Management Interlocks Booklet

COMPTROLLER’S LICENSING MANUAL

MANAGEMENT
INTERLOCKS

APRIL 2022

Contents
Contents .................................................................................................................................... i
Introduction ............................................................................................................................. 1
Key Policies .............................................................................................................................. 2
Prohibitions ........................................................................................................................... 2
Exemptions ........................................................................................................................... 2
Statutory Exemptions ........................................................................................................ 2
Regulatory Exemptions ..................................................................................................... 3
Background Investigations ................................................................................................... 5
Decision Criteria ................................................................................................................... 5
Application Process ................................................................................................................. 6
General .................................................................................................................................. 6
General Exemption Filings ................................................................................................... 6
Presumptions of No Adverse Effect on Competition Filings ............................................... 7
Diversified Savings and Loan Holding Companies .............................................................. 7
Change in Circumstances...................................................................................................... 7
Additional Information Requests .......................................................................................... 8
Glossary ................................................................................................................................... 9
References .............................................................................................................................. 12
Table of Updates Since Publication ..................................................................................... 13

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Introduction
This booklet of the Comptroller’s Licensing Manual provides guidance concerning the
licensing procedures of the Office of the Comptroller of the Currency (OCC) relating to
management interlocks.1 The requirements referred to in this guidance document reflect
provisions in existing statutes and regulations. The relevant statutes and regulations are listed
at the end of this booklet or referenced as applicable throughout the document.2
Specifically, this booklet
•
•
•
•

explains when a prohibited interlock is created.
summarizes interlock exemptions for persons and organizations.
outlines the OCC’s filing requirements for persons and organizations seeking interlock
exemptions.
includes a glossary of terms, a reference section of statutes and regulations, and web links
to sample filing forms.

The purpose of the Depository Institution Management Interlocks Act, 12 USC 3201–3208,
(Interlocks Act) is to foster competition by generally prohibiting a management official of a
depository organization from simultaneously serving as a management official of an
unaffiliated depository organization in situations when the management interlock likely
would have an anticompetitive effect.3 There are certain statutory and regulatory exemptions
to these general interlock prohibitions. Some of these exemptions are self-executing. In other
cases, the exemption applies only after the OCC approves an application.
Banks interested in establishing a management interlock should review the OCC’s regulation,
12 CFR 26, before submitting a filing for an interlock exemption.

Throughout this booklet, national banks and federal savings associations are referred to collectively as banks,
except when it is necessary to distinguish between the two.
1

2

This booklet also may include procedures that banks must follow in connection with filing applications and
notices with the OCC. Such procedures are not substantive rules that establish decision criteria. Rather, they are
steps a bank must take in connection with filing an application or notice to allow the OCC to assess whether a
bank has met the substantive requirements for the application or notice in existing statutes and regulations.
Consistent with the Administrative Procedure Act, the OCC may issue guidance concerning licensing that has
binding procedural steps a bank must take to allow the OCC to assess a bank’s application or notice. See 5 USC
553(b)(A).
3

A “depository organization” is defined as a depository holding company (refer to 12 CFR 26.2(e)) or a
depository institution (refer to 12 CFR 26.2(f)). Pursuant to 12 USC 5364, nonbank financial companies
supervised by the Board of Governors of the Federal Reserve System (Federal Reserve) are treated as bank
holding companies for purposes of the Interlocks Act.
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Key Policies
Prohibitions
The Interlocks Act and the OCC’s implementing regulation generally prohibit management
interlocks in the following three situations, unless the interlock is otherwise exempted:
•
•

•

Community prohibition: If both unaffiliated depository organizations, or any of their
depository institution affiliates, have a principal or branch office in the same community,4
they may not have a management interlock regardless of their size.
Relevant metropolitan statistical area (RMSA) prohibition: If each unaffiliated
depository organization has total assets of $50 million or more, and both depository
organizations, or any of their depository institution affiliates, have offices in the same
RMSA, they may not have a management interlock.
Major assets prohibition: If a depository organization has total assets exceeding $10
billion, a management official of that organization, or any of its affiliates, may not serve
at the same time as a management official of any unaffiliated depository organization
with total assets exceeding $10 billion, or any affiliate of such depository organization,
regardless of their locations. The OCC and the other federal financial regulatory
authorities may periodically adjust the thresholds for the major assets prohibition by
publishing a final rule in the Federal Register.5

Exemptions
Statutory Exemptions
The Interlocks Act includes several specific exemptions from the general interlocks
prohibitions. Under these statutory exemptions (codified in 12 USC 3204 and 3205, and
listed in 12 CFR 26.4), the Interlocks Act permits a management interlock for the following
organizations and persons:
•
•
•
•
•

A depository organization that is placed formally in liquidation, under receivership or
conservatorship, or in similar circumstances.
A corporation operating under section 25 or 25A of the Federal Reserve Act (Edge Act
and Agreement Corporations).
A credit union being served by a management official of another credit union.
A depository organization that does not conduct business in the United States, except as
incidental to its activities outside of the United States.
A state-chartered savings and loan guaranty corporation.

4

Principal office for a national bank means its main office. Principal office for a federal savings association
means its home office.
5

The other federal financial regulatory authorities are the Federal Reserve, the Federal Deposit Insurance
Corporation (FDIC), and the National Credit Union Administration (NCUA).
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•
•

•

•
•
•

A Federal Home Loan Bank or any other bank organized solely to serve depository
institutions (for example, a bankers’ bank) or solely to provide securities clearing
services and related services for depository institutions and securities companies.
A depository organization that is closed or that the appropriate federal depository
institution’s regulatory authority finds to be in danger of closing and is acquired by
another depository organization. This exemption lasts five years from the date of
acquisition.
A diversified savings and loan holding company for which a director serves
simultaneously as a director of an unaffiliated depository organization, if (1) both the
diversified savings and loan holding company and the unaffiliated depository
organization notify their appropriate regulatory agencies at least 60 days before
beginning the dual service; and (2) the appropriate regulatory agency does not disapprove
the dual service before the end of the 60-day period.
Any savings association that has issued stock in connection with a qualified stock
issuance pursuant to 12 USC 1467a(q).
An otherwise prohibited interlocking relationship with a federal savings association for a
period of up to 10 years if the FDIC approves such relationship pursuant to
12 USC 1823(k)(1)(A)(v).
A person whose continuing dual service as a management official of more than one
depository organization began before November 10, 1978.6

Regulatory Exemptions
The Interlocks Act also provides general authority for the OCC to establish other exemptions
through its regulations. The OCC has used this authority to establish the small market share
exemption and the general exemption as discussed further below.

Small Market Share Exemption
Under the small market share exemption (12 CFR 26.5), a management interlock involving
two unaffiliated depository organizations is permitted if (1) the interlock is not prohibited by
the major assets prohibition;7 and (2) the depository organizations and their depository
institution affiliates hold, in the aggregate, no more than 20 percent of the deposits in each
RMSA or community in which both organizations, or their depository institution affiliates,
have offices. OCC approval is not required to claim the small market share exemption.
Depository organizations seeking to establish a management interlock relying on the small
market share exemption must determine their eligibility by using deposit market share data
published in the FDIC’s summary of deposits for the RMSA or community.8
6

This statutory exemption is at 12 USC 3205(a); it is not included in the statutory exemptions listed in
12 CFR 26.4.
7

Refer to 12 CFR 26.3(c).

8

Refer to FDIC, “Bank Data & Statistics, Deposit Market Share Reports,” at
https://www.fdic.gov/bank/statistical/ (June 2021).
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Although no filing with the OCC is required for the small market share exemption, each
depository organization using this exemption must maintain records to support its
determination of eligibility for the exemption and must reconfirm that determination
annually. A bank may meet this record requirement by documenting the determination of
eligibility in the board of directors’ minutes. The OCC confirms the bank’s determination of
eligibility through the supervisory process.
The small market share exemption continues to apply as long as the depository organizations
meet the applicable conditions. Any event (such as an expansion, merger, or growth) that
causes the level of deposits to exceed 20 percent of the total deposits in an RMSA or
community, as applicable, requires the management official to either terminate their service
or apply to the OCC for an exemption.

General Exemption
Under its general exemption authority (12 CFR 26.6(a)), the OCC may permit an exemption
of an otherwise prohibited management interlock if it finds that the interlock would not result
in a monopoly or substantial lessening of competition and would not present safety and
soundness concerns.
To request an exemption for an interlock under the general exemption provision, the
applicant must submit an application to the OCC demonstrating that the proposed
management interlock would not result in a monopoly or substantial lessening of competition
and would not present safety and soundness concerns. If the OCC approves the interlock
exemption without applying any presumptions (see paragraph below) and without an
expiration date, then the interlock exemption continues as long as the circumstances at the
depository organizations do not change; that is, as long as the interlock would not result in a
monopoly, substantial lessening of competition, or an unsafe or unsound condition.
Presumption of No Adverse Effect on Competition (12 CFR 26.6(b))
When a general exemption is sought, the OCC’s regulations provide that the agency will
apply a rebuttable presumption that a management interlock will not result in a monopoly or
substantial lessening of competition if the depository organization seeking to add the
management official
•
•
•
•

primarily serves low- and moderate-income areas;
is controlled or managed by members of a minority group or women;
is a depository institution that has been chartered for less than two years; or
is deemed to be in “troubled condition” by the OCC.

A bank that intends to rely on one of these presumptions must submit an application
demonstrating that (1) the management interlock would not present a safety and soundness
concern to the bank; and (2) the depository organization fits into one of the four categories
listed above. The OCC may request any additional information it needs to render its decision.

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If the OCC grants an interlock exemption relying on a presumption listed in 12 CFR 26.6(b),
the interlock may continue for three years, unless the OCC specifies otherwise in writing. A
bank may file for an extension of such an interlock or, alternatively, use any other exemption
for which it qualifies.

Background Investigations
The OCC investigates the character, competence, experience, and integrity of each person
who is the subject of a request for a management interlock exemption. To conduct
background investigations, the OCC requires the bank to submit the biographical portion of
the Interagency Biographical and Financial Report on the management official creating the
interlock. The OCC may grant a waiver of this requirement if the agency obtains a written
record with sufficient information regarding the management official’s recent management
history with a regulated depository institution.
If the person is serving as a management official of a state-chartered bank, a state-chartered
savings association, or a credit union, the OCC will contact other financial regulatory
agencies (i.e., the FDIC, the Federal Reserve, the NCUA, or the appropriate state financial
regulator) and inquire into that agency’s experience with the proposed management official.

Decision Criteria
The OCC may reject a request for a management interlock exemption under its general
exemption authority, in 12 CFR 26.6(a), if the agency finds that the interlock would
•
•

result in a monopoly or substantial lessening of competition; or
present safety and soundness concerns.

The OCC may disapprove a notice for a proposed management interlock under the
diversified savings and loan holding company exemption, 12 CFR 26.4(h)(2),9 if the agency
finds that
•
•
•

the service cannot be structured or limited so as to preclude an anticompetitive effect in
financial services in any part of the United States;
the service would lead to substantial conflicts of interest or unsafe or unsound practices;
or
the filer does not furnish all the information the OCC requires.

9

For more information on diversified savings and loan holding companies, see further discussion on page 8 of
this booklet.
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Application Process
General
A bank must submit an application to the appropriate OCC licensing office for a general
exemption under 12 CFR 26.6(a). A statutory exemption involving a diversified savings and
loan holding company requires filing a notice with the appropriate OCC licensing office
under 12 CFR 26.4(h)(1)(i). After determining that sufficient information is provided, the
OCC makes its decision on the management interlock filing.

General Exemption Filings
A bank filing an application for a general exemption must include the following information:
•
•

•
•

•
•
•
•

Identity (name, position) of all management officials to whom the filing pertains and the
full legal name and home office/headquarters of the depository organizations the officials
serve or propose to serve.
The biographical portion of the Interagency Biographical and Financial Report on the
management official creating the interlock, unless the OCC grants a waiver because of
recent management experience in another depository institution. Refer to the
“Background Investigations” booklet of the Comptroller’s Licensing Manual.
A description of the product lines, geographic locations, market areas, and principal
competitors for each affected depository organization. Specifically identify any product
lines or market areas in which the depository organizations compete.
Market share data, such as the Herfindahl-Hirschman Indexes (HHI), and other
information demonstrating that the interlock will not result in a monopoly or substantial
lessening of competition. This information also should include any expansion, merger, or
growth plans of either depository organization that could have anticompetitive effects or
cause decreased competition or increased market overlap in any of the affected market
areas or product lines.
Information regarding any other interlocks among the affected depository organizations.
Information demonstrating that the interlock would not adversely affect the bank’s safety
and soundness.
If applicable, copies of filings and/or information regarding the status of any interlock
exemption request submitted to any other federal or state banking agency.
Certification that the bank’s board of directors, shareholders, or a designated official have
authorized the filing of the application.

Generally, the entity for which the individual proposes to commence service as a
management official (and, thus, create the interlock) would file the request for a general
exemption.

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Presumptions of No Adverse Effect on Competition Filings
A bank that seeks an exemption under the OCC’s general exemption authority and believes it
fits within one of the presumptions set forth in 12 CFR 26.6(b) must submit an application
with all relevant information, as set forth in the “General Exemption Filings” section of this
booklet, but the bank may exclude an analysis on competitive factors. In addition, the
application should include information demonstrating that the bank
•
•
•
•

primarily serves low- and moderate-income areas;
is controlled or managed by women or minorities or both;
has been chartered for less than two years; or
is in “troubled condition” as defined in 12 CFR 5.51(c)(7).

Diversified Savings and Loan Holding Companies
A bank filing a notice for an exemption pursuant to 12 CFR 26.4(h) must include the
information required under the “General Exemption Filings” section and information
demonstrating the following:
•
•
•
•

The holding company in question is diversified as defined in the Home Owners’ Loan
Act and implementing regulations.
The interlock would not cause an anticompetitive effect in financial services in any part
of the United States.
The interlock would not lead to substantial conflicts of interest. The filing should include
information concerning any relationships or transactions between the diversified savings
and loan holding company and its subsidiaries and the subject depository organization.
The interlock would not lead to unsafe or unsound practices.

Each entity involved in the proposed interlock must file a notice with its appropriate federal
banking agency.

Change in Circumstances
Pursuant to 12 CFR 26.7, a management official must terminate their service with a
depository organization or apply for an exemption if a change in circumstances causes the
service to become a prohibited management interlock. Depository organizations must address
the prohibited interlock within 15 months of the change or such shorter period as the OCC
directs. The following changes in circumstances may cause a previously permissible
interlock to become prohibited:
•
•

An increase in an organization’s asset size. Refer to the discussion of asset size in the
“Prohibitions” section of this booklet;
A change in the delineation of the RMSA or community resulting in the same
management official serving two depository organizations in the same RMSA or
community;

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•
•
•

The establishment of an office resulting in the same management official serving two
depository organizations in the same RMSA or community;
An increase in the aggregate deposits of the depository organization. Refer to the
discussion of small market share in the “Regulatory Exemptions” section of this booklet;
or
An acquisition, a merger, a consolidation, or any reorganization of the ownership
structure of a depository organization. Refer to the “Business Combinations” booklet of
the Comptroller’s Licensing Manual.

Pursuant to 12 CFR 26.4(h)(3), the OCC may require that any interlock permitted by the
diversified savings and loan holding company exemption be terminated if a change in
circumstances occurs with respect to one of the interlocked depository organizations that
would have provided a basis for disapproval of the interlock during the notice period.

Additional Information Requests
The OCC notifies the filer whether additional information is required to make the decision
and includes a due date for response. The OCC may disapprove an application if the
applicant does not provide the requested information.
If the filer cannot submit the additional information on or before the deadline, it should
contact the OCC as soon as possible. Generally, the OCC considers a filing abandoned if the
additional information is not received within 30 days. At that time, the OCC notifies the filer
that the OCC has stopped processing the filing.

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Glossary
Affiliate: An affiliate of a depository institution, as defined in 12 USC 3201(3), generally is
any company controlled by the same stockholders, including members of the same
immediate family, who control the depository organization. Refer to 12 USC 3201(3) and
12 CFR 26.2(a) for the complete definition of an affiliate.
Anticompetitive effect: A monopoly or substantial lessening of competition.
Area median income: The median family income for the metropolitan statistical area (MSA)
in which a depository organization is located or the statewide nonmetropolitan median family
income if the depository organization is outside an MSA.
Community: A city, town, or village, and contiguous or adjacent cities, towns, or villages.
Contiguous or adjacent cities, towns, or villages: Cities, towns, or villages whose borders
touch each other or whose borders are within 10 road miles of each other at their closest
points. The property line of an office in an unincorporated city, town, or village is the
boundary line of that city, town, or village.
Depository holding company: A bank holding company or a savings and loan holding
company whose principal office is in the United States. Generally, a company qualifies as a
depository holding company if it owns, controls, or has power to vote at least 25 percent of
the voting shares of a bank or savings association; controls the election of a majority of
directors or trustees of the bank or savings association; or otherwise is found to exercise a
controlling influence over the management or policies of the bank or savings association. A
depository holding company also includes a company that would be a bank holding company
as defined in 12 USC 1841(a) but for the exemption in 12 USC 1841(a)(5)(f) and a nonbank
financial company supervised by the Federal Reserve.
Depository institution: A commercial bank, a savings bank, a trust company, a savings and
loan association, a building and loan association, a homestead association, a cooperative
bank, an industrial bank, or a credit union chartered under the laws of the United States and
whose principal office is in the United States. Additionally, a branch or agency office of a
foreign commercial bank in the United States is a depository institution.
Depository institution affiliate: A depository institution that is an affiliate of a depository
organization.
Depository organization: A depository institution or a depository holding company.
Diversified savings and loan holding company: Any savings and loan holding company
whose subsidiary savings association and related activities as permitted under
12 USC 1467a(c)(2) represented, on either an actual or a pro forma basis, less than
50 percent of its consolidated net worth at the close of its preceding fiscal year and of its
consolidated net earnings for such fiscal year.
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Immediate family: A spouse, mother, father, child, grandchild, sister, brother, or any of their
spouses, whether or not any of their shares are held in trust. Shares held by a person include
shares held by members of their immediate family.
Interlock: An interlock exists when a management official simultaneously serves two
unaffiliated depository organizations.
Low- and moderate-income area: A census tract (or, if an area is not in a census tract, a
block numbering area delineated by the U.S. Bureau of the Census) in which the median
family income is less than 100 percent of the area median income.
Management official: For Interlocks Act purposes, a management official includes a senior
executive officer, as that term is defined in 12 CFR 5.51(c)(4) (see senior executive officer),
a director, an advisory or honorary director of a depository institution with total assets of
$100 million or more, a branch manager, a trustee of a depository organization under the
control of trustees, and any person who has a representative or nominee serving in any of
those capacities. The term “management official” does not include a person whose
management functions relate exclusively to the business of retail merchandising or
manufacturing, a person whose management functions relate principally to the business
outside the United States of a foreign commercial bank, or a person described in the provisos
of section 202(4) of the Interlocks Act (12 USC 3201(4)) (referring to an officer of a statechartered savings bank, cooperative bank, or trust company that neither makes real estate
mortgage loans nor accepts savings).
Newly chartered institution: An institution that has been chartered for less than two years
from the time it files a request for exemption.
Office: A principal or branch office of a depository institution in the United States, but not a
representative office of a foreign commercial bank, an electronic terminal, or a loan
production office.
Relevant metropolitan statistical area (RMSA): An MSA, a primary MSA, or a
consolidated MSA that is not composed of designated primary MSAs to the extent these
terms are defined and applied by the Office of Management and Budget.
Representative or nominee: A natural person who serves as a management official and has
an obligation to act on behalf of another person with respect to management responsibilities.
Senior executive officer: A president, chief executive officer, chief operating officer, chief
financial officer, chief lending officer, chief investment officer, and any other person the
OCC identifies in writing to the bank who exercises significant influence over, or participates
in, major policymaking decisions of the bank without regard to title, salary, or compensation.
The term also includes employees of entities retained by a bank to perform such functions in
lieu of directly hiring the persons, and, with respect to a federal branch operated by a foreign
bank, the person functioning as the chief managing official of the federal branch. Refer to 12
CFR 5.51(c)(4).

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Total assets: Assets measured on a consolidated basis and reported in the most recent fiscal
year-end consolidated reports of condition and income. Note that for diversified savings and
loan holding companies, total assets include only the assets of the depository institution. For
a foreign bank, total assets include only assets of its U.S. branch or agency. Refer to
12 CFR 26.2(o) for a complete definition of total assets.
Troubled condition: A bank is designated to be in troubled condition if it (1) has a
composite CAMELS rating of 4 or 5;10 (2) is subject to a cease-and-desist order, a consent
order, or a formal written agreement, unless otherwise informed in writing by the OCC; or
(3) has been informed in writing by the OCC that, based on information pertaining to such
bank, it has been designated in troubled condition.

10

A bank’s composite rating under the Uniform Financial Institutions Rating System, or CAMELS, integrates
ratings from six component areas: capital adequacy, asset quality, management, earnings, liquidity, and
sensitivity to market risk.
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References
Changes in Directors and Senior Executive Officers
Law
Regulation

12 USC 1831i
12 CFR 5.51

Depository Institution Management Interlocks Act
Law
12 USC 3201–3208
Regulation
12 CFR 26
Dodd–Frank Wall Street Reform and Consumer Protection Act
Law
12 USC 5364
Home Owners’ Loan Act
Law

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12 USC 1467a

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Table of Updates Since Publication
Date of Last Publication: January 2017
Reason

Affected pages

Reflect change to major assets prohibition threshold

2

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