al property to consumers that may be considered the functional equivalent of loans on personal security: Provided, the association relies substantially upon other factors, such as the general credit standing of the borrower, guaranties, or security other than the real estate or mobile home, as the primary security for the loan. Appropriate evidence to demonstrate justification for such reliance should be retained in an association's files. Among the types of credit included within this term are consumer loans; educational loans; unsecured loans for real property alteration, repair or improvement, or for the equipping of real property; loans in the nature of overdraft protection; and credit extended in connection with credit cards.

[45 FR 76110, Nov. 18, 1980, as amended at 47 FR 3543 Jan. 26, 1982]

§ 561.39 Open-end consumer credit. "Open-end credit" as defined in Regulation Z (12 CFR 226.2(x)).

[45 FR 76110, Nov. 18, 1980]

8 561.40 Closed-end consumer credit. Consumer credit other than openend consumer credit.

[45 FR 76110, Nov. 18, 1980]

8561.41 Security.

A "security" is any non-withdrawable account, note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, or, in general, any interest or instrument commonly known as a “security," or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing, except that a "security" shall not include an insured account.

[47 FR 13782, Apr. 1, 1982]

§ 561.42 Nonwithdrawable account.

An account which by the terms of the contract of the holder with the in

of th

562.9 Effective date of insurance; initial premium payment, issuance of certifi to cate of insurance.

562.10 Prohibition against advertising pro-appli spective insurance. be da y no

AUTHORITY: Secs. 2, 5, 48 Stat. 128, 132, as amended (12 U.S.C. 1462, 1464); secs. 401-d 403, 405-407, 48 Stat. 1255-1257, 1259–1260, the as amended (12 U.S.C. 1724-1726, 17281730); sec. 408, 82 Stat. 5, as amended (12 U.S.C. 1730a); sec. 801, 91 Stat. 1147, as amended (12 U.S.C. 2901 et seq.); Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 19431948 Comp., p. 1071.

SOURCE: 32 FR 8125, June 7, 1967, unless otherwise noted.

§ 562.1 General provisions.

Proc

All requests by interested persons for advice or instructions with respect to any matter arising under this part or shall be addressed to the Corporation's Supervisory Agent. As used in this part, the term "Supervisory Agent" means the President of the Federal home loan bank of the district in which the insured institution is to be located or any other officer or employee of such bank designated by the Board as agent of the Corporation as provided by § 501.10 of the general regulations of the Federal Home Loan Bank Board (§ 501.10 of this chapter).

300

562.2 Application form.

An application for insurance of acpunts shall be submitted in form precribed by the Corporation and shall e supported in accordance with the rescribed "Outline of Information to e Submitted in Support of an Appliation for Insurance of Accounts or a equest for a Commitment to Insure Accounts" (hereinafter in this part reerred to as "Outline of Information”).

562.3 Filing and amendment of application.

An application for insurance of acounts shall be filed with the Corporaion by delivering three copies thereof, ogether with three copies of all supporting information, to the Supervisoy Agent. After an application for insurance of accounts has been filed with the Corporation, and prior to the date of advice by the Supervisory Agent to the applicant to publish notice of the filing of the application pursuant to § 562.4, the applicant may file additional information in support of the application and may amend it; after the date of such advice the applicant may not amend the application or file any additional supporting information unless requested to do so by the Supervisory Agent or otherwise by or on behalf of the Corporation.

[36 FR 13682, July 23, 1971, as amended at 49 FR 41243, Oct. 22, 1984]

§ 562.4 Processing of application.

I Processing of an application under this part shall follow the procedures set forth in § 543.2(d), (e), and (f) of this chapter, except that an interim I state institution need not follow such procedures except as required by Part 546, 563, or 584 of this chapter.

[48 FR 178, Jan. 3, 1983]

=8562.5 [Reserved]

§ 562.6 Exceptions to the foregoing procedure.

(a) Procedure prior to receipt of State charter. The foregoing sections of this part shall be applicable to an application submitted to obtain insurance of accounts by persons in process of organizing a new institution and who have received a conditional ap

proval of organization from the State, but have not yet received a charter, except that said organizers shall initially submit, in lieu of an application for insurance of accounts, a request for a commitment to insure accounts in form prescribed by the Corporation and supported in accordance with the prescribed Outline of Information. Immediately following the valid incorporation of the institution under State law, the applicant institution shall file an application for insurance of accounts in form prescribed by the Corporation by delivering two copies thereof to the Supervisory Agent.

(b) Procedure not applicable to Federal savings and loan associations or interim Federal associations. The procedure prescribed by the foregoing sections of this Part 562 shall not be applicable to an application for insurance of accounts by a Federal savings and loan association or an interim Federal association.

(Sec. 801, 91 Stat. 1147, (12 U.S.C. 2901 et seq.), Pub. L. 95-128 (the Community Reinvestment Act of 1977); sec. 5, 48 Stat. 132, as amended; (12 U.S.C. 1464); secs. 402, 403, 407, 408, 48 Stat. 1256, 1257, 1260, as amended, (12 U.S.C. 1725, 1726, 1730), 82 Stat. 5, Pub. L. 90-255, (12 U.S.C. 1730a); Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 194348 Comp., p. 1071; secs. 2, 5, 48 Stat. 128, 132, as amended (12 U.S.C. 1462, 1464); secs. 401, 402, 403, 405, 406, 407, 48 Stat. 1255, 1256, 1257, 1259, 1260, as amended (12 U.S.C. 1724, 1725, 1726, 1728, 1729, 1730); sec. 408, 82 Stat. 5, as amended (12 U.S.C. 1730a); Reorg. Plan No. 3 of 1947, 3 CFR, 1943-1948 Comp., p. 1071)

[32 FR 8125, June 7, 1967, as amended at 43 FR 47162, Oct. 12, 1978; 48 FR 178, Jan. 3, 1983]

§ 562.7 Action by Corporation.

(a) Decisions of the Corporation on all applications for insurance of accounts will be made by action of the Board. The Corporation's approval of an application for insurance of accounts or of a request for a commitment to insure accounts may be conditioned by the Corporation upon submission of evidence satisfactory to the Corporation that the applicant has complied in a manner satisfactory to the Corporation with such conditions as are deemed necessary to enable the applicant to qualify for insurance.

30-039 0-89--10

Failure by an applicant to comply with conditions imposed by the Corporation within the time fixed for such compliance, or within any extended time as the Corporation may fix, will result in the withdrawal of the conditional approval. Any subsequent application from such applicant shall be treated in the same manner as a new application.

(b) The Board delegates to the Principal Supervisory Agent or to the Director of the Office of District Banks or his designee, with the concurrence of the General Counsel or his designee, the authority to approve the application for insurance of accounts of an interim Federal association (i) accompanying an application for permission to organize an interim federal association which may be approved under delegated authority pursuant to § 543.2(h)(3) (i) and (ii) respectively, or (ii) for an interim state-chartered institution chartered to facilitate transaction which otherwise may be approved under delegated authority by the Principal Supervisory Agent or by the Director of the Office of District Banks, the General Counsel or the Director of ORPOS, or their respective designees, jointly or individually.

a

[35 FR 2515, Feb. 4, 1970, as amended at 51 FR 40147, Nov. 5, 1986]

§ 562.8 Costs of examination, audit, and appraisal.

The cost, as computed by the Corporation, of all examinations, including any required eligibility examination, audits, appraisals, and charactercredit-financial reports, whether or not the application for insurance of accounts or a request for a commitment to insure accounts is withdrawn or whether or not insurance of accounts is approved, shall be paid by the applicant.

§ 562.9 Effective date of insurance; initial premium payment, issuance of certificate of insurance.

Upon the approval of any application for insurance of accounts, the Corporation will notify the applicant, and upon receipt of the initial premium payment for such insurance, and an admission fee in such amount as

563.18-3 Reports of change in chief executive officer or director; other reports; form and filing of such reports.

563.19 Bonds for directors, officers, employees, and agents; form of and amount of bonds.

563.20 Bonds for agents.

563.21 Safe deposit business. 563.22 Merger, consolidation, purchase or sale of assets, or assumption of liabilities.

563.23-1 Premiums and discounts with respect to loans.

563.23-2 Accounting for gains and losses with respect to transactions in securities.

563.23-3 Accounting principles and procedures.

563.23-4 Accounting for troubled debt re

structuring.

563.24 Sales plans; give-aways. 563.25-563.26 [Reserved]

563.27 Advertising.

Sec.

563.28 Advertising of insurance of ac

counts.

563.29 Name of association.

563.29-1 Continuation of insurance.

563.30 Reservation of right concerning ad

vertising.

563.31

Other insurance or guaranty. 563.32 Payment of trustee fees on pension trust accounts.

563.33 Directors, officers, and employees. 563.34 Deposit relationships involving affiliated persons.

563.35 Restrictions involving loan services. 563.36 Equal Opportunity in Employment. 563.37 Operation of service corporations;

limited liability of insured institution for debt of service corporation. 563.38 Salvage power of insured institution to assist service corporation. 563.39 Employment contracts. 563.39-1 Pension plans.

563.40 Restrictions on loan procurement fees, kickbacks and unearned fees. 563.41 Restrictions on real and personal property transactions with affiliated persons.

563.43 Restrictions on loans and other investments involving affiliated persons. 563.44 Loans involving mortgage insurance. 563.45 Disclosure.

563.46 Charge-off of consumer credit classified as a loss.

563.47 Capital forbearance.

AUTHORITY: Sec. 1, 47 Stat. 725, as amended (12 U.S.C. 1421 et seq.); sec. 5A, 47 Stat. 727, as added by sec. 1, 64 Stat. 256, as amended (12 U.S.C. 1425a); sec. 5B, 47 Stat. 727, as added by sec. 4, 80 Stat. 824, as amended (12 U.S.C. 1425b); sec. 17, 47 Stat. 736, as amended (12 U.S.C. 1437); sec. 2, 48 Stat. 128, as amended (12 U.S.C. 1462); sec. 5, 48 Stat. 132, as amended (12 U.S.C. 1464); secs. 401-407, 48 Stat. 1255-1260, as amended (12 U.S.C. 1724-1730); sec. 408, 82 Stat. 5. as amended (12 U.S.C. 1730a); sec. 1204, 101 Stat. 662 (12 U.S.C. 3806); Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 1943-1948 Comp., p. 1071.

EDITORIAL NOTE: For nomenclature changes to this part, see 39 FR 31624, Aug. 30, 1974.

§ 563.1 Form of account.

(a) Submission for approval. At the time of application for insurance, every applicant shall submit to the Corporation for approval forms of all insured accounts and securities proposed to be issued by the applicant as an insured institution. An applicant also shall submit for approval its charter, constitution, and bylaws, and all

amendments thereto, affecting its insured accounts or securities. No insured institution shall issue: (1) Any form of insured account (except NOW accounts as defined in § 526.11g of this chapter) without complying with the requirements of paragraph (b) of this section; or (2) Any security that has not been approved in writing by the Corporation. Notwithstanding any other delegation of the authority granted under this paragraph, the General Counsel or his designee, are delegated exclusive authority to exercise the Corporation's approval authority under this paragraph with respect to preferred stock security forms and amendments thereto for mandatorily redeemable preferred stock and preferred stock redeemable at the option of the issuer. Any insured institution which amends its charter, constitution, or bylaws affecting its insured accounts or securities promptly shall transmit such amendments to the Corporation for approval. Except with the written approval of the Corporation, no insured institution may issue or have outstanding any class of insured account having preference, whether as to time or amount in the event of liquidation, over any other class of insured account: Provided, That where there may be a change from one type of insured account to another, a reasonable time, to be determined by the Corporation, may be allowed to effect such change. Each insured institution shall cause a true copy of its charter and bylaws and all amendments thereto to be available to members at all times in each office of the institution, and shall upon request deliver to any member a copy of such charter, constitution, bylaws, and amendments.

(b) Filing. Prior to issuing any form of insured account, an insured institution shall file with the Corporation (1) the form of account and (2) an opinion of its legal counsel that the form complies with the requirements of applicable law and regulations and the institution's charter and bylaws. If the account is issued in negotiable instrument form, the opinion must state expressly that the form so qualifies under applicable law. Filing shall be made by delivering a copy of the form

and legal opinion to the Corporation's Principal Supervisory Agent (as defined in § 561.35 of this chapter). The institution shall retain a copy of the opinion for as long as accounts in that form are outstanding. The requirements of this paragraph shall not apply if an institution issues a form of insured account that has been approved by the Corporation for use by insured institutions.

[47 FR 13782, Apr. 1, 1982, as amended at 50 FR 46742, Nov. 13, 1985; 51 FR 10819, Mar. 31, 1986]

§ 563.2 Simple form of certificate; passbooks.

An insured mutual institution which, in accordance with State law, includes in its charter, constitution, or bylaws a clear provision that all shareholders are members and shall share equally in earnings and in assets (except for bonus payments under a bonus plan) pro rata to paid-in value, plus credited dividends, and that the institution shall not directly or indirectly charge any membership, admission, repurchase, withdrawal, or any other fee or sum of money for the privilege of becoming, remaining, or ceasing to be a member of the institution, may issue a simple form of savings or investment certificate or a passbook, which need not contain any membership certificate or any statement of the dividend, withdrawal, or other rights of members.

[34 FR 8906, June 4, 1969]

§ 563.3 Long form of membership certificate.

Every share, membership, or deposit certificate, passbook or other instrument evidencing a withdrawable investment hereafter issued by an insured institution, which pays or proposes to pay a different rate of dividends or interest upon different classes of shares or securities, which prefers, or proposes to prefer, either as to time or amount of participation in earnings or assets (except by way of a bonus plan), any one or more classes of shares or securities, or which charges directly or indirectly any membership, admission, repurchase, withdrawal, or any other fee or sum of