The Dodd-Frank Wall Street Reform and Consumer Protection ...The Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. 5301, et seq..(Dodd-Frank Act), among other things,

INw.aMni fErvP~

Federal Register /Vol. 80, No. 208 /Wednesday, October 28, 2015 /Rules and Regulations 65889

beginning with the 2015-16 crop year;(3) handlers are aware of this actionwhich was unanimously recommendedby the committee at a public meetingand is similar to other assessment rateactions issued in past years; and (4) thisinterim rule provides a 60-day commentperiod, and all comments timelyreceived will be considered prior tofinalization of this rule.

List of Subjects in 7 CFR Part 987

Dates, Marketing agreements,Reporting and recordkeepingrequirements.

For the reasons set forth in thepreamble, 7 CFR part 987 is amended asfollows:

PART 987—DATES PRODUCED ORPACKED IN RIVERSIDE COUNTY,CALIFORNIA

■ 1. The authority citation for 7 CFRpart 987 continues to xead as follows:

Authority: 7 U.S.C. 601-674.

■ Z. Section 987.339 is revised to read

as follows:

§ 987.339 Assessment rate.

On and after October 1, 2015, an

assessment rate of $0.10 per

hundredweight is established forRiverside County, California dates.

Dated: October 22, 2015.

Rex A. Barnes,

Associate Administrator, AgriculturalMarketing Service.

[FR Doc. 2015-27340 Filed 10-27-15; 8:45 am]

BILLING CODE 3410-02-P

FEDERAL DEPOSIT INSURANCECORPORATION

12 CFR Parts 303 and 391

RIN 3064-AE24

Filing Requirements and ProcessingProcedures for Changes in ControlWith Respect to State NonmemberBanks and State Savings Associations

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Final rule.

SUMMARY: On November 25, 2014, the

FDIC published a notice of proposedrulemaking (proposed rule or NPR) toamend its filing requirements andprocessing procedures for notices filedunder the Change in Bank Control Act(Notices). The comment period closedJanuary 26, 2015, and no commentswere received. The FDIC is nowadopting that proposed rule as finalwith one change (final rule). The final

rule accomplishes several objectives.First, the final rule consolidates into onesubpart the current requirements andprocedures for Notices filed withrespect to State nonmember banks andcertain parent companies thereof, andthe requirements and procedures forNotices filed with respect to Statesavings associations and certain parentcompanies thereof. Second, the finalrule rescinds the FDIC's separateregulation governing the requirementsand procedures for Notices filed withrespect to State savings associations andcertain parent companies thereof andrescinds any guidance issued by theOffice of Thrift Supervision (OTS)relating to changes in control of Statesavings associations that is inconsistentwith the final rule. Third, the final ruleadopts the best practices of the relatedregulations of the Office of theComptroller of the Currency (OCC) andthe Board of Governors of the FederalReserve System (Board of Governors).Finally, the final rule clarifies theFDIC's requirements and proceduresbased on its experience interpreting andimplementing the existing regulation.This final rule is also part of the FDIC'scontinuing review of its regulationsunder the Economic Growth andRegulatory Paperwork Reduction Act of1996,.DATES: The final rule is effective January1, 2016.FOR FURTHER INFORMATION CONTACT: Ann

Johnson Taylor, Supervisory Counsel,AjohnsonTaylozQfdic.gov,• Gregory S.Feder, Counsel, GFederQfdic.gov,~Rachel J. Ackmann, Counsel,RAclanannQfdic.gov,• Robert C. Fick,Senior Counsel, RFickQfdic.gov.SUPPLEMENTARY INFORMATION:

I. Background

The Federal Deposit Insurance Act(FDI Act) at section 7(j) (the Change inBank Control Act) generally providesthat no person may acquire control of aninsured depository institution unlessthe person has provided the appropriateFederal banking agency prior writtennotice of the transaction and thebanking agency has not objected to theproposed transaction.1 Subpart E of Part303 of the FDIC's rules and regulations z(Subpart E of Part 303) implementssection 7(j) of the FDI Act and sets forththe filing requirements and processingprocedures for Notices filed withrespect to the proposed acquisition ofState nonmember banks and certainparent companies thereof.3

112 U.S.C. 1817(j).z 12 CFR 303.80 et seq.3 Certain industrial loan companies, trust

companies, and credit card banks that are State

The Dodd-Frank Wall Street Reformand Consumer Protection Act, 12 U.S.C.5301, et seq..(Dodd-Frank Act), amongother things, provided for a substantialreorganization of the regulation of Stateand Federal savings associations andtheir holding companies. On July 21,2011, (the "transfer date" established bysection 311 of the Dodd-Frank Act), thepowers, duties, and functions formerlyassigned to, or performed by, the OTSwere fransferred to (i) the FDIC, as toState savings associations; 4 (ii) the OCC,as to Federal savings associations; and(iii) the Board of Governors, as tosavings and loan holding companies.sSection 316(b) of the Dodd-Frank Actprovides the manner of treatment for allorders, resolutions, determinations,regulations, and advisory materials thathad been issued, made, prescribed, orallowed to become effective by theOTS.6 The section provides that if suchmaterials were in effect on the daybefore the transfer date, they continue tobe in effect and are enforceable by oragainst the appropriate successor agencyuntil they are modified, terminated, setaside, or superseded in accordance withapplicable law by such. successoragency, by any court of competentjurisdiction, or by operation of law.

Section 316(c) of the Dodd-Frank Act,further directed the FDIC and the OCCto consult with one another and topublish a list of the continued OTSregulations which would be enforced byeach agency.' On June 14, 2011, theBoard of Directors of the FDIC (theBoard) approved a "List of OTSRegulations to be Enforced by the OCCand the FDIC pursuant to the Dodd-Frank Wall Street Reform and ConsumerProtection Act". This list was publishedby the FDIC and the OCC as a JointNotice in the Federal Register on July6, 2011.8Although section 312(b)(2)(B)(i)(II) of

the Dodd-Frank Act granted the OCCrulemaking authority relating to savingsassociations, nothing in the Dodd-FrankAct affected the FDIC's existingauthority to issue regulations under theFDI Act and other laws as the

nonmember banks under the FDI Act are not"banks" under the Bank Holding Company Act("BHC AcY'J. 12 U.S.C. 1841(c)(2J. Therefore, acompany that seeks to control such an institutionwould not necessazily have to be a bank holdingcompany under the BHC Act and would not haveto be subject to supervision by the Soard ofGovernors.. However, such a company would haveto file a Notice with, and obtain the approval of, theFDIC prior to acquiring such an institution.4 As of June 2015, there aze approximately 50

State savings associations insured by the FDIC.512 U.S.C. 5411.fi 12 U.S.C. 5414(b).~ 12 U.S.C. 5414(c).8 76 FR 39246 (July 6, 2011).

65890 Federal Register /Vol. 80, No. 208 /Wednesday, October 28, 2015 /Rules and Regulations

"appropriate Federal banking agency"or under similar statutory terminology.9Section 312(c) of the Dodd-Frank Actamended section 3 (q) of the F'DI Act anddesignated the FDIC as the "appropriateFederal banking agency" for Statesavings associations.l~ As a result, whenthe FDIC acts as the designated"appropriate Federal banking agency"(or under similar terminology) for Statesavings associations, as it has in thefinal rule, the FDIC is authorized toissue., modify and rescind regulationsinvolving such associations.11As noted above, on June 14, 2011,

operating pursuant to this authority, theBoard reissued and redesignated certainregulations transferred from the formerOTS. These regulations were adoptedand issued as new FDIC regulations atParts 390 and 391 of Title 12. When itrepublished these regulations as newFDIC regulations, the FDIC specificallynoted that staff would evaluate thetransferred regulations and might laterrecommend amending them, rescindingthem, or incorporating the transferredregulations into other FDIC rules asappropriate.

Certain of the regulations transferredto the FDIC govern acquisitions of Statesavings associations under the Changein Bank Control Act (transferred CBCAregulation).12 The FDIC is incorporatingportions of those regulations into theFDIC's Subpart E of Part 303 andrescinding the transferred CBCAregulation. In addition to consolidatingand conforming the change in controlregulations for both State nonmemberbanks and State savings associations,the final rule increases the consistencyof Subpart E of Part 303 with the OCC'sand the Board of Governors' relatedregulations by incorporating certain bestpractices of those regulations intoSubpart E of Part 303.13 Also, the FDICis generally updating Subpart E of Part303 to provide greater fransparency toits change in control regulation based onits experience interpreting andimplementing the Change in BankConfrol Act.

II. Proposed Rule

On November 25, 2014, the FDICpublished the NPR, which proposedamending the FDIC's filing requirementsand processing procedures forNotices.14 The FDIC did not receive any

912 U.S.C. 5412(b)(2)(B)(i)(In•

1° 12 U.S.C. 1813(q).1112 U.S.C. 1819(a)(Tenth).1212 CFR pazt 391, subpart E, entitled

Acquisitions of Control of State SavingsAssociations.

1312 CFR 5.50 et seq. (OCC) and 12 CFR 225.41—.43 (Board of Governors).

14 7g FR 70121 (Nov. 25, 2014).

comments on the proposed rule and isnow adopting the proposed rule as finalwith only one modification..

III. Final Rule

a. Section 303.80 Scope

The scope of the final rule makes itclear that Subpart E of Part 303 appliesto acquisitions of confrol of Statenonmember banks, State savingsassociations, and certain companies thatcontrol one or more State nonmemberbanks and/or State savings associations(parent companies). The FDIC believesthat expanding the scope of Subpart Eof Part 303 to include State savingsassociations and certain parentcompanies 15 and rescinding thetransferred CBCA regulation bothstreamlines its rules and procedures andincreases regulatory consistency for allFDIC-supervised institutions. To thatend, the final rule defines the term"covered institution" to include aninsured State nonmember bank, aninsured State savings association, andcertain companies that control, directlyor indirectly, an insured Statenonmember bank or an insured Statesavings association.In addition, the final rule amends the

scope of Subpart E of Part 303 toindicate that the subpart implements theChange in Bank Control Act 16 and toclarify that the subpart includes theprocedures for filing and processing aNotice. The revised scope section alsosets forth the circumstances that requirethe filing of a Notice.

b. Section 303.81 Definitions

1. Acting in Concert

The final rule defines "acting inconcert' as "knowing participation in ajoint activity or parallel action towardsa common goal of acquiring control ofa covered institution whether or notpursuant to an agreement." Thisdefinition is not substantively differentfrom the definition of "acting inconcert" in the existing Subpart E ofPart 303.17 The only modification isupdated terminology. Specifically, themodification replaces the term "insuredstate nonmember bank or a parentcompany" with "covered institution" toreflect that the FDIC is also theappropriate Federal banking agency forState savings associations. The FDIC

15 A company that is not a bank holding companynor a savings and loan holding company and thatseeks to acquire a State savings association thatoperates solely in a fiduciary capacity would not besubject to supervision by the Boazd of Governors.Such a company would have to file a Notice with,and obtain the approval of, the FDIC.

16 The final rule uses language adopted from thetransferred CBCA regulation.

17 See 12 GFR 303.81(b).

does not believe any furthermodifications are necessary. The FDIChas not adopted the comparabledefinition from the transferred CBCAregulation because the definition in theexisting Subpart E of Part 303 is broadenough to include the specificcircumstances described in thetransferred CBCA regulation and is clearand easy to understand.l$The FDIC notes that a group of

persons acting in concert becomes adifferent group of persons acting inconcert when a member of the groupleaves or a new member joins. Forexample, if certain members of a familyhave previously filed a Notice with, andreceived anon-objection from, the FDICas a group acting in concert, eachmember of the group must file a newNotice and obtain the FDIC's non-objection when a member of the groupceases. participation in the group, andthe group continues to hold sufficientshares to constitute "control."The FDIC also notes that if a person

who is a member of a group acting inconcert proposes to acquire votingsecurities that result in that personholding 25 percent or more of the votingsecurities in his/her/its own right, thenthe person must file a Notice with theFDIC because that person individuallywill have acquired control as defined bythe Change in Bank Control Act. Sucha person must file a Notice even if thatperson had already filed and beenapproved as a member of the groupacting in concert.The FDIC further notes that it will

look closely at transactions where a leadinvestor has a material role inorganizing a bank's capital offering. Thepresence of a lead investors) whosolicits persons with whom the leadinvestor has a pattern of co-investingsuggests that the solicited investors,together with the lead investor, mayconstitute a group acting in concert. TheFDIC will analyze the facts andcircumstances of each case to determinewhether such persons constitute a groupacting in concert.

2. Company

As discussed in section III.c.3 below,the final rule adds certain rebuttablepresumptions of acting in concert,including presumptions relating tocompanies. The final rule defines theterm "company" by reference to section2 of the Bank Holding Company Act of1956, as amended (12 U.S.C. 1841 etseq.) (BHC Act) and includes acatch-allfor any person that is not an individualor group of individuals acting in

la See 12 CFR 391.41 for the definition of actingin concert in the transferred CBCA regulation.


concert, for example, a limited liabilitycompany.

3. Control

The final rule defines "control" as"the power, directly or indirectly, todirect the management or policies of acovered institution or to vote 25 percentor more of any class of voting securitiesof a covered institution." This definitionis not substantively different from thedefinition of "control" in the existingSubpart E of Part 303.19 The onlymodifiication is updated terminology,i.e., replacing "voting shares" with"voting securities" and replacing"insured state nonmember bank or aparent company" with "coveredinstitution" to reflect that the FDIC isalso the appropriate Federal bankingagency for State savings associationsand certain parent companies thereof.The final rule does not adopt theenumerated conditions in the definitionof control from the transferred CBCAregulation because the definition of"confrol" in the final rule is broadenough to include such conditions andenumerating some of the conditions thatare probative of confrol could be read toexclude others.20

4. Convertible Securities

As discussed in section III.c.4, thefinal rule includes a presumptionrelating to convertible securities. Thefinal rule defines "convertiblesecurities" as debt or equity intereststhat maybe converted into votingsecurities. The definition is not in thee~cisting Subpart E of Part 303 or thetransferred CBCA regulation, butconvertible securities are notuncommon in the industry, and theFDICs regulations will now reflect thisfact.z1

5. Covered Institution

The final rule defines the term"covered institution" as "an insuredState nonmember bank, an insured Statesavings association, and any companythat controls, directly or indirectly, aninsured State nonmember bank or aninsured State savings association otherthan a holding company that is thesubject of an exemption described ineither section 303.84(a)(3) or (a)(8)."Therefore, the final rule could apply toan individual's acquisition of votingsecurities of a bank holding company orsavings and loan holding company,provided the transaction is nototherwise exempted under 303.84(a)(3)or (a)(8). Subsections (a)(3) and (a)(8)

19 See 12 CFR 303.81(c).

zO See 12 CFR 391.43(a)(1).zl See 12 CFR 225.31(d)(1).

exempt transactions that are subject toSection 3 of the BHC Act andtransactions for which the Board ofGovernors reviews a Notice. The303.84(a)(3) and (a)(8) exemptions arediscussed in section IILe.3 and 8.The Board of Governors is not the

primary regulator of all companies thatconfrol State nonmember banks sincesome State nonmember banks are not"banks" under the BHC Act.22 Also,. theBoard of Governors is not the primaryregulator of all companies that controlState savings associations. Under theHome Owners' Loan Act,23 "a companythat controls a savings association thatfunctions solely in a trust or fiduciarycapacity as described in section2(c)(2)(D) of the Bank Holding CompanyAct of 1956" is not a savings and loanholding company.24 As a result, acompany that is not otherwise a bankholding company or a savings and loanholding company and that seeks toacquire control of either a Statenonmember hank that is not a "bank"under the BHC Act or a State savingsassociation that functions solely in afrust or fiduciary capacity is subject tothe final rule and is not be eligible forthe exceptions from Notice in303.84(a)(3) and (a)(8).

6. Immediate Family

As discussed in section III.c.3 below,the final rule adds certain rebuttablepresumptions of acting in concert,including a presumption relating to aperson's immediate family. The finalrule defines "immediate family" as "aperson's parents, mother-in-law, father-in-law, children, step-children, siblings,step-siblings, brothers-in-law, sisters-in-law, grandparents, and grandchildren,whether biological, adoptive,adjudicated, confractual, or de facto; thespouse of any of the foregoing; and theperson's spouse." This definition issimilar to the definitions of "immediatefamily" in the OCCs and the Board ofGovernors' related regulations.25 TheFDIC's final rule interprets the term"spouse" to include any formalizeddomestic relationship, for example,through civil union or marriage. Thefinal rule does not adopt the definitionof "immediate family" in the transferredCBCA regulation because that definitiondoes not include an acquirer'sgrandparents or step-relatives.26 TheFDIC believes that these relationstypically have a natural tendency to

ZZ Zz u.s.c. Zs41(c)(z).2312 U.S.C. 1467a.2412 i~.S.C. 1467a(a)[1J(D)(ii)(II).z5 See 12 GFR 5.50(d)(4) (OCCJ and 12 CFR

2z5,41(b)(3) (Board of Governors).z6 See 12 CFR 391.41.

engage in joint or parallel action topreserve or enhance the value of thefamily's investment(s).The FDIC would interpret the term

"sibling" as one of two or moreindividuals having at least one commonparent.

7. Person

The final rule defines ̀ `person" as "anindividual, corporation, limited liabilitycompany (LLC), partnership, trust,association, joint venture, pool,syndicate, sole proprietorship,unincorporated organization, votingtrust, or any other form of entity; andincludes each party to a votingagreement and any group of personsacting in concert." The final rule doesnot adopt the definition of "person" inthe transferred CBCA regulation andinstead includes an amended version ofthe definition from the existing SubpartE of Part 303 because the definitionfrom the existing Subpart E of Part 303more closely fracks the definition ofperson in the Change in Bank ControlAct.~~ The final rule amends thedefinition from the existing Subpart E ofPart 303 to explicitly include limitedliability companies as persons. TheFDIC believes that limited liabilitycompanies are more common in theindustry than when the statute wasenacted in 1978 and therefore meritexpress recognition as "persons". Thefinal rule also makes a number oftechnical edits. For example, to begrammatically correct, the final rulemoves "voting trust' to the enumeratedlist of entities.

8. Management Official

As discussed in section III.c.3 below,the final rule includes a newpresumption of acting in concertrelating to a company and its controllingshareholder or management official. Thefinal rule defines management official as"any officer, LLC manager, director,partner, or trustee of an entity, or otherperson with similar functions andpowers with respect to a coveredinstitution." This definition issubstantively identical to the definitionpreviously adopted by the Board ofGovernors; 28 the only modification,beyond updated terminology, is theinclusion of the term "LLC manager" torecognize the prevalence of limitedliability companies in the industry.29

27 Compare 12 CFR 391.41 and 12 CFR 303.81(e)with lz U.s.C. 1517(j)(a)(A).

28 See 12 CFR 225.2(1).z9 The updated terminology replaces "a bank or

other company" with the term "entity" andreplaces the term "employee" with the term"person". The OCC recently adopted a definition of

Continued.


Generally, the final rule treats membersof an LLC who are not managers similarto shareholders in a corporation. Thefinal rule does not adopt the definitionof "management official" from thetransferred CBCA regulation because thefinal rule's definition is a more accuratedescription of the persons intended tobe covered by the presumption.

9. Voting Securities

Unlike the existing Subpart E of Part303, the final rule includes a definitionof "voting securities", Including adefinition of "voting securities" makesthe final rule more consistent with theOCCs and the Board of Governors'related regulations. The final ruledefines "voting securities" as shares ofcommon or preferred stock, general orlimited partnership shares or interests,membership interests, or similarinterests if the shares or interests, bystatute, charter, or in any manner,entitle the holder: (i) To vote for, or toselect, directors, trustees, managers ofan LLC, partners, or other personsexercising similar functions of theissuing entity; or (ii) to vote on, or todirect, the conduct of the operations orsignificant policies of the issuing entity.The final rule further states that sharesof common or preferred stock, limitedpartnership shares or interests,membership interests, or similarinterests are not "voting securities" if:(i) Any voting rights associated with theshares or interests are limited solely tothe type customarily provided by Statestatute with regard to matters thatwould significantly and adversely affectthe rights or preference of the securityor other interest, such as the issuance ofadditional amounts or classes of seniorsecurities, the modification of the termsof the security or interest, thedissolution of the issuing entity, or thepayment of dividends by the issuingentity when preferred dividends are inarrears; (ii) the shares or interestsrepresent an essentially passiveinvestment or financing device and donot otherwise provide the holder withcontrol over the issuing entity; and (ui)the shares or interests do not entitle theholder, by statute, charter, or in anymanner, to select, or to vote for theselection of, directors, trustees,managers of an LLC, partners, orpersons exercising similar functions ofthe issuing entity. The definition of"voting securities" also states thatvoting securities issued by a singleissuer are deemed to be the same class

"management official", although the OCC'sdefinition of the term is not substantially identicalto the Board of Governors' definition. 80 FR 28346(May 18, 2015).

of voting securities, regardless ofdifferences in dividend rights orliquidation preference, if the securitiesare voted together as a single class onall matters for which the securities havevoting rights, other than rights thataffect solely the rights or preferences ofthe securities.The definition derives from the Board

of Governors' definition of "votingsecurities" with a few minormodifications.30 For example, unlikethe Board of Governors' definition, thedefinition adopted by the FDICexplicitly references LLCs and managersthereof. Additionally, the definitionprovides for the existence of nonvotingcommon stock in addition to nonvotingpreferred stock. Similar to the Board ofGovernors' definition, the final ruleexcludes nonvoting preferred stock thatincludes the right to elect or appointdirectors upon failure of the coveredinstitution to pay preferred dividendsfrom the definition of voting securitiesuntil such time as the right to vote orappoint directors arises. Once the rightto vote for or appoint directors arises,such non-voting preferred stock wouldbecome voting securities. Again, thefinal rule does not adopt the definitionof "voting securities" from thetransferred CBCA regulation because thedefinition in the final rule is a moreaccurate definition of the securities thatcould trigger application of the Changein Bank Control Act.

10. Other Definitions

The final rule does not define"acquisition" as does existing Subpart Eof Part 303. The final rule also does notadopt several other definitions in thetransferred CBCA regulation. Forexample, the terms "State savingsassociation" and "affiliate" are also notdefined in the final rule as those termsare defined in the FDI Act. The FDIC isnot adopting these definitions becausethey were determined to be unnecessaryor are statutorily defined in the FDI Act.

c. Section 303.82 Transactions ThatRequire Prior Notice

1. Section 303.82(a) Prior NoticeRequirement

The proposed rule asked whether theFDIC should continue to exempt allfuture acquisitions.. of voting securitiesof an institution once a person hasacquired control incompliance with theprocedures from the Change in BankControl Act. Such a change would makethe final rule more consistent with theOCC and the Board of Governors whoreserve the right to limit a person's

34 See 12 CFR 225.2(q)(1).

future acquisition of voting securities.As noted above, the FDIC received nocomments on this question or any otheraspect of the proposed rule and hasdecided to limit the scope of thatexemption in the final rule consistentwith the regulations of the OCC and theBoard of Governors,31

Specifically, the final rule requirespersons previously approved to acquirecontrol to file a second prior Notice incertain circumstances. Similar to theproposed rule, the final rule requiresany person, whether acting directly orindirectly, alone or in concert withothers, to give the FDIC prior writtennotice before the acquisition of controlof a covered institution, unless theacquisition is exempt.32 However, thefinal rule provides that unless waivedby the FDIC, a person who has beenapproved to acquire control of a coveredinstitution and who has maintained thatcontrol must file a second Notice beforeany acquisition that would increase aperson's ownership, control, or power tovote from less than 25 percent to 25percent or more of any class of votingsecurities of the covered institution. TheFDIC may waive this requirement if it isin the public interest and consistentwith the purposes of the CBCA and theFDI Act.

2. Section 303.82(b)(1) RebuttablePresumption of ControlThe final rule includes a rebuttable

presumption of control that generallyapplies whenever a person's acquisitionwould result in that person owning orcontrolling 10 percent or more of a classof voting securities of a coveredinstitution, and either (1) the institutionhas issued any class of securities subjectto the registration requirements ofsection 12 of the Securities ExchangeAct of 1934, or (2) immediately after thetransaction, no other person will awn agreater proportion of that class of votingsecurities. The final rule removes fromexisting Subpart E of Part 303 theprovision that if two or more persons,not acting in concert, each propose toacquire simultaneously equalpercentages of 10 percent or more of aclass of voting securities of a coveredinstitution, each such person shall filea prior Notice with. the FDIC. The finalrule clarifies the FDIC's policy byremoving the implication that the

3112 CFR 5.50(c)((2J(iu) and 12 CFR 225.42(a)(Z).3z See 12 CFR 303.82(a) and12 CFR 391.42(h).

The FDIC notes that section 391.42(b) of thetransferred CBCA regulation includes two specificexceptions. (one for certain persons affiliated witha savings and loan holding company and one formergers with interim companies) that are notexplicifly stated in this section of the final rule.These exceptions aze statutory and included in therule in section 303.84.


largest shareholders only have to file aNotice if they simultaneously acquirethe voting securities. By removing thatprovision, the final rule makes it clearthat if two or more shareholders eachpropose to acquire an equal percentageof any class of voting securities wherethat percentage is 10 percent or moreand where no other shareholder willown or confrol a greater percentage of.that class of voting securities, then eachsuch acquirer must file a Notice. Thetiming of each shareholder's acquisitionis irrelevant.The transferred CBCA regulation also

includes a rebuttable presumption ofconfrol, but the presumption is triggeredonly if there exists one of theenumerated control factors.33 Theenumerated control factors includefactors such as that the acquirer wouldbe one of the two largest holders of anyclass of voting stock; the acquirer wouldhold 25 percent or more of the totalstockholders' equity; the acquirer wouldhold more than 35 percent of thecombined debt securities andstockholders' equity; or the acquirerand/or the acquirer's representatives ornominees would constitute more thanone member of the institution's board ofdirectors.34 The final rule does notinclude any control factors as additionalelements to the rebuttable presumptionof control. The FDIC notes that theenumerated control factors representonly some of the. circumstantial factorsthat the FDIC analyzes whendetermining whether a person willacquire the ability to direct themanagement or policies of a coveredinstitution. The FDIC believes that thedetermination of whether a person willacquire the power to direct themanagement or policies of an institutionis dependent on the facts andcircumstances of the case and that it isimpractical and potentially misleadingto attempt to list all such factors.

It is also noted that the Board ofGovernors has issued a policy statemententitled Policy Statement on EquityInvestments in Banks and Bank HoldingCompanies regarding the interpretationof the BHC Act.35 The policy statementgenerally provided certain guidanceregarding the amount of total equity aperson can control without the Board ofGovernors determining that the personhas the ability to exercise a controllinginfluence over the management orpolicies of a banking organization. Aperson who acquires total equity inexcess of the amount proscribed in that

as 12 CFR 391.43(b).

3912 CFR 391.43(c).3s See http://wcvcv. federaireserve.gov/newsevents/

press/bcreg/2008o922c.htm.

guidance would likely have to file anapplication under the BHC Act. TheFDIC has found the logic of the policystatement useful in analyzing factpatterns under the Change in BankControl Act, but has not adopted thatpolicy statement pending furtherconsideration.The proposed rule asked to what

e~ctent and under what circumstanceswould the confrol of one-third or moreof a covered institution's total equitygive such a person the power to directthe management or policies of a coveredinstitution. As noted above, nocomments were received on theproposed rule. Pending furtherconsideration, the FDIC has determinednot to adopt a presumption that thepower to control a covered institutionfor purposes of the Change in BankControl Act exists at one-third of aninstitution's total equity. Instead, theFDIC will continue to review suchissues based on the facts andcircumstances of each case,The existing Subpart E of Part 303

states that ownership interests otherthan those set forth in the rebuttablepresumption of control and thatrepresent less than 25 percent of a classof an institution's voting shares do notconstitute control for purposes of theChange in Bank Confrol Act.36 The finalrule does not include this provisionbecause the provision has been a sourceof confusion regarding the meaning ofthe term "control". The FDIC hasoccasionally addressed questionsregarding this provision and now seeksto clarify in the final rule that thedefinition of "control" includes twostandards: One based on fhe amount ofvoting securities controlled by a personand the other based on a facts-and-circumstances analysis of whether aperson has the power to direct themanagement or policies of a coveredinstitution. The FDIC notes that thechange does not expand the thresholdsin the rebuttable presumption ofconfrol, but only removes the potentialambiguity regarding whether the factsand circumstances alone could supporta conclusion that a person will controlthe institution. Such afacts-and-circumstances analysis is consistentwith both the statutory definition of"controP' in the Change in Bank ControlAct and the FDIC's long-standingpractices.

3. Section 303.82(b)(2) RebuttablePresumptions of Acting in Concert

The final rule includes new rebuttablepresumptions of acting in concert. Theacting in concert presumptions included

3s 12 CFR 303.82(d).

in the final rule are generally derivedfrom the rebuttable presumptions ofacting in concert in the Board ofGovernors' regulations.37 The OCCrecently adopted presumptionsconsistent with the Board of Governors'presumptions of acting in concert.38The final rule includes an acting in

concert presumption with respect to acompany and any controllingshareholder or management official ofthat company. If both the company andcontrolling shareholder or managementofficial will own or control votingsecurities of a covered institution, thenthe FDIC will presume that the companyand the controlling shareholder ormanagement official are acting inconcert,Second, the final rule includes an

acting in concert presumption betweenan individual and one or more membersof the individuaPs immediate family. Iftwo or more members of an immediatefamily will own or confrol votingsecurities of a covered institution, thenthe FDIC will presume that thosepersons are acting in concert. Thedefinition of immediate family isdiscussed in section III.b.5 above.The final rule also includes

presumptions of acting in concertbetween (i) two or more companiesunder common control or a companyand each other company it controls; (ii)persons that have made or propose tomake a joint filing under sections 13 or14 of the Securities Exchange Act of1934; 39 and (iii) a person and any trustfor which the person serves as trustee orany trust for which the person is abeneficiary.The final rule also includes a

presumption that persons that areparties to any agreement, contract,understanding, relationship, or otherarrangement, whether written orotherwise, regarding the acquisition,voting, or transfer of control of votingsecurities of a covered institution, otherthan through revocable proxies asdescribed in 303.84(a)(5), are presumedto be acting in concert. The FDIC hasincluded these presumptions in thefinal rule because the interests of such

37 is cFx zz5.4icaJ.as g0 FR 28346 (May 18, 2015)..

39 Section 13 of the Securities Exchange Act of1934 (the "Exchange AcY') requires the filing oftunely and accurate annual and periodic reports,and Section 14 of the Exchange Act requires thefiling of proxy materials. For purposes of thereporting provisions of section 13(g), section13(8)(3) provides that two or more persons acting"as a paz~ership, limited partnership, syndicate, orother group for the purpose of acquiring, holding,or disposing of securities of an issuer, suchsyndicate or group shall be deemed a "person" farthe purposes of section 13(g)". Section 14 has asimilar Teporting provision fox such persons.


parties are so aligned that there e3cists anatural tendency to act together towardsuch a common goal.The transferred CBCA regulation

includes a presumption of acting inconcert for a company that providescertain financial assistance to aconfrolling shareholder or managementofficial of such company to enable thepurchase of a State saving association'sstock.4O The FDIC believes that suchsituations are included within thepresumption regarding a company andany controlling shareholder ormanagement official of that company.The transferred CBCA regulation alsoincludes a presumption of acting inconcert when one person providescredit to, or is instrumental in obtainingfinancing for, another person topurchase stock of a coveredinstitution.41 The FDIC does not believethis situation, by itself, aligns persons'interests to an extent sufficient towarrant a presumption of acting inconcert. Accordingly, the final rule doesnot include that presumption. However,the FDIC notes that providing orfacilitating the financing for anotherperson to purchase stock would berelevant evidence of acting in concertthat in combination with other facts andcircumstances may result in adetermination that those persons areacting in concert.

4. Section 303.82(b)(3) ConvertibleSecurities, Options, and Warrants

The final rule includes a rebuttablepresumption that an acquisition ofconvertible securities, options, andwarrants is presumed to constitute theacquisition of voting securities as if theconversion already occurred or theoptions or warrants were alreadyexercised. The existing Subpart E of Part303 does not explicifly include such apresumption; however,. the transferredCBCA regulation, and the relatedregulations of the Board of Governors,treat such securities in a similarmanner. The FDIC's longstandingposition is that the acquisition of anoption or warrant constitutes theacquisition of the underlying votingsecurities for purposes of the Change inBank Confrol Act even if they may onlybe exercised after a period of time. TheFDIC also believes that nonvotinginterests that maybe converted intovoting securities at the election of theholder of the convertible securities, orthat convert after the passage of time,should be considered voting securitiesat all times for purposes of the Changein Bank Control Act. However, the FDICrecognizes that nonvoting securities that

4~ 12 CFR 391.43(d)(3)(ii).

are convertible into voting securitiescarry less influence when the nonvotingsecurities may not be converted intovoting securities in the hands of theinvestor and may only be convertedafter transfer by the investor; (i) In awidespread public distribution; (ii) intransfers in which no fransferee (orgroup of associated transferees) wouldreceive 2 percent or more of any classof voting securities of the bankingorganization; or (iii) to a transferee thatwould control more than 50 percent ofthe voting securities of the bankingorganization without any fransfer fromthe investor. The FDIC would generallyconsider such convertible securities asnonvoting equity.

5. Section 303.82(b)(4) Rebuttal ofPresumptions

The procedures for rebutting apresumption of control remainunchanged from the existing Subpart Eof Part 303 42 The final rule does notinclude the detailed procedures forrebutting the presumptions included inthe transferred CBCA regulation becausethe FDIC believes that the variety of thefacts and circumstances oftenencountered dictate the more flexibleprocess embodied in the existingSubpart E of Part 303.4a

6. Section 303.82(c) Acquisition ofLoans in Default

The final rule provides that anacquisition of a loan in default that issecured by voting securities of a coveredinstitution is deemed to be anacquisition of the underlying votingsecurities. This freatment is notsubstantively different from thetreatment of a loan in default secured byvoting securities in the existing SubpartE of Part 303; 44 however, the final ruleis not identical to existing Subpart E ofPart 303, The FDIC has receivedquestions about the use of the term"presumes" in Subpart E of Part 303and whether the presumption isrebuttable. As the presumption is notrebuttable, the final rule clarifies thisissue by stating that such acquisitionsare "deemed" to be an acquisition of theunderlying voting securities forpurposes of the Change in Bank ControlAct.

7. Transferred CBCA Regulation's SafeHarbor

Notwithstanding any other provisionsin the transferred CBCA regulation, the"Safe Harbor" provision permits anacquirer of an otherwise controlling

4~ See 12 CFR 303,82(eJ.43 See 12 CFR 391.43.(e).

445ee 12 CFR 303.82(c).

interest in a State savings association toavoid filing a Notice if the acquirer hasno intention of participating in, orseeking to exercise control over, a Statesavings association's management orpolicies.45 To qualify for the safe harbor,the acquirer must make certaincertifications to the FDIC. The final ruledoes not include this regulatory safeharbor. The FDIC believes that anycertifications or passivity commitmentsexecuted in connection with anacquisition of voting securities must betailored to the facts and circumstancesof each situation and a fixed set ofcertifications would not likely capturethe variety of circumstances presentedin such situations.

d. Section 303.83 Transactions ThatRequire Notice, but Not Prior Notice

Existing Subpart E of Part 303 and thetransferred CBCA regulation do notrequire prior Notice for the acquisitionof voting securities for certain types ofacquisitions. For example, bothregulations permit a person acquiringvoting securities through inheritance orbona fide gift to provide Notice within90 calendar days after the acquisition.E3cisting Subpart E of Part 303 and thetransferred CBCA regulation, however,differ materially in what transactionsare eligible for anafter-the-fact Noticeand the limitations imposed on theacquirer before receiving a non-objection. As discussed in detail below,the final rule materially amends existingSubpart E of Part 303 by incorporatingseveral aspects of the transferred CBCAregulation.4s

1. Section 303.83(a)(1)

The final rule, like the e~cistingSubpart E of Part 303 and thetransferred CBCA regulation, providesthat acquisitions through bona fide giftthat result in control of an institutionrequires the acquirer to provide Noticeto the FDIC within 90 days after theacquisition.

Z. Section 303.83(a)(2)

The final rule, as does the existingSubpart E of Part 3Q3, provides that theacquisition of voting securities insatisfaction of a debt previouslycontracted for in good faith that wouldotherwise require prior Notice requiresthe acquirer to provide Notice to theFDIC within 90 days after theacquisition. (Note that the acquisifion ofa defaulted loan secured by an amountof a covered institution's votingsecurities that would result in theacquirer holding a controlling amount of

4512 CFR 391.430.4s See 12 CFR 303.83(b) and 12 CFR 391.42(d).


the institution's voting securitiesrequires prior Notice).47 The transferredCBCA regulation creates separate Notice.requirements for such acquisitionsbased on whether the loan was made inthe ordinary course of business for thelender; however, the FDIC does notbelieve that distinction warrantsseparate Notice procedures, andtherefore, the FDIC has not adoptedsuch separate Notice requirements.

3. Section 303.83(x)(3)

The final rule, as does e~cistingSubpart E of Part 303, permits anacquirer to provide Notice to the FDICwithin 90 days after the acquisition ofvoting securities through an inheritancewhere the acquisition would result inthe acquirer holding a controllingamount of the institution's votingsecurities. The final rule provides aslightly longer period for filing a Noticethan the transferred CBCA regulation.The fransferred CBCA regulationprovides asixty-day Notice period forState savings associations.48 In the finalrule, acquirers of State savingsassociations or parent companies ofState savings associations have the sametimeframe (90 days after the acquisition)as acquirers of State nonmember banksor parent companies of Statenonmember banks.

4. Section 303.83(b)(1)

The final rule, like the e3cistingSubpart E of Part 303 and thetransferred CBCA regulation, permitsthe filing of a Notice within 90 daysafter being notified of a redemption ofvoting securities that results in theacquisition of control of the coveredinstitution.The final rule issubstantively the same as existingSubpart E of Part 303. The differencerelates to a change in regulatorylanguage to reflect that a person mightacquire control without acquiringadditional voting securities when acovered institution redeems votingsecurities. For example, if the twolargest shareholders hold 23 and 21percent of a covered institution's votingsecurities, and the covered institutionredeems all of the voting securities heldby the person with 23 percent, theperson with 21 percent would have tofile a Notice. As such, the final rule usesthe term "acquisition of control" insteadof "a percentage increase in votingsecurities". The transferred CBCAregulation provides different Noticeprocedures for redemptions based onwhether the redemption is pro rata or is

4~ See section 303.82(c).

4812 CFR 391.42(d)(1)(v)•

not pro rata.49 The FDIC does notbelieve the distinction between types ofredemptions merits varying Noticeprocedures. Accordingly, the final ruleprovides that if a person acquirescontrol of a covered institution as aresult of a redemption, that person has90 days after receiving notice of thefransaction to provide Notice to theFDIC.

5. Section 303.83(b)(2)

Existing Subpart E of Part 303 permitsa person to provide the FDIC Noticewithin 90 days after receiving notice ofa sale of shares by any shareholder thatis not within the control of a person andwhich results in that person becomingthe largest shareholder.SO The final rulerevises this provision. Under the finalrule, if a person gains control as a resultof any third-party event or action that isnot within the confrol of the personacquiring confrol, that person must filea Notice within 90 days of receivingnotice of such action. This provision,similar to the catch-all in the transferredCBCA regulation, is intended to providea broader exemption from prior Noticerequirements than an exemption basedsolely on an acquisition of controlarising from the sale of securities whichresults in the acquirer becoming thelargest shareholder.sl The FDIC alsointerprets the catch-all to include anytransfer that results from the operationof law, For example, some trustees areappointed by operation of law or in thecourse of a bankruptcy proceeding.Under the final rule, such a trustee mustprovide the FDIC with a Notice within90 days after the trustee is appointedand acquires control of a coveredinstitution. This provision codifies long-standing FDIC policy. The FDIC notesthat if the person acquiring controlcauses the third-party event or action.,then prior Notice is required.

6. Section 303.83(c)

The final rule expressly provides thatthe FDIC may disapprove a Notice filedafter-the-fact and that nothing in section303.83 limits the FDIC's authority todisapprove a Notice. Existing Subpart Eof Part 303 includes this provision withrespect to acquisitions of control ofState nonmember banks and certainparent companies of State nonmemberbanks, the final rule also applies thisprovision to acquisitions of control ofState savings associations and certainparent companies of State savingsassociations.

4912 CFR 391.42(d)(1)(iii).so 12 CFR 303;83(b)(2)(ii).51 See 12 CFR 391.42(d)(1)[iv).

7. Section 303.83(d)

The final rule explicitly states that therelevant information that the FDIC mayrequire under this section may includeall of the information typically requiredfor a prior Notice. The relevantinformation may include, withoutlimitation, all the information requestedby the Interagency Notice of Change inControl form and the InteragencyBiographical and Financial Report. Thisprovision is not in existing Subpart E ofPart 303, but is included in the finalrule for transparency and to codify long-standing FDIC policy.

8. Section 303.83(e)

The final rule expressly states that ifthe FDIC disapproves a Notice, then thenotificant must divest control of thecovered institution which may include,without limitation, disposing of some orall of the voting securities so that thenotificant(s) is no longer in confrol ofthe covered institution. This provisionis not in e~cisting Subpart E of Part 303,but is included in the final rule forclarity and to codify long-standing FDICpolicy.

9. Additional Transferred CBCARegulation Provisions Notlncluded

In addition to the provisionsdiscussed above, the final rule does notinclude the express caveat thattransactions eligible for after-the-factNotice are only eligible for after-the-factNotice provided that the timing of thetransaction is outside the control of thenotificant. The FDIC does not believethat it is necessary to state explicitlysuch a restraint on eligibility for anafterthe-fact Notice because failure tocomply with the statutory or regulatoryprovisions may subject the acquirer toliability, As a result, the FDIC hashistorically interpreted the exceptionsto prior Notice as including thisresfraint.

e. Secfion 303.84 Transacfions ThatDo Not Require Notice

1. Section 303.84(x)(1)

Section 303.84(x)(1) includesgrandfather provisions for long-heldcontrol interests in covered institutions.Under section 303.84(a)(1)(i), Notice isnot required when a person acquiresadditional voting securities of coveredinstitution if the person held the powerto vote 25 percent or more of any classof voting securities continuously sincethe later of March 9, 1979, or the datethe institution commenced business.This exemption from Noticerequirements is not substantivelydifferent from the exemption in the


existing Subpart E of Part 303 and onlyupdates terminology.5zThe transferred CBCA regulation has

a substantively identical exemption to303.84(a)(1)(i) in the final rule forpersons that have previously held thepower to vote 25 percent or more of anyclass of voting securities continuouslysince March 9, 1979; however, it doesnot exempt persons who held the powerto vote 25 percent or more of any classof voting securities since the date thesavings association commencedbusiness.53 The final rule, however,exempts such an acquisition. As such,compared to the transferred CBCAregulation, the final rule expands theNotice exemptions for persons who heldthe power to vote 25 percent or more ofany class of voting securities since thedate the savings association commencedbusiness. The FDIC believes thisexpansion makes the change in confrolrequirements more uniform andconsistent among State savingsassociations, State nonmember banks,and certain parent companies of either.In general, the FDIC does not believesignificant reasons exist to treatacquisitions of confrol of State savingsassociations or parent companiesthereof differently, in this respect, thanacquisitions of control of Statenonmember banks and parentcompanies thereof, and, by issuing thisfinal. rule, has fried to make theirtreatment as uniform as possible.Furthermore, because shareholders whohave held over 25 percent of the votingsecurities since the commencement of aState savings association were likelyreviewed by the FDIC when theinstitution acquired its charter anddeposit insurance, generally, the FDICdoes not believe that the sameshareholders need to be reviewed asecond time when they acquireadditional voting securities.Under section 303.84(a)(1)(ii), Notice

is not required when a person who ispresumed to have controlled a coveredinstitution continuously since March 9,1979, acquires additional votingsecurities of an institution provided thatthe aggregate amount of votingsecurities held does not exceed 25percent or more of any class of votingsecurities, or the FDIC has determinedthat the person has continuouslycontrolled the insfiitution since March 9,1979.54 The final rule does not amendthis exemption for State nonmemberbanks or certain parent companiesthereof. The fransferTed CBCAregulation included a similar provision,

5z See 12 CFR 303.83(a)(1)(i).s312 CFR 391.42(c)(2)(v)(A) and (B),5412 CFR 303.83(a)(1)(ii).

except with a grandfather date ofDecember 26, 1985.55 The final ruledoes not include the grandfather datefrom the transferred CBCA regulation;rather it adopts the same grandfatherprovisions for State savings associationsas are applicable for State nonmemberbanks. This treatment generally reflectsthe FDIC's position that acquirers ofState savings associations should becreated in a similar manner to acquirersof State nonmember banks.. In addition,this freatment is consistent with theOCCs treatment of Federal savingsassociations.ss

2. Section 303.84(a)(2)

The existing Subpart E of Part 303 andthe transferred CBCA regulationsexempt from Notice requirementscertain persons who have confrolled acovered institution in compliance withthe procedures of the Change in BankControl Act or the repealed Change inSavings and Loan Control Act, or anyregulations issued under either act, andwho acquires additional votingsecurities.57 The final rule retains thisexemption, with an exception for anotice that is required by a person whoincreases their ownership as providedin 12 CFR 303.82(a)(2). As noted above,both the OCC and the Board ofGovernors reserve the right to limit thefuture acquisitions of a person who hasonce been approved to acquire confrol.

3. Section 303.84(x)(3)

Under the Change in Bank ControlAct and both the existing Subpart E ofPart 303 and the transferred CBCAregulation, acquisitions of votingsecurities that are subject to approvalunder section 3 of the BHC Act,Sa

section 18(c) of the FDI Act,59 or section10 of the Home Owners' Loan Act 6O areexempt from Notice requirements.These are statutory exemptions and areincluded in the final rule for clarity.sl

4. Section 303.84(x)(4)

The existing Subpart E of Part 303exempts from Notice requirements thosefransactions that are exempt under theBHC Act including, foreclosures byinstitutional lenders, fiduciaryacquisitions by banks, and increases of

ss The difference in the grandfather date is due toa difference in when the presumptions in thetransferred CBCA regulation and Existing Subpart Eof Part 303 became effective. The FDIC does notanticipate many persons, if any, would be affectedby the March 9,1979 grandfather date for Statesavings associations.

5g 12 CFR 5.50(c)(21, .

b~12 CFR 303.83(x)(2) and 391.42(c)(2)(v).sa 12 U.S.C. 1842 et seq.

5912 U.S.C. 1828(c).so 12 U.S.C. 1467b.6112 U.S.G. 1817(j)(17).

majority holdings by bank holdingcompanies described in sections 2(a)(5),3(a)(A), or 3(a)(B), respectively, of theBHC Act, 12 U.S.C. 1841(a)(5),1842(a)(A), and 1842(a)(B).62 The finalrule includes these exemptions, butdoes not include the tent preceding thestatutory references. The text,"foreclosures by institutional lenders,fiduciary acquisitions by banks, andincreases of majority holdings by bankholding companies" is removed forclarity only; no substantive change isintended or effected. Intended asshorthand references to the subjectmatter of the statutory provisions, thetext has generated confusion regardingits proper interpretation in that it couldbe interpreted as limiting the scope ofthose statutory references. In order toeliminate that confusion, the FDIC hasdeleted the text. Consequently, the finalrule provides that any transactiondescribed in sections 2(a)(5), 3(a)(A), or3(a)(B) of the BHC Act by a persondescribed in those provisions is exemptfrom Notice requirements.

5. Section 303.84(a)(5J

The existing Subpart E of Part 303exempts a customary one-time proxysolicitation from the Noticerequirements.63 The final ruletechnically modifies. this exemption byexpressly limiting its applicability toonly revocable proxies, which is in linewith long-standing FDIC interpretation.This exemption is applicable any timerevocable proxies are solicited for asingle meeting of a covered institution.This exemption does not coverirrevocable proxies or revocable proxiesthat do not terminate within areasonable period after the meeting. Thetransferred CBCA regulation does notinclude a similar exemption for the one-time solicitation of revocable proxies.However, the FDIC believes that thisexemption is just as appropriate for statesavings associations as it is for statenonmember banks, and the final ruleextends this exemption to State savingsassociations.

6. Section 303.84(x)(6)

The existing Subpart E of Part 303also exempts from Notice requirementsthe receipt of voting shares through apro rata stock dividend.64 Thetransferred CBCA regulation has asimilar exemption, but extends theexemption to stock splits, if the

6z 12 CFR 303.83(x)[4). The transferred CBCAregulaflon includes references [o exempttransactions in 12 CFR 391.42(c)(2)[i)(A), (ii), (iii),and (iv) that aze substantially similar to the exempttransactions included in the final rule.s312 CFR 303.83(x)(5).

6412 CFR 303.83(x)(6).


proportional interests of the recipientsremain substantially the same.65 Thislanguage is similar to languagecontained in the Board of Governors'change in control regulation.ss TheFDIC believes the effect of a stock splitis substantially similar to the effect of apro rata stock dividend and hasincorporated this exemption. Thus, thefinal rule permits an exemption for anincrease in voting securities througheither a pro rata stock dividend or astock split, provided the proportionalinterests of the recipients remain thesame.

7. Section 303.84(a)(7)

The final rule, like the existingSubpart E of Part 303, exempts theacquisition of voting securities in aforeign bank that has an insured branchin the United States.

8. Section 303.84(a)(8)

The existing Subpart E of Part 303exempts from Notice requirements theacquisition of voting shares of adepository institution holding companythat either the Board of Governors or theformer OTS reviews under the Changein Bank Control Acts' The purpose ofthis exemption is to avoid duplicateregulatory review of the sameacquisition of control by both the Boardof Governors and the FDIC. The finalrule includes this exemption, but.removes the reference to the formerOTS. The final rule also continues theFDIC's longstanding practice torecognize this exemption only when theBoard of Governors actually reviews aNotice under the Change in BankControl Act and not when the Board ofGovernors does not require and reviewa Notice. Accordingly, if the Board ofGovernors determines to acceptpassivity commitments in lieu of aNotice, the FDIC will evaluate the factsand circumstances of the case todetermine whether a Notice is requiredto be filed with the FDIC for the indirectacquisition of control of an FDIC-supervised institution. This revision tothe existing Subpart E of Part 303 isconsistent with the language in thetransferred CBCA regulation, whichstates that transactions for which "achange of control notice must besubmitted" to the Board of Governorsare exempt from Notice requirements.68This revision is also consistent with the

s512 CFR 391.42(c)(2)(i)(C).ss See 12 CFR 225.42(a)(6j.

s~ 12 CFR 303,83(a)(S). This fact pattern would

azise, for example, when an individual investor,rather than a company, seeks to acquire control ofa bank holding company,

6a 12 CFR 391.42(c)[2)[iv).

purpose of the exemptions and theFDIC's long-standing practice.

9. Other Transferred GBCA RegulationExemptions

The transferred CBCA regulation alsoincludes an exemption for acquisitionsof up to twenty-five percent of a classof stock by a ta~c-qualified employeestock benefit plan as defined in 12 CFR192,25.69 The final rule does not includethis provision because such plans arefreated in the same manner as any trust.To the extent that a trustee does nothave voting rights or the power to directhow the votes will be cast, typically theFDIC would not determine that thetrustee has control..

f. 303.85 Filing Procedures

The filing procedures in the final ruleare identical to the filing procedures inthe existing Subpart E of Part 303.70 TheFDIC is not substantially modifying thefiling procedures in the existing SubpartE of Part 303 because these proceduresare well-understood by the industry andhave historically been easy toimplement by both the FDIC and theindustry. The final rule changes thefiling procedures specified in thetransferred CBCA regulation such thatacquirers of State savings associationsand certain parent companies thereof donot need to file a Notice using the OTS'sNotice Form 1393,71 Under the finalrule, a specific Notice form is notrequired, however, all of theinformation required by the FFIECInteragency Notice of Change in Controlform as well as the InteragencyBiographical and Financial Reportwould need to be submitted.7z The FDICencourages the use of the FFIEC forms.

Additionally, the final rule does notspecifically state that the notificant mayamend the Notice, as in the transferredCBCA regulation, but it is current FDICpolicy that notificants can amend aNotice at their own initiative or uponthe request of the FDIC.

g. 303.86 Processing and Disapprovalof Notices

The procedural requirements in thefinal rule are substantively identical tothe procedural requirements in theexisting Subpart E of Part 303.73 Similarto the reasoning for not substantiallymodifying the filing procedures in thee3cisting Subpart E of Part 303, the FDICis not making any substantive changes

6912 CFR 391.42(c)(2)(i)(E).

'O See 12 CFR 303,84.

"12 CFR 391.45(a) and (b).

~z A notificant may choose to use an interagencyform which is available at the FFIEC Web site orfrom an FDIC Regional Director.'3 See 12 CFR 303.85.

to the processing procedures in the finalrule. Relative to the proceduralrequirements in the existing Subpart Eof Part 303, the only modification is tostate explicitly that the Change in BankControl Act permits the FDIC to extendthe notice period.74 Material changesapplicable to State savings associations,as compared to the transferred CBCAregulation, are discussed below.75

First, the final rule does not includethe provision in the transferred CBCAregulation that failure by a State savingsassociation to respond to a writtenrequest for information or documentswithin 30 calendar days would bedeemed a withdrawal of the Notice orrebuttal filing.76 Instead, any writtenrequest for information from the FDICmay include atime-limit within whichthe institution must respond before theNotice or rebuttal filing would beconsidered abandoned or withdrawn.This procedure provides more flexibilitydepending on the depth and amount ofinformation requested.Second, the final rule does not

include the limitation in the transferredCBCA regulation restricting the FDIC'sadditional information requests, afterthe initial information request, to onlyinformation regarding matters derivedfrom the initial information request orNotice, or information of a materialnature that was not reasonably availablefor the acquirer, was concealed, orpertained to developments after the timeof the initial information request.~~ Thefinal rule does not include such aresfriction because the FDIC believes itshould have the flexibility to obtain allmaterial information throughout thenotice review period.

Additionally, the transferred CBCAregulation includes a list of factors thatgive rise to a rebuttable presumptionthat an acquirer may fail the integrityand financial condition statutoryfactors.78 For example, if during the 10-yearperiod immediately preceding thefiling of the Notice, certain judgments,consents, orders, or administrativeproceedings terminated in anyagreements or orders issued against theacquirer, or affiliates of the acquirer, byany governmental entity, which involve:(A) Fraud, moral turpitude, dishonesty,breach of trust or fiduciary duties,organized crime or racketeering; (B)violation of securities or commoditieslaws or regulations; (C) violation ofdepository institution laws or

74 See 12 CFR 303.86(b)(1).

~5 See Y2 CF'R 391.45(c) and 391.46 for relevantprovisions of the transferred CBCA regulation.

~B See 12 CFR 391.45(c)(1).

~~ See Y2 CFR 391.45(c)(3).

~B 12 CFR 391.46(g).


regulations; (D) violation of housingauthority laws or regulations; or (E)violation of the rules, regulations, codesof conduct or ethics of aself-regulatorytrade or professional organization, thereis a rebuttable presumption that thenotificant cannot meet the statutoryintegrity factor. For the financialcondition factor, for instance, if thenotificant failed to furnish a businessplan or furnished a business planprojecting activities which. areinconsistent with economical homefinancing, then there is a rebuttablepresumption the notificant cannot meetthe financial condition statutory factor.As discussed above, the final rule doesnot adopt the presumption regardingdisqualification factors. Nevertheless,the FDIC notes that these are the sort offacts that it considers when evaluatingthe financial or integrity factors.

h. 303.87 Public Notice Requirement

The final rule does not substantivelyamend the public notice requirementsin the existing Subpart E of Part 303.79The final rule includes minor revisionsto the public notice requirements forNotices that are not filed in accordancewith the Change in Bank Control Actand this subpart within the time periodsspecified. The final rule harmonizes thepublic notice requirements for suchNotices with the requirements forNotices filed in accordance with theChange in Bank Control Act and thissubpart. Material changes applicable toState savings associations, as comparedto the transferred CBCA regulation, arediscussed below.80

First, the fransferred CBCA regulationdoes not explicitly permit the FDIC todelay publication requirements. Thefinal rule, like the existing Subpart E ofPart 303, permits the FDIC to delay thepublication required if the FDICdetermines, for good cause, that it is inthe public interest to grant a delay.The final rule also permits the FDIC

to shorten the public comment period toa period of not less than 10 days, orwaive the public comment ornewspaper publication requirements, oract on a Notice before the expiration ofa public comment period, if itdetermines that an emergency exists orthat disclosure of the Notice, solicitationof public comment, or delay untilexpiration of the public comment periodwould seriously threaten the safety andsoundness of the institution to beacquired. The fransferred CBCAregulation permits the FDIC to waive thepublic notice period and submission of

~9 See 12 CFR 303.86.

eO See 12 CFR 391.45.

comments for supervisory reasons.81The final rule includes the languagefrom the existing Subpart E of Part 303and not the broader language from thetransferred CBCA regulation because theFDIC believes that such a waiver shouldbe rare and granted only as specified inthe existing Subpart E of Part 303. TheFDIC believes that public comment is animportant right and should only bewaived for an emergency or seriousthreats to an institution's safety andsoundness.The transferred CBCA regulation

provides fora 30-day comment period,but the existing Subpart E of Part 303and the final rule include a 20-daycomment period.82 The final ruleincludes a 20-day comment periodbecause, in the FDIC's experience, the20-day comment period in the existingSubpart E of Part 303 has providedpotential commenters sufficient time tocomment. In addition, a 20-daycomment period gives the FDICsufficient time to review any commentsduring the limited statutory reviewperiod (60-days unless extendedfurther). Finally, a 20-day commentperiod provides consistency among theFederal banking agencies with respect toState savings associations, Statenonmember banks, national banks, andState member banks.The final rule also requires that if a

Notice was not filed in accordance withthe Change in Bank Confrol Act and thissubpart within the time periodsspecified, the notificant must publish anannouncement of the acquisition ofconfrol in a newspaper of generalcirculation in the community in whichthe home office of the FDIC-supervisedinstitution acquired is located within 10days after being directed to file a Noticeby the FDIC. This express requirementis not included in the transferred CBCAregulation.The transferred CBCA regulation

includes a provision regarding how anapplicant can request that informationsubmitted in connection with a Noticebe treated as confidentia1.83 The finalrule does not include these proceduresbecause the FDIC has comparabledisclosure and confidentialityregulations in 12 CFR part 309 thatalready cover such requests.

Finally, the transferred CBCAregulation explicitly states that the FDICwill notify the State savingsassociation's State supervisor of thefiling of a Notice.84 As this is a statutoryrequirement, the FDIC does not believe

e~ 12 CFR 391.45 (g).ez 12 CFI2 303.86(d) and 12 CFR 391.45(e).e312 CFR 391.45(fl.

B412 CFR 391.45(hJ.

its inclusion in the final rule isnecessary.

i. 303.88 Reporting of Stock Loansand Changes in Chief Executive Officersand Directors

The final rule includes twolongstanding statutory reportingrequirements that are not included inexisting Subpart E of Part 303 or thetransferred CBCA regulation. The firststatutory reporting requirement relatesto any foreign bank, or any affiliatethereof, that has credit outstanding toany person or group of persons whichis secured, directly or indirectly, by 25percent or more of any class of votingsecurities of a covered institution.85 Thesecond statutory reporting requirementincluded in the final rule relates tochanges in chief executive officers anddirectors o£ a bank within 12 months ofa change in control beingconsummated.86 The final rule does notadd to, or modify, the existing statutoryrequirements and only includes thelongstanding statutory requirements toenhance transparency for coveredinstitutions.

j. Other Transferred CBCA RegulationProvisions

The final rule does not includesimilar language to that in 12 CFR391.45(1)—(j), which outlines additionalprocedures for Notices that involveother filings to the FDIC. Notificantsshould review other applicableregulatory sections, such as 12 CFR303.60 et seq. concerning mergerapplications or mutual-to-stockconversions, for further information onrelated filings. The FDIC generallyprefers not to cross-reference filings thata particular transaction may require.The FDIC notes that acquisitions ofvoting securities subject to approvalunder section 18(c) of the FDI Act areexempt from Notice requirements.

The transferred CBCA regulation alsocontains a rebuttal of controlagreement.87 The final rule does notinclude this agreement because theFDIC believes that a rebuttal of controlshould be tailored to the facts andcircumstances of each situation, and astandard agreement would not typicallycapture the various circumstances thatmaybe present in some situations. TheFDIC prefers to make any potentialrebuttal of control decision onlq afterreviewing the facts and circumstances ofthe particular acquisition.sg

as 12 U.S.C. 1817(])(9)•

8612 U.S.C. 1817(j)(12).

°712 CFR 391.48.

ae See also discussion at II.c.7, supra.

Federal Register /Val. 8D, No. 208 /Wednesday, October 28, 2015 /Rules and Regulations 65899

The final rule also excludes therequirement in the fransferred CBCAregulation that certain acquirers ofbeneficial ownership exceeding 10percent of any class. of stock of a Statesavings association file a certification ofownership. The FDIC believes that theregulatory burden of these filingsexceeds the benefits derived from them.

k. Existing OTS Guidance

All guidance issued by the OTS thatwould otherwise apply to changes incontrol of State savings associations andthat is inconsistent with the provisionsof this final rule or the FDIC's policiesor procedures is rescinded on theeffective date of this final rule to theextent that such guidance wouldotherwise apply to changes in control ofState savings associations.

IV. Regulatory Analyses

A. Paperwork Reduction Act (PRA)

In accordance with the requirementsof the Paperwork Reduction Act of 1995,the FDIC may not conduct or sponsor,and the respondent is not required torespond to, an information collectionunless it displays a currently validOffice of Management and Budget(OMB) control number.89 TheInteragency Notice of Change in Controlform has previously been approved bythe OMB under Control No. 3060019for all covered institutions, includingState nonmember banks and Statesavings associations. This final ruledoes not revise the Interagency Notice ofChange in Control form for coveredinstitutions; therefore, no InformationCollection Request will be submitted toOMB.

B. ftegulatoryFlexibilityActAnalysis

The Regulatory Flexibility Act (RFA)generally requires that, in connectionwith a final rulemaking, an agencyprepare and make available for publiccomment a final regulatory flexibilityanalysis that describes the impact of afinal rule on small entities (defined inregulations promulgated by the SmallBusiness Administration to includebanking organizations with total assetsof less than or equal to $550 million).A regulatory flexibility analysis,however, is not required if the agencycertifies that the rule will not have asignificant economic impact on asubstantial number of small entities,and publishes its certification and ashort e~cplanatory statement in theFederal Register together with the finalrule. For the reasons provided below,the FDIC certifies that the final rule doesnot have a significant economic impact

8944 U.S.C. 3501 et seq.

on a substantial number of smallentities. Accordingly, a regulatoryflexibility analysis is not required.

The final rule only affects personsacquiring control of coveredinstitutions, which may include smallbanking entities. As such, the rule doesnot have a significant economic impacton a substantial number of small entitiesas the final rule does not impose anynew requirements or prohibitions onsmall banking entities and does notimpose any direct costs on smallbanking entities. As discussed in thepreamble, the final rule primarilyrevises the circumstances that requirethe filing of a Notice for personsacquiring control of a coveredinstitution, including a small bankingentity. Any impact of the final rule isborne by the persons acquiring acontrolling interest in a coveredinstitution and not by the coveredinstitution directly. Furthermore, forState nonmember banks and certain oftheir parent companies, the final rulegenerally codifies existing FDIC practiceand should only marginally affect thenumber of persons subject to Noticerequirements. While the changes forState savings associations are morematerial, the changes generally conformthe requirements for acquirers of Statesavings associations under thetransferred CBCA regulation with therequirements for acquirers of otherinsured depository institutions andshould not materially increase thenumber of change in control Noticesthat must be filed. Currently, the FDICreceives approximately 35 change incontrol Notices each year, and the FDICdoes not expect the final rule to increasethe number of Notices received. Assuch, the final rule does not have asignificant economic impact on asubstantial number of small bankingentities.

C. Plain Language

Section 722 of the Gramm-Leach-Bliley Act requires the FDIC to use plainlanguage in all proposed and final rulespublished after January 1, 2000. TheFDIC sought to present the proposedrule in a simple and sfraightforwardmanner and did not receive anycomments on the use of plain language.The FDIC has similarly drafted the finalrule.

List of Subjects in 12 CFR Part 303

Administrative practice andprocedure, Banks, Banking, Savingsassociations, Change in bank confrol.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

For the reasons stated in thepreamble, the Federal Deposit InsuranceCorporation amends parts 303 and 391of chapter III of Title 12, Code of FederalRegulations as follows:

PART 303—FILING PROCEDURES

■ 1. Revise the authority citation for part303 to read as follows:

Authority: 12 U.S.C. 378, 1464, 1813, 1815,1817, 1818, 1819(a) (seventh and Tenth),1820, 1823, 1828, 1831a, 1831e, 18310,1831p-1, 1831w, 1835a, 1843(1), 3104, 3105,3108, 3207, 5414; 15 U.S,C. 1601-1607.

■ 2. Revise Subpart E to read as follows:

Subpart E—Change in Bank Control Act

Sec.303:,80 Scope.303.81 Definitions.303,82 Transactions that require prior

notice.303.83 Transactions that require notice, but

not prior notice.303.84 Transactions that do not require

notice.303.85 Filing procedures.303.86 Processing.303.87 Public notice requirements.303.88 Reporting of stock loans and

changes in chief executive. officers anddirectors.

303.89-303.99 [Reserved]

Subpart E—Change in Bank Control

§ 303.80 Scope.This subpart implements the

provisions of the Change in BankConfrol Act of 1978, section 7(j) of theFDI Act (12 U.S.C. 1817(j)) (CBCA), andsets forth the filing requirements andprocessing procedures for a notice ofchange in control with respect to theacquisition of control of a Statenonmember bank, a State savingsassociation, or certain parent companiesof either a State nonmember bank or aState savings association.

§ 303.81 Definitions.For purposes of this subpart:(a) Acting in concert means knowing

participation in a joint activity orparallel action towards a common goalof acquiring control of a coveredinstitution whether or not pursuant toan e~cpress agreement.(b) Companymeans a company as

defined in section 2 of the Bank HoldingCompany Act of 1956, as amended (12U.S.C. 1841 et seq.) and any person thatis not an individual including forexample, a limited liability comp any.(c) Control means the power, directly

or indirectly, to direct the management


or policies of a covered institution or tovote 25 percent or more of any class ofvoting securities of a coveredinstitution.(d) Convertible securities mean debt

or equity interests that maybeconverted into voting securities.(e) Covered institution means an

insured State nonmember bank, aninsured State savings association, andany company that controls, directly orindirectly, an insured State nonmemberbank or an insured State savingsassociation other than a holdingcompany that is the subject of anexemption described in either section303.84(a)(3) or (a)(8).

(f~ Immediate familymeans a person'sparents, mother-in-law, father-in-law,children, step-children, siblings, step-siblings, brothers-in-law, sisters-in-law,.grandparents, and grandchildren,whether biological, adoptive,adjudicated, contractual, or de facto; thespouse of any of the foregoing; and theperson's spouse.(g) Person means an individual,

corporation, limited liability company(LLC), partnership, trust, association,joint venture, pool, syndicate,. soleproprietorship, unincorporatedorganization, voting trust, or any otherform of entity; and includes each partyto a voting agreement and any group ofpersons acting in concert.(h) Management official means any

officer, LLC manager, director, partner,or trustee of an entity, or other personwith similar functions and powers withrespect to a company.

(i)(1) Voting securities means sharesof common or preferred stock, general orlimited partnership shares or interests,membership interests, or similarinterests if the shares or interests, bystatute, charter, or in any manner,entitle the holder:

(i) To vote for, or to select, directors,trustees, managers of an LLC, partners,or other persons exercising similarfunctions of the issuing entity; or

(ii) To vote on, or to direct, theconduct of the operations or significantpolicies of the issuing entity.(2) Nonvoting shares: Shares of

common or preferred stock, limitedpartnership shares or interests,membership interests, or similarinterests are not "voting securities" if;

(i) Any voting rights associated withthe shares or interests are limited solelyto the type customarily provided byState statute with regard to matters thatwould significantly and adversely affectthe rights or preference of the securityor other interest, such as the issuance ofadditional amounts or classes of seniorsecurities, the modification of the termsof the security or interest, the

dissolution of the issuing enfity, or thepayment of dividends by the issuingentity when preferred dividends are inarrears;

(ii) The shares or interests representan essentially passive investment orfinancing device and do not otherwiseprovide the holder with confrol over theissuing entity; and

(iii) The shares or interests do notentitle the holder, by statute, charter, orin any manner, to select, or to vote forthe selection of, directors, trustees,managers of an LLC, partners, orpersons exercising similar functions ofthe issuing entity.(3) Class of voting securities: Voting

securities issued by a single issuer aredeemed to be the same class of votingsecurities, regardless of differences individend rights or liquidationpreference, if the securities are votedtogether as a single class on all mattersfor which the securities have votingrights other than matters described inparagraph (i)(2)(i) of this section thataffect solely the rights or preferences ofthe securities.

§303.82 Transactions that require priornotice.(a) Prior notice requirement. (1)

Except as provided in §§ 303.83 and303.84, no person, acting direcfly orindirecfly, or through or in concert withone or more persons, shall acquireconfrol of a covered institution unlessthe person shall have given the FDICprior notice of the proposed acquisitionas provided in the CBCA and thissubpart, and the FDIC has notdisapproved the acquisition within 60days or such longer period as maybepermitted under the CBCA; and(2) Except as provided in §§ 303.83

and 303.84, and unless waived by theFDIC, no person who has been approvedto acquire control of a coveredinstitution and who has maintained thatcontrol shall acquire, directly orindirectly, or through or in concert withone or more persons, voting securities ofsuch covered institution if that person'sownership, control, or power to votewill increase from less than 25 percentto 25 percent or more of any class ofvoting securities of the coveredinstitution, unless the person shall havegiven the FDIC prior notice of theproposed acquisition as provided in theCBCA and this subpart, and the FDIChas not disapproved the acquisitionwithin 60 days or such longer period asmaybe permitted under the CBCA.(b) Rebuttable presumptions—(1)

Rebuttable presumptions of control, TheFDIC presumes that an acquisition ofvoting securities of a covered institutionconstitutes the acquisition of the power

to direct the management or policies ofthat institution requiring prior notice tothe FDIC, if, immediately after thetransaction, the acquiring person willown, control, or hold with power to vate10 percent or more of any class of votingsecurities of the institution, and if:

(i) The institution has registeredsecurities under section 12 of theSecurities Exchange Act of 1934 (15U.S.G. 781); or

(ii) No other person will own, controlor hold the power to vote a greaterpercentage of that class of votingsecurities immediately after thetransaction.(2) Rebuttable presumptions of acting

in concert. The following persons whoown or control, or propose to own orcontrol voting securities in a coveredinstitution, shall be presumed to beacting in concert for purposes of thissub art:(i~A company and any controlling

shareholder or management official ofthe company;

(ii) An individual and one or moremembers of the individual's immediatefamily;

(iii) Companies under commonconfrol or a company and each companyit controls;(iv) Two or more persons that have

made, or propose to make, a joint filingrelated to the proposed acquisitionunder sections 13 or 14 of the SecuritiesExchange Act of 1934 (15 U.S.C. 78m or78n), and the rules promulgatedthereunder by the Securities andExchange Commission;.(v) A person and any trust for which

the person serves as trustee or any trustfor which the person is a beneficiary;and(vi) Persons that are parties to any

agreement, contract, understanding,relationship, or other arrangement,whether written or otherwise, regardingthe acquisition, voting, or transfer ofcontrol of voting securities of a coveredinstitution, other than through revocableproxies as described in § 303.84(a)(5).(3) Convez~tible securities, options,

and warrants. The acquisition ofconvertible securities, or options orwarrants to acquire voting securities ispresumed to constitute the acquisitionof voting securities.(4) Rebuttal of presumptions. The

FDIC will afford any person seeking torebut a presumption in this paragraph(b) an opportunity to present its viewsin writing.(c) Acquisition of loans in default. An

acquisition of a loan in default that issecured by voting securities of a coveredinstitution is deemed to be anacquisition of the underlying securitiesfor purposes of this subpart. Before


acquiring a loan in default that uponforeclosure would result in theacquiring person owning, controlling, orholding with the power to vote acontrolling amount of a coveredinstitution's voting securities, thepotential acquirer must give the FDICprior written notice as specified in thissubpart

§ 303.83 Transactions that require notice,but not prior notice.(a) Notice within 90 days after the

acquisition. The following acquisitionsof voting securities of a coveredinstitution, which otherwise wouldrequire prior notice under this subpart,instead require the acquirer to provideto the appropriate FDIC office within 90calendar days after the acquisition allrelevant information requested by theFDIC:(1) The acquisition of voting securities

as a bona fide gift;(2) The acquisition of voting securities

in satisfaction of a debt previouslycontracted in good faith, except asprovided in § 303.82(c); and(3) The acquisition of voting securities

through inheritance.(b) Notice within 90 days after

receiving notice of the event giving riseto the acquisition of control. Thefollowing acquisitions of control of acovered institution, which otherwisewould require prior notice under thissubpart, instead require the personacquiring control to provide to theappropriate FDIC office, within 90calendar days after receiving notice ofthe event giving rise to the acquisitionof control, all relevant informationrequested by the FDIC:(1) The acquisition of control

resulting from a redemption of votingsecurities by the issuing coveredinstitution; and(2) The acquisition of control as a

result of any event or action. (includingwithout limitation the sale of securities)by any third party that is not within thecontrol of the person acquiring control.(c) The FDIC may disapprove a notice

filed after an acquisition of confrol, andnothing in this section limits theauthority of the FDIC to disapprove anotice pursuant to § 303.86(c).(d) The relevant information that the

FDIC may require under this sectionmay include all information anddocuments routinely required for a priornotice as provided in § 303.85.(e) If the FDIC disapproves a Notice

filed under this § 303.83, thenotificant(s) must divest control of thecovered institution which may include,without limitation, disposing of some orall of the voting securities so that thenotificant(s) is no longer in control of

the covered institution, within suchperiod of time and in the manner thatthe FDIC may determine.

§ 303.84 Transactions that do not requirenotice.

(a) Exempt transactions. Thefollowing transactions do not requirenotice to the FDIC under this subpart:(1) The. acquisition of additional

voting securities of a covered institutionby a person who:

(i) Held the power to vote 25 percentor more of any class of voting securitiesof the institution continuously since thelater of March 9, 1979, or the date thatthe institution commenced business; or

(ii) Is presumed, under § 303.82(b) tohave controlled the institutioncontinuously since March 9, 1979, if theaggregate amount of voting securitiesheld does not exceed 25 percent or moreof any class of voting securities of theinstitution or, in other cases, where theFDIC determines that the person hascontrolled the institution continuouslysince March 9, 1979;(2) The acquisition of additional

voting securities of a covered institutionby a person who has lawfully acquiredand maintained control of theinstitution (for purposes of § 303.82)after obtaining the FDICs nnn-objectionunder the CBCA and the FDICsregulations or the OTS's non-objectionunder the repealed Change in Savingsand Loan Control Act, 12 U.S.C.1730(q), and the regulations thereunderthen in effect, to acquire control of theinstitution, unless a notice is requiredfor an increase in ownership describedin 12 CFR 303.82(a)(2);(3) Acquisitions of voting securities

subject to approval under section 3 ofthe Bank Holding Company Act (12U.S.C. 1842(a)), section 18(c) of the FDIAct (12 U.S.C. 1828(c)), or section 10 ofthe Home Owners' Loan Act (12 U.S.C.1467a);(4) Any fransaction described in

sections 2(a)(5), 3(a)(A), or 3(a)(B) of theBank Holding Company Act (12 U.S.C.1841(a)(5), 1842(a)(A), or 1842(a)(B)) bya person described in those provisions;(5) A customary one-time solicitation

of a revocable pro~ry;(6) The receipt of voting securities of

a covered institution through a pro ratastock dividend or stock split if theproportional interests of the recipientsremain substantially the same;(7) The acquisition of voting securities

in a foreign bank that has an insuredbranch in the United States. (Thisexemption does not extend to thereports. and information required underparagraphs 9, 10, and 12 of the CBCA(12 U.S.C, 1817(j)(9), (10), and (12)); and

(8) The acquisition of voting securitiesof a depository institution holdingcompany for which the Board ofGovernors of the Federal ReserveSystem reviews a notice pursuant to theCBCA (12 U.S.C. 1817(j)).

§303.85 Filing procedures.

(a) Filing notice. (1) A notice requiredunder this subpart shall be filed withthe appropriate FDIC office and shallcontain all the information required byparagraph 6 of the CBCA, section 7(j) ofthe FDI Act, (12 U.S.C. 1817(j)(6)), orprescribed in the designated interagencyforms which maybe obtained from anyFDIC regional director.(2) The FDIC may waive any of the

informational requirements of the noticeif the FDIC determines that it is in thepublic interest.(3) A notificant shall notify the

appropriate FDIC office immediately ofany material changes in the informationcontained in a notice submitted to theFDIC, including changes in financial orother conditions.(4) When the acquiring person is an

individual, or group of individualsacting in concert, the requirement toprovide personal financial data maybesatisfied by a current statement of assetsand liabilities and an income summary,as required in the designatedinteragency form, together with astatement of any material changes sincethe date of the statement or summary.The FDIC may require additionalinformation if appropriate.(b) Other laws. Nothing in this subpart

shall affect any obligation which theacquiring persons) may have to complywith the. federal securities laws or otherlaws.

g 303.86 Processing.

(a) Acceptance of notice, additionalinformation. The FDIC shall notify theperson or persons submitting a noticeunder this subpart in writing of the datethe notice is accepted as substantiallycomplete. The FDIC may requestadditional information at any time.(b) Commencement of the 60-day

notice period: consummation ofacquisition. (1) The 60-day noticeperiod specified in § 303.82 shallcommence on the day after the date ofacceptance of a substantially completenotice by the appropriate regionaldirector. The notificant(s) mayconsummate the proposed acquisitionafter the expiration of the 60-day noticeperiod, unless the FDIC disapproves theproposed acquisition or extends thenotice period as provided in the CBGA.(2) The notificant(s) may consummate

the proposed transaction before theexpiration of the 60-day period,


including any extensions, if the FDICnotifies the notificant(s) in writing of itsintention not to disapprove theac uisition.

~c) Disapproval of acquisition ofcontrol. Subpart D of 12 CFR part 308sets forth the rules of practice andprocedure for a notice of disapproval.

§ 3Q3.87 Public notice requirements.(a) Publication—(1) Newspaper

announcement. Any persons) filing anotice under this subpart shall publishan announcement soliciting publiccomment on the proposed acquisition.The announcement shall be publishedin a newspaper of general circulation inthe community in which the homeoffice of the covered institution to beac uired is located.

~2) Timing of publication. Theannouncement shall be published asclose as is practicable to the date thenotice is filed with the appropriate FDICoffice, but in no event more than 10calendar days before or after the filingdate. If the filing is not filed inaccordance with the CBCA and thissubpart within the time periodsspecified herein, the acquiring persons)shall, within 10 days of being directedby the FDIC to file a Notice, publish anannouncement of the acquisition ofcontrol.(3) Contents of newspaper

announcement. The newspaperannouncement shall conform to thepublic notice requirements set forth in§ 303.7. If the filing is not filed inaccordance with the CBCA and thissubpart within the time periodsspecified herein, the announcementshall also include the date of theacquisition and contain a statementindicating that the FDIC is currentlyreviewing the acquisition of control.(b) Delay of publication, The FDIC

may permit delay in the publicationrequired by this section if the FDICdetermines, for good cause, that it is inthe public interest to grant such a delay.Requests for delay of publication maybesubmitted to the appropriate FDICoffice.(c) Shortening or waiving public

comment period, waiving publications;acting before close of public commentperiod. The FDIC may shorten thepublic comment period to a period ofnot less than 10 days, or waive thepublic comment or newspaperpublication requirements of paragraph(a) of this section, or act on a noticebefore the expiration of a publiccomment period, if it determines inwriting either that an emergency existsor that disclosure of the notice,solicitation of public comment, or delayuntil expiration of the public comment

period would seriously threaten thesafety and soundness of the Statenonmember bank or State savingsassociation to be acquired.(d) Consideration of public comments.

In acting upon a notice filed under thissubpart, the FDIC shall consider allpublic comments received in writingwithin 20 days following the requirednewspaper publication or, if the FDIChas shortened the public commentperiod pursuant to paragraph (c) of thissection., within such shorter period.

§ 303.88 Reporting of stock loans andchanges in chief executive officers anddirectors.

(a) Requirements of reporting stockloans. (1) Any foreign bank or affiliateof a foreign bank that has creditoutstanding to any person or group ofpersons, in the aggregate, which issecured, directly or indirectly, by 25percent or more of any class of votingsecurities of a covered institution, shallfile a consolidated report with theappropriate FDIC office.(2) Any voting securities of the

covered institution held by the foreignbank or any affiliate of the foreign bankas principal must be included in thecalculation of the number of votingsecurities in which the foreign bank orits affiliate has a security interest forpurposes of this paragraph (a).(b) Definitions. For purposes of

paragraph (a) of this section:(1) Foreign bank shall have the same

meaning as in section 1(b) of theInternational Banking Act of 1978 (12U.S.C. 3101).(2) Affiliate shall have the same

meaning as in section 1(b) of theInternational Banking Act of 1978 (12U.S.C. 3101).(3) Credit outstanding includes any

loan or extension of credit; the issuanceof a guarantee, acceptance, or letter ofcredit, including an endorsement orstandby letter of credit; and any othertype of fransaction that extends credit orfinancing to the person or group ofpersons.(4) Group of persons includes any

number of persons that the foreign bankor any affiliate of a foreign bank hasreason to believe:

(i) Are acting together, in concert, orwith one another to acquire or controlvoting securities of the same coveredinstitution, including an acquisition ofvoting securities of the same coveredinstitution at approximately the sametime under substantially the same terms;or

(ii) Have made, or propose to make, ajoint filing under section 13 or 14 of theSecurities Exchange Act of 1934 (15U.S.C. 78m or 78n), and the rules

promulgated thereunder by theSecurities and Exchange Commissionregarding ownership of the votingsecurities of the same coveredinstitution.(c) Exceptions. Compliance with

paragraph (a) of this section is notrequired if:(1) The person or group of persons

referred to in paragraph (a) hasdisclosed the amount borrowed and thesecurity interest therein to theappropriate FDIC office in connectionwith a notice filed under the CBCA, anapplication filed under either 12 U.S.C.1841, et seq, or 12 U.S.C. 1467a, or anyother application filed with the FDIC asa substitute for a notice under § 303.82of this subpart, including an applicationfiled under section 18(c) of the FDI Act(Bank Merger Act, 12 U.S.C. 1828(c)) orsection 5 of the FDI Act (12 U.S.C.1E15); or(2) The transaction involves a person

or group of persons that has been theowner or owners of record of the stockfor a period of one year or more; or, ifthe transaction involves stock issued bya newly chartered bank, before the bankis opened for business.(d) Report requirements for purposes

of paragraph (a) of this section. (1) Theconsolidated report must indicate thenumber and percentage of votingsecurities securing each applicableextension of credit, the identity of theborrower, the number of votingsecurities held as principal by theforeign bank and any affiliate thereof,.and any additional information that theFDIC may require in connection with aparticular report.(2) A foreign bank, or any affiliate of

a foreign bank, shall file theconsolidated report in writing within 30days of the date on which the foreignbank or affiliate first believes that thesecurity for any outstanding creditconsists of 25 percent or more of anyclass of voting securities of a coveredinstitution.(e) Foreign bank or affiliate not

supervised by FDIC. If the foreign bank,or any affiliate thereof, is not supervisedby the FDIC, it shall file a copy of thereport filed under paragraph (a) of thissection with its appropriate Federalbanking agency.

(f~ Reporting requirement. After theconsummation of a change in control, acovered institution must notify the FDICin writing of any changes orreplacements of its chief executiveofficer or of any director occurringduring the 12—month period beginningon the date of consummation. Thisnotice must be filed within 10 days ofsuch change. or replacement and mustinclude a statement of the past and


current business and professionalaffiliations of the new chief executiveofficers or directors.

§§ 303.8903.99 [Reserved]

PART 391—FORMER OFFICE OFTHRIFT SUPERVISION REGULATIONS

■ 3. The authority for part 391 is revisedto read as follows;

Authority: 12 U.S.C.: 1819(a) (Tenth).;Subpart A also issued under 12 U.S.C. 1462a;1463; 1464; 1828; 1831p-1; 1881-1884; 15U.S.C. 16s1w; 15 U.S.G. 6801; 6805,; SubpartB also issued under 12 U.S.C. 1462a; 1463;1464; 1828; 1831p-1; 1881-1884; 15U.S.C.1681w; 15 U.S.C. 6801; 6805.; SubpartC also issued under 12 U.S.C. 1462a; 1463;1464; 1828; 1831p-1; and 1881-1884; 15U.S.C. 1681m; 1681w.; Subpart D also issuedender 12 U.S.C. 1462; 1462a; 1463; 1464; 42U.S.C. 4012a; 4104a; 4104b; 4106; 4128.

Subpart E—[Removed and Reserved]

■ 4. Remove and reserve subpart E,consisting of §§ 391.40 through 391.48.

By order of the Board of Directors.Dated at Washington, DC this 22nd day of

October, 2015.

Federal Deposit Insurance Corporation.

Robert E. Feldman,Executive Secretary.

[FR Doc. 2015-27289 Filed 10-27-15; 8;45 am]

BILLING CODE 6714-07-P

FEDERAL DEPOSIT INSURANCECORPORATION

12 CFR Parts 308, 364, and 391

RIN 3064-AE28

Removal of Transferred OTSRegulations Regarding Safety andSoundness Guidelines andCompliance Procedures; Rules onSafety and Soundness

AGENCY: Federal Deposit InsuranceCorporation..ACTION: Final rule.

SUMMARY: The Federal DepositInsurance Corporation ("FDIC") isadopting a final rule ("Final Rule") torescind and remove from the Code ofFederal Regulations 12 CFR part 391,subpart B ("part 391, subpart B"),entitled "Safety and SoundnessGuidelines and ComplianceProcedures," appendices A and B topart 391, subpart B, and supplement Ato appendix B. The Final Rule alsoamends 12 CFR part 308, subpart R("part 308, subpart R"), entitled"Submission and Review of Safety andSoundness Compliance Plans andIssuance of Orders to Correct Safety and

Soundness Deficiencies," and 12 CFRpart 364 ("part 364"), entitled"Standards for Safety and Soundness"and its corresponding appendices andsupplement. Part 391, subpart B wasone of several rules transferred to theFDIC fallowing dissolution of the formerOffice of Thrift Supervision ("OTS") inconnection with the implementation ofapplicable provisions of Title III of theDodd-Frank Wall Sfreet Reform andConsumer Protection Act ("Dodd-FrankAct"). Section 316(b)(3) of the Dodd-Frank Act provided that the former OTSrules that were transferred to the FDICwould be enforceable by or against theFDIC until they were modified,terminated, set aside, or superseded inaccordance with applicable law by theFDIC, by any court of competentjurisdiction, or by operation of law. OnJanuary 30, 2015, the FDIC published inthe Federal Register a notice ofproposed rulemaking ("NPR'' or"Proposed Rule") that explained andsolicited public comment on a proposalto rescind and remove part 391, subpartB and to amend part 364,. itsappendices,. and its supplement andpart 308, subpart R by making themapplicable to "State savingsassociations" and making minortechnical updates to the appendices andsupplement to part 364. The FDICreceived no comments on the ProposedRule and consequently is adopting theFinal Rule as proposed in the NPRwithout change.DATES: The Final Rule is effective onNovember 27, 2015.FOR FURTHER INFORMATION CONTACT:Rebecca M. Parks, Review Examiner,Division of Risk ManagementSupervision (202) 898-3912; Jann L.Harley, Senior Attorney, Legal Division(312) 382-6535; or Michael P. Condon,Counsel, Legal Division (202) 898-6536.SUPPLEMENTARY INFORMATION:

I. Background

The Dodd-Frank Act

The Dodd-Frank Act provided for asubstantial reorganization of theregulation of State and Federal savingsassociations and their holdingcompanies. Beginning July 21, 2011, thetransfer date established by section 311of the Dodd-Frank Act, codified at 12U.S.C. 5411, the powers, duties, andfunctions formerly performed by theOTS were divided among the FDIC., asto State.savings associations, the Officeof the Comptroller of the Currency("OCC"), as to Federal savingsassociations, and the Board ofGovernors of the Federal ReserveSystem ("FRB"), as to savings and loanholding companies.. Section 316(b) of

the Dodd-Frank Act, codified at 12U.S.C. 5414(b), provides the manner oftreatment for all orders, resolutions,determinations, regulations, andadvisory materials that had been issued,made, prescribed, or allowed to becomeeffective by the OTS. The sectionprovides that if such materials were ineffect on the day before the transferdate, they continue in effect and areenforceable by or against theappropriate successor agency until theyare modified, terminated, set aside, orsuperseded in accordance withapplicable law by such successoragency, by any court of competentjurisdiction, or by operation of law.

Section 316(c) of the Dodd-Frank Act,codified at 12 U.S.C. 5414(c), furtherdirected the FDIC and the OCC toconsult with one another and to publisha list of the continued OTS regulationswhich would be enforced by the FDICand the OCC, respectively. On June 14,2011, the FDIC's Board of Directorsapproved a "List of OTS Regulations tobe Enforced by the OCC and the FDICPursuant to the Dodd-Frank Wall StreetReform and Consumer Protection Act."This list was published by the FDIC andthe OCC as a Joint Notice in the FederalRegister on July 6, 2011.1Although section 31z(b)(z)(B)(i)(II) of

the Dodd-Frank Act, codified at 12U.S.C. 5412(b)(2)(B)(i)(II), granted theOCC rulemaking authority relating toboth State and Federal savingsassociations, nothing in the Dodd-FrankAct affected the FDICs existingauthority to issue regulations under theFDI Act and other laws as the"appropriate Federal banking agency"or under similar statutory terminology.Section 312(c) of the Dodd-Frank Actamended the definition of "appropriateFederal banking agency" contained inSection 3(q) of the FDI Act, 12 U,S,C.1813(q), to add State savingsassociations to the list of entities forwhich the FDIC is designated as the"appropriate Federal banking agency."As a result, when the FDIC acts as thedesignated "appropriate Federalbanking agency" (or under similarterminology) for State savingsassociations, as it does here, the FDIC isauthorized to issue, modify,. and rescindregulations involving such associations,as well as for State nonmember banksand insured branches of foreign banks.As noted, on June 14, 2011, operating

pursuant to this authority, the FDIC'sBoard of Directors reissued andredesignated certain transferringregulations of the former OTS. Thesetransferred OTS regulations werepublished as new FDIC regulations in

176 FR 39247 (July 6, 2011).

Documents

The Dodd-Frank Wall Street Reform and Consumer Protection ...The Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. 5301, et seq..(Dodd-Frank Act), among other things,