Comptroller's Licensing Manual

Section: Change in Control

Section 310

This handbook section provides guidance on notices filed by individuals seeking to acquire control of
a savings institution. The Office of Thrift Supervision (OTS) has the authority to prevent an
individual of questionable integrity or financial condition from acquiring control of a savings
institution. Furthermore, OTS has the authority to deny a proposed acquisition of control if it would
lessen competition in the banking industry or have an adverse effect on the Savings Association
Insurance Fund (SAIF) or Bank Insurance Fund (BIF).
12 C.F.R. § 574.4 includes a list of the circumstances under which an individual is deemed to have
acquired control of a savings institution. Control of an institution is divided into two categories:
rebuttable control and conclusive control. Rebuttable control occurs, for example, when, at a
minimum, ten percent of any class of voting stock, or 25 percent of any class of stock, is acquired,
and a control factor exists (e.g., acquiror is one of the two largest holders of any class of stock). A
more detailed discussion of rebuttable control is provided in Section 320, Rebuttals.
An individual has acquired conclusive control of a savings institution if the individual, or a group of
individuals acting in concert, acquires more than 25 percent of a class of the institution's voting stock
or controls the election of a majority of the directors of the institution. If an individual proposes to
acquire conclusive control, or is in a rebuttable position and elects not to rebut control, the individual
must file a notice of change in control (notice). Except for special circumstances set forth in 12
C.F.R. § 574.3(d), OTS must issue a no-objection letter prior to the acquisition of control.
Note: The definition of a savings institution, as set forth in 12 C.F.R. § 574.2(p), includes a savings
and loan holding company.

FILING REQUIREMENTS
Delegated Authority
Generally, notices filed under this section may be processed by the Regional Office under delegated
authority. Notices that are not delegated to the Regional Office are those involving: a significant
issue of law or policy; filings under 12 C.F.R. § 563b.3(i); approval of requested waivers of statutes,
regulations, OTS policy or significant notice requirements; adverse comments and formal meetings;
hostile or contested acquisitions, opposition proxy solicitations or other potential acquisitions where
there is a competing acquiror; person(s) subject to a pending notice of charges or formal
investigation; or raise significant competitive factors. See Delegation Section 040 of the handbook
for information on the delegation process

Expedited and Standard Processing Procedures
This notice is not subject to the expedited processing procedures set forth in 12 C.F.R. Part 516.
Accordingly, the notice for change in control will be processed utilizing the procedures set forth in
12 C.F.R. § 574.6.

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Prefiling Meeting Requirements
It is the applicant’s responsibility to contact the Regional Office in a reasonable time period in
advance of filing the notice, to discuss whether a prefiling meeting will be required. Since this notice
is identified as a type that may necessitate a prefiling meeting, OTS anticipates that a meeting will be
held in certain cases. The purpose of the meeting is to permit OTS and the applicant to identify any
legal or policy issues before submission of the notice, and enable the applicant to address these issues
early in the process. The Regional Office has the discretion to require a prefiling meeting, and will
work with the applicant to determine a schedule and forum for a meeting. The forum for the meeting
will usually be in person at the Regional Office, although the Regional Office may consider meetings
by telephone or video conferencing at its discretion on a case-by-case basis. OTS may decide not to
accept a submitted notice until the prefiling meeting requirements in 12 C.F.R. Part 516 are met,
leading to significant delays in processing the notice.
When a meeting is required, the applicant should contact the Regional Office to determine which
individuals should be present at the meeting. These individuals will be expected to discuss the salient
aspects of the proposed transaction. Depending upon the circumstances of the proposed transaction,
the Regional Office may require that information be provided prior to the meeting in a time frame in
advance of the meeting acceptable to the Regional Office. If the Regional Office determines that the
proposed transaction warrants the submission of a draft business plan, the plan at a minimum should:
•

Describe clearly and completely the projected operations and activities;

•

Provide financial projections for a three-year period;

•

Discuss the associated risks and the impact of the transaction on the institution;

•

Identify all or a majority of the proposed director and key senior executive officers with
documentation to support that these individuals have the required qualifications and
experience to prudently oversee operations; and,

•

Demonstrate how the institution will serve the credit and lending needs in its target market.

Information and Form Requirements
Notices must receive approval prior to the acquisition of control except for certain transactions.
For the following transactions, the acquiror must file the appropriate notice within 90 days of
acquisition of control. The acquiror must not take any action to direct management or policies of the
institution or which are designed to effect a change in the business plan of the institution other than
voting on matters that may be presented to stockholders by management, until OTS has acted
favorably on the notice.
•

Control acquired through bona fide gift;

•

Control 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;

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•

Control acquired through a percentage increase in ownership following a stock split or
redemption that was not pro rata; or

•

Control determined pursuant to 12 C.F.R. § 547(a) or (b) as a result of actions by third parties
that are not within the control of the acquiror.

Control acquired through testate or intestate succession is also exempt from the filing requirements of
12 C.F.R. Part 574, provided that the acquiror transmits written notification of the acquisition to OTS
within 60 days of the acquisition and provides such additional information as OTS may specifically
request.
If delegated, all notices and the applicable filing fee should be filed with the appropriate Regional
Office in accordance with 12 C.F.R. Part 516. The applicant is required to file the original and two
conformed copies of each notice. In addition, the applicant should provide three additional copies.
These copies should be distributed by the Regional Office to the Office of the Comptroller of the
Currency, Federal Reserve Board and Federal Deposit Insurance Corporation. If the applicant wishes
to acquire a state-chartered institution, one additional copy should also be provided. All copies are to
be clearly marked as to the type of filing, and should contain all exhibits and other pertinent
documents. One copy must contain original signatures on all executed documents. For applications
that are not delegated to the Regional Office, an additional three copies of the application should be
filed with the Applications Filing Room in OTS-Washington.
Each notice submitted to OTS for action should include the following:
•

Interagency Notice of Change in Control;

•

Interagency Biographical and Financial Report, including financial statements for an
acquiror's proprietary interests;

•

Attachment A to Regulatory Bulletin 20;

•

FBI fingerprint cards completed by the acquiror and processing fee made payable to OTS and
submitted to the Regional Office;

•

If funds are to be borrowed to acquire the stock, copies of any loan agreement or commitment
letter;

•

Three-year business plan;

•

Proxy material; and

•

Copies of any filings made with other regulatory agencies.

Confidentiality
The applicant must submit in writing, concurrently with the submission of the notice, any requests to
keep specific portions of the notice confidential. In accordance with the Freedom of Information Act,
the request should discuss the justification for the requested treatment and should specifically
demonstrate the harm (e.g., to competitive position, invasion of privacy) that would result from the

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public release of information. OTS will not treat as confidential the portion of an notice describing
the plan to meet the Community Reinvestment Act objectives.
Information for which confidential treatment is requested should be: (i) specifically identified in the
public portion of the notice by reference to the confidential section; (ii) separately bound; and (iii)
labeled “confidential.” The applicant should follow these same procedures when filing supplemental
information to the notice. OTS will determine whether information designated as confidential must
be made available to the public under the Freedom of Information Act. OTS will advise the applicant
before it makes information designated as confidential available to the public.

Special Considerations
Publication Requirements and Comment Procedures
The applicant shall publish notice of its change in control filing no earlier than three days before and
no later than three days after filing the notice, in accordance with the requirements of 12 C.F.R.
§ 574.6(d). Notice shall be published in a newspaper printed in the English language and having a
general circulation in the community in which the home office of the institution is located. If the
Regional Office determines that the primary language of a significant number of adult residents of the
community is a language other than English, the applicant may also be required to publish notice
simultaneously in the appropriate language(s). See Publication Forms Section 020 of the handbook
for examples of publication language.
Any person may submit a written comment supporting or opposing the application within 20 days
after the filing date of the application. Up to an additional 20 days to submit comments may be
obtained upon a showing of good cause, if a written request is received by OTS within the initial
20-day period. Comments received after the comment period shall not be part of the record and need
not be considered by OTS. The duration of an extension request is subject to the discretion of OTS
on a case-by-case basis, after consideration of the unique circumstances of each extension request.
The comment should recite relevant facts, including any economic or financial data supporting the
commenter's position. If the commenter opposes the application, the comment should also: 1) address
at least one reason for denial based upon regulatory criteria for denial; 2) support the reason for denial
with relevant facts and supporting data; and, 3) address how the approval of the application is harmful
to the community or the commenter.

Waiver of Certified Financial Statements
The Regional Director, or his/her designee, may grant, or deny, a request for the waiver of certified
financial statements for an acquiror's proprietary interests, provided that the acquiror files the
following information:
•

310.4

A statement supporting the acquiror’s contention that production of certified financial
statements is unduly burdensome.

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A table setting forth: (1) the acquiror's percent of interest and amount of investment in the
savings institution; and (2) the amount of investment as a percentage of the acquiror's total
assets, net worth, and gross income.

Background Checks
OTS policy requires background investigations of all organizers, proposed senior executive officers,
directors, and any individuals or groups acing in concert who own or control, directly or indirectly,
ten percent or more of the institution’s stock. With respect to any changes in these individuals as a
result of this application, said individuals must submit, at a minimum, an Interagency Biographical
and Financial form, FBI Fingerprint Card, and a Regulatory Bulletin (RB) 20 Certification Form.
RB-20 authorizes OTS to request supplemental information from applicants if the information is
useful in completing a thorough background investigation. Applicants can request a waiver from
filing portions of this information by providing justification stating why this information is unduly
burdensome or unnecessary. Waiver requests will only be granted in limited circumstances and
consistent with current OTS policy. The Regional Office will conduct a background investigation in
compliance with RB-20. If appropriate, the review may also require OTS to contact other regulatory
agencies to seek additional comments on the applicants. Individuals must be fingerprinted by an
independent third party unrelated to the individual or companies affiliated with the individual on
fingerprint cards bearing the OTS identification number. Results of all background checks should be
addressed in the Regional Office's digest.

Safe Harbor Filings and Certifications of Ownership
An acquiror, including any person acting in concert, who owns less than 25 percent of the institution's
voting stock, has no control factors present (see discussion in Section 320), and has no plans to solicit
proxies from other stockholders, may make a “safe harbor” filing with OTS. In order to qualify for
the safe harbor, an acquiror must submit a certification in the form set forth at 12 C.F.R.
§ 574.4(f)(1). OTS will accept a safe harbor filing when the certification is properly filed. Acquirors
who claim safe harbor status may vote their stock freely and dissent with respect to their institution
stock. It should be noted that the filing is not mandatory, but is available to investors who seek
certainty that their investment complies with OTS control regulations.
Upon the acquisition of ten percent or more of any class of stock of an institution under circumstances
that do not give rise to a conclusive or rebuttable control determination, an acquiror must file a
certification of ownership with OTS in accordance with 12 C.F.R. § 574.5(a). Such certification is
required based upon beneficial ownership of the stock. The certification identifies the savings
institution and states that: the acquiror owns ten percent or more of any class of stock of the
institution; the acquiror is not currently subject to a rebuttable or conclusive determination of control;
and the acquiror will file a rebuttal or notice prior to taking any action that would give rise to a
determination of control. An acquiror is not required to file a certification if the acquiror has already
obtained OTS approval to acquire control or is in the process of obtaining such approval. The filing
of a certification of ownership is not treated as a notice subject to any statutory or regulatory time
frames for review. The certification provides OTS with notice of acquirors who have amassed
substantial amounts of stock of a savings institution and, thus, are capable of acquiring control of the
institution.

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Interim Institutions
If an individual proposes to form an interim Federal savings institution, as defined in 12 C.F.R.
§ 541.18, to facilitate the acquisition of control, the transaction will be subject to the Bank Merger
Act rather than the Change in Bank Control Act or 12 C.F.R. Part 574. The individual must file an
application to establish and merge an interim institution.
The approval of an interim application is conditioned upon OTS approval of an application to merge
the interim institution into an existing insured savings institution or upon OTS approval of a related
transaction. In evaluating the application, OTS considers the following factors:
•

The purpose for which the institution will be organized;

•

The form of any proposed transaction involving the organizing institution;

•

The effect of the transaction on existing institutions involved in the transactions; and,

•

The factors specified in 12 C.F.R. § 543.2(g)(1) to the extent relevant.

Prohibition on Offers to Acquire and Acquisitions of Stock for Three Years Following
Conversion
If the subject institution converted from the mutual to stock form of ownership within the previous
three years, no person may, directly or indirectly, acquire or offer to acquire the beneficial ownership
of more than ten percent of any class of the institution’s equity securities without OTS prior written
approval. If a person violates this prohibition, the institution may not permit the person to vote shares
in excess of ten percent, and may not count these shares in any shareholder vote.
Certain exceptions to the regulations governing offers to acquire stock within three years of
conversion are set forth at 12 C.F.R. § 563b.3(i). OTS may deny an notice filed under 12 C.F.R.
§ 563b.3(i) if the proposed acquisition:
•

Is contrary to the purposes of 12 C.F.R. Part 563b;

•

Is manipulative or deceptive;

•

Subverts the fairness of the conversion;

•

Is likely to injure the institution;

•

Is inconsistent with the institution’s plan to meet the credit and lending needs of its proposed
market area;

•

Otherwise violates law or regulation; or

•

Does not prudently deploy the institution's conversion proceeds.

The primary purposes of this rule are to provide a reasonable period of time for the institution to
prudently deploy the new capital according to its business plan, for it to acclimate to operating as a
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public company, and to do both without the distraction of considering takeover proposals. OTS does
not believe acquisitions in the first three years following conversion are in the best interests of newly
converted institutions, the communities the institutions serve, or the shareholders. In addition, OTS
believes that the approval of friendly acquisitions may be inconsistent with the purposes of the
conversion rules. As such, the standards for allowing such acquisitions are high and should not be
approved unless there are significant risks to the institution operating on a stand-alone basis.

Actions Concerning Violations
OTS staff should review for violations of the Change in Control regulations on a case-by-case basis.
During the review period, the shareholder(s) under review is prohibited from (i) receiving dividends
from the subject institution and (ii) voting on his/her stock, other than proportionately with other
stockholders.
OTS may take one or more of the following actions concerning a violation of the change in control
regulations:
•

Require the shareholder(s) under review to file a notice with the appropriate OTS office. (If
OTS issues a no-objection letter, the violation will be remedied as of the date of the noobjection letter.)

•

Require the shareholder to divest his/her stock holdings below a control threshold.

•

Impose one or more enforcement actions against the shareholder(s).

The Reviewing Analyst should consult with the appropriate Regional Counsel to determine what
action should be taken.

REVIEW GUIDELINES
Processing Procedures and Time Frames
As noted in the Delegated Authority section, certain notices are not subject to delegated authority and
are processed concurrently with OTS-Washington staff. As a general matter, correspondence from
OTS regarding notices that are nondelegated will be transmitted from OTS-Washington.
Correspondence on delegated notices will generally come from the Regional Office.
Within five business days of receipt of the notice and the application fee, the Regional Office must
notify the applicant of the notice’s receipt. The appropriate application fee must accompany each
notice in order for it to be considered filed. For nondelegated notices, the notice will not be
considered filed until received by both OTS-Washington and the Regional Office.
Immediately upon receiving a notice, Regional staff should submit copies of the notice to the other
appropriate Federal regulators for comments and allow 30 days for the regulators to review and
provide comments. For notices relating to the acquisition of control of a state-chartered institution,
the Regional staff should forward a copy of the notice and allow 30 days for the state authority to

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review and provide comments. OTS should consider the views and recommendations of federal and
state agencies in determining whether to disapprove a proposed acquisition of control.
Within 30 calendar days of receipt of a properly submitted notice, OTS shall take the following
actions.
•

Deem the notice complete;

•

Request, in writing, any additional information necessary to deem the notice complete; or

•

Decline to further process the notice if it is deemed by OTS to be materially deficient and/or
substantially incomplete.

Failure by OTS to act within 30 calendar days of receipt of the notice for processing shall result in the
filed notice being deemed complete, commencing the period for review.
OTS must timely review requests for a waiver of a notice requirement that certain information be
supplied. Unless OTS requests, in writing, additional information about the waiver request, or denies
the waiver request, the waiver request shall be deemed granted.
If additional information is requested, a response must be submitted within 30 calendar days of the
letter requesting such information. The applicant may, in writing, request a brief extension of the
30-calendar day period for responding to a request for additional information, prior to the expiration
of the 30-calendar day time period. OTS, at its option, may grant the applicant a limited extension of
time in writing. Failure to respond to a written request for additional information within 30 calendar
days of such request may be deemed to constitute withdrawal of the notice or may be treated as
grounds for denial or disapproval of the notice.
After the timely filing of any additional information in response to an initial or subsequent request by
OTS for additional information, OTS has 15 calendar days to review the additional information for
completeness or appropriateness and take one of the following actions.
•

Request, in writing, any additional information necessary to deem the notice complete;

•

Deem the notice complete; or

•

Decline to further process the notice if it is deemed by OTS to be materially deficient and/or
substantially incomplete.

The 15-day review period commences when the OTS receives a response that purports to respond to
all questions in the information request. OTS may extend the 15-day review period for an additional
15 calendar days, if OTS requires the additional time to review the response. OTS will notify the
applicant that it has extended the period before the end of the initial 15-day period.
Failure by OTS to act within 15 calendar days of receipt of the additional information shall result in
the filed notice being deemed complete, commencing the period for review.
For transactions involving a contribution of assets (companies, loans, receivables, etc.) to the
institution, OTS may elect to conduct an eligibility examination during the review process. OTS will
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not deem a notice complete until it concludes the examination. In addition, OTS may request
additional information as a result of the eligibility examination that must be submitted in accordance
with the time frames set forth in this section.
Once the notice has been deemed complete, there is a 60-day review period during which time OTS
will take into consideration all factors present in the notice and render a decision thereon. If, upon
expiration of the 60-day review period, assuming no extension has been granted, OTS has failed to
act, the notice is deemed accepted automatically, and the applicant may thereafter consummate the
transaction.
During the review period, OTS may request additional information if the information is necessary to
resolve or clarify the issues presented in the notice. OTS may also notify the applicant that the notice
is incomplete and require that the applicant to submit additional information to complete the notice.
The review period can be extended an additional 30 calendar days if OTS determines that additional
time will be required to analyze the proposed transaction. In such cases, OTS must notify an
applicant before the expiration of the period for review.
Pursuant to 12 U.S.C. § 1817(j)(1) and 12 C.F.R. § 574.6(c)(3)(ii), the review period may be further
extended not to exceed two additional times for not more than 45 days each time if:
•

OTS determines that any acquiring party has not furnished all the information required by
12 C.F.R. Part 574;

•

In OTS’s judgment, any material information submitted is substantially inaccurate;

•

OTS has been unable to complete an investigation of each acquiror because of any delay
caused by, or the inadequate cooperation of, such acquiror; or

•

OTS 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.

For purposes of calculating processing time frames, OTS does not include the day of the act or event,
in determining the date the time period commences. In determining the conclusion of a time period,
when the last day of the time period is a Saturday, Sunday, or a Federal holiday, the last day will
become the next day that is not a Saturday, Sunday, or Federal holiday.
Under 12 C.F.R. § 516.290, if OTS has not acted on a pending notice within two calendar years after
the filing date, OTS may deem the notice withdrawn unless OTS determines that the applicant is
actively pursuing a final determination on the notice. Notices that are subject to this withdrawal
provision are those that have failed to timely take action such as filing required additional
information, or OTS has suspended processing of an notice based on circumstances that are, in whole
or in part, within the applicant’s control and have failed to take reasonable steps to resolve these
circumstances.

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Regulatory Criteria
Authority to act on a notice is granted in the Change in Bank Control Act (12 U.S.C. § 1817(j)). The
regulations under this statute are found in 12 C.F.R. Part 574. Specifically, 12 C.F.R. § 574.7(d) sets
forth the grounds upon which a notice may be disapproved. These grounds include situations where:
•

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 banking
business in any part of the United States.

•

The effect of the proposed acquisition of control, in any section of the country, may be to
substantially lessen competition, to create a monopoly, or 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.

•

The financial condition of the acquiring person might jeopardize the financial stability of the
institution or prejudice the interests of the depositors of the institution.

•

The competence, experience, or integrity of the acquiring person, or any of the proposed
management personnel, indicates that it would not be in the interests of the depositors of the
institution, OTS, or the public to permit such person to control the institution.

•

The acquiring person fails or refuses to furnish information requested by OTS.

•

OTS determines that the proposed acquisition would have an adverse effect on the SAIF or
BIF.

Note: If it appears that grounds for disapproval of a notice are present, OTS-Washington should be
consulted as soon as possible to determine whether there is an adequate basis for disapproval.
12 C.F.R. § 574.7(g) sets forth a list of presumptive disqualifiers that, if applicable, could result in the
disapproval of a potential acquiror's notice. The purpose of these regulatory provisions is to put
potential acquirors on notice as to the grounds upon which a notice may be disapproved, unless
adequately refuted. The following factors give rise to a rebuttable presumptive disqualifier:
•

During the ten year period immediately preceding filing of the notice, criminal, civil, or
administrative judgments, consents, or orders, and any indictments, formal investigations,
examinations, or civil or administrative proceedings (excluding routine or customary audits,
inspections and investigations) that terminated in any agreements, undertakings, consents or
orders, issued against, entered into by, or involving the acquiror or affiliates of the acquiror
by any Federal or state court, any department, agency, or commission of the U.S.
Government, any state or municipality, any Federal Home Loan Bank, any self-regulatory
trade or professional organization, or any foreign government or governmental entity, that
involve:
∗

310.10

Fraud, moral turpitude, dishonesty, breach of trust or fiduciary duties, organized
crime, or racketeering;

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∗

Violation of securities or commodities laws or regulations;

∗

Violation of depository institution laws or regulations;

∗

Violation of housing authority laws or regulations; or

∗

Violation of the rules, regulations, codes of conduct or ethics of self-regulatory trade,
or professional organizations.

Denial, or withdrawal after receipt of formal or informal notice of an intent to deny, by the
acquiror or affiliates of the acquiror, of:
∗

Any application relating to the organization of a financial institution;

∗

An application to acquire any financial institution or holding company thereof under
the Savings and Loan Holding Company Act or the Bank Holding Company Act;

∗

A notice relating to a change in control of any of the foregoing under the Change in
Savings and Loan Control Act or the Change in Bank Control Act; or

∗

An application or notice under a state holding company or change in control statute.

•

The acquiror or affiliate(s) of the acquiror were placed in receivership or conservatorship
during the preceding ten years, or any management official of the acquiror was a management
official or director (other than an official or director serving at the request of OTS, the
Federal Deposit Insurance Corporation, the former Resolution Trust Corporation, or the
former Federal Savings and Loan Insurance Corporation) or controlling shareholder of a
company or savings institution that was placed into receivership, conservatorship, or a
management consignment program, or was liquidated during his or her tenure or control or
within two years thereafter.

•

Felony conviction of the acquiror, an affiliate of the acquiror, or a management official of the
acquiror or its affiliate.

•

Knowingly making any written or oral statement to OTS or any predecessor agency (or its
delegate) in connection with an notice, notice or other filing under 12 C.F.R. Part 574 that is
false or misleading with respect to a material fact or omits a material fact with respect to
information furnished or requested in connection with such an application, notice, or other
filing.

•

Acquisition and retention of stock in the savings institution, at the time of submission of an
application or notice, in violation of 12 C.F.R. § 574.3 or its predecessor sections.

•

Liability for amounts of debt that, in the opinion of OTS, create excessive risks of default and
pressure on the savings institution to be acquired.

•

Acquisition of control would result in a significant change in the business strategy of the
institution that would implement activities inconsistent with economical home financing.

The presence of any of these considerations may constitute grounds for disapproval of a proposed
acquisition if not adequately addressed by the acquiror. In order to rebut a presumptive disqualifier
on integrity grounds, an acquiror should submit materials proving that the conduct in question has
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ceased, has become irrelevant, or otherwise should not warrant a disapproval decision. With regard
to financial factors, the submission of an acceptable business plan or the acquiror's commitment to
raise additional capital (for the acquiror) may be sufficient to rebut a presumptive disqualifier.

Decision Guidelines
The statutory and regulatory requirements are designed to ensure that the individuals seeking to
acquire control of an institution will provide for the continued viability and safe and sound operation
of the institution. The analysis should conclude that the proposed acquirors have the financial, ethical
and managerial wherewithal to operate the institution in a safe and sound manner and expertise to
implement the business plan. In addition, OTS must also conclude that the proposed transaction is in
compliance with applicable rules and regulations. If, based upon the review, OTS has determined
that the acquirors will adversely affect the institution; a denial recommendation may be the
appropriate course of action. OTS should consider the following factors in analyzing the application
to determine if the transaction satisfies the applicable statutory and regulatory criteria for approval:
•

Did the applicant submit the following forms and information:
∗

Interagency Notice of Change in Control;

∗

Interagency Biographical and Financial Report, including financial statements for an
acquiror's proprietary interests;

∗

Attachment A to Regulatory Bulletin 20;

∗

FBI fingerprint cards completed by the acquiror and processing fee made payable to
OTS and submitted to the Regional office;

∗

If funds are to be borrowed to acquire the stock, copies of any loan agreement or
commitment letter;

∗

Three-year business plan;

∗

Proxy material; and

∗

Copies of any filings made with other regulatory agencies.

•

Is a notice the appropriate filing? OTS should determine whether the acquisition involves an
individual or group of individuals acting in concert constituting a company as defined in
12 C.F.R. § 574.2(f). If a company is the acquiror, a holding company notice is the
appropriate filing (see Holding Company Acquisitions Section 510). If an individual is a
director or officer of a savings and loan holding company, or controls more than 25 percent of
the voting shares of such holding company, and proposes to acquire control of an institution
that is not a subsidiary of the savings and loan holding company, an H-(e)2 application is
required.

•

Have all appropriate parties joined in the filing? OTS should determine whether the
person(s) filing the notice is acting in concert with another person(s) who has not filed. In
addition, OTS should determine whether any trusts or voting agreements would qualify as

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savings and loan holding companies pursuant to 12 C.F.R. § 574.2(q) or 574.2(r),
respectively.
•

Did the certification or background check (FBI, LEXIS/NEXIS and/or Westlaw, and CIIS) of
the individual(s) indicate that they have been the subject of any enforcement, criminal or
questionable actions?

•

Has the acquiror served as a management official or been a controlling person of another
savings institution, savings and loan holding company, commercial bank, or bank holding
company? If so, have the appropriate regulators been contacted for comment on the
acquiror?

•

Does the Interagency notice of Change in Control or information disclosed in the background
checks raise a presumptive disqualifier as to the acquiror's integrity, competence, or financial
condition? If so, has the acquiror provided information to OTS to successfully rebut the
disqualifier?

•

Does the acquiror own or control a business that engages in an activity that the target
institution or its service corporation may engage, such as real estate development, mortgage
lending, or insurance sales? If so, the acquiror should be required to identify those specific
areas where any conflicts exist and should provide OTS with a set of specific policies and
procedures to avoid potential conflicts.

•

If the target institution was recently converted, has the acquiror filed and received approval of
an application under 12 C.F.R. § 563b.3(i) prior to filing the notice?

•

Has the acquiror indicated the method by which the institution's stock will be acquired (i.e.,
open market purchase, tender offer, etc.)? The specifics of the transaction should be detailed
prior to OTS deeming the notice sufficient.

•

How will the acquiror finance the acquisition? If the funds are to be borrowed, OTS should
determine whether the acquiror could service the debt without placing undue pressure on the
institution to pay dividends.

•

If the acquiror will borrow funds for the stock purchase, specific information concerning the
loan should be provided, including a copy of the loan agreement or commitment letter.

•

Does the acquiror intend to radically alter the business strategy or corporate structure of the
institution? If so, do the changes raise any supervisory concerns or are inconsistent with
economical home financing?

•

Does the acquiror propose to make changes in the management or board of the institution? If
so, the identity of the new management officials should be provided in the notice filing.

•

Does the notice adequately address all statutory and regulatory grounds for disapproval of an
acquisition of control?

Conditions
If OTS does not deny a notice, it will issue a nonobjection letter. Letters of nonobjection generally
should state that (i) the acquisition must be consummated within one year of the date of the letter, (ii)

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that acquisition must be in accordance with the terms and representations made in the notice, and (iii)
that there must be no material change in circumstances prior to the acquisition.
Letters of nonobjection should specify the nature of the proposed transaction. Unless notices
specifically indicate otherwise, it is assumed that the acquiror will acquire 100 percent of an
institution’s voting stock. If the acquisition is for less than 100 percent of the institution’s voting
stock, the letter should state that the no-objection applies only to the percentage (or number, as
appropriate) of shares proposed to be acquired.
OTS may condition its approval of the change in control notice to include nonstandard conditions. If
such nonstandard conditions are utilized, the Regional Office’s digest must include appropriate
justification for imposing such condition.
Any nonstandard conditions incorporated into the approval letter must be summarized in the National
Applications Tracking System record for the application. This requirement helps OTS to provide the
public a complete listing of all notices approved with nonstandard conditions of approval.

RECORDKEEPING REQUIREMENTS
OTS is required to consolidate all correspondence related to the processing of the notice or notice into
a file copy to be sent to a central file. Both the Regional Office and OTS-Washington will maintain a
separate file copy for nondelegated filings. The file copy must include a copy of the original filing
including all exhibits, all amendments, all internal and external correspondence between interested
parties, all documentation associated with the review and analysis of the filing, and all decision,
recommendation memorandum, and compliance material. The file copy must be organized and
separated into public and confidential material, and clearly identified as such. The public and
confidential sections must be arranged in chronological order.

MONITORING AND CONTROL
The approval order or letter will generally include conditions of approval. The Regional Office will
monitor compliance with all conditions imposed in connection with an notice’s approval. The
applicant must submit evidence of satisfaction of the conditions included in the approval order or
letter to the Regional Office within the stated time frames.
OTS should notify the appropriate staff responsible for the supervision and examination of the
institution regarding the action taken on an notice. In addition, OTS should provide the appropriate
staff with copies of the approval order or letter. If an notice is approved, the first examination of the
institution following the approval should include a review of compliance with all conditions of
approval and any changes in operations as a result of the transaction.
A review of the notice file should be made after all compliance material is received to ensure that the
file is complete. Any deficiencies should be corrected before the file is sent to storage.
OTS-Washington may conduct a post audit review of the notice in the Regional Office, including a
review of the documentation maintained in the notice file.

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INFORMATION SOURCES
Statutes
12 U.S.C. § 1817(j)

Change in Bank Control Act

Regulations
12 C.F.R. Part 516
12 C.F.R. § 563.183
12 C.F.R. § 563b.3(i)
12 C.F.R. Part 574

Applications Processing Guidelines
Reports of Change in CEO or Director
Acquisition of the Securities of Converting and
Converted Savings Associations
Acquisition of Control of Savings Institutions

OTS Bulletins
Regulatory Bulletin 20

Proper Investigation of Applicants and Increased
Communications Between OTS and Other Financial
Institution Regulatory Agencies

Forms
OTS Form 1163
OTS Form 1623

Office of Thrift Supervision

Interagency Notice of Change in Control
Interagency Biographical and Financial Report

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