12 CFR Part 5 — Rules, Policies, and Procedures for Corporate Activities

PART 5—RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES Authority: 12 U.S.C. 1 et seq., et seq., et seq., Source: 61 FR 60363, Nov. 27, 1996, unless otherwise noted. § 5.1 Scope. This part establishes rules, policies and procedures of the Office of the Comptroller of the Currency (OCC) for corporate activities and transactions involving national banks and Federal savings associations. It contains information on rules of general and specific applicability, where and how to file, and requirements and policies applicable to filings. This part also establishes the corporate filing procedures for Federal branches and agencies of foreign banks. [80 FR 28414, May 18, 2015] Subpart A—Rules of General Applicability Source: 80 FR 28414, May 18, 2015, unless otherwise noted. § 5.2 Rules of general applicability. (a) In general. (b) Exceptions. (c) Comptroller's Licensing Manual. www.occ.gov (d) Electronic filing. [80 FR 28414, May 18, 2015, as amended at 85 FR 80434, Dec. 11, 2020] § 5.3 Definitions. As used in this part: Application Appropriate Federal banking agency Appropriate OCC licensing office www.occ.gov. Appropriate OCC supervisory office Capital and surplus (1) For qualifying community banking organizations that have elected to use the community bank leverage ratio framework, as set forth under the OCC's Capital Adequacy Standards at part 3 of this chapter: (i) A qualifying community banking organization's tier 1 capital, as used under § 3.12 of this chapter; plus (ii) A qualifying community banking organization's allowance for loan and lease losses or adjusted allowances for credit losses, as applicable, as reported in the national bank's or Federal savings association's Consolidated Report of Condition and Income (Call Report); or (2) For all other national banks and Federal savings associations: (i) A national bank's or Federal savings association's tier 1 and tier 2 capital calculated under the OCC's risk-based capital standards set forth in part 3 of this chapter, as applicable, as reported in the Call Report, respectively; plus (ii) The balance of the national bank's or Federal savings association's allowance for loan and lease losses or adjusted allowances for credit losses, as applicable, not included in the institution's tier 2 capital, for purposes of the calculation of risk-based capital described in paragraph (2)(i) of this definition, as reported in the Call Report. Covered community bank covered community savings association (1) A national bank or Federal savings association that: (i) Has less than $30 billion in total assets, as reported in the national bank's or Federal savings association's Call Report, and is not an affiliate of a depository institution or foreign bank with $30 billion or more in total assets, as reported in the depository institution's Call Report or the foreign bank's equivalent to a Call Report; (ii) Is well capitalized as defined in § 5.3; and (iii) Is not subject to a cease and desist order, a consent order, or a formal written agreement, that requires action to improve the financial condition of the national bank or Federal savings association unless otherwise informed in writing by the OCC. (2) For purposes of this definition, the term “affiliate” means any company that controls, is controlled by, or is under common control with the depository institution or foreign bank, as control is defined in § 5.50(d)(4). Depository institution Eligible bank or eligible savings association (1) Is well capitalized under § 5.3; (2) Has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (CAMELS); (3) Has a Community Reinvestment Act (CRA), 12 U.S.C. 2901 et seq., (4) Has a consumer compliance rating of 1 or 2 under the Uniform Interagency Consumer Compliance Rating System; and (5) Is not subject to a cease and desist order, consent order, formal written agreement, or Prompt Corrective Action directive ( see Eligible depository institution (1) With respect to a national bank, a State bank or a Federal or State savings association that meets the criteria for an “eligible bank or eligible savings association” under § 5.3 and is FDIC-insured; and (2) With respect to a Federal savings association, a State or national bank or a State savings association that meets the criteria for an “eligible bank or eligible savings association” under § 5.3 and is FDIC-insured. FDIC Filer Filing GAAP MSA Nonconforming assets and nonconforming activities Notice, notice OTS Previously approved activity (1) In the case of a national bank, any activity approved in published OCC precedent for a national bank, an operating subsidiary of a national bank, or a non-controlling investment of a national bank; and (2) In the case of a Federal savings association, any activity approved in published OCC or OTS precedent for a Federal savings association, an operating subsidiary of a Federal savings association, or a pass-through investment of a Federal savings association. Principal city Short-distance relocation (1) One thousand foot-radius of the site if the branch, main office, or home office is located within a principal city of an MSA; (2) One-mile radius of the site if the branch, main office, or home office is not located within a principal city, but is located within an MSA; or (3) Two-mile radius of the site if the branch, main office, or home office is not located within an MSA. Well capitalized (1) In the case of a national bank or Federal savings association, the capital level described in 12 CFR 6.4(b)(1); (2) In the case of a Federal branch or agency, the capital level described in 12 CFR 4.7(b)(1)(iii); or (3) In the case of another depository institution, the capital level designated as “well capitalized” by the institution's appropriate Federal banking agency pursuant to section 38 of the Federal Deposit Insurance Act (12 U.S.C. 1831 o Well managed (1) In the case of a national bank or Federal savings association: (i) Unless otherwise determined in writing by the OCC, the national bank or Federal savings association has received a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System in connection with its most recent examination, and at least a rating of 2 for management, if such a rating is given; or (ii) In the case of a national bank or Federal savings association that has not been examined by the OCC, the existence and use of managerial resources that the OCC determines are satisfactory. (2) In the case of a Federal branch or agency of a foreign bank: (i) Unless determined otherwise in writing by the OCC, the Federal branch or agency has received a composite ROCA supervisory rating (which rates risk management, operational controls, compliance, and asset quality) of 1 or 2 at its most recent examination, and at least a rating of 2 for risk management, if such a rating is given; or (ii) In the case of a Federal branch or agency that has not been examined by the OCC, the existence and use of managerial resources that the OCC determines are satisfactory. (3) In the case of another depository institution: (i) Unless otherwise determined in writing by the appropriate Federal banking agency, the institution has received a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating under an equivalent rating system) in connection with the most recent examination or subsequent review of the depository institution and, at least a rating of 2 for management, if such a rating is given; or (ii) In the case of another depository institution that has not been examined by its appropriate Federal banking agency, the existence and use of managerial resources that the appropriate Federal banking agency determines are satisfactory. [85 FR 80434, Dec. 11, 2020, as amended at 91 FR 10497, Mar. 4, 2026] § 5.4 Filing required. (a) Filing. (b) Availability of forms. www.occ.gov (c) Other agency's applications or filings. (d) Where to file. www.occ.gov (e) Incorporation of other material. (f) Prefiling meeting. (g) Certification. [80 FR 28414, May 18, 2015, as amended at 85 FR 80435, Dec. 11, 2020] § 5.5 Filing fees. (a) Procedure. (b) Fee schedule. [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020] § 5.6 [Reserved] § 5.7 Investigations. (a) Authority. (b) Fingerprints. (c) Fees. [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020] § 5.8 Public notice. (a) In general. (b) Contents of the public notice. www.occ.gov (c) Confirmation of public notice. (d) Multiple transactions. (e) Joint public notices accepted. (f) Public notice by the OCC. (g) New public notice. (1) The filer submits either a revised filing or new or additional information related to a filing; (2) A major issue of law or change in circumstance arises after a filing; or (3) The OCC determines that a new public notice is appropriate. [80 FR 28414, May 18, 2015, as amended at 82 FR 8103, Jan. 23, 2017; 85 FR 80436, Dec. 11, 2020] § 5.9 Public availability. (a) In general. www.occ.gov (b) Public file. (c) Confidential treatment. see [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020] § 5.10 Comments. (a) Submission of comments. (b) Comment period In general. (2) Extension. (i) The filer fails to file all required publicly available information on a timely basis to permit review by interested persons or makes a request for confidential treatment not granted by the OCC that delays the public availability of that information; (ii) Any person requesting an extension of time satisfactorily demonstrates to the OCC that additional time is necessary to develop factual information that the OCC determines is necessary to consider the filing; or (iii) The OCC determines that other extenuating circumstances exist. (3) Filer response. [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020] § 5.11 Hearings and other meetings. (a) Hearing requests. (b) Action on a hearing request. (c) Denial of a hearing request. (d) OCC procedures prior to the hearing Notice of hearing. (2) Presiding officer. (e) Participation in the hearing. (f) Hearing transcripts. (g) Conduct of the hearing Presentations. (2) Information submitted. (3) Laws not applicable to hearings. et seq. et seq. (h) Closing the hearing record. (i) Other meetings Public meetings. (2) Private meetings. (3) Issues at meetings. (4) Meeting format. [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020] § 5.12 Computation of time. In computing the period of days, the OCC does not include the day of the act or event ( e.g., [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020] § 5.13 Decisions. (a) In general. (1) Conditional approval. (2) Expedited review. (i) The OCC may extend the expedited review period or remove a filing from expedited review procedures if it concludes that the filing, or an adverse comment regarding the filing, presents a significant supervisory, CRA (if applicable), or compliance concern or raises a significant legal or policy issue requiring additional OCC review. The OCC will provide the filer with a written explanation if it decides not to process an application from a qualifying national bank or Federal savings association under expedited review pursuant to this paragraph. (ii) Adverse comments that the OCC determines do not raise a significant supervisory, CRA (if applicable), or compliance concern or a significant legal or policy issue; are frivolous, non-substantive, or filed primarily as a means of delaying action on the filing; or raise a CRA concern that has been satisfactorily resolved do not affect the OCC's decision under paragraph (a)(2)(i) of this section. For purposes of this paragraph (a)(2)(ii), the OCC considers a concern to be significant if the facts are previously unknown to the OCC and, if proven accurate, would support denying, or imposing a condition on the approval of, the filing. The OCC considers a comment to be non-substantive if it is a generalized opinion that a filing should or should not be approved or a conclusory statement, lacking factual or analytical support. The OCC considers a CRA concern to have been satisfactorily resolved if the OCC previously reviewed ( e.g., (iii) If a bank or savings association makes a filing for any activity or transaction that is dependent upon the approval of another filing under this part, or if requests for approval for more than one activity or transaction are combined in a single filing under applicable sections of this part, none of the subject filings may be deemed approved upon expiration of the applicable time periods, unless all of the filings are subject to expedited review procedures and the longest of the time periods expires without the OCC issuing a decision or notifying the bank or savings association that the filings are not eligible for expedited review under the standards in paragraph (a)(2)(i) of this section. (b) Denial. (1) A significant supervisory, CRA (if applicable), or compliance concern exists with respect to the filer; (2) Approval of the filing is inconsistent with applicable law, regulation, or OCC policy thereunder; or (3) The filer fails to provide information requested by the OCC that is necessary for the OCC to make an informed decision. (c) Required information and abandonment of filing. (d) Notification of final disposition. (e) Publication of decision. (f) Appeal. www.occ.gov (g) Extension of time. (h) Nullifying a decision. (1) The OCC discovers a material misrepresentation or omission in any information provided to the OCC in the filing or supporting materials; (2) The decision is contrary to law, regulation, or OCC policy thereunder; or (3) The decision was granted due to clerical or administrative error, or a material mistake of law or fact. (i) Modifying, Suspending, or Rescinding a Decision. [80 FR 28414, May 18, 2015, as amended at 85 FR 80436, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] Subpart B—Initial Activities § 5.20 Organizing a national bank or Federal savings association. (a) Authority. (b) Licensing requirements. (c) Scope. (d) Definitions. (1) Bankers' bank (2) Control (3) Final approval (4) Holding company (5) Lead depository institution (6) Institution (7) Organizer (8) Organizing group (9) Preliminary approval (10) Principal shareholder (e) Requirements In general. et seq. (ii) The OCC charters a Federal savings association under the authority of section 5 of the Home Owners' Loan Act, 12 U.S.C. 1464, which in an application to establish a Federal savings association requires the OCC to consider: (A) Whether the filers are persons of good character and responsibility; (B) Whether a necessity exists for the association in the community to be served; (C) Whether there is a reasonable probability of the association's usefulness and success; and (D) Whether the association can be established without undue injury to properly conducted existing local savings associations and home financing institutions. (iii) In determining whether to approve an application to establish a national bank or Federal savings association, the OCC verifies that the proposed national bank or Federal savings association has complied with the following requirements. A national bank or a Federal savings association must: (A) File either articles of association (for a national bank), or a charter and by-laws (for a Federal savings association) with the OCC; (B) In the case of an application to establish a national bank, file an organization certificate containing specified information with the OCC; (C) Ensure that all capital stock is paid in, or in the case of a Federal mutual savings association, ensure that at least a minimum amount of capital is paid in; and (D) Have at least five elected directors. (2) Community Reinvestment Act. (3) Federal Deposit Insurance. (f) Policy In general. (i) Maintaining a safe and sound banking system; (ii) Encouraging a national bank or Federal savings association to provide fair access to financial services by helping to meet the credit needs of its entire community; (iii) Ensuring compliance with laws and regulations; and (iv) Promoting fair treatment of customers including efficiency and better service. (2) Policy considerations. (A) Has organizers who are familiar with national banking laws and regulations or Federal savings association laws and regulations, respectively; (B) Has competent management, including a board of directors, with ability and experience relevant to the types of services to be provided; (C) Has capital that is sufficient to support the projected volume and type of business; (D) Can reasonably be expected to achieve and maintain profitability; (E) Will be operated in a safe and sound manner; and (F) Does not have a title that misrepresents the nature of the institution or the services it offers. (ii) In evaluating an application to establish a Federal savings association, the OCC considers whether the proposed Federal savings association will be operated as a qualified thrift lender under section 10(m) of the Home Owners' Loan Act, 12 U.S.C. 1467a(m). (iii) The OCC may also consider additional factors listed in section 6 of the Federal Deposit Insurance Act, 12 U.S.C. 1816, including the risk to the Federal deposit insurance fund, and whether the proposed institution's corporate powers are consistent with the purposes of the Federal Deposit Insurance Act, the National Bank Act, and the Home Owners' Loan Act, as applicable. (3) OCC evaluation. (g) Organizing group In general. (2) Management selection. (3) Financial resources. (ii) Because directors are often the primary source of additional capital for an institution not affiliated with a holding company, it is desirable that the proposed directors of the national bank or Federal savings association, as a group, be able to supply or have a realistic plan to enable the institution to obtain capital when needed. (iii) Any financial or other business arrangement, direct or indirect, between the organizing group or other insiders and the proposed national bank or Federal savings association must be on nonpreferential terms. (4) Organizational expenses. (ii) A proposed national bank or Federal savings association may not pay any fee that is contingent upon an OCC decision. Such action generally is grounds for denial of the application or nullification or rescission of a preliminary approval. Organizational expenses for denied applications are the sole responsibility of the organizing group. (5) Sponsor's experience and support. (i) An existing holding company; (ii) Individuals currently affiliated with other depository institutions; or (iii) Individuals who, in the OCC's view, are otherwise collectively experienced in banking and have demonstrated the ability to work together effectively. (h) Business plan or Operating plan In general. (ii) The OCC may offset deficiencies in one factor by strengths in one or more other factors. However, deficiencies in some factors, such as unrealistic earnings prospects, may have a negative influence on the evaluation of other factors, such as capital adequacy, or may be serious enough by themselves to result in denial. The OCC considers inadequacies in a business plan or operating plan to reflect negatively on the organizing group's ability to operate a successful institution. (2) Earnings prospects. pro forma (3) Management. (ii) The organizing group may not hire an officer or elect or appoint a director if the OCC objects to that person at any time prior to the date the institution commences business. (4) Capital. (5) Community service. (ii) As part of its business plan or operating plan, the organizing group must submit a statement that demonstrates its plans to achieve CRA objectives. (iii) Because community support is important to the long-term success of a national bank or Federal savings association, the organizing group must include plans for attracting and maintaining community support. (6) Safety and soundness. (7) Fiduciary powers. (i) Procedures Prefiling meeting. (2) Business plan or operating plan. (3) Biographical and financial reports (A) The information prescribed in the Interagency Biographical and Financial Report, available at www.occ.gov; (B) Legible fingerprints. (ii) The OCC may require additional information about any proposed organizer, director, executive officer, or principal shareholder, if appropriate. The OCC may waive any of the information requirements of this paragraph if the OCC determines that it is in the public interest. (4) Contact person. (5) Decision notification. (6) Activities. (ii)(A) After the OCC grants preliminary approval, the organizing group must elect a board of directors, take steps necessary to organize the proposed national bank or Federal savings association and prepare it for commencing business. (B) A proposed national bank may not conduct the business of banking until the OCC grants final approval and issues a charter. A proposed Federal savings association may not commence business until the OCC grants final approval and issues a charter, which must be in the form provided in this part. (iii) For all capital obtained through a public offering a proposed national bank or Federal savings association must use an offering circular that complies with the OCC's securities offering regulations, 12 CFR part 16, as applicable. All securities of a particular class in the initial offering must be sold at the same price. (iv) A national bank or Federal savings association in organization must raise its capital before it commences business. Preliminary approval expires if the proposed national bank or Federal savings association does not raise the required capital within 12 months from the date the OCC grants preliminary approval. Preliminary approval expires if the proposed national bank or Federal savings association does not commence business within 18 months from the date of preliminary approval, unless the OCC grants an extension. If preliminary approval expires, all cash collected on subscriptions must be returned. (j) Expedited review. (1) Notifies the filer prior to that date that the filing has been removed from expedited review, or the expedited review process is extended, under § 5.13(a)(2); or (2) Notifies the filer prior to that date that the OCC has determined that the proposed bank will offer banking services that are materially different than those offered by the lead depository institution. (k) National bankers' banks Activities and customers. (2) Waiver of requirements. (3) Investments. (l) Special purpose institutions In general. (2) Changes in charter purpose. [80 FR 28418, May 18, 2015, as amended at 82 FR 8103, Jan. 23, 2017; 85 FR 80437, Dec. 11, 2020; 85 FR 80437, Dec. 11, 2020; 91 FR 9982, Mar. 2, 2026; 91 FR 10498, Mar. 4, 2026] § 5.21 Federal mutual savings association charter and bylaws. (a) Authority. et seq. (b) Licensing requirements. (c) Scope. (d) Exceptions to rules of general applicability. (e) Charter form. Federal Mutual Charter Section 1. Corporate title. Section 2. Office. Section 3. Duration. Section 4. Purpose and powers. Section 5. Capital. Section 6. Members. Section 7. Directors. Section 8. Capital, surplus, and distribution of earnings. Provided, pro rata Section 9. Amendment of charter. Attest: Secretary of the Association By: President or Chief Executive Officer of the Association Attest: Deputy Comptroller for Licensing By: Comptroller of the Currency Effective Date: (f) Charter amendments. (1) Board of directors approval. (2) Form of filing Application requirement. (A) Expedited review. (B) Amendments exempted from expedited review. (ii) Notice requirement. (3) Effectiveness. (g) Optional charter amendments. (1) Purpose and powers. Section 4. Purpose and powers. (2) Title change. (3) Home office. (4) Maximum number of votes. (h) Reissuance of charter. (i) Availability of chartering documents. (j) Bylaws for Federal mutual savings associations In general. provided that, (2) Requirements. (i) Annual meetings of members. (B) At each annual meeting, the officers must make a full report of the financial condition of the association and of its progress for the preceding year and must outline a program for the succeeding year. (C) If the association's bylaws provide for telephonic or electronic participation in member meetings, the association must follow the procedures for telephonic or electronic participation of the State corporate governance provisions it is permitted to elect pursuant to paragraph (j)(3)(ii) of this section, if those State corporate governance provisions include telephonic or electronic participation procedures; the Delaware General Corporation Law, Del. Code Ann. Tit. 8 (1991, as amended 1994, and as amended thereafter) (with “member” substituting for “stockholder”); or the Model Business Corporation Act (with “member” substituting for “shareholder”), provided, however, that such procedures are not inconsistent with applicable Federal statutes and regulations and safety and soundness. The association must indicate the use of these procedures in its bylaws. (ii) Special meetings of members. (iii) Notice of meeting of members. (iv) Fixing of record date. (v) Member quorum. (vi) Voting by proxy. (vii) Communications between members. (A) A list of depositors in or borrowers from such association; (B) Their addresses; (C) Individual deposit or loan balances or records; or (D) Any data from which such information could be reasonably constructed. (viii) Number of directors, membership. (ix) Meetings of the board. (x) Officers, employees and agents. (B) Any officer may be removed by the board of directors with or without cause, but such removal, other than for cause, must be without prejudice to the contractual rights, if any, of the person so removed. Termination for cause, for purposes of this section and § 5.22, includes termination because of the person's personal dishonesty; incompetence; willful misconduct; breach of fiduciary duty involving personal profit; intentional failure to perform stated duties; willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease and desist order; or material breach of any provision of an employment contract. (xi) Vacancies, resignation or removal of directors. (xii) Powers of the board. (xiii) Nominations for directors. (xiv) New business. (xv) Amendment. (A) Amendments will be effective: ( 1 ( 2 (B) When an association fails to meet its quorum requirement, solely due to vacancies on the board, the bylaws may be amended by an affirmative vote of a majority of the sitting board. (xvi) Miscellaneous. (3) Form of filing Application requirement. (A) Expedited review. (B) Amendments not subject to expedited review. (ii) Corporate governance election and notice requirement. (iii) No filing required. (4) Effectiveness. (5) Effect of subsequent charter or bylaw change. [80 FR 28421, May 18, 2015, as amended at 82 FR 8103, Jan. 23, 2017; 85 FR 31948, May 28, 2020; 85 FR 80437, Dec. 11, 2020; 85 FR 83726, Dec. 22, 2020] § 5.22 Federal stock savings association charter and bylaws. (a) Authority. et seq. (b) Licensing requirements. (c) Scope. (d) Exceptions to rules of general applicability. (e) Charter form. Federal Stock Charter Section 1. Corporate title. Section 2. Office. Section 3. Duration. Section 4. Purpose and powers. Section 5. Capital stock. Except for shares issued in the initial organization of the association or in connection with the conversion of the association from the mutual to stock form of capitalization, no shares of capital stock (including shares issuable upon conversion, exchange, or exercise of other securities) may be issued, directly or indirectly, to officers, directors, or controlling persons of the association other than as part of a general public offering or as qualifying shares to a director, unless the issuance or the plan under which they would be issued has been approved by a majority of the total votes eligible to be cast at a legal meeting. The holders of the common stock exclusively possess all voting power. Each holder of shares of common stock is entitled to one vote for each share held by such holder, except as to the cumulation of votes for the election of directors, unless the charter provides that there will be no such cumulative voting. Subject to any provision for a liquidation account, in the event of any liquidation, dissolution, or winding up of the association, the holders of the common stock will be entitled, after payment or provision for payment of all debts and liabilities of the association, to receive the remaining assets of the association available for distribution, in cash or in kind. Each share of common stock must have the same relative rights as and be identical in all respects with all the other shares of common stock. Section 6. Preemptive rights. Section 7. Directors. Section 8. Amendment of charter. Attest: Secretary of the Association By: President or Chief Executive Officer of the Association Attest: Deputy Comptroller for Licensing By: Comptroller of the Currency Effective Date: (f) Charter amendments. (1) Board of directors approval. (2) Form of filing Application requirement. (A) Expedited review. (B) Amendments exempted from expedited review. (ii) Notice requirement. (3) Effectiveness. (g) Optional charter amendments. (1) Title change. (2) Home office. (3) Number of shares of stock and par value. (4) Capital stock. Section 5. Capital stock. Except for shares issued in the initial organization of the association or in connection with the conversion of the association from the mutual to the stock form of capitalization, no shares of capital stock (including shares issuable upon conversion, exchange, or exercise of other securities) may be issued, directly or indirectly, to officers, directors, or controlling persons of the association other than as part of a general public offering or as qualifying shares to a director, unless their issuance or the plan under which they would be issued has been approved by a majority of the total votes eligible to be cast at a legal meeting. Nothing contained in this Section 5 (or in any supplementary sections hereto) entitles the holders of any class of a series of capital stock to vote as a separate class or series or to more than one vote per share, except as to the cumulation of votes for the election of directors, unless the charter otherwise provides that there will be no such cumulative voting: Provided, i. To any provision which would authorize the holders of preferred stock, voting as a class or series, to elect some members of the board of directors, less than a majority thereof, in the event of default in the payment of dividends on any class or series of preferred stock; ii. To any provision that would require the holders of preferred stock, voting as a class or series, to approve the merger or consolidation of the association with another corporation or the sale, lease, or conveyance (other than by mortgage or pledge) of properties or business in exchange for securities of a corporation other than the association if the preferred stock is exchanged for securities of such other corporation: Provided, iii. To any amendment which would adversely change the specific terms of any class or series of capital stock as set forth in this Section 5 (or in any supplementary sections hereto), including any amendment which would create or enlarge any class or series ranking prior thereto in rights and preferences. An amendment which increases the number of authorized shares of any class or series of capital stock, or substitutes the surviving association in a merger or consolidation for the association, is not considered to be such an adverse change. A description of the different classes and series (if any) of the association's capital stock and a statement of the designations, and the relative rights, preferences, and limitations of the shares of each class of and series (if any) of capital stock are as follows: A. Common stock. Whenever there has been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to the payment of dividends, the full amount of dividends and of sinking fund, retirement fund, or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on any class or series of stock entitled to participate therewith as to dividends out of any assets legally available for the payment of dividends. In the event of any liquidation, dissolution, or winding up of the association, the holders of the common stock (and the holders of any class or series of stock entitled to participate with the common stock in the distribution of assets) will be entitled to receive, in cash or in kind, the assets of the association available for distribution remaining after: (i) Payment or provision for payment of the association's debts and liabilities; (ii) distributions or provision for distributions in settlement of its liquidation account; and (iii) distributions or provision for distributions to holders of any class or series of stock having preference over the common stock in the liquidation, dissolution, or winding up of the association. Each share of common stock will have the same relative rights as and be identical in all respects with all the other shares of common stock. B. Preferred stock. a. The distinctive serial designation and the number of shares constituting such series; b. The dividend rate or the amount of dividends to be paid on the shares of such series, whether dividends are cumulative and, if so, from which date(s), the payment date(s) for dividends, and the participating or other special rights, if any, with respect to dividends; c. The voting powers, full or limited, if any, of shares of such series; d. Whether the shares of such series are redeemable and, if so, the price(s) at which, and the terms and conditions on which, such shares may be redeemed; e. The amount(s) payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution, or winding up of the association; f. Whether the shares of such series are entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price(s) at which such shares may be redeemed or purchased through the application of such fund; g. Whether the shares of such series are convertible into, or exchangeable for, shares of any other class or classes of stock of the association and, if so, the conversion price(s) or the rate(s) of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange. h. The price or other consideration for which the shares of such series are issued; and i. Whether the shares of such series which are redeemed or converted have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued as shares of the same or any other series of serial preferred stock. Each share of each series of serial preferred stock must have the same relative rights as and be identical in all respects with all the other shares of the same series. The board of directors has authority to divide, by the adoption of supplementary charter sections, any authorized class of preferred stock into series, and, within the limitations set forth in this section and the remainder of this charter, fix and determine the relative rights and preferences of the shares of any series so established. Prior to the issuance of any preferred shares of a series established by a supplementary charter section adopted by the board of directors, the association must file with the OCC a dated copy of that supplementary section of this charter established and designating the series and fixing and determining the relative rights and preferences thereof. (5) Limitations on subsequent issuances. (6) Cumulative voting. (7) Anti-takeover provisions following mutual to stock conversion. Section 8. Certain Provisions Applicable for Five Years. A. Beneficial Ownership Limitation. In the event shares are acquired in violation of this section 8, all shares beneficially owned by any person in excess of 10 percent will be considered “excess shares” and will not be counted as shares entitled to vote and may not be voted by any person or counted as voting shares in connection with any matters submitted to the stockholders for a vote. For purposes of this section 8, the following definitions apply: 1. The term “person” includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of the equity securities of the association. 2. The term “offer” includes every offer to buy or otherwise acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value. 3. The term “acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise. 4. The term “acting in concert” means (a) knowing participation in a joint activity or parallel action towards a common goal of acquiring control whether or not pursuant to an express agreement, or (b) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. B. Cumulative Voting Limitation. C. Call for Special Meetings. (h) Anti-takeover provisions. (i) Reissuance of charter. (j) Bylaws for Federal stock savings associations In general. (2) Form of filing Application requirement. (A) Expedited review. (B) Amendments exempted from expedited review. ( 1 ( 2 (ii) Corporate governance election and notice requirement. (iii) No filing required. (3) Effectiveness. (4) Effect of subsequent charter or bylaw change. (k) Shareholders of Federal stock savings associations Shareholder meetings In general. (ii) Location of shareholder meetings In general. (B) Procedures for telephonic or electronic participation. (2) Notice of shareholder meetings. (3) Fixing of record date. (4) Voting lists. prima facie (ii) In lieu of making the shareholders list available for inspection by any shareholders as provided in paragraph (k)(4)(i) of this section, the board of directors may perform such acts as required by paragraphs (a) and (b) of Rule 14a-7 of the General Rules and Regulations under the Securities and Exchange Act of 1934 (17 CFR 240.14a-7) as may be duly requested in writing, with respect to any matter which may be properly considered at a meeting of shareholders, by any shareholder who is entitled to vote on such matter and who must defray the reasonable expenses to be incurred by the association in performance of the act or acts required. (5) Shareholder quorum. (6) Shareholder voting Proxies. (ii) Shares controlled by association. (7) Nominations and new business submitted by shareholders. (8) Informal action by stockholders. (l) Board of directors General powers and duties. (2) Number and term. (3) Regular meetings. (4) Quorum. (5) Vacancies. (6) Removal or resignation of directors. (ii) If less than the entire board is to be removed, no one of the directors may be removed if the votes cast against the removal would be sufficient to elect a director if then cumulatively voted at an election of the class of directors of which such director is a part. (iii) Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the charter or supplemental sections thereto, the provisions of this section apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole. (7) Executive and other committees. (8) Notice of special meetings. (9) Action without a meeting. (10) Presumption of assent. (11) Age limitation on directors. (m) Officers Positions. (2) Removal. (3) Age limitation on officers. (n) Certificates for shares and their transfer Certificates for shares. (2) Transfer of shares. [80 FR 28425, May 18, 2015, as amended at 82 FR 8103, Jan. 23, 2017; 85 FR 31948, May 28, 2020; 85 FR 80440, Dec. 11, 2020; 85 FR 83726, Dec. 22, 2020] § 5.23 Conversion to become a Federal savings association. (a) Authority. (b) Scope. (2) As used in this section, depository institution means any commercial bank (including a private bank), a savings bank, a trust company, a savings and loan association, a building and loan association, a homestead association, a cooperative bank, an industrial bank, or a credit union chartered in the United States and having its principal office located in the United States. (c) Licensing requirements. (d) Conversion of a mutual depository institution or a stock depository institution to a Federal savings association Policy. (2) Procedures Prefiling communications. (ii) Application. (A) Identify each branch that the resulting financial institution expects to operate after conversion; (B) Include the institution's most recent audited financial statements (if any); (C) Include the latest report of condition and report of income (the most recent daily statement of condition will suffice if the institution does not file these reports); (D) Unless otherwise advised by the OCC in a prefiling communication, include an opinion of counsel that, in the case of State-chartered institutions, the conversion is not in contravention of applicable State law, or in the case of Federally-chartered institutions, the conversion is not in contravention of applicable Federal law; (E) State whether the institution wishes to exercise fiduciary powers after the conversion; (F) Identify all subsidiaries, service corporation investments, bank service company investments, and other equity investments that will be retained following the conversion, and provide the information and analysis of the subsidiaries' activities and the service corporation investments and other equity investments that would be required if the converting mutual institution or stock institution were a Federal mutual savings association or Federal stock savings association, respectively, establishing each subsidiary or making each service corporation or other equity investment pursuant to § 5.35, § 5.38, § 5.58, or § 5.59, or other applicable law and regulation; (G) Identify any nonconforming assets (including nonconforming subsidiaries) and nonconforming activities that the institution engages in and describe the plans to retain or divest those assets and activities; (H) Include a business plan if the converting institution has been operating for less than three years, plans to make significant changes to its business after the conversion, or at the request of the OCC; (I) Include a list of all outstanding conditions or other requirements imposed by the institution's current appropriate Federal banking agency and, if applicable, current State bank supervisor or State attorney-general in any cease and desist order, written agreement, other formal enforcement order, memorandum of understanding, approval of any application, notice or request, commitment letter, board resolution, or in any other manner, including the converting institution's analysis whether any such actions prohibit conversion under 12 U.S.C. 35, and the converting institution's plans regarding adhering to such conditions and requirements after conversion; (J) If the converting institution does not meet the qualified thrift lender test of 12 U.S.C. 1467a(m), include a plan to achieve compliance within a reasonable period of time and a request for an exception from the OCC; (K) Include a list of directors and senior executive officers, as defined in § 5.51, of the converting institution; and (L) Include a list of individuals, directors, and shareholders who directly or indirectly, or acting in concert with one or more persons or companies, or together with members of their immediate family, do or will own, control, or hold 10 percent or more of the institution's voting stock. (iii) The OCC may permit a Federal savings association to retain nonconforming assets of a converting institution for the time period prescribed by the OCC following a conversion, subject to conditions and an OCC determination of the carrying value of the retained assets consistent with the requirements of section 5(c) of the Home Owners' Loan Act (12 U.S.C. 1464(c)) relating to loans and investments. The OCC may permit a Federal savings association to continue nonconforming activities of a converting institution for the time period prescribed by the OCC following a conversion, subject to conditions. (iv) The OCC may require directors and senior executive officers of the converting institution to submit the Interagency Biographical and Financial Report, available at www.occ.gov, (v) Approval for an institution to convert to a Federal savings association expires if the conversion has not occurred within six months of the OCC's approval of the application, unless the OCC grants an extension of time. (vi) When the OCC determines that the filer has satisfied all statutory and regulatory requirements and any other conditions, the OCC issues a charter. The charter provides that the institution is authorized to begin conducting business as a Federal mutual savings association or a Federal stock savings association as of a specified date. (3) Exceptions to rules of general applicability. (4) Expedited review. (e) Conversion of a mutual depository institution to a Federal mutual savings association—supplemental rules. (f) Conversion of a national bank to a Federal stock savings association—supplemental rules Additional procedures. (2) Termination and change of status. (g) Continuation of business and entity. [80 FR 28430, May 18, 2015, as amended at 85 FR 80445, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.24 Conversion to become a national bank. (a) Authority. (b) Licensing requirements. (c) Scope. (2) As used in this section, State bank (d) Policy. (e) Procedures Prefiling communications. (2) Application. (i) Identify each branch that the resulting bank expects to operate after conversion; (ii) Include the institution's most recent audited financial statements (if any); (iii) Include the latest report of condition and report of income (the most recent daily statement of condition will suffice if the institution does not file these reports); (iv) Unless otherwise advised by the OCC in a prefiling communication, include an opinion of counsel that, in the case of a State bank, the conversion is not in contravention of applicable State law, or in the case of a Federal stock savings association, the conversion is not in contravention of applicable Federal law; (v) State whether the institution wishes to exercise fiduciary powers after the conversion; (vi) Identify all subsidiaries, bank service company investments, and other equity investments that will be retained following the conversion, and provide the information and analysis of the subsidiaries' activities, the bank service company investments, and the other equity investments that would be required if the converting bank or savings association were a national bank establishing each subsidiary or making each bank service company investment or other equity investment pursuant to § 5.34, § 5.35, § 5.36, § 5.39, 12 CFR part 1, or other applicable law and regulation; (vii) Identify any nonconforming assets (including nonconforming subsidiaries) and nonconforming activities that the institution engages in and describe the plans to retain or divest those assets and activities; (viii) Include a business plan if the converting institution has been operating for fewer than three years, plans to make significant changes to its business after the conversion, or at the request of the OCC; (ix) List all outstanding conditions or other requirements imposed by the institution's current appropriate Federal banking agency and, if applicable, current State bank supervisor or State attorney-general in any cease and desist order, written agreement, other formal enforcement order, memorandum of understanding, approval of any application, notice or request, commitment letter, board resolution, or in any other manner, including the converting institution's analysis whether the conversion is prohibited under 12 U.S.C. 35, and State the institution's plans regarding adhering to such conditions or requirements after conversion; (x) Include a list of directors and senior executive officers, as defined in § 5.51, of the converting institution; and (xi) Include a list of individuals, directors, and shareholders who directly or indirectly, or acting in concert with one or more persons or companies, or together with members of their immediate family, do or will own, control, or hold 10 percent or more of the institution's voting stock. (3) The OCC may permit a national bank to retain nonconforming assets of a State bank or stock State savings association, subject to conditions and an OCC determination of the carrying value of the retained assets, pursuant to 12 U.S.C. 35. The OCC may permit a national bank to continue nonconforming activities of a State bank or stock State savings association, or to retain the nonconforming assets or nonconforming activities of a Federal stock savings association, for a reasonable period of time following a conversion, subject to conditions imposed by the OCC. (4) The OCC may require directors and senior executive officers of the converting institution to submit the Interagency Biographical and Financial Report, available at www.occ.gov, (5) Approval for an institution to convert to a national bank expires if the conversion has not occurred within six months of the OCC's approval of the application, unless the OCC grants an extension of time. (6) When the OCC determines that the filer has satisfied all statutory and regulatory requirements, including those set forth in 12 U.S.C. 35, and any other conditions, the OCC issues a charter certificate. The certificate provides that the institution is authorized to begin conducting business as a national bank as of a specified date. (f) Conversion of a Federal stock savings association to a national bank—supplemental rules Additional information. (2) Termination and change of status. (g) Exceptions to rules of general applicability. (h) Expedited review. (i) Continuation of business and corporate entity. [80 FR 28432, May 18, 2015, as amended at 85 FR 80446, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.25 Conversion from a national bank or Federal savings association to a State bank or State savings association. (a) Authority. (b) Licensing requirement. (c) Scope. (d) Procedures National banks. (2) Federal savings associations. (3) Notice of intent. (ii) The notice must include: (A) A copy of the conversion application; and (B) An analysis demonstrating that the conversion is in compliance with laws of the applicable jurisdictions regarding the permissibility, requirements, and procedures for conversions, including any applicable stockholder or account holder approval requirements. (4) Consultation. (5) Termination of status. (e) Exceptions to rules of general applicability. [80 FR 28433, May 18, 2015, as amended at 85 FR 80446, Dec. 11, 2020] § 5.26 Fiduciary powers of national banks and Federal savings associations. (a) Authority. (b) Licensing requirements. (1) Where two or more national banks consolidate or merge, and any of the national banks has, prior to the consolidation or merger, received OCC approval to exercise fiduciary powers and that approval is in force at the time of the consolidation or merger, the resulting national bank may exercise fiduciary powers in the same manner and to the same extent as the national bank to which approval was originally granted; (2) Where two or more Federal savings associations consolidate or merge, and any of the Federal savings associations has, prior to the consolidation or merger, received approval from the OCC or the OTS to exercise fiduciary powers and that approval is in force at the time of the consolidation or merger, the resulting Federal savings association may exercise fiduciary powers in the same manner and to the same extent as the Federal savings association to which approval was originally granted; (3) Where a national bank with prior OCC approval to exercise fiduciary powers is the resulting bank in a merger or consolidation with a State bank, State savings association, or Federal savings association and the national bank will exercise fiduciary powers in the same manner and to the same extent to which approval was originally granted; and (4) Where a Federal savings association with prior approval from the OCC or the OTS to exercise fiduciary powers is the resulting savings association in a merger or consolidation with a State bank, State savings association, or national bank and the Federal savings association will exercise fiduciary powers in the same manner and to the same extent to which approval was originally granted. (c) Scope. (d) Policy. (e) Procedure In general. (i) A national bank or Federal savings association without fiduciary powers: (ii) A national bank without fiduciary powers that desires to exercise fiduciary powers as the resulting bank after merging with a State bank, State savings association, or Federal savings association with fiduciary powers or a Federal savings association without fiduciary powers that desires to exercise fiduciary powers as the resulting savings association after merging with a State bank, State savings association or national bank with fiduciary powers; (iii) A national bank that results from the conversion of a State bank or a State or Federal savings association that was exercising fiduciary powers prior to the conversion or a Federal savings association that results from a conversion of a State or national bank or a State savings association that was exercising fiduciary powers prior to the conversion; and (iv) A national bank or Federal savings association that has received approval from the OCC to exercise limited fiduciary powers that desires to exercise full fiduciary powers. (2) Application. (A) A statement requesting full or limited powers (specifying which powers); (B) A statement that the capital and surplus of the national bank or Federal savings association is not less than the capital and surplus required by State law of State banks, trust companies, and other corporations exercising comparable fiduciary powers; (C) Sufficient biographical information on proposed senior trust management personnel, as identified by the OCC, to enable the OCC to assess their qualifications, including, if requested by the OCC, legible fingerprints and the Interagency Biographical and Financial Report, available at www.occ.gov; (D) A description of the locations where the national bank or Federal savings association will conduct fiduciary activities; (E) If requested by the OCC, an opinion of counsel that the proposed activities do not violate applicable Federal or State law, including citations to applicable law; and (F) Any other information necessary to enable the OCC to sufficiently assess the factors described in paragraph (e)(2)(iii) of this section. (ii) If approval to exercise fiduciary powers is desired in connection with any other transaction subject to an application under this part, the filer covered under paragraph (e)(1)(ii), (e)(1)(iii), or (e)(1)(iv) of this section may include a request for approval of fiduciary powers, including the information required by paragraph (e)(2)(i) of this section, as part of its other application. The OCC does not require a separate application requesting approval to exercise fiduciary powers under these circumstances. (iii) When reviewing any application filed under this section, the OCC considers factors such as the following: (A) The financial condition of the national bank or Federal savings association; (B) The adequacy of the national bank's or Federal savings association's capital and surplus and whether it is sufficient under the circumstances and not less than the capital and surplus required by State law or State banks, trust companies, and other corporations exercising comparable fiduciary powers; (C) The character and ability of proposed trust management, including qualifications, experience, and competency. The OCC must approve any trust management change the bank or savings association makes prior to commencing trust activities; (D) The adequacy of the proposed business plan, if applicable; (E) The needs of the community to be served; and (F) Any other factors or circumstances that the OCC considers proper. (3) Expedited review. (4) Permit. (5) Notice required. (6) Notice of fiduciary activities in additional States. (ii) A notice submitted pursuant to paragraph (e)(6)(i) of this section must identify the new State or States involved, identify the fiduciary activities to be conducted, and describe the extent to which the activities differ materially from the fiduciary activities the national bank or Federal savings association previously conducted. (iii) No notice under paragraph (e)(6)(i) of this section is required if the national bank or Federal savings association provides the information required by paragraph (e)(6)(ii) of this section through other means, such as a merger application. (iv) No notice is required if the national bank or Federal savings association is conducting only activities ancillary to its fiduciary business through a trust representative office or otherwise. (7) Exceptions to rules of general applicability. (8) Expiration of approval. [80 FR 28433, May 18, 2015, as amended at 85 FR 80446, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] Subpart C—Expansion of Activities § 5.30 Establishment, acquisition, and relocation of a branch of a national bank. (a) Authority. (b) Licensing requirements. (c) Scope In general. (2) Branch established through a conversion or business combination. (d) Definitions Branch (i) A branch established by a national bank includes a seasonal agency described in 12 U.S.C. 36(c), a mobile facility, a temporary facility, or an intermittent facility. (ii) A facility otherwise described in this paragraph (d)(1) is not a branch if: (A) The bank establishing the facility does not permit members of the public to have physical access to the facility for purposes of making deposits, paying checks, or borrowing money ( e.g., (B) It is located at the site of, or is an extension of, an approved main office or branch office of the national bank. The OCC determines whether a facility is an extension of an existing main office or branch office on a case-by-case basis. For this purpose, the OCC will consider a drive-in or pedestrian facility located within 500 feet of a public entrance to an existing main office or branch office to be an extension of the existing main office or branch office, provided the functions performed at the drive-in or pedestrian facility are limited to functions that are ordinarily performed at a teller window. (iii) A branch does not include a remote service unit (RSU) as described in 12 CFR 7.1027. This encompasses RSUs that are automated teller machines (ATMs), including interactive ATMs. A branch also does not include a loan production office, a deposit production office, a trust office, an administrative office, a data processing office, or any other office that does not engage in at least one of the activities in paragraph (d)(1) of this section. (2) Home State (3) Intermittent branch (4) Messenger service (5) Mobile branch (6) Temporary branch (e) Policy. (1) Maintaining a safe and sound banking system; (2) Encouraging a national bank to provide fair access to financial services by helping to meet the credit needs of its entire community; (3) Ensuring compliance with laws and regulations; and (4) Promoting fair treatment of customers including efficiency and better service. (f) Procedures In general. (2) Messenger services. See (3) Jointly established branches. (4) Intermittent branches. (5) Authorization. (6) Expedited review. (g) Interstate branches. de novo (h) Exceptions to rules of general applicability. (2) The comment period on an application to engage in a short-distance relocation is 15 days. (3) The OCC may waive or reduce the public notice and comment period, as appropriate, with respect to an application to establish a branch to restore banking services to a community affected by a disaster or to temporarily replace banking facilities where, because of an emergency, the bank cannot provide services or must curtail banking services. (4) The OCC may waive or reduce the public notice and comment period, as appropriate, for an application by a national bank with a CRA rating of Satisfactory or better to establish a temporary branch which, if it were established by a State bank to operate in the manner proposed, would be permissible under State law without State approval. (i) Expiration of approval. (j) Branch closings. [80 FR 28435, May 18, 2015, as amended at 85 FR 80447, Dec. 11, 2020; 85 FR 83726, Dec. 22, 2020; 91 FR 10498, Mar. 4, 2026] § 5.31 Establishment, acquisition, and relocation of a branch and establishment of an agency office of a Federal savings association. (a) Authority. (b) Licensing requirements. (c) Scope In general. (2) Branch established through a conversion or business combination. (3) Branching by savings associations in the District of Columbia. (d) Definitions. branch (2) Home State (e) Policy. (1) Maintaining a safe and sound banking system; (2) Encouraging a Federal savings association to provide fair access to financial services by helping to meet the credit needs of its entire community; (3) Ensuring compliance with laws and regulations; and (4) Promoting fair treatment of customers including efficiency and better service. (f) Procedures Application requirements. (ii) Authorization. (iii) Expedited review. (2) Exceptions. (i) Drive-in or pedestrian offices. (ii) Short-distance relocation. (iii) Highly rated Federal savings associations. (A) It published a public notice under § 5.8 of its intent to change the location of the branch office or establish a new branch office. The public notice must be published at least 35 days before the proposed action establishment or relocation. If the notice is published more than 12 months before the proposed action, the publication is invalid. (B) If the Federal savings association intends to change the location of an existing branch office, it must post a notice of its intent in a prominent location in the existing office to be relocated. This notice must be posted for 30 days from the date of publication of the initial public notice described in paragraph (f)(2)(iii)(A) of this section. (C)( 1 ( 2 (3) Notice of branch opening. (g) Exceptions to rules of general applicability. (2) The OCC may waive or reduce the public notice and comment period, as appropriate, for an application by a Federal savings association with a CRA rating of Satisfactory or better to establish a temporary branch which, if it were established by a State bank to operate in the manner proposed, would be permissible under State law without State approval. (h) Expiration of approval. (i) Branch closings. (j) Section 5(m) of the Home Owners' Loan Act. (2) Any Federal savings association that must obtain approval of the OCC under 12 U.S.C. 1464(m)(1) must follow the application procedures of this section. Any State savings association that must obtain approval of the OCC under 12 U.S.C. 1464(m)(1) must follow the application procedures of this section as if it were a Federal savings association. (3) For purposes of 12 U.S.C. 1464(m)(1), a branch in the District of Columbia includes any location at which accounts are opened, payments are received, or withdrawals are made. This includes an Automated Teller Machine that performs one or more of these functions. (k) Agency offices In general. (i) Servicing, originating, or approving loans and contracts; (ii) Managing or selling real estate owned by the Federal savings association; and (iii) Conducting fiduciary activities or activities ancillary to the association's fiduciary business in compliance with § 5.26(e). (2) Additional services In general. (ii) Application required. (iii) Exceptions to rules of general applicability. (3) Records. [80 FR 28436, May 18, 2015, as amended at 85 FR 80447, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.32 Expedited procedures for certain reorganizations of a national bank. (a) Authority. (b) Scope. (c) Licensing requirements. (d) Procedures General. (2) Reorganization plan. (i) Specifies the manner in which the reorganization will be carried out; (ii) Is approved by a majority of the entire board of directors of the national bank; (iii) Specifies: (A) The amount and type of consideration that the bank holding company will provide to the shareholders of the reorganizing bank for their shares of stock of the bank; (B) The date as of which the rights of each shareholder to participate in that exchange will be determined; and (C) The manner in which the exchange will be carried out; (iv) Is submitted to the shareholders of the reorganizing bank at a meeting to be held at the call of the directors in accordance with the procedures prescribed in connection with a merger of a national bank under section 3 of the National Bank Consolidation and Merger Act, 12 U.S.C. 215a(a)(2); and (v) Describes any changes to the bank's business plan resulting from the reorganization. (3) Financial and managerial resources and future prospects. (4) Exceptions to rules of general applicability. (e) Rights of dissenting shareholders. (f) Approval under the Bank Holding Company Act. (g) Expiration of approval. (h) Adequacy of disclosure. (2) Any filer not subject to the registration provisions of the Securities Exchange Act of 1934 must submit the proxy materials or information statements it uses in connection with the reorganization to the appropriate OCC licensing office no later than when the materials are sent to the shareholders. [68 FR 70129, Dec. 17, 2003, as amended at 80 FR 28437, May 18, 2015; 85 FR 80447, Dec. 11, 2020] § 5.33 Business combinations involving a national bank or Federal savings association. (a) Authority. (b) Scope. (1) OCC review and approval of an application by a national bank or a Federal savings association for a business combination resulting in a national bank or Federal savings association; and (2) Requirements of notices and other procedures for national banks and Federal savings associations involved in other combinations in which a national bank or Federal savings association is not the resulting institution. (c) Licensing requirements. 1 1 (d) Definitions. (1) Bank (2) Business combination (i) Any merger or consolidation between a national bank or a Federal savings association and one or more depository institutions or State trust companies, in which the resulting institution is a national bank or Federal savings association; (ii) In the case of a Federal savings association, any merger or consolidation with a credit union in which the resulting institution is a Federal savings association; (iii) In the case of a national bank, any merger between a national bank and one or more of its nonbank affiliates; (iv) The acquisition by a national bank or a Federal savings association of all, or substantially all, of the assets of another depository institution; or (v) The assumption by a national bank or a Federal savings association of any deposit liabilities of another insured depository institution or any deposit accounts or other liabilities of a credit union or any other institution that will become deposits at the national bank or Federal savings association. (3) Business reorganization (i) A business combination between eligible banks and eligible savings associations, or between an eligible bank or an eligible savings association and an eligible depository institution, that are controlled by the same holding company or that will be controlled by the same holding company prior to the combination; or (ii) A business combination between an eligible bank or an eligible savings association and an interim national bank or interim Federal savings association chartered in a transaction in which a person or group of persons exchanges its shares of the eligible bank or eligible savings association for shares of a newly formed holding company and receives after the transaction substantially the same proportional share interest in the holding company as it held in the eligible bank or eligible savings association (except for changes in interests resulting from the exercise of dissenters' rights), and the reorganization involves no other transactions involving the bank or savings association. (4) Company (5) For business combinations under paragraphs (g)(4) and (5) of this section, a company or shareholder is deemed to control (i) Such company or shareholder, directly or indirectly, or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting securities of the other company; or (ii) Such company or shareholder controls in any manner the election of a majority of the directors or trustees of the other company. No company is deemed to own or control another company by virtue of its ownership or control of shares in a fiduciary capacity. (6) Credit union (7) Home State (8) Interim national bank or interim Federal savings association (9) Nonbank affiliate (10) Other combination (i) Any merger or consolidation between a national bank or a Federal savings association and one or more depository institutions or State trust companies, in which the resulting institution is not a national bank or Federal savings association; (ii) In the case of a Federal stock savings association, any merger or consolidation with a credit union in which the resulting institution is a credit union; (iii) The transfer by a national bank or a Federal savings association of any deposit liabilities to another insured depository institution, a credit union or any other institution; or (iv) The acquisition by a national bank or a Federal savings association of all, or substantially all, of the assets, or the assumption of all or substantially all of the liabilities, of any company other than a depository institution. (11) Savings association State savings association (12) State trust company (e) Policy and related filing requirements Factors In general. (A) The capital level of any resulting national bank or Federal savings association; (B) The conformity of the transaction to applicable law, regulation, and supervisory policies; (C) The purpose of the transaction; (D) The impact of the transaction on safety and soundness of the national bank or Federal savings association; and (E) The effect of the transaction on the national bank's or Federal savings association's shareholders (or members in the case of a mutual savings association), depositors, other creditors, and customers. (ii) Bank Merger Act. (A) Competition. 1 ( 2 (B) Financial and managerial resources and future prospects. (C) Convenience and needs of community. (D) Money laundering. (E) Financial stability. (F) Deposit concentration limit. (iii) Community Reinvestment Act In General. (B) Interstate mergers under 12 U.S.C. 1831u. (C) CRA Sunshine. ( 1 ( 2 1 (iv) Interstate mergers under 12 U.S.C. 1831u. (2) Acquisition and retention of branches. (3) Subsidiaries. (ii) A national bank filer proposing to acquire, through a business combination, a subsidiary, financial subsidiary investment, bank service company investment, service corporation investment, or other equity investment of any entity other than a national bank must provide the same information and analysis of the subsidiary's activities, or of the investment, that would be required if the filer were establishing the subsidiary, or making such investment, pursuant to §§ 5.34, 5.35, 5.36, or 5.39. (iii) A Federal savings association filer proposing to acquire, through a business combination, a subsidiary, bank service company investment, service corporation investment, or other equity investment of any entity other than a Federal savings association must provide the same information and analysis of the subsidiary's activities, or of the investment, that would be required if the filer were establishing the subsidiary, or making such investment, pursuant to §§ 5.35, 5.38, 5.58, or 5.59. (4) Interim national bank or interim Federal savings association Application. (ii) Conditional approval. (iii) Corporate status. (A) On the date the OCC advises the interim national bank that its articles of association and organization certificate are acceptable or advises the interim Federal savings association that its charter and bylaws are acceptable; or (B) On the date the interim national bank files articles of association and an organization certificate that conform to the form for those documents provided by the OCC in the Comptroller's Licensing Manual or the date the interim Federal savings association files a charter and bylaws that conform to the requirements set out in this part 5. (iv) Other corporate procedures. (5) Nonconforming assets. (ii) Any resulting Federal savings association must conform to the requirements of sections 5(c) and 10(m) of the Home Owners' Loan Act (12 U.S.C. 1464(c) and 1467a(m)) within the time period prescribed by the OCC. (6) Fiduciary powers. (ii) If a filer intends to exercise fiduciary powers after the combination and requires OCC approval for such powers, the filer must include the information required under § 5.26(e)(2). (7) Expiration of approval. (8) Adequacy of disclosure. (ii) A national bank or Federal savings association filer with one or more classes of securities subject to the registration provisions of section 12(b) or (g) of the Securities Exchange Act of 1934, 15 U.S.C. 78 l l (f) Exceptions to rules of general applicability National bank or Federal savings association filer In general. (ii) Statutory notice. (2) Interim national bank or interim Federal savings association. (3) State bank, or State savings association, State trust company, or credit union as resulting institution. (g) Provisions governing consolidations and mergers with different types of entities Consolidations and mergers under 12 U.S.C. 215 or 215a of a national bank with other national banks and State banks as defined in 12 U.S.C. 215b(1) resulting in a national bank. (2) Interstate consolidations and mergers under 12 U.S.C. 215a-1 resulting in a national bank. (ii) Unless it has elected to follow the procedures set out in paragraph (h) of this section, the resulting national bank entering into the consolidation or merger must comply with the procedures of 12 U.S.C. 215 or 215a, as applicable. (iii) Unless it has elected to follow the procedures applicable to State banks under paragraph (h)(1)(i), any national bank that will not be the resulting bank in a consolidation or merger pursuant to 12 U.S.C. 215a-1 must comply with the procedures of 12 U.S.C. 215 or 215a, as applicable. (iv) Corporate existence. (3) Consolidations and mergers of a national bank with Federal savings associations under 12 U.S.C. 215c resulting in a national bank. (A) Unless it has elected to follow the procedures set out in paragraph (h) of this section, a national bank entering into the consolidation or merger must follow the procedures of 12 U.S.C. 215 or 215a, respectively, as if the Federal savings association were a national bank. (B)( 1 ( 2 (ii)(A) Unless the national bank has elected to follow the procedures set out in paragraph (h) of this section, national bank shareholders who dissent from a plan to consolidate may receive in cash the value of their national bank shares if they comply with the requirements of 12 U.S.C. 215 as if the Federal savings association were a national bank. (B) Unless the Federal savings association has elected to follow the procedures applicable to State savings associations pursuant to paragraph (o)(1)(i)(A) of this section, Federal savings association shareholders who dissent from a plan to consolidate or merge may receive in cash the value of their Federal savings association shares if they comply with the requirements of 12 U.S.C. 215 or 215a as if the Federal savings association were a national bank. (C) Unless the national bank or Federal savings association has elected to follow the procedures applicable to State banks or State savings associations, respectively, pursuant to paragraph (h)(1)(i) or (o)(1)(i)(A) of this section, respectively, the OCC will conduct an appraisal or reappraisal of the value of a national bank or Federal savings association held by dissenting shareholders in accordance with the provisions of 12 U.S.C. 215 or 215a, as applicable, except that the costs and expenses of any appraisal or reappraisal may be apportioned and assessed by the Comptroller as he or she may deem equitable against all or some of the parties. In making this determination the Comptroller will consider whether any party has acted arbitrarily or not in good faith in respect to the rights provided by this paragraph. (iii) The consolidation or merger agreement must address the effect upon, and the terms of the assumption of, any liquidation account of any participating institution by the resulting institution. (4) Mergers of a national bank with its nonbank affiliates under 12 U.S.C. 215a-3 resulting in a national bank. (ii) Unless it has elected to follow the procedures set out in paragraph (h) of this section, a national bank entering into the merger must follow the procedures of 12 U.S.C. 215a as if the nonbank affiliate were a State bank, except as otherwise provided herein. (iii) A nonbank affiliate entering into the merger must follow the procedures for such mergers set out in the law of the State or other jurisdiction under which the nonbank affiliate is organized. (iv) The rights of dissenting shareholders and appraisal of dissenters' shares of stock in the nonbank affiliate entering into the merger must be determined in the manner prescribed by the law of the State or other jurisdiction under which the nonbank affiliate is organized. (v) The corporate existence of each institution participating in the merger continues in the resulting national bank, and all the rights, franchises, property, appointments, liabilities, and other interests of the participating institutions are transferred to the resulting national bank, as set forth in 12 U.S.C. 215a(a), (e), and (f) in the same manner and to the same extent as in a merger between a national bank and a State bank under 12 U.S.C. 215a(a), as if the nonbank affiliate were a State bank. (5) Mergers of an uninsured national bank with its nonbank affiliates under 12 U.S.C. 215a-3 resulting in a nonbank affiliate. (ii) Unless it has elected to follow the procedures applicable to State banks under paragraph (h)(1)(i) of this section, a national bank entering into the merger must follow the procedures of 12 U.S.C. 214a, as if the nonbank affiliate were a State bank, except as otherwise provided in this section. (iii) A nonbank affiliate entering into the merger must follow the procedures for such mergers set out in the law of the State or other jurisdiction under which the nonbank affiliate is organized. (iv)(A) National bank shareholders who dissent from an approved plan to merge may receive in cash the value of their national bank shares if they comply with the requirements of 12 U.S.C. 214a as if the nonbank affiliate were a State bank. The OCC may conduct an appraisal or reappraisal of dissenters' shares of stock in a national bank involved in the merger if all parties agree that the determination is final and binding on each party and agree on how the total expenses of the OCC in making the appraisal will be divided among the parties and paid to the OCC. (B) The rights of dissenting shareholders and appraisal of dissenters' shares of stock in the nonbank affiliate involved in the merger must be determined in the manner prescribed by the law of the State or other jurisdiction under which the nonbank affiliate is organized. (v) The corporate existence of each entity participating in the merger continues in the resulting nonbank affiliate, and all the rights, franchises, property, appointments, liabilities, and other interests of the participating national bank are transferred to the resulting nonbank affiliate as set forth in 12 U.S.C. 214b, in the same manner and to the same extent as in a merger between a national bank and a State bank under 12 U.S.C. 214a, as if the nonbank affiliate were a State bank. (6) Consolidations and mergers of a Federal savings association with other Federal savings associations, national banks, State banks, State savings banks, State savings associations, State trust companies, or credit unions resulting in a Federal savings association. (A)( 1 ( 2 (B)( 1 ( 2 (C)( 1 ( 2 ( 3 (D)( 1 ( 2 (ii) The consolidation or merger agreement must address the effect upon, and the terms of the assumption of, any liquidation account of any participating institution by the resulting institution. (7) Consolidations and mergers under 12 U.S.C. 214a of a national bank with State banks resulting in a State bank as defined in 12 U.S.C. 214(a) In general. (ii) Procedures. (iii) Dissenters' rights and appraisal procedures. (iv) Liquidation account. (8) Interstate consolidations and mergers between an insured national bank and insured State banks resulting in a State bank In general. (ii) Procedures. (iii) Notice. (9) Consolidations and mergers of a Federal savings association with State banks, State savings banks, State savings associations, State trust companies, or credit unions resulting in a State bank, State savings bank, State savings association, State trust company, or credit union Policy. (ii) Procedures. (B) For purposes of this paragraph (g)(9), a combination in which a State bank, State savings bank, State savings association, State trust company, or credit union acquires all or substantially all of the assets, or assumes all or substantially all of the liabilities, of a Federal savings association must be treated as a consolidation by the Federal savings association. (iii) Dissenters' rights and appraisal procedures. (B) Unless the Federal savings association has elected to follow the procedures applicable to State savings associations under paragraph (o)(1)(i)(A), the plan of merger or consolidation must provide the manner of disposing of the shares of the resulting State institution not taken by the dissenting shareholders of the Federal savings association. (iv) Liquidation account. (h) Procedural requirements for national bank combinations Permissible elections. (i) The procedures applicable to a State bank chartered by the State where the national bank's main office is located; or (ii) Paragraph (p) of this section, if applicable. (2) Rules of Construction. (i) Any references to a State agency in the applicable State procedures should be read as referring to the OCC; and (ii) Unless otherwise specified in Federal law, all filings required by the applicable State procedures must be made to the OCC. (i) Expedited review for business reorganizations and streamlined applications. (j) Streamlined applications. (i) At least one party to the transaction is an eligible bank or eligible savings association, and all other parties to the transaction are eligible banks, eligible savings associations, or eligible depository institutions, the resulting national bank or resulting Federal savings association will be well capitalized immediately following consummation of the transaction, and the total assets of the target institution are no more than 50 percent of the total assets of the acquiring bank or Federal savings association, as reported in each institution's Consolidated Report of Condition and Income filed for the quarter immediately preceding the filing of the application; (ii) The acquiring bank or Federal savings association is an eligible bank or eligible savings association, the target bank or savings association is not an eligible bank, eligible savings association, or an eligible depository institution, the resulting national bank or resulting Federal savings association will be well capitalized immediately following consummation of the transaction, and the filers in a prefiling communication request and obtain approval from the appropriate OCC licensing office to use the streamlined application; (iii) The acquiring bank or Federal savings association is an eligible bank or eligible savings association, the target bank or savings association is not an eligible bank, eligible savings association, or an eligible depository institution, the resulting bank or resulting Federal savings association will be well capitalized immediately following consummation of the transaction, and the total assets acquired do not exceed 10 percent of the total assets of the acquiring national bank or acquiring Federal savings association, as reported in each institution's Consolidated Report of Condition and Income filed for the quarter immediately preceding the filing of the application; (iv) In the case of a transaction under paragraph (g)(4) of this section, the acquiring bank is an eligible bank, the resulting national bank will be well capitalized immediately following consummation of the transaction, the filers in a prefiling communication request and obtain approval from the appropriate OCC licensing office to use the streamlined application, and the total assets acquired do not exceed 10 percent of the total assets of the acquiring national bank, as reported in the bank's Consolidated Report of Condition and Income filed for the quarter immediately preceding the filing of the application; or (v) The acquiring national bank or Federal savings association is a covered community bank or covered community savings association and the transaction would result in a national bank or Federal savings association with less than $30 billion in total assets. (2) Notwithstanding paragraph (j)(1) of this section, a filer does not qualify for a streamlined business combination application if the transaction is part of a conversion under part 192 of this chapter. (3) When a business combination qualifies for a streamlined application, the filer should consult the Comptroller's Licensing Manual to determine the abbreviated application information required by the OCC. The OCC encourages prefiling communications between the filers and the appropriate OCC licensing office before filing under paragraph (j) of this section. (k) Exit notice to OCC Notice required. (2) Timing of notice. (3) Content of notice. (i)(A) A short description of the material features of the transaction, the identity of the acquiring institution, the identity of the State or Federal regulator to whom the application was made, and the date of the application; or (B) A copy of a filing made with another Federal or State regulatory agency seeking approval from that agency for the transaction under the Bank Merger Act or other applicable statute; (ii) The planned consummation date for the transaction; (iii) Information to demonstrate compliance by the national bank or Federal savings association with applicable requirements to engage in the transactions ( e.g., (iv) If the national bank or Federal savings association submitting the notice maintains a liquidation account established pursuant to part 192 of this chapter, the notice must state that the resulting institution will assume such liquidation account. (4) Termination of status. (5) Expiration. (l) Mergers and consolidations; transfer of assets and liabilities to the resulting institution. (2) The authority in paragraph (l)(1) of this section is in addition to any authority granted by applicable statutes for specific transactions and is subject to the National Bank Act, the Home Owners' Loan Act, and other applicable statutes. (m) Certification of combination; effective date. (2) When the transaction is consummated, the filer must notify the OCC of the consummation date. The OCC will issue a letter certifying that the combination was effective on the date specified in the filer's notice. (n) Authority for and certain limits on business combinations and other transactions by Federal savings associations. (2) A Federal savings association may consolidate or merge with another depository institution, a State trust company or a credit union, may engage in another business combination listed in paragraphs (d)(2)(iv) and (v) of this section, or may engage in any other combination listed in paragraph (d)(10), provided that: (i) The combination is in compliance with, and receives all approvals required under, any applicable statutes and regulations; (ii) Any resulting Federal savings association meets the requirements for insurance of accounts; and (iii) A consolidation or merger involving a mutual savings association or the transfer of all or substantially all of the deposits of a mutual savings association must result in a mutually held depository institution that is insured by the FDIC, unless: (A) The transaction is approved under part 192 governing mutual to stock conversions; (B) The transaction involves a mutual holding company reorganization under 12 U.S.C. 1467a(o) or a similar transaction under State law; or (C) The transaction is part of a voluntary liquidation for which the OCC has provided non-objection under § 5.48. (3) Where the resulting institution is a Federal mutual savings association, the OCC may approve a temporary increase in the number of directors of the resulting institution provided that the association submits a plan for bringing the board of directors into compliance with the requirements of § 5.21(e) within a reasonable period of time. (4)(i) The Federal savings associations described in paragraph (n)(4)(ii) of this section below must provide affected accountholders with a notice of a proposed account transfer and an option of retaining the account in the transferring Federal savings association. The notice must allow affected accountholders at least 30 days to consider whether to retain their accounts in the transferring Federal savings association. (ii) The following savings associations must provide the notices: (A) A Federal mutual savings association transferring account liabilities to an institution the accounts of which are not insured by the Deposit Insurance Fund or the National Credit Union Share Insurance Fund; and (B) Any Federal mutual savings association transferring account liabilities to a stock form depository institution. (o) Procedural requirements for Federal savings association approval of combinations In general Permissible elections. (A) The procedures applicable to a State savings association chartered by the State where the Federal savings association's home office is located: or (B) The standard procedures provided in paragraph (o)(2) of this section. (ii) Rules of Construction. (A) Any references to a State agency in the applicable State procedures should be read as referring to the OCC; and (B) Unless otherwise specified in Federal law, all filings required by the applicable State procedures must be made to the OCC. (2) Standard procedures Board approval. (ii) Shareholder vote General rule. (B) General exception. (C) Exceptions for certain combinations involving an interim association. (3) Change of name or home office. (4) Mutual member vote. (p) Exception to voting requirements. (1) Either: (i) The transaction does not involve an interim bank or an interim savings association; or (ii) The transaction involves an interim bank or an interim savings association and the existing shareholders of the national bank or Federal stock savings association will directly hold the shares of the resulting national bank or Federal stock savings association; (2) The national bank's articles of association or the Federal stock savings association's charter, as applicable, is not changed; (3) Each share of stock outstanding immediately prior to the effective date of the consolidation or merger is to be an identical outstanding share or a treasury share of the resulting national bank or Federal stock savings association after such effective date; and (4) Either: (i) No shares of voting stock of the resulting national bank or Federal stock savings association and no securities convertible into such stock are to be issued or delivered under the plan of combination; or (ii) The authorized unissued shares or the treasury shares of voting stock of the resulting national bank or Federal stock savings association to be issued or delivered under the plan of merger or consolidation, plus those initially issuable upon conversion of any securities to be issued or delivered under such plan, do not exceed 20 percent of the total shares of voting stock of such national bank or Federal stock savings association outstanding immediately prior to the effective date of the consolidation or merger. [85 FR 80448, Dec. 11, 2020; 86 FR 1255, Jan. 8, 2021, as amended at 89 FR 78218, Sept. 25, 2024; 90 FR 20564, May 15, 2025; 91 FR 10498, Mar. 4, 2026] § 5.34 Operating subsidiaries of a national bank. (a) Authority. (b) Licensing requirements. (c) Scope. 2 (d) Definition. authorized product (e) Standards and requirements Authorized activities. (A) Providing authorized products as principal; and (B) Providing title insurance as principal if the national bank or subsidiary thereof was actively and lawfully underwriting title insurance before November 12, 1999, and no affiliate of the national bank (other than a subsidiary) provides insurance as principal. A subsidiary may not provide title insurance as principal if the State had in effect before November 12, 1999, a law which prohibits any person from underwriting title insurance with respect to real property in that State. (ii) In addition to OCC authorization, before it begins business an operating subsidiary also must comply with other laws applicable to it and its proposed business, including applicable licensing or registration requirements, if any, such as registration requirements under securities laws. (2) Qualifying subsidiaries. (A) The bank has the ability to control the management and operations of the subsidiary, and no other person or entity has the ability to exercise effective control or influence over the management or operations of the subsidiary to an extent equal to or greater than that of the bank or an operating subsidiary thereof; (B) The parent bank owns and controls more than 50 percent of the voting (or similar type of controlling) interest of the operating subsidiary, or the parent bank otherwise controls the operating subsidiary and no other party controls a percentage of the voting (or similar type of controlling) interest of the operating subsidiary greater than the bank's interest; and (C) The operating subsidiary is consolidated with the bank under GAAP. (ii) However, the following entities are not operating subsidiaries subject to this section: (A) A subsidiary in which the bank's investment is made pursuant to specific authorization in a statute or OCC regulation ( e.g., et seq., (B) A subsidiary in which the bank has acquired, in good faith, shares through foreclosure on collateral, by way of compromise of a doubtful claim, or to avoid a loss in connection with a debt previously contracted; and (C) A trust formed for purposes of securitizing assets held by the bank as part of its banking business. (iii) Notwithstanding the requirements of paragraph (e)(2)(i) of this section, (A) A national bank must have reasonable policies and procedures to preserve the limited liability of the bank and its operating subsidiaries; and (B) OCC regulations may not be construed as requiring a national bank and its operating subsidiaries to operate as a single entity. (3) Examination and supervision. (4) Consolidation of figures National banks. e.g., (ii) Federal branches or agencies. (f) Procedures Application required. (ii) The application must explain, as appropriate, how the bank “controls” the enterprise, describing in full detail structural arrangements where control is based on factors other than bank ownership of more than 50 percent of the voting interest of the subsidiary and the ability to control the management and operations of the subsidiary by holding voting interests sufficient to select the number of directors needed to control the subsidiary's board and to select and terminate senior management. In the case of a limited partnership or limited liability company that does not qualify for the notice procedures set forth in paragraph (f)(2) of this section, the bank must provide a statement explaining why it is not eligible. The application also must include a complete description of the bank's investment in the subsidiary, the proposed activities of the subsidiary, the organizational structure and management of the subsidiary, the relations between the bank and the subsidiary, and other information necessary to adequately describe the proposal. To the extent that the application relates to the initial affiliation of the bank with a company engaged in insurance activities, the bank must describe the type of insurance activity in which the company is engaged and has present plans to conduct. The bank must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable. The application must state whether the operating subsidiary will conduct any activity at a location other than the main office or a previously approved branch of the bank. The OCC may require a filer to submit a legal analysis if the proposal is novel, unusually complex, or raises substantial unresolved legal issues. In these cases, the OCC encourages filers to have a prefiling meeting with the OCC. Any bank receiving approval under this paragraph is deemed to have agreed that the subsidiary will conduct the activity in a manner consistent with published OCC guidance. (2) Notice process only for certain qualifying filings. (A) The activity is listed in paragraph (f)(5) of this section or, except as provided in paragraph (f)(2)(ii) of this section, the activity is substantively the same as a previously approved activity and the activity will be conducted in accordance with the same terms and conditions applicable to the previously approved activity; (B) The entity is a corporation, limited liability company, limited partnership, or trust; and (C) The bank or an operating subsidiary thereof: ( 1 ( i ( ii ( iii ( iv ( 2 ( i ( ii ( iii ( 3 (ii) A national bank must file an application under paragraph (f)(1) of this section if a State has or will charter or license the proposed operating subsidiary as a bank, trust company, or savings association. (iii) The written notice must include a complete description of the bank's investment in the subsidiary and of the activity conducted and a representation and undertaking that the activity will be conducted in accordance with OCC policies contained in guidance issued by the OCC regarding the activity. To the extent that the notice relates to the initial affiliation of the bank with a company engaged in insurance activities, the bank must describe the type of insurance activity in which the company is engaged and has present plans to conduct. The bank also must list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable. Any bank receiving approval under this paragraph is deemed to have agreed that the subsidiary will conduct the activity in a manner consistent with published OCC guidance. (3) Exceptions to rules of general applicability. (4) OCC review and approval. (5) Activities eligible for notice. (i) Holding and managing assets acquired by the parent bank or its operating subsidiaries, including investment assets and property acquired by the bank through foreclosure or otherwise in good faith to compromise a doubtful claim, or in the ordinary course of collecting a debt previously contracted; (ii) Providing services to or for the bank or its affiliates, including accounting, auditing, appraising, advertising and public relations, and financial advice and consulting; (iii) Making loans or other extensions of credit, and selling money orders, savings bonds, and travelers checks; (iv) Purchasing, selling, servicing, or warehousing loans or other extensions of credit, or interests therein; (v) Providing courier services between financial institutions; (vi) Providing management consulting, operational advice, and services for other financial institutions; (vii) Providing check guaranty, verification and payment services; (viii) Providing data processing, data warehousing and data transmission products, services, and related activities and facilities, including associated equipment and technology, for the bank or its affiliates; (ix) Acting as investment adviser (including an adviser with investment discretion) or financial adviser or counselor to governmental entities or instrumentalities, businesses, or individuals, including advising registered investment companies and mortgage or real estate investment trusts, furnishing economic forecasts or other economic information, providing investment advice related to futures and options on futures, and providing consumer financial counseling; (x) Providing tax planning and preparation services; (xi) Providing financial and transactional advice and assistance, including advice and assistance for customers in structuring, arranging, and executing mergers and acquisitions, divestitures, joint ventures, leveraged buyouts, swaps, foreign exchange, derivative transactions, coin and bullion, and capital restructurings; (xii) Underwriting and reinsuring credit related insurance to the extent permitted under section 302 of the Gramm-Leach-Bliley Act (15 U.S.C. 6712); (xiii) Leasing of personal property and acting as an agent or adviser in leases for others; (xiv) Providing securities brokerage or acting as a futures commission merchant, and providing related credit and other related services; (xv) Underwriting and dealing, including making a market, in bank permissible securities and purchasing and selling as principal, asset backed obligations; (xvi) Acting as an insurance agent or broker, including title insurance to the extent permitted under section 303 of the Gramm-Leach-Bliley Act (15 U.S.C. 6713); (xvii) Reinsuring mortgage insurance on loans originated, purchased, or serviced by the bank, its subsidiaries, or its affiliates, provided that if the subsidiary enters into a quota share agreement, the subsidiary assumes less than 50 percent of the aggregate insured risk covered by the quota share agreement. A “quota share agreement” is an agreement under which the reinsurer is liable to the primary insurance underwriter for an agreed upon percentage of every claim arising out of the covered book of business ceded by the primary insurance underwriter to the reinsurer; (xviii) Acting as a finder pursuant to 12 CFR 7.1002 to the extent permitted by published OCC precedent for national banks; 2 2 See, e.g., www.occ.gov. (xix) Offering correspondent services to the extent permitted by published OCC precedent for national banks; (xx) Acting as agent or broker in the sale of fixed or variable annuities; (xxi) Offering debt cancellation or debt suspension agreements; (xxii) Providing real estate settlement, closing, escrow, and related services; and real estate appraisal services for the subsidiary, parent bank, or other financial institutions; (xxiii) Acting as a transfer or fiscal agent; (xxiv) Acting as a digital certification authority to the extent permitted by published OCC precedent for national banks, subject to the terms and conditions contained in that precedent; (xxv) Providing or selling public transportation tickets, event and attraction tickets, gift certificates, prepaid phone cards, promotional and advertising material, postage stamps, and Electronic Benefits Transfer (EBT) script, and similar media, to the extent permitted by published OCC precedent for national banks, subject to the terms and conditions contained in that precedent; (xxvi) Providing data processing, and data transmission services, facilities (including equipment, technology, and personnel), databases, advice and access to such services, facilities, databases and advice, for the parent bank and for others, pursuant to 12 CFR 7.5006 to the extent permitted by published OCC precedent for national banks; (xxvii) Providing bill presentment, billing, collection, and claims-processing services; (xxviii) Providing safekeeping for personal information or valuable confidential trade or business information, such as encryption keys, to the extent permitted by published OCC precedent for national banks; (xxix) Providing payroll processing; (xxx) Providing branch management services; (xxxi) Providing merchant processing services except when the activity involves the use of third parties to solicit or underwrite merchants; and (xxxii) Performing administrative tasks involved in benefits administration. (6) No application or notice required. (i) Activities of the new subsidiary are limited to those activities previously reported by the bank in connection with the establishment or acquisition of a prior operating subsidiary; (ii) Activities in which the new subsidiary will engage continue to be legally permissible for the subsidiary; (iii) Activities of the new subsidiary will be conducted in accordance with any conditions imposed by the OCC in approving the conduct of these activities for any prior operating subsidiary of the bank; and (iv) The standards set forth in paragraphs (f)(2)(i)(B) and (C) of this section are satisfied. (7) Fiduciary powers. (ii) Unless the subsidiary is a registered investment adviser, if an operating subsidiary proposes to exercise investment discretion on behalf of customers or provide investment advice for a fee, the national bank must have prior OCC approval to exercise fiduciary powers pursuant to § 5.26 and 12 CFR part 9. (8) Expiration of approval. (g) Grandfathered operating subsidiaries. [80 FR 28444, May 18, 2015, as amended at 85 FR 80455, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.35 Bank service company investments by a national bank or Federal savings association. (a) Authority. (b) Licensing requirements. (c) Scope. (d) Definitions Bank service company et seq., (2) Limited liability company (3) Depository institution (4) Insured depository institution, (5) Invest (6) Principal investor (e) Standards and requirements. (f) Procedures OCC notice and approval required. (2) Expedited review for certain activities. (ii) A notice is eligible for expedited review if all of the following requirements are met: (A) The national bank or Federal savings association is a covered community bank or covered community savings association or is both well capitalized and well managed; and (B) The bank service company engages only in activities that are permissible for the bank service company under 12 U.S.C. 1864 and that are listed in § 5.34(f)(5) or § 5.38(f)(5), as applicable. (3) Investments requiring no approval or notice. (4) Federal Reserve approval. (5) Exceptions to rules of general applicability. (g) Required information. (1) The name and location of the bank service company; (2) A complete description of the activities the bank service company will conduct and a representation and undertaking that the activities will be conducted in accordance with OCC guidance. To the extent the notice relates to the initial affiliation of the national bank or Federal savings association with a company engaged in insurance activities, the national bank or Federal savings association should describe the type of insurance activity that the company is engaged in and has present plans to conduct. The national bank or Federal savings association also must list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable; (3) A complete description of the national bank's or Federal savings association's investment in the bank service company and information demonstrating that the national bank or Federal savings association will comply with the investment limitations of paragraph (i) of this section; and (4) Information demonstrating that the bank service company will perform only those services that each insured depository institution shareholder or member is authorized to perform under applicable Federal or State law and will perform such services only at locations in a State in which each such shareholder or member is authorized to perform such services unless performing services that are authorized by the Federal Reserve Board under the authority of 12 U.S.C. 1865(b). (h) Examination and supervision. (i) Investment limitations. [80 FR 28448, May 18, 2015, as amended at 85 FR 80458, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.36 Other equity investments by a national bank. (a) Authority. et seq., et seq (b) Scope. (c) Definitions. (1) Enterprise (2) Non-controlling investment non-controlling investment (d) Procedure. (i) An agricultural credit corporation; (ii) A savings association eligible to be acquired under section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823); and (iii) Any other equity investment that may be authorized by statute after February 12, 1990, if not covered by other applicable OCC regulation. (2) The written notice required by paragraph (d)(1) of this section must include a description, and the amount, of the bank's investment. (3) The OCC reserves the right to require additional information as necessary. (e) Non-controlling investments; notice procedure. (1) Describe the structure of the investment and the activity or activities conducted by the enterprise in which the bank is investing. To the extent the notice relates to the initial affiliation of the bank with a company engaged in insurance activities, the bank should describe the type of insurance activity that the company is engaged in and has present plans to conduct. The bank must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable; (2) State: (i) Which paragraphs of § 5.34(f)(5) describe the activity; or (ii) If the activity is substantively the same as a previously approved activity: (A) How the activity is substantively the same as a previously approved activity; (B) The citation to the applicable precedent; and (C) That the activity will be conducted in accordance with the same terms and conditions applicable to the previously approved activity; (3) Certify that the bank is a covered community bank or is both well capitalized and well managed at the time of the investment; (4) Describe how the bank has the ability to prevent the enterprise from engaging in activities that are not set forth in § 5.34(f)(5) or not contained in published OCC precedent for previously approved activities, or how the bank otherwise has the ability to withdraw its investment; (5) Describe how the investment is convenient and useful to the bank in carrying out its business and not a mere passive investment unrelated to the bank's banking business; (6) Certify that the bank's loss exposure is limited as a legal matter and that the bank does not have unlimited liability for the obligations of the enterprise; and (7) Certify that the enterprise in which the bank is investing agrees to be subject to OCC supervision and examination, subject to the limitations and requirements of section 45 of the Federal Deposit Insurance Act (12 U.S.C. 1831v) and section 115 of the Gramm-Leach-Bliley Act (12 U.S.C. 1820a). (f) Non-controlling investment; application procedure In general. (2) Expedited review. (i) The national bank makes the representation required by paragraph (e)(2) and the certification required by paragraph (e)(3) of this section; (ii) The book value of the national bank's non-controlling investment for which the application is being submitted is no more than 1% of the bank's capital and surplus; (iii) No more than 50% of the enterprise is owned or controlled by banks or savings associations subject to examination by an appropriate Federal banking agency or credit unions insured by the National Credit Union Association; and (iv) The OCC has not notified the national bank that the application has been removed from expedited review, or the expedited review process is extended, under § 5.13(a)(2). (g) Non-controlling investment; no application or notice required. (1) Activities of the enterprise are limited to those activities previously reported by the bank in connection with the making or acquiring of a non-controlling investment; (2) Activities of the enterprise continue to be legally permissible for a national bank; (3) The bank's non-controlling investment will be made in accordance with any conditions imposed by the OCC in approving any prior non-controlling investment in an enterprise conducting these same activities; and (4) The bank is able to make the representations and certifications specified in paragraphs (e)(3) through (e)(7) of this section. (h) Non-controlling investments in entities holding assets in satisfaction of debts previously contracted. (1) Notice required. (2) No notice or application required. (i) Non-controlling investments by Federal branches. (j) Exceptions to rules of general applicability. [61 FR 60363, Nov. 27, 1996, as amended at 65 FR 12913, Mar. 10, 2000; 65 FR 41560, July 6, 2000; 68 FR 70698, Dec. 19, 2003; 73 FR 22239, Apr. 24, 2008; 79 FR 11310, Feb. 28, 2014; 80 FR 28449, May 18, 2015; 85 FR 80458, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.37 Investment in national bank or Federal savings association premises. (a) Authority. (b) Scope. (c) Definitions. (1) Banking premises (i) Premises that are owned and occupied (or to be occupied, if under construction) by a national bank or Federal savings association, its respective branches, or its consolidated subsidiaries; (ii) Capitalized leases and leasehold improvements, vaults, and fixed machinery and equipment; (iii) Remodeling costs to existing premises; (iv) Real estate acquired and intended, in good faith, for use in future expansion; or (v) Parking facilities that are used by customers or employees of the national bank or Federal savings association. (2) Capital stock (d) Procedure Premises application When required. e.g., (ii) Contents of premises application. (A) A description of the national bank's or Federal savings association's present investment in banking premises; (B) The investment in banking premises that the national bank or Federal savings association intends to make, and the business reason for making the investment; and (C) The amount by which the national bank's or Federal savings association's aggregate investment will exceed the amount of the national bank's or Federal stock savings association's capital stock, or, in the case of a Federal mutual savings association, the amount of retained earnings. (2) Approval of premises application. (3) Premises notice process General rule. (ii) Exception. (4) Service corporation. (5) Exceptions to rules of general applicability. [80 FR 28449, May 18, 2015, as amended at 84 FR 4240, Feb. 14, 2019; 84 FR 61794, Nov. 13, 2019; 84 FR 69297, Dec. 18, 2019; 85 FR 80459, Dec. 11, 2020] § 5.38 Operating subsidiaries of a Federal savings association. (a) Authority. (b) Licensing requirements. (c) Scope. (d) [Reserved] (e) Standards and requirements Authorized activities. (ii) In addition to OCC authorization, before it begins business an operating subsidiary also must comply with other laws applicable to it and its proposed business, including applicable licensing or registration requirements, if any, such as registration requirements under securities laws. (2) Qualifying subsidiaries. (A) The savings association has the ability to control the management and operations of the subsidiary, and no other person or entity has the ability to exercise effective control or influence over the management or operations of the subsidiary to an extent equal to or greater than that of the savings association or an operating subsidiary thereof; (B) The parent savings association owns and controls more than 50 percent of the voting (or similar type of controlling) interest of the operating subsidiary, or the parent savings association otherwise controls the operating subsidiary and no other party controls a percentage of the voting (or similar type of controlling) interest of the operating subsidiary greater than the savings association's interest; and (C) The operating subsidiary is consolidated with the savings association under GAAP. (ii) Subject to the requirements in this section, a Federal savings association may hold another insured depository institution as an operating subsidiary. (iii) However, the following entities are not operating subsidiaries subject to this section: (A) A subsidiary in which the savings association's investment is made pursuant to specific authorization in a statute or OCC regulation ( e.g., et seq. (B) A subsidiary in which the savings association has acquired, in good faith, shares through foreclosure on collateral, by way of compromise of a doubtful claim, or to avoid a loss in connection with a debt previously contracted; and (C) A trust formed for purpose of securitizing assets held by the savings association as part of its business. (iv) Notwithstanding the requirements of paragraph (e)(2)(i) of this section: (A) A Federal savings association must have reasonable policies and procedures to preserve the limited liability of the savings association and its operating subsidiaries; and (B) OCC regulations may not be construed as requiring a Federal savings association and its operating subsidiaries to operate as a single entity. (3) Examination and supervision. (4) Consolidation of figures. e.g., (ii) Consolidation for purposes of calculating portfolio assets and qualified thrift investments is subject to 12 U.S.C. 1467a(m)(5). (f) Procedures Application required. (ii) The application must explain, as appropriate, how the savings association “controls” the enterprise, describing in full detail structural arrangements where control is based on factors other than savings association ownership of more than 50 percent of the voting interest of the subsidiary and the ability to control the management and operations of the subsidiary by holding voting interests sufficient to select the number of directors needed to control the subsidiary's board and to select and terminate senior management. In the case of a limited partnership or limited liability company that does not qualify for the expedited review procedure set forth in paragraph (f)(2) of this section, the savings association must provide a statement explaining why it is not eligible. The application also must include a complete description of the savings association's investment in the subsidiary, the proposed activities of the subsidiary, the organizational structure and management of the subsidiary, the relations between the savings association and the subsidiary, and other information necessary to adequately describe the proposal. To the extent that the application relates to the initial affiliation of the savings association with a company engaged in insurance activities, the savings association must describe the type of insurance activity in which the company is engaged and has present plans to conduct. The savings association must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable. The application must state whether the operating subsidiary will conduct any activity at a location other than the home office or a previously approved branch of the savings association. The OCC may require a filer to submit a legal analysis if the proposal is novel, unusually complex, or raises substantial unresolved legal issues. In these cases, the OCC encourages filers to have a prefiling meeting with the OCC. Any savings association receiving approval under this paragraph is deemed to have agreed that the subsidiary will conduct the activity in a manner consistent with published OCC guidance. (2) Expedited review. (ii) An application is eligible for expedited review if all of the following requirements are met: (A) The savings association is a covered community savings association or is both well capitalized and well managed; (B) The activity is listed in paragraph (f)(5) this section or is substantively the same as a previously approved activity and the activity will be conducted in accordance with the same terms and conditions applicable to the previously approved activity; (C) The entity is a corporation, limited liability company, limited partnership or trust; and (D) The savings association or an operating subsidiary thereof: ( 1 ( i ( ii ( iii ( iv ( 2 ( i ( ii ( iii ( 3 (3) Exceptions to rules of general applicability. (4) OCC review and approval. (5) Activities eligible for expedited review. (i) Holding and managing assets acquired by the parent savings association or its operating subsidiaries, including investment assets and property acquired by the savings association through foreclosure or otherwise in good faith to compromise a doubtful claim, or in the ordinary course of collecting a debt previously contracted; (ii) Providing services to or for the savings association or its affiliates, including accounting, auditing, appraising, advertising and public relations, and financial advice and consulting; (iii) Making loans or other extensions of credit, and selling money orders and travelers checks; (iv) Purchasing, selling, servicing, or warehousing loans or other extensions of credit, or interests therein; (v) Providing management consulting, operational advice, and services for other financial institutions; (vi) Providing check payment services; (vii) Acting as investment adviser (including an adviser with investment discretion) or financial adviser or counselor to governmental entities or instrumentalities, businesses, or individuals, including advising registered investment companies and mortgage or real estate investment trusts; (viii) Providing financial and transactional advice and assistance, including advice and assistance for customers in structuring, arranging, and executing mergers and acquisitions, divestitures, joint ventures, leveraged buyouts, swaps, foreign exchange, derivative transactions, coin and bullion, and capital restructurings; (ix) Underwriting and reinsuring credit life and disability insurance; (x) Leasing of personal property; (xi) Providing securities brokerage; (xii) Underwriting and dealing, including making a market, in savings association permissible securities and purchasing and selling as principal, asset backed obligations; (xiii) Acting as an insurance agent or broker for credit life, disability, and unemployment insurance; single property interest insurance; and title insurance; (xiv) Offering correspondent services to the extent permitted by published OCC precedent for Federal savings associations; (xv) Acting as agent or broker in the sale of fixed annuities; (xvi) Offering debt cancellation or debt suspension agreements; (xvii) Providing escrow services; (xviii) Acting as a transfer agent; and (xix) Providing or selling postage stamps. (6) Redesignation. (7) Fiduciary powers. (ii) Unless the subsidiary is a registered investment adviser, if an operating subsidiary proposes to exercise investment discretion on behalf of customers or provide investment advice for a fee, the Federal savings association must have prior OCC approval to exercise fiduciary powers pursuant to § 5.26 (or a predecessor provision) and 12 CFR part 150. (8) Expiration of approval. (g) Grandfathered operating subsidiaries. (h) Issuances of securities by operating subsidiaries. [80 FR 28450, May 18, 2015, as amended at 85 FR 80459, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.39 Financial subsidiaries of a national bank. (a) Authority. (b) Approval requirements. (c) Scope. (d) Definitions. (1) Affiliate (2) Company (3) Control (4) Eligible debt (i) Not supported by any form of credit enhancement, including a guaranty or standby letter of credit; and (ii) Not held in whole or in any significant part by any affiliate, officer, director, principal shareholder, or employee of the bank or any other person acting on behalf of or with funds from the bank or an affiliate of the bank. (5) Financial subsidiary (i) Engages solely in activities that national banks may engage in directly and that are conducted subject to the same terms and conditions that govern the conduct of these activities by national banks; or (ii) A national bank is specifically authorized to control by the express terms of a Federal statute (other than section 5136A of the Revised Statutes), and not by implication or interpretation, such as by section 25 of the Federal Reserve Act (12 U.S.C. 601-604a), section 25A of the Federal Reserve Act (12 U.S.C. 611-631), or the Bank Service Company Act (12 U.S.C. 1861 et seq. (6) Insured depository institution (7) Long term debt (8) Subsidiary (9) Tangible equity (e) Authorized activities. (1) Activities that are financial in nature and activities incidental to a financial activity, authorized pursuant to 5136A(a)(2)(A)(i) of the Revised Statutes (12 U.S.C. 24a(a)(2)(A)(i)) (to the extent not otherwise permitted under paragraph (e)(2) of this section), including: (i) Lending, exchanging, transferring, investing for others, or safeguarding money or securities; (ii) Engaging as agent or broker in any State for purposes of insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability, death, defects in title, or providing annuities as agent or broker; (iii) Providing financial, investment, or economic advisory services, including advising an investment company as defined in section 3 of the Investment Company Act (15 U.S.C. 80a-3); (iv) Issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly; (v) Underwriting, dealing in, or making a market in securities; (vi) Engaging in any activity that the Board of Governors of the Federal Reserve System has determined, by order or regulation in effect on November 12, 1999, to be so closely related to banking or managing or controlling banks as to be a proper incident thereto (subject to the same terms and conditions contained in the order or regulation, unless the order or regulation is modified by the Board of Governors of the Federal Reserve System); (vii) Engaging, in the United States, in any activity that a bank holding company may engage in outside the United States and the Board of Governors of the Federal Reserve System has determined, under regulations prescribed or interpretations issued pursuant to section 4(c)(13) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)(13)) as in effect on November 11, 1999, to be usual in connection with the transaction of banking or other financial operations abroad; and (viii) Activities that the Secretary of the Treasury in consultation with the Board of Governors of the Federal Reserve System, as provided in section 5136A of the Revised Statutes, determines to be financial in nature or incidental to a financial activity; and (2) Activities that may be conducted by an operating subsidiary pursuant to § 5.34. (f) Impermissible activities. (1) Insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability or death, or defects in title (except to the extent permitted under sections 302 or 303(c) of the Gramm-Leach-Bliley Act, (15 U.S.C. 6712 or 15 U.S.C. 6713)) or providing or issuing annuities the income of which is subject to tax treatment under section 72 of the Internal Revenue Code (26 U.S.C. 72); (2) Real estate development or real estate investment, unless otherwise expressly authorized by law; and (3) Activities authorized for bank holding companies by section 4(k)(4)(H) or (I) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H) or (I)), except activities authorized under section 4(k)(4)(H) that may be permitted in accordance with section 122 of the Gramm-Leach-Bliley Act (12 U.S.C. 1843 note). (g) Qualifications. (1) The national bank and each depository institution affiliate of the national bank are well capitalized and well managed; (2) The aggregate consolidated total assets of all financial subsidiaries of the national bank do not exceed the lesser of 45 percent of the consolidated total assets of the parent bank or $50 billion (or such greater amount as is determined according to an indexing mechanism jointly established by regulation by the Secretary of the Treasury and the Board of Governors of the Federal Reserve System); and (3) If the national bank is one of the 100 largest insured banks, determined on the basis of the bank's consolidated total assets at the end of the calendar year, the bank has not fewer than one issue of outstanding debt that meets such standards of creditworthiness or other criteria as the Secretary of the Treasury and the Federal Reserve Board may jointly establish pursuant to Section 5136A of title LXII of the Revised Statutes (12 U.S.C. 24a). (4) Paragraph (g)(3) of this section does not apply if the financial subsidiary is engaged solely in activities in an agency capacity. (h) Safeguards. (1) For purposes of determining regulatory capital the national bank may not consolidate the assets and liabilities of a financial subsidiary with those of the bank and must deduct the aggregate amount of its outstanding equity investment, including retained earnings, in its financial subsidiaries from regulatory capital as provided by § 3.22(a)(7) of this chapter; (2) Any published financial statement of the national bank must, in addition to providing information prepared in accordance withGAAP, separately present financial information for the bank in the manner provided in paragraph (h)(1) of this section; (3) The national bank must have reasonable policies and procedures to preserve the separate corporate identity and limited liability of the bank and the financial subsidiaries of the bank; (4) The national bank must have procedures for identifying and managing financial and operational risks within the bank and the financial subsidiary that adequately protect the national bank from such risks; (5) Except for a subsidiary of a bank that is considered a financial subsidiary under paragraph (d)(5) of this section solely because the subsidiary engages in the sale of insurance as agent or broker in a manner that is not permitted for national banks, sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 371c and 371c-1), as implemented by Regulation W, 12 CFR part 223, apply to transactions involving a financial subsidiary in the following manner: (i) A financial subsidiary is deemed to be an affiliate of the bank and is not deemed to be a subsidiary of the bank; (ii) [Reserved] (iii) A bank's purchase of or investment in a security issued by a financial subsidiary of the bank must be valued at the greater of: (A) The total amount of consideration given (including liabilities assumed) by the bank, reduced to reflect amortization of the security to the extent consistent with GAAP, or (B) The carrying value of the security (adjusted so as not to reflect the bank's pro rata (iv) Any purchase of, or investment in, the securities of a financial subsidiary of a bank by an affiliate of the bank will be considered to be a purchase of or investment in such securities by the bank; (v) Any extension of credit to a financial subsidiary of a bank by an affiliate of the bank is treated as an extension of credit by the bank to the financial subsidiary if the extension of credit is treated as capital of the financial subsidiary under any Federal or State law, regulation, or interpretation applicable to the subsidiary; and (vi) Any other extension of credit by an affiliate of a bank to a financial subsidiary of the bank may be considered an extension of credit by the bank to the financial subsidiary if the Board of Governors of the Federal Reserve System determines that such treatment is necessary or appropriate to prevent evasions of the Federal Reserve Act and the Gramm-Leach-Bliley Act. (6) A financial subsidiary is deemed a subsidiary of a bank holding company and not a subsidiary of the bank for purposes of the anti-tying prohibitions set forth in 12 U.S.C. 1971 et seq. (i) Procedures to engage in activities through a financial subsidiary. (1) Certification with subsequent application. (ii) Thereafter, at such time as the bank seeks OCC approval to acquire control of, or hold an interest in, a new financial subsidiary, or commence a new activity authorized under section 5136A(a)(2)(A)(i) of the Revised Statutes (12 U.S.C. 24a(a)(2)(A)(i)) in an existing subsidiary, the bank may file an application with the appropriate OCC licensing office at the time of acquiring control of, or holding an interest in, a financial subsidiary, or commencing such activity in an existing subsidiary. The application must be labeled “Financial Subsidiary Application” and must: (A) State that the bank's Certification remains valid; (B) Describe the activity or activities conducted by the financial subsidiary. To the extent the application relates to the initial affiliation of the bank with a company engaged in insurance activities, the bank should describe the type of insurance activity that the company is engaged in and has present plans to conduct. The bank must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable; (C) Cite the specific authority permitting the activity to be conducted by the financial subsidiary. (Where the authority relied on is an agency order or interpretation under section 4(c)(8) or 4(c)(13), respectively, of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)(8) or (c)(13)), a copy of the order or interpretation should be attached); (D) Certify that the bank will be well capitalized after making adjustments required by paragraph (h)(1) of this section; (E) Demonstrate the aggregate consolidated total assets of all financial subsidiaries of the national bank do not exceed the lesser of 45 percent of the bank's consolidated total assets or $50 billion (or the increased level established by the indexing mechanism); and (F) If applicable, certify that the bank meets the eligible debt requirement in paragraph (g)(3) of this section. (2) Combined certification and application. (i) List the bank's depository institution affiliates and certify that the bank and each depository institution affiliate of the bank is well capitalized and well managed; (ii) Describe the activity or activities to be conducted in the financial subsidiary. To the extent the application relates to the initial affiliation of the bank with a company engaged in insurance activities, the bank should describe the type of insurance activity that the company is engaged in and has present plans to conduct. The bank must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable; (iii) Cite the specific authority permitting the activity to be conducted by the financial subsidiary. (Where the authority relied on is an agency order or interpretation under section 4(c)(8) or 4(c)(13), respectively, of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)(8) or (c)(13)), a copy of the order or interpretation should be attached); (iv) Certify that the bank will remain well capitalized after making the adjustments required by paragraph (h)(1) of this section; (v) Demonstrate the aggregate consolidated total assets of all financial subsidiaries of the national bank do not exceed the lesser of 45% of the bank's consolidated total assets or $50 billion (or the increased level established by the indexing mechanism); and (vi) If applicable, certify that the bank meets the eligible debt requirement in paragraph (g)(3) of this section. (3) Approval. (4) Exceptions to rules of general applicability. (5) Community Reinvestment Act (CRA). (j) Failure to continue to meet certain qualification requirements Qualifications and safeguards. (i) The OCC will give notice to the national bank and, in the case of an affiliated depository institution to that depository institution's appropriate Federal banking agency, promptly upon determining that the national bank, or, as applicable, its affiliated depository institution, does not continue to meet the requirements in paragraph (g)(1) or (2) of this section or the safeguards in paragraph (h)(1), (2), (3), or (4) of this section. The bank is deemed to have received such notice three business days after mailing of the letter by the OCC; (ii) Not later than 45 days after receipt of the notice under paragraph (j)(1)(i) of this section, or any additional time as the OCC may permit, the national bank must execute an agreement with the OCC to comply with the requirements in paragraphs (g)(1) and (2) and (h)(1), (2), (3), and (4) of this section; (iii) The OCC may impose limitations on the conduct or activities of the national bank or any subsidiary of the national bank as the OCC determines appropriate under the circumstances and consistent with the purposes of section 5136A of the Revised Statutes; and (iv) The OCC may require a national bank to divest control of a financial subsidiary if the national bank does not correct the conditions giving rise to the notice within 180 days after receipt of the notice provided under paragraph (j)(1)(i) of this section. (2) Eligible debt requirement. (k) Examination and supervision. [65 FR 12914, Mar. 10, 2000, as amended at 73 FR 22240, Apr. 24, 2008; 77 FR 35258, June 13, 2012; 78 FR 62275, Oct. 11, 2013; 79 FR 11310, Feb. 28, 2014; 80 FR 28452, May 18, 2015; 85 FR 80461, Dec. 11, 2020] Subpart D—Other Changes in Activities and Operations § 5.40 Change in location of a main office of a national bank or home office of a Federal savings association. (a) Authority. (b) Scope. 3 3 (c) Licensing requirements and procedures Main office or home office relocation to an authorized branch location within city, town, or village limits. (2) To any other location National banks. (ii) Federal savings associations. (3) Establishment of a branch at site of former main office or home office. (4) Expedited review. (5) Exceptions to rules of general applicability. (ii) The comment period on any application filed under paragraph (c)(2) of this section to engage in a short-distance relocation of a main office or home office is 15 days. (d) Expiration of approval. [80 FR 28452, May 18, 2015, as amended at 85 FR 80462, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.42 Corporate title of a national bank or Federal savings association. (a) Authority. et. seq. (b) Scope. (c) Standards. (2) For a national bank, the new title must include the word “national.” (d) Procedures Notice process. (2) Amendment to articles of association. (3) Amendment to charter. (4) Exceptions to rules of general applicability. [80 FR 28453, May 18, 2015, as amended at 85 FR 80462, Dec. 11, 2020] § 5.43 National bank director residency and citizenship waivers. (a) Authority. (b) Scope. (c) Application Procedures Residency. (2) Citizenship. (3) Biographical and Financial Reports. www.occ.gov. (ii) The OCC may require additional information about any subject of a citizenship waiver application, including legible fingerprints, if appropriate. The OCC may waive any of the information requirements of paragraph (c)(3)(i) if the OCC determines that doing so is in the public interest. (4) Exceptions to rules of general applicability. (d) Revocation of waiver Procedure. (2) Effective date. (i) If the director or national bank, or both, appeals pursuant to paragraph (e) of this section, upon the director's receipt of the decision of the Comptroller, an authorized delegate, or the appellate official, to uphold the initial decision to revoke the residency or citizenship waiver; or (ii) If neither the director nor national bank appeals pursuant to paragraph (e) of this section, upon the expiration of the period to appeal. (e) Appeal. (2) The Comptroller, or an authorized delegate, may designate an appellate official who was not previously involved in the decision leading to the appeal at issue. The Comptroller, an authorized delegate, or the appellate official considers all information submitted with the original application for the residency or citizenship waiver, the material before the OCC official who made the initial decision, and any information submitted by the appellant at the time of appeal. (3) The Comptroller, an authorized delegate, or the appellate official will independently determine whether the reasons given for the initial decision to revoke are contrary to fact or arbitrary and capricious. If they determine either to be the case, the Comptroller, an authorized delegate, or the appellate official may reverse the initial decision to revoke the waiver. (4) Upon completion of the review, the Comptroller, an authorized delegate, or the appellate official will notify the appellant in writing of the decision. If the initial decision is upheld, the decision to revoke the waiver is effective pursuant to paragraph (d)(2)(i) of this section. (f) Prior waivers. [85 FR 80462, Dec. 11, 2020] § 5.45 Increases in permanent capital of a Federal stock savings association. (a) Authority. (b) Licensing requirements. (c) Scope. (d) Exceptions to rules of general applicability. (e) Definitions. (1) Capital plan (2) Capital stock (3) Capital surplus (i) The amount paid in on capital stock in excess of the par or stated value; (ii) Direct capital contributions representing the amounts paid in to the Federal stock savings association other than for capital stock; (iii) The amount transferred from retained net income; and (iv) The amount transferred from retained net income reflecting stock dividends. (4) Permanent capital (5) Retained net income (f) Policy. (1) Consistent with law, regulation, and OCC policy thereunder; (2) Provides an adequate capital structure; and (3) If appropriate, complies with the Federal stock savings association's capital plan. (g) Procedures When prior approval is required. (i) Required to receive OCC approval pursuant to letter, order, directive, written agreement or otherwise; (ii) Selling common or preferred stock for consideration other than cash; or (iii) Receiving a material noncash contribution to capital surplus. (2) Content of application. (i) Describe the type and amount of the proposed change in permanent capital and explain the reason for the change; (ii) In the case of a material noncash contribution to capital, provide a description of the method of valuing the contribution; and (iii) State if the Federal stock savings association is subject to a capital plan with the OCC and how the proposed change would conform to a capital plan or if a capital plan is otherwise required in connection with the proposed change in permanent capital. (3) Expedited review. (4) Notice of increase. (A) The amount, including the par value of the stock, and effective date of the increase; (B) A certification that the funds have been paid in, if applicable; and (C) A statement that the Federal stock savings association has complied with all laws, regulations and conditions imposed by the OCC. (5) Expiration of approval. (h) Offers and sales of stock. (i) Shareholder approval. [80 FR 28453, May 18, 2015, as amended at 82 FR 8104, Jan. 23, 2017; 85 FR 80463, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.46 Changes in permanent capital of a national bank. (a) Authority. (b) Licensing requirements. (c) Scope. (d) Exceptions to rules of general applicability. (e) Definitions. (1) Capital plan (2) Capital stock (3) Capital surplus (i) The amount paid in on capital stock in excess of the par or stated value; (ii) Direct capital contributions representing the amounts paid in to the national bank other than for capital stock; (iii) The amount transferred from undivided profits; and (iv) The amount transferred from undivided profits reflecting stock dividends. (4) Permanent capital (f) Policy. (1) Consistent with law, regulation, and OCC policy thereunder; (2) Provides an adequate capital structure; and (3) If appropriate, complies with the bank's capital plan. (g) Increases in permanent capital Approval Prior approval not required. (ii) Prior approval required. (A) Required to receive OCC approval pursuant to letter, order, directive, written agreement, or otherwise; (B) Selling common or preferred stock for consideration other than cash; or (C) Receiving a material noncash contribution to capital surplus. (2) Preferred stock. (h) Decreases in permanent capital. (i) Procedures Prior approval. (i) Describe the type and amount of the proposed change in permanent capital and explain the reason for the change; (ii) In the case of a reduction in capital, provide a schedule detailing the present and proposed capital structure; (iii) In the case of a material noncash contribution to capital, provide a description of the method of valuing the contribution; and (iv) State if the bank is subject to a capital plan with the OCC and how the proposed change would conform to a capital plan or if a capital plan is otherwise required in connection with the proposed change in permanent capital. (2) Expedited review. (3) Notice of increase. (A) A description of the transaction, unless already provided pursuant to paragraph (i)(1) of this section; (B) The amount, including the par value of the stock, and effective date of the increase; (C) A certification that the funds have been paid in, if applicable; (D) A certified copy of the amendment to the articles of association, if required; and (E) A statement that the bank has complied with all laws, regulations and conditions imposed by the OCC. (ii) After it receives the notice of capital increase, the OCC issues a certification specifying the amount of the increase and the effective date ( i.e., (4) Notice of decrease. (5) Expiration of approval. (6) Exception for accounting adjustments. (ii) Within 30 days after the end of the quarter in which the adjustment occurred, a bank must notify the OCC if the accounting adjustment resulted in an increase or decrease to permanent capital in an amount greater than 5% of the bank's total permanent capital prior to the adjustments; or, if the bank is subject to a letter, order, directive, written agreement, or otherwise related to changes in permanent capital. The notification must include the amount and description of the adjustment, including the applicable provision of GAAP. (j) Offers and sales of stock. (k) Shareholder approval. [80 FR 28454, May 18, 2015, as amended at 82 FR 8104, Jan. 23, 2017; 85 FR 80463, Dec. 11, 2020; 91 FR 10498, Mar. 4, 2026] § 5.47 Subordinated debt issued by a national bank. (a) Authority. (b) Scope. (c) Definitions. Capital plan Original maturity Payment on subordinated debt Subordinated debt document Tier 2 capital (d) Requirements for issuance of subordinated debt. (1) Minimum terms. (i) Have a minimum original maturity of at least five years; (ii) Not be a deposit and not insured by the FDIC; (iii) Be subordinated to the claims of depositors; (iv) Be unsecured, which would include prohibiting the establishment of any legally enforceable fund earmarked for payment of the subordinated debt note through: (A) A sinking fund; or (B) A compensating balance or any other funds or assets subject to a legal right of offset, as defined by applicable State law; (v) Be ineligible as collateral for a loan by the issuing national bank; (vi) Provide that once any scheduled payments of principal begin, all scheduled payments must be made at least annually and the amount repaid in each year may be no less than in the prior year; and (vii) Provide that, where applicable, no payment (including payment pursuant to an acceleration clause, redemption prior to maturity, repurchase, or exercising a call option) may be made without prior OCC approval. (2) Corporate authority. (i) Maintains a certain minimum amount in its capital accounts or other metric, such as minimum capital assets, liquidity, or loan ratios; (ii) Unreasonably restricts a national bank's ability to raise additional capital through the issuance of additional subordinated debt or other regulatory capital instruments; (iii) Provides for default and acceleration of the subordinated debt as the result of a change in control, if such change in control results from the OCC's exercise of its statutory authority to require a national bank to sell stock in that national bank, enter into a merger or consolidation, or be acquired by a bank holding company; (iv) Requires the prior approval of a purchaser or holder of the subordinated debt note in the case of a voluntary merger by a national bank where the resulting institution: (A) Assumes the due and punctual performance of all conditions of the subordinated debt note and agreement; and (B) Is not in default of the various covenants of the subordinated debt; and (v) Provides for default and acceleration of the subordinated debt as the result of a default by a subsidiary (including a limited liability company) of the national bank, unless: (A) There is a separate agreement between the subsidiary and the purchaser of the national bank's subordinated debt note; and (B) Such agreement has been reviewed and approved by the OCC. (3) Disclosure requirements. (A) THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION; and (B) THIS OBLIGATION IS SUBORDINATED TO CLAIMS OF DEPOSITORS AND GENERAL CREDITORS, IS UNSECURED, AND IS INELIGIBLE AS COLLATERAL FOR A LOAN BY [INSERT NAME OF ISSUING NATIONAL BANK]. (ii) A national bank must disclose clearly and accurately in the subordinated debt note: (A) The order and level of subordination, and in addition to being subordinated to the claims of depositors, provide that, at a minimum, the subordinated debt note is subordinate and junior in its right of payment to the obligations of all creditors, including both secured and unsecured or general creditors, except those specifically designated as ranking on a parity with, or subordinated to, the subordinated debt note; (B) A general description of the OCC's regulatory authority with respect to a national bank in danger of insolvency that includes: ( 1 ( 2 ( 3 (C) A description of the OCC's authority under 12 CFR 3.11 to limit distributions, including interest payments on any tier 2 capital instrument if the national bank has full discretion to permanently or temporarily suspend such payments without triggering an event of default, if applicable to the subordinated debt issuance. (D) A statement that the obligation may be fully subordinated to interests held by the U.S. government in the event that the national bank enters into a receivership, insolvency, liquidation, or similar proceeding. (iii) A national bank must comply with the Securities Offering Disclosure Rules in 12 CFR part 16. (e) Additional requirements to qualify as tier 2 capital. (f) Process and procedures Issuance of subordinated debt Approval Eligible bank. ( 1 ( 2 ( 3 (B) Covered community bank. ( 1 ( 2 ( 3 (C) National bank not an eligible bank or covered community bank. (ii) Application to include subordinated debt in tier 2 capital. (2) Prepayment of subordinated debt Subordinated debt not included in tier 2 capital Eligible bank. ( 1 ( 2 ( 3 ( 4 (B) Covered community bank. ( 1 ( 2 ( 3 ( 4 (C) National bank not an eligible bank or covered community bank. (ii) Subordinated debt included in tier 2 capital. (3) Material changes to existing subordinated debt documents. (g) Prior approval procedure Application Issuance of subordinated debt. (A) A description of the terms and amount of the proposed issuance; (B) A statement of whether the national bank is subject to a capital plan or required to file a capital plan with the OCC and, if so, how the proposed change conforms to the capital plan; (C) A copy of the proposed subordinated note and any other subordinated debt documents; and (D) A statement that the subordinated debt issue complies with all applicable laws and regulations. (ii) Prepayment of subordinated debt. (A) A description of the terms and amount of the proposed prepayment; (B) A statement of whether the national bank is subject to a capital plan or required to file a capital plan with the OCC and, if so, how the proposed change conforms to the capital plan; (C) A copy of the subordinated debt note the national bank is proposing to prepay and any other subordinated debt documents; and (D) Either: ( 1 ( 2 (iii) Material changes to existing subordinated debt. (A) A description of all proposed changes; (B) A statement of whether the national bank is subject to a capital plan or required to file a capital plan with the OCC and, if so, how the proposed change conforms to the capital plan; (C) A copy of the revised subordinated debt documents reflecting all proposed changes; and (D) A statement that the proposed changes to the subordinated debt documents complies with all applicable laws and regulations. (iv) Additional information. (2) Approval General. (ii) Prepayment. 4 4 (iii) Tier 2 capital. (iv) Expiration of approval. (h) Application procedure for inclusion in tier 2 capital. (2) The application must include: (i) The terms of the issuance; (ii) The amount or projected amount and date or projected date of receipt of funds; (iii) The interest rate or expected calculation method for the interest rate; (iv) Copies of the final subordinated debt documents; and (v) A statement that the issuance complies with all applicable laws and regulations. (i) Exceptions to rules of general applicability. (j) Subordinated debt issued under the Emergency Capital Investment Program. [79 FR 75421, Dec. 18, 2014, as amended at 80 FR 28455, May 18, 2015; 85 FR 80464, Dec. 11, 2020; 86 FR 15080, Mar. 22, 2021; 91 FR 10498, Mar. 4, 2026] § 5.48 Voluntary liquidation of a national bank or Federal savings association. (a) Authority. (b) Licensing requirements. (c) Exceptions to rules of general applicability. (d) Standards In general. (i) The purpose of the liquidation; (ii) Its impact on the safety and soundness of the national bank or Federal savings association; and (iii) Its impact on the bank's or savings association's depositors, other creditors, and customers. (2) National banks. (3) Federal mutual savings associations. (e) Procedure Preliminary notice of voluntary liquidation. (2) Submission of liquidation plan and nonobjection. (ii) The national bank or Federal savings association must receive the OCC's non-objection to the liquidation plan before beginning the liquidation. (3) Notice upon commencing liquidation In general. (A) File a notice with the appropriate OCC licensing office; and (B) provide notice to depositors, other known creditors, and known claimants of the bank or savings association. (ii) National banks. (iii) Federal savings associations. (4) Report of condition. (5) Report of progress. (6) Final report. (f) Expedited liquidations in connection with acquisitions In general. (2) Procedure. (i) The acquiring depository institution certifies to the OCC that it has purchased all the assets and assumed all the liabilities, including all contingent liabilities, of the national bank or Federal savings association in liquidation; and (ii) The acquiring depository institution and the national bank or Federal savings association in liquidation have published notice that the bank or savings association will dissolve after the purchase and assumption to the acquiror. This notice must be included in the notice and publication for the purchase and assumption required under the Bank Merger Act, 12 U.S.C. 1828(c). [80 FR 28455, May 18, 2015, as amended at 82 FR 8104, Jan. 23, 2017; 85 FR 80465, Dec. 11, 2020] § 5.50 Change in control of a national bank or Federal savings association; reporting of stock loans. (a) Authority. (b) Licensing requirements. (c) Scope In general. (2) Exempt transactions. (i) The acquisition of additional shares of a national bank or Federal savings association by a person who: (A) Has, continuously since March 9, 1979, (or since that institution commenced business, if later) held power to vote 25 percent or more of the voting securities of that bank or Federal savings association; or (B) Under paragraph (f)(2)(ii) of this section, would be presumed to have controlled that bank or Federal savings association continuously since March 9, 1979, if the transaction will not result in that person's direct or indirect ownership or power to vote 25 percent or more of any class of voting securities of the national bank or Federal savings association; or, in other cases, where the OCC determines that the person has controlled the bank or savings association continuously since March 9, 1979; (ii) Unless the OCC otherwise provides in writing, the acquisition of additional shares of a national bank or Federal savings association by a person who has lawfully acquired and maintained continuous control of the bank or Federal savings association under paragraph (f) of this section after complying with the procedures and filing the notice required by this section; (iii) A transaction subject to approval under section 3 of the Bank Holding Company Act, 12 U.S.C. 1842, section 18(c) of Federal Deposit Insurance Act, 12 U.S.C. 1828(c), or section 10 of the Home Owners' Loan Act, 12 U.S.C. 1467a; (iv) Any transaction described in section 2(a)(5) or 3(a) (A) or (B) of the Bank Holding Company Act, 12 U.S.C. 1841(a)(5) and 1842(a) (A) and (B), by a person described in those provisions; (v) A customary one-time proxy solicitation or receipt of pro rata (vi) The acquisition of shares of a foreign bank that has a Federally licensed branch in the United States. This exemption does not extend to the reports and information required under paragraph (i) of this section. (3) Prior notice exemption. (i) The acquisition of control as a result of acquisition of voting shares of a national bank or Federal savings association through testate or intestate succession; (ii) The acquisition of control as a result of acquisition of voting shares of a national bank or Federal savings association as a bona fide gift; (iii) The acquisition of voting shares of a national bank or Federal savings association resulting from a redemption of voting securities; (iv) The acquisition of control of a national bank or Federal savings association as a result of actions by third parties (including the sale of securities) that are not within the control of the acquiror; and (v) The acquisition of control as a result of the acquisition of voting shares of a national bank or Federal savings association in satisfaction of a debt previously contracted in good faith. (A) “Good faith” means that a person must either make, renew, or acquire a loan secured by voting securities of a national bank or Federal savings association in advance of any knowledge of a default or of the substantial likelihood that a default is forthcoming. A person who purchases a previously defaulted loan, or a loan for which there is a substantial likelihood of default, secured by voting securities of a national bank or Federal savings association may not rely on this paragraph (c)(3)(v) to foreclose on that loan, seize or purchase the underlying collateral, and acquire control of the national bank or Federal savings association without complying with the prior notice requirements of this section. (B) To ensure compliance with this section, the acquiror of a defaulted loan secured by a controlling amount of a national bank's or a Federal savings association's voting securities must file a notice prior to the time the loan is acquired unless the acquiror can demonstrate to the satisfaction of the OCC that the voting securities are not the anticipated source of repayment for the loan. (d) Definitions. (1) Acquire (i) An increase in percentage ownership resulting from a redemption, repurchase, reverse stock split or a similar transaction involving other securities of the same class, and (ii) The acquisition of stock by a group of persons and/or companies acting in concert, which is deemed to occur upon formation of such group. (2) Acting in concert (i) Knowing participation in a joint activity or parallel action towards a common goal of acquiring control whether or not pursuant to an express agreement; or (ii) A combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement, or other arrangement, whether written or otherwise. (3) Company (4) Control (5) Controlling shareholder (6) Depository institution means a depository institution as defined in section 3(c)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(1). (7) Federal savings association (8) Immediate family (9) Management official (10) Notice (11) Person (12) Similar organization (i) The transferability and voting of any stock or other indicia of participation in another entity, or (ii) Achievement of a common or shared objective, such as to collectively manage or control another entity. (13) Stock (14) Voting securities (i) Shares of stock, if the shares or interests, by statute, charter, or in any manner, allow the holder to vote for or select directors (or persons exercising similar functions) of the issuing national bank or Federal savings association, or to vote on or to direct the conduct of the operations or other significant policies of the issuing national bank or Federal savings association. However, preferred stock or similar interests are not voting securities if: (A) Any voting rights associated with the shares or interests are limited solely to voting rights customarily provided by statute regarding matters that would significantly affect the rights or preference of the security or other interest. This includes the issuance of additional amounts of classes of senior securities, the modification of the terms of the security or interest, the dissolution of the issuing national bank, or the payment of dividends by the issuing national bank or Federal savings association when preferred dividends are in arrears; (B) The shares or interests are a passive investment or financing device and do not otherwise provide the holder with control over the issuing national bank or Federal savings association; and (C) The shares or interests do not allow the holder by statute, charter, or in any manner, to select or to vote for the selection of directors (or persons exercising similar functions) of the issuing national bank or Federal savings association. (ii) Securities, other instruments, or similar interests that are immediately convertible, at the option of the owner or holder thereof, into voting securities. (e) Policy In general. (2) Acquisitions subject to the Bank Holding Company Act. (ii) Certain transactions, including foreclosures by depository institutions and other institutional lenders, fiduciary acquisitions by depository institutions, and increases of majority holdings by bank holding companies, are described in sections 2(a)(5)(D) and 3(a) (A) and (B) of the Bank Holding Company Act, 12 U.S.C. 1841(a)(5)(D) and 12 U.S.C. 1842(a) (A) and (B), but do not require the Federal Reserve Board's prior approval. For purposes of this section, they are considered subject to section 3 of the Bank Holding Company Act, 12 U.S.C. 1842, and do not require either a prior or subsequent notice to the OCC under this section. (3) Assessing financial condition. (f) Procedures Exceptions to rules of general applicability. (2) Who must file. (ii) The following persons are presumed to be acting in concert for purposes of this section: (A) A company and any controlling shareholder, partner, trustee or management official of such company if both the company and the person own stock in the national bank or Federal savings association; (B) A person and the members of the person's immediate family; (C) Companies under common control; (D) Persons that have made, or propose to make, a joint filing under section 13 or 14 of the Securities Exchange Act of 1934, 15 U.S.C. 78m or 78n, and the rules thereunder promulgated by the Securities and Exchange Commission; (E) A person or company will be presumed to be acting in concert with any trust for which such person or company serves as trustee, except that a tax-qualified employee stock benefit plan as defined in 12 CFR 192.25 is not be presumed to be acting in concert with its trustee or person acting in a similar fiduciary capacity solely for the purposes of determining whether to combine the holdings of a plan and its trustee or fiduciary; and (F) Persons that are parties to any agreement, contract, understanding, relationship, or other arrangement, whether written or otherwise, regarding the acquisition, voting or transfer of control of voting securities of a national bank or Federal savings association, other than through a revocable proxy in connection with a proxy solicitation for the purposes of conducting business at a regular or special meeting of the institution, if the proxy terminates within a reasonable period after the meeting. (iii) The OCC presumes, unless rebutted, that an acquisition or other disposition of voting securities through which any person proposes to acquire ownership of, or the power to vote, 10 percent or more of a class of voting securities of a national bank or Federal savings association is an acquisition by a person of the power to direct the bank's or savings association's management or policies if: (A) The securities to be acquired or voted are subject to the registration requirements of section 12 of the Securities Exchange Act of 1934, 15 U.S.C. 78 l (B) Immediately after the transaction no other person will own or have the power to vote a greater proportion of that class of voting securities. (iv) The OCC will consider a rebuttal of the presumption of control where the person or company intends to have no more than one representative on the board of directors of the national bank or Federal savings association. (v) The presumption of control may not be rebutted if the total equity investment by the person or company in the national bank or Federal savings association, including 15 percent or more of any class of voting securities, equals or exceeds one third of the total equity of the national bank or Federal savings association. (vi) Other transactions resulting in a person's control of less than 25 percent of a class of voting securities of a national bank or Federal savings association are not deemed by the OCC to result in control for purposes of this section. (vii) If two or more persons, not acting in concert, each propose to acquire simultaneously equal percentages of 10 percent or more of a class of a national bank's or Federal savings association's voting securities, and either the acquisitions are of a class of securities subject to the registration requirements of section 12 of the Securities Exchange Act of 1934, 15 U.S.C. 78l, or immediately after the transaction no other shareholder of the national bank or Federal savings association would own or have the power to vote a greater percentage of the class, each of the acquiring persons must either file a notice or rebut the presumption of control. (viii) An acquiring person may seek to rebut a presumption established in paragraph (f)(2)(ii) or (iii) of this section by presenting relevant information in writing to the appropriate OCC licensing office. The OCC will respond in writing to any person that seeks to rebut the presumption of control or the presumption of concerted action. No rebuttal filing is effective unless the OCC indicates in writing that the information submitted has been found to be sufficient to rebut the presumption of control. (3) Filings. i.e., (A) The notice must contain the information required under 12 U.S.C. 1817(j)(6)(A), and the information prescribed in the Interagency Biographical and Financial Report. This form is available at www.occ.gov (B) When the acquiring person is an individual, or group of individuals acting in concert, the requirement to provide personal financial data may be satisfied with a current statement of assets and liabilities and an income summary, together with a statement of any material changes since the date of the statement or summary. However, the OCC may require additional information, if appropriate. (ii) The OCC has 60 days from the date it declares the notice to be technically complete to review the notice. (A) When the OCC declares a notice technically complete, the appropriate OCC licensing office sends a letter of acknowledgment to the filer indicating the technically complete date. (B) As set forth in paragraph (g) of this section, the filer must publish an announcement within 10 days of filing the notice with the OCC. The publication of the announcement triggers a 20-day public comment period. The OCC may waive or shorten the public comment period if an emergency exists. The OCC also may shorten the comment period for other good cause. The OCC may act on a proposed change in control prior to the expiration of the public comment period if the OCC makes a written determination that an emergency exists. (C) A filer must notify the OCC immediately of any material changes in a notice submitted to the OCC, including changes in financial or other conditions that may affect the OCC's decision on the filing. (iii) Within the 60-day period, the OCC may inform the filer that the acquisition has been disapproved, has not been disapproved, or that the OCC will extend the 60-day review period for up to an additional 30 days. The period or the OCC's review of a notice may be further extended not to exceed two additional times for not more than 45 days each time if: (A) The OCC determines that any acquiring party has not furnished all the information required under this part; (B) In the OCC's judgment, any material information submitted is substantially inaccurate; (C) The OCC has been unable to complete an investigation of each acquirer because of any delay caused by, or the inadequate cooperation of, such acquirer; or (D) The OCC determines that additional time is needed to investigate and determine that no acquiring party has a record of failing to comply with the requirements of subchapter II of chapter 53 of title 31 of the United States Code. (4) Conditional actions. (5) Disapproval. (i) The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the United States; (ii) The effect of the proposed acquisition of control in any section of the country may be substantially to lessen competition or to tend to create a monopoly or the proposed acquisition of control would in any other manner be in restraint of trade, and the anticompetitive effects of the proposed acquisition of control are not clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served; (iii) Either the financial condition of any acquiring person or the future prospects of the institution is such as might jeopardize the financial stability of the bank or Federal savings association or prejudice the interests of the depositors of the bank or Federal savings association; (iv) The competence, experience, or integrity of any acquiring person, or of any of the proposed management personnel, indicates that it would not be in the interest of the depositors of the bank or Federal savings association, or in the interest of the public, to permit that person to control the bank or Federal savings association; (v) An acquiring person neglects, fails, or refuses to furnish the OCC all the information it requires; or (vi) The OCC determines that the proposed transaction would result in an adverse effect on the Deposit Insurance Fund. (6) Notification of disapproval Written notice by OCC. (ii) Hearing Request. See (iii) Failure to request a hearing. (g) Disclosure Announcement. (i) In addition to the information required by § 5.8(b), the announcement must include the name of the national bank or Federal savings association named in the notice and the comment period ( i.e., (ii) Notwithstanding any other provisions of this paragraph (g), if the OCC determines in writing that an emergency exists and that the announcement requirements of this paragraph (g) would seriously threaten the safety and soundness of the national bank or Federal savings association to be acquired, including situations where the OCC must act immediately in order to prevent the probable failure of a national bank or Federal savings association, the OCC may waive or shorten the publication requirement. (2) Release of information. (ii) The OCC handles requests for the non-public portion of the notice as requests under the Freedom of Information Act, 5 U.S.C. 552, and other applicable law. (h) Reporting requirement. (i) Reporting of stock loans Requirements. (ii) The foreign bank, or any affiliate thereof, must also file a copy of the report with its appropriate OCC supervisory office if that office is different from the national bank's or Federal savings association's appropriate OCC supervisory office. If the foreign bank, or any affiliate thereof, is not supervised by the OCC, it must file a copy of the report filed with the OCC with its appropriate Federal banking agency. (iii) Any shares of the national bank or Federal savings association held by the foreign bank, or any affiliate thereof, as principal must be included in the calculation of the number of shares in which the foreign bank or any affiliate thereof has a security interest for purposes of paragraph (i)(1)(i) of this section. (2) Definitions. (i) Foreign bank and affiliate (ii) Credit outstanding (iii) Group of persons (A) Are acting together, in concert, or with one another to acquire or control shares of the same insured national bank or Federal savings association, including an acquisition of shares of the same national bank or Federal savings association at approximately the same time under substantially the same terms; or (B) Have made, or propose to make, a joint filing under 15 U.S.C. 78m regarding ownership of the shares of the same depository institution. (3) Exceptions. (i) The person or group of persons referred to in paragraph (i)(1) of this section has disclosed the amount borrowed and the security interest therein to the appropriate OCC licensing office in connection with a notice filed under this section or any other application filed with the appropriate OCC licensing office as a substitute for a notice under this section, such as for a national bank or Federal savings association charter; or (ii) The transaction involves a person or group of persons that has been the owner or owners of record of the stock for a period of one year or more or, if the transaction involves stock issued by a newly chartered bank or Federal savings association, before the bank's or Federal savings association's opening. (4) Report requirements. (ii) The foreign bank and all affiliates thereof must file the consolidated report in writing within 30 days of the date on which the foreign bank or affiliate thereof first believes that the security for any outstanding credit consists of 25 percent or more of any class of voting securities of a national bank or Federal savings association. (5) Other reporting requirements. [80 FR 28456, May 18, 2015, as amended at 82 FR 8104, Jan. 23, 2017; 85 FR 80465, Dec. 11, 2020] § 5.51 Changes in directors and senior executive officers of a national bank or Federal savings association. (a) Authority. (b) Scope. (c) Definitions Director (i) A director of a foreign bank that operates a Federal branch; and (ii) An advisory director who does not have the authority to vote on matters before the board of directors or any committee of the board of directors and provides solely general policy advice to the board of directors or any committee. (2) Federal savings association (3) National bank (4) Senior executive officer (5) Technically complete notice (6) Technically complete notice date (7) Troubled condition (i) Has a composite rating of 4 or 5 under the Uniform Financial Institutions Rating System (CAMELS); (ii) Is subject to a cease and desist order, a consent order, or a formal written agreement, that requires action to improve the financial condition of the national bank or Federal savings association unless otherwise informed in writing by the OCC; or (iii) Is informed in writing by the OCC that, based on information pertaining to such national bank or Federal savings association, it has been designated in “troubled condition” for purposes of this section. (d) Prior notice. (1) The national bank or Federal savings association is not in compliance with minimum capital requirements, as prescribed in 12 CFR part 3 or is otherwise in troubled condition; or (2) The OCC determines, in writing, in connection with the review by the agency of the plan required under section 38 of the Federal Deposit Insurance Act (12 U.S.C. 1831o), or otherwise, that such prior notice is appropriate. (e) Procedures Filing notice. (2) Content of notice. (A) The information required under 12 U.S.C. 1817(j)(6)(A), and the information prescribed in the Interagency Notice of Change in Director or Senior Executive Officer, the biographical and certification portions of the Interagency Biographical and Financial Report (“IBFR”), and unless otherwise determined by the OCC in writing, the financial portion of the IBFR. These forms are available from the OCC; (B) Legible fingerprints of the individual, except that fingerprints are not required for any individual who, within the three years immediately preceding the initial submission date of the notice currently under review, has been the subject of a notice filed with the OCC or the OTS pursuant to 12 U.S.C. 1831i, or this section, and has previously submitted fingerprints; and (C) Such other information required by the OCC. (ii) Modification of content requirements. (3) Requests for additional information. (ii) If the national bank or Federal savings association cannot provide the information requested by the OCC within the time specified in paragraph (e)(3)(i) of this section, the national bank or Federal savings association may request in writing that the OCC suspend processing of the notice. The OCC will advise the national bank or Federal savings association in writing whether the suspension request is granted and, if granted, the length of the suspension. (iii) If the national bank or Federal savings association fails to provide the requested information within the time specified in paragraphs (e)(3)(i) or (ii) of this section, the OCC may deem the filing abandoned under § 5.13(c) or may review the notice based on the information provided. (4) Notice of disapproval. (5) Notice of intent not to disapprove. (6) Waiver of prior notice Waiver request. (B) The OCC may grant the waiver if it issues a written finding that: ( 1 ( 2 ( 3 (C) The OCC will determine the length of the waiver on a case-by-case basis. All waivers that the OCC grants under this paragraph (e)(6) are subject to the condition that the national bank or Federal savings association must file a technically complete notice under this section within the time period specified by the OCC. (D) Subject to paragraph (e)(6)(i)(C) of this section, the proposed individual may assume the position on an interim basis until the earliest of the following events: ( 1 ( 2 ( 3 (E) If the technically complete notice is not filed within the time period specified in the waiver, the proposed individual must immediately resign their position. Thereafter, the individual may assume the position only after a technically complete notice has been filed, all other applicable requirements are satisfied, and: ( 1 ( 2 ( 3 (F) Notwithstanding the grant of a waiver, the OCC has authority to issue a notice of disapproval within 30 days of the expiration of such waiver. (ii) Automatic waiver. 1 2 3 (7) Commencement of service. (i) Prior to the expiration of the review period, only if the OCC notifies the national bank or Federal savings association in writing that the OCC does not disapprove the proposed director or senior executive officer pursuant to paragraph (e)(5) of this section; or (ii) Following the expiration of the review period, unless: (A) The OCC issues a written notice of disapproval during the review period; or (B) The national bank or Federal savings association does not provide additional information within the time period required by the OCC pursuant to paragraph (e)(3) of this section and the OCC deems the notice to be abandoned pursuant to § 5.13(c). (8) Exceptions to rules of general applicability. (f) Appeal. (2) The Comptroller, or an authorized delegate, may designate an appellate official who was not previously involved in the decision leading to the appeal at issue. The Comptroller, an authorized delegate, or the appellate official considers all information submitted with the original notice, the material before the OCC official who made the initial decision, and any information submitted by the appellant at the time of the appeal. (3) The Comptroller, an authorized delegate, or the appellate official will independently determine whether the reasons given for the disapproval are contrary to fact or insufficient to justify the disapproval. If either is determined to be the case, the Comptroller, an authorized delegate, or the appellate official may reverse the disapproval. (4) Upon completion of the review, the Comptroller, an authorized delegate, or the appellate official will notify the appellant in writing of the decision. If the original decision is reversed, the individual may assume the position in the national bank or Federal savings association for which he or she was proposed. [80 FR 28460, May 18, 2015, as amended at 85 FR 80466, Dec. 11, 2020] § 5.52 Change of address of a national bank or Federal savings association. (a) Authority. (b) Scope. (c) Notice process. (2) No notice is required if the change in address results from a transaction approved under this part or if notice has been provided pursuant to § 5.40(c)(1) with respect to the relocation of a main office or home office to a branch location in the same city, town or village. (d) Exceptions to rules of general applicability. [80 FR 28462, May 18, 2015, as amended at 85 FR 80466, Dec. 11, 2020] § 5.53 Substantial asset change by a national bank or Federal savings association. (a) Authority. (b) Scope. (c) Definition In general. substantial asset change (i) The sale or other disposition of all, or substantially all, of the national bank's or Federal savings association's assets in a transaction or a series of transactions; (ii) After having sold or disposed of all, or substantially all, of its assets, subsequent purchases or other acquisitions or other expansions of the national bank's or Federal savings association's operations; (iii) Any other purchases, acquisitions or other expansions of operations that are part of a plan to increase the size of the national bank or Federal savings association by more than 25 percent in a one year period; (iv) Any other material increase or decrease in the size of the national bank or Federal savings association or a material alteration in the composition of the types of assets or liabilities of the national bank or Federal savings association (including the entry or exit of business lines), on a case-by-case basis, as determined by the OCC; or (v) Any change in the purpose of the charter of the national bank or Federal savings association as described in § 5.20(l)(2). (2) Exceptions. (i) That the bank or savings association undertakes in response to direction from the OCC ( e.g., (ii) That is part of a voluntary liquidation under § 5.48, if the bank or savings association in liquidation has obtained the OCC's non-objection to its plan of liquidation under § 5.48 and has stipulated in its notice of liquidation to the OCC that its liquidation will be completed, the bank or savings association dissolved and its charter returned to the OCC within one year of the date it filed the notice of liquidation, unless the OCC extends the time period; (iii) That occurs as a result of a bank's or savings association's ordinary and ongoing business of originating and securitizing loans; or (iv) That are subject to OCC approval under another application to the OCC. (d) Procedures Consultation. (2) Approval requirement. (3) Factors In general. ( 1 ( 2 ( 3 ( 4 ( 5 (B) The OCC may deny the application if the transaction would have a negative effect in any of these respects. (ii) Additional factors. (e) Exceptions to rules of general applicability. [80 FR 28462, May 18, 2015, as amended at 82 FR 8104, Jan. 23, 2017; 85 FR 80466, Dec. 11, 2020] § 5.55 Capital distributions by Federal savings associations. (a) Authority. (b) Licensing requirements. (c) Scope. (d) Definitions. (1) Affiliate (2) Capital distribution (i) A distribution of cash or other property to owners of a Federal savings association made on account of their ownership, but excludes: (A) Any dividend consisting only of the shares of the savings association or rights to purchase the shares; or (B) If the savings association is a Federal mutual savings association, any payment that the savings association is required to make under the terms of a deposit instrument and any other amount paid on deposits that the OCC determines is not a distribution for the purposes of this section; (ii) A Federal savings association's payment to repurchase, redeem, retire or otherwise acquire any of its shares or other ownership interests; any payment to repurchase, redeem, retire, or otherwise acquire debt instruments included in its total capital under 12 CFR part 3; and any extension of credit to finance an affiliate's acquisition of the savings association's shares or interests; (iii) Any direct or indirect payment of cash or other property to owners or affiliates made in connection with a corporate restructuring. This includes the Federal savings association's payment of cash or property to shareholders of another association or to shareholders of its holding company to acquire ownership in that association, other than by a distribution of shares; (iv) Any other distribution charged against a Federal savings association's capital accounts if the savings association would not be well capitalized, as set forth in 12 CFR 6.4, following the distribution; and (v) Any transaction that the OCC determines, by order or regulation, to be in substance a distribution of capital. (3) Control (4) Net income (5) Retained net income (6) Shares (e) Filing requirements Application required. (i) The Federal savings association is: (A) Not an eligible savings association or covered community savings association; or (B) Is an eligible savings association or covered community savings association but would not continue to be well capitalized following the distribution; (ii) The total amount of all of the Federal savings association's capital distributions (including the proposed capital distribution) for the applicable calendar year exceeds its net income for that year to date plus retained net income for the preceding two years. If the capital distribution is from retained earnings, the aggregate limitation in this paragraph may be calculated in accordance with § 5.64(c)(2), substituting “capital distributions” for “dividends” in that section; (iii) The Federal savings association's proposed capital distribution would reduce the amount of or retire any part of its common or preferred stock or retire any part of debt instruments such as notes or debentures included in capital under 12 CFR part 3 (other than regular payments required under a debt instrument approved under § 5.56); (iv) The Federal savings association's proposed capital distribution is payable in property other than cash; (v) The Federal savings association is directly or indirectly controlled by a mutual savings and loan holding company or by a company that is not a savings and loan holding company; or (vi) The Federal savings association's proposed capital distribution would violate a prohibition contained in any applicable statute, regulation, or agreement between the Federal savings association and the OCC or the OTS, or violate a condition imposed on the Federal savings association in an application or notice approved by the OCC or the OTS. (2) No application required. (3) Informational copy of Federal Reserve System notice required. (f) Application format Contents. (i) Be in narrative form; (ii) Include all relevant information concerning the proposed capital distribution, including the amount, timing, and type of distribution; and (iii) Demonstrate compliance with paragraph (h) of this section. (2) Schedules. (3) Combined filings. (g) Filing procedures Application. (i) Additional information is required to supplement the application; (ii) The application has been removed from expedited review, or the expedited review process is extended, under 5.13(a)(2); or (iii) The application is denied. (2) Applications not subject to expedited review. (i) The Federal savings association is not an eligible savings association or covered community savings association; (ii) The total amount of all of the Federal savings association's capital distributions (including the proposed capital distribution) for the applicable calendar year exceeds its net income for that year to date plus retained net income for the preceding two years; (iii) The Federal savings association would not be at least adequately capitalized, as set forth in 12 CFR 6.4, following the distribution; or (iv) The Federal savings association's proposed capital distribution would violate a prohibition contained in any applicable statute, regulation, or agreement between the savings association and the OCC or the OTS, or violate a condition imposed on the savings association in an application or notice approved by the OCC or the OTS. (3) OCC filing office Appropriate licensing office. (ii) Appropriate supervisory office. (h) OCC review of capital distributions. (1) The OCC may deny the application in whole or in part, if it makes any of the following determinations: (i) The Federal savings association will be undercapitalized, significantly undercapitalized, or critically undercapitalized as set forth in 12 CFR 6.4, as applicable, following the capital distribution. If so, the OCC will determine if the capital distribution is permitted under 12 U.S.C. 1831o(d)(1)(B). (ii) The proposed capital distribution raises safety or soundness concerns. (iii) The proposed capital distribution violates a prohibition contained in any statute, regulation, agreement between the Federal savings association and the OCC or the OTS, or a condition imposed on the Federal savings association in an application or notice approved by the OCC or the OTS. (2) The OCC may approve the application in whole or in part. Notwithstanding paragraph (h)(1)(iii) of this section, the OCC may waive any waivable prohibition or condition to permit a distribution. (i) Exceptions to rules of general applicability. [80 FR 28463, May 18, 2015, as amended at 85 FR 80466, Dec. 11, 2020; 91 FR 10499, Mar. 4, 2026] § 5.56 Inclusion of subordinated debt securities and mandatorily redeemable preferred stock as Federal savings association supplementary (tier 2) capital. (a) Scope and definitions. (2) For purposes of this section, mandatorily redeemable preferred stock means mandatorily redeemable preferred stock that was issued before July 23, 1985 or issued pursuant to regulations and memoranda of the Federal Home Loan Bank Board and approved in writing by the Federal Savings and Loan Insurance Corporation for inclusion as regulatory capital before or after issuance. (b) Application procedures Application to include covered securities in tier 2 capital Application required. (ii) Expedited review. (A) Additional information is required to supplement the application; (B) The application has been removed from expedited review or the expedited review process is extended under § 5.13(a)(2); or (C) The OCC denies the application. (iii) Securities offering rules. (2) Application required to prepay covered securities included in tier 2 capital In general. (A) A statement explaining why the Federal savings association believes that following the proposed prepayment the savings association would continue to hold an amount of capital commensurate with its risk; or (B) A description of the replacement capital instrument that meets the criteria for tier 1 or tier 2 capital under 12 CFR 3.20, including the amount of such instrument and the time frame for issuance. (ii) Replacement covered security. (c) General requirements. (d) Securities requirements for inclusion in tier 2 capital. (1) Form. (A) Bear the following legend on its face, in bold type: “This security is not not (B) State that the security is subordinated on liquidation, as to principal, interest, and premium, to all claims against the savings association that have the same priority as savings accounts or a higher priority; (C) State that the security is not secured by the savings association's assets or the assets of any affiliate of the savings association. An affiliate means any person or company that controls, is controlled by, or is under common control with the savings association; (D) State that the security is not eligible collateral for a loan by the savings association; (E) State the prohibition on the payment of dividends or interest at 12 U.S.C. 1828(b) and, in the case of subordinated debt securities, state the prohibition on the payment of principal and interest at 12 U.S.C. 1831o(h), 12 CFR 3.11, and any other relevant restrictions; (F) For subordinated debt securities, state or refer to a document stating the terms under which the savings association may prepay the obligation; (G) Where applicable, state or refer to a document stating that the savings association must obtain OCC's prior approval before the acceleration of payment of principal or interest on subordinated debt securities, redemption of subordinated debt securities prior to maturity, repurchase of subordinated debt securities, or exercising a call option in connection with a subordinated debt security; and (H) State that the security may be fully subordinated to interests held by the U.S. government in the event that the savings association enters into a receivership, insolvency, liquidation, or similar proceeding; (ii) A Federal savings association must include such additional statements as the OCC may prescribe for certificates, purchase agreements, indentures, and other related documents. (2) Indenture. (ii) A Federal savings association is not required to use an indenture if the subordinated debt securities are sold only to accredited investors, as that term is defined in 15 U.S.C. 77b(a)(15). A savings association must have an indenture that meets the requirements of paragraph (d)(2)(i) of this section in place before any debt securities for which an exemption from the indenture requirement is claimed, are transferred to any non-accredited investor. If a savings association relies on this exemption from the indenture requirement, it must place a legend on the debt securities indicating that an indenture must be in place before the debt securities are transferred to any non-accredited investor. (e) Review by the OCC. (i) The issuance of the covered securities is authorized under applicable laws and regulations and is consistent with the savings association's charter and bylaws; (ii) The savings association is at least adequately capitalized under 12 CFR 6.4 and meets the regulatory capital requirements at 12 CFR 3.10; (iii) The savings association is or will be able to service the covered securities; (iv) The covered securities are consistent with the requirements of this section; (v) The covered securities and related transactions sufficiently transfer risk from the Deposit Insurance Fund; and (vi) The OCC has no objection to the issuance based on the savings association's overall policies, condition, and operations. (2) The OCC's approval is conditioned upon no material changes to the information disclosed in the application submitted to the OCC. The OCC may impose such additional requirements or conditions as it may deem necessary to protect purchasers, the savings association, the OCC, or the Deposit Insurance Fund. (f) Amendments. (g) Sale of covered securities. (h) Issuance of a replacement regulatory capital instrument in connection with prepaying a covered security. 5 5 (i) Reports. (1) A written report indicating the number of purchasers, the total dollar amount of securities sold, the net proceeds received by the savings association from the issuance, and the amount of covered securities, net of all expenses, to be included as tier 2 capital; (2) Three copies of an executed form of the securities and a copy of any related documents governing the issuance or administration of the securities; and (3) A certification by the appropriate executive officer indicating that the savings association complied with all applicable laws and regulations in connection with the offering, issuance, and sale of the securities. [80 FR 28464, May 18, 2015, as amended at 85 FR 80467, Dec. 11, 2020; 91 FR 10499, Mar. 4, 2026] § 5.58 Pass-through investments by a Federal savings association. (a) Authority. (b) Scope. (c) Licensing requirements. (d) Definitions. (1) Enterprise (2) Pass-through investment pass-through investment (e) Pass-through investments; notice procedure. (1) Describe the structure of the investment and the activity or activities conducted by the enterprise in which the Federal savings association is investing. To the extent the notice relates to the initial affiliation of the Federal savings association with a company engaged in insurance activities, the savings association should describe the type of insurance activity that the company is engaged in and has present plans to conduct. The Federal savings association must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the company holds a resident license or charter, as applicable; (2) State: (i) Which paragraphs of § 5.38(f)(5) describe the activity; or (ii) If the activity is substantively the same as a previously approved activity: (A) How, the activity is substantively the same as a previously approved activity; (B) The citation to the applicable precedent; and (C) That the activity will be conducted in accordance with the same terms and conditions applicable to the previously approved activity; (3) Certify that the Federal savings association is a covered community savings association or is both well capitalized and well managed at the time of the investment; (4) Describe how the Federal savings association has the ability to prevent the enterprise from engaging in an activity that is not set forth in § 5.38(f)(5) or not contained in published OCC (including published former OTS) precedent for previously approved activities, or how the savings association otherwise has the ability to withdraw its investment; (5) Describe how the investment is convenient and useful to the Federal savings association in carrying out its business and not a mere passive investment unrelated to the savings association's banking business; (6) Certify that the Federal savings association's loss exposure is limited as a legal matter and that the savings association does not have unlimited liability for the obligations of the enterprise; and (7) Certify that the enterprise in which the Federal savings association is investing agrees to be subject to OCC supervision and examination, subject to the limitations and requirements of section 45 of the Federal Deposit Insurance Act (12 U.S.C. 1831v) and section 115 of the Gramm-Leach-Bliley Act (12 U.S.C. 1820a). (f) Pass-through investments; application procedure In general. (2) Expedited review. (A) The Federal savings association makes the representation required by paragraph (e)(2) and the certification required by paragraph (e)(3) of this section; (B) The book value of the Federal savings association's pass-through investment for which the application is being submitted is no more than 1% of the savings association's capital and surplus; (C) No more than 50% of the enterprise is owned or controlled by banks or savings associations subject to examination by an appropriate Federal banking agency or credit unions insured by the National Credit Union Association; and (D) The OCC has not notified the Federal savings association that the application has been removed from expedited review, or the expedited review process is extended, under § 5.13(a)(2). (3) Investments requiring a filing under 12 U.S.C. 1828(m). (g) Pass-through investments; no application or notice required. (1) The activities of the enterprise are limited to those activities previously reported by the savings association in connection with the making or acquiring of a pass-through investment; (2) The activities in the enterprise continue to be legally permissible for a Federal savings association; (3) The savings association's pass-through investment will be made in accordance with any conditions imposed by the OCC or OTS in approving any prior pass-through investment conducting these activities; (4) The savings association is able to make the representations and certifications specified in paragraphs (e)(3) through (e)(7) of this section; and (5) The enterprise will not be a subsidiary for purposes of 12 U.S.C. 1828(m). (h) Pass-through investments in enterprises holding assets in satisfaction of debts previously contracted. (1) Notice required. (2) No notice or application required. (i) Additional exception to filing requirement. (1) The investment is in an investment company the portfolio of which consists exclusively of assets that the Federal savings association may hold directly; (2) The Federal savings association is not investing more than 10 percent of its total capital (or, in the case of a Federal savings association that is a qualifying community banking organization that has elected to use the community bank leverage ratio framework, 10 percent of its tier 1 capital, as used under § 3.12 of this chapter) in one company; (3) The book value of the Federal savings association's aggregate pass-through investments does not exceed 25 percent of its total capital (or, in the case of a Federal savings association that is a qualifying community banking organization that has elected to use the community bank leverage ratio framework, 25 percent of its tier 1 capital, as used under § 3.12 of this chapter) after making the investment; (4) The investment would not give Federal savings association direct or indirect control of the company; and (5) The Federal savings association's liability is limited to the amount of its investment. (j) Exceptions to rules of general applicability. [80 FR 28466, May 18, 2015, as amended at 84 FR 61794, Nov. 13, 2019; 84 FR 69297, Dec. 18, 2019; 85 FR 80468, Dec. 11, 2020; 86 FR 1255, Jan. 8, 2021; 91 FR 10499, Mar. 4, 2026] § 5.59 Service corporations of Federal savings associations. (a) Authority. (b) Licensing requirements. (1) Acquire or establish a service corporation; or (2) Commence a new activity in an existing service corporation subsidiary. (c) Scope. (d) Definitions Control (2) GAAP-consolidated subsidiary (3) Ownership interest (4) Service corporation (5) Service corporation subsidiary (e) Standards and requirements Ownership. (2) Geographic restrictions. (3) Authorized activities. (4) Investment limitations. (5) Form of organization. (6) Qualified thrift lender test. (7) Supervisory, legal or safety or soundness considerations. (ii) The OCC may, at any time, limit a Federal savings association's investment in a service corporation, or limit or refuse to permit any activity of a service corporation, for supervisory, legal, or safety or soundness reasons. (8) Separate corporate identity. (i) Their respective business transactions, accounts, and records are not intermingled; (ii) Each observes the formalities of their separate corporate procedures; (iii) Each is held out to the public as a separate enterprise; and (iv) Unless the parent Federal savings association has guaranteed a loan to the service corporation, all borrowings by the service corporation indicate that the savings association is not liable. (9) Issuances of securities by service corporations. (10) Certain pre-existing non-controlling investments. (f) Authorized service corporation activities. (1) Any activity that all Federal savings associations may conduct directly. (2) Business and professional services. (i) Accounting or internal audit; (ii) Advertising, market research and other marketing; (iii) Clerical; (iv) Consulting; (v) Courier; (vi) Data processing; (vii) Data storage facilities operation and related services; (viii) Office supplies, furniture, and equipment purchasing and distribution; (ix) Personnel benefit program development or administration; (x) Printing and selling forms that require Magnetic Ink Character Recognition (MICR) encoding; (xi) Relocation of personnel; (xii) Research studies and surveys; (xiii) Software development and systems integration; and (xiv) Remote service unit operation, leasing, ownership or establishment. (3) Credit-related activities. (ii) Acquiring and leasing personal property; (iii) Appraising; (iv) Collection agency; (v) Credit analysis; (vi) Check or credit card guaranty and verification; (vii) Escrow agent or trustee (under deeds of trust, including executing and delivery of conveyances, reconveyances and transfers of title); and (viii) Loan inspection. (4) Consumer services. (ii) Foreign currency exchange; (iii) Home ownership counseling; (iv) Income tax return preparation; (v) Postal services; (vi) Stored value instrument sales; (vii) Welfare benefit distribution; (viii) Check printing and related services; and (ix) Remote service unit operation, leasing, ownership, or establishment. (5) Real estate related services. (ii) Acquiring improved real estate or manufactured homes to be held for rental or resale, for remodeling, renovating or demolishing and rebuilding for resale or rental, or to be used for offices and related facilities of a stockholder of the service corporation; (iii) Maintaining and managing real estate; and (iv) Real estate brokerage for property owned by a savings association that owns capital stock of the service corporation, or a lower-tier service corporation in which the service corporation invests. (6) Securities activities, liquidity management, and coins. (ii) Liquidity management; (iii) Issuing notes, bonds, debentures, or other obligations or securities; and (iv) Purchase or sale of coins issued by the U.S. Treasury. (7) Investments. (ii) Tax-exempt obligations of public housing agencies used to finance housing projects with rental assistance subsidies; (iii) Small business investment companies and new markets venture capital companies licensed by the U.S. Small Business Administration; (iv) Rural business investment companies licensed by the U.S. Department of Agriculture; and (v) Investing in savings accounts of an investing thrift. (8) Community development investments. (9) Charitable activities. provided (10) Activities conducted as agent. (11) Incidental activities. (g) Limitations on investments in service corporations In general. (2) Loans. (i) Loans to service corporations other than a GAAP-consolidated subsidiary are subject to the lending limits in part 32 of this chapter. (ii) The OCC may limit the amount of loans to any service corporation where safety and soundness considerations warrant such action. (3) Definition. (4) GAAP-consolidated subsidiaries. (h) Filing requirements Application. (A) Acquiring or establishing a service corporation; or (B) Commencing a new activity in an existing service corporation subsidiary. (ii) The application must include a complete description of the savings association's investment in the service corporation, the proposed activities of the service corporation, the organizational structure and management of the service corporation, the relations between the savings association and the service corporation, and other information necessary to adequately describe the proposal. If the service corporation proposes to engage in insurance activities, the savings association must describe the type of insurance activity in which the service corporation proposes to engage. The savings association must also list for each State the lines of business for which the company holds, or will hold, an insurance license, indicating the State where the service corporation holds a resident license or charter, as applicable. The OCC may require a filer to submit a legal analysis if the proposal is novel, unusually complex, or raises substantial unresolved legal issues. In these cases, the OCC encourages filers to have a prefiling meeting with the OCC. Any savings association receiving approval under this paragraph is deemed to have agreed that the service corporation will conduct the activity in a manner consistent with published OCC guidance. (2) Expedited review. (ii) An application is eligible for expedited review if the following requirements are met: (A) The savings association is a covered community savings association or is both well capitalized and well managed; and (B) The service corporation engages only in one or more of the preapproved activities listed in paragraph (f) of this section. (3) OCC review and approval. (4) Redesignation. (5) Exception to rules of general applicability. (i) Exercise of salvage powers through service corporations. (i) The salvage investment protects the savings association's interest in the service corporation; (ii) The salvage investment is consistent with safety and soundness; and (iii) The savings association considered alternatives to the salvage investment and determined that such alternatives would not adequately satisfy paragraphs (i)(1)(i) and (ii) of this section. (2) If the OCC notifies the Federal savings association within 30 days of the filing of the notification that the notification presents supervisory concerns, or raises significant issues of law or policy, the Federal savings association must apply for and receive the OCC's prior written approval before making the salvage investment. (3) If a service corporation is a GAAP-consolidated subsidiary, the salvage investment will be considered an investment in a subsidiary for purposes of 12 CFR part 3. (j) Failure to comply with the requirements applicable to service corporations. [80 FR 28467, May 18, 2015, as amended at 85 FR 80469, Dec. 11, 2020; 91 FR 10499, Mar. 4, 2026] Subpart E—Payment of Dividends by National Banks § 5.60 Authority, scope, and exceptions to rules of general applicability. (a) Authority. (b) Scope. (c) Exceptions to the rules of general applicability. § 5.61 Definitions. For the purposes of subpart E, the following definitions apply: (a) Capital stock, capital surplus, permanent capital (b) Retained net income § 5.62 Date of declaration of dividend. A national bank must use the date a dividend is declared for the purposes of determining compliance with this subpart. [61 FR 60363, Nov. 27, 1996, as amended at 85 FR 80469, Dec. 11, 2020] § 5.63 Capital limitation under 12 U.S.C. 56. (a) General limitation. (b) Preferred stock. § 5.64 Earnings limitation under 12 U.S.C. 60. (a) Definitions. (b) Dividends from undivided profits. (c) Earnings limitations under 12 U.S.C. 60 General rule. (2) Excess dividends in prior periods. (ii) If the bank's retained net income in current year minus three and current year minus four was insufficient to offset the full amount of the excess dividends declared, as calculated in accordance with paragraph (c)(2)(i) of this section, then the amount that is not offset will reduce the retained net income available to pay dividends in the current year. (iii) The calculation in paragraphs (c)(2)(i) and (c)(2)(ii) of this section applies only to retained net loss that results from dividends declared in excess of a single year's net income and does not apply to other types of current earnings deficits. (3) Prior approval required. [73 FR 22241, Apr. 24, 2008, as amended at 80 FR 28470, May 18, 2015; 85 FR 80469, Dec. 11, 2020] § 5.65 Restrictions on undercapitalized institutions. Notwithstanding any other provision in this subpart, a national bank may not declare or pay any dividend if, after making the dividend, the national bank would be “undercapitalized” as defined in 12 CFR part 6. § 5.66 Dividends payable in property other than cash. In addition to cash dividends, directors of a national bank may declare dividends payable in property, with the approval of the OCC. A national bank must submit a request for prior approval of a noncash dividend to the appropriate OCC licensing office. The dividend is equivalent to a cash dividend in an amount equal to the actual current value of the property, regardless of whether the book value is higher or lower under GAAP. Before the dividend is declared, the bank should show the difference between actual value and book value on the books of the national bank as a gain or loss, as applicable, and the dividend should then be declared in the amount of the actual current value of the property being distributed. [85 FR 80469, Dec. 11, 2020] § 5.67 Fractional shares. A national bank issuing additional stock may adopt arrangements to preclude the issuance of fractional shares. The bank may remit the cash equivalent of the fraction not being issued to those to whom fractional shares would otherwise be issued. The cash equivalent is based on the market value of the stock, if there is an established and active market in the national bank's stock. In the absence of such a market, the cash equivalent is based on a reliable and disinterested determination as to the fair market value of the stock if such stock is available. The bank may propose an alternate method in the application for the stock issuance filed with the OCC. [85 FR 80470, Dec. 11, 2020] Subpart F—Federal Branches and Agencies § 5.70 Federal branches and agencies. (a) Authority. et seq. (b) Scope. (c) Definitions. (1) To establish (i) Open and conduct business through an initial or additional Federal branch or agency; (ii) Acquire directly, through merger, consolidation, or similar transaction with another foreign bank, the operations of a Federal branch or agency that is open and conducting business; (iii) Acquire a Federal branch or agency through the acquisition of a foreign bank subsidiary that will cease to operate in the same corporate form following the acquisition; (iv) Convert a State branch or State agency operated by a foreign bank, or a commercial lending company controlled by a foreign bank, into a Federal branch or agency; (v) Relocate a Federal branch or agency within a State or from one State to another; or (vi) Convert a Federal agency or a limited Federal branch into a Federal branch. (2) Federal branch (d) Filing requirements General. (2) Applications. (i) Establishes a Federal branch or agency; or (ii) Exercises fiduciary powers at a Federal branch. A foreign bank may submit an application to exercise fiduciary powers at the time of filing an application for a Federal branch license or at any subsequent date. (3) Biographical and Financial Reports. www.occ.gov, [61 FR 60363, Nov. 27, 1996, as amended at 68 FR 70698, Dec. 19, 2003; 85 FR 80470, Dec. 11, 2020]

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• 50 CFR Part 648 — Fisheries of the Northeastern United States#512151