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Electronic Code of Federal Regulations
Title 12: Banks and Banking
§574.3 Acquisition of control of savings associations.
(a) Acquisition by a company or certain persons. Unless a transaction is exempt under paragraph (c) of this section, or exempt from prior approval under paragraph (d) of this section, no company or any director or officer of a savings and loan holding company, or any individual who owns, controls, or holds with power to vote (or holds proxies representing) more than 25 percent of the voting stock of a savings and loan holding company, shall acquire control, as defined in §574.4 (a) and (b) of this part, of a savings association except upon receipt of the written approval of the Office.
(b) Acquisition by a person. Unless a transaction is exempt under paragraph (c) of this section, or exempt from prior notice under paragraph (d) of this section, no person (other than certain persons affiliated with a savings and loan holding company who are subject to paragraph (a) of this section), shall acquire control, as defined in §574.4 (a) and (b) of this part, of a savings association until written notice has been provided to the Office and (1) the Office indicates in writing its intent not to disapprove the proposed acquisition or (2) 60 days (or such period of time as the Office may specify if the review period has been extended under §574.6(c)(3) of this part) have passed since receipt of a notice deemed sufficient under §574.6(c)(2). Notwithstanding the forgoing, acquisitions by persons by means of a merger with an interim association are not subject to this part, but shall be subject to approval under §563.22, and either §552.13 or applicable state law.
(c) Exempt transactions. (1) The following transactions are exempt from the application requirements of paragraph (a) of this section:
(i) Control of a savings association acquired by devise under the terms of a will creating a trust which is excluded from the definition of savings and loan holding company under §574.2(q) of this part;
(ii) Control of a savings association acquired in connection with a reorganization that involves solely the acquisition of control of that association by a newly formed company that is controlled by the same acquirors that controlled the savings association for the immediately preceding three years, and entails no other transactions, such as an assumption of the acquirors' debt by the newly formed company: Provided, that the acquirors have filed with the Office an H-(e)4 notification as provided in section 574.6 of this part and the OTS does not object to the acquisition within 30 days of the filing date;
(iii) Control of a savings association acquired by a bank holding company that is registered under and subject to, the Bank Holding Company Act of 1956, or any company controlled by such bank holding company;
(iv) Control of a savings association acquired solely as a result of (A) a pledge or hypothecation of stock to secure a loan contracted for in good faith or (B) the liquidation of a loan contracted for in good faith, in either case where such loan was made in the ordinary course of the business of the lender: Provided, further, That acquisition of control pursuant to such pledge, hypothecation or liquidation is reported to the Office within 30 days, and Provided, further, That the acquiror shall not retain such control for more than one year from the date on which such control was acquired; however, the Office may, upon application by an acquiror, extend such one-year period from year to year, for an additional period of time not exceeding three years, if the Office finds such extension is warranted and would not be detrimental to the public interest;
(v) Control of a savings association acquired through a percentage increase in stock ownership following a pro rata stock dividend or stock split, if the proportional interests of the recipients remain substantially the same;
(vi) Acquisition of additional stock after approval under §574.7 of this part, or any predecessor provision, has been received: Provided, That such acquisition is consistent with any conditions imposed in connection with such approval and with the representations made by the acquiror in its application;
(vii) Acquisitions of up to twenty-five percent (25%) of a class of stock by a tax-qualified employee stock benefit plan as defined in §563b.25; and
(viii) Acquisitions of up to 15 percent of the voting stock of any savings association by a savings and loan holding company (other than a bank holding company) in connection with a qualified stock issuance if such acquisition is approved by the Office pursuant to §574.8(a).
(2) The following transactions are exempt from the notice requirements of paragraph (b) of this section:
(i) Transactions which are exempt pursuant to paragraphs (c)(1)(iii), (c)(1)(iv), (c)(1)(v), and (c)(1)(vi) of this section;
(ii) Transactions for which approval is required under paragraph (a) of this section;
(iii) Transactions for which approval is required under part 546 or §552.13 and §563.22 of this chapter;
(iv) Transactions for which a change of control notice must be submitted to the Board of Governors of the Federal Reserve System pursuant to the Change in Bank Control Act, 12 U.S.C. 1817(j);
(v) Acquisition of additional stock of a savings association by any person who:
(A) Has held power to vote 25 percent or more of any class of voting stock in such association continuously since March 9, 1979; or
(B) Has maintained control of the savings association continuously since acquiring control in compliance with the Control Act (or the Repealed Control Act) and the Office's regulations thereunder then in effect: Provided, That such acquisition is consistent with any conditions imposed in connection with such acquisition of control and with the representations made by the acquiror in its notice; and
(vi) Acquisitions of stock of a de novo federal savings association in connection with the organization of such association: Provided, That the Office has considered the financial and managerial resources of the acquiror in granting the association its federal savings association charter; and additional acquisitions of stock of such association, and further provided, that the acquisitions are consistent with any conditions imposed in connection with the approval of the association's charter and with representations made by the acquiror in its application for a federal savings association charter, and that the Regional Director has no supervisory objection to the acquiror's additional acquisitions.
(3) An acquiror that would be considered to be in control of a savings association pursuant to §574.4 of this part on December 26, 1985, shall not be subject to this §574.3 unless the acquiror acquires additional stock of the savings association or obtains a control factor with respect to such association after December 26, 1985: Provided, That an acquiror shall not be deemed to have acquired control of a savings association on the basis of actions taken prior to December 26, 1985, or on the basis of actions taken after December 26, 1985, if such actions are pursuant to and consistent with a materially complete application under the Holding Company Act or notice under the Repealed Control Act filed prior to December 26, 1985, if such acquisition is made pursuant to an application approved under the Holding Company Act or a notice under the Repealed Control Act that was not disapproved.
(d) Transactions exempt from prior approval or notice. (1) Subject to the conditions set forth in paragraph (d)(2) of this section, the following transactions are exempt from prior approval and prior notice under §574.3: Provided, That the timing of the transaction was not within the control of the acquiror.
(i) Control of a savings association acquired through bona fide gift;
(ii) Control of a savings association acquired through liquidation of a loan contracted in good faith where the loan was not made in the ordinary course of business of the lender;
(iii) Control of a savings association acquired through a percentage increase in ownership following a stock split or redemption that was not pro rata;
(iv) Control determined pursuant to §574.4 (a) or (b) as a result of actions by third parties that are not within the control of the acquiror;
(v) Control of a savings association acquired through testate or intestate succession: Provided, That the acquiror transmits written notification of the acquisition to the Office within 60 days of the acquisition and provides such additional information as the Office may specifically request.
(2) The exemptions provided by paragraphs (d)(1)(i) through (d)(1)(iv) of this section are subject to the following conditions:
(i) The acquiror shall file an application, notice or rebuttal, as appropriate, with the Office within 90 days of acquisition of control;
(ii) The acquiror shall not take any action to direct the management or policies of the savings association or which are designed to effect a change in the business plan of the savings association other than voting on matters that may be presented to stockholders by management of the savings association until the Office has acted favorably upon the acquiror's application or notice, and the Office may require that the acquiror take such steps as the Office deems necessary to insure that control is not exercised; and
(iii) If the Office disapproves the acquiror's application or notice, the acquiror shall divest such portion of the stock held by the acquiror so as to cause the acquiror not to be determined to be in control of the savings association under §574.4 of this part, within one year or such shorter period of time and in the manner that the Office may order.
(e) Prohibited acquisitions. No acquisition shall be approved by the Office pursuant to §574.3(a) which would result in the formation by any company, through one or more subsidiaries or through one or more transactions, of a multiple savings and loan holding company controlling savings associations in more than one state where the acquisition causes a savings association to become an affiliate of another savings association with which it was not previously affiliated unless:
(1) Such company, or a savings association subsidiary of such company, is authorized to acquire control of a savings association subsidiary, or to operate a home or branch office, in the additional state or states pursuant to section 13(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1823(k) (or section 408(m) of the National Housing Act as in effect immediately prior to enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989);
(2) Such company controls a savings association subsidiary which operated a home or branch office in the additional state or states as of March 5, 1987; or
(3) The statute laws of the state in which the savings association, control of which is to be acquired, is located are such that a savings association chartered by such state could be acquired by a savings association chartered by the state where the acquiring savings association or savings and loan holding company is located (or by a holding company that controls such a state chartered savings association), and such statute laws specifically authorize such an acquisition by language to that effect and not merely by implication.
[54 FR 49690, Nov. 30, 1989, as amended at 57 FR 14348, Apr. 20, 1992; 60 FR 66720, Dec. 26, 1995; 61 FR 60184, Nov. 27, 1996; 67 FR 52035, Aug. 9, 2002]