# O

+-----------------------------------------------------------------------+
| ## Comptroller of the Currency                                        |
|                                                                       |
| > **Administrator of National Banks**                                 |
+-----------------------------------------------------------------------+

Southern District Licensing

1600 Lincoln Plaza

500 North Akard

Dallas, Texas 75201-3323

**Conditional Approval #735**

February 24, 2006 **March 2006**

Wesley Morehead

President

Texas Citizens Bank, N.A. (Proposed)

4130 Fairmont Parkway

Pasadena, Texas 77504

Re: Charter Application No. 2005-SO-01-0022; Texas Citizens Bank, N.A.
(Proposed), Pasadena, Texas, Charter No. 24640

Dear Mr. Morehead:

The Office of the Comptroller of the Currency (OCC) has reviewed your
application to establish a new national bank with the title of Texas
Citizens Bank, National Association. On February 24, 2006, the OCC
granted preliminary conditional approval of your charter application
after a determination that your proposal met certain regulatory and
policy requirements.

This preliminary conditional approval is granted based on a thorough
evaluation of all information available to the OCC, including the
representations and commitments made in the application and by the
Bank's representatives. We also made our decision to grant preliminary
conditional approval with the understanding that the proposed Bank will
apply for Federal Reserve membership and will obtain deposit insurance
from the Federal Deposit Insurance Corporation (FDIC).

The OCC has granted preliminary conditional approval only. Final
approval and authorization for the Bank to open will not be granted
until all pre-opening requirements are met. Until final approval is
granted, the OCC has the right to alter, suspend, or revoke this
preliminary conditional approval should the OCC deem any interim
development to warrant such action.

This preliminary conditional approval is subject to the following
condition:

1.  The Bank: (i) shall give the Houston Field Office at least
    sixty (60) days prior written notice of the Bank's intent to
    significantly deviate or change from its business plan or
    operations[^1] and (ii) shall obtain the OCC's written determination
    of no objection before the Bank engages in any significant deviation
    or change from its business plan or operations. The OCC may impose
    additional conditions it deems appropriate in a written
    determination of no objection to a bank's notice. For the first
    three years of operation, the Bank also must provide a copy of such
    written notice to the FDIC's Dallas Regional Office.

This condition of approval is a condition "imposed in writing by the
agency in connection with the granting of any 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 Bank's initial paid-in capital, net of all organizational and
pre-opening expenses, shall be no less than \$9.5 million. The manner in
which capital is raised must not deviate from that described in the
business plan without prior written OCC notification. If the capital for
the Bank is not raised within 12 months or if the Bank is not opened for
business within 18 months from the preliminary conditional approval
date, this approval expires. The OCC is opposed to granting extensions,
except under the most extenuating circumstances and when the OCC
determines that the delay is beyond the applicant's control. The
organizers are expected to proceed diligently, consistent with their
application, for the Bank to open for business as soon as possible.

The OCC poses no objection to the following persons serving as executive
officers, directors, and/or organizers as proposed in the application:

> [Name]{.underline} [Title]{.underline}
>
> Bill Bailey Director
>
> Michael Cornett Executive Vice President/Director
>
> George Dempsey Director
>
> Ervin Lev Executive Vice President
>
> Kenneth Love Director
>
> Wesley Morehead Chief Executive Officer/Director
>
> Duncan Stewart Director
>
> Tommy Watson Executive Vice President/Director

Not all background checks requested by the OCC have been received for
Mr. Lev or Mr. Love. Accordingly, their continued service will be
dependent on satisfactory completion of the background investigation
process.

Prior to opening, the Bank must obtain the OCC's prior written
determination of no objection for any additional organizers or executive
officers, or directors appointed or elected before the person assumes
the position. For a two-year period after the Bank commences business,
the Bank must file an *Interagency Biographical and Financial Report*
with the OCC and receive a letter of no objection from the OCC prior to
any new executive officer or director assuming such position.

The "Charters" booklet in the *Comptroller's Licensing Manual* provides
guidance for organizing your bank. The booklet is located at the OCC\'s
web site:
<http://www.occ.treas.gov/corpbook/group4/public/pdf/charters.pdf>. The
booklet contains all of the steps you must take to receive your charter.

As detailed in the booklet, since the OCC has already accepted your
Articles of Association and the Organization Certificate, you may begin
organizing the Bank. As a "body corporate" or legal entity, you may
begin taking those steps necessary for obtaining final approval. The
Bank may not begin the business of banking until it fulfills all
requirements for a bank in organization and the OCC grants final
approval.

Enclosed are standard requirements and minimum policies and procedures
for new national banks. The Bank must meet the standard requirements
before it is allowed to commence business and the Board of Directors
must ensure that the applicable policies and procedures are established
and adopted before the Bank begins operation.

In addition to the standard requirements for all new national banks, the
following special requirements must be satisfied prior to the Bank's
request for a pre-opening examination and before the OCC will grant
final charter approval:

1.  The Bank must submit to the Houston Field Office for review, and
    prior written determination of no supervisory objection, a complete
    description of the Bank's final information systems and operations
    architecture as well as the information systems risk assessment and
    management plan. This should include a schematic drawing and
    discussion of the following items:

Vendor due diligence and contracts; electronic banking security
mechanisms and policies; information systems personnel; internal
controls; audit plans; and operating policies and procedures, including,
but not limited to, vendor management, weblinking, customer
authentication and verification, and business resumption contingency
plans.

2.  The Bank must have performed an independent security review and test
    of its electronic banking platform. The Bank must have this review
    performed regardless of whether the platform is operated in-house or
    by one or more third-party service providers. If the Bank outsources
    the technology platform, it can rely on testing performed for the
    service provider to the extent that it satisfies the scope and
    requirements listed herein. The review must be conducted by an
    objective, qualified independent source (Reviewer). The scope should
    cover:

-   All access points, including the Internet, Intranet, or remote
    access.

```{=html}
<!-- -->
```
-   The adequacy of physical and logical protection against unauthorized
    access including individual penetration attempts, computer viruses,
    denial of service, and other forms of electronic access.

> By written report, the Reviewer must confirm that the security
> measures, including the firewall, have been satisfactorily implemented
> and tested. For additional guidance, refer to the *FFIEC IT
> Examination E-Banking Handbook*, pages 26-30, Information Security
> Program. The booklet is located at the FFIEC's Web site:
> [http://www.ffiec.gov/ffiecinfobase/booklets/e_banking/e_banking.pdf.](http://www.ffiec.gov/ffiecinfobase/booklets/e_banking/e_banking.pdf)

3.  The Bank must have a security program in place that complies with
    the "Interagency Guidelines Establishing Standards for Safeguarding
    Customer Information" specified at 12 CFR 30, Appendix B.

Under separate cover, the OCC will send to you an appropriate set of OCC
handbooks, manuals, issuances, and selected other publications. This
information does not include the *Comptroller's Licensing Manual*, which
is available only in electronic form at our web site:
<http://www.occ.treas.gov/corpapps/corpapplic.htm>.

A separate letter is enclosed requesting your feedback on how we handled
your application. We would appreciate your response so we may improve
our service. Please direct any questions concerning this preliminary
conditional approval to me or Licensing Analyst Elizabeth Classey Phan
at (214) 720-7052.

Yours truly,

signed

Karen H. Bryant

Director for District Licensing

Enclosures: Standard Requirements

Minimum Policies and Procedures

Survey Letter

[^1]: If such deviation is the subject of an application filed with the
    OCC, no separate notice to the supervisory office is required.