Introduction

The Board of Governors of the Federal Reserve System (Federal Reserve) has announced a new optional process for its regulated institutions to request feedback from Federal Reserve staff on potential acquisitions or other proposals before submitting a formal application. The new process was announced in a SR Letter dated July 11, 2012.1 In that letter, the Federal Reserve explained that the optional pre-filing process may be particularly helpful for community banking organizations and other institutions that do not file acquisition applications frequently or for novel proposals.

Optional pre-filing submission

The Federal Reserve’s optional process allows prospective applicants for acquisitions or other proposals to request feedback on specific issues prior to making a formal filing with the Federal Reserve. The pre-filing may include inquiries related to a specific proposal or issue, a potential business plan, Bank Holding Company Act or Home Owners’ Loan Act questions related to control or other issues, or draft transactional or structural documents. It may also include requests for guidance on the type of filing required.

The pre-filing process is optional. This differs from the historical pre-filing requirement the Federal Reserve abandoned in the mid-1990’s, which was removed in the name of regulatory relief, as it often resulted in delays. However, pre-filing often provided a communication channel between Federal Reserve staff and at times resolved issues early on in the application process. In many ways, this new process is a middle ground between the old pre-filing requirement and the current formal filings only.

The Federal Reserve expects the optional process to be beneficial for applicants that are not frequent filers, including community banking organizations, as the process will allow such organizations to obtain the Federal Reserve staff’s assistance early in the process to better understand potential issues relevant to an application. The pre-filing submission will provide an opportunity for targeted review and assistance, but the outcome is of necessity limited. The pre-filing is not to be used as a means to identify all potential issues, predict the outcome of an application, negotiate transaction structure, or resolve significant legal or policy issues.

The pre-filing process

A pre-filing should be made to the appropriate Reserve Bank or via the Federal Reserve’s online E-Apps program. Reviews are expected, but not required, to take no more than 60 days and may include consultation with Federal Reserve staff. Institutions are free to file a formal application even if review of a pre-filing is still pending. Only one pre-filing submission per application will be allowed. As with formal filings, pre-filing submissions become public records of the Federal Reserve and should be accompanied by Freedom of Information Act confidentiality requests as appropriate.