Form1522_Form1523_20160126_omb

Supporting Statement for the
Notice of Mutual Holding Company Reorganization (Form 1522) and the
Application for Approval of a Minority Stock Issuance by a
Savings Association Subsidiary of a Mutual Holding Company (Form 1523)
(OMB No. 7100-0340)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to extend for three years, without
revision, the mandatory Notice of Mutual Holding Company Reorganization (Form 1522;
OMB No. 7100-0340) and the Application for Approval of a Minority Stock Issuance by a
Savings Association Subsidiary of a Mutual Holding Company (Form 1523; OMB No. 71000340). Any mutual savings association that wishes to reorganize to form a mutual holding
company must submit a notice (Form 1522) to the Federal Reserve. The notice provides details
of the reorganization plan, which is to be approved by the majority of the association’s board of
directors and any acquired association. Details of the reorganization plan should contain a
complete description of all significant terms of the proposed reorganization, shall attach and
incorporate any Stock Issuance Plan proposed in connection with the reorganization plan and
comply with other informational requirements specified in 12 C.F.R. § 239.6.
Any savings association subsidiary or subsidiary holding company of a mutual holding
company must file an application (Form 1523) for minority stock issuance. Minority stock
issuances applications are required to provide the Federal Reserve with information to determine
whether mutual holding companies and their subsidiaries are conducting insider abuse or unsafe
and unsound practices.
The Federal Reserve intends to update and revise the Notice and Application to conform
to Federal Reserve standards in the near future. The total annual reporting burden is estimated to
be 1,450 hours.
Background and Justification
A mutual holding company is a form of corporate organization that is owned by its
members in the same manner that members own a mutual savings association. A member of a
mutual holding company is any person who holds a deposit account at, or in some circumstances,
has obtained a loan from, a savings association subsidiary of the mutual holding company that
was in mutual form prior to the association’s reorganization into or acquisition by the mutual
holding company.
The purpose underlying many of the provisions on mutual holding companies has been to
protect against actions by mutual holding company insiders (i.e., officers and directors) that may
be abusive or otherwise detrimental to the interests of a mutual holding company’s members.
The specific information collections for which approval is requested are detailed below.

Description of Information Collection
Form 1522 is used by a mutual savings association to apply to form a mutual holding
company. These applications are reviewed under the procedures described in section 239.3 of
subpart B of Regulation MM. Each application requires information on the proposed
transaction, a formal Reorganization Plan, proxy statement(s) to be circulated to member of the
Reorganizing Association for approval of the Reorganizing Plan, a business plan, the effect on
the convenience and needs of the communities to be served, evidence of publication of the
proposed transaction, financial information, managerial and capital information, and competitive
information.
Form 1523 is used by a subsidiary holding company of a mutual holding company to
issue stock to persons other than its mutual holding company parent. These applications are
reviewed under the procedures described in section 239.24 of subpart C of Regulation MM.
Each application requires information on the transaction, a Stock Issuance Plan, financial and
capital information, the aggregate amount of outstanding common stock of the subsidiary
holding company owned or controlled by persons other than the mutual holding company parent,
and the proposed price or price range of the stock to be issued.
Time Schedule for Information Collection
The applications submitted with these forms are event generated and the data are not part
of any published reporting series. If the application meets established criteria to be processed on
a delegated basis, the Reserve Bank or Secretary of the Board generally acts on the proposal
within 30 calendar days of submission of the application. If the proposal does not meet the
criteria for processing under delegated authority, the application will be processed for action by
the Board. Such an application will generally be acted on within 60 calendar days of submission
of the application, unless an applicant is notified that the processing period is being extended and
informed of the reasons for the extension.
Legal Status
The Board’s Legal Division has determined that Forms 1522 and 1523 are mandatory and
authorized pursuant to section 10 of the Home Owners’ Loan Act (HOLA). Section 10 of
HOLA (“Regulations of holding companies”) provides generally that “[t]he Board is authorized
to issue such regulations…as the Board deems necessary or appropriate to enable the Board to
administer and carry out the purposes of this section, and to require compliance therewith and
prevent evasions thereof.” (12 U.S.C. § 1467a(g)(1)). With respect to mutual holding
companies, HOLA states that a mutual holding company “shall be subject to such regulations as
the Board may prescribe.” (12 U.S.C. § 1467a(o)(7)). Section 10 of HOLA also requires a
savings and loan holding company to file “such reports as may be required by the Board” and
provides that such reports “shall contain such information concerning the operations of such
savings and loan holding company and its subsidiaries as the Board may require.” (12 U.S.C. §
1467a(b)(2)).
The information on Forms 1522 and 1523 generally not considered confidential.

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However, the notificant or applicant may request confidential treatment for portions of these
forms pursuant to exemption 4 of the Freedom of Information Act (5 U.S.C. § 552(b)(4)) if it
believes disclosure of those portions would likely result in substantial competitive harm. All
such requests for confidential treatment would need to be reviewed on a case-by-case basis and
in response to a specific request for disclosure.
Consultation Outside the Agency
On June 17 2015, the Federal Reserve published a notice in the Federal Register
(80 FR 34641) requesting public comment for 60 days on the extension, without revision, of
Form 1522 and Form 1523. The comment period for this notice expired on August 17, 2015.
The Federal Reserve did not receive any comments. On September 11, 2015, the Federal
Reserve published a final notice in the Federal Register (80 FR 54790).
Estimate of Respondent Burden
The current annual reporting burden for these notices and applications is estimated to be
1,450 hours as shown in the following table. The average hours per response is estimated to be
400 hours for Form 1522 and 350 hours for Form 1523. Since 2010 the Federal Reserve has not
received a Notice of Mutual Holding Company Reorganization. In order to provide a burden
estimate to OMB, Federal Reserve estimates that one respondent per year will submit a notice to
the Federal Reserve.1 The annual burden for the these notices and applications reports represents
less than 1 percent of total Federal Reserve System paperwork burden.

1

Estimated
average hours
per response
400

Estimated
annual burden
hours
400

1

350

1,050

Number of
respondents2

Annual
frequency

Form 1522

1

Form 1523

3
Total

1,450

The cost to the public is estimated to be $75,038 for these notices and applications.3

1

Reports with fewer than 10 respondents per year are not subject to the Paperwork Reduction Act (PRA); however,
because the reporting requirements pertain to all mutual holding companies, the proposal is processed following
PRA procedures.
2
Of these respondents, none are estimated to be small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/content/table-small-business-size-standards.
3
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2014, published March 25, 2015, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The information submitted in the applications is not automated. The cost to the Federal
Reserve System of printing and mailing instructions is negligible.

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