[Federal Register Volume 91, Number 42 (Wednesday, March 4, 2026)]
[Rules and Regulations]
[Pages 10491-10499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-04275]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 5
[Docket ID OCC-2025-0273]
RIN 1557-AF38
Community Bank Licensing Amendments
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
amending its rules related to policies and procedures to simplify
licensing requirements for corporate activities and transactions
involving national banks and Federal savings associations that have
less than $30 billion in total assets and satisfy certain conditions.
The final rule is intended to reduce burden on these institutions.
DATES: The final rule is effective on April 3, 2026.
FOR FURTHER INFORMATION CONTACT: Christopher Crawford, Acting Assisting
Director, or Scott Burnett, Counsel, Chief Counsel's Office, 202-649-
5490, Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.
SUPPLEMENTARY INFORMATION:
I. Background
Twelve CFR part 5 sets forth the OCC's requirements for national
banks and Federal savings associations that seek to engage in certain
corporate activities and transactions, including establishing, changing
the structure of or the activities performed by, and dissolving OCC-
supervised institutions. The filing requirements differ depending on
the nature of corporate activity or transaction, ranging from a full
application before engaging in an activity or transaction to an after-
the-fact notification for informational purposes.
While all similarly categorized corporate activities and
transactions are generally subject to identical filing requirements,
the OCC's licensing regulations provide expedited review of filings and
modified filing requirements in certain circumstances (expedited or
reduced filing procedures). The OCC first introduced these expedited or
reduced filing procedures in 1996, when the regulations in 12 CFR part
5 were amended to include expedited procedures for certain filings by
``eligible banks.'' \1\ The 1996 amendments also established notice
procedures, rather than applications, for certain filings by national
banks that were ``adequately capitalized'' or ``well capitalized,'' as
those terms are defined in the prompt corrective action (PCA) framework
set forth in 12 CFR part 6.\2\ Over time, the OCC has amended and
expanded these expedited or reduced filing procedures, with current 12
CFR part 5 providing expedited or reduced filing procedures to OCC-
supervised institutions that are: (1) either an ``eligible bank'' or
``eligible savings association,'' or (2) both ``well managed'' and
``well capitalized.'' These procedures reduce the baseline burden for
OCC-supervised institutions that satisfy the eligibility criteria, as
there is either less burden in preparing the requisite filing for the
OCC, reduced
[[Page 10492]]
delay before engaging in a proposed activity or transaction, or both.
As noted when the OCC first adopted expedited review, certain
applications by healthy institutions entail low levels of risk.\3\
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\1\ 61 FR 60342-43 (Nov. 27, 1996).
\2\ 61 FR 60343.
\3\ See 61 FR 60342.
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On November 18, 2025, the OCC proposed to amend its regulations to
similarly simplify licensing requirements for corporate activities and
transactions involving national banks and Federal savings associations
that have less than $30 billion in total assets and satisfy certain
conditions.\4\ The proposed rule was based on the OCC's experience
supervising and reviewing filings by such institutions, which informs
the OCC's belief that applications by community national banks and
community Federal savings associations generally present low levels of
risk, comparable to those by eligible banks and eligible savings
associations, and thus should also benefit from expedited or reduced
filing procedures. The OCC received eight responsive comments to the
proposal. Three commenters broadly supported the proposal. Other
commenters opposed the proposal and offered specific requests for
changes to the proposed amendments.\5\ As explained in greater detail
below, following review of the comments received on the proposal, the
OCC is finalizing these proposed amendments with one change.
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\4\ 90 FR 51577 (Nov. 18, 2025).
\5\ The OCC also received one comment discussing various
regulatory analyses under, inter alia, the Regulatory Flexibility
Act and Unfunded Mandates Reform Act. The OCC has completed all
required analyses in accordance with statute, as discussed in the
Regulatory Analysis section of this SUPPLEMENTARY INFORMATION.
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II. Description of the Final Rule
The OCC's licensing requirements generally apply equally regardless
of the size of the OCC-supervised institution. The final rule modifies
this approach by establishing a new definition of ``covered community
bank or covered community savings association'' to provide such
institutions access to all currently available expedited or reduced
filing procedures. The OCC is adopting these changes as part of a
broader initiative to tailor the regulatory framework for community
national banks and community Federal savings associations, with the
goal of reducing regulatory burden and tailoring requirements to the
size and risk-profile of the institution. Community national banks and
community Federal savings associations typically engage in lower risk
and less complex activities. Accordingly, the OCC will generally be
able to review filings from community national banks and community
Federal savings associations more quickly. Similarly, a lower risk
profile is generally correlated to a proposal more clearly meeting the
evaluative factors and less likely to warrant denial. Accordingly, the
OCC is expanding the existing expedited or reduced filing procedures to
community national banks and community Federal savings associations
that satisfy certain conditions.
Definitions (Sec. 5.3)
Twelve CFR 5.3 defines the terms that are used throughout part 5.
The OCC is adopting a new definition, ``covered community bank or
covered community savings association,'' as originally proposed. The
proposal defined a ``covered community bank or covered community
savings association'' as a national bank or Federal savings association
that: (1) has less than $30 billion in total assets and is not an
affiliate of a depository institution or foreign bank with $30 billion
or more in total assets, (2) is ``well capitalized'' as defined in 12
CFR 5.3, and (3) is not subject to a cease and desist order, a consent
order, or a formal written agreement, that requires action to improve
the financial condition of the national bank or Federal savings
association unless otherwise informed in writing by the OCC. The total
assets of the national bank, Federal savings association, and any
depository institution affiliate would be as reported in the
institution's Consolidated Report of Condition and Income (Call
Report). Any foreign bank's total assets would be as reported in an
equivalent to a Call Report. A national bank or Federal savings
association would be an affiliate of a depository institution or
foreign bank if it controls, is controlled by, or is under common
control with the depository institution or foreign bank, with
``control'' being defined in 12 CFR 5.50(d)(4). The OCC believes that
this standard for control, as used in the Change in Bank Control Act
and implementing regulations,\6\ provides the appropriate, flexible
test for determining when a national bank or Federal savings
association is affiliated with a larger institution. This standard is
well known and frequently applied for control analyses.
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\6\ 12 U.S.C. 1817(j); 12 CFR 5.50.
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The OCC received several comments on the proposal's new definition.
Three commenters strongly supported the addition of the new definition
and corresponding grant of expedited or reduced filing procedures to
such institutions, contending that the proposal reflected a thoughtful
approach to tailoring regulations based on risk and complexity. Despite
this general support, one commenter suggested indexing the $30 billion
threshold to inflation to ensure it remained meaningful over time.
Otherwise, the commenter suggested, the natural growth of the economy
would inevitably result in fewer institutions qualifying under the new
definition over time. Similarly, one commenter suggested that
aggregating affiliate depository institutions could undermine the
intent of the rule and exclude otherwise eligible smaller institutions
from receiving relief.
Several commenters, however, raised concerns about the proposed
definition. Several commenters argued that the OCC did not provide
analysis and support for the proposal's $30 billion threshold. One
commenter suggested that the OCC should instead utilize the Federal
Deposit Insurance Corporation's (FDIC) definition of ``community
bank,'' which considers not only an inflation-adjusted asset size, but
other factors, such as activities conducted and geographic market area.
One commenter suggested additional amendments to the proposed
definition, including that (1) the bank has a Community Reinvestment
Act (CRA) rating of Outstanding or Satisfactory; (2) the application is
not subject to an adverse public comment; and (3) the bank is not the
subject of any fair housing, fair lending, or consumer protection
orders, agreements, or investigations. Finally, one commenter expressed
concerns regarding the OCC's ability to review filings under expedited
or reduced filing procedures.
The final rule retains the proposal's definition without
alteration. The OCC explained in the proposal that the $30 billion
total asset limitation is consistent with the OCC's recently announced
Community Bank group, which will supervise institutions with total
assets up to that threshold.\7\ These are national banks and Federal
savings associations that the OCC has concluded, through its
supervisory experience, typically engage in lower risk and less complex
activities. The OCC, therefore, disagrees with the suggestion of some
commenters that the current thresholds lack analysis and support--these
thresholds are informed by the OCC's more than 160 years of supervising
financial institutions, including the agency's longstanding
[[Page 10493]]
practice of appropriately tailoring supervision to the size and
operations of individual institutions.\8\
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\7\ See OCC, News Release 2025-89, ``OCC Announces Updates to
Organizational Structure'' (Sept. 18, 2025), https://www.occ.gov/news-issuances/news-releases/2025/nr-occ-2025-89.html.
\8\ For example, the Comptroller's Handbook, ``Examination
Process'' series booklets are delineated by institution size,
including the general ``Bank Supervision Process,'' ``Community Bank
Supervision,'' and ``Large Bank Supervision'' booklets.
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The OCC is also not incorporating inflation indexing into the final
rule's asset size threshold. While natural growth in the economy over
time may reduce the number of entities that meet the new definition's
asset size threshold, the OCC believes it is appropriate to make any
adjustments to the asset size thresholds contained in the definitions
as needed. As with the current thresholds, future adjustments would be
made based on the OCC's supervisory experience, which may warrant
revisions that are either greater or less than what inflation indexing
would dictate. The OCC, however, understands the commenter's concern
and notes that this issue is not unique to the current rulemaking given
the presence of other asset size thresholds throughout the OCC's
regulations. The OCC may determine it is appropriate to address
indexing for purposes of this definition specifically, or to address
the issue more generally across appropriate regulations, in a
subsequent rulemaking.
The final rule also retains the proposal's aggregation of
affiliated depository institutions' assets for purposes of determining
this $30 billion threshold. While commenters noted that aggregation
reduces the pool of eligible institutions, the OCC views this as an
intended, rather than unintended, consequence. As explained in the
proposal, the purpose of this rulemaking is to grant greater
flexibility to community banks based on their generally lower risk
profile. This justification is not always present in the context of an
OCC-supervised institution that is affiliated with a larger banking
organization. Furthermore, viewing institutions on a standalone basis
could invite regulatory arbitrage opportunities, which would be
contrary to the rule's intended purpose of more appropriately tailoring
the OCC's licensing requirements based on risk.
The OCC is also not incorporating other commenter-suggested
amendments to the covered community bank or covered community savings
association definition. The definition's requirement that the OCC-
supervised institution be ``well capitalized'' is consistent with the
OCC's general approach to conferring expedited or reduced filing
procedures. The definition's enforcement action restriction mirrors the
current language in the ``troubled condition'' definition in 12 CFR
5.51(c)(7)(ii) with respect to enforcement actions. A national bank or
Federal savings association that is not well capitalized or is subject
to an enforcement action that requires improvement in its financial
condition typically has a higher risk profile than a covered community
bank or covered community savings association. Accordingly, the OCC
more closely examines filings from these institutions, and expedited or
reduced filing procedures are not appropriate. Contrary to commenter
suggestions, the OCC does not believe expanding the scope of
enforcement actions is necessary or appropriate because enforcement
actions concerning specific laws are generally not relevant to many
types of applications, unlike the institution's financial condition,
which is always relevant. The OCC will consider facts underlying all
enforcement actions or investigations in the evaluative factors for
each filing, as appropriate. For example, the OCC would consider any
fair lending-related enforcement action as part of its review of the
convenience and needs of the community to be served in a proposed
merger under the Bank Merger Act.\9\ Furthermore, the suggestion that
the definition should include an absence of adverse public comments
would be both unworkable and unnecessary. The definition of covered
community bank or covered community savings association applies to the
institution, not the filing itself. The definition permits the
institution to use the expedited or reduced filing procedures. To the
extent that an adverse comment warrants additional review, the OCC
retains authority to extend review periods or remove filings from
expedited review with standards as discussed in 12 CFR 5.13(a)(2), as
discussed further within.
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\9\ See 12 U.S.C. 1828(c)(5).
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The OCC also declines to adopt the definition of community bank
cited by a commenter. The cited definition was used by the FDIC for a
study published in 2012 and contains complex definitions and
requirements for designating an institution as a community bank.\10\
While potentially suitable for research purposes, the OCC believes that
this complex definition would be very difficult to operationalize, as
both the OCC and its supervised entities may have difficulty applying
such a definition.
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\10\ See FDIC Community Banking Study (Dec. 2012), available at
https://www.fdic.gov/resources/community-banking/report/2012/2012-cbi-study-full.pdf.
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Expedited or Reduced Filing Procedures
The OCC's regulations currently have expedited review provisions
for eligible banks or eligible savings associations for thirteen types
of filings. Two commenters expressed concerns about the agency's
ability to review filings under expedited or reduced filing procedures.
The OCC disagrees with these comments. As noted in the proposal, the
OCC's regulations have contained expedited or reduced filing procedures
for decades, and the agency has demonstrated its ability to complete
the required reviews within such timeframes. To the extent that
individual filings warrant different treatment, the OCC has existing
authority in part 5 to adjust the procedures for such filings. The OCC
will retain the ability to extend the expedited review period or remove
a filing from expedited review, as the OCC's regulations currently
provide for filings by eligible banks and eligible savings associations
in 12 CFR 5.13(a)(2)(i). Further, the OCC retains the discretion under
12 CFR 5.2(b) to adopt materially different procedures for a particular
filing, or class of filings, as it deems necessary--for example, in
exceptional circumstances or for unusual transactions, after providing
notice of the change to the filer and to any other party that the OCC
determines should receive notice. Accordingly, the expansion of
expedited or reduced filing procedures will not impair the OCC's
ability to perform the required reviews.
While expedited review provisions exist in thirteen types of
filings, these provisions are not uniform and vary depending on the
nature of the filing type. For charter applications, 12 CFR 5.20(j)
provides expedited review for an application to establish a full-
service national bank or Federal savings association sponsored by a
bank holding company or savings and loan holding company whose lead
depository institution is an eligible bank or eligible savings
association. Twelve CFR 5.23(d)(4) and 5.24(h) provide for expedited
review of an application to convert from an eligible bank to a Federal
savings association and from an eligible savings association to a
national bank, respectively. Twelve CFR 5.26(e)(3) provides for
expedited review of an application by an eligible bank or eligible
savings association to exercise fiduciary powers. Twelve CFR 5.30(f)(6)
provides for expedited review of applications for establishment or
relocation of a branch by an eligible bank. Twelve CFR 5.31(f)(2)(iii)
[[Page 10494]]
provides that an eligible savings association need not file an
application to establish or relocate a branch if it has published
public notice and no person has filed a comment opposing the branch, or
if the OCC determines that a comment raises issues not relevant to the
approval standards for an application for a branch or that OCC action
in response to the comment is not required. If an application is
required, because a comment has been filed or the branch is located in
the District of Columbia,\11\ 12 CFR 5.31(f)(1)(iii) provides for
expedited review of applications by an eligible savings association.
Twelve CFR 5.40(c)(4) provides for expedited review of applications to
relocate a main office or home office of an eligible bank or eligible
savings association, respectively. Twelve CFR 5.45(g)(3) provides for
expedited review of applications for a capital increase by an eligible
savings association. Twelve CFR 5.46(i)(2) provides for expedited
review of applications for a change in permanent capital by an eligible
bank. Under 12 CFR 5.47(f)(1)(i)(A) and (f)(2)(i)(A), an eligible bank
is required to receive OCC approval to issue any subordinated debt or
to prepay subordinated debt not included in tier 2 capital,
respectively, only if the national bank will not continue to be an
eligible bank after the transaction, the OCC has previously notified
the national bank that prior approval is required, or prior approval is
required by law. Similarly, 12 CFR 5.56(b)(1)(ii) provides for
expedited review of applications to include subordinated debt
securities or mandatorily redeemable preferred stock in tier 2 capital
by an eligible savings association. The OCC proposed adding covered
community bank or covered community savings association to each of
these provisions referencing an eligible bank or eligible savings
association. The OCC did not receive any comments on these provisions
and is finalizing these amendments as proposed.
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\11\ See 12 U.S.C. 1464(m); 12 CFR 5.31(j).
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Under 12 CFR 5.33(i), an application for a business combination is
eligible for expedited review if the filing qualifies as a business
reorganization as defined in 12 CFR 5.33(d)(3) or the filing qualifies
as a streamlined business combination application as described in 12
CFR 5.33(j).\12\ The OCC proposed to add to paragraph (j) a new
paragraph permitting the use of the streamlined application form when
the acquiring national bank or Federal savings association is a covered
community bank or covered community savings association and the
transaction would result in a national bank or Federal savings
association with less than $30 billion in total assets.
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\12\ Twelve CFR 5.33(j) authorizes the use of a streamlined
application if: (i) At least one party to the transaction is an
eligible bank or eligible savings association, and all other parties
to the transaction are eligible banks, eligible savings
associations, or eligible depository institutions; the resulting
national bank or resulting Federal savings association will be well
capitalized immediately following consummation of the transaction;
and the total assets of the target institution are no more than 50
percent of the total assets of the acquiring bank or Federal savings
association, as reported in each institution's Consolidated Report
of Condition and Income filed for the quarter immediately preceding
the filing of the application; (ii) the acquiring bank or Federal
savings association is an eligible bank or eligible savings
association; the target bank or savings association is not an
eligible bank, eligible savings association, or an eligible
depository institution; the resulting national bank or resulting
Federal savings association will be well capitalized immediately
following consummation of the transaction; and the filers in a
prefiling communication request and obtain approval from the
appropriate OCC licensing office to use the streamlined application;
(iii) the acquiring bank or Federal savings association is an
eligible bank or eligible savings association; the target bank or
savings association is not an eligible bank, eligible savings
association, or an eligible depository institution; the resulting
bank or resulting Federal savings association will be well
capitalized immediately following consummation of the transaction;
and the total assets acquired do not exceed 10 percent of the total
assets of the acquiring national bank or acquiring Federal savings
association, as reported in each institution's Consolidated Report
of Condition and Income filed for the quarter immediately preceding
the filing of the application; or (iv) in the case of a transaction
under 12 CFR 5.33(g)(4), the acquiring bank is an eligible bank; the
resulting national bank will be well capitalized immediately
following consummation of the transaction; the filers in a prefiling
communication request and obtain approval from the appropriate OCC
licensing office to use the streamlined application; and the total
assets acquired do not exceed 10 percent of the total assets of the
acquiring national bank, as reported in the bank's Consolidated
Report of Condition and Income filed for the quarter immediately
preceding the filing of the application.
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A commenter suggested that allowing expedited review of business
combinations by acquiring covered community banks or covered community
savings associations was inconsistent with the OCC's required review of
such transactions under the Bank Merger Act, section 18(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(c)). The commenter
suggested that a 45-day review period provided the OCC with
insufficient time to consider mandatory statutory factors for such
transactions, such as the convenience and needs of the communities to
be served. The commenter also criticized that expedited reviews were
only conditioned on the acquirer being well capitalized, which would
permit expedited review when the target is not well capitalized.
The OCC disagrees with these commenter concerns and therefore is
adopting the revisions to 12 CFR 5.33(j) without alteration. The
current streamlined application and expedited review process in Sec.
5.33 has been in place since 1996, and the OCC has a demonstrated
history of completing reviews required under the Bank Merger Act under
these procedures. As previously discussed, the OCC has the authority to
remove merger applications from the expedited review process where
additional time is needed. Furthermore, conditioning eligibility based
on the acquirer's capital category and not the target's is consistent
with the existing criteria for expedited review eligibility in 12 CFR
5.33, as multiple options for streamlined applications do not require
the target institution to be an eligible bank, eligible savings
association, or eligible depository institution, each of which requires
the institution to be well capitalized.\13\ The OCC will review the
financial resources of both the existing and resulting institutions in
accordance with the Bank Merger Act.\14\ To the extent that a target
institution's capital could adversely impact the resulting
institution's capital position, the OCC would retain authority to
extend the review period to fully evaluate such concerns, as needed.
Accordingly, the OCC is finalizing this amendment as proposed.
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\13\ See 12 CFR 5.3.
\14\ See 12 U.S.C. 1828(c)(5).
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Under 12 CFR 5.55(e)(1)(i), a Federal savings association must file
an application before making a capital distribution if, inter alia, it
would not be at least well capitalized or otherwise remain an eligible
savings association following the distribution. The OCC proposed adding
covered community savings association to this provision and
restructuring paragraph (e)(1)(i) for clarity. Specifically, an
application would be required if either the Federal savings association
is not an eligible savings association or a covered community savings
association or the Federal savings association is an eligible savings
association or a covered community savings association but would not
remain well capitalized following the distribution. Twelve CFR
5.55(g)(1) provides for expedited review of capital distribution
applications by eligible savings associations. The OCC proposed adding
covered community savings association to this provision. The OCC did
not receive comments on these provisions and is finalizing these
amendments as proposed.
The OCC's regulations also provide for expedited or reduced filing
[[Page 10495]]
requirements for certain filings by national banks and Federal savings
associations that are well managed and well capitalized. Twelve CFR
5.34(f)(1) generally requires an application for a national bank to
establish or acquire an operating subsidiary or perform a new activity
in an existing operating subsidiary. Twelve CFR 5.34(f)(2) permits a
national bank that is well capitalized and well managed to provide
after-the-fact notice instead of an application if the operating
subsidiary meets certain structural and activity requirements.
Similarly, 12 CFR 5.34(f)(6) permits a national bank to acquire or
establish an operating subsidiary or perform a new activity in an
existing operating subsidiary if the bank is well managed and well
capitalized and meets other requirements. The OCC proposed that a
national bank qualify for these expedited or reduced filing
requirements if it is a covered community bank or is both well
capitalized and well managed. The OCC did not receive comments on these
provisions and is finalizing these amendments as proposed.
Twelve CFR 5.35(f)(2)(ii) provides for expedited review of a notice
to make an investment in a bank service company or to perform new
activities in an existing bank service company if the national bank or
Federal savings association is well capitalized and well managed and
the bank service company meets certain activity qualifications. The OCC
proposed adding covered community banks and covered community savings
associations to this provision. The OCC did not receive comments on
this provision and is finalizing this amendment as proposed.
Twelve CFR 5.36(e) permits a national bank to file a notice no
later than 10 days after making a non-controlling investment if the
notice contains, inter alia, a certification that the bank is well
capitalized and well managed at the time of the investment. If the
national bank is not well capitalized and well managed but still meets
other requirements necessary to make the non-controlling investment, it
must instead file an application under 12 CFR 5.36(f). The OCC proposed
to add covered community bank as an alternative to the current
requirement that a national bank be well capitalized and well managed
for purposes of the certification in 12 CFR 5.36(e)(3). Twelve CFR
5.36(h)(1) permits a national bank that is well capitalized and well
managed to make a non-controlling investment in an enterprise that
engages in the activities of holding and managing assets acquired by
the parent bank in satisfaction of a debt previously contracted. The
national bank must submit a notice with the OCC no later than 10 days
after making the investment. The OCC proposed to permit covered
community banks to use this procedure. Twelve CFR 5.58 provides
substantively identical provisions for Federal savings association's
pass-through investments. The OCC proposed parallel changes for covered
community savings associations in that regulation. The OCC did not
receive comments on these provisions and is finalizing these amendments
as proposed.
Twelve CFR 5.38 provides for expedited review of an application to
establish or acquire an operating subsidiary or to perform a new
activity in an existing operating subsidiary by a Federal savings
association \15\ that is well capitalized and well managed if the
operating subsidiary meets certain structural and activity
requirements. Twelve CFR 5.59 provides for expedited review of an
application to establish or acquire a service corporation, or to
perform a new activity in an existing service corporation subsidiary,
by a Federal savings association \16\ that is well capitalized and well
managed if the service corporation engages only in one or more of the
preapproved activities listed in 12 CFR 5.59(f). The OCC proposed to
add covered community savings associations to these provisions. The OCC
did not receive comments on these provisions and is finalizing these
amendments as proposed.
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\15\ Twelve CFR 5.38 does not apply to a Federal savings
association that is not subject to 12 U.S.C. 1828(m) because the
Federal savings association is a Federal savings bank that was
chartered prior to October 15, 1982 as a savings bank under State
law or acquired its principal assets from an institution that was
chartered prior to October 15, 1982, as a savings bank under State
law. See 12 CFR 5.38(b). Such a Federal savings association may
establish or acquire an operating subsidiary or commence a new
activity in an existing operating subsidiary without a filing to the
OCC.
\16\ As with 12 CFR 5.38, the application requirements in 12 CFR
5.59 do not apply to Federal savings associations not subject to 12
U.S.C. 1828(m). See 12 CFR 5.59(h)(1)(i).
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Adverse Comments
Additionally, the OCC proposed to clarify the standard for when an
adverse comment raises a significant supervisory, CRA, or compliance
concern. Under 12 CFR 5.13(a)(2)(i), the OCC may extend the expedited
review period or remove a filing from expedited review procedures if,
inter alia, it concludes that the filing, or an adverse comment
regarding the filing, presents a significant supervisory, CRA, or
compliance concern. The OCC does not extend the expedited review period
or remove a filing from expedited review procedures if, inter alia, the
OCC determines that an adverse comment does not raise a significant
supervisory, CRA, or compliance concern. The OCC's regulation does not
currently define when a concern is significant. The OCC proposed to add
a sentence to 12 CFR 5.13(a)(2)(ii) that, for purposes of that
paragraph, it considers a concern to be significant if the facts are
previously unknown to the OCC and, if proven accurate, would support
denial of the filing. This new sentence would provide additional
clarity to filers and commenters on when the OCC may extend the
expedited review period or remove a filing from expedited review
procedures in light of the comment. If the information in a comment is
already known to the OCC, the OCC may act under 12 CFR 5.13(a)(2)(i) or
deny the filing, as appropriate. If the information in a comment, if
accurate, would not support denial of the filing, the OCC does not see
a basis to change the otherwise applicable expedited processing, as the
record available to the OCC would already provide sufficient basis for
decision.
One commenter criticized the proposed standard as difficult and
arbitrary. The OCC has not significantly changed its regulations
regarding consideration of public comments since 1996. The addition of
a standard for a significant comment would provide additional clarity,
as the OCC has done in other rulemakings in recent years.\17\ The
proposed standard continues this clarification and offers more
information to commenters and institutions than the current regulation.
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\17\ See 85 FR 80436 (Dec. 11, 2020) (adding definition of
``non-substantive'').
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The OCC also received a comment requesting clarification regarding
what constitutes a significant adverse comment, with which the OCC
agrees. Specifically, the commenter contended that a comment should be
considered significant if it would warrant not only a denial, as
originally proposed, but also if it would warrant the OCC imposing a
condition on the approval of the filing. The OCC has authority to
impose conditions on its approvals, and such conditions are generally
enforceable by the OCC under 12 U.S.C. 1818(b), if needed. The OCC
recognizes that the proposal was insufficiently granular regarding such
conditional approvals, which the final rule remedies by expressly
addressing such scenarios. The OCC believes that if a comment raises
concerns that may warrant a conditional approval, the comment
necessarily raises an issue of
[[Page 10496]]
significance to the filing and, thus, will be considered significant in
such circumstances. Accordingly, the OCC is finalizing the proposed
amendment substantially as proposed with the additional reference to
conditional approval.
III. Regulatory Analysis
Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA),\18\ the OCC may
not conduct or sponsor, and a respondent is not required to respond to,
an information collection unless it displays a currently valid Office
of Management and Budget (OMB) control number. The information
collection requirements in this final rule have been submitted to OMB
under OMB control number 1557-0014 (Licensing Manual).
---------------------------------------------------------------------------
\18\ 44 U.S.C. 3501-3521.
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The final rule creates a new definition of ``covered community bank
or covered community savings association'' and amends various
provisions of 12 CFR part 5 to grant expedited or reduced filing
procedures already present in the regulations to covered community
banks and covered community savings associations.
Title: Licensing Manual.
OMB Control Number: 1557-0014.
Frequency of Response: Occasional.
Affected Public: National banks and Federal savings associations.
The changes to the burden of the Licensing Manual are de minimis
and continue to be:
Estimated Number of Respondents: 3,694.
Estimated Total Annual Burden: 12,481.15.
Comments continue to be invited on:
(a) Whether the collections of information are necessary for the
proper performance of the agencies' functions, including whether the
information has practical utility;
(b) The accuracy of the estimate of the burden of the information
collections, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information 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.
All comments will become a matter of public record. Written
comments and recommendations for the information collection should be
sent within 30 days of publication of this notice. Comments on the
collection of information should be sent to Chief Counsel's Office,
Attention: Comment Processing, Office of the Comptroller of the
Currency, Attention: 1557-0014, 400 7th Street SW, Suite 3E-218,
Washington, DC 20219. Comments may also be sent to
[email protected] or to www.reginfo.gov/public/do/PRAMain. Find
this information collection by selecting ``Currently under 30-day
Review--Open for Public Comments'' or using the search function.
Regulatory Flexibility Act
In general, the Regulatory Flexibility Act (RFA) \19\ 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 U.S. Small Business Administration for
purposes of the RFA to include commercial banks and savings
institutions with total assets of $850 million or less and trust
companies with total assets of $47 million or less). However, under
section 605(b) of the RFA, this analysis is not required if an agency
certifies that the final rule would not have a significant economic
impact on a substantial number of small entities and publishes its
certification and a short explanatory statement in the Federal Register
along with its final rule.
---------------------------------------------------------------------------
\19\ 5 U.S.C. 601 et seq.
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The OCC currently supervises 997 institutions (commercial banks,
trust companies, Federal savings associations, and branches or agencies
of foreign banks),\20\ of which approximately 609 are small
entities.\21\ The OCC estimates that on average, up to 68 OCC-
supervised institutions could be impacted by the rule, based on the
definition of covered community bank or covered community savings
association. In general, the OCC classifies the economic impact on an
individual small entity as significant if the total estimated impact in
one year is greater than 5 percent of the small entity's total annual
salaries and benefits or greater than 2.5 percent of the small entity's
total non-interest expense. Furthermore, the OCC considers 5 percent or
more of OCC-supervised small entities to be a substantial number. Thus,
at present, 30 OCC-supervised small entities would constitute a
substantial number.
---------------------------------------------------------------------------
\20\ Based on data accessed using the OCC's Financial
Institutions Data Retrieval System on February 18, 2026.
\21\ We base our estimate of the number of small entities on the
Small Business Administration's size thresholds for commercial banks
and savings institutions, and trust companies, which are $850
million and $47 million, respectively. Consistent with the General
Principles of Affiliation 13 CFR 121.103(a), we count the assets of
affiliated financial institutions when determining if we should
classify an OCC-supervised institution as a small entity. We use
December 31, 2024, 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.
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The final rule will provide expedited review of certain
applications for some small entities and would require fewer filings
for some small entities for other types of filings. This would result
in cost savings for some OCC-regulated institutions that would now
qualify for expedited or reduced filing procedures. Although there are
individual small entities that will be impacted by the final rule, the
economic impact would not be more than 5 percent of the small entity's
total annual salaries and benefits nor greater than 2.5 percent of the
small entity's total non-interest expense. Therefore, the OCC certifies
that this final rule would not have a significant economic impact on a
substantial number of small entities. A Regulatory Flexibility Analysis
is thus not required.
Unfunded Mandates Reform Act
The OCC has analyzed the final rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA).\22\ Under this analysis,
the OCC considered whether the final rule includes a Federal mandate
that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year ($187 million as adjusted annually for
inflation). Pursuant to section 202 of the UMRA,\23\ if a final rule
meets this UMRA threshold, the OCC would need to prepare a written
statement that includes, among other things, a cost-benefit analysis of
the proposal. The UMRA does not apply to regulations that incorporate
requirements specifically set forth in law.
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\22\ 2 U.S.C. 1531 et seq.
\23\ 2 U.S.C. 1532.
---------------------------------------------------------------------------
The OCC estimates that the final rule would not require additional
expenditures from OCC regulated entities. As noted earlier, there would
likely be a decrease in expenditures due to reduced filing
requirements, resulting in cost savings. Therefore, the OCC finds that
the final rule does not trigger the UMRA cost threshold. Accordingly,
the OCC has not prepared the written
[[Page 10497]]
statement described in section 202 of the UMRA.
Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA) of 1994, 12 U.S.C. 4802(a), in
determining the effective date and administrative compliance
requirements for new regulations that impose additional reporting,
disclosure, or other requirements on insured depository institutions,
the OCC must consider, consistent with principles of safety and
soundness and the public interest: (1) any administrative burdens that
the final rule would place on depository institutions, including small
depository institutions and customers of depository institutions; and
(2) the benefits of the final rule. In addition, section 302(b) of
RCDRIA requires new regulations and amendments to regulations that
impose additional reporting, disclosures, or other new requirements on
insured depository institutions 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.
The OCC has considered the changes made by this final rule and
believes that the overall effective date of April 3, 2026 will provide
OCC-regulated institutions with adequate time to comply with the rule.
The final rule will not impose any new administrative compliance
requirements, but rather provide expedited or reduce filing
requirements to certain institutions.
Executive Order 12866
Executive Order 12866, titled ``Regulatory Planning and Review,''
as amended, requires the Office of Information and Regulatory Affairs
(OIRA), Office of Management and Budget (OMB), to determine whether a
final rule is a ``significant regulatory action'' prior to the
disclosure of the final rule to the public. If OIRA finds the final
rule to be a ``significant regulatory action,'' Executive Order 12866
requires the agencies to conduct a cost-benefit analysis of the final
rule and for OIRA to conduct a review of the final rule prior to
publication in the Federal Register. Executive Order 12866 defines
``significant regulatory action'' to mean a regulatory action that is
likely to (1) have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866.
OMB has determined that this final rule is not a ``significant
regulatory action'' as defined in section 3(f) of Executive Order 12866
and, therefore, is not subject to review under Executive Order 12866.
Executive Order 14192
Executive Order 14192, titled ``Unleashing Prosperity Through
Deregulation,'' requires that an agency, unless prohibited by law,
identify at least ten existing regulations to be repealed when the
agency publicly proposes for notice and comment or otherwise
promulgates a new regulation with total costs greater than zero.
Executive Order 14192 further requires that new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
ten prior regulations. This rule is not an Executive Order 14192
regulatory action because this rule is not significant under Executive
Order 12866. Further, the final rule is a deregulatory action under
Executive Order 14192 because it will result in potential cost savings
for OCC-supervised institutions.
Congressional Review Act
For purposes of the Congressional Review Act, OMB makes a
determination as to whether a final rule constitutes a ``major rule.''
\24\ If a rule is deemed a ``major rule'' by OMB, the Congressional
Review Act generally provides that the rule may not take effect until
at least 60 days following its publication.\25\
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\24\ 5 U.S.C. 801 et seq.
\25\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------
The Congressional Review Act 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.\26\
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\26\ 5 U.S.C. 804(2).
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OMB has determined that the final rule is not a major rule for
purposes of the Congressional Review Act. As required, the OCC will
submit the final rule and other appropriate reports to Congress and the
Government Accountability Office for review.
List of Subjects in 12 CFR Part 5
Administrative practice and procedure, National banks, Reporting
and recordkeeping requirements, Savings associations, Securities.
Authority and Issuance
For the reasons set forth in the preamble, the OCC amends chapter I
of title 12 of the Code of Federal Regulations as follows:
PART 5--RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES
0
1. The authority citation for part 5 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 24a, 35, 93a, 214a, 215, 215a,
215a-1, 215a-2, 215a-3, 215c, 371d, 481, 1462a, 1463, 1464, 1817(j),
1831i, 1831u, 2901 et seq., 3101 et seq., 3907, and 5412(b)(2)(B).
0
2. Amend Sec. 5.3 by adding the definition of ``Covered community bank
or covered community savings association'' in alphabetical order to
read as follows:
Sec. 5.3 Definitions.
* * * * *
Covered community bank or covered community savings association
means:
(1) A national bank or Federal savings association that:
(i) Has less than $30 billion in total assets, as reported in the
national bank's or Federal savings association's Call Report, and is
not an affiliate of a depository institution or foreign bank with $30
billion or more in total assets, as reported in the depository
institution's Call Report or the foreign bank's equivalent to a Call
Report;
(ii) Is well capitalized as defined in Sec. 5.3; and
(iii) Is not subject to a cease and desist order, a consent order,
or a formal written agreement, that requires action to improve the
financial condition of the national bank or Federal savings association
unless otherwise informed in writing by the OCC.
(2) For purposes of this definition, the term ``affiliate'' means
any company
[[Page 10498]]
that controls, is controlled by, or is under common control with the
depository institution or foreign bank, as control is defined in Sec.
5.50(d)(4).
* * * * *
0
3. Amend Sec. 5.13(a)(2)(ii) by adding a sentence after the first
sentence to read as follows:
Sec. 5.13 Decisions.
(a) * * *
(2) * * *
(ii) * * * For purposes of this paragraph (a)(2)(ii), the OCC
considers a concern to be significant if the facts are previously
unknown to the OCC and, if proven accurate, would support denying, or
imposing a condition on the approval of, the filing. * * *
* * * * *
Sec. 5.20 [Amended]
0
4. Amend Sec. 5.20(j) introductory text by removing the phrase
``eligible bank or eligible savings association'' and adding in its
place the phrase ``eligible bank, eligible savings association, covered
community bank, or covered community savings association''.
Sec. 5.23 [Amended]
0
5. Amend Sec. 5.23(d)(4) by adding the phrase ``or covered community
bank'' after the phrase ``eligible bank''.
Sec. 5.24 [Amended]
0
6. Amend Sec. 5.24(h) by adding the phrase ``or covered community
savings association'' after the phrase ``eligible savings
association''.
Sec. 5.26 [Amended]
0
7. Amend Sec. 5.26(e)(3) by removing the phrase ``eligible bank or
eligible savings association'' and adding in its place the phrase
``eligible bank, eligible savings association, covered community bank,
or covered community savings association''.
Sec. 5.30 [Amended]
0
8. Amend Sec. 5.30(f)(6) by adding the phrase ``or covered community
bank'' after the phrase ``eligible bank''.
Sec. 5.31 [Amended]
0
9. Amend Sec. 5.31(f)(1)(iii) introductory text and (f)(2)(iii)
introductory text by adding the phrase ``or covered community savings
association'' after the phrase ``eligible savings association''.
0
10. Amend Sec. 5.33 by:
0
a. In paragraph (j)(1)(iii), removing the word ``or'' at the end of the
paragraph;
0
b. In paragraph (j)(1)(iv), removing the period at the end of the
paragraph and adding in its place ``; or''; and
0
c. Adding paragraph (j)(1)(v).
The addition reads as follows:
Sec. 5.33 Business combinations involving a national bank or Federal
savings association.
* * * * *
(j) * * *
(1) * * *
(v) The acquiring national bank or Federal savings association is a
covered community bank or covered community savings association and the
transaction would result in a national bank or Federal savings
association with less than $30 billion in total assets.
* * * * *
Sec. 5.34 [Amended]
0
11. Amend Sec. 5.34 by:
0
a. In paragraph (f)(2)(i) introductory text, adding the phrase ``a
covered community bank or is both'' after the phrase ``a national bank
that is''; and
0
b. In paragraph (f)(6) introductory text, adding the phrase ``a covered
community bank or is both'' after the phrase ``if the bank is''.
Sec. 5.35 [Amended]
0
12. Amend Sec. 5.35(f)(2)(ii)(A) by adding the phrase ``a covered
community bank or covered community savings association or is both''
after the phrase ``national bank or Federal savings association is''.
Sec. 5.36 [Amended]
0
13. Amend Sec. 5.36 by:
0
a. In paragraph (e)(3), adding the phrase ``a covered community bank or
is both'' after the phrase ``that the bank is''; and
0
b. In paragraph (h)(1), adding the phrase ``a covered community bank or
is both'' after the phrase ``national bank that is''.
Sec. 5.38 [Amended]
0
14. Amend Sec. 5.38(f)(2)(ii)(A) by adding the phrase ``a covered
community savings association or is both'' after the phrase ``savings
association is''.
Sec. 5.40 [Amended]
0
15. Amend Sec. 5.40(c)(4) by removing the phrase ``eligible bank or
eligible savings association'' and adding in its place the phrase
``eligible bank, eligible savings association, covered community bank,
or covered community savings association''.
Sec. 5.45 [Amended]
0
16. Amend Sec. 5.45(g)(3) by removing the phrase ``eligible savings
association's application'' and adding in its place the phrase
``application by an eligible savings association or covered community
savings association''.
0
17. Amend Sec. 5.46 by revising and republishing paragraph (i)(2) to
read as follows:
Sec. 5.46 Changes in permanent capital of a national bank.
* * * * *
(i) * * *
(2) Expedited review. An application by an eligible bank or covered
community bank is deemed approved by the OCC 15 days after the date the
OCC receives the application described in paragraph (i)(1) of this
section, unless the OCC notifies the bank prior to that date that the
application has been removed from expedited review, or the expedited
review process is extended, under Sec. 5.13(a)(2). An eligible bank or
covered community bank seeking to decrease its capital may request OCC
approval for up to four consecutive quarters. The request need only
specify a total dollar amount for the four-quarter period and need not
specify amounts for each quarter. An eligible bank may decrease its
capital pursuant to such a plan only if the bank maintains its eligible
bank status before and after each decrease in its capital. A covered
community bank may decrease its capital pursuant to such a plan only if
it maintains its covered community bank status before and after each
decrease in its capital.
* * * * *
0
18. Amend Sec. 5.47 by:
0
a. Redesignating paragraph (f)(1)(i)(B) as paragraph (f)(1)(i)(C);
0
b. Adding new paragraph (f)(1)(i)(B);
0
c. Revising newly redesignated paragraph (f)(1)(i)(C);
0
d. Redesignating paragraph (f)(2)(i)(B) as paragraph (f)(2)(i)(C);
0
e. Adding new paragraph (f)(2)(i)(B); and
0
f. Revising newly redesignated paragraph (f)(2)(i)(C).
The additions and revisions read as follows:
Sec. 5.47 Subordinated debt issued by a national bank.
* * * * *
(f) * * *
(1) * * *
(i) * * *
(B) Covered community bank. A covered community bank is required to
receive prior approval from the OCC to issue any subordinated debt, in
accordance with paragraph (g)(1)(i) of this section, if:
(1) The national bank will not continue to be well capitalized
after the transaction;
[[Page 10499]]
(2) The OCC has previously notified the national bank that prior
approval is required; or
(3) Prior approval is required by law.
(C) National bank not an eligible bank or covered community bank. A
national bank that is not an eligible bank or covered community bank
must receive prior OCC approval to issue any subordinated debt, in
accordance with paragraph (g)(1)(i) of this section.
* * * * *
(2) * * *
(i) * * *
(B) Covered community bank. A covered community bank is required to
receive prior approval from the OCC to prepay any subordinated debt
that is not included in tier 2 capital (including acceleration,
repurchase, redemption prior to maturity, and exercising a call
option), in accordance with paragraph (g)(1)(ii) of this section, only
if:
(1) The national bank will not continue to be well capitalized
after the transaction;
(2) The OCC has previously notified the national bank that prior
approval is required;
(3) Prior approval is required by law; or
(4) The amount of the proposed prepayment is equal to or greater
than one percent of the national bank's total capital, as defined in 12
CFR 3.2.
(C) National bank not an eligible bank or covered community bank. A
national bank that is not an eligible bank or covered community bank
must receive prior OCC approval to prepay any subordinated debt that is
not included in tier 2 capital (including acceleration, repurchase,
redemption prior to maturity, and exercising a call option), in
accordance with paragraph (g)(1)(ii) of this section.
* * * * *
0
19. Amend Sec. 5.55 by:
0
a. Revising paragraph (e)(1)(i); and
0
b. In paragraphs (g)(1) introductory text and (g)(2)(i), adding the
phrase ``or covered community savings association'' after the phrase
``eligible savings association''.
The revision reads as follows:
Sec. 5.55 Capital distributions by Federal savings associations.
* * * * *
(e) * * *
(1) * * *
(i) The Federal savings association is:
(A) Not an eligible savings association or covered community
savings association; or
(B) Is an eligible savings association or covered community savings
association but would not continue to be well capitalized following the
distribution;
* * * * *
Sec. 5.56 [Amended]
0
20. Amend Sec. 5.56(b)(1)(ii) introductory text by adding the phrase
``or covered community savings association'' after the phrase
``eligible savings association''.
Sec. 5.58 [Amended]
0
21. Amend Sec. 5.58 by:
0
a. In paragraph (e)(3), adding the phrase ``a covered community savings
association or is both'' after the phrase ``that the Federal savings
association is''; and
0
b. In paragraph (h)(1), adding the phrase ``a covered community savings
association or is both'' after the phrase ``Federal savings association
that is''.
Sec. 5.59 [Amended]
0
22. Amend Sec. 5.59(h)(2)(ii)(A) by adding the phrase ``a covered
community savings association or is both'' after the phrase ``savings
association is''.
Jonathan V. Gould,
Comptroller of the Currency.
[FR Doc. 2026-04275 Filed 3-3-26; 8:45 am]
BILLING CODE 4810-33-P