solidation of the oral argument on applications for permission to organize Federal associations or to establish branch office or mobile facilities, or for insurance of accounts of a new Statechartered association by the Federal Savings and Loan Insurance Corporation to be located in or to serve the same general area. In hearing oral argument, the person presiding may determine the order of presentation by various persons and whether to permit rebuttal, or he may permit the parties to agree on a division of time. In consolidated arguments, he may allow each applicant the full time which would be allowed if there were no consolidated argument. Ordinarily, the arguments should be based only on the facts and information already on file. Occasionally, a party may seek to introduce new matter. If it appears to the person presiding that there is in fact substantive new matter, he should permit the parties to argue on the basis of such new matter, and require the party introducing it to submit a memorandum of such new matter at the time of oral argument. If opposing parties wish to file a rebuttal, the person presiding may allow a reasonable time-10 days should suffice in most cases-for the submission of a rebuttal. The Supervisory Agent should include 3 copies of the transcript in the file which is transmitted to the Board.

(4) Recommendations to the Board. An application file forwarded by the Supervisory Agent to the Board in Washington, D.C., should be directed to the Office of Industry Development accompanied by a recommendation by the Supervisory Agent as to Board action thereon, and such recommendation should be supported by a summary and analysis of relevant information. The Office of Industry Development should submit the application to the Office of the Secretary accompanied by its recommendation as to Board action thereon, and supported by such additional summary and analysis of relevant information as it deems appropriate.

(5) Timetable for handling applications. The following timetable should be the objective in the handling of each application, but the Board recognizes that there may be instances in which circumstances will prevent adherence to the objective:

(i) The Supervisory Agent's report and recommendation should be transmitted to the Office of Industry Develop

ment within 60 days following the date of publication of notice by the applicant, if oral argument was not heard, and within 90 days from the date of such publication if oral argument was heard.

(il) The recommendation to the Board by the Office of Industry Development should be submitted to the Office of the Secretary within 25 days after receipt of the recommendation from the Supervisory Agent.

(iii) The Office of the Secretary should place an application on an agenda which is scheduled to be before the Board within 10 days after receipt of a recommendation from the Office of Industry Development.

(6) Public inspection. In making application files available for public inspection at the offices of Supervisory Agents and at the Board offices in Washington, D.C., only the following material should be made available, unless in a particular case there is a determination that additional material is required by law to be made available for inspection:

(i) All information submitted by an applicant except, in the case of an application for a branch office or mobile facility, information requested by or on behalf of the Board which relates to supervisory matters and except, in the case of an application for permission to organize, the biographical and financial information furnished by applicants on FHLBB Form 139.

(ii) All information submitted by persons who have filed communications in favor or in protest of an application pursuant to the published notice of the application.

(iii) The transcript of oral argument. (iv) Communications placed in the public record pursuant to § 510.1 of this chapter.

Prior to transmittal of an application file to the Board, the Supervisory Agent should divide the file to separate all material in such file which is not a part of the public record.

(7) Branch and mobile facility applications—supervisory considerations—

(1) Regulatory provisions. The regulations governing branch and mobile facility applications provide that no such application shall be approved if “in the opinion of the Board, the policies, condition, or operation of the applicant association afford a basis for supervisory objection to the application.” Such regulations also provide that the Supervisory

Agent shall not advise an applicant to publish notice of such an application unless "it has been preliminarily determined that there is no basis for supervisory objection to approval of the application."

(ii) Preliminary determination of supervisory objection (a) Procedure. (1) The Director of the Office of Examinations and Supervision is authorized, with respect to any application for a branch office or mobile facility, to make a preliminary determination that there is no basis for supervisory objection, and the Supervisory Agent is authorized, within limits fixed by such Director, to make such determination. If the Director of the Office of Examinations and Supervision is of the opinion that there is any supervisory matter which might afford a basis for preliminary supervisory objection, he should submit the matter to the Board for its decision, together with a report and recommendation. The Director of the Office of Examinations and Supervision shall issue instructions to assure that there is no delay for supervisory reasons in the processing of an application of an association whose policies, condition, or operation, as determined by the Supervisory Agent within limits fixed by the Director, do not afford a basis for preliminary supervisory objection, and, in other cases, to assure that the preliminary determination, or submission to the Board for decision, is made within 30 days from the date of filing of the application.

(2) An association which intends to file an application for a branch office or mobile facility may, prior to the filing of such application, submit to the Supervisory Agent a written advice of intent to file such an application with a request for a preliminary determination that there will be no basis for supervisory objection with respect to such application. Any such request shall be processed as provided in subdivision (1) of this subdivision, except that the 30-day period referred to therein shall run from the date of receipt of the advice of intent by the Supervisory Agent. In the event that the association is given preliminary supervisory clearance and files the intended application within 90 days from the date of such clearance, no further preliminary supervisory clearance will be required with respect to such application.

(b) Adequacy of net worth. If the net worth of an applicant association is in an amount less than 3 percent of its

savings accounts, this factor shall afford a basis for preliminary supervisory objection unless the Supervisory Agent finds in writing that the applicant association meets all of the following criteria:

(1) Adequacy of net worth to support the particular branch office or mobile facility applied for;

(2) Sound management;

(3) Sound lending practices;

(4) Assets of above-average quality; and

(5) Satisfactory operating results. (iii) Subsequent determination of supervisory objection. If at any time subsequent to preliminary supervisory clearance and prior to final Board action on an application for a branch office or mobile facility the Director of the Office of Examinations and Supervision is of the opinion that there is any substantial question that the policies, condition, or operation of the applicant association might afford a basis for supervisory objection to approval of the application, he shall submit to the Board a report and recommendation thereon.

(b) Policy on approval of branch office and mobile facilities. (1) As a general policy, the Board permits branches and mobile facilities by Federal savings and loan associations in a particular State if the State law, or State practice in absence of statutory prohibition, permits savings and loan associations, savings banks or similar institutions or commercial banks of the State to establish branches in such State or to conduct chain, group, or affiliate operations. However, the Board will make exceptions to this policy in cases where (i) an office acquired as a result of a merger instituted for supervisory reasons would be maintained as a branch office or (ii) a proposed branch office would be located in and serve, based on the criteria set forth in paragraph (b) (4) of this section, a low-income, inner-city area which is inadequately served by existing savings and loan facilities.

(2) It is the Board's general policy not to approve the establishment of a branch office or a mobile facility by such an association in a State other than that in which the home office of the association is located. However, as to a Federal association which has converted (or is in the process of converting) from a State-chartered association, this policy does not apply to the upgrading, with the prior approval of the Board, of an

office facility, which such association (1) operated while under State charter and (ii) has operated continuously since becoming a Federal association (if conversion has been completed), to the status of a branch office to be located at or in the same vicinity as such existing office facility is located.

(3) It is the Board's general policy to consider an application by such an association for permission to establish or maintain a branch office or mobile facility only when the proposed branch office or mobile facility is to be located within 100 miles of the association's home office unless (i) the association's home office is located in Alaska, Hawaii, Puerto Rico, or the Virgin Islands, (ii) such application is for permission to maintain, as a branch office, an existing home or branch office of an institution which is to be absorbed by merger or other approved acquisition, or (iii) such application is by a Federal association which has converted (or is in the process of converting) from a State-chartered association for permission to upgrade an office facility, which is located outside the State in which the applicant's home office is located but inside the applicant's regular lending area as prescribed in § 545.6-6 of this subchapter, to the status of a branch office located at or in the same vicinity as such existing office facility is located. However, the Board may permit consideration of applications for permission to establish branch offices or mobile facilities in a State without regard to the 100-mile geographical limitation contained in the preceding sentence if the Board determines that:

(a) Such State permits State-chartered savings and loan associations, saving banks, or similar institutions or commercial banks to establish branch offices or mobile facilities beyond 100 miles from their home offices;

(b) The total assets of Federal associations with home offices located in such State are 90 percent or more of the combined assets of all offices in such State of institutions insured by the Federal Savings and Loan Insurance Corporation and mutual savings banks insured by the Federal Deposit Insurance Corporation; or

(c) Such State as a general policy permits (1) a bank holding company or a savings and loan holding company, respectively, through acquisition of a de novo charter to have an office of a subsidiary bank or savings and loan asso

ciation located more than 100 miles from the corporate headquarters of the holding company located in such State or (2) a subsidiary bank or savings and loan association of a bank holding company or a savings and loan holding company, respectively, to establish de novo branch offices or mobile facilities more than 100 miles from the corporate headquarters of such holding company located in such State.

(4) (i) As a general policy under 545.14(b) of this chapter, the Board will not consider or process any application by a Federal association for permission to establish a branch office unless the applicant association meets all of the eligibility requirements contained in subparagraph (1) of § 545.14(b) of this chapter. However, under subparagraph (2) of paragraph (b) of § 545.14 of this chapter, the Board may, in its discretion, permit the consideration and processing of particular branch applications even if the applicant association fails to meet the eligibility requirement contained in subdivision (1) of subparagraph (1) of § 545.14(b) of this chapter.

(ii) It is the intention of the Board to permit this special treatment in connection with applications for branches to serve low-income, innercity areas which are inadequately served by existing savings and loan facilities. Applicant associations wishing such special treatment with respect to a particular application must furnish the Supervisory Agent with detailed information demonstrating that the application (or a prior branch application, if less than 4 months have expired from the date of publication of notice thereof) is for a branch office (a) to be located within an area characterized by substandard family incomes, chronically high unemployment, a high percentage of welfare recipients, and substandard housing, and (b) to fulfill the objectives of facilitating the granting of loans in such area, particularly for construction or rehabilitation of housing, stimulating thrift and providing financial guidance among low-income residents of such area, and providing opportunities for employment or job training for residents of such area. If the Supervisory Agent is satisfied that the above criteria for special treatment of the application have been met, he may determine that the association is eligible under § 545.14(g) of this chapter, and the application may be processed as provided therein.

(iii) In addition to permitting special treatment under subparagraph (2) of paragraph (b) of § 545.14 of this chapter for applications for branches to serve certain low-income, inner-city areas, the Board may permit the consideration and processing of branch office applications for all Federal associations servicing particular geographical areas, e.g., State, county, or city, upon recommendation by the Supervisory Agent that the eligibility requirement of subdivision (1) of subparagraph (1) of § 545.14(b) of this chapter could cause a competitive hardship to such associations. Following approval by the Board of such a recommendation by a Supervisory Agent, branch office applications from such Federal associations may be considered and processed with such frequency as the Board may determine to be appropriate for the particular geographical area.

(5) As a general policy, the Board encourages the establishment of branch offices and other office facilities by Federal associations in communities and market areas which either are not serviced or are underserviced by existing savings and loan facilities. In addition, the Board favors increasing the level of competition, by permitting more than one savings and loan facility in a market area, to provide convenient, alternative choices resulting in better service to the public. Since the Board's general policy is to encourage expansion through branching, protests to applications for office facilities will have to be increasingly persuasive and factually documented to adversely affect the Board's decisions on such applications.

Applicant associations wishing such special treatment with respect to a particular application must furnish the Supervisory Agent with detailed information demonstrating that the application (or a prior branch application, if it is still pending or if less than 12 months have expired from the date of publication of notice thereof and the branch is not yet opened) is for a branch office (1) to be located within an area characterized by substandard family incomes, chronically high unemployment, a high percentage of welfare recipients, and substandard housing, and (ii) to fulfill the objectives of facilitating the granting of loans in such area, particularly for construction or rehabilitation of housing, stimulating thrift and providing financial guidance among low-income residents of such area

and providing opportunities for employment or job training for residents of such area. If the Supervisory Agent is satisfied that the above criteria for special treatment of the application have been met, he may determine that the association is eligible under § 545.14(g), and the application may be processed as provided therein.

(c) Satellite offices. The provisions of paragraphs (a), (b)(1), and (d) of this section relating to branch offices and to applications for permission to establish branch offices shall be applicable also to satellite offices and to applications for permission to establish satellite offices.

(d) Name of branch office or mobile facility. In order to minimize public confusion and prevent unfair competition, the Board may condition its approval of an application to establish or maintain a branch office or mobile facility, to be located within the market area of another Federal association having a name similar to the name of the parent association of such branch office or mobile facility, by prescribing the name to be used for such branch office or mobile facility and the manner in which the presence of such branch office or mobile facility in such area may be advertised or made known to the public. In the case of a merger or other acquisition, the Board will generally permit the resulting association to use as a name for any branch office or mobile facility a name (without the word "Association") that will preserve the identity of the merging association, such name to be followed by the words "a Division of (the name of the resulting association)".

[35 F.R. 4287, Mar. 10, 1970, as amended at 36 FR 10724, June 2, 1971; 36 FR 13681, July 23, 1971; 37 FR 3987, Feb. 25, 1972; 37 FR 12932, June 30, 1972; 37 FR 19607, Sept. 21, 1972; 38 FR 16030, June 20, 1973; 38 FR 28816, Oct. 17, 1973; 39 FR 34648, Sept. 27, 1974] § 556.6 Establishment of agencies

(a) As a general policy, the Board will not approve the establishment of agencies by Federal associations under Federal Regulation 545.15 unless the business to be transacted at the agency will be limited to the origination of mortgage loans, in addition to the loan servicing functions which § 545.15 expressly authorizes, thereby precluding the transaction of any savings account business at the agency office.

(b) In extremely exceptional cases, however, where community need for such

service is established, the Board is willing to permit the additional agency function of receiving payments on existing savings accounts. The Board will consider approval of an agency which may receive such savings payments only in cases where the proposed agency is to be located in a small town situated in an area that is sparsely settled and considerably distant from existing associations. With rare exceptions, such an agency will not be approved if the community involved is of such size and nature that the establishment of a branch office or the organization of a local asso

ciation would seem economically feasible or if any savings and loan facilities insured by the Federal Savings and Loan Insurance Corporation are already located in such community.

(c) It is also the Board's policy not to approve the establishment of an agency in a state other than that in which the home office of the association is located.

(d) All agency approvals will be limited to a 5-year period in order to afford the Board an opportunity at the end of such period to reappraise the community situation in all pertinent aspects. [32 F.R. 20630, Dec. 21, 1967]

561.16 Slow loans.

561.17 Specified assets

561.20 Insured loan.

561.21 Guaranteed loan.

561.21a Guaranteed obligation.

561.22 Normal lending terrritory. 561.23 Low-rent housing.

561.24 Subordinated debt security. 561.25 Affiliate.

561.26 Service corporation.

561.27 Service corporation affiliate. 561.28 Controlling person.

AUTHORITY: The provisions of this Part 561 issued under secs. 401-403, 48 Stat. 12551257, as amended; 12 US.C. 1724-1726, Reorg. Plan No. 3 of 1947; 3 CFR, 1943-1949 Comp., unless otherwise noted.

SOURCE: The provisions of this Part 561 appear at 23 F.R. 9911, Dec. 23, 1958, unless otherwise noted.

association, or a cooperative bank, whose accounts are insured by the Federal Savings and Loan Insurance Corporation, referred to in this subchapter as the "Corporation". The Federal Home Loan Bank Board is referred to in this subchapter as the "Board".

§ 561.2

Insured member.

The term "insured member" means the holder of an account or accounts in an institution insured by the Corporation. Such holder is a separate insured member in each of the capacities and to the extent provided in Part 564 of this subchapter. The term does not include the holder of any subordinated debt security issued by an insured institution.

[37 F.R. 26316, Dec. 9, 1972]

An "insured account" is a withdrawable or repurchasable share, investment certificate, deposit, or savings account held by an insured member in an institution insured by the Corporation. Accounts which by the terms of the contract of the holder with the institution or by provisions of State law cannot be withdrawn or the value thereof paid to the holder until all of the liabilities, including other classes of share liabilities, of the institution have been fully liquidated and paid upon the winding up of the institution are not insurable, and are hereinafter referred to as "nonwithdrawable accounts." Subordinated debt securities issued by an insured institution are deemed not to be "accounts,” and such securities are not insurable. [37 F.R. 26316, Dec. 9, 1972]