The Office of the Comptroller of the Currency is scheduled to issue rules today that are aimed at easing some regulatory burdens on community banks.

One rule, designed to make it easier for small banks to qualify for Subchapter S tax status, would give banks more flexibility to buy back their shares. Buybacks can be necessary because S corporations, which pay no corporate taxes, may not have more than 75 shareholders.

Another rule, which would make it easier for directors to buy shares of their company, is aimed at helping banks attract qualified board members. A third clarifies that automated teller machines and loan production offices are not defined as branches, and are therefore not subject to geographic restrictions imposed on branches by individual states.

The rules are slated to take effect in early December.

On Wednesday the agency approved an application from National Bank of Commerce in Memphis to underwrite corporate bonds and other debt securities through a subsidiary. With the approval, NBC Capital Markets Groups Inc. may also deal in and privately place trust-preferred securities, and buy and sell collateralized mortgage obligations.

While the approval was granted under the OCC's current regulations, the regulator noted that it was also consistent with the standards set out in the pending financial modernization legislation.

Comptroller John D. Hawke Jr. said in a statement that if banks expand into the securities business, "they will increase competition for underwriting services, thereby lowering borrowing costs and fees for corporate customers." -- Louis Whiteman

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