FAQ's

AMERICA'S MUTUAL HOLDING COMPANIES
QUESTIONS AND ANSWERS

1. What is a mutual holding company?

Mutual holding companies (MHCs) are a unique blend of the characteristics of the mutual cooperative institution and a stock company.   Mutual holding companies are formed by the reorganization of a mutual institution whereby the mutual forms a stock institution subsidiary which receives  all of the assets and liabilities of the mutual institution with the parent holding company retaining all the attributes of mutuality while owning at least majority  of the new stock subsidiary.  Mutual holding companies were first authorized by the section 107 of the Competitive Equality Banking Act of 1987 (Pub. Law 100-86)

There are two types of mutual holding companies for federal regulatory purposes. One type is a mutual holding company of a state chartered savings bank which is regulated by the Federal Reserve Board as a bank holding company under Section  3(g) of the Bank Holding Company Act of 1956, as amended . The other is a mutual holding company parent of a federal or state chartered savings association which is regulated by the Federal Reserve Board as a Savings and Loan Holding Company under Section 10(o) of the Home Owners Loan Act.  Unlike bank holding companies, savings and loan mutual holding companies are chartered by the Federal Reserve Board under section 10(o) (7) of the Home Owners Loan Act.  Section 3(g)(2) gives to the Federal Reserve Board comparable powers to charter other mutual holding companies such as MHCs with a commercial bank subsidiary.

MHCs were created to preserve the virtues of mutuality such as mutual governance, community orientation and continuity with the ability to grow incrementally by issuing common stock as Tier-1 capital. MHCs are characterized by:

  • No direct ownership -MHCs have no stockholders or other direct owners.  Rather, the depositors of the subsidiary bank, often called "members", have an inchoate interest in the  consolidated net worth of the institution. This interest cannot be bought or sold.
  • Promotion of thrift and home ownership –As the mutual subsidiary was created to promote savings among its members the business focus continues. Some, such as savings and loan associations, are chartered to promote home ownership as well.

2. How many mutual holding companies are there in the United States?

Today, there are 57 mutual holding companies with public stockholders, which are located in 20 states.   The states with the most mutual holding companies are New York (11) and New Jersey (10).   At December 31, 2010, mutual holding companies had total assets of $51.4 billion. The median mutual holding company had assets of $292 million.

3. How strong are mutual holding companies?

Mutual holding companies are among the strongest in the country.
The average Tier 1 capital ratio (a barometer of capital strength and safety) for all mutual holding companies was 10.84% and the average risk based capital ratio was 19.88%. The FDIC considers a holding company to be "well capitalized" (the highest ratio for safety and soundness) if a holding company's Tier 1 capital ratio is at or above 6% and its risk-based capital ratio is at or above 10%.

4. Did mutual holding companies cause the last financial crisis?

NO. Mutual holding companies generally stick to providing the basic banking services required by a community. That is, mutual holding companies provide checking and savings products and make home loans, other consumer loans and loans for local businesses. Mutuals generally do not engage in those activities recognized as causing the financial crisis that began in the Fall of 2008.

5. What is America's Mutual Holding Companies?

America's Mutual Holding Companies is composed of persons and institutions that are committed to both mutuality as well as public ownership of their banking institutions. America's Mutual Holding Companies operates on the basis of inclusivity and represents the interests of mutual holding companies regardless of charter, location or size.

6. What is the purpose of America's Mutual Holding Companies?

The goal of America's Mutual Holding Companies is to be the preeminent voice for mutual holding companies with public stockholders. AMHC defines itself in the following ways:

  • AMHC will be an advocate for issues uniquely affecting mutual holding companies;
  • AMHC will be the voice to promote the mutual holding company agenda among Federal and State legislators, regulators and other policymakers;
  • AMHC will educate legislators, regulators and other stakeholders on the unique attributes of the mutual holding company form of ownership;
  • AMHC will strive to preserve mutual holding companies' freedom of choice with respect to Federal or State charter and form of corporate charter;
  • AMHC will work with the national and state trade groups to promote the mutual holding company form of organization and will assist those trade groups on other issues, if deemed advisable, to the extent not inconsistent with the purposes of AMHC;

7. Is America's Mutual Holding Companies a trade group?

America's Mutual Holding Companies  is an unincorporated nonprofit association of MHCs which will advocate for its members’ unique interests. It intends to concentrate on those issues which affect its members uniquely but it may take positions on broader issues.

8. What are the challenges of the Dodd-Frank Act that are peculiar to mutual holding companies?

  • The adoption by the Federal Reserve Board of rules which elevate the status of inchoate depositor rights to unprecedented levels;
  • The Federal Reserve Board’s rule requiring costly and disruptive member votes for dividend waivers;
  • Acclimation to the new rules and supervisory policies of the, Federal Reserve Board;
  • Elimination of the public mutual holding company as a viable vehicle to raise capital;
  • Structural limitations on multiple combinations of mutual savings institutions;
  • Absence of a mutual national bank charter;
  • The lack of knowledge and experience by the bank regulators with mutual corporate governance and the hybrid characteristics of MHCs;
  • Heightened capital requirements without taking into account the limitations on mutuals for raising capital and the significantly reduced risk profile of mutuals;
  • The absence of any specific exemption in the Dodd-Frank Act from the jurisdiction of the Bureau of Consumer Financial Protection with respect to the member/depositor relationship;
  • The assimilation by the Federal Reserve Board of the Savings and Loan Holding Company Act and the weakening of the provisions prohibiting third party control of mutual savings institutions;
  • The decline of the dual system for state- and federally-charted mutuals;
  • The peculiar impact of the phasing out of the government-sponsored entities from the secondary mortgage market; and
  • The absence of development of creative capital instruments for mutuals such as mutual capital certificates, paired options/shares and subordinated debt.
  • Acclimation to the new rules and supervisory policies of the Federal Reserve Board;
  • Regulations affecting the public mutual holding company as a viable vehicle to raise capital;
  • Limitations on ability to convert bank subsidiary to commercial banking charter;
  • The lack of knowledge and experience by the mutual holding company regulators with mutual corporate governance;
  • The absence of any specific exemption in the Dodd-Frank Act from the jurisdiction of the Bureau of Consumer Financial Protection with respect to the member/depositor relationship;
  • The assimilation by the Federal Reserve Board of the Savings and Loan Holding Company Act; and
  • The peculiar impact of the phasing out of the government-sponsored entities from the secondary mortgage market.

9. How much will it cost?

The cost of a six-month membership in America's Mutual Holding Companies is based on the size of the mutual institution.

Total Assets

Six Month Cost of Membership

Above $1.5 Billion

$15,000

Between $1 Billion and $1.5 Billion

$9,000

Between $750 Million and $1 Billion

$6,000

Between $250 Million and $750 Million

$3,000

Below $250 Million

$600

10. Who may join America's Mutual Holding Companies?

Any mutual holding company with public shareholders that meets all regulatory capital requirements is eligible. While we envision seeking common ground on issues peculiar to mutual holding companies with other mutual organizations such as insurance companies when it is in the interest of our members to do so, membership consists exclusively of mutual holding companies of FDIC-insured depository institutions.