O

**Comptroller of the Currency**

**Administrator of National Banks**

Southern District Licensing

1600 Lincoln Plaza

500 North Akard

Dallas, Texas 75201-3342

# Conditional Approval #721

## December 13, 2005 January 2006

Charles F. Rivers, III

Spokesperson

Harbor National Bank, Proposed

Post Office Box 31239

Charleston, South Carolina 29417-1239

Re: De Novo Charter, Harbor National Bank, Proposed, Charleston, South
Carolina

Application Control Number 2005-SO-01-0017

Dear Mr. Rivers:

The Office of the Comptroller of the Currency (OCC) has reviewed your
application to establish a new national bank with the title of Harbor
National Bank. On December 13, 2005, the OCC granted preliminary
conditional approval of your charter application after a determination
that your proposal met certain regulatory and policy requirements. Your
request for a branch is also approved.

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 preopening 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:

The Bank: (i) shall give the Carolina 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

Charles F. Rivers

December 13, 2005

Page 2

> 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 Atlanta supervisory office.

The condition of this 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 USC § 1818. As such, the condition is
enforceable under 12 USC § 1818.

The following requirements must be satisfied prior to the bank
implementing a transactional Internet site:

1\. The bank must submit to the Carolina Supervisory 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.

-   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 Internet and the National Bank
Charter\" booklet of the *Comptroller\'s Licensing Manual*, pages 37-38,
Information System Security. The booklet is located at the Electronic
Banking section of the OCC\'s Web site:
<http://www.occ.treas.gov/corpbook/group4/public/pdf/internetnbc.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.

Charles F. Rivers

December 13, 2005

Page 3

The Bank's initial paid-in capital, net of all organizational and
preopening expenses, shall be no less than \$14,200,000 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. You must furnish the OCC with a copy of all related filings to
the Federal Reserve.

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

[Name]{.underline} [Proposed Position]{.underline}

> Charles Rivers President/ CEO/ Organizer/ Director
>
> Lester A. Butler, Jr. Chairman/ Organizer/Director

Charles Werk Executive Vice President/ Organizer/ Director

William Stanley Ashburne SVP/ Chief Credit Officer

> Joseph LaFerte Chief Financial Officer/ Chief Operations Officer

Dr. John Boatwright Organizer/ Director

> Andrew K. Epting Organizer/ Director
>
> Robert D. Fairey Organizer/ Director
>
> Thomas F. Hartnett Organizer/ Director
>
> Charles M. Huff Organizer/ Director
>
> James J. Kerr Organizer/ Director
>
> Cynthia J. Lowrey Organizer/ Director
>
> James M. Stelling Organizer/ Director
>
> Crayton Walters Organizer/ Director

Background checks requested by the OCC have not been received yet from
one source for Mr. Fairey. Accordingly, the continued service of this
individual will be dependent on satisfactory completion of the
background investigation process.

Prior to the Bank's 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. Any individual subscribing to the stock offering
in an amount exceeding 10% of outstanding stock will need to undergo OCC
review and approval including background checks, prior to the bank's
opening. Also, 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.

Charles F. Rivers

December 13, 2005

Page 4

As detailed in the booklet, you may establish the corporate existence of
and begin organizing the Bank as soon as you adopt and forward Articles
of Association and the Organization Certificate to the Southern District
Office for our review and acceptance. 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.

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>.

This preliminary conditional 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 (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.

Direct any questions concerning this preliminary conditional approval to
Pansy G. Hale, NBE/ Licensing Analyst at (214) 720-7052. The referenced
application control number should be included in all correspondence.

Yours truly,

/s/ Brenda E. McNeese

Brenda E. McNeese

Acting District Director for Licensing

Enclosures: Minimum Policies and Procedures

Standard Requirements

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