Qualified thrift lender test

Except as provided in paragraphs (2) and (7), any savings association is a qualified thrift lender if—

(A) the savings association qualifies as a domestic building and loan association, as such term is defined in section 7701(a)(19) of title 26 ; or

(B) (i) the savings association’s qualified thrift investments equal or exceed 65 percent of the savings association’s portfolio assets; and (ii) the savings association’s qualified thrift investments continue to equal or exceed 65 percent of the savings association’s portfolio assets on a monthly average basis in 9 out of every 12 months.

Notwithstanding paragraph (1), the appropriate Federal banking agency may grant such temporary and limited exceptions from the minimum actual thrift investment percentage requirement contained in such paragraph as the appropriate Federal banking agency deems necessary if—

(A) the appropriate Federal banking agency determines that extraordinary circumstances exist, such as when the effects of high interest rates reduce mortgage demand to such a degree that an insufficient opportunity exists for a savings association to meet such investment requirements; or

(B) the appropriate Federal banking agency determines that— (i) the grant of any such exception will significantly facilitate an acquisition under section 1823(c) or 1823(k) of this title; (ii) the acquired association will comply with the transition requirements of paragraph (7)(B), as if the date of the exemption were the starting date for the transition period described in that paragraph; and (iii) the appropriate Federal banking agency determines that 7 7 So in original. The words “the appropriate Federal banking agency determines that” probably should not appear. the exemption will not have an undue adverse effect on competing savings associations in the relevant market and will further the purposes of this subsection.

(A) In general A savings association that fails to become or remain a qualified thrift lender shall immediately be subject to the restrictions under subparagraph (B).

(B) Restrictions applicable to savings associations that are not qualified thrift lenders (i) Restrictions effective immediately The following restrictions shall apply to a savings association beginning on the date on which the savings association should have become or ceases to be a qualified thrift lender: (I) Activities The savings association shall not make any new investment (including an investment in a subsidiary) or engage, directly or indirectly, in any other new activity unless that investment or activity would be permissible for the savings association if it were a national bank, and is also permissible for the savings association as a savings association. (II) Branching The savings association shall not establish any new branch office at any location at which a national bank located in the savings association’s home State may not establish a branch office. For purposes of this subclause, a savings association’s home State is the State in which the savings association’s total deposits were largest on the date on which the savings association should have become or ceased to be a qualified thrift lender. (III) Dividends The savings association may not pay dividends, except for dividends that— (aa) would be permissible for a national bank; (bb) are necessary to meet obligations of a company that controls such savings association; and (cc) are specifically approved by the Comptroller of the Currency and the Board after a written request submitted to the Comptroller of the Currency and the Board by the savings association not later than 30 days before the date of the proposed payment. (IV) Regulatory authority A savings association that fails to become or remain a qualified thrift lender shall be deemed to have violated section 1464 of this title and subject to actions authorized by section 1464(d) of this title . (ii) Additional restrictions effective after 3 years Beginning 3 years after the date on which a savings association should have become a qualified thrift lender, or the date on which the savings association ceases to be a qualified thrift lender, as applicable, the savings association shall not retain any investment (including an investment in any subsidiary) or engage, directly or indirectly, in any activity, unless that investment or activity— (I) would be permissible for the savings association if it were a national bank; and (II) is permissible for the savings association as a savings association.

(C) Holding company regulation Any company that controls a savings association that is subject to any provision of subparagraph (B) shall, within one year after the date on which the savings association should have become or ceases to be a qualified thrift lender, register as and be deemed to be a bank holding company subject to all of the provisions of the Bank Holding Company Act of 1956 [ 12 U.S.C. 1841 et seq.], section 1818 of this title , and other statutes applicable to bank holding companies, in the same manner and to the same extent as if the company were a bank holding company and the savings association were a bank, as those terms are defined in the Bank Holding Company Act of 1956.

(D) Requalification A savings association that should have become or ceases to be a qualified thrift lender shall not be subject to subparagraph (B) or (C) if the savings association becomes a qualified thrift lender by meeting the qualified thrift lender requirement in paragraph (1) on a monthly average basis in 9 out of the preceding 12 months and remains a qualified thrift lender. If the savings association (or any savings association that acquired all or substantially all of its assets from that savings association) at any time thereafter ceases to be a qualified thrift lender, it shall immediately be subject to all provisions of subparagraphs (B) and (C) as if all the periods described in subparagraphs (B)(ii) and (C) had expired.

(E) Exemption for specialized savings associations serving certain military personnel Subparagraph (A) shall not apply to a savings association subsidiary of a savings and loan holding company if at least 90 percent of the customers of the savings and loan holding company and its subsidiaries and affiliates are active or former members in the United States military services or the widows, widowers, divorced spouses, or current or former dependents of such members.

(F) Exemption for certain Federal savings associations This paragraph shall not apply to any Federal savings association in existence as a Federal savings association on August 9, 1989 — (i) that was chartered before October 15, 1982 , as a savings bank or a cooperative bank under State law; or (ii) that acquired its principal assets from an association that was chartered before October 15, 1982 , as a savings bank or a cooperative bank under State law.

(G) No circumvention of exit moratorium Subparagraph (A) of this paragraph shall not be construed as permitting any insured depository institution to engage in any conversion transaction prohibited under section 1815(d) 3 of this title.

For purposes of this subsection, the following definitions shall apply:

(A) Actual thrift investment percentage The term “actual thrift investment percentage” means the percentage determined by dividing— (i) the amount of a savings association’s qualified thrift investments, by (ii) the amount of the savings association’s portfolio assets.

(B) Portfolio assets The term “portfolio assets” means, with respect to any savings association, the total assets of the savings association, minus the sum of— (i) goodwill and other intangible assets; (ii) the value of property used by the savings association to conduct its business; and (iii) liquid assets of the type required to be maintained under section 1465 of this title , as in effect on the day before December 27, 2000 , in an amount not exceeding the amount equal to 20 percent of the savings association’s total assets.

(C) Qualified thrift investments (i) In general The term “qualified thrift investments” means, with respect to any savings association, the assets of the savings association that are described in clauses (ii) and (iii). (ii) Assets includible without limit The following assets are described in this clause for purposes of clause (i): (I) The aggregate amount of loans held by the savings association that were made to purchase, refinance, construct, improve, or repair domestic residential housing or manufactured housing. (II) Home-equity loans. (III) Securities backed by or representing an interest in mortgages on domestic residential housing or manufactured housing. (IV) Existing obligations of deposit insurance agencies.— Direct or indirect obligations of the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation issued in accordance with the terms of agreements entered into prior to July 1, 1989 , for the 10-year period beginning on the date of issuance of such obligations. (V) New obligations of deposit insurance agencies.— Obligations of the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, the FSLIC Resolution Fund, and the Resolution Trust Corporation issued in accordance with the terms of agreements entered into on or after July 1, 1989 , for the 5-year period beginning on the date of issuance of such obligations. (VI) Shares of stock issued by any Federal home loan bank. (VII) Loans for educational purposes, loans to small businesses, and loans made through credit cards or credit card accounts. (iii) Assets includible subject to percentage restriction The following assets are described in this clause for purposes of clause (i): (I) 50 percent of the dollar amount of the residential mortgage loans originated by such savings association and sold within 90 days of origination. (II) Investments in the capital stock or obligations of, and any other security issued by, any service corporation if such service corporation derives at least 80 percent of its annual gross revenues from activities directly related to purchasing, refinancing, constructing, improving, or repairing domestic residential real estate or manufactured housing. (III) 200 percent of the dollar amount of loans and investments made to acquire, develop, and construct 1- to 4-family residences the purchase price of which is or is guaranteed to be not greater than 60 percent of the median value of comparable newly constructed 1- to 4-family residences within the local community in which such real estate is located, except that not more than 25 percent of the amount included under this subclause may consist of commercial properties related to the development if those properties are directly related to providing services to residents of the development. (IV) 200 percent of the dollar amount of loans for the acquisition or improvement of residential real property, churches, schools, and nursing homes located within, and loans for any other purpose to any small businesses located within any area which has been identified by the appropriate Federal banking agency, in connection with any review or examination of community reinvestment practices, as a geographic area or neighborhood in which the credit needs of the low- and moderate-income residents of such area or neighborhood are not being adequately met. (V) Loans for the purchase or construction of churches, schools, nursing homes, and hospitals, other than those qualifying under clause (IV), and loans for the improvement and upkeep of such properties. (VI) Loans for personal, family, or household purposes (other than loans for personal, family, or household purposes described in clause (ii)(VII)). (VII) Shares of stock issued by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association. (iv) Percentage restriction applicable to certain assets The aggregate amount of the assets described in clause (iii) which may be taken into account in determining the amount of the qualified thrift investments of any savings association shall not exceed the amount which is equal to 20 percent of a savings association’s portfolio assets. (v) Qualified thrift investments The term “qualified thrift investments” excludes— (I) except for home equity loans, that portion of any loan or investment that is used for any purpose other than those expressly qualifying under any subparagraph of clause (ii) or (iii); or (II) goodwill or any other intangible asset.

(D) Credit card The appropriate Federal banking agency shall issue such regulations as may be necessary to define the term “credit card”.

(E) Small business The appropriate Federal banking agency shall issue such regulations as may be necessary to define the term “small business”.

(A) In determining the amount of a savings association’s portfolio assets, the assets of any subsidiary of the savings association shall be consolidated with the assets of the savings association if— (i) Assets of the subsidiary are consolidated with the assets of the savings association in determining the savings association’s qualified thrift investments; or (ii) Residential mortgage loans originated by the subsidiary are included pursuant to paragraph (4)(C)(iii)(I) in determining the savings association’s qualified thrift investments.

(B) In determining the amount of a savings association’s portfolio assets and qualified thrift investments, consistent accounting principles shall be applied.

(A) Puerto Rico savings associations With respect to any savings association headquartered and operating primarily in Puerto Rico— (i) the term “qualified thrift investments” includes, in addition to the items specified in paragraph (4)— (I) the aggregate amount of loans for personal, family, educational, or household purposes made to persons residing or domiciled in the Commonwealth of Puerto Rico; and (II) the aggregate amount of loans for the acquisition or improvement of churches, schools, or nursing homes, and of loans to small businesses, located within the Commonwealth of Puerto Rico; and (ii) the aggregate amount of loans related to the purchase, acquisition, development and construction of 1- to 4-family residential real estate— (I) which is located within the Commonwealth of Puerto Rico; and (II) the value of which (at the time of acquisition or upon completion of the development and construction) is below the median value of newly constructed 1- to 4-family residences in the Commonwealth of Puerto Rico, which may be taken into account in determining the amount of the qualified thrift investments and of such savings association shall be doubled.

(B) Virgin Islands savings associations With respect to any savings association headquartered and operating primarily in the Virgin Islands— (i) the term “qualified thrift investments” includes, in addition to the items specified in paragraph (4)— (I) the aggregate amount of loans for personal, family, educational, or household purposes made to persons residing or domiciled in the Virgin Islands; and (II) the aggregate amount of loans for the acquisition or improvement of churches, schools, or nursing homes, and of loans to small businesses, located within the Virgin Islands; and (ii) the aggregate amount of loans related to the purchase, acquisition, development and construction of 1- to 4-family residential real estate— (I) which is located within the Virgin Islands; and (II) the value of which (at the time of acquisition or upon completion of the development and construction) is below the median value of newly constructed 1- to 4-family residences in the Virgin Islands, which may be taken into account in determining the amount of the qualified thrift investments and of such savings association shall be doubled.

(A) In general If any Federal savings association in existence as a Federal savings association on August 9, 1989 — (i) that was chartered as a savings bank or a cooperative bank under State law before October 15, 1982 ; or (ii) that acquired its principal assets from an association that was chartered before October 15, 1982 , as a savings bank or a cooperative bank under State law, meets the requirements of subparagraph (B), such savings association shall be treated as a qualified thrift lender during the period ending on September 30, 1995 .

(B) Subparagraph (B) requirements A savings association meets the requirements of this subparagraph if, in the determination of the appropriate Federal banking agency— (i) the actual thrift investment percentage of such association does not, after August 9, 1989 , decrease below the actual thrift investment percentage of such association on July 15, 1989 ; and (ii) the amount by which— (I) the actual thrift investment percentage of such association at the end of each period described in the following table, exceeds (II) the actual thrift investment percentage of such association on July 15, 1989 , is equal to or greater than the applicable percentage (as determined under the following table) of the amount by which 70 percent exceeds the actual thrift investment percentage of such association on August 9, 1989 :

(C) Actual thrift investment percentage For purposes of this paragraph, the actual thrift investment percentage of an association on July 15, 1989 , shall be determined by applying the definition of “actual thrift investment percentage” that takes effect on July 1, 1991 .