In January of 2024, the Office of the Comptroller of the Currency (OCC) issued a proposal to amend its rules for business combinations involving national banks and federal savings associations. Additionally, during March of 2024, the Federal Deposit Insurance Corporation (FDIC) also issued a proposal on the same topic. These rules are relatively consistent between the two agencies and both rules aim to streamline and enhance the regulatory framework governing mergers involving banks. For community banks, the proposed regulatory amendments from the OCC would apply to all national banks, federal savings associations, and federal branches and agencies of foreign banks. The proposed policy statement would apply to insured national banks, federal savings associations, and federal branches of foreign banks.
The OCC’s proposal would amend their procedures and add a policy statement summarizing the principles that the OCC utilizes when reviewing bank merger transactions. The OCC initially requested comments by April 15, 2024. However, the OCC has extended that timeline to June 15th to provide stakeholders with additional time to comment.
The proposal includes regulatory changes, including:
- Removal of an expedited review – This removal will allow the OCC to be able to review a proposed merger without being “on the clock” or a merger to be approved just by the passage of time.
- Remove the streamlined business combination application – If approved, the Interagency Bank Merger Act application will be the overall basis for the OCC to consider.
Pertaining to policy matters, the OCC is proposing to add general principles to be considered as part of the review of applications, such as financial stability, financial/managerial resources and convenience and needs considerations. The specific proposal includes additional analysis over these factors, including what the OCC would generally consider acceptable and what factors would indicate some sort of remediation required before a proposed bank merger would be approved.
Financial service organizations that are considering a merger should consult with the proposed rules as part of the due diligence process. This will ensure that potential matters are identified early in the merger process, as well as potentially addressed prior to the OCC application.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to myself at akofira@bonadio.com, or any member of our Financial Services Team to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
