FR2070_20180530_omb

Supporting Statement for the
Interagency Bank Merger Act Application
(FR 2070; OMB No. 7100-0171)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
with revision, the Interagency Bank Merger Act Application (FR 2070; OMB No. 7100-0171).
The Board, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance
Corporation (FDIC) (collectively, the agencies) each use this reporting form to collect
information on bank merger proposals that require prior approval under the Bank Merger Act.
Prior approval is required for merger transactions involving affiliated or nonaffiliated institutions
and must be sought from the regulatory agency of the depository institution that would survive
the proposed transaction. A merger transaction may include a merger, consolidation, assumption
of deposit liabilities, or certain asset transfers between or among two or more institutions. The
Board collects this information so that it may meet its statutory obligation of evaluating, with
respect to every state member bank (SMB) merger proposal, the competitive effects, the
adequacy of the financial and managerial resources of the institutions involved, future prospects,
financial stability, and the effect on the convenience and needs of the affected communities1.
The Board proposes to revise the FR 2070 reporting form and instructions to improve
transparency for filers by adding requests for information required to evaluate merger
transactions, clarifying certain existing requests, deleting requests for information no longer
considered necessary to evaluate the proposal, and updating the form to conform to current legal
and accounting requirements. The current annual reporting burden for the FR 2070 is estimated
to be 1,800 hours. The revisions increase the estimated average hours per response by one hour
for a total annual burden of 1,864 hours.
Background and Justification
The FR 2070 was instituted in 1960 with the enactment of section 18(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)), which is known as the Bank Merger Act. The
FR 2070 was discontinued in 1990 when the Application for Prior Approval for a Bank Holding
Company to Acquire an Additional Bank or Bank Holding Company (FR Y-2) was amended for
use with a broader range of proposals. The FR Y-2 was modified for use with proposals filed
pursuant to sections 3(a)(3) and 3(a)(5) of the Bank Holding Company Act and for proposals
filed pursuant to the Bank Merger Act and section 9 of the Federal Reserve Act. At the time, it
was felt that there was sufficient commonality with the information requirements of these three
types of expansionary proposals to use the same application form. However, subsequent
experience indicated that the resulting application form was more cumbersome and somewhat
more confusing than originally anticipated. As a consequence, the FR 2070 was reinstated in
1994.

1

See 12 U.S.C. 1828(c).

The FR 2070 was reformatted in 1998 to address directives in the Riegle Community
Development and Regulatory Improvement Act of 1994 (Riegle-Neal) (12 U.S.C. 1831u), that
the agencies should (to the extent consistent with principles of safety and soundness, statutory
law, and policy) work together to make uniform all regulations and guidelines implementing
common statutory or supervisory policies. The bank merger application forms of each of the
agencies were viewed to be subject to the directive. The new interagency bank merger
application form streamlined filing requirements and identified specific information that each of
the agencies believed was necessary for reviewing a bank merger proposal. Supplemental pages
were added to collect certain additional information that individual agencies believed was critical
to the consideration of a bank merger proposal. The supplemental questions and advice were
intended to address particular concerns of the individual agencies and facilitate the overall
review process.
Information submitted on the FR 2070 is used by the Board to fulfill its statutory
obligations under the Bank Merger Act to evaluate, with respect to an SMB merger or other
restructuring, the competitive effects of the proposal, the financial and managerial resources and
future prospects of the existing and proposed banking organizations, financial stability, and the
effect of the proposal on the convenience and needs of the affected communities. The
application form collects information on the basic legal and structural aspects of the proposed
transaction and on the extent to which the surviving SMB intends to retain and continue
operating as individual branches the headquarters and branches of the target bank.
As a general matter, the collected information is not readily available from any other
source and is used by the Board to determine whether a proposal is financially sound,
competitively acceptable, and consistent with the public interest, and to assess the impact on
financial stability.
Description of Information Collection
The FR 2070 is an event-generated application and is completed by an SMB each time
the bank requests approval to effect a merger, consolidation, assumption of deposit liabilities,
other combining transaction with a nonaffiliated party, or a corporate reorganization with an
affiliated party. The reporting form collects information on the basic legal and structural aspects
of these transactions.
The applicant is required to publish a notice in a newspaper of general circulation in the
community(ies) in which the head office of each of the banks to be a party to the merger,
consolidation, or acquisition of assets or assumption of liabilities is located. The notice must be
published on at least three occasions at appropriate intervals. The last publication of the notice
shall appear at last 30 days after the first publication. The notice must state the name and
address of each party to the proposal, and it must invite the public to submit written comments to
the appropriate Federal Reserve Bank. Within seven days of publication of notice for the first
time, the applicant shall submit its application to the appropriate Reserve Bank for acceptance,
along with a copy of the notice.

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Proposed Revisions
The Board proposes a number of revisions to the FR 2070. The changes are being made
in order to improve transparency for filers by adding requests for information required to
evaluate merger transactions, clarifying certain existing requests, deleting requests for
information no longer considered necessary to evaluate a proposal, and updating the reporting
form to conform to current statutory requirements, banking regulations, and accounting rules.
The Board surveyed the Federal Reserve Banks for suggested changes and considered the effects
of the changes on respondents, including community bank organizations, which represent the
vast majority of Bank Merger Act filers. Certain revisions are related to information commonly
requested on a follow-up basis by the respective regulators. Requesting the information upfront
should increase transparency as well as the efficiency of the review process. The changes are
outlined below and are grouped into the following categories:
A. Information that is customarily requested as supplemental information for a filing or that
is otherwise considered necessary to evaluate the statutory factors,
B. Clarification of certain items related to biographical and financial information for
principals and Community Reinvestment Act-related information,
C. Deletion of unnecessary information,
D. Updates relating to modified capital requirements and outdated accounting rules (this
revision is solely with respect to the FR 2070), and
E. Other minor and stylistic changes, such as improved grammar.
Discussion of FR 2070 Revisions
A. Additional requested items
The Board proposes to revise the FR 2070 to supplement the questions included in the
current form. This should save time and effort. These newly requested items are:
1. Any contract deadlines associated with the transaction.
2. Identification of any filings to other state and federal regulators in connection with
the merger transaction.
3. A discussion of the changes in the resultant institution’s business strategy and
operations and integration plans along with the submission of a business plan, if
available.
4. Projected financial statements and capital figures as of the end of each of the first
three years of operation following consummation. The prior form’s request for only
one year of projected statements was not viewed as providing sufficient information
for analysis of the transaction.
5. Any changes to directors and senior executive officers due to the proposed
transaction.
6. Statement of any litigation or investigations involving the applicant, the target
institution, and their subsidiaries during the past two years.
7. A discussion of the effect of the proposed transaction on the stability of the United
States banking and financial systems in light of the Dodd-Frank Wall Street Reform
and Consumer Protection Act.

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8. Information regarding whether the proposed investment in branches is consistent with
section 208.21 of the Board’s Regulation H. (This is a Board-only request; the FDIC
and OCC will not request this information.)
B. Clarification of certain items
1. The instructions provide greater detail on what is considered an affiliate transaction.
2. The instructions provide greater detail regarding establishment of branches and
branch closing.
3. The instructions now discuss publications requirements when there is no newspaper
of general circulation in the community or communities in which the main office of
each of the parties is located.
4. The instructions to the form now recommend consultation with the Board to
determine whether biographical or financial information for new principal
shareholders, directors, and senior executive officers involved in the transaction will
need to be provided.
5. Questions regarding how the proposal will assist in meeting the convenience and
needs of the community, including with respect to the Community Reinvestment Act,
are modified or expanded to provide more detail on what is required.
6. Questions regarding the interstate merger provisions of the Riegle-Neal Act are
modified or expanded to provide more detailed information regarding the statutory
requirements.
C. Deletion of unnecessary information
1. The request for cash flow projections for the parent company in certain transactions
will be deleted. This request has been superseded by the enhanced financial
projections now requested.
2. The request for goodwill amortization and purchase discount accretion schedules is
no longer required due to accounting rule changes.
D. Updated capital information
1. Ratios included in the request for a projected regulatory capital schedule are updated
to reflect the latest capital regulatory rules. The following ratios will now be
required: common equity tier 1 capital, tier 1 capital, total capital, and leverage
ratios.
E. Minor editing changes
1. Other changes to the form that are less significant in nature include those to improve
grammar, update citations and addresses, clarify instructions, and note the option of
filing electronically.

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Time Schedule for Information Collection
The application is event-generated. 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 Bank Merger Act authorizes the Board to collect the information on the FR 2070.
The Bank Merger Act requires, in relevant part, that a SMB, when it is the acquiring, assuming
or resulting bank, obtain prior approval from the Board before merging or consolidating with
another insured depository institution, or before acquiring the assets of or assuming liability to
deposits made in any other insured depository institution (12 U.S.C. 1828(c)). The FR 2070 is
required to obtain a benefit.
The Federal Reserve treats the Interagency Bank Merger Act Application as a public
document. However, applicants may request that parts of their applications be kept confidential.
In such cases, the filer must justify the exemption by demonstrating that disclosure would cause
substantial competitive harm, would result in an unwarranted invasion of personal privacy, or
would otherwise qualify for an exemption under the Freedom of Information Act (5 U.S.C. 552).
The confidentiality status of the information submitted will be judged on a case-by-case basis.
Consultation Outside the Agency
An interagency working group responsible for reviewing this collection is comprised of
representatives from the Board, OCC, and FDIC, and collaborated to recommend the above
changes. The agencies reviewed the forms in consideration of current law and applications
processing procedures and practices. Each agency has separately published a notice with regard
to this form and will separately publish the final version of the form. The Board’s extension of
these forms would align with the proposed extensions of identical forms by the OCC and FDIC.
On October 2, 2017, the Board published an initial notice in the Federal Register
(82 FR 45847) requesting public comment for 60 days on the extension, with revision, of the
FR 2070. The comment period for this notice expired on December 1, 2017. The Board did not
receive any comments. On March 15, 2018, the Board published a final notice in the Federal
Register (83 FR 11521). The revisions will be implemented as proposed.
Estimate of Respondent Burden
The burden for the revised FR 2070 is estimated to be 1,864 hours annually for state
member banks, as shown in the table below. The Board estimates that the proposed average
response time would be 31 hours for applications filed to effect a merger, consolidation,

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assumption of deposit liabilities, or other combining transaction between nonaffiliated parties
and 19 hours for applications filed to effect a corporate reorganization between affiliated parties.
The current estimate is based on the number of applications filed and represents less than 1
percent of total Federal Reserve System paperwork burden. As noted above, some of the
additional information being requested in the form was already being requested by regulatory
staff on a follow-up basis. By adding these requests to the form, applicants should be able to
receive a quicker response to their requests as staff will no longer need to send requests for such
information. These revisions will make the application process more transparent and improve
the accuracy of the Board’s burden estimate.
Number of
respondents2

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

Nonaffiliate Transactions

54

1

30

1,620

Affiliate Transactions

10

1

18

180

FR 2070
Current

Total

1,800

Proposed
Nonaffiliate Transactions

54

1

31

1,674

Affiliate Transactions

10

1

19

190

Total

1,864

Change

64

The total cost to the public is estimated to increase from the current level of $100,890 to
$104,477 for the revised FR 2070.3
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.

2

Of these respondents, 17 are considered small entities as defined by the Small Business Administration (i.e.
entities with less than $550 million in assets). www.sba.gov/document/support--table-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 $18, 45% Financial Managers at
$69, 15% Lawyers at $68, and 10% Chief Executives at $94). 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 2017, published March 30, 2018 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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Estimate of Cost to the Federal Reserve System
The estimated costs to the Federal Reserve System associated with this information is
$227,500 per year.

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