On November 19, 2014, the Federal Deposit Insurance Corporation (the "FDIC") issued Financial Institution Letter 54-2014, Filing and Documentation Procedures for State Banks Engaging, Directly or Indirectly, in Activities or Investments That Are Permissible for National Banks ("FIL-54-2014"). FIL-54-2014 provides guidance to state banks with respect to document retention and application and notice requirements, and reminds banks that a state bank is not required to file an application or notice to engage in activities that are permissible for a national bank if the bank maintains certain documentation.
Generally, a state bank may engage in an activity or investment (collectively, an "Activity") that is both permissible for a national bank and permissible under applicable state law. In addition, a state bank may engage in an Activity that may not be permissible for a national bank if the FDIC determines that: (1) the Activity would pose no significant risk to the Deposit Insurance Fund; and (2) the state bank is, and continues to be, in compliance with applicable capital standards. As a best practice, it is important to maintain proper documentation that supports the bank's authority for its activities, as all activities and related documentation are subject to examination by the FDIC. Implementing proper document maintenance procedures will help ensure the bank is prepared for an examination.
What to Maintain:
Permissible Activities of a national bank: Documentation evidencing that the Activity is permissible for national banks, such as: a legal opinion; a copy of a relevant statute or Office of the Comptroller of the Currency (the "OCC") regulation; a copy of a relevant OCC official circular, bulletin, order, or interpretive letter; or other written documentation satisfactory to the FDIC.
Permissible Activities of a national bank, but subject to certain OCC conditions: In addition to the documentation suggested above, a state bank should maintain documentation demonstrating that the bank satisfies the OCC conditions or restrictions imposed on a desired Activity.
When to file a Part 362 Application or Notice:
A state bank (or its subsidiary, regardless of the subsidiary's organizational form) seeking to engage in an Activity that has not been determined by the OCC to be permissible for a national bank should file an application or notice under 12 C.F.R. Part 362 and the filing procedures of Section 303.121.
The following is a link to FIL-54-2014: https://www.fdic.gov/news/news/financial/2014/fil14054.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.