credit needs to (title and address of institution official) and to (title of officer), Federal Home Loan Bank of (address). Your letter, together with any response by us, may be made public.

You may look at a file of all signed, written comments received by us within the past 2 years, any responses we have made to the comments, and all CRA statements in effect during the past 2 years at our office located at (address). [You also may look at the file about this community at (name and address of designated office).]

You may ask to look at any comments received by the Federal Home Loan Bank of

In connection with its examination of an institution, the Board shall assess the record of performance of the institution in helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. The Board will review the institution's CRA statement(s) and any signed, written comments retained by the institution or the agency. In addition, the Board will consider the following factors in assessing an institution's record of performance:

(a) Activities conducted by the institution to ascertain the credit needs of its community, including the extent of the institution's efforts to communicate with members of its community regarding the credit services being provided by the institution;

(b) The extent of the institution's marketing and special credit-related programs to make members of the community aware of the credit services offered by the institution;

(c) The extent of participation by the institution's board of directors in formulating the institution's policies and reviewing its performance with respect to the purposes of the Community Reinvestment Act;

(d) Any practices intended to discourage applications for types of credit set forth in the institution's CRA statement(s);

(e) The geographic distribution of the institution's credit extensions, credit applications and credit denials; (f) Evidence of prohibited discrimi natory or other illegal credit practices;

(g) The institution's record of opening and closing offices and providing services at offices;

(h) The institution's participation, including investments, in local community development and redevelopment projects or programs;

(i) The institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans, and small business or small farm loans within its community, or the purchase of such loans originated in its community;

(j) The institution's participation in governmentally insured, guaranteed, or subsidized loan programs for housing, small businesses or small farms;

(k) The institution's ability to meet various community credit needs based on its financial condition and size, and legal impediments, local economic con ditions and other factors; and

(1) Other factors that, in the Board's judgment, reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire community.

§ 563e.8 Effect on applications.

(a) Assessments under this part shall be taken into account in determining whether to grant charters, deposit insurance, branches and other deposit facilities, relocations, mergers, consoli dations, acquisitions of assets or as sumptions of liabilities, and savings and loan holding company acquisi tions. Assessment of an institution's record of performance may be the basis for denying an application.

(b) The Board will take into account any views expressed by State-char tered applicants' State supervisory authorities with regard to whether appli cants are helping to meet the credit needs of their communities.

(c) The Board may consider the credit-granting record of any financial subsidiaries of savings and loan holding companies when such holding companies submit to the Board applica

5631.6 Changes in circumstances. 563f.7 Delegation of authority to grant exemptions and extensions of time. 5631.8 Enforcement.

AUTHORITY: Depository Institution Management Interlocks Act "Interlocks Act" (12 U.S.C. 3201 et seq.).

§ 563f.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.)

(b) Purpose and scope. The general purpose of the Interlocks Act and this part is to foster competition by generally prohibiting a management official of a depository institution or depository holding company from also serving as a management official of another depository institution or depository holding company if the two organizations (1) are not affiliated and (2) are very large or are located in the same local area. This part applies to management officials of insured institutions, savings and loan holding companies, and their affiliates.

[45 FR 24397, Apr. 9, 1980]

8563f.2 Definitions.

For the purpose of this part, the following definitions apply:

(a) "Affiliate" has the meaning given in section 202 of the Interlocks Act. For purposes of section 202, an individual's shares include shares of members of his or her immediate family. For the purpose of section 202(3)(B) of the Interlocks Act, an affiliate relationship based on common ownership does not exist if the appropriate Federal supervisory agency or agencies determine, after giving the

affected persons the opportunity to respond, that the asserted affiliation appears to have been 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 agencies will consider, 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 with that person's ownership of shares in the other organization. "Immediate family" includes spouse, mother, father, child, grandchild, sister, brother, or any of their spouses, whether or not any of their shares are held in trust.

(b) "Community" means city, town, or village, or contiguous or adjacent cities, towns, or villages. “Contiguous or adjacent cities, towns, or villages" means cities, towns, or villages whose borders actually touch each other or are within ten road miles of each other at their closest points. The property line of an office located in an unincorporated city, town, or village is regarded as the boundary line of that city, town, or village for the purpose of this definition.

(c) "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) having its principal office located in the United States.

(d) "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 in 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."

(e) “Depository organization” means a depository institution or a depository holding company.

(f)(1) “Management official” means (i) an employee or officer with man

agement functions (including a branch manager); (ii) a director (including an advisory director or honorary director); (iii) a trustee of a business organization under the control of trustees (e.g., a mutual savings bank); or (iv) any person who has a representative or nominee serving in any such capacity.

(2) "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) persons described in the provisos of section 202(4) of the Interlocks Act (12 U.S.C. 3201(4)).

(g) "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, or any office of a depository holding company.

(h) "Person" means a natural person, corporation, or other business. (i) "Representative or nominee" means a person who serves as a management official and has an express or implied obligation to act on behalf of another person with respect to management responsibilities. Whether a person is a "representative or nominee" depends upon the facts in individual cases, and the appropriate Federal supervisory agency or agencies will determine, after giving the affected persons an opportunity to respond, whether a person is a "representative or nominee." Certain relationships, including family, employment, or agency relationships, or the ability and exercise of ability by a shareholder of a depository organization to elect a director may be evidence of such an express or implied obligation by the management official to another person. For the purposes of this definition, "person" shall include only natural persons.

(j) "Total assets" means assets measured on a consolidated basis as of the close of the organization's last fiscal year. The total assets of a depository holding company include the total

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assets of all its subsidiary affiliates, except that "total assets" of a diversified savings and loan holding company as defined in section 408(a)(1)(F) of the National Housing Act (12 U.S.C.d 1730a(a)(1)(F)), or of a bank holding company that is exempt from the prohibitions of section 4 of the Bank Holding Company Act of 1956 pursu ant to an order issued under section 4(d) of that Act (12 U.S.C. 1843(d)), means only the total assets of its de pository institution affiliate. "Total assets" of a United States branch or agency of a foreign commercial bank means total assets of such branch or agency itself exclusive of the assets of the other offices of the foreign commercial bank.

(k) "United States" means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands.

(1) Relevant metropolitan statistical area: means a Primary Metropolitan Statistical Area, a Metropolitan Statis tical Area, or a Consolidated Metropolitan Statistical Area that is not comprised of designated Primary Metropolitan Areas as defined by the Office of Management and Budget.

(Secs. 206, 207, 209, 92 Stat. 3674, 3675 (12 U.S.C. 3205, 3206, 3207, as amended by International Banking Facility Deposit Insurance Act, Pub. L. 97-110, 302 (Dec. 26, 1981)); Reorg. Plan No. 3 of 1947, 3 CFR, 1943-48 Comp., p. 1071)

[45 FR 24397, Apr. 9, 1980, as amended at 48 FR 50300, Nov. 1, 1983; 49 FR 28044, July 10, 1984]

§ 563f.3 General prohibitions.

(a) Community. A management official of a depository organization may not serve at the same time as a managment official of another depository or ganization not affiliated with it if:

(1) Both are depository institutions and each has an office in the same community;

(2) Offices of depository institution affiliates of both are located in the same community; or

(3) One is a depository institution that has an office in the same community as a depository institution affiliate of the other.

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(b) Relevant Metropolitan Statistical Area. A management official of a depository organization may not serve at the same time as a management official of another depository organization ofnot affiliated with it if:

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exempt (1) Both are depository institutions, tion deach has an office in the same reley Act vant metropolitan statistical area, and Issued either institution has total assets of (12 USC $20 million or more;

total a (2) Offices of depository institution on affi affiliates of both are located in the ed Statesame relevant metropolitan statistical gn come area and either of the depository instis of such tution affiliates has total assets of $20 sive of the million or more; or

of the fe (3) One is a depository institution that has an office in the same relevant S" means metropolitan statistical area as a dees, the pository institution affiliate of the tory of th other and either the depository instiGuam tution or the depository institution afIslands filiate has total assets of $20 million or

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18.

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(Secs. 206, 207, 209, 92 Stat. 3674, 3675 (12 U.S.C. 3205, 3206, 3207, as amended by International Banking Facility Deposit Insurance Act, Pub. L. 97-110, 302 (Dec. 26, 1981)); Reorg. Plan No. 3 of 1947, 3 CFR, 1943-48 Comp., p. 1071)

agement [45 FR 24397, Apr. 9, 1980, as amended at 48 nization FR 50300, Nov. 1, 1983; 49 FR 28044, July as & 10, 1984]

(2) A corporation operating under section 25 or 25(a) of the Federal Reserve Act ("Edge Corporations" and "Agreement Corporations");

(3) A depository organization that has been placed formally in liquidation, or that is in the hands of a receiver, conservator, or other official exercising a similar function;

(4) A credit union being served by a management official of another credit union;

(5) A State-chartered savings and loan guaranty corporation; or

(6) A Federal Home Loan Bank or any other bank organized solely for the purpose of serving depository institutions (commonly referred to as "bankers' banks") or solely for the purpose of providing securities clearing services and services related thereto for depository institutions, securities companies, or both.

(b) Interlocking relationships permitted by agency order. A management official or a prospective management official of an insured institution, a savings and loan holding company, or an affiliate of either may enter into an otherwise prohibited interlocking relationship with a depository organization that falls within one of the classifications enumerated in this paragraph (b) if the Federal supervisory agency (as specified in section 207 of the Interlocks Act) of the organization that falls within one of the classifications determines that the relationship meets the requirements set forth in this paragraph. If the depository organization that falls within one of the classifications is not subject to the interlocks regulations of any of the Federal supervisory agencies, then the Board shall determine whether the relationship meets the requirements of this paragraph.

tions: (A) The relationship is necessary to provide management or operating expertise to the organization specified in paragraph (b)(1) (i) or (ii) of this section; (B) no interlocking relationship permitted by this paragraph shall continue for more than five years; and (C) other conditions in addition to or in lieu of the foregoing may be imposed by the appropriate Federal supervisory agency in any specific case.

(2) Newly chartered organization. A person may serve at the same time as a management official of two or more depository organizations if one of the depository organizations (or an affiliate thereof) is a newly chartered organization, subject to the following conditions: (i) The relationship is necessary to provide management or operating expertise to the newly created organization; (ii) no interlocking relationship permitted by this subparagraph shall continue for more than two years after the newly chartered organization commences business; and (iii) other conditions in addition to or in lieu of the foregoing may be imposed by the appropriate Federal supervisory agency in any specific case.

(3) Conditions endangering safety or soundness. A person may serve at the same time as a management official of two or more depository organizations (or affiliates thereof) if one of the depository organizations faces conditions endangering the organization's safety or soundness, Provided: (i) The relationship is necessary to provide management or operating expertise to the organization facing conditions endangering safety or soundness; and (ii) other conditions in addition to or in lieu of the foregoing may be imposed by the appropriate Federal supervisory agency in any specific case.

(4) Organization sponsoring credit union. A management official of a depository organization or its affiliate may serve at the same time as a management official of a federally-insured credit union that is sponsored by the depository organization or its affiliate primarily to serve employees of the depository organization.

(5) Loss of management officials due to changes in circumstances. If a depository organization is likely to lose

200

30 percent or more of its directors or of its total management officials due to a change in circumstances described in § 563f.6 of this part, the affected management officials may continue to serve in excess of the time periods specified in § 563f.6, Provided That: (i) The depository organization's prospec tive loss of management officials or directors will be disruptive to the internal management of the depository or ganization; (ii) the depository organi zation demonstrates that, absent a grant of relief in accordance with this paragraph, 30 percent or more of either its directors or management of ficials are likely to sever their interlocking relationships with the deposi tory organization; (iii) if the prospec tive losses of management officials resulted from more than one change in circumstances, such changes in cir cumstances must have occurred within a 15-month period; and (iv) the depository organization develops a plan for the orderly termination of service by each such management official over a period not longer than 30 months after the change in circumstances which caused the person's service to become prohibited (but if the loss of management officials is the result of more than one change in circumstances, the 30-month period is measured from the first change in circum stances). Other conditions in addition to or in lieu of the foregoing may be imposed by the Federal supervisory agency. In evaluating requests made pursuant to this subparagraph, thes Federal supervisory agency will pre sume that a director who also is a paid, full-time employee of the deposi tory organization, absent unusual circumstances, will not resign from the position of director with that depository organization. This presumption may, however, be rebutted by a showing that such unusual circumstances exist.

(c) Diversified savings and loan holding company. Notwithstanding § 563f.3, a person who serves as a management official of a depository orga nization and of a nondepository orga nization (or any subsidiary thereof) is not prohibited from continuing the interlocking service when the nondepository organization becomes a diver

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