[Federal Register Volume 63, Number 33 (Thursday, February 19, 1998)]
[Proposed Rules]
[Pages 8364-8369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4069]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 933
[No. 98-05]
RIN 3069-AA67
Membership Approval
AGENCY: Federal Housing Finance Board.
ACTION: Proposed rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is proposing
to amend its regulation on membership in the Federal Home Loan Banks
(Banks) (Membership Regulation) to make certain technical and
substantive revisions to the regulation that would improve the
operation of the membership application process, as well as further
streamline application processing for certain types of applicants for
Bank membership.
DATES: Comments on this proposed rule must be received in writing on or
before March 23, 1998.
ADDRESSES: Comments should be mailed to: Elaine L. Baker, Secretary to
the Board, Federal Housing Finance Board, 1777 F Street, N.W.,
Washington, D.C. 20006. Comments will be available for public
inspection at this address.
FOR FURTHER INFORMATION CONTACT: Richard Tucker, Deputy Director,
Compliance Assistance Division, Office of Policy, (202) 408-2848, or
Sharon B. Like, Senior Attorney-Adviser, Office of General Counsel,
(202) 408-2930, Federal Housing Finance Board, 1777 F Street, N.W.,
Washington, D.C. 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Under the Federal Home Loan Bank Act (Act), the Finance Board is
responsible for the supervision and regulation of the 12 Banks, which
provide advances and other financial services to their member
institutions. See 12 U.S.C. 1422a(a). Institutions may become members
of a Bank if they meet certain membership eligibility and minimum stock
purchase criteria set forth in the Act and the Finance Board's
implementing Membership Regulation. See id. sections 1424, 1426,
1430(e)(3); 12 CFR part 933.
On August 16, 1996, the Finance Board published a final rule
amending the Membership Regulation to authorize the 12 Banks, rather
than the Finance Board, to approve or deny all applications for Bank
membership, subject to certain criteria for determining compliance with
the statutory eligibility requirements for Bank membership formerly
contained in policy guidelines used by the Finance Board in approving
membership applications. See 61 FR 42531 (Aug. 16, 1996) (codified at
12 CFR part 933); Federal Home Loan Bank System Membership Application
Guidelines, Finance Board Res. No. 93-88 (Nov. 17, 1993) (Guidelines).
The final rule also provided for streamlined application processing for
certain types of membership applications. See 12 CFR part 933.
In the course of processing and approving membership applications
under the Membership Regulation, the Banks have raised a number of
technical and substantive issues with the Regulation whose resolution
would improve operation of the membership application process and
streamline membership application processing for certain types of
institutions. These issues and proposed amendments for addressing these
issues are discussed below in the Analysis of Proposed Rule section.
The Finance Board requests comment on all aspects of the proposed
amendments.
[[Page 8365]]
II. Analysis of Proposed Rule
A. Definitions Section 933.1
1. Definition of ``Primary Regulator''--Section 933.1(y)
Section 933.1(y) of the current Membership Regulation defines the
term ``primary regulator'' as the chartering authority for federally-
chartered applicants, the insuring authority for federally-insured
applicants that are not federally-chartered, or the appropriate state
regulator for all other applicants. See id. Sec. 933.1(y). This
definition does not include the Federal Reserve Board (FRB) for state-
chartered applicants that are members of the Federal Reserve System
(FRS). Under Sec. 933.11(a)(3), a Bank is required to obtain as part of
the membership application the applicant's most recent available
regulatory examination report prepared by its primary regulator or
appropriate state regulator. See id. Sec. 933.11(a)(3). Section
933.11(b)(1) provides that an applicant must have received a composite
regulatory examination rating from its primary regulator or appropriate
state regulator within two years preceding the date the Bank receives
the application for membership. See id. Sec. 933.11(b)(1).
One Bank has identified a potential problem with meeting these
financial condition requirements where the FRB and a state financial
institution regulator alternate examinations of a state-chartered
applicant that is an FRS member. When the state financial institution
regulator performs the examination, it provides a copy of the
regulatory examination report to the FRB. According to the Bank,
certain state financial institution regulators in its district cannot
or will not release to the Bank copies of the regulatory examination
reports they have prepared, nor will the FRB release to the Bank copies
of the state regulatory examination reports. Thus, regulatory
examination reports prepared under such circumstances are not available
in order for the Bank to obtain a regulatory examination rating for the
applicant. Nor may the Bank obtain and rely on a copy of the regulatory
examination report and rating of the FRB when the FRB has examined the
applicant, because the definition of ``primary regulator'' in
Sec. 933.1(y) does not include the FRB. Thus, in such situations, the
Bank may not be able to obtain any examination report and rating for
the applicant and, therefore, the applicant cannot be deemed to satisfy
the financial condition requirements of Sec. Sec. 933.11(a)(3) and
(b)(1). The presumption of noncompliance with the financial condition
requirements would have to be rebutted under Sec. 933.17(d)(1) by
preparing a written justification providing substantial evidence
acceptable to the Bank that the applicant is in the financial condition
required by Sec. 933.6(a)(4), notwithstanding the lack of a regulatory
examination rating. See id. Sec. 933.17(d)(1).
The exclusion of the FRB from the definition of ``primary
regulator'' in Sec. 933.1(y) was an oversight. The Banks should be able
to rely on regulatory examination reports and examination ratings from
the FRB to determine an applicant's financial condition under
Sec. 933.11. An applicant should not have to go through the additional
burden of establishing its satisfactory financial condition through the
rebuttal process if an FRB regulatory examination report and rating are
available. Accordingly, the proposed rule revises the definition of
``primary regulator'' in Sec. 933.1(y), as further described below, to
include the FRB.
Another limitation of the current definition of primary regulator
in Sec. 933.1(y) is that it requires a Bank to obtain the regulatory
examination report and rating only from the ``primary'' regulator
listed, even though a regulatory examination report and rating from an
alternate regulator also may be available. For example, many potential
members are examined by more than one regulator. However, under the
regulation, the Bank is required to obtain the regulatory examination
report and rating prepared by the Federal Deposit Insurance Corporation
(FDIC) for a state-chartered, FDIC-insured institution, even though
there may be a more recent state regulatory examination report and
rating available for such institution. A Bank should not be limited to
using only the ``primary'' regulator's regulatory examination report
and rating when more current information is available.
Accordingly, the proposed rule amends Sec. 933.1(y) by changing the
term ``primary regulator'' to the broader term ``appropriate
regulator,'' and defining it to mean a regulatory entity listed in
Sec. 933.8, as applicable. The regulatory entities listed in Sec. 933.8
are: for depository institution applicants, the FDIC, FRB, National
Credit Union Administration, Office of the Comptroller of the Currency
(OCC), Office of Thrift Supervision (OTS), or other appropriate state
regulator; and for insurance company applicants, an appropriate state
regulator accredited by the National Association of Insurance
Commissioners. See id. Sec. 933.8. The proposed rule replaces the terms
``primary regulator'' and ``primary regulator or appropriate state
regulator'' wherever they appear throughout the Membership Regulation
with the term ``appropriate regulator.''
2. Nonperforming Assets Performance Trend Criterion; Definitions of
``Nonperforming Loans, Leases and Securities;'' ``Performing Loans,
Leases and Securities''--Sections 933.11(b)(3)(i)(B); 933.1 (u), (x).
Section 933.11(b)(3)(i)(B) of the current Membership Regulation
provides that if an applicant's most recent composite regulatory
examination rating within the past two years was ``2'' or ``3,'' the
applicant's nonperforming loans, leases and securities plus foreclosed
and repossessed real estate may not have exceeded 10 percent of its
performing loans, leases and securities plus foreclosed and repossessed
real estate, in the most recent calendar quarter. See id.
Sec. 933.11(b)(3)(i)(B). This nonperforming assets performance trend
criterion was intended to be the same criterion as that required in the
former Finance Board Guidelines, but was described incorrectly in the
Membership Regulation.
The proposed rule revises Sec. 933.11(b)(3)(i)(B) to state the
criterion correctly, as follows: the applicant's nonperforming loans
and leases plus other real estate owned, did not exceed 10 percent of
its total loans and leases plus other real estate owned, in the most
recent calendar quarter. The proposed rule makes a conforming change to
the definition of ``nonperforming loans, leases and securities'' in
Sec. 933.1(u) by deleting the references to securities. The proposed
rule also makes a conforming change to Sec. 933.1(x) by replacing the
definition of ``performing loans, leases and securities'' with a new
definition of ``other real estate owned.''
3. Definition of ``Consolidation''--Section 933.1(ee)
Sections 933.24 and 933.25 of the current Membership Regulation set
forth certain requirements and procedures in the event of the
``consolidation'' of members with other members or members with
nonmembers. See id. Secs. 933.24, 933.25. Questions have been raised as
to whether the term ``consolidation'' applies only to transactions
falling within the narrow meaning of the term, i.e., combinations where
a new company is formed to acquire the net assets of the combining
companies. The term ``consolidation'' was not intended to apply solely
to such combinations of entities. Accordingly, the proposed rule
clarifies this issue by
[[Page 8366]]
adding a new definition of ``consolidation'' in Sec. 933.1(ee) to
include a consolidation, a merger, or a purchase of all of the assets
and assumption of all of the liabilities of an entity by another
entity.
B. Action on Applications--Section 933.3(c)
Section 933.3(c) of the current Membership Regulation requires a
Bank to notify an applicant when its application is deemed by the Bank
to be complete. See id. Sec. 933.3(c). Section 933.3(c) also requires a
Bank to notify an applicant if the 60-day period for acting on a
membership application is stopped, and when the period for acting on
the application is resumed. See id. The proposed rule requires the Bank
to provide such notices to the applicant in writing. This will ensure
that there is a written record of the Banks' actions during the
application processing period, which may be relevant in the event of an
appeal of a Bank's denial of an application for membership.
C. Automatic Membership for Certain Consolidations--Section 933.4(d)
Sections 933.4 (a) and (b) of the current Membership Regulation
provide for automatic Bank membership only for institutions required by
law to become Bank members, and for institutions that have undergone
certain charter conversions, respectively. See id. Sec. Sec. 933.4 (a),
(b). Several Banks have suggested that the regulation also should allow
for automatic Bank membership where a member consolidates with a
nonmember, the nonmember is the surviving entity, and a significant
percentage of the surviving entity's total assets are derived from the
assets of the disappearing member. Where the surviving entity has
substantially the same assets as the disappearing member, the surviving
entity arguably should not have to go through the membership
application process. The Finance Board believes this argument has merit
where 90 percent or more of the total assets of the surviving entity
are derived from the assets of the disappearing member, and where the
surviving entity provides written notice to the Bank that it desires to
be a member of the Bank. These proposed requirements are set forth in
proposed new Sec. 933.4(d).
The Finance Board specifically requests comment on the arguments
for or against this proposal, including whether the 90 percent
calculation or some other number or approach is an appropriate method
for determining the similarity of the disappearing and surviving
entities. One Bank has suggested that the chief executive officer (CEO)
of the surviving entity should be required to submit a letter stating
that the surviving entity continues to meet the membership eligibility
requirements. The Finance Board specifically requests comment on
whether such a letter, or a certification from the CEO, should be
required.
D. Allowance for Loan and Lease Losses Performance Trend Criterion--
Section 933.11(b)(3)(i)(C)
Section 933.11(b)(3)(i)(C) of the current Membership Regulation
provides that if an applicant's most recent composite regulatory
examination rating within the past two years was ``2'' or ``3,'' the
applicant's ratio of its allowance for loan and lease losses to
nonperforming loans, leases and securities must have been 60 percent or
greater during 4 of the 6 most recent calendar quarters. This allowance
for loan and lease losses performance trend criterion was intended to
be the same criterion as that required in the former Finance Board
Guidelines, but was described incorrectly in the Membership Regulation.
The proposed rule revises this section to state the criterion
correctly, as follows: The applicant's ratio of its allowance for loan
and lease losses plus the allocated transfer risk reserve to
nonperforming loans and leases was 60 percent or greater during 4 of
the 6 most recent calendar quarters.
E. De Novo Insured Depository Institution Applicants--Section 933.14
Section 933.14 of the current Membership Regulation sets forth the
requirements for processing and approving membership applications from
de novo insured depository institution applicants. See id. Sec. 933.14.
Section 933.14(a) provides for streamlined processing for newly-
chartered applicants that have not yet commenced operations, which are
deemed to meet the duly organized, inspection and regulation, financial
condition, and character of management eligibility requirements. See
id. Sec. 933.14(a)(1). Section 933.14(b) requires newly-chartered
applicants that have commenced operations to meet all of the
eligibility requirements, subject to certain exceptions provided in
paragraph (b). In particular, if such applicants have not yet filed
regulatory financial reports for the last six calendar quarters
preceding the date the Bank receives the membership application, the
applicant need not meet the performance trend criteria in
Sec. 933.11(b)(3)(i) (A) through (C) if the applicant has filed
regulatory financial reports for at least three calendar quarters of
operation. See id. Sec. 933.14(b)(2)(iii)(A).
A number of Banks have stated that the requirement for having filed
three calendar quarters of regulatory financial reports should not be
necessary for institutions that have recently commenced operations. The
financial condition and character of management of such institutions
already will have been recently reviewed and approved by their
chartering and insuring regulators (see, e.g., 12 U.S.C. 1816, 12 CFR
303.7(d)(ii) (FDIC); 12 U.S.C. 26, 12 CFR 5.20 (OCC)), will have been
based on a forward looking business plan, and should not have changed
significantly since the commencement of operations. The Banks should
not have to duplicate the review performed by the prospective member's
appropriate regulator. Further, de novo insured depository institution
applicants should be treated similarly to mandatory de novo thrift
institutions, which do not have to satisfy any specific Bank membership
eligibility requirements since they are required by law to be Bank
members.
The Finance Board believes there is merit in these arguments.
Accordingly, proposed Sec. 933.14(a)(1) extends the streamlined
application processing currently applicable to newly-chartered insured
depository institutions that have not yet commenced operations to
newly-chartered insured depository institutions that have commenced
operations. Such applicants would be deemed to meet the duly organized,
inspection and regulation, financial condition, and character of
management eligibility requirements. In order to be considered newly-
chartered and subject to the streamlined application processing
procedures of Sec. 933.14(a)(1), applicants would have to have been
chartered within three years prior to the date the Bank receives the
application for membership. Three years is consistent with the time
period for de novo treatment applied by other financial institution
regulators. See, e.g., 12 CFR 543.3(a) (OTS).
The Finance Board specifically requests comment on the arguments
for or against this proposal.
F. Recent Merger or Acquisition Applicants--Section 933.15
Sections 933.9 and 933.10 of the current Membership Regulation
require applicants to show satisfaction of the ``makes long-term home
mortgage loans'' and ``10 percent residential mortgage loans''
requirements, respectively, based on the applicant's most recent
regulatory financial report. See id. Secs. 933.9, 933.10. An applicant
[[Page 8367]]
that recently has merged with or acquired another institution prior to
applying for Bank membership must show satisfaction of these
eligibility requirements based on the most recent regulatory financial
report filed by the consolidated entity. See id. However, a newly
consolidated entity may not be able to show compliance with these
requirements as it may be several months before the next quarterly
regulatory financial report is due to be filed with the appropriate
regulator.
One Bank has suggested that in order to allow the applicant to be
approved for membership immediately, the applicant should be allowed to
provide the most recent regulatory financial report filed prior to the
merger or acquisition by each of the institutions that entered into the
merger or acquisition. The Bank then would consolidate the relevant
data from both reports for purposes of determining compliance with
Secs. 933.9 and 933.10. The Finance Board believes this suggestion has
merit, provided that in the case of showing satisfaction of the 10
percent residential mortgage loans requirement, the Bank obtains a
certification from the applicant that there has been no material
decrease in the ratio of consolidated residential mortgage loans to
consolidated total assets derived from the reports since the reports
were filed with the appropriate regulator. These proposed requirements
are set forth in proposed new Secs. 933.15 (a) and (b).
III. Regulatory Flexibility Act
The proposed rule implements statutory requirements binding on all
Banks and on all applicants for Bank membership, regardless of their
size. The Finance Board is not at liberty to make adjustments to those
requirements to accommodate small entities. The proposed rule does not
impose any additional regulatory requirements that will have a
disproportionate impact on small entities. Therefore, in accordance
with section 605(b) of the Regulatory Flexibility Act, see 5 U.S.C.
605(b), the Finance Board hereby certifies that this proposed rule, if
promulgated as a final rule, will not have a significant economic
impact on a substantial number of small entities.
IV. Paperwork Reduction Act
The current information collection has been approved by the Office
of Management and Budget (OMB) and assigned OMB control number 3069-
0004. The Finance Board has submitted to the OMB an analysis of the
proposed changes to the collection of information contained in
Secs. 933.15 (a) and (b) of the proposed rule, described more fully in
part II. of the SUPPLEMENTARY INFORMATION. The Banks and, where
appropriate, the Finance Board, will use the proposed changes to the
information collection to determine whether a recent merger or
acquisition applicant meets certain membership eligibility
requirements. See 12 U.S.C. 1424(a)(1)(C), (a)(2)(A); 12 CFR 933.9,
933.10. Only applicants meeting such requirements may become Bank
members. See id.; id. Responses are required to obtain or retain a
benefit. See 12 U.S.C. 1424. The Finance Board and the Banks will
maintain the confidentiality of information obtained from respondents
pursuant to the proposed changes to the collection of information as
required by applicable statute, regulation, and agency policy. Books or
records relating to this proposed collection of information must be
retained as provided in the regulation.
Likely respondents and/or recordkeepers will be the Finance Board,
Banks, and financial institutions that have recently undergone a merger
or acquisition and are eligible to become Bank members under the Act,
see id. section 1424(a)(1), including any building and loan
association, savings and loan association, cooperative bank, homestead
association, insurance company, savings bank, or insured depository
institution. Potential respondents are not required to respond to the
proposed changes to the collection of information unless the regulation
collecting the information displays a currently valid control number
assigned by the OMB. See 44 U.S.C. 3512(a).
The proposed changes to the information collection will not impose
any additional costs on the Finance Board or the Banks. The estimated
annual reporting and recordkeeping hour burden on respondents is:
a. Number of respondents--15.
b. Total annual responses--15; Percentage of these responses
collected electronically--0%.
c. Total annual hours requested--60.
d. Current OMB inventory--59,152.
e. Difference--(59,092).
The estimated annual reporting and recordkeeping cost burden on
respondents is:
a. Total annualized capital/startup costs--$0.
b. Total annual costs (O&M)--$0.
c. Total annualized cost requested--$1,800.
d. Current OMB inventory--$1,684,000.
e. Difference--($1,682,200).
Comments concerning the accuracy of the burden estimates and
suggestions for reducing the burden may be submitted to the Finance
Board in writing at the address listed above.
The Finance Board has submitted the proposed collection of
information to the OMB for review in accordance with the Paperwork
Reduction Act of 1995. See id. section 3501 et seq. Comments regarding
the proposed changes to the collection of information may be submitted
in writing to the Office of Information and Regulatory Affairs of the
Office of Management and Budget, Attention: Desk Officer for Federal
Housing Finance Board, Washington, D.C. 20503, by April 20, 1998.
List of Subjects in 12 CFR Part 933
Credit, Federal home loan banks, Reporting and recordkeeping
requirements.
Accordingly, the Finance Board hereby proposes to amend title 12,
chapter IX, part 933, Code of Federal Regulations, as follows:
PART 933--MEMBERS OF THE BANKS
1. The authority citation for part 933 continues to read as
follows:
Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430,
1442.
2. Part 933 is amended by removing the term ``primary regulator or
appropriate state regulator'' wherever it appears and adding the term
``appropriate regulator'' in its place in the following locations:
a. Sec. 933.1(l);
b. Sec. 933.1(z);
c. Sec. 933.2(c)(2);
d. Sec. 933.11(a)(3);
e. Sec. 933.11(a)(4);
f. Sec. 933.11(b)(1);
g. Sec. 933.12(a);
h. Sec. 933.17(e)(1) introductory text;
i. Sec. 933.17(e)(1)(i);
j. Sec. 933.17(e)(2)(i); and
k. Sec. 933.17(e)(3)(i).
Sec. 933.11 [Amended]
3. Section 933.11(b)(3)(i) introductory text is amended by removing
the term ``primary regulatory or appropriate state regulator'' and
adding the term ``appropriate regulator'' in its place.
Secs. 933.11 and 933.17 [Amended]
4. Sections 933.11(a)(4) and 933.17(e)(1)(i) are amended by
removing the phrase ``, whichever is applicable,'' wherever it appears.
5. Part 933 is amended by removing the term ``primary regulator''
wherever it appears and adding the term ``appropriate regulator'' in
its place in the following locations:
[[Page 8368]]
a. Sec. 933.1(aa);
b. Sec. 933.9;
c. Sec. 933.10;
d. Sec. 933.11(a)(1);
e. Sec. 933.11(b)(2);
f. Sec. 933.11(b)(3)(i) introductory text;
g. Sec. 933.16; and
h. Sec. 933.17(f)(1).
6. Section 933.1 is amended by revising paragraphs (u), (x), and
(y), and adding paragraph (ee) to read as follows:
Sec. 933.1 Definitions.
* * * * *
(u) Nonperforming loans and leases means the sum of the following,
reported on a regulatory financial report: Loans and leases that have
been past due for 90 days (60 days in the case of credit union
applicants) or longer but are still accruing; loans and leases on a
nonaccrual basis; and restructured loans and leases (not already
reported as nonperforming).
* * * * *
(x) Other real estate owned means all other real estate owned
(i.e., foreclosed and repossessed real estate), reported on a
regulatory financial report, and does not include direct and indirect
investments in real estate ventures.
(y) Appropriate regulator means a regulatory entity listed in
Sec. 933.8, as applicable.
* * * * *
(ee) Consolidation includes a consolidation, a merger, or a
purchase of all of the assets and assumption of all of the liabilities
of an entity by another entity.
7. Section 933.3 is amended by revising the fourth and fifth
sentences of paragraph (c) to read as follows:
Sec. 933.3 Decision on application.
* * * * *
(c) * * * The Bank shall notify an applicant in writing when its
application is deemed by the Bank to be complete. The Bank also shall
notify an applicant in writing if the 60-day clock is stopped, and when
the clock is resumed. * * *
* * * * *
8. Section 933.4 is amended by adding paragraph (d) to read as
follows:
Sec. 933.4 Automatic membership.
* * * * *
(d) Automatic membership for certain consolidations. If a member
institution and nonmember institution are consolidated and the
consolidated institution will operate under the charter of the
nonmember institution, on the effective date of the consolidation, the
consolidated institution automatically shall become a member of the
Bank of which the disappearing institution was a member immediately
prior to the effective date of the consolidation, provided that:
(1) 90 percent or more of the total assets of the consolidated
institution are derived from the assets of the disappearing member
institution; and
(2) The consolidated institution provides written notice to such
Bank that it desires to be a member of the Bank.
9. Section 933.11 is amended by revising paragraphs (b)(3)(i)(B)
and (b)(3)(i)(C) to read as follows:
Sec. 933.11 Financial condition requirement for applicants other than
insurance companies.
* * * * *
(b) * * *
(3) * * *
(i) * * *
(B) Nonperforming assets. The applicant's nonperforming loans and
leases plus other real estate owned, did not exceed 10 percent of its
total loans and leases plus other real estate owned, in the most recent
calendar quarter; and
(C) Allowance for loan and lease losses. The applicant's ratio of
its allowance for loan and lease losses plus the allocated transfer
risk reserve to nonperforming loans and leases was 60 percent or
greater during 4 of the 6 most recent calendar quarters.
* * * * *
10. Section 933.14 is amended by removing the heading for paragraph
(a), revising paragraph (a)(1), and removing and reserving paragraph
(b), to read as follows:
Sec. 933.14 De novo insured depository institution applicants.
(a)(1) Duly organized, subject to inspection and regulation,
financial condition and character of management requirements. An
insured depository institution applicant that is chartered within three
years prior to the date the Bank receives the applicant's application
for membership in the Bank, is deemed to meet the requirements of
Secs. 933.7, 933.8, 933.11 and 933.12.
* * * * *
11. Section 933.15 is amended by redesignating paragraphs (a) and
(b) as paragraphs (c) and (d), respectively, further redesignating
newly designated paragraphs (c)(i) and (c)(ii) as paragraphs (c)(1) and
(c)(2), respectively, revising ``primary regulator'' to read
``appropriate regulator'' in newly designated paragraphs (c)(1) and
(c)(2), and adding new paragraphs (a) and (b), to read as follows:
Sec. 933.15 Recent merger or acquisition applicants.
* * * * *
(a) Makes long-term home mortgage loans requirement--Regulatory
financial reports. For purposes of Sec. 933.9, an applicant that, as a
result of a merger or acquisition preceding the date the Bank receives
its application for membership, has not yet filed a regulatory
financial report for the combined entity with its appropriate
regulator, shall provide the most recent regulatory financial report
filed with the appropriate regulator prior to the merger or acquisition
by each of the institutions that entered into the merger or
acquisition, and the Bank shall consolidate the long-term home mortgage
loans data in such reports for purposes of determining the applicant's
compliance with Sec. 933.9.
(b) 10 percent requirement for insured depository institution
applicants--Regulatory financial reports. For purposes of Sec. 933.10,
an applicant that, as a result of a merger or acquisition preceding the
date the Bank receives its application for membership, has not yet
filed a regulatory financial report for the combined entity with its
appropriate regulator, shall provide the most recent regulatory
financial report filed with the appropriate regulator prior to the
merger or acquisition by each of the institutions that entered into the
merger or acquisition, and the Bank shall consolidate the residential
mortgage loans and total assets data in such reports for purposes of
determining the applicant's compliance with Sec. 933.10, provided the
Bank obtains a certification from the applicant that there has been no
material decrease in the ratio of consolidated residential mortgage
loans to consolidated total assets derived from such reports since the
reports were filed with the appropriate regulator.
* * * * *
12. Section 933.25 is amended by revising paragraph (a) to read as
follows:
Sec. 933.25 Consolidations involving nonmembers.
(a) Termination of membership. Except as provided in Sec. 933.4(d),
if a member is consolidated into an institution that is not a member,
its membership in the Bank terminates upon cancellation of its charter.
* * * * *
Dated: February 12, 1998.
[[Page 8369]]
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 98-4069 Filed 2-18-98; 8:45 am]
BILLING CODE 6725-01-P
