Office of Thrift Supervision

Policy Statement on Minority Depository Institutions

OTS Policy Statement on Minority Depository Institutions

This statement outlines Office of Thrift Supervision (OTS) policies regarding minority depository institutions for the guidance of those institutions, OTS staff and other parties with an interest in the thrift industry.

OTS recognizes the important role of minority depository institutions in furthering the economic viability of minority and low-income communities. Minority depository institutions can also provide significant assistance to regulators and other government agencies in their efforts to evaluate and address the needs of those communities for financial services. OTS and its predecessor have had an ongoing minority institution technical assistance function since the 1970s.

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Section 308, reinforces our commitment. FIRREA identifies the following goals that form the basis of OTS' Minority Depository Institutions Program:

• Preserve the present number of minority depository institutions;
• Preserve their minority character in cases involving merger or acquisition of a minority depository institution by using general preference guidelines;
• Provide technical assistance to prevent insolvency of institutions not now insolvent;
• Promote and encourage creation of new minority depository institutions; and
• Provide for training, technical assistance and educational programs.

As defined in FIRREA, the term “minority” includes Black American, Native American, Hispanic American, or Asian American. A minority depository institution is either a publicly-owned or privately-owned savings association in which (1) minorities have at least 51 percent ownership or stock ownership as applicable; (2) a majority of the Board of Directors is minority and the community the institution services is predominantly minority; or (3) socially and economically disadvantaged individuals have at least 51 percent ownership or stock ownership as applicable. It is also open to mutual savings associations in which (1) the majority of the Board of Directors is minority and the community that it services is predominantly minority or (2) the majority of the Board of Directors and the Chief Executive Officer are women.

Identification of Minority Depository Institutions

OTS will annually verify previously identified minority depository institutions through a self-certification process by the institutions to establish their continued inclusion in the program. OTS staff will identify additional candidates for the program through the examination and application process. Additionally, OTS-regulated institutions may petition the agency for inclusion in the program if their circumstances change to qualify them as a Minority Depository Institution.

OTS makes a list of minority depository institutions available to potential investors or other parties interested in establishing business relationships with minority owned institutions.

Technical Assistance

OTS will provide technical assistance, especially in the supervision and application process, to preserve the number, character and financial health of minority depository institutions. Requests for technical assistance should be directed to the Community Affairs Liaison in the appropriate OTS regional office, who will coordinate with regional supervisory staff.

OTS will also monitor the financial condition of minority depository institutions on an ongoing basis, and will share compilations of non-confidential financial data with minority depository institutions to help them monitor their performance. Through this process, OTS will identify minority depository institutions that might benefit from a program of increased support and technical assistance, such as mentoring arrangements with other thrifts. Minority depository institutions that are in a generally sound condition, but which may be experiencing operating difficulties in one or a few areas would fall into this category. Often, problems can be attributed to limited resources due to the institution's small size. Participation in the program, by both minority depository institutions and potential mentors, is voluntary.

For minority depository institutions experiencing more serious operating problems, appropriate OTS regional staff, such as the Field Manager or Assistant Regional Director, will consult and work with executive management of the institution to determine, and implement, a course of corrective action.

Resolution of Supervisory Cases

In resolving supervisory cases involving minority depository institutions, OTS will consider and evaluate possible solutions that would, consistent with the safety and soundness of the institution, maintain the institution's minority identity. In evaluating solutions, OTS will also consider the composition of the community being served by the institution.

Outreach to Minority Depository Institutions

Whenever possible, OTS staff will participate in seminars, conferences and workshops directed to minority depository institution audiences. Requests for such participation should be directed to the Community Affairs Liaisons in the regional offices.

Additionally, OTS will maintain contact with minority depository institutions outside the more customary examination and supervision process. At a minimum, the Regional Director will offer to meet with each institution's Board of Directors, at least annually, to discuss issues of mutual interest, such as economic trends, regulatory or legislative developments, and types of assistance that OTS can provide to minority depository institutions.

OTS will support minority depository institutions in their efforts to offer products and services to their minority and non-minority customers. To support minority depository institutions in providing credit and other needed financial services to their communities, OTS will work with appropriate parties to measure and track performance. In addition, the regional Community Affairs Liaisons will contact each minority owned thrift at least annually to discuss community development activities and opportunities.

Potential Investors

The agency will also offer technical assistance to minority groups or individuals considering investment in the thrift industry to strengthen existing institutions, create new minority depository institutions, or help to service minority communities. OTS encourages such interest and will work with minority organizations to provide information and to identify potential minority investors. If minority investors are interested in acquiring thrift institutions held by the Federal Deposit Insurance Corporation as conservator or receiver, OTS will work with them to expeditiously process the preliminary regulatory approval required prior to submission of a bid.