[Federal Register Volume 62, Number 243 (Thursday, December 18, 1997)]
[Rules and Regulations]
[Pages 66260-66264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32829]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 506, 544, 545, 552, 559, 560, 561, 563, 565, 567, 575
[No. 97-126]
Technical Amendments
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of Thrift Supervision (OTS) is amending its
regulations to incorporate a number of technical and conforming
amendments. The OTS is amending its capital rules to remove transition
periods that are outdated, making technical revisions to final rules
issued during December, 1996 pursuant to the regulatory reinvention
initiative, and making other miscellaneous technical changes to
existing regulations.
EFFECTIVE DATE: December 18, 1998.
FOR FURTHER INFORMATION CONTACT: Mary H. Gottlieb, Senior Paralegal
(Regulations), (202) 906-7135, or Karen A. Osterloh, Assistant Chief
Counsel, (202) 906-6639, Regulations and Legislation Division, Chief
Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW.,
Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
Capital
OTS is today adopting several technical amendments to its capital
regulations to remove references to transition periods that have
elapsed and to streamline its definitions relating to capital.
Regulatory Burden Reduction Regulations
OTS is also making a number of technical corrections to its charter
and bylaw, conversion, and subordinate organization regulations
1 that were substantially revised during December, 1996,
pursuant to the Regulatory Reinvention Initiative of the Vice
President's National Performance Review and section 303 of the Riegle
Community Development and Regulatory Improvement Act of
1994.2
---------------------------------------------------------------------------
\1\ Corporate Governance, 61 FR 64007 (December 3, 1996).
Subsidiaries and Equity Investments, 61 FR 66561 (December 18,
1996).
\2\ 12 U.S.C. 4803(a)(1).
---------------------------------------------------------------------------
In particular, Sec. 552.10, regarding the mailing of annual reports
to stockholders, is being amended. Section 552.10 currently requires
Federal stock associations that are not wholly-owned
[[Page 66261]]
to send out annual reports to their shareholders within 90 days of the
end of the association's fiscal year.
OTS's regulation regarding Corporate Governance 3
extended the time frame within which an association must hold its
annual meeting from 120 days to 150 days after the close of its fiscal
year. OTS inadvertently did not extend the time frame for mailing
annual reports to stockholders.
---------------------------------------------------------------------------
\3\ 61 FR 64007 (December 3, 1996).
---------------------------------------------------------------------------
Section 552.10 is, therefore, being amended to provide a 130-day
mailing requirement for annual reports to enable federal savings
associations that are subject to the Securities Exchange Act of 1934 to
take advantage of the full time period permitted for delivery of an
annual report under the SEC's Proxy Rules, 4 and to conform
to the changes to the regulations under Corporate Governance. The
extension to 130 days also ensures that the mailing requirement in
section 552.10 is consistent with the OTS rule that a notice for an
annual meeting be sent 20 to 50 days before the meeting.5
---------------------------------------------------------------------------
\4\ See 17 CFR 240.14a-3(b), which requires that proxy
statements sent to shareholders must be accompanied or preceded by
the annual report to shareholders.
\5\ 12 CFR 552.6(b).
---------------------------------------------------------------------------
In addition, section 545.71, which restates federal savings
associations' statutory authority to invest in liquid assets, is being
removed. The substance of the provision was added to the lending and
investment powers chart found at 12 CFR 560.30 as part of the final
rule on Subsidiaries and Equity Investments.
Miscellaneous
Finally, OTS is making the following technical revisions:
--OTS's subordinated debt securities regulation is amended to remove
references to the Resolution Trust Corporation.
--Erroneous cross-references are corrected throughout OTS's
regulations.
--The definition of service corporation in Sec. 561.45 is revised to
correct a cross-reference to OTS's subordinate organizations
regulations.
--Part 506 is amended to include language mandated by the Paperwork
Reduction Act of 1995, 44 U.S.C. 3501 et seq., and to update the
display table of OMB control numbers.
Administrative Procedure Act; Riegle Community Development and
Regulatory Improvement Act of 1994
The OTS has found good cause to dispense with both prior notice and
comment on this final rule and a 30-day delay of its effective date
mandated by the Administrative Procedure Act.6 OTS believes
that it is contrary to public interest to delay the effective date of
the rule, as it eliminates provisions that have caused confusion.
Because the amendments in the rule are not substantive, they will not
detrimentally affect savings associations by becoming effective
immediately.
---------------------------------------------------------------------------
\6\ 5 U.S.C. 553.
---------------------------------------------------------------------------
In addition, this document is exempt from the requirement found in
section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 7 that regulations must not take
effect before the first day of the quarter following publication, as it
imposes no new requirements.
---------------------------------------------------------------------------
\7\ Pub. L. 103-325, 12 U.S.C. 4802.
---------------------------------------------------------------------------
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act,
8 it is certified that this technical corrections regulation
will not have a significant economic impact on a substantial number of
small entities.
---------------------------------------------------------------------------
\8\ Pub. L. 96-354, 5 U.S.C. 601.
---------------------------------------------------------------------------
Executive Order 12866
OTS has determined that this rule is not a ``significant regulatory
action'' for purposes of Executive Order 12866.
Unfunded Mandates Reform Act of 1995
OTS has determined that the requirements of this final rule will
not result in expenditures by State, local, and tribal governments, or
by the private sector, of $100 million or more in any one year.
Accordingly, a budgetary impact statement is not required under section
202 of the Unfunded Mandates Reform Act of 1995.
List of Subjects
12 CFR Part 506
Reporting and recordkeeping requirements.
12 CFR Part 544
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic funds
transfers, Investments, Reporting and recordkeeping requirements,
Savings associations.
12 CFR Part 552
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 559
Savings associations, Subsidiaries.
12 CFR Part 560
Consumer protection, Investments, Manufactured homes, Mortgages,
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 561
Savings associations.
12 CFR Part 563
Accounting, Advertising, Crime, Currency, Investments, Reporting
and recordkeeping requirements, Savings associations, Securities,
Surety bonds.
12 CFR Part 565
Administrative practice and procedure, Capital, Savings
associations.
12 CFR Part 567
Capital, Savings associations.
12 CFR Part 575
Administrative practice and procedure, Capital, Holding companies,
Reporting and recordkeeping requirements, Savings associations,
Securities.
Accordingly, the Office of Thrift Supervision hereby amends title
12, chapter V, of the Code of Federal Regulations as set forth below:
PART 506--INFORMATION COLLECTION REQUIREMENTS UNDER THE PAPERWORK
REDUCTION ACT
1. The authority citation for part 506 continues to read as
follows:
Authority: 44 U.S.C. 3501 et seq.
2. Section 506.1 is amended:
a. In paragraph (a) by adding a sentence at the end of the
paragraph;
b. In paragraph (b) by adding two entries to the table in numerical
order, and revising the entry for Part 575.
The additions and revisions read as follows:
Sec. 506.1 OMB control numbers assigned pursuant to the Paperwork
Reduction Act.
(a) * * * Respondents/recordkeepers are not required to comply with
any collection of information unless it displays a currently valid OMB
control number.
(b) * * *
[[Page 66262]]
------------------------------------------------------------------------
Current OMB
12 CFR part or section where identified and described control No.
------------------------------------------------------------------------
* * * * *
Part 516............................................. 1550-0005, 1550-
0006, 1550-0016
* * * * *
550.3................................................ 1550-0037
* * * * *
Part 575............................................. 1550-0072
* * * * *
------------------------------------------------------------------------
PART 544--CHARTER AND BYLAWS
3. The authority for part 544 continues to read as follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et
seq.
Sec. 544.5 [Amended]
4. Section 544.5 is amended, in paragraph (a), by removing the word
``shall'' from the last sentence, and by adding in lieu thereof the
word ``may''.
PART 545--OPERATIONS
5. The authority citation for part 545 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
Sec. 545.71 [Removed]
6. Section 545.71 is removed.
PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
STOCK ASSOCIATIONS
7. The authority citation for part 552 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
Sec. 552.4 [Amended]
8. Section 552.4 is amended in paragraph (b)(4), Section 5 of the
charter, by removing the word ``section'', and by adding in lieu
thereof the word ``Section'', where it appears in:
a. The second sentence of the first paragraph;
b. The first sentence of the third paragraph;
c. The first sentence of paragraph (iii); and
d. The first sentence of paragraph A.
Sec. 552.6-1 [Amended]
9. Section 552.6-1 is amended by removing, in the last sentence of
paragraph (c), the word ``such'', and by adding in lieu thereof the
word ``regular''.
Sec. 552.10 [Amended]
10. Section 552.10 is amended by removing the word ``ninety'' in
the first sentence, and by adding in lieu thereof the number ``130''.
PART 559--SUBORDINATE ORGANIZATIONS
11. The authority citation for part 559 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1828.
Sec. 559.3 [Amended]
12. Section 559.3(g)(2) is amended by removing the phrase
``entities be aggregated'', and by adding in lieu thereof the phrase
``entities must be aggregated''.
PART 560--LENDING AND INVESTMENT
13. The authority citation for part 560 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1701j-3,
1828, 3803, 3806; 42 U.S.C. 4106.
14. Section 560.93 is amended by removing and reserving paragraph
(b)(6), and revising paragraph (d)(3)(ii) to read as follows:
Sec. 560.93 Lending limitations.
* * * * *
(d) * * *
(3) * * *
(ii) The savings association is, and continues to be, in compliance
with its capital requirements under part 567 of this chapter;
* * * * *
Sec. 560.100 [Amended]
15. Section 560.100 is amended by removing the phrase ``12 CFR
567.1(l)'', and by adding in lieu thereof the phrase ``12 CFR 567.1''.
PART 561--DEFINITIONS
16. The authority citation for part 561 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
Sec. 561.45 [Amended]
17. Section 561.45 is amended by removing the phrase ``Sec. 545.74
of this chapter'', and by adding in lieu thereof the phrase ``part 559
of this chapter''.
PART 563--OPERATIONS
18. The authority citation for part 563 continues to read as
follows:
Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,
1817, 1820, 1828, 3806; 42 U.S.C. 4106.
Sec. 563.41 [Amended]
19. Section 563.41(b)(11) is amended by removing the phrase
``Sec. 563.93(b)(11) of this part'', and by adding in lieu thereof the
phrase ``Sec. 560.93(b)(11) of this chapter''.
20. Section 563.81 is amended by revising paragraphs (A) and (B) of
the certificate statement contained in paragraph (d)(1)(vi), and by
removing the phrase ``or RTC'' where it appears in paragraph (d)(3), to
read as follows:
Sec. 563.81 Issuance of subordinated debt securities and mandatorily
redeemable preferred stock.
* * * * *
(d) * * *
(1) * * *
(vi) * * *
* * * (A) if the FDIC shall be appointed receiver for the issuer
of this certificate (the ``issuer'') and in its capacity as such
shall cause the issuer to merge with or into another financial
institution, or in such capacity shall sell or otherwise convey part
or all of the assets of the issuer to another financial institution
or shall arrange for the assumption of less than all of the
liabilities of the issuer by one or more other financial
institutions, the FDIC shall have no obligation, either in its
capacity as receiver or in its corporate capacity, to contract for
or to otherwise arrange for the assumption of the obligation
represented by this certificate in whole or in part by any financial
institution or institutions which results from any such merger or
which has purchased or otherwise acquired from the FDIC as receiver
for the issuer, any of the assets of the issuer, or which, pursuant
to any arrangement with the FDIC, has assumed less than all of the
liabilities of the issuer. To the extent that obligations
represented by this certificate have not been assumed in full by a
financial institution with or into which the issuer may have been
merged, as described in this paragraph (A), and/or by one or more
financial institutions which have succeeded to all or a portion of
the assets of the issuer, or which have assumed a portion but not
all of the liabilities of the issuer as a result of one or more
transactions entered into by the FDIC as receiver for the issuer,
then the holder of this certificate shall be entitled to payments on
this obligation in accordance with the procedures and priorities set
forth in any applicable receivership regulations or in orders of the
FDIC relating to such receivership.
(B) In the event that the obligation represented by this
certificate is assumed in full by another financial institution,
which shall succeed by merger or otherwise to substantially all of
the assets and the business of the issuer, or which shall by
arrangement with the FDIC assume all or portion of the liabilities
of the issuer, and payment or provision for payment shall have been
made in respect of all matured installments of interests upon the
certificates together with all matured installments of principal on
such certificates which shall have become due otherwise than by
[[Page 66263]]
acceleration, then any default caused by the appointment of a
receiver for the issuer shall be deemed to have been cured, and any
declaration consequent upon such default declaring the principal and
interest on the certificate to be immediately due and payable shall
be deemed to have been rescinded.
* * * * *
21. Section 563.134 is amended by:
a. Revising paragraph (a)(3); and
b. By removing, in paragraphs (a)(7), (a)(8), and (a)(9), the
phrase ``fully phased-in capital requirement'', and by adding in lieu
thereof the phrase ``capital requirement'.
The revisions read as follows:
Sec. 563.134 Capital distributions.
(a) * * *
(3) Capital requirement means an association's capital requirement
under part 567 of this chapter.
* * * * *
PART 565--PROMPT CORRECTIVE ACTION
22. The authority citation for part 565 continues to read as
follows:
Authority: 12 U.S.C. 1831o.
Sec. 565.2 [Amended]
23. Section 565.2 is amended, in paragraph (f), by removing the
phrase ``Sec. 567.1(m)'', and by adding in lieu thereof the phrase
``Sec. 567.1''.
PART 567--CAPITAL
24. The authority citation for part 567 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828
(note).
25. Section 567.1 is amended by:
a. removing paragraph (ll) and the alphabetic paragraph
designations for the remaining definitions, and placing the definitions
in alphabetical order;
b. in the definition of adjusted total assets, removing paragraph
(2)(ii), adding the word ``and'' at the end of paragraph (2)(i),
redesignating paragraph (2)(iii) as paragraph (2)(ii) and revising it,
and revising paragraphs (1), (3)(i), and (3)(iii);
c. in the definition of equity investments, redesignating paragraph
(2) introductory text and paragraphs (2)(i) through (2)(vii) as
paragraph (2)(i) introductory text and paragraphs (2)(i)(A) through
(2)(i)(G), respectively, designating the concluding text of paragraph
(2) as paragraph (2)(ii) and revising it, and adding a colon at the end
of newly redesignated paragraph (2)(i) introductory text;
d. in the definition of Qualifying multifamily mortgage loan,
revising paragraph (3) and paragraph (4) introductory text;
e. in the definition of Qualifying residential construction loan,
revising paragraph (2); and
f. in the definition of Qualifying supervisory goodwill, revising
paragraphs (2)(i), (2)(ii)(A), (2)(ii)(B), and (2)(ii)(C) introductory
text.
The revisions read as follows:
Sec. 567.1 Definitions.
* * * * *
Adjusted total assets. * * *
* * * * *
(1) A savings association's total assets as that term is defined in
this section;
* * * * *
(2) * * *
(ii) The remaining goodwill (FSLIC Capital Contributions) resulting
from prior regulatory accounting practices as provided in the
definition of qualifying supervisory goodwill in this section;
(3) * * *
(i) Assets not included in the applicable capital standard except
for those subject to paragraphs (3)(ii) and (3)(iii) of this
definition; * * *
(iii) Investments in any subsidiary subject to consolidation under
paragraph (2)(ii) of this definition; and
* * * * *
Equity investments. * * *
* * * * *
(2) * * *
(ii) The term equity securities does not include investments in a
subsidiary as that term is defined in this section, equity investments
that are permissible for national banks, ownership interests in pools
of assets that are risk-weighted in accordance with
Sec. 567.6(a)(1)(vi) of this part, or the stock of Federal Home Loan
Banks or Federal Reserve Banks.
* * * * *
Qualifying multifamily mortgage loan. * * *
* * * * *
(3) For purposes of paragraphs (1) (vi) and (vii) of this
definition, the term value of the property means, at origination of a
loan to purchase a multifamily property: the lower of the purchase
price or the amount of the initial appraisal, or if appropriate, the
initial evaluation. In cases not involving purchase of a multifamily
loan, the value of the property is determined by the most current
appraisal, or if appropriate, the most current evaluation.
(4) In cases where a borrower refinances a loan on an existing
property, as an alternative to paragraphs (1)(iii), (vi), and (vii) of
this definition:
* * * * *
Qualifying residential construction loan. * * *
* * * * *
(2) The documentation for each loan and home sale must be
sufficient to demonstrate compliance with the criteria in paragraph (1)
of this definition. The OTS retains the discretion to determine that
any loans not meeting sound lending principles must be placed in a
higher risk-weight category. The OTS also reserves the discretion to
modify these criteria on a case-by-case basis provided that any such
modifications are not inconsistent with the safety and soundness
objectives of this definition.
Qualifying supervisory goodwill. * * *
* * * * *
(2) * * *
(i) Supervisory goodwill as defined in this section that is
included in goodwill that is reflected in the current reporting period
under generally accepted accounting principles (``GAAP''); or
(ii)(A) Supervisory goodwill as defined in this section that is
included in goodwill that is reflected in the current reporting period
under GAAP;
(B) Plus any amortization of the goodwill in paragraph (2)(ii)(A)
of this definition that occurred subsequent to April 12, 1989 for GAAP
reporting purposes;
(C) Minus the amortization of the goodwill in paragraph (2)(ii)(A)
of this definition through the current reporting period that results
when the goodwill is amortized subsequent to April 12, 1989 on a
straightline basis over the shorter of--
* * * * *
Sec. 567.2 [Amended]
26. Section 567.2 is amended by removing and reserving paragraph
(b).
27. Section 567.5 is amended by:
a. revising paragraphs (a)(1)(v), (a)(2)(i), (a)(2)(v), and (c);
b. in paragraph (a)(2)(vi), removing the word ``subsidi.ary'', and
by adding in lieu thereof the word ``subsidiary'', and removing the
phrase ``Sec. 567.1(l)'', and by adding in lieu thereof the phrase
``Sec. 567.1''; and
c. in paragraph (b)(4), removing the last two sentences.
The revisions read as follows:
Sec. 567.5 Components of capital.
(a) * * * (1) * * *
(v) The remaining goodwill (FSLIC Capital Contributions) resulting
from prior regulatory accounting practices as provided in paragraph (1)
of the definition for qualifying supervisory goodwill in Sec. 567.1 of
this part.
(2) Deductions from core capital. (i) Intangible assets, as defined
in Sec. 567.1 of this part, are deducted from assets and capital in
computing core capital,
[[Page 66264]]
except as otherwise provided by Sec. 567.12 of this part.
* * * * *
(v) If a savings association has any investments (both debt and
equity) in one or more subsidiaries engaged as of April 12, 1989 and
continuing to be engaged in any activity that would not fall within the
scope of activities in which includable subsidiaries may engage, it
must deduct such investments from assets and, thus, core capital in
accordance with this paragraph (a)(2)(v). The savings association must
first deduct from assets and, thus, core capital the amount by which
any investments in such subsidiary(ies) exceed the amount of such
investments held by the savings association as of April 12, 1989. Next
the savings association must deduct from assets and, thus, core capital
the lesser of:
(A) The savings association's investments in and extensions of
credit to the subsidiary as of April 12, 1989; or
(B) The savings association's investments in and extensions of
credit to the subsidiary on the date as of which the savings
association's capital is being determined.
* * * * *
(c) Total capital. (1) A savings association's total capital equals
the sum of its core capital and supplementary capital (to the extent
that such supplementary capital does not exceed 100% of its core
capital).
(2) The following assets, in addition to assets required to be
deducted elsewhere in calculating core capital, are deducted from
assets for purposes of determining total capital:
(i) Reciprocal holdings of depository institution capital
instruments;
(ii) All equity investments; and
(iii) That portion of land loans and nonresidential construction
loans in excess of 80 percent loan-to-value ratio.
(3) For the purposes of any risk-based capital requirement under
this part, a savings association's total capital equals the amount
calculated pursuant to paragraphs (c)(1) and (c)(2) of this section,
minus the amount of its IRR component as calculated pursuant to
Sec. 567.7 of this part.
28. Section 567.6 is amended by revising paragraph (a)(1)(iii)(D)
to read as follows:
Sec. 567.6 Risk-based capital credit risk-weight categories.
(a) * * *
(1) * * *
(iii) * * *
(D) Qualifying residential construction loans as defined in
Sec. 567.1 of this part.
* * * * *
29. Section 567.9 is amended by:
a. in paragraph (c)(1), removing the phrase ``Sec. 567.1(m)'', and
by adding in lieu thereof the phrase ``Sec. 567.1'';
b. revising paragraph (c)(3); and
c. in paragraph (c)(4), removing the phrase ``Sec. 567.1(1)'', and
by adding in lieu thereof the phrase ``Sec. 567.1''.
The revisions read as follows:
Sec. 567.9 Tangible capital requirement.
* * * * *
(c) * * *
(3) If a savings association has any investments (both debt and
equity) in one or more subsidiary(ies) engaged as of April 12, 1989 and
continuing to be engaged in any activity that would not fall within the
scope of activities in which includable subsidiaries may engage, it
must deduct such investments from assets and, thus, tangible capital in
accordance with this paragraph (c)(3). The savings association must
first deduct from assets and, thus, capital the amount by which any
investments in such a subsidiary(ies) exceed the amount of such
investments held by the savings association as of April 12, 1989. Next,
the savings association must deduct from assets and, thus, tangible
capital the lesser of:
(i) The savings association's investments in and extensions of
credit to the subsidiary as of April 12, 1989; or
(ii) The savings association's investments in and extensions of
credit to the subsidiary on the date as of which the savings
association's capital is being determined.
* * * * *
30. Section 567.12 is amended by revising paragraph (a) and the
last sentence of paragraph (b) to read as follows:
Sec. 567.12 Qualifying intangible assets and mortgage servicing
rights.
(a) Scope. This section prescribes the maximum amount of qualifying
intangible assets, as defined in Sec. 567.1 of this part, and mortgage
servicing rights that savings associations may include in calculating
tangible and core capital.
(b) * * * Intangible assets, as defined in Sec. 567.1 of this part,
other than purchased credit card relationships and core deposit
intangibles grandfathered by paragraph (g)(3) of this section, must be
deducted in computing tangible and core capital.
* * * * *
PART 575--MUTUAL HOLDING COMPANIES
31. The authority citation for part 575 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828, 2901.
Sec. 575.9 [Amended]
32. Section 575.9 is amended, in the last sentence of paragraph
(a)(4), by removing the phrase ``remaining paragraphs of section 11'',
and by adding in lieu thereof the phrase ``remaining paragraphs of
section 12''.
Dated: December 11, 1997.
By the Office of Thrift Supervision.
Ellen Seidman,
Director.
[FR Doc. 97-32829 Filed 12-17-97; 8:45 am]
BILLING CODE 6720-01-P
