[Federal Register Volume 90, Number 126 (Thursday, July 3, 2025)]
[Rules and Regulations]
[Pages 29413-29417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12493]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 90, No. 126 / Thursday, July 3, 2025 / Rules
and Regulations
[[Page 29413]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 303
RIN 3064-ZA45
Statement of Policy on Bank Merger Transactions
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rescission and reinstatement of statement of policy.
-----------------------------------------------------------------------
SUMMARY: The FDIC is taking final action to rescind the Statement of
Policy on Bank Merger Transactions published in 2024 (2024 Statement of
Policy) and reinstate its Statement of Policy on Bank Merger
Transactions that was in effect prior to the 2024 Statement of Policy
(Bank Merger Statement of Policy). The reinstated Bank Merger Statement
of Policy will remain in effect pending the FDIC's review of all
aspects of the regulatory framework governing the FDIC's review of
merger transactions in connection with a future proposal to
comprehensively revise its merger policy.
DATES: This Bank Merger Statement of Policy supersedes the 2024
Statement of Policy, effective on August 4, 2025.
FOR FURTHER INFORMATION CONTACT:
Division of Risk Management Supervision: Thomas F. Lyons, Associate
Director of Risk Management Policy, (202) 898-6850, [email protected];
Ryan C. Senegal, Chief, Policy and Program Development, (980) 249-3863,
[email protected]; George J. Small, Senior Examination Specialist,
(347) 267-2453, [email protected]. Legal Division: Annmarie Boyd,
Assistant General Counsel, (202) 898-3714, [email protected]; Nicholas A.
Simons, Counsel, (202) 898-6785, [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Section 18(c) of the Federal Deposit Insurance Act (FDI Act), which
codifies the Bank Merger Act (BMA), prohibits an insured depository
institution (IDI) from engaging in a merger transaction except with the
prior approval of the responsible agency.\1\ The FDIC has jurisdiction
to act on merger transactions that solely involve IDIs in which the
acquiring, assuming, or resulting institution is an FDIC-supervised
institution.\2\ The FDIC also has jurisdiction to act on merger
transactions that involve an IDI and any non-insured entity,
notwithstanding the IDI's charter.\3\
---------------------------------------------------------------------------
\1\ 12 U.S.C. 1828(c).
\2\ 12 U.S.C. 1828(c)(2).
\3\ 12 U.S.C. 1828(c)(1).
---------------------------------------------------------------------------
On March 11, 2025, the FDIC published a request for comment \4\ in
the Federal Register on a proposal to rescind the 2024 Statement of
Policy issued on September 27, 2024 \5\ and to reinstate the FDIC's
prior Bank Merger Statement of Policy, which was initially adopted in
1998 and amended most recently in 2008.\6\
---------------------------------------------------------------------------
\4\ 90 FR 11679 (Mar. 11, 2025).
\5\ 89 FR 79125 (Sep. 27, 2024).
\6\ See 63 FR 44761 (Aug. 20, 1998), 67 FR 48178 (Jul. 23,
2002), 67 FR 79278 (Dec. 27, 2002), and 73 FR 8870 (Feb. 15, 2008).
---------------------------------------------------------------------------
Having considered the comments received, the FDIC Board of
Directors is rescinding the 2024 Statement of Policy and reinstating
the Bank Merger Statement of Policy as described in this Supplementary
Information.
II. Overview of the Proposal
A. Purpose
The FDIC proposed to rescind the 2024 Statement of Policy and
reinstate the Bank Merger Statement of Policy due to concerns that the
2024 Statement of Policy added considerable uncertainty to the merger
application process and raised additional questions regarding when
merger applications would be required.\7\ The 2024 Statement of Policy
also deemphasized the use of the Herfindahl-Hirschman Index (HHI)
thresholds in the competitive effects analysis, which had long served
as a predictable proxy for determining whether a proposed transaction
is anticompetitive,\8\ and replaced those thresholds with more
subjective criteria. In addition, the 2024 Statement of Policy placed
an affirmative burden on applicants to demonstrate that a merger
transaction would enable the resulting institution to better meet the
convenience and needs of the community to be served than would
otherwise occur in the absence of the merger, without offering any
objective or quantifiable criteria regarding how the FDIC would
evaluate this factor.\9\ There were also concerns that the 2024
Statement of Policy made the FDIC's merger review process less
transparent and predictable and left prospective applicants unclear
about the prospects for approval and the resources and time necessary
to complete the merger application process. Based on these concerns, in
March of 2025, the FDIC proposed a return to its historical approach by
seeking comment on the reinstatement of the prior Bank Merger Statement
of Policy, which is well-understood by the public and market
participants. Reinstatement of the Bank Merger Statement of Policy
would serve as an interim measure while the agency develops future
policy regarding merger transactions.
---------------------------------------------------------------------------
\7\ See e.g., supra n. 5 at 89 FR 79134 (``The applicability of
the BMA will depend on the facts and circumstances of the proposed
transaction. In addition to transactions that combine institutions
into a single legal entity through merger or consolidation, the
scope of merger transactions subject to approval under the BMA
encompasses transactions that take other forms, including purchase
and assumption transactions or other transactions that are mergers
in substance, and assumptions of deposits or other similar
liabilities.'').
\8\ See id. at 89 FR 79136.
\9\ See id. at 89 FR 79138.
---------------------------------------------------------------------------
B. Summary of the Merger Policy Statement
The Bank Merger Statement of Policy was first published in 1998 and
was subsequently amended several times without public comment,\10\ most
recently in 2008. The Bank Merger Statement of Policy being reinstated
is essentially \11\ identical to the 2008 document. It includes a
general introduction, followed by an overview of application
procedures, a discussion of the FDIC's evaluation of the statutory
factors required for consideration under the BMA,\12\ and concludes
with a list of related considerations. The discussion of the BMA
statutory factors addresses
[[Page 29414]]
the competitive factors, the prudential considerations related to
financial and managerial resources and future prospects, the
convenience and needs of the community to be served, and the
effectiveness of each IDI involved in the proposed merger transaction
in combatting money-laundering activities.
---------------------------------------------------------------------------
\10\ See supra n. 6.
\11\ The only changes are technical edits updating a room number
and a citation.
\12\ Supra n. 1.
---------------------------------------------------------------------------
Although the Bank Merger Statement of Policy does not directly
address the BMA's statutory factor related to the risk to the stability
of the United States banking or financial system, which was added to
the BMA by the Dodd-Frank Act in 2010,\13\ the FDIC has articulated its
approach to evaluating this factor in the context of merger
transactions in the FDIC's Applications Procedures Manual.\14\
---------------------------------------------------------------------------
\13\ 12 U.S.C. 1828(c)(5), as amended by Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, Pub. L. 111-203, section
604(f), 124 Stat. 1376, 1602 (2010).
\14\ See FDIC Applications Procedures Manual, pp. 4-22--4-23,
available at: https://www.fdic.gov/sites/default/files/2024-03/pr19111a.pdf. (``In evaluating a merger application, the FDIC must
consider the risk to the stability of the United States banking or
financial system (Section 18(c)(5) of the FDI Act). [The FDIC]
consider[s] both quantitative and qualitative metrics when
evaluating a transaction's impact on financial stability. The
following is a non-exhaustive list of quantitative metrics [the
FDIC] consider[s]: the size of the resulting firm; the availability
of substitute providers for any critical products and services
offered by the resulting firm; the interconnectedness of the
resulting firm with the banking or financial system; the extent to
which the resulting firm contributes to the complexity of the
financial system; and the extent of cross-border activities of the
resulting firm. In addition to these quantitative metrics,
qualitative factors should inform the evaluation of the financial
stability factor. Such factors include those that are indicative of
the relative degree of difficult in resolving the resulting firm,
such as the opaqueness and complexity of the resulting institution's
operations.'')
---------------------------------------------------------------------------
III. Summary and Discussion of Comments
The FDIC received 12 comment letters from 10 commenters on its
proposal to rescind the 2024 Statement of Policy and reinstate the Bank
Merger Statement of Policy. Two of the commenters sent two letters each
writing separately first to request an extension of the comment period
and then to discuss the proposal. Commenters included academics,
advocacy groups, trade associations, and an individual.
A. Request for Extension of the Comment Period
Four commenters requested an extension of the 30-day comment period
to allow for additional time for more robust public feedback. The FDIC
decided not to extend the comment period given the extensive
consideration of, and public feedback on, the 2024 Statement of Policy,
which centered on the same issues. The FDIC desires to provide greater
clarity for applicants in a timely manner as to how the FDIC would
consider the BMA statutory factors in the context of a merger
application, and reinstatement of the prior Bank Merger Statement of
Policy supports this objective as it is well-understood by the public
and market participants.
B. Comments on the Proposal To Rescind the 2024 Statement of Policy and
Reinstate the Bank Merger Statement of Policy
Five commenters supported the proposed rescission of the 2024
Statement of Policy and the reinstatement of the Bank Merger Statement
of Policy, and five commenters were opposed. Commenters who supported
rescission and reinstatement objected to certain aspects of the 2024
Statement of Policy and noted IDIs' familiarity and experience with the
Bank Merger Statement of Policy. For example, one commenter believed
that the 2024 Statement of Policy introduced uncertainty and
subjectivity into the merger review process that potentially deterred
beneficial transactions and appropriate corporate reorganizations. This
commenter believed that reinstatement of the Bank Merger Statement of
Policy would help restore clarity and predictability for these
transactions. Another commenter considered it a prudent measure for the
FDIC to return to the previous, well-understood framework for reviewing
merger transactions as an interim measure while it considered more
comprehensive revisions to its merger policy. All five commenters in
support of rescission and reinstatement also generally supported a
comprehensive review of the FDIC's evaluation of merger transactions.
Commenters who opposed the proposal generally expressed support for
the 2024 Statement of Policy and stated that rescission would be
regressive, counterproductive, and unnecessary. These commenters stated
that the 2024 Statement of Policy provided more clarity regarding
considerations that are not addressed in the Bank Merger Statement of
Policy, including for example, the community and economic impacts of
branch closures and the FDIC's adjudication of a merger application
under the financial stability factor. Commenters who opposed
reinstatement of the Bank Merger Statement of Policy also generally
supported the 2024 Statement of Policy's treatment of the convenience
and needs statutory factor, as well as the FDIC's expectations
regarding public hearings for transactions where the resultant
institution would have total assets of $50 billion or more, heightened
financial stability standards for merger transactions where the
resultant institution would have total assets of $100 billion or more,
and references to community benefit agreements.
As discussed previously in this Supplementary Information section,
the FDIC believes that the 2024 Statement of Policy has added
considerable uncertainty to the merger application process.
Accordingly, and in view of the comments received in support of the
proposal, the FDIC believes it would be appropriate and beneficial to
the public to rescind the 2024 Statement of Policy and reinstate the
long-standing Bank Merger Statement of Policy that is both more
familiar to, and better understood by, key stakeholders in the merger
application process.
C. Comments Regarding Future Review of Merger Policy
Several commenters made recommendations to the FDIC in the context
of its future review of the agency's merger policy, including ensuring
closer adherence to the statutory criteria, reducing automatic bars to
approval based on supervisory ratings alone, promoting greater
interagency coordination, providing concrete timelines for approval,
and improving transparency. Commenters also urged consideration of a
streamlined application process for certain transactions based on their
size or nature, such as internal reorganizations or transfers involving
a small number of deposits. Other commenters recommended implementing a
de minimis exception for mergers of small IDIs in rural markets,
modernizing the competitive effects analysis to consider competition
from nonbanks and financial services firms, re-evaluating how the FDIC
utilizes Summary of Deposits data when measuring market concentration,
and ensuring closer coordination with State regulators. These comments
will be considered, and the FDIC will seek additional public comments,
in connection with a future proposal to comprehensively revise merger
policy.
IV. Administrative Law Matters
A. Executive Order 12866
Executive Order 12866, as amended by Executive Order 14215, directs
certain agencies to assess costs and benefits of significant regulatory
actions and to select regulatory approaches that maximize net benefits
(including
[[Page 29415]]
potential economic, environmental, public health and safety effects,
distributive impacts, and equity). Pursuant to section 3(f) of
Executive Order 12866, the Office of Information and Regulatory Affairs
within the Office of Management and Budget has determined that the
rescission of the 2024 Statement of Policy and the reinstatement of the
FDIC's Bank Merger Statement of Policy that was in effect prior to 2024
is a ``significant regulatory action.''
B. Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA),\15\ the FDIC may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number.
---------------------------------------------------------------------------
\15\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
The Bank Merger Statement of Policy does not create any new or
revise any existing collections of information under the PRA.
Therefore, no information collection request will be submitted to the
OMB for review.
V. Bank Merger Statement of Policy
The text of the Bank Merger Statement of Policy is as follows:
FDIC Statement of Policy on Bank Merger Transactions
I. Introduction
Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C.
1828(c)), popularly known as the ``Bank Merger Act,'' requires the
prior written approval of the FDIC before any insured depository
institution may:
(1) Merge or consolidate with, purchase or otherwise acquire the
assets of, or assume any deposit liabilities of, another insured
depository institution if the resulting institution is to be a state
nonmember bank, or
(2) Merge or consolidate with, assume liability to pay any deposits
or similar liabilities of, or transfer assets and deposits to, a
noninsured bank or institution.
Institutions undertaking one of the above described ``merger
transactions'' must file an application with the FDIC. Transactions
that do not involve a transfer of deposit liabilities typically do not
require prior FDIC approval under the Bank Merger Act, unless the
transaction involves the acquisition of all or substantially all of an
institution's assets.
The Bank Merger Act prohibits the FDIC from approving any proposed
merger transaction that would result in a monopoly, or would further a
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States. Similarly, the
Bank Merger Act prohibits the FDIC from approving a proposed merger
transaction whose effect in any section of the country may be
substantially to lessen competition, or to tend to create a monopoly,
or which in any other manner would be in restraint of trade. An
exception may be made in the case of a merger transaction whose effect
would be to substantially lessen competition, tend to create a
monopoly, or otherwise restrain trade, if the FDIC finds that the
anticompetitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the community to be
served. For example, the FDIC may approve a merger transaction to
prevent the probable failure of one of the institutions involved.
In every proposed merger transaction, the FDIC must also consider
the financial and managerial resources and future prospects of the
existing and proposed institutions, the convenience and needs of the
community to be served, and the effectiveness of each insured
depository institution involved in the proposed merger transaction in
combating money-laundering activities, including in overseas branches.
II. Application Procedures
1. Application filing. Application forms and instructions may be
obtained from the appropriate FDIC office. Completed applications and
any other pertinent materials should be filed with the appropriate FDIC
office. The application and related materials will be reviewed by the
FDIC for compliance with applicable laws and FDIC rules and
regulations. When all necessary information has been received, the
application will be processed and a decision rendered by the FDIC.
2. Expedited processing. Section 303.64 of the FDIC rules and
regulations (12 CFR 303.64) provides for expedited processing, which
the FDIC will grant to eligible applicants. In addition to the eligible
institution criteria provided for in Sec. 303.2 (12 CFR 303.2), Sec.
303.64 provides expedited processing criteria specifically applicable
to proposed merger transactions.
3. Publication of notice. The FDIC will not take final action on a
merger application until notice of the proposed merger transaction is
published in a newspaper or newspapers of general circulation in
accordance with the requirements of section 18(c)(3) of the Federal
Deposit Insurance Act. See Sec. 303.65 of the FDIC rules and
regulations (12 CFR 303.65). The applicant must furnish evidence of
publication of the notice to the appropriate FDIC office following
compliance with the publication requirement. See Sec. 303.7(b) of the
FDIC rules and regulations (12 CFR 303.7(b)).
4. Reports on competitive factors. As required by law, the FDIC
will request a report on the competitive factors involved in a proposed
merger transaction from the Attorney General. This report must
ordinarily be furnished within 30 days, and the applicant upon request
will be given an opportunity to submit comments to the FDIC on the
contents of the competitive factors report.
5. Notification of the Attorney General. After the FDIC approves
any merger transaction, the FDIC will immediately notify the Attorney
General. Generally, unless it involves a probable failure, an emergency
exists requiring expeditious action, or it is solely between an insured
depository institution and one or more of its affiliates, a merger
transaction may not be consummated until 30 calendar days after the
date of the FDIC's approval. However, the FDIC may prescribe a 15-day
period, provided the Attorney General concurs with the shorter period.
6. Merger decisions available. Applicants for consent to engage in
a merger transaction may find additional guidance in the reported bases
for FDIC approval or denial in prior merger transaction cases compiled
in the FDIC's annual ``Merger Decisions'' report. Reports may be
obtained from the FDIC Public Information Center, 3501 North Fairfax
Drive, Room E-1005, Arlington, VA 22226. Reports may also be viewed at
https://www.fdic.gov.
III. Evaluation of Merger Applications
The FDIC's intent and purpose is to foster and maintain a safe,
efficient, and competitive banking system that meets the needs of the
communities served. With these broad goals in mind, the FDIC will apply
the specific standards outlined in this Statement of Policy when
evaluating and acting on proposed merger transactions.
Competitive Factors
In deciding the competitive effects of a proposed merger
transaction, the FDIC will consider the extent of existing competition
between and among the merging institutions, other depository
institutions, and other providers of similar or equivalent services in
the
[[Page 29416]]
relevant product market(s) within the relevant geographic market(s).
1. Relevant geographic market. The relevant geographic market(s)
includes the areas in which the offices to be acquired are located and
the areas from which those offices derive the predominant portion of
their loans, deposits, or other business. The relevant geographic
market also includes the areas where existing and potential customers
impacted by the proposed merger transaction may practically turn for
alternative sources of banking services. In delineating the relevant
geographic market, the FDIC will also consider the location of the
acquiring institution's offices in relation to the offices to be
acquired.
2. Relevant product market. The relevant product market(s) includes
the banking services currently offered by the merging institutions and
to be offered by the resulting institution. In addition, the product
market may also include the functional equivalent of such services
offered by other types of competitors, including other depository
institutions, securities firms, or finance companies. For example,
share draft accounts offered by credit unions may be the functional
equivalent of demand deposit accounts. Similarly, captive finance
companies of automobile manufacturers may compete directly with
depository institutions for automobile loans, and mortgage bankers may
compete directly with depository institutions for real estate loans.
3. Analysis of competitive effects. In its analysis of the
competitive effects of a proposed merger transaction, the FDIC will
focus particularly on the type and extent of competition that exists
and that will be eliminated, reduced, or enhanced by the proposed
merger transaction. The FDIC will also consider the competitive impact
of providers located outside a relevant geographic market where it is
shown that such providers individually or collectively influence
materially the nature, pricing, or quality of services offered by the
providers currently operating within the geographic market.
The FDIC's analysis will focus primarily on those services that
constitute the largest part of the businesses of the merging
institutions. In its analysis, the FDIC will use whatever analytical
proxies are available that reasonably reflect the dynamics of the
market, including deposit and loan totals, the number and volume of
transactions, contributions to net income, or other measures.
Initially, the FDIC will focus on the respective shares of total
deposits \16\ held by the merging institutions and the various other
participants with offices in the relevant geographic market(s), unless
the other participants' loan, deposit, or other business varies
markedly from that of the merging institutions. Where it is clear,
based on market share considerations alone, that the proposed merger
transaction would not significantly increase concentration in an
unconcentrated market, a favorable finding will be made on the
competitive factor.
---------------------------------------------------------------------------
\16\ In many cases, total deposits will adequately serve as a
proxy for overall share of the banking business in the relevant
geographic market(s); however, the FDIC may also consider other
analytical proxies.
---------------------------------------------------------------------------
Where the market shares of the merging institutions are not clearly
insignificant, the FDIC will also consider the degree of concentration
within the relevant geographic market(s) using the Herfindahl-Hirschman
Index (HHI) \17\ as a primary measure of market concentration. For
purposes of this test, a reasonable approximation for the relevant
geographic market(s) consisting of one or more predefined areas may be
used. Examples of such predefined areas include counties, the Bureau of
the Census Metropolitan-Statistical Areas (MSAs), or Rand-McNally
Ranally Metro Areas (RMAs).
---------------------------------------------------------------------------
\17\ The HHI is a statistical measure of market concentration
and is also used as the principal measure of market concentration in
the Department of Justice's Merger Guidelines. The HHI for a given
market is calculated by squaring each individual competitor's share
of total deposits within the market and then summing the squared
market share products. For example, the HHI for a market with a
single competitor would be: 100\2\ = 10,000: for a market with five
competitors with equal market shares, the HHI would be: 20\2\ +
20\2\ + 20\2\ + 20\2\ + 20\2\ = 2,000.
---------------------------------------------------------------------------
The FDIC normally will not deny a proposed merger transaction on
antitrust grounds (absent objection from the Department of Justice)
where the post-merger HHI in the relevant geographic market(s) is 1,800
points or less or, if it is more than 1,800, it reflects an increase of
less than 200 points from the pre-merger HHI. Where a proposed merger
transaction fails this initial concentration test, the FDIC will
consider more closely the various competitive dynamics at work in the
market, taking into account a variety of factors that may be especially
relevant and important in a particular proposal, including:
The number, size, financial strength, quality of
management, and aggressiveness of the various participants in the
market;
The likelihood of new participants entering the market
based on its attractiveness in terms of population, income levels,
economic growth, and other features;
Any legal impediments to entry or expansion; and
Definite entry plans by specifically identified entities.
In addition, the FDIC will consider the likelihood that new
entrants might enter the market by less direct means, for example,
electronic banking with local advertisement of the availability of such
services. This consideration will be particularly important where there
is evidence that the mere possibility of such entry tends to encourage
competitive pricing and to maintain the quality of services offered by
the existing competitors in the market.
The FDIC will also consider the extent to which the proposed merger
transaction likely would create a stronger, more efficient institution
able to compete more vigorously in the relevant geographic markets.
4. Consideration of the public interest. The FDIC will deny any
proposed merger transaction whose overall effect likely would be to
reduce existing competition substantially by limiting the service and
price options available to the public in the relevant geographic
market(s), unless the anticompetitive effects of the proposed merger
transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs
of the community to be served. For this purpose, the applicant must
show by clear and convincing evidence that any claimed public benefits
would be both substantial and incremental and generally available to
seekers of banking services in the relevant geographic market(s) and
that the expected benefits cannot reasonably be achieved through other,
less anticompetitive means.
Where a proposed merger transaction is the least costly alternative
to the probable failure of an insured depository institution, the FDIC
may approve the merger transaction even if it is anticompetitive.
Prudential Factors
The FDIC does not wish to create larger weak institutions or to
debilitate existing institutions whose overall condition, including
capital, management, and earnings, is generally satisfactory.
Consequently, apart from competitive considerations, the FDIC normally
will not approve a proposed merger transaction where the resulting
institution would fail to meet existing capital standards, continue
with weak or unsatisfactory management, or whose earnings prospects,
both in terms of quantity and quality, are weak, suspect,
[[Page 29417]]
or doubtful. In assessing capital adequacy and earnings prospects,
particular attention will be paid to the adequacy of the allowance for
loan and lease losses. In evaluating management, the FDIC will rely to
a great extent on the supervisory histories of the institutions
involved and of the executive officers and directors that are proposed
for the resultant institution. In addition, the FDIC may review the
adequacy of management's disclosure to shareholders of the material
aspects of the merger transaction to ensure that management has
properly fulfilled its fiduciary duties.
Convenience and Needs Factor
In assessing the convenience and needs of the community to be
served, the FDIC will consider such elements as the extent to which the
proposed merger transaction is likely to benefit the general public
through higher lending limits, new or expanded services, reduced
prices, increased convenience in utilizing the services and facilities
of the resulting institution, or other means. The FDIC, as required by
the Community Reinvestment Act, will also note and consider each
institution's Community Reinvestment Act performance evaluation record.
An unsatisfactory record may form the basis for denial or conditional
approval of an application.
Anti-Money Laundering Record
In every case, the FDIC will take into consideration the
effectiveness of each insured depository institution involved in the
proposed merger transaction in combating money-laundering activities,
including in overseas branches. In this regard, the FDIC will consider
the adequacy of each institution's programs, policies, and procedures
relating to anti-money laundering activities; the relevant supervisory
history of each participating institution, including their compliance
with anti-money laundering laws and regulations; and the effectiveness
of any corrective program outstanding. The FDIC's assessment may also
incorporate information made available to the FDIC by the Department of
the Treasury, other Federal or State authorities, and/or foreign
governments. Adverse findings may warrant correction of identified
problems before consent is granted, or the imposition of conditions.
Significantly adverse findings in this area may form the basis for
denial of the application.
Special Information Requirement if Applicant Is Affiliated With or Will
Be Affiliated With an Insurance Company
If the institution that is the subject of the application is, or
will be, affiliated with a company engaged in insurance activities that
is subject to supervision by a state insurance regulator, the applicant
must submit the following information as part of its application: (1)
the name of insurance company; (2) a description of the insurance
activities that the company is engaged in and has plans to conduct; and
(3) a list of each state and the lines of business in that state which
the company holds, or will hold, an insurance license. Applicant must
also indicate the state where the company holds a resident license or
charter, as applicable.
IV. Related Considerations
1. Interstate bank merger transactions. Where a proposed
transaction is an interstate merger transaction between insured banks,
the FDIC will consider the additional factors provided for in section
44 of the Federal Deposit Insurance Act, 12 U.S.C. 1831u.
2. Interim merger transactions. An interim institution is a state-
or federally-chartered institution that does not operate independently,
but exists, normally for a very short period of time, solely as a
vehicle to accomplish a merger transaction. In cases where the
establishment of a new or interim institution is contemplated in
connection with a proposed merger transaction, the applicant should
contact the FDIC to discuss any relevant deposit insurance
requirements. In general, a merger transaction (other than a purchase
and assumption) involving an insured depository institution and a
federal interim depository institution will not require an application
for deposit insurance, even if the federal interim depository
institution will be the surviving institution.
3. Branch closings. Where banking offices are to be closed in
connection with the proposed merger transaction, the FDIC will review
the merging institutions' conformance to any applicable requirements of
section 42 of the FDI Act concerning notice of branch closings as
reflected in the Interagency Policy Statement Concerning Branch Closing
Notices and Policies. See 64 FR 34844 (Jun. 29, 1999).
4. Legal fees and other expenses. The commitment to pay or payment
of unreasonable or excessive fees and other expenses incident to an
application reflects adversely upon the management of the applicant
institution. The FDIC will closely review expenses for professional or
other services rendered by present or prospective board members, major
shareholders, or other insiders for any indication of self-dealing to
the detriment of the institution. As a matter of practice, the FDIC
expects full disclosure to all directors and shareholders of any
arrangement with an insider. In no case will the FDIC approve an
application where the payment of a fee, in whole or in part, is
contingent upon any act or forbearance by the FDIC or by any other
federal or state agency or official.
5. Trade names. Where an acquired bank or branch is to be operated
under a different trade name than the acquiring bank, the FDIC will
review the adequacy of the steps taken to minimize the potential for
customer confusion about deposit insurance coverage. Applicants may
refer to the Interagency Statement on Branch Names for additional
guidance. See FDIC, Financial Institution Letter, 46-98 (May 1, 1998).
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on May 20, 2025.
Jennifer M. Jones,
Deputy Executive Secretary.
[FR Doc. 2025-12493 Filed 7-2-25; 8:45 am]
BILLING CODE 6714-01-P