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instances may not be necessarily obvious to shareholders. The upon proposed M&A or Change in Control filings. Although M&A
implica�on of legal terminology is crucial. For instance, in a situa�on ac�vity may not be on your bank’s radar at this �me, who knows what
where a group of related individuals (“immediate family” as defined by the future holds?
the regula�on) together controls 10% or more of the stock of an
ins�tu�on (with no other individual shareholder controlling a larger How do I know where I stand?
percentage), this requires a Change in Control filing. It is important to Change in control can be complicated to iden�fy and navigate, and the
know how “immediate family” is defined and who is considered part signs along the path may be confusing to understand. If you believe
of a control group. Perhaps stock ownership was shi�ed around back there may have been a change in control that was never properly
in 2011, ahead of estate planning tax changes, without anyone addressed with your federal regulators, please give DD&F a call. We
realizing there may have been a need to submit a prior no�ce to the would be happy to have a preliminary discussion about your
regulators for a change in control. ins�tu�on’s ownership history, free of charge. This would give you an
idea of whether further evalua�on is merited. If so, we are
A common occurrence is when an exis�ng control group adds a family experienced at making No�ce of Change in Control determina�ons, as
member, (as a result of stock ownership, whether by purchase, gi�, well as preparing and submi�ng any required regulatory filings.
transfer, etc.) who was not previously established as part of the _________________________________
control group through a no�ce filed with the regulators. Each �me a
family member of an established control group member gains control Kyle Shadid is a Principal and Ashley Floyd a Senior Consultant at DD&F
of bank or BHC stock, even if it is just by one share, prior no�ce must Consul�ng Group, Li�le Rock. DD&F is a 30-year �me tested and
be filed with the regulators for the new shareholder to be added to proven consul�ng group assis�ng banks to grow strategically - to
the control group. overcome opera�onal or regulatory challenges - and to prepare for
the unexpected. DD&F is an ACB Associate Member and may be
Another common misstep of banks/BHCs is the failure to ensure reached at info@ddfconsul�ng.com or (501) 374-2600.
stockholders file a no�ce of change in control due to a
misunderstanding that such a filing, when involving gi�s or transfers, is
exempt. The regula�ons on prior no�ce exemp�ons for bank stock
gi�s or transfers through inheritance are narrow and are s�ll subject to
the acquiring person no�fying the regulators within 90 days a�er the
acquisi�on.

When bank/BHC stock is placed into a trust and unknowingly violates
regulatory guidelines, this is also a change in control issue. Certain
federal regulators have limita�ons on what assets a trust can hold, if
that trust controls a certain percentage of a bank/BHC. For instance, if
a trust controls 5% or more of a bank/BHC, certain federal regulators
will only allow 25% or less of the aggregate assets held by that trust to
be impermissible assets for a bank or BHC. As an example, if a trust
holds $400,000 worth of BHC stock, which represents 5% or greater
ownership of the BHC, and the trust’s only other asset is a personal
residence valued at $600,000 (which represents 60% of the trust’s
total assets), the residence, considered an impermissible asset,
exceeds the 25% limit. In such a scenario there would essen�ally be
three op�ons: 1) the trust either must be approved as a BHC (most
shareholders will not want this); 2) the real estate would have to be
divested out of the current trust; or 3) a separate, qualified trust
would need to be established to hold the bank/BHC stock.

When are the Filings Required?
These are just a few of the numerous scenarios that could trigger a
change in control. When it comes to control of an ins�tu�on, there are
many factors to consider, both in the rela�onship of individuals who
own the stock and who/what controls the stock. While prior no�ce is
required before a change in control occurs – typically 60 days advance
no�ce – it is important to understand that if a change in control has
already occurred, an a�er-the-fact no�ce is s�ll required to be filed
with one or more of the ins�tu�on’s regulators providing no�ce.

At DD&F, we are aware of recent instances where an applicant bank/
BHC was forced to withdraw M&A related applica�ons because there
was an exis�ng change in control for which prior no�ce was never
submi�ed. Regulators may require that a no�ce for the change in
control be filed (even if retroac�vely) prior to accep�ng and ac�ng

Arkansas Community Banker | 17 | SUMMER 2025