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2000 - Rules and Regulations
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PART 348MANAGEMENT OFFICIAL INTERLOCKS
Sec. 348.1
Authority, purpose, and scope.
348.2
Definitions.
348.3
Prohibitions.
348.4
Interlocking relationships permitted by statute.
348.5
Small market share.
348.6
General exemption.
348.7
Change in circumstances.
348.8
Enforcement.
AUTHORITY: 12 U.S.C.
1823(k), 3207
SOURCE: The provisions of this Part 348 appear at 61 Fed. Reg.
40305, August 2, 1996, effective October 1, 1996, except as otherwise
noted.
§ 348.1 Authority, purpose, and scope.
(a) Authority. This part is issued under the provisions
of the Depository Institution Management Interlocks Act (Interlocks
Act) (12 U.S.C. 3201 et seq.), as amended.
(b) Purpose. The purpose of the Interlocks Act and this
part is to foster competition by generally prohibiting a management
official from serving two nonaffiliated depository organizations in
situations where the management interlock likely would have an
anticompetitive effect.
(c) Scope. This part applies to management officials of
insured nonmember banks and their affiliates.
[Codified to 12 C.F.R.
§ 348.1]
§ 348.2 Definitions.
For the purpose of this part, the following definitions apply:
(a) Affiliate. (1) The term affiliate has the
meaning given in section 202 of the Interlocks Act
(12 U.S.C. 3201). For purposes
of section 202, shares held by an individual include shares held by
members of his or her immediate family. "Immediate family" means
spouse, mother, father, child, grandchild, sister, brother or any of
their spouses, whether or not any of their shares are held in trust.
(2) For purposes of section 202(3)(B) of the Interlocks Act (12
U.S.C. 3201(3)(B)), an affiliate relationship involving an insured
nonmember bank based on common ownership does not exist if the FDIC
determines, after giving the affected persons the opportunity to
respond, that the asserted affiliation was established in order to
avoid the prohibitions of the Interlocks Act and does not represent a
true commonality of interest between the depository organizations. In
making this determination, the FDIC considers, among other things,
whether a person, including members of his or her immediate family
whose shares are necessary to constitute the group, owns a nominal
percentage of the shares of one of the organizations and the percentage
is substantially disproportionate to that person's ownership of shares
in the other organization.
(b) Area median income means:
(1) The median family income for the metropolitan statistical
area (MSA), if a depository organization is located in an MSA; or
(2) The statewide nonmetropolitan median family income, if a
depository organization is located outside an MSA.
(c) Community means a city, town, or village, and
contiguous or adjacent cities, towns, or villages.
(d) Contiguous or adjacent cities, towns, or villages
means cities, towns, or villages whose borders touch each other or
whose borders are within 10 road miles of each other at
{{2-28-07 p.2866}}their closest points. The
property line of an office located in an unincorporated city, town, or
village is the boundary line of that city, town, or village for the
purpose of this definition.
(e) Depository holding company means a bank holding
company or a savings and loan holding company (as more fully defined in
section 202 of the Interlocks Act (12 U.S.C. 3201)) having its
principal office located in the United States.
(f) Depository institution means a commercial bank
(including a private bank), a savings bank, a trust company, a savings
and loan association, a building and loan association, a homestead
association, a cooperative bank, an industrial bank, or a credit union,
chartered under the laws of the United States and having a principal
office located in the United States. Additionally, a United States
office, including a branch or agency, of a foreign commercial bank is a
depository institution.
(g) Depository institution affiliate means a depository
institution that is an affiliate of a depository organization.
(h) Depository organization means a depository
institution or a depository holding company.
(i) Low- and moderate-income areas means census tracts
(or, if an area is not in a census tract, block numbering areas
delineated by the United States Bureau of the Census) where the median
family income is less than 100 percent of the area median income.
(j) Management official. (1) The term management
official means:
(i) A director;
(ii) An advisory or honorary director of a depository institution
with total assets of $100 million or more;
(iii) A senior executive officer as that term is defined in 12
CFR 303.101(b);
(iv) A branch manager;
(v) A trustee of a depository organization under the control of
trustees; and
(vi) Any person who has a representative or nominee serving in
any of the capacities in this paragraph
(j)(1).
(2) The term management official does not include:
(i) A person whose management functions relate exclusively to the
business of retail merchandising or manufacturing;
(ii) A person whose management functions relate principally to
the business outside the United States of a foreign commercial bank; or
(iii) A person described in the provisos of section 202(4) of the
Interlocks Act (12 U.S.C.
3201(4)) (referring to an officer of a state-chartered savings
bank, cooperative bank, or trust company that neither makes real estate
mortgage loans nor accepts savings).
(k) Office means a principal or branch office of a
depository institution located in the United States. Office
does not include a representative office of a foreign commercial
bank, an electronic terminal, or a loan production office.
(l) Person means a natural
person, corporation, or other business entity.
(m) Relevant metropolitan statistical area (RMSA) means
an MSA, a primary MSA, or a consolidated MSA that is not comprised of
designated Primary MSAs to the extent that these terms are defined and
applied by the Office of Management and Budget.
(n) Representative or nominee means a natural person who
serves as a management official and has an obligation to act on behalf
of another person with respect to management responsibilities. The FDIC
will find that a person has an obligation to act on behalf of another
person only if the first person has an agreement, express or implied,
to act on behalf of the second person with respect to management
responsibilities. The FDIC will determine, after giving the affected
persons an opportunity to respond, whether a person is a
representative or nominee.
(o) Total assets. (1) The term total assets
includes assets measured on a consolidated basis and reported in
the most recent fiscal year-end Consolidated Report of Condition and
Income.
(2) The term total assets does not
include:
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(i) Assets of a diversified savings and loan holding company as
defined by section 10(a)(1)(F) of the Home Owners' Loan Act
(12 U.S.C. 1467a(a)(1)(F))
other than the assets of its depository institution affiliate;
(ii) Assets of a bank holding company that are exempt from the
prohibitions of section 4 of the Bank Holding Company Act of 1956
pursuant to an order issued under section 4(d) of that Act
(12 U.S.C. 1843(d)) other than
the assets of its depository institution affiliate; or
(iii) Assets of offices of a foreign commercial bank other than
the assets of its United States branch or agency.
(p) United States means the United States of America,
any state or territory of the United States of America, the District of
Columbia, Puerto Rico, Guam, American Samoa, and the Virgin Islands.
[Codified to 12 C.F.R. § 348.2]
[Section 348.2 amended at 64 Fed. Reg. 51679, September 24, 1999,
effective January 1, 2000; 68 Fed. Reg. 50461, August 21, 2003,
effective September 22, 2003; 72 Fed. Reg. 1276, January 11, 2007; 72
Fed. Reg. 38753, July 16, 2007]
§ 348.3 Prohibitions.
(a) Community. A management official of a depository
organization may not serve at the same time as a management official of
an unaffiliated depository organization if the depository organizations
in question (or a depository institution affiliate thereof) have
offices in the same community.
(b) RMSA. A management official of a depository
organization may not serve at the same time as a management official of
an unaffiliated depository organization if the depository organizations
in question (or a depository institution affiliate thereof) have
offices in the same RMSA and each depository organization has total
assets of $50 million or more.
(c) Major assets. A management official of a depository
organization with total assets exceeding $2.5 billion (or any affiliate
of such an organization) may not serve at the same time as a management
official of an unaffiliated depository organization with total assets
exceeding $1.5 billion (or any affiliate of such an organization),
regardless of the location of the two depository organizations. The
FDIC will adjust these thresholds, as necessary, based on the
year-to-year change in the average of the Consumer Price Index for the
Urban Wage Earners and Clerical Workers, not seasonally adjusted, with
rounding to the nearest $100 million. The FDIC will announce the
revised thresholds by publishing a final rule without notice and
comment in the Federal Register.
[Codified to 12 C.F.R. § 348.3]
[Section 348.3 amended at 64 Fed. Reg. September 24, 1999,
effective January 1, 2000; 72 Fed. Reg. 1276, January 11, 2007; 72 Fed.
Reg. 38753, July 16, 2007]
§ 348.4 Interlocking relationships permitted by statute.
The prohibitions of § 348.3 do not apply in the case of any one or
more of the following organizations or to a subsidiary thereof:
(a) A depository organization that has been placed formally in
liquidation, or which is in the hands of a receiver, conservator, or
other official exercising a similar function;
(b) A corporation operating under section 25 or section 25A of the
Federal Reserve Act (12 U.S.C. 601 et seq. and
12 U.S.C. 611 et seq.,
respectively) (Edge Corporations and Agreement Corporations);
(c) A credit union being served by a management official of another
credit union;
{{8-31-07 p.2868}}
(d) A depository organization that does not do business within the
United States except as an incident to its activities outside the
United States;
(e) A state-chartered savings and loan guaranty corporation;
(f) A Federal Home Loan bank or any other bank organized solely to
serve depository institutions (a bankers' bank) or solely for the
purpose of providing securities clearing services and services related
thereto for depository institutions and securities companies;
(g) A depository organization that is closed or is in danger of
closing as determined by the appropriate federal depository
institutions regulatory agency and is acquired by another depository
organization. This exemption lasts for five years, beginning on the
date the depository organization is acquired;
(h) A savings association whose acquisition has been authorized on
an emergency basis in accordance with section 13(k) of the Federal
Deposit Insurance Act (12 U.S.C.
1823(k)) with resulting dual service by a management official
that would otherwise be prohibited under the Interlocks Act which may
continue for up to 10 years from the date of the acquisition provided
that the FDIC has given its approval for the continuation of such
service; and
(i)(1) A diversified savings and loan holding company (as defined
in section 10(a)(1)(F) of the Home Owners' Loan Act
(12 U.S.C. 1467a(a)(1)(F)) with
respect to the service of a director of such company who is also a
director of an unaffiliated depository organization if:
(i) Both the diversified savings and loan holding company and the
unaffiliated depository organization notify their appropriate federal
depository institutions regulatory agency at least 60 days before the
dual service is proposed to begin; and
(ii) The appropriate regulatory agency does not disapprove the
dual service before the end of the 60-day period.
(2) The FDIC may disapprove a notice of proposed service if it
finds that:
(i) The service cannot be structured or limited so as to preclude
an anticompetitive effect in financial services in any part of the
United States;
(ii) The service would lead to substantial conflicts of interest
or unsafe or unsound practices; or
(iii) The notificant failed to furnish all the information
required by the FDIC.
(3) The FDIC may require that any interlock permitted under this
paragraph (h) be terminated if a change in circumstances occurs with
respect to one of the interlocked depository organizations that would
have provided a basis for disapproval of the interlock during the
notice period.
[Codified to 12 C.F.R.
§ 348.4]
§ 348.5 Small market share exemption.
(a) Exemption. A management interlock that is prohibited
by § 348.3 is permissible, if:
(1) The interlock is not prohibited by § 348.3(c); and
(2) The depository organizations (and their depository
institution affiliates) hold, in the aggregate, no more than 20 percent
of the deposits in each RMSA or community in which both depository
organizations (or their depository institution affiliates) have
offices. The amount of deposits shall be determined by reference to the
most recent annual Summary of Deposits published by the FDIC for the
RMSA or community.
(b) Confirmation and records. Each depository
organization must maintain records sufficient to support its
determination of eligibility for the exemption under paragraph (a) of
this section, and must reconfirm that determination on an annual
basis.
{{12-29-06 p.2869}}
[Codified to 12 C.F.R. § 348.5]
[Section 348.5 amended at 64 Fed. Reg. 51680, September 24, 1999,
effective January 1, 2000]
§ 348.6 General exemption.
(a) Exemption. The FDIC may by agency order exempt an
interlock from the prohibitions in § 348.3 if the FDIC finds that the
interlock would not result in a monopoly or substantial lessening of
competition and would not present safety and soundness concerns.
(b) Presumptions. In reviewing an application for an
exemption under this section, the FDIC will apply a rebuttable
presumption that an interlock will not result in a monopoly or
substantial lessening of competition if the depository organization
seeking to add a management official:
(1) Primarily serves low- and moderate-income areas;
(2) Is controlled or managed by persons who are members of a
minority group, or women;
(3) Is a depository institution that has been chartered for less
than two years; or
(4) Is deemed to be in "troubled condition" as defined in
§ 303.101(c).
(c) Duration. Unless a shorter expiration period is
provided in the FDIC approval, an exemption permitted by paragraph (a)
of this section may continue so long as it does not result in a
monopoly or substantial lessening of competition, or is unsafe or
unsound. If the FDIC grants an interlock exemption in reliance upon a
presumption under paragraph (b) of this section, the interlock may
continue for three years, unless otherwise provided by the FDIC in
writing.
(d) Procedures. Procedures for applying for an exemption
under this section are set forth in
12 CFR 303.249.
[Codified to 12 C.F.R. § 348.6]
[Section 348.6 amended at 64 Fed. Reg. 51680, September
24, 1999, effective January 1, 2000; 71 Fed. Reg. 20527, April 21,
2006]
§ 348.7 Change in circumstances.
(a) Termination. A management official shall terminate
his or her service or apply for an exemption if a change in
circumstances causes the service to become prohibited. A change in
circumstances may include an increase in asset size of an organization,
a change in the delineation of the RMSA or community, the establishment
of an office, an increase in the aggregate deposits of the depository
organization, or an acquisition, merger, consolidation, or
reorganization of the ownership structure of a depository organization
that causes a previously permissible interlock to become prohibited.
(b) Transition period. A management official described
in paragraph (a) of this section may continue to serve the insured
nonmember bank involved in the interlock for 15 months following the
date of the change in circumstances. The FDIC may shorten this period
under appropriate circumstances.
[Codified to 12 C.F.R. § 348.7]
[Section 348.7 amended at 64 Fed. Reg. 51680, September
24, 1999, effective January 1, 2000]
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§ 348.8 Enforcement.
Except as provided in this section, the FDIC administers and
enforces the Interlocks Act with respect to insured nonmember banks and
their affiliates and may refer any case of a prohibited interlocking
relationship involving these entities to the Attorney General of the
United States to enforce compliance with the Interlocks Act and this
part. If an affiliate of an insured nonmember bank is subject to the
primary regulation of another federal depository organization
supervisory agency, then the FDIC does not administer and enforce the
Interlocks Act with respect to that affiliate.
[Codified to 12 C.F.R. § 348.8]
[The page following this is 2905.]
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