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e-CFR
Data is current as of October 10, 2008

Title 12:
Banks and Banking
PART 563—SAVINGS ASSOCIATIONS—OPERATIONS

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Subpart E—Capital Distributions

Source:   64 FR 2809, Jan. 19, 1999,
unless otherwise noted.

§ 563.140   What does this subpart cover?

This subpart applies to all capital distributions by a savings
association (“you”).

§ 563.141   What is a capital distribution?

A capital distribution is:

(a) A distribution of cash or other property to your owners made on
account of their ownership, but excludes:

(1) Any dividend consisting only of your shares or rights to purchase
your shares; or

(2) If you are a mutual savings association, any payment that you are
required to make under the terms of a deposit instrument and any other
amount paid on deposits that the OTS determines is not a distribution for
the purposes of this section;

(b) Your payment to repurchase, redeem, retire or otherwise acquire any
of your shares or other ownership interests, any payment to repurchase,
redeem, retire, or otherwise acquire debt instruments included in your
total capital under part 567 of this chapter, and any extension of credit
to finance an affiliate's acquisition of your shares or interests;

(c) Any direct or indirect payment of cash or other property to owners
or affiliates made in connection with a corporate restructuring. This
includes your 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;

(d) Any other distribution charged against your capital accounts if you
would not be well capitalized, as set forth in §565.4(b)(1) of this
chapter, following the distribution; and

(e) Any transaction that the OTS or the Corporation determines, by
order or regulation, to be in substance a distribution of capital.

[64 FR 2809, Jan. 19, 1999, as amended at 72 FR 69438, Dec. 7,
2007]

§ 563.142   What other definitions apply to this
subpart?

The following definitions apply to this subpart:

Affiliate means an affiliate, as defined under §563.41(b) of
this part.

Capital means total capital, as computed under part 567 of this
chapter.

Net income means your net income computed in accordance with
generally accepted accounting principles.

Retained net income means your net income for a specified period
less total capital distributions declared in that period.

Shares means common and preferred stock, and any options,
warrants, or other rights for the acquisition of such stock. The term
“share” also includes convertible securities upon their conversion into
common or preferred stock. The term does not include convertible debt
securities prior to their conversion into common or preferred stock or
other securities that are not equity securities at the time of a capital
distribution.

[64 FR 2809, Jan. 19, 1999, as amended at 72 FR 69438, Dec. 7,
2007]

§ 563.143   Must I file with OTS?

Whether and what you must file with the OTS depends on whether you and
your proposed capital distribution fall within certain criteria.

(a) Application required.

If:

Then you:

(1) You are not eligible
for expedited treatment under §516.5 of this chapter

Must file an application with the
OTS.

(2) The total amount of
all of your capital distributions (including the proposed capital
distribution) for the applicable calendar year exceeds your net
income for that year to date plus your retained net income for the
preceding two years

Must file an application with the
OTS.

(3) You would not be at
least adequately capitalized, as set forth in §565.4(b)(2) of this
chapter, following the distribution

Must file an application with the
OTS.

(4) Your proposed capital
distribution would violate a prohibition contained in any applicable
statute, regulation, or agreement between you and the OTS (or the
Corporation), or violate a condition imposed on you in an
OTS-approved application or notice

Must file an application with the
OTS.

(b) Notice required.

If you are not required to file an
application under paragraph (a) of this section, but:

Then you:

(1) You would not be well
capitalized, as set forth under §565.4(b)(1), following the
distribution

Must file a notice with the
OTS.

(2) Your proposed capital
distribution would reduce the amount of or retire any part of your
common or preferred stock or retire any part of debt instruments
such as notes or debentures included in capital under part 567 of
this chapter (other than regular payments required under a debt
instrument approved under §563.81)

Must file a notice with the
OTS.

(3) You are a subsidiary
of a savings and loan holding company

Must file a notice with the
OTS.

(c) No prior notice required.

If neither you nor your
proposed capital distribution meet any of the criteria listed in
paragraphs (a) and (b) of this section

Then you do not need to file a
notice or an application with the OTS before making a capital
distribution.

[64 FR 2809, Jan. 19, 1999, as amended at 66 FR 13008, Mar. 2,
2001]

§ 563.144   How do I file with the OTS?

(a) Contents. Your notice or application must:

(1) Be in narrative form.

(2) Include all relevant information concerning the proposed capital
distribution, including the amount, timing, and type of distribution.

(3) Demonstrate compliance with §563.146.

(b) Schedules. Your notice or application may include a schedule
proposing capital distributions over a specified period, not to exceed 12
months.

(c) Timing. You must file your notice or application at least 30
days before the proposed declaration of dividend or approval of the
proposed capital distribution by your board of directors.

§ 563.145   May I combine my notice or application
with other notices or applications?

You may combine the notice or application required under §563.143 with
any other notice or application, if the capital distribution is a part of,
or is proposed in connection with, another transaction requiring a notice
or application under this chapter. If you submit a combined filing, you
must:

(a) State that the related notice or application is intended to serve
as a notice or application under this subpart; and

(b) Submit the notice or application in a timely manner.

§ 563.146   Will the OTS permit my capital
distribution?

The OTS will review your notice or application under the review
procedures in 12 CFR part 516, subpart E. The OTS may disapprove your
notice or deny your application filed under §563.143, in whole or in part,
if the OTS makes any of the following determinations.

(a) You will be undercapitalized, significantly undercapitalized, or
critically undercapitalized as set forth in §565.4(b) of this chapter,
following the capital distribution. If so, the OTS will determine if your
capital distribution is permitted under 12 U.S.C. 1831o(d)(1)(B).

(b) Your proposed capital distribution raises safety or soundness
concerns.

(c) Your proposed capital distribution violates a prohibition contained
in any statute, regulation, agreement between you and the OTS (or the
Corporation), or a condition imposed on you in an OTS-approved application
or notice. If so, the OTS will determine whether it may permit your
capital distribution notwithstanding the prohibition or condition.

[64 FR 2809, Jan. 19, 1999, as amended at 67 FR 78152, Dec. 23,
2002]

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