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Comptroller of the Currency

Administrator of National Banks

Southeastern District

Marquis One Tower, Suite 600

245 Peachtree Center Ave., N.E.

Atlanta, Georgia 30303

#### Corporate Decision #2001-21

July 26, 2001 **August 2001**

Scott M. J. Anderegg, Esquire

Troutman Sanders Mays & Valentine LLP

Bank of America Center

1111 East Main Street

Richmond, Virginia 23219

Re: Bank of Powhatan, N.A.

Powhatan, Virginia

Expedited Reorganization

CAIS Control Number 2001-SE-12-081

Dear Mr. Anderegg:

This is to inform you that the Office of the Comptroller of the Currency
("OCC") approved the application of Bank of Powhatan, N.A. ("Bank") to
undertake a reorganization pursuant to Section 1204 of the American Home
Ownership and Economic Opportunity Act of 2000 and 12 C.F.R. §
7.2000(a).

## I. Discussion

##  A. American Home Ownership and Economic Opportunity Act of 2000

On December 21, 2000, Congress passed the American Homeownership and
Economic Opportunity Act of 2000 ("AHEOA").[^1] Section 1204 of this act
provides a streamlined process for national banks to effect holding
company reorganizations through an exchange of the banks' stock for cash
or securities of a bank holding company.[^2]

Section 1204 permits a national bank, with a vote of the shareholders of
at least two-thirds of its shares, to reorganize to become a subsidiary
of a bank holding. The bank also must obtain OCC approval and observe
OCC rules and regulations.

Section 1204 provides a detailed description of procedures a national
bank must follow to effect a reorganization through a share exchange.
The national bank must carry out its reorganization in accordance with a
reorganization plan that specifies the manner in which the
reorganization shall be carried out. The plan must specify the
consideration to be paid for shares of bank stock, the date for fixing
the right of shareholders to participate in the exchange, and the manner
in which the bank will carry out the exchange. A majority of the entire
board of directors of the national bank must approve the plan. Also,
shareholders must approve the plan at a meeting following the procedures
prescribed for a merger of a national bank under section 3 of the
National Bank Consolidation and Merger Act.[^3]

Shareholders who vote against the reorganization or have given written
notice of dissent are entitled to receive dissenters' rights provided
under section 215a.[^4] That provision gives dissenting shareholders the
right to receive fair value for their shares and to have the value
determined by an appraisal committee, or if none is appointed, the
Comptroller of the Currency.

**B. OCC Regulations**

National banks may conduct reorganizations under section 1204 pursuant
to existing OCC rules and regulations. Section 1204 does not require the
OCC to adopt regulations before banks may conduct share exchanges under
its provisions. The plain language of section 1204 provides for
reorganizations with the Comptroller's approval "pursuant to rules and
regulations promulgated by the Comptroller" rather than "pursuant to
rules and regulations promulgated by the Comptroller under this
section."

Further support for this reading is provided by the effective date
chosen by Congress for section 1204. Section 1204 was effective on its
enactment, reflecting congressional intent that banks be able to conduct
transactions authorized under section 1204 immediately. Accordingly,
section 1204 does not require that the OCC adopt regulations
implementing its provisions before banks may conduct reorganizations.
Banks must comply, however, with OCC regulations in effect at the time
of the transactions, including regulations promulgated in the future
under section 1204.

Twelve 12 C.F.R. § 7.2000 is a regulation that applies to
reorganizations. Section 7.2000(a) provides that a national bank
proposing to engage in a corporate governance procedure "shall comply
with applicable Federal banking statutes and regulations, and safe and
sound banking practices." Section 1204 provides a highly detailed set of
requirements for a national bank to observe in effecting a
reorganization. A national bank that effects a share exchange under
section 1204 also must comply with those requirements and safe and sound
banking practices. [^5]

**C. The Bank's Plan**

We have reviewed the Bank's plan of reorganization and find that it
complies with the requirements of section 1204 and section 7.2000(a):

-   The Bank's reorganization plan appropriately specifies the manner in
    which the reorganization will be carried out;

-   A majority of the entire Board of Directors of the Bank has approved
    the plan of reorganization;

-   The reorganization plan specifies (A) the amount of cash or
    securities of the bank holding company, or other consideration, to
    be paid to the bank's shareholders in exchange for their shares of
    stock of the Bank; (B) the date as of which the rights of each
    shareholder to participate in the exchange will be determined;
    and (C) the manner in which the exchange will be carried out; and

-   The Bank is submitting its reorganization to its shareholders at a
    meeting to be held at the call of the directors in accordance with
    the procedures prescribed in connection with a merger of a national
    bank under section 215a. The Bank is soliciting a vote in favor of
    the reorganization plan by shareholders owning at least two-thirds
    of the Bank's outstanding shares.

-   Should the Bank's shareholders approve the reorganization plan, any
    Bank shareholder who has voted against the plan at the shareholders
    meeting or who has given notice in writing at or prior to that
    meeting that the shareholder dissents from the plan, shall be
    entitled to receive the value of his or her shares as provided for
    in section 215a.

## II. Conclusion

The Bank's reorganization plan meets the requirements of section 1204
and section 7.2000(a). Accordingly, the OCC approves this application.
We will certify the reorganization upon receipt of the final executed
Agreement and Plan of Reorganization, final shareholder approval and
notification of the effective date of the transaction.

This approval is granted based on a thorough review of all information
available, including the representations and commitments made in the
application(s) and by the bank's representatives. 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 United States, any agency or entity
of the United States, or an officer or employee of the United States,
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 United States

Please include the CAIS control number on all correspondence related to
this filing.

If you have any questions concerning this decision, please contact
Senior Licensing Analyst Louis Gittleman at (404) 588-4525.

Sincerely,

-signed-

John O. Stein

Licensing Manager

[^1]: 114 Stat. 2944, Pub. L. 106-569, 106^th^ Cong. (2000). This
    section is codified as Section 5 of the National Bank Consolidation
    and Merger Act, 12 U.S.C. § 215a-2.

[^2]: 12 U.S.C. § 215a-2(a).

[^3]: 12 U.S.C. § 215a-2(b). Section 3, codified at 12 U.S.C. § 215a,
    addresses shareholder approval, shareholder notice, and dissenters'
    rights.

[^4]: 12 U.S.C. § 215a-2(c). Section 1204(d) provides that the corporate
    existence of a national bank that reorganizes pursuant to section
    1204 is unaffected by reason of the reorganization. Section 1204(e)
    provides that section 1204 does not affect in any way the
    applicability of the Bank Holding Company Act of 1956 to a
    reorganization. *See* 12 U.S.C. § 215a-2(d) and (e).

[^5]: Prior to the enactment of section 1204, the OCC permitted national
    banks to effect reorganizations through share exchanges under
    authority of section 7.2000(b). That provision permits a national
    bank to adopt the corporate governance procedures of the state in
    which it is headquartered, Delaware law, or the Model Business
    Corporation Act to the extent they are not inconsistent with federal
    banking law or safety and soundness. *See* Interpretive Letter No.
    891, *reprinted in* \[Current Binder\] Fed. Banking L. Rep. (CCH) ¶
    81-410 (Apr. 26, 2000), Interpretive Letter No. 879, *reprinted in*
    \[1999-2000\] Fed. Banking L. Rep. (CCH) ¶ 81-372 (Nov. 19, 1999),
    Interpretive Letter No. 870, *reprinted in* \[1999-2000\] Fed.
    Banking L. Rep. (CCH) ¶ 81-364(Oct. 12, 1999), and Interpretive
    Letter No. 869, *reprinted in* \[1999-2000\] Fed. Banking L. Rep.
    (CCH) ¶ 81-363 (Oct. 12, 1999). Now that section 1204 provides a
    federal framework for effecting share exchanges, a national bank may
    not rely on section 7.2000(b) to effect a share exchange.