[Federal Register Volume 69, Number 27 (Tuesday, February 10, 2004)]
[Proposed Rules]
[Pages 6201-6214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2846]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 502

[No. 2004-06]
RIN 1550-AB47


Assessments and Fees

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Office of Thrift Supervision (OTS) is proposing to amend 
its rules on assessments and fees. The proposed rule would replace 
examination fees for savings and loan holding companies (SLHCs) with 
semi-annual assessments on top-tier SLHCs. OTS would charge a base 
assessment amount on all top-tier SLHCs, and would add up to three 
additional components to this base amount. The three components would 
be based on the risk or complexity of the SLHC's business, its 
organizational form, and its condition. OTS is also considering 
assessing certain SLHCs that are large and complex enterprises 
(conglomerates) under a separate assessment procedure and solicits 
comments on these assessment procedures.
    OTS also proposes to amend the existing rules governing the 
calculation of savings association semi-annual assessments. 
Specifically, OTS proposes to eliminate the alternative calculation for 
the asset size component currently available to small ``qualifying 
savings associations.''

DATES: Comments must be received on or before March 26, 2004.

ADDRESSES: Mail: Send comments to Regulation Comments, Chief Counsel's 
Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552, Attention: No. 2004-06. Commenters should be aware that there 
have been some unpredictable and lengthy delays in postal deliveries to 
the Washington, DC area and may prefer to make their comments via 
facsimile, e-mail, or hand delivery.
    Delivery: Hand deliver comments to the Guard's Desk, East Lobby 
Entrance, 1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, 
Attention: Regulation Comments, Chief Counsel's Office, No. 2004-06.
    Facsimiles: Send facsimile transmissions to Fax Number (202) 906-
6518, Attention: No. 2004-06.
    E-Mail: Send e-mails to [email protected], Attention: No. 
2004-06, and include your name and telephone number.
    Availability of comments: OTS will post comments and the related 
index on the OTS Internet Site at www.ots.treas.gov. You may inspect 
comments at the Public Reading Room, 1700 G Street, NW., by 
appointment. To make an appointment for access, call (202) 906-5922, 
send an e-mail to public.info@ots.treas.gov">public.info@ots.treas.gov, or send a facsimile 
transmission to (202) 906-7755. (Please identify the materials you 
would like to inspect to assist us in serving you.) We schedule 
appointments on business days between 10 a.m. and 4 p.m. In most cases, 
appointments will be available the business day after the date we 
receive a request.

FOR FURTHER INFORMATION CONTACT: Donna Deale, Manager, Affiliates and 
Holding Company Supervision, (202) 906-7488; or Karen Osterloh, Special 
Counsel, Regulations and Legislation Division, Chief Counsel's Office, 
(202)

[[Page 6202]]

906-6639; Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

    The Home Owners' Loan Act (HOLA) authorizes the OTS Director to 
assess fees against savings associations and holding companies to fund 
OTS's direct and indirect expenses as the Director deems necessary or 
appropriate.\1\ OTS also may assess savings associations and affiliates 
of savings associations for the costs of conducting examinations.\2\
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 1467(k). See also 12 U.S.C. 1462a, 1463, 1467, 
1467a.
    \2\ 12 U.S.C. 1467(a) and (b) and 1467a(b)(4). See also 12 
U.S.C. 1467(d) (trust examinations of savings associations).
---------------------------------------------------------------------------

    OTS has promulgated regulations implementing this authority at 12 
CFR part 502. Under these rules, OTS currently charges each savings 
association a semi-annual assessment, which includes a size component, 
a condition component, and a complexity component. In addition, OTS 
charges an examination fee for thrifts that have trust assets that are 
under the $1 billion complexity component threshold. OTS also charges 
SLHCs and other thrift affiliates fees for investigating and examining 
their operations. These examination-related fees are assessed at an 
hourly rate for examiner time spent performing the examination.

II. Description of the Proposal

    OTS proposes to revise its current rules to more accurately 
apportion the cost of OTS supervision among savings associations, 
SLHCs, and other affiliates. The agency has three primary goals: (1) 
Keep charges as low as possible while providing the agency with the 
resources essential to effectively supervise a changing industry; (2) 
tailor its charges to more accurately reflect the agency's costs of 
supervising institutions and their affiliates; and (3) provide 
institutions and their affiliates with consistent and predictable 
assessments to facilitate financial planning.
    Consistent with these principles, OTS is proposing several 
amendments to its existing assessments rule. OTS expects to implement 
the proposed changes in the July 2004 semi-annual assessment.
    OTS proposes the following changes. First, OTS proposes to 
eliminate most examination fees for SLHCs and instead charge semi-
annual assessments to these entities. In addition, OTS proposes to 
revise the assessment procedures for savings associations by 
eliminating the alternative calculation for the asset size component 
currently available to small ``qualifying savings associations.''

A. SLHC Semi-Annual Assessment

    Under the existing assessment regulation at 12 CFR 502.50, OTS may 
assess fees for examining or investigating savings association 
affiliates, including SLHCs. OTS currently charges SLHCs for time spent 
conducting on-site examinations and working on off-site examination 
related issues.
    As SLHCs have become more complex in both structure and nature of 
operations, OTS staff has spent substantially more off-site time 
addressing supervisory and examination related issues, as well as 
monitoring the financial condition of SLHCs. To attempt to better 
capture off-site time spent on these supervisory issues, OTS enhanced 
its system for tracking time devoted by regional and headquarters staff 
to specific SLHCs, and issued a Thrift Bulletin stating that OTS would 
bill SLHCs directly for these off-site services. Thrift Bulletin 48-19 
(September 23, 2003).
    Following the publication of the Thrift Bulletin, various members 
of the industry contacted OTS to discuss the proposed assessment of 
off-site examination hours. In addition to industry feedback, OTS 
conducted an analysis of off-site examination time records and 
collected input from staff on the process of collecting and tracking 
off-site examination time. Based on the industry and staff feedback, 
OTS has determined that the administrative burden of collecting and 
billing off-site hours outweighs the cost-recovery benefit.
    In response to these developments, OTS is proposing a revision of 
its assessment regulation to permit OTS to recoup supervisory expenses 
related to the examination of SLHCs through semi-annual assessments 
rather than to directly bill for OTS hours. In connection with this 
change, OTS will cease charging most fees connected with staff time 
spent on SLHC and affiliate examination related issues.\3\
---------------------------------------------------------------------------

    \3\ OTS will, however, retain the authority to charge a fee to 
recover extraordinary expenses related to examination, 
investigation, regulation, or supervision of savings associations 
and their affiliates. 12 CFR 502.60(e). OTS will also continue to 
charge application fees as outlined in TB 48-19 (September 23, 
2003).
---------------------------------------------------------------------------

    OTS's goal is to tailor its charges in relation to its supervisory 
efforts and to provide transparency and predictability to the industry 
regarding costs. The current system primarily bases SLHC fees on on-
site examiner hours. This method does not capture the significant 
amount of OTS staff time devoted to off-site monitoring and supervision 
of SLHCs. Moreover, the current system can result in sharply 
fluctuating or unexpected examination billings. As conditions and 
activities at the SLHC change from year-to-year, OTS attempts to adjust 
its examination scope to conduct its work in a risk-focused manner. 
Therefore, examiners do not spend the same amount of time at a 
particular SLHC during each examination. The time spent on-site can 
also vary considerably depending upon the amount of time spent off-site 
both in preparation for and concluding the examination. OTS believes 
that the recovery of supervisory costs based on regular assessments 
offers a measure of predictability as to the amount and the timing of 
payments and will aid SLHCs in their budgetary planning processes.
    OTS believes that the proposed change will better support our risk-
focused examination and supervisory processes and encourage efforts to 
perform exam related SLHC work off premise, when possible. With SLHC 
assessment fees set at fixed rates based on a variety of factors, staff 
will be encouraged to conduct its SLHC supervision in the most 
effective and efficient manner based on each SHLC's overall profile. 
With fixed assessments, staff will not feel undue pressure to expand or 
restrict on-site examination time due to concerns about the potential 
examination charges.
    In today's rulemaking, OTS proposes to eliminate most examination 
related fees for SLHCs, and substitute semi-annual assessments. In 
establishing the proposed assessment structure, OTS is aware that every 
type of SLHC does not require an equal amount of supervisory attention. 
Accordingly, OTS has developed a rule that considers important factors, 
such as the complexity and risk of the SLHC enterprise, the total 
amount of SLHC assets, the organizational form of the SLHC, and the 
condition of SLHCs in the holding company structure.
1. Assessment of Top-Tier SLHCs
    In most cases, OTS performs only one examination of each SLHC 
structure, even though the examination often includes a review of 
multiple tiers of direct and indirect thrift ownership. Because our 
SLHC examination and supervisory efforts consider the entire holding 
company structure, OTS does not propose to assess any charge on 
intermediate-level SLHCs in a holding company structure. Instead, the 
proposed rule would institute a semi-annual assessment only on the top-
tier SLHC. The top-tier SLHC is defined as

[[Page 6203]]

the highest level of ownership by a registered holding company in the 
holding company structure.
    Occasionally two or more SLHCs own a controlling interest in a 
savings association. This occurs, for example, where two companies each 
directly owns 50 percent of the savings association's voting stock. 
Where there are two or more distinct controlling interests in a savings 
association, OTS examines each ownership structure separately. 
Accordingly, OTS would impose a semi-annual assessment on the top-tier 
SLHC in each ownership path. OTS would not reduce the amount of the 
assessment to reflect overlaps in these ownership structures.
    In some cases, a top-tier SLHC is a trust that holds a controlling 
interest in an intermediate-tier SLHC. When OTS examines such 
structures, the vast majority of its efforts are expended in the review 
of the intermediate tier SLHC. OTS specifically requests comment on 
whether it should assess the intermediate SLHC, rather than the top-
tier SLHC, in these instances.
2. Calculation of Semi-Annual Assessment
    OTS intends to calculate the semi-annual assessments for most SLHC 
enterprises under the procedures described at section II.A.2.a. of this 
preamble. OTS is also considering assessing those SLHCs that are large 
and particularly complex enterprises (conglomerates) under a separate 
assessment procedure described at section II.A.2.b. of this preamble.
    a. Calculation of Semi-Annual Assessment--In General. OTS intends 
to calculate the semi-annual assessments for most SLHC enterprises as 
follows. First, OTS would impose a base assessment amount on top-tier 
SLHCs. OTS would then add up to three components to this base 
assessment amount. These three components would be based on the risk or 
complexity of the SLHC's business, its organizational form, and its 
condition. See proposed Sec. 502.26. The calculation of the base charge 
and the three components is discussed below.
    Base Charge. As noted above, OTS will establish the amount of the 
base assessment charge for top-tier SLHCs. The amount of the charge 
will reflect OTS's estimate of the base cost of conducting on- and off-
site supervision of small low risk, noncomplex SLHCs. OTS anticipates 
that these costs will reflect the costs of conducting on-site 
examinations using the abbreviated holding company examination 
program,\4\ conducting off-site activities in preparation for such an 
examination,\5\ and performing off-site monitoring between 
examinations.\6\ OTS also will recover a portion of its operating 
costs, such as the cost of OTS facilities and examination support 
personnel allocated to these activities.
---------------------------------------------------------------------------

    \4\ See Holding Company Handbook, Section 720, Abbreviated 
Holding Company Examination Program.
    \5\ This would include, for example, the costs of completing 
pre-examination procedures and the risk classification checklist for 
a low risk, noncomplex SLHC. See Holding Company Handbook, Section 
710 Holding Company Administrative Program.
    \6\ These costs would include the costs to review and analyze 
basic reports filed by the savings association and SLHCs (e.g., 
Schedule HC of the Thrift Financial Report (TFR), the SLHC's 
quarterly H-(b)11 reports, and relevant private sector information).
---------------------------------------------------------------------------

    OTS is currently considering establishing a fixed charge of $ 3,000 
for each semi-annual assessment. This charge would equate to 
approximately 21 hours at OTS's current billing rate of $145 per hour. 
OTS will separately publish the amount of the final fixed charge in a 
Thrift Bulletin. We specifically request comment on the amount of this 
base charge.\7\
---------------------------------------------------------------------------

    \7\ The amounts included as examples in this preamble are 
subject to change in the Thrift Bulletin implementing the final 
rule. These amounts reflect OTS's current costs and the proposed 
assessment structure. Because OTS cannot predict what its final rule 
will look like, OTS cannot determine with certainty what assessment 
amounts will appear in the implementing Thrift Bulletin. At the same 
time, OTS wants to be as informative as possible about potential 
assessments under the proposed rule. It hopes that SLHCs will find 
the proposed amounts useful in determining how the proposed 
regulation may affect them.
---------------------------------------------------------------------------

    Risk and Complexity Component. The first component of the general 
SLHC semi-annual assessment is the risk and complexity component. OTS 
will compute the amount of this component using schedules that set out 
charges based on OTS holding company risk classifications and total 
consolidated holding company assets.
    Currently, OTS classifies SLHCs into two categories.\8\ This 
process distinguishes low risk or noncomplex holding company 
enterprises (Category I) from those that have complex operations or 
structures or exhibit a higher risk profile (Category II). To recognize 
that OTS spends greater resources to supervise Category II SLHCs, the 
proposed rule would permit OTS to establish separate risk and 
complexity component schedules for different categories of SLHCs.\9\
---------------------------------------------------------------------------

    \8\ See Holding Companies Handbook, Section 100, Supervisory 
Approach, and Section 710, Administrative Program.
    \9\ There is also a limited, select number of large and complex 
enterprises (conglomerates), which OTS will assess under a separate 
assessment procedure described at section II.A.2.b. of this 
preamble.
---------------------------------------------------------------------------

    In assigning a particular SLHC to a risk category, OTS assesses the 
following factors:
     SLHC financial condition. OTS will review 
whether the SLHC lacks a consistent source of reliable cash flow and 
stable earnings from operations, other than proceeds from the thrift or 
affiliates that are regulated financial entities; is significantly 
leveraged, either with high debt levels, hybrid instruments with debt-
like features, or highly volatile instruments; has major investments 
that can rapidly require significant cash expenditures; is in a 
cyclical industry that is distressed or experiencing adverse trends; 
has a history of volatile operations; or has recently had a downgrade 
in debt rating by a major debt rating agency.
     Financial independence. OTS will consider 
whether the savings association or affiliates that are regulated 
financial entities are dependent on the SLHC for access to capital 
markets and whether they are unlikely to survive the financial collapse 
of the SLHC or a major SLHC affiliate.
     Operational independence. OTS will determine 
whether the management and board of the savings association or 
affiliates that are regulated financial entities consistently act in a 
manner beholden to the SLHC; their operational systems are dependent on 
the SLHC or any affiliate; the thrift or affiliates that are regulated 
financial entities have few full time employees dedicated to them; 
audit functions are consolidated within the SLHC, rather than in a 
separate audit department; key functions are performed by the SLHC or 
any other affiliate; the compensation of employees is tied directly or 
indirectly to the performance of the SLHC; or there are significant or 
abusive inter-company or insider transactions.
     Reputational risk. In reviewing this factor, OTS 
reviews whether the public identity of the thrift or affiliates that 
are regulated financial entities are linked to the SLHC through similar 
names or marketing strategies; whether there is significant cross-
selling of proprietary products; whether the thrift and affiliates that 
are regulated financial entities serve only to facilitate the sales of 
SLHC services and products; or whether all assets or liabilities of the 
thrift or affiliates that are regulated financial entities come from 
the SLHC or other affiliates.
     Management experience. In reviewing this factor, 
OTS considers the management experience of the SLHC in

[[Page 6204]]

running regulated financial entities; whether the thrift (or affiliates 
that are regulated financial entities) are de novo entities or have 
existing management with a proven track record; whether the SLHC is 
newly established or has a record of successful operation; or whether 
the SLHC is engaged in a significantly different business other than 
financial services.
    If a holding company enterprise is classified as Category I, OTS 
considers the structure to be noncomplex and to have relatively low 
risk. OTS examination and supervision of these entities requires 
limited OTS resources. Typically, OTS will examine these entities using 
an abbreviated examination program, although the examination staff may 
also apply some of the more detailed procedures from the CORE Holding 
Company Examination Program.\10\ OTS intends to assess these 
enterprises a lower amount under the risk and complexity component.
---------------------------------------------------------------------------

    \10\ The CORE Holding Company Examination Program focuses on 
four primary areas of review: Capital, Organizational Structure, 
Relationship and Earnings. Holding Company Handbook, Section 730, 
CORE Holding Company Examination Program.
---------------------------------------------------------------------------

    Category II holding company structures, on the other hand, include 
complex structures and entities that exhibit characteristics that 
present a higher degree of risk. OTS examinations of these entities 
generally require greater resources in order to review the current and 
prospective risks that the entity may pose to the thrift. Usually, OTS 
will examine these entities using the CORE Holding Company Examination 
Program, although all CORE procedures may not be required.
    Similar to the size component currently assessed on thrifts, 
amounts assessed under the risk and complexity component would increase 
as the amount of the total consolidated SLHC assets increase.\11\ This 
would reflect the fact that OTS's supervisory efforts and related costs 
typically increase as the overall size of the top-tier SLHC increases. 
Because a flat rate for all asset sizes would fail to reflect economies 
of scale in the supervision of larger structures, the scheduled amounts 
established under this section would also reflect marginal assessment 
rates that decrease as asset size increases.
---------------------------------------------------------------------------

    \11\ OTS would use total consolidated top-tier SLHC assets, as 
reported in Schedule HC of the TFR. Where the depository institution 
does not submit Schedule HC, OTS would use consolidated assets 
reported on the quarterly report H-(b)11. OTS would use the 
September 30 TFR or report H-(b)11 to determine amounts due at the 
January 31 assessment; and the March 31 TFR or report H-(b)11 to 
determine amounts due at the July 31 assessment.
---------------------------------------------------------------------------

    OTS will establish and publish these schedules in a Thrift 
Bulletin. To assist commenters in assessing the impact of the proposed 
rule, OTS is considering establishing the following schedules under the 
risk and complexity component:\12\
---------------------------------------------------------------------------

    \12\ See footnote 7.

                                          Schedule for Category I SLHCs
----------------------------------------------------------------------------------------------------------------
     If you are a top-tier Category I SLHC and your total         Your risk and complexity component is . . .
                consolidated assets are . . .                 --------------------------------------------------
--------------------------------------------------------------                                              Of
                                                               This amount . . .    Plus--this marginal   assets
             Over . . .                  But not over . . .                             rate . . .        over .
                                                                                                            . .
----------------------------------------------------------------------------------------------------------------
$0..................................  $150 Million...........                 $0  N/A...................  $0.
$150 Million........................  $250 Million...........                  0  0.000007500000........  $150
                                                                                                          Millio
                                                                                                           n.
$250 Million........................  $500 Million...........                750  0.000003000000........  $250
                                                                                                          Millio
                                                                                                           n.
$500 Million........................  $1 Billion.............              1,500  0.000002000000........  $500
                                                                                                          Millio
                                                                                                           n.
$1 Billion..........................  $5 Billion.............              2,500  0.000000500000........   $1
                                                                                                          Billio
                                                                                                           n.
$5 Billion..........................  $50 Billion............              4,500  0.000000055556........   $5
                                                                                                          Billio
                                                                                                           n.
$50 Billion.........................  $100 Billion...........              7,000  0.000000040000........  $50
                                                                                                          Billio
                                                                                                           n.
$100 Billion........................  $300 Billion...........              9,000  0.000000017500........  $100
                                                                                                          Billio
                                                                                                           n.
Over $300 Billion...................  .......................             12,500  0.000000007857........  $300
                                                                                                          Billio
                                                                                                           n.
----------------------------------------------------------------------------------------------------------------


                                         Schedule for Category II SLHCs
----------------------------------------------------------------------------------------------------------------
If you are a top-tier Category II SLHC and your total         Your risk and complexity component is . . .
            consolidated assets are . . .             ----------------------------------------------------------
------------------------------------------------------                        Plus--this
                                                       This amount . . .  marginal rate . .   Of assets over . .
           Over . . .              But not over . . .                             .                   .
----------------------------------------------------------------------------------------------------------------
$0..............................  $150 Million.......             $1,000      0.00001333335  $0.
$150 Million....................  $250 Million.......              3,000      0.00001000000  $150 Million.
$250 Million....................  $500 Million.......              4,000      0.00000800000  $250 Million.
$500 Million....................  $1 Billion.........              6,000      0.00000600000  $500 Million.
$1 Billion......................  $5 Billion.........              9,000      0.00000225000  $1 Billion.
$5 Billion......................  $50 Billion........             18,000      0.00000017778  $5 Billion.
$50 Billion.....................  $100 Billion.......             26,000      0.00000014000  $50 Billion.
$100 Billion....................  $300 Billion.......             33,000      0.00000006000  $100 Billion.
Over $300 Billion...............  ...................             45,000      0.00000002000  $300 Billion.
----------------------------------------------------------------------------------------------------------------

    In applying the assessment schedules, OTS will use the most recent 
risk classification assigned by OTS of which a SLHC enterprise has been 
notified in writing before an assessment's due date. OTS does not 
currently inform SLHC enterprises whether they are identified as a 
Category I or Category II holding company. At publication, 
approximately 80 percent of SLHCs are Category I. To assist commenters 
in responding to the issues raised in this proposed rulemaking, OTS 
regional staff will inform SLHC enterprises of their risk 
classification category upon request.
    Using the proposed schedule, the risk and complexity component for 
a Category I SLHC with total consolidated assets of $1.0 billion is 
$2,500. Assuming the organizational form

[[Page 6205]]

component and condition component do not apply to the SLHC, OTS would 
add the base assessment amount ($3,000) and the risk and complexity 
component ($2,500), and would impose a semi-annual assessment of $5,500 
on this SLHC.
    Organizational Form Component. The second component of the general 
SLHC semi-annual assessment is the organizational form component. OTS-
regulated SLHCs can own thrifts in a variety of forms, including stock 
holding companies, mutual holding companies, and trust holding 
companies. Certain SLHCs own thrifts that operate as trust only 
institutions and do not accept insured deposits from the public. In 
addition, OTS regulates certain holding companies under section 10(l) 
of the HOLA, which permits a state savings bank (or state cooperative 
bank) to elect to be treated as a savings association for the purposes 
of regulating the holding company.\13\
---------------------------------------------------------------------------

    \13\ By making such an election, the holding company is 
regulated by OTS as a SLHC for purposes of section 10 of the HOLA, 
rather than by the Federal Reserve Board as a bank holding company. 
However, another appropriate federal banking regulator and the 
appropriate State regulator, not OTS, continue to be the primary 
regulators of the subsidiary state bank or cooperative bank.
---------------------------------------------------------------------------

    OTS may incur different supervisory costs to properly supervise 
SLHC with a particular organizational form. To allow OTS to tailor its 
assessments to these costs of supervising a particular form of SLHC, 
the proposed rule would permit OTS to modify the amount of the 
assessment charged under the organizational form component. OTS would 
compute the amount of the organizational form component by adding the 
base assessment to the risk and complexity component, and multiplying 
this total by a factor (positive or negative) established for the 
particular organizational form. OTS would establish the applicable 
factors in a Thrift Bulletin. See proposed Sec. 502.28.
    OTS is currently considering applying this component only to 
section 10(l) holding companies. OTS regulation of section 10(l) 
holding companies presents many challenges. OTS's primary regulatory 
goal for section 10(l) holding companies is the same as its regulatory 
goal for SLHCs--to understand how holding company operations may affect 
the operations of the subsidiary depository institution. When OTS 
examines a SLHC that controls a savings association, it already has a 
thorough knowledge of thrift operations because it has examined the 
thrift. As a result, OTS can focus its primary efforts on understanding 
the operations of the SLHC. When it undertakes the examination of a 
section 10(l) holding company, however, OTS has little direct 
information on the operations of the state subsidiary depository 
institution and must undertake a more extensive review to understand 
those operations. OTS is also responsible for ensuring that the state 
subsidiary depository institution complies with a number of 
requirements applicable under section 10 of the HOLA. For example, a 
state savings bank (or a cooperative bank) that is deemed to be a 
savings association for purposes of section 10 of the HOLA must comply 
with section 10(d) of the HOLA, which subjects it to additional 
transactions with affiliate restrictions.\14\ In addition, section 
10(f) of the HOLA requires the subsidiary insured institution to file 
advance notices of dividend declarations with OTS. OTS must also ensure 
that the state savings bank (or a cooperative bank) meets the 
requirements of a qualified thrift lender. See 12 U.S.C. 1467a(l)(2).
---------------------------------------------------------------------------

    \14\ See section 11 of the HOLA. 12 U.S.C. 1468.
---------------------------------------------------------------------------

    This review also requires OTS to work closely with other federal 
and state regulators. For example, OTS examiners must communicate with 
these regulators to determine whether they have any special concerns 
with the depository subsidiary/holding company relationship. They must 
also obtain data from one or more of 50 state regulators, which may or 
may not be in an automated format readily transferable and usable by 
OTS. OTS also attempts to coordinate with appropriate regulators to 
conduct its examination of section 10(l) holding companies in 
conjunction with the examination of the subsidiary depository 
institution.
    To assist commenters in assessing the impact of the proposed rule, 
OTS is considering establishing an organizational form component 
multipler of 50 percent for section 10(l) holding companies.\15\ 
Building on the example described above, the base assessment ($3,000) 
plus the risk and complexity component for a Category I SLHC with 
consolidated assets of $1.0 billion ($2,500) would total $5,500. If 
this SLHC is a section 10(l) holding company, its complexity component 
would be an additional $2,750 (50 percent times $5,500). Assuming the 
SLHC was not subject to the condition component discussed below, its 
semi-annual assessment would be $8,250.
---------------------------------------------------------------------------

    \15\ See footnote 7.
---------------------------------------------------------------------------

    OTS specifically requests comment whether the organizational form 
component should apply to other types of SLHCs. For example, OTS 
supervises several large insurance companies and securities firms that 
control savings associations that provide only trust services and do 
not accept insured deposits from the public. Because the proposed 
assessment is based on the amount of consolidated holding company 
assets, OTS is concerned that the assessment for these companies, as 
calculated under the proposed rule, may not correspond to the actual 
costs of supervision. Under the proposed rule, an organizational form 
component may be a positive or negative amount. In these instances, it 
may be appropriate to calculate a negative amount under the 
organizational component. Accordingly, OTS specifically requests 
comment on how it should treat SLHCs where the sole savings association 
in the structure is a trust-only institution.
    Condition Component. The third component of the general SLHC 
assessment is the condition component. Under proposed Sec. 502.29, OTS 
would add an additional amount to an assessment if the most recent 
examination rating assigned to the top-tier SLHC (or the most recent 
examination rating assigned to any savings and loan holding company 
directly or indirectly controlled by the top-tier SLHC) was 
``unsatisfactory.''\16\ OTS will use the most recent examination rating 
of which the SLHC has been notified in writing before an assessment due 
date.
---------------------------------------------------------------------------

    \16\ See Holding Companies Handbook page 200.8.
---------------------------------------------------------------------------

    Under OTS's holding company rating system, an unsatisfactory rating 
is reserved for SLHCs that have a detrimental or burdensome effect on 
the thrift. These companies typically exhibit troublesome operating 
weaknesses. Either the SLHC inordinately relies on the thrift for cash 
flow, revenue, or dividends, or the thrift is inordinately reliant upon 
the SLHC for critical operating systems. Without immediate corrective 
action, the thrift's viability may be impaired.
    Historically, OTS has not frequently assigned unsatisfactory 
ratings to SLHCs. Currently, only 11 SLHCs have unsatisfactory 
ratings.\17\ Nonetheless, OTS must devote considerably more resources 
to the supervision of these few SLHC structures than it devotes to 
SLHCs with satisfactory or above average ratings. For similar reasons, 
OTS imposes an additional assessment amount on savings associations 
that receive a ``3,'' ``4,'' or ``5'' rating under the Uniform 
Financial Institutions Rating System (UFIRS) (also referred to

[[Page 6206]]

as the CAMELS rating system). See 12 CFR 502.20.
---------------------------------------------------------------------------

    \17\ These numbers are based on ratings data as of December 6, 
2003.
---------------------------------------------------------------------------

    Under the proposed rule, the condition component of the SLHC 
assessment would be equal to 100 percent of the total of the base 
assessment, the risk and complexity component, and the organizational 
component. As a result, the semi-annual assessment for a SLHC rated as 
unsatisfactory would be twice as much as a similar SLHC rated as 
satisfactory. Building on the example described more fully above, the 
semi-annual assessment for an unsatisfactory-rated, section 10(l) SLHC 
in Category I with consolidated assets of $1.0 billion would be 
$16,500.
    b. Calculation of Semi-Annual Assessment-- Conglomerates. OTS also 
supervises a limited, select number of large and particularly complex 
enterprises (conglomerates) that are made up of a number of different 
companies, or legal entities that operate in diversified fields. Unlike 
traditional SLHCs, these conglomerates are often highly integrated and 
are managed with less regard for separate corporate existence and with 
more focus on product lines or geographic areas. OTS examines and 
supervises these SLHCs along functional or centralized lines in order 
to match the SLHC's business practices. OTS's supervision of these 
entities often involves increased planning and off-site monitoring; a 
more formalized supervisory process that focuses OTS's efforts on major 
risk areas and evaluates the enterprise across business lines; and 
substantial coordination with other domestic and foreign regulators. 
See Holding Company Handbook, Section 940, Large and Complex 
Enterprises (Conglomerates). The examination and regulation of these 
conglomerates consume a disproportionate amount of agency resources vis 
a vis other SLHCs.
    One of the goals of the proposed rule is to closely tailor OTS 
charges to the actual costs of supervision. To ensure that the costs of 
supervision for conglomerates are not subsidized by other SLHCs, OTS 
intends to assess complex conglomerates (i.e., those SLHCs examined 
under section 940 of the Holding Company Handbook) under separate 
assessment procedures. OTS anticipates that these assessments will 
substantially exceed the amounts prescribed for other SLHCs under the 
proposed rule. OTS has not included rule text addressing these 
procedures as part of today's rulemaking because it believes that 
information gathered through the public comment process will be 
critical in crafting these procedures. However, OTS intends to describe 
the possible assessment procedures in sufficient detail to permit their 
codification in the final rule.
    OTS is considering various approaches to calculating assessments 
for complex conglomerates.\18\ For example, OTS may impose:
---------------------------------------------------------------------------

    \18\ In addition to this separate assessment procedure, OTS may 
still exercise its existing authority to recover extraordinary 
expenses related to the examination, investigation, regulation, or 
supervision of complex conglomerates and their affiliates under 12 
CFR 502.60(e).
---------------------------------------------------------------------------

     A set charge or flat fee.
     A variable charge that is based upon a 
percentage of the total holding company assets or some other financial 
measure. The applicable percentage may vary as the size of holding 
company assets (or other financial measure) increases or may represent 
a multiple of the Category II SLHC assessment schedule.
     An additional charge for complex multinational 
conglomerates with activities that require a high degree of 
coordination with other regulators. See e.g., Holding Company Handbook, 
Section 940A, Financial Activities in the European Union.
     A fee structure that combines some of the 
elements listed above. For example, OTS may include a flat fee for each 
complex conglomerate and an additional charge based on a percentage of 
total holding company assets.
    OTS requests comment on these possible calculations and any 
alternative methods for calculating semi-annual assessments for complex 
conglomerates.
3. Collection of Semi-Annual SLHC Assessments
    Under the proposed rule, OTS will bill SLHCs using the same 
procedures it uses to bill the semi-annual assessments from savings 
associations. OTS will bill each SLHC enterprise semi-annually for 
assessments. Assessments would be due January 31 and July 31 of each 
year. At least seven days before the assessment is due, OTS will mail 
the top-tier of the SLHC enterprise a notice that indicates the amount 
of the assessment, explains how OTS calculated the amount, and 
specifies when payment is due. See proposed Sec. 502.25. The proposed 
rule would clarify that where an assessment due date is a Saturday, 
Sunday, or Federal holiday, assessments would be due on the first day 
preceding the due date that is not also a Saturday, Sunday or Federal 
holiday.
    Proposed Sec. 502.35(b) would permit a SLHC to establish an account 
at an insured depository institution and authorize OTS to debit the 
account for the semi-annual SLHC assessment. If the top-tier SLHC does 
not establish such an account or does not maintain funds in the account 
sufficient to pay the semi-annual assessment when it is due, the 
proposed rule would permit OTS to charge the SLHC a fee to cover OTS 
administrative costs of collecting and billing for the assessment. This 
fee is in addition to interest on delinquent assessments charged under 
proposed Sec. 502.45. Like other fees and assessments, OTS will 
establish the amount of the fee and publish the amount of the fee in a 
Thrift Bulletin.\19\
---------------------------------------------------------------------------

    \19\ OTS has also made a clarifying amendment to existing Sec. 
502.25(a). This rule requires every savings association that is a 
member of a Federal Home Loan Bank (FHLB) to maintain a demand 
deposit account at the FHLB with sufficient funds to pay the 
assessment. Some FLHBs no longer offer demand deposit accounts to 
their members. Accordingly, the proposed rule would require these 
thrifts to maintain an account at the association. OTS will directly 
debit these accounts for the amount of the assessment. See proposed 
Sec. 502.25(a)(1) and (2).
---------------------------------------------------------------------------

    While OTS anticipates that it will have its new SLHC assessment 
structure in place for the July 2004 semi-annual assessment, it does 
not believe that it will be prepared to directly debit SLHC accounts at 
insured depository institutions until the January 2005 semi-annual 
assessment. Accordingly, OTS will not assess a fee for a SLHC's failure 
to establish the direct debit account until the January 2005 semi-
annual assessment.
    Proposed Sec. 502.45(a) states that an assessment is delinquent if 
it is not paid by the due date. OTS will charge interest on delinquent 
assessments that accrues at a rate (that OTS will determine quarterly) 
equal to 150 percent of the average of the bond-equivalent rates of 13-
week Treasury bills auctioned during the calendar quarter preceding the 
assessment.
    Pursuant to the authority in section 9(c) of the HOLA, proposed 
Sec. 502.45(b) states that if a SLHC fails to pay an assessment within 
60 days of the due date, OTS may assess and collect the assessment with 
interest from a subsidiary savings association. If a SLHC controls more 
than one savings association, the Director may assess and collect the 
assessment from each savings association as the Director may 
prescribe.\20\
---------------------------------------------------------------------------

    \20\ This provision is based on existing Sec. 502.75 and 12 
U.S.C. 1467(c). If OTS collects the SLHC assessment from the thrift 
in this manner, the thrift's payment will be considered to be an 
unsecured loan to the SLHC and would raise issues under sections 23A 
and 23B of the Federal Reserve Act. 12 U.S.C. 371c and 371c-1.
---------------------------------------------------------------------------

B. Savings Association Semi-Annual Assessment

    Under 12 CFR part 502, OTS currently charges each savings 
association a semi-

[[Page 6207]]

annual assessment. OTS determines each institution's semi-annual 
assessment by totaling three components. These components address the 
following factors:
     Asset size. To compute the asset size component, 
OTS applies an assessment rate to the total asset size of the 
institution as reported on the TFR. The applicable rate schedule 
incorporates OTS fixed rates as an explicit fixed charge and marginal 
assessment rates that decrease in size as the asset size increases. OTS 
provides a lower alternate asset size component for certain small 
savings associations (``qualifying savings associations'').
     Condition. OTS assesses an additional assessment 
amount based on the condition of the institution, as determined by the 
most recent composite rating under the CAMELS rating system. This 
additional amount is equal to 50% of the size component for 3-rated 
institutions, and 100% percent of the size component for 4- or 5-rated 
institutions.
     Complexity. The complexity component addresses 
certain complex assets or activities, including trust assets 
administered by a thrift, assets covered by a thrift's recourse 
obligations or direct credit substitutes, and loans serviced by the 
thrift for others. OTS applies the complexity component only where the 
thrift exceeds $1 billion in an asset category.
    As noted above, OTS provides an alternate asset size component 
calculation for qualifying savings associations. To be eligible for 
this calculation, a savings association must have been a savings 
association as of January 1, 1999, and its total assets must not exceed 
$100 million at the end of the current or any previous quarter. Under 
the alternate calculation, the asset size component for a qualifying 
savings association is its assessment calculated under pre-1998 
assessment tables.
    OTS developed the alternative asset size component in its 1998 
rulemaking. 63 FR 65663 (November 30, 1998). One of the primary 
purposes of the 1998 rule changes was to make OTS assessments more 
equitable for institutions of all sizes. In analyzing the effects of 
various assessment rates, however, OTS feared that its changes to the 
asset size component would have a disproportionate impact on the 
smallest institutions, which might not have been in a position to 
absorb new costs. 63 FR 65665.
    OTS is proposing to abandon the alternative asset size computation 
for qualifying savings associations. OTS's assessment regulation, to 
the maximum extent possible, attempts to tailor rates and charges to 
the agency's costs of supervising particular institutions. While OTS 
believes that it may have been appropriate to provide qualifying 
savings associations with an initial period to adjust to the 1998 
assessment regime, OTS questions whether it is equitable to continue to 
require non-qualifying savings associations to carry some of the cost 
burdens for qualifying savings associations.
    Non-qualifying savings associations, which include some small 
savings associations,\21\ have now carried an extra burden for 
qualifying institutions for five years. The burden has not remained 
static, but rather has increased over the five-year period, as a result 
of two factors.
---------------------------------------------------------------------------

    \21\ While the alternate asset size calculation was originally 
promulgated to relieve the disproportionate impact of the size 
component on small institutions, this calculation does not benefit 
all small institutions. Savings associations organized after 1998 
may not take advantage of the changes and institutions that go over 
$100 million in assets do not qualify for the alternative program, 
even when their asset size returns to below $100 million.
---------------------------------------------------------------------------

    First, more savings associations use the alternative computation 
method. The alternative computation did not initially benefit all 
qualifying savings associations. Based on the assessment rates for the 
January 1999 semi-annual assessment, only qualifying savings 
associations with less than $67.5 million in assets benefited from 
lower assessments under the alternative asset size computation. As a 
result of subsequent revisions to OTS's assessment schedules reflecting 
inflation and increased costs, all qualifying savings associations now 
benefit from the alternative computation.
    In addition, non-qualifying savings associations have shouldered, 
and in the absence of regulatory change will continue to shoulder, an 
increasing burden as OTS modifies its assessment schedule to adjust for 
increases in costs. As noted above, assessments computed using the 
alternative asset size computation remain fixed at 1998 levels, even as 
OTS has periodically increased the base assessment rate and marginal 
rates to reflect inflation.\22\ As a result, qualifying savings 
associations now receive a much greater reduction to their assessment. 
For example, the asset size component computed under the standard 
method for an institution with $67 million in assets was $11,584 for 
the January 1999 semi-annual assessment. The alternate computation 
reduced the asset size component to $11,575, a net reduction of only 
$9. See TB 48-15 (November 30, 1998). For the January 2004 semi-annual 
assessment, however, the asset size component computed under the 
standard method for a $67 million institution is $13,252. The alternate 
computation reduced the asset component to $11,575, a net reduction of 
$1,677. Because the alternate computation remains fixed at 1998 levels, 
the amount of this disparity under the alternative computation will 
become more pronounced as OTS revises its assessment schedules upward 
over time.
---------------------------------------------------------------------------

    \22\ See TB 48-20 (December 2, 2003).
---------------------------------------------------------------------------

    OTS believes that all institutions, even small institutions, should 
be able to plan for, adjust to, and carry the burden of inflation-
related and cost changes to the assessments schedule. Accordingly, OTS 
does not believe that it is appropriate to hold assessments for certain 
institutions at pre-1998 levels, and compel other institutions to carry 
an increased burden. Accordingly, OTS proposes to delete the 
alternative computation under the asset size computation.
    To help interested persons understand this proposal and to provide 
the greatest opportunity to review the probable assessment rates that 
will apply to all savings associations, OTS is publishing the asset 
size schedule that will apply if the proposed rule is finalized without 
substantive changes. This schedule reflects the rates for non-
qualifying small institutions contained in TB 48-20 (December 2, 2003).

----------------------------------------------------------------------------------------------------------------
              If total assets (SC60) is:                                 The size component is:
----------------------------------------------------------------------------------------------------------------
              Over:                  But not over:        This amount:          Plus:          Of excess over:
----------------------------------------------------------------------------------------------------------------
$0..............................  $67 million........             $2,042         .000116731  $0.
$67 million.....................  $215 million.......             13,252         .000111160  $67 million.
$215 million....................  $1 billion.........             29,769          .00008928  $215 million.
$1 billion......................  $6.03 billion......             99,853          .00007142  $1 billion.

[[Page 6208]]

 
$6.03 million...................  $18 billion........            459,096          .00006126  $6.03 billion.
$18 billion.....................  $35 billion........          1,192,378          .00004518  $18 billion.
$35 billion.....................  ...................          1,960,438          .00003388  $35 billion.
----------------------------------------------------------------------------------------------------------------

    By contrast, the alternative size assessment schedule for 
qualifying small institutions proposed for deletion in this rule is as 
follows:

----------------------------------------------------------------------------------------------------------------
                     Alternative size assessment schedule for qualifying small institutions
-----------------------------------------------------------------------------------------------------------------
              Over:                  But not over:        This amount:          Plus:          Of excess over:
----------------------------------------------------------------------------------------------------------------
$0..............................  $67 million........                 $0         .000172761  $0.
$67 million.....................  $100 million.......             11,575         .000133872  $67 million.
----------------------------------------------------------------------------------------------------------------

    OTS encourages comments on all aspects of this proposal.\23\
---------------------------------------------------------------------------

    \23\ See footnote 7.
---------------------------------------------------------------------------

III. Solicitation of Comments Regarding the Use of Plain Language

    Section 722 of the Gramm-Leach Bliley Act (12 U.S.C. 4809) requires 
federalbanking agencies to use ``plain language'' in all proposed and 
final rules published after January 1, 2000. OTS invites comments on 
how to make this proposed rule easier to understand. For example:
    (1) Have we organized the material to suit your needs? If not, how 
could the material be better organized?
    (2) Do we clearly state the requirements in the rule? If not, how 
could the rule be more clearly stated?
    (3) Does the rule contain technical language or jargon that is not 
clear? If so, what language requires clarification?
    (4) Would a different format (grouping and order of sections, use 
of headings, paragraphing) make the rule easier to understand? If so, 
what changes to the format would make the rule easier to understand?

IV. Executive Order 12866

    The Director of OTS has determined that this final rule does not 
constitute a ``significant regulatory action'' for the purposes of 
Executive Order 12866.

V. Regulatory Flexibility Act Analysis

    Under section 605(b) of the Regulatory Flexibility Act of 1980,\24\ 
OTS has evaluated the impact that this final rule will have on small 
businesses, small organizations, and small governmental jurisdictions. 
As required, OTS has prepared the following initial regulatory 
flexibility analysis (IRFA).
---------------------------------------------------------------------------

    \24\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

A. Legal Basis for the Rule; Objectives of the Rule

    The HOLA authorizes the Director to assess fees against savings 
associations and holding companies to fund OTS's direct and indirect 
expenses as the Director deems necessary or appropriate.\25\ OTS also 
may assess savings associations and affiliates of savings associations 
for the costs of conducting examinations.\26\
---------------------------------------------------------------------------

    \25\ 12 U.S.C. 1467(k). See also 12 U.S.C. 1462a, 1463, 1467, 
1467a.
    \26\ 12 U.S.C. 1467(a) and (b) and 1467a(b)(4). See also 12 
U.S.C. 1467(d) (trust examinations of savings associations).
---------------------------------------------------------------------------

    OTS has promulgated regulations implementing this authority at 12 
CFR part 502. Under these rules, OTS currently charges each savings 
association a semi-annual assessment, which includes a size component, 
a condition component, and a complexity component. In addition, OTS 
charges thrifts an examination fee for thrifts that have trust assets 
that are under the $1 billion complexity component threshold. OTS also 
charges SLHCs and other thrift affiliates fees for investigating and 
examining their operations. These examination related fees are assessed 
at an hourly rate for examiner time spent preparing for and conducting 
the examination.
    OTS is proposing this rule to more accurately apportion the cost of 
OTS supervision among savings associations, SLHCs, and other 
affiliates. The agency has three primary goals: (1) Keep charges as low 
as possible while providing the agency with the resources essential to 
effectively supervise a changing industry; (2) tailor its charges to 
more accurately reflect the agency's costs of supervising institutions 
and their affiliates; and (3) providing institutions and their 
affiliates with consistent and predictable assessments to facilitate 
financial planning.

B. Impact of the Rule

    The proposed rule would affect small savings associations and small 
SLHCs. It would not affect other small businesses, small organizations, 
or small governmental jurisdictions. OTS addresses the impact of the 
rule on small savings associations and small SLHCs below. OTS also 
considered various alternatives to the proposed rule to reduce the 
impact of the rule on small savings associations and small SLHCs. These 
alternatives are also discussed below.
1. Effect on Small SLHCs
    a. Size standard for small SLHCs. The Small Business Administration 
(SBA) prescribes size standards for various economic activities and 
industries using the North American Industry Classification System 
(NAICS).\27\ Under the SBA's standards, companies that are primarily 
engaged in holding securities of (or other equity interests in) 
depository institutions for the purpose of controlling those companies 
are addressed at NAICS Codes 551111 and 551112 (Office of Bank Holding 
Companies and Offices of Other Holding Companies). Companies within 
this group are considered to be small if they have annual receipts of 
$6 million or less. Companies that are primarily engaged in holding the 
securities of depository institutions and operating these entities are 
classified under NAICS Codes 522110-522190. Companies classified in 
this group are considered to be small if their total assets are less 
than $150 million.
---------------------------------------------------------------------------

    \27\ 13 CFR part 121.
---------------------------------------------------------------------------

    In this IRFA, OTS has analyzed the impact of this rule using both 
the $150 million asset size standard and the $6 million annual receipts 
standard. OTS specifically requests comment on its use of these 
standards. Commenters are

[[Page 6209]]

invited to address whether these or other size standards are 
appropriate.
    b. Impact on small SLHCs. The proposed rule would replace 
examination fees for SLHCs with semi-annual assessments on each top-
tier SLHC. For small SLHCs, OTS would impose a base assessment amount, 
and would add up to three components to this base amount. The three 
components would be based on the risk and complexity of the SLHC's 
business, its organizational form, and its condition. No small SLHC 
would be subject to the alternative assessment on conglomerate 
enterprises.
    OTS calculates that there are 946 OTS-regulated SLHCs, including 
many intermediate holding companies within a single ownership 
structure. The proposed rule would charge semi-annual assessment fees 
only on the top-tier SLHC in each holding company structure. OTS 
regulates 509 top tier SLHCs. Of these 509 top tier SLHCs, 163 have 
total consolidated assets of less than $150 million and are considered 
to be small under the asset size standard. OTS estimates that 103 top-
tier SLHCs have annual receipts of $6 million or less and would be 
considered to be small under the annual receipts standard.\28\
---------------------------------------------------------------------------

    \28\ OTS electronically collects information on total 
consolidated assets held by most SLHCs. However, it does not 
electronically collect annual receipts data. OTS has estimated the 
number of small SLHCs under the annual receipts standard by 
analyzing actual trailing 12-month revenues reported for 277 
publicly traded SLHCs for the fiscal/calendar year ending December 
31, 2003. Source: SNLDataSource. Using total revenue figures, OTS 
has concluded that approximately 20.2% of the 509 holding company 
structures are small under the annual receipts standard.
---------------------------------------------------------------------------

    The proposed assessment amount would affect all of these small 
SLHCs in varying degrees. Specifically, the various aspects of the rule 
would have the following impacts:
    Base assessment charge. The base assessment charge will affect all 
small SLHCs. Under the current proposal, these small SLHCs would be 
assessed a charge of $3,000 for each semi-annual assessment (or $6,000 
per year).
    Risk and complexity component. Under the anticipated schedules, OTS 
is not proposing to impose any additional charge on small Category I 
SLHCs under the risk and complexity component. Small Category II SLHCs, 
however, would be assessed an additional semi-annual charge of $1,000 
to $3,000 (or $2,000 to $6,000 per year) under the anticipated 
schedules, depending on total consolidated assets.
    There are 147 small Category I SLHCs and 16 small Category II SLHCs 
under the asset size standard. OTS estimates that there are 93 small 
Category I SLHCs and 10 small Category II SLHCs under the annual 
receipts standard.\29\
---------------------------------------------------------------------------

    \29\ As noted above, OTS does not electronically collect annual 
receipts data for SLHCs. OTS has estimated the number of small 
Category I and II SLHCs, small section 10(l) SLHCs, and small 
unsatisfactorily rated SLHCs under the annual revenues standard by 
applying the proportion of small SLHCs in these categories under the 
asset size standard.
---------------------------------------------------------------------------

    Organizational form component. The proposed organizational form 
component would apply only to section 10(l) SLHCs. For small section 
10(l) holding companies that are Category I SLHCs, this component would 
increase the semi-annual assessment by an additional 50 percent or 
$1,500 ($3,000 per year).\30\ For small section 10(l) holding companies 
that are Category II SLHCs, this component would also increase the 
semi-annual assessment by 50 percent. The increase to the semi-annual 
assessment for these SLHCs under this component would range from $2,000 
to $3,000 ($4,000 to $6,000 per year).\31\ The actual amount of the 
increase will depend upon total consolidated SLHC assets.
---------------------------------------------------------------------------

    \30\ The additional semi-annual organizational charge of $1,500 
is 50 percent times the total of the base assessment component 
($3,000) plus the risk and complexity component for Category I SLHCs 
($0).
    \31\ This $2,000 to $3,000 range for the semi-annual 
organizational component is 50 percent times the total of the base 
charge ($3,000) plus the risk and complexity component for a 
Category II SLHC. As noted above, the risk and complexity component 
for a Category II SLHC will range from $1,000 to 3,000.
---------------------------------------------------------------------------

    OTS regulates 47 section 10(l) SLHCs. Nineteen of these section 
10(l) SLHCs are small under the asset size standard. Of these 19 small 
section 10(l) SLHCs, 14 are Category I and 5 are Category II. OTS 
estimates that 12 section 10(l) SLHCs are small under the annual 
receipts standard, and that 9 of these small SLHCs are Category I and 3 
of these SLHCs are Category II.
    Condition component. The proposed rule would impose an additional 
charge on SLHCs that are rated ``unsatisfactory.'' For these small 
SLHCs, the proposed condition component would increase the assessment 
by 100 percent. Applying the asset size standard, only 5 small SLHCs 
are rated unsatisfactory. Under the annual receipts standard, only 3 
small SLHC are rated unsatisfactory.\32\
---------------------------------------------------------------------------

    \32\ OTS cannot provide a more specific breakdown regarding the 
impact of the condition component on each of these small SLHCs 
because such information may result in the public disclosure of 
sensitive and privileged supervisory rating information for specific 
SLHCs. See 12 CFR 510.5.
---------------------------------------------------------------------------

    The following chart summarizes the impact of the proposed rule on 
the semi-annual assessment for small SLHCs:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 A               B               C               D
                                                                                         ---------------------------------------------------------------
                                                          Number of small SLHCs                Base          Risk and     Organizational    Total semi-
                                                                                            assessment      complexity    form component      annual
                                                                                             amount 33     component 34         35         assessment 36
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Category I SLHCs that are not section      133 (asset size standard)..............          $3,000              $0             N/A          $3,000
 10(l) SLHCs.                                    84 (receipts standard).................
Small Category II SLHCs that are not section     11 (asset size standard)...............           3,000          *3,000             N/A          *6,000
 10(l) SLHCs.                                    7 (receipts standard)..................
Small Category I SLHCs that are section 10(l)    14 (asset size standard)...............           3,000               0          $1,500           4,500
 SLHCs.                                          9 (receipts standard)..................
Small Category II SLHCs that are section 10(l)   5 (asset size standard)................           3,000          *3,000          *3,000         *9,000
 SLHCs.                                          3 (receipts standard)..................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Maximum.
\33\ OTS has proposed a $3,000 base semi-annual assessment amount for all SLHCs.
\34\ Amounts in Column B are from the proposed schedule for the risk and complexity component.
\35\ Amounts in Column C are 50% of the total of Column A + Column B.
\36\ Amounts in Column D equal Column A + Column B + Column C.

    As noted above, for the five SLHCs that are rated unsatisfactory, 
the amount of the semi-annual assessment is doubled.
    The amounts charged under the new assessments rule for SLHC would 
be

[[Page 6210]]

offset by the elimination of the periodic SLHC examination fees. 
Although the amount of this offset will vary from SLHC-to-SLHC, OTS 
estimates that the average examination for a small SLHC is conducted 
every 18 months, and consumes approximately 39 examiner hours. At the 
current OTS billing rate of $145 per hour, OTS estimates that the 
average small SLHC will avoid on-site examination charges of $5,655 or 
an annualized charge of $3,770 per year.
    In any event, OTS has considered alternatives to the proposed 
assessment rule. OTS considered, for example, assessing all SLHCs the 
same base assessment amount; computing the semi-annual assessment 
amount for all SLHCs using the same asset-based assessment schedule; 
and continuing to assess only on-site examination and off-site 
examination related fees rather than semi-annual assessments.
    OTS does not believe that the first two alternatives would further 
the goal of tailoring OTS charges more closely to the costs of 
supervising various types of SLHCs, and could result in some SLHCs 
subsidizing the increased costs of supervising others.\37\ For the 
reasons set forth in the preamble, OTS further believes that continuing 
to assess examination fees would not provide SLHCs with consistency and 
predictability of assessments to facilitate financial planning.
---------------------------------------------------------------------------

    \37\ Moreover, OTS believes that requiring unsatisfactory-rated 
SLHCs to pay for their extra supervisory costs will provide an added 
incentive for those SLHCs to promptly address the supervisory 
concerns that could adversely impact the depository subsidiary and 
to take other actions to improve their ratings.
---------------------------------------------------------------------------

    OTS specifically requests comments on each of these alternatives, 
and any other alternatives that may minimize the impact of the rule on 
small SLHCs consistent with the goals of this rulemaking.
2. Effect on Small Savings Associations
    This proposed rule would effect small savings associations by 
eliminating the alternative calculation of the size component currently 
available to certain small savings associations. To be eligible for 
this calculation, a savings association must have been a savings 
association as of January 1, 1999, and its total assets must not exceed 
$100 million at the end of the current or any previous quarter.
    Small savings associations are defined as institutions with assets 
under $150 million.\38\ OTS estimates that it regulates approximately 
478 small savings associations and that 289 of these small savings 
associations will take advantage of the alternative size calculation 
for the January 2004 assessment.
---------------------------------------------------------------------------

    \38\ 13 CFR 121.201.
---------------------------------------------------------------------------

    Under the alternate calculation, the asset size component for a 
qualifying savings association is its assessment calculated under pre-
1998 assessment schedules, rather than the current assessment 
schedules. Unlike the pre-1998 assessment schedules, the current 
assessment schedules use rates that have been adjusted for inflation 
and include a base charge for certain fixed costs that are the same or 
nearly the same for all institutions. Because the amount of the size 
component varies with the size of the institution, the impact of the 
proposed change on the 289 small thrifts will vary. Using the most 
recent assessment table published in TB 48-20 for the January 2004 
semi-annual assessment, the asset size component computed under the 
standard method and the alternative methods for institutions of various 
selected sizes is illustrated by the following chart:

                  Impact of the Alternative Size Computation on Institutions of Selected Sizes
----------------------------------------------------------------------------------------------------------------
                                                             Asset size
                                                             component      Alternative asset   Net reduction of
                       Asset size                        computed under TB    size component       assessment
                                                          48-20 schedules      computation
----------------------------------------------------------------------------------------------------------------
$0 Million.............................................             $2,042                 $0             $2,042
$35 Million............................................              7,898              6,046              1,852
$67 Million............................................             13,252             11,575              1,677
$100 Million...........................................             16,935             15,993                942
----------------------------------------------------------------------------------------------------------------

    Approximately 20 of the 289 small savings associations are 
currently rated ``3'' and are subject to an additional assessment under 
the condition component. This additional assessment is equal to 50 
percent of the size component. For these 20 thrifts, the overall 
benefit of the alternative size calculation is 150 percent of the 
amount in the final column of the chart. Thus, the overall semi-annual 
benefit from the alternative size calculation for any individual 3-
rated savings association will range from $1,413 to $3,063, depending 
on the institution's asset size. Three small savings associations are 
rated ``4'' or ``5'' and are subject to an additional assessment under 
the condition component that is equal to 100 percent of the size 
component. For these three institutions, the overall benefit of the 
alternative size calculation is 200 percent of figure in the final 
column of the chart. The overall semi-annual benefit from the 
alternative size calculation for any individual 4- or 5-rated savings 
association will range from $1,884 to $4,084, depending on the 
institution's asset size.\39\
---------------------------------------------------------------------------

    \39\ See 12 CFR 502.20. These numbers are based on ratings data 
as of December 6, 2003. OTS cannot provide a more specific breakdown 
regarding the impact of the condition component on each of these 
small savings associations because such information may result in 
the public disclosure of sensitive and privileged supervisory rating 
information for specific institutions. See 12 CFR 510.5.
---------------------------------------------------------------------------

    OTS considered various alternatives to the proposed rule. For 
example, it considered retaining the alternative asset size component 
for qualifying savings associations, prescribing a separate asset size 
schedule for smaller institutions with a lower base assessment rate or 
lower rates for smaller institutions, or phasing out the alternative 
schedule over time.
    OTS's assessment regulation, to the maximum extent possible, 
attempts to tailor rates and charges to the agency's costs of 
supervising particular institutions. While it may have been appropriate 
to provide qualifying savings associations with an initial period to 
adjust to the assessment regulation originally adopted in 1998, it is 
not equitable to continue to require non-qualifying savings 
associations to carry the cost burdens for qualifying savings 
associations. Non-qualifying savings associations, which include many 
small savings associations,\40\ have carried an extra burden for 
qualifying institutions for five years. As described

[[Page 6211]]

above at Section II.B.1., the burden has not remained static, but 
rather has increased over the five-year period. OTS believes that all 
institutions, even small institutions, should be able to plan for, 
adjust to, and carry the burden of inflation-related and cost changes 
reflected in OTS's assessments schedule. Accordingly, OTS does not 
believe that it is appropriate to compel other institutions to continue 
to carry an increased burden.
---------------------------------------------------------------------------

    \40\ OTS estimates that 189 of the 478 institutions with assets 
under $150 million are not qualifying savings associations.
---------------------------------------------------------------------------

    OTS specifically requests comments on each of these alternatives, 
and any other alternatives that may minimize the impact of the rule on 
small savings associations consistent with the goals of this 
rulemaking.

C. Other Matters

    The proposed rule imposes no reporting, recordkeeping, or other 
compliance requirements. The current savings association assessment and 
the new SLHC assessment would be based on information contained in TFRs 
or in report H-(b)11, which savings associations and their SLHCs 
otherwise must file with OTS. While state-regulated depository 
institutions held by section 10(l) SLHCs do not currently submit 
holding company asset size information to OTS in Schedule HC of the 
TFR, OTS is considering revising its TFR filing requirements to collect 
this information electronically through Schedule HC filings.
    OTS will continue to use its current collection procedures for 
savings associations and would use similar procedures for billing and 
collecting semi-annual assessments from SLHCs.
    No federal rules duplicate, overlap, or conflict with this final 
rule.

VI. Unfunded Mandates Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 
104-4 (Unfunded Mandates Act), requires an agency to prepare a 
budgetary impact statement before promulgating a rule that includes a 
federal mandate that may result in expenditure by state, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. OTS has determined that the 
final rule will not result in expenditures by state, local, or tribal 
governments or by the private sector of $100 million or more. 
Accordingly, this rulemaking is not subject to section 202 of the 
Unfunded Mandates Act.

List of Subjects in 12 CFR Part 502

    Assessments, Federal home loan banks, Reporting and recordkeeping 
requirements, Savings associations.

    Accordingly, the Office of Thrift Supervision proposes to amend 
part 502, chapter V, title 12, Code of Federal Regulations as set forth 
below.

PART 502--ASSESSMENTS AND FEES

    1. The authority citation for part 502 continues to read as 
follows:

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

    2. In Sec. 502.5, revise paragraphs (b) and (c) to read as follows:

Sec. 502.5  Who must pay assessments and fees?

* * * * *
    (b) Assessments. If you are a savings association or a top-tier 
savings and loan holding company, and OTS regulates you on the last day 
of January or on the last day of July of each year, you must pay a 
semi-annual assessment due on that day. Subpart A of this part 
describes OTS's assessment procedures and requirements.
    (c) Fees. If you make a filing with OTS or use OTS services, the 
Director may require you to pay a fee to cover the costs of processing 
your submission or providing those services. The Director may charge a 
fee for any filing including notices, applications, and securities 
filings. The Director may charge a fee for any service including 
publications, seminars, certifications for official copies of agency 
documents, and records or services requested by other agencies. The 
Director also assesses fees for examining and investigating savings 
associations that administer trust assets of $1 billion or less, and 
savings association affiliates. If OTS incurs extraordinary expenses 
related to examination, investigation, regulation, or supervision of a 
savings association or its affiliate, the Director may charge the 
savings association or the affiliate a fee to fund those expenses. 
Subpart B of this part describes OTS's fee procedures and requirements.
    3. Revise part 502, subpart A to read as follows:

Subpart A--Assessments

Savings Associations--Calculation of Assessments


Sec. 502.10  How does OTS calculate the semi-annual assessment for 
savings associations?

    (a) If you are a savings association, OTS determines your semi-
annual assessment by totaling three components: Your size, your 
condition, and the complexity of your business. OTS determines the 
amounts of each component under Sec.Sec. 502.15 through 502.25 of this 
part.
    (b) OTS uses the September 30 Thrift Financial Report to determine 
amounts due at the January 31 assessment; and the March 31 Thrift 
Financial Report to determine amounts due at the July 31 assessment. 
For purposes of Sec.Sec. 502.10 through 502.25 of this part, total 
assets are your total assets as reported on Thrift Financial Reports 
filed with OTS.


Sec. 502.15  How does OTS determine my size component?

    (a) Chart. If you are a savings association, OTS uses the following 
chart to calculate your size component:

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


[[Page 6212]]

    (b) Calculation. To calculate your size component, find the row in 
Columns A and B that describes your total assets. Reading across in 
that same row, find your base assessment amount in Column C, your 
marginal rate in Column D, and your class floor in Column E. Calculate 
how much your total assets exceed your Column E class floor. Multiply 
this number by your Column D marginal rate. Add this number to your 
Column C base assessment amount. The total is your size component. OTS 
will establish the base assessment amounts and the marginal rates in 
columns C and D in a Thrift Bulletin.


Sec. 502.20  How does OTS determine my condition component?

    (a) If you are a savings association, OTS uses the following chart 
to determine your condition component:

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

    (b) For the purposes of this section, OTS uses the most recent 
composite rating, as defined in 12 CFR part 516, of which you have been 
notified in writing before an assessment's due date.


Sec. 502.25  How does OTS determine my complexity component?

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

Savings and Loan Holding Companies--Calculation of Assessments


Sec. 502.26  How does OTS calculate the semi-annual assessment for 
savings and loan holding companies?

    (a) OTS will assess a base assessment amount on all top-tier 
savings and loan holding companies. The base assessment amount will 
reflect OTS's estimate of the base costs of conducting on- and off-site 
supervision of a noncomplex, low risk savings and loan holding company. 
OTS will establish the amount of the base assessment component in a 
Thrift Bulletin.
    (b) OTS will add three components to the base assessment amount to 
compute the amount of the semi-annual assessment for top-tier savings 
and loan holding companies: a component based on the risk and 
complexity of the savings and loan holding company's business, a 
component based on its organizational form, and a component based on 
its condition. OTS determines the amount of each component under 
Sec.Sec. 502.27 through 502.29 of this part.
    (c) For purposes of the semi-annual assessment of savings and loan 
holding companies:
    (1) The top-tier holding company is the highest level of ownership 
by a registered holding company in the holding company structure.
    (2) Total consolidated holding company assets are the total assets 
as reported on Thrift Financial Reports, Schedule HC. If Schedule HC is 
unavailable, OTS will use total assets reported on report H-(b)11. OTS 
uses information contained in the September 30 Thrift Financial Report 
or report H-(b)11 to determine amounts due at the January 31 
assessment; and the March 31 Thrift Financial Report or report H-(b)11 
to determine amounts due at the July 31 assessment.


Sec. 502.27  How does OTS determine the risk and complexity component 
for a savings and loan holding company?

    (a) OTS computes the risk and complexity component for top-tier 
savings and loan holding companies using schedules that set out charges 
based on OTS holding company risk classifications and total 
consolidated holding company assets. OTS will establish these schedules 
in a Thrift Bulletin.
    (b) For the purposes of this section, the holding company risk 
classification is the most recent risk classification assigned by OTS 
of which the savings and loan holding company has been notified in 
writing before an assessment's due date. OTS holding company risk 
classifications reflect OTS's assessment of a holding company's 
financial condition, financial independence, operational independence, 
reputational risk, and management experience, as more fully described 
in OTS Holding Company Handbook.
    (c) OTS uses the following chart to compute the risk and complexity 
component under this section. OTS will establish the amounts in column 
C and D in the Thrift Bulletin.

--------------------------------------------------------------------------------------------------------------------------------------------------------
 If your total                        Your risk and complexity component is . . .
 consolidated  ----------------------------------------------------------------------------------------
assets are . .
       .
---------------                                         Plus--this marginal rate . .   Of assets over .
Over   But not            This amount . . .                          .                       . .
 . .  over . .
  .       .
-------------------------------------------------------------------------------------------------------
Colu  Column B  Column C.............................  Column D.....................           Colume E
 mn
 A
-----
$0      $150    .....................................  .............................                $0.
      Million
$150    $250    .....................................  .............................      $150 Million.
 Mil  Million
 lio
  n
$250    $500    .....................................  .............................      $250 Million.
 Mil  Million
 lio
  n
$500      $1    .....................................  .............................      $500 Million.
 Mil  Billion
 lio
  n
$1        $5    .....................................  .............................        $1 Billion.
 Bil  Billion
 lio
  n
$5       $50    .....................................  .............................        $5 Billion.
 Bil  Billion
 lio
  n
$50     $100    .....................................  .............................       $50 Billion.
 Bil  Billion
 lio
  n

[[Page 6213]]

 
$100    $300    .....................................  .............................      $100 Billion.
 Bil  Billion
 lio
  n
Over  ........  .....................................  .............................      $300 Billion.
 $30
  0
 Bil
 lio
  n
--------------------------------------------------------------------------------------------------------------------------------------------------------

    0(d) To compute your risk and complexity component, find the row in 
the appropriate schedule that describes your total consolidated assets 
by referring to the amounts in Columns A and B. In that row, calculate 
how much your total consolidated assets exceed the class floor (Column 
E); multiply this number by your marginal rate (Column D); and add the 
product to the amount in Column C. The total is your risk and 
complexity component.


Sec. 502.28  How does OTS determine the organizational form component 
for a savings and loan holding company?

    (a) OTS may determine that a particular organizational form used by 
savings and loan holding companies causes OTS to incur different 
supervisory costs, and may modify the assessment charged to such top-
tier savings and loan holding companies under the organizational form 
component.
    (b) OTS computes the organizational form component for top-tier 
savings and loan holding companies by adding the base assessment to the 
risk and complexity component, and multiplying this amount times a 
factor (positive or negative) established for the particular 
organizational form.
    (c) OTS will establish applicable factors in a Thrift Bulletin. OTS 
may establish different factors for different organizational forms and 
based on the amount of total consolidated holding company assets.


Sec. 502.29  How does OTS determine the condition component for a 
savings and loan holding company?

    (a) If the most recent examination rating assigned to a top-tier 
savings and loan holding company (or the most recent examination rating 
assigned to a savings and loan holding company controlled by the top-
tier savings and loan holding company) was ``unsatisfactory,'' OTS will 
assess a charge under the condition component. The amount of the 
condition component is equal to 100 percent of the assessment amounts 
computed under Sec.Sec. 502.26 through 502.28 of this part.
    (b) For the purposes of this section, examination ratings are the 
ratings that OTS assigns under the OTS holding company rating system. 
OTS uses the most recent rating of which the savings and loan holding 
company has been notified in writing before an assessment's due date.

Payment of Assessments


Sec. 502.30  When must I pay my assessment?

    OTS will bill you semi-annually for your assessments. Assessments 
are due January 31 and July 31 of each year, unless that date is a 
Saturday, Sunday, or Federal holiday. If the due date is a Saturday, 
Sunday or Federal holiday, your assessment is due on the first day 
preceding the due date that is not a Saturday, Sunday or Federal 
holiday. At least seven days before your assessment is due, the 
Director will mail you a notice that indicates the amount of your 
assessment, explains how OTS calculated the amount, and specifies when 
payment is due.


Sec. 502.35  How do I pay my assessment?

    (a) Savings associations. (1) If you are a member of a Federal Home 
Loan Bank that offers demand deposit accounts, you must maintain a 
demand deposit account at your Federal Home Loan Bank with sufficient 
funds to pay your assessment when due. OTS will notify your Federal 
Home Loan Bank of the amount of your assessment. OTS will debit your 
account for your assessments.
    (2) If paragraph (a)(1) of this section does not apply to you, OTS 
will directly debit an account you must maintain at your association.
    (b) Savings and loan holding companies. You may establish an 
account at an insured depository institution and authorize OTS to debit 
the account for your semi-annual assessment. If you do not establish an 
account and maintain funds in the account sufficient to pay the semi-
annual assessment when due, OTS may charge you a fee to cover its 
administrative costs of collecting and billing your assessment. This 
fee is in addition to interest on delinquent assessments charged under 
Sec. 502.45 of this part. OTS will establish the amount of the 
administrative fee and publish the amount of the fee in a Thrift 
Bulletin.


Sec. 502.40  Will OTS refund or prorate my assessment?

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


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

    (a) Your assessment is delinquent if you do not pay it on the date 
it is due under Sec. 502.30 of this part. The Director will charge 
interest on delinquent assessments. Interest will accrue at a rate 
(that OTS will determine quarterly) equal to 150 percent of the average 
of the bond-equivalent rates of 13-week Treasury bills auctioned during 
the calendar quarter preceding the assessment.
    (b) If a savings and loan holding company fails to pay an 
assessment within 60 days of the date it is due under Sec. 502.30 of 
this part, the Director may assess and collect the assessment with 
interest from a subsidiary savings association. If a savings and loan 
holding company controls more than one savings association, the 
Director may assess and collect the assessment from each savings 
association as the Director may prescribe.
    4. Revise Sec. 502.50 to read as follows:


Sec. 502.50  What fees does OTS charge?

    (a) The Director assesses fees for examining or investigating 
savings associations that administer trust assets of $1 billion or 
less, and saving association affiliates. Because OTS recovers the 
ordinary costs of examining and investigating savings and loan holding 
companies through the semi-annual assessment under Sec.Sec. 502.25 
through 502.29 of this part, the Director will not generally charge an 
examination fee to a savings and loan holding company. ``Affiliate'' 
has the meaning in 12 U.S.C. 1462(9), except that, for this part only, 
``affiliate'' does

[[Page 6214]]

not include any entity that is consolidated with a savings association 
on the Consolidated Statement of the Condition of the Thrift Financial 
Report.
    (b) The Director assesses fees for processing notices, 
applications, securities filings, and requests, and for providing other 
services.
    5. Revise Sec. 502.75(b) to read as follows:


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

* * * * *
    (b) Failure to pay. If you are a savings association and your 
holding company, affiliate, or subsidiary fails to pay any fee within 
60 days of the date specified in a bill, the Director may assess and 
collect that fee, with interest, from you. If the holding company, 
affiliate, or subsidiary is related to more than one savings 
association, the Director may assess the fee against and collect it 
from each savings association as the Director may prescribe.

    Dated: February 4, 2004.

    By the Office of Thrift Supervision.
Richard M. Riccobono,
Deputy Director.
[FR Doc. 04-2846 Filed 2-9-04; 8:45 am]
BILLING CODE 6720-01-P