# O

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| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
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Washington, DC 20219

######### **Interpretive Letter #1037**

August 9, 2005 **September 2005**

**12 USC 24(7)**

Re: Authority to Hedge Investment Advisory Fees with

> Cash-settled Derivatives Linked to the Performance of the
>
> Standard and Poor's 500 Index ("S&P 500")

Dear **\[ \]**:

This responds to your letter of May 16, 2005 requesting confirmation
that **\[ \]** ("Trust Company") may use cash-settled derivatives linked
to the performance of the S&P 500 to hedge the market risk associated
with the fees it receives from its investment advisory activities. For
the reasons discussed below and subject to the limitations and
conditions set forth herein, we believe that the proposed activity is
permissible for the Trust Company, provided that the Trust Company has
established, to the satisfaction of its Supervisory Office, an
appropriate risk measurement and management and compliance process to
conduct its proposed hedging activity.

#### Background 

The Trust Company acts as an investment advisor to a family of mutual
funds. The Trust Company believes its investment advisory activities
expose a significant portion of the Trust Company's revenues to market
risk. More than 85 percent of the Trust Company's revenues are in the
form of advisory fees for managing the mutual funds. These advisory fees
are generally a percentage of the advised funds' value. The Trust
Company contends that a decline in the value of the securities held by
the funds would reduce its advisory fee revenues. In the event of a
severe market disruption, the Trust Company believes its earnings and
capital could be placed at risk. Accordingly, the Trust Company has
determined it is necessary to hedge against that risk.

######## The Trust Company has determined the price movement of one of the most important and volatile funds[^1] it advises is sufficiently correlated to the S&P 500 that a derivative based on the S&P 500 would be an effective hedge of advisory fees from the fund advised by the Trust Company. Accordingly, the Trust Company has proposed to enter into put spread contracts linked to the S&P 500 Index to hedge market risk associated with its advisory fees. The put spread contracts will provide a hedge benefit only for declines in the value of the S&P 500 within certain pre-arranged parameters. The Trust Company would not receive payment for declines above or below those parameters. In this manner, the Trust Company will limit the amount of protection it purchases against market declines to the amount that it believes is necessary or cost effective. This amount will not exceed the forecasted investment advisory fee income earned for advisory services to its equity fund. 

######## 

######## The Proposal

To protect against downward movements in the value of the S&P 500, the
Trust Company has proposed to enter into three one-year put spread
contracts, for a notional amount of \$2,000,000 each.[^2] Each contract
would expire at the end of each successive year. The Trust Company would
pay the counterparty an up-front premium, which would increase in amount
in each successive contract. In return, the counterparty would make a
payment to the Trust Company at the end of each annual contract if the
S&P 500 loses a certain amount of value, as measured against the annual
average close of the S&P 500 for each year. The payoff amount would be
based on the "put spreads" agreed to in the contracts.

These put spreads would be created by buying a put option on the S&P 500
at a particular strike price (Upper Strike Price) and simultaneously
selling a put option on the S&P 500 with a lower strike price (Lower
Strike Price) within the same contract period.[^3] The Upper and Lower
Strike Prices would each be a percentage of the value of the S&P 500 at
the inception of the contract.[^4]

The Trust Company would receive payment from the counterparty if the S&P
500 declines to a level below the Upper Strike Price. The payment would
be equal to the notional amount (\$2,000,000) times the amount by which
the percentage decline of the S&P 500 exceeds the Upper Strike Price.
For example, if the S&P 500 declines by 12% and the Upper Strike Price
is set at 10% below the value of the S&P 500 at the inception of the
contract, the payment obligation would equal \$40,000 (2% x
\$2,000,000). If the S&P 500 falls below the Lower Strike Price, then
the maximum payment would equal the percentage difference between the
Upper Strike Price and the Lower Strike Price multiplied by the notional
amount of the contract. For example, if the Upper Strike Price is 10%
and the Lower Strike Price is 25%, and if the S&P 500 falls 30% over the
contract period, the maximum payment would be \$30,000 (15% x
\$2,000,000).

The following illustrates how the put spread would work, based on the
assumptions below:

-   Trust Company enters into three one-year put spread contracts
    beginning in 2006.

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-   Closing Price of the S&P 500 on December 31, 2005 of \$1000.

-   S&P 500 Index average daily prices of 1100 in 2006, 800 in 2007 and
    700 in 2008.

-   Upper and lower strike prices in 2006 equal to 90-85% of the value
    of the S&P 500 on 12/31/05, 90-80% 2007 and 90-75% in 2008.

-   Based on the upper and lower strike prices, the put spread contracts
    would cover losses in the value of the S&P 500 from 10 to 15% in
    2006, 10-20% in 2007 and 10-25% in 2008.

-   Premium would rise from 1% of the notional amount of the contract in
    2006, to 2% in 2007 and 4% in 2008.

Based on those assumptions, there would be no payoff in 2006, because
the average price of the S&P 500 in 2006 is above the closing price of
the S&P 500 at the end of 2005. In 2007, there is a 20 percent decline
in the S&P 500, but the first 10% decline would not create a payoff
obligation, because it is not covered by the put spread. The payoff
obligations would only be for the second 10% or loss or \$200,000. In
2008, there is a 30 percent decline in the S&P 500. The payoff would
only cover 15% of the losses, however, because the first 10 percent and
the last 5 percent of loss would not be covered by the put spread.
Therefore, the Trust Company would receive a payoff of \$300,000.

The table below further illustrates the example.

+-----+-------+-------+------------------+---------+-------+--------+
| Y   | S&P   | S&P   | Put Spread:      | N       | P     | P      |
| ear | 500   | 500   |                  | otional | ayoff | remium |
|     | 12/   | A     | Upper & Lower    | Amount  |       | Paid   |
|     | 31/05 | nnual | Strike           |         |       |        |
|     | Close | Av    |                  |         |       |        |
|     |       | erage |                  |         |       |        |
+-----+-------+-------+------------------+---------+-------+--------+
| 2   | 1000  | 1100  | 90-85%           | \$2,    | \--   | \$     |
| 006 |       |       |                  | 000,000 |       | 20,000 |
+-----+-------+-------+------------------+---------+-------+--------+
| 2   | 1000  | 800   | 90-80%           | \$2,    | \$20  | \$     |
| 007 |       |       |                  | 000,000 | 0,000 | 40,000 |
+-----+-------+-------+------------------+---------+-------+--------+
| 2   | 1000  | 700   | 90-75%           | \$2,    | \$30  | \$     |
| 008 |       |       |                  | 000,000 | 0,000 | 80,000 |
+-----+-------+-------+------------------+---------+-------+--------+

As the example shows, the put spread contracts will provide a hedge
benefit only for declines in the value of the S&P 500 that fall between
the Upper and Lower Strike Prices -- the put spread. The Trust Company
would not receive payment for declines above or below the Upper and
Lower Strike Prices. In this manner, the Trust Company will limit the
amount of protection it purchases against market declines to the amount
that it believes is necessary or cost effective.

The Trust Company has committed that it will enter into the proposed put
spread contracts solely to hedge market risk associated with its
investment advisory fees and will not engage in speculation. In
addition, the hedging strategy may only be used when there is at least a
95% correlation in price movement between the S&P 500 Index and its
Fund. In the event the Trust Company determines that the correlation is
such that the hedge is no longer effective, the Trust Company will exit
the hedge by selling the contract either to the contract counterparty or
to a buyer identified by the contract counterparty.

The Trust Company intends initially to enter into put spread contracts
for only 32.3% of the existing exposure to be hedged. The Board of
Directors of the Trust Company may increase this percentage depending
upon the fund's capital, the forecasted earnings, profits, and the
overall hedging strategy as well as any desired increase in the notional
amount. The Trust Company has committed that it will not hedge more than
the forecasted investment advisory fee income earned for providing
investment advisory services to its equity fund.

The Board of Directors and the Audit Committee of the Trust Company have
approved written policies and operating procedures for general risk
monitoring, identification and control, risk management systems, audit
coverage, and an effective risk control function to oversee and assure
the appropriateness of the risk management process. The Trust Company
will ensure that it has effective senior management supervision and
oversight by the Board of Directors to guarantee the proposed activities
are conducted in a safe and sound manner and consistent with its
commitments.

##### 

##### II. Discussion

#### 

The Trust Company has determined that the fees associated with its
investment advisory activities are subject to market risk that could
reduce the Trust Company's revenues and place its earnings and capital
at risk. The Trust Company has proposed to use put spread contracts
linked to the performance of the S&P 500 Index to hedge that risk.
National banks may use derivative contracts to manage or hedge the risks
from permissible activities under certain conditions. Thus, in our
opinion, the Trust Company may enter into put spread contracts as a
means to hedge its market risk from the fee income it receives from
investment advisory activities, subject to the limitations and
conditions set forth herein and provided that 1) the proposed put spread
contracts are entered to for the purpose of hedging the market risk
associated with its investment advisory fee, and not for speculation,
and 2) the Trust Company establishes an appropriate risk measurement and
management and compliance process to conduct such hedging activities.
This process is necessary for the Trust Company to achieve its risk
management objectives in a safe and sound manner and, thus, must be
established before the OCC can determine that the proposed activities
are permissible as part of the Trust Company's investment advisory
business.

A.  **Providing investment advice for a fee and hedging risks associated
    with those fees with put spread contracts is permissible.**

A national bank may engage in activities pursuant to 12 U.S.C.
§ 24(Seventh) if the activities are part of or incidental to the
business of banking.[^5] The OCC has long held that a national bank may
provide investment advice for a fee as part of the business of banking
under 12 U.S.C. § 24(Seventh) and pursuant to its fiduciary powers under
12 U.S.C. § 92a.[^6] Hedging risk arising from investment advisory
activities is integral to those permissible activities.

The Trust Company has determined that its investment advisory fees are
subject to market risk exposure. The Trust Company's management of that
risk is therefore integral to its bank permissible business of providing
investment advice for a fee. The Trust Company has proposed to use put
spread contracts linked to the performance of the S&P 500 Index to hedge
that risk. The put spread contracts will provide a hedge benefit only
for declines in the value of the S&P 500 within certain pre-arranged
parameters. The Trust Company would not receive payment for declines
above or below those parameters.

The OCC has long permitted national banks to enter into derivative
contracts to manage or hedge risks arising from permissible banking
activities.[^7] The OCC has recognized the permissibility of such
activities both for the purpose of providing bank customers with the
ability to hedge their own risks and as a means for banks to directly
hedge the risks that arise from permissible banking activities.[^8]

For example, in *MII Deposit*, the OCC authorized a national bank to
purchase equity index futures to hedge interest rate risk exposures on
deposit accounts that had interest rates tied to S&P 500 Index.[^9] In
confirming the permissibility of the hedging activity, the OCC noted
that national banks are permitted, and indeed encouraged, to manage
prudently the exposure arising out of bank activities and they must be
allowed the flexibility to use the most suitable risk management
tool.[^10]

Similarly, in *DPC Shares,* the OCC permitted a national bank to buy and
sell options to manage market risks associated with changes in the value
of shares of a company the bank had acquired as debt previously
contracted in a workout.[^11] The OCC concluded that the hedging
strategy could facilitate and improve the bank's ability to reduce
credit exposures to its borrowers by protecting the value of the shares.

In the *Electricity Derivatives Letter*, the OCC permitted a national
bank to hedge bank permissible electricity derivative transactions with
electricity futures, and swaps and options and other OTC instruments,
provided the activity would be conducted in a safe and sound
manner.[^12] The OCC concluded that using cash-settled electricity
derivatives to hedge against the risks associated with the bank's
customer-driven, cash-settled electricity derivatives business was an
integral part of those permissible banking activities.

In each of those decisions, the hedging transactions were used to manage
risks arising from otherwise bank permissible activities and were not
entered into for speculative purposes. In much the same manner, the
Trust Company would hedge the market risk associated with the fees it
collects from its authorized investment advisory activities by entering
into cash-settled put spread contracts linked to the S&P 500 Index. It
would not enter into the contracts for speculative purposes.

The major difference between the Trust Company's proposal and the
hedging activities approved in the OCC letters cited above is the
different contexts in which the banks were seeking to manage risks. In
the *MII Deposit*, the bank was managing interest rate risks arising
from its deposit *liabilities*, while in *DPC Shares*, the bank was
hedging market risks arising from changes in the value of its DPC
*assets*. In the *Electricity Derivatives Letter*, the banks used
electricity futures, swaps and options to hedge the *off-balance sheet*
risk of their bank permissible cash-settled electricity derivatives
activities. In this case, the Trust Company seeks to hedge market risks
associated with its investment advisory fee *income*. Regardless of
whether the bank is hedging risks from its assets and liabilities, from
off-balance sheet activities or from its income statement, the
fundamental principle is the same \-- managing the risks arising from
permissible banking activities is part of and is integral to the
business of banking. This principle is equally valid whether the
activity is deposit-taking, lending, entering into derivatives
transactions or providing investment advice for a fee. A bank must
manage the risks from its bank permissible activities to operate
profitability and may engage in hedging activities to do so.[^13] Thus,
hedging the Trust Company's advisory fee income by entering into put
spreads is permissible under 12 U.S.C. 24(Seventh), provided, as
discussed below, the Trust Company demonstrates to the satisfaction of
the OCC, that it has the capacity to conduct the activity in a safe and
sound manner.[^14]

#### B. The hedging activity must be conducted in a safe and sound manner. 

For the Trust Company to permissibly engage in the proposed activity,
the Trust Company's risk measurement and management capabilities must be
of appropriate sophistication to ensure that the activity can be
conducted in a safe and sound manner. Consequently, in order for the OCC
to conclude that this activity is permissible for the Trust Company
because it is part of the business of banking or convenient and useful
to conducting authorized banking activities, the Trust Company must
demonstrate to the satisfaction of the Supervisory Office that the Bank
has established an appropriate risk measurement and management process
for its proposed activity. As detailed further in the OCC handbook *Risk
Management of Financial Derivatives*[^15]*,* Banking Circular 277,[^16]
and the Statement of Financial Accounting Standards No. 133 ("FAS
133")[^17] an effective risk measurement and management process includes
board supervision, managerial and staff expertise, comprehensive
policies and operating procedures, risk identification and measurement,
and management information systems, as well as an effective risk control
function that oversees and ensures the appropriateness of the risk
management process.

The Trust Company's risk control processes should include the Trust
Company's compliance with accounting and reporting as stipulated by the
instructions for the Consolidated Reports of Condition and Income, and
generally accepted accounting principles.

In addition to a risk management program, the Trust Company's process
must include an independent compliance-monitoring program to ensure
ongoing compliance with the specific commitments made by the Trust
Company described above.[^18] The Trust Company must have an adequate
and effective compliance monitoring program that includes policies,
training, independent surveillance and well-defined exception approval
and reporting procedures.

In addition, prior to conducting the proposed activity, the Board of
Directors of the Trust Company must execute an operating agreement
("Operating Agreement") with the OCC on terms and provisions acceptable
to the OCC. The safeguards in the Operating Agreement will ensure that
the Trust Company continues to operate in a safe and sound manner after
it commences the proposed hedging activity. This requirement is a
condition imposed in writing by the agency in connection with the
granting of an application or other request within the meaning of 12
U.S.C. § 1818. As such, the condition is enforceable under 12 U.S.C. §
1818.

The Trust Company may not commence the proposed activity unless and
until its Supervisory Office has concluded that the foregoing standards
are met.

#### III. Conclusion

> The Trust Company may engage in the proposed activity subject to the
> limitations and conditions set forth herein and provided the Trust
> Company acts in accord with the commitments reflected in this letter
> and has established, to the satisfaction of its Supervisory Office,
> appropriate risk measurement and management and compliance processes.
>
> Sincerely,
>
> **signed**
>
> Julie L. Williams
>
> First Senior Deputy Comptroller and Chief Counsel

[^1]: The fund (the "Fund"), which accounts for 59.6% of the assets
    under management and 60.3% of the Trust Company's revenues, is the
    largest account under management and is invested in equity
    securities.

[^2]: The notional amount is the amount used to calculate payments made
    on derivative product. *See*
    [http://www.investordictionary.com](http://www.investordictionary.com/).
    In case of a put spread, the notional amount is the amount of
    coverage purchased.

[^3]: A put spread is created by buying a put option(s) at a particular
    strike price on a particular stock or stock index and simultaneously
    selling a put option on the same underlying stock or index with a
    lower strike price within the same contract period. A put spread is
    typically executed as a package in one single transaction, but could
    also be created with separate buy and sell transactions. The put
    spread allows the bank to limit the amount of protection it
    purchases against market declines to the amount that it believes is
    necessary or cost effective. *See*
    <http://www.riskglossary.com/articles/options_spread.htm>.

[^4]: The Upper and Lower Strike Prices for each of the three successive
    contracts would be based on the closing value of the Index on the
    date prior to the date of the first contract. Thus, when the Trust
    Company enters into the second and third put spread contracts in
    years two and three, the Upper Strike Prices and the Lower Strike
    Prices will be set as a percentage of the closing price of the Index
    on the date prior to the date the Trust Company enters into the
    first contract in year one.

[^5]: Section 24(Seventh) expressly provides that national banks shall
    have the power: To exercise . . .all such incidental powers as shall
    be necessary to carry on the business of banking; by discounting and
    negotiating evidences of debt; by receiving deposits; by buying and
    selling exchange, coin, and bullion; by loaning money on personal
    security; and by obtaining, issuing, and circulating notes according
    to the provisions of title 62 of the Revised Statutes. The Supreme
    Court held that this authority is a broad grant of power to engage
    in the business of banking, including, but not limited to, the five
    powers expressly granted in 12 U.S.C. § 24(Seventh) and in the
    business of banking as a whole. *NationsBank of North Carolina v.
    Variable Annuity Life Insurance Co.*, 513 U.S. 251 (1995)
    ("*VALIC*").

[^6]: *See e.g.*, Interpretive Letter No. 940 (May 24, 2002);
    Interpretive Letter No. 897 (October 23, 2000) *reprinted in*
    \[2000-2001 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81-416;
    Interpretive Letter No. 871 (October 14, 1999) *reprinted in*
    \[1999-2000 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81,365;
    Conditional Approval Letter No. 164 (December 9, 1994); Interpretive
    Letter No. 648 (May 4, 1994) *reprinted in* \[1994 Transfer Binder\]
    Fed. Banking L. Rep. (CCH) ¶ 83,557; Interpretive Letter No. 647
    (April 15, 1994) *reprinted in* \[1994 Transfer Binder\] Fed.
    Banking L. Rep. (CCH) ¶ 83,558; Interpretive Letter No. 403
    (December 9, 1987) *reprinted in* \[1988-1989 Transfer Binder\] Fed.
    Banking L. Rep. (CCH) 85,627.

[^7]: *See e.g.,* OCC Interpretive Letter No. 896 (August 21, 2000)
    (*Agricultural Loan Hedge Letter*) *reprinted in* \[2000-2001
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81-415 (national bank
    may purchase cash-settled options on futures on agricultural
    commodities to hedge bank permissible lending activities).

[^8]: *See* OCC Interpretive Letter No. 356 (January 7, 1986) *reprinted
    in* \[1985-1987 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶
    85,526 (bank registered as a futures commission merchant could
    execute customer orders for agricultural and metals futures in
    connection with its loans to the customers); *Decision of the Office
    of the Comptroller of the Currency on the Request by Chase Manhattan
    Bank, N.A. to Offer the Chase Market Index Investment Deposit
    Account* (August 8, 1988) ("*MII Deposit*"), 1988 OCC Ltr. LEXIS 266
    (national bank may buy and sell futures on the S&P Index to hedge
    deposits with interest rates tied to the S&P 500 Index); OCC
    Interpretive Letter No. 937 (May 14, 2002) (*Electricity Derivatives
    Letter*) *reprinted in* \[2001-2002 Transfer Binder\] Fed. Banking
    L. Rep. (CCH) ¶ 81,462 (bank could hedge risks arising from
    financial intermediation transactions based on electricity prices);
    OCC Interpretive Letter No. 892 (September 13, 2000) *reprinted in*
    \[2000-2001 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81-411
    (*Equity Hedge Letter*) (national bank may hedge the risk of
    derivatives activities by purchasing equity securities); OCC No
    Objection Letter No. 87-5 (July 20, 1987) *reprinted in* \[1988-1989
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 84,034 (bank could
    act as principal in commodity price index swaps with its customers);
    OCC No Objection Letter 90-1 (February 16, 1990) *reprinted in*
    \[1989-1990 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 83,095
    (bank could act as principal in unmatched commodity price index
    swaps with its customers and hedge its price risk exposure using
    exchange-traded commodity futures); OCC Letter from Horace Sneed,
    Senior Attorney, Legal Advisory Services Division (March 2, 1992)
    (unpublished) (bank could manage its commodity index swaps on a
    portfolio basis and hedge the swaps with swaps, exchange traded
    futures or over-the-counter (OTC) options; OCC Interpretive Letter
    No. 642 (September 13, 1994) *reprinted in* \[1994 Transfer Binder\]
    Fed. Banking L. Rep. (CCH) ¶ 83,600 (bank could engage in equity and
    equity derivative swaps and hedge risk using futures contracts,
    options and similar OTC instruments).

[^9]: *MII Deposit*, *supra*. The threshold issue the OCC confronted was
    whether the bank had the authority to offer a deposit product with
    interest based in part on a stock index. The OCC concluded that the
    offering of the deposit was permissible under the express authority
    in 12 U.S.C. § 24(Seventh) for national banks to receive deposits.
    The OCC also specifically rejected the argument that purchasing S&P
    500 Index futures contracts was impermissible under the Glass
    Steagall Act due to restrictions on bank purchases of the underlying
    securities. *See also Investment Company Institute v. Ludwig*, 884
    F. Supp. 4 (D.D.C. 1995) (controlling effect given to *MII Deposit*
    in denying plaintiff's motion for summary judgment in suit claiming
    the MII program violated the Glass-Steagall Act). *See also*, OCC
    Letter from Ellen Broadman, Director, Securities and Corporate
    Practices Division, OCC to Barbara Moheit, Regional Counsel, FDIC
    (October 20, 1998) (unpublished) (national bank may hedge interest
    rate risk on deposits that pay interest based on a particular equity
    index or unit investment trust ("UIT") by purchasing options on the
    same equity index or UIT).

[^10]: *MII Deposit*, *supra*.

[^11]: *See* OCC Interpretive Letter No. 961 (Mar. 17, 2003) ("*DPC
    Shares"*), *OCC Interpretations and Actions, April 2003* (national
    bank may buy and sell options on the shares of stock of a company
    when the bank has acquired shares of the company in satisfaction of
    debts previously contracts).

[^12]: OCC Interpretive Letter No. 937 (June 27, 2002) ("*Electricity
    Derivatives Letter*"), *reprinted in* \[2001-2002 Transfer Binder\]
    Fed. Banking L. Rep. (CCH) ¶ 81,462 (national bank may hedge bank
    permissible electricity derivative transactions with electricity
    futures, and swaps and options and OTC derivative instruments).

[^13]: *Equity Hedge Letter, supra*.

[^14]: The Trust Company has identified a stock index that is highly
    correlated (95%) to the risk factors that could affect the Trust
    Company's income flows. Thus, the derivatives of that stock index
    provide a highly correlated hedge that justifies the hedging
    activity.

[^15]: January 1997.

[^16]: October 27, 1993.

[^17]: Statement of Financial Accounting Standards No. 133, "Accounting
    for Derivative Instruments and Hedging Activities" (FAS 133).

[^18]: The OCC has long incorporated safety and soundness considerations
    when determining whether an activity is part of, or incidental to
    the business of banking. *See e.g.*, *Equity Hedge Letter*, *supra*
    (national bank may engage in equity hedging activities only if it
    has an appropriate risk management process in place); Interpretive
    Letter No. 684 (August 4, 1985) (commodity hedging is a permissible
    banking activity provided the activity is conducted in accordance
    with safe and sound banking practices); *MII Deposit, supra*
    (national banks have the authority to establish and determine the
    amount of the payments to be made and received under their deposit
    and loan contracts by reference to any index or standard as long as
    the bank is in compliance with safe and sound banking principles);
    Interpretive Letter No. 376 (Oct. 22, 1986) *reprinted in*
    \[1985-1986 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 85,600
    (indemnification from losses resulting from participation in the
    bank's fiduciary securities lending program is a permissible
    incidental activity provided the indemnification is consistent with
    OCC guidance and safety and soundness).