ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release November 9, 2000 #00-127
E-mail: [email protected]

ACB SEEKS SIGNIFICANT CHANGES TO OTS’S MUTUAL THRIFT PROPOSAL

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WASHINGTON, D.C. — America’s Community Bankers is seeking significant changes to the Office of Thrift Supervision’s comprehensive proposal on mutual savings institutions, mutual holding company reorganizations and mutual-to-stock conversions. ACB represents a vast majority of the nation’s mutual savings institutions.

ACB said in its comment letter to OTS that it supports the agency’s efforts to improve the regulation of mutuals and mutual holding companies, and to enhance the viability of the mutual form of organization. “ACB strongly believes that all depository institutions should retain the freedom to choose the form of organization that best meets their strategic and market objectives,” ACB said.

ACB encouraged OTS to develop final regulations that will “improve the regulatory process while preserving an institution’s flexibility to choose the corporate form best suited to its business.”

ACB highlighted one “particularly troublesome” question posed by OTS, which asks whether regulations or guidance should be developed regarding special capital distributions by mutuals. “ACB is strongly opposed to the issuance of any regulation or guidance on this type of distribution,” ACB said, adding that many institutions already have the power to make special capital distributions and the agency has ample authority to review such distributions.

“Mutual institutions develop these types of plans based on their community and financial condition,” ACB said. But a regulation or guidance may give depositors, members of the community or others the belief that they have a right to such distributions, ACB noted.

While the voluntary nature of the distributions has been settled by the courts and OTS, “there continue to be the instances in which parties disrupt the operation of a mutual institution or second guess management decisions by demanding that distributions be made,” ACB said.

On another issue, ACB strongly urged OTS to substantially revise its proposed business plan requirements for mutuals converting to stock form. “ACB believes that the proposed pre-application process would unnecessarily lengthen a conversion timeline that already averages several months in duration,” ACB said.

While OTS should encourage applicants to engage in a pre-filing meeting with OTS regional staff, ACB said it opposes a separate business plan approval process during the pre-filing meeting stage. ACB suggested following the practice of the Office of the Comptroller of the Currency in making the business plan a part of the overall conversion application.

In response to OTS’s request for comment on how it can make it more attractive for mutual institutions to remain mutuals, ACB said it favored OTS allowing mutual institution affiliations, which would permit mutuals to enjoy certain economies of scale while preserving their independence and community focus.

ACB said mutuals should not be forced into becoming mutual holding companies by regulatory fiat. But for those institutions that choose the mutual holding company option, the application process “should be as streamlined as possible,” ACB said, adding that “the proposed business plan requirements may inhibit an institution from forming a mutual holding or may make a step conversion a less appealing option.”

America’s Community Bankers represents the nation’s community banks of all charter types and sizes. ACB members pursue progressive, entrepreneurial and service-oriented strategies in providing financial services to benefit their customers and communities.

ACB’s comment letters on the proposal and on OTS’s interim rule are attached.

Comment Letter 1 is HERE

Comment Letter 2 is HERE

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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