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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations disapprove the transaction if the bank holding company does not provide all of the information required to be submitted under paragraph j2 of this section.
4 Disapproval and hearing. i The Board, or the appropriate Reserve Bank with concurrence of the Board, will notify the bank holding company in writing of the reasons for a decision to disapprove any proposed capital distribution. Within 15 calendar days after receipt of a disapproval by the Board, the bank holding company may submit a written request for a hearing.
ii The Board may, in its sole discretion, order an informal hearing if the Board finds that a hearing is appropriate or necessary to resolve disputes regarding material issues of fact. An informal hearing shall be held within 30 calendar days of a request, if granted, provided that the Board may extend this period upon notice to the requesting party.
iii Written notice of the final decision of the Board shall be given to the bank holding company within 60
calendar days of the conclusion of any informal hearing ordered by the Board, provided that the Board may extend this period upon notice to the requesting party.
iv While the Boards decision is pending and until such time as the Board, or the appropriate Reserve Bank with concurrence of the Board, approves the capital distribution at issue, the bank holding company may not make such capital distribution.
k Post notice requirement. A bank holding company must notify the Board and the appropriate Reserve Bank within 15 days of making a capital distribution if:
1 The capital distribution was approved pursuant to paragraph j3 of this section; or 2 The dollar amount of the capital distribution will exceed the dollar amount of the bank holding companys final planned capital distributions, as measured on an aggregate basis beginning in the fourth quarter of the planning horizon through the quarter at issue.

jbell on DSKJLSW7X2PROD with RULES

PART 238SAVINGS AND LOAN
HOLDING COMPANIES REGULATION
LL
5. The authority citation for part 238
continues to read as follows:

Authority: 5 U.S.C. 552, 559; 12 U.S.C.
1462, 1462a, 1463, 1464, 1467, 1467a, 1468, 5365; 1813, 1817, 1829e, 1831i, 1972, 15
U.S.C. 78l.

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15:49 Feb 02, 2021

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Subpart OSupervisory Stress Test Requirements for Covered Savings and Loan Holding Companies 6. Amend 238.132 by adding paragraph a4, revising paragraph c2, and adding paragraph d to read as follows:

238.132
Board.

Analysis conducted by the
a
4 In conducting the analysis, the Board will not incorporate changes to a firms business plan that are likely to have a material impact on the covered companys capital adequacy and funding profile in its projections of losses, net income, pro forma capital levels, and capital ratios.

c
2 Change in frequency. i The Board may conduct a stress test of a covered company on a more or less frequent basis than would be required under paragraph c1 of this section based on the companys financial condition, size, complexity, risk profile, scope of operations, or activities, or risks to the U.S. economy.
ii A Category IV savings and loan holding company may elect to have the Board conduct a stress test with respect to the company in a year ending in an odd number by providing notice to the Board and the appropriate Federal Reserve Bank by January 15 of that year.

d Capital Action Assumptions. In conducting a stress test under this section, the Board will make the following assumptions regarding a covered companys capital actions over the planning horizon:
1 The covered company will not pay any dividends on any instruments that qualify as common equity tier 1 capital;
2 The covered company will make payments on instruments that qualify as additional tier 1 capital or tier 2 capital equal to the stated dividend, interest, or principal due on such instrument;
3 The covered company will not make a redemption or repurchase of any capital instrument that is eligible for inclusion in the numerator of a regulatory capital ratio; and 4 The covered company will not make any issuances of common stock or preferred stock.
Subpart PCompany-Run Stress Test Requirements for Savings and Loan Holding Companies 7. Amend 238.144 by revising paragraphs a2 and b1 and 2 and adding paragraphs b3 and 4 to read as follows:

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238.144

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Methodologies and practices.

a
2 The potential impact on pro forma regulatory capital levels and pro forma capital ratios including regulatory capital ratios and any other capital ratios specified by the Board, and in so doing must:
i Incorporate the effects of any capital actions over the planning horizon and maintenance of an allowance for credit losses appropriate for credit exposures throughout the planning horizon; and ii Exclude the impacts of changes to a firms business plan that are likely to have a material impact on the covered companys capital adequacy and funding profile.
b
1 The covered company will not pay any dividends on any instruments that qualify as common equity tier 1 capital;
2 The covered company will make payments on instruments that qualify as additional tier 1 capital or tier 2 capital equal to the stated dividend, interest, or principal due on such instrument;
3 The covered company will not make a redemption or repurchase of any capital instrument that is eligible for inclusion in the numerator of a regulatory capital ratio; and 4 The covered company will not make any issuances of common stock or preferred stock.

8. Amend 238.146 by revising paragraph a1 to read as follows:
238.146

Disclosure of stress test results.

a Public disclosure of results1 In general. i A covered company that is subject to a supervisory stress test under 12 CFR 238.132 must publicly disclose a summary of the results of the stress test required under 238.143 within the period that is 15 calendar days after the Board publicly discloses the results of its supervisory stress test of the covered company pursuant to 238.134, unless that time is extended by the Board in writing; and ii A covered company that is not subject to a supervisory stress test under 238.132 must publicly disclose a summary of the results of the stress test required under 238.143 in the period beginning on June 15 and ending on June 30 in the year in which the stress test is conducted, unless that time is extended by the Board in writing.

9. Add Subpart S, consisting of 238.170, to read as follows:

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