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e-CFR
Data is current as of January 22, 2008

Title 12:
Banks and Banking
PART 574—ACQUISITION OF CONTROL OF SAVINGS
ASSOCIATIONS

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§ 574.3   Acquisition of control of savings
associations.

(a) Acquisition by a company or certain persons. Unless a
transaction is exempt under paragraph (c) of this section, or exempt from
prior approval under paragraph (d) of this section, no company or any
director or officer of a savings and loan holding company, or any
individual who owns, controls, or holds with power to vote (or holds
proxies representing) more than 25 percent of the voting stock of a
savings and loan holding company, shall acquire control, as defined in
§574.4 (a) and (b) of this part, of a savings association except upon
receipt of the written approval of the Office.

(b) Acquisition by a person. Unless a transaction is exempt
under paragraph (c) of this section, or exempt from prior notice under
paragraph (d) of this section, no person (other than certain persons
affiliated with a savings and loan holding company who are subject to
paragraph (a) of this section), shall acquire control, as defined in
§574.4 (a) and (b) of this part, of a savings association until written
notice has been provided to the Office and (1) the Office indicates in
writing its intent not to disapprove the proposed acquisition or (2) 60
days (or such period of time as the Office may specify if the review
period has been extended under §574.6(c)(3) of this part) have passed
since receipt of a notice deemed sufficient under §574.6(c)(2).
Notwithstanding the forgoing, acquisitions by persons by means of a merger
with an interim association are not subject to this part, but shall be
subject to approval under §563.22, and either §552.13 or applicable state
law.

(c) Exempt transactions. (1) The following transactions are
exempt from the application requirements of paragraph (a) of this
section:

(i) Control of a savings association acquired by devise under the terms
of a will creating a trust which is excluded from the definition of
savings and loan holding company under §574.2(q) of this part;

(ii) Control of a savings association acquired in connection with a
reorganization that involves solely the acquisition of control of that
association by a newly formed company that is controlled by the same
acquirors that controlled the savings association for the immediately
preceding three years, and entails no other transactions, such as an
assumption of the acquirors' debt by the newly formed company: Provided,
that the acquirors have filed with the Office an H–(e)4 notification as
provided in section 574.6 of this part and the OTS does not object to the
acquisition within 30 days of the filing date;

(iii) Control of a savings association acquired by a bank holding
company that is registered under and subject to, the Bank Holding Company
Act of 1956, or any company controlled by such bank holding company;

(iv) Control of a savings association acquired solely as a result of
(A) a pledge or hypothecation of stock to secure a loan contracted for in
good faith or (B) the liquidation of a loan contracted for in good faith,
in either case where such loan was made in the ordinary course of the
business of the lender: Provided, further, That acquisition of
control pursuant to such pledge, hypothecation or liquidation is reported
to the Office within 30 days, and Provided, further, That the
acquiror shall not retain such control for more than one year from the
date on which such control was acquired; however, the Office may, upon
application by an acquiror, extend such one-year period from year to year,
for an additional period of time not exceeding three years, if the Office
finds such extension is warranted and would not be detrimental to the
public interest;

(v) Control of a savings association acquired through a percentage
increase in stock ownership following a pro rata stock dividend or
stock split, if the proportional interests of the recipients remain
substantially the same;

(vi) Acquisition of additional stock after approval under §574.7 of
this part, or any predecessor provision, has been received: Provided,
That such acquisition is consistent with any conditions imposed in
connection with such approval and with the representations made by the
acquiror in its application;

(vii) Acquisitions of up to twenty-five percent (25%) of a class of
stock by a tax-qualified employee stock benefit plan as defined in
§563b.25; and

(viii) Acquisitions of up to 15 percent of the voting stock of any
savings association by a savings and loan holding company (other than a
bank holding company) in connection with a qualified stock issuance if
such acquisition is approved by the Office pursuant to §574.8(a).

(2) The following transactions are exempt from the notice requirements
of paragraph (b) of this section:

(i) Transactions which are exempt pursuant to paragraphs (c)(1)(iii),
(c)(1)(iv), (c)(1)(v), and (c)(1)(vi) of this section;

(ii) Transactions for which approval is required under paragraph (a) of
this section;

(iii) Transactions for which approval is required under part 546 or
§552.13 and §563.22 of this chapter;

(iv) Transactions for which a change of control notice must be
submitted to the Board of Governors of the Federal Reserve System pursuant
to the Change in Bank Control Act, 12 U.S.C. 1817(j);

(v) Acquisition of additional stock of a savings association by any
person who:

(A) Has held power to vote 25 percent or more of any class of voting
stock in such association continuously since March 9, 1979; or

(B) Has maintained control of the savings association continuously
since acquiring control in compliance with the Control Act (or the
Repealed Control Act) and the Office's regulations thereunder then in
effect: Provided, That such acquisition is consistent with any
conditions imposed in connection with such acquisition of control and with
the representations made by the acquiror in its notice; and

(vi) Acquisitions of stock of a de novo federal savings
association in connection with the organization of such association:
Provided, That the Office has considered the financial and
managerial resources of the acquiror in granting the association its
federal savings association charter; and additional acquisitions of stock
of such association, and further provided, that the acquisitions
are consistent with any conditions imposed in connection with the approval
of the association's charter and with representations made by the acquiror
in its application for a federal savings association charter, and that the
Regional Director has no supervisory objection to the acquiror's
additional acquisitions.

(3) An acquiror that would be considered to be in control of a savings
association pursuant to §574.4 of this part on December 26, 1985, shall
not be subject to this §574.3 unless the acquiror acquires additional
stock of the savings association or obtains a control factor with respect
to such association after December 26, 1985: Provided, That an
acquiror shall not be deemed to have acquired control of a savings
association on the basis of actions taken prior to December 26, 1985, or
on the basis of actions taken after December 26, 1985, if such actions are
pursuant to and consistent with a materially complete application under
the Holding Company Act or notice under the Repealed Control Act filed
prior to December 26, 1985, if such acquisition is made pursuant to an
application approved under the Holding Company Act or a notice under the
Repealed Control Act that was not disapproved.

(d) Transactions exempt from prior approval or notice. (1)
Subject to the conditions set forth in paragraph (d)(2) of this section,
the following transactions are exempt from prior approval and prior notice
under §574.3: Provided, That the timing of the transaction was not
within the control of the acquiror.

(i) Control of a savings association acquired through bona fide
gift;

(ii) Control of a savings association acquired through liquidation of a
loan contracted in good faith where the loan was not made in the ordinary
course of business of the lender;

(iii) Control of a savings association acquired through a percentage
increase in ownership following a stock split or redemption that was not
pro rata ;

(iv) Control determined pursuant to §574.4 (a) or (b) as a result of
actions by third parties that are not within the control of the
acquiror;

(v) Control of a savings association acquired through testate or
intestate succession: Provided, That the acquiror transmits written
notification of the acquisition to the Office within 60 days of the
acquisition and provides such additional information as the Office may
specifically request.

(2) The exemptions provided by paragraphs (d)(1)(i) through (d)(1)(iv)
of this section are subject to the following conditions:

(i) The acquiror shall file an application, notice or rebuttal, as
appropriate, with the Office within 90 days of acquisition of control;

(ii) The acquiror shall not take any action to direct the management or
policies of the savings association or which are designed to effect a
change in the business plan of the savings association other than voting
on matters that may be presented to stockholders by management of the
savings association until the Office has acted favorably upon the
acquiror's application or notice, and the Office may require that the
acquiror take such steps as the Office deems necessary to insure that
control is not exercised; and

(iii) If the Office disapproves the acquiror's application or notice,
the acquiror shall divest such portion of the stock held by the acquiror
so as to cause the acquiror not to be determined to be in control of the
savings association under §574.4 of this part, within one year or such
shorter period of time and in the manner that the Office may order.

(e) Prohibited acquisitions. No acquisition shall be approved by
the Office pursuant to §574.3(a) which would result in the formation by
any company, through one or more subsidiaries or through one or more
transactions, of a multiple savings and loan holding company controlling
savings associations in more than one state where the acquisition causes a
savings association to become an affiliate of another savings association
with which it was not previously affiliated unless:

(1) Such company, or a savings association subsidiary of such company,
is authorized to acquire control of a savings association subsidiary, or
to operate a home or branch office, in the additional state or states
pursuant to section 13(k) of the Federal Deposit Insurance Act, 12 U.S.C.
1823(k) (or section 408(m) of the National Housing Act as in effect
immediately prior to enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989);

(2) Such company controls a savings association subsidiary which
operated a home or branch office in the additional state or states as of
March 5, 1987; or

(3) The statute laws of the state in which the savings association,
control of which is to be acquired, is located are such that a savings
association chartered by such state could be acquired by a savings
association chartered by the state where the acquiring savings association
or savings and loan holding company is located (or by a holding company
that controls such a state chartered savings association), and such
statute laws specifically authorize such an acquisition by language to
that effect and not merely by implication.

[54 FR 49690, Nov. 30, 1989, as amended at 57 FR 14348, Apr. 20, 1992;
60 FR 66720, Dec. 26, 1995; 61 FR 60184, Nov. 27, 1996; 67 FR 52035, Aug.
9, 2002]

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