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State/Federal Supervisory Protocol
November 14, 1996
This Agreement is made and entered into by and between the Parties.
It is not intended to prevent the Parties from entering into other
agreements or arrangements regarding the subject matter of the Agreement.
- Statement Of Purpose
The Parties recognize that state-chartered banks
will establish interstate branches creating a compelling need
for enhanced cooperation among Federal and State regulatory
agencies. The goals of the Parties to this Agreement are to:
(1 ) provide for a seamless supervisory process; (2) ensure
that supervision is flexible and commensurate with the organization's
risk; and (3) minimize regulatory burden and cost.
- The State Supervisory Authorities that are parties to
this Agreement (collectively the "State Supervisory Authorities")
have endorsed the Nationwide Cooperative Agreement, dated
November 13, 1996, which governs the supervisory responsibilities
among the State Supervisory Authorities for Multi-State
Banks in such states.
- The Board of Governors of the Federal Reserve System (the
"Board of Governors") and the Federal Deposit Insurance
Corporation (the "FDIC") recognize the responsibility of
the Home State Supervisor to coordinate the involvement
of Host State Supervisors in the supervision and examination
of Multi-State Banks, as set forth in the CSBS Interstate
Banking and Branching Supervisory Protocol dated April 20,
- The State Supervisory Authorities, the Board of Governors
and the FDIC have endorsed the State/Federal Supervisory
Protocol, (the "State/Federal Protocol"), which is attached
as Exhibit 1, and which outlines the responsibilities of
the Responsible Federal Agency and Home State Supervisor
for a Multi-State Bank. This Agreement between the Parties
implements the State/Federal Protocol and sets forth the
procedures to fulfill its goals and terms.
- Supervision And Examination Process
The Parties agree to adopt and implement the procedures
for the supervision and examination of Multi-State Banks as set
forth in the State/Federal Protocol and, at a minimum, to take
the following steps:
- Within 30 days of the date of this Agreement, the Responsible
Federal Agencies and the Home State Supervisors will identify
the Multi-State Banks covered by the supervisory program set
forth in the State/Federal Protocol and this Agreement. On a
quarterly basis, this list will be reviewed and, as needed,
- Within 60 days of the date of this Agreement, the Responsible
Federal Agency and the Home State Supervisor will each designate
a Primary Contact Person for each of the subject Multi-State
Banks. Among other things, these individuals will jointly coordinate
the supervisory and examination responsibilities of their respective
agencies according to the principles of the State/Federal Protocol
and this Agreement. The Responsible Federal Agency and the Home
State Supervisor and the Primary Contact Persons, in particular,
will take the necessary steps to ensure that the goals of the
State/Federal Protocol and this Agreement, including a risk-focused,
seamless supervisory process, are achieved.
- The Primary Contact Persons will develop and, as needed, update
a written comprehensive supervisory plan that covers an agreed
upon period and provides for an effective and efficient supervision
process tailored to the Multi-State Bank's organizational structure
and risk profile. In developing and updating the comprehensive
supervisory plan, the Responsible Federal Agency and the Home
State Supervisor will consider the views of the Local Federal
Reserve Banks, the Local FDIC Regional Offices and the Host
State Supervisors, as appropriate. The comprehensive supervisory
plan will include:
- A risk assessment of the organization;
- The examination plan described in Section II.D. of this
- Schedules for examination planning meetings;
- Estimated resource requirements for conducting on-site
- Review and assessment of pending issues, such as the status
of applications and compliance with enforcement actions:
- Off-site monitoring plans; and
- Such other matters as are necessary to promote the safety
and soundness of the organization.
- The Primary Contact Persons will ensure that, as part of the
comprehensive supervisory plan, a written examination plan is
developed that details the type, timing and location of on-site
safety and soundness and specialty (FOOTNOTE 1) examinations.
The examination plan will take into consideration the risk profile
of the organization, its structure, and managerial preferences
concerning certain aspects of the examination process (i.e.,
a preference for a series of target examinations versus a preference
for all on-site examinations to be conducted simultaneously),
and each agency's on-site examination cycle mandates. In tailoring
the supervisory program, the examination plan will take into
consideration the organization's internal control/compliance
functions, as well as the external audit, as appropriate.
- Safety and soundness examinations will generally be conducted
on a joint basis (FOOTNOTE 2). A joint examination will be conducted
by an examination team comprised of representatives from both
agencies which will issue a single examination report.
- Notwithstanding the above provisions, the Responsible Federal
Agency or the Home State Supervisor may conduct independent
or special examinations in exceptional circumstances (FOOTNOTE
3). The regulator initiating the independent or special examination
will make every effort to provide appropriate notice to the
other regulators prior to commencing the examination.
FOOTNOTE 1. Trust, Information Systems, and Consumer Affairs/CRA
FOOTNOTE 2. This is not intended to supersede existing Alternate
Examination Programs ("AEP"). An AEP examination will be conducted
by either the Responsible Federal Agency or the Home State
Supervisor, which will also issue the examination report.
FOOTNOTE 3. For example. where there is significant safety
and soundness risk.
- The Responsible Federal Agency and the Home State Supervisor
may agree to have one examiner-in-charge (the "EIC") or may
each assign a co-EIC to manage the on-site, joint examination.
All necessary steps will be taken to ensure that all aspects
of the examination process are fully coordinated and that duplication
is avoided (FOOTNOTE 4).
The Primary Contact Persons and/or the EICs, as appropriate,
will meet to:
- Develop the examination focus and scope;
- Develop procedures for compiling off-site and on-site
- Develop a joint entry letter to be sent in a timely manner
prior to the start of the examination that requests essential
information and materials, preferably internal bank reports,
for off-site review, thereby minimizing onsite efforts and
their associated burden;
- Determine appropriate staffing levels and assign responsibilities
for examination staff;
- Develop procedures for coordinating information requests
during the examination;
- Schedule meetings with management; and
- Determine a format for the examination report and assign
responsibilities for writing and processing the examination
report, including timeframes for completion, as required
by Sections II.H. and ll.l of this Agreement.
FOOTNOTE 4. Steps will also be taken to avoid duplication
in specialty examinations. The procedures described herein
will apply when appropriate.
- All examiners involved in an examination will perform the
responsibilities assigned and promptly report the findings,
conclusions and recommendations in the form requested, together
with supporting papers to the EIC or their agency's co-EIC.
- The examination report will be prepared using an agreed-upon
format and will be forwarded to the institution within 45 calendar
days from the close of the examination, which is the date of
the exit interview with management. The exit interviews will
take place within 15 calendar days from the close of all on-site
- Supervisory Actions
- The Parties will, in all cases, consult one another regarding
investigations and supervisory actions involving a Multi-State
- When the Responsible Federal Agency and the Home State Supervisor
jointly deem that a follow-up supervisory action against a Multi-State
Bank is warranted, both agencies will consult one another and
coordinate the drafting and implementation.
- Supervisory Information
- Consistent with the goal of seamless supervision, any information
provided by a Party to another Party will be treated as confidential
supervisory information, unless otherwise specified by the providing
Party, and will remain the property of the providing Party.
A Party will use confidential supervisory information only for
purposes directly related to its supervisory responsibilities.
- The Responsible Federal Agency may disclose to Local Federal
Reserve Banks or Local FDIC Regional Offices confidential supervisory
information obtained from Home State Supervisors if such disclosure
is directly related to the Local Federal Reserve Banks' or Local
FDIC Regional Offices' responsibilities. Similarly, Home State
Supervisors may disclose to the Host State Supervisors confidential
supervisory information obtained from Responsible Federal Agencies
if such disclosure is directly related to the Host State Supervisors'
- Whenever a Party receives an access request from another federal
or state administrative agency, or a subpoena, discovery request
or other legal process that would require the disclosure of
confidential information obtained from the other Party, the
Party will promptly notify the providing Party. Except as provided
in Section IV.B. of this Agreement, and unless the providing
Party consents to the disclosure or the disclosure is required
by law, regulation, court order or other legal process, no Party
will disclose to another person, agency or entity (other than
the subject organization) confidential supervisory information
obtained from the other Party without furnishing prior notice
to the providing Party. As appropriate, the Parties will cooperate
in the preparation of any memoranda or pleading deemed desirable
by the Parties to protect the confidentiality of the information.
- The Responsible Federal Agency and the Home State Supervisor
have primary responsibility for processing any application submitted
by a bank as required under Federal and State law, respectively.
- When available, similar (if not identical) applications
forms will be used for applications required by both Federal
and State law.
- For applications required by both Federal and State law,
the Responsible Federal Agency or the Home State Supervisor
will promptly exchange copies of any applications received.
Whenever a Multi-State Bank has submitted an application
only to the Responsible Federal Agency or the Home State
Supervisor, the party receiving the application will promptly
provide a copy of the application to the other party. Where
appropriate, the Responsible Federal Agency and the Home
State Supervisor will jointly coordinate any requests for
additional information from the applicant and will share
any changes to the application submitted by the applicant.
- The Responsible Federal Agency and the Home State Supervisor
will each reach a decision regarding their respective application
and will communicate this decision to the applicant and
to each other in a timely manner.
- The Responsible Federal Agency has authority for all applications
required by Federal law, and will promptly furnish the Home
State Supervisor with a copy of the decision.
- The Home State Supervisor has responsibility for the coordination
of all applications required by State law, and will promptly
furnish the Responsible Federal Agency with a copy of any Home
or Host State decision.
- Resolution Of Significant Differences
- The Parties will make every effort to resolve any significant
differences concerning the supervision of Multi-State Banks.
- In those matters where, despite their best efforts, the Primary
Contact Person cannot resolve a significant difference concerning
the supervision of Multi-State Banks, the matters will immediately
be referred to the appropriate senior officials of the Responsible
Federal Agencies and the Home State Supervisor.
- Whenever this Agreement provides for a notice to be given
to a Party, the notice will be given in writing.
- A Party may terminate this Agreement by giving notice to the
other Party. The terminations shall be effective 90 days after
the date of the notice.
- This Agreement may be amended only by a written instrument
signed by each of the Parties.
- This Agreement may be executed in counterparts and shall become
effective when all parties have executed the original or a counterpart
- This Agreement is not intended to be limited to the original
signatories and other Parties may sign after the initial execution
of this document.
- "Home State" means the state where a state-chartered, Multi-State
Bank is chartered.
- "Home State Supervisor" means the bank supervisory agency of the
Home State of a Multi-State Bank.
- "Host State" means a state other than the Home State of a Multi-State
Bank where the bank maintains a branch.
- "Host State Supervisor" means the bank supervisory agency of a
Host State of a Multi-State Bank.
- "Local FDIC Regional Office" means a FDIC regional office other
than the region of the Responsible FDIC Regional Office where a
nonmember, Multi-State Bank maintains a branch.
- "Local Federal Reserve Bank" means a Federal Reserve district
other than the Responsible Reserve Bank's district where a member
Multi-State Bank maintains a branch.
- "Multi-State Bank" means a state-charter bank that operates a
branch or branches in a state other than its Home State.
- "Party" and "Parties" means the signatories to this Agreement.
With respect to Sections IV and VI of this Agreement the terms "Party"
and "Parties" include the Federal Reserve Banks.
- "Responsible FDIC Regional Office" means the FDIC regional office
with responsibility for coordinating the FDIC's supervision process
for a state nonmember bank.
- "Responsible Federal Reserve Bank" means the Federal Reserve Bank
with responsibility for coordinating the Federal Reserve's supervision
process for a state member bank.
- "Responsible Federal Agency" means either the Responsible Federal
Reserve Bank or Responsible FDIC Regional Office for member or nonmember
Multi-State Banks, respectively.
Link to the State/Federal Supervisory Protocol
- Exhibit 1 to the Nationwide State/Federal Supervisory Agreement