OCC bank merger policy: What's old is new again
The OCC has reversed recent changes to its bank merger policies through an interim final rule. Our client update is a refresher on the new state of play for Bank Merger Act applications to the OCC, which is a return to the old state of play.
OCC interim final rule on bank mergers
The Office of the Comptroller of the Currency is reversing recent changes to its bank merger policies through an interim final rule, citing “confusion and uncertainty” caused by its 2024 final rule.
- The table below provides a refresher on the new state of play for BMA applications to the OCC, which is actually a return to the old state of play.
- The interim final rule will be effective immediately upon publication in the Federal Register.
- The OCC will consider issuing a new bank merger policy statement after reviewing any comments on the interim final rule, which will be due 30 days after publication in the Federal Register.
- Please refer to our previous client updates for more details on the OCC’s now-reversed 2024 final rule and the related proposed rule.
Refresher on OCC bank merger policy changes
| 2024 final rule | 2025 interim final rule | |
|---|---|---|
| Streamlined BMA application form | Eliminated use of the streamlined form, instead requiring all applicants to complete the full interagency BMA application form | Makes the streamlined form available again for certain combinations involving eligible banks and certain internal reorganizations, reducing the application burden for those transactions (e.g., by not requiring three years’ of financial projections for the merged institution) See below for details |
| Expedited review procedures | Eliminated procedures in which transactions that qualify for a streamlined application would be deemed approved 15 days after the close of the public comment period if the OCC does not take further action | Adds back expedited review procedures in the same limited circumstances as the streamlined application form |
| Positive and negative indicators | Outlined 13 positive indicators and 6 negative indicators that set forth the likelihood of a quick or slow approval of a BMA application Notably, identified having less than $50 billion in combined assets as a positive indicator and acquirer’s GSIB status as a negative indicator | Rescinds policy statement in its entirety, pointing to other existing information sources (e.g., the Business Combinations booklet of the Comptroller’s Licensing Manual, and 12 CFR 5.10 and 5.11 on comments and meetings) The repeal of the 2024 policy statement means that the OCC is no longer going to view mergers resulting in banking organizations larger than $50 billion in assets as facing a higher bar to approval, or lacking in an important “positive indicator.” It is, however, now less clear how the OCC will apply the BMA’s financial stability factor, as the interim final rule repeals the 2024 policy statement’s discussion of the factor without replacement |
| BMA statutory factors | Summarized the OCC’s substantive approach to three BMA statutory factors: financial stability, financial and managerial resources and future prospects, and convenience and needs Notably, said the OCC would consider “job losses or lost job opportunities from branching changes” in considering the convenience and needs factor | |
| Public comment period / meetings | Described criteria informing the OCC’s decision on whether to extend the 30-day public comment period and whether to hold a public meeting on a BMA application |
Refresher on streamlined application and expedited processing
The OCC’s streamlined BMA application and expedited processing will now be available again in four limited situations:
- Transactions between (1) an eligible bank or eligible savings association and (2) one or more eligible banks, eligible savings associations, or eligible depository institutions, where the target’s assets are no more than 50% of the acquirer’s total assets;
- Transactions where (1) the acquirer is an eligible bank or eligible savings association, (2) the target bank or savings association is not an eligible bank, eligible savings association, or an eligible depository institution, and (3) the filers obtain prior OCC approval to use the streamlined form;
- Transactions where (1) the acquirer is an eligible bank or eligible savings association, (2) the target bank or savings association is not an eligible bank, eligible savings association, or an eligible depository institution, and (3) the total assets to be acquired are no more than 10% of the acquirer’s total assets; and
- Certain mergers of a national bank with one or more of its nonbank affiliates, where the filers obtain prior OCC approval to use the streamlined form and the total assets acquired are no more than 10% of the acquirer’s total assets.
In each case, the resulting bank or savings association must be well capitalized.
“Eligible bank or eligible savings association” means a national bank or federal savings association that:
- is well capitalized;
- has a composite CAMELS rating of 1 or 2;
- has a Community Reinvestment Act rating of Outstanding or Satisfactory;
- has a consumer compliance rating of 1 or 2 under the Uniform Interagency Consumer Compliance Rating System; and
- does not have a cease and desist order, consent order, formal written agreement, or prompt corrective action directive or, if subject to any such order, agreement, or directive, is informed in writing by the OCC that the bank or savings association may be treated as an eligible bank or eligible savings association.
“Eligible depository institution” means the above, plus FDIC-insured state banks and savings associations meeting the above criteria.