On October 8, the Fed published a new FAQ to assist mutual banking organizations in complying with Regulation MM when considering issuing mutual capital instruments. The FAQ explained that a mutual banking organization “must be legally authorized to issue mutual capital certificates” and should consult its charter and applicable law to determine its authority. For “Board-chartered” mutual banks whose charters conform to the mutual holding company model charter found in Appendix A to Regulation MM, the FAQ provided model charter amendment language and noted that such amendments “generally would require only 30-days’ prior notice” to the Fed, rather than a formal application. The FAQ further clarified that mutual banking organizations chartered by authorities other than the Fed should consult their own chartering authority for amendment procedures and typically would not require Fed approval to amend their charter.

To further assist mutual banks, the Fed released two sample term sheets outlining key terms for mutual capital certificates that may qualify as capital under Sections 217.20(b) and 217.20(c) of Regulation Q. One template covered common equity tier 1 capital, and the other template addressed additional tier 1 capital.