[Federal Register Volume 59, Number 106 (Friday, June 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13253]


  Federal Register / Vol. 59, No. 106 / Friday, June 3, 1994 /
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[[Page Unknown]]

[Federal Register: June 3, 1994]


                                                   VOL. 59, NO. 106

                                               Friday, June 3, 1994

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Regulation H; Docket No. R-0773]

 

Membership of State Banking Institutions in the Federal Reserve 
System

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board is amending Regulation H to allow a state member 
bank that meets certain conditions to invest in its premises in an 
amount up to 50 percent of its Tier 1 capital without obtaining 
specific approval. The Board believes that a general approval for a 
state member bank to invest an amount not exceeding 50 percent of its 
Tier 1 capital is appropriate for a bank that meets those conditions. 
This action will significantly reduce the number of applications to 
invest in bank premises that are filed with the Board and will thereby 
reduce regulatory burden.

EFFECTIVE DATE: July 5, 1994.

FOR FURTHER INFORMATION CONTACT:
Manley Williams, Attorney (202/736-5565), Legal Division; Richard 
Fabrizio, Senior Financial Analyst (202/452-3423); Beverly Evans, 
Supervisory Financial Analyst (202/452-2573); John Russell, Manager 
(202/452-2466), Division of Banking Supervision and Regulation, Board 
of Governors of the Federal Reserve System. For the hearing impaired 
only, Telecommunications Device for the Deaf (TDD), Dorothea Thompson 
(202/452-3544), Board of Governors of the Federal Reserve System, 20th 
and C Street NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION: Section 24A of the Federal Reserve Act, 12 
U.S.C. 371d, requires a state member bank to obtain the approval of the 
Board to invest in the bank's premises if the aggregate level of direct 
and indirect investment in its premises will exceed the bank's capital 
stock account. Section 24A applies
    (1) To investments in bank premises and to investments in the 
stock, bonds, debentures, or other such obligations of any corporation 
holding the premises of such bank,
    (2) To the making of loans to or upon the security of the stock of 
any such corporation; and
    (3) To the indebtedness incurred by any corporation that is an 
affiliate of the bank.
    The Board is amending Regulation H to allow a state member board 
that meets certain conditions to invest in bank premises in an amount 
that exceeds its capital stock account but not exceeding 50 percent of 
its Tier 1 capital without obtaining specific approval for the 
investment. Prior to this amendment, a state member bank was required 
to obtain Board approval for each investment in bank premises if the 
aggregate investment exceeded, or would exceed, the capital stock 
account of the state member bank.
    The Board believes that investments by a state member bank in bank 
premises in an amount in excess of its stock account but not exceeding 
50 percent of the bank's Tier 1 capital generally do not present any 
significant risks to the bank if the bank is well capitalized, is rated 
CAMEL ``1'' or ``2'', and is not subject to any written agreement, 
cease and desist order, capital directive. The Board believes that a 
general approval for a state member bank to invest an amount not exceed 
50 percent of its Tier 1 capital its appropriate for a bank that meets 
those conditions. This action will significantly reduce the number of 
applications to invest in bank premises that are filed with the Board 
and will thereby reduce regulatory burden. The amendment does not 
affect state member banks' ability to invest in bank premises, without 
conditions, up to the amount of their capital stock account.

Notice and Public Participation

    The provisions of 5 U.S.C. 553(b) relating to notice and public 
participation have not been followed in connection with the adoption of 
this amendment because the changes relate to rules of agency 
organization, procedure, or practice.

Regulatory Flexibility Act Analysis

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), the Board certifies that the proposed amendment 
will not have a significant economic impact on a substantial number of 
small entities. The proposed amendment will reduce the regulatory 
burden for many small depository institutions by relieving them of the 
requirement to file an application in certain cases, and will have no 
effect in other cases.

List of Subjects in 12 CFR Part 208

    Accounting, Agriculture, Banks, Banking, Confidential business 
information, Currency, Federal Reserve System, Reporting and 
recordkeeping requirements, Securities.

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (Regulation H)

    1. The authority citation for part 208 continues to read as 
follows:

    Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d, 461, 
481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o, 1831p-1, 3105, 
3310, 3331-3351, and 3906-3909; 15 U.S.C. 1(b), 1(g), 1(i), 78b, 
78o-4(c)(5), 78q, 78q-1, and 78w; 31 U.S.C. 5318.

    2. Section 208.22 is added to subpart A read as follows:


Sec. 208.22  Investment in bank premises.

    (a) Under Section 24A of the Federal Reserve Act, state member bank 
investments in bank premises or in the stock, bonds, debentures, or 
other such obligations of any corporation holding the premises of the 
bank, and loans on the security of the stock of such corporation, do 
not require the approval of the Board if the aggregate of all such 
investments and loans, together with the indebtedness incurred by any 
such corporation that is an affiliate of the bank (as defined in 
section 2 of the Banking Act of 1933, as amended, 12 U.S.C. 221a):
    (1) Does not exceed the capital stock account of the bank; or
    (2) Does not exceed 50 percent of the bank's Tier 1 capital and the 
bank:
    (i) Is well capitalized as defined in Sec. 208.33(b)(1) of this 
part;
    (ii) Received a composite CAMEL rating of ``1'' or ``2'' as of its 
most recent examination by the relevant Federal Reserve Bank or state 
regulatory authority; and
    (iii) Is not subject to any written agreement, cease and desist 
order, capital directive, or prompt corrective action directive issued 
by the Board or a Federal Reserve Bank.

    By order of the Board of Governors of the Federal Reserve 
System, May 25, 1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 94-13253 Filed 6-2-94; 8:45 am]
BILLING CODE 6210-01-M