counterparty minus the sum of the current 
fair values of any instruments or cash in the currency the FDIC-
supervised institution has borrowed, purchased subject to resale, or 
taken as collateral from the counterparty); and
    (F) Hfx equals the haircut appropriate to the mismatch 
between the currency referenced in Efx and the settlement 
currency.
    (ii) Standard supervisory haircuts. (A) Under the standard 
supervisory haircuts approach:
    (1) An FDIC-supervised institution must use the haircuts for market 
price volatility (Hs) in Table 1 to Sec.  324.132, as 
adjusted in certain circumstances as provided in paragraphs 
(b)(2)(ii)(A)(3) and (4) of this section;

                                  Table 1 to Sec.   324.132--Standard Supervisory Market Price Volatility Haircuts \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Haircut (in percent) assigned based on:
                                                              ------------------------------------------------------------------------
                                                                  Sovereign issuers risk weight     Non-sovereign issuers risk weight   Investment grade
                      Residual maturity                            under Sec.   324.32 \2\ (in      under Sec.   324.32 (in percent)     securitization
                                                                            percent)              ------------------------------------   exposures (in
                                                              ------------------------------------                                          percent)
                                                                  Zero      20 or 50       100         20          50          100
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than or equal to 1 year.................................         0.5         1.0        15.0         1.0         2.0         4.0                4.0
Greater than 1 year and less than or equal to 5 years........         2.0         3.0        15.0         4.0         6.0         8.0               12.0
Greater than 5 years.........................................         4.0         6.0        15.0         8.0        12.0        16.0               24.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Main index equities (including convertible bonds) and gold..........................15.0.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other publicly traded equities (including convertible bonds)........................25.0.........
Mutual funds....................................................Highest haircut applicable to any security in
                                                                         which the fund can invest.
Cash collateral held................................................................Zero.........
Other exposure types................................................................25.0.........
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The market price volatility haircuts in Table 1 to Sec.   324.132 are based on a 10 business-day holding period.
\2\ Includes a foreign PSE that receives a zero percent risk weight.

    (2) For currency mismatches, an FDIC-supervised institution must use 
a haircut for foreign exchange rate volatility (Hfx) of 8 
percent, as adjusted in certain circumstances as provided in paragraphs 
(b)(2)(ii)(A)(3) and (4) of this section.
    (3) For repo-style transactions, an FDIC-supervised institution may 
multiply the supervisory haircuts provided in paragraphs 
(b)(2)(ii)(A)(1) and (2) of this section by the square root of \1/2\ 
(which equals 0.707107).
    (4) An FDIC-supervised institution must adjust the supervisory 
haircuts upward on the basis of a holding period longer than ten 
business days (for eligible margin loans) or five business days (for 
repo-style transactions) where the following conditions apply. If the 
number of trades in a netting set exceeds 5,000 at any time during a 
quarter, an FDIC-supervised institution must adjust the supervisory 
haircuts upward on the basis of a holding period of twenty business days 
for the following quarter (except when an FDIC-supervised institution is 
calculating EAD for a cleared transaction under Sec.  324.133). If a 
netting set contains one or more

[[Page 310]]

trades involving illiquid collateral or an OTC derivative that cannot be 
easily replaced, an FDIC-supervised institution must adjust the 
supervisory haircuts upward on the basis of a holding period of twenty 
business days. If over the two previous quarters more than two margin 
disputes on a netting set have occurred that lasted more than the 
holding period, then the FDIC-supervised institution must adjust the 
supervisory haircuts upward for that netting set on the basis of a 
holding period that is at least two times the minimum holding period for 
that netting set. An FDIC-supervised institution must adjust the 
standard supervisory haircuts upward using the following formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.026

(i) TM equals a holding period of longer than 10 business 
          days for eligible margin loans and derivative contracts or 
          longer than 5 business days for repo-style transactions;
(ii) Hs equals the standard supervisory haircut; and
(iii) Ts equals 10 business days for eligible margin loans 
          and derivative contracts or 5 business days for repo-style 
          transactions.

    (5) If the instrument an FDIC-supervised institution has lent, sold 
subject to repurchase, or posted as collateral does not meet the 
definition of financial collateral, the FDIC-supervised institution must 
use a 25.0 percent haircut for market price volatility (Hs).
    (iii) Own internal estimates for haircuts. With the prior written 
approval of the FDIC, an FDIC-supervised institution may calculate 
haircuts (Hs and Hfx) using its own internal 
estimates of the volatilities of market prices and foreign exchange 
rates.
    (A) To receive FDIC approval to use its own internal estimates, an 
FDIC-supervised institution must satisfy the following minimum 
quantitative standards:
    (1) An FDIC-supervised institution must use a 99th percentile one-
tailed confidence interval.
    (2) The minimum holding period for a repo-style transaction is five 
business days and for an eligible margin loan is ten business days 
except for transactions or netting sets for which paragraph 
(b)(2)(iii)(A)(3) of this section applies. When an FDIC-supervised 
institution calculates an own-estimates haircut on a TN-day 
holding period, which is different from the minimum holding period for 
the transaction type, the applicable haircut (HM) is 
calculated using the following square root of time formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.027

(i) TM equals 5 for repo-style transactions and 10 for 
          eligible margin loans;
(ii) TN equals the holding period used by the FDIC-supervised 
          institution to derive HN; and
(iii) HN equals the haircut based on the holding period 
          TN.

    (3) If the number of trades in a netting set exceeds 5,000 at any 
time during a quarter, an FDIC-supervised institution must calculate the 
haircut using a minimum holding period of twenty business days for the 
following quarter (except when an FDIC-supervised institution is 
calculating EAD for a cleared transaction under Sec.  324.133). If a 
netting set contains one or more trades involving illiquid collateral or

[[Page 311]]

an OTC derivative that cannot be easily replaced, an FDIC-supervised 
institution must calculate the haircut using a minimum holding period of 
twenty business days. If over the two previous quarters more than two 
margin disputes on a netting set have occurred that lasted more than the 
holding period, then the FDIC-supervised institution must calculate the 
haircut for transactions in that netting set on the basis of a holding 
period that is at least two times the minimum holding period for that 
netting set.
    (4) An FDIC-supervised institution is required to calculate its own 
internal estimates with inputs calibrated to historical data from a 
continuous 12-month period that reflects a period of significant 
financial stress appropriate to the security or category of securities.
    (5) An FDIC-supervised institution must have policies and procedures 
that describe how it determines the period of significant financial 
stress used to calculate the FDIC-supervised institution's own internal 
estimates for haircuts under this section and must be able to provide 
empirical support for the period used. The FDIC-supervised institution 
must obtain the prior approval of the FDIC for, and notify the FDIC if 
the FDIC-supervised institution makes any material changes to, these 
policies and procedures.
    (6) Nothing in this section prevents the FDIC from requiring an 
FDIC-supervised institution to use a different period of significant 
financial stress in the calculation of own internal estimates for 
haircuts.
    (7) An FDIC-supervised institution must update its data sets and 
calculate haircuts no less frequently than quarterly and must also 
reassess data sets and haircuts whenever market prices change 
materially.
    (B) With respect to debt securities that are investment grade, an 
FDIC-supervised institution may calculate haircuts for categories of 
securities. For a category of securities, the FDIC-supervised 
institution must calculate the haircut on the basis of internal 
volatility estimates for securities in that category that are 
representative of the securities in that category that the FDIC-
supervised institution has lent, sold subject to repurchase, posted as 
collateral, borrowed, purchased subject to resale, or taken as 
collateral. In determining relevant categories, the FDIC-supervised 
institution must at a minimum take into account:
    (1) The type of issuer of the security;
    (2) The credit quality of the security;
    (3) The maturity of the security; and
    (4) The interest rate sensitivity of the security.
    (C) With respect to debt securities that are not investment grade 
and equity securities, an FDIC-supervised institution must calculate a 
separate haircut for each individual security.
    (D) Where an exposure or collateral (whether in the form of cash or 
securities) is denominated in a currency that differs from the 
settlement currency, the FDIC-supervised institution must calculate a 
separate currency mismatch haircut for its net position in each 
mismatched currency based on estimated volatilities of foreign exchange 
rates between the mismatched currency and the settlement currency.
    (E) An FDIC-supervised institution's own estimates of market price 
and foreign exchange rate volatilities may not take into account the 
correlations among securities and foreign exchange rates on either the 
exposure or collateral side of a transaction (or netting set) or the 
correlations among securities and foreign exchange rates between the 
exposure and collateral sides of the transaction (or netting set).
    (3) Simple VaR methodology. With the prior written approval of the 
FDIC, an FDIC-supervised institution may estimate EAD for a netting set 
using a VaR model that meets the requirements in paragraph (b)(3)(iii) 
of this section. In such event, the FDIC-supervised institution must set 
EAD equal to max {0, [([Sigma]E-[Sigma]C) + PFE]{time} , where:
    (i) [Sigma]E equals the value of the exposure (the sum of the 
current fair values of all instruments, gold, and cash the FDIC-
supervised institution has lent, sold subject to repurchase, or posted 
as collateral to the counterparty under the netting set);
    (ii) [Sigma]C equals the value of the collateral (the sum of the 
current fair values of all instruments, gold, and cash the FDIC-
supervised institution has borrowed, purchased subject to resale, or

[[Page 312]]

taken as collateral from the counterparty under the netting set); and
    (iii) PFE (potential future exposure) equals the FDIC-supervised 
institution's empirically based best estimate of the 99th percentile, 
one-tailed confidence interval for an increase in the value of 
([Sigma]E-[Sigma]C) over a five-business-day holding period for repo-
style transactions, or over a ten-business-day holding period for 
eligible margin loans except for netting sets for which paragraph 
(b)(3)(iv) of this section applies using a minimum one-year historical 
observation period of price data representing the instruments that the 
FDIC-supervised institution has lent, sold subject to repurchase, posted 
as collateral, borrowed, purchased subject to resale, or taken as 
collateral. The FDIC-supervised institution must validate its VaR model 
by establishing and maintaining a rigorous and regular backtesting 
regime.
    (iv) If the number of trades in a netting set exceeds 5,000 at any 
time during a quarter, an FDIC-supervised institution must use a twenty-
business-day holding period for the following quarter (except when an 
FDIC-supervised institution is calculating EAD for a cleared transaction 
under Sec.  324.133). If a netting set contains one or more trades 
involving illiquid collateral, an FDIC-supervised institution must use a 
twenty-business-day holding period. If over the two previous quarters 
more than two margin disputes on a netting set have occurred that lasted 
more than the holding period, then the FDIC-supervised institution must 
set its PFE for that netting set equal to an estimate over a holding 
period that is at least two times the minimum holding period for that 
netting set.
    (c) EAD for OTC derivative contracts--(1) OTC derivative contracts 
not subject to a qualifying master netting agreement. An FDIC-supervised 
institution must determine the EAD for an OTC derivative contract that 
is not subject to a qualifying master netting agreement using the 
current exposure methodology in paragraph (c)(5) of this section or 
using the internal models methodology described in paragraph (d) of this 
section. An FDIC-supervised institution may reduce the EAD calculated 
according to paragraph (c)(5) of this section by the credit valuation 
adjustment that the FDIC-supervised institution has recognized in its 
balance sheet valuation of any OTC derivative contracts in the netting 
set. For purposes of this paragraph (c)(1), the credit valuation 
adjustment does not include any adjustments to common equity tier 1 
capital attributable to changes in the fair value of the FDIC-supervised 
institution's liabilities that are due to changes in its own credit risk 
since the inception of the transaction with the counterparty.
    (2) OTC derivative contracts subject to a qualifying master netting 
agreement. An FDIC-supervised institution must determine the EAD for 
multiple OTC derivative contracts that are subject to a qualifying 
master netting agreement using the current exposure methodology in 
paragraph (c)(6) of this section or using the internal models 
methodology described in paragraph (d) of this section. An FDIC-
supervised institution may reduce the EAD calculated according to 
paragraph (c)(6) of this section by the credit valuation adjustment that 
the FDIC-supervised institution has recognized in its balance sheet 
valuation of any OTC derivative contracts in the netting set. For 
purposes of this paragraph (c)(2), the credit valuation adjustment does 
not include any adjustments to common equity tier 1 capital attributable 
to changes in the fair value of the FDIC-supervised institution's 
liabilities that are due to changes in its own credit risk since the 
inception of the transaction with the counterparty.
    (3) Credit derivatives. Notwithstanding paragraphs (c)(1) and (c)(2) 
of this section:
    (i) An FDIC-supervised institution that purchases a credit 
derivative that is recognized under Sec.  324.134 or Sec.  324.135 as a 
credit risk mitigant for an exposure that is not a covered position 
under subpart F of this part is not required to calculate a separate 
counterparty credit risk capital requirement under this section so long 
as the FDIC-supervised institution does so consistently for all such 
credit derivatives and either includes or excludes all such credit 
derivatives that are subject to a master netting agreement from

[[Page 313]]

any measure used to determine counterparty credit risk exposure to all 
relevant counterparties for risk-based capital purposes.
    (ii) An FDIC-supervised institution that is the protection provider 
in a credit derivative must treat the credit derivative as a wholesale 
exposure to the reference obligor and is not required to calculate a 
counterparty credit risk capital requirement for the credit derivative 
under this section, so long as it does so consistently for all such 
credit derivatives and either includes all or excludes all such credit 
derivatives that are subject to a master netting agreement from any 
measure used to determine counterparty credit risk exposure to all 
relevant counterparties for risk-based capital purposes (unless the 
FDIC-supervised institution is treating the credit derivative as a 
covered position under subpart F of this part, in which case the FDIC-
supervised institution must calculate a supplemental counterparty credit 
risk capital requirement under this section).
    (4) Equity derivatives. An FDIC-supervised institution must treat an 
equity derivative contract as an equity exposure and compute a risk-
weighted asset amount for the equity derivative contract under 
Sec. Sec.  324.151-324.155 (unless the FDIC-supervised institution is 
treating the contract as a covered position under subpart F of this 
part). In addition, if the FDIC-supervised institution is treating the 
contract as a covered position under subpart F of this part, and under 
certain other circumstances described in Sec.  324.155, the FDIC-
supervised institution must also calculate a risk-based capital 
requirement for the counterparty credit risk of an equity derivative 
contract under this section.
    (5) Single OTC derivative contract. Except as modified by paragraph 
(c)(7) of this section, the EAD for a single OTC derivative contract 
that is not subject to a qualifying master netting agreement is equal to 
the sum of the FDIC-supervised institution's current credit exposure and 
potential future credit exposure (PFE) on the derivative contract.
    (i) Current credit exposure. The current credit exposure for a 
single OTC derivative contract is the greater of the mark-to-fair value 
of the derivative contract or zero; and
    (ii) PFE. The PFE for a single OTC derivative contract, including an 
OTC derivative contract with a negative mark-to-fair value, is 
calculated by multiplying the notional principal amount of the 
derivative contract by the appropriate conversion factor in Table 2 to 
Sec.  324.132. For purposes of calculating either the PFE under 
paragraph (c)(5) of this section or the gross PFE under paragraph (c)(6) 
of this section for exchange rate contracts and other similar contracts 
in which the notional principal amount is equivalent to the cash flows, 
the notional principal amount is the net receipts to each party falling 
due on each value date in each currency. For any OTC derivative contract 
that does not fall within one of the specified categories in Table 2 to 
Sec.  324.132, the PFE must be calculated using the ``other'' conversion 
factors. An FDIC-supervised institution must use an OTC derivative 
contract's effective notional principal amount (that is, its apparent or 
stated notional principal amount multiplied by any multiplier in the OTC 
derivative contract) rather than its apparent or stated notional 
principal amount in calculating PFE. PFE of the protection provider of a 
credit derivative is capped at the net present value of the amount of 
unpaid premiums.

                                  Table 2 to Sec.   324.132--Conversion Factor Matrix for OTC Derivative Contracts \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Credit       Credit (non-
                                                                        Foreign      (investment-     investment-                 Precious
                 Remaining maturity \2\                    Interest  exchange rate       grade           grade        Equity   metals (except    Other
                                                             rate       and gold       reference       reference                    gold)
                                                                                      asset) \3\        asset)
--------------------------------------------------------------------------------------------------------------------------------------------------------
One year or less........................................      0.00           0.01             0.05            0.10       0.06            0.07       0.10
Over one to five years..................................      0.005          0.05             0.05            0.10       0.08            0.07       0.12
Over five years.........................................      0.015          0.075            0.05            0.10       0.10            0.08       0.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For an OTC derivative contract with multiple exchanges of principal, the conversion factor is multiplied by the number of remaining payments in the
  derivative contract.

[[Page 314]]

 
\2\ For an OTC derivative contract that is structured such that on specified dates any outstanding exposure is settled and the terms are reset so that
  the fair value of the contract is zero, the remaining maturity equals the time until the next reset date. For an interest rate derivative contract
  with a remaining maturity of greater than one year that meets these criteria, the minimum conversion factor is 0.005.
\3\ An FDIC-supervised institution must use the column labeled ``Credit (investment-grade reference asset)'' for a credit derivative whose reference
  asset is an outstanding unsecured long-term debt security without credit enhancement that is investment grade. An FDIC-supervised institution must use
  the column labeled ``Credit (non-investment-grade reference asset)'' for all other credit derivatives.

    (6) Multiple OTC derivative contracts subject to a qualifying master 
netting agreement. Except as modified by paragraph (c)(7) of this 
section, the EAD for multiple OTC derivative contracts subject to a 
qualifying master netting agreement is equal to the sum of the net 
current credit exposure and the adjusted sum of the PFE exposure for all 
OTC derivative contracts subject to the qualifying master netting 
agreement.
    (i) Net current credit exposure. The net current credit exposure is 
the greater of:
    (A) The net sum of all positive and negative fair values of the 
individual OTC derivative contracts subject to the qualifying master 
netting agreement; or
    (B) Zero; and
    (ii) Adjusted sum of the PFE. The adjusted sum of the PFE, 
Anet, is calculated as Anet = (0.4 x 
Agross) + (0.6 x NGR x Agross), where:
    (A) Agross equals the gross PFE (that is, the sum of the 
PFE amounts (as determined under paragraph (c)(5)(ii) of this section) 
for each individual derivative contract subject to the qualifying master 
netting agreement); and
    (B) NGR equals the net to gross ratio (that is, the ratio of the net 
current credit exposure to the gross current credit exposure). In 
calculating the NGR, the gross current credit exposure equals the sum of 
the positive current credit exposures (as determined under paragraph 
(c)(6)(i) of this section) of all individual derivative contracts 
subject to the qualifying master netting agreement.
    (7) Collateralized OTC derivative contracts. An FDIC-supervised 
institution may recognize the credit risk mitigation benefits of 
financial collateral that secures an OTC derivative contract or single-
product netting set of OTC derivatives by factoring the collateral into 
its LGD estimates for the contract or netting set. Alternatively, an 
FDIC-supervised institution may recognize the credit risk mitigation 
benefits of financial collateral that secures such a contract or netting 
set that is marked-to-market on a daily basis and subject to a daily 
margin maintenance requirement by estimating an unsecured LGD for the 
contract or netting set and adjusting the EAD calculated under paragraph 
(c)(5) or (c)(6) of this section using the collateral haircut approach 
in paragraph (b)(2) of this section. The FDIC-supervised institution 
must substitute the EAD calculated under paragraph (c)(5) or (c)(6) of 
this section for [Sigma]E in the equation in paragraph (b)(2)(i) of this 
section and must use a ten-business day minimum holding period 
(TM = 10) unless a longer holding period is required by 
paragraph (b)(2)(iii)(A)(3) of this section.
    (8) Clearing member FDIC-supervised institution's EAD. A clearing 
member FDIC-supervised institution's EAD for an OTC derivative contract 
or netting set of OTC derivative contracts where the FDIC-supervised 
institution is either acting as a financial intermediary and enters into 
an offsetting transaction with a QCCP or where the FDIC-supervised 
institution provides a guarantee to the QCCP on the performance of the 
client equals the exposure amount calculated according to paragraph 
(c)(5) or (6) of this section multiplied by the scaling factor 0.71. If 
the FDIC-supervised institution determines that a longer period is 
appropriate, it must use a larger scaling factor to adjust for a longer 
holding period as follows:

[[Page 315]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.028


where H equals the holding period greater than five days. Additionally, 
the FDIC may require the FDIC-supervised institution to set a longer 
holding period if the FDIC determines that a longer period is 
appropriate due to the nature, structure, or characteristics of the 
transaction or is commensurate with the risks associated with the 
transaction.
    (d) Internal models methodology. (1)(i) With prior written approval 
from the FDIC, an FDIC-supervised institution may use the internal 
models methodology in this paragraph (d) to determine EAD for 
counterparty credit risk for derivative contracts (collateralized or 
uncollateralized) and single-product netting sets thereof, for eligible 
margin loans and single-product netting sets thereof, and for repo-style 
transactions and single-product netting sets thereof.
    (ii) An FDIC-supervised institution that uses the internal models 
methodology for a particular transaction type (derivative contracts, 
eligible margin loans, or repo-style transactions) must use the internal 
models methodology for all transactions of that transaction type. An 
FDIC-supervised institution may choose to use the internal models 
methodology for one or two of these three types of exposures and not the 
other types.
    (iii) An FDIC-supervised institution may also use the internal 
models methodology for derivative contracts, eligible margin loans, and 
repo-style transactions subject to a qualifying cross-product netting 
agreement if:
    (A) The FDIC-supervised institution effectively integrates the risk 
mitigating effects of cross-product netting into its risk management and 
other information technology systems; and
    (B) The FDIC-supervised institution obtains the prior written 
approval of the FDIC.
    (iv) An FDIC-supervised institution that uses the internal models 
methodology for a transaction type must receive approval from the FDIC 
to cease using the methodology for that transaction type or to make a 
material change to its internal model.
    (2) Risk-weighted assets using IMM. Under the IMM, an FDIC-
supervised institution uses an internal model to estimate the expected 
exposure (EE) for a netting set and then calculates EAD based on that 
EE. An FDIC-supervised institution must calculate two EEs and two EADs 
(one stressed and one unstressed) for each netting set as follows:
    (i) EADunstressed is calculated using an EE estimate 
based on the most recent data meeting the requirements of paragraph 
(d)(3)(vii) of this section;
    (ii) EADstressed is calculated using an EE estimate based 
on a historical period that includes a period of stress to the credit 
default spreads of the FDIC-supervised institution's counterparties 
according to paragraph (d)(3)(viii) of this section;
    (iii) The FDIC-supervised institution must use its internal model's 
probability distribution for changes in the fair value of a netting set 
that are attributable to changes in market variables to determine EE; 
and
    (iv) Under the internal models methodology, EAD = Max (0, [alpha] x 
effective EPE-CVA), or, subject to the prior written approval of FDIC as 
provided in paragraph (d)(10) of this section, a more conservative 
measure of EAD.
    (A) CVA equals the credit valuation adjustment that the FDIC-
supervised institution has recognized in its balance sheet valuation of 
any OTC derivative contracts in the netting set. For purposes of this 
paragraph (d), CVA does not include any adjustments to common equity 
tier 1 capital attributable to changes in the fair value of the FDIC-
supervised institution's liabilities that are due to changes in its own 
credit risk since the inception of the transaction with the 
counterparty.

[[Page 316]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.029


(that is, effective EPE is the time-weighted average of effective EE 
where the weights are the proportion that an individual effective EE 
represents in a one-year time interval) where:
    (1) EffectiveEEtk = max(Effective EEtk-1, EEtk) (that is, for a 
specific date tk, effective EE is the greater of EE at that 
date or the effective EE at the previous date); and
    (2) tk represents the k\th\ future time period in the 
model and there are n time periods represented in the model over the 
first year, and
    (C) [alpha] = 1.4 except as provided in paragraph (d)(6) of this 
section, or when the FDIC has determined that the FDIC-supervised 
institution must set [alpha] higher based on the FDIC-supervised 
institution's specific characteristics of counterparty credit risk or 
model performance.
    (v) An FDIC-supervised institution may include financial collateral 
currently posted by the counterparty as collateral (but may not include 
other forms of collateral) when calculating EE.
    (vi) If an FDIC-supervised institution hedges some or all of the 
counterparty credit risk associated with a netting set using an eligible 
credit derivative, the FDIC-supervised institution may take the 
reduction in exposure to the counterparty into account when estimating 
EE. If the FDIC-supervised institution recognizes this reduction in 
exposure to the counterparty in its estimate of EE, it must also use its 
internal model to estimate a separate EAD for the FDIC-supervised 
institution's exposure to the protection provider of the credit 
derivative.
    (3) Prior approval relating to EAD calculation. To obtain FDIC 
approval to calculate the distributions of exposures upon which the EAD 
calculation is based, the FDIC-supervised institution must demonstrate 
to the satisfaction of the FDIC that it has been using for at least one 
year an internal model that broadly meets the following minimum 
standards, with which the FDIC-supervised institution must maintain 
compliance:
    (i) The model must have the systems capability to estimate the 
expected exposure to the counterparty on a daily basis (but is not 
expected to estimate or report expected exposure on a daily basis);
    (ii) The model must estimate expected exposure at enough future 
dates to reflect accurately all the future cash flows of contracts in 
the netting set;
    (iii) The model must account for the possible non-normality of the 
exposure distribution, where appropriate;
    (iv) The FDIC-supervised institution must measure, monitor, and 
control current counterparty exposure and the exposure to the 
counterparty over the whole life of all contracts in the netting set;
    (v) The FDIC-supervised institution must be able to measure and 
manage current exposures gross and net of collateral held, where 
appropriate. The FDIC-supervised institution must estimate expected 
exposures for OTC derivative contracts both with and without the effect 
of collateral agreements;
    (vi) The FDIC-supervised institution must have procedures to 
identify, monitor, and control wrong-way risk throughout the life of an 
exposure. The procedures must include stress testing and scenario 
analysis;
    (vii) The model must use current market data to compute current 
exposures. The FDIC-supervised institution must estimate model 
parameters using historical data from the most recent three-year period 
and update the data quarterly or more frequently if market conditions 
warrant. The FDIC-supervised institution should consider using model 
parameters based on forward-looking measures, where appropriate;
    (viii) When estimating model parameters based on a stress period, 
the FDIC-supervised institution must use at least three years of 
historical data that include a period of stress to the credit default 
spreads of the FDIC-supervised institution's counterparties.

[[Page 317]]

The FDIC-supervised institution must review the data set and update the 
data as necessary, particularly for any material changes in its 
counterparties. The FDIC-supervised institution must demonstrate, at 
least quarterly, and maintain documentation of such demonstration, that 
the stress period coincides with increased CDS or other credit spreads 
of the FDIC-supervised institution's counterparties. The FDIC-supervised 
institution must have procedures to evaluate the effectiveness of its 
stress calibration that include a process for using benchmark portfolios 
that are vulnerable to the same risk factors as the FDIC-supervised 
institution's portfolio. The FDIC may require the FDIC-supervised 
institution to modify its stress calibration to better reflect actual 
historic losses of the portfolio;
    (ix) An FDIC-supervised institution must subject its internal model 
to an initial validation and annual model review process. The model 
review should consider whether the inputs and risk factors, as well as 
the model outputs, are appropriate. As part of the model review process, 
the FDIC-supervised institution must have a backtesting program for its 
model that includes a process by which unacceptable model performance 
will be determined and remedied;
    (x) An FDIC-supervised institution must have policies for the 
measurement, management and control of collateral and margin amounts; 
and
    (xi) An FDIC-supervised institution must have a comprehensive stress 
testing program that captures all credit exposures to counterparties, 
and incorporates stress testing of principal market risk factors and 
creditworthiness of counterparties.
    (4) Calculating the maturity of exposures. (i) If the remaining 
maturity of the exposure or the longest-dated contract in the netting 
set is greater than one year, the FDIC-supervised institution must set M 
for the exposure or netting set equal to the lower of five years or 
M(EPE), where:
[GRAPHIC] [TIFF OMITTED] TR10SE13.030

    (ii) If the remaining maturity of the exposure or the longest-dated 
contract in the netting set is one year or less, the FDIC-supervised 
institution must set M for the exposure or netting set equal to one 
year, except as provided in Sec.  324.131(d)(7).
    (iii) Alternatively, an FDIC-supervised institution that uses an 
internal model to calculate a one-sided credit valuation adjustment may 
use the effective credit duration estimated by the model as M(EPE) in 
place of the formula in paragraph (d)(4)(i) of this section.
    (5) Effects of collateral agreements on EAD. An FDIC-supervised 
institution may capture the effect on EAD of a collateral agreement that 
requires receipt of collateral when exposure to the counterparty 
increases, but may not capture the effect on EAD of a collateral 
agreement that requires receipt of collateral when counterparty credit 
quality deteriorates. Two methods are

[[Page 318]]

available to capture the effect of a collateral agreement, as set forth 
in paragraphs (d)(5)(i) and (ii) of this section:
    (i) With prior written approval from the FDIC, an FDIC-supervised 
institution may include the effect of a collateral agreement within its 
internal model used to calculate EAD. The FDIC-supervised institution 
may set EAD equal to the expected exposure at the end of the margin 
period of risk. The margin period of risk means, with respect to a 
netting set subject to a collateral agreement, the time period from the 
most recent exchange of collateral with a counterparty until the next 
required exchange of collateral, plus the period of time required to 
sell and realize the proceeds of the least liquid collateral that can be 
delivered under the terms of the collateral agreement and, where 
applicable, the period of time required to re-hedge the resulting market 
risk upon the default of the counterparty. The minimum margin period of 
risk is set according to paragraph (d)(5)(iii) of this section; or
    (ii) As an alternative to paragraph (d)(5)(i) of this section, an 
FDIC-supervised institution that can model EPE without collateral 
agreements but cannot achieve the higher level of modeling 
sophistication to model EPE with collateral agreements can set effective 
EPE for a collateralized netting set equal to the lesser of:
    (A) An add-on that reflects the potential increase in exposure of 
the netting set over the margin period of risk, plus the larger of:
    (1) The current exposure of the netting set reflecting all 
collateral held or posted by the FDIC-supervised institution excluding 
any collateral called or in dispute; or
    (2) The largest net exposure including all collateral held or posted 
under the margin agreement that would not trigger a collateral call. For 
purposes of this section, the add-on is computed as the expected 
increase in the netting set's exposure over the margin period of risk 
(set in accordance with paragraph (d)(5)(iii) of this section); or
    (B) Effective EPE without a collateral agreement plus any collateral 
the FDIC-supervised institution posts to the counterparty that exceeds 
the required margin amount.
    (iii) For purposes of this part, including paragraphs (d)(5)(i) and 
(ii) of this section, the margin period of risk for a netting set 
subject to a collateral agreement is:
    (A) Five business days for repo-style transactions subject to daily 
remargining and daily marking-to-market, and ten business days for other 
transactions when liquid financial collateral is posted under a daily 
margin maintenance requirement, or
    (B) Twenty business days if the number of trades in a netting set 
exceeds 5,000 at any time during the previous quarter (except if the 
FDIC-supervised institution is calculating EAD for a cleared transaction 
under Sec.  324.133) or contains one or more trades involving illiquid 
collateral or any derivative contract that cannot be easily replaced. If 
over the two previous quarters more than two margin disputes on a 
netting set have occurred that lasted more than the margin period of 
risk, then the FDIC-supervised institution must use a margin period of 
risk for that netting set that is at least two times the minimum margin 
period of risk for that netting set. If the periodicity of the receipt 
of collateral is N-days, the minimum margin period of risk is the 
minimum margin period of risk under this paragraph (d) plus N minus 1. 
This period should be extended to cover any impediments to prompt re-
hedging of any market risk.
    (C) Five business days for an OTC derivative contract or netting set 
of OTC derivative contracts where the FDIC-supervised institution is 
either acting as a financial intermediary and enters into an offsetting 
transaction with a CCP or where the FDIC-supervised institution provides 
a guarantee to the CCP on the performance of the client. An FDIC-
supervised institution must use a longer holding period if the FDIC-
supervised institution determines that a longer period is appropriate. 
Additionally, the FDIC may require the FDIC-supervised institution to 
set a longer holding period if the FDIC determines that a longer period 
is appropriate due to the nature, structure, or characteristics of the 
transaction or is commensurate with the risks associated with the 
transaction.

[[Page 319]]

    (6) Own estimate of alpha. With prior written approval of the FDIC, 
an FDIC-supervised institution may calculate alpha as the ratio of 
economic capital from a full simulation of counterparty exposure across 
counterparties that incorporates a joint simulation of market and credit 
risk factors (numerator) and economic capital based on EPE 
(denominator), subject to a floor of 1.2. For purposes of this 
calculation, economic capital is the unexpected losses for all 
counterparty credit risks measured at a 99.9 percent confidence level 
over a one-year horizon. To receive approval, the FDIC-supervised 
institution must meet the following minimum standards to the 
satisfaction of the FDIC:
    (i) The FDIC-supervised institution's own estimate of alpha must 
capture in the numerator the effects of:
    (A) The material sources of stochastic dependency of distributions 
of fair values of transactions or portfolios of transactions across 
counterparties;
    (B) Volatilities and correlations of market risk factors used in the 
joint simulation, which must be related to the credit risk factor used 
in the simulation to reflect potential increases in volatility or 
correlation in an economic downturn, where appropriate; and
    (C) The granularity of exposures (that is, the effect of a 
concentration in the proportion of each counterparty's exposure that is 
driven by a particular risk factor).
    (ii) The FDIC-supervised institution must assess the potential model 
uncertainty in its estimates of alpha.
    (iii) The FDIC-supervised institution must calculate the numerator 
and denominator of alpha in a consistent fashion with respect to 
modeling methodology, parameter specifications, and portfolio 
composition.
    (iv) The FDIC-supervised institution must review and adjust as 
appropriate its estimates of the numerator and denominator of alpha on 
at least a quarterly basis and more frequently when the composition of 
the portfolio varies over time.
    (7) Risk-based capital requirements for transactions with specific 
wrong-way risk. An FDIC-supervised institution must determine if a repo-
style transaction, eligible margin loan, bond option, or equity 
derivative contract or purchased credit derivative to which the FDIC-
supervised institution applies the internal models methodology under 
this paragraph (d) has specific wrong-way risk. If a transaction has 
specific wrong-way risk, the FDIC-supervised institution must treat the 
transaction as its own netting set and exclude it from the model 
described in paragraph (d)(2) of this section and instead calculate the 
risk-based capital requirement for the transaction as follows:
    (i) For an equity derivative contract, by multiplying:
    (A) K, calculated using the appropriate risk-based capital formula 
specified in Table 1 of Sec.  324.131 using the PD of the counterparty 
and LGD equal to 100 percent, by
    (B) The maximum amount the FDIC-supervised institution could lose on 
the equity derivative.
    (ii) For a purchased credit derivative by multiplying:
    (A) K, calculated using the appropriate risk-based capital formula 
specified in Table 1 of Sec.  324.131 using the PD of the counterparty 
and LGD equal to 100 percent, by
    (B) The fair value of the reference asset of the credit derivative.
    (iii) For a bond option, by multiplying:
    (A) K, calculated using the appropriate risk-based capital formula 
specified in Table 1 of Sec.  324.131 using the PD of the counterparty 
and LGD equal to 100 percent, by
    (B) The smaller of the notional amount of the underlying reference 
asset and the maximum potential loss under the bond option contract.
    (iv) For a repo-style transaction or eligible margin loan by 
multiplying:
    (A) K, calculated using the appropriate risk-based capital formula 
specified in Table 1 of Sec.  324.131 using the PD of the counterparty 
and LGD equal to 100 percent, by
    (B) The EAD of the transaction determined according to the EAD 
equation in Sec.  324.132(b)(2), substituting the estimated value of the 
collateral assuming a default of the counterparty for the value of the 
collateral in [Sigma]C of the equation.

[[Page 320]]

    (8) Risk-weighted asset amount for IMM exposures with specific 
wrong-way risk. The aggregate risk-weighted asset amount for IMM 
exposures with specific wrong-way risk is the sum of an FDIC-supervised 
institution's risk-based capital requirement for purchased credit 
derivatives that are not bond options with specific wrong-way risk as 
calculated under paragraph (d)(7)(ii) of this section, an FDIC-
supervised institution's risk-based capital requirement for equity 
derivatives with specific wrong-way risk as calculated under paragraph 
(d)(7)(i) of this section, an FDIC-supervised institution's risk-based 
capital requirement for bond options with specific wrong-way risk as 
calculated under paragraph (d)(7)(iii) of this section, and an FDIC-
supervised institution's risk-based capital requirement for repo-style 
transactions and eligible margin loans with specific wrong-way risk as 
calculated under paragraph (d)(7)(iv) of this section, multiplied by 
12.5.
    (9) Risk-weighted assets for IMM exposures. (i) The FDIC-supervised 
institution must insert the assigned risk parameters for each 
counterparty and netting set into the appropriate formula specified in 
Table 1 of Sec.  324.131 and multiply the output of the formula by the 
EADunstressed of the netting set to obtain the unstressed 
capital requirement for each netting set. An FDIC-supervised institution 
that uses an advanced CVA approach that captures migrations in credit 
spreads under paragraph (e)(3) of this section must set the maturity 
adjustment (b) in the formula equal to zero. The sum of the unstressed 
capital requirement calculated for each netting set equals 
Kunstressed.
    (ii) The FDIC-supervised institution must insert the assigned risk 
parameters for each wholesale obligor and netting set into the 
appropriate formula specified in Table 1 of Sec.  324.131 and multiply 
the output of the formula by the EADstressed of the netting 
set to obtain the stressed capital requirement for each netting set. An 
FDIC-supervised institution that uses an advanced CVA approach that 
captures migrations in credit spreads under paragraph (e)(6) of this 
section must set the maturity adjustment (b) in the formula equal to 
zero. The sum of the stressed capital requirement calculated for each 
netting set equals Kstressed.
    (iii) The FDIC-supervised institution's dollar risk-based capital 
requirement under the internal models methodology equals the larger of 
Kunstressed and Kstressed. An FDIC-supervised 
institution's risk-weighted assets amount for IMM exposures is equal to 
the capital requirement multiplied by 12.5, plus risk-weighted assets 
for IMM exposures with specific wrong-way risk in paragraph (d)(8) of 
this section and those in paragraph (d)(10) of this section.
    (10) Other measures of counterparty exposure. (i) With prior written 
approval of the FDIC, an FDIC-supervised institution may set EAD equal 
to a measure of counterparty credit risk exposure, such as peak EAD, 
that is more conservative than an alpha of 1.4 (or higher under the 
terms of paragraph (d)(7)(iv)(C) of this section) times the larger of 
EPEunstressed and EPEstressed for every 
counterparty whose EAD will be measured under the alternative measure of 
counterparty exposure. The FDIC-supervised institution must demonstrate 
the conservatism of the measure of counterparty credit risk exposure 
used for EAD. With respect to paragraph (d)(10)(i) of this section:
    (A) For material portfolios of new OTC derivative products, the 
FDIC-supervised institution may assume that the current exposure 
methodology in paragraphs (c)(5) and (c)(6) of this section meets the 
conservatism requirement of this section for a period not to exceed 180 
days.
    (B) For immaterial portfolios of OTC derivative contracts, the FDIC-
supervised institution generally may assume that the current exposure 
methodology in paragraphs (c)(5) and (c)(6) of this section meets the 
conservatism requirement of this section.
    (ii) To calculate risk-weighted assets for purposes of the approach 
in paragraph (d)(10)(i) of this section, the FDIC-supervised institution 
must insert the assigned risk parameters for each counterparty and 
netting set into the appropriate formula specified in Table 1 of Sec.  
324.131, multiply the output

[[Page 321]]

of the formula by the EAD for the exposure as specified above, and 
multiply by 12.5.
    (e) Credit valuation adjustment (CVA) risk-weighted assets. (1) In 
general. With respect to its OTC derivative contracts, an FDIC-
supervised institution must calculate a CVA risk-weighted asset amount 
for its portfolio of OTC derivative transactions that are subject to the 
CVA capital requirement using the simple CVA approach described in 
paragraph (e)(5) of this section or, with prior written approval of the 
FDIC, the advanced CVA approach described in paragraph (e)(6) of this 
section. An FDIC-supervised institution that receives prior FDIC 
approval to calculate its CVA risk-weighted asset amounts for a class of 
counterparties using the advanced CVA approach must continue to use that 
approach for that class of counterparties until it notifies the FDIC in 
writing that the FDIC-supervised institution expects to begin 
calculating its CVA risk-weighted asset amount using the simple CVA 
approach. Such notice must include an explanation of the FDIC-supervised 
institution's rationale and the date upon which the FDIC-supervised 
institution will begin to calculate its CVA risk-weighted asset amount 
using the simple CVA approach.
    (2) Market risk FDIC-supervised institutions. Notwithstanding the 
prior approval requirement in paragraph (e)(1) of this section, a market 
risk FDIC-supervised institution may calculate its CVA risk-weighted 
asset amount using the advanced CVA approach if the FDIC-supervised 
institution has FDIC approval to:
    (i) Determine EAD for OTC derivative contracts using the internal 
models methodology described in paragraph (d) of this section; and
    (ii) Determine its specific risk add-on for debt positions issued by 
the counterparty using a specific risk model described in Sec.  
324.207(b).
    (3) Recognition of hedges. (i) An FDIC-supervised institution may 
recognize a single name CDS, single name contingent CDS, any other 
equivalent hedging instrument that references the counterparty directly, 
and index credit default swaps (CDSind) as a CVA hedge under 
paragraph (e)(5)(ii) of this section or paragraph (e)(6) of this 
section, provided that the position is managed as a CVA hedge in 
accordance with the FDIC-supervised institution's hedging policies.
    (ii) An FDIC-supervised institution shall not recognize as a CVA 
hedge any tranched or n\th\-to-default credit derivative.
    (4) Total CVA risk-weighted assets. Total CVA risk-weighted assets 
is the CVA capital requirement, KCVA, calculated for an FDIC-
supervised institution's entire portfolio of OTC derivative 
counterparties that are subject to the CVA capital requirement, 
multiplied by 12.5.
    (5) Simple CVA approach. (i) Under the simple CVA approach, the CVA 
capital requirement, KCVA, is calculated according to the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.031

    (A) wi equals the weight applicable to counterparty i under Table 3 
to Sec.  324.132;
    (B) Mi equals the EAD-weighted average of the effective maturity of 
each netting set with counterparty i (where each netting set's effective 
maturity can be no less than one year.)

[[Page 322]]

    (C) EADi total equals the sum of the EAD for all netting sets of OTC 
derivative contracts with counterparty i calculated using the current 
exposure methodology described in paragraph (c) of this section or the 
internal models methodology described in paragraph (d) of this section. 
When the FDIC-supervised institution calculates EAD under paragraph (c) 
of this section, such EAD may be adjusted for purposes of calculating 
EADi total by multiplying EAD by (1-exp(-0.05 x Mi))/(0.05 x Mi), where 
``exp'' is the exponential function. When the FDIC-supervised 
institution calculates EAD under paragraph (d) of this section, EADi 
total equals EADunstressed.
    (D) M i hedge equals the notional weighted average maturity of the 
hedge instrument.
    (E) Bi equals the sum of the notional amounts of any purchased 
single name CDS referencing counterparty i that is used to hedge CVA 
risk to counterparty i multiplied by (1-exp(-0.05 x Mi hedge))/(0.05 x 
Mi hedge).
    (F) Mind equals the maturity of the CDSind or the notional weighted 
average maturity of any CDSind purchased to hedge CVA risk of 
counterparty i.
    (G) Bind equals the notional amount of one or more CDSind 
purchased to hedge CVA risk for counterparty i multiplied by (1-exp(-
0.05 x Mind))/(0.05 x Mind)
    (H) wind equals the weight applicable to the CDSind based 
on the average weight of the underlying reference names that comprise 
the index under Table 3 to Sec.  324.132.
    (ii) The FDIC-supervised institution may treat the notional amount 
of the index attributable to a counterparty as a single name hedge of 
counterparty i (Bi,) when calculating KCVA, and subtract the 
notional amount of Bi from the notional amount of the CDSind. 
An FDIC-supervised institution must treat the CDSind hedge 
with the notional amount reduced by Bi as a CVA hedge.

      Table 3 to Sec.   324.132--Assignment of Counterparty Weight
------------------------------------------------------------------------
                                                          Weight wi (in
                Internal PD (in percent)                     percent)
------------------------------------------------------------------------
0.00-0.07..............................................             0.70
0.070-0.15..................................             0.80
0.15-0.40...................................             1.00
0.40-2.00...................................             2.00
2.00-6.00...................................             3.00
6.00........................................            10.00
------------------------------------------------------------------------

    (6) Advanced CVA approach. (i) An FDIC-supervised institution may 
use the VaR model that it uses to determine specific risk under Sec.  
324.207(b) or another VaR model that meets the quantitative requirements 
of Sec.  324.205(b) and Sec.  324.207(b)(1) to calculate its CVA capital 
requirement for a counterparty by modeling the impact of changes in the 
counterparties' credit spreads, together with any recognized CVA hedges, 
on the CVA for the counterparties, subject to the following 
requirements:
    (A) The VaR model must incorporate only changes in the 
counterparties' credit spreads, not changes in other risk factors. The 
VaR model does not need to capture jump-to-default risk;
    (B) An FDIC-supervised institution that qualifies to use the 
advanced CVA approach must include in that approach any immaterial OTC 
derivative portfolios for which it uses the current exposure methodology 
in paragraph (c) of this section according to paragraph (e)(6)(viii) of 
this section; and
    (C) An FDIC-supervised institution must have the systems capability 
to calculate the CVA capital requirement for a counterparty on a daily 
basis (but is not required to calculate the CVA capital requirement on a 
daily basis).
    (ii) Under the advanced CVA approach, the CVA capital requirement, 
KCVA, is calculated according to the following formulas:

[[Page 323]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.032

Where

(A) ti equals the time of the i-th revaluation time bucket starting from 
          t0 = 0.
(B) tT equals the longest contractual maturity across the OTC derivative 
          contracts with the counterparty.
(C) si equals the CDS spread for the counterparty at tenor ti used to 
          calculate the CVA for the counterparty. If a CDS spread is not 
          available, the FDIC-supervised institution must use a proxy 
          spread based on the credit quality, industry and region of the 
          counterparty.
(D) LGDMKT equals the loss given default of the counterparty based on 
          the spread of a publicly traded debt instrument of the 
          counterparty, or, where a publicly traded debt instrument 
          spread is not available, a proxy spread based on the credit 
          quality, industry, and region of the counterparty. Where no 
          market information and no reliable proxy based on the credit 
          quality, industry, and region of the counterparty are 
          available to determine LGDMKT, an FDIC-supervised 
          institution may use a conservative estimate when determining 
          LGDMKT, subject to approval by the FDIC.
(E) EEi equals the sum of the expected exposures for all netting sets 
          with the counterparty at revaluation time ti, calculated 
          according to paragraphs (e)(6)(iv)(A) and (e)(6)(v)(A) of this 
          section.
(F) Di equals the risk-free discount factor at time ti, where D0 = 1.
(G) Exp is the exponential function.
(H) The subscript j refers either to a stressed or an unstressed 
          calibration as described in paragraphs (e)(6)(iv) and (v) of 
          this section.

    (iii) Notwithstanding paragraphs (e)(6)(i) and (e)(6)(ii) of this 
section, an FDIC-supervised institution must use the formulas in 
paragraphs (e)(6)(iii)(A) or (e)(6)(iii)(B) of this section to calculate 
credit spread sensitivities if its VaR model is not based on full 
repricing.
    (A) If the VaR model is based on credit spread sensitivities for 
specific tenors, the FDIC-supervised institution must calculate each 
credit spread sensitivity according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR10SE13.033

    (B) If the VaR model uses credit spread sensitivities to parallel 
shifts in credit spreads, the FDIC-supervised institution must calculate 
each credit spread sensitivity according to the following formula:

[[Page 324]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.034

    (iv) To calculate the CVAUnstressed measure for purposes of 
paragraph (e)(6)(ii) of this section, the FDIC-supervised institution 
must:
    (A) Use the EEi calculated using the calibration of paragraph 
(d)(3)(vii) of this section, except as provided in Sec.  324.132 
(e)(6)(vi), and
    (B) Use the historical observation period required under Sec.  
324.205(b)(2).
    (v) To calculate the CVAStressed measure for purposes of paragraph 
(e)(6)(ii) of this section, the FDIC-supervised institution must:
    (A) Use the EEi calculated using the stress calibration in paragraph 
(d)(3)(viii) of this section except as provided in paragraph (e)(6)(vi) 
of this section.
    (B) Calibrate VaR model inputs to historical data from the most 
severe twelve-month stress period contained within the three-year stress 
period used to calculate EEi. The FDIC may require an FDIC-supervised 
institution to use a different period of significant financial stress in 
the calculation of the CVAStressed measure.
    (vi) If an FDIC-supervised institution captures the effect of a 
collateral agreement on EAD using the method described in paragraph 
(d)(5)(ii) of this section, for purposes of paragraph (e)(6)(ii) of this 
section, the FDIC-supervised institution must calculate EEi using the 
method in paragraph (d)(5)(ii) of this section and keep that EE constant 
with the maturity equal to the maximum of:
    (A) Half of the longest maturity of a transaction in the netting 
set, and
    (B) The notional weighted average maturity of all transactions in 
the netting set.
    (vii) For purposes of paragraph (e)(6) of this section, the FDIC-
supervised institution's VaR model must capture the basis between the 
spreads of any CDSind that is used as the hedging instrument 
and the hedged counterparty exposure over various time periods, 
including benign and stressed environments. If the VaR model does not 
capture that basis, the FDIC-supervised institution must reflect only 50 
percent of the notional amount of the CDSind hedge in the VaR 
model.
    (viii) If an FDIC-supervised institution uses the current exposure 
methodology described in paragraphs (c)(5) and (c)(6) of this section to 
calculate the EAD for any immaterial portfolios of OTC derivative 
contracts, the FDIC-supervised institution must use that EAD as a 
constant EE in the formula for the calculation of CVA with the maturity 
equal to the maximum of:
    (A) Half of the longest maturity of a transaction in the netting 
set, and
    (B) The notional weighted average maturity of all transactions in 
the netting set.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014; 
80 FR 41424, July 15, 2015]



Sec.  324.133  Cleared transactions.

    (a) General requirements. (1) An FDIC-supervised institution that is 
a clearing member client must use the methodologies described in 
paragraph (b) of this section to calculate risk-weighted assets for a 
cleared transaction.
    (2) An FDIC-supervised institution that is a clearing member must 
use the methodologies described in paragraph (c) of this section to 
calculate its risk-weighted assets for cleared transactions and 
paragraph (d) of this section to calculate its risk-weighted assets for 
its default fund contribution to a CCP.

[[Page 325]]

    (b) Clearing member client FDIC-supervised institutions--(1) Risk-
weighted assets for cleared transactions. (i) To determine the risk-
weighted asset amount for a cleared transaction, an FDIC-supervised 
institution that is a clearing member client must multiply the trade 
exposure amount for the cleared transaction, calculated in accordance 
with paragraph (b)(2) of this section, by the risk weight appropriate 
for the cleared transaction, determined in accordance with paragraph 
(b)(3) of this section.
    (ii) A clearing member client FDIC-supervised institution's total 
risk-weighted assets for cleared transactions is the sum of the risk-
weighted asset amounts for all of its cleared transactions.
    (2) Trade exposure amount. (i) For a cleared transaction that is a 
derivative contract or a netting set of derivative contracts, trade 
exposure amount equals the EAD for the derivative contract or netting 
set of derivative contracts calculated using the methodology used to 
calculate EAD for OTC derivative contracts set forth in Sec.  324.132(c) 
or (d), plus the fair value of the collateral posted by the clearing 
member client FDIC-supervised institution and held by the CCP or a 
clearing member in a manner that is not bankruptcy remote. When the 
FDIC-supervised institution calculates EAD for the cleared transaction 
using the methodology in Sec.  324.132(d), EAD equals 
EADunstressed.
    (ii) For a cleared transaction that is a repo-style transaction or 
netting set of repo-style transactions, trade exposure amount equals the 
EAD for the repo-style transaction calculated using the methodology set 
forth in Sec.  324.132(b)(2), (b)(3), or (d), plus the fair value of the 
collateral posted by the clearing member client FDIC-supervised 
institution and held by the CCP or a clearing member in a manner that is 
not bankruptcy remote. When the FDIC-supervised institution calculates 
EAD for the cleared transaction under Sec.  324.132(d), EAD equals 
EADunstressed.
    (3) Cleared transaction risk weights. (i) For a cleared transaction 
with a QCCP, a clearing member client FDIC-supervised institution must 
apply a risk weight of:
    (A) 2 percent if the collateral posted by the FDIC-supervised 
institution to the QCCP or clearing member is subject to an arrangement 
that prevents any loss to the clearing member client FDIC-supervised 
institution due to the joint default or a concurrent insolvency, 
liquidation, or receivership proceeding of the clearing member and any 
other clearing member clients of the clearing member; and the clearing 
member client FDIC-supervised institution has conducted sufficient legal 
review to conclude with a well-founded basis (and maintains sufficient 
written documentation of that legal review) that in the event of a legal 
challenge (including one resulting from an event of default or from 
liquidation, insolvency or receivership proceedings) the relevant court 
and administrative authorities would find the arrangements to be legal, 
valid, binding and enforceable under the law of the relevant 
jurisdictions.
    (B) 4 percent, if the requirements of paragraph (b)(3)(i)(A) of this 
section are not met.
    (ii) For a cleared transaction with a CCP that is not a QCCP, a 
clearing member client FDIC-supervised institution must apply the risk 
weight applicable to the CCP under Sec.  324.32.
    (4) Collateral. (i) Notwithstanding any other requirement of this 
section, collateral posted by a clearing member client FDIC-supervised 
institution that is held by a custodian (in its capacity as custodian) 
in a manner that is bankruptcy remote from the CCP, the custodian, 
clearing member, and other clearing member clients of the clearing 
member, is not subject to a capital requirement under this section.
    (ii) A clearing member client FDIC-supervised institution must 
calculate a risk-weighted asset amount for any collateral provided to a 
CCP, clearing member or a custodian in connection with a cleared 
transaction in accordance with requirements under subparts E or F of 
this part, as applicable.
    (c) Clearing member FDIC-supervised institution--(1) Risk-weighted 
assets for cleared transactions. (i) To determine the risk-weighted 
asset amount for a cleared transaction, a clearing member FDIC-
supervised institution must multiply the trade exposure amount for

[[Page 326]]

the cleared transaction, calculated in accordance with paragraph (c)(2) 
of this section by the risk weight appropriate for the cleared 
transaction, determined in accordance with paragraph (c)(3) of this 
section.
    (ii) A clearing member FDIC-supervised institution's total risk-
weighted assets for cleared transactions is the sum of the risk-weighted 
asset amounts for all of its cleared transactions.
    (2) Trade exposure amount. A clearing member FDIC-supervised 
institution must calculate its trade exposure amount for a cleared 
transaction as follows:
    (i) For a cleared transaction that is a derivative contract or a 
netting set of derivative contracts, trade exposure amount equals the 
EAD calculated using the methodology used to calculate EAD for OTC 
derivative contracts set forth in Sec.  324.132(c) or Sec.  324.132(d), 
plus the fair value of the collateral posted by the clearing member 
FDIC-supervised institution and held by the CCP in a manner that is not 
bankruptcy remote. When the clearing member FDIC-supervised institution 
calculates EAD for the cleared transaction using the methodology in 
Sec.  324.132(d), EAD equals EADunstressed.
    (ii) For a cleared transaction that is a repo-style transaction or 
netting set of repo-style transactions, trade exposure amount equals the 
EAD calculated under Sec. Sec.  324.132(b)(2), (b)(3), or (d), plus the 
fair value of the collateral posted by the clearing member FDIC-
supervised institution and held by the CCP in a manner that is not 
bankruptcy remote. When the clearing member FDIC-supervised institution 
calculates EAD for the cleared transaction under Sec.  324.132(d), EAD 
equals EADunstressed.
    (3) Cleared transaction risk weights. (i) A clearing member FDIC-
supervised institution must apply a risk weight of 2 percent to the 
trade exposure amount for a cleared transaction with a QCCP.
    (ii) For a cleared transaction with a CCP that is not a QCCP, a 
clearing member FDIC-supervised institution must apply the risk weight 
applicable to the CCP according to Sec.  324.32.
    (iii) Notwithstanding paragraphs (c)(3)(i) and (ii) of this section, 
a clearing member FDIC-supervised institution may apply a risk weight of 
0 percent to the trade exposure amount for a cleared transaction with a 
CCP where the clearing member FDIC-supervised institution is acting as a 
financial intermediary on behalf of a clearing member client, the 
transaction offsets another transaction that satisfies the requirements 
set forth in Sec.  324.3(a), and the clearing member FDIC-supervised 
institution is not obligated to reimburse the clearing member client in 
the event of the CCP default.
    (4) Collateral. (i) Notwithstanding any other requirement of this 
section, collateral posted by a clearing member FDIC-supervised 
institution that is held by a custodian in a manner that is bankruptcy 
remote from the CCP is not subject to a capital requirement under this 
section.
    (ii) A clearing member FDIC-supervised institution must calculate a 
risk-weighted asset amount for any collateral provided to a CCP, 
clearing member or a custodian in connection with a cleared transaction 
in accordance with requirements under subparts E or F of this part, as 
applicable.
    (d) Default fund contributions--(1) General requirement. A clearing 
member FDIC-supervised institution must determine the risk-weighted 
asset amount for a default fund contribution to a CCP at least 
quarterly, or more frequently if, in the opinion of the FDIC-supervised 
institution or the FDIC, there is a material change in the financial 
condition of the CCP.
    (2) Risk-weighted asset amount for default fund contributions to 
non-qualifying CCPs. A clearing member FDIC-supervised institution's 
risk-weighted asset amount for default fund contributions to CCPs that 
are not QCCPs equals the sum of such default fund contributions 
multiplied by 1,250 percent or an amount determined by the FDIC, based 
on factors such as size, structure and membership characteristics of the 
CCP and riskiness of its transactions, in cases where such default fund 
contributions may be unlimited.
    (3) Risk-weighted asset amount for default fund contributions to 
QCCPs. A clearing member FDIC-supervised institution's risk-weighted 
asset amount for default fund contributions to

[[Page 327]]

QCCPs equals the sum of its capital requirement, KCM for each 
QCCP, as calculated under the methodology set forth in paragraph 
(d)(3)(i) of this section (Method 1), multiplied by 1,250 percent or 
paragraph (d)(3)(iv) of this section (Method 2).
    (i) Method 1. The hypothetical capital requirement of a QCCP 
(KCCP) equals:
[GRAPHIC] [TIFF OMITTED] TR10SE13.035

Where

(A) EBRMi equals the EAD for each transaction cleared through 
          the QCCP by clearing member i, calculated using the 
          methodology used to calculate EAD for OTC derivative contracts 
          set forth in Sec.  324.132(c)(5) and Sec.  324.132.(c)(6) or 
          the methodology used to calculate EAD for repo-style 
          transactions set forth in Sec.  324.132(b)(2) for repo-style 
          transactions, provided that:
(1) For purposes of this section, when calculating the EAD, the FDIC-
          supervised institution may replace the formula provided in 
          Sec.  324.132 (c)(6)(ii) with the following formula:
          [GRAPHIC] [TIFF OMITTED] TR10SE13.047
          
    (2) For option derivative contracts that are cleared transactions, 
the PFE described in Sec.  324.132(c)(5) must be adjusted by multiplying 
the notional principal amount of the derivative contract by the 
appropriate conversion factor in Table 2 to Sec.  324.132 and the 
absolute value of the option's delta, that is, the ratio of the change 
in the value of the derivative contract to the corresponding change in 
the price of the underlying asset.
    (3) For repo-style transactions, when applying Sec.  324.132(b)(2), 
the FDIC-supervised institution must use the methodology in Sec.  
324.132(b)(2)(ii).
    (B) VMi equals any collateral posted by clearing member i 
to the QCCP that it is entitled to receive from the QCCP but has not yet 
received, and any collateral that the QCCP has actually received from 
clearing member i;
    (C) IMi equals the collateral posted as initial margin by 
clearing member i to the QCCP;
    (D) DFi equals the funded portion of clearing member i's 
default fund contribution that will be applied to reduce the QCCP's loss 
upon a default by clearing member i; and
    (E) RW equals 20 percent, except when the FDIC has determined that a 
higher risk weight is more appropriate based on the specific 
characteristics of the QCCP and its clearing members; and
    (F) Where a QCCP has provided its KCCP, an FDIC-
supervised institution must rely on such disclosed figure instead of 
calculating KCCP under this paragraph (d), unless the FDIC-
supervised institution determines that a more conservative figure is 
appropriate based on the nature, structure, or characteristics of the 
QCCP.

    (ii) For an FDIC-supervised institution that is a clearing member of 
a QCCP with a default fund supported by funded commitments, 
KCM equals:

[[Page 328]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.036


[[Page 329]]


[GRAPHIC] [TIFF OMITTED] TR10SE13.037

Where

(A) DFi equals the FDIC-supervised institution's unfunded 
          commitment to the default fund;
(B) DFCM equals the total of all clearing members' unfunded 
          commitments to the default fund; and
(C) K*CM as defined in paragraph (d)(3)(ii) of this section.
(D) For an FDIC-supervised institution that is a clearing member of a 
          QCCP with a default fund supported by unfunded commitments and 
          that is unable to calculate KCM using the 
          methodology described above in this paragraph (d)(3)(iii), 
          KCM equals:

[[Page 330]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.038

Where

(1) IMi equals the FDIC-supervised institution's initial 
          margin posted to the QCCP;
(2) IMCM = the total of initial margin posted to the QCCP; 
          and
(3) K*CM as defined above in this paragraph (d)(3)(iii).
(iv) Method 2. A clearing member FDIC-supervised institution's risk-
          weighted asset amount for its default fund contribution to a 
          QCCP, RWADF, equals:
RWADF = Min {12.5 * DF; 0.18 * TE{time} 

Where

(A) TE equals the FDIC-supervised institution's trade exposure amount to 
          the QCCP calculated according to section 133(c)(2);
(B) DF equals the funded portion of the FDIC-supervised institution's 
          default fund contribution to the QCCP.

    (v) Total risk-weighted assets for default fund contributions. Total 
risk-weighted assets for default fund contributions is the sum of a 
clearing member FDIC-supervised institution's risk-weighted assets for 
all of its default fund contributions to all CCPs of which the FDIC-
supervised institution is a clearing member.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014; 
80 FR 41425, July 15, 2015]



Sec.  324.134  Guarantees and credit derivatives: 
PD substitution and LGD adjustment approaches.

    (a) Scope. (1) This section applies to wholesale exposures for 
which:
    (i) Credit risk is fully covered by an eligible guarantee or 
eligible credit derivative; or
    (ii) Credit risk is covered on a pro rata basis (that is, on a basis 
in which the FDIC-supervised institution and the protection provider 
share losses proportionately) by an eligible guarantee or eligible 
credit derivative.
    (2) Wholesale exposures on which there is a tranching of credit risk 
(reflecting at least two different levels of seniority) are 
securitization exposures subject to Sec. Sec.  324.141 through 324.145.
    (3) An FDIC-supervised institution may elect to recognize the credit 
risk mitigation benefits of an eligible guarantee or eligible credit 
derivative covering an exposure described in paragraph (a)(1) of this 
section by using the PD substitution approach or the LGD adjustment 
approach in paragraph (c) of this section or, if the transaction 
qualifies, using the double default treatment in Sec.  324.135. An FDIC-
supervised institution's PD and LGD for the hedged exposure may not be 
lower than the PD and LGD floors described in Sec.  324.131(d)(2) and 
(d)(3).
    (4) If multiple eligible guarantees or eligible credit derivatives 
cover a single exposure described in paragraph (a)(1) of this section, 
an FDIC-supervised institution may treat the hedged exposure as multiple 
separate exposures each covered by a single eligible guarantee or 
eligible credit derivative and may calculate a separate risk-based 
capital requirement for each separate exposure as described in paragraph 
(a)(3) of this section.
    (5) If a single eligible guarantee or eligible credit derivative 
covers multiple hedged wholesale exposures described in paragraph (a)(1) 
of this section, an FDIC-supervised institution must treat each hedged 
exposure as covered by a separate eligible guarantee or eligible credit 
derivative and must calculate a separate risk-based capital requirement 
for each exposure as described in paragraph (a)(3) of this section.
    (6) An FDIC-supervised institution must use the same risk parameters 
for calculating ECL as it uses for calculating the risk-based capital 
requirement for the exposure.
    (b) Rules of recognition. (1) An FDIC-supervised institution may 
only recognize the credit risk mitigation benefits of eligible 
guarantees and eligible credit derivatives.
    (2) An FDIC-supervised institution may only recognize the credit 
risk mitigation benefits of an eligible credit derivative to hedge an 
exposure that is different from the credit derivative's

[[Page 331]]

reference exposure used for determining the derivative's cash settlement 
value, deliverable obligation, or occurrence of a credit event if:
    (i) The reference exposure ranks pari passu (that is, equally) with 
or is junior to the hedged exposure; and
    (ii) The reference exposure and the hedged exposure are exposures to 
the same legal entity, and legally enforceable cross-default or cross-
acceleration clauses are in place to assure payments under the credit 
derivative are triggered when the obligor fails to pay under the terms 
of the hedged exposure.
    (c) Risk parameters for hedged exposures--(1) PD substitution 
approach--(i) Full coverage. If an eligible guarantee or eligible credit 
derivative meets the conditions in paragraphs (a) and (b) of this 
section and the protection amount (P) of the guarantee or credit 
derivative is greater than or equal to the EAD of the hedged exposure, 
an FDIC-supervised institution may recognize the guarantee or credit 
derivative in determining the FDIC-supervised institution's risk-based 
capital requirement for the hedged exposure by substituting the PD 
associated with the rating grade of the protection provider for the PD 
associated with the rating grade of the obligor in the risk-based 
capital formula applicable to the guarantee or credit derivative in 
Table 1 of Sec.  324.131 and using the appropriate LGD as described in 
paragraph (c)(1)(iii) of this section. If the FDIC-supervised 
institution determines that full substitution of the protection 
provider's PD leads to an inappropriate degree of risk mitigation, the 
FDIC-supervised institution may substitute a higher PD than that of the 
protection provider.
    (ii) Partial coverage. If an eligible guarantee or eligible credit 
derivative meets the conditions in paragraphs (a) and (b) of this 
section and P of the guarantee or credit derivative is less than the EAD 
of the hedged exposure, the FDIC-supervised institution must treat the 
hedged exposure as two separate exposures (protected and unprotected) in 
order to recognize the credit risk mitigation benefit of the guarantee 
or credit derivative.
    (A) The FDIC-supervised institution must calculate its risk-based 
capital requirement for the protected exposure under Sec.  324.131, 
where PD is the protection provider's PD, LGD is determined under 
paragraph (c)(1)(iii) of this section, and EAD is P. If the FDIC-
supervised institution determines that full substitution leads to an 
inappropriate degree of risk mitigation, the FDIC-supervised institution 
may use a higher PD than that of the protection provider.
    (B) The FDIC-supervised institution must calculate its risk-based 
capital requirement for the unprotected exposure under Sec.  324.131, 
where PD is the obligor's PD, LGD is the hedged exposure's LGD (not 
adjusted to reflect the guarantee or credit derivative), and EAD is the 
EAD of the original hedged exposure minus P.
    (C) The treatment in paragraph (c)(1)(ii) of this section is 
applicable when the credit risk of a wholesale exposure is covered on a 
partial pro rata basis or when an adjustment is made to the effective 
notional amount of the guarantee or credit derivative under paragraphs 
(d), (e), or (f) of this section.
    (iii) LGD of hedged exposures. The LGD of a hedged exposure under 
the PD substitution approach is equal to:
    (A) The lower of the LGD of the hedged exposure (not adjusted to 
reflect the guarantee or credit derivative) and the LGD of the guarantee 
or credit derivative, if the guarantee or credit derivative provides the 
FDIC-supervised institution with the option to receive immediate payout 
upon triggering the protection; or
    (B) The LGD of the guarantee or credit derivative, if the guarantee 
or credit derivative does not provide the FDIC-supervised institution 
with the option to receive immediate payout upon triggering the 
protection.
    (2) LGD adjustment approach--(i) Full coverage. If an eligible 
guarantee or eligible credit derivative meets the conditions in 
paragraphs (a) and (b) of this section and the protection amount (P) of 
the guarantee or credit derivative is greater than or equal to the EAD 
of the hedged exposure, the FDIC-supervised institution's risk-based 
capital requirement for the hedged exposure is the greater of:

[[Page 332]]

    (A) The risk-based capital requirement for the exposure as 
calculated under Sec.  324.131, with the LGD of the exposure adjusted to 
reflect the guarantee or credit derivative; or
    (B) The risk-based capital requirement for a direct exposure to the 
protection provider as calculated under Sec.  324.131, using the PD for 
the protection provider, the LGD for the guarantee or credit derivative, 
and an EAD equal to the EAD of the hedged exposure.
    (ii) Partial coverage. If an eligible guarantee or eligible credit 
derivative meets the conditions in paragraphs (a) and (b) of this 
section and the protection amount (P) of the guarantee or credit 
derivative is less than the EAD of the hedged exposure, the FDIC-
supervised institution must treat the hedged exposure as two separate 
exposures (protected and unprotected) in order to recognize the credit 
risk mitigation benefit of the guarantee or credit derivative.
    (A) The FDIC-supervised institution's risk-based capital requirement 
for the protected exposure would be the greater of:
    (1) The risk-based capital requirement for the protected exposure as 
calculated under Sec.  324.131, with the LGD of the exposure adjusted to 
reflect the guarantee or credit derivative and EAD set equal to P; or
    (2) The risk-based capital requirement for a direct exposure to the 
guarantor as calculated under Sec.  324.131, using the PD for the 
protection provider, the LGD for the guarantee or credit derivative, and 
an EAD set equal to P.
    (B) The FDIC-supervised institution must calculate its risk-based 
capital requirement for the unprotected exposure under Sec.  324.131, 
where PD is the obligor's PD, LGD is the hedged exposure's LGD (not 
adjusted to reflect the guarantee or credit derivative), and EAD is the 
EAD of the original hedged exposure minus P.
    (3) M of hedged exposures. For purposes of this paragraph (c), the M 
of the hedged exposure is the same as the M of the exposure if it were 
unhedged.
    (d) Maturity mismatch. (1) An FDIC-supervised institution that 
recognizes an eligible guarantee or eligible credit derivative in 
determining its risk-based capital requirement for a hedged exposure 
must adjust the effective notional amount of the credit risk mitigant to 
reflect any maturity mismatch between the hedged exposure and the credit 
risk mitigant.
    (2) A maturity mismatch occurs when the residual maturity of a 
credit risk mitigant is less than that of the hedged exposure(s).
    (3) The residual maturity of a hedged exposure is the longest 
possible remaining time before the obligor is scheduled to fulfil its 
obligation on the exposure. If a credit risk mitigant has embedded 
options that may reduce its term, the FDIC-supervised institution 
(protection purchaser) must use the shortest possible residual maturity 
for the credit risk mitigant. If a call is at the discretion of the 
protection provider, the residual maturity of the credit risk mitigant 
is at the first call date. If the call is at the discretion of the FDIC-
supervised institution (protection purchaser), but the terms of the 
arrangement at origination of the credit risk mitigant contain a 
positive incentive for the FDIC-supervised institution to call the 
transaction before contractual maturity, the remaining time to the first 
call date is the residual maturity of the credit risk mitigant.\30\
---------------------------------------------------------------------------

    \30\ For example, where there is a step-up in cost in conjunction 
with a call feature or where the effective cost of protection increases 
over time even if credit quality remains the same or improves, the 
residual maturity of the credit risk mitigant will be the remaining time 
to the first call.
---------------------------------------------------------------------------

    (4) A credit risk mitigant with a maturity mismatch may be 
recognized only if its original maturity is greater than or equal to one 
year and its residual maturity is greater than three months.
    (5) When a maturity mismatch exists, the FDIC-supervised institution 
must apply the following adjustment to the effective notional amount of 
the credit risk mitigant: Pm = E x (t-0.25)/(T-0.25), where:
    (i) Pm equals effective notional amount of the credit 
risk mitigant, adjusted for maturity mismatch;
    (ii) E equals effective notional amount of the credit risk mitigant;

[[Page 333]]

    (iii) t equals the lesser of T or the residual maturity of the 
credit risk mitigant, expressed in years; and
    (iv) T equals the lesser of five or the residual maturity of the 
hedged exposure, expressed in years.
    (e) Credit derivatives without restructuring as a credit event. If 
an FDIC-supervised institution recognizes an eligible credit derivative 
that does not include as a credit event a restructuring of the hedged 
exposure involving forgiveness or postponement of principal, interest, 
or fees that results in a credit loss event (that is, a charge-off, 
specific provision, or other similar debit to the profit and loss 
account), the FDIC-supervised institution must apply the following 
adjustment to the effective notional amount of the credit derivative: 
Pr = Pm x 0.60, where:
    (1) Pr equals effective notional amount of the credit 
risk mitigant, adjusted for lack of restructuring event (and maturity 
mismatch, if applicable); and
    (2) Pm equals effective notional amount of the credit 
risk mitigant adjusted for maturity mismatch (if applicable).
    (f) Currency mismatch. (1) If an FDIC-supervised institution 
recognizes an eligible guarantee or eligible credit derivative that is 
denominated in a currency different from that in which the hedged 
exposure is denominated, the FDIC-supervised institution must apply the 
following formula to the effective notional amount of the guarantee or 
credit derivative: Pc = Pr x (1-HFX), 
where:
    (i) Pc equals effective notional amount of the credit 
risk mitigant, adjusted for currency mismatch (and maturity mismatch and 
lack of restructuring event, if applicable);
    (ii) Pr equals effective notional amount of the credit 
risk mitigant (adjusted for maturity mismatch and lack of restructuring 
event, if applicable); and
    (iii) HFX equals haircut appropriate for the currency 
mismatch between the credit risk mitigant and the hedged exposure.
    (2) An FDIC-supervised institution must set HFX equal to 
8 percent unless it qualifies for the use of and uses its own internal 
estimates of foreign exchange volatility based on a ten-business-day 
holding period and daily marking-to-market and remargining. An FDIC-
supervised institution qualifies for the use of its own internal 
estimates of foreign exchange volatility if it qualifies for:
    (i) The own-estimates haircuts in Sec.  324.132(b)(2)(iii);
    (ii) The simple VaR methodology in Sec.  324.132(b)(3); or
    (iii) The internal models methodology in Sec.  324.132(d).
    (3) An FDIC-supervised institution must adjust HFX 
calculated in paragraph (f)(2) of this section upward if the FDIC-
supervised institution revalues the guarantee or credit derivative less 
frequently than once every ten business days using the square root of 
time formula provided in Sec.  324.132(b)(2)(iii)(A)(2).

[78 FR 55471, Sept. 10, 2013, as amended at 81 FR 71354, Oct. 17, 2016]



Sec.  324.135  Guarantees and credit derivatives: Double default treatment.

    (a) Eligibility and operational criteria for double default 
treatment. An FDIC-supervised institution may recognize the credit risk 
mitigation benefits of a guarantee or credit derivative covering an 
exposure described in Sec.  324.134(a)(1) by applying the double default 
treatment in this section if all the following criteria are satisfied:
    (1) The hedged exposure is fully covered or covered on a pro rata 
basis by:
    (i) An eligible guarantee issued by an eligible double default 
guarantor; or
    (ii) An eligible credit derivative that meets the requirements of 
Sec.  324.134(b)(2) and that is issued by an eligible double default 
guarantor.
    (2) The guarantee or credit derivative is:
    (i) An uncollateralized guarantee or uncollateralized credit 
derivative (for example, a credit default swap) that provides protection 
with respect to a single reference obligor; or
    (ii) An nth-to-default credit derivative (subject to the 
requirements of Sec.  324.142(m)).
    (3) The hedged exposure is a wholesale exposure (other than a 
sovereign exposure).
    (4) The obligor of the hedged exposure is not:

[[Page 334]]

    (i) An eligible double default guarantor or an affiliate of an 
eligible double default guarantor; or
    (ii) An affiliate of the guarantor.
    (5) The FDIC-supervised institution does not recognize any credit 
risk mitigation benefits of the guarantee or credit derivative for the 
hedged exposure other than through application of the double default 
treatment as provided in this section.
    (6) The FDIC-supervised institution has implemented a process (which 
has received the prior, written approval of the FDIC) to detect 
excessive correlation between the creditworthiness of the obligor of the 
hedged exposure and the protection provider. If excessive correlation is 
present, the FDIC-supervised institution may not use the double default 
treatment for the hedged exposure.
    (b) Full coverage. If a transaction meets the criteria in paragraph 
(a) of this section and the protection amount (P) of the guarantee or 
credit derivative is at least equal to the EAD of the hedged exposure, 
the FDIC-supervised institution may determine its risk-weighted asset 
amount for the hedged exposure under paragraph (e) of this section.
    (c) Partial coverage. If a transaction meets the criteria in 
paragraph (a) of this section and the protection amount (P) of the 
guarantee or credit derivative is less than the EAD of the hedged 
exposure, the FDIC-supervised institution must treat the hedged exposure 
as two separate exposures (protected and unprotected) in order to 
recognize double default treatment on the protected portion of the 
exposure:
    (1) For the protected exposure, the FDIC-supervised institution must 
set EAD equal to P and calculate its risk-weighted asset amount as 
provided in paragraph (e) of this section; and
    (2) For the unprotected exposure, the FDIC-supervised institution 
must set EAD equal to the EAD of the original exposure minus P and then 
calculate its risk-weighted asset amount as provided in Sec.  324.131.
    (d) Mismatches. For any hedged exposure to which an FDIC-supervised 
institution applies double default treatment under this part, the FDIC-
supervised institution must make applicable adjustments to the 
protection amount as required in Sec. Sec.  324.134(d), (e), and (f).
    (e) The double default dollar risk-based capital requirement. The 
dollar risk-based capital requirement for a hedged exposure to which an 
FDIC-supervised institution has applied double default treatment is 
KDD multiplied by the EAD of the exposure. KDD is 
calculated according to the following formula: KDD = 
Ko x (0.15 + 160 x PDg),

where:
(1)
[GRAPHIC] [TIFF OMITTED] TR10SE13.039

(2) PDg equals PD of the protection provider.
(3) PDo equals PD of the obligor of the hedged exposure.
(4) LGDg equals:
(i) The lower of the LGD of the hedged exposure (not adjusted to reflect 
          the guarantee or credit derivative) and the LGD of the 
          guarantee or credit derivative, if the guarantee or credit 
          derivative provides the FDIC-supervised institution with the 
          option to receive immediate payout on triggering the 
          protection; or
(ii) The LGD of the guarantee or credit derivative, if the guarantee or 
          credit derivative does not provide the FDIC-supervised 
          institution with the option to receive immediate payout on 
          triggering the protection; and
(5) [rho]os (asset value correlation of the obligor) is 
          calculated according to the appropriate formula for (R) 
          provided in Table 1 in Sec.  324.131, with PD equal to 
          PDo.
(6) b (maturity adjustment coefficient) is calculated according to the 
          formula for b provided in Table 1 in Sec.  324.131, with PD 
          equal to the lesser of PDo and PDg; and
(7) M (maturity) is the effective maturity of the guarantee or credit 
          derivative, which may not be less than one year or greater 
          than five years.

[[Page 335]]



Sec.  324.136  Unsettled transactions.

    (a) Definitions. For purposes of this section:
    (1) Delivery-versus-payment (DvP) transaction means a securities or 
commodities transaction in which the buyer is obligated to make payment 
only if the seller has made delivery of the securities or commodities 
and the seller is obligated to deliver the securities or commodities 
only if the buyer has made payment.
    (2) Payment-versus-payment (PvP) transaction means a foreign 
exchange transaction in which each counterparty is obligated to make a 
final transfer of one or more currencies only if the other counterparty 
has made a final transfer of one or more currencies.
    (3) A transaction has a normal settlement period if the contractual 
settlement period for the transaction is equal to or less than the 
market standard for the instrument underlying the transaction and equal 
to or less than five business days.
    (4) The positive current exposure of an FDIC-supervised institution 
for a transaction is the difference between the transaction value at the 
agreed settlement price and the current market price of the transaction, 
if the difference results in a credit exposure of the FDIC-supervised 
institution to the counterparty.
    (b) Scope. This section applies to all transactions involving 
securities, foreign exchange instruments, and commodities that have a 
risk of delayed settlement or delivery. This section does not apply to:
    (1) Cleared transactions that are subject to daily marking-to-market 
and daily receipt and payment of variation margin;
    (2) Repo-style transactions, including unsettled repo-style 
transactions (which are addressed in Sec. Sec.  324.131 and 324.132);
    (3) One-way cash payments on OTC derivative contracts (which are 
addressed in Sec. Sec.  324.131 and 324.132); or
    (4) Transactions with a contractual settlement period that is longer 
than the normal settlement period (which are treated as OTC derivative 
contracts and addressed in Sec. Sec.  324.131 and 324.132).
    (c) System-wide failures. In the case of a system-wide failure of a 
settlement or clearing system, or a central counterparty, the FDIC may 
waive risk-based capital requirements for unsettled and failed 
transactions until the situation is rectified.
    (d) Delivery-versus-payment (DvP) and payment-versus-payment (PvP) 
transactions. An FDIC-supervised institution must hold risk-based 
capital against any DvP or PvP transaction with a normal settlement 
period if the FDIC-supervised institution's counterparty has not made 
delivery or payment within five business days after the settlement date. 
The FDIC-supervised institution must determine its risk-weighted asset 
amount for such a transaction by multiplying the positive current 
exposure of the transaction for the FDIC-supervised institution by the 
appropriate risk weight in Table 1 to Sec.  324.136.

    Table 1 to Sec.   324.136--Risk Weights for Unsettled DvP and PvP
                              Transactions
------------------------------------------------------------------------
                                                      Risk weight to be
     Number of business days after contractual       applied to positive
                  settlement date                      current exposure
                                                         (in percent)
------------------------------------------------------------------------
From 5 to 15.......................................                100
From 16 to 30......................................                625
From 31 to 45......................................                937.5
46 or more.........................................              1,250
------------------------------------------------------------------------

    (e) Non-DvP/non-PvP (non-delivery-versus-payment/non-payment-versus-
payment) transactions. (1) An FDIC-supervised institution must hold 
risk-based capital against any non-DvP/non-PvP transaction with a normal 
settlement period if the FDIC-supervised institution has delivered cash, 
securities, commodities, or currencies to its counterparty but has not 
received its corresponding deliverables by the end of the same business 
day. The FDIC-supervised institution must continue to hold risk-based 
capital against the transaction until the FDIC-supervised institution 
has received its corresponding deliverables.
    (2) From the business day after the FDIC-supervised institution has 
made its delivery until five business days after the counterparty 
delivery is due, the FDIC-supervised institution must calculate its 
risk-based capital requirement for the transaction by treating

[[Page 336]]

the current fair value of the deliverables owed to the FDIC-supervised 
institution as a wholesale exposure.
    (i) An FDIC-supervised institution may use a 45 percent LGD for the 
transaction rather than estimating LGD for the transaction provided the 
FDIC-supervised institution uses the 45 percent LGD for all transactions 
described in paragraphs (e)(1) and (e)(2) of this section.
    (ii) An FDIC-supervised institution may use a 100 percent risk 
weight for the transaction provided the FDIC-supervised institution uses 
this risk weight for all transactions described in paragraphs (e)(1) and 
(e)(2) of this section.
    (3) If the FDIC-supervised institution has not received its 
deliverables by the fifth business day after the counterparty delivery 
was due, the FDIC-supervised institution must apply a 1,250 percent risk 
weight to the current fair value of the deliverables owed to the FDIC-
supervised institution.
    (f) Total risk-weighted assets for unsettled transactions. Total 
risk-weighted assets for unsettled transactions is the sum of the risk-
weighted asset amounts of all DvP, PvP, and non-DvP/non-PvP 
transactions.

[78 FR 55471, Sept. 10, 2013, as amended at 80 FR 41425, July 15, 2015]



Sec. Sec.  324.137-324.140  [Reserved]

            Risk-Weighted Assets for Securitization Exposures



Sec.  324.141  Operational criteria for recognizing the transfer of risk.

    (a) Operational criteria for traditional securitizations. An FDIC-
supervised institution that transfers exposures it has originated or 
purchased to a securitization SPE or other third party in connection 
with a traditional securitization may exclude the exposures from the 
calculation of its risk-weighted assets only if each of the conditions 
in this paragraph (a) is satisfied. An FDIC-supervised institution that 
meets these conditions must hold risk-based capital against any 
securitization exposures it retains in connection with the 
securitization. An FDIC-supervised institution that fails to meet these 
conditions must hold risk-based capital against the transferred 
exposures as if they had not been securitized and must deduct from 
common equity tier 1 capital any after-tax gain-on-sale resulting from 
the transaction. The conditions are:
    (1) The exposures are not reported on the FDIC-supervised 
institution's consolidated balance sheet under GAAP;
    (2) The FDIC-supervised institution has transferred to one or more 
third parties credit risk associated with the underlying exposures;
    (3) Any clean-up calls relating to the securitization are eligible 
clean-up calls; and
    (4) The securitization does not:
    (i) Include one or more underlying exposures in which the borrower 
is permitted to vary the drawn amount within an agreed limit under a 
line of credit; and
    (ii) Contain an early amortization provision.
    (b) Operational criteria for synthetic securitizations. For 
synthetic securitizations, an FDIC-supervised institution may recognize 
for risk-based capital purposes under this subpart the use of a credit 
risk mitigant to hedge underlying exposures only if each of the 
conditions in this paragraph (b) is satisfied. An FDIC-supervised 
institution that meets these conditions must hold risk-based capital 
against any credit risk of the exposures it retains in connection with 
the synthetic securitization. An FDIC-supervised institution that fails 
to meet these conditions or chooses not to recognize the credit risk 
mitigant for purposes of this section must hold risk-based capital under 
this subpart against the underlying exposures as if they had not been 
synthetically securitized. The conditions are:
    (1) The credit risk mitigant is:
    (i) Financial collateral; or
    (ii) A guarantee that meets all of the requirements of an eligible 
guarantee in Sec.  324.2 except for paragraph (3) of the definition; or
    (iii) A credit derivative that meets all of the requirements of an 
eligible credit derivative except for paragraph (3) of the definition of 
eligible guarantee in Sec.  324.2.

[[Page 337]]

    (2) The FDIC-supervised institution transfers credit risk associated 
with the underlying exposures to third parties, and the terms and 
conditions in the credit risk mitigants employed do not include 
provisions that:
    (i) Allow for the termination of the credit protection due to 
deterioration in the credit quality of the underlying exposures;
    (ii) Require the FDIC-supervised institution to alter or replace the 
underlying exposures to improve the credit quality of the underlying 
exposures;
    (iii) Increase the FDIC-supervised institution's cost of credit 
protection in response to deterioration in the credit quality of the 
underlying exposures;
    (iv) Increase the yield payable to parties other than the FDIC-
supervised institution in response to a deterioration in the credit 
quality of the underlying exposures; or
    (v) Provide for increases in a retained first loss position or 
credit enhancement provided by the FDIC-supervised institution after the 
inception of the securitization;
    (3) The FDIC-supervised institution obtains a well-reasoned opinion 
from legal counsel that confirms the enforceability of the credit risk 
mitigant in all relevant jurisdictions; and
    (4) Any clean-up calls relating to the securitization are eligible 
clean-up calls.
    (c) Due diligence requirements for securitization exposures. (1) 
Except for exposures that are deducted from common equity tier 1 capital 
and exposures subject to Sec.  324.142(k), if an FDIC-supervised 
institution is unable to demonstrate to the satisfaction of the FDIC a 
comprehensive understanding of the features of a securitization exposure 
that would materially affect the performance of the exposure, the FDIC-
supervised institution must assign a 1,250 percent risk weight to the 
securitization exposure. The FDIC-supervised institution's analysis must 
be commensurate with the complexity of the securitization exposure and 
the materiality of the position in relation to regulatory capital 
according to this part.
    (2) An FDIC-supervised institution must demonstrate its 
comprehensive understanding of a securitization exposure under paragraph 
(c)(1) of this section, for each securitization exposure by:
    (i) Conducting an analysis of the risk characteristics of a 
securitization exposure prior to acquiring the exposure and document 
such analysis within three business days after acquiring the exposure, 
considering:
    (A) Structural features of the securitization that would materially 
impact the performance of the exposure, for example, the contractual 
cash flow waterfall, waterfall-related triggers, credit enhancements, 
liquidity enhancements, fair value triggers, the performance of 
organizations that service the position, and deal-specific definitions 
of default;
    (B) Relevant information regarding the performance of the underlying 
credit exposure(s), for example, the percentage of loans 30, 60, and 90 
days past due; default rates; prepayment rates; loans in foreclosure; 
property types; occupancy; average credit score or other measures of 
creditworthiness; average loan-to-value ratio; and industry and 
geographic diversification data on the underlying exposure(s);
    (C) Relevant market data of the securitization, for example, bid-ask 
spreads, most recent sales price and historical price volatility, 
trading volume, implied market rating, and size, depth and concentration 
level of the market for the securitization; and
    (D) For resecuritization exposures, performance information on the 
underlying securitization exposures, for example, the issuer name and 
credit quality, and the characteristics and performance of the exposures 
underlying the securitization exposures; and
    (ii) On an on-going basis (no less frequently than quarterly), 
evaluating, reviewing, and updating as appropriate the analysis required 
under this section for each securitization exposure.



Sec.  324.142  Risk-weighted assets for securitization exposures.

    (a) Hierarchy of approaches. Except as provided elsewhere in this 
section and in Sec.  324.141:
    (1) An FDIC-supervised institution must deduct from common equity 
tier 1 capital any after-tax gain-on-sale resulting from a 
securitization and must

[[Page 338]]

apply a 1,250 percent risk weight to the portion of any CEIO that does 
not constitute after tax gain-on-sale;
    (2) If a securitization exposure does not require deduction or a 
1,250 percent risk weight under paragraph (a)(1) of this section, the 
FDIC-supervised institution must apply the supervisory formula approach 
in Sec.  324.143 to the exposure if the FDIC-supervised institution and 
the exposure qualify for the supervisory formula approach according to 
Sec.  324.143(a);
    (3) If a securitization exposure does not require deduction or a 
1,250 percent risk weight under paragraph (a)(1) of this section and 
does not qualify for the supervisory formula approach, the FDIC-
supervised institution may apply the simplified supervisory formula 
approach under Sec.  324.144;
    (4) If a securitization exposure does not require deduction or a 
1,250 percent risk weight under paragraph (a)(1) of this section, does 
not qualify for the supervisory formula approach in Sec.  324.143, and 
the FDIC-supervised institution does not apply the simplified 
supervisory formula approach in Sec.  324.144, the FDIC-supervised 
institution must apply a 1,250 percent risk weight to the exposure; and
    (5) If a securitization exposure is a derivative contract (other 
than protection provided by an FDIC-supervised institution in the form 
of a credit derivative) that has a first priority claim on the cash 
flows from the underlying exposures (notwithstanding amounts due under 
interest rate or currency derivative contracts, fees due, or other 
similar payments), an FDIC-supervised institution may choose to set the 
risk-weighted asset amount of the exposure equal to the amount of the 
exposure as determined in paragraph (e) of this section rather than 
apply the hierarchy of approaches described in paragraphs (a)(1) through 
(4) of this section.
    (b) Total risk-weighted assets for securitization exposures. An 
FDIC-supervised institution's total risk-weighted assets for 
securitization exposures is equal to the sum of its risk-weighted assets 
calculated using Sec. Sec.  324.141 through 146.
    (c) Deductions. An FDIC-supervised institution may calculate any 
deduction from common equity tier 1 capital for a securitization 
exposure net of any DTLs associated with the securitization exposure.
    (d) Maximum risk-based capital requirement. Except as provided in 
Sec.  324.141(c), unless one or more underlying exposures does not meet 
the definition of a wholesale, retail, securitization, or equity 
exposure, the total risk-based capital requirement for all 
securitization exposures held by a single FDIC-supervised institution 
associated with a single securitization (excluding any risk-based 
capital requirements that relate to the FDIC-supervised institution's 
gain-on-sale or CEIOs associated with the securitization) may not exceed 
the sum of:
    (1) The FDIC-supervised institution's total risk-based capital 
requirement for the underlying exposures calculated under this subpart 
as if the FDIC-supervised institution directly held the underlying 
exposures; and
    (2) The total ECL of the underlying exposures calculated under this 
subpart.
    (e) Exposure amount of a securitization exposure. (1) The exposure 
amount of an on-balance sheet securitization exposure that is not a 
repo-style transaction, eligible margin loan, OTC derivative contract, 
or cleared transaction is the FDIC-supervised institution's carrying 
value.
    (2) Except as provided in paragraph (m) of this section, the 
exposure amount of an off-balance sheet securitization exposure that is 
not an OTC derivative contract (other than a credit derivative), repo-
style transaction, eligible margin loan, or cleared transaction (other 
than a credit derivative) is the notional amount of the exposure. For an 
off-balance-sheet securitization exposure to an ABCP program, such as an 
eligible ABCP liquidity facility, the notional amount may be reduced to 
the maximum potential amount that the FDIC-supervised institution could 
be required to fund given the ABCP program's current underlying assets 
(calculated without regard to the current credit quality of those 
assets).
    (3) The exposure amount of a securitization exposure that is a repo-
style transaction, eligible margin loan, or OTC derivative contract 
(other than

[[Page 339]]

a credit derivative) or cleared transaction (other than a credit 
derivative) is the EAD of the exposure as calculated in Sec.  
324.132 or Sec.  324.133.
    (f) Overlapping exposures. If an FDIC-supervised institution has 
multiple securitization exposures that provide duplicative coverage of 
the underlying exposures of a securitization (such as when an FDIC-
supervised institution provides a program-wide credit enhancement and 
multiple pool-specific liquidity facilities to an ABCP program), the 
FDIC-supervised institution is not required to hold duplicative risk-
based capital against the overlapping position. Instead, the FDIC-
supervised institution may assign to the overlapping securitization 
exposure the applicable risk-based capital treatment under this subpart 
that results in the highest risk-based capital requirement.
    (g) Securitizations of non-IRB exposures. Except as provided in 
Sec.  324.141(c), if an FDIC-supervised institution has a securitization 
exposure where any underlying exposure is not a wholesale exposure, 
retail exposure, securitization exposure, or equity exposure, the FDIC-
supervised institution:
    (1) Must deduct from common equity tier 1 capital any after-tax 
gain-on-sale resulting from the securitization and apply a 1,250 percent 
risk weight to the portion of any CEIO that does not constitute gain-on-
sale, if the FDIC-supervised institution is an originating FDIC-
supervised institution;
    (2) May apply the simplified supervisory formula approach in Sec.  
324.144 to the exposure, if the securitization exposure does not require 
deduction or a 1,250 percent risk weight under paragraph (g)(1) of this 
section;
    (3) Must assign a 1,250 percent risk weight to the exposure if the 
securitization exposure does not require deduction or a 1,250 percent 
risk weight under paragraph (g)(1) of this section, does not qualify for 
the supervisory formula approach in Sec.  324.143, and the FDIC-
supervised institution does not apply the simplified supervisory formula 
approach in Sec.  324.144 to the exposure.
    (h) Implicit support. If an FDIC-supervised institution provides 
support to a securitization in excess of the FDIC-supervised 
institution's contractual obligation to provide credit support to the 
securitization (implicit support):
    (1) The FDIC-supervised institution must calculate a risk-weighted 
asset amount for underlying exposures associated with the securitization 
as if the exposures had not been securitized and must deduct from common 
equity tier 1 capital any after-tax gain-on-sale resulting from the 
securitization; and
    (2) The FDIC-supervised institution must disclose publicly:
    (i) That it has provided implicit support to the securitization; and
    (ii) The regulatory capital impact to the FDIC-supervised 
institution of providing such implicit support.
    (i) Undrawn portion of a servicer cash advance facility. (1) 
Notwithstanding any other provision of this subpart, an FDIC-supervised 
institution that is a servicer under an eligible servicer cash advance 
facility is not required to hold risk-based capital against potential 
future cash advance payments that it may be required to provide under 
the contract governing the facility.
    (2) For an FDIC-supervised institution that acts as a servicer, the 
exposure amount for a servicer cash advance facility that is not an 
eligible servicer cash advance facility is equal to the amount of all 
potential future cash advance payments that the FDIC-supervised 
institution may be contractually required to provide during the 
subsequent 12 month period under the contract governing the facility.
    (j) Interest-only mortgage-backed securities. Regardless of any 
other provisions in this part, the risk weight for a non-credit-
enhancing interest-only mortgage-backed security may not be less than 
100 percent.
    (k) Small-business loans and leases on personal property transferred 
with recourse. (1) Notwithstanding any other provisions of this subpart 
E, an FDIC-supervised institution that has transferred small-business 
loans and leases on personal property (small-business obligations) with 
recourse must include in risk-weighted assets only the contractual 
amount of retained recourse if all the following conditions are met:
    (i) The transaction is a sale under GAAP.

[[Page 340]]

    (ii) The FDIC-supervised institution establishes and maintains, 
pursuant to GAAP, a non-capital reserve sufficient to meet the FDIC-
supervised institution's reasonably estimated liability under the 
recourse arrangement.
    (iii) The loans and leases are to businesses that meet the criteria 
for a small-business concern established by the Small Business 
Administration under section 3(a) of the Small Business Act (15 U.S.C. 
632 et seq.); and
    (iv) The FDIC-supervised institution is well-capitalized, as defined 
in subpart H of this part. For purposes of determining whether an FDIC-
supervised institution is well capitalized for purposes of this 
paragraph (k), the FDIC-supervised institution's capital ratios must be 
calculated without regard to the capital treatment for transfers of 
small-business obligations with recourse specified in paragraph (k)(1) 
of this section.
    (2) The total outstanding amount of recourse retained by an FDIC-
supervised institution on transfers of small-business obligations 
subject to paragraph (k)(1) of this section cannot exceed 15 percent of 
the FDIC-supervised institution's total capital.
    (3) If an FDIC-supervised institution ceases to be well capitalized 
or exceeds the 15 percent capital limitation in paragraph (k)(2) of this 
section, the preferential capital treatment specified in paragraph 
(k)(1) of this section will continue to apply to any transfers of small-
business obligations with recourse that occurred during the time that 
the FDIC-supervised institution was well capitalized and did not exceed 
the capital limit.
    (4) The risk-based capital ratios of an FDIC-supervised institution 
must be calculated without regard to the capital treatment for transfers 
of small-business obligations with recourse specified in paragraph 
(k)(1) of this section.
    (l) Nth-to-default credit derivatives-- (1) Protection provider. An 
FDIC-supervised institution must determine a risk weight using the 
supervisory formula approach (SFA) pursuant to Sec.  324.143 or the 
simplified supervisory formula approach (SSFA) pursuant to Sec.  324.144 
for an nth-to-default credit derivative in accordance with this 
paragraph (l). In the case of credit protection sold, an FDIC-supervised 
institution must determine its exposure in the n\th\-to-default credit 
derivative as the largest notional amount of all the underlying 
exposures.
    (2) For purposes of determining the risk weight for an n\th\-to-
default credit derivative using the SFA or the SSFA, the FDIC-supervised 
institution must calculate the attachment point and detachment point of 
its exposure as follows:
    (i) The attachment point (parameter A) is the ratio of the sum of 
the notional amounts of all underlying exposures that are subordinated 
to the FDIC-supervised institution's exposure to the total notional 
amount of all underlying exposures. For purposes of the SSFA, parameter 
A is expressed as a decimal value between zero and one. For purposes of 
using the SFA to calculate the risk weight for its exposure in an n\th\-
to-default credit derivative, parameter A must be set equal to the 
credit enhancement level (L) input to the SFA formula. In the case of a 
first-to-default credit derivative, there are no underlying exposures 
that are subordinated to the FDIC-supervised institution's exposure. In 
the case of a second-or-subsequent-to-default credit derivative, the 
smallest (n-1) risk-weighted asset amounts of the underlying exposure(s) 
are subordinated to the FDIC-supervised institution's exposure.
    (ii) The detachment point (parameter D) equals the sum of parameter 
A plus the ratio of the notional amount of the FDIC-supervised 
institution's exposure in the n\th\-to-default credit derivative to the 
total notional amount of all underlying exposures. For purposes of the 
SSFA, parameter W is expressed as a decimal value between zero and one. 
For purposes of the SFA, parameter D must be set to equal L plus the 
thickness of tranche T input to the SFA formula.
    (3) An FDIC-supervised institution that does not use the SFA or the 
SSFA to determine a risk weight for its exposure in an n\th\-to-default 
credit derivative must assign a risk weight of 1,250 percent to the 
exposure.
    (4) Protection purchaser--(i) First-to-default credit derivatives. 
An FDIC-supervised institution that obtains credit

[[Page 341]]

protection on a group of underlying exposures through a first-to-default 
credit derivative that meets the rules of recognition of Sec.  
324.134(b) must determine its risk-based capital requirement under this 
subpart for the underlying exposures as if the FDIC-supervised 
institution synthetically securitized the underlying exposure with the 
lowest risk-based capital requirement and had obtained no credit risk 
mitigant on the other underlying exposures. An FDIC-supervised 
institution must calculate a risk-based capital requirement for 
counterparty credit risk according to Sec.  324.132 for a first-to-
default credit derivative that does not meet the rules of recognition of 
Sec.  324.134(b).
    (ii) Second-or-subsequent-to-default credit derivatives. (A) An 
FDIC-supervised institution that obtains credit protection on a group of 
underlying exposures through a n\th\-to-default credit derivative that 
meets the rules of recognition of Sec.  324.134(b) (other than a first-
to-default credit derivative) may recognize the credit risk mitigation 
benefits of the derivative only if:
    (1) The FDIC-supervised institution also has obtained credit 
protection on the same underlying exposures in the form of first-
through-(n-1)-to-default credit derivatives; or
    (2) If n-1 of the underlying exposures have already defaulted.
    (B) If an FDIC-supervised institution satisfies the requirements of 
paragraph (l)(3)(ii)(A) of this section, the FDIC-supervised institution 
must determine its risk-based capital requirement for the underlying 
exposures as if the bank had only synthetically securitized the 
underlying exposure with the n\th\ smallest risk-based capital 
requirement and had obtained no credit risk mitigant on the other 
underlying exposures.
    (C) An FDIC-supervised institution must calculate a risk-based 
capital requirement for counterparty credit risk according to Sec.  
324.132 for a nth-to-default credit derivative that does not meet the 
rules of recognition of Sec.  324.134(b).
    (m) Guarantees and credit derivatives other than nth-to-default 
credit derivatives--(1) Protection provider. For a guarantee or credit 
derivative (other than an nth-to-default credit derivative) provided by 
an FDIC-supervised institution that covers the full amount or a pro rata 
share of a securitization exposure's principal and interest, the FDIC-
supervised institution must risk weight the guarantee or credit 
derivative as if it holds the portion of the reference exposure covered 
by the guarantee or credit derivative.
    (2) Protection purchaser. (i) An FDIC-supervised institution that 
purchases an OTC credit derivative (other than an n\th\-to-default 
credit derivative) that is recognized under Sec.  324.145 as a credit 
risk mitigant (including via recognized collateral) is not required to 
compute a separate counterparty credit risk capital requirement under 
Sec.  324.131 in accordance with Sec.  324.132(c)(3).
    (ii) If an FDIC-supervised institution cannot, or chooses not to, 
recognize a purchased credit derivative as a credit risk mitigant under 
Sec.  324.145, the FDIC-supervised institution must determine the 
exposure amount of the credit derivative under Sec.  324.132(c).
    (A) If the FDIC-supervised institution purchases credit protection 
from a counterparty that is not a securitization SPE, the FDIC-
supervised institution must determine the risk weight for the exposure 
according to Sec.  324.131.
    (B) If the FDIC-supervised institution purchases the credit 
protection from a counterparty that is a securitization SPE, the FDIC-
supervised institution must determine the risk weight for the exposure 
according to this section, including paragraph (a)(5) of this section 
for a credit derivative that has a first priority claim on the cash 
flows from the underlying exposures of the securitization SPE 
(notwithstanding amounts due under interest rate or currency derivative 
contracts, fees due, or other similar payments).

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014]



Sec.  324.143  Supervisory formula approach (SFA).

    (a) Eligibility requirements. An FDIC-supervised institution must 
use the SFA to determine its risk-weighted asset amount for a 
securitization exposure if the FDIC-supervised institution can calculate 
on an ongoing basis each

[[Page 342]]

of the SFA parameters in paragraph (e) of this section.
    (b) Mechanics. The risk-weighted asset amount for a securitization 
exposure equals its SFA risk-based capital requirement as calculated 
under paragraph (c) and (d) of this section, multiplied by 12.5.
    (c) The SFA risk-based capital requirement. (1) If KIRB 
is greater than or equal to L + T, an exposure's SFA risk-based capital 
requirement equals the exposure amount.
    (2) If KIRB is less than or equal to L, an exposure's SFA 
risk-based capital requirement is UE multiplied by TP multiplied by the 
greater of:
    (i) F [middot] T (where F is 0.016 for all securitization 
exposures); or
    (ii) S[L + T] - S[L].
    (3) If KIRB is greater than L and less than L + T, the 
FDIC-supervised institution must apply a 1,250 percent risk weight to an 
amount equal to UE [middot] TP [middot] (KIRB - L), and the 
exposure's SFA risk-based capital requirement is UE multiplied by TP 
multiplied by the greater of:
    (i) F [middot] (T - (KIRB - L)) (where F is 0.016 for all 
other securitization exposures); or
    (ii) S[L + T] - S[KIRB].
    (d) The supervisory formula:

[[Page 343]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.040

    (e) SFA parameters. For purposes of the calculations in paragraphs 
(c) and (d) of this section:
    (1) Amount of the underlying exposures (UE). UE is the EAD of any 
underlying exposures that are wholesale and retail exposures (including 
the amount of any funded spread accounts, cash collateral accounts, and 
other similar funded credit enhancements) plus the amount of any 
underlying exposures that are securitization exposures (as defined in 
Sec.  324.142(e)) plus the adjusted carrying value of any underlying 
exposures that are equity exposures (as defined in Sec.  324.151(b)).
    (2) Tranche percentage (TP). TP is the ratio of the amount of the 
FDIC-supervised institution's securitization exposure to the amount of 
the tranche that contains the securitization exposure.
    (3) Capital requirement on underlying exposures (KIRB). (i) 
KIRB is the ratio of:
    (A) The sum of the risk-based capital requirements for the 
underlying exposures plus the expected credit losses of the underlying 
exposures (as determined under this subpart E as if the

[[Page 344]]

underlying exposures were directly held by the FDIC-supervised 
institution); to
    (B) UE.
    (ii) The calculation of KIRB must reflect the effects of 
any credit risk mitigant applied to the underlying exposures (either to 
an individual underlying exposure, to a group of underlying exposures, 
or to all of the underlying exposures).
    (iii) All assets related to the securitization are treated as 
underlying exposures, including assets in a reserve account (such as a 
cash collateral account).
    (4) Credit enhancement level (L). (i) L is the ratio of:
    (A) The amount of all securitization exposures subordinated to the 
tranche that contains the FDIC-supervised institution's securitization 
exposure; to
    (B) UE.
    (ii) An FDIC-supervised institution must determine L before 
considering the effects of any tranche-specific credit enhancements.
    (iii) Any gain-on-sale or CEIO associated with the securitization 
may not be included in L.
    (iv) Any reserve account funded by accumulated cash flows from the 
underlying exposures that is subordinated to the tranche that contains 
the FDIC-supervised institution's securitization exposure may be 
included in the numerator and denominator of L to the extent cash has 
accumulated in the account. Unfunded reserve accounts (that is, reserve 
accounts that are to be funded from future cash flows from the 
underlying exposures) may not be included in the calculation of L.
    (v) In some cases, the purchase price of receivables will reflect a 
discount that provides credit enhancement (for example, first loss 
protection) for all or certain tranches of the securitization. When this 
arises, L should be calculated inclusive of this discount if the 
discount provides credit enhancement for the securitization exposure.
    (5) Thickness of tranche (T). T is the ratio of:
    (i) The amount of the tranche that contains the FDIC-supervised 
institution's securitization exposure; to
    (ii) UE.
    (6) Effective number of exposures (N). (i) Unless the FDIC-
supervised institution elects to use the formula provided in paragraph 
(f) of this section,
[GRAPHIC] [TIFF OMITTED] TR10SE13.041

where EADi represents the EAD associated with the i\th\ 
          instrument in the underlying exposures.

    (ii) Multiple exposures to one obligor must be treated as a single 
underlying exposure.
    (iii) In the case of a resecuritization, the FDIC-supervised 
institution must treat each underlying exposure as a single underlying 
exposure and must not look through to the originally securitized 
underlying exposures.
    (7) Exposure-weighted average loss given default (EWALGD). EWALGD is 
calculated as:
[GRAPHIC] [TIFF OMITTED] TR10SE13.042


[[Page 345]]


where LGDi represents the average LGD associated with all 
          exposures to the i\th\ obligor. In the case of a 
          resecuritization, an LGD of 100 percent must be assumed for 
          the underlying exposures that are themselves securitization 
          exposures.

    (f) Simplified method for computing N and EWALGD. (1) If all 
underlying exposures of a securitization are retail exposures, an FDIC-
supervised institution may apply the SFA using the following 
simplifications:
    (i) h = 0; and
    (ii) v = 0.
    (2) Under the conditions in Sec. Sec.  324.143(f)(3) and (f)(4), an 
FDIC-supervised institution may employ a simplified method for 
calculating N and EWALGD.
    (3) If C1 is no more than 0.03, an FDIC-supervised 
institution may set EWALGD = 0.50 if none of the underlying exposures is 
a securitization exposure, or may set EWALGD = 1 if one or more of the 
underlying exposures is a securitization exposure, and may set N equal 
to the following amount:
[GRAPHIC] [TIFF OMITTED] TR10SE13.043

where:
(i) Cm is the ratio of the sum of the amounts of the `m' 
          largest underlying exposures to UE; and
(ii) The level of m is to be selected by the FDIC-supervised 
          institution.

    (4) Alternatively, if only C1 is available and 
C1 is no more than 0.03, the FDIC-supervised institution may 
set EWALGD = 0.50 if none of the underlying exposures is a 
securitization exposure, or may set EWALGD = 1 if one or more of the 
underlying exposures is a securitization exposure and may set N = 1/
C1.



Sec.  324.144  Simplified supervisory formula approach (SSFA).

    (a) General requirements for the SSFA. To use the SSFA to determine 
the risk weight for a securitization exposure, an FDIC-supervised 
institution must have data that enables it to assign accurately the 
parameters described in paragraph (b) of this section. Data used to 
assign the parameters described in paragraph (b) of this section must be 
the most currently available data; if the contracts governing the 
underlying exposures of the securitization require payments on a monthly 
or quarterly basis, the data used to assign the parameters described in 
paragraph (b) of this section must be no more than 91 calendar days old. 
An FDIC-supervised institution that does not have the appropriate data 
to assign the parameters described in paragraph (b) of this section must 
assign a risk weight of 1,250 percent to the exposure.
    (b) SSFA parameters. To calculate the risk weight for a 
securitization exposure using the SSFA, an FDIC-supervised institution 
must have accurate information on the following five inputs to the SSFA 
calculation:
    (1) KG is the weighted-average (with unpaid principal 
used as the weight for each exposure) total capital requirement of the 
underlying exposures calculated using subpart D of this part. 
KG is expressed as a decimal value between zero and one (that 
is, an average risk weight of 100 percent represents a value of 
KG equal to 0.08).
    (2) Parameter W is expressed as a decimal value between zero and 
one. Parameter W is the ratio of the sum of the dollar amounts of any 
underlying exposures of the securitization that meet any of the criteria 
as set forth in paragraphs (b)(2)(i) through (vi) of this section to the 
balance, measured in dollars, of underlying exposures:
    (i) Ninety days or more past due;
    (ii) Subject to a bankruptcy or insolvency proceeding;
    (iii) In the process of foreclosure;
    (iv) Held as real estate owned;
    (v) Has contractually deferred payments for 90 days or more, other 
than

[[Page 346]]

principal or interest payments deferred on:
    (A) Federally-guaranteed student loans, in accordance with the terms 
of those guarantee programs; or
    (B) Consumer loans, including non-federally-guaranteed student 
loans, provided that such payments are deferred pursuant to provisions 
included in the contract at the time funds are disbursed that provide 
for period(s) of deferral that are not initiated based on changes in the 
creditworthiness of the borrower; or
    (vi) Is in default.
    (3) Parameter A is the attachment point for the exposure, which 
represents the threshold at which credit losses will first be allocated 
to the exposure. Except as provided in Sec.  324.142(l) for nth-to-
default credit derivatives, parameter A equals the ratio of the current 
dollar amount of underlying exposures that are subordinated to the 
exposure of the FDIC-supervised institution to the current dollar amount 
of underlying exposures. Any reserve account funded by the accumulated 
cash flows from the underlying exposures that is subordinated to the 
FDIC-supervised institution's securitization exposure may be included in 
the calculation of parameter A to the extent that cash is present in the 
account. Parameter A is expressed as a decimal value between zero and 
one.
    (4) Parameter D is the detachment point for the exposure, which 
represents the threshold at which credit losses of principal allocated 
to the exposure would result in a total loss of principal. Except as 
provided in Sec.  324.142(l) for n\th\-to-default credit derivatives, 
parameter D equals parameter A plus the ratio of the current dollar 
amount of the securitization exposures that are pari passu with the 
exposure (that is, have equal seniority with respect to credit risk) to 
the current dollar amount of the underlying exposures. Parameter D is 
expressed as a decimal value between zero and one.
    (5) A supervisory calibration parameter, p, is equal to 0.5 for 
securitization exposures that are not resecuritization exposures and 
equal to 1.5 for resecuritization exposures.
    (c) Mechanics of the SSFA. KG and W are used to calculate 
KA, the augmented value of KG, which reflects the 
observed credit quality of the underlying exposures. KA is 
defined in paragraph (d) of this section. The values of parameters A and 
D, relative to KA determine the risk weight assigned to a 
securitization exposure as described in paragraph (d) of this section. 
The risk weight assigned to a securitization exposure, or portion of a 
securitization exposure, as appropriate, is the larger of the risk 
weight determined in accordance with this paragraph (c), paragraph (d) 
of this section, and a risk weight of 20 percent.
    (1) When the detachment point, parameter D, for a securitization 
exposure is less than or equal to KA, the exposure must be 
assigned a risk weight of 1,250 percent;
    (2) When the attachment point, parameter A, for a securitization 
exposure is greater than or equal to KA, the FDIC-supervised 
institution must calculate the risk weight in accordance with paragraph 
(d) of this section;
    (3) When A is less than KA and D is greater than 
KA, the risk weight is a weighted-average of 1,250 percent 
and 1,250 percent times KSSFA calculated in accordance with 
paragraph (d) of this section. For the purpose of this weighted-average 
calculation:

[[Page 347]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.044


[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014]



Sec.  324.145  Recognition of credit risk mitigants 
for securitization exposures.

    (a) General. An originating FDIC-supervised institution that has 
obtained a credit risk mitigant to hedge its securitization exposure to 
a synthetic or traditional securitization that satisfies the operational 
criteria in Sec.  324.141 may recognize the credit risk mitigant, but 
only as provided in this section. An investing FDIC-supervised 
institution that has obtained a credit risk mitigant to hedge a 
securitization exposure may recognize the credit risk

[[Page 348]]

mitigant, but only as provided in this section.
    (b) Collateral--(1) Rules of recognition. An FDIC-supervised 
institution may recognize financial collateral in determining the FDIC-
supervised institution's risk-weighted asset amount for a securitization 
exposure (other than a repo-style transaction, an eligible margin loan, 
or an OTC derivative contract for which the FDIC-supervised institution 
has reflected collateral in its determination of exposure amount under 
Sec.  324.132) as follows. The FDIC-supervised institution's risk-
weighted asset amount for the collateralized securitization exposure is 
equal to the risk-weighted asset amount for the securitization exposure 
as calculated under the SSFA in Sec.  324.144 or under the SFA in Sec.  
324.143 multiplied by the ratio of adjusted exposure amount (SE*) to 
original exposure amount (SE), where:
    (i) SE* equals max {0, [SE - C x (1- Hs - 
Hfx)]{time} ;
    (ii) SE equals the amount of the securitization exposure calculated 
under Sec.  324.142(e);
    (iii) C equals the current fair value of the collateral;
    (iv) Hs equals the haircut appropriate to the collateral 
type; and
    (v) Hfx equals the haircut appropriate for any currency 
mismatch between the collateral and the exposure.
[GRAPHIC] [TIFF OMITTED] TR10SE13.048

    (3) Standard supervisory haircuts. Unless an FDIC-supervised 
institution qualifies for use of and uses own-estimates haircuts in 
paragraph (b)(4) of this section:
    (i) An FDIC-supervised institution must use the collateral type 
haircuts (Hs) in Table 1 to Sec.  324.132 of this subpart;
    (ii) An FDIC-supervised institution must use a currency mismatch 
haircut (Hfx) of 8 percent if the exposure and the collateral 
are denominated in different currencies;
    (iii) An FDIC-supervised institution must multiply the supervisory 
haircuts obtained in paragraphs (b)(3)(i) and (ii) of this section by 
the square root of 6.5 (which equals 2.549510); and
    (iv) An FDIC-supervised institution must adjust the supervisory 
haircuts upward on the basis of a holding period longer than 65 business 
days where and as appropriate to take into account the illiquidity of 
the collateral.
    (4) Own estimates for haircuts. With the prior written approval of 
the FDIC, an FDIC-supervised institution may calculate haircuts using 
its own internal estimates of market price volatility and foreign 
exchange volatility, subject to Sec.  324.132(b)(2)(iii). The minimum 
holding period (TM) for securitization exposures is 65 
business days.
    (c) Guarantees and credit derivatives--(1) Limitations on 
recognition. An FDIC-supervised institution may only recognize an 
eligible guarantee or eligible credit derivative provided by an eligible 
guarantor in determining the FDIC-supervised institution's risk-weighted 
asset amount for a securitization exposure.
    (2) ECL for securitization exposures. When an FDIC-supervised 
institution recognizes an eligible guarantee or eligible credit 
derivative provided by an eligible guarantor in determining the FDIC-
supervised institution's risk-weighted asset amount for a securitization 
exposure, the FDIC-supervised institution must also:
    (i) Calculate ECL for the protected portion of the exposure using 
the same

[[Page 349]]

risk parameters that it uses for calculating the risk-weighted asset 
amount of the exposure as described in paragraph (c)(3) of this section; 
and
    (ii) Add the exposure's ECL to the FDIC-supervised institution's 
total ECL.
    (3) Rules of recognition. An FDIC-supervised institution may 
recognize an eligible guarantee or eligible credit derivative provided 
by an eligible guarantor in determining the FDIC-supervised 
institution's risk-weighted asset amount for the securitization exposure 
as follows:
    (i) Full coverage. If the protection amount of the eligible 
guarantee or eligible credit derivative equals or exceeds the amount of 
the securitization exposure, the FDIC-supervised institution may set the 
risk-weighted asset amount for the securitization exposure equal to the 
risk-weighted asset amount for a direct exposure to the eligible 
guarantor (as determined in the wholesale risk weight function described 
in Sec.  324.131), using the FDIC-supervised institution's PD for the 
guarantor, the FDIC-supervised institution's LGD for the guarantee or 
credit derivative, and an EAD equal to the amount of the securitization 
exposure (as determined in Sec.  324.142(e)).
    (ii) Partial coverage. If the protection amount of the eligible 
guarantee or eligible credit derivative is less than the amount of the 
securitization exposure, the FDIC-supervised institution may set the 
risk-weighted asset amount for the securitization exposure equal to the 
sum of:
    (A) Covered portion. The risk-weighted asset amount for a direct 
exposure to the eligible guarantor (as determined in the wholesale risk 
weight function described in Sec.  324.131), using the FDIC-supervised 
institution's PD for the guarantor, the FDIC-supervised institution's 
LGD for the guarantee or credit derivative, and an EAD equal to the 
protection amount of the credit risk mitigant; and
    (B) Uncovered portion. (1) 1.0 minus the ratio of the protection 
amount of the eligible guarantee or eligible credit derivative to the 
amount of the securitization exposure); multiplied by
    (2) The risk-weighted asset amount for the securitization exposure 
without the credit risk mitigant (as determined in Sec. Sec.  324.142 
through 324.146).
    (4) Mismatches. The FDIC-supervised institution must make applicable 
adjustments to the protection amount as required in Sec.  324.134(d), 
(e), and (f) for any hedged securitization exposure and any more senior 
securitization exposure that benefits from the hedge. In the context of 
a synthetic securitization, when an eligible guarantee or eligible 
credit derivative covers multiple hedged exposures that have different 
residual maturities, the FDIC-supervised institution must use the 
longest residual maturity of any of the hedged exposures as the residual 
maturity of all the hedged exposures.



Sec. Sec.  324.146-324.150  [Reserved]

                Risk-Weighted Assets for Equity Exposures



Sec.  324.151  Introduction and exposure measurement.

    (a) General. (1) To calculate its risk-weighted asset amounts for 
equity exposures that are not equity exposures to investment funds, an 
FDIC-supervised institution may apply either the Simple Risk Weight 
Approach (SRWA) in Sec.  324.152 or, if it qualifies to do so, the 
Internal Models Approach (IMA) in Sec.  324.153. An FDIC-supervised 
institution must use the look-through approaches provided in Sec.  
324.154 to calculate its risk-weighted asset amounts for equity 
exposures to investment funds.
    (2) An FDIC-supervised institution must treat an investment in a 
separate account (as defined in Sec.  324.2), as if it were an equity 
exposure to an investment fund as provided in Sec.  324.154.
    (3) Stable value protection. (i) Stable value protection means a 
contract where the provider of the contract is obligated to pay:
    (A) The policy owner of a separate account an amount equal to the 
shortfall between the fair value and cost basis of the separate account 
when the policy owner of the separate account surrenders the policy, or
    (B) The beneficiary of the contract an amount equal to the shortfall 
between the fair value and book value of a specified portfolio of 
assets.

[[Page 350]]

    (ii) An FDIC-supervised institution that purchases stable value 
protection on its investment in a separate account must treat the 
portion of the carrying value of its investment in the separate account 
attributable to the stable value protection as an exposure to the 
provider of the protection and the remaining portion of the carrying 
value of its separate account as an equity exposure to an investment 
fund.
    (iii) An FDIC-supervised institution that provides stable value 
protection must treat the exposure as an equity derivative with an 
adjusted carrying value determined as the sum of Sec.  324.151(b)(1) and 
(2).
    (b) Adjusted carrying value. For purposes of this subpart, the 
adjusted carrying value of an equity exposure is:
    (1) For the on-balance sheet component of an equity exposure, the 
FDIC-supervised institution's carrying value of the exposure;
    (2) For the off-balance sheet component of an equity exposure, the 
effective notional principal amount of the exposure, the size of which 
is equivalent to a hypothetical on-balance sheet position in the 
underlying equity instrument that would evidence the same change in fair 
value (measured in dollars) for a given small change in the price of the 
underlying equity instrument, minus the adjusted carrying value of the 
on-balance sheet component of the exposure as calculated in paragraph 
(b)(1) of this section.
    (3) For unfunded equity commitments that are unconditional, the 
effective notional principal amount is the notional amount of the 
commitment. For unfunded equity commitments that are conditional, the 
effective notional principal amount is the FDIC-supervised institution's 
best estimate of the amount that would be funded under economic downturn 
conditions.



Sec.  324.152  Simple risk weight approach (SRWA).

    (a) General. Under the SRWA, an FDIC-supervised institution's 
aggregate risk-weighted asset amount for its equity exposures is equal 
to the sum of the risk-weighted asset amounts for each of the FDIC-
supervised institution's individual equity exposures (other than equity 
exposures to an investment fund) as determined in this section and the 
risk-weighted asset amounts for each of the FDIC-supervised 
institution's individual equity exposures to an investment fund as 
determined in Sec.  324.154.
    (b) SRWA computation for individual equity exposures. An FDIC-
supervised institution must determine the risk-weighted asset amount for 
an individual equity exposure (other than an equity exposure to an 
investment fund) by multiplying the adjusted carrying value of the 
equity exposure or the effective portion and ineffective portion of a 
hedge pair (as defined in paragraph (c) of this section) by the lowest 
applicable risk weight in this section.
    (1) Zero percent risk weight equity exposures. An equity exposure to 
an entity whose credit exposures are exempt from the 0.03 percent PD 
floor in Sec.  324.131(d)(2) is assigned a zero percent risk weight.
    (2) 20 percent risk weight equity exposures. An equity exposure to a 
Federal Home Loan Bank or the Federal Agricultural Mortgage Corporation 
(Farmer Mac) is assigned a 20 percent risk weight.
    (3) 100 percent risk weight equity exposures. The following equity 
exposures are assigned a 100 percent risk weight:
    (i) Community development equity exposures. An equity exposure that 
qualifies as a community development investment under section 24 
(Eleventh) of the National Bank Act, excluding equity exposures to an 
unconsolidated small business investment company and equity exposures 
held through a consolidated small business investment company described 
in section 302 of the Small Business Investment Act.
    (ii) Effective portion of hedge pairs. The effective portion of a 
hedge pair.
    (iii) Non-significant equity exposures. Equity exposures, excluding 
significant investments in the capital of an unconsolidated institution 
in the form of common stock and exposures to an investment firm that 
would meet the definition of a traditional securitization were it not 
for the FDIC's application of paragraph (8) of that definition in Sec.  
324.2 and has greater than immaterial

[[Page 351]]

leverage, to the extent that the aggregate adjusted carrying value of 
the exposures does not exceed 10 percent of the FDIC-supervised 
institution's total capital.
    (A) To compute the aggregate adjusted carrying value of an FDIC-
supervised institution's equity exposures for purposes of this section, 
the FDIC-supervised institution may exclude equity exposures described 
in paragraphs (b)(1), (b)(2), (b)(3)(i), and (b)(3)(ii) of this section, 
the equity exposure in a hedge pair with the smaller adjusted carrying 
value, and a proportion of each equity exposure to an investment fund 
equal to the proportion of the assets of the investment fund that are 
not equity exposures or that meet the criterion of paragraph (b)(3)(i) 
of this section. If an FDIC-supervised institution does not know the 
actual holdings of the investment fund, the FDIC-supervised institution 
may calculate the proportion of the assets of the fund that are not 
equity exposures based on the terms of the prospectus, partnership 
agreement, or similar contract that defines the fund's permissible 
investments. If the sum of the investment limits for all exposure 
classes within the fund exceeds 100 percent, the FDIC-supervised 
institution must assume for purposes of this section that the investment 
fund invests to the maximum extent possible in equity exposures.
    (B) When determining which of an FDIC-supervised institution's 
equity exposures qualifies for a 100 percent risk weight under this 
section, an FDIC-supervised institution first must include equity 
exposures to unconsolidated small business investment companies or held 
through consolidated small business investment companies described in 
section 302 of the Small Business Investment Act, then must include 
publicly traded equity exposures (including those held indirectly 
through investment funds), and then must include non-publicly traded 
equity exposures (including those held indirectly through investment 
funds).
    (4) 250 percent risk weight equity exposures. Significant 
investments in the capital of unconsolidated financial institutions in 
the form of common stock that are not deducted from capital pursuant to 
Sec.  324.22(b)(4) are assigned a 250 percent risk weight.
    (5) 300 percent risk weight equity exposures. A publicly traded 
equity exposure (other than an equity exposure described in paragraph 
(b)(6) of this section and including the ineffective portion of a hedge 
pair) is assigned a 300 percent risk weight.
    (6) 400 percent risk weight equity exposures. An equity exposure 
(other than an equity exposure described in paragraph (b)(6) of this 
section) that is not publicly traded is assigned a 400 percent risk 
weight.
    (7) 600 percent risk weight equity exposures. An equity exposure to 
an investment firm that:
    (i) Would meet the definition of a traditional securitization were 
it not for the FDIC's application of paragraph (8) of that definition in 
Sec.  324.2; and
    (ii) Has greater than immaterial leverage is assigned a 600 percent 
risk weight.
    (c) Hedge transactions--(1) Hedge pair. A hedge pair is two equity 
exposures that form an effective hedge so long as each equity exposure 
is publicly traded or has a return that is primarily based on a publicly 
traded equity exposure.
    (2) Effective hedge. Two equity exposures form an effective hedge if 
the exposures either have the same remaining maturity or each has a 
remaining maturity of at least three months; the hedge relationship is 
formally documented in a prospective manner (that is, before the FDIC-
supervised institution acquires at least one of the equity exposures); 
the documentation specifies the measure of effectiveness (E) the FDIC-
supervised institution will use for the hedge relationship throughout 
the life of the transaction; and the hedge relationship has an E greater 
than or equal to 0.8. An FDIC-supervised institution must measure E at 
least quarterly and must use one of three alternative measures of E:
    (i) Under the dollar-offset method of measuring effectiveness, the 
FDIC-supervised institution must determine the ratio of value change 
(RVC). The RVC is the ratio of the cumulative sum of the periodic 
changes in value of one equity exposure to the cumulative sum of the 
periodic changes in the value of the other equity exposure. If RVC is

[[Page 352]]

positive, the hedge is not effective and E equals zero. If RVC is 
negative and greater than or equal to -1 (that is, between zero and -1), 
then E equals the absolute value of RVC. If RVC is negative and less 
than -1, then E equals 2 plus RVC.
    (ii) Under the variability-reduction method of measuring 
effectiveness:
[GRAPHIC] [TIFF OMITTED] TR10SE13.045

    (iii) Under the regression method of measuring effectiveness, E 
equals the coefficient of determination of a regression in which the 
change in value of one exposure in a hedge pair is the dependent 
variable and the change in value of the other exposure in a hedge pair 
is the independent variable. However, if the estimated regression 
coefficient is positive, then the value of E is zero.
    (3) The effective portion of a hedge pair is E multiplied by the 
greater of the adjusted carrying values of the equity exposures forming 
a hedge pair.
    (4) The ineffective portion of a hedge pair is (1-E) multiplied by 
the greater of the adjusted carrying values of the equity exposures 
forming a hedge pair.



Sec.  324.153  Internal models approach (IMA).

    (a) General. An FDIC-supervised institution may calculate its risk-
weighted asset amount for equity exposures using the IMA by modeling 
publicly traded and non-publicly traded equity exposures (in accordance 
with paragraph (c) of this section) or by modeling only publicly traded 
equity exposures (in accordance with paragraphs (c) and (d) of this 
section).
    (b) Qualifying criteria. To qualify to use the IMA to calculate 
risk-weighted assets for equity exposures, an FDIC-supervised 
institution must receive prior written approval from the FDIC. To 
receive such approval, the FDIC-supervised institution must demonstrate 
to the FDIC's satisfaction that the FDIC-supervised institution meets 
the following criteria:
    (1) The FDIC-supervised institution must have one or more models 
that:
    (i) Assess the potential decline in value of its modeled equity 
exposures;
    (ii) Are commensurate with the size, complexity, and composition of 
the FDIC-supervised institution's modeled equity exposures; and
    (iii) Adequately capture both general market risk and idiosyncratic 
risk.
    (2) The FDIC-supervised institution's model must produce an estimate 
of potential losses for its modeled equity exposures that is no less 
than the estimate of potential losses produced by a VaR methodology 
employing a 99th percentile one-tailed confidence interval of the 
distribution of quarterly returns for a benchmark portfolio of equity 
exposures comparable to the FDIC-supervised institution's modeled

[[Page 353]]

equity exposures using a long-term sample period.
    (3) The number of risk factors and exposures in the sample and the 
data period used for quantification in the FDIC-supervised institution's 
model and benchmarking exercise must be sufficient to provide confidence 
in the accuracy and robustness of the FDIC-supervised institution's 
estimates.
    (4) The FDIC-supervised institution's model and benchmarking process 
must incorporate data that are relevant in representing the risk profile 
of the FDIC-supervised institution's modeled equity exposures, and must 
include data from at least one equity market cycle containing adverse 
market movements relevant to the risk profile of the FDIC-supervised 
institution's modeled equity exposures. In addition, the FDIC-supervised 
institution's benchmarking exercise must be based on daily market prices 
for the benchmark portfolio. If the FDIC-supervised institution's model 
uses a scenario methodology, the FDIC-supervised institution must 
demonstrate that the model produces a conservative estimate of potential 
losses on the FDIC-supervised institution's modeled equity exposures 
over a relevant long-term market cycle. If the FDIC-supervised 
institution employs risk factor models, the FDIC-supervised institution 
must demonstrate through empirical analysis the appropriateness of the 
risk factors used.
    (5) The FDIC-supervised institution must be able to demonstrate, 
using theoretical arguments and empirical evidence, that any proxies 
used in the modeling process are comparable to the FDIC-supervised 
institution's modeled equity exposures and that the FDIC-supervised 
institution has made appropriate adjustments for differences. The FDIC-
supervised institution must derive any proxies for its modeled equity 
exposures and benchmark portfolio using historical market data that are 
relevant to the FDIC-supervised institution's modeled equity exposures 
and benchmark portfolio (or, where not, must use appropriately adjusted 
data), and such proxies must be robust estimates of the risk of the 
FDIC-supervised institution's modeled equity exposures.
    (c) Risk-weighted assets calculation for an FDIC-supervised 
institution using the IMA for publicly traded and non-publicly traded 
equity exposures. If an FDIC-supervised institution models publicly 
traded and non-publicly traded equity exposures, the FDIC-supervised 
institution's aggregate risk-weighted asset amount for its equity 
exposures is equal to the sum of:
    (1) The risk-weighted asset amount of each equity exposure that 
qualifies for a 0 percent, 20 percent, or 100 percent risk weight under 
Sec.  324.152(b)(1) through (b)(3)(i) (as determined under Sec.  
324.152) and each equity exposure to an investment fund (as determined 
under Sec.  324.154); and
    (2) The greater of:
    (i) The estimate of potential losses on the FDIC-supervised 
institution's equity exposures (other than equity exposures referenced 
in paragraph (c)(1) of this section) generated by the FDIC-supervised 
institution's internal equity exposure model multiplied by 12.5; or
    (ii) The sum of:
    (A) 200 percent multiplied by the aggregate adjusted carrying value 
of the FDIC-supervised institution's publicly traded equity exposures 
that do not belong to a hedge pair, do not qualify for a 0 percent, 20 
percent, or 100 percent risk weight under Sec.  324.152(b)(1) through 
(b)(3)(i), and are not equity exposures to an investment fund;
    (B) 200 percent multiplied by the aggregate ineffective portion of 
all hedge pairs; and
    (C) 300 percent multiplied by the aggregate adjusted carrying value 
of the FDIC-supervised institution's equity exposures that are not 
publicly traded, do not qualify for a 0 percent, 20 percent, or 100 
percent risk weight under Sec.  324.152(b)(1) through (b)(3)(i), and are 
not equity exposures to an investment fund.
    (d) Risk-weighted assets calculation for an FDIC-supervised 
institution using the IMA only for publicly traded equity exposures. If 
an FDIC-supervised institution models only publicly traded equity 
exposures, the FDIC-supervised institution's aggregate risk-weighted 
asset amount for its equity exposures is equal to the sum of:
    (1) The risk-weighted asset amount of each equity exposure that 
qualifies for

[[Page 354]]

a 0 percent, 20 percent, or 100 percent risk weight under Sec. Sec.  
324.152(b)(1) through (b)(3)(i) (as determined under Sec.  324.152), 
each equity exposure that qualifies for a 400 percent risk weight under 
Sec.  324.152(b)(5) or a 600 percent risk weight under Sec.  
324.152(b)(6) (as determined under Sec.  324.152), and each equity 
exposure to an investment fund (as determined under Sec.  324.154); and
    (2) The greater of:
    (i) The estimate of potential losses on the FDIC-supervised 
institution's equity exposures (other than equity exposures referenced 
in paragraph (d)(1) of this section) generated by the FDIC-supervised 
institution's internal equity exposure model multiplied by 12.5; or
    (ii) The sum of:
    (A) 200 percent multiplied by the aggregate adjusted carrying value 
of the FDIC-supervised institution's publicly traded equity exposures 
that do not belong to a hedge pair, do not qualify for a 0 percent, 20 
percent, or 100 percent risk weight under Sec.  324.152(b)(1) through 
(b)(3)(i), and are not equity exposures to an investment fund; and
    (B) 200 percent multiplied by the aggregate ineffective portion of 
all hedge pairs.



Sec.  324.154  Equity exposures to investment funds.

    (a) Available approaches. (1) Unless the exposure meets the 
requirements for a community development equity exposure in Sec.  
324.152(b)(3)(i), an FDIC-supervised institution must determine the 
risk-weighted asset amount of an equity exposure to an investment fund 
under the full look-through approach in paragraph (b) of this section, 
the simple modified look-through approach in paragraph (c) of this 
section, or the alternative modified look-through approach in paragraph 
(d) of this section.
    (2) The risk-weighted asset amount of an equity exposure to an 
investment fund that meets the requirements for a community development 
equity exposure in Sec.  324.152(b)(3)(i) is its adjusted carrying 
value.
    (3) If an equity exposure to an investment fund is part of a hedge 
pair and the FDIC-supervised institution does not use the full look-
through approach, the FDIC-supervised institution may use the 
ineffective portion of the hedge pair as determined under Sec.  
324.152(c) as the adjusted carrying value for the equity exposure to the 
investment fund. The risk-weighted asset amount of the effective portion 
of the hedge pair is equal to its adjusted carrying value.
    (b) Full look-through approach. An FDIC-supervised institution that 
is able to calculate a risk-weighted asset amount for its proportional 
ownership share of each exposure held by the investment fund (as 
calculated under this subpart E of this part as if the proportional 
ownership share of each exposure were held directly by the FDIC-
supervised institution) may either:
    (1) Set the risk-weighted asset amount of the FDIC-supervised 
institution's exposure to the fund equal to the product of:
    (i) The aggregate risk-weighted asset amounts of the exposures held 
by the fund as if they were held directly by the FDIC-supervised 
institution; and
    (ii) The FDIC-supervised institution's proportional ownership share 
of the fund; or
    (2) Include the FDIC-supervised institution's proportional ownership 
share of each exposure held by the fund in the FDIC-supervised 
institution's IMA.
    (c) Simple modified look-through approach. Under this approach, the 
risk-weighted asset amount for an FDIC-supervised institution's equity 
exposure to an investment fund equals the adjusted carrying value of the 
equity exposure multiplied by the highest risk weight assigned according 
to subpart D of this part that applies to any exposure the fund is 
permitted to hold under its prospectus, partnership agreement, or 
similar contract that defines the fund's permissible investments 
(excluding derivative contracts that are used for hedging rather than 
speculative purposes and that do not constitute a material portion of 
the fund's exposures).
    (d) Alternative modified look-through approach. Under this approach, 
an FDIC-supervised institution may assign the adjusted carrying value of 
an equity exposure to an investment fund on a pro rata basis to 
different risk weight categories assigned according to subpart D of this 
part based on the investment limits in the fund's prospectus, 
partnership agreement, or

[[Page 355]]

similar contract that defines the fund's permissible investments. The 
risk-weighted asset amount for the FDIC-supervised institution's equity 
exposure to the investment fund equals the sum of each portion of the 
adjusted carrying value assigned to an exposure class multiplied by the 
applicable risk weight. If the sum of the investment limits for all 
exposure types within the fund exceeds 100 percent, the FDIC-supervised 
institution must assume that the fund invests to the maximum extent 
permitted under its investment limits in the exposure type with the 
highest risk weight under subpart D of this part, and continues to make 
investments in order of the exposure type with the next highest risk 
weight under subpart D of this part until the maximum total investment 
level is reached. If more than one exposure type applies to an exposure, 
the FDIC-supervised institution must use the highest applicable risk 
weight. An FDIC-supervised institution may exclude derivative contracts 
held by the fund that are used for hedging rather than for speculative 
purposes and do not constitute a material portion of the fund's 
exposures.



Sec.  324.155  Equity derivative contracts.

    (a) Under the IMA, in addition to holding risk-based capital against 
an equity derivative contract under this part, an FDIC-supervised 
institution must hold risk-based capital against the counterparty credit 
risk in the equity derivative contract by also treating the equity 
derivative contract as a wholesale exposure and computing a supplemental 
risk-weighted asset amount for the contract under Sec.  324.132.
    (b) Under the SRWA, an FDIC-supervised institution may choose not to 
hold risk-based capital against the counterparty credit risk of equity 
derivative contracts, as long as it does so for all such contracts. 
Where the equity derivative contracts are subject to a qualified master 
netting agreement, an FDIC-supervised institution using the SRWA must 
either include all or exclude all of the contracts from any measure used 
to determine counterparty credit risk exposure.



Sec. Sec.  324.161-324.160  [Reserved]

                Risk-Weighted Assets for Operational Risk



Sec.  324.161  Qualification requirements for incorporation 
of operational risk mitigants.

    (a) Qualification to use operational risk mitigants. An FDIC-
supervised institution may adjust its estimate of operational risk 
exposure to reflect qualifying operational risk mitigants if:
    (1) The FDIC-supervised institution's operational risk 
quantification system is able to generate an estimate of the FDIC-
supervised institution's operational risk exposure (which does not 
incorporate qualifying operational risk mitigants) and an estimate of 
the FDIC-supervised institution's operational risk exposure adjusted to 
incorporate qualifying operational risk mitigants; and
    (2) The FDIC-supervised institution's methodology for incorporating 
the effects of insurance, if the FDIC-supervised institution uses 
insurance as an operational risk mitigant, captures through appropriate 
discounts to the amount of risk mitigation:
    (i) The residual term of the policy, where less than one year;
    (ii) The cancellation terms of the policy, where less than one year;
    (iii) The policy's timeliness of payment;
    (iv) The uncertainty of payment by the provider of the policy; and
    (v) Mismatches in coverage between the policy and the hedged 
operational loss event.
    (b) Qualifying operational risk mitigants. Qualifying operational 
risk mitigants are:
    (1) Insurance that:
    (i) Is provided by an unaffiliated company that the FDIC-supervised 
institution deems to have strong capacity to meet its claims payment 
obligations and the obligor rating category to which the FDIC-supervised 
institution assigns the company is assigned a PD equal to or less than 
10 basis points;
    (ii) Has an initial term of at least one year and a residual term of 
more than 90 days;
    (iii) Has a minimum notice period for cancellation by the provider 
of 90 days;

[[Page 356]]

    (iv) Has no exclusions or limitations based upon regulatory action 
or for the receiver or liquidator of a failed depository institution; 
and
    (v) Is explicitly mapped to a potential operational loss event;
    (2) Operational risk mitigants other than insurance for which the 
FDIC has given prior written approval. In evaluating an operational risk 
mitigant other than insurance, the FDIC will consider whether the 
operational risk mitigant covers potential operational losses in a 
manner equivalent to holding total capital.



Sec.  324.162  Mechanics of risk-weighted asset calculation.

    (a) If an FDIC-supervised institution does not qualify to use or 
does not have qualifying operational risk mitigants, the FDIC-supervised 
institution's dollar risk-based capital requirement for operational risk 
is its operational risk exposure minus eligible operational risk offsets 
(if any).
    (b) If an FDIC-supervised institution qualifies to use operational 
risk mitigants and has qualifying operational risk mitigants, the FDIC-
supervised institution's dollar risk-based capital requirement for 
operational risk is the greater of:
    (1) The FDIC-supervised institution's operational risk exposure 
adjusted for qualifying operational risk mitigants minus eligible 
operational risk offsets (if any); or
    (2) 0.8 multiplied by the difference between:
    (i) The FDIC-supervised institution's operational risk exposure; and
    (ii) Eligible operational risk offsets (if any).
    (c) The FDIC-supervised institution's risk-weighted asset amount for 
operational risk equals the FDIC-supervised institution's dollar risk-
based capital requirement for operational risk determined under sections 
162(a) or (b) multiplied by 12.5.



Sec. Sec.  324.163-324.170  [Reserved]

                               Disclosures



Sec.  324.171  Purpose and scope.

    Sec. Sec.  324.171 through 324.173 establish public disclosure 
requirements related to the capital requirements of an FDIC-supervised 
institution that is an advanced approaches FDIC-supervised institution.



Sec.  324.172  Disclosure requirements.

    (a) An FDIC-supervised institution that is an advanced approaches 
FDIC-supervised institution that has completed the parallel run process 
and that has received notification from the FDIC pursuant to Sec.  
324.121(d) must publicly disclose each quarter its total and tier 1 
risk-based capital ratios and their components as calculated under this 
subpart (that is, common equity tier 1 capital, additional tier 1 
capital, tier 2 capital, total qualifying capital, and total risk-
weighted assets).
    (b) An FDIC-supervised institution that is an advanced approaches 
FDIC-supervised institution that has completed the parallel run process 
and that has received notification from the FDIC pursuant to section 
Sec.  324.121(d) must comply with paragraph (c) of this section unless 
it is a consolidated subsidiary of a bank holding company, savings and 
loan holding company, or depository institution that is subject to these 
disclosure requirements or a subsidiary of a non-U.S. banking 
organization that is subject to comparable public disclosure 
requirements in its home jurisdiction.
    (c)(1) An FDIC-supervised institution described in paragraph (b) of 
this section must provide timely public disclosures each calendar 
quarter of the information in the applicable tables in Sec.  324.173. If 
a significant change occurs, such that the most recent reported amounts 
are no longer reflective of the FDIC-supervised institution's capital 
adequacy and risk profile, then a brief discussion of this change and 
its likely impact must be disclosed as soon as practicable thereafter. 
Qualitative disclosures that typically do not change each quarter (for 
example, a general summary of the FDIC-supervised institution's risk 
management objectives and policies, reporting system, and definitions) 
may be disclosed annually after the end of the fourth calendar quarter, 
provided that any significant changes to these are disclosed in the 
interim. Management may provide all

[[Page 357]]

of the disclosures required by this subpart in one place on the FDIC-
supervised institution's public Web site or may provide the disclosures 
in more than one public financial report or other regulatory reports, 
provided that the FDIC-supervised institution publicly provides a 
summary table specifically indicating the location(s) of all such 
disclosures.
    (2) An FDIC-supervised institution described in paragraph (b) of 
this section must have a formal disclosure policy approved by the board 
of directors that addresses its approach for determining the disclosures 
it makes. The policy must address the associated internal controls and 
disclosure controls and procedures. The board of directors and senior 
management are responsible for establishing and maintaining an effective 
internal control structure over financial reporting, including the 
disclosures required by this subpart, and must ensure that appropriate 
review of the disclosures takes place. One or more senior officers of 
the FDIC-supervised institution must attest that the disclosures meet 
the requirements of this subpart.
    (3) If an FDIC-supervised institution described in paragraph (b) of 
this section believes that disclosure of specific commercial or 
financial information would prejudice seriously its position by making 
public information that is either proprietary or confidential in nature, 
the FDIC-supervised institution is not required to disclose those 
specific items, but must disclose more general information about the 
subject matter of the requirement, together with the fact that, and the 
reason why, the specific items of information have not been disclosed.
    (d)(1) An FDIC-supervised institution that meets any of the criteria 
in Sec.  324.100(b)(1) before January 1, 2015, must publicly disclose 
each quarter its supplementary leverage ratio and the components thereof 
(that is, tier 1 capital and total leverage exposure) as calculated 
under subpart B of this part, beginning with the first quarter in 2015. 
This disclosure requirement applies without regard to whether the FDIC-
supervised institution has completed the parallel run process and 
received notification from the FDIC pursuant to Sec.  324.121(d).
    (2) An FDIC-supervised institution that meets any of the criteria in 
Sec.  324.100(b)(1) on or after January 1, 2015, must publicly disclose 
each quarter its supplementary leverage ratio and the components thereof 
(that is, tier 1 capital and total leverage exposure) as calculated 
under subpart B of this part beginning with the calendar quarter 
immediately following the quarter in which the FDIC-supervised 
institution becomes an advanced approaches FDIC-supervised institution. 
This disclosure requirement applies without regard to whether the FDIC-
supervised institution has completed the parallel run process and has 
received notification from the FDIC pursuant to Sec.  324.121(d).

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 57750, Sept. 26, 2014; 
80 FR 41425, July 15, 2015]



Sec.  324.173  Disclosures by certain advanced approaches 
FDIC-supervised institutions.

    (a)(1) An advanced approaches FDIC-supervised institution described 
in Sec.  324.172(b) must make the disclosures described in Tables 1 
through 12 to Sec.  324.173.
    (2) An advanced approaches FDIC-supervised institution that is 
required to publicly disclose its supplementary leverage ratio pursuant 
to Sec.  324.172(d) must make the disclosures required under Table 13 to 
Sec.  324.173, unless the FDIC-supervised institution is a consolidated 
subsidiary of a bank holding company, savings and loan holding company, 
or depository institution that is subject to these disclosures 
requirements or a subsidiary of a non-U.S. banking organization that is 
subject to comparable public disclosure requirements in its home 
jurisdiction.
    (3) The disclosures described in Tables 1 through 12 to Sec.  
324.173 must be made publicly available for twelve consecutive quarters 
beginning on January 1, 2014, or a shorter period, as applicable, for 
the quarters after the FDIC-supervised institution has completed the 
parallel run process and received notification from the FDIC pursuant to 
Sec.  324.121(d). The disclosures described in

[[Page 358]]

Table 13 to Sec.  324.173 must be made publicly available for twelve 
consecutive quarters beginning on January 1, 2015, or a shorter period, 
as applicable, for the quarters after the FDIC-supervised institution 
becomes subject to the disclosure of the supplementary leverage ratio 
pursuant to Sec.  324.172(d) and Sec.  324.173(a)(2).

             Table 1 to Sec.   324.173--Scope of Application
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The name of the top
                                                 corporate entity in the
                                                 group to which subpart
                                                 E of this part applies.
                               (b)............  A brief description of
                                                 the differences in the
                                                 basis for consolidating
                                                 entities \1\ for
                                                 accounting and
                                                 regulatory purposes,
                                                 with a description of
                                                 those entities:
                                                (1) That are fully
                                                 consolidated;
                                                (2) That are
                                                 deconsolidated and
                                                 deducted from total
                                                 capital;
                                                (3) For which the total
                                                 capital requirement is
                                                 deducted; and
                                                (4) That are neither
                                                 consolidated nor
                                                 deducted (for example,
                                                 where the investment in
                                                 the entity is assigned
                                                 a risk weight in
                                                 accordance with this
                                                 subpart E).
                               (c)............  Any restrictions, or
                                                 other major
                                                 impediments, on
                                                 transfer of funds or
                                                 total capital within
                                                 the group.
Quantitative disclosures.....  (d)............  The aggregate amount of
                                                 surplus capital of
                                                 insurance subsidiaries
                                                 included in the total
                                                 capital of the
                                                 consolidated group.
                               ((e)...........  The aggregate amount by
                                                 which actual total
                                                 capital is less than
                                                 the minimum total
                                                 capital requirement in
                                                 all subsidiaries, with
                                                 total capital
                                                 requirements and the
                                                 name(s) of the
                                                 subsidiaries with such
                                                 deficiencies.
------------------------------------------------------------------------
\1\ Such entities include securities, insurance and other financial
  subsidiaries, commercial subsidiaries (where permitted), and
  significant minority equity investments in insurance, financial and
  commercial entities.


              Table 2 to Sec.   324.173--Capital Structure
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  Summary information on
                                                 the terms and
                                                 conditions of the main
                                                 features of all
                                                 regulatory capital
                                                 instruments.
Quantitative disclosures.....  (b)............  The amount of common
                                                 equity tier 1 capital,
                                                 with separate
                                                 disclosure of:
                                                (1) Common stock and
                                                 related surplus;
                                                (2) Retained earnings;
                                                (3) Common equity
                                                 minority interest;
                                                (4) AOCI (net of tax)
                                                 and other reserves; and
                                                (5) Regulatory
                                                 adjustments and
                                                 deductions made to
                                                 common equity tier 1
                                                 capital.
                               (c)............  The amount of tier 1
                                                 capital, with separate
                                                 disclosure of:
                                                (1) Additional tier 1
                                                 capital elements,
                                                 including additional
                                                 tier 1 capital
                                                 instruments and tier 1
                                                 minority interest not
                                                 included in common
                                                 equity tier 1 capital;
                                                 and
                                                (2) Regulatory
                                                 adjustments and
                                                 deductions made to tier
                                                 1 capital.
                               (d)............  The amount of total
                                                 capital, with separate
                                                 disclosure of:
                                                (1) Tier 2 capital
                                                 elements, including
                                                 tier 2 capital
                                                 instruments and total
                                                 capital minority
                                                 interest not included
                                                 in tier 1 capital; and
                                                (2) Regulatory
                                                 adjustments and
                                                 deductions made to
                                                 total capital.
------------------------------------------------------------------------


               Table 3 to Sec.   324.173--Capital Adequacy
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  A summary discussion of
                                                 the FDIC-supervised
                                                 institution's approach
                                                 to assessing the
                                                 adequacy of its capital
                                                 to support current and
                                                 future activities.
Quantitative disclosures.....  (b)............  Risk-weighted assets for
                                                 credit risk from:
                                                (1) Wholesale exposures;
                                                (2) Residential mortgage
                                                 exposures;
                                                (3) Qualifying revolving
                                                 exposures;
                                                (4) Other retail
                                                 exposures;
                                                (5) Securitization
                                                 exposures;
                                                (6) Equity exposures:
                                                (7) Equity exposures
                                                 subject to the simple
                                                 risk weight approach;
                                                 and
                                                (8) Equity exposures
                                                 subject to the internal
                                                 models approach.

[[Page 359]]

 
                               (c)............  Standardized market risk-
                                                 weighted assets and
                                                 advanced market risk-
                                                 weighted assets as
                                                 calculated under
                                                 subpart F of this part:
                                                (1) Standardized
                                                 approach for specific
                                                 risk; and
                                                (2) Internal models
                                                 approach for specific
                                                 risk.
                               (d)............  Risk-weighted assets for
                                                 operational risk.
                               (e)............  Common equity tier 1,
                                                 tier 1 and total risk-
                                                 based capital ratios:
                                                (1) For the top
                                                 consolidated group; and
                                                (2) For each depository
                                                 institution subsidiary.
                               (f)............  Total risk-weighted
                                                 assets.
------------------------------------------------------------------------


   Table 4 to Sec.   324.173--Capital Conservation and Countercyclical
                             Capital Buffers
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The FDIC-supervised
                                                 institution must
                                                 publicly disclose the
                                                 geographic breakdown of
                                                 its private sector
                                                 credit exposures used
                                                 in the calculation of
                                                 the countercyclical
                                                 capital buffer.
Quantitative disclosures.....  (b)............  At least quarterly, the
                                                 FDIC-supervised
                                                 institution must
                                                 calculate and publicly
                                                 disclose the capital
                                                 conservation buffer and
                                                 the countercyclical
                                                 capital buffer as
                                                 described under Sec.
                                                 324.11 of subpart B.
                               (c)............  At least quarterly, the
                                                 FDIC-supervised
                                                 institution must
                                                 calculate and publicly
                                                 disclose the buffer
                                                 retained income of the
                                                 FDIC-supervised
                                                 institution, as
                                                 described under Sec.
                                                 324.11 of subpart B.
                               (d)............  At least quarterly, the
                                                 FDIC-supervised
                                                 institution must
                                                 calculate and publicly
                                                 disclose any
                                                 limitations it has on
                                                 distributions and
                                                 discretionary bonus
                                                 payments resulting from
                                                 the capital
                                                 conservation buffer and
                                                 the countercyclical
                                                 capital buffer
                                                 framework described
                                                 under Sec.   324.11 of
                                                 subpart B, including
                                                 the maximum payout
                                                 amount for the quarter.
------------------------------------------------------------------------

    (b) General qualitative disclosure requirement. For each separate 
risk area described in Tables 5 through 12 to Sec.  324.173, the FDIC-
supervised institution must describe its risk management objectives and 
policies, including:
    (1) Strategies and processes;
    (2) The structure and organization of the relevant risk management 
function;
    (3) The scope and nature of risk reporting and/or measurement 
systems; and
    (4) Policies for hedging and/or mitigating risk and strategies and 
processes for monitoring the continuing effectiveness of hedges/
mitigants.

     Table 5\1\ to Sec.   324.173--Credit Risk: General Disclosures
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The general qualitative
                                                 disclosure requirement
                                                 with respect to credit
                                                 risk (excluding
                                                 counterparty credit
                                                 risk disclosed in
                                                 accordance with Table 7
                                                 to Sec.   324.173),
                                                 including:
                                                (1) Policy for
                                                 determining past due or
                                                 delinquency status;
                                                (2) Policy for placing
                                                 loans on nonaccrual;
                                                (3) Policy for returning
                                                 loans to accrual
                                                 status;
                                                (4) Definition of and
                                                 policy for identifying
                                                 impaired loans (for
                                                 financial accounting
                                                 purposes).
                                                (5) Description of the
                                                 methodology that the
                                                 entity uses to estimate
                                                 its allowance for loan
                                                 and lease losses,
                                                 including statistical
                                                 methods used where
                                                 applicable;
                                                (6) Policy for charging-
                                                 off uncollectible
                                                 amounts; and
                                                (7) Discussion of the
                                                 FDIC-supervised
                                                 institution's credit
                                                 risk management policy

[[Page 360]]

 
Quantitative disclosures.....  (b)............  Total credit risk
                                                 exposures and average
                                                 credit risk exposures,
                                                 after accounting
                                                 offsets in accordance
                                                 with GAAP,\2\ without
                                                 taking into account the
                                                 effects of credit risk
                                                 mitigation techniques
                                                 (for example,
                                                 collateral and netting
                                                 not permitted under
                                                 GAAP), over the period
                                                 categorized by major
                                                 types of credit
                                                 exposure. For example,
                                                 FDIC-supervised
                                                 institutions could use
                                                 categories similar to
                                                 that used for financial
                                                 statement purposes.
                                                 Such categories might
                                                 include, for instance:
                                                (1) Loans, off-balance
                                                 sheet commitments, and
                                                 other non-derivative
                                                 off-balance sheet
                                                 exposures;
                                                (2) Debt securities; and
                                                (3) OTC derivatives.
                               (c)............  Geographic \3\
                                                 distribution of
                                                 exposures, categorized
                                                 in significant areas by
                                                 major types of credit
                                                 exposure.
                               (d)............  Industry or counterparty
                                                 type distribution of
                                                 exposures, categorized
                                                 by major types of
                                                 credit exposure.
                               (e)............  By major industry or
                                                 counterparty type:
                                                (1) Amount of impaired
                                                 loans for which there
                                                 was a related allowance
                                                 under GAAP;
                                                (2) Amount of impaired
                                                 loans for which there
                                                 was no related
                                                 allowance under GAAP;
                                                (3) Amount of loans past
                                                 due 90 days and on
                                                 nonaccrual;
                                                (4) Amount of loans past
                                                 due 90 days and still
                                                 accruing; \4\
                                                (5) The balance in the
                                                 allowance for loan and
                                                 lease losses at the end
                                                 of each period,
                                                 disaggregated on the
                                                 basis of the entity's
                                                 impairment method. To
                                                 disaggregate the
                                                 information required on
                                                 the basis of impairment
                                                 methodology, an entity
                                                 shall separately
                                                 disclose the amounts
                                                 based on the
                                                 requirements in GAAP;
                                                 and
                                                (6) Charge-offs during
                                                 the period.
                               (f)............  Amount of impaired loans
                                                 and, if available, the
                                                 amount of past due
                                                 loans categorized by
                                                 significant geographic
                                                 areas including, if
                                                 practical, the amounts
                                                 of allowances related
                                                 to each geographical
                                                 area,\5\ further
                                                 categorized as required
                                                 by GAAP.
                               (g)............  Reconciliation of
                                                 changes in ALLL.\6\
                               (h)............  Remaining contractual
                                                 maturity breakdown (for
                                                 example, one year or
                                                 less) of the whole
                                                 portfolio, categorized
                                                 by credit exposure.
------------------------------------------------------------------------
\1\ Table 5 to Sec.   324.173 does not cover equity exposures, which
  should be reported in Table 9 to Sec.   324.173.
\2\ See, for example, ASC Topic 815-10 and 210-20, as they may be
  amended from time to time.
\3\ Geographical areas may comprise individual countries, groups of
  countries, or regions within countries. An FDIC-supervised institution
  might choose to define the geographical areas based on the way the
  company's portfolio is geographically managed. The criteria used to
  allocate the loans to geographical areas must be specified.
\4\ An FDIC-supervised institution is encouraged also to provide an
  analysis of the aging of past-due loans.
\5\ The portion of the general allowance that is not allocated to a
  geographical area should be disclosed separately.
\6\ The reconciliation should include the following: a description of
  the allowance; the opening balance of the allowance; charge-offs taken
  against the allowance during the period; amounts provided (or
  reversed) for estimated probable loan losses during the period; any
  other adjustments (for example, exchange rate differences, business
  combinations, acquisitions and disposals of subsidiaries), including
  transfers between allowances; and the closing balance of the
  allowance. Charge-offs and recoveries that have been recorded directly
  to the income statement should be disclosed separately.


   Table 6 to Sec.   324.173--Credit Risk: Disclosures for Portfolios
               Subject to IRB Risk-Based Capital Formulas
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  Explanation and review
                                                 of the:
                                                (1) Structure of
                                                 internal rating systems
                                                 and if the FDIC-
                                                 supervised institution
                                                 considers external
                                                 ratings, the relation
                                                 between internal and
                                                 external ratings;
                                                (2) Use of risk
                                                 parameter estimates
                                                 other than for
                                                 regulatory capital
                                                 purposes;
                                                (3) Process for managing
                                                 and recognizing credit
                                                 risk mitigation (see
                                                 Table 8 to Sec.
                                                 324.173); and
                                                (4) Control mechanisms
                                                 for the rating system,
                                                 including discussion of
                                                 independence,
                                                 accountability, and
                                                 rating systems review.

[[Page 361]]

 
                               (b)............  (1) Description of the
                                                 internal ratings
                                                 process, provided
                                                 separately for the
                                                 following:
                                                (i) Wholesale category;
                                                (ii) Retail
                                                 subcategories;
                                                (iii) Residential
                                                 mortgage exposures;
                                                (iv) Qualifying
                                                 revolving exposures;
                                                 and
                                                (v) Other retail
                                                 exposures.
                                                (2) For each category
                                                 and subcategory above
                                                 the description should
                                                 include:
                                                (i) The types of
                                                 exposure included in
                                                 the category/
                                                 subcategories; and
                                                (ii) The definitions,
                                                 methods and data for
                                                 estimation and
                                                 validation of PD, LGD,
                                                 and EAD, including
                                                 assumptions employed in
                                                 the derivation of these
                                                 variables.\1\
Quantitative disclosures:      (c)............  (1) For wholesale
 risk assessment.                                exposures, present the
                                                 following information
                                                 across a sufficient
                                                 number of PD grades
                                                 (including default) to
                                                 allow for a meaningful
                                                 differentiation of
                                                 credit risk: \2\
                                                (i) Total EAD; \3\
                                                (ii) Exposure-weighted
                                                 average LGD
                                                 (percentage);
                                                (iii) Exposure-weighted
                                                 average risk weight;
                                                 and
                                                (iv) Amount of undrawn
                                                 commitments and
                                                 exposure-weighted
                                                 average EAD including
                                                 average drawdowns prior
                                                 to default for
                                                 wholesale exposures.
                                                (2) For each retail
                                                 subcategory, present
                                                 the disclosures
                                                 outlined above across a
                                                 sufficient number of
                                                 segments to allow for a
                                                 meaningful
                                                 differentiation of
                                                 credit risk.
Quantitative disclosures:      (d)............  Actual losses in the
 historical results.                             preceding period for
                                                 each category and
                                                 subcategory and how
                                                 this differs from past
                                                 experience. A
                                                 discussion of the
                                                 factors that impacted
                                                 the loss experience in
                                                 the preceding period--
                                                 for example, has the
                                                 FDIC-supervised
                                                 institution experienced
                                                 higher than average
                                                 default rates, loss
                                                 rates or EADs.
                               (e)............  The FDIC-supervised
                                                 institution's estimates
                                                 compared against actual
                                                 outcomes over a longer
                                                 period.\4\ At a
                                                 minimum, this should
                                                 include information on
                                                 estimates of losses
                                                 against actual losses
                                                 in the wholesale
                                                 category and each
                                                 retail subcategory over
                                                 a period sufficient to
                                                 allow for a meaningful
                                                 assessment of the
                                                 performance of the
                                                 internal rating
                                                 processes for each
                                                 category/
                                                 subcategory.\5\ Where
                                                 appropriate, the FDIC-
                                                 supervised institution
                                                 should further
                                                 decompose this to
                                                 provide analysis of PD,
                                                 LGD, and EAD outcomes
                                                 against estimates
                                                 provided in the
                                                 quantitative risk
                                                 assessment disclosures
                                                 above.\6\
------------------------------------------------------------------------
\1\ This disclosure item does not require a detailed description of the
  model in full--it should provide the reader with a broad overview of
  the model approach, describing definitions of the variables and
  methods for estimating and validating those variables set out in the
  quantitative risk disclosures below. This should be done for each of
  the four category/subcategories. The FDIC-supervised institution must
  disclose any significant differences in approach to estimating these
  variables within each category/subcategories.
\2\ The PD, LGD and EAD disclosures in Table 6 (c) to Sec.   324.173
  should reflect the effects of collateral, qualifying master netting
  agreements, eligible guarantees and eligible credit derivatives as
  defined under this part. Disclosure of each PD grade should include
  the exposure-weighted average PD for each grade. Where an FDIC-
  supervised institution aggregates PD grades for the purposes of
  disclosure, this should be a representative breakdown of the
  distribution of PD grades used for regulatory capital purposes.
\3\ Outstanding loans and EAD on undrawn commitments can be presented on
  a combined basis for these disclosures.
\4\ These disclosures are a way of further informing the reader about
  the reliability of the information provided in the ``quantitative
  disclosures: risk assessment'' over the long run. The disclosures are
  requirements from year-end 2010; in the meantime, early adoption is
  encouraged. The phased implementation is to allow an FDIC-supervised
  institution sufficient time to build up a longer run of data that will
  make these disclosures meaningful.
\5\ This disclosure item is not intended to be prescriptive about the
  period used for this assessment. Upon implementation, it is expected
  that an FDIC-supervised institution would provide these disclosures
  for as long a set of data as possible--for example, if an FDIC-
  supervised institution has 10 years of data, it might choose to
  disclose the average default rates for each PD grade over that 10-year
  period. Annual amounts need not be disclosed.
\6\ An FDIC-supervised institution must provide this further
  decomposition where it will allow users greater insight into the
  reliability of the estimates provided in the ``quantitative
  disclosures: risk assessment.'' In particular, it must provide this
  information where there are material differences between its estimates
  of PD, LGD or EAD compared to actual outcomes over the long run. The
  FDIC-supervised institution must also provide explanations for such
  differences.


[[Page 362]]


  Table 7 to Sec.   324.173--General Disclosure for Counterparty Credit
 Risk of OTC Derivative Contracts, Repo-Style Transactions, and Eligible
                              Margin Loans
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative Disclosures......  (a)............  The general qualitative
                                                 disclosure requirement
                                                 with respect to OTC
                                                 derivatives, eligible
                                                 margin loans, and repo-
                                                 style transactions,
                                                 including:
                                                (1) Discussion of
                                                 methodology used to
                                                 assign economic capital
                                                 and credit limits for
                                                 counterparty credit
                                                 exposures;
                                                (2) Discussion of
                                                 policies for securing
                                                 collateral, valuing and
                                                 managing collateral,
                                                 and establishing credit
                                                 reserves;
                                                (3) Discussion of the
                                                 primary types of
                                                 collateral taken;
                                                (4) Discussion of
                                                 policies with respect
                                                 to wrong-way risk
                                                 exposures; and
                                                (5) Discussion of the
                                                 impact of the amount of
                                                 collateral the FDIC-
                                                 supervised institution
                                                 would have to provide
                                                 if the FDIC-supervised
                                                 institution were to
                                                 receive a credit rating
                                                 downgrade.
Quantitative Disclosures.....  (b)............  Gross positive fair
                                                 value of contracts,
                                                 netting benefits,
                                                 netted current credit
                                                 exposure, collateral
                                                 held (including type,
                                                 for example, cash,
                                                 government securities),
                                                 and net unsecured
                                                 credit exposure.\1\
                                                 Also report measures
                                                 for EAD used for
                                                 regulatory capital for
                                                 these transactions, the
                                                 notional value of
                                                 credit derivative
                                                 hedges purchased for
                                                 counterparty credit
                                                 risk protection, and,
                                                 for FDIC-supervised
                                                 institutions not using
                                                 the internal models
                                                 methodology in Sec.
                                                 324.132(d), the
                                                 distribution of current
                                                 credit exposure by
                                                 types of credit
                                                 exposure.\2\
                               (c)............  Notional amount of
                                                 purchased and sold
                                                 credit derivatives,
                                                 segregated between use
                                                 for the FDIC-supervised
                                                 institution's own
                                                 credit portfolio and
                                                 for its intermediation
                                                 activities, including
                                                 the distribution of the
                                                 credit derivative
                                                 products used,
                                                 categorized further by
                                                 protection bought and
                                                 sold within each
                                                 product group.
                               (d)............  The estimate of alpha if
                                                 the FDIC-supervised
                                                 institution has
                                                 received supervisory
                                                 approval to estimate
                                                 alpha.
------------------------------------------------------------------------
\1\ Net unsecured credit exposure is the credit exposure after
  considering the benefits from legally enforceable netting agreements
  and collateral arrangements, without taking into account haircuts for
  price volatility, liquidity, etc.
\2\ This may include interest rate derivative contracts, foreign
  exchange derivative contracts, equity derivative contracts, credit
  derivatives, commodity or other derivative contracts, repo-style
  transactions, and eligible margin loans.


         Table 8 to Sec.   324.173--Credit Risk Mitigation\1 2\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The general qualitative
                                                 disclosure requirement
                                                 with respect to credit
                                                 risk mitigation,
                                                 including:
                                                (1) Policies and
                                                 processes for, and an
                                                 indication of the
                                                 extent to which the
                                                 FDIC-supervised
                                                 institution uses, on-
                                                 or off-balance sheet
                                                 netting;
                                                (2) Policies and
                                                 processes for
                                                 collateral valuation
                                                 and management;
                                                (3) A description of the
                                                 main types of
                                                 collateral taken by the
                                                 FDIC-supervised
                                                 institution;
                                                (4) The main types of
                                                 guarantors/credit
                                                 derivative
                                                 counterparties and
                                                 their creditworthiness;
                                                 and
                                                (5) Information about
                                                 (market or credit) risk
                                                 concentrations within
                                                 the mitigation taken.
Quantitative disclosures.....  (b)............  For each separately
                                                 disclosed portfolio,
                                                 the total exposure
                                                 (after, where
                                                 applicable, on- or off-
                                                 balance sheet netting)
                                                 that is covered by
                                                 guarantees/credit
                                                 derivatives.
------------------------------------------------------------------------
\1\ At a minimum, an FDIC-supervised institution must provide the
  disclosures in Table 8 to Sec.   324.173 in relation to credit risk
  mitigation that has been recognized for the purposes of reducing
  capital requirements under this subpart. Where relevant, FDIC-
  supervised institutions are encouraged to give further information
  about mitigants that have not been recognized for that purpose.
\2\ Credit derivatives and other credit mitigation that are treated for
  the purposes of this subpart as synthetic securitization exposures
  should be excluded from the credit risk mitigation disclosures (in
  Table 8 to Sec.   324.173) and included within those relating to
  securitization (in Table 9 to Sec.   324.173).


[[Page 363]]


                Table 9 to Sec.   324.173--Securitization
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The general qualitative
                                                 disclosure requirement
                                                 with respect to
                                                 securitization
                                                 (including synthetic
                                                 securitizations),
                                                 including a discussion
                                                 of:
                                                (1) The FDIC-supervised
                                                 institution's
                                                 objectives for
                                                 securitizing assets,
                                                 including the extent to
                                                 which these activities
                                                 transfer credit risk of
                                                 the underlying
                                                 exposures away from the
                                                 FDIC-supervised
                                                 institution to other
                                                 entities and including
                                                 the type of risks
                                                 assumed and retained
                                                 with resecuritization
                                                 activity; \1\
                                                (2) The nature of the
                                                 risks (e.g. liquidity
                                                 risk) inherent in the
                                                 securitized assets;
                                                (3) The roles played by
                                                 the FDIC-supervised
                                                 institution in the
                                                 securitization process
                                                 \2\ and an indication
                                                 of the extent of the
                                                 FDIC-supervised
                                                 institution's
                                                 involvement in each of
                                                 them;
                                                (4) The processes in
                                                 place to monitor
                                                 changes in the credit
                                                 and market risk of
                                                 securitization
                                                 exposures including how
                                                 those processes differ
                                                 for resecuritization
                                                 exposures;
                                                (5) The FDIC-supervised
                                                 institution's policy
                                                 for mitigating the
                                                 credit risk retained
                                                 through securitization
                                                 and resecuritization
                                                 exposures; and
                                                (6) The risk-based
                                                 capital approaches that
                                                 the FDIC-supervised
                                                 institution follows for
                                                 its securitization
                                                 exposures including the
                                                 type of securitization
                                                 exposure to which each
                                                 approach applies.
                               (b)............  A list of:
                                                (1) The type of
                                                 securitization SPEs
                                                 that the FDIC-
                                                 supervised institution,
                                                 as sponsor, uses to
                                                 securitize third-party
                                                 exposures. The FDIC-
                                                 supervised institution
                                                 must indicate whether
                                                 it has exposure to
                                                 these SPEs, either on-
                                                 or off- balance sheet;
                                                 and
                                                (2) Affiliated entities:
                                                (i) That the FDIC-
                                                 supervised institution
                                                 manages or advises; and
                                                (ii) That invest either
                                                 in the securitization
                                                 exposures that the FDIC-
                                                 supervised institution
                                                 has securitized or in
                                                 securitization SPEs
                                                 that the FDIC-
                                                 supervised institution
                                                 sponsors.\3\
                               (c)............  Summary of the FDIC-
                                                 supervised
                                                 institution's
                                                 accounting policies for
                                                 securitization
                                                 activities, including:
                                                (1) Whether the
                                                 transactions are
                                                 treated as sales or
                                                 financings;
                                                (2) Recognition of gain-
                                                 on-sale;
                                                (3) Methods and key
                                                 assumptions and inputs
                                                 applied in valuing
                                                 retained or purchased
                                                 interests;
                                                (4) Changes in methods
                                                 and key assumptions and
                                                 inputs from the
                                                 previous period for
                                                 valuing retained
                                                 interests and impact of
                                                 the changes;
                                                (5) Treatment of
                                                 synthetic
                                                 securitizations;
                                                (6) How exposures
                                                 intended to be
                                                 securitized are valued
                                                 and whether they are
                                                 recorded under subpart
                                                 E of this part; and
                                                (7) Policies for
                                                 recognizing liabilities
                                                 on the balance sheet
                                                 for arrangements that
                                                 could require the FDIC-
                                                 supervised institution
                                                 to provide financial
                                                 support for securitized
                                                 assets.
                               (d)............  An explanation of
                                                 significant changes to
                                                 any of the quantitative
                                                 information set forth
                                                 below since the last
                                                 reporting period.
Quantitative disclosures.....  (e)............  The total outstanding
                                                 exposures securitized
                                                 \4\ by the FDIC-
                                                 supervised institution
                                                 in securitizations that
                                                 meet the operational
                                                 criteria in Sec.
                                                 324.141 (categorized
                                                 into traditional/
                                                 synthetic), by
                                                 underlying exposure
                                                 type \5\ separately for
                                                 securitizations of
                                                 third-party exposures
                                                 for which the FDIC-
                                                 supervised institution
                                                 acts only as sponsor.
                               (f)............  For exposures
                                                 securitized by the FDIC-
                                                 supervised institution
                                                 in securitizations that
                                                 meet the operational
                                                 criteria in Sec.
                                                 324.141:
                                                (1) Amount of
                                                 securitized assets that
                                                 are impaired \6\/past
                                                 due categorized by
                                                 exposure type; and
                                                (2) Losses recognized by
                                                 the FDIC-supervised
                                                 institution during the
                                                 current period
                                                 categorized by exposure
                                                 type.\7\
                               (g)............  The total amount of
                                                 outstanding exposures
                                                 intended to be
                                                 securitized categorized
                                                 by exposure type.

[[Page 364]]

 
                               (h)............  Aggregate amount of:
                                                (1) On-balance sheet
                                                 securitization
                                                 exposures retained or
                                                 purchased categorized
                                                 by exposure type; and
                                                (2) Off-balance sheet
                                                 securitization
                                                 exposures categorized
                                                 by exposure type.
                               (i)............  (1) Aggregate amount of
                                                 securitization
                                                 exposures retained or
                                                 purchased and the
                                                 associated capital
                                                 requirements for these
                                                 exposures, categorized
                                                 between securitization
                                                 and resecuritization
                                                 exposures, further
                                                 categorized into a
                                                 meaningful number of
                                                 risk weight bands and
                                                 by risk-based capital
                                                 approach (e.g. SA, SFA,
                                                 or SSFA).
                                                (2) Aggregate amount
                                                 disclosed separately by
                                                 type of underlying
                                                 exposure in the pool of
                                                 any:
                                                (i) After-tax gain-on-
                                                 sale on a
                                                 securitization that has
                                                 been deducted from
                                                 common equity tier 1
                                                 capital; and
                                                (ii) Credit-enhancing
                                                 interest-only strip
                                                 that is assigned a
                                                 1,250 percent risk
                                                 weight.
                               (j)............  Summary of current
                                                 year's securitization
                                                 activity, including the
                                                 amount of exposures
                                                 securitized (by
                                                 exposure type), and
                                                 recognized gain or loss
                                                 on sale by asset type.
                               (k)............  Aggregate amount of
                                                 resecuritization
                                                 exposures retained or
                                                 purchased categorized
                                                 according to:
                                                (1) Exposures to which
                                                 credit risk mitigation
                                                 is applied and those
                                                 not applied; and
                                                (2) Exposures to
                                                 guarantors categorized
                                                 according to guarantor
                                                 creditworthiness
                                                 categories or guarantor
                                                 name.
------------------------------------------------------------------------
\1\ The FDIC-supervised institution must describe the structure of
  resecuritizations in which it participates; this description must be
  provided for the main categories of resecuritization products in which
  the FDIC-supervised institution is active.
\2\ For example, these roles would include originator, investor,
  servicer, provider of credit enhancement, sponsor, liquidity provider,
  or swap provider.
\3\ For example, money market mutual funds should be listed
  individually, and personal and private trusts, should be noted
  collectively.
\4\ ``Exposures securitized'' include underlying exposures originated by
  the FDIC-supervised institution, whether generated by them or
  purchased, and recognized in the balance sheet, from third parties,
  and third-party exposures included in sponsored transactions.
  Securitization transactions (including underlying exposures originally
  on the FDIC-supervised institution's balance sheet and underlying
  exposures acquired by the FDIC-supervised institution from third-party
  entities) in which the originating bank does not retain any
  securitization exposure should be shown separately but need only be
  reported for the year of inception.
\5\ An FDIC-supervised institution is required to disclose exposures
  regardless of whether there is a capital charge under this part.
\6\ An FDIC-supervised institution must include credit-related other
  than temporary impairment (OTTI).
\7\ For example, charge-offs/allowances (if the assets remain on the
  FDIC-supervised institution's balance sheet) or credit-related OTTI of
  I/O strips and other retained residual interests, as well as
  recognition of liabilities for probable future financial support
  required of the FDIC-supervised institution with respect to
  securitized assets.


              Table 10 to Sec.   324.173--Operational Risk
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The general qualitative
                                                 disclosure requirement
                                                 for operational risk.
                               (b)............  Description of the AMA,
                                                 including a discussion
                                                 of relevant internal
                                                 and external factors
                                                 considered in the FDIC-
                                                 supervised
                                                 institution's
                                                 measurement approach.
                               (c)............  A description of the use
                                                 of insurance for the
                                                 purpose of mitigating
                                                 operational risk.
------------------------------------------------------------------------


  Table 11 to Sec.   324.173--Equities Not Subject to Subpart F of This
                                  Part
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The general qualitative
                                                 disclosure requirement
                                                 with respect to the
                                                 equity risk of equity
                                                 holdings not subject to
                                                 subpart F of this part,
                                                 including:
                                                (1) Differentiation
                                                 between holdings on
                                                 which capital gains are
                                                 expected and those held
                                                 for other objectives,
                                                 including for
                                                 relationship and
                                                 strategic reasons; and
                                                (2) Discussion of
                                                 important policies
                                                 covering the valuation
                                                 of and accounting for
                                                 equity holdings not
                                                 subject to subpart F of
                                                 this part. This
                                                 includes the accounting
                                                 methodology and
                                                 valuation methodologies
                                                 used, including key
                                                 assumptions and
                                                 practices affecting
                                                 valuation as well as
                                                 significant changes in
                                                 these practices.
Quantitative disclosures.....  (b)............  Carrying value on the
                                                 balance sheet of equity
                                                 investments, as well as
                                                 the fair value of those
                                                 investments.

[[Page 365]]

 
                               (c)............  The types and nature of
                                                 investments, including
                                                 the amount that is:
                                                (1) Publicly traded; and
                                                (2) Non-publicly traded.
                               (d)............  The cumulative realized
                                                 gains (losses) arising
                                                 from sales and
                                                 liquidations in the
                                                 reporting period.
                               (e)............  (1) Total unrealized
                                                 gains (losses) \1\
                                                (2) Total latent
                                                 revaluation gains
                                                 (losses) \2\
                                                (3) Any amounts of the
                                                 above included in tier
                                                 1 and/or tier 2
                                                 capital.
                               (f)............  Capital requirements
                                                 categorized by
                                                 appropriate equity
                                                 groupings, consistent
                                                 with the FDIC-
                                                 supervised
                                                 institution's
                                                 methodology, as well as
                                                 the aggregate amounts
                                                 and the type of equity
                                                 investments subject to
                                                 any supervisory
                                                 transition regarding
                                                 total capital
                                                 requirements.\3\
------------------------------------------------------------------------
\1\ Unrealized gains (losses) recognized in the balance sheet but not
  through earnings.
\2\ Unrealized gains (losses) not recognized either in the balance sheet
  or through earnings.
\3\ This disclosure must include a breakdown of equities that are
  subject to the 0 percent, 20 percent, 100 percent, 300 percent, 400
  percent, and 600 percent risk weights, as applicable.


     Table 12 to Sec.   324.173--Interest Rate Risk for Non-trading
                               Activities
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualitative disclosures......  (a)............  The general qualitative
                                                 disclosure requirement,
                                                 including the nature of
                                                 interest rate risk for
                                                 non-trading activities
                                                 and key assumptions,
                                                 including assumptions
                                                 regarding loan
                                                 prepayments and
                                                 behavior of non-
                                                 maturity deposits, and
                                                 frequency of
                                                 measurement of interest
                                                 rate risk for non-
                                                 trading activities.
Quantitative disclosures.....  (b)............  The increase (decline)
                                                 in earnings or economic
                                                 value (or relevant
                                                 measure used by
                                                 management) for upward
                                                 and downward rate
                                                 shocks according to
                                                 management's method for
                                                 measuring interest rate
                                                 risk for non-trading
                                                 activities, categorized
                                                 by currency (as
                                                 appropriate).
------------------------------------------------------------------------

    (c) Except as provided in Sec.  324.172(b), an FDIC-supervised 
institution described in Sec.  324.172(d) must make the disclosures 
described in Table 13 to Sec.  324.173; provided, however, the 
disclosures required under this paragraph are required without regard to 
whether the FDIC-supervised institution has completed the parallel run 
process and has received notification from the FDIC pursuant to Sec.  
324.121(d). The FDIC-supervised institution must make these disclosures 
publicly available beginning on January 1, 2015.

                            Table 13 to Sec.   324.173--Supplementary Leverage Ratio
----------------------------------------------------------------------------------------------------------------
                                                                          Dollar amounts in thousands
                                                             ---------------------------------------------------
                                                                  Tril         Bil          Mil          Thou
----------------------------------------------------------------------------------------------------------------
                   Part 1: Summary comparison of accounting assets and total leverage exposure
----------------------------------------------------------------------------------------------------------------
1 Total consolidated assets as reported in published
 financial statements.......................................
2 Adjustment for investments in banking, financial,
 insurance or commercial entities that are consolidated for
 accounting purposes but outside the scope of regulatory
 consolidation..............................................
3 Adjustment for fiduciary assets recognized on balance
 sheet but excluded from total leverage exposure............
4 Adjustment for derivative exposures.......................
5 Adjustment for repo-style transactions....................
6 Adjustment for off-balance sheet exposures (that is,
 conversion to credit equivalent amounts of off-balance
 sheet exposures)...........................................
7 Other adjustments.........................................
8 Total leverage exposure...................................
----------------------------------------------------------------------------------------------------------------
                                      Part 2: Supplementary leverage ratio
----------------------------------------------------------------------------------------------------------------
                 On-balance sheet exposures
 
1 On-balance sheet assets (excluding on-balance sheet assets
 for repo-style transactions and derivative exposures, but
 including cash collateral received in derivative
 transactions)..............................................
2 LESS: Amounts deducted from tier 1 capital................

[[Page 366]]

 
3 Total on-balance sheet exposures (excluding on-balance
 sheet assets for repo-style transactions and derivative
 exposures, but including cash collateral received in
 derivative transactions) (sum of lines 1 and 2)............
 
                    Derivative exposures
 
4 Replacement cost for derivative exposures (that is, net of
 cash variation margin).....................................
5 Add-on amounts for potential future exposure (PFE) for
 derivative exposures.......................................
6 Gross-up for cash collateral posted if deducted from the
 on-balance sheet assets, except for cash variation margin..
7 LESS: Deductions of receivable assets for cash variation
 margin posted in derivative transactions, if included in on-
 balance sheet assets.......................................
8 LESS: Exempted CCP leg of client-cleared transactions.....
9 Effective notional principal amount of sold credit
 protection.................................................
10 LESS: Effective notional principal amount offsets and PFE
 adjustments for sold credit protection.....................
11 Total derivative exposures (sum of lines 4 to 10)........
 
                   Repo-style transactions
 
12 On-balance sheet assets for repo-style transactions,
 except include the gross value of receivables for reverse
 repurchase transactions. Exclude from this item the value
 of securities received in a security-for-security repo-
 style transaction where the securities lender has not sold
 or re-hypothecated the securities received. Include in this
 item the value of securities that qualified for sales
 treatment that must be reversed............................
13 LESS: Reduction of the gross value of receivables in
 reverse repurchase transactions by cash payables in
 repurchase transactions under netting agreements...........
14 Counterparty credit risk for all repo-style transactions.
15 Exposure for repo-style transactions where a banking
 organization acts as an agent..............................
16 Total exposures for repo-style transactions (sum of lines
 12 to 15)..................................................
 
              Other off-balance sheet exposures
 
17 Off-balance sheet exposures at gross notional amounts....
18 LESS: Adjustments for conversion to credit equivalent
 amounts....................................................
19 Off-balance sheet exposures (sum of lines 17 and 18).....
 
             Capital and total leverage exposure
 
20 Tier 1 capital...........................................
21 Total leverage exposure (sum of lines 3, 11, 16 and 19)..
 
                Supplementary leverage ratio
                                                             ---------------------------------------------------
 
22 Supplementary leverage ratio.............................                     (in percent)
----------------------------------------------------------------------------------------------------------------


[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 57750, Sept. 26, 2014; 
80 FR 41425, July 15, 2015]



Sec. Sec.  324.174-324.200  [Reserved]



               Subpart F_Risk-Weighted Assets_Market Risk



Sec.  324.201  Purpose, applicability, and reservation of authority.

    (a) Purpose. This subpart F establishes risk-based capital 
requirements for FDIC-supervised institutions with significant exposure 
to market risk, provides methods for these FDIC-supervised institutions 
to calculate their standardized measure for market risk and, if 
applicable, advanced measure for market risk, and establishes public 
disclosure requirements.
    (b) Applicability. (1) This subpart F applies to any FDIC-supervised 
institution with aggregate trading assets and trading liabilities (as 
reported in the FDIC-supervised institution's most recent quarterly Call 
Report), equal to:

[[Page 367]]

    (i) 10 percent or more of quarter-end total assets as reported on 
the most recent quarterly Call Report; or
    (ii) $1 billion or more.
    (2) The FDIC may apply this subpart to any FDIC-supervised 
institution if the FDIC deems it necessary or appropriate because of the 
level of market risk of the FDIC-supervised institution or to ensure 
safe and sound banking practices.
    (3) The FDIC may exclude an FDIC-supervised institution that meets 
the criteria of paragraph (b)(1) of this section from application of 
this subpart if the FDIC determines that the exclusion is appropriate 
based on the level of market risk of the FDIC-supervised institution and 
is consistent with safe and sound banking practices.
    (c) Reservation of authority (1) The FDIC may require an FDIC-
supervised institution to hold an amount of capital greater than 
otherwise required under this subpart if the FDIC determines that the 
FDIC-supervised institution's capital requirement for market risk as 
calculated under this subpart is not commensurate with the market risk 
of the FDIC-supervised institution's covered positions. In making 
determinations under paragraphs (c)(1) through (c)(3) of this section, 
the FDIC will apply notice and response procedures generally in the same 
manner as the notice and response procedures set forth in Sec.  
324.5(c).
    (2) If the FDIC determines that the risk-based capital requirement 
calculated under this subpart by the FDIC-supervised institution for one 
or more covered positions or portfolios of covered positions is not 
commensurate with the risks associated with those positions or 
portfolios, the FDIC may require the FDIC-supervised institution to 
assign a different risk-based capital requirement to the positions or 
portfolios that more accurately reflects the risk of the positions or 
portfolios.
    (3) The FDIC may also require an FDIC-supervised institution to 
calculate risk-based capital requirements for specific positions or 
portfolios under this subpart, or under subpart D or subpart E of this 
part, as appropriate, to more accurately reflect the risks of the 
positions.
    (4) Nothing in this subpart limits the authority of the FDIC under 
any other provision of law or regulation to take supervisory or 
enforcement action, including action to address unsafe or unsound 
practices or conditions, deficient capital levels, or violations of law.



Sec.  324.202  Definitions.

    (a) Terms set forth in Sec.  324.2 and used in this subpart have the 
definitions assigned thereto in Sec.  324.2.
    (b) For the purposes of this subpart, the following terms are 
defined as follows:
    Backtesting means the comparison of an FDIC-supervised institution's 
internal estimates with actual outcomes during a sample period not used 
in model development. For purposes of this subpart, backtesting is one 
form of out-of-sample testing.
    Commodity position means a position for which price risk arises from 
changes in the price of a commodity.
    Corporate debt position means a debt position that is an exposure to 
a company that is not a sovereign entity, the Bank for International 
Settlements, the European Central Bank, the European Commission, the 
International Monetary Fund, a multilateral development bank, a 
depository institution, a foreign bank, a credit union, a public sector 
entity, a GSE, or a securitization.
    Correlation trading position means:
    (1) A securitization position for which all or substantially all of 
the value of the underlying exposures is based on the credit quality of 
a single company for which a two-way market exists, or on commonly 
traded indices based on such exposures for which a two-way market exists 
on the indices; or
    (2) A position that is not a securitization position and that hedges 
a position described in paragraph (1) of this definition; and
    (3) A correlation trading position does not include:
    (i) A resecuritization position;
    (ii) A derivative of a securitization position that does not provide 
a pro rata share in the proceeds of a securitization tranche; or

[[Page 368]]

    (iii) A securitization position for which the underlying assets or 
reference exposures are retail exposures, residential mortgage 
exposures, or commercial mortgage exposures.
    Covered position means the following positions:
    (1) A trading asset or trading liability (whether on- or off-balance 
sheet),\31\ as reported on Call Report, that meets the following 
conditions:
---------------------------------------------------------------------------

    \31\ Securities subject to repurchase and lending agreements are 
included as if they are still owned by the lender.
---------------------------------------------------------------------------

    (i) The position is a trading position or hedges another covered 
position; \32\ and
---------------------------------------------------------------------------

    \32\ A position that hedges a trading position must be within the 
scope of the bank's hedging strategy as described in paragraph (a)(2) of 
Sec.  324.203.
---------------------------------------------------------------------------

    (ii) The position is free of any restrictive covenants on its 
tradability or the FDIC-supervised institution is able to hedge the 
material risk elements of the position in a two-way market;
    (2) A foreign exchange or commodity position, regardless of whether 
the position is a trading asset or trading liability (excluding any 
structural foreign currency positions that the FDIC-supervised 
institution chooses to exclude with prior supervisory approval); and
    (3) Notwithstanding paragraphs (1) and (2) of this definition, a 
covered position does not include:
    (i) An intangible asset, including any servicing asset;
    (ii) Any hedge of a trading position that the FDIC determines to be 
outside the scope of the FDIC-supervised institution's hedging strategy 
required in paragraph (a)(2) of Sec.  324.203;
    (iii) Any position that, in form or substance, acts as a liquidity 
facility that provides support to asset-backed commercial paper;
    (iv) A credit derivative the FDIC-supervised institution recognizes 
as a guarantee for risk-weighted asset amount calculation purposes under 
subpart D or subpart E of this part;
    (v) Any position that is recognized as a credit valuation adjustment 
hedge under Sec.  324.132(e)(5) or Sec.  324.132(e)(6), except as 
provided in Sec.  324.132(e)(6)(vii);
    (vi) Any equity position that is not publicly traded, other than a 
derivative that references a publicly traded equity and other than a 
position in an investment company as defined in and registered with the 
SEC under the Investment Company Act, provided that all the underlying 
equities held by the investment company are publicly traded;
    (vii) Any equity position that is not publicly traded, other than a 
derivative that references a publicly traded equity and other than a 
position in an entity not domiciled in the United States (or a political 
subdivision thereof) that is supervised and regulated in a manner 
similar to entities described in paragraph (3)(vi) of this definition;
    (viii) Any position an FDIC-supervised institution holds with the 
intent to securitize; or
    (ix) Any direct real estate holding.
    Debt position means a covered position that is not a securitization 
position or a correlation trading position and that has a value that 
reacts primarily to changes in interest rates or credit spreads.
    Default by a sovereign entity has the same meaning as the term 
sovereign default under Sec.  324.2.
    Equity position means a covered position that is not a 
securitization position or a correlation trading position and that has a 
value that reacts primarily to changes in equity prices.
    Event risk means the risk of loss on equity or hybrid equity 
positions as a result of a financial event, such as the announcement or 
occurrence of a company merger, acquisition, spin-off, or dissolution.
    Foreign exchange position means a position for which price risk 
arises from changes in foreign exchange rates.
    General market risk means the risk of loss that could result from 
broad market movements, such as changes in the general level of interest 
rates, credit spreads, equity prices, foreign exchange rates, or 
commodity prices.
    Hedge means a position or positions that offset all, or 
substantially all, of one or more material risk factors of another 
position.
    Idiosyncratic risk means the risk of loss in the value of a position 
that arises from changes in risk factors unique to that position.

[[Page 369]]

    Incremental risk means the default risk and credit migration risk of 
a position. Default risk means the risk of loss on a position that could 
result from the failure of an obligor to make timely payments of 
principal or interest on its debt obligation, and the risk of loss that 
could result from bankruptcy, insolvency, or similar proceeding. Credit 
migration risk means the price risk that arises from significant changes 
in the underlying credit quality of the position.
    Market risk means the risk of loss on a position that could result 
from movements in market prices.
    Resecuritization position means a covered position that is:
    (1) An on- or off-balance sheet exposure to a resecuritization; or
    (2) An exposure that directly or indirectly references a 
resecuritization exposure in paragraph (1) of this definition.
    Securitization means a transaction in which:
    (1) All or a portion of the credit risk of one or more underlying 
exposures is transferred to one or more third parties;
    (2) The credit risk associated with the underlying exposures has 
been separated into at least two tranches that reflect different levels 
of seniority;
    (3) Performance of the securitization exposures depends upon the 
performance of the underlying exposures;
    (4) All or substantially all of the underlying exposures are 
financial exposures (such as loans, commitments, credit derivatives, 
guarantees, receivables, asset-backed securities, mortgage-backed 
securities, other debt securities, or equity securities);
    (5) For non-synthetic securitizations, the underlying exposures are 
not owned by an operating company;
    (6) The underlying exposures are not owned by a small business 
investment company described in section 302 of the Small Business 
Investment Act;
    (7) The underlying exposures are not owned by a firm an investment 
in which qualifies as a community development investment under section 
24(Eleventh) of the National Bank Act;
    (8) The FDIC may determine that a transaction in which the 
underlying exposures are owned by an investment firm that exercises 
substantially unfettered control over the size and composition of its 
assets, liabilities, and off-balance sheet exposures is not a 
securitization based on the transaction's leverage, risk profile, or 
economic substance;
    (9) The FDIC may deem an exposure to a transaction that meets the 
definition of a securitization, notwithstanding paragraph (5), (6), or 
(7) of this definition, to be a securitization based on the 
transaction's leverage, risk profile, or economic substance; and
    (10) The transaction is not:
    (i) An investment fund;
    (ii) A collective investment fund (as defined in 12 CFR 344.3 (state 
nonmember bank) and 12 CFR 390.203 (state savings association));
    (iii) An employee benefit plan as defined in paragraphs (3) and (32) 
of section 3 of ERISA, a ``governmental plan'' (as defined in 29 USC 
1002(32)) that complies with the tax deferral qualification requirements 
provided in the Internal Revenue Code, or any similar employee benefit 
plan established under the laws of a foreign jurisdiction; or
    (iv) Registered with the SEC under the Investment Company Act or 
foreign equivalents thereof.
    Securitization position means a covered position that is:
    (1) An on-balance sheet or off-balance sheet credit exposure 
(including credit-enhancing representations and warranties) that arises 
from a securitization (including a resecuritization); or
    (2) An exposure that directly or indirectly references a 
securitization exposure described in paragraph (1) of this definition.
    Sovereign debt position means a direct exposure to a sovereign 
entity.
    Specific risk means the risk of loss on a position that could result 
from factors other than broad market movements and includes event risk, 
default risk, and idiosyncratic risk.
    Structural position in a foreign currency means a position that is 
not a trading position and that is:
    (1) Subordinated debt, equity, or minority interest in a 
consolidated subsidiary that is denominated in a foreign currency;

[[Page 370]]

    (2) Capital assigned to foreign branches that is denominated in a 
foreign currency;
    (3) A position related to an unconsolidated subsidiary or another 
item that is denominated in a foreign currency and that is deducted from 
the FDIC-supervised institution's tier 1 or tier 2 capital; or
    (4) A position designed to hedge an FDIC-supervised institution's 
capital ratios or earnings against the effect on paragraphs (1), (2), or 
(3) of this definition of adverse exchange rate movements.
    Term repo-style transaction means a repo-style transaction that has 
an original maturity in excess of one business day.
    Trading position means a position that is held by the FDIC-
supervised institution for the purpose of short-term resale or with the 
intent of benefiting from actual or expected short-term price movements, 
or to lock in arbitrage profits.
    Two-way market means a market where there are independent bona fide 
offers to buy and sell so that a price reasonably related to the last 
sales price or current bona fide competitive bid and offer quotations 
can be determined within one day and settled at that price within a 
relatively short time frame conforming to trade custom.
    Value-at-Risk (VaR) means the estimate of the maximum amount that 
the value of one or more positions could decline due to market price or 
rate movements during a fixed holding period within a stated confidence 
interval.

[78 FR 55471, Sept. 10, 2013, as amended at 81 FR 71354, Oct. 17, 2016]



Sec.  324.203  Requirements for application of this subpart F.

    (a) Trading positions--(1) Identification of trading positions. An 
FDIC-supervised institution must have clearly defined policies and 
procedures for determining which of its trading assets and trading 
liabilities are trading positions and which of its trading positions are 
correlation trading positions. These policies and procedures must take 
into account:
    (i) The extent to which a position, or a hedge of its material 
risks, can be marked-to-market daily by reference to a two-way market; 
and
    (ii) Possible impairments to the liquidity of a position or its 
hedge.
    (2) Trading and hedging strategies. An FDIC-supervised institution 
must have clearly defined trading and hedging strategies for its trading 
positions that are approved by senior management of the FDIC-supervised 
institution.
    (i) The trading strategy must articulate the expected holding period 
of, and the market risk associated with, each portfolio of trading 
positions.
    (ii) The hedging strategy must articulate for each portfolio of 
trading positions the level of market risk the FDIC-supervised 
institution is willing to accept and must detail the instruments, 
techniques, and strategies the FDIC-supervised institution will use to 
hedge the risk of the portfolio.
    (b) Management of covered positions--(1) Active management. An FDIC-
supervised institution must have clearly defined policies and procedures 
for actively managing all covered positions. At a minimum, these 
policies and procedures must require:
    (i) Marking positions to market or to model on a daily basis;
    (ii) Daily assessment of the FDIC-supervised institution's ability 
to hedge position and portfolio risks, and of the extent of market 
liquidity;
    (iii) Establishment and daily monitoring of limits on positions by a 
risk control unit independent of the trading business unit;
    (iv) Daily monitoring by senior management of information described 
in paragraphs (b)(1)(i) through (b)(1)(iii) of this section;
    (v) At least annual reassessment of established limits on positions 
by senior management; and
    (vi) At least annual assessments by qualified personnel of the 
quality of market inputs to the valuation process, the soundness of key 
assumptions, the reliability of parameter estimation in pricing models, 
and the stability and accuracy of model calibration under alternative 
market scenarios.
    (2) Valuation of covered positions. The FDIC-supervised institution 
must have a process for prudent valuation of its

[[Page 371]]

covered positions that includes policies and procedures on the valuation 
of positions, marking positions to market or to model, independent price 
verification, and valuation adjustments or reserves. The valuation 
process must consider, as appropriate, unearned credit spreads, close-
out costs, early termination costs, investing and funding costs, 
liquidity, and model risk.
    (c) Requirements for internal models. (1) An FDIC-supervised 
institution must obtain the prior written approval of the FDIC before 
using any internal model to calculate its risk-based capital requirement 
under this subpart.
    (2) An FDIC-supervised institution must meet all of the requirements 
of this section on an ongoing basis. The FDIC-supervised institution 
must promptly notify the FDIC when:
    (i) The FDIC-supervised institution plans to extend the use of a 
model that the FDIC has approved under this subpart to an additional 
business line or product type;
    (ii) The FDIC-supervised institution makes any change to an internal 
model approved by the FDIC under this subpart that would result in a 
material change in the FDIC-supervised institution's risk-weighted asset 
amount for a portfolio of covered positions; or
    (iii) The FDIC-supervised institution makes any material change to 
its modeling assumptions.
    (3) The FDIC may rescind its approval of the use of any internal 
model (in whole or in part) or of the determination of the approach 
under Sec.  324.209(a)(2)(ii) for an FDIC-supervised institution's 
modeled correlation trading positions and determine an appropriate 
capital requirement for the covered positions to which the model would 
apply, if the FDIC determines that the model no longer complies with 
this subpart or fails to reflect accurately the risks of the FDIC-
supervised institution's covered positions.
    (4) The FDIC-supervised institution must periodically, but no less 
frequently than annually, review its internal models in light of 
developments in financial markets and modeling technologies, and enhance 
those models as appropriate to ensure that they continue to meet the 
FDIC's standards for model approval and employ risk measurement 
methodologies that are most appropriate for the FDIC-supervised 
institution's covered positions.
    (5) The FDIC-supervised institution must incorporate its internal 
models into its risk management process and integrate the internal 
models used for calculating its VaR-based measure into its daily risk 
management process.
    (6) The level of sophistication of an FDIC-supervised institution's 
internal models must be commensurate with the complexity and amount of 
its covered positions. An FDIC-supervised institution's internal models 
may use any of the generally accepted approaches, including but not 
limited to variance-covariance models, historical simulations, or Monte 
Carlo simulations, to measure market risk.
    (7) The FDIC-supervised institution's internal models must properly 
measure all the material risks in the covered positions to which they 
are applied.
    (8) The FDIC-supervised institution's internal models must 
conservatively assess the risks arising from less liquid positions and 
positions with limited price transparency under realistic market 
scenarios.
    (9) The FDIC-supervised institution must have a rigorous and well-
defined process for re-estimating, re-evaluating, and updating its 
internal models to ensure continued applicability and relevance.
    (10) If an FDIC-supervised institution uses internal models to 
measure specific risk, the internal models must also satisfy the 
requirements in paragraph (b)(1) of Sec.  324.207.
    (d) Control, oversight, and validation mechanisms. (1) The FDIC-
supervised institution must have a risk control unit that reports 
directly to senior management and is independent from the business 
trading units.
    (2) The FDIC-supervised institution must validate its internal 
models initially and on an ongoing basis. The FDIC-supervised 
institution's validation process must be independent of the internal 
models' development, implementation, and operation, or the validation 
process must be subjected to an independent review of its adequacy and 
effectiveness. Validation must include:

[[Page 372]]

    (i) An evaluation of the conceptual soundness of (including 
developmental evidence supporting) the internal models;
    (ii) An ongoing monitoring process that includes verification of 
processes and the comparison of the FDIC-supervised institution's model 
outputs with relevant internal and external data sources or estimation 
techniques; and
    (iii) An outcomes analysis process that includes backtesting. For 
internal models used to calculate the VaR-based measure, this process 
must include a comparison of the changes in the FDIC-supervised 
institution's portfolio value that would have occurred were end-of-day 
positions to remain unchanged (therefore, excluding fees, commissions, 
reserves, net interest income, and intraday trading) with VaR-based 
measures during a sample period not used in model development.
    (3) The FDIC-supervised institution must stress test the market risk 
of its covered positions at a frequency appropriate to each portfolio, 
and in no case less frequently than quarterly. The stress tests must 
take into account concentration risk (including but not limited to 
concentrations in single issuers, industries, sectors, or markets), 
illiquidity under stressed market conditions, and risks arising from the 
FDIC-supervised institution's trading activities that may not be 
adequately captured in its internal models.
    (4) The FDIC-supervised institution must have an internal audit 
function independent of business-line management that at least annually 
assesses the effectiveness of the controls supporting the FDIC-
supervised institution's market risk measurement systems, including the 
activities of the business trading units and independent risk control 
unit, compliance with policies and procedures, and calculation of the 
FDIC-supervised institution's measures for market risk under this 
subpart. At least annually, the internal audit function must report its 
findings to the FDIC-supervised institution's board of directors (or a 
committee thereof).
    (e) Internal assessment of capital adequacy. The FDIC-supervised 
institution must have a rigorous process for assessing its overall 
capital adequacy in relation to its market risk. The assessment must 
take into account risks that may not be captured fully in the VaR-based 
measure, including concentration and liquidity risk under stressed 
market conditions.
    (f) Documentation. The FDIC-supervised institution must adequately 
document all material aspects of its internal models, management and 
valuation of covered positions, control, oversight, validation and 
review processes and results, and internal assessment of capital 
adequacy.



Sec.  324.204  Measure for market risk.

    (a) General requirement. (1) An FDIC-supervised institution must 
calculate its standardized measure for market risk by following the 
steps described in paragraph (a)(2) of this section. An advanced 
approaches FDIC-supervised institution also must calculate an advanced 
measure for market risk by following the steps in paragraph (a)(2) of 
this section.
    (2) Measure for market risk. An FDIC-supervised institution must 
calculate the standardized measure for market risk, which equals the sum 
of the VaR-based capital requirement, stressed VaR-based capital 
requirement, specific risk add-ons, incremental risk capital 
requirement, comprehensive risk capital requirement, and capital 
requirement for de minimis exposures all as defined under this paragraph 
(a)(2), (except, that the FDIC-supervised institution may not use the 
SFA in Sec.  324.210(b)(2)(vii)(B) for purposes of this calculation), 
plus any additional capital requirement established by the FDIC. An 
advanced approaches FDIC-supervised institution that has completed the 
parallel run process and that has received notifications from the FDIC 
pursuant to Sec.  324.121(d) also must calculate the advanced measure 
for market risk, which equals the sum of the VaR-based capital 
requirement, stressed VaR-based capital requirement, specific risk add-
ons, incremental risk capital requirement, comprehensive risk capital 
requirement, and capital requirement for de minimis exposures as defined 
under this paragraph (a)(2), plus any additional capital requirement 
established by the FDIC.

[[Page 373]]

    (i) VaR-based capital requirement. An FDIC-supervised institution's 
VaR-based capital requirement equals the greater of:
    (A) The previous day's VaR-based measure as calculated under Sec.  
324.205; or
    (B) The average of the daily VaR-based measures as calculated under 
Sec.  324.205 for each of the preceding 60 business days multiplied by 
three, except as provided in paragraph (b) of this section.
    (ii) Stressed VaR-based capital requirement. An FDIC-supervised 
institution's stressed VaR-based capital requirement equals the greater 
of:
    (A) The most recent stressed VaR-based measure as calculated under 
Sec.  324.206; or
    (B) The average of the stressed VaR-based measures as calculated 
under Sec.  324.206 for each of the preceding 12 weeks multiplied by 
three, except as provided in paragraph (b) of this section.
    (iii) Specific risk add-ons. An FDIC-supervised institution's 
specific risk add-ons equal any specific risk add-ons that are required 
under Sec.  324.207 and are calculated in accordance with Sec.  324.210.
    (iv) Incremental risk capital requirement. An FDIC-supervised 
institution's incremental risk capital requirement equals any 
incremental risk capital requirement as calculated under Sec.  324.208.
    (v) Comprehensive risk capital requirement. An FDIC-supervised 
institution's comprehensive risk capital requirement equals any 
comprehensive risk capital requirement as calculated under Sec.  
324.209.
    (vi) Capital requirement for de minimis exposures. An FDIC-
supervised institution's capital requirement for de minimis exposures 
equals:
    (A) The absolute value of the fair value of those de minimis 
exposures that are not captured in the FDIC-supervised institution's 
VaR-based measure or under paragraph (a)(2)(vi)(B) of this section; and
    (B) With the prior written approval of the FDIC, the capital 
requirement for any de minimis exposures using alternative techniques 
that appropriately measure the market risk associated with those 
exposures.
    (b) Backtesting. An FDIC-supervised institution must compare each of 
its most recent 250 business days' trading losses (excluding fees, 
commissions, reserves, net interest income, and intraday trading) with 
the corresponding daily VaR-based measures calibrated to a one-day 
holding period and at a one-tail, 99.0 percent confidence level. An 
FDIC-supervised institution must begin backtesting as required by this 
paragraph (b) no later than one year after the later of January 1, 2014, 
and the date on which the FDIC-supervised institution becomes subject to 
this subpart. In the interim, consistent with safety and soundness 
principles, an FDIC-supervised institution subject to this subpart as of 
January 1, 2014 should continue to follow backtesting procedures in 
accordance with the FDIC's supervisory expectations.
    (1) Once each quarter, the FDIC-supervised institution must identify 
the number of exceptions (that is, the number of business days for which 
the actual daily net trading loss, if any, exceeds the corresponding 
daily VaR-based measure) that have occurred over the preceding 250 
business days.
    (2) An FDIC-supervised institution must use the multiplication 
factor in Table 1 to Sec.  324.204 that corresponds to the number of 
exceptions identified in paragraph (b)(1) of this section to determine 
its VaR-based capital requirement for market risk under paragraph 
(a)(2)(i) of this section and to determine its stressed VaR-based 
capital requirement for market risk under paragraph (a)(2)(ii) of this 
section until it obtains the next quarter's backtesting results, unless 
the FDIC notifies the FDIC-supervised institution in writing that a 
different adjustment or other action is appropriate.

  Table 1 to Sec.   324.204--Multiplication Factors Based on Results of
                               Backtesting
------------------------------------------------------------------------
                                                         Multiplication
                 Number of exceptions                        factor
------------------------------------------------------------------------
4 or fewer...........................................               3.00
5....................................................               3.40
6....................................................               3.50
7....................................................               3.65
8....................................................               3.75
9....................................................               3.85
10 or more...........................................               4.00
------------------------------------------------------------------------


[[Page 374]]



Sec.  324.205  VaR-based measure.

    (a) General requirement. An FDIC-supervised institution must use one 
or more internal models to calculate daily a VaR-based measure of the 
general market risk of all covered positions. The daily VaR-based 
measure also may reflect the FDIC-supervised institution's specific risk 
for one or more portfolios of debt and equity positions, if the internal 
models meet the requirements of Sec.  324.207(b)(1). The daily VaR-based 
measure must also reflect the FDIC-supervised institution's specific 
risk for any portfolio of correlation trading positions that is modeled 
under Sec.  324.209. An FDIC-supervised institution may elect to include 
term repo-style transactions in its VaR-based measure, provided that the 
FDIC-supervised institution includes all such term repo-style 
transactions consistently over time.
    (1) The FDIC-supervised institution's internal models for 
calculating its VaR-based measure must use risk factors sufficient to 
measure the market risk inherent in all covered positions. The market 
risk categories must include, as appropriate, interest rate risk, credit 
spread risk, equity price risk, foreign exchange risk, and commodity 
price risk. For material positions in the major currencies and markets, 
modeling techniques must incorporate enough segments of the yield 
curve--in no case less than six--to capture differences in volatility 
and less than perfect correlation of rates along the yield curve.
    (2) The VaR-based measure may incorporate empirical correlations 
within and across risk categories, provided the FDIC-supervised 
institution validates and demonstrates the reasonableness of its process 
for measuring correlations. If the VaR-based measure does not 
incorporate empirical correlations across risk categories, the FDIC-
supervised institution must add the separate measures from its internal 
models used to calculate the VaR-based measure for the appropriate 
market risk categories (interest rate risk, credit spread risk, equity 
price risk, foreign exchange rate risk, and/or commodity price risk) to 
determine its aggregate VaR-based measure.
    (3) The VaR-based measure must include the risks arising from the 
nonlinear price characteristics of options positions or positions with 
embedded optionality and the sensitivity of the fair value of the 
positions to changes in the volatility of the underlying rates, prices, 
or other material risk factors. An FDIC-supervised institution with a 
large or complex options portfolio must measure the volatility of 
options positions or positions with embedded optionality by different 
maturities and/or strike prices, where material.
    (4) The FDIC-supervised institution must be able to justify to the 
satisfaction of the FDIC the omission of any risk factors from the 
calculation of its VaR-based measure that the FDIC-supervised 
institution uses in its pricing models.
    (5) The FDIC-supervised institution must demonstrate to the 
satisfaction of the FDIC the appropriateness of any proxies used to 
capture the risks of the FDIC-supervised institution's actual positions 
for which such proxies are used.
    (b) Quantitative requirements for VaR-based measure. (1) The VaR-
based measure must be calculated on a daily basis using a one-tail, 99.0 
percent confidence level, and a holding period equivalent to a 10-
business-day movement in underlying risk factors, such as rates, 
spreads, and prices. To calculate VaR-based measures using a 10-
business-day holding period, the FDIC-supervised institution may 
calculate 10-business-day measures directly or may convert VaR-based 
measures using holding periods other than 10 business days to the 
equivalent of a 10-business-day holding period. An FDIC-supervised 
institution that converts its VaR-based measure in such a manner must be 
able to justify the reasonableness of its approach to the satisfaction 
of the FDIC.
    (2) The VaR-based measure must be based on a historical observation 
period of at least one year. Data used to determine the VaR-based 
measure must be relevant to the FDIC-supervised institution's actual 
exposures and of sufficient quality to support the calculation of risk-
based capital requirements. The FDIC-supervised institution must update 
data sets at least monthly or more frequently as changes

[[Page 375]]

in market conditions or portfolio composition warrant. For an FDIC-
supervised institution that uses a weighting scheme or other method for 
the historical observation period, the FDIC-supervised institution must 
either:
    (i) Use an effective observation period of at least one year in 
which the average time lag of the observations is at least six months; 
or
    (ii) Demonstrate to the FDIC that its weighting scheme is more 
effective than a weighting scheme with an average time lag of at least 
six months representing the volatility of the FDIC-supervised 
institution's trading portfolio over a full business cycle. An FDIC-
supervised institution using this option must update its data more 
frequently than monthly and in a manner appropriate for the type of 
weighting scheme.
    (c) An FDIC-supervised institution must divide its portfolio into a 
number of significant subportfolios approved by the FDIC for 
subportfolio backtesting purposes. These subportfolios must be 
sufficient to allow the FDIC-supervised institution and the FDIC to 
assess the adequacy of the VaR model at the risk factor level; the FDIC 
will evaluate the appropriateness of these subportfolios relative to the 
value and composition of the FDIC-supervised institution's covered 
positions. The FDIC-supervised institution must retain and make 
available to the FDIC the following information for each subportfolio 
for each business day over the previous two years (500 business days), 
with no more than a 60-day lag:
    (1) A daily VaR-based measure for the subportfolio calibrated to a 
one-tail, 99.0 percent confidence level;
    (2) The daily profit or loss for the subportfolio (that is, the net 
change in price of the positions held in the portfolio at the end of the 
previous business day); and
    (3) The p-value of the profit or loss on each day (that is, the 
probability of observing a profit that is less than, or a loss that is 
greater than, the amount reported for purposes of paragraph (c)(2) of 
this section based on the model used to calculate the VaR-based measure 
described in paragraph (c)(1) of this section).



Sec.  324.206  Stressed VaR-based measure.

    (a) General requirement. At least weekly, an FDIC-supervised 
institution must use the same internal model(s) used to calculate its 
VaR-based measure to calculate a stressed VaR-based measure.
    (b) Quantitative requirements for stressed VaR-based measure. (1) An 
FDIC-supervised institution must calculate a stressed VaR-based measure 
for its covered positions using the same model(s) used to calculate the 
VaR-based measure, subject to the same confidence level and holding 
period applicable to the VaR-based measure under Sec.  324.205, but with 
model inputs calibrated to historical data from a continuous 12-month 
period that reflects a period of significant financial stress 
appropriate to the FDIC-supervised institution's current portfolio.
    (2) The stressed VaR-based measure must be calculated at least 
weekly and be no less than the FDIC-supervised institution's VaR-based 
measure.
    (3) An FDIC-supervised institution must have policies and procedures 
that describe how it determines the period of significant financial 
stress used to calculate the FDIC-supervised institution's stressed VaR-
based measure under this section and must be able to provide empirical 
support for the period used. The FDIC-supervised institution must obtain 
the prior approval of the FDIC for, and notify the FDIC if the FDIC-
supervised institution makes any material changes to, these policies and 
procedures. The policies and procedures must address:
    (i) How the FDIC-supervised institution links the period of 
significant financial stress used to calculate the stressed VaR-based 
measure to the composition and directional bias of its current 
portfolio; and
    (ii) The FDIC-supervised institution's process for selecting, 
reviewing, and updating the period of significant financial stress used 
to calculate the stressed VaR-based measure and for monitoring the 
appropriateness of the period to the FDIC-supervised institution's 
current portfolio.
    (4) Nothing in this section prevents the FDIC from requiring an 
FDIC-supervised institution to use a different period of significant 
financial stress in

[[Page 376]]

the calculation of the stressed VaR-based measure.



Sec.  324.207  Specific risk.

    (a) General requirement. An FDIC-supervised institution must use one 
of the methods in this section to measure the specific risk for each of 
its debt, equity, and securitization positions with specific risk.
    (b) Modeled specific risk. An FDIC-supervised institution may use 
models to measure the specific risk of covered positions as provided in 
Sec.  324.205(a) (therefore, excluding securitization positions that are 
not modeled under Sec.  324.209). An FDIC-supervised institution must 
use models to measure the specific risk of correlation trading positions 
that are modeled under Sec.  324.209.
    (1) Requirements for specific risk modeling. (i) If an FDIC-
supervised institution uses internal models to measure the specific risk 
of a portfolio, the internal models must:
    (A) Explain the historical price variation in the portfolio;
    (B) Be responsive to changes in market conditions;
    (C) Be robust to an adverse environment, including signaling rising 
risk in an adverse environment; and
    (D) Capture all material components of specific risk for the debt 
and equity positions in the portfolio. Specifically, the internal models 
must:
    (1) Capture event risk and idiosyncratic risk; and
    (2) Capture and demonstrate sensitivity to material differences 
between positions that are similar but not identical and to changes in 
portfolio composition and concentrations.
    (ii) If an FDIC-supervised institution calculates an incremental 
risk measure for a portfolio of debt or equity positions under Sec.  
324.208, the FDIC-supervised institution is not required to capture 
default and credit migration risks in its internal models used to 
measure the specific risk of those portfolios.
    (2) Specific risk fully modeled for one or more portfolios. If the 
FDIC-supervised institution's VaR-based measure captures all material 
aspects of specific risk for one or more of its portfolios of debt, 
equity, or correlation trading positions, the FDIC-supervised 
institution has no specific risk add-on for those portfolios for 
purposes of Sec.  324.204(a)(2)(iii).
    (c) Specific risk not modeled. (1) If the FDIC-supervised 
institution's VaR-based measure does not capture all material aspects of 
specific risk for a portfolio of debt, equity, or correlation trading 
positions, the FDIC-supervised institution must calculate a specific-
risk add-on for the portfolio under the standardized measurement method 
as described in Sec.  324.210.
    (2) An FDIC-supervised institution must calculate a specific risk 
add-on under the standardized measurement method as described in Sec.  
324.210 for all of its securitization positions that are not modeled 
under Sec.  324.209.



Sec.  324.208  Incremental risk.

    (a) General requirement. An FDIC-supervised institution that 
measures the specific risk of a portfolio of debt positions under Sec.  
324.207(b) using internal models must calculate at least weekly an 
incremental risk measure for that portfolio according to the 
requirements in this section. The incremental risk measure is the FDIC-
supervised institution's measure of potential losses due to incremental 
risk over a one-year time horizon at a one-tail, 99.9 percent confidence 
level, either under the assumption of a constant level of risk, or under 
the assumption of constant positions. With the prior approval of the 
FDIC, an FDIC-supervised institution may choose to include portfolios of 
equity positions in its incremental risk model, provided that it 
consistently includes such equity positions in a manner that is 
consistent with how the FDIC-supervised institution internally measures 
and manages the incremental risk of such positions at the portfolio 
level. If equity positions are included in the model, for modeling 
purposes default is considered to have occurred upon the default of any 
debt of the issuer of the equity position. An FDIC-supervised 
institution may not include correlation trading positions or 
securitization positions in its incremental risk measure.
    (b) Requirements for incremental risk modeling. For purposes of 
calculating the incremental risk measure, the incremental risk model 
must:

[[Page 377]]

    (1) Measure incremental risk over a one-year time horizon and at a 
one-tail, 99.9 percent confidence level, either under the assumption of 
a constant level of risk, or under the assumption of constant positions.
    (i) A constant level of risk assumption means that the FDIC-
supervised institution rebalances, or rolls over, its trading positions 
at the beginning of each liquidity horizon over the one-year horizon in 
a manner that maintains the FDIC-supervised institution's initial risk 
level. The FDIC-supervised institution must determine the frequency of 
rebalancing in a manner consistent with the liquidity horizons of the 
positions in the portfolio. The liquidity horizon of a position or set 
of positions is the time required for an FDIC-supervised institution to 
reduce its exposure to, or hedge all of its material risks of, the 
position(s) in a stressed market. The liquidity horizon for a position 
or set of positions may not be less than the shorter of three months or 
the contractual maturity of the position.
    (ii) A constant position assumption means that the FDIC-supervised 
institution maintains the same set of positions throughout the one-year 
horizon. If an FDIC-supervised institution uses this assumption, it must 
do so consistently across all portfolios.
    (iii) An FDIC-supervised institution's selection of a constant 
position or a constant risk assumption must be consistent between the 
FDIC-supervised institution's incremental risk model and its 
comprehensive risk model described in Sec.  324.209, if applicable.
    (iv) An FDIC-supervised institution's treatment of liquidity 
horizons must be consistent between the FDIC-supervised institution's 
incremental risk model and its comprehensive risk model described in 
Sec.  324.209, if applicable.
    (2) Recognize the impact of correlations between default and 
migration events among obligors.
    (3) Reflect the effect of issuer and market concentrations, as well 
as concentrations that can arise within and across product classes 
during stressed conditions.
    (4) Reflect netting only of long and short positions that reference 
the same financial instrument.
    (5) Reflect any material mismatch between a position and its hedge.
    (6) Recognize the effect that liquidity horizons have on dynamic 
hedging strategies. In such cases, an FDIC-supervised institution must:
    (i) Choose to model the rebalancing of the hedge consistently over 
the relevant set of trading positions;
    (ii) Demonstrate that the inclusion of rebalancing results in a more 
appropriate risk measurement;
    (iii) Demonstrate that the market for the hedge is sufficiently 
liquid to permit rebalancing during periods of stress; and
    (iv) Capture in the incremental risk model any residual risks 
arising from such hedging strategies.
    (7) Reflect the nonlinear impact of options and other positions with 
material nonlinear behavior with respect to default and migration 
changes.
    (8) Maintain consistency with the FDIC-supervised institution's 
internal risk management methodologies for identifying, measuring, and 
managing risk.
    (c) Calculation of incremental risk capital requirement. The 
incremental risk capital requirement is the greater of:
    (1) The average of the incremental risk measures over the previous 
12 weeks; or
    (2) The most recent incremental risk measure.



Sec.  324.209  Comprehensive risk.

    (a) General requirement. (1) Subject to the prior approval of the 
FDIC, an FDIC-supervised institution may use the method in this section 
to measure comprehensive risk, that is, all price risk, for one or more 
portfolios of correlation trading positions.
    (2) An FDIC-supervised institution that measures the price risk of a 
portfolio of correlation trading positions using internal models must 
calculate at least weekly a comprehensive risk measure that captures all 
price risk according to the requirements of this section. The 
comprehensive risk measure is either:
    (i) The sum of:

[[Page 378]]

    (A) The FDIC-supervised institution's modeled measure of all price 
risk determined according to the requirements in paragraph (b) of this 
section; and
    (B) A surcharge for the FDIC-supervised institution's modeled 
correlation trading positions equal to the total specific risk add-on 
for such positions as calculated under Sec.  324.210 multiplied by 8.0 
percent; or
    (ii) With approval of the FDIC and provided the FDIC-supervised 
institution has met the requirements of this section for a period of at 
least one year and can demonstrate the effectiveness of the model 
through the results of ongoing model validation efforts including robust 
benchmarking, the greater of:
    (A) The FDIC-supervised institution's modeled measure of all price 
risk determined according to the requirements in paragraph (b) of this 
section; or
    (B) The total specific risk add-on that would apply to the bank's 
modeled correlation trading positions as calculated under Sec.  324.210 
multiplied by 8.0 percent.
    (b) Requirements for modeling all price risk. If an FDIC-supervised 
institution uses an internal model to measure the price risk of a 
portfolio of correlation trading positions:
    (1) The internal model must measure comprehensive risk over a one-
year time horizon at a one-tail, 99.9 percent confidence level, either 
under the assumption of a constant level of risk, or under the 
assumption of constant positions.
    (2) The model must capture all material price risk, including but 
not limited to the following:
    (i) The risks associated with the contractual structure of cash 
flows of the position, its issuer, and its underlying exposures;
    (ii) Credit spread risk, including nonlinear price risks;
    (iii) The volatility of implied correlations, including nonlinear 
price risks such as the cross-effect between spreads and correlations;
    (iv) Basis risk;
    (v) Recovery rate volatility as it relates to the propensity for 
recovery rates to affect tranche prices; and
    (vi) To the extent the comprehensive risk measure incorporates the 
benefits of dynamic hedging, the static nature of the hedge over the 
liquidity horizon must be recognized. In such cases, an FDIC-supervised 
institution must:
    (A) Choose to model the rebalancing of the hedge consistently over 
the relevant set of trading positions;
    (B) Demonstrate that the inclusion of rebalancing results in a more 
appropriate risk measurement;
    (C) Demonstrate that the market for the hedge is sufficiently liquid 
to permit rebalancing during periods of stress; and
    (D) Capture in the comprehensive risk model any residual risks 
arising from such hedging strategies;
    (3) The FDIC-supervised institution must use market data that are 
relevant in representing the risk profile of the FDIC-supervised 
institution's correlation trading positions in order to ensure that the 
FDIC-supervised institution fully captures the material risks of the 
correlation trading positions in its comprehensive risk measure in 
accordance with this section; and
    (4) The FDIC-supervised institution must be able to demonstrate that 
its model is an appropriate representation of comprehensive risk in 
light of the historical price variation of its correlation trading 
positions.
    (c) Requirements for stress testing. (1) An FDIC-supervised 
institution must at least weekly apply specific, supervisory stress 
scenarios to its portfolio of correlation trading positions that capture 
changes in:
    (i) Default rates;
    (ii) Recovery rates;
    (iii) Credit spreads;
    (iv) Correlations of underlying exposures; and
    (v) Correlations of a correlation trading position and its hedge.
    (2) Other requirements. (i) An FDIC-supervised institution must 
retain and make available to the FDIC the results of the supervisory 
stress testing, including comparisons with the capital requirements 
generated by the FDIC-supervised institution's comprehensive risk model.
    (ii) An FDIC-supervised institution must report to the FDIC promptly 
any

[[Page 379]]

instances where the stress tests indicate any material deficiencies in 
the comprehensive risk model.
    (d) Calculation of comprehensive risk capital requirement. The 
comprehensive risk capital requirement is the greater of:
    (1) The average of the comprehensive risk measures over the previous 
12 weeks; or
    (2) The most recent comprehensive risk measure.



Sec.  324.210  Standardized measurement method for specific risk.

    (a) General requirement. An FDIC-supervised institution must 
calculate a total specific risk add-on for each portfolio of debt and 
equity positions for which the FDIC-supervised institution's VaR-based 
measure does not capture all material aspects of specific risk and for 
all securitization positions that are not modeled under Sec.  324.209. 
An FDIC-supervised institution must calculate each specific risk add-on 
in accordance with the requirements of this section. Notwithstanding any 
other definition or requirement in this subpart, a position that would 
have qualified as a debt position or an equity position but for the fact 
that it qualifies as a correlation trading position under paragraph (2) 
of the definition of correlation trading position in Sec.  324.2, shall 
be considered a debt position or an equity position, respectively, for 
purposes of this Sec.  324.210.
    (1) The specific risk add-on for an individual debt or 
securitization position that represents sold credit protection is capped 
at the notional amount of the credit derivative contract. The specific 
risk add-on for an individual debt or securitization position that 
represents purchased credit protection is capped at the current fair 
value of the transaction plus the absolute value of the present value of 
all remaining payments to the protection seller under the transaction. 
This sum is equal to the value of the protection leg of the transaction.
    (2) For debt, equity, or securitization positions that are 
derivatives with linear payoffs, an FDIC-supervised institution must 
assign a specific risk-weighting factor to the fair value of the 
effective notional amount of the underlying instrument or index 
portfolio, except for a securitization position for which the FDIC-
supervised institution directly calculates a specific risk add-on using 
the SFA in paragraph (b)(2)(vii)(B) of this section. A swap must be 
included as an effective notional position in the underlying instrument 
or portfolio, with the receiving side treated as a long position and the 
paying side treated as a short position. For debt, equity, or 
securitization positions that are derivatives with nonlinear payoffs, an 
FDIC-supervised institution must risk weight the fair value of the 
effective notional amount of the underlying instrument or portfolio 
multiplied by the derivative's delta.
    (3) For debt, equity, or securitization positions, an FDIC-
supervised institution may net long and short positions (including 
derivatives) in identical issues or identical indices. An FDIC-
supervised institution may also net positions in depositary receipts 
against an opposite position in an identical equity in different 
markets, provided that the FDIC-supervised institution includes the 
costs of conversion.
    (4) A set of transactions consisting of either a debt position and 
its credit derivative hedge or a securitization position and its credit 
derivative hedge has a specific risk add-on of zero if:
    (i) The debt or securitization position is fully hedged by a total 
return swap (or similar instrument where there is a matching of swap 
payments and changes in fair value of the debt or securitization 
position);
    (ii) There is an exact match between the reference obligation of the 
swap and the debt or securitization position;
    (iii) There is an exact match between the currency of the swap and 
the debt or securitization position; and
    (iv) There is either an exact match between the maturity date of the 
swap and the maturity date of the debt or securitization position; or, 
in cases where a total return swap references a portfolio of positions 
with different maturity dates, the total return swap maturity date must 
match the maturity date of the underlying asset in that portfolio that 
has the latest maturity date.

[[Page 380]]

    (5) The specific risk add-on for a set of transactions consisting of 
either a debt position and its credit derivative hedge or a 
securitization position and its credit derivative hedge that does not 
meet the criteria of paragraph (a)(4) of this section is equal to 20.0 
percent of the capital requirement for the side of the transaction with 
the higher specific risk add-on when:
    (i) The credit risk of the position is fully hedged by a credit 
default swap or similar instrument;
    (ii) There is an exact match between the reference obligation of the 
credit derivative hedge and the debt or securitization position;
    (iii) There is an exact match between the currency of the credit 
derivative hedge and the debt or securitization position; and
    (iv) There is either an exact match between the maturity date of the 
credit derivative hedge and the maturity date of the debt or 
securitization position; or, in the case where the credit derivative 
hedge has a standard maturity date:
    (A) The maturity date of the credit derivative hedge is within 30 
business days of the maturity date of the debt or securitization 
position; or
    (B) For purchased credit protection, the maturity date of the credit 
derivative hedge is later than the maturity date of the debt or 
securitization position, but is no later than the standard maturity date 
for that instrument that immediately follows the maturity date of the 
debt or securitization position. The maturity date of the credit 
derivative hedge may not exceed the maturity date of the debt or 
securitization position by more than 90 calendar days.
    (6) The specific risk add-on for a set of transactions consisting of 
either a debt position and its credit derivative hedge or a 
securitization position and its credit derivative hedge that does not 
meet the criteria of either paragraph (a)(4) or (a)(5) of this section, 
but in which all or substantially all of the price risk has been hedged, 
is equal to the specific risk add-on for the side of the transaction 
with the higher specific risk add-on.
    (b) Debt and securitization positions. (1) The total specific risk 
add-on for a portfolio of debt or securitization positions is the sum of 
the specific risk add-ons for individual debt or securitization 
positions, as computed under this section. To determine the specific 
risk add-on for individual debt or securitization positions, an FDIC-
supervised institution must multiply the absolute value of the current 
fair value of each net long or net short debt or securitization position 
in the portfolio by the appropriate specific risk-weighting factor as 
set forth in paragraphs (b)(2)(i) through (b)(2)(vii) of this section.
    (2) For the purpose of this section, the appropriate specific risk-
weighting factors include:
    (i) Sovereign debt positions. (A) In accordance with Table 1 to 
Sec.  324.210, an FDIC-supervised institution must assign a specific 
risk-weighting factor to a sovereign debt position based on the CRC 
applicable to the sovereign, and, as applicable, the remaining 
contractual maturity of the position, or if there is no CRC applicable 
to the sovereign, based on whether the sovereign entity is a member of 
the OECD. Notwithstanding any other provision in this subpart, sovereign 
debt positions that are backed by the full faith and credit of the 
United States are treated as having a CRC of 0.

             Table 1 to Sec.   324.210--Specific Risk-Weighting Factors for Sovereign Debt Positions
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                                 Specific risk-weighting factor (in percent)
----------------------------------------------------------------------------------------------------------------
CRC........................................             0-1                          0.0
                                            --------------------------------------------------------------------
                                                        2-3  Remaining contractual maturity of 6            0.25
                                                              months or less.
                                                            ----------------------------------------------------

[[Page 381]]

 
                                                             Remaining contractual maturity of               1.0
                                                              greater than 6 and up to and
                                                              including 24 months.
                                                            ----------------------------------------------------
                                                             Remaining contractual maturity                  1.6
                                                              exceeds 24 months.
                                            --------------------------------------------------------------------
                                                        4-6                          8.0
                                            --------------------------------------------------------------------
                                                          7                          12.0
----------------------------------------------------------------------------------------------------------------
OECD Member with No CRC                                              0.0
----------------------------------------------------------------------------------------------------------------
Non-OECD Member with No CRC                                          8.0
----------------------------------------------------------------------------------------------------------------
Sovereign Default                                                    12.0
----------------------------------------------------------------------------------------------------------------

    (B) Notwithstanding paragraph (b)(2)(i)(A) of this section, an FDIC-
supervised institution may assign to a sovereign debt position a 
specific risk-weighting factor that is lower than the applicable 
specific risk-weighting factor in Table 1 to Sec.  324.210 if:
    (1) The position is denominated in the sovereign entity's currency;
    (2) The FDIC-supervised institution has at least an equivalent 
amount of liabilities in that currency; and
    (3) The sovereign entity allows banks under its jurisdiction to 
assign the lower specific risk-weighting factor to the same exposures to 
the sovereign entity.
    (C) An FDIC-supervised institution must assign a 12.0 percent 
specific risk-weighting factor to a sovereign debt position immediately 
upon determination a default has occurred; or if a default has occurred 
within the previous five years.
    (D) An FDIC-supervised institution must assign a 0.0 percent 
specific risk-weighting factor to a sovereign debt position if the 
sovereign entity is a member of the OECD and does not have a CRC 
assigned to it, except as provided in paragraph (b)(2)(i)(C) of this 
section.
    (E) An FDIC-supervised institution must assign an 8.0 percent 
specific risk-weighting factor to a sovereign debt position if the 
sovereign is not a member of the OECD and does not have a CRC assigned 
to it, except as provided in paragraph (b)(2)(i)(C) of this section.
    (ii) Certain supranational entity and multilateral development bank 
debt positions. An FDIC-supervised institution may assign a 0.0 percent 
specific risk-weighting factor to a debt position that is an exposure to 
the Bank for International Settlements, the European Central Bank, the 
European Commission, the International Monetary Fund, or an MDB.
    (iii) GSE debt positions. An FDIC-supervised institution must assign 
a 1.6 percent specific risk-weighting factor to a debt position that is 
an exposure to a GSE. Notwithstanding the foregoing, an FDIC-supervised 
institution must assign an 8.0 percent specific risk-weighting factor to 
preferred stock issued by a GSE.
    (iv) Depository institution, foreign bank, and credit union debt 
positions. (A) Except as provided in paragraph (b)(2)(iv)(B) of this 
section, an FDIC-supervised institution must assign a specific risk-
weighting factor to a debt position that is an exposure to a depository 
institution, a foreign bank, or a credit union, in accordance with Table 
2 to Sec.  324.210 of this section, based on the CRC that corresponds to 
that entity's home country or the OECD membership status of that 
entity's home

[[Page 382]]

country if there is no CRC applicable to the entity's home country, and, 
as applicable, the remaining contractual maturity of the position.

     Table 2 to Sec.   324.210--Specific Risk-weighting Factors for
  Depository Institution, Foreign Bank, and Credit Union Debt Positions
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                       Specific risk-            Percent
                                       weighting factor
------------------------------------------------------------------------
CRC 0-2 or OECD Member with No CRC  Remaining                       0.25
                                     contractual
                                     maturity of 6
                                     months or less.
                                    Remaining                        1.0
                                     contractual
                                     maturity of greater
                                     than 6 and up to
                                     and including 24
                                     months.
                                    Remaining                        1.6
                                     contractual
                                     maturity exceeds 24
                                     months.
CRC 3.............................  ....................             8.0
CRC 4-7...........................  ....................            12.0
Non-OECD Member with No CRC.......  ....................             8.0
Sovereign Default.................  ....................            12.0
------------------------------------------------------------------------

    (B) An FDIC-supervised institution must assign a specific risk-
weighting factor of 8.0 percent to a debt position that is an exposure 
to a depository institution or a foreign bank that is includable in the 
depository institution's or foreign bank's regulatory capital and that 
is not subject to deduction as a reciprocal holding under Sec.  324.22.
    (C) An FDIC-supervised institution must assign a 12.0 percent 
specific risk-weighting factor to a debt position that is an exposure to 
a foreign bank immediately upon determination that a default by the 
foreign bank's home country has occurred or if a default by the foreign 
bank's home country has occurred within the previous five years.
    (v) PSE debt positions. (A) Except as provided in paragraph 
(b)(2)(v)(B) of this section, an FDIC-supervised institution must assign 
a specific risk-weighting factor to a debt position that is an exposure 
to a PSE in accordance with Tables 3 and 4 to Sec.  324.210 depending on 
the position's categorization as a general obligation or revenue 
obligation based on the CRC that corresponds to the PSE's home country 
or the OECD membership status of the PSE's home country if there is no 
CRC applicable to the PSE's home country, and, as applicable, the 
remaining contractual maturity of the position, as set forth in Tables 3 
and 4 to Sec.  324.210.
    (B) An FDIC-supervised institution may assign a lower specific risk-
weighting factor than would otherwise apply under Tables 3 and 4 to 
Sec.  324.210 to a debt position that is an exposure to a foreign PSE 
if:
    (1) The PSE's home country allows banks under its jurisdiction to 
assign a lower specific risk-weighting factor to such position; and
    (2) The specific risk-weighting factor is not lower than the risk 
weight that corresponds to the PSE's home country in Table 1 to Sec.  
324.210.
    (C) An FDIC-supervised institution must assign a 12.0 percent 
specific risk-weighting factor to a PSE debt position immediately upon 
determination that a default by the PSE's home country has occurred or 
if a default by the PSE's home country has occurred within the previous 
five years.

   Table 3 to Sec.   324.210--Specific Risk-weighting Factors for PSE
                    General Obligation Debt Positions
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                      General obligation      Percent
                                        specific risk-
                                       weighting factor
------------------------------------------------------------------------

[[Page 383]]

 
CRC 0-2 or OECD Member with No CRC  Remaining contractual           0.25
                                     maturity of 6 months
                                     or less.
                                    Remaining contractual           1.0
                                     maturity of greater
                                     than 6 and up to and
                                     including 24 months.
                                    Remaining contractual           1.6
                                     maturity exceeds 24
                                     months.
CRC 3.............................  .....................           8.0
CRC 4-7...........................  .....................          12.0
Non-OECD Member with No CRC.......  .....................           8.0
Sovereign Default.................  .....................          12.0
------------------------------------------------------------------------


   Table 4 to Sec.   324.210--Specific Risk-weighting Factors for PSE
                    Revenue Obligation Debt Positions
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                      Revenue obligation      Percent
                                        specific risk-
                                       weighting factor
------------------------------------------------------------------------
CRC 0-1 or OECD Member with No CRC  Remaining contractual           0.25
                                     maturity of 6 months
                                     or less.
                                    Remaining contractual           1.0
                                     maturity of greater
                                     than 6 and up to and
                                     including 24 months.
                                    Remaining contractual           1.6
                                     maturity exceeds 24
                                     months.
CRC 2-3...........................  .....................           8.0
CRC 4-7...........................  .....................          12.0
Non-OECD Member with No CRC.......  .....................           8.0
Sovereign Default.................  .....................          12.0
------------------------------------------------------------------------

    (vi) Corporate debt positions. Except as otherwise provided in 
paragraph (b)(2)(vi)(B) of this section, an FDIC-supervised institution 
must assign a specific risk-weighting factor to a corporate debt 
position in accordance with the investment grade methodology in 
paragraph (b)(2)(vi)(A) of this section.
    (A) Investment grade methodology. (1) For corporate debt positions 
that are exposures to entities that have issued and outstanding publicly 
traded instruments, an FDIC-supervised institution must assign a 
specific risk-weighting factor based on the category and remaining 
contractual maturity of the position, in accordance with Table 5 to 
Sec.  324.210. For purposes of this paragraph (b)(2)(vi)(A)(1), the 
FDIC-supervised institution must determine whether the position is in 
the investment grade or not investment grade category.

  Table 5 to Sec.   324.210--Specific Risk-weighting Factors for Corporate Debt Positions Under the Investment
                                                Grade Methodology
----------------------------------------------------------------------------------------------------------------
                                                                                         Specific risk-weighting
                    Category                         Remaining contractual maturity        factor (in percent)
----------------------------------------------------------------------------------------------------------------
Investment Grade...............................  6 months or less......................                     0.50
                                                 Greater than 6 and up to and including                     2.00
                                                  24 months.
                                                 Greater than 24 months................                     4.00
Non-investment Grade...........................  ......................................                    12.00
----------------------------------------------------------------------------------------------------------------


[[Page 384]]

    (2) An FDIC-supervised institution must assign an 8.0 percent 
specific risk-weighting factor for corporate debt positions that are 
exposures to entities that do not have publicly traded instruments 
outstanding.
    (B) Limitations. (1) An FDIC-supervised institution must assign a 
specific risk-weighting factor of at least 8.0 percent to an interest-
only mortgage-backed security that is not a securitization position.
    (2) An FDIC-supervised institution shall not assign a corporate debt 
position a specific risk-weighting factor that is lower than the 
specific risk-weighting factor that corresponds to the CRC of the 
issuer's home country, if applicable, in Table 1 to Sec.  324.210.
    (vii) Securitization positions. (A) General requirements. (1) An 
FDIC-supervised institution that is not an advanced approaches FDIC-
supervised institution must assign a specific risk-weighting factor to a 
securitization position using either the simplified supervisory formula 
approach (SSFA) in paragraph (b)(2)(vii)(C) of this section (and Sec.  
324.211) or assign a specific risk-weighting factor of 100 percent to 
the position.
    (2) An FDIC-supervised institution that is an advanced approaches 
FDIC-supervised institution must calculate a specific risk add-on for a 
securitization position in accordance with paragraph (b)(2)(vii)(B) of 
this section if the FDIC-supervised institution and the securitization 
position each qualifies to use the SFA in Sec.  324.143. An FDIC-
supervised institution that is an advanced approaches FDIC-supervised 
institution with a securitization position that does not qualify for the 
SFA under paragraph (b)(2)(vii)(B) of this section may assign a specific 
risk-weighting factor to the securitization position using the SSFA in 
accordance with paragraph (b)(2)(vii)(C) of this section or assign a 
specific risk-weighting factor of 100 percent to the position.
    (3) An FDIC-supervised institution must treat a short securitization 
position as if it is a long securitization position solely for 
calculation purposes when using the SFA in paragraph (b)(2)(vii)(B) of 
this section or the SSFA in paragraph (b)(2)(vii)(C) of this section.
    (B) SFA. To calculate the specific risk add-on for a securitization 
position using the SFA, an FDIC-supervised institution that is an 
advanced approaches FDIC-supervised institution must set the specific 
risk add-on for the position equal to the risk-based capital requirement 
as calculated under Sec.  324.143.
    (C) SSFA. To use the SSFA to determine the specific risk-weighting 
factor for a securitization position, an FDIC-supervised institution 
must calculate the specific risk-weighting factor in accordance with 
Sec.  324.211.
    (D) N\th\-to-default credit derivatives. An FDIC-supervised 
institution must determine a specific risk add-on using the SFA in 
paragraph (b)(2)(vii)(B) of this section, or assign a specific risk-
weighting factor using the SSFA in paragraph (b)(2)(vii)(C) of this 
section to an n\th\-to-default credit derivative in accordance with this 
paragraph (b)(2)(vii)(D), regardless of whether the FDIC-supervised 
institution is a net protection buyer or net protection seller. An FDIC-
supervised institution must determine its position in the n\th\-to-
default credit derivative as the largest notional amount of all the 
underlying exposures.
    (1) For purposes of determining the specific risk add-on using the 
SFA in paragraph (b)(2)(vii)(B) of this section or the specific risk-
weighting factor for an n\th\-to-default credit derivative using the 
SSFA in paragraph (b)(2)(vii)(C) of this section the FDIC-supervised 
institution must calculate the attachment point and detachment point of 
its position as follows:
    (i) The attachment point (parameter A) is the ratio of the sum of 
the notional amounts of all underlying exposures that are subordinated 
to the FDIC-supervised institution's position to the total notional 
amount of all underlying exposures. For purposes of the SSFA, parameter 
A is expressed as a decimal value between zero and one. For purposes of 
using the SFA in paragraph (b)(2)(vii)(B) of this section to calculate 
the specific add-on for its position in an n\th\-to-default credit 
derivative, parameter A must be set equal to the credit enhancement 
level (L) input to the SFA formula in Sec.  324.143. In the

[[Page 385]]

case of a first-to-default credit derivative, there are no underlying 
exposures that are subordinated to the FDIC-supervised institution's 
position. In the case of a second-or-subsequent-to-default credit 
derivative, the smallest (n-1) notional amounts of the underlying 
exposure(s) are subordinated to the FDIC-supervised institution's 
position.
    (ii) The detachment point (parameter D) equals the sum of parameter 
A plus the ratio of the notional amount of the FDIC-supervised 
institution's position in the n\th\-to-default credit derivative to the 
total notional amount of all underlying exposures. For purposes of the 
SSFA, parameter A is expressed as a decimal value between zero and one. 
For purposes of using the SFA in paragraph (b)(2)(vii)(B) of this 
section to calculate the specific risk add-on for its position in an 
n\th\-to-default credit derivative, parameter D must be set to equal the 
L input plus the thickness of tranche (T) input to the SFA formula in 
Sec.  324.143.
    (2) An FDIC-supervised institution that does not use the SFA in 
paragraph (b)(2)(vii)(B) of this section to determine a specific risk-
add on, or the SSFA in paragraph (b)(2)(vii)(C) of this section to 
determine a specific risk-weighting factor for its position in an n\th\-
to-default credit derivative must assign a specific risk-weighting 
factor of 100 percent to the position.
    (c) Modeled correlation trading positions. For purposes of 
calculating the comprehensive risk measure for modeled correlation 
trading positions under either paragraph (a)(2)(i) or (a)(2)(ii) of 
Sec.  324.209, the total specific risk add-on is the greater of:
    (1) The sum of the FDIC-supervised institution's specific risk add-
ons for each net long correlation trading position calculated under this 
section; or
    (2) The sum of the FDIC-supervised institution's specific risk add-
ons for each net short correlation trading position calculated under 
this section.
    (d) Non-modeled securitization positions. For securitization 
positions that are not correlation trading positions and for 
securitizations that are correlation trading positions not modeled under 
Sec.  324.209, the total specific risk add-on is the greater of:
    (1) The sum of the FDIC-supervised institution's specific risk add-
ons for each net long securitization position calculated under this 
section; or
    (2) The sum of the FDIC-supervised institution's specific risk add-
ons for each net short securitization position calculated under this 
section.
    (e) Equity positions. The total specific risk add-on for a portfolio 
of equity positions is the sum of the specific risk add-ons of the 
individual equity positions, as computed under this section. To 
determine the specific risk add-on of individual equity positions, an 
FDIC-supervised institution must multiply the absolute value of the 
current fair value of each net long or net short equity position by the 
appropriate specific risk-weighting factor as determined under this 
paragraph (e):
    (1) The FDIC-supervised institution must multiply the absolute value 
of the current fair value of each net long or net short equity position 
by a specific risk-weighting factor of 8.0 percent. For equity positions 
that are index contracts comprising a well-diversified portfolio of 
equity instruments, the absolute value of the current fair value of each 
net long or net short position is multiplied by a specific risk-
weighting factor of 2.0 percent.\33\
---------------------------------------------------------------------------

    \33\ A portfolio is well-diversified if it contains a large number 
of individual equity positions, with no single position representing a 
substantial portion of the portfolio's total fair value.
---------------------------------------------------------------------------

    (2) For equity positions arising from the following futures-related 
arbitrage strategies, an FDIC-supervised institution may apply a 2.0 
percent specific risk-weighting factor to one side (long or short) of 
each position with the opposite side exempt from an additional capital 
requirement:
    (i) Long and short positions in exactly the same index at different 
dates or in different market centers; or
    (ii) Long and short positions in index contracts at the same date in 
different, but similar indices.
    (3) For futures contracts on main indices that are matched by 
offsetting positions in a basket of stocks comprising the index, an 
FDIC-supervised

[[Page 386]]

institution may apply a 2.0 percent specific risk-weighting factor to 
the futures and stock basket positions (long and short), provided that 
such trades are deliberately entered into and separately controlled, and 
that the basket of stocks is comprised of stocks representing at least 
90.0 percent of the capitalization of the index.
    (f) Due diligence requirements for securitization positions. (1) An 
FDIC-supervised institution must demonstrate to the satisfaction of the 
FDIC a comprehensive understanding of the features of a securitization 
position that would materially affect the performance of the position by 
conducting and documenting the analysis set forth in paragraph (f)(2) of 
this section. The FDIC-supervised institution's analysis must be 
commensurate with the complexity of the securitization position and the 
materiality of the position in relation to capital.
    (2) An FDIC-supervised institution must demonstrate its 
comprehensive understanding for each securitization position by:
    (i) Conducting an analysis of the risk characteristics of a 
securitization position prior to acquiring the position and document 
such analysis within three business days after acquiring position, 
considering:
    (A) Structural features of the securitization that would materially 
impact the performance of the position, for example, the contractual 
cash flow waterfall, waterfall-related triggers, credit enhancements, 
liquidity enhancements, fair value triggers, the performance of 
organizations that service the position, and deal-specific definitions 
of default;
    (B) Relevant information regarding the performance of the underlying 
credit exposure(s), for example, the percentage of loans 30, 60, and 90 
days past due; default rates; prepayment rates; loans in foreclosure; 
property types; occupancy; average credit score or other measures of 
creditworthiness; average loan-to-value ratio; and industry and 
geographic diversification data on the underlying exposure(s);
    (C) Relevant market data of the securitization, for example, bid-ask 
spreads, most recent sales price and historical price volatility, 
trading volume, implied market rating, and size, depth and concentration 
level of the market for the securitization; and
    (D) For resecuritization positions, performance information on the 
underlying securitization exposures, for example, the issuer name and 
credit quality, and the characteristics and performance of the exposures 
underlying the securitization exposures.
    (ii) On an on-going basis (no less frequently than quarterly), 
evaluating, reviewing, and updating as appropriate the analysis required 
under paragraph (f)(1) of this section for each securitization position.

[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014; 
81 FR 71354, Oct. 17, 2016]



Sec.  324.211  Simplified supervisory formula approach (SSFA).

    (a) General requirements. To use the SSFA to determine the specific 
risk-weighting factor for a securitization position, an FDIC-supervised 
institution must have data that enables it to assign accurately the 
parameters described in paragraph (b) of this section. Data used to 
assign the parameters described in paragraph (b) of this section must be 
the most currently available data; if the contracts governing the 
underlying exposures of the securitization require payments on a monthly 
or quarterly basis, the data used to assign the parameters described in 
paragraph (b) of this section must be no more than 91 calendar days old. 
An FDIC-supervised institution that does not have the appropriate data 
to assign the parameters described in paragraph (b) of this section must 
assign a specific risk-weighting factor of 100 percent to the position.
    (b) SSFA parameters. To calculate the specific risk-weighting factor 
for a securitization position using the SSFA, an FDIC-supervised 
institution must have accurate information on the five inputs to the 
SSFA calculation described in paragraphs (b)(1) through (b)(5) of this 
section.
    (1) KG is the weighted-average (with unpaid principal 
used as the weight for each exposure) total capital requirement of the 
underlying exposures calculated using subpart D. KG is 
expressed as a decimal value between

[[Page 387]]

zero and one (that is, an average risk weight of 100 percent represents 
a value of KG equal to 0.08).
    (2) Parameter W is expressed as a decimal value between zero and 
one. Parameter W is the ratio of the sum of the dollar amounts of any 
underlying exposures of the securitization that meet any of the criteria 
as set forth in paragraphs (b)(2)(i) through (vi) of this section to the 
balance, measured in dollars, of underlying exposures:
    (i) Ninety days or more past due;
    (ii) Subject to a bankruptcy or insolvency proceeding;
    (iii) In the process of foreclosure;
    (iv) Held as real estate owned;
    (v) Has contractually deferred payments for 90 days or more, other 
than principal or interest payments deferred on:
    (A) Federally-guaranteed student loans, in accordance with the terms 
of those guarantee programs; or
    (B) Consumer loans, including non-federally-guaranteed student 
loans, provided that such payments are deferred pursuant to provisions 
included in the contract at the time funds are disbursed that provide 
for period(s) of deferral that are not initiated based on changes in the 
creditworthiness of the borrower; or
    (vi) Is in default.
    (3) Parameter A is the attachment point for the position, which 
represents the threshold at which credit losses will first be allocated 
to the position. Except as provided in Sec.  324.210(b)(2)(vii)(D) for 
n\th\-to-default credit derivatives, parameter A equals the ratio of the 
current dollar amount of underlying exposures that are subordinated to 
the position of the FDIC-supervised institution to the current dollar 
amount of underlying exposures. Any reserve account funded by the 
accumulated cash flows from the underlying exposures that is 
subordinated to the position that contains the FDIC-supervised 
institution's securitization exposure may be included in the calculation 
of parameter A to the extent that cash is present in the account. 
Parameter A is expressed as a decimal value between zero and one.
    (4) Parameter D is the detachment point for the position, which 
represents the threshold at which credit losses of principal allocated 
to the position would result in a total loss of principal. Except as 
provided in Sec.  324.210(b)(2)(vii)(D) for n\th\-to-default credit 
derivatives, parameter D equals parameter A plus the ratio of the 
current dollar amount of the securitization positions that are pari 
passu with the position (that is, have equal seniority with respect to 
credit risk) to the current dollar amount of the underlying exposures. 
Parameter D is expressed as a decimal value between zero and one.
    (5) A supervisory calibration parameter, p, is equal to 0.5 for 
securitization positions that are not resecuritization positions and 
equal to 1.5 for resecuritization positions.
    (c) Mechanics of the SSFA. KG and W are used to calculate 
KA, the augmented value of KG, which reflects the 
observed credit quality of the underlying exposures. KA is 
defined in paragraph (d) of this section. The values of parameters A and 
D, relative to KA determine the specific risk-weighting 
factor assigned to a position as described in this paragraph (c) and 
paragraph (d) of this section. The specific risk-weighting factor 
assigned to a securitization position, or portion of a position, as 
appropriate, is the larger of the specific risk-weighting factor 
determined in accordance with this paragraph (c), paragraph (d) of this 
section, and a specific risk-weighting factor of 1.6 percent.
    (1) When the detachment point, parameter D, for a securitization 
position is less than or equal to KA, the position must be 
assigned a specific risk-weighting factor of 100 percent.
    (2) When the attachment point, parameter A, for a securitization 
position is greater than or equal to KA, the FDIC-supervised 
institution must calculate the specific risk-weighting factor in 
accordance with paragraph (d) of this section.
    (3) When A is less than KA and D is greater than 
KA, the specific risk-weighting factor is a weighted-average 
of 1.00 and KSSFA calculated under paragraphs (c)(3)(i) and 
(c)(3)(ii) of this section. For the purpose of this calculation:

[[Page 388]]

[GRAPHIC] [TIFF OMITTED] TR10SE13.046


[78 FR 55471, Sept. 10, 2013, as amended at 79 FR 20761, Apr. 14, 2014]



Sec.  324.212  Market risk disclosures.

    (a) Scope. An FDIC-supervised institution must comply with this 
section unless it is a consolidated subsidiary of a bank holding company 
or a depository institution that is subject to these requirements or of 
a non-U.S. banking organization that is subject to comparable public 
disclosure requirements in its home jurisdiction. An FDIC-supervised 
institution must make timely public disclosures each calendar quarter. 
If a significant change occurs, such that the most recent reporting 
amounts are no longer reflective of the FDIC-supervised institution's 
capital adequacy and risk profile, then a brief discussion of this 
change and its likely impact must be provided as soon as practicable 
thereafter. Qualitative disclosures that typically do not change

[[Page 389]]

each quarter may be disclosed annually, provided any significant changes 
are disclosed in the interim. If an FDIC-supervised institution believes 
that disclosure of specific commercial or financial information would 
prejudice seriously its position by making public certain information 
that is either proprietary or confidential in nature, the FDIC-
supervised institution is not required to disclose these specific items, 
but must disclose more general information about the subject matter of 
the requirement, together with the fact that, and the reason why, the 
specific items of information have not been disclosed. The FDIC-
supervised institution's management may provide all of the disclosures 
required by this section in one place on the FDIC-supervised 
institution's public Web site or may provide the disclosures in more 
than one public financial report or other regulatory reports, provided 
that the FDIC-supervised institution publicly provides a summary table 
specifically indicating the location(s) of all such disclosures.
    (b) Disclosure policy. The FDIC-supervised institution must have a 
formal disclosure policy approved by the board of directors that 
addresses the FDIC-supervised institution's approach for determining its 
market risk disclosures. The policy must address the associated internal 
controls and disclosure controls and procedures. The board of directors 
and senior management must ensure that appropriate verification of the 
disclosures takes place and that effective internal controls and 
disclosure controls and procedures are maintained. One or more senior 
officers of the FDIC-supervised institution must attest that the 
disclosures meet the requirements of this subpart, and the board of 
directors and senior management are responsible for establishing and 
maintaining an effective internal control structure over financial 
reporting, including the disclosures required by this section.
    (c) Quantitative disclosures. (1) For each material portfolio of 
covered positions, the FDIC-supervised institution must provide timely 
public disclosures of the following information at least quarterly:
    (i) The high, low, and mean VaR-based measures over the reporting 
period and the VaR-based measure at period-end;
    (ii) The high, low, and mean stressed VaR-based measures over the 
reporting period and the stressed VaR-based measure at period-end;
    (iii) The high, low, and mean incremental risk capital requirements 
over the reporting period and the incremental risk capital requirement 
at period-end;
    (iv) The high, low, and mean comprehensive risk capital requirements 
over the reporting period and the comprehensive risk capital requirement 
at period-end, with the period-end requirement broken down into 
appropriate risk classifications (for example, default risk, migration 
risk, correlation risk);
    (v) Separate measures for interest rate risk, credit spread risk, 
equity price risk, foreign exchange risk, and commodity price risk used 
to calculate the VaR-based measure; and
    (vi) A comparison of VaR-based estimates with actual gains or losses 
experienced by the FDIC-supervised institution, with an analysis of 
important outliers.
    (2) In addition, the FDIC-supervised institution must disclose 
publicly the following information at least quarterly:
    (i) The aggregate amount of on-balance sheet and off-balance sheet 
securitization positions by exposure type; and
    (ii) The aggregate amount of correlation trading positions.
    (d) Qualitative disclosures. For each material portfolio of covered 
positions, the FDIC-supervised institution must provide timely public 
disclosures of the following information at least annually after the end 
of the fourth calendar quarter, or more frequently in the event of 
material changes for each portfolio:
    (1) The composition of material portfolios of covered positions;
    (2) The FDIC-supervised institution's valuation policies, 
procedures, and methodologies for covered positions including, for 
securitization positions, the methods and key assumptions used

[[Page 390]]

for valuing such positions, any significant changes since the last 
reporting period, and the impact of such change;
    (3) The characteristics of the internal models used for purposes of 
this subpart. For the incremental risk capital requirement and the 
comprehensive risk capital requirement, this must include:
    (i) The approach used by the FDIC-supervised institution to 
determine liquidity horizons;
    (ii) The methodologies used to achieve a capital assessment that is 
consistent with the required soundness standard; and
    (iii) The specific approaches used in the validation of these 
models;
    (4) A description of the approaches used for validating and 
evaluating the accuracy of internal models and modeling processes for 
purposes of this subpart;
    (5) For each market risk category (that is, interest rate risk, 
credit spread risk, equity price risk, foreign exchange risk, and 
commodity price risk), a description of the stress tests applied to the 
positions subject to the factor;
    (6) The results of the comparison of the FDIC-supervised 
institution's internal estimates for purposes of this subpart with 
actual outcomes during a sample period not used in model development;
    (7) The soundness standard on which the FDIC-supervised 
institution's internal capital adequacy assessment under this subpart is 
based, including a description of the methodologies used to achieve a 
capital adequacy assessment that is consistent with the soundness 
standard;
    (8) A description of the FDIC-supervised institution's processes for 
monitoring changes in the credit and market risk of securitization 
positions, including how those processes differ for resecuritization 
positions; and
    (9) A description of the FDIC-supervised institution's policy 
governing the use of credit risk mitigation to mitigate the risks of 
securitization and resecuritization positions.



Sec. Sec.  324.213-324.299  [Reserved]



                     Subpart G_Transition Provisions



Sec.  324.300  Transitions.

    (a) Capital conservation and countercyclical capital buffer. (1) 
From January 1, 2014, through December 31, 2015, an FDIC-supervised 
institution is not subject to limits on distributions and discretionary 
bonus payments under Sec.  324.11 notwithstanding the amount of its 
capital conservation buffer or any applicable countercyclical capital 
buffer amount.
    (2) Beginning January 1, 2016, through December 31, 2018, an FDIC-
supervised institution's maximum payout ratio shall be determined as set 
forth in Table 1 to Sec.  324.300.

                                            Table 1 to Sec.   324.300
----------------------------------------------------------------------------------------------------------------
                                                                                      Maximum payout ratio (as a
            Transition period                     Capital conservation buffer           percentage of eligible
                                                                                           retained income)
----------------------------------------------------------------------------------------------------------------
Calendar year 2016......................  Greater than 0.625 percent (plus 25         No payout ratio limitation
                                           percent of any applicable countercyclical   applies under this
                                           capital buffer amount).                     section.
                                          Less than or equal to 0.625 percent (plus   60 percent.
                                           25 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.469 percent (plus
                                           17.25 percent of any applicable
                                           countercyclical capital buffer amount).
                                          Less than or equal to 0.469 percent (plus   40 percent.
                                           17.25 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.313 percent (plus 12.5
                                           percent of any applicable countercyclical
                                           capital buffer amount).
                                          Less than or equal to 0.313 percent (plus   20 percent.
                                           12.5 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.156 percent (plus 6.25
                                           percent of any applicable countercyclical
                                           capital buffer amount).
                                          Less than or equal to 0.156 percent (plus   0 percent.
                                           6.25 percent of any applicable
                                           countercyclical capital buffer amount).
Calendar year 2017......................  Greater than 1.25 percent (plus 50 percent  No payout ratio limitation
                                           of any applicable countercyclical capital   applies under this
                                           buffer amount).                             section.

[[Page 391]]

 
                                          Less than or equal to 1.25 percent (plus    60 percent.
                                           50 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.938 percent (plus 37.5
                                           percent of any applicable countercyclical
                                           capital buffer amount).
                                          Less than or equal to 0.938 percent (plus   40 percent.
                                           37.5 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.625 percent (plus 25
                                           percent of any applicable countercyclical
                                           capital buffer amount).
                                          Less than or equal to 0.625 percent (plus   20 percent.
                                           25 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.313 percent (plus 12.5
                                           percent of any applicable countercyclical
                                           capital buffer amount).
                                          Less than or equal to 0.313 percent (plus   0 percent.
                                           12.5 percent of any applicable
                                           countercyclical capital buffer amount).
Calendar year 2018......................  Greater than 1.875 percent (plus 75         No payout ratio limitation
                                           percent of any applicable countercyclical   applies under this
                                           capital buffer amount).                     section.
                                          Less than or equal to 1.875 percent (plus   60 percent.
                                           75 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 1.406 percent (plus
                                           56.25 percent of any applicable
                                           countercyclical capital buffer amount).
                                          Less than or equal to 1.406 percent (plus   40 percent.
                                           56.25 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.938 percent (plus 37.5
                                           percent of any applicable countercyclical
                                           capital buffer amount).
                                          Less than or equal to 0.938 percent (plus   20 percent.
                                           37.5 percent of any applicable
                                           countercyclical capital buffer amount),
                                           and greater than 0.469 percent (plus
                                           18.75 percent of any applicable
                                           countercyclical capital buffer amount).
                                          Less than or equal to 0.469 percent (plus   0 percent.
                                           18.75 percent of any applicable
                                           countercyclical capital buffer amount).
----------------------------------------------------------------------------------------------------------------

    (b) Regulatory capital adjustments and deductions. Beginning January 
1, 2014, for an advanced approaches FDIC-supervised institution, and 
beginning January 1, 2015, for an FDIC-supervised institution that is 
not an advanced approaches FDIC-supervised institution, and in each case 
through December 31, 2017, an FDIC-supervised institution must make the 
capital adjustments and deductions in Sec.  324.22 in accordance with 
the transition requirements in this paragraph (b). Beginning January 1, 
2018, an FDIC-supervised institution must make all regulatory capital 
adjustments and deductions in accordance with Sec.  324.22.
    (1) Transition deductions from common equity tier 1 capital. 
Beginning January 1, 2014, for an advanced approaches FDIC-supervised 
institution, and beginning January 1, 2015, for an FDIC-supervised 
institution that is not an advanced approaches FDIC-supervised 
institution, and in each case through December 31, 2017, an FDIC-
supervised institution, must make the deductions required under Sec.  
324.22(a)(1)--(7) from common equity tier 1 or tier 1 capital elements 
in accordance with the percentages set forth in Tables 2 and 3 to Sec.  
324.300.
    (i) An FDIC-supervised institution must deduct the following items 
from common equity tier 1 and additional tier 1 capital in accordance 
with the percentages set forth in Table 2 to Sec.  324.300: Goodwill 
(Sec.  324.22(a)(1)), DTAs that arise from net operating loss and tax 
credit carryforwards (Sec.  324.22(a)(3)), a gain-on-sale in connection 
with a securitization exposure (Sec.  324.22(a)(4)), defined benefit 
pension fund assets (Sec.  324.22(a)(5)), expected credit loss that 
exceeds eligible credit reserves (for advanced approaches FDIC-
supervised institutions that have completed the parallel run process and 
that have received notifications from the FDIC pursuant to Sec.  
324.121(d) of subpart E) (Sec.  324.22(a)(6)), and financial 
subsidiaries (Sec.  324.22(a)(7)).

[[Page 392]]



                                            Table 2 to Sec.   324.300
----------------------------------------------------------------------------------------------------------------
                                             Transition deductions        Transition deductions under Sec.
                                                   under Sec.                     324.22(a)(3)-(6)
                                             324.22(a)(1), (a)(7), ---------------------------------------------
                                               (a)(8), and (a)(9)
             Transition period              -----------------------   Percentage of the
                                               Percentage of the       deductions from       Percentage of the
                                                deductions from      common equity tier 1   deductions from tier
                                              common equity tier 1         capital               1 capital
                                                    capital
----------------------------------------------------------------------------------------------------------------
Calendar year 2014.........................                   100                     20                     80
Calendar year 2015.........................                   100                     40                     60
Calendar year 2016.........................                   100                     60                     40
Calendar year 2017.........................                   100                     80                     20
Calendar year 2018, and thereafter.........                   100                    100                      0
----------------------------------------------------------------------------------------------------------------

    (ii) An FDIC-supervised institution must deduct from common equity 
tier 1 capital any intangible assets other than goodwill and MSAs in 
accordance with the percentages set forth in Table 3 to Sec.  324.300.
    (iii) An FDIC-supervised institution must apply a 100 percent risk-
weight to the aggregate amount of intangible assets other than goodwill 
and MSAs that are not required to be deducted from common equity tier 1 
capital under this section.

                        Table 3 to Sec.   324.300
------------------------------------------------------------------------
                                   Transition deductions under Sec.
      Transition period       324.22(a)(2)--Percentage of the deductions
                                   from common equity tier 1 capital
------------------------------------------------------------------------
Calendar year 2014..........                                         20
Calendar year 2015..........                                         40
Calendar year 2016..........                                         60
Calendar year 2017..........                                         80
Calendar year 2018, and                                             100
 thereafter.................
------------------------------------------------------------------------

    (2) Transition adjustments to common equity tier 1 capital. 
Beginning January 1, 2014, for an advanced approaches FDIC-supervised 
institution, and beginning January 1, 2015, for an FDIC-supervised 
institution that is not an advanced approaches FDIC-supervised 
institution, and in each case through December 31, 2017, an FDIC-
supervised institution, must allocate the regulatory adjustments related 
to changes in the fair value of liabilities due to changes in the FDIC-
supervised institution's own credit risk (Sec.  324.22(b)(1)(iii)) 
between common equity tier 1 capital and tier 1 capital in accordance 
with the percentages set forth in Table 4 to Sec.  324.300.
    (i) If the aggregate amount of the adjustment is positive, the FDIC-
supervised institution must allocate the deduction between common equity 
tier 1 and tier 1 capital in accordance with Table 4 to Sec.  324.300.
    (ii) If the aggregate amount of the adjustment is negative, the 
FDIC-supervised institution must add back the adjustment to common 
equity tier 1 capital or to tier 1 capital, in accordance with Table 4 
to Sec.  324.300.

                                                                Table 4 to Sec.   324.300
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Transition adjustments under Sec.   324.22(b)(2)
                                                                   -------------------------------------------------------------------------------------
                         Transition period                           Percentage of the adjustment applied to    Percentage of the adjustment applied to
                                                                           common equity tier 1 capital                      tier 1 capital
--------------------------------------------------------------------------------------------------------------------------------------------------------
Calendar year 2014................................................                                        20                                         80
Calendar year 2015................................................                                        40                                         60
Calendar year 2016................................................                                        60                                         40
Calendar year 2017................................................                                        80                                         20
Calendar year 2018, and thereafter................................                                       100                                          0
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 393]]

    (3) Transition adjustments to AOCI for an advanced approaches FDIC-
supervised institution and an FDIC-supervised institution that has not 
made an AOCI opt-out election under Sec.  324.22(b)(2). Beginning 
January 1, 2014, for an advanced approaches FDIC-supervised institution, 
and beginning January 1, 2015, for an FDIC-supervised institution that 
is not an advanced approaches FDIC-supervised institution and that has 
not made an AOCI opt-out election under Sec.  324.22(b)(2), and in each 
case through December 31, 2017, an FDIC-supervised institution must 
adjust common equity tier 1 capital with respect to the transition AOCI 
adjustment amount (transition AOCI adjustment amount):
    (i) The transition AOCI adjustment amount is the aggregate amount of 
an FDIC-supervised institution's:
    (A) Unrealized gains on available-for-sale securities that are 
preferred stock classified as an equity security under GAAP or 
available-for-sale equity exposures, plus
    (B) Net unrealized gains or losses on available-for-sale securities 
that are not preferred stock classified as an equity security under GAAP 
or available-for-sale equity exposures, plus
    (C) Any amounts recorded in AOCI attributed to defined benefit 
postretirement plans resulting from the initial and subsequent 
application of the relevant GAAP standards that pertain to such plans 
(excluding, at the FDIC-supervised institution's option, the portion 
relating to pension assets deducted under Sec.  324.22(a)(5)), plus
    (D) Accumulated net gains or losses on cash flow hedges related to 
items that are reported on the balance sheet at fair value included in 
AOCI, plus
    (E) Net unrealized gains or losses on held-to-maturity securities 
that are included in AOCI.
    (ii) An FDIC-supervised institution must make the following 
adjustment to its common equity tier 1 capital:
    (A) If the transition AOCI adjustment amount is positive, the 
appropriate amount must be deducted from common equity tier 1 capital in 
accordance with Table 5 to Sec.  324.300.
    (B) If the transition AOCI adjustment amount is negative, the 
appropriate amount must be added back to common equity tier 1 capital in 
accordance with Table 5 to Sec.  324.300.

                        Table 5 to Sec.   324.300
------------------------------------------------------------------------
                                   Percentage of the transition AOCI
      Transition period        adjustment amount to be applied to common
                                         equity tier 1 capital
------------------------------------------------------------------------
Calendar year 2014..........                                         80
Calendar year 2015..........                                         60
Calendar year 2016..........                                         40
Calendar year 2017..........                                         20
Calendar year 2018 and                                                0
 thereafter.................
------------------------------------------------------------------------

    (iii) An FDIC-supervised institution may include in tier 2 capital 
the percentage of unrealized gains on available-for-sale preferred stock 
classified as an equity security under GAAP and available-for-sale 
equity exposures as set forth in Table 6 to Sec.  324.300.

                        Table 6 to Sec.   324.300
------------------------------------------------------------------------
                                   Percentage of unrealized gains on
                                  available-for-sale preferred stock
                                classified as an equity security under
      Transition period           GAAP and available-for-sale equity
                               exposures that may be included in tier 2
                                                capital
------------------------------------------------------------------------
Calendar year 2014..........                                         36
Calendar year 2015..........                                         27
Calendar year 2016..........                                         18
Calendar year 2017..........                                          9
Calendar year 2018 and                                                0
 thereafter.................
------------------------------------------------------------------------


[[Page 394]]

    (4) Additional transition deductions from regulatory capital. Except 
as provided in paragraph (b)(5) of this section:
    (i) Beginning January 1, 2014, for an advanced approaches FDIC-
supervised institution, and beginning January 1, 2015, for an FDIC-
supervised institution that is not an advanced approaches FDIC-
supervised institution, and in each case through December 31, 2017, an 
FDIC-supervised institution, must use Table 7 to Sec.  324.300 to 
determine the amount of investments in capital instruments and the items 
subject to the 10 and 15 percent common equity tier 1 capital deduction 
thresholds (Sec.  324.22(d)) (that is, MSAs, DTAs arising from temporary 
differences that the FDIC-supervised institution could not realize 
through net operating loss carrybacks, and significant investments in 
the capital of unconsolidated financial institutions in the form of 
common stock) that must be deducted from common equity tier 1 capital.
    (ii) Beginning January 1, 2014, for an FDIC-supervised advanced 
approaches institution, and beginning January 1, 2015, for an FDIC-
supervised institution that is not an advanced approaches FDIC-
supervised institution, and in each case through December 31, 2017, an 
FDIC-supervised institution must apply a 100 percent risk weight to the 
aggregate amount of the items subject to the 10 and 15 percent common 
equity tier 1 capital deduction thresholds that are not deducted under 
this section. As set forth in Sec.  324.22(d)(2), beginning January 1, 
2018, an FDIC-supervised institution must apply a 250 percent risk 
weight to the aggregate amount of the items subject to the 10 and 15 
percent common equity tier 1 capital deduction thresholds that are not 
deducted from common equity tier 1 capital.

                        Table 7 to Sec.   324.300
------------------------------------------------------------------------
                                                        Transitions for
                                                        deductions under
                                                        Sec.   324.22(c)
                                                           and (d)--
                  Transition period                      percentage of
                                                           additional
                                                        deductions from
                                                           regulatory
                                                            capital
------------------------------------------------------------------------
Calendar year 2014...................................                 20
Calendar year 2015...................................                 40
Calendar year 2016...................................                 60
Calendar year 2017...................................                 80
Calendar year 2018 and thereafter....................                100
------------------------------------------------------------------------

    (iii) For purposes of calculating the transition deductions in this 
paragraph (b)(4) beginning January 1, 2014, for an advanced approaches 
FDIC-supervised institution, and beginning January 1, 2015, for an FDIC-
supervised institution that is not an advanced approaches FDIC-
supervised institution, and in each case through December 31, 2017, an 
FDIC-supervised institution's 15 percent common equity tier 1 capital 
deduction threshold for MSAs, DTAs arising from temporary differences 
that the FDIC-supervised institution could not realize through net 
operating loss carrybacks, and significant investments in the capital of 
unconsolidated financial institutions in the form of common stock is 
equal to 15 percent of the sum of the FDIC-supervised institution's 
common equity tier 1 elements, after regulatory adjustments and 
deductions required under Sec.  324.22(a) through (c) (transition 15 
percent common equity tier 1 capital deduction threshold).
    (iv) Beginning January 1, 2018, an FDIC-supervised institution must 
calculate the 15 percent common equity tier 1 capital deduction 
threshold in accordance with Sec.  324.22(d).
    (5) Special transition provisions for non-significant investments in 
the capital of unconsolidated financial institutions, significant 
investments in the capital of unconsolidated financial institutions that 
are not in the form of common stock, MSAs, DTAs arising from temporary 
differences that the FDIC-supervised institution could not realize 
through net operating loss carrybacks, and significant investments in 
the capital of unconsolidated financial institutions in the form of 
common stock. Beginning January 1, 2018, an FDIC-supervised institution 
that is not an advanced approaches FDIC-supervised institution must 
continue to apply the transition provisions described in paragraphs 
(b)(4)(i), (ii), and (iii) of this section applicable to calendar year 
2017 to items that are subject to deduction under Sec.  324.22(c)(4), 
(c)(5), and (d), respectively.
    (c) Non-qualifying capital instruments. Depository institutions. (1) 
Beginning on January 1, 2014, a depository institution that is an 
advanced approaches

[[Page 395]]

FDIC-supervised institution, and beginning on January 1, 2015, all other 
depository institutions may include in regulatory capital debt or equity 
instruments issued prior to September 12, 2010, that do not meet the 
criteria for additional tier 1 or tier 2 capital instruments in Sec.  
324.20 but that were included in tier 1 or tier 2 capital respectively 
as of September 12, 2010 (non-qualifying capital instruments issued 
prior to September 12, 2010) up to the percentage of the outstanding 
principal amount of such non-qualifying capital instruments as of 
January 1, 2014 in accordance with Table 8 to Sec.  324.300.
    (2) Table 8 to Sec.  324.300 applies separately to tier 1 and tier 2 
non-qualifying capital instruments.
    (3) The amount of non-qualifying capital instruments that cannot be 
included in additional tier 1 capital under this section may be included 
in tier 2 capital without limitation, provided that the instruments meet 
the criteria for tier 2 capital instruments under Sec.  324.20(d).

                        Table 8 to Sec.   324.300
------------------------------------------------------------------------
                                 Percentage of non-qualifying capital
 Transition period (calendar   instruments includable in additional tier
            year)                         1 or tier 2 capital
------------------------------------------------------------------------
Calendar year 2014..........                                         80
Calendar year 2015..........                                         70
Calendar year 2016..........                                         60
Calendar year 2017..........                                         50
Calendar year 2018..........                                         40
Calendar year 2019..........                                         30
Calendar year 2020..........                                         20
Calendar year 2021..........                                         10
Calendar year 2022 and                                                0
 thereafter.................
------------------------------------------------------------------------

    (d) Minority interest--(1) Surplus minority interest--(i) Advanced 
approaches FDIC-supervised institution surplus minority interest. 
Beginning January 1, 2014, through December 31, 2017, an advanced 
approaches FDIC-supervised institution may include in common equity tier 
1 capital, tier 1 capital, or total capital the percentage of the common 
equity tier 1 minority interest, tier 1 minority interest and total 
capital minority interest outstanding as of January 1, 2014 that exceeds 
any common equity tier 1 minority interest, tier 1 minority interest or 
total capital minority interest includable under Sec.  324.21 (surplus 
minority interest), respectively, as set forth in Table 9 to Sec.  
324.300.
    (ii) Non-advanced approaches FDIC-supervised institution surplus 
minority interest. An FDIC-supervised institution that is not an 
advanced approaches FDIC-supervised institution may include in common 
equity tier 1 capital, tier 1 capital, or total capital 20 percent of 
the common equity tier 1 minority interest, tier 1 minority interest and 
total capital minority interest outstanding as of January 1, 2014 that 
exceeds any common equity tier 1 minority interest, tier 1 minority 
interest or total capital minority interest includable under Sec.  
324.21 (surplus minority interest), respectively.
    (2) Non-qualifying minority interest. Beginning January 1, 2014, for 
an advanced approaches FDIC-supervised institution, and beginning 
January 1, 2015, for an FDIC-supervised institution that is not an 
advanced approaches FDIC-supervised institution, and in each case 
through December 31, 2017, an FDIC-supervised institution may include in 
tier 1 capital or total capital the percentage of the tier 1 minority 
interest and total capital minority interest outstanding as of January 
1, 2014 that does not meet the criteria for additional tier 1 or tier 2 
capital instruments in Sec.  324.20 (non-qualifying minority interest), 
as set forth in Table 9 to Sec.  324.300.

[[Page 396]]



                        Table 9 to Sec.   324.300
------------------------------------------------------------------------
                                                       Percentage of the
                                                       amount of surplus
                                                       or non-qualifying
                                                       minority interest
                                                          that can be
                  Transition period                       included in
                                                           regulatory
                                                         capital during
                                                         the transition
                                                             period
------------------------------------------------------------------------
Calendar year 2014...................................                 80
Calendar year 2015...................................                 60
Calendar year 2016...................................                 40
Calendar year 2017...................................                 20
Calendar year 2018 and thereafter....................                  0
------------------------------------------------------------------------

    (e) Prompt corrective action. For purposes of subpart H of this 
part, an FDIC-supervised institution must calculate its capital measures 
and tangible equity ratio in accordance with the transition provisions 
in this section.

[78 FR 55471, Sept. 10, 2013, as amended at 82 FR 55317, Nov. 21, 2017]



Sec. Sec.  324.301-324.399  [Reserved]



                   Subpart H_Prompt Corrective Action



Sec.  324.401  Authority, purpose, scope, other supervisory authority, 
disclosure of capital categories, and transition procedures.

    (a) Authority. This subpart H is issued by the FDIC pursuant to 
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 subpart is to 
define, for FDIC-supervised institutions, the capital measures and 
capital levels, and for insured branches of foreign banks, comparable 
asset-based measures and levels, that are used for determining the 
supervisory actions authorized under section 38 of the FDI Act. This 
subpart also establishes procedures for submission and review of capital 
restoration plans and for issuance and review of directives and orders 
pursuant to section 38 of the FDI Act.
    (c) Scope. Until January 1, 2015, subpart B of part 325 of this 
chapter will continue to apply to banks and insured branches of foreign 
banks for which the FDIC is the appropriate Federal banking agency. 
Until January 1, 2015, subpart Y of part 390 of this chapter will 
continue to apply to state savings associations. Beginning on, and 
thereafter, January 1, 2015, this subpart H implements the provisions of 
section 38 of the FDI Act as they apply to FDIC-supervised institutions 
and insured branches of foreign banks for which the FDIC is the 
appropriate Federal banking agency. Certain of these provisions also 
apply to officers, directors and employees of those insured 
institutions. In addition, certain provisions of this subpart apply to 
all insured depository institutions that are deemed critically 
undercapitalized.
    (d) Other supervisory authority. Neither section 38 of the FDI Act 
nor this subpart H in any way limits the authority of the FDIC 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 subpart H may be taken independently of, in 
conjunction with, or in addition to any other enforcement action 
available to the FDIC, 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 an FDIC-
supervised institution or an insured branch of a foreign bank for which 
the FDIC is the appropriate Federal banking agency under this subpart H 
within a particular capital category is for purposes of implementing and 
applying the provisions of section 38 of the FDI Act. Unless permitted 
by the FDIC or otherwise required by law, no FDIC-supervised institution 
or insured branch of a foreign bank for which the FDIC is the 
appropriate Federal banking agency may state in any advertisement or 
promotional material its capital category under this subpart H or that 
the FDIC or any other Federal banking agency

[[Page 397]]

has assigned it to a particular capital category.
    (f) Transition procedures--(1) Definitions applicable before January 
1, 2015, for certain FDIC-supervised institutions. Before January 1, 
2015, notwithstanding any other requirement in this subpart H and with 
respect to any FDIC-supervised institution that is not an advanced 
approaches FDIC-supervised institution:
    (i) The definitions of leverage ratio, tangible equity, tier 1 
capital, tier 1 risk-based capital, and total risk-based capital as 
calculated or defined under Appendix A to part 325 or Appendix B to part 
325, as applicable, remain in effect for purposes of this subpart H; and
    (ii) The term total assets shall have the meaning provided in 12 CFR 
325.2(x).
    (2) Timing. The calculation of the definitions of common equity tier 
1 capital, the common equity tier 1 risk-based capital ratio, the 
leverage ratio, the supplementary leverage ratio, tangible equity, tier 
1 capital, the tier 1 risk-based capital ratio, total assets, total 
leverage exposure, the total risk-based capital ratio, and total risk-
weighted assets under this subpart H is subject to the timing provisions 
at 12 CFR 324.1(f) and the transitions at 12 CFR part 324, subpart G.
    (g) For purposes of subpart H, as of January 1, 2015, total assets 
means quarterly average total assets as reported in an FDIC-supervised 
institution's Call Report, minus amounts deducted from tier 1 capital 
under Sec.  324.22(a), (c), and (d). At its discretion, the FDIC may 
calculate total assets using an FDIC-supervised institution's period-end 
assets rather than quarterly average assets.



Sec.  324.402  Notice of capital category.

    (a) Effective date of determination of capital category. An FDIC-
supervised institution shall be deemed to be within a given capital 
category for purposes of section 38 of the FDI Act and this subpart H as 
of the date the FDIC-supervised institution 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. An FDIC-supervised institution shall 
be deemed to have been notified of its capital levels and its capital 
category as of the most recent date:
    (1) A Call Report is required to be filed with the FDIC;
    (2) A final report of examination is delivered to the FDIC-
supervised institution; or
    (3) Written notice is provided by the FDIC to the FDIC-supervised 
institution of its capital category for purposes of section 38 of the 
FDI Act and this subpart or that the FDIC-supervised institution's 
capital category has changed as provided in Sec.  324.403(d).
    (c) Adjustments to reported capital levels and capital category -- 
(1) Notice of adjustment by bank or state savings association. An FDIC-
supervised institution shall provide the appropriate FDIC regional 
director with written notice that an adjustment to the FDIC-supervised 
institution'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 FDIC-supervised institution to be placed in a lower 
capital category from the category assigned to the FDIC-supervised 
institution for purposes of section 38 of the FDI Act and this subpart H 
on the basis of the FDIC-supervised institution's most recent Call 
Report or report of examination.
    (2) Determination by the FDIC to change capital category. After 
receiving notice pursuant to paragraph (c)(1) of this section, the FDIC 
shall determine whether to change the capital category of the FDIC-
supervised institution and shall notify the bank or state savings 
association of the FDIC's determination.



Sec.  324.403  Capital measures and capital category definitions.

    (a) Capital measures. For purposes of section 38 of the FDI Act and 
this subpart H, the relevant capital measures shall be:
    (1) The total risk-based capital ratio;
    (2) The Tier 1 risk-based capital ratio; and
    (3) The common equity tier 1 ratio;
    (4) The leverage ratio;
    (5) The tangible equity to total assets ratio; and

[[Page 398]]

    (6) Beginning January 1, 2018, the supplementary leverage ratio 
calculated in accordance with Sec.  324.11 for advanced approaches FDIC-
supervised institutions that are subject to subpart E of this part.
    (b) Capital categories. For purposes of section 38 of the FDI Act 
and this subpart, an FDIC-supervised institution shall be deemed to be:
    (1) ``Well capitalized'' if it:
    (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 8.0 percent or 
greater; and
    (iii) Has a common equity tier 1 capital ratio of 6.5 percent or 
greater; and
    (iv) Has a leverage ratio of 5.0 percent or greater;
    (v) Is not subject to any written agreement, order, capital 
directive, or prompt corrective action directive issued by the FDIC 
pursuant to section 8 of the FDI Act (12 U.S.C. 1818), the International 
Lending Supervision Act of 1983 (12 U.S.C. 3907), or the Home Owners' 
Loan Act (12 U.S.C. 1464(t)(6)(A)(ii)), or section 38 of the FDI Act (12 
U.S.C. 1831o), or any regulation thereunder, to meet and maintain a 
specific capital level for any capital measure; and
    (vi) Beginning on January 1, 2018 and thereafter, an FDIC-supervised 
institution that is a subsidiary of a covered BHC will be deemed to be 
well capitalized if the FDIC-supervised institution satisfies paragraphs 
(b)(1)(i) through (v) of this section and has a supplementary leverage 
ratio of 6.0 percent or greater. For purposes of this paragraph, a 
covered BHC means a U.S. top-tier bank holding company with more than 
$700 billion in total assets as reported on the company's most recent 
Consolidated Financial Statement for Bank Holding Companies (FR Y-9C) or 
more than $10 trillion in assets under custody as reported on the 
company's most recent Banking Organization Systemic Risk Report (FR Y-
15).
    (2) ``Adequately capitalized'' if it:
    (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 6.0 percent or 
greater; and
    (iii) Has a common equity tier 1 capital ratio of 4.5 percent or 
greater; and
    (iv) Has a leverage ratio of 4.0 percent or greater; and
    (v) Does not meet the definition of a well capitalized bank.
    (vi) Beginning January 1, 2018, an advanced approaches FDIC-
supervised institution will be deemed to be ``adequately capitalized'' 
if it satisfies paragraphs (b)(2)(i) through (v) of this section and has 
a supplementary leverage ratio of 3.0 percent or greater, as calculated 
in accordance with Sec.  324.11 of subpart B of this part.
    (3) ``Undercapitalized'' if it:
    (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 6.0 
percent; or
    (iii) Has a common equity tier 1 capital ratio that is less than 4.5 
percent; or
    (iv) Has a leverage ratio that is less than 4.0 percent.
    (v) Beginning January 1, 2018, an advanced approaches FDIC-
supervised institution will be deemed to be ``undercapitalized'' if it 
has a supplementary leverage ratio of less than 3.0 percent, as 
calculated in accordance with Sec.  324.11.
    (4) ``Significantly undercapitalized'' if it 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 4.0 
percent; or
    (iii) A common equity tier 1 capital ratio that is less than 3.0 
percent; or
    (iv) A leverage ratio that is less than 3.0 percent.
    (5) ``Critically undercapitalized'' if the insured depository 
institution has a ratio of tangible equity to total assets that is equal 
to or less than 2.0 percent.
    (c) Capital categories for insured branches of foreign banks. For 
purposes of the provisions of section 38 of the FDI Act and this subpart 
H, an insured branch of a foreign bank shall be deemed to be:
    (1) ``Well capitalized'' if the insured branch:
    (i) Maintains the pledge of assets required under Sec.  347.209 of 
this chapter; and
    (ii) Maintains the eligible assets prescribed under Sec.  347.210 of 
this chapter at 108 percent or more of the preceding

[[Page 399]]

quarter's average book value of the insured branch's third-party 
liabilities; and
    (iii) Has not received written notification from:
    (A) The OCC to increase its capital equivalency deposit pursuant to 
12 CFR 28.15, or to comply with asset maintenance requirements pursuant 
to 12 CFR 28.20; or
    (B) The FDIC to pledge additional assets pursuant to Sec.  347.209 
of this chapter or to maintain a higher ratio of eligible assets 
pursuant to Sec.  347.210 of this chapter.
    (2) ``Adequately capitalized'' if the insured branch:
    (i) Maintains the pledge of assets required under Sec.  347.209 of 
this chapter; and
    (ii) Maintains the eligible assets prescribed under Sec.  347.210 of 
this chapter at 106 percent or more of the preceding quarter's average 
book value of the insured branch's third-party liabilities; and
    (iii) Does not meet the definition of a well capitalized insured 
branch.
    (3) ``Undercapitalized'' if the insured branch:
    (i) Fails to maintain the pledge of assets required under Sec.  
347.209 of this chapter; or
    (ii) Fails to maintain the eligible assets prescribed under Sec.  
347.210 of this chapter at 106 percent or more of the preceding 
quarter's average book value of the insured branch's third-party 
liabilities.
    (4) ``Significantly undercapitalized'' if it fails to maintain the 
eligible assets prescribed under Sec.  347.210 of this chapter at 104 
percent or more of the preceding quarter's average book value of the 
insured branch's third-party liabilities.
    (5) ``Critically undercapitalized'' if it fails to maintain the 
eligible assets prescribed under Sec.  347.210 of this chapter at 102 
percent or more of the preceding quarter's average book value of the 
insured branch's third-party liabilities.
    (d) Reclassifications based on supervisory criteria other than 
capital. The FDIC may reclassify a well capitalized FDIC-supervised 
institution as adequately capitalized and may require an adequately 
capitalized FDIC-supervised institution or an undercapitalized FDIC-
supervised institution to comply with certain mandatory or discretionary 
supervisory actions as if the FDIC-supervised institution were in the 
next lower capital category (except that the FDIC may not reclassify a 
significantly undercapitalized FDIC-supervised institution as critically 
undercapitalized) (each of these actions are hereinafter referred to 
generally as ``reclassifications'') in the following circumstances:
    (1) Unsafe or unsound condition. The FDIC has determined, after 
notice and opportunity for hearing pursuant to Sec.  308.202(a) of this 
chapter, that the FDIC-supervised institution is in unsafe or unsound 
condition; or
    (2) Unsafe or unsound practice. The FDIC has determined, after 
notice and opportunity for hearing pursuant to Sec.  308.202(a) of this 
chapter, that, in the most recent examination of the FDIC-supervised 
institution, the FDIC-supervised institution received and has not 
corrected a less-than-satisfactory rating for any of the categories of 
asset quality, management, earnings, or liquidity.

[81 FR 22173, Apr. 15, 2016, as amended at 79 FR 24541, May 1, 2014; 83 
FR 17617, Apr. 23, 2018]



Sec.  324.404  Capital restoration plans.

    (a) Schedule for filing plan--(1) In general. An FDIC-supervised 
institution shall file a written capital restoration plan with the 
appropriate FDIC regional director within 45 days of the date that the 
FDIC-supervised institution receives notice or is deemed to have notice 
that the FDIC-supervised institution is undercapitalized, significantly 
undercapitalized, or critically undercapitalized, unless the FDIC 
notifies the FDIC-supervised institution in writing that the plan is to 
be filed within a different period. An adequately capitalized FDIC-
supervised institution that has been required pursuant to Sec.  
324.403(d) to comply with supervisory actions as if the FDIC-supervised 
institution 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

[[Page 400]]

this section, an FDIC-supervised institution that has already submitted 
and is operating under a capital restoration plan approved under section 
38 and this subpart H 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.  324.403 unless the 
FDIC notifies the FDIC-supervised institution that it must submit a new 
or revised capital plan. An FDIC-supervised institution that is notified 
that it must submit a new or revised capital restoration plan shall file 
the plan in writing with the appropriate FDIC regional director within 
45 days of receiving such notice, unless the FDIC notifies it in writing 
that the plan must 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 Call Report, unless the FDIC 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. 
An FDIC-supervised institution that is required to submit a capital 
restoration plan as a result of its reclassification pursuant to Sec.  
324.403(d) shall include a description of the steps the FDIC-supervised 
institution 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 FDIC-supervised institution.
    (c) Review of capital restoration plans. Within 60 days after 
receiving a capital restoration plan under this subpart, the FDIC shall 
provide written notice to the FDIC-supervised institution of whether the 
plan has been approved. The FDIC 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 FDIC, the FDIC-supervised institution shall submit a 
revised capital restoration plan within the time specified by the FDIC. 
Upon receiving notice that its capital restoration plan has not been 
approved, any undercapitalized FDIC-supervised institution (as defined 
in Sec.  324.403(b)) shall be subject to all of the provisions of 
section 38 of the FDI Act and this subpart H applicable to significantly 
undercapitalized institutions. These provisions shall be applicable 
until such time as a new or revised capital restoration plan submitted 
by the FDIC-supervised institution has been approved by the FDIC.
    (e) Failure to submit capital restoration plan. An FDIC-supervised 
institution that is undercapitalized (as defined in Sec.  324.403(b)) 
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 
subpart applicable to significantly undercapitalized institutions.
    (f) Failure to implement capital restoration plan. Any 
undercapitalized FDIC-supervised institution that fails in any material 
respect to implement a capital restoration plan shall be subject to all 
of the provisions of section 38 of the FDI Act and this subpart H 
applicable to significantly undercapitalized institutions.
    (g) Amendment of capital restoration plan. An FDIC-supervised 
institution that has filed an approved capital restoration plan may, 
after prior written notice to and approval by the FDIC, amend the plan 
to reflect a change in circumstance. Until such time as a proposed 
amendment has been approved, the FDIC-supervised institution shall 
implement the capital restoration plan as approved prior to the proposed 
amendment.
    (h) Performance guarantee by companies that control an FDIC-
supervised institution--(1) Limitation on liability--(i) Amount 
limitation. The aggregate liability under the guarantee provided under 
section 38 and this subpart H for all companies that control a specific 
FDIC-supervised institution that is required to submit a capital 
restoration plan under this subpart H shall be limited to the lesser of:
    (A) An amount equal to 5.0 percent of the FDIC-supervised 
institution's total assets at the time the FDIC-supervised institution 
was notified or deemed to have notice that the FDIC-supervised 
institution was undercapitalized; or

[[Page 401]]

    (B) The amount necessary to restore the relevant capital measures of 
the FDIC-supervised institution to the levels required for the FDIC-
supervised institution to be classified as adequately capitalized, as 
those capital measures and levels are defined at the time that the FDIC-
supervised institution initially fails to comply with a capital 
restoration plan under this subpart H.
    (ii) Limit on duration. The guarantee and limit of liability under 
section 38 of the FDI Act and this subpart H shall expire after the FDIC 
notifies the FDIC-supervised institution 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 FDIC-supervised institution after 
expiration of the first guarantee.
    (iii) Collection on guarantee. Each company that controls a given 
FDIC-supervised institution shall be jointly and severally liable for 
the guarantee for such FDIC-supervised institution as required under 
section 38 and this subpart H, and the FDIC 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 an FDIC-
supervised institution 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 FDIC-supervised institution 
shall, upon submission of the plan, be subject to the provisions of 
section 38 and this subpart H that are applicable to FDIC-supervised 
institutions that have not submitted an acceptable capital restoration 
plan.
    (3) Failure to perform guarantee. Failure by any company that 
controls an FDIC-supervised institution 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 FDIC-supervised institution shall be subject to the provisions of 
section 38 and this subpart H that are applicable to FDIC-supervised 
institutions that have failed in a material respect to implement a 
capital restoration plan.



Sec.  324.405  Mandatory and discretionary supervisory actions.

    (a) Mandatory supervisory actions--(1) Provisions applicable to all 
FDIC-supervised institutions. All FDIC-supervised institutions 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 FDIC-supervised 
institution. Immediately upon receiving notice or being deemed to have 
notice, as provided in Sec.  324.402, that the FDIC-supervised 
institution is undercapitalized, significantly undercapitalized, or 
critically undercapitalized, it 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) of the FDI Act);
    (ii) Requiring that the FDIC monitor the condition of the FDIC-
supervised institution (section 38(e)(1) of the FDI Act);
    (iii) Requiring submission of a capital restoration plan within the 
schedule established in this subpart (section 38(e)(2) of the FDI Act);
    (iv) Restricting the growth of the FDIC-supervised institution's 
assets (section 38(e)(3) of the FDI Act); and
    (v) Requiring prior approval of certain expansion proposals (section 
38(e)(4) of the FDI Act).
    (3) Additional provisions applicable to significantly 
undercapitalized, and critically undercapitalized FDIC-supervised 
institutions. 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.  
324.402, that the FDIC-supervised institution is significantly 
undercapitalized, or critically undercapitalized, or that the FDIC-
supervised institution is subject to the provisions applicable to 
institutions that are significantly undercapitalized because the FDIC-
supervised institution

[[Page 402]]

failed to submit or implement in any material respect an acceptable 
capital restoration plan, the FDIC-supervised institution 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) of the FDI Act).
    (4) Additional provisions applicable to critically undercapitalized 
institutions. (i) 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.  324.402, that the insured depository institution is 
critically undercapitalized, the institution is prohibited from doing 
any of the following without the FDIC's prior written approval:
    (A) Entering into any material transaction other than in the usual 
course of business, including any investment, expansion, acquisition, 
sale of assets, or other similar action with respect to which the 
depository institution is required to provide notice to the appropriate 
Federal banking agency;
    (B) Extending credit for any highly leveraged transaction;
    (C) Amending the institution's charter or bylaws, except to the 
extent necessary to carry out any other requirement of any law, 
regulation, or order;
    (D) Making any material change in accounting methods;
    (E) Engaging in any covered transaction (as defined in section 
23A(b) of the Federal Reserve Act (12 U.S.C. 371c(b)));
    (F) Paying excessive compensation or bonuses;
    (G) Paying interest on new or renewed liabilities at a rate that 
would increase the institution's weighted average cost of funds to a 
level significantly exceeding the prevailing rates of interest on 
insured deposits in the institution's normal market areas; and
    (H) Making any principal or interest payment on subordinated debt 
beginning 60 days after becoming critically undercapitalized except that 
this restriction shall not apply, until July 15, 1996, with respect to 
any subordinated debt outstanding on July 15, 1991, and not extended or 
otherwise renegotiated after July 15, 1991.
    (ii) In addition, the FDIC may further restrict the activities of 
any critically undercapitalized institution to carry out the purposes of 
section 38 of the FDI Act.
    (iii) The FDIC-supervised institution must remain in compliance with 
the plan or is operating under a written agreement with the appropriate 
Federal banking agency.
    (b) Discretionary supervisory actions. In taking any action under 
section 38 of the FDI Act that is within the FDIC's discretion to take 
in connection with:
    (1) An insured depository institution that is deemed to be 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized, or has been reclassified as undercapitalized, or 
significantly undercapitalized; or
    (2) An officer or director of such institution, the FDIC shall 
follow the procedures for issuing directives under Sec. Sec.  308.201 
and 308.203 of this chapter, unless otherwise provided in section 38 of 
the FDI Act or this subpart H.



PART 325_ANNUAL STRESS TEST--Table of Contents



Sec.
325.1 Authority, purpose, and reservation of authority.
325.2 Definitions.
325.3 Applicability.
325.4 Annual stress tests required.
325.5 Methodologies and practices.
325.6 Required reports of stress test results to the FDIC and the Board 
          of Governors of the Federal Reserve System.
325.7 Publication of stress test results.

    Authority: 12 U.S.C. 5365(i)(2); 12 U.S.C. 5412(b)(2)(C); 12 U.S.C. 
1818, 12 U.S.C. 1819(a)(Tenth), 12 U.S.C. 1831o, and 12 U.S.C. 1831p-1.

    Source: 77 FR 62424, Oct. 15, 2012, unless otherwise noted.



Sec.  325.1  Authority, purpose, and reservation of authority.

    (a) Authority. This subpart is issued by the Federal Deposit 
Insurance Corporation (the ``Corporation'' or ``FDIC'') under 12 U.S.C. 
5365(i)(2), 12 U.S.C. 5412(b)(2)(B), 12 U.S.C. 1818, 12 U.S.C. 
1819(a)(Tenth), 12 U.S.C. 1831o, and 12 U.S.C. 1831p-1.
    (b) Purpose. This subpart implements 12 U.S.C. 5365(i)(2), which 
requires the Corporation (in coordination with the

[[Page 403]]

Board of Governors of the Federal Reserve System (``Board'') and the 
Federal Insurance Office) to issue regulations that require each covered 
bank to conduct annual stress tests and establishes a definition of 
stress test, methodologies for conducting stress tests, and reporting 
and disclosure requirements.
    (c) Reservation of authority. Notwithstanding any other provisions 
of this subpart, the Corporation may modify some or all of the 
requirements of this subpart.
    (1) The Corporation may accelerate or extend any deadline for stress 
testing, reporting, or publication of the stress test results.
    (2) The Corporation may require different or additional tests not 
otherwise required by this subpart or may require or permit different or 
additional analytical techniques and methodologies, different or 
additional scenarios (including components for the scenarios), or 
different assumptions for the covered bank to use in meeting the 
requirements of this subpart. In addition, the FDIC may specify a 
different as-of date for any or all categories of financial data used by 
the stress test.
    (3) The Corporation may modify the reporting requirements of a 
report under this subpart or may require additional reports. The 
Corporation may modify the publication requirements of this subpart and 
or may require different or additional publication disclosures.
    (4) Factors considered: Any exercise of authority under this section 
by the Corporation will be in writing and will consider the activities, 
level of complexity, risk profile, scope of operations, and the 
regulatory capital of the covered bank, in addition to any other 
relevant factors.
    (5) Notice and comment procedures: In exercising its authority to 
require different or additional stress tests and different or additional 
scenarios (including components for the scenarios) under paragraph 
(c)(2) of this section, the Corporation will apply notice and response 
procedures in the same manner and to the same extent as the notice and 
response procedures in 12 CFR 324.5, as appropriate.
    (6) Nothing in this subpart limits the authority of the Corporation 
under any other provision of law or regulation to take supervisory or 
enforcement action, including action to address unsafe and unsound 
practices or conditions, or violations of law or regulation.

[77 FR 62424, Oct. 15, 2012. Redesignated and amended at 83 FR 17740, 
Apr. 24, 2018]



Sec.  325.2  Definitions.

    For purposes of this subpart--
    (a) Adverse scenario means a set of conditions that affect the U.S. 
economy or the financial condition of a covered bank that are more 
adverse than those associated with the baseline scenario and may include 
trading or other additional components.
    (b) Average total consolidated assets means the average of the 
covered bank's total consolidated assets, as reported on the covered 
bank's Consolidated Report of Condition and Income (Call Report) for the 
four most recent consecutive quarters. If the covered bank has not filed 
a Call Report for each of the four most recent consecutive quarters, the 
covered bank's average total consolidated assets means the average of 
the covered bank's total consolidated assets, as reported on the covered 
bank's Call Reports, for the most recent one or more consecutive 
quarters. The date on which the state nonmember bank or the state 
savings association becomes a covered bank will be the as-of date of the 
most recent Call Report used in the calculation of the average.
    (c) Baseline scenario means a set of conditions that affect the U.S. 
economy or the financial condition of a covered bank, and that reflect 
the consensus views of the economic and financial outlook.
    (d) Covered bank means any state nonmember bank or state savings 
association subject to the following categories:
    (1) $10 billion to $50 billion covered bank. Any state nonmember 
bank or state savings association with average total consolidated assets 
calculated as required under this subpart that are greater than $10 
billion but less than $50 billion.
    (2) Over $50 billion covered bank. Any state nonmember bank or state 
savings

[[Page 404]]

association with average total consolidated assets calculated as 
required under this subpart that are not less than $50 billion.
    (e) Planning horizon means the period of at least nine quarters over 
which the relevant projections extend.
    (f) Pre-provision net revenue means the sum of net interest income 
and non-interest income, less expenses, before adjusting for loss 
provisions.
    (g) Provision for loan and lease losses means the provision for loan 
and lease losses as reported by the covered bank on its Call Report.
    (h) Regulatory capital ratio means a capital ratio for which the 
Corporation established minimum requirements by regulation or order, 
including the leverage ratio and tier 1 and total risk-based capital 
ratios applicable to that covered bank as calculated under the 
Corporation's regulations.
    (i) Scenarios are those sets of conditions that affect the U.S. 
economy or the financial condition of a covered bank that the 
Corporation annually determines are appropriate for use in the company-
run stress tests, including, but not limited to, baseline, adverse, and 
severely adverse scenarios.
    (j) Severely adverse scenario means a set of conditions that affect 
the U.S. economy or the financial condition of a covered bank and that 
overall are more severe than those associated with the adverse scenario 
and may include trading or other additional components.
    (k) State nonmember bank and state savings association have the same 
meanings as those terms are defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813).
    (l) Stress test means the process to assess the potential impact of 
scenarios on the consolidated earnings, losses, and capital of a covered 
bank over the planning horizon, taking into account the current 
condition of the covered bank and the covered bank's risks, exposures, 
strategies, and activities.
    (m) Stress test cycle means:
    (1) Until October 1, 2015, the period beginning October 1 of a 
calendar year and ending on September 30 of the following calendar year; 
and
    (2) Beginning October 1, 2015, the period beginning January 1 of a 
calendar year and ending on December 31 of that year.

[77 FR 62424, Oct. 15, 2012, as amended at 79 FR 69368, Nov. 21, 2014. 
Redesignated at 83 FR 17740, Apr. 24, 2018]



Sec.  325.3  Applicability.

    (a) First stress test for covered banks subject to stress testing 
requirements as of October 15, 2012. (1) A $10 billion to $50 billion 
covered bank as of October 15, 2012 must conduct its first stress test 
under this subpart using financial statement data as of September 30, 
2013, and report the results of its stress test on or before March 31, 
2014.
    (2) A $10 billion to $50 billion covered bank that is subject to its 
first annual stress test pursuant to section 203(a)(1) of this subpart 
must make its initial public disclosure in the period starting June 15 
and ending June 30 of 2015, by disclosing the results of a stress test 
conducted in 2014, using financial statement data as of September 30, 
2014.
    (3) A state nonmember bank or state savings association that is an 
over $50 billion covered bank as of October 15, 2012, must conduct its 
first stress test under this subpart using financial statement data as 
of September 30, 2012, and report the results of its stress test on or 
before January 5, 2013.
    (b)(1) A state nonmember bank or state savings association that 
becomes a covered bank after October 15, 2012 and on or before March 31, 
2014 shall conduct its first annual stress test under this subpart 
beginning in the next calendar year after the date the state nonmember 
bank or state savings association becomes a covered bank.
    (2) A state nonmember bank or state savings association that becomes 
a covered bank after March 31, 2014 and on or before March 31, 2015 
shall conduct its first annual stress test under this subpart in the 
January 1, 2016 stress testing cycle.
    (3) A state nonmember bank or state savings association that becomes 
a covered bank on or before March 31 in years following 2015 shall 
conduct its first annual stress test under this subpart in the stress 
testing cycle in the next calendar year after the date the state 
nonmember bank or state savings association becomes a covered bank. A

[[Page 405]]

state nonmember bank or state savings association that becomes a covered 
bank after March 31 in years following 2015 shall conduct its first 
annual stress test under this subpart in the second calendar year after 
the date the state nonmember bank or state savings association becomes a 
covered bank.
    (c) Ceasing to be a covered bank or changing categories. (1) A 
covered bank will remain subject to the stress test requirements based 
on its applicable category unless and until total consolidated assets of 
the covered bank falls below the relevant size threshold for each of 
four consecutive quarters as reported on the covered bank's most recent 
Call Reports. The calculation will be effective on the as-of date of the 
fourth consecutive Call Report.
    (2) Notwithstanding paragraph (c)(1) of this section, a state 
nonmember bank or state savings association that migrates from a $10 
billion to $50 billion covered bank to an over $50 billion covered bank 
will be subject to the stress test requirements applicable to an over 
$50 billion covered bank immediately as of the date the state nonmember 
bank or state savings association satisfies the size threshold for an 
over $50 billion covered bank.
    (d) Covered bank subsidiaries of a bank holding company or savings 
and loan holding company subject to annual stress test requirements. (1) 
Notwithstanding the requirements applicable to covered banks under this 
section, a covered bank that is a consolidated subsidiary of a bank 
holding company or savings and loan holding company that is required to 
conduct an annual company-run stress test under applicable regulations 
of the Board of Governors of the Federal Reserve System may elect to 
conduct its stress test and report to the FDIC on the same timeline as 
its parent bank holding company or savings and loan holding company.
    (2) A covered bank that elects to conduct its stress test under 
paragraph (d)(1) of this section will remain subject to the same 
timeline requirements of its parent company until otherwise approved by 
the FDIC.

[77 FR 62424, Oct. 15, 2012, as amended at 79 FR 69368, Nov. 21, 2014. 
Redesignated at 83 FR 17740, Apr. 24, 2018]



Sec.  325.4  Annual stress tests required.

    (a) General requirements--(1) $10 billion to $50 billion covered 
bank. Prior to January 1, 2016, a $10 billion to $50 billion covered 
bank must conduct a stress test on or before March 31 of each calendar 
year based on financial data as of September 30 of the preceding 
calendar year. Beginning January 1, 2016, a $10 billion to $50 billion 
covered bank must conduct a stress test on or before July 31 of each 
calendar year based on financial data as of December 31 of the preceding 
calendar year.
    (2) Over $50 billion covered bank. Prior to January 1, 2016, an over 
$50 billion covered bank must conduct a stress test on or before January 
5 of each calendar year based on financial data as of September 30 of 
the preceding calendar year. Beginning January 1, 2016, an over $50 
billion covered bank must conduct a stress test on or before April 5 of 
each calendar year based on financial data as of December 31 of the 
preceding calendar year.
    (b) Scenarios provided by the Corporation. In conducting the stress 
test under this subpart, each covered bank must use the scenarios 
provided the Corporation. The scenarios provided by the Corporation will 
reflect a minimum of three sets of economic and financial conditions, 
including baseline, adverse, and severely adverse scenarios. The 
Corporation will provide a description of the scenarios required under 
this section to each covered bank no later than November 15 (for stress 
test cycle beginning October 1, 2014) or February 15 (for stress test 
cycle beginning January 1, 2016, and all stress test cycles thereafter) 
of that calendar year.
    (c) Significant trading activities. The Corporation may require a 
covered bank with significant trading activities, as determined by the 
Corporation, to include trading and counterparty components in its 
adverse and severely adverse scenarios. The trading and counterparty 
position data used in these components will be as of a date between 
October 1 and December 1 (for the stress test cycle beginning October 1, 
2014) or between January 1 and March 1 (for the stress test cycle 
beginning January 1, 2016, and all stress test cycles thereafter) of 
that calendar year

[[Page 406]]

selected by the Corporation and communicated to the covered bank no 
later than December 1 (for the stress test cycle beginning October 1, 
2014) or March 1 (for the stress test cycle beginning January 1, 2016, 
and all stress test cycles thereafter) of the calendar year.

[79 FR 69368, Nov. 21, 2014. Redesignated at 83 FR 17740, Apr. 24, 2018]



Sec.  325.5  Methodologies and practices.

    (a) Potential impact on capital. In conducting a stress test under 
this subpart, during each quarter of the planning horizon, each covered 
bank must estimate the following for each scenario required to be used:
    (1) Pre-provision net revenues, losses, loan loss provisions and net 
income; and
    (2) The potential impact on the regulatory capital levels and ratios 
applicable to the covered bank, and any other capital ratios specified 
by the Corporation, incorporating the effects of any capital action over 
the planning horizon and maintenance of an allowance for loan losses 
appropriate for credit exposures throughout the planning horizon.
    (b) Controls and oversight of stress testing processes. (1) The 
senior management of a covered bank must establish and maintain a system 
of controls, oversight, and documentation, including policies and 
procedures, that are designed to ensure that its stress test processes 
satisfy the requirements in this subpart. These policies and procedures 
must, at a minimum, describe the covered bank's stress test practices 
and methodologies, and processes for validating and updating the covered 
bank's stress test practices and methodologies consistent with 
applicable laws, regulations, and supervisory guidance.
    (2) The board of directors, or a committee thereof, of a covered 
bank must approve and review the policies and procedures of the stress 
testing processes as frequently as economic conditions or the condition 
of the covered bank may warrant, but no less than annually. The board of 
directors and senior management of the covered bank must receive a 
summary of the results of the stress test.
    (3) The board of directors and senior management of each covered 
bank must consider the results of the stress tests in the normal course 
of business, including but not limited to, the covered bank's capital 
planning, assessment of capital adequacy, and risk management practices.

[77 FR 62424, Oct. 15, 2012. Redesignated and amended at 83 FR 17740, 
Apr. 24, 2018]



Sec.  325.6  Required reports of stress test results to the FDIC 
and the Board of Governors of the Federal Reserve System.

    (a) Report required for annual stress test results--(1) $10 billion 
to $50 billion covered bank. Prior to January 1, 2016, a $10 billion to 
$50 billion covered bank must report to the FDIC and to the Board on or 
before March 31 the results of the stress test in the manner and form 
specified by the FDIC. Beginning January 1, 2016, a $10 billion to $50 
billion covered bank must report to the FDIC and to the Board on or 
before July 31 the results of the stress test in the manner and form 
specified by the FDIC.
    (2) Over $50 billion covered bank. Prior to January 1, 2016, an over 
$50 billion covered bank must report to the FDIC and to the Board, on or 
before January 5, the results of the stress test in the manner and form 
specified by the FDIC. Beginning January 1, 2016, an over $50 billion 
covered bank must report to the FDIC and to the Board, on or before 
April 5, the results of the stress test in the manner and form specified 
by the FDIC.
    (b) Content of reports. (1) The reports required under paragraph (a) 
of this section must include under the baseline scenario, adverse 
scenario, severely adverse scenario and any other scenario required by 
the Corporation under this subpart, a description of the types of risks 
being included in the stress test, a summary description of the 
methodologies used in the stress test, and, for each quarter of the 
planning horizon, estimates of aggregate losses, pre-provision net 
revenue, provision for loan and lease losses, net income, and pro forma 
capital ratios (including regulatory and any other capital ratios 
specified by the FDIC). In addition, the report must include an

[[Page 407]]

explanation of the most significant causes for the changes in regulatory 
capital ratios and any other information required by the Corporation.
    (2) The description of aggregate losses and net income must include 
the cumulative losses and cumulative net income over the planning 
horizon, and the description of each regulatory capital ratio must 
include the beginning value, ending value, and minimum value of each 
ratio over the planning horizon.
    (c) Confidential treatment of information submitted. The 
confidentiality of information submitted to the Corporation under this 
subpart and related materials will be determined in accordance with 
applicable law including any available exemptions under the Freedom of 
Information Act (5 U.S.C. 552(b)) and the FDIC's Rules and Regulations 
regarding the Disclosure of Information (12 CFR Part 309).

[77 FR 62424, Oct. 15, 2012, as amended at 79 FR 69368, Nov. 21, 2014. 
Redesignated at 83 FR 17740, Apr. 24, 2018]



Sec.  325.7  Publication of stress test results.

    (a) Publication date--(1) $10 billion to $50 billion covered bank. 
(i) Prior to January 1, 2016, a $10 billion to $50 billion covered bank 
must publish a summary of the results of its annual stress test in the 
period starting June 15 and ending June 30 (for the stress test cycle 
beginning October 1, 2014).
    (ii) Beginning January 1, 2016, a $10 billion to $50 billion covered 
bank must publish a summary of the results of its annual stress test in 
the period starting October 15 and ending October 31 (for the stress 
test cycle beginning January 1, 2016 and for all stress test cycles 
thereafter).
    (2) Over $50 billion covered bank. (i) Prior to January 1, 2016, an 
over $50 billion covered bank must publish a summary of the results of 
its annual stress tests in the period starting March 15 and ending March 
31 (for the stress test cycle beginning October 1, 2014).
    (ii) Beginning January 1, 2016, an over $50 billion covered bank 
must publish a summary of the results of its annual stress tests in the 
period starting June 15 and ending July 15 (for the stress test cycle 
beginning January 1 2016, and for all stress test cycles thereafter) 
provided:
    (A) Unless the Corporation determines otherwise, if the over $50 
billion covered bank is a consolidated subsidiary of a bank holding 
company or savings and loan holding company subject to supervisory 
stress tests conducted by the Board of Governors of the Federal Reserve 
System under 12 CFR part 252, then, within the June 15 to July 15 
period, such covered bank may not publish the required summary of its 
annual stress test earlier than the date that the Board of Governors of 
the Federal Reserve System publishes the supervisory stress test results 
of the covered bank's parent holding company.
    (B) If the Board of Governors of the Federal Reserve System 
publishes the supervisory stress test results of the covered bank's 
parent holding company prior to June 15, then such covered bank may 
publish its stress test results prior to June 15, but no later than July 
15, through actual publication by the covered bank or through 
publication by the parent holding company under paragraph (b) of this 
section.
    (b) Publication method. The summary required under this section may 
be published on the covered bank's Web site or in any other forum that 
is reasonably accessible to the public. A covered bank that is a 
consolidated subsidiary of a bank holding company or savings and loan 
holding company that is required to conduct an annual company-run stress 
test under applicable regulations of the Board of Governors of the 
Federal Reserve System will be deemed to have satisfied the public 
disclosure requirements under this subpart if it publishes a summary of 
its stress test results with its parent bank holding company's or 
savings and loan holding company's summary of stress test results. 
Subsidiary covered banks electing to satisfy their public disclosure 
requirement in this manner must include a summary of changes in 
regulatory capital ratios of such covered bank over the planning 
horizon, and an explanation of the most significant causes for the 
changes in regulatory capital ratios.
    (c) Information to be disclosed in the summary. A covered bank must 
disclose

[[Page 408]]

the following information regarding the severely adverse scenario if it 
is not a consolidated subsidiary of a parent bank holding company or 
savings and loan holding company that has elected to make its disclosure 
under section 203(d):
    (1) A description of the types of risks included in the stress test;
    (2) A summary description of the methodologies used in the stress 
test;
    (3) Estimates of aggregate losses, pre-provision net revenue, 
provision for loan and lease losses, net income, and pro forma capital 
ratios (including regulatory and any other capital ratios specified by 
the FDIC); and
    (4) An explanation of the most significant causes for the changes in 
the regulatory capital ratios.
    (d) Content of results. (1) The disclosure of aggregate losses, pre-
provision net revenue, provisions for loan and lease losses, and net 
income under this section must be on a cumulative basis over the 
planning horizon.
    (2) The disclosure of regulatory capital ratios and any other 
capital ratios specified by the Corporation under this section must 
include the beginning value, ending value, and minimum value of each 
ratio over the planning horizon.

[77 FR 62424, Oct. 15, 2012, as amended at 79 FR 69369, Nov. 21, 2014. 
Redesignated at 83 FR 17740, Apr. 24, 2018]



PART 326_MINIMUM SECURITY DEVICES AND PROCEDURES 
AND BANK SECRECY ACT \1\ COMPLIANCE--Table of Contents


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

    \1\ In its original form, subchapter II of chapter 53 of title 31 
U.S.C., was part of Pub. L. 91-508 which requires recordkeeping for and 
reporting of currency transactions by banks and others and is commonly 
known as the Bank Secrecy Act.
---------------------------------------------------------------------------

                  Subpart A_Minimum Security Procedures

Sec.
326.0 Authority, purpose, and scope.
326.1 Definitions.
326.2 Designation of security officer.
326.3 Security program.
326.4 Reports.

    Subpart B_Procedures for Monitoring Bank Secrecy Act Complianace

326.8 Bank Secrecy Act compliance.

    Authority: 12 U.S.C. 1813, 1815, 1817, 1818, 1819 (Tenth), 1881-
1883; 31 U.S.C. 5311-5314 and 5316-5332.2



                  Subpart A_Minimum Security Procedures

    Source: 83 FR 13842, Apr. 2, 2018, unless otherwise noted.



Sec.  326.0  Authority, purpose, and scope.

    (a) This part is issued by the Federal Deposit Insurance Corporation 
(``FDIC'') pursuant to section 3 of the Bank Protection Act of 1968 (12 
U.S.C. 1882). It applies to FDIC-supervised insured depository 
institutions. It requires each institution to adopt appropriate security 
procedures to discourage robberies, burglaries, and larcenies and to 
assist in identifying and apprehending persons who commit such acts.
    (b) It is the responsibility of the institution's board of directors 
to comply with this part and ensure that a written security program for 
the institution's main office and branches is developed and implemented.



Sec.  326.1  Definitions.

    For the purposes of this part--
    (a) The term FDIC-supervised insured depository institution or 
institution means any insured depository institution for which the 
Federal Deposit Insurance Corporation is the appropriate Federal banking 
agency pursuant to section 3(q)(2) of the Federal Deposit Insurance Act, 
12 U.S.C. 1813(q)(2).
    (b) The term banking office includes any branch of an institution 
and, in the case of an FDIC-supervised insured depository institution; 
it includes the main office of that institution.
    (c) The term branch for an institution chartered under the laws of 
any state of the United States includes any branch institution, branch 
office, branch agency, additional office, or any branch place of 
business located in any state or territory of the United States, 
District of Columbia, Puerto Rico, Guam, American Samoa, the Trust 
Territory of the Pacific Islands, the Northern Mariana Islands or the

[[Page 409]]

Virgin Islands at which deposits are received or checks paid or money 
lent. In the case of a foreign bank defined in Sec.  347.202 of this 
chapter, the term branch has the meaning given in Sec.  347.202 of this 
chapter.
    (d) The term State savings association has the same meaning as in 
section (3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 
1813(b)(3).



Sec.  326.2  Designation of security officer.

    Upon the issuance of Federal deposit insurance, the board of 
directors of each institution 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 banking 
office.



Sec.  326.3  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 institution and that will preserve 
evidence that may aid in their identification and prosecution; such 
procedures may include, but are not limited to:
    (i) Retaining a record of any robbery, burglary, or larceny 
committed against the institution;
    (ii) Maintaining a camera that records activity in the banking 
office; and
    (iii) Using identification devices, such as prerecorded serial-
numbered bills, or chemical and electronic devices;
    (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 robbery, burglar 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 institution shall have, at a minimum, the 
following security devices:
    (1) A means of protecting cash or 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 banking office;
    (3) An alarm system or other appropriate device for promptly 
notifying the nearest responsible law enforcement officers of an 
attempted or perpetrated robbery or burglary;
    (4) Tamper-resistant locks on exterior doors and exterior windows 
that may be opened; 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 or other valuables exposed to robbery, 
burglary, and larceny;
    (iii) The distance of the banking office from the nearest 
responsible law enforcement officers;
    (iv) The cost of the security devices;
    (v) Other security measures in effect at the banking office; and
    (vi) The physical characteristics of the structure of the banking 
office and its surroundings.



Sec.  326.4  Reports.

    The security officer for each institution shall report at least 
annually to the institution's board of directors on the implementation, 
administration, and effectiveness of the security program.



     Subpart B_Procedures for Monitoring Bank Secrecy Act Compliance



Sec.  326.8  Bank Security Act compliance.

    (a) Purpose. This subpart is issued to assure that all insured 
nonmember banks as defined in 12 CFR 326.1 establish and maintain 
procedures reasonably designed to assure and monitor their compliance 
with the requirements of subchapter II of chapter 53 of title 31, United 
States Code, and the implementing regulations promulgated

[[Page 410]]

thereunder by the Department of Treasury at 31 CFR Chapter X.
    (b) Compliance procedures--(1) Program requirement. Each bank shall 
develop and provide for the continued administration of a program 
reasonably designed to assure and monitor compliance with recordkeeping 
and reporting requirements set forth in subchapter II of chapter 53 of 
title 31, United States Code, and the implementing regulations issued by 
the Department of Treasury at 31 CFR Chapter X. The compliance program 
shall be written, approved by the bank's board of directors, and noted 
in the minutes.
    (2) Customer identification program. Each bank is subject to the 
requirements of 31 U.S.C. 5318(l) and the implementing regulation 
jointly promulgated by the FDIC and the Department of the Treasury at 31 
CFR 1020.220.
    (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 bank personnel or by an outside party;
    (3) Designate an individual or individuals responsible for 
coordinating and monitoring day-to-day compliance; and
    (4) Provide training for appropriate personnel.

[76 FR 14793, Mar. 18, 2011, as amended at 77 FR 30371, May 23, 2012]



PART 327_ASSESSMENTS--Table of Contents



                          Subpart A_In General

Sec.
327.1 Purpose and scope.
327.2 Certified statements.
327.3 Payment of assessments.
327.4 Assessment rates.
327.5 Assessment base.
327.6 Mergers and consolidations; other terminations of insurance.
327.7 Payment of interest on assessment underpayments and overpayments.
327.8 Definitions.
327.9 Assessment pricing methods.
327.10 Assessment rate schedules.
327.11 Surcharges and assessments required to raise the reserve ratio of 
          the DIF to 1.35 percent.
327.12 Prepayment of quarterly risk-based assessments.
327.15 Emergency special assessments.
327.16 Assessment pricing methods--beginning the first assessment period 
          after June 30, 2016, where the reserve ratio of the DIF as of 
          the end of the prior assessment period has reached or exceeded 
          1.15 percent.

Appendix A to Subpart A of Part 327--Method to Derive Pricing 
          Multipliers and Uniform Amount
Appendix B to Subpart A of Part 327--Conversion of Scorecard Measures 
          into Score
Appendix C to Subpart A of Part 327--Description of Concentration 
          Measures
Appendix D to Subpart A of Part 327--Description of the Loss Severity 
          Measure

         Subpart B_Implementation of One-Time Assessment Credit

327.30 Purpose and scope.
327.31 Definitions.
327.32 Determination of aggregate credit amount.
327.33 Determination of eligible institution's credit amount.
327.34 Transferability of credits.
327.35 Application of credits.
327.36 Requests for review of credit amount.

            Subpart C_Implementation of Dividend Requirements

327.50 Dividends.

    Authority: 12 U.S.C. 1441, 1813, 1815, 1817-19, 1821.

    Source: 54 FR 51374, Dec. 15, 1989, unless otherwise noted.



                          Subpart A_In General

    Source: Sections 327.1 through 327.8 appear at 71 FR 69277, Nov. 30, 
2006, unless otherwise noted.



Sec.  327.1  Purpose and scope.

    (a) Scope. This part 327 applies to any insured depository 
institution, including any insured branch of a foreign bank.
    (b) Purpose. (1) Except as specified in paragraph (b)(2) of this 
section, this part 327 sets forth the rules for:
    (i) The time and manner of filing certified statements by insured 
depository institutions;
    (ii) The time and manner of payment of assessments by such 
institutions;
    (iii) The payment of assessments by depository institutions whose 
insured status has terminated;

[[Page 411]]

    (iv) The classification of depository institutions for risk; and
    (v) The processes for review of assessments.
    (2) Deductions from the assessment base of an insured branch of a 
foreign bank are stated in subpart B part 347 of this chapter.



Sec.  327.2  Certified statements.

    (a) Required. (1) The certified statement shall also be known as the 
quarterly certified statement invoice. Each insured depository 
institution shall file and certify its quarterly certified statement 
invoice in the manner and form set forth in this section.
    (2) The quarterly certified statement invoice shall reflect the 
institution's risk assignment, assessment base, assessment computation, 
and assessment amount, for each quarterly assessment period.
    (b) Availability and access. (1) The Corporation shall make 
available to each insured depository institution via the FDIC's e-
business Web site FDICconnect a quarterly certified statement invoice 
each assessment period.
    (2) Insured depository institutions shall access their quarterly 
certified statement invoices via FDICconnect, unless the FDIC provides 
notice to insured depository institutions of a successor system. In the 
event of a contingency, the FDIC may employ an alternative means of 
delivering the quarterly certified statement invoices. A quarterly 
certified statement invoice delivered by any alternative means will be 
treated as if it had been downloaded from FDICconnect.
    (3) Institutions that do not have Internet access may request a 
renewable one-year exemption from the requirement that quarterly 
certified statement invoices be accessed through FDICconnect. Any 
exemption request must be submitted in writing to the Manager of the 
Assessments Section.
    (4) Each assessment period, the FDIC will provide courtesy e-mail 
notification to insured depository institutions indicating that new 
quarterly certified statement invoices are available and may be accessed 
on FDICconnect. E-mail notification will be sent to all individuals with 
FDICconnect access to quarterly certified statement invoices.
    (5) E-mail notification may be used by the FDIC to communicate with 
insured depository institutions regarding quarterly certified statement 
invoices and other assessment-related matters.
    (c) Review by institution. The president of each insured depository 
institution, or such other officer as the institution's president or 
board of directors or trustees may designate, shall review the 
information shown on each quarterly certified statement invoice.
    (d) Retention by institution. If the appropriate officer of the 
insured depository institution agrees that, to the best of his or her 
knowledge and belief, the information shown on the quarterly certified 
statement invoice is true, correct, and complete and in accordance with 
the Federal Deposit Insurance Act and the regulations issued under it, 
the institution shall pay the amount specified on the quarterly 
certified statement invoice and shall retain it in the institution's 
files for three years as specified in section 7(b)(4) of the Federal 
Deposit Insurance Act.
    (e) Amendment by institution. If the appropriate officer of the 
insured depository institution determines that, to the best of his or 
her knowledge and belief, the information shown on the quarterly 
certified statement invoice is not true, correct, and complete and in 
accordance with the Federal Deposit Insurance Act and the regulations 
issued under it, the institution shall pay the amount specified on the 
quarterly certified statement invoice, and may:
    (1) Amend its report of condition, or other similar report, to 
correct any data believed to be inaccurate on the quarterly certified 
statement invoice; amendments to such reports timely filed under section 
7(g) of the Federal Deposit Insurance Act but not permitted to be made 
by an institution's primary federal regulator may be filed with the FDIC 
for consideration in determining deposit insurance assessments; or
    (2) Amend and sign its quarterly certified statement invoice to 
correct a calculation believed to be inaccurate

[[Page 412]]

and return it to the FDIC by the applicable payment date specified in 
Sec.  327.3(b)(2).
    (f) Certification. Data used by the Corporation to complete the 
quarterly certified statement invoice has been previously attested to by 
the institution in its reports of condition, or other similar reports, 
filed with the institution's primary federal regulator. When an insured 
institution pays the amount shown on the quarterly certified statement 
invoice and does not correct that invoice as provided in paragraph (e) 
of this section, the information on that invoice shall be deemed true, 
correct, complete, and certified for purposes of paragraph (a) of this 
section and section 7(c) of the Federal Deposit Insurance Act.
    (g) Requests for revision of assessment computation. (1) The timely 
filing of an amended report of condition or other similar report under 
paragraph (e)(1) of this section, or the timely filing of an amended 
quarterly certified statement invoice under paragraph (e)(2), that will 
result in a change to deposit insurance assessments owed or paid by an 
insured depository institution, shall be treated as a timely filed 
request for revision of computation of quarterly assessment payment 
under Sec.  327.3(f).
    (2) The assessment rate on the quarterly certified statement invoice 
shall be amended only if it is inconsistent with the assessment risk 
assignment(s) provided to the institution by the Corporation for the 
assessment period in question pursuant to Sec.  327.4(a). Agreement with 
the assessment rate shall not be deemed to constitute agreement with the 
assessment risk assignment. An institution may request review of an 
assessment risk assignment it believes to be incorrect pursuant to Sec.  
327.4(c).



Sec.  327.3  Payment of assessments.

    (a) Required--(1) In general. Each insured depository institution 
shall pay to the Corporation for each assessment period an assessment 
determined in accordance with this part 327.
    (2) Notice of designated deposit account. For the purpose of making 
such payments, each insured depository institution shall designate a 
deposit account for direct debit by the Corporation. No later than 30 
days prior to the next payment date specified in paragraph (b)(2) of 
this section, each institution shall provide notice to the Corporation 
via FDICconnect of the account designated, including all information and 
authorizations needed by the Corporation for direct debit of the 
account. After the initial notice of the designated account, no further 
notice is required unless the institution designates a different account 
for assessment debit by the Corporation, in which case the requirements 
of the preceding sentence apply.
    (3) Transition Rule for Financing Corporation (FICO) Payments. 
Quarterly FICO payments shall be collected by the FDIC without 
interruption during the assessment system transitional period in 2007. 
All insured depository institutions shall make scheduled quarterly FICO 
payments on January 2, 2007 (unless prepaid on December 30, 2006), and 
March 30, 2007, based upon, respectively, their September 30, 2006, and 
December 31, 2006 reported assessment bases, which shall be the final 
assessment bases calculated pursuant to 12 CFR 327.5(a) and (b) (2006). 
Simultaneous collection of deposit insurance assessments and FICO 
assessments will resume in June of 2007, based on the March 31, 2007 
reported assessment base.
    (b) Assessment payment--(1) Quarterly certified statement invoice. 
Starting with the first assessment period of 2007, no later than 15 days 
prior to the payment date specified in paragraph (b)(2) of this section, 
the Corporation will provide to each insured depository institution a 
quarterly certified statement invoice showing the amount of the 
assessment payment due from the institution for the prior quarter (net 
of credits or dividends, if any), and the computation of that amount. 
Subject to paragraph (e) of this section, the invoiced amount on the 
quarterly certified statement invoice shall be the product of the 
following: the assessment base of the institution for the prior quarter 
computed in accordance with Sec.  327.5 multiplied by the institution's 
rate for that prior quarter as assigned to the institution pursuant to 
Sec.  327.4(a) and Sec.  327.9 or Sec.  327.16.

[[Page 413]]

    (2) Quarterly payment date and manner. The Corporation will cause 
the amount stated in the applicable quarterly certified statement 
invoice to be directly debited on the appropriate payment date from the 
deposit account designated by the insured depository institution for 
that purpose, as follows:
    (i) In the case of the assessment payment for the quarter that 
begins on January 1, the payment date is the following June 30;
    (ii) In the case of the assessment payment for the quarter that 
begins on April 1, the payment date is the following September 30;
    (iii) In the case of the assessment payment for the quarter that 
begins on July 1, the payment date is the following December 30; and
    (iv) In the case of the assessment payment for the quarter that 
begins on October 1, the payment date is the following March 30.
    (c) Necessary action, sufficient funding by institution. Each 
insured depository institution shall take all actions necessary to allow 
the Corporation to debit assessments from the insured depository 
institution's designated deposit account. Each insured depository 
institution shall, prior to each payment date indicated in paragraph 
(b)(2) of this section, ensure that funds in an amount at least equal to 
the amount on the quarterly certified statement invoice are available in 
the designated account for direct debit by the Corporation. Failure to 
take any such action or to provide such funding of the account shall be 
deemed to constitute nonpayment of the assessment. Penalties for failure 
to timely pay assessments are provided for at 12 CFR 308.132(d)(9).
    (d) Business days. If a payment date specified in paragraph (b)(2) 
falls on a date that is not a business day, the applicable date shall be 
the previous business day.
    (e) Payment adjustments in succeeding quarters. Quarterly certified 
statement invoices provided by the Corporation may reflect adjustments, 
initiated by the Corporation or an institution, resulting from such 
factors as amendments to prior quarterly reports of condition, 
retroactive revision of the institution's assessment risk assignment, 
and revision of the Corporation's assessment computations for prior 
quarters.
    (f) Request for revision of computation of quarterly assessment 
payment--(1) In general. An institution may submit a written request for 
revision of the computation of the institution's quarterly assessment 
payment as shown on the quarterly certified statement invoice in the 
following circumstances:
    (i) The institution disagrees with the computation of the assessment 
base as stated on the quarterly certified statement invoice;
    (ii) The institution determines that the rate applied by the 
Corporation is inconsistent with the assessment risk assignment(s) 
provided to the institution in writing by the Corporation for the 
assessment period for which the payment is due; or
    (iii) The institution believes that the quarterly certified 
statement invoice does not fully or accurately reflect adjustments 
provided for in paragraph (e) of this section.
    (2) Inapplicability. This paragraph (f) is not applicable to 
requests for review of an institution's assessment risk assignment, 
which are covered by Sec.  327.4(c) of this part.
    (3) Requirements. Any such request for revision must be submitted 
within 90 days from the date the computation being challenged appears on 
the institution's quarterly certified statement invoice. The request for 
revision shall be submitted to the Manager of the Assessments Section 
and shall provide documentation sufficient to support the change sought 
by the institution. If additional information is requested by the 
Corporation, such information shall be provided by the institution 
within 21 days of the date of the request for additional information. 
Any institution submitting a timely request for revision will receive 
written notice from the Corporation regarding the outcome of its 
request. Upon completion of a review, the DOF Director (or designee) 
shall promptly notify the institution in writing of his or her 
determination of whether revision is warranted. If the institution 
requesting revision disagrees with that determination, it may appeal to 
the FDIC's Assessment Appeals Committee. Notice of

[[Page 414]]

the procedures applicable to appeals will be included with the written 
determination.
    (g) Quarterly certified statement invoice unavailable. Any 
institution whose quarterly certified statement invoice is unavailable 
on FDICconnect by the fifteenth day of the month in which the payment is 
due shall promptly notify the Corporation. Failure to provide prompt 
notice to the Corporation shall not affect the institution's obligation 
to make full and timely assessment payment. Unless otherwise directed by 
the Corporation, the institution shall preliminarily pay the amount 
shown on its quarterly certified statement invoice for the preceding 
assessment period, subject to subsequent correction.

[54 FR 51374, Dec. 15, 1989, as amended at 74 FR 9550, Mar. 4, 2009; 81 
FR 32201, May 20, 2016; 81 FR 42243, June 29, 2016]

    Effective Date Note: At 83 FR 61115, Nov. 28, 2018, Sec.  327.3 was 
amended by revising paragraph (c), effective Jan. 15, 2019. For the 
convenience of the user, the revised text is set forth as follows:



Sec.  327.3  Payment of assessments.

                                * * * * *

    (c) Necessary action, sufficient funding by institution. Each 
insured depository institution shall take all actions necessary to allow 
the Corporation to debit assessments from the insured depository 
institution's designated deposit account. Each insured depository 
institution shall, prior to each payment date indicated in paragraph 
(b)(2) of this section, ensure that funds in an amount at least equal to 
the amount on the quarterly certified statement invoice are available in 
the designated account for direct debit by the Corporation. Failure to 
take any such action or to provide such funding of the account shall be 
deemed to constitute nonpayment of the assessment. Penalties for failure 
to timely pay assessments will be calculated and published in accordance 
with 12 CFR 308.132(d).

                                * * * * *



Sec.  327.4  Assessment rates.

    (a) Assessment risk assignment. For the purpose of determining the 
annual assessment rate for insured depository institutions under Sec.  
327.9 or Sec.  327.16 , each insured depository institution will be 
provided an assessment risk assignment. Notice of an institution's 
current assessment risk assignment will be provided to the institution 
with each quarterly certified statement invoice. Adjusted assessment 
risk assignments for prior periods may also be provided by the 
Corporation. Notice of the procedures applicable to reviews will be 
included with the notice of assessment risk assignment provided pursuant 
to paragraph (a) of this section.
    (b) Payment of assessment at rate assigned. Institutions shall make 
timely payment of assessments based on the assessment risk assignment in 
the notice provided to the institution pursuant to paragraph (a) of this 
section. Timely payment is required notwithstanding any request for 
review filed pursuant to paragraph (c) of this section. Assessment risk 
assignments remain in effect for future assessment periods until 
changed. If the risk assignment in the notice is subsequently changed, 
any excess assessment paid by the institution will be credited by the 
Corporation, with interest, and any additional assessment owed shall be 
paid by the institution, with interest, in the next assessment payment 
after such subsequent assignment or change. Interest payable under this 
paragraph shall be determined in accordance with Sec.  327.7.
    (c) Requests for review. An institution that believes any assessment 
risk assignment provided by the Corporation pursuant to paragraph (a) of 
this section is incorrect and seeks to change it must submit a written 
request for review of that risk assignment. An institution cannot 
request review through this process of the CAMELS ratings assigned by 
its primary federal regulator or challenge the appropriateness of any 
such rating; each federal regulator has established procedures for that 
purpose. An institution may also request review of a determination by 
the FDIC to assess the institution as a large, highly complex, or a 
small institution (Sec. Sec.  327.9(e)(3) and 327.16(f)(3)) or a 
determination by the FDIC that the institution is a new institution 
(Sec. Sec.  327.9(f)(5) and 327.16(g)(5)). Any request for review must 
be submitted within 90 days from the date the assessment risk assignment 
being challenged pursuant to paragraph (a) of this section appears on 
the institution's quarterly certified

[[Page 415]]

statement invoice. The request shall be submitted to the Corporation's 
Director of the Division of Insurance and Research in Washington, DC, 
and shall include documentation sufficient to support the change sought 
by the institution. If additional information is requested by the 
Corporation, such information shall be provided by the institution 
within 21 days of the date of the request for additional information. 
Any institution submitting a timely request for review will receive 
written notice from the Corporation regarding the outcome of its 
request. Upon completion of a review, the Director of the Division of 
Insurance and Research (or designee) or the Director of the Division of 
Supervision and Consumer Protection (or designee) or any successor 
divisions, as appropriate, shall promptly notify the institution in 
writing of his or her determination of whether a change is warranted. If 
the institution requesting review disagrees with that determination, it 
may appeal to the FDIC's Assessment Appeals Committee. Notice of the 
procedures applicable to appeals will be included with the written 
determination.
    (d) Disclosure restrictions. The portion of an assessment risk 
assignment provided to an institution by the Corporation pursuant to 
paragraph (a) of this section that reflects any supervisory evaluation 
or confidential information is deemed to be exempt information within 
the scope of Sec.  309.5(g)(8) of this chapter and, accordingly, is 
governed by the disclosure restrictions set out at Sec.  309.6 of this 
chapter.
    (e) Limited use of assessment risk assignment. Any assessment risk 
assignment provided to a depository institution under this part 327 is 
for purposes of implementing and operating the FDIC's risk-based 
assessment system. Unless permitted by the Corporation or otherwise 
required by law, no institution may state in any advertisement or 
promotional material, or in any other public place or manner, the 
assessment risk assignment provided to it pursuant to this part.
    (f) Effective date for changes to risk assignment. Changes to an 
insured institution's risk assignment resulting from a supervisory 
ratings change become effective as of the date of written notification 
to the institution by its primary federal regulator or state authority 
of its supervisory rating (even when the CAMELS component ratings have 
not been disclosed to the institution), if the FDIC, after taking into 
account other information that could affect the rating, agrees with the 
rating. If the FDIC does not agree, the FDIC will notify the institution 
of the FDIC's supervisory rating; resulting changes to an insured 
institution's risk assignment become effective as of the date of written 
notification to the institution by the FDIC.
    (g) Designated Reserve Ratio. The designated reserve ratio for the 
Deposit Insurance Fund is 2 percent.

[71 FR 69277, 69326, Nov. 30, 2006, as amended at 75 FR 79293, Dec. 20, 
2010; 76 FR 10704, Feb. 25, 2011; 81 FR 32201, May 20, 2016]



Sec.  327.5  Assessment base.

    (a) Assessment base for all insured depository institutions. Except 
as provided in paragraphs (b), (c), and (d) of this section, the 
assessment base for an insured depository institution shall equal the 
average consolidated total assets of the insured depository institution 
during the assessment period minus the average tangible equity of the 
insured depository institution during the assessment period.
    (1) Average consolidated total assets defined and calculated. 
Average consolidated total assets are defined in the schedule of 
quarterly averages in the Consolidated Reports of Condition and Income, 
using either a daily averaging method or a weekly averaging method as 
described in paragraphs (a)(1)(i) or (ii) of this section. The amounts 
to be reported as daily averages are the sum of the gross amounts of 
consolidated total assets for each calendar day during the quarter 
divided by the number of calendar days in the quarter. The amounts to be 
reported as weekly averages are the sum of the gross amounts of 
consolidated total assets for each Wednesday during the quarter divided 
by the number of Wednesdays in the quarter. For days that an office of 
the reporting institution (or any of its subsidiaries or branches) is 
closed (e.g., Saturdays, Sundays, or holidays), the amounts outstanding 
from the previous business day will be used. An office is

[[Page 416]]

considered closed if there are no transactions posted to the general 
ledger as of that date. For institutions that begin operating during the 
calendar quarter, the amounts to be reported as daily averages are the 
sum of the gross amounts of consolidated total assets for each calendar 
day the institution was operating during the quarter divided by the 
number of calendar days the institution was operating during the 
quarter.
    (i) Institutions that must report average consolidated total assets 
using a daily averaging method. All insured depository institutions that 
report $1 billion or more in quarter-end consolidated total assets on 
their March 31, 2011 Consolidated Report of Condition and Income or 
Thrift Financial Report (or successor report), and all institutions that 
become insured after March 31, 2011, shall report average consolidated 
total assets as of the close of business for each day of the calendar 
quarter.
    (ii) Institutions that may report average consolidated total assets 
using a weekly averaging method. All insured depository institutions 
that report less than $1 billion in quarter-end consolidated total 
assets on their March 31, 2011, Consolidated Report of Condition and 
Income or Thrift Financial Report may report average consolidated total 
assets as an average of the balances as of the close of business on each 
Wednesday during the calendar quarter, or may at any time opt 
permanently to report average consolidated total assets on a daily basis 
as set forth in paragraph (a)(1)(i) of this section. Once an institution 
that reports average consolidated total assets using a weekly average 
reports average consolidated total assets equal to or greater than $1 
billion for two consecutive quarters, it shall permanently report 
average consolidated total assets using daily averaging starting in the 
next quarter.
    (iii) Mergers and consolidations. The average calculation of the 
assets of the surviving or resulting institution in a merger or 
consolidation shall include the assets of all the merged or consolidated 
institutions for the days in the quarter prior to the merger or 
consolidation, whether reported by the daily or weekly method.
    (2) Average tangible equity defined and calculated. Tangible equity 
is defined as Tier 1 capital.
    (i) Calculation of average tangible equity. Except as provided in 
paragraph (a)(2)(ii) of this section, average tangible equity shall be 
calculated using monthly averaging. Monthly averaging means the average 
of the three month-end balances within the quarter.
    (ii) Alternate calculation of average tangible equity. Institutions 
that report less than $1 billion in quarter-end consolidated total 
assets on their March 31, 2011 Consolidated Reports of Condition and 
Income or Thrift Financial Reports may report average tangible equity 
using an end-of-quarter balance or may at any time opt permanently to 
report average tangible equity using a monthly average balance. An 
institution that reports average tangible equity using an end-of-quarter 
balance and reports average daily or weekly consolidated assets of $1 
billion or more for two consecutive quarters shall permanently report 
average tangible equity using monthly averaging starting in the next 
quarter. Newly insured institutions shall report using monthly 
averaging.
    (iii) Calculation of average tangible equity for the surviving 
institution in a merger or consolidation. For the surviving institution 
in a merger or consolidation, Tier 1 capital shall be calculated as if 
the merger occurred on the first day of the quarter in which the merger 
or consolidation occurred.
    (3) Consolidated subsidiaries--(i) Reporting for insured depository 
institutions with consolidated subsidiaries that are not insured 
depository institutions. For insured institutions with consolidated 
subsidiaries that are not insured depository institutions, assets, 
including assets eliminated in consolidation, shall be calculated using 
a daily or weekly averaging method, corresponding to the daily or weekly 
averaging requirement of the parent institution. The Consolidated 
Reports of Condition and Income instructions in effect for the quarter 
for which data is being reported shall govern calculation of the average 
amount of subsidiaries'

[[Page 417]]

assets, including those assets eliminated in consolidation. An insured 
depository institution that reports average tangible equity using a 
monthly averaging method and that has subsidiaries that are not insured 
depository institutions shall use monthly average reporting for the 
subsidiaries. The monthly average data for these subsidiaries, however, 
may be calculated for the current quarter or for the prior quarter 
consistent with the method used to report average consolidated total 
assets and in conformity with Consolidated Reports of Condition and 
Income requirements. Once the method of reporting the subsidiaries' 
assets and tangible equity is chosen, however (current quarter or prior 
quarter), insured depository institutions cannot change the reporting 
method from quarter to quarter. An institution that reports consolidated 
assets and tangible equity using data for the prior quarter may switch 
to concurrent reporting on a permanent basis.
    (ii) Reporting for insured depository institutions with consolidated 
insured depository subsidiaries. Insured depository institutions that 
consolidate with other insured depository institutions for financial 
reporting purposes shall report for the parent and for each subsidiary 
individually, daily average consolidated total assets or weekly average 
consolidated total assets, as appropriate under paragraph (a)(1)(i) or 
(ii) above, and tangible equity, without consolidating their insured 
depository institution subsidiaries into the calculations. Investments 
in insured depository institution subsidiaries should be included in 
total assets using the equity method of accounting.
    (b) Assessment base for banker's banks--(1) Bankers bank defined. A 
banker's bank for purposes of calculating deposit insurance assessments 
shall meet the definition of banker's bank as that term is used in 12 
U.S.C. 24. Banker's banks that have funds from government capital 
infusion programs (such as TARP and the Small Business Lending Fund), 
and stock owned by the FDIC resulting from banks failures, as well as 
non-bank-owned stock resulting from equity compensation programs, are 
not thereby excluded from the definition of banker's banks.
    (2) Self-certification. Institutions that meet the requirements of 
paragraph (b)(1) of this section shall so certify to that effect each 
quarter on the Consolidated Reports of Condition and Income or Thrift 
Financial Report or successor report.
    (3) Assessment base calculation for banker's banks. A banker's bank 
shall pay deposit insurance assessments on its assessment base as 
calculated in paragraph (a) of this section provided that it conducts 50 
percent or more of its business with entities other than its parent 
holding company or entities other than those controlled (control has the 
same meaning as in section 3(w)(5) of the FDI Act) either directly or 
indirectly by its parent holding company. The assessment base will 
exclude the average (daily or weekly depending on how the institution 
calculates its average consolidated total assets) amount of reserve 
balances passed through to the Federal Reserve, the average amount of 
reserve balances held at the Federal Reserve for its own account 
(including all balances due from the Federal Reserve as described in the 
instructions to line 4 of Schedule RC-A of the Consolidated Report of 
Condition and Income as of December 31, 2010), and the average amount of 
the institution's federal funds sold, but in no case shall the amount 
excluded exceed the sum of the bank's average amount of total deposits 
of commercial banks and other depository institutions in the United 
States and the average amount of its federal funds purchased.
    (c) Assessment base for custodial banks--(1) Custodial bank defined. 
A custodial bank for purposes of calculating deposit insurance 
assessments shall be an insured depository institution with previous 
calendar-year trust assets (fiduciary and custody and safekeeping 
assets, as described in the instructions to Schedule RC-T of the 
Consolidated Report of Condition and Income) of at least $50 billion or 
an insured depository institution that derived more than 50 percent of 
its total revenue (interest income plus non-interest income) from trust 
activity over the previous calendar year.

[[Page 418]]

    (2) Assessment base calculation for custodial banks. A custodial 
bank shall pay deposit insurance assessments on its assessment base as 
calculated in paragraph (a) of this section, but the FDIC will exclude 
from that assessment base the daily or weekly average (depending on how 
the bank reports its average consolidated total assets) of all asset 
types described in the instructions to lines 1, 2, and 3 of Schedule RC 
of the Consolidated Report of Condition and Income with a standardized 
approach risk weight of 0 percent, regardless of maturity, plus 50 
percent of those asset types described in the instructions to lines 1, 
2, and 3 of Schedule RC of the Consolidated Report of Condition and 
Income, with a standardized approach risk-weight greater than 0 and up 
to and including 20 percent, regardless of maturity, subject to the 
limitation that the daily or weekly average (depending on how the bank 
reports its average consolidated total assets) value of all assets that 
serve as the basis for a deduction under this section cannot exceed the 
daily or weekly average value of those deposits that are classified as 
transaction accounts in the instructions to Schedule RC-E of the 
Consolidated Report of Condition and Income and that are identified by 
the institution as being directly linked to a fiduciary or custodial and 
safekeeping account asset.
    (d) Assessment base for insured branches of foreign banks. Average 
consolidated total assets for an insured branch of a foreign bank are 
defined as total assets of the branch (including net due from related 
depository institutions) in accordance with the schedule of assets and 
liabilities in the Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Banks as of the assessment period for which the 
assessment is being calculated, but measured using the definition for 
reporting total assets in the schedule of quarterly averages in the 
Consolidated Reports of Condition and Income, and calculated using the 
appropriate daily or weekly averaging method under paragraph (a)(1)(i) 
or (ii) of this section. Tangible equity for an insured branch of a 
foreign bank is eligible assets (determined in accordance with Sec.  
347.210 of the FDIC's regulations) less the book value of liabilities 
(exclusive of liabilities due to the foreign bank's head office, other 
branches, agencies, offices, or wholly owned subsidiaries) calculated on 
a monthly or end-of-quarter basis, according to the branch's size.
    (e) Newly insured institutions. A newly insured institution shall 
pay an assessment for the assessment period during which it became 
insured. The FDIC will prorate the newly insured institution's 
assessment amount to reflect the number of days it was insured during 
the period.

[76 FR 10704, Feb. 25, 2011, as amended at 79 FR 70437, Nov. 26, 2014]



Sec.  327.6  Mergers and consolidations; other terminations of insurance.

    (a) Final quarterly certified invoice for acquired institution. An 
institution that is not the resulting or surviving institution in a 
merger or consolidation must file a report of condition for every 
assessment period prior to the assessment period in which the merger or 
consolidation occurs. The surviving or resulting institution shall be 
responsible for ensuring that these reports of condition are filed and 
shall be liable for any unpaid assessments on the part of the 
institution that is not the resulting or surviving institution.
    (b) Assessment for quarter in which the merger or consolidation 
occurs. For an assessment period in which a merger or consolidation 
occurs, consolidated total assets for the surviving or resulting 
institution shall include the consolidated total assets of all insured 
depository institutions that are parties to the merger or consolidation 
as if the merger or consolidation occurred on the first day of the 
assessment period. Tier 1 capital shall be reported in the same manner.
    (c) Other termination. When the insured status of an institution is 
terminated, and the deposit liabilities of such institution are not 
assumed by another insured depository institution--
    (1) Payment of assessments; quarterly certified statement invoices. 
The depository institution whose insured status is terminating shall 
continue to file and certify its quarterly certified statement invoice 
and pay assessments for

[[Page 419]]

the assessment period its deposits are insured. Such institution shall 
not be required to certify its quarterly certified statement invoice and 
pay further assessments after it has paid in full its deposit 
liabilities and the assessment to the Corporation required to be paid 
for the assessment period in which its deposit liabilities are paid in 
full, and after it, under applicable law, goes out of business or 
transfers all or substantially all of its assets and liabilities to 
other institutions or otherwise ceases to be obliged to pay subsequent 
assessments.
    (2) Payment of deposits; certification to Corporation. When the 
deposit liabilities of the depository institution have been paid in 
full, the depository institution shall certify to the Corporation that 
the deposit liabilities have been paid in full and give the date of the 
final payment. When the depository institution has unclaimed deposits, 
the certification shall further state the amount of the unclaimed 
deposits and the disposition made of the funds to be held to meet the 
claims. For assessment purposes, the following will be considered as 
payment of the unclaimed deposits:
    (i) The transfer of cash funds in an amount sufficient to pay the 
unclaimed and unpaid deposits to the public official authorized by law 
to receive the same; or
    (ii) If no law provides for the transfer of funds to a public 
official, the transfer of cash funds or compensatory assets to an 
insured depository institution in an amount sufficient to pay the 
unclaimed and unpaid deposits in consideration for the assumption of the 
deposit obligations by the insured depository institution.
    (3) Notice to depositors. (i) The depository institution whose 
insured status is terminating shall give sufficient advance notice of 
the intended transfer to the owners of the unclaimed deposits to enable 
the depositors to obtain their deposits prior to the transfer. The 
notice shall be mailed to each depositor and shall be published in a 
local newspaper of general circulation. The notice shall advise the 
depositors of the liquidation of the depository institution, request 
them to call for and accept payment of their deposits, and state the 
disposition to be made of their deposits if they fail to promptly claim 
the deposits.
    (ii) If the unclaimed and unpaid deposits are disposed of as 
provided in paragraph (c)(2)(i) of this section, a certified copy of the 
public official's receipt issued for the funds shall be furnished to the 
Corporation.
    (iii) If the unclaimed and unpaid deposits are disposed of as 
provided in paragraph (c)(2)(ii) of this section, an affidavit of the 
publication and of the mailing of the notice to the depositors, together 
with a copy of the notice and a certified copy of the contract of 
assumption, shall be furnished to the Corporation.
    (4) Notice to Corporation. The depository institution whose insured 
status is terminating shall advise the Corporation of the date on which 
it goes out of business or transfers all or substantially all of its 
assets and liabilities to other institutions or otherwise ceases to be 
obligated to pay subsequent assessments and the method whereby the 
termination has been effected.
    (d) Resumption of insured status before insurance of deposits 
ceases. If a depository institution whose insured status has been 
terminated is permitted by the Corporation to continue or resume its 
status as an insured depository institution before the insurance of its 
deposits has ceased, the institution will be deemed, for assessment 
purposes, to continue as an insured depository institution and must 
thereafter file and certify its quarterly certified statement invoices 
and pay assessments as though its insured status had not been 
terminated. The procedure for applying for the continuance or resumption 
of insured status is set forth in Sec.  303.248 of this chapter.

[76 FR 10706, Feb. 25, 2011]



Sec.  327.7  Payment of interest on assessment underpayments and overpayments.

    (a) Payment of interest--(1) Payment by institutions. Each insured 
depository institution shall pay interest to the Corporation on any 
underpayment of the institution's assessment.

[[Page 420]]

    (2) Payment by Corporation. The Corporation will pay interest on any 
overpayment by the institution of its assessment.
    (3) Accrual of interest. (i) Interest on an amount owed to or by the 
Corporation for the underpayment or overpayment of an assessment shall 
accrue interest at the relevant interest rate.
    (ii) Interest on an amount specified in paragraph (a)(3)(i) of this 
section shall begin to accrue on the day following the regular payment 
date, as provided for in Sec.  327.3(b)(2), for the amount so overpaid 
or underpaid, provided, however, that interest shall not begin to accrue 
on any overpayment until the day following the date such overpayment was 
received by the Corporation. Interest shall continue to accrue through 
the date on which the overpayment or underpayment (together with any 
interest thereon) is discharged.
    (iii) The relevant interest rate shall be redetermined for each 
quarterly assessment interval. A quarterly assessment interval begins on 
the day following a regular payment date, as specified in Sec.  
327.3(b)(2), and ends on the immediately following regular payment date.
    (b) Interest rates. (1) The relevant interest rate for a quarterly 
assessment interval that includes the month of January, April, July, and 
October, respectively, is the coupon equivalent yield of the average 
discount rate set on the 3-month Treasury bill at the last auction held 
by the United States Treasury Department during the preceding December, 
March, June, and September, respectively.
    (2) The relevant interest rate for a quarterly assessment interval 
will apply to any amounts overpaid or underpaid on the payment date 
immediately prior to the beginning of the quarterly assessment interval. 
The relevant interest rate will also apply to any amounts owed for 
previous overpayments or underpayments (including any interest thereon) 
that remain outstanding, after any adjustments to such overpayments or 
underpayments have been made thereon, at the end of the regular payment 
date immediately prior to the beginning of the quarterly assessment 
interval. Interest will be compounded daily.



Sec.  327.8  Definitions.

    For the purpose of this part 327:
    (a) Deposits. The term deposit has the meaning specified in section 
3(l) of the Federal Deposit Insurance Act.
    (b) Quarterly report of condition. The term quarterly report of 
condition means a report required to be filed pursuant to section 
7(a)(3) of the Federal Deposit Insurance Act.
    (c) Assessment period--In general. The term assessment period means 
a period beginning on January 1 of any calendar year and ending on March 
31 of the same year, or a period beginning on April 1 of any calendar 
year and ending on June 30 of the same year; or a period beginning on 
July 1 of any calendar year and ending on September 30 of the same year; 
or a period beginning on October 1 of any calendar year and ending on 
December 31 of the same year.
    (d) Acquiring institution. The term acquiring institution means an 
insured depository institution that assumes some or all of the deposits 
of another insured depository institution in a terminating transfer.
    (e) Small institution. An insured depository institution with assets 
of less than $10 billion as of December 31, 2006, and an insured branch 
of a foreign institution shall be classified as a small institution. If, 
after December 31, 2006, an institution classified as large under 
paragraph (f) of this section (other than an institution classified as 
large for purposes of Sec. Sec.  327.9(e) and 327.16(f)) reports assets 
of less than $10 billion in its quarterly reports of condition for four 
consecutive quarters, the FDIC will reclassify the institution as small 
beginning the following quarter.
    (f) Large institution. An institution classified as large for 
purposes of Sec. Sec.  327.9(e) and 327.16(f) or an insured depository 
institution with assets of $10 billion or more as of December 31, 2006 
(other than an insured branch of a foreign bank or a highly complex 
institution) shall be classified as a large institution. If, after 
December 31, 2006, an institution classified as small under

[[Page 421]]

paragraph (e) of this section reports assets of $10 billion or more in 
its quarterly reports of condition for four consecutive quarters, the 
FDIC will reclassify the institution as large beginning the following 
quarter.
    (g) Highly complex institution. (1) A highly complex institution is:
    (i) An insured depository institution (excluding a credit card bank) 
that has had $50 billion or more in total assets for at least four 
consecutive quarters that is controlled by a U.S. parent holding company 
that has had $500 billion or more in total assets for four consecutive 
quarters, or controlled by one or more intermediate U.S. parent holding 
companies that are controlled by a U.S. holding company that has had 
$500 billion or more in assets for four consecutive quarters; or
    (ii) A processing bank or trust company.
    (2) Control has the same meaning as in section 3(w)(5) of the FDI 
Act. A U.S. parent holding company is a parent holding company 
incorporated or organized under the laws of the United States or any 
State, as the term ``State'' is defined in section 3(a)(3) of the FDI 
Act. If, after December 31, 2010, an institution classified as highly 
complex under paragraph (g)(1)(i) of this section falls below $50 
billion in total assets in its quarterly reports of condition for four 
consecutive quarters, or its parent holding company or companies fall 
below $500 billion in total assets for four consecutive quarters, the 
FDIC will reclassify the institution beginning the following quarter. 
If, after December 31, 2010, an institution classified as highly complex 
under paragraph (a)(1)(ii) of this section falls below $10 billion in 
total assets for four consecutive quarters, the FDIC will reclassify the 
institution beginning the following quarter.
    (h) CAMELS composite and CAMELS component ratings. The terms CAMELS 
composite ratings and CAMELS component ratings shall have the same 
meaning as in the Uniform Financial Institutions Rating System as 
published by the Federal Financial Institutions Examination Council.
    (i) ROCA supervisory ratings. ROCA supervisory ratings rate risk 
management, operational controls, compliance, and asset quality.
    (j) New depository institution. A new insured depository institution 
is a bank or savings association that has been federally insured for 
less than five years as of the last day of any quarter for which it is 
being assessed.
    (k) Established depository institution. An established insured 
depository institution is a bank or savings association that has been 
federally insured for at least five years as of the last day of any 
quarter for which it is being assessed.
    (1) Merger or consolidation involving new and established 
institution(s). Subject to paragraphs (k)(2), (3), (4), and (5) of this 
section and Sec. Sec.  327.9(f)(3) and (4) and 327.16 (g)(3) and (4), 
when an established institution merges into or consolidates with a new 
institution, the resulting institution is a new institution unless:
    (i) The assets of the established institution, as reported in its 
report of condition for the quarter ending immediately before the 
merger, exceeded the assets of the new institution, as reported in its 
report of condition for the quarter ending immediately before the 
merger; and
    (ii) Substantially all of the management of the established 
institution continued as management of the resulting or surviving 
institution.
    (2) Consolidation involving established institutions. When 
established institutions consolidate, the resulting institution is an 
established institution.
    (3) Grandfather exception. If a new institution merges into an 
established institution, and the merger agreement was entered into on or 
before July 11, 2006, the resulting institution shall be deemed to be an 
established institution for purposes of this part.
    (4) Subsidiary exception. Subject to paragraph (k)(5) of this 
section, a new institution will be considered established if it is a 
wholly owned subsidiary of:
    (i) A company that is a bank holding company under the Bank Holding 
Company Act of 1956 or a savings and loan holding company under the Home 
Owners' Loan Act, and:
    (A) At least one eligible depository institution (as defined in 12 
CFR

[[Page 422]]

303.2(r)) that is owned by the holding company has been chartered as a 
bank or savings association for at least five years as of the date that 
the otherwise new institution was established; and
    (B) The holding company has a composite rating of at least ``2'' for 
bank holding companies or an above average or ``A'' rating for savings 
and loan holding companies and at least 75 percent of its insured 
depository institution assets are assets of eligible depository 
institutions, as defined in 12 CFR 303.2(r); or
    (ii) An eligible depository institution, as defined in 12 CFR 
303.2(r), that has been chartered as a bank or savings association for 
at least five years as of the date that the otherwise new institution 
was established.
    (5) Effect of credit union conversion. In determining whether an 
insured depository institution is new or established, the FDIC will 
include any period of time that the institution was a federally insured 
credit union.
    (l) Risk assignment. Under Sec.  327.9, for all small institutions 
and insured branches of foreign banks, risk assignment includes 
assignment to Risk Category I, II, III, or IV and, within Risk Category 
I, assignment to an assessment rate. Under Sec.  327.16, for all new 
small institutions and insured branches of foreign banks, risk 
assignment includes assignment to Risk Category I, II, III, or IV, and 
for insured branches of foreign banks within Risk Category I, assignment 
to an assessment rate or rates. For all established small institutions, 
and all large institutions and all highly complex institutions, risk 
assignment includes assignment to an assessment rate.
    (m) Unsecured debt--For purposes of the unsecured debt adjustment as 
set forth in Sec. Sec.  327.9(d)(1) and 327.16(e)(1) and the depository 
institution debt adjustment as set forth in Sec. Sec.  327.9(d)(2) and 
327.16(e)(2), unsecured debt shall include senior unsecured liabilities 
and subordinated debt.
    (n) Senior unsecured liability--For purposes of the unsecured debt 
adjustment as set forth in Sec. Sec.  327.9(d)(1) and 327.16(e)(1) and 
the depository institution debt adjustment as set forth in Sec. Sec.  
327.9(d)(2) and 327.16(e)(2), senior unsecured liabilities shall be the 
unsecured portion of other borrowed money as defined in the quarterly 
report of condition for the reporting period as defined in paragraph (b) 
of this section, but shall not include any senior unsecured debt that 
the FDIC has guaranteed under the Temporary Liquidity Guarantee Program, 
12 CFR part 370.
    (o) Subordinated debt--For purposes of the unsecured debt adjustment 
as set forth in Sec. Sec.  327.9(d)(1) and 327.16(e)(1) and the 
depository institution debt adjustment as set forth in Sec. Sec.  
327.9(d)(2) and 327.16(e)(2), subordinated debt shall be as defined in 
the quarterly report of condition for the reporting period; however, 
subordinated debt shall also include limited-life preferred stock as 
defined in the quarterly report of condition for the reporting period.
    (p) Long-term unsecured debt--For purposes of the unsecured debt 
adjustment as set forth in Sec. Sec.  327.9(d)(1) and 327.16(e)(1)and 
the depository institution debt adjustment as set forth in Sec. Sec.  
327.9(d)(2) and 327.16(e)(2), long-term unsecured debt shall be 
unsecured debt with at least one year remaining until maturity; however, 
any such debt where the holder of the debt has a redemption option that 
is exercisable within one year of the reporting date shall not be deemed 
long-term unsecured debt.
    (q) Reciprocal deposits--Deposits that an insured depository 
institution receives through a deposit placement network on a reciprocal 
basis, such that: (1) for any deposit received, the institution (as 
agent for depositors) places the same amount with other insured 
depository institutions through the network; and (2) each member of the 
network sets the interest rate to be paid on the entire amount of funds 
it places with other network members.
    (r) Parent holding company--A parent holding company has the same 
meaning as ``depository institution holding company,'' as defined in 
Sec.  3(w) of the FDI Act.
    (s) Processing bank or trust company--A processing bank or trust 
company is an institution whose last three years' non-lending interest 
income, fiduciary revenues, and investment banking fees, combined, 
exceed 50 percent of total revenues (and its last three years fiduciary 
revenues are non-zero), and

[[Page 423]]

whose total fiduciary assets total $500 billion or more, and whose total 
assets for at least four consecutive quarters have been $10 billion or 
more.
    (t) Credit card bank--A credit card bank is a bank for which credit 
card receivables plus securitized receivables exceed 50 percent of 
assets plus securitized receivables.
    (u) Control--Control has the same meaning as in section 2 of the 
Bank Holding Company Act of 1956, 12 U.S.C. 1841(a)(2).
    (v) Established small institution. An established small institution 
is a ``small institution'' as defined under paragraph (e) of this 
section that meets the definition of ``established depository 
institution'' under paragraph (k) of this section.
    (w) New small institution. A new small institution is a ``small 
institution'' as defined under paragraph (e) of this section that meets 
the definition of ``new depository institution'' under paragraph (j) of 
this section.
    (x) Deposit Insurance Fund and DIF. The Deposit Insurance Fund as 
defined in 12 U.S.C. 1813(y)(1).
    (y) Reserve ratio of the DIF. The reserve ratio as defined in 12 
U.S.C. 1813(y)(3).
    (z) Well capitalized, adequately capitalized and undercapitalized. 
For any insured depository institution other than an insured branch of a 
foreign bank, Well Capitalized, Adequately Capitalized and 
Undercapitalized have the same meaning as in: 12 CFR 6.4 (for national 
banks and federal savings associations), as either may be amended from 
time to time, except that 12 CFR 6.4(c)(1)(v) and (e), as they may be 
amended from time to time, shall not apply; 12 CFR 208.43 (for state 
member institutions), as either may be amended from time to time, except 
that 12 CFR 208.43(b)(1)(v) and (c), as they may be amended from time to 
time, shall not apply; and 12 CFR 324.403 (for state nonmember 
institutions and state savings associations), as either may be amended 
from time to time, except that 12 CFR 324.403(b)(1)(v) and (d), as they 
may be amended from time to time, shall not apply.

[54 FR 51374, Dec. 15, 1989, as amended at 74 FR 9551, Mar. 4, 2009; 76 
FR 10707, Feb. 25, 2011; 81 FR 32201, May 20, 2016; 83 FR 14568, Apr. 5, 
2018]



Sec.  327.9  Assessment pricing methods.

     The following pricing methods shall apply through the later of June 
30, 2016, or the subsequent calendar quarter in which the reserve ratio 
of the DIF reaches 1.15 percent.
    (a) Small institutions--(1) Risk Categories. Each small insured 
depository institution shall be assigned to one of the following four 
Risk Categories based upon the institution's capital evaluation and 
supervisory evaluation as defined in this section.
    (i) Risk Category I. Small institutions in Supervisory Group A that 
are Well Capitalized will be assigned to Risk Category I.
    (ii) Risk Category II. Small institutions in Supervisory Group A 
that are Adequately Capitalized, and small institutions in Supervisory 
Group B that are either Well Capitalized or Adequately Capitalized will 
be assigned to Risk Category II.
    (iii) Risk Category III. Small institutions in Supervisory Groups A 
and B that are Undercapitalized, and small institutions in Supervisory 
Group C that are Well Capitalized or Adequately Capitalized will be 
assigned to Risk Category III.
    (iv) Risk Category IV. Small institutions in Supervisory Group C 
that are Undercapitalized will be assigned to Risk Category IV.
    (2) Capital evaluations. Each small institution will receive one of 
the following three capital evaluations on the basis of data reported in 
the institution's Consolidated Reports of Condition and Income or Thrift 
Financial Report (or successor report, as appropriate) dated as of March 
31 for the assessment period beginning the preceding January 1; dated as 
of June 30 for the assessment period beginning the preceding April 1; 
dated as of September 30 for the assessment period beginning the 
preceding July 1; and dated as of December 31 for the assessment period 
beginning the preceding October 1.

[[Page 424]]

    (i) Well Capitalized. A Well Capitalized institution is one that 
satisfies each of the following capital ratio standards: Total risk-
based capital ratio, 10.0 percent or greater; tier 1 risk-based capital 
ratio, 8.0 percent or greater; leverage ratio, 5.0 percent or greater; 
common equity tier 1 capital ratio, 6.5 percent or greater; and, if the 
institution is an insured depository institution subject to the enhanced 
supplementary leverage ratio standards under 12 CFR 6.4(c)(1)(iv)(B), 12 
CFR 208.43(c)(2)(iv)(B), or 12 CFR 324.403(b)(1)(v), as each may be 
amended from time to time, a supplementary leverage ratio of 6.0 percent 
or greater.
    (ii) Adequately Capitalized. An Adequately Capitalized institution 
is one that does not satisfy the standards of Well Capitalized in 
paragraph (a)(2)(i) of this section but satisfies each of the following 
capital ratio standards: Total risk-based capital ratio, 8.0 percent or 
greater; tier 1 risk-based capital ratio, 6.0 percent or greater; 
leverage ratio, 4.0 percent or greater; common equity tier 1 capital 
ratio, 4.5 percent or greater; and, if the institution is subject to the 
advanced approaches risk-based capital rules under 12 CFR 
6.4(c)(2)(iv)(B), 12 CFR 208.43(c)(2)(iv)(B), or 12 CFR 
324.403(b)(2)(vi), as each may be amended from time to time, a 
supplementary leverage ratio of 3.0 percent or greater.
    (iii) Undercapitalized. An undercapitalized institution is one that 
does not qualify as either Well Capitalized or Adequately Capitalized 
under paragraphs (a)(2)(i) and (ii) of this section.
    (3) Supervisory evaluations. Each small institution will be assigned 
to one of three Supervisory Groups based on the Corporation's 
consideration of supervisory evaluations provided by the institution's 
primary federal regulator. The supervisory evaluations include the 
results of examination findings by the primary federal regulator, as 
well as other information that the primary federal regulator determines 
to be relevant. In addition, the Corporation will take into 
consideration such other information (such as state examination 
findings, as appropriate) as it determines to be relevant to the 
institution's financial condition and the risk posed to the Deposit 
Insurance Fund. The three Supervisory Groups are:
    (i) Supervisory Group ``A.'' This Supervisory Group consists of 
financially sound institutions with only a few minor weaknesses;
    (ii) Supervisory Group ``B.'' This Supervisory Group consists of 
institutions that demonstrate weaknesses which, if not corrected, could 
result in significant deterioration of the institution and increased 
risk of loss to the Deposit Insurance Fund; and
    (iii) Supervisory Group ``C.'' This Supervisory Group consists of 
institutions that pose a substantial probability of loss to the Deposit 
Insurance Fund unless effective corrective action is taken.
    (4) Financial ratios method. A small insured depository institution 
in Risk Category I shall have its initial base assessment rate 
determined using the financial ratios method.
    (i) Under the financial ratios method, each of six financial ratios 
and a weighted average of CAMELS component ratings will be multiplied by 
a corresponding pricing multiplier. The sum of these products will be 
added to a uniform amount. The resulting sum shall equal the 
institution's initial base assessment rate; provided, however, that no 
institution's initial base assessment rate shall be less than the 
minimum initial base assessment rate in effect for Risk Category I 
institutions for that quarter nor greater than the maximum initial base 
assessment rate in effect for Risk Category I institutions for that 
quarter. An institution's initial base assessment rate, subject to 
adjustment pursuant to paragraphs (d)(1), (2), and (3) of this section, 
as appropriate (resulting in the institution's total base assessment 
rate, which in no case can be lower than 50 percent of the institution's 
initial base assessment rate), and adjusted for the actual assessment 
rates set by the Board under Sec.  327.10(f), will equal an 
institution's assessment rate. The six financial ratios are: Leverage 
ratio; Loans past due 30-89 days/gross assets; Nonperforming assets/
gross assets; Net loan charge-offs/gross assets; Net income before 
taxes/risk-weighted assets; and the Adjusted brokered deposit ratio. The 
ratios are defined in Table

[[Page 425]]

A.1 of Appendix A to this subpart. The ratios will be determined for an 
assessment period based upon information contained in an institution's 
report of condition filed as of the last day of the assessment period as 
set out in paragraph (a)(2) of this section. The weighted average of 
CAMELS component ratings is created by multiplying each component by the 
following percentages and adding the products: Capital adequacy--25%, 
Asset quality--20%, Management--25%, Earnings--10%, Liquidity--10%, and 
Sensitivity to market risk--10%. The following table sets forth the 
initial values of the pricing multipliers:

------------------------------------------------------------------------
                                                               Pricing
                      Risk measures *                        multipliers
                                                                  **
------------------------------------------------------------------------
Leverage ratio.............................................     (0.056)
Loans Past Due 30-89 Days/Gross Assets.....................       0.575
Nonperforming Assets/Gross Assets..........................       1.074
Net Loan Charge-Offs/Gross Assets..........................       1.210
Net Income before Taxes/Risk-Weighted Assets...............     (0.764)
Adjusted brokered deposit ratio............................       0.065
Weighted Average CAMELS Component Rating...................       1.095
------------------------------------------------------------------------
* Ratios are expressed as percentages.
** Multipliers are rounded to three decimal places.

    (ii) The six financial ratios and the weighted average CAMELS 
component rating will be multiplied by the respective pricing 
multiplier, and the products will be summed. To this result will be 
added the uniform amount. The resulting sum shall equal the 
institution's initial base assessment rate; provided, however, that no 
institution's initial base assessment rate shall be less than the 
minimum initial base assessment rate in effect for Risk Category I 
institutions for that quarter nor greater than the maximum initial base 
assessment rate in effect for Risk Category I institutions for that 
quarter.
    (iii) Uniform amount and pricing multipliers. Except as adjusted for 
the actual assessment rates set by the Board under Sec.  327.10(f), the 
uniform amount shall be:
    (A) 4.861 whenever the assessment rate schedule set forth in Sec.  
327.10(a) is in effect;
    (B) 2.861 whenever the assessment rate schedule set forth in Sec.  
327.10(b) is in effect;
    (C) 1.861 whenever the assessment rate schedule set forth in Sec.  
327.10(c) is in effect; or
    (D) 0.861 whenever the assessment rate schedule set forth in Sec.  
327.10(d) is in effect.
    (iv) Implementation of CAMELS rating changes--(A) Changes between 
risk categories. If, during a quarter, a CAMELS composite rating change 
occurs that results in a Risk Category I institution moving from Risk 
Category I to Risk Category II, III or IV, the institution's initial 
base assessment rate for the portion of the quarter that it was in Risk 
Category I shall be determined using the supervisory ratings in effect 
before the change and the financial ratios as of the end of the quarter, 
subject to adjustment pursuant to paragraphs (d)(1), (2), and (3) of 
this section, as appropriate, and adjusted for the actual assessment 
rates set by the Board under Sec.  327.10(f). For the portion of the 
quarter that the institution was not in Risk Category I, the 
institution's initial base assessment rate, which shall be subject to 
adjustment pursuant to paragraphs (d)(1), (2), and (3), shall be 
determined under the assessment schedule for the appropriate Risk 
Category. If, during a quarter, a CAMELS composite rating change occurs 
that results in an institution moving from Risk Category II, III or IV 
to Risk Category I, then the financial ratios method shall apply for the 
portion of the quarter that it was in Risk Category I, subject to 
adjustment pursuant to paragraphs (d)(1), (2) and (3) of this section, 
as appropriate, and adjusted for the actual assessment rates set by the 
Board under Sec.  327.10(f). For the portion of the quarter that the 
institution was not in Risk Category I, the institution's initial base 
assessment rate, which shall be subject to adjustment pursuant to 
paragraphs (d)(1), (2), and (3) of this section shall be determined 
under the assessment schedule for the appropriate Risk Category.
    (B) Changes within Risk Category I. If, during a quarter, an 
institution's CAMELS component ratings change in a way that will change 
the institution's initial base assessment rate within Risk Category I, 
the initial base assessment rate for the period before the change shall 
be determined under the financial ratios method using the CAMELS 
component ratings in effect before

[[Page 426]]

the change, subject to adjustment pursuant to paragraphs (d)(1), (2), 
and (3) of this section, as appropriate. Beginning on the date of the 
CAMELS component ratings change, the initial base assessment rate for 
the remainder of the quarter shall be determined using the CAMELS 
component ratings in effect after the change, again subject to 
adjustment pursuant to paragraphs (d)(1), (2), and (3) of this section, 
as appropriate.
    (b) Large and Highly Complex institutions--(1) Assessment scorecard 
for large institutions (other than highly complex institutions). (i) A 
large institution other than a highly complex institution shall have its 
initial base assessment rate determined using the scorecard for large 
institutions.

                    Scorecard for Large Institutions
------------------------------------------------------------------------
                                                     Measure   Component
                         Scorecard measures and      weights    weights
                               components           (percent)  (percent)
------------------------------------------------------------------------
P..................  Performance Score
P.1................  Weighted Average CAMELS           100         30
                      Rating.
P.2................  Ability to Withstand Asset-    .........      50
                      Related Stress.
                      Leverage ratio..............      10
                      Concentration Measure.......      35
                      Core Earnings/Average             20
                      Quarter-End Total Assets *.
                      Credit Quality Measure......      35
P.3................  Ability to Withstand Funding-  .........      20
                      Related Stress.
                      Core Deposits/Total               60
                      Liabilities.
                      Balance Sheet Liquidity           40
                      Ratio.
L..................  Loss Severity Score..........
L.1................  Loss Severity Measure........  .........     100
------------------------------------------------------------------------
* Average of five quarter-end total assets (most recent and four prior
  quarters)

    (ii) The scorecard for large institutions produces two scores: 
performance score and loss severity score.
    (A) Performance score for large institutions. The performance score 
for large institutions is a weighted average of the scores for three 
measures: the weighted average CAMELS rating score, weighted at 30 
percent; the ability to withstand asset-related stress score, weighted 
at 50 percent; and the ability to withstand funding-related stress 
score, weighted at 20 percent.
    (1) Weighted average CAMELS rating score. (i) To compute the 
weighted average CAMELS rating score, a weighted average of an 
institution's CAMELS component ratings is calculated using the following 
weights:
[GRAPHIC] [TIFF OMITTED] TR25FE11.006

    (ii) A weighted average CAMELS rating converts to a score that 
ranges from 25 to 100. A weighted average rating of 1 equals a score of 
25 and a weighted average of 3.5 or greater equals a score of 100. 
Weighted average CAMELS ratings between 1 and 3.5 are assigned a score 
between 25 and 100. The score increases at an increasing rate as the 
weighted average CAMELS rating increases. Appendix B of this subpart 
describes the conversion of a weighted average CAMELS rating to a score.

[[Page 427]]

    (2) Ability to withstand asset-related stress score. (i) The ability 
to withstand asset-related stress score is a weighted average of the 
scores for four measures: Leverage ratio; concentration measure; the 
ratio of core earnings to average quarter-end total assets; and the 
credit quality measure. Appendices A and C of this subpart define these 
measures.
    (ii) The Leverage ratio and the ratio of core earnings to average 
quarter-end total assets are described in appendix A and the method of 
calculating the scores is described in appendix C of this subpart.
    (iii) The score for the concentration measure is the greater of the 
higher-risk assets to Tier 1 capital and reserves score or the growth-
adjusted portfolio concentrations score. Both ratios are described in 
appendix C.
    (iv) The score for the credit quality measure is the greater of the 
criticized and classified items to Tier 1 capital and reserves score or 
the underperforming assets to Tier 1 capital and reserves score.
    (v) The following table shows the cutoff values and weights for the 
measures used to calculate the ability to withstand asset-related stress 
score. Appendix B of this subpart describes how each measure is 
converted to a score between 0 and 100 based upon the minimum and 
maximum cutoff values, where a score of 0 reflects the lowest risk and a 
score of 100 reflects the highest risk.

Cutoff Values and Weights for Measures To Calculate Ability To Withstand
                       Asset-Related Stress Score
------------------------------------------------------------------------
                                           Cutoff values
Measures of the ability to withstand ------------------------   Weights
        asset-related stress            Minimum     Maximum    (percent)
                                       (percent)   (percent)
------------------------------------------------------------------------
Leverage ratio......................           6          13          10
Concentration Measure...............  ..........  ..........          35
    Higher-Risk Assets to Tier 1               0         135
     Capital and Reserves; or.......
    Growth-Adjusted Portfolio                  4          56
     Concentrations.................
Core Earnings/Average Quarter-End              0           2          20
 Total Assets *.....................
Credit Quality Measure..............  ..........  ..........          35
    Criticized and Classified Items/           7         100
     Tier 1 Capital and Reserves; or
    Underperforming Assets/Tier 1              2          35
     Capital and Reserves...........
------------------------------------------------------------------------
* Average of five quarter-end total assets (most recent and four prior
  quarters).

    (vi) The score for each measure in the table in paragraph 
(b)(1)(ii)(A)(2)(v) is multiplied by its respective weight and the 
resulting weighted score is summed to arrive at the score for an ability 
to withstand asset-related stress, which can range from 0 to 100, where 
a score of 0 reflects the lowest risk and a score of 100 reflects the 
highest risk.
    (3) Ability to withstand funding-related stress score. Two measures 
are used to compute the ability to withstand funding-related stress 
score: a core deposits to total liabilities ratio, and a balance sheet 
liquidity ratio. Appendix A of this subpart describes these measures. 
Appendix B of this subpart describes how these measures are converted to 
a score between 0 and 100, where a score of 0 reflects the lowest risk 
and a score of 100 reflects the highest risk. The ability to withstand 
funding-related stress score is the weighted average of the scores for 
the two measures. In the following table, cutoff values and weights are 
used to derive an institution's ability to withstand funding-related 
stress score:

  Cutoff Values and Weights To Calculate Ability To Withstand Funding-
                          Related Stress Score
------------------------------------------------------------------------
                                           Cutoff values
Measures of the ability to withstand ------------------------   Weights
       funding-related stress           Minimum     Maximum    (percent)
                                       (percent)   (percent)
------------------------------------------------------------------------
Core Deposits/Total Liabilities.....           5          87          60
Balance Sheet Liquidity Ratio.......           7         243          40
------------------------------------------------------------------------


[[Page 428]]

    (4) Calculation of Performance Score. In paragraph (b)(1)(ii)(A)(3), 
the scores for the weighted average CAMELS rating, the ability to 
withstand asset-related stress, and the ability to withstand funding-
related stress are multiplied by their respective weights (30 percent, 
50 percent and 20 percent, respectively) and the results are summed to 
arrive at the performance score. The performance score cannot be less 
than 0 or more than 100, where a score of 0 reflects the lowest risk and 
a score of 100 reflects the highest risk.
    (B) Loss severity score. The loss severity score is based on a loss 
severity measure that is described in appendix D of this subpart. 
Appendix B also describes how the loss severity measure is converted to 
a score between 0 and 100. The loss severity score cannot be less than 0 
or more than 100, where a score of 0 reflects the lowest risk and a 
score of 100 reflects the highest risk. Cutoff values for the loss 
severity measure are:

             Cutoff Values To Calculate Loss Severity Score
------------------------------------------------------------------------
                                                        Cutoff values
                                                   ---------------------
             Measure of loss severity                Minimum    Maximum
                                                    (percent)  (percent)
------------------------------------------------------------------------
Loss Severity.....................................          0         28
------------------------------------------------------------------------

    (C) Total Score. The performance and loss severity scores are 
combined to produce a total score. The loss severity score is converted 
into a loss severity factor that ranges from 0.8 (score of 5 or lower) 
to 1.2 (score of 85 or higher). Scores at or below the minimum cutoff of 
5 receive a loss severity factor of 0.8, and scores at or above the 
maximum cutoff of 85 receive a loss severity factor of 1.2. The 
following linear interpolation converts loss severity scores between the 
cutoffs into a loss severity factor:

(Loss Severity Factor = 0.8 + [0.005 * (Loss Severity Score - 5)].


The performance score is multiplied by the loss severity factor to 
produce a total score (total score = performance score * loss severity 
factor). The total score can be up to 20 percent higher or lower than 
the performance score but cannot be less than 30 or more than 90. The 
total score is subject to adjustment, up or down, by a maximum of 15 
points, as set forth in paragraph (b)(3) of this section. The resulting 
total score after adjustment cannot be less than 30 or more than 90.
    (D) Initial base assessment rate. A large institution with a total 
score of 30 pays the minimum initial base assessment rate and an 
institution with a total score of 90 pays the maximum initial base 
assessment rate. For total scores between 30 and 90, initial base 
assessment rates rise at an increasing rate as the total score 
increases, calculated according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR25FE11.007


where Rate is the initial base assessment rate (expressed in basis 
points), Maximum Rate is the maximum initial base assessment rate then 
in effect (expressed in basis points), and Minimum Rate is the minimum 
initial base assessment rate then in effect (expressed in basis points). 
Initial base assessment rates are subject to adjustment pursuant to 
paragraphs (b)(3), (d)(1), (d)(2), of this section; large institutions 
that are not well capitalized or have a CAMELS composite rating of 3, 4 
or 5 shall be subject to the adjustment at paragraph (d)(3); these 
adjustments shall result in the institution's total base assessment 
rate, which in no case can be lower than 50 percent of the institution's 
initial base assessment rate.
    (2) Assessment scorecard for highly complex institutions. (i) A 
highly complex institution shall have its initial base assessment rate 
determined using the scorecard for highly complex institutions.

[[Page 429]]



                Scorecard for Highly Complex Institutions
------------------------------------------------------------------------
                                                     Measure   Component
                        Measures and components      weights    weights
                                                    (percent)  (percent)
------------------------------------------------------------------------
P..................  Performance Score
P.1................  Weighted Average CAMELS           100         30
                      Rating.
P.2................  Ability To Withstand Asset-    .........      50
                      Related Stress.
                      Leverage ratio..............      10
                      Concentration Measure.......      35
                      Core Earnings/Average             20
                      Quarter-End Total Assets.
                      Credit Quality Measure and        35
                      Market Risk Measure.
P.3................  Ability To Withstand Funding-  .........      20
                      Related Stress.
                      Core Deposits/Total               50
                      Liabilities.
                      Balance Sheet Liquidity           30
                      Ratio.
                      Average Short-Term Funding/       20
                      Average Total Assets.
L..................  Loss Severity Score..........  .........
L.1................  Loss Severity................  .........     100
------------------------------------------------------------------------

    (ii) The scorecard for highly complex institutions produces two 
scores: performance and loss severity.
    (A) Performance score for highly complex institutions. The 
performance score for highly complex institutions is the weighted 
average of the scores for three components: weighted average CAMELS 
rating, weighted at 30 percent; ability to withstand asset-related 
stress score, weighted at 50 percent; and ability to withstand funding-
related stress score, weighted at 20 percent.
    (1) Weighted average CAMELS rating score. (i) To compute the score 
for the weighted average CAMELS rating, a weighted average of an 
institution's CAMELS component ratings is calculated using the following 
weights:
[GRAPHIC] [TIFF OMITTED] TR25FE11.008

    (ii) A weighted average CAMELS rating converts to a score that 
ranges from 25 to 100. A weighted average rating of 1 equals a score of 
25 and a weighted average of 3.5 or greater equals a score of 100. 
Weighted average CAMELS ratings between 1 and 3.5 are assigned a score 
between 25 and 100. The score increases at an increasing rate as the 
weighted average CAMELS rating increases. Appendix B of this subpart 
describes the conversion of a weighted average CAMELS rating to a score.
    (2) Ability to withstand asset-related stress score. (i) The ability 
to withstand asset-related stress score is a weighted average of the 
scores for four measures: Leverage ratio; concentration measure; ratio 
of core earnings to average quarter-end total assets; credit quality 
measure and market risk measure. Appendix A of this subpart describes 
these measures.
    (ii) The Leverage ratio and the ratio of core earnings to average 
quarter-end total assets are described in appendix A and the method of 
calculating the scores is described in appendix B of this subpart.
    (iii) The score for the concentration measure for highly complex 
institutions is the greatest of the higher-risk assets to the sum of 
Tier 1 capital and reserves score, the top 20 counterparty exposure to 
the sum of Tier 1 capital and reserves score, or the largest 
counterparty exposure to the sum of

[[Page 430]]

Tier 1 capital and reserves score. Each ratio is described in appendix A 
of this subpart. The method used to convert the concentration measure 
into a score is described in appendix C of this subpart.
    (iv) The credit quality score is the greater of the criticized and 
classified items to Tier 1 capital and reserves score or the 
underperforming assets to Tier 1 capital and reserves score. The market 
risk score is the weighted average of three scores--the trading revenue 
volatility to Tier 1 capital score, the market risk capital to Tier 1 
capital score, and the level 3 trading assets to Tier 1 capital score. 
All of these ratios are described in appendix A of this subpart and the 
method of calculating the scores is described in appendix B. Each score 
is multiplied by its respective weight, and the resulting weighted score 
is summed to compute the score for the market risk measure. An overall 
weight of 35 percent is allocated between the scores for the credit 
quality measure and market risk measure. The allocation depends on the 
ratio of average trading assets to the sum of average securities, loans 
and trading assets (trading asset ratio) as follows:
    (v) Weight for credit quality score = 35 percent * (1--trading asset 
ratio); and,
    (vi) Weight for market risk score = 35 percent * trading asset 
ratio.
    (vii) Each of the measures used to calculate the ability to 
withstand asset-related stress score is assigned the following cutoff 
values and weights:

     Cutoff Values and Weights for Measures To Calculate the Ability To Withstand Asset-Related Stress Score
----------------------------------------------------------------------------------------------------------------
                                                  Cutoff values
 Measures of the ability to withstand asset- ----------------------  Market risk
               related stress                  Minimum    Maximum      measure           Weights (percent)
                                              (percent)  (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
Leverage ratio..............................          6         13  ............  10.
Concentration Measure.......................  .........  .........  ............  35.
    Higher Risk Assets/Tier 1 Capital and             0        135  ............
     Reserves;.
    Top 20 Counterparty Exposure/Tier 1               0        125  ............
     Capital and Reserves; or.
    Largest Counterparty Exposure/Tier 1              0         20  ............
     Capital and Reserves.
Core Earnings/Average Quarter-end Total               0          2  ............  20.
 Assets.
Credit Quality Measure *....................  .........  .........  ............  35 * (1 - Trading Asset
                                                                                   Ratio).
    Criticized and Classified Items to Tier           7        100  ............
     1 Capital and Reserves; or.
    Underperforming Assets/Tier 1 Capital             2         35  ............
     and Reserves.
Market Risk Measure *.......................  .........  .........  ............  35 * Trading Asset Ratio.
    Trading Revenue Volatility/Tier 1                 0          2            60  ..............................
     Capital.
    Market Risk Capital/Tier 1 Capital......          0         10            20  ..............................
    Level 3 Trading Assets/Tier 1 Capital...          0         35            20  ..............................
----------------------------------------------------------------------------------------------------------------
* Combined, the credit quality measure and the market risk measure are assigned a 35 percent weight. The
  relative weight of each of the two scores depends on the ratio of average trading assets to the sum of average
  securities, loans and trading assets (trading asset ratio).

    (viii) [Reserved]
    (ix) The score of each measure is multiplied by its respective 
weight and the resulting weighted score is summed to compute the ability 
to withstand asset-related stress score, which can range from 0 to 100, 
where a score of 0 reflects the lowest risk and a score of 100 reflects 
the highest risk.
    (3) Ability to withstand funding related stress score. Three 
measures are used to calculate the score for the ability to withstand 
funding-related stress: a core deposits to total liabilities ratio, a 
balance sheet liquidity ratio, and average short-term funding to average 
total assets ratio. Appendix A of this subpart describes these ratios. 
Appendix B of this subpart describes how each measure is converted to a 
score.

[[Page 431]]

The ability to withstand funding-related stress score is the weighted 
average of the scores for the three measures. In the following table, 
cutoff values and weights are used to derive an institution's ability to 
withstand funding-related stress score:

  Cutoff Values and Weights To Calculate Ability To Withstand Funding-
                         Related Stress Measures
------------------------------------------------------------------------
                                             Cutoff values
  Measures of the ability to withstand  ----------------------  Weights
         funding-related stress           Minimum    Maximum   (percent)
                                         (percent)  (percent)
------------------------------------------------------------------------
Core Deposits/Total Liabilities........          5         87         50
Balance Sheet Liquidity Ratio..........          7        243         30
Average Short-term Funding/Average               2         19         20
 Total Assets..........................
------------------------------------------------------------------------

    (4) Calculation of Performance Score. The weighted average CAMELS 
score, the ability to withstand asset-related stress score, and the 
ability to withstand funding-related stress score are multiplied by 
their respective weights (30 percent, 50 percent and 20 percent, 
respectively) and the results are summed to arrive at the performance 
score, which cannot be less than 0 or more than 100.
    (B) Loss severity score. The loss severity score is based on a loss 
severity measure described in appendix D of this subpart. Appendix B of 
this subpart also describes how the loss severity measure is converted 
to a score between 0 and 100. Cutoff values for the loss severity 
measure are:

                 Cutoff Values for Loss Severity Measure
------------------------------------------------------------------------
                                                        Cutoff values
                                                   ---------------------
             Measure of loss severity                Minimum    Maximum
                                                    (percent)  (percent)
------------------------------------------------------------------------
Loss Severity.....................................          0         28
------------------------------------------------------------------------

    (C) Total Score. The performance and loss severity scores are 
combined to produce a total score. The loss severity score is converted 
into a loss severity factor that ranges from 0.8 (score of 5 or lower) 
to 1.2 (score of 85 or higher). Scores at or below the minimum cutoff of 
5 receive a loss severity factor of 0.8, and scores at or above the 
maximum cutoff of 85 receive a loss severity factor of 1.2. The 
following linear interpolation converts loss severity scores between the 
cutoffs into a loss severity factor: (Loss Severity Factor = 0.8 + 
[0.005 * (Loss Severity Score - 5)]. The performance score is multiplied 
by the loss severity factor to produce a total score (total score = 
performance score * loss severity factor). The total score can be up to 
20 percent higher or lower than the performance score but cannot be less 
than 30 or more than 90. The total score is subject to adjustment, up or 
down, by a maximum of 15 points, as set forth in paragraph (b)(3) of 
this section. The resulting total score after adjustment cannot be less 
than 30 or more than 90.
    (D) Initial base assessment rate. A highly complex institution with 
a total score of 30 pays the minimum initial base assessment rate and an 
institution with a total score of 90 pays the maximum initial base 
assessment rate. For total scores between 30 and 90, initial base 
assessment rates rise at an increasing rate as the total score 
increases, calculated according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR25FE11.009


where Rate is the initial base assessment rate (expressed in basis 
points), Maximum Rate is the maximum initial base assessment rate then 
in effect (expressed in basis points), and Minimum Rate is the minimum 
initial base assessment rate then in effect (expressed in basis points). 
Initial base assessment rates are subject to adjustment pursuant to 
paragraphs (b)(3), (d)(1), and

[[Page 432]]

(d)(2) of this section; highly complex institutions that are not well 
capitalized or have a CAMELS composite rating of 3, 4 or 5 shall be 
subject to the adjustment at paragraph (d)(3); these adjustments shall 
result in the institution's total base assessment rate, which in no case 
can be lower than 50 percent of the institution's initial base 
assessment rate.
    (3) Adjustment to total score for large institutions and highly 
complex institutions. The total score for large institutions and highly 
complex institutions is subject to adjustment, up or down, by a maximum 
of 15 points, based upon significant risk factors that are not 
adequately captured in the appropriate scorecard. In making such 
adjustments, the FDIC may consider such information as financial 
performance and condition information and other market or supervisory 
information. The FDIC will also consult with an institution's primary 
federal regulator and, for state chartered institutions, state banking 
supervisor.
    (i) Prior notice of adjustments--(A) Prior notice of upward 
adjustment. Prior to making any upward adjustment to an institution's 
total score because of considerations of additional risk information, 
the FDIC will formally notify the institution and its primary federal 
regulator and provide an opportunity to respond. This notification will 
include the reasons for the adjustment and when the adjustment will take 
effect.
    (B) Prior notice of downward adjustment. Prior to making any 
downward adjustment to an institution's total score because of 
considerations of additional risk information, the FDIC will formally 
notify the institution's primary federal regulator and provide an 
opportunity to respond.
    (ii) Determination whether to adjust upward; effective period of 
adjustment. After considering an institution's and the primary federal 
regulator's responses to the notice, the FDIC will determine whether the 
adjustment to an institution's total score is warranted, taking into 
account any revisions to scorecard measures, as well as any actions 
taken by the institution to address the FDIC's concerns described in the 
notice. The FDIC will evaluate the need for the adjustment each 
subsequent assessment period. Except as provided in paragraph (b)(3)(iv) 
of this section, the amount of adjustment cannot exceed the proposed 
adjustment amount contained in the initial notice unless additional 
notice is provided so that the primary federal regulator and the 
institution may respond.
    (iii) Determination whether to adjust downward; effective period of 
adjustment. After considering the primary federal regulator's responses 
to the notice, the FDIC will determine whether the adjustment to total 
score is warranted, taking into account any revisions to scorecard 
measures. Any downward adjustment in an institution's total score will 
remain in effect for subsequent assessment periods until the FDIC 
determines that an adjustment is no longer warranted. Downward 
adjustments will be made without notification to the institution. 
However, the FDIC will provide advance notice to an institution and its 
primary federal regulator and give them an opportunity to respond before 
removing a downward adjustment.
    (iv) Adjustment without notice. Notwithstanding the notice 
provisions set forth above, the FDIC may change an institution's total 
score without advance notice under this paragraph, if the institution's 
supervisory ratings or the scorecard measures deteriorate.
    (c) Insured branches of foreign banks--(1) Risk categories for 
insured branches of foreign banks. Insured branches of foreign banks 
shall be assigned to risk categories as set forth in paragraph (a)(1) of 
this section.
    (2) Capital evaluations for insured branches of foreign banks. Each 
insured branch of a foreign bank will receive one of the following three 
capital evaluations on the basis of data reported in the institution's 
Report of Assets and Liabilities of U.S. Branches and Agencies of 
Foreign Banks dated as of March 31 for the assessment period beginning 
the preceding January 1; dated as of June 30 for the assessment period 
beginning the preceding April 1; dated as of September 30 for the 
assessment period beginning the preceding July 1; and dated as of 
December 31 for the assessment period beginning the preceding October 1.

[[Page 433]]

    (i) Well Capitalized. An insured branch of a foreign bank is Well 
Capitalized if the insured branch:
    (A) Maintains the pledge of assets required under Sec.  347.209 of 
this chapter; and
    (B) Maintains the eligible assets prescribed under Sec.  347.210 of 
this chapter at 108 percent or more of the average book value of the 
insured branch's third-party liabilities for the quarter ending on the 
report date specified in paragraph (c)(2) of this section.
    (ii) Adequately Capitalized. An insured branch of a foreign bank is 
Adequately Capitalized if the insured branch:
    (A) Maintains the pledge of assets required under Sec.  347.209 of 
this chapter; and
    (B) Maintains the eligible assets prescribed under Sec.  347.210 of 
this chapter at 106 percent or more of the average book value of the 
insured branch's third-party liabilities for the quarter ending on the 
report date specified in paragraph (c)(2) of this section; and
    (C) Does not meet the definition of a Well Capitalized insured 
branch of a foreign bank.
    (iii) Undercapitalized. An insured branch of a foreign bank is 
undercapitalized institution if it does not qualify as either Well 
Capitalized or Adequately Capitalized under paragraphs (c)(2)(i) and 
(ii) of this section.
    (3) Supervisory evaluations for insured branches of foreign banks. 
Each insured branch of a foreign bank will be assigned to one of three 
supervisory groups as set forth in paragraph (a)(3) of this section.
    (4) Assessment method for insured branches of foreign banks in Risk 
Category I. Insured branches of foreign banks in Risk Category I shall 
be assessed using the weighted average ROCA component rating.
    (i) Weighted average ROCA component rating. The weighted average 
ROCA component rating shall equal the sum of the products that result 
from multiplying ROCA component ratings by the following percentages: 
Risk Management--35%, Operational Controls--25%, Compliance--25%, and 
Asset Quality--15%. The weighted average ROCA rating will be multiplied 
by 5.076 (which shall be the pricing multiplier). To this result will be 
added a uniform amount. The resulting sum--the initial base assessment 
rate--will equal an institution's total base assessment rate; provided, 
however, that no institution's total base assessment rate will be less 
than the minimum total base assessment rate in effect for Risk Category 
I institutions for that quarter nor greater than the maximum total base 
assessment rate in effect for Risk Category I institutions for that 
quarter.
    (ii) Uniform amount. Except as adjusted for the actual assessment 
rates set by the Board under Sec.  327.10(f), the uniform amount for all 
insured branches of foreign banks shall be:
    (A) -3.127 whenever the assessment rate schedule set forth in Sec.  
327.10(a) is in effect;
    (B) -5.127 whenever the assessment rate schedule set forth in Sec.  
327.10(b) is in effect;
    (C) --6.127 whenever the assessment rate schedule set forth in Sec.  
327.10(c) is in effect; or
    (D) -7.127 whenever the assessment rate schedule set forth in Sec.  
327.10(d) is in effect.
    (iii) Insured branches of foreign banks not subject to certain 
adjustments. No insured branch of a foreign bank in any risk category 
shall be subject to the adjustments in paragraphs (b)(3), (d)(1), or 
(d)(3) of this section.
    (iv) Implementation of changes between Risk Categories for insured 
branches of foreign banks. If, during a quarter, a ROCA rating change 
occurs that results in an insured branch of a foreign bank moving from 
Risk Category I to Risk Category II, III or IV, the institution's 
initial base assessment rate for the portion of the quarter that it was 
in Risk Category I shall be determined using the weighted average ROCA 
component rating. For the portion of the quarter that the institution 
was not in Risk Category I, the institution's initial base assessment 
rate shall be determined under the assessment schedule for the 
appropriate Risk Category. If, during a quarter, a ROCA rating change 
occurs that results in an insured branch of a foreign bank moving from 
Risk Category II, III or IV to Risk Category I, the institution's 
assessment rate for the portion of the quarter that it was in Risk 
Category I shall equal the rate determined as provided

[[Page 434]]

using the weighted average ROCA component rating. For the portion of the 
quarter that the institution was not in Risk Category I, the 
institution's initial base assessment rate shall be determined under the 
assessment schedule for the appropriate Risk Category.
    (v) Implementation of changes within Risk Category I for insured 
branches of foreign banks. If, during a quarter, an insured branch of a 
foreign bank remains in Risk Category I, but a ROCA component rating 
changes that will affect the institution's initial base assessment rate, 
separate assessment rates for the portion(s) of the quarter before and 
after the change(s) shall be determined under this paragraph (c)(4) of 
this section.
    (d) Adjustments--(1) Unsecured debt adjustment to initial base 
assessment rate for all institutions. All institutions, except new 
institutions as provided under paragraphs (f)(1) and (2) of this section 
and insured branches of foreign banks as provided under paragraph 
(c)(4)(iii) of this section, shall be subject to an adjustment of 
assessment rates for unsecured debt. Any unsecured debt adjustment shall 
be made after any adjustment under paragraph (b)(3) of this section.
    (i) Application of unsecured debt adjustment. The unsecured debt 
adjustment shall be determined as the sum of the initial base assessment 
rate plus 40 basis points; that sum shall be multiplied by the ratio of 
an insured depository institution's long-term unsecured debt to its 
assessment base. The amount of the reduction in the assessment rate due 
to the adjustment is equal to the dollar amount of the adjustment 
divided by the amount of the assessment base.
    (ii) Limitation--No unsecured debt adjustment for any institution 
shall exceed the lesser of 5 basis points or 50 percent of the 
institution's initial base assessment rate.
    (iii) Applicable quarterly reports of condition--Unsecured debt 
adjustment ratios for any given quarter shall be calculated from 
quarterly reports of condition (Consolidated Reports of Condition and 
Income and Thrift Financial Reports, or any successor reports to either, 
as appropriate) filed by each institution as of the last day of the 
quarter.
    (2) Depository institution debt adjustment to initial base 
assessment rate for all institutions. All institutions shall be subject 
to an adjustment of assessment rates for unsecured debt held that is 
issued by another depository institution. Any such depository 
institution debt adjustment shall be made after any adjustment under 
paragraphs (b)(3) and (d)(1) of this section.
    (i) Application of depository institution debt adjustment. An 
insured depository institution shall pay a 50 basis point adjustment on 
the amount of unsecured debt it holds that was issued by another insured 
depository institution to the extent that such debt exceeds 3 percent of 
the institution's Tier 1 capital. The amount of long-term unsecured debt 
issued by another insured depository institution shall be calculated 
using the same valuation methodology used to calculate the amount of 
such debt for reporting on the asset side of the balance sheets.
    (ii) Applicable quarterly reports of condition. Depository 
institution debt adjustment ratios for any given quarter shall be 
calculated from quarterly reports of condition (Consolidated Reports of 
Condition and Income and Thrift Financial Reports, or any successor 
reports to either, as appropriate) filed by each institution as of the 
last day of the quarter.
    (3) Brokered Deposit Adjustment. All small institutions in Risk 
Categories II, III, and IV, all large institutions and all highly 
complex institutions, except large and highly complex institutions 
(including new large and new highly complex institutions) that are well 
capitalized and have a CAMELS composite rating of 1 or 2, shall be 
subject to an assessment rate adjustment for brokered deposits. Any such 
brokered deposit adjustment shall be made after any adjustment under 
paragraphs (b)(3), (d)(1), and (d)(2) of this section. The brokered 
deposit adjustment includes all brokered deposits as defined in Section 
29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f), and 12 CFR 
337.6, including reciprocal deposits as defined in Sec.  327.8(p), and 
brokered deposits that consist of balances swept into an insured 
institution from

[[Page 435]]

another institution. The adjustment under this paragraph is limited to 
those institutions whose ratio of brokered deposits to domestic deposits 
is greater than 10 percent; asset growth rates do not affect the 
adjustment. Insured branches of foreign banks are not subject to the 
brokered deposit adjustment as provided in paragraph (c)(4)(iii) of this 
section.
    (i) Application of brokered deposit adjustment. The brokered deposit 
adjustment shall be determined by multiplying 25 basis points by the 
ratio of the difference between an insured depository institution's 
brokered deposits and 10 percent of its domestic deposits to its 
assessment base.
    (ii) Limitation. The maximum brokered deposit adjustment will be 10 
basis points; the minimum brokered deposit adjustment will be 0.
    (iii) Applicable quarterly reports of condition. Brokered deposit 
ratios for any given quarter shall be calculated from the quarterly 
reports of condition (Call Reports and Thrift Financial Reports, or any 
successor reports to either, as appropriate) filed by each institution 
as of the last day of the quarter.
    (e) Request to be treated as a large institution--(1) Procedure. Any 
institution with assets of between $5 billion and $10 billion may 
request that the FDIC determine its assessment rate as a large 
institution. The FDIC will consider such a request provided that it has 
sufficient information to do so. Any such request must be made to the 
FDIC's Division of Insurance and Research. Any approved change will 
become effective within one year from the date of the request. If an 
institution whose request has been granted subsequently reports assets 
of less than $5 billion in its report of condition for four consecutive 
quarters, the institution shall be deemed a small institution for 
assessment purposes.
    (2) Time limit on subsequent request for alternate method. An 
institution whose request to be assessed as a large institution is 
granted by the FDIC shall not be eligible to request that it be assessed 
as a small institution for a period of three years from the first 
quarter in which its approved request to be assessed as a large 
institution became effective. Any request to be assessed as a small 
institution must be made to the FDIC's Division of Insurance and 
Research.
    (3) An institution that disagrees with the FDIC's determination that 
it is a large, highly complex, or small institution may request review 
of that determination pursuant to Sec.  327.4(c).
    (f) New and established institutions and exceptions--(1) New small 
institutions. A new small Risk Category I institution shall be assessed 
the Risk Category I maximum initial base assessment rate for the 
relevant assessment period. No new small institution in any risk 
category shall be subject to the unsecured debt adjustment as determined 
under paragraph (d)(1) of this section. All new small institutions in 
any Risk Category shall be subject to the depository institution debt 
adjustment as determined under paragraph (d)(2) of this section. All new 
small institutions in Risk Categories II, III, and IV shall be subject 
to the brokered deposit adjustment as determined under paragraph (d)(3) 
of this section.
    (2) New large institutions and new highly complex institutions. All 
new large institutions and all new highly complex institutions shall be 
assessed under the appropriate method provided at paragraph (b)(1) or 
(2) of this section and subject to the adjustments provided at 
paragraphs (b)(3), (d)(2), and (d)(3) of this section. No new highly 
complex or large institutions are entitled to adjustment under paragraph 
(d)(1) of this section. If a large or highly complex institution has not 
yet received CAMELS ratings, it will be given a weighted CAMELS rating 
of 2 for assessment purposes until actual CAMELS ratings are assigned.
    (3) CAMELS ratings for the surviving institution in a merger or 
consolidation. When an established institution merges with or 
consolidates into a new institution, if the FDIC determines the 
resulting institution to be an established institution under Sec.  
327.8(k)(1), its CAMELS ratings for assessment purposes will be based 
upon the established institution's ratings prior to the merger or 
consolidation until new ratings become available.

[[Page 436]]

    (4) Rate applicable to institutions subject to subsidiary or credit 
union exception. A small Risk Category I institution that is established 
under Sec.  327.8(k)(4) or (5), but does not have CAMELS component 
ratings, shall be assessed at 2 basis points above the minimum initial 
base assessment rate applicable to Risk Category I institutions until it 
receives CAMELS component ratings. Thereafter, the assessment rate will 
be determined by annualizing, where appropriate, financial ratios 
obtained from all quarterly reports of condition that have been filed, 
until the institution files four quarterly reports of condition. If a 
large or highly complex institution is considered established under 
Sec.  327.8(k)(4) or (5), but does not have CAMELS component ratings, it 
will be given a weighted CAMELS rating of 2 for assessment purposes 
until actual CAMELS ratings are assigned.
    (5) Request for review. An institution that disagrees with the 
FDIC's determination that it is a new institution may request review of 
that determination pursuant to Sec.  327.4(c).
    (g) Assessment rates for bridge depository institutions and 
conservatorships. Institutions that are bridge depository institutions 
under 12 U.S.C. 1821(n) and institutions for which the Corporation has 
been appointed or serves as conservator shall, in all cases, be assessed 
at the Risk Category I minimum initial base assessment rate, which shall 
not be subject to adjustment under paragraphs (b)(3), (d)(1), (2) or (3) 
of this section.

[76 FR 10708, Feb. 25, 2011, as amended at 79 FR 70437, Nov. 26, 2014; 
81 FR 32201, May 20, 2016]



Sec.  327.10  Assessment rate schedules.

    (a) Assessment rate schedules before the reserve ratio of the DIF 
reaches 1.15 percent--(1) Applicability. The assessment rate schedules 
in paragraph (a) of this section will cease to be applicable when the 
reserve ratio of the DIF first reaches 1.15 percent.
    (2) Initial Base Assessment Rate Schedule. Before the reserve ratio 
of the DIF reaches 1.15 percent, the initial base assessment rate for an 
insured depository institution shall be the rate prescribed in the 
following schedule:

         Initial Base Assessment Rate Schedule Before the Reserve Ratio of the DIF Reaches 1.15 Percent
----------------------------------------------------------------------------------------------------------------
                                                                                                     Large and
                                   Risk category   Risk category   Risk category   Risk category  highly complex
                                         I              II              III             IV         institutions
----------------------------------------------------------------------------------------------------------------
Initial base assessment rate....             5-9              14              23              35            5-35
----------------------------------------------------------------------------------------------------------------
* All amounts for all risk categories are in basis points annually. Initial base rates that are not the minimum
  or maximum rate will vary between these rates.

    (i) Risk Category I Initial Base Assessment Rate Schedule. The 
annual initial base assessment rates for all institutions in Risk 
Category I shall range from 5 to 9 basis points.
    (ii) Risk Category II, III, and IV Initial Base Assessment Rate 
Schedule. The annual initial base assessment rates for Risk Categories 
II, III, and IV shall be 14, 23, and 35 basis points, respectively.
    (iii) All institutions in any one risk category, other than Risk 
Category I, will be charged the same initial base assessment rate, 
subject to adjustment as appropriate.
    (iv) Large and Highly Complex Institutions Initial Base Assessment 
Rate Schedule. The annual initial base assessment rates for all large 
and highly complex institutions shall range from 5 to 35 basis points.
    (3) Total Base Assessment Rate Schedule after Adjustments. Before 
the reserve ratio of the DIF reaches 1.15 percent, the total base 
assessment rates after adjustments for an insured depository institution 
shall be as prescribed in the following schedule.

[[Page 437]]



    Total Base Assessment Rate Schedule (After Adjustments)* Before the Reserve Ratio of the DIF Reaches 1.15
                                                   Percent **
----------------------------------------------------------------------------------------------------------------
                                                                                                     Large and
                                   Risk category   Risk category   Risk category   Risk category  highly complex
                                         I              II              III             IV         institutions
----------------------------------------------------------------------------------------------------------------
Initial base assessment rate....             5-9              14              23              35            5-35
Unsecured debt adjustment.......         (4.5)-0           (5)-0           (5)-0           (5)-0           (5)-0
Brokered deposit adjustment.....  ..............            0-10            0-10            0-10            0-10
    Total base assessment rate..           2.5-9            9-24           18-33           30-45          2.5-45
----------------------------------------------------------------------------------------------------------------
* All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum or
  maximum rate will vary between these rates.
** Total base assessment rates do not include the depository institution debt adjustment.

    (i) Risk Category I Total Base Assessment Rate Schedule. The annual 
total base assessment rates for all institutions in Risk Category I 
shall range from 2.5 to 9 basis points.
    (ii) Risk Category II Total Base Assessment Rate Schedule. The 
annual total base assessment rates for Risk Category II shall range from 
9 to 24 basis points.
    (iii) Risk Category III Total Base Assessment Rate Schedule. The 
annual total base assessment rates for Risk Category III shall range 
from 18 to 33 basis points.
    (iv) Risk Category IV Total Base Assessment Rate Schedule. The 
annual total base assessment rates for Risk Category IV shall range from 
30 to 45 basis points.
    (v) Large and Highly Complex Institutions Total Base Assessment Rate 
Schedule. The annual total base assessment rates for all large and 
highly complex institutions shall range from 2.5 to 45 basis points.
    (b) Assessment rate schedules for established small institutions and 
large and highly complex institutions applicable in the first assessment 
period after June 30, 2016, where the reserve ratio of the DIF as of the 
end of the prior assessment period has reached or exceeded 1.15 percent, 
and in all subsequent assessment periods where the reserve ratio of the 
DIF as of the end of the prior assessment period is less than 2 percent.
    (1) Initial base assessment rate schedule for established small 
institutions and large and highly complex institutions. In the first 
assessment period after June 30, 2016, where the reserve ratio of the 
DIF as of the end of the prior assessment period has reached or exceeded 
1.15 percent, and for all subsequent assessment periods where the 
reserve ratio as of the end of the prior assessment period is less than 
2 percent, the initial base assessment rate for established small 
institutions and large and highly complex institutions, except as 
provided in paragraph (f) of this section, shall be the rate prescribed 
in the following schedule:

   Initial Base Assessment Rate Schedule Beginning the First Assessment Period After June 30, 2016, Where the
   Reserve Ratio as of the End of the Prior Assessment Period Has Reached 1.15 Percent, and for All Subsequent
 Assessment Periods Where the Reserve Ratio as of the End of the Prior Assessment Period Is Less Than 2 Percent
                                                       \1\
----------------------------------------------------------------------------------------------------------------
                                               Established small institutions
                              ---------------------------------------------------------------   Large & highly
                                                      CAMELS composite                              complex
                              ---------------------------------------------------------------    institutions
                                      1 or 2                 3                  4 or 5
----------------------------------------------------------------------------------------------------------------
Initial Base Assessment Rate.  3 to 16............  6 to 30............  16 to 30...........  3 to 30.
----------------------------------------------------------------------------------------------------------------
\1\ All amounts for all risk categories are in basis points annually. Initial base rates that are not the
  minimum or maximum rate will vary between these rates.

    (i) CAMELS composite 1- and 2-rated established small institutions 
initial base assessment rate schedule. The annual initial base 
assessment rates for all established small institutions with a CAMELS 
composite rating of 1 or 2 shall range from 3 to 16 basis points.

[[Page 438]]

    (ii) CAMELS composite 3-rated established small institutions initial 
base assessment rate schedule. The annual initial base assessment rates 
for all established small institutions with a CAMELS composite rating of 
3 shall range from 6 to 30 basis points.
    (iii) CAMELS composite 4- and 5-rated established small institutions 
initial base assessment rate schedule. The annual initial base 
assessment rates for all established small institutions with a CAMELS 
composite rating of 4 or 5 shall range from 16 to 30 basis points.
    (iv) Large and highly complex institutions initial base assessment 
rate schedule. The annual initial base assessment rates for all large 
and highly complex institutions shall range from 3 to 30 basis points.
    (2) Total base assessment rate schedule after adjustments. In the 
first assessment period after June 30, 2016, that the reserve ratio of 
the DIF as of the end of the prior assessment period has reached or 
exceeded 1.15 percent, and for all subsequent assessment periods where 
the reserve ratio for the prior assessment period is less than 2 
percent, the total base assessment rates after adjustments for 
established small institutions and large and highly complex 
institutions, except as provided in paragraph (f) of this section, shall 
be as prescribed in the following schedule:

Total Base Assessment Rate Schedule (After Adjustments) \1\ Beginning the First Assessment Period After June 30,
2016, Where the Reserve Ratio as of the End of the Prior Assessment Period Has Reached 1.15 Percent, and for All
 Subsequent Assessment Periods Where the Reserve Ratio as of the End of the Prior Assessment Period Is Less Than
                                                  2 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                               Established small institutions
                              ---------------------------------------------------------------   Large & highly
                                                      CAMELS composite                              complex
                              ---------------------------------------------------------------    institutions
                                      1 or 2                 3                  4 or 5
----------------------------------------------------------------------------------------------------------------
Initial Base Assessment Rate.  3 to 16............  6 to 30............  16 to 30...........  3 to 30.
Unsecured Debt Adjustment....  -5 to 0............  -5 to 0............  -5 to 0............  -5 to 0.
Brokered Deposit Adjustment..  N/A................  N/A................  N/A................  0 to 10.
                              ----------------------------------------------------------------------------------
    Total Base Assessment      1.5 to 16..........  3 to 30............  11 to 30...........  1.5 to 40.
     Rate.
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum
  or maximum rate will vary between these rates.

    (i) CAMELS composite 1- and 2-rated established small institutions 
total base assessment rate schedule. The annual total base assessment 
rates for all established small institutions with a CAMELS composite 
rating of 1 or 2 shall range from 1.5 to 16 basis points.
    (ii) CAMELS composite 3-rated established small institutions total 
base assessment rate schedule. The annual total base assessment rates 
for all established small institutions with a CAMELS composite rating of 
3 shall range from 3 to 30 basis points.
    (iii) CAMELS composite 4- and 5-rated established small institutions 
total base assessment rate schedule. The annual total base assessment 
rates for all established small institutions with a CAMELS composite 
rating of 4 or 5 shall range from 11 to 30 basis points.
    (iv) Large and highly complex institutions total base assessment 
rate schedule. The annual total base assessment rates for all large and 
highly complex institutions shall range from 1.5 to 40 basis points.
    (c) Assessment rate schedules if the reserve ratio of the DIF as of 
the end of the prior assessment period is equal to or greater than 2 
percent and less than 2.5 percent--(1) Initial base assessment rate 
schedule for established small institutions and large and highly complex 
institutions. If the reserve ratio of the DIF as of the end of the prior 
assessment period is equal to or greater than 2 percent and less than 
2.5 percent, the initial base assessment rate for established small 
institutions and large and highly complex institutions, except as 
provided in paragraph (f) of this section, shall be

[[Page 439]]

the rate prescribed in the following schedule:

Initial Base Assessment Rate Schedule if the Reserve Ratio as of the End of the Prior Assessment Period Is Equal
                           to or Greater Than 2 Percent But Less Than 2.5 Percent \1\
----------------------------------------------------------------------------------------------------------------
                                               Established small institutions
                              ---------------------------------------------------------------   Large & highly
                                                      CAMELS composite                              complex
                              ---------------------------------------------------------------    institutions
                                      1 or 2                 3                  4 or 5
----------------------------------------------------------------------------------------------------------------
Initial Base Assessment Rate.  2 to 14............  5 to 28............  14 to 28...........  2 to 28.
----------------------------------------------------------------------------------------------------------------
\1\ All amounts for all risk categories are in basis points annually. Initial base rates that are not the
  minimum or maximum rate will vary between these rates.

    (i) CAMELS composite 1- and 2-rated established small institutions 
initial base assessment rate schedule. The annual initial base 
assessment rates for all established small institutions with a CAMELS 
composite rating of 1 or 2 shall range from 2 to 14 basis points.
    (ii) CAMELS composite 3-rated established small institutions initial 
base assessment rate schedule. The annual initial base assessment rates 
for all established small institutions with a CAMELS composite rating of 
3 shall range from 5 to 28 basis points.
    (iii) CAMELS composite 4- and 5-rated established small institutions 
initial base assessment rate schedule. The annual initial base 
assessment rates for all established small institutions with a CAMELS 
composite rating of 4 or 5 shall range from 14 to 28 basis points.
    (iv) Large and highly complex institutions initial base assessment 
rate schedule. The annual initial base assessment rates for all large 
and highly complex institutions shall range from 2 to 28 basis points.
    (2) Total base assessment rate schedule after adjustments for 
established small institutions and large and highly complex 
institutions. If the reserve ratio of the DIF as of the end of the prior 
assessment period is equal to or greater than 2 percent and less than 
2.5 percent, the total base assessment rates after adjustments for 
established small institutions and large and highly complex 
institutions, except as provided in paragraph (f) of this section, shall 
be as prescribed in the following schedule:

   Total Base Assessment Rate Schedule (After Adjustments) \1\ If the Reserve Ratio as of the End of the Prior
              Assessment Period Is Equal To or Greater Than 2 Percent but Less Than 2.5 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                               Established small institutions
                              ---------------------------------------------------------------   Large & highly
                                                      CAMELS composite                              complex
                              ---------------------------------------------------------------    institutions
                                      1 or 2                 3                  4 or 5
----------------------------------------------------------------------------------------------------------------
Initial Base Assessment Rate.  2 to 14............  5 to 28............  14 to 28...........  2 to 28.
Unsecured Debt Adjustment....  -5 to 0............  -5 to 0............  -5 to 0............  -5 to 0.
Brokered Deposit Adjustment..  N/A................  N/A................  N/A................  0 to 10.
                              ----------------------------------------------------------------------------------
    Total Base Assessment      1 to 14............  2.5 to 28..........  9 to 28............  1 to 38.
     Rate.
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum
  or maximum rate will vary between these rates.

    (i) CAMELS composite 1- and 2-rated established small institutions 
total base assessment rate schedule. The annual total base assessment 
rates for all established small institutions with a CAMELS composite 
rating of 1 or 2 shall range from 1 to 14 basis points.
    (ii) CAMELS composite 3-rated established small institutions total 
base assessment rate schedule. The annual total

[[Page 440]]

base assessment rates for all established small institutions with a 
CAMELS composite rating of 3 shall range from 2.5 to 28 basis points.
    (iii) CAMELS composite 4- and 5-rated established small institutions 
total base assessment rate schedule. The annual total base assessment 
rates for all established small institutions with a CAMELS composite 
rating of 4 or 5 shall range from 9 to 28 basis points.
    (iv) Large and highly complex institutions total base assessment 
rate schedule. The annual total base assessment rates for all large and 
highly complex institutions shall range from 1 to 38 basis points.
    (d) Assessment rate schedules if the reserve ratio of the DIF as of 
the end of the prior assessment period is greater than 2.5 percent--(1) 
Initial base assessment rate schedule. If the reserve ratio of the DIF 
as of the end of the prior assessment period is greater than 2.5 
percent, the initial base assessment rate for established small 
institutions and large and highly complex institutions, except as 
provided in paragraph (f) of this section, shall be the rate prescribed 
in the following schedule:

   Initial Base Assessment Rate Schedule if the Reserve Ratio as of the End of the Prior Assessment Period Is
                                    Greater Than or Equal to 2.5 Percent \1\
----------------------------------------------------------------------------------------------------------------
                                               Established small institutions
                              ---------------------------------------------------------------   Large & highly
                                                      CAMELS composite                              complex
                              ---------------------------------------------------------------    institutions
                                      1 or 2                 3                  4 or 5
----------------------------------------------------------------------------------------------------------------
Initial Base Assessment Rate.  1 to 13............  4 to 25............  13 to 25...........  1 to 25.
----------------------------------------------------------------------------------------------------------------
\1\ All amounts for all risk categories are in basis points annually. Initial base rates that are not the
  minimum or maximum rate will vary between these rates.

    (i) CAMELS composite 1- and 2-rated established small institutions 
initial base assessment rate schedule. The annual initial base 
assessment rates for all established small institutions with a CAMELS 
composite rating of 1 or 2 shall range from 1 to 13 basis points.
    (ii) CAMELS composite 3-rated established small institutions initial 
base assessment rate schedule. The annual initial base assessment rates 
for all established small institutions with a CAMELS composite rating of 
3 shall range from 4 to 25 basis points.
    (iii) CAMELS composite 4- and 5-rated established small institutions 
initial base assessment rate schedule. The annual initial base 
assessment rates for all established small institutions with a CAMELS 
composite rating of 4 or 5 shall range from 13 to 25 basis points.
    (iv) Large and highly complex institutions initial base assessment 
rate schedule. The annual initial base assessment rates for all large 
and highly complex institutions shall range from 1 to 25 basis points.
    (2) Total base assessment rate schedule after adjustments. If the 
reserve ratio of the DIF as of the end of the prior assessment period is 
greater than 2.5 percent, the total base assessment rates after 
adjustments for established small institutions and large and highly 
complex institutions, except as provided in paragraph (f) of this 
section, shall be the rate prescribed in the following schedule:

   Total Base Assessment Rate Schedule (After Adjustments) \1\ If the Reserve Ratio as of the End of the Prior
                          Assessment Period is Greater Than or Equal to 2.5 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                               Established small institutions
                               --------------------------------------------------------------   Large & highly
                                                      CAMELS composite                              complex
                               --------------------------------------------------------------    institutions
                                       1 or 2                 3                 4 or 5
----------------------------------------------------------------------------------------------------------------
Initial Base Assessment Rate..  1 to 13............  4 to 25............  13 to 25..........  1 to 25.
Unsecured Debt Adjustment.....  -5 to 0............  -5 to 0............  -5 to 0...........  -5 to 0.
Brokered Deposit Adjustment...  N/A................  N/A................  N/A...............  0 to 10.
                               ---------------------------------------------------------------------------------

[[Page 441]]

 
    Total Base Assessment Rate  0.5 to 13..........  2 to 25............  8 to 25...........  0.5 to 35.
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum
  or maximum rate will vary between these rates.

    (i) CAMELS composite 1- and 2-rated established small institutions 
total base assessment rate schedule. The annual total base assessment 
rates for all established small institutions with a CAMELS composite 
rating of 1 or 2 shall range from 0.5 to 13 basis points.
    (ii) CAMELS composite 3-rated established small institutions total 
base assessment rate schedule. The annual total base assessment rates 
for all established small institutions with a CAMELS composite rating of 
3 shall range from 2 to 25 basis points.
    (iii) CAMELS composite 4- and 5-rated established small institutions 
total base assessment rate schedule. The annual total base assessment 
rates for all established small institutions with a CAMELS composite 
rating of 4 or 5 shall range from 8 to 25 basis points.
    (iv) Large and highly complex institutions total base assessment 
rate schedule. The annual total base assessment rates for all large and 
highly complex institutions shall range from 0.5 to 35 basis points.
    (e) Assessment rate schedules for new institutions and insured 
branches of foreign banks. (1) New depository institutions, as defined 
in Sec.  327.8(j), shall be subject to the assessment rate schedules as 
follows:
    (i) Prior to the reserve ratio of the DIF first reaching 1.15 
percent on or after June 30, 2016. Prior to the reserve ratio of the DIF 
reaching 1.15 percent for the first time on or after June 30, 2016, all 
new institutions shall be subject to the initial and total base 
assessment rate schedules provided for in paragraph (a) of this section.
    (ii) Assessment rate schedules for new large and highly complex 
institutions once the DIF reserve ratio first reaches 1.15 percent on or 
after June 30, 2016. In the first assessment period after June 30, 2016, 
where the reserve ratio of the DIF as of the end of the prior assessment 
period has reached or exceeded 1.15 percent, and for all subsequent 
assessment periods, even if the reserve ratio equals or exceeds 2 
percent or 2.5 percent, new large and new highly complex institutions 
shall be subject to the initial and total base assessment rate schedules 
provided for in paragraph (b) of this section.
    (iii) Assessment rate schedules for new small institutions beginning 
the first assessment period after June 30, 2016, where the reserve ratio 
of the DIF as of the end of the prior assessment period has reached or 
exceeded 1.15 percent, and for all subsequent assessment periods--(A) 
Initial base assessment rate schedule for new small institutions. In the 
first assessment period after June 30, 2016, where the reserve ratio of 
the DIF as of the end of the prior assessment period has reached or 
exceeded 1.15 percent, and for all subsequent assessment periods, the 
initial base assessment rate for a new small institution shall be the 
rate prescribed in the following schedule, even if the reserve ratio 
equals or exceeds 2 percent or 2.5 percent:

[[Page 442]]



   Initial Base Assessment Rate Schedule Beginning the First Assessment Period After June 30, 2016, Where the
   Reserve Ratio as of the End of the Prior Assessment Period Has Reached 1.15 Percent, and For All Subsequent
                                             Assessment Periods \1\
----------------------------------------------------------------------------------------------------------------
                                                                Risk Category    Risk Category    Risk Category
                                              Risk Category I         II              III               IV
----------------------------------------------------------------------------------------------------------------
Initial Assessment Rate.....................               7               12               19               30
----------------------------------------------------------------------------------------------------------------
\1\ All amounts for all risk categories are in basis points annually.

    (1) Risk category I initial base assessment rate schedule. The 
annual initial base assessment rates for all new small institutions in 
Risk Category I shall be 7 basis points.
    (2) Risk category II, III, and IV initial base assessment rate 
schedule. The annual initial base assessment rates for all new small 
institutions in Risk Categories II, III, and IV shall be 12, 19, and 30 
basis points, respectively.
    (B) Total base assessment rate schedule for new small institutions. 
In the first assessment period after June 30, 2016, that the reserve 
ratio of the DIF as of the end of the prior assessment period has 
reached or exceeded 1.15 percent, and for all subsequent assessment 
periods, the total base assessment rates after adjustments for a new 
small institution shall be the rate prescribed in the following 
schedule, even if the reserve ratio equals or exceeds 2 percent or 2.5 
percent:

Total Base Assessment Rate Schedule (After Adjustments) \1\ Beginning the First Assessment Period After June 30,
2016, Where the Reserve Ratio as of the End of the Prior Assessment Period Has Reached 1.15 Percent, and for All
 Subsequent Assessment Periods Where the Reserve Ratio as of the End of the Prior Assessment Period Is Less Than
                                                  2 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                 Risk Category I      Risk Category II    Risk Category III    Risk Category IV
----------------------------------------------------------------------------------------------------------------
Initial Assessment Rate......  7..................  12.................  19.................  30.
Brokered Deposit Adjustment    N/A................  0 to 10............  0 to 10............  0 to 10.
 (added).
                              ----------------------------------------------------------------------------------
    Total Assessment Rate....  7..................  12 to 22...........  19 to 29...........  30 to 40.
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Total base rates that are not the minimum
  or maximum rate will vary between these rates.

    (1) Risk category I total assessment rate schedule. The annual total 
base assessment rates for all new small institutions in Risk Category I 
shall be 7 basis points.
    (2) Risk category II total assessment rate schedule. The annual 
total base assessment rates for all new small institutions in Risk 
Category II shall range from 12 to 22 basis points.
    (3) Risk category III total assessment rate schedule. The annual 
total base assessment rates for all new small institutions in Risk 
Category III shall range from 19 to 29 basis points.
    (4) Risk category IV total assessment rate schedule. The annual 
total base assessment rates for all new small institutions in Risk 
Category IV shall range from 30 to 40 basis points.
    (2) Insured branches of foreign banks--(i) Beginning the first 
assessment period after June 30, 2016, where the reserve ratio of the 
DIF as of the end of the prior assessment period has reached or exceeded 
1.15 percent, and for all subsequent assessment periods where the 
reserve ratio as of the end of the prior assessment period is less than 
2 percent. In the first assessment period after June 30, 2016, where the 
reserve ratio of the DIF as of the end of the prior assessment period 
has reached or exceeded 1.15 percent, and for all subsequent assessment 
periods where the reserve ratio as of the end of the prior assessment 
period is less than 2 percent, the initial and

[[Page 443]]

total base assessment rates for an insured branch of a foreign bank, 
except as provided in paragraph (f) of this section, shall be the rate 
prescribed in the following schedule:

 Initial and Total Base Assessment Rate Schedule \1\ Beginning the First Assessment Period After June 30, 2016,
   Where the Reserve Ratio as of the End of the Prior Assessment Period Has Reached 1.15 Percent, and for All
 Subsequent Assessment Periods Where the Reserve Ratio as of the End of the Prior Assessment Period Is Less Than
                                                  2 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                                                Risk Category    Risk Category    Risk Category
                                          Risk Category I             II              III               IV
----------------------------------------------------------------------------------------------------------------
Initial and Total Assessment Rate..  3 to 7..................              12               19               30
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Initial and total base rates that are not
  the minimum or maximum rate will vary between these rates.

    (A) Risk category I initial and total base assessment rate schedule. 
The annual initial and total base assessment rates for an insured branch 
of a foreign bank in Risk Category I shall range from 3 to 7 basis 
points.
    (B) Risk category II, III, and IV initial and total base assessment 
rate schedule. The annual initial and total base assessment rates for 
Risk Categories II, III, and IV shall be 12, 19, and 30 basis points, 
respectively.
    (C) All insured branches of foreign banks in any one risk category, 
other than Risk Category I, will be charged the same initial base 
assessment rate, subject to adjustment as appropriate.
    (ii) Assessment rate schedule for insured branches of foreign banks 
if the reserve ratio of the DIF as of the end of the prior assessment 
period is equal to or greater than 2 percent and less than 2.5 percent. 
If the reserve ratio of the DIF as of the end of the prior assessment 
period is equal to or greater than 2 percent and less than 2.5 percent, 
the initial and total base assessment rates for an insured branch of a 
foreign bank, except as provided in paragraph (f) of this section, shall 
be the rate prescribed in the following schedule:

 Initial and Total Base Assessment Rate Schedule \1\ if the Reserve Ratio as of the End of the Prior Assessment
                   Period is Equal to or Greater Than 2 Percent but Less Than 2.5 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                                                Risk Category    Risk Category    Risk Category
                                          Risk Category I             II              III               IV
----------------------------------------------------------------------------------------------------------------
Initial and Total Assessment Rate..  2 to 6..................              10               17               28
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Initial and total base rates that are not
  the minimum or maximum rate will vary between these rates.

    (A) Risk category I initial and total base assessment rate schedule. 
The annual initial and total base assessment rates for an insured branch 
of a foreign bank in Risk Category I shall range from 2 to 6 basis 
points.
    (B) Risk category II, III, and IV initial and total base assessment 
rate schedule. The annual initial and total base assessment rates for 
Risk Categories II, III, and IV shall be 10, 17, and 28 basis points, 
respectively.
    (C) All insured branches of foreign banks in any one risk category, 
other than Risk Category I, will be charged the same initial base 
assessment rate, subject to adjustment as appropriate.
    (iii) Assessment rate schedule for insured branches of foreign banks 
if the reserve ratio of the DIF as of the end of the prior assessment 
period is greater than 2.5 percent. If the reserve ratio of the DIF as 
of the end of the prior assessment period is greater than 2.5 percent, 
the initial and total base assessment rate

[[Page 444]]

for an insured branch of foreign bank, except as provided in paragraph 
(f) of this section, shall be the rate prescribed in the following 
schedule:

 Initial and Total Base Assessment Rate Schedule \1\ If the Reserve Ratio as of the End of the Prior Assessment
                               Period Is Greater Than or Equal to 2.5 Percent \2\
----------------------------------------------------------------------------------------------------------------
                                                                   Risk Category   Risk Category   Risk Category
                                            Risk Category I             II              III             IV
----------------------------------------------------------------------------------------------------------------
Initial Assessment Rate..............  1 to 5...................               9              15              25
----------------------------------------------------------------------------------------------------------------
\1\ The depository institution debt adjustment, which is not included in the table, can increase total base
  assessment rates above the maximum assessment rates shown in the table.
\2\ All amounts for all risk categories are in basis points annually. Initial and total base rates that are not
  the minimum or maximum rate will vary between these rates.

    (A) Risk category I initial and total base assessment rate schedule. 
The annual initial and total base assessment rates for an insured branch 
of a foreign bank in Risk Category I shall range from 1 to 5 basis 
points.
    (B) Risk category II, III, and IV initial and total base assessment 
rate schedule. The annual initial and total base assessment rates for 
Risk Categories II, III, and IV shall be 9, 15, and 25 basis points, 
respectively.
    (C) All insured branches of foreign banks in any one risk category, 
other than Risk Category I, will be charged the same initial base 
assessment rate, subject to adjustment as appropriate.
    (f) Total base assessment rate schedule adjustments and procedures--
(1) Board rate adjustments. The Board may increase or decrease the total 
base assessment rate schedule in paragraphs (a) through (e) of this 
section up to a maximum increase of 2 basis points or a fraction thereof 
or a maximum decrease of 2 basis points or a fraction thereof (after 
aggregating increases and decreases), as the Board deems necessary. Any 
such adjustment shall apply uniformly to each rate in the total base 
assessment rate schedule. In no case may such rate adjustments result in 
a total base assessment rate that is mathematically less than zero or in 
a total base assessment rate schedule that, at any time, is more than 2 
basis points above or below the total base assessment schedule for the 
Deposit Insurance Fund in effect pursuant to paragraph (b) of this 
section, nor may any one such adjustment constitute an increase or 
decrease of more than 2 basis points.
    (2) Amount of revenue. In setting assessment rates, the Board shall 
take into consideration the following:
    (i) Estimated operating expenses of the Deposit Insurance Fund;
    (ii) Case resolution expenditures and income of the Deposit 
Insurance Fund;
    (iii) The projected effects of assessments on the capital and 
earnings of the institutions paying assessments to the Deposit Insurance 
Fund;
    (iv) The risk factors and other factors taken into account pursuant 
to 12 U.S.C. 1817(b)(1); and
    (v) Any other factors the Board may deem appropriate.
    (3) Adjustment procedure. Any adjustment adopted by the Board 
pursuant to this paragraph (f) will be adopted by rulemaking, except 
that the Corporation may set assessment rates as necessary to manage the 
reserve ratio, within set parameters not exceeding cumulatively 2 basis 
points, pursuant to paragraph (f)(1) of this section, without further 
rulemaking.
    (4) Announcement. The Board shall announce the assessment schedules 
and the amount and basis for any adjustment thereto not later than 30 
days before the quarterly certified statement invoice date specified in 
Sec.  327.3(b) for the first assessment period for which the adjustment 
shall be effective. Once set, rates will remain in effect until changed 
by the Board.

[76 FR 10717, Feb. 25, 2011, as amended at 81 FR 32201, May 20, 2016]



Sec.  327.11  Surcharges and assessments required to raise the reserve ratio 
of the DIF to 1.35 percent.

    (a) Surcharge--(1) Institutions subject to surcharge. The following 
insured depository institutions are subject to the surcharge described 
in this paragraph:
    (i) Large institutions, as defined in Sec.  327.8(f);

[[Page 445]]

    (ii) Highly complex institutions, as defined in Sec.  327.8(g); and
    (iii) Insured branches of foreign banks whose assets are equal to or 
exceed $10 billion, as reported in Schedule RAL of the branch's most 
recent quarterly Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Banks.
    (2) Surcharge period. The surcharge period shall begin the later of 
the first day of the assessment period following the assessment period 
in which the reserve ratio of the DIF first reaches or exceeds 1.15 
percent, or the assessment period beginning on July 1, 2016. The 
surcharge period shall continue through the earlier of the assessment 
period ending December 31, 2018, or the end of the assessment period in 
which the reserve ratio of the DIF first reaches or exceeds 1.35 
percent.
    (3) Notification of surcharge. The FDIC shall notify each insured 
depository institution subject to the surcharge of the amount of such 
surcharge no later than 15 days before such surcharge is due, as 
described in paragraph (a)(4) of this section.
    (4) Payment of any surcharge. Each insured depository institution 
subject to the surcharge shall pay to the Corporation any surcharge 
imposed under paragraph (a) of this section in compliance with and 
subject to the provisions of Sec. Sec.  327.3, 327.6 and 327.7. The 
payment date for any surcharge shall be the date provided in Sec.  
327.3(b)(2) for the institution's quarterly certified statement invoice 
for the assessment period in which the surcharge was imposed.
    (5) Calculation of surcharge. An insured depository institution's 
surcharge for each assessment period during the surcharge period shall 
be determined by multiplying 1.125 basis points times the institution's 
surcharge base for the assessment period.
    (i) Surcharge base--Insured depository institution that has no 
affiliated insured depository institution subject to the surcharge. The 
surcharge base for an assessment period for an insured depository 
institution subject to the surcharge that has no affiliated insured 
depository institution subject to the surcharge shall equal:
    (A) The institution's deposit insurance assessment base for the 
assessment period, determined according to Sec.  327.5; plus
    (B) The greater of the increase amount determined according to 
paragraph (a)(5)(iii) of this section or zero; minus
    (C) $10 billion; provided, however, that an institution's surcharge 
base for an assessment period cannot be negative.
    (ii) Surcharge base--insured depository institution that has one or 
more affiliated insured depository institutions subject to the 
surcharge. The surcharge base for an assessment period for an insured 
depository institution subject to the surcharge that has one or more 
affiliated insured depository institutions subject to the surcharge 
shall equal:
    (A) The institution's deposit insurance assessment base for the 
assessment period, determined according to Sec.  327.5; plus
    (B) The greater of the institution's portion, determined according 
to paragraph (a)(5)(v) of this section, of the increase amount 
determined according to paragraph (a)(5)(iii) of this section or zero; 
minus
    (C) The institution's portion, determined according to paragraph 
(a)(5)(v) of this section, of $10 billion; provided, however, that an 
institution's surcharge base for an assessment period cannot be 
negative.
    (iii) Surcharge base--determination of increase amount. The increase 
amount for an assessment period shall equal:
    (A) The amount of the aggregate deposit insurance assessment bases 
for the assessment period, determined according to Sec.  327.5, of all 
of the institution's affiliated insured depository institutions that are 
not subject to the surcharge, minus
    (B) The product of the increase multiplier set out in paragraph 
(a)(5)(iv) of this section and the aggregate deposit insurance 
assessment bases, determined according to Sec.  327.5, as of December 
31, 2015, of all of the small institutions, as defined in Sec.  
327.8(e), that were the institution's affiliated insured depository 
institutions for the assessment period ending December 31, 2015.
    (iv) Increase multiplier for the assessment periods during the 
surcharge period.

[[Page 446]]

During the surcharge period, the increase multiplier shall be the amount 
prescribed in the following schedule:

  Increase Multipliers for the Assessment Periods During the Surcharge
                                 Period
------------------------------------------------------------------------
            For the assessment period ending--
------------------------------------------------------------------------
September 30, 2016......................................       1.0740995
December 31, 2016.......................................       1.1000000
March 31, 2017..........................................       1.1265251
June 30, 2017...........................................       1.1536897
September 30, 2017......................................       1.1815094
December 31, 2017.......................................       1.2100000
 March 31, 2018.........................................       1.2391776
June 30, 2018...........................................       1.2690587
September 30, 2018......................................       1.2996604
December 31, 2018.......................................       1.3310000
------------------------------------------------------------------------

    (A) For the assessment period ending September 30, 2016, the 
increase multiplier shall be 1.0740995.
    (B) For the assessment period ending December 31, 2016, the increase 
multiplier shall be 1.1000000.
    (C) For the assessment period ending March 31, 2017, the increase 
multiplier shall be 1.1265251.
    (D) For the assessment period ending June 30, 2017, the increase 
multiplier shall be 1.1536897.
    (E) For the assessment period ending September 30, 2017, the 
increase multiplier shall be 1.1815094.
    (F) For the assessment period ending December 31, 2017, the increase 
multiplier shall be 1.2100000.
    (G) For the assessment period ending March 31, 2018, the increase 
multiplier shall be 1.2391776.
    (H) For the assessment period ending June 30, 2018, the increase 
multiplier shall be 1.2690587.
    (I) For the assessment period ending September 30, 2018, the 
increase multiplier shall be 1.2996604.
    (J) For the assessment period ending December 31, 2018, the increase 
multiplier shall be 1.33100000.
    (v) Surcharge base--institution's portion. For purposes of 
paragraphs (a)(5)(ii)(B) and (C) of this section, an institution's 
portion shall equal the ratio of the institution's deposit insurance 
assessment base for the assessment period, determined according to Sec.  
327.5, to the sum of the institution's deposit insurance assessment base 
for the assessment period, determined according to Sec.  327.5, and the 
deposit insurance assessment bases for the assessment period, determined 
according to Sec.  327.5, of all of the institution's affiliated insured 
depository institutions subject to the surcharge.
    (vi) For the purposes of this section, an affiliated insured 
depository institution is an insured depository institution that meets 
the definition of ``affiliate'' in section 3 of the FDI Act, 12 U.S.C. 
1813(w)(6).
    (6) Effect of mergers and consolidations on surcharge base. (i) If 
an insured depository institution acquires another insured depository 
institution through merger or consolidation during the surcharge period, 
the acquirer's surcharge base will be calculated consistent with Sec.  
327.6 and Sec.  327.11(a)(5). For the purposes of the surcharge, a 
merger or consolidation means any transaction in which an insured 
depository institution merges or consolidates with any other insured 
depository institution, and includes transactions in which an insured 
depository institution either directly or indirectly acquires all or 
substantially all of the assets, or assumes all or substantially all of 
the deposit liabilities of any other insured depository institution 
where there is not a legal merger or consolidation of the two insured 
depository institutions.
    (ii) If an insured depository institution not subject to the 
surcharge is the surviving or resulting institution in a merger or 
consolidation with an insured depository institution that is subject to 
the surcharge or acquires all or substantially all of the assets, or 
assumes all or substantially all of the deposit liabilities, of an 
insured depository institution subject to the surcharge, then the 
surviving or resulting insured deposit institution or the insured 
depository institution that acquires such assets or assumes such deposit 
liabilities is subject to the surcharge.
    (b) Shortfall assessment.--(1) Institutions subject to shortfall 
assessment. Any insured depository institution that was subject to a 
surcharge under paragraph (a)(1) of this section, in any assessment 
period during the surcharge period described in paragraph (a)(2) of this 
section, shall be subject to the shortfall assessment described in this 
paragraph (b). If surcharges under paragraph (a) of this section have 
not been in effect,

[[Page 447]]

the insured depository institutions subject to the shortfall assessment 
described in this paragraph (b) will be the insured depository 
institutions described in paragraph (a)(1) of this section as of the 
assessment period in which the reserve ratio of the DIF reaches or 
exceeds 1.15 percent.
    (2) Notification of shortfall. The FDIC shall notify each insured 
depository institution subject to the shortfall assessment of the amount 
of such institution's share of the shortfall assessment described in 
paragraph (b)(5) of this section no later than 15 days before such 
shortfall assessment is due, as described in paragraph (b)(3) of this 
section.
    (3) Payment of any shortfall assessment. Each insured depository 
institution subject to the shortfall assessment shall pay to the 
Corporation such institution's share of any shortfall assessment as 
described in paragraph (b)(5) of this section in compliance with and 
subject to the provisions of Sec. Sec.  327.3, 327.6 and 327.7. The 
payment date for any shortfall assessment shall be the date provided in 
Sec.  327.3(b)(2) for the institution's quarterly certified statement 
invoice for the assessment period in which the shortfall assessment is 
imposed.
    (4) Amount of aggregate shortfall assessment. (i) If the reserve 
ratio of the DIF is at least 1.15 percent but has not reached or 
exceeded 1.35 percent as of December 31, 2018, the shortfall assessment 
shall be imposed on March 31, 2019, and shall equal 1.35 percent of 
estimated insured deposits as of December 31, 2018, minus the actual DIF 
balance as of that date.
    (ii) If the reserve ratio of the DIF is less than 1.15 percent and 
has not reached or exceeded 1.35 percent by December 31, 2018, the 
shortfall assessment shall be imposed at the end of the assessment 
period immediately following the assessment period that occurs after 
December 31, 2018, during which the reserve ratio first reaches or 
exceeds 1.15 percent and shall equal 0.2 percent of estimated insured 
deposits as of the end of the calendar quarter in which the reserve 
ratio first reaches or exceeds 1.15 percent.
    (5) Institutions' shares of aggregate shortfall assessment. Each 
insured depository institution's share of the aggregate shortfall 
assessment shall be determined by apportioning the aggregate amount of 
the shortfall assessment among all institutions subject to the shortfall 
assessment in proportion to each institution's shortfall assessment base 
as described in this paragraph.
    (i) Shortfall assessment base if surcharges have been in effect. If 
surcharges have been in effect, an institution's shortfall assessment 
base shall equal the average of the institution's surcharge bases during 
the surcharge period. For purposes of determining the average surcharge 
base, if an institution was not subject to the surcharge during any 
assessment period of the surcharge period, its surcharge base shall 
equal zero for that assessment period.
    (ii) Shortfall assessment base if surcharges have not been in 
effect. If surcharges have not been in effect, an institution's 
shortfall assessment base shall equal the average of what its surcharge 
bases would have been over the four assessment periods ending with the 
assessment period in which the reserve ratio first reaches or exceeds 
1.15 percent. If an institution would not have been subject to a 
surcharge during one of those assessment periods, its surcharge base 
shall equal zero for that assessment period.
    (6) Effect of mergers and consolidations on shortfall assessment. 
(i) If an insured depository institution, through merger or 
consolidation, acquires another insured depository institution that paid 
surcharges for one or more assessment periods, the acquirer will be 
subject to a shortfall assessment and its average surcharge base will be 
increased by the average surcharge base of the acquired institution, 
consistent with paragraph (b)(5) of this section.
    (ii) For the purposes of the shortfall assessment, a merger or 
consolidation means any transaction in which an insured depository 
institution merges or consolidates with any other insured depository 
institution, and includes transactions in which an insured depository 
institution either directly or indirectly acquires all or substantially 
all of the assets, or assumes all or substantially all of the deposit 
liabilities

[[Page 448]]

of any other insured depository institution where there is not a legal 
merger or consolidation of the two insured depository institutions.
    (c) Assessment credits. (1)(i) Eligible Institutions. For the 
purposes of this paragraph (c) an insured depository institution will be 
considered an eligible institution, if, for at least one assessment 
period during the credit calculation period, the institution was a 
credit accruing institution.
    (ii) Credit accruing institutions. A credit accruing institution is 
an institution that, for a particular assessment period, is not:
    (A) A large institution, as defined in Sec.  327.8(f);
    (B) A highly complex institution, as defined in Sec.  327.8(g); or
    (C) An insured branch of a foreign bank whose assets are equal to or 
exceed $10 billion, as reported in Schedule RAL of the branch's most 
recent quarterly Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Banks.
    (2) Credit calculation period. The credit calculation period shall 
begin the first day of the assessment period after the reserve ratio of 
the DIF reaches or exceeds 1.15 percent, and shall continue through the 
earlier of the assessment period that the reserve ratio of the DIF 
reaches or exceeds 1.35 percent or the assessment period that ends 
December 31, 2018.
    (3) Determination of aggregate assessment credit awards to all 
eligible institutions. The FDIC shall award an aggregate amount of 
assessment credits equal to the product of the fraction of quarterly 
regular deposit insurance assessments paid by credit accruing 
institutions during the credit calculation period and the amount by 
which the DIF increase, as determined under paragraph (c)(3)(ii) or 
(iii) of this section, exceeds total surcharges imposed under paragraph 
(b) of this section; provided, however, that the aggregate amount of 
assessment credits cannot exceed the aggregate amount of quarterly 
deposit insurance assessments paid by credit accruing institutions 
during the credit calculation period.
    (i) Fraction of quarterly regular deposit insurance assessments paid 
by credit accruing institutions. The fraction of assessments paid by 
credit accruing institutions shall equal quarterly deposit insurance 
assessments, as determined under Sec. Sec.  327.9 and 327.16, paid by 
such institutions for each assessment period during the credit 
calculation period, divided by the total amount of quarterly deposit 
insurance assessments paid by all insured depository institutions during 
the credit calculation period, excluding the aggregate amount of 
surcharges imposed under paragraph (b) of this section.
    (ii) DIF increase if the DIF reserve ratio has reached 1.35 percent 
by December 31, 2018. If the DIF reserve ratio has reached 1.35 percent 
by December 31, 2018, the DIF increase shall equal 0.2 percent of 
estimated insured deposits as of the date that the DIF reserve ratio 
first reaches or exceeds 1.35 percent.
    (iii) DIF Increase if the DIF reserve ratio has not reached 1.35 
percent by December 31, 2018. If the DIF reserve ratio has not reached 
1.35 percent by December 31, 2018, the DIF increase shall equal the DIF 
balance on December 31, 2018, minus 1.15 percent of estimated insured 
deposits on that date.
    (4) Determination of individual eligible institutions' shares of 
aggregate assessment Credit.--
    (i) Assessment credit share. To determine an eligible institution's 
assessment credit share, the aggregate assessment credits awarded by the 
FDIC shall be apportioned among all eligible institutions in proportion 
to their respective assessment credit bases, as described in paragraph 
(c)(4)(ii) of this section.
    (ii) Assessment credit base. An eligible institution's assessment 
credit base shall equal the average of its quarterly deposit insurance 
assessment bases, as determined under Sec.  327.5, during the credit 
calculation period, as defined in paragraph (c)(2) of this section. An 
eligible institution's credit base shall be deemed to equal zero for any 
assessment period during which the institution was not a credit accruing 
institution.
    (iii) Limitation. The assessment credits awarded to an eligible 
institution shall not exceed the total amount of

[[Page 449]]

quarterly deposit insurance assessments paid by that institution for 
assessment periods during the credit calculation period in which it was 
a credit accruing institution.
    (5) Effect of merger or consolidation on assessment credit base. If 
an eligible institution acquires another eligible institution through 
merger or consolidation before the reserve ratio of the DIF reaches 1.35 
percent, the acquirer's quarterly deposit insurance assessment base (for 
purposes of calculating the acquirer's assessment credit base) shall be 
deemed to include the acquired institution's deposit insurance 
assessment base for the assessment periods during the credit calculation 
period that were prior to the merger or consolidation and in which the 
acquired institution was a credit accruing institution.
    (6) Effect of call report amendments. Amendments to the quarterly 
Reports of Condition and Income or the quarterly Reports of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks that occur 
subsequent to the payment date for the final assessment period of the 
credit calculation period shall not affect an eligible institution's 
credit share.
    (7) Award and notice of assessment credits--(i) Award of assessment 
credits. As soon as practicable after the earlier of either December 31, 
2018, or the date on which the reserve ratio of the DIF reaches 1.35 
percent, the FDIC shall notify an eligible institution of the FDIC's 
preliminary estimate of such institution's assessment credits and the 
manner in which the FDIC calculated such credits.
    (ii) Notice of assessment credits. The FDIC shall provide eligible 
institutions with periodic updated notices reflecting adjustments to the 
institution's assessment credits resulting from requests for review or 
appeals, mergers or consolidations, or the FDIC's application of credits 
to an institution's quarterly deposit insurance assessments.
    (8) Requests for review and appeal of assessment credits. Any 
institution that disagrees with the FDIC's computation of or basis for 
its assessment credits, as determined under this paragraph (c), may 
request review of the FDIC's determination or appeal that determination. 
Such requests for review or appeal shall be filed pursuant to the 
procedures set forth in paragraph (d) of this section.
    (9) Successors. If an insured depository institution acquires an 
eligible institution through merger or consolidation after the reserve 
ratio of the DIF reaches 1.35 percent, the acquirer is successor to any 
assessment credits of the acquired institution.
    (10) Mergers and consolidation include only legal mergers and 
consolidation. For the purposes of this paragraph (c), a merger or 
consolidation does not include transactions in which an insured 
depository institution either directly or indirectly acquires the assets 
of, or assumes liability to pay any deposits made in, any other insured 
depository institution, but there is not a legal merger or consolidation 
of the two insured depository institutions.
    (11) Use of credits. (i) The FDIC shall apply assessment credits 
awarded under paragraph (c) of this section to an institution's deposit 
insurance assessments, as calculated under Sec. Sec.  327.9 and 327.16, 
only for assessment periods in which the reserve ratio of the DIF is at 
least 1.38 percent.
    (ii) The FDIC shall apply assessment credits to reduce an 
institution's quarterly deposit insurance assessments by each 
institution's remaining credits. The assessment credit applied to each 
institution's deposit insurance assessment for any assessment period 
shall not exceed the institution's total deposit insurance assessment 
for that assessment period.
    (iii) The amount of credits applied each quarter will not be 
recalculated as a result of amendments to the quarterly Reports of 
Condition and Income or the quarterly Reports of Assets and Liabilities 
of U.S. Branches and Agencies of Foreign Banks pertaining to any quarter 
in which credits have been applied.
    (12) Transfer or sale of credits. Other than through merger or 
consolidation, credits may not be sold or transferred.
    (d) Request for review and appeals of assessment credits. (1) An 
institution that disagrees with the basis for its assessment credits, or 
the Corporation's computation of its assessments credits

[[Page 450]]

under paragraph (c) of this section and seeks to change it must submit a 
written request for review and any supporting documentation to the 
FDIC's Director of the Division of Finance.
    (2) Timing. (i) Any request for review under this paragraph must be 
submitted within 30 days from
    (A) The initial notice provided by the FDIC to the insured 
depository institution under paragraph (c)(7) of this section stating 
the FDIC's preliminary estimate of an eligible institution's assessment 
credit and the manner in which the assessment credit was calculated; or
    (B) Any updated notice provided by the FDIC to the insured 
depository institution under paragraph (c)(7) of this section.
    (ii) Any requests submitted after the deadline in paragraph 
(d)(2)(i) of this section will be considered untimely filed and the 
institution will be subsequently barred from submitting a request for 
review of its assessment credit.
    (3) Process of review. (i) Upon receipt of a request for review, the 
FDIC shall temporarily freeze the amount of the assessment credit being 
reviewed until a final determination is made by the Corporation.
    (ii) The FDIC may request, as part of its review, additional 
information from the insured depository institution involved in the 
request and any such information must be submitted to the FDIC within 21 
days of the FDIC's request;
    (iii) The FDIC's Director of the Division of Finance, or his or her 
designee, will notify the requesting institution of his or her 
determination of whether a change is warranted within 60 days of receipt 
by the FDIC of the request for review, or if additional information had 
been requested from the FDIC, within 60 days of receipt of any such 
additional information.
    (4) Appeal. If the requesting institution disagrees with the final 
determination from the Director of the Division of Finance, that 
institution may appeal its assessment credit determination to the FDIC's 
Assessment Appeals Committee within 30 days from the date of the 
Director's written determination. Notice of the procedures applicable to 
an appeal before the Assessment Appeals Committee will be included in 
the Director's written determination.
    (5) Adjustments to assessment credits. Once the Director of the 
Division of Finance, or the Assessment Appeals Committee, as 
appropriate, has notified the requesting bank of its final 
determination, the FDIC will make appropriate adjustments to assessment 
credit amounts consistent with that determination. Adjustments to an 
insured depository institution's assessment credit amounts will not be 
applied retroactively to reduce or increase the quarterly deposit 
insurance assessment for a prior assessment period.

[81 FR 16069, Mar. 25, 2016, as amended at 83 FR 14568, Apr. 5, 2018]



Sec.  327.12  Prepayment of quarterly risk-based assessments.

    (a) Requirement to prepay assessment. On December 30, 2009, each 
insured depository institution shall pay to the FDIC a prepaid 
assessment, which shall equal its estimated quarterly risk-based 
assessments aggregated for the fourth quarter of 2009, and all of 2010, 
2011, and 2012 (the ``prepayment period'').
    (b) Calculation of prepaid assessment-- (1) Prepaid assessment-- (i) 
Fourth quarter 2009 and all of 2010. An institution's prepaid assessment 
for the fourth quarter of 2009 and for all of 2010 shall be determined 
by multiplying its prepaid assessment rate as defined in paragraph 
(b)(2) of this section times the corresponding prepaid assessment base 
for each quarter as determined pursuant to paragraph (b)(3) of this 
section.
    (ii) All of 2011 and 2012. An institution's prepaid assessment for 
each quarter of 2011 and 2012 shall be determined by multiplying the sum 
of its prepaid assessment rate as defined in paragraph (b)(2) of this 
section, plus .75 basis points (which implements the 3 basis point 
increase in annual assessment rates adopted by the Board on September 
29, 2009), times the corresponding prepaid assessment base for each 
quarter determined pursuant to paragraph (b)(3) of this section.
    (2) Prepaid assessment rate. For each quarter of the prepayment 
period, an institution's prepaid assessment rate

[[Page 451]]

shall equal the total base assessment rate that the institution would 
have paid for the third quarter of 2009 had the institution's CAMELS 
ratings in effect on September 30, 2009, and, where applicable, long-
term debt issuer ratings in effect on September 30, 2009, been in effect 
for the entire third quarter of 2009.
    (3) Prepaid assessment base. For each quarter of the prepayment 
period, an institution's prepaid assessment base shall be calculated by 
increasing its third quarter 2009 assessment base at an annual rate of 5 
percent.
    (4) Finality of prepaid assessment. The prepaid assessment rate and 
prepaid assessment base defined in paragraphs (b)(2) and (3) of this 
section shall be determined based upon data in the FDIC's computer 
systems as of December 24, 2009. Changes to data underlying an 
institution's adjusted total base assessment rate or assessment base, 
whether by amendment to a report of condition or otherwise, received by 
the FDIC after December 24, 2009, shall not affect an institution's 
prepaid assessment.
    (5) Prepaid assessment rates for mergers and consolidations. For 
mergers and consolidations recorded in the FDIC's computer systems no 
later than December 24, 2009, the acquired institution's prepaid 
assessment rate under paragraph (b)(2) of this section shall be the 
prepaid assessment rate of the acquiring institution.
    (c) Invoicing of prepaid assessment. The FDIC shall advise each 
insured depository institution of the amount and calculation of its 
prepaid assessment at the same time the FDIC provides the institution's 
quarterly certified statement invoice for the third quarter of 2009. The 
FDIC will re-invoice through FDICconnect based upon any data changes as 
provided in paragraph (b)(4) of this section.
    (d) Payment of prepaid assessment. Each insured depository 
institution shall pay to the Corporation the amount of its prepaid 
assessment as required under paragraph (a) of this section in compliance 
with and subject to the provisions of Sec. Sec.  327.3 and 327.7 of 
subpart A.
    (1) Exception to ACH payment. If an institution's prepaid assessment 
is greater than $99 million, the institution shall make payment by wire 
transfer to the FDIC, rather than by funding its designated deposit 
account for payment via ACH as provided in Sec.  327.3 of subpart A.
    (2) One-time assessment credits. The FDIC will not apply an 
institution's one-time assessment credit under subpart B of this part 
327 to reduce an institution's prepaid assessment. The FDIC will apply 
an institution's remaining one-time assessment credits under Part 327 
subpart B to its quarterly deposit insurance assessments before applying 
its prepaid assessments.
    (e) Use of prepaid assessments. Prepaid assessments shall only be 
used to offset regular quarterly risk-based deposit insurance 
assessments payable under this subpart A. The FDIC will begin offsetting 
regular quarterly risk-based deposit insurance assessments against 
prepaid assessments on March 30, 2010. The FDIC will continue to make 
such offsets until the earlier of the exhaustion of the institution's 
prepaid assessment or June 30, 2013. Any prepaid assessment remaining 
after collection of the amount due on June 30, 2013, shall be returned 
to the institution. If the FDIC, in its discretion, determines that its 
liquidity needs allow, it may return any remaining prepaid assessment to 
the institution prior to June 30, 2013.
    (f) Transfers. An insured depository institution may enter into an 
agreement to transfer, but not pledge, any portion of that institution's 
prepaid assessment to another insured depository institution, provided 
that the parties to the agreement notify the FDIC's Division of Finance 
and submit a written agreement, signed by legal representatives of both 
institutions. The parties must include documentation stating that each 
representative has the legal authority to bind the institution. The 
institution transferring its prepaid assessment shall submit the 
required notice and documentation through FDICconnect. That information 
will be presented by the FDIC through FDICconnect to the institution 
acquiring the prepaid assessments for its acceptance. The adjustment to 
the amount of the prepaid assessment for

[[Page 452]]

each institution involved in the transfer will be made in the next 
assessment invoice that is sent at least 10 days after the FDIC's 
receipt of acceptance by the institution acquiring the prepaid 
assessments.
    (g) Prepaid assessments following a merger. In the event that an 
insured depository institution merges with, or consolidates into, 
another insured depository institution, the surviving or resulting 
institution will be entitled to use any unused portion of the acquired 
institution's prepaid assessment not otherwise transferred pursuant to 
paragraph (f) of this section.
    (h) Disposition in the event of failure or termination of insured 
status. In the event of failure of an insured depository institution, 
any amount of its prepaid assessment remaining (other than any amounts 
needed to satisfy its assessment obligations not yet offset against the 
prepaid amount) will be refunded to the institution's receiver. In the 
event that an insured depository institution's insured status 
terminates, any amount of its prepaid assessment remaining (other than 
any amounts needed to satisfy its assessment obligations not yet offset 
against the prepaid amount) will be refunded to the institution, subject 
to the provisions of Sec.  327.6 of subpart A.
    (i) Exemptions--(1) Exemption without application. The FDIC, after 
consultation with an institution's primary federal regulator, will 
exercise its discretion as supervisor and insurer to exempt an 
institution from the prepayment requirement under paragraph (a) of this 
section if the FDIC determines that the prepayment would adversely 
affect the safety and soundness of that institution. No application is 
required for this review and the FDIC will notify any affected 
institution of its exemption by November 23, 2009.
    (2) Application for exemption. An institution may also apply to the 
FDIC for an exemption from the prepayment requirement under paragraph 
(a) of this section if the prepayment would significantly impair the 
institution's liquidity, or would otherwise create extraordinary 
hardship. Written applications for exemption from the prepayment 
obligation must be submitted to the Director of the Division of 
Supervision and Consumer Protection on or before December 1, 2009, by 
electronic mail ([email protected]) or fax (202-898-6676). The 
application must contain a full explanation of the need for the 
exemption and provide supporting documentation, including current 
financial statements, cash flow projections, and any other relevant 
information, including any information the FDIC may request. The FDIC 
will exercise its discretion in deciding whether to exempt an 
institution that files an application for exemption. An application 
shall be deemed denied unless the FDIC notifies an applying institution 
by December 15, 2009, either that the institution is exempt from the 
prepaid assessment or the FDIC has postponed determination under 
paragraph (i)(4) of this section. The FDIC's denial of applications for 
exemption will be final and not subject to further agency review.
    (3) Application for withdrawal of exemption. An institution that has 
received an exemption under paragraph (i)(1) of this section may request 
that the FDIC withdraw the exemption. Written applications for 
withdrawal of exemption must be submitted to the Director of the 
Division of Supervision and Consumer Protection on or before December 1, 
2009, by electronic mail ([email protected]) or fax (202-898-
6676). The application must contain a full explanation of the reasons 
the exemption is not needed and provide supporting documentation, 
including current financial statements, cash flow projections, and any 
other relevant information, including any information the FDIC may 
request. The FDIC, after consultation with the institution's primary 
Federal regulator, will exercise its discretion in deciding whether to 
withdraw the exemption. The FDIC will notify an institution of its 
decision to withdraw the exemption by December 15, 2009; that 
determination will be final and not subject to further agency review. An 
application shall be deemed denied unless the FDIC notifies an applying 
institution by December 15, 2009, that the exemption is withdrawn.

[[Page 453]]

    (4) Postponement of determination. The FDIC may postpone making a 
determination on any application for exemption filed under paragraph 
(i)(2) of this section until no later than January 14, 2010. An 
institution notified by the FDIC of such postponement will not have to 
pay the prepaid assessment calculated under paragraph (b) of this 
section on December 30, 2009. If the FDIC denies the application for 
exemption, the FDIC will notify the institution of the denial and of the 
date by which the institution must pay the prepaid assessment. The due 
date for payment of the prepaid assessment after such a denial will be 
no less than 15 days after the date of the notice of denial.
    (5) Obligation to pay third quarter 2009 assessment. Any institution 
exempted from the prepayment requirement or any institution whose 
application for exemption has been postponed under this section shall 
pay to the Corporation on December 30, 2009, any amount due for the 
third quarter of 2009 as shown on the certified statement invoice for 
that quarter.

[74 FR 59065, Nov. 17, 2009]



Sec.  327.15  Emergency special assessments.

    (a) Emergency special assessment imposed on June 30, 2009. On June 
30, 2009, the FDIC shall impose an emergency special assessment of 20 
basis points on each insured depository institution based on the 
institution's assessment base calculated pursuant to Sec.  327.5 for the 
second assessment period of 2009.
    (b) Emergency special assessments after June 30, 2009. After June 
30, 2009, if the reserve ratio of the Deposit Insurance Fund is 
estimated to fall to a level that that the Board believes would 
adversely affect public confidence or to a level which shall be close to 
zero or negative at the end of a calendar quarter, an emergency special 
assessment of up to 10 basis points may be imposed by a vote of the 
Board on all insured depository institutions based on each institution's 
assessment base calculated pursuant to Sec.  327.5 for the corresponding 
assessment period.
    (1) Estimation process. For purposes of any emergency special 
assessment under this paragraph (b), the FDIC shall estimate the reserve 
ratio of the Deposit Insurance Fund for the applicable calendar quarter 
end from available data on, or estimates of, insurance fund assessment 
income, investment income, operating expenses, other revenue and 
expenses, and loss provisions, including provisions for anticipated 
failures. The FDIC will assume that estimated insured deposits will 
increase during the quarter at the average quarterly rate over the 
previous four quarters.
    (2) Imposition and announcement of emergency special assessments. 
Any emergency special assessment under this paragraph (b) shall be on 
the last day of a calendar quarter and shall be announced by the end of 
such quarter. As soon as practicable after announcement, the FDIC will 
have a notice published in the Federal Register of the emergency special 
assessment.
    (c) Invoicing of any emergency special assessments. The FDIC shall 
advise each insured depository institution of the amount and calculation 
of any emergency special assessment imposed under paragraph (a) or (b) 
of this section. This information shall be provided at the same time as 
the institution's quarterly certified statement invoice for the 
assessment period in which the emergency special assessment was imposed.
    (d) Payment of any emergency special assessment. Each insured 
depository institution shall pay to the Corporation any emergency 
special assessment imposed under paragraph (a) or (b) of this section in 
compliance with and subject to the provisions of Sec. Sec.  327.3, 327.6 
and 327.7 of subpart A, and the provisions of subpart B. The payment 
date for any emergency special assessment shall be the date provided in 
Sec.  327.3(b)(2) for the institution's quarterly certified statement 
invoice for the calendar quarter in which the emergency special 
assessment was imposed.

[74 FR 9341, Mar. 3, 2009]

[[Page 454]]



Sec.  327.16  Assessment pricing methods--beginning the first assessment 
period after June 30, 2016, where the reserve ratio of the DIF 
as of the end of the prior assessment period has reached 
or exceeded 1.15 percent.

    (a) Established small institutions. Beginning the first assessment 
period after June 30, 2016, where the reserve ratio of the DIF as of the 
end of the prior assessment period has reached or exceeded 1.15 percent, 
and for all subsequent assessment periods, an established small 
institution shall have its initial base assessment rate determined by 
using the financial ratios methods set forth in paragraph (a)(1) of this 
section.
    (1) Under the financial ratios method, each of seven financial 
ratios and a weighted average of CAMELS component ratings will be 
multiplied by a corresponding pricing multiplier. The sum of these 
products will be added to a uniform amount. The resulting sum shall 
equal the institution's initial base assessment rate; provided, however, 
that no institution's initial base assessment rate shall be less than 
the minimum initial base assessment rate in effect for established small 
institutions with a particular CAMELS composite rating for that 
assessment period nor greater than the maximum initial base assessment 
rate in effect for established small institutions with a particular 
CAMELS composite rating for that assessment period. An institution's 
initial base assessment rate, subject to adjustment pursuant to 
paragraphs (e)(1) and (2) of this section, as appropriate (resulting in 
the institution's total base assessment rate, which in no case can be 
lower than 50 percent of the institution's initial base assessment 
rate), and adjusted for the actual assessment rates set by the Board 
under Sec.  327.10(f), will equal an institution's assessment rate. The 
seven financial ratios are: Leverage Ratio (%); Net Income before Taxes/
Total Assets (%); Nonperforming Loans and Leases/Gross Assets (%); Other 
Real Estate Owned/Gross Assets (%); Brokered Deposit Ratio (%); One Year 
Asset Growth (%); and Loan Mix Index. The ratios and the weighted 
average of CAMELS component ratings are defined in paragraph (a)(1)(ii) 
of this section. The ratios will be determined for an assessment period 
based upon information contained in an institution's report of condition 
filed as of the last day of the assessment period as set out in 
paragraph (a)(2) of this section. The weighted average of CAMELS 
component ratings is created by multiplying each component by the 
following percentages and adding the products: Capital adequacy--25%, 
Asset quality--20%, Management--25%, Earnings--10%, Liquidity--10%, and 
Sensitivity to market risk--10%. The following tables set forth the 
values of the pricing multipliers:

  Pricing Multipliers Applicable Beginning the First Assessment Period
 After June 30, 2016, Where the Reserve Ratio as of the End of the Prior
   Assessment Period Has Reached 1.15 Percent, and for All Subsequent
  Assessment Periods Where the Reserve Ratio as of the End of the Prior
                Assessment Period Is Less Than 2 Percent
------------------------------------------------------------------------
                                                              Pricing
                    Risk measures \1\                       multipliers
                                                                \2\
------------------------------------------------------------------------
Leverage ratio..........................................          -1.264
Net Income before Taxes/Total Assets....................          -0.720
Nonperforming Loans and Leases/Gross Assets.............           0.942
Other Real Estate Owned/Gross Assets....................           0.533
Brokered Deposit Ratio..................................           0.264
One Year Asset Growth...................................           0.061
Loan Mix Index..........................................           0.081
Weighted Average CAMELS Component Rating................           1.519
------------------------------------------------------------------------
\1\ Ratios are expressed as percentages.
\2\ Multipliers are rounded to three decimal places.


 Pricing Multipliers Applicable When the Reserve Ratio as of the End of
  the Prior Assessment Period Is Equal to or Greater Than 2 Percent but
                          Less Than 2.5 Percent
------------------------------------------------------------------------
                                                              Pricing
                    Risk measures \1\                       multipliers
                                                                \2\
------------------------------------------------------------------------
Leverage Ratio..........................................          -1.217
Net Income before Taxes/Total Assets....................          -0.694
Nonperforming Loans and Leases/Gross Assets.............           0.907
Other Real Estate Owned/Gross Assets....................           0.513
Brokered Deposit Ratio..................................           0.254
One Year Asset Growth...................................           0.059
Loan Mix Index..........................................           0.078
Weighted Average CAMELS Component Rating................           1.463
------------------------------------------------------------------------
\1\ Ratios are expressed as percentages.
\2\ Multipliers are rounded to three decimal places.


[[Page 455]]


 Pricing Multipliers Applicable When the Reserve Ratio as of the End of
   the Prior Assessment Period Is Greater Than or Equal to 2.5 Percent
------------------------------------------------------------------------
                                                              Pricing
                    Risk measures \1\                       multipliers
                                                                \2\
------------------------------------------------------------------------
Leverage Ratio..........................................          -1.123
Net Income before Taxes/Total Assets....................          -0.640
Nonperforming Loans and Leases/Gross Assets.............           0.837
Other Real Estate Owned/Gross Assets....................           0.474
Brokered Deposit Ratio..................................           0.235
One Year Asset Growth...................................           0.054
Loan Mix Index..........................................           0.072
Weighted Average CAMELS Component Rating................           1.350
------------------------------------------------------------------------
\1\ Ratios are expressed as percentages.
\2\ Multipliers are rounded to three decimal places.

    (i) Uniform amount. Except as adjusted for the actual assessment 
rates set by the Board under Sec.  327.10(f), the uniform amount shall 
be:
    (A) 7.352 whenever the assessment rate schedule set forth in Sec.  
327.10(b) is in effect;
    (B) 6.188 whenever the assessment rate schedule set forth in Sec.  
327.10(c) is in effect; or
    (C) 4.870 whenever the assessment rate schedule set forth in Sec.  
327.10(d) is in effect.
    (ii) Definitions of measures used in the financial ratios method--
(A) Definitions. The following table lists and defines the measures used 
in the financial ratios method:

       Definitions of Measures Used in the Financial Ratios Method
------------------------------------------------------------------------
             Variables                           Description
------------------------------------------------------------------------
Leverage Ratio (%)................  Tier 1 capital divided by adjusted
                                     average assets. (Numerator and
                                     denominator are both based on the
                                     definition for prompt corrective
                                     action.)
Net Income before Taxes/Total       Income (before applicable income
 Assets (%).                         taxes and discontinued operations)
                                     for the most recent twelve months
                                     divided by total assets.\1\
Nonperforming Loans and Leases/     Sum of total loans and lease
 Gross Assets (%).                   financing receivables past due 90
                                     or more days and still accruing
                                     interest and total nonaccrual loans
                                     and lease financing receivables
                                     (excluding, in both cases, the
                                     maximum amount recoverable from the
                                     U.S. Government, its agencies or
                                     government-sponsored enterprises,
                                     under guarantee or insurance
                                     provisions) divided by gross
                                     assets.\2\
Other Real Estate Owned/Gross       Other real estate owned divided by
 Assets (%).                         gross assets.\2\
Brokered Deposit Ratio............  The ratio of the difference between
                                     brokered deposits and 10 percent of
                                     total assets to total assets. For
                                     institutions that are well
                                     capitalized and have a CAMELS
                                     composite rating of 1 or 2,
                                     reciprocal deposits are deducted
                                     from brokered deposits. If the
                                     ratio is less than zero, the value
                                     is set to zero.
Weighted Average of C, A, M, E, L,  The weighted sum of the ``C,''
 and S Component Ratings.            ``A,'' ``M,'' ``E'', ``L'', and
                                     ``S'' CAMELS components, with
                                     weights of 25 percent each for the
                                     ``C'' and ``M'' components, 20
                                     percent for the ``A'' component,
                                     and 10 percent each for the ``E'',
                                     ``L'', and ``S'' components.
Loan Mix Index....................  A measure of credit risk described
                                     paragraph (a)(1)(ii)(B) of this
                                     section.
One-Year Asset Growth (%).........  Growth in assets (adjusted for
                                     mergers \3\) over the previous year
                                     in excess of 10 percent.\4\ If
                                     growth is less than 10 percent, the
                                     value is set to zero.
------------------------------------------------------------------------
\1\ The ratio of Net Income before Taxes to Total Assets is bounded
  below by (and cannot be less than) -25 percent and is bounded above by
  (and cannot exceed) 3 percent.
\2\ Gross assets are total assets plus the allowance for loan and lease
  financing receivable losses (ALLL).
\3\ Growth in assets is also adjusted for acquisitions of failed banks.
\4\ The maximum value of the Asset Growth measure is 230 percent; that
  is, asset growth (merger adjusted) over the previous year in excess of
  240 percent (230 percentage points in excess of the 10 percent
  threshold) will not further increase a bank's assessment rate.

    (B) Definition of loan mix index. The Loan Mix Index assigns loans 
in an institution's loan portfolio to the categories of loans described 
in the following table. The Loan Mix Index is calculated by multiplying 
the ratio of an institution's amount of loans in a particular loan 
category to its total assets by the associated weighted average charge-
off rate for that loan category, and summing the products for all loan 
categories. The table gives the weighted average charge-off rate for 
each category of loan. The Loan Mix Index excludes credit card loans.

   Loan Mix Index Categories and Weighted Charge-Off Rate Percentages
------------------------------------------------------------------------
                                                             Weighted
                                                            charge-off
                                                          rate (percent)
------------------------------------------------------------------------
Construction & Development..............................       4.4965840
Commercial & Industrial.................................       1.5984506
Leases..................................................       1.4974551
Other Consumer..........................................       1.4559717
Real Estate Loans Residual..............................       1.0169338
Multifamily Residential.................................       0.8847597

[[Page 456]]

 
Nonfarm Nonresidential..................................       0.7289274
I-4 Family Residential..................................       0.6973778
Loans to Depository Banks...............................       0.5760532
Agricultural Real Estate................................       0.2376712
Agriculture.............................................       0.2432737
------------------------------------------------------------------------

    (iii) Implementation of CAMELS rating changes--(A) Composite rating 
change. If, during an assessment period, a CAMELS composite rating 
change occurs in a way that changes the institution's initial base 
assessment rate, then the institution's initial base assessment rate for 
the portion of the assessment period prior to the change shall be 
determined using the assessment schedule for the appropriate CAMELS 
composite rating in effect before the change, including any minimum or 
maximum initial base assessment rates, and subject to adjustment 
pursuant to paragraphs (e)(1) and (2) of this section, as appropriate, 
and adjusted for actual assessment rates set by the Board under Sec.  
327.10(f). For the portion of the assessment period after the CAMELS 
composite rating change, the institution's initial base assessment rate 
shall be determined using the assessment schedule for the applicable 
CAMELS composite rating in effect, including any minimum or maximum 
initial base assessment rates, and subject to adjustment pursuant to 
paragraphs (e)(1) and (2) of this section, as appropriate, and adjusted 
for actual assessment rates set by the Board under Sec.  327.10(f).
    (B) Component ratings changes. If, during an assessment period, a 
CAMELS component rating change occurs in a way that changes the 
institution's initial base assessment rate, the initial base assessment 
rate for the period before the change shall be determined under the 
financial ratios method using the CAMELS component ratings in effect 
before the change, subject to adjustment under paragraphs (e)(1) and (2) 
of this section, as appropriate. Beginning on the date of the CAMELS 
component rating change, the initial base assessment rate for the 
remainder of the assessment period shall be determined under the 
financial ratios method using the CAMELS component ratings in effect 
after the change, again subject to adjustment under paragraphs (e)(1) 
and (2) of this section, as appropriate.
    (iv) No CAMELS composite rating or no CAMELS component ratings--(A) 
No CAMELS composite rating. If, during an assessment period, an 
institution has no CAMELS composite rating, its initial assessment rate 
will be 2 basis points above the minimum initial assessment rate for 
established small institutions until it receives a CAMELS composite 
rating.
    (B) No CAMELS component ratings. If, during an assessment period, an 
institution has a CAMELS composite rating but no CAMELS component 
ratings, the initial base assessment rate for that institution shall be 
determined under the financial ratios method using the CAMELS composite 
rating for its weighted average CAMELS component rating and, if the 
institution has not yet filed four quarterly reports of condition, by 
annualizing, where appropriate, financial ratios obtained from all 
quarterly reports of condition that have been filed.
    (2) Applicable quarterly reports of condition. The financial ratios 
used to determine the assessment rate for an established small 
institution shall be based upon information contained in an 
institution's Consolidated Reports of Condition and Income (or successor 
report, as appropriate) dated as of March 31 for the assessment period 
beginning the preceding January 1; dated as of June 30 for the 
assessment period beginning the preceding April 1; dated as of September 
30 for the assessment period beginning the preceding July 1; and dated 
as of December 31 for the assessment period beginning the preceding 
October 1.
    (b) Large and highly complex institutions--(1) Assessment scorecard 
for large institutions (other than highly complex institutions). (i) A 
large institution other than a highly complex institution shall have its 
initial base assessment rate determined using the scorecard for large 
institutions.

[[Page 457]]



                                        Scorecard for Large Institutions
----------------------------------------------------------------------------------------------------------------
                                                                                            Measure    Component
                                                    Scorecard measures and components       weights     weights
                                                                                           (percent)   (percent)
----------------------------------------------------------------------------------------------------------------
P..............................................  Performance Score......................
P.1............................................  Weighted Average CAMELS Rating.........         100          30
P.2............................................  Ability to Withstand Asset-Related       ..........          50
                                                  Stress.
                                                 Leverage ratio.........................          10
                                                 Concentration Measure..................          35
                                                 Core Earnings/Average Quarter-End Total          20
                                                  Assets \1\.
                                                 Credit Quality Measure.................          35
P.3............................................  Ability to Withstand Funding-Related     ..........          20
                                                  Stress.
                                                 Core Deposits/Total Liabilities........          60
                                                 Balance Sheet Liquidity Ratio..........          40
L..............................................  Loss Severity Score....................
L.1............................................  Loss Severity Measure..................  ..........         100
----------------------------------------------------------------------------------------------------------------
\1\ Average of five quarter-end total assets (most recent and four prior quarters).

    (ii) The scorecard for large institutions produces two scores: 
Performance score and loss severity score.
    (A) Performance score for large institutions. The performance score 
for large institutions is a weighted average of the scores for three 
measures: The weighted average CAMELS rating score, weighted at 30 
percent; the ability to withstand asset-related stress score, weighted 
at 50 percent; and the ability to withstand funding-related stress 
score, weighted at 20 percent.
    (1) Weighted average CAMELS rating score. (i) To compute the 
weighted average CAMELS rating score, a weighted average of an 
institution's CAMELS component ratings is calculated using the following 
weights:

------------------------------------------------------------------------
                     CAMELS component                        Weight (%)
------------------------------------------------------------------------
C.........................................................           25
A.........................................................           20
M.........................................................           25
E.........................................................           10
L.........................................................           10
S.........................................................           10
------------------------------------------------------------------------

    (ii) A weighted average CAMELS rating converts to a score that 
ranges from 25 to 100. A weighted average rating of 1 equals a score of 
25 and a weighted average of 3.5 or greater equals a score of 100. 
Weighted average CAMELS ratings between 1 and 3.5 are assigned a score 
between 25 and 100. The score increases at an increasing rate as the 
weighted average CAMELS rating increases. Appendix B of this subpart 
describes the conversion of a weighted average CAMELS rating to a score.
    (2) Ability to withstand asset-related stress score. (i) The ability 
to withstand asset-related stress score is a weighted average of the 
scores for four measures: Leverage ratio; concentration measure; the 
ratio of core earnings to average quarter-end total assets; and the 
credit quality measure. Appendices A and C of this subpart define these 
measures.
    (ii) The Leverage ratio and the ratio of core earnings to average 
quarter-end total assets are described in appendix A and the method of 
calculating the scores is described in appendix C of this subpart.
    (iii) The score for the concentration measure is the greater of the 
higher-risk assets to Tier 1 capital and reserves score or the growth-
adjusted portfolio concentrations score. Both ratios are described in 
appendix C of this subpart.
    (iv) The score for the credit quality measure is the greater of the 
criticized and classified items to Tier 1 capital and reserves score or 
the underperforming assets to Tier 1 capital and reserves score.
    (v) The following table shows the cutoff values and weights for the 
measures used to calculate the ability to withstand asset-related stress 
score. Appendix B of this subpart describes how each measure is 
converted to a score between 0 and 100 based upon the minimum and 
maximum cutoff values, where a score of 0 reflects the lowest risk and a 
score of 100 reflects the highest risk.

[[Page 458]]



       Cutoff Values and Weights for Measures To Calculate Ability To Withstand Asset-Related Stress Score
----------------------------------------------------------------------------------------------------------------
                                                                           Cutoff values
                                                                 --------------------------------     Weights
    Measures of the ability to withstand asset-related stress         Minimum         Maximum        (percent)
                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Leverage ratio..................................................               6              13              10
Concentration Measure...........................................  ..............  ..............              35
    Higher-Risk Assets to Tier 1 Capital and Reserves; or.......               0             135
    Growth-Adjusted Portfolio Concentrations....................               4              56
Core Earnings/Average Quarter-End Total Assets \1\..............               0               2              20
Credit Quality Measure..........................................  ..............  ..............              35
    Criticized and Classified Items/Tier 1 Capital and Reserves;               7             100
     or.........................................................
    Underperforming Assets/Tier 1 Capital and Reserves..........               2              35
----------------------------------------------------------------------------------------------------------------
\1\ Average of five quarter-end total assets (most recent and four prior quarters).

    (vi) The score for each measure in the table in paragraph 
(b)(1)(ii)(A)(2)(v) of this section is multiplied by its respective 
weight and the resulting weighted score is summed to arrive at the score 
for an ability to withstand asset-related stress, which can range from 0 
to 100, where a score of 0 reflects the lowest risk and a score of 100 
reflects the highest risk.
    (3) Ability to withstand funding-related stress score. Two measures 
are used to compute the ability to withstand funding-related stress 
score: A core deposits to total liabilities ratio, and a balance sheet 
liquidity ratio. Appendix A of this subpart describes these measures. 
Appendix B of this subpart describes how these measures are converted to 
a score between 0 and 100, where a score of 0 reflects the lowest risk 
and a score of 100 reflects the highest risk. The ability to withstand 
funding-related stress score is the weighted average of the scores for 
the two measures. In the following table, cutoff values and weights are 
used to derive an institution's ability to withstand funding-related 
stress score:

            Cutoff Values and Weights To Calculate Ability To Withstand Funding-Related Stress Score
----------------------------------------------------------------------------------------------------------------
                                                                           Cutoff values
                                                                 --------------------------------     Weights
   Measures of the ability to withstand funding-related stress        Minimum         Maximum        (percent)
                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Core Deposits/Total Liabilities.................................               5              87              60
Balance Sheet Liquidity Ratio...................................               7             243              40
----------------------------------------------------------------------------------------------------------------

    (4) Calculation of performance score. In paragraph (b)(1)(ii)(A)(3) 
of this section, the scores for the weighted average CAMELS rating, the 
ability to withstand asset-related stress, and the ability to withstand 
funding-related stress are multiplied by their respective weights (30 
percent, 50 percent and 20 percent, respectively) and the results are 
summed to arrive at the performance score. The performance score cannot 
be less than 0 or more than 100, where a score of 0 reflects the lowest 
risk and a score of 100 reflects the highest risk.
    (B) Loss severity score. The loss severity score is based on a loss 
severity measure that is described in appendix D of this subpart. 
Appendix B of this subpart also describes how the loss severity measure 
is converted to a score between 0 and 100. The loss severity score 
cannot be less than 0 or more than 100, where a score of 0 reflects the 
lowest risk and a score of 100 reflects the highest risk. Cutoff values 
for the loss severity measure are:

[[Page 459]]



                                 Cutoff Values To Calculate Loss Severity Score
----------------------------------------------------------------------------------------------------------------
                                                                                          Cutoff values
                                                                               ---------------------------------
                           Measure of loss severity                                 Minimum          Maximum
                                                                                   (percent)        (percent)
----------------------------------------------------------------------------------------------------------------
Loss Severity.................................................................               0               28
----------------------------------------------------------------------------------------------------------------

    (C) Total score. (1) The performance and loss severity scores are 
combined to produce a total score. The loss severity score is converted 
into a loss severity factor that ranges from 0.8 (score of 5 or lower) 
to 1.2 (score of 85 or higher). Scores at or below the minimum cutoff of 
5 receive a loss severity factor of 0.8, and scores at or above the 
maximum cutoff of 85 receive a loss severity factor of 1.2. The 
following linear interpolation converts loss severity scores between the 
cutoffs into a loss severity factor:

(Loss Severity Factor = 0.8 + [0.005 * (Loss Severity Score - 5)]

    (2) The performance score is multiplied by the loss severity factor 
to produce a total score (total score = performance score * loss 
severity factor). The total score can be up to 20 percent higher or 
lower than the performance score but cannot be less than 30 or more than 
90. The total score is subject to adjustment, up or down, by a maximum 
of 15 points, as set forth in paragraph (b)(3) of this section. The 
resulting total score after adjustment cannot be less than 30 or more 
than 90.
    (D) Initial base assessment rate. A large institution with a total 
score of 30 pays the minimum initial base assessment rate and an 
institution with a total score of 90 pays the maximum initial base 
assessment rate. For total scores between 30 and 90, initial base 
assessment rates rise at an increasing rate as the total score 
increases, calculated according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR20MY16.166

Where:

Rate is the initial base assessment rate (expressed in basis points);
Maximum Rate is the maximum initial base assessment rate then in effect 
          (expressed in basis points); and
Minimum Rate is the minimum initial base assessment rate then in effect 
          (expressed in basis points). Initial base assessment rates are 
          subject to adjustment pursuant to paragraphs (b)(3) and (e)(1) 
          and (2) of this section; large institutions that are not well 
          capitalized or have a CAMELS composite rating of 3, 4 or 5 
          shall be subject to the adjustment at paragraph (e)(3) of this 
          section; these adjustments shall result in the institution's 
          total base assessment rate, which in no case can be lower than 
          50 percent of the institution's initial base assessment rate.

    (2) Assessment scorecard for highly complex institutions. (i) A 
highly complex institution shall have its initial base assessment rate 
determined using the scorecard for highly complex institutions.

                                    Scorecard for Highly Complex Institutions
----------------------------------------------------------------------------------------------------------------
                                                                                            Measure    Component
                                                         Measures and components            weights     weights
                                                                                           (percent)   (percent)
----------------------------------------------------------------------------------------------------------------
P..............................................  Performance Score......................
P.1............................................  Weighted Average CAMELS Rating.........         100          30
P.2............................................  Ability To Withstand Asset-Related       ..........          50
                                                  Stress.
                                                 Leverage ratio.........................          10
                                                 Concentration Measure..................          35
                                                 Core Earnings/Average Quarter-End Total          20
                                                  Assets.

[[Page 460]]

 
                                                 Credit Quality Measure and Market Risk           35
                                                  Measure.
P.3............................................  Ability To Withstand Funding-Related     ..........          20
                                                  Stress.
                                                 Core Deposits/Total Liabilities........          50
                                                 Balance Sheet Liquidity Ratio..........          30
                                                 Average Short-Term Funding/Average               20
                                                  Total Assets.
L..............................................  Loss Severity Score....................
L.1............................................  Loss Severity..........................  ..........         100
----------------------------------------------------------------------------------------------------------------

    (ii) The scorecard for highly complex institutions produces two 
scores: Performance and loss severity.
    (A) Performance score for highly complex institutions. The 
performance score for highly complex institutions is the weighted 
average of the scores for three components: Weighted average CAMELS 
rating, weighted at 30 percent; ability to withstand asset-related 
stress score, weighted at 50 percent; and ability to withstand funding-
related stress score, weighted at 20 percent.
    (1) Weighted average CAMELS rating score. (i) To compute the score 
for the weighted average CAMELS rating, a weighted average of an 
institution's CAMELS component ratings is calculated using the following 
weights:

------------------------------------------------------------------------
                      CAMELS component                        Weight (%)
------------------------------------------------------------------------
C...........................................................          25
A...........................................................          20
M...........................................................          25
E...........................................................          10
L...........................................................          10
S...........................................................          10
------------------------------------------------------------------------

    (ii) A weighted average CAMELS rating converts to a score that 
ranges from 25 to 100. A weighted average rating of 1 equals a score of 
25 and a weighted average of 3.5 or greater equals a score of 100. 
Weighted average CAMELS ratings between 1 and 3.5 are assigned a score 
between 25 and 100. The score increases at an increasing rate as the 
weighted average CAMELS rating increases. Appendix B of this subpart 
describes the conversion of a weighted average CAMELS rating to a score.
    (2) Ability to withstand asset-related stress score. (i) The ability 
to withstand asset-related stress score is a weighted average of the 
scores for four measures: Leverage ratio; concentration measure; ratio 
of core earnings to average quarter-end total assets; credit quality 
measure and market risk measure. Appendix A of this subpart describes 
these measures.
    (ii) The Leverage ratio and the ratio of core earnings to average 
quarter-end total assets are described in appendix A of this subpart and 
the method of calculating the scores is described in appendix B of this 
subpart.
    (iii) The score for the concentration measure for highly complex 
institutions is the greatest of the higher-risk assets to the sum of 
Tier 1 capital and reserves score, the top 20 counterparty exposure to 
the sum of Tier 1 capital and reserves score, or the largest 
counterparty exposure to the sum of Tier 1 capital and reserves score. 
Each ratio is described in appendix A of this subpart. The method used 
to convert the concentration measure into a score is described in 
appendix C of this subpart.
    (iv) The credit quality score is the greater of the criticized and 
classified items to Tier 1 capital and reserves score or the 
underperforming assets to Tier 1 capital and reserves score. The market 
risk score is the weighted average of three scores--the trading revenue 
volatility to Tier 1 capital score, the market risk capital to Tier 1 
capital score, and the level 3 trading assets to Tier 1 capital score. 
All of these ratios are described in appendix A of this subpart and the 
method of calculating the scores is described in appendix B of this 
subpart. Each score is multiplied by its respective weight, and the 
resulting weighted score is summed to compute the score for the market 
risk measure. An overall

[[Page 461]]

weight of 35 percent is allocated between the scores for the credit 
quality measure and market risk measure. The allocation depends on the 
ratio of average trading assets to the sum of average securities, loans 
and trading assets (trading asset ratio) as follows:
    (v) Weight for credit quality score = 35 percent * (1-trading asset 
ratio); and,
    (vi) Weight for market risk score = 35 percent * trading asset 
ratio.
    (vii) Each of the measures used to calculate the ability to 
withstand asset-related stress score is assigned the following cutoff 
values and weights:

     Cutoff Values and Weights for Measures To Calculate the Ability To Withstand Asset-Related Stress Score
----------------------------------------------------------------------------------------------------------------
                                                  Cutoff values
Measures of the ability to withstand asset--------------------------- Market risk
              related stress                  Minimum      Maximum      measure          Weights (percent)
                                             (percent)    (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
Leverage ratio............................            6           13  ...........  10.
Concentration Measure.....................  ...........  ...........  ...........  35.
  Higher Risk Assets/Tier 1 Capital and               0          135
   Reserves;.
  Top 20 Counterparty Exposure/Tier 1                 0          125
   Capital and Reserves; or.
  Largest Counterparty Exposure/Tier 1                0           20
   Capital and Reserves.
Core Earnings/Average Quarter-end Total               0            2  ...........  20.
 Assets.
Credit Quality Measure \1\................  ...........  ...........  ...........  35* (1-Trading Asset Ratio).
  Criticized and Classified Items to Tier             7          100
   1 Capital and Reserves; or.
  Underperforming Assets/Tier 1 Capital               2           35
   and Reserves.
Market Risk Measure \1\...................  ...........  ...........  ...........  35* Trading Asset Ratio.
  Trading Revenue Volatility/Tier 1                   0            2           60
   Capital.
  Market Risk Capital/Tier 1 Capital......            0           10           20
  Level 3 Trading Assets/Tier 1 Capital...            0           35           20
----------------------------------------------------------------------------------------------------------------
\1\ Combined, the credit quality measure and the market risk measure are assigned a 35 percent weight. The
  relative weight of each of the two scores depends on the ratio of average trading assets to the sum of average
  securities, loans and trading assets (trading asset ratio).

    (viii) [Reserved]
    (ix) The score of each measure is multiplied by its respective 
weight and the resulting weighted score is summed to compute the ability 
to withstand asset-related stress score, which can range from 0 to 100, 
where a score of 0 reflects the lowest risk and a score of 100 reflects 
the highest risk.
    (3) Ability to withstand funding related stress score. Three 
measures are used to calculate the score for the ability to withstand 
funding-related stress: A core deposits to total liabilities ratio, a 
balance sheet liquidity ratio, and average short-term funding to average 
total assets ratio. Appendix A of this subpart describes these ratios. 
Appendix B of this subpart describes how each measure is converted to a 
score. The ability to withstand funding-related stress score is the 
weighted average of the scores for the three measures. In the following 
table, cutoff values and weights are used to derive an institution's 
ability to withstand funding-related stress score:

           Cutoff Values and Weights To Calculate Ability To Withstand Funding-Related Stress Measures
----------------------------------------------------------------------------------------------------------------
                                                                           Cutoff values
                                                                 --------------------------------     Weights
   Measures of the ability to withstand funding-related stress        Minimum         Maximum        (percent)
                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Core Deposits/Total Liabilities.................................               5              87              50
Balance Sheet Liquidity Ratio...................................               7             243              30
Average Short-term Funding/Average Total Assets.................               2              19              20
----------------------------------------------------------------------------------------------------------------


[[Page 462]]

    (4) Calculation of performance score. The weighted average CAMELS 
score, the ability to withstand asset-related stress score, and the 
ability to withstand funding-related stress score are multiplied by 
their respective weights (30 percent, 50 percent and 20 percent, 
respectively) and the results are summed to arrive at the performance 
score, which cannot be less than 0 or more than 100.
    (B) Loss severity score. The loss severity score is based on a loss 
severity measure described in appendix D of this subpart. Appendix B of 
this subpart also describes how the loss severity measure is converted 
to a score between 0 and 100. Cutoff values for the loss severity 
measure are:

                                     Cutoff Values for Loss Severity Measure
----------------------------------------------------------------------------------------------------------------
                                                                                          Cutoff values
                                                                               ---------------------------------
                           Measure of loss severity                                 Minimum          Maximum
                                                                                   (percent)        (percent)
----------------------------------------------------------------------------------------------------------------
Loss Severity.................................................................               0               28
----------------------------------------------------------------------------------------------------------------

    (C) Total score. The performance and loss severity scores are 
combined to produce a total score. The loss severity score is converted 
into a loss severity factor that ranges from 0.8 (score of 5 or lower) 
to 1.2 (score of 85 or higher). Scores at or below the minimum cutoff of 
5 receive a loss severity factor of 0.8, and scores at or above the 
maximum cutoff of 85 receive a loss severity factor of 1.2. The 
following linear interpolation converts loss severity scores between the 
cutoffs into a loss severity factor: (Loss Severity Factor = 0.8 + 
[0.005 * (Loss Severity Score - 5)]. The performance score is multiplied 
by the loss severity factor to produce a total score (total score = 
performance score * loss severity factor). The total score can be up to 
20 percent higher or lower than the performance score but cannot be less 
than 30 or more than 90. The total score is subject to adjustment, up or 
down, by a maximum of 15 points, as set forth in paragraph (b)(3) of 
this section. The resulting total score after adjustment cannot be less 
than 30 or more than 90.
    (D) Initial base assessment rate. A highly complex institution with 
a total score of 30 pays the minimum initial base assessment rate and an 
institution with a total score of 90 pays the maximum initial base 
assessment rate. For total scores between 30 and 90, initial base 
assessment rates rise at an increasing rate as the total score 
increases, calculated according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR20MY16.167

Where:

Rate is the initial base assessment rate (expressed in basis points);
Maximum Rate is the maximum initial base assessment rate then in effect 
          (expressed in basis points); and
Minimum Rate is the minimum initial base assessment rate then in effect 
          (expressed in basis points). Initial base assessment rates are 
          subject to adjustment pursuant to paragraphs (b)(3) and (e)(1) 
          and (2) of this section; highly complex institutions that are 
          not well capitalized or have a CAMELS composite rating of 3, 4 
          or 5 shall be subject to the adjustment at paragraph (e)(3) of 
          this section; these adjustments shall result in the 
          institution's total base assessment rate, which in no case can 
          be lower than 50 percent of the institution's initial base 
          assessment rate.

    (3) Adjustment to total score for large institutions and highly 
complex institutions. The total score for large institutions and highly 
complex institutions is subject to adjustment, up or down, by a maximum 
of 15 points, based upon

[[Page 463]]

significant risk factors that are not adequately captured in the 
appropriate scorecard. In making such adjustments, the FDIC may consider 
such information as financial performance and condition information and 
other market or supervisory information. The FDIC will also consult with 
an institution's primary federal regulator and, for state chartered 
institutions, state banking supervisor.
    (i) Prior notice of adjustments--(A) Prior notice of upward 
adjustment. Prior to making any upward adjustment to an institution's 
total score because of considerations of additional risk information, 
the FDIC will formally notify the institution and its primary federal 
regulator and provide an opportunity to respond. This notification will 
include the reasons for the adjustment and when the adjustment will take 
effect.
    (B) Prior notice of downward adjustment. Prior to making any 
downward adjustment to an institution's total score because of 
considerations of additional risk information, the FDIC will formally 
notify the institution's primary federal regulator and provide an 
opportunity to respond.
    (ii) Determination whether to adjust upward; effective period of 
adjustment. After considering an institution's and the primary federal 
regulator's responses to the notice, the FDIC will determine whether the 
adjustment to an institution's total score is warranted, taking into 
account any revisions to scorecard measures, as well as any actions 
taken by the institution to address the FDIC's concerns described in the 
notice. The FDIC will evaluate the need for the adjustment each 
subsequent assessment period. Except as provided in paragraph (b)(3)(iv) 
of this section, the amount of adjustment cannot exceed the proposed 
adjustment amount contained in the initial notice unless additional 
notice is provided so that the primary federal regulator and the 
institution may respond.
    (iii) Determination whether to adjust downward; effective period of 
adjustment. After considering the primary federal regulator's responses 
to the notice, the FDIC will determine whether the adjustment to total 
score is warranted, taking into account any revisions to scorecard 
measures. Any downward adjustment in an institution's total score will 
remain in effect for subsequent assessment periods until the FDIC 
determines that an adjustment is no longer warranted. Downward 
adjustments will be made without notification to the institution. 
However, the FDIC will provide advance notice to an institution and its 
primary federal regulator and give them an opportunity to respond before 
removing a downward adjustment.
    (iv) Adjustment without notice. Notwithstanding the notice 
provisions set forth in paragraph (b)(3) of this section, the FDIC may 
change an institution's total score without advance notice, if the 
institution's supervisory ratings or the scorecard measures deteriorate.
    (c) New small institutions--(1) Risk categories. Each new small 
institution shall be assigned to one of the following four Risk 
Categories based upon the institution's capital evaluation and 
supervisory evaluation as defined in this section.
    (i) Risk category I. New small institutions in Supervisory Group A 
that are Well Capitalized will be assigned to Risk Category I.
    (ii) Risk category II. New small institutions in Supervisory Group A 
that are Adequately Capitalized, and new small institutions in 
Supervisory Group B that are either Well Capitalized or Adequately 
Capitalized will be assigned to Risk Category II.
    (iii) Risk category III. New small institutions in Supervisory 
Groups A and B that are Undercapitalized, and new small institutions in 
Supervisory Group C that are Well Capitalized or Adequately Capitalized 
will be assigned to Risk Category III.
    (iv) Risk category IV. New small institutions in Supervisory Group C 
that are Undercapitalized will be assigned to Risk Category IV.
    (2) Capital evaluations. Each new small institution will receive one 
of the following three capital evaluations on the basis of data reported 
in the institution's Consolidated Reports of Condition and Income or 
Thrift Financial Report (or successor report, as appropriate) dated as 
of the last day of

[[Page 464]]

each assessment period: Well Capitalized, Adequately Capitalized, or 
Undercapitalized as defined in Sec.  327.8(z) of this chapter.
    (3) Supervisory evaluations. Each new small institution will be 
assigned to one of three Supervisory Groups based on the Corporation's 
consideration of supervisory evaluations provided by the institution's 
primary federal regulator. The supervisory evaluations include the 
results of examination findings by the primary federal regulator, as 
well as other information that the primary federal regulator determines 
to be relevant. In addition, the Corporation will take into 
consideration such other information (such as state examination 
findings, as appropriate) as it determines to be relevant to the 
institution's financial condition and the risk posed to the Deposit 
Insurance Fund. The three Supervisory Groups are:
    (i) Supervisory group ``A.'' This Supervisory Group consists of 
financially sound institutions with only a few minor weaknesses;
    (ii) Supervisory group ``B.'' This Supervisory Group consists of 
institutions that demonstrate weaknesses which, if not corrected, could 
result in significant deterioration of the institution and increased 
risk of loss to the Deposit Insurance Fund; and
    (iii) Supervisory group ``C.'' This Supervisory Group consists of 
institutions that pose a substantial probability of loss to the Deposit 
Insurance Fund unless effective corrective action is taken.
    (4) Assessment method for new small institutions in risk category 
I--(i) Maximum initial base assessment rate for risk category I new 
small institutions. A new small institution in Risk Category I shall be 
assessed the maximum initial base assessment rate for Risk Category I 
small institutions in the relevant assessment period.
    (ii) New small institutions not subject to certain adjustments. No 
new small institution in any risk category shall be subject to the 
adjustment in paragraph (e)(1) of this section.
    (iii) Implementation of CAMELS rating changes--(A) Changes between 
risk categories. If, during an assessment period, a CAMELS composite 
rating change occurs that results in a Risk Category I institution 
moving from Risk Category I to Risk Category II, III or IV, the 
institution's initial base assessment rate for the portion of the 
assessment period that it was in Risk Category I shall be the maximum 
initial base assessment rate for the relevant assessment period, subject 
to adjustment pursuant to paragraph (e)(2) of this section, as 
appropriate, and adjusted for the actual assessment rates set by the 
Board under Sec.  327.10(f). For the portion of the assessment period 
that the institution was not in Risk Category I, the institution's 
initial base assessment rate, which shall be subject to adjustment 
pursuant to paragraphs (e)(2) and (3) of this section, as appropriate, 
shall be determined under the assessment schedule for the appropriate 
Risk Category. If, during an assessment period, a CAMELS composite 
rating change occurs that results in an institution moving from Risk 
Category II, III or IV to Risk Category I, then the maximum initial base 
assessment rate for new small institutions in Risk Category I shall 
apply for the portion of the assessment period that it was in Risk 
Category I, subject to adjustment pursuant to paragraph (e)(2) of this 
section, as appropriate, and adjusted for the actual assessment rates 
set by the Board under Sec.  327.10(f). For the portion of the 
assessment period that the institution was not in Risk Category I, the 
institution's initial base assessment rate, which shall be subject to 
adjustment pursuant to paragraphs (e)(2) and (3) of this section shall 
be determined under the assessment schedule for the appropriate Risk 
Category.
    (B) [Reserved]
    (d) Insured branches of foreign banks--(1) Risk categories for 
insured branches of foreign banks. Insured branches of foreign banks 
shall be assigned to risk categories as set forth in paragraph (c)(1) of 
this section.
    (2) Capital evaluations for insured branches of foreign banks. Each 
insured branch of a foreign bank will receive one of the following three 
capital evaluations on the basis of data reported in the institution's 
Report of Assets and Liabilities of U.S. Branches and Agencies of 
Foreign Banks dated as of

[[Page 465]]

March 31 for the assessment period beginning the preceding January 1; 
dated as of June 30 for the assessment period beginning the preceding 
April 1; dated as of September 30 for the assessment period beginning 
the preceding July 1; and dated as of December 31 for the assessment 
period beginning the preceding October 1.
    (i) Well Capitalized. An insured branch of a foreign bank is Well 
Capitalized if the insured branch:
    (A) Maintains the pledge of assets required under Sec.  347.209 of 
this chapter; and
    (B) Maintains the eligible assets prescribed under Sec.  347.210 of 
this chapter at 108 percent or more of the average book value of the 
insured branch's third-party liabilities for the quarter ending on the 
report date specified in paragraph (d)(2) of this section.
    (ii) Adequately Capitalized. An insured branch of a foreign bank is 
Adequately Capitalized if the insured branch:
    (A) Maintains the pledge of assets required under Sec.  347.209 of 
this chapter; and
    (B) Maintains the eligible assets prescribed under Sec.  347.210 of 
this chapter at 106 percent or more of the average book value of the 
insured branch's third-party liabilities for the quarter ending on the 
report date specified in paragraph (d)(2) of this section; and
    (C) Does not meet the definition of a Well Capitalized insured 
branch of a foreign bank.
    (iii) Undercapitalized. An insured branch of a foreign bank is 
undercapitalized institution if it does not qualify as either Well 
Capitalized or Adequately Capitalized under paragraphs (d)(2)(i) and 
(ii) of this section.
    (3) Supervisory evaluations for insured branches of foreign banks. 
Each insured branch of a foreign bank will be assigned to one of three 
supervisory groups as set forth in paragraph (c)(3) of this section.
    (4) Assessment method for insured branches of foreign banks in risk 
category I. Insured branches of foreign banks in Risk Category I shall 
be assessed using the weighted average ROCA component rating.
    (i) Weighted average ROCA component rating. The weighted average 
ROCA component rating shall equal the sum of the products that result 
from multiplying ROCA component ratings by the following percentages: 
Risk Management--35%, Operational Controls--25%, Compliance--25%, and 
Asset Quality--15%. The weighted average ROCA rating will be multiplied 
by 5.076 (which shall be the pricing multiplier). To this result will be 
added a uniform amount. The resulting sum--the initial base assessment 
rate--will equal an institution's total base assessment rate; provided, 
however, that no institution's total base assessment rate will be less 
than the minimum total base assessment rate in effect for Risk Category 
I institutions for that assessment period nor greater than the maximum 
total base assessment rate in effect for Risk Category I institutions 
for that assessment period.
    (ii) Uniform amount. Except as adjusted for the actual assessment 
rates set by the Board under Sec.  327.10(f), the uniform amount for all 
insured branches of foreign banks shall be:
    (A) -5.127 whenever the assessment rate schedule set forth in Sec.  
327.10(b) is in effect;
    (B) -6.127 whenever the assessment rate schedule set forth in Sec.  
327.10(c) is in effect; or
    (C) -7.127 whenever the assessment rate schedule set forth in Sec.  
327.10(d) is in effect.
    (iii) Insured branches of foreign banks not subject to certain 
adjustments. No insured branch of a foreign bank in any risk category 
shall be subject to the adjustments in paragraph (b)(3) or (e)(1) or (3) 
of this section.
    (iv) Implementation of changes between risk categories for insured 
branches of foreign banks. If, during an assessment period, a ROCA 
rating change occurs that results in an insured branch of a foreign bank 
moving from Risk Category I to Risk Category II, III or IV, the 
institution's initial base assessment rate for the portion of the 
assessment period that it was in Risk Category I shall be determined 
using the weighted average ROCA component rating. For the portion of the 
assessment period that the institution was not in Risk Category I, the 
institution's initial base assessment rate shall be determined under the 
assessment schedule for the appropriate Risk Category. If,

[[Page 466]]

during an assessment period, a ROCA rating change occurs that results in 
an insured branch of a foreign bank moving from Risk Category II, III or 
IV to Risk Category I, the institution's assessment rate for the portion 
of the assessment period that it was in Risk Category I shall equal the 
rate determined as provided using the weighted average ROCA component 
rating. For the portion of the assessment period that the institution 
was not in Risk Category I, the institution's initial base assessment 
rate shall be determined under the assessment schedule for the 
appropriate Risk Category.
    (v) Implementation of changes within risk category I for insured 
branches of foreign banks. If, during an assessment period, an insured 
branch of a foreign bank remains in Risk Category I, but a ROCA 
component rating changes that will affect the institution's initial base 
assessment rate, separate assessment rates for the portion(s) of the 
assessment period before and after the change(s) shall be determined 
under this paragraph (d)(4).
    (e) Adjustments--(1) Unsecured debt adjustment to initial base 
assessment rate for all institutions. All institutions, except new 
institutions as provided under paragraphs (g)(1) and (2) of this section 
and insured branches of foreign banks as provided under paragraph 
(d)(4)(iii) of this section, shall be subject to an adjustment of 
assessment rates for unsecured debt. Any unsecured debt adjustment shall 
be made after any adjustment under paragraph (b)(3) of this section.
    (i) Application of unsecured debt adjustment. The unsecured debt 
adjustment shall be determined as the sum of the initial base assessment 
rate plus 40 basis points; that sum shall be multiplied by the ratio of 
an insured depository institution's long-term unsecured debt to its 
assessment base. The amount of the reduction in the assessment rate due 
to the adjustment is equal to the dollar amount of the adjustment 
divided by the amount of the assessment base.
    (ii) Limitation. No unsecured debt adjustment for any institution 
shall exceed the lesser of 5 basis points or 50 percent of the 
institution's initial base assessment rate.
    (iii) Applicable quarterly reports of condition. Unsecured debt 
adjustment ratios for any given quarter shall be calculated from 
quarterly reports of condition (Consolidated Reports of Condition and 
Income and Thrift Financial Reports, or any successor reports to either, 
as appropriate) filed by each institution as of the last day of the 
quarter.
    (2) Depository institution debt adjustment to initial base 
assessment rate for all institutions. All institutions shall be subject 
to an adjustment of assessment rates for unsecured debt held that is 
issued by another depository institution. Any such depository 
institution debt adjustment shall be made after any adjustment under 
paragraphs (b)(3) and (e)(1) of this section.
    (i) Application of depository institution debt adjustment. An 
insured depository institution shall pay a 50 basis point adjustment on 
the amount of unsecured debt it holds that was issued by another insured 
depository institution to the extent that such debt exceeds 3 percent of 
the institution's Tier 1 capital. The amount of long-term unsecured debt 
issued by another insured depository institution shall be calculated 
using the same valuation methodology used to calculate the amount of 
such debt for reporting on the asset side of the balance sheets.
    (ii) Applicable quarterly reports of condition. Depository 
institution debt adjustment ratios for any given quarter shall be 
calculated from quarterly reports of condition (Consolidated Reports of 
Condition and Income and Thrift Financial Reports, or any successor 
reports to either, as appropriate) filed by each institution as of the 
last day of the quarter.
    (3) Brokered deposit adjustment. All new small institutions in Risk 
Categories II, III, and IV, all large institutions and all highly 
complex institutions, except large and highly complex institutions 
(including new large and new highly complex institutions) that are well 
capitalized and have a CAMELS composite rating of 1 or 2, shall be 
subject to an assessment rate adjustment for brokered deposits. Any such 
brokered deposit adjustment shall be made after any adjustment under 
paragraphs (b)(3) and (e)(1) and (2) of this

[[Page 467]]

section. The brokered deposit adjustment includes all brokered deposits 
as defined in Section 29 of the Federal Deposit Insurance Act (12 U.S.C. 
1831f), and 12 CFR 337.6, including reciprocal deposits as defined in 
Sec.  327.8(p), and brokered deposits that consist of balances swept 
into an insured institution from another institution. The adjustment 
under this paragraph is limited to those institutions whose ratio of 
brokered deposits to domestic deposits is greater than 10 percent; asset 
growth rates do not affect the adjustment. Insured branches of foreign 
banks are not subject to the brokered deposit adjustment as provided in 
paragraph (d)(4)(iii) of this section.
    (i) Application of brokered deposit adjustment. The brokered deposit 
adjustment shall be determined by multiplying 25 basis points by the 
ratio of the difference between an insured depository institution's 
brokered deposits and 10 percent of its domestic deposits to its 
assessment base.
    (ii) Limitation. The maximum brokered deposit adjustment will be 10 
basis points; the minimum brokered deposit adjustment will be 0.
    (iii) Applicable quarterly reports of condition. The brokered 
deposit adjustment for any given quarter shall be calculated from the 
quarterly reports of condition (Call Reports and Thrift Financial 
Reports, or any successor reports to either, as appropriate) filed by 
each institution as of the last day of the quarter.
    (f) Request to be treated as a large institution--(1) Procedure. Any 
institution with assets of between $5 billion and $10 billion may 
request that the FDIC determine its assessment rate as a large 
institution. The FDIC will consider such a request provided that it has 
sufficient information to do so. Any such request must be made to the 
FDIC's Division of Insurance and Research. Any approved change will 
become effective within one year from the date of the request. If an 
institution whose request has been granted subsequently reports assets 
of less than $5 billion in its report of condition for four consecutive 
quarters, the institution shall be deemed a small institution for 
assessment purposes.
    (2) Time limit on subsequent request for alternate method. An 
institution whose request to be assessed as a large institution is 
granted by the FDIC shall not be eligible to request that it be assessed 
as a small institution for a period of three years from the first 
quarter in which its approved request to be assessed as a large 
institution became effective. Any request to be assessed as a small 
institution must be made to the FDIC's Division of Insurance and 
Research.
    (3) Request for review. An institution that disagrees with the 
FDIC's determination that it is a large, highly complex, or small 
institution may request review of that determination pursuant to Sec.  
327.4(c).
    (g) New and established institutions and exceptions--(1) New small 
institutions. A new small Risk Category I institution shall be assessed 
the Risk Category I maximum initial base assessment rate for the 
relevant assessment period. No new small institution in any risk 
category shall be subject to the unsecured debt adjustment as determined 
under paragraph (e)(1) of this section. All new small institutions in 
any Risk Category shall be subject to the depository institution debt 
adjustment as determined under paragraph (e)(2) of this section. All new 
small institutions in Risk Categories II, III, and IV shall be subject 
to the brokered deposit adjustment as determined under paragraph (e)(3) 
of this section.
    (2) New large institutions and new highly complex institutions. All 
new large institutions and all new highly complex institutions shall be 
assessed under the appropriate method provided at paragraph (b)(1) or 
(2) of this section and subject to the adjustments provided at 
paragraphs (b)(3) and (e)(2) and (3) of this section. No new highly 
complex or large institutions are entitled to adjustment under paragraph 
(e)(1) of this section. If a large or highly complex institution has not 
yet received CAMELS ratings, it will be given a weighted CAMELS rating 
of 2 for assessment purposes until actual CAMELS ratings are assigned.
    (3) CAMELS ratings for the surviving institution in a merger or 
consolidation. When an established institution merges

[[Page 468]]

with or consolidates into a new institution, if the FDIC determines the 
resulting institution to be an established institution under Sec.  
327.8(k)(1), its CAMELS ratings for assessment purposes will be based 
upon the established institution's ratings prior to the merger or 
consolidation until new ratings become available.
    (4) Rate applicable to institutions subject to subsidiary or credit 
union exception--(i) Established small institutions. A small institution 
that is established under Sec.  327.8(k)(4) or (5) shall be assessed as 
follows:
    (A) If the institution does not have a CAMELS composite rating, its 
initial base assessment rate shall be 2 basis points above the minimum 
initial base assessment rate applicable to established small 
institutions until it receives a CAMELS composite rating.
    (B) If the institution has a CAMELS composite rating but no CAMELS 
component ratings, its initial assessment rate shall be determined using 
the financial ratios method, as set forth in paragraph (a)(1) of this 
section, but its CAMELS composite rating will be substituted for its 
weighted average CAMELS component rating and, if the institution has not 
filed four quarterly reports of condition, then the assessment rate will 
be determined by annualizing, where appropriate, financial ratios from 
all quarterly reports of condition that have been filed.
    (ii) Large or highly complex institutions. If a large or highly 
complex institution is considered established under Sec.  327.8(k)(4) or 
(5), but does not have CAMELS component ratings, it will be given a 
weighted CAMELS rating of 2 for assessment purposes until actual CAMELS 
ratings are assigned.
    (5) Request for review. An institution that disagrees with the 
FDIC's determination that it is a new institution may request review of 
that determination pursuant to Sec.  327.4(c).
    (h) Assessment rates for bridge depository institutions and 
conservatorships. Institutions that are bridge depository institutions 
under 12 U.S.C. 1821(n) and institutions for which the Corporation has 
been appointed or serves as conservator shall, in all cases, be assessed 
at the minimum initial base assessment rate applicable to established 
small institutions, which shall not be subject to adjustment under 
paragraph (b)(3) or (e)(1), (2), or (3) of this section.

[81 FR 32207, May 20, 2016, as amended at 83 FR 14568, Apr. 5, 2018]



   Sec. Appendix A to Subpart A of Part 327--Method to Derive Pricing 
                     Multipliers and Uniform Amount

                             I. Introduction

    The uniform amount and pricing multipliers are derived from:
     A model (the Statistical Model) that estimates 
the probability that a Risk Category I institution will be downgraded to 
a composite CAMELS rating of 3 or worse within one year;
     Minimum and maximum downgrade probability cutoff 
values, based on data from June 30, 2008, that will determine which 
small institutions will be charged the minimum and maximum initial base 
assessment rates applicable to Risk Category I;
     The minimum initial base assessment rate for Risk 
Category I, equal to 12 basis points, and
     The maximum initial base assessment rate for Risk 
Category I, which is four basis points higher than the minimum rate.

                        II. The Statistical Model

    The Statistical Model is defined in equations 1 and 3 below.

                               Equation 1

Downgrade(0,1)i,t = [beta]0 + [beta]1 
          (Leverage ratioT) + [beta]2 (Loans past 
          due 30 to 89 days ratioi,t) + [beta]3 
          (Nonperforming asset ratioi,t) + [beta]4 
          (Net loan charge-off ratioi,t) + [beta]5 
          (Net income before taxes ratioi,t) + 
          [beta]6 (Adjusted brokered deposit 
          ratioi,t) + [beta]7 (Weighted average 
          CAMELS component ratingi,t) where 
          Downgrade(01)i,t (the dependent variable--the event 
          being explained) is the incidence of downgrade from a 
          composite rating of 1 or 2 to a rating of 3 or worse during an 
          on-site examination for an institution i between 3 and 12 
          months after time t. Time t is the end of a year within the 
          multi-year period over which the model was estimated (as 
          explained below). The dependent variable takes a value of 1 if 
          a downgrade occurs and 0 if it does not.
    The explanatory variables (regressors) in the model are six 
financial ratios and a weighted average of the ``C,'' ``A,'' ``M,'' 
``E'' and ``L'' component ratings. The six financial ratios included in 
the model are:
     Leverage ratio
     Loans past due 30-89 days/Gross assets
     Nonperforming assets/Gross assets
     Net loan charge-offs/Gross assets

[[Page 469]]

     Net income before taxes/Risk-weighted assets
     Brokered deposits/domestic deposits above the 10 
percent threshold, adjusted for the asset growth rate factor
    Table A.1 defines these six ratios along with the weighted average 
of CAMELS component ratings. The adjusted brokered deposit ratio 
(Bi,T) is calculated by multiplying the ratio of brokered 
deposits to domestic deposits above the 10 percent threshold by an asset 
growth rate factor that ranges from 0 to 1 as shown in Equation 2 below. 
The asset growth rate factor (Ai,T) is calculated by 
subtracting 0.4 from the four-year cumulative gross asset growth rate 
(expressed as a number rather than as a percentage), adjusted for 
mergers and acquisitions, and multiplying the remainder by 3\1/3\. The 
factor cannot be less than 0 or greater than 1.

                               Equation 2
[GRAPHIC] [TIFF OMITTED] TR04MR09.016

    The component rating for sensitivity to market risk (the ``S'' 
rating) is not available for years prior to 1997. As a result, and as 
described in Table A.1, the Statistical Model is estimated using a 
weighted average of five component ratings excluding the ``S'' 
component. Delinquency and non-accrual data on government guaranteed 
loans are not available before 1993 for Call Report filers and before 
the third quarter of 2005 for TFR filers. As a result, and as also 
described in Table A.1, the Statistical Model is estimated without 
deducting delinquent or past-due government guaranteed loans from either 
the loans past due 30-89 days to gross assets ratio or the nonperforming 
assets to gross assets ratio. Reciprocal deposits are not presently 
reported in the Call Report or TFR. As a result, and as also described 
in Table A.1, the Statistical Model is estimated without deducting 
reciprocal deposits from brokered deposits in determining the adjusted 
brokered deposit ratio.

                  Table A.1--Definitions of Regressors
------------------------------------------------------------------------
             Regressor                           Description
------------------------------------------------------------------------
Leverage ratio (%)................  Tier 1 capital for Prompt Corrective
                                     Action (PCA) divided by adjusted
                                     average assets based on the
                                     definition for prompt corrective
                                     action.
Loans Past Due 30-89 Days/Gross     Total loans and lease financing
 Assets (%).                         receivables past due 30 through 89
                                     days and still accruing interest
                                     divided by gross assets (gross
                                     assets equal total assets plus
                                     allowance for loan and lease
                                     financing receivable losses and
                                     allocated transfer risk).
Nonperforming Assets/Gross Assets   Sum of total loans and lease
 (%).                                financing receivables past due 90
                                     or more days and still accruing
                                     interest, total nonaccrual loans
                                     and lease financing receivables,
                                     and other real estate owned divided
                                     by gross assets.
Net Loan Charge-Offs/Gross Assets   Total charged-off loans and lease
 (%).                                financing receivables debited to
                                     the allowance for loan and lease
                                     losses less total recoveries
                                     credited to the allowance to loan
                                     and lease losses for the most
                                     recent twelve months divided by
                                     gross assets.
Net Income before Taxes/Risk-       Income before income taxes and
 Weighted Assets (%).                extraordinary items and other
                                     adjustments for the most recent
                                     twelve months divided by risk-
                                     weighted assets.
Adjusted brokered deposit ratio     Brokered deposits divided by
 (%).                                domestic deposits less 0.10
                                     multiplied by the asset growth rate
                                     factor (which is the term Ai,T as
                                     defined in equation 2 above) that
                                     ranges between 0 and 1.
Weighted Average of C, A, M, E and  The weighted sum of the ``C,''
 L Component Ratings.                ``A,'' ``M,'' ``E'' and ``L''
                                     CAMELS components, with weights of
                                     28 percent each for the ``C'' and
                                     ``M'' components, 22 percent for
                                     the ``A'' component, and 11 percent
                                     each for the ``E'' and ``L''
                                     components. (For the regression,
                                     the ``S'' component is omitted.)
------------------------------------------------------------------------

    The financial variable regressors used to estimate the downgrade 
probabilities are obtained from quarterly reports of condition (Reports 
of Condition and Income and Thrift Financial Reports). The weighted 
average of the ``C,'' ``A,'' ``M,'' ``E'' and ``L'' component ratings 
regressor is based on component ratings obtained from the most recent 
bank examination conducted within 24 months before the date of the 
report of condition.

[[Page 470]]

    The Statistical Model uses ordinary least squares (OLS) regression 
to estimate downgrade probabilities. The model is estimated with data 
from a multi-year period (as explained below) for all institutions in 
Risk Category I, except for institutions established within five years 
before the date of the report of condition.
    The OLS regression estimates coefficients, [beta]j for a 
given regressor j and a constant amount, [beta]0, as 
specified in equation 1. As shown in equation 3 below, these 
coefficients are multiplied by values of risk measures at time T, which 
is the date of the report of condition corresponding to the end of the 
quarter for which the assessment rate is computed. The sum of the 
products is then added to the constant amount to produce an estimated 
probability, diT, that an institution will be downgraded to 3 
or worse within 3 to 12 months from time T.
    The risk measures are financial ratios as defined in Table A.1, 
except that: (1) The loans past due 30 to 89 days ratio and the 
nonperforming asset ratio are adjusted to exclude the maximum amount 
recoverable from the U.S. Government, its agencies or government-
sponsored agencies, under guarantee or insurance provisions; (2) the 
weighted sum of six CAMELS component ratings is used, with weights of 25 
percent each for the ``C'' and ``M'' components, 20 percent for the 
``A'' component, and 10 percent each for the ``E,'' ``L,'' and ``S'' 
components; and (3) reciprocal deposits are deducted from brokered 
deposits in determining the adjusted brokered deposit ratio.

                               Equation 3

diT = [beta]0 + [beta]1 (Leverage 
          ratioiT) + [beta]2 (Loans past due 30 to 
          89 days ratioiT) + [beta]3 
          (Nonperforming asset ratioiT) + [beta]4 
          (Net loan charge-off ratioiT) + [beta]5 
          (Net income before taxes ratioiT) + 
          [beta]6 (Adjusted brokered deposit 
          ratioiT) + [beta]7 (Weighted average 
          CAMELS component ratingiT)

      III. Minimum and Maximum Downgrade Probability Cutoff Values

    The pricing multipliers are also determined by minimum and maximum 
downgrade probability cutoff values, which will be computed as follows:
     The minimum downgrade probability cutoff value 
will be the maximum downgrade probability among the twenty-five percent 
of all small insured institutions in Risk Category I (excluding new 
institutions) with the lowest estimated downgrade probabilities, 
computed using values of the risk measures as of June 30, 2008.\1\ \2\ 
The minimum downgrade probability cutoff value is 0.0182.
---------------------------------------------------------------------------

    \1\ As used in this context, a ``new institution'' means an 
institution that has been chartered as a bank or thrift for less than 
five years.
    \2\ For purposes of calculating the minimum and maximum downgrade 
probability cutoff values, institutions that have less than $100,000 in 
domestic deposits are assumed to have no brokered deposits.
---------------------------------------------------------------------------

     The maximum downgrade probability cutoff value 
will be the minimum downgrade probability among the fifteen percent of 
all small insured institutions in Risk Category I (excluding new 
institutions) with the highest estimated downgrade probabilities, 
computed using values of the risk measures as of June 30, 2008. The 
maximum downgrade probability cutoff value is 0.1506.

        IV. Derivation of Uniform Amount and Pricing Multipliers

    The uniform amount and pricing multipliers used to compute the 
annual base assessment rate in basis points, PiT, for any 
such institution i at a given time T will be determined from the 
Statistical Model, the minimum and maximum downgrade probability cutoff 
values, and minimum and maximum initial base assessment rates in Risk 
Category I as follows:

                               Equation 4

PiT = [alpha]0 + [alpha]1 * 
          diT subject to Min <=PiT <=Min + 4

where [alpha]0 and [alpha]1 are a constant term 
and a scale factor used to convert diT (the estimated 
downgrade probability for institution i at a given time T from the 
Statistical Model) to an assessment rate, respectively, and Min is the 
minimum initial base assessment rate expressed in basis points. 
(PiT is expressed as an annual rate, but the actual rate 
applied in any quarter will be PiT/4.) The maximum initial 
base assessment rate is 4 basis points above the minimum (Min + 4)
    Solving equation 4 for minimum and maximum initial base assessment 
rates simultaneously,

Min = [alpha]0 + [alpha]1 * 0.0182 and Min + 4 = 
          [alpha]0 + [alpha]1 * 0.1506

where 0.0182 is the minimum downgrade probability cutoff value and 
0.1506 is the maximum downgrade probability cutoff value, results in 
values for the constant amount, [alpha]0 and the scale 
factor, [alpha]1:

                               Equation 5
[GRAPHIC] [TIFF OMITTED] TR04MR09.017


[[Page 471]]



                             and Equation 6
[GRAPHIC] [TIFF OMITTED] TR04MR09.018

Substituting equations 3, 5 and 6 into equation 4 produces an annual 
initial base assessment rate for institution i at time T, 
PiT, in terms of the uniform amount, the pricing multipliers 
and the ratios and weighted average CAMELS component rating referred to 
in 12 CFR 327.9(d)(2)(i):

                               Equation 7

PiT = [(Min - 0.550) + 30.211* [beta]0] + 30.211 * 
          [[beta]1 (Leverage ratioT)] + 30.211 * 
          [[beta]2 (Loans past due 30 to 89 days 
          ratioT)] + 30.211 * [[beta]3 
          (Nonperforming asset ratioT)] + 30.211 * 
          [[beta]4 (Net loan charge-off ratioT)] + 
          30.211 * [[beta]5 (Net income before taxes 
          ratioT)] + 30.211 * [[beta]6 (Adjusted 
          brokered deposit ratioT)] + 30.211 * 
          [[beta]7 (Weighted average CAMELS component 
          ratingT)]

again subject to Min <=PiT <=Min + 4

where (Min - 0.550) + 30.211 * [beta]0 equals the uniform 
amount, 30.211 * [beta]j is a pricing multiplier for the 
associated risk measure j, and T is the date of the report of condition 
corresponding to the end of the quarter for which the assessment rate is 
computed.

     V. Updating the Statistical Model, Uniform Amount, and Pricing 
                               Multipliers

    The initial Statistical Model is estimated using year-end financial 
ratios and the weighted average of the ``C,'' ``A,'' ``M,'' ``E'' and 
``L'' component ratings over the 1988 to 2006 period and downgrade data 
from the 1989 to 2007 period. The FDIC may, from time to time, but no 
more frequently than annually, re-estimate the Statistical Model with 
updated data and publish a new formula for determining initial base 
assessment rates--equation 7--based on updated uniform amounts and 
pricing multipliers. However, the minimum and maximum downgrade 
probability cutoff values will not change without additional notice-and-
comment rulemaking. The period covered by the analysis will be 
lengthened by one year each year; however, from time to time, the FDIC 
may drop some earlier years from its analysis.

                  VI. Description of Scorecard Measures

------------------------------------------------------------------------
        Scorecard measures \1\                    Description
------------------------------------------------------------------------
Leverage ratio.......................  Tier 1 capital for Prompt
                                        Corrective Action (PCA) divided
                                        by adjusted average assets based
                                        on the definition for prompt
                                        corrective action.
Concentration Measure for Large        The concentration score for large
 Insured depository institutions        institutions is the higher of
 (excluding Highly Complex              the following two scores:
 Institutions).
    (1) Higher-Risk Assets/Tier 1      Sum of construction and land
     Capital and Reserves.              development (C&D) loans (funded
                                        and unfunded), higher-risk C&I
                                        loans (funded and unfunded),
                                        nontraditional mortgages, higher-
                                        risk consumer loans, and higher-
                                        risk securitizations divided by
                                        Tier 1 capital and reserves. See
                                        Appendix C for the detailed
                                        description of the ratio.
    (2) Growth-Adjusted Portfolio      The measure is calculated in the
     Concentrations.                    following steps:
                                          (1) Concentration levels (as a
                                           ratio to Tier 1 capital and
                                           reserves) are calculated for
                                           each broad portfolio
                                           category:
                                             C&D,
                                             Other
                                             commercial real estate
                                             loans,
                                             First
                                             lien residential mortgages
                                             (including non-agency
                                             residential mortgage-backed
                                             securities),
                                             Closed-
                                             end junior liens and home
                                             equity lines of credit
                                             (HELOCs),
                                            
                                             Commercial and industrial
                                             loans,
                                             Credit
                                             card loans, and
                                             Cther
                                             consumer loans.
                                          (2) Risk weights are assigned
                                           to each loan category based
                                           on historical loss rates.
                                          (3) Concentration levels are
                                           multiplied by risk weights
                                           and squared to produce a risk-
                                           adjusted concentration ratio
                                           for each portfolio.
                                          (4) Three-year merger-adjusted
                                           portfolio growth rates are
                                           then scaled to a growth
                                           factor of 1 to 1.2 where a 3-
                                           year cumulative growth rate
                                           of 20 percent or less equals
                                           a factor of 1 and a growth
                                           rate of 80 percent or greater
                                           equals a factor of 1.2. If
                                           three years of data are not
                                           available, a growth factor of
                                           1 will be assigned.
                                          (5) The risk-adjusted
                                           concentration ratio for each
                                           portfolio is multiplied by
                                           the growth factor and
                                           resulting values are summed.
                                       See Appendix C for the detailed
                                        description of the measure.
Concentration Measure for Highly       Concentration score for highly
 Complex Institutions.                  complex institutions is the
                                        highest of the following three
                                        scores:

[[Page 472]]

 
    (1) Higher-Risk Assets/Tier 1      Sum of C&D loans (funded and
     Capital and Reserves.              unfunded), higher-risk C&I loans
                                        (funded and unfunded),
                                        nontraditional mortgages, higher-
                                        risk consumer loans, and higher-
                                        risk securitizations divided by
                                        Tier 1 capital and reserves. See
                                        Appendix C for the detailed
                                        description of the measure.
(2) Top 20 Counterparty Exposure/Tier  Sum of the 20 largest total
 1 Capital and Reserves.                exposure amounts to
                                        counterparties divided by Tier 1
                                        capital and reserves. The total
                                        exposure amount is equal to the
                                        sum of the institution's
                                        exposure amounts to one
                                        counterparty (or borrower) for
                                        derivatives, securities
                                        financing transactions (SFTs),
                                        and cleared transactions, and
                                        its gross lending exposure
                                        (including all unfunded
                                        commitments) to that
                                        counterparty (or borrower). A
                                        counterparty includes an
                                        entity's own affiliates.
                                        Exposures to entities that are
                                        affiliates of each other are
                                        treated as exposures to one
                                        counterparty (or borrower).
                                        Counterparty exposure excludes
                                        all counterparty exposure to the
                                        U.S. government and departments
                                        or agencies of the U.S.
                                        government that is
                                        unconditionally guaranteed by
                                        the full faith and credit of the
                                        United States. The exposure
                                        amount for derivatives,
                                        including OTC derivatives,
                                        cleared transactions that are
                                        derivative contracts, and
                                        netting sets of derivative
                                        contracts, must be calculated
                                        using the methodology set forth
                                        in 12 CFR 324.34(a), but without
                                        any reduction for collateral
                                        other than cash collateral that
                                        is all or part of variation
                                        margin and that satisfies the
                                        requirements of 12 CFR
                                        324.10(c)(4)(ii)(C)(1)-(7). The
                                        exposure amount associated with
                                        SFTs, including cleared
                                        transactions that are SFTs, must
                                        be calculated using the
                                        standardized approach set forth
                                        in 12 CFR 324.37(b) or (c). For
                                        both derivatives and SFT
                                        exposures, the exposure amount
                                        to central counterparties must
                                        also include the default fund
                                        contribution.\2\
(3) Largest Counterparty Exposure/     The largest total exposure amount
 Tier 1 Capital and Reserves.           to one counterparty divided by
                                        Tier 1 capital and reserves. The
                                        total exposure amount is equal
                                        to the sum of the institution's
                                        exposure amounts to one
                                        counterparty (or borrower) for
                                        derivatives, SFTs, and cleared
                                        transactions, and its gross
                                        lending exposure (including all
                                        unfunded commitments) to that
                                        counterparty (or borrower). A
                                        counterparty includes an
                                        entity's own affiliates.
                                        Exposures to entities that are
                                        affiliates of each other are
                                        treated as exposures to one
                                        counterparty (or borrower).
                                        Counterparty exposure excludes
                                        all counterparty exposure to the
                                        U.S. government and departments
                                        or agencies of the U.S.
                                        government that is
                                        unconditionally guaranteed by
                                        the full faith and credit of the
                                        United States. The exposure
                                        amount for derivatives,
                                        including OTC derivatives,
                                        cleared transactions that are
                                        derivative contracts, and
                                        netting sets of derivative
                                        contracts, must be calculated
                                        using the methodology set forth
                                        in 12 CFR 324.34(a), but without
                                        any reduction for collateral
                                        other than cash collateral that
                                        is all or part of variation
                                        margin and that satisfies the
                                        requirements of 12 CFR
                                        324.10(c)(4)(ii)(C)(1)-(7). The
                                        exposure amount associated with
                                        SFTs, including cleared
                                        transactions that are SFTs, must
                                        be calculated using the
                                        standardized approach set forth
                                        in 12 CFR 324.37(b) or (c). For
                                        both derivatives and SFT
                                        exposures, the exposure amount
                                        to central counterparties must
                                        also include the default fund
                                        contribution.\2\
Core Earnings/Average Quarter-End      Core earnings are defined as net
 Total Assets.                          income less extraordinary items
                                        and tax-adjusted realized gains
                                        and losses on available-for-sale
                                        (AFS) and held-to-maturity (HTM)
                                        securities, adjusted for
                                        mergers. The ratio takes a four-
                                        quarter sum of merger-adjusted
                                        core earnings and divides it by
                                        an average of five quarter-end
                                        total assets (most recent and
                                        four prior quarters). If four
                                        quarters of data on core
                                        earnings are not available, data
                                        for quarters that are available
                                        will be added and annualized. If
                                        five quarters of data on total
                                        assets are not available, data
                                        for quarters that are available
                                        will be averaged.
Credit Quality Measure...............  The credit quality score is the
                                        higher of the following two
                                        scores:

[[Page 473]]

 
    (1) Criticized and Classified      Sum of criticized and classified
     Items/Tier 1 Capital and           items divided by the sum of Tier
     Reserves.                          1 capital and reserves.
                                        Criticized and classified items
                                        include items an institution or
                                        its primary federal regulator
                                        have graded ``Special Mention''
                                        or worse and include retail
                                        items under Uniform Retail
                                        Classification Guidelines,
                                        securities, funded and unfunded
                                        loans, other real estate owned
                                        (ORE), other assets, and marked-
                                        to-market counterparty
                                        positions, less credit valuation
                                        adjustments.\3\ Criticized and
                                        classified items exclude loans
                                        and securities in trading books,
                                        and the amount recoverable from
                                        the U.S. government, its
                                        agencies, or government-
                                        sponsored enterprises, under
                                        guarantee or insurance
                                        provisions.
    (2) Underperforming Assets/Tier 1  Sum of loans that are 30 days or
     Capital and Reserves.              more past due and still accruing
                                        interest, nonaccrual loans,
                                        restructured loans (including
                                        restructured 1-4 family loans),
                                        and ORE, excluding the maximum
                                        amount recoverable from the U.S.
                                        government, its agencies, or
                                        government-sponsored
                                        enterprises, under guarantee or
                                        insurance provisions, divided by
                                        a sum of Tier 1 capital and
                                        reserves.
Core Deposits/Total Liabilities......  Total domestic deposits excluding
                                        brokered deposits and uninsured
                                        non-brokered time deposits
                                        divided by total liabilities.
Balance Sheet Liquidity Ratio........  Sum of cash and balances due from
                                        depository institutions, federal
                                        funds sold and securities
                                        purchased under agreements to
                                        resell, and the market value of
                                        available for sale and held to
                                        maturity agency securities
                                        (excludes agency mortgage-backed
                                        securities but includes all
                                        other agency securities issued
                                        by the U.S. Treasury, U.S.
                                        government agencies, and U.S.
                                        government-sponsored
                                        enterprises) divided by the sum
                                        of federal funds purchased and
                                        repurchase agreements, other
                                        borrowings (including FHLB) with
                                        a remaining maturity of one year
                                        or less, 5 percent of insured
                                        domestic deposits, and 10
                                        percent of uninsured domestic
                                        and foreign deposits.\4\
Potential Losses/Total Domestic        Potential losses to the DIF in
 Deposits (Loss Severity Measure).      the event of failure divided by
                                        total domestic deposits.
                                        Appendix D describes the
                                        calculation of the loss severity
                                        measure in detail.
Market Risk Measure for Highly         The market risk score is a
 Complex Institutions.                  weighted average of the
                                        following three scores:
    (1) Trading Revenue Volatility/    Trailing 4-quarter standard
     Tier 1 Capital.                    deviation of quarterly trading
                                        revenue (merger-adjusted)
                                        divided by Tier 1 capital.
    (2) Market Risk Capital/Tier 1     Market risk capital divided by
     Capital.                           Tier 1 capital.\5\
    (3) Level 3 Trading Assets/Tier 1  Level 3 trading assets divided by
     Capital.                           Tier 1 capital.
Average Short-term Funding/Average     Quarterly average of federal
 Total Assets.                          funds purchased and repurchase
                                        agreements divided by the
                                        quarterly average of total
                                        assets as reported on Schedule
                                        RC-K of the Call Reports
------------------------------------------------------------------------
\1\ The FDIC retains the flexibility, as part of the risk-based
  assessment system, without the necessity of additional notice-and-
  comment rulemaking, to update the minimum and maximum cutoff values
  for all measures used in the scorecard. The FDIC may update the
  minimum and maximum cutoff values for the higher-risk assets to Tier 1
  capital and reserves ratio in order to maintain an approximately
  similar distribution of higher-risk assets to Tier 1 capital and
  reserves ratio scores as reported prior to April 1, 2013, or to avoid
  changing the overall amount of assessment revenue collected. 76 FR
  10672, 10700 (February 25, 2011). The FDIC will review changes in the
  distribution of the higher-risk assets to Tier 1 capital and reserves
  ratio scores and the resulting effect on total assessments and risk
  differentiation between banks when determining changes to the cutoffs.
  The FDIC may update the cutoff values for the higher-risk assets to
  Tier 1 capital and reserves ratio more frequently than annually. The
  FDIC will provide banks with a minimum one quarter advance notice of
  changes in the cutoff values for the higher-risk assets to Tier 1
  capital and reserves ratio with their quarterly deposit insurance
  invoice.
\2\ EAD and SFTs are defined and described in the compilation issued by
  the Basel Committee on Banking Supervision in its June 2006 document,
  ``International Convergence of Capital Measurement and Capital
  Standards.'' The definitions are described in detail in Annex 4 of the
  document. Any updates to the Basel II capital treatment of
  counterparty credit risk would be implemented as they are adopted.
  http://www.bis.org/publ/bcbs128.pdf
\3\ A marked-to-market counterparty position is equal to the sum of the
  net marked-to-market derivative exposures for each counterparty. The
  net marked-to-market derivative exposure equals the sum of all
  positive marked-to-market exposures net of legally enforceable netting
  provisions and net of all collateral held under a legally enforceable
  CSA plus any exposure where excess collateral has been posted to the
  counterparty. For purposes of the Criticized and Classified Items/Tier
  1 Capital and Reserves definition a marked-to-market counterparty
  position less any credit valuation adjustment can never be less than
  zero.
\4\ Deposit runoff rates for the balance sheet liquidity ratio reflect
  changes issued by the Basel Committee on Banking Supervision in its
  December 2010 document, ``Basel III: International Framework for
  liquidity risk measurement, standards, and monitoring,'' http://
  www.bis.org/publ/bcbs188.pdf.
\5\ Market risk is defined in 12 CFR 324.202.


[74 FR 9557, Mar. 4, 2009, as amended at 76 FR 10720, Feb. 25, 2011; 76 
FR 17521, Mar. 30, 2011; 77 FR 66015, Oct. 31, 2012; 78 FR 55904, Sept. 
10, 2013; 79 FR 70437, Nov. 26, 2014; 83 FR 17740, Apr. 24, 2018]

[[Page 474]]



   Sec. Appendix B to Subpart A of Part 327--Conversion of Scorecard 
                           Measures into Score

                    1. Weighted Average CAMELS Rating

    Weighted average CAMELS ratings between 1 and 3.5 are assigned a 
score between 25 and 100 according to the following equation:

S = 25 + [(20/3) * (C\2\ -1)],

where:
S = the weighted average CAMELS score; and
C = the weighted average CAMELS rating.

                       2. Other Scorecard Measures

    For certain scorecard measures, a lower ratio implies lower risk and 
a higher ratio implies higher risk. These measures include:
     Concentration measure;
     Credit quality measure;
     Market risk measure;
     Average short-term funding to average total 
assets ratio; and
     Potential losses to total domestic deposits ratio 
(loss severity measure).
    For those measures, a value between the minimum and maximum cutoff 
values is converted linearly to a score between 0 and 100, according to 
the following formula:

S = (V -Min) * 100/(Max -Min),

where S is score (rounded to three decimal points), V is the value of 
          the measure, Min is the minimum cutoff value and Max is the 
          maximum cutoff value.
    For other scorecard measures, a lower value represents higher risk 
and a higher value represents lower risk. These measures include:
     Leverage ratio;
     Core earnings to average quarter-end total assets 
ratio;
     Core deposits to total liabilities ratio; and
     Balance sheet liquidity ratio.
    For those measures, a value between the minimum and maximum cutoff 
values is converted linearly to a score between 0 and 100, according to 
the following formula:

S = (Max -V) * 100/(Max -Min),

where S is score (rounded to three decimal points), V is the value of 
          the measure, Max is the maximum cutoff value and Min is the 
          minimum cutoff value.

[76 FR 10720, Feb. 25, 2011]



 Sec. Appendix C to Subpart A of Part 327--Description of Concentration 
                                Measures

                        I. Concentration Measures

    The concentration score for large banks is the higher of the higher-
risk assets to Tier 1 capital and reserves score or the growth-adjusted 
portfolio concentrations score.\1\ The concentration score for highly 
complex institutions is the highest of the higher-risk assets to Tier 1 
capital and reserves score, the Top 20 counterparty exposure to Tier 1 
capital and reserves score, or the largest counterparty to Tier 1 
capital and reserves score. The higher-risk assets to Tier 1 capital and 
reserves ratio and the growth-adjusted portfolio concentration measure 
are described herein.
---------------------------------------------------------------------------

    \1\ For the purposes of this Appendix, the term ``bank'' means 
insured depository institution.
---------------------------------------------------------------------------

            A. Higher-Risk Assets/Tier 1 Capital and Reserves

    The higher-risk assets to Tier 1 capital and reserves ratio is the 
sum of the concentrations in each of five risk areas described below and 
is calculated as:
[GRAPHIC] [TIFF OMITTED] TR31OC12.027

Where:

Hi is bank i's higher-risk concentration measure and k is a 
          risk area.\2\ The five risk areas (k) are: construction and 
          land development (C&D) loans; higher-risk commercial and 
          industrial (C&I) loans and securities; higher-risk consumer 
          loans; nontraditional mortgage loans; and higher-risk 
          securitizations.
---------------------------------------------------------------------------

    \2\ The higher-risk concentration ratio is rounded to two decimal 
points.

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

[[Page 475]]

               1. Construction and Land Development Loans

    Construction and land development loans include construction and 
land development loans outstanding and unfunded commitments to fund 
construction and land development loans, whether irrevocable or 
unconditionally cancellable.\3\
---------------------------------------------------------------------------

    \3\ Construction and land development loans are as defined in the 
instructions to Call Report Schedule RC-C Part I--Loans and Leases, as 
they may be amended from time to time, and include items reported on 
line items RC-C 1.a.1 (1-4 family residential construction loans), RC-C 
1.a.2. (Other construction loans and all land development and other land 
loans), and RC-O M.10.a (Total unfunded commitments to fund 
construction, land development, and other land loans secured by real 
estate), and exclude RC-O M.10.b (Portion of unfunded commitments to 
fund construction, land development and other loans that are guaranteed 
or insured by the U.S. government, including the FDIC), RC-O M.13.a 
(Portion of funded construction, land development, and other land loans 
guaranteed or insured by the U.S. government, excluding FDIC loss 
sharing agreements), RC-M 13a.1.a.1 (1-4 family construction and land 
development loans covered by loss sharing agreements with the FDIC), and 
RC-M 13a.1.a.2 (Other construction loans and all land development loans 
covered by loss sharing agreements with the FDIC).
---------------------------------------------------------------------------

   2. Higher-Risk Commercial and Industrial (C&I) Loans and Securities

                               Definitions

                  Higher-Risk C&I Loans and Securities

    Higher-risk C&I loans and securities are:
    (a) All commercial and industrial (C&I) loans (including funded 
amounts and the amount of unfunded commitments, whether irrevocable or 
unconditionally cancellable) owed to the reporting bank (i.e., the bank 
filing its report of condition and income, or Call Report) by a higher-
risk C&I borrower, as that term is defined herein, regardless when the 
loans were made; \4 5\ and
---------------------------------------------------------------------------

    \4\ Commercial and industrial loans are as defined as commercial and 
industrial loans in the instructions to Call Report Schedule RC-C Part 
I--Loans and Leases, as they may be amended from time to time. This 
definition includes purchased credit impaired loans and overdrafts.
    \5\ Unfunded commitments are defined as unused commitments, as this 
term is defined in the instructions to Call Report Schedule RC-L, 
Derivatives and Off-Balance Sheet Items, as they may be amended from 
time to time.
---------------------------------------------------------------------------

    (b) All securities, except securities classified as trading book, 
issued by a higher-risk C&I borrower, as that term is defined herein, 
that are owned by the reporting bank, without regard to when the 
securities were purchased; however, higher-risk C&I loans and securities 
exclude:
    (a) The maximum amount that is recoverable from the U.S. government 
under guarantee or insurance provisions;
    (b) Loans (including syndicated or participated loans) that are 
fully secured by cash collateral as provided herein;
    (c) Loans that are eligible for the asset-based lending exclusion, 
described herein, provided the bank's primary federal regulator (PFR) 
has not cited a criticism (included in the Matters Requiring Attention, 
or MRA) of the bank's controls or administration of its asset-based loan 
portfolio; and
    (d) Loans that are eligible for the floor plan lending exclusion, 
described herein, provided the bank's PFR has not cited a criticism 
(included in the MRA) of the bank's controls or administration of its 
floor plan loan portfolio.

                        Higher-Risk C&I Borrower

    A ``higher-risk C&I borrower'' is a borrower that:
    (a) Owes the reporting bank on a C&I loan originally made on or 
after April 1, 2013, if:
    (i) The C&I loan has an original amount (including funded amounts 
and the amount of unfunded commitments, whether irrevocable or 
unconditionally cancellable) of at least $5 million;
    (ii) The loan meets the purpose and materiality tests described 
herein; and
    (iii) When the loan is made, the borrower meets the leverage test 
described herein; or
    (b) Obtains a refinance, as that term is defined herein, of an 
existing C&I loan, where the refinance occurs on or after April 1, 2013, 
and the refinanced loan is owed to the reporting bank, if:
    (i) The refinanced loan is in an amount (including funded amounts 
and the amount of unfunded commitments, whether irrevocable or 
unconditionally cancellable) of at least $5 million;
    (ii) The C&I loan being refinanced met the purpose and materiality 
tests (described herein) when it was originally made;
    (iii) The original loan was made no more than 5 years before the 
refinanced loan; and
    (iv) When the loan is refinanced, the borrower meets the leverage 
test.
    When a bank acquires a C&I loan originally made on or after April 1, 
2013, by another lender, it must determine whether the borrower is a 
higher-risk borrower as a result of the loan as soon as reasonably 
practicable, but not later than one year after acquisition. When a bank 
acquires loans from another entity on a recurring or programmatic basis, 
however, the bank must determine whether the borrower is a higher-risk 
borrower as a result of the loan as soon

[[Page 476]]

as is practicable, but not later than three months after the date of 
acquisition.
    A borrower ceases to be a ``higher-risk C&I borrower'' only if:
    (a) The borrower no longer has any C&I loans owed to the reporting 
bank that, when originally made, met the purpose and materiality tests 
described herein;
    (b) The borrower has such loans outstanding owed to the reporting 
bank, but they have all been refinanced more than 5 years after 
originally being made; or
    (c) The reporting bank makes a new C&I loan or refinances an 
existing C&I loan and the borrower no longer meets the leverage test 
described herein.

                             Original Amount

    The original amount of a loan, including the amounts to aggregate 
for purposes of arriving at the original amount, as described herein, 
is:
    (a) For C&I loans drawn down under lines of credit or loan 
commitments, the amount of the line of credit or loan commitment on the 
date of its most recent approval, extension or renewal prior to the date 
of the most recent Call Report; if, however, the amount currently 
outstanding on the loan as of the date of the bank's most recent Call 
Report exceeds this amount, then the original amount of the loan is the 
amount outstanding as of the date of the bank's most recent Call Report.
    (b) For syndicated or participated C&I loans, the total amount of 
the loan, rather than just the syndicated or participated portion held 
by the individual reporting bank.
    (c) For all other C&I loans (whether term or non-revolver loans), 
the total amount of the loan as of origination or the amount outstanding 
as of the date of the bank's most recent Call Report, whichever is 
larger.
    For purposes of defining original amount and a higher-risk C&I 
borrower:
    (a) All C&I loans that a borrower owes to the reporting bank that 
meet the purpose test when made, and that are made within six months of 
each other, must be aggregated to determine the original amount of the 
loan; however, only loans in the original amount of $1 million or more 
must be aggregated; and further provided, that loans made before the 
April 1, 2013, need not be aggregated.
    (b) When a C&I loan is refinanced through more than one loan, and 
the loans are made within six months of each other, they must be 
aggregated to determine the original amount.

                                Refinance

    For purposes of a C&I loan, a refinance includes:
    (a) Replacing an original obligation by a new or modified obligation 
or loan agreement;
    (b) Increasing the master commitment of the line of credit (but not 
adjusting sub-limits under the master commitment);
    (c) Disbursing additional money other than amounts already committed 
to the borrower;
    (d) Extending the legal maturity date;
    (e) Rescheduling principal or interest payments to create or 
increase a balloon payment;
    (f) Releasing a substantial amount of collateral;
    (g) Consolidating multiple existing obligations; or
    (h) Increasing or decreasing the interest rate.
    A refinance of a C&I loan does not include a modification or series 
of modifications to a commercial loan other than as described above or 
modifications to a commercial loan that would otherwise meet this 
definition of refinance, but that result in the classification of a loan 
as a troubled debt restructuring (TDR), as this term is defined in the 
glossary of the Call Report instructions, as they may be amended from 
time to time.

                              Purpose Test

    A loan or refinance meets the purpose test if it is to finance:
    (a) A buyout, defined as the purchase or repurchase by the borrower 
of the borrower's outstanding equity, including, but not limited to, an 
equity buyout or funding an Employee Stock Ownership Plan (ESOP);
    (b) An acquisition, defined as the purchase by the borrower of any 
equity interest in another company, or the purchase of all or a 
substantial portion of the assets of another company; or
    (c) A capital distribution, defined as a dividend payment or other 
transaction designed to enhance shareholder value, including, but not 
limited to, a repurchase of stock.
    At the time of refinance, whether the original loan met the purpose 
test may not be easily determined by a new lender. In such a case, the 
new lender must use its best efforts and reasonable due diligence to 
determine whether the original loan met the test.

                            Materiality Test

    A loan or refinance meets the materiality test if:
    (a) The original amount of the loan (including funded amounts and 
the amount of unfunded commitments, whether irrevocable or 
unconditionally cancellable) equals or exceeds 20 percent of the total 
funded debt of the borrower; total funded debt of the borrower is to be 
determined as of the date of the original loan and does not include the 
loan to which the materiality test is being applied; or

[[Page 477]]

    (b) Before the loan was made, the borrower had no funded debt.
    When multiple loans must be aggregated to determine the original 
amount, the materiality test is applied as of the date of the most 
recent loan.
    At the time of refinance, whether the original loan met the 
materiality test may not be easily determined by a new lender. In such a 
case, the new lender must use its best efforts and reasonable due 
diligence to determine whether the original loan met the test.

                              Leverage Test

    A borrower meets the leverage test if:
    (a) The ratio of the borrower's total debt to trailing twelve-month 
EBITDA (commonly known as the operating leverage ratio) is greater than 
4; or
    (b) The ratio of the borrower's senior debt to trailing twelve-month 
EBITDA (also commonly known as the operating leverage ratio) is greater 
than 3.
    EBITDA is defined as earnings before interest, taxes, depreciation, 
and amortization.
    Total debt is defined as all interest-bearing financial obligations 
and includes, but is not limited to, overdrafts, borrowings, repurchase 
agreements (repos), trust receipts, bankers acceptances, debentures, 
bonds, loans (including those secured by mortgages), sinking funds, 
capital (finance) lease obligations (including those obligations that 
are convertible, redeemable or retractable), mandatory redeemable 
preferred and trust preferred securities accounted for as liabilities in 
accordance with ASC Subtopic 480-10, Distinguishing Liabilities from 
Equity--Overall (formerly FASB Statement No. 150, ``Accounting for 
Certain Financial Instruments with Characteristics of both Liabilities 
and Equity''), and subordinated capital notes. Total debt excludes 
pension obligations, deferred tax liabilities and preferred equity.
    Senior debt includes any portion of total debt that has a priority 
claim on any of the borrower's assets. A priority claim is a claim that 
entitles the holder to priority of payment over other debt holders in 
bankruptcy.
    When calculating either of the borrower's operating leverage ratios, 
the only permitted EBITDA adjustments are those specifically permitted 
for that borrower in the loan agreement (at the time of underwriting) 
and only funded amounts of lines of credit must be considered debt.
    The debt-to-EBITDA ratio must be calculated using the consolidated 
financial statements of the borrower. If the loan is made to a 
subsidiary of a larger organization, the debt-to-EBITDA ratio may be 
calculated using the financial statements of the subsidiary or, if the 
parent company has unconditionally and irrevocably guaranteed the 
borrower's debt, using the consolidated financial statements of the 
parent company.
    In the case of a merger of two companies or the acquisition of one 
or more companies or parts of companies, pro-forma debt is to be used as 
well as the trailing twelve-month pro-forma EBITDA for the combined 
companies. When calculating the trailing pro-forma EBITDA for the 
combined company, no adjustments are allowed for economies of scale or 
projected cost savings that may be realized subsequent to the 
acquisition unless specifically permitted for that borrower under the 
loan agreement.

                               Exclusions

                        Cash Collateral Exclusion

    To exclude a loan based on cash collateral, the cash must be in the 
form of a savings or time deposit held by a bank. The bank (or lead bank 
or agent bank in the case of a participation or syndication) must have a 
perfected first priority security interest, a security agreement, and a 
collateral assignment of the deposit account that is irrevocable for the 
remaining term of the loan or commitment. In addition, the bank must 
place a hold on the deposit account that alerts the bank's employees to 
an attempted withdrawal. If the cash collateral is held at another bank 
or at multiple banks, a security agreement must be in place and each 
bank must have an account control agreement in place.\6\ For the 
exclusion to apply to a revolving line of credit, the cash collateral 
must be equal to or greater than the amount of the total loan commitment 
(the aggregate funded and unfunded balance of the loan).
---------------------------------------------------------------------------

    \6\ An account control agreement, for purposes of this Appendix, 
means a written agreement between the lending bank (the secured party), 
the borrower, and the bank that holds the deposit account serving as 
collateral (the depository bank), that the depository bank will comply 
with instructions originated by the secured party directing disposition 
of the funds in the deposit account without further consent by the 
borrower (or any other party).
---------------------------------------------------------------------------

              Asset-Based and Floor Plan Lending Exclusions

    The FDIC retains the authority to verify that banks have sound 
internal controls and administration practices for asset-based and floor 
plan loans that are excluded from a bank's reported higher-risk C&I 
loans and securities totals. If the bank's PFR has cited a criticism of 
the bank's controls or administration of its asset-based or floor plan 
loan portfolios in an MRA, the bank is not eligible for the asset-based 
or floor plan lending exclusions.

[[Page 478]]

                     Asset-Based Lending Conditions

    Asset-based loans (loans secured by accounts receivable and 
inventory) that meet all the following conditions are excluded from a 
bank's higher-risk C&I loan totals:
    (a) The loan is managed by a loan officer or group of loan officers 
at the reporting bank who have experience in asset-based lending and 
collateral monitoring, including, but not limited to, experience in 
reviewing the following: Collateral reports, borrowing base certificates 
(which are discussed herein), collateral audit reports, loan-to-
collateral values (LTV), and loan limits, using procedures common to the 
industry.
    (b) The bank has taken, or has the legally enforceable ability to 
take, dominion over the borrower's deposit accounts such that proceeds 
of collateral are applied to the loan balance as collected. Security 
agreements must be in place in all cases; in addition, if a borrower's 
deposit account is held at a bank other than the lending bank, an 
account control agreement must also be in place.
    (c) The bank has a perfected first priority security interest in all 
assets included in the borrowing base certificate.
    (d) If the loan is a credit facility (revolving or term loan), it 
must be fully secured by self-liquidating assets such as accounts 
receivable and inventory.\7\ Other non-self-liquidating assets may be 
part of the borrowing base, but the outstanding balance of the loan must 
be fully secured by the portion of the borrowing base that is composed 
of self-liquidating assets. Fully secured is defined as a 100 percent or 
lower LTV ratio after applying the appropriate discounts (determined by 
the loan agreement) to the collateral. If an over advance (including a 
seasonal over advance) causes the LTV to exceed 100 percent, the loan 
may not be excluded from higher-risk C&I loans owed by a higher-risk C&I 
borrower. Additionally, the bank must have the ability to withhold 
funding of a draw or advance if the loan amount exceeds the amount 
allowed by the collateral formula.
---------------------------------------------------------------------------

    \7\ An asset is self-liquidating if, in the event the borrower 
defaults, the asset can be easily liquidated and the proceeds of the 
sale of the assets would be used to pay down the loan. These assets can 
include machinery, heavy equipment or rental equipment if the machinery 
or equipment is inventory for the borrower's primary business and the 
machinery or equipment is included in the borrowing base.
---------------------------------------------------------------------------

    (e) A bank's lending policy or procedures must address the 
maintenance of an accounts receivable loan agreement with the borrower. 
This loan agreement must establish a maximum percentage advance, which 
cannot exceed 85 percent, against eligible accounts receivable, include 
a maximum dollar amount due from any one account debtor, address the 
financial strength of debtor accounts, and define eligible receivables. 
The definition of eligible receivables must consider the receivable 
quality, the turnover and dilution rates of receivables pledged, the 
aging of accounts receivable, the concentrations of debtor accounts, and 
the performance of the receivables related to their terms of sale.
    Concentration of debtor accounts is the percentage value of 
receivables associated with one or a few customers relative to the total 
value of receivables. Turnover of receivables is the velocity at which 
receivables are collected. The dilution rate is the uncollectible 
accounts receivable as a percentage of sales.
    Ineligibles must be established for any debtor account where there 
is concern that the debtor may not pay according to terms. Monthly 
accounts receivable agings must be received in sufficient detail to 
allow the bank to compute the required ineligibles. At a minimum, the 
following items must be deemed ineligible accounts receivable:
    (i) Accounts receivable balances over 90 days beyond invoice date or 
60 days past due, depending upon custom with respect to a particular 
industry with appropriate adjustments made for dated billings;
    (ii) Entire account balances where over 50 percent of the account is 
over 60 days past due or 90 days past invoice date;
    (iii) Accounts arising from sources other than trade (e.g., 
royalties, rebates);
    (iv) Consignment or guaranteed sales;
    (v) Notes receivable;
    (vi) Progress billings;
    (vii) Account balances in excess of limits appropriate to account 
debtor's credit worthiness or unduly concentrated by industry, location 
or customer;
    (viii) Affiliate and intercompany accounts; and
    (ix) Foreign accounts receivable.
    (f) Loans against inventory must be made with advance rates no more 
than 65 percent of eligible inventory (at the lower of cost valued on a 
first-in, first-out (FIFO) basis or market) based on an analysis of 
realizable value. When an appraisal is obtained, or there is a readily 
determinable market price for the inventory, however, up to 85 percent 
of the net orderly liquidation value (NOLV) or the market price of the 
inventory may be financed. Inventory must be valued or appraised by an 
independent third-party appraiser using NOLV, fair value, or forced sale 
value (versus a ``going concern'' value), whichever is appropriate, to 
arrive at a net realizable value. Appraisals are to be prepared in 
accordance with industry standards, unless there is a readily available 
and determinable market price for the inventory (e.g., in the case of 
various commodities), from a recognized exchange or third-party industry

[[Page 479]]

source, and a readily available market (e.g., for aluminum, crude oil, 
steel, and other traded commodities); in that case, inventory may be 
valued using current market value. When relying upon current market 
value rather than an independent appraisal, the reporting bank's 
management must update the value of inventory as market prices for the 
product change. Valuation updates must be as frequent as needed to 
ensure compliance with margin requirements. In addition, appropriate 
mark-to-market reserves must be established to protect against excessive 
inventory price fluctuations. An asset has a readily identifiable and 
publicly available market price if the asset's price is quoted routinely 
in a widely disseminated publication that is readily available to the 
general public.
    (g) A bank's lending policy or procedures must address the 
maintenance of an inventory loan agreement with the borrower. This loan 
agreement must establish a maximum percentage advance rate against 
acceptable inventory, address acceptable appraisal and valuation 
requirements, and define acceptable and ineligible inventory. 
Ineligibles must be established for inventory that exhibit 
characteristics that make it difficult to achieve a realizable value or 
to obtain possession of the inventory. Monthly inventory agings must be 
received in sufficient detail to allow the bank to compute the required 
ineligibles. At a minimum, ineligible inventory must include:
    (i) Slow moving, obsolete inventory and items turning materially 
slower than industry average;
    (ii) Inventory with value to the client only, which is generally 
work in process, but may include raw materials used solely in the 
client's manufacturing process;
    (iii) Consigned inventory or other inventory where a perfected 
security interest cannot be obtained;
    (iv) Off-premise inventory subject to a mechanic's or other lien; 
and
    (v) Specialized, high technology or other inventory subject to rapid 
obsolescence or valuation problems.
    (h) The bank must maintain documentation of borrowing base 
certificate reviews and collateral trend analyses to demonstrate that 
collateral values are actively, routinely and consistently monitored. A 
borrowing base certificate is a form prepared by the borrower that 
reflects the current status of the collateral. A new borrowing base 
certificate must be obtained within 30 days before or after each draw or 
advance on a loan. A bank is required to validate the borrowing base 
through asset-based tracking reports. The borrowing base validation 
process must include the bank requesting from the borrower a list of 
accounts receivable by creditor and a list of individual items of 
inventory and the bank certifying that the outstanding balance of the 
loan remains within the collateral formula prescribed by the loan 
agreement. Any discrepancies between the list of accounts receivable and 
inventory and the borrowing base certificate must be reconciled with the 
borrower. Periodic, but no less than annual, field examinations (audits) 
must also be performed by individuals who are independent of the credit 
origination or administration process. There must be a process in place 
to ensure that the bank is correcting audit exceptions.

                      Floor Plan Lending Conditions

    Floor plan loans may include, but are not limited to, loans to 
finance the purchase of various vehicles or equipment including 
automobiles, boat or marine equipment, recreational vehicles (RV), 
motorized watersports vehicles such as jet skis, or motorized lawn and 
garden equipment such as tractor lawnmowers. Floor plan loans that meet 
all the following conditions are excluded from a bank's higher-risk C&I 
loan totals:
    (a) The loan is managed by a loan officer or a group of loan 
officers at the reporting bank who are experienced in floor plan lending 
and monitoring collateral to ensure the borrower remains in compliance 
with floor plan limits and repayment requirements. Loan officers must 
have experience in reviewing certain items, including but not limited 
to: Collateral reports, floor plan limits, floor plan aging reports, 
vehicle inventory audits or inspections, and LTV ratios. The bank must 
obtain and review financial statements of the borrower (e.g., tax 
returns, company-prepared financial statements, or dealer statements) on 
at least a quarterly basis to ensure that adequate controls are in 
place. (A ``dealer statement'' is the standard format financial 
statement issued by Original Equipment Manufacturers (OEMs) and used by 
nationally recognized automobile dealer floor plan lenders.)
    (b) For automobile floor plans, each loan advance must be made 
against a specific automobile under a borrowing base certificate held as 
collateral at no more than 100 percent of (i) dealer invoice plus 
freight charges (for new vehicles) or (ii) the cost of a used automobile 
at auction or the wholesale value using the prevailing market guide 
(e.g., NADA, Black Book, Blue Book). The advance rate of 100 percent of 
dealer invoice plus freight charges on new automobiles, and the advance 
rate of the cost of a used automobile at auction or the wholesale value, 
may only be used where there is a manufacturer repurchase agreement or 
an aggressive curtailment program in place that is tracked by the bank 
over time and subject to strong controls. Otherwise, permissible advance 
rates must be lower than 100 percent.
    (c) Advance rates on vehicles other than automobiles must conform to 
industry

[[Page 480]]

standards for advance rates on such inventory, but may never exceed 100 
percent of dealer invoice plus freight charges on new vehicles or 100 
percent of the cost of a used vehicle at auction or its wholesale value.
    (d) Each loan is self-liquidating (i.e., if the borrower defaulted 
on the loan, the collateral could be easily liquidated and the proceeds 
of the sale of the collateral would be used to pay down the loan 
advance).
    (e) Vehicle inventories and collateral values are closely monitored, 
including the completion of regular (at least quarterly) dealership 
automotive or other vehicle dealer inventory audits or inspections to 
ensure accurate accounting for all vehicles held as collateral. The 
lending bank or a third party must prepare inventory audit reports and 
inspection reports for loans to automotive dealerships, or loans to 
other vehicle dealers, and the lending bank must review the reports at 
least quarterly. The reports must list all vehicles held as collateral 
and verify that the collateral is in the dealer's possession.
    (f) Floor plan aging reports must be reviewed by the bank as 
frequently as required under the loan agreement, but no less frequently 
than quarterly. Floor plan aging reports must reflect specific 
information about each automobile or vehicle being financed (e.g., the 
make, model, and color of the automobile or other vehicle, and 
origination date of the loan to finance the automobile or vehicle). 
Curtailment programs should be instituted where necessary and banks must 
ensure that curtailment payments are made on stale automotive or other 
vehicle inventory financed under the floor plan loan.

                            Detailed Reports

    Examples of detailed reports that must be provided to the asset-
based and floor plan lending bank include:
    (a) Borrowing Base Certificates: Borrowing base certificates, along 
with supporting information, must include:
    (i) The accounts receivable balance (rolled forward from the 
previous certificate);
    (ii) Sales (reported as gross billings) with detailed adjustments 
for returns and allowances to allow for proper tracking of dilution and 
other reductions in collateral;
    (iii) Detailed inventory information (e.g., raw materials, work-in-
process, finished goods); and
    (iv) Detail of loan activity.
    (b) Accounts Receivable and Inventory Detail: A listing of accounts 
receivable and inventory that is included on the borrowing base 
certificate. Monthly accounts receivable and inventory agings must be 
received in sufficient detail to allow the lender to compute the 
required ineligibles.
    (c) Accounts Payable Detail: A listing of each accounts payable owed 
to the borrower. Monthly accounts payable agings must be received to 
monitor payable performance and anticipated working capital needs.
    (d) Covenant Compliance Certificates: A listing of each loan 
covenant and the borrower's compliance with each one. Borrowers must 
submit Covenant Compliance Certificates, generally on a monthly or 
quarterly basis (depending on the terms of the loan agreement) to 
monitor compliance with the covenants outlined in the loan agreement. 
Non-compliance with any covenants must be promptly addressed.
    (e) Dealership Automotive Inventory or Other Vehicle Inventory 
Audits or Inspections: The bank or a third party must prepare inventory 
audit reports or inspection reports for loans to automotive dealerships 
and other vehicle dealerships. The bank must review the reports at least 
quarterly. The reports must list all vehicles held as collateral and 
verify that the collateral is in the dealer's possession.
    (f) Floor Plan Aging Reports: Borrowers must submit floor plan aging 
reports on a monthly or quarterly basis (depending on the terms of the 
loan agreement). These reports must reflect specific information about 
each automobile or other type of vehicle being financed (e.g., the make, 
model, and color of the automobile or other type of vehicle, and 
origination date of the loan to finance the automobile or other type of 
vehicle).

                      3. Higher-Risk Consumer Loans

                               Definitions

    Higher-risk consumer loans are defined as all consumer loans where, 
as of origination, or, if the loan has been refinanced, as of refinance, 
the probability of default (PD) within two years (the two-year PD) is 
greater than 20 percent, excluding those consumer loans that meet the 
definition of a nontraditional mortgage loan. \8 9\
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    \8\ For the purposes of this rule, consumer loans consist of all 
loans secured by 1-4 family residential properties as well as loans and 
leases made to individuals for household, family, and other personal 
expenditures, as defined in the instructions to the Call Report, 
Schedule RC-C, as the instructions may be amended from time to time. 
Higher-risk consumer loans include purchased credit-impaired loans that 
meet the definition of higher-risk consumer loans.
    \9\ The FDIC has the flexibility, as part of its risk-based 
assessment system, to change the 20 percent threshold for identifying 
higher-risk consumer loans without further notice-and-comment rulemaking 
as a result of reviewing data for up to the first two reporting periods 
after the effective date of this rule. Before making any such change, 
the FDIC will analyze the potential effect of changing the PD threshold 
on the distribution of higher-risk consumer loans among banks and the 
resulting effect on assessments collected from the industry. The FDIC 
will provide banks with at least one quarter advance notice of any such 
change to the PD threshold through a Financial Institution Letter.

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[[Page 481]]

    Higher-risk consumer loans exclude:
    (a) The maximum amounts recoverable from the U.S. government under 
guarantee or insurance provisions; and
    (b) Loans fully secured by cash collateral. To exclude a loan based 
on cash collateral, the cash must be in the form of a savings or time 
deposit held by a bank. The lending bank (or lead or agent bank in the 
case of a participation or syndication) must, in all cases, (including 
instances in which cash collateral is held at another bank or banks) 
have a perfected first priority security interest under applicable state 
law, a security agreement in place, and all necessary documents executed 
and measures taken as required to result in such perfection and 
priority. In addition, the lending bank must place a hold on the deposit 
account that alerts the bank's employees to an attempted withdrawal. For 
the exclusion to apply to a revolving line of credit, the cash 
collateral must be equal to, or greater than, the amount of the total 
loan commitment (the aggregate funded and unfunded balance of the loan).
    Banks must determine the PD of a consumer loan as of the date the 
loan was originated, or, if the loan has been refinanced, as of the date 
it was refinanced. The two-year PD must be estimated using an approach 
that conforms to the requirements detailed herein.

 Loans Originated or Refinanced Before April 1, 2013, and all Acquired 
                                  Loans

    For loans originated or refinanced by a bank before April 1, 2013, 
and all acquired loans regardless of the date of acquisition, if 
information as of the date the loan was originated or refinanced is not 
available, then the bank must use the oldest available information to 
determine the PD. If no information is available, then the bank must 
obtain recent, refreshed data from the borrower or other appropriate 
third party to determine the PD. Refreshed data is defined as the most 
recent data available, and must be as of a date that is no earlier than 
three months before the acquisition of the loan. In addition, for loans 
acquired on or after April 1, 2013, the acquiring bank shall have six 
months from the date of acquisition to determine the PD.
    When a bank acquires loans from another entity on a recurring or 
programmatic basis, the acquiring bank may determine whether the loan 
meets the definition of a higher-risk consumer loan using the 
origination criteria and analysis performed by the original lender only 
if the acquiring bank verifies the information provided. Loans acquired 
from another entity are acquired on a recurring basis if a bank has 
acquired other loans from that entity at least once within the calendar 
year of the acquisition of the loans in question or in the previous 
calendar year. If the acquiring bank cannot or does not verify the 
information provided by the original lender, the acquiring bank must 
obtain the necessary information from the borrower or other appropriate 
third party to make its own determination of whether the purchased 
assets should be classified as a higher-risk consumer loan.

   Loans That Meet Both Higher-Risk Consumer Loans and Nontraditional 
                       Mortgage Loans Definitions

    A loan that meets both the nontraditional mortgage loan and higher-
risk consumer loan definitions at the time of origination, or, if the 
loan has been refinanced, as of refinance, must be reported only as a 
nontraditional mortgage loan. If, however, the loan ceases to meet the 
nontraditional mortgage loan definition but continues to meet the 
definition of a higher-risk consumer loan, the loan is to be reported as 
a higher-risk consumer loan.

                 General Requirements for PD Estimation

                         Scorable Consumer Loans

    Estimates of the two-year PD for a loan must be based on the 
observed, stress period default rate (defined herein) for loans of a 
similar product type made to consumers with credit risk comparable to 
the borrower being evaluated. While a bank may consider additional risk 
factors beyond the product type and credit score (e.g., geography) in 
estimating the PD of a loan, it must at a minimum account for these two 
factors. The credit risk assessment must be determined using third party 
or internal scores derived using a scoring system that qualifies as 
empirically derived, demonstrably and statistically sound as defined in 
12 CFR 202.2(p), as it may be amended from time to time, and has been 
approved by the bank's model risk oversight and governance process and 
internal audit mechanism. In the case of a consumer loan with a co-
signer or co-borrower, the PD may be determined using the most favorable 
individual credit score.
    In estimating the PD based on such scores, banks must adhere to the 
following requirements:
    (a) The PD must be estimated as the average of the two, 24-month 
default rates observed from July 2007 to June 2009, and July 2009 to 
June 2011, where the average is calculated according to the following 
formula

[[Page 482]]

and DRt is the observed default rate over the 24-month period 
beginning in July of year t:
[GRAPHIC] [TIFF OMITTED] TR31OC12.028

    (b) The default rate for each 24-month period must be calculated as 
the number of active loans that experienced at least one default event 
during the period divided by the total number of active loans as of the 
observation date (i.e., the beginning of the 24-month period). An 
``active'' loan is defined as any loan that was open and not in default 
as of the observation date, and on which a payment was made within the 
12 months prior to the observation date.
    (c) The default rate for each 24-month period must be calculated 
using a stratified random sample of loans that is sufficient in size to 
derive statistically meaningful results for the product type and credit 
score (and any additional risk factors) being evaluated. The product 
strata must be as homogenous as possible with respect to the factors 
that influence default, such that products with distinct risk 
characteristics are evaluated separately. The loans should be sampled 
based on the credit score as of the observation date, and each 24-month 
default rate must be calculated using a random sample of at least 1,200 
active loans.
    (d) Credit score strata must be determined by partitioning the 
entire credit score range generated by a given scoring system into a 
minimum of 15 bands. While the width of the credit score bands may vary, 
the scores within each band must reflect a comparable level of credit 
risk. Because performance data for scores at the upper and lower 
extremes of the population distribution is likely to be limited, 
however, the top and bottom bands may include a range of scores that 
suggest some variance in credit quality.
    (e) Each credit score will need to have a unique PD associated with 
it. Therefore, when the number of score bands is less than the number of 
unique credit scores (as will almost always be the case), banks must use 
a linear interpolation between adjacent default rates to determine the 
PD for a particular score. The observed default rate for each band must 
be assumed to correspond to the midpoint of the range for the band. For 
example, if one score band ranges from 621 to 625 and has an observed 
default rate of 4 percent, while the next lowest band ranges from 616 to 
620 and has an observed default rate of 6 percent, a 620 score must be 
assigned a default rate of 5.2 percent, calculated as
[GRAPHIC] [TIFF OMITTED] TR31OC12.029

    When evaluating scores that fall below the midpoint of the lowest 
score band or above the midpoint of the highest score band, the 
interpolation must be based on an assumed adjacent default rate of 1 or 
0, respectively.
    (f) The credit scores represented in the historical sample must have 
been produced by the same entity, using the same or substantially 
similar methodology as the methodology used to derive the credit scores 
to which the default rates will be applied. For example, the default 
rate for a particular vendor score cannot be evaluated based on the 
score-to-default rate relationship for a different vendor, even if the 
range of scores under both systems is the same. On the other hand, if 
the current and historical scores were produced by the same vendor using 
slightly different versions of the same scoring system and equivalent 
scores represent a similar likelihood of default, then the historical 
experience could be applied.
    (g) A loan is to be considered in default when it is 90 + days past 
due, charged-off, or the borrower enters bankruptcy.

                        Unscorable Consumer Loans

    For unscorable consumer loans--where the available information about 
a borrower is insufficient to determine a credit score--the bank will be 
unable to assign a PD to the loan according to the requirements 
described above. If the total outstanding balance of the unscorable 
consumer loans of a particular product type (including, but not limited 
to, student loans) exceeds 5 percent of the total outstanding balance 
for that product type, including both foreign and domestic loans,

[[Page 483]]

the excess amount shall be treated as higher risk (the de minimis 
approach). Otherwise, the total outstanding balance of unscorable 
consumer loans of a particular product type will not be considered 
higher risk. The consumer product types used to determine whether the 5 
percent test is satisfied shall correspond to the product types listed 
in the table used for reporting PD estimates.
    A bank may not develop PD estimates for unscorable loans based on 
internal data.
    If, after the origination or refinance of the loan, an unscorable 
consumer loan becomes scorable, a bank must reclassify the loan using a 
PD estimated according to the general requirements above. Based upon 
that PD, the loan will be determined to be either higher risk or not, 
and that determination will remain in effect until a refinancing occurs, 
at which time the loan must be re-evaluated. An unscorable loan must be 
reviewed at least annually to determine if a credit score has become 
available.

                        Alternative Methodologies

    A bank may use internally derived default rates that were calculated 
using fewer observations or score bands than those specified above under 
certain conditions. The bank must submit a written request to the FDIC 
either in advance of, or concurrent with, reporting under the requested 
approach. The request must explain in detail how the proposed approach 
differs from the rule specifications and the bank must provide support 
for the statistical appropriateness of the proposed methodology. The 
request must include, at a minimum, a table with the default rates and 
number of observations used in each score and product segment. The FDIC 
will evaluate the proposed methodology and may request additional 
information from the bank, which the bank must provide. The bank may 
report using its proposed approach while the FDIC evaluates the 
methodology. If, after reviewing the request, the FDIC determines that 
the bank's methodology is unacceptable, the bank will be required to 
amend its Call Reports and report according to the generally applicable 
specifications for PD estimation. The bank will be required to submit 
amended information for no more than the two most recently dated and 
filed Call Reports preceding the FDIC's determination.

                         Foreign Consumer Loans

    A bank must estimate the PD of a foreign consumer loan according to 
the general requirements described above unless doing so would be unduly 
complex or burdensome (e.g., if a bank had to develop separate PD 
mappings for many different countries). A bank may request to use 
default rates calculated using fewer observations or score bands than 
the specified minimums, either in advance of, or concurrent with, 
reporting under that methodology, but must comply with the requirements 
detailed above for using an alternative methodology.
    When estimating a PD according to the general requirements described 
above would be unduly complex or burdensome, a bank that is required to 
calculate PDs for foreign consumer loans under the requirements of the 
Basel II capital framework may: (1) Use the Basel II approach discussed 
herein, subject to the terms discussed herein; (2) submit a written 
request to the FDIC to use its own methodology, but may not use the 
methodology until approved by the FDIC; or (3) treat the loan as an 
unscorable consumer loan subject to the de minimis approach described 
above.
    When estimating a PD according to the general requirements described 
above would be unduly complex or burdensome, a bank that is not required 
to calculate PDs for foreign consumer loans under the requirements of 
the Basel II capital framework may: (1) Treat the loan as an unscorable 
consumer loan subject to the de minimis approach described above; or (2) 
submit a written request to the FDIC to use its own methodology, but may 
not use the methodology until approved by the FDIC.
    When a bank submits a written request to the FDIC to use its own 
methodology, the FDIC may request additional information from the bank 
regarding the proposed methodology and the bank must provide the 
information. The FDIC may grant a bank tentative approval to use the 
methodology while the FDIC considers it in more detail. If the FDIC 
ultimately disapproves the methodology, the bank may be required to 
amend its Call Reports; however, the bank will be required to amend no 
more than the two most recently dated and filed Call Reports preceding 
the FDIC's determination. In the amended Call Reports, the bank must 
treat any loan whose PD had been estimated using the disapproved 
methodology as an unscorable domestic consumer loan subject to the de 
minimis approach described above.

                            Basel II Approach

    A bank that is required to calculate PDs for foreign consumer loans 
under the requirements of the Basel II capital framework may estimate 
the two-year PD of a foreign consumer loan based on the one-year PD used 
for Basel II capital purposes.\10\ The bank

[[Page 484]]

must submit a written request to the FDIC in advance of, or concurrent 
with, reporting under that methodology. The request must explain in 
detail how one-year PDs calculated under the Basel II framework are 
translated to two-year PDs that meet the requirements above. While the 
range of acceptable approaches is potentially broad, any proposed 
methodology must meet the following requirements:
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    \10\ Using these Basel II PDs for this purpose does not imply that a 
bank's PFR has approved use of these PDs for the Basel II capital 
framework. If a bank's PFR requires it to revise its Basel II PD 
methodology, the bank must use revised Basel II PDs to calculate (or 
recalculate if necessary) corresponding PDs under this Basel II 
approach.
---------------------------------------------------------------------------

    (a) The bank must use data on a sample of loans for which both the 
one-year Basel II PDs and two-year final rule PDs can be calculated. The 
sample may contain both foreign and domestic loans.
    (b) The bank must use the sample data to demonstrate that a 
meaningful relationship exists between the two types of PD estimates, 
and the significance and nature of the relationship must be determined 
using accepted statistical principles and methodologies. For example, to 
the extent that a linear relationship exists in the sample data, the 
bank may use an ordinary least-squares regression to determine the best 
linear translation of Basel II PDs to final rule PDs. The estimated 
equation should fit the data reasonably well based on standard 
statistics such as the coefficient of determination; and
    (c) The method must account for any significant variation in the 
relationship between the two types of PD estimates that exists across 
consumer products based on the empirical analysis of the data. For 
example, if the bank is using a linear regression to determine the 
relationship between PD estimates, it should test whether the parameter 
estimates are significantly different by product type.
    The bank may report using this approach (if it first notifies the 
FDIC of its intention to do so), while the FDIC evaluates the 
methodology. If, after reviewing the methodology, the FDIC determines 
that the methodology is unacceptable, the bank will be required to amend 
its Call Reports. The bank will be required to submit amended 
information for no more than the two most recently dated and filed Call 
Reports preceding the FDIC's determination.

                                Refinance

    For purposes of higher-risk consumer loans, a refinance includes:
    (a) Extending new credit or additional funds on an existing loan;
    (b) Replacing an existing loan with a new or modified obligation;
    (c) Consolidating multiple existing obligations;
    (d) Disbursing additional funds to the borrower. Additional funds 
include a material disbursement of additional funds or, with respect to 
a line of credit, a material increase in the amount of the line of 
credit, but not a disbursement, draw, or the writing of convenience 
checks within the original limits of the line of credit. A material 
increase in the amount of a line of credit is defined as a 10 percent or 
greater increase in the quarter-end line of credit limit; however, a 
temporary increase in a credit card line of credit is not a material 
increase;
    (e) Increasing or decreasing the interest rate (except as noted 
herein for credit card loans); or
    (f) Rescheduling principal or interest payments to create or 
increase a balloon payment or extend the legal maturity date of the loan 
by more than six months.
    A refinance for this purpose does not include:
    (a) A re-aging, defined as returning a delinquent, open-end account 
to current status without collecting the total amount of principal, 
interest, and fees that are contractually due, provided:
    (i) The re-aging is part of a program that, at a minimum, adheres to 
the re-aging guidelines recommended in the interagency approved Uniform 
Retail Credit Classification and Account Management Policy;\11\
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    \11\ Among other things, for a loan to be considered for re-aging, 
the following must be true: (1) The borrower must have demonstrated a 
renewed willingness and ability to repay the loan; (2) the loan must 
have existed for at least nine months; and (3) the borrower must have 
made at least three consecutive minimum monthly payments or the 
equivalent cumulative amount.
---------------------------------------------------------------------------

    (ii) The program has clearly defined policy guidelines and 
parameters for re-aging, as well as internal methods of ensuring the 
reasonableness of those guidelines and monitoring their effectiveness; 
and
    (iii) The bank monitors both the number and dollar amount of re-aged 
accounts, collects and analyzes data to assess the performance of re-
aged accounts, and determines the effect of re-aging practices on past 
due ratios;
    (b) Modifications to a loan that would otherwise meet this 
definition of refinance, but result in the classification of a loan as a 
TDR;
    (c) Any modification made to a consumer loan pursuant to a 
government program, such as the Home Affordable Modification Program or 
the Home Affordable Refinance Program;
    (d) Deferrals under the Servicemembers Civil Relief Act;
    (e) A contractual deferral of payments or change in interest rate 
that is consistent with the terms of the original loan agreement (e.g., 
as allowed in some student loans);

[[Page 485]]

    (f) Except as provided above, a modification or series of 
modifications to a closed-end consumer loan;
    (g) An advance of funds, an increase in the line of credit, or a 
change in the interest rate that is consistent with the terms of the 
loan agreement for an open-end or revolving line of credit (e.g., credit 
cards or home equity lines of credit);
    (h) For credit card loans:
    (i) Replacing an existing card because the original is expiring, for 
security reasons, or because of a new technology or a new system;
    (ii) Reissuing a credit card that has been temporarily suspended (as 
opposed to closed);
    (iii) Temporarily increasing the line of credit;
    (iv) Providing access to additional credit when a bank has 
internally approved a higher credit line than it has made available to 
the customer; or
    (v) Changing the interest rate of a credit card line when mandated 
by law (such as in the case of the Credit CARD Act).
    4. Nontraditional mortgage loans
    Nontraditional mortgage loans include all residential loan products 
that allow the borrower to defer repayment of principal or interest and 
include all interest-only products, teaser rate mortgages, and negative 
amortizing mortgages, with the exception of home equity lines of credit 
(HELOCs) or reverse mortgages. A teaser-rate mortgage loan is defined as 
a mortgage with a discounted initial rate where the lender offers a 
lower rate and lower payments for part of the mortgage term. A mortgage 
loan is no longer considered a nontraditional mortgage loan once the 
teaser rate has expired. An interest-only loan is no longer considered a 
nontraditional mortgage loan once the loan begins to amortize.
    Banks must determine whether residential loans meet the definition 
of a nontraditional mortgage loan as of origination, or, if the loan has 
been refinanced, as of refinance, as refinance is defined in this 
Appendix for purposes of higher-risk consumer loans. When a bank 
acquires a residential loan, it must determine whether the loan meets 
the definition of a nontraditional mortgage loan using the origination 
criteria and analysis performed by the original lender. If this 
information is unavailable, the bank must obtain refreshed data from the 
borrower or other appropriate third party. Refreshed data for 
residential loans is defined as the most recent data available. The 
data, however, must be as of a date that is no earlier than three months 
before the acquisition of the residential loan. The acquiring bank must 
also determine whether an acquired loan is higher risk not later than 
three months after acquisition.
    When a bank acquires loans from another entity on a recurring or 
programmatic basis, however, the acquiring bank may determine whether 
the loan meets the definition of a nontraditional mortgage loan using 
the origination criteria and analysis performed by the original lender 
only if the acquiring bank verifies the information provided. Loans 
acquired from another entity are acquired on a recurring basis if a bank 
has acquired other loans from that entity at least once within the 
calendar year or the previous calendar year of the acquisition of the 
loans in question.

                     5. Higher-Risk Securitizations

    Higher-risk securitizations are defined as securitization exposures 
(except securitizations classified as trading book), where, in 
aggregate, more than 50 percent of the assets backing the securitization 
meet either the criteria for higher-risk C & I loans or securities, 
higher-risk consumer loans, or nontraditional mortgage loans, except 
those classified as trading book. A securitization exposure is as 
defined in 12 CFR 324.2, as it may be amended from time to time. A 
higher-risk securitization excludes the maximum amount that is 
recoverable from the U.S. government under guarantee or insurance 
provisions.
    A bank must determine whether a securitization is higher risk based 
upon information as of the date of issuance (i.e., the date the 
securitization is sold on a market to the public for the first time). 
The bank must make this determination within the time limit that would 
apply under this Appendix if the bank were directly acquiring loans or 
securities of the type underlying the securitization. In making the 
determination, a bank must use one of the following methods:
    (a) For a securitization collateralized by a static pool of loans, 
whose underlying collateral changes due to the sale or amortization of 
these loans, the 50 percent threshold is to be determined based upon the 
amount of higher-risk assets, as defined in this Appendix, owned by the 
securitization on the date of issuance of the securitization.
    (b) For a securitization collateralized by a dynamic pool of loans, 
whose underlying collateral may change by the purchase of additional 
assets, including purchases made during a ramp-up period, the 50 percent 
threshold is to be determined based upon the highest amount of higher-
risk assets, as defined in this Appendix, allowable under the portfolio 
guidelines of the securitization.
    A bank is not required to evaluate a securitization on a continuous 
basis when the securitization is collateralized by a dynamic pool of 
loans; rather, the bank is only required to evaluate the securitization 
once.

[[Page 486]]

    A bank is required to use the information that is reasonably 
available to a sophisticated investor in reasonably determining whether 
a securitization meets the 50 percent threshold. Information reasonably 
available to a sophisticated investor includes, but is not limited to, 
offering memoranda, indentures, trustee reports, and requests for 
information from servicers, collateral managers, issuers, trustees, or 
similar third parties. When determining whether a revolving trust or 
similar securitization meets the threshold, a bank may use established 
criteria, model portfolios, or limitations published in the offering 
memorandum, indenture, trustee report, or similar documents.
    Sufficient information necessary for a bank to make a definitive 
determination may not, in every case, be reasonably available to the 
bank as a sophisticated investor. In such a case, the bank may exercise 
its judgment in making the determination. In some cases, the bank need 
not rely upon all of the aforementioned pieces of information to make a 
higher-risk determination if fewer documents provide sufficient data to 
make the determination.
    In cases in which a securitization is required to be consolidated on 
the balance sheet as a result of SFAS 166 and SFAS 167, and a bank has 
access to the necessary information, a bank may opt for an alternative 
method of evaluating the securitization to determine whether it is 
higher risk. The bank may evaluate individual loans in the 
securitization on a loan-by-loan basis and only report as higher risk 
those loans that meet the definition of a higher-risk asset; any loan 
within the securitization that does not meet the definition of a higher-
risk asset need not be reported as such. When making this evaluation, 
the bank must follow the provisions of section I.B herein. Once a bank 
evaluates a securitization for higher-risk asset designation using this 
alternative evaluation method, it must continue to evaluate all 
securitizations that it has consolidated on the balance sheet as a 
result of SFAS 166 and SFAS 167, and for which it has the required 
information, using the alternative evaluation method. For 
securitizations for which the bank does not have access to information 
on a loan-by-loan basis, the bank must determine whether the 
securitization meets the 50 percent threshold in the manner previously 
described for other securitizations.

                      B. Application of Definitions

    Section I of this Appendix applies to:
    (1) All construction and land development loans, whenever originated 
or purchased;
    (2) C&I loans (as that term is defined in this Appendix) owed to a 
reporting bank by a higher-risk C&I borrower (as that term is defined in 
this Appendix) and all securities issued by a higher-risk C&I borrower, 
except securitizations of C&I loans, that are owned by the reporting 
bank;
    (3) Consumer loans (as defined in this Appendix), except 
securitizations of consumer loans, whenever originated or purchased;
    (4) Securitizations of C&I and consumer loans (as defined in this 
Appendix) issued on or after April 1, 2013, including those 
securitizations issued on or after April 1, 2013, that are partially or 
fully collateralized by loans originated before April 1, 2013.
    For C&I loans that are either originated or refinanced by a 
reporting bank before April 1, 2013, or purchased by a reporting bank 
before April 1, 2013, where the loans are owed to the reporting bank by 
a borrower that does not meet the definition of a higher-risk C&I 
borrower as that term is defined in this Appendix (which requires, among 
other things, that the borrower have obtained a C&I loan or refinanced 
an existing C&I loan on or after April 1, 2013) and securities purchased 
before April 1, 2013, that are issued by an entity that does not meet 
the definition of a higher-risk C&I borrower, as that term is defined in 
this Appendix, banks must continue to use the transition guidance in the 
September 2012 Call Report instructions to determine whether to report 
the loan or security as a higher-risk asset for purposes of the higher-
risk assets to Tier 1 capital and reserves ratio. A bank may opt to 
apply the definition of higher-risk C&I loans and securities in this 
Appendix to all of its C&I loans and securities, but, if it does so, it 
must also apply the definition of a higher-risk C&I borrower in this 
Appendix without regard to when the loan is originally made or 
refinanced (i.e., whether made or refinanced before or after April 1, 
2013).
    For consumer loans (other than securitizations of consumer loans) 
originated or purchased prior to April 1, 2013, a bank must determine 
whether the loan met the definition of a higher-risk consumer loan no 
later than June 30, 2013.
    For all securitizations issued before April 1, 2013, banks must 
either (1) continue to use the transition guidance or (2) apply the 
definitions in this Appendix to all of its securitizations. If a bank 
applies the definition of higher-risk C&I loans and securities in this 
Appendix to its securitizations, it must also apply the definition of a 
higher-risk C&I borrower in this Appendix to all C&I borrowers without 
regard to when the loans to those borrowers were originally made or 
refinanced (i.e., whether made or refinanced before or after April 1, 
2013).

           II. Growth-Adjusted Portfolio Concentration Measure

    The growth-adjusted concentration measure is the sum of the values 
of concentrations in each of the seven portfolios, each of the values 
being first adjusted for risk weights and

[[Page 487]]

growth. The product of the risk weight and the concentration ratio is 
first squared and then multiplied by the growth factor. The measure is 
calculated as:
[GRAPHIC] [TIFF OMITTED] TR31OC12.030

Where:

N is bank i's growth-adjusted portfolio concentration measure; \12\
---------------------------------------------------------------------------

    \12\ The growth-adjusted portfolio concentration measure is rounded 
to two decimal points.
---------------------------------------------------------------------------

k is a portfolio;
g is a growth factor for bank i's portfolio k; and,
w is a risk weight for portfolio k.

    The seven portfolios (k) are defined based on the Call Report/TFR 
data and they are:
     Construction and land development loans;
     Other commercial real estate loans;
     First-lien residential mortgages and non-agency 
residential mortgage-backed securities (excludes CMOs, REMICS, CMO and 
REMIC residuals, and stripped MBS issued by non-U.S. government issuers 
for which the collateral consists of MBS issued or guaranteed by U.S. 
government agencies);
     Closed-end junior liens and home equity lines of 
credit (HELOCs);
     Commercial and industrial loans;
     Credit card loans; and
     Other consumer loans. \13 14\
---------------------------------------------------------------------------

    \13\ All loan concentrations should include the fair value of 
purchased credit impaired loans.
    \14\ Each loan concentration category should exclude the amount of 
loans recoverable from the U.S. government under guarantee or insurance 
provisions.
---------------------------------------------------------------------------

    The growth factor, g, is based on a three-year merger-adjusted 
growth rate for a given portfolio; g ranges from 1 to 1.2 where a 20 
percent growth rate equals a factor of 1 and an 80 percent growth rate 
equals a factor of 1.2.\15\ For growth rates less than 20 percent, g is 
1; for growth rates greater than 80 percent, g is 1.2. For growth rates 
between 20 percent and 80 percent, the growth factor is calculated as:
---------------------------------------------------------------------------

    \15\ The growth factor is rounded to two decimal points.
    [GRAPHIC] [TIFF OMITTED] TR31OC12.031
    
Where:
[GRAPHIC] [TIFF OMITTED] TR31OC12.032


V is the portfolio amount as reported on the Call Report/TFR and t is 
          the quarter for which the assessment is being determined.

    The risk weight for each portfolio reflects relative peak loss rates 
for banks at the 90th percentile during the 1990-2009 period.\16\ These 
loss rates were converted into equivalent risk weights as shown in Table 
C.1.
---------------------------------------------------------------------------

    \16\ The risk weights are based on loss rates for each portfolio 
relative to the loss rate for C&I loans, which is given a risk weight of 
1. The peak loss rates were derived as follows. The loss rate for each 
loan category for each bank with over $5 billion in total assets was 
calculated for each of the last twenty calendar years (1990-2009). The 
highest value of the 90th percentile of each loan category over the 
twenty year period was selected as the peak loss rate.

[[Page 488]]



  Table C.1--90th Percentile Annual Loss Rates for 1990-2009 Period and
                       Corresponding Risk Weights
------------------------------------------------------------------------
                                            Loss rates
                Portfolio                      (90th       Risk weights
                                            percentile)
------------------------------------------------------------------------
First-Lien Mortgages....................            2.3%             0.5
Second/Junior Lien Mortgages............            4.6%             0.9
Commercial and Industrial (C&I) Loans...            5.0%             1.0
Construction and Development (C&D) Loans           15.0%             3.0
Commercial Real Estate Loans, excluding             4.3%             0.9
 C&D....................................
Credit Card Loans.......................           11.8%             2.4
Other Consumer Loans....................            5.9%             1.2
------------------------------------------------------------------------


[77 FR 66017, Oct. 31, 2013, as amended at 78 FR 55594, Sept. 10, 2013; 
83 FR 17740, Apr. 24, 2018]



   Sec. Appendix D to Subpart A of Part 327--Description of the Loss 
                            Severity Measure

    The loss severity measure applies a standardized set of assumptions 
to an institution's balance sheet to measure possible losses to the FDIC 
in the event of an institution's failure. To determine an institution's 
loss severity rate, the FDIC first applies assumptions about uninsured 
deposit and other unsecured liability runoff, and growth in insured 
deposits, to adjust the size and composition of the institution's 
liabilities. Assets are then reduced to match any reduction in 
liabilities.\1\ The institution's asset values are then further reduced 
so that the Leverage ratio reaches 2 percent.\2\ In both cases, assets 
are adjusted pro rata to preserve the institution's asset composition. 
Assumptions regarding loss rates at failure for a given asset category 
and the extent of secured liabilities are then applied to estimated 
assets and liabilities at failure to determine whether the institution 
has enough unencumbered assets to cover domestic deposits. Any projected 
shortfall is divided by current domestic deposits to obtain an end-of-
period loss severity ratio. The loss severity measure is an average loss 
severity ratio for the three most recent quarters of data available.
---------------------------------------------------------------------------

    \1\ In most cases, the model would yield reductions in liabilities 
and assets prior to failure. Exceptions may occur for institutions 
primarily funded through insured deposits, which the model assumes to 
grow prior to failure.
    \2\ Of course, in reality, runoff and capital declines occur more or 
less simultaneously as an institution approaches failure. The loss 
severity measure assumptions simplify this process for ease of modeling.
---------------------------------------------------------------------------

                Runoff and Capital Adjustment Assumptions

    Table D.1 contains run-off assumptions.

                   Table D.1--Runoff Rate Assumptions
------------------------------------------------------------------------
                 Liability type                  Runoff rate * (percent)
------------------------------------------------------------------------
Insured Deposits...............................                     (10)
Uninsured Deposits.............................                       58
Foreign Deposits...............................                       80
Federal Funds Purchased........................                      100
Repurchase Agreements..........................                       75
Trading Liabilities............................                       50
Unsecured Borrowings <= 1 Year.................                       75
Secured Borrowings <= 1 Year...................                       25
Subordinated Debt and Limited Liability                               15
 Preferred Stock...............................
------------------------------------------------------------------------
* A negative rate implies growth.

    Given the resulting total liabilities after runoff, assets are then 
reduced pro rata to preserve the relative amount of assets in each of 
the following asset categories and to achieve a Leverage ratio of 2 
percent:
     Cash and Interest Bearing Balances;
     Trading Account Assets;
     Federal Funds Sold and Repurchase Agreements;
     Treasury and Agency Securities;
     Municipal Securities;
     Other Securities;
     Construction and Development Loans;
     Nonresidential Real Estate Loans;
     Multifamily Real Estate Loans;
     1-4 Family Closed-End First Liens;
     1-4 Family Closed-End Junior Liens;
     Revolving Home Equity Loans; and
     Agricultural Real Estate Loans.

                   Recovery Value of Assets at Failure

    Table D.2 shows loss rates applied to each of the asset categories 
as adjusted above.

[[Page 489]]



                 Table D.2--Asset Loss Rate Assumptions
------------------------------------------------------------------------
                                                             Loss rate
                     Asset category                          (percent)
------------------------------------------------------------------------
Cash and Interest Bearing Balances......................             0.0
Trading Account Assets..................................             0.0
Federal Funds Sold and Repurchase Agreements............             0.0
Treasury and Agency Securities..........................             0.0
Municipal Securities....................................            10.0
Other Securities........................................            15.0
Construction and Development Loans......................            38.2
Nonresidential Real Estate Loans........................            17.6
Multifamily Real Estate Loans...........................            10.8
1-4 Family Closed-End First Liens.......................            19.4
1-4 Family Closed-End Junior Liens......................            41.0
Revolving Home Equity Loans.............................            41.0
Agricultural Real Estate Loans..........................            19.7
Agricultural Loans......................................            11.8
Commercial and Industrial Loans.........................            21.5
Credit Card Loans.......................................            18.3
Other Consumer Loans....................................            18.3
All Other Loans.........................................            51.0
Other Assets............................................            75.0
------------------------------------------------------------------------

                     Secured Liabilities at Failure

    Federal home loan bank advances, secured federal funds purchased and 
repurchase agreements are assumed to be fully secured. Foreign deposits 
are treated as fully secured because of the potential for ring fencing.

                     Loss Severity Ratio Calculation

    The FDIC's loss given failure (LGD) is calculated as:
    [GRAPHIC] [TIFF OMITTED] TR25FE11.013
    
    An end-of-quarter loss severity ratio is LGD divided by total 
domestic deposits at quarter-end and the loss severity measure for the 
scorecard is an average of end-of-period loss severity ratios for three 
most recent quarters.

[76 FR 10724, Feb. 25, 2011]



         Subpart B_Implementation of One-Time Assessment Credit

    Authority: 12 U.S.C. 1817(e)(3).

    Source: 71 FR 61383, Oct. 18, 2006, unless otherwise noted.



Sec.  327.30  Purpose and scope.

    (a) Scope. This subpart B of part 327 implements the one-time 
assessment credit required by section 7(e)(3) of the Federal Deposit 
Insurance Act, 12 U.S.C. 1817(e)(3) and applies to insured depository 
institutions.
    (b) Purpose. This subpart B of part 327 sets forth the rules for:
    (1) Determination of the aggregate amount of the one-time credit;
    (2) Identification of eligible insured depository institutions;
    (3) Determination of the amount of each eligible institution's 
December 31, 1996 assessment base ratio and one-time credit;
    (4) Transferability of credit amounts among insured depository 
institutions;
    (5) Application of such credit amounts against assessments; and
    (6) An institution's request for review of the FDIC's determination 
of a credit amount.



Sec.  327.31  Definitions.

    For purposes of this subpart and subpart C:
    (a) The average assessment rate for any assessment period means the 
aggregate assessment charged all insured depository institutions for 
that period divided by the aggregate assessment base for that period.

[[Page 490]]

    (b) Board means the Board of Directors of the FDIC.
    (c) De facto rule means any transaction in which an insured 
depository institution assumes substantially all of the deposit 
liabilities and acquires substantially all of the assets of any other 
insured depository institution at the time of the transaction.
    (d) An eligible insured depository institution:
    (1) Means an insured depository institution that:
    (i) Was in existence on December 31, 1996, and paid a deposit 
insurance assessment before December 31, 1996; or
    (ii) Is a successor to an insured depository institution referred to 
in paragraph (d)(1)(i) of this section; and
    (2) does not include an institution if its insured status has 
terminated as of or after the effective date of this regulation.
    (e) Merger means any transaction in which an insured depository 
institution merges or consolidates with any other insured depository 
institution. Notwithstanding part 303, subpart D, for purposes of this 
subpart B and subpart C of this part, merger does not include 
transactions in which an insured depository institution either directly 
or indirectly acquires the assets of, or assumes liability to pay any 
deposits made in, any other insured depository institution, but there is 
not a legal merger or consolidation of the two insured depository 
institutions.
    (f) Resulting institution refers to the acquiring, assuming, or 
resulting institution in a merger.
    (g) Successor means a resulting institution or an insured depository 
institution that acquired part of another insured depository 
institution's 1996 assessment base ratio under paragraph 327.33(c) of 
this subpart under the de facto rule.



Sec.  327.32  Determination of aggregate credit amount.

    The aggregate amount of the one-time credit shall equal 
$4,707,580,238.19.



Sec.  327.33  Determination of eligible institution's credit amount.

    (a) Subject to paragraph (c) of this section, allocation of the one-
time credit shall be based on each eligible insured depository 
institution's 1996 assessment base ratio.
    (b) Subject to paragraph (c) of this section, an eligible insured 
depository institution's 1996 assessment base ratio shall consist of:
    (1) Its assessment base as of December 31, 1996 (adjusted as 
appropriate to reflect the assessment base of December 31, 1996, of all 
institutions for which it is the successor), as the numerator; and
    (2) The combined aggregate assessment bases of all eligible insured 
depository institutions, including any successor institutions, as of 
December 31, 1996, as the denominator.
    (c) If an insured depository institution is a successor to an 
eligible insured depository institution under the de facto rule, as 
defined in paragraph 327.31(c) of this subpart, the successor and the 
eligible insured depository institution will divide the eligible insured 
depository institution's 1996 assessment base ratio pro rata, based on 
the deposit liabilities assumed in the transaction. In any subsequent 
transaction involving an insured depository institution that previously 
engaged in a transaction to which the de facto rule applied, the insured 
depository institution may not be deemed to have transferred more than 
its remaining 1996 assessment base ratio. If the transferring 
institution is no longer an insured depository institution after the 
transfer, the last successor will acquire the transferring institution's 
remaining 1996 assessment base ratio.



Sec.  327.34  Transferability of credits.

    (a) Any remaining amount of the one-time assessment credit and the 
associated 1996 assessment base ratio shall transfer to a successor of 
an eligible insured depository institution.
    (b) Prior to the final determination of its 1996 assessment base and 
one-time assessment credit amount by the FDIC, an eligible insured 
depository institution may enter into an agreement to transfer any 
portion of such institution's one-time credit amount and 1996 assessment 
base ratio to another insured depository institution. The parties to the 
agreement shall notify the FDIC's Division of Finance and submit a 
written agreement, signed by legal

[[Page 491]]

representatives of both institutions. The parties must include 
documentation stating that each representative has the legal authority 
to bind the institution. The adjustment to credit amount and the 
associated 1996 assessment base ratio shall be made in the next 
assessment invoice that is sent at least 10 days after the FDIC's 
receipt of the written agreement.
    (c) An eligible insured depository institution may enter into an 
agreement after the final determination of its 1996 assessment base 
ratio and one-time credit amount by the FDIC to transfer any portion of 
such institution's one-time credit amount to another insured depository 
institution. The parties to the agreement shall notify the FDIC's 
Division of Finance and submit a written agreement, signed by legal 
representatives of both institutions. The parties must include 
documentation stating that each representative has the legal authority 
to bind the institution. The adjustment to the credit amount shall be 
made in the next assessment invoice that is sent at least 10 days after 
the FDIC's receipt of the written agreement.



Sec.  327.35  Application of credits.

    (a) Subject to the limitations in paragraph (b) of this section, the 
amount of an eligible insured depository institution's one-time credit 
shall be applied to the maximum extent allowable by law against that 
institution's quarterly assessment payment under subpart A of this part, 
after applying assessment credits awarded under Sec.  327.11(c), until 
the institution's credit is exhausted.
    (b) The following limitations shall apply to the application of the 
credit against assessment payments.
    (1) For assessments that become due for assessment periods beginning 
in calendar years 2008, 2009, and 2010, the credit may not be applied to 
more than 90 percent of the quarterly assessment.
    (2) For an insured depository institution that exhibits financial, 
operational, or compliance weaknesses ranging from moderately severe to 
unsatisfactory, or is not at least adequately capitalized (as defined 
pursuant to section 38 of the Federal Deposit Insurance Act) at the 
beginning of an assessment period, the amount of the credit that may be 
applied against the institution's quarterly assessment for that period 
shall not exceed the amount that the institution would have been 
assessed if it had been assessed at the average assessment rate for all 
insured institutions for that period. The FDIC shall determine the 
average assessment rate for an assessment period based upon its best 
estimate of the average rate for the period. The estimate shall be made 
using the best information available, but shall be made no earlier than 
30 days and no later than 20 days prior to the payment due date for the 
period.
    (3) If the FDIC has established a restoration plan pursuant to 
section 7(b)(3)(E) of the Federal Deposit Insurance Act, the FDIC may 
elect to restrict the application of credit amounts, in any assessment 
period, up to the lesser of:
    (i) The amount of an insured depository institution's assessment for 
that period; or
    (ii) The amount equal to 3 basis points of the institution's 
assessment base.

[71 FR 61383, Oct. 18, 2006, as amended at 81 FR 16073, Mar. 25, 2016]



Sec.  327.36  Requests for review of credit amount.

    (a)(1) As soon as practicable after the publication date of this 
rule, the FDIC shall notify each insured depository institution by 
FDICconnect or mail of its 1996 assessment base ratio and credit amount 
in a Statement of One-Time Credit (``Statement''), if any. An insured 
depository institution may submit a request for review of the FDIC's 
determination of the institution's 1996 assessment base ratio or credit 
amount as shown on the Statement within 30 days after the effective date 
of this rule. Such review may be requested if:
    (i) The institution disagrees with a determination as to eligibility 
for the credit that relates to that institution's credit amount;
    (ii) The institution disagrees with the calculation of the credit as 
stated on the Statement; or
    (iii) The institution believes that the 1996 assessment base ratio 
attributed to the institution on the Statement

[[Page 492]]

does not fully or accurately reflect its own 1996 assessment base or 
appropriate adjustments for successors.
    (2) If an institution does not submit a timely request for review, 
that institution is barred from subsequently requesting review of its 
credit amount, subject to paragraph (e) of this section.
    (b)(1) An insured depository institution may submit a request for 
review of the FDIC's adjustment to the credit amount in a quarterly 
invoice within 30 days of the date on which the FDIC provides the 
invoice. Such review may be requested if:
    (i) The institution disagrees with the calculation of the credit as 
stated on the invoice; or
    (ii) The institution believes that the 1996 assessment base ratio 
attributed to the institution due to the adjustment to the invoice does 
not fully or accurately reflect appropriate adjustments for successors 
since the last quarterly invoice.
    (2) If an institution does not submit a timely request for review, 
that institution is barred from subsequently requesting review of its 
credit amount, subject to paragraph (e) of this section.
    (c) The request for review shall be submitted to the Division of 
Finance and shall provide documentation sufficient to support the change 
sought by the institution. At the time of filing with the FDIC, the 
requesting institution shall notify, to the extent practicable, any 
other insured depository institution that would be directly and 
materially affected by granting the request for review and provide such 
institution with copies of the request for review, the supporting 
documentation, and the FDIC's procedures for requests under this 
subpart. In addition, the FDIC also shall make reasonable efforts, based 
on its official systems of records, to determine that such institutions 
have been identified and notified.
    (d) During the FDIC's consideration of the request for review, the 
amount of credit in dispute shall not be available for use by any 
institution.
    (e) Within 30 days of being notified of the filing of the request 
for review, those institutions identified as potentially affected by the 
request for review may submit a response to such request, along with any 
supporting documentation, to the Division of Finance, and shall provide 
copies to the requesting institution. If an institution that was 
notified under paragraph (c) does not submit a response to the request 
for review, that institution may not:
    (1) Subsequently dispute the information submitted by other 
institutions on the transaction(s) at issue in the review process; or
    (2) Appeal the decision by the Director of the Division of Finance.
    (f) If additional information is requested of the requesting or 
affected institutions by the FDIC, such information shall be provided by 
the institution within 21 days of the date of the FDIC's request for 
additional information.
    (g) Any institution submitting a timely request for review will 
receive a written response from the FDIC's Director of the Division of 
Finance, (or his or her designee), notifying the requesting and affected 
institutions of the determination of the Director as to whether the 
requested change is warranted. Notice of the procedures applicable to 
appeals under paragraph (h) of this section will be included with the 
Director's written determination. Whenever feasible, the FDIC will 
provide the institution with the aforesaid written response the later 
of:
    (1) Within 60 days of receipt by the FDIC of the request for 
revision;
    (2) If additional institutions have been notified by the requesting 
institution or the FDIC, within 60 days of the date of the last response 
to the notification; or
    (3) If additional information has been requested by the FDIC, within 
60 days of receipt of the additional information.
    (h) Subject to paragraph (e) of this section, the insured depository 
institution that requested review under this section, or an insured 
depository institution materially affected by the Director's 
determination, that disagrees with that determination may appeal to the 
FDIC's Assessment Appeals Committee on the same grounds as set forth 
under paragraph (a) of this section. Any such appeal must be submitted 
within 30 calendar days from

[[Page 493]]

the date of the Director's written determination. Notice of the 
procedures applicable to appeals under this section will be included 
with the Director's written determination. The decision of the 
Assessment Appeals Committee shall be the final determination of the 
FDIC.
    (i) Any adjustment to an institution's credits resulting from a 
determination by the Director of the FDIC's Assessment Appeals Committee 
shall be reflected in the institution's next assessment invoice. The 
adjustment to credits shall affect future assessments only and shall not 
result in a retroactive adjustment of assessment amounts owed for prior 
periods.



            Subpart C_Implementation of Dividend Requirements

    Authority: 12 U.S.C. 1817(e)(2), (4).

    Source: 73 FR 73162, Dec. 2, 2008, unless otherwise noted.



Sec.  327.50  Dividends.

    (a) Suspension of dividends. The Board will suspend dividends 
indefinitely whenever the DIF reserve ratio exceeds 1.50 percent at the 
end of any year.
    (b) Assessment rate schedule if DIF reserve ratio exceeds 1.50 
Percent. In lieu of dividends, when the DIF reserve ratio exceeds 1.50 
percent, assessment rates shall be determined as set forth in section 
327.10, as appropriate.

[76 FR 10725, Feb. 25, 2011]



PART 328_ADVERTISEMENT OF MEMBERSHIP--Table of Contents



Sec.
328.0 Scope.
328.1 Official sign.
328.2 Display and procurement of official sign.
328.3 Official advertising statement requirements.
328.4 Prohibition against receiving deposits at same teller station or 
          window as noninsured institution.

    Authority: 12 U.S.C. 1818(a), 1819 (Tenth), 1828(a).

    Source: 72 FR 66102, Nov. 13, 2006, unless otherwise noted.



Sec.  328.0  Scope.

    Part 328 describes the official sign of the FDIC and prescribes its 
use by insured depository institutions. It also prescribes the official 
advertising statement insured depository institutions must include in 
their advertisements. For purposes of part 328, the term ``insured 
depository institution'' includes insured branches of a foreign 
depository institution. Part 328 does not apply to non-insured offices 
or branches of insured depository institutions located in foreign 
countries.



Sec.  328.1  Official sign.

    (a) The official sign referred to in this part shall be 7 
by 3 in size, with black lettering and gold background, and 
of the following design:
[GRAPHIC] [TIFF OMITTED] TR13AU10.000


[[Page 494]]


    (b) The ``symbol'' of the Corporation, as used in this part, shall 
be that portion of the official sign consisting of ``FDIC'' and the two 
lines of smaller type above and below ``FDIC.''

[72 FR 66102, Nov. 13, 2006, as amended at 75 FR 49365, Aug. 13, 2010]



Sec.  328.2  Display and procurement of official sign.

    (a) Display of official sign. Each insured depository institution 
shall continuously display the official sign at each station or window 
where insured deposits are usually and normally received in the 
depository institution's principal place of business and in all its 
branches.
    (1) Other locations--(i) Within the institution. In addition to 
locations where display of the official sign is required under this 
Sec.  328.2(a), an insured depository institution may display the 
official sign in other locations at the institution.
    (ii) Other facilities. An insured depository institution may display 
the official sign on or at Remote Service Facilities. If an insured 
depository institution displays the official sign at a Remote Service 
Facility, and if there are any noninsured institutions that share in the 
Remote Service Facility, any insured depository institution that 
displays the official sign must clearly show that the sign refers only 
to a designated insured depository institution(s). As used in this part, 
the term ``Remote Service Facility'' includes any automated teller 
machine, cash dispensing machine, point-of-sale terminal, or other 
remote electronic facility where deposits are received.
    (2) Varied signs. Instead of displaying the official sign, an 
insured depository institution may display signs that vary from the 
official sign in size, color, or material at any location where display 
of the official sign is required or permitted under this Sec.  328.2(a). 
However, any such varied sign that is displayed in locations where 
display of the official sign is required under this Sec.  328.2(a) must 
not be smaller in size than the official sign and must have the same 
color for the text and symbols.
    (3) Newly insured institutions. A depository institution shall 
display the official sign no later than its twenty-first day of 
operation as an insured depository institution, unless the institution 
promptly requested the official sign from the Corporation, but did not 
receive it before that date.
    (b) Procuring official sign. An insured depository institution may 
procure the official sign from the Corporation for official use at no 
charge. Information on obtaining the official sign is posted on the 
FDIC's internet Web site, http://www.fdic.gov. Alternatively, insured 
depository institutions may, at their expense, procure from commercial 
suppliers signs that vary from the official sign in size, color, or 
material. Any insured depository institution which has promptly 
submitted a written request for an official sign to the Corporation 
shall not be deemed to have violated this Sec.  328.2 by failing to 
display the official sign, unless the insured depository institution 
fails to display the official sign after receipt thereof.
    (c) Required changes in sign. The Corporation may require any 
insured depository institution, upon at least thirty (30) days' written 
notice, to change the wording of the official sign in a manner deemed 
necessary for the protection of depositors or others.



Sec.  328.3  Official advertising statement requirements.

    (a) Advertisement defined. The term ``advertisement,'' as used in 
this part, shall mean a commercial message, in any medium, that is 
designed to attract public attention or patronage to a product or 
business.
    (b) Official advertising statement. The official advertising 
statement shall be in substance as follows: ``Member of the Federal 
Deposit Insurance Corporation.''
    (1) Optional short title and symbol. The short title ``Member of 
FDIC'' or ``Member FDIC,'' or a reproduction of the symbol of the 
Corporation (as described in Sec.  328.1(b)), may be used by insured 
depository institutions at their option as the official advertising 
statement.
    (2) Size and print. The official advertising statement shall be of 
such size and print to be clearly legible. If the symbol of the 
Corporation is used as the official advertising statement, and the 
symbol must be reduced to such

[[Page 495]]

proportions that the two lines of smaller type above and below ``FDIC'' 
are indistinct and illegible, those lines of smaller type may be blocked 
out or dropped.
    (c) Use of official advertising statement in advertisements--(1) 
General requirement. Except as provided in Sec.  328.3(d), each insured 
depository institution shall include the official advertising statement 
prescribed in Sec.  328.3(b) in all advertisements that either promote 
deposit products and services or promote non-specific banking products 
and services offered by the institution. For purposes of this Sec.  
328.3, an advertisement promotes non-specific banking products and 
services if it includes the name of the insured depository institution 
but does not list or describe particular products or services offered by 
the institution. An example of such an advertisement would be, ``Anytown 
Bank, offering a full range of banking services.''
    (2) Foreign depository institutions. When a foreign depository 
institution has both insured and noninsured U.S. branches, the 
depository institution must also identify which branches are insured and 
which branches are not insured in all of its advertisements requiring 
use of the official advertising statement.
    (3) Newly insured institutions. A depository institution shall 
include the official advertising statement in its advertisements no 
later than its twenty-first day of operation as an insured depository 
institution.
    (d) Types of advertisements which do not require the official 
advertising statement. The following types of advertisements do not 
require use of the official advertising statement:
    (1) Statements of condition and reports of condition of an insured 
depository institution which are required to be published by State or 
Federal law;
    (2) Insured depository institution supplies such as stationery 
(except when used for circular letters), envelopes, deposit slips, 
checks, drafts, signature cards, deposit passbooks, certificates of 
deposit, etc.;
    (3) Signs or plates in the insured depository institution offices or 
attached to the building or buildings in which such offices are located;
    (4) Listings in directories;
    (5) Advertisements not setting forth the name of the insured 
depository institution;
    (6) Entries in a depository institution directory, provided the name 
of the insured depository institution is listed on any page in the 
directory with a symbol or other descriptive matter indicating it is a 
member of the Federal Deposit Insurance Corporation;
    (7) Joint or group advertisements of depository institution services 
where the names of insured depository institutions and noninsured 
institutions are listed and form a part of such advertisements;
    (8) Advertisements by radio or television, other than display 
advertisements, which do not exceed thirty (30) seconds in time;
    (9) Advertisements which are of the type or character that make it 
impractical to include the official advertising statement, including, 
but not limited to, promotional items such as calendars, matchbooks, 
pens, pencils, and key chains; and
    (10) Advertisements which contain a statement to the effect that the 
depository institution is a member of the Federal Deposit Insurance 
Corporation, or that the depository institution is insured by the 
Federal Deposit Insurance Corporation, or that its deposits or 
depositors are insured by the Federal Deposit Insurance Corporation to 
at least $100,000 for each depositor.
    (e) Restrictions on using the official advertising statement when 
advertising non-deposit products--(1) Definitions--
    (i) Non-deposit product. As used in this part, the term ``non-
deposit product'' shall include, but is not limited to, insurance 
products, annuities, mutual funds, and securities. For purposes of this 
definition, a credit product is not a non-deposit product.
    (ii) Hybrid product. As used in this part, the term ``hybrid 
product'' shall mean a product or service that has both deposit product 
features and non-deposit product features. A sweep account is an example 
of a hybrid product.
    (2) Non-deposit product advertisements. Except as provided in Sec.  
328.3(e)(4), an insured depository institution shall not

[[Page 496]]

include the official advertising statement, or any other statement or 
symbol which implies or suggests the existence of Federal deposit 
insurance, in any advertisement relating solely to non-deposit products.
    (3) Hybrid product advertisements. Except as provided in Sec.  
328.3(e)(4), an insured depository institution shall not include the 
official advertising statement, or any other statement or symbol which 
implies or suggests the existence of federal deposit insurance, in any 
advertisement relating solely to hybrid products.
    (4) Mixed advertisements. In advertisements containing information 
about both insured deposit products and non-deposit products or hybrid 
products, an insured depository institution shall clearly segregate the 
official advertising statement or any similar statement from that 
portion of the advertisement that relates to the non-deposit products.
    (f) Official advertising statement in non-English language. The non-
English equivalent of the official advertising statement may be used in 
any advertisement, provided that the translation has had the prior 
written approval of the Corporation.



Sec.  328.4  Prohibition against receiving deposits at same teller station 
or window as noninsured institution.

    (a) Prohibition. An insured depository institution may not receive 
deposits at any teller station or window where any noninsured 
institution receives deposits or similar liabilities.
    (b) Exception. This Sec.  328.4 does not apply to deposits received 
at a Remote Service Facility.



PART 329_LIQUIDITY RISK MEASUREMENT STANDARDS--Table of Contents



                      Subpart A_General Provisions

Sec.
329.1 Purpose and applicability.
329.2 Reservation of authority.
329.3 Definitions.
329.4 Certain operational requirements.

                   Subpart B_Liquidity Coverage Ratio

329.10 Liquidity coverage ratio.

                  Subpart C_High-Quality Liquid Assets

329.20 High-quality liquid asset criteria.
329.21 High-quality liquid asset amount.
329.22 Requirements for eligible high-quality liquid assets.

                    Subpart D_Total Net Cash Outflow

329.30 Total net cash outflow amount.
329.31 Determining maturity.
329.32 Outflow amounts.
329.33 Inflow amounts.

                 Subpart E_Liquidity Coverage Shortfall

329.40 Liquidity coverage shortfall: Supervisory framework.

                          Subpart F_Transitions

329.50 Transitions.

    Authority: 12 U.S.C. 1815, 1816, 1818, 1819, 1828, 1831p-1, 5412.

    Source: 79 FR 61523, Oct. 10, 2014, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  329.1  Purpose and applicability.

    (a) Purpose. This part establishes a minimum liquidity standard for 
certain FDIC-supervised institutions on a consolidated basis, as set 
forth herein.
    (b) Applicability. (1) An FDIC-supervised institution is subject to 
the minimum liquidity standard and other requirements of this part if:
    (i) It has total consolidated assets equal to $250 billion or more, 
as reported on the most recent year-end Consolidated Report of Condition 
and Income;
    (ii) It has total consolidated on-balance sheet foreign exposure at 
the most recent year-end equal to $10 billion or more (where total on-
balance sheet foreign exposure equals total cross-border claims less 
claims with a head office or guarantor located in another country plus 
redistributed guaranteed amounts to the country of the head office or 
guarantor plus local country claims on local residents plus revaluation 
gains on foreign exchange and derivative transaction products, 
calculated in accordance with the Federal Financial Institutions 
Examination Council (FFIEC) 009 Country Exposure Report);
    (iii) It is a depository institution that has total consolidated 
assets

[[Page 497]]

equal to $10 billion or more, as reported on the most recent year-end 
Consolidated Report of Condition and Income and is a consolidated 
subsidiary of one of the following:
    (A) A covered depository institution holding company that has total 
assets equal to $250 billion or more, as reported on the most recent 
year-end Consolidated Financial Statements for Holding Companies 
reporting form (FR Y-9C), or, if the covered depository institution 
holding company is not required to report on the FR Y-9C, its estimated 
total consolidated assets as of the most recent year-end, calculated in 
accordance with the instructions to the FR Y-9C;
    (B) A depository institution that has total consolidated assets 
equal to $250 billion or more, as reported on the most recent year-end 
Consolidated Report of Condition and Income;
    (C) A covered depository institution holding company or depository 
institution that has total consolidated on-balance sheet foreign 
exposure at the most recent year-end equal to $10 billion or more (where 
total on-balance sheet foreign exposure equals total cross-border claims 
less claims with a head office or guarantor located in another country 
plus redistributed guaranteed amounts to the country of the head office 
or guarantor plus local country claims on local residents plus 
revaluation gains on foreign exchange and derivative transaction 
products, calculated in accordance with the Federal Financial 
Institutions Examination Council (FFIEC) 009 Country Exposure Report); 
or
    (D) A covered nonbank company.
    (iv) The FDIC has determined that application of this part is 
appropriate in light of the FDIC-supervised institutions's asset size, 
level of complexity, risk profile, scope of operations, affiliation with 
foreign or domestic covered entities, or risk to the financial system.
    (2) Subject to the transition periods set forth in subpart F of this 
part:
    (i) An FDIC-supervised institution that is subject to the minimum 
liquidity standard and other requirements of this part under paragraph 
(b)(1) of this section on September 30, 2014, must comply with the 
requirements of this part beginning on January 1, 2015;
    (ii) An FDIC-supervised institution that becomes subject to the 
minimum liquidity standard and other requirements of this part under 
paragraphs (b)(1)(i) through (iii) of this section after September 30, 
2014, must comply with the requirements of this part beginning on April 
1 of the year in which the An FDIC-supervised institution becomes 
subject to the minimum liquidity standard and other requirements of this 
part, except:
    (A) From April 1 to December 31 of the year in which the FDIC-
supervised institution becomes subject to the minimum liquidity standard 
and other requirements of this part, the FDIC-supervised institution 
must calculate and maintain a liquidity coverage ratio monthly, on each 
calculation date that is the last business day of the applicable 
calendar month; and
    (B) Beginning January 1 of the year after the first year in which 
the [BANK] becomes subject to the minimum liquidity standard and other 
requirements of this part under paragraph (b)(1) of this section, and 
thereafter, the FDIC-supervised institution must calculate and maintain 
a liquidity coverage ratio on each calculation date; and
    (iii) An FDIC-supervised institution that becomes subject to the 
minimum liquidity standard and other requirements of this part under 
paragraph (b)(1)(iv) of this section after September 30, 2014, must 
comply with the requirements of this part subject to a transition period 
specified by the FDIC.
    (3) This part does not apply to:
    (i) A bridge financial company as defined in 12 U.S.C. 5381(a)(3), 
or a subsidiary of a bridge financial company; or
    (ii) A new depository institution or a bridge depository 
institution, as defined in 12 U.S.C. 1813(i).
    (4) An FDIC-supervised institution subject to a minimum liquidity 
standard under this part shall remain subject until the FDIC determines 
in writing that application of this part to the FDIC-supervised 
institution is not appropriate in light of the FDIC-supervised 
institution's asset size, level of

[[Page 498]]

complexity, risk profile, scope of operations, affiliation with foreign 
or domestic covered entities, or risk to the financial system.
    (5) In making a determination under paragraphs (b)(1)(iv) or (4) of 
this section, the FDIC will apply notice and response procedures in the 
same manner and to the same extent as the notice and response procedures 
in 12 CFR 324.5.

[79 FR 61540, Oct. 10, 2014, as amended at 79 FR 61541, Oct. 10, 2014]



Sec.  329.2  Reservation of authority.

    (a) The FDIC may require an FDIC-supervised institution to hold an 
amount of high-quality liquid assets (HQLA) greater than otherwise 
required under this part, or to take any other measure to improve the 
FDIC-supervised institution's liquidity risk profile, if the FDIC 
determines that the FDIC-supervised institution's liquidity requirements 
as calculated under this part are not commensurate with the FDIC-
supervised institutions's liquidity risks. In making determinations 
under this section, the FDIC will apply notice and response procedures 
as set forth in 12 CFR 324.5.
    (b) Nothing in this part limits the authority of the FDIC under any 
other provision of law or regulation to take supervisory or enforcement 
action, including action to address unsafe or unsound practices or 
conditions, deficient liquidity levels, or violations of law.



Sec.  329.3  Definitions.

    For the purposes of this part:
    Affiliated depository institution means with respect to an FDIC-
supervised institution that is a depository institution, another 
depository institution that is a consolidated subsidiary of a bank 
holding company or savings and loan holding company of which the FDIC-
supervised institution is also a consolidated subsidiary.
    Asset exchange means a transaction in which, as of the calculation 
date, the counterparties have previously exchanged non-cash assets, and 
have each agreed to return such assets to each other at a future date. 
Asset exchanges do not include secured funding and secured lending 
transactions.
    Bank holding company is defined in section 2 of the Bank Holding 
Company Act of 1956, as amended (12 U.S.C. 1841 et seq.).
    Brokered deposit means any deposit held at the FDIC-supervised 
institution that is obtained, directly or indirectly, from or through 
the mediation or assistance of a deposit broker as that term is defined 
in section 29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f(g)), 
and includes a reciprocal brokered deposit and a brokered sweep deposit.
    Brokered sweep deposit means a deposit held at the FDIC-supervised 
institution by a customer or counterparty through a contractual feature 
that automatically transfers to the FDIC-supervised institution from 
another regulated financial company at the close of each business day 
amounts identified under the agreement governing the account from which 
the amount is being transferred.
    Calculation date means any date on which an FDIC-supervised 
institution calculates its liquidity coverage ratio under Sec.  329.10.
    Client pool security means a security that is owned by a customer of 
the FDIC-supervised institution that is not an asset of the FDIC-
supervised institution, regardless of a FDIC-supervised institution's 
hypothecation rights with respect to the security.
    Collateralized deposit means:
    (1) A deposit of a public sector entity held at the FDIC-supervised 
institution that is secured under applicable law by a lien on assets 
owned by the FDIC-supervised institution and that gives the depositor, 
as holder of the lien, priority over the assets in the event the FDIC-
supervised institution enters into receivership, bankruptcy, insolvency, 
liquidation, resolution, or similar proceeding; or
    (2) A deposit of a fiduciary account held at the FDIC-supervised 
institution for which the FDIC-supervised institution is a fiduciary and 
sets aside assets owned by the FDIC-supervised institution as security 
under 12 CFR 9.10 (national bank) or 12 CFR 150.300 through 150.320 
(Federal savings associations) and that gives the depositor priority 
over the assets in the event the FDIC-

[[Page 499]]

supervised institution enters into receivership, bankruptcy, insolvency, 
liquidation, resolution, or similar proceeding.
    Committed means, with respect to a credit facility or liquidity 
facility, that under the terms of the legally binding written agreement 
governing the facility:
    (1) The FDIC-supervised institution may not refuse to extend credit 
or funding under the facility; or
    (2) The FDIC-supervised institution may refuse to extend credit 
under the facility (to the extent permitted under applicable law) only 
upon the satisfaction or occurrence of one or more specified conditions 
not including change in financial condition of the borrower, customary 
notice, or administrative conditions.
    Company means a corporation, partnership, limited liability company, 
depository institution, business trust, special purpose entity, 
association, or similar organization.
    Consolidated subsidiary means a company that is consolidated on the 
balance sheet of an FDIC-supervised institution or other company under 
GAAP.
    Controlled subsidiary means, with respect to a company or An FDIC-
supervised institution a consolidated subsidiary or a company that 
otherwise meets the definition of ``subsidiary'' in section 2(d) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841(d)).
    Covered depository institution holding company means a top-tier bank 
holding company or savings and loan holding company domiciled in the 
United States other than:
    (1) A top-tier savings and loan holding company that is:
    (i) A grandfathered unitary savings and loan holding company as 
defined in section 10(c)(9)(A) of the Home Owners' Loan Act (12 U.S.C. 
1461 et seq.); and
    (ii) As of June 30 of the previous calendar year, derived 50 percent 
or more of its total consolidated assets or 50 percent of its total 
revenues on an enterprise-wide basis (as calculated under GAAP) from 
activities that are not financial in nature under section 4(k) of the 
Bank Holding Company Act (12 U.S.C. 1842(k));
    (2) A top-tier depository institution holding company that is an 
insurance underwriting company; or
    (3)(i) A top-tier depository institution holding company that, as of 
June 30 of the previous calendar year, held 25 percent or more of its 
total consolidated assets in subsidiaries that are insurance 
underwriting companies (other than assets associated with insurance for 
credit risk); and
    (ii) For purposes of paragraph 3(i) of this definition, the company 
must calculate its total consolidated assets in accordance with GAAP, or 
if the company does not calculate its total consolidated assets under 
GAAP for any regulatory purpose (including compliance with applicable 
securities laws), the company may estimate its total consolidated 
assets, subject to review and adjustment by the Board of Governors of 
the Federal Reserve System.
    Covered nonbank company means a designated company that the Board of 
Governors of the Federal Reserve System has required by rule or order to 
comply with the requirements of 12 CFR part 249.
    Credit facility means a legally binding agreement to extend funds if 
requested at a future date, including a general working capital facility 
such as a revolving credit facility for general corporate or working 
capital purposes. A credit facility does not include a legally binding 
written agreement to extend funds at a future date to a counterparty 
that is made for the purpose of refinancing the debt of the counterparty 
when it is unable to obtain a primary or anticipated source of funding. 
See liquidity facility.
    Customer short position means a legally binding written agreement 
pursuant to which the customer must deliver to the FDIC-supervised 
institution a non-cash asset that the customer has already sold.
    Deposit means ``deposit'' as defined in section 3(l) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(l)) or an equivalent liability of 
the FDIC-supervised institution in a jurisdiction outside of the United 
States.
    Depository institution is defined in section 3(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(c)).

[[Page 500]]

    Depository institution holding company means a bank holding company 
or savings and loan holding company.
    Deposit insurance means deposit insurance provided by the Federal 
Deposit Insurance Corporation under the Federal Deposit Insurance Act 
(12 U.S.C. 1811 et seq.).
    Derivative transaction means a financial contract whose value is 
derived from the values of one or more underlying assets, reference 
rates, or indices of asset values or reference rates. Derivative 
contracts include interest rate derivative contracts, exchange rate 
derivative contracts, equity derivative contracts, commodity derivative 
contracts, credit derivative contracts, forward contracts, and any other 
instrument that poses similar counterparty credit risks. Derivative 
contracts also include unsettled securities, commodities, and foreign 
currency exchange transactions with a contractual settlement or delivery 
lag that is longer than the lesser of the market standard for the 
particular instrument or five business days. A derivative does not 
include any identified banking product, as that term is defined in 
section 402(b) of the Legal Certainty for Bank Products Act of 2000 (7 
U.S.C. 27(b)), that is subject to section 403(a) of that Act (7 U.S.C. 
27a(a)).
    Designated company means a company that the Financial Stability 
Oversight Council has determined under section 113 of the Dodd-Frank Act 
(12 U.S.C. 5323) shall be supervised by the Board of Governors of the 
Federal Reserve System and for which such determination is still in 
effect.
    Dodd-Frank Act means the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 124 Stat. 1376 (2010).
    Eligible HQLA means a high-quality liquid asset that meets the 
requirements set forth in Sec.  329.22.
    Fair value means fair value as determined under GAAP.
    FDIC means the Federal Deposit Insurance Corporation.
    FDIC-supervised institution means any state nonmember bank or state 
savings association.
    Financial sector entity means an investment adviser, investment 
company, pension fund, non-regulated fund, regulated financial company, 
or identified company.
    Foreign withdrawable reserves means a FDIC-supervised institution's 
balances held by or on behalf of the FDIC-supervised institution at a 
foreign central bank that are not subject to restrictions on the FDIC-
supervised institution's ability to use the reserves.
    GAAP means generally accepted accounting principles as used in the 
United States.
    High-quality liquid asset (HQLA) means an asset that is a level 1 
liquid asset, level 2A liquid asset, or level 2B liquid asset, in 
accordance with the criteria set forth in Sec.  329.20.
    HQLA amount means the HQLA amount as calculated under Sec.  329.21.
    Identified company means any company that the FDIC has determined 
should be treated for the purposes of this part the same as a regulated 
financial company, investment company, non-regulated fund, pension fund, 
or investment adviser, based on activities similar in scope, nature, or 
operations to those entities.
    Individual means a natural person, and does not include a sole 
proprietorship.
    Investment adviser means a company registered with the SEC as an 
investment adviser under the Investment Advisers Act of 1940 (15 U.S.C. 
80b-1 et seq.) or foreign equivalents of such company.
    Investment company means a person or company registered with the SEC 
under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or 
foreign equivalents of such persons or companies.
    Liquid and readily-marketable has the meaning given the term in 12 
CFR 249.3.
    Liquidity facility means a legally binding written agreement to 
extend funds at a future date to a counterparty that is made for the 
purpose of refinancing the debt of the counterparty when it is unable to 
obtain a primary or anticipated source of funding. A liquidity facility 
includes an agreement to provide liquidity support to asset-backed 
commercial paper by lending to, or purchasing assets

[[Page 501]]

from, any structure, program or conduit in the event that funds are 
required to repay maturing asset-backed commercial paper. Liquidity 
facilities exclude facilities that are established solely for the 
purpose of general working capital, such as revolving credit facilities 
for general corporate or working capital purposes. If a facility has 
characteristics of both credit and liquidity facilities, the facility 
must be classified as a liquidity facility. See credit facility.
    Multilateral development bank means the International Bank for 
Reconstruction and Development, the Multilateral Investment Guarantee 
Agency, the International Finance Corporation, the Inter-American 
Development Bank, the Asian Development Bank, the African Development 
Bank, the European Bank for Reconstruction and Development, the European 
Investment Bank, the European Investment Fund, the Nordic Investment 
Bank, the Caribbean Development Bank, the Islamic Development Bank, the 
Council of Europe Development Bank, and any other entity that provides 
financing for national or regional development in which the U.S. 
government is a shareholder or contributing member or which the FDIC 
determines poses comparable risk.
    Municipal obligation means an obligation of:
    (1) A state or any political subdivision thereof; or
    (2) Any agency or instrumentality of a state or any political 
subdivision thereof.
    Non-regulated fund means any hedge fund or private equity fund whose 
investment adviser is required to file SEC Form PF (Reporting Form for 
Investment Advisers to Private Funds and Certain Commodity Pool 
Operators and Commodity Trading Advisors), other than a small business 
investment company as defined in section 102 of the Small Business 
Investment Act of 1958 (15 U.S.C. 661 et seq.).
    Nonperforming exposure means an exposure that is past due by more 
than 90 days or nonaccrual.
    Operational deposit means unsecured wholesale funding or a 
collateralized deposit that is necessary for the FDIC-supervised 
institution to provide operational services as an independent third-
party intermediary, agent, or administrator to the wholesale customer or 
counterparty providing the unsecured wholesale funding or collateralized 
deposit. In order to recognize a deposit as an operational deposit for 
purposes of this part, an FDIC-supervised institution must comply with 
the requirements of Sec.  329.4(b) with respect to that deposit.
    Operational services means the following services, provided they are 
performed as part of cash management, clearing, or custody services:
    (1) Payment remittance;
    (2) Administration of payments and cash flows related to the 
safekeeping of investment assets, not including the purchase or sale of 
assets;
    (3) Payroll administration and control over the disbursement of 
funds;
    (4) Transmission, reconciliation, and confirmation of payment 
orders;
    (5) Daylight overdraft;
    (6) Determination of intra-day and final settlement positions;
    (7) Settlement of securities transactions;
    (8) Transfer of capital distributions and recurring contractual 
payments;
    (9) Customer subscriptions and redemptions;
    (10) Scheduled distribution of customer funds;
    (11) Escrow, funds transfer, stock transfer, and agency services, 
including payment and settlement services, payment of fees, taxes, and 
other expenses; and
    (12) Collection and aggregation of funds.
    Pension fund means an employee benefit plan as defined in paragraphs 
(3) and (32) of section 3 of the Employee Retirement Income and Security 
Act of 1974 (29 U.S.C. 1001 et seq.), a ``governmental plan'' (as 
defined in 29 U.S.C. 1002(32)) that complies with the tax deferral 
qualification requirements provided in the Internal Revenue Code, or any 
similar employee benefit plan established under the laws of a foreign 
jurisdiction.
    Public sector entity means a state, local authority, or other 
governmental subdivision below the U.S. sovereign entity level.

[[Page 502]]

    Publicly traded means, with respect to an equity security, that the 
equity security is traded on:
    (1) Any exchange registered with the SEC as a national securities 
exchange under section 6 of the Securities Exchange Act of 1934 (15 
U.S.C. 78f); or
    (2) Any non-U.S.-based securities exchange that:
    (i) Is registered with, or approved by, a national securities 
regulatory authority; and
    (ii) Provides a liquid, two-way market for the security in question.
    Qualifying master netting agreement means a written, legally 
enforceable agreement provided that:
    (1) The agreement creates a single legal obligation for all 
individual transactions covered by the agreement upon an event of 
default following any stay permitted by paragraph (2) of this 
definition, including upon an event of receivership, conservatorship, 
insolvency, liquidation, or similar proceeding, of the counterparty;
    (2) The agreement provides the FDIC-supervised institution the right 
to accelerate, terminate, and close-out on a net basis all transactions 
under the agreement and to liquidate or set-off collateral promptly upon 
an event of default, including upon an event of receivership, 
conservatorship, insolvency, liquidation, or similar proceeding, of the 
counterparty, provided that, in any such case,
    (i) Any exercise of rights under the agreement will not be stayed or 
avoided under applicable law in the relevant jurisdictions, other than:
    (A) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under 
any similar insolvency law applicable to GSEs, or laws of foreign 
jurisdictions that are substantially similar \1\ to the U.S. laws 
referenced in this paragraph (2)(i)(A) in order to facilitate the 
orderly resolution of the defaulting counterparty; or
---------------------------------------------------------------------------

    \1\ The FDIC expects to evaluate jointly with the Federal Reserve 
and the OCC whether foreign special resolution regimes meet the 
requirements of this paragraph.
---------------------------------------------------------------------------

    (B) Where the agreement is subject by its terms to, or incorporates, 
any of the laws referenced in paragraph (2)(i)(A) of this definition; 
and
    (ii) The agreement may limit the right to accelerate, terminate, and 
close-out on a net basis all transactions under the agreement and to 
liquidate or set-off collateral promptly upon an event of default of the 
counterparty to the extent necessary for the counterparty to comply with 
the requirements of part 382 of this title, subpart I of part 252 of 
this title or part 47 of this title, as applicable;
    (3) The agreement does not contain a walkaway clause (that is, a 
provision that permits a non-defaulting counterparty to make a lower 
payment than it otherwise would make under the agreement, 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 
agreement); and
    (4) In order to recognize an agreement as a qualifying master 
netting agreement for purposes of this subpart, an FDIC-supervised 
institution must comply with the requirements of Sec.  329.4(a) with 
respect to that agreement.
    Reciprocal brokered deposit means a brokered deposit that an FDIC-
supervised institution receives through a deposit placement network on a 
reciprocal basis, such that:
    (1) For any deposit received, the FDIC-supervised institution (as 
agent for the depositors) places the same amount with other depository 
institutions through the network; and
    (2) Each member of the network sets the interest rate to be paid on 
the entire amount of funds it places with other network members.
    Regulated financial company means:
    (1) A depository institution holding company or designated company;
    (2) A company included in the organization chart of a depository 
institution holding company on the Form FR Y-6, as listed in the 
hierarchy report of the depository institution holding company produced 
by the National Information Center (NIC) Web site,\2\ provided that the 
top-tier depository institution holding company is subject to a minimum 
liquidity standard under 12 CFR part 249;
---------------------------------------------------------------------------

    \2\ http://www.ffiec.gov/nicpubweb/nicweb/NicHome.aspx.

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

[[Page 503]]

    (3) A depository institution; foreign bank; credit union; industrial 
loan company, industrial bank, or other similar institution described in 
section 2 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 
1841 et seq.); national bank, state member bank, or state non-member 
bank that is not a depository institution;
    (4) An insurance company;
    (5) A securities holding company as defined in section 618 of the 
Dodd-Frank Act (12 U.S.C. 1850a); broker or dealer registered with the 
SEC under section 15 of the Securities Exchange Act (15 U.S.C. 78o); 
futures commission merchant as defined in section 1a of the Commodity 
Exchange Act of 1936 (7 U.S.C. 1 et seq.); swap dealer as defined in 
section 1a of the Commodity Exchange Act (7 U.S.C. 1a); or security-
based swap dealer as defined in section 3 of the Securities Exchange Act 
(15 U.S.C. 78c);
    (6) A designated financial market utility, as defined in section 803 
of the Dodd-Frank Act (12 U.S.C. 5462); and
    (7) Any company not domiciled in the United States (or a political 
subdivision thereof) that is supervised and regulated in a manner 
similar to entities described in paragraphs (1) through (6) of this 
definition (e.g., a foreign banking organization, foreign insurance 
company, foreign securities broker or dealer or foreign financial market 
utility).
    (8) A regulated financial company does not include:
    (i) U.S. government-sponsored enterprises;
    (ii) Small business investment companies, as defined in section 102 
of the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.);
    (iii) Entities designated as Community Development Financial 
Institutions (CDFIs) under 12 U.S.C. 4701 et seq. and 12 CFR part 1805; 
or
    (iv) Central banks, the Bank for International Settlements, the 
International Monetary Fund, or multilateral development banks.
    Reserve Bank balances means:
    (1) Balances held in a master account of the FDIC-supervised 
institution at a Federal Reserve Bank, less any balances that are 
attributable to any respondent of the FDIC-supervised institution if the 
FDIC-supervised institution is a correspondent for a pass-through 
account as defined in section 204.2(l) of Regulation D (12 CFR 
204.2(l));
    (2) Balances held in a master account of a correspondent of the 
FDIC-supervised institution that are attributable to the FDIC-supervised 
institution if the FDIC-supervised institution is a respondent for a 
pass-through account as defined in section 204.2(l) of Regulation D;
    (3) ``Excess balances'' of the FDIC-supervised institution as 
defined in section 204.2(z) of Regulation D (12 CFR 204.2(z)) that are 
maintained in an ``excess balance account'' as defined in section 
204.2(aa) of Regulation D (12 CFR 204.2(aa)) if the FDIC-supervised 
institution is an excess balance account participant; or
    (4) ``Term deposits'' of the FDIC-supervised institution as defined 
in section 204.2(dd) of Regulation D (12 CFR 204.2(dd)) if such term 
deposits are offered and maintained pursuant to terms and conditions 
that:
    (i) Explicitly and contractually permit such term deposits to be 
withdrawn upon demand prior to the expiration of the term, or that
    (ii) Permit such term deposits to be pledged as collateral for term 
or automatically-renewing overnight advances from the Federal Reserve 
Bank.
    Retail customer or counterparty means a customer or counterparty 
that is:
    (1) An individual;
    (2) A business customer, but solely if and to the extent that:
    (i) The FDIC-supervised institution manages its transactions with 
the business customer, including deposits, unsecured funding, and credit 
facility and liquidity facility transactions, in the same way it manages 
its transactions with individuals;
    (ii) Transactions with the business customer have liquidity risk 
characteristics that are similar to comparable transactions with 
individuals; and
    (iii) The total aggregate funding raised from the business customer 
is less than $1.5 million; or
    (3) A living or testamentary trust that:
    (i) Is solely for the benefit of natural persons;

[[Page 504]]

    (ii) Does not have a corporate trustee; and
    (iii) Terminates within 21 years and 10 months after the death of 
grantors or beneficiaries of the trust living on the effective date of 
the trust or within 25 years, if applicable under state law.
    Retail deposit means a demand or term deposit that is placed with 
the FDIC-supervised institution by a retail customer or counterparty, 
other than a brokered deposit.
    Retail mortgage means a mortgage that is primarily secured by a 
first or subsequent lien on one-to-four family residential property.
    Savings and loan holding company means a savings and loan holding 
company as defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 
1467a).
    SEC means the Securities and Exchange Commission.
    Secured funding transaction means any funding transaction that is 
subject to a legally binding agreement as of the calculation date and 
gives rise to a cash obligation of the FDIC-supervised institution to a 
counterparty that is secured under applicable law by a lien on assets 
owned by the FDIC-supervised institution, which gives the counterparty, 
as holder of the lien, priority over the assets in the event the FDIC-
supervised institution enters into receivership, bankruptcy, insolvency, 
liquidation, resolution, or similar proceeding. Secured funding 
transactions include repurchase transactions, loans of collateral to the 
FDIC-supervised institution's customers to effect short positions, other 
secured loans, and borrowings from a Federal Reserve Bank.
    Secured lending transaction means any lending transaction that is 
subject to a legally binding agreement of the calculation date and gives 
rise to a cash obligation of a counterparty to the FDIC-supervised 
institution that is secured under applicable law by a lien on assets 
owned by the counterparty, which gives the FDIC-supervised institution, 
as holder of the lien, priority over the assets in the event the 
counterparty enters into receivership, bankruptcy, insolvency, 
liquidation, resolution, or similar proceeding, including reverse 
repurchase transactions and securities borrowing transactions.
    Securities Exchange Act means the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.).
    Sovereign entity means a central government (including the U.S. 
government) or an agency, department, ministry, or central bank of a 
central government.
    Special purpose entity means a company organized for a specific 
purpose, the activities of which are significantly limited to those 
appropriate to accomplish a specific purpose, and the structure of which 
is intended to isolate the credit risk of the special purpose entity.
    Stable retail deposit means a retail deposit that is entirely 
covered by deposit insurance and:
    (1) Is held by the depositor in a transactional account; or
    (2) The depositor that holds the account has another established 
relationship with the FDIC-supervised institution such as another 
deposit account, a loan, bill payment services, or any similar service 
or product provided to the depositor that the FDIC-supervised 
institution demonstrates to the satisfaction of the FDIC would make 
deposit withdrawal highly unlikely during a liquidity stress event.
    Structured security means a security whose cash flow characteristics 
depend upon one or more indices or that has embedded forwards, options, 
or other derivatives or a security where an investor's investment return 
and the issuer's payment obligations are contingent on, or highly 
sensitive to, changes in the value of underlying assets, indices, 
interest rates, or cash flows.
    Structured transaction means a secured transaction in which 
repayment of obligations and other exposures to the transaction is 
largely derived, directly or indirectly, from the cash flow generated by 
the pool of assets that secures the obligations and other exposures to 
the transaction.
    Two-way market means a market where there are independent bona fide 
offers to buy and sell so that a price reasonably related to the last 
sales price or current bona fide competitive

[[Page 505]]

bid and offer quotations can be determined within one day and settled at 
that price within a relatively short time frame conforming to trade 
custom.
    U.S. government-sponsored enterprise means an entity established or 
chartered by the Federal government to serve public purposes specified 
by the United States Congress, but whose debt obligations are not 
explicitly guaranteed by the full faith and credit of the United States 
government.
    Unsecured wholesale funding means a liability or general obligation 
of the FDIC-supervised institution to a wholesale customer or 
counterparty that is not secured under applicable law by a lien on 
assets owned by the FDIC-supervised institution, including a wholesale 
deposit.
    Wholesale customer or counterparty means a customer or counterparty 
that is not a retail customer or counterparty.
    Wholesale deposit means a demand or term deposit that is provided by 
a wholesale customer or counterparty.

[79 FR 61523, Oct. 10, 2014, as amended at 81 FR 71354, Oct. 17, 2016; 
82 FR 50261, Oct. 30, 2017; 82 FR 61443, Dec. 28, 2017; 83 FR 44455, 
Aug. 31, 2018]



Sec.  329.4  Certain operational requirements.

    (a) Qualifying master netting agreements. In order to recognize an 
agreement as a qualifying master netting agreement as defined in Sec.  
329.3, an FDIC-supervised institution must:
    (1) Conduct sufficient legal review to conclude with a well-founded 
basis (and maintain sufficient written documentation of that legal 
review) that:
    (i) The agreement meets the requirements of the definition of 
qualifying master netting agreement in Sec.  329.3; and
    (ii) In the event of a legal challenge (including one resulting from 
default or from receivership, bankruptcy, insolvency, liquidation, 
resolution, or similar proceeding) the relevant judicial and 
administrative authorities would find the agreement to be legal, valid, 
binding, and enforceable under the law of the relevant jurisdictions; 
and
    (2) Establish and maintain written procedures to monitor possible 
changes in relevant law and to ensure that the agreement continues to 
satisfy the requirements of the definition of qualifying master netting 
agreement in Sec.  329.3.
    (b) Operational deposits. In order to recognize a deposit as an 
operational deposit as defined in Sec.  329.3:
    (1) The related operational services must be performed pursuant to a 
legally binding written agreement, and:
    (i) The termination of the agreement must be subject to a minimum 30 
calendar-day notice period; or
    (ii) As a result of termination of the agreement or transfer of 
services to a third-party provider, the customer providing the deposit 
would incur significant contractual termination costs or switching costs 
(switching costs include significant technology, administrative, and 
legal service costs incurred in connection with the transfer of the 
operational services to a third-party provider);
    (2) The deposit must be held in an account designated as an 
operational account;
    (3) The customer must hold the deposit at the FDIC-supervised 
institution for the primary purpose of obtaining the operational 
services provided by the FDIC-supervised institution;
    (4) The deposit account must not be designed to create an economic 
incentive for the customer to maintain excess funds therein through 
increased revenue, reduction in fees, or other offered economic 
incentives;
    (5) The FDIC-supervised institution must demonstrate that the 
deposit is empirically linked to the operational services and that it 
has a methodology that takes into account the volatility of the average 
balance for identifying any excess amount, which must be excluded from 
the operational deposit amount;
    (6) The deposit must not be provided in connection with the FDIC-
supervised institution's provision of prime brokerage services, which, 
for the purposes of this part, are a package of services offered by the 
FDIC-supervised

[[Page 506]]

institution whereby the FDIC-supervised institution, among other 
services, executes, clears, settles, and finances transactions entered 
into by the customer or a third-party entity on behalf of the customer 
(such as an executing broker), and where the FDIC-supervised institution 
has a right to use or rehypothecate assets provided by the customer, 
including in connection with the extension of margin and other similar 
financing of the customer, subject to applicable law, and includes 
operational services provided to a non-regulated fund; and
    (7) The deposits must not be for arrangements in which the FDIC-
supervised institution (as correspondent) holds deposits owned by 
another depository institution bank (as respondent) and the respondent 
temporarily places excess funds in an overnight deposit with the FDIC-
supervised institution .



                   Subpart B_Liquidity Coverage Ratio



Sec.  329.10  Liquidity coverage ratio.

    (a) Minimum liquidity coverage ratio requirement. Subject to the 
transition provisions in subpart F of this part, an FDIC-supervised 
institution must calculate and maintain a liquidity coverage ratio that 
is equal to or greater than 1.0 on each business day in accordance with 
this part. An FDIC-supervised institution must calculate its liquidity 
coverage ratio as of the same time on each business day (elected 
calculation time). The FDIC-supervised institution must select this time 
by written notice to the FDIC prior to the effective date of this rule. 
The FDIC-supervised institution may not thereafter change its elected 
calculation time without prior written approval from the FDIC.
    (b) Calculation of the liquidity coverage ratio. A FDIC-supervised 
institution's liquidity coverage ratio equals:
    (1) The FDIC-supervised institution's HQLA amount as of the 
calculation date, calculated under subpart C of this part; divided by
    (2) The FDIC-supervised institution's total net cash outflow amount 
as of the calculation date, calculated under subpart D of this part.



                  Subpart C_High-Quality Liquid Assets



Sec.  329.20  High-quality liquid asset criteria.

    (a) Level 1 liquid assets. An asset is a level 1 liquid asset if it 
is one of the following types of assets:
    (1) Reserve Bank balances;
    (2) Foreign withdrawable reserves;
    (3) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury;
    (4) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, a U.S. government 
agency (other than the U.S. Department of the Treasury) whose 
obligations are fully and explicitly guaranteed by the full faith and 
credit of the U.S. government, provided that the security is liquid and 
readily-marketable;
    (5) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, a sovereign entity, 
the Bank for International Settlements, the International Monetary Fund, 
the European Central Bank, European Community, or a multilateral 
development bank, that is:
    (i) Assigned a zero percent risk weight under subpart D of 12 CFR 
part 324 as of the calculation date;
    (ii) Liquid and readily-marketable;
    (iii) Issued or guaranteed by an entity whose obligations have a 
proven record as a reliable source of liquidity in repurchase or sales 
markets during stressed market conditions; and
    (iv) Not an obligation of a financial sector entity and not an 
obligation of a consolidated subsidiary of a financial sector entity; or
    (6) A security issued by, or unconditionally guaranteed as to the 
timely payment of principal and interest by, a sovereign entity that is 
not assigned a zero percent risk weight under subpart D of 12 CFR part 
324, where the sovereign entity issues the security in its own currency, 
the security is liquid and readily-marketable, and the FDIC-

[[Page 507]]

supervised institution holds the security in order to meet its net cash 
outflows in the jurisdiction of the sovereign entity, as calculated 
under subpart D of this part.
    (b) Level 2A liquid assets. An asset is a level 2A liquid asset if 
the asset is liquid and readily-marketable and is one of the following 
types of assets:
    (1) A security issued by, or guaranteed as to the timely payment of 
principal and interest by, a U.S. government-sponsored enterprise, that 
is investment grade under 12 CFR part 1 as of the calculation date, 
provided that the claim is senior to preferred stock; or
    (2) A security that is issued by, or guaranteed as to the timely 
payment of principal and interest by, a sovereign entity or multilateral 
development bank that is:
    (i) Not included in level 1 liquid assets;
    (ii) Assigned no higher than a 20 percent risk weight under subpart 
D of 12 CFR part 324 as of the calculation date;
    (iii) Issued or guaranteed by an entity whose obligations have a 
proven record as a reliable source of liquidity in repurchase or sales 
markets during stressed market conditions, as demonstrated by:
    (A) The market price of the security or equivalent securities of the 
issuer declining by no more than 10 percent during a 30 calendar-day 
period of significant stress, or
    (B) The market haircut demanded by counterparties to secured lending 
and secured funding transactions that are collateralized by the security 
or equivalent securities of the issuer increasing by no more than 10 
percentage points during a 30 calendar-day period of significant stress; 
and
    (iv) Not an obligation of a financial sector entity, and not an 
obligation of a consolidated subsidiary of a financial sector entity.
    (c) Level 2B liquid assets. An asset is a level 2B liquid asset if 
the asset is liquid and readily-marketable and is one of the following 
types of assets:
    (1) A corporate debt security that is:
    (i) Investment grade under 12 CFR part 1 as of the calculation date;
    (ii) Issued or guaranteed by an entity whose obligations have a 
proven record as a reliable source of liquidity in repurchase or sales 
markets during stressed market conditions, as demonstrated by:
    (A) The market price of the corporate debt security or equivalent 
securities of the issuer declining by no more than 20 percent during a 
30 calendar-day period of significant stress, or
    (B) The market haircut demanded by counterparties to secured lending 
and secured funding transactions that are collateralized by the 
corporate debt security or equivalent securities of the issuer 
increasing by no more than 20 percentage points during a 30 calendar-day 
period of significant stress; and
    (iii) Not an obligation of a financial sector entity and not an 
obligation of a consolidated subsidiary of a financial sector entity;
    (2) A publicly traded common equity share that is:
    (i) Included in:
    (A) The Russell 1000 Index; or
    (B) An index that an FDIC-supervised institution supervisor in a 
foreign jurisdiction recognizes for purposes of including equity shares 
in level 2B liquid assets under applicable regulatory policy, if the 
share is held in that foreign jurisdiction;
    (ii) Issued in:
    (A) U.S. dollars; or
    (B) The currency of a jurisdiction where the FDIC-supervised 
institution operates and the FDIC-supervised institution holds the 
common equity share in order to cover its net cash outflows in that 
jurisdiction, as calculated under subpart D of this part;
    (iii) Issued by an entity whose publicly traded common equity shares 
have a proven record as a reliable source of liquidity in repurchase or 
sales markets during stressed market conditions, as demonstrated by:
    (A) The market price of the security or equivalent securities of the 
issuer declining by no more than 40 percent during a 30 calendar-day 
period of significant stress, or
    (B) The market haircut demanded by counterparties to securities 
borrowing and lending transactions that are collateralized by the 
publicly traded common equity shares or equivalent securities of the 
issuer increasing by

[[Page 508]]

no more than 40 percentage points, during a 30 calendar day period of 
significant stress;
    (iv) Not issued by a financial sector entity and not issued by a 
consolidated subsidiary of a financial sector entity;
    (v) If held by a depository institution, is not acquired in 
satisfaction of a debt previously contracted (DPC); and
    (vi) If held by a consolidated subsidiary of a depository 
institution, the depository institution can include the publicly traded 
common equity share in its level 2B liquid assets only if the share is 
held to cover net cash outflows of the depository institution's 
consolidated subsidiary in which the publicly traded common equity share 
is held, as calculated by the FDIC-supervised institution under subpart 
D of this part; or
    (3) A municipal obligation that is investment grade under 12 CFR 
part 1 as of the calculation date.

[79 FR 61523, Oct. 10, 2014, as amended at 83 FR 44455, Aug. 31, 2018]



Sec.  329.21  High-quality liquid asset amount.

    (a) Calculation of the HQLA amount. As of the calculation date, a 
FDIC-supervised institution's HQLA amount equals:
    (1) The level 1 liquid asset amount; plus
    (2) The level 2A liquid asset amount; plus
    (3) The level 2B liquid asset amount; minus
    (4) The greater of:
    (i) The unadjusted excess HQLA amount; and
    (ii) The adjusted excess HQLA amount.
    (b) Calculation of liquid asset amounts. (1) Level 1 liquid asset 
amount. The level 1 liquid asset amount equals the fair value of all 
level 1 liquid assets held by the FDIC-supervised institution as of the 
calculation date that are eligible HQLA, less the amount of the reserve 
balance requirement under section 204.5 of Regulation D (12 CFR 204.5).
    (2) Level 2A liquid asset amount. The level 2A liquid asset amount 
equals 85 percent of the fair value of all level 2A liquid assets held 
by the FDIC-supervised institution as of the calculation date that are 
eligible HQLA.
    (3) Level 2B liquid asset amount. The level 2B liquid asset amount 
equals 50 percent of the fair value of all level 2B liquid assets held 
by the FDIC-supervised institution as of the calculation date that are 
eligible HQLA.
    (c) Calculation of the unadjusted excess HQLA amount. As of the 
calculation date, the unadjusted excess HQLA amount equals:
    (1) The level 2 cap excess amount; plus
    (2) The level 2B cap excess amount.
    (d) Calculation of the level 2 cap excess amount. As of the 
calculation date, the level 2 cap excess amount equals the greater of:
    (1) The level 2A liquid asset amount plus the level 2B liquid asset 
amount minus 0.6667 times the level 1 liquid asset amount; and
    (2) 0.
    (e) Calculation of the level 2B cap excess amount. As of the 
calculation date, the level 2B excess amount equals the greater of:
    (1) The level 2B liquid asset amount minus the level 2 cap excess 
amount minus 0.1765 times the sum of the level 1 liquid asset amount and 
the level 2A liquid asset amount; and
    (2) 0.
    (f) Calculation of adjusted liquid asset amounts. (1) Adjusted level 
1 liquid asset amount. A FDIC-supervised institution's adjusted level 1 
liquid asset amount equals the fair value of all level 1 liquid assets 
that would be eligible HQLA and would be held by the FDIC-supervised 
institution upon the unwind of any secured funding transaction (other 
than a collateralized deposit), secured lending transaction, asset 
exchange, or collateralized derivatives transaction that matures within 
30 calendar days of the calculation date where the FDIC-supervised 
institution will provide an asset that is eligible HQLA and the 
counterparty will provide an asset that will be eligible HQLA; less the 
amount of the reserve balance requirement under section 204.5 of 
Regulation D (12 CFR 204.5).
    (2) Adjusted level 2A liquid asset amount. A FDIC-supervised 
institution's adjusted level 2A liquid asset

[[Page 509]]

amount equals 85 percent of the fair value of all level 2A liquid assets 
that would be eligible HQLA and would be held by the FDIC-supervised 
institution upon the unwind of any secured funding transaction (other 
than a collateralized deposit), secured lending transaction, asset 
exchange, or collateralized derivatives transaction that matures within 
30 calendar days of the calculation date where the FDIC-supervised 
institution will provide an asset that is eligible HQLA and the 
counterparty will provide an asset that will be eligible HQLA.
    (3) Adjusted level 2B liquid asset amount. A FDIC-supervised 
institution's adjusted level 2B liquid asset amount equals 50 percent of 
the fair value of all level 2B liquid assets that would be eligible HQLA 
and would be held by the FDIC-supervised institution upon the unwind of 
any secured funding transaction (other than a collateralized deposit), 
secured lending transaction, asset exchange, or collateralized 
derivatives transaction that matures within 30 calendar days of the 
calculation date where the FDIC-supervised institution will provide an 
asset that is eligible HQLA and the counterparty will provide an asset 
that will be eligible HQLA.
    (g) Calculation of the adjusted excess HQLA amount. As of the 
calculation date, the adjusted excess HQLA amount equals:
    (1) The adjusted level 2 cap excess amount; plus
    (2) The adjusted level 2B cap excess amount.
    (h) Calculation of the adjusted level 2 cap excess amount. As of the 
calculation date, the adjusted level 2 cap excess amount equals the 
greater of:
    (1) The adjusted level 2A liquid asset amount plus the adjusted 
level 2B liquid asset amount minus 0.6667 times the adjusted level 1 
liquid asset amount; and
    (2) 0.
    (i) Calculation of the adjusted level 2B excess amount. As of the 
calculation date, the adjusted level 2B excess liquid asset amount 
equals the greater of:
    (1) The adjusted level 2B liquid asset amount minus the adjusted 
level 2 cap excess amount minus 0.1765 times the sum of the adjusted 
level 1 liquid asset amount and the adjusted level 2A liquid asset 
amount; and
    (2) 0.



Sec.  329.22  Requirements for eligible high-quality liquid assets.

    (a) Operational requirements for eligible HQLA. With respect to each 
asset that is eligible for inclusion in a FDIC-supervised institution's 
HQLA amount, an FDIC-supervised institution must meet all of the 
following operational requirements:
    (1) The FDIC-supervised institution must demonstrate the operational 
capability to monetize the HQLA by:
    (i) Implementing and maintaining appropriate procedures and systems 
to monetize any HQLA at any time in accordance with relevant standard 
settlement periods and procedures; and
    (ii) Periodically monetizing a sample of HQLA that reasonably 
reflects the composition of the FDIC-supervised institution's eligible 
HQLA, including with respect to asset type, maturity, and counterparty 
characteristics;
    (2) The FDIC-supervised institution'' in its place wherever it 
appears. must implement policies that require eligible HQLA to be under 
the control of the management function in the FDIC-supervised 
institution'' in its place wherever it appears. that is charged with 
managing liquidity risk, and this management function must evidence its 
control over the HQLA by either:
    (i) Segregating the HQLA from other assets, with the sole intent to 
use the HQLA as a source of liquidity; or
    (ii) Demonstrating the ability to monetize the assets and making the 
proceeds available to the liquidity management function without 
conflicting with a business or risk management strategy of the FDIC-
supervised institution'' in its place wherever it appears.;
    (3) The fair value of the eligible HQLA must be reduced by the 
outflow amount that would result from the termination of any specific 
transaction hedging eligible HQLA;
    (4) The FDIC-supervised institution'' in its place wherever it 
appears. must implement and maintain policies and procedures that 
determine the composition of its eligible HQLA on each calculation date, 
by:

[[Page 510]]

    (i) Identifying its eligible HQLA by legal entity, geographical 
location, currency, account, or other relevant identifying factors as of 
the calculation date;
    (ii) Determining that eligible HQLA meet the criteria set forth in 
this section; and
    (iii) Ensuring the appropriate diversification of the eligible HQLA 
by asset type, counterparty, issuer, currency, borrowing capacity, or 
other factors associated with the liquidity risk of the assets; and
    (5) The FDIC-supervised institution'' in its place wherever it 
appears.must have a documented methodology that results in a consistent 
treatment for determining that the FDIC-supervised institutions eligible 
HQLA meet the requirements set forth in this section.
    (b) Generally applicable criteria for eligible HQLA. A FDIC-
supervised institutions eligible HQLA must meet all of the following 
criteria:
    (1) The assets are unencumbered in accordance with the following 
criteria:
    (i) The assets are free of legal, regulatory, contractual, or other 
restrictions on the ability of the FDIC-supervised institution to 
monetize the assets; and
    (ii) The assets are not pledged, explicitly or implicitly, to secure 
or to provide credit enhancement to any transaction, but the assets may 
be considered unencumbered if the assets are pledged to a central bank 
or a U.S. government-sponsored enterprise where:
    (A) Potential credit secured by the assets is not currently extended 
to the FDIC-supervised institution or its consolidated subsidiaries; and
    (B) The pledged assets are not required to support access to the 
payment services of a central bank;
    (2) The asset is not:
    (i) A client pool security held in a segregated account; or
    (ii) An asset received from a secured funding transaction involving 
client pool securities that were held in a segregated account;
    (3) For eligible HQLA held in a legal entity that is a U.S. 
consolidated subsidiary of an FDIC-supervised institution:
    (i) If the U.S. consolidated subsidiary is subject to a minimum 
liquidity standard under this part, the FDIC-supervised institution may 
include the eligible HQLA of the U.S. consolidated subsidiary in its 
HQLA amount up to:
    (A) The amount of net cash outflows of the U.S. consolidated 
subsidiary calculated by the U.S. consolidated subsidiary for its own 
minimum liquidity standard under this part; plus
    (B) Any additional amount of assets, including proceeds from the 
monetization of assets, that would be available for transfer to the top-
tier FDIC-supervised institution during times of stress without 
statutory, regulatory, contractual, or supervisory restrictions, 
including sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 
371c and 12 U.S.C. 371c-1) and Regulation W (12 CFR part 223); and
    (ii) If the U.S. consolidated subsidiary is not subject to a minimum 
liquidity standard under this part, the FDIC-supervised institution may 
include the eligible HQLA of the U.S. consolidated subsidiary in its 
HQLA amount up to:
    (A) The amount of the net cash outflows of the U.S. consolidated 
subsidiary as of the 30th calendar day after the calculation date, as 
calculated by the FDIC-supervised institution for the FDIC-supervised 
institution's minimum liquidity standard under this part; plus
    (B) Any additional amount of assets, including proceeds from the 
monetization of assets, that would be available for transfer to the top-
tier FDIC-supervised institution during times of stress without 
statutory, regulatory, contractual, or supervisory restrictions, 
including sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 
371c and 12 U.S.C. 371c-1) and Regulation W (12 CFR part 223);
    (4) For HQLA held by a consolidated subsidiary of the FDIC-
supervised institution that is organized under the laws of a foreign 
jurisdiction, the FDIC-supervised institution may include the eligible 
HQLA of the consolidated subsidiary organized under the laws of a 
foreign jurisdiction in its HQLA amount up to:
    (i) The amount of net cash outflows of the consolidated subsidiary 
as of the 30th calendar day after the calculation

[[Page 511]]

date, as calculated by the FDIC-supervised institution for the FDIC-
supervised institution's minimum liquidity standard under this part; 
plus
    (ii) Any additional amount of assets that are available for transfer 
to the top-tier FDIC-supervised institution during times of stress 
without statutory, regulatory, contractual, or supervisory restrictions;
    (5) The FDIC-supervised institution must not include as eligible 
HQLA any assets, or HQLA resulting from transactions involving an asset 
that the FDIC-supervised institution received with rehypothecation 
rights, if the counterparty that provided the asset or the beneficial 
owner of the asset has a contractual right to withdraw the assets 
without an obligation to pay more than de minimis remuneration at any 
time during the 30 calendar days following the calculation date; and
    (6) The FDIC-supervised institution has not designated the assets to 
cover operational costs.
    (c) Maintenance of U.S. eligible HQLA. An FDIC-supervised 
institution is generally expected to maintain as eligible HQLA an amount 
and type of eligible HQLA in the United States that is sufficient to 
meet its total net cash outflow amount in the United States under 
subpart D of this part.



                    Subpart D_Total Net Cash Outflow



Sec.  329.30  Total net cash outflow amount.

    (a) Calculation of total net cash outflow amount. As of the 
calculation date, a FDIC-supervised institution's total net cash outflow 
amount equals:
    (1) The sum of the outflow amounts calculated under Sec.  329.32(a) 
through (l); minus
    (2) The lesser of:
    (i) The sum of the inflow amounts calculated under Sec.  329.33(b) 
through (g); and
    (ii) 75 percent of the amount calculated under paragraph (a)(1) of 
this section; plus
    (3) The maturity mismatch add-on as calculated under paragraph (b) 
of this section.
    (b) Calculation of maturity mismatch add-on. (1) For purposes of 
this section:
    (i) The net cumulative maturity outflow amount for any of the 30 
calendar days following the calculation date is equal to the sum of the 
outflow amounts for instruments or transactions identified in Sec.  
329.32(g), (h)(1), (h)(2), (h)(5), (j), (k), and (l) that have a 
maturity date prior to or on that calendar day minus the sum of the 
inflow amounts for instruments or transactions identified in Sec.  
329.33(c), (d), (e), and (f) that have a maturity date prior to or on 
that calendar day.
    (ii) The net day 30 cumulative maturity outflow amount is equal to, 
as of the 30th day following the calculation date, the sum of the 
outflow amounts for instruments or transactions identified in Sec.  
329.32(g), (h)(1), (h)(2), (h)(5), (j), (k), and (l) that have a 
maturity date 30 calendar days or less from the calculation date minus 
the sum of the inflow amounts for instruments or transactions identified 
in Sec.  329.33(c), (d), (e), and (f) that have a maturity date 30 
calendar days or less from the calculation date.
    (2) As of the calculation date, a FDIC-supervised institution's 
maturity mismatch add-on is equal to:
    (i) The greater of:
    (A) 0; and
    (B) The largest net cumulative maturity outflow amount as calculated 
under paragraph (b)(1)(i) of this section for any of the 30 calendar 
days following the calculation date; minus
    (ii) The greater of:
    (A) 0; and
    (B) The net day 30 cumulative maturity outflow amount as calculated 
under paragraph (b)(1)(ii) of this section.
    (3) Other than the transactions identified in Sec.  329.32(h)(2), 
(h)(5), or (j) or Sec.  329.33(d) or (f), the maturity of which is 
determined under Sec.  329.31(a), transactions that have no maturity 
date are not included in the calculation of the maturity mismatch add-
on.



Sec.  329.31  Determining maturity.

    (a) For purposes of calculating its liquidity coverage ratio and the 
components thereof under this subpart, an FDIC-supervised institution 
shall assume an asset or transaction matures:
    (1) With respect to an instrument or transaction subject to Sec.  
329.32, on the

[[Page 512]]

earliest possible contractual maturity date or the earliest possible 
date the transaction could occur, taking into account any option that 
could accelerate the maturity date or the date of the transaction as 
follows:
    (i) If an investor or funds provider has an option that would reduce 
the maturity, the FDIC-supervised institution must assume that the 
investor or funds provider will exercise the option at the earliest 
possible date;
    (ii) If an investor or funds provider has an option that would 
extend the maturity, the FDIC-supervised institution must assume that 
the investor or funds provider will not exercise the option to extend 
the maturity;
    (iii) If the FDIC-supervised institution has an option that would 
reduce the maturity of an obligation, the FDIC-supervised institution 
must assume that the FDIC-supervised institution will exercise the 
option at the earliest possible date, except if either of the following 
criteria are satisfied, in which case the maturity of the obligation for 
purposes of this part will be the original maturity date at issuance:
    (A) The original maturity of the obligation is greater than one year 
and the option does not go into effect for a period of 180 days 
following the issuance of the instrument; or
    (B) The counterparty is a sovereign entity, a U.S. government-
sponsored enterprise, or a public sector entity.
    (iv) If the FDIC-supervised institution has an option that would 
extend the maturity of an obligation it issued, the FDIC-supervised 
institution must assume the FDIC-supervised institution will not 
exercise that option to extend the maturity; and
    (v) If an option is subject to a contractually defined notice 
period, the FDIC-supervised institution must determine the earliest 
possible contractual maturity date regardless of the notice period.
    (2) With respect to an instrument or transaction subject to Sec.  
329.33, on the latest possible contractual maturity date or the latest 
possible date the transaction could occur, taking into account any 
option that could extend the maturity date or the date of the 
transaction as follows:
    (i) If the borrower has an option that would extend the maturity, 
the FDIC-supervised institution must assume that the borrower will 
exercise the option to extend the maturity to the latest possible date;
    (ii) If the borrower has an option that would reduce the maturity, 
the FDIC-supervised institution must assume that the borrower will not 
exercise the option to reduce the maturity;
    (iii) If the FDIC-supervised institution has an option that would 
reduce the maturity of an instrument or transaction, the FDIC-supervised 
institution must assume the FDIC-supervised institution will not 
exercise the option to reduce the maturity;
    (iv) If the FDIC-supervised institution has an option that would 
extend the maturity of an instrument or transaction, the FDIC-supervised 
institution must assume the FDIC-supervised institution will exercise 
the option to extend the maturity to the latest possible date; and
    (v) If an option is subject to a contractually defined notice 
period, the FDIC-supervised institution must determine the latest 
possible contractual maturity date based on the borrower using the 
entire notice period.
    (3) With respect to a transaction subject to Sec.  329.33(f)(1)(iii) 
through (vii) (secured lending transactions) or Sec.  329.33(f)(2)(ii) 
through (x) (asset exchanges), to the extent the transaction is secured 
by collateral that has been pledged in connection with either a secured 
funding transaction or asset exchange that has a remaining maturity of 
30 calendar days or less as of the calculation date, the maturity date 
is the later of the maturity date determined under paragraph (a)(2) of 
this section for the secured lending transaction or asset exchange or 
the maturity date determined under paragraph (a)(1) of this section for 
the secured funding transaction or asset exchange for which the 
collateral has been pledged.
    (4) With respect to a transaction that has no maturity date, is not 
an operational deposit, and is subject to the provisions of Sec.  
329.32(h)(2), (h)(5), (j), or (k) or Sec.  329.33(d) or (f), the 
maturity date is the first calendar day after the calculation date. Any 
other transaction that has no maturity date and is

[[Page 513]]

subject to the provisions of Sec.  329.32 must be considered to mature 
within 30 calendar days of the calculation date.
    (5) With respect to a transaction subject to the provisions of Sec.  
329.33(g), on the date of the next scheduled calculation of the amount 
required under applicable legal requirements for the protection of 
customer assets with respect to each broker-dealer segregated account, 
in accordance with the FDIC-supervised institution's normal frequency of 
recalculating such requirements.
    (b) [Reserved]



Sec.  329.32  Outflow amounts.

    (a) Retail funding outflow amount. A FDIC-supervised institution's 
retail funding outflow amount as of the calculation date includes 
(regardless of maturity or collateralization):
    (1) 3 percent of all stable retail deposits held at the FDIC-
supervised institution ;
    (2) 10 percent of all other retail deposits held at the FDIC-
supervised institution;
    (3) 20 percent of all deposits placed at the FDIC-supervised 
institution by a third party on behalf of a retail customer or 
counterparty that are not brokered deposits, where the retail customer 
or counterparty owns the account and the entire amount is covered by 
deposit insurance;
    (4) 40 percent of all deposits placed at the FDIC-supervised 
institution by a third party on behalf of a retail customer or 
counterparty that are not brokered deposits, where the retail customer 
or counterparty owns the account and where less than the entire amount 
is covered by deposit insurance; and
    (5) 40 percent of all funding from a retail customer or counterparty 
that is not:
    (i) A retail deposit;
    (ii) A brokered deposit provided by a retail customer or 
counterparty; or
    (iii) A debt instrument issued by the FDIC-supervised institution 
that is owned by a retail customer or counterparty (see paragraph 
(h)(2)(ii) of this section).
    (b) Structured transaction outflow amount. If the FDIC-supervised 
institution is a sponsor of a structured transaction where the issuing 
entity is not consolidated on the FDIC-supervised institution's balance 
sheet under GAAP, the structured transaction outflow amount for each 
such structured transaction as of the calculation date is the greater 
of:
    (1) 100 percent of the amount of all debt obligations of the issuing 
entity that mature 30 calendar days or less from such calculation date 
and all commitments made by the issuing entity to purchase assets within 
30 calendar days or less from such calculation date; and
    (2) The maximum contractual amount of funding the FDIC-supervised 
institution may be required to provide to the issuing entity 30 calendar 
days or less from such calculation date through a liquidity facility, a 
return or repurchase of assets from the issuing entity, or other funding 
agreement.
    (c) Net derivative cash outflow amount. The net derivative cash 
outflow amount as of the calculation date is the sum of the net 
derivative cash outflow amount for each counterparty. The net derivative 
cash outflow amount does not include forward sales of mortgage loans and 
any derivatives that are mortgage commitments subject to paragraph (d) 
of this section. The net derivative cash outflow amount for a 
counterparty is the sum of:
    (1) The amount, if greater than zero, of contractual payments and 
collateral that the FDIC-supervised institution will make or deliver to 
the counterparty 30 calendar days or less from the calculation date 
under derivative transactions other than transactions described in 
paragraph (c)(2) of this section, less the contractual payments and 
collateral that the FDIC-supervised institution will receive from the 
counterparty 30 calendar days or less from the calculation date under 
derivative transactions other than transactions described in paragraph 
(c)(2) of this section, provided that the derivative transactions are 
subject to a qualifying master netting agreement; and
    (2) The amount, if greater than zero, of contractual principal 
payments that the FDIC-supervised institution will make to the 
counterparty 30 calendar days or less from the calculation date

[[Page 514]]

under foreign currency exchange derivative transactions that result in 
the full exchange of contractual cash principal payments in different 
currencies within the same business day, less the contractual principal 
payments that the FDIC-supervised institution will receive from the 
counterparty 30 calendar days or less from the calculation date under 
foreign currency exchange derivative transactions that result in the 
full exchange of contractual cash principal payments in different 
currencies within the same business day.
    (d) Mortgage commitment outflow amount. The mortgage commitment 
outflow amount as of a calculation date is 10 percent of the amount of 
funds the FDIC-supervised institution has contractually committed for 
its own origination of retail mortgages that can be drawn upon 30 
calendar days or less from such calculation date.
    (e) Commitment outflow amount. (1) A FDIC-supervised institution's 
commitment outflow amount as of the calculation date includes:
    (i) Zero percent of the undrawn amount of all committed credit and 
liquidity facilities extended by an FDIC-supervised institution that is 
a depository institution to an affiliated depository institution that is 
subject to a minimum liquidity standard under this part;
    (ii) 5 percent of the undrawn amount of all committed credit and 
liquidity facilities extended by the an FDIC-supervised institution to 
retail customers or counterparties;
    (iii) 10 percent of the undrawn amount of all committed credit 
facilities extended by the an FDIC-supervised institution to a wholesale 
customer or counterparty that is not a financial sector entity or a 
consolidated subsidiary thereof, including a special purpose entity 
(other than those described in paragraph (e)(1)(viii) of this section) 
that is a consolidated subsidiary of such wholesale customer or 
counterparty;
    (iv) 30 percent of the undrawn amount of all committed liquidity 
facilities extended by the an FDIC-supervised institution to a wholesale 
customer or counterparty that is not a financial sector entity or a 
consolidated subsidiary thereof, including a special purpose entity 
(other than those described in paragraph (e)(1)(viii) of this section) 
that is a consolidated subsidiary of such wholesale customer or 
counterparty;
    (v) 50 percent of the undrawn amount of all committed credit and 
liquidity facilities extended by the an FDIC-supervised institution to 
depository institutions, depository institution holding companies, and 
foreign banks, but excluding commitments described in paragraph 
(e)(1)(i) of this section;
    (vi) 40 percent of the undrawn amount of all committed credit 
facilities extended by the an FDIC-supervised institution to a financial 
sector entity or a consolidated subsidiary thereof, including a special 
purpose entity (other than those described in paragraph (e)(1)(viii) of 
this section) that is a consolidated subsidiary of a financial sector 
entity, but excluding other commitments described in paragraph (e)(1)(i) 
or (v) of this section;
    (vii) 100 percent of the undrawn amount of all committed liquidity 
facilities extended by the an FDIC-supervised institution to a financial 
sector entity or a consolidated subsidiary thereof, including a special 
purpose entity (other than those described in paragraph (e)(1)(viii) of 
this section) that is a consolidated subsidiary of a financial sector 
entity, but excluding other commitments described in paragraph (e)(1)(i) 
or (v) of this section and liquidity facilities included in paragraph 
(b)(2) of this section;
    (viii) 100 percent of the undrawn amount of all committed credit and 
liquidity facilities extended to a special purpose entity that issues or 
has issued commercial paper or securities (other than equity securities 
issued to a company of which the special purpose entity is a 
consolidated subsidiary) to finance its purchases or operations, and 
excluding liquidity facilities included in paragraph (b)(2) of this 
section; and
    (ix) 100 percent of the undrawn amount of all other committed credit 
or liquidity facilities extended by the an FDIC-supervised institution.
    (2) For the purposes of this paragraph (e), the undrawn amount of a 
committed credit facility or committed liquidity facility is the entire 
unused amount of the facility that could be

[[Page 515]]

drawn upon within 30 calendar days of the calculation date under the 
governing agreement, less the amount of level 1 liquid assets and the 
amount of level 2A liquid assets securing the facility.
    (3) For the purposes of this paragraph (e), the amount of level 1 
liquid assets and level 2A liquid assets securing a committed credit or 
liquidity facility is the fair value of level 1 liquid assets and 85 
percent of the fair value of level 2A liquid assets that are required to 
be pledged as collateral by the counterparty to secure the facility, 
provided that:
    (i) The assets pledged upon a draw on the facility would be eligible 
HQLA; and
    (ii) The FDIC-supervised institution has not included the assets as 
eligible HQLA under subpart C of this part as of the calculation date.
    (f) Collateral outflow amount. The collateral outflow amount as of 
the calculation date includes:
    (1) Changes in financial condition. 100 percent of all additional 
amounts of collateral the FDIC-supervised institution could be 
contractually required to pledge or to fund under the terms of any 
transaction as a result of a change in the FDIC-supervised institution's 
financial condition;
    (2) Derivative collateral potential valuation changes. 20 percent of 
the fair value of any collateral securing a derivative transaction 
pledged to a counterparty by the FDIC-supervised institution that is not 
a level 1 liquid asset;
    (3) Potential derivative valuation changes. The absolute value of 
the largest 30-consecutive calendar day cumulative net mark-to-market 
collateral outflow or inflow realized during the preceding 24 months 
resulting from derivative transaction valuation changes;
    (4) Excess collateral. 100 percent of the fair value of collateral 
that:
    (i) The FDIC-supervised institution could be required by contract to 
return to a counterparty because the collateral pledged to the FDIC-
supervised institution exceeds the current collateral requirement of the 
counterparty under the governing contract;
    (ii) Is not segregated from the FDIC-supervised institution's other 
assets such that it cannot be rehypothecated; and
    (iii) Is not already excluded as eligible HQLA by the FDIC-
supervised institution under Sec.  329.22(b)(5);
    (5) Contractually required collateral. 100 percent of the fair value 
of collateral that the FDIC-supervised institution is contractually 
required to pledge to a counterparty and, as of such calculation date, 
the FDIC-supervised institution has not yet pledged;
    (6) Collateral substitution. (i) Zero percent of the fair value of 
collateral pledged to the FDIC-supervised institution by a counterparty 
where the collateral qualifies as level 1 liquid assets and eligible 
HQLA and where, under the contract governing the transaction, the 
counterparty may replace the pledged collateral with other assets that 
qualify as level 1 liquid assets, without the consent of the FDIC-
supervised institution;
    (ii) 15 percent of the fair value of collateral pledged to the FDIC-
supervised institution by a counterparty, where the collateral qualifies 
as level 1 liquid assets and eligible HQLA and where, under the contract 
governing the transaction, the counterparty may replace the pledged 
collateral with assets that qualify as level 2A liquid assets, without 
the consent of the FDIC-supervised institution;
    (iii) 50 percent of the fair value of collateral pledged to the 
FDIC-supervised institution by a counterparty where the collateral 
qualifies as level 1 liquid assets and eligible HQLA and where under, 
the contract governing the transaction, the counterparty may replace the 
pledged collateral with assets that qualify as level 2B liquid assets, 
without the consent of the FDIC-supervised institution;
    (iv) 100 percent of the fair value of collateral pledged to the 
FDIC-supervised institution by a counterparty where the collateral 
qualifies as level 1 liquid assets and eligible HQLA and where, under 
the contract governing the transaction, the counterparty may replace the 
pledged collateral with assets that do not qualify as HQLA, without the 
consent of the FDIC-supervised institution;

[[Page 516]]

    (v) Zero percent of the fair value of collateral pledged to the 
FDIC-supervised institution by a counterparty where the collateral 
qualifies as level 2A liquid assets and eligible HQLA and where, under 
the contract governing the transaction, the counterparty may replace the 
pledged collateral with assets that qualify as level 1 or level 2A 
liquid assets, without the consent of the FDIC-supervised institution;
    (vi) 35 percent of the fair value of collateral pledged to the FDIC-
supervised institution by a counterparty where the collateral qualifies 
as level 2A liquid assets and eligible HQLA and where, under the 
contract governing the transaction, the counterparty may replace the 
pledged collateral with assets that qualify as level 2B liquid assets, 
without the consent of the FDIC-supervised institution;
    (vii) 85 percent of the fair value of collateral pledged to the 
FDIC-supervised institution by a counterparty where the collateral 
qualifies as level 2A liquid assets and eligible HQLA and where, under 
the contract governing the transaction, the counterparty may replace the 
pledged collateral with assets that do not qualify as HQLA, without the 
consent of the FDIC-supervised institution;
    (viii) Zero percent of the fair value of collateral pledged to the 
FDIC-supervised institution by a counterparty where the collateral 
qualifies as level 2B liquid assets and eligible HQLA and where, under 
the contract governing the transaction, the counterparty may replace the 
pledged collateral with other assets that qualify as HQLA, without the 
consent of the FDIC-supervised institution; and
    (ix) 50 percent of the fair value of collateral pledged to the FDIC-
supervised institution by a counterparty where the collateral qualifies 
as level 2B liquid assets and eligible HQLA and where, under the 
contract governing the transaction, the counterparty may replace the 
pledged collateral with assets that do not qualify as HQLA, without the 
consent of the FDIC-supervised institution.
    (g) Brokered deposit outflow amount for retail customers or 
counterparties. The brokered deposit outflow amount for retail customers 
or counterparties as of the calculation date includes:
    (1) 100 percent of all brokered deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty that are not 
described in paragraphs (g)(5) through (9) of this section and which 
mature 30 calendar days or less from the calculation date;
    (2) 10 percent of all brokered deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty that are not 
described in paragraphs (g)(5) through (9) of this section and which 
mature later than 30 calendar days from the calculation date;
    (3) 20 percent of all brokered deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty that are not 
described in paragraphs (g)(5) through (9) of this section and which are 
held in a transactional account with no contractual maturity date, where 
the entire amount is covered by deposit insurance;
    (4) 40 percent of all brokered deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty that are not 
described in paragraphs (g)(5) through (9) of this section and which are 
held in a transactional account with no contractual maturity date, where 
less than the entire amount is covered by deposit insurance;
    (5) 10 percent of all reciprocal brokered deposits at the FDIC-
supervised institution provided by a retail customer or counterparty, 
where the entire amount is covered by deposit insurance;
    (6) 25 percent of all reciprocal brokered deposits at the FDIC-
supervised institution provided by a retail customer or counterparty, 
where less than the entire amount is covered by deposit insurance;
    (7) 10 percent of all brokered sweep deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty:
    (i) That are deposited in accordance with a contract between the 
retail customer or counterparty and the FDIC-supervised institution, a 
controlled

[[Page 517]]

subsidiary of the FDIC-supervised institution, or a company that is a 
controlled subsidiary of the same top-tier company of which the FDIC-
supervised institution is a controlled subsidiary; and
    (ii) Where the entire amount of the deposits is covered by deposit 
insurance;
    (8) 25 percent of all brokered sweep deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty:
    (i) That are not deposited in accordance with a contract between the 
retail customer or counterparty and the FDIC-supervised institution, a 
controlled subsidiary of the FDIC-supervised institution, or a company 
that is a controlled subsidiary of the same top-tier company of which 
the FDIC-supervised institution is a controlled subsidiary; and
    (ii) Where the entire amount of the deposits is covered by deposit 
insurance; and
    (9) 40 percent of all brokered sweep deposits at the FDIC-supervised 
institution provided by a retail customer or counterparty where less 
than the entire amount of the deposit balance is covered by deposit 
insurance.
    (h) Unsecured wholesale funding outflow amount. A FDIC-supervised 
institution's unsecured wholesale funding outflow amount, for all 
transactions that mature within 30 calendar days or less of the 
calculation date, as of the calculation date includes:
    (1) For unsecured wholesale funding that is not an operational 
deposit and is not provided by a financial sector entity or consolidated 
subsidiary of a financial sector entity:
    (i) 20 percent of all such funding, where the entire amount is 
covered by deposit insurance and the funding is not a brokered deposit;
    (ii) 40 percent of all such funding, where:
    (A) Less than the entire amount is covered by deposit insurance; or
    (B) The funding is a brokered deposit;
    (2) 100 percent of all unsecured wholesale funding that is not an 
operational deposit and is not included in paragraph (h)(1) of this 
section, including:
    (i) Funding provided by a company that is a consolidated subsidiary 
of the same top-tier company of which the FDIC-supervised institutions 
is a consolidated subsidiary; and
    (ii) Debt instruments issued by the FDIC-supervised institutions, 
including such instruments owned by retail customers or counterparties;
    (3) 5 percent of all operational deposits, other than operational 
deposits that are held in escrow accounts, where the entire deposit 
amount is covered by deposit insurance;
    (4) 25 percent of all operational deposits not included in paragraph 
(h)(3) of this section; and
    (5) 100 percent of all unsecured wholesale funding that is not 
otherwise described in this paragraph (h).
    (i) Debt security buyback outflow amount. A FDIC-supervised 
institution's debt security buyback outflow amount for debt securities 
issued by the FDIC-supervised institution that mature more than 30 
calendar days after the calculation date and for which the FDIC-
supervised institution or a consolidated subsidiary of the FDIC-
supervised institution is the primary market maker in such debt 
securities includes:
    (1) 3 percent of all such debt securities that are not structured 
securities; and
    (2) 5 percent of all such debt securities that are structured 
securities.
    (j) Secured funding and asset exchange outflow amount. (1) A FDIC-
supervised institution's secured funding outflow amount, for all 
transactions that mature within 30 calendar days or less of the 
calculation date, as of the calculation date includes:
    (i) Zero percent of all funds the FDIC-supervised institution must 
pay pursuant to secured funding transactions, to the extent that the 
funds are secured by level 1 liquid assets;
    (ii) 15 percent of all funds the FDIC-supervised institution must 
pay pursuant to secured funding transactions, to the extent that the 
funds are secured by level 2A liquid assets;
    (iii) 25 percent of all funds the FDIC-supervised institution must 
pay pursuant to secured funding transactions with sovereign entities, 
multilateral development banks, or U.S. government-sponsored enterprises 
that are assigned a risk weight of 20 percent under

[[Page 518]]

subpart D of 12 CFR part 324, to the extent that the funds are not 
secured by level 1 or level 2A liquid assets;
    (iv) 50 percent of all funds the FDIC-supervised institution must 
pay pursuant to secured funding transactions, to the extent that the 
funds are secured by level 2B liquid assets;
    (v) 50 percent of all funds received from secured funding 
transactions that are customer short positions where the customer short 
positions are covered by other customers' collateral and the collateral 
does not consist of HQLA; and
    (vi) 100 percent of all other funds the FDIC-supervised institution 
must pay pursuant to secured funding transactions, to the extent that 
the funds are secured by assets that are not HQLA.
    (2) If an outflow rate specified in paragraph (j)(1) of this section 
for a secured funding transaction is greater than the outflow rate that 
the FDIC-supervised institution is required to apply under paragraph (h) 
of this section to an unsecured wholesale funding transaction that is 
not an operational deposit with the same counterparty, the FDIC-
supervised institution may apply to the secured funding transaction the 
outflow rate that applies to an unsecured wholesale funding transaction 
that is not an operational deposit with that counterparty, except in the 
case of:
    (i) Secured funding transactions that are secured by collateral that 
was received by the FDIC-supervised institution under a secured lending 
transaction or asset exchange, in which case the FDIC-supervised 
institution must apply the outflow rate specified in paragraph (j)(1) of 
this section for the secured funding transaction; and
    (ii) Collateralized deposits that are operational deposits, in which 
case the FDIC-supervised institution may apply to the operational 
deposit amount, as calculated in accordance with Sec.  329.4(b), the 
operational deposit outflow rate specified in paragraph (h)(3) or (4) of 
this section, as applicable, if such outflow rate is lower than the 
outflow rate specified in paragraph (j)(1) of this section.
    (3) A FDIC-supervised institution's asset exchange outflow amount, 
for all transactions that mature within 30 calendar days or less of the 
calculation date, as of the calculation date includes:
    (i) Zero percent of the fair value of the level 1 liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive level 1 
liquid assets from the asset exchange counterparty;
    (ii) 15 percent of the fair value of the level 1 liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive level 
2A liquid assets from the asset exchange counterparty;
    (iii) 50 percent of the fair value of the level 1 liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive level 
2B liquid assets from the asset exchange counterparty;
    (iv) 100 percent of the fair value of the level 1 liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive assets 
that are not HQLA from the asset exchange counterparty;
    (v) Zero percent of the fair value of the level 2A liquid assets 
that FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where FDIC-supervised institution will receive level 1 or 
level 2A liquid assets from the asset exchange counterparty;
    (vi) 35 percent of the fair value of the level 2A liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive level 
2B liquid assets from the asset exchange counterparty;

[[Page 519]]

    (vii) 85 percent of the fair value of the level 2A liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive assets 
that are not HQLA from the asset exchange counterparty;
    (viii) Zero percent of the fair value of the level 2B liquid assets 
the FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive HQLA 
from the asset exchange counterparty; and
    (ix) 50 percent of the fair value of the level 2B liquid assets the 
FDIC-supervised institution must post to a counterparty pursuant to 
asset exchanges, not described in paragraphs (j)(3)(x) through (xiii) of 
this section, where the FDIC-supervised institution will receive assets 
that are not HQLA from the asset exchange counterparty;
    (x) Zero percent of the fair value of the level 1 liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
an asset exchange where the FDIC-supervised institution has 
rehypothecated the assets posted by the asset exchange counterparty, 
and, as of the calculation date, the assets will not be returned to the 
FDIC-supervised institution within 30 calendar days;
    (xi) 15 percent of the fair value of the level 2A liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
an asset exchange where the [BANK] has rehypothecated the assets posted 
by the asset exchange counterparty, and, as of the calculation date, the 
assets will not be returned to the FDIC-supervised institution within 30 
calendar days;
    (xii) 50 percent of the fair value of the level 2B liquid assets the 
[BANK] will receive from a counterparty pursuant to an asset exchange 
where the FDIC-supervised institution has rehypothecated the assets 
posted by the asset exchange counterparty, and, as of the calculation 
date, the assets will not be returned to the FDIC-supervised institution 
within 30 calendar days; and
    (xiii) 100 percent of the fair value of the non-HQLA the FDIC-
supervised institution will receive from a counterparty pursuant to an 
asset exchange where the FDIC-supervised institution has rehypothecated 
the assets posted by the asset exchange counterparty, and, as of the 
calculation date, the assets will not be returned to the FDIC-supervised 
institution within 30 calendar days.
    (k) Foreign central bank borrowing outflow amount. A FDIC-supervised 
institution's foreign central bank borrowing outflow amount is, in a 
foreign jurisdiction where the FDIC-supervised institution has borrowed 
from the jurisdiction's central bank, the outflow amount assigned to 
borrowings from central banks in a minimum liquidity standard 
established in that jurisdiction. If the foreign jurisdiction has not 
specified a central bank borrowing outflow amount in a minimum liquidity 
standard, the foreign central bank borrowing outflow amount must be 
calculated in accordance with paragraph (j) of this section.
    (l) Other contractual outflow amount. A FDIC-supervised 
institution's other contractual outflow amount is 100 percent of funding 
or amounts, with the exception of operating expenses of the FDIC-
supervised institution (such as rents, salaries, utilities, and other 
similar payments), payable by the FDIC-supervised institution to 
counterparties under legally binding agreements that are not otherwise 
specified in this section.
    (m) Excluded amounts for intragroup transactions. The outflow 
amounts set forth in this section do not include amounts arising out of 
transactions between:
    (1) The FDIC-supervised institution and a consolidated subsidiary of 
the FDIC-supervised institution; or
    (2) A consolidated subsidiary of the FDIC-supervised institution and 
another consolidated subsidiary of the FDIC-supervised institution.



Sec.  329.33  Inflow amounts.

    (a) The inflows in paragraphs (b) through (g) of this section do not 
include:

[[Page 520]]

    (1) Amounts the FDIC-supervised institution holds in operational 
deposits at other regulated financial companies;
    (2) Amounts the FDIC-supervised institution expects, or is 
contractually entitled to receive, 30 calendar days or less from the 
calculation date due to forward sales of mortgage loans and any 
derivatives that are mortgage commitments subject to Sec.  329.32(d);
    (3) The amount of any credit or liquidity facilities extended to the 
FDIC-supervised institution;
    (4) The amount of any asset that is eligible HQLA and any amounts 
payable to the FDIC-supervised institution with respect to that asset;
    (5) Any amounts payable to the FDIC-supervised institution from an 
obligation of a customer or counterparty that is a nonperforming asset 
as of the calculation date or that the FDIC-supervised institution has 
reason to expect will become a nonperforming exposure 30 calendar days 
or less from the calculation date; and
    (6) Amounts payable to the FDIC-supervised institution with respect 
to any transaction that has no contractual maturity date or that matures 
after 30 calendar days of the calculation date (as determined by Sec.  
329.31).
    (b) Net derivative cash inflow amount. The net derivative cash 
inflow amount as of the calculation date is the sum of the net 
derivative cash inflow amount for each counterparty. The net derivative 
cash inflow amount does not include amounts excluded from inflows under 
paragraph (a)(2) of this section. The net derivative cash inflow amount 
for a counterparty is the sum of:
    (1) The amount, if greater than zero, of contractual payments and 
collateral that the FDIC-supervised institution will receive from the 
counterparty 30 calendar days or less from the calculation date under 
derivative transactions other than transactions described in paragraph 
(b)(2) of this section, less the contractual payments and collateral 
that the FDIC-supervised institution will make or deliver to the 
counterparty 30 calendar days or less from the calculation date under 
derivative transactions other than transactions described in paragraph 
(b)(2) of this section, provided that the derivative transactions are 
subject to a qualifying master netting agreement; and
    (2) The amount, if greater than zero, of contractual principal 
payments that the FDIC-supervised institution will receive from the 
counterparty 30 calendar days or less from the calculation date under 
foreign currency exchange derivative transactions that result in the 
full exchange of contractual cash principal payments in different 
currencies within the same business day, less the contractual principal 
payments that the FDIC-supervised institution will make to the 
counterparty 30 calendar days or less from the calculation date under 
foreign currency exchange derivative transactions that result in the 
full exchange of contractual cash principal payments in different 
currencies within the same business day.
    (c) Retail cash inflow amount. The retail cash inflow amount as of 
the calculation date includes 50 percent of all payments contractually 
payable to the FDIC-supervised institution from retail customers or 
counterparties.
    (d) Unsecured wholesale cash inflow amount. The unsecured wholesale 
cash inflow amount as of the calculation date includes:
    (1) 100 percent of all payments contractually payable to the FDIC-
supervised institution from financial sector entities, or from a 
consolidated subsidiary thereof, or central banks; and
    (2) 50 percent of all payments contractually payable to the FDIC-
supervised institution from wholesale customers or counterparties that 
are not financial sector entities or consolidated subsidiaries thereof, 
provided that, with respect to revolving credit facilities, the amount 
of the existing loan is not included in the unsecured wholesale cash 
inflow amount and the remaining undrawn balance is included in the 
outflow amount under Sec.  329.32(e)(1).
    (e) Securities cash inflow amount. The securities cash inflow amount 
as of the calculation date includes 100 percent of all contractual 
payments due to the FDIC-supervised institution on securities it owns 
that are not eligible HQLA.

[[Page 521]]

    (f) Secured lending and asset exchange cash inflow amount. (1) A 
FDIC-supervised institution's secured lending cash inflow amount as of 
the calculation date includes:
    (i) Zero percent of all contractual payments due to the FDIC-
supervised institution pursuant to secured lending transactions, 
including margin loans extended to customers, to the extent that the 
payments are secured by collateral that has been rehypothecated in a 
transaction and, as of the calculation date, will not be returned to the 
FDIC-supervised institution within 30 calendar days;
    (ii) 100 percent of all contractual payments due to the FDIC-
supervised institution pursuant to secured lending transactions not 
described in paragraph (f)(1)(vii) of this section, to the extent that 
the payments are secured by assets that are not eligible HQLA, but are 
still held by the FDIC-supervised institution and are available for 
immediate return to the counterparty at any time;
    (iii) Zero percent of all contractual payments due to the FDIC-
supervised institution pursuant to secured lending transactions not 
described in paragraphs (f)(1)(i) or (ii) of this section, to the extent 
that the payments are secured by level 1 liquid assets;
    (iv) 15 percent of all contractual payments due to the FDIC-
supervised institution pursuant to secured lending transactions not 
described in paragraphs (f)(1)(i) or (ii) of this section, to the extent 
that the payments are secured by level 2A liquid assets;
    (v) 50 percent of all contractual payments due to the FDIC-
supervised institution pursuant to secured lending transactions not 
described in paragraphs (f)(1)(i) or (ii) of this section, to the extent 
that the payments are secured by level 2B liquid assets;
    (vi) 100 percent of all contractual payments due to the FDIC-
supervised institution pursuant to secured lending transactions not 
described in paragraphs (f)(1)(i), (ii), or (vii) of this section, to 
the extent that the payments are secured by assets that are not HQLA; 
and
    (vii) 50 percent of all contractual payments due to the FDIC-
supervised institution pursuant to collateralized margin loans extended 
to customers, not described in paragraph (f)(1)(i) of this section, 
provided that the loans are secured by assets that are not HQLA.
    (2) A FDIC-supervised institution's asset exchange inflow amount as 
of the calculation date includes:
    (i) Zero percent of the fair value of assets the FDIC-supervised 
institution will receive from a counterparty pursuant to asset 
exchanges, to the extent that the asset received by the FDIC-supervised 
institution from the counterparty has been rehypothecated in a 
transaction and, as of the calculation date, will not be returned to the 
FDIC-supervised institution within 30 calendar days;
    (ii) Zero percent of the fair value of level 1 liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post level 1 liquid assets to 
the asset exchange counterparty;
    (iii) 15 percent of the fair value of level 1 liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post level 2A liquid assets 
to the asset exchange counterparty;
    (iv) 50 percent of the fair value of level 1 liquid assets the FDIC-
supervised institution will receive from counterparty pursuant to asset 
exchanges, not described in paragraph (f)(2)(i) of this section, where 
the FDIC-supervised institution must post level 2B liquid assets to the 
asset exchange counterparty;
    (v) 100 percent of the fair value of level 1 liquid assets the FDIC-
supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post assets that are not HQLA 
to the asset exchange counterparty;
    (vi) Zero percent of the fair value of level 2A liquid assets the 
FDIC-supervised institution will receive from a

[[Page 522]]

counterparty pursuant to asset exchanges, not described in paragraph 
(f)(2)(i) of this section, where the FDIC-supervised institution must 
post level 1 or level 2A liquid assets to the asset exchange 
counterparty;
    (vii) 35 percent of the fair value of level 2A liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post level 2B liquid assets 
to the asset exchange counterparty;
    (viii) 85 percent of the fair value of level 2A liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post assets that are not HQLA 
to the asset exchange counterparty;
    (ix) Zero percent of the fair value of level 2B liquid assets the 
FDIC-supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post assets that are HQLA to 
the asset exchange counterparty; and
    (x) 50 percent of the fair value of level 2B liquid assets the FDIC-
supervised institution will receive from a counterparty pursuant to 
asset exchanges, not described in paragraph (f)(2)(i) of this section, 
where the FDIC-supervised institution must post assets that are not HQLA 
to the asset exchange counterparty.
    (g) Broker-dealer segregated account inflow amount. A FDIC-
supervised institution's broker-dealer segregated account inflow amount 
is the fair value of all assets released from broker-dealer segregated 
accounts maintained in accordance with statutory or regulatory 
requirements for the protection of customer trading assets, provided 
that the calculation of the broker-dealer segregated account inflow 
amount, for any transaction affecting the calculation of the segregated 
balance (as required by applicable law), shall be consistent with the 
following:
    (1) In calculating the broker-dealer segregated account inflow 
amount, the FDIC-supervised institution must calculate the fair value of 
the required balance of the customer reserve account as of 30 calendar 
days from the calculation date by assuming that customer cash and 
collateral positions have changed consistent with the outflow and inflow 
calculations required under Sec. Sec.  329.32 and 329.33.
    (2) If the fair value of the required balance of the customer 
reserve account as of 30 calendar days from the calculation date, as 
calculated consistent with the outflow and inflow calculations required 
under Sec. Sec.  329.32 and 329.33, is less than the fair value of the 
required balance as of the calculation date, the difference is the 
segregated account inflow amount.
    (3) If the fair value of the required balance of the customer 
reserve account as of 30 calendar days from the calculation date, as 
calculated consistent with the outflow and inflow calculations required 
under Sec. Sec.  329.32 and 329.33, is more than the fair value of the 
required balance as of the calculation date, the segregated account 
inflow amount is zero.
    (h) Other cash inflow amounts. A FDIC-supervised institution's 
inflow amount as of the calculation date includes zero percent of other 
cash inflow amounts not included in paragraphs (b) through (g) of this 
section.
    (i) Excluded amounts for intragroup transactions. The inflow amounts 
set forth in this section do not include amounts arising out of 
transactions between:
    (1) The FDIC-supervised institution and a consolidated subsidiary of 
the FDIC-supervised institution; or
    (2) A consolidated subsidiary of the FDIC-supervised institution and 
another consolidated subsidiary of the FDIC-supervised institution.



                 Subpart E_Liquidity Coverage Shortfall



Sec.  329.40  Liquidity coverage shortfall: Supervisory framework.

    (a) Notification requirements. must notify the FDIC on any business 
day when its liquidity coverage ratio is calculated to be less than the 
minimum requirement in Sec.  329.10.

[[Page 523]]

    (b) Liquidity plan. (1) For the period during which an FDIC-
supervised institution must calculate a liquidity coverage ratio on the 
last business day of each applicable calendar month under subpart F of 
this part, if the FDIC-supervised institution's liquidity coverage ratio 
is below the minimum requirement in Sec.  329.10 for any calculation 
date that is the last business day of the applicable calendar month, or 
if the FDIC has determined that the FDIC-supervised institution is 
otherwise materially noncompliant with the requirements of this part, 
the FDIC-supervised institution must promptly consult with the FDIC to 
determine whether the FDIC-supervised institution must provide to the 
FDIC a plan for achieving compliance with the minimum liquidity 
requirement in Sec.  329.10 and all other requirements of this part.
    (2) For the period during which an FDIC-supervised institution must 
calculate a liquidity coverage ratio each business day under subpart F 
of this part, if a FDIC-supervised institution's liquidity coverage 
ratio is below the minimum requirement in Sec.  329.10 for three 
consecutive business days, or if the FDIC has determined that the FDIC-
supervised institution is otherwise materially noncompliant with the 
requirements of this part, the FDIC-supervised institution must promptly 
provide to the FDIC a plan for achieving compliance with the minimum 
liquidity requirement in Sec.  329.10 and all other requirements of this 
part.
    (3) The plan must include, as applicable:
    (i) An assessment of the FDIC-supervised institution's liquidity 
position;
    (ii) The actions the FDIC-supervised institution has taken and will 
take to achieve full compliance with this part, including:
    (A) A plan for adjusting the FDIC-supervised institution's risk 
profile, risk management, and funding sources in order to achieve full 
compliance with this part; and
    (B) A plan for remediating any operational or management issues that 
contributed to noncompliance with this part;
    (iii) An estimated time frame for achieving full compliance with 
this part; and
    (iv) A commitment to report to the FDIC no less than weekly on 
progress to achieve compliance in accordance with the plan until full 
compliance with this part is achieved.
    (c) Supervisory and enforcement actions. The FDIC may, at its 
discretion, take additional supervisory or enforcement actions to 
address noncompliance with the minimum liquidity standard and other 
requirements of this part.



                          Subpart F_Transitions



Sec.  329.50  Transitions.

    (a) Covered depository institution holding companies with $700 
billion or more in total consolidated assets or $10 trillion or more in 
assets under custody. For any depository institution holding company 
that has total consolidated assets equal to $700 billion or more, as 
reported on the company's most recent Consolidated Financial Statements 
for Holding Companies (FR Y-9C), or $10 trillion or more in assets under 
custody, as reported on the company's most recent Banking Organization 
Systemic Risk Report (FR Y-15), and any depository institution that is a 
consolidated subsidiary of such depository institution holding company 
that has total consolidated assets equal to $10 billion or more, as 
reported on the most recent year-end Consolidated Report of Condition 
and Income:
    (1) Beginning January 1, 2015, through June 30, 2015, the FDIC-
supervised institution must calculate and maintain a liquidity coverage 
ratio monthly, on each calculation date that is the last business day of 
the applicable calendar month, in accordance with this part, that is 
equal to or greater than 0.80.
    (2) Beginning July 1, 2015 through December 31, 2015, the FDIC-
supervised institution must calculate and maintain a liquidity coverage 
ratio on each calculation date in accordance with this part that is 
equal to or greater than 0.80.
    (3) Beginning January 1, 2016, through December 31, 2016, the FDIC-
supervised institution must calculate and maintain a liquidity coverage 
ratio on each calculation date in accordance with this part that is 
equal to or greater than 0.90.

[[Page 524]]

    (4) On January 1, 2017, and thereafter, the FDIC-supervised 
institution must calculate and maintain a liquidity coverage ratio on 
each calculation date that is equal to or greater than 1.0.
    (b) Other FDIC-supervised institution's For any FDIC-supervised 
institution subject to a minimum liquidity standard under this part not 
described in paragraph (a) of this section:
    (1) Beginning January 1, 2015, through December 31, 2015, the FDIC-
supervised institution must calculate and maintain a liquidity coverage 
ratio monthly, on each calculation date that is the last business day of 
the applicable calendar month, in accordance with this part, that is 
equal to or greater than 0.80.
    (2) Beginning January 1, 2016, through June 30, 2016, the FDIC-
supervised institution must calculate and maintain a liquidity coverage 
ratio monthly, on each calculation date that is the last business day of 
the applicable calendar month, in accordance with this part, that is 
equal to or greater than 0.90.
    (3) Beginning July 1, 2016, through December 31, 2016, the FDIC-
supervised institution must calculate and maintain a liquidity coverage 
ratio on each calculation date in accordance with this part that is 
equal to or greater than 0.90.
    (4) On January 1, 2017, and thereafter, the FDIC-supervised 
institution must calculate and maintain a liquidity coverage ratio on 
each calculation date that is equal to or greater than 1.0.



PART 330_DEPOSIT INSURANCE COVERAGE--Table of Contents



Sec.
330.1 Definitions.
330.2 Purpose.
330.3 General principles.
330.4 Continuation of separate deposit insurance after merger of insured 
          depository institutions.
330.5 Recognition of deposit ownership and fiduciary relationships.
330.6 Single ownership accounts.
330.7 Accounts held by an agent, nominee, guardian, custodian or 
          conservator.
330.8 Annuity contract accounts.
330.9 Joint ownership accounts.
330.10 Revocable trust accounts.
330.11 Accounts of a corporation, partnership or unincorporated 
          association.
330.12 Accounts held by a depository institution as the trustee of an 
          irrevocable trust.
330.13 Irrevocable trust accounts.
330.14 Retirement and other employee benefit plan accounts.
330.15 Accounts held by government depositors.
330.16 [Reserved]
330.101 Premiums.

    Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 
1819(a)(Tenth), 1820(f), 1820(g), 1821(a), 1821(d), 1822(c).

    Source: 63 FR 25756, May 11, 1998, unless otherwise noted.



Sec.  330.1  Definitions.

    For the purposes of this part:
    (a) Act means the Federal Deposit Insurance Act (12 U.S.C. 1811 et 
seq.).
    (b) Corporation means the Federal Deposit Insurance Corporation.
    (c) Default has the same meaning as provided under section 3(x) of 
the Act (12 U.S.C. 1813(x)).
    (d) Deposit has the same meaning as provided under section 3(l) of 
the Act (12 U.S.C. 1813(l)).
    (e) Deposit account records means account ledgers, signature cards, 
certificates of deposit, passbooks, corporate resolutions authorizing 
accounts in the possession of the insured depository institution and 
other books and records of the insured depository institution, including 
records maintained by computer, which relate to the insured depository 
institution's deposit taking function, but does not mean account 
statements, deposit slips, items deposited or cancelled checks.
    (f) FDIC means the Federal Deposit Insurance Corporation.
    (g) Independent activity. A corporation, partnership or 
unincorporated association shall be deemed to be engaged in an 
``independent activity'' if the entity is operated primarily for some 
purpose other than to increase deposit insurance.
    (h) Insured branch means a branch of a foreign bank any deposits in 
which are insured in accordance with the provisions of the Act.
    (i) Insured deposit has the same meaning as that provided under 
section 3(m)(1) of the Act (12 U.S.C. 1813(m)(1)) and this part.
    (j) Insured depository institution is any depository institution 
whose deposits

[[Page 525]]

are insured pursuant to the Act, including a foreign bank having an 
insured branch.
    (k) Interest, with respect to a deposit, means any payment to or for 
the account of any depositor as compensation for the use of funds 
constituting a deposit. A bank's absorption of expenses incident to 
providing a normal banking function or its forbearance from charging a 
fee in connection with such a service is not considered a payment of 
interest.
    (l) Natural person means a human being.
    (m) Non-contingent trust interest means a trust interest capable of 
determination without evaluation of contingencies except for those 
covered by the present worth tables and rules of calculation for their 
use set forth in Sec.  20.2031-7 of the Federal Estate Tax Regulations 
(26 CFR 20.2031-7) or any similar present worth or life expectancy 
tables which may be adopted by the Internal Revenue Service.
    (n) Sole proprietorship means a form of business in which one person 
owns all the assets of the business, in contrast to a partnership or 
corporation.
    (o) Standard maximum deposit insurance amount, referred to as the 
``SMDIA'' hereafter, means $250,000 adjusted pursuant to subparagraph 
(F) of section 11(a)(1) of the FDI Act (12 U.S.C. 1821(a)(1)(F)).
    (p) Trust estate means the determinable and beneficial interest of a 
beneficiary or principal in trust funds but does not include the 
beneficial interest of an heir or devisee in a decedent's estate.
    (q) Trust funds means funds held by an insured depository 
institution as trustee pursuant to any irrevocable trust established 
pursuant to any statute or written trust agreement.
    (r) Trust interest means the interest of a beneficiary in an 
irrevocable express trust (other than an employee benefit plan) created 
either by written trust instrument or by statute, but does not include 
any interest retained by the settlor.
    (s) [Reserved]

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006; 73 
FR 61660, Oct. 17, 2008; 74 FR 47716, Sept. 17, 2009; 75 FR 49365, Aug. 
13, 2010; 75 FR 69583, Nov. 15, 2010; 76 FR 4816, Jan. 27, 2011; 76 FR 
41395, July 14, 2011; 78 FR 56588, Sept. 13, 2013; 80 FR 65921, Oct. 28, 
2015]



Sec.  330.2  Purpose.

    The purpose of this part is to clarify the rules and define the 
terms necessary to afford deposit insurance coverage under the Act and 
provide rules for the recognition of deposit ownership in various 
circumstances.



Sec.  330.3  General principles.

    (a) Ownership rights and capacities. The insurance coverage provided 
by the Act and this part is based upon the ownership rights and 
capacities in which deposit accounts are maintained at insured 
depository institutions. All deposits in an insured depository 
institution which are maintained in the same right and capacity (by or 
for the benefit of a particular depositor or depositors) shall be added 
together and insured in accordance with this part. Deposits maintained 
in different rights and capacities, as recognized under this part, shall 
be insured separately from each other. (Example: Single ownership 
accounts and joint ownership accounts are insured separately from each 
other.)
    (b) Deposits maintained in separate insured depository institutions 
or in separate branches of the same insured depository institution. Any 
deposit accounts maintained by a depositor at one insured depository 
institution are insured separately from, and without regard to, any 
deposit accounts that the same depositor maintains at any other 
separately chartered and insured depository institution, even if two or 
more separately chartered and insured depository institutions are 
affiliated through common ownership. (Example: Deposits held by the same 
individual at two different banks owned by the same bank holding company 
would be insured separately, per bank.)
    The deposit accounts of a depositor maintained in the same right and 
capacity at different branches or offices

[[Page 526]]

of the same insured depository institution are not separately insured; 
rather they shall be added together and insured in accordance with this 
part.
    (c) Deposits maintained by foreigners and deposits denominated in 
foreign currency. The availability of deposit insurance is not limited 
to citizens and residents of the United States. Any person or entity 
that maintains deposits in an insured depository institution is entitled 
to the deposit insurance provided by the Act and this part. In addition, 
deposits denominated in a foreign currency shall be insured in 
accordance with this part. Deposit insurance for such deposits shall be 
determined and paid in the amount of United States dollars that is 
equivalent in value to the amount of the deposit denominated in the 
foreign currency as of close of business on the date of default of the 
insured depository institution. The exchange rates to be used for such 
conversions are the 12 PM rates (the ``noon buying rates for cable 
transfers'') quoted for major currencies by the Federal Reserve Bank of 
New York on the date of default of the insured depository institution, 
unless the deposit agreement specifies that some other widely recognized 
exchange rates are to be used for all purposes under that agreement, in 
which case, the rates so specified shall be used for such conversions.
    (d) Deposits in insured branches of foreign banks. Deposits in an 
insured branch of a foreign bank which are payable by contract in the 
United States shall be insured in accordance with this part, except that 
any deposits to the credit of the foreign bank, or any office, branch, 
agency or any wholly owned subsidiary of the foreign bank, shall not be 
insured. All deposits held by a depositor in the same right and capacity 
in more than one insured branch of the same foreign bank shall be added 
together for the purpose of determining the amount of deposit insurance.
    (e) Deposits payable outside of the United States and certain other 
locations. (1) Any obligation of an insured depository institution which 
is payable solely at an office of that institution located outside any 
State, as the term ``State'' is defined in section 3(a)(3) of the Act 
(12 U.S.C. 1813(a)(3)), is not a deposit for the purposes of this part.
    (2) Except as provided in paragraph (e)(3) of this section, any 
obligation of an insured depository institution which is carried on the 
books and records of an office of that institution located outside any 
State, as referred to in paragraph (e)(1) of this section, shall not be 
an insured deposit for purposes of this part, or any other provision of 
this part, notwithstanding that the obligation may also be payable at an 
office of that institution located within any State.
    (3) Rule of construction. For purposes of this paragraph (e), 
Overseas Military Banking Facilities operated under Department of 
Defense regulations, 32 CFR Parts 230 and 231, are not considered to be 
offices located outside any State, as referred to in paragraph (e)(1) of 
this section.
    (f) International banking facility deposits. An ``international 
banking facility time deposit,'' as defined by the Board of Governors of 
the Federal Reserve System in Regulation D (12 CFR 204.8(a)(2)), or in 
any successor regulation, is not a deposit for the purposes of this 
part.
    (g) Bank investment contracts. As required by section 11(a)(8) of 
the Act (12 U.S.C. 1821(a)(8)), any liability arising under any 
investment contract between any insured depository institution and any 
employee benefit plan which expressly permits ``benefit responsive 
withdrawals or transfers'' (as defined in section 11(a)(8) of the Act) 
are not insured deposits for purposes of this part. The term 
``substantial penalty or adjustment'' used in section 11(a)(8) of the 
Act means, in the case of a deposit having an original term which 
exceeds one year, all interest earned on the amount withdrawn from the 
date of deposit or for six months, whichever is less; or, in the case of 
a deposit having an original term of one year or less, all interest 
earned on the amount withdrawn from the date of deposit or three months, 
whichever is less.
    (h) Application of state or local law to deposit insurance 
determinations. In general, deposit insurance is for the benefit of the 
owner or owners of funds on deposit. However, while ownership

[[Page 527]]

under state law of deposited funds is a necessary condition for deposit 
insurance, ownership under state law is not sufficient for, or decisive 
in, determining deposit insurance coverage. Deposit insurance coverage 
is also a function of the deposit account records of the insured 
depository institution and of the provisions of this part, which, in the 
interest of uniform national rules for deposit insurance coverage, are 
controlling for purposes of determining deposit insurance coverage.
    (i) Determination of the amount of a deposit--(1) General rule. The 
amount of a deposit is the balance of principal and interest 
unconditionally credited to the deposit account as of the date of 
default of the insured depository institution, plus the ascertainable 
amount of interest to that date, accrued at the contract rate (or the 
anticipated or announced interest or dividend rate), which the insured 
depository institution in default would have paid if the deposit had 
matured on that date and the insured depository institution had not 
failed. In the absence of any such announced or anticipated interest or 
dividend rate, the rate for this purpose shall be whatever rate was paid 
in the immediately preceding payment period.
    (2) Discounted certificates of deposit. The amount of a certificate 
of deposit sold by an insured depository institution at a discount from 
its face value is its original purchase price plus the amount of accrued 
earnings calculated by compounding interest annually at the rate 
necessary to increase the original purchase price to the maturity value 
over the life of the certificate.
    (3) Waiver of minimum requirements. In the case of a deposit with a 
fixed payment date, fixed or minimum term, or a qualifying or notice 
period that has not expired as of such date, interest thereon to the 
date of closing shall be computed according to the terms of the deposit 
contract as if interest had been credited and as if the deposit could 
have been withdrawn on such date without any penalty or reduction in the 
rate of earnings.
    (j) Continuation of insurance coverage following the death of a 
deposit owner. The death of a deposit owner shall not affect the 
insurance coverage of the deposit for a period of six months following 
the owner's death unless the deposit account is restructured. The 
operation of this grace period, however, shall not result in a reduction 
of coverage. If an account is not restructured within six months after 
the owner's death, the insurance shall be provided on the basis of 
actual ownership in accordance with the provisions of Sec.  330.5(a)(1).

[63 FR 25756, May 11, 1998, as amended at 64 FR 15656, Apr. 1, 1999; 78 
FR 56589, Sept. 13, 2013]



Sec.  330.4  Continuation of separate deposit insurance after merger 
of insured depository institutions.

    Whenever the liabilities of one or more insured depository 
institutions for deposits are assumed by another insured depository 
institution, whether by merger, consolidation, other statutory 
assumption or contract:
    (a) The insured status of the institutions whose liabilities have 
been assumed terminates on the date of receipt by the FDIC of 
satisfactory evidence of the assumption; and
    (b) The separate insurance of deposits assumed continues for six 
months from the date the assumption takes effect or, in the case of a 
time deposit, the earliest maturity date after the six-month period. In 
the case of time deposits which mature within six months of the date the 
deposits are assumed and which are renewed at the same dollar amount 
(either with or without accrued interest having been added to the 
principal amount) and for the same term as the original deposit, the 
separate insurance applies to the renewed deposits until the first 
maturity date after the six-month period. Time deposits that mature 
within six months of the deposit assumption and that are renewed on any 
other basis, or that are not renewed and thereby become demand deposits, 
are separately insured only until the end of the six-month period.



Sec.  330.5  Recognition of deposit ownership and fiduciary relationships.

    (a) Recognition of deposit ownership--(1) Evidence of deposit 
ownership. Except as indicated in this paragraph (a)(1) or as provided 
in Sec.  330.3(j), in determining

[[Page 528]]

the amount of insurance available to each depositor, the FDIC shall 
presume that deposited funds are actually owned in the manner indicated 
on the deposit account records of the insured depository institution. If 
the FDIC, in its sole discretion, determines that the deposit account 
records of the insured depository institution are clear and unambiguous, 
those records shall be considered binding on the depositor, and the FDIC 
shall consider no other records on the manner in which the funds are 
owned. If the deposit account records are ambiguous or unclear on the 
manner in which the funds are owned, then the FDIC may, in its sole 
discretion, consider evidence other than the deposit account records of 
the insured depository institution for the purpose of establishing the 
manner in which the funds are owned. Despite the general requirements of 
this paragraph (a)(1), if the FDIC has reason to believe that the 
insured depository institution's deposit account records misrepresent 
the actual ownership of deposited funds and such misrepresentation would 
increase deposit insurance coverage, the FDIC may consider all available 
evidence and pay claims for insured deposits on the basis of the actual 
rather than the misrepresented ownership.
    (2) Recognition of deposit ownership in custodial accounts. In the 
case of custodial deposits, the interest of each beneficial owner may be 
determined on a fractional or percentage basis. This may be accomplished 
in any manner which indicates that where the funds of an owner are 
commingled with other funds held in a custodial capacity and a portion 
thereof is placed on deposit in one or more insured depository 
institutions without allocation, the owner's insured interest in the 
deposit in any one insured depository institution would represent, at 
any given time, the same fractional share as his or her share of the 
total commingled funds.
    (b) Fiduciary relationships--(1) Recognition. The FDIC will 
recognize a claim for insurance coverage based on a fiduciary 
relationship only if the relationship is expressly disclosed, by way of 
specific references, in the ``deposit account records'' (as defined in 
Sec.  330.1(e)) of the insured depository institution. Such 
relationships include, but are not limited to, relationships involving a 
trustee, agent, nominee, guardian, executor or custodian pursuant to 
which funds are deposited. The express indication that the account is 
held in a fiduciary capacity will not be necessary, however, in 
instances where the FDIC determines, in its sole discretion, that the 
titling of the deposit account and the underlying deposit account 
records sufficiently indicate the existence of a fiduciary relationship. 
This exception may apply, for example, where the deposit account title 
or records indicate that the account is held by an escrow agent, title 
company or a company whose business is to hold deposits and securities 
for others.
    (2) Details of fiduciary relationships. If the deposit account 
records of an insured depository institution disclose the existence of a 
relationship which might provide a basis for additional insurance 
(including the exception provided for in paragraph (b)(1) of this 
section), the details of the relationship and the interests of other 
parties in the account must be ascertainable either from the deposit 
account records of the insured depository institution or from records 
maintained, in good faith and in the regular course of business, by the 
depositor or by some person or entity that has undertaken to maintain 
such records for the depositor.
    (3) Multi-tiered fiduciary relationships. In deposit accounts where 
there are multiple levels of fiduciary relationships, there are two 
methods of satisfying paragraphs (b)(1) and (b)(2) of this section to 
obtain insurance coverage for the interests of the true beneficial 
owners of a deposit account.
    (i) One method is to:
    (A) Expressly indicate, on the deposit account records of the 
insured depository institution, the existence of each and every level of 
fiduciary relationships; and
    (B) Disclose, at each level, the name(s) and interest(s) of the 
person(s) on whose behalf the party at that level is acting.
    (ii) An alternative method is to:
    (A) Expressly indicate, on the deposit account records of the 
insured depository institution, that there are multiple levels of 
fiduciary relationships;

[[Page 529]]

    (B) Disclose the existence of additional levels of fiduciary 
relationships in records, maintained in good faith and in the regular 
course of business, by parties at subsequent levels; and
    (C) Disclose, at each of the levels, the name(s) and interest(s) of 
the person(s) on whose behalf the party at that level is acting. No 
person or entity in the chain of parties will be permitted to claim that 
they are acting in a fiduciary capacity for others unless the possible 
existence of such a relationship is revealed at some previous level in 
the chain.
    (4) Exceptions--(i) Deposits evidenced by negotiable instruments. If 
any deposit obligation of an insured depository institution is evidenced 
by a negotiable certificate of deposit, negotiable draft, negotiable 
cashier's or officer's check, negotiable certified check, negotiable 
traveler's check, letter of credit or other negotiable instrument, the 
FDIC will recognize the owner of such deposit obligation for all 
purposes of claim for insured deposits to the same extent as if his or 
her name and interest were disclosed on the records of the insured 
depository institution; provided, that the instrument was in fact 
negotiated to such owner prior to the date of default of the insured 
depository institution. The owner must provide affirmative proof of such 
negotiation, in a form satisfactory to the FDIC, to substantiate his or 
her claim. Receipt of a negotiable instrument directly from the insured 
depository institution in default shall, in no event, be considered a 
negotiation of said instrument for purposes of this provision.
    (ii) Deposit obligations for payment of items forwarded for 
collection by depository institution acting as agent. Where an insured 
depository institution in default has become obligated for the payment 
of items forwarded for collection by a depository institution acting 
solely as agent, the FDIC will recognize the holders of such items for 
all purposes of claim for insured deposits to the same extent as if 
their name(s) and interest(s) were disclosed as depositors on the 
deposit account records of the insured depository institution, when such 
claim for insured deposits, if otherwise payable, has been established 
by the execution and delivery of prescribed forms. The FDIC will 
recognize such depository institution forwarding such items for the 
holders thereof as agent for such holders for the purpose of making an 
assignment to the FDIC of their rights against the insured depository 
institution in default and for the purpose of receiving payment on their 
behalf.

[63 FR 25756, May 11, 1998, as amended at 64 FR 15656, Apr. 1, 1999]



Sec.  330.6  Single ownership accounts.

    (a) Individual accounts. Funds owned by a natural person and 
deposited in one or more deposit accounts in his or her own name shall 
be added together and insured up to the SMDIA in the aggregate. 
Exception: Despite the general requirement in this paragraph (a), if 
more than one natural person has the right to withdraw funds from an 
individual account (excluding persons who have the right to withdraw by 
virtue of a Power of Attorney), the account shall be treated as a joint 
ownership account (although not necessarily a qualifying joint account) 
and shall be insured in accordance with the provisions of Sec.  330.9, 
unless the deposit account records clearly indicate, to the satisfaction 
of the FDIC, that the funds are owned by one individual and that other 
signatories on the account are merely authorized to withdraw funds on 
behalf of the owner.
    (b) Sole proprietorship accounts. Funds owned by a business which is 
a ``sole proprietorship'' (as defined in Sec.  330.1(n)) and deposited 
in one or more deposit accounts in the name of the business shall be 
treated as the individual account(s) of the person who is the sole 
proprietor, added to any other individual accounts of that person, and 
insured up to the SMDIA in the aggregate.
    (c) Single-name accounts containing community property funds. 
Community property funds deposited into one or more deposit accounts in 
the name of one member of a husband-wife community shall be treated as 
the individual account(s) of the named member, added to any other 
individual accounts of that person, and insured up to the SMDIA in the 
aggregate.
    (d) Accounts of a decedent and accounts held by executors or 
administrators

[[Page 530]]

of a decedent's estate. Funds held in the name of a decedent or in the 
name of the executor, administrator, or other personal representative of 
his or her estate and deposited into one or more deposit accounts shall 
be added together and insured up to the SMDIA in the aggregate; 
provided, however, that nothing in this paragraph (d) shall affect the 
operation of Sec.  330.3(j). The deposit insurance provided by this 
paragraph (d) shall be separate from any insurance coverage provided for 
the individual deposit accounts of the executor, administrator, other 
personal representative or the beneficiaries of the estate.

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006; 76 
FR 41395, July 14, 2011]



Sec.  330.7  Accounts held by an agent, nominee, guardian, 
custodian or conservator.

    (a) Agency or nominee accounts. Funds owned by a principal or 
principals and deposited into one or more deposit accounts in the name 
of an agent, custodian or nominee, shall be insured to the same extent 
as if deposited in the name of the principal(s). When such funds are 
deposited by an insured depository institution acting as a trustee of an 
irrevocable trust, the insurance coverage shall be governed by the 
provisions of Sec.  330.13.
    (b) Guardian, custodian or conservator accounts. Funds held by a 
guardian, custodian, or conservator for the benefit of his or her ward, 
or for the benefit of a minor under the Uniform Gifts to Minors Act, and 
deposited into one or more accounts in the name of the guardian, 
custodian or conservator shall, for purposes of this part, be deemed to 
be agency or nominee accounts and shall be insured in accordance with 
paragraph (a) of this section.
    (c) Accounts held by fiduciaries on behalf of two or more persons. 
Funds held by an agent, nominee, guardian, custodian, conservator or 
loan servicer, on behalf of two or more persons jointly, shall be 
treated as a joint ownership account and shall be insured in accordance 
with the provisions of Sec.  330.9.
    (d) Mortgage servicing accounts. Accounts maintained by a mortgage 
servicer, in a custodial or other fiduciary capacity, which are 
comprised of payments by mortgagors of principal and interest, shall be 
insured for the cumulative balance paid into the account by the 
mortgagors, up to the limit of the SMDIA per mortgagor. Accounts 
maintained by a mortgage servicer, in a custodial or other fiduciary 
capacity, which are comprised of payments by mortgagors of taxes and 
insurance premiums shall be added together and insured in accordance 
with paragraph (a) of this section for the ownership interest of each 
mortgagor in such accounts. This provision is effective as of October 
10, 2008, for all existing and future mortgage servicing accounts.
    (e) Custodian accounts for American Indians. Paragraph (a) of this 
section shall not apply to any interest an individual American Indian 
may have in funds deposited by the Bureau of Indian Affairs of the 
United States Department of the Interior (the ``BIA'') on behalf of that 
person pursuant to 25 U.S.C. 162(a), or by any other disbursing agent of 
the United States on behalf of that person pursuant to similar 
authority, in an insured depository institution. The interest of each 
American Indian in all such accounts maintained at the same insured 
depository institution shall be added together and insured, up to the 
SMDIA, separately from any other accounts maintained by that person in 
the same insured depository institution.

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006; 73 
FR 61660, Oct. 17, 2008; 74 FR 47716, Sept. 17, 2009]



Sec.  330.8  Annuity contract accounts.

    (a) Funds held by an insurance company or other corporation in a 
deposit account for the sole purpose of funding life insurance or 
annuity contracts and any benefits incidental to such contracts, shall 
be insured separately in the amount of up to the SMDIA per annuitant, 
provided that, pursuant to a state statute:
    (1) The corporation establishes a separate account for such funds;
    (2) The account cannot be charged with the liabilities arising out 
of any other business of the corporation; and
    (3) The account cannot be invaded by other creditors of the 
corporation in

[[Page 531]]

the event that the corporation becomes insolvent and its assets are 
liquidated.
    (b) Such insurance coverage shall be separate from the insurance 
provided for any other accounts maintained by the corporation or the 
annuitants at the same insured depository institution.

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006]



Sec.  330.9  Joint ownership accounts.

    (a) Separate insurance coverage. Qualifying joint accounts, whether 
owned as joint tenants with the right of survivorship, as tenants in 
common or as tenants by the entirety, shall be insured separately from 
any individually owned (single ownership) deposit accounts maintained by 
the co-owners. (Example: If A has a single ownership account and also is 
a joint owner of a qualifying joint account, A's interest in the joint 
account would be insured separately from his or her interest in the 
individual account.) Qualifying joint accounts in the names of both 
husband and wife which are comprised of community property funds shall 
be added together and insured up to twice the SMDIA, separately from any 
funds deposited into accounts bearing their individual names.
    (b) Determination of insurance coverage. The interests of each co-
owner in all qualifying joint accounts shall be added together and the 
total shall be insured up to the SMDIA. (Example: ``A&B'' have a 
qualifying joint account with a balance of $150,000; ``A&C'' have a 
qualifying joint account with a balance of $200,000; and ``A&B&C'' have 
a qualifying joint account with a balance of $375,000. A's combined 
ownership interest in all qualifying joint accounts would be $300,000 
($75,000 plus $100,000 plus $125,000); therefore, A's interest would be 
insured in the amount of $250,000 and uninsured in the amount of 
$50,000. B's combined ownership interest in all qualifying joint 
accounts would be $200,000 ($75,000 plus $125,000); therefore, B's 
interest would be fully insured. C's combined ownership interest in all 
qualifying joint accounts would be $225,000 ($100,000 plus $125,000); 
therefore, C's interest would be fully insured.
    (c) Qualifying joint accounts. (1) A joint deposit account shall be 
deemed to be a qualifying joint account, for purposes of this section, 
only if:
    (i) All co-owners of the funds in the account are ``natural 
persons'' (as defined in Sec.  330.1(l)); and
    (ii) Each co-owner has personally signed a deposit account signature 
card; and
    (iii) Each co-owner possesses withdrawal rights on the same basis.
    (2) The signature-card requirement of paragraph (c)(1)(ii) of this 
section shall not apply to certificates of deposit, to any deposit 
obligation evidenced by a negotiable instrument, or to any account 
maintained by an agent, nominee, guardian, custodian or conservator on 
behalf of two or more persons.
    (3) All deposit accounts that satisfy the criteria in paragraph 
(c)(1) of this section, and those accounts that come within the 
exception provided for in paragraph (c)(2) of this section, shall be 
deemed to be jointly owned provided that, in accordance with the 
provisions of Sec.  330.5(a), the FDIC determines that the deposit 
account records of the insured depository institution are clear and 
unambiguous as to the ownership of the accounts. If the deposit account 
records are ambiguous or unclear as to the manner in which the deposit 
accounts are owned, then the FDIC may, in its sole discretion, consider 
evidence other than the deposit account records of the insured 
depository institution for the purpose of establishing the manner in 
which the funds are owned. The signatures of two or more persons on the 
deposit account signature card or the names of two or more persons on a 
certificate of deposit or other deposit instrument shall be conclusive 
evidence that the account is a joint account (although not necessarily a 
qualifying joint account) unless the deposit records as a whole are 
ambiguous and some other evidence indicates, to the satisfaction of the 
FDIC, that there is a contrary ownership capacity.
    (d) Nonqualifying joint accounts. A deposit account held in two or 
more names which is not a qualifying joint account, for purposes of this 
section, shall be treated as being owned by each

[[Page 532]]

named owner, as an individual, corporation, partnership, or 
unincorporated association, as the case may be, and the actual ownership 
interest of each individual or entity in such account shall be added to 
any other single ownership accounts of such individual or other accounts 
of such entity, and shall be insured in accordance with the provisions 
of this part governing the insurance of such accounts.
    (e) Determination of interests. The interests of the co-owners of 
qualifying joint accounts, held as tenants in common, shall be deemed 
equal, unless otherwise stated in the depository institution's deposit 
account records. This section applies regardless of whether the 
conjunction ``and'' or ``or'' is used in the title of a joint deposit 
account, even when both terms are used, such as in the case of a joint 
deposit account with three or more co-owners.

[63 FR 25756, May 11, 1998, as amended at 64 FR 15656, Apr. 1, 1999; 64 
FR 62102, Nov. 16, 1999; 71 FR 14631, Mar. 23, 2006; 74 FR 47716, Sept. 
17, 2009; 76 FR 41395, July 14, 2011]



Sec.  330.10  Revocable trust accounts.

    (a) General rule. Except as provided in paragraph (e) of this 
section, the funds owned by an individual and deposited into one or more 
accounts with respect to which the owner evidences an intention that 
upon his or her death the funds shall belong to one or more 
beneficiaries shall be separately insured (from other types of accounts 
the owner has at the same insured depository institution) in an amount 
equal to the total number of different beneficiaries named in the 
account(s) multiplied by the SMDIA. This section applies to all accounts 
held in connection with informal and formal testamentary revocable 
trusts. Such informal trusts are commonly referred to as payable-on-
death accounts, in-trust-for accounts or Totten Trust accounts, and such 
formal trusts are commonly referred to as living trusts or family 
trusts. (Example 1: Account Owner ``A'' has a living trust account with 
four different beneficiaries named in the trust. A has no other 
revocable trust accounts at the same FDIC-insured institution. The 
maximum insurance coverage would be $1,000,000, determined by 
multiplying 4 times $250,000 (the number of beneficiaries times the 
SMDIA). (Example 2: Account Owner ``A'' has a payable-on-death account 
naming his niece and cousin as beneficiaries, and A also has, at the 
same FDIC-insured institution, another payable-on-death account naming 
the same niece and a friend as beneficiaries. The maximum coverage 
available to the account owner would be $750,000. This is because the 
account owner has named only three different beneficiaries in the 
revocable trust accounts--his niece and cousin in the first, and the 
same niece and a friend in the second. The naming of the same 
beneficiary in more than one revocable trust account, whether it be a 
payable-on-death account or living trust account, does not increase the 
total coverage amount.) (Example 3: Account Owner ``A'' establishes a 
living trust account, with a balance of $300,000, naming his two 
children ``B'' and ``C'' as beneficiaries. A also establishes, at the 
same FDIC-insured institution, a payable-on-death account, with a 
balance of $300,000, also naming his children B and C as beneficiaries. 
The maximum coverage available to A is $500,000, determined by 
multiplying 2 times $250,000 (the number of different beneficiaries 
times the SMDIA). A is uninsured in the amount of $100,000. This is 
because all funds that a depositor holds in both living trust accounts 
and payable-on-death accounts, at the same FDIC-insured institution and 
naming the same beneficiaries, are aggregated for insurance purposes and 
insured to the applicable coverage limits.)
    (b) Required intention and naming of beneficiaries. (1) The required 
intention in paragraph (a) of this section that upon the owner's death 
the funds shall belong to one or more beneficiaries must be manifested 
in the ``title'' of the account using commonly accepted terms such as, 
but not limited to, ``in trust for,'' ``as trustee for,'' ``payable-on-
death to,'' or any acronym therefor. For purposes of this requirement, 
``title'' includes the electronic deposit account records of the 
institution. (For example, the FDIC would recognize an account as a 
revocable trust account

[[Page 533]]

even if the title of the account signature card does not designate the 
account as a revocable trust account as long as the institution's 
electronic deposit account records identify (through a code or 
otherwise) the account as a revocable trust account.) The settlor of a 
revocable trust shall be presumed to own the funds deposited into the 
account.
    (2) For informal revocable trust accounts, the beneficiaries must be 
specifically named in the deposit account records of the insured 
depository institution.
    (c) Definition of beneficiary. For purposes of this section, a 
beneficiary includes a natural person as well as a charitable 
organization and other non-profit entity recognized as such under the 
Internal Revenue Code of 1986, as amended.
    (d) Interests of beneficiaries outside the definition of beneficiary 
in this section. If a beneficiary named in a trust covered by this 
section does not meet the definition of beneficiary in paragraph (c) of 
this section, the funds corresponding to that beneficiary shall be 
treated as the individually owned (single ownership) funds of the 
owner(s). As such, they shall be aggregated with any other single 
ownership accounts of such owner(s) and insured up to the SMDIA per 
owner. (Example: Account Owner ``A'' establishes a payable-on-death 
account naming a pet as beneficiary with a balance of $100,000. A also 
has an individual account at the same FDIC-insured institution with a 
balance of $175,000. Because the pet is not a ``beneficiary,'' the two 
accounts are aggregated and treated as a single ownership account. As a 
result, A is insured in the amount of $250,000, but is uninsured for the 
remaining $25,000.)
    (e) Revocable trust accounts with aggregate balances exceeding five 
times the SMDIA and naming more than five different beneficiaries. 
Notwithstanding the general coverage provisions in paragraph (a) of this 
section, for funds owned by an individual in one or more revocable trust 
accounts naming more than five different beneficiaries and whose 
aggregate balance is more than five times the SMDIA, the maximum 
revocable trust account coverage for the account owner shall be the 
greater of either: five times the SMDIA or the aggregate amount of the 
interests of each different beneficiary named in the trusts, to a limit 
of the SMDIA per different beneficiary. (Example 1: Account Owner ``A'' 
has a living trust with a balance of $1 million and names two friends, 
``B'' and ``C'' as beneficiaries. At the same FDIC-insured institution, 
A establishes a payable-on-death account, with a balance of $1 million 
naming his two cousins, ``D'' and ``E'' as beneficiaries. Coverage is 
determined under the general coverage provisions in paragraph (a) of 
this section, and not this paragraph (e). This is because all funds that 
A holds in both living trust accounts and payable-on-death accounts, at 
the same FDIC-insured institution, are aggregated for insurance 
purposes. Although A's aggregated balance of $2 million is more than 
five times the SMDIA, A names only four different beneficiaries, and 
coverage under this paragraph (e) applies only if there are more than 
five different beneficiaries. A is insured in the amount of $1 million 
(4 beneficiaries times the SMDIA), and uninsured for the remaining $1 
million.) (Example 2: Account Owner ``A'' has a living trust account 
with a balance of $1,500,000. Under the terms of the trust, upon A's 
death, A's three children are each entitled to $125,000, A's friend is 
entitled to $15,000, and a designated charity is entitled to $175,000. 
The trust also provides that the remainder of the trust assets shall 
belong to A's spouse. In this case, because the balance of the account 
exceeds $1,250,000 (5 times the SMDIA) and there are more than five 
different beneficiaries named in the trust, the maximum coverage 
available to A would be the greater of: $1,250,000 or the aggregate of 
each different beneficiary's interest to a limit of $250,000 per 
beneficiary. The beneficial interests in the trust for purposes of 
determining coverage are: $125,000 for each of the children (totaling 
$375,000), $15,000 for the friend, $175,000 for the charity, and 
$250,000 for the spouse (because the spouse's $935,000 is subject to the 
$250,000 per-beneficiary limitation). The aggregate beneficial interests 
total $815,000. Thus, the maximum coverage afforded to the account owner

[[Page 534]]

would be $1,250,000, the greater of $1,250,000 or $815,000.)
    (f) Co-owned revocable trust accounts. (1) Where an account 
described in paragraph (a) of this section is established by more than 
one owner, the respective interest of each account owner (which shall be 
deemed equal) shall be insured separately, per different beneficiary, up 
to the SMDIA, subject to the limitation imposed in paragraph (e) of this 
section. (Example 1: A and B, two individuals, establish a payable-on-
death account naming their three nieces as beneficiaries. Neither A nor 
B has any other revocable trust accounts at the same FDIC-insured 
institution. The maximum coverage afforded to A and B would be 
$1,500,000, determined by multiplying the number of owners (2) times the 
SMDIA ($250,000) times the number of different beneficiaries (3). In 
this example, A would be entitled to revocable trust coverage of 
$750,000 and B would be entitled to revocable trust coverage of 
$750,000.) (Example 2: A and B, two individuals, establish a payable-on-
death account naming their two children, two cousins, and a charity as 
beneficiaries. The balance in the account is $1,750,000. Neither A nor B 
has any other revocable trust accounts at the same FDIC-insured 
institution. The maximum coverage would be determined (under paragraph 
(a) of this section) by multiplying the number of account owners (2) 
times the number of different beneficiaries (5) times $250,000, totaling 
$2,500,000. Because the account balance ($1,750,000) is less than the 
maximum coverage amount ($2,500,000), the account would be fully 
insured.) (Example 3: A and B, two individuals, establish a living trust 
account with a balance of $3.75 million. Under the terms of the trust, 
upon the death of both A and B, each of their three children is entitled 
to $600,000, B's cousin is entitled to $380,000, A's friend is entitled 
to $70,000, and the remaining amount ($1,500,000) goes to a charity. 
Under paragraph (e) of this section, the maximum coverage, as to each 
co-owned account owner, would be the greater of $1,250,000 or the 
aggregate amount (as to each co-owner) of the interest of each different 
beneficiary named in the trust, to a limit of $250,000 per account owner 
per beneficiary. The beneficial interests in the trust considered for 
purposes of determining coverage for account owner A are: $750,000 for 
the children (each child's interest attributable to A, $300,000, is 
subject to the $250,000-per-beneficiary limitation), $190,000 for the 
cousin, $35,000 for the friend, and $250,000 for the charity (the 
charity's interest attributable to A, $750,000, is subject to the 
$250,000 per-beneficiary limitation). As to A, the aggregate amount of 
the beneficial interests eligible for deposit insurance coverage totals 
$1,225,000. Thus, the maximum coverage afforded to account co-owner A 
would be $1,250,000, which is the greater of $1,250,000 or the aggregate 
of all the beneficial interests attributable to A (limited to $250,000 
per beneficiary), which totaled slightly less at $1,225,000. Because B 
has equal ownership interest in the trust, the same analysis and 
coverage determination also would apply to B. Thus, of the total account 
balance of $3.75 million, $2.5 million would be insured and $1.25 
million would be uninsured.)
    (2) Notwithstanding paragraph (f)(1) of this section, where the 
owners of a co-owned revocable trust account are themselves the sole 
beneficiaries of the corresponding trust, the account shall be insured 
as a joint account under Sec.  330.9 and shall not be insured under the 
provisions of this section. (Example: If A and B establish a payable-on-
death account naming themselves as the sole beneficiaries of the 
account, the account will be insured as a joint account because the 
account does not satisfy the intent requirement (under paragraph (a) of 
this section) that the funds in the account belong to the named 
beneficiaries upon the owners' death. The beneficiaries are in fact the 
actual owners of the funds during the account owners' lifetimes.)
    (g) For deposit accounts held in connection with a living trust that 
provides for a life-estate interest for designated beneficiaries, the 
FDIC shall value each such life estate interest as the SMDIA for 
purposes of determining the insurance coverage available to the account 
owner under paragraph (e) of this section. (Example: Account Owner ``A'' 
has a living trust account with a balance of $1,500,000. Under the terms

[[Page 535]]

of the trust, A provides a life estate interest for his spouse. 
Moreover, A's three children are each entitled to $275,000, A's friend 
is entitled to $15,000, and a designated charity is entitled to 
$175,000. The trust also provides that the remainder of the trust assets 
shall belong to A's granddaughter. In this case, because the balance of 
the account exceeds $1,250,000 ((5) five times the SMDIA) and there are 
more than five different beneficiaries named in the trust, the maximum 
coverage available to A would be the greater of: $1,250,000 or the 
aggregate of each different beneficiary's interest to a limit of 
$250,000 per beneficiary. The beneficial interests in the trust 
considered for purposes of determining coverage are: $250,000 for the 
spouse's life estate, $750,000 for the children (because each child's 
$275,000 is subject to the $250,000 per-beneficiary limitation), $15,000 
for the friend, $175,000 for the charity, and $250,000 for the 
granddaughter (because the granddaughter's $310,000 remainder is limited 
by the $250,000 per-beneficiary limitation). The aggregate beneficial 
interests total $1,440,000. Thus, the maximum coverage afforded to the 
account owner would be $1,440,000, the greater of $1,250,000 or 
$1,440,000.)
    (h) Revocable trusts that become irrevocable trusts. Notwithstanding 
the provisions in section 330.13 on the insurance coverage of 
irrevocable trust accounts, if a revocable trust account converts in 
part or entirely to an irrevocable trust upon the death of one or more 
of the trust's owners, the trust account shall continue to be insured 
under the provisions of this section. (Example: Assume A and B have a 
trust account in connection with a living trust, of which they are joint 
grantors. If upon the death of either A or B the trust transforms into 
an irrevocable trust as to the deceased grantor's ownership in the 
trust, the account will continue to be insured under the provisions of 
this section.)
    (i) This section shall apply to all existing and future revocable 
trust accounts and all existing and future irrevocable trust accounts 
resulting from formal revocable trust accounts.

[74 FR 47716, Sept. 17, 2009]



Sec.  330.11  Accounts of a corporation, partnership 
or unincorporated association.

    (a) Corporate accounts. (1) The deposit accounts of a corporation 
engaged in any ``independent activity'' (as defined in Sec.  330.1(g)) 
shall be added together and insured up to the SMDIA in the aggregate. If 
a corporation has divisions or units which are not separately 
incorporated, the deposit accounts of those divisions or units shall be 
added to any other deposit accounts of the corporation. If a corporation 
maintains deposit accounts in a representative or fiduciary capacity, 
such accounts shall not be treated as the deposit accounts of the 
corporation but shall be treated as fiduciary accounts and insured in 
accordance with the provisions of Sec.  330.7.
    (2) Notwithstanding any other provision of this part, any trust or 
other business arrangement which has filed or is required to file a 
registration statement with the Securities and Exchange Commission 
pursuant to section 8 of the Investment Company Act of 1940 (15 U.S.C. 
80a-8) or that would be required so to register but for the fact it is 
not created under the laws of the United States or a state or but for 
sections 2(b), 3(c)(1), or 6(a)(1) of that act shall be deemed to be a 
corporation for purposes of determining deposit insurance coverage. An 
exception to this paragraph (a)(2) shall exist for any trust or other 
business arrangement established by a state or that is a state agency or 
state public instrumentality as part of a qualified tuition savings 
program under section 529 of the Internal Revenue Code (26 U.S.C. 529). 
A deposit account of such a trust or business arrangement shall not be 
deemed to be the deposit of a corporation provided that: The funds in 
the account may be traced to one or more particular investors or 
participants; and the existence of the trust relationships is disclosed 
in accordance with the requirements of Sec.  330.5. If these conditions 
are satisfied, each participant's funds shall be insured as a deposit 
account of the participant.
    (b) Partnership accounts. The deposit accounts of a partnership 
engaged in any ``independent activity'' (as defined in Sec.  330.1(g)) 
shall be added together and

[[Page 536]]

insured up to the SMDIA in the aggregate. Such insurance coverage shall 
be separate from any insurance provided for individually owned (single 
ownership) accounts maintained by the individual partners. A partnership 
shall be deemed to exist, for purposes of this paragraph, any time there 
is an association of two or more persons or entities formed to carry on, 
as co-owners, an unincorporated business for profit.
    (c) Unincorporated association accounts. The deposit accounts of an 
unincorporated association engaged in any independent activity shall be 
added together and insured up to the SMDIA in the aggregate, separately 
from the accounts of the person(s) or entity(ies) comprising the 
unincorporated association. An unincorporated association shall be 
deemed to exist, for purposes of this paragraph, whenever there is an 
association of two or more persons formed for some religious, 
educational, charitable, social or other noncommercial purpose.
    (d) Non-qualifying entities. The deposit accounts of an entity which 
is not engaged in an ``independent activity'' (as defined in Sec.  
330.1(g)) shall be deemed to be owned by the person or persons owning 
the corporation or comprising the partnership or unincorporated 
association, and, for deposit insurance purposes, the interest of each 
person in such a deposit account shall be added to any other deposit 
accounts individually owned by that person and insured up to the SMDIA 
in the aggregate.

[63 FR 25756, May 11, 1998, as amended at 70 FR 33692, June 9, 2005; 70 
FR 62059, Oct. 28, 2005; 71 FR 14631, Mar. 23, 2006]



Sec.  330.12  Accounts held by a depository institution as the trustee 
of an irrevocable trust.

    (a) Separate insurance coverage. ``Trust funds'' (as defined in 
Sec.  330.1(q)) held by an insured depository institution in its 
capacity as trustee of an irrevocable trust, whether held in its trust 
department, held or deposited in any other department of the fiduciary 
institution, or deposited by the fiduciary institution in another 
insured depository institution, shall be insured up to the SMDIA for 
each owner or beneficiary represented. This insurance shall be separate 
from, and in addition to, the insurance provided for any other deposits 
of the owners or the beneficiaries.
    (b) Determination of interests. The insurance for funds held by an 
insured depository institution in its capacity as trustee of an 
irrevocable trust shall be determined in accordance with the following 
provisions:
    (1) Allocated funds of a trust estate. If trust funds of a 
particular ``trust estate'' (as defined in Sec.  330.1(p)) are allocated 
by the fiduciary and deposited, the insurance with respect to such trust 
estate shall be determined by ascertaining the amount of its funds 
allocated, deposited and remaining to the credit of the claimant as 
fiduciary at the insured depository institution in default.
    (2) Interest of a trust estate in unallocated trust funds. If funds 
of a particular trust estate are commingled with funds of other trust 
estates and deposited by the fiduciary institution in one or more 
insured depository institutions to the credit of the depository 
institution as fiduciary, without allocation of specific amounts from a 
particular trust estate to an account in such institution(s), the 
percentage interest of that trust estate in the unallocated deposits in 
any institution in default is the same as that trust estate's percentage 
interest in the entire commingled investment pool.
    (c) Limitation on applicability. This section shall not apply to 
deposits of trust funds belonging to a trust which is classified as a 
corporation under Sec.  330.11(a)(2).

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006; 76 
FR 41395, July 14, 2011]



Sec.  330.13  Irrevocable trust accounts.

    (a) General rule. Funds representing the ``non-contingent trust 
interest(s)'' (as defined in Sec.  330.1(m)) of a beneficiary deposited 
into one or more deposit accounts established pursuant to one or more 
irrevocable trust agreements created by the same settlor(s) (grantor(s)) 
shall be added together and insured up to the SMDIA in the aggregate. 
Such insurance coverage shall be separate from the coverage provided for 
other accounts maintained by the settlor(s), trustee(s) or 
beneficiary(ies)

[[Page 537]]

of the irrevocable trust(s) at the same insured depository institution. 
Each ``trust interest'' (as defined in Sec.  330.1(r)) in any 
irrevocable trust established by two or more settlors shall be deemed to 
be derived from each settlor pro rata to his or her contribution to the 
trust.
    (b) Treatment of contingent trust interests. In the case of any 
trust in which certain trust interests do not qualify as non-contingent 
trust interests, the funds representing those interests shall be added 
together and insured up to the SMDIA in the aggregate. Such insurance 
coverage shall be in addition to the coverage provided for the funds 
representing non-contingent trust interests which are insured pursuant 
to paragraph (a) of this section.
    (c) Commingled accounts of bankruptcy trustees. Whenever a 
bankruptcy trustee appointed under title 11 of the United States Code 
commingles the funds of various bankruptcy estates in the same account 
at an insured depository institution, the funds of each title 11 
bankruptcy estate will be added together and insured up to the SMDIA, 
separately from the funds of any other such estate.

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006; 76 
FR 41395, July 14, 2011]



Sec.  330.14  Retirement and other employee benefit plan accounts.

    (a) ``Pass-through'' insurance. Any deposits of an employee benefit 
plan in an insured depository institution shall be insured on a ``pass-
through'' basis, in the amount of up to the SMDIA for the non-contingent 
interest of each plan participant, provided the rules in Sec.  330.5 are 
satisfied. Deposits eligible for coverage under paragraph (b)(2) of this 
section that also are deposits of a employee benefit plan or deposits of 
an deferred compensation plan described in section 457 of the Internal 
Revenue Code of 1986 (26 U.S.C. 457) in an insured depository 
institution shall be insured on a ``pass-through'' basis in the amount 
of $250,000 for the non-contingent interest of each plan participant, 
provided the rules in Sec.  330.5 are satisfied.
    (b) Aggregation--(1) Multiple plans. Funds representing the non-
contingent interests of a beneficiary in an employee benefit plan, or 
eligible deferred compensation plan described in section 457 of the 
Internal Revenue Code of 1986 (26 U.S.C. 457), which are deposited in 
one or more deposit accounts shall be aggregated with any other 
deposited funds representing such interests of the same beneficiary in 
other employee benefit plans, or eligible deferred compensation plans 
described in section 457 of the Internal Revenue Code of 1986, 
established by the same employer or employee organization.
    (2) Certain retirement accounts. Deposits in an insured depository 
institution made in connection with the following types of retirement 
plans shall be aggregated and insured in the amount of up to $250,000 
per participant:
    (i) Any individual retirement account described in section 408(a) of 
the Internal Revenue Code of 1986 (26 U.S.C. 408(a)):
    (ii) Any eligible deferred compensation plan described in section 
457 of the Internal Revenue Code of 1986 (26 U.S.C. 457); and
    (iii) Any individual account plan defined in section 3(34) of the 
Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1002) and any 
plan described in section 401(d) of the Internal Revenue Code of 1986 
(26 U.S.C. 401(d)), to the extent that participants and beneficiaries 
under such plans have the right to direct the investment of assets held 
in individual accounts maintained on their behalf by the plans.
    (c) Determination of interests--(1) Defined contribution plans. The 
value of an employee's non-contingent interest in a defined contribution 
plan shall be deemed to be the employee's account balance as of the date 
of default of the insured depository institution, regardless of whether 
said amount was derived, in whole or in part, from contributions of the 
employee and/or the employer to the account.
    (2) Defined benefit plans. The value of an employee's non-contingent 
interest in a defined benefit plan shall be deemed to be the present 
value of the employee's interest in the plan, evaluated in accordance 
with the method of calculation ordinarily used under such

[[Page 538]]

plan, as of the date of default of the insured depository institution.
    (3) Amounts taken into account. For the purposes of applying the 
rule under paragraph (b)(2) of this section, only the present vested and 
ascertainable interests of each participant in an employee benefit plan 
or ``457 Plan,'' excluding any remainder interest created by, or as a 
result of, the plan, shall be taken into account in determining the 
amount of deposit insurance accorded to the deposits of the plan.
    (d) Treatment of contingent interests. In the event that employees' 
interests in an employee benefit plan are not capable of evaluation in 
accordance with the provisions of this section, or an account 
established for any such plan includes amounts for future participants 
in the plan, payment by the FDIC with respect to all such interests 
shall not exceed the SMDIA in the aggregate.
    (e) Overfunded pension plan deposits. Any portion of an employee 
benefit plan's deposits which is not attributable to the interests of 
the beneficiaries under the plan shall be deemed attributable to the 
overfunded portion of the plan's assets and shall be aggregated and 
insured up to the SMDIA, separately from any other deposits.
    (f) Definitions of ``depositor'', ``employee benefit plan'', 
``employee organization'' and ``non-contingent interest''. Except as 
otherwise indicated in this section, for purposes of this section:
    (1) The term depositor means the person(s) administering or managing 
an employee benefit plan.
    (2) The term employee benefit plan has the same meaning given to 
such term in section 3(3) of the Employee Retirement Income Security Act 
of 1974 (ERISA) (29 U.S.C. 1002) and includes any plan described in 
section 401(d) of the Internal Revenue Code of 1986.
    (3) The term employee organization means any labor union, 
organization, employee representation committee, association, group, or 
plan, in which employees participate and which exists for the purpose, 
in whole or in part, of dealing with employers concerning an employee 
benefit plan, or other matters incidental to employment relationships; 
or any employees' beneficiary association organized for the purpose, in 
whole or in part, of establishing such a plan.
    (4) The term non-contingent interest means an interest capable of 
determination without evaluation of contingencies except for those 
covered by the present worth tables and rules of calculation for their 
use set forth in Sec.  20.2031-7 of the Federal Estate Tax Regulations 
(26 CFR 20.2031-7) or any similar present worth or life expectancy 
tables as may be published by the Internal Revenue Service.

[63 FR 25756, May 11, 1998, as amended at 64 FR 15657, Apr. 1, 1999; 71 
FR 14631, Mar. 23, 2006; 71 FR 53550, Sept. 12, 2006]



Sec.  330.15  Accounts held by government depositors.

    (a) Extent of insurance coverage--(1) Accounts of the United States. 
Each official custodian of funds of the United States lawfully 
depositing such funds in an insured depository institution shall be 
separately insured in the amount of:
    (i) Up to the SMDIA in the aggregate for all time and savings 
deposits; and
    (ii) Up to the SMDIA in the aggregate for all demand deposits.
    (2) Accounts of a state, county, municipality or political 
subdivision. (i) Each official custodian of funds of any state of the 
United States, or any county, municipality, or political subdivision 
thereof, lawfully depositing such funds in an insured depository 
institution in the state comprising the public unit or wherein the 
public unit is located (including any insured depository institution 
having a branch in said state) shall be separately insured in the amount 
of:
    (A) Up to the SMDIA in the aggregate for all time and savings 
deposits; and
    (B) Up to the SMDIA in the aggregate for all demand deposits.
    (ii) In addition, each such official custodian depositing such funds 
in an insured depository institution outside of the state comprising the 
public unit or wherein the public unit is located, shall be insured in 
the amount of up to the SMDIA in the aggregate for all deposits, 
regardless of whether they are time, savings or demand deposits.
    (3) Accounts of the District of Columbia. (i) Each official 
custodian of funds of

[[Page 539]]

the District of Columbia lawfully depositing such funds in an insured 
depository institution in the District of Columbia (including an insured 
depository institution having a branch in the District of Columbia) 
shall be separately insured in the amount of:
    (A) Up to the SMDIA in the aggregate for all time and savings 
deposits; and
    (B) Up to the SMDIA in the aggregate for all demand deposits.
    (ii) In addition, each such official custodian depositing such funds 
in an insured depository institution outside of the District of Columbia 
shall be insured in the amount of up to the SMDIA in the aggregate for 
all deposits, regardless of whether they are time, savings or demand 
deposits.
    (4) Accounts of the Commonwealth of Puerto Rico and other government 
possessions and territories. (i) Each official custodian of funds of the 
Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, the 
Trust Territory of the Pacific Islands, Guam, or The Commonwealth of the 
Northern Mariana Islands, or of any county, municipality, or political 
subdivision thereof lawfully depositing such funds in an insured 
depository institution in Puerto Rico, the Virgin Islands, American 
Samoa, the Trust Territory of the Pacific Islands, Guam, or The 
Commonwealth of the Northern Mariana Islands, respectively, shall be 
separately insured in the amount of:
    (A) Up to the SMDIA in the aggregate for all time and savings 
deposits; and
    (B) Up to the SMDIA in the aggregate for all demand deposits.
    (ii) In addition, each such official custodian depositing such funds 
in an insured depository institution outside of the commonwealth, 
possession or territory comprising the public unit or wherein the public 
unit is located, shall be insured in the amount of up to the SMDIA in 
the aggregate for all deposits, regardless of whether they are time, 
savings or demand deposits.
    (5) Accounts of an Indian tribe. Each official custodian of funds of 
an Indian tribe (as defined in 25 U.S.C. 1452(c)), including an agency 
thereof having official custody of tribal funds, lawfully depositing the 
same in an insured depository institution shall be separately insured in 
the amount of:
    (i) Up to the SMDIA in the aggregate for all time and savings 
deposits; and
    (ii) Up to the SMDIA in the aggregate for all demand deposits.
    (b) Rules relating to the ``official custodian''--(1) Qualifications 
for an ``official custodian''. In order to qualify as an ``official 
custodian'' for the purposes of paragraph (a) of this section, such 
custodian must have plenary authority, including control, over funds 
owned by the public unit which the custodian is appointed or elected to 
serve. Control of public funds includes possession, as well as the 
authority to establish accounts for such funds in insured depository 
institutions and to make deposits, withdrawals, and disbursements of 
such funds.
    (2) Official custodian of the funds of more than one public unit. 
For the purposes of paragraph (a) of this section, if the same person is 
an official custodian of the funds of more than one public unit, he or 
she shall be separately insured with respect to the funds held by him or 
her for each such public unit, but shall not be separately insured by 
virtue of holding different offices in such public unit or, except as 
provided in paragraph (c) of this section, holding such funds for 
different purposes.
    (3) Split of authority or control over public unit funds. If the 
exercise of authority or control over the funds of a public unit 
requires action by, or the consent of, two or more officers, employees, 
or agents of such public unit, then they will be treated as one 
``official custodian'' for the purposes of this section.
    (c) Public bond issues. Where an officer, agent or employee of a 
public unit has custody of certain funds which by law or under a bond 
indenture are required to be set aside to discharge a debt owed to the 
holders of notes or bonds issued by the public unit, any deposit of such 
funds in an insured depository institution shall be deemed to be a 
deposit by a trustee of trust funds of which the noteholders or 
bondholders are pro rata beneficiaries, and the beneficial interest of 
each noteholder or bondholder in the deposit shall be separately insured 
up to the SMDIA.

[[Page 540]]

    (d) Definition of ``political subdivision''. The term ``political 
subdivision'' 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. It also includes any subdivision of a 
public unit mentioned in paragraphs (a)(2), (a)(3) and (a)(4) of this 
section or any principal department of such public unit:
    (1) The creation of which subdivision or department has been 
expressly authorized by the law of such public unit;
    (2) To which some functions of government have been delegated by 
such law; and
    (3) Which is empowered to exercise exclusive control over funds for 
its exclusive use.

[63 FR 25756, May 11, 1998, as amended at 71 FR 14631, Mar. 23, 2006]



Sec.  330.16  [Reserved]



Sec.  330.101  Premiums.

    This interpretive rule describes certain payments that are not 
deemed to be ``interest'' as defined in Sec.  330.1(k).
    (a) Premiums, whether in the form of merchandise, credit, or cash, 
given by a bank to the holder of a deposit will not be regarded as 
``interest'' as defined in Sec.  330.1(k) if:
    (1) The premium is given to the depositor only at the time of the 
opening of a new account or an addition to an existing account;
    (2) No more than two premiums per deposit are given in any twelve-
month interval; and
    (3) The value of the premium (in the case of merchandise, the total 
cost to the bank, including shipping, warehousing, packaging, and 
handling costs) does not exceed $10 for a deposit of less than $5,000 or 
$20 for a deposit of $5,000 or more.
    (b) The costs of premiums may not be averaged.
    (c) A bank may not solicit funds for deposit on the basis that the 
bank will divide the funds into several accounts for the purpose of 
enabling the bank to pay the depositor more than two premiums within a 
twelve-month interval on the solicited funds.
    (d) The bank must retain sufficient information for examiners to 
determine that the requirements of this section have been satisfied.
    (e) Notwithstanding paragraph (a) of this section, any premium that 
is not, directly or indirectly, related to or dependent on the balance 
in a demand deposit account and the duration of the account balance 
shall not be considered the payment of interest on a demand deposit 
account and shall not be subject to the limitations in paragraph (a) of 
this section.

[76 FR 41395, July 14, 2011]

                           PART 331 [RESERVED]



PART 332_PRIVACY OF CONSUMER FINANCIAL INFORMATION--Table of Contents



Sec.
332.1 Purpose and scope.
332.2 Model privacy form and examples.
332.3 Definitions.

                  Subpart A_Privacy and Opt Out Notices

332.4 Initial privacy notice to consumers required.
332.5 Annual privacy notice to customers required.
332.6 Information to be included in privacy notices.
332.7 Form of opt out notice to consumers; opt out methods.
332.8 Revised privacy notices.
332.9 Delivering privacy and opt out notices.

                     Subpart B_Limits on Disclosures

332.10 Limits on disclosure of nonpublic personal information to 
          nonaffiliated third parties.
332.11 Limits on redisclosure and reuse of information.
332.12 Limits on sharing account number information for marketing 
          purposes.

                          Subpart C_Exceptions

332.13 Exception to opt out requirements for service providers and joint 
          marketing.
332.14 Exceptions to notice and opt out requirements for processing and 
          servicing transactions.
332.15 Other exceptions to notice and opt out requirements.

[[Page 541]]

            Subpart D_Relation to Other Laws; Effective Date

332.16 Protection of Fair Credit Reporting Act.
332.17 Relation to State laws.
332.18 Effective date; transition rule.

Appendix A to Part 332--Model Privacy Form

    Authority: 12 U.S.C. 1819 (Seventh and Tenth); 15 U.S.C. 6801 et 
seq.

    Source: 65 FR 35216, June 1, 2000, unless otherwise noted.



Sec.  332.1  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 Sec. Sec.  332.13, 332.14, and 332.15.
    (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 
the United States offices of entities for which the Federal Deposit 
Insurance Corporation (FDIC) has primary federal supervisory authority. 
They are referred to in this part as ``you.'' These are: banks insured 
by the FDIC (other than members of the Federal Reserve System), insured 
state branches of foreign banks, and certain subsidiaries of such 
entities.
    (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.  332.2  Model privacy form and examples.

    (a) Model privacy form. Use of the model privacy form in appendix A 
of this part, consistent with the instructions in appendix A, 
constitutes compliance with the notice content requirements of 
Sec. Sec.  332.6 and 332.7 of this part, although use of the model 
privacy form is not required.
    (b) Examples. The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.

[74 FR 62935, Dec. 1, 2009]



Sec.  332.3  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.
    (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;

[[Page 542]]

    (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 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,

[[Page 543]]

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 FDIC 
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 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

[[Page 544]]

    (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.
    (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:

[[Page 545]]

    (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.
    (q) You means:
    (1) A bank insured by the FDIC (other than a member of the Federal 
Reserve System);
    (2) An insured state branch of a foreign bank; and
    (3) A subsidiary of either such entity except:
    (i) A broker or dealer that is registered under the Securities and 
Exchange Act of 1934 (15 U.S.C. 78a et seq.);
    (ii) A registered investment adviser, properly registered by or on 
behalf of either the Securities Exchange Commission or any State, with 
respect to its investment advisory activities and its activities 
incidental to those investment advisory activities;
    (iii) An investment company that is registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 et seq.); or
    (iv) An insurance company, with respect to its insurance activities 
and its activities incidental to those insurance activities, that is 
subject to supervision by a State insurance regulator.



                  Subpart A_Privacy and Opt Out Notices



Sec.  332.4  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 Sec. Sec.  332.14 and 
332.15.
    (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 
Sec. Sec.  332.14 and 332.15; 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.

[[Page 546]]

    (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
    (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.  332.8, 
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.  332.9. If 
you use a short-form initial notice for non-customers according to Sec.  
332.6(d), you may deliver your privacy notice according to Sec.  
332.6(d)(3).



Sec.  332.5  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

[[Page 547]]

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.
    (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.  
332.4(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.  332.9.



Sec.  332.6  Information to be included in privacy notices.

    (a) General rule. The initial, annual and revised privacy notices 
that you provide under Sec. Sec.  332.4, 332.5, and 332.8 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 Sec. Sec.  332.14 and 
332.15;
    (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 Sec. Sec.  332.14 and 332.15;
    (5) If you disclose nonpublic personal information to a 
nonaffiliated third party under Sec.  332.13 (and no other exception in 
Sec.  332.14 or 332.15 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.  332.10(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 Sec. Sec.  332.14 and 332.15, you are not 
required to list those exceptions in the initial or

[[Page 548]]

annual privacy notices required by Sec. Sec.  332.4 and 332.5. When 
describing the categories with respect to those parties, it is 
sufficient to state that you make disclosures to other nonaffiliated 
companies:
    (1) For your everyday business purposes, such as [include all that 
apply] to process transactions, maintain account(s), respond to court 
orders and legal investigations, or report to credit bureaus; or
    (2) 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.
    (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.  332.13 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 Sec. Sec.  332.14 and 332.15, 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 
Sec. Sec.  332.4(a)(2), 332.7(b), and 332.7(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.  332.7.
    (2) A short-form initial notice must:

[[Page 549]]

    (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.  332.9. 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.  332.9.
    (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 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) Model privacy form. Pursuant to Sec.  332.2(a) of this part, a 
model privacy form that meets the notice content requirements of this 
section is included in appendix A of this part.

[65 FR 35216, June 1, 2000, as amended at 74 FR 62935, Dec. 1, 2009]



Sec.  332.7  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.  332.10(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.  332.6(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 
provide 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

[[Page 550]]

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.  332.4.
    (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.  332.4, 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:
    (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.  332.9.
    (i) Model privacy form. Pursuant to Sec.  332.2(a) of this part, a 
model privacy form that meets the notice content requirements of this 
section is included in Appendix A of this part.

[65 FR 35216, June 1, 2000, as amended at 74 FR 62936, Dec. 1, 2009]



Sec.  332.8  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.  332.4, unless:

[[Page 551]]

    (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 Sec. Sec.  
332.13, 332.14, and 332.15, 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.  332.9.



Sec.  332.9  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; or
    (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; or
    (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.  
332.4(a)(1), the annual notice required by Sec.  332.5(a), and the 
revised notice required by Sec.  332.8 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

[[Page 552]]

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 Sec. Sec.  332.4(a), 
332.5(a), and 332.8(a), respectively, by providing one notice to those 
consumers jointly.



                     Subpart B_Limits on Disclosures



Sec.  332.10  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 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.  332.4;
    (ii) You have provided to the consumer an opt out notice as required 
in Sec.  332.7;
    (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 Sec. Sec.  
332.13, 332.14, and 332.15.
    (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.  332.11  Limits on redisclosure and reuse of information.

    (a)(1) Information you receive under an exception. If you receive 
nonpublic personal information from a nonaffiliated

[[Page 553]]

financial institution under an exception in Sec.  332.14 or 332.15 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.  332.14 or 332.15 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.  332.14(a), you may disclose that 
information under any exception in Sec.  332.14 or 332.15 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 personal information from a nonaffiliated financial 
institution other than under an exception in Sec.  332.14 or 332.15 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.  332.14 and 
332.15:
    (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.  332.14 or 332.15, 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.  332.14 or 332.15 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.  332.14 or 332.15 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.  332.14 or 332.15 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.

[[Page 554]]



Sec.  332.12  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.
    (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.  332.13  Exception to opt out requirements for service providers 
and joint marketing.

    (a) General rule. (1) The opt out requirements in Sec. Sec.  332.7 
and 332.10 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.  332.4; 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.  332.14 or 332.15 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.  332.14 or 332.15 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.  332.14  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.  332.4(a)(2), for the opt 
out in Sec. Sec.  332.7 and 332.10 and for service providers and joint 
marketing in Sec.  332.13 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;

[[Page 555]]

    (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;
    (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; or
    (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.  332.15  Other exceptions to notice and opt out requirements.

    (a) Exceptions to opt out requirements. The requirements for initial 
notice in Sec.  332.4(a)(2), for the opt out in Sec. Sec.  332.7 and 
332.10, and for service providers and joint marketing in Sec.  332.13 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

[[Page 556]]

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 opt out of future disclosures of nonpublic personal information 
as permitted under Sec.  332.7(f).



            Subpart D_Relation to Other Laws; Effective Date



Sec.  332.16  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.  332.17  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 FDIC, on the 
Federal Trade Commission's own motion, or upon the petition of any 
interested party.



Sec.  332.18  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 FDIC 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.  332.4, 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.  332.13(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.

[[Page 557]]





             Sec. Appendix A to Part 332--Model Privacy Form

                        A. The Model Privacy Form
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[GRAPHIC] [TIFF OMITTED] TR01DE09.020

                         B. General Instructions

                  1. How the Model Privacy Form Is Used

    (a) The model form may be used, at the option of a financial 
institution, including a group of financial institutions that use a 
common privacy notice, to meet the content requirements of the privacy 
notice and opt-out notice set forth in Sec. Sec.  332.6 and 332.7 of 
this part.
    (b) The model form is a standardized form, including page layout, 
content, format, style, pagination, and shading. Institutions seeking to 
obtain the safe harbor through use of the model form may modify it only 
as described in these Instructions.
    (c) 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 [15 U.S.C. 1681-
1681x] (FCRA), 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.
    (d) The word ``customer'' may be replaced by the word ``member'' 
whenever it appears in the model form, as appropriate.

                2. The Contents of the Model Privacy Form

    The model form consists of two pages, which may be printed on both 
sides of a single sheet of paper, or may appear on two separate pages. 
Where an institution provides a long list of institutions at the end of 
the model form in accordance with Instruction C.3(a)(1), or provides 
additional information in accordance with Instruction C.3(c), and such 
list or additional information exceeds the space available on page two 
of the model form, such list or additional information may extend to a 
third page.
    (a) Page One. The first page consists of the following components:
    (1) Date last revised (upper right-hand corner).
    (2) Title.
    (3) Key frame (Why?, What?, How?).
    (4) Disclosure table (``Reasons we can share your personal 
information'').
    (5) ``To limit our sharing'' box, as needed, for the financial 
institution's opt-out information.
    (6) ``Questions'' box, for customer service contact information.
    (7) Mail-in opt-out form, as needed.
    (b) Page Two. The second page consists of the following components:
    (1) Heading (Page 2).
    (2) Frequently Asked Questions (``Who we are'' and ``What we do'').
    (3) Definitions.
    (4) ``Other important information'' box, as needed.

                 3. The Format of the Model Privacy Form

    The format of the model form may be modified only as described 
below.
    (a) Easily readable type font. Financial institutions that use the 
model form must use an easily readable type font. While a number of 
factors together produce easily readable type font, institutions are 
required to use a minimum of 10-point font (unless otherwise expressly 
permitted in these Instructions) and sufficient spacing between the 
lines of type.
    (b) Logo. A financial institution may include a corporate logo on 
any page of the notice, so long as it does not interfere with the

[[Page 564]]

readability of the model form or the space constraints of each page.
    (c) Page size and orientation. Each page of the model form must be 
printed on paper in portrait orientation, the size of which must be 
sufficient to meet the layout and minimum font size requirements, with 
sufficient white space on the top, bottom, and sides of the content.
    (d) Color. The model form must be printed on white or light color 
paper (such as cream) with black or other contrasting ink color. Spot 
color may be used to achieve visual interest, so long as the color 
contrast is distinctive and the color does not detract from the 
readability of the model form. Logos may also be printed in color.
    (e) Languages. The model form may be translated into languages other 
than English.

            C. Information Required in the Model Privacy Form

    The information in the model form may be modified only as described 
below:

1. Name of the Institution or Group of Affiliated Institutions Providing 
                               the Notice

    Insert the name of the financial institution providing the notice or 
a common identity of affiliated institutions jointly providing the 
notice on the form wherever [name of financial institution] appears.

                               2. Page One

    (a) Last revised date. The financial institution must insert in the 
upper right-hand corner the date on which the notice was last revised. 
The information shall appear in minimum 8-point font as ``rev. [month/
year]'' using either the name or number of the month, such as ``rev. 
July 2009'' or ``rev. 7/09''.
    (b) General instructions for the ``What?'' box. (1) The bulleted 
list identifies the types of personal information that the institution 
collects and shares. All institutions must use the term ``Social 
Security number'' in the first bullet.
    (2) Institutions must use five (5) of the following terms to 
complete the bulleted list: income; account balances; payment history; 
transaction history; transaction or loss history; credit history; credit 
scores; assets; investment experience; credit-based insurance scores; 
insurance claim history; medical information; overdraft history; 
purchase history; account transactions; risk tolerance; medical-related 
debts; credit card or other debt; mortgage rates and payments; 
retirement assets; checking account information; employment information; 
wire transfer instructions.
    (c) General instructions for the disclosure table. The left column 
lists reasons for sharing or using personal information. Each reason 
correlates to a specific legal provision described in paragraph C.2(d) 
of this Instruction. In the middle column, each institution must provide 
a ``Yes'' or ``No'' response that accurately reflects its information 
sharing policies and practices with respect to the reason listed on the 
left. In the right column, each institution must provide in each box one 
of the following three (3) responses, as applicable, that reflects 
whether a consumer can limit such sharing: ``Yes'' if it is required to 
or voluntarily provides an opt-out; ``No'' if it does not provide an 
opt-out; or ``We don't share'' if it answers ``No'' in the middle 
column. Only the sixth row (``For our affiliates to market to you'') may 
be omitted at the option of the institution. See paragraph C.2(d)(6) of 
this Instruction.
    (d) Specific disclosures and corresponding legal provisions. (1) For 
our everyday business purposes. This reason incorporates sharing 
information under Sec. Sec.  332.14 and 332.15 and with service 
providers pursuant to Sec.  332.13 of this part other than the purposes 
specified in paragraphs C.2(d)(2) or C.2(d)(3) of these Instructions.
    (2) For our marketing purposes. This reason incorporates sharing 
information with service providers by an institution for its own 
marketing pursuant to Sec.  332.13 of this part. An institution that 
shares for this reason may choose to provide an opt-out.
    (3) For joint marketing with other financial companies. This reason 
incorporates sharing information under joint marketing agreements 
between two or more financial institutions and with any service provider 
used in connection with such agreements pursuant to Sec.  332.13 of this 
part. An institution that shares for this reason may choose to provide 
an opt-out.
    (4) For our affiliates' everyday business purposes--information 
about transactions and experiences. This reason incorporates sharing 
information specified in sections 603(d)(2)(A)(i) and (ii) of the FCRA. 
An institution that shares for this reason may choose to provide an opt-
out.
    (5) For our affiliates' everyday business purposes--information 
about creditworthiness. This reason incorporates sharing information 
pursuant to section 603(d)(2)(A)(iii) of the FCRA. An institution that 
shares for this reason must provide an opt-out.
    (6) For our affiliates to market to you. This reason incorporates 
sharing information specified in section 624 of the FCRA. This reason 
may be omitted from the disclosure table when: The institution does not 
have affiliates (or does not disclose personal information to its 
affiliates); the institution's affiliates do not use personal 
information in a manner that requires an opt-out; or the institution 
provides the affiliate marketing notice separately. Institutions that 
include

[[Page 565]]

this reason must provide an opt-out of indefinite duration. An 
institution that is required to provide an affiliate marketing opt-out, 
but does not include that opt-out in the model form under this part, 
must comply with section 624 of the FCRA and 12 CFR part 334, subpart C, 
with respect to the initial notice and opt-out and any subsequent 
renewal notice and opt-out. An institution not required to provide an 
opt-out under this subparagraph may elect to include this reason in the 
model form.
    (7) For nonaffiliates to market to you. This reason incorporates 
sharing described in Sec. Sec.  332.7 and 332.10(a) of this part. An 
institution that shares personal information for this reason must 
provide an opt-out.
    (e) To limit our sharing: A financial institution must include this 
section of the model form only if it provides an opt-out. The word 
``choice'' may be written in either the singular or plural, as 
appropriate. Institutions must select one or more of the applicable opt-
out methods described: Telephone, such as by a toll-free number; a Web 
site; or use of a mail-in opt-out form. Institutions may include the 
words ``toll-free'' before telephone, as appropriate. An institution 
that allows consumers to opt out online must provide either a specific 
Web address that takes consumers directly to the opt-out page or a 
general Web address that provides a clear and conspicuous direct link to 
the opt-out page. The opt-out choices made available to the consumer who 
contacts the institution through these methods must correspond 
accurately to the ``Yes'' responses in the third column of the 
disclosure table. In the part titled ``Please note'' institutions may 
insert a number that is 30 or greater in the space marked ``[30].'' 
Instructions on voluntary or state privacy law opt-out information are 
in paragraph C.2(g)(5) of these Instructions.
    (f) Questions box. Customer service contact information must be 
inserted as appropriate, where [phone number] or [Web site] appear. 
Institutions may elect to provide either a phone number, such as a toll-
free number, or a Web address, or both. Institutions may include the 
words ``toll-free'' before the telephone number, as appropriate.
    (g) Mail-in opt-out form. Financial institutions must include this 
mail-in form only if they state in the ``To limit our sharing'' box that 
consumers can opt out by mail. The mail-in form must provide opt-out 
options that correspond accurately to the ``Yes'' responses in the third 
column in the disclosure table. Institutions that require customers to 
provide only name and address may omit the section identified as 
``[account ].'' Institutions that require additional or different 
information, such as a random opt-out number or a truncated account 
number, to implement an opt-out election should modify the ``[account 
]'' reference accordingly. This includes institutions that require 
customers with multiple accounts to identify each account to which the 
opt-out should apply. An institution must enter its opt-out mailing 
address: In the far right of this form (see version 3); or below the 
form (see version 4). The reverse side of the mail-in opt-out form must 
not include any content of the model form.
    (1) Joint accountholder. Only institutions that provide their joint 
accountholders the choice to opt out for only one accountholder, in 
accordance with paragraph C.3(a)(5) of these Instructions, must include 
in the far left column of the mail-in form the following statement: ``If 
you have a joint account, your choice(s) will apply to everyone on your 
account unless you mark below. [square] Apply my choice(s) only to me.'' 
The word ``choice'' may be written in either the singular or plural, as 
appropriate. Financial institutions that provide insurance products or 
services, provide this option, and elect to use the model form may 
substitute the word ``policy'' for ``account'' in this statement. 
Institutions that do not provide this option may eliminate this left 
column from the mail-in form.
    (2) FCRA Section 603(d)(2)(A)(iii) opt-out. If the institution 
shares personal information pursuant to section 603(d)(2)(A)(iii) of the 
FCRA, it must include in the mail-in opt-out form the following 
statement: ``[square] Do not share information about my creditworthiness 
with your affiliates for their everyday business purposes.''
    (3) FCRA Section 624 opt-out. If the institution incorporates 
section 624 of the FCRA in accord with paragraph C.2(d)(6) of these 
Instructions, it must include in the mail-in opt-out form the following 
statement: ``[square] Do not allow your affiliates to use my personal 
information to market to me.''
    (4) Nonaffiliate opt-out. If the financial institution shares 
personal information pursuant to Sec.  332.10(a) of this part, it must 
include in the mail-in opt-out form the following statement: ``[square] 
Do not share my personal information with nonaffiliates to market their 
products and services to me.''
    (5) Additional opt-outs. Financial institutions that use the 
disclosure table to provide opt-out options beyond those required by 
Federal law must provide those opt-outs in this section of the model 
form. A financial institution that chooses to offer an opt-out for its 
own marketing in the mail-in opt-out form must include one of the two 
following statements: ``[square] Do not share my personal information to 
market to me.'' or ``[square] Do not use my personal information to 
market to me.'' A financial institution that chooses to offer an opt-out 
for joint marketing must include the following statement: ``[square] Do 
not share my personal information with other financial institutions to 
jointly market to me.''

[[Page 566]]

    (h) Barcodes. A financial institution may elect to include a barcode 
and/or ``tagline'' (an internal identifier) in 6-point font at the 
bottom of page one, as needed for information internal to the 
institution, so long as these do not interfere with the clarity or text 
of the form.

                               3. Page Two

    (a) General Instructions for the Questions. Certain of the Questions 
may be customized as follows:
    (1) ``Who is providing this notice?'' This question may be omitted 
where only one financial institution provides the model form and that 
institution is clearly identified in the title on page one. Two or more 
financial institutions that jointly provide the model form must use this 
question to identify themselves as required by Sec.  332.9(f) of this 
part. Where the list of institutions exceeds four (4) lines, the 
institution must describe in the response to this question the general 
types of institutions jointly providing the notice and must separately 
identify those institutions, in minimum 8-point font, directly following 
the ``Other important information'' box, or, if that box is not included 
in the institution's form, directly following the ``Definitions.'' The 
list may appear in a multi-column format.
    (2) ``How does [name of financial institution] protect my personal 
information?'' The financial institution may only provide additional 
information pertaining to its safeguards practices following the 
designated response to this question. Such information may include 
information about the institution's use of cookies or other measures it 
uses to safeguard personal information. Institutions are limited to a 
maximum of 30 additional words.
    (3) ``How does [name of financial institution] collect my personal 
information?'' Institutions must use five (5) of the following terms to 
complete the bulleted list for this question: Open an account; deposit 
money; pay your bills; apply for a loan; use your credit or debit card; 
seek financial or tax advice; apply for insurance; pay insurance 
premiums; file an insurance claim; seek advice about your investments; 
buy securities from us; sell securities to us; direct us to buy 
securities; direct us to sell your securities; make deposits or 
withdrawals from your account; enter into an investment advisory 
contract; give us your income information; provide employment 
information; give us your employment history; tell us about your 
investment or retirement portfolio; tell us about your investment or 
retirement earnings; apply for financing; apply for a lease; provide 
account information; give us your contact information; pay us by check; 
give us your wage statements; provide your mortgage information; make a 
wire transfer; tell us who receives the money; tell us where to send the 
money; show your government-issued ID; show your driver's license; order 
a commodity futures or option trade. Institutions that collect personal 
information from their affiliates and/or credit bureaus must include 
after the bulleted list the following statement: ``We also collect your 
personal information from others, such as credit bureaus, affiliates, or 
other companies.'' Institutions that do not collect personal information 
from their affiliates or credit bureaus but do collect information from 
other companies must include the following statement instead: ``We also 
collect your personal information from other companies.'' Only 
institutions that do not collect any personal information from 
affiliates, credit bureaus, or other companies can omit both statements.
    (4) ``Why can't I limit all sharing?'' Institutions that describe 
state privacy law provisions in the ``Other important information'' box 
must use the bracketed sentence: ``See below for more on your rights 
under state law.'' Other institutions must omit this sentence.
    (5) ``What happens when I limit sharing for an account I hold 
jointly with someone else?'' Only financial institutions that provide 
opt-out options must use this question. Other institutions must omit 
this question. Institutions must choose one of the following two 
statements to respond to this question: ``Your choices will apply to 
everyone on your account.'' or ``Your choices will apply to everyone on 
your account--unless you tell us otherwise.'' Financial institutions 
that provide insurance products or services and elect to use the model 
form may substitute the word ``policy'' for ``account'' in these 
statements.
    (b) General Instructions for the Definitions. The financial 
institution must customize the space below the responses to the three 
definitions in this section. This specific information must be in 
italicized lettering to set off the information from the standardized 
definitions.
    (1) Affiliates. As required by Sec.  332.6(a)(3) of this part, where 
[affiliate information] appears, the financial institution must:
    (i) If it has no affiliates, state: ``[name of financial 
institution] has no affiliates'';
    (ii) If it has affiliates but does not share personal information, 
state: ``[name of financial institution] does not share with our 
affiliates''; or
    (iii) If it shares with its affiliates, state, as applicable: ``Our 
affiliates include companies with a [common corporate identity of 
financial institution] name; financial companies such as [insert 
illustrative list of companies]; nonfinancial companies, such as [insert 
illustrative list of companies]; and others, such as [insert 
illustrative list].''
    (2) Nonaffiliates. As required by Sec.  332.6(c)(3) of this part, 
where [nonaffiliate information] appears, the financial institution 
must:

[[Page 567]]

    (i) If it does not share with nonaffiliated third parties, state: 
``[name of financial institution] does not share with nonaffiliates so 
they can market to you''; or
    (ii) If it shares with nonaffiliated third parties, state, as 
applicable: ``Nonaffiliates we share with can include [list categories 
of companies such as mortgage companies, insurance companies, direct 
marketing companies, and nonprofit organizations].''
    (3) Joint Marketing. As required by Sec.  332.13 of this part, where 
[joint marketing] appears, the financial institution must:
    (i) If it does not engage in joint marketing, state: ``[name of 
financial institution] doesn't jointly market''; or
    (ii) If it shares personal information for joint marketing, state, 
as applicable: ``Our joint marketing partners include [list categories 
of companies such as credit card companies].''
    (c) General instructions for the ``Other important information'' 
box. This box is optional. The space provided for information in this 
box is not limited. Only the following types of information can appear 
in this box.
    (1) State and/or international privacy law information; and/or
    (2) Acknowledgment of receipt form.

[74 FR 69236, Dec. 1, 2009]



PART 333_EXTENSION OF CORPORATE POWERS--Table of Contents



                               Regulations

Sec.
333.1 Classification of general character of business.
333.2 Change in general character of business.
333.3 Consent required for exercise of trust powers.
333.4 Conversions from mutual to stock form.

                             Interpretations

333.101 Prior consent not required.

    Authority: 12 U.S.C. 1816; 1817(i); 1818; 1819(a) (``Seventh'', 
``Eighth'', and ``Tenth''), 1828, 1828(m), 1831p-1(c), 5414 and 5415.

                               Regulations



Sec.  333.1  Classification of general character of business.

    State nonmember insured banks are divided into five categories for 
the purpose of classifying their general character or type of business, 
\2\ viz: commercial banks, banks and trust companies, savings banks 
(including mutual and stock), industrial banks, and cash depositories.
---------------------------------------------------------------------------

    \2\ A bank's business may include two or more of the general 
classifications.

[15 FR 8644, Dec. 6, 1950]



Sec.  333.2  Change in general character of business.

    No State nonmember insured bank (except a District bank) or branch 
thereof shall hereafter cause or permit any change to be made in the 
general character or type of business exercised by it after the 
effective date of this part without the prior written consent of the 
Corporation.

[15 FR 8644, Dec. 6, 1950]



Sec.  333.3  Consent required for exercise of trust powers.

    Except as provided in 12 CFR 303.242(a), a State nonmember bank or 
State savings association seeking to exercise trust powers must obtain 
prior written consent from the FDIC. Procedures for obtaining the FDIC's 
prior written consent are set forth in 12 CFR 303.242.

[83 FR 60337, Nov. 26, 2018]



Sec.  333.4  Conversions from mutual to stock form.

    (a) Scope. This section applies to the conversion of insured mutual 
state savings banks to the stock form of ownership. It supplements the 
procedural and other requirements for such conversions in subpart I of 
part 303 of this chapter. This section also applies, to the extent 
appropriate, to the reorganization of insured mutual state savings banks 
to the mutual holding company form of ownership. As determined by the 
Board of Directors of the FDIC on a case-by-case basis, the requirements 
of paragraphs (d), (e), and (f) of this section do not apply to mutual-
to-stock conversions of insured mutual state savings banks whose capital 
category under Sec.  325.103 of this chapter or Sec.  324.403, as 
applicable, is ``undercapitalized'', ``significantly undercapitalized'' 
or ``critically undercapitalized''. As determined by the Board of 
Directors of the FDIC on a case-by-case basis, the requirements of 
paragraphs (d), (e), and (f) of this section do not apply to mutual-to-
stock conversions of insured mutual state savings banks whose capital 
category

[[Page 568]]

under Sec.  324.403 of this chapter is ``undercapitalized'', 
``significantly undercapitalized'' or ``critically undercapitalized''.
    (b) Definition of Eligible Depositor. For purposes of this section, 
eligible depositors are depositors holding qualifying deposits at the 
bank as of a date designated in the bank's plan of conversion that is 
not less than one year prior to the date of adoption of the plan of 
conversion by the converting bank's board of directors/trustees.
    (c) Requirements. In addition to other requirements that may be 
imposed by the applicable state statutes and regulations and other 
federal statutes and regulations, including subpart I of part 303 of 
this chapter, an insured mutual state savings bank shall not convert to 
the stock form of ownership unless the following requirements are 
satisfied:
    (1) Eligible depositors shall have higher subscription rights than 
employee stock ownership plans;
    (2) The proposed conversion shall be approved by a vote of at least 
a majority of the bank's depositors and, as reasonably determined by the 
bank's directors or trustees, other stakeholders of the bank who are 
entitled to vote on the conversion, unless the applicable state law 
requires a higher percentage, in which case the higher percentage shall 
be used. Voting may be in person or by proxy; and
    (3) Management shall not use proxies executed outside the context of 
the proposed conversion to satisfy the voting requirement imposed in the 
previous paragraph.
    (d) Restriction on repurchase of stock. An insured mutual state 
savings bank that has converted from the mutual to stock form of 
ownership may not repurchase its capital stock within one year following 
the date of its conversion to stock form, except that stock repurchases 
of no greater than 5% of the bank's outstanding capital stock may be 
repurchased during this one-year period where compelling and valid 
business reasons are established, to the satisfaction of the FDIC. Any 
stock repurchases shall be subject to the requirements of section 
18(i)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1828(i)(1)).
    (e) Stock benefit plan limitations. The FDIC will presume that a 
stock option plan or management or employee stock benefit plan that does 
not conform with the applicable percentage limitations of the 
regulations issued by the Office of Thrift Supervision constitutes 
excessive insider benefits and thereby evidences a breach of the board 
of directors' or trustees' fiduciary responsibility. In addition, no 
converted insured mutual state savings bank shall, for one year from the 
date of the conversion, implement a stock option plan or management or 
employee stock benefit plan, other than a tax-qualified employee stock 
ownership plan, unless each of the following requirements is met:
    (1) Each of the plans was fully disclosed in the proxy solicitation 
and conversion stock offering materials;
    (2) All such plans are approved by a majority of the bank's 
stockholders, or in the case of a recently formed holding company, its 
stockholders, prior to implementation at a duly called meeting of 
shareholders, either annual or special, to be held no sooner than six 
months after the completion of the conversion;
    (3) In the case of a savings bank subsidiary of a mutual holding 
company, all such plans are approved by a majority of stockholders other 
than its parent mutual holding company prior to implementation at a duly 
called meeting of shareholders, either annual or special, to be held no 
sooner than six months following the stock issuance;
    (4) For stock option plans, stock options are granted at no lower 
than the market price at which the stock is trading at the time of 
grant; and
    (5) For management or employee stock benefit plans, no conversion 
stock is used to fund the plans.

[59 FR 61246, Nov. 30, 1994, as amended at 63 FR 44750, Aug. 20, 1998; 
68 FR 50461, Aug. 21, 2003; 78 FR 55595, Sept. 10, 2013; 83 FR 17740, 
Apr. 24, 2018]

                             Interpretations



Sec.  333.101  Prior consent not required.

    (a) The extension by any State nonmember insured bank of its 
business to

[[Page 569]]

include personal, character or installment loans, or the extension by an 
industrial bank of its business to include the business of a commercial 
bank, is not a change in the general character or type of business 
requiring the prior written consent of the Corporation.
    (b) An insured State nonmember bank or State savings association, 
not exercising trust powers, may act as trustee or custodian of 
Individual Retirement Accounts established pursuant to the Employee 
Retirement Income Security Act of 1974 (26 U.S.C. 408), Self-Employed 
Retirement Plans established pursuant to the Self-Employed Individuals 
Retirement Act of 1962 (26 U.S.C. 401), Roth Individual Retirement 
Accounts and Coverdell Education Savings Accounts established pursuant 
to the Taxpayer Relief Act of 1997 (26 U.S.C. 408A and 530 
respectively), Health Savings Accounts established pursuant to the 
Medicare Prescription Drug Improvement and Modernization Act of 2003 (26 
U.S.C. 223), and other similar accounts without the prior written 
consent of the Corporation provided:
    (1) The bank's or savings association's duties as trustee or 
custodian are essentially custodial or ministerial in nature,
    (2) The bank or savings association is required to invest the funds 
from such plans only
    (i) In its own time or savings deposits, or
    (ii) In any other assets at the direction of the customer, provided 
the bank or savings association does not exercise any investment 
discretion or provide any investment advice with respect to such account 
assets, and
    (3) The bank's or savings association's acceptance of such accounts 
without trust powers is not contrary to applicable State law.

[41 FR 2375, Jan. 16, 1976, as amended at 50 FR 10754, Mar. 18, 1985; 70 
FR 60422, Oct. 18, 2005; 83 FR 60337, Nov. 26, 2018]



PART 334_FAIR CREDIT REPORTING--Table of Contents



                      Subpart A_General Provisions

Sec.
334.1 Purpose and scope.
334.2 Examples.
334.3 Definitions.

Subparts B-H [Reserved]

                       Subpart I_Records Disposal

334.80-334.82 [Reserved]
334.83 Disposal of consumer information.

                   Subpart J_Identity Theft Red Flags

334.90 Duties regarding the detection, prevention, and mitigation of 
          identity theft.
334.91 Duties of card issuers regarding changes of address.

Appendixes A-I to Part 334 [Reserved]
Appendix J to Part 334--Interagency Guidelines on Identity Theft 
          Detection, Prevention, and Mitigation

    Authority: 12 U.S.C. 1818, 1819 (Tenth), and 1831p-1; 15 U.S.C. 
1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3, 1681t, 1681w, 6801 
et seq., Pub. L. 108-159, 117 Stat. 1952.

    Source: 69 FR 77618, Dec. 28, 2004, unless otherwise noted.



                      Subpart A_General Provisions

    Source: 70 FR 70685, Nov. 22, 2005, unless otherwise noted.



Sec.  334.1  Purpose and scope.

    (a) Purpose The purpose of this part is to implement the Fair Credit 
Reporting Act.
    (b) Scope Except as otherwise provided in this part, the regulations 
in this part apply to insured state nonmember banks, state savings 
associations whose deposits are insured by the Federal Deposit Insurance 
Corporation, insured state licensed branches of foreign banks, and 
subsidiaries of such entities (except brokers, dealers, persons 
providing insurance, investment companies, and investment advisers).

[80 FR 65918, Oct. 28, 2015]



Sec.  334.2  Examples.

    The examples in this part are not exclusive. Compliance with an 
example, to the extent applicable, constitutes compliance with this 
part. Examples in a paragraph illustrate only the issue described in the 
paragraph and do not illustrate any other issue that may arise in this 
part.



Sec.  334.3  Definitions.

    For purposes of this part, unless explicitly stated otherwise:

[[Page 570]]

    (a) Act means the Fair Credit Reporting Act (15 U.S.C. 1681 et 
seq.).
    (b) Affiliate means any company that is related by common ownership 
or common corporate control with another company.
    (c) [Reserved]
    (d) Company means any corporation, limited liability company, 
business trust, general or limited partnership, association, or similar 
organization.
    (e) Consumer means an individual.
    (f)-(h) [Reserved]
    (i) Common ownership or common corporate control means a 
relationship between two companies under which:
    (1) One company has, with respect to the other company:
    (i) Ownership, control, or power to vote 25 percent or more of the 
outstanding shares of any class of voting security of a company, 
directly or indirectly, or acting through one or more other persons;
    (ii) Control in any manner over the election of a majority of the 
directors, trustees, or general partners (or individuals exercising 
similar functions) of a company; or
    (iii) The power to exercise, directly or indirectly, a controlling 
influence over the management or policies of a company, as the FDIC 
determines; or
    (2) Any other person has, with respect to both companies, a 
relationship described in paragraphs (i)(1)(i) through (i)(1)(iii) of 
this section.
    (j) [Reserved]
    (k) Medical information means:
    (1) Information or data, whether oral or recorded, in any form or 
medium, created by or derived from a health care provider or the 
consumer, that relates to:
    (i) The past, present, or future physical, mental, or behavioral 
health or condition of an individual;
    (ii) The provision of health care to an individual; or
    (iii) The payment for the provision of health care to an individual.
    (2) The term does not include:
    (i) The age or gender of a consumer;
    (ii) Demographic information about the consumer, including a 
consumer's residence address or e-mail address;
    (iii) Any other information about a consumer that does not relate to 
the physical, mental, or behavioral health or condition of a consumer, 
including the existence or value of any insurance policy; or
    (iv) Information that does not identify a specific consumer.
    (l) Person means any individual, partnership, corporation, trust, 
estate cooperative, association, government or governmental subdivision 
or agency, or other entity.
    (m) State savings association has the same meaning as in section 
3(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).

[70 FR 70685, Nov. 22, 2005, as amended at 72 FR 63760, Nov. 9, 2007; 80 
FR 65919, Oct. 28, 2015]

Subparts B-H [Reserved]



                       Subpart I_Records Disposal



Sec. Sec.  334.80-334.82  [Reserved]



Sec.  334.83  Disposal of consumer information.

    (a) In general. You must properly dispose of any consumer 
information that you maintain or otherwise possess in accordance with 
the Interagency Guidelines Establishing Information Security Standards, 
as set forth in appendix B to part 364 of this chapter, prescribed 
pursuant to section 216 of the Fair and Accurate Credit Transactions Act 
of 2003 (15 U.S.C. 1681w) and section 501(b) of the Gramm-Leach-Bliley 
Act (15 U.S.C. 6801(b)), to the extent the Guidelines are applicable to 
you.
    (b) Rule of construction. Nothing in this section shall be construed 
to:
    (1) Require you to maintain or destroy any record pertaining to a 
consumer that is not imposed under any other law; or
    (2) Alter or affect any requirement imposed under any other 
provision of law to maintain or destroy such a record.



                   Subpart J_Identity Theft Red Flags

    Source: 72 FR 63761, Nov. 9, 2007, unless otherwise noted.

[[Page 571]]



Sec.  334.90  Duties regarding the detection, prevention, 
and mitigation of identity theft.

    (a) Scope This section applies to a financial institution or 
creditor that is an insured state nonmember bank, State savings 
association whose deposits are insured by the Federal Deposit Insurance 
Corporation, insured state licensed branch of a foreign bank, or a 
subsidiary of such entities (except brokers, dealers, persons providing 
insurance, investment companies, and investment advisers).
    (b) Definitions. For purposes of this section and Appendix J, the 
following definitions apply:
    (1) Account means a continuing relationship established by a person 
with a financial institution or creditor to obtain a product or service 
for personal, family, household or business purposes. Account includes:
    (i) An extension of credit, such as the purchase of property or 
services involving a deferred payment; and
    (ii) A deposit account.
    (2) The term board of directors includes:
    (i) In the case of a branch or agency of a foreign bank, the 
managing official in charge of the branch or agency; and
    (ii) In the case of any other creditor that does not have a board of 
directors, a designated employee at the level of senior management.
    (3) Covered account means:
    (i) An account that a financial institution or creditor offers or 
maintains, primarily for personal, family, or household purposes, that 
involves or is designed to permit multiple payments or transactions, 
such as a credit card account, mortgage loan, automobile loan, margin 
account, cell phone account, utility account, checking account, or 
savings account; and
    (ii) Any other account that the financial institution or creditor 
offers or maintains for which there is a reasonably foreseeable risk to 
customers or to the safety and soundness of the financial institution or 
creditor from identity theft, including financial, operational, 
compliance, reputation, or litigation risks.
    (4) Credit has the same meaning as in 15 U.S.C. 1681a(r)(5).
    (5) Creditor has the same meaning as in 15 U.S.C. 1681m(e)(4).
    (6) Customer means a person that has a covered account with a 
financial institution or creditor.
    (7) Financial institution has the same meaning as in 15 U.S.C. 
1681a(t).
    (8) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (9) Red Flag means a pattern, practice, or specific activity that 
indicates the possible existence of identity theft.
    (10) Service provider means a person that provides a service 
directly to the financial institution or creditor.
    (11) State savings association has the same meaning as in section 
3(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
    (c) Periodic identification of covered accounts. Each financial 
institution or creditor must periodically determine whether it offers or 
maintains covered accounts. As a part of this determination, a financial 
institution or creditor must conduct a risk assessment to determine 
whether it offers or maintains covered accounts described in paragraph 
(b)(3)(ii) of this section, taking into consideration:
    (1) The methods it provides to open its accounts;
    (2) The methods it provides to access its accounts; and
    (3) Its previous experiences with identity theft.
    (d) Establishment of an Identity Theft Prevention Program--(1) 
Program requirement. Each financial institution or creditor that offers 
or maintains one or more covered accounts must develop and implement a 
written Identity Theft Prevention Program (Program) that is designed to 
detect, prevent, and mitigate identity theft in connection with the 
opening of a covered account or any existing covered account. The 
Program must be appropriate to the size and complexity of the financial 
institution or creditor and the nature and scope of its activities.
    (2) Elements of the Program. The Program must include reasonable 
policies and procedures to:
    (i) Identify relevant Red Flags for the covered accounts that the 
financial institution or creditor offers or maintains, and incorporate 
those Red Flags into its Program;

[[Page 572]]

    (ii) Detect Red Flags that have been incorporated into the Program 
of the financial institution or creditor;
    (iii) Respond appropriately to any Red Flags that are detected 
pursuant to paragraph (d)(2)(ii) of this section to prevent and mitigate 
identity theft; and
    (iv) Ensure the Program (including the Red Flags determined to be 
relevant) is updated periodically, to reflect changes in risks to 
customers and to the safety and soundness of the financial institution 
or creditor from identity theft.
    (e) Administration of the Program. Each financial institution or 
creditor that is required to implement a Program must provide for the 
continued administration of the Program and must:
    (1) Obtain approval of the initial written Program from either its 
board of directors or an appropriate committee of the board of 
directors;
    (2) Involve the board of directors, an appropriate committee 
thereof, or a designated employee at the level of senior management in 
the oversight, development, implementation and administration of the 
Program;
    (3) Train staff, as necessary, to effectively implement the Program; 
and
    (4) Exercise appropriate and effective oversight of service provider 
arrangements.
    (f) Guidelines. Each financial institution or creditor that is 
required to implement a Program must consider the guidelines in Appendix 
J of this part and include in its Program those guidelines that are 
appropriate.

[72 FR 63761, Nov. 9, 2007, as amended at 80 FR 65919, Oct. 28, 2015]



Sec.  334.91  Duties of card issuers regarding changes of address.

    (a) Scope This section applies to an issuer of a debit or credit 
card (card issuer) that is an insured state nonmember bank, state 
savings association whose deposits are insured by the Federal Deposit 
Insurance Corporation, insured state licensed branch of a foreign bank, 
or a subsidiary of such entities (except brokers, dealers, persons 
providing insurance, investment companies, or investment advisers).
    (b) Definitions. For purposes of this section:
    (1) Cardholder means a consumer who has been issued a credit or 
debit card.
    (2) Clear and conspicuous means reasonably understandable and 
designed to call attention to the nature and significance of the 
information presented.
    (3) State savings association has the same meaning as in section 
3(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
    (c) Address validation requirements. A card issuer must establish 
and implement reasonable policies and procedures to assess the validity 
of a change of address if it receives notification of a change of 
address for a consumer's debit or credit card account and, within a 
short period of time afterwards (during at least the first 30 days after 
it receives such notification), the card issuer receives a request for 
an additional or replacement card for the same account. Under these 
circumstances, the card issuer may not issue an additional or 
replacement card, until, in accordance with its reasonable policies and 
procedures and for the purpose of assessing the validity of the change 
of address, the card issuer:
    (1)(i) Notifies the cardholder of the request:
    (A) At the cardholder's former address; or
    (B) By any other means of communication that the card issuer and the 
cardholder have previously agreed to use; and
    (ii) Provides to the cardholder a reasonable means of promptly 
reporting incorrect address changes; or
    (2) Otherwise assesses the validity of the change of address in 
accordance with the policies and procedures the card issuer has 
established pursuant to Sec.  334.90 of this part.
    (d) Alternative timing of address validation. A card issuer may 
satisfy the requirements of paragraph (c) of this section if it 
validates an address pursuant to the methods in paragraph (c)(1) or 
(c)(2) of this section when it receives an address change notification, 
before it receives a request for an additional or replacement card.
    (e) Form of notice. Any written or electronic notice that the card 
issuer provides under this paragraph must be

[[Page 573]]

clear and conspicuous and provided separately from its regular 
correspondence with the cardholder.

[72 FR 63761, Nov. 9, 2007, as amended at 80 FR 65919, Oct. 28, 2015]



               Sec. Appendixes A-I to Part 334 [Reserved]



 Sec. Appendix J to Part 334--Interagency Guidelines on Identity Theft 
                  Detection, Prevention, and Mitigation

    Section 334.90 of this part requires each financial institution and 
creditor that offers or maintains one or more covered accounts, as 
defined in Sec.  334.90(b)(3) of this part, to develop and provide for 
the continued administration of a written Program to detect, prevent, 
and mitigate identity theft in connection with the opening of a covered 
account or any existing covered account. These guidelines are intended 
to assist financial institutions and creditors in the formulation and 
maintenance of a Program that satisfies the requirements of Sec.  334.90 
of this part.

                             I. The Program

    In designing its Program, a financial institution or creditor may 
incorporate, as appropriate, its existing policies, procedures, and 
other arrangements that control reasonably foreseeable risks to 
customers or to the safety and soundness of the financial institution or 
creditor from identity theft.

                   II. Identifying Relevant Red Flags

    (a) Risk Factors. A financial institution or creditor should 
consider the following factors in identifying relevant Red Flags for 
covered accounts, as appropriate:
    (1) The types of covered accounts it offers or maintains;
    (2) The methods it provides to open its covered accounts;
    (3) The methods it provides to access its covered accounts; and
    (4) Its previous experiences with identity theft.
    (b) Sources of Red Flags. Financial institutions and creditors 
should incorporate relevant Red Flags from sources such as:
    (1) Incidents of identity theft that the financial institution or 
creditor has experienced;
    (2) Methods of identity theft that the financial institution or 
creditor has identified that reflect changes in identity theft risks; 
and
    (3) Applicable supervisory guidance.
    (c) Categories of Red Flags. The Program should include relevant Red 
Flags from the following categories, as appropriate. Examples of Red 
Flags from each of these categories are appended as Supplement A to this 
Appendix J.
    (1) Alerts, notifications, or other warnings received from consumer 
reporting agencies or service providers, such as fraud detection 
services;
    (2) The presentation of suspicious documents;
    (3) The presentation of suspicious personal identifying information, 
such as a suspicious address change;
    (4) The unusual use of, or other suspicious activity related to, a 
covered account; and
    (5) Notice from customers, victims of identity theft, law 
enforcement authorities, or other persons regarding possible identity 
theft in connection with covered accounts held by the financial 
institution or creditor.

                        III. Detecting Red Flags.

    The Program's policies and procedures should address the detection 
of Red Flags in connection with the opening of covered accounts and 
existing covered accounts, such as by:
    (a) Obtaining identifying information about, and verifying the 
identity of, a person opening a covered account, for example, using the 
policies and procedures regarding identification and verification set 
forth in the Customer Identification Program rules implementing 31 
U.S.C. 5318(l) (31 CFR 1020.220); and
    (b) Authenticating customers, monitoring transactions, and verifying 
the validity of change of address requests, in the case of existing 
covered accounts.

              IV. Preventing and Mitigating Identity Theft.

    The Program's policies and procedures should provide for appropriate 
responses to the Red Flags the financial institution or creditor has 
detected that are commensurate with the degree of risk posed. In 
determining an appropriate response, a financial institution or creditor 
should consider aggravating factors that may heighten the risk of 
identity theft, such as a data security incident that results in 
unauthorized access to a customer's account records held by the 
financial institution, creditor, or third party, or notice that a 
customer has provided information related to a covered account held by 
the financial institution or creditor to someone fraudulently claiming 
to represent the financial institution or creditor or to a fraudulent 
Web site. Appropriate responses may include the following:
    (a) Monitoring a covered account for evidence of identity theft;
    (b) Contacting the customer;
    (c) Changing any passwords, security codes, or other security 
devices that permit access to a covered account;
    (d) Reopening a covered account with a new account number;

[[Page 574]]

    (e) Not opening a new covered account;
    (f) Closing an existing covered account;
    (g) Not attempting to collect on a covered account or not selling a 
covered account to a debt collector;
    (h) Notifying law enforcement; or
    (i) Determining that no response is warranted under the particular 
circumstances.

                        V. Updating the Program.

    Financial institutions and creditors should update the Program 
(including the Red Flags determined to be relevant) periodically, to 
reflect changes in risks to customers or to the safety and soundness of 
the financial institution or creditor from identity theft, based on 
factors such as:
    (a) The experiences of the financial institution or creditor with 
identity theft;
    (b) Changes in methods of identity theft;
    (c) Changes in methods to detect, prevent, and mitigate identity 
theft;
    (d) Changes in the types of accounts that the financial institution 
or creditor offers or maintains; and
    (e) Changes in the business arrangements of the financial 
institution or creditor, including mergers, acquisitions, alliances, 
joint ventures, and service provider arrangements.

                VI. Methods for Administering the Program

    (a) Oversight of Program. Oversight by the board of directors, an 
appropriate committee of the board, or a designated employee at the 
level of senior management should include:
    (1) Assigning specific responsibility for the Program's 
implementation;
    (2) Reviewing reports prepared by staff regarding compliance by the 
financial institution or creditor with Sec.  334.90 of this part; and
    (3) Approving material changes to the Program as necessary to 
address changing identity theft risks.
    (b) Reports. (1) In general. Staff of the financial institution or 
creditor responsible for development, implementation, and administration 
of its Program should report to the board of directors, an appropriate 
committee of the board, or a designated employee at the level of senior 
management, at least annually, on compliance by the financial 
institution or creditor with Sec.  334.90 of this part.
    (2) Contents of report. The report should address material matters 
related to the Program and evaluate issues such as: the effectiveness of 
the policies and procedures of the financial institution or creditor in 
addressing the risk of identity theft in connection with the opening of 
covered accounts and with respect to existing covered accounts; service 
provider arrangements; significant incidents involving identity theft 
and management's response; and recommendations for material changes to 
the Program.
    (c) Oversight of service provider arrangements. Whenever a financial 
institution or creditor engages a service provider to perform an 
activity in connection with one or more covered accounts the financial 
institution or creditor should take steps to ensure that the activity of 
the service provider is conducted in accordance with reasonable policies 
and procedures designed to detect, prevent, and mitigate the risk of 
identity theft. For example, a financial institution or creditor could 
require the service provider by contract to have policies and procedures 
to detect relevant Red Flags that may arise in the performance of the 
service provider's activities, and either report the Red Flags to the 
financial institution or creditor, or to take appropriate steps to 
prevent or mitigate identity theft.

                VII. Other Applicable Legal Requirements

    Financial institutions and creditors should be mindful of other 
related legal requirements that may be applicable, such as:
    (a) For financial institutions and creditors that are subject to 31 
U.S.C. 5318(g), filing a Suspicious Activity Report in accordance with 
applicable law and regulation;
    (b) Implementing any requirements under 15 U.S.C. 1681c-1(h) 
regarding the circumstances under which credit may be extended when the 
financial institution or creditor detects a fraud or active duty alert;
    (c) Implementing any requirements for furnishers of information to 
consumer reporting agencies under 15 U.S.C. 1681s-2, for example, to 
correct or update inaccurate or incomplete information, and to not 
report information that the furnisher has reasonable cause to believe is 
inaccurate; and
    (d) Complying with the prohibitions in 15 U.S.C. 1681m on the sale, 
transfer, and placement for collection of certain debts resulting from 
identity theft.

                       Supplement A to Appendix J

    In addition to incorporating Red Flags from the sources recommended 
in section II.b. of the Guidelines in Appendix J of this part, each 
financial institution or creditor may consider incorporating into its 
Program, whether singly or in combination, Red Flags from the following 
illustrative examples in connection with covered accounts:

   Alerts, Notifications or Warnings from a Consumer Reporting Agency

    1. A fraud or active duty alert is included with a consumer report.
    2. A consumer reporting agency provides a notice of credit freeze in 
response to a request for a consumer report.
    3. A consumer reporting agency provides a notice of address 
discrepancy, as defined in 12 CFR 1022.82(b).

[[Page 575]]

    4. A consumer report indicates a pattern of activity that is 
inconsistent with the history and usual pattern of activity of an 
applicant or customer, such as:
    a. A recent and significant increase in the volume of inquiries;
    b. An unusual number of recently established credit relationships;
    c. A material change in the use of credit, especially with respect 
to recently established credit relationships; or
    d. An account that was closed for cause or identified for abuse of 
account privileges by a financial institution or creditor.

                          Suspicious Documents

    5. Documents provided for identification appear to have been altered 
or forged.
    6. The photograph or physical description on the identification is 
not consistent with the appearance of the applicant or customer 
presenting the identification.
    7. Other information on the identification is not consistent with 
information provided by the person opening a new covered account or 
customer presenting the identification.
    8. Other information on the identification is not consistent with 
readily accessible information that is on file with the financial 
institution or creditor, such as a signature card or a recent check.
    9. An application appears to have been altered or forged, or gives 
the appearance of having been destroyed and reassembled.

               Suspicious Personal Identifying Information

    10. Personal identifying information provided is inconsistent when 
compared against external information sources used by the financial 
institution or creditor. For example:
    a. The address does not match any address in the consumer report; or
    b. The Social Security Number (SSN) has not been issued, or is 
listed on the Social Security Administration's Death Master File.
    11. Personal identifying information provided by the customer is not 
consistent with other personal identifying information provided by the 
customer. For example, there is a lack of correlation between the SSN 
range and date of birth.
    12. Personal identifying information provided is associated with 
known fraudulent activity as indicated by internal or third-party 
sources used by the financial institution or creditor. For example:
    a. The address on an application is the same as the address provided 
on a fraudulent application; or
    b. The phone number on an application is the same as the number 
provided on a fraudulent application.
    13. Personal identifying information provided is of a type commonly 
associated with fraudulent activity as indicated by internal or third-
party sources used by the financial institution or creditor. For 
example:
    a. The address on an application is fictitious, a mail drop, or a 
prison; or
    b. The phone number is invalid, or is associated with a pager or 
answering service.
    14. The SSN provided is the same as that submitted by other persons 
opening an account or other customers.
    15. The address or telephone number provided is the same as or 
similar to the address or telephone number submitted by an unusually 
large number of other persons opening accounts or by other customers.
    16. The person opening the covered account or the customer fails to 
provide all required personal identifying information on an application 
or in response to notification that the application is incomplete.
    17. Personal identifying information provided is not consistent with 
personal identifying information that is on file with the financial 
institution or creditor.
    18. For financial institutions and creditors that use challenge 
questions, the person opening the covered account or the customer cannot 
provide authenticating information beyond that which generally would be 
available from a wallet or consumer report.

 Unusual Use of, or Suspicious Activity Related to, the Covered Account

    19. Shortly following the notice of a change of address for a 
covered account, the institution or creditor receives a request for a 
new, additional, or replacement card or a cell phone, or for the 
addition of authorized users on the account.
    20. A new revolving credit account is used in a manner commonly 
associated with known patterns of fraud. For example:
    a. The majority of available credit is used for cash advances or 
merchandise that is easily convertible to cash (e.g., electronics 
equipment or jewelry); or
    b. The customer fails to make the first payment or makes an initial 
payment but no subsequent payments.
    21. A covered account is used in a manner that is not consistent 
with established patterns of activity on the account. There is, for 
example:
    a. Nonpayment when there is no history of late or missed payments;
    b. A material increase in the use of available credit;
    c. A material change in purchasing or spending patterns;
    d. A material change in electronic fund transfer patterns in 
connection with a deposit account; or
    e. A material change in telephone call patterns in connection with a 
cellular phone account.
    22. A covered account that has been inactive for a reasonably 
lengthy period of time is used (taking into consideration the type of

[[Page 576]]

account, the expected pattern of usage and other relevant factors).
    23. Mail sent to the customer is returned repeatedly as 
undeliverable although transactions continue to be conducted in 
connection with the customer's covered account.
    24. The financial institution or creditor is notified that the 
customer is not receiving paper account statements.
    25. The financial institution or creditor is notified of 
unauthorized charges or transactions in connection with a customer's 
covered account.

   Notice From Customers, Victims of Identity Theft, Law Enforcement 
   Authorities, or Other Persons Regarding Possible Identity Theft in 
 Connection With Covered Accounts Held by the Financial Institution or 
                                Creditor

    26. The financial institution or creditor is notified by a customer, 
a victim of identity theft, a law enforcement authority, or any other 
person that it has opened a fraudulent account for a person engaged in 
identity theft.

[72 FR 63762, Nov. 9, 2007, as amended at 74 FR 22643, May 14, 2009; 76 
FR 14794, Mar. 18, 2011; 80 FR 65919, Oct. 28, 2015]



PART 335_SECURITIES OF STATE NONMEMBER BANKS AND STATE SAVINGS ASSOCIATIONS--
Table of Contents



Sec.
335.101 Scope of part, authority and OMB control number.
335.111 Forms and schedules.
335.121 Listing standards related to audit committees.
335.201 Securities exempted from registration.
335.211 Registration and reporting.
335.221 Forms for registration of securities and cross reference to 
          Regulation FD (Fair Disclosure).
335.231 Certification, suspension of trading, and removal from listing 
          by exchanges.
335.241 Unlisted trading.
335.251 Forms for notification of action taken by national securities 
          exchanges.
335.261 Exemptions; terminations; and definitions.
335.301 Reports of issuers of securities registered pursuant to section 
          12.
335.311 Forms for annual, quarterly, current, and other reports of 
          issuers.
335.321 Maintenance of records and issuer's representations in 
          connection with required reports.
335.331 Acquisition statements, acquisition of securities by issuers, 
          and other matters.
335.401 Solicitations of proxies.
335.501 Tender offers.
335.601 Requirements of section 16 of the Securities Exchange Act of 
          1934.
335.611 Initial statements of beneficial ownership of securities (Form 
          3).
335.612 Statement of changes in beneficial ownership of securities (Form 
          4).
335.613 Annual statement of beneficial ownership of securities (Form 5).
335.701 Filing requirements, public reference, and confidentiality.
335.801 Inapplicable SEC regulations; FDIC substituted regulations; 
          additional information.

    Authority: 12 U.S.C. 1819; 15 U.S.C. 78j-1, 78l(i), 78m, 78n, 78p, 
78w, 5412, 5414, 5415, 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 
7265.

    Source: 62 FR 6856, Feb. 14, 1997, unless otherwise noted.



Sec.  335.101  Scope of part, authority and OMB control number.

    (a) This part is issued by the Federal Deposit Insurance Corporation 
(the FDIC) under section 12(i) of the Securities Exchange Act of 1934, 
15 U.S.C. 78 et seq. (the Exchange Act), and applies to all securities 
of FDIC-insured State nonmember banks (including foreign banks having an 
insured branch) and State savings associations that are subject to the 
registration requirements of section 12(b) or section 12(g) of the 
Exchange Act). The FDIC is vested with the powers, functions, and duties 
of the Securities and Exchange Commission (SEC) to administer and 
enforce sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of 
the Exchange Act) (15 U.S.C. 78j-1, 78l, 78m, 78n(a), 78n(c), 78n(d), 
78n(f), and 78p), and sections 302, 303, 304, 306, 401(b), 404, 406, and 
407 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7242, 7243, 7244, 
7261, 7262, 7264, and 7265) regarding State nonmember banks and State 
savings associations with one or more classes of securities subject to 
the registration provisions of sections 12(b) or 12(g) of the Exchange 
Act.
    (b) Part 335 generally incorporates through cross reference the 
regulations of the SEC as these regulations are issued, revised, or 
updated from time to time under sections 10A(m), 12, 13, 14(a), 14(c), 
14(d), 14(f), and 16 of the Exchange Act and sections 302, 303, 304, 
306, 401(b), 404, 406, and 407 of the Sarbanes-Oxley Act of 2002 
(Sarbanes-Oxley Act), except as provided at Sec.  335.801 of this part. 
References to the

[[Page 577]]

Commission in the regulations of the SEC are deemed to refer to the FDIC 
unless the context otherwise requires.

[62 FR 6856, Feb. 14, 1997, as amended at 69 FR 19088, Apr. 12, 2004; 69 
FR 59783, Oct. 6, 2004; 70 FR 16400, Mar. 31, 2005; 70 FR 44272, Aug. 2, 
2005; 79 FR 63501, Oct. 24, 2014]



Sec.  335.111  Forms and schedules.

    The Exchange Act regulations of the SEC, which are cross referenced 
under this part, require the filing of forms and schedules as 
applicable. Reference is made to SEC Exchange Act regulation 17 CFR part 
249 regarding the availability of all applicable SEC Exchange Act forms. 
Required schedules are codified and are found within the context of the 
SEC's regulations. All forms and schedules shall be titled with the name 
of the FDIC in substitution for the name of the SEC. The filing of forms 
and schedules shall be made with the FDIC at the address in Sec.  
335.701 or may be filed electronically at FDICconnect at https://
www2.fdicconnect.gov/index.asp. However, electronic filing of Beneficial 
Ownership Forms 3, 4 and 5 is required. Copies of Forms 3 (Sec.  
335.611), 4 (Sec.  335.612) and 5 (Sec.  335.613) and the instructions 
thereto may be printed and downloaded from https://www.fdic.gov/
regulations/laws/forms.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.121  Listing standards related to audit committees.

    The provisions of the applicable SEC regulation under section 
10(A)(m) of the Exchange Act shall be followed as codified at 17 CFR 
part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.201  Securities exempted from registration.

    Persons subject to registration requirements under Exchange Act 
section 12 and subject to this part shall follow the applicable and 
currently effective SEC regulations relative to exemptions from 
registration issued under sections 3 and 12 of the Exchange Act as 
codified at 17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.211  Registration and reporting.

    Persons with securities subject to registration under Exchange Act 
sections 12(b) and 12(g), required to report under Exchange Act section 
13, and subject to this part shall follow the applicable and currently 
effective SEC regulations issued under section 12(b) of the Exchange Act 
as codified at 17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.221  Forms for registration of securities and cross reference 
to Regulation FD (Fair Disclosure).

    (a) The applicable forms for registration of securities and similar 
matters are codified in 17 CFR part 249. All forms shall be filed with 
the FDIC as appropriate and shall be titled with the name of the FDIC 
instead of the SEC.
    (b) The requirements for Financial Statements can generally be found 
in Regulation S-X (17 CFR part 210). Banks and State savings 
associations may also refer to the instructions for Federal Financial 
Institutions Examination Council (FFIEC) Consolidated Reports of 
Condition and Income when preparing unaudited interim statements. The 
requirements for Management's Discussion and Analysis of Financial 
Condition and Results of Operations can be found at 17 CFR part 229. 
Additional requirements are provided at Industry Guide 3, Statistical 
Disclosure by Bank Holding Companies, which is found at 17 CFR part 229.
    (c) The provisions of the applicable and currently effective SEC 
regulation FD shall be followed as codified at 17 CFR part 243.

[75 FR 73949, Nov. 30, 2010; 79 FR 63501, Oct. 24, 2014]



Sec.  335.231  Certification, suspension of trading, 
and removal from listing by exchanges.

    The provisions of the applicable and currently effective SEC 
regulations under section 12(d) of the Exchange Act shall be followed as 
codified at 17 part CFR 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.241  Unlisted trading.

    The provisions of the applicable and currently effective SEC 
regulations

[[Page 578]]

under section 12(f) of the Exchange Act shall be followed as codified at 
17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.251  Forms for notification of action taken 
by national securities exchanges.

    The applicable forms for notification of action taken by national 
securities exchanges are codified in 17 CFR part 249. All forms shall be 
filed with the FDIC as appropriate and shall be titled with the name of 
the FDIC instead of the SEC.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.261  Exemptions, terminations, and definitions.

    The provisions of the applicable and currently effective SEC 
regulations under sections 12(g) and 12(h) of the Exchange Act shall be 
followed as codified in 17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.301  Reports of issuers of securities registered 
pursuant to section 12.

    The provisions of the applicable and currently effective SEC 
regulations under section 13(a) of the Exchange Act shall be followed as 
codified at 17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.311  Forms for annual, quarterly, current, 
and other reports of issuers.

    (a) The applicable forms for annual, quarterly, current, and other 
reports are codified in 17 CFR part 249. All forms shall be filed with 
the FDIC as appropriate and shall be titled with the name of the FDIC 
instead of the SEC.
    (b) The requirements for Financial Statements can generally be found 
in Regulation S-X (17 CFR part 210). Banks and State savings 
associations may also refer to the instructions for FFIEC Consolidated 
Reports of Condition and Income when preparing unaudited interim 
reports. The requirements for Management's Discussion and Analysis of 
Financial Condition and Results of Operations can be found at 17 CFR 
part 229. Additional requirements are included in Industry Guide 3, 
Statistical Disclosure by Bank Holding Companies, which is found at 17 
CFR part 229.

[75 FR 73949, Nov. 30, 2010, as amended at 79 FR 63501, Oct. 24, 2014]



Sec.  335.321  Maintenance of records and issuer's representations 
in connection with required reports.

    The provisions of the applicable and currently effective SEC 
regulations under 13(b) of the Exchange Act shall be followed as 
codified at 17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.331  Acquisition statements, acquisition of securities by issuers, 
and other matters.

    The provisions of the applicable and currently effective SEC 
regulations under sections 13(d) and 13(e) of the Exchange Act shall be 
followed as codifed at 17 CFR part 240.

[75 FR 73949, Nov. 30, 2010]



Sec.  335.401  Solicitations of proxies.

    The provisions of the applicable and currently effective SEC 
regulations under sections 14(a) and 14(c) of the Exchange Act shall be 
followed as codified at 17 CFR part 240.

[75 FR 73950, Nov. 30, 2010]



Sec.  335.501  Tender offers.

    The provisions of the applicable and currently effective SEC 
regulations under sections 14(d), 14(e), and 14(f) of the Exchange Act 
shall be followed as codified at 17 CFR part 240.

[75 FR 73950, Nov. 30, 2010]



Sec.  335.601  Requirements of section 16 
of the Securities Exchange Act of 1934.

    Persons subject to section 16 of the Exchange Act with respect to 
securities registered under this part shall follow the applicable and 
currently effective SEC regulations issued under section 16 of the 
Exchange Act (17 CFR part 240), except that the forms described in Sec.  
335.611 (FDIC Form 3), Sec.  335.612 (FDIC Form 4), and Sec.  335.613 
(FDIC Form 5) shall be used in lieu of SEC Form 3, Form 4, and Form 5, 
respectively. FDIC Forms 3, 4, and 5 shall be filed electronically on 
FDICconnect

[[Page 579]]

at https://www2.fdicconnect.gov/index.asp. Copies of FDIC Forms 3, 4, 
and 5 and the instructions thereto can be printed and downloaded at 
https://www.fdic.gov/regulations/laws/forms.

[75 FR 73950, Nov. 30, 2010]



Sec.  335.611  Initial statement of beneficial ownership 
of securities (Form 3).

    This form shall be filed in lieu of SEC Form 3 pursuant to SEC rules 
for initial statements of beneficial ownership of securities. The FDIC 
is authorized to solicit the information required by this form pursuant 
to sections 16(a) and 23(a) of the Exchange Act (15 U.S.C. 78p and 78w) 
and the rules and regulations thereunder. SEC regulations referenced in 
this form are codified at 17 CFR part 240.

[75 FR 73950, Nov. 30, 2010]



Sec.  335.612  Statement of changes in beneficial ownership 
of securities (Form 4).

    This form shall be filed in lieu of SEC Form 4 pursuant to SEC Rules 
for statements of changes in beneficial ownership of securities. The 
FDIC is authorized to solicit the information required by this form 
pursuant to sections 16(a) and 23(a) of the Exchange Act (15 U.S.C. 78p 
and 78w) and the rules and regulations thereunder. SEC regulations 
referenced in this form are codified at 17 CFR part 240.

[75 FR 73950, Nov. 30, 2010]



Sec.  335.613  Annual statement of beneficial ownership of securities (Form 5).

    This form shall be filed in lieu of SEC Form 5 pursuant to SEC Rules 
for annual statements of beneficial ownership of securities. The FDIC is 
authorized to solicit the information required by this form pursuant to 
sections 16(a) and 23(a) of the Exchange Act (15 U.S.C. 78p and 78w) and 
the rules and regulations thereunder. SEC regulations referenced in this 
form are codified at 17 CFR part 240.

[75 FR 73950, Nov. 30, 2010]



Sec.  335.701  Filing requirements, public reference, and confidentiality.

    (a) Filing requirements. Unless otherwise indicated in this part, 
one original and four conformed copies of all papers required to be 
filed with the FDIC under the Exchange Act or regulations thereunder 
shall be filed at its office in Washington, DC. Official filings may be 
filed electronically at https://www2.fdicconnect.gov/index.asp, except 
for FDIC Beneficial Ownership Forms 3, 4, and 5 for which electronic 
filing is mandatory as described in Sec.  335.801(b). Paper filings 
should be submitted to the FDIC's office in Washington, DC, and should 
be addressed as follows: Accounting and Securities Disclosure Section, 
Division of Risk Management Supervision, Federal Deposit Insurance 
Corporation, 550 17th Street NW., Washington, DC 20429. Material may be 
filed by delivery to the FDIC through the mails or otherwise. The date 
on which paper filings are actually received by the designated FDIC 
office shall be the date of filing.
    (b) Inspection. Except as provided in paragraph (c) of this section, 
all information filed regarding a security registered with the FDIC will 
be available for inspection at the Federal Deposit Insurance 
Corporation, Accounting and Securities Disclosure Section, Division of 
Risk Management Supervision, 550 17th Street NW., Washington, DC. 
Beneficial ownership report forms and other official filings that are 
electronically submitted to the FDIC are available for inspection on the 
FDIC's Web site at http://www2.fdic.gov/efr/
    (c) Nondisclosure of certain information filed. Any person filing 
any statement, report, or document with the FDIC under the Exchange Act 
may make a written objection to the public disclosure of any information 
contained therein in accordance with the procedure set forth in this 
paragraph (c) or the instructions provided for electronic filing 
available on the FDIC's Web site https://www2.fdicconnect.gov/index.asp.
    (1) The person shall omit from the statement, report, or document, 
when it is filed, the portion thereof that it desires to keep 
undisclosed (hereinafter called the confidential portion). In lieu 
thereof, it shall indicate at the appropriate place in the statement, 
report, or document that the confidential portion has been so omitted 
and filed separately with the FDIC.

[[Page 580]]

    (2) The person shall file with the copies of the statement, report, 
or document filed with the FDIC:
    (i) As many copies of the confidential portion, each clearly marked 
``Confidential Treatment,'' as there are copies of the statement, 
report, or document filed with the FDIC and with each exchange, if any. 
Each copy shall contain the complete text of the item and, 
notwithstanding that the confidential portion does not constitute the 
whole of the answer, the entire answer thereto; except that in the case 
where the confidential portion is part of a financial statement or 
schedule, only the particular financial statement or schedule need be 
included. All copies of the confidential portion shall be in the same 
form as the remainder of the statement, report, or document;
    (ii) An application making objection to the disclosure of the 
confidential portion. Such application shall be on a sheet or sheets 
separate from the confidential portion and shall contain:
    (A) An identification of the portion of the statement, report, or 
document that has been omitted;
    (B) A statement of the grounds of the objection;
    (C) Consent that the FDIC may determine the question of public 
disclosure upon the basis of the application, subject to proper judicial 
reviews;
    (D) The name of each exchange, if any, with which the statement, 
report, or document is filed;
    (iii) The copies of the confidential portion and the application 
filed in accordance with this paragraph shall be enclosed in a separate 
envelope marked ``Confidential Treatment'' and addressed to Executive 
Secretary, Federal Deposit Insurance Corporation, Washington, DC 20429.
    (3) Pending the determination by the FDIC as to the objection filed 
in accordance with paragraph (c)(2)(ii) of this section, the 
confidential portion will not be disclosed by the FDIC.
    (4) If the FDIC determines that the objection shall be sustained, a 
notation to that effect will be made at the appropriate place in the 
statement, report, or document.
    (5) If the FDIC determines that disclosure of the confidential 
portion is in the public interest, a finding and determination to that 
effect will be entered and notice of the finding and determination will 
be sent by registered or certified mail to the person.
    (6) The confidential portion shall be made available to the public:
    (i) Upon the lapse of 15 days after the dispatch of notice by 
registered or certified mail of the finding and determination of the 
FDIC described in paragraph (c)(5) of this section, or the date of the 
electronic filing, if prior to the lapse of such 15 days the person 
shall not have filed a written statement that he intends in good faith 
to seek judicial review of the finding and determination;
    (ii) Upon the lapse of 60 days after the dispatch of notice by 
registered or certified mail, or the date of the electronic filing, of 
the finding and determination of the FDIC, if the statement described in 
paragraph (c)(6)(i) of this section shall have been filed and if a 
petition for judicial review shall not have been filed within such 60 
days; or
    (iii) If such petition for judicial review shall have been filed 
within such 60 days upon final disposition, adverse to the person, of 
the judicial proceedings.
    (7) If the confidential portion is made available to the public, a 
copy thereof shall be attached to each copy of the statement, report, or 
document filed with the FDIC and with each exchange concerned.

[75 FR 73950, Nov. 30, 2010, as amended at 79 FR 63501, Oct. 24, 2014]



Sec.  335.801  Inapplicable SEC regulations; FDIC substituted regulations; 
additional information.

    (a) Filing fees. Filing fees will not be charged relative to any 
filings or submissions of materials made with the FDIC pursuant to the 
cross reference to regulations of the SEC issued under sections 10A(m), 
12, 13, 14, and 16 of the Securities Exchange Act of 1934 (15 U.S.C. 
78), sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the 
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7242, 7243, 7244, 7261, 
7262, 7264, and 7265), and this part.
    (b) Electronic filings. (1) The FDIC does not participate in the 
SEC's EDGAR (Electronic Data Gathering

[[Page 581]]

Analysis and Retrieval) electronic filing program (17 CFR part 232). The 
FDIC permits voluntary electronically transmitted filings and 
submissions of correspondence and other materials in electronic format 
to the FDIC, with the exception of Beneficial Ownership Reports (Forms 
3, 4, and 5) for which electronic filing is mandatory. Beneficial 
Ownership Report filing requirements are provided in paragraph (b)(2) of 
this section.
    (2) All reporting persons must electronically file Beneficial 
Ownership Reports (FDIC Forms 3, 4, and 5), including amendments and 
exhibits thereto, using the Internet-based interagency Beneficial 
Ownership Filings System, except that a reporting person that has 
obtained a continuing hardship exemption under these rules may file the 
forms with the FDIC in paper format. For electronic filing purposes, 
FDIC Forms 3, 4, and 5 are accessible at the Internet-based interagency 
Web site for Beneficial Ownership Filings at FDICconnect at https://
www2.fdicconnect.gov/index.asp. These forms and the instructions thereto 
are available for printing and downloading at http://www.fdic.gov/
regulations/laws/forms. A reporting person that has obtained a 
continuing hardship exemption under these rules may file the appropriate 
forms with the FDIC in paper format. Instructions for continuing 
hardship exemptions are provided in paragraph (b)(6) of this section.
    (3) Electronic filings of FDIC beneficial ownership report Forms 3, 
4, and 5 must be submitted to the FDIC through the interagency 
Beneficial Ownership Filings system. Beneficial ownership reports and 
any amendments are deemed filed with the FDIC upon electronic receipt on 
business days from 8 a.m. through 10 p.m., Eastern Standard Time or 
Eastern Daylight Saving Time, whichever is currently in effect (Eastern 
Time). Business days include each day, except Saturdays, Sundays and 
Federal holidays. All filings submitted electronically to the FDIC 
commencing after 10 p.m. Eastern Time on business days shall be deemed 
filed as of 8 a.m. on the following business day. All filings submitted 
electronically to the FDIC on non-business days shall be deemed filed as 
of 8 a.m. on the following business day.
    (4) Adjustment of the filing date. If an electronic filer in good 
faith attempts to file a beneficial ownership report with the FDIC in a 
timely manner but the filing is delayed due to technical difficulties 
beyond the electronic filer's control, the electronic filer may request 
an adjustment of the filing date of such submission. The FDIC may grant 
the request if it appears that such adjustment is appropriate and 
consistent with the public interest and the protection of investors.
    (5) Exhibits. (i) Exhibits to an electronic filing that have not 
previously been filed with the FDIC shall be filed in electronic format, 
absent a hardship exemption.
    (ii) Previously filed exhibits, whether in paper or electronic 
format, may be incorporated by reference into an electronic filing to 
the extent permitted by applicable SEC rules under the Exchange Act. An 
electronic filer may, at its option, restate in electronic format an 
exhibit incorporated by reference that originally was filed in paper 
format.
    (iii) Any document filed in paper format in violation of mandated 
electronic filing requirements shall not be incorporated by reference 
into an electronic filing.
    (6) Continuing Hardship Exemption. The FDIC will not accept in paper 
format any beneficial ownership report filing required to be submitted 
electronically under this part unless the filer satisfies the 
requirements for a continuing hardship exemption:
    (i) A filer may apply in writing for a continuing hardship exemption 
if all or part of a filing or group of filings otherwise required to be 
filed in electronic format cannot be so filed without undue burden or 
expense. Such written application shall be made at least ten business 
days prior to the required due date of the filing(s) or the proposed 
filing date, as appropriate, or within such shorter period as may be 
permitted. The written application shall be sent to the Accounting and 
Securities Disclosure Section, Division of Risk Management Supervision, 
Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, 
DC 20429, and shall

[[Page 582]]

contain the information set forth in paragraph (b)(6)(ii) of this 
section.
    (A) The application shall not be deemed granted until the applicant 
is notified by the FDIC.
    (B) If the FDIC denies the application for a continuing hardship 
exemption, the filer shall file the required document in electronic 
format on the required due date or the proposed filing date or such 
other date as may be permitted.
    (C) If the FDIC determines that the grant of the exemption is 
appropriate and consistent with the public interest and the protection 
of investors and so notifies the applicant, the filer shall follow the 
procedures set forth in paragraph (b)(6)(iii) of this section.
    (ii) The request for the continuing hardship exemption shall 
include, but not be limited to, the following:
    (A) The reason(s) that the necessary hardware and software are not 
available without unreasonable burden and expense;
    (B) The burden and expense involved to employ alternative means to 
make the electronic submission; and/or
    (C) The reasons for not submitting electronically the document or 
group of documents, as well as justification for the requested time 
period for the exemption.
    (iii) If the request for a continuing hardship exemption is granted, 
the electronic filer shall submit the document or group of documents for 
which the exemption is granted in paper format on the required due date 
specified in the applicable form, rule or regulation, or the proposed 
filing date, as appropriate. The paper format document(s) shall have 
placed at the top of page 1, or at the top of an attached cover page, a 
legend in capital letters:

IN ACCORDANCE WITH 12 CFR 335.801(b), THIS (SPECIFY DOCUMENT) IS BEING 
FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION.

    (iv) Where a continuing hardship exemption is granted with respect 
to an exhibit only, the paper format exhibit shall be filed with the 
FDIC under Form SE (17 CFR part 249). The name of the FDIC shall be 
substituted for the name of the SEC on the form. Form SE shall be filed 
as a paper cover sheet to all exhibits to Beneficial Ownership Reports 
submitted to the FDIC in paper form pursuant to a hardship exemption.
    (v) Form SE may be filed with the FDIC up to six business days prior 
to, or on the date of filing of, the electronic form to which it relates 
but shall not be filed after such filing date. If a paper exhibit is 
submitted in this manner, requirements that the exhibit be filed with, 
provided with, or accompany the electronic filing shall be satisfied. 
Any requirements as to delivery or furnishing the information to persons 
other than the FDIC shall not be affected by this section.
    (7) Signatures. (i) Required signatures to, or within, any 
electronic submission must be in typed form. When used in connection 
with an electronic filing, the term ``signature'' means an electronic 
entry or other form of computer data compilation of any letters or 
series of letters or characters comprising a name, executed, adopted or 
authorized as a signature.
    (ii) Each signatory to an electronic filing shall manually sign a 
signature page or other document authenticating, acknowledging or 
otherwise adopting his or her signature that appears in typed form 
within the electronic filing. Such document shall be executed before or 
at the time the electronic filing is made and shall be retained by the 
filer for a period of five years. Upon request, an electronic filer 
shall furnish to the FDIC a copy of any or all documents retained 
pursuant to this section.
    (iii) Where the FDIC's rules require a filer to furnish a national 
securities exchange, a national securities association, a bank, or State 
savings association, paper copies of a document filed with the FDIC in 
electronic format, signatures to such paper copies may be in typed form.
    (c) Legal proceedings. Whenever this part or cross referenced 
provisions of the SEC regulations require disclosure of legal 
proceedings, administrative or judicial proceedings arising under 
section 8 of the Federal Deposit Insurance Act shall be deemed material 
and shall be described.
    (d) Indebtedness of management. Whenever this part of cross 
referenced provisions of the SEC regulations require

[[Page 583]]

disclosure of indebtedness of management, extensions of credit to 
specified persons in excess of ten (10) percent of the equity capital 
accounts of the bank or State savings association or $5 million, 
whichever is less, shall be deemed material and shall be disclosed in 
addition to any other required disclosure. The disclosure of this 
material indebtedness shall include the largest aggregate amount of 
indebtedness (in dollar amounts, and as a percentage of total equity 
capital accounts at the time), including extensions of credit or 
overdrafts, endorsements and guarantees outstanding at any time since 
the beginning of the bank or State savings association's last fiscal 
year, and as of the latest practicable date.
    (1) If aggregate extensions of credit to all specified persons as a 
group exceeded 20 percent of the equity capital accounts of the bank or 
State savings association at any time since the beginning of the last 
fiscal year, the aggregate amount of such extensions of credit shall 
also be disclosed.
    (2) Other loans are deemed material and shall be disclosed where:
    (i) The extension(s) of credit was not made on substantially the 
same terms, including interest rates, collateral and repayment terms as 
those prevailing at the time for comparable transactions with other than 
the specified persons;
    (ii) The extension(s) of credit was not made in the ordinary course 
of business; or
    (iii) The extension(s) of credit has involved or presently involves 
more than a normal risk of collectibility or other unfavorable features 
including the restructuring of an extension of credit, or a delinquency 
as to payment of interest or principal.
    (e) Proxy material required to be filed. (1) Three preliminary 
copies of each information statement, proxy statement, form of proxy, 
and other item of soliciting material to be furnished to security 
holders concurrently therewith, shall be filed with the FDIC by the 
bank, State savings association, or any other person making a 
solicitation subject to 12 CFR 335.401 at least ten calendar days (or 15 
calendar days in the case of other than routine meetings, as defined in 
paragraph (e)(2) of this section) prior to the date such item is first 
sent or given to any security holders, or such shorter date as may be 
authorized.
    (2) For the purposes of this paragraph (e), a routine meeting means:
    (i) A meeting with respect to which no one is soliciting proxies 
subject to 12 CFR 335.401 other than on behalf of the bank or State 
savings association and at which the bank or State savings association 
intends to present no matters other than:
    (A) The election of directors;
    (B) The election, approval or ratification of accountants;
    (C) A Security holder proposal included pursuant to SEC Rule 14(a)-8 
(17 CFR 240.14a-8); and
    (D) The approval or ratification of a plan as defined in paragraph 
(a)(7)(ii) of Item 402 of SEC Regulation S-K (17 CFR 229.402(a)(7)(ii)) 
or amendments to such a plan; and
    (ii) The bank or State savings association does not comment upon or 
refer to a solicitation in opposition (as defined in 17 CFR 240.14a-6) 
in connection with the meeting in its proxy material.
    (3) Where preliminary copies of material are filed with the FDIC 
under this section, the printing of definitive copies for distribution 
to security holders should be deferred until the comments of the FDIC's 
staff have been received and considered.
    (f) Additional information; filing of other statements in certain 
cases. (1) In addition to the information expressly required to be 
included in a statement, form, schedule or report, 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.
    (2) The FDIC may, upon the written request of the bank or State 
savings association, and where consistent with the protection of 
investors, permit the omission of one or more of the statements or 
disclosures herein required, or the filing in substitution therefor of 
appropriate statements or disclosures of comparable character.
    (3) The FDIC may also require the filing of other statements or 
disclosures in addition to, or in substitution for those herein required 
in any case where

[[Page 584]]

such statements are necessary or appropriate for an adequate 
presentation of the financial condition of any person whose financial 
statements are required, or disclosure about which is otherwise 
necessary for the protection of investors.

[62 FR 6856, Feb. 14, 1997, as amended at 69 FR 19088, Apr. 12, 2004; 69 
FR 59783, Oct. 6, 2004; 70 FR 16400, Mar. 31, 2005; 70 FR 44273, Aug. 2, 
2005; 75 FR 73951, Nov. 30, 2010; 79 FR 63501, Oct. 24, 2014]



PART 336_FDIC EMPLOYEES--Table of Contents



             Subpart A_Employee Responsibilities and Conduct

Sec.
336.1 Cross-reference to employee ethical conduct standards and 
          financial disclosure regulations.

 Subpart B_Minimum Standards of Fitness for Employment With the Federal 
                      Deposit Insurance Corporation

336.2 Authority, purpose and scope.
336.3 Definitions.
336.4 Minimum standards for appointment to a position with the FDIC.
336.5 Minimum standards for employment with the FDIC.
336.6 Verification of compliance.
336.7 Employee responsibility, counseling and distribution of 
          regulation.
336.8 Sanctions and remedial actions.
336.9 Finality of determination.

 Subpart C_One-Year Restriction on Post-Employment Activities of Senior 
                                Examiners

336.10 Purpose and scope.
336.11 Definitions.
336.12 One-year post-employment restriction.
336.13 Penalties.

    Source: 61 FR 28728, June 6, 1996, unless otherwise noted.



             Subpart A_Employee Responsibilities and Conduct

    Authority: 5 U.S.C. 7301; 12 U.S.C. 1819(a).



Sec.  336.1  Cross-reference to employee ethical conduct standards 
and financial disclosure regulations.

    Employees of the Federal Deposit Insurance Corporation (Corporation) 
are subject to the Executive Branch-wide Standards of Ethical Conduct at 
5 CFR part 2635, the Corporation regulation at 5 CFR part 3201 which 
supplements the Executive Branch-wide Standards, the Executive Branch-
wide financial disclosure regulations at 5 CFR part 2634, and the 
Corporation regulation at 5 CFR part 3202, which supplements the 
Executive Branch-wide financial disclosure regulations.



 Subpart B_Minimum Standards of Fitness for Employment With the Federal 
                      Deposit Insurance Corporation

    Authority: 12 U.S.C. 1819 (Tenth), 1822(f).



Sec.  336.2  Authority, purpose and scope.

    (a) Authority. This part is adopted pursuant to section 12(f) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1822, and the rulemaking 
authority of the Federal Deposit Insurance Corporation (FDIC) found at 
12 U.S.C. 1819. This part is in addition to, and not in lieu of, any 
other statutes or regulations which may apply to standards for ethical 
conduct or fitness for employment with the FDIC and is consistent with 
the goals and purposes of 18 U.S.C. 201, 203, 205, 208, and 209.
    (b) Purpose. The purpose of this part is to state the minimum 
standards of fitness and integrity required of individuals who provide 
service to or on behalf of the FDIC and provide procedures for 
implementing these requirements.
    (c) Scope. (1) This part applies to applicants for employment with 
the FDIC under title 5 of the U.S. Code appointing authority in either 
the excepted or competitive service, including Special Government 
Employees. This part applies to all appointments, regardless of tenure, 
including intermittent, temporary, time-limited and permanent 
appointments.
    (2) In addition, this part applies to all employees of the FDIC who 
serve under an appointing authority under chapter 21 of title 5 of the 
U.S. Code.
    (3) Further, this part applies to any individual who, pursuant to a 
contract or any other arrangement, performs functions or activities of 
the Corporation, under the direct supervision of an officer or employee 
of the Corporation.

[[Page 585]]



Sec.  336.3  Definitions.

    For the purposes of this part:
    (a) Company means any corporation, firm, partnership, society, joint 
venture, business trust, association or similar organization, or any 
other trust unless by its terms it 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, or any other 
organization or institution, but shall not include any corporation the 
majority of the shares of which are owned by the United States, any 
state, or the District of Columbia.
    (b) Control means the power to vote, directly or indirectly, 25 
percent or more of any class of the voting stock of a company, the 
ability to direct in any manner the election of a majority of a 
company's directors or trustees, or the ability to exercise a 
controlling influence over the company's management and policies. For 
purposes of this definition, a general partner of a limited partnership 
is presumed to be in control of that partnership. For purposes of this 
part, an entity or individual shall be presumed to have control of a 
company if the entity or individual directly or indirectly, or acting in 
concert with one or more entities or individuals, or through one or more 
subsidiaries, owns or controls 25 percent or more of its equity, or 
otherwise controls or has power to control its management or policies.
    (c) Default on a material obligation means a loan or advance from an 
insured depository institution which is or was delinquent for 90 or more 
days as to payment of principal or interest, or any combination thereof.
    (d) Employee means any officer or employee, including a liquidation 
graded or temporary employee, providing service to or on behalf of the 
FDIC who has been appointed to a position under an authority contained 
in title 5 of the U.S. Code. This definition excludes those individuals 
designated by title 5 of the U.S. Code as officials in the Federal 
Executive Schedule.
    (e) Federal banking agency means the Office of the Comptroller of 
the Currency, the Board of Governors of the Federal Reserve System, or 
the Federal Deposit Insurance Corporation, or their predecessors or 
successors.
    (f) Federal deposit insurance fund means the Deposit Insurance Fund, 
the former Bank Insurance Fund, the former Savings Association Insurance 
Fund, the Federal Savings and Loan Insurance Corporation (FSLIC) 
Resolution Trust, or the funds formerly maintained by the Resolution 
Trust Corporation (RTC), or their successors, for the benefit of insured 
depositors.
    (g) FDIC means the Federal Deposit Insurance Corporation, in its 
receivership and corporate capacities.
    (h) Insured depository institution means any bank or savings 
association the deposits of which are insured by the FDIC.
    (i) Pattern or practice of defalcation regarding obligations means:
    (1) A history of financial irresponsibility with regard to debts 
owed to insured depository institutions which are in default in excess 
of $50,000 in the aggregate. Examples of such financial irresponsibility 
include, without limitation:
    (i) Failure to pay a debt or debts totalling more than $50,000 
secured by an uninsured property which is destroyed; or
    (ii) Abuse of credit cards or incurring excessive debt well beyond 
the individual's ability to repay resulting in default(s) in excess of 
$50,000 in the aggregate.
    (2) Wrongful refusal to fulfill duties and obligations to insured 
depository institutions. Examples of such wrongful refusal to fulfill 
duties and obligations include, without limitation:
    (i) Any use of false financial statements;
    (ii) Misrepresentation as to the individual's ability to repay 
debts;
    (iii) Concealing assets from the insured depository institution;
    (iv) Any instance of fraud, embezzlement or similar misconduct in 
connection with an obligation to the insured depository institution; and
    (v) Any conduct described in any civil or criminal judgment against 
an individual for breach of any obligation, contractual or otherwise, or 
any duty of loyalty or care that the individual owed to an insured 
depository institution.

[[Page 586]]

    (3) Defaults shall not be considered a pattern or practice of 
defalcation where the defaults are caused by catastrophic events beyond 
the control of the employee such as death, disability, illness or loss 
of financial support.
    (j) Substantial loss to federal deposit insurance funds--(1) 
Substantial loss to federal deposit insurance funds means:
    (i) A loan or advance from an insured depository institution, which 
is now owed to the FDIC, RTC, FSLIC or their successors, or any federal 
deposit insurance fund, that is delinquent for ninety (90) or more days 
as to payment of principal, interest, or a combination thereof and on 
which there remains a legal obligation to pay an amount in excess of 
$50,000; or
    (ii) A final judgment in excess of $50,000 in favor of any federal 
deposit insurance fund, the FDIC, RTC, FSLIC, or their successors 
regardless of whether it becomes forgiven in whole or in part in a 
bankruptcy proceeding.
    (2) For purposes of computing the $50,000 ceiling in paragraphs 
(j)(1)(i) and (ii) of this section, all delinquent judgments, loans, or 
advances currently owed to the FDIC, RTC, FSLIC or their successors, or 
any federal deposit insurance fund, shall be aggregated. In no event 
shall delinquent loans or advances from different insured depository 
institutions be separately considered.

[61 FR 28728, June 6, 1996, as amended at 71 FR 20526, Apr. 21, 2006; 79 
FR 42183, July 21, 2014]



Sec.  336.4  Minimum standards for appointment to a position with the FDIC.

    (a) No person shall become employed on or after June 18, 1994, by 
the FDIC or otherwise perform any service for or on behalf of the FDIC 
who has:
    (1) Been convicted of any felony;
    (2) Been removed from, or prohibited from participating in the 
affairs of, any insured depository institution pursuant to any final 
enforcement action by any appropriate federal banking agency;
    (3) Demonstrated a pattern or practice of defalcation regarding 
obligations to insured depository institutions; or
    (4) Caused a substantial loss to federal deposit insurance funds.
    (b) Prior to an offer of employment, any person applying for 
employment with the FDIC shall sign a certification of compliance with 
the minimum standards listed in paragraphs (a) (1) through (4) of this 
section. In addition, any person applying for employment with the FDIC 
shall provide as an attachment to the certification any instance in 
which the applicant, or a company under the applicant's control, 
defaulted on a material obligation to an insured depository institution 
within the preceding five years.
    (c) Incumbent employees who separate from the FDIC and are 
subsequently reappointed after a break in service of more than three 
days are subject to the minimum standards listed in paragraphs (a) (1) 
though (4) of this section. The former employee is required to submit a 
new certification statement including attachments, as provided in 
paragraph (b) of this section, prior to appointment to the new position.



Sec.  336.5  Minimum standards for employment with the FDIC.

    (a) No person who is employed by the FDIC shall continue in 
employment in any manner whatsoever or perform any service for or on 
behalf of the FDIC who, beginning June 18, 1994 and thereafter:
    (1) Is convicted of any felony;
    (2) Is prohibited from participating in the affairs of any insured 
depository institution pursuant to any final enforcement action by any 
appropriate federal banking agency;
    (3) Demonstrates a pattern or practice of defalcation regarding 
obligations to insured depository institution(s); or
    (4) Causes a substantial loss to federal deposit insurance funds.
    (b) Any noncompliance with the standards listed in paragraphs (a) 
(1) through (4) of this section is a basis for removal from employment 
with the FDIC.



Sec.  336.6  Verification of compliance.

    The FDIC's Division of Administration shall order appropriate 
investigations as authorized by 12 U.S.C. 1819

[[Page 587]]

and 1822 on newly appointed employees, either prior to or following 
appointment, to verify compliance with the minimum standards listed 
under Sec.  336.4(a) (1) through (4).



Sec.  336.7  Employee responsibility, counseling and distribution 
of regulation.

    (a) Each employee is responsible for being familiar with and 
complying with the provisions of this part.
    (b) The Ethics Counselor shall provide a copy of this part to each 
new employee within 30 days of initial appointment.
    (c) An employee who believes that he or she may not be in compliance 
with the minimum standards provided under Sec.  336.5(a)(1) through (4), 
or who receives a demand letter from the FDIC for any reason, shall make 
a written report of all relevant facts to the Ethics Counselor within 
ten (10) business days after the employee discovers the possible 
noncompliance, or after the receipt of a demand letter from the FDIC.
    (d) The Ethics Counselor shall provide guidance to employees 
regarding the appropriate statutes, regulations and corporate policies 
affecting employee's ethical responsibilities and conduct under this 
part.
    (e) The Ethics Counselor shall provide the Personnel Services Branch 
with notice of an employee's noncompliance.



Sec.  336.8  Sanctions and remedial actions.

    (a) Any employee found not in compliance with the minimum standards 
except as provided in paragraph (b) of this section below shall be 
terminated and prohibited from providing further service for or on 
behalf of the FDIC in any capacity. No other remedial action is 
authorized for sanctions for noncompliance.
    (b) Any employee found not in compliance with the minimum standards 
under Sec.  336.5(a)(3) based on financial irresponsibility as defined 
in Sec.  336.3(i)(1) shall be terminated consistent with applicable 
procedures and prohibited from providing future services for or on 
behalf of the FDIC in any capacity, unless the employee brings him or 
herself into compliance with the minimum standards as provided in 
paragraphs (b) (1) and (2) of this section.
    (1) Upon written notification by the Corporation of financial 
irresponsibility, the employee will be allowed a reasonable period of 
time to establish an agreement that satisfies the creditor and the FDIC 
as to resolution of outstanding indebtedness or otherwise resolves the 
matter to the satisfaction of the FDIC prior to the initiation of a 
termination action.
    (2) As part of the agreement described in paragraph (b)(1) of this 
section, the employee shall provide authority to the creditor to report 
any violation by the employee of the terms of the agreement directly to 
the FDIC Ethics Counselor.



Sec.  336.9  Finality of determination.

    Any determination made by the FDIC pursuant to this part shall be at 
the FDIC's sole discretion and shall not be subject to further review.



 Subpart C_One-Year Restriction on Post-Employment Activities of Senior 
                                Examiners

    Source: 70 FR 69639, Nov. 17, 2005, unless otherwise noted.

    Authority: 12 U.S.C. 1819 and 1820(k).



Sec.  336.10  Purpose and scope.

    This subpart applies to officers or employees of the FDIC who are 
subject to the post-employment restrictions set forth in section 10(k) 
of the Federal Deposit Insurance Act, 12 U.S.C. 1820(k), and implements 
those restrictions as they apply to officers and employees of the FDIC.



Sec.  336.11  Definitions.

    For purposes of this subpart:
    (a) Bank holding company has the meaning given to such term in 
section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)).
    (b) A consultant for an insured depository institution or other 
company shall include only individuals who work directly on matters for, 
or on behalf of, such institution or other company.

[[Page 588]]

    (c) Control has the meaning given to such term in section 336.3(b), 
and a foreign bank shall be deemed to control any insured branch of the 
foreign bank.
    (d) Depository institution means any bank or savings association, 
including a branch of a foreign bank, if such branch is located in the 
United States.
    (e) Foreign bank means any bank or company described in section 8(a) 
of the International Banking Act of 1978 (12 U.S.C. 3106(a)).
    (f) Savings and loan holding company has the meaning given to such 
term in section 10(a)(1)(D) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(D)).
    (g) A senior examiner for an insured depository institution means an 
officer or employee of the FDIC--
    (1) who has been authorized by the FDIC to conduct examinations or 
inspections of insured depository institutions on behalf of the FDIC;
    (2) who has been assigned continuing, broad, and lead responsibility 
for the examination or inspection of the institution;
    (3) who routinely interacts with officers or employees of the 
institution or its affiliates; and
    (4) whose responsibilities with respect to the institution represent 
a substantial portion of the FDIC officer or employee's overall 
responsibilities.



Sec.  336.12  One-year post-employment restriction.

    (a) Prohibition. An officer or employee of the FDIC who serves as a 
senior examiner of an insured depository institution for at least 2 
months during the last 12 months of that individual's employment with 
the FDIC may not, within 1 year after the termination date of his or her 
employment with the FDIC, knowingly accept compensation as an employee, 
officer, director, or consultant from--
    (1) The insured depository institution; or
    (2) Any company (including a bank holding company or savings and 
loan holding company) that controls such institution.
    (b) Waivers. The post-employment restrictions in paragraph (a) of 
this section will not apply to a senior examiner if the FDIC Chairperson 
certifies in writing and on a case-by case basis that a waiver of the 
restrictions will not affect the integrity of the FDIC's supervisory 
program.
    (c) Effective Date. The post-employment restrictions in paragraph 
(a) of this section will not apply to any officer or employee of the 
FDIC, or any former officer or employee of the FDIC, who ceased to be an 
officer or employee of the FDIC before December 17, 2005.



Sec.  336.13  Penalties.

    (a) Penalties under section 10(k) of the FDI Act. A senior examiner 
of the FDIC who violates the post-employment restrictions set forth in 
Sec.  336.12 shall be subject to the following penalties--
    (1) An order--
    (i) Removing such person from office or prohibiting such person from 
further participation in the affairs of the relevant insured depository 
institution or company (including a bank holding company or savings and 
loan holding company) that controls such institution for a period of up 
to five years, and
    (ii) Prohibiting any further participation by such person, in any 
manner, in the affairs of any insured depository institution for a 
period of up to five years; or
    (2) A civil monetary penalty of not more than $250,000; or
    (3) Both.
    (b) Enforcement by appropriate Federal banking agency of hiring 
entity. Violations of Sec.  336.12 shall be enforced by the appropriate 
Federal banking agency of the depository institution, depository 
institution holding company, or other company at which the violation 
occurred, as determined under section 10(k)(6), which may be an agency 
other than the FDIC.
    (c) Scope of prohibition orders. Any senior examiner who is subject 
to an order issued under paragraph (a)(1) of this section shall, as 
required by 12 U.S.C. 1820(k)(6)(B), be subject to paragraphs (6) and 
(7) of section 8(e) in the same manner and to the same extent as a 
person subject to an order issued under section 8(e).
    (d) Other penalties. The penalties set forth in paragraph (a) of 
this section are not exclusive, and a senior examiner who violates the 
restrictions in

[[Page 589]]

Sec.  336.12 may also be subject to other administrative, civil, or 
criminal remedies or penalties as provided by law.



PART 337_UNSAFE AND UNSOUND BANKING PRACTICES--Table of Contents



Sec.
337.1 Scope.
337.2 Standby letters of credit.
337.3 Limits on extensions of credit to executive officers, directors, 
          and principal shareholders of insured nonmember banks.
337.4 [Reserved]
337.5 Exemption.
337.6 Brokered deposits.
337.7-337.9 [Reserved]
337.10 Waiver.
337.11 Effect on other banking practices.
337.12 Frequency of examination.

    Authority: 12 U.S.C. 375a(4), 375b, 1463(a)(1), 1816, 1818(a), 
1818(b), 1819, 1820(d), 1828(j)(2), 1831, 1831f, 5412.

    Source: 39 FR 29179, Aug. 14, 1974, unless otherwise noted.



Sec.  337.1  Scope.

    The provisions of this part apply to certain banking practices which 
are likely to have adverse effects on the safety and soundness of 
insured State nonmember banks or which are likely to result in 
violations of law, rule, or regulation.



Sec.  337.2  Standby letters of credit.

    (a) Definition. As used in this section, the term standby letter of 
credit means any letter of credit, or similar arrangement however named 
or described, which represents an obligation to the beneficiary on the 
part of the issuer: (1) To repay money borrowed by or advanced to or for 
the account of the account party, or (2) to make payment on account of 
any indebtedness undertaken by the account party, or (3) to make payment 
on account of any default (including any statement of default) by the 
account party in the performance of an obligation. \1\ The term similar 
arrangement includes the creation of an acceptance or similar 
undertaking.
---------------------------------------------------------------------------

    \1\ As defined in this paragraph (a), the term standby letter of 
credit would not include commercial letters of credit and similar 
instruments where the issuing bank expects the beneficiary to draw upon 
the issuer, which do not ``guaranty'' payment of a money obligation of 
the account party and which do not provide that payment is occasioned by 
default on the part of the account party.
---------------------------------------------------------------------------

    (b) Restriction. A standby letter of credit issued by an insured 
State nonmember bank shall be combined with all other standby letters of 
credit and all loans for purposes of applying any legal limitation on 
loans of the bank (including limitations on loans to any one borrower, 
on loans to affiliates of the bank, or on aggregate loans); Provided, 
however, That if such standby letter of credit is subject to separate 
limitation under applicable State or federal law, then the separate 
limitation shall apply in lieu of the loan limitation. \2\
---------------------------------------------------------------------------

    \2\ Where the standby letter of credit is subject to a non-recourse 
participation agreement with another bank or other banks, this section 
shall apply to the issuer and each participant in the same manner as in 
the case of a participated loan.
---------------------------------------------------------------------------

    (c) Exceptions. All standby letters of credit shall be subject to 
the provisions of paragraph (b) of this section except where:
    (1) Prior to or at the time of issuance, the issuing bank is paid an 
amount equal to the bank's maximum liability under the standby letter of 
credit; or,
    (2) Prior to or at the time of issuance, the issuing bank has set 
aside sufficient funds in a segregated deposit account, clearly 
earmarked for that purpose, to cover the bank's maximum liability under 
the standby letter of credit.
    (d) Disclosure. Each insured State nonmember bank must maintain 
adequate control and subsidiary records of its standby letters of credit 
comparable to the records maintained in connection with the bank's 
direct loans so that at all times the bank's potential liability 
thereunder and the bank's compliance with this section may be readily 
determined. In addition, all such standby letters of credit must be 
adequately reflected on the bank's published financial statements.

[[Page 590]]



Sec.  337.3  Limits on extensions of credit to executive officers, directors, 
and principal shareholders of insured nonmember banks.

    (a) With the exception of 12 CFR 215.5(b), 215.5(c)(3), 215.5(c)(4), 
and 215.11, insured nonmember banks are subject to the restrictions 
contained in subpart A of Federal Reserve Board Regulation O (12 CFR 
part 215, subpart A) to the same extent and to the same manner as though 
they were member banks.
    (b) For the purposes of compliance with Sec.  215.4(b) of Federal 
Reserve Board Regulation O, no insured nonmember bank may extend credit 
or grant a line of credit to any of its executive officers, directors, 
or principal shareholders or to any related interest of any such person 
in an amount that, when aggregated with the amount of all other 
extensions of credit and lines of credit by the bank to that person and 
to all related interests of that person, exceeds the greater of $25,000 
or five percent of the bank's capital and unimpaired surplus, \3\ or 
$500,000 unless (1) the extension of credit or line of credit has been 
approved in advance by a majority of the entire board of directors of 
that bank and (2) the interested party has abstained from participating 
directly or indirectly in the voting.
---------------------------------------------------------------------------

    \3\ For the purposes of Sec.  337.3, an insured nonmember bank's 
capital and unimpaired surplus shall have the same meaning as found in 
Sec.  215.2(f) of Federal Reserve Board Regulation O (12 CFR 215.2(f)).
---------------------------------------------------------------------------

    (c)(1) No insured nonmember bank may extend credit in an aggregate 
amount greater than the amount permitted in paragraph (c)(2) of this 
section to a partnership in which one or more of the bank's executive 
officers are partners and, either individually or together, hold a 
majority interest. For the purposes of paragraph (c)(2) of this section, 
the total amount of credit extended by an insured nonmember bank to such 
partnership is considered to be extended to each executive officer of 
the insured nonmember bank who is a member of the partnership.
    (2) An insured nonmember bank is authorized to extend credit to any 
executive officer of the bank for any other purpose not specified in 
Sec.  215.5(c)(1) and (2) of Federal Reserve Board Regulation O (12 CFR 
215.5(c)(1) and (2)) if the aggregate amount of such other extensions of 
credit does not exceed at any one time the higher of 2.5 percent of the 
bank's capital and unimpaired surplus or $25,000 but in no event more 
than $100,000, provided, however, that no such extension of credit shall 
be subject to this limit if the extension of credit is secured by:
    (i) A perfected security interest in bonds, notes, certificates of 
indebtedness, or Treasury bills of the United States or in other such 
obligations fully guaranteed as to principal and interest by the United 
States;
    (ii) Unconditional takeout commitments or guarantees of any 
department, agency, bureau, board, commission or establishment of the 
United States or any corporation wholly owned directly or indirectly by 
the United States; or
    (iii) A perfected security interest in a segregated deposit account 
in the lending bank.
    (3) Any extension of credit that was outstanding on May 28, 1992 and 
that would if made on or after that date violate paragraph (c)(1) or 
paragraph (c)(2) of this Sec.  337.3 shall be reduced in amount by May 
28, 1993 so that the extension of credit is in compliance with the 
lending limit set forth in paragraphs (c)(1) and (c)(2) of this section. 
Any renewal or extension of such an extension of credit on or after May 
28, 1992 shall be made only on terms that will bring the extension of 
credit into compliance with the lending limit of paragraphs (c)(1) and 
(c)(2) of this section by May 28, 1993, however, any extension of credit 
made before May 28, 1992 that bears a specific maturity date of May 28, 
1993 or later shall be repaid in accordance with its repayment schedule 
in existence on or before May 28, 1992.
    (4) If an insured nonmember bank is unable to bring all extensions 
of credit outstanding as of May 28, 1992 into compliance as required by 
paragraph (c)(3) of this Sec.  337.3, the bank may at the discretion of 
the appropriate FDIC regional director (Division of Supervision and 
Consumer Protection (DSC)) obtain, for good cause shown, not more

[[Page 591]]

than two additional one-year periods to come into compliance.
    (5) For the purposes of paragraph (c) of this section, the 
definitions of the terms used in Federal Reserve Board Regulation O 
shall apply including the exclusion of executive officers of a bank's 
parent bank holding company and executive officers of any other 
subsidiary of that bank holding company from the definition of executive 
officer for the purposes of complying with the loan restrictions 
contained in section 22(g) of the Federal Reserve Act. For the purposes 
of complying with Sec.  215.5(d) of Federal Reserve Board Regulation O, 
the reference to ``the amount specified for a category of credit in 
paragraph (c) of this section'' shall be understood to refer to the 
amount specified in paragraph (c)(2) of this Sec.  337.3.

(Approved by the Office of Management and Budget under control number 
3064-0108)

[47 FR 47003, Oct. 22, 1982, as amended at 48 FR 42971, Sept. 21, 1983; 
57 FR 7649, Mar. 4, 1992; 57 FR 17850, Apr. 28, 1992; 57 FR 28457, June 
25, 1992; 59 FR 66668, Dec. 28, 1994]



Sec.  337.4  [Reserved]



Sec.  337.5  Exemption.

    Check guaranty card programs, customer-sponsored credit card 
programs, and similar arrangements in which a bank undertakes to 
guarantee the obligations of individuals who are its retail banking 
deposit customers are exempted from Sec.  337.2: Provided, however, That 
the bank establishes the creditworthiness of the individual before 
undertaking to guarantee his/her obligations and that any such 
arrangement to which a bank's principal shareholders, directors, or 
executive officers are a party be in compliance with applicable 
provisions of Federal Reserve Regulation O (12 CFR part 215).

[50 FR 10495, Mar. 15, 1985]



Sec.  337.6  Brokered deposits.

    (a) Definitions. For the purposes of this Sec.  337.6, the following 
definitions apply:
    (1) Appropriate Federal banking agency has the same meaning as 
provided under section 3(q) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q)).
    (2) Brokered deposit means any deposit that is obtained, directly or 
indirectly, from or through the mediation or assistance of a deposit 
broker.
    (3) Capital categories. (i) For purposes of section 29 of the 
Federal Deposit Insurance Act and this Sec.  337.6, the terms well 
capitalized, adequately capitalized, and undercapitalized, \11\ shall 
have the same meaning as to each insured depository institution as 
provided under regulations implementing section 38 of the Federal 
Deposit Insurance Act issued by the appropriate federal banking agency 
for that institution. \12\
---------------------------------------------------------------------------

    \11\ The term undercapitalized includes any institution that is 
significantly undercapitalized or critically undercapitalized under 
regulations implementing section 38 of the Federal Deposit Insurance Act 
and issued by the appropriate federal banking agency for that 
institution.
    \12\ For the most part, the capital measure terms are defined in the 
following regulations: FDIC--12 CFR part 324, subpart H; Board of 
Governors of the Federal Reserve System--12 CFR part 208; and Office of 
the Comptroller of the Currency--12 CFR part 6.
---------------------------------------------------------------------------

    (ii) If the appropriate federal banking agency reclassifies a well 
capitalized insured depository institution as adequately capitalized 
pursuant to section 38 of the Federal Deposit Insurance Act, the 
institution so reclassified shall be subject to the provisions 
applicable to such lower capital category under this Sec.  337.6.
    (iii) An insured depository institution shall be deemed to be within 
a given capital category for purposes of this Sec.  337.6 as of the date 
the institution is notified of, or is deemed to have notice of, its 
capital category, under regulations implementing section 38 of the 
Federal Deposit Insurance Act issued by the appropriate federal banking 
agency for that institution. \13\
---------------------------------------------------------------------------

    \13\ The regulations implementing section 38 of the Federal Deposit 
Insurance Act and issued by the federal banking agencies generally 
provide that an insured depository institution is deemed to have been 
notified of its capital levels and its capital category as of the most 
recent date: (1) A Consolidated Report of Condition and Income is 
required to be filed with the appropriate federal banking agency; (2) A 
final report of examination is delivered to the institution; or (3) 
Written notice is provided by the appropriate federal banking agency to 
the institution of its capital category for purposes of section 38 of 
the Federal Deposit Insurance Act and implementing regulations or that 
the institution's capital category has changed. Provisions specifying 
the effective date of determination of capital category are generally 
published in the following regulations: FDIC--12 CFR 324.402; Board of 
Governors of the Federal Reserve System--12 CFR part 208, subpart D; and 
Office of the Comptroller of the Currency--12 CFR 6.3.

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

[[Page 592]]

    (4) Deposit has the same meaning as provided under section 3(l) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(1)).
    (5) Deposit broker. (i) The term deposit broker means:
    (A) Any person engaged in the business of placing deposits, or 
facilitating the placement of deposits, of third parties with insured 
depository institutions, or the business of placing deposits with 
insured depository institutions for the purpose of selling interests in 
those deposits to third parties; and
    (B) An agent or trustee who establishes a deposit account to 
facilitate a business arrangement with an insured depository institution 
to use the proceeds of the account to fund a prearranged loan.
    (ii) The term deposit broker does not include:
    (A) An insured depository institution, with respect to funds placed 
with that depository institution;
    (B) An employee of an insured depository institution, with respect 
to funds placed with the employing depository institution;
    (C) A trust department of an insured depository institution, if the 
trust or other fiduciary relationship in question has not been 
established for the primary purpose of placing funds with insured 
depository institutions;
    (D) The trustee of a pension or other employee benefit plan, with 
respect to funds of the plan;
    (E) A person acting as a plan administrator or an investment adviser 
in connection with a pension plan or other employee benefit plan 
provided that person is performing managerial functions with respect to 
the plan;
    (F) The trustee of a testamentary account;
    (G) The trustee of an irrevocable trust (other than one described in 
paragraph (a)(5)(i)(B) of this section), as long as the trust in 
question has not been established for the primary purpose of placing 
funds with insured depository institutions;
    (H) A trustee or custodian of a pension or profit-sharing plan 
qualified under section 401(d) or 403(a) of the Internal Revenue Code of 
1986 (26 U.S.C. 401(d) or 403(a));
    (I) An agent or nominee whose primary purpose is not the placement 
of funds with depository institutions; or
    (J) An insured depository institution acting as an intermediary or 
agent of a U.S. government department or agency for a government 
sponsored minority or women-owned depository institution deposit 
program.
    (iii) Notwithstanding paragraph (a)(5)(ii) of this section, the term 
deposit broker includes any insured depository institution that is not 
well-capitalized, and any employee of any such insured depository 
institution, which engages, directly or indirectly, in the solicitation 
of deposits by offering rates of interest (with respect to such 
deposits) which are significantly higher than the prevailing rates of 
interest on deposits offered by other insured depository institutions in 
such depository institution's normal market area.
    (6) Employee means any employee: (i) Who is employed exclusively by 
the insured depository institution;
    (ii) Whose compensation is primarily in the form of a salary;
    (iii) Who does not share such employee's compensation with a deposit 
broker; and
    (iv) Whose office space or place of business is used exclusively for 
the benefit of the insured depository institution which employs such 
individual.
    (7) FDIC means the Federal Deposit Insurance Corporation.
    (8) Insured depository institution means any bank, savings 
association, or branch of a foreign bank insured under the provisions of 
the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.).
    (b) Solicitation and acceptance of brokered deposits by insured 
depository institutions. (1) A well capitalized insured depository 
institution may solicit and

[[Page 593]]

accept, renew or roll over any brokered deposit without restriction by 
this section.
    (2)(i) An adequately capitalized insured depository institution may 
not accept, renew or roll over any brokered deposit unless it has 
applied for and been granted a waiver of this prohibition by the FDIC in 
accordance with the provisions of this section.
    (ii) Any adequately capitalized insured depository institution that 
has been granted a waiver to accept, renew or roll over a brokered 
deposit may not pay an effective yield on any such deposit which, at the 
time that such deposit is accepted, renewed or rolled over, exceeds by 
more than 75 basis points:
    (A) The effective yield paid on deposits of comparable size and 
maturity in such institution's normal market area for deposits accepted 
from within its normal market area; or
    (B) The national rate paid on deposits of comparable size and 
maturity for deposits accepted outside the institution's normal market 
area. For purposes of this paragraph (b)(2)(ii)(B), the national rate 
shall be a simple average of rates paid by all insured depository 
institutions and branches for which data are available. This rate shall 
be determined by the FDIC.
    (3)(i) An undercapitalized insured depository institution may not 
accept, renew or roll over any brokered deposit.
    (ii) An undercapitalized insured depository institution may not 
solicit deposits by offering an effective yield that exceeds by more 
than 75 basis points the prevailing effective yields on insured deposits 
of comparable maturity in such institution's normal market area or in 
the market area in which such deposits are being solicited.
    (c) Waiver. The FDIC may, on a case-by-case basis and upon 
application by an adequately capitalized insured depository institution, 
waive the prohibition on the acceptance, renewal or rollover of brokered 
deposits upon a finding that such acceptance, renewal or rollover does 
not constitute an unsafe or unsound practice with respect to such 
institution. The FDIC may conclude that it is not unsafe or unsound and 
may grant a waiver when the acceptance, renewal or rollover of brokered 
deposits is determined to pose no undue risk to the institution. Any 
waiver granted may be revoked at any time by written notice to the 
institution. For filing requirements, consult 12 CFR 303.243.
    (d) Exclusion for institutions in FDIC conservatorship. No insured 
depository institution for which the FDIC has been appointed conservator 
shall be subject to the prohibition on the acceptance, renewal or 
rollover of brokered deposits contained in this Sec.  337.6 or section 
29 of the Federal Deposit Insurance Act for 90 days after the date on 
which the institution was placed in conservatorship. During this 90-day 
period, the institution shall, nevertheless, be subject to the 
restriction on the payment of interest contained in paragraph (b)(2)(ii) 
of the section. After such 90-day period, the institution may not 
accept, renew or roll over any brokered deposit.
    (e) A market is any readily defined geographical area in which the 
rates offered by any one insured depository institution soliciting 
deposits in that area may affect the rates offered by other insured 
depository institutions operating in the same area. The effective yield 
on a deposit with an odd maturity shall be determined by interpolating 
between the yields offered by other insured depository institutions on 
deposits of the next longer and shorter maturities offered in the 
market. For purposes of this Sec.  337.6, a presumption shall exist that 
the prevailing rate or effective yield in the relevant market is the 
national rate as defined in paragraph (b)(2)(ii)(B) of this section 
unless the FDIC determines, in its sole discretion based on available 
evidence, that the effective yield in that market differs from the 
national rate. Evidence of the effective yield in a particular market 
may include (but is not limited to) the following:
    (1) Evidence as to the rates paid by other insured depository 
institutions in the same State, county or metropolitan statistical area 
(though the FDIC shall not be obligated to recognize each State, county 
or metropolitan statistical area as a separate market area);

[[Page 594]]

    (2) Evidence as to the rates paid by credit unions in the same 
market area if the FDIC determines that the insured depository 
institution competes directly with these credit unions; and
    (3) Evidence as to the different rates paid on different deposit 
products in the same market area (though the FDIC shall not be obligated 
to recognize all alleged distinctions among various deposit products). 
(Example: For a particular market, evidence exists that the rates on 
money market deposit accounts (MMDAs) differ from the rates on 
negotiable order of withdrawal (NOW) accounts. MMDAs are distinguishable 
from NOW accounts in that the two types of accounts are subject to 
different legal requirements. Under these circumstances, for this 
market, the FDIC could recognize that the prevailing rate on MMDAs is 
different than the prevailing rate on NOW accounts.)

[57 FR 23941, June 5, 1992, as amended at 58 FR 54935, Oct. 25, 1993; 60 
FR 31384, June 15, 1995; 63 FR 44750, Aug. 20, 1998; 66 FR 17622, Apr. 
3, 2001; 74 FR 27683, June 11, 2009; 78 FR 55595, Sept. 10, 2013; 83 FR 
17740, Apr. 24, 2018]



Sec. Sec.  337.7-337.9  [Reserved]



Sec.  337.10  Waiver.

    An insured State nonmember bank has the right to petition the Board 
of Directors of the Corporation for a waiver of this part or any subpart 
thereof with respect to any particular transaction or series of similar 
transactions. A waiver may be granted at the discretion of the Board 
upon a showing of good cause. All such petitions should be filed with 
the Executive Secretary, Federal Deposit Insurance Corporation, 550 17th 
Street, NW., Washington, DC 20429.

[39 FR 29179, Aug. 14, 1974, as amended at 67 FR 71071, Nov. 29, 2002]



Sec.  337.11  Effect on other banking practices.

    Nothing in this part shall be construed as restricting in any manner 
the Corporation's authority to deal with any banking practice which is 
deemed to be unsafe or unsound or otherwise not in accordance with law, 
rule, or regulation; or which violates any condition imposed in writing 
by the Corporation in connection with the granting of any application or 
other request by an insured State nonmember bank, or any written 
agreement entered into by such bank with the Corporation. Compliance 
with the provisions of this part shall not relieve an insured State 
nonmember bank from its duty to conduct its operations in a safe and 
sound manner nor prevent the Corporation from taking whatever action it 
deems necessary and desirable to deal with specific acts or practices 
which, although they do not violate the provisions of this part, are 
considered detrimental to the safety and sound operation of the bank 
engaged therein.



Sec.  337.12  Frequency of examination.

    (a) General. The Federal Deposit Insurance Corporation examines 
insured state nonmember banks pursuant to authority conferred by section 
10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) and examines 
insured State savings associations pursuant to authority conferred by 
section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) and 
section 4 of the Home Owners' Loan Act (12 U.S.C. 1463). The FDIC is 
required to conduct a full-scope, on-site examination of every insured 
state nonmember bank and insured State savings association at least once 
during each 12-month period.
    (b) 18-month rule for certain small institutions. The FDIC may 
conduct a full-scope, on-site examination of an insured state nonmember 
bank or insured State 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 institution has total assets of less than $3 billion;
    (2) The institution is well capitalized as defined in Sec.  
324.403(b)(1) of this chapter;
    (3) At the most recent FDIC or applicable State agency examination, 
the FDIC:
    (i) Assigned the institution a rating of 1 or 2 for management as 
part of the institution's composite rating under the Uniform Financial 
Institutions Rating System (commonly referred to as CAMELS); and

[[Page 595]]

    (ii) Assigned the institution a composite rating of 1 or 2 under the 
Uniform Financial Institutions Rating System (copies of which are 
available at the addresses specified in Sec.  309.4 of this chapter);
    (4) The institution currently is not subject to a formal enforcement 
proceeding or order by the FDIC, OCC, or the Board of Governors of the 
Federal Reserve System; and
    (5) No person acquired control of the institution 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 FDIC to examine any insured state 
nonmember bank or insured State savings association as frequently as the 
agency deems necessary.

[81 FR 10069, Feb. 29, 2016, as amended at 83 FR 43965, Aug. 29, 2018]



PART 338_FAIR HOUSING--Table of Contents



                          Subpart A_Advertising

Sec.
338.1 Purpose.
338.2 Definitions applicable to subpart A of this part.
338.3 Nondiscriminatory advertising.
338.4 Fair housing poster.

                         Subpart B_Recordkeeping

338.5 Purpose.
338.6 Definitions applicable to this subpart B.
338.7 Recordkeeping requirements.
338.8 Compilation of loan data in register format.
338.9 Mortgage lending of a controlled entity.

    Authority: 12 U.S.C. 1817, 1818, 1819, 1820(b), 2801 et seq.; 15 
U.S.C. 1691 et seq.; 42 U.S.C. 3605, 3608; 12 CFR parts 202, 203; 24 CFR 
part 110.



                          Subpart A_Advertising



Sec.  338.1  Purpose.

    The purpose of this subpart A is to prohibit insured state nonmember 
banks from engaging in discriminatory advertising with regard to 
residential real estate-related transactions. This subpart A also 
requires insured state nonmember banks to publicly display either the 
Equal Housing Lender poster set forth in Sec.  338.4(b) of the FDIC's 
regulations or the Equal Housing Opportunity poster prescribed by part 
110 of the regulations of the United States Department of Housing and 
Urban Development (24 CFR part 110). This subpart A enforces section 805 
of title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-3619 (Fair 
Housing Act), as amended by the Fair Housing Amendments Act of 1988.

[62 FR 36204, July 7, 1997]



Sec.  338.2  Definitions applicable to subpart A of this part.

    For purposes of subpart A of this part:
    (a) Bank means an insured State nonmember bank as defined in section 
3 of the Federal Deposit Insurance Act.
    (b) Dwelling means any building, structure, or portion thereof which 
is occupied as, or designed or intended for occupancy as, a residence by 
one or more families, and any vacant land wihch is offered for sale or 
lease for the construction or location thereon of any such building, 
structure, portion thereof.
    (c) Handicap means, with respect to a person:
    (1) A physical or mental impairment which substantially limits one 
or more of such person's major life activities;
    (2) A record of having such an impairment; or
    (3) Being regarded as having such an impairment, but such term does 
not include current, illegal use of or addition to a controlled 
substance (as defined in section 102 of the Controlled Substances Act 
(21 U.S.C. 802)).
    (d) Familial status means one or more individuals (who have not 
attained the age of 18 years) being domiciled with:
    (1) A parent or another person having legal custody of such 
individual or individuals; or
    (2) The designee of such parent or other person having such custody, 
with the written persmission of such parent or other person.

The protections afforded against discrimination on the basis of familial 
status shall apply to any person who is

[[Page 596]]

pregnant or is in the process of securing legal custody of any indivdual 
who has not attained the age of 18 years.

[56 FR 50039, Oct. 3, 1991]



Sec.  338.3  Nondiscriminatory advertising.

    (a) Any bank which directly or through third parties engages in any 
form of advertising of any loan for the purpose of purchasing, 
constructing, improving, repairing, or maintaining a dwelling or any 
loan secured by a dwelling shall prominently indicate in such 
advertisement, in a manner appropriate to the advertising medium and 
format utilized, that the bank makes such loans without regard to race, 
color, religion, national origin, sex, handicap, or familial status.
    (1) With respect to written and visual advertisements, this 
requirement may be satisfied by including in the advertisement a copy of 
the logotype with the Equal Housing Lender legend contained in the Equal 
Housing Lender poster prescribed in Sec.  338.4(b) of the FDIC's 
regulations or a copy of the logotype with the Equal Housing Opportunity 
legend contained in the Equal Housing Opportunity poster prescribed in 
Sec.  110.25(a) of the United States Department of Housing and Urban 
Development's regulations (24 CFR 110.25(a)).
    (2) With respect to oral advertisements, this requirement may be 
satisfied by a statement, in the spoken text of the advertisement, that 
the bank is an ``Equal Housing Lender'' or an ``Equal Opportunity 
Lender.''
    (3) When an oral advertisement is used in conjunction with a written 
or visual advertisement, the use of either of the methods specified in 
paragraphs (a) (1) and (2) of this section will satisfy the requirements 
of this paragraph (a).
    (b) No advertisement shall contain any words, symbols, models or 
other forms of communication which express, imply, or suggest a 
discriminatory preference or policy of exclusion in violation of the 
provisions of the Fair Housing Act or the Equal Credit Opportunity Act.

[43 FR 11563, Mar. 20, 1978, as amended at 54 FR 52930, Dec. 26, 1989. 
Redesignated and amended at 56 FR 50039, Oct. 3, 1991; 62 FR 36204, July 
7, 1997]



Sec.  338.4  Fair housing poster.

    (a) Each bank engaged in extending loans for the purpose of 
purchasing, constructing, improving, repairing, or maintaining a 
dwelling or any loan secured by a dwelling shall conspicuously display 
either the Equal Housing Lender poster set forth in paragraph (b) of 
this section or the Equal Housing Opportunity poster prescribed by Sec.  
110.25(a) of the United States Department of Housing and Urban 
Development's regulations (24 CFR 110.25(a)), in a central location 
within the bank where deposits are received or where such loans are made 
in a manner clearly visible to the general public entering the area, 
where the poster is displayed.
    (b) The Equal Housing Lender Poster shall be at least 11 by 14 
inches in size and have the following text:

[[Page 597]]

[GRAPHIC] [TIFF OMITTED] TR07AU08.000

    (c) The Equal Housing Lender Poster specified in this section was 
adopted under Sec.  110.25(b) of the United States Department of Housing 
and Urban Development's rules and regulations as an authorized 
substitution for the poster

[[Page 598]]

required in Sec.  110.25(a) of those rules and regulations.

[54 FR 52930, Dec. 26, 1989. Redesignated at 56 FR 50039, Oct. 3, 1991, 
as amended at 59 FR 52667, Oct. 19, 1994; 62 FR 36204, July 7, 1997; 73 
FR 45855, Aug. 7, 2008]



                         Subpart B_Recordkeeping



Sec.  338.5  Purpose.

    The purpose of this subpart B is two-fold. First, this subpart B 
notifies all insured state nonmember banks of their duty to collect and 
retain certain information about a home loan applicant's personal 
characteristics in accordance with Regulation B of the Board of 
Governors of the Federal Reserve System (12 CFR part 202) in order to 
monitor an institution's compliance with the Equal Credit Opportunity 
Act of 1974 (15 U.S.C. 1691 et seq.). Second, this subpart B notifies 
certain insured state nonmember banks of their duty to maintain, update 
and report a register of home loan applications in accordance with 
Regulation C of the Board of Governors of the Federal Reserve System (12 
CFR part 203), which implements the Home Mortgage Disclosure Act (12 
U.S.C. 2801 et seq.).

[62 FR 36204, July 7, 1997]



Sec.  338.6  Definitions applicable to this subpart B.

    For purposes of this subpart B--
    (a) Bank means an insured state nonmember bank as defined in section 
3 of the Federal Deposit Insurance Act.
    (b) Controlled entity means a corporation, partnership, association, 
or other business entity with respect to which a bank possesses, 
directly or indirectly, the power to direct or cause the direction of 
management and policies, whether through the ownership of voting 
securities, by contract, or otherwise.

[62 FR 36204, July 7, 1997]



Sec.  338.7  Recordkeeping requirements.

    All banks that receive an application for credit primarily for the 
purchase or refinancing of a dwelling occupied or to be occupied by the 
applicant as a principal residence where the extension of credit will be 
secured by the dwelling shall request and retain the monitoring 
information required by Regulation B of the Board of Governors of the 
Federal Reserve System (12 CFR part 202).

[62 FR 36204, July 7, 1997]



Sec.  338.8  Compilation of loan data in register format.

    Banks and other lenders required to file a Home Mortgage Disclosure 
Act loan application register (LAR) with the Federal Deposit Insurance 
Corporation shall maintain, update and report such LAR in accordance 
with Regulation C of the Board of Governors of the Federal Reserve 
System (12 CFR part 203).

[62 FR 36204, July 7, 1997]



Sec.  338.9  Mortgage lending of a controlled entity.

    Any bank which refers any applicants to a controlled entity and 
which purchases any home purchase loans or home improvement loans as 
defined in Regulation C of the Board of Governors of the Federal Reserve 
Board (12 CFR part 203) originated by the controlled entity, as a 
condition to transacting any business with the controlled entity, shall 
require the controlled entity to enter into a written agreement with the 
bank. The written agreement shall provide that the entity shall:
    (a) Comply with the requirements of Sec. Sec.  338.3, 338.4 and 
338.7, and, if otherwise subject to Regulation C of the Board of 
Governors of the Federal Reserve System (12 CFR part 203), Sec.  338.8;
    (b) Open its books and records to examination by the Federal Deposit 
Insurance Corporation; and
    (c) Comply with all instructions and orders issued by the Federal 
Deposit Insurance Corporation with respect to its home loan practices.

[49 FR 35764, Sept. 12, 1984. Redesignated and amended at 56 FR 50039, 
Oct. 3, 1991; 62 FR 36204, July 7, 1997]



PART 339_LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS--Table of Contents



Sec.
339.1 Authority, purpose, and scope.
339.2 Definitions.
339.3 Requirement to purchase flood insurance where available.
339.4 Exemptions.
339.5 Escrow requirement.

[[Page 599]]

339.6 Required use of standard flood hazard determination form.
339.7 Force placement of flood insurance.
339.8 Determination fees.
339.9 Notice of special flood hazards and availability of Federal 
          disaster relief assistance.
339.10 Notice of servicer's identity.

Appendix A to Part 339--Sample Form of Notice of Special Flood Hazards 
          and Availability of Federal Disaster Relief Assistance
Appendix B to Part 339--Sample Clause for Option to Escrow for 
          Outstanding Loans

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1819 (Tenth), 5412(b)(2)(C) 
and 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

    Source: 80 FR 43249, July 21, 2015, unless otherwise noted.



Sec.  339.1  Authority, purpose, and scope.

    (a) Authority. This part is issued pursuant to 12 U.S.C. 1462a, 
1463, 1464, 1819 (Tenth), 5412(b)(2)(C) and 42 U.S.C. 4012a, 4104a, 
4104b, 4106, and 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 Act of 1973, as amended (42 U.S.C. 4001-4129).
    (c) Scope. This part, except for Sec. Sec.  339.6 and 339.8, applies 
to loans secured by buildings or mobile homes located or to be located 
in areas determined by the Administrator of the Federal Emergency 
Management Agency to have special flood hazards. Sections 339.6 and 
339.8 apply to loans secured by buildings or mobile homes, regardless of 
location.



Sec.  339.2  Definitions.

    As used in this part:
    Act means the National Flood Insurance Act of 1968, as amended (42 
U.S.C. 4001-4129).
    Administrator of FEMA means the Administrator of the Federal 
Emergency Management Agency.
    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.
    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.
    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.
    FDIC-supervised institution means any insured depository institution 
for which the Federal Deposit Insurance Corporation is the appropriate 
Federal banking agency pursuant to section 3(q) of the Federal Deposit 
Insurance Act, 12 U.S.C. 1813(q).
    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.
    NFIP means the National Flood Insurance Program authorized under the 
Act.
    Residential improved real estate means real estate upon which a home 
or other residential building is located or to be located.
    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.
    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 Administrator of FEMA.
    Table funding means a settlement at which a loan is funded by a 
contemporaneous advance of loan funds and an

[[Page 600]]

assignment of the loan to the person advancing the funds.

[80 FR 43249, July 21, 2015, as amended at 81 FR 6170, Feb. 5, 2016]



Sec.  339.3  Requirement to purchase flood insurance where available.

    (a) In general. An FDIC-supervised institution 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 building or mobile home and any personal 
property that secures a loan and not the land itself.
    (b) Table funded loans. An FDIC-supervised institution that acquires 
a loan from a mortgage broker or other entity through table funding 
shall be considered to be making a loan for the purpose of this part.



Sec.  339.4  Exemptions.

    The flood insurance requirement prescribed by Sec.  339.3 does not 
apply with respect to:
    (a) Any state-owned property covered under a policy of self-
insurance satisfactory to the Administrator of FEMA, who publishes and 
periodically revises the list of states falling within this exemption;
    (b) Property securing any loan with an original principal balance of 
$5,000 or less and a repayment term of one year or less; or
    (c) Any structure that is a part of any residential property but is 
detached from the primary residential structure of such property and 
does not serve as a residence. For purposes of this paragraph (c):
    (1) ``A structure that is a part of a residential property'' is a 
structure used primarily for personal, family, or household purposes, 
and not used primarily for agricultural, commercial, industrial, or 
other business purposes;
    (2) A structure is ``detached'' from the primary residential 
structure if it is not joined by any structural connection to that 
structure; and
    (3) ``Serve as a residence'' shall be based upon the good faith 
determination of the FDIC-supervised institution that the structure is 
intended for use or actually used as a residence, which generally 
includes sleeping, bathroom, or kitchen facilities.



Sec.  339.5  Escrow requirement.

    (a) In general--(1) Applicability. Except as provided in paragraphs 
(a)(2) or (c) of this section, an FDIC-supervised institution, or a 
servicer acting on its behalf, shall require the escrow of all premiums 
and fees for any flood insurance required under Sec.  339.3(a) for any 
designated loan secured by residential improved real estate or a mobile 
home that is made, increased, extended, or renewed on or after January 
1, 2016, payable with the same frequency as payments on the designated 
loan are required to be made for the duration of the loan.
    (2) Exceptions. Paragraph (a)(1) of this section does not apply if:
    (i) The loan is an extension of credit primarily for business, 
commercial, or agricultural purposes;
    (ii) The loan is in a subordinate position to a senior lien secured 
by the same residential improved real estate or mobile home for which 
the borrower has obtained flood insurance coverage that meets the 
requirements of Sec.  339.3(a);
    (iii) Flood insurance coverage for the residential improved real 
estate or mobile home is provided by a policy that:
    (A) Meets the requirements of Sec.  339.3(a);
    (B) Is provided by a condominium association, cooperative, 
homeowners association, or other applicable group; and
    (C) The premium for which is paid by the condominium association, 
cooperative, homeowners association, or other applicable group as a 
common expense;
    (iv) The loan is a home equity line of credit;
    (v) The loan is a nonperforming loan, which is a loan that is 90 or 
more days past due and remains nonperforming until it is permanently 
modified or until the entire amount past due, including principal, 
accrued interest, and

[[Page 601]]

penalty interest incurred as the result of past due status, is collected 
or otherwise discharged in full; or
    (vi) The loan has a term of not longer than 12 months.
    (3) Duration of exception. If an FDIC-supervised institution, or a 
servicer acting on its behalf, determines at any time during the term of 
a designated loan secured by residential improved real estate or a 
mobile home that is made, increased, extended, or renewed on or after 
January 1, 2016, that an exception under paragraph (a)(2) of this 
section does not apply, then the FDIC-supervised institution or its 
servicer shall require the escrow of all premiums and fees for any flood 
insurance required under Sec.  339.3(a) as soon as reasonably 
practicable and, if applicable, shall provide any disclosure required 
under section 10 of the Real Estate Settlement Procedures Act of 1974 
(12 U.S.C. 2609) (RESPA).
    (4) Escrow account. The FDIC-supervised institution, or a servicer 
acting on its behalf, shall deposit the flood insurance premiums and 
fees on behalf of the borrower in an escrow account. This escrow account 
will be subject to escrow requirements adopted pursuant to section 10 of 
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 Administrator of FEMA or 
other provider of flood insurance that premiums are due, the FDIC-
supervised institution, or a servicer acting on its behalf, shall pay 
the amount owed to the insurance provider from the escrow account by the 
date when such premiums are due.
    (b) Notice. For any loan for which an FDIC-supervised institution is 
required to escrow under paragraph (a) or paragraph (c)(2) of this 
section or may be required to escrow under paragraph (a)(3) of this 
section during the term of the loan, the FDIC-supervised institution, or 
a servicer acting on its behalf, shall mail or deliver a written notice 
with the notice provided under Sec.  339.9 informing the borrower that 
the FDIC-supervised institution is required to escrow all premiums and 
fees for required flood insurance, using language that is substantially 
similar to model clauses on the escrow requirement in appendix A.
    (c) Small lender exception--(1) Qualification. Except as may be 
required under applicable State law, paragraphs (a), (b) and (d) of this 
section do not apply to an FDIC-supervised institution:
    (i) That has total assets of less than $1 billion as of December 31 
of either of the two prior calendar years; and
    (ii) On or before July 6, 2012:
    (A) Was not required under Federal or State law to deposit taxes, 
insurance premiums, fees, or any other charges in an escrow account for 
the entire term of any loan secured by residential improved real estate 
or a mobile home; and
    (B) Did not have a policy of consistently and uniformly requiring 
the deposit of taxes, insurance premiums, fees, or any other charges in 
an escrow account for any loans secured by residential improved real 
estate or a mobile home.
    (2) Change in status. If an FDIC-supervised institution previously 
qualified for the exception in paragraph (c)(1) of this section, but no 
longer qualifies for the exception because it had assets of $1 billion 
or more for two consecutive calendar year ends, the FDIC-supervised 
institution must escrow premiums and fees for flood insurance pursuant 
to paragraph (a) for any designated loan made, increased, extended, or 
renewed on or after July 1 of the first calendar year of changed status.
    (d) Option to escrow--(1) In general. An FDIC-supervised 
institution, or a servicer acting on its behalf, shall offer and make 
available to the borrower the option to escrow all premiums and fees for 
any flood insurance required under Sec.  339.3 for any loan secured by 
residential improved real estate or a mobile home that is outstanding on 
January 1, 2016, or July 1 of the first calendar year in which the FDIC-
supervised institution has had a change in status pursuant to paragraph 
(c)(2) of this section, unless:
    (i) The loan or the FDIC-supervised institution qualifies for an 
exception from the escrow requirement under

[[Page 602]]

paragraphs (a)(2) or (c) of this section, respectively;
    (ii) The borrower is already escrowing all premiums and fees for 
flood insurance for the loan; or
    (iii) The FDIC-supervised institution is required to escrow flood 
insurance premiums and fees pursuant to paragraph (a) of this section.
    (2) Notice. For any loan subject to paragraph (d) of this section, 
the FDIC-supervised institution, or a servicer acting on its behalf, 
shall mail or deliver to the borrower no later than June 30, 2016, or 
September 30 of the first calendar year in which the FDIC-supervised 
institution has had a change in status pursuant to paragraph (c)(2) of 
this section, a notice in writing, or if the borrower agrees, 
electronically, informing the borrower of the option to escrow all 
premiums and fees for any required flood insurance and the method(s) by 
which the borrower may request the escrow, using language similar to the 
model clause in appendix B to this part.
    (3) Timing. The FDIC-supervised institution or servicer must begin 
escrowing premiums and fees for flood insurance as soon as reasonably 
practicable after the FDIC-supervised institution or servicer receives 
the borrower's request to escrow.

[80 FR 43252, July 21, 2015]



Sec.  339.6  Required use of standard flood hazard determination form.

    (a) Use of form. An FDIC-supervised institution shall use the 
standard flood hazard determination form developed by the Administrator 
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. An FDIC-supervised institution may 
obtain the standard flood hazard determination form from FEMA's Web site 
at www.fema.gov.
    (b) Retention of form. An FDIC-supervised institution 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 FDIC-
supervised institution owns the loan.



Sec.  339.7  Force placement of flood insurance.

    (a) Notice and purchase of coverage. If an FDIC-supervised 
institution, or a servicer acting on its behalf, 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.  339.3, then the FDIC-supervised 
institution 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.  339.3, for the 
remaining term of the loan. If the borrower fails to obtain flood 
insurance within 45 days after notification, then the FDIC-supervised 
institution or its servicer shall purchase insurance on the borrower's 
behalf. The FDIC-supervised institution or its servicer may charge the 
borrower for the cost of premiums and fees incurred in purchasing the 
insurance, including premiums or fees incurred for coverage beginning on 
the date on which flood insurance coverage lapsed or did not provide a 
sufficient coverage amount.
    (b) Termination of force-placed insurance--(1) Termination and 
refund. Within 30 days of receipt by an FDIC-supervised institution, or 
a servicer acting on its behalf, of a confirmation of a borrower's 
existing flood insurance coverage, the FDIC-supervised institution or 
its servicer shall:
    (i) Notify the insurance provider to terminate any insurance 
purchased by the FDIC-supervised institution or its servicer under 
paragraph (a) of this section; and
    (ii) Refund to the borrower all premiums paid by the borrower for 
any insurance purchased by the FDIC-supervised institution or its 
servicer under paragraph (a) of this section during any period during 
which the borrower's flood insurance coverage and the insurance coverage 
purchased by the FDIC-supervised institution or its servicer were each 
in effect, and any related

[[Page 603]]

fees charged to the borrower with respect to the insurance purchased by 
the FDIC-supervised institution or its servicer during such period.
    (2) Sufficiency of demonstration. For purposes of confirming a 
borrower's existing flood insurance coverage under paragraph (b) of this 
section, an FDIC-supervised institution or its servicer shall accept 
from the borrower an insurance policy declarations page that includes 
the existing flood insurance policy number and the identity of, and 
contact information for, the insurance company or agent.



Sec.  339.8  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 FDIC-supervised institution, or a servicer acting on its behalf, 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:
    (1) Is made in connection with a making, increasing, extending, or 
renewing of the loan that is initiated by the borrower;
    (2) Reflects the Administrator of FEMA's revision or updating of 
floodplain areas or flood-risk zones;
    (3) Reflects the Administrator 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 Administrator 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.  339.7.
    (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.  339.9  Notice of special flood hazards and availability 
of Federal disaster relief assistance.

    (a) Notice requirement. When an FDIC-supervised institution 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 FDIC-
supervised institution 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 Administrator 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 from private insurance companies that issue standard flood 
insurance policies on behalf of the NFIP or directly from the NFIP;
    (4) A statement that flood insurance that provides the same level of 
coverage as a standard flood insurance policy under the NFIP may also be 
available from a private insurance company that issues policies on 
behalf of the company.
    (5) A statement that the borrower is encouraged to compare the flood 
insurance coverage, deductibles, exclusions, conditions, and premiums 
associated with flood insurance policies issued on behalf of the NFIP 
and policies issued on behalf of private insurance companies and that 
the borrower should direct inquiries regarding the availability, cost, 
and comparisons of flood insurance coverage to an insurance agent; and

[[Page 604]]

    (6) 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 FDIC-supervised institution 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 FDIC-supervised 
institution provides notice to the borrower and in any event no later 
than the time the FDIC-supervised institution 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 FDIC-supervised institution shall retain 
a record of the receipt of the notices by the borrower and the servicer 
for the period of time the FDIC-supervised institution owns the loan.
    (e) Alternate method of notice. Instead of providing the notice to 
the borrower required by paragraph (a) of this section, an FDIC-
supervised institution 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 FDIC-supervised institution shall 
retain a record of the written assurance from the seller or lessor for 
the period of time the FDIC-supervised institution owns the loan.
    (f) Use of sample form of notice. An FDIC-supervised institution 
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.

[80 FR 43249, July 21, 2015, as amended at 80 FR 43253, July 21, 2015]



Sec.  339.10  Notice of servicer's identity.

    (a) Notice requirement. When an FDIC-supervised institution 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 FDIC-supervised institution shall notify the 
Administrator of FEMA (or the Administrator of FEMA's designee) in 
writing of the identity of the servicer of the loan. The Administrator 
of FEMA has designated the insurance provider to receive the FDIC-
supervised institution's notice of the servicer's identity. This notice 
may be provided electronically if electronic transmission is 
satisfactory to the Administrator of FEMA's designee.
    (b) Transfer of servicing rights. The FDIC-supervised institution 
shall notify the Administrator of FEMA (or the Administrator of FEMA'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 Administrator or his or her 
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.



  Sec. Appendix A to Part 339--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 Administrator 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 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 
Administrator of FEMA to review the determination of whether the 
property securing the loan is located

[[Page 605]]

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.
     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 building 
or mobile home and any personal property that secures your loan and not 
the land itself.
     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.
     Although you may not be required to maintain 
flood insurance on all structures, you may still wish to do so, and your 
mortgage lender may still require you to do so to protect the collateral 
securing the mortgage. If you choose not to maintain flood insurance on 
a structure and it floods, you are responsible for all flood losses 
relating to that structure.

            Availability of Private Flood Insurance Coverage

    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 that provides the same level of coverage as a standard 
flood insurance policy under the NFIP may be available from private 
insurers that do not participate in the NFIP. You should compare the 
flood insurance coverage, deductibles, exclusions, conditions, and 
premiums associated with flood insurance policies issued on behalf of 
the NFIP and policies issued on behalf of private insurance companies 
and contact an insurance agent as to the availability, cost, and 
comparisons of flood insurance coverage.

                [Escrow Requirement for Residential Loans

    Federal law may require a lender or its servicer to escrow all 
premiums and fees for flood insurance that covers any residential 
building or mobile home securing a loan that is located in an area with 
special flood hazards. If your lender notifies you that an escrow 
account is required for your loan, then you must pay your flood 
insurance premiums and fees to the lender or its servicer with the same 
frequency as you make loan payments for the duration of your loan. These 
premiums and fees will be deposited in the escrow account, which will be 
used to pay the flood insurance provider.]
    __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.

[80 FR 43253, July 21, 2015]



  Sec. Appendix B to Part 339--Sample Clause for Option to Escrow for 
                            Outstanding Loans

                          Escrow Option Clause

    You have the option to escrow all premiums and fees for the payment 
on your flood insurance policy that covers any residential building or 
mobile home that is located in an area with special flood hazards and 
that secures your loan. If you choose this option:
     Your payments will be deposited in an escrow 
account to be paid to the flood insurance provider.
     The escrow amount for flood insurance will be 
added to the regular mortgage payment that you make to your lender or 
its servicer.
     The payments you make into the escrow account 
will accumulate over time and the funds will be used to pay your flood 
insurance policy when your lender or servicer receives a notice from 
your flood insurance provider that the flood insurance premium is due.
    To choose this option, follow the instructions below. If you have 
any questions about the option, contact [Insert Name of Lender or 
Servicer] at [Insert Contact Information].
    [Insert Instructions for Selecting to Escrow]

[80 FR 43254, July 21, 2015]

[[Page 606]]



PART 340_RESTRICTIONS ON SALE OF ASSETS OF A FAILED INSTITUTION 
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION--Table of Contents



Sec.
340.1 What is the statutory authority for the regulation, what are its 
          purpose and scope, and can the FDIC have other policies on 
          related topics?
340.2 Definitions.
340.3 What are the restrictions on the sale of assets by the FDIC if the 
          buyer wants to finance the purchase with a loan from the FDIC?
340.4 What are the restrictions on the sale of assets by the FDIC 
          regardless of the method of financing?
340.5 Can the FDIC deny a loan to a buyer who is not disqualified from 
          purchasing assets using seller-financing under this 
          regulation?
340.6 What is the effect of this part on transactions that were entered 
          into before its effective date?
340.7 When is a certification required, and who does not have to provide 
          a certification?
340.8 Does this part apply in the case of a workout, resolution, or 
          settlement of obligations?

    Authority: 12 U.S.C. 1819 (Tenth), 1821(p).

    Source: 80 FR 22889, Apr. 24, 2015, unless otherwise noted.



Sec.  340.1  What is the statutory authority for the regulation, 
what are its purpose and scope, and can the FDIC have other policies 
on related topics?

    (a) Authority. The statutory authority for adopting this part is 
section 11(p) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 
1821(p). Section 11(p) was added to the FDI Act by section 20 of the 
Resolution Trust Corporation Completion Act (Pub. L. 103-204, 107 Stat. 
2369 (1993)).
    (b) Purpose. The purpose of this part is to prohibit individuals or 
entities that improperly profited or engaged in wrongdoing at the 
expense of a failed institution or covered financial company, or 
seriously mismanaged a failed institution, from buying assets of a 
failed institution from the Federal Deposit Insurance Corporation 
(FDIC).
    (c) Scope. (1) The restrictions of this part generally apply to 
sales of assets of failed institutions owned or controlled by the FDIC 
in any capacity.
    (2) The restrictions in this section apply to the sale of assets of 
a subsidiary of a failed institution or a bridge depository institution 
if the FDIC controls the terms of the sale by agreement or in its role 
as shareholder.
    (3) Unless we determine otherwise, this part does not apply to the 
sale of securities in connection with the investment of corporate and 
receivership funds pursuant to the Investment Policy for Liquidation 
Funds managed by the FDIC as it is in effect from time to time.
    (4) In the case of a sale of securities backed by a pool of assets 
that may include assets of failed institutions by a trust or other 
entity, this part applies only to the sale of assets by the FDIC to an 
underwriter in an initial offering, and not to any other purchaser of 
the securities.
    (5) The restrictions of this part do not apply to a sale of a 
security or a group or index of securities, a commodity, or any 
qualified financial contract that, in each case, customarily is traded 
through a financial intermediary, as defined in Sec.  340.2, where the 
seller cannot control selection of the purchaser and the sale is 
consummated through that customary practice.
    (6) The restrictions of this part do not apply to a judicial sale or 
a trustee's sale of property that secures an obligation to the FDIC 
where the sale is not conducted or controlled by the FDIC.
    (d) The FDIC retains the authority to establish other policies 
restricting asset sales. Neither 12 U.S.C. 1821(p) nor this part in any 
way limits the authority of the FDIC to establish policies prohibiting 
the sale of assets to prospective purchasers who have injured any failed 
institution, or to other prospective purchasers, such as certain 
employees or contractors of the FDIC, or individuals who are not in 
compliance with the terms of any debt or duty owed to the FDIC. Any such 
policies may be independent of, in conjunction with, or in addition to 
the restrictions set forth in this part.

[[Page 607]]



Sec.  340.2  Definitions.

    Many of the terms used in this part are defined in the Federal 
Deposit Insurance Act, 12 U.S.C. 1811, et seq. Additionally, for the 
purposes of this part, the following terms are defined:
    (a) Associated person of an individual or entity means:
    (1) With respect to an individual:
    (i) The individual's spouse or dependent child or any member of his 
or her immediate household;
    (ii) A partnership of which the individual is or was a general or 
limited partner;
    (iii) A limited liability company of which the individual is or was 
a member; or
    (iv) A corporation of which the individual is or was an officer or 
director.
    (2) With respect to a partnership, a managing or general partner of 
the partnership or with respect to a limited liability company, a 
manager; or
    (3) With respect to any entity, an individual or entity who, acting 
individually or in concert with one or more individuals or entities, 
owns or controls 25 percent or more of the entity.
    (b) Default means any failure to comply with the terms of an 
obligation to such an extent that:
    (1) A judgment has been rendered in favor of the FDIC or a failed 
institution; or
    (2) In the case of a secured obligation, the property securing such 
obligation is foreclosed on.
    (c) FDIC means the Federal Deposit Insurance Corporation.
    (d) Failed institution means any insured depository institution (as 
defined in 12 U.S.C. 1813(c)) that has been under the conservatorship or 
receivership of the FDIC or any of its predecessors.
    (e) Financial intermediary means any broker, dealer, bank, 
underwriter, exchange, clearing agency registered with the Securities 
and Exchange Commission (SEC) under section 17A of the Securities 
Exchange Act of 1934, transfer agent (as defined in section 3(a)(25) of 
the Securities Exchange Act of 1934), central counterparty or any other 
entity whose role is to facilitate a transaction by, as a riskless 
intermediary, purchasing a security or qualified financial contract from 
one counterparty and then selling it to another.
    (f) Obligation means any debt or duty to pay money owed to the FDIC 
or a failed institution, including any guarantee of any such debt or 
duty.
    (g) Person means an individual, or an entity with a legally 
independent existence, including: A trustee; the beneficiary of at least 
a 25 percent share of the proceeds of a trust; a partnership; a 
corporation; an association; or other organization or society.
    (h) Substantial loss means:
    (1) An obligation that is delinquent for ninety (90) or more days 
and on which there remains an outstanding balance of more than $50,000;
    (2) An unpaid final judgment in excess of $50,000 regardless of 
whether it becomes forgiven in whole or in part in a bankruptcy 
proceeding;
    (3) A deficiency balance following a foreclosure of collateral in 
excess of $50,000, regardless of whether it becomes discharged in whole 
or in part in a bankruptcy proceeding;
    (4) Any loss in excess of $50,000 evidenced by an IRS Form 1099-C 
(Information Reporting for Cancellation of Debt).



Sec.  340.3  What are the restrictions on the sale of assets by the FDIC 
if the buyer wants to finance the purchase with a loan from the FDIC?

    A person may not borrow money or accept credit from the FDIC in 
connection with the purchase of any assets of a failed institution from 
the FDIC if:
    (a) There has been a default with respect to one or more obligations 
totaling in excess of $1,000,000 owed by that person or its associated 
person; and
    (b) The person or its associated person made any fraudulent 
misrepresentations in connection with any such obligation(s).



Sec.  340.4  What are the restrictions on the sale of assets by the FDIC 
regardless of the method of financing?

    (a) A person may not acquire any assets of a failed institution from 
the FDIC if the person or its associated person:
    (1) Has participated, as an officer or director of a failed 
institution or of an affiliate of a failed institution, in a

[[Page 608]]

material way in one or more transaction(s) that caused a substantial 
loss to that failed institution;
    (2) Has been removed from, or prohibited from participating in the 
affairs of, a failed institution pursuant to any final enforcement 
action by the Office of the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, the FDIC, or any of their 
predecessors or successors;
    (3) Has demonstrated a pattern or practice of defalcation regarding 
obligations to any failed institution;
    (4) Has been convicted of committing or conspiring to commit any 
offense under 18 U.S.C. 215, 656, 657, 1005, 1006, 1007, 1008, 1014, 
1032, 1341, 1343 or 1344 affecting any failed institution and there has 
been a default with respect to one or more obligations owed by that 
person or its associated person; or
    (5) Would be prohibited from purchasing the assets of a covered 
financial company from the FDIC under 12 U.S.C. 5390(r) or its 
implementing regulation at 12 CFR part 380.13.
    (b) For purposes of paragraph (a) of this section, a person has 
participated ``in a material way in a transaction that caused a 
substantial loss to a failed institution'' if, in connection with a 
substantial loss to a failed institution, the person has been found in a 
final determination by a court or administrative tribunal, or is alleged 
in a judicial or administrative action brought by the FDIC or by any 
component of the government of the United States or of any state:
    (1) To have violated any law, regulation, or order issued by a 
federal or state banking agency, or breached or defaulted on a written 
agreement with a federal or state banking agency, or breached a written 
agreement with a failed institution;
    (2) To have engaged in an unsafe or unsound practice in conducting 
the affairs of a failed institution; or
    (3) To have breached a fiduciary duty owed to a failed institution.
    (c) For purposes of paragraph (a) of this section, a person or its 
associated person has demonstrated a ``pattern or practice of 
defalcation'' regarding obligations to a failed institution if the 
person or associated person has:
    (1) Engaged in more than one transaction that created an obligation 
on the part of such person or its associated person with intent to cause 
a loss to any insured depository institution or with reckless disregard 
for whether such transactions would cause a loss to any such insured 
depository institution; and
    (2) The transactions, in the aggregate, caused a substantial loss to 
one or more failed institution(s).



Sec.  340.5  Can the FDIC deny a loan to a buyer who is not disqualified 
from purchasing assets using seller-financing under this regulation?

    The FDIC still has the right to make an independent determination, 
based upon all relevant facts of a person's financial condition and 
history, of that person's eligibility to receive any loan or extension 
of credit from the FDIC, even if the person is not in any way 
disqualified from purchasing assets from the FDIC under the restrictions 
set forth in this part.



Sec.  340.6  What is the effect of this part on transactions 
that were entered into before its effective date?

    This part does not affect the enforceability of a contract of sale 
and/or agreement for seller financing in effect prior to July 1, 2000.



Sec.  340.7  When is a certification required, and who does not 
have to provide a certification?

    (a) Before any person may purchase any asset from the FDIC that 
person must certify, under penalty of perjury, that none of the 
restrictions contained in this part applies to the purchase. The person 
must also certify that neither the identity nor form of the person, nor 
any aspect of the contemplated transaction, has been created or altered 
with the intent, in whole or in part, to allow an individual or entity 
who otherwise would be ineligible to purchase assets from the FDIC to 
benefit directly or indirectly from the proposed transaction. The FDIC 
may establish the form of the certification and may change the form from 
time to time.
    (b) Notwithstanding paragraph (a) of this section, and unless the 
Director of the FDIC's Division of Resolutions and

[[Page 609]]

Receiverships or designee in his or her discretion so requires, a 
certification need not be provided by:
    (1) A state or political subdivision of a state;
    (2) A federal agency or instrumentality such as the Government 
National Mortgage Association;
    (3) A federally-regulated, government-sponsored enterprise such as 
the Federal National Mortgage Association or Federal Home Loan Mortgage 
Corporation; or
    (4) A bridge depository institution.



Sec.  340.8  Does this part apply in the case of a workout, resolution, 
or settlement of obligations?

    The restrictions of Sec. Sec.  340.3 and 340.4 do not apply if the 
sale or transfer of an asset resolves or settles, or is part of the 
resolution or settlement of, one or more obligations or claims that have 
been, or could have been, asserted by the FDIC against the person with 
whom the FDIC is settling regardless of the amount of such obligations 
or claims.



PART 341_REGISTRATION OF SECURITIES TRANSFER AGENTS--Table of Contents



Sec.
341.1 Scope.
341.2 Definitions.
341.3 Registration as securities transfer agent.
341.4 Amendments to registration.
341.5 Withdrawal from registration.
341.6 Reports.

    Authority: Secs. 2, 3, 17, 17A and 23(a), Securities Exchange Act of 
1934, as amended (15 U.S.C. 78b, 78c, 78q, 78q-1 and 78w(a)).

    Source: 47 FR 38106, Aug. 30, 1982, unless otherwise noted.



Sec.  341.1  Scope.

    This part is issued by the Federal Deposit Insurance Corporation 
(the FDIC) under sections 2, 3(a)(34)(B), 17, 17A and 23(a) of the 
Securities Exchange Act of 1934 (the Act), as amended (15 U.S.C. 78b, 
78c(a)(34)(B), 78q, 78q-1 and 78w(a)) and applies to all insured State 
nonmember banks, insured State savings associations, or subsidiaries of 
such institutions, that act as transfer agents for securities registered 
under section 12 of the Act (15 U.S.C. 78l), or for securities exempt 
from registration under subsections (g)(2)(B) or (g)(2)(G) of section 12 
(15 U.S.C. 781(g)(2)(B) and (G)) (securities of investment companies, 
including mutual funds, and certain insurance companies). Such 
securities are qualifying securities for purposes of this part.

[81 FR 27297, May 6, 2016]



Sec.  341.2  Definitions.

    For the purpose of this part, including all forms and instructions 
promulgated for use in connection herewith, unless the context otherwise 
requires:
    (a) The term transfer agent means any person who engages on behalf 
of an issuer of qualifying securities or on behalf of itself as an 
issuer of qualifying securities in: (1) Countersigning such securities 
upon issuance;
    (2) Monitoring the issuance of such securities with a view to 
preventing unauthorized issuance, a function commonly performed by a 
person called a registrar;
    (3) Registering the transfer of such securities;
    (4) Exchanging or converting such securities; or
    (5) Transferring record ownership of securities by bookkeeping entry 
without physical issuance of such securities certificates. The term 
transfer agent includes any person who performs these functions as a co-
transfer agent with respect to equity or debt issues, and any person who 
performs these functions as registrar or co-registrar with respect to 
debt issued by corporations.

    Note: The following examples are illustrative of the kinds of 
activities engaged in by transfer agents under this part.

    1. A transfer agent of stock or shares in a mutual fund maintains 
the records of shareholders and transfers stock from one shareholder to 
another by cancellation of the surrendered certificates and issuance of 
new certificates in the name of the new shareholder. A co-transfer agent 
also performs these functions.
    2. A registrar of stock or shares in a mutual fund monitors the 
issuance of such securities to prevent over-issuance of shares, affixing 
its signature of each stock certificate issued to

[[Page 610]]

signify its authorized issuance. A co-registrar also performs these 
functions.
    3. A registrar of corporate debt securities maintains the records of 
ownership of registered bonds; makes changes in such records; issues, 
transfers, and exchanges such certificates; and monitors the securities 
to prevent over-issuance of certificates. A co-registrar also performs 
these functions.
    (b) The term Act means the Securities Exchange Act of 1934.
    (c) The acronym ARA means the appropriate regulatory agency, as 
defined in section 3(a)(34)(B) of the Act.
    (d) The phrase Federal bank regulators means the Office of the 
Comptroller of the Currency, the Board of Governors of the Federal 
Reserve System, and the Federal Deposit Insurance Corporation.
    (e) The term Form TA-1 means the form and any attachments to that 
form, whether filed as a registration or an amendment to a registration.
    (f) The term registrant means the entity on whose behalf Form TA-1 
is filed.
    (g) The acronym SEC means the Securities and Exchange Commission.
    (h) The term covered institution means an insured State nonmember 
bank, an insured State savings association, and any subsidiary of such 
institutions.
    (i) The term qualifying securities means:
    (1) Securities registered on a national securities exchange (15 
U.S.C. 78l(b)); or
    (2) Securities required to be registered under section 12(g)(1) of 
the Act (15 U.S.C. 78l(g)(1)), except for securities exempted from 
registration with the SEC by section 12(g)(2) (C, D, E, F, and H) of the 
Act.

[47 FR 38106, Aug. 30, 1982, as amended at 81 FR 27297, May 6, 2016]



Sec.  341.3  Registration as securities transfer agent.

    (a) Requirement for registration. Any covered institution that 
performs any of the functions of a transfer agent as described in Sec.  
341.2(a) with respect to qualifying securities shall register with the 
FDIC in the manner indicated in this section.
    (b) Application to register as transfer agent. An application for 
registration under section 17A(c) of the Act, of a transfer agent for 
which the FDIC is the appropriate regulatory agency, as defined in 
section 3(a)(34)(B)(iii) of the Act, shall be filed with the FDIC at its 
Washington, DC headquarters on Form TA-1, in accordance with the 
instructions contained therein.
    (c) Effective date of registration. Registration shall become 
effective 30 days after the date an application on Form TA-1 is filed 
unless the FDIC accelerates, denies, or postpones such registration in 
accordance with section 17A(c) of the Act. The effective date of such 
registration may be postponed by order for a period not to exceed 15 
days. Postponement of registration for more than 15 days shall be after 
notice and opportunity for hearing. Form TA-1 may be completed 
electronically and is available from the FDIC at www.fdic.gov or the 
Federal Financial Institutions Examination Council at www.ffiec.gov, or 
upon request, from the Director, Division of Risk Management Supervision 
(RMS), FDIC, Washington, DC 20429.

[47 FR 38106, Aug. 30, 1982, as amended at 60 FR 31384, June 15, 1995; 
81 FR 27297, May 6, 2016]



Sec.  341.4  Amendments to registration.

    (a) Within 60 calendar days following the date which any information 
reported on Form TA-1 becomes inaccurate, misleading, or incomplete, the 
registrant shall file an amendment on Form TA-1 correcting the 
inaccurate, misleading, or incomplete information.
    (b) The filing of an amendment to an application for registration as 
a transfer agent under Sec.  341.3, which registration has not become 
effective, shall postpone the effective date of the registration for 30 
days following the date on which the amendment is filed unless the FDIC 
accelerates, denies, or postpones the registration in accordance with 
section 17A(c) of the Act.

[47 FR 38106, Aug. 30, 1982, as amended at 52 FR 1182, Jan. 12, 1987]



Sec.  341.5  Withdrawal from registration.

    (a) Notice of withdrawal from registration. Any transfer agent 
registered under this part that ceases to engage in the functions of a 
transfer agent as defined in Sec.  341.2(a) shall file a written notice 
of withdrawal from registration

[[Page 611]]

with the FDIC. A registered transfer agent that ceases to engage in one 
or more of the functions of transfer agent as defined in Sec.  341.2(a), 
but continues to engage in another such function, shall not withdraw 
from registration.
    (b) A notice of withdrawal shall be filed with the FDIC at its 
Washington, DC headquarters. Deregistration shall be effective upon 
receipt of notice of withdrawal by the FDIC. A Request for 
Deregistration form is available electronically from www.fdic.gov or by 
request from the Director, Division of Risk Management Supervision 
(RMS), FDIC, Washington, DC 20429.
    (c) If the FDIC finds that any registered transfer agent for which 
it is the ARA, is no longer in existence or has ceased to do business as 
a transfer agent, FDIC shall cancel or deny the registration by order of 
the Board of Directors.
    (d) Registration of a transfer agent with another ARA shall cancel 
registration of the transfer agent with FDIC.

[47 FR 38106, Aug. 30, 1982, as amended at 60 FR 31384, June 15, 1995; 
81 FR 27297, May 6, 2016]



Sec.  341.6  Reports.

    Every registration or amendment filed under this section shall 
constitute a report or application within the meaning or sections 17, 
17A(c), and 32(a) of the Act.

                           PART 342 [RESERVED]



PART 343_CONSUMER PROTECTION IN SALES OF INSURANCE--Table of Contents



Sec.
343.10 Purpose and scope.
343.20 Definitions.
343.30 Prohibited practices.
343.40 What you must disclose.
343.50 Where insurance activities may take place.
343.60 Qualification and licensing requirements for insurance sales 
          personnel.

Appendix A to Part 343--Consumer Grievance Process

    Authority: 12 U.S.C. 1819 (Seventh and Tenth); 12 U.S.C. 1831x.

    Source: 83 FR 13847, Apr. 2, 2018, unless otherwise noted.



Sec.  343.10  Purpose and scope.

    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:
    (a) Any institution; or
    (b) Any other person that is engaged in such activities at an office 
of the institution or on behalf of the institution.



Sec.  343.20  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 you 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;

[[Page 612]]

    (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 you and a consumer in a format that allows visual 
text to be displayed on equipment, for example, a personal computer 
monitor.
    FDIC-supervised insured depository institution or institution means 
any State nonmember insured bank or State savings association for which 
the Federal Deposit Insurance Corporation is the appropriate Federal 
banking agency pursuant to section 3(q) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(q)).
    Office means the premises of an institution where retail deposits 
are accepted from the public.
    State savings association has the same meaning as in section 
(3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
    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--(1) Means:
    (i) An institution; or
    (ii) Any other person only when the person sells, solicits, 
advertises, or offers an insurance product or annuity to a consumer at 
an office of the institution or on behalf of an institution.
    (2) For purposes of this definition, activities on behalf of an 
institution include activities where a person, whether at an office of 
the institution or at another location sells, solicits, advertises, or 
offers an insurance product or annuity and at least one of the following 
applies:
    (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 institution;
    (ii) The institution refers a consumer to a seller of insurance 
products or annuities and the institution 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 
institution.



Sec.  343.30  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 106(b) of the Bank Holding Company Act 
Amendments of 1970 (12 U.S.C. 1972) in the case of a State nonmember 
insured bank and a foreign bank having an insured branch, or in 
violation of section 5(q) of the Home Owners' Loan Act (12 U.S.C. 
1464(q)) in the case of a State savings association, is conditional upon 
either:
    (1) The purchase of an insurance product or annuity from the 
institution 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, the institution or a subsidiary of the institution 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 sold or offered 
for sale by you or any subsidiary of the institution is not backed by 
the Federal government or the institution, 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 an institution or subsidiary of the institution 
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 
institution or subsidiary may not be conditioned on the purchase of an 
insurance product or annuity by the consumer from

[[Page 613]]

the institution or a subsidiary of the institution; 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.  343.40  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, the institution or an affiliate of the 
institution;
    (2) The insurance product or annuity is not insured by the Federal 
Deposit Insurance Corporation (FDIC) or any other agency of the United 
States, the institution, or (if applicable) an affiliate of the 
institution; 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 disclosure. In the case of an application for credit in 
connection with which an insurance product or annuity is solicited, 
offered, or sold, you must disclose that the institution may not 
condition an extension of credit on either:
    (1) The consumer's purchase of an insurance product or annuity from 
the institution 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 a sale of an insurance 
product or annuity is conducted 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, 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) Any disclosure required by paragraph (a) or (b) of this section 
that is

[[Page 614]]

provided by electronic media is not required to be provided orally.
    (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:
    (i) ``NOT A DEPOSIT''
    (ii) ``NOT FDIC-INSURED''
    (iii) ``NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY''
    (iv) ``NOT GUARANTEED BY THE INSTITUTION''
    (v) ``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 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 paragraph 
(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 paragraph (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 materials are of a general nature describing or listing the 
services or products offered by the institution.



Sec.  343.50  Where insurance activities may take place.

    (a) General rule. An institution must, to the extent practicable, 
keep the area where the institution conducts transactions involving 
insurance products or annuities physically segregated from areas where 
retail deposits are routinely accepted from the general public, identify 
the areas where insurance product or annuity sales activities occur, and 
clearly delineate and distinguish those areas from the areas where the 
institution'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 the institution 
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,

[[Page 615]]

nominal fee of a fixed dollar amount for each referral that does not 
depend on whether the referral results in a transaction.



Sec.  343.60  Qualification and licensing requirements 
for insurance sales personnel.

    An institution may not permit any person to sell or offer for sale 
any insurance product or annuity in any part of its 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.



         Sec. Appendix A to Part 343--Consumer Grievance Process

    Any consumer who believes that any institution or any other person 
selling, soliciting, advertising, or offering insurance products or 
annuities to the consumer at an office of the institution or on behalf 
of the institution has violated the requirements of this part should 
contact the Division of Depositor and Consumer Protection, Consumer 
Response Center, Federal Deposit Insurance Corporation, at the following 
address: 1100 Walnut Street, Box 11, Kansas City, MO 64106, or 
telephone 1-877-275-3342, or FDIC Electronic Customer Assistance Form at 
http://www5.fdic.gov/starsmail/index.asp.



PART 344_RECORDKEEPING AND CONFIRMATION REQUIREMENTS 
FOR SECURITIES TRANSACTIONS--Table of Contents



Sec.
344.1 Purpose and scope.
344.2 Exceptions.
344.3 Definitions.
344.4 Recordkeeping.
344.5 Content and time of notification.
344.6 Notification by agreement; alternative forms and times of 
          notification.
344.7 Settlement of securities transactions.
344.8 Securities trading policies and procedures.
344.9 Personal securities trading reporting by officers and employees.
344.10 Waivers.

    Authority: 12 U.S.C. 1817, 1818, 1819, and 5412.

    Source: 78 FR 76723, Dec. 19, 2013, unless otherwise noted.



Sec.  344.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to ensure that purchasers 
of securities in transactions effected by FDIC-supervised institutions 
are provided adequate information regarding transactions. This part is 
also designed to ensure that FDIC-supervised institutions subject to 
this part maintain adequate records and controls with respect to the 
securities transactions they effect.
    (b) Scope; general. Any security transaction effected for a customer 
by an FDIC-supervised institution is subject to this part unless 
excepted by Sec.  344.2. An FDIC-supervised institution effecting 
transactions in government securities is subject to the notification, 
recordkeeping, and policies and procedures requirements of this part. 
This part also applies to municipal securities transactions by an FDIC-
supervised institution that is not registered as a ``municipal 
securities dealer'' with the Securities and Exchange Commission. See 15 
U.S.C. 78c(a)(30) and 78o-4.



Sec.  344.2  Exceptions.

    (a) An FDIC-supervised institution effecting securities transactions 
for customers is not subject to all or part of this part 344 to the 
extent that they qualify for one or more of the following exceptions:
    (1) Small number of transactions. The requirements of Sec. Sec.  
344.4(a)(2) through (4) and 344.8(a)(1) through (3) do not apply to an 
FDIC-supervised institution effecting an average of fewer than 500 
securities transactions per year for customers over the prior three 
calendar year period. The calculation of this average does not include 
transactions in government securities.
    (2) Government securities. The recordkeeping requirements of Sec.  
344.4 do not apply to FDIC-supervised institutions effecting fewer than 
500 government securities brokerage transactions per year. This 
exemption does not apply to government securities dealer transactions by 
FDIC-supervised institutions.
    (3) Municipal securities. This part does not apply to transactions 
in municipal securities effected by an FDIC-supervised institution 
registered with the Securities and Exchange Commission as a ``municipal 
securities dealer'' as defined in title 15 U.S.C. 78c(a)(30). See 15 
U.S.C. 78o-4.

[[Page 616]]

    (4) Foreign branches. Activities of foreign branches of FDIC-
supervised institutions shall not be subject to the requirements of this 
part.
    (5) Transactions effected by registered broker/dealers. (i) This 
part does not apply to securities transactions effected for an FDIC-
supervised institution's customer by a registered broker/dealer if:
    (A) The broker/dealer is fully disclosed to the customer; and
    (B) The customer has a direct contractual agreement with the broker/
dealer.
    (ii) This exemption extends to arrangements with broker/dealers 
which involve FDIC-supervised institution employees when acting as 
employees of, and subject to the supervision of, the registered broker/
dealer when soliciting, recommending, or effecting securities 
transactions.
    (b) Safe and sound operations. Notwithstanding this section, every 
FDIC-supervised institution effecting securities transactions for 
customers shall maintain, directly or indirectly, effective systems of 
records and controls regarding their customer securities transactions to 
ensure safe and sound operations. The records and systems maintained 
must clearly and accurately reflect the information required under this 
part and provide an adequate basis for an audit.



Sec.  344.3  Definitions.

    (a) Asset-backed security means a security that is serviced 
primarily by the cash flows of a discrete pool of receivables or other 
financial assets, either fixed or revolving, that by their terms convert 
into cash within a finite time period plus any rights or other assets 
designed to assure the servicing or timely distribution of proceeds to 
the security holders.
    (b) Cash management sweep account means a prearranged, automatic 
transfer of funds above a certain dollar level from a deposit account to 
purchase a security or securities, or any prearranged, automatic 
redemption or sale of a security or securities when a deposit account 
drops below a certain level with the proceeds being transferred into a 
deposit account.
    (c) Collective investment fund means funds held by an FDIC-
supervised institution as fiduciary and, consistent with local law, 
invested collectively:
    (1) In a common trust fund maintained by such FDIC-supervised 
institution exclusively for the collective investment and reinvestment 
of monies contributed thereto by the FDIC-supervised institution in its 
capacity as trustee, executor, administrator, guardian, or custodian 
under the Uniform Gifts to Minors Act; or
    (2) In a fund consisting solely of assets of retirement, pension, 
profit sharing, stock bonus or similar trusts which are exempt from 
Federal income taxation under the Internal Revenue Code (26 U.S.C.).
    (d) Completion of the transaction means:
    (1) For purchase transactions, the time when the customer pays the 
FDIC-supervised institution any part of the purchase price (or the time 
when the FDIC-supervised institution makes the book-entry for any part 
of the purchase price, if applicable), however, if the customer pays for 
the security prior to the time payment is requested or becomes due, then 
the transaction shall be completed when the FDIC-supervised institution 
transfers the security into the account of the customer; and
    (2) For sale transactions, the time when the FDIC-supervised 
institution transfers the security out of the account of the customer 
or, if the security is not in its custody, then the time when the 
security is delivered to it, however, if the customer delivers the 
security to the FDIC-supervised institution prior to the time delivery 
is requested or becomes due then the transaction shall be completed when 
the FDIC-supervised institution makes payment into the account of the 
customer.
    (e) Crossing of buy and sell orders means a security transaction in 
which the same FDIC-supervised institution acts as agent for both the 
buyer and the seller.
    (f) Customer means any person or account, including any agency, 
trust, estate, guardianship, or other fiduciary account for which an 
FDIC-supervised

[[Page 617]]

institution effects or participates in effecting the purchase or sale of 
securities, but does not include a broker, dealer, insured depository 
institution acting as a broker or a dealer, issuer of the securities 
that are the subject of the transaction or a person or account having a 
direct, contractual agreement with a fully disclosed broker/dealer.
    (g) Debt security means any security, such as a bond, debenture, 
note, or any other similar instrument that evidences a liability of the 
issuer (including any security of this type that is convertible into 
stock or a similar security) and fractional or participation interests 
in one or more of any of the foregoing; provided, however, that 
securities issued by an investment company registered under the 
Investment Company Act of 1940, 15 U.S.C. 80a--1 et seq., shall not be 
included in this definition.
    (h) FDIC-supervised institution means any insured depository 
institution for which the Federal Deposit Insurance Corporation is the 
appropriate Federal banking agency pursuant to section 3(q) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1813(q).
    (i) Government security means:
    (1) A security that is a direct obligation of, or obligation 
guaranteed as to principal and interest by, the United States;
    (2) A security that is issued or guaranteed by a corporation in 
which the United States has a direct or indirect interest and which is 
designated by the Secretary of the Treasury for exemption as necessary 
or appropriate in the public interest or for the protection of 
investors;
    (3) A security issued or guaranteed as to principal and interest by 
any corporation whose securities are designated, by statute specifically 
naming the corporation, to constitute exempt securities within the 
meaning of the laws administered by the Securities and Exchange 
Commission; or
    (4) Any put, call, straddle, option, or privilege on a security 
described in paragraph (i)(1), (2), or (3) of this section other than a 
put, call, straddle, option, or privilege that is traded on one or more 
national securities exchanges, or for which quotations are disseminated 
through an automated quotation system operated by a registered 
securities association.
    (j) Investment discretion means that, with respect to an account, an 
FDIC-supervised institution directly or indirectly:
    (1) Is authorized to determine what securities or other property 
shall be purchased or sold by or for the account; or
    (2) Makes decisions as to what securities or other property shall be 
purchased or sold by or for the account even though some other person 
may have responsibility for these investment decisions.
    (k) Municipal security means a security which is a direct obligation 
of, or an obligation guaranteed as to principal or interest by, a State 
or any political subdivision, or any agency or instrumentality of a 
State or any political subdivision, or any municipal corporate 
instrumentality of one or more States or any security which is an 
industrial development bond (as defined in 26 U.S.C. 103(c)(2)) the 
interest on which is excludable from gross income under 26 U.S.C. 
103(a)(1) if, by reason of the application of paragraph (4) or (6) of 26 
U.S.C. 103(c) (determined as if paragraphs (4)(A), (5) and (7) were not 
included in 26 U.S.C. 103(c), paragraph (1) of 26 U.S.C. 103(c) does not 
apply to such security. See 15. U.S.C. 78c(a)(29).
    (l) Periodic plan means any written authorization for an FDIC-
supervised institution to act as agent to purchase or sell for a 
customer a specific security or securities, in a specific amount 
(calculated in security units or dollars) or to the extent of dividends 
and funds available, at specific time intervals, and setting forth the 
commission or charges to be paid by the customer or the manner of 
calculating them. Periodic plans include dividend reinvestment plans, 
automatic investment plans, and employee stock purchase plans.
    (m) Security means any note, stock, treasury stock, bond, debenture, 
certificate of interest or participation in any profit-sharing agreement 
or in any oil, gas, or other mineral royalty or lease, any collateral-
trust certificate, preorganization certificate or subscription, 
transferable share, investment contract, voting-trust certificate, and

[[Page 618]]

any put, call, straddle, option, or privilege on any security or group 
or index of securities (including any interest therein or based on the 
value thereof), 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. The term security 
does not include:
    (1) A deposit or share account in a federally or state insured 
depository institution;
    (2) A loan participation;
    (3) A letter of credit or other form of insured depository 
institution indebtedness incurred in the ordinary course of business;
    (4) Currency;
    (5) Any note, draft, bill of exchange, or bankers acceptance 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;
    (6) Units of a collective investment fund;
    (7) Interests in a variable amount (master) note of a borrower of 
prime credit; or
    (8) U.S. Savings Bonds.



Sec.  344.4  Recordkeeping.

    (a) General rule. An FDIC-supervised institution effecting 
securities transactions for customers shall maintain the following 
records for at least three years:
    (1) Chronological records. An itemized daily record of each purchase 
and sale of securities maintained in chronological order, and including:
    (i) Account or customer name for which each transaction was 
effected;
    (ii) Description of the securities;
    (iii) Unit and aggregate purchase or sale price;
    (iv) Trade date; and
    (v) Name or other designation of the broker/dealer or other person 
from whom the securities were purchased or to whom the securities were 
sold;
    (2) Account records. Account records for each customer, reflecting:
    (i) Purchases and sales of securities;
    (ii) Receipts and deliveries of securities;
    (iii) Receipts and disbursements of cash; and
    (iv) Other debits and credits pertaining to transactions in 
securities;
    (3) A separate memorandum (order ticket) of each order to purchase 
or sell securities (whether executed or canceled), which shall include:
    (i) The accounts for which the transaction was effected;
    (ii) Whether the transaction was a market order, limit order, or 
subject to special instructions;
    (iii) The time the order was received by the trader or other FDIC-
supervised institution employee responsible for effecting the 
transaction;
    (iv) The time the order was placed with the broker/dealer, or if 
there was no broker/dealer, time the order was executed or canceled;
    (v) The price at which the order was executed; and
    (vi) The broker/dealer utilized;
    (4) Record of broker/dealers. A record of all broker/dealers 
selected by the FDIC-supervised institution to effect securities 
transactions and the amount of commissions paid or allocated to each 
broker during the calendar year; and
    (5) Notifications. A copy of the written notification required by 
Sec. Sec.  344.5 and 344.6.
    (b) Manner of maintenance. Records may be maintained in whatever 
manner, form or format an FDIC-supervised institution deems appropriate, 
provided however, the records required by this section must clearly and 
accurately reflect the information required and provide an adequate 
basis for the audit of the information. Records may be maintained in 
hard copy, automated or electronic form provided the records are easily 
retrievable, readily available for inspection, and capable of being 
reproduced in a hard copy. An FDIC-supervised institution may contract 
with third party service providers, including broker/dealers, to 
maintain records required under this part.



Sec.  344.5  Content and time of notification.

    Every FDIC-supervised institution effecting a securities transaction 
for a

[[Page 619]]

customer shall give or send, by mail, facsimile or other means of 
electronic transmission, to the customer at or before completion of the 
transaction one of the types of written notification identified below:
    (a) Broker/dealer's confirmations. (1) A copy of the confirmation of 
a broker/dealer relating to the securities transaction. An FDIC-
supervised institution may either have the broker/dealer send the 
confirmation directly to the FDIC-supervised institution's customer or 
send a copy of the broker/dealer's confirmation to the customer upon 
receipt of the confirmation by the FDIC-supervised institution. If an 
FDIC-supervised institution chooses to send a copy of the broker/
dealer's confirmation, it must be sent within one business day from the 
institution's receipt of the broker/dealer's confirmation; and
    (2) If the FDIC-supervised institution is to receive remuneration 
from the customer or any other source in connection with the 
transaction, a statement of the source and amount of any remuneration to 
be received if such would be required under paragraph (b)(6) of this 
section; or
    (b) Written notification. A written notification disclosing:
    (1) Name of the FDIC-supervised institution;
    (2) Name of the customer;
    (3) Whether the FDIC-supervised institution is acting as agent for 
such customer, as agent for both such customer and some other person, as 
principal for its own account, or in any other capacity;
    (4) The date and time of execution, or the fact that the time of 
execution will be furnished within a reasonable time upon written 
request of the customer, and the identity, price, and number of shares 
or units (or principal amount in the case of debt securities) of the 
security purchased or sold by the customer;
    (5) The amount of any remuneration received or to be received, 
directly or indirectly, by any broker/dealer from such customer in 
connection with the transaction;
    (6)(i) The amount of any remuneration received or to be received by 
the FDIC-supervised institution from the customer, and the source and 
amount of any other remuneration received or to be received by the FDIC-
supervised institution in connection with the transaction, unless:
    (A) Remuneration is determined pursuant to a prior written agreement 
between the FDIC-supervised institution and the customer; or
    (B) In the case of government securities and municipal securities, 
the FDIC-supervised institution received the remuneration in other than 
an agency transaction; or
    (C) In the case of open end investment company securities, the FDIC-
supervised institution has provided the customer with a current 
prospectus which discloses all current fees, loads and expenses at or 
before completion of the transaction;
    (ii) If the FDIC-supervised institution elects not to disclose the 
source and amount of remuneration it has received or will receive from a 
party other than the customer pursuant to paragraph (b)(6)(i)(A), (B), 
or (C) of this section, the written notification must disclose whether 
the FDIC-supervised institution has received or will receive 
remuneration from a party other than the customer, and that the FDIC-
supervised institution will furnish within a reasonable time the source 
and amount of this remuneration upon written request of the customer. 
This election is not available, however, if, with respect to a purchase, 
the FDIC-supervised institution was participating in a distribution of 
that security; or, with respect to a sale, the FDIC-supervised 
institution was participating in a tender offer for that security;
    (7) Name of the broker/dealer utilized; or where there is no broker/
dealer, the name of the person from whom the security was purchased or 
to whom the security was sold, or a statement that the FDIC-supervised 
institution will furnish this information within a reasonable time upon 
written request;
    (8) In the case of a transaction in a debt security subject to 
redemption before maturity, a statement to the effect that the debt 
security may be redeemed in whole or in part before maturity, that the 
redemption could affect the yield represented and that additional 
information is available upon request;

[[Page 620]]

    (9) In the case of a transaction in a debt security effected 
exclusively on the basis of a dollar price:
    (i) The dollar price at which the transaction was effected; and
    (ii) The yield to maturity calculated from the dollar price, 
provided however, that this shall not apply to a transaction in a debt 
security that either has a maturity date that may be extended by the 
issuer thereof, with a variable interest payable thereon, or is an 
asset-backed security that represents an interest in or is secured by a 
pool of receivables or other financial assets that are subject 
continuously to prepayment;
    (10) In the case of a transaction in a debt security effected on the 
basis of yield:
    (i) The yield at which the transaction was effected, including the 
percentage amount and its characterization (e.g., current yield, yield 
to maturity, or yield to call) and if effected at yield to call, the 
type of call, the call date and call price;
    (ii) The dollar price calculated from the yield at which the 
transaction was effected; and
    (iii) If effected on a basis other than yield to maturity and the 
yield to maturity is lower than the represented yield, the yield to 
maturity as well as the represented yield; provided however, that this 
paragraph (b)(10) shall not apply to a transaction in a debt security 
that either has a maturity date that may be extended by the issuer with 
a variable interest rate payable thereon, or is an asset-backed security 
that represents an interest in or is secured by a pool of receivables or 
other financial assets that are subject continuously to prepayment;
    (11) In the case of a transaction in a debt security that is an 
asset-backed security, which represents an interest in or is secured by 
a pool of receivables or other financial assets that are subject 
continuously to prepayment, a statement indicating that the actual yield 
of the asset-backed security may vary according to the rate at which the 
underlying receivables or other financial assets are prepaid and a 
statement of the fact that information concerning the factors that 
affect yield (including at a minimum estimated yield, weighted average 
life, and the prepayment assumptions underlying yield) will be furnished 
upon written request of the customer; and
    (12) In the case of a transaction in a debt security, other than a 
government security, that the security is unrated by a nationally 
recognized statistical rating organization, if that is the case.



Sec.  344.6  Notification by agreement; alternative forms 
and times of notification.

    An FDIC-supervised institution may elect to use the following 
alternative notification procedures if the transaction is effected for:
    (a) Notification by agreement. Accounts (except periodic plans) 
where the FDIC-supervised institution does not exercise investment 
discretion and the FDIC-supervised institution and the customer agree in 
writing to a different arrangement as to the time and content of the 
written notification; provided however, that such agreement makes clear 
the customer's right to receive the written notification pursuant to 
Sec.  344.5(a) or (b) at no additional cost to the customer.
    (b) Trust accounts. Accounts (except collective investment funds) 
where the FDIC-supervised institution exercises investment discretion in 
other than in an agency capacity, in which instance it shall, upon 
request of the person having the power to terminate the account or, if 
there is no such person, upon the request of any person holding a vested 
beneficial interest in such account, give or send to such person the 
written notification within a reasonable time. The FDIC-supervised 
institution may charge such person a reasonable fee for providing this 
information.
    (c) Agency accounts. Accounts where the FDIC-supervised institution 
exercises investment discretion in an agency capacity, in which 
instance:
    (1) The FDIC-supervised institution shall give or send to each 
customer not less frequently than once every three months an itemized 
statement which shall specify the funds and securities in the custody or 
possession of the FDIC-supervised institution at the end of such period 
and all debits, credits and

[[Page 621]]

transactions in the customer's accounts during such period; and
    (2) If requested by the customer, the FDIC-supervised institution 
shall give or send to each customer within a reasonable time the written 
notification described in Sec.  344.5. The FDIC-supervised institution 
may charge a reasonable fee for providing the information described in 
Sec.  344.5.
    (d) Cash management sweep accounts. An FDIC-supervised institution 
effecting a securities transaction for a cash management sweep account 
shall give or send its customer a written statement, in the same form as 
required under paragraph (f) of this section, for each month in which a 
purchase or sale of a security takes place in the account and not less 
than once every three months if there are no securities transactions in 
the account. Notwithstanding the provisions of this paragraph (d), FDIC-
supervised institutions that retain custody of government securities 
that are the subject of a hold-in-custody repurchase agreement are 
subject to the requirements of 17 CFR 403.5(d).
    (e) Collective investment fund accounts. The FDIC-supervised 
institution shall at least annually give or send to the customer a copy 
of a financial report of the fund, or provide notice that a copy of such 
report is available and will be furnished upon request to each person to 
whom a regular periodic accounting would ordinarily be rendered with 
respect to each participating account. This report shall be based upon 
an audit made by independent public accountants or internal auditors 
responsible only to the board of directors of the FDIC-supervised 
institution.
    (f) Periodic plan accounts. The FDIC-supervised institution shall 
give or send to the customer not less than once every three months a 
written statement showing:
    (1) The funds and securities in the custody or possession of the 
FDIC-supervised institution;
    (2) All service charges and commissions paid by the customer in 
connection with the transaction; and
    (3) All other debits and credits of the customer's account involved 
in the transaction; provided that upon written request of the customer, 
the FDIC-supervised institution shall give or send the information 
described in Sec.  344.5, except that any such information relating to 
remuneration paid in connection with the transaction need not be 
provided to the customer when the remuneration is paid by a source other 
than the customer. The FDIC-supervised institution may charge a 
reasonable fee for providing information described in Sec.  344.5.



Sec.  344.7  Settlement of securities transactions.

    (a) All contracts effected or entered into by an FDIC-supervised 
institution that provide for the purchase or sale of a security (other 
than an exempted security as defined in 15 U.S.C. 78c(a)(12), government 
security, municipal security, commercial paper, bankers' acceptances, or 
commercial bills) shall provide for completion of the transaction within 
the number of business days in the standard settlement cycle followed by 
registered broker dealers in the United States, unless otherwise agreed 
to by the parties at the time of the transaction. The number of business 
days in the standard settlement cycle shall be determined by reference 
to paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a).
    (b) Paragraphs (a) and (c) of this section shall not apply to 
contracts:
    (1) For the purchase or sale of limited partnership interests that 
are not listed on an exchange or for which quotations are not 
disseminated through an automated quotation system of a registered 
securities association; or
    (2) For the purchase or sale of securities that the Securities and 
Exchange Commission (SEC) may from time to time, taking into account 
then existing market practices, exempt by order from the requirements of 
paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a), either 
unconditionally or on specified terms and conditions, if the SEC 
determines that an exemption is consistent with the public interest and 
the protection of investors.
    (c) Paragraph (a) of this section shall not apply to contracts for 
the sale for cash of securities that are priced after 4:30 p.m. Eastern 
time on the date the securities are priced and that are sold

[[Page 622]]

by an issuer to an underwriter pursuant to a firm commitment 
underwritten offering registered under the Securities Act of 1933, 15 
U.S.C. 77a et seq., or sold to an initial purchaser by an FDIC-
supervised institution participating in the offering. An FDIC-supervised 
institution shall not effect or enter into a contract for the purchase 
or sale of the securities that provides for payment of funds and 
delivery of securities later than the fourth business day after the date 
of the contract unless otherwise expressly agreed to by the parties at 
the time of the transaction.
    (d) For the purposes of paragraphs (a) and (c) of this section, the 
parties to a contract shall be deemed to have expressly agreed to an 
alternate date for payment of funds and delivery of securities at the 
time of the transaction for a contract for the sale for cash of 
securities pursuant to a firm commitment offering if the managing 
underwriter and the issuer have agreed to the date for all securities 
sold pursuant to the offering and the parties to the contract have not 
expressly agreed to another date for payment of funds and delivery of 
securities at the time of the transaction.

[78 FR 76723, Dec. 19, 2013, as amended at 83 FR 26349, June 7, 2018]



Sec.  344.8  Securities trading policies and procedures.

    (a) Policies and procedures. Every FDIC-supervised institution 
effecting securities transactions for customers shall establish written 
policies and procedures providing:
    (1) Assignment of responsibility for supervision of all officers or 
employees who:
    (i) Transmit orders to or place orders with broker/dealers; or
    (ii) Execute transactions in securities for customers;
    (2) Assignment of responsibility for supervision and reporting, 
separate from those in paragraph (a)(1) of this section, with respect to 
all officers or employees who process orders for notification or 
settlement purposes, or perform other back office functions with respect 
to securities transactions effected for customers;
    (3) For the fair and equitable allocation of securities and prices 
to accounts when orders for the same security are received at 
approximately the same time and are placed for execution either 
individually or in combination; and
    (4) Where applicable, and where permissible under local law, for the 
crossing of buy and sell orders on a fair and equitable basis to the 
parties to the transaction.



Sec.  344.9  Personal securities trading reporting by officers 
and employees of FDIC-supervised institutions.

    (a) Officers and employees subject to reporting. FDIC-supervised 
institution officers and employees who:
    (1) Make investment recommendations or decisions for the accounts of 
customers;
    (2) Participate in the determination of such recommendations or 
decisions; or
    (3) In connection with their duties, obtain information concerning 
which securities are being purchased or sold or recommend such action, 
must report to the FDIC-supervised institution, within 30-calendar days 
after the end of the calendar quarter, all transactions in securities 
made by them or on their behalf, either at the FDIC-supervised 
institution or elsewhere in which they have a beneficial interest. The 
report shall identify the securities purchased or sold and indicate the 
dates of the transactions and whether the transactions were purchases or 
sales.
    (b) Exempt transactions. Excluded from this reporting requirement 
are:
    (1) Transactions for the benefit of the officer or employee over 
which the officer or employee has no direct or indirect influence or 
control;
    (2) Transactions in registered investment company shares;
    (3) Transactions in government securities; and
    (4) All transactions involving in the aggregate $10,000 or less 
during the calendar quarter.
    (c) Alternative report. Where an FDIC-supervised institution acts as 
an investment adviser to an investment company registered under the 
Investment Company Act of 1940, the FDIC-supervised institution's 
officers and

[[Page 623]]

employees may fulfill their reporting requirement under paragraph (a) of 
this section by filing with the FDIC-supervised institution the ``access 
persons'' personal securities trading report required by SEC Rule 17j-1, 
17 CFR 270.17j-1.



Sec.  344.10  Waivers.

    The Board of Directors of the FDIC, in its discretion, may waive for 
good cause all or any part of this part 344.



PART 345_COMMUNITY REINVESTMENT--Table of Contents



                            Subpart A_General

Sec.
345.11 Authority, purposes, and scope.
345.12 Definitions.

              Subpart B_Standards for Assessing Performance

345.21 Performance tests, standards, and ratings, in general.
345.22 Lending test.
345.23 Investment test.
345.24 Service test.
345.25 Community development test for wholesale or limited purpose 
          banks.
345.26 Small bank performance standards.
345.27 Strategic plan.
345.28 Assigned ratings.
345.29 Effect of CRA performance on applications.

        Subpart C_Records, Reporting, and Disclosure Requirements

345.41 Assessment area delineation.
345.42 Data collection, reporting, and disclosure.
345.43 Content and availability of public file.
345.44 Public notice by banks.
345.45 Publication of planned examination schedule.

Appendix A to Part 345--Ratings
Appendix B to Part 345--CRA Notice

    Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u and 2901-
2908, 3103-3104, and 3108(a).

    Source: 43 FR 47151, Oct. 12, 1978, unless otherwise noted.



                            Subpart A_General

    Source: 60 FR 22201, May 4, 1995, unless otherwise noted.



Sec.  345.11  Authority, purposes, and scope.

    (a) Authority and OMB control number--(1) Authority. The authority 
for this part is 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u and 2901-
2907, 3103-3104, and 3108(a).
    (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 3064-0092.
    (b) Purposes. In enacting the Community Reinvestment Act (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 Federal 
Deposit Insurance Corporation (FDIC) assesses a bank'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 bank; and
    (2) Providing that the FDIC takes that record into account in 
considering certain applications.
    (c) Scope--(1) General. Except for certain special purpose banks 
described in paragraph (c)(3) of this section, this part applies to all 
insured State nonmember banks, including insured State branches as 
described in paragraph (c)(2) and any uninsured State branch that 
results from an acquisition described in section 5(a)(8) of the 
International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).
    (2) Insured State branches. Insured State branches are branches of a 
foreign bank established and operating under the laws of any State, the 
deposits of which are insured in accordance with the provisions of the 
Federal Deposit Insurance Act. In the case of insured State branches, 
references in this part to main office mean the principal

[[Page 624]]

branch within the United States and the term branch or branches refers 
to any insured State branch or branches located within the United 
States. The assessment area of an insured State branch is the community 
or communities located within the United States served by the branch as 
described in Sec.  345.41.
    (3) Certain special purpose banks. This part does not apply to 
special purpose banks 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 
banks include banker's banks, as defined in 12 U.S.C. 24 (Seventh), and 
banks that engage only in one or more of the following activities: 
providing cash management controlled disbursement services or serving as 
correspondent banks, trust companies, or clearing agents.



Sec.  345.12  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 for the metropolitan division, if a person or 
geography is located in an MSA that has been subdivided into 
metropolitan divisions; 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.  345.41.
    (d) Remote Service Facility (RSF) means an automated, unstaffed 
banking facility owned or operated by, or operated exclusively for, the 
bank, such as an automated teller machine, cash dispensing machine, 
point-of-sale terminal, or other remote electronic facility, at which 
deposits are received, cash dispersed, or money lent.
    (e) Bank means a State nonmember bank, as that term is defined in 
section 3(e)(2) of the Federal Deposit Insurance Act, as amended (FDIA) 
(12 U.S.C. 1813(e)(2)), with Federally insured deposits, except as 
provided in Sec.  345.11(c). The term bank also includes an insured 
State branch as defined in Sec.  345.11(c).
    (f) 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. The term ``branch'' only includes a 
``domestic branch'' as that term is defined in section 3(o) of the FDIA 
(12 U.S.C. 1813(o)).
    (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--
    (i) Low-or moderate-income geographies;
    (ii) Designated disaster areas; or
    (iii) Distressed or underserved nonmetropolitan middle-income 
geographies designated by the Board of Governors of the Federal Reserve 
System, FDIC, and Office of the Comptroller of the Currency, based on--
    (A) Rates of poverty, unemployment, and population loss; or
    (B) Population size, density, and dispersion. Activities revitalize 
and stabilize geographies designated based on population size, density, 
and dispersion if they help to meet essential community needs, including 
needs of low- and moderate-income individuals.
    (h) Community development loan means a loan that:
    (1) Has as its primary purpose community development; and

[[Page 625]]

    (2) Except in the case of a wholesale or limited purpose bank:
    (i) Has not been reported or collected by the bank or an affiliate 
for consideration in the bank's assessment as a home mortgage, small 
business, small farm, or consumer loan, unless the loan is for a 
multifamily dwelling (as defined in Sec.  1003.2(n) of this title); and
    (ii) Benefits the bank's assessment area(s) or a broader statewide 
or regional area that includes the bank'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 bank's retail 
banking services under Sec.  345.24(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.  1026.2 of 
this title;
    (3) Other secured consumer loan, which is a secured consumer loan 
that is not included in one of the other categories of consumer loans; 
and
    (4) 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 delineated by the United States 
Bureau of the Census in the most recent decennial census.
    (l) Home mortgage loan means a closed-end mortgage loan or an open-
end line of credit as these terms are defined under Sec.  1003.2 of this 
title and that is not an excluded transaction under Sec.  1003.3(c)(1) 
through (10) and (13) 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 bank means a bank 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 bank 
is in effect, in accordance with Sec.  345.25(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.
    (q) Metropolitan division means a metropolitan division as defined 
by the Director of the Office of Management and Budget.
    (r) MSA means a metropolitan statistical area as defined by the 
Director of the Office of Management and Budget.
    (s) Nonmetropolitan area means any area that is not located in an 
MSA.

[[Page 626]]

    (t) Qualified investment means a lawful investment, deposit, 
membership share, or grant that has as its primary purpose community 
development.
    (u) Small bank--(1) Definition. Small bank means a bank that, as of 
December 31 of either of the prior two calendar years, had assets of 
less than $1.284 billion. Intermediate small bank means a small bank 
with assets of at least $321 million as of December 31 of both of the 
prior two calendar years and less than $1.284 billion as of December 31 
of either of the prior two calendar years.
    (2) Adjustment. The dollar figures in paragraph (u)(1) of this 
section shall be adjusted annually and published by the FDIC, based on 
the year-to-year change in the average of the Consumer Price Index for 
Urban Wage Earners and Clerical Workers, not seasonally adjusted, for 
each twelve-month period ending in November, with rounding to the 
nearest million.
    (v) Small business loan means a loan included in ``loans to small 
businesses'' as defined in the instructions for preparation of the 
Consolidated Report of Condition and Income.
    (w) Small farm loan means a loan included in ``loans to small 
farms'' as defined in the instructions for preparation of the 
Consolidated Report of Condition and Income.
    (x) Wholesale bank means a bank 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 bank is 
in effect, in accordance with Sec.  345.25(b).

[60 FR 22201, May 4, 1995]

    Editorial Note: For Federal Register citations affecting Sec.  
345.12, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and at www.govinfo.gov.



              Subpart B_Standards for Assessing Performance

    Source: 60 FR 22201, May 4, 1995, unless otherwise noted.



Sec.  345.21  Performance tests, standards, and ratings, in general.

    (a) Performance tests and standards. The FDIC assesses the CRA 
performance of a bank in an examination as follows:
    (1) Lending, investment, and service tests. The FDIC applies the 
lending, investment, and service tests, as provided in Sec. Sec.  345.22 
through 345.24, in evaluating the performance of a bank, except as 
provided in paragraphs (a)(2), (a)(3), and (a)(4) of this section.
    (2) Community development test for wholesale or limited purpose 
banks. The FDIC applies the community development test for a wholesale 
or limited purpose bank, as provided in Sec.  345.25, except as provided 
in paragraph (a)(4) of this section.
    (3) Small bank performance standards. The FDIC applies the small 
bank performance standards as provided in Sec.  345.26 in evaluating the 
performance of a small bank or a bank that was a small bank during the 
prior calendar year, unless the bank elects to be assessed as provided 
in paragraphs (a)(1), (a)(2), or (a)(4) of this section. The bank 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 banks under 
Sec.  345.42.
    (4) Strategic plan. The FDIC evaluates the performance of a bank 
under a strategic plan if the bank submits, and the FDIC approves, a 
strategic plan as provided in Sec.  345.27.
    (b) Performance context. The FDIC 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 bank's assessment area(s);
    (2) Any information about lending, investment, and service 
opportunities in the bank's assessment area(s) maintained by the bank or 
obtained from community organizations, state, local, and tribal 
governments, economic development agencies, or other sources;
    (3) The bank's product offerings and business strategy as determined 
from data provided by the bank;

[[Page 627]]

    (4) Institutional capacity and constraints, including the size and 
financial condition of the bank, the economic climate (national, 
regional, and local), safety and soundness limitations, and any other 
factors that significantly affect the bank's ability to provide lending, 
investments, or services in its assessment area(s);
    (5) The bank's past performance and the performance of similarly 
situated lenders;
    (6) The bank's public file, as described in Sec.  345.43, and any 
written comments about the bank's CRA performance submitted to the bank 
or the FDIC; and
    (7) Any other information deemed relevant by the FDIC.
    (c) Assigned ratings. The FDIC assigns to a bank one of the 
following four ratings pursuant to Sec.  345.28 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 FDIC reflects the bank'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 bank.
    (d) Safe and sound operations. This part and the CRA do not require 
a bank to make loans or investments or to provide services that are 
inconsistent with safe and sound operations. To the contrary, the FDIC 
anticipates banks can meet the standards of this part with safe and 
sound loans, investments, and services on which the banks expect to make 
a profit. Banks 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.
    (e) Low-cost education loans provided to low-income borrowers. In 
assessing and taking into account the record of a bank under this part, 
the FDIC considers, as a factor, low-cost education loans originated by 
the bank to borrowers, particularly in its assessment area(s), who have 
an individual income that is less than 50 percent of the area median 
income. For purposes of this paragraph, ``low-cost education loans'' 
means any education loan, as defined in section 140(a)(7) of the Truth 
in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state or 
local education loan program), originated by the bank for a student at 
an ``institution of higher education,'' as that term is generally 
defined in sections 101 and 102 of the Higher Education Act of 1965 (20 
U.S.C. 1001 and 1002) and the implementing regulations published by the 
U.S. Department of Education, with interest rates and fees no greater 
than those of comparable education loans offered directly by the U.S. 
Department of Education. Such rates and fees are specified in section 
455 of the Higher Education Act of 1965 (20 U.S.C. 1087e).
    (f) Activities in cooperation with minority- or women-owned 
financial institutions and low-income credit unions. In assessing and 
taking into account the record of a nonminority-owned and nonwomen-owned 
bank under this part, the FDIC considers as a factor capital investment, 
loan participation, and other ventures undertaken by the bank in 
cooperation with minority- and women-owned financial institutions and 
low-income credit unions. Such activities must help meet the credit 
needs of local communities in which the minority- and women-owned 
financial institutions and low-income credit unions are chartered. To be 
considered, such activities need not also benefit the bank's assessment 
area(s) or the broader statewide or regional area that includes the 
bank's assessment area(s).

[60 FR 22201, May 4, 1995, as amended at 75 FR 61045, Oct. 4, 2010]



Sec.  345.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a bank's record of 
helping to meet the credit needs of its assessment area(s) through its 
lending activities by considering a bank's home mortgage, small 
business, small farm, and community development lending. If consumer 
lending constitutes a substantial majority of a bank's business, the 
FDIC will evaluate the bank's consumer lending in one or more of the 
following categories: motor vehicle, credit card, other secured, and 
other unsecured loans. In addition, at a bank's option, the FDIC will 
evaluate

[[Page 628]]

one or more categories of consumer lending, if the bank has collected 
and maintained, as required in Sec.  345.42(c)(1), the data for each 
category that the bank elects to have the FDIC evaluate.
    (2) The FDIC considers originations and purchases of loans. The FDIC 
will also consider any other loan data the bank may choose to provide, 
including data on loans outstanding, commitments and letters of credit.
    (3) A bank may ask the FDIC to consider loans originated or 
purchased by consortia in which the bank participates or by third 
parties in which the bank has invested only if the loans meet the 
definition of community development loans and only in accordance with 
paragraph (d) of this section. The FDIC will not consider these loans 
under any criterion of the lending test except the community development 
lending criterion.
    (b) Performance criteria. The FDIC evaluates a bank's lending 
performance pursuant to the following criteria:
    (1) Lending activity. The number and amount of the bank's home 
mortgage, small business, small farm, and consumer loans, if applicable, 
in the bank's assessment area(s);
    (2) Geographic distribution. The geographic distribution of the 
bank's home mortgage, small business, small farm, and consumer loans, if 
applicable, based on the loan location, including:
    (i) The proportion of the bank's lending in the bank's assessment 
area(s);
    (ii) The dispersion of lending in the bank's assessment area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the bank's assessment area(s);
    (3) Borrower characteristics. The distribution, particularly in the 
bank's assessment area(s), of the bank'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 bank'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 bank'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 bank's option, the FDIC will 
consider loans by an affiliate of the bank, if the bank provides data on 
the affiliate's loans pursuant to Sec.  345.42.
    (2) The FDIC 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 bank elects to have the FDIC consider loans within a 
particular lending category made by one or more of the bank's affiliates 
in a particular assessment area, the bank shall elect to have the FDIC 
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 bank's affiliates.
    (3) The FDIC does not consider affiliate lending in assessing a 
bank'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 bank 
participates or by a third party in which the bank has invested:
    (1) Will be considered, at the bank's option, if the bank reports 
the data pertaining to these loans under Sec.  345.42(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:

[[Page 629]]

    (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 FDIC rates a bank's lending 
performance as provided in Appendix A of this part.

[60 FR 22201, May 4, 1995, as amended at 82 FR 55743, Nov. 24, 2017]



Sec.  345.23  Investment test.

    (a) Scope of test. The investment test evaluates a bank'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 bank'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 bank's option, the FDIC will 
consider, in its assessment of a bank's investment performance, a 
qualified investment made by an affiliate of the bank, 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 bank 
that 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 FDIC evaluates the investment 
performance of a bank 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 FDIC rates a bank's 
investment performance as provided in Appendix A of this part.



Sec.  345.24  Service test.

    (a) Scope of test. The service test evaluates a bank's record of 
helping to meet the credit needs of its assessment area(s) by analyzing 
both the availability and effectiveness of a bank's systems for 
delivering retail banking services and the extent and innovativeness of 
its community development services.
    (b) Area(s) benefited. Community development services must benefit a 
bank's assessment area(s) or a broader statewide or regional area that 
includes the bank's assessment area(s).
    (c) Affiliate service. At a bank's option, the FDIC will consider, 
in its assessment of a bank's service performance, a community 
development service provided by an affiliate of the bank, if the 
community development service is not claimed by any other institution.
    (d) Performance criteria--retail banking services. The FDIC 
evaluates the availability and effectiveness of a bank's systems for 
delivering retail banking services, pursuant to the following criteria:
    (1) The current distribution of the bank's branches among low-,

moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the bank's 
branches, the bank'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., RSFs, RSFs not owned or 
operated by or exclusively for the bank, 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

[[Page 630]]

which the services are tailored to meet the needs of those geographies.
    (e) Performance criteria--community development services. The FDIC 
evaluates community development services pursuant to the following 
criteria:
    (1) The extent to which the bank provides community development 
services; and
    (2) The innovativeness and responsiveness of community development 
services.
    (f) Service performance rating. The FDIC rates a bank's service 
performance as provided in Appendix A of this part.



Sec.  345.25  Community development test for wholesale 
or limited purpose banks.

    (a) Scope of test. The FDIC assesses a wholesale or limited purpose 
bank'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 bank. In order to 
receive a designation as a wholesale or limited purpose bank, a bank 
shall file a request, in writing, with the FDIC, at least three months 
prior to the proposed effective date of the designation. If the FDIC 
approves the designation, it remains in effect until the bank requests 
revocation of the designation or until one year after the FDIC notifies 
the bank that the FDIC has revoked the designation on its own 
initiative.
    (c) Performance criteria. The FDIC evaluates the community 
development performance of a wholesale or limited purpose bank 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 bank, 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 bank's responsiveness to credit and community development 
needs.
    (d) Indirect activities. At a bank's option, the FDIC will consider 
in its community development performance assessment:
    (1) Qualified investments or community development services provided 
by an affiliate of the bank, 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.  345.22 (c) 
and (d).
    (e) Benefit to assessment area(s)--(1) Benefit inside assessment 
area(s). The FDIC considers all qualified investments, community 
development loans, and community development services that benefit areas 
within the bank's assessment area(s) or a broader statewide or regional 
area that includes the bank's assessment area(s).
    (2) Benefit outside assessment area(s). The FDIC considers the 
qualified investments, community development loans, and community 
development services that benefit areas outside the bank's assessment 
area(s), if the bank has adequately addressed the needs of its 
assessment area(s).
    (f) Community development performance rating. The FDIC rates a 
bank's community development performance as provided in Appendix A of 
this part.



Sec.  345.26  Small bank performance standards.

    (a) Performance criteria--(1) Small banks that are not intermediate 
small banks. The FDIC evaluates the record of a small bank that is not, 
or that was not during the prior calendar year, an intermediate small 
bank, of helping to meet the credit needs of its assessment area(s) 
pursuant to the criteria set forth in paragraph (b) of this section.
    (2) Intermediate small banks. The FDIC evaluates the record of a 
small bank that is, or that was during the prior calendar year, an 
intermediate small bank, of helping to meet the credit needs of its 
assessment area(s) pursuant to the criteria set forth in paragraphs (b) 
and (c) of this section.

[[Page 631]]

    (b) Lending test. A small bank's lending performance is evaluated 
pursuant to the following criteria:
    (1) The bank'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 bank's assessment area(s);
    (3) The bank'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 bank's loans; and
    (5) The bank'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).
    (c) Community development test. An intermediate small bank's 
community development performance also is evaluated pursuant to the 
following criteria:
    (1) The number and amount of community development loans;
    (2) The number and amount of qualified investments;
    (3) The extent to which the bank provides community development 
services; and
    (4) The bank's responsiveness through such activities to community 
development lending, investment, and services needs.
    (d) Small bank performance rating. The FDIC rates the performance of 
a bank evaluated under this section as provided in appendix A of this 
part.

[70 FR 44269, Aug. 2, 2005, as amended at 71 FR 78337, Dec. 29, 2006; 72 
FR 72573, Dec. 21, 2007]



Sec.  345.27  Strategic plan.

    (a) Alternative election. The FDIC will assess a bank's record of 
helping to meet the credit needs of its assessment area(s) under a 
strategic plan if:
    (1) The bank has submitted the plan to the FDIC as provided for in 
this section;
    (2) The FDIC has approved the plan;
    (3) The plan is in effect; and
    (4) The bank has been operating under an approved plan for at least 
one year.
    (b) Data reporting. The FDIC's approval of a plan does not affect 
the bank's obligation, if any, to report data as required by Sec.  
345.42.
    (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 FDIC will evaluate the bank's 
performance.
    (2) Multiple assessment areas. A bank 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 FDIC for approval, a bank 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 bank 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 
bank 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 bank shall submit its plan to the FDIC 
at least three months prior to the proposed effective date of the plan. 
The bank 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.

[[Page 632]]

    (f) Plan content--(1) Measurable goals. (i) A bank 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 bank shall address in its plan all three performance 
categories and, unless the bank has been designated as a wholesale or 
limited purpose bank, 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 bank's capacity and constraints, product 
offerings, and business strategy.
    (2) Confidential information. A bank may submit additional 
information to the FDIC on a confidential basis, but the goals stated in 
the plan must be sufficiently specific to enable the public and the FDIC 
to judge the merits of the plan.
    (3) Satisfactory and outstanding goals. A bank shall specify in its 
plan measurable goals that constitute ``satisfactory'' performance. A 
plan may specify measurable goals that constitute ``outstanding'' 
performance. If a bank submits, and the FDIC approves, both 
``satisfactory'' and ``outstanding'' performance goals, the FDIC will 
consider the bank eligible for an ``outstanding'' performance rating.
    (4) Election if satisfactory goals not substantially met. A bank may 
elect in its plan that, if the bank fails to meet substantially its plan 
goals for a satisfactory rating, the FDIC will evaluate the bank's 
performance under the lending, investment, and service tests, the 
community development test, or the small bank performance standards, as 
appropriate.
    (g) Plan approval--(1) Timing. The FDIC will act upon a plan within 
60 calendar days after the FDIC receives the complete plan and other 
material required under paragraph (e) of this section. If the FDIC fails 
to act within this time period, the plan shall be deemed approved unless 
the FDIC extends the review period for good cause.
    (2) Public participation. In evaluating the plan's goals, the FDIC 
considers the public's involvement in formulating the plan, written 
public comment on the plan, and any response by the bank to public 
comment on the plan.
    (3) Criteria for evaluating plan. The FDIC 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 bank's qualified investments; and
    (iii) The availability and effectiveness of the bank's systems for 
delivering retail banking services and the extent and innovativeness of 
the bank's community development services.
    (h) Plan amendment. During the term of a plan, a bank may request 
the FDIC to approve an amendment to the plan on grounds that there has 
been a material change in circumstances. The bank 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 FDIC approves the goals and assesses 
performance under a plan as provided for in Appendix A of this part.

[60 FR 22201, May 4, 1995, as amended at 60 FR 66050, Dec. 20, 1995; 69 
FR 41188, July 8, 2004]



Sec.  345.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b) and (c) of this 
section, the FDIC assigns to a bank a rating of ``outstanding,'' 
``satisfactory,'' ``needs to improve,'' or ``substantial noncompliance'' 
based on the bank's performance under the lending, investment and 
service tests, the community

[[Page 633]]

development test, the small bank performance standards, or an approved 
strategic plan, as applicable.
    (b) Lending, investment, and service tests. The FDIC assigns a 
rating for a bank assessed under the lending, investment, and service 
tests in accordance with the following principles:
    (1) A bank that receives an ``outstanding'' rating on the lending 
test receives an assigned rating of at least ``satisfactory'';
    (2) A bank 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 bank 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. (1) The FDIC's evaluation of a bank's CRA performance is 
adversely affected by evidence of discriminatory or other illegal credit 
practices in any geography by the bank or in any assessment area by any 
affiliate whose loans have been considered as part of the bank's lending 
performance. In connection with any type of lending activity described 
in Sec.  345.22(a), evidence of discriminatory or other credit practices 
that violate an applicable law, rule, or regulation includes, but is not 
limited to:
    (i) Discrimination against applicants on a prohibited basis in 
violation, for example, of the Equal Credit Opportunity Act or the Fair 
Housing Act;
    (ii) Violations of the Home Ownership and Equity Protection Act;
    (iii) Violations of section 5 of the Federal Trade Commission Act;
    (iv) Violations of section 8 of the Real Estate Settlement 
Procedures Act; and
    (v) Violations of the Truth in Lending Act provisions regarding a 
consumer's right of rescission.
    (2) In determining the effect of evidence of practices described in 
paragraph (c)(1) of this section on the bank's assigned rating, the FDIC 
considers the nature, extent, and strength of the evidence of the 
practices; the policies and procedures that the bank (or affiliate, as 
applicable) has in place to prevent the practices; any corrective action 
that the bank (or affiliate, as applicable) has taken or has committed 
to take, including voluntary corrective action resulting from self-
assessment; and any other relevant information.

[60 FR 22201, May 4, 1995, as amended at 70 FR 44269, Aug. 2, 2005]



Sec.  345.29  Effect of CRA performance on applications.

    (a) CRA performance. Among other factors, the FDIC takes into 
account the record of performance under the CRA of each applicant bank 
in considering an application for approval of:
    (1) The establishment of a domestic branch or other facility with 
the ability to accept deposits;
    (2) The relocation of the bank's main office or a branch;
    (3) The merger, consolidation, acquisition of assets, or assumption 
of liabilities; and
    (4) Deposit insurance for a newly chartered financial institution.
    (b) New financial institutions. A newly chartered financial 
institution shall submit with its application for deposit insurance a 
description of how it will meet its CRA objectives. The FDIC takes the 
description into account in considering the application and may deny or 
condition approval on that basis.
    (c) Interested parties. The FDIC takes into account any views 
expressed by interested parties that are submitted in accordance with 
the FDIC's procedures set forth in part 303 of this chapter in 
considering CRA performance in an application listed in paragraphs (a) 
and (b) of this section.
    (d) Denial or conditional approval of application. A bank's record 
of performance may be the basis for denying or conditioning approval of 
an application listed in paragraph (a) of this section.



        Subpart C_Records, Reporting, and Disclosure Requirements

    Source: 60 FR 22201, May 4, 1995, unless otherwise noted.



Sec.  345.41  Assessment area delineation.

    (a) In general. A bank shall delineate one or more assessment areas 
within

[[Page 634]]

which the FDIC evaluates the bank's record of helping to meet the credit 
needs of its community. The FDIC does not evaluate the bank's 
delineation of its assessment area(s) as a separate performance 
criterion, but the FDIC reviews the delineation for compliance with the 
requirements of this section.
    (b) Geographic area(s) for wholesale or limited purpose banks. The 
assessment area(s) for a wholesale or limited purpose bank must consist 
generally of one or more MSAs or metropolitan divisions (using the MSA 
or metropolitan division 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 bank has its main office, branches, and deposit-taking 
ATMs.
    (c) Geographic area(s) for other banks. The assessment area(s) for a 
bank other than a wholesale or limited purpose bank must:
    (1) Consist generally of one or more MSAs or metropolitan divisions 
(using the MSA or metropolitan division 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 bank has its main office, 
its branches, and its deposit-taking RSFs, as well as the surrounding 
geographies in which the bank 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 bank chooses, such as those 
consumer loans on which the bank elects to have its performance 
assessed).
    (d) Adjustments to geographic area(s). A bank 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 configuration, or 
divided by significant geographic barriers.
    (e) Limitations on the delineation of an assessment area. Each 
bank'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 bank's size and financial condition; and
    (4) May not extend substantially beyond an MSA boundary or beyond a 
state boundary unless the assessment area is located in a multistate 
MSA. If a bank serves a geographic area that extends substantially 
beyond a state boundary, the bank shall delineate separate assessment 
areas for the areas in each state. If a bank serves a geographic area 
that extends substantially beyond an MSA boundary, the bank shall 
delineate separate assessment areas for the areas inside and outside the 
MSA.
    (f) Banks serving military personnel. Notwithstanding the 
requirements of this section, a bank 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 FDIC uses the assessment area(s) 
delineated by a bank in its evaluation of the bank's CRA performance 
unless the FDIC determines that the assessment area(s) do not comply 
with the requirements of this section.

[60 FR 22201, May 4, 1995, as amended at 69 FR 41188, July 8, 2004]



Sec.  345.42  Data collection, reporting, and disclosure.

    (a) Loan information required to be collected and maintained. A 
bank, except a small bank, shall collect, and maintain in machine 
readable form (as prescribed by the FDIC) until the completion of its 
next CRA examination, the following data for each small business or 
small farm loan originated or purchased by the bank:
    (1) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (2) The loan amount at origination;

[[Page 635]]

    (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 bank, except a small 
bank or a bank that was a small bank during the prior calendar year, 
shall report annually by March 1 to the FDIC in machine readable form 
(as prescribed by the FDIC) the following data for the prior calendar 
year:
    (1) Small business and small farm loan data. For each geography in 
which the bank 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 an 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 bank 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 bank is subject to reporting under 
part 1003 of this title, the location of each home mortgage loan 
application, origination, or purchase outside the MSAs in which the bank 
has a home or branch office (or outside any MSA) in accordance with the 
requirements of part 1003 of this title.
    (c) Optional data collection and maintenance--(1) Consumer loans. A 
bank may collect and maintain in machine readable form (as prescribed by 
the FDIC) data for consumer loans originated or purchased by the bank 
for consideration under the lending test. A bank may maintain data for 
one or more of the following categories of consumer loans: motor 
vehicle, credit card, other secured, and other unsecured. If the bank 
maintains data for loans in a certain category, it shall maintain data 
for all loans originated or purchased within that category. The bank 
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 bank 
considered in making its credit decision.
    (2) Other loan data. At its option, a bank may provide other 
information concerning its lending performance, including additional 
loan distribution data.
    (d) Data on affiliate lending. A bank that elects to have the FDIC 
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 bank 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 bank. For 
home mortgage loans, the bank shall also be prepared to identify the 
home mortgage loans reported under part 1003 of this title by the 
affiliate.
    (e) Data on lending by a consortium or a third party. A bank that 
elects to have the FDIC 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 bank would have reported under paragraph (b)(2) 
of this section had the loans been originated or purchased by the bank.
    (f) Small banks electing evaluation under the lending, investment, 
and service tests. A bank that qualifies for evaluation under the small 
bank performance standards but elects evaluation under the lending, 
investment, and service tests shall collect, maintain, and report the 
data required for other banks pursuant to paragraphs (a) and (b) of this 
section.
    (g) Assessment area data. A bank, except a small bank or a bank that 
was a small bank during the prior calendar year, shall collect and 
report to the FDIC by March 1 of each year a list for each assessment 
area showing the geographies within the area.

[[Page 636]]

    (h) CRA Disclosure Statement. The FDIC prepares annually for each 
bank 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 bank 
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 bank 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 bank 
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 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 bank 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 bank and the number 
and amount of small business and small farm loans located outside the 
assessment area(s) reported by the bank; and
    (4) The number and amount of community development loans reported as 
originated or purchased.
    (i) Aggregate disclosure statements. The FDIC, in conjunction with 
the Board of Governors of the Federal Reserve System and the Office of 
the Comptroller of the Currency, prepares annually, for each MSA or 
metropolitan division (including an MSA or metropolitan division that 
crosses a state boundary) and the nonmetropolitan 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, 195, or 228 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 FDIC 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 FDIC makes the aggregate 
disclosure statements, described in paragraph (i) of this section, and 
the individual bank CRA Disclosure Statements, described in paragraph 
(h) of this section, available to the public at central data 
depositories. The FDIC publishes a list of

[[Page 637]]

the depositories at which the statements are available.

[60 FR 22201, May 4, 1995, as amended at 69 FR 41188, July 8, 2004; 80 
FR 81165, Dec. 29, 2015; 82 FR 55743, Nov. 24, 2017]



Sec.  345.43  Content and availability of public file.

    (a) Information available to the public. A bank 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 bank's performance in helping to meet community credit needs, and 
any response to the comments by the bank, if neither the comments nor 
the responses contain statements that reflect adversely on the good name 
or reputation of any persons other than the bank or publication of which 
would violate specific provisions of law;
    (2) A copy of the public section of the bank's most recent CRA 
Performance Evaluation prepared by the FDIC. The bank shall place this 
copy in the public file within 30 business days after its receipt from 
the FDIC;
    (3) A list of the bank's branches, their street addresses, and 
geographies;
    (4) A list of branches opened or closed by the bank 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 products, and transaction fees) generally offered at the 
bank's branches and descriptions of material differences in the 
availability or cost of services at particular branches, if any. At its 
option, a bank may include information regarding the availability of 
alternative systems for delivering retail banking services (e.g., RSFs, 
RSFs not owned or operated by or exclusively for the bank, 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 bank chooses.
    (b) Additional information available to the public--(1) Banks other 
than small banks. A bank, except a small bank or a bank that was a small 
bank during the prior calendar year, shall include in its public file 
the following information pertaining to the bank and its affiliates, if 
applicable, for each of the prior two calendar years:
    (i) If the bank 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 bank's assessment area(s) and outside the 
bank's assessment area(s); and
    (ii) The bank's CRA Disclosure Statement. The bank shall place the 
statement in the public file within three business days of its receipt 
from the FDIC.
    (2) Banks required to report Home Mortgage Disclosure Act (HMDA) 
data. A bank required to report home mortgage loan data pursuant part 
1003 of this title shall include in its public file a written notice 
that the institution's HMDA Disclosure Statement may be obtained on the 
Consumer Financial Protection Bureau's (Bureau's) Web site at 
www.consumerfinance.gov/hmda. In addition, a bank that elected to have 
the FDIC consider the mortgage lending of an affiliate shall include in 
its public file the name of the affiliate and a written notice that the 
affiliate's HMDA Disclosure Statement may be obtained at the Bureau's 
Web site. The bank shall place the written notice(s) in the public file 
within three business days after receiving notification from the Federal 
Financial Institutions Examination Council of the availability of the 
disclosure statement(s).
    (3) Small banks. A small bank or a bank that was a small bank during 
the prior calendar year shall include in its public file:
    (i) The bank's loan-to-deposit ratio for each quarter of the prior 
calendar

[[Page 638]]

year and, at its option, additional data on its loan-to-deposit ratio; 
and
    (ii) The information required for other banks by paragraph (b)(1) of 
this section, if the bank has elected to be evaluated under the lending, 
investment, and service tests.
    (4) Banks with strategic plans. A bank that has been approved to be 
assessed under a strategic plan shall include in its public file a copy 
of that plan. A bank need not include information submitted to the FDIC 
on a confidential basis in conjunction with the plan.
    (5) Banks with less than satisfactory ratings. A bank 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 bank shall update the description quarterly.
    (c) Location of public information. A bank 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 bank, at one branch 
office in each state, all information in the public file; and
    (2) At each branch:
    (i) A copy of the public section of the bank'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 bank 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 bank 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 bank 
shall ensure that the information required by this section is current as 
of April 1 of each year.

[60 FR 22201, May 4, 1995, as amended at 80 FR 81165, Dec. 29, 2015; 82 
FR 55743, Nov. 24, 2017]



Sec.  345.44  Public notice by banks.

    A bank 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 bank having more than one assessment area 
shall include the bracketed material in the notice for branch offices. 
Only a bank that is an affiliate of a holding company shall include the 
next to the last sentence of the notices. A bank shall include the last 
sentence of the notices only if it is an affiliate of a holding company 
that is not prevented by statute from acquiring additional banks.



Sec.  345.45  Publication of planned examination schedule.

    The FDIC publishes at least 30 days in advance of the beginning of 
each calendar quarter a list of banks scheduled for CRA examinations in 
that quarter.





                  Sec. Appendix A to Part 345--Ratings

    (a) Ratings in general. (1) In assigning a rating, the FDIC 
evaluates a bank's performance under the applicable performance criteria 
in this part, in accordance with Sec. Sec.  345.21 and 345.28. This 
includes consideration of low-cost education loans provided to low-
income borrowers and activities in cooperation with minority- or women-
owned financial institutions and low-income credit unions, as well as 
adjustments on the basis of evidence of discriminatory or other illegal 
credit practices.
    (2) A bank'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 bank's overall performance, however, must be 
consistent with safe and sound banking practices and generally with the 
appropriate rating profile as follows.
    (b) Banks evaluated under the lending, investment, and service 
tests--(1) Lending performance rating. The FDIC assigns each bank's 
lending performance one of the five following ratings.
    (i) Outstanding. The FDIC rates a bank'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);

[[Page 639]]

    (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 bank;
    (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 FDIC rates a bank'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 bank;
    (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;
    (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 FDIC rates a bank'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 bank;
    (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 FDIC rates a bank'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 bank;
    (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 FDIC rates a bank'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 bank;

[[Page 640]]

    (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 FDIC assigns each bank's 
investment performance one of the five following ratings.
    (i) Outstanding. The FDIC rates a bank'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 FDIC rates a bank'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 FDIC rates a bank's investment 
performance ``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 FDIC rates a bank'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 FDIC rates a bank'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 FDIC assigns each bank's service 
performance one of the five following ratings.
    (i) Outstanding. The FDIC rates a bank's service performance 
``outstanding'' if, in general, the bank 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 FDIC rates a bank's service performance 
``high satisfactory'' if, in general, the bank 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 FDIC rates a bank's service performance 
``low satisfactory'' if, in general, the bank 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),

[[Page 641]]

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 FDIC rates a bank's service performance 
``needs to improve'' if, in general, the bank 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 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 FDIC rates a bank's service 
performance as being in ``substantial noncompliance'' if, in general, 
the bank 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;
    (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 banks. The FDIC assigns each 
wholesale or limited purpose bank's community development performance 
one of the four following ratings.
    (1) Outstanding. The FDIC rates a wholesale or limited purpose 
bank'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 FDIC rates a wholesale or limited purpose 
bank'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 FDIC rates a wholesale or limited purpose 
bank'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 FDIC rates a wholesale or limited 
purpose bank'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) Banks evaluated under the small bank performance standards--(1) 
Lending test ratings--(i) Eligibility for a satisfactory lending test 
rating. The FDIC rates a small bank's lending performance 
``satisfactory'' if, in general, the bank demonstrates:
    (A) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit needs 
of its assessment area(s), and taking into account, as appropriate, 
other lending-related activities such as loan originations for sale to 
the secondary markets and community development loans and qualified 
investments;

[[Page 642]]

    (B) A majority of its loans and, as appropriate, other lending-
related activities, are in its assessment area;
    (C) 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 bank's 
assessment area(s);
    (D) A record of taking appropriate action, when warranted, in 
response to written complaints, if any, about the bank's performance in 
helping to meet the credit needs of its assessment area(s); and
    (E) A reasonable geographic distribution of loans given the bank's 
assessment area(s).
    (ii) Eligibility for an ``outstanding'' lending test rating. A small 
bank that meets each of the standards for a ``satisfactory'' rating 
under this paragraph and exceeds some or all of those standards may 
warrant consideration for a lending test rating of ``outstanding.''
    (iii) Needs to improve or substantial noncompliance ratings. A small 
bank may also receive a lending test rating of ``needs to improve'' or 
``substantial noncompliance'' depending on the degree to which its 
performance has failed to meet the standard for a ``satisfactory'' 
rating.
    (2) Community development test ratings for intermediate small 
banks--(i) Eligibility for a satisfactory community development test 
rating. The FDIC rates an intermediate small bank's community 
development performance ``satisfactory'' if the bank demonstrates 
adequate responsiveness to the community development needs of its 
assessment area(s) through community development loans, qualified 
investments, and community development services. The adequacy of the 
bank's response will depend on its capacity for such community 
development activities, its assessment area's need for such community 
development activities, and the availability of such opportunities for 
community development in the bank's assessment area(s).
    (ii) Eligibility for an outstanding community development test 
rating. The FDIC rates an intermediate small bank's community 
development performance ``outstanding'' if the bank demonstrates 
excellent responsiveness to community development needs in its 
assessment area(s) through community development loans, qualified 
investments, and community development services, as appropriate, 
considering the bank's capacity and the need and availability of such 
opportunities for community development in the bank's assessment 
area(s).
    (iii) Needs to improve or substantial noncompliance ratings. An 
intermediate small bank may also receive a community development test 
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.
    (3) Overall rating--(i) Eligibility for a satisfactory overall 
rating. No intermediate small bank may receive an assigned overall 
rating of ``satisfactory'' unless it receives a rating of at least 
``satisfactory'' on both the lending test and the community development 
test.
    (ii) Eligibility for an outstanding overall rating. (A) An 
intermediate small bank that receives an ``outstanding'' rating on one 
test and at least ``satisfactory'' on the other test may receive an 
assigned overall rating of ``outstanding.''
    (B) A small bank that is not an intermediate small bank that meets 
each of the standards for a ``satisfactory'' rating under the lending 
test and exceeds some or all of those standards may warrant 
consideration for an overall rating of ``outstanding.'' In assessing 
whether a bank's performance is ``outstanding,'' the FDIC considers the 
extent to which the bank 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).
    (iii) Needs to improve or substantial noncompliance overall ratings. 
A small bank may also 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 FDIC approves as ``satisfactory'' measurable goals that adequately 
help to meet the credit needs of the bank'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 FDIC will approve those goals as ``outstanding.''
    (3) Rating. The FDIC assesses the performance of a bank operating 
under an approved plan to determine if the bank has met its plan goals:
    (i) If the bank substantially achieves its plan goals for a 
satisfactory rating, the FDIC will rate the bank's performance under the 
plan as ``satisfactory.''
    (ii) If the bank exceeds its plan goals for a satisfactory rating 
and substantially achieves its plan goals for an outstanding rating, the 
FDIC will rate the bank's performance under the plan as ``outstanding.''
    (iii) If the bank fails to meet substantially its plan goals for a 
satisfactory rating, the FDIC will rate the bank as either ``needs to 
improve'' or ``substantial noncompliance,'' depending on the extent to 
which it falls

[[Page 643]]

short of its plan goals, unless the bank elected in its plan to be rated 
otherwise, as provided in Sec.  345.27(f)(4).

[60 FR 22201, May 4, 1995, as amended at 70 FR 44270, Aug. 2, 2005; 75 
FR 61045, Oct. 4, 2010]



                 Sec. Appendix B to Part 345--CRA Notice

    (a) Notice for main offices and, if an interstate bank, one branch 
office in each state.

                    Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Federal 
Deposit Insurance Corporation (FDIC) evaluates our record of helping to 
meet the credit needs of this community consistent with safe and sound 
operations. The FDIC 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 FDIC; 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 FDIC 
publishes a nationwide list of the banks that are scheduled for CRA 
examination in that quarter. This list is available from the Regional 
Director, FDIC (address). You may send written comments about our 
performance in helping to meet community credit needs to (name and 
address of official at bank) and FDIC Regional Director. You may also 
submit comments electronically through the FDIC's Web site at 
www.fdic.gov/regulations/cra. Your letter, together with any response by 
us, will be considered by the FDIC in evaluating our CRA performance and 
may be made public.
    You may ask to look at any comments received by the FDIC Regional 
Director. You may also request from the FDIC Regional Director an 
announcement of our applications covered by the CRA filed with the FDIC. 
We are an affiliate of (name of holding company), a bank holding 
company. You may request from the (title of responsible official), 
Federal Reserve Bank of _______(address) an announcement of applications 
covered by the CRA filed by bank holding companies.

    (b) Notice for branch offices.

                    Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Federal 
Deposit Insurance Corporation (FDIC) evaluates our record of helping to 
meet the credit needs of this community consistent with safe and sound 
operations. The FDIC 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 FDIC, 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 FDIC 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) 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 bank is 
available at (name of office located in state), located at (address).]

    At least 30 days before the beginning of each quarter, the FDIC 
publishes a nationwide list of the banks that are scheduled for CRA 
examination in that quarter. This list is available from the Regional 
Director, FDIC (address). You may send written comments about our 
performance in helping to meet community credit needs to (name and 
address of official at bank) and the FDIC Regional Director. You may 
also submit comments electronically through the FDIC's Web site at 
www.fdic.gov/regulations/cra. Your letter, together with any response by 
us, will be considered by the FDIC in evaluating our CRA performance and 
may be made public.
    You may ask to look at any comments received by the FDIC Regional 
Director. You may also request from the FDIC Regional Director an 
announcement of our applications covered by the CRA filed with the FDIC. 
We are an affiliate of (name of holding company), a bank holding 
company. You may request from the (title of responsible official), 
Federal Reserve Bank of _______(address) an announcement of applications 
covered by the CRA filed by bank holding companies.

[43 FR 47151, Oct. 12, 1978, as amended at 82 FR 5356, Jan. 18, 2017]

[[Page 644]]



PART 346_DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS--Table of Contents



Sec.
346.1 Purpose and scope of this part.
346.2 Definition of covered agreement.
346.3 CRA communications.
346.4 Fulfillment of the CRA.
346.5 Related agreements considered a single agreement.
346.6 Disclosure of covered agreements.
346.7 Annual reports.
346.8 Release of information under FOIA.
346.9 Compliance provisions.
346.10 Transition provisions.
346.11 Other definitions and rules of construction used in this part.

    Authority: 12 U.S.C. 1831y.

    Source: 80 FR 23692, Apr. 29, 2015, unless otherwise noted.



Sec.  346.1  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, 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) State nonmember insured banks;
    (2) Subsidiaries of state nonmember insured banks;
    (3) Nongovernmental entities or persons that enter into covered 
agreements with any company listed in paragraphs (b)(1), (2), (4) and 
(5) of this section.
    (4) State savings associations; and
    (5) Subsidiaries of State savings associations.
    (c) Relation to Community Reinvestment Act. This part does not 
affect in any way the Community Reinvestment Act of 1977 (12 U.S.C. 2901 
et seq.) or the FDIC's Community Reinvestment regulation found at 12 CFR 
part 345, or the FDIC's interpretations or administration of that Act or 
regulation.
    (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.  346.2  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 nongovernmental entities or persons (referred to 
hereafter as 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 Community Reinvestment Act of 1977 (12 U.S.C. 2901 et 
seq.) (CRA), as defined inSec.  346.4.
    (5) The agreement is with a NGEP that has had a CRA communication as 
described in Sec.  346.3 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

[[Page 645]]

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--
    (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.

[[Page 646]]

    (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.  346.3  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 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

[[Page 647]]

case of any other oral communication not described in paragraph 
(b)(2)(ii) of this section.
    (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 this paragraph 
(b)(3)(ii) or (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 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 (2) of this section and the appropriate representatives have 
knowledge of the communication as specified in paragraphs (b)(3) and (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) Examples 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

[[Page 648]]

target institution. (See Sec.  346.11(a).) 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 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 disclosure 
and annual reporting requirements in Sec. Sec.  346.6 and 346.7 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.

[[Page 649]]



Sec.  346.4  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 12 CFR 
345.22, 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 12 CFR 345.23;
    (iii) Delivering retail banking services as described in 12 CFR 
345.24(d);
    (iv) Providing community development services, as described in 12 
CFR 345.24(e);
    (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 12 CFR 345.25(c);
    (vi) In the case of a small insured depository institution, any 
lending or other activity described in 12 CFR 345.26(a); 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 12 CFR 345.27(f).
    (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.  346.5  Related agreements considered a single agreement.

    The following rules must be applied in determining whether an 
agreement is a covered agreement under Sec.  346.2.
    (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.  346.6  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 promptly make a copy of the 
covered agreement available to any individual or entity upon request.

[[Page 650]]

    (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 the FDIC's rules regarding Disclosure of Information (12 CFR part 
309)).
    (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 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 12 
CFR 345.43.
    (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 of a NGEP 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--

[[Page 651]]

    (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 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). Any joint filing must identify 
the insured depository institution(s) and affiliate(s) for whom the 
filings are being made.



Sec.  346.7  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.
    (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 
(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 any 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

[[Page 652]]

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 
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) Examples 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) Examples 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

[[Page 653]]

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 (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 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 (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.

[[Page 654]]

    (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.  346.8  Release of information under FOIA.

    The FDIC 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.) and the FDIC's rules regarding Disclosure of 
Information (12 CFR part 309). 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.  346.9  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations. (1) If the FDIC determines that a NGEP has willfully failed 
to comply in a material way with Sec. Sec.  346.6 or 346.7, the FDIC 
will notify the NGEP in writing of that determination and provide the 
NGEP a period of 90 days (or such longer period as the FDIC finds to be 
reasonable under the circumstances) to comply.
    (2) If the NGEP does not comply within the time period established 
by the FDIC, 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) The FDIC 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, the FDIC 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 paragraph (a)(1) of this section, or taking any action under 
paragraph (b) of this section, the FDIC will provide written notice and 
an opportunity to present information to the FDIC 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 the FDIC under 
Sec. Sec.  346.6 or 346.7 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 the FDIC to enforce the 
provisions of any covered agreement.



Sec.  346.10  Transition provisions.

    (a) Disclosure of covered agreements entered into before the 
effective date of this part--(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.  
346.6 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.  346.6 until at least April 
1, 2002.

[[Page 655]]

    (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.  346.6(d)(1)(i); or
    (B) The information described in Sec.  346.6(d)(1)(ii) 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.  346.7 for a fiscal year 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.  
346.7(f)(2).



Sec.  346.11  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.  346.2, 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.  346.3.
    (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 12 CFR 
345.43.
    (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 System's Regulation O (12 CFR 215.2(e)(1)).
    (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) NGEP. ``NGEP'' means a nongovernmental entity or person.
    (j) Nongovernmental entity or person--(1) General. A 
``nongovernmental entity or person'' 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;

[[Page 656]]

    (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 (j)(2)(i) through 
(iii) of this section.
    (k) Party. The term ``party''. The authority citation for part 405 
continues to read as follows: with respect to a covered agreement means 
each NGEP and each insured depository institution or affiliate that 
entered into the agreement.
    (l) 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.
    (m) State savings association. ``State savings association'' has the 
same meaning as in section 3(b)(3) of the Federal Deposit Insurance Act 
(12 U.S.C. 1813(b)(3)).
    (n) 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.

[[Page 657]]



                              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
  List of CFR Sections Affected

[[Page 659]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2019)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 660]]

     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   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)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)

[[Page 661]]

    XXVIII  Department of Justice (Parts 3800--3899)
      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 (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)

[[Page 662]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Parts 10000--10049)
        CI  National Mediation Board (Part 10101)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         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)

[[Page 663]]

        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)
       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)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      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 Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      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  National Institute of Food and 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)

[[Page 664]]

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 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)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      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  (Parts 500--599) [Reserved]
        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)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)

[[Page 665]]

       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      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--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (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)
        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 Industry and Security, 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  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)

[[Page 666]]

      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) [Reserved]

                    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  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599) [Reserved]

                     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)

[[Page 667]]

        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, 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 Service, 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 (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)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       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)
        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)

[[Page 668]]

        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--1699)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 669]]

                           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--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900--999)
        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 (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       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)

                            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)

[[Page 670]]

        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  Employee Benefits Security 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  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 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)
        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)

[[Page 671]]

      VIII  Office of Investment Security, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      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)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     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 Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army, Department 
                of Defense (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 672]]

        IV  Office of Career, Technical and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  (Parts 1100--1199) [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             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)
        VI  [Reserved]
       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 (Parts 1500--
                1599)
       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  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

[[Page 673]]

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        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)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            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)
   62--100  [Reserved]
            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)
  103--104  [Reserved]
       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)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [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)

[[Page 674]]

       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   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 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (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)

[[Page 675]]

         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)
        IX  Denali Commission (Parts 900--999)
         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  Administration for Children and Families, 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 of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      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 Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (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)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

[[Page 676]]

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, 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  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         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)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        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) 
                [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

[[Page 677]]

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        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 Homeland Security (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 (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   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)

[[Page 679]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2019)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  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
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 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
  National Institute of Food and Agriculture      7, XXXIV
  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 of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
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

[[Page 680]]

Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
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
Career, Technical, and Adult Education, Office    34, IV
     of
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
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 Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense Contract Audit Agency                     32, I
Defense, Department of                            2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 681]]

  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 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
Denali Commission                                 45, IX
Disability, National Council on                   5, C; 34, XII
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical, and Adult Education, Office  34, IV
       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
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Policy, National Commission for        1, IV
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 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                   2, XV; 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
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99
  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, 2

[[Page 682]]

  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
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                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
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 Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
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
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission of                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
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 Services Administration                   5, LVII; 41, 105

[[Page 683]]

  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  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 Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 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
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
   Secretary
[[Page 684]]

Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
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, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior, Department of                           2, XIV
  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
  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
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  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 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
Investment Security, Office of                    31, VIII
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 of                            2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  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 Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor, Department of                              2, XXIX; 5, XLII
  Employee Benefits Security Administration       29, XXV
  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
[[Page 685]]

  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
  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, VII
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
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
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 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   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV, VI
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II; 37, IV
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          5, CI; 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                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI

[[Page 686]]

National Security Council and Office of Science   47, II
     and Technology Policy
National Technical Information Service            15, XI
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
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                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 5, IV; 45, 
                                                  VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory 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
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
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
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
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
Safety and Environmental Enforcement, Bureau of   30, II
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                5, XXXIV; 17, II

[[Page 687]]

Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 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 of                              2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Tennessee Valley Authority                        5, LXIX; 18, XIII
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  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; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury, Department of the                       2, X;5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
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
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs, Department of                   2, VIII; 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
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 689]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2014 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, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.govinfo.gov. For changes to this volume of the 
CFR prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 
1964-1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. 
The ``List of CFR Sections Affected 1986-2000'' is available at 
www.govinfo.gov.

                                  2014

12 CFR
                                                                   79 FR
                                                                    Page
Chapter III
303.2 Regulation at 78 FR 55470 confirmed
303.64 Regulation at 78 FR 55470 confirmed.........................20758
303.181 Regulation at 78 FR 55470 confirmed........................20758
303.184 Regulation at 78 FR 55470 confirmed........................20758
303.200 Regulation at 78 FR 55470 confirmed........................20758
303.207 Regulation at 78 FR 55470 confirmed........................20758
303.241 Regulation at 78 FR 55470 confirmed........................20758
308.200 Regulation at 78 FR 55470 confirmed........................20758
308.202 Regulation at 78 FR 55470 confirmed........................20758
308.204 Regulation at 78 FR 55471 confirmed........................20758
324 Regulation at 78 FR 55471 confirmed............................20758
324.1 (d)(4) amended...............................................57748
324.2 Amended........................................20758, 44124, 57748
324.3 (a) introductory text revised................................20758
324.10 (b)(4) revised..............................................20758
    (c)(4) revised.................................................57748
324.11 (b)(1)(iv)(C) revised.......................................20758
324.21 (c)(2)(i) revised...........................................20759
324.22 (a) introductory text, (b)(1) introductory text, (d)(1) 
        introductory text, (3), (e)(3) introductory text, (5), 
        (h)(2)(iii)(B)(1), (3)(i) and (iii)(A) revised; 
        (b)(2)(iv)(C), (c)(4)(i) and (5) amended...................20759
324.32 (k) introductory text revised...............................20759
324.34 (a)(1)(ii)(B) revised.......................................20760
324.35 (b)(2)(i)(A), (ii)(A), (c)(2)(i)(A), (ii)(A) and 
        (d)(3)(i)(F) revised; text following (d)(3)(ii) formula 
        designated as (d)(3)(ii)(A); new (d)(3)(ii)(A) amended.....20760
324.37 (c)(4)(i)(A) revised........................................20760
324.41 (b) amended.................................................20760
324.42 (h)(1)(iv) and (i)(1) amended...............................20760
324.43 (c) introductory text amended; (e)(3)(i) revised............20760
324.51 (a)(3)(i)(A) revised........................................20760
324.63 (a) amended.................................................20760
324.124 (a) amended................................................20761
324.131 (e)(4) amended.............................................20761
324.132 (d)(2)(iv)(A) and (5)(iii)(B) amended......................20761
324.133 (d)(3)(i)(F) revised.......................................20761
324.142 (k)(1)(iv) and (l)(1) amended; (m)(2)(ii)(B) revised.......20761

[[Page 690]]

324.144 (c) introductory text amended..............................20761
324.172 (d) added..................................................57750
324.173 (a) introductory text revised; (c) and Table 13 added......57750
324.210 (e) introductory text amended..............................20761
324.211 (c) introductory text amended..............................20761
324.403 (b)(1)(v) revised; eff. 1-1-18.............................24541
325 Policy statement...............................................14153
    Authority citation revised.....................................69368
325.202 (m) added..................................................69368
325.203 (b) revised................................................69368
325.204 Revised....................................................69368
325.206 (a) revised................................................69368
325.207 (a) revised................................................69369
327.1--327.15 (Subpart A) Regulation at 78 FR 55594 confirmed......20758
    Nomenclature change............................................70437
327.5 (c)(1) and (2) revised.......................................70437
327.9 (a)(2)(i) and (ii) revised...................................70437
327.9 (a)(2)(i) and (ii) revised; eff. 1-1-18......................70437
327.1--327.15 (Subpart A) Appendix A amended.......................70437
329 Part and authority citation added; nomenclature changes........61540
329.1 (b)(1)(iii) revised..........................................61541
329.3 Amended......................................................61541
333.4 Regulation at 78 FR 55595 confirmed..........................20758
335 Heading and authority citation revised.........................63500
    Technical correction...........................................64504
335.101 (a) revised................................................63501
335.221 (b) revised................................................63501
335.311 (b) revised................................................63501
335.701 (a) and (b) revised........................................63501
335.801 (b)(6)(i) introductory text, (7)(iii), (d) introductory 
        text, (1), (e)(1), (2)(i) introductory text, (ii) and 
        (f)(2) revised.............................................63501
335.901 Removed....................................................63502
336.3 (e) revised..................................................42183
337.6 Regulation at 78 FR 55595 confirmed..........................20758
337.12 Regulation at 78 FR 55595 confirmed.........................20758
339 Revised; eff. 1-20-15..........................................75744
345.12 (u)(1) revised..............................................77854
346 Revised........................................................42185
347.102 Regulation at 78 FR 55595 confirmed........................20758
349.8 Regulation at 78 FR 55595 confirmed..........................20758
351 Added; nomenclature change......................................5805
351.1 Revised.......................................................5805
351.16 Added; interim...............................................5228
360.5 Regulation at 78 FR 55595 confirmed..........................20758
360.9 Regulation at 78 FR 55595 confirmed..........................20758
362.2 Regulation at 78 FR 55596 confirmed..........................20758
362.4 Regulation at 78 FR 55596 confirmed..........................20758
362.17 Regulation at 78 FR 55596 confirmed.........................20758
362.18 Regulation at 78 FR 55596 confirmed.........................20758
363 Regulation at 78 FR 55596 confirmed............................20758
364 Regulation at 78 FR 55597 confirmed............................20758
365.1--365.2 (Subpart A) Regulation at 78 FR 55597 confirmed.......20758
373 Added; eff.2-23-15.............................................77765
373 Authority citation added; eff. 2-23-15.........................77765
373.1 Added; eff. 2-23-15..........................................77765
380 Authority citation revised.....................................20766
380.13 Added.......................................................20766
390 Authority citation revised..............................42183, 63502
    Technical correction...........................................64504
390.1--390.5 (Subpart A) Removed...................................42183
390.160--390.170 (Subpart H) Removed...............................42186
390.265 Regulation at 78 FR 55597 confirmed........................20758
390.321 (b)(2) revised.............................................63502
390.380 (a)(3) removed.............................................63502
390.390--390.395 (Subpart U) Removed...............................63502
391 Authority citation revised.....................................75746
391.10--391.14 (Subpart B) Regulation at 78 FR 55597 confirmed.....20758
391.30--391.39 (Subpart D) Removed; eff. 1-20-15...................75746

[[Page 691]]

                                  2015

12 CFR
                                                                   80 FR
                                                                    Page
Chapter III
303 Authority citation revised.....................................65899
303.80--303.99 (Subpart E) Revised.................................65899
308 Authority citation revised......................................5011
308.1 (e) introductory text, (1) and (9) revised; (a)(12), (13) 
        and (14) added..............................................5011
308.3 (k) through (r) redesignated as (l) through (s); (e), (j)(3) 
        and new (l) through (s) revised; new (l) added..............5012
308.25 (b) revised..................................................5012
308.101 (a) revised; (d) added......................................5012
308.107 (a) revised.................................................5012
308.109 (b)(1) and (2) revised......................................5012
308.144 Revised.....................................................5013
308.145 Revised.....................................................5013
308.146 Revised.....................................................5013
308.147 Revised.....................................................5013
308.148 Introductory text and (c) revised...........................5013
308.150 (a) revised.................................................5013
308.161 (a) revised.................................................5013
308.163 (a)(2) and (c) revised; (d) added...........................5014
308.164 (b)(1), (3) and (5) revised; (b)(10) added..................5014
308.300--308.305 (Subpart R) Revised...............................65906
323 Authority citation revised.....................................32684
323.1--323.7 (Subpart A) Designated as Subpart A; heading added....32684
323.1 Amended......................................................32684
323.3 Amended......................................................32684
323.4 Amended......................................................32684
323.5 Amended......................................................32684
323.8--323.14 (Subpart B) Added....................................32684
324.2 Amended......................................................41422
324.10 (c) introductory text revised...............................41422
324.22 (b)(1)(iii) revised.........................................41423
324.100 (b)(1)(ii) revised.........................................41423
324.122 (c)(9) and (10) redesignated as (c)(10) and (11); (a)(3), 
        (b)(1), (3), (5), (c)(1), (2), (5), (6), new (c)(10), (11) 
        and (i)(5) revised; (b)(2)(iii) and new (c)(9) added.......41423
324.131 (d)(5)(ii) and (iii) revised; (e)(3)(vi) amended...........41424
324.132 Table 1 amended; (c)(1), (2) and (d)(5)(iii)(B) revised; 
        (d)(2)(iv)(C), (7)(iv)(B) and (d)(9)(ii) amended...........41424
324.133 (b)(3)(i)(B), (4)(ii) and (c)(4)(ii) amended; (c)(3)(iii) 
        added......................................................41425
324.136 (e)(2)(i) and (ii) amended.................................41425
324.172 (d) revised................................................41425
324.173 (a) redesignated as (a)(1) and revised; (a)(2) and (3) 
        added; Table 6 and Table 9 amended.........................41425
324.403 (b) revised................................................41426
325.203 (b)(3) amended; CFR correction.............................81738
330.1 (s) removed..................................................65921
330.16 Removed.....................................................65921
334.1 Revised......................................................65918
334.3 (m) added....................................................65919
334.20--334.28 (Subpart C) Removed.................................65919
334.30--334.32 (Subpart D) Removed.................................65919
334.40--334.43 (Subpart E) Removed.................................65919
334.80--334.83 (Subpart I) Heading revised.........................65919
334.82 Removed.....................................................65919
334.90 (a) and (b)(5) revised; (b)(11) added.......................65919
334.91 (a) revised; (b)(3) added...................................65919
334 Appendix J amended.............................................65919
339 Revised........................................................43249
339.5 Revised......................................................43252
339.9 (b) revised..................................................43253
339 Appendix A revised.............................................43253
    Appendix B added...............................................43254
340 Revised........................................................22889
345.12 (h)(2)(i), (j)(2) and (l) amended; (u)(1) revised...........81164
345.42 (b)(3), (d) and (i) amended.................................81165
345.43 (b)(2) amended..............................................81165
346 Correctly revised..............................................23692
348 Revised; eff. 1-20-16..........................................79252
349 Heading revised; authority citation redesignated as Subpart B 
        authority citation; eff. 4-1-16............................74912
349.1--349.12 (Subpart A) Added; amended; eff. 4-1-16..............74912
349.1 Redesignated as 349.13; eff. 4-1-16..........................74912
    (a), (b) and (c) added; eff. 4-1-16............................74912
    (d) added and amended; interim; eff. 4-1-16....................74924

[[Page 692]]

349.2 Redesignated as 349.14; eff. 4-1-16..........................74912
    Amended; eff. 4-1-16...........................................74913
349.3 Redesignated as 349.15; eff. 4-1-16..........................74912
349.4 Redesignated as 349.16; eff. 4-1-16..........................74912
349.5 Redesignated as 349.17; eff. 4-1-16..........................74912
349.6 Redesignated as 349.18; eff. 4-1-16..........................74912
    Amended; eff. 4-1-16...........................................74913
349.7 Redesignated as 349.19; eff. 4-1-16..........................74912
349.8 Redesignated as 349.20; eff. 4-1-16..........................74912
349.9 Redesignated as 349.21; eff. 4-1-16..........................74912
349.10 Redesignated as 349.22; eff. 4-1-16.........................74912
349.11 Redesignated as 349.23; eff. 4-1-16.........................74912
349.12 Redesignated as 349.24; eff. 4-1-16.........................74912
    Added; eff. 4-1-16.............................................74913
349.13--349.16 (Subpart B) Heading added; authority citation 
        redesignated from Part 349 authority citation; eff. 4-1-16
                                                                   74912
349.13 Redesignated as 349.25; redesignated from 349.1; (d) 
        amended; eff. 4-1-16.......................................74912
349.14 Redesignated as 349.26; redesignated from 349.2; eff. 4-1-
        16.........................................................74912
349.15 Redesignated as 349.27; redesignated from 349.3; eff. 4-1-
        16.........................................................74912
349.16 Redesignated as 349.28; redesignated from 349.4; amended; 
        eff. 4-1-16................................................74912
349.17 Redesignated from 349.5; eff. 4-1-16........................74912
349.18 Redesignated from 349.6; eff. 4-1-16........................74912
349.19 Redesignated from 349.7; amended; eff. 4-1-16...............74912
349.20 Redesignated from 349.8; eff. 4-1-16........................74912
349.21 Redesignated from 349.9; eff. 4-1-16........................74912
349.22 Redesignated from 349.10; amended; eff. 4-1-16..............74912
349.23 Redesignated from 349.11; eff. 4-1-16.......................74912
349.24 Redesignated from 349.12; eff. 4-1-16.......................74912
349.25 Redesignated from 349.13; eff. 4-1-16.......................74912
349.26 Redesignated from 349.14; eff. 4-1-16.......................74912
349.27 Redesignated from 349.15; eff. 4-1-16.......................74912
349.28 Redesignated from 349.16; eff. 4-1-16.......................74912
352.9 (b) amended..................................................62445
352.10 (c), (e) introductory text, (g), (h) and (i) amended........62445
360.6 (a)(1) through (11) redesignated as (a)(2) through (12); new 
        (a)(1) added; (b)(5)(i) revised; eff. 1-25-16..............73089
361.5 (a) and (b) amended..........................................62445
361.6 (a) amended..................................................62445
364 Revised........................................................65907
370 Removed........................................................65921
390 Authority citation revised...........5014, 5017, 32686, 65613, 79255
390.10--390.23 (Subpart B) Removed..................................5014
390.30--390.75 (Subpart C) Removed..................................5014
390.80--390.86 (Subpart D) Removed..................................5014
390.90--390.97 (Subpart E) Removed..................................5015
390.220--390.222 (Subpart L) Removed...............................65614
390.240--390.241 (Subpart N) Revised................................5017
390.400--390.408 (Subpart V) Removed; eff. 1-20-16.................79255
390.440--390.447 (Subpart X) Removed...............................32687
391 Authority citation revised..............................65903, 65913
391.10--391.14 (Subpart B) Removed.................................65913
391.20--391.23 (Subpart C) Removed.................................65919
391.40--391.48 (Subpart E) Removed.................................65903

                                  2016

12 CFR
                                                                   81 FR
                                                                    Page
Chapter III
308 Authority citation revised.....................................42239
308.116 (b)(4) revised; interim....................................42239
    (b)(4) revised; eff. 1-15-17...................................95416

[[Page 693]]

308.132 (c)(1) revised; (d) added; interim.........................42239
    (c) and (d) revised; eff. 1-15-17..............................95416
308.502 (a)(6), (b)(4) and (d) revised; interim....................42242
309.2 (e) revised; interim.........................................83646
309.4 (a)(2) heading, (i) introductory text, (D) and (b) revised; 
        interim....................................................83646
309.5 (d)(6), (7), (h) and (i) redesignated as (d)(7), (8), new 
        (i) and (j); new (d)(8)(iii) redesignated as (d)(8)(iv); 
        new (d)(6), new (8)(iii), (iv)(E) and new (h) added; 
        (a)(6), (d)(1), (4), new (8)(iv)(C), (D), (f)(1)(x), 
        (g)(3), and new (i)(2) revised; interim....................83647
323 Policy statement...............................................75315
324.2 Footnote 5 redesignated as footnote 9; amended...............71354
324.4 Footnote 6 redesignated as footnote 10.......................71354
324.11 Footnote 7 redesignated as footnote 11......................71354
324.20 Footnotes 8 through 17 redesignated as footnotes 12 through 
        21.........................................................71354
324.22 Footnotes 18 through 24 redesignated as footnotes 22 
        through 28.................................................71354
324.101 Footnote 25 redesignated as footnote 29....................71354
324.134 Footnote 26 redesignated as footnote 30....................71354
324.202 Footnotes 27 and 28 redesignated as footnotes 31 and 32....71354
324.210 Footnote 29 redesignated as footnote 33....................71354
324.403 Correctly revised..........................................22173
327.3 (b)(1) amended...............................................32201
    (c) revised; interim...........................................42243
327.4 (a) and (c) amended..........................................32201
327.8 (e), (f), (k)(1) and (m) through (p) amended; (l) revised; 
        (v) through (y) added......................................32201
327.9 Introductory text added......................................32201
327.10 (b) through (f) revised.....................................32201
327.11 Revised.....................................................16069
327.16 Added.......................................................32207
327.35 (a) revised.................................................16073
329.3 Footnote 1 redesignated as footnote 2; amended...............71356
334 Appendices C and E removed.....................................58382
337 Authority citation revised.....................................10069
    Regulation at 81 FR 10069 confirmed; eff. 1-17-17..............90952
337.12 Revised; interim............................................10069
    Regulation at 81 FR 10069 confirmed; eff. 1-17-17..............90952
339 Authority citation correctly added..............................6170
339.2 Correctly amended.............................................6170
341.1 Revised......................................................27297
341.2 (h) and (i) revised..........................................27297
341.3 (a) revised; (c) amended.....................................27297
341.5 (b) amended..................................................27297
341.7 Removed......................................................27298
345 Policy statement...............................................48506
347 Authority citation revised.....................................10070
    Regulation at 81 FR 10070 confirmed; eff. 1-17-17..............90952
347.211 (b)(1)(i) revised; interim.................................10070
    Regulation at 81 FR 10070 confirmed; eff. 1-17-17..............90952
349.1 Regulation at 80 FR 74924 confirmed..........................50613
360 Authority citation revised.....................................41423
360.6 (b)(3)(ii)(A) revised........................................41423
370 Added; eff. 4-1-17.............................................87759
380 Authority citation revised.....................................41417
380.14 Added.......................................................41417
390.351 Removed; interim...........................................10070
    Regulation at 81 FR 10070 confirmed; eff. 1-17-17..............90952

                                  2017

12 CFR
                                                                   82 FR
                                                                    Page
Chapter III
323 Policy statement...............................................49089
324.2 Amended......................................................50260
324.300 (b)(4), (d)(1) and table 9 revised; (b)(5) added...........55317
329.3 Amended......................................................50261
    corrected......................................................61443
345.12 (u)(1) revised...............................................5356
    (g)(3), (4)(iii)(B), (h)(2)(i) and (l) amended; (g)(5) and 
(j)(3) removed; (j)(4) and (5) redesignated as new (j)(3) and (5) 
                                                                   55743
    (j)(5) redesignated as (j)(4); (u)(1) revised..................61145
345.22 (a)(1) amended..............................................55743
345.42 (c)(1) introductory text amended............................55743
345.43 (b)(2) revised..............................................55743
345 Appendix B amended..............................................5356

[[Page 694]]

371 Revised........................................................35599
382 Added..........................................................50262
382.1 Amended......................................................50267
    Regulation at 82 FR 50267 eff. date confirmed..................61443
382.2 (c)(1)(ii) corrected.........................................61443

                                  2018

12 CFR
                                                                   83 FR
                                                                    Page
Chapter III
303 Authority citation revised.....................................60336
303.2 (b), (ee), and (ff) revised..................................17739
303.64 (a)(4)(i) revised...........................................17739
303.181 (c)(4) revised.............................................17739
303.184 (d)(1)(ii) revised.........................................17739
303.200 (a)(2) and (b) revised.....................................17739
303.241 (c)(4) revised.............................................17739
303.242 Revised....................................................60337
308.116 (b)(4) revised..............................................1522
308.116 (b) revised; eff. 1-15-19..................................61114
308.132 (d) revised.................................................1522
308.132 (d) revised; (e) added; eff. 1-15-19.......................61114
308.200 Revised....................................................17739
308.202 (a)(1)(i)(A) and (ii) revised..............................17739
308.204 (b)(2) and (c) revised.....................................17739
308.502 (a)(6) and (b)(4) revised; eff. 1-15-19....................61115
308.530 (d) revised; eff. 1-15-19..................................61115
323 Authority citation revised.....................................15036
323.1 (a) revised..................................................15036
323.2 (e) through (m) redesignated as (f) through (n); new (e) 
        added......................................................15036
323.3 (a)(11) amended; (a)(12), (b), and (d)(2) revised; (a)(13) 
        added......................................................15036
324.22 (b)(2)(iii) footnote 22 revised.............................17740
324.403 (b)(1)(v) revised..........................................17617
325 Heading revised................................................17740
325.1--325.6 (Subpart A) Removed...................................17740
325.1 Redesignated from 325.201; new (c)(5) revised................17740
325.2 Redesignated from 325.202....................................17740
325.3 Redesignated from 325.203....................................17740
325.4 Redesignated from 325.204....................................17740
325.5 Redesignated from 325.205....................................17740
325.6 Redesignated from 325.206....................................17740
325.7 Redesignated from 325.207....................................17740
325.101--325.105 (Subpart B) Removed...............................17740
325.201--325.207 (Subpart C) Heading removed.......................17740
325.201 Redesignated as 325.1......................................17740
325.202 Redesignated as 325.2......................................17740
325.203 Redesignated as 325.3......................................17740
325.204 Redesignated as 325.4......................................17740
325.205 Redesignated as 325.5......................................17740
325.206 Redesignated as 325.6......................................17740
325.207 Redesignated as 325.7......................................17740
325 Appendix A D removed...........................................17740
326.0--326.4 (Subpart A) Revised...................................13842
327.1--327.16 (Subpart A) Appendix A and Appendix C amended........17740
327.3 (c) revised; eff. 1-15-19....................................61115
327.8 (z) added....................................................14568
327.11 (c)(3)(i) and (11)(i) revised...............................14568
327.16 (a)(1)(ii)(B) and (c)(2) revised............................14568
329.3 Amended; interim.............................................44455
329.20 (c)(1)(iii) and (2)(vi) amended; (c)(3) added; interim......44455
333 Authority citation revised.....................................60337
333.3 Added........................................................60337
333.4 (a) amended..................................................17740
333.101 (b) revised................................................60337
337.6 (a)(3)(i) footnote 12 and (iii) footnote 13 revised..........17740
337.12 (b)(1) revised; interim.....................................43965
337.12 Regulation at 83 FR 43965 confirmed.........................67035
343 Revised........................................................13847
344.7 (a) revised..................................................26349
345 Technical correction...........................................15298
345.12 (u)(1) revised..............................................66603


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