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Issuance of subordinated securities by savings banks and savings and loan associations

UNOFFICIAL COPY  : General Regulations of the Banking Board, Part 71 -- Issuance Of Subordinated Securities By Savings Banks And Savings And Loan Associations
(Statutory authority: Banking Law, §§ 234[5-b], 382-b[2])

Sec.

71.1 Definitions
71.2 Approval of [Superintendent of Financial Services]
71.3 Restrictions and requirements as to securities
71.4 Applications
71.5 Reports

History: Part (§ 71.1) filed June 15, 1973 eff. upon enacting into law of Assembly Bill Number 3916-A. 

3 NYCRR - § 71.1 -- Definitions.

As defined in this Part, the term savings institution means a savings bank or savings and loan association; and the term subordinated debt security means any unsecured note, bond, debenture, or other obligation or security issued pursuant to section 234(5-b) or 382-b(2) of the Banking Law, but shall not mean any note, bond, debenture, or other obligation or security subordinated to the claims of depositors issued to the Federal Deposit Insurance Corporation of the Federal Savings and Insurance Corporation.

History: Sec. filed June 15, 1973; amds. filed: Aug. 13, 1973; Jan. 11, 1983 as emergency measure; March 8, 1983; Feb. 17, 1988 as emergency measure; April 12, 1988 as emergency measure; May 10, 1988 eff. May 25, 1988. 

3 NYCRR - § 71.2 -- Approval Of [Superintendent of Financial Services.]

(a) No savings institution shall issue subordinated debt securities unless it shall have obtained the prior written approval of the Superintendent of Financial Services. The Superintendent may grant approval in principle of the issuance of the subordinated debt securities, based on preliminary drafts of documents submitted with the application pursuant to section 71.4 of this Part. Final written approval, however, will not be given until final copies of the documents have been submitted to the Department and reviewed.

(b) In granting approval, the Superintendent may impose such restrictions and limitation on a particular issue as he shall deem necessary. Upon receipt of the Superintendent's final written approval, the applicant may proceed to issue the securities described in the application and in the manner described therein.

(c) Written approval of the Superintendent shall also be required for any subsequent amendment to the terms or conditions governing the original issue.

History: Sec. filed Aug. 13, 1973; amds. filed: Feb. 17, 1988 as emergency measure; April 12, 1988 as emergency measure; May 10, 1988 eff. May 25, 1988. Amended (a). 

3 NYCRR - § 71.3 -- Restrictions And Requirements As To Securities.

(a) No subordinated debt securities may be issued by a savings institution in denominations of less than $50,000, or with an original maturity of less than seven years.

(b) Each certificate, note or other evidence of subordinated debt issued pursuant to this Part shall:

(1) indicate clearly on its face, in boldface type, that the security does not represent a savings account or other deposit and is not insured by any government agency;

(2) clearly state that the security is subordinated, as to principal and interest, to all deposits of the issuing savings institution, and is unsecured; and

(3) state the terms, if any, under which the issuing savings institution may prepay or call the obligation.

(c) No optional payment in whole or in part of the unpaid principal of subordinated debt securities shall be made without prior written approval of the Superintendent of [Financial Services].

History: Sec. filed Aug. 13, 1973; amds. filed: Feb. 17, 1988 as emergency measure; April 12, 1988 as emergency measure; May 10, 1988 eff. May 25, 1988. 

3 NYCRR - § 71.4 -- Applications.

(a) Each application by a savings institution to issue subordinated debt securities pursuant to this Part shall be in letter form and be accompanied by:

(1) a specimen of the certificates, notes or debentures to be issued, a copy of the proposed agreement or indenture pursuant to which the securities are to be issued, and a copy of any other agreement relating to the sale or distribution of the issue. Such documents may be in preliminary draft form but shall contain the basic provisions, terms, restrictions, and covenants relating to the issue. Definitive copies of documents shall be filed with the Department as soon as available, and should be marked to indicate changes from prior drafts submitted;

(2) a certified copy of a resolution of the board of trustees or directors of the issuing institution:

(i) approving the issuance of subordinated debt securities in a specified maximum amount, the maximum interest rate at which the securities may be issued, the form and content of the note or certificate to be issued, the agreement of indenture and any collateral agreements; and

(ii) designating an officer or officers to submit application for approval to the appropriate supervisory authorities and to take other necessary action in connection therewith.

(b) Each application shall include the following information (a cross-reference to the appropriate section of the relevant agreement or indenture may be substituted):

(1) the aggregate dollar amount of the proposed issue and the lowest denomination to be issued;

(2) interest rate or rates to be paid (if such rate or rates is not determinable at the time the application is filed, a maximum rate should be estimated);

(3) an estimate of the effect on net annual operating income attributable to the issuance of subordinated debt securities;

(4) the maturity date of the proposed issue or, if maturing serially, a schedule of amounts and maturity dates;

(5) details of call, prepayment, and sinking fund provisions, or any of them;

(6) details of any covenants to be agreed to by the issuing institution, together with a specific explanation of the necessity for any covenants that place greater restrictions on the issuing institution than restrictions imposed on such institution by the provisions of the Banking Law or regulations issued thereunder;

(7) a statement of the intended use of the proceeds;

(8) a statement of the expected source of funds for repayment of the issue; and

(9) an opinion of counsel for the applicant that the issue is in compliance with all applicable State and Federal statutes and regulations relating to the issuance and sale of securities and is consistent with the issuing institution's charter and bylaws.

(c) The Superintendent of Banks reserves the right to require additional information in connection with a particular application.

History: Sec. filed Aug. 13, 1973; amds. filed: Feb. 17, 1988 as emergency measure; April 12, 1988 as emergency measure; May 10, 1988 eff. May 25, 1988. Amended (a). 

3 NYCRR - § 71.5 -- Reports.

Within 30 days after the completion of the sale of subordinated debt securities, the savings institution shall file a report of the transaction with the Superintendent of Financial Services stating the total face value of the securities sold, the rate of interest agreed upon and the net proceeds to the issuing institution. In addition, the issuing savings institution shall submit two condensed statements of condition acknowledged by its chief executive or financial officer: one as of the close of business on the day immediately preceding the sale and the other as of the close of business on the day on which the sale was consummated.

History: Sec. filed Aug. 13, 1973; amds. filed: Feb. 17, 1988 as emergency measure; April 12, 1988 as emergency measure; May 10, 1988 eff. May 25, 1988.

3 NYCRR - § 71.6 -- Repealed

History: Sec. filed Aug. 13, 1973; repealed, filed: Feb. 17, 1988 as emergency measure; April 12, 1988 as emergency measure; May 10, 1988 eff. May 25, 1988.