(a) Filing of notice.
(1) Information
required and public notice. As an alternative to the procedure
provided in section 225.15, a bank holding company that meets the
requirements of paragraph (c) of this section may satisfy the prior-approval
requirements of section 225.11 in connection with the acquisition
of shares, assets, or control of a bank, or a merger or consolidation
between bank holding companies, by providing the appropriate Reserve
Bank with a written notice containing the following:
(i) a certification
that all of the criteria in paragraph (c) of this section are met;
(ii) a description
of the transaction that includes identification of the companies and
insured depository institutions involved in the transaction
1 and identification of each banking market
affected by the transaction;
(iii) a description of the effect of
the transaction on the convenience and needs of the communities to
be served and of the actions being taken by the bank holding company
to improve the CRA performance of any insured depository institution
subsidiary that does not have at least a satisfactory CRA performance
rating at the time of the transaction;
(iv) evidence that notice of the proposal
has been published in accordance with section 225.16(b)(1);
(v) (A) if the
bank holding company is not a qualifying community banking organization
(as defined in section 217.12 of this chapter) that is subject to
the community bank leverage ratio framework (as defined in section
217.12 of this chapter), and:
(1) if the bank holding company has consolidated assets of
$3 billion or more, an abbreviated consolidated pro forma balance sheet as of the most recent quarter showing credit and debit
adjustments that reflect the proposed transaction, consolidated pro forma risk-based capital ratios for the acquiring bank holding
company as of the most recent quarter, and a description of the purchase
price and the terms and sources of funding for the transaction; or
(2) if the bank
holding company has consolidated assets of less than $3 billion, a pro forma parent-only balance sheet as of the most recent quarter
showing credit and debit adjustments that reflect the proposed transaction,
and a description of the purchase price, the terms and sources of
funding for the transaction, and the sources and schedule for retiring
any debt incurred in the transaction;
(B) if the bank holding company
is a qualifying community banking organization (as defined in section
217.12 of this chapter) that is subject to the community bank leverage
ratio framework (as defined in section 217.12 of this chapter), an
abbreviated consolidated pro forma balance sheet as of the
most recent quarter showing credit and debit adjustments that reflect
the proposed transaction, consolidated pro forma leverage ratio
(as calculated under section 217.12 of this chapter) for the acquiring
bank holding company as of the most recent quarter, and a description
of the purchase price and the terms and sources of funding for the
transaction;
(vi) if the bank holding company has
consolidated assets of less than $300 million, a list of and biographical
information regarding any directors or senior executive officers of
the resulting bank holding company that are not directors or senior
executive officers of the acquiring bank holding company or of a company
or institution to be acquired;
(vii) (A) For each insured
depository institution (that is not a qualifying community banking
organization (as defined in section 217.12 of this chapter) that is
subject to the community bank leverage ratio framework (as defined
in section 217.12 of this chapter)) whose tier 1 capital, total capital,
total assets or risk-weighted assets change as a result of the transaction,
the total risk-weighted assets, total assets, tier 1 capital and total
capital of the institution on a pro forma basis; and
(B) For each insured depository
institution that is a qualifying community banking organization (as
defined in section 217.12 of this chapter) that is subject to the
community bank leverage ratio framework (as defined in section 217.12
of this chapter) whose tier 1 capital (as defined in section 217.2
of this chapter and calculated in accordance with section 217.12(b)
of this chapter) or total assets change as a result of the transaction,
the total assets and tier 1 capital of the institution of a pro
forma basis; and
(viii) the market indexes for each relevant
banking market reflecting the pro forma effect of the transaction.
(2) Waiver of unnecessary information. The
Reserve Bank may reduce the information requirements in paragraph
(a)(1)(v) through (viii) as appropriate.
4-024.2
(b) (1) Action on proposals under this section. The Board or the appropriate
Reserve Bank shall act on a proposal submitted under this section
or notify the bank holding company that the transaction is subject
to the procedure in section 225.15 within five business days after
the close of the public-comment period. The Board and the Reserve
Bank shall not approve any proposal under this section prior to the
third business day following the close of the public-comment period,
unless an emergency exists that requires expedited or immediate action.
The Board may extend the period for action under this section for
up to five business days.
(2) Acceptance of notice in event expedited
procedure not available. In the event that the Board or the Reserve
Bank determines after the filing of a notice under this section that
a bank holding company may not use the procedure in this section and
must file an application under section 225.15, the application shall
be deemed accepted for purposes of section 225.15 as of the date that
the notice was filed under this section.
4-024.3
(c) Criteria for use of expedited procedure. The procedure in this section is available only if—
(1) Well-capitalized
organization.
(i) Bank holding
company. Both at the time of and immediately after the proposed
transaction, the acquiring bank holding company is well capitalized;
(ii) Insured depository institutions. Both at
the time of and immediately after the proposed transaction—
(A) the lead
insured depository institution of the acquiring bank holding company
is well capitalized;
(B)
well-capitalized insured depository institutions control at least
80 percent of the total risk-weighted assets of insured depository
institutions controlled by the acquiring bank holding company; and
(C) no insured depository
institution controlled by the acquiring bank holding company is undercapitalized;
(2) Well-managed organization.
(i) Satisfactory examination ratings. At the time of the transaction, the acquiring bank holding company,
its lead insured depository institution, and insured depository institutions
that control at least 80 percent of the total risk-weighted assets
of insured depository institutions controlled by the holding company
are well managed and have received at least a satisfactory rating
for compliance at their most recent examination if such a rating was
given;
(ii) No poorly managed institutions. No insured
depository institution controlled by the acquiring bank holding company
has received 1 of the 2 lowest composite ratings at the later of the
institution’s most recent examination or subsequent review by the
appropriate federal banking agency for the institution;
(iii) Recently acquired institutions excluded. Any insured depository institution that has been acquired by the
bank holding company during the 12-month period preceding the date
on which written notice is filed under paragraph (a) of this section
may be excluded for purposes of paragraph (c)(2)(ii) if—
(A) the bank
holding company has developed a plan acceptable to the appropriate
federal banking agency for the institution to restore the capital
and management of the institution; and
(B) All insured depository institutions excluded
under this paragraph represent, in the aggregate, less than 10 percent
of the aggregate total risk-weighted assets of all insured depository
institutions controlled by the bank holding company;
4-024.4
(3) Convenience-and-needs criteria.
(i) Effect on the community. The record indicates
that the proposed transaction would meet the convenience and needs
of the community standard in the BHC Act; and
(ii) Established
CRA performance record. At the time of the transaction, the lead
insured depository institution of the acquiring bank holding company
and insured depository institutions that control at least 80 percent
of the total risk-weighted assets of insured institutions controlled
by the holding company have received a satisfactory or better composite
rating at the most recent examination under the Community Reinvestment
Act;
(4) Public comment. No comment that is timely
and substantive as provided in section 225.16 is received by the Board
or the appropriate Reserve Bank other than a comment that supports
approval of the proposal;
(5) Competitive criteria.
(i) Competitive screen. Without regard to any
divestitures proposed by the acquiring bank holding company, the acquisition
does not cause—
(A) insured depository institutions controlled
by the acquiring bank holding company to control in excess of 35 percent
of market deposits in any relevant banking market; or
(B) the Herfindahl-Hirschman
index to increase by more than 200 points in any relevant banking
market with a post-acquisition index of at least 1800; and
(ii) Department of Justice. The Department of
Justice has not indicated to the Board that consummation of the transaction
is likely to have a significantly adverse effect on competition in
any relevant banking market;
4-024.5
(6) Size of acquisition.
(i) In general.
(A) Limited growth. Except as provided
in paragraphs (c)(6)(ii) and (iii) of this section, the sum of the
aggregate risk-weighted assets to be acquired in the proposal and
the aggregate risk-weighted assets acquired by the acquiring bank
holding company in all other qualifying transactions does not exceed
35 percent of the consolidated risk-weighted assets of the acquiring
bank holding company. For purposes paragraph (c)(6) of this section, other qualifying transactions means any transaction approved
under this section or section 225.23 during the 12 months prior to
filing the notice under this section; and
(B) Individual size
limitation. Except as provided in paragraph (c)(6)(iii) of this
section, the total risk-weighted assets to be acquired do not exceed
$7.5 billion;
(ii) Small
bank holding companies. Paragraph (c)(6)(i)(A) shall not apply
if, immediately following consummation of the proposed transaction,
the consolidated risk-weighted assets of the acquiring bank holding
company are less than $300 million;
(iii) Qualifying
community banking organizations. Paragraphs (c)(6)(i)(A) and
(B) of this section shall not apply if:
(A) The acquiring bank holding
company is a qualifying community banking organization (as defined
in section 217.12 of this chapter) that is subject to the community
bank leverage ratio framework (as defined in section 217.12 of this
chapter);
(B) The sum of
the total assets to be acquired in the proposal and the total assets
acquired by the acquiring bank holding company in all other qualifying
transactions does not exceed 35 percent of the average total consolidated
assets (as used in section 217.12 of this chapter) of the acquiring
bank holding company as last reported to the Board; and
(C) The total assets to be acquired
do not exceed $7.5 billion;
(7) Supervisory actions. During the 12-month period ending on the
date on which the bank holding company proposes to consummate the
proposed transaction, no formal administrative order, including a
written agreement, cease-and-desist order, capital directive, prompt-corrective-action
directive, asset-maintenance agreement, or other formal enforcement
action, is or was outstanding against the bank holding company or
any insured depository institution subsidiary of the holding company,
and no formal administrative enforcement proceeding involving any
such enforcement action, order, or directive is or was pending;
4-024.6
(8) Interstate acquisitions. Board approval
of the transaction is not prohibited under section 3(d) of the BHC
Act;
(9) Other supervisory considerations. Board
approval of the transaction is not prohibited under the informational
sufficiency or comprehensive home-country supervision standards set
forth in section 3(c)(3) of the BHC Act; and
(10) Notification. The acquiring
bank holding company has not been notified by the Board, in its discretion,
prior to the expiration of the period in paragraph (b)(1) of this
section that an application under section 225.15 is required in order
to permit closer review of any financial, managerial, competitive,
convenience-and-needs, or other matter related to the factors that
must be considered under this part.
4-024.7
(d) Comment by primary banking supervisor.
(1) Notice. Upon receipt of a notice under this section, the appropriate
Reserve Bank shall promptly furnish notice of the proposal and a copy
of the information filed pursuant to paragraph (a) of this section
to the primary banking supervisor of the insured depository institutions
to be acquired.
(2) Comment period. The primary banking supervisor
shall have 30 calendar days (or such shorter time as agreed to by
the primary banking supervisor) from the date of the letter giving
notice in which to submit its views and recommendations to the Board.
(3) Action subject to supervisor’s comment. Action by the Board or the Reserve Bank on a proposal under this
section is subject to the condition that the primary banking supervisor
not recommend in writing to the Board disapproval of the proposal
prior to the expiration of the comment period described in paragraph
(d)(2) of this section. In such event, any approval given under this
section shall be revoked and, if required by section 3(b) of the BHC
Act, the Board shall order a hearing on the proposal.
(4) Emergencies. Notwithstanding paragraphs (d)(2) and (d)(3) of
this section, the Board may provide the primary banking supervisor
with 10 calendar days’ notice of a proposal under this section if
the Board finds that an emergency exists requiring expeditious action,
and may act during the notice period or without providing notice to
the primary banking supervisor if the Board finds that it must act
immediately to prevent probable failure.
(5) Primary banking
supervisor. For purposes of this section and section 225.15(b),
the primary banking supervisor for an institution is—
(i) the
Office of the Comptroller of the Currency, in the case of a national
banking association or District bank;
(ii) the appropriate supervisory authority
for the state in which the bank is chartered, in the case of a state
bank;
(iii) the
director of the Office of Thrift Supervision, in the case of a savings
association.
4-024.8
(e) Branches and agencies of foreign banking organizations. For purposes of this section, a U.S. branch or agency of a foreign
banking organization shall be considered to be an insured depository
institution. A U.S. branch or agency of a foreign banking organization
shall be subject to paragraph (c)(3)(ii) of this section only to the
extent it is insured by the Federal Deposit Insurance Corporation
in accordance with section 6 of the International Banking Act of 1978
(12 U.S.C. 3104).
(f) Qualifying community banking organizations. For purposes of
this section, a qualifying community banking organization (as defined
in section 217.12 of this chapter) that is subject to the community
bank leverage ratio framework (as defined in section 217.12 of this
chapter) controls total risk-weighted assets equal to the qualifying
community banking organization’s average total consolidated assets
(as used in section 217.12 of this chapter) as last reported to its
primary banking supervisor.
