[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Proposed Rules]
[Pages 70121-70135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27609]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 79, No. 227 / Tuesday, November 25, 2014 / 
Proposed Rules  

[[Page 70121]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 303 and 391

RIN 3064-AE24


Filing Requirements and Processing Procedures for Changes in 
Control With respect to State Nonmember Banks and State Savings 
Associations

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is proposing to amend its filing requirements and 
processing procedures for notices filed under the Change in Bank 
Control Act (Notices). The proposed amendments are intended to 
accomplish several objectives. First, the proposed rule would 
consolidate into one subpart the current requirements and procedures 
for Notices filed with respect to State nonmember banks and certain 
parent companies thereof, and the requirements and procedures for 
Notices filed with respect to State savings associations and certain 
parent companies thereof. Second, the proposed rule would rescind the 
FDIC's separate regulation governing the requirements and procedures 
for Notices filed with respect to State savings associations and 
certain parent companies thereof and would rescind any guidance issued 
by the Office of Thrift Supervision (OTS) relating to changes in 
control of State savings associations that is inconsistent with the 
proposed rule. Third, the proposed rule would adopt the best practices 
of the related regulations of the Office of the Comptroller of the 
Currency (OCC) and the Board of Governors of the Federal Reserve System 
(Board of Governors). Finally, the proposed rule would clarify the 
FDIC's requirements and procedures based on its experience interpreting 
and implementing the existing regulation. This proposed rule is also 
part of the FDIC's continuing review of its regulations under the 
Economic Growth and Regulatory Paperwork Reduction Act of 1996.

DATES: Comments must be received by January 26, 2015.

ADDRESSES: You may submit comments, identified by RIN 3064-AE24, by any 
of the following methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the Agency Web 
site.
     Email: [email protected]. Include the RIN 3064-AE24 on the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., 
Washington, DC 20429.
     Hand Delivery: Comments may be hand delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7:00 a.m. and 5:00 p.m.
    Public Inspection: All comments received must include the agency 
name and RIN 3064-AE24 for this rulemaking. All comments received will 
be posted without change to http://www.fdic.gov/regulations/laws/federal/, including any personal information provided. Paper copies of 
public comments may be ordered from the FDIC Public Information Center, 
3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226 by telephone 
at 1 (877) 275-3342 or 1 (703) 562-2200.

FOR FURTHER INFORMATION CONTACT: Ann Johnson Taylor, Supervisory 
Counsel, [email protected]; Gregory S. Feder, Counsel, 
[email protected]; Rachel J. Ackmann, Senior Attorney, [email protected]; 
Robert C. Fick, Senior Counsel, [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Section 7(j) of the Federal Deposit Insurance Act (FDI Act) 
generally provides that no person may acquire control of an insured 
depository institution unless the person has provided the appropriate 
Federal banking agency prior written notice of the transaction and the 
banking agency has not objected to the proposed transaction (the Change 
in Bank Control Act).\1\ Subpart E of part 303 of the FDIC's rules and 
regulations \2\ (subpart E of part 303) implements section 7(j) of the 
FDI Act and sets forth the filing requirements and processing 
procedures for Notices filed with respect to the proposed acquisition 
of State nonmember banks and certain parent companies thereof.\3\
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    \1\ 12 U.S.C. 1817(j).
    \2\ 12 CFR 303.80 et seq.
    \3\ A State nonmember bank that is either an industrial loan 
company, a trust company, or a credit card bank is not a ``bank'' 
under the Bank Holding Company Act (``BHC Act''). 12 U.S.C. 
1841(c)(2). Therefore, a company that is not a bank holding company 
and that seeks to acquire one or more such State nonmember banks 
would not be subject to supervision by the Board of Governors. As a 
result, such a company would have to file a Notice with, and obtain 
the approval of, the FDIC.
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    The Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 
U.S.C. 5301, et seq. (Dodd-Frank Act), among other things, provided for 
a substantial reorganization of the regulation of State and Federal 
savings associations and their holding companies. On July 21, 2011, 
(the transfer date established by section 311 of the Dodd-Frank Act), 
the powers, duties, and functions formerly assigned to, or performed by 
the OTS were transferred to the FDIC, as to State savings associations; 
\4\ the OCC, as to Federal savings associations; and the Board of 
Governors, as to savings and loan holding companies.\5\ Section 316(b) 
of the Dodd-Frank Act provides the manner of treatment for all orders, 
resolutions, determinations, regulations, and advisory materials that 
had been issued, made, prescribed, or allowed to become effective by 
the OTS.\6\ The section provides that if such materials were in effect 
on the day before the transfer date, they continue to be in effect and 
are enforceable by or against the appropriate successor agency until 
they are modified, terminated, set aside, or superseded in accordance 
with applicable law by such successor agency, by any court of competent 
jurisdiction, or by operation of law.
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    \4\ As of June 2014, there are 54 State savings associations 
insured by the FDIC.
    \5\ 12 U.S.C. 5411.
    \6\ 12 U.S.C. 5414(b).
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    Section 316(c) of the Dodd-Frank Act, further directed the FDIC and 
the OCC to consult with one another and to publish a list of the 
continued OTS regulations which would be enforced by each agency.\7\ On 
June 14, 2011, the Board approved a ``List of OTS Regulations to be 
Enforced by the OCC and the FDIC pursuant to the Dodd-Frank Wall Street 
Reform and Consumer Protection Act''. This list was published

[[Page 70122]]

by the FDIC and the OCC as a Joint Notice in the Federal Register on 
July 6, 2011.\8\
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    \7\ 12 U.S.C. 5414(c).
    \8\ 76 FR 39246 (July 6, 2011).
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    Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act granted 
the OCC rulemaking authority relating to savings associations, nothing 
in the Dodd-Frank Act affected the FDIC's existing authority to issue 
regulations under the FDI Act and other laws as the ``appropriate 
Federal banking agency'' or under similar statutory terminology.\9\ 
Section 312(c) of the Dodd-Frank Act amended section 3(q) of the FDI 
Act and designated the FDIC as the ``appropriate Federal banking 
agency'' for State savings associations.\10\ As a result, when the FDIC 
acts as the designated ``appropriate Federal banking agency'' (or under 
similar terminology) for State savings associations, as it does in the 
proposed rule, the FDIC is authorized to issue, modify, and rescind 
regulations involving such associations.\11\
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    \9\ 12 U.S.C. 5412(b)(2)(B)(i)(II).
    \10\ 12 U.S.C. 1813(q).
    \11\ 12 U.S.C. 1819(a)(Tenth).
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    As noted above, on June 14, 2011, operating pursuant to this 
authority, the Board reissued and redesignated certain regulations 
transferred from the former OTS. These regulations were adopted and 
issued as new FDIC regulations at parts 390 and 391 of title 12. When 
it republished these regulations as new FDIC regulations, the FDIC 
specifically noted that staff would evaluate the transferred 
regulations and might later recommend amending them, rescinding them, 
or incorporating the transferred regulations into other FDIC rules as 
appropriate.
    Certain of the regulations transferred to the FDIC govern 
acquisitions of State savings associations under the Change in Bank 
Control Act (transferred CBCA regulation).\12\ The FDIC is proposing to 
incorporate portions of those regulations into the FDIC's subpart E of 
part 303 and to rescind the transferred CBCA regulation. In addition to 
consolidating and conforming the change in control regulations for both 
State nonmember banks and State savings associations, the proposed rule 
would increase the consistency of subpart E of part 303 with the OCC's 
and the Board of Governors' related regulations by incorporating 
certain best practices of those regulations into subpart E of part 
303.\13\ Also, the FDIC is generally updating its subpart E of part 303 
to provide greater transparency to its change in control regulation 
based on its experience interpreting and implementing the Change in 
Bank Control Act.
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    \12\ 12 CFR part 391, subpart E, entitled Acquisitions of 
Control of State Savings Associations.
    \13\ 12 CFR 5.50 et seq. (OCC) and 12 CFR 225.41-43 (Board of 
Governors).
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II. Proposed Rule

a. Section 303.80 Scope

    The scope of the proposed rule makes it clear that subpart E of 
part 303 would apply to acquisitions of control of State nonmember 
banks, State savings associations, and certain companies that control 
one or more State nonmember banks and/or State savings associations 
(parent companies). The FDIC believes that expanding the scope of 
subpart E of part 303 to include State savings associations and certain 
parent companies \14\ and rescinding the transferred CBCA regulation 
would both streamline its rules and procedures and increase regulatory 
consistency for all FDIC-supervised institutions. To that end, the 
proposed rule defines the term ``covered institution'' to include an 
insured State nonmember bank, an insured State savings association, and 
certain companies that control, directly or indirectly, an insured 
State nonmember bank or an insured State savings association.
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    \14\ A company that is not a bank holding company nor a savings 
and loan holding company and that seeks to acquire a State savings 
association that operates solely in a fiduciary capacity would not 
be subject to supervision by the Board of Governors. Such a company 
would have to file a Notice with, and obtain the approval of, the 
FDIC.
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    In addition, the proposed rule would amend the scope of subpart E 
of part 303 to state that the subpart implements the Change in Bank 
Control Act \15\ to clarify that the subpart includes the procedures 
for filing and processing a Notice and also sets forth the 
circumstances that require the filing of a Notice.
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    \15\ The proposed rule uses language adopted from the 
transferred CBCA regulation.
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b. Section 303.81 Definitions

1. Acting in Concert
    The proposed rule would define ``acting in concert'' as ``knowing 
participation in a joint activity or parallel action towards a common 
goal of acquiring control of a covered institution whether or not 
pursuant to an agreement.'' This definition is not substantively 
different from the definition of ``acting in concert'' in the existing 
subpart E of part 303.\16\ The only proposed modification is updated 
terminology. Specifically, the modification is to replace ``insured 
state nonmember bank or a parent company'' with ``covered institution'' 
to reflect that the FDIC is also the appropriate Federal banking agency 
for State savings associations. The FDIC does not believe any further 
modifications are necessary. The FDIC is not adopting the comparable 
definition from the transferred CBCA regulation because the definition 
in the existing subpart E of part 303 is broad enough to include the 
specific circumstances described in the transferred CBCA regulation and 
is clear and easy to understand.\17\
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    \16\ See 12 CFR 303.81(b).
    \17\ See 12 CFR 391.41 for the definition of acting in concert 
in the transferred CBCA regulation.
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    The FDIC notes that a group of persons acting in concert becomes a 
different group of persons acting in concert when a member of the group 
leaves or a new member joins. For example, if certain members of a 
family have previously filed a Notice with, and received a non-
objection from, the FDIC as a group acting in concert, each member of 
the group must file a new Notice and obtain the FDIC's non-objection 
when a member of the group ceases participation in the group and the 
group continues to hold sufficient shares to constitute ``control.''
    The FDIC also notes that if a person who is a member of a group 
acting in concert proposes to acquire voting securities that result in 
that person holding 25 percent or more of the voting securities in his/
her/its own right, then the person must file a Notice with the FDIC 
because that person will have acquired control as defined by the Change 
in Bank Control Act. Such a person must file a Notice even if that 
person had already filed and been approved as a member of the group 
acting in concert.
    The FDIC further notes that it will look closely at transactions 
where a lead investor has a material role in organizing a bank's 
capital offering. The presence of a lead investor(s) who solicits 
persons that the lead investor has a pattern of co-investing with 
suggests that the solicited investors, together with the lead investor, 
may constitute a group acting in concert. The FDIC will analyze the 
facts and circumstances of each case to determine whether such persons 
constitute a group acting in concert.
2. Company
    As discussed in section II.c.3 below, the proposed rule would add 
certain rebuttable presumptions of acting in concert, including 
presumptions relating to companies. The proposed rule would define the 
term company by reference to section 2 of the Bank Holding Company Act 
of 1956, as amended (12 U.S.C. 1841 et seq.) (BHC Act) and by including 
a catch-all for any

[[Page 70123]]

person that is not an individual or group of individuals acting in 
concert.
3. Control
    The proposed rule would define ``control'' as ``the power, directly 
or indirectly, to direct the management or policies of a covered 
institution or to vote 25 percent or more of any class of voting 
securities of a covered institution.'' This definition is not 
substantively different from the definition of ``control'' in the 
existing subpart E of part 303.\18\ The only proposed modification is 
updated terminology, i.e., replacing ``voting shares'' with ``voting 
securities'' and replacing ``insured state nonmember bank or a parent 
company'' with ``covered institution'' to reflect that the FDIC is also 
the appropriate Federal banking agency for State savings associations. 
The proposed rule would not adopt the enumerated conditions in the 
definition of control from the transferred CBCA regulation because the 
definition of ``control'' in the proposed rule is broad enough to 
include such conditions and enumerating some of the conditions that are 
probative of control could be read to exclude others.\19\
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    \18\ See 12 CFR 303.81(c).
    \19\ See 12 CFR 391.43(a)(1).
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4. Convertible Securities
    As discussed in section II.c.4, the proposed rule includes a 
presumption relating to convertible securities. The proposed rule would 
define convertible securities as debt or equity interests that may be 
converted into voting securities. The definition is not in the existing 
subpart E of part 303 or the transferred CBCA regulation, but 
convertible securities are not uncommon in the industry, and the FDIC's 
regulations need to recognize the influence they carry.\20\
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    \20\ See 12 CFR 225.31(d)(1).
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5. Covered Institution
    The proposed rule would define the term ``covered institution'' as 
``an insured State nonmember bank, an insured State savings 
association, and any company that controls, directly or indirectly, an 
insured State nonmember bank or an insured State savings association 
other than a holding company that is the subject of an exemption 
described in either section 303.84(a)(3) or (a)(8).'' Therefore, the 
proposed rule could apply to an individual's acquisition of voting 
securities of a bank holding company or savings and loan holding 
company, provided the transaction is not otherwise exempted under 
303.84(a)(3) or (a)(8). Subsections (a)(3) and (a)(8) would exempt 
transactions that are subject to Section 3 of the BHC Act and 
transactions for which the Board of Governors reviews a Notice. The 
303.84(a)(3) and (a)(8) exemptions are discussed in section II.e.3 and 
8.
    The Board of Governors is not the primary regulator of all 
companies that control State nonmember banks since some State nonmember 
banks are not ``banks'' under the BHC Act.\21\ Also, the Board of 
Governors is not the primary regulator of all companies that control 
State savings associations. Under the Home Owners' Loan Act,\22\ ``a 
company that controls a savings association that functions solely in a 
trust or fiduciary capacity as described in section 2(c)(2)(D) of the 
Bank Holding Company Act of 1956'' is not a savings and loan holding 
company.\23\ As a result, a company that is not otherwise a bank 
holding company or a savings and loan holding company and that seeks to 
acquire control of either a State nonmember bank that is not a ``bank'' 
under the BHC Act or a State savings association that functions solely 
in a trust or fiduciary capacity is subject to the proposed rule and 
would not be eligible for the exceptions from Notice in 303.84(a)(3) 
and (a)(8).
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    \21\ 12 U.S.C. 1841(c)(2).
    \22\ 12 U.S.C. 1467a.
    \23\ 12 U.S.C. 1467a(a)(1)(D)(ii)(II).
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6. Immediate Family
    As discussed in section II.c.3 below, the proposed rule would add 
certain rebuttable presumptions of acting in concert, including a 
presumption relating to a person's immediate family. The proposed rule 
would define ``immediate family'' as ``a person's parents, mother-in-
law, father-in-law, children, step-children, siblings, step-siblings, 
brothers-in-law, sisters-in-law, grandparents, and grandchildren, 
whether biological, adoptive, adjudicated, contractual, or de facto; 
the spouse of any of the foregoing; and the person's spouse.'' This 
definition is similar to the definitions of ``immediate family'' in the 
OCC's and the Board of Governors' related regulations.\24\ The FDIC 
would interpret the term ``spouse'' to include any formalized domestic 
relationship, for example, through civil union or marriage. The 
proposed rule would not adopt the definition of ``immediate family'' in 
the transferred CBCA regulation because that definition does not 
include an acquirer's grandparents or step-relatives.\25\ The FDIC 
believes that these relations typically have a natural tendency to 
engage in joint or parallel action to preserve or enhance the value of 
the family's investment.
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    \24\ See 12 CFR 5.50(d)(4) (OCC) and 12 CFR 225.41(b)(3) (Board 
of Governors).
    \25\ See 12 CFR 391.41.
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    The FDIC would interpret the term ``sibling'' as one of two or more 
individuals having at least one common parent.
    Question 1: Is there a more appropriate definition of ``immediate 
family''? For instance, should there be a facts and circumstance 
element to include situations in which persons were raised by an 
individual that is not otherwise a member of their immediate family?
7. Person
    The proposed rule would define ``person'' as ``an individual, 
corporation, limited liability company (LLC), partnership, trust, 
association, joint venture, pool, syndicate, sole proprietorship, 
unincorporated organization, voting trust, or any other form of entity; 
and includes each party to a voting agreement and any group of persons 
acting in concert.'' The proposed rule would not adopt the definition 
of ``person'' in the transferred CBCA regulation and instead includes 
an amended version of the definition from the existing subpart E of 
part 303 because the definition from the existing subpart E of part 303 
more closely tracks the definition of person in the Change in Bank 
Control Act.\26\ The proposed rule amends the definition from the 
existing subpart E of part 303 to explicitly include limited liability 
companies as persons. The FDIC believes that limited liability 
companies are more common in the industry than when the statute was 
enacted in 1978 and therefore merit express recognition as ``persons.'' 
The proposed rule also would make a number of technical edits. For 
example, to be grammatically correct the proposed rule would move 
``voting trust'' to the enumerated list of entities.
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    \26\ Compare 12 CFR 391.41 and 12 CFR 303.81(e) with 12 U.S.C. 
1817(j)(8)(A).
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8. Management Official
    As discussed in section II.c.3 below, the proposed rule includes a 
new presumption of acting in concert relating to a company and its 
controlling shareholder or management official. The proposed rule would 
define management official as ``any officer, LLC manager, director, 
partner, or trustee of an entity, or other person with policy-making 
functions.'' This definition is substantively identical to the 
definition previously adopted by the

[[Page 70124]]

Board of Governors; \27\ the only modification beyond updated 
terminology is the inclusion of the term ``LLC manager'' to recognize 
the prevalence of limited liability companies in the industry.\28\ 
Generally, the proposed rule would treat members of an LLC who are not 
managers similar to shareholders in a corporation. The proposed rule 
does not adopt the definition of ``management official'' from the 
transferred CBCA regulation because the proposed definition is a more 
accurate description of the persons intended to be covered by the 
presumption.
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    \27\ See 12 CFR 225.2(i).
    \28\ The updated terminology includes replacing ``a bank or 
other company'' with the term ``entity'' and replacing the term 
``employee'' with the term ``person''. The OCC recently also 
proposed a definition of management official although it is not 
substantially identical to the Board of Governors' definition. 79 FR 
33260 (June 10, 2014).
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9. Voting Securities
    Unlike the existing subpart E of part 303, the proposed rule 
includes a definition of ``voting securities.'' Including a definition 
of ``voting securities'' makes the proposed rule more consistent with 
the OCC's and the Board of Governors' related regulations. The proposed 
rule would define ``voting securities'' as shares of common or 
preferred stock, general or limited partnership shares or interests, 
membership interests, or similar interests if the shares or interests, 
by statute, charter, or in any manner, entitle the holder: (i) To vote 
for, or to select, directors, trustees, managers of an LLC, partners, 
or other persons exercising similar functions of the issuing entity; or 
(ii) to vote on, or to direct, the conduct of the operations or 
significant policies of the issuing entity. The proposed rule further 
states that shares of common or preferred stock, limited partnership 
shares or interests, membership interests, or similar interests are not 
``voting securities'' if: (i) Any voting rights associated with the 
shares or interests are limited solely to the type customarily provided 
by State statute with regard to matters that would significantly and 
adversely affect the rights or preference of the security or other 
interest, such as the issuance of additional amounts or classes of 
senior securities, the modification of the terms of the security or 
interest, the dissolution of the issuing entity, or the payment of 
dividends by the issuing entity when preferred dividends are in 
arrears; (ii) the shares or interests represent an essentially passive 
investment or financing device and do not otherwise provide the holder 
with control over the issuing entity; and (iii) the shares or interests 
do not entitle the holder, by statute, charter, or in any manner, to 
select, or to vote for the selection of, directors, trustees, managers 
of an LLC, partners, or persons exercising similar functions of the 
issuing entity. The proposed definition of ``voting securities'' also 
states that shares of stock or other interests issued by a single 
issuer are deemed to be the same class of voting shares, regardless of 
differences in dividend rights or liquidation preference, if the shares 
are voted together as a single class on all matters for which the 
shares have voting rights that affect solely the rights or preferences 
of the shares.
    The proposed definition derives from the Board of Governors' 
definition of ``voting securities'' with a few minor modifications.\29\ 
For example, unlike the Board of Governors' definition, the proposed 
definition explicitly references LLCs and managers thereof. 
Additionally, the proposed definition would provide for the existence 
of nonvoting common stock in addition to nonvoting preferred stock. 
Similar to the Board of Governors, the FDIC would exclude nonvoting 
preferred stock that includes the right to elect or appoint directors 
upon failure of the covered institution to pay preferred dividends from 
the definition of voting securities until the time the right to vote or 
appoint directors arises. Once the right to vote for, or appoint, 
directors arises, any newly controlling person would be required to 
file Notice with the FDIC. Again, the proposed rule would not adopt the 
definition of ``voting securities'' from the transferred CBCA 
regulation because the definition in the proposed rule is a more 
accurate definition of the securities that could trigger application of 
the Change in Bank Control Act.
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    \29\ See 12 CFR 225.2(q)(1).
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10. Other Definitions
    The proposed rule would not define ``acquisition'' as does existing 
subpart E of part 303. The proposed rule also would not adopt several 
other definitions in the transferred CBCA regulation. For example, the 
terms ``State savings association'' and ``affiliate'' are also not 
defined in the proposed rule as those terms are defined in the FDI Act. 
The FDIC is not proposing to adopt these definitions because they were 
determined to be unnecessary or statutorily defined by the FDI Act.
    Question 2: Are there more appropriate definitions for any of the 
defined terms in the proposed rule? Are there any terms not defined in 
the proposed rule for which a definition is required? If so, in each 
case, provide an appropriate definition.

c. Section 303.82 Transactions That Require Prior Notice

1. Section 303.82(a) Prior Notice Requirement
    Generally, the proposed rule would require any person, whether 
acting directly or indirectly, alone or in concert with others, to give 
the FDIC prior written notice before the acquisition of control of a 
covered institution, unless the acquisition is exempt.\30\ This 
requirement is substantively similar to the prior notice requirement in 
the existing subpart E of part 303 and the transferred CBCA 
regulation.\31\
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    \30\ See 12 CFR 303.82(a) and 12 CFR 391.42(a). The FDIC notes 
that section 391.42(a) of the transferred CBCA regulation includes 
two specific exceptions (one for certain persons affiliated with a 
savings and loan holding company and one for mergers with interim 
companies) that are not explicitly stated in this section of the 
proposed rule. These exceptions are statutory and included in the 
rule in section 303.84.
    \31\ The changes in this provision as compared to subpart E of 
part 303 include updated terminology, i.e., replacing ``voting 
shares'' with ``voting securities'' and replacing ``insured state 
nonmember bank or a parent company'' with ``covered institution'' to 
reflect that the FDIC is also the appropriate Federal banking agency 
for State savings associations. The proposed rule also restructured 
the provision as compared to Subpart E of Part 303 for clarity.
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2. Section 303.82(b)(1) Rebuttable Presumption of Control
    The proposed rule includes a rebuttable presumption of control 
whenever a person acquires the power to vote 10 percent or more of a 
class of voting securities of a covered institution, if either (1) the 
institution has issued any class of securities subject to the 
registration requirements of section 12 of the Securities Exchange Act 
of 1934, or (2) immediately after the transaction, no other person will 
own a greater proportion of that class of voting securities. One change 
in the proposed rule from existing subpart E of part 303 is the removal 
of the provision that if two or more persons, not acting in concert, 
each propose to acquire simultaneously equal percentages of 10 percent 
or more of a class of voting securities of a covered institution, each 
such person shall file prior notice with the FDIC. The proposed rule 
clarifies the FDIC's policy by removing the implication that the 
largest shareholders only have to file a Notice if they simultaneously 
acquire the voting securities. By removing that provision,

[[Page 70125]]

the proposed rule makes it clear that if two or more shareholders own 
the greatest proportion of a class of voting securities, then each such 
shareholder must file a Notice. The timing of each shareholder's 
acquisition is irrelevant.
    The transferred CBCA regulation also includes a rebuttable 
presumption of control, but the presumption is triggered only if there 
exists one of the enumerated control factors.\32\ The enumerated 
control factors include factors such as that the acquirer would be one 
of the two largest holders of any class of voting stock; the acquirer 
would hold 25 percent or more of the total stockholders' equity; the 
acquirer would hold more than 35 percent of the combined debt 
securities and stockholders' equity; or the acquirer and/or the 
acquirer's representatives or nominees would constitute more than one 
member of the institution's board of directors.\33\ The proposed rule 
does not include any control factors as additional elements to the 
rebuttable presumption of control. The FDIC notes that the enumerated 
control factors represent only some of the circumstantial factors that 
the FDIC would analyze when determining whether a person has acquired 
the ability to direct the management or policies of a covered 
institution. The FDIC believes that the determination of whether a 
person will acquire the power to direct the management or policies of 
an institution is dependent on the facts and circumstances of the case 
and that it is impractical and potentially misleading to attempt to 
list all such factors.
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    \32\ 12 CFR 391.43(b).
    \33\ 12 CFR 391.43(c).
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    It is also noted that the Board of Governors has issued a policy 
statement entitled Policy Statement on Equity Investments in Banks and 
Bank Holding Companies regarding the interpretation of the BHC Act.\34\ 
The policy statement generally established certain guidance regarding 
the amount of total equity a person can control without the Board of 
Governors determining that the person has the ability to exercise a 
controlling influence over the management or policies of a banking 
organization. A person who acquires total equity in excess of that 
guidance would likely have to file an application under the BHC Act. 
The FDIC has found the logic of the policy statement useful in 
analyzing fact patterns under the Change in Bank Control Act, but has 
not adopted that policy statement pending further consideration.
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    \34\ See http://www.federalreserve.gov/newsevents/press/bcreg/20080922c.htm.
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    Question 3: To what extent and under what circumstances does the 
control of one-third or more of a covered institution's total equity 
give such person the power to direct the management or policies of a 
covered institution? Is there a combination of voting and non-voting 
securities that gives a person the power to direct the management or 
policies of a covered institution?
    The existing subpart E of part 303 states that ownership interests 
other than those set forth in the rebuttable presumption of control and 
that represent less than 25 percent of a class of an institution's 
voting shares do not constitute control for purposes of the Change in 
Bank Control Act.\35\ The proposed rule does not include this provision 
because the provision has been a source of confusion regarding the 
meaning of the term ``control''. The FDIC has occasionally addressed 
questions regarding this provision and now seeks to clarify in the 
proposed rule that the definition of control would include both the 
amount of voting securities controlled by a person and a facts-and-
circumstance analysis to determine whether a person directs the 
management or policies of a covered institution. The FDIC notes that 
the proposed change would not expand the thresholds in the rebuttable 
presumption of control, and would only remove ambiguity regarding 
whether the facts and circumstances alone could support a conclusion 
that a person will have the power to direct the management or policies 
of a covered institution and therefore will control the institution. 
Such a facts and circumstance analysis is consistent with the statutory 
definition of ``control'' in the Change in Bank Control Act and FDIC's 
long-standing practices.
---------------------------------------------------------------------------

    \35\ 12 CFR 303.82(d).
---------------------------------------------------------------------------

3. Section 303.82(b)(2) Rebuttable Presumptions of Acting in Concert
    The proposed rule includes new rebuttable presumptions of acting in 
concert. The acting in concert presumptions included in the proposed 
rule are generally derived from the rebuttable presumptions of acting 
in concert in the Board of Governors' regulations.\36\ The OCC recently 
proposed adopting presumptions consistent with the Board of Governors' 
presumptions of acting in concert.\37\
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    \36\ 12 CFR 225.41(d).
    \37\ 79 FR33260 (June 10, 2014).
---------------------------------------------------------------------------

    The proposed rule includes an acting in concert presumption with 
respect to a company and any controlling shareholder or management 
official of that company. If both the company and controlling 
shareholder or management official own or control voting securities of 
a covered institution, then the FDIC would presume that the company and 
the controlling shareholder or management official are acting in 
concert.
    Second, the proposed rule includes an acting in concert presumption 
between an individual and the individual's immediate family. If two or 
more members of an immediate family own or control voting securities of 
a covered institution, then the FDIC would presume that those persons 
are acting in concert. The definition of immediate family is discussed 
in section II.b.5 above.
    The proposed rule also includes presumptions of acting in concert 
between (i) two or more companies under common control or a company and 
each other company it controls; (ii) persons that have made or propose 
to make a joint filing under sections 13 or 14 of the Securities 
Exchange Act of 1934; \38\ and (iii) a person and any trust for which 
the person serves as trustee or any trust for which the person is a 
beneficiary.
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    \38\ Section 13 of the Securities Exchange Act of 1934 (the 
Exchange Act) requires the filing of timely and accurate annual and 
periodic reports, and Section 14 of the Exchange Act requires the 
filing of proxy materials. For purposes of the reporting provisions 
of section 13(g), section 13(g)(3) provides that two or more persons 
acting ``as a partnership, limited partnership, syndicate, or other 
group for the purpose of acquiring, holding, or disposing of 
securities of an issuer, such syndicate or group shall be deemed a 
``person'' for the purposes of'' section 13(g)''. Section 14 has a 
similar reporting provision for such persons.
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    Question 4: Is a rebuttable presumption of acting in concert 
between persons who both own stock of a covered institution and are 
management officials or controlling shareholders of an unaffiliated 
company appropriate? Please support your answer with any relevant data 
or information.
    Question 5: Should the FDIC explicitly exempt certain kinds of 
trustees from the presumptions of acting in concert, such as a trustee 
that must vote shares as directed by the beneficiaries? Explain any 
potential burden or benefit if the FDIC instead relies on trustees to 
provide a trust document demonstrating that the trustee does not have 
voting discretion on a case-by-case basis? Also, please discuss whether 
the proposed rule should include a presumption of acting in concert 
between a person and any trust for which the person is a beneficiary? 
Please discuss the rationale

[[Page 70126]]

for your answer and include any supporting data or information.
    The proposed rule also includes a presumption that persons that are 
parties to any agreement, contract, understanding, relationship, or 
other arrangement, whether written or otherwise, regarding the 
acquisition, voting, or transfer of control of voting securities of a 
covered institution, other than through revocable proxies as described 
in 303.84(a)(5), are presumed to be acting in concert. The FDIC 
believes these presumptions should be included in the proposed rule 
because the interests of such parties are so aligned that there exists 
a natural tendency to act together towards a common goal.
    The transferred CBCA regulation includes a presumption of acting in 
concert for a company that provides certain financial assistance to a 
controlling shareholder or management official of such company to 
enable the purchase of a State saving association's stock.\39\ The FDIC 
believes that situations in which companies that acquire or hold stock 
of a covered institution and that provide financial assistance to the 
company's controlling shareholders or managing officials are included 
within the presumption between a company and any controlling 
shareholder or management official. The transferred CBCA regulation 
also includes a presumption of acting in concert when one person 
provides credit to, or is instrumental in obtaining financing for, 
another person to purchase stock of a covered institution.\40\ The FDIC 
does not believe this situation by itself aligns persons' interests as 
to warrant a presumption of acting in concert. Accordingly, the 
proposed rule does not include that presumption. However, the FDIC 
notes that providing or facilitating the financing for another person 
to purchase stock would be evidence of acting in concert that in 
combination with other facts and circumstances may result in a 
determination that those persons are acting in concert.
---------------------------------------------------------------------------

    \40\ 12 CFR 391.43(d)(3)(ii).
---------------------------------------------------------------------------

4. Section 303.82(b)(3) Convertible Securities, Options, and Warrants
    The proposed rule includes a rebuttable presumption that an 
acquisition of convertible securities, options, and warrants is 
presumed to constitute the acquisition of voting securities as if the 
conversion already occurred or the options or warrants were already 
exercised. The existing subpart E of part 303 does not explicitly 
include such a presumption; however, the transferred CBCA regulation, 
and the related regulations of the Board of Governors, treat such 
securities in a similar manner. The FDIC's longstanding position is 
that the acquisition of an option or warrant constitutes the 
acquisition of the underlying voting securities notwithstanding that 
they may only be exercised after a period of time. The FDIC also 
believes that nonvoting interests that may be converted into voting 
securities at the election of the holder of the convertible securities, 
or that convert after the passage of time, should be considered voting 
securities at all times for purposes of the Change in Bank Control Act. 
However, the FDIC recognizes that nonvoting securities that are 
convertible into voting securities carry less influence when the 
nonvoting securities may not be converted into voting securities in the 
hands of the investor and may only be converted after transfer by the 
investor: (i) In a widespread public distribution; (ii) in transfers in 
which no transferee (or group of associated transferees) would receive 
2 percent or more of any class of voting securities of the banking 
organization; or (iii) to a transferee that would control more than 50 
percent of the voting securities of the banking organization without 
any transfer from the investor. The FDIC would generally consider such 
convertible securities as nonvoting equity.
    Question 6: Should convertible securities be conclusively 
considered voting securities, or should the FDIC allow investors to 
rebut the presumption that an acquisition of convertible securities 
constitutes the acquisition of voting securities?
5. Section 303.82(b)(4) Rebuttal of Presumptions
    The proposed procedures for rebutting a presumption of control 
would remain unchanged from the existing subpart E of part 303.\41\ The 
procedures for rebutting a presumption of acting in concert would be 
the same as rebutting a presumption of control. The proposed rule does 
not include the detailed procedures for rebutting the presumptions 
included in the transferred CBCA regulation because the FDIC believes 
that the variety of the facts and circumstances often encountered 
dictate the more flexible process embodied in the existing subpart E of 
part 303.\42\
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    \41\ See 12 CFR 303.82(e).
    \42\ See 12 CFR 391.43(e).
---------------------------------------------------------------------------

6. Section 303.82(c) Acquisition of Loans in Default
    The proposed rule includes an irrebuttable presumption that an 
acquisition of a loan in default secured by voting securities of a 
covered institution is deemed to be an acquisition of the underlying 
voting securities. This treatment would not be substantively different 
from the treatment of a loan in default secured by voting securities in 
the existing subpart E of part 303; \43\ however, the proposed rule is 
not identical to existing subpart E of part 303. The FDIC has received 
questions about the use of the term ``presumes'' in subpart E of part 
303 and whether the presumption is rebuttable. As the presumption is 
not rebuttable, the proposed rule would clarify this issue by stating 
that such acquisitions are ``deemed'' to be an acquisition of the 
underlying voting securities for purposes of the Change in Bank Control 
Act.
---------------------------------------------------------------------------

    \43\ See 12 CFR 303.82(c).
---------------------------------------------------------------------------

7. Transferred CBCA Regulation's Safe Harbor
    Notwithstanding any other provisions in the transferred CBCA 
regulation, the ``Safe Harbor'' provision permits an acquirer of an 
otherwise controlling interest in a State savings association that has 
no intention of participating in, or seeking to exercise control over, 
a State savings association's management or policies to avoid filing a 
Notice.\44\ To qualify for the safe harbor, the acquirer must make 
certifications to the FDIC. The proposed rule does not include this 
regulatory safe harbor. The FDIC believes that any certifications or 
passivity commitments executed in connection with an acquisition of 
voting securities must be tailored to the facts and circumstances of 
each situation and a fixed set of certifications would not likely 
capture the variety of circumstances presented in such situations.
---------------------------------------------------------------------------

    \44\ 12 CFR 391.43(f).
---------------------------------------------------------------------------

d. Section 303.83 Transactions That Require Notice, but Not Prior 
Notice

    Existing subpart E of part 303 and the transferred CBCA regulation 
do not require prior notice for the acquisition of voting securities 
for certain types of acquisitions. For example, both regulations permit 
a person acquiring voting securities through inheritance or bona fide 
gift to provide notice within 90 calendar days of the acquisition. 
Existing subpart E of part 303 and the transferred CBCA regulation, 
however, differ materially in what transactions are eligible for an 
after-the-fact notice

[[Page 70127]]

and the limitations imposed on the acquirer before receiving a non-
objection. As discussed in detail below, the proposed rule would 
materially amend existing subpart E of part 303 by incorporating 
several aspects of the transferred CBCA regulation.\45\
---------------------------------------------------------------------------

    \45\ See 12 CFR 303.83(b) and 12 CFR 391.42(d).
---------------------------------------------------------------------------

1. Section 303.83(a)(1)
    The proposed rule, like the existing subpart E of part 303 and the 
transferred CBCA regulation, provides that acquisitions through bona 
fide gift that result in control of an institution would require the 
acquirer to provide notice to the FDIC within 90 days after the 
acquisition.
2. Section 303.83(a)(2)
    The proposed rule, as does the existing subpart E of part 303, 
provides that the acquisition of voting securities in satisfaction of a 
debt previously contracted for in good faith that would otherwise 
require prior notice requires the acquirer to provide notice to the 
FDIC within 90 days after the acquisition (note that the acquisition of 
a defaulted loan secured by an amount of a covered institution's voting 
securities that would result in the acquirer holding a controlling 
amount of the institution's voting securities requires prior 
notice).\46\ The transferred CBCA regulation creates separate notice 
requirements for such acquisitions based on whether the loan was made 
in the ordinary course of business for the lender; however, the FDIC 
does not believe that distinction warrants separate notice procedures 
and therefore the FDIC has not adopted such separate notice 
requirements.
---------------------------------------------------------------------------

    \46\ See proposed section 303.82(c).
---------------------------------------------------------------------------

3. Section 303.83(a)(3)
    The proposed rule, as does existing subpart E of part 303, would 
permit an acquirer to provide notice to the FDIC within 90 days after 
the acquisition of voting securities through an inheritance where the 
acquisition would result in the acquirer holding a controlling amount 
of the institution's voting securities. The proposed rule would provide 
a slightly longer period for filing a notice than the transferred CBCA 
regulation. The transferred CBCA regulation provides a sixty-day notice 
period for State savings associations.\47\ In the proposed rule, 
acquirers of State savings associations or parent companies of State 
savings associations would have the same timeframe (90 days after the 
acquisition) as acquirers of State nonmember banks or parent companies 
of State nonmember banks.
---------------------------------------------------------------------------

    \47\ 12 CFR 391.42(d)(1)(v).
---------------------------------------------------------------------------

4. Section 303.83(b)(1)
    The proposed rule, like the existing subpart E of part 303 and the 
transferred CBCA regulation, would permit the filing of a Notice within 
90 days after being notified of a redemption of voting securities that 
results in the acquisition of control of the covered institution. The 
proposed rule is substantively the same as existing subpart E of part 
303. The difference relates to a change in regulatory language to 
reflect that a person might acquire control without acquiring 
additional voting securities when a covered institution redeems voting 
securities. For example, if the two largest shareholders hold 23 and 21 
percent of a covered institution's voting securities and the covered 
institution redeems all of the voting securities held by the person 
with 23 percent, the person with 21 percent would have to file a 
Notice. As such, the proposed rule uses the term ``acquisition of 
control'' instead of ``a percentage increase in voting securities''. 
The transferred CBCA regulation provides different notice procedures 
for redemptions based on whether the redemption is pro rata or is not 
pro rata.\48\ The FDIC does not believe the distinction between types 
of redemptions merits varying notice procedures. Accordingly, the 
proposed rule provides that if a person acquires control of a covered 
institution as a result of a redemption, that person would have 90 days 
after receiving notice of the transaction to provide notice to the 
FDIC.
---------------------------------------------------------------------------

    \48\ 12 CFR 391.42(d)(1)(iii).
---------------------------------------------------------------------------

5. Section 303.83(b)(2)
    Existing subpart E of part 303 permits a person to provide the FDIC 
notice within 90 days after receiving notice of a sale of shares by any 
shareholder that is not within the control of a person and which 
results in that person becoming the largest shareholder.\49\ The 
proposed rule would revise this provision. Under the proposed rule, if 
a person gains control as a result of any third-party event or action 
that is not within the control of the person acquiring control, that 
person must file a Notice within 90 days of receiving notice of such 
action. This provision, similar to the catch-all in the transferred 
CBCA regulation, is intended to provide a broader exemption from prior 
notice requirements than solely an acquisition of control arising from 
the sale of securities which results in the acquirer becoming the 
largest shareholder.\50\ The FDIC would also interpret the proposed 
catch-all to include any transfer that results from the operation of 
law. For example, some trustees are appointed by operation of law, such 
as a trustee in bankruptcy. Under the proposed rule, the trustees would 
have to provide the FDIC with a Notice within 90 days after the person 
receives notice of the acquisition. This provision codifies long-
standing FDIC policy. The FDIC notes that if the person acquiring 
control causes the third-party event or action, then prior notice is 
required.
---------------------------------------------------------------------------

    \49\ 12 CFR 303.83(b)(2)(ii).
    \50\ See 12 CFR 391.42(d)(1)(iv).
---------------------------------------------------------------------------

6. Section 303.83(c)
    The proposed rule would expressly provide that the FDIC may 
disapprove a Notice filed after-the-fact and that nothing in section 
303.83 limits the FDIC's authority to disapprove a Notice. Existing 
subpart E of part 303 includes this provision with respect to 
acquisitions of control of State nonmember banks and certain parent 
companies of State nonmember banks; the proposed rule would also apply 
this provision to acquisitions of control of State savings associations 
and certain parent companies of State savings associations.
7. Section 303.83(d)
    The proposed rule explicitly states that the relevant information 
that the FDIC may require under this section may include all of the 
information typically required for a prior notice; the relevant 
information may include, without limitation, all the information 
requested by the Interagency Notice of Change in Control form and the 
Interagency Biographical and Financial Report. This provision is not in 
existing subpart E of part 303, but is included in the proposed rule 
for transparency and to codify long-standing FDIC policy.
8. Section 303.83(e)
    The proposed rule expressly states that if the FDIC disapproves a 
Notice, then the notificant must divest control of the covered 
institution which may include, without limitation, disposing of some or 
all of the voting securities so that the notificant(s) is no longer in 
control of the covered institution. This provision is not in existing 
subpart E of part 303, but is included in the proposed rule for clarity 
and to codify long-standing FDIC policy.
9. Additional Transferred CBCA Regulation Provisions Not Included
    In addition to the provisions discussed above, the proposed rule 
does

[[Page 70128]]

not include the express caveat that transactions eligible for after-
the-fact notice are only eligible for after-the-fact notice provided 
that the timing of the transaction is outside the control of the 
notificant. The FDIC does not believe that it is necessary to state 
explicitly such a restraint on eligibility for an after-the-fact notice 
because failure to comply with the statutory or regulatory provisions 
may subject the acquirer to liability. As a result, the FDIC has 
historically interpreted the exceptions to prior notice as including 
this restraint.

e. Section 303.84 Transactions That Do Not Require Notice

1. Section 303.84(a)(1)
    Section 303.84(a)(1) includes grandfather provisions for long-held 
control interests in covered institutions. Under section 
303.84(a)(1)(i), notice would not be required when a person acquires 
additional voting securities of covered institution if the person held 
the power to vote 25 percent or more of any class of voting securities 
continuously since the later of March 9, 1979, or the date the 
institution commenced business. This exemption from notice requirements 
is not substantively different from the exemption in the existing 
subpart E of part 303 and only updates terminology.\51\
---------------------------------------------------------------------------

    \51\ See 12 CFR 303.83(a)(1)(i).
---------------------------------------------------------------------------

    The transferred CBCA regulation has a substantively identical 
exemption to 303.84(a)(1)(i) in the proposed rule for persons that have 
previously held the power to vote 25 percent or more of any class of 
voting securities continuously since March 9, 1979; however, it does 
not exempt persons who held the power to vote 25 percent or more of any 
class of voting securities since the date the savings association 
commenced business.\52\ The proposed rule, however, would exempt such 
an acquisition. As such, compared to the transferred CBCA regulation, 
the proposed rule would expand the notice exemptions for persons who 
held the power to vote 25 percent or more of any class of voting 
securities since the date the savings association commenced business. 
The FDIC feels this expansion would serve to make the change in control 
requirements more uniform and consistent between State savings 
associations, State nonmember banks, and certain parent companies of 
either. In general, the FDIC does not believe significant reasons exist 
to treat acquisitions of control of State savings associations or 
parent companies thereof differently, in this respect, than 
acquisitions of control of State nonmember banks and parent companies 
thereof, and has tried to make their treatment as uniform as possible 
under the proposed rule. Furthermore, because shareholders who have 
held over 25 percent of the voting securities since the commencement of 
a State savings association were likely reviewed when the institution 
acquired its charter and deposit insurance, the FDIC does not believe 
the same shareholders need to be reviewed a second time when they 
acquire additional voting securities.
---------------------------------------------------------------------------

    \52\ 12 CFR 391.42(c)(2)(v)(A) and (B).
---------------------------------------------------------------------------

    Under section 303.84(a)(1)(ii), notice is not required when a 
person who is presumed to have controlled a covered institution 
continuously since March 9, 1979, acquires additional voting securities 
of an institution provided that the aggregate amount of voting 
securities held does not exceed 25 percent or more of any class of 
voting securities, or the FDIC has determined that the person has 
continuously controlled the institution since March 9, 1979.\53\ The 
proposed rule would not amend this exemption for State nonmember banks 
or certain parent companies thereof. The transferred CBCA regulation 
included a similar provision, except with a grandfather date of 
December 26, 1985.\54\ The proposed rule would not include the 
grandfather date from the transferred CBCA regulation; rather it would 
adopt the same grandfather provisions for State savings associations as 
are applicable for State nonmember banks. This treatment generally 
reflects the FDIC's position that State savings associations should be 
treated in a similar manner to State nonmember banks. In addition, this 
treatment is consistent with the OCC's proposed treatment of Federal 
savings associations.\55\
---------------------------------------------------------------------------

    \53\ 12 CFR 303.83(a)(1)(ii).
    \54\ The difference in the grandfather date is due to a 
difference in when the presumptions in the transferred CBCA 
regulation and existing subpart E of part 303 became effective. The 
FDIC does not anticipate many persons, if any, would be affected by 
the proposed March 9,1979 grandfather date for State savings 
associations.
    \55\ 12 CFR 5.50(c)(2).
---------------------------------------------------------------------------

2. Section 303.84(a)(2)
    The proposed rule would also exempt from notice requirements a 
person who has controlled a covered institution in compliance with the 
procedures of the Change in Bank Control Act or the repealed Change in 
Savings and Loan Control Act, or any regulations issued under either 
act, and who acquires additional voting securities.\56\ Existing 
subpart E of part 303 and the transferred CBCA have substantially 
similar provisions.\57\
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    \56\ See 12 CFR 391.42(c)(2)(v)(B) for a similar provision in 
the transferred CBCA regulation.
    \57\ 12 CFR 303.83(a)(2) and 391.42(c)(2)(v).
---------------------------------------------------------------------------

    Question 7: Should the FDIC continue to exempt all future 
acquisitions of voting securities of an institution once a person has 
acquired control in compliance with the procedures from the Change in 
Bank Control Act? Or, should the FDIC limit this exemption to a certain 
percentage of a class of voting securities of a covered institution? 
For example, should only acquisitions of up to 50 percent of a class of 
voting securities be exempt once a person has acquired control in 
compliance with the procedures from the Change in Bank Control Act? If 
such a policy is adopted, and a person acquires over 50 percent of a 
class of voting securities, then a second Notice would be required.
3. Section 303.84(a)(3)
    Under the Change in Bank Control Act, and both the existing Subpart 
E of Part 303 and the transferred CBCA regulation, acquisitions of 
voting securities that are subject to approval under section 3 of the 
BHC Act,\58\ section 18(c) of the FDI Act,\59\ or section 10 of the 
Home Owners' Loan Act \60\ are exempt from notice requirements. These 
are statutory exemptions.\61\
---------------------------------------------------------------------------

    \58\ 12 U.S.C. 1842 et seq.
    \59\ 12 U.S.C. 1828(c).
    \60\ 12 U.S.C. 1467b.
    \61\ 12 U.S.C. 1817(j)(17).
---------------------------------------------------------------------------

4. Section 303.84(a)(4)
    The existing subpart E of part 303 exempts from notice requirements 
those transactions that are exempt under the BHC Act, foreclosures by 
institutional lenders, fiduciary acquisitions by banks, and increases 
of majority holdings by bank holding companies described in sections 
2(a)(5), 3(a)(A), or 3(a)(B), respectively, of the BHC Act, 12 U.S.C. 
1841(a)(5), 1842(a)(A), and 1842(a)(B).\62\ The proposed rule includes 
these exemptions, but does not include the text preceding the statutory 
references. The text, ``foreclosures by institutional lenders, 
fiduciary acquisitions by banks, and increases of majority holdings by 
bank holding companies'' is removed for clarity only; no substantive 
change is intended or effected. Intended as shorthand reference to the 
subject matter of the statutory provisions, the text has generated 
confusion regarding

[[Page 70129]]

its proper interpretation in that it could be interpreted as limiting 
the scope of those statutory references. In order to eliminate that 
confusion, the FDIC proposes to delete the text. Consequently, the 
proposed rule provides that any transaction described in sections 
2(a)(5), 3(a)(A), or 3(a)(B) of the BHC Act by a person described in 
those provisions is exempt from notice requirements.
---------------------------------------------------------------------------

    \62\ 12 CFR 303.83(a)(4). The transferred CBCA regulation 
includes references to exempt transactions in 12 CFR 
391.42(c)(2)(i)(A), (ii), (iii), and (iv) that are substantially 
similar to the exempt transactions included in the proposed rule.
---------------------------------------------------------------------------

5. Section 303.84(a)(5)
    The existing subpart E of part 303 exempts a customary one-time 
proxy solicitation from the notice requirements.\63\ The proposed rule 
would only technically modify this exemption by expressly limiting its 
applicability to revocable proxies, which is in line with long-standing 
FDIC interpretation. This exemption would be applicable any time 
revocable proxies are solicited for a single meeting of a covered 
institution. This exemption would not cover irrevocable proxies or 
revocable proxies that do not terminate within a reasonable period 
after the meeting. The transferred CBCA regulation does not include a 
similar exemption for the one-time solicitation of revocable proxies.
---------------------------------------------------------------------------

    \63\ 12 CFR 303.83(a)(5).
---------------------------------------------------------------------------

    Question 8: To what extent would the holding of such a proxy allow 
the holder to significantly influence an institution? In what manner 
should this exemption be limited, if any?
6. Section 303.84(a)(6)
    The existing subpart E of part 303 also exempts from notice 
requirements the receipt of voting shares through a pro rata stock 
dividend.\64\ The transferred CBCA regulation has a similar exemption, 
but extends the exemption to stock splits, if the proportional 
interests of the recipients remain substantially the same.\65\ This 
language is similar to language contained in the Board of Governors' 
change in control regulation.\66\ The FDIC believes the effect of a 
stock split is substantially similar to the effect of a pro rata stock 
dividend and has incorporated this exemption. Thus, the proposed rule 
would permit an exemption for an increase in voting securities through 
both a pro rata stock dividend or a stock split, provided the 
proportional interests of the recipients remain the same.
---------------------------------------------------------------------------

    \64\ 12 CFR 303.83(a)(6).
    \65\ 12 CFR 391.42(c)(2)(i)(C).
    \66\ See 12 CFR 225.42(a)(6).
---------------------------------------------------------------------------

7. Section 303.84(a)(7)
    The proposed rule, like the existing subpart E of part 303, exempts 
the acquisition of voting securities in a foreign bank that has an 
insured branch in the United States.
8. Section 303.84(a)(8)
    The existing subpart E of part 303 exempts from notice requirements 
the acquisition of voting shares of a depository institution holding 
company that either the Board of Governors or the former OTS reviews 
under the Change in Bank Control Act.\67\ The purpose of this exemption 
is to avoid duplicate regulatory review of the same acquisition of 
control by both the Board of Governors and the FDIC. The proposed rule 
includes this exemption, but removes the reference to the former OTS. 
The proposed rule also would continue the FDIC's longstanding practice 
that this exemption is only applicable when the Board of Governors 
actually reviews a Notice under the Change in Bank Control Act and not 
when the Board of Governors has jurisdiction but does not require a 
Notice. Accordingly, if the Board of Governors determines to accept 
passivity commitments in lieu of a Notice, the FDIC will evaluate the 
facts and circumstances of the case to determine whether a Notice is 
required to be filed with the FDIC for the indirect acquisition of 
control of an FDIC-supervised institution. This revision to the 
existing subpart E of part 303 is consistent with the language in the 
transferred CBCA regulation, which states that transactions for which 
``a change of control notice must be submitted'' to the Board of 
Governors are exempt from notice requirements.\68\ This revision is 
also consistent with the purpose of the exemptions and the FDIC's long-
standing practice.
---------------------------------------------------------------------------

    \67\ 12 CFR 303.83(a)(8). This fact pattern would arise, for 
example, when an individual investor, rather than a company, seeks 
to acquire control of a bank holding company.
    \68\ 12 CFR 391.42(c)(2)(iv).
---------------------------------------------------------------------------

9. Other CBCA Exemptions
    The transferred CBCA regulation also includes an exemption for 
acquisitions of up to twenty-five percent of a class of stock by a tax-
qualified employee stock benefit plan as defined in 12 CFR 192.25.\69\ 
The proposed rule does not include this provision because such plans 
are treated in the same manner as any trust. To the extent that a 
trustee does not have voting rights or the power to direct how the 
votes will be cast, typically the FDIC would not determine that the 
trustee has control.
---------------------------------------------------------------------------

    \69\ 12 CFR 391.42(c)(2)(i)(E).
---------------------------------------------------------------------------

f. 303.85 Filing Procedures

    The filing procedures in the proposed rule would be identical to 
the filing procedures in the existing subpart E of part 303.\70\ The 
FDIC is not proposing substantial modifications to the filing 
procedures in the existing subpart E of part 303 because these 
procedures are well-understood by the industry and have historically 
been easy to implement by both the FDIC and the industry. The proposed 
rule would change the filing procedures specified in the transferred 
CBCA regulation such that acquirers of State savings associations and 
certain parent companies thereof do not need to file a Notice using the 
OTS's Notice Form 1393.\71\ Under the proposed rule, a specific notice 
form would not be required, however, all of the information required by 
the FFIEC forms would need to be submitted.\72\ However, the FDIC 
encourages the use of the FFIEC Interagency Notice of Change in Control 
form as well as the Interagency Biographical and Financial Report.
---------------------------------------------------------------------------

    \70\ See 12 CFR 303.84.
    \71\ 12 CFR 391.45(a) and (b).
    \72\ A notificant may choose to use an interagency form 
requested from an FDIC Regional Director.
---------------------------------------------------------------------------

    Additionally, the proposed rule would not specifically state that 
the notificant may amend the Notice, as in the transferred CBCA 
regulation, but it is current FDIC policy that notificants can amend a 
Notice at their own initiative or upon the request of the FDIC.

g. 303.86 Processing and Disapproval of Notices

    The procedural requirements in the proposed rule are substantively 
identical to the procedural requirements in the existing subpart E of 
part 303.\73\ Similar to the reasoning for not proposing substantial 
modifications to the filing procedures in the existing subpart E of 
part 303, the FDIC is not proposing any substantive changes to the 
processing procedures in the proposed rule. Relative to the procedural 
requirements in the existing subpart E of part 303, the only 
modification proposed would be to state explicitly that the Change in 
Bank Control Act permits the FDIC to extend the notice period.\74\ 
Material changes for State savings associations, as compared

[[Page 70130]]

to the transferred CBCA regulation, are discussed below.\75\
---------------------------------------------------------------------------

    \73\ See 12 CFR 303.85.
    \74\ See 12 CFR 303.86(b)(1).
    \75\ See 12 CFR 391.45(c) and 391.46 for relevant provisions of 
the transferred CBCA regulation.
---------------------------------------------------------------------------

    First, the proposed rule does not include the provision in the 
transferred CBCA regulation that failure by a State savings association 
to respond to a written request for information or documents within 30 
calendar days would be deemed a withdrawal of the Notice or rebuttal 
filing.\76\ Instead, any written request for information from the FDIC 
may include a time-limit within which the institution must respond 
before the Notice or rebuttal filing would be considered abandoned or 
withdrawn. This procedure provides more flexibility depending on the 
depth and amount of information requested.
---------------------------------------------------------------------------

    \76\ See 12 CFR 391.45(c)(1).
---------------------------------------------------------------------------

    Second, the limitation in the transferred CBCA regulation 
restricting the FDIC's additional information requests, after the 
initial information request, to only information regarding matters 
derived from the initial information request or Notice, or information 
of a material nature that was not reasonably available for the 
acquirer, was concealed, or pertained to developments after the time of 
the initial information request is not included in the proposed 
rule.\77\ The proposed rule does not include such a restriction because 
the FDIC believes it should have the flexibility to investigate all 
material information throughout the notice review period.
---------------------------------------------------------------------------

    \77\ See 12 CFR 391.45(c)(3).
---------------------------------------------------------------------------

    Additionally, the transferred CBCA regulation includes a list of 
factors that give rise to a rebuttable presumption that an acquirer may 
fail the integrity and financial condition statutory factors.\78\ For 
example, if during the 10-year period immediately preceding the filing 
of the Notice, certain judgments, consents, orders, or administrative 
proceedings terminated in any agreements or orders issued against the 
acquirer, or affiliates of the acquirer, by any governmental entity, 
which involve: (A) Fraud, moral turpitude, dishonesty, breach of trust 
or fiduciary duties, organized crime or racketeering; (B) violation of 
securities or commodities laws or regulations; (C) violation of 
depository institution laws or regulations; (D) violation of housing 
authority laws or regulations; or (E) violation of the rules, 
regulations, codes of conduct or ethics of a self-regulatory trade or 
professional organization, there is a rebuttable presumption that the 
notificant cannot meet the statutory integrity factor. For the 
financial condition factor, for instance, if the notificant failed to 
furnish a business plan or furnished a business plan projecting 
activities which are inconsistent with economical home financing, then 
there is a rebuttable presumption the notificant cannot meet the 
financial condition statutory factor. As discussed above, the proposed 
rule would not adopt the presumption regarding disqualification 
factors. Nevertheless, the FDIC notes that these are the sort of facts 
that it considers when evaluating the financial or integrity factors.
---------------------------------------------------------------------------

    \78\ 12 CFR 391.46(g).
---------------------------------------------------------------------------

h. 303.87 Public Notice Requirement

    The proposed rule would not substantively amend the public notice 
requirements in the existing subpart E of part 303.\79\ The proposed 
rule includes minor revisions to the public notice requirements for 
Notices that are not filed in accordance with the CBCA and this subpart 
within the time periods specified. The proposed rule harmonizes the 
public notice requirements for such Notices with the requirements for 
Notices filed in accordance with the CBCA and this subpart. Material 
changes for State savings associations, as compared to the transferred 
CBCA regulation, are discussed below.\80\
---------------------------------------------------------------------------

    \79\ See 12 CFR 303.86.
    \80\ See 12 CFR 391.45.
---------------------------------------------------------------------------

    First, the transferred CBCA regulation does not explicitly permit 
the FDIC to delay publication requirements. The proposed rule, like the 
existing subpart E of part 303, would permit the FDIC to delay the 
publication required if the FDIC determines, for good cause, that it is 
in the public interest to grant a delay.
    The proposed rule also permits the FDIC to shorten the public 
comment period to a period of not less than 10 days, or waive the 
public comment or newspaper publication requirements, or act on a 
Notice before the expiration of a public comment period, if it 
determines that an emergency exists or that disclosure of the Notice, 
solicitation of public comment, or delay until expiration of the public 
comment period would seriously threaten the safety and soundness of the 
institution to be acquired. The transferred CBCA regulation permits the 
FDIC to waive the public notice period and submission of comments for 
supervisory reasons.\81\ The proposed rule includes the language from 
the existing subpart E of part 303 and not the broader language from 
the transferred CBCA regulation because the FDIC believes that such a 
waiver should be rare and granted only as specified in the existing 
subpart E of part 303. The FDIC believes that public comment is an 
important right and should only be waived for an emergency or serious 
threats to an institution's safety and soundness.
---------------------------------------------------------------------------

    \81\ 12 CFR 391.45(g).
---------------------------------------------------------------------------

    The transferred CBCA regulation provides for a 30-day comment 
period, but the existing subpart E of part 303 and the proposed rule 
include a 20-day comment period.\82\ The proposed rule includes a 20-
day comment period because in the FDIC's experience the 20-day comment 
period in the existing subpart E of part 303 has provided potential 
commenters sufficient time to comment. In addition, a 20-day comment 
period is preferable because it gives the FDIC sufficient time to 
review any comments during the limited statutory review period (60-days 
unless extended further). Finally, a 20-day comment period provides 
consistency among the Federal banking agencies with respect to State 
savings associations, State nonmember banks, national banks, and State 
member banks.
---------------------------------------------------------------------------

    \82\ 12 CFR 303.86(d) and 12 CFR 391.45(e).
---------------------------------------------------------------------------

    The proposed rule would also require that if a Notice was not filed 
in accordance with the CBCA and this subpart within the time periods 
specified, the notificant must publish an announcement of the 
acquisition of control in a newspaper of general circulation in the 
community in which the home office of the FDIC-supervised institution 
acquired is located within 10 days after being directed to file a 
Notice by the FDIC. This express requirement is not included in the 
transferred CBCA regulation.
    The transferred CBCA regulation includes a provision regarding how 
an applicant can request that information submitted in connection with 
a Notice be treated as confidential.\83\ The proposed rule does not 
include these procedures because the FDIC has comparable disclosure and 
confidentiality regulations in 12 CFR part 309 that already cover such 
requests.
---------------------------------------------------------------------------

    \83\ 12 CFR 391.45(f).
---------------------------------------------------------------------------

    Finally, the transferred CBCA regulation explicitly states that the 
FDIC will notify the State savings association's State supervisor of 
the filing of a Notice.\84\ As this is a statutory requirement, the 
FDIC does not believe its inclusion in the proposed rule is necessary.
---------------------------------------------------------------------------

    \84\ 12 CFR 391.45(h).

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

[[Page 70131]]

i. 303.88 Reporting of Stock Loans and Changes in Chief Executive 
Officers and Directors

    The proposed rule includes two longstanding statutory reporting 
requirements that are not included in existing subpart E of part 303 or 
the transferred CBCA regulation. The first statutory reporting 
requirement relates to any foreign bank, or any affiliate thereof, that 
has credit outstanding to any person or group of persons which is 
secured, directly or indirectly, by 25 percent or more of any class of 
voting securities of a covered institution.\85\ The second statutory 
reporting requirement included in the proposed rule relates to changes 
in chief executive officers and directors of a bank within 12 months of 
a change in control being consummated.\86\ The proposed rule does not 
add to, or modify, the existing statutory requirements and only 
includes the longstanding statutory requirements to enhance 
transparency for covered institutions.
---------------------------------------------------------------------------

    \85\ 12 U.S.C. 1817(j)(9).
    \86\ 12 U.S.C. 1817(j)(12).
---------------------------------------------------------------------------

j. Other Transferred CBCA Regulation Provisions

    The proposed rule does not include similar language to that in 12 
CFR 391.45(i)-(j), which outline additional procedures for Notices that 
involve other filings to the FDIC. Notificants should review other 
applicable regulatory sections, such as 12 CFR 303.60 et seq. 
concerning merger applications or mutual-to-stock conversions for 
further information on related filings. The FDIC generally prefers not 
to cross-reference filings that a particular transaction may require. 
The FDIC notes that acquisitions of voting securities subject to 
approval under section 18(c) of the FDI Act are exempt from notice 
requirements.
    The transferred CBCA regulation also contains a rebuttal of control 
agreement.\87\ The proposed rule does not include this agreement 
because the FDIC believes that a rebuttal of control should be tailored 
to the facts and circumstances of each situation, and a standard 
agreement would not typically capture the various circumstances present 
in some situations. The FDIC prefers to make any potential rebuttal of 
control decision only after reviewing the facts and circumstances of 
the particular acquisition.\88\
---------------------------------------------------------------------------

    \87\ 12 CFR 391.48.
    \88\ See also discussion at II.c.7, supra.
---------------------------------------------------------------------------

    The proposed rule also excludes the requirement in the transferred 
CBCA regulation that certain acquirers of beneficial ownership 
exceeding 10 percent of any class of stock of a State savings 
association file a certification of ownership. The FDIC believes that 
the regulatory burden of these filings exceeds the benefits derived 
from them.

k. Existing OTS Guidance

    All guidance issued by the OTS that would otherwise apply to 
changes in control of State savings associations and that is 
inconsistent with the provisions of any final rule issued by the FDIC 
on the subject would be rescinded on the effective date of an FDIC 
final rule regarding changes in control of State savings associations.
    In addition to the questions presented above, the FDIC requests 
comment on all aspects of the proposed rule, including the potential 
cost and benefits of the proposed rule.

III. Regulatory Analyses

A. Paperwork Reduction Act (PRA)

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995, the FDIC may not conduct or sponsor, and the respondent is not 
required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (``OMB'') control 
number.\89\ The Interagency Notice of Change in Control has previously 
been approved by the OMB under Control No. 3064-0019 for all covered 
institutions, including State nonmember banks and State savings 
associations. This proposed rule would not revise the Interagency 
Notice of Change in Control form for covered institutions. As such, the 
proposed rule does not include an information collection as defined 
under the PRA.
---------------------------------------------------------------------------

    \89\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

B. Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (RFA) generally requires that, in 
connection with a notice of proposed rulemaking, an agency prepare and 
make available for public comment an initial regulatory flexibility 
analysis that describes the impact of a proposed rule on small entities 
(defined in regulations promulgated by the Small Business 
Administration to include banking organizations with total assets of 
less than or equal to $550 million). A regulatory flexibility analysis, 
however, is not required if the agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities, and publishes its certification and a short explanatory 
statement in the Federal Register together with the proposed rule. For 
the reasons provided below, the FDIC certifies that the proposed rule, 
if adopted in final form, would not have a significant economic impact 
on a substantial number of small entities. Accordingly, a regulatory 
flexibility analysis is not required.
    The proposed rule only affects persons acquiring control of covered 
small banking entities. As such, the rule would not have a significant 
economic impact on a substantial number of small banking entities as 
the proposed rule would not impose any new requirements or prohibitions 
on small banking entities and would not impose any direct costs on 
small banking entities. As discussed in the preamble, the proposed rule 
primarily revises the circumstances that require the filing of a Notice 
for persons acquiring control of a small banking entity. Any impact of 
the proposed rule would be borne by the persons acquiring a controlling 
interest in a covered institution and not by the covered institution 
directly. Furthermore, for State nonmember banks and certain of their 
parent companies, the proposal generally codifies existing FDIC 
practice and should only marginally affect the number of persons 
subject to notice requirements. While the changes for State savings 
associations are more material, the changes generally simplify the 
requirements under the transferred CBCA regulation and should not 
materially increase the number of change in control Notices that must 
be filed. Currently, the FDIC receives approximately 35 change in 
control Notices each year and the FDIC does not expect the proposed 
rule to increase the number of Notices received by more than one or two 
Notices annually. As such, the proposed rule should not have a 
significant economic impact on a substantial number of small banking 
entities.

C. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act requires the FDIC to use 
plain language in all proposed and final rules published after January 
1, 2000. The FDIC invites comment on how to make this proposed rule 
easier to understand. For example:
     Has the FDIC organized the material to suit your needs? If 
not, how could the FDIC present the rule more clearly?
     Are the requirements in the rule clearly stated? If not, 
how could the rule be more clearly stated?
     Do the regulations contain technical language or jargon 
that is not clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation

[[Page 70132]]

easier to understand? If so, what changes would achieve that?
     Is this section format adequate? If not, which of the 
sections should be changed and how?
     What other changes can the agencies incorporate to make 
the regulation easier to understand?

List of Subjects in 12 CFR Part 303

    Administrative practice and procedure, banks, banking, savings 
associations, change in bank control.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend parts 303 and 391 of chapter 
III of Title 12, Code of Federal Regulations as follows:

PART 303--FILING PROCEDURES

0
1. Revise the authority citation for part 303 to read as follows:

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

0
2. Revise Subpart E to read as follows:
* * * * *
Subpart E--Change in Bank Control Act
303.80 Scope.
303.81 Definitions.
303.82 Transactions that require prior notice.
303.83 Transactions that require notice, but not prior notice.
303.84 Transactions that do not require notice.
303.85 Filing procedures.
303.86 Processing.
303.87 Public notice requirements.
303.88 Reporting of stock loans and changes in chief executive 
officers and directors.
303.89-303.99 [Reserved]
* * * * *
0
3. Revise Subpart E of part 303 to read as follows:

Subpart E--Change in Bank Control


Sec.  303.80  Scope.

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


Sec.  303.81  Definitions.

    For purposes of this subpart:
    (a) Acting in concert means knowing participation in a joint 
activity or parallel action towards a common goal of acquiring control 
of a covered institution whether or not pursuant to an express 
agreement.
    (b) Company means a company as defined in section 2 of the Bank 
Holding Company Act of 1956, as amended (12 U.S.C. 1841 et seq.) and 
any person that is not an individual.
    (c) Control means the power, directly or indirectly, to direct the 
management or policies of a covered institution or to vote 25 percent 
or more of any class of voting securities of a covered institution.
    (d) Convertible securities mean debt or equity interests that may 
be converted into voting securities.
    (e) Covered institution means an insured State nonmember bank, an 
insured State savings association, and any company that controls, 
directly or indirectly, an insured State nonmember bank or an insured 
State savings association other than a holding company that is the 
subject of an exemption described in either section 303.84(a)(3) or 
(a)(8).
    (f) Immediate family means a person's parents, mother-in-law, 
father-in-law, children, step-children, siblings, step-siblings, 
brothers-in-law, sisters-in-law, grandparents, and grandchildren, 
whether biological, adoptive, adjudicated, contractual, or de facto; 
the spouse of any of the foregoing; and the person's spouse.
    (g) Person means an individual, corporation, limited liability 
company (LLC), partnership, trust, association, joint venture, pool, 
syndicate, sole proprietorship, unincorporated organization, voting 
trust, or any other form of entity; and includes each party to a voting 
agreement and any group of persons acting in concert.
    (h) Management official means any officer, LLC manager, director, 
partner, or trustee of an entity, or other person with policy-making 
functions.
    (i)(1) Voting securities means shares of common or preferred stock, 
general or limited partnership shares or interests, membership 
interests, or similar interests if the shares or interests, by statute, 
charter, or in any manner, entitle the holder:
    (i) To vote for, or to select, directors, trustees, managers of an 
LLC, partners, or other persons exercising similar functions of the 
issuing entity; or
    (ii) To vote on, or to direct, the conduct of the operations or 
significant policies of the issuing entity.
    (2) Nonvoting shares. Shares of common or preferred stock, limited 
partnership shares or interests, membership interests, or similar 
interests are not ``voting securities'' if:
    (i) Any voting rights associated with the shares or interests are 
limited solely to the type customarily provided by State statute with 
regard to matters that would significantly and adversely affect the 
rights or preference of the security or other interest, such as the 
issuance of additional amounts or classes of senior securities, the 
modification of the terms of the security or interest, the dissolution 
of the issuing entity, or the payment of dividends by the issuing 
entity when preferred dividends are in arrears;
    (ii) The shares or interests represent an essentially passive 
investment or financing device and do not otherwise provide the holder 
with control over the issuing entity; and
    (iii) The shares or interests do not entitle the holder, by 
statute, charter, or in any manner, to select, or to vote for the 
selection of, directors, trustees, managers of an LLC, partners, or 
persons exercising similar functions of the issuing entity.
    (3) Class of voting securities. Shares of stock or other interests 
issued by a single issuer are deemed to be the same class of voting 
shares, regardless of differences in dividend rights or liquidation 
preference, if the shares are voted together as a single class on all 
matters for which the shares have voting rights other than matters 
described in paragraph (i)(2)(i) of this section that affect solely the 
rights or preferences of the shares.


Sec.  303.82  Transactions that require prior notice.

    (a) Prior notice requirement. Except as provided in Sections 303.83 
and 303.84, no person, acting directly or indirectly, or through or in 
concert with one or more persons, shall acquire control of a covered 
institution unless the person shall have given the FDIC prior notice of 
the proposed acquisition as provided in the CBCA and this subpart, and 
the FDIC has not disapproved the acquisition within 60 days or such 
longer period as may be permitted under the CBCA.
    (b) Rebuttable presumptions.
    (1) Rebuttable presumptions of control. The FDIC presumes that an 
acquisition of voting securities of a covered institution constitutes 
the acquisition of the power to direct the management or policies of 
that institution requiring prior notice to the FDIC, if, immediately 
after the transaction, the acquiring person will

[[Page 70133]]

own, control, or hold with power to vote 10 percent or more of any 
class of voting securities of the institution, and if:
    (i) The institution has registered securities under section 12 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78l); or
    (ii) No other person will own, control or hold the power to vote a 
greater percentage of that class of voting securities immediately after 
the transaction.
    (2) Rebuttable Presumptions of Acting in Concert. The following 
persons who own or control, or propose to own or control voting 
securities in a covered institution, shall be presumed to be acting in 
concert for purposes of this subpart:
    (i) A company and any controlling shareholder or management 
official of the company;
    (ii) An individual and the individual's immediate family;
    (iii) Companies under common control or a company and each company 
it controls;
    (iv) Two or more persons that have made, or propose to make, a 
joint filing related to the proposed acquisition under sections 13 or 
14 of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78n), and 
the rules promulgated thereunder by the Securities and Exchange 
Commission;
    (v) A person and any trust for which the person serves as trustee 
or any trust for which the person is a beneficiary; and
    (vi) Persons that are parties to any agreement, contract, 
understanding, relationship, or other arrangement, whether written or 
otherwise, regarding the acquisition, voting, or transfer of control of 
voting securities of a covered institution, other than through 
revocable proxies as described in 303.84(a)(5).
    (3) Convertible securities, Options, and Warrants. The acquisition 
of convertible securities, options, or warrants is presumed to 
constitute the acquisition of voting securities.
    (4) Rebuttal of presumptions. The FDIC will afford any person 
seeking to rebut a presumption in this paragraph (b) an opportunity to 
present views in writing.
    (c) Acquisition of loans in default. An acquisition of a loan in 
default that is secured by voting securities of a covered institution 
is deemed to be an acquisition of the underlying securities for 
purposes of this subpart. Before acquiring a loan in default that would 
result in the acquiring person owning, controlling, or holding with the 
power to vote a controlling amount of a covered institution's voting 
securities, the potential acquirer must give the FDIC prior written 
notice as specified in this subpart.


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

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


Sec.  303.84  Transactions that do not require notice.

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

[[Page 70134]]

Sec.  303.85  Filing procedures.

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


Sec.  303.86  Processing.

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


Sec.  303.87  Public notice requirements.

    (a) Publication--
    (1) Newspaper announcement. Any person(s) filing a notice under 
this subpart shall publish an announcement soliciting public comment on 
the proposed acquisition. The announcement shall be published in a 
newspaper of general circulation in the community in which the home 
office of the covered institution to be acquired is located.
    (2) Timing of Publication. The announcement shall be published as 
close as is practicable to the date the notice is filed with the 
appropriate FDIC office, but in no event more than 10 calendar days 
before or after the filing date. If the filing is not filed in 
accordance with the CBCA and this subpart within the time periods 
specified herein, the acquiring person(s) shall, within 10 days of 
being so directed by the FDIC to file a Notice, publish an announcement 
of the acquisition of control.
    (3) Contents of newspaper announcement. The newspaper announcement 
shall conform to the public notice requirements set forth in Sec.  
303.7. If the filing is not filed in accordance with the CBCA and this 
subpart within the time periods specified herein, the announcement 
shall also include the date of the acquisition and contain a statement 
indicating that the FDIC is currently reviewing the acquisition of 
control.
    (b) Delay of publication. The FDIC may permit delay in the 
publication required by this section if the FDIC determines, for good 
cause, that it is in the public interest to grant such a delay. 
Requests for delay of publication may be submitted to the appropriate 
FDIC office.
    (c) Shortening or waiving public comment period, waiving 
publications; acting before close of public comment period. The FDIC 
may shorten the public comment period to a period of not less than 10 
days, or waive the public comment or newspaper publication requirements 
of paragraph (a) of this section, or act on a notice before the 
expiration of a public comment period, if it determines in writing 
either that an emergency exists or that disclosure of the notice, 
solicitation of public comment, or delay until expiration of the public 
comment period would seriously threaten the safety and soundness of the 
State nonmember bank or State savings association to be acquired.
    (d) Consideration of public comments. In acting upon a notice filed 
under this subpart, the FDIC shall consider all public comments 
received in writing within 20 days following the required newspaper 
publication or, if the FDIC has shortened the public comment period 
pursuant to paragraph (c) of this section, within such shorter period.


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

    (a) Requirements of reporting stock loans.
    (1) Any foreign bank or affiliate of a foreign bank that has credit 
outstanding to any person or group of persons, in the aggregate, which 
is secured, directly or indirectly, by 25 percent or more of any class 
of voting securities of a covered institution, shall file a 
consolidated report with the appropriate FDIC office.
    (2) Any voting securities of the covered institution held by the 
foreign bank or any affiliate of the foreign bank as principal must be 
included in the calculation of the number of voting securities in which 
the foreign bank or its affiliate has a security interest for purposes 
of paragraph (a) of this section.
    (b) Definitions. For purposes of paragraph (a) of this section:
    (1) Foreign bank shall have the same meaning as in section 1(b) of 
the International Banking Act of 1978 (12 U.S.C. 3101).
    (2) Affiliate shall have the same meaning as in section 1(b) of the 
International Banking Act of 1978 (12 U.S.C. 3101).
    (3) Credit outstanding includes any loan or extension of credit; 
the issuance of a guarantee, acceptance, or letter of credit, including 
an endorsement or standby letter of credit; and any other type of 
transaction that extends credit or financing to the person or group of 
persons.
    (4) Group of persons includes any number of persons that the 
foreign bank or any affiliate of a foreign bank has reason to believe:
    (i) Are acting together, in concert, or with one another to acquire 
or control voting securities of the same covered institution, including 
an acquisition of voting securities of the same covered institution at 
approximately the same time under substantially the same terms; or
    (ii) Have made, or propose to make, a joint filing under section 13 
or 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78n), 
and the rules promulgated thereunder by the Securities and Exchange 
Commission

[[Page 70135]]

regarding ownership of the voting securities of the same covered 
institution.
    (c) Exceptions. Compliance with paragraph (a) of this section is 
not required if:
    (1) The person or group of persons referred to in paragraph (a) has 
disclosed the amount borrowed and the security interest therein to the 
appropriate FDIC office in connection with a notice filed under the 
CBCA, an application filed under either 12 U.S.C. 1841, et seq. or 12 
U.S.C. 1467a, or any other application filed to the FDIC as a 
substitute for a notice under Sec.  303.82 of this subpart, including 
an application filed under section 18(c) of the FDI Act (Bank Merger 
Act, 12 U.S.C. 1828(c)) or section 5 of the Federal Deposit Insurance 
Act (12 U.S.C. 1815); or
    (2) The transaction involves a person or group of persons that has 
been the owner or owners of record of the stock for a period of one 
year or more; or, if the transaction involves stock issued by a newly 
chartered bank, before the bank is opened for business.
    (d) Report requirements for purposes of paragraph (a) of this 
section.
    (1) The consolidated report must indicate the number and percentage 
of voting securities securing each applicable extension of credit, the 
identity of the borrower, the number of voting securities held as 
principal by the foreign bank and any affiliate thereof, and any 
additional information that the FDIC may require in connection with a 
particular report.
    (2) A foreign bank, or any affiliate of a foreign bank, shall file 
the consolidated report in writing within 30 days of the date on which 
the foreign bank or affiliate first believes that the security for any 
outstanding credit consists of 25 percent or more of any class of 
voting securities of a covered institution.
    (e) If the foreign bank, or any affiliate thereof, is not 
supervised by the FDIC, it shall file a copy of the report filed under 
paragraph (a) of this section with its appropriate Federal banking 
agency.
    (f) Reporting requirement. After the consummation of a change in 
control, a covered institution must notify the FDIC in writing of any 
changes or replacements of its chief executive officer or of any 
director occurring during the 12-month period beginning on the date of 
consummation. This notice must be filed within 10 days of such change 
or replacement and must include a statement of the past and current 
business and professional affiliations of the new chief executive 
officers or directors.


Sec. Sec.  303.89-303.99  [Reserved]

* * * * *

PART 391--FORMER OFFICE OF THRIFT SUPERVISION REGULATIONS

0
4. The authority for part 391 is revised to read as follows:

    Authority: 12 U.S.C. 1819 (Tenth).; Subpart A also issued under 
12 U.S.C. 1462a; 1463; 1464; 1828; 1831p-1; 1881-1884; 15 U.S.C. 
1681w; 15 U.S.C. 6801; 6805.; Subpart B also issued under 12 U.S.C. 
1462a; 1463; 1464; 1828; 1831p-1; 1881-1884; 15 U.S.C. 1681w; 15 
U.S.C. 6801; 6805.; Subpart C also issued under 12 U.S.C. 1462a; 
1463; 1464; 1828; 1831p-1; and 1881-1884; 15 U.S.C. 1681m; 1681w.; 
Subpart D also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 42 
U.S.C. 4012a; 4104a; 4104b; 4106; 4128.

Subpart E--[Removed and Reserved]

0
5. Remove and reserve part 391 subpart E consisting of Sec. Sec.  
391.40 through 391.48.

    By order of the Board of Directors.

    Dated at Washington, DC, this 18th day of November, 2014.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2014-27609 Filed 11-24-14; 8:45 am]
BILLING CODE 6714-01-P