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Application Documents
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Process-Related FAQs for Capital Purchase Program
How does a Qualifying Financial Institution (QFI) know if it is eligible to participate in the Treasury Department’s Capital Purchase Program (CPP)?
A QFI should review the eligibility requirements as described in the TPP term sheet and related documents (which are available at http://www.treas.gov/initiatives/eesa/). In addition, a QFI should contact its appropriate Federal banking agency.
Which financial institutions are eligible as a QFI under the CPP?
Generally speaking, any bank, savings association, bank holding company and savings and loan holding company organized under the laws of the United States qualifies as a QFI. Financial institutions controlled by a foreign entity will not be eligible.
Specifically, a QFI is defined as:
(i) Any U.S. bank or U.S savings institution not controlled by a Bank Holding Company (“BHC”) or Savings and Loan Company (“SLHC”); and (ii) any U.S. BHC, or any U.S. SLHC which engages solely or predominately in activities that are permitted for financial holding companies under relevant law, and any U.S bank or U.S savings association controlled by such a qualifying U.S. BHC or U.S. SLHC; except that QFI shall not mean any BHC, SLHC, bank or savings association controlled by a foreign bank or company.
If a financial institution cannot qualify for this program, will it still be eligible to participate in other aspects of the TARP program?
Yes.
How does a QFI apply to the Treasury Department’s CPP?
A QFI must submit an application to the appropriate Federal banking agency. If the applicant is a bank holding company, the application should be submitted to both the applicant's holding company supervisor and the supervisor of the largest insured depository institution controlled by the applicant. Each Federal banking agency has provided information on its public web site regarding where an application for participation in the Capital Purchase Program (CPP) should be directed. This information is available at:
- For the Federal Deposit Insurance Corporation: www.fdic.gov
- For the Federal Reserve: www.federalreserve.gov
- For the Office of the Comptroller of the Currency: www.occ.treas.gov
- For the Office of Thrift Supervision: www.ots.treas.gov
Is there an application form?
Yes. The Federal banking agencies, working in consultation with the Treasury Department, have developed a common application form that may be used by all QFIs seeking to participate in the CPP. The application form is available on the public web sites of each Federal banking agency and on Treasury’s website referenced above. All inquiries regarding preparation of the application should be directed to the appropriate FBA for the applicant.
What information will a QFI have to provide on the application?
The application form requires the QFI to submit basic information about the institution, the amount of the perpetual preferred stock investment that the financial institution is requesting from Treasury, as well as information regarding the amount of authorized but unissued preferred stock and common stock that the institution currently has available for purchase.
What happens if a QFI is not able to issue the Preferred Shares by the application deadline due to the need for a shareholder vote, Board authorization, or other constraint?
With respect to issuing preferred stock, some QFIs will be required to solicit and obtain shareholder approval for the authorization of preferred stock. To solicit shareholder approval, a financial institution must comply with the federal securities laws and any applicable state laws. The federal securities laws require certain financial institutions to file a proxy statement when soliciting shareholder approval. In some circumstances, the staff of the Division of Corporation Finance at the SEC may review and comment on proxy statements filed by QFIs seeking shareholder approval for the authorization of preferred stock. The review and comment process, as well as the process for soliciting shareholder approval and holding a shareholder meeting, may extend beyond 30 days due to circumstances outside of the control of the QFI. For this reason, a QFI will be permitted to close as soon as practicable after it completes its proxy solicitation and receives shareholder approval provided that the QFI filed any required preliminary proxy statement with the SEC within 30 days after receiving preliminary approval and diligently continues to complete the proxy process as well as diligently schedules and holds any required meeting to obtain shareholder approval.
SEC Staff Guidance:
Will applications filed by QFIs or the names of applying QFIs be released publicly?
Any applicant desiring confidential treatment of specific portions of the application must submit a request in writing with the application. The request must discuss the justification for the requested treatment. The applicant's reasons for requesting confidentiality should specifically demonstrate the harm (for example, loss of competitive position, invasion of privacy) that would result from public release of information (5 U.S.C. 552). Information for which confidential treatment is requested should be: (1) specifically identified in the public portion of the application (by reference to the confidential section); (2) separately bound; and (3) labeled "Confidential."
The applicant should follow the same procedure when requesting confidential treatment for the subsequent filing of supplemental information to the application.
The applicant should contact the appropriate regulatory agency for specific instructions regarding requests for confidential treatment. The appropriate regulatory agency will determine whether the information will be treated as confidential and will advise the applicant of any decision to make available to the public information labeled as "Confidential."
Treasury will provide electronic reports detailing any completed transactions, as required by the Emergency Economic Stabilization Act of 2008, within 48 hours.
Who should a QFI contact if they have questions regarding how to file an application or the status of a submitted application?
The QFI should contact its appropriate Federal banking agency using the contact information provided on the above referenced agency web site.
Will a QFI receive verification that its application has been filed with its appropriate Federal banking agency?
Yes.
How long will it take for an application to be processed?
Treasury, working in consultation with the Federal banking agencies, will process and preliminarily accept applications submitted under the CPP as expeditiously as possible. However, because of the diversity of institutions that are expected to apply, response times may vary.
How will a QFI that has filed a timely application be notified when a preliminary decision on the application has been made by Treasury?
Preliminary decisions on applications will be communicated by Treasury to the representative of the institution identified on the application form.
When does a QFI submit the final documentation to complete the Preferred Share purchase?
Final documentation must be submitted no later than 30 days after a QFI has been notified that it has received preliminary acceptance into the program. Instructions for submitting final documentation will be available on Treasury’s website at http://www.treas.gov/initiatives/eesa/.
Will capital raised under this program count as Tier 1 capital?
Yes.
Does the definition of QFI include all FDIC-insured depository institutions?
Yes, all FDIC-insured depository institutions are covered by the definition of QFI. If an FDIC-insured depository institution is part of an eligible U.S. BHC or eligible U.S SLHC which means a holding company that engages solely or predominately in activities permitted for financial holding companies under relevant law, access to the Program will be provided through the top-tier holding company.
Other FDIC-insured depository institutions could have direct access to the Program if they are part of a holding company structure that does not meet the preceding requirement or if they are not part of a holding company structure. Access will be determined as described below.
What level of access to the program will be provided for top-tier holding companies that are QFIs?
For these institutions the level of access to the Program will be between 1 and 3 percent of total risk-weighted assets of the top-tier holding company level.
What level of access to the Program will be provided for FDIC-insured depository institutions that are not part of a holding company, or are controlled by a holding company that is not an eligible QFI?
For these institutions the level of access to the Program will be between 1 and 3 percent of risk-weighted assets at the FDIC-insured depository institution level. This group of institutions would include, among others, stand alone banks and savings associations, industrial loan companies, and banks and savings associations that are part of SLHCs that engage in activities that are not solely or predominately permitted for financial holding companies under relevant law (e.g., grandfathered Unitary Thrift Holding Companies).
What is the deadline to apply to the TARP Capital Purchase Program?
The deadline for public companies is November 14, 2008. The Department of Treasury will provide a separate deadline for private companies when the term sheet for private companies is made available. Both the term sheet for private companies and the applicable deadline will be posted on the Department of Treasury’s website.
How will you define a “public” company for purposes of institutions applying for the program with the November 14, 2008 deadline?
A “public” bank, savings association, bank holding company, or savings and loan holding company is a company (1) whose securities are traded on a national securities exchange and (2) required to file, under the federal securities laws, periodic reports such as the annual (Form 10-K) and quarterly (Form 10-Q) reports with either the Securities and Exchange Commission or their primary federal bank regulator. A company may be required to do so by virtue of having securities registered under Section 12 of the Securities Exchange Act (Exchange Act) which applies to all companies that are traded on an exchange or that have $10 million in assets and 500 shareholders or Section 15(d) of the Exchange Act which requires companies that have filed a Securities Act registration statement and have 300 or more shareholders to file reports required under Section 13 of the Exchange Act, e.g., periodic reports.
What if an institution has a bank or thrift holding company application pending with a federal banking regulator?
Institutions that have filed a bank or thrift holding company application on or before November 14, 2008 may apply to the TARP program through their federal banking regulator on a conditional basis by the applicable deadline (November 14, 2008 in the case of public companies).
In order to receive funding from the TARP Capital Purchase Program, final approval of the holding company application must be granted by the applicable federal regulator by December 31, 2008. In order to qualify for the TARP program, the applicant company must apply for approval to become a bank or thrift holding through ownership of an U.S. bank or savings association that was in existence on or before November 14, 2008.
What if an institution’s bank holding or thrift holding company application is not approved by December 31, 2008?
An applicant holding company would not be eligible to participate in the Capital Purchase Program unless its federal bank regulator approved its holding company application and the regulator recommended the holding company for participation in the TARP Capital Purchase Program by December 31, 2008.*
*At their request we have given the regulators until January 15 to finish processing any holding company or thrift applications that were not completed by 12/31 for applicants wishing to participate in CPP who have made a timely filing of their underlying CPP applications.
May an applicant apply for a new bank charter and a new bank or thrift holding company at the same time?
In order to qualify for the TARP program, the applicant company must apply for approval to become a bank or thrift holding through ownership of an U.S. bank or savings association that was in existence on or before November 14, 2008.
If an applicant applied before October 31 (the day investment agreements were available on Treasury’s website), does the applicant need to file an amended application?
The Application Guidelines for TARP Capital Purchase Program (Guidelines), published on October 31, 2008, provides “[i]n the event the applicant files an application with the appropriate FBA prior to the availability of the investment agreement, the applicant must file an amended application which includes updated responses to any items in the application that required prior review of the investment agreement [emphasis added].” We are amending this provision to provide “[i]n the event the applicant files an application with the appropriate FBA prior to the availability of the investment agreement, the applicant may file an amended application which includes updated responses to any items in the application that required prior review of the investment agreement [emphasis added]. ”
Please clarify the warrant calculation, the term sheet and the application guidelines indicate it is based on signing or closing the transactions while the definitive agreements state it is based on the date of preliminary approval.
As provided for in the Letter Agreement, including Form of Warrant to Purchase Common Stock, published on the Department of the Treasury’s website, the warrant exercise price is calculated based on the average of the closing prices of the applicant’s common stock on the 20 trading days ending on the last trading day prior to the date the applicant’s application for participation in the Capital Purchase Program was preliminarily approved by the Department of the Treasury.
May a QFI terminate it status as a bank holding company or a savings and loan holding company and continue to participate in the CPP?
Any QFI that is or becomes a bank holding company or a savings and loan holding company and participates in the TARP Capital Purchase Program must maintain its status as a bank or thrift holding company for as long as Treasury holds preferred stock and/or warrants in the company. A bank or thrift holding company seeking to terminate its status as such must fully redeem all preferred stock and warrants held by Treasury prior to terminating its status.
Are foreign owned banks permitted to participate in the TARP CPP?
The Application Guidelines for TARP Capital Purchase Program (Guidelines), published on October 31, 2008, provides, “[t]o qualify, the applicant must be established and operating in the United States and may not be controlled by a foreign bank or company.” For purposes of determining whether a bank is controlled by a foreign bank or company, the Treasury will rely on the federal banking agencies’ control determinations.
Please check back regularly for postings of additional Q&As.
Last Updated:
January 8, 2009
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