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On March 3, the OCC announced a final rule amending its merger review and licensing frameworks involving national banks and federal savings associations that have no more than $30 billion in total assets, with the goal of simplifying filing requirements for qualifying community banking institutions. These institutions will gain access to shorter review periods, simplified applications and, in some cases, relief from prior approval requirements.
Key elements of the final rule include:
- New "covered community bank" category. A national bank or federal savings association may qualify if it has less than $30 billion in total assets, is well capitalized, and is not subject to a cease-and-desist order, consent order, or formal written agreement requiring improvements to its financial condition.
- Expanded access to expedited licensing procedures. Qualifying community banks will be able to use streamlined or expedited filing procedures for a variety of corporate transactions and activities, including branch establishment or relocation, capital changes, fiduciary powers, certain investments, and other licensing filings.
- Streamlined review of certain business combinations. The rule allows covered community banks to use streamlined merger application procedures when the resulting institution will remain below the $30 billion asset threshold.
The OCC stated that the rule is part of a broader initiative to tailor regulatory requirements to the size and risk profile of community banking organizations and reduce administrative burden where appropriate.
Putting It Into Practice: The final rule signals the OCC's continued effort to tailor regulatory requirements for smaller banking organizations (previously discussed here). Community banks should review the rule to determine whether they may qualify for expedited or reduced procedures once the rule becomes effective. Banks should also continue monitoring OCC rulemaking and supervisory developments and update licensing and transaction planning processes as necessary.
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