[Federal Register Volume 85, Number 135 (Tuesday, July 14, 2020)]
[Rules and Regulations]
[Pages 42630-42661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12784]



[[Page 42629]]

Vol. 85

Tuesday,

No. 135

July 14, 2020

Part IV





Department of the Treasury





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Office of the Comptroller of the Currency





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12 CFR Parts 3, 4, 11, et al.





Employment Contracts, Mutual to Stock Conversions; Final Rule

  Federal Register / Vol. 85, No. 135 / Tuesday, July 14, 2020 / Rules 
and Regulations  

[[Page 42630]]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 3, 4, 11, 16, 19, 23, 26, 32, 108, 112, 141, 160, 161, 
163, 192, and 195

[Docket ID OCC-2018-0041]
RIN 1557-AE21


Employment Contracts, Mutual to Stock Conversions

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.

ACTION: Final rule and technical amendments.

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SUMMARY: The OCC is issuing a final rule that repeals the OCC's 
employment contracts rule for Federal savings associations. This change 
was recommended in the March 2017 Economic Growth and Regulatory 
Paperwork Reduction Act report. The final rule also amends the OCC's 
rule for conversions from mutual to stock form of a savings association 
to reduce burden, provide clarity, increase flexibility, and update 
cross-references. Additionally, the final rule updates cross-references 
to repealed and integrated rules, removes unnecessary definitions, and 
makes technical changes to other OCC rules.

DATES: This rule is effective on August 13, 2020.

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Charlotte Bahin, Senior Advisor for Thrift Supervision, (202) 649-6281, 
Marta Stewart-Bates, Senior Attorney, (202) 649-5490, Chief Counsel's 
Office, for persons who are deaf or hearing impaired, TTY, (202) 649-
5597, Office of the Comptroller of the Currency, 400 7th Street SW, 
Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

I. Background

    The OCC continually reviews its regulations with the goal of 
updating them to reduce burden, increase flexibility, and provide 
clarity where possible.\1\ Section 2222 of the Economic Growth and 
Regulatory Paperwork Reduction Act of 1996 (EGRPRA) requires that, at 
least once every 10 years, the Federal Financial Institutions 
Examination Council (FFIEC) and each appropriate Federal banking agency 
(Agencies) represented on the FFIEC (the OCC, the Federal Deposit 
Insurance Corporation (FDIC), and the Board of Governors of the Federal 
Reserve System (Federal Reserve Board)) conduct a review of their 
regulations.\2\ The purpose of this review is to identify outdated or 
otherwise unnecessary regulatory requirements imposed on insured 
depository institutions. Specifically, EGRPRA requires the Agencies to 
categorize and publish their regulations for comment, requesting 
commenters to identify areas of the regulations that are outdated, 
unnecessary, or unduly burdensome, and eliminate unnecessary 
regulations to the extent that such action is appropriate. The Agencies 
completed their second EGRPRA review on March 30, 2017, and published a 
Report to Congress in the Federal Register.\3\ The OCC published a 
proposed rule on January 8, 2020,\4\ that sought comment on OCC 
proposed changes recommended in the March 2017 EGRPRA report, including 
the repeal of 12 CFR 163.39 (Federal savings association employment 
contracts) and possible amendments to 12 CFR 9.8 and 150.420 (fiduciary 
recordkeeping) and 9.10 and 150.320 (acceptable collateral for 
fiduciary funds awaiting investment or distribution).\5\
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    \1\ Most recently, the OCC published for notice and comment 
amendments to 12 CFR part 5 (Rules, Policies, and Procedures for 
Corporate Activities) and 12 CFR part 7 (Activities & Operations). 
See 85 FR 18728 (April 2, 2020); 85 FR 40794 (July 7, 2020).
    \2\ Section 2222 of EGRPRA is codified at 12 U.S.C. 3311(b).
    \3\ 82 FR 15900 (March 30, 2017).
    \4\ 85 FR 1052 (January 8, 2020).
    \5\ See FFIEC Joint Report to Congress (March 2017), available 
at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.
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    The OCC also proposed to amend 12 CFR part 192 (Federal savings 
association conversions from mutual to stock form) to reduce burden, 
increase flexibility, and replace cross-references to repealed 12 CFR 
197 (Securities offerings rules for Federal savings associations) with 
cross-references to 12 CFR part 16 (Securities offering disclosure 
rules). The OCC proposed to clarify which forms and accounting 
standards savings associations must use in connection with a part 192 
conversion and to increase flexibility and reduce burden for Federal 
savings associations by encouraging electronic filing, electronic 
meetings, providing notice by email, and reducing the number of copies 
of proxy materials that must be filed with the OCC.
    Finally, the proposed rule contained various technical and 
clarifying amendments to 12 CFR parts 3, 4, 8, 11, 16, 19, 23, 26, 32, 
108, 112, 141, 160, 161, and 163.

II. Summary of the Proposals, Comments Received, and the Final Rule

    In response to the proposal, the OCC received four comment letters 
from industry stakeholders and the public. The commenters generally 
supported the proposed amendments, but requested particular changes and 
additional clarity.

A. Employment Contracts for Federal Savings Associations

    Twelve CFR 163.39 sets forth the requirements for a Federal savings 
association that enters into an employment contract with its officers 
and employees. Section 163.39(a) requires written employment contracts 
for officers and employees that are approved by a Federal savings 
association's board of directors. Section 163.39(a) also prohibits a 
Federal savings association from entering into an employment contract 
with any of its officers or other employees if the employment contract 
would constitute an unsafe or unsound practice. Under section 
163.39(b), a contract must include a Federal savings association's 
right to terminate the employee at will. There are no similar 
requirements for national banks.
    In March 2017, the FFIEC made its Joint Report to Congress under 
EGRPRA. One EGRPRA commenter recommended that the OCC eliminate Sec.  
163.39 in its entirety because the regulation only applies to Federal 
savings associations and there is no reason to distinguish Federal 
savings associations from national banks. Additionally, the EGRPRA 
commenter stated that it is unnecessary to require board approval of 
all employment contracts because there are comprehensive safety and 
soundness standards and interagency guidance on compensation.
    The OCC proposed to eliminate Sec.  163.39 in its entirety. 
Commenters supported the repeal. One commenter agreed that the OCC 
should eliminate the entire rule because it is confusing and 
unnecessarily burdensome. Another commenter stated that the 
requirements are more onerous than those applied to national banks 
because the current rule applies to all Federal savings association 
employment contracts and mandates a number of detailed contractual 
provisions that must be included in each contract. The commenter noted 
that the OCC already has a robust regulatory framework governing 
Federal savings association employment contracts, making the rule 
duplicative and unnecessary, and that there are no persuasive policy 
reasons for the OCC to impose more stringent

[[Page 42631]]

regulatory requirements on the employment contracts of Federal savings 
associations as opposed to national banks. The commenter stated that 
the current rule increases a Federal savings association's litigation 
risks and limits its ability to tailor its compensation programs in 
ways that best suit its size and complexity.
    The OCC is repealing 12 CFR 163.39 in its entirety. The repeal 
provides for consistent treatment of Federal savings associations and 
national banks with respect to employment contracts and compensation. 
The OCC believes that the current framework of rules and guidance on 
compensation and employment contracts, independent of Sec.  163.39, is 
adequate to address and safeguard against unsafe and unsound employment 
and compensation practices for Federal savings associations. Federal 
savings associations, like national banks, are subject to the safety 
and soundness standards of 12 U.S.C. 1818; 12 CFR part 30, the 
prohibition on unsafe and unsound compensation in appendix A to part 
30; the prompt corrective action restrictions on compensation to senior 
executive officers in 12 CFR 6.6(a)(3) and section 38 of the Federal 
Deposit Insurance Act (FDIA); and are informed by the 2010 Interagency 
Guidance on Sound Incentive Compensation Policies. Moreover, the boards 
of directors at national banks and Federal savings associations have 
oversight responsibilities for compensation, benefits arrangements, and 
employment contracts for their executive officers and employees.
    The repeal of Sec.  163.39 also reduces burden and increases 
flexibility for Federal savings associations by eliminating the 
requirement for written contracts that the board of directors must 
approve, although Federal savings associations are not prohibited from 
voluntarily using those procedures for their employment contracts. It 
is a good corporate governance practice to have agreements relating to 
employment and compensation in writing and that the board, or committee 
thereof, review and approve those agreements. The repeal of Sec.  
163.39 does not alter any other obligation with regard to employment 
agreements entered into by a Federal savings association. For example, 
if there are other laws and regulations that apply to a Federal savings 
association regarding employment contracts, the repeal of Sec.  163.39 
does not affect the application of those laws.

B. Fiduciary Recordkeeping

    12 CFR part 9 sets forth the standards that apply to national bank 
fiduciary activities. Twelve CFR part 150 sets forth the standards that 
apply to the fiduciary activities of Federal savings associations. 
Sections 9.8 and 150.420 contain requirements for the documentation and 
retention of records for fiduciary accounts at national banks and 
Federal savings associations, respectively. Sections 9.8(b) and 150.420 
require national banks and Federal savings associations to retain 
fiduciary account records for a period of three years from the later of 
the termination of the account or the termination of any litigation 
relating to the account. During the 2017 EGRPRA process, a commenter 
recommended that the OCC amend 12 CFR 9.8(b) to require the retention 
of documents for a ``necessary period'' or to refer to applicable State 
law on the retention of documents, instead of the current three-year 
requirement. The commenter explained that three years may be inadequate 
to protect beneficiaries in some situations, such as a suit filed by a 
beneficiary against a predecessor trustee more than three years after 
an account is closed but before a State statute of limitations has run.
    In the proposal, the OCC requested comment on whether to amend 
Sec. Sec.  9.8(b) and 150.420 to require a national bank or Federal 
savings association to retain fiduciary account records for the later 
of three years from the termination of account, three years from the 
termination of any litigation relating to the account, or the minimum 
period required by applicable fiduciary State law. The OCC noted that 
this approach could place additional burdens on institutions by 
increasing the number of years an institution would be required to 
retain records, and because this approach may require institutions to 
monitor changes to states' fiduciary laws. The OCC received no comments 
in response and declines to amend Sec. Sec.  9.8(b) and 150.420. The 
OCC notes that nothing in Sec. Sec.  9.8(b) and 150.420 prohibits 
financial institutions from holding fiduciary account records longer 
than the three-year period.

C. Acceptable Collateral for Self-Deposited Trust Funds

    Under 12 U.S.C. 92a(d), 12 CFR 9.10(b)(1), 12 U.S.C. 1464(n)(3), 
and 12 CFR 150.310, a national bank or Federal savings association may 
deposit trust funds awaiting investment or distribution in the 
commercial, savings, or other department of the bank, unless prohibited 
by applicable law. To the extent the funds are not insured by the 
Federal Deposit Insurance Corporation (FDIC), the national bank or 
Federal savings association must set aside U.S. bonds or other 
securities and assets designated by the OCC as collateral for the 
deposit. Sections 9.10(b)(2) and 150.320 list acceptable collateral 
types for national banks and Federal savings associations, 
respectively. During the notice and comment period for the 2017 EGRPRA 
report, one commenter suggested an expansion of the Sec.  9.10(b)(2) 
list of acceptable collateral for fiduciary funds to allow for other 
instruments that provide similar protection from loss.
    In the proposed rule, the OCC requested comment on whether to 
expand the list of acceptable collateral in Sec. Sec.  9.10(b)(2) and 
150.320 to include additional types of instruments. The OCC received 
one comment in response. The commenter requested that the OCC expand 
the list of acceptable collateral to include Federal Home Loan Bank 
(FHLB) letters of credit. The same commenter also requested that, with 
respect to surety bonds as an acceptable form of collateral, the OCC 
remove the phrase ``unless prohibited by applicable law'' from 12 CFR 
9.10(b)(2)(iv) and 150.320(d) because the phrase requires institutions 
to conduct burdensome 50-state surveys to ensure compliance. The OCC 
plans to take these comments into consideration in any future proposal 
to revise the OCC's fiduciary rules.

D. Amendments to Securities Offering Disclosure Rules

    Twelve CFR 16.8 provides an exemption from the registration and 
prospectus requirements for offers and sales of national bank- or 
Federal savings association-issued securities that satisfy the 
requirements of SEC Regulation A (17 CFR part 230) (General rules and 
regulations, Securities Act of 1933). The SEC's Form 1-A, the offering 
statement required by Regulation A, requires audited financial 
statements for certain offerings. However, a national bank or Federal 
savings association in organization does not have an operating history 
and cannot generate detailed financial statements that require an 
audit. The audited financial statements of a national bank or Federal 
savings association in organization typically do not add materially to 
the information already available to the OCC through the chartering 
process. The OCC proposed to amend Sec.  16.15(e) to clarify that a 
national bank or Federal savings association in organization is not 
required to include audited financial statements as part of its 
offering statement for the issuance of securities pursuant to Sec.  
16.8, unless the OCC determines otherwise.
    Twelve CFR 16.17 sets forth the filing requirements and inspection 
of

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documents for securities offerings. The OCC proposed to add a sentence 
to Sec.  16.17(b) to clarify that all registration statements, offering 
documents, amendments, notices, or other documents relating to a mutual 
to stock conversion pursuant to 12 CFR part 192 must be filed with the 
appropriate OCC licensing office and not the Securities and Corporate 
Practices Division of the OCC.
    The OCC received one comment in support of the amendments to the 
securities offering disclosure rules in Sec. Sec.  16.15 and 16.17. The 
OCC is finalizing those amendments as proposed.

E. Removal, Suspension, or Debarment of Independent Public Accountants

    Section 36(g)(4)(A) of the FDIA (12 U.S.C. 1831m(g)(4)(A)) provides 
that the FDIC or an appropriate Federal banking agency may remove, 
suspend, or bar an independent public accountant, upon a showing of 
good cause, from performing audit services required by section 36. The 
OCC's implementing rules for insured national banks and insured Federal 
branches of foreign banks are set forth in subpart P to 12 CFR part 19. 
The former Office of Thrift Supervision (OTS) implemented section 
36(g)(4) with respect to insured savings associations at 12 CFR 513.8, 
and these rules are substantively identical to subpart P. However, when 
republishing the former OTS rules as OCC rules pursuant to Title III of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act), the OCC inadvertently did not republish 12 CFR 513.8 nor 
amend subpart P of part 19 to apply to Federal savings associations. In 
the proposed rule, the OCC proposed amendments that would correct that 
error by amending subpart P to also apply to insured Federal savings 
associations.
    In addition, the OCC proposed several clarifying amendments to 
subpart P. First, the OCC proposed amending Sec.  19.243(b)(2), which 
provides that hearings will be conducted in the same manner as other 
hearings under the Uniform Rules of Practice and Procedure (12 CFR part 
19, subpart A), by adding a cross-reference to the specific rules and 
limitations for subpart P hearings set forth in Sec.  19.243(c)(4). 
Second, the OCC proposed a clarifying change to Sec.  19.243(c)(3), 
which currently states that an accountant or firm immediately suspended 
from performing audit services may, within 10 calendar days after 
service of the notice of immediate suspension, file a petition to stay 
the immediate suspension with the OCC and that, if no petition is 
filed, the immediate suspension will remain in effect. The OCC proposed 
to clarify that if the accountant or firm has not filed a petition 
within 10 calendar days, they have waived their right to file a 
petition. The OCC also proposed to revise Sec.  19.243(c)(3) (petition 
for stay of immediate suspension) to add a cross-reference to Sec.  
19.243(c)(2), which sets forth the rules for when the OCC may lift an 
immediate suspension. Third, the OCC proposed to amend Sec.  
19.243(c)(4), which provides that upon request of a stay petition, the 
Comptroller must designate a presiding officer who must fix a place and 
time for the hearing that is not more than 10 calendar days after 
receipt of the petition, unless extended by the OCC at the request of 
petitioner. The amendment provides that a later hearing date may occur 
only if permitted by the OCC, and, therefore, the request for an 
extension would not receive automatic approval. This change would allow 
the OCC some discretion as to how far into the future a hearing may 
take place. Fourth, the OCC proposed a technical correction to subpart 
P by adding ``insured Federal branches of foreign banks'' where 
appropriate and removing references to Federal ``agencies.'' Section 
36(g)(4) of the FDIA only applies to insured depository institutions 
and no insured Federal agencies exist. Finally, the OCC proposed to 
replace the word ``shall'' with ``must,'' ``will,'' or other 
appropriate language, which is the recommended drafting style of the 
Federal Register.
    The OCC received one comment on the proposed amendments to subpart 
P of part 19. The commenter supports the application of subpart P of 
part 19 to Federal savings associations. The commenter also supports 
the clarifying amendments to subpart P of part 19 that provide more 
detailed procedures for the removal, suspension, or debarment of an 
independent public accountant. With respect to the proposed amendment 
to Sec.  192.243(c)(4) that would give the OCC 10 days to hold a stay 
petition hearing (unless the presiding officer allows further time 
requested by the petitioner), the commenter urges the OCC to exercise 
reasonable judgment in each circumstance. Therefore, the OCC finalizes 
the amendments to subpart P of part 19 as proposed. Under both the 
current rule and the amended rule, the presiding officer is expected to 
exercise reasonable judgment in their discretion to determine whether 
to allow further time requested by the petitioner in Sec.  
192.243(c)(4).

F. Definitions of Loans to Small Businesses and Loans to Small Farms in 
Lending Limits Rules

    The OCC proposed to revise the definitions of ``small business 
loans'' and ``small farm loans or extensions of credit'' in 12 CFR 
32.2(cc) and (dd) of the lending limits rule to align the definitions 
with the language of the Call Report instructions. The revisions to 
Sec.  32.2(dd) clarify that the $500,000 limit contained within the 
``loans to small farms'' definition in the Call Report instructions 
does not apply for purposes of the supplemental lending limit program.
    The OCC received one comment on the proposed changes. The commenter 
encouraged the OCC to work collaboratively with other federal agencies 
on the definitions of a ``small business'' and a ``small farm'' so that 
there is greater consistency across all prudential financial regulators 
and regulations. The commenter believes this will assist banks as they 
lend to these segments of the economy. The commenter recommended that 
the definitions in the Call Report should also be consistent with the 
definitions adopted. The commenter filed a corresponding letter in 
response to the Federal banking agencies' request for comment \6\ on 
ways to modify the current requirements for reporting data on loans to 
small businesses and small farms in the Call Report.
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    \6\ 84 FR 55687 (October 17, 2019).
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    Because the OCC did not propose to amend the definitions of ``small 
businesses'' and ``small farms'' in the proposal and because this final 
rule is not an interagency rulemaking, the OCC is unable to make the 
changes recommended by the commenter in this final rule. However, the 
federal banking agencies received and are considering the corresponding 
comment letter submitted in response to the agencies' request for 
comment on ways to modify the current requirements for reporting data 
on loans to small businesses and small farms in the Call Report.
    Therefore, the OCC is finalizing the changes to Sec.  32.2(cc) and 
(dd) and making the technical change of replacing the terms ``small 
business loans'' and ``small farm loans or extensions of credit'' with 
the terms ``loans to small businesses'' and ``loans or extensions of 
credit to small farms,'' respectively, to conform with the Call Report 
instructions. These technical changes are made to Sec. Sec.  32.2(cc), 
32.2(dd), 32.7(a)(1), 32.7(a)(2), and 32.7(d).

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G. Savings Association Conversions From Mutual to Stock Form

    The OCC proposed amendments to 12 CFR part 192, which governs how a 
savings association may convert from mutual to stock form of ownership 
under standard and voluntary supervisory conversions. The amendments 
reduce burden, provide clarity, and increase flexibility for savings 
associations and make several technical amendments. Unless otherwise 
noted, part 192 applies to both Federal and State savings associations.
    Forms. The OCC proposed to amend Sec.  192.5(b) to clarify that a 
savings association must use the forms prescribed under part 192 and 12 
CFR part 16 (the securities offering disclosure rules for Federal 
savings associations and national banks), including the applicable form 
for a registration statement under Sec.  16.15. Use of the registration 
forms required by Sec.  16.15 is currently the standard industry 
practice, and should not increase burden on savings associations. The 
OCC also proposed to clarify the accounting guidance and requirements 
used in the preparation and filing of these forms, financial 
statements, and related financial data under part 192. The accounting 
guidance and requirements that applied to part 192 conversions and 
proxy materials were repealed in 2017.\7\ New Sec.  192.5(d) would 
provide that the institution must prepare and present the form and 
content of financial statements and related financial data in a filing 
under part 192 in accordance with U.S. Generally Accepted Accounting 
Principles (GAAP), pursuant to 12 U.S.C. 1463(b)(2)(A), and other 
applicable accounting guidance and requirements as specified by the OCC 
in the relevant mutual to stock conversion forms required under Sec.  
192.5(b). The OCC notes that it is currently revising its forms under 
part 192, including Form AC (Application for Conversion); Form PS 
(Proxy Statement); Form OC (Offering Circular); and Form OF (Order 
Form), to conform with these amendments to part 192.
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    \7\ See 82 FR 8082 (January 23, 2017).
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    The OCC proposed a technical change to this section by defining 
``OCC'' as the Office of the Comptroller of the Currency in the text of 
Sec.  192.5(b).
    The OCC received one comment on the proposed changes to Sec.  
192.5. The commenter supports the proposed changes to Sec.  192.5 that 
would specify which forms a Federal savings association must use when 
converting from mutual to stock form because the changes would increase 
clarity. The OCC is finalizing the amendments to Sec.  192.5 as 
proposed.
    Electronic filing and computation of time. The OCC proposed a new 
Sec.  192.7 to encourage the electronic filing of all part 192 
applications, notices, or other documents through http://www.banknet.gov, consistent with other licensing-related filings \8\ 
and a new Sec.  192.8 to clarify the computation of time under part 192 
when the last day of a time period falls on a Saturday, Sunday, or 
Federal holiday. Specifically, in computing the time period, the OCC 
would exclude the day of the act or event (e.g., the date an 
application is received by the OCC) from when the period begins to run. 
When the last day of a time period is a Saturday, Sunday, or Federal 
holiday, the time period would run until the end of the next day that 
is not a Saturday, Sunday, or Federal holiday. This amendment makes the 
computation of time under part 192 consistent with the computation of 
time rule that applies to corporate activities and transactions 
pursuant to 12 CFR part 5.\9\
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    \8\ See 12 CFR 5.2(d).
    \9\ See 12 CFR 5.12.
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    The OCC received one comment in support of the additions of new 
Sec. Sec.  192.7 and 192.8. The OCC is finalizing Sec. Sec.  192.7 and 
192.8 as proposed.
    Definitions. In Sec.  192.25, the OCC proposed to add definitions 
of ``community offering,'' ``offering circular,'' and ``voluntary 
supervisory conversion,'' because these terms are currently undefined 
in part 192. The proposal defined ``community offering'' as the 
offering to sell to members of the general public in the savings 
association's community the securities not subscribed for in the 
subscription offering and provides that the community offering may 
occur concurrently with the subscription offering and any syndicated 
community offering or upon conclusion of the subscription offering. The 
proposal defined ``offering circular'' as the securities offering 
materials for the conversion. The proposal defined ``voluntary 
supervisory conversion'' as a mutual to stock conversion for a savings 
association that is unable to complete a standard mutual to stock 
conversion under subpart A to part 192 and that meets the eligibility 
requirements of Sec.  192.625.
    The OCC also proposed to add several definitions to Sec.  192.25 
that are currently included in 12 CFR part 141 (Definition for 
regulations affecting Federal savings associations), and 12 CFR part 
161 (Definitions for regulations affecting all savings associations). 
Although the definitions in parts 141 and 161 apply to part 192, the 
OCC believes that it is more appropriate, for clarity and as an aid to 
the reader, to include these definitions in part 192 than in a separate 
rule. Specifically, the proposal would add the definition of: (1) 
``appropriate Federal banking agency'' from Sec.  161.7, which is 
defined in section 3 of the FDIA (12 U.S.C. 1813(q)); (2) ``demand 
accounts'' from Sec.  161.16, as meaning non-interest-bearing demand 
deposits that are subject to check or to withdrawal or transfer on 
negotiable or transferable order to the savings association and that 
are permitted to be issued by statute, regulation, or otherwise and are 
payable on demand; (3) ``Federal savings association'' from Sec.  
141.11, which means a Federal savings association or Federal savings 
bank chartered under section 5 of the Home Owners' Loan Act (HOLA) (12 
U.S.C. 1464); (4) ``savings account'' from Sec.  161.42, which means 
any withdrawable account, including a demand account, except this term 
does not mean a tax and loan account, a note account, a United States 
Treasury general account, or a United States Treasury time deposit-open 
account; and (5) ``savings association'' from Sec.  161.43, which means 
a savings association as defined in section 3 of the FDIA (12 U.S.C. 
1813(b)(1)). In addition, the OCC proposed to add the definition of 
``state'' to mean any State of the United States, the District of 
Columbia, any territory of the United States, Puerto Rico, Guam, 
American Samoa, the Trust Territory of the Pacific Islands, the Virgin 
Islands, and the Northern Mariana Islands. This definition would be the 
same as the definition in Sec.  161.50 as amended by this rule, 
discussed below.
    Finally, the OCC proposed to add a definition of ``state savings 
association,'' defined to have the same definition as in section 3 of 
the FDIA (12 U.S.C. 1813(b)(3)). This definition is not included in 
parts 141 or 161. However, the OCC believes it would be helpful to 
define this term in part 192 because the proposed rule adds the 
definitions of other related terms.
    The OCC received one comment on the amendments to Sec.  192.25. The 
commenter supports the definitions of ``community offering'' and 
``offering circular'' in Sec.  192.25 because the commenter believes 
the definitions reflect common sense and clarity. However, the 
commenter believes that the definition of ``voluntary supervisory 
conversion'' is incomplete because it does not specify what is needed 
to

[[Page 42634]]

qualify for a voluntary supervisory conversion. The commenter believes 
that it would be more helpful to have a definition of the term that 
also includes the full eligibility requirements for a voluntary 
supervisory conversion. In the interest of keeping the definition 
concise, the OCC believes the cross-reference to Sec.  192.625 in the 
definition of ``voluntary supervisory conversion'' to be sufficient, as 
the cross-reference directs the reader to the subpart of part 192 that 
specifies the eligibility requirements for this type of conversion. 
Therefore, the OCC is finalizing the amendments to Sec.  192.25 as 
proposed.
    Prior to conversion. Twelve CFR 192.100 (Preparing for a 
conversion) requires that a savings association's board, or 
subcommittee of the board, meet with the appropriate Federal banking 
agency before adopting its plan of conversion. The OCC proposed to 
increase flexibility by allowing in person or electronic board meetings 
for purposes of Sec.  192.100. The OCC also proposed to amend Sec.  
192.115 (Review of business plan by the appropriate Federal banking 
agency) to clarify that the business plan must be filed as a 
confidential exhibit to Form AC (Application for Conversion).
    The OCC received one comment in support of the proposed changes to 
Sec. Sec.  192.100 and 192.115. The OCC is finalizing the amendments to 
Sec. Sec.  192.100 and 192.115 as proposed.
    Plan of conversion. Twelve CFR 192.135 (Notifying members of plan 
of conversion) requires that a savings association promptly notify its 
members that its board of directors adopted a plan of conversion and 
that a copy of the plan is available for the members' inspection in its 
home office and its branch offices. The savings association must make 
this notice by mailing a letter to each member or by publishing a 
notice in the local newspaper in every local community where the 
savings association has an office. The savings association may also 
issue a press release. The OCC proposed to increase flexibility and 
reduce burden by allowing a savings association to email a letter with 
a notification of the plan of conversion instead of mailing a letter to 
its members who receive electronic communication. The amendment also 
allows a savings association to make the press release available on its 
website.
    The OCC received one comment in support of its proposed changes to 
Sec.  192.135. The OCC is finalizing the amendments to Sec.  192.135 as 
proposed.
    Rejection of application for conversion. Twelve CFR 192.150 
(Information required in an application for conversion) provides that 
the appropriate Federal banking agency will not accept for filing, and 
will return, any application for conversion that is executed 
improperly, materially deficient, substantially incomplete, or that 
provides for unreasonable conversion expenses. The OCC proposed to 
amend Sec.  192.150(b) to permit, rather than require, the appropriate 
Federal banking agency to return any application for conversion that is 
executed improperly, materially deficient, substantially incomplete, or 
that provides for unreasonable conversion expenses. A materially 
deficient or substantially incomplete application may not always be 
returned, especially if it is submitted electronically as a PDF 
document or if there are supervisory or enforcement reasons to retain 
the application.
    The OCC received one comment in support of its proposed changes to 
Sec.  192.150. The OCC finalizes the amendments to Sec.  192.150 as 
proposed.
    Notice of filing of application and comment process. Twelve CFR 
192.185 sets forth the process for commenters to submit public comments 
on an application for conversion. Section 192.185 currently requires a 
commenter to file the original and one copy of any comments on an 
application for conversion with the appropriate OCC licensing office. 
The OCC proposed to amend Sec.  192.185 to require the commenter to 
file only one copy of the comment instead of both an original and copy 
of any comments with the appropriate OCC licensing office.
    The OCC received one comment on the amendment to Sec.  192.185. The 
commenter supports the proposed change because it eliminates 
unnecessary paperwork. The OCC finalizes the amendment to Sec.  192.185 
as proposed.
    Proxy solicitation. Twelve CFR 192.275 requires a savings 
association to file seven copies of its revised proxy materials and 
related documents as an amendment to its application for conversion. 
The OCC proposed to revise Sec.  192.275 to reduce burden for savings 
associations by requiring the filing of only one copy of these 
materials with the OCC. The OCC also proposed to amend Sec.  192.275(c) 
to remove the requirement that four copies of the revised proxy 
solicitation materials be marked to clearly indicate the changes from 
the prior filing. Instead, the savings association would need to file 
only one copy of the revised proxy solicitation materials that clearly 
indicates the changes.
    The OCC received one comment on the proposed amendments to Sec.  
192.275. The commenter believes the amendments would eliminate 
unnecessary paperwork. The OCC is finalizing the amendments to Sec.  
192.275 as proposed.
    Offering circular requirements. Twelve CFR 192.300 currently 
requires a Federal savings association to file its offering circular 
with the Securities and Corporate Practices Division of the OCC and 
that a State savings association file its offering circular with the 
appropriate FDIC region in compliance with part 192 and Form OC, and, 
where applicable, part 197. The OCC proposed to amend Sec.  192.300 to 
replace the cross-reference to repealed part 197 with a more specific 
cross-reference to the applicable SEC registration statement form 
required under 12 CFR 16.15. Additionally, the OCC proposed to clarify 
that a Federal savings association must file its offering circular with 
the appropriate OCC licensing office, not the Securities and Corporate 
Practices Division.
    As a corresponding change, the OCC proposed to amend Sec.  16.17 
(Filing requirements and inspection of documents) to clarify that all 
registration statements, offering documents, amendments, notices, or 
other documents relating to a mutual to stock conversion pursuant to 
part 192 must be filed with the appropriate OCC licensing office.
    The OCC proposed to amend Sec. Sec.  192.305(b) and (c), 
192.310(a), and 192.310(b) to clarify that the SEC, not the 
``appropriate Federal banking agency,'' declares Federal savings 
association holding company offering circulars effective in mutual to 
stock conversions under part 192.
    The OCC received one comment on the amendments to Sec. Sec.  
192.300, 192.305, and 192.310 and no comments on the amendment to Sec.  
16.17. The commenter supports the proposed changes to Sec.  192.300 
that would specify where the offering circular must be filed and what 
forms must be included because the changes will reduce the potential 
for confusion. The same commenter also supports the clarifications in 
Sec. Sec.  192.305(b), (c), 192.310(a), and 192.310(b). The OCC 
finalizes the amendments to Sec. Sec.  192.300, 192.305, 192.310, and 
16.17 as proposed.
    Offers and sales of stock. Section 192.340(d) states that any 
person who is found to have violated the restrictions in Sec.  
192.340(b) may face prosecution or other legal action. To clarify and 
make consistent the actions that may result from engaging in any of the 
prohibited activities listed in Sec.  192.340, the OCC proposed to 
amend Sec.  192.340(d) to state that persons engaged in any of the 
activities listed in Sec.  192.340(a) and

[[Page 42635]]

Sec.  192.340(b) may be subject to enforcement actions, civil money 
penalties, or criminal prosecution.
    The OCC received one comment on the amendment to Sec.  192.340. The 
commenter disagrees with the proposed changes to Sec.  192.340(d) that 
impose sanctions for violating the conversion share restrictions found 
in Sec.  192.340(a) and (b). The commenter believes that the OCC 
already has broad powers to seek an enforcement action and that the 
proposed changes are unnecessary. The OCC is finalizing the amendment 
to Sec.  192.340 as proposed because the change clarifies the variety 
of tools available to address violations of Sec. Sec.  192.340(a) and 
(b).
    Priority of accounts. Twelve CFR 192.430 describes the requirements 
for charter amendments, charter cancellations, and new charters that 
apply to a savings association conducting a conversion under part 192. 
The OCC proposed to add a new paragraph in Sec.  192.430 to require 
that, in any conversion pursuant to this section that involves a mutual 
holding company, the charter of each resulting subsidiary savings 
association of the holding company must contain a provision, specified 
in Sec.  192.430(d), indicating that the claims of depositors of the 
savings association have the same priority as the claims of general 
creditors of the savings association not having priority (other than 
any priority arising or resulting from consensual subordination) over 
other general creditors of the association. The former OTS regulation 
for mutual holding companies, 12 CFR 575.9(b) (2011), originally 
required the inclusion of a similar priority of accounts provision in 
the charters of subsidiary savings associations of mutual holding 
companies, regardless of whether the subsidiary had a State or Federal 
charter. When promulgating 12 CFR 575.9(b), the OTS stated that the 
purpose of the priority of accounts provision was to ensure that claims 
of depositors of the insured institution were not relegated to a lower 
priority because the deposits confer membership rights in the 
association's mutual holding company.\10\ However, after the enactment 
of the Dodd-Frank Act, which transferred the holding company 
regulations of the former OTS to the Federal Reserve Board,\11\ the 
Federal Reserve Board republished 12 CFR 575.9(b) as a Federal Reserve 
Board regulation without including this charter requirement because it 
related to savings associations and not mutual holding companies.\12\ 
The OCC believes that the priority of accounts provision in the former 
OTS regulation protected member rights, and the amendment reinstates 
this charter requirement for all savings association subsidiaries of a 
mutual holding company.\13\
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    \10\ See 56 FR 1126, 1133 (January 11, 1991).
    \11\ Section 312(b)(1), Public Law 111-203. 121 Stat. 1376 (July 
21, 2010).
    \12\ See 76 FR 56508, 56523 (September 13, 2011) (``[This 
section] contains the provisions from section 575.9 concerning 
charters, as revised to delete unnecessary provisions specific to 
savings associations and to reflect the change in supervisory 
authority.'') See also, 12 CFR 239.13.
    \13\ Twelve CFR 5.21 requires all Federal mutual savings 
association charters to include this priority of accounts provision.
---------------------------------------------------------------------------

    The OCC received one comment on the addition of new paragraph (d) 
to Sec.  192.430. The commenter is uncertain that the addition 
regarding priority of accounts is necessary. While the commenter 
acknowledges that the OCC may view the addition as protective of 
depositor rights, the commenter also believes that the FDIC rules for 
conservatorship and receivership would govern any asset distribution. 
Because the FDIC has the definitive role, the commenter believes that 
it is not clear that the new language on priority of accounts is 
needed. Further, the commenter suggests that if the OCC includes the 
new priority of accounts language in Sec.  192.430(d), it also adds a 
proviso that recognizes that the rights of depositors are ``subject to 
any applicable legal and regulatory requirements affecting depositors' 
rights.'' In response, the OCC notes that, notwithstanding this 
priority of accounts provision, if a savings association is placed in 
conservatorship or receivership, its assets would be distributed in 
accordance with the FDIA, 12 U.S.C. 1811, et seq., and the depositor 
preference provisions of section 11(d)(11) of the FDIA, 12 U.S.C. 
1821(d)(11). The OCC believes the addition of the priority of accounts 
provision is crucial to protecting members' rights by ensuring that 
claims of depositors of the insured institution are not relegated to a 
lower priority because the deposits confer membership rights in the 
association's mutual holding company. For these reasons, the OCC is 
finalizing Sec.  192.430(d) as proposed.
    Liquidation account. A liquidation account represents the potential 
interest of all the savings association's eligible account holders and 
supplemental eligible account holders in the savings association's net 
worth at the time of conversion. A liquidation sub-account represents 
the potential interest of each individual eligible account holder and 
supplemental account holder in the liquidation account. Twelve CFR 
192.460 sets forth how a savings association determines the initial 
balances of liquidation sub-accounts. The OCC proposed to revise Sec.  
192.460(a)(1) to provide that a savings association must calculate the 
initial liquidation sub-account balance of each eligible and 
supplemental eligible account holder at the time of the conversion. 
Because current Sec.  192.460 does not explain when a savings 
association must perform the calculation, this amendment clarifies that 
the initial liquidation sub-accounts must be calculated at the time of 
the conversion.
    Section 192.460(a)(1) provides the calculation for a savings 
account held by an eligible account holder, which is to multiply the 
initial balance of the liquidation account by a fraction that has as 
its numerator the qualifying deposit in the savings account expressed 
in dollars on the eligibility record date and as its denominator the 
total qualifying deposits of all eligible account holders on the 
eligibility record date. Section 192.460(a)(2) provides the same 
calculation for a savings account held by a supplemental eligible 
account holder, except that the eligibility record date is replaced 
with the supplemental eligibility record date. However, the denominator 
used for the calculation of the initial sub-account balances for both 
eligible account holders and supplemental eligible account holders is 
incorrect because the denominator in the current regulation does not 
include both the deposits of eligible account holders and the deposits 
of the supplemental eligible account holders. This results in both 
eligible account holders and supplemental account holders having a 
greater claim than their appropriate portion of the liquidation 
account.
    The amendments correct this error by inserting language in Sec.  
192.460 similar to that in the previous OTS regulation, renumbering the 
Sec.  192.460(a)(1) and (a)(2) calculations to be in Sec.  
192.460(a)(2) and (a)(3), making the denominator in the fractions in 
Sec.  192.460(a)(2) and (a)(3) the total sub-account balances of 
eligible account holders and supplemental eligible account holders as 
calculated in proposed revised Sec.  192.460(a)(5). As proposed, Sec.  
192.460(a)(5) provides that the denominator for calculating the initial 
sub-account balance of each eligible and supplemental eligible account 
holder is the sum of the numerator calculations in Sec.  192.460(a)(2) 
through (a)(4). These changes make clear that the eligible account 
holders and the supplemental

[[Page 42636]]

eligible account holders would be allocated their proportionate shares 
of the liquidation account (the association's net worth, as defined in 
12 CFR 192.455).
    In addition, the 2002 OTS amendments to the liquidation account 
provision inadvertently removed language that addressed savings 
accounts that increased in value between the eligible record date and 
the supplemental eligibility record date.\14\ As a result, the current 
regulation does not address accounts that increased in value between 
the two dates. Therefore, the OCC proposed to add language in Sec.  
192.460(a)(4) providing that for a savings account held on both the 
eligibility record date and the supplemental eligibility record date, 
the amount of the qualifying deposit for calculating the sub-account is 
the higher account balance of the savings account on either the 
eligibility record date or the supplemental eligibility record date. 
The initial sub-account is calculated by multiplying the liquidation 
account balance by the following fraction: The numerator is the higher 
amount of the qualifying deposit in the savings account on either the 
eligibility record date or the supplemental eligibility record date and 
the denominator is the calculation in proposed Sec.  192.460(a)(5).
---------------------------------------------------------------------------

    \14\ See 67 FR 52009 (August 9, 2002). The pre-2002 OTS 
regulation at 12 CFR 563b.3(f)(4) stated ``The initial subaccount 
balance for a savings account held by an eligible account holder 
and/or supplemental eligible account holder shall be determined by 
multiplying the opening balance in the liquidation account by a 
fraction of which the numerator is the amount of qualifying deposits 
in such savings account on the eligibility record date and/or the 
supplemental eligibility record date and the denominator is the 
total amount of qualifying deposits of all eligible account holders 
and supplemental eligible account holders in the converting savings 
association on such dates. For savings accounts in existence at both 
dates, separate subaccounts shall be determined on the basis of the 
qualifying deposits in such saving accounts on such record dates.''
---------------------------------------------------------------------------

    The OCC invited comment on whether the proposed changes to Sec.  
192.460 help to clarify the computation of liquidation sub-account 
balances, asking specifically whether commenters have any alternative 
methods for clarifying these computations. The OCC received one comment 
in response. The commenter requested that, with respect to the 
calculation of the initial balance of liquidation sub-accounts and 
required adjustments in Sec. Sec.  192.460 and 192.470, the OCC provide 
a more detailed explanation as to how the calculation of sub-accounts 
prohibits sub-account increases. The commenter believes that the 
statements in Sec. Sec.  192.460(b) and 192.470(b) that a Federal 
savings association may not increase the balance of liquidation sub-
accounts are insufficient to prevent confusion. The commenter appears 
to suggest that the statements should instead be included in the 
calculation formulas set forth in Sec. Sec.  192.460(a) and 192.470(a).
    In response to the comment, Sec.  192.470(a)(1) is revised to 
clarify that the liquidation sub-account balance must not be increased 
and to provide that a savings association must reduce the balance of an 
eligible account holder's or supplemental eligible account holder's 
sub-account if the deposit balance in the account holder's savings 
account at the close of business on any annual closing date (ACD) \15\ 
falls below the lesser of: (i) The deposit balance in the account 
holder's savings account as of the relevant eligibility record date; or 
(ii) the deposit balance in the account holder's savings account as of 
its lowest balance as of any subsequent ACD. Also, Sec.  192.470(a)(2) 
is revised to clarify that the proportionate reduction in the 
liquidation sub-account must be made from its balance at the time of 
conversion and to provide that the reduction in the account holder's 
liquidation sub-account from its balance at the time of conversion must 
be proportionate to the reduction in the account holder's savings 
account from its balance at the time of conversion. In addition, Sec.  
192.470(e) is revised to clarify that, if there is a complete 
liquidation, the savings association must provide the account holder of 
a liquidation sub-account with a liquidation distribution in the amount 
of the account holder's remaining liquidation sub-account balance.
---------------------------------------------------------------------------

    \15\ For purposes of Sec.  192.470, the annual closing date 
(ACD) is the end of the savings association's fiscal year.
---------------------------------------------------------------------------

    For example, at the time of conversion, the account holder's 
savings account balance is $10,000 and the account holder's liquidation 
sub-account balance is $1,000. At ACD 1, if the savings account balance 
is $8,000, then the liquidation sub-account balance is proportionately 
reduced from $1,000 by 20 percent to $800. At ACD 2, if the savings 
account balance is $9,000, then the liquidation sub-account balance is 
$800. At ACD 3, if the savings account balance is $5,000, then the 
liquidation sub-account balance is proportionately reduced from $1,000 
by 50 percent to $500.
    Contributions to charitable organizations. Twelve CFR 192.550 
permits a savings association to contribute some of its conversion 
shares or proceeds to a charitable organization, provided certain 
requirements are met. One of these requirements, set forth at 12 CFR 
192.575(a)(3), is that the charitable organization must annually 
provide the appropriate Federal banking agency with a copy of the 
annual report that it submitted to the IRS. The OCC proposed to remove 
this requirement because it is often not used and, if necessary, the 
OCC may obtain it from the IRS or request it directly from the 
charitable organization.
    The OCC received one comment in support of removal of paragraph 
(a)(3) in Sec.  192.575 and finalizes the amendment as proposed.
    Prohibition on self-dealing for charitable organizations. 12 CFR 
192.575 (Other requirements for charitable organizations) provides that 
a charitable organization may not engage in self-dealing. The OCC 
proposed to amend Sec.  192.575(a) to provide that a charitable 
organization must not engage in self-dealing, to emphasize the 
prohibition on self-dealing. The OCC also proposed to move the 
requirement that the charitable organization comply with all laws 
necessary to maintain its tax-exempt status under the Internal Revenue 
Code to a new paragraph (a)(5) in Sec.  192.575.
    The OCC received no comments on the proposed amendments to Sec.  
192.575(a) and finalizes the amendments as proposed.
    Voluntary supervisory conversions. Section 192.600 describes the 
purposes of subpart B to part 192, which governs voluntary supervisory 
mutual to stock conversions. A voluntary supervisory conversion is a 
transaction to recapitalize an eligible mutual savings association 
where the association's members have no rights of approval or 
participation and no rights to the continuance of any legal or 
beneficial ownership interest in the converted association pursuant to 
a plan of voluntary supervisory conversion approved by a majority of 
the board of directors of the converting savings association. The OCC 
proposed new language in Sec.  192.600 to clarify that a voluntary 
supervisory mutual to stock conversion would be appropriate when the 
appropriate Federal banking agency and, in the case of a State-
chartered savings association, the appropriate State banking regulator, 
determines that the savings association has demonstrated that it is 
unable to complete a standard mutual to stock conversion under subpart 
A to part 192.
    Section 192.650 sets forth the information required to be included 
in a plan of voluntary supervisory conversion. Among other things, 
current Sec.  192.650 requires the savings association's name and 
address; the

[[Page 42637]]

name, address, date and place of birth, and social security number of 
each proposed purchaser of conversion shares. The OCC proposed to 
remove the personal identifying information from the plan of voluntary 
supervisory conversion (i.e., the name, address, date and place of 
birth, and social security number of each proposed purchaser of 
conversion shares) as the OCC does not believe the inclusion of such 
information is necessary or appropriate. The plan is a publicly 
available document and the OCC believes that requiring this information 
raises privacy concerns. The OCC also proposed to amend Sec.  192.650 
to remove from the plan of voluntary supervisory conversion the title, 
per-unit par value, number, and per-unit and aggregate offering price 
of shares that the savings association will issue; and the number and 
percentage of shares that each investor will purchase. The OCC does not 
find this information to be necessary in the plan of voluntary 
supervisory conversion. In addition, the OCC proposed to move the 
information required in the plan by Sec.  192.650(e) (the aggregate 
number and percentage of shares that each director, officer, and any 
affiliates or associates of the director or officer will purchase) to 
the application for voluntary supervisory conversion in Sec.  
192.660(d)(5). The OCC believes this information more appropriately 
belongs in the application, rather than the plan, because the OCC 
reviews these proposed purchases during the application review process 
and because the proposed purchases may change during the review of the 
application. As a result, under revised Sec.  192.650, a plan for 
voluntary supervisory conversion would be required to contain a 
complete description of the proposed voluntary supervisory conversion 
that also describes plans for any liquidation account and certified 
copies of all resolutions relating to the conversion adopted by the 
savings association's board of directors.
    Twelve CFR 192.660 specifies the information a savings association 
must include in its application for voluntary supervisory conversion. 
To assist in its review of these applications, the OCC proposed to 
require the application to contain some additional information. As 
described in the preceding paragraph, the OCC proposed to relocate the 
information contained in current Sec.  192.650(e) (the aggregate number 
and percentage of shares that each director, officer, and any 
affiliates or associates of the director or officer will purchase) to 
Sec.  192.660(d)(5). The OCC proposed to add a new Sec.  192.660(e)(3) 
to require that the voluntary supervisory conversion application 
include any securities offering circular and other securities 
disclosure materials that the savings association has prepared to use 
in connection with the proposed voluntary supervisory conversion. In 
addition, the OCC proposed to require that the application include a 
statement indicating the role in the successor savings association each 
director, officer, and affiliate of the savings association or 
associate of the director or officer will have after the conversion. 
The OCC finds that information on the role that each director, officer, 
affiliate, and associate will have after the conversion to be necessary 
for consideration of the decision factors in Sec.  192.670(c) and 
(d).\16\ Finally, the OCC proposed to require as part of this 
application any other information requested by the OCC, as authorized 
by law.
---------------------------------------------------------------------------

    \16\ Under Sec.  192.670(c) and (d), the appropriate Federal 
banking agency will generally approve a voluntary supervisory 
conversion application unless it determines the savings association 
or its acquiror, or the controlling parties or directors and 
officers of the savings association or its acquiror, have engaged in 
unsafe or unsound practices in connection with the voluntary 
supervisory conversion, or the savings association fails to justify 
an employment contract incidental to the conversion, or the 
employment contract will be an unsafe or unsound practice or 
represent a sale of control.
---------------------------------------------------------------------------

    The OCC received one comment letter on subpart B of part 192 
concerning voluntary supervisory conversions. As a general matter, the 
commenter believes that the policy objectives of this subpart are 
confusing and that it could benefit from further review and 
consultation with industry stakeholders to clarify the goals of the 
subpart. The commenter urged the OCC to clearly state the policy 
objectives and goals of voluntary supervisory conversions and describe 
in general terms its expectations for the conversion.
    The commenter also had several specific recommendations for subpart 
B of part 192 that are unrelated to the OCC's proposed amendments. 
First, the commenter states that it is not clear when a financial 
institution qualifies as ``significantly undercapitalized'' under Sec.  
192.625(a)(1). The commenter asserts that, in the past, the OTS tied 
the component to capital standards and Prompt Corrective Action (PCA). 
The commenter believes that the OCC should clarify whether PCA levels 
are a triggering event for a voluntary supervisory conversion and, if 
so, expressly cross-reference those provisions and state whether there 
will be PCA waivers or growth restrictions.
    In response to the comment regarding PCA, the OCC may take into 
account the PCA levels and other capital standards when determining a 
savings association's eligibility for a voluntary supervisory 
conversion. However, the PCA levels are not the sole determinant of: A 
``significantly undercapitalized'' or ``undercapitalized'' 
determination on eligibility under Sec.  192.625(a)(1); a ``severe 
financial circumstances'' determination on eligibility under Sec.  
192.625(a)(2); and an ``adequately capitalized'' determination on 
viability after a voluntary supervisory conversion under Sec.  
192.625(b)(1). The PCA category is only one factor in making these 
decisions. Among other factors, these decisions may include the OCC 
assessing capital adequacy based on the savings association's risk 
profile and risk management.\17\ Therefore, the OCC declines to cross-
reference the PCA provisions in Sec.  192.625.
---------------------------------------------------------------------------

    \17\ The PCA capital categories generally are not to be 
considered indications of capital adequacy under 12 CFR 3, the OCC's 
capital rules. For example, a bank that is well capitalized for the 
purposes of PCA may be found by the OCC to have inadequate capital 
for the purposes of 12 CFR 3. The OCC assesses capital adequacy 
based on the bank's risk profile relative to its risk management. 
See OCC Bulletin 2018-33, Prompt Corrective Action: Guidelines and 
Rescissions (September 28, 2018), available at https://www.occ.gov/news-issuances/bulletins/2018/bulletin-2018-33.html.
---------------------------------------------------------------------------

    Second, the commenter asserts that the market supporting voluntary 
supervisory conversions is limited and that subordinated debt may be an 
alternative means to help an undercapitalized Federal savings 
association become adequately capitalized and viable. Because the OCC 
did not propose any subordinated debt-related amendments in the 
proposed rule, the OCC declines to address this concern in the final 
rule.
    Finally, the commenter believes that the provision in Sec.  
192.670(d) that generally limits employment contracts to one year for 
existing management of Federal savings associations that are undergoing 
voluntary supervisory conversions is in potential conflict with the 
provision in Sec.  192.660(d)(5) which recognizes that directors, 
officers, and their affiliates and associates may participate in a 
voluntary supervisory conversion. The commenter is concerned that an 
officer with a one-year contract is unlikely to make a significant 
investment in a Federal savings association. The OCC disagrees that 
Sec.  192.670(d) and 192.660(d)(5) are in conflict. The OCC believes 
that it is not likely that the deciding factor for significant 
investment hinges on whether the officer's employment contract is 
limited to one year and that

[[Page 42638]]

there is no evidence of correlation between contract length and 
investment.
    Federal Home Loan Bank (FHLB) membership. The OCC proposed to 
remove the references to FHLB membership in Sec. Sec.  192.135(b)(12) 
and 192.660(g)(4) because Federal savings associations are no longer 
required to be members of the FHLB System.\18\ The existing provisions 
of part 192 that reference FHLB membership were drafted when FHLB 
System membership was required for Federal savings associations. 
Whether the Federal savings association retains FHLB membership has no 
impact on the OCC's consideration of an application for a voluntary 
supervisory conversion in Sec.  192.660(g)(4), nor would it be of 
interest to members as part of the notice in Sec.  192.135(b)(12).
---------------------------------------------------------------------------

    \18\ In 1999, HOLA was amended to no longer require Federal 
savings associations to become FHLB members. See 12 U.S.C. 1464(f); 
Public Law 106-102 section 603 (1999).
---------------------------------------------------------------------------

    The OCC received one comment in support of the removal of the 
references to FHLB membership in Sec. Sec.  192.135 and 192.660 and 
finalizes these amendments as proposed.
    Technical amendments. The OCC proposed several global technical 
changes to part 192. First, the OCC proposed to change the text of part 
192 from the OTS question and answer format to the standard format of 
the national bank rules in 12 CFR parts 1 through 50. Second, the OCC 
proposed to add paragraph headings in compliance with Federal Register 
guidelines. Third, the OCC proposed to clarify that calendar days are 
used for computations of time under part 192. Finally, the OCC proposed 
to replace cross-references to the repealed 12 CFR part 197 (2017) 
(Securities offering disclosure rules) with cross-references to the OCC 
rule that now applies to Federal savings associations, 12 CFR part 16.
    Furthermore, the OCC proposed to make a number of technical changes 
to specific sections of part 192. First, the OCC proposed to amend 
Sec.  192.200 to remove the cross-reference to the FDIC's repealed 
capital rules in subpart Z to 12 CFR part 390. In addition, the OCC 
proposed to remove from Sec.  192.520(b) the cross-reference to 12 CFR 
part 167 and replace it with a cross-reference to integrated 12 CFR 
part 3. Finally, the OCC proposed to amend Sec.  192.660 by replacing 
an outdated cross-reference to the Thrift Financial Report with the 
Call Report.
    The OCC received one comment in support of the technical amendments 
to part 192 and finalizes the amendments as proposed.

H. Miscellaneous Technical Amendments

    The OCC proposed to amend subpart J to 12 CFR part 3 to correct an 
out-of-date cross-reference. Currently, at 12 CFR 3.601(b), OCC 
regulations provide, in part, that a capital directive (i.e., an order 
issued by the OCC to a national bank or Federal savings association to 
take certain actions to achieve and/or maintain a specified capital 
ratio) is enforceable in the same manner and to the same extent as a 
final cease and desist order as defined under 12 U.S.C. 1818(k). 
Because section 1818(k) has been repealed, the OCC proposed to amend 
Sec.  3.601(b) to provide instead that a capital directive is 
enforceable under section 1818(i) in the same manner and to the same 
extent as an effective and outstanding cease and desist order issued 
pursuant to section 1818(b) that has become final. This revision is 
consistent with the OCC's existing authority as set forth under the 
International Lending Supervision Act at 12 U.S.C. 3907(b) and is not 
intended to have any substantive impact on the procedures for the 
enforcement of a capital directive.
    The OCC proposed to amend 12 CFR 4.14(a)(9) to remove cross-
references to 12 CFR parts 194 (2017) and 197, which have been 
repealed. The requirements in former parts 194 and 197 have been added 
to 12 CFR parts 11 and 16, respectively, and the cross-references to 
those parts have been added to Sec.  4.14(a)(9) accordingly.
    The OCC proposed to amend 12 CFR 4.34(c)(2), 4.37(a)(2)(ii), 
108.6(d), 108.7(c) and (d), and 112.4 to change ``the OCC's Enforcement 
and Compliance Division'' to ``the OCC's Law Department.'' Similarly, 
the proposal would amend 12 CFR 11.3(a), 16.17(a) and (f), and 16.30(a) 
by removing the phrase ``the OCC's Securities and Corporate Practices 
Division'' and replacing it with ``the OCC's Law Department.''
    The OCC proposed to amend 12 CFR 8.2 to change ``full service'' to 
``full-service.''
    The OCC proposed to amend 12 CFR 23.6 to change an incorrect 
singular subject and verb to the correct plural subject and verb.
    The OCC proposed to amend 12 CFR 26.6(b)(4) to correct a cross-
reference. The cross-reference to Sec.  5.51(c)(6) is incorrect; the 
correct cross-reference is Sec.  5.51(c)(7).
    The OCC proposed to remove several definitions in the OCC's rules 
for Federal and State savings associations that are no longer 
necessary. These definitions are currently included in 12 CFR part 141 
(Definition for regulations affecting Federal savings associations) and 
12 CFR part 161 (Definitions for regulations affecting all savings 
associations). These definitions apply only to the OCC's rules in 12 
CFR parts 100 through 195 that the former OTS originally issued and the 
OCC republished as OCC rules pursuant to the Dodd-Frank Act. Because 
the OCC has integrated and amended a number of these rules, many of the 
terms defined in parts 141 and 161 are no longer used in parts 100 
through 195 and, therefore, these definitions are no longer necessary. 
Specifically, the OCC proposed to remove the definitions of ``Act,'' 
``debit card,'' ``improved nonresidential real estate,'' ``improved 
residential real estate,'' ``interim Federal savings association,'' 
``interim state savings association,'' ``unimproved real estate,'' 
``withdrawal value of a savings account,'' ``accountholder,'' ``audit 
period,'' ``land loan,'' ``low-rent housing,'' ``Money Market Deposit 
Accounts,'' ``Negotiable Order of Withdrawal (NOW) accounts,'' 
``nonresidential construction loan,'' ``nonwithdrawable account,'' 
``parent company,'' ``principal office,'' ``service corporation,'' and 
``subordinated debt security.''
    The OCC also proposed to amend the definition of ``state'' in 12 
CFR 161.50 so that it is identical to the definition of this term in 
section 3 of the FDIA (12 U.S.C. 1813(a)(3)). Specifically, the 
definition includes any territory of the United States, American Samoa, 
the Trust Territory of the Pacific Islands, and the Northern Mariana 
Islands, in addition to a State, the District of Columbia, Guam, Puerto 
Rico, and the Virgin Islands.
    The OCC proposed to amend 12 CFR 160.60(b)(3) to remove a cross-
reference to the repealed 12 CFR 163.43 and replace it with 12 CFR 
31.2. The rule also amends parts 160 and 163 to define ``OCC'' as the 
Office of the Comptroller of the Currency in the text of Sec. Sec.  
160.1 and 163.47 and to define ``FDIC'' as the Federal Deposit 
Insurance Corporation in Sec.  163.80.
    Finally, the OCC proposed to update the authority citation for 12 
CFR 195.11(a) to include a citation to section 312 of the Dodd-Frank 
Act (12 U.S.C. 5412(b)(2)(B)).
    The OCC received one comment in support of the miscellaneous, 
technical amendments and finalizes them as proposed.

[[Page 42639]]

III. Regulatory Analysis

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), 
requires an agency, in connection with a final rule, to prepare a final 
Regulatory Flexibility Analysis describing the impact of the rule on 
small entities (defined by the Small Business Administration (SBA) for 
purposes of the RFA to include commercial banks and savings 
institutions with total assets of $600 million or less and trust 
companies with total revenue of $41.5 million or less) or to certify 
that the final rule would not have a significant economic impact on a 
substantial number of small entities. The OCC currently supervises 
approximately 782 small entities, of which 258 are Federal savings 
associations.\19\ The final rule places one new mandate on Federal 
savings associations to submit additional information to the OCC as 
part of their voluntary supervisory conversion applications to convert 
from mutual to stock form pursuant to 12 CFR 192.660. Because the 
additional reporting requirement for Federal savings associations that 
are converting from mutual to stock form through a voluntary 
supervisory conversion would likely require minimal additional effort 
and cost relative to the overall cost of the conversion, the costs 
associated with this additional information would likely be de minimis. 
Therefore, the OCC certifies that the final rule would not have a 
significant economic impact on a substantial number of OCC-supervised 
small entities.
---------------------------------------------------------------------------

    \19\ The OCC bases its estimate of the number of small entities 
on the SBA's size thresholds for commercial banks and savings 
institutions, and trust companies, which are $600 million and $41.5 
million, respectively. Consistent with the General Principles of 
Affiliation 13 CFR 121.103(a), the OCC counts the assets of 
affiliated financial institutions when determining if we should 
classify an OCC-supervised institution a small entity. The OCC uses 
December 31, 2018, to determine size because a ``financial 
institution's assets are determined by averaging the assets reported 
on its four quarterly financial statements for the preceding year.'' 
See footnote 8 of the U.S. Small Business Administration's Table of 
Size Standards.
---------------------------------------------------------------------------

Unfunded Mandates Reform Act of 1995

    Consistent with the Unfunded Mandates Reform Act, the OCC's review 
considers whether the mandates imposed by the final rule may result in 
an expenditure of $100 million or more (currently $154 million adjusted 
for inflation) by state, local, and tribal governments, or by the 
private sector, in any one year. The final rule places one new mandate 
on Federal savings associations to submit additional information to the 
OCC as part of their voluntary supervisory conversion applications to 
convert from mutual to stock form pursuant to 12 CFR 192.660. This 
additional requirement for Federal savings associations to submit 
additional information to the OCC would likely require minimal effort 
and cost relative to the overall cost of the conversion. Therefore, we 
conclude that the final rule would not result in the expenditure of 
$100 million or more annually ($154 million adjusted for inflation) by 
state, local, and tribal governments, or by the private sector.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995,\20\ the OCC may not 
conduct or sponsor, and a person is not required to respond to, an 
information collection unless the information collection displays a 
valid OMB control number. The OCC submitted the information collection 
requirements contained in the final rule at the proposed rule stage. 
OMB filed a comment on the submission instructing the OCC to resubmit 
the collection at the final rule stage. Therefore, the OCC has 
submitted the information collection requirements imposed by the final 
rule to OMB for review.
---------------------------------------------------------------------------

    \20\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The final rule adds a new Sec.  192.660(e)(3) to require that the 
voluntary supervisory conversion application include a statement 
indicating the role in the successor savings association each director, 
officer, and affiliate of the savings association or associate of the 
director or officer will have after the conversion. This burden for 
this requirement will be added to the existing information collection 
for OCC's Licensing Manual.
    Title: Voluntary Supervisory Conversion Application: Successor 
Savings Association Roles.
    OMB Control No.: 1557-NEW.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Estimated Number of Respondents: 1.
    Estimated Burden per Respondent: 2 hours.
    Estimated Total Annual Burden: 2 hours.
    In the proposed rule, the OCC invited comments on:
    (a) Whether the collections of information are necessary for the 
proper performance of the functions of the OCC, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimates of the burden of the 
collections of information;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the collections on respondents, 
including through the use of automated collection techniques or other 
forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The OCC received no comments on the information collection 
requirements.

Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\21\ in determining the effective 
date and administrative compliance requirements for new regulations 
that impose additional reporting, disclosure, or other requirements on 
IDIs, each Federal banking agency must consider, consistent with 
principles of safety and soundness and the public interest, any 
administrative burdens that such regulations would place on depository 
institutions, including small depository institutions, and customers of 
depository institutions, as well as the benefits of such regulations. 
In addition, section 302(b) of RCDRIA requires new regulations and 
amendments to regulations that impose additional reporting, 
disclosures, or other new requirements on IDIs generally to take effect 
on the first day of a calendar quarter that begins on or after the date 
on which the regulations are published in final form.\22\
---------------------------------------------------------------------------

    \21\ 12 U.S.C. 4802(a).
    \22\ Id. at 4802(b).
---------------------------------------------------------------------------

    In accordance with these provisions of RCDRIA, the OCC considered 
any administrative burdens, as well as benefits, that the final rule 
would place on IDIs and their customers in determining the effective 
date and administrative compliance requirements of the final rule. The 
final rule contains one new mandate for IDIs in the form of additional 
reporting requirements for voluntary supervisory conversion 
applications under 12 CFR 192.660(e)(3). Because the additional 
reporting requirements for Federal savings associations that are 
converting from mutual to stock form through a voluntary supervisory 
conversion would likely require minimal additional effort and cost 
relative to the overall cost of the conversion, we expect that the 
additional burden of collecting this information for the application 
will be de minimis. In conjunction with the

[[Page 42640]]

requirements of RCDRIA, the final rule is effective on August 13, 2020.

Congressional Review Act

    For purposes of Congressional Review Act (CRA), the Office of 
Management and Budget (OMB) makes a determination as to whether a final 
rule constitutes a ``major'' rule.\23\ If a rule is deemed a ``major 
rule'' by the OMB, the CRA generally provides that the rule may not 
take effect until at least 60 days following its publication.\24\
---------------------------------------------------------------------------

    \23\ 5 U.S.C. 801 et seq.
    \24\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------

    The CRA defines a ``major rule'' as any rule that the Administrator 
of the Office of Information and Regulatory Affairs of the OMB finds 
has resulted in or is likely to result in (1) an annual effect on the 
economy of $100,000,000 or more; (2) a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies or geographic regions; or (3) significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export 
markets.\25\ As required by the CRA, the OCC will submit the final rule 
and other appropriate reports to Congress and the Government 
Accountability Office for review.
---------------------------------------------------------------------------

    \25\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------

List of Subjects

12 CFR Part 3

    Administrative practice and procedure, Banks, banking, Federal 
Reserve System, Investments, National banks.

12 CFR Part 4

    Administrative practice and procedure, Freedom of Information, 
Individuals with disabilities, Minority businesses, Organization and 
functions (Government agencies), Reporting and recordkeeping 
requirements, Women.

12 CFR Part 11

    Business information, National banks, Reporting and recordkeeping 
requirements, Securities.

12 CFR Part 16

    National banks, Reporting and recordkeeping requirements, 
Securities.

12 CFR Part 19

    Crime, Equal access to justice, Investigations, National banks, 
Penalties, Securities.

12 CFR Part 23

    Banks, banking, National banks, Reporting and recordkeeping 
requirements.

12 CFR Part 26

    Antitrust, Holding companies, National banks.

12 CFR Part 32

    National banks, Reporting and recordkeeping requirements.

12 CFR Part 108

    Administrative practice and procedure, Crime, Savings associations.

12 CFR Part 112

    Administrative practice and procedure, Investigations.

12 CFR Part 141

    Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 160

    Consumer protection, Investments, Manufactured homes, Mortgages, 
Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 161

    Administrative practice and procedure, Savings associations.

12 CFR Part 163

    Accounting, Administrative practice and procedure, Advertising, 
Crime, Currency, Investments, Mortgages, Reporting and recordkeeping 
requirements, Savings associations.

12 CFR Part 192

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 195

    Community development, Credit, Investments, Reporting and 
recordkeeping requirements, Savings associations.

    For the reasons set out in the preamble, the OCC amends 12 CFR 
chapter I as follows:

PART 3--CAPITAL ADEQUACY STANDARDS

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818, 
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, and 5412(b)(2)(B).


Sec.  3.2  [Amended]

0
2. Section 3.2 is amended in in paragraph (1) of the definition of 
``Qualifying master netting agreement'' by adding ``and'' after 
``counterparty;''.

0
3. Section 3.601 is amended by revising paragraph (b) to read as 
follows:


Sec.  3.601  Purpose and scope.

* * * * *
    (b) A directive issued under this rule, including a plan submitted 
under a directive, is enforceable under the provisions of 12 U.S.C. 
1818(i) in the same manner and to the same extent as an effective and 
outstanding cease and desist order issued pursuant to 12 U.S.C. 1818(b) 
that has become final. Violation of a directive may result in 
assessment of civil money penalties in accordance with 12 U.S.C. 
3909(d).

PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF 
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT 
RESTRICTIONS FOR SENIOR EXAMINERS

0
4. The authority citation for part 4 continues to read as follows:

    Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482, 
484(a), 1442, 1462a, 1463, 1464 1817(a), 1818, 1820, 1821, 1831m, 
1831p-1, 1831o, 1833e, 1867, 1951 et seq., 2601 et seq., 2801 et 
seq., 2901 et seq., 3101 et seq., 3401 et seq., 5321, 5412, 5414; 15 
U.S.C. 77uu(b), 78q(c)(3); 18 U.S.C. 641, 1905, 1906; 29 U.S.C. 
1204; 31 U.S.C. 5318(g)(2), 9701; 42 U.S.C. 3601; 44 U.S.C. 3506, 
3510; E.O. 12600 (3 CFR, 1987 Comp., p. 235).


Sec.  4.14  [Amended]

0
5. Section 4.14 is amended in paragraph (a)(9) by removing the phrase 
``parts 11, 16, 194 or 197 of this chapter'' and adding in its place 
``part 11 or 16 of this chapter''.


Sec.  4.34  [Amended]

0
6. Section 4.34 is amended in paragraph (c)(2) by removing the phrase 
``and Compliance''.


Sec.  4.37  [Amended]

0
7. Section 4.37 is amended in paragraph (a)(2)(ii) by removing the 
phrase ``and Compliance''.

PART 11--SECURITIES EXCHANGE ACT DISCLOSURE RULES

0
8. The authority citation for part 11 continues to read as follows:

    Authority: 12 U.S.C. 93a, 1462a, 1463, 1464 and 5412(b)(2)(B); 
15 U.S.C. 78j-1(m), 78m, 78n, 78p, 78w, 78l, 7241, 7242, 7243, 7244, 
7261, 7262, 7264, and 7265.


Sec.  11.3  [Amended]

0
9. Section 11.3 is amended:

[[Page 42641]]

0
a. In paragraph (a)(1)(i) and the second sentence of paragraph 
(a)(1)(ii) by removing the phrase ``the Securities and Corporate 
Practices Division'' and by adding the phrase ``the OCC's Law 
Department'' in its place; and
0
b. In the first sentence of paragraph (a)(1)(ii) by removing the phrase 
``the OCC's Securities and Corporate Practices Division'' and by adding 
the phrase ``the OCC's Law Department'' in its place.

PART 16--SECURITIES OFFERING DISCLOSURE RULES

0
10. The authority citation for part 16 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 93a, 1462a, 1463, 1464, and 
5412(b)(2)(B).


Sec.  16.15  [Amended]

0
11. Section 16.15 is amended in paragraph (e) by adding the phrase ``or 
as part of its offering statement for the offer and sale of its 
securities pursuant to 12 CFR 16.8,'' after ``registration statement 
for the offer and sale of its securities,''.

0
12. Section 16.17 is amended:
0
a. In paragraph (a), by removing the phrase ``the OCC's Securities and 
Corporate Practices Division'' and by adding the phrase ``the OCC's Law 
Department'' in its place;
0
b. In paragraph (b), by adding a sentence at the end; and
0
c. In the first and second sentences of paragraph (f), by removing the 
phrase ``the OCC's Securities and Corporate Practices Division'' and by 
adding the phrase ``the OCC's Law Department'' in its place.
    The addition reads as follows:


Sec.  16.17  Filing requirements and inspection of documents.

* * * * *
    (b) * * * All registration statements, offering documents, 
amendments, notices, or other documents relating to a mutual to stock 
conversion pursuant to 12 CFR part 192 must be filed with the 
appropriate OCC licensing office at http://www.banknet.gov/.
* * * * *


Sec.  16.30  [Amended]

0
13. Section 16.30 is amended in paragraph (a) by removing the phrase 
``the OCC's Securities and Corporate Practices Division'' and by adding 
the phrase ``the OCC's Law Department'' in its place.

PART 19--RULES OF PRACTICE AND PROCEDURE

0
14. The authority citation for part 19 continues to read as follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 93a, 164, 
481, 504, 1817, 1818, 1820, 1831m, 1831o, 1832, 1884, 1972, 3102, 
3108(a), 3110, 3909, and 4717; 15 U.S.C. 78(h) and (i), 78o-4(c), 
78o-5, 78q-1, 78s, 78u, 78u-2, 78u-3, 78w, and 1639e; 28 U.S.C. 2461 
note; 31 U.S.C. 330 and 5321; and 42 U.S.C. 4012a.


Sec.  19.241   [Amended]

0
15. Section 19.241 is amended by:
0
a. Removing the phrase ``Federal Deposit Insurance Act (FDI Act)'' and 
adding in its place ``FDIA'';
0
b. Removing the phrase ``section 36 of the FDI Act'' and adding in its 
place ``section 36 of the FDIA''; and
0
c. Removing the phrase ``insured national banks and Federal branches 
and agencies of foreign banks'' and adding in its place the phrase 
``insured national banks, insured Federal savings associations, and 
insured Federal branches of foreign banks''.


Sec.  19.242   [Amended]

0
16. Section 19.242 is amended:
0
a. By removing the word ``shall'' in the introductory text; and
0
b. In paragraph (b), by adding ``(12 U.S.C. 1831m)'' after the phrase 
``section 36 of the FDIA''.

0
17. Section 19.243 is amended:
0
a. In paragraph (a)(1) introductory text, by adding ``(12 U.S.C. 
1831m)'' after ``section 36 of the FDIA'';
0
b. In paragraph (a)(1) introductory text, by adding the phrase ``, 
insured Federal savings associations, or insured Federal branches of 
foreign banks'' after the phrase ``national banks'';
0
c. In paragraphs (a)(1)(vi) and (vii), by removing the word ``state'' 
and adding the word ``State'' in its place;
0
d. In paragraph (a)(3), by removing the phrase ``particular national 
bank or class of national banks'' and adding in its place the phrase 
``particular insured national bank, insured Federal savings 
association, or insured Federal branch of a foreign bank or class of 
insured national banks, insured Federal savings associations, or 
insured Federal branches of foreign banks'';
0
e. In paragraph (b)(2) by:
0
i. Removing the word ``shall'' and adding in its place the word 
``will''; and
0
ii. Adding the phrase ``, subject to the limitations in Sec.  
19.243(c)(4)'' at the end of the second sentence;
0
f. In paragraph (c)(1) introductory text, by adding the phrase ``, 
insured Federal savings associations, or insured Federal branches of 
foreign banks'' after the phrase ``national banks'';
0
g. In paragraph (c)(3), by revising the last sentence;
0
h. In paragraph (c)(4) by:
0
i. Removing the phrase ``who shall fix a place'' in the first sentence 
and adding in its place the phrase ``who will fix a place'';
0
ii. Removing the phrase ``unless extended'' in the first sentence and 
adding in its place the phrase ``unless further time is allowed by the 
presiding officer'';
0
iii. Removing the phrase ``there shall be no discovery'' in the last 
sentence and adding in its place the phrase ``there will be no 
discovery''; and
0
iv. Removing the phrase ``of this part shall apply'' and adding in its 
place ``of this part apply'';
0
i. In paragraph (c)(5), by removing the word ``shall'' in the first 
sentence and adding in its place the word ``will''; and
0
j. In paragraph (c)(6), by removing the word ``shall'' wherever it 
appears and adding in its place the word ``will''.
    The revision reads as follows:


Sec.  19.243  Removal, suspension, or debarment.

* * * * *
    (c) * * *
    (3) * * * If no petition is filed within 10 calendar days, the 
right to a petition is waived and the immediate suspension remains in 
effect pursuant to paragraph (c)(2).
* * * * *

0
18. Section 19.244 is amended:
0
a. By revising the section heading;
0
b. In paragraph (a) introductory text, by adding the phrase ``, insured 
Federal savings associations, or insured Federal branches of foreign 
banks'' after the phrase ``national banks'';
0
c. In paragraph (a)(1) by:
0
i. Adding the word ``former'' before the phrase ``Office of Thrift 
Supervision''; and
0
ii. Adding ``(12 U.S.C. 1831m)'' after the phrase ``section 36 of the 
FDIA'';
0
d. In paragraph (b) by:
0
i. Adding the word ``insured'' before the phrase ``national banks'';
0
ii. Adding the phrase ``, insured Federal savings associations, or 
insured Federal branches of foreign banks'' after the phrase ``national 
banks''; and
0
iii. Removing the word ``shall'' and adding in its place the word 
``must''.
    The revision reads as follows:


Sec.  19.244   Automatic removal, suspension, or debarment.

* * * * *


Sec.  19.245   [Amended]

0
19. Section 19.245 is amended:
0
a. By adding a comma after the word ``suspension'' in the section 
heading;
0
b. In paragraph (a), by removing the word ``shall'' and adding in its 
place the word ``will'';
0
c. In paragraph (b) introductory text by:

[[Page 42642]]

0
i. Adding the word ``insured'' before the phrase ``national bank''; and
0
ii. Adding the phrase ``, insured Federal savings association, or 
insured Federal branch of a foreign bank'' after the phrase ``national 
bank'';
0
d. In paragraph (b)(1), by removing ``Sec.  19.243(a)(1)(vi) through 
(a)(1)(vii) or Sec.  19.244(a)(2) through (a)(3)'' and adding in its 
place ``Sec.  19.243(a)(1)(vi) through (vii) or Sec.  19.244(a)(2) and 
(3)'';
0
e. In paragraph (b)(2), by removing the phrase ``Sarbanes-Oxley Act)'' 
and adding in its place the phrase ``Sarbanes-Oxley Act''; and
0
f. In paragraph (c), by removing the word ``shall'' and adding in its 
place the word ``must''.


Sec.  19.246   [Amended]

0
20. Section 19.246 is amended:
0
a. In paragraph (a), by removing the word ``shall'' and adding in its 
place the word ``must''; and
0
b. In paragraph (b):
0
i. By removing the phrase ``shall bear'' wherever it appears and adding 
in its place the word ``bears''; and
0
ii. In the penultimate and last sentences, by removing the word 
``shall'' and adding in its place the word ``will''.

PART 23--LEASING

0
21. The authority citation for part 23 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 24(Seventh), 24(Tenth), and 93a.


Sec.  23.6  [Amended]

0
22. Section 23.6 is amended by:
0
a. Removing the word ``lease'' before the phrase ``entered into 
pursuant to this part'' and adding in its place the word ``leases''; 
and
0
b. Removing the word ``is'' before the phrase ``subject to the lending 
limits prescribed'' and adding in its place the word ``are''.

PART 26--MANAGEMENT INTERLOCKS

0
23. The authority citation for part 26 continues to read as follows:

    Authority: 12 U.S.C. 1, 93a, 1462a, 1463, 1464, 3201-3208, 
5412(b)(2)(B).


Sec.  26.6  [Amended]

0
24. Section 26.6 is amended in paragraph (b)(4) by removing 
``5.51(c)(6)'' and adding in its place ``5.51(c)(7)''.

PART 32--LENDING LIMITS

0
25. The authority citation for part 32 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 12 U.S.C. 84, 93a, 1462a, 1463, 
1464(u), 5412(b)(2)(B), and 15 U.S.C. 1639h.


0
26. Section 32.2 is amended by revising paragraphs (cc) and (dd) to 
read as follows:


Sec.  32.2  Definitions.

* * * * *
    (cc) Loans to small businesses means loans or extensions of credit 
``secured by nonfarm nonresidential properties'' or ``commercial and 
industrial loans'' as defined in the instructions for preparation of 
the Consolidated Report of Condition and Income.
    (dd) Loans or extensions of credit to small farms means ``loans 
secured by farmland'' or ``loans to finance agricultural production and 
other loans to farmers'' as defined in the instructions for preparation 
of the Consolidated Report of Condition and Income.
* * * * *

0
27. Section 32.7 is amended by revising the section heading and 
paragraphs (a) and (d) to read as follows:


Sec.  32.7  Residential real estate loans, loans to small businesses, 
and loans or extensions of credit to small farms (``Supplemental 
Lending Limits Program'').

    (a) Residential real estate, loans to small businesses, and loans 
or extensions of credit to small farms. (1) In addition to the amount 
that a national bank or savings association may lend to one borrower 
under Sec.  32.3, an eligible national bank or eligible savings 
association may make residential real estate loans or extensions of 
credit to one borrower in the lesser of the following two amounts: 10 
percent of its capital and surplus; or the percent of its capital and 
surplus, in excess of 15 percent, that a State bank or savings 
association is permitted to lend under the State lending limit that is 
available for residential real estate loans or unsecured loans in the 
State where the main office of the national bank or savings association 
is located. Any such loan or extension of credit must be secured by a 
perfected first-lien security interest in 1-4 family real estate in an 
amount that does not exceed 80 percent of the appraised value of the 
collateral at the time the loan or extension of credit is made.
    (2) In addition to the amount that a national bank or savings 
association may lend to one borrower under Sec.  32.3, an eligible 
national bank or eligible savings association may make loans to small 
businesses to one borrower in the lesser of the following two amounts: 
10 percent of its capital and surplus; or the percent of its capital 
and surplus, in excess of 15 percent, that a State bank is permitted to 
lend under the state lending limit that is available for loans to small 
businesses or unsecured loans in the state where the main office of the 
national bank or home office of the savings association is located.
    (3) In addition to the amount that a national bank or savings 
association may lend to one borrower under Sec.  32.3, an eligible 
national bank or eligible savings association may make loans or 
extensions of credit to small farms to one borrower in the lesser of 
the following two amounts: 10 percent of its capital and surplus; or 
the percent of its capital and surplus, in excess of 15 percent, that a 
State bank or savings association is permitted to lend under the State 
lending limit that is available for loans or extensions of credit to 
small farms or unsecured loans in the State where the main office of 
the national bank or savings association is located.
* * * * *
    (d) Discretionary termination of authority. The appropriate 
supervisory office may rescind a bank's or savings association's 
authority to use the supplemental lending limits in paragraphs (a)(1), 
(2), and (3) of this section based upon concerns about credit quality, 
undue concentrations in the bank's or savings association's portfolio 
of residential real estate, loans to small businesses, or loans or 
extensions of credit to small farms, or concerns about the bank's or 
savings association's overall credit risk management systems and 
controls. The bank or savings association must cease making new loans 
or extensions of credit in reliance on the supplemental lending limits 
upon receipt of written notice from the appropriate supervisory office 
that its authority has been rescinded.
* * * * *

PART 108--REMOVALS, SUSPENSIONS, AND PROHIBITIONS WHERE A CRIME IS 
CHARGED OR PROVEN

0
28. The authority citation for part 108 continues to read as follows:

    Authority: 12 U.S.C. 1464, 1818, 5412(b)(2)(B).


Sec.  108.6  [Amended]

0
29. Section 108.6 is amended in paragraph (d) by removing the phrase 
``and Compliance''.


Sec.  108.7  [Amended]

0
30. Section 108.7 is amended in the first sentence of paragraph (c) and 
in paragraph (d) by removing the phrase ``and Compliance''.

[[Page 42643]]

Sec.  108.13  [Amended]

0
31. Section 108.13 is amended in paragraph (c) by removing the phrase 
``and Compliance''.

PART 112--RULES FOR INVESTIGATIVE PROCEEDINGS AND FORMAL 
EXAMINATION PROCEEDINGS

0
32. The authority citation for part 112 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467, 1467a, 1813, 
1817(j), 1818(n), 1820(c), 5412(b)(2)(B); 15 U.S.C. 78l.


Sec.  112.4  [Amended]

0
33. Section 112.4 is amended in the second sentence by removing the 
phrase ``and Compliance''.

PART 141--DEFINITIONS FOR REGULATIONS AFFECTING FEDERAL SAVINGS 
ASSOCIATIONS

0
34. The authority citation for part 141 continues to read as follows:

    Authority:  12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).


Sec.  Sec.  141.2, 141.8, 141.15, 141.16, 141.18, and 141.19  [Removed 
and Reserved]

0
35. Sections 141.2, 141.8, 141.15, 141.16, 141.18, and 141.19 are 
removed and reserved.


Sec.  Sec.  141.27 and 141.28  [Removed]

0
36. Sections 141.27 and 141.28 are removed.

PART 160--LENDING AND INVESTMENT

0
37. The authority for part 160 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1701j-3, 1828, 
3803, 3806, 5412(b)(2)(B); 42 U.S.C. 4106.


Sec.  160.1  [Amended]

0
38. Section 160.1 is amended in paragraph (a) by removing ``OCC'' and 
adding in its place the phrase ``Office of the Comptroller of the 
Currency (OCC)''.


Sec.  160.60  [Amended]

0
39. Section 160.60 is amended in paragraph (b)(3) by removing the 
phrase ``12 CFR part 32 and Sec.  163.43 of this chapter'' and adding 
in its place ``12 CFR 31.2 and part 32 of this chapter''.

PART 161--DEFINITIONS FOR REGULATIONS AFFECTING All SAVINGS 
ASSOCIATIONS

0
40. The authority citation for part 161 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 5412(b)(2)(B).


Sec.  Sec.  161.3, 161.6, 161.26, 161.27, 161.28. 161.29, 161.30, 
161.31  [Removed and Reserved]

0
41. Sections 161.3, 161.6, 161.26, 161.27, 161.28, 161.29, 161.30, and 
161.31 are removed and reserved.


Sec.  161.37  [Amended]

0
42. Section 161.37 is amended by removing the first sentence.


Sec.  Sec.  161.39 and 161.45  [Removed and Reserved]

0
43. Sections 161.39 and 161.45 are removed and reserved.

0
44. Section 161.50 is revised to read as follows:


Sec.  161.50  State.

    The term ``State'' means any State of the United States, the 
District of Columbia, any territory of the United States, Puerto Rico, 
Guam, American Samoa, the Trust Territory of the Pacific Islands, the 
Virgin Islands, and the Northern Mariana Islands.


Sec.  161.51  [Removed and Reserved]

0
45. Section 161.51 is removed and reserved.

PART 163--SAVINGS ASSOCIATIONS--OPERATIONS

0
46. The authority citation for part 163 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1817, 1820, 1828, 
1831o, 3806, 5101 et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42 U.S.C. 
4106.


Sec.  163.39  [Removed and Reserved]

0
47. Section 163.39 is removed and reserved.


Sec.  163.47  [Amended]

0
48. Section 163.47 is amended in paragraph (d) by removing ``OCC'' and 
adding in its place the phrase ``Office of the Comptroller of the 
Currency (OCC)''.


Sec.  163.76  [Amended]

0
49. Section 163.76 is amended:
0
a. In paragraph (b), by removing the phrase ``Sec.  197.10 of this 
chapter'' and adding in its place ``Sec.  16.32 of this chapter''; and
0
b. In paragraph (c), in the Form of Certification, by removing ``]'' 
after the phrase ``I should call the Office of the Comptroller of the 
Currency''.


Sec.  163.80  [Amended]

0
50. Section 163.80 is amended in paragraph (c) by removing the phrase 
``or the FDIC'' and adding in its place the phrase ``or the Federal 
Deposit Insurance Corporation (FDIC)''.


Sec.  163.180  [Amended]

0
51. Section 163.180 is amended by removing the first paragraph 
designation of (d)(12)(i)(A) and its subject heading ``General rule'' 
and redesignating the paragraph as paragraph (d)(12)(i) introductory 
text.

0
52. Part 192 is revised to read as follows:

PART 192--CONVERSIONS FROM MUTUAL TO STOCK FORM

Sec.
192.5 Purpose, prescribed forms, waiver.
192.7 Electronic filing.
192.8 Computation of time.
192.10 Forming a holding company upon conversion.
192.15 Forming a charitable organization upon conversion.
192.20 Acquiring another insured depository institution upon 
conversion.
192.25 Definitions.
Subpart A--Standard Conversions

Prior to Conversion

192.100 Preparing for a conversion.
192.105 Information required in business plan.
192.110 Review of business plan by chief executive officer and board 
of directors.
192.115 Review of business plan by the appropriate Federal banking 
agency.
192.120 Confidentiality of conversion information.

Plan of Conversion

192.125 Adoption of plan of conversion by board of directors.
192.130 Information required in plan of conversion.
192.135 Notifying members of adopted plan of conversion.
192.140 Amendments to plan of conversion.

Filing Requirements

192.150 Information required in an application for conversion.
192.155 Filing an application for conversion.
192.160 Request for confidential treatment.
192.165 Amendments to an application for conversion.

Notice of Filing of Application and Comment Process

192.180 Public notice of an application for conversion.
192.185 Public comment on application for conversion.

Agency Review of the Application for Conversion

192.200 Review, approval, or denial of application for conversion.
192.205 Court review of final action on application for conversion.

Vote by Members

195.225 Approval of plan of conversion by members.
192.230 Members' voting eligibility.
192.235 Notice of members' meeting.
192.240 Submission of documents to the appropriate Federal banking 
agency after the members' meeting.

[[Page 42644]]

Proxy Solicitation

192.250 Compliance with proxy solicitation provisions.
192.255 Form of proxy requirements.
192.260 Previously executed proxies.
192.265 Proxies executed under this part.
192.270 Proxy statement requirements.
192.275 Filing revised proxy materials.
192.280 Mailing member's proxy solicitation materials.
192.285 Prohibited solicitations.
192.290 Remedial measures for prohibited solicitations.
192.295 Re-solicitation of proxies.

Offering Circular

192.300 Offering circular requirements.
192.305 Distribution of offering circular.
192.310 Filing a post-effective amendment to an offering circular.

Offers and Sales of Stock

192.320 Order of priority to purchase conversion shares.
192.325 Timing of offer to sell conversion shares.
192.330 Pricing of conversion shares.
192.335 Procedures for the sale of conversion shares.
192.340 Prohibited sales practices.
192.345 Permissible forms of subscriber payment.
192.350 Interest on payments for conversion shares.
192.355 Subscription rights for eligible account holders and 
supplemental eligible account holders.
192.360 Officers, directors, and associates as eligible account 
holders.
192.365 Purchase of conversion shares by other voting members.
192.370 Limits on aggregate purchases by officers, directors, and 
associates.
192.375 Allocation of oversubscribed conversion shares.
192.380 Purchase of conversion shares by employee stock ownership 
plan.
192.385 Purchase limitations.
192.390 Community offering of conversion shares.
192.395 Other conditions for community and public offerings.

Completion of the Offering

192.400 Time period for completion of sale of stock.
192.405 Extension of the offering period.

Completion of the Conversion

192.420 Time period for completion of the conversion.
192.425 Termination of conversion.
192.430 Charter amendments.
192.435 Corporate existence after conversion.
192.440 Stockholder voting rights after conversion.
192.445 Savings account holder's account after conversion.

Liquidation Account

192.450 Liquidation accounts.
192.455 Initial balance of liquidation account.
192.460 Initial balance of liquidation sub-account.
192.465 Retention of voting rights based on liquidation sub-
accounts.
192.470 Required adjustments to liquidation sub-accounts.
192.475 Definition of liquidation.
192.480 Effect of liquidation account on net worth.
192.485 Required liquidation account provision in new Federal 
charter.

Post-Conversion

192.500 Possible management stock benefit plans after conversion.
192.505 Restrictions on the trading of shares by directors, 
officers, and associates.
192.510 Repurchase of shares after conversion.
192.515 Information to be filed with Federal banking agency prior to 
repurchase of shares.
192.520 Declaring and paying dividends after the conversion.
192.525 Restrictions on acquisition of shares after conversion.
192.530 Other post-conversion requirements.

Contributions to Charitable Organizations

192.550 Donating conversion shares or conversion proceeds to a 
charitable organization.
192.555 Member approval of charitable contributions.
192.560 Limitations on charitable contributions.
192.565 Contents of organizational documents of charitable 
organization.
192.570 Conflicts of interest among directors.
192.575 Other requirements for charitable organizations.
Subpart B--Voluntary Supervisory Conversions
192.600 Voluntary supervisory conversions.
192.605 Conducting a voluntary supervisory conversion.
192.610 Member rights in a voluntary supervisory conversion.

Eligibility

192.625 Eligibility for a voluntary supervisory conversion.
192.630 Eligibility of State-chartered savings bank for voluntary 
supervisory conversion.

Plan of Supervisory Conversion

192.650 Contents of plan of voluntary supervisory conversion.

Voluntary Supervisory Conversion Application

192.660 Contents of voluntary supervisory conversion application.

Appropriate Federal Banking Agency Review of the Voluntary 
Supervisory Conversion Application

192.670 Approval of voluntary supervisory conversion application.
192.675 Conditions imposed upon approval of voluntary supervisory 
conversion application.

Offers and Sales of Stock

192.680 Offer and sale of shares in a voluntary supervisory 
conversion.

Post-Conversion

192.690 Restrictions on acquisition of additional shares after 
voluntary supervisory conversion.

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 2901 et seq., 
5412(b)(2)(B); 15 U.S.C. 78c, 78l, 78m, 78n, 78w.


Sec.  192.5  Purpose, prescribed forms, waiver.

    (a) General. This part governs how a savings association may 
convert from the mutual to the stock form of ownership. Subpart A of 
this part governs standard mutual-to-stock conversions. Subpart B of 
this part governs voluntary supervisory mutual-to-stock conversions. 
This part supersedes all inconsistent charter and bylaw provisions of 
Federal savings associations converting to stock form.
    (b) Prescribed forms. A savings association must use the forms 
prescribed under this part and part 16 and provide such information as 
the appropriate Federal banking agency may require under the forms and 
by regulation. The forms required under this part include: Form AC 
(Application for Conversion); Form PS (Proxy Statement); Form OC 
(Offering Circular); Form OF (Order Form); and the applicable form for 
a registration statement under 12 CFR 16.15. Forms AC, PS, OC, and OF 
are available on the website of the Office of the Comptroller of the 
Currency (OCC) at http://www.occ.gov.
    (c) Waivers. The appropriate Federal banking agency may waive any 
requirement of this part or a provision in any prescribed form. To 
obtain a waiver, a savings association must file a written request with 
the appropriate Federal banking agency that:
    (1) Specifies the requirement(s) or provision(s) the savings 
association wants the appropriate Federal banking agency to waive;
    (2) Demonstrates that the waiver is equitable; is not detrimental 
to the savings association, its account holders, or other savings 
associations; and is not contrary to the public interest; and
    (3) Includes an opinion of counsel demonstrating that applicable 
law does not conflict with the waiver of the requirement or provision.
    (d) Financial statements. The form and content of financial 
statements and related financial data in a filing under this part must 
be prepared and presented in accordance with U. S. generally accepted 
accounting principles and other applicable accounting guidance and 
requirements

[[Page 42645]]

as specified by the OCC in the forms required under paragraph (b) of 
this section.


Sec.  192.7  Electronic filing.

    For Federal savings associations, the OCC encourages the electronic 
filing of all applications, notices, or other documents required by 
this part through http://www.banknet.gov/. The Comptroller's Licensing 
Manual describes the OCC's electronic filing procedures.


Sec.  192.8  Computation of time.

    In computing the period of days, the OCC excludes the day of the 
act or event (e.g., the date an application is received by the OCC) 
from when the period begins to run. When the last day of a time period 
is a Saturday, Sunday, or Federal holiday, the time period runs until 
the end of the next day that is not a Saturday, Sunday, or Federal 
holiday.


Sec.  192.10  Forming a holding company upon conversion.

    A savings association may convert to the stock form of ownership as 
part of a transaction where the savings association organizes a holding 
company to acquire all of the savings association's shares upon their 
issuance. In this transaction, the savings association's holding 
company will offer rights to purchase its shares instead of the savings 
association's shares. Regulations of the Board of Governors of the 
Federal Reserve System address holding company application 
requirements.


Sec.  192.15  Forming a charitable organization upon conversion.

    When a savings association converts to the stock form, it may form 
a charitable organization. A savings association's contributions to the 
charitable organization are governed by the requirements of Sec. Sec.  
192.550 through 192.575.


Sec.  192.20  Acquiring another insured depository institution upon 
conversion.

    When a savings association converts to stock form, it may acquire 
for cash or stock another insured depository institution that is 
already in the stock form of ownership.


Sec.  192.25  Definitions.

    The following definitions apply to this part and the forms 
prescribed under this part:
    Acting in concert has the same meaning as in 12 CFR 5.50(d)(2). The 
rebuttable presumptions of 12 CFR 5.50(f)(2), other than 12 CFR 
5.50(f)(2)(ii)(A) and (B), apply to the share purchase limitations at 
Sec. Sec.  192.355 through 192.395.
    Affiliate of, or a person affiliated with, a specified person is a 
person that directly or indirectly, through one or more intermediaries, 
controls, is controlled by, or is under common control with the 
specified person.
    Appropriate Federal banking agency means appropriate Federal 
banking agency as defined in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(q)).
    Associate of a person is:
    (1) A corporation or organization (other than a savings association 
or its majority-owned subsidiaries), if the person is a senior officer 
or partner, or beneficially owns, directly or indirectly, 10 percent or 
more of any class of equity securities of the corporation or 
organization.
    (2) A trust or other estate, if the person has a substantial 
beneficial interest in the trust or estate or is a trustee or fiduciary 
of the trust or estate. For purposes of Sec. Sec.  192.370 through 
192.395 and 192.505, a person who has a substantial beneficial interest 
in a savings association's tax-qualified or non-tax-qualified employee 
stock benefit plan, or who is a trustee or a fiduciary of the plan, is 
not an associate of the plan. For the purposes of Sec.  192.370, a 
savings association's tax-qualified employee stock benefit plan is not 
an associate of a person.
    (3) Any person who is related by blood or marriage to such person 
and:
    (i) Who lives in the same home as the person; or
    (ii) Who is the savings association's director or senior officer, 
or a director or senior officer of the savings association's holding 
company or its subsidiary.
    Association members or members are persons who, under applicable 
law, are eligible to vote at the meeting on conversion.
    Community offering means the offer to sell to the members of the 
general public in the savings association's community the securities 
not subscribed for in the subscription offering. The community offering 
may occur concurrently with the subscription offering and any 
syndicated community offering, or upon conclusion of the subscription 
offering.
    Control (including controlling, controlled by, and under common 
control with) means the direct or indirect power to direct or exercise 
a controlling influence over the management and policies of a person, 
whether through the ownership of voting securities, by contract, or 
otherwise as described in 12 CFR 5.50.
    Demand accounts means non-interest-bearing demand deposits that are 
subject to check or to withdrawal or transfer on negotiable or 
transferable order to the savings association and that are permitted to 
be issued by statute, regulation, or otherwise and are payable on 
demand.
    Eligibility record date is the date for determining eligible 
account holders. The eligibility record date must be at least one year 
before the date a savings association's board of directors adopts the 
plan of conversion.
    Eligible account holders are any persons holding qualifying 
deposits on the eligibility record date.
    Federal savings association means a Federal savings association or 
Federal savings bank chartered under section 5 of the Home Owners' Loan 
Act (HOLA) (12 U.S.C. 1464).
    IRS is the Internal Revenue Service.
    Local community includes:
    (1) Every county, parish, or similar governmental subdivision in 
which a savings association has a home or branch office;
    (2) Each county's, parish's, or subdivision's metropolitan 
statistical area;
    (3) All zip code areas in a savings association's Community 
Reinvestment Act assessment area; and
    (4) Any other area or category that a savings association sets out 
in its plan of conversion, as approved by the appropriate Federal 
banking agency.
    Offer, offer to sell, or offer for sale is an attempt or offer to 
dispose of, or a solicitation of an offer to buy, a security or 
interest in a security for value. Preliminary negotiations or 
agreements with an underwriter, or among underwriters who are or will 
be in privity of contract with a savings association, are not offers, 
offers to sell, or offers for sale.
    Offering circular means the securities offering materials for the 
conversion.
    Person is an individual, a corporation, a partnership, an 
association, a joint-stock company, a limited liability company, a 
trust, an unincorporated organization, or a government or political 
subdivision of a government.
    Proxy soliciting material includes a proxy statement, form of 
proxy, or other written or oral communication regarding the conversion.
    Purchase or buy includes every contract to acquire a security or 
interest in a security for value.
    Qualifying deposit is the total balance in an account holder's 
savings accounts at the close of business on the eligibility or 
supplemental eligibility record date. A savings association's plan of 
conversion may provide that only

[[Page 42646]]

savings accounts with total deposit balances of $50 or more will 
qualify.
    Sale or sell includes every contract to dispose of a security or 
interest in a security for value. An exchange of securities in a merger 
or acquisition approved by the appropriate Federal banking agency is 
not a sale.
    Savings account means any withdrawable account, including a demand 
account, except this term does not mean a tax and loan account, a note 
account, a United States Treasury general account, or a United States 
Treasury time deposit-open account.
    Savings association means a savings association as defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(1)).
    Solicitation and solicit is a request for a proxy, whether or not 
accompanied by or included in a form of proxy; a request to execute, 
not execute, or revoke a proxy; or the furnishing of a form of proxy or 
other communication reasonably calculated to cause a savings 
association's members to procure, withhold, or revoke a proxy. 
Solicitation or solicit does not include providing a form of proxy at 
the unsolicited request of a member, the acts required to mail 
communications for members, or ministerial acts performed on behalf of 
a person soliciting a proxy.
    State means any State of the United States, the District of 
Columbia, any territory of the United States, Puerto Rico, Guam, 
American Samoa, the Trust Territory of the Pacific Islands, the Virgin 
Islands, and the Northern Mariana Islands.
    State savings association means a State savings association as 
defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
1813(b)(3)).
    Subscription offering is the offering of shares through 
nontransferable subscription rights to:
    (1) Eligible account holders under Sec.  192.355;
    (2) Tax-qualified employee stock ownership plans under Sec.  
192.380;
    (3) Supplemental eligible account holders under Sec.  192.355; and
    (4) Other voting members under Sec.  192.365.
    Supplemental eligibility record date is the date for determining 
supplemental eligible account holders. The supplemental eligibility 
record date is the last day of the calendar quarter before the 
appropriate Federal banking agency approves a savings association's 
conversion and will only occur if such agency has not approved such 
conversion within 15 months after the eligibility record date.
    Supplemental eligible account holders are any persons, except a 
savings association's officers, directors, and their associates, 
holding qualifying deposits on the supplemental eligibility record 
date.
    Tax-qualified employee stock benefit plan is any defined benefit 
plan or defined contribution plan, such as an employee stock ownership 
plan, stock bonus plan, profit-sharing plan, or other plan, and a 
related trust, that is qualified under section 401 of the Internal 
Revenue Code (26 U.S.C. 401).
    Underwriter is any person who purchases any securities from a 
savings association with a view to distributing the securities, offers 
or sells securities for a savings association in connection with the 
securities' distribution, or participates or has a direct or indirect 
participation in the direct or indirect underwriting of any such 
undertaking. Underwriter does not include a person whose interest is 
limited to a usual and customary distributor's or seller's commission 
from an underwriter or dealer.
    Voluntary supervisory conversion is a mutual to stock conversion 
for a savings association that is unable to complete a standard mutual 
to stock conversion under part 192, subpart A, and that meets the 
eligibility requirements of Sec.  192.625.

Subpart A--Standard Conversions

Prior to Conversion


Sec.  192.100  Preparing for a conversion.

    (a) Meeting with appropriate Federal banking agency prior to 
passing plan. A savings association's board, or a subcommittee of its 
board, must meet, in person or electronically, with the appropriate 
Federal banking agency before the savings association passes its plan 
of conversion. At this meeting the savings association must provide the 
appropriate Federal banking agency with a written strategic plan that 
outlines the objectives of the proposed conversion and the intended use 
of the conversion proceeds.
    (b) Consultation with appropriate Federal banking agency before 
filing application. A savings association also should consult with the 
appropriate Federal banking agency before filing its application for 
conversion. The appropriate Federal banking agency will discuss the 
information that the savings association must include in the 
application for conversion, general issues that it may confront in the 
conversion process, and any other pertinent issues.


Sec.  192.105  Information required in business plan.

    (a) Minimum requirements. Prior to filing an application for 
conversion, a savings association must adopt a business plan reflecting 
its intended plans for deployment of the proposed conversion proceeds. 
The savings association's business plan is required, under Sec.  
192.150, to be included in its application for conversion. At a 
minimum, the business plan must address:
    (1) The savings association's projected operations and activities 
for three years following the conversion. These projections must 
include how the savings association will accomplish the following by 
the final year of the business plan:
    (i) Deploy the conversion proceeds at the converted savings 
association (and holding company, if applicable);
    (ii) What opportunities are available to reasonably achieve its 
planned deployment of conversion proceeds in the proposed market areas; 
and
    (iii) How the deployment will provide a reasonable return on 
investment commensurate with investment risk, investor expectations, 
and industry norms. The savings association must include three years of 
projected financial statements. The business plan must provide that the 
converted savings association must retain at least 50 percent of the 
net conversion proceeds. The appropriate Federal banking agency may 
require that a larger percentage of proceeds remain in the institution.
    (2) The savings association's plan for deploying conversion 
proceeds to meet credit and lending needs in the proposed market areas. 
The appropriate Federal banking agencies strongly discourage business 
plans that provide for a substantial investment in mortgage securities 
or other securities, except as an interim measure to facilitate 
orderly, prudent deployment of proceeds during the three years 
following the conversion or as part of a properly managed leverage 
strategy.
    (3) The risks associated with the savings association's plan for 
deployment of conversion proceeds, and the effect of this plan on 
management resources, staffing, and facilities.
    (4) The expertise of the savings association's management and board 
of directors, or plans for adequate staffing and controls to prudently 
manage the growth, expansion, new investment, and other operations and 
activities proposed in the business plan.
    (b) Prohibited information. The savings association may not project 
returns of capital or special dividends in any part of the business 
plan. A newly

[[Page 42647]]

converted company may not plan on stock repurchases in the first year 
of the business plan.


Sec.  192.110  Review of business plan by chief executive officer and 
board of directors.

    (a) Review and approval. A savings association's chief executive 
officer and members of the board of directors must review, and at least 
two-thirds of the board of directors must approve, the business plan.
    (b) Certification. A savings association's chief executive officer 
and at least two-thirds of the board of directors must certify that the 
business plan accurately reflects the intended plans for deployment of 
conversion proceeds, and that any new initiatives reflected in the 
business plan are reasonably achievable. The savings association must 
submit these certifications with its business plan, as part of its 
application for conversion under Sec.  192.150.


Sec.  192.115  Review of business plan by the appropriate Federal 
banking agency.

    (a) Agency review. The appropriate Federal banking agency will 
review the savings association's business plan to determine that it 
demonstrates a safe and sound deployment of conversion proceeds, as 
part of its review of the application for conversion. In making its 
determination, the appropriate Federal banking agency will consider how 
the savings association has addressed the applicable factors of Sec.  
192.105. No single factor will be determinative.
    (b) Filing of business plan. A savings association must file its 
business plan as a separate confidential exhibit to the Form AC with 
the appropriate OCC licensing office if it is a Federal savings 
association, or with the appropriate Federal Deposit Insurance 
Corporation (FDIC) region if it is a State savings association. The 
appropriate Federal banking agency may request additional information, 
if necessary, to support its determination under paragraph (a) of this 
section.
    (c) Operation within business plan. If the appropriate Federal 
banking agency approves a savings association's application for 
conversion and the conversion is completed, the savings association 
must operate within the parameters of its business plan. The savings 
association must obtain the prior written approval of the appropriate 
Federal banking agency for any material deviations from its business 
plan.


Sec.  192.120  Confidentiality of conversion information.

    (a) Permitted disclosure. A savings association may discuss 
information about its conversion with individuals that the savings 
association authorizes to prepare documents for its conversion.
    (b) Confidential information. Except as permitted under paragraph 
(a) of this section, a savings association must keep all information 
about its conversion confidential until its board of directors adopts 
the plan of conversion.
    (c) Violations of confidentiality. If a savings association 
violates this section, the appropriate Federal banking agency may 
require the savings association to take remedial action. For example, 
the appropriate Federal banking agency may require the savings 
association to take any or all of the following actions:
    (1) Publicly announce that the savings association is considering a 
conversion;
    (2) Set an eligibility record date acceptable to the appropriate 
Federal banking agency;
    (3) Limit the subscription rights of any person who violates or 
aids a violation of this section; or
    (4) Any other action to assure that the conversion is fair and 
equitable.

Plan of Conversion


Sec.  192.125  Adoption of plan of conversion by board of directors.

    Prior to filing an application for conversion, a savings 
association's board of directors must adopt a plan of conversion that 
conforms to Sec. Sec.  192.320 through 192.485 and 192.505. The savings 
association's board of directors must adopt the plan by at least a two-
thirds vote. Pursuant to Sec.  192.150, the savings association must 
include the plan of conversion in the application for conversion.


Sec.  192.130  Information required in plan of conversion.

    A savings association must include the information included in 
Sec. Sec.  192.320 through 192.485 and 192.505 in its plan of 
conversion. The appropriate Federal banking agency may require the 
savings association to delete or revise any provision in its plan of 
conversion if it determines the provision is inequitable; is 
detrimental to the savings association, its account holders, or other 
savings associations; or is contrary to public interest.


Sec.  192.135  Notifying members of adopted plan of conversion.

    (a) Notice. A savings association must promptly notify its members 
that the board of directors adopted a plan of conversion and that a 
copy of the plan is available for the members' inspection in the 
savings association's home office and in its branch offices. The 
savings association must provide this notice by sending to each member 
a letter, through the mail or electronically if the member receives 
electronic communication, or by publishing a notice in the local 
newspaper in every local community where the savings association has an 
office. The savings association also may issue a press release and may 
make this notice available on its website. The appropriate Federal 
banking agency may require broader publication, if necessary, to ensure 
adequate notice to the savings association's members.
    (b) Contents of notice. The savings association may include only 
the following statements and descriptions in the letter, notice, or 
press release.
    (1) The savings association's board of directors adopted a proposed 
plan to convert from a mutual to a stock savings institution.
    (2) The savings association will send its members a proxy statement 
with detailed information on the proposed conversion before the savings 
association convenes a members' meeting to vote on the conversion.
    (3) The savings association's members will have an opportunity to 
approve or disapprove the proposed conversion at a meeting. A majority 
of the eligible votes must approve the conversion.
    (4) The savings association will not vote existing proxies to 
approve or disapprove the conversion. The savings association will 
solicit new proxies for voting on the proposed conversion.
    (5) The appropriate Federal banking agency, and in the case of a 
State-chartered savings association, the appropriate State regulator, 
must approve the conversion before the conversion will be effective. 
The savings association's members will have an opportunity to file 
written comments, including objections and materials supporting the 
objections, with the appropriate Federal banking agency.
    (6) The IRS must issue a favorable tax ruling, or a tax expert must 
issue an appropriate tax opinion, on the tax consequences of the 
savings association's conversion before the appropriate Federal banking 
agency will approve the conversion. The ruling or opinion must indicate 
the conversion will be a tax-free reorganization.
    (7) The appropriate Federal banking agency, and in the case of a 
State-chartered savings association, the appropriate State regulator, 
might not approve the conversion, and the IRS or a tax expert might not 
issue a favorable tax ruling or tax opinion.
    (8) Savings account holders will continue to hold accounts in the 
converted savings association with the same dollar amounts, rates of 
return, and general terms as existing deposits.

[[Page 42648]]

The FDIC will continue to insure the accounts.
    (9) The savings association's conversion will not affect borrowers' 
loans, including the amount, rate, maturity, security, and other 
contractual terms.
    (10) The savings association's business of accepting deposits and 
making loans will continue without interruption.
    (11) The savings association's current management and staff will 
continue to conduct current services for depositors and borrowers under 
current policies and in existing offices.
    (12) The savings association may substantively amend its proposed 
plan of conversion before the members' meeting.
    (13) The savings association may terminate the proposed conversion.
    (14) After the appropriate Federal banking agency, and in the case 
of a State-chartered savings association, the appropriate State 
regulator, approves the proposed conversion, the savings association 
will send proxy materials providing additional information. After the 
savings association sends proxy materials, members may telephone or 
write to the savings association with additional questions.
    (15) The proposed record date for determining the eligible account 
holders who are entitled to receive subscription rights to purchase the 
savings association's shares.
    (16) A brief description of the circumstances under which 
supplemental eligible account holders will receive subscription rights 
to purchase the savings association's shares.
    (17) A brief description of how voting members may participate in 
the conversion.
    (18) A brief description of how directors, officers, and employees 
will participate in the conversion.
    (19) A brief description of the proposed plan of conversion.
    (20) The par value (if any) and approximate number of shares the 
savings association will issue and sell in the conversion.
    (c) Other requirements. (1) The savings association may not solicit 
proxies, provide financial statements, describe the benefits of 
conversion, or estimate the value of its shares upon conversion in the 
letter, notice, or press release.
    (2) If the savings association responds to inquiries about the 
conversion, it may address only the matters listed in paragraph (b) of 
this section.


Sec.  192.140   Amendments to plan of conversion.

    A savings association may amend its plan of conversion before it 
solicits proxies. After the savings association solicits proxies, it 
may amend the plan of conversion only if the appropriate Federal 
banking agency concurs.

Filing Requirements


Sec.  192.150   Information required in an application for conversion.

    (a) Required information. A savings association's application for 
conversion must include all of the following information.
    (1) The savings association's plan of conversion.
    (2) Pricing materials meeting the requirements of Sec.  192.200(b).
    (3) Proxy soliciting materials under Sec.  192.270, including:
    (i) A preliminary proxy statement with signed financial statements;
    (ii) A form of proxy meeting the requirements of Sec.  192.255; and
    (iii) Any additional proxy soliciting materials, including press 
releases, personal solicitation instructions, radio or television 
scripts that the savings association plans to use or furnish to its 
members, and a legal opinion indicating that any marketing materials 
comply with all applicable securities laws.
    (4) An offering circular described in Sec.  192.300.
    (5) The documents and information required by Form AC. The savings 
association may obtain Form AC from the appropriate Federal banking 
agency.
    (6) Where indicated, written consents, signed and dated, of any 
accountant, attorney, investment banker, appraiser, or other 
professional who prepared, reviewed, passed upon, or certified any 
statement, report, or valuation for use. See Form AC, instructions.
    (7) The savings association's business plan, submitted as a 
separately bound, confidential exhibit. See Sec.  192.160.
    (8) Any additional information that the appropriate Federal banking 
agency requests.
    (b) Rejection of filing. The appropriate Federal banking agency 
will not accept for filing, and may return, any application for 
conversion that is executed improperly, materially deficient, 
substantially incomplete, or that provides for unreasonable conversion 
expenses.


Sec.  192.155   Filing an application for conversion.

    A Federal savings association must file Form AC with the 
appropriate OCC licensing office. A State savings association must file 
its application with the appropriate FDIC region.


Sec.  192.160   Request for confidential treatment.

    (a) In general. The appropriate Federal banking agency makes all 
filings under this part available to the public, but may keep portions 
of the application for conversion confidential under paragraph (b) of 
this section.
    (b) Requests for confidential treatment. A savings association may 
request that the appropriate Federal banking agency keep portions of 
the savings association's application confidential. To make this 
request, the savings association must clearly designate as 
``confidential'' any portion of its application for conversion that it 
deems confidential. The savings association must provide a written 
statement specifying the grounds supporting its request for 
confidentiality. The appropriate Federal banking agency will not treat 
as confidential the portion of a savings association's application 
describing how it plans to meet Community Reinvestment Act (CRA) 
objectives. The CRA portion of a savings association's application may 
not incorporate by reference information contained in the confidential 
portion of the application.
    (c) Determination of confidential treatment. The appropriate 
Federal banking agency will determine whether confidential information 
must be made available to the public under 5 U.S.C. 552 and 12 CFR part 
4 or 12 CFR part 309, as appropriate. The appropriate Federal banking 
agency will advise the savings association before it makes information 
designated as ``confidential'' available to the public.


Sec.  192.165   Amendments to an application for conversion.

    To amend its application for conversion, a savings association 
must:
    (a) File an amendment with an appropriate facing sheet;
    (b) Number each amendment consecutively;
    (c) Respond to all issues raised by the appropriate Federal banking 
agency; and
    (d) Demonstrate that the amendment conforms to all applicable 
regulations.

Notice of Filing of Application and Comment Process


Sec.  192.180   Public notice of an application for conversion.

    (a) In general. A Federal savings association must publish a public 
notice of the application in accordance with the procedures in 12 CFR 
5.8. The Federal savings association must simultaneously prominently 
post the notice in its home office and all branch

[[Page 42649]]

offices and may also make this notice available on its website.
    (b) Additional notice. If the appropriate Federal banking agency 
does not accept a savings association's application for conversion 
under Sec.  192.200 and requires the savings association to file a new 
application, the savings association must publish and post a new notice 
and allow an additional 30 calendar days for comment.


Sec.  192.185   Public comment on application for conversion.

    Commenters may submit comments on a Federal savings association's 
application in accordance with the procedures in 12 CFR 5.10.

Agency Review of the Application for Conversion


Sec.  192.200   Review, approval, or denial of application for 
conversion.

    (a) Standards for review of application. The appropriate Federal 
banking agency may approve an application for conversion only if:
    (1) The conversion complies with this part;
    (2) The savings association will meet its regulatory capital 
requirements under 12 CFR part 3 or part 324, as applicable, after the 
conversion; and
    (3) The conversion will not result in a taxable reorganization 
under the Internal Revenue Code of 1986, as amended.
    (b) Standards for review of appraisal. The appropriate Federal 
banking agency will review the appraisal required by Sec.  
192.150(a)(2) in determining whether to approve the application. The 
appropriate Federal banking agency will review the appraisal under the 
following requirements.
    (1) Independent persons experienced and expert in corporate 
appraisal, and acceptable to the appropriate Federal banking agency, 
must prepare the appraisal report.
    (2) An affiliate of the appraiser may serve as an underwriter or 
selling agent, if the savings association ensures that the appraiser is 
separate from the underwriter or selling agent affiliate and the 
underwriter or selling agent affiliate does not make recommendations or 
affect the appraisal.
    (3) The appraiser may not receive any fee in connection with the 
conversion other than for appraisal services.
    (4) The appraisal report must include a complete and detailed 
description of the elements of the appraisal, a justification for the 
appraisal methodology, and sufficient support for the conclusions.
    (5) If the appraisal is based on a capitalization of the savings 
association's pro forma income, it must indicate the basis for 
determining the income to be derived from the sale of shares, and 
demonstrate that the earnings multiple used is appropriate, including 
future earnings growth assumptions.
    (6) If the appraisal is based on a comparison of the savings 
association's shares with outstanding shares of existing stock 
associations, the existing stock associations must be reasonably 
comparable in size, market area, competitive conditions, risk profile, 
profit history, and expected future earnings.
    (7) The appropriate Federal banking agency may decline to process 
the application for conversion and deem it materially deficient or 
substantially incomplete if the initial appraisal report is materially 
deficient or substantially incomplete.
    (8) A savings association may not represent or imply that the 
appropriate Federal banking agency approved the appraisal.
    (c) Compliance with the Community Reinvestment Act. The appropriate 
Federal banking agency will review the savings association's compliance 
record under 12 CFR part 195 and its business plan to determine how the 
savings association will serve the convenience and needs of its 
communities after the conversion.
    (1) Based on this review, the appropriate Federal banking agency 
may approve the application, deny the application, or approve the 
application on the condition that the savings association will improve 
its CRA performance or that the savings association will address the 
particular credit or lending needs of the communities that it will 
serve.
    (2) The appropriate Federal banking agency may deny the application 
if the savings association's business plan does not demonstrate that 
its proposed use of conversion proceeds will help the savings 
association to meet the credit and lending needs of the communities 
that it will serve.
    (d) Additional information. The appropriate Federal banking agency 
may request that a savings association amend its application if further 
explanation is necessary, material is missing, or material needs 
correction.
    (e) Denial of application. The appropriate Federal banking agency 
will deny an application if the application does not meet the 
requirements of this subpart, unless the appropriate Federal banking 
agency waives the requirement under Sec.  192.5(c).


Sec.  192.205   Court review of final action on application for 
conversion.

    (a) In general. Any person aggrieved by the appropriate Federal 
banking agency's final action on a savings association's application 
for conversion may ask the court of appeals of the United States for 
the circuit in which the principal office or residence of such person 
is located, or the U.S. Court of Appeals for the District of Columbia 
Circuit, to review the action under 12 U.S.C. 1464(i)(2)(B).
    (b) Filing procedures. To obtain court review of the action, this 
statute requires the aggrieved person to file a written petition 
requesting that the court modify, terminate, or set aside the final 
appropriate Federal banking agency action. The aggrieved person must 
file the petition with the court within the later of 30 calendar days 
after the appropriate Federal agency publishes notice of its final 
action in the Federal Register or 30 calendar days after the savings 
association mails the proxy statement to its members under Sec.  
192.235.

Vote by Members


Sec.  192.225   Approval of plan of conversion by members.

    (a) In general. After the appropriate Federal banking agency 
approves a plan of conversion, the savings association must submit the 
plan of conversion to its members for approval. The savings association 
must obtain this approval at a meeting of its members, which may be a 
special or annual meeting, unless the savings association is State-
chartered and State law requires approval via an annual meeting.
    (b) Approval. The savings association's members must approve the 
plan of conversion by a majority of the total outstanding votes, unless 
the savings association is State-chartered and State law prescribes a 
higher percentage.
    (c) Voting method. Savings association members may vote in person 
or by proxy.
    (d) Notification to non-voting members. The savings association may 
notify eligible account holders or supplemental eligible account 
holders who are not voting members of its proposed conversion. The 
savings association may include only the information in Sec.  192.135 
in its notice.


Sec.  192.230   Members' voting eligibility.

    A savings association determines members' eligibility to vote by 
setting a voting record date. The savings association must set a voting 
record date that is not more than 60 calendar days nor less than 20 
calendar days before its

[[Page 42650]]

meeting, unless the savings association is State-chartered and State 
law requires a different voting record date.


Sec.  192.235   Notice of members' meeting.

    (a) In general. A savings association must notify its members of 
the meeting to consider its conversion by sending the members a proxy 
statement cleared by the appropriate Federal banking agency.
    (b) Timing of notice. The savings association must notify its 
members 20 to 45 calendar days before the meeting, unless the savings 
association is State-chartered and State law requires a different 
notice period.
    (c) Notice to beneficial account holders. The savings association 
must also notify each beneficial holder of an account held in a 
fiduciary capacity:
    (1) If the savings association is a Federal savings association, 
and the name of the beneficial holder is disclosed on the savings 
association's records; or
    (2) If the savings association is a State-chartered savings 
association and the beneficial holder possesses voting rights under 
State law.


Sec.  192.240   Submission of documents to the appropriate Federal 
banking agency after the members' meeting.

    (a) Filings after members' meeting. Promptly after the members' 
meeting, a savings association must file all of the following 
information with the appropriate OCC licensing office, if the savings 
association is Federally-chartered, and with the appropriate FDIC 
region if the savings association is State-chartered.
    (1) A certified copy of each adopted resolution on the conversion.
    (2) The total votes eligible to be cast.
    (3) The total votes represented in person or by proxy.
    (4) The total votes cast in favor of and against each matter.
    (5) The percentage of votes necessary to approve each matter.
    (6) An opinion of counsel that the savings association conducted 
the members' meeting in compliance with all applicable State or Federal 
laws and regulations.
    (b) Filing after conversion. Promptly after completion of the 
conversion, the savings association must submit an opinion of counsel 
that it complied with all laws applicable to the conversion.

Proxy Solicitation


Sec.  192.250   Compliance with proxy solicitation provisions.

    (a) Savings association compliance. A savings association must 
comply with these proxy solicitation provisions when it provides proxy 
solicitation material to members for the meeting to vote on the plan of 
conversion.
    (b) Member compliance. Members of the savings association must 
comply with these proxy solicitation provisions when they provide proxy 
solicitation materials to members for the meeting to vote on the 
conversion, pursuant to Sec.  192.280, except where:
    (1) The member solicits 50 people or fewer and does not solicit 
proxies on the savings association's behalf; or
    (2) The member solicits proxies through newspaper advertisements 
after the savings association's board of directors adopts the plan of 
conversion. Any newspaper advertisements may include only the following 
information:
    (i) The name of the savings association;
    (ii) The reason for the advertisement;
    (iii) The proposal or proposals to be voted upon;
    (iv) Where a member may obtain a copy of the proxy solicitation 
material; and
    (v) A request for the savings association's members to vote at the 
meeting.


Sec.  192.255   Form of proxy requirements.

    The form of proxy must include all of the following:
    (a) A statement in bold face type stating that management is 
soliciting the proxy.
    (b) Blank spaces where the member must date and sign the proxy.
    (c) Clear and impartial identification of each matter or group of 
related matters that members will vote upon. The savings association 
must include any proposed charitable contribution as an item to be 
voted on separately.
    (d) The phrase ``Revocable Proxy'' in bold face type (at least 18 
point).
    (e) A description of any charter or State law requirement that 
restricts or conditions votes by proxy.
    (f) An acknowledgment that the member received a proxy statement 
before he or she signed the form of proxy.
    (g) The date, time, and the place of the meeting, when available.
    (h) A way for the member to specify by ballot whether he or she 
approves or disapproves of each matter that members will vote upon.
    (i) A statement that management will vote the proxy in accordance 
with the member's specifications.
    (j) A statement in bold face type indicating how management will 
vote the proxy if the member does not specify a choice for a matter.


Sec.  192.260   Previously executed proxies.

    A savings association may not use previously executed proxies for 
the plan of conversion vote. If members consider the plan of conversion 
at an annual meeting, the savings association may vote proxies obtained 
through other proxy solicitations only on matters not related to the 
plan of conversion.


Sec.  192.265   Proxies executed under this part.

    A savings association may vote a proxy obtained under this part on 
matters that are incidental to the conduct of the meeting. The savings 
association may not vote a proxy obtained under this subpart at any 
meeting other than the meeting (or any adjournment of the meeting) to 
vote on the plan of conversion.


Sec.  192.270   Proxy statement requirements.

    (a) Content requirements. A savings association must prepare its 
proxy statement in compliance with this part and Form PS.
    (b) Other requirements. (1) The appropriate Federal banking agency 
will review the proxy solicitation material when it reviews the 
application for conversion and will clear the proxy solicitation 
material.
    (2) The savings association must provide a cleared written proxy 
statement to its members before or at the same time it provides any 
other soliciting material. The savings association must mail cleared 
proxy solicitation material to its members within 10 calendar days 
after the appropriate Federal banking agency clears the solicitation.


Sec.  192.275   Filing revised proxy materials.

    (a) In general. A savings association must file revised proxy 
solicitation materials as an amendment to its application for 
conversion. The proxy solicitation materials must be in the form in 
which it furnished the materials to its members.
    (b) Content of filing. To revise its proxy solicitation materials, 
the savings association must file:
    (1) Its revised proxy materials as required by Form PS;
    (2) Its revised form of proxy, if applicable;
    (3) Any additional proxy solicitation material subject to Sec.  
192.270; and
    (4) A copy of the revised proxy solicitation materials marked to 
clearly indicate changes from the prior filing.
    (c) When to file. The savings association must file no later than 
the date that it sends or gives the proxy solicitation material to its 
members. The savings association must indicate the date that it will 
release the materials.

[[Page 42651]]

    (d) Material not required to be filed. Unless requested by the 
appropriate Federal banking agency, the savings association does not 
have to file copies of replies to inquiries from its members or copies 
of communications that merely request members to sign and return proxy 
forms.


Sec.  192.280   Mailing member's proxy solicitation materials.

    (a) In general. A savings association must mail the member's 
cleared proxy solicitation material if:
    (1) The savings association's board of directors adopted a plan of 
conversion;
    (2) A member requests in writing that the savings association mail 
the proxy solicitation material;
    (3) The appropriate Federal banking agency has cleared the member's 
proxy solicitation; and
    (4) The member agrees to defray the savings association's 
reasonable expenses.
    (b) Required information. As soon as practicable after the savings 
association receives a request under paragraph (a) of this section, it 
must mail or otherwise furnish the following information to the member:
    (1) The approximate number of members that the savings association 
solicited or will solicit, or the approximate number of members of any 
group of account holders that the member designates; and
    (2) The estimated cost of mailing the proxy solicitation material 
for the member.
    (c) Timing. The savings association must mail cleared proxy 
solicitation material to the designated members promptly after the 
member furnishes the materials, envelopes (or other containers), and 
postage (or payment for postage) to the savings association.
    (d) Content. The savings association is not responsible for the 
content of a member's proxy solicitation material.
    (e) Sharing of proxy material. A member may furnish other members 
its own proxy solicitation material, cleared by the appropriate Federal 
banking agency, subject to the rules in this section.


Sec.  192.285   Prohibited solicitations.

    (a) False or misleading statements. (1) No one may use proxy 
solicitation material for the members' meeting if the material contains 
any statement which, considering the time and the circumstances of the 
statement:
    (i) Is false or misleading with respect to any material fact;
    (ii) Omits any material fact that is necessary to make the 
statements not false or misleading; or
    (iii) Omits any material fact that is necessary to correct a 
statement in an earlier communication that has become false or 
misleading.
    (2) No one may represent or imply that the appropriate Federal 
banking agency determined that the proxy solicitation material is 
accurate, complete, not false or not misleading, or passed upon the 
merits of or approved any proposal.
    (b) Other prohibited solicitations. No person may solicit:
    (1) An undated or post-dated proxy;
    (2) A proxy that states it will be dated after the date it is 
signed by a member;
    (3) A proxy that is not revocable at will by the member; or
    (4) A proxy that is part of another document or instrument.


Sec.  192.290   Remedial measures for prohibited solicitations.

    (a) In general. If a solicitation violates Sec.  192.285, the 
appropriate Federal banking agency may require remedial measures, 
including:
    (1) Correction of the violation by a retraction and a new 
solicitation;
    (2) Rescheduling the members' meeting; or
    (3) Any other actions necessary to ensure a fair vote.
    (b) Other action. The appropriate Federal banking agency also may 
bring an enforcement action against the violator.


Sec.  192.295   Re-solicitation of proxies.

    If a savings association amends its application for conversion, the 
appropriate Federal banking agency may require the savings association 
to re-solicit proxies for its members' meeting as a condition of 
approval of the amendment.

Offering Circular


Sec.  192.300   Offering circular requirements.

    (a) Content and filing requirements. A savings association must 
prepare and file its offering circular in compliance with this part, 
Form OC, and the applicable SEC registration statement form required 
under 12 CFR 16.15. A Federal savings association must file its 
offering circular with the appropriate OCC licensing office and a State 
savings association must file its offering circular with the 
appropriate FDIC region. If filing an amendment, the savings 
association also must comply with Sec. Sec.  192.155 and 192.165.
    (b) Member approval. A savings association must condition its stock 
offering upon member approval of its plan of conversion.
    (c) Agency review. The appropriate Federal banking agency will 
review the offering circular and may comment on the included 
disclosures and financial statements. The appropriate Federal banking 
agency will not approve the adequacy or accuracy of the offering 
circular or the disclosures.
    (d) Revised filings. A savings association must file any revised 
offering circular, final offering circular, and any post-effective 
amendment to the final offering circular in accordance with the 
procedures in Sec. Sec.  192.155 and 192.165.
    (e) Request for effectiveness. After a savings association 
satisfactorily addresses the appropriate Federal banking agency's 
comments, the savings association must request that the appropriate 
Federal banking agency declare the offering circular effective for a 
time period. The time period may not exceed the maximum time period for 
the completion of the sale of all of the savings association's shares 
under Sec.  192.400.


Sec.  192.305   Distribution of offering circular.

    (a) Preliminary offering circular. A savings association may 
distribute a preliminary offering circular at the same time as or after 
it mails the proxy statement to its members.
    (b) Early distribution prohibited. A savings association may not 
distribute a final offering circular for stock issued in the 
transaction until after the appropriate Federal banking agency declares 
the offering circular effective or the Securities and Exchange 
Commission declares the registration statement for the offering 
circular effective. The savings association must have the offering 
circular delivered in accordance with this part.
    (c) Effective offering circular. A savings association must 
distribute a final offering circular for stock issued in the 
transaction to persons listed in its plan of conversion within 10 
calendar days after the appropriate Federal banking agency declares the 
offering circular effective or the Securities and Exchange Commission 
declares the registration statement for the offering circular 
effective.


Sec.  192.310   Filing a post-effective amendment to an offering 
circular.

    (a) In general. A savings association must file a post-effective 
amendment to the offering circular with the appropriate Federal banking 
agency or have its proposed stock holding company file a post-effective 
amendment to its registration statement for the offering circular with 
the Securities and Exchange Commission, when a material event or change 
of circumstances occurs.

[[Page 42652]]

    (b) Timing of delivery. After the appropriate Federal banking 
agency or the Securities and Exchange Commission declares the post-
effective amendment effective, the savings association must immediately 
have the amendment to the offering circular delivered to each person 
who subscribed for or ordered shares in the offering.
    (c) Content. The post-effective amendment must indicate that each 
person may increase, decrease, or rescind their subscription or order.
    (d) Post-effective offering period. The post-effective offering 
period must remain open no less than 10 calendar days nor more than 20 
calendar days, unless the appropriate Federal banking agency approves a 
longer rescission period.

Offers and Sales of Stock


Sec.  192.320   Order of priority to purchase conversion shares.

    A savings association must offer to sell its shares in the 
following order:
    (a) Eligible account holders.
    (b) Tax-qualified employee stock ownership plans.
    (c) Supplemental eligible account holders.
    (d) Other voting members who have subscription rights.
    (e) The savings association's community, its community and the 
general public, or the general public.


Sec.  192.325   Timing of offer to sell conversion shares.

    (a) In general. A savings association may offer to sell its 
conversion shares after the appropriate Federal banking agency approves 
the conversion, clears the proxy statement, and declares the offering 
circular effective.
    (b) Timing. The offer may commence at the same time the savings 
association starts the proxy solicitation of its members.


Sec.  192.330   Pricing of conversion shares.

    (a) In general. A savings association must sell its conversion 
shares at a uniform price per share and at a total price that is equal 
to the estimated pro forma market value of its shares after the 
conversion.
    (b) Maximum price. The maximum price must be no more than 15 
percent above the midpoint of the estimated price range in the savings 
association's offering circular.
    (c) Minimum price. The minimum price must be no more than 15 
percent below the midpoint of the estimated price range in the savings 
association's offering circular.
    (d) Increase in price. If the appropriate Federal banking agency 
permits, the savings association may increase the maximum price of 
conversion shares sold. The maximum price, as adjusted, must be no more 
than 15 percent above the maximum price computed under paragraph (b) of 
this section.
    (e) Price range. The maximum price must be between $5 and $50 per 
share.
    (f) Inclusion in preliminary offering circular. The savings 
association must include the estimated price in any preliminary 
offering circular.


Sec.  192.335   Procedures for the sale of conversion shares.

    (a) Distribution of order forms. A savings association must 
distribute order forms to all eligible account holders, supplemental 
eligible account holders, and other voting members to enable them to 
subscribe for the conversion shares they are permitted under the plan 
of conversion. The savings association may either send the order forms 
with its offering circular or after the savings association distributes 
its offering circular.
    (b) Sale of shares. A savings association may sell its conversion 
shares in a community offering, a public offering, or both. The savings 
association may begin the community offering, the public offering, or 
both at any time during the subscription offering or upon conclusion of 
the subscription offering.
    (c) Underwriting commissions and fees. A savings association may 
pay underwriting commissions (including underwriting discounts). The 
appropriate Federal banking agency may object to the payment of 
unreasonable commissions. The savings association may reimburse an 
underwriter for accountable expenses in a subscription offering if the 
public offering is limited. If no public offering occurs, the savings 
association may pay an underwriter a consulting fee. The appropriate 
Federal banking agency may object to the payment of unreasonable 
consulting fees.
    (d) Sequence of order fulfillment. If a savings association 
conducts the community offering, the public offering, or both at the 
same time as the subscription offering, the savings association must 
fill all subscription orders first.
    (e) Preparation of order form. A savings association must prepare 
its order form in compliance with this part and Form OF.


Sec.  192.340   Prohibited sales practices.

    (a) Offers, sales, or purchases of conversion shares. In connection 
with offers, sales, or purchases of conversion shares under this part, 
a savings association and its directors, officers, agents, or employees 
may not:
    (1) Employ any device, scheme, or artifice to defraud;
    (2) Obtain money or property by means of any untrue statement of a 
material fact or any omission of a material fact necessary to make the 
statements, in light of the circumstances under which they were made, 
not misleading; or
    (3) Engage in any act, transaction, practice, or course of business 
that operates or would operate as a fraud or deceit upon a purchaser or 
seller.
    (b) Conversion. During the conversion, no person may:
    (1) Transfer, or enter into any agreement or understanding to 
transfer, the legal or beneficial ownership of subscription rights for 
the savings association's conversion shares or the underlying 
securities to the account of another;
    (2) Make any offer, or any announcement of an offer, to purchase 
any of the savings association's conversion shares from anyone but the 
savings association; or
    (3) Knowingly acquire more than the maximum purchase allowable 
under the savings association's plan of conversion.
    (c) Exceptions. The restrictions in paragraphs (b)(1) and (2) of 
this section do not apply to offers for more than 10 percent of any 
class of conversion shares by:
    (1) An underwriter or a selling group, acting on the savings 
association's behalf, that makes the offer with a view toward public 
resale; or
    (2) One or more of the savings association's tax-qualified employee 
stock ownership plans so long as the plan or plans do not beneficially 
own more than 25 percent of any class of the savings association's 
equity securities in the aggregate.
    (d) Violations. Any person found to have violated the restrictions 
in paragraph (a) or (b) of this section may become subject to an 
enforcement action, civil money penalties, criminal prosecution, or 
other legal action.


Sec.  192.345   Permissible forms of subscriber payment.

    (a) In general. A subscriber may purchase conversion shares with 
cash, by a withdrawal from a savings account, or a withdrawal from a 
certificate of deposit. If a subscriber purchases shares by a 
withdrawal from a certificate of deposit, the savings association may 
not assess a penalty for the withdrawal.
    (b) Prohibition. A savings association may not extend credit to any 
person to purchase the savings association's conversion shares.

[[Page 42653]]

Sec.  192.350   Interest on payments for conversion shares.

    (a) In general. A savings association must pay interest from the 
date the savings association receives a payment for conversion shares 
until the date the savings association completes or terminates the 
conversion. The savings association must pay interest at no less than 
its passbook rate for amounts paid in cash, check, or money order.
    (b) Interest on withdrawals from savings accounts. If a subscriber 
withdraws money from a savings account to purchase conversion shares, 
the savings association must pay interest on the payment until the 
savings association completes or terminates the conversion as if the 
withdrawn amount remained in the account.
    (c) Interest on withdrawals from certificates of deposit. If a 
depositor fails to maintain the applicable minimum balance requirement 
because he or she withdraws money from a certificate of deposit to 
purchase conversion shares, the savings association may cancel the 
certificate and pay interest at no less than its passbook rate on any 
remaining balance.


Sec.  192.355   Subscription rights for eligible account holders and 
supplemental eligible account holders.

    (a) Eligible account holders. A savings association must give each 
eligible account holder subscription rights to purchase conversion 
shares in an amount equal to the greater of:
    (1) The maximum purchase limitation established for the community 
offering or the public offering under Sec.  192.395;
    (2) One-tenth of one percent of the total stock offering; or
    (3) Fifteen times the following number: The total number of 
conversion shares that the savings association will issue, multiplied 
by the following fraction. The numerator is the total qualifying 
deposit of the eligible account holder. The denominator is the total 
qualifying deposits of all eligible account holders. The savings 
association must round down the product of this multiplied fraction to 
the next whole number.
    (b) Supplemental eligible account holders. The savings association 
must give subscription rights to purchase shares to each supplemental 
eligible account holder in the same amount as described in paragraph 
(a) of this section, except that the savings association must compute 
the fraction described in paragraph (a)(3) of this section as follows: 
The numerator is the total qualifying deposit of the supplemental 
eligible account holder. The denominator is the total qualifying 
deposits of all supplemental eligible account holders.


Sec.  192.360   Officers, directors, and associates as eligible account 
holders.

    A savings association's officers, directors, and their associates 
may be eligible account holders. However, if an officer, director, or 
his or her associate receives subscription rights based on increased 
deposits in the year before the eligibility record date, the savings 
association must subordinate subscription rights for these deposits to 
subscription rights exercised by other eligible account holders.


Sec.  192.365   Purchase of conversion shares by other voting members.

    (a) In general. A savings association must give rights to purchase 
its conversion shares in the conversion to voting members who are 
neither eligible account holders nor supplemental eligible account 
holders. The savings association must allocate rights to each voting 
member that are equal to the greater of:
    (1) The maximum purchase limitation established for the community 
offering and the public offering under Sec.  192.395; or
    (2) One-tenth of one percent of the total stock offering.
    (b) Subordination of voting rights. The savings association must 
subordinate the voting members' rights to the rights of eligible 
account holders, tax-qualified employee stock ownership plans, and 
supplemental eligible account holders.


Sec.  192.370   Limits on aggregate purchases by officers, directors, 
and associates.

    (a) In general. When a savings association converts, its officers, 
directors, and their associates may not purchase, in the aggregate, 
more than the following percentage of the savings association's total 
stock offering:

                      Table 1 to Sec.   192.370(a)
------------------------------------------------------------------------
                                                            Officer and
                                                             director
                    Institution size                         purchases
                                                             (percent)
------------------------------------------------------------------------
$50,000,000 or less.....................................              35
$50,000,001-100,000,000.................................              34
$100,000,001-150,000,000................................              33
$150,000,001-200,000,000................................              32
$200,000,001-250,000,000................................              31
$250,000,001-300,000,000................................              30
$300,000,001-350,000,000................................              29
$350,000,001-400,000,000................................              28
$400,000,001-450,000,000................................              27
$450,000,001-500,000,000................................              26
Over $500,000,000.......................................              25
------------------------------------------------------------------------

    (b) Exception. The purchase limitations in this section do not 
apply to shares held in tax-qualified employee stock benefit plans that 
are attributable to the savings association's officers, directors, and 
their associates.


Sec.  192.375   Allocation of oversubscribed conversion shares.

    (a) Eligible account holders. If a savings association's conversion 
shares are oversubscribed by its eligible account holders, the savings 
association must allocate shares among the eligible account holders so 
that each, to the extent possible, may purchase 100 shares.
    (b) Supplemental eligible account holders. If a savings 
association's conversion shares are oversubscribed by its supplemental 
eligible account holders, the savings association must allocate shares 
among the supplemental eligible account holders so that each, to the 
extent possible, may purchase 100 shares.
    (c) Eligible and supplemental eligible account holders. If a person 
is an eligible account holder and a supplemental eligible account 
holder, the savings association must include the eligible account 
holder's allocation in determining the number of conversion shares that 
the savings association may allocate to the person as a supplemental 
eligible account holder.
    (d) Additional allocations. For conversion shares that the savings 
association does not allocate under paragraphs (a) and (b) of this 
section, the savings association must allocate the shares among the 
eligible or supplemental eligible account holders equitably, based on 
the amounts of qualifying deposits. The savings association must 
describe this method of allocation in its plan of conversion.
    (e) Oversubscription. If shares remain after the savings 
association has allocated shares as provided in paragraphs (a) and (b) 
of this section, and if the savings association's voting members 
oversubscribe, the savings association must allocate its conversion 
shares among those members equitably. The savings association must 
describe the method of allocation in its plan of conversion.


Sec.  192.380   Purchase of conversion shares by employee stock 
ownership plan.

    (a) In general. A savings association's tax-qualified employee 
stock ownership plan may purchase up to 10 percent of the total 
offering of the savings association's conversion shares.
    (b) Revised stock valuation range. If the appropriate Federal 
banking agency approves a revised stock valuation range as described in 
Sec.  192.330(e), and the final conversion stock valuation range

[[Page 42654]]

exceeds the former maximum stock offering range, a savings association 
may allocate conversion shares to its tax-qualified employee stock 
ownership plan, up to the 10 percent limit in paragraph (a) of this 
section.
    (c) Open market purchase. If a savings association's tax-qualified 
employee stock ownership plan is not able to or chooses not to purchase 
stock in the offering, it may, with prior appropriate Federal banking 
agency approval and appropriate disclosure in the savings association's 
offering circular, purchase stock in the open market, or purchase 
authorized but unissued conversion shares.
    (d) Charitable organizations. A savings association may include 
stock contributed to a charitable organization in the conversion in the 
calculation of the total offering of conversion shares under paragraphs 
(a) and (b) of this section, unless the appropriate Federal banking 
agency objects on supervisory grounds.


Sec.  192.385   Purchase limitations.

    (a) In general. A savings association may limit the number of 
shares that any person, group of associated persons, or persons 
otherwise acting in concert, may subscribe to up to five percent of the 
total stock sold.
    (b) Modification of purchase limit. If a savings association sets a 
limit of five percent under paragraph (a) of this section, the savings 
association may modify that limit with appropriate Federal banking 
agency approval to provide that any person, group of associated 
persons, or persons otherwise acting in concert subscribing for five 
percent, may purchase between five and 10 percent as long as the 
aggregate amount that the subscribers purchase does not exceed 10 
percent of the total stock offering.
    (c) Minimum purchase. A savings association may require persons 
exercising subscription rights to purchase a minimum number of 
conversion shares. The minimum number of shares must equal the lesser 
of the number of shares obtained by a $500 subscription or 25 shares.
    (d) Aggregation. In setting purchase limitations under this 
section, a savings association may not aggregate conversion shares 
attributed to a person in the savings association's tax-qualified 
employee stock ownership plan with shares purchased directly by, or 
otherwise attributable to, that person.


Sec.  192.390   Community offering of conversion shares.

    (a) Purchase preference in subscription offering. In a subscription 
offering, a savings association may give a purchase preference to 
eligible account holders, supplemental eligible account holders, and 
voting members residing in its local community.
    (b) Purchase preference in community offering. In a community 
offering, a savings association must give a purchase preference to 
natural persons residing in its local community.


Sec.  192.395   Other conditions for community and public offerings.

    A savings association must offer and sell its stock to achieve a 
widespread distribution of the stock. If a savings association offers 
shares in a community offering, a public offering, or both, it must 
first fill orders for its stock up to a maximum of two percent of the 
conversion stock on a basis that will promote a widespread distribution 
of stock. The savings association must allocate any remaining shares on 
an equal number of shares per order basis until it fills all orders.

Completion of the Offering


Sec.  192.400   Time period for completion of sale of stock.

    A savings association must complete all sales of its stock within 
45 calendar days after the last day of the subscription period, unless 
the offering is extended under Sec.  192.405.


Sec.  192.405   Extension of the offering period.

    (a) In general. A savings association must submit a request in 
writing to the appropriate Federal banking agency for an extension of 
any offering period. The appropriate Federal banking agency will not 
grant any single extension of more than 90 calendar days.
    (b) Post-effective amendment to offering circular. If the 
appropriate Federal banking agency grants a savings association's 
request for an extension of time, the savings association must provide 
a post-effective amendment to the offering circular under Sec.  192.310 
to each person who subscribed for or ordered stock. The amendment must 
indicate that the appropriate Federal banking agency extended the 
offering period and that each person who subscribed for or ordered 
stock may increase, decrease, or rescind their subscription or order 
within the time remaining in the extension period.

Completion of the Conversion


Sec.  192.420   Time period for completion of conversion.

    In its plan of conversion, a savings association must set a date by 
which the conversion must be completed. This date must not be more than 
24 months from the date that the savings association's members approve 
the plan of conversion. The date, once set, may not be extended by the 
savings association or by the appropriate Federal banking agency. The 
savings association must terminate the conversion if it is not 
completed by that date. The conversion is complete on the date that the 
savings association accepts the offers for its stock.


Sec.  192.425   Termination of conversion.

    A conversion may be terminated by:
    (a) A savings association's members failing to approve the 
conversion at its members' meeting;
    (b) A savings association before its members' meeting; or
    (c) A savings association after the members' meeting, but only if 
the appropriate Federal banking agency concurs.


Sec.  192.430   Charter amendments.

    (a) Conversion from Federally-chartered mutual savings association 
or savings bank to Federally-chartered stock savings association or 
savings bank. If the savings association is a Federally-chartered 
mutual savings association or savings bank and it converts to a 
Federally-chartered stock savings association or savings bank, it must 
apply to the OCC to amend its charter and bylaws consistent with 12 CFR 
5.22, as part of the savings association's application for conversion. 
The savings association may only include OCC pre-approved anti-takeover 
provisions in its amended charter and bylaws. See 12 CFR 5.22(g)(7).
    (b) Conversion from Federally-chartered mutual savings association 
or savings bank to State-chartered stock savings association or savings 
bank. If the savings association is a Federally-chartered mutual 
savings association or savings bank and is converting to a State-
chartered stock savings association under this part, the savings 
association must surrender its charter to the OCC for cancellation 
promptly after the State issues its new State stock charter. The 
savings association must promptly file a copy of its new State stock 
charter with the FDIC.
    (c) Conversion from State-chartered mutual savings association or 
savings bank to Federally State-chartered stock savings association or 
savings bank. If the savings association is a State-chartered mutual 
savings association or savings bank, and is converting to a Federally 
chartered stock savings association or savings bank, it must apply to 
the OCC for a new charter and bylaws consistent with 12 CFR 5.22. The 
savings association may only include OCC pre-approved anti-takeover

[[Page 42655]]

provisions in its charter and bylaws. See 12 CFR 5.22(g)(7).
    (d) Priority of accounts. In any conversion described in this 
section that involves a mutual holding company, the charter of each 
resulting subsidiary savings association of the holding company must 
contain the following provision:

    In any situation in which the priority of the accounts of the 
association is in controversy, all such accounts must, to the extent 
of their withdrawable value, be debts of the association having the 
same priority as the claims of general creditors of the association 
not having priority (other than any priority arising or resulting 
from consensual subordination) over other general creditors of the 
association.

    (e) Liquidation account. The savings association's new or amended 
charter must require the savings association to establish and maintain 
a liquidation account for eligible and supplemental eligible account 
holders under Sec.  192.450.


Sec.  192.435   Corporate existence after conversion.

    A savings association's corporate existence will continue following 
its conversion, unless it converts to a State-chartered stock savings 
association and State law prescribes otherwise.


Sec.  192.440   Stockholder voting rights after conversion.

    A savings association must provide its stockholders with exclusive 
voting rights, except as provided in Sec.  192.445(c).


Sec.  192.445   Savings account holder's account after conversion.

    (a) In general. The savings association must provide each savings 
account holder, without payment, a withdrawable savings account or 
accounts in the same amount and under the same terms and conditions as 
their accounts before the conversion.
    (b) Liquidation account. The savings association must provide a 
liquidation account for each eligible and supplemental eligible account 
holder under Sec.  192.450.
    (c) Voting rights. If the savings association is State-chartered 
and State law requires the savings association to provide voting rights 
to savings account holders or borrowers, the charter must:
    (1) Limit these voting rights to the minimum required by State law; 
and
    (2) Require the savings association to solicit proxies from the 
savings account holders and borrowers in the same manner that the 
savings association solicits proxies from its stockholders.

Liquidation Account


Sec.  192.450   Liquidation accounts.

    (a) In general. A liquidation account represents the potential 
interest of eligible account holders and supplemental eligible account 
holders in the savings association's net worth at the time of 
conversion. A savings association must maintain a sub-account to 
reflect the interest of each account holder.
    (b) Distribution of liquidation. Before a savings association may 
provide a liquidation distribution to common stockholders, it must give 
a liquidation distribution to those eligible account holders and 
supplemental eligible account holders who hold savings accounts from 
the time of conversion until liquidation.
    (c) Recording of liquidation account in financial statements. A 
savings association may not record the liquidation account in its 
financial statements. The savings association must disclose the 
liquidation account in the footnotes to the savings association's 
financial statements.


Sec.  192.455   Initial balance of liquidation account.

    The initial balance of the liquidation account is the savings 
association's net worth in the statement of financial condition 
included in the final offering circular.


Sec.  192.460   Initial balance of liquidation sub-account.

    (a) General rule. (1) A savings association must calculate the 
initial liquidation sub-account balance of each eligible and 
supplemental eligible account holder at the time of the conversion.
    (2) The initial liquidation sub-account balance for a savings 
account held by an eligible account holder, for a savings account not 
held by the eligible account holder on the supplemental eligibility 
record date, is calculated by multiplying the initial liquidation 
account balance by the following fraction: The numerator is the 
qualifying deposit in the savings account on the eligibility record 
date and the denominator is the calculation in paragraph (a)(5) of this 
section.
    (3) The initial liquidation sub-account balance for a savings 
account held by a supplemental eligible account holder, for a savings 
account not held by the supplemental eligible account holder on the 
eligibility record date, is calculated by multiplying the initial 
liquidation account balance by the following fraction: The numerator is 
the qualifying deposit in the savings account on the supplemental 
eligibility record date and the denominator is the calculation in 
paragraph (a)(5) of this section.
    (4) For a savings account held on both the eligibility record date 
and the supplemental eligibility record date, the amount of the 
qualifying deposit for calculating the initial liquidation sub-account 
is the higher account balance of the savings account on either the 
eligibility record date or the supplemental eligibility record date. 
The initial liquidation sub-account balance is calculated by 
multiplying the liquidation account balance by the following fraction: 
The numerator is the higher amount of the qualifying deposit in the 
savings account on either the eligibility record date or the 
supplemental eligibility record date and the denominator is the 
calculation in paragraph (a)(5) of this section.
    (5) The denominator for calculating the initial liquidation sub-
account balance of each eligible and supplemental eligible account 
holder is the sum of the numerator calculations in paragraphs (a)(2) 
through (4) of this section.
    (b) Balance increases and decreases. A savings association must not 
increase the initial liquidation and sub-account balances. It must 
decrease the initial liquidation account and the sub-account balances 
under Sec.  192.470 as depositors reduce or close their savings 
accounts.


Sec.  192.465   Retention of voting rights based on liquidation sub-
accounts.

    Eligible account holders or supplemental eligible account holders 
do not retain any voting rights based on their liquidation sub-
accounts.


Sec.  192.470   Required adjustments to liquidation sub-accounts.

    (a) Reductions. (1) A savings association must reduce the balance 
of an eligible account holder's or supplemental eligible account 
holder's liquidation sub-account if the deposit balance in the account 
holder's savings account at the close of business on any annual closing 
date, which for purposes of this section is the savings association's 
fiscal year end, falls below the lesser of:
    (i) The deposit balance in the account holder's savings account as 
of the relevant eligibility record date; or
    (ii) The deposit balance in the account holder's savings account as 
of its lowest balance as of any subsequent annual closing date.
    (2) The reduction in the account holder's liquidation sub-account 
from its balance at the time of conversion must be proportionate to the 
reduction in the account holder's savings account

[[Page 42656]]

from its balance at the time of conversion.
    (b) Prohibition on increases. If a savings association reduces the 
balance of a liquidation sub-account, it may not subsequently increase 
it if the deposit balance increases.
    (c) Liquidation account adjustments. A savings association is not 
required to adjust the liquidation account and sub-account balances at 
each annual closing date if the savings association maintains 
sufficient records to make the computations if a liquidation 
subsequently occurs.
    (d) Maintenance of liquidation sub-account. A savings association 
must maintain the liquidation sub-account for each account holder as 
long as the account holder maintains an account with the same social 
security number.
    (e) Complete liquidation. If there is a complete liquidation, the 
savings association must provide the account holder of a liquidation 
sub-account with a liquidation distribution in the amount of the 
account holder's remaining liquidation sub-account balance.


Sec.  192.475   Definition of liquidation.

    (a) In general. A liquidation is a sale of a savings association's 
assets and settlement of its liabilities with the intent to cease 
operations and close. Upon liquidation, a savings association must 
return its charter to the governmental agency that issued it. The 
government agency must cancel the savings association's charter.
    (b) Other transactions. A merger, consolidation, or similar 
combination or transaction with another depository institution, is not 
a liquidation. If a savings association is involved in such a 
transaction, the surviving institution must assume the liquidation 
account.


Sec.  192.480   Effect of liquidation account on net worth.

    The liquidation account does not affect a savings association's net 
worth.


Sec.  192.485   Required liquidation account provision in new Federal 
charter.

    If a savings association converts to Federal stock form, it must 
include the following provision in its new charter: ``Liquidation 
Account. Under appropriate Federal banking agency regulations, the 
association must establish and maintain a liquidation account for the 
benefit of its savings account holders as of ___. If the association 
undergoes a complete liquidation, it must comply with appropriate 
Federal banking agency regulations with respect to the amount and 
priorities on liquidation of each of the savings account holder's 
interests in the liquidation account. A savings account holder's 
interest in the liquidation account does not entitle the savings 
account holder to any voting rights.''

Post-Conversion


Sec.  192.500   Permissible management stock benefit plans after 
conversion.

    (a) In general. During the 12 months after its conversion, a 
savings association may implement a stock option plan (Option Plan), an 
employee stock ownership plan or other tax-qualified employee stock 
benefit plan (collectively, ESOP), and a management recognition plan 
(MRP), provided that the savings association meets all of the following 
requirements:
    (1) The savings association discloses the plans in its proxy 
statement and offering circular and indicates in its offering circular 
that there will be a separate shareholder vote on the Option Plan and 
the MRP at least six months after the conversion. No shareholder vote 
is required to implement the ESOP. The savings association's ESOP must 
be tax-qualified.
    (2) The savings association's Option Plan does not encompass more 
than 10 percent of the number of shares that the savings association 
issued in the conversion.
    (3)(i) The savings association's ESOP and MRP do not encompass, in 
the aggregate, more than 10 percent of the number of shares that the 
savings association issued in the conversion. If the savings 
association has tangible capital of 10 percent or more following the 
conversion, the appropriate Federal banking agency may permit the ESOP 
and MRP to encompass, in the aggregate, up to 12 percent of the number 
of shares issued in the conversion; and
    (ii) The savings association's MRP does not encompass more than 
three percent of the number of shares that the savings association 
issued in the conversion. If the savings association has tangible 
capital of 10 percent or more after the conversion, the appropriate 
Federal banking agency may permit the MRP to encompass up to four 
percent of the number of shares that the savings association issued in 
the conversion.
    (4) No individual receives more than 25 percent of the shares under 
any plan.
    (5) The savings association's directors who are not officers of the 
savings association do not receive more than five percent of the shares 
of the MRP or Option Plan individually, or 30 percent of any such plan 
in the aggregate.
    (6) The savings association's shareholders approve each of the 
Option Plan and the MRP by a majority of the total votes eligible to be 
cast at a duly called meeting before the savings association 
establishes or implements the plan. The savings association may not 
hold this meeting until six months after its conversion.
    (7) When the savings association distributes proxies or related 
material to shareholders in connection with the vote on a plan, the 
savings association states that the plan complies with the appropriate 
Federal banking agency's regulations and that the appropriate Federal 
banking agency does not endorse or approve the plan in any way. The 
savings association may not make any written or oral representations to 
the contrary.
    (8) The savings association does not grant stock options at less 
than the market price at the time of grant.
    (9) The savings association does not fund the Option Plan or the 
MRP at the time of the conversion.
    (10) The savings association's plan does not begin to vest earlier 
than one year after shareholders approve the plan, and does not vest at 
a rate exceeding 20 percent per year.
    (11) The savings association's plan permits accelerated vesting 
only for disability or death, or if the savings association undergoes a 
change of control.
    (12) The savings association's plan provides that its executive 
officers or directors must exercise or forfeit their options in the 
event the institution becomes critically undercapitalized (as defined 
in 12 CFR 6.4 or 324.403, as applicable), is subject to appropriate 
Federal banking agency enforcement action, or receives a capital 
directive under 12 CFR part 6, subpart B or 12 CFR 308.201, as 
applicable.
    (13) The savings association files a copy of the proposed Option 
Plan or MRP with the appropriate Federal banking agency and certify to 
such agency that the plan approved by the shareholders is the same plan 
that the savings association filed with, and disclosed in, the proxy 
materials distributed to shareholders in connection with the vote on 
the plan.
    (14) The savings association files the plan and the certification 
with the appropriate Federal banking agency within five calendar days 
after its shareholders approve the plan.
    (b) Stock splits or other adjustments. The savings association may 
provide dividend equivalent rights or dividend adjustment rights to 
allow for stock splits or other adjustments to its stock in the ESOP, 
MRP, and Option Plan.
    (c) Plans implemented more than 12 months after conversion. The

[[Page 42657]]

restrictions in paragraph (a) of this section do not apply to plans 
implemented more than 12 months after the conversion, provided that 
materials pertaining to any shareholder vote regarding such plans are 
not distributed within the 12 months after the conversion. If a plan 
adopted in conformity with paragraph (a) of this section is amended 
more than 12 months following the conversion, shareholders must ratify 
any material deviations to the requirements in paragraph (a).


Sec.  192.505   Restrictions on the trading of shares by directors, 
officers, and associates.

    (a) Sales restriction. Directors and officers who purchase 
conversion shares may not sell the shares for one year after the date 
of purchase, except that in the event of the death of the officer or 
director, the successor in interest may sell the shares.
    (b) Notice of sales restriction on stock certificate. The savings 
association must include notice of the restriction described in 
paragraph (a) of this section on each certificate of stock that a 
director or officer purchases during the conversion or receives in 
connection with a stock dividend, stock split, or otherwise with 
respect to such restricted shares.
    (c) Stock purchase restrictions. For three years after the 
conversion, the savings association's officers, directors, and their 
associates may purchase the savings association's stock only from a 
broker or dealer registered with the Securities and Exchange 
Commission. However, the savings association's officers, directors, and 
their associates may engage in a negotiated transaction involving more 
than one percent of the savings association's outstanding stock, and 
may purchase stock through any of the savings association's management 
or employee stock benefit plans.
    (d) Communication of restrictions with transfer agent. The savings 
association must instruct its stock transfer agent about the transfer 
restrictions in this section.


Sec.  192.510   Repurchase of shares after conversion.

    (a) Repurchases during first year after conversion. A savings 
association may not repurchase its shares in the first year after the 
conversion except:
    (1) In extraordinary circumstances, a savings association may make 
open market repurchases of up to five percent of its outstanding stock 
in the first year after the conversion if the savings association files 
a notice under Sec.  192.515(a) and the appropriate Federal banking 
agency does not disapprove the repurchase. The appropriate Federal 
banking agency will not approve such repurchases unless the repurchase 
meets the standards in Sec.  192.515(c), and the repurchase is 
consistent with paragraph (c) of this section.
    (2) A savings association may repurchase qualifying shares of a 
director or conduct an appropriate Federal banking agency-approved 
repurchase pursuant to an offer made to all shareholders of the savings 
association.
    (3) Repurchases to fund management recognition plans that have been 
ratified by shareholders do not count toward the repurchase limitations 
in this section. Repurchases in the first year to fund such plans 
require prior written notification to the appropriate Federal banking 
agency.
    (4) Purchases to fund tax qualified employee stock benefit plans do 
not count toward the repurchase limitations in this section.
    (b) Repurchases following first year after conversion. After the 
first year, a savings association may repurchase its shares, subject to 
all other applicable regulatory and supervisory restrictions and 
paragraph (c) of this section.
    (c) Restrictions on all repurchases. All stock repurchases are 
subject to the following restrictions.
    (1) A savings association may not repurchase its shares if the 
repurchase will reduce the savings association's regulatory capital 
below the amount required for its liquidation account under Sec.  
192.450. The savings association must comply with the capital 
distribution requirements at 12 CFR 5.55.
    (2) The restrictions on share repurchases apply to a charitable 
organization under Sec.  192.550. A savings association must aggregate 
purchases of shares by the charitable organization with the savings 
association's repurchases.


Sec.  192.515   Information to be filed with Federal banking agency 
prior to repurchase of shares.

    (a) Notice requirement. To repurchase stock in the first year 
following conversion, other than repurchases under Sec.  192.510(a)(3) 
or (4), a savings association must file a written notice with the 
appropriate OCC licensing office if Federally chartered, and with the 
appropriate FDIC region if State-chartered. The savings association 
must provide the following information:
    (1) The proposed repurchase program;
    (2) The effect of the repurchases on the savings association's 
regulatory capital; and
    (3) The purpose of the repurchases and, if applicable, an 
explanation of the extraordinary circumstances necessitating the 
repurchases.
    (b) Filing of notice. A Federal savings association must file its 
notice with the appropriate OCC licensing office, and a State savings 
association must file its notice with the appropriate regional director 
of the FDIC, at least 10 calendar days before the savings association 
begins its repurchase program.
    (c) Agency review. A savings association may not repurchase its 
shares if the appropriate Federal banking agency objects to the 
repurchase program. The appropriate Federal banking agency will not 
object to a repurchase program if:
    (1) The repurchase program will not adversely affect the savings 
association's financial condition;
    (2) The savings association submits sufficient information to 
evaluate the proposed repurchases;
    (3) The savings association demonstrates extraordinary 
circumstances and a compelling and valid business purpose for the share 
repurchases; and
    (4) The repurchase program would not be contrary to other 
applicable regulations.


Sec.  192.520   Declaring and paying dividends after the conversion.

    A savings association may declare or pay a dividend on its shares 
after the conversion if:
    (a) The dividend will not reduce the savings association's 
regulatory capital below the amount required for the liquidation 
account under Sec.  192.450;
    (b) The savings association complies with all capital requirements 
under 12 CFR part 3 after it declares or pays dividends;
    (c) The savings association complies with the capital distribution 
requirements under 12 CFR 5.55; and
    (d) The savings association does not return any capital, other than 
ordinary dividends, to purchasers during the term of the business plan 
submitted with the conversion.


Sec.  192.525   Restrictions on acquisition of shares after conversion.

    (a) Prior agency approval. For three years after conversion, no 
person may, directly or indirectly, acquire or offer to acquire the 
beneficial ownership of more than 10 percent of any class of the 
savings association's equity securities without the appropriate Federal 
banking agency's prior written approval. If a person violates this 
prohibition, the savings association may not permit the person to vote 
shares in excess of 10

[[Page 42658]]

percent, and may not count the shares in excess of 10 percent in any 
shareholder vote.
    (b) Beneficial ownership. A person acquires beneficial ownership of 
more than 10 percent of a class of shares when he or she holds any 
combination of the savings association's stock or revocable or 
irrevocable proxies under circumstances that give rise to a conclusive 
control determination or rebuttable control determination under 12 CFR 
5.50. The appropriate Federal banking agency will presume that a person 
has acquired shares if the acquiror entered into a binding written 
agreement for the transfer of shares. For purposes of this section, an 
offer is made when it is communicated. An offer does not include non-
binding expressions of understanding or letters of intent regarding the 
terms of a potential acquisition.
    (c) Exceptions. Notwithstanding the restrictions in this section:
    (1) Paragraphs (a) and (b) of this section do not apply to any 
offer with a view toward public resale made exclusively to the savings 
association, to the underwriters, or to a selling group acting on the 
savings association's behalf.
    (2) Unless the appropriate Federal banking agency objects in 
writing, any person may offer or announce an offer to acquire up to one 
percent of any class of shares. In computing the one percent limit, the 
person must include all of his or her acquisitions of the same class of 
shares during the prior 12 months.
    (3) A corporation whose ownership is, or will be, substantially the 
same as the savings association's ownership may acquire or offer to 
acquire more than 10 percent of the savings association's common stock, 
if it makes the offer or acquisition more than one year after the 
savings association's conversion.
    (4) One or more of the savings association's tax-qualified employee 
stock benefit plans may acquire the savings association's shares, if 
the plan or plans do not beneficially own more than 25 percent of any 
class of the savings association's shares in the aggregate.
    (5) An acquiror does not have to file a separate application to 
obtain the appropriate Federal banking agency's approval under 
paragraph (a) of this section if the acquiror files an application 
under 12 CFR 5.50 that specifically addresses the criteria listed under 
paragraph (d) of this section and the savings association does not 
oppose the proposed acquisition.
    (d) Factors for agency denial. The appropriate Federal banking 
agency may deny an application under paragraph (a) of this section if 
the proposed acquisition:
    (1) Is contrary to the purposes of this part;
    (2) Is manipulative or deceptive;
    (3) Subverts the fairness of the conversion;
    (4) Is likely to injure the savings association;
    (5) Is inconsistent with the savings association's plan to meet the 
credit and lending needs of its proposed market area;
    (6) Otherwise violates laws or regulations; or
    (7) Does not prudently deploy the savings association's conversion 
proceeds.


Sec.  192.530   Other post-conversion requirements.

    After a savings association converts, it must:
    (a) Promptly register its shares under the Securities Exchange Act 
of 1934 (15 U.S.C. 78a-78jj, as amended). The savings association may 
not deregister the shares for three years.
    (b) Encourage and assist a market maker to establish and to 
maintain a market for its shares. A market maker for a security is a 
dealer who:
    (1) Regularly publishes bona fide competitive bid and offer 
quotations for the security in a recognized inter-dealer quotation 
system;
    (2) Furnishes bona fide competitive bid and offer quotations for 
the security on request; or
    (3) May effect transactions for the security in reasonable 
quantities at quoted prices with other brokers or dealers.
    (c) Use its best efforts to list its shares on a national or 
regional securities exchange or on the National Association of 
Securities Dealers Automated Quotation system.
    (d) File all post-conversion reports that the appropriate Federal 
banking agency requires.

Contributions to Charitable Organizations


Sec.  192.550   Donating conversion shares or conversion proceeds to a 
charitable organization.

    A savings association may contribute some of its conversion shares 
or proceeds to a charitable organization if:
    (a) The savings association's plan of conversion provides for the 
proposed contribution;
    (b) The savings association's members approve the proposed 
contribution; and
    (c) The IRS either has approved, or approves within two years after 
formation, the charitable organization as a tax-exempt charitable 
organization under the Internal Revenue Code.


Sec.  192.555   Member approval of charitable contributions.

    At the meeting to consider the conversion, a savings association's 
members must separately approve, by a majority of the total eligible 
votes, a charitable contribution of conversion shares or proceeds. If 
the savings association is in mutual holding company form and adding a 
charitable contribution as part of a second step stock conversion, the 
savings association must also have its minority shareholders separately 
approve the charitable contribution by a majority of their total 
eligible votes.


Sec.  192.560   Limitations on charitable contributions.

    A savings association may contribute a reasonable amount of 
conversion shares or proceeds to a charitable organization if such 
contribution will not exceed limits for charitable deductions under the 
Internal Revenue Code and the appropriate Federal banking agency does 
not object on supervisory grounds. If the savings association is well-
capitalized, the appropriate Federal banking agency generally will not 
object if the savings association contributes an aggregate amount of 
eight percent or less of the conversion shares or proceeds.


Sec.  192.565   Contents of organizational documents of charitable 
organization.

    The charitable organization's charter (or trust agreement) and gift 
instrument must provide that:
    (a) The charitable organization's primary purpose is to serve and 
make grants in the savings association's local community;
    (b) As long as the charitable organization controls shares, it must 
vote those shares in the same ratio as all other shares voted on each 
proposal considered by the savings association's shareholders;
    (c) For at least five years after its organization, one seat on the 
charitable organization's board of directors (or board of trustees) is 
reserved for an independent director (or trustee) from the savings 
association's local community. This director may not be an officer, 
director, or employee of the savings association or of an affiliate of 
the savings association, and should have experience with local 
community charitable organizations and grant making; and
    (d) For at least five years after its organization, one seat on the 
charitable organization's board of directors (or board of trustees) is 
reserved for a director from the savings association's board of 
directors or the board of

[[Page 42659]]

directors of an acquiror or resulting institution in the event of a 
merger or acquisition of the savings association.


Sec.  192.570   Conflicts of interest among directors.

    (a) In general. A person is subject to 12 CFR 163.200 if that 
person:
    (1) Is a director, officer, or employee of the savings association; 
has the power to direct the savings association's management or 
policies; or otherwise owes a fiduciary duty to the savings association 
(for example, holding company directors); and
    (2) Will serve as an officer, director, or employee of the 
charitable organization. See Form AC for further information on 
operating plans and conflict of interest plans.
    (b) Identification and recusal of directors. Before the savings 
association's board of directors may adopt a plan of conversion that 
includes a charitable organization, the savings association must 
identify its directors that will serve on the charitable organization's 
board. These directors may not participate in the board's discussions 
concerning contributions to the charitable organization, and may not 
vote on the matter.


Sec.  192.575   Other requirements for charitable organizations.

    (a) Charter and gift instrument requirements. The charitable 
organization's charter (or trust agreement) and the gift instrument for 
the contribution must provide that:
    (1) The appropriate Federal banking agency may examine the 
charitable organization at the charitable organization's expense;
    (2) The charitable organization must comply with all supervisory 
directives that the appropriate Federal banking agency imposes;
    (3) The charitable organization must operate according to written 
policies adopted by its board of directors (or board of trustees), 
including a conflict of interest policy;
    (4) The charitable organization must not engage in self-dealing; 
and
    (5) The charitable organization must comply with all laws necessary 
to maintain its tax-exempt status under the Internal Revenue Code.
    (b) Stock certificate requirement. The savings association must 
include the following legend in the stock certificates of shares that 
the savings association contributes to the charitable organization or 
that the charitable organization otherwise acquires: ``The board of 
directors must consider the shares that this stock certificate 
represents as voted in the same ratio as all other shares voted on each 
proposal considered by the shareholders, as long as the shares are 
controlled by the charitable organization.''
    (c) Voting ratio. As long as the charitable organization controls 
shares, the savings association must consider those shares as voted in 
the same ratio as all of the shares voted on each proposal considered 
by the savings association's shareholders.
    (d) Filing requirement. After the savings association completes its 
stock offering, it must submit copies of the following documents to the 
appropriate OCC licensing office if it is a Federal savings association 
or with the appropriate FDIC region if it is a State savings 
association:
    (1) The charitable organization's charter and bylaws (or trust 
agreement);
    (2) The charitable organization's operating plan (within six months 
after the savings association's stock offering);
    (3) The charitable organization's conflict of interest policy; and
    (4) The gift instrument for the contributions of either stock or 
cash to the charitable organization.

Subpart B--Voluntary Supervisory Conversions


Sec.  192.600   Voluntary supervisory conversions.

    (a) In general. A savings association must comply with this subpart 
and part 16 to engage in a voluntary supervisory conversion. This 
subpart applies to all voluntary supervisory conversions under sections 
5(i)(1), (i)(2), and (p) of HOLA, 12 U.S.C. 1464(i)(1), (i)(2), and 
(p).
    (b) Application of subpart A. Subpart A of this part also applies 
to a voluntary supervisory conversion, unless a requirement is clearly 
inapplicable.


Sec.  192.605   Conducting a voluntary supervisory conversion.

    A savings association may conduct a voluntary supervisory 
conversion through one of the following methods:
    (a) A savings association may sell its shares or the shares of a 
holding company to the public under the requirements of subpart A of 
this part.
    (b) A savings association may convert to stock form by merging into 
an interim Federal- or State-chartered stock association.
    (c) A savings association may sell its shares directly to an 
acquiror, who may be a person, company, depository institution, or 
depository institution holding company.
    (d) A savings association may merge or consolidate with an existing 
or newly created depository institution. The merger or consolidation 
must be authorized by, and is subject to, other applicable laws and 
regulations.


Sec.  192.610   Member rights in a voluntary supervisory conversion.

    Savings association members do not have the right to approve or 
participate in a voluntary supervisory conversion, and will not have 
any legal or beneficial ownership interests in the converted 
association, unless the appropriate Federal banking agency provides 
otherwise. Savings association members may have interests in a 
liquidation account, if one is established.

Eligibility


Sec.  192.625   Eligibility for a voluntary supervisory conversion.

    (a) Eligibility. An insured savings association may be eligible to 
convert under this subpart B if:
    (1) The savings association is significantly undercapitalized (or 
undercapitalized and a standard conversion that would make the savings 
association adequately capitalized is not feasible) and the savings 
association will be a viable entity following the conversion;
    (2) Severe financial conditions threaten the savings association's 
stability and a conversion is likely to improve its financial 
condition;
    (3) The FDIC will assist the savings association under section 13 
of the Federal Deposit Insurance Act, 12 U.S.C. 1823; or
    (4) The savings association is in receivership and a conversion 
will assist the savings association.
    (b) Requirements for viability after conversion. The savings 
association will be a viable entity following the conversion if it 
satisfies all of the following:
    (1) The savings association will be adequately capitalized as a 
result of the conversion;
    (2) The savings association, its proposed conversion, and its 
acquiror(s) comply with applicable supervisory policies;
    (3) The transaction is in the savings association's best interest, 
and the best interest of the Deposit Insurance Fund and the public; and
    (4) The transaction will not injure or be detrimental to the 
savings association, the Deposit Insurance Fund, or the public 
interest.


Sec.  192.630   Eligibility of State-chartered savings bank for 
voluntary supervisory conversion.

    A State-chartered savings bank may be eligible to convert to a 
Federal stock savings bank under this subpart if:

[[Page 42660]]

    (a) The FDIC certifies under section 5(o)(2)(C) of the HOLA that 
severe financial conditions threaten the savings bank's stability and 
that the voluntary supervisory conversion is likely to improve its 
financial condition; or
    (b) The savings bank meets the following conditions:
    (1) The savings bank's liabilities exceed its assets, as calculated 
under generally accepted accounting principles, assuming the savings 
bank is a going concern; and
    (2) The savings bank will issue a sufficient amount of permanent 
capital stock to meet its applicable FDIC capital requirement 
immediately upon completion of the conversion, or the FDIC determines 
that the savings bank will achieve an acceptable capital level within 
an acceptable time period.

Plan of Supervisory Conversion


Sec.  192.650   Contents of plan of voluntary supervisory conversion.

    A majority of the board of directors of the savings association 
must adopt a plan of voluntary supervisory conversion. The savings 
association must include all of the following information in its plan 
of voluntary supervisory conversion.
    (a) The savings association's name and address.
    (b) A complete description of the proposed voluntary supervisory 
conversion transaction that also describes plans for any liquidation 
account.
    (c) Certified copies of all resolutions relating to the conversion 
adopted by the board of directors of the savings association.

Voluntary Supervisory Conversion Application


Sec.  192.660   Contents of voluntary supervisory conversion 
application.

    A savings association must include all of the following information 
and documents in a voluntary supervisory conversion application to the 
appropriate OCC licensing office if it is a Federal savings association 
and to the appropriate FDIC region if it is a State savings association 
under this subpart:
    (a) Eligibility. (1) Evidence establishing that the savings 
association meets the eligibility requirements under Sec.  192.625 or 
Sec.  192.630.
    (2) An opinion of qualified, independent counsel or an independent, 
certified public accountant regarding the tax consequences of the 
conversion, or an IRS ruling indicating that the transaction qualifies 
as a tax-free reorganization.
    (3) An opinion of independent counsel indicating that applicable 
State law authorizes the voluntary supervisory conversion, if the 
conversion involves a State-chartered savings association converting to 
State stock form.
    (b) Plan of conversion. A plan of voluntary supervisory conversion 
that complies with Sec.  192.650.
    (c) Business plan. A business plan that complies with Sec.  
192.105, when required by the appropriate Federal banking agency.
    (d) Financial data. (1) The savings association's most recent 
audited financial statements and Consolidated Reports of Condition and 
Income or Call Report, as appropriate. The savings association must 
explain how its current capital levels make the savings association 
eligible to engage in a voluntary supervisory conversion under Sec.  
192.625 or Sec.  192.630.
    (2) A description of the savings association's estimated conversion 
expenses.
    (3) Evidence supporting the value of any non-cash asset 
contributions. Appraisals must be acceptable to the appropriate Federal 
banking agency and the non-cash assets must meet all other appropriate 
Federal banking agency policy guidelines.
    (4) Pro forma financial statements that reflect the effects of the 
transaction. The savings association must identify its tangible, core, 
and risk-based capital levels and show the adjustments necessary to 
compute the capital levels. The savings association must prepare its 
pro forma statements in conformance with the appropriate Federal 
banking agency's regulations and the applicable accounting 
requirements.
    (5) A statement describing the aggregate number and percentage of 
shares that each director, officer, and any affiliates or associates of 
the director or officer will purchase.
    (e) Proposed documents. (1) The savings association's proposed 
charter and bylaws.
    (2) The savings association's proposed stock certificate form.
    (3) Any securities offering circular and other securities 
disclosure materials to be used in connection with the proposed 
voluntary supervisory conversion.
    (f) Agreements. (1) A copy of any agreements between the savings 
association and proposed purchasers.
    (2) A copy and description of all existing and proposed employment 
contracts. The savings association must describe the term, salary, and 
severance provisions of the contract, the identity and background of 
the officer or employee to be employed, and the amount of any 
conversion shares to be purchased by the officer or employee or his or 
her affiliates or associates.
    (g) Related filings and applications. (1) All filings required 
under the securities offering rules of 12 CFR parts 16 and 192.
    (2) Any required Change in Bank Control Act notice and rebuttal of 
control submissions under 12 U.S.C. 1817(j) and 12 CFR 5.50, or copies 
of any Holding Company Act applications, including prior-conduct 
certifications listed under the appropriate Federal banking agency's 
regulatory guidance.
    (3) A subordinated debt application, if applicable.
    (4) Applications for permission to organize a stock association and 
for approval of a merger, if applicable, and a copy of any application 
for FDIC insurance of accounts, if applicable.
    (5) A statement describing any other applications required under 
Federal or State banking laws for all transactions related to the 
conversion, copies of all dispositive documents issued by regulatory 
authorities relating to the applications, and, if requested by the 
appropriate Federal banking agency, copies of the applications and 
related documents.
    (h) Other information. (1) A statement indicating the role each 
director, officer, and affiliate of the savings association or 
associate of the director or officer will have after the conversion.
    (2) Any additional information requested by the OCC, as authorized 
by law.
    (i) Waiver request. A description of any of the features of the 
savings association's application that do not conform to the 
requirements of this subpart, including any request for waiver of these 
requirements.

Appropriate Federal Banking Agency Review of the Voluntary Supervisory 
Conversion Application


Sec.  192.670   Approval of voluntary supervisory conversion 
application.

    The appropriate Federal banking agency will generally approve a 
savings association's application to engage in a voluntary supervisory 
conversion unless it determines:
    (a) The savings association does not meet the eligibility 
requirements for a voluntary supervisory conversion under Sec.  192.625 
or Sec.  192.630 or because the proceeds from the sale of conversion 
stock, less the expenses of the conversion, would be insufficient to 
satisfy any applicable viability requirement;
    (b) The transaction is detrimental to or would cause potential 
injury to the savings association or the Deposit

[[Page 42661]]

Insurance Fund or is contrary to the public interest;
    (c) The savings association or its acquiror, or the controlling 
parties or directors and officers of the savings association or its 
acquiror, have engaged in unsafe or unsound practices in connection 
with the voluntary supervisory conversion; or
    (d) The savings association fails to justify an employment contract 
incidental to the conversion, or the employment contract will be an 
unsafe or unsound practice or represent a sale of control. In a 
voluntary supervisory conversion, the appropriate Federal banking 
agency generally will not approve employment contracts of more than one 
year for existing management.


Sec.  192.675   Conditions imposed upon approval of voluntary 
supervisory conversion application.

    (a) Required condition. The appropriate Federal banking agency will 
condition approval of a voluntary supervisory conversion application on 
all of the following.
    (1) The savings association must complete the conversion stock sale 
within three months after the appropriate Federal banking agency 
approves the application. The appropriate Federal banking agency may 
grant an extension for good cause.
    (2) The savings association must comply with all filing 
requirements of this part, and 12 CFR part 16.
    (3) The savings association must submit an opinion of independent 
legal counsel indicating that the sale of its shares complies with all 
applicable State securities law requirements.
    (4) The savings association must comply with all applicable laws, 
rules, and regulations.
    (5) The savings association must satisfy any other requirements or 
conditions the appropriate Federal banking agency may impose.
    (b) Discretionary conditions. The appropriate Federal banking 
agency may condition approval of a voluntary supervisory application 
for conversion on either of the following:
    (1) The savings association must satisfy any conditions and 
restrictions the appropriate Federal banking agency imposes to prevent 
unsafe or unsound practices, to protect the Deposit Insurance Fund and 
the public interest, and to prevent potential injury or detriment to 
the savings association before and after the conversion. The 
appropriate Federal banking agency may impose these conditions and 
restrictions on the savings association (before and after the 
conversion) or, as appropriate, the savings association's acquiror, 
controlling parties, or its directors and officers; or
    (2) The savings association must infuse a larger amount of capital, 
if necessary, for safety and soundness reasons.

Offers and Sales of Stock


Sec.  192.680   Offer and sale of shares in a voluntary supervisory 
conversion.

    If a savings association converts under this subpart, it must offer 
and sell its shares in accordance with the applicable requirements of 
12 CFR parts 16 and 192.

Post-Conversion


Sec.  192.690   Restrictions on acquisition of additional shares after 
voluntary supervisory conversion.

    For three years after the completion of a voluntary supervisory 
conversion, neither the savings association nor its controlling 
shareholder(s) may acquire shares from minority shareholders without 
the appropriate Federal banking agency's prior approval.

PART 195--COMMUNITY REINVESTMENT

0
54. The authority citation for part 195 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1814, 1816, 1828(c), 
2901 through 2908, and 5412(b)(2)(B).


0
55. Section 195.11 is amended by revising paragraph (a) to read as 
follows:


Sec.  195.11   Authority, purposes, and scope.

    (a) Authority. This part is issued under the Community Reinvestment 
Act of 1977 (CRA), as amended (12 U.S.C. 2901 et seq.); section 5, as 
amended, and sections 3, and 4, as added, of the Home Owners' Loan Act 
of 1933 (12 U.S.C. 1462a, 1463, and 1464); sections 4, 6, and 18(c), as 
amended of the Federal Deposit Insurance Act (12 U.S.C. 1814, 1816, 
1828(c)); and section 312 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5412(b)(2)(B)).
* * * * *

Brian P. Brooks,
Acting Comptroller of the Currency.
[FR Doc. 2020-12784 Filed 7-8-20; 4:15 pm]
BILLING CODE 4810-33-P