[Code of Federal Regulations]
[Title 12, Volume 3, Parts 220 to 299]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR225.82]

[Page 109-110]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y)--Table of Contents
 
                 Subpart I--Financial Holding Companies
 
Sec. 225.82  How does a company elect to become a financial holding company?

    (a) Filing requirement. A bank holding company may elect to become a 
financial holding company by filing a written declaration with the 
appropriate Federal Reserve Bank.
    (b) Contents of declaration. The declaration must:
    (1) State that the bank holding company elects to be a financial 
holding company;
    (2) Provide the name and head office address of the company and of 
each depository institution controlled by the company;
    (3) Certify that all depository institutions controlled by the 
company are well capitalized as of the date the company files its 
election;
    (4) Provide the capital ratios for all relevant capital measures (as 
defined in section 38 of the Federal Deposit Insurance Act) as of the 
close of the previous quarter for each depository institution controlled 
by the company on the date the company files its election; and
    (5) Certify that all depository institutions controlled by the 
company are well managed as of the date the company files its election.
    (c) Under what circumstances will the Board find an election to be 
ineffective? An election to become a financial holding company shall not 
be effective if, during the period provided in paragraph (f) of this 
section, the Board finds that as of the date the election is received by 
the appropriate Federal Reserve Bank:
    (1) Any insured depository institution controlled by the bank 
holding company (except an institution excluded under paragraph (e) of 
this section) has not achieved at least a rating of ``satisfactory 
record of meeting community credit needs'' under the Community 
Reinvestment Act at the institution's most recent examination; or
    (2) Any depository institution controlled by the bank holding 
company is not both well capitalized and well managed.
    (d) May the Board impose supervisory limits on financial holding 
companies? The Board may, in the exercise of its supervisory authority, 
restrict or limit the commencement or conduct of additional activities 
or acquisitions of a financial holding company, or take other 
appropriate action, if the Board finds that the financial holding 
company does not have the financial resources, including capital 
resources, or managerial resources to engage in activities, make 
acquisitions, or retain ownership

[[Page 110]]

of companies permitted for financial holding companies.
    (e) How is CRA performance of recently acquired insured depository 
institutions considered? An insured depository institution will be 
excluded for purposes of the review of CRA ratings described in 
paragraph (c)(1) of this section if:
    (1) The bank holding company acquired the insured depository 
institution during the 12-month period preceding the filing of an 
election under paragraph (a) of this section;
    (2) The bank holding company has submitted an affirmative plan to 
the appropriate Federal banking agency for the institution to take 
actions necessary for the institution to achieve at least a rating of 
``satisfactory record of meeting community credit needs'' under the 
Community Reinvestment Act at the next examination of the institution; 
and
    (3) The appropriate Federal banking agency for the institution has 
accepted that plan.
    (f) When is an election effective? (1) In general. An election 
described in paragraph (a) of this section is effective on the 31st day 
after the date that the election was received by the appropriate Federal 
Reserve Bank, unless the Board notifies the bank holding company prior 
to that time that the election is ineffective.
    (2) Earlier notification that an election is effective. The Board or 
the appropriate Federal Reserve Bank may notify a bank holding company 
that its election to become a financial holding company is effective 
prior to the 31st day after the election was filed with the appropriate 
Federal Reserve Bank. Such a notification must be in writing.