OCC Publishes Guidance on Substantial Asset Changes

by Goodwin
Contact

On August 23, 2017, the Office of the Comptroller of the Currency (OCC) published guidance on filings required by national banks and federal savings associations (collectively referred to here as “banks”) pertaining to “substantial asset changes.”  The guidance lists various events that are considered substantial asset changes for which banks must seek approval and describes the criteria analyzed by the OCC when making a decision on an application for a substantial asset change.

Substantial Asset Changes

Aside from changes that occurred as a result of a bank’s ordinary and ongoing business of originating and securitizing loans and certain changes the OCC had prior knowledge of—such as a change undertaken at the direction of the OCC—banks must file applications for and obtain OCC approval before engaging in any transaction or series of transactions that may constitute, or result in, a material alteration in the composition of the bank’s assets or liabilities.  The following is an illustrative list of events that constitute substantial asset changes and for which banks must seek approval before engaging in:

  • the sale or other disposition of all, or substantially all, of a bank’s assets in a transaction or a series of transactions;
  • the sale or other disposition of all, or substantially all, of its assets, subsequent purchases or other acquisitions or other expansions of the bank’s operations;
  • any other purchases, acquisitions, or other expansions of operations that are part of a plan to increase a bank’s size by more than 25 percent in a one-year period;
  • any change in a bank charter’s purpose as described in 12 CFR 5.20(l)(2);
  • any other material increase or decrease in a bank’s size or a material alteration in the composition of the types of assets or liabilities of a bank (including the entry or exit of business lines), on a case-by-case basis, as determined by the OCC;
  • expansion of operations (i.e., the bank is a special purpose bank that wants to change to another special purpose, add another special purpose, or no longer be limited to a special purpose); and
  • contraction of operations (i.e., the bank’s activities are not limited and the bank wants to limit its activities and become a special purpose bank).

Decision Criteria

The guidance states that the OCC considers the following criteria when deciding whether to approve an application for a substantial asset change:

  • capital level of any resulting bank;
  • conformity of the transaction to applicable laws, regulations, and supervisory policies;
  • purpose of the transaction;
  • impact of the transaction on the bank’s safety and soundness; and
  • projected effect of the transaction on the bank’s depositors, other creditors, customers, and shareholders or members.

In addition to the above considerations, when reviewing applications for substantial asset changes that involve the purchase, other acquisition, or other expansion of a bank’s operations or that involve a change in charter purpose, the OCC also takes into account the federal policy considerations that apply to the organization of a new bank, codified at 12 C.F.R. § 5.20.  Some examples of these latter considerations include the maintenance of a “safe and sound banking system,” promoting the “fair treatment of customers,” and a determination that the bank will have “capital that is sufficient to support the projected volume and type of business.”

Filing Requirements & Application Process

The OCC’s guidance also provided access to a sample substantial asset change application form and practical information on the filing requirements associated with substantial asset change applications and on the applications process itself.  In its guidance, the OCC encourages potential applicants to make use of “exploratory meetings” and/or “prefiling meetings” to open a dialogue with the OCC regarding questions or concerns related to applicants’ substantial asset change applications.

In light of the OCC’s decision to publish this guidance pertaining to substantial asset change filings, it behooves banks to familiarize themselves with and to comply with the regulatory requirements associated with substantial asset changes.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin | Attorney Advertising

Written by:

Goodwin
Contact
more
less

Goodwin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.