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

February 24, 2003 **Interpretive Letter #986**

###### April 2004

Richard E. Brophy, Jr. **12 USC 24(7)**

Naman, Howell, Smith & Lee

P.O. Box 1470

Waco, TX 76703

Subject: Operating Subsidiary Application by Extraco Banks, N.A., Waco,
TX to Expand Activities of Extraco Institutional Services Corp.,
Application Control Number: 2002-WO-08-0002

Dear Mr. Brophy:

By letter dated June 28, 2002, OCC Corporate Decision No. 2002-11 (the
"Approval Letter"), the OCC approved an application by Extraco Banks,
N.A., (the \"Bank\"), Waco, TX under 12 CFR § 5.34 to expand the scope
of activities performed by an operating subsidiary of the Bank, Extraco
Institutional Services Corporation (the \"Company\"). Based on the
commitments and representations in the Bank\'s application and other
materials, OCC approved the Company's proposal to provide advisory and
consulting services to Bank customers who use the Bank's electronic
retail or wholesale transactional services; the advice would cover the
hardware, software, and other technologies necessary to use those
services. Likewise, based upon these commitments and representations,
OCC approved the Company's proposal to provide advisory and consulting
services to business customers on the hardware, software, and other
technology necessary to enable those customers to process for themselves
banking, economic, and financial information. The Bank now seeks
clarification from the OCC on whether the Company can provide the second
category of advisory activities to persons or entities not currently
"bank customers." For the reasons below, the Company may do so under the
Approval Letter.[^1]

As you note, in the Approval Letter, the OCC approved essentially two
categories of advisory activities. Under the first category, the Company
would provide advisory and consulting services to Bank retail and
business customers with regard to the installation of necessary
hardware, software, telephone lines, modems and other devices in order
to operate the Bank\'s Internet-based banking products.

Under the second category, the Company would provide advice and
consulting services to business customers on the processing of banking,
financial, and economic data for themselves, including the hardware and
software needed to enable customers to process such data. With regard to
the second category, the Bank represented that such banking, financial,
and economic data would include accounts receivable, accounts payable,
revenues, expenses, and similar financial data and that the advisory and
consulting services would be limited to the type of banking, financial,
and economic data that the Bank would be permitted to process on behalf
of its customers.

The Approval Letter concluded that both categories of advisory
activities came within the provision of the OCC's final regulation on
electronic activities of national banks that codified the existing OCC
position on a national bank's authority to engage in data processing
activities. The new regulation provides in relevant part:

> It is part of the business of banking under 12 U.S.C. § 24(Seventh)
> for a national bank to provide data processing, and data transmission
> services, facilities (including equipment, technology, and personnel),
> data bases, advice and access to such services, facilities, data bases
> **and advice**, for itself and for others, where the data is banking,
> financial, or economic data, and other types of data if the derivative
> or resultant product is banking, financial, or economic data. For this
> purpose, economic data includes anything of value in banking and
> financial decisions.

12 CFR § 7.5006(a) (emphasis added.)

The Approval Letter stated:

> Here, ... the proposed advisory services entail providing advice on
> the processing of banking, financial, or economic data. The Company
> proposes to advise retail and wholesale Bank customers, who use the
> Bank's electronic transactional services, on the hardware, software,
> and other technologies necessary to use those services. Such advice is
> clearly focused on the processing of banking data. The Company also
> proposes to provide advisory and consulting services to business
> customers on the hardware, software, and other technology necessary to
> enable Bank customers to process banking, economic, and financial
> information for themselves. This would include processing of
> information on the customer's accounts receivable, accounts payable,
> revenues, expenses, and similar financial data. The Bank has committed
> that it will limit its advisory and consulting services to the type of
> banking, financial, and economic data that the Bank would be permitted
> to process on behalf of its customers.

(Footnote omitted.)

The first category of approved advisory activities was intended to be
limited to persons or entities that had an existing business
relationship with the Bank. The advisory activities approved were those
that related to the technology needed to support that banking
relationship. Limiting the advice to the customer's underlying Bank
service relationship assures that the first category of advisory
services will pertain only to "banking" data and, thus, will fall within
7.5006(a).

However, the second category was not intended to be so limited. With
respect to the second category, the Bank expressly committed that the
advisory and consulting services would be "limited to the type of
banking, financial, and economic data that the Bank would be permitted
to process on behalf of its customers." This commitment is sufficient to
assure that the second category will be within 7.5006(a) irrespective of
whether the specific business customer of the Company also has a banking
relationship with the Bank.

As you point out, what matters under 7.5006(a) is the nature of the data
being processed, not whether the entity receiving the processing also
receives other banking services from the bank. As demonstrated in the
first category of approved services, one way to assure that data being
processed is "banking" data is to require that the data be connected to
the consumption of banking services. However, this is not the only way
to satisfy 7.5006(a). An express commitment that processing will be
limited to financial data permitted for national banks, which the Bank
provided and which formed the basis for the approval of the second
category, is equally effective.

Thus, the Approval Letter's reference to "bank customers" in the second
category was intended only to reflect the Bank's commitment that the
Company would be limited to the type of advice the Bank would be
permitted to provide to "bank customers." However, there was no intent
to limit the Company to providing the second category of advice only to
customers of the Bank.

This letter merely interprets the scope of the Approval Letter and is
not itself a new or additional approval. For this reason, the proposed
activities discussed in this letter remain subject to all the
commitments and representations referenced in the Approval Letter. We
expect that the Company will conduct all its advisory activities in
conformance with OCC Corporate Decision No. 2002-11.

Sincerely,

/s/ Julie L. Williams

Julie L. Williams

First Senior Deputy Comptroller and Chief Counsel

[^1]: Since the proposed activities fall within the intent and scope of
    the Approval Letter, I conclude that the proposed activities are not
    "new" activities for purposes of 12 CFR 5.34e)(5(i) and, thus, that
    no additional application under that section is required.