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Board of Governors of the Federal Reserve System
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Semiannual Report on Banking Applications Activity


The Federal Reserve revised this report on November 22, 2016, to reflect the following correction:

On p. 3, table 3 under "Proposals receiving adverse public comments, Approved" the number in the furthest right column under "2016:H1" has been revised from 4 to 5.

This report provides information regarding the applications filed by banking organizations and reviewed by the Federal Reserve as of the most recent reporting period ending on June 30 and December 31 of each calendar year.

The Federal Reserve, in its role as a primary federal regulator, reviews applications submitted by bank holding companies (BHCs), state member banks, savings and loan holding companies (SLHCs), foreign banking organizations, and other entities and individuals for approval to undertake various transactions, including mergers and acquisitions, and to engage in new activities.

The Federal Reserve reviews and acts on proposals filed under the Bank Holding Company Act; the Bank Merger Act; the Change in Bank Control Act (CIBCA); the Federal Reserve Act; section 914 of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA); section 10 of the Home Owners' Loan Act (HOLA); the International Banking Act; and other provisions of law.1

Overview of Activity

The Federal Reserve reviewed 635 proposals in the first half of 2016, of which 588 were approved, 42 were withdrawn, 3 were mooted, and 2 were returned (table 1). Total dispositions in the first half of 2016 declined from 654 in the first half of 2015. The composition of proposals was consistent with prior periods. The majority of proposals were merger and acquisition (M&A) proposals, FIRREA notices, branch applications, and CIBCA notices.

Table 1. Dispositions and processing times of approved proposals, 2012-15 and 2015:H1 and 2016:H1
All proposals 2012 2013 2014 2015 2015:H1 2016:H1
Approved 1,361 1,305 1,218 1,186 582 588
Withdrawn 157 124 101 100 60 42
Denied 0 1 1 0 0 0
Mooted 20 10 11 10 4 3
Returned 18 6 11 12 8 2
Total 1,556 1,446 1,342 1,308 654 635
Percent withdrawn of total 10% 9% 8% 8% 9% 7%
Processing time (days)
Average 49 37 44 47 43 49
Median 30 28 30 30 30 30

Table 1 illustrates that the average number of days to approve a proposal was 49 days in the first half of 2016, compared with 43 days in the first half of 2015. The median processing time was unchanged from the first half of 2015. The average number of days was slightly elevated in this period in part because of the approval of four unusually delayed transactions.2

Seven percent of total dispositions in the first half of 2016 were withdrawn. Proposals are withdrawn most often at the initiative of the applicant. However, proposals also may be withdrawn after the Federal Reserve informs the applicant that a significant issue exists that precludes an approval recommendation by staff based on staff's review of the statutory standards for approval.3 For example, the applicant or resulting banking organization's financial or managerial condition may be less than satisfactory; the Community Reinvestment Act (CRA) or consumer compliance record, including fair lending (see the section on Consumer Compliance and CRA), may be less than satisfactory or there may be other significant consumer compliance issues; or there may be significant competitive issues.4

Of the 42 proposals withdrawn in the first half of 2016, 20 proposals were withdrawn at the initiative of the applicant. The remainder were withdrawn after consultation with staff for technical or procedural reasons or because the proposals raised significant issues regarding the statutory factors that must be considered by the Federal Reserve. Specifically, 13 of these proposals raised financial and managerial issues as well as regulatory compliance and CRA and fair lending issues.


Mergers and Acquisitions

In the first half of 2016, 127 M&A proposals were approved, compared with 136 approved in the first half of 2015 (table 2).5 These types of proposals accounted for 22 percent of total approved proposals in the first half of 2016, generally in line with prior periods. In reviewing M&A proposals, the Federal Reserve considers the applicant's current and pro forma financial condition and future prospects, managerial resources, record of meeting the convenience and needs of the communities to be served (including consumer compliance record and performance under the CRA), record of compliance with the Bank Secrecy Act/anti-money-laundering requirements, public benefits, and the competitive and financial stability effects of the proposal. Other considerations may include a review of ownership changes of the resultant banking organization or policy questions.

Table 2. Merger and acquisition proposals, dispositions and processing times of approved proposals, 2012-15 and 2015:H1 and 2016:H1
Mergers and acquisitions 2012 2013 2014 2015 2015:H1 2016:H1
Approved 226 190 248 279 136 127
Withdrawn 43 40 25 21 16 17
Percent M&A of total
approved proposals
17% 15% 20% 23% 23% 22%
Processing time (days)
Average 67 56 60 71 63 59
Median 41 40 41 41 41 42

M&A proposals generally are more complex than other proposals because they typically require review of several organizations under multiple statutory factors. As table 2 illustrates, the average and median number of days to approve an M&A proposal in the first half of 2016 were 59 and 42 days, respectively. In comparison, for the same period, the average and median number of days to approve all proposals were 49 and 30 days, respectively (table 1).

The Federal Reserve may receive adverse comments on a proposal from the public.6 Such proposals typically require additional time to allow the applicant the opportunity to respond to the comments and for the Federal Reserve to evaluate the comments. The majority of public comments received by the Federal Reserve are based upon the CRA and fair lending records of the applicant. Comments also may be directed at other aspects of a proposal. Proposals that receive a substantive adverse public comment are required to be acted on by the Board as opposed to the Reserve Banks.7

Table 3 breaks down M&A processing times for proposals that did and did not receive adverse public comments. Although M&A proposals receiving adverse public comments represent a small proportion of total M&A proposals approved by the Federal Reserve, processing times for these proposals are considerably greater than those M&A proposals not receiving such comments. In the first half of 2016, the average number of days to approve M&A proposals that did not receive adverse public comments was 54, compared with an average of 213 days for the four M&A proposals that received adverse public comments.8

Table 3. Merger and acquisition approved proposals, volume and processing times by proposals that did not receive adverse public comments and those that received adverse public comments, 2012-15 and 2015:H1 and 2016:H1
Mergers and acquisitions 2012 2013 2014 2015 2015:H1 2016:H1
Proposals not receiving adverse public comments
Approved 219 184 237 262 128 122
Processing time (days)
Average 60 52 53 56 53 54
Median 41 39 40 41 41 41
Proposals receiving adverse public comments
Approved 7 6 11 17 8 5
Percent M&A receiving adverse public comments of total M&A proposals 3% 3% 4% 6% 6% 3%
Processing time (days)
Average 283 203 209 297 208 213
Median 219 191 188 211 211 210

Pre-filing Process

The Federal Reserve has established a pre-filing process to provide potential applicants with information about the procedural requirements, such as timing and the applicable forms associated with a proposal. This process also helps to identify information that may be needed in connection with issues that the Board typically considers in connection with a particular type of application or notice, such as competition or financial stability. The pre-filing process is not used to resolve or predetermine the outcome of any substantive issues. Processing delays can be avoided by using the pre-filing process. The pre-filing process is described in the Federal Reserve's Supervisory and Regulation Letter SR 12-12/CA 12-11 titled "Implementation of a New Process for Requesting Guidance from the Federal Reserve Regarding Bank and Nonbank Acquisitions and Other Proposals."

The Federal Reserve reviewed 72 pre-filings in 2014 and 69 in 2015. Fifteen pre-filings were reviewed in the first half of 2016, down significantly from 40 pre-filings reviewed in the first half of 2015 and 36 in the first half of 2014. The majority of pre-filings were related to potential M&A proposals and CIBCA notices. Pre-filings may or may not result in a formal filing.

Consumer Compliance and CRA

In evaluating M&A proposals, the Federal Reserve reviews the consumer compliance and CRA records of the acquiring and target organizations as part of its assessment of the managerial resources factor and the convenience and needs factor. An organization's strong consumer compliance and CRA records can facilitate the review process. Conversely, unaddressed consumer compliance and CRA weaknesses in an organization can cause significant delays in the review process and may pose barriers to approval. With respect to M&A proposals, an applicant should ensure that its consumer compliance program, policies, and procedures are adequate to ensure successful integration of the target and that the combined organization would maintain satisfactory consumer compliance and CRA programs following consummation.

Other Analysis

Community Banking Organizations

Table 4 provides the volume and processing times of proposals most commonly submitted by community banking organizations (CBOs) according to their asset size. Small CBOs are those under $1 billion in assets, and large CBOs are those with $1 billion to $10 billion in assets. Changes in average processing times from the prior year period were mixed for both small and large CBOs.9 However, the volume of filings by both small and large CBOs declined in most categories.

Table 4. Proposals from CBOs, volume and processing times (days) of approved proposals, for the full year 2015 as well as 2015:H1 and 2016:H1
Proposals by applicant
asset size
2015 2015:H1 2016:H1
Approved Average (days) Median (days) Approved Average (days) Median (days) Approved Average (days) Median (days)
Under $1 billion
Change in control 136 58 57 63 63 56 84 75 59
Federal Reserve membership 20 17 14 10 14 14 7 29 29
FIRREA 127 8 6 82 8 6 65 8 3
Mergers and acquisitions 111 47 40 75 59 40 57 46 41
Branch establishment 70 24 22 44 26 22 35 22 24
$1 billion-$10 billion
Change in control 16 99 59 9 97 55 4 393 99
Federal Reserve membership 9 34 28 5 38 30 2 17 17
FIRREA 15 12 8 6 15 12 6 4 2
Mergers and acquisitions 90 62 41 49 63 42 33 59 42
Branch establishment 50 31 20 19 23 19 39 33 25

For further reference, please consult the following:

1. For the purpose of this report, the term "proposal" is defined as one filing, which may have been submitted pursuant to multiple statutes. For example, an applicant BHC with a subsidiary state member bank could file to acquire another BHC and merge the target's subsidiary bank with its own state member bank and thereby establish branches. This one proposal would include filings under the Bank Holding Company Act, the Bank Merger Act, and the Federal Reserve Act. Further information on banking applications and regulation is available on the Federal Reserve Board's website at  Return to text

2. Excluding these transactions from the calculation results in an average processing time of 44 days. Return to text

3. Supervision and Regulation Letter SR 14-2/CA 14-1 "Enhancing Transparency in the Federal Reserve's Applications Process" provides the general public with a better understanding of the Federal Reserve's approach to applications and notices that may not satisfy statutory requirements for approval of the proposal or otherwise raise supervisory or regulatory concerns. This guidance applies to all financial institutions supervised by the Federal Reserve, including those with $10 billion or less in consolidated assets and is available on the Federal Reserve Board's website at  Return to text

4. Under section 3 of the Bank Holding Company Act, for example, the Federal Reserve must assess whether the following statutory factors are consistent with approval: financial, managerial, future prospects, financial stability, competition, convenience, and needs (including CRA performance).  Return to text

5. M&A proposals are defined as those filed by BHCs, SLHCs, or state member banks that seek approval to acquire additional ownership interest or to merge with another banking organization. These proposals also include BHC and SLHC formations.  Return to text

6. The applicant is required to publish notice of its proposal, typically in newspapers serving certain communities in which the applicant or target has operations. The Federal Reserve also publishes notice in the Federal Register. The notices inform the public of the opportunity to submit written comments on any proposal.   Return to text

7. Generally, Reserve Banks can act under delegated authority with respect to proposals that do not receive adverse public comments; do not present significant concerns relative to the statutory factors; do not raise a policy issue; or are not novel, complex, or otherwise required to be acted upon by the Board.  Return to text

8. As noted previously, the average number of days for all filings was elevated in this period because of the approval of four transactions that had unusually long processing delays. Generally, delays in the processing of M&A proposals with adverse comments may also be caused by other significant policy or supervisory issues raised in the application.  Return to text

9. The average days processing for CIBCA notices made by large CBOs was skewed in the first half of 2016 because of (1)the small number of filings (only four in the period) and (2) the resolution of a single notice that had been pending for several years.  Return to text

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Last update: November 22, 2016

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