Business Combinations Booklet

Office of the
Comptroller of the Currency
Washington, DC 20219

COMPTROLLER’S LICENSING MANUAL

Business
Combinations

Version 1.0, November 2017
Version 1.1, July 2018

Version 1.1

Contents
Introduction ..............................................................................................................................1
Key Policies ...............................................................................................................................2
Decision Criteria ........................................................................................................... 2
Types of Combinations ................................................................................................. 9
Application Process ................................................................................................................27
Exploratory Calls or Meetings .................................................................................... 27
Prefiling Meetings or Discussions .............................................................................. 27
Public Notice and Comment Periods .......................................................................... 28
Filing the Application ................................................................................................. 30
Application Issues ....................................................................................................... 32
Post-Decision Process ................................................................................................. 50
Procedures: Prefiling .............................................................................................................53
Exploratory Inquiry, Conference Call, or Meeting ..................................................... 53
Prefiling Meeting ........................................................................................................ 53
Procedures: Application Process ..........................................................................................54
Filing the Application and Publication ....................................................................... 54
Organizing an Interim Bank........................................................................................ 54
Public Comments and Hearings .................................................................................. 54
Initial Review .............................................................................................................. 55
Procedures: Consummation ..................................................................................................56
Consummation and Filing of Documents ................................................................... 56
Post-Consummation .................................................................................................... 56
Dissenters’ Rights ....................................................................................................... 56
Appendixes..............................................................................................................................57
Appendix A: Expedited Review Eligibility Criteria for Business Combinations
Involving Banks or Depository Institutions* ........................................................ 57
Appendix B: Bank Merger Act Competitive Review ................................................. 59
Glossary ..................................................................................................................................63
References ...............................................................................................................................69
Table of Updates Since Publication ......................................................................................74

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Introduction
This booklet of the Comptroller’s Licensing Manual supports the Office of the Comptroller
of the Currency’s (OCC) supervisory activity with respect to reviewing and deciding
applications for business combinations for national banks and federal savings associations
(FSA). Throughout this booklet, national banks and FSAs are collectively referred to as
“banks,” “federally chartered banks,” or “institutions,” unless it is necessary to distinguish
between the two types of charter.
Business combinations, as defined in the “Glossary” section of this booklet, include mergers,
consolidations, and certain purchase and assumption transactions. This booklet also covers
reorganizations under 12 USC 215a-2 in which a national bank becomes a subsidiary of a
bank holding company (BHC). A national bank or FSA must apply to, and obtain approval
from, the OCC before consummating any business combination in which the bank or FSA
will be the resulting entity. In the case of a national bank, prior approval is required if the
surviving entity is a nonbank affiliate of the national bank. A bank engaging in a merger or
consolidation must file notice with the OCC when it is not the applicant and the resulting
institution.
This booklet
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describes OCC policies and procedures used in the combination process, along with
detailed guidance and instructions.
discusses the factors that the OCC considers in deciding a combination application.
describes the application process, including the prefiling process, filing and review of the
application, the decision, and the post-consummation phase of the combination.
discusses the procedures and requirements for a bank to enter into a combination (e.g.,
approval by directors and shareholder vote).

This booklet consists of the following sections:
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“Introduction”
“Key Policies,” which outlines specific factors for combinations
“Application Process”
“Procedures”
“Appendixes,” which addresses expedited review and streamlined application eligibility
and bank merger competitive review
“Glossary”
“References,” with statutory and regulatory citations and other useful material; references
are also made to other booklets of the Comptroller’s Licensing Manual and the
Comptroller’s Handbook

Throughout this booklet are hyperlinks to sample documents on the OCC’s website, such as
the Interagency Bank Merger Act Application, and other information that applicants may
find useful.

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Key Policies
Decision Criteria
In evaluating a business combination application, the OCC considers a number of statutory
and regulatory factors. This section provides an overview of the applicable evaluative factors.

General Policy Factors
The OCC considers the following factors in evaluating an application for a business
combination:
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Capital level of the resulting national bank or FSA.
Conformity of the transaction to applicable law, regulation, and supervisory policies.
Transaction’s purpose.
Transaction’s impact on the safety and soundness of the national bank or FSA.
Effect of the transaction on the national bank’s or FSA’s shareholders (or members, in
the case of a mutual savings association), depositors, other creditors, and customers.

Bank Merger Act and Related Factors
In addition to the above factors, when the OCC evaluates an application for a business
combination under the Bank Merger Act (BMA), the OCC also considers the
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effect of a proposed business combination on competition.
financial and managerial resources and future prospects of the existing or proposed
institutions.
probable effects of the business combination on the convenience and needs of the
community served.
effectiveness of any insured depository institution involved in the transaction in
combating money laundering activities.
risk to the stability of the U.S. banking and financial system.
deposit concentration limit in 12 USC 1828(c)(13) for certain interstate transactions.
total liabilities concentration limit under 12 USC 1852 for certain combinations involving
large financial firms.
performance of the applicant and the other depository institutions involved in the
business combination in helping to meet the credit needs of the relevant communities,
including low- and moderate-income neighborhoods, consistent with safe and sound
banking practices, in accordance with 12 USC 2903(a)(2).

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Safety and Soundness and Compliance
The OCC considers safety and soundness factors, including ratings and examination findings,
when assessing the post-merger condition of the acquiring institution.
The OCC expects the resulting institution to remain in a safe and sound condition with
acceptable future prospects and to comply with all laws and regulations. Applications from
banks in troubled condition or from sound banks seeking to acquire banks in less than
satisfactory condition may raise questions regarding the safety and soundness of the resulting
institution. The OCC considers the condition of the merging and resulting banks, including
capital, management and earnings. Specifically, the OCC considers the following:
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Does the resulting bank have expertise to oversee any areas of concern or new products
or lines of business?
Has management appropriately planned for system integration issues?
Will the resulting bank have sufficient capital relative to its risk profile?
Are there any material contingent liabilities to be assumed?

The OCC also considers the compliance records of all merging institutions, including their
record of compliance with Bank Secrecy Act (BSA)/Anti-Money Laundering (AML)
requirements, the Community Reinvestment Act (CRA), and consumer laws and regulations.
The OCC considers the following, for example:
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Do the applicant or target institutions have BSA/AML compliance deficiencies? If so, has
any such institution corrected the identified deficiencies? If not fully corrected, what is
the status of the bank’s progress in remediating these deficiencies?
Do any of the combining banks present concerns relating to unfair, deceptive, or abusive
acts or practices (UDAP/UDAAP), fair lending, or other discriminatory or illegal
practices?
Does either of the combining banks have a “less than satisfactory” CRA rating overall, or
in one or more geographic rating areas?

Banks considering business combinations that present safety and soundness or compliance
concerns should consult with the appropriate OCC supervisory office to include Compliance
and Community Affairs, Compliance Supervision Management, and the Licensing Division
before filing any related application.

Legal
The OCC evaluates and decides combination proposals based on requirements under relevant
laws and regulations. The OCC regulations governing national bank combination
transactions are detailed in 12 CFR 5.33 and incorporate references to the BMA,
12 USC 1828(c), the Riegle-Neal Interstate Banking and Branching Efficiency Act (RiegleNeal Act, or Riegle-Neal), 12 USC 1831u, and the National Bank Consolidation and Merger
Act, 12 USC 215 et seq. The OCC regulations governing an FSA’s combination transactions

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are detailed in 12 CFR 5.33 and incorporate references to the BMA and sections 5(d)(3)(A)
and 10(s) of the Home Owners’ Loan Act (HOLA), 12 USC 1464(d)(3)(A) and 1467a(s).
In determining the legal permissibility of a business combination, the OCC considers:
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the structure of the proposed transaction, including the use of interim banks and the
ownership structure of the parties involved.
the adequacy of notices to the public and disclosure to shareholders.
the treatment of any minority or dissenting shareholders.
the permissibility of any subsidiaries or related organizations, assets, and activities.
any plans to divest or otherwise bring into conformance any impermissible subsidiaries,
assets, or activities.
the resulting bank’s authority to retain and operate its main or home office and branches,
as well as the main or home office and branches of the target bank.
whether applicable filings or waivers of related applications have been made with the
Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit
Insurance Corporation (FDIC), or other regulators as appropriate.
whether proposed changes to capital meet statutory requirements.
whether other related applications required in connection with the business combination,
such as applications for trust powers, operating or financial subsidiaries, or noncontrolling investments, are permissible.
concentration limits under the Dodd–Frank Wall Street Reform and Consumer Protection
Act (Dodd–Frank), sections 622 and 623.
whether the transaction conforms with any other relevant legal requirements or policy.

Banks considering business combinations that present significant legal issues should consult
with the OCC’s Licensing Division before filing any related application.

Competition
The U.S. Department of Justice (DOJ) and the responsible federal banking agency review the
competitive effect of all BMA applications under federal banking and antitrust laws. When
the resulting institution is a national bank or FSA and all of the institutions involved in the
combination are insured, the OCC is the responsible federal banking agency. For applications
filed pursuant to the BMA, the OCC will not approve a combination whose effect in any
section of the country may substantially lessen competition or tend to create a monopoly, or
which in any other manner would be in restraint of trade, unless these effects are 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.
Under the BMA, the DOJ and the FDIC (rather than the OCC) evaluate competitive effects
of combinations that involve an insured depository institution combining with an uninsured
depository institution.

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Combinations in which each depository institution involved is uninsured are not subject to
the BMA, but are subject to the general federal antitrust statutes such as the prohibitions
against monopoly and substantial lessening of competition under the Sherman Antitrust Act
and Clayton Antitrust Act, and to notification requirements under the Hart–Scott–Rodino
Antitrust Improvement Act, as administered by the DOJ and the Federal Trade Commission.

Affiliated and Nonaffiliated Combinations
Combinations between banks and their affiliates are considered competitively neutral and,
therefore, do not result in adverse competitive effects. The OCC generally deems a bank to
be affiliated with another depository or non-depository institution if one or more common
individuals or companies control both the bank and the other institution. Refer to the
“Glossary” section of this booklet for a definition of “control.” The OCC also deems an
applicant bank and another depository institution involved in a combination to be affiliated
when a BHC or savings and loan holding company (SLHC) that owns the applicant bank has
filed a related application with the Federal Reserve under the Bank Holding Company Act
(BHCA) or HOLA to acquire the other depository institution, the related application has
undergone review for competitive effects, and the holding company acquisition consummates
before the bank combination. However, the OCC deems a combination between a bank and
another nonaffiliated depository institution in which the applicant bank’s BHC or SLHC has
requested that the Federal Reserve not require a related application as a nonaffiliated
combination.

Merger Screens
To speed the competitive review process and reduce regulatory burden on the banking
industry, federal banking agencies and the DOJ have developed Merger Screens to identify
proposed nonaffiliated combinations that do not have significant adverse effects on
competition. The OCC primarily relies on Merger Screen A for measuring competitive
effects of a combination. 1 A proposed combination exceeds the threshold of Merger
Screen A when it would cause the Herfindahl-Hirschman Index (HHI), a statistical measure
of market concentration, to increase by more than 200 points to a level above 1800 based on
increased concentration levels of deposits in any geographic banking market.
Applicants may elect to submit an independent competitive analysis for combinations that do
not pass Merger Screen A.
Banks planning a combination that may raise a significant anticompetitive issue should
consult with the OCC or the DOJ before submitting an application. Banks may wish to
resolve anticompetitive issues by agreeing to make an appropriate divestiture.

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In addition, the OCC has concluded that geographic markets with populations of less than 10,000 are not
economically significant for the purpose of this analysis, and therefore, any anticompetitive effects in these
markets are considered negligible. Generally, the OCC does not object to a proposed combination in such a
market on anticompetitive grounds.

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Competitive Review Process
In some instances, the DOJ may further review transactions that do not exceed the thresholds
in Merger Screen A. If the OCC determines that no competitive concerns exist and the
application satisfies the other evaluative factors for combinations, the OCC may approve the
transaction, even if the DOJ has concerns over possible anticompetitive effects of the
combination. In these cases, the OCC approval may include a condition that the applicant
will comply with any agreement reached with the DOJ (for example, regarding divestitures).
For a detailed discussion of the competitive review screening process and the DOJ process,
refer to appendix B, “Bank Merger Act Competitive Review,” of this booklet.

Financial and Managerial Resources and Future Prospects
The OCC considers the financial and managerial resources and future prospects of the
combining and resulting institutions. The OCC weighs safety and soundness factors and
normally does not approve a combination that would result in a bank with inadequate capital,
unsatisfactory management, or poor earnings prospects.
In evaluating financial and managerial resources, the OCC relies on the views of the
supervisory office and information from a variety of sources, such as reports of examination
of the depository institutions involved in the combination and the applicant’s plans to operate
the resulting bank. The OCC closely scrutinizes combinations that raise issues about
management’s ability to address increased risk to bank earnings and capital that can arise
from any of the eight categories of risk that the OCC has defined for supervision purposes:
credit, interest rate, liquidity, price, operational, compliance, strategic, and reputation.
The OCC also considers the applicant’s plans to identify and manage systems integration
issues, such as software compatibility, hardware requirements, and network integration
problems. The OCC’s assessment and degree of scrutiny considers the applicant’s track
record of integrating acquisitions. Any combination in which systems integration concerns
are identified is subject to additional review, which could warrant removal from expedited
processing status, if otherwise eligible. If the OCC determines that systems integration
problems represent a significant concern, the OCC may impose conditions, enforceable
pursuant to 12 USC 1818, to address the concern. These could include requirements and time
frames for specific remedial actions and specific measures for assessing and evaluating the
bank’s systems integration progress.
If the integration issues or other issues present significant supervisory concerns, and the
issues cannot be resolved through appropriate conditions or otherwise, the OCC may deny
the application.
Before entering into merger agreements and data conversion contracts, the bank should take
into consideration the possibility that the application may generate substantive public
comments and that the review period could therefore be extended.

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Convenience and Needs and CRA
When reviewing a business combination application under the BMA, the OCC considers the
likely impact of the applicant’s plans on the community to be served. The OCC reviews any
significant anticipated changes in financial services or products and fees offered to bank
customers that would occur after the transaction.
The convenience and needs factor is distinguished from the CRA requirements in that the
convenience and needs analysis is prospective, whereas the CRA requires the OCC to
consider the applicant’s record of performance. The OCC considers any plans of the
resulting, combined bank to close branches, particularly in low- to moderate-income areas,
reduce services, or provide expanded or less costly services to the community.
When rendering a decision on combination applications, the OCC also considers
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the CRA records of performance for all participating insured depository institutions.
the most recent CRA performance evaluations for each of the participating institutions
and any public comments received during the public comment period.
public comment letters relating to the participating institutions’ CRA performance that
were received from the public before the filing of an application.
the applicant’s responses to any comment letters or additional information requests from
the OCC.
other relevant information.

If the OCC determines that the CRA record of performance of any of the participating
institutions is less than satisfactory, the OCC may deny or conditionally approve a business
combination application based on the facts and circumstances involved in the particular
case 2.
Refer to the “Public Notice and Comments” booklet of the Comptroller’s Licensing Manual
for a detailed discussion of how convenience and needs and CRA factors affect the
application process, including an application’s removal from the expedited review process
because of significant CRA issues.

AML Compliance
When transactions are subject to the BMA, the OCC considers the effectiveness of AML
compliance programs of each insured depository institution involved, 12 USC 1828(c)(11).
The OCC reviews existing supervisory records, comments received during the public notice
period, and comments from other regulators and public officials. The OCC anticipates that, in
most cases, required information will be available from the supervisory record.
During the processing of a combination application, the OCC reviews any identified
BSA/AML program deficiencies. In evaluating this factor, the OCC reviews matters
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See PPM 6300-2, “Impact of CRA Ratings on Licensing Applications.”

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requiring attention and program deficiencies identified by regulatory agencies and the bank’s
own audit program. The OCC assesses the nature and duration of the issues, the institution’s
progress in remediating identified program deficiencies, and whether the proposed
combination would detract from the remediation, exacerbate existing problems, or create new
problems for the resulting institution. If the BSA/AML deficiencies have resulted in an
enforcement action for BSA/AML violations, the bank should consult with its supervisory
office and the Licensing Division before pursuing any plans for a combination.
Refer to the Federal Financial Institutions Examination Council’s BSA/AML Examination
Manual for an expanded discussion on supervisory expectations.

Financial Stability
The BMA, 12 USC 1828(c)(5), requires the OCC to consider “the risk to the stability of the
United States banking or financial system” when reviewing transactions subject to the act. In
evaluating a BMA application under this review criterion, the OCC considers the following
factors:
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Whether the proposed transaction would result in a material increase in risks to financial
system stability due to an increase in size of the combining institutions.
Whether the proposed transaction would result in a reduction in the availability of
substitute providers for the services offered by the combining institutions.
Whether the combined entity would engage in any business activities or participate in
markets in a manner that, in the event of financial distress of the combined entity, would
cause significant risks to other institutions.
Whether the proposed transaction would materially increase the extent to which the
combining institutions contribute to the complexity of the financial system.
Whether the proposed transaction would materially increase the extent of cross-border
activities of the combining institutions.
Whether the proposed transaction would increase the relative degree of difficulty of
resolving or winding up the combined institution’s business in the event of failure or
insolvency.
Any other factors that could indicate that the transaction poses a risk to the U.S. banking
or financial system.

Deposit Concentration Limit
Under 12 USC 1828(c)(13), the OCC may not approve an interstate merger transaction if,
after the transaction, the acquiring bank and all of its insured depository institution affiliates
would control more than 10 percent of insured deposits in the United States. An “interstate
merger transaction” is one between insured depository institutions with different home states
that are not affiliates. There is an exception for transactions involving an institution in default
or in danger of default or with respect to which the FDIC provides assistance under
12 USC 1823.

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Liability Concentration Limit
Under 12 USC 1852, a financial company may not combine with another company if, after
the transaction, the total consolidated liabilities of the acquiring financial company would
exceed 10 percent of aggregate consolidated liabilities of all financial companies in the
United States. “Financial company” includes an insured national bank or FSA. There is an
exception for transactions involving an institution in default or in danger of default,
transactions with respect to which the FDIC provides assistance under 12 USC 1823, or
transactions that would result in only a de minimis increase in liabilities.

Types of Combinations
A bank may structure a combination based on a variety of factors, such as the charter type of
the target institution, the location of the target institution, branching restrictions in the states
where the target is located, whether the target is FDIC-insured, whether the target is affiliated
with the acquiring bank, and tax considerations. In some cases, a bank may use a multi-step
process that involves more than one type of combination.

Combinations Resulting in a National Bank
Same-State Combinations With Banks and Savings Associations
A national bank may combine with other depository institutions located in the same state.
These same-state combinations generally involve transactions in which the main offices of
both the acquiring national bank and the target are located in the same state. Same-state
combinations, however, also may include ones in which the main office of the target is
located in a state in which the acquiring national bank has a branch (or a trust office, in the
case of a national bank limited to the activities of a trust company), but not its main office.
As outlined in this section, the sources of authority for the various types of combination
transactions, as well as authority to retain branches, may differ depending on the type of
institution being acquired. In addition, these transactions may be subject to other statutory
requirements, such as the BMA, which are discussed elsewhere in this booklet.
The following lists different ways that a national bank may combine with other depository
institutions located in the same state:
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Pursuant to 12 USC 215 or 215a, a national bank may acquire a national or state bank
with its main office in the same state as the acquiring bank. For purposes of sections 215
and 215a, “state bank” includes a state commercial bank, state trust company, state stock
savings bank, or state-chartered savings association. Authority to consolidate or merge
under sections 215 or 215a does not depend on the FDIC-insured status of the
participating institutions. The resulting bank may retain the branches of the banks
involved, including the branches that are not located in the same state as the main offices

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of the combining banks, if branch retention meets the requirements of the law governing
branch retention in section 215 or 215a transactions (12 USC 36(b)(2)).
In certain circumstances under 12 USC 215 or 215a, a national bank with its main office
in one state may acquire a national or state bank, including a state savings association,
with its main office in a different state. The most common situation is when the national
bank is acquiring another national or state bank in a state in which the acquiring bank
already operates a branch, and when the target institution operates branches only in that
state or in other states in which the acquiring national bank already operates branches.
The resulting national bank may retain the branches of the banks involved, if permitted
under the law governing branch retention in section 215 or 215a transactions
(12 USC 36(b)(2)). 3
Sections 215 and 215a authorize only mergers and consolidations with other national
banks, state banks, state stock savings banks, and state savings associations. They do not
apply to a merger or consolidation of a national bank with an FSA. Those transactions are
authorized pursuant to 12 USC 215c. A resulting national bank may retain the branches
of the target FSA if the national bank could establish branches at the sites of the FSA
branches under 12 USC 36(c). Generally, this permits the retention of the FSA’s branches
in states where the national bank already has its main office or branches, or in states
where the national bank does not have an existing branch but may, and does, establish a
de novo interstate branch under 12 USC 36(g), and where state intrastate branching law,
as applied to national banks by 12 USC 36(c), permits establishment of a branch at a site
or sites of the various branches of the acquired FSA.

Interstate Combinations Under the Riegle–Neal Act
The Riegle–Neal Act authorizes interstate combinations between insured national and state
banks with different home states. 4 The “home state” of a bank under the Riegle–Neal Act is,
for national banks, the state where the bank’s main office is located or, for state banks, the
3

While these transactions can be effected under sections 215 or 215a because the banks are located in the same
state for purposes of those statutes, if the institutions are both insured banks (not savings associations) and have
different home states, the transaction also falls within the scope of the Riegle–Neal Act and could be
accomplished under that authority, as discussed in the “Interstate Combinations” section of this booklet. An
applicant may select whether to rely on Riegle–Neal Act or sections 215 or 215a for authority to undertake the
transaction, especially when the target bank operates only in one state where the acquiring bank already has
branches. When the target bank operates branches in states where the acquiring bank does not have its main
office or any branches, there may be issues regarding the authority of the acquiring bank in a consolidation or
merger under sections 215 or 215a to retain branches in those states under section 36(b)(2). In such cases, the
OCC strongly encourages applications under the Riegle–Neal Act.

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The Riegle–Neal Act covers only insured banks (as “bank” is defined in the Federal Deposit Insurance Act),
and so it does not apply to combinations between a national bank and a state or federal savings association or to
combinations in which one of the banks is uninsured. As discussed in “Interstate Combinations Between
National Banks and Insured State and Federal Savings Associations,” a national bank may accomplish a Riegle–
Neal Act combination with a state or federal savings association that has first converted to a national bank
under, as applicable, 12 USC 35 and 12 CFR 5.24 or, if eligible, under 12 USC 1464(i)(5)(A), provided that the
combination is consistent with other Riegle–Neal Act requirements. Also, as discussed in the “Interim Bank
Combinations” section of this booklet, a national bank may accomplish a Riegle–Neal Act combination with an
uninsured bank by first combining the uninsured bank into an interim national bank.

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state that chartered the bank. Thus, under the Riegle–Neal Act, an insured national bank may
combine with another insured bank with a different home state. As discussed in footnote 3
and the accompanying text under the “Same-State Combinations” section of this booklet,
some combinations that are within the scope of the Riegle–Neal Act are also within the scope
of sections 215 or 215a, and the applicant bank may select which authority to use.
Interstate combinations under the Riegle–Neal Act include mergers, consolidations, and
purchase and assumption transactions. The Riegle–Neal Act provides its own branch
retention authority in 12 USC 36(d) and 1831u(d), and under it the resulting bank may retain,
as branches, the main offices and branches of all banks involved in the combination. In
addition, the resulting bank may designate its main office from among the main offices and
branches of the banks involved in the combination. For purchase and assumption transactions
in which a national bank seeks to enter a new state by acquiring an existing branch of an
insured bank, but without acquiring the bank, the state where the target branch is located
must permit branch acquisitions by an out-of-state bank. 5
The Riegle–Neal Act has a number of requirements that must be met for a transaction to be
approved:
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Age requirements (refer to 12 USC 1831u(a)(5), (6)): The bank being acquired must
have existed for at least the minimum period of time, if any, specified in the host state’s
statutes, up to a maximum of five years. A bank that is chartered solely to acquire a bank
or branch and that does not open for business before acquiring the existing bank or
branch is deemed to have existed for the same period of time as the target bank or branch
(in the case of the acquisition of a branch without the acquisition of the bank).
Filing requirements (refer to 12 USC 1831u(b)(1)A): An acquiring bank must comply
with the filing requirements of any state that will become a host state as a result of the
transaction, if the requirements do not discriminate against out-of-state banks and BHCs
or their subsidiaries and are similar in effect to those imposed on out-of-state nonbanking
corporations. An acquiring bank also must submit a copy of its OCC application to the
state bank supervisor of each host state. These filing requirements, however, do not mean
that the national bank must obtain approval from the state to undertake the transaction.
Deposit concentration limits (refer to 12 USC 1831u(b)(2): The Riegle–Neal Act
imposes nationwide and statewide deposit concentration limits on certain interstate
merger transactions. Those limits, however, pertain only to interstate merger transactions
involving nonaffiliated banks, and the statewide limitations apply only when both

5

For branch acquisitions under the Riegle–Neal Act, the state where the target branch is located, rather than the
selling bank’s main office state or chartering state, is considered to be the home state of the selling bank (the
state whose law must permit branch acquisitions).

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institutions or their affiliates have branches in the same state. 6 In addition, the acquiring
bank in an affiliated combination should assess the applicability of separate stateimposed concentration limits.
CRA considerations (refer to 12 USC 1831u(b)(3)): All interstate combinations,
including affiliate combinations, are subject to OCC review for compliance with the
CRA. The Riegle–Neal Act imposes additional CRA-related criteria on all nonaffiliated
Riegle–Neal Act interstate mergers. To approve a nonaffiliated combination that results
in a national bank having a branch in a state in which it had neither a branch nor an
affiliated bank immediately before the transaction, the OCC considers compliance with
the CRA (as it currently must do for any business combination), the most recent written
CRA performance evaluation of any bank that would become an affiliate of the resulting
bank, comments received during the public comment period, and compliance by
applicants with applicable state community reinvestment laws.
Capital and management (refer to 12 USC 1831u(b)(4): Each bank involved in the
combination must be at least adequately capitalized as of the date the application is filed.
In addition, the OCC must determine that the resulting national bank will be well
capitalized and well managed upon consummating the combination.

There is an exception from these requirements for transactions involving one or more banks
in default or in danger of default or with respect to which the FDIC provides assistance under
12 USC 1823(c). See 12 USC 1831u(e).

Interstate Combinations Between National Banks and Insured State and
Federal Savings Associations
The Riegle–Neal Act does not apply to interstate combinations between national banks and
federal and state savings associations. An insured national bank, however, may combine with
an insured federal or state savings association in an interstate transaction in several ways.
The authority for a national bank to consolidate or merge with a state savings association is
12 USC 215 and 215a. As previously noted, these statutes apply to institutions located in the
same state. The authority for a national bank to consolidate or merge with an FSA is
12 USC 215c. There is not a same-state location requirement in section 215c. For
combinations with state savings associations and FSAs, the authority of the resulting national
bank to retain the branches of the savings association is 12 USC 36(c), which, as noted
above, authorizes establishment of branches in a state in which the national bank is situated.
If the national bank has a branch in the state where the state savings association is located,
then the bank is located in that state and the consolidation or merger can be effected under
6

The nationwide limit prohibits the OCC from approving an interstate merger transaction if the resulting
national bank and all of its insured affiliated depository institutions would control, upon consummation, more
than 10 percent of the total amount of deposits of insured depository institutions in the United States. The
statewide limitation prohibits the OCC from approving an interstate merger transaction if the resulting bank
(and all of its insured depository institution affiliates) would control 30 percent or more of the total deposits of
insured depository institutions in any state involved in the transaction. This 30 percent limit may be increased
by state statute, regulation, or order, or by approval of the state bank supervisor if the standard of approval does
not discriminate against out-of-state banks or holding companies or their subsidiaries.

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12 USC 215 or 215a. Similarly, since the bank has a branch in that state, the bank can
establish additional branches in that state under 12 USC 36(c) like other banks in the state.
Thus, the bank can retain the savings association’s branches. Similarly, in a merger with an
FSA under 12 USC 215c, if the national bank has branches in the state where the FSA is
located, the bank can retain the FSA’s branches.
If the national bank does not already have a branch in the state where the savings association
is located, the bank would first establish an interstate de novo branch in that state under the
Riegle–Neal Act, 12 USC 36(g). Then it would proceed as stated.
Another way to accomplish an interstate combination with a state savings association or FSA
that has a different home state than the national bank is for the savings association first to
convert to a national bank. Then, once it is a national bank, the combination is an interstate
merger between two insured banks under the Riegle–Neal Act.
Section 341 of Dodd–Frank, codified at 12 USC 5451, provides that notwithstanding any
other provision of federal or state law, a savings association that becomes a bank may
continue to operate any branch that the savings association operated immediately before it
became a bank. Section 341 also provides that after becoming a bank, the bank may
establish, acquire, and operate additional branches at any location within any state in which
the savings association operated a branch immediately before the conversion if the law of the
state where the branch is located, or is to be located, would permit establishing the branch if
the bank were a state bank chartered by such state.
The national bank resulting from the conversion then engages in a Riegle–Neal Act
transaction with the acquiring national bank, provided the Riegle–Neal Act requirements set
forth above are satisfied. Generally, the age of the newly converted bank before its
conversion may be taken into account in determining compliance with Riegle–Neal Act age
requirements. As with branch retention after Riegle–Neal Act combinations between insured
banks, the resulting bank in the Riegle–Neal Act combination may retain the branches of all
participating institutions.

Purchase and Assumption Transactions
A national bank may effect a business combination through a purchase and assumption
transaction under 12 USC 24(Seventh), as well as a merger or consolidation. With OCC
approval under the BMA, an insured national bank may acquire the assets of another insured
depository institution or assume any deposit liabilities of another insured depository
institution. 7 The OCC interprets “acquire the assets” for BMA filing purposes to include the
acquisition of assets such that the target is no longer a viable competitor, regardless of
whether the target plans to liquidate immediately after consummating the transaction.

7

If the institution from which the national bank is assuming deposits or similar liabilities or to which the
national bank is transferring deposits is not an FDIC-insured depository institution, review of the transaction
under the BMA rests with the FDIC. Combinations with uninsured entities are discussed further in the next
section of this booklet.

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If the purchase and assumption transaction includes the acquisition of branches, the bank
must have authority to acquire and operate the branches under applicable branching statutes.
While 12 USC 24(Seventh) provides authority to acquire assets and assume deposits, it does
not by itself authorize branches. If the bank already has its main office or branches in the
state(s) where the acquired branches are located, the bank may retain the acquired branches if
it could establish or acquire new branches at the sites of the target’s branches under
12 USC 36(c). If the bank does not already operate branches in the state in which the
acquired branches are located, the bank may acquire and retain the branches, if the
transaction can be approved as an interstate branch acquisition under the Riegle–Neal Act
(12 USC 1831u(a)(4)). Under section 1831u(a)(4) a bank may acquire branches from a bank
in a new state without acquiring the bank if the state where the branch is located permits such
acquisitions. If the bank does not already operate branches in the state in which the acquired
branches are located, and the state in which the branches are located does not permit
interstate branch acquisitions, the national bank may acquire and retain the branches after
first establishing a de novo interstate branch under 12 USC 36(g) of the Riegle–Neal Act in
the state where the branches are located. Then, the bank may retain the acquired branches if it
could establish or acquire new branches at the sites of the target’s branches under
12 USC 36(c).
If, after a purchase and assumption transaction, the target institution plans to liquidate or
otherwise will no longer be a viable business, the application should include information
showing that possible creditors of the target institution, including potential contingent
liability claimants, will be protected so that the risk of claims being made against the
acquiring national bank is mitigated. This information should be provided regardless of the
charter of the target institution. This information need not be provided if the acquiring
national bank will assume all liabilities of the target institution, including contingent
liabilities.
In addition, if the target institution is a national bank or FSA and plans to liquidate after the
purchase and assumption transaction, the target institution must demonstrate that it will be
able to liquidate in an orderly manner under 12 CFR 5.48, unless the acquiring bank has
assumed all liabilities and obligations, including contingent liabilities. 8 If the target national
bank or FSA plans to liquidate or otherwise will no longer be a viable business after the
purchase and assumption transaction, the OCC expects the owners to begin the process of
liquidating the bank under 12 CFR 5.48 promptly after consummating the transaction and to
return the institution’s charter to the OCC, unless the bank and the OCC have agreed to other
arrangements.

Combinations Between National Banks and Uninsured Entities
There are several types of combinations involving uninsured entities: (i) an FDIC-insured
national bank acquiring an uninsured depository institution; (ii) an uninsured national bank
acquiring an uninsured depository institution; (iii) a national bank merging with its nonbank
subsidiary or affiliate; (iv) an insured national bank assuming deposits or similar liabilities
from an institution that is not an FDIC-insured depository institution; and (v) an insured
8

National banks also are subject to the requirements set forth in 12 USC 181.

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national bank transferring deposits to an institution that is not an FDIC-insured depository
institution. The latter two types of transactions are discussed in the preceding section of this
booklet.
A national bank seeking to merge or consolidate with an uninsured entity must file an
application and obtain OCC approval under the OCC’s combination regulation
(12 CFR 5.33) and under national banking laws for consolidations or mergers before
consummating the combination. Applicants also must provide the OCC with assurances that
the combination complies with legal requirements covering the proxy or information
statement, and shareholders’ approval of the proposed combination. Refer to the
“Shareholder Considerations” section of this booklet under “Application Process” for
additional discussion.

Insured National Bank Combining with an Uninsured Depository
Institution
In addition to filing an application with the OCC under relevant laws and regulations, an
insured bank seeking to combine with an uninsured depository institution must apply to and
receive prior approval from the FDIC under the BMA. Applications filed with the OCC
should include a letter and a copy of the application filed with the FDIC.

Uninsured National Bank Combining With an Uninsured Depository
Institution
An uninsured national bank may combine with another uninsured depository institution, such
as a national trust bank or state trust company, under the OCC’s combination regulation.
Applications to effect mergers and consolidations between uninsured depository institutions
also must comply with relevant national banking laws. For purposes of those statutes, an
uninsured national trust bank seeking to combine with another uninsured depository
institution whose business is limited to providing trust services is considered to be located in
states where they have a trust office as defined in 12 CFR 9.2(j) and 9.7(d).
Combinations that involve only uninsured depository institutions are not subject to the BMA
or the CRA. Accordingly, applicants for these transactions should complete and submit an
Interagency Bank Merger Act Application, but may omit questions relating to competition
and the CRA. Applicants should consult with the DOJ, because these transactions are subject
to federal antitrust statutes and may require filing under the Hart–Scott–Rodino Act.

National Banks Merging With a Nonbank Subsidiary or Affiliate
A national bank may merge with its nonbank subsidiary or affiliate with OCC approval
(12 USC 215a-3). For purposes of this authority, a nonbank affiliate is any company, other
than a bank, state trust company, state savings association, or FSA that controls, is controlled
by, or is under common control with the national bank. Control generally means having the
ability to vote 25 percent or more of any class of voting securities. Refer to the “Glossary”
section of this booklet for definitions of “company,” “nonbank affiliate,” and “control.”

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Both insured and uninsured national banks may participate in mergers under 12 USC 215a-3
when the resulting entity will be the national bank. However, the OCC permits only
uninsured national banks to merge with a nonbank affiliate when the nonbank subsidiary or
affiliate will be the resulting entity. An insured bank planning to merge into a nonbank
subsidiary or affiliate first must repay its deposits or transfer them to another insured
institution and become uninsured. In either case, the nonbank subsidiary or affiliate does not
have to be located in the same state as the bank.
Applications
Both insured and uninsured national banks proposing to merge with a nonbank subsidiary or
affiliate must seek approval from the OCC under section 215a-3. Insured banks also must
seek approval from the FDIC under the BMA.
Applications to the OCC from both insured and uninsured banks for approval under section
215a-3 to merge a nonbank subsidiary or affiliate into the bank should contain information
requested in the Interagency Bank Merger Act Application. When an insured national bank is
also applying to the FDIC for approval under the BMA, the bank may submit a copy of its
Interagency Bank Merger Act Application and request OCC approval under section 215a-3.
The letter also should address compliance with other requirements not covered in the
Interagency Bank Merger Act Application. Refer to the procedures and requirements in the
next section of this booklet.
An uninsured bank seeking to merge into a nonbank subsidiary or affiliate should submit a
letter addressing compliance with the following requirements, as well as other matters the
OCC requests. Uninsured banks seeking to use this structure should contact the OCC before
filing an application.
Procedures and Requirements
12 CFR 5.33(g)(4) and (5) set out requirements and procedures for mergers authorized under
section 215a-3. The nonbank subsidiary or affiliate must have the authority to enter the
merger under the law of the state or other jurisdiction under which the nonbank subsidiary or
affiliate is organized. The law need not specifically address national banks. This requirement
typically is met when a state’s law permits its domestic corporations to merge with entities
organized under the law of another jurisdiction.
When the national bank will be the resulting entity, the national bank must follow the
procedures and requirements for matters such as notice of shareholder meeting, shareholder
and director approval, and content of the merger agreement contained in 12 USC 215a as if
the nonbank affiliate were a state bank, except as provided otherwise in 12 CFR 5.33(g)(4).
When the nonbank subsidiary or affiliate will be the resulting entity, the national bank must
follow the procedures and requirements for matters, such as notice of shareholder meeting,
shareholder and director approval, the rights of dissenting shareholders, and appraisal of

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dissenters’ shares contained in 12 USC 214a as if the nonbank affiliate were a state bank
except as provided otherwise in 12 CFR 5.33(g)(5).
In both types of transactions, the nonbank subsidiary or affiliate follows the procedures and
requirements set out in the law of the state or other jurisdiction under which the nonbank
affiliate is organized. The rights of dissenting shareholders and the appraisal of dissenters’
shares also are determined in the manner prescribed by the law of the state or other
jurisdiction under which the nonbank subsidiary or affiliate is organized.
While mergers under section 215a-3 are not eligible for the BMA exemption to sections 23A
and 23B of the Federal Reserve Act (FRA), a merger between a bank and its operating
subsidiary generally is exempt from sections 23A and 23B as implemented by Regulation W.
Also, under certain circumstances Regulation W may provide section 215a-3 mergers with an
exemption from the collateral requirements and quantitative limits of section 23A. (See the
discussion of sections 23A and 23B exemptions in the “Affiliate Transaction Restrictions”
section of the booklet.)

Transactions Involving Bank Holding Companies
Many combinations involve BHCs. Generally, shareholders controlling at least two-thirds of
the common stock of a national bank can restructure their ownership so that the bank
becomes a subsidiary of a new or nonaffiliated BHC. Shareholders also may choose to use a
BHC in a combination transaction for tax purposes.

Reorganizations to Become a Holding Company Subsidiary
National bank shareholders seeking to reorganize to form a holding company or be acquired
by a nonaffiliated holding company formerly used an interim national bank merger.
Currently, 12 USC 215a-2 and 12 CFR 5.32 provide shareholders with a simplified
alternative for effecting such reorganizations. For purposes of section 215a-2, a holding
company is any company that controls a national bank or will control a national bank as a
result of the reorganization. A company that is or will become a BHC under the BHCA also
must file any application required under the BHCA with the appropriate Federal Reserve
Bank.
When reorganizing a national bank to become a subsidiary of a holding company under
section 215a-2, the national bank must file a Reorganization of a National Bank to a
Subsidiary of a Bank Holding Company Application. Generally, public notice under
12 CFR 5.8 does not apply to an application under this section unless the OCC determines
that the application presents significant or novel policy, supervisory, or legal issues.
(Updated July 31, 2018)
When evaluating applications under section 215a-2, the OCC considers the impact of the
proposed affiliation on the financial and managerial resources and future prospects of the
national bank. As in other applications, the OCC also considers whether a significant
deviation condition requiring the OCC’s prior written approval before making changes is

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appropriate. The condition may be imposed in any 215a-2 decision where the OCC considers
that the supervisory risk warrants such a condition. Examples where the condition may be
appropriate include a relatively new national bank that is experiencing growth that
significantly exceeds projections, or a bank that is considering new services, products, or
business lines.

Acquiring a Bank Subsidiary of a Bank Holding Company
A national bank may, through a multi-step process, use an operating subsidiary to facilitate a
combination with a bank that is a wholly owned subsidiary of a nonaffiliated BHC. In the
first step, the operating subsidiary of the national bank acquires all of the shares of the target
bank’s holding company. The target bank’s holding company is then liquidated or combined
with its subsidiary bank. Finally, the national bank merges or consolidates with the target
bank. Alternatively, in the first step, the target holding company is merged with the target
bank, and then the national bank merges or consolidates with the target bank.
This structure is permissible provided that the acquiring bank obtains confirmation that the
Federal Reserve will not consider the acquiring national bank to be a BHC. Also, the BHC
generally should make a representation when filing that it has no outstanding liabilities,
including present and contingent liabilities. The BHC should assume the merger cost before
its dissolution, including all necessary payments to dissenting shareholders. In the
application, the acquiring bank must identify any nonconforming assets or activities,
including nonconforming subsidiaries, of the BHC and target bank involved in the
combination that will not be disposed of or discontinued before consummating the
transaction, and set out its plans for such nonconforming assets or activities. (See the
“Nonconforming Assets and Activities” section of this booklet for additional discussion.) In
addition, the acquisition of the target bank’s holding company stock and the subsequent
merger or liquidation of the target bank should occur over a short time period, no longer than
a few hours, in sequential steps, within a single transaction.
While a combination of the two banks would be subject to section 23A of the FRA and
Regulation W because the banks would be affiliates at that stage, it likely would qualify for
the BMA exemption (see the “Affiliate Transaction Restrictions” section of this booklet). If
the BMA exemption is not available, certain other exemptions may be available.

Combinations Resulting in an FSA
Same-State and Interstate Combinations
FSAs may enter into a business combinations in accordance with 12 CFR 5.33(g)(3), 5.33(n),
and 5.33(o), the BMA, and sections 5(d)(3)(A) and 10(s) of the HOLA.
A stock FSA may consolidate or merge with another insured depository institution, a state
trust company, or a credit union or may engage in another business combination listed in
12 CFR 5.33(d)(2)(iv) or (v) or 12 CFR 5.33(d)(10) if the

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•
•

combination is in compliance with, and receives all approvals required under, any
applicable statutes and regulations.
resulting FSA meets the requirements for insurance of accounts.

A mutual FSA may engage in any of the transactions described in the preceding paragraph if
the mutual FSA is the surviving institution, subject to the requirements described in that
paragraph. If the mutual FSA is not the surviving institution, however, the transaction is
permissible only if: (i) the acquiring institution is an FDIC-insured state-chartered mutual
savings association or mutual savings bank; (ii) the transaction is approved under
12 CFR 192; or (iii) the transaction involves a mutual holding company reorganization under
12 USC 1467a(o) or a similar transaction under state law.
A resulting FSA must comply with 12 USC 1464(r)(1), which generally permits an FSA to
establish, retain, or operate out-of-state branches only if: (1) the FSA meets the Qualified
Thrift Lender (QTL) test set forth at 12 USC 1467a(m) or qualifies as a domestic building
and loan association under 26 USC 7701(a)(19); and (2) for out-of-state branches, the total
assets of the FSA attributed to all branches of the FSA in that state would qualify the
branches as a whole as a QTL or a domestic building and loan association. There are several
exceptions to this requirement, which are set forth at 12 USC 1464(r)(2).

Purchase and Assumption Transactions
An FSA may effect a business combination through a purchase and assumption transaction,
as well as a merger or consolidation. With OCC approval under the BMA, an FSA may
acquire the assets of another insured depository institution or assume any deposit liabilities of
another insured depository institution. With FDIC approval under the BMA and OCC
approval under 12 CFR 5.33, an FSA may assume deposits or similar liabilities from, or
transfer deposits to, an uninsured bank or institution, including a credit union. 9 The OCC
interprets “acquire the assets” for BMA filing purposes to include the acquisition of assets
such that the target is no longer a viable competitor, regardless of whether the target plans to
liquidate immediately after consummating the transaction. If, after a purchase and
assumption transaction, the target institution plans to liquidate or otherwise will no longer be
a viable business, the application should include information showing that possible creditors
of the target institution, including potential contingent liability claimants, will be protected.
This information should be provided regardless of the charter of the target institution. This
information need not be provided if the acquiring FSA will assume all liabilities of the target
institution, including contingent liabilities.
In addition, if the target institution is a national bank or FSA and plans to liquidate after the
purchase and assumption transaction, the target bank must demonstrate that it will be able to
liquidate in an orderly manner under 12 CFR 5.48 unless the acquiring bank has assumed all
9

If the institution from which the FSA is assuming deposits or similar liabilities or to which the FSA is
transferring deposits is not an FDIC-insured depository institution, review of the transaction under the BMA
rests with the FDIC. Combinations with uninsured entities are discussed further below. Transfers of deposits
from mutual FSAs to stock institutions or uninsured institutions may raise significant issues.

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liabilities and obligations, including contingent liabilities. 10 If the target national bank or
FSA plans to liquidate or otherwise will no longer be a viable business after the purchase and
assumption transaction, the OCC expects the owners to begin the process of liquidating the
bank under 12 CFR 5.48 promptly after consummating the transaction and to return the
institution’s charter to the OCC, unless the bank and the OCC have agreed to other
arrangements.
If the purchase and assumption transaction includes the acquisition of branches, the FSA
must have authority to acquire and operate the branches. Generally, an FSA may branch in
any state unless the branching would violate section 5(r) or 10(e)(3) of the HOLA, or section
13(k)(4) of the Federal Deposit Insurance Act of 1950 (FDIA). 11

Combinations Resulting in a Mutual FSA
Same-State and Interstate Combinations
When a mutual FSA combines with a mutual federal or state-chartered savings association,
12 CFR 5.33(o) requires that, for each federal mutual savings association involved in the
transaction, the board of directors shall approve the plan of combination by a two-thirds vote.
Mutual FSAs do not have shareholders and although the members of a mutual FSA possess
voting rights, they are not required by regulation to vote on a merger. Pursuant to
12 CFR 5.33(o)(4), however, the OCC may require that a plan of combination be submitted
to the mutual members at a duly called meeting and that the plan, to be effective, be
approved by such voting members.
Mutual FSAs seeking to merge do not need to seek a waiver of 12 CFR 5.33(o)(4) from the
OCC. Rather, upon a review of the plan of combination and, specifically, a review and
comparison of the membership rights of the existing institution and the resultant institution,
the OCC makes a determination as to whether the membership rights are changed to the
extent that the merger transaction should receive the vote and approval of the members of the
acquired institution.

Purchase and Assumption Transactions
A mutual FSA must provide notice to affected accountholders and the option of retaining the
account with the transferring FSA, if it proposes to transfer any account liabilities to: (i) an
entity the accounts of which are not insured by the FDIC Deposit Insurance Fund or the
National Credit Union Share Insurance Fund; or (ii) a stock form depository institution. 12
Based on the relevant facts and circumstances, the OCC may require a mutual FSA to obtain
approval of a transfer of deposits under 12 CFR 5.53. A mutual FSA may not begin

10

National banks also are subject to the requirements set forth in 12 USC 181.

11

Refer to 12 CFR 145.92.

12

Refer to 12 CFR 5.33(n)(4).

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liquidation unless the OCC has notified it that the OCC does not object to the liquidation
plan.

Combinations Between FSAs and Uninsured Entities
There are several types of combinations involving an FSA and an uninsured entity: (i) an
FSA acquiring an uninsured depository institution; (ii) an uninsured depository institution
acquiring a stock FSA; (iii) an FSA assuming deposits or similar liabilities from an
institution that is not an FDIC-insured depository institution; and (iv) an FSA transferring
deposits to an institution that is not an FDIC-insured depository institution. The second type
of transaction is discussed in the “Termination of Federal Charter” booklet of the
Comptroller’s Licensing Manual, and the third and fourth types of transactions are discussed
in the section of this booklet addressing purchase and assumption transactions by FSAs.
An FSA seeking to acquire an uninsured depository institution in a merger or consolidation
must file an application and obtain OCC approval under the OCC’s combination regulation
(12 CFR 5.33), and obtain FDIC approval under the BMA, 13 before consummating the
combination. Applicants also must provide the OCC with assurances that the combination
complies with legal requirements covering the proxy or information statement, and
shareholders’ approval of the proposed combination. Refer to the “Shareholder
Considerations” section of this booklet under “Application Issues” for additional discussion.

Other Combinations
Interim Bank Combinations
A national bank or BHC may, with OCC approval, charter and organize an interim national
bank to facilitate a combination. Similarly, an FSA or SLHC may, with OCC approval,
charter and organize an interim FSA to facilitate a combination. An interim national bank or
FSA does not operate independently, but exists, usually for a short time period, solely as a
vehicle to effect a combination, such as acquiring a nonaffiliated bank or savings association,
cashing out minority shareholders, or forming a holding company. Using an interim national
bank or FSA to effect a merger may raise issues regarding dissenters’ rights unless the
interim bank is the acquiring bank, and the existing bank is the target bank. A national bank
or BHC that would own the interim national bank for a brief period during the combination
should contact the Federal Reserve to confirm whether it would be considered a BHC for that
period and, if so, file any applications required or request waiver of applications under the
BHCA and its implementing regulation. Similarly, an FSA or SLHC that would own an
interim FSA for a brief period during a combination should contact the Federal Reserve to
confirm whether it would be considered a SLHC for that period.

13

Applications filed with the OCC should include a letter and a copy of the application filed with the FDIC.

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Common Uses of an Interim Bank
•

•

•

•

Acquiring a nonaffiliated bank: 14 An interim bank may be used as a means of acquiring
a nonaffiliated bank. In such a transaction, the acquirer would be assured of 100 percent
ownership of the resulting bank, since all shareholders of the target bank must surrender
their shares in exchange for consideration in the merger or consolidation between the
interim bank and the target bank.
Eliminating minority shareholders: A shareholder or shareholders, including a BHC,
that control a majority of the voting shares of a national bank or FSA, may use an interim
bank to eliminate or “freeze out” minority shareholders of the bank. The majority
shareholders form an interim bank that acquires the existing bank through a merger or
consolidation. 15 Minority shareholders of the existing bank normally receive either cash
or, if the majority owner of the bank is a holding company, shares of the holding
company in exchange for their shares of the existing bank.
Forming a holding company: Shareholders may use an interim bank to form a holding
company to own a bank. Directors of the existing bank form a new company that applies
to the Federal Reserve to become a BHC under the BHCA, or an SLHC under the HOLA.
The new company organizes the interim bank, which combines with the existing bank.
Shareholders of the existing bank normally receive shares of the new holding company in
exchange for their shares. As previously stated, 12 USC 215a-2 provides a simplified
process for a national bank to reorganize to be controlled by a BHC. Unlike applications
for interim bank mergers to form a BHC, applications filed with the OCC under section
215a-2 are not subject to the BMA factors or requirements.
Change in bank control: The use of an interim bank by an individual or group of
individuals to acquire control of a bank may raise serious policy concerns. The evaluative
factors for setting up an interim bank and merging it with the target bank are
fundamentally different from the factors set out in the Change in Bank Control Act
(CBCA), 12 USC 1817(j). Refer to the “Change in Bank Control” booklet of the
Comptroller’s Licensing Manual. The use of an interim bank may result in, or may be
perceived as resulting in, a circumvention of the CBCA. As such, any individual or group
of individuals who seeks to use an interim bank to effect a change in control should meet
with the Deputy Comptroller for Licensing before filing an application.

14

In this paragraph, a nonaffiliated bank and target bank refer to national banks, FSAs, state banks, and state
savings associations.
15
Interim bank transactions are eligible for expedited review only in a corporate reorganization resulting in the
formation of a new BHC (refer to 12 CFR 5.33(d)(3)(ii) and 5.33(i)). A statutory merger involving an interim
bank to eliminate minority shareholders (“freeze out” transaction) does not qualify for expedited review. If the
transaction is structured as a consolidation, however, and the resulting bank’s charter number is that of the
existing bank, the transaction can qualify for expedited review if it satisfies the streamlined application criteria
under 12 CFR 5.33(j)(1).

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Reverse Triangular Mergers
Generally, most business combinations are “forward” combinations in which the target
institution is merged into the acquiring bank, which becomes the resulting institution.
Applicants may seek to effect a combination using a reverse triangular merger, which often
confers tax benefits. Under a reverse triangular merger, the acquiring bank is merged into the
target bank, which typically becomes a subsidiary of the acquiring bank’s holding company.
With certain exceptions, the OCC will not approve a reverse triangular merger of a national
bank under 12 USC 215a because the target bank’s shareholders are not granted dissenters’
rights under that statute. Based on Internal Revenue Service interpretations, often the
combining institutions can achieve the same tax benefits offered by a reverse triangular
merger if the applicant structures the transaction as a consolidation under 12 USC 215, which
provides dissenters’ rights to shareholders of all parties to the combination. The OCC has
made exceptions to allow reverse triangular mergers using 12 USC 215a if the
•
•
•
•

transaction cannot be accommodated through a forward merger or a consolidation,
target bank is wholly owned by a BHC,
target bank’s shareholders have unanimously approved the combination, or
target bank is a state bank and state law protects the dissenting shareholders.
Chartering and Organization Requirements

Applicants for interim bank combinations must apply for and receive approval to organize an
interim national bank or interim FSA. The OCC has developed streamlined organization
documents to establish the interim charter. The Interim Bank Charter Application and the
combination application are processed simultaneously. Although an interim bank does not
operate independently as a bank, the interim bank must comply with various chartering and
organizational requirements.
Capitalization and Directors
The OCC has broad discretion to set capital requirements for interim banks, including the
ability to set capital requirements on a case-by-case basis. An interim national bank generally
meets its capital requirements by having at least the amount of capital raised by the sale of
directors’ qualifying shares. Interim national bank directors’ residency, citizenship, and stock
ownership requirements are the same as those for operating banks under 12 USC 72. Refer to
the “National Bank Director Waivers” booklet of the Comptroller’s Licensing Manual.
The OCC grants preliminary approval to form an interim bank when it acknowledges receipt
of the application to engage in a combination that involves the creation of the interim bank.
The interim bank becomes a legal entity at that time and may enter into legally valid
agreements or contracts after it files, and the OCC accepts, for national banks, its executed
articles of association, organization certificate, and oaths of directors, and for FSAs, its
executed charter. Before consummating the combination, an interim national bank must

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complete the organization process by completing the Stock Payment Certificate and Oaths of
Directors and Officers form.
Structure Issues
For an interim national bank combination structured as a merger under 12 USC 215a, the
acquiring bank must be the interim national bank and the target must be the existing bank to
preserve dissenters’ rights for the shareholders of the existing bank, unless the shareholders
of the existing bank unanimously approve the transaction. The OCC generally does not
approve purchase and assumption transactions that transfer all, or substantially all, of a
target’s assets and liabilities to an interim national bank because the purchase and assumption
structure does not provide dissenters’ rights for the target’s shareholders. Moreover, if an
interim bank would continue as an operating bank in its own right after a purchase and
assumption transaction, it may be required to apply for deposit insurance. Refer to
12 CFR 303.62(b)(2).
Timing Issues
Although an interim bank must be a party to the combination agreement, it does not have to
be organized at the time the primary parties execute the initial agreement. The interim bank
may become a party to the transaction through an addendum provided in the initial
agreement. Refer to the “Agreements and Board of Directors’ Approval” section of this
booklet under “Application Issues.”

Emergency Combinations
Under the BMA, applicants generally are required to provide public notice and opportunity
for public comment for 30 days, and the OCC requests comments from the DOJ on
competitive factors. In addition, for combinations between unaffiliated banks, the parties
must wait 30 days after OCC approval, or 15 days in some cases, before consummating the
transaction. The OCC may shorten or eliminate the notice and comment periods, and the
post-approval waiting period under the BMA, if certain conditions are met. Where the effect
of the proposed combination may be to substantially lessen competition or tend to create a
monopoly, or otherwise would be in restraint of trade, the OCC also may weigh the
convenience and needs of the communities served by troubled institutions against possible
anticompetitive effects of an emergency combination under the BMA.
In addition, when an interstate combination is filed under the Riegle–Neal Act, the filing is
exempt under 12 USC 1831u(e) from many of the requirements of the Riegle–Neal Act if the
combination involves an insured bank in default or in danger of default, or with respect to
which the FDIC provides assistance. These requirements include the age, branch acquisition,
and concentration limits, and the filing, CRA, and adequacy of capital and management
requirements. Similarly, there is also an exception from the deposit concentration limit for
certain interstate transactions in 12 USC 1828(c)(13) for transactions involving an institution
in default or in danger of default or with respect to which the FDIC provides assistance under
12 USC 1823.

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Expedited (10-Day, 5-Day) Combinations
The BMA allows the OCC to shorten the public, DOJ, and bank regulatory notice and
comment periods before approval of a combination to 10 days, and to shorten the postdecision DOJ waiting period to five days, when the OCC determines that an emergency
exists requiring expeditious action. These transactions are referred to as 10-day, 5-day
emergency combinations.
Filing a 10-Day, 5-Day Combination Application
A national bank or FSA interested in acquiring a target institution under 10-day, 5-day
processing must submit a written request to the OCC (see Emergency Processing Request).
The request should contain information to assist the OCC in determining that the target is
affected by circumstances sufficiently serious to require swift action and shorten the public,
DOJ, and bank regulatory notice and comment periods. The OCC solicits written comments
from the target institution’s primary supervisory agency to attest to its condition. The OCC
subsequently reviews and evaluates this information and decides whether to approve or deny
the acquiring bank’s request for 10-day, 5-day processing. If the OCC disapproves the
request for 10-day, 5-day processing, the combination is handled according to normal
licensing procedures.
The applicant generally submits the streamlined bank merger application with the request for
10-day, 5-day processing. The OCC reviews the application for accuracy and completeness
while it considers the request for 10-day, 5-day processing. The OCC provides copies of the
combination application for 10-day, 5-day processing to the DOJ for its views on the
competitive effects of the proposal. By statute, the DOJ has 10 days to review and comment
on the application.
Processing Time Frames for 10-Day, 5-Day Combinations
An institution that is party to a combination under 10-day, 5-day processing must publish
notice to the public of its intention to combine twice during a 10-day period. Applicants
should not publish notice of application under 10-day, 5-day processing until the OCC
approves the applicant’s request to process the application under emergency procedures. The
first publication using 10-day, 5-day processing should appear on the day after the OCC
approves the request, or as soon as possible thereafter. The second and final publication
should occur approximately one week after the date of the first publication.
If the OCC approves a combination under 10-day, 5-day processing, the acquiring bank may
consummate the transaction after a 5-day post-decision waiting period during which the DOJ
may comment on whether the combination is anticompetitive or take action to challenge the
transaction. The OCC issues a letter certifying consummation, if the bank has met all premerger requirements and conditions specified in its approval letter.

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The BMA allows the OCC to approve a merger if anticompetitive effects of the transaction
are clearly outweighed in the public interest by the probable effect of the transaction on
meeting the convenience and needs of the community to be served. This situation may arise
when a bank is the only party to express interest in acquiring an insured depository institution
that is in imminent or immediate danger of failing. Laws enjoining anticompetitive mergers,
such as the Sherman Act, are incorporated in the BMA, and are reviewed by the DOJ for all
bank mergers. When large post-acquisition market shares are anticipated, applicants are
encouraged to speak with the DOJ as early in the acquisition process as possible to determine
if anticompetitive effects of a proposed acquisition would cause it to enjoin a bank merger.

Immediate Combinations
The BMA allows the OCC to eliminate the public notice and comment requirements and
permit consummation immediately upon approval if the OCC finds that it must act
immediately to prevent the probable failure of an FDIC-insured depository institution
involved in the transaction. Refer to 12 USC 1828(c)(3).

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Application Process
The OCC encourages banks to review its website for more detailed information about the
application process, including policies and procedures, and merger-related documentation.
The website contains previous OCC decisions on business combinations and provides
information on the policy matters that the OCC considers before making a decision on an
application. The website also contains opinions and legal interpretations addressing a variety
of permissible activities.

Exploratory Calls or Meetings
The applicant’s contact person may contact the OCC licensing staff at the appropriate OCC
licensing office to ask for further information or assistance. As the applicant commences
acquisition negotiations and before execution of a definitive agreement, the contact person
may request an exploratory conference call or meeting with the OCC to ask questions or
clarify concerns. The licensing staff coordinates an initial conference call or meeting between
appropriate OCC staff and the contact person and other key people associated with the
proposal, to discuss the potential risks surrounding the proposal and gauge the prospects for a
favorable OCC decision. The OCC expects applicants considering transactions that raise
novel, precedential, complex, or significant legal or supervisory issues to contact the
licensing staff before entering into a definitive agreement. Circumstances warranting prior
licensing contact include the following:
•
•
•
•
•
•
•

The application presents novel, precedential, or highly complex issues.
The applicant or target bank is in less than satisfactory condition.
The applicant or target bank presents BSA/AML, compliance, or CRA issues.
The applicant or target bank is, or is soon to be, subject to an enforcement action.
The size of the target bank represents 50 percent or more of the total assets of the
acquiring bank.
The acquisition is being financed by debt, either at the bank level or the holding company
level.
The applicant is new to the application process.

Prefiling Meetings or Discussions
The OCC normally requires a prefiling conference call or meeting with the acquiring bank
before filing of an application regarding any combination that would result in a significant
increase in assets or that involves any of the issues discussed in the “Exploratory Calls or
Meeting” section of this booklet. The prefiling conference call or meeting normally is held in
the OCC district office where the application is filed but may be held at another location at
the request of the applicant.
To request a prefiling conference call or meeting, the bank’s representative or contact person
should contact the licensing staff in the appropriate district office, who will coordinate
participation by other OCC staff, as necessary.
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Public Notice and Comment Periods
The public comment period for a filing subject to the BMA is generally 30 days after the
newspaper publication. The end of the public comment period is listed in the Weekly
Bulletin. 16 The newspaper notice should direct the public to the Weekly Bulletin for
additional information about the filing, including the closing date of the comment period.
(Updated July 31, 2018)
Notice of a combination application subject to the BMA generally must be published three
times in a newspaper of general circulation in the community or communities where the main
or home offices of the banks involved in the transaction are located. (Updated July 31, 2018)
The first notice should be published in the newspaper on the date of filing or as soon as
practicable before or after the date of filing. The second notice should be published one week
after the first publication or, if the newspaper does not publish on that day, on the
newspaper’s publication date that is closest to that day. The last notice should be published
on the 25th day after the first publication or, if the newspaper does not publish on the 25th
day, on the newspaper’s publication date that most closely precedes the 25th day.
The OCC may require additional public notice or may provide public notice itself if the OCC
believes it necessary to ensure adequate notice and opportunity to comment. Material
differences between initial and subsequent notices may result in extended comment periods
and delays in processing applications.
The public notice of the transaction described in this section is separate from the notice of the
shareholders’ meeting that must be published for the conduct of any shareholder meeting,
which is discussed under the “Shareholder Considerations” section of this booklet under
“Application Process.”
The applicant should submit confirmation of the public notice to the OCC as part of the
combination application. This confirmation should include a statement containing the name
and address of the newspaper in which the notice was or will be published, and dates of
publication. Refer to “Public Notice Instructions” and sample public notice.
All notices should be published in the joint names of all depository institutions involved in
the transaction. If a bank operates under more than one name or under a name not
substantially similar to its legal name, the public notices should contain both the legal name
of the bank and the name(s) the bank uses in the community in which the publication
circulates.

16

The OCC publishes a Weekly Bulletin containing certain national bank and FSA applications and notices. It
is a record of receipt and actions taken by the OCC on applications and notices filed by national banks and
FSAs for new banks, new branches, mergers, conversions, fiduciary powers, subsidiaries, relocation of main
offices and branches, changes in corporate title, branch closings, changes in bank control, terminations, and
federal branches and agencies. The Weekly Bulletin is available by date and incorporates a comment period end
date for national bank and FSA mergers, consolidations, and purchase and assumption transactions.

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The notice must state whether the application involves an interim bank charter application
and whether the application is a merger, consolidation, or purchase and assumption. It also
must state whether any branches of the combining institutions would cease to operate as a
result of the transaction. Where applicable, the bank must follow the procedures applicable to
branch closings under 12 USC 1831r-1. Refer to the “Branch Closings” booklet of the
Comptroller’s Licensing Manual. If the applicant knows that branches would close or
consolidate because of the combination, but the identity and number of branches to be closed
have not yet been finalized when the application is filed with the OCC, the notice should
disclose that an as-yet-undetermined number of offices would cease to operate.
Finally, if during the public notice period an applicant identifies branches that it plans to
close, it should amend subsequent publications to disclose this new information.

FOIA Reading Room
To allow community groups and the general public to have access to public portions of
combination applications and information regarding comment periods, the OCC posts merger
applications to the FOIA Reading Room. 17
The applicant must clearly designate any sections of the application for which it is seeking
confidential treatment. Improperly designating public information as confidential, or
including certain confidential information in the public section, may delay posting of the
public portion of the application to the FOIA Reading Room.
To ensure the application is posted promptly to the FOIA Reading Room, applicants should
submit separate PDF files of the public portion, the confidential portion, and the personally
identifiable information (PII). Refer to the “General Policies and Procedures” booklet of the
Comptroller’s Licensing Manual.

Comments From the Public
When evaluating public comments, 18 the OCC considers the information provided by the
commenter and information provided by the applicant’s response(s), as well as information
available through the course of the OCC’s supervision. With the exception of confidential
information, the applicant’s response is shared with the commenter.
Significant adverse comments may result in delays in processing an application. Applicants
need to consider the possibility of such delay when planning a target date for consummating
a transaction or systems conversions. (Updated July 31, 2018)

17
The FOIA Reading Room serves as the vehicle to obtain federal agency records, unless the records (or any
portion thereof) are protected from disclosure by one of FOIA’s nine exemptions or one of its three special law
enforcement record exclusions.
18

The OCC posts comments on www.regulations.gov, where they can be viewed by the public.

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Meetings and Hearings
In general, the OCC relies on written information submitted during the comment period to
reach a decision on an application. The OCC considers obtaining information through other
means, such as meetings or hearings, however, if it would be useful in reaching a decision.
Refer to the “Public Notice and Comments” booklet of the Comptroller’s Licensing Manual
for additional discussion about OCC policies and procedures concerning meetings and public
hearings. 19

Filing the Application
An authorized bank officer must sign and date the OCC certification in either the streamlined
or the interagency BMA application. Applications that qualify as business reorganizations or
that involve a streamlined business combination (as those terms are defined in the “Glossary”
section of this booklet) generally are granted expedited review. The OCC and the other
banking agencies have adopted an “Interagency Bank Merger Act Application” that bank
applicants should use to apply to the OCC for any combination that does not qualify for
expedited review. An applicant involved in a transaction that qualifies for expedited review
may file the “Streamlined Business Combination Application.” (See the “Expedited Review”
section of this booklet.) Applicants should attach the appropriate checklist when using either
form. Applicants also should refer to the “General Policies and Procedures” booklet of the
Comptroller’s Licensing Manual for guidance on how to file the application.
When acknowledging receipt of an application, the licensing staff indicates whether it
qualifies for expedited review and provides a target time frame for processing the filing.
OCC staff notifies the applicant promptly if the situation changes (for example, the OCC
removes the application from expedited review), or if the OCC needs additional information
to complete its review. Although the OCC strives to request additional information at the
earliest possible date, it may request information or opinions from an applicant at any time
during the processing of a corporate filing.
The contact person should advise the OCC promptly whenever any significant changes occur
from the applicant’s original plans after the application is filed.

Initial Process
The OCC begins its review by determining whether the application is accurate and complete.
During the review process, the OCC may ask the applicant to provide additional detailed
information about any aspect of the proposal to reach an informed decision.
A number of factors affect the processing time frame for a combination application. These
factors include whether the filing is complete and qualifies for expedited review, or whether
there are any reasons for removing the filing from expedited review. Other factors that may
affect processing time frames include adverse public comments, safety and soundness or
19

Refer to 12 CFR 5.11 for additional information on hearings.

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compliance issues, the DOJ competitive factor review period, a proposed significant increase
in the acquiring bank’s assets, and any meetings or hearings under 12 CFR 5.11.

Expedited Review
Applications processed under expedited review are deemed approved as of the 15th day after
the close of the public comment period, unless the OCC notifies the applicant that the filing
is not eligible for expedited review or that the expedited review process is extended, or the
application is removed from expedited review, pursuant to 12 CFR 5.13(a)(2). The OCC may
act on the application before the end of the expedited review period, but in no event before
the conclusion of the public comment period.
Under 12 CFR 5.13(a)(2), the OCC removes a business combination from expedited review
if the OCC concludes that the filing, or an adverse comment regarding the filing, presents a
significant supervisory, CRA, or compliance concern, or raises a significant legal or policy
issue. The OCC notifies applicants promptly if such concerns or issues cause it to remove an
application from expedited review. Refer to the “Public Notice and Comments” and the
“General Policies and Procedures” booklets of the Comptroller’s Licensing Manual for
additional discussion.
Combination applications involving nonaffiliated depository institutions in which one of the
institutions has experienced rapid asset growth may be removed from expedited review to
allow adequate time for supervisory review.
The OCC removes a combination from expedited processing if it determines that, before
reaching a decision, it must conduct an examination or field investigation to address or
evaluate the supervisory implications of the proposal. The OCC notifies applicants whether it
will charge for the examination or investigation (see sample notice).

Standard Processing
For applications that do not qualify for, or are removed from, expedited review, the OCC sets
a target decision date on a case-by-case basis. The OCC expects that most applications that
do not qualify for expedited review will be decided within 60 calendar days from their
receipt or publication of public notice, whichever is later. An activity or transaction involving
novel, precedent-setting, or highly complex or sensitive issues, however, could take longer to
decide.

Streamlined Application
Under 12 CFR 5.33(i) and (j), business reorganizations and streamlined business
combinations, as defined in 12 CFR 5.33, generally are eligible for expedited review and
may use the “Streamlined Business Combination Application.” Information requirements
concerning CRA performance, branch closings, convenience and needs, and related matters
are not reduced on this application compared with the standard application.

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Appendix A of this booklet contains a diagram to assist the applicant in determining whether
the proposed combination meets the criteria for expedited review and use of a streamlined
application.

Application Issues
Legal Issues
A combination application should include citation of federal and state laws relevant to the
combination. If the applicant believes that the proposed combination raises legal issues, it
should provide an opinion from counsel that addresses these issues, as well as why the
proposal is not in contravention of state law, when the target is state-chartered, or federal law
when the target is a national bank or FSA. Counsel should indicate that any action required
by the applicable federal or state law has been or will be taken before consummating the
proposal. The OCC may request a legal opinion from the applicant if one is not provided.
Applications for a combination must include accurate and fully developed facts, and a
determination that the transaction complies with all applicable statutes and regulations.

Affiliate Transaction Restrictions
Banks are subject to quantitative and qualitative restrictions on certain covered transactions
with affiliates under sections 23A and 23B of the FRA, codified as 12 USC 371c, 371c-1,
and their implementing regulation, Regulation W (12 CFR 223). 12 USC 1468 applies
sections 23A and 23B to FSAs “in the same manner and to the same extent as if the savings
association were a member bank,” and also imposes additional restrictions on affiliate
transactions involving FSAs and affiliates. The affiliate transaction restrictions are designed
to safeguard the interests of the bank when it engages in transactions with affiliates. Covered
transactions, restricted by sections 23A and 23B, include a bank’s purchase of assets from,
investment in securities issued by, or loan or extension of credit to, an affiliate. The
acceptance of securities issued by an affiliate as collateral security for a loan and the issuance
of a guarantee, acceptance, or letter of credit on behalf of an affiliate are also covered
transactions. Certain other types of transactions listed in 12 CFR 223.52 are subject to the
restrictions of sections 23B, as well. 20
For purposes of business combinations, the restrictions typically arise in mergers of a
nonbank company with an affiliated national bank or combinations involving one or more
affiliated, uninsured depository institutions. 21 Most other affiliated business combinations,
20

Note that an affiliate’s donation of assets to a bank (when the acquiring bank neither pays cash or other
consideration nor assumes liabilities in exchange for the assets received) is not considered a purchase of assets
by the bank, and is therefore not subject to sections 23A and 23B. If the bank pays consideration or assumes
liabilities, the transaction is treated as a purchase of assets.

21
For purposes of Regulation W, “depository institution” means any FDIC-insured bank or savings association,
as defined in the FDIA, 12 USC 1813, but does not include any branch of a foreign bank.

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such as combinations involving only affiliated insured depository institutions that are
reviewed under the BMA, are exempt from most of the restrictions in sections 23A and 23B
and Regulation W. 22
“Affiliate,” for purposes of sections 23A and 23B and Regulation W, generally includes any
company that controls the bank or that is controlled by the same company or by the same
shareholders that control the bank. Certain other relationships between a bank and a company
can confer affiliate status on the company, as well. Depository institutions generally are
included in the term “company.”
“Control” under sections 23A and 23B generally occurs when
•
•
•

the company or shareholders have the power to vote 25 percent or more of any class of
voting securities,
the company or shareholders are able to control in any manner the election of a majority
of the directors or trustees of the company, or
the Federal Reserve determines after notice and opportunity for hearing that the company
or shareholders directly or indirectly exercise a controlling influence over the
management and policies of a company.

Regulation W expands the statutory definition of control significantly in two respects. First,
it provides a rebuttable presumption that a shareholder that owns or controls 25 percent or
more of a company’s nonvoting equity capital controls that company. Second, it provides a
rebuttable presumption that a shareholder that owns or controls instruments (including
warrants and options) that are convertible or exercisable at the option of the holder into other
securities (such as common stock) controls those other securities. To rebut either of these
presumptions of control, a bank or shareholder must file rebuttal materials with the Federal
Reserve. Applicants may wish to inform the OCC if they intend to file such materials with
the Federal Reserve.
Regulation W, unlike sections 23A and 23B, distinguishes between a bank’s insured and
uninsured depository institution affiliates. Regulation W provides that a bank’s transactions
with an insured depository institution affiliate may be eligible for certain exemptions from
the restrictions of section 23A and Regulation W, such as the BMA and “sister-bank”
exemptions. A bank’s transactions with an uninsured depository institution affiliate,
however, do not qualify for most exemptions from section 23A and thus are generally subject
to all of section 23A’s restrictions.

Sections 23A and 23B—Provisions
The three provisions in sections 23A and 23B that are most likely to present issues in
connection with corporate reorganizations are: (1) the quantitative limits; (2) the prohibition
on purchasing low-quality assets (see the “Glossary” section of this booklet for definitions);
22

Refer to 12 CFR 223.42(j) for the BMA exemption.

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and (3) the requirement that transactions with affiliates be conducted on arm’s-length terms.
Sections 23A and 23B also require that covered transactions be consistent with principles of
safety and soundness and that credit transactions with affiliates generally be collateralized. 23
Depending on the structure of the reorganization, a full or partial exemption from these
restrictions may be available.
•

Quantitative limits: In the absence of any available exemption, a bank may not engage
in covered transactions with an affiliate in an amount that exceeds 10 percent of the
bank’s capital and surplus, or 20 percent of capital and surplus for all affiliates as a
group. Regulation W prescribes certain valuation rules for section 23A covered
transactions that must be applied to determine whether such a transaction complies with
these quantitative limits. For example, the value of a purchase of assets is calculated by
combining the value of liabilities assumed plus any consideration paid for the assets. A
bank must observe the quantitative limits when engaging in a covered transaction with an
affiliate unless an exemption is available. Thus, a bank’s purchase of assets from its
holding company, or any subsidiary of that holding company that is not an insured
depository institution, usually may not exceed 10 percent of the acquiring bank’s capital
and surplus. Transactions with financial subsidiaries, however, are treated differently
from transactions with other affiliates with respect to these quantitative limits. A bank’s
transactions with its own financial subsidiary are not subject to a 10 percent limit,
although they are included in the 20 percent limit.

•

Transfers of low-quality assets: A bank’s purchase of low-quality assets from an
affiliate is generally prohibited unless the purchase is made in connection with a
transaction eligible for the BMA exemption. When a corporate reorganization
contemplates a bank’s acquisition of low-quality assets from an affiliate, and the BMA
exemption is not available, a banking organization has at least the following four options
that are acceptable to both the OCC’s and the Federal Reserve’s staff:
– The affiliate holding the low-quality assets may retain them and transfer the rest of
the assets to the bank.
– The affiliate may transfer the low-quality assets to the bank’s shareholders as a
dividend or in some other legally permissible way. The shareholders may in turn
either keep the assets or donate, but not sell, them to the bank. A donation of the lowquality assets may be made concurrently with the bank’s purchase of permissible
assets from the same transferor, provided it is done in a separate transaction.
– In addition, the OCC may exempt a transaction by a bank from the requirements of
section 23A if the OCC and the Federal Reserve jointly find the exemption to be in
the public interest and consistent with the purposes of section 23A. The OCC and
Federal Reserve must notify the FDIC of such finding, and the FDIC, before the end
of the 60-day period commencing on the date it receives notice of the finding, must
not object in writing based on a determination that the exemption presents an
unreasonable risk to the Deposit Insurance Fund.

23

The term “credit transaction” includes not only loans or extensions of credit, but also a bank’s issuance of a
guarantee or letter of credit on behalf of an affiliate or a confirmation of a letter of credit issued by an affiliate.
It also includes a cross-netting arrangement, as that term is defined in Regulation W.

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–

The affiliate holding the assets may sell any servicing rights associated with the assets
to the bank, while retaining title to the assets. If the assets later recover and are no
longer “low-quality assets” as defined in Regulation W, they may be sold outright to
the bank.

Other options may be available. In every case, however, the OCC reviews any low-quality
assets in a portfolio and determines whether their acquisition by a bank conforms to safe and
sound banking practices. Banks are advised to contact the OCC if a contemplated transfer of
low-quality assets may present a barrier to accomplishing a transaction.
•

Section 23B and the arm’s-length requirement: As previously noted, section 23B of
the FRA requires that transactions between a bank and its affiliates be conducted on an
arm’s-length basis. Section 23B provides that banks may engage in certain transactions
with an affiliate on terms and under circumstances, including credit standards, that are
substantially the same, or at least as favorable to the bank, as those prevailing at the time
for comparable transactions with or involving nonaffiliated companies. If no such
comparable transactions exist, then the bank must transact on terms and under
circumstances, including credit standards, which in good faith would be offered to, or
would apply to, nonaffiliated companies. As is the case with section 23A, mergers or
purchase and assumption transactions between affiliated insured depository institutions
that are reviewed and approved under the BMA are exempt from section 23B and
Regulation W. If one of the transacting institutions is uninsured, the acquiring bank
should contact the OCC even when the combination will be reviewed and approved under
the BMA.

Sections 23A and 23B—Exemptions
A near-complete exemption to all affiliate-transactions restrictions, including the prohibition
against a bank’s purchase of low-quality assets from an affiliate, is available when a
reorganization involves a combination of a bank with an affiliated, insured depository
institution subject to the BMA. Only the safety and soundness requirement of section 23A
applies to such combinations.
Transactions between affiliated depository institutions that do not qualify for the BMA
exemption also may receive favorable treatment under the sister-bank exemption, although
this exemption is available only when a bank is engaging in a covered transaction with an
affiliated insured depository institution. Combinations that qualify for the sister-bank
exemption, but not for the BMA exemption, are subject to the prohibitions against unsafe or
unsound transactions and purchasing low-quality assets.
Uninsured sister depository institutions are treated as affiliates. A bank’s transactions with
uninsured sister depository institutions are subject to section 23B unless an exemption from
section 23B is available.
Regulation W includes two exemptions that may be useful for banks contemplating
combinations. First, Regulation W exempts certain internal corporate reorganizations from

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the collateral requirements and quantitative limits of section 23A, but not from the lowquality asset prohibition, the safety and soundness requirement, or from section 23B. The
following conditions must be satisfied for the exemption to be available:
•
•
•

•
•

•

The transactions must be part of an internal corporate reorganization of a holding
company involving the transfer of all or substantially all of the assets of an affiliate or of
a division of an affiliate.
The bank must provide advance notice to the OCC and the Federal Reserve, including a
description of the primary business of the affiliate and an indication of the proposed date
of the transfer.
The bank’s top-tier holding company must commit to the OCC and the Federal Reserve
(and carry through on its commitment) to make the bank whole with respect to any assets
that become low-quality during the first two years after the transfer, either by making
cash contributions to the bank or by purchasing the low-quality assets.
A majority of the bank’s board of directors must review and approve the transactions in
advance.
The value of the covered transaction, when aggregated with any other transactions
undertaken pursuant to this internal corporate reorganization exemption during the
previous 12 months, must represent less than an amount set by the OCC that is between
10 and 25 percent of the bank’s capital and surplus.
The holding company and all of its subsidiary depository institutions must be well
capitalized and well managed both before and after consummating the transfer.

Second, Regulation W exempts asset purchases by de novo banks from the collateral
requirements, quantitative limits, and low-quality asset prohibitions of section 23A, as well
as from section 23B, provided that the OCC has approved the asset purchase in writing in
connection with its review of the formation of the new bank. Refer to 12 CFR 223.42(i).
Regulation W also exempts step transactions from the provisions of section 23A except for
the safety and soundness requirement, but not from section 23B. A step transaction occurs
when a bank acquires the securities of a company within one day (the OCC may extend this
time limit) after the company first becomes an affiliate as a result of its acquisition by an
affiliate of the bank. The acquiring bank must acquire all of the shares that were acquired by
the transferring affiliate. An example of a step transaction would be if a bank’s holding
company acquires 100 percent of the shares of a nonaffiliated company and then immediately
transfers all of the shares of that company to its subsidiary bank. Certain conditions, set forth
at section 223.31(d) of Regulation W, must be satisfied for the step transaction exemption to
be available, including notice by the bank to both the OCC and the Federal Reserve at or
before the time when the transferred company first becomes an affiliate.

Undercapitalized Banks
An undercapitalized national bank or FSA, as defined in 12 CFR 6.4, is prohibited from,
among other things, acquiring any interest in any company or any other insured depository
institution unless: (1) the OCC has accepted the bank’s capital restoration plan, the bank is
implementing the plan, and the proposed combination is consistent with and would further

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achievement of the plan; or (2) the FDIC determines that the proposed action would further
the purpose of the prompt corrective action statute. 24

Liquidation Account
When the target in a combination is a savings association that converted from a mutual to a
stock institution, the resulting bank must establish and maintain the liquidation account
previously established by the target. This account represents the eligible depositors’ interest
in the net worth of the mutual institution at the time it converted to a stock institution. In the
event of a solvent liquidation of the resulting bank, eligible depositors are entitled to a
priority distribution from the institution’s net worth before any distributions are made to
stockholders. Pursuant to 12 CFR 5.33(g)(3)(ii), the consolidation or merger agreement must
address the effect on, and the terms of the assumption of, any liquidation account of any
participating institution by the resulting institution. Refer to 12 CFR 5.33(g)(3)(ii).

Golden Parachutes Restrictions
National banks and FSAs that are in troubled condition as defined by 12 CFR 5.51(c)(7) must
receive prior OCC approval for any golden parachute payments or employment agreements
pursuant to 12 USC 1828(k) and 12 CFR 359. FDIC concurrence is generally, but not
always, required.

Bank and Trade Names
The OCC considers the name of a bank to be primarily a business decision subject to any
applicable state law. The National Bank Act requires that every national bank’s formal name
include the word “national.” A national bank or FSA may change its corporate title provided
that the new name complies with applicable laws, including 18 USC 709. The institution’s
name should be consistent with OCC Bulletin 1998-22, “Branch Names: Interagency
Statement” regarding false advertising and the misuse of names.
When different trade names are used, customers may believe they are dealing with two
different depository institutions, and as a result may inadvertently exceed FDIC insurance
limits (generally, $250,000 per institution) by depositing excess amounts in different
branches of the same institution. The OCC believes it is important that customers understand
the scope of FDIC insurance in those circumstances. Accordingly, a bank that intends to use
a different name for a branch or other facility should ensure that customers do not become
confused and believe that the bank’s facilities are separate institutions or that deposits in the
different offices are separately insured. Such measures may include the following:
•

24

Disclosing, clearly and conspicuously, in signs, advertising, and similar materials that the
facility is a branch, division, or other unit of the bank. The bank should exercise care that
the signs and advertising do not create a deceptive or misleading impression.

Refer to 12 USC 1831o(e)(4).

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•
•

•

Using the legal name of the bank for legal documents, certificates of deposit, signature
cards, loan agreements, account statements, checks, drafts, and other similar documents.
Educating bank staff about the possibility of customer confusion over deposit insurance.
The bank should instruct staff at the branch and any other facilities operating under trade
names to ask customers before opening new accounts whether the customers have
deposits at the bank’s other facilities or branches. In addition, soon after the bank
combines with, acquires, or is acquired by another depository institution, staff should call
customers’ attention to disclosures that identify a particular branch or facility as part of
an institution.
Obtaining from depositors opening new accounts at the branch a signed statement
acknowledging that they are aware that the branch and other facilities belong to the same
bank and that deposits held at each facility are not insured separately.

In addition, the practice of banks using different trade names for different delivery channels
raises similar concerns. Accordingly, institutions intending to use different trade names in
different delivery channels should take reasonable steps to ensure that customers will not be
confused about either the bank’s identity or the extent of FDIC insurance coverage.
Refer to the “Changes of Corporate Title and Address” booklet of the Comptroller’s
Licensing Manual for additional information.

National Bank Directors’ Residency and Citizenship Requirements
Pursuant to 12 USC 72, every national bank director must be a citizen of the United States
throughout his or her term of service. The OCC, however, may waive this requirement for a
minority of the total number of directors of any national bank.
Also pursuant to 12 USC 72, a majority of a national bank’s directors must reside in the state
where the bank is located (that is, the state(s) in which the bank has its main office or
branches) or within 100 miles of its main office for at least one year immediately preceding
their election and during their continuance in office. The OCC may waive the residency
requirement.
Refer to the “National Bank Director Waivers” booklet of the Comptroller’s Licensing
Manual for additional information.

Dividends and Capital Reduction
With prior OCC approval, a national bank may make a cash or noncash distribution to its
shareholders in connection with a business combination. A national bank may include with a
combination application requests to declare dividends under 12 USC 60(b) and 12 CFR 5.64

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or to reduce capital under 12 USC 59 and 12 CFR 5.46. 25 Refer to the “Capital and
Dividends” booklet of the Comptroller’s Licensing Manual for additional information.
FSAs may be subject to an application or notice requirement when submitting an application
that involves a declaration of dividends or a reduction of capital. Refer to 12 CFR 5.55. In
certain circumstances, there is an informational notice requirement that must be submitted to
the OCC for subsidiaries of SLHCs that are subject to a dividend or capital distribution filing
with the Federal Reserve. 26
FSAs may include with a combination application requests to declare dividends or to reduce
capital under 12 CFR 5.55.

Fiduciary Powers
OCC-supervised institutions that do not have fiduciary powers under 12 USC 92a or 1464(n),
and that plan to acquire a state bank or state savings association that engages in activities for
which a bank would need fiduciary powers, must seek and obtain OCC approval before
exercising fiduciary powers. The request for fiduciary powers may be included in the
combination application. No additional approval is necessary if two or more national banks
combine through merger or consolidation and any of the national banks has, before the
combination, received OCC approval to exercise fiduciary powers, and the resulting bank
exercises fiduciary powers in the same manner and to the same extent as the bank to which
approval was originally granted. Similarly, no additional approval is necessary if two or more
FSAs combine through merger or consolidation and any of the FSAs has, before the
combination, received OCC or Office of Thrift Supervision approval to exercise fiduciary
powers, and the resulting FSA exercises fiduciary powers in the same manner and to the
same extent as the FSA to which approval was originally granted. OCC approval under the
fiduciary powers regulations is required, however, if a national bank without trust powers
acquires an FSA with trust powers or if an FSA without trust powers acquires a national bank
with trust powers, and the resulting entity intends to exercise the fiduciary powers previously
exercised by the acquired institution. No approval is required for a national bank or FSA with
OCC or OTS approval to exercise fiduciary powers to continue exercising those powers if it
is the resulting bank in a merger or consolidation with a state bank. Refer to 12 CFR 5.26 and
the “Fiduciary Powers” booklet of the Comptroller’s Licensing Manual for additional
discussion.

Investment in Bank Premises
A bank that proposes to increase its investment in bank premises in connection with a
combination may need to seek and receive OCC approval under 12 CFR 5.37 before
consummating the combination, or may need to provide notice to the OCC within 30 days
25

Distributions under 12 USC 59 and 12 CFR 5.46 will have no effect on the national bank’s future dividend
paying capacity.
26

12 CFR 5.55(e)(4).

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after consummating the combination. For details, refer to the “Bank Premises and
Equipment” booklet of the Comptroller’s Handbook.

Main or Home Office Designation
A national bank should consult the OCC before filing an application if the main office of the
resulting national bank in a merger or consolidation under 12 USC 215 or 215a will be
located at a place other than the main office of the acquiring bank.
A national bank resulting from a Riegle–Neal Act combination under 12 USC 215a-1 and
1831u may, with OCC approval, retain and operate, as its main office, a main office or
branch that any bank involved in the transaction operated immediately before the
combination.
An FSA resulting from a merger can change the name or location of the home office by
amending its charter accordingly.

Resulting Bank Charter Number
In a transaction structured as a merger, the resulting bank generally uses the charter number
of the acquiring bank. If the acquiring bank is an interim national bank or interim FSA and
the target is a national bank or FSA, the resulting bank must retain the charter number of the
target national bank or FSA. In a transaction structured as a consolidation under 12 USC 215
or 215c and 12 CFR 5.33, the resulting bank may use the charter number of any national
bank or FSA involved in the transaction or a new charter number.

Shareholder Considerations
Shareholder Approval
National Banks
Before consummating a merger or consolidation that will result in a national bank,
shareholders that own or control at least two-thirds of the capital stock of each depository
institution involved must approve the terms and conditions that govern the transaction at a
shareholders’ meeting. 27 If one or more of the institutions is a state institution, and the laws
of that state require more than a two-thirds affirmative vote for ratification of the agreement,
that higher affirmative vote must be obtained before consummating the transaction. The
shareholder approval requirement cannot be waived, even in an emergency situation
involving imminent or immediate failure of an FDIC-insured depository institution. The
OCC will not certify consummation of a combination until it receives the required secretary’s
certificate for shareholders’ approval or certified declaration(s) of unanimous shareholder
consent from the holding company.

27

Refer to 12 USC 215(a) and 12 USC 215a(a)(2).

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In the case of the merger of a national bank with a nonbank affiliate under 12 USC 215a-3
resulting in a national bank, or the merger of an uninsured national bank with a nonbank
affiliate under 12 USC 215a-3 resulting in a nonbank affiliate, shareholders that own or
control at least two-thirds of the capital stock of the national bank must approve the terms
and conditions that govern the transaction at a shareholders’ meeting. In each of these cases,
the nonbank affiliate must follow the procedures for merger set out in the laws of the state or
other jurisdiction under which the nonbank affiliate is organized. 28
Federal Savings Associations
Generally an affirmative vote of two-thirds of the outstanding voting stock of any constituent
stock FSA is required for approval of a merger or consolidation involving the stock FSA. If
any class of shares is entitled to vote as a class under the FSA’s charter, an affirmative vote
of the majority of the shares of each voting class and two-thirds of the total voting shares is
required. The shareholders of a constituent institution other than an FSA must approve the
transaction under the standard set forth in the laws of the applicable jurisdiction.
Shareholders of the resulting FSA are not required to authorize a consolidation or merger if
•
•
•
•

the consolidation or merger does not involve an interim FSA or interim state savings
association,
the association’s charter is not changed,
each share of stock outstanding immediately prior to the effective date of the
consolidation or merger is to be an identical outstanding share or a treasury share of the
resulting FSA after such effective date, and
either
- no voting stock of the resulting FSA and no securities convertible to voting stock of
the resulting bank are to be delivered or issued under the plan of combination, or
- the authorized unissued shares or treasury shares of voting stock of the resulting FSA
to be issued or delivered under the plan of combination, plus those initially issuable
upon conversion of any securities to be issued or delivered under such plan, do not
exceed 15 percent of the total shares of voting stock of the FSA outstanding
immediately before the effective date of the consolidation or merger.

The OCC may require mutual FSA members to vote on a consolidation, merger, or other
business combination at a duly called meeting and may require that the transaction, to be
effective, must be approved by such voting members.
Purchase and Assumption Transactions
In purchase and assumption transactions, usually no shareholder vote is required for the
acquiring or purchasing bank. The target bank’s shareholders may be required to vote,
however, when the target is a national bank or FSA that will go into liquidation after or
concurrent with the purchase and assumption. Similarly, shareholder approval may be
28

Refer to 12 CFR 5.33(g)(4) and 5.33(g)(5).

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required if state law requires it for a target state-chartered bank, or if the target bank’s articles
or charter require a vote.

Proxy Disclosures
National banks or FSAs seeking to merge or consolidate with other depository institutions,
and national banks seeking to merge with one or more of their nonbank subsidiaries or
affiliates, must adequately inform all shareholders eligible to vote on all material aspects of
the transaction and notify shareholders of the meeting to vote on the combination. Refer to
“Notice of Shareholders’ Meeting to Vote on Combination.” Only banks with securities
registered under the Securities Exchange Act of 1934, subject to 12 CFR 11, must submit
preliminary proxy materials or information statements to the OCC’s Securities and Corporate
Practices Division before distribution to shareholders. 29 All other banks must submit a copy
of final proxy materials or information statements used for the combination to the appropriate
district office no later than the time they are sent to shareholders.
All proxy materials and information statements should point out that OCC approval or
possible approval of the combination
•
•
•

reflects only its view that the transaction does not contravene applicable competitive
standards imposed by law and is consistent with regulatory policies relating to safety and
soundness.
is not an OCC opinion that the proposed combination is financially favorable to the
shareholders or that the OCC has considered the adequacy of the terms of the transaction.
is not an endorsement of, or recommendation for, the combination.

The last statement, because of its significance, should be emphasized, for example through
use of a boldface font or capital letters.

Timing of OCC Approval and Proxy Release
If a bank has not printed its proxy materials when it receives OCC approval of the
combination, the proxy materials or information statement should disclose the facts and
circumstances surrounding the approval, usually in those portions dealing with regulatory
matters. If the bank has printed its proxy materials or information statement, but has not
mailed them at the time it receives approval, it generally must include a supplementary letter
or “sticker” containing the appropriate disclosures. Proxy material or information statements
that are mailed before the bank receives OCC approval should indicate that the application
has been filed and that OCC approval is necessary to consummate the transaction. The
statement also should state that, as of the date of the mailing, OCC approval has not been
granted.

29

A bank must register its securities with the OCC under the Securities Exchange Act of 1934 if it has shares
that are traded on a national securities exchange or it has total assets exceeding $10 million and a class of equity
security (other than an exempted security) held of record by 2,000 or more persons. Refer to 15 USC 781(b),
(g), and (i).

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If the OCC’s approval is granted after the proxy material or information statement is mailed,
but before the shareholders’ meeting or vote, supplemental disclosures about the
combination’s approval, and a new proxy card, if appropriate, should be sent to the
shareholders. If the OCC’s approval is granted shortly before the shareholders’ meeting,
however, the bank should consult with counsel on disclosure obligations concerning the
combination approval.

Shareholders’ Notice and Meeting
A national bank generally must publish notice of the shareholders’ meetings to ratify merger
or consolidation agreements on the same day each week for four consecutive weeks in a
newspaper of general circulation in the communities where each institution’s main office is
located. 30 Publication of shareholder notice to the shareholders may be waived in cases
where the OCC determines that an emergency exists justifying such waiver, by unanimous
action of the shareholders. In addition, a BHC that is the sole shareholder of a bank may
approve a merger or consolidation agreement without holding a shareholders’ meeting. Refer
to “Shareholders’ Waiver of Notice of Shareholders’ Meeting and Written Consent of
Business Combination.”
In addition to the newspaper notice, at least 10 days before the meeting, a national bank
soliciting shareholder votes must send to each shareholder, by certified or registered mail, a
notice accompanied by a proxy or information statement. 31 If one or more of the entities
involved in a combination is not a national bank, then the applicants should consider the
relevant laws and regulations governing notice and publication requirements for the nonnational bank entities.
The notice for the conduct of any shareholder meeting is separate from the public notice that
must be published. Refer to the “Public Notice and Comment” section of this booklet under
“Application Process” section of this booklet for additional public notice details.

Exercise of Dissenters’ Rights; Appraisal Process
A shareholder dissenting from a consolidation or merger involving a national bank or FSA
may be entitled to receive the value of his or her shares from the resulting entity. The specific
details of the steps a shareholder must follow to perfect his or her dissenters’ rights generally
are detailed in the appropriate statute and regulation under which the transaction is

30

Refer to 12 USC 215(a), 12 USC 215a(a)(2). There is no similar requirement for FSAs.

31

The additional notice to each shareholder may be waived for those shareholders who specifically waive such
notice. Refer to 12 USC 215(a) and 12 USC 215a(a)(2).

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authorized. Refer to 12 USC 214a, 215, 215a, 215a-2, 215a-3, or 215c and 12 CFR 5.33. 32
The requirements in each of these sections vary slightly and should be read carefully and
followed precisely so that dissenters’ rights are not erroneously forfeited. In addition, any
proxy material distributed to the shareholders should describe the appropriate steps for
dissenting shareholders.
Generally, a shareholder must dissent either by voting against the transaction at the
shareholders’ meeting or by notifying the bank in writing at or before such meeting that he or
she dissents from the plan to consolidate, or merge. Within 30 days after the date of
consummation of the transaction, the dissenting shareholder also must confirm in writing his
or her dissent to the transaction and surrender his or her stock certificates to the resulting
bank. Next, a committee of three is selected to appraise the stock of the dissenting
shareholders. The committee includes one representative that the majority of dissenting
shareholders appoints, one representative that the resulting entity appoints, and one
representative that those two representatives appoint. If two members of the three-member
committee agree on the value of the shares, that value governs. If that value is acceptable to
one or more dissenting shareholders, the process is complete for those shareholders who find
the value acceptable, and the appraised value of the shares is paid by the resulting entity. If
that value is not acceptable to one or more dissenting shareholders, those shareholders may,
within five days of being notified of the appraised value, appeal to the OCC, which then
conducts a reappraisal that will be final and binding upon the appellants.
In addition, if within 90 days of the date of consummation of the transaction, for any reason
one or more of the appraisers are not selected, or the appraisers fail to determine a value, any
interested party may request in writing an appraisal from the OCC. In transactions involving
mergers and consolidations between national banks and state banks (as defined in 12 USC
214(a) and 215b(1)), the statutes provide that the OCC’s appraisal or reappraisal is final and
binding on all parties, and the resulting entity pays the cost of an OCC appraisal or
reappraisal. Refer to 12 USC 214a(b), 215(d), and 215a(d).
There are several exceptions to the dissenters’ rights and appraisal process described above.
First, in transactions in which an FSA is merging or consolidating into a national bank or in
which a national bank or another FSA is merging or consolidating into an FSA, the OCC
may apportion the costs and expenses among the parties. Refer to 12 CFR 5.33(g)(2)(ii)(C),
and 5.33(g)(3)(i)(B)(2) and (C)(2). Second, in transactions in which a state bank, state
savings association, or other state entity is merging or consolidating into an FSA, or in
transactions in which a nonbank affiliate is merging into a national bank, the rights of
dissenting shareholders of the state entity are determined by the law of the state or other
jurisdiction under which the state entity is organized. Refer to 12 CFR 5.33(g)(3)(i)(D)(2)
32

For mergers of an insured or uninsured national bank with a nonbank affiliate under 12 USC 215a-3 resulting
in a national bank, the rights of dissenting shareholders of the nonbank affiliate are determined in the manner
prescribed by the laws of the state or other jurisdiction under which the nonbank affiliate is organized. For
mergers of an uninsured national bank with a nonbank affiliate resulting in a nonbank affiliate, national bank
shareholders who dissent may receive the value of their shares if they comply with 12 USC 214a, as if the
nonbank affiliate were a state bank. The rights of dissenting shareholders of the nonbank affiliate are
determined in the manner prescribed by the laws of the state or other jurisdiction under which the nonbank
affiliate is organized.

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and 5.33(g)(4)(iv). Third, in transactions in which a national bank is merging into a nonbank
affiliate and transactions in which an FSA is merging or consolidating into a state bank, state
savings association, or other state entity, the regulations provide that the OCC will conduct
an appraisal or reappraisal only if the parties agree the OCC’s appraisal will be final and
binding and agree on how the total expenses of the OCC will be divided among the parties
and paid to the OCC. Refer to 12 CFR 5.33(g)(5)(iv)(A) and 5.33(g)(7)(iii)(A). Also, see the
Licensing Fee Schedule for the OCC’s current fee for performing a stock appraisal.
In addition, when dissenters’ rights are provided in accordance with 12 USC 215 or 215a, the
dissenting shareholder may be entitled to receive additional compensation. The shares of
stock of the receiving entity that would have been delivered to the dissenting shareholder
must be sold at public auction. If the shares are sold at public auction at a price greater than
the amount paid to the dissenting shareholders, the excess of such sale price must also be
paid to such dissenting shareholders.
The rights and appraisal process for dissenting shareholders of a state bank or nonbank
affiliate are determined in the manner prescribed by the law of the state or other jurisdiction,
as appropriate.

OCC Valuation Methodology
Because the statutes that provide for appraisals do not define value, nor does the legislative
history illuminate congressional intent, the OCC has elected to use valuation methods that
ensure that stockholders receive full value for their shares being appraised. After reviewing
the particular facts in each case and the available information on a bank’s shares, the OCC
selects an appropriate valuation method, or combination of methods, to determine a fair
estimate of the shares’ value.
The OCC values the stock as of the date of consummation of the consolidation or merger,
with the exception of transactions subject to the requirements of 12 USC 214a, in which case
the value is determined as of the date the shareholders’ meeting was held authorizing the
transaction. The OCC also may apply a marketability discount due to the lack of
marketability for stock that is closely held or has a limited trading history. The use of a
marketability discount for stock that is not readily marketable is a standard practice in the
business valuation industry. The OCC has determined that where the facts warrant the
inclusion of this type of discount, such a discount is helpful in reaching the best possible
determination of the value. The OCC normally does not apply certain minority discounts to
the fair valuation of the dissenting shares of stock.
For banks that are considered going concerns, the OCC typically uses one of three methods
or a combination of those methods to determine a reasonable estimate of the shares’ value.
Each of those methods is described in this section of the booklet: market value, investment
value, and adjusted book value. If more than one method is used, varying weights are applied
in reaching an overall valuation. The weight given to the value by a particular valuation
method is based on how accurately the given method is believed to represent a fair price. For
example, the OCC may give more weight to a value representing infrequent trading by

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shareholders than to the value derived from the investment value method when the subject
bank’s earnings trend is so irregular that it is considered to be a poor predictor of future
earnings.
For mergers and consolidations, the OCC recognizes that purchase premiums do exist and
may, in some instances, be paid in the purchase of small blocks of shares. The payment of
purchase premiums, however, depends entirely on the acquisition or control plans of the
purchasers, and such payments are not regular or predictable elements of value.
Consequently, the OCC’s valuation methods do not include consideration of purchase
premiums in arriving at the value of shares.
Market Value Method
Market value is the price at which a willing buyer and seller would exchange a share of stock
in an arm’s-length transaction. If sufficient trading in the shares exists and the prices are
available from direct quotes from The Wall Street Journal or a market maker, those quotes
are considered in determining value. If the stock is heavily traded on a major exchange, it is
likely that the OCC would simply apply that value for the appropriate date. If no value is
readily available, or if the value available is not well established, the OCC typically uses
other methods of estimating value, such as the investment value and adjusted book value
methods.
Investment Value Method
Investment value is a method of valuation that attempts to make a reasonable and informed
assessment of earnings capacity at the bank and then applies the market perception of the
value of banking organizations with similar earnings potential. This two-step process requires
establishing a peer group composed of banking organizations with similar earnings potential
for which market data are readily available, and an analysis of historical earnings data for the
target bank. In practice, the investment value is calculated by multiplying a selected price to
earnings ratio for the peer banks by the earnings capacity per share of the target bank.
The peer banks are selected based on location, size, and earnings patterns. To select a
reasonable peer group when there are too few comparable independent banks in a location
that are comparable to that of the subject bank, the pool of banks from which a peer group is
selected may be broadened. For example, the peer group may be broadened to include onebank holding company banks in a comparable location, or by selecting banks in less
comparable locations that are similar in asset size and earnings patterns to the subject bank.
Once the peer banks are selected, the selected price to earnings ratio of the peer banks is then
applied to the earnings per share estimated for the subject bank to reach a fair estimate of
value.
Adjusted Book Value Method
The third method the OCC uses for reaching a fair estimate of value is the adjusted book
value method. An adjusted book value is derived by multiplying the book value of the target

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bank’s assets per share by a selected market price-to-book value ratio for a group of
comparable banking organizations. The adjusted book value reflects the premium or discount
to a bank’s book value that is attributed to the condition and prospects of banking
organizations in similar situations. The adjusted book value method is an asset-based method
whose value is reflective of a bank in liquidation.

Agreements and Board of Directors’ Approval
A majority of the board of directors of each of the participating depository institutions
involved in a merger or consolidation involving a national bank must approve an agreement
to combine. 33 If a target depository institution in a merger or consolidation with a national
bank is a state bank, and the law of the state where the target is located is more stringent with
respect to board and shareholder approval than the national bank merger and consolidation
statutes, then the target bank must abide by the state law requirements. In a combination
transaction involving a stock FSA that does not involve a national bank, a majority of the
board of each constituent must approve the combination, but where a state-chartered bank or
state-chartered savings association is a constituent, the vote of the directors of the statechartered institution is governed by state law. A combination involving a mutual FSA must
be approved by two-thirds of the mutual FSA’s board. For national banks, refer to the
“Sample Agreement—Merger”; “Sample Agreement-Consolidation”; “Secretary’s
Certificate of Board of Directors’ Approval of Combination.” Alternatively, a bank’s board
of directors may waive its notice of a board meeting and approve a combination agreement
by consent.
In the case of purchase and assumption transactions, management, as directed by the board of
directors’ resolution, usually executes a purchase of assets and assumption of liabilities
agreement.
In combinations involving interim banks, the OCC accepts agreements executed between the
primary parties (for example, an operating depository institution and a BHC or SLHC). To
help ensure that the combination is completed in accordance with 12 USC 215 or 215a, the
agreement should provide for the interim bank to become a party to the agreement upon its
organization. This is done through an addendum to the initial agreement. Combination
agreements structured in this manner are permissible if: (1) the agreement satisfies all the
requirements of 12 USC 215 or 215a in the case of transactions with a national bank; (2) the
initial agreement clearly states the intent to include the interim bank in the combination; and
(3) the interim bank becomes a party to the agreement before consummating the
combination.

33

Refer to 12 USC 215(a), 215a(a)(1).

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Branch Authorization and Closing
Branch Authorization
The resulting national bank in a combination may retain, as branches, the branches of the
acquiring bank and the main offices and branches of the target institutions as permitted under
12 USC 36 and 12 CFR 5.30. A resulting FSA in a combination may retain, as branches, the
branches of the acquiring FSA and main offices and branches of the target institutions as
permitted under 12 USC 1464(r) and 12 CFR 145.92. The application should address the
legal authority of the resulting bank to retain branches of all institutions participating in the
combination.
The combination application must include a list of all locations for which the resulting bank
requests OCC authorization. The application also must list all branches of each institution
involved in the combination, including those of a national bank or FSA that the resulting
bank will not retain after consummation. (See the “Branch Closings” section of this booklet.)
The OCC issues an authorization letter after consummating the transaction for any office that
will be a branch of the resulting bank that was not approved as a branch of a national bank or
FSA before the combination. Refer to the “Branches Requiring Authorization” form. The
OCC letter certifying the combination authorizes the resulting bank’s retention, as branches,
of the main offices of the combining institutions (except the resulting bank’s main office) and
all existing branch offices (brick-and-mortar branches and other types of facilities that meet
the definition of a branch under federal banking laws) of the acquired institutions that are not
national banks or FSAs.
If permitted under 12 USC 36 or 12 USC 1464(r) and 12 CFR 5.30 or 12 CFR 5.31, as
applicable, banks may retain approved but unopened branches of a target institution if the
target institution received all required approvals for those branches before the transaction.
The application must include a list of all approved but unopened branches for which
authorization is requested. Banks should be aware of the 18-month expiration period
affecting approved but unopened branches.

Branch Closings
The applicant must identify branches that will cease to operate as a result of the transaction.
If the applicant is unable to determine at the time of filing the exact number and location of
the branch closings, the application should state that a yet-to-be-determined number of
offices will close and provide as much specificity as possible. When the exact locations are
determined, the applicant must follow the branch closing procedures set forth in 12 USC
1831r-1. Refer to the “Branch Closings” booklet of the Comptroller’s Licensing Manual. The
OCC may require additional public notice once the determination of exact branch closings is
made.
The responsibility for filing the notice lies with the acquiring or resulting national bank or
FSA, but either party to a combination may give notice. Thus, for example, the acquirer may

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give the notice before consummating the transaction when the acquirer intends to close a
branch after consummation, or the target or seller may give the notice because it intends to
close a branch at or before consummation.

Nonconforming Assets and Activities
An applicant must identify any nonconforming assets or activities, including nonconforming
subsidiaries, of any institutions involved in the combination that will not be disposed of, or
discontinued, before consummating the transaction. Refer to 12 CFR 5.33(e)(5). A
nonconforming asset or activity is one that is impermissible for a national bank or FSA or, if
permissible in general, is being conducted in a manner that exceeds limits applicable to
national banks or FSAs. Nonconforming assets include investments in subsidiaries or other
entities that are not permissible for a national bank or FSA, as applicable. If the applicant has
questions about the legal authority of the resulting bank to retain certain assets or continue
certain activities, the application should contain an analysis of the legality of the assets or
activities, including a legal opinion, if appropriate.
The OCC generally permits the resulting bank a reasonable period of time, usually not more
than two years after consummating the combination, to divest or conform nonconforming
assets or discontinue or conform nonconforming activities of the target without undue
hardship. An applicant seeking to retain nonconforming assets or activities must provide
information describing its plan to conform, divest, or discontinue nonconforming assets or
activities, and an explanation of the reasonableness of the time periods involved. If an asset
or activity is conforming only if it is held or conducted in a financial subsidiary of a national
bank, then the resulting national bank must hold the asset or conduct the activity in a
financial subsidiary, or if not, then the national bank must conform or divest the asset or
activity within the time period specified by the OCC, which will generally be two years. Any
resulting FSA shall conform to the requirements of sections 5(c) and 10(m) of HOLA, 12
USC 1464(c) and 1467a(m), within the time period prescribed by the OCC.

Subsidiary and Investment Authorization
An applicant must identify any subsidiary, other company, or investment to be acquired in a
business combination and state the activities of each subsidiary or other company in which
the applicant would be acquiring an investment. The OCC does not require a separate
application or notice under 12 CFR 5.34, 5.35, 5.36, 5.38, 5.39, 5.58, or 5.59.
A national bank proposing to acquire, through a business combination, a subsidiary, financial
subsidiary investment, bank service company investment, service corporation investment or
other equity investment of any entity other than a national bank, must provide the same
information and analysis of the subsidiary’s activities, or of the investment, that would be
required if the applicant were establishing the subsidiary, or making such investment,
pursuant to 12 CFR 5.34, 5.35, 5.36, or 5.39.
An FSA proposing to acquire, through a business combination, a subsidiary, bank service
company investment, service corporation investment or other equity investment of any entity

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other than an FSA must provide the same information and analysis of the subsidiary’s
activities, or of the investment, that would be required if the applicant were establishing the
subsidiary, or making such investment, pursuant to 12 CFR 5.35, 5.38, 5.58, or 5.59.
A national bank that proposes to acquire a community development project or corporation
that the OCC previously has not approved must seek and receive OCC approval from
Community Affairs under 12 CFR 24 before consummating the combination. 34

Exit Notice to OCC
A national bank or FSA engaging in a consolidation or merger in which it is not the resulting
institution must file a notice with the appropriate OCC licensing office advising of its
intention to terminate its status as a federal charter. Refer to 12 CFR 5.33(k). The bank shall
submit the notice at the time the application to merge or consolidate is filed with the
responsible agency, or if there is no such filing, then 30 days before the effective date of the
merger or consolidation.
The notice should contain a short description of the transaction, a copy of the filing with
another regulatory agency, and the planned consummation date.

Post-Decision Process
Appeals
An applicant may appeal an OCC decision under policy and procedures discussed in OCC
Bulletin 2013-15, “Bank Appeals Process: Guidance for Bankers.” For more information, see the
“General Policies and Procedures” booklet of the Comptroller’s Licensing Manual.

Extension of Time
When the OCC approves or conditionally approves a business combination, the applicant has
up to six months to consummate the transaction. Refer to 12 CFR 5.33(e)(7). The approval
will lapse if a combination is not consummated within six months from the date of OCC
approval, unless the OCC grants an extension of time.
The OCC normally does not grant extensions of time to consummate. An extension of the
approval time, however, may be requested from the appropriate OCC licensing office and
granted if the applicant can provide sufficient information to prove that the reason for the
delay is beyond its control or otherwise satisfy the OCC that sufficient grounds exist to
extend the approval.

34

Questions about national bank public welfare investments in community development corporation
subsidiaries and other community and economic development entities under 12 USC 24(Eleventh) and its
implementing regulation, 12 CFR 24, can be referred to the Community Affairs Division:
[email protected].

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Consummation
Applicants should advise the OCC at least 10 days before the desired consummation date for
the combination, allowing the OCC adequate time to determine if the bank has met any
applicable pre-combination requirements specified in the approval letter. Refer to the “Notice
of Consummation.” Generally, the OCC issues its certification letter on the effective date.

Certification of Resulting Bank’s Capital
Resulting banks may be required to file a notice or application for any increases in permanent
capital as a result of a combination. Pursuant to 12 CFR 5.46, national banks are required to
file a notice, or in some cases an application, after an increase in permanent capital and
obtain OCC certification. The OCC will acknowledge receipt of the filing and certify any
increase in permanent capital for resulting national banks. In cases specified in 12 CFR 5.45,
FSAs are required to file an application after an increase in permanent capital. Certification
by the OCC is not required for FSAs.

Lending Limit Calculation
When a combination transaction results in a change in capital category under 12 USC 1831o
and 12 CFR 6 (prompt corrective action), the bank should calculate its lending limit based on
the resulting capital and the effective date of such capital category change. The effective date
of the change in capital category is the date the bank is notified of, or is deemed to have
notice of, its capital category pursuant to 12 CFR 6.3(b).
In addition, on a case-by-case basis, the OCC may require recalculation of a bank’s lending
limit when a combination transaction causes a change to capital but does not result in a
change in capital category. Further, a bank may request permission from the OCC to
recalculate its lending limit when a combination transaction causes a material change to
capital but does not result in a change in the prompt corrective action capital category.

Oath of New Directors
A resulting national bank must furnish the OCC with an executed “Oath of Bank Director”
for all new directors added as a result of a merger. In a consolidation, the resulting national
bank must furnish the OCC with an executed “Oath of Bank Director” for all directors.

OCC Semiannual Assessment
The OCC assesses a bank based on the assets reported as of a June 30 or December 31
Consolidated Reports of Condition and Income (call report) date. For example, for any
consummation date between July 1 and December 31, the resulting bank’s assessment will be
based on its December 31 assets.

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If a bank leaves the federal banking system on or before June 30 or December 31, no fee is
assessed for the upcoming period. Institutions must leave the federal banking system before
the close of business on the call report date to avoid paying the full semiannual assessment.
The assessment fee is due on March 31 and September 30 of each year and is automatically
deducted from the bank’s designated bank account on the payment due date. If a bank leaves
the federal banking system before the payment date, the bank should contact the OCC’s
Financial Management Division to discuss arrangements for payment.

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Procedures: Prefiling
Exploratory Inquiry, Conference Call, or Meeting
1. Potential applicants may request an exploratory conference call or meeting with the OCC
to clarify any questions or concerns. The potential applicant should provide any available
written documents that describe the proposal to the appropriate OCC licensing office for
review before the call or meeting. The potential applicant should allow adequate time for
OCC staff to review the material.
2. Potential applicants may request information about the business combination process
from the licensing staff in the appropriate OCC office if this information has not been
requested previously.

Prefiling Meeting
3. The OCC strongly encourages potential applicants to schedule a prefiling meeting. A
prefiling meeting is optional but would be beneficial if the transaction presents possible
issues or if the applicant has questions on the structure of the transaction or the filing
process. Either the applicant or the OCC may request a prefiling meeting.
4. In advance of any prefiling meeting, the potential applicant usually provides the OCC
staff with an overview of the proposal, including a discussion of the business plan and the
market, with particular emphasis on any unique aspects or novel policy or legal issues.

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Procedures: Application Process
Filing the Application and Publication
1. The applicant completes and forwards the application 35 (original and copies) to the
appropriate OCC licensing office. The applicant should e-mail a PDF copy of the public
and confidential portions of the application to the OCC.
2. For combinations that require approval under the BMA, the applicant arranges for
newspaper publication of public notice on the filing date, or as soon as practicable before
or after the date of filing, and two times thereafter. (Refer to the “Public Notice and
Comment Periods” section of this booklet and the sample notice.) Promptly after
publication, the applicant submits a statement containing the name and address of the
newspaper in which the notice was published and dates of publication to the appropriate
OCC licensing office. Refer to the “Public Notice and Comments” booklet of the
Comptroller’s Licensing Manual.
3. The applicant applies for and obtains any other required regulatory approvals.

Organizing an Interim Bank
4. If the transaction includes the formation of an interim national bank or FSA to facilitate
the transaction, the applicant files the “Interim Bank Charter Application” with the other
application materials. The application to form an interim national bank should include the
interim’s signed articles of association, organizational certificate, and oaths of directors.
The application to charter an interim FSA should include the interim’s charter and
bylaws. Refer to 12 CFR 5.33(e)(4).
5. The applicant proceeds with any remaining steps required to organize the interim bank,
including filing the “Stock Payment Certificate and Oaths of Directors and Officers” for
an interim national bank.

Public Comments and Hearings
6. If the public or interested persons request copies of the application, OCC licensing staff
follows the information request procedures in the “General Policies and Procedures”
booklet of the Comptroller’s Licensing Manual.
7. If public comments are filed or a hearing or meeting is requested, OCC licensing staff
refers parties to the “Public Notice and Comments” booklet of the Comptroller’s
Licensing Manual for guidance and procedures.
35

Refer to occ.gov, for the “Interagency Bank Merger Act Application” and application forms for a streamlined
merger, a national bank reorganization to form a BHC, or a merger of a national bank with a nonbank affiliate
(in which the affiliate survives or the national bank survives).

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8. The applicant reviews and may respond to the OCC on any public comments, and
provides a copy to the commenter. If the applicant does not provide a copy to the
commenter, the OCC forwards any nonconfidential portions of the response from the
applicant to the commenter.

Initial Review
Shareholder Approval
1. If the bank has, or will have, registered securities under section 12(b) or (g) of the
Securities Exchange Act of 1934, 12 USC 78l(b) or (g), it must file preliminary
shareholder proxy materials or information statements with the OCC’s Securities and
Corporate Practices Division in the OCC’s Washington, D.C., headquarters.
2. For national banks, if the transaction requires shareholder approval, the bank publishes
notice of the shareholders’ meeting on the same day of the week for four consecutive
weeks (see the “Shareholder Considerations” section of this booklet under “Application
Process”).
3. The bank mails notice of the shareholders’ meeting, with accompanying proxy materials
or information statements, to all shareholders by certified or registered mail at least
10 days before the meeting, or earlier, if required. The bank also sends definitive copies
of the shareholders’ materials to the appropriate OCC licensing office.
4. The bank mails proxy materials or information statements to the appropriate OCC
licensing office.
Note: Any shareholders wishing to dissent must file to dissent at or before the
shareholder vote.
5. The bank obtains any applicable shareholders’ approval of the combination.
6. Shareholders of depository institutions who are provided with dissenters’ rights by law or
regulation may perfect their rights by objecting to the combination before the applicable
shareholder meeting, or by voting against the combination at the shareholder meeting.
Refer to the “Dissenters’ Rights” section of this booklet for more information as specific
requirements apply.

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Procedures: Consummation
Banks should use the following procedures:

Consummation and Filing of Documents
1. Notify the Director for district licensing by e-mail or letter at least 10 days in advance
(five days in advance for a combination processed under 10-day, 5-day procedures) of the
date that the bank plans to consummate the combination. The consummation date must
follow any applicable DOJ waiting period for transactions filed under the BMA.
2. As applicable, forward to the OCC copies of any pertinent required regulatory approvals,
evidence of satisfaction of any pre-consummation requirements imposed by the OCC, or
other similar documentation required by the OCC.
3. If not previously done, submit to the OCC the: secretary’s certificates of the board of
directors’ approval; the executed combination agreement; amended articles of association
for combinations in which the articles of association change for a resulting national bank,
or amended charter for an FSA; and, if applicable, the secretary’s certificates certifying
shareholders’ ratification.

Post-Consummation
4. File an “Oath of Bank Director” for each new director who has not previously taken the
oath (applicable for national banks only).
5. Surrender any national bank or FSA charter certificates that are no longer valid.
6. Surrender any branch certificates or authorizations for branches to be closed as a result of
the transaction.

Dissenters’ Rights
7. If there are any dissenting shareholders appealing the valuation of shares, submit a
request for a stock appraisal directly to the Licensing Division at OCC Headquarters in
accordance with 12 USC 214, 215, 215a, 215a-2, 215a-3, 215c, or 12 CFR 5.33.

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Appendixes
Appendix A: Expedited Review Eligibility Criteria for Business
Combinations Involving Banks or Depository Institutions*

Are the parties to the
transaction (other than
an interim bank)
currently affiliated, or
will they be affiliated at
the time of the
business combination?

No

Yes

Is an interim
bank involved
in the
transaction?

Yes

Is the purpose of
the interim bank
only to facilitate
the formation of
a holding
company?

No

Yes

No

Are all parties
eligible banks
or depository
institutions,
other than the
interim bank?

No

Yes
The transaction cannot qualify
for expedited review unless it
meets the criteria for a
streamlined application. (See
chart on the next page).

The transaction is a
business reorganization
and qualifies for
expedited review.*

*Mergers involving non-bank subsidiaries or affiliates with a national bank are not eligible for
expedited review. Combinations involving a mutual FSA do not qualify for expedited review.
**A transaction that qualifies for expedited review and streamlined application can be removed
from expedited review by the OCC as provided in 12 CFR 5.13(a)(2)(i).

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From previous page

If the transaction
is not a business
reorganization, is
the acquiring bank
an eligible bank?

No

Yes

No
Will the
resulting
bank be “well
capitalized?

Yes

Are the target(s)
eligible banks or
depository
institutions?

Are the target’s
combined total
assets less than
10% of the acquiring
bank’s total assets?

No

Yes

Yes

Are the target’s
combined total assets
less than or equal to
50% of the acquiring
bank’s total assets?

No

Before filing, the
OCC granted
approval for
expedited review.

No

Yes
No

Yes
Transaction qualifies for
expedited review and a
streamlined application.*

Standard
processing applies

*A transaction that qualifies for expedited review and streamlined application may be removed from expedited review.
12 CFR 5.13(a)(2)(i)

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Appendix B: Bank Merger Act Competitive Review
Introduction and Overview
The banking agencies and the DOJ review the competitive impact of mergers involving
FDIC-insured depository institutions, as well as mergers involving BHCs or SLHCs, under
the banking and antitrust laws to proscribe mergers that may substantially lessen
competition. 36 To speed this competitive review and reduce regulatory burden on the banking
industry, the banking agencies and the DOJ have developed screens (Screens A and B) to
identify proposed mergers that clearly do not have significant adverse effects on competition.
In addition to the screens, the banking agencies and the DOJ have identified information,
described in section 2 of this appendix, which has proven to be useful in analyzing the
competitive effects of proposed mergers highlighted by Screen A or Screen B.
Parties planning a merger transaction may wish to consult with the relevant banking agency
or the DOJ before submitting an application. When a proposed merger causes a significant
anticompetitive problem, it is often possible to resolve the problem by agreeing to make an
appropriate divestiture. In such cases, it may be useful to discuss the matter with the DOJ and
the relevant regulatory agency. The DOJ seeks divestitures that resolve the loss of
competition in the market. A divestiture resolves the problem if it ensures the presence of a
strong and vigorous competitor that replaces the competition lost because of the merger.

Section 1—Screening
Banking Agencies
The banking agencies rely primarily on Screen A, which looks at competition in predefined
markets developed by the Federal Reserve. If the calculation specified in Screen A does not
result in a post-merger HHI over 1800 and an increase of more than 200, the banking
agencies are unlikely to further review the competitive effects of the merger. If the result of
the calculation specified in Screen A exceeds the 1800/200 threshold, applicants may
consider providing additional information. See section 2 of this appendix for a description of
the types of information that may be relevant. Providing such information with a merger
application can eliminate delays in the review process and may avoid special requests for
additional information.

Department Of Justice
The DOJ initially reviews transactions using data from the banking agencies’ screen, Screen
A. If a proposed merger exceeds the 1800/200 threshold in Screen A, applicants should
consider submitting the calculations set forth in Screen B.

36

The information in this appendix is taken from the DOJ’s policy statement on bank mergers, “Bank Merger
Competitive Review—Introduction and Overview (1995).”

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In some cases, the DOJ may further review transactions that do not exceed the 1800/200
threshold in Screen A. This is most likely when Screen A does not reflect fully the
competitive effects of the transaction in all relevant markets, in particular lending to small
and midsize businesses. For example, the DOJ is more likely to review a transaction
involving two commercial banks if the post-merger HHI approaches 1800 and the HHI
increase approaches 200, and Screen A includes savings associations that are not actively
engaged in commercial lending. In addition, the DOJ is more likely to review a transaction if
the predefined market in which the applicants compete is significantly larger than the area in
which small business lending competition may exist (for example, the predefined market
includes multiple counties, or is significantly larger than Ranally Metropolitan Area (RMA)
in which the applicants are located). In such a case, applicants should consider submitting the
calculations set forth in Screen B. Often, the DOJ reviews the information in Screen B and
finds no need for further review of the proposed merger.
If the calculation specified in Screen B results in an HHI over 1800 and an increase of over
200, applicants may consider providing additional information. (See section 2 of this
appendix for a description of the types of information that may be relevant. Providing such
information with a merger application can eliminate delays in the review process and may
avoid special requests for additional information.)
In some limited instances, the DOJ may examine a transaction in further detail, even though
Screen A and Screen B do not identify anticompetitive problems. This is most likely to occur
when it appears that
•

•

the screens’ market area does not fit the transaction. Sometimes the geographic market
used in the screens may not be an appropriate choice for analyzing the particular merger
involved. For example, the screens’ market area is a county, and one merging institution
is at the east end of one county and the other merging institution is at the west end of the
adjacent county. The institutions may in reality be each other’s most important
competitors, but the screens would not reflect that fact. Or the screens’ market area may
be quite large, but the merger involves two institutions at the center of the market.
Institutions at the periphery of the market area may be improbable substitutes for the
competition that would be lost in the transaction, and thus the transaction should be
scrutinized in a narrower area to ensure that the relevant geographic market is considered.
specialized products are involved. Sometimes the merging institutions are competitors for
a specialized product and few of the institutions included in the screens compete in
offering that product. For example, the screens likely would not identify a concentrated
market for working capital loans to midsize commercial customers if the market area has
many institutions but the merging institutions are two of only a few able to compete for
such business.

In such cases, applicants may wish to submit additional information. (See section 2 of this
appendix for a description of the types of information that may be relevant. Providing such
information with a merger application can eliminate delays in the review process and may
avoid special requests for additional information.)

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Section 2—Additional Analysis
The DOJ and the banking agencies are likely to examine a transaction in more detail if it
exceeds the 1800/200 threshold in Screen A. The DOJ is also likely to examine the effect of a
proposed merger on competition for commercial loans if the transaction exceeds the
1800/200 threshold in Screen B. In instances when a screen highlights a transaction for
further review, the applicant may present additional information not considered in the screen.
In cases when either Screen A or Screen B highlights a transaction for further scrutiny,
additional information may establish a clearer picture of competitive realities in the market.
Such information may include
•
•
•

•

evidence that the merging parties do not significantly compete with one another.
evidence that rapid economic change has resulted in an outdated geographic market
definition, and that an alternative market is more appropriate.
evidence that market shares are not an adequate indicator of the extent of competition in
the market, such as evidence that
– institutions in the market would be likely to expand current levels of commercial
lending. Such evidence might include current loan-to-deposit ratios, recent hiring of
new commercial loan officers, pending branch applications or significant out-ofmarket resources that would be shifted into the market in response to new loan
opportunities.
– a particular institution’s market share overstates or understates its competitive
significance (such as evidence that an institution is rapidly gaining or losing market
share or that the institution is not competitively viable or is operating under
regulatory restrictions on its activities).
evidence concerning entry conditions, including evidence of entry by institutions within
the last two years and the growth of those institutions that have entered; evidence of
likely entry within the next two years, such as pending branch applications; and
expectations about potential entry by institutions not now in the market area and the
reasons for such expectations, including legal requirements for entry.

When Screen B highlights a transaction for further scrutiny, applicants may consider
preparing an HHI worksheet for the market area using, instead of deposits, data from the
relevant call report on commercial and industrial loans (a) below $250,000 and (b) between
$250,000 and $1 million. Such information can be a useful assessment of actual competition
for small business lending.
Additional information that may be relevant includes evidence of competition from sources
not included in Screen B, such as
•

evidence that a thrift institution is actively engaged in providing services to commercial
customers, particularly loans for business startup or working capital purposes and cash
management services.

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•
•
•

evidence that a credit union has such membership restrictions, or lack of restrictions, and
offers such services to commercial customers that it should be considered to be in the
market.
evidence of actual competition by out-of-market institutions for commercial customers,
particularly competition for loans for business startup or working capital purposes.
evidence of actual competition by nonbank institutions for commercial customers,
particularly competition for loans for business startup or working capital purposes.

If the applicants believe that Screen B does not accurately reflect market concentration and
competitive realities in a particular area, they are encouraged to submit additional
information explaining the reasons for their belief. This information should include an HHI
worksheet that indicates the geographical area that should be covered, the institutions that
should be included, the method of calculating the market share of each institution (for
example, deposits, branches, loans), and the reasons why this information is preferable to the
information supplied in Screen B. Inclusion of institutions outside the areas identified in
Screen B should be supported, wherever possible, by evidence of actual competition by these
institutions. Such alternative worksheets should be submitted in addition to, rather than in
lieu of, the HHI worksheets from parts A and B.

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Glossary
Affiliate: Generally, any company, including a bank or other depository institution that
controls or is under common control with a bank. Certain other entities also are affiliates for
purposes of sections 23A and 23B of the FRA (12 USC 371c and 371c-1) and Regulation W
(12 CFR 223). Also refer to 12 USC 1468.
Applicant: Either the acquiring or target depository institution.
Appropriate licensing office: The OCC office responsible for processing applications or
notices to engage in various corporate activities or transactions as described at Licensing
Office Contacts.
Appropriate district office: The OCC office responsible for the supervision of a national
bank or FSA, as described in subpart A of 12 CFR 4.
Business combination:
(i) Any merger or consolidation between a national bank or FSA and one or more depository
institutions or state trust companies, in which the resulting institution is a national bank
or FSA;
(ii) in the case of an FSA, any merger or consolidation with a credit union in which the
resulting institution is an FSA;
(iii) in the case of a national bank, any merger between a national bank and one or more of its
nonbank affiliates;
(iv) the acquisition by a national bank or FSA of all, or substantially all, of the assets of
another depository institution; or
(v) the assumption by a national bank or FSA of any deposit liabilities of another insured
depository institution or deposit accounts or other liabilities of a credit union or any other
institution that will become deposits at the national bank or FSA.
Business reorganization:
(i) A business combination between eligible national banks and eligible FSAs, or between
an eligible national bank or an eligible savings association and an eligible depository
institution, that are controlled by the same holding company or that will be controlled by
the same holding company before the combination; or
(ii) a business combination between an eligible national bank or an eligible savings
association and an interim national bank or interim FSA chartered in a transaction in
which a person or group of persons exchanges its shares of the eligible national bank or
eligible savings association for shares of a newly formed holding company and receives
after the transaction substantially the same proportional share interest in the holding
company as it held in the eligible national bank or eligible savings association (except for
changes in interests resulting from the exercise of dissenters’ rights), and the
reorganization involves no other transactions involving the national bank or savings
association.

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Company: A corporation, limited liability company, partnership, business trust, association,
or similar organization.
Consolidation:
•

•

In the case of a national bank under 12 USC 215 and 1828(c), any combination of
existing depository institutions into a new entity under a national bank charter, or under
the charter of an existing national bank, when at least one institution is a national bank.
Shareholders of the consolidating institutions surrender their equity in return for either
equity in the consolidated bank or another form of consideration. Shareholders of the
consolidating depository institutions must approve the transaction under 12 USC 215,
which provides dissenters’ rights to shareholders of all consolidating institutions.
In the case of an FSA, any combination of existing FSAs into a new entity under an FSA
charter, or under the charter of an existing FSA, when at least one institution is an FSA.
FSA shareholders who dissent from a plan to consolidate may receive the value of their
FSA shares in cash if they comply with the requirements of 12 USC 214a as if the other
FSA were a state bank.

Control: As defined in the transactions with affiliates provisions of the FRA, when a
company or shareholder
(i) directly or indirectly, or acting through one or more other persons, owns, controls, or has
the power to vote 25 percent or more of any class of voting securities of the other
company;
(ii) controls in any manner the election of a majority of the directors or trustees of the other
company; or
(iii) the Federal Reserve determines, after notice and opportunity for hearing, that a company
or shareholder, directly or indirectly, exercises a controlling influence over the
management of policies of a company.
The statute provides that no company shall be deemed to own or control another company by
virtue of its ownership or control of shares in a fiduciary capacity. Regulation W provides a
rebuttable presumption that a shareholder that owns or controls 25 percent or more of a
company’s equity capital controls that company.
Depository institution: Any bank, state bank, or savings association.
Dormant bank: A bank that is no longer engaged in core banking activities other than on a
de minimis basis. This definition includes, for example, a bank that has significantly reduced
its activities and services or that has contracted out significant portions of its operations to
third-party service providers, other than in the ordinary course of the bank’s ongoing
business.
Eligible bank or eligible FSA: A national bank or FSA that
(i) is well capitalized as defined in 12 CFR 6.4.

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(ii) has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System
(CAMELS);
(iii) has a CRA (12 USC 2901 et seq.) rating of “outstanding” or “satisfactory,” if applicable;
(iv) has a consumer compliance rating of 1 or 2 under the Uniform Interagency Consumer
Compliance Rating System; and
(v) is not subject to a cease and desist order, consent order, formal written agreement, or
prompt corrective action directive (refer to 12 CFR 6, subpart B) or, if subject to any such
order, agreement, or directive, is informed in writing by the OCC that the national bank
or FSA may be treated as an “eligible bank or eligible savings association” for purposes
of this part.
Eligible depository institution:
(i) With respect to a national bank, a state bank or a federal or state savings association that
meets the criteria for an “eligible bank or eligible savings association” under 12 CFR
5.3(g) and is FDIC-insured; and
(ii) with respect to an FSA, a state or national bank or a state savings association that meets
the criteria for an “eligible bank or eligible savings association” under 12 CFR 5.3(g) and
is FDIC-insured.
Federal savings association: A depository institution (mutual or stock) chartered under
section 5 of the HOLA, 12 USC 1464.
Fair value: The amount at which an asset (or liability) could be bought (or assumed) or sold
(or settled) in a current transaction between willing parties, other than in a forced or
liquidation sale.
Herfindahl-Hirschman Index: A statistical measure of market concentration. It is used as
the principal measure of market concentration in the Merger Screen. The HHI for a given
market is calculated by squaring each individual competitor’s share of total deposits within
the market and summing the squared market share products. The more concentrated a
specific market becomes, the higher the HHI. For example, for a market with four
competitors with equal market shares, the HHI would be: 25²+25²+25²+25²=2,500; however,
for a market with two banks having 40 percent of the deposits and two banks having
10 percent of the deposits, the HHI would be: 40²+40²+10²+10²=3,400. For a more
concentrated market, with one bank having 60 percent of the deposits and two banks having
20 percent of the deposits, the HHI would be: 60²+20²+20²=4,400.
Home Owners’ Loan Act: The statute that provides for the chartering, regulation, and
supervision of FSAs, including the extent to which an FSA may invest in, sell, or otherwise
deal in loans and investments.
Home state: (1) With respect to national banks and state banks under the Riegle–Neal Act,
the state where the bank’s main office is located (for national banks) or the state by which the
bank is chartered (for state banks), or (2) with respect to FSAs, the state where the FSA’s
home office is located.

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Host state: As applied to both a national and a state bank under the Riegle–Neal Act, any
state other than its home state, in which the bank maintains, or seeks to establish and
maintain, a branch (or branches).
Interim bank: A national bank or FSA that does not operate independently, but exists solely
as a vehicle to accomplish a business combination.
Lending limit: The legal limit under 12 CFR 32 on the aggregate amount of credit that a
bank can extend to a single borrower. In certain circumstances, loans to separate borrowers
are combined for purposes of applying the limit. The limit is calculated as a percentage of the
bank’s capital and surplus.
Low-quality assets: As defined under Regulation W, these include
•

•
•
•
•

an asset (including a security) classified as “substandard,” “doubtful,” or “loss,” or
treated as “special mention” or “other transfer risk problems,” either in the most recent
report of examination or in any internal classification system used by the member bank or
the affiliate (including an asset that receives a rating that is substantially equivalent to
“classified” or “special mention” in the internal system of the member bank or affiliate).
an asset in nonaccrual status.
an asset on which principal or interest payments are more than 30 days past due.
an asset whose terms have been renegotiated or compromised due to the deteriorating
financial condition of the obligor.
assets acquired debts previously contracted that have not yet been reviewed in an
examination or inspection.

Merger: Under 12 USC 215a, 215c, 1828(c), 1464(d)(3)(A), 1467a(s) and 12 CFR 5.33, the
acquisition of one or more depository institutions by an existing national bank, FSA or
interim national bank or interim FSA. The shareholders of the target institution surrender
their equity in return for either equity in the acquiring bank or another form of consideration.
Merger screen: A screening device based on the HHI, used primarily by the OCC and the
DOJ to identify proposed business combinations that do not present anticompetitive
concerns. The screen also includes a description of the DOJ’s antitrust review process. The
applicant for a nonaffiliated business combination should submit the Merger Screen.
National bank: Any national banking association operating under the OCC’s supervision.
Nonbank affiliate: With respect to a national bank, for purposes of 12 USC 215a-3, any
company, other than a bank or FSA that controls, is controlled by, or is under common
control with the national bank.

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Other combination: 37
(i) Any merger or consolidation between a national bank or FSA and one or more depository
institutions or state trust companies in which the national bank or FSA is not a resulting
bank;
(ii) in the case of a federal stock savings association, any merger or consolidation with a
credit union in which the resulting institution is a credit union;
(iii) the transfer by a national bank or FSA of any deposits to another insured depository
institution, credit union, or any other institution; and
(iv) the acquisition by a national bank or FSA of all, or substantially all, of the assets or
substantially all of the liabilities of any company other than a depository institution.
State savings association: An institution as defined in section 3(b)(1) of the FDIA,
12 USC 1813(b)(1).
State trust company: A trust company organized under state laws that is not engaged in the
business of receiving deposits, other than trust funds.
Streamlined business combination: A transaction that satisfies one of the following
standards:
(i) At least one party to the transaction is an eligible bank or eligible FSA, and all other
parties to the transaction are eligible banks, eligible FSAs, or eligible depository
institutions; the resulting national bank or FSA will be well capitalized immediately after
consummating the transaction; and the total assets of the target institution are no more
than 50 percent of the total assets of the acquiring bank or FSA, as reported in each
institution’s call report filed for the quarter immediately preceding the filing of the
application;
(ii) The acquiring bank or FSA is an eligible bank or eligible FSA; the target bank or savings
association is not an eligible bank, eligible FSA, or eligible depository institution; the
resulting national bank or resulting FSA will be well capitalized immediately after
consummating the transaction; and the applicants in a prefiling communication request
and obtain approval from the appropriate OCC licensing office to use the streamlined
application;
(iii)The acquiring bank or FSA is an eligible bank or eligible FSA; the target bank or savings
association is not an eligible bank, eligible FSA, or eligible depository institution; the
resulting bank or FSA will be well capitalized immediately after consummating the
transaction; and the total assets acquired do not exceed 10 percent of the total assets of
the acquiring national bank or FSA, as reported in each institution’s call report filed for
the quarter immediately preceding the filing of the application; or
(iv) In the case of a transaction under 12 CFR 5.33(g)(4), the acquiring bank is an eligible
bank, the resulting national bank will be well capitalized immediately after
consummating the transaction, the applicants in a prefiling communication request and
obtain approval from the appropriate OCC licensing office to use the streamlined
37

Other combination transactions do not require an application to the OCC under 12 CFR 5.33. Some, however,
may require an application under 12 CFR 5.53 or otherwise; others may require notice to the OCC.

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application; and the total assets acquired do not exceed 10 percent of the total assets of
the acquiring national bank, as reported in the bank’s call report filed for the quarter
immediately preceding the filing of the application.
Significant deviation or change: A material variance from the bank’s business plan or
operations that occurs after the proposed transaction has consummated.
Undercapitalized bank: An FDIC-insured depository institution that meets the criteria
established in 12 CFR 6.4(b)(3), (4), or (5), for an undercapitalized, significantly
undercapitalized, or critically undercapitalized bank, respectively.

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References
In this section, “NB” denotes that the referenced law, regulation, or issuance applies only to
national banks, and “FSA” denotes that the reference applies only to federal savings associations.

Asset Composition
Regulation

12 CFR 5.53

Authorization to Commence Banking Business
Law
12 USC 26 and 27 (NB)
Bank Holding Company Act
Law
Regulation

12 USC 1841
12 CFR 225

Bank Merger Act
Law
Regulation

12 USC 1828(c)
12 CFR 5.33

Bank and Thrift Combinations
Law

Regulation

12 USC 214a, 215, 215a, 215a-1, 215a-3,
215c (NB)
12 USC 1464(d)(3), 1467a(s) (FSA)
12 USC 1828(c)
12 USC 1831u (NB)
12 USC 1842(d) (NB)
12 CFR 5.33

Bank Secrecy Act
Law
Regulation

31 USC 5311-5328
12 CFR 21.21

Branch and Subsidiary Authorization
Law
Regulation

12 USC 24(7), 36, 1831u(d) (NB)
12 CFR 5.30 (NB)
12 CFR 5.31 (FSA)
12 CFR 5.33

Branch Closings
Law
12 USC 1831r-1
Issuance
Joint Policy Statement on Branch Closing, Notices and Policies, June 3, 1999

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Business Combinations
Law

Regulation

12 USC 24(7), 214a, 215, 215a, 215a-1, 215a-2,
215a-3, 215c, 1831u (NB)
12 USC 1464(d)(3), 1467a(s) (FSA)
12 USC 1828(c)
12 CFR 5.33

Capital Requirements
Law
Regulation

12 USC 92a, 36(c), 3907 (NB)
12 CFR 5.20, 5.33

Capital Stock
Law

12 USC 51c, 52, 53, 55 (NB)

Capital Structure Change
Law
Regulation

12 USC 57, 59 (NB)
12 CFR 5.46, 5.47, 7.2020, 7.2023 (NB)
12 CFR 5.45, 5.55, 5.56 (FSA)

Certificate Authorizing Transaction of Banking Business
Law
12 USC 27, 1814 (NB)
Community Reinvestment Act of 1977
Law
Regulation

12 USC 2901 to 2908
12 CFR 25 (NB), 12 CFR 195 (FSA)

Competitive Analysis
Law
Regulation

12 USC 1828(c)(4)
12 CFR 5.33(e)(1)(i)

Consolidation
Law
Regulation

12 USC 215 (NB)
12 USC 1828(c)
12 CFR 5.33

Depository Institution Management Interlocks Act
Law
12 USC 3201
Regulation
12 CFR 26
De Minimis Market Test
Issuance
OCC Decision, April 8, 1983, Application to Merge The National Bank and Trust Company
of Norwich, Norwich, NY, With National Bank of Oxford, Oxford, NY
Directors
Law

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Number of
Law

12 USC 71a (NB)
Oath of

Law

12 USC 73 (NB)
President as

Law

12 USC 76 (NB)
Purchases from and Sales to

Law

12 USC 375 (NB)

Qualification of
Law
Regulation
Composition

12 USC 72 (NB)
12 CFR 7.2005 (NB)
12 CFR 163.33 (FSA)

Filing Fees
Regulation

12 CFR 5.5

Fiduciary Powers
Law
Regulation

12 USC 92a (NB), 12 USC 1464(n) (FSA)
12 CFR 5.26
12 CFR 9 (NB), 12 CFR 150 (FSA)

Issuance
Interpretive Letter 695, December 8, 1995 (NB)
Interstate Combinations
Law

Regulation
Intrastate Combinations
Law

12 USC 24(Seventh), 30, 36, 215, 215a,
215a-1, 215c, 1815(d)(3), 1823(c) (NB)
12 USC 1828(c)
12 USC 1831u, 1835a, 1842(d) (NB)
12 CFR 5.33

Regulation

12 USC 24(Seventh), 215, 215a, 215c (NB)
12 USC 24(Seventh) 1828(c)
12 CFR 5.33

Investment in Bank Premises
Law
Regulation

12 USC 371d (NB)
12 CFR 5.37, 7.1000

Lending Limit Calculation
Law
Regulation

12 USC 84
12 USC 1464(u) (FSA)
12 CFR 3, 6, 32

Liquidation
Law

12 USC 181, 182 (NB)

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Regulation
Merger
Law

12 CFR 5.48

Regulation

12 USC 214a, 215, 215a, 215c, 215a-1, 215a-3
(NB)
12 USC 1828(c)
12 CFR 5.33

Meetings and Hearings
Regulation

12 CFR 5.11

Operating Subsidiary Annual Report
Regulation
12 CFR 5.34(e)(6) (NB)
Issuance
OCC Bulletin 2004-55, “Annual Report on Operating Subsidiaries: Final Rule,” December 1,
2004 (NB)
Place of Business
Law
Proxy or Information Statement
Law
Regulation

12 USC 22, 81 (NB)

15 USC 78l
12 CFR 5.33, 11
12 CFR 169 (FSA)

Public Comments
Regulation
12 CFR 5.10
Issuance
Comptroller’s Licensing Manual, “Public Notice and Comments” booklet
Public Welfare Investments (Community Development Corporation, Community
Development Projects, and Other Public Welfare Investments)
Law
12 USC 24(Eleventh) (NB)12 USC
1464(c)(3)(A) (FSA)
Regulation
12 CFR 24 (NB)
12 CFR 160.36 (FSA)
12 CFR 5.59(f)(8) (FSA)
Publication of Application (Public Notice)
Law
12 USC 1828(c)
Regulation
12 CFR 5.33, 5.8
Publication of Significant Corporate Decisions
Issuance
PPM 1000-15, “Publication of Significant OCC Interpretive Opinions and Corporate
Decisions in Interpretations and Actions,” September 5, 2001

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Purchase and Assumption
Law
Regulation

12 USC 24(7) (NB)
12 USC 1828(c)
12 CFR 5.33

Regulation W
Regulation

12 CFR 223

Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994
Law
12 USC 36(d), (e), (f); 215a-1; 1823(c),
1828(d); 1831u; 1835a; 2906(b)(1)(B), (d), (e)
(NB)
Regulation
12 CFR 5.33 (NB)
Issuance
Comptroller’s Handbook, “Other Consumer Protection Laws and Regulations”
Shareholders’ List
Law

12 USC 62 (NB)

Shareholders’ Meeting
Law

12 USC 214a(a), 215a(a)(2) (NB)

Transactions with Affiliates, Restrictions
Law
12 USC 371c (section 23A), 371c-1 (section
23B)
12 USC 1468 (FSA)
Regulation
12 CFR 223 (Regulation W)

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Table of Updates Since Publication
Version number
1.1

Version 1.0 Published November 14, 2017
Date
Reason
July 31, 2018
Clarification
July 31, 2018
Policy change

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28, 29

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