# O

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

###### CRA Decision #125

December 21, 2004 **January 2005**

OCC Control Nr. 2004-ML-02-0010

Ms. Courtney D. Allison

Assistant General Counsel

Wachovia Corporation

301 South College Street / NC0630

Charlotte, North Carolina 28288

Dear Ms. Allison:

This is to inform you that today the Office of the Comptroller of the
Currency ("OCC") approved the application to merge SouthTrust Bank,
Birmingham, Alabama, into Wachovia Bank, National Association,
Charlotte, North Carolina. As discussed below, this approval was granted
based upon a thorough review of statutorily required evaluative factors
utilizing all information available and in reliance upon commitments and
representations made in the application and those of Wachovia Bank,
N.A.'s representatives.

#### I. INTRODUCTION

Wachovia Bank, N.A. ("WBNA") applied to the OCC for approval to merge
with and into its charter, SouthTrust Bank ("STB"), a state-chartered
bank with its main office in Birmingham, Alabama under 12 U.S.C. §§
215a-1, 1831u, and 1828(c). [^1] STB has branches in Alabama, Florida,
Georgia, Mississsippi, North Carolina, South Carolina, Tennessee, Texas,
and Virginia.[^2] WBNA is a national bank with its main office located
in Charlotte, North Carolina. WBNA has branches in Connecticut, Florida,
Georgia, North Carolina, Virginia, Pennsylvania, South Carolina, New
Jersey, New York, and the District of Columbia. WBNA, as the resulting
institution, will retain the main office of STB as a branch and the
branches of STB as branches of WBNA, and will also retain the main
office and branches of WBNA.

WBNA applied to retain various subsidiaries of STB after the Merger. All
but one of these subsidiaries engage in activities permissible for
national banks under Part 24 or Part 28, or through operating
subsidiaries under 12 C.F.R. Part 5 or under OCC precedent. However, one
of STB's subsidiaries, SouthTrust Development Corporation ("STDC") holds
real property that does not conform to the requirements for assets
acquired and held by national banks. STDC was acquired by STB through
the acquisition by a predecessor bank of a Georgia state-chartered
thrift. WBNA will divest any nonconforming assets within the two-year
time of consummation of the merger.[^3]

#### AUTHORITY FOR THE TRANSACTION

The proposed transaction is an interstate merger of an FDIC-insured
Alabama-chartered bank into an FDIC-insured national bank located in
North Carolina. Such interstate transactions are authorized under
section 44 of the Federal Deposit Insurance Act:

> "Beginning on June 1, 1997, the responsible agency may approve a
> merger transaction
>
> under section 18(c) \[12 U.S.C. § 1828(c), the Bank Merger Act\]
> between insured banks
>
> with different home States, without regard to whether such transaction
> is prohibited
>
> under the law of any State." \[12 U.S.C. § 1831u(a)(1) (the
> "Riegle-Neal Act").\][^4]

An application to engage in an interstate merger transaction under 12
U.S.C. § 1831u is also subject to certain requirements and conditions
set forth in sections 1831u(a)(5) and 1831u(b). These conditions are:
(1) compliance with state-imposed age limits, if any, subject to the
Riegle-Neal Act's limits; (2) compliance with certain state filing
requirements, to the extent the filing requirements are permitted by the
Act; (3) compliance with nationwide and state deposit concentration
limits; (4) community reinvestment compliance; and (5) adequacy of
capital and management skills. The merger of STB into WBNA satisfies all
these conditions to the extent applicable.

First, the proposal satisfies the state-imposed age requirements
permitted by section 1831u(a)(5). Under that section, the OCC may not
approve a merger under section 1831u(a)(1) "that would have the effect
of permitting an out-of-State bank or out-of-State bank holding company
to acquire a bank in a *host State* that has not been in existence for
the minimum period of time, if any, specified in the statutory law of
the *host State*." 12 U.S.C. § 1831u(a)(5)(A) (emphasis added). The term
"host state" means, "with respect to a bank, a State, other than the
home State of the bank, in which the bank maintains, or seeks to
establish and maintain a branch. 12 U.S.C. § 1831u(f)(5). In this merger
application, Alabama is the host state and for purposes of this section,
specifies that a bank must be in existence and continued operation for a
period of five years prior to being acquired.[^5] STB has been in
continuous operation for more than five years.[^6] Thus, the merger
satisfies the Riegle-Neal Act's age requirement.

Second, the proposal meets the applicable filing requirements. A bank
applying for an interstate merger transaction under section 1831u(a)
must (1) "comply with the filing requirements of any host State of the
bank which will result from such transaction" as long as the filing
requirement does not discriminate against out-of-state banks and is
similar in effect to filing requirements imposed by the host State on
out-of-state nonbanking corporations doing business in the host State,
and (2) submit a copy of the application to the state bank supervisor of
the host State. *See* 12 U.S.C. § 1831u(b)(1).[^7] WBNA submitted a copy
of its OCC Application to the Superintendent of the State of Alabama
Banking Department as required by section 1831u(b)(1) and Section
5-13B-5 of the Alabama Code. Copies of the Application were also sent to
the banking authorities in the other states where STB has branches and
WBNA does not, *i.e.*, Mississippi, Tennessee, and Texas. WBNA has
complied with any applicable additional state filing requirement.

Third, the proposed interstate merger transaction does not raise issues
with respect to the deposit concentration limits of the Riegle-Neal Act.
Section 1831u(b)(2) places certain nationwide deposit concentration
limits on section 1831u(a) interstate merger transactions. However,
interstate merger transactions involving only affiliated banks are
specifically excepted from these provisions. 12 U.S.C. § 1831u(b)(2)(E).
WBNA and STB are affiliates; thus section 1831u(b)(2) is not applicable
to this merger.

Fourth, the proposed interstate merger transaction does not raise issues
with respect to the special community reinvestment compliance provisions
of the Riegle-Neal Act. In determining whether to approve an application
for an interstate merger transaction under section 1831u(a), the OCC
must (1) comply with its responsibilities under section 804 of the
federal Community Reinvestment Act ("CRA"), 12 U.S.C. § 2903, (2) take
into account the CRA evaluations of any bank which would be an affiliate
of the resulting bank, and (3) take into account the applicant bank's
record of compliance with applicable state community reinvestment laws.
12 U.S.C.

§ 1831u(b)(3). However, this provision does not apply to mergers between
affiliated banks.[^8] In this Application, WBNA and STB are affiliates,
and so this Riegle-Neal Act provision is not applicable. However, the
CRA itself is applicable, as discussed below.

Fifth, the OCC may approve an application for an interstate merger
transaction under section 1831u(a) only if each bank involved in the
transaction is adequately capitalized as of the date the application is
filed, and the resulting bank will continue to be adequately capitalized
and adequately managed upon consummation of the transaction. 12 U.S.C. §
1831u(b)(4). As of the date the Application was filed, WBNA and STB
satisfied all regulatory and supervisory requirements relating to
adequate capitalization. Currently, the banks are at least
satisfactorily managed. The OCC has also determined that, following the
consolidation, the resulting bank will continue to exceed the standards
for an adequately capitalized and adequately managed bank. The
requirements of 12 U.S.C. § 1831u(b)4 are, therefore, satisfied.

Accordingly, the proposed merger is legally authorized under the
Riegle-Neal Act.[^9]

The Applicant has also requested that, after the merger, WBNA, as the
resulting bank, be permitted (1) to retain its own main office and
branches and (2) to retain the target bank's main office and branches
(subject to the DOJ divestiture agreement) as branches of WBNA. Such
continued operation is permissible under 12 U.S.C. § 1831u(d)(1) and 12
U.S.C. § 36(d). [^10] Therefore, WBNA, the resulting bank, may retain
and operate the requested main offices and branches.

The Applicant has also requested that, WBNA, as the resulting bank, be
permitted to retain STB's foreign branch in the Cayman Islands. This is
permissible under 12 U.S.C. § 601 and Regulation K, 12 C.F.R. §
211.3(b).[^11]

#### Retention of subsidiaries 

STB owns a number of subsidiaries that will become subsidiaries of WBNA
as a result of the merger. Most of these subsidiaries qualify as
operating subsidiaries and the Applicant seeks to retain them as
operating subsidiaries. Operating subsidiaries are those that conduct
activities that are permissible for a national bank to engage in
directly and conduct those activities pursuant to the same
authorization, terms, and conditions that apply to the conduct of those
activities by their parent bank.[^12] All of these subsidiaries, except
as discussed below concerning SouthTrust Development Corporation, engage
in activities permissible for national banks by statute, regulations,
and prior OCC precedent, and thus may be retained by WBNA. The
subsidiaries, as described by the Applicant, include:

-   First State Service Corporation acts as a trustee for deeds of trust
    and holds other real estate owned ("OREO").

-   Magic City, Inc. ("MCI"), an intermediate holding company, holds all
    of the stock of Magic City Three, Inc.

-   Magic City Three, Inc. is located in Delaware and manages investment
    securities for STB.[^13]

-   SC Realty, LLC holds SouthTrust Bank OREO.

-   SouthTrust Capital Funding Corp. holds and services loans from STB's
    portfolio.

-   SouthTrust Mobile Services Funding Corp. was the depositor (*i.e*.,
    serves as a special purpose vehicle) of STB mobile home loans in
    asset securitization transactions.

-   ST Holding (TN), Inc., an intermediate holding company, holds all of
    the stock of Omniplus Capital Corp., ST Realty, Inc., ST Realty 3,
    Inc. and ST Realty 4, Inc.

-   ST Realty, Inc. is a captive real estate investment trust.

-   ST Realty 3, Inc. is a captive real estate investment trust.

-   ST Realty 4, Inc. is a captive real estate investment trust.

-   SouthTrust Community Development Management Corporation, an
    intermediate holding company, holds one percent interests in two STB
    community development corporations: SouthTrust Community Development
    LLC and SouthTrust Community Development Series A, LLC. All three of
    these companies are inactive.

-   ST Holding (SC), Inc., an intermediate holding company, holds the
    stock of SC Financial Insurance Company.

-   ST Holding (AL), Inc. ("STHAL"), an intermediate holding company,
    holds the stock of its subsidiary, ST Holding (TN), Inc.[^14]

The above listed subsidiaries conduct activities that are permissible
for national banks and their operating subsidiaries. *See* 12 C.F.R. §
5.34(e)(5)(v)(A), which authorizes an operating subsidiary to hold
assets acquired by the parent bank, including investment assets, and
property acquired through foreclosure or to collect a debt previously
contracted.

SouthTrust Mortgage Corp. is engaged in mortgage lending activities.
This is a permissible activity for national banks and their operating
subsidiaries. 12 C.F.R. § 5.34(e)(5)(v)(C).

Omniplus Capital Corporation purchases, sells, services and warehouses
loans. This is a permissible activity for national banks and their
operating subsidiaries. 12 C.F.R.

§ 5.34(e)(5)(v)(D).

HNB Auto Exchange, LLC engages in automobile leasing activities. This is
a permissible activity for national banks and their operating
subsidiaries. 12 C.F.R. § 5.34(e)(5)(v)(M).

SC Financial Insurance Company ("SCFIC") reinsures credit related
insurance and private mortgage insurance. This is a permissible activity
for national banks and their operating subsidiaries. 12 C.F.R. §
5.34(e)(5)(v)(L) and (Q). In addition, SCFIC also provides excess lines
coverage for STB-related risks. [^15] The excess lines coverages
provided by SCFIC for STB-related risks are within the types of
insurance coverages a national bank subsidiary may provide for its
parent bank and bank affiliates. The OCC concluded in Interpretive
Letter No. 845 (October 20, 1998) that a national bank and its operating
subsidiary could, in general, "self-insure" the risks associated with
operating a bank as a business enterprise.[^16]

Section 302 of the Gramm-Leach-Bliley Act ("GLBA"), 15 U.S.C. § 6712,
preserved the authority of national banks to continue to engage in these
activities. Under Section 302, national banks and their subsidiaries may
not provide insurance products as principal, except for "authorized
products." The term "authorized products" is defined to include any
product that the OCC had determined in writing, as of January 1, 1999,
that national banks may provide as principal, provided that, as of such
date, no court had rendered a final judgment overturning such
determination. The OCC authorized national banks to "self-insure" the
risks associated with operating a bank as a business enterprise prior to
January 1, 1999,[^17] and these determinations have not been overturned
by any court. The excess lines coverages provided by SCFIC involve
self-insurance of risks of STB relating to its operating as a bank.
Accordingly, SCFIC's excess lines insurance for STB-related risks
satisfies the "authorized product" exception in Section 302 of the GLBA,
and is permissible for national banks and their subsidiaries.

SouthTrust Bank also owns two subsidiaries that conduct foreign
operations authorized under the Federal Reserve Act, 12 U.S.C. § 601 *et
seq.*[^18] The OCC's rules provide that "a national bank may engage in
any activity in a foreign country that is permissible under the FRB's
Regulation K, 12 C.F.R. Part 211." [^19]

The four subsidiaries formed to engage in community development
activities provided under 12 C.F.R. Part 24 (ST Community Redevelopment,
LLC, SouthTrust Community Development Series A, LLC, SouthTrust
Community Reinvestment Company, LLC, and SOCO Community Development
Company, LLC) are discussed later in the Community Investments section
D.

Lastly, South Trust Development Corporation holds some nonconforming
assets. However, WBNA represents that it will divest all remaining
nonconforming assets within two years after consummation of the proposed
merger.[^20]

Consequently, the resulting bank may retain these above-referenced
subsidiaries.

**III. ADDITIONAL REVIEWS**

#### 

#### The Bank Merger Act

1\. Competitive Effects

WBNA and STB have subsidiary depository institutions that compete
directly in forty-one banking markets in five states. The Federal
Reserve Board ("FRB) reviewed the competitive effects of the proposal in
each of these banking markets in light of all the facts of record,
including public comment on the HC proposal with only two comments
opposing based on competitive effects. The FRB considered the number of
competitors that would remain in the markets, the relative shares of
total deposits of depository institutions in the markets controlled by
both banks, the concentration levels of market deposits and the
increases in these levels as measured by the Herfindahl-Hirschman Index
("HHI") under the Department of Justice ("DOJ") guidelines, and other
characteristics of the markets. The FRB also considered commitments made
by Wachovia Corporation (WC) to the DOJ to reduce the potential that the
proposal would have adverse effects on competition by divesting eighteen
STB branches that account for approximately \$592 million in deposits,
in four banking markets.

Since the FRB and the DOJ identified banking markets likely to become
anti-competitive and obtained an Agreement with WC to divest 18 branches
and the associated deposits to prevent lessening of competition prior to
approving the HC merger, the OCC waived analysis of anti-competitive
effects and will rely on the Agreement made between the FRB, the DOJ and
WC to divest eighteen STB branches to reduce identified anti competitive
effects. Therefore, in light of the divestiture agreement between WC and
the FRB as detailed in the FRB's conditional approval for the merger of
SouthTrust Corporation ("STC"), the merger of STB into WBNA will not
have an anticompetitive effect on any of the related banking markets.

WBNA has subsequently represented to the OCC that: (1) it has entered
into a contract to sell all branches and accounts subject to the
divestiture agreement; (2) the buying depository institution has
received required regulatory approval; and, (3) the subject branches and
accounts will remain operationally segregated from WBNA until
consummation of their sale.

2\. Convenience and Needs

The proposed bank merger will enhance the combined banks' ability to
serve the convenience and needs of the communities that it will operate
in. The resulting bank will be able to offer a greater number of credit
products, a broader range, and expanded access to financial products and
services. The resulting bank will also be able to compete effectively
with large national financial institutions that are emerging from
consolidation in the financial services industry.

Specifically, the combined bank will be able to offer improved checking
and savings accounts with greater ATM access for its customers (minimum
deposit and ATM fees will be reduced or eliminated). Loan products
offered to customers will enhance the bank's ability to continue the
strong home equity and mortgage lending business to include risk-based
pricing and lower loan pricing. WBNA plans to offer affordable housing
mortgage loans to STB's customers in the low- and moderate-income
category. Also, STB customers will benefit from WBNA's student loan
program offered under the trade name "Educaid", a long-time leader in
the government-backed student loan business currently ranked 7^th^
largest student loan provider and the 4^th^ largest holder of student
loans in the nation.

As one of the largest commercial lenders in the USA, WBNA plans to
continue to provide superior services and loan products while making
available a variety of loan products to mid-size and small business
customers. Through an operating subsidiary, WBNA is a national leader in
providing U.S. Small Business Administration loans. As of August 2004,
the WBNA ranked sixth in the nation among SBA Section 7(a) lenders on a
national level; Number 1 in Alabama, and North Carolina; Number 2 in
Florida and Virginia, Number 5 in Georgia; and has obtained "Preferred
Lender" status with the SBA. In addition to participating in the SBA
Section 7(a) program, WBNA participates in the SBA Express program,
which makes smaller loan amounts, and the SBA Section 504 Program to
provide long-term financing for fixed assets like buildings or land.

WBNA also will continue to offer a wide array of financing products to
service the needs of small businesses including: lines of credit, credit
cards, vehicle and equipment leases, letters of credit, term loans,
mortgages, and construction loans. To further serve the needs of small
business clients, WBNA will continue to have dedicated staff, small
business specialists, in branches and small business loan underwriting
centralized to allow for increased efficiency and consistency in the
decision process.

STB customers will have access to a wide array of investment options.
WBNA will continue to offer mutual fund products known as the Evergreen
Funds with approximately \$109 billion assets under management.
Customers will enjoy access to Wachovia Securities, LLC a registered
broker-dealer affiliate of WBNA available in all branches.

Customers will experience improved access to ATMs and branches
throughout the combined service areas. WBNA has nearly 2,500 branches
and STB has 742 branches with combined 5,300 ATMs. Customers will not
pay surcharges when using the branch/ATM network. The bank merger is
expected to enhance the resulting bank's efforts to help meet the
"Convenience and Needs of the Community", and is expected to strengthen
bank efforts to further comply with the Community Reinvestment Act. STB
customers will see the benefits from an extended branch and ATM network
into Pennsylvania, New Jersey, New York and the District of Columbia.
WBNA customers will see the benefits from an extended branch network
into Alabama, Mississippi, Tennessee, and Texas. Also, WBNA plans to
continue its Call Center and On-line Banking operations allowing 24-hour
access.

WBNA plans to retain 100% of its customers during the branch conversion
phase of the bank merger. To minimize customer impact and to allow time
to correct any problems that may arise, the branch conversion process
will take place gradually beginning in the second quarter of 2005 and
ending in the first quarter of 2006 given the bank merger occurs as
hoped on or about January 3, 2005. WBNA has previously announced that
between 175 and 200 branches will be closed or consolidated as a result
of the merger. Most of the branches that will be subject to
consolidation are in close proximity to one another and therefore will
be serving overlapping census tracts. WBNA represents that any
anticipated branch closings or consolidations will occur well after the
proposed date of the merger and will comply with 12 U.S.C. 1831r-1 with
a separate 90-day branch closing notice.

3.  Financial and Managerial Resources

Given both banks' well-capitalized position and the expectations that
the resulting bank will continue in well-capitalized status, the
combined banks are projected to maintain adequate financial resources to
operate effectively. The pro forma Tier 1 capital ratio of 7.97%, pro
forma Total capital ratio of 11.41%, and a pro forma Leverage capital
ratio of 6.34% will facilitate the bank to be a leading East Coast bank
post merger with total assets of \$428.9 billion and deposits of \$294.7
billion. WBNA and STB are well-managed institutions and will remain
well-managed post merger. The Board of Directors and Senior Executive
Officers of WBNA before the bank merger will continue to serve in their
respective positions after the merger. The combined banks are also
expected to retain virtually all of the technically and analytically
skilled staff to function in the various service areas needed to ensure
the banks continued good financial condition.

## B. The Community Reinvestment Act 

1\. CRA Record of Performance

The CRA requires the OCC to take into account the applicants' record of
helping to meet the credit needs of the entire community, including low-
and moderate-income neighborhoods, when evaluating certain applications,
including transactions subject to the Bank Merger Act.[^21] The OCC's
review revealed no evidence that applicants' records of helping meet the
credit needs of their communities, including low- and moderate-income
neighborhoods, are less than satisfactory.

WBNA received an "Outstanding" CRA rating in the OCC's September 30,
2000, Performance Evaluation ("PE"). At that time, the bank was
operating under the name First Union National Bank, Charlotte, North
Carolina. In 2002, when First Union National Bank merged with WBNA First
Union National Bank assumed the name WBNA. Prior to the 2002 merger,
WBNA also received an "Outstanding" CRA rating in the OCC's December 31,
2000 PE. STB received a "Satisfactory" CRA rating in the Federal Reserve
Bank of Atlanta's May 5, 2003 PE. None of these PEs disclosed any fair
lending concerns.

2\. Discussion of Public Comments

The OCC received a comment from a community organization that expressed
concerns that WBNA and STB do not provide a sufficient amount of credit
to African-American farmers and business owners in their respective
markets.[^22] As mentioned above, both banks have been examined for fair
lending and neither bank has a record of violating substantive
provisions of fair lending laws.[^23] In addition, WBNA noted that it
made over \$221 million in small farm loans in 2003.[^24] WBNA also
noted that it assisted more than 70,000 entrepreneurs start or expand
their businesses in 2003.[^25]

The commenter also expressed concerns that WBNA and STB Bank do not
provide sufficient outreach and support to African-American farmers and
community organizations. WBNA responded that, in connection with the
proposed merger, WBNA and STB contacted over 325 community organizations
within a 15-state market area, including the commenter.[^26] Of those
contacted, 201 completed surveys, which enabled the banks to collect
information on community credit program needs to incorporate into the
banks' community plan following the merger. The plan pledges \$75
billion over five years in the nine states affected by the merger and
sets forth annual state-by-state goals. In addition, WBNA indicated
that, since 2001, it had provided technical and financial support to the
commenter for purposes including establishing the community organization
and sponsoring annual conferences of the organization. WBNA also
indicated that in 2003 and 2004 it sponsored or otherwise provided
financial support to several other conferences or organizations
benefiting African-American or other minority agricultural producers.

**C.** **REQUEST FOR PUBLIC HEARING**

The commenter also requested that the OCC conduct a public hearing.
After careful consideration, the OCC has determined not to conduct a
hearing on this merger application.

The general standard the OCC applies to determine whether to hold a
public hearing is contained in 12 C.F.R. § 5.11, which provides:

> *The OCC generally grants a hearing request only if the OCC determines
> that written submissions would be insufficient or that a hearing would
> otherwise benefit the decision- making process. The OCC also may order
> a hearing if it concludes that a hearing would be in the public
> interest.*

The commenter believed the OCC should conduct public hearings in order
to obtain additional information from the banks regarding the
commenter's concerns and the plans developed for the community. The
commenter indicated that it had not been able to obtain such information
from the banks. As noted in footnote 23, supra, the banks are generally
prohibited from collecting data with regard to the race of applicants
for the types of loans in question. The banks otherwise provided
information to the OCC responding to the commenter's concerns regarding
lending and outreach by the banks and the banks' plans for the
community. The OCC was not persuaded that the proposed testimony would
provide the OCC with additional information beneficial to the OCC's
decision-making process on the pending application, nor that a hearing
would be in the public interest.

##### D. Community Investments

WBNA will acquire three STB community development investments under the
investment authority of 12 U.S.C. § 24(Eleventh) (the "Statute") and 12
C.F.R. Part 24 (the \"Regulation") concerning national bank investments
in community and economic development entities, community development
projects, and other public welfare investments:

-   SouthTrust Community Development, LLC (\$5,000.00)

-   SouthTrust Community Development Series A, LLC (\$1,000.00)

-   SouthTrust Community Reinvestment Company, LLC (\$108,135,911.32)

These STB investments primarily benefit low- and moderate-income
individuals, low- and moderate-income areas, or other areas targeted by
a governmental entity for redevelopment, or the investments would
receive consideration as "qualified investments" under 12 C.F.R. §
25.23. The aggregate amount of these investments under the Statute and
the Regulation is \$108,141,911.32. The aggregate amount of WBNA\'s
investments under the Statute and the Regulation following the
acquisition will be \$1,961,718,491.32, which will be less than 5
percent of WBNA's capital and surplus following the merger. Furthermore,
the acquisition of the investments will not expose WBNA to unlimited
liability. Therefore, the acquisition of the investments by WBNA is
consistent with the Statute and the Regulation.

#### IV. CONCLUSION AND APPROVAL

For the reasons set forth above, and in reliance on the representations
and commitments of the Applicant, we find that the merger transaction,
together with the requests to retain and operate main offices and
branches and the retention of various subsidiaries, are legally
authorized under 12 U.S.C. §§ 215a-1, 1831u(a), and 1828(c), 36(d) and
1831u(d)(1) and 12 C.F.R. § 5.34. The Application also meets the other
relevant statutory criteria for approval, and the transactions raise no
supervisory and policy concerns. Accordingly, the Application is hereby
approved.

This approval, and the activities and communications by OCC employees in
connection with the filing, do not constitute a contract, express or
implied, or any other obligation binding upon the OCC, the U.S., any
agency or entity of the U.S., or any officer or employee of the U.S.,
and do not affect the ability of the OCC to exercise its supervisory,
regulatory and examination authorities under applicable law and
regulations. The foregoing may not be waived or modified by any employee
or agent of the OCC or the U.S.

In the event of questions, please contact Large Bank Licensing Manager
Richard T. Erb who may be reached by e-mail: <largebank@occ.treas.gov>
or by telephone at (202) 874-5060. Please include the application
control number in all correspondence.

Sincerely,

/s/ Lawrence E. Beard

Lawrence E. Beard

Deputy Comptroller for Licensing

ACN #2004- ML-02-0010

[^1]: The Federal Reserve Board approved the merger of Wachovia
    Corporation and SouthTrust Corporation, the parent holding companies
    of WBNA and STB on October 15, 2004, and the holding company merger
    was consummated on November 1, 2004. Thus, WBNA and STB are now
    affiliates.

[^2]: In addition to these domestic branches, STB maintains a foreign
    branch in the Cayman Islands under the authority of Regulation K, 12
    C.F.R. § 211.3.

[^3]: *See* Business Combinations booklet, Comptroller's Licensing
    Manual (January 2004) at p.35.

[^4]: Section 44 was added by section 102(a) of the Riegle-Neal
    Interstate Banking and Branching and Efficiency Act of 1994, Pub. L.
    No. 103-328, 108 Stat. 2338 (enacted Sepember 29, 1994) (the
    "Riegle-Neal Act"). The Riegle-Neal Act also made conforming
    amendments to the National Bank Consolidation and Merger Act to
    permit national banks to engage in such section 44 interstate merger
    transactions and to the McFadden Act to permit national banks to
    maintain and operate branches in accordance with section 44. *See*
    Riegle-Neal Act §§ 102(b)(4)(adding a new section, codified at 12
    U.S.C. § 215a-1) & 102(b)(1)(B) (adding new subsection 12 U.S.C. §
    36(d)).

    For purposes of section 1831u, the following definitions apply: The
    term "home State" means, with respect to a national bank, "the State
    in which the main office of the bank is located." The term "host
    State" means, "with respect to a bank, a State other than the home
    State of the bank, in which the bank maintains, or seeks to
    establish and maintain, a branch." The term "out-of-State bank"
    means, "with respect to any State, a bank whose home State is
    another State." The term "responsible agency" means the agency
    determined in accordance with 12 U.S.C.

    § 1828(c)(2) (namely, the OCC if the acquiring, assuming, or
    resulting bank is a national bank). *See* 12 U.S.C.

    § 1831u(f)(4), (5), (6), (8), & 10.

[^5]: *See* Ala.Code § 5-13B-6.

[^6]: STB, through predecessor institutions, has been in business since
    1887, but the present entity was chartered as a national bank in
    1996. In 2000, STB converted to an Alabama state-chartered bank
    pursuant to section 5-7A of the Code of Alabama. Section 5-7A-22 of
    the Code of Alabama states that "\[u\]pon such conversion becoming
    effective, the state bank shall be deemed to be a continuation of
    the entity and identity of the national bank...."

    Therefore, the age of STB relates back to the charter granted in
    1996.

[^7]: Under this provision, states are permitted to impose a filing
    requirement on out-of-state banks that will operate branches in the
    state as a result of an interstate merger transaction under the
    Riegle-Neal Act, but the states may impose only those requirements
    that are within the terms specified. Since Congress has specifically
    set forth and limited what state filing requirements apply for these
    interstate transactions, it clearly intended that only those
    requirements would apply, and the states may not impose others. For
    a fuller discussion of this subject, *see, e.g., Decision on the
    Application to Merge First Interstate Banks into Wells Fargo Bank,
    N.A.*( OCC Corporate Decision No. 96-29, June 1, 1996)(at pages 4-5,
    12-14 & note 11).

[^8]: It does not apply to mergers between affiliated banks because it
    applies only "for an interstate merger transaction in which the
    resulting bank would have a branch or bank affiliates immediately
    following the transaction in any State in which the bank submitting
    the application (as the acquiring bank) had no branch or bank
    affiliate immediately before the transaction." 12 U.S.C. §
    1831u(b)(3). *See also* H.R. Conf. Rep. No. 651, 103d Cong. 2d Sess.
    52 (1994).

[^9]: The merger also meets the requirements of 12 U.S.C. § 215a. In
    particular, since the target is a state bank, the merger must not be
    in contravention of state law. Alabama permits its state banks to
    merge into national banks. *See* Ala. Code § 5-13B-23. In addition,
    there will be no non-conforming assets or subsidiaries in STB, as
    WBNA commits to divesting from its subsidiary SouthTrust Development
    Corporation, all remaining nonconforming assets within two years.

[^10]: In interstate transactions under section 1831u, the resulting
    bank's retention and continued operation of the offices of the
    combining banks is expressly provided for: "A resulting bank may,
    subject to the approval of the appropriate Federal banking agency,
    retain and operate as a main office or a branch, any office that any
    bank involved in an interstate merger transaction was operating as a
    main office or a branch immediately before the merger transaction."
    12 U.S.C. § 1831u(d)(1). The resulting bank is the "bank that has
    resulted from an interstate merger transaction under this section
    \[section 1831u(a)\]". 12 U.S.C. § 1831u(g)(11). In addition,
    Congress added a conforming amendment to the McFadden Act to
    emphasize that branch retention in an interstate merger transaction
    under section 1831 occurs under the authority of section 1831u(d):

    \(d\) Branches Resulting From Interstate Merger Transactions. -- A
    national bank resulting from an interstate merger transaction (as
    defined in section 44(f)(6) of the Federal Deposit Insurance Act)
    may maintain and operate a branch in a State other than the home
    State (as defined in subsection (g)(3)(B)) of such bank in
    accordance with section 44 of the Federal Deposit Insurance Act.

    12 U.S.C. § 36(d) (as added by Riegle-Neal Act § 102(b)(1)(B)).
    Section 36(d) makes it clear that section 1831u(d)(1) is an express
    and complete grant of office-retention authority for transactions
    effected under section 1831u and that it operates independently of
    the provisions for branch retention in 12 U.S.C. 36(b)(2) that apply
    to combinations under 12 U.S.C. §§ 215 or 215a. Neither section
    36(d) nor section 1831u(d)(1) refer to section 36(b)(2). By
    expressly providing for office-retention in section 1831u(d)(1) and
    then incorporating that into the McFadden Act in section 36(d),
    Congress clearly intended that those provisions, rather than the
    complex branch retention provisions of section 36(b)(2), apply to
    branch retention in transactions under section 1831u.

[^11]: WBNA will retain STB's Cayman Islands branch but since WBNA also
    maintains a foreign branch in the Cayman Islands, it may decide to
    consolidate them into one branch. Under 12 C.F.R. § 28.3(a),
    national banks are required to notify the OCC regarding foreign
    branches. Applicant included the foreign branch in the application
    in fulfillment of this requirement. Nothing in the OCC's rules
    relieves the Applicant from complying with requirements that are
    imposed by the Federal Reserve Board under Regulation K, (12 C.F.R.
    Part 211). *See* 12 C.F.R. 28.10(c). However, since WBNA already
    maintains a foreign branch in the Cayman Islands, no prior notice to
    the FRB is required to establish additional branches there. *See* 12
    C.F.R. § 211.3(b)(4).

[^12]: 12 C.F.R. § 5.34(e)(1)(3).

[^13]: The Applicant has represented that all of the investment assets
    held in this subsidiary are permissible for a national bank under 12
    U.S.C. § 1.

[^14]: On December 2, 2004, the Applicant requested that the Application
    be amended to include the retention of STHAL, an Alabama corporation
    and the parent of ST Holding (TN), Inc. ("STHTN"). STHTN is the
    parent of various subsidiaries that hold real estate related assets.

[^15]: WBNA represents that STB has primary insurance in place from a
    third party insurance company up to a certain amount and SCFIC
    provides insurance coverage in excess of the limits in those
    policies. WBNA represents that SCFIC provides the following
    coverages: excess employment practices liability, bankers
    professional liability, excess bankers' professional liability,
    excess business aircraft, excess fidelity computer crime, excess
    business interruption, and excess umbrella liability.

[^16]: *See also,* Corporate Decision \# 99-03 (December 21, 1998).

[^17]: *See* Interpretive Letter No. 845 (October 20, 1998); and
    Corporate Decision \# 99-03 (December 21, 1998).

[^18]: SouthTrust International, Inc. is an "Agreement corporation"
    organized pursuant to 12 C.F.R. § 211.5(g). It is an intermediate
    holding company which holds all of the stock of SouthTrust Hong
    Kong, Ltd. SouthTrust Hong Kong, Ltd. is engaged in issuing and
    processing letters of credit for STB in connection with the
    export/import activities of its customers, as authorized pursuant to
    12 C.F.R. § 211.10. The Federal Reserve Board approved the
    acquisition of South Trust International, Inc. by Wachovia pursuant
    to the Federal Reserve Act, 12 U.S.C. § 601 *et seq.* and Regulation
    K, 12 C.F.R. § 211.5, in its Holding Company Merger Decision dated
    October 15, 2004.

[^19]: *See* 12 C.F.R. § 28.4(b). The Applicant has consulted with the
    Federal Reserve Board and determined that no additional filing is
    required.

[^20]: *See* discussion at note 9, *supra*.

[^21]: [See]{.underline} 12 U.S.C. § 2903; 12 C.F.R. § 25.29(a).

[^22]: The Board of Governors of the Federal Reserve System received
    similar comments from the same community organization in connection
    with the application to merge WC and STC. The Order approving the
    merger of these holding companies, dated October 15, 2004,
    considered the concerns raised by the commenter but found no basis
    to deny or conditionally approve the application. The Order noted
    that WBNA had provided financial support and technical assistance to
    many community organizations, including the commenter. In addition,
    since the commenter expressed concerns with the lack of "black farm
    loans in the USDA guaranteed program", the Order noted that CRA does
    not require banks to provide specific kinds of credit products or
    programs. Subsequently, WBNA indicated to the OCC that while it is a
    USDA lender, the bank does not generate a high volume of these types
    of loans due in part to the high administrative expense of that
    program.

[^23]: The Equal Credit Opportunity Act, 15 U.S.C. § 1691 [et
    seq]{.underline}., implemented by Regulation B, 12 C.F.R. Part 202,
    prohibits banks from collecting data regarding the race of an
    applicant unless the loan is primarily for the purchase or
    refinancing of a dwelling to be occupied by the applicant as a
    principal residence and the loan is secured by such dwelling, or
    such collection is in connection with a self-test. [See]{.underline}
    12 C.F.R. §§ 202.5, 202.13.

[^24]: For example, WBNA indicated that to meet the credit needs of
    small farmers in Virginia, it extended a \$5 million loan as part of
    a \$25.5 million syndicated participation agreement. The syndicated
    fund is managed by a division of a cooperative, and the loan was
    extended to establish a financing program that targets small farmers
    with annual revenues up to \$500,000. An analysis of that lending
    portfolio indicated that almost 90 percent of the extensions of
    credit were in amounts of \$500,000 or less, and 89 percent of all
    loans were extended to local farms that would not qualify for
    traditional, conventional loans.

[^25]: WBNA indicated that it has created products, channels and
    processes to benefit its small business customers. The bank delivers
    small business services including loans, real estate loans, vehicle
    and equipment leasing and other financing products, such as a
    commercial credit card product.

[^26]: WBNA indicated that 38 of those contacts were with minority
    organizations and four were with rural/farming organizations.