(a) Applications under this subpart. Any filing with the Board required
under this subpart must be filed in accordance with section 238.14
of this chapter. The Board will review any filing made under this
subpart in accordance with section 238.14 of this chapter.
(b) Requirements.
(1) The application for conversion must
include all of the following information.
(i) A plan of conversion
meeting the requirements of section 239.54(b).
(ii) Pricing materials meeting the requirements
paragraph (g)(2) of this section.
(iii) Proxy soliciting materials under
section 239.57(d), including:
(A) A preliminary proxy statement
with signed financial statements;
(B) A form of proxy meeting the requirements
of section 239.57(b); and
(C) Any additional proxy soliciting materials, including press releases,
personal solicitation instructions, radio or television scripts that
the mutual holding company plans to use or furnish to the members,
and a legal opinion indicating that any marketing materials comply
with all applicable securities laws.
(iv) An offering circular described
in section 239.58(a).
(v) The documents and information required by Form AC. The mutual
holding company may obtain Form AC from the appropriate Reserve Bank
and the Board’s Web site (http://www.federalreserve.gov).
(vi) Where indicated, written
consents, signed and dated, of any accountant, attorney, investment
banker, appraiser, or other professional who prepared, reviewed, passed
upon, or certified any statement, report, or valuation for use. See
Form AC, instruction B(7).
(vii) The business plan, submitted as
a separately bound, confidential exhibit. See paragraph (c) of this
section.
(viii) Any
additional information the Board requests.
(2) The Board will not accept
for filing, and will return, any application for conversion
that is improperly executed, materially deficient, substantially incomplete,
or that provides for unreasonable conversion expenses.
(c) Filing an application
for conversion.
(1) The mutual holding company must file
the application for conversion on Form AC with the appropriate Reserve
Bank.
(2) Upon receipt
of an application under this subpart, the Reserve Bank will promptly
furnish notice and a copy of the application to the primary federal
supervisor of any subsidiary savings association. The primary supervisor
will have 30 calendar days from the date of the letter giving notice
in which to submit its views and recommendations to the Board.
(d) Confidential
treatment of portions of an application for conversion.
(1) The Board makes all filings under this
subpart available to the public, but may keep portions of the application
for conversion confidential under paragraph (d)(2) of this section.
(2) The mutual holding
company may request the Board keep portions of the application confidential.
To do so, the mutual holding company must separately bind and clearly
designate as “confidential” any portion of the application for conversion
that the mutual holding company deems confidential. The mutual holding
company must provide a written statement specifying the grounds supporting
the request for confidentiality. The Board will not treat as confidential
the portion of the application describing how the mutual holding company
plans to meet the Community Reinvestment Act (CRA) objectives. The
CRA portion of the application may not incorporate by reference information
contained in the confidential portion of the application.
(3) The Board will determine
whether confidential information must be made available to the public
under 5 U.S.C. 552 and part 261 of this chapter. The Board will advise
the mutual holding company before it makes information the mutual
holding company designated as “confidential” available to the public.
(e) Amending
an application for conversion. To amend an application for conversion,
the mutual holding company must:
(1) File an amendment with an appropriate
facing sheet;
(2) Number
each amendment consecutively;
(3) Respond to all issues raised by the
Board; and
(4) Demonstrate
that the amendment conforms to all applicable regulations.
(f) Notice of filing of
application and comment process.
(1) Public notice
of an application for conversion.
(i) The mutual holding
company must publish a public notice of the application for conversion
in accordance with the procedures in section 238.14 of this chapter.
The mutual holding company must simultaneously prominently post the
notice in its home office and in all of the branch offices of its
subsidiary savings associations.
(ii) Promptly after publication, the
mutual holding company must file a copy of any public notice and an
affidavit of publication from each publisher with the appropriate
Reserve Bank.
(iii)
If the Board does not accept the application for conversion under
section 239.55(g) and requires the mutual holding company to file
a new application, the mutual holding company must publish and post
a new notice and allow an additional 30 days for comment.
(2) Public comments. Commenters may submit
comments on the application in accordance with the procedures in section
238.14 of this chapter. A commenter must file any comments with the
appropriate Reserve Bank.
(g) Board review of the application for conversion.
(1) Board action on a conversion application. The Board may approve
an application for conversion only if:
(i) The conversion
complies with this subpart;
(ii) The mutual holding company will meet all applicable regulatory
capital requirements after the conversion; and
(iii) The conversion will not result
in a taxable reorganization under the Internal Revenue Code of 1986,
as amended.
(2) Board review of appraisal. The
Board will review the appraisal required by paragraph (b)(1)(ii) of
this section in determining whether to approve the application. The
Board will review the appraisal under the following requirements.
(i) Independent persons experienced and expert in corporate appraisal,
and acceptable to the Board, must prepare the appraisal report.
(ii) An affiliate of
the appraiser may serve as an underwriter or selling agent, if the
mutual holding company ensures that the appraiser is separate from
the underwriter or selling agent affiliate and the underwriter or
selling agent affiliate does not make recommendations or affect the
appraisal.
(iii)
The appraiser may not receive any fee in connection with the conversion
other than for appraisal services.
(iv) The appraisal report must include
a complete and detailed description of the elements of the appraisal,
a justification for the appraisal methodology, and sufficient support
for the conclusions.
(v) If the appraisal is based on a capitalization of the pro forma
income, it must indicate the basis for determining the income to be
derived from the sale of shares, and demonstrate that the earnings
multiple used is appropriate, including future earnings growth assumptions.
(vi) If the appraisal
is based on a comparison of the shares with outstanding shares of
existing stock associations, the existing stock associations must
be reasonably comparable in size, market area, competitive conditions,
risk profile, profit history, and expected future earnings.
(vii) The Board may decline
to process the application for conversion and deem it materially deficient
or substantially incomplete if the initial appraisal report is materially
deficient or substantially incomplete.
(viii) The mutual holding company may
not represent or imply that the Board has approved the appraisal.
(3) Board review of compliance record. The
Board will review the compliance record of the subsidiary savings
association under the regulations applicable to the savings association
and the business plan to determine how the conversion will affect
the convenience and needs of its communities.
(i) Based
on this review, the Board may approve the application, deny the application,
or approve the application on the condition that the resulting stock
holding company will improve the CRA performance or will address the
particular credit or lending needs of the communities that it will
serve.
(ii) The
Board may deny the application if the business plan does not demonstrate
that the proposed use of conversion proceeds will help the resulting
stock holding company to meet the credit and lending needs of the
communities that the resulting stock holding company will serve.
(4) The
Board may request that the mutual holding company amend the application
if further explanation is necessary, material is missing, or material
must be corrected.
(5) The Board will deny the application if the application does not
meet the requirements of this subpart, unless the Board waives the
requirement under section 239.50(c).
(h) Judicial review.
(1) Any person aggrieved by the Board’s
final action on the application for conversion may ask the court of
appeals of the United States for the circuit in which the principal
office or residence of such person is located, or the U.S. Court of
Appeals for the District of Columbia Circuit, to review the action
under 12 U.S.C. 1467a(j), which provisions shall apply in all respects
as if such final action were an order, subject to paragraph (h)(2)
of this section.
(2)
To obtain court review of the action, the aggrieved person must file
a written petition requesting that the court modify, terminate, or
set aside the final Board action. The aggrieved person must file the
petition with the court within the later of 30 days after the Board
publishes notice of its final action in the Federal Register or 30 days after the mutual holding company mails the proxy statement
to its members under section 239.56(c).
