State Member Bank
Changes in the General Character of a State Member Bank's Business
Notice of Addition or Change in Directors or Senior Executive Officers
Bank Merger
Sections 18(c) and 5(d)(3) of the Federal Deposit Insurance Act
Who must file?
A bank must file an application for prior Federal Reserve approval under section 18(c) or section 5(d)(3) of the Federal Deposit Insurance Act to merge with another bank or thrift institution, respectively, or to acquire the assets, or assume the liabilities, of another bank or thrift institution, if the resulting institution is to be a state member bank.
Publication requirements--newspaper/Federal Register
The applicant must publish three notices in local newspapers for a proposal processed under section 18(c). If the applicant proposes to retain any domestic branches of the target depository institution in connection with a proposal under section 18(c), then at least one of the applicant's newspaper notices must also satisfy the requirements under the Board's Regulation H (12 CFR 208.6) relating to the establishment of domestic branches by a state member bank.
Required form
The information requested in Form FR 2070 must be submitted.
Processing time frames
For merger or Oakar proposals, the Federal Reserve normally acts within 30 or 60 calendar days after receipt unless the Federal Reserve notifies the applicant that the processing period is being extended
Factors reviewed
For merger and Oakar proposals, the Federal Reserve considers the factors in section 18(c)(5) of the Federal Deposit Insurance Act. For Oakar transactions only, the Federal Reserve would consider whether the transaction complies with section 3(d) of the Bank Holding Company Act.
Consummation period
Proposals under sections 18(c) and 5(d)(3) may not be consummated for 30 calendar days after action by the Federal Reserve unless the Department of Justice authorizes a waiting period of 15 calendar days. Authority to consummate a merger or an Oakar transaction would expire three months from the earliest date on which the transaction could have been consummated unless extended by the Federal Reserve. The consummation period may not be extended beyond one calendar year from the date the application was approved by the Federal Reserve.
Bank Service Company
Section 5 of the Bank Service Company Act
Who must file?
A state member bank must file an application for prior Federal Reserve approval under section 5(a) of the Bank Service Company Act (BSC Act) to invest in or establish a bank service company if the company would engage in activities under sections 4(c), 4(d), or 4(e) of the BSC Act. A bank (regardless of its charter) must file an application for prior Federal Reserve approval under section 5(b) of the BSC Act to invest in or establish a bank service company if the company would engage in activities under sections 4(b) or 4(f) of the BSC Act.
Publication requirements--newspaper/Federal Register
No publication notice is required for applications under section 5 of the BSC Act.
Required form
The information requested in Form FR Y-4 must be submitted. The bank's filing must include the following information:
- a description of each proposed activity and a discussion of how the activity is consistent with section 4(f) of the BSC Act;
- the name(s) of the bank(s) proposing to invest in the bank service company;
- a description of the terms and sources of funds for the transaction for each investing bank,
- the effect of the proposal on competition if there are multiple investing banks that are currently engaged in any activities to be conducted by the bank service company; and
- pro forma financial statements and three year projections for the proposed bank service company.
Processing time frames
The Federal Reserve normally acts on an application under section 5 within 30 or 60 calendar days after receipt unless the Federal Reserve notifies the applicant that the processing period is being extended.
Factors reviewed
For an application submitted under section 5, the Federal Reserve considers the following:
- the financial and managerial resources and future prospects of the investing bank(s) and the bank service company, including the financial capability of a bank to make an investment in the bank service company;
- the potential for any adverse effects, such as undue concentration of resources, unfair or decreased competition, conflicts of interest, or unsafe or unsound banking practices; and
- whether the proposed activities to be conducted by the bank service company have been approved for bank holding companies by the Board through regulation or Order.
Consummation period
Proposals to invest in or establish a bank service company may be consummated immediately.
Change in Control
Sections 225.41, 225.42, and 225.43 of Regulation Y
Who must file?
Any person, as defined in section 225.2 of Regulation Y, proposing to acquire control of a state member bank must provide prior notice to the Federal Reserve under section 225.43 of Regulation Y.
Publication requirements--newspaper/Federal Register
For change in control proposals, a person must publish a notice in the local newspaper(s) and the Federal Reserve will publish a notice in the Federal Register.
Required forms
The information requested in Form FR 2081a and Form FR 2081c must be submitted.
Processing time frames
The notice period would expire 60 days after the notice is received by the Federal Reserve unless the Federal Reserve notifies the applicant that the period is being extended.
Factors reviewed
For change in control proposals, the Federal Reserve considers the factors in section 225.43(g) of Regulation Y.
Consummation period
Change in control proposals may be consummated immediately upon approval. Authority to consummate a change in control transaction would expire three months from the earliest date on which the transaction could have been consummated unless extended by the Federal Reserve. The consummation period may not be extended beyond one calendar year from the date the notice was acted on by the Federal Reserve.
Changes in the General Character of a State Member Bank's Business
Section 208.3(d)(1) and (2) of Regulation H
Who must file?
A state member bank must receive the prior approval of the Board before making any significant change in the general character of its business. Changes in the general character of a bank's business would include, for example, providing a significant level of credit facilities to a new customer base or in a new geographic area, or concentrating solely on subprime lending or leasing activities. These activities can present novel risks for banking organizations, depending on how they are conducted and managed, and may also present risks to the deposit insurance fund. In many cases, these activities involve aggressive growth plans and may give rise to significant financial, managerial, and other supervisory issues. A significant change in a bank's business plan without the Board's prior approval may be considered a violation of Regulation H and may be addressed through follow-up supervisory action.
Publication requirements--newspaper/Federal Register
No publication notice is required.
Required information
The application must be submitted in the form of a letter that details the proposed changes to the general character of business.
Processing time frames
The Federal Reserve normally acts within 30 or 60 calendar days after receipt unless the Federal Reserve notifies the applicant that the processing period is being extended.
Factors reviewed
Consideration is given to a bank's proposed business plan in order to ensure, at a minimum, that appropriate financial and managerial standards are met.
Consummation period
Following approval of the change in the general character of a bank's business, the new business plan may be implemented as proposed.
Domestic Branches
Section 208.6 of Regulation H
Who must file?
A state member bank must file an application for prior Federal Reserve approval under section 208.6 of Regulation H to establish a new branch facility.1
Publication requirements--newspaper/Federal Register
The applicant must publish a notice in local newspapers.
Required information
The application must be submitted in the form of a letter that includes a detailed description of the proposed branch. A copy of the affidavit of publication must also be included with the letter.
Processing time frames
For branch proposals processed on an expedited basis, the Federal Reserve would act by the fifth business day after the expiration of the public comment period.2 For other branch proposals, the Federal Reserve normally acts within 30 or 60 calendar days after receipt unless the Federal Reserve notifies the applicant that the processing period is being extended.
Factors reviewed
For branch proposals, the Federal Reserve considers the factors in section 208.6(b) of Regulation H.
Consummation period
Branch proposals may be consummated immediately.3 Authority to establish a branch would expire 12 months from the earliest date on which the branch could have been established unless extended by the Federal Reserve.
1 A member bank may seek approval in a single application for any branches it proposes to establish within one year after the approval date. Return to text.
2 A branch proposal may qualify for the expedited processing procedure if it meets the criteria in section 208.6(c). Return to text.
3 For proposals to establish multiple branches within one year, the bank must then notify the Federal Reserve within 30 days after opening each branch unless this requirement is waived. Return to text.
Emergency Applications
Emergency conditions associated with a problem or failing banking organization may allow for processing of an application under the streamlined procedures of the Bank Holding Company Act, the Federal Deposit Insurance Act, the Change in Bank Control Act, or the Federal Reserve Act.1 The two types of emergency procedures are expeditious action and immediate action. Under the expeditious action procedures, the Federal Reserve allows the public up to 10 days to comment on a proposal. Under the immediate action procedures, the Federal Reserve would act on a proposal as soon as possible.
Potential filers are encouraged to contact the Federal Reserve as early as possible to discuss emergency procedures. While all applications or notifications involving a failing institution would be reviewed, only a filing by an organization or individual identified by the FDIC as a winner in the bidding process is ultimately approved.
Who must file?
Bank holding companies, banks, or individuals proposing to acquire a failing banking organization.
Publication requirements--newspaper/Federal Register
Under the expeditious action procedure, the applicant must publish a notice in local newspapers and the Federal Reserve will publish a notice in the Federal Register with a public comment period of 10 days. Under the immediate action procedure, no publication notice is required.
Processing time frames
Under the expeditious action procedure, the Federal Reserve would act on an application as soon as practicable, taking into account the expiration of the public comment period. Under the immediate action procedure, the Federal Reserve would act on an application on the same day that the failing institution is closed.
Consummation period
For applications approved under the expeditious action procedure, which normally involve a waiting period after approval (for example, Bank Holding Company Act and Bank Merger Act filings), the proposal may be consummated on or after the fifth calendar day following the approval date. For applications processed under the expeditious action procedures, which normally do not involve a waiting period, and for all applications processed under the immediate action procedures, the proposal may be consummated immediately.
1 Emergency procedures cannot be used without a letter from the chartering authority of the failing financial institution. Return to text.
Membership
Section 208.3 of Regulation H
Who must file?
A state chartered bank proposing to become a member of the Federal Reserve System or a national bank converting to a state charter and desiring to remain a member of the Federal Reserve System must file an application for prior Federal Reserve approval under section 208.3 of Regulation H.1 A bank seeking membership should contact the Federal Reserve prior to submitting a final application to allow for the completion of a pre-membership examination, if needed.
Publication requirements--newspaper/Federal Register
No publication notice is required.
Required form
The information requested in Form FR 2083A/B/C must be provided.
Processing time frames
For membership applications reviewed on an expedited basis, the Federal Reserve acts within 15 calendar days after receipt.2 For other membership applications, the Federal Reserve normally acts within 30 or 60 calendar days after receipt unless the Federal Reserve notifies the applicant that the processing period is being extended.
Factors reviewed
For membership proposals, the Federal Reserve considers the factors in section 208.3(b) of Regulation H.
Consummation period
Membership proposals may be consummated immediately. However, the banking organization must first arrange the purchase of relevant Reserve Bank stock so that the stock may be issued when the bank becomes a member.
1 A newly organized bank must apply directly to the FDIC for deposit insurance. The bank should also have received at least preliminary approval for a state banking charter prior to filing a final membership application with the Federal Reserve. A draft application may be submitted prior to state action on the charter. Return to text.
2 A membership proposal may qualify for the expedited processing procedure if it meets the criteria in section 208.3(c)(1). Return to text.
Notice of Addition or Change in Directors or Senior Executive Officers
Section 225.72 of Regulation Y
Who must file?
A state member bank must provide prior notice to the Federal Reserve to add a director or a senior executive officer if the bank meets the criteria in section 225.72 of Regulation Y. An institution may request a waiver of the prior notice requirement if the individual's services are needed immediately.
Publication requirements--newspaper/Federal Register
No publication notice is required.
Required forms
The information requested in Form FR 2081b and Form FR 2081c must be submitted.
Processing time frames
The notice period expires 30 days after the notice is received by the Federal Reserve unless the Federal Reserve notifies the applicant that the processing period is being extended.
Factors reviewed
For proposals to add a director or senior officer, the Federal Reserve considers the factors in section 225.73(c) of Regulation Y.
Consummation period
These proposals may be consummated immediately.
Premises Acquisition
Section 208.21 of Regulation H
Who must file?
A state member bank must provide prior notice to the Federal Reserve under section 208.21 of Regulation H to increase its investment in bank premises if the aggregate of all such investments and loans, together with the amount of any indebtedness incurred by any corporation that is an affiliate of the bank, will be more than the bank's perpetual preferred stock and related surplus plus common stock and surplus. The filing threshold is raised to 150 percent of the bank's perpetual preferred stock and related surplus plus common stock and surplus if the proposal meets the conditions in section 208.21(a)(3) of Regulation H.
Publication requirements--newspaper/Federal Register
No publication notice is required.
Required information
Applications must be submitted in the form of a letter that includes the applicant's current and pro forma financial statements, as well as the amount, general description, and purpose of the proposed investment in bank premises. The letter should also identify the seller and whether such party is related to, or is an affiliate of, the applicant or any of its directors, senior executive officers, or shareholders. If the property is being purchased from an affiliate or related party, the applicant should provide a copy of an appraisal of the property.
Processing time frames
The notice period would expire 15 days after the notice is received by the Federal Reserve unless the Federal Reserve notifies the applicant that the period is being extended.
Factors reviewed
For premises proposals, the Federal Reserve considers the impact of the transaction on the applicant's financial condition and the overall financial and managerial condition of the applicant.
Consummation period
Premises proposals may be consummated immediately.