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

**Interpretive Letter #1012**

November 19, 2004 **December 2004**

##### 12 CFR 4.31

Mark E. Wilson, Esq.

Kerns, Pitrof, Frost & Pearlman, LLC

333 West Wacker Drive, Suite 1840

Chicago, Illinois 60606

Subject: [In the Matter of the Arbitration between IBAT Bond Trust and
City Nat'l Bank]{.underline}

Dear Mr. Wilson:

This is with further reference to your request, acknowledged on October
4, 2004, seeking non-public OCC information under 12 C.F.R. § 4.31 *et
seq*. on City National Bank, Kilgore, Texas, for use in the above
referenced arbitration proceeding. Your request, which is on behalf of
the IBAT Bond Trust, asks for OCC examination reports, examiner work
papers and Suspicious Activity Reports related to this bank for the
period 1997 to present. We also received a comment from your opposing
counsel dated October 19, 2004.

#### Background

Your request indicates that in the arbitration proceeding referenced
above, City National Bank is seeking insurance coverage for its
potential liability in a separate proceeding brought against the bank by
the Securities Investor Protection Corporation and pending in U.S.
Bankruptcy Court for the Eastern District of Texas. In the first phase
of the arbitration proceeding, the parties are now engaged in discovery.
According to your request, one important question is whether the bank
made a material misstatement or omission on its May 22, 2000 application
for insurance when it answered \"no\" to a question asking whether, in
the most recent examination by regulatory authorities, any \"material
criticisms of your operations\" were cited. Exhibit 2, § A, question 18.
The application also asks whether, in the past two years, the bank\'s
directors or officers were alerted to \"\[m\]aterial violations of laws
and regulations.\" Exhibit 2, § C, question 9(d). You indicate that
another issue in the arbitration is whether the bank failed to disclose
to IBAT that it had not filed a timely Suspicious Activity Report
(\"SAR\") when the owner of Sunpoint Securities \"tried to give CNB\'s
president a paper bag containing \$25,000 in cash in an apparent
attempted bribery.\"

#### Decision

Although your request seeks non-public OCC information for the period
1997 to September 2004, this is plainly too broad. As noted above, the
bank\'s application for insurance asked about material criticisms in
\"the last examination\" and material violations of law during the two
years preceding the bank\'s May 22, 2000 application for insurance.
Thus, for purposes of your request, the only OCC examination report that
might be responsive is the report covering the examination commenced on
October 5, 1998.

While the OCC may conclude that it is appropriate to authorize
disclosure of nonpublic OCC information when a national bank has made
specific misrepresentations regarding OCC statements in examination
reports or in other nonpublic OCC information, the OCC will not
authorize disclosure to confirm or refute a bank\'s general statements
that do not misrepresent the tenor of nonpublic OCC information, nor
will the OCC authorize disclosure to confirm or refute a bank\'s general
statements about its condition. After reviewing the relevant examination
report in light of the issues raised in your request, I conclude that
there is no basis for authorizing disclosure of nonpublic OCC
information. Accordingly, your request for examination reports and
workpapers is denied.

Moreover, statements in an OCC examination report regarding the bank are
simply not relevant to the arbitration because the bank is barred by
federal law from disclosing such information to its bonding company. See
12 C.F.R. § 4.37(b)(1). While the OCC\'s regulation contains several
exceptions in 12 C.F.R. § 4.37(b)(2) to the general prohibition on
disclosure by a national bank of non-public OCC information, disclosure
to the bank\'s bonding company is *not* among the exceptions. Thus, City
National Bank would not have been able to disclose such criticisms and
violations, if they were discussed in an OCC examination report. Nor
does the regulation permit a national bank to disclose its composite
CAMEL rating to a bonding company, and City National Bank erred in doing
so on its insurance application. Exhibit 2, § A, question 22.

With respect to SARs, the OCC will not disclose any SARs or state
whether a SAR was filed. Under federal statutes, OCC regulations and the
abundant case law, a SAR is confidential. 31 U.S.C. § 5318(g)(2); 12
C.F.R. § 21.11(k); [Whitney Nat\'l Bank v. Karam]{.underline}, 306
F.Supp. 2d 678 (S.D. Tex. 2004) (citing numerous court decisions). The
OCC\'s position on disclosure of SARs is well known. [See]{.underline}
OCC Interpretive Letter 978 dated December 4, 2003, signed by Ford
Barrett, Assistant Director, Litigation Division.

For the reasons above, I must deny your request.

Sincerely yours,

/s/ Timothy W. Long

Timothy W. Long

Senior Deputy Comptroller

Mid-Size / Community Bank Supervision

cc: Jeffrey A. Hage, Esq.

Winstead Sechrest & Minick

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270