Hilltop Holdings Inc (HTH)

[Enterprising Investor]

OCC Conditionally Approves First National Bank “Shelf Charter” to Expand Pool of Qualified Bidders for Troubled Institutions

WASHINGTON — The Office of the Comptroller of the Currency announced today it had granted its first conditional preliminary approval of a new type of national bank “shelf-charter,” designed to facilitate new equity investments in troubled depository institutions.

The new mechanism involves the granting of preliminary approval to investors for a national bank charter. The charter remains inactive, or “on the shelf” until such time as the investor group is in a position to acquire a troubled institution. By granting the preliminary approval, the OCC expands the pool of potential buyers available to buy troubled institutions, and in particular the new equity capital available to bid on troubled institutions through the Federal Deposit Insurance Corporation’s bid process.

The first such approval was granted Monday to establish the Ford Group Bank, National Association.

The process involves several stages:

In the initial review, the OCC evaluates the qualifications of the proposed management team, the sources and amount of capital that would be available to the bank, and a streamlined business plan that describes how the acquired bank will be operated. At the end of this process, the OCC can grant conditional preliminary approval of a national bank charter, subject to certain conditions and to requirements that more detailed operating plans, satisfactory to the OCC, be submitted if the bank targets a specific institution for acquisition. The investor group is thereby positioned to make proposals to acquire troubled institutions, and, in particular, to be cleared to view the FDIC’s list of failing or troubled institutions and to submit bids for those institutions. Through the conditions imposed in connection with the approval and the operating plan, the OCC retains the ability to oversee how the shelf charter will activate and provide for the new institution to be operated on a safe and sound basis.

In the case of an FDIC resolution of a failing institution, after a bid is submitted, the OCC will evaluate the specific proposal. If it is found to be acceptable, and if the FDIC approves the bid, final charter approval can be granted, together with final approval of deposit insurance by the FDIC. If the bid is not accepted by the FDIC, the charter remains on the shelf for up to 18 months. During that time, the charter can be used for other bids.

Related Links: Conditional Preliminary Approval Letter (http://www.occ.gov/ftp/release/2008-137a.pdf)


http://www.occ.treas.gov/ftp/release/2008-137.htm