State Member Bank - Investment in Premises

Section 208.21 of Regulation H

Who must file?

A state member bank must provide prior notice to the Federal Reserve under section 208.21 of Regulation H to increase its investment in bank premises if the aggregate of all such investments and loans, together with the amount of any indebtedness incurred by any corporation that is an affiliate of the bank, will be more than the bank's perpetual preferred stock and related surplus plus common stock and surplus.  The filing threshold is raised to more than 150 percent of the bank's perpetual preferred stock and related surplus plus common stock and surplus if the proposal meets the conditions in section 208.21(a)(3) of Regulation H.

Publication requirements--newspaper/Federal Register

No publication notice is required.

Required information

Applications should be submitted in the form of a letter that includes the applicant's current and pro forma financial statements, as well as the amount, general description, and purpose of the proposed investment in bank premises.  The letter should also identify the seller/lessor and whether such party is related to, or is an affiliate of, the applicant or any of its directors, senior executive officers, or shareholders. If the property is being purchased from an affiliate or related party, the filer should provide a copy of an appraisal of the property.  If the property is being leased from an affiliate or related party, the filer should provide a copy of the lease or identify the lease terms.

Processing time frames

The notice period would expire 15 days after the notice is received by the Federal Reserve unless the period is extended.

Factors reviewed

For premises proposals, the Federal Reserve considers the impact of the transaction on the applicant's financial condition and the overall financial and managerial condition of the applicant.

Consummation period

Premises proposals may be consummated immediately.