Legal Developments: First Quarter, 2006 

ORDERS ISSUED UNDER BANK 

HOLDING COMPANY ACT 

ORDERS ISSUED UNDER SECTION 3 OF 

THE BANK HOLDING COMPANY ACT 

Compass Bancshares, Inc. 

Birmingham, Alabama 

Compass Bank 

Birmingham, Alabama 

Order Approving the Acquisition of Bank 

Holding Companies, Merger of Banks, and 

Establishment of Branches 

Compass Bancshares, Inc. ("Compass"), a financial holding company within the meaning of the Bank Holding 

Company Act ("BHC Act''), has requested the Board's 

approval under section 3 of the BHC Act(footnote 1 12U.S.C. 

§1842. end footnote)to acquire 

Texas Banc Holding Co. ("TBH"), Weather ford, and its 

subsidiary, Texas Bank, Fort Worth, both of Texas(footnote 2 

Compass also would acquire M&F Financial Corp., Wilmington, 

Delaware, the intermediate parent holding company of Texas Bank. 

end footnote)In 

addition, Compass's subsidiary bank, Compass Bank, a 

state member bank, has requested the Board's approval 

under section 18(c) of the Federal Deposit Insurance Act 

("Bank Merger Act'')(footnote 3 12U.S.C. § 1828(c) end footnote) 

to merge with Texas Bank, with 

Compass Bank as the surviving entity. Compass Bank has 

also applied under section 9 of the Federal Reserve Act 

("FRA") to establish and operate branches at Texas Bank's 

main office and branch locations(footnote 4 12 U.S.C. § 321. 

These branches are listed in Appendix A. end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published in the 

Federal Register (70 Federal Register 70,613 (2005)) and 

in local publications in accordance with relevant statutes 

and the Board's Rules of Procedure(footnote 5 12 CFR 262.3 

(b) end footnote)As required by the 

BHC Act and the Bank Merger Act, reports on the competitive effects of the mergers were requested from the United 

States Attorney General and the appropriate banking agencies. The time for filing comments has expired, and the 

Board has considered the applications and all comments 

received in light of the factors set forth in section 3 of the 

BHC Act, the Bank Merger Act, and the FRA. 

Compass, with total consolidated assets of approximately 

$30.8 billion, is the 48th largest depository organization in 

the United States, and it controls deposits of approximately 

$17.9 billion, which represent less than 1 percent of the total 

amount of deposits of insured depository institutions in the 

United States(footnote 6 Asset data are as of December 31, 2005, 

and national ranking data 

are as of September 30, 2005. Deposit data and state 

rankings are as of 

June 30, 2005, and reflect merger activity through 

November 15, 2005. 

In this context, the term "insured depository institutions'' i 

ncludes 

insured commercial banks, savings banks, 

and savings associations 

Compass operates subsidiary depository 

institutions in Alabama, Arizona, Colorado, Florida, New 

Mexico, and Texas and engages in numerous permissible 

non banking activities. In Texas, Compass is the eighth 

largest depository organization, controlling deposits of approximately $7 billion, which represent 2 percent of the total 

amount of deposits of insured depository institutions in the 

state ("state deposits''). 

TBH, with total consolidated assets of approximately 

$1.7 billion, operates one depository institution, TexasBank, which has branches only in Texas. Texas Bank is the 

31st largest depository institution in Texas, controlling 

deposits of approximately $1.8 billion, which represent less 

than 1 percent of state deposits. 

On consummation of the proposal, Compass would 

become the 47th largest depository organization in the 

United States, with total consolidated assets of approximately $32.5 billion. Compass would become the seventh 

largest depository organization in Texas, controlling deposits of approximately $8.8 billion, which represent 2.3 percent of state deposits. 

INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of such bank holding company if certain conditions are 

met(foote 7 A bank holding company's home state is the state 

in which the 

total deposits of all subsidiary banks of the company were 

the largest 

on July 1, 1966, or the date on which the company became a bank 

holding company, whichever is later (12 U.S.C. § 1841(o)(4)(C)) 

end footnote) 

Section 44 of the Federal Deposit Insurance Act 

("FDI Act'') authorizes a bank to merge with another bank 

under certain conditions unless, before June 1, 1997, the 

home state of one of the banks involved in the transaction 
Federal Reserve Bulletin • 2006 

adopted a law expressly prohibiting merger transactions 

involving out-of-state banks.(footnote 8 12U.S.C. § 1831u 

end footnote)For purposes of section 3(d) 

of the BHC Act, the home state of Compass is Alabama, 

and for purposes of section 44 of the FDI Act, the home 

state of Compass Bank is Alabama(footnote 9 For purposes of 

section 3(d), the Board considers a bank to be 

located in the states in which the bank is chartered or headquartered, or 

operates a branch. See 12 U.S.C. §§ 1841(o)(4)-(7), 1842(d)(1)(A), 

and 1842(d)(2)(B). Under section 44 of the FDI Act, a state member 

bank's home state is the state where it is chartered (12 U.S.C. 

§ 1831u(g)(4)) end footnote)Compass proposes to 

acquire, and Compass Bank proposes to merge with, a bank 

located in Texas. 

Based on a review of all the facts of record, including a 

review of relevant state statutes, the Board finds that all the 

conditions for an interstate acquisition and bank merger 

enumerated in section 3(d) of the BHC Act and section 44 

of the FDI Act are met in this case(footnote 10 See 12 U.S.C. § 

1842(d)(1)(A)-(B), (d)(2)(A)-(B); 12 U.S.C. 

§ 1831u. Compass and Compass Bank are adequately capitalized and 

adequately managed, as defined by applicable law. Texas Bank has 

been in existence and operated for the minimum period of time 

required by applicable law (five years). On consummation of the 

proposal, Compass and Compass Bank would control less than 10 

percent of the total amount of deposits of insured depository institutions in the United States and less than 20 percent of the total amount 

of deposits of insured depository institutions in Texas. All other 

requirements of section 3(d) of the BHC Act and section 44 of the FDI 

Act also would be met on consummation of the proposal. end footnote)In light of the facts of 

record, the Board is permitted to approve the proposal 

under both statutes. 

COMPETITIVE CONSIDERATIONS 

The BHC Act and the Bank Merger Act prohibit the Board 

from approving a proposal that would result in a monopoly 

or would be in furtherance of any attempt to monopolize 

the business of banking in any relevant banking market. 

Both acts also prohibit the Board from approving a bank 

acquisition that would substantially lessen competition in 

any relevant banking market, unless the anticompetitive 

effects of the proposal are clearly outweighed in the public 

interest by its probable effect in meeting the convenience 

and needs of the community to be served(footnote 11 12 

U.S.C. § 1842(c)(1); 12 U.S.C. § 1828(c)(5). end footnote) 

Compass and TBH compete directly in the Dallas and 

Fort Worth banking markets in Texas(footnote 12 

The Dallas banking market is defined as follows: Dallas and 

Rockwall counties; the southeastern quadrant (including Denton and 

Lewisville) of Denton County; the southwestern quadrant (including 

McKinney and Plano) of Collin County; Forney and Terrell in 

Kaufman County; Midlothian, Waxahachie, and Ferris in Ellis County; 

and Grapevine and Arlington in Tarrant County, all in Texas. The Fort 

Worth banking market is defined as follows: Johnson and Parker 

counties; Tarrant County, excluding Grapevine and Arlington; Boyd, 

Newark, and Rhome in Wise County; and the southwestern quadrant 

(including Roanoke and Justin) of Denton County, all in Texas. 

end footnote)The Board has 

carefully reviewed the competitive effects of the proposal 

in each of these banking markets in light of all the facts of 

record. In particular, the Board has considered the number 

of competitors that would remain in the banking markets, 

the relative shares of total deposits in depository institutions in the markets (''market deposits'') controlled by 

Compass and TBH,(footnote 13 

Deposit and market share data are based on data 

reported by 

insured depository institutions in the summary of 

deposits (SOD) data 

as of June 30, 2005 (adjusted to reflect mergers a 

nd acquisitions 

through November 15, 2005) and are based on 

calculations in which 

the deposits of thrift institutions are included at 

50 percent. The Board 

previously has indicated that thrift institutions have 

become, or have 

the potential to become, significant competitors of 

commercial banks. 

See, e.g., Midwest Financial Group, 75 Federal 

Reserve Bulletin 386 

(1989); National City Corporation, 70 Federal 

Reserve Bulletin 743 

(1984). Thus, the Board regularly has included 

thrift deposits in the 

market-share calculation on a 50 percent weighted 

basis. See, e.g., 

First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). 

end footnote)the concentration level of market 

deposits and the increase in this level as measured by the 

Herfindahl-Hirschman Index ("HHI'') under the Department of Justice Merger Guidelines (''DOJ Guidelines''), 

(footnote 14 Under the DOJ Guidelines, a market is 

considered 

unconcentrated if the post-merger HHI is less than 

1000, moderately concentrated if the post-merger HHI is between 1000 and 

1800, and highly 

concentrated if the post-merger HHI is more than 

1800. The Department of Justice has informed the Board that a 

bank merger or 

acquisition generally will not be challenged (in the 

absence of other 

factors indicating anticompetitive effects) unless the 

post-merger HHI 

is at least 1800 and the merger increases the HHI by 

more than 200 

points. The Department of Justice has stated that the 

higher than normal 

HHI thresholds for screening bank mergers for anticompetitive 

effects implicitly recognize the competitive effects of limited-purpose 

lenders and other non depository financial entities end footnote) 

and other characteristics of the markets. 

Consummation of the proposal would be consistent with 

Board precedent and within the thresholds in the DOJ 

Guidelines in each of these banking markets. After consummation of the proposal, the Dallas banking market would 

remain moderately concentrated and the Fort Worth banking market would remain highly concentrated, as measured 

by the HHI(footnote 15 Summaries of the market data for these 

banking markets are 

provided in Appendix B end footnote)In each market the increase 

in concentration 

would be small and numerous competitors would remain. 

The Department of Justice has reviewed the anticipated 

competitive effects of the proposal and advised the Board 

that consummation of the proposal would not likely have a 

significantly adverse effect on competition in any relevant 

banking market. In addition, the appropriate banking agencies have been afforded an opportunity to comment and 

have not objected to the proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in the Dallas or Fort Worth banking markets tingly ation ThFINANCIAL, CONSIDERATIONS o conside e BHs, th ar,Ce oe Boar Accnsisten rr i th MANAGERIAL, nt an de financial hady thothe st determine wit e Ban r relevan h approval an k Merge d AND d manageria tha t bankin . rt Ac competitiv SUPERVISORY t requir g market l resource ee th consider . Accord e Boar s and -
Legal Developments 

future prospects of the companies and depository institutions involved in the proposal and certain other supervisory 

factors. The Board has considered these factors in light of 

all the facts of record, including confidential reports of 

examination, other supervisory information from the primary federal and state supervisors of the organizations 

involved in the proposal, publicly reported and other 

financial information, information provided by Compass, 

and public comment on the proposal(footnote 16 A commenter expressed concern about Compass Bank's relationships with unaffiliated retail check cashers, pawn shops, and other 

alternative-financial-service providers. As a general matter, the activities of the consumer finance businesses identified by the commenter 

are permissible, and the businesses are licensed by the states where 

they operate. Compass has represented that Compass Bank has lending 

relationships with fewer than ten alternative-financial-service providers and that these firms are subject to the bank's annual "Know Your 

Customer'' review related to the Bank Secrecy Act. Compass also has 

represented that it does not play any role in the lending practices, 

credit review, or other business practices of these firms end footnote) 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non-banking 

operations. The Board considers a variety of measures in 

this evaluation, including capital adequacy, asset quality, 

and earnings performance. In assessing financial factors, 

the Board consistently has considered capital adequacy to 

be especially important. The Board also evaluates the 

financial condition of the combined organizations at consummation, including their capital position, asset quality, 

and earnings prospects, and the impact of the proposed 

funding of the transaction. 

Compass, TBH, and their subsidiary depository institutions are well capitalized and the resulting organizations 

would remain so on consummation of the proposal. Based 

on its review of the record in this case, the Board finds that 

Compass has sufficient financial resources to effect the 

proposal. The proposed transaction is structured as a combination share exchange and cash purchase. Compass will 

use existing resources to fund the cash portion of the 

transaction. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organizations(footnote 17 The commenter also expressed 

concern about a press report 

indicating that a political action committee related to Compass might 

have contributed to candidates on the recommendation of another 

unrelated political action committee currently under investigation for 

alleged violations of Texas campaign finance laws. The Board does not 

have jurisdiction to administer state campaign finance laws or to 

investigate or adjudicate alleged violations of such laws. This matter is 

not within the limited statutory factors the Board may consider when 

reviewing an application under the BHC Act. See Western Bancshares, 

Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973) end footnote) 

The Board has reviewed the examination 

records of Compass, TBH, and their subsidiary depository 

institutions, including assessments of their management, 

risk-management systems, and operations. In addition, the 

Board has considered its supervisory experiences with the 

relevant organizations and the organizations' records of 

compliance with applicable banking law. Compass, TBH, 

and their subsidiary depository institutions are considered 

to be well managed. The Board also has considered Compass's plans for implementing the proposal, including the 

proposed management after consummation. 

Based on all the facts of record, the Board concludes that 

considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act and the 

Bank Merger Act. 

CONVENIENCE AND NEEDS AND OTHER 

CONSIDERATIONS 

In acting on a proposal under the BHC Act and the Bank 

Merger Act, the Board also must consider its effects on 

the convenience and needs of the communities to be 

served and take into account the records of the relevant 

insured depository institutions under the Community 

Reinvestment Act (''CRA'')(footnote 18 12 U.S.C. 

§2901 etseq. end footnote)The CRA requires the federal financial supervisory agencies to encourage insured 

depository institutions to help meet the credit needs of the 

local communities in which they operate, consistent with 

their safe and sound operation, and requires the appropriate federal financial supervisory agency to take into 

account an institution's record of meeting the credit needs 

of its entire community, including low- and moderateincome neighborhoods, in evaluating bank expansionary 

proposals(footnote 19 12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including evaluations of the CRA performance 

records of Compass Bank and Texas Bank, data reported by 

Compass Bank under the Home Mortgage Disclosure Act 

(''HMDA''),(footnote 20 12 U.S.C. § 2801 etseq end footnote) 

other information provided by Compass, 

confidential supervisory information, and public comment 

received on the proposal. A commenter opposing the 

proposal asserted, based on 2004 HMDA data, that Compass engaged in disparate treatment of minority individuals 

in its home mortgage lending operations. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations 

by the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution' s most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution's overall record of performance under the CRA by its appropriate federal 

supervisor(footnote 21 See Interagency Questions and Answers 

Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 (2001) end footnote) 
Compass Bank received a ''satisfactory'' rating at its 

most recent CRA performance evaluation from the Federal 

Reserve Bank of Atlanta, as of March 10, 2003 ('' 2003 

Evaluation'')(footnote 22 Compass's other subsidiary bank, 

Central Bank of the South, 

Anniston, Alabama, engages only in providing 

controlled disbursement services, and accordingly, is not evaluated under the 

CRA. See 12 CFR 345.11(c)(3) end footnote) 

Texas Bank received a ''satisfactory'' rating 

at its most recent CRA performance evaluation by the 

Federal Reserve Bank of Dallas, as of October 6, 2003. 

Compass Bank's current CRA program will be implemented at the resulting bank after consummation of the 

merger of Compass Bank and TexasBank. 

B. HMDA Data and Fair Lending Record 

The Board has carefully considered Compass's lending 

record and HMDA data in light of public comment about its 

record of lending to minorities. The commenter alleged, 

based on 2004 HMDA data, that Compass denied home 

purchase and refinance applications of African-American 

and Hispanic borrowers more frequently than those of 

non-minority applicants in various Metropolitan Statistical 

Areas (''MSAs''). In addition, the commenter alleged that 

in the Houston MSA, Compass made higher-cost loans 

more frequently to African Americans than to non minority 

borrowers(footnote 23 Beginning 

January 1, 2004, the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 or more percentage 

points for first-lien mortgages and 5 or more percentage points for 

second-lien mortgages (12 CFR 203.4) end footnote)The Board 

reviewed the HMDA data for 2004 

that were reported by Compass Bank on a company-wide 

basis and for the states and MSAs in which it principally 

operates. 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

Compass Bank is excluding or imposing higher credit costs 

on any racial or ethnic group on a prohibited basis. The 

Board recognizes that HMDA data alone, even with the 

recent addition of pricing information, provide only limited 

information about the covered loans(footnote 24 

The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data. end footnote)HMDA data, therefore, have limitations that make them an inadequate basis, 

absent other information, for concluding that an institution 

has engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully and taken into account other information, 

including examination reports that provide on-site evaluations of compliance by Compass Bank. 

In the fair lending review conducted in conjunction with 

Compass Bank's 2003 Evaluation, examiners cited failures 

to comply with the Board's Regulation B (Equal Credit 

Opportunity Act) in a non mortgage lending program but 

concluded that the bank's record of complying with antidiscrimination laws generally had been sound. The Board has 

considered the actions that Compass Bank took since then 

to address the compliance failures, including immediate 

termination of the criticized practice when advised of 

examiners' concerns and revisions to its compliance policies, procedures, and training. 

The Board also has considered other steps by Compass 

to ensure compliance with fair lending and other consumer 

protection laws. Compass has stated that Compass Bank' s 

corporate compliance staff handles consumer compliance 

matters for the entire Compass organization. The corporate 

compliance staff monitors regulatory requirements, assists 

with and oversees implementation of compliance procedures and controls, and performs ongoing compliance risk 

assessments and monitoring. The corporate compliance 

staff also makes quarterly risk assessments available to a 

risk-management committee of Compass executives and to 

senior managers of Compass's business lines making home 

mortgage and consumer loans. Compass Bank's fair lending analysis includes testing to detect pricing, redlining, or 

underwriting issues, review of underwriting policies and 

practices, comparative file analysis, and analysis of HMDA 

data. Compass Bank also maintains a program to track and 

respond to consumer complaints, and the corporate compliance staff administers a web-based program to provide 

ongoing training to employees. Compass Bank's current 

compliance program will be used at the resulting bank after 

Compass Bank and Texas Bank merge. 

The Board also has considered the HMDA data in light 

of other information, including Compass Bank's CRA 

lending programs and the overall performance records of 

Compass Bank and Texas Bank under the CRA. These 

established efforts demonstrate that the institutions are 

active in helping to meet the credit needs of their entire 

communities. 

C. Conclusion on Convenience and Needs and 

CRA Performance 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by Compass, 

comments received on the proposal, and confidential supervisory information. The Board notes that the proposal 

would provide customers of Texas Bank with a broader 

array of products and services, including expanded options 

for affordable mortgage loans and ATM networks. Based 
on a review of the entire record, and for the reasons 

discussed above, the Board concludes that considerations 

relating to the convenience and needs factor and the CRA 

performance records of the relevant depository institutions 

are consistent with approval. 

As previously noted, Compass Bank also has applied 

under section 9 of the FRA to establish and operate 

branches at the locations listed in Appendix B. The Board 

has assessed the factors it is required to consider when 

reviewing an application under section 9 of the FRA and 

finds those factors to be consistent with approval(footnote 25 

12 U.S.C. §322; 12 CFR 208.6(b) end footnote) 

CONCLUSION 

Based on the foregoing and all facts of record, the Board 

has determined that the applications should be, and hereby 

are, approved(footnote 26 The commenter requested that the Board hold a public meeting 

or hearing on the proposal. Section 3 of the BHC Act does not require 

the Board to hold a public hearing on an application unless the 

appropriate supervisory authority for the bank to be acquired makes a 

timely written recommendation of denial of the application. The Board 

has not received such a recommendation from the appropriate supervisory authority. The Bank Merger Act and the FRA do not require the 

Board to hold a public meeting or hearing. 

Under its rules, the Board also may, in its discretion, hold a public 

meeting or hearing on an application to acquire a bank if a meeting or 

hearing is necessary or appropriate to clarify factual issues related to 

the application and to provide an opportunity for testimony (12 CFR 

225.16(e)). The Board has considered carefully the commenter's 

request in light of all the facts of record. In the Board's view, the 

commenter had ample opportunity to submit its views and, in fact, 

submitted written comments that the Board has considered carefully in 

acting on the proposal. The commenter's request fails to demonstrate 

why the written comments do not present its views adequately or why 

a meeting or hearing otherwise would be necessary or appropriate. For 

these reasons, and based on all the facts of record, the Board has 

determined that a public meeting or hearing is not required or 

warranted in this case. Accordingly, the request for a public meeting or 

hearing on the proposal is denied end footnote)In reaching 

its conclusion, the Board has 

considered all the facts of record in light of the factors that 

it is required to consider under the BHC Act, the Bank 

Merger Act, and the FRA. The Board's approval is specifically conditioned on compliance by Compass and Compass 

Bank with the conditions imposed in this order, the commitments made to the Board in connection with the applications, and receipt of all other regulatory approvals. For 

purposes of this action, the conditions and commitments 

are deemed to be conditions imposed in writing by the 

Board in connection with its findings and decision herein 

and, as such, may be enforced in proceedings under 

applicable law. 

The proposed transactions may not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order, unless such period is extended for good cause by 

the Board or the Federal Reserve Bank of Atlanta, acting 

pursuant to delegated authority. 

By order of the Board of Governors, effective March 8, 

2006. 

Voting for this action: Chairman Bernanke and Governors Bies, 

Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice 

Chairman Ferguson. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix A 

BRANCHES IN TEXAS TO BE ESTABLISHED 

BY COMPASS BANK 

Arlington 

2221 E. Lamar Blvd., Suite 110 

610 West Randol Mill Road 

5980 S. Cooper Street 

Benbrook 

9200 Benbrook Blvd. 

Cleburne 

1671 West Henderson Street 

Colleyville 

4841 Colleyville Blvd. 

Crowley 

816 South Crowley Road 

Denton 

1013 W. University Drive 

729 Forth Worth Drive 

Flower Mound 

3212 Long Prairie Road 

Fort Worth 

2525 Ridgmar Blvd. 

8875 Camp Bowie West 

300 W. Seventh Street 

2601 Hulen Street 

1600 W. Rosedale Drive 

Granbury 

702 West Pearl Street 

Grapevine 

1205 South Main Street 

Hudson Oaks 

2817 Fort Worth Highway 

Lewisville 

1101 W. Main Street 

Southlake 

2200 W. Southlake Blvd. 

Weatherford 

139 College Park Drive 

102 N. Main Street 

1400 Santa Fe Drive 
Willow Park 

5171 E. I-20 Service Road N. 

Appendix B 

MARKET DATA fOR BANKINg MARKETS 

IN TEXAS 

Moderately Concentrated Banking Market 

Dallas 

On consummation, the HHI would increase 2 points, to 

1426. Compass operates the fourth largest depository institution in the market, controlling deposits of approximately 

$2.5 billion, which represent approximately 4 percent of 

market deposits. TBH operates the 21st largest depository 

institution in the market, controlling deposits of approximately $423.4 million, which represent less than 1 percent 

of market deposits. After the proposed acquisition, Compass would remain the fourth largest depository institution 

in the market, controlling deposits of approximately $2.9 billion, which represent approximately 5 percent of market 

deposits. One hundred and twenty-five depository institutions would remain in the banking market. 

Highly Concentrated Banking Market 

Fort Worth 

On consummation, the HHI would increase 1 point, to 

4711. Compass operates the 26th largest depository institution in the market, controlling deposits of approximately 

$86.8 million, which represent less than 1 percent of 

market deposits. TBH operates the sixth largest depository 

institution in the market, controlling deposits of approximately $908.1 million, which represent approximately 

2 percent of market deposits. After the proposed acquisition, Compass would operate the fifth largest depository 

institution in the market, controlling deposits of approximately $994.9 million, which represent approximately 

2 percent of market deposits. Fifty-eight depository institutions would remain in the banking market. 

Fulton Financial Corporation 

Lancaster, Pennsylvania 

Order Approving the Merger 

of Bank Holding Companies 

Fulton Financial Corporation ("Fulton"), a financial holding company within the meaning of the Bank Holding 

Company Act ("BHC Act''), has requested the Board's 

approval under section 3 of the BHC Act 

(footnote 1 12 U.S.C. § 1842 

end footnote)to merge with 

Columbia Bancorp (''Columbia'') and acquire its 

subsidiary bank, The Columbia Bank (''Columbia Bank''), both of 

Columbia, Maryland(footnote 2 In addition, Fulton has requested the 

Board's approval to hold 

and exercise a warrant to purchase up to 19.9 

percent of Columbia's 

common stock. The warrant would expire 

on consummation of the 

proposal end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published (70 

Federal Register 61,826 (2005)). The time for filing comments has expired, and the Board has considered the 

application and all comments received in light of the 

factors set forth in section 3 of the BHC Act. 

Fulton, with total consolidated assets of approximately 

$12.3 billion, operates 14 subsidiary insured depository 

institutions in Pennsylvania, New Jersey, Virginia, Maryland, and Delaware, as well as a non depository trust 

company in Pennsylvania. Fulton is the ninth largest 

depository organization in Pennsylvania, controlling deposits of approximately $5.1 billion, which represent approximately 2.3 percent of the total amount of deposits of 

insured depository institutions in the state ('' state deposits'' )(footnote 3 In this context, insured depository institutions 

include commercial banks, savings banks, and savings associations end footnote) 

In Maryland, Fulton is the 20th largest depository 

organization, controlling deposits of approximately 

$481.3 million, which represent less than 1 percent of state 

deposits. 

Columbia, with total consolidated assets of approximately $1.3 billion, is the 12th largest depository organization in Maryland, controlling deposits of approximately 

$976.5 million, which represent approximately 1 percent of 

state deposits. On consummation of the proposal, Fulton 

would become the 10th largest depository organization in 

Maryland, controlling deposits of approximately $1.5 billion, which represent approximately 1.6 percent of state 

deposits(footnote 4 Asset data are as of September 30, 2005. 

Deposit data and state 

rankings are as of June 30, 2005, and are adjusted to 

reflect mergers 

and acquisitions completed through January 6, 2006 

end footnote) 

Fulton would have consolidated assets of approximately $13.8 billion. 

INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of such bank holding company if certain conditions are 

met. For purposes of the BHC Act, the home state of Fulton 

is Pennsylvania(footnote 5 A bank holding company's home state 

is the state in which the 

total deposits of all subsidiary banks of the company were 

the largest 

on July 1, 1966, or the date on which the company 

became a bank 

holding company, whichever is later (12 U.S.C. § 1841 

(o)(4)(C)) end footnote) 

and Columbia is located in Maryland(footnote 6 For purposes 

of section 3(d), the Board considers a bank to be 

located in the states in which the bank is chartered or 

headquartered, or 

operates a branch (12 U.S.C. §§ 1841(o)(4)-(7) 

(d)(2)(B)) revieBase w od of end relevan n a footnote) reviet stat w ofe al statutes l the fact , thse o Boar andf record 1842(d)(1)(A) d finds , includin that and al g a l
conditions for an interstate acquisition enumerated in section 3(d) are met in this case(footnote 7 12 U.S.C. §§ 1842(d)(1)(A)-

B), 1842(d)(2)(A)-(B). Fulton is 

adequately capitalized and adequately managed, as defined by applicable law. Maryland does not have a minimum age requirement applicable to the proposal. On consummation of the proposal, Fulton would 

control less than 10 percent of the total amount of deposits of insured 

depository institutions in the United States and less than 30 percent of 

the total amount of deposits of insured depository institutions in 

Maryland. All other requirements of section 3(d) would be met on 

consummation of the proposal end footnote)Accordingly, the Board is 

permitted to approve the proposal under section 3(d) of the 

BHC Act. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposed bank acquisition that would result in 

a monopoly or would be in furtherance of any attempt to 

monopolize the business of banking in any relevant banking market. The BHC Act also prohibits the Board from 

approving a proposed bank acquisition that would substantially lessen competition in any relevant banking market, 

unless the Board finds that the anticompetitive effects of the 

proposal clearly are outweighed in the public interest by the 

probable effect of the proposal in meeting the convenience 

and needs of the community to be served(footnote 8 

12 U.S.C. § 1842(c)(1) end footnote) 

Fulton and Columbia compete directly in the Washington, D.C./Maryland/Virginia/West Virginia banking market 

(''Washington, D.C. market'')(footnote 9 The Washington, D.C 

. market includes: the Washington, D.C. 

Ranally Metropolitan Area (''RMA''); the non RMA portions of 

Fauquier and Loudoun counties, and the cities of Alexandria, Fairfax, 

Falls Church, and Manassas, all in Virginia; the non RMA portions of 

Calvert, Charles, Frederick, and St. Mary's counties, all in Maryland; 

and Jefferson County, West Virginia end footnote)The Board has reviewed 

carefully the competitive effects of the proposal in this 

banking market in light of all the facts of record. In 

particular, the Board has considered the number of competitors that would remain in the market, the relative shares of 

total deposits of depository institutions in the market 

(''market deposits'') controlled by Fulton and Columbia, 

(footnote 10 Deposit and market share data are as of 

June 30, 2005, reflect 

mergers and acquisitions through January 6, 2006, and are based on 

calculations in which the deposits of thrift institutions are included at 

50 percent. The Board previously has indicated that thrift institutions 

have become, or have the potential to become, significant competitors 

of commercial banks. See, e.g., Midwest Financial Group, 75 Federal 

Reserve Bulletin 386, 387 (1989); National City Corporation, 70 Federal Reserve Bulletin 743, 744 (1984). Thus, the Board regularly has 

included thrift deposits in the calculation of market share on a 

50 percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal 

Reserve Bulletin 52, 55 (1991) end footnote) 

the concentration level of market deposits and the increase 

in this level as measured by the Herfindahl-Hirschman 

Index (''HHI'') under the Department of Justice Merger 

Guidelines (''DOJ Guidelines''),(footnote 11 

Under the DOJ Guidelines, a market is considered unconcentrated if the post-merger HHI is under 1000, moderately concentrated 

if the post-merger HHI is between 1000 and 1800, and highly 

concentrated if the post-merger HHI exceeds 1800. The Department of 

Justice (''DOJ'') has informed the Board that a bank merger or 

acquisition generally will not be challenged (in the absence of other 

factors indicating anticompetitive effects) unless the post-merger HHI 

is at least 1800 and the merger increases the HHI by more than 

200 points. The DOJ has stated that the higher-than-normal HHI 

petitive thresholds effects purpose of th for e implicitly market screening and other . recognize bank non-depository mergers the competitive and financial acquisitions othe effects institution r characteristic for of anticom- limited- sand s 

Consummation of the proposal would be consistent with 

Board precedent and the DOJ Guidelines in the Washington, D.C. market(footnote 12 Fulton is the 35th largest 

depository organization in the 

Washington, D.C. market, controlling deposits of approximately 

$177.3 million, which represent less than 1 percent of market 

deposits. Columbia Bank is the 26th largest depository institution in 

the market, controlling deposits of approximately $308.6 million, 

which represent less than 1 percent of market deposits. On consummation, Fulton would operate the 21st largest depository organization in the market, controlling deposits of approximately $485.9 million, which represent less than 1 percent of market deposits. The 

HHI would remain unchanged at 868. Ninety-one 

depository institutions would remain in the banking market after consummation of the 

proposal end footnote)The market would remain 

unconcentrated as measured by the HHI, and numerous competitors 

would remain in the market. 

The Department of Justice has reviewed the anticipated 

competitive effects of the proposal and advised the Board 

that consummation of the proposal would not likely have a 

significantly adverse effect on competition in any relevant 

banking market. In addition, the appropriate banking agencies have been afforded an opportunity to comment and 

have not objected to the proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in the Washington, D.C. market or in any 

other relevant banking market. Accordingly, the Board has 

determined that competitive considerations are consistent 

with approval. 

FINANCIAL, MANAGERIAL, AND 

SUPERVISORY CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of 

record, including confidential reports of examination, other 

supervisory information received from the primary federal 

supervisors of the organizations involved in the proposal, 

publicly reported and other financial information, information provided by Fulton, and public comment received on 

the proposal. 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non-banking 

operations. The Board considers a variety of measures in 

this evaluation, including capital adequacy, asset quality, 
and earnings performance. In assessing financial factors, 

the Board consistently has considered capital adequacy to 

be especially important. The Board also evaluates the 

financial condition of the combined organization at consummation, including its capital position, asset quality, and 

earnings prospects, and the impact of the proposed funding 

of the transaction. 

Fulton, each of Fulton' s subsidiary banks, and Columbia 

Bank are well capitalized and would remain so on consummation of the proposal. Based on its review of the record, 

the Board finds that Fulton has sufficient financial resources 

to effect the proposal. The transaction is structured as a 

combination of cash and an exchange of shares. The cash 

portion of the transaction would be funded by issuing trust 

preferred securities. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organization. The Board has reviewed the examination 

records of Fulton and its subsidiary banks, Columbia, and 

Columbia Bank, including assessments of their management, risk-management systems, and operations. In addition, the Board has considered its supervisory experiences 

and those of the other relevant banking supervisory agencies with the organizations and their records of compliance 

with applicable banking law. Fulton, each of Fulton' s 

subsidiary banks, Columbia, and Columbia Bank are considered to be well managed. The Board also has considered 

Fulton's plans for implementing the proposal, including the 

proposed management after consummation. 

Based on all the facts of record, the Board concludes that 

considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board also must consider the effects of the proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'')(footnote 13 12 U.S.C. § 2901 etseq footnote) 

The CRA requires the federal financial 

supervisory agencies to encourage insured depository institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and 

sound operation, and requires the appropriate federal financial supervisory agency to take into account an institution' s 

record of meeting the credit needs of its entire community, 

including low- and moderate-income (''LMI'') neighborhoods, in evaluating bank expansionary proposals 

(footnote 14 12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including evaluations of the CRA performance 

records of Fulton' s subsidiary insured depository institutions and Columbia Bank, data reported by Fulton's 

subsidiary banks and Columbia Bank under the Home Mortgage 

Disclosure Act ("HMDA''),(footnote 15 12 U.S.C. 

§ 2801 etseq end footnote)other information provided 

by Fulton, confidential supervisory information, and public 

comment received on the proposal. A commenter opposed 

the proposal and alleged, based on 2004 data reported 

under HMDA, that Fulton engaged in discriminatory treatment of minority individuals in its home mortgage lending 

operations. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations 

by the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution' s overall record of performance under the CRA by its appropriate federal 

supervisor(footnote 16 See Interagency Questions and 

Answers Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 

(2001). end footnote) 

Fulton's 14 subsidiary banks each received a rating of 

''satisfactory'' or ''outstanding'' at its most recent CRA 

performance evaluation(footnote 17 

The appendix lists the most recent CRA performance ratings of 

Fulton's subsidiary banks end footnote)Columbia Bank received a ''satisfactory'' rating at its most recent CRA performance 

evaluation by the Federal Deposit Insurance Corporation 

(''FDIC''), as of August 9, 2004. Fulton represented that it 

intends to maintain Columbia Bank's CRA program on 

consummation of the proposal. 

B. HMDA and Fair Lending Record 

The Board has considered carefully Fulton' s lending record 

and HMDA data in light of public comment about its record 

of lending to minorities. A commenter alleged, based on 

2004 HMDA data, that certain Fulton subsidiary banks 

made higher-cost loans(footnote 18 Beginning January 1, 2004, 

the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 percentage points 

for first-lien mortgages and 5 percentage points for second-lien 

mortgages (12 CFR 203.4) end footnote)to African Americans 

and Hispanics more frequently than to non minorities 

in various states 

and Metropolitan Statistical Areas (''MSAs''). 

The commenter als

disproportionately excluded or denied applications by 

African-American and Hispanic applicants for HMDAreportable loans(footnote 19 The majority of the 

commenter's concerns related to 2004 

HMDA data reported by Resource Bank, Virginia Beach, Virginia. 

Fulton acquired Resource Bank in April 2004 end footnote) 

The Board reviewed the HMDA data for 

2004 reported by certain subsidiary banks of Fulton in their 

assessment areas and in certain MSAs where portions of 

the banks' assessment areas are located. 
Although the HMDA data may reflect certain disparities 

in the rates of loan applications, originations, denials, or 

pricing among members of different racial or ethnic groups 

in certain local areas, the HMDA data provide an insufficient 

basis by themselves on which to conclude whether or not 

Fulton's subsidiary banks are excluding any racial or ethnic 

group or imposing higher credit costs on these groups on a 

prohibited basis. The Board recognizes that HMDA data 

alone, even with the recent addition of pricing information, 

provide only limited information about the covered loans 

(footnote 20 The data, for example, do not account for 

the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote) 

HMDA data, therefore, have limitations that make them an 

inadequate basis, absent other information, for concluding 

that an institution has engaged in illegal lending 

discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully in light of other information, including 

examination reports that provide on-site evaluations of 

compliance by Fulton with fair lending laws. In the fair 

lending reviews conducted in conjunction with the most 

recent CRA evaluations of Fulton' s subsidiary depository 

institutions, examiners noted no substantive violations of 

applicable fair lending laws. 

The record also indicates that Fulton has taken steps to 

ensure compliance with fair lending laws and other consumer protection laws. Fulton represented that it undertakes significant monitoring of compliance in its mortgage lending operations by using a wide variety of audit 

and review programs, including loan file reviews, statistical analyses, and exception reviews. Fulton also performs 

a second review of all residential mortgage loan applications scheduled for denial to verify that no factors have 

been overlooked in the analysis of the application and to 

determine whether the applicant qualifies for any other 

available programs. 

Fulton represented that it intends to maintain Columbia 

Bank's fair lending policies and procedures at the bank on 

consummation of the proposal, which include a qualitycontrol review performed by an outside company. The 

quality-control review features statistical sampling and a 

random evaluation of denied loans and third-party originations. The review also includes verification of origination 

documents. Fulton represented that Columbia Bank's fair 

lending policies and procedures would be subject to oversight by Fulton on consummation of the proposal. 

The Board also has considered the HMDA data in light 

of other information, including the overall CRA performance records of each of Fulton's subsidiary banks. These 

efforts demonstrate that Fulton is active in meeting the 

convenience and needs of its entire community. 

C. Conclusion on Convenience and Needs 

and CRA Performance 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by Fulton, public comment received on the proposal, and confidential 

supervisory information. The Board notes that the proposal 

would provide customers of Columbia with a broader array 

of products and services, including personal and corporate 

trust services, new leasing products, and expanded branch 

and ATM networks. Based on a review of the entire record, 

and for the reasons discussed above, the Board concludes 

that considerations relating to the convenience and needs 

factor and the CRA performance records of the relevant 

depository institutions are consistent with approval. 

CONCLUSION 

Based on the foregoing and all the facts of record, the 

Board has determined that the application should be, and 

hereby is, approved(footnote 21 The commenter requested that the 

Board hold a public meeting 

or hearing on the proposal. Section 3 of the 

BHC Act does not require 

the Board to hold a public hearing on an 

application unless the 

appropriate supervisory authority for the bank 

to be acquired makes a 

timely written recommendation of denial of the 

application. The Board 

has not received such a recommendation from the 

appropriate supervisory authority. Under its regulations, the 

Board also may, in its 

discretion, hold a public meeting or hearing on an 

application to 

acquire a bank if a meeting or hearing is necessary 

or appropriate to 

clarify factual issues related to the application and 

to provide an 

opportunity for testimony (12 CFR 225.16(e)). The 

Board has considered carefully the commenter's request in light of 

all the facts of 

record. In the Board's view, the commenter had 

ample opportunity to 

submit its views and, in fact, submitted written 

comments that the 

Board has considered carefully in acting on the 

proposal. The commenter' s request fails to 

demonstrate why its written comments do not 

present its views adequately or why a meeting or 

hearing otherwise 

would be necessary or appropriate. For these reasons, 

and based on all 

the facts of record, the Board has determined that a 

public meeting or 

theexamination, those comment Regulation facts isaccumulated sufficient provisions information, ofhearing Accordingly, request denied cosiering hatha Board b record, y period s Fulto t considere i Y confidential The t i'rquire end sto for is withinas approva on n thecommenter require warrant notsignificant wit and afootnote) thethe public Board the required dh the public certain alth proposal. proposal supervisory ld iaction e Board l tth condition meeting s has specificall o alsorecord comment. e conside ortime fact concluded In atto warranted isAs requested reachin this act s periods. notor in o previously information, sf imposehearing this r on recor time y unde Moreover, necessary conditione g proposals that case,it thatin Basedand sdr conclusion this ith d onthe ithenoted, n including that ligh ne the publicrecord case.thi endBH othe Board d submitted further oproposal st a otheBHC orde footnote)The Cn review complianc f Act(footnot reports inth, extendth Boardreports this re delayAct an e factor Boar is under ofd case and hasth e allof in dese 22 
commitments made to the Board in connection with the 

application. For purposes of this action, the conditions and 

commitments are deemed to be conditions imposed in 

writing by the Board in connection with its findings and 

decision herein and, as such, may be enforced in proceedings under applicable law. 

The proposed transaction may not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order, unless such period is extended for good cause by 

the Board or the Federal Reserve Bank of Philadelphia, 

acting pursuant to delegated authority. 

By order of the Board of Governors, effective January 17, 2006. 

Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Bies, Olson, and Kohn. 

Robert deV. Frierson 

Deputy Secretary of the Board 

Appendix 

CRA RATINGS OF FULTON'S SUBSIDIARY BANKS 

Heading row column 1 Bank column 2 CRA Rating column 3 Date 

column 4 Supervisor end heading row 

Bank:FNB Bank, National Association,Danville, Pennsylvania 

CRA RatingSatisfactory Date:June 9, 2003 

Supervisor:Office of the Comptroller of the Currency (''OCC'') 

Bank:Fulton Bank,Lancaster, Pennsylvania 

CRA Rating Satisfactory Date:October 21, 2002 Supervisor:FDIC 

Bank:Lafayette Ambassador Bank,Easton, Pennsylvania 

CRA Rating Outstanding Date:December 1, 2003 

Supervisor:Federal Reserve Bank of Philadelphia (''FRB Phil.'') 

Bank:Lebanon Valley Farmers Bank,Lebanon, Pennsylvania 

CRA Rating Outstanding Date:February 22, 2005 Supervisor:FRB Phil. 

Bank:Premier Bank,Doylestown, Pennsylvania 

CRA Rating Satisfactory Date:January 5, 2004 Supervisor:FRB Phil. 

Bank:Swineford National Bank,Middleburg, Pennsylvania 

CRA Rating Satisfactory Date:March 7, 2005 Supervisor:OCC 

Bank:The Bank,Woodbury, New Jersey CRA Rating Outstanding 

Date:January 18, 2005 Supervisor:FDIC 

Bank:First Washington State Bank,Windsor, New Jersey 

CRA Rating Satisfactory Date:March 1, 2004 Supervisor:FDIC 

Bank:Skylands Community Bank,Hackettstown, New Jersey 

CRA Rating Satisfactory Date:April 28, 2005 Supervisor:FDIC 

Bank:Somerset Valley Bank,Somerville, New Jersey 

CRA Rating Satisfactory Date:January 21, 2004 Supervisor:FDIC 

Bank:Hagerstown Trust Company,Hagerstown, Maryland 

CRA Rating Satisfactory Date:January 18, 2005 Supervisor:FDIC 

Bank:The Peoples Bank of Elkton,Elkton, Maryland 

CRA Rating Outstanding Date:December 30, 2002 Supervisor:FDIC 

Bank:Resource Bank,Virginia Beach, Virginia CRA Rating Satisfactory 

Date:March 15, 2004 Supervisor:Federal Reserve Bank of Richmond 

Bank:Delaware National Bank,Georgetown, Delaware 

CRA Rating Outstanding Date:January 6, 2003 Supervisor:OCC 

Huntington Bancshares, Incorporated 

Columbus, Ohio 

Order Approving the Acquisition of a Bank 

Holding Company 

Huntington Bancshares, Incorporated (''Huntington''), a 

financial holding company within the meaning of the Bank 

Holding Company Act (''BHC Act''), has requested the 

Board's approval under section 3 of the BHC Act(footnote 

1 12 U.S.C. § 1842 )to acquire 

Unizan Financial Corp. ("Unizan'') and its subsidiary bank, 

Unizan Bank, National Association (''Unizan Bank''), both 

of Canton, Ohio(footnote 2 In addition, Huntington proposes 

to acquire the non banking 

subsidiaries of Unizan in accordance with section 4(k) 

ofthe BHC Act 

(12 U.S.C. § 1843(k)) end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published 
(70 Federal Register 66,435 (2005))(footnote 3 

12 CFR 262.3(b) end footnote)The time for filing 

comments has expired, and the Board has considered the 

proposal and all comments received in light of the factors 

set forth in section 3 of the BHC Act. 

Huntington, with total consolidated assets of $32.7 

billion, controls one depository institution, The Huntington 

National Bank (''Huntington Bank''), also in Columbus, 

with branches in Florida, Indiana, Kentucky, Michigan, 

Ohio, and West Virginia. Huntington is the fifth largest 

depository organization in Ohio, controlling deposits of 

approximately $14.3 billion, which represent 7.1 percent of 

the total amount of deposits of insured depository institutions in the state (''state deposits'')(footnote 4 

Asset data are as of September 30, 2005; statewide deposit and 

ranking data are as of June 30, 2005, and reflect merger activity 

through November 21, 2005. In this context, insured depository 

institutions include commercial banks, savings banks, and savings 

associations end footnote) 

Unizan, with total consolidated assets of approximately 

$2.5 billion, controls one depository institution, Unizan 

Bank, with branches only in Ohio. Unizan is the 14th 

largest depository organization in Ohio, controlling deposits of approximately $1.9 billion, which represent less than 

1 percent of state deposits. On consummation of the 

proposal, Huntington would become the fourth largest 

depository organization in Ohio, controlling deposits of 

approximately $16.2 billion, which represent approximately 8.1 percent of state deposits(footnote 5 

Huntington Bank has applied to the Office of the Comptroller of 

the Currency (''OCC'') for permission to merge with Unizan Bank and 

Unizan Financial Services Group, National Association, 

a non-depository national trust and wholly 

owned subsidiary of Unizan, on 

consummation of the proposal before the Board end footnote) 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposal that would result in a monopoly or 

would be in furtherance of an attempt to monopolize the 

business of banking. The BHC Act also prohibits the Board 

from approving a bank acquisition that would substantially 

lessen competition in any relevant banking market unless 

the anticompetitive effects of the proposal are clearly 

outweighed in the public interest by its probable effect in 

meeting the convenience and needs of the community to be 

served(footnote 6 12 U.S.C. § 1842(c)(1) end footnote) 

Huntington and Unizan compete directly in the Akron, 

Columbus, and Dayton, Ohio banking markets(footnote 7 

These banking markets are described in Appendix A. end footnote) 

The Board 

has reviewed the competitive effects of the proposal in each 

of these banking markets in light of all the facts of record. 

In particular, the Board has considered the number of 

competitors that would remain in the markets, the relative 

shares of total deposits of depository institutions in the 

markets (''market deposits'') controlled by Huntington and 

Unizan,(footnote 8 Deposit and market share data are as of June 30, 2005, are 

adjusted to reflect mergers and acquisitions through December 7,2005, 

and are based on calculations in which the deposits of thrift 

institutions are included at 50 percent. The Board previously has 

indicated that thrift institutions have become, or have the potential to 

become, significant competitors of commercial banks. See, e.g., 

Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); 

National City Corporation, 70 Federal Reserve Bulletin 743 (1984). 

Thus, the Board regularly has included thrift deposits in the market 

share calculation on a 50 percent weighted basis. See, e.g., First 

Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991) end footnote) the concentration level of market deposits and the 

increase in this level as measured by the HerfindahlHirschman Index (''HHI'') under the Department of Justice 

Merger Guidelines ("DOJ Guidelines''),(footnote 9 

Under the DOJ Guidelines, a market is considered 

moderately 

concentrated if the post-merger HHI is between 

1000 and 1800 and 

highly concentrated if the post-merger HHI 

is more than 1800. The 

Department of Justice has informed the 

Board that a bank merger or 

acquisition generally will not be challenged 

(in the absence of other 

factors indicating anticompetitive effects) 

unless the post-merger HHI 

is at least 1800 and the merger increases the 

HHI by more than 200 

points. The Department of Justice has stated that the 

higher than normal HHI thresholds for screening 

bank mergers for anticompetitive 

effects implicitly recognize the competitive effects 

of limited-purpose 

lenders and other non depository financial 

institutions end footnote) 

and other characteristics of the markets. 

Consummation of the proposal would be consistent with 

Board precedent and the DOJ Guidelines in each of these 

banking markets. After consummation, each banking market would be considered moderately concentrated, the 

increase in concentration would be small, and numerous 

competitors would remain(footnote 10 The effect of 

the proposal on the concentration of banking 

resources in each market is described in Appendix B. 

end footnote) 

The Department of Justice also has reviewed the anticipated competitive effects of the proposal and advised the 

Board that consummation would not likely have a significantly adverse effect on competition in any relevant banking market. In addition, the appropriate banking agencies 

have been afforded an opportunity to comment and have 

not objected to the proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration 

of resources in the Akron, Columbus, or Dayton banking 

markets or in any other relevant banking market. Accordingly, the Board has determined that competitive considerations are consistent with approval. 

FINANCIAL, MANAGERIAL, AND 

SUPERVISORY CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of 

record, including confidential reports of examination and 

other supervisory information received from the federal 

and state supervisors of the organizations involved, publicly reported and other financial information, information 

provided by Huntington, and public comments received on 

the proposal. 
In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant nonbanking 

operations. The Board considers a variety of measures in 

this evaluation, including capital adequacy, asset quality, 

and earnings performance. In assessing financial factors, 

the Board consistently has considered capital adequacy to 

be especially important. The Board also evaluates the 

financial condition of the combined organization at consummation, including its capital position, asset quality, and 

earnings prospects, and the impact of the proposed funding 

of the transaction. 

Huntington and Huntington Bank are well capitalized 

and would remain so on consummation of the proposal(footnote 

11 As noted, Huntington also intends to merge Nizam Bank into 

Huntington Bank on consummation of the proposal. Huntington Bank 

would be well capitalized after consummation of the bank merger, 

which the OCC recently approved. end footnote) 

Based on its review of the record, the Board believes that 

Huntington has sufficient financial resources to effect the 

proposal. The proposed transaction is structured as a share 

exchange. 

The Board also has considered the managerial resources 

of Huntington and Unizan and the effect of the proposal on 

those resources. In addition, the Board has considered 

Huntington' s plans for implementing the proposal, including the proposed management after consummation. 

In reviewing this proposal, the Board has assembled 

and considered a detailed record, including substantial 

confidential and public information about Huntington, 

Unizan, and their subsidiaries. The Board considered its 

supervisory experiences with Huntington; the supervisory 

experiences and assessments of Huntington Bank's management, risk-management systems, and operations by the 

OCC; and the organizations' records of compliance with 

applicable banking laws. The Board also consulted with 

the Securities and Exchange Commission ('' SEC'') about 

Huntington' s record of compliance with applicable federal securities laws and considered its public settlement of 

an investigation initiated by the SEC related to Huntington's accounting practices. The SEC terminated its investigation on June 2, 2005, when it approved Huntington's 

proposed settlement(footnote 12 

The investigation resulted in the SEC charging Huntington, one 

of its current officers, and two former officers with violations of 

several provisions of the Securities Act of 1933, the Securities 

Exchange Act of 1934, and their implementing rules. Under the 

settlement, Huntington and the officers entered into a cease-and-desist 

agreement, Huntington paid a civil money penalty of $7.5 million for 

its actions, and the three officers paid disgorgement fees end footnote) 

In addition, the Board has considered that on February 

28, 2005, Huntington entered into a formal written agreement (''Written Agreement'') with the Federal Reserve 

Bank of Cleveland ('' Cleveland Reserve Bank'') to address certain deficiencies in its corporate governance, 

accounting policies and procedures, internal audit, risk 

management, and financial and regulatory reporting(footnote 13 

Huntington's Written Agreement included provisions that required Huntington to develop and submit to the Cleveland Reserve 

Bank the following documents: (i) written policies and procedures in 

the areas of accounting, financial and regulatory reporting, internal 

audit, and corporate governance that fully address the findings and 

recommendations of independent consultants approved by the Cleveland Reserve Bank; and (ii) a detailed written plan designed to 

strengthen Huntington's risk management in the areas of accounting 

and regulatory reporting. Huntington Bank entered into a similar 

written agreement with the OCC, which was terminated on October 6, 

2005 end footnote) 

The Board has considered Huntington' s record of compliance with the Written Agreement and the actions Huntington has already taken and is in the process of implementing rules to correct the deficiencies noted in the Written 

Agreement(footnote 14 A commenter expressed a 

general concern about Huntington's 

accounting practices end footnote) 

Based on all the facts of record, including the actions 

Huntington has taken to address the managerial matters 

discussed above, the Board concludes that considerations 

relating to the financial and managerial resources and 

future prospects of the organizations involved in the proposal are consistent with approval, as are the other supervisory factors under the BHC Act. 

CONVENIENCE AND nEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, 

the Board also must consider the effects of the proposal 

on the convenience and needs of the communities to be 

served and take into account the records of the relevant 

insured depository institutions under the Community Reinvestment Act (''CRA'' )(footnote 15 12 U.S.C. § 2901 etseq.; 

12 U.S.C. § 1842(c)(2) end footnote)The CRA requires the federal 

financial supervisory agencies to encourage insured depository institutions to help meet the credit needs of the local 

communities in which they operate, consistent with their 

safe and sound operation, and requires the appropriate 

federal financial supervisory agency to take into account 

an institution' s record of meeting the credit needs of its 

entire community, including low- and moderate-income 

(''LMI'') neighborhoods, in evaluating bank expansionary 

proposals(footnote 16 12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of record, 

including the CRA performance evaluation records of the 

subsidiary depository institutions of Huntington and Unizan, data reported by Huntington under the Home Mortgage 

Disclosure Act ("HMDA''),(footnote 17 12 U.S.C. § 2801 

etseq end footnote) other information provided 

by Huntington, confidential supervisory information, and 

public comment received on the proposal. A commenter 

who opposed the proposal expressed concern about possible 

branch closures after consummation of the proposal. The 

commenter also alleged, based on 2004 HMDA data, that 

Huntington Bank engaged in discriminatory treatment of 

minority individuals in home mortgage lending. 
A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations by 

the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor 

(footnote 18 See Interagency Questions and Answers 

Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 

(2001) end footnote) 

Huntington Bank received an overall ''satisfactory'' rating at its most recent CRA evaluation by the OCC, as of 

March 31, 2003. The OCC has not yet evaluated Unizan 

Bank's CRA performance. Unizan Bank was formed in 

2002 by the merger of First National Bank of Zanesville 

(''First National''), Zanesville, and The United National 

Bank and Trust Company (''United National''), Canton, 

both in Ohio. Both banks had ''satisfactory'' CRA performance ratings by the OCC when they were consolidated 

(footnote 19 First National received an overall ''satisfactory'' 

CRA performance rating as of December 8, 1998, and United National received an 

overall "satisfactory'' CRA performance rating as of October 29, 

2001 end footnote) 

Huntington has represented that, on consummation of the 

proposal, it will implement Huntington Bank's current CRA 

policies, procedures, and programs at the combined 

organization. 

B. Branch Closings 

Huntington stated that it intends to close six branches and 

consolidate three other branches after consummation but 

that none of these branches are in LMI census tracts. 

Huntington also provided the Board with Huntington 

Bank's policy regarding office openings, closings, and 

consolidations. That policy entails a review of a number of 

factors before a branch is closed, including consideration of 

any adverse impact on LMI communities. Examiners at 

Huntington Bank's most recent CRA performance evaluation reported that the bank' s service delivery systems were 

accessible to geographies and individuals of different 

income levels throughout its assessment areas. 

The Board also has considered the fact that federal 

banking law provides a specific mechanism for addressing 

branch closings.(footnote 20 Section 42 of the Federal Deposit 

Insurance Act (12 U.S.C. 

§ 1831r-1), as implemented by the Joint Policy Statement Regarding 

Branch Closings (64 Federal Register 34,844 (1999)), requires that a 

bank provide the public with at least 30 days' notice and the 

appropriate federal supervisory agency and customers of the branch 

with at least 90 days' notice before the date of the proposed branch 

closing. The bank also is required to provide reasons and other 

supporting data for the closure, consistent with the institution's written 

policy for branch closings end footnote)Federal law 

requires an insured depository institution to provide notice to the public and to the 

appropriate federal supervisor before closing a branch. In 

addition, the Board notes that the OCC, as the appropriate 

federal supervisor of Huntington Bank, will continue to 

review its branch closing record in the course of conducting 

CRA performance evaluations. 

C. HMDA and Fair Lending Records 

The Board has carefully considered the lending record and 

HMDA data of Huntington Bank in light of public comment 

about its record of lending to minorities. A commenter 

alleged, based on 2004 HMDA data, that Huntington Bank 

disproportionately denied applications for HMDAreportable loans by African-American and Hispanic applicants. The commenter also asserted that Huntington Bank 

made higher-cost loans to African Americans and Hispanics 

more frequently than to nonminorities(footnote 21 

Beginning January 1, 2004, the HMDA data required to be 

reported by lenders were expanded to include 

pricing information for 

loans on which the annual percentage rate 

(APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 percentage points 

for first-lien mortgages and 5 percentage points for second-lien 

mortgages (12 CFR 203.4) end footnote)The Board reviewed HMDA data for 2004 reported by Huntington Bank 

on a company-wide basis. 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

Huntington Bank is excluding or imposing higher credit 

costs on any racial or ethnic group on a prohibited basis. 

The Board recognizes that HMDA data alone, even with 

the recent addition of pricing information, provide only 

limited information about the covered loans(footnote 22 

The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, 

therefore, have limitations that make them an inadequate 

basis, absent other information, for concluding that an 

institution has engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully and taken into account other information, 

including examination reports that provide on-site evaluations of compliance by Huntington Bank with fair lending 

laws and the CRA performance record of Huntington Bank 

and Unizan Bank that are detailed above. In the fair lending 

reviews that were conducted in conjunction with the most 

recent CRA performance evaluations of the subsidiary 
depository institutions of Huntington and Unizan, examiners noted no substantive violations of applicable fair lending laws. 

The record also indicates that Huntington has taken steps 

to ensure compliance with fair lending and other consumer 

protection laws. Huntington represented that it has a comprehensive fair lending program consisting of lending 

policies, annual training and testing of lending personnel, 

fair lending analyses, and oversight and monitoring. In 

addition, Huntington represented that it performs fair lending analysis using regression modeling and benchmarking 

and monitors adherence to credit policy using monthly 

reporting and quality control reviews. Huntington also 

represented that its fair lending policy includes a secondreview program for its residential lending and that its 

corporate underwriting department conducts a third review 

of denied applications from minority applicants or for loans 

used to finance properties in LMI areas. 

The Board also has considered the HMDA data in light 

of other information, including Huntington's CRA lending 

programs and the overall performance records of the 

subsidiary banks of Huntington and Unizan under the 

CRA. These established efforts demonstrate that the institutions are active in helping to meet the credit needs of their 

entire communities. 

D. Conclusion on Convenience and Needs Factor 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA performance 

records of the institutions involved, information provided 

by Huntington, comments received on the proposal, and 

confidential supervisory information. Huntington represented that the proposal would benefit Unizan customers by 

providing expanded delivery channels and access to a 

broader array of investment products, including annuities 

and a broader array of mutual funds, and enhanced investment management and research capabilities. Based on a 

review of the entire record, and for the reasons discussed 

above, the Board concludes that considerations relating to 

the convenience and needs factor, including the CRA 

performance records of the relevant depository institutions, 

are consistent with approval. 

CONCLUSION 

Based on the foregoing and all the facts of record, the Board 

has determined that the application should be, and hereby is, 

approved. In reaching its conclusion, the Board has considered all the facts of record in light of the factors that it is 

required to consider under the BHC Act(footnote 23 

A commenter requested that the Board hold a public meeting or 

hearing on the proposal. Section 3 of the BHC Act does not require the 

Board to hold a public hearing on an application unless the appropriate 

supervisory authority for the bank to be acquired makes a timely 

written recommendation of denial of the application. The Board has 

not received such a recommendation from the appropriate supervisory 

authority. Under its regulations, the Board also may, in its discretion, 

hold a public meeting or hearing on an application to acquire a bank 

if a meeting or hearing is necessary or appropriate to clarify factual 

issues related to the application and to provide an opportunity for 

testimony (12 CFR 225.16(e)). The Board has considered carefully the 

commenter's request in light of all the facts of record. In the Board's 

view, the commenter had ample opportunity to submit its views and, in 

required adequately orcarefully appropriate. the fact, demonstrate ormeeting Board warranted orsubmitted in why acting For has or a why hearing thesedetermined meeting onin written this the reasons, prposal. case.written on or comments the aringthat Accordingly, and proposal comments a The public based otherwise that commenter's is the meeting on denied.Th do the all Board not would request the present or factshas request hearing be e Board'for considered necessary of its a record, fails public views is not tos

approval is specifically conditioned on compliance by Huntington with the conditions imposed in this order and the 

commitments made in connection with the application. For 

purposes of this action, the conditions and commitments are 

deemed to be conditions imposed in writing by the Board in 

connection with its findings and decision herein and, as 

such, may be enforced in proceedings under applicable law. 

The proposed transaction may not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order, unless such period is extended for good cause by 

the Board or the Cleveland Reserve Bank, acting pursuant 

to delegated authority. 

By order of the Board of Governors, effective January 26, 2006. 

Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Bies, Olson, and Kohn. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix A 

OHIO BANKING MARKETS IN WHICH 

HUNTINGTON AND UNIZAN 

COMPETE DIRECTLY 

Akron 

(1) Summit County, excluding (i) the cities of Hudson, 

Macedonia, and Twinsburg, and (ii) the townships of 

Boston, Northfield Center, Richfield, Sagamore Hills, and 

Twinsburg and the villages adjoining those townships; 

(2) Portage County, excluding (i) the cities of Aurora and 

Streetsboro and (ii) the townships of Freedom, Hiram, 

Mantua, Nelson, Shalersville, and Windham and the villages adjoining those townships; 

(3) in Medina County, the city of Wadsworth, the townships 

of Guilford and Sharon, and the village of Seville; 

(4) in Stark County, the townships of Lake and Lawrence 

and the villages of Canal Fulton and Hartville; and 

(5) in Wayne County, the city of Rittman, the townships of 
Chippewa and Milton, and the villages adjoining those 

townships. 

Columbus 

Delaware, Franklin, Fairfield, Licking, Madison, Morrow, 

Pickaway, and Union counties and Perry County, excluding 

the township of Harrison. 

Dayton 

Greene, Miami, Montgomery, and Preble counties. 

Appendix B 

MARKET DATA FOR OHIO BANKING MARKETS 

Akron 

Huntington operates the seventh largest depository institution in the market, controlling deposits of $364.6 million, 

which represent approximately 4.2 percent of market 

deposits. Unizan operates the 13th largest depository institution in the market, controlling deposits of approximately 

$116.6 million, which represent approximately 1.4 percent 

of market deposits. After consummation of the proposal, 

Huntington would remain the seventh largest depository 

organization in the market, controlling deposits of approximately $481.2 million, which represent approximately 

5.6 percent of market deposits. Twenty-three depository 

institutions would remain in the banking market. The HHI 

would increase 11 points, to 1349. 

Columbus 

Huntington operates the largest depository institution in the 

market, controlling deposits of $8.1 billion, which represent approximately 28.6 percent of market deposits. Unizan 

operates the 11th largest depository institution in the market, controlling deposits of approximately $300.8 million, 

which represent approximately 1.1 percent of market 

deposits. After consummation of the proposal, Huntington 

would remain the largest depository organization in the 

market, controlling deposits of approximately $8.4 billion, 

which represent approximately 29.7 percent of market 

deposits. Fifty-five depository institutions would remain in 

the banking market. The HHI would increase 60 points, to 

1639. 

Dayton 

Huntington operates the seventh largest depository institution in the market, controlling deposits of $242.9 million, 

which represent approximately 2.5 percent of market 

deposits. Unizan operates the eighth largest depository 

institution in the market, controlling deposits of approximately $225.6 million, which represent approximately 

2.3 percent of market deposits. After consummation of the 

proposal, Huntington would become the sixth largest 

depository organization in the market, controlling deposits 

of approximately $468.5 million, which represent approximately 4.9 percent of market deposits. Thirty depository 

institutions would remain in the banking market. The HHI 

would increase 13 points, to 1512. 

Marshall & Ilsley Corporation 

Milwaukee, Wisconsin 

Order Approving the Merger 

of Bank Holding Companies 

Marshall & Ilsley Corporation (''M&I''), a financial holding company within the meaning of the Bank Holding 

Company Act (''BHC Act''), has requested the Board's 

approval under section 3 of the BHC Act(footnote 1 12 U.S.C. 

§ 1842. The Board also approved today the separate 

applications and a notice by M&I to acquire Gold Banc 

Corporation, 

Inc. ("Gold Banc'') and its subsidiary bank Gold Bank, 

both of 

Leawood, Kansas, under sections 3 and 4 of the BHC 

Act and the 

application by M&I's subsidiary bank, M&I Marshall & 

Ilsley Bank 

(''M&I Bank''), Milwaukee, Wisconsin, a 

state member bank, to 

merge with Gold Bank under section 18(c) of the 

Federal Deposit 

Insurance Act, with M&I Bank as the surviving entity 

(collectively, 

the ''Gold Banc proposal''). See Marshall & Ilsley 

Corporation, 

92 Federal Reserve Bulletin C121 (2006) 

(''Gold Banc Order'') 

end footnote)to acquire 

Trustcorp Financial, Inc. (''Trustcorp''), St. Louis, and its 

subsidiary bank, Missouri State Bank and Trust Company 

(''MSBTC''), Clayton, both of Missouri. 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published in the 

Federal Register (71 Federal Register 4365 (2006)). The 

time for filing comments has expired, and the Board has 

considered the application and all comments received in 

light of the factors set forth in section 3 of the BHC Act. 

M&I, with total consolidated assets of approximately 

$46.3 billion, operates four subsidiary insured depository 

institutions in Arizona, Florida, Illinois, Minnesota, Missouri, Nevada, and Wisconsin. In Missouri, M&I is the 

ninth largest depository organization, controlling deposits 

of approximately $1.6 billion, which represent 1.7 percent 

of the total amount of deposits of insured depository 

institutions in the state (''state deposits'')(footnote 2 

Asset data are as of December 31, 2005. State 

deposit and ranking 

data are as of June 30, 2005, and reflect merger and 

acquisition activity 

as of February 24, 2006. In this context, insured 

depository institutions 

include commercial banks, savings banks, 

and savings associations 

end footnote 

Trustcorp, with total consolidated assets of approxi- matel MSBTC throllin tota Missouri organization lioneO 17t l, consolidate whic ny consummatio g $74 h deposit , larges , whic M& h represen 8, million controllin Iht woul s hadepositor od asset fs approximatel branche ntd, 2. o perate becom g4sf deposit othi percen yf organizatio approximatel ss onl proposal es th onsty ooe $60ie sixt ffn approximatel depositor stat Missouri 6h,n M&million e largesi deposits yn $4 Missouri I woul y. Trustcor 7t institution depositor . billion y. $2. d, hav con 2 bil .p I iy nes-,
INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of such bank holding company if certain conditions are 

met. For purposes of the BHC Act, the home state of M&I 

is Wisconsin,(footnote 3 A bank holding company's home state 

is the state in which the 

total deposits of all subsidiary banks of the company were the largest 

on July 1, 1966, or the date on which the company became a bank 

holding company, whichever is later (12 U.S.C. § 1841(o)(4)(C)) end footnote) 

and MSBTC is located in Missouri(footnote 4 

For purposes of section 3(d) of the BHC Act, the Board considers 

a bank to be located in states in which the bank is headquartered or 

operates a branch. See 12 U.S.C. §§ 1841(o)(4)-(7) and 1842(d)(1)(A)-

(d)(2)(B) end footnote) 

Based on a review of all the facts of record, including a 

review of relevant state statutes, the Board finds that all 

conditions for an interstate acquisition enumerated in section 3(d) of the BHC Act are met. Accordingly, the Board is 

permitted to approve the proposal under section 3(d) of the 

BHC Act. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposal that would result in a monopoly or 

would be in furtherance of an attempt to monopolize the 

business of banking in any relevant banking market. The 

BHC Act also prohibits the Board from approving a bank 

acquisition that would substantially lessen competition in 

any relevant banking market, unless the anticompetitive 

effects of the proposal are clearly outweighed in the public 

interest by the probable effect of the proposal in meeting 

the convenience and needs of the community to be served 

(footnote 5 12 U.S.C. § 1842(c)(1) end footnote) 

M&I and Trustcorp compete directly in the St. Louis, 

Missouri banking market ("St. Louis market'') 

(footnote 6 The St. Louis market consists of (1) the city of St. Louis; 

Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, and 

Washington counties; the eastern half of Gasconade County, including 

the cities of Hermann and Owensville; Boone township in Crawford 

County; Loutre township in Montgomery County, all in Missouri; and 

(2) Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe, and 

St. Clair counties; the western part of Randolph County (bounded by 

route 3 to the east and the Kaskaskia River to the south), including the 

cities of Red Bud, Ruma, and Evansville; and Washington County, 

excluding Ashley and DuBois townships, and the city of Centralia, all 

in Illinois end footnote)The Board 

has reviewed carefully the competitive effects of the proposal in this banking market in light of all the facts of 

record. In particular, the Board has considered the number 

of competitors that would remain in the market, the relative 

shares of total deposits of depository institutions in the 

market (''market deposits'')(footnote 7 

Deposit and market share data are as of June 30, 2005, reflect 

merger and acquisition activity as of February 24, 2006, and are based 

on calculations in which the deposits of thrift institutions are included 

at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant 

competitors of commercial banks. See, e.g., Midwest Financial Group, 

75 Federal Reserve Bulletin 386, 387 (1989); National City Corporation 

, 70 Federal Reserve Bulletin 743, 744 (1984). Thus, the Board 

regularly has included thrift deposits in the calculation of market share 

on a 50 percent weighted basis. See, e.g., First Hawaiian, Inc., 

77 Federal Reserve Bulletin 52, 55 (1991) end footnote) 

controlled by M&I and Trustcorp, the concentration level of market deposits and the 

increase in this level as measured by the HerfindahlHirschman Index ("HHI'') under the Department of Justice 

Merger Guidelines (''DOJ Guidelines'' ),(footnote 8 Under the 

DOJ Guidelines, 49 Federal Register 26,823 (June 29, 

1984), a market is considered unconcentrated if the post-merger HHI 

is under 1000, moderately concentrated if the post-merger HHI is 

between 1000 and 1800, and highly concentrated if the post-merger 

HHI exceeds 1800. The Department of Justice has informed the Board 

that a bank merger or acquisition generally will not be challenged (in 

the absence of other factors indicating anticompetitive effects) unless 

the post-merger HHI is at least 1800 and the merger increases the HHI 

more than 200 points. The Department of Justice has stated that the 

higher-than-normal HHI thresholds for screening bank mergers and 

acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose and other non depository financial 

institutions end footnote)and other characteristics of the market. 

Consummation of the proposal would be consistent with 

Board precedent and the DOJ Guidelines in the St. Louis 

market(footnote 9 M&I is the sixth largest depository organization 

in the St. Louis 

market, controlling deposits of approximately $1.7 billion, which 

represent 3.5 percent of market deposits. Trustcorp is the 14th largest 

depository organization in the market, controlling deposits of approximately $606 million, which represent 1.3 percent of market deposits. 

On consummation, M&I would become the fifth largest depository 

organization in the market, controlling deposits of approximately 

$2.3 billion, which represent 4.8 percent of market deposits. The HHI 

would increase 9 points, to 735. One hundred and forty-two depository 

institutions would remain in the banking market after consummation 

of the proposal end footnote)The market would remain 

unconcentrated, as 

measured by the HHI, and numerous competitors would 

remain in the market. 

The Department of Justice also has reviewed the anticipated competitive effects of the proposal and has advised 

the Board that consummation of the proposal would likely 

not have a significantly adverse effect on competition in 

any relevant banking market. The appropriate banking 

agencies also have been afforded an opportunity to comment and have not objected to the proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in the St. Louis market or in any other 

relevant banking market. Accordingly, the Board has determined that competitive considerations are consistent with 

approval. 

FINANCIAL AND MANAGERIAL RESOURCES 

AND FUTURE PROSPECTS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of 

record, including confidential reports of examination, other 
supervisory information from the various primary federal 

and state banking supervisors of the organizations involved 

in the proposal, publicly reported and other financial information, and information provided by M&I. 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non banking 

operations. In this evaluation, the Board considers a variety 

of measures, including capital adequacy, asset quality, and 

earnings performance. In assessing financial factors, the 

Board consistently has considered capital adequacy to be 

especially important. The Board also evaluates the financial 

condition of the combined organization at consummation, 

including its capital position, asset quality, and earnings 

prospects, and the impact of the proposed funding of the 

transaction. 

The Board has carefully considered the proposal under 

the financial factors. M&I, its subsidiary depository institutions, and MSBTC are all well capitalized and would 

remain so on consummation of the proposal. Based on its 

review of the record, the Board finds that M&I has 

sufficient financial resources to effect the proposal. The 

proposed transaction is structured as a partial share exchange 

and partial cash purchase, and M&I will fund the cash 

portion by incurring long-term debt. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organization. The Board has reviewed the examination 

records of M&I, Trustcorp, and their subsidiary depository 

institutions, including assessments of their management, 

risk-management systems, and operations. In addition, the 

Board has considered its supervisory experiences and those 

of the other relevant banking supervisory agencies with the 

organizations and their records of compliance with applicable banking law. M&I, Trustcorp, and their subsidiary 

depository institutions are considered to be well managed. 

The Board also has considered M&I's plans for implementing the proposal, including the proposed management after 

consummation. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND nEEDS CONSIDERATIONS 

In acting on proposals under section 3 of the BHC Act, the 

Board also must consider the effects of the proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'')(footnote 10 12 U.S.C. § 2901 etseq.; 12 

U.S.C. § 1842(c)(2). end footnote)The CRA requires the federal financial 

supervisory agencies to encourage insured depository 

institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and 

sound operation, and requires the appropriate federal financial supervisory agency to take into account a relevant 

depository institution' s record of meeting the credit needs 

of its entire community, including low- and moderateincome (''LMI'') neighborhoods, in evaluating bank expansionary proposals(footnote 11 12 U.S.C. §2903. end footnote) 

The Board has considered carefully all the facts of 

record, including evaluations of the CRA performance 

records of the subsidiary depository institutions of M&I 

and Trustcorp, data reported by the subsidiary depository 

and lending institutions of M&I and Trustcorp under the 

Home Mortgage Disclosure Act (''HMDA''),(footnote 12 

12 U.S.C. § 2801 etseq end footnote)other information provided by M&I, confidential supervisory information, and public comment received on the proposal. A 

commenter opposed the proposal and repeated its allegations from the Gold Banc proposal that, based on 2004 data 

reported under HMDA, M&I's subsidiary depository institution, M&I Bank FSB (''M&I FSB''), Las Vegas, Nevada, 

made higher-cost loans more frequently to minority borrowers than to non minority borrowers in certain states. The 

commenter also alleged that M&I FSB's nationwide mortgage subsidiary, M&I Mortgage Corp. (''M&I Mortgage''), 

and MSBTC disproportionately denied minority applicants 

for certain home mortgage loans in the St. Louis Metropolitan Statistical Area (''MSA'')(footnote 13 In addition, 

the commenter reiterated the assertions it raised in 

the Gold Banc proposal about an investment made 

by Gold Bank in 

multi family housing revenue bonds, which is not an institution 

involved in this proposal. The Board considered that issue in connection with its approval of the Gold Banc proposal. See Gold Banc 

Order, at 14 n. 31. end footnote)In reviewing this proposal, 

the Board incorporates its findings in the Gold Banc 

proposal. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations by 

the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor(footnote 14 See Interagency Questions and Answers 

Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 

(2001). end footnote) 

M&I Bank, M&I's largest subsidiary depository institution as measured by total deposits, received an overall 

''outstanding'' rating at its most recent CRA performance 

evaluation by the Federal Reserve Bank of Chicago, as of 

August 11, 2003. M&I's other subsidiary depository institutions received ''satisfactory'' ratings at their most recent 
CRA performance evaluations(footnote 15 

Southwest Bank of St. Louis (''Southwest Bank''), a subsidiary 

bank of M&I, received an overall ''satisfactory'' rating at its most 

recent CRA performance evaluation by the Federal Reserve Bank of 

St. Louis, as of August 11, 2003. M&I Bank FSB received an overall 

''satisfactory'' rating at its most recent CRA performance evaluation 

by the Office of Thrift Supervision as of February 23, 2005. M&I Bank 

of Mayville, Mayville, Wisconsin, is a special-purpose bank that is not 

evaluated under the CRA end footnote)MSBTC received a '' satisfactory'' rating at its most recent CRA performance 

evaluation by the Federal Deposit Insurance Corporation 

(''FDIC''), as of March 1, 2005. 

M&I represented that it would implement its CRA 

policies, procedures, and programs throughout the combined organization. This implementation would be carried 

out by local and regional CRA committees with coordinated oversight from M&I's corporate CRA committee, in 

accordance with its CRA program. 

B. HMDA and Fair Lending Record 

The Board has carefully considered the lending record and 

HMDA data of M&I and Trustcorp in light of public 

comment received on the proposal. As noted, the commenter 

reiterated the comments it submitted in the Gold 

Banc proposal that, based on 2004 HMDA data, M&I FSB 

made higher-cost loans(footnote 16 

Beginning January 1, 2004, the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 or more percentage 

points for first-lien mortgages and 5 or more percentage points for 

second-lien mortgages (12 CFR 203.4) end footnote)more 

frequently to minority borrowers than non minority borrowers statewide in Wisconsin 

and Ohio(footnote 17 The commenter also repeated its 

allegation from the Gold Banc 

proposal that, based on 2004 HMDA data, M&I FSB made higher-cost 

loans more frequently to Latinos than to non minority borrowers in 

Missouri. M&I FSB has no assessment areas in Missouri. end footnote) 

As noted in the Gold Banc Order, the Board 

reviewed HMDA data reported by M&I FSB in its assessment area in the Milwaukee-Waukesha Primary Metropolitan Statistical Area and in its assessment areas statewide in 

Wisconsin and Ohio. 

The commenter also based its allegation that M&I 

Mortgage and MSBTC denied applications by minority 

borrowers for conventional home-purchase loans more 

frequently than non minority applicants in the St. Louis 

MSA on 2004 HMDA data. The Board analyzed 2004 

HMDA data, M&I Bank, M&I FSB, M&I Mortgage, and 

reported by Southwest Bank in Southwest Bank's assessment areas in the St. Louis MSA and statewide in Missouri(footnote 18 M&I Bank, M&I FSB, and M&I Mortgage do not have an 

assessment area in the St. Louis MSA or in Missouri. end footnote) 

In addition, the Board analyzed 2004 HMDA data 

reported by MSBTC in its assessment area in the St. Louis 

MSA and in its assessment areas statewide in Missouri. 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

M&I or Trustcorp is excluding or imposing higher costs on 

any racial or ethnic group on a prohibited basis. The Board 

recognizes that HMDA data alone, even with the recent 

addition of pricing information, provide only limited information about the covered loans(footnote 19 

The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, therefore, 

have limitations that make them an inadequate basis, absent 

other information, for concluding that an institution has 

engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all lending institutions are obligated to ensure that their 

lending practices are based on criteria that ensure not only 

safe and sound lending but also equal access to credit by 

creditworthy applicants regardless of their race. Because of 

the limitations of HMDA data, the Board has considered 

these data carefully and taken into account other information, including examination reports that provide on-site 

evaluations of compliance by M&I and Trustcorp with fair 

lending laws. The Board also consulted with the FDIC, the 

primary regulator of MSBTC, and considered the compliance examination records of M&I's and Trustcorp's subsidiary depository institutions. Examiners noted no evidence 

of illegal credit discrimination by their subsidiary depository institutions. 

The record also indicates that M&I, Trustcorp, their 

subsidiary depository institutions, and their non-bank lending subsidiaries have taken steps to ensure compliance with 

fair lending and other consumer protection laws. As noted in 

the Gold Banc Order, M&I represented that it has centralized programs in place to monitor and manage compliance 

that feature (1) ongoing comprehensive training programs to 

ensure that regulatory requirements and policies are clearly 

communicated to personnel and (2) an internal audit department that periodically performs independent testing and 

validation of the compliance performance of M&I's various 

business units to ensure compliance with fair lending and 

consumer protection laws and to measure the effectiveness 

of internal controls. The Board hereby reaffirms and adopts 

the facts and findings detailed in the Gold Banc Order with 

respect to M&I's lending compliance and auditing programs(footnote 20 See Gold Banc Order, at footnote 17 end footnote) 

M&I also represented that it would implement its 

centralized compliance-related policies and procedures 

across its combined organization, thereby ensuring that all 

entities have the same compliance monitoring and independent testing processes and centralized performance of critical functions, such as underwriting for consumer and mortgage lending. 

The Board also has considered the HMDA data in light of 

other information, including the overall CRA performance 
records of the subsidiary depository and lending institutions 

of M&I and Trustcorp. These established efforts and records 

demonstrate that the institutions are active in helping to meet 

the credit needs of their entire communities. 

C. Conclusion on the Convenience and Needs 

Factor 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by M&I, the 

comment received on the proposal, and confidential supervisory information. M&I represented that the proposal 

would provide customers of Trustcorp with access to a 

broader array of financial products and services. Based on a 

review of the entire record, and for the reasons discussed 

above and in the Gold Banc Order, the Board concludes 

that considerations relating to the convenience and needs 

factor and the CRA performance records of the relevant 

depository institutions are consistent with approval. 

CONCLUSION 

Based on the foregoing and all facts of record, the Board 

has determined that the application should be, and hereby 

is, approved(footnote 21 The commenter requested that the 

Board hold a public hearing 

or meeting on the proposal. Section 3 of the BHC Act does not require 

the Board to hold a public hearing on an application unless the 

appropriate supervisory authority for any of the banks to be acquired 

makes a timely written recommendation of denial of the application. 

The Board has not received such a recommendation from any supervisory authority. Under its regulations, the Board also may, in its 

discretion, hold a public meeting or hearing on an application to 

acquire a bank if a meeting or hearing is necessary or appropriate to 

clarify factual issues related to the application and to provide an 

opportunity for testimony (12 CFR 225.16(e)). The Board has considered carefully the commenter's requests in light of all the facts of 

record. In the Board's view, the commenter had ample opportunity to 

submit comments on the proposal and, in fact, submitted written 

comments that the Board has considered carefully in acting on the 

proposal. The request fails to demonstrate why its written comments 

do not present its views adequately or why a meeting or hearing 

otherwise would be necessary or appropriate. For these reasons, and 

based on all the facts of record, the Board has determined that a public 

hearing or meeting is not required or warranted in this case. Accordingly, the request for a public hearing or meeting on the proposal is 

denied end footnote)In reaching its conclusion, the Board has 

considered all the facts of record in light of the factors that 

it is required to consider under the BHC Act and other 

applicable statutes. The Board's approval is specifically 

conditioned on compliance by M&I with the conditions 

imposed in this order and the commitments made to the 

Board in connection with the application. For purposes of 

this action, the conditions and commitments are deemed to 

be conditions imposed in writing by the Board in connection with its findings and decision herein and, as such, may 

be enforced in proceedings under applicable law. 

The proposal may not be consummated before the 15th 

calendar day after the effective date of this order, or later 

than three months after the effective date of this order, 

unless such period is extended for good cause by the Board 

or the Federal Reserve Bank of Chicago, acting pursuant to 

delegated authority. 

By order of the Board of Governors, effective March 13, 

2006. 

Voting for this action: Chairman Bernanke, Vice Chairman Ferguson, and Governors Bies, Olson, Kohn, Warsh, and Kroszner. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

National City Corporation 

Cleveland, Ohio 

Order Approving the Acquisition 

of a Bank Holding Company 

National City Corporation (''National City''), a financial 

holding company within the meaning of the Bank Holding 

Company Act (''BHC Act''), has requested the Board's 

approval under section 3 of the BHC Act 

(footnote 1 12 U.S.C. § 1842 end footnote)to acquire Forbes 

First Financial Corporation (''Forbes''), St. Louis, and its 

subsidiary bank, Pioneer Bank and Trust Company (''Pioneer Bank''), Maple wood, both in Missouri. 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published 

(71 Federal Register 933 (2006)). The time for filing 

comments has expired, and the Board has considered the 

proposal and all comments received in light of the factors 

set forth in section 3 of the BHC Act. 

National City, with total consolidated assets of $142.4 

billion, is the 15th largest depository organization in the 

United States and controls deposits of $76.6 billion, which 

represent approximately 1.3 percent of total deposits in 

insured depository institutions in the United States 

(footnote 2 Asset and nationwide deposit and ranking 

data are as of December 31, 2005. Statewide deposit and ranking data are as of June 30, 

2005, and reflect merger activity through February 7, 2006. In this 

context, insured depository institutions include commercial banks, 

savings banks, and savings associations end footnote) 

National City operates subsidiary insured depository institutions in Illinois, Indiana, Kentucky, Michigan, Missouri, 

Ohio, and Pennsylvania. In Missouri, National City is the 

tenth largest depository organization, controlling deposits 

of $1.46 billion, which represent approximately 1.6 percent 

of total deposits of insured depository institutions in the 

state (''state deposits''). 

Forbes, with total consolidated assets of approximately 

$529.5 million, operates one depository institution, Pioneer 

Bank, which has branches only in Missouri. Pioneer Bank 

is the 32nd largest depository institution in Missouri, 

controlling deposits of $397 million, which represent less 

than 1 percent of state deposits. 

On consummation of this proposal, National City would 

remain the 15th largest depository organization in the 

United States, with total consolidated assets of $142.9 
billion. National City would become the seventh largest 

depository organization in Missouri, controlling deposits of 

approximately $1.9 billion, which represent approximately 

2 percent of state deposits. 

INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of such bank holding company if certain conditions are 

met. For purposes of the BHC Act, the home state of 

National City is Ohio,(footnote 3 

A bank holding company's home state is the state in which the 

total deposits of all subsidiary banks of the company were largest on 

July 1, 1966, or the date on which the company became a bank holding 

company, whichever is later (12 U.S.C. § 1841(o)(4)(C)) 

. end footnote)and Pioneer Bank is located in 

Missouri(footnote 4 

For purposes of section 3(d) of the BHC Act, the Board considers 

a bank to be located in the states in which the bank is chartered, 

headquartered, or operates a branch. See 12 U.S.C. §§ 1841(o)(4)-(7) 

and 1842(d)(1)(A)-(D)(2)(B) end footnote) 

Based on a review of all the facts of record, including 

relevant state statutes, the Board finds that all the conditions for an interstate acquisition enumerated in section 

3(d) are met in this case(footnote 5 

See 12 U.S.C. §§ 1842(d)(1)(A) and (B), 1842(d)(2)(A) and (B). 

National City is adequately capitalized and adequately managed, as 

defined by applicable law. Pioneer Bank has been in existence and 

operated for the minimum period of time required by applicable state 

law (five years). See Mo. Rev. Stat. §362.077. On consummation of 

the proposal, National City would control less than 10 percent of the 

total amount of deposits of insured depository institutions ("total 

deposits'') in the United States. National City also would comply with 

the applicable state deposit cap in Missouri by controlling less than 

13 percent of state deposits. See Mo. Rev. Stat. § 362.915. All other 

requirements under section 3(d) of the BHC Act also would be met on 

consummation of the proposal end footnote) 

In light of all the facts of record, 

the Board is permitted to approve the proposal under 

section 3(d) of the BHC Act. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposal that would result in a monopoly or 

would be in furtherance of any attempt to monopolize the 

business of banking in any relevant banking market. The 

BHC Act also prohibits the Board from approving a 

proposed bank acquisition that would substantially lessen 

competition in any relevant banking market, unless the 

Board finds that the anticompetitive effects of the proposal 

clearly are outweighed in the public interest by the probable effect of the proposal in meeting the convenience and 

needs of the community to be served(footnote 6 12 U.S.C. 

§ 1842(c)(1) end footnote) 

National City and Forbes compete directly in the 

St. Louis, Missouri banking market (''St. Louis market'')(footnote 7 The St. Louis market consists of (1) the city of St. Louis; 

Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, and 

Washington counties; the eastern half of Gasconade County, including 

the cities of Hermann and Owensville; Boone township in Crawford 

County; Loutre township in Montgomery County, all in Missouri; and 

(2) Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe and 

St. Clair counties, the western part of Randolph County (bounded by 

Route 3 to the east and the Kaskaskia River to the south), including the 

cities of Red Bud, Ruma, and Evansville; and Washington County, 

excludingin Illinois Ashley end and footnote)Th DuBois townships, e Board ha ands reviewe the cityd of carefull Centralia, y th all e competitive 

effects of the proposal in this banking market in light of 

all the facts of record. In particular, the Board has considered the number of competitors that would remain in the 

market, the relative shares of total deposits in depository 

institutions in the market (''market deposits'') controlled 

by National City and Forbes,(footnote 8 

Market share data are as of June 30, 2005, and are based on 

calculations in which the deposits of thrift institutions are included 

at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant 

competitors of commercial banks. See, e.g., 

Midwest Financial Group, 

75 Federal Reserve Bulletin 386 (1989); National City Corporation, 

70 Federal Reserve Bulletin 743 (1984). Thus, the Board regularly 

has included thrift deposits in the market share calculation on a 50 

percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal 

Reserve Bulletin 52 (1991) end footnote)the concentration level of 

market deposits and the increase in this level as measured 

by the Herfindahl-Hirschman Index (''HHI'') under the 

Department of Justice Merger Guidelines (''DOJ Guidelines'' ),(footnote 9 Under the DOJ Guidelines, 49 

Federal Register 26,823 (1984), a 

market is considered unconcentrated if the post-merger 

HHI is below 

1000. The Department of Justice has informed the 

Board that a bank 

merger or acquisition generally will not be 

challenged (in the absence 

of other factors indicating anticompetitive 

effects) unless the postmerger HHI is at least 1800 and the merger 

increases the HHI more 

than 200 points. The Department of Justice has 

stated that the 

higher-than-normal HHI thresholds for screening 

bank mergers for 

anticompetitive effects implicitly recognize the 

competitive effects of 

limited-purpose lenders and other non 

depository financial institutions end footnote) 

and other characteristics of the market. 

Consummation of the proposal would be consistent with 

Board precedent and the DOJ Guidelines in the St. Louis 

market(footnote 10 National City is the seventh 

largest depository organization in the 

St. Louis market, controlling deposits of $1.5 billion, 

which represent 

3.1 percent of market deposits. Forbes operates the 

18th largest 

depository institution in the market, controlling deposits 

of $397.2 

million, which represent less than 1 percent of market 

deposits. After 

consummation of the proposal, National City would 

become the sixth 

largest depository organization in the market, 

controlling deposits of 

$1.8 billion, which represent approximately 3.8 percent 

of market 

deposits. The HHI would increase 5 points, to 731. 

One hundred and 

thirty-nine bank and thrift competitors would remain 

in the market 

end footnote)After consummation of the proposal, the St. Louis 

market would remain unconcentrated, as measured by the 

HHI, and numerous competitors would remain in the market. 

The Department of Justice also has reviewed the anticipated competitive effects of the proposal and has advised 

the Board that consummation would not likely have a 

significantly adverse effect on competition in the St. Louis 

market or in any other relevant banking market. In addition, 

the appropriate banking agencies have been afforded an proposal opportunit consummatio cantl of resource Base y advers d. oyns t alieno effec l oth thcommen fee th St fact t oe. Loui proposa ns competitio ot an f record s make d hav l woul , thn oe oe no rd Boar r i o no nn an t objecte thtd hav ye conclude othe concentratio e ard relevan signifi tos ththae n-t
banking market and that competitive considerations are 

consistent with approval. 

FINANCIAL, MANAGERIAL, AND 

SUPERVISORY CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and banks involved in the proposal and 

certain other supervisory factors. The Board has carefully 

considered these factors in light of all the facts of record, 

including confidential reports of examination and other 

supervisory information received from the federal and state 

supervisors of the organizations involved, publicly reported 

and other financial information, information provided by 

National City, and public comments received on the 

proposal(footnote 11 

A commenter expressed concern about National City's relationships with unaffiliated retail check cashers, pawn shops, and other 

alternative financial services providers. As a general matter, the 

activities of the consumer finance businesses identified by 

the commenter are permissible, and the businesses are licensed by the states 

where they operate. National City has represented that it does not play 

any role in the lending practices, credit review, or other business 

practices of these firms end footnote) 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non banking 

operations. The Board considers a variety of measures in 

this evaluation, including capital adequacy, asset quality, 

and earnings performance(footnote 12 

The commenter also expressed concern about a press report 

asserting that non-traditional mortgage loans, such as interest-only 

mortgages, could raise asset-quality issues for institutions holding 

them. The press report indicated that First Franklin Financial Corporation, San Jose, California, a subsidiary of National City Bank of 

Indiana ("National City Indiana''), Indianapolis, Indiana, originates 

many interest-only mortgages. The Board and the Office of the 

Comptroller of the Currency (''OCC''), the primary regulator of 

National City Indiana, carefully scrutinize institutions' lending programs, including the policies and procedures and risk-management 

processes that they have in place for non traditional lending products. 

The Board has consulted with the OCC about the risk-management 

processes for non traditional lending activities at National City Indiana 

and its mortgage subsidiaries end footnote)In assessing financial factors, 

the Board consistently has considered capital adequacy to 

be especially important. The Board also evaluates the 

financial condition of the combined organization at consummation, including its capital position, asset quality, and 

earnings prospects, and the impact of the proposed funding 

of the transaction. 

The Board has carefully considered the financial factors. National City, all its subsidiary banks, and Pioneer 

Bank are well capitalized and would remain so on consummation of the proposal. Based on its review of the 

record, the Board finds that National City has sufficient 

financial resources to effect the proposal. The proposed 

transaction is structured as a cash purchase, and National 

City will use available resources to fund the transaction. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organization. The Board has reviewed the examination 

records of National City, Forbes, and their subsidiary 

depository institutions, including assessments of their management, risk-management systems, and operations. In 

addition, the Board has considered its supervisory experiences and those of the other relevant banking supervisory 

agencies with the organizations and their records of compliance with applicable banking law. National City, Forbes, 

and their subsidiary depository institutions are considered 

to be well managed. The Board also has considered 

National City' s plans for implementing the proposal, 

including the proposed management after consummation. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board is required to consider the effects of the proposal on 

the convenience and needs of the communities to be served 

and to take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'' )(footnote 13 12 U.S.C. § 2901 etseq. end footnote) 

The CRA requires the federal financial 

supervisory agencies to encourage financial institutions to 

help meet the credit needs of the local communities in 

which they operate, consistent with their safe and sound 

operation, and requires the appropriate federal financial 

supervisory agency to take into account an institution's 

record of meeting the credit needs of its entire community, 

including low- and moderate-income (''LMI'') neighborhoods, in evaluating bank expansionary proposals 

(footnote 14 12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including evaluations of the CRA performance 

records of National City's subsidiary banks and Pioneer 

Bank, data reported by National City under the Home 

Mortgage Disclosure Act (''HMDA''),(footnote 15 12 U.S.C. 

§ 2801 etseq. end footnote)other information 

provided by National City, confidential supervisory information, and public comment received on the proposal. A 

commenter opposed the proposal and alleged, based on 

2004 HMDA data, that National City engaged in discriminatory treatment of minority individuals in its home mortgage lending operations. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations by 
the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor 

(footnote 16 See Interagency Questions and Answers Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 (2001) end footnote) 

National City's largest subsidiary bank, as measured by 

total deposits, is its Cleveland subsidiary, National City 

Bank (''National City Cleveland'')(footnote 17 As of December 31, 2005, National City Cleveland accounted 

for more than 42 percent of the total domestic deposits of National 

City's six subsidiary banks end footnote)The bank received an 

"outstanding'' rating by the OCC, as of February 22, 2000. 

National City's remaining subsidiary banks all received 

either ''outstanding'' or ''satisfactory'' ratings at their most 

recent CRA evaluations(footnote 18 The appendix 

lists the most recent CRA ratings of National 

City's other subsidiary banks end footnote)Pioneer Bank received a ''satisfactory'' rating at its most recent CRA performance evaluation by the Federal Deposit Insurance Corporation, as of 

June 12, 2003. National City has indicated that its CRA and 

consumer compliance programs would be implemented at 

Pioneer Bank on consummation of the proposal. 

B. HMDA Data, Subprime Lending, and Fair 

Lending Record 

The Board has carefully considered the lending record and 

HMDA data of National City in light of public comment 

about its record of lending to minorities. A commenter 

alleged, based on 2004 HMDA data, that National City 

disproportionately denied applications for HMDAreportable loans by African-American and Latino applicants 

in certain Metropolitan Statistical Areas (''MSAs''). The 

commenter also asserted that National City made highercost loans to African Americans and Latinos more frequently than to nonminorities(footnote 19 

Beginning January 1, 2004, the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 or more percentage 

points for first-lien mortgages and 5 or more percentage points for 

second-lien mortgages (12 CFR 203.4) end footnote) 

The Board reviewed HMDA 

data reported by all of National City's subsidiary banks, and 

National City's non-bank lending subsidiary, National City 

Mortgage Services, Kalamazoo, Michigan, (collectively, 

"National City Lenders''), in the MSAs identified by the 

commenter and focused its analysis on the MSAs that 

comprise the assessment areas of the National City Lenders 

in Illinois, Indiana, Kentucky, Michigan, and Ohio. 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

National City is excluding or imposing higher credit costs 

on any racial or ethnic group on a prohibited basis. The 

Board recognizes that HMDA data alone, even with the 

recent addition of pricing information, provide only limited 

information about the covered loans(footnote 20 The data, 

for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, therefore, have limitations that make them an inadequate basis, 

absent other information, for concluding that an institution 

has engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully and taken into account other information, 

including examination reports that provide on-site evaluations of compliance by National City with fair lending 

laws. In the fair lending reviews that were conducted in 

conjunction with the most recent CRA performance evaluations of National City's subsidiary banks, examiners noted 

no substantive violations of applicable fair lending laws. 

The Board has also consulted with the OCC about the fair 

lending compliance records of those institutions. 

National City has represented that it has a comprehensive fair lending program consisting of lending policies, 

annual training and testing of lending personnel, fair lending analyses, and oversight and monitoring. In addition, 

National City represented that it performs fair lending 

analysis using regression modeling and benchmarking and 

monitors adherence to credit policy using monthly reporting and quality control reviews. National City also represented that its fair lending policy includes a second-review 

program for its residential lending and that its corporate 

underwriting department conducts a third review of denied 

applications from minority applicants or for loans used to 

finance properties in LMI areas. National City has indicated that its consumer compliance program will be implemented at Pioneer Bank after consummation of the 

proposal(footnote 21 

A commenter expressed concern about a press report that 

National City had imposed a prepayment penalty 

on a customer who 

used insurance proceeds to pay off a mortgage 

on her home, which was 

damaged by Hurricane Katrina. The Board has 

referred this individual 

complaint to National City and to the OCC for 

their review and has 

considered National City's response end footnote) 

The Board also has considered the HMDA data in light 

of other information, including the CRA performance 

records of each of National City's subsidiary banks. These 

established efforts and records demonstrate that National 

City is active in helping to meet the credit needs of its 

entire community. 
C. Conclusion on Convenience and Needs Factor 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by National 

City, comments received on the proposal, and confidential 

supervisory information. National City represented that the 

proposal would provide customers of Forbes with access to 

a broader array of financial products, including trust, 

foreign exchange, and brokerage services. Based on a 

review of the entire record, and for the reasons discussed 

above, the Board concludes that considerations relating to 

the convenience and needs factor, including the CRA 

performance records of the relevant depository institutions, 

are consistent with approval. 

CONCLUSION 

Based on the foregoing and all the facts of record, the 

Board has determined that the application should be, and 

hereby is, approved. In reaching its conclusion, the Board 

has considered all the facts of record in light of the factors 

that it is required to consider under the BHC Act(footnote 22 

A commenter requested that the Board hold a public meeting or 

hearing on the proposal. Section 3 of the BHC Act does not require the 

Board to hold a public hearing on an application unless the appropriate 

supervisory authority for the bank to be acquired makes a timely 

written recommendation of denial of the application. The Board has 

not received such a recommendation from the appropriate supervisory 

authority. Under its regulations, the Board also may, in its discretion, 

hold a public meeting or hearing on an application to acquire a bank if 

a meeting or hearing is necessary or appropriate to clarify factual 

issues related to the application and to provide an opportunity for 

testimony (12 CFR 225.16(e)). The Board has considered carefully the 

commenter's request in light of all the facts of record. In the Board's 

view, the commenter had ample opportunity to submit its views and, in 

fact, submitted written comments that the Board has considered 

carefully in acting on the proposal. The commenter's request fails to 

demonstrate why the written comments do not present its views 

adequately or why a meeting or hearing otherwise would be necessary 

or appropriate. For these reasons, and based on all the facts of record, 

the Board has determined that a public meeting or hearing is not 

required or warranted in this case. Accordingly, the request for a public 

meeting or hearing on the proposal is denied The 

Board' s approval is specifically conditioned on compliance 

by National City with the conditions imposed in this order 

and the commitments made to the Board in connection with 

the application. For purposes of this action, the conditions 

and commitments are deemed to be conditions imposed in 

writing by the Board in connection with its findings and 

decisions herein and, as such, may be enforced in proceedings under applicable law. 

The proposed transaction may not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order unless such period is extended for good cause by 

the Board or the Federal Reserve Bank of Cleveland, acting 

pursuant to delegated authority. 

By order of the Board of Governors, effective March 23, 

2006. 

Voting for this action: Chairman Bernanke and Governors Bies, 

Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice 

Chairman Ferguson. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix 

CRA PERFORMANCE EVALUATIONS OF NATIONAL CITY'S BANKS 

Heading row column 1 Bank column 2 CRA Rating column 3 Date 

column 4 Supervisor end heading row 

National City Bank of Indiana,Indianapolis, Indiana 

CRA Rating:Satisfactory Date:February 2000 Supervisor:OCC 

National City Bank of Kentucky,Louisville, Kentucky 

CRA Rating:Satisfactory Date:February 2000 Supervisor:OCC 

National City Bank of the Midwest,Bannockburn, Illinois CRA 

Rating:Outstanding Date:February 2000 Supervisor:OCC 

National City Bank of Pennsylvania,Pittsburgh, Pennsylvania 

CRA Rating:Outstanding Date:February 2000 Supervisor:OCC 

National City Bank of Southern Indiana,New Albany, Indiana 

CRA Rating:Satisfactory Date:February 2000 Supervisor:OCC 
New York Community Bancorp, Inc. 

Westbury, New York 

New York Community Newco, Inc. 

Westbury, New York 

Order Approving the Acquisition of a Bank 

New York Community Bancorp, Inc. ("NYCB''), a bank 

holding company within the meaning of the Bank Holding 

Company Act (''BHC Act''), and New York Community 

Newco, Inc. ("Newco''), have requested the Board's approval pursuant to section 3 of the BHC Act(footnote 1 

12 U.S.C. § 1842 end footnote) to acquire 

Atlantic Bank of New York ("Atlantic Bank''), New York, 

New York(footnote 2 

NYCB would acquire Atlantic Bank from National Bank of 

Greece, S.A., Athens, Greece. NYCB has also requested the Board's 

approval pursuant to section 3 for its subsidiary bank, New York 

Commercial Bank ("NY Commercial Bank''), Islandia, New York, 

to purchase all the assets and assume all the liabilities of Atlantic 

Bank in exchange for the subsidiary bank's stock, which Atlantic 

Bank would immediately dividend back to NYCB. The proposed 

purchase-and-assumption transaction also is subject to the approval 

of the Federal Deposit Insurance Corporation ("FDIC'') and the 

state of New York end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published in 

the Federal Register (71 Federal Register 119 (2006)). 

The time for filing comments has expired, and the Board 

has considered the applications and all comments received in light of the factors set forth in section 3 of the 

BHC Act(footnote 3 Twenty commenter's expressed 

concerns on various aspects of the 

proposal end footnote) 

NYCB, with total consolidated assets of approximately 

$26.3 billion, operates two depository institutions, New York 

Community Bank (''NY Community Bank''), Flushing, 

New York, with branches in New Jersey and New York, and 

NY Commercial Bank,(footnote 4 On December 31, 2005, 

NYCB acquired Long Island Financial 

Corporation ("LIFC'') and thereby acquired its subsidiary bank, Long 

Island Commercial Bank (''LICB''), both of Islandia, New York. See 

New York Community Bancorp, Inc., 92 Federal Reserve Bulletin C33 

(2006) (''NYCB/LIFC Order"). In connection with the acquisition, 

NYCB (1) changed the name of New York Commercial Bank, a 

limited-purpose bank wholly owned by NY Community Bank, to New 

York Municipal Bank (''NYMB''), Flushing, New York, and (2) renamed LICB as NY Commercial Bank. NYCB has represented that it 

intends to dissolve NYMB end footnote)with branches in New York 

(footnote 5 Asset data are as of December 31, 2005, and statewide deposit 

and ranking data are as of June 30, 2005. Data reflect subsequent 

merger activity through March 6, 2006. In this context, insured 

depository institutions include commercial banks, savings banks, and 

savings associations end footnote) 

NYCB is the eighth largest depository organization in New 

York, controlling deposits of approximately $11.7 billion, 

which represent approximately 2 percent of the total 

amount of deposits of insured depository institutions in the 

state ('' state deposits''). 

Atlantic Bank, with total consolidated assets of 

approximately $2.7 billion, has branches only in New York. 

Atlantic Bank is the 30th largest insured depository institution in New York, controlling deposits of approximately 

$1.8 billion. 

On consummation of the proposal, NYCB would have 

consolidated assets of approximately $29 billion. NYCB 

would remain the eighth largest depository organization in 

New York, controlling deposits of approximately $13.5 billion, which represent approximately 2 percent of state 

deposits. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposed bank acquisition that would result in 

a monopoly or would be in furtherance of any attempt to 

monopolize the business of banking in any relevant banking market. In addition, section 3 prohibits the Board from 

approving a proposed bank acquisition that would substantially lessen competition in any relevant banking market, 

unless the anticompetitive effects of the proposal are 

clearly outweighed in the public interest by its probable 

effect in meeting the convenience and needs of the community to be served(footnote 6 12 U.S.C. § 1842(c)(1) end footnote) 

NYCB and Atlantic Bank compete directly in the Metro 

New York banking market (''New York banking market'') 

(footnote 7 The New York banking market includes Bronx, Dutchess, Kings, 

Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, 

Suffolk, Sullivan, Ulster, and Westchester counties in New York; 

Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, 

Ocean, Passaic, Somerset, Sussex, Union, and Warren counties and 

portions of Mercer County in New Jersey; Pike County in Pennsylvania; and Fairfield County and portions of Litchfield and New Haven 

counties in Connecticut end footnote) 

The Board has carefully reviewed the competitive effects 

of the proposal in this banking market in light of all the 

facts of record. In particular, the Board has considered the 

number of competitors that would remain in the banking 

market, the relative shares of total deposits in depository 

institutions in the market (''market deposits'') controlled 

by NYCB and Atlantic Bank,(footnote 8 

Deposit and market share data are as of June 30, 2005 (adjusted to 

reflect mergers and acquisitions through March 6, 2006), and are based 

on calculations in which the deposits of thrift institutions are included 

at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant 

competitors of commercial banks. See, e.g., Midwest Financial Group, 

75 Federal Reserve Bulletin 386 (1989); National City Corporation, 

70 Federal Reserve Bulletin 743 (1984). Thus, the Board regularly has 

included thrift deposits in the market share calculation on a 50 percent 

weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve 

Bulletin 52 (1991) end footnote)the concentration level of 

market deposits and the increase in this level as measured 

by the Herfindahl-Hirschman Index (''HHI'') under the 

Department of Justice Merger Guidelines (''DOJ Guidelines'' ),(footnote 9 Under the DOJ Guidelines, a market is 

considered unconcentrated if the post-merger HHI is 

less than 1000, moderately concentrated if the post-merger HHI is between 1000 and 1800, and highly 

concentrated if the post-merger HHI is more than 1800. The Department of Justice (''DOJ'') has informed the Board that a bank merger 

or acquisition generally will not be challenged (in the absence of 

other factors indicating anticompetitive effects) unless the postmerger HHI is at least 1800 and the merger increases the HHI more 

than HHI implicitly ers and 200 thresholds other points. recognize and non the for The depository r screening characteristic the DOJ competitive has financial bank stateds mergers o that effects entiies f th thee market for of higher end limited-purpose anticompetitive footnote) than . normal lend- effects 
Consummation of the proposal would be consistent with 

Board precedent and the DOJ Guidelines in the New York 

banking market. After consummation of the proposal, the 

market would remain moderately concentrated, as measured by the HHI, and numerous competitors would 

remain(footnote 10 After the proposed acquisition, the 

HHI would increase 1 point, 

to 1054. NYCB operates the tenth largest depository organization in 

the market, controlling deposits of approximately $12.2 billion, which 

represent less than 2 percent of market deposits. Atlantic Bank is the 

35th largest depository institution in the market, controlling deposits 

of approximately $1.8 billion, which represent less than 1 percent of 

market deposits. After the proposed acquisition, NYCB would operate 

the ninth largest depository institution in the market, controlling 

deposits of approximately $14 billion, which represent less than 

2 percent of market deposits. Two hundred and ninety depository 

institutions would remain in the banking market end footnote) 

The DOJ also has conducted a detailed review of the 

anticipated competitive effects of the proposal and has 

advised the Board that consummation of the proposal 

would not likely have a significantly adverse effect on 

competition in any relevant banking market. In addition, 

the appropriate banking agencies have been afforded an 

opportunity to comment and have not objected to the 

proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in the New York banking market or in any 

other relevant banking market. Accordingly, based on all 

the facts of record, the Board has determined that competitive considerations are consistent with approval. 

FINANCIAL, MANAGERIAL, AND 

SUPERVISORY CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of record, 

including confidential reports of examination, other supervisory information from the primary federal and state 

supervisors of the organizations involved in the proposal, 

publicly reported and other financial information, information provided by NYCB, and public comment on the 

proposal. 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non-banking 

operations. In this evaluation, the Board considers a variety 

of measures, including capital adequacy, asset quality, and 

earnings performance. In assessing financial factors, the 

Board consistently has considered capital adequacy to be 

especially important. The Board also evaluates the financial 

condition of the combined organization at consummation, 

including its capital position, asset quality, and earnings 

prospects, and the impact of the proposed funding of the 

transaction. 

The Board carefully considered the proposals under the 

financial factors. NYCB, Newco, their subsidiary depository institutions, and Atlantic Bank are well capitalized 

and would remain so on consummation of the proposal. 

The proposed transaction is structured as a cash purchase. 

Based on its review of the record in this case, the Board 

believes that NYCB, Newco, and Atlantic Bank have 

sufficient financial resources to effect the proposal. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organization. The Board has reviewed the examination 

records of NYCB and its subsidiary depository institutions 

and Atlantic Bank, including assessments of their management, risk-management systems, and operations. In addition, the Board has considered its supervisory experiences 

and those of the other relevant banking supervisory agencies with the organizations and their records of compliance 

with applicable banking law. Moreover, the Board has 

consulted with the FDIC, the primary federal banking 

supervisor of NYCB' s subsidiary banks and Atlantic 

Bank(footnote 11 Commenter's alleged that NY 

Community Bank holds mortgages on a significant number of deteriorated multi family buildings 

in New York City and that it has failed to conduct adequate due 

diligence on the buildings before extending credit to the owners of 

these buildings. A commenter alleged that many of NY Community 

Bank's multi family borrowers are over leveraged, thereby preventing 

them from maintaining their buildings in good condition. NYCB 

stated that it conducts inspections before closing mortgage transactions on multi family residential properties and periodically re-inspects 

the properties during the term of the loan. In its re-inspection 

program for residential buildings, NYCB represented that its inspectors notify borrowers in writing of any deferred maintenance found 

during routine re-inspections and that, when appropriate, follow-up 

actions are taken by NYCB. NYCB further represented that NY 

Community Bank has never incurred a loss on a multi family loan in 

more than 25 years. The Board consulted with the FDIC, the 

primary federal regulator of NY Community Bank and NY 

Commer-cial Bank, about the adequacy of NY 

Community Bank's management of its multi family loan programs. The Board notes that the 

supervisory guidance proposed by the banking agencies for institutions with concentrations in commercial real estate lending, including lending activities involving multi family residential buildings, 

urges lenders to remain informed about any credit deterioration or 

value impairment affecting the collateral. See proposed Concentrations in Commercial Real Estate Lending, Sound Risk Management 

Practices, www.federalreserve.gov/boarddocs/press/bcreg/2006/ 

20060110/ end footnote)The Board also 

has considered NYCB's plans for 

implementing the proposal, including the proposed management after consummation. NYCB, Newco, and their 

subsidiary depository institutions and Atlantic Bank are 

considered to be well managed. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 
resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board also must consider the effects of a proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'')(footnote 12 12 U.S.C. § 2901 etseq end footnote) 

The CRA requires the federal financial 

supervisory agencies to encourage financial institutions to 

help meet the credit needs of the local communities in 

which they operate, consistent with their safe and sound 

operation, and requires the appropriate federal financial 

supervisory agency to take into account an institution's 

record of meeting the credit needs of its entire community, 

including low- and moderate-income (''LMI'') neighborhoods, in evaluating depository institutions' expansionary 

proposals(footnote 13 12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including reports of examination of the CRA performance records of NYCB's subsidiary depository institutions and Atlantic Bank, data reported by NYCB under the 

Home Mortgage Disclosure Act (''HMDA''), 

(footnote 14 12 U.S.C. § 2801 etseq end footnote)other information provided by NYCB, confidential supervisory information, and public comments received on the proposal 

(footnote 15 As discussed above in footnote 11, a number of commenter's 

alleged that some of NY Community Bank's multi-family loan borrowers do not maintain their properties appropriately, and 

some commenter's identified specific landlords and buildings with alleged housing 

code violations. Most commenter's asserted that NY Community 

Bank's alleged failure to ensure good property maintenance by its 

mortgagor/residential landlords is a disservice to the tenants and the 

communities where the bank lends. They argued that the Board should 

deny the proposal or approve it only on the condition that NYCB 

address property maintenance concerns. NYCB represented that NY 

Community Bank contributes positively to the communities it serves 

by providing approximately $14 billion in loans to building and 

apartment owners in the New York City area in the last five years. As 

noted above, NYCB has provided information about its pre 

closing inspection and post closing re inspection programs for its multi family 

loans, and the Board has consulted with the FDIC about the adequacy 

of NY Community Bank's management of its multi family lending 

program. The Board has also considered the weight given to those 

loans by the FDIC in its evaluation of the CRA performance record of 

NY Community Bank. In addition, the Board has previously considered these allegations in the context of NYCB's application to acquire 

LIFC. See NYCB/LIFC Order. end footnote) 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations by 

the appropriate federal supervisors of the CRA performance records of the insured depository institutions of both 

organizations. An institution's most recent CRA performance evaluation is a particularly important consideration 

in the applications process because it represents a detailed, 

on-site evaluation of the institution' s overall record of 

performance under the CRA by its appropriate federal 

supervisor(footnote 16 See Interagency Questions and Answers 

Regarding Community 

Reinvestment, 66 Federal Register 36,620, 36,640 

(2001) end footnote) 

NY Community Bank received a ''satisfactory'' rating at 

its most recent CRA performance evaluation by the FDIC, 

as of March 25, 2002(footnote 17 A commenter alleged that 

NY Community Bank maintains few 

full-service branches in low-income, minority neighborhoods. FDIC 

examiners reported in the most recent CRA performance evaluation of 

NY Community Bank that the bank had a limited branch presence in 

the low- income census tracts of its assessment area. Examiners noted, 

however, that new branch openings and relocations during the evaluation period improved the accessibility of its delivery systems, particularly in LMI geographies and to LMI individuals. Overall, NY 

Community Bank's performance was rated "low satisfactory'' for the 

service test. Atlantic Bank and LICB each received a ''high satisfactory'' rating for the service test at its most recent CRA performance 

evaluation, and examiners noted that the retail banking services of 

each bank were reasonably available to all segments of its assessment 

area, including LMI geographies end footnote)NY 

Commercial Bank, formerly 

LICB, received a ''satisfactory'' rating at its most recent 

CRA performance evaluation by the FDIC, as of March 15, 

2004. Atlantic Bank received a ''satisfactory'' rating at its 

most recent CRA performance evaluation by the FDIC, as 

of March 7, 2005. NYCB has represented that it intends to 

implement Atlantic Bank's CRA program at NY Commercial Bank. 

B. HMDA Data and Fair Lending Record 

The Board has carefully considered NY Community Bank's 

lending record and HMDA data in light of public comment 

about the bank's record of lending to minorities. Two 

commenter's expressed concern, based on 2004 HMDA 

data in certain Metropolitan Statistical Areas (''MSAs'') in 

New York and New Jersey, that NY Community Bank has 

(1) denied or excluded the home mortgage and refinance 

applications of African-American and Latino borrowers 

more frequently than those of non minority applicants and 

(2) lagged its competitors in conventional home mortgage 

lending in minority geographies(footnote 18 

One commenter complained that NYCB provided the 2004 

HMDA data of NY Community Bank on paper rather than electronically in the CD-ROM format requested by the commenter. The Board 

notes that neither HMDA nor the CRA require financial institutions to 

provide HMDA data in an electronic format on written request. See 

12 CFR 203.5. Another commenter expressed concern that NY 

Community Bank did not consistently report the ethnicity, race, and 

gender of denied applicants. The Board has consulted with the FDIC 

about the bank's compliance with HMDA reporting requirements. The 

Board and the other banking agencies make HMDA data available to 

the public through the Federal Financial Institutions Examination 

Council, which provides HMDA data through its web site and in 

CD-ROM format on request end footnote)In its consideration of 

NYCB's proposal to acquire LIFC, the Board reviewed 

essentially these same allegations in light of the HMDA 

data for 2004 reported by NY Community Bank in its 

assessment area(footnote 19 The Board reviewed 2004 

HMDA data reported by NY Community Bank 

in portions of the following metropolitan divisions that 
Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they are insufficient by 

themselves to support a conclusion on whether or not NY 

Community Bank is excluding any racial or ethnic group or 

imposing higher credit costs on those groups on a prohibited basis. The Board recognizes that HMDA data alone, 

even with the recent addition of pricing information, provide only limited information about the covered loans 

(footnote 20 The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote) 

HMDA data, therefore, have limitations that make them an 

inadequate basis, absent other information, for concluding 

that an institution has engaged in illegal lending 

discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully and taken into account other information, 

including examination reports that provide on-site evaluations of compliance by NY Community Bank with fair 

lending laws. In the fair lending review conducted in 

conjunction with the bank's CRA evaluation in 2002, 

examiners noted no violations of the substantive provisions 

of applicable fair lending laws. In addition, the Board has 

consulted with the FDIC, the primary federal supervisor of 

NY Community Bank, about the bank's record of compliance with fair lending laws and other consumer protection 

laws. 

As noted in the NYCB/LIFC Order, the record also 

indicates that NYCB has taken steps designed to ensure 

compliance with fair lending laws and other consumer 

protection laws. NYCB represented that it has implemented 

fair lending policies, procedures, and training programs at 

NY Community Bank and that all lending department 

personnel at the bank are required to take annual compliance 

training. NYCB further represented that the bank's fair 

lending policies and procedures are designed to help ensure 

that loan officers price loans uniformly, illegally discriminatory loan products are avoided, and current and proposed 

lending activities and customer complaints are reviewed. 

NY Community Bank conducts independent audits of its 

lending activities, and audit results are provided to its Audit 

Committee of the Board of Directors, Compliance Department, and Legal Department. The bank also analyzes HMDA 

Loan Application Register data to help assess its lending 

activities for compliance with the CRA. 

NYCB has represented that NY Commercial Bank maintains similar policies and programs designed to ensure 

compliance with applicable fair lending and consumer 

protection laws. NYCB intends to combine the compliance 

programs of NY Commercial Bank and NY Community 

Bank into one comprehensive compliance program managed through NYCB. 

The Board also has considered the HMDA data in light 

of other information, including NY Community Bank's 

CRA lending programs and the overall performance records 

of NY Community Bank and Atlantic Bank under the 

CRA(footnote 21 A commenter also expressed concern, 

based on 2004 HMDA 

data, that the percentage of NY Community 

Bank's total number of 

conventional home mortgage loans and refinancings 

in LMI census 

tracts in the New York City MD lagged the percentages for 

the 

aggregate of lenders ("aggregate lenders''). The Board notes that 

the 

percentage of NY Community Bank's total HMD 

A-reportable loans in 

LMI census tracts and to LMI individuals in the 

New York City MD 

exceeded the percentages for the aggregate lenders end footnote) 

These established efforts demonstrate that the 

institutions are active in helping to meet the credit needs of 

their entire communities. 

C. Conclusion on Convenience and Needs 

and CRA Performance Records 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by NYCB, 

comments received on the proposal, and confidential supervisory information(footnote 22 

A commenter expressed concern about planned branch closures 

at NY Community Bank. NYCB has represented that it does not plan 

to close any branches in connection with this proposal or the planned 

merger of Atlantic Bank into NY Commercial Bank. The Board notes 

that federal law will require NYCB or its subsidiary banks to provide 

notice before the date of any proposed branch closing, including a 

30-day advance notice to the public and a 90-day advance notice to the 

FDIC and customers of the branch (12 U.S.C. § 1831r-1, as implemented by Joint Policy Statement Regarding Branch Closings, 64 Federal Register, 34,844 (1999)). The bank also must provide reasons and 

other supporting data for the proposed closure, consistent with the 

institution's written policy for branch closings. The Board notes that 

the FDIC, as the appropriate federal supervisor of NY Community 

Bank and NY Commercial Bank, will continue to review each 

depository institution's branch closing record during CRA performance evaluations end footnote)The Board notes that the proposal 

would expand the availability and array of banking products and services to Atlantic Bank's customers, including 

access to expanded branch and ATM networks. Based on a 

review of the entire record, and for the reasons discussed 

above, the Board concludes that considerations relating to 

the convenience and needs factor and the CRA performance records of the relevant depository institutions are 

consistent with approval. 
CONCLUSION 

Based on the foregoing and in light of all the facts of 

record, the Board has determined that the applications 

should be, and hereby are, approved. In reaching this 

conclusion, the Board has considered all the facts of record 

in light of the factors it is required to consider under the 

BHC Act and other applicable statutes(footnote 23 

Several commenter's requested that the Board hold a public 

hearing or meeting on the proposal. Section 3 of the BHC Act does not 

require the Board to hold a public hearing or meeting on an application 

unless the appropriate supervisory authority for any of the banks to be 

acquired makes a timely written recommendation of denial of the 

application. The Board has not received such a recommendation from 

any supervisory authority. Under its rules, the Board also may, in its 

discretion, hold a public meeting or hearing on an application to 

acquire a bank if necessary or appropriate to clarify factual issues 

related to the application and to provide an opportunity for testimony 

(12 CFR 225.16(e)). The Board has considered carefully the 

commenter's' requests in light of all the facts of record. In the Board's view, the 

commenter's had ample opportunity to submit comments on the 

proposal and, in fact, submitted written comments that the Board has 

considered carefully in acting on the proposal. The commenter's' 

requests fail to demonstrate why written comments do not present their 

views adequately or why a hearing or meeting otherwise would be 

necessary or appropriate. For these reasons, and based on all the facts 

of record, the Board has 

determined that a public 

hearing or meeting is 

not required or warranted in this case. Accordingly, the requests for a 

public hearing or meeting on the proposal are denied end footnote) 

The Board's 

approval is specifically conditioned on compliance by 

NYCB with the conditions in this order and all the commitments made to the Board in connection with the proposal. 

For purposes of this action, the commitments and conditions are deemed to be conditions imposed in writing by the 

Board in connection with its findings and decision and, as 

such, may be enforced in proceedings under applicable law. 

The proposed transaction shall not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order, unless such period is extended for good cause by 

the Board or by the Federal Reserve Bank of New York, 

acting pursuant to delegated authority. 

By order of the Board of Governors, effective March 30, 

2006. 

Voting for this action: Chairman Bernanke and Governors Olson, 

Kohn, Warsh, and Kroszner. Absent and not voting: Vice Chairman 

Ferguson and Governor Bies. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Sky Financial Group, Inc. 

Bowling Green, Ohio 

Order Approving Acquisition of Shares 

of a Bank Holding Company 

Sky Financial Group, Inc. (''Sky''), a financial holding 

company within the meaning of the Bank Holding Company Act (''BHC Act''), has requested the Board's approval 

under section 3 of the BHC Act(footnote 1 12U.S.C. § 1842 

end footnote)to acquire through its 

subsidiary, Sky Holdings, Inc., Wilmington, Delaware, up 

to 9.99 percent of the voting shares of LNB Bancorp, Inc. 

(''LNB'') and thereby indirectly acquire an interest in 

LNB's subsidiary bank, The Lorain National Bank (''Lorain National''), both of Lorain, Ohio(footnote 2 

Sky currently owns 4.73 percent of LNB's voting shares and 

proposes to acquire the additional voting shares through 

open-market 

purchases end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published 

(70 Federal Register 76,850 (2005)). The time for filing 

comments has expired, and the Board has considered the 

proposal and all comments received in light of the factors 

set forth in section 3 of the BHC Act. 

Sky, with total consolidated assets of approximately 

$15.7 billion, controls Sky Bank(footnote 3 Sky 

also controls Sky Trust, National Association ("Sky Trust''), 

Pepper Pike, Ohio, a limited-purpose bank that provides only trust 

services end footnote)Salineville, Ohio, with 

branches in Ohio, Indiana, Michigan, Pennsylvania, and 

West Virginia. Sky is the eighth largest depository organization in Ohio, controlling deposits of approximately 

$8.1 billion, which represent 4 percent of the total amount 

of deposits of insured depository institutions in the state 

(''state deposits'')(footnote 4 Asset data are as of 

December 31, 2005. 

State deposit and ranking 

data are as of June 30, 2005, and reflect merger 

and acquisition activity 

as of February 6, 2006. In this context, insured 

depository institutions 

include commercial banks, savings banks, 

and savings associations end footnote)LNB, 

with consolidated assets of approximately $801.1 million, is the 25th largest depository 

organization in Ohio, controlling approximately $642.8 

million in deposits. If Sky were deemed to control LNB on 

consummation of the proposal, Sky would become the 

seventh largest depository organization in Ohio, controlling 

approximately $8.7 billion in deposits, which represent 

4.3 percent of state deposits. 

The Board received a comment from LNB objecting to 

the proposal on the grounds that the investment could 

create uncertainty about the future independence of LNB or 

result in Sky controlling and potentially harming LNB(footnote 5 

LNB also expressed concern that investor uncertainty over the 

future of LNB due to Sky's investment could result in the sale of LNB 

shares by long-term investors and undermine LNB's business plan. 

The Board is limited under the BHC Act to consideration of the factors 

specified in the act. See Western Bancshares, Inc. v. Board of 

Governors of the Federal Reserve System, 480 F.2d 749 (10th Cir. 

1973). The potential effect of a proposal on the behavior of other 

investors in the market is not among the factors the Board is charged 

with considering under the BHC Act or other applicable 

statutes end footnote) 

LNB asserted that the commitments that Sky has provided 

to prevent the exercise of a controlling influence over LNB 

are insufficient, and LNB requested that the Board impose 

additional commitments to ensure that Sky cannot exercise 

control over LNB. The Board has considered these comments carefully in light of the factors that the Board must 

conside Th r under section 3 of the BHC Act. les compan s thae Boar ny ais controllin no d previousl t a norma g interes y ha l acquisitio s state t in ad tha ban n fot th kr o aer acquisitio ban k holdin n og f
company(footnote 6 See, e.g., Penn Bancshares, Inc., 

92 Federal Reserve Bulletin C37 

(2006) ("Penn Bancshares"); C-B-G, Inc., 91 Federal Reserve Bulletin 421 (2005) (''C-B-G"); S&T Bancorp Inc., 91 Federal Reserve 

Bulletin 74 (2005) (''S&T Bancorp"); Brookline Bancorp, MHC, 

86 Federal Reserve Bulletin 52 (2000) ("Brookline"); North Fork 

Bancorporation, Inc., 81 Federal Reserve Bulletin 734 (1995); First 

Piedmont Corp., 59 Federal Reserve Bulletin 456, 457 (1973) end footnote) 

The requirement in section 3(a)(3) of the BHC 

Act, however, that the Board's approval be obtained before 

a bank holding company acquires more than 5 percent of 

the voting shares of a bank suggests that Congress contemplated the acquisition by bank holding companies of 

between 5 percent and 25 percent of the voting shares of 

banks(footnote 7 See 12 U.S.C. § 1842(a)(3). end footnote) 

On this basis, the Board previously has approved 

the acquisition by a bank holding company of less than a 

controlling interest in a bank or bank holding company 

(footnote 8 See, e.g., Penn Bancshares (acquisition of up to 24.89 percent of 

the voting shares of a bank holding company); C-B-G (acquisition of 

up to 24.35 percent of the voting shares of a bank holding company); 

S&T Bancorp (acquisition of up to 24.9 percent of the voting shares of 

a bank holding company); Brookline (acquisition of up to 9.9 percent 

of the voting shares of a bank holding company) end footnote) 

Sky has stated that the acquisition is intended as a 

passive investment and that it does not propose to control 

or exercise a controlling influence over LNB. Sky has 

agreed to abide by certain commitments on which the 

Board previously has relied in determining that an investing bank holding company would not be able to exercise 

a controlling influence over another bank holding company or bank for purposes of the BHC Act(footnote 9 See, e.g., 

Penn Bancshares, C-B-G; S&T Bancorp; Emigrant 

Bancorp, Inc., 82 Federal Reserve Bulletin 555 (1996); First Community Bancshares, Inc., 77 Federal Reserve Bulletin 50 (1991). Sky's 

commitments are set forth in the appendix end footnote)For example, 

Sky has committed not to exercise or attempt to exercise 

a controlling influence over the management or policies 

of LNB or any of its subsidiaries; not to seek or accept 

representation on the board of directors of LNB or any of 

its subsidiaries; and not to have any director, officer, 

employee, or agent interlocks with LNB or any of its 

subsidiaries. Sky also has committed not to attempt to 

influence the dividend policies, loan decisions, or operations of LNB or any of its subsidiaries. The Board 

concludes that additional commitments are unnecessary to 

ensure that Sky does not acquire control of, or have the 

ability to exercise a controlling influence over, LNB 

through the proposed acquisition of voting shares. Moreover, the BHC Act prohibits Sky from acquiring shares of 

LNB in excess of the amount considered in this proposal 

or attempting to exercise a controlling influence over 

LNB without the Board's prior approval. 

The Board has adequate supervisory authority to monitor Sky's compliance with its commitments and can take 

enforcement action against Sky if it violates any of the 

commitments(footnote 10 See 12 U.S.C. § 1818(b)(1) end footnote) 

The Board also has authority to initiate a 

control proceeding(footnote 11 See 12 U.S.C. § 1841(a)(2)(C) end footnote) 

against Sky if facts presented later 

indicate that Sky or any of its subsidiaries or affiliates, in 

fact, controls LNB for purposes of the BHC Act. Based 

on these considerations and all the other facts of record, 

the Board has concluded that Sky would not acquire 

control of, or have the ability to exercise a controlling 

influence over, LNB through the proposed acquisition of 

voting shares(footnote 12 

LNB asserted that Sky did not fully investigate 

or disclose 

whether it and any associated persons had already 

acquired more than 

5 percent of the shares of LNB without prior 

approval of the Board, or 

whether Sky and any such persons constitute 

a ''group acting in 

concert'' under the Change in Bank Control Act 

(''CIBC Act'') 

(12 U.S.C. section 1817(j)) and are required to file 

a CIBC Act Notice. 

Sky surveyed its management officials with major 

policymaking 

functions about their ownership of LNB shares 

and reported those 

findings as part of this proposal. In addition, 

Sky has represented and 

committed to the Board that it does not and will not 

have any agreement, 

understanding, or arrangement with any person 

regarding voting or 

transferring LNB shares and that it has not provide 

d financing for the 

purchase of LNB shares. The Board has reviewed 

information provided 

by Sky and LNB and confidential supervisory 

information about the 

current ownership of both organizations, including 

information about 

the ownership of LNB's shares by individuals 

associated with Sky, in 

light of the Board's rules and precedent for 

aggregating shares held by 

a company and persons associated with the company. 

The record does 

not support a finding that Sky has acted together 

with any of its 

directors, officers, or employees or together with 

any other person to 

acquire voting shares of LNB in violation of the 

BHC Act or the CIBC 

Act end footnote) 

FINANCIAL AND MANAGERIAL 

CONSIDERATIONS AND FUTURE PROSPECTS 

Section 3 of the BHC Act requires the Board to consider 

the financial and managerial resources and future prospects of the companies and depository institutions involved in the proposal and certain other supervisory 

factors. The Board has considered these factors in light of 

all the facts of record, including confidential reports of 

examination, other supervisory information from the primary federal supervisors of the organizations involved in 

the proposal, publicly reported and other financial information, information provided by the applicant, and public 

comments received. 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentwould would not tiBaroonl operations oearning especiall evaluate fundin the consolidated. quality Skf measures y acquire nTh financial y be anoo an de consistentl n considered f Boar g,d thconsummation earning sd o Sk sperformance y consolidate thf important only e. th I subsidiar statements ye,dn endicludin financial Ban e ha thi ransaction(footnot upss prospects footnote) s to carefull y evaluation k to ha ar control 9.99 d.yg Whe basis e conditio .s of , bankcapita I welincludin considere the Sky n percent y assessin current , LNB.considere an l,n capitalize as, andapplicable thl an dequacy sdn wel theg o Underof LNBBoar e it d proposal dfe 13 significan capitathg impacLNB's ls a financial Ascapita des th would d combine th previously these anconsider ,e, asse th e financial l voting t provides adequac financial odl position woul circumstances, not fe thtt Boarfactors no quality de be shares s organiza noted, propose and thatfactors bankin remai y variet condi d t , asseals ,,o an Skyth and bg yon e--.t
so on consummation of the proposal. Based on its review of 

the record, the Board believes that Sky has sufficient 

financial resources to effect the proposal. The proposed 

transaction would be funded from Sky's general corporate 

resources. 

The Board also has considered the managerial resources 

of the organizations involved. The Board has reviewed the 

examination records of Sky, Sky Bank, Sky Trust, LNB, and 

Lorain National, including assessments of their management, risk-management systems, and operations. In addition, the Board has considered its supervisory experiences 

and those of the other relevant banking supervisory agencies 

with the organizations and their records of compliance with 

applicable banking laws. Sky, Sky Bank, Sky Trust, LNB, 

and Lorain National are considered to be well managed. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the supervisory factors under the BHC Act. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposed bank acquisition that would result in 

a monopoly or would be in furtherance of any attempt to 

monopolize the business of banking in any relevant banking market. Section 3 also prohibits the Board from approving a proposed bank acquisition that would substantially 

lessen competition in any relevant banking market, unless 

the Board finds that the anticompetitive effects of the 

proposal clearly are outweighed in the public interest by the 

probable effect of the proposal in meeting the convenience 

and needs of the community to be served 

(footnote 14 See 12U.S.C. § 1842(c)(1) end footnote) 

The Board previously has stated that one company need 

not acquire control of another company to lessen competition between them substantially(footnote 15 See, e.g., 

SunTrust Banks, Inc., 76 Federal Reserve Bulletin 542 

(1990); First State Corp., 76 Federal Reserve Bulletin 376, 379 

(1990); Sun Banks, Inc., 71 Federal Reserve Bulletin 243 (1985) 

(''Sun Banks") end footnote)The Board has found 

that non-controlling interests in directly competing depository institutions may raise serious questions under the BHC 

Act and has stated that the specific facts of each case will 

determine whether the minority investment in a company 

would be anticompetitive(footnote 16 See, e.g., 

BOK Financial Corp., 81 Federal Reserve Bulletin 

1052, 1053-54 (1995); Mansura Bancshares, Inc., 79 Federal Reserve 

Bulletin 37, 38 (1993); Sun Banks at 244 end footnote) 

Sky and LNB compete directly in the Cleveland, Ohio 

banking market (''Cleveland market'')(footnote 17 

The Cleveland market is defined as Cuyahoga, Geauga, Lake, 

and Lorain counties; all of Medina County except the city of Wadsworth, the townships of Guilford, Sharon, and Wadsworth, and the 

village of Seville; the cities of Aurora and Streetsboro, the townships 

of Freedom, Hiram, Mantua, Nelson, Shalersville, and Windham, and 

the villages adjoining these townships in Portage County; the cities of 

Hudson, Macedonia, and Twinsburg, the townships of Boston, Northfield Center, Richfield, Sagamore Hills, and Twinsburg, and the 

villages adjoining these townships in Summit County; and part of the 

city of Vermilion in Erie County, all in Ohio end footnote)In particular, the 

Board has considered the number of competitors that would 

remain in the market, the relative shares of total deposits of 

depository institutions in the market (''market deposits'') 

controlled by Sky and LNB,(footnote 18 Deposit and market share 

data are as of June 30, 2005, reflect 

mergers and acquisitions through January 4, 2006, and are based on 

calculations in which the deposits of thrift institutions are included at 

50 percent. The Board previously has indicated that thrift institutions 

have become, or have the potential to become, significant competitors 

of commercial banks. See, e.g., Midwest Financial Group, 75 Federal 

Reserve Bulletin 386, 387 (1989); National City Corporation, 70 Federal Reserve Bulletin 743, 744 (1984). Thus, the Board regularly has 

included thrift deposits in the calculation of market share on a 

50 percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal 

Reserve Bulletin 52, 55 (1991). end footnote)the concentration level of 

market deposits and the increase in this level as measured by 

the Herfindahl-Hirschman Index (''HHI'') under the Department of Justice Merger Guidelines (''DOJ Guidelines''), 

(footnote 19 Under the DOJ Guidelines, 49 Federal Register 26,823 (June 

29, 1984), a market is considered unconcentrated if the post-merger 

HHI is under 1000, moderately concentrated ifthe post- merger HHI is 

between 1000 and 1800, and highly concentrated if the post-merger 

HHI exceeds 1800. The Department of Justice (''DOJ'') has informed 

the Board that a bank merger or acquisition generally will not be 

challenged (in the absence of other factors indicating anticompetitive 

effects) unless the post-merger HHI is at least 1800 and the merger 

increases the HHI more than 200 points. The DOJ has stated that the 

higher-than-normal HHI thresholds for screening bank mergers and 

acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose and other non depository financial 

institutions end footnote) 

and other characteristics of the market. If Sky and LNB were 

viewed as a combined organization, consummation of the 

proposal would be consistent with Board precedent and the 

DOJ Guidelines in the Cleveland market(footnote 20 LNB 

expressed concern that Sky is expanding its operations in 

the Cleveland market by acquiring banks instead of internal growth. 

Bank holding companies may expand in any geographic market by 

acquisition, as long as the acquisition is consistent with the competitive requirements and other factors of the BHC Act end footnote) 

Although the 

market would remain highly concentrated, the increase in 

market concentration as measured by the HHI would be 

small, and numerous competitors would remain in the 

market(footnote 21 

Sky is the 11th largest depository organization in the Cleveland market, controlling $1.1 billion in deposits, which represent 

1.9 percent of the total deposits in depository institutions in the 

market ("market deposits''). LNB is the 13th largest depository 

organization in the market, controlling $642.8 million in deposits. If 

considered a combined banking organization on consummation of 

the proposal, Sky and LNB would be the ninth largest depository 

organization in the Cleveland market, controlling approximately 

$1.8 billion in deposits, which would represent 2.9 percent of market 

deposits. The HHI for the Cleveland market would increase 4 points, 

to 1883. Forty-three depository institutions would remain in the 

market end footnote) 

The Department of Justice also has reviewed the proposal and has advised the Board that it does not believe 

that the acquisition would likely have a significantly 

adverse effect on competition in any relevant banking 

market. The appropriate banking agencies have been afforded an opportunity to comment and have not objected 

to the proposal. 
Accordingly, in light of all the facts of record, the Board 

concludes that consummation of the proposal would not 

have a significantly adverse effect on competition or on the 

concentration of resources in any relevant banking market 

and that competitive considerations are consistent with 

approval of the proposal. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board also must consider the effects of the proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the CRA(footnote 

22 12 U.S.C. § 2901 etseq. end footnote)The CRA requires 

the federal financial supervisory agencies to encourage 

insured depository institutions to help meet the credit needs 

of the local communities in which they operate, consistent 

with their safe and sound operation, and requires the 

appropriate federal financial supervisory agency to take 

into account an institution's record of meeting the credit 

needs of its entire community, including low- and moderateincome neighborhoods, in evaluating bank expansionary 

proposals(footnote 23 12 U.S.C. §2903. end footnote) 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations by 

the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. Sky Bank received a ''satisfactory'' rating at its most 

recent CRA evaluation by the Federal Reserve Bank of 

Cleveland as of October 14, 2003. Lorain National also 

received a ''satisfactory'' rating at its most recent CRA 

performance evaluation by the Office of the Comptroller of 

the Currency, as of October 7, 2002. 

Based on a review of the entire record, the Board 

concludes that considerations relating to the convenience 

and needs factor and the CRA performance records of the 

relevant depository institutions are consistent with approval. 

CONCLUSION 

Based on the foregoing and all other facts of record, the 

Board has determined that the application should be, and 

hereby is, approved. In reaching this conclusion, the Board 

has considered all the facts of record in light of the factors 

that it is required to consider under the BHC Act and other 

applicable statutes(footnote 24 LNB expressed 

concern that public disclosure of Sky's proposal 

was inadequate because it did not accompany disclosure in public 

reports filed with the Securities and Exchange Commission ("SEC''). 

All public notices required by the Board's regulations in connection 

with the application have been made, including publishing notice of 

the transaction in local newspapers in the communities where Sky and 

LNB are headquartered (12 CFR 262.3(b)(1)(ii)(E)). Furthermore, Sky 

has represented that it was not legally required to disclose the 

proposed transaction in filings with the SEC, because the proposed 

investment would not qualify as a material investment for Sky and 

therefore would not trigger an SEC filing requirement. 

The SEC has jurisdiction to determine whether Sky has violated any federal securities laws or violations end footnote)The Board's approval is specifically 

conditioned on compliance by Sky with the conditions 

imposed in this order and all the commitments made to the 

Board in connection with the application, including the 

commitments discussed in this order, and receipt of all 

required regulatory approvals(footnote 25 LNB questioned 

when the passivity commitments that Sky 

provided would become effective. The commitments are effective 

when Sky owns, controls, or holds the power to vote at least 5 percent 

of LNB's voting shares end footnote)The conditions and commitments are deemed to be conditions imposed in writing 

by the Board in connection with its findings and decision 

and, as such, may be enforced in proceedings under 

applicable law. 

The acquisition of LNB's voting shares shall not be 

consummated before the 15th calendar day after the effective date of this order, or later than three months after the 

effective date of this order, unless such period is extended 

for good cause by the Board or by the Federal Reserve 

Bank of Cleveland, acting pursuant to delegated authority. 

By order of the 

Board of Governors, effective February 24, 2006. 

Voting for this action: Chairman Bernanke, Vice Chairman Ferguson, and Governors Bies, Olson, and Kohn. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix 

In connection with its application to acquire up to 9.99 

percent of LNB, Sky commits that it will not, directly or 

indirectly, without the Federal Reserve System's prior 

approval: 

(1) exercise or attempt to exercise a controlling influence 

over the management or policies of LNB or any of its 

subsidiaries; 

(2) seek or accept representation on the board of directors 

of LNB or any of its subsidiaries; 

(3) serve, have, or seek to have any 

representative serve 

as an officer, agent, or employee of LNB or any of its 

subsidiaries; 

(4) take any action that would cause 

LNB or any of its 

subsidiaries to become a subsidiary of Sky or any of 

its subsidiaries; 

(5) acquire or retain shares that would cause the combined interests of Sky and its subsidiaries, and their 

respective officers, directors, and affiliates, to equal or 

exceed 25 percent of the outstanding voting shares of 

LNB or any of its subsidiaries; 

(6) propose a director or slate of directors in opposition to 

a nominee or slate of nominees proposed by the 

management or board of directors of LNB or any of 

its subsidiaries; 

(7) solicit or participate in soliciting proxies with respect 

to any matter presented to the shareholders of LNB or 

any of its subsidiaries; 
(8) attempt to influence the dividend policies or practices 

of LNB or any of its subsidiaries; 

(9) attempt to influence the investment, loan, or credit 

decisions or policies; pricing of services; personnel 

decisions; operations activities (including the location 

of any offices or branches or their hours of operation, 

etc.); or any similar activities or decisions of LNB or 

any of its subsidiaries; 

(10) dispose or threaten to dispose of shares of LNB or any 

of its subsidiaries in any manner as a condition of 

specific action or nonaction by LNB or any of its 

subsidiaries; or 

(11) enter into any other banking or non banking transactions with LNB or any of its subsidiaries, except that 

Sky may establish and maintain deposit accounts with 

depository institution subsidiaries of LNB, provided 

that the aggregate balance of all such accounts does 

not exceed $500,000 and that the accounts are maintained on substantially the same terms as those prevailing for comparable accounts of persons 

unaffiliated with LNB or any of its subsidiaries. 

Synovus Financial Corp. 

Columbus, Georgia 

Order Approving the Merger 

of Bank Holding Companies 

Synovus Financial Corp. (''Synovus''), a financial holding 

company within the meaning of the Bank Holding Company 

Act ("BHC Act''), has requested the Board's approval under 

section 3 of the BHC Act(footnote 1 12 U.S.C. § 1842 end footnote) 

to acquire Riverside Bancshares, 

Inc. (''Riverside'') and its subsidiary bank, Riverside Bank 

(''Riverside Bank''), both of Marietta, Georgia. 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published 

(70 Federal Register 54,747 (2005)). The time for filing 

comments has expired, and the Board has considered the 

application and all comments received in light of the 

factors set forth in section 3 of the BHC Act. 

Synovus, with total consolidated assets of approximately 

$27.1 billion, is the 46th largest depository organization in 

the United States(footnote 2 National asset and ranking 

data are as of September 30, 2005 end footnote)Synovus operates 

39 subsidiary insured 

depository institutions in Alabama, Florida, Georgia, South 

Carolina, and Tennessee, as well as a non-depository trust 

company in Georgia. Synovus is the fourth largest depository organization in Georgia, and its subsidiary depository 

institutions control approximately $10.6 billion in combined deposits, which represent 7.1 percent of the total 

amount of deposits of insured depository institutions in the 

state ('' state deposits'' )(footnote 3 

State deposit and ranking data are as of June 30, 2005, and reflect 

merger activity through November 25, 2005. In this context, insured 

depository institutions include commercial banks, savings banks, and 

savings associations end footnote) 

Riverside, with total consolidated assets of approximately $668.6 million, operates one depository institution, 

Riverside Bank, which has branches only in Georgia. 

Riverside Bank is the 30th largest insured depository 

institution in Georgia, controlling deposits of approximately $459.5 million. 

On consummation of the proposal, Synovus would have 

consolidated assets of $27.8 billion. In Georgia, Synovus 

would remain the fourth largest depository organization, 

controlling deposits of $11.1 billion, which represent 

7.4 percent of state deposits(footnote 4 

Synovus represented that it plans to file an application with the 

Federal Deposit Insurance Corporation (''FDIC'') for approval under 

the Bank Merger Act (12 U.S.C. § 1828(c)) to merge Riverside Bank 

into Bank of North Georgia ("BNG''), Alpharetta, Georgia, a Synovus 

subsidiary bank, after consummation of the proposal. end footnote) 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly or would be 

in furtherance of an attempt to monopolize the business of 

banking in any relevant banking market. The BHC Act also 

prohibits the Board from approving a bank acquisition that 

would substantially lessen competition in any relevant 

banking market unless the anticompetitive effects of the 

proposal are clearly outweighed in the public interest by the 

probable effect of the proposal in meeting the convenience 

and needs of the community to be served(footnote 5 

12 U.S.C. § 1842(c)(1) end footnote) 

Seven Synovus banks(footnote 6 These institutions include: Athens 

First Bank & Trust Company, 

Athens; Bank of Coweta, Newnan; BNG; 

Citizens & Merchants State 

Bank, Douglasville; First Nation Bank, Covington; 

The National Bank 

of Walton County, Monroe; and Peachtree 

National Bank, Peachtree 

City, all of Georgia (collectively, "Synovus's 

Atlanta Area banks'') 

end footnote)compete directly with Riverside 

Bank in the Atlanta Area Banking Market (''Atlanta 

Market'')(footnote 7 The Atlanta Market is defined as: 

Bartow, Cherokee, Clayton, 

Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, 

Henry, Newton, Paulding, Rockdale, and Walton counties; Hall County 

excluding the town of Clermont; the towns of Auburn and Winder in 

Barrow County; and the town of Luthersville in Meriwether County, 

all in Georgia end footnote)The Board has carefully 

reviewed the competitive effects of the proposal in this banking market in light 

of all the facts of record, including the number of competitors that would remain in the market, the relative 

shares of total deposits in depository institutions in the 

market (''market deposits'') controlled by Synovus's Atlanta Area banks and Riverside Bank,(footnote 8 

Deposit and market share data are as of June 30, 2005, and are 

based on calculations in which the deposits of thrift institutions are 

included at 50 percent. The Board previously has indicated that thrift 

institutions have become, or have the potential to become, significant 

competitors of commercial banks. See, e.g., Midwest Financial Group, 

75 Federal Reserve Bulletin 386 (1989); National City Corporation, 

70 Federal Reserve Bulletin 743 (1984). Thus, the Board regularly has 

included thrift deposits in the market share calculation on a 50 percent 

weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve 

Bulletin 52 (1991). end footnote)the concentration 

level of market deposits and the increase in this level as measured by the Herfindahl-Hirschman Index (''HHI'') 
under the Department of Justice Merger Guidelines ("DOJ 

Guidelines''),(footnote 9 Under the DOJ Guidelines, 

a market is considered unconcentrated if the post-merger 

HHI is under 1000, moderately concentrated 

if the post-merger HHI is between 1000 and 1800, and highly 

concentrated if the post-merger HHI exceeds 1800. The Department of 

Justice (''DOJ'') has informed the Board that a bank merger or 

acquisition generally will not be challenged (in the absence of other 

factors indicating anticompetitive effects) unless the post-merger HHI 

is at least 1800 and the merger increases the HHI more than 200 

points. The DOJ has stated that the higher than normal HHI thresholds 

for screening bank mergers and acquisitions for anticompetitive effects 

implicitly recognize the competitive effects of limited-purpose and 

other non depository financial entities. end footnote) 

and other characteristics of the markets. 

Consummation of the proposal would be consistent with 

Board precedent and within the relevant thresholds in the 

DOJ Guidelines in the Atlanta Market. After consummation, the Atlanta Market would remain unconcentrated, as 

measured by the HHI. In addition, the increase in concentration would be small, and numerous competitors would 

remain in this market(footnote 10 

On consummation of the proposal, the HHI would increase 

4 points, to 1601 in the Atlanta Market. Synovus operates the fourth 

largest depository organization in the market, controlling deposits of 

$3.4 billion, which represent 3.9 percent of market deposits. Riverside 

operates the 19th largest depository institution in the market, controlling deposits of approximately $459.5 million, which represent less 

than 1 percent of market deposits. After the proposed acquisition, 

Synovus would continue to operate the fourth largest depository 

organization in the market, controlling deposits of approximately 

$3.9 billion, which represent 4.4 percent of market deposits. One 

hundred eight depository institutions would remain in the banking 

market end footnote) 

The Department of Justice also has reviewed the anticipated competitive effects of the proposal and advised the 

Board that consummation of the proposal likely would not 

have a significant adverse effect on competition in any 

relevant banking market. In addition, the appropriate banking agencies have been afforded an opportunity to comment 

and have not objected to the proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in the Atlanta Market or in any other 

relevant banking market. Accordingly, the Board has determined that competitive considerations are consistent with 

approval. 

FINANCIAL, MANAGERIAL, AND SUPERVISORY 

CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of 

record, including confidential reports of examination, other 

supervisory information from the various primary federal 

and state banking supervisors of the organizations involved 

in the proposal, publicly reported and other financial information, information provided by Synovus, and public 

comment on the proposal(footnote 11 

A commenter criticized the relationship 

between Synovus's lead 

subsidiary bank, Columbus Bank and Trust 

("CB&T''), Columbus, 

Georgia, and an unaffiliated lender, CompuCredit 

Corporation ("CompuCredit''), Atlanta, Georgia. The Board previously reviewed 

CB&T's 

relationship with CompuCredit in its decision approving 

Synovus's 

acquisition of a de novo institution. See 

Synovus Financial Corp., 

91 Federal Reserve Bulletin 273, 275 n.15 (2005) 

(''Board's February 

2005 Decision''). The Board noted that 

CompuCredit is an unaffiliated 

organization that engages in subprime credit 

card and payday lending 

activities. CB&T and CompuCredit offer a cobranded credit card 

program (''credit card affinity program'') under a 

contractual arrangement. Under the contract, CB&T reviews, modifies, 

and approves the 

credit terms and underwriting criteria proposed by 

CompuCredit for 

the credit card affinity program and issues the 

credit cards, and 

CompuCredit buys the credit card receivables and 

provides certain 

marketing and other services for the issued cards. 

Synovus represented 

that, since the Board's February 2005 Decision, 

CB&T has engaged in 

the following additional activities to ensure regulatory 

compliance of 

its CompuCredit relationship with applicable fair lending 

and consumer protection laws: (1) reviewing the application 

of the credit and 

underwriting criteria to the credit card accounts and the 

scoring used to 

adjust credit lines under the credit card affinity 

program; (2) reviewing 

the process for approving statement inserts and 

strengthening controls 

over the process; (3) participating in CompuCredit's 

internal compliance audits; (4) developing a system to allow the CB& 

T compliance 

officer to engage in remote, anonymous monitoring of 

customer 

service and collection calls handled by CompuCredit 

and its service 

providers; and (5) requiring CB&T's compliance officer 

to perform 

monthly reviews of the CompuCredit relationship and to 

provide 

reports to CB&T's Credit Risk Committee concerning those 

reviews. 

In addition, Synovus represented that it is not involved 

in any other 

business conducted by CompuCredit and does not own orCompuCredit Board consulted other tial and relationship bankin tioBoar prospects transaction wel thfinds conditio onlperations oearning especiall conditio includin effec aorganization sfe measures thacontrol nITh proposal Synovu y information ln CB&T's oshar capitalize an tha devaluatin et confiden- e thorganization consistentl f also Boar g th sd organizations gne performance y consolidate et it ,oproposal important exchange Synovuan with e.s. Iansubsidiar fs,d. thwith n includin ThBasecapita als d thi within dg the theal financial an combine organization about oseey CompuCredit evaluation l haBoar impac d itha .dss FDICTh oha l. woul .involve position Th dssyg subsidiar the basis n considere .s bankcapita , Ithe e considere ith s propose ed sufficien factor n Boar s meaning td ha andassessin orevie organizatio credit e remai , Boar afds, th sls an , dequacy s assereviewed reviewe involve d wel ys als eewd depositor iend d Boar d propose d thcard ndn otransactio d th significan stcapita exansio go offinancial review ltf ae quality financial evaluate o th footnote) e manageria os the propose d affinity thnded consider n ao, recordsupervisory thasseconsummatio el BHC dty adequac n financial consummation fundin institution s bot ,en th an resource s examinatio t proposal it factors thno quality d program s,he Act.combine th ldstructure se resource financial a earning anfinancial g bankin e parent y variet condi Boaro t The and,f,so an s th n ar tb og ydn oesf-,
records of Synovus, Riverside, and their subsidiary depository institutions, including assessments of their management, risk-management systems, and operations. In addition, the Board has considered its supervisory experiences 

and those of the other relevant banking supervisory agencies with the organizations and their records of compliance with applicable banking law. Synovus, Riverside, 

and their subsidiary depository institutions are considered 

to be well managed. The Board also has considered 

Synovus' s plans for implementing the proposal, including 

the proposed management after consummation. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board also must consider the effects of the proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'')(footnote 12 12 U.S.C. §2901 etseq.; 12 U.S.C. 

§ 1842(c)(2) end footnote)The CRA requires the federal financial 

supervisory agencies to encourage insured depository institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and 

sound operation, and requires the appropriate federal financial supervisory agency to take into account a relevant 

depository institution' s record of meeting the credit needs 

of its entire community, including low- and moderateincome (''LMI'') neighborhoods, in evaluating bank expansionary proposals(footnote 13 12 U.S.C. §2903. end footnote) 

The Board has considered carefully all the facts of 

record, including reports of examination of the CRA 

performance records of the subsidiary depository institutions of Synovus and Riverside, data reported by Synovus 

under the Home Mortgage Disclosure Act (''HMDA''), 

(footnote 14 12 U.S.C. § 2801 etseq. end footnote) 

other information provided by Synovus, confidential supervisory information, and public comment received on 

the proposal. Based primarily on 2004 HMDA data, a 

commenter alleged that Synovus, through its primary 

mortgage lender, Synovus Mortgage Company (''SMC''), 

Birmingham, Alabama,(footnote 15 SMC is a subsidiary 

of First Commercial Bank, also of 

Birmingham end footnote) engaged in discriminatory treatment of minority individuals in its home mortgage lending operations. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations 

by the appropriate federal supervisors of the CRA 

performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution' s overall record of performance under the CRA by its appropriate federal 

supervisor(footnote 16 See Interagency Questions and Answers 

Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 

(2001) end footnote) 

All Synovus subsidiary depository institutions that have 

been examined under the CRA received ''outstanding'' or 

''satisfactory'' ratings at their most recent performance 

evaluations. CB&T, Synovus's lead bank, received an 

overall'' satisfactory'' rating at its most recent CRA performance evaluation by the FDIC, as of April 18, 2005. 

Riverside Bank also received a ''satisfactory'' rating at its 

most recent CRA performance evaluation by the FDIC, as 

of November 17, 2003. Synovus has represented that it will 

institute BNG's CRA policies, procedures, and programs at 

Riverside Bank after its merger with and into BNG. As 

noted above, Synovus plans to merge Riverside Bank with 

BNG, and Synovus will operate Riverside Bank's branches 

as branches of BNG after consummation of the proposed 

transaction(footnote 17 BNG received a 

''satisfactory'' rating at its most recent CRA 

performance evaluation by the FDIC, as of June 10, 2004 

end footnote) 

B. HMDA and Fair Lending Record 

The Board has carefully considered the lending record and 

HMDA data of SMC in light of public comment received 

on the proposal. The commenter alleged, based primarily 

on 2004 HMDA data, that SMC denied the home mortgage 

and refinance applications of African Americans more 

frequently than those of nonminority applicants in several 

Metropolitan Statistical Areas (''MSAs'') in Alabama and 

Georgia where it operates. The commenter also alleged that 

SMC made higher-cost loans more frequently to AfricanAmerican borrowers than to non minority borrowers on a 

company-wide basis, on a statewide basis in Alabama, and 

in MSAs in Alabama, Florida, and Georgia(footnote 18 

Beginning January 1, 2004, the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 percentage points 

for first-lien mortgages and 5 percentage points for second-lien 

mortgages (12 CFR 203.4) end footnote)The Board 

has analyzed the 2004 HMDA data reported by SMC on a 

company-wide basis and for its lending in Alabama, 

Florida, and Georgia(footnote 19 Specifically, the Board examined 

the HMDA data for SMC 

company-wide, in Alabama statewide, and in certain MSAs in Alabama, Florida, and Georgia that constitute significant markets for 

SMC end footnote) 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

SMC is excluding or imposing higher costs on any racial or 
ethnic group on a prohibited basis. The Board recognizes 

that HMDA data alone, even with the recent addition of 

pricing information, provide only limited information about 

the covered loans(footnote 20 The data, for example, 

do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, therefore, 

have limitations that make them an inadequate basis, absent other 

information, for concluding that an institution has engaged 

in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all lending institutions are obligated to ensure that their 

lending practices are based on criteria that ensure not only 

safe and sound lending but also equal access to credit by 

creditworthy applicants regardless of their race. Because of 

the limitations of HMDA data, the Board has considered 

these data carefully and taken into account other information, including examination reports that provide on-site 

evaluations of compliance by Synovus and Riverside with 

fair lending laws. The Board also consulted with the FDIC, 

the primary regulator of First Commercial Bank, SMC, and 

CB&T, and considered examination records of compliance 

with fair lending laws of these and other Synovus subsidiary depository institutions. Examiners noted no evidence of 

illegal credit discrimination by First Commercial Bank, 

SMC, CB&T, or any other Synovus subsidiary depository 

institution. 

The record also indicates that Synovus and SMC have 

taken steps to ensure compliance with fair lending and 

other consumer protection laws. Synovus represented that 

it has programs in place to monitor and manage compliance 

that include periodic reviews of all consumer lending 

programs, systemic tracking of applicable laws and regulations, ongoing risk analyses, the development of programs 

to train personnel involved in consumer lending, and 

oversight of the drafting and use of consumer lending 

forms for its depository and lending institutions to verify 

compliance with applicable consumer and fair lending 

laws. Synovus also represented that it is enhancing its 

system for corporate-wide reporting of compliance information. Synovus represented that its internal audit function 

examines SMC annually, and that SMC has engaged an 

independent third-party firm to review monthly a random 

sample of all closed loans from the application stage to the 

loan closing for any evidence of illegal discrimination. 

The Board also has considered the HMDA data in light 

of other information, including Synovus's CRA lending 

programs and the overall CRA performance records of the 

subsidiary depository and lending institutions of Synovus 

and Riverside. These established efforts and records demonstrate that the institutions are active in helping to meet 

the credit needs of their entire communities. 

C. Conclusion on CRA Performance Records 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by the applicant, comments received on the proposal, and confidential 

supervisory information. Synovus represented that the proposal would provide customers in Riverside Bank's assessment area with access to a broader array of financial 

products and services. Based on a review of the entire 

record, and for the reasons discussed above, the Board 

concludes that considerations relating to the convenience 

and needs factor and the CRA performance records of the 

relevant depository institutions are consistent with approval. 

CONCLUSION 

Based on the foregoing and all facts of record, the Board 

has determined that the application should be, and hereby 

is, approved(footnote 21 A commenter requested that the 

Board hold a public hearing or 

meeting on the proposal. Section 3 of the BHC Act does 

not require the 

Board to hold a public hearing on an application unless 

the appropriate 

supervisory authority for any of the banks to be 

acquired makes a 

timely written recommendation of denial of the 

application. The Board 

has not received such a recommendation from any 

supervisory authority. Under its rules, the Board also may, in its discretion, 

hold a public 

meeting or hearing on an application to acquire a bank 

if a meeting or 

hearing is necessary or appropriate to clarify factual 

issues related to 

the application and to provide an opportunity for testimony 

(12 CFR 

225.16(e)). The Board has considered carefully the 

commenter's 

requests in light of all the facts of record. In the 

Board's view, the 

commenter had ample opportunity to submit 

comments on the proposal and, in fact, submitted written comments 

that the Board has 

considered carefully in acting on the proposal. 

The commenter's 

request fails to demonstrate why its written 

comments do not present 

its views adequately or why a meeting or hearing 

otherwise would be 

necessary or appropriate. For these reasons, 

and based on all the facts 

of record, the Board has determined that a public 

hearing or meeting is 

not required or warranted in this case. Accordingly, 

the request for a 

public hearing or meeting on the proposal is 

denied end footnote) 

In reaching its conclusion, the Board has 

considered all the facts of record in light of the factors 

that it is required to consider under the BHC Act and 

The comment Board accumulated including examination, public information, commenter opportunity multiple submissions inproposal. Ytowithin timehe has warrant at comment further end mad purpose Boar othe cificall condition ar require thisacting e Boarddeeme concluded footnote) commenter periods. erd applicabl ont imehas reports icertain delay yo action ns written conditione thproposals on Moreover, operiodreports connectio the s impose andha de tohe f that andtBoar ahi inconfidential Basedoar and thatsubmit ignificant o thatconsidering ample alsobe onnor s thepublic of statutes(footnot action ed the submitted thecondition neither onid Boardthe requested dn i n itsowit record connectio a proposal. n comment. BHC n reviewviews thi , recordsupervisory complianc thh as an it the es inunder Actorde condition sTh extension that s findings considered and proposal imposethis of ine As e andBoard As22 all thewitis ha those r case previously an e noted, information, the Rgulation bBoard provided h case, an of dthissy is provisions facts ' ianth sSynovu carefully necessary thesufficient e approva dn the application decisio writinextend ed commitment commitment of noted, record, s wit g the l to n ib the herei sy spe h. Fo th n esr-
and, as such, may be enforced in proceedings under 

applicable law. 

The proposed transaction may not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order, unless such period is extended for good cause by 

the Board or the Federal Reserve Bank of Atlanta, acting 

pursuant to delegated authority. 

By order of the Board of Governors, effective January 19, 2006. 

Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Bies, Olson, and Kohn. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

The Toronto-Dominion Bank 

Toronto, Canada 

TD Banknorth Inc. 

Portland, Maine 

Order Approving the Acquisition 

of a Bank Holding Company 

The Toronto-Dominion Bank ('' TD'') and its subsidiary, 

TD BanknorthInc. ('' TDBanknorth'') (collectively '' Applicants'' ), both financial holding companies within the meaning of the Bank Holding Company Act (''BHC Act''), have 

requested the Board's approval under section 3 of the BHC 

Act(footnote 1 12 U.S.C. § 1842. end footnote)to acquire 

Hudson United Bancorp and its wholly 

owned subsidiary, Hudson United Bank, both of Mahwah, 

New Jersey(footnote 2 Applicants propose to acquire 

the non banking subsidiaries of 

Hudson United Bank in accordance with section 4(k) of the BHC Act 

and the post-transaction notice procedures in section 225.87 of 

Regulation Y (12 U.S.C. § 1843(k); 12 CFR 225.87) end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published 

(70 Federal Register 56,166 and 57,876 (2005)). The time 

for filing comments has expired, and the Board has considered the proposal and all comments received in light of the 

factors set forth in section 3 of the BHC Act. 

TD, with total consolidated assets of approximately 

$310 billion, is the second largest banking organization in 

Canada(footnote 3 Canadian asset data are as of October 31, 

2005, and rankings are 

as of July 31, 2005. Both are based on the exchange rate then in effect. 

Domestic assets are as of September 30, 2005, and deposit data and 

rankings are as of June 30, 2005 end footnote) 

TD is the 39th largest depository organization in 

the United States, controlling $29.2 billion in deposits 

through its U.S. subsidiary insured depository institutions, 

TD Waterhouse Bank, National Association (''TDW 

Bank''), Jersey City, New Jersey, and TD Banknorth, 

National Association (''TDB Bank''), Portland, Maine. TD 

also operates a branch in New York City and an agency in 

Houston. 

Hudson United Bancorp, with total consolidated assets 

of approximately $9.1 billion, is the 74th largest depository 

organization in the United States, controlling deposits of 

$6.6 billion, which represent less than 1 percent of total 

deposits of insured depository institutions in the United 

States. On consummation of this proposal, TD would 

become the 34th largest depository organization in the 

United States, controlling deposits of approximately 

$35.8 billion, which represent less than 1 percent of total 

deposits of insured depository institutions in the United 

States. 

INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of the bank holding company if certain conditions are met 

(footnote 4 Under section 3(d), a bank holding company's home state is the 

state in which the total deposits of all subsidiary banks of the company 

were the largest on July 1, 1966, or the date on which the company 

became a bank holding company, whichever is later (12 U.S.C. 

§ 1841(o)(4)(C)). New York is the home state of TD for purposes of 

the International Banking Act and Regulation K (12 U.S.C. §3103; 

12 CFR 211.22) end footnote) 

For purposes of the BHC Act, the home state of TD is New 

York, and Hudson United Bank is located in Connecticut, 

Pennsylvania, New Jersey, and New York(footnote 5 

For purposes of section 3(d), the Board considers 

a bank to be 

located in the states in which the bank is chartered 

or headquartered or 

operates a branch (12 U.S.C. §§ 1841(o)(4)-(7) 

and 1842(d)(1)(A) and 

(d)(2)(B)) end footnote) 

Based on a review of the facts of record, including a 

review of relevant state statutes, the Board finds that all 

conditions for an interstate acquisition enumerated in section 3(d) of the BHC Act are met in this case(footnote 6 

12 U.S.C. § 1842(d)(1)(A)-(B), 1842(d)(2)(A)-(B). TD is adequately capitalized and adequately managed, as defined by applicable 

law. Hudson United Bank has been in existence and operated for the 

minimum period of time required by applicable state law. See Conn. 

Gen. Stats. Ann. Ch. 666 § 36a-411 (five years). Pennsylvania and 

New Jersey do not have minimum age requirements applicable to the 

proposal. On consummation of the proposal, TD would control less 

than 10 percent of the total amount of deposits of insured depository 

institutions ("total deposits'') in the United States. TD would also 

control less than 30 percent of total deposits in Connecticut and New 

Jersey, consistent with state law. See Conn. Gen. Stats. Ann. Ch. 666 

§36a-411 and N.J. Stat. Ann. 17.9A-413(2003). All other requirements under section 3(d) of the BHC Act also would be met on 

consummation of the proposal. end footnote)In light of all 

the facts of record, the Board is permitted to approve the 

proposal under section 3(d) of the BHC Act. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposal that would result in a monopoly or 

would be in furtherance of any attempt to monopolize the 

business of banking in any relevant banking market. The 

BHC Act also prohibits the Board from approving a 
proposed bank acquisition that would substantially lessen 

competition in any relevant banking market unless the 

anticompetitive effects of the proposal clearly are outweighed in the public interest by its probable effect in 

meeting the convenience and needs of the community to be 

served(footnote 7 12 U.S.C. § 1842(c)(1)end footnote) 

TD and Hudson United Bancorp compete directly in 

the Metro New York and the Hartford and New Haven, 

Connecticut banking markets(foodnote 8 These banking markets 

are described in Appendix A end footnote)The Board has reviewed 

carefully the competitive effects of the proposal in these 

banking markets in light of all the facts of record. In 

particular, the Board has considered the number of competitors that would remain in the markets, the relative 

shares of total deposits in depository institutions in the 

markets (''market deposits'') controlled by TD and Hudson United Bancorp,(footnote 9 

Deposit and market share data are based on Summary of Deposits 

reports filed as of June 30, 2005, and on calculations in which the 

deposits of thrift institutions are included at 50 percent. The Board 

previously has indicated that thrift institutions have become, or have 

the potential to become, significant competitors of commercial banks. 

See, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 

(1989); National City Corporation, 70 Federal Reserve Bulletin 743 

(1984). Thus, the Board regularly has included thrift deposits in the 

market share calculation on a 50 percent weighted basis. See, e.g., 

First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991) end footnote) 

the concentration level of market 

deposits and the increase in this level as measured by the 

Herfindahl-Hirschman Index (''HHI'') under the Department of Justice Merger Guidelines (''DOJ Guidelines''),10 

and other characteristics of the markets. 

Consummation of the proposal would be consistent with 

Board precedent and the DOJ Guidelines in these banking 

markets(footnote 11 Market data for these banking markets 

are provided in Appendix B end footnote)After consummation, 

the Metro New York and 

New Haven banking markets would remain moderately 

concentrated, and the Hartford banking market would 

remain highly concentrated, as measured by the HHI. In 

each market, the increase in concentration would be small, 

and numerous competitors would remain. 

The Department of Justice has reviewed the anticipated 

competitive effects of the proposal and has advised the 

Board that consummation of the proposal would not have a 

significantly adverse effect on competition in any of these 

markets or in any other relevant banking market. In addition, the appropriate banking agencies have been afforded 

an opportunity to comment and have not objected to the 

proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market 

and that competitive considerations are consistent with 

approval. 

FINANCIAL, MANAGERIAL, AND SUPERVISORY 

CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and banks involved in the proposal and 

certain other supervisory factors. The Board has carefully 

considered these factors in light of all the facts of record, 

including confidential supervisory and examination information from the various U.S. banking supervisors of the 

institutions involved, publicly reported and other financial 

information, information provided by the Applicants, and 

public comment on the proposal(footnote 12 

A commenter expressed concerns about press reports of a 

lawsuit recently filed against TD by options traders at the Chicago 

Board of Options Exchange. The lawsuit involves allegations about 

the price paid by TD in its earlier acquisition of the traders' limited 

liability company. This matter is not within the Board's jurisdiction to 

adjudicate or within the limited statutory factors that the Board is 

authorized to consider when reviewing an application under the BHC 

Act. See, e.g., Western Bancshares, Inc. v. Board of Governors, 480 

F.2d 749 (10th Cir. 1973)end footnote)The Board also has 

consulted with the Office of the Superintendent of Financial 

Institutions (''OSFI''), which is responsible for the supervision and regulation of Canadian banks. 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of subsidiary depository institutions and significant 

non banking operations. In this evaluation, the Board considers a variety of areas, including capital adequacy, asset 

quality, and earnings performance. In assessing financial 

factors, the Board consistently has considered capital adequacy to be especially important. The Board also evaluates the financial condition of the combined organization 

on consummation, including its capital position, asset 

quality, and earnings prospects, and the impact of the 

proposed funding of the transaction. 

The capital levels of TD would continue to exceed the 

minimum levels that would be required under the Basel 

Capital Accord, and its capital levels are considered 

equivalent to the capital levels that would be required of 

a U.S. banking organization. In addition, the U.S. subsidiary depository institutions of Applicants and Hudson 

United Bancorp are well capitalized and would remain so 

on consummation of the proposal. Based on its review of 

the record, the Board finds that Applicants have sufficient 

financial resources to effect the proposal. The proposed 

transaction is structured as a combination share exchange 

and cash purchase. TD will use existing resources to 

enable TD Bank north to fund the cash portion of the 

12. A commenter expressed concerns about press reports of a 

lawsuit recently filed against TD by options traders at the Chicago 

Board of Options Exchange. The lawsuit involves allegations about 

the price paid by TD in its earlier acquisition of the traders' limited 

liability company. This matter is not within the Board's jurisdiction to 

adjudicate or within the limited statutory factors that the Board is 

authorized to consider when reviewing an application under the BHC 

Act. See, e.g., Western Bancshares, Inc. v. Board of Governors, 480 

F.2d 749 (10th Cir. 1973). 
consideration to be received by Hudson United Bancorp 

shareholders. 

The Board also has evaluated the managerial resources 

of the organizations involved, including the proposed combined organization. The Board has reviewed the examination records of TD's U.S. operations, Hudson United 

Bancorp, and Hudson United Bank, including assessments 

of their management, risk-management systems, and operations. In addition, the Board has considered its supervisory 

experience and that of the other relevant banking supervisory agencies with the organizations and their records of 

compliance with applicable banking laws(footnote 13 

A commenter also expressed concern about TDB Bank' s 

relationships with unaffiliated retail check cashers, pawn shops, and 

other nontraditional providers of financial services. As a general 

matter, the activities of the consumer finance businesses identified by 

the commenter are permissible, and the businesses are licensed by the 

states where they operate. Applicants have indicated that they regularly review TDB Bank's relationships with these types of businesses 

and have opted to continue relationships with those firms willing to 

meet certain conditions. These conditions include providing representations and warranties in each loan agreement with TDB Bank that the 

firm will comply with all applicable laws, including all applicable fair 

lending and consumer protections laws, and will follow the bank' s 

requirements to ensure compliance with anti-money-laundering laws 

and regulations. Applicants have represented that neither TDB Bank 

nor any of its affiliates play any role in the lending practices, credit 

review, or other business practices of these firms, nor does the bank or 

any of its affiliates purchase any loans originated by 

these firms end footnote)TD, Hudson 

United Bancorp, and their U.S. subsidiary banks are considered well managed. The Board has also considered 

Applicants' plans for implementing the proposal, including 

the proposed management after consummation. 

Based on these and all other facts of record, the Board 

concludes that the financial and managerial resources and 

future prospects of the organizations involved in the proposal are consistent with approval(footnote 14 

A commenter reiterated its concerns about allegations in press 

reports that TD assisted Enron in preparing false financial statements. 

The commenter had submitted substantially similar comments in 

connection with TD's proposal to acquire Banknorth Group, Inc., 

Portland, Maine. As noted in the Board's order approving that 

proposal, the Securities and Exchange Commission ("SEC'') has the 

authority to investigate and adjudicate whether any violations of 

federal securities laws have occurred. The Toronto-Dominion Bank, 91 

Federal Reserve Bulletin 277, fn. 15, (2005) (''TD Banknorth Order"). 

The Board has consulted with the SEC about this matter end footnote) 

Section 3 of the BHC Act also provides that the Board 

may not approve an application involving a foreign bank 

unless the bank is subject to comprehensive supervision or 

regulation on a consolidated basis by the appropriate 

authorities in the bank's home country(footnote 15 

12 U.S.C. § 1842(c)(3)(B). Under Regulation Y, the Board uses 

the standards enumerated in Regulation K to determine whether a 

foreign bank is subject to consolidated home country supervision. See 

12 CFR 225.13(a)(4). Regulation K provides that a foreign bank will 

be considered subject to comprehensive supervision or regulation on a 

consolidated basis if the Board determines that the bank is supervised 

or regulated in such a manner that its home country supervisor 

receives sufficient information on the worldwide operations of the 

bank, including its relationship to any affiliates, to assess the bank's 

overall financial condition and its compliance with laws and regulations. See 12 CFR 211.24(c)(1) end footnote)As noted, the 

home country supervisor of TD is the OSFI. 

In approving applications under the BHC Act and the 

International Banking Act (''IBA''),(footnote 16 

12 U.S.C. § 3101 etseq end footnote)the Board previously 

has determined that TD was subject to home country 

supervision on a consolidated basis by the OSFI(footnote 17 

TD Bank north Order end footnote) Based 

on this finding and all the facts of record, the Board has 

concluded that TD continues to be subject to comprehensive supervision on a consolidated basis by its home 

country supervisor. 

In addition, section 3 of the BHC Act requires the Board 

to determine that an applicant has provided adequate 

assurances that it will make available to the Board such 

information on its operations and activities and those of its 

affiliates that the Board deems appropriate to determine and 

enforce compliance with the BHC Act(footnote 18 

See 12 U.S.C. § 1842(c)(3)(A) end footnote)The Board has 

reviewed the restrictions on disclosure in relevant jurisdictions in which TD operates and has communicated with 

relevant government authorities concerning access to information. In addition, TD previously has committed to make 

available to the Board such information on the operations 

of it and its affiliates that the Board deems necessary to 

determine and enforce compliance with the BHC Act, the 

IBA, and other applicable federal laws. TD also previously 

has committed to cooperate with the Board to obtain any 

waivers or exemptions that may be necessary to enable TD 

and its affiliates to make such information available to the 

Board. In light of these commitments, the Board concludes 

that TD has provided adequate assurances of access to any 

appropriate information the Board may request. Based on 

these and all other facts of record, the Board has concluded 

that the supervisory factors it is required to consider are 

consistent with approval. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on this proposal, the Board also must consider 

the effects of the proposal on the convenience and needs 

of the communities to be served and take into account the 

records of the relevant insured depository institutions 

under the Community Reinvestment Act (''CRA'')(footnote 19 

12 U.S.C. § 1842(c)(2); 12 U.S.C. § 2901 etseq. end footnote)The 

CRA requires the federal financial supervisory agencies to 

encourage financial institutions to help meet the credit 

needs of local communities in which they operate, consistent with their safe and sound operation, and requires the 

appropriate federal financial supervisory agency to take 

into account an institution' s record of meeting the credit 

needs of its entire community, including low- and 

moderate-income (''LMI'') neighborhoods, in evaluating 

bank expansionary proposals(footnote 20 12 U.S.C. §2903 

end footnote) 

The Board has considered carefully all the facts of 

record, including reports of examination on the CRA 

performance records of TD's subsidiary insured depository 

institutions and Hudson United Bank, data reported by 

Applicants under the Home Mortgage Disclosure Act 
(''HMDA''),(footnote 21 12 U.S.C. § 2801 etseq. end footnote) 

other information provided by Applicants, 

and public comments on the proposal. Two commenter's 

opposed the proposal and expressed concern about the 

community reinvestment or home mortgage lending records 

of TDB Bank and Hudson United Bank. One commenter 

expressed concern about possible branch closures after 

consummation of the proposal. Commenter's also alleged, 

based on 2004 HMDA data, that TDB Bank and Hudson 

United Bank provided a low level of home mortgage 

lending to LMI borrowers or in LMI communities and that 

Applicants engaged in disparate treatment of minority 

individuals in home mortgage lending. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations 

by the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution's overall record of performance under the CRA by its appropriate federal 

supervisor(footnote 22 See Interagency Questions and 

Answers Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 (2001) end footnote) 

TDW Bank received a "satisfactory'' rating at its most 

recent CRA performance evaluation by the Office of the 

Comptroller of the Currency (''OCC''), as of March 10, 

2003 (footnote 23 TD dissolved its other U.S. subsidiary insured depository 

institution, TD Bank USA, FSB, Jersey City, New Jersey, as of 

December 31, 2004 end footnote)The OCC has not yet evaluated 

TDB Bank's CRA 

performance. After acquiring Bank north Group, Inc. in 

2005, TD formed TDB Bank by renaming Bank north, 

National Association ('' Bank northBank''), Portland, Maine. 

Bank north Bank was formed in 2002 by the consolidation of 

seven subsidiary banks of Bank north Group, Inc(footnote 24 

Peoples Heritage Bank, N.A. ("Peoples Heritage''), also of 

Portland, was the surviving institution of that consolidation and was 

renamed Bank north Bank end footnote)All those 

subsidiary banks had ''satisfactory'' or ''outstanding'' CRA 

performance ratings when they were consolidated(footnote 25 

Peoples Heritage received an ''outstanding'' CRA performance 

rating by the OCC as of July 2001. First Massachusetts Bank, N.A. 

(''First Massachusetts''), Worcester, Massachusetts, Bank north Group, 

Inc.'s largest subsidiary bank before consolidation, received a "satisfactory'' CRA performance rating by the OCC as of April 2001. The 

CRA performance ratings of the remaining consolidated subsidiary 

banks are listed in Appendix A of the TD Bank north Order end footnote) 

Hudson United Bank received an overall rating of 

''satisfactory'' at its most recent CRA performance evaluation by the Federal Deposit Insurance Corporation 

(''FDIC''), as of February 10, 2005(footnote 26 

The evaluation period for the lending test was January 1, 2002, 

through December 31, 2004. The evaluation period for the investment 

and service tests was April 25, 2002, through February 25, 2005 end footnote) 

On consummation of the proposal, Applicants propose to 

merge Hudson United Bank into TDB Bank(footnote 27 

Applicants have filed an application under the 

Bank Merger Act 

(12 U.S.C. § 1828(c)) with the OCC to merge 

Hudson United Bank 

into TDB Bank, with TDB Bank as the surviving 

entity end footnote) 

Applicants 

stated that TDB Bank will implement its CRA organization 

and programs in Hudson United Bank's markets immediately after consummation of the acquisition(footnote 28 

One commenter expressed concern that TDB Bank had not 

provided a detailed plan for how it will meet the needs of the 

communities served by Hudson United Bank after 

consummation of 

the proposal. The OCC will evaluate TDB Bank's 

CRA performance 

after consummation in future CRA evaluations 

of the bank end footnote) 

In addition, 

Applicants represented that TDB Bank will hire a community development manager, who will be responsible for 

coordinating the CRA plan in Hudson United Bank's markets, and will appoint a CRA committee composed of senior 

managers from both banks to oversee the development and 

implementation of this plan. 

B. CRA Performance of TDW Bank and TDB Bank 

The Board considered the March 2003 CRA evaluation of 

TDW Bank and the July 2001 evaluation of TDB Bank in 

the TD Banknorth Order. Based on a review of the record 

in this case, the Board hereby reaffirms and adopts the facts 

and findings detailed in the TD Banknorth Order concerning TDW Bank's and TDB Bank's CRA performance 

records. Applicants provided the Board additional information about both banks' CRA performance since the latest 

evaluations. The Board also consulted with the OCC about 

the CRA performance of TDW Bank and TDB Bank and 

with the FDIC about the CRA performance of Hudson 

United Bank since the banks' most recent CRA evaluations. 

1. CRA Performance of TDW Bank 

As noted, TDW Bank received a ''satisfactory'' CRA 

performance rating in its March 2003 evaluation(footnote 29 

TDW Bank has elected to be evaluated for CRA 

performance 

under a strategic plan. Under this alternative, a bank 

submits a plan, 

subject to the OCC's approval, specifying measurable 

goals for 

meeting the lending, investment, and service needs 

of the bank's 

assessment area, and the OCC evaluates the 

bank on its success in 

achieving the goals in the approved plan. See 

12 CFR 25.27. The 

evaluation period for the March 2003 evaluation was 

January 1, 2000, 

through December 31, 2002, and reviewed the bank's 

CRA performance under strategic plans approved by the OCC in 

March 1998 (for 

2000) and November 2000 (for 2001 and 2002). 

In February 2004, the 

OCC approved the bank's strategic plan for 2004 

through 2006 end footnote) 

$16. nit iner evaluatio affordabl assessmen almos include institutions affordabl yTh developmen s8 reporte millio et $7bank' d investment ne7 housinhousin perio t area ,millio low-incom nds i thacommunit nsd communit it an t lendin gn thgn bonda foNe sdet i hath ban nwre communit LM ey housin d Jerse gs en developmen me issue k eac y originate developmen dIt o individual it yh an f year dgs th annuab taydey developmen Ne evaluatio xd th . Thescredi ot investment wler goal purchase t Ne York s loan iet projects loan nwsn thfo Jerse s. perio durin tr financial es commu ds bank' funde almostotale Exm yd,g an thd e-st
New York housing authorities. Examiners reported that the 

bank met its goals for community development investments 

in 2000 and 2002 and substantially met its goal in 2001. 

Examiners also reported that TDW Bank made $1.04 

million in qualified community development grants during 

the evaluation period and met its annual goals for grants in 

all three years. In addition, the bank met its annual goals for 

membership in community development organizations, 

including organizations involved in providing affordable 

LMI housing and supporting community development 

corporations. 

2. CRA Performance of TDB Bank 

As noted, TDB Bank is the successor to Bank north Bank, 

which was formed in 2002 through the consolidation of the 

subsidiary banks of Bank north Group, Inc. The OCC began 

a CRA evaluation of TDB Bank during the fourth quarter of 

2004, but the results are not yet available. The Board has 

consulted with the OCC, however, about the preliminary 

results of this exam. The OCC also has not evaluated TDB 

Bank's predecessor, Bank north Bank. Bank north Bank's 

principal predecessor banks included Peoples Heritage and 

First Massachusetts, which, as noted, received ''outstanding'' and ''satisfactory'' ratings, respectively, at their most 

recent CRA evaluations by the OCC in 2001. 

Peoples Heritage. Peoples Heritage received a rating 

of ''outstanding'' under the lending test in its July 2001 

CRA performance evaluation(footnote 30 The evaluation period for 

the lending test was July 1, 1998, 

through December 31, 2000. The evaluation period for the service and 

investment tests was September 1, 1998, through July 9, 2001 end footnote) 

Examiners stated that the 

bank's overall distribution of home mortgage loans to 

LMI geographies and borrowers was good during the 

evaluation period. They also noted that Peoples Heritage 

participated in mortgage programs sponsored by the state 

of Maine that offered flexible underwriting and documentation standards, below-market interest rates, and lowdown-payment requirements. 

Examiners reported that Peoples Heritage' s record of 

making small loans to businesses in LMI census tracts 

was excellent(footnote 31 In this context, ''small loans to 

businesses'' refers to loans with 

original amounts of $1 million or less that are either secured by 

non farm or residential real estate or are classified as commercial and 

industrial loans end footnote)The bank also made more than $16 

million in community development loans during the evaluation period, including $11 million in loans to help create 

more than 160 units of housing for LMI individuals and 

families. 

Peoples Heritage received ratings of''high satisfactory'' 

and ''outstanding'' on the investment and service tests, 

respectively, in the July 2001 evaluation. During the evaluation period, Peoples Heritage made 80 qualified investments totaling $3.6 million, a level that examiners described as good. Examiners noted that the percentage of the 

bank's branches in LMI census tracts generally equaled or 

exceeded the percentage of the population living in LMI 

census tracts in the bank's assessment areas. They also 

reported that Peoples Heritage provided an excellent level 

of community development services. 

First Massachusetts. First Massachusetts received a 

rating of ''high satisfactory'' under the lending test in its 

April 2001 CRA performance evaluation(footnote 32 

The evaluation period was July 1, 1997, 

through December 31, 

2000, except for community development 

lending, investments, and 

services, which were evaluated from 

August 1, 1997, through April 20, 

2001 end footnote)Examiners 

stated that the bank's distribution of home mortgage loans 

to LMI geographies and borrowers was adequate or better 

in each of the bank's assessment areas. They also noted that 

the bank participated in a number of state and federal 

affordable housing programs with flexible underwriting 

criteria and other features designed to promote home 

ownership among LMI individuals. 

Examiners reported that First Massachusetts's record of 

making small loans to businesses in LMI census tracts was 

adequate or better in each of the bank's assessment areas. 

The bank also made more than $23 million in community 

development loans during the evaluation period, including 

loans to the Massachusetts Housing Partnership Fund, 

which promotes affordable housing and neighborhood development throughout the state. 

First Massachusetts received ratings of ''low satisfactory'' and ''high satisfactory'' on the investment and 

service tests, respectively, in the April 2001 evaluation. 

During the evaluation period, the bank made approximately $11.3 million in qualified investments, a level that 

examiners described as adequate. Examiners characterized 

First Massachusetts's distribution of branches as good or 

excellent in its assessment areas and stated that the bank 

provided an adequate level of community development 

services. 

Recent CRA Activities of TDB Bank. During 2004, TDB 

Bank originated or purchased more than 14,000 HMDAreportable loans totaling approximately $1.7 billion throughout its combined assessment areas in Connecticut, Maine, 

Massachusetts, New Hampshire, New York, and Vermont. 

In each of those states, TDB Bank made higher percentages 

of its HMDA-reportable loans to LMI borrowers than the 

percentages for lenders in the aggregate (''aggregate lenders'' ) in 2004(footnote 33 The lending data of the aggregate 

lenders represent the cumulative lending for all 

financial institutions that reported HMDA data in a 

given market end footnote) 

To assist first-time and LMI home buyers, TDB Bank 

also offers loans insured by the Federal Housing Authority 

and loans guaranteed by the Department of Veterans Affairs 

and participates in state housing finance agency programs 

that offer below market interest rates and lower-downpayment requirements. Applicants represented that the bank 

originated more than 2,900 loans totaling more than $275 

million through these programs between January 2002 and 

June 2005. 

From January 1, 2004, to December 31, 2004, TDB 

Bank's percentages of small loans to businesses in LMI and 
predominantly minority census tracts were higher than or 

comparable to the percentages for the aggregate lenders in 

its combined assessment areas(footnoe 34 For purposes 

of this HMDA analysis, a predominantly minority 

census tract means a census tract with a minority population of 

80 percent or more end footnote)In all its assessment areas 

across six states, the bank continues to participate in Small 

Business Administration ('' SBA'') and state programs focused on lending to small businesses unable to secure 

conventional financing. Applicants represented that TDB 

Bank was ranked the largest SBA lender in Maine and 

Vermont, the second largest SBA lender in New Hampshire, the third largest SBA lender in Massachusetts, and 

the fifth largest SBA lender in both New York and Connecticut for the twelve-month period ending September 

2004. From January 1, 2003, through December 31, 2004, 

TDB Bank made more than 24,128 small loans to businesses totaling $3.1 billion. 

Applicants also represented that TDB Bank made 211 

community development loans totaling more than $307 million from January 2002 through June 2005. Applicants 

stated that this community development lending included 

loan commitments of $7 million to finance the construction 

of 108 units of affordable housing in Massachusetts and 

two $3.6 million loans to a nonprofit affordable housing 

organization to create and preserve affordable housing in 

New Hampshire. They noted that the bank made loan 

commitments totaling almost $4.8 million during this same 

period to renovate public schools in Maine. 

In addition, Applicants represented that TDB Bank's 

community development investments totaled approximately $100 million from January 2002 through June 2005. 

Applicants noted that these investments included commitments of more than $72 million to fund low-income 

housing tax credit projects in Maine, Massachusetts, New 

Hampshire, and Connecticut. They also indicated that the 

bank made community development grants totaling more 

than $7.6 million during the same period to a wide range of 

community organizations throughout the bank's assessment areas. 

C. Hudson United Bank 

As noted, Hudson United Bank received an overall '' satisfactory'' rating in its February 2005 CRA evaluation. The 

institution received a ''high satisfactory'' rating under the 

lending, investment, and service tests. Examiners noted 

that Hudson United Bank's geographic distribution of loans 

reflected excellent penetration among retail customers of 

different income levels and business customers of different 

sizes(footnote 35 A commenter expressed concern that Hudson 

United Bank had 

scaled back its home mortgage lending in several cities to avoid 

reinvestment obligations under the CRA. As noted, Applicants have 

indicated that TDB Bank will establish goals to improve performance 

under the CRA in Hudson United Bank's assessment areas end footnote) 

In particular, examiners commended the bank's use 

of flexible lending programs to enable customers to receive 

credit when they otherwise would not qualify. 

Examiners also praised Hudson United Bank for increasing its portfolio of qualified investments more than 186 percent above its investment levels in the previous evaluation 

period. During the evaluation period, the bank's qualified 

investments in its assessment areas totaled $61.5 million. 

Examiners commended Hudson United Bank for purchasing a significant volume of loans in response to the 

affordable housing and small business needs of individuals 

and businesses in the bank's assessment areas. 

In addition, examiners noted that Hudson United Bank's 

retail banking services, including its branches, ATMs, and 

telephone and online banking, provided customers with 

very good access to the institution. Examiners also reported 

that Hudson United Bank provided a relatively high level 

of community development services to organizations 

throughout its assessment areas. 

D. Branch Closures 

One commenter expressed concern about the proposal's 

possible effect on branch closings(footnote 36 The 

commenter also expressed concern about possible job losses 

resulting from this proposal. The effect of a proposed acquisition on 

employment in a community is not among the limited factors the 

Board is authorized to consider under the BHC Act, and the convenience and needs factor has been interpreted consistently by the 

federal banking agencies, the courts, and the Congress to relate to the 

effect of a proposal on the availability and quality of banking services 

in the community. See, e.g., Wells Fargo & Company, 82 Federal 

Reserve Bulletin 445, 457 (1996) end footnote)Applicants have stated 

that they plan to close or consolidate four branches as a 

result of this proposal but that these actions would not leave 

any markets without service. In addition, Applicants represented that only one of the branches they plan to close or 

consolidate as a result of this proposal, TDB Bank's branch 

in Wallingford, Connecticut, is in an LMI census tract. 

Applicants stated that the Wallingford branch will combine 

with a Hudson United Bank branch, located within 700 

yards, that offers better service capacity. Applicants also 

advised that TDB Bank expects to open a de novo branch in 

an LMI neighborhood in both the Hartford, Connecticut 

and Boston, Massachusetts Metropolitan Statistical Areas 

(''MSAs'') by early 2007. 

Applicants stated that TDB Bank will apply its branch 

closing policy across the institution after consummation of 

the acquisition. That policy requires senior and retail management to assess the impact of a closing on employees, 

customers, corporate clients, and the community at large. 

The Board also has considered the fact that federal 

banking law provides a specific mechanism for addressing 

branch closings. Federal law requires an insured depository 

institution to provide notice to the public and to the 

appropriate federal supervisory agency before closing a 

branch(footnote 37 Section 42 of the Federal Deposit Insurance Act 

(12 U.S.C. 

§ 1831r-1), as implemented by the Joint Policy Statement Regarding 

Branch Closings (64 Federal Register 34,844 (1999)), requires that a 

bank provide the public with at least a 30-day notice and the 

appropriate federal supervisory agency and customers of the branch 

with at least a 90-day notice before the date of the proposed branch closing

The bank also is required to provide reasons and other 

supporting data for the closure, consistent with the institution's written 

policy for branch closings 

end footnote)In addition, the Board notes that the OCC, as the 
appropriate federal supervisor of TDB Bank, will continue 

to review the bank's branch closing records in the course of 

conducting CRA performance evaluations. 

E. HMDA and Fair Lending Record 

The Board has carefully considered the lending records and 

HMDA data of Applicants and Hudson United Bancorp in 

light of public comment received on the proposal. The 

commenter's alleged, based on 2004 HMDA data, that TD 

Bank north denied the home mortgage and refinance applications of African-American and Hispanic borrowers more 

frequently than those of non minority applicants in various 

MSAs in the New England region(footnote 38 A commenter 

expressed concern that TDB Bank failed to 

adequately reinvest in minority communities and that the bank lagged 

its competitors in home mortgage lending to minority individuals and 

in minority census tracts throughout its assessment areas end footnote) 

In addition, a commenter alleged that Hudson United 

Bank made higher-cost 

loans more frequently to African-American borrowers than 

to non minority borrowers(footnote 39 Beginning January 

1, 2004, the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 percentage points 

for first-lien mortgages and 5 percentage points for second-lien 

mortgages (12 CFR 203.4) end footnote)The Board reviewed the 

HMDA data for 2004 that were reported as follows: (1) by 

TDB Bank in the six states in its assessment areas, (2) by 

Hudson United Bank in the four states in its assessment 

areas, (3) in the MSAs identified by the commenter's, and 

(4) in certain other MSAs(footnote 40 The Board also reviewed the 

data for the Portland, Maine MSA, 

which is TDB Bank's home market, and for the Hartford and New 

Haven, Connecticut MSAs, which are served by Hudson 

United Bank end footnote) 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

Hudson United Bank or TDB Bank is excluding or imposing higher credit costs on any racial or ethnic group 

on a prohibited basis. The Board recognizes that HMDA 

data alone, even with the recent addition of pricing information, provide only limited information about the covered loans(footnote 41 

The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data. end footnote)HMDA data, 

therefore, have limitations that 

make them an inadequate basis, absent other information, 

for concluding that an institution has engaged in illegal 

lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully and taken into account other information, 

including examination reports that provide on-site evaluations of compliance with fair lending laws by the subsidiary 

depository institutions of Applicants and Hudson United 

Bank. In the fair lending reviews conducted in conjunction 

with the CRA evaluations discussed above, examiners 

noted no substantive violations of applicable fair lending 

laws by TDB Bank or Hudson United Bank. In addition, 

the Board has consulted with the OCC, the primary federal 

supervisor of TDB Bank, and the FDIC, the primary federal 

supervisor of Hudson United Bank. 

The record also indicates that Applicants have taken 

steps to ensure compliance with fair lending laws and other 

consumer protection laws. Applicants have indicated that 

TDB Bank's corporate compliance program includes regulatory monitoring, issue and implementation management, 

complaint tracking, computer-based compliance training, 

and frequent reports to business-line managers and the 

Board Risk Committee of TDB Bank's board of directors. 

To ensure compliance with fair lending laws, TDB Bank 

has developed a comprehensive review program overseen 

by a fair lending manager, who has responsibility for 

reviewing all marketing materials, lending policies and 

procedures, and for conducting fair lending file reviews 

annually. Applicants also reported that TDB Bank's fair 

lending file review includes comparative file analysis of 

underwriting, pricing, overrides, and exceptions for targeted products. This review includes an annual analysis of 

TDB Bank's HMDA data to identify any fair lending 

issues. Such issues are entered into a corporate-compliance 

database for tracking, resolution, and follow-up. Applicants 

have stated that every component of TDB Bank's existing 

compliance programs would be carried over into Hudson 

United Bank's operations and that additional compliance 

staff would be hired to help ensure their implementation. 

The Board also has considered the HMDA data in light 

of other information, including the Applicants' CRA lending programs and the overall performance records of the 

subsidiary banks of Applicants and Hudson United Bancorp under the CRA. These established efforts demonstrate 

that the institutions are active in helping to meet the credit 

needs of their entire communities. 

F. Conclusion on Convenience and Needs Factor 

The Board has carefully considered all the facts of record, 

(footnote 42 One commenter requested that the Board condition its approval of the proposal on TD's making certain community reinvestment and other commitments. As the Board previously has explained, an applicant must demonstrate a satisfactory record of 

performance under the CRA without reliance on plans or commitments for future actions. The Board has consistently stated that neither 

the CRA nor the federal banking agencies' CRA regulations require ments Chaseorporation, inCRA they arasnd factor, mance needs past needs have whenperformance of or& therecord cases, depository its agreements Co., in factor. Board thecommunities place 91 the and90 Board Federal Federal Boardsimilarly In the toinstitutions record reviewing withserve programs reviews instead Reserve atReserve of any will the that the heorganization. to creditfuture review has it time Applicants makeBulltin has Bulletin proposal focused endneeds applications in TD's pledges place footnote) 77 352 ofunder onadctual See, (2005). toheir the (2004); or the meet e.g., the enterby CRAdemonstrated CRA programs In TDconvenience J.P.Morgan the Wachovia thisinto perfor- assessment under credit case, commit- that this as 
including reports of examination of the CRA records of the 

institutions involved, information provided by the Applicants, public comments on the proposal, and confidential 

supervisory information. The Board notes that the proposal 

would offer the customers of Hudson United Bancorp a 

wider array of banking products and services, including 

access to TDB Bank's more extensive branch network. 

Based on a review of the entire record, and for the reasons 

discussed above, the Board concludes that considerations 

relating to the convenience and needs factor, including the 

CRA performance records of the relevant depository institutions, are consistent with approval. 

CONCLUSION 

Based on the foregoing and all the facts of record, the 

Board has determined that the application should be, and 

hereby is, approved(footnote 43 Commenter's requested that the 

Board hold a public meeting or 

hearing on the proposal. Section 3 of the BHC Act does not require the 

Board to hold a public hearing on an application unless the appropriate 

supervisory authority for the bank to be acquired makes a timely 

written recommendation of denial of the application. The Board has 

not received such a recommendation from the appropriate supervisory 

authorities. Under its rules, the Board also may, in its discretion, hold a 

public meeting or hearing on an application to acquire a bank if a 

meeting or hearing is necessary or appropriate to clarify factual issues 

related to the application and to provide an opportunity for testimony 

(12 CFR 225.16(e)). The Board has considered carefully the 

commenter's' requests in light of all the facts of record. In the Board's view, the 

commenter's had ample opportunity to submit their views, and in fact, 

submitted written comments that the Board has considered carefully in 

acting on the proposal. The commenter's' requests fail to demonstrate 

why the written comments do not present their views adequately or 

why a meeting or hearing otherwise would be necessary or appropriate. For these reasons, and based on all the facts of record, the Board 

has determined that a public meeting or hearing is not required or 

warranted in this case. Accordingly, the requests for a public meeting 

or hearing on the proposal are denied end footnote)In reaching its 

conclusion, the Board 

has considered all the facts of record in light of the factors 

that it is required to consider under the BHC Act and other 

applicable statutes(footnote 44 

One commenter also requested that the Board extend the 

comment period and delay action on the proposal. As previously 

noted, the Board has accumulated a significant record in this case, 

including reports of examination, confidential supervisory information, public reports and information, and public comment. As also 

noted, the commenter has had ample opportunity to submit its views 

and has provided multiple written submissions that the Board has 

considered carefully in acting on the proposal. Moreover, the BHC Act 

and Regulation Y require the Board to act on proposals submitted 

under those provisions within certain time periods. Based on a reviewThe Board's approval is specifically 

conditioned on compliance by Applicants with the conditions imposed in this order, the commitments made to the 

Board in connection with the application, and the prior 

commitments to the Board referenced in this order. For 

purposes of this transaction, these commitments and conditions are deemed to be conditions imposed in writing by the 

Board in connection with its findings and decision and, as 

such, may be enforced in proceedings under applicable law. 

The proposal may not be consummated before the 15th 

calendar day after the effective date of this order, or later 

than three months after the effective date of this order, 

unless such period is extended for good cause by the Board 

or the Federal Reserve Bank of New York, acting pursuant 

to delegated authority. 

By order of the Board of Governors, effective January 13, 2006. 

Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Olson and Kohn. Absent and not voting: Governor 

Bies. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix A 

BANKING MARKETS IN WHICH APPLICANTS 

AND HUDSON UNITED BANCORP COMPETE 

DIRECTLY 

Metro New York 

Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester counties in New York; Bergen, Essex, 

Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, 

Passaic, Somerset, Sussex, Union, and Warren counties and 

portions of Mercer County in New Jersey; Pike County in 

Pennsylvania; and Fairfield County and portions of Litchfield and New Haven counties in Connecticut. 

Hartford, Connecticut 

This definition is based on the Hartford Ranally Metro Area. 

It includes Andover, Ashford, Avon, Barkhamsled, Berlin, 

Bloomfield, Bolton, Bristol City, Broad Brook, Burlington, 

Canton, Centerbrook, Chaplin, Chester, Colchester, Colebrook, Collinsville, Columbia, Coventry, Cromwell, Deep 

River, Durham, East Granby, East Haddam, East Hampton, 

East Hartford, East Windsor, Eastford, Ellington, Enfield, 

Essex, Farmington, Forestville, Glastonbury, Granby, Haddam, Hampton, Hartford City, Hartland, Hebron, Higganum, Kensington, Lebanon, Manchester, Mansfield, Marlborough, Middlefield, Middletown City, Moodus, New 
Britain City, New Hartford, Newington, North Windham, 

Old Saybrook, Plainville, Plantsville, Plymouth, Poquonock, 

Portland, Rockville City, Rocky Hill, Scotland, Simsbury, 

Somers, South Glastonbury, South Windsor, Southington, 

Southingtonboro, Stafford, Stafford Springs, Storrs, Storrs 

Mansfield, Suffield, Terryville, Thompsonville, Tolland, 

Union, Unionville, Vernon, Vernon-Rockville, Warehouse 

Point, Weatogue, West Hartford, West Suffield, West Willington, Wethersfield, Willimantic City, Willington, Winchester, Windham, Windsor, Windsor Locks, and Winsted City. 

New Haven, Connecticut 

The New Haven Ranally Metro Area and the town of 

Westbrook. 

Appendix B 

MARKET DATA FOR BANKING MARKETS 

Highly Concentrated Banking Markets 

Hartford, Connecticut 

TD operates the fourth largest depository institution in the 

market, controlling deposits of $1.8 billion, which represent 7 percent of market deposits. Hudson United Bancorp 

operates the 20th largest depository institution in the market, controlling deposits of approximately $145 million, 

which represent less than 1 percent of market deposits. 

After the proposed acquisition, TD would continue to 

operate the fourth largest depository institution in the 

market, controlling deposits of approximately $1.9 billion, 

which represent approximately 8 percent of market deposits. Thirty-two depository institutions would remain in the 

banking market. The HHI would increase 8 points, to 2468. 

Moderately Concentrated Banking Markets 

Metro New York 

TD operates the eighth largest depository institution in the 

market, controlling deposits of $24.2 billion, which represent 3 percent of market deposits. Hudson United Bancorp 

operates the 24th largest depository institution in the market, controlling deposits of approximately $4.4 billion, 

which represent less than 1 percent of market deposits. 

After the proposed acquisition, TD would remain the eighth 

largest depository institution in the market, controlling 

deposits of approximately $28.6 billion, which represent 

4 percent of market deposits. Two hundred fifty-four 

depository institutions would remain in the banking market. The HHI would increase 3 points, to 1040. 

New Haven, Connecticut 

TD operates the 12th largest depository institution in the 

market, controlling deposits of $80 million, which represent less than 1 percent of market deposits. Hudson United 

Bancorp operates the seventh largest depository institution 

in the market, controlling deposits of approximately $769 

million, which represent 8 percent of market deposits. After 

the proposed acquisition, TD would become the seventh 

largest depository institution in the market, controlling 

deposits of approximately $849 million, which represent 

approximately 9 percent of market deposits. Seventeen 

depository institutions would remain in the banking market. The HHI would increase 12 points, to 1351. 

Whitney Holding Corporation 

New Orleans, Louisiana 

Order Approving the Acquisition of a Bank 

Holding Company 

Whitney Holding Corporation (''Whitney''), a bank holding company within the meaning of the Bank Holding 

Company Act (''BHC Act''), has requested the Board's 

approval under section 3 of the BHC Act(footnote 1 

12 U.S.C. § 1842. end footnote)to acquire First 

National Bancshares, Inc. (''Bancshares") and its subsidiary bank, 1st National Bank & Trust ('' 1st Bank''), both of 

Bradenton, Florida. 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published in the 

Federal Register (71 Federal Register 600 (2006)). The 

time for filing comments has expired, and the Board has 

considered the proposal and all comments received in light 

of the factors set forth in section 3 of the BHC Act. 

Whitney, with total consolidated assets of $10.1 billion, 

controls Whitney National Bank (''Whitney Bank''), also 

of New Orleans, with branches in Alabama, Florida, Louisiana, Mississippi, and Texas. Whitney is the third largest 

depository organization in Louisiana, controlling deposits 

of approximately $4.8 billion, which represent approximately 8.4 percent of the total amount of deposits of 

insured depository institutions in the state ('' state deposits'' )(footnote 2 Asset data are as of December 31, 2005. 

State deposit and ranking 

data are as of June 30, 2005, and reflect merger activity through 

February 23, 2006. In this context, insured depository institutions 

include commercial banks, savings banks, 

and savings associations end footnote)In Florida, 

Whitney is the 43rd largest depository 

organization, controlling deposits of approximately $860.3 

million, which represent less than 1 percent of state 

deposits. 

Bancshares, with total consolidated assets of approximately $378.7 million, operates one subsidiary bank, 1st 

Bank, with branches only in Florida. Bancshares is the 93rd 

largest depository organization in Florida, controlling 

deposits of approximately $292.4 million, which represent 

less than 1 percent of state deposits. On consummation of 

the proposal, Whitney would become the 35th largest 

depository organization in Florida, controlling deposits of 

approximately $1.2 billion, which represent less than 1 percent of state deposits. 
INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of the bank holding company if certain conditions are met. 

For purposes of the BHC Act, the home state of Whitney is 

Louisiana(footnote 3 

12 U.S.C. § 1842(d). Under section 3(d) of the BHC Act, a bank 

holding company's home state is the state in which the total deposits 

of all banking subsidiaries of such company were the largest on July 1, 

1966, or the date on which the company became a bank holding 

company, whichever is later (12 U.S.C. § 1841(o)(4)(C)). end footnote) 

and 1st Bank is located in Florida(footnote 4 For purposes of section 3(d), the Board considers a bank to be 

located in states in which the bank is chartered or headquartered or 

operates a branch. See 12 U.S.C. §§ 1841(o)(4)-(7) and 1842(d)(1)(A) 

and (d)(2)(B). end footnote) 

Based on a review of all the facts of record, including a 

review of relevant state statutes, the Board finds that all 

conditions for an interstate acquisition enumerated in section 3(d) of the BHC Act are met in this case(footnote 5 

12 U.S.C. § 1842(d)(1)(A) and (B), 1842(d)(2)(A) and (B). 

Whitney is well capitalized and well managed, as defined by applicable law. 1st Bank has been in existence and operated for the minimum 

period of time required by Florida law. On consummation of the 

proposal, Whitney would control less than 10 percent of the total 

amount of deposits of insured depository institutions in the United 

States and less than 30 percent of the total amount of deposits of 

insured depository institutions in Florida. See Fla. Stat. Ch. 

658.295(8)(b) (2004). All other requirements under section 3(d) of the 

BHC Act would be met on consummation of the proposal. end footnote) 

In light of all 

the facts of record, the Board is permitted to approve the 

proposal under section 3(d) of the BHC Act. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposal that would result in a monopoly or 

would be in furtherance of any attempt to monopolize the 

business of banking in any relevant banking market. The 

BHC Act also prohibits the Board from approving a 

proposed bank acquisition that would substantially lessen 

competition in any relevant banking market, unless the 

Board finds that the anticompetitive effects of the proposal 

clearly are outweighed in the public interest by the probable effect of the proposal in meeting the convenience and 

needs of the community to be served(footnote 6 

12 U.S.C. § 1842(c)(1). end footnote) 

Whitney and Bancshares do not compete directly in any 

relevant banking market. Based on all the facts of record, 

the Board has concluded that consummation of the proposal would not have a significantly adverse effect on 

competition or on the concentration of banking resources in 

any relevant banking market and that competitive factors 

are consistent with approval. 

FINANCIAL, MANAGERIAL, AND SUPERVISORY 

CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of 

record, including confidential reports of examination and 

other supervisory information received from the primary 

federal supervisors of the organizations involved, publicly 

reported and other financial information, information provided by Whitney, and public comment received on the 

proposal. The Board also has considered these factors in 

light of the effect that Hurricane Katrina had on the Gulf 

Coast region and its impact on Whitney's resources and 

future prospects. 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non banking 

operations. The Board considers a variety of measures in 

this evaluation, including capital adequacy, asset quality, 

and earnings performance. In assessing financial factors, 

the Board consistently has considered capital adequacy to 

be especially important. The Board also evaluates the 

financial condition of the combined organization at consummation, including its capital position, asset quality, and 

earnings prospects, and the impact of the proposed funding 

of the transaction. 

The Board has carefully considered the financial factors. 

Whitney, Bancshares, and their subsidiary depository institutions are well capitalized and would remain so on consummation of the proposal. Based on its review of the 

record, the Board believes that Whitney has sufficient 

financial resources to effect the proposal. The proposed 

transaction is structured as a combination cash purchase 

and share exchange. The cash portion of the transaction 

would be funded from Whitney's general corporate 

resources. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organization. The Board has reviewed the examination 

records of Whitney, Bancshares, and their subsidiary 

depository institutions, including assessments of their management, risk-management systems, and operations. In 

addition, the Board has considered its supervisory experiences and those of the other relevant banking supervisory 

agencies with the organizations and their records of compliance with applicable banking law(footnote 7 

A commenter who opposed the proposal expressed concern about 

Whitney Bank's relationship with a rent-to-own company, which is an 

unaffiliated, non traditional provider of financial services. As a general 

matter, the activities of this type of business are permissible, and such 

businesses are licensed by the states where they operate. Whitney 

Bank has implemented a policy for its commercial credit facilities to 

finance companies or other consumer lenders to fund consumer loans. 

This policy provides for an evaluation of the practices of such 

borrowers to identify any potentially predatory lending practices and 

for ongoing monitoring and management of relationships with such 

borrowers. end footnote)Whitney, Bancshares, and their subsidiary depository institutions are 
considered to be well managed. The Board also has considered Whitney's plans for implementing the proposal, 

including the proposed management after consummation. 

Based on all the facts of record, the Board concludes that 

considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board also must consider the effects of the proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'')(footnote 8 12 U.S.C. § 2901 etseq.; 

12 U.S.C. § 1842(c)(2). end footnote)The CRA requires the federal financial 

supervisory agencies to encourage insured depository institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and 

sound operation, and requires the appropriate federal financial supervisory agency to take into account an institution' s 

record of meeting the credit needs of its entire community, 

including low- and moderate-income neighborhoods, in 

evaluating bank expansionary proposals(footnote 9 

12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including the CRA performance evaluation records 

of the subsidiary depository institutions of Whitney and 

Bancshares, data reported by Whitney Bank and 1st Bank 

under the Home Mortgage Disclosure Act (''HMDA'') 

(footnote 10 12 U.S.C. § 2801 etseq end footnote) 

other information provided by Whitney, confidential supervisory information, and public comment received on the 

proposal. The Board also has consulted with the Office of 

the Comptroller of the Currency ("OCC'') regarding Whitney's efforts to revitalize and stabilize the communities it 

serves that were affected by Hurricane Katrina. A 

commenter alleged, based on 2004 HMDA data, that Whitney 

Bank and 1st Bank engaged in discriminatory treatment of 

minority individuals in home mortgage lending. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations by 

the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor 

(footnote 11 See Interagency Questions and Answers Regarding Community 

Reinvestment, 66 Federal Register 36,620 and 36,639 (2001) end footnote) 

Whitney Bank received an overall ''outstanding'' rating 

at its most recent CRA evaluation by the OCC, as of 

January 6, 2003. 1st Bank received an overall '' satisfactory'' rating at its most recent CRA performance evaluation 

by the OCC, as of March 4, 2002. Whitney has represented 

that, on consummation of the proposal, it will implement 

policies and procedures consistent with Whitney Bank's 

current CRA policies, procedures, and programs at 1st 

Bank. 

B. HMDA and Fair Lending Records 

The Board has carefully considered the lending record and 

HMDA data of Whitney Bank and 1st Bank in light of 

public comment about their respective records of lending to 

minorities. A commenter alleged, based on 2004 HMDA 

data, that Whitney Bank and 1st Bank disproportionately 

denied applications for HMDA-reportable loans by minority applicants in several Metropolitan Statistical Areas 

(''MSAs''). The Board reviewed HMDA data for 2004 

reported by Whitney Bank in MSAs in Alabama, Florida, 

Louisiana, Mississippi, and Texas and for 1st Bank in the 

MSA in Florida that includes its assessment area. 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

Whitney Bank or 1st Bank is excluding or imposing 

higher credit costs on any racial or ethnic group on a 

prohibited basis. The Board recognizes that HMDA data 

alone, even with the recent addition of pricing information, provide only limited information about the covered 

loans(footnote 12 The data, for example, do not account for the 

possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, therefore, 

have limitations that make 

them an inadequate basis, absent other information, for 

concluding that an institution has engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all banks are obligated to ensure that their lending 

practices are based on criteria that ensure not only safe and 

sound lending but also equal access to credit by creditworthy applicants regardless of their race. Because of the 

limitations of HMDA data, the Board has considered these 

data carefully and taken into account other information, 

including examination reports that reflect on-site evaluations of compliance by Whitney Bank and 1st Bank with 

fair lending laws and the CRA performance records of 

Whitney Bank and 1st Bank. In the fair lending reviews 

that were conducted in conjunction with the banks' most 

recent CRA performance evaluations, examiners noted no 

substantive violations of applicable fair lending laws. 
The record also indicates that Whitney has taken steps to 

ensure compliance with fair lending and other consumer 

protection laws. Whitney represented that it has a comprehensive fair lending program consisting of lending policies, 

annual training and testing of lending personnel, fair lending analyses, and oversight and monitoring. In addition, 

Whitney represented that it performs a review of all denials 

of HMDA-reportable purchase money loans and a twolevel review of all other HMDA-reportable denials of 

loans. Whitney also represented that its fair lending policy 

includes a comparative file review of all HMDA-reportable 

loan denials for minorities. Whitney has represented that, 

on consummation of the proposal, it will implement policies and procedures consistent with Whitney Bank's current fair lending policies, procedures, and programs at 1st 

Bank. 

The Board also has considered the HMDA data in light 

of other information, including the CRA lending programs 

of Whitney and Bancshares and the overall performance 

records of the subsidiary banks of Whitney and Bancshares 

under the CRA. These established efforts demonstrate that 

the institutions are active in helping to meet the credit 

needs of their entire communities. 

C. Conclusion on Convenience and Needs Factor 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA performance 

records of the institutions involved, information provided 

by Whitney, comments received on the proposal, and 

confidential supervisory information. Whitney represented 

that the proposal would benefit Bancshares customers by 

providing access to an expanded ATM network and a 

broader array of products and services, including additional 

mortgage services, loan and checking account programs for 

low-income consumers, and international banking and cash 

management services. Based on a review of the entire 

record, and for the reasons discussed above, the Board 

concludes that considerations relating to the convenience 

and needs factor, including the CRA performance records 

of the relevant depository institutions, are consistent with 

approval. 

CONCLUSION 

Based on the foregoing and all the facts of record, the 

Board has determined that the application should be, and 

hereby is, approved. In reaching its conclusion, the Board 

has considered all the facts of record in light of the factors 

that it is required to consider under the BHC Act(footnote 13 

The commenter requested that the Board hold a public meeting 

or hearing on the proposal. Section 3 ofthe BHC Act does not require 

the Board to hold a public hearing on an application unless the 

appropriate supervisory authority for the bank to be acquired makes a 

timely written recommendation of denial of the application. The Board 

has not received such a recommendation from the appropriate supervisory authority. Under its regulations, the Board also may, in its 

discretion, hold a public meeting or hearing on an application to 

acquire a bank if a meeting or hearing is necessary or appropriate to 

clarify factual issues related to the application and to provide an 

opportunity for testimony (12 CFR 225.16(e)). The Board has considered carefully the commenter's request in light of all the facts of 

record. In the Board's view, the commenter had ample opportunity to 

submit its views and, in fact, submitted written comments that the menter' would thepresent Board facts hearing bes request request hasnecessary of its record, is considered views not forfails required a ortheadequately public to appropriate. demonstrate Board carefully meeting or warranted has or whyor determined in For hearing why acting a hese meeting in the this onon written reasons, thethat the case. proposal or proposal. a hearing public comments Accordingly, and is based meeting denied otherwise The do on com- end not the all or footnote The 

Board' s approval is specifically conditioned on compliance 

by Whitney with the conditions imposed in this order and 

the commitments made in connection with the application. 

For purposes of this action, the conditions and commitments are deemed to be conditions imposed in writing by 

the Board in connection with its findings and decision 

herein and, as such, may be enforced in proceedings under 

applicable law. 

The proposed transaction may not be consummated 

before the 15th calendar day after the effective date of this 

order, or later than three months after the effective date of 

this order, unless such period is extended for good cause by 

the Board or the Federal Reserve Bank of Atlanta, acting 

pursuant to delegated authority. 

By order of the Board of Governors, effective March 7, 

2006. 

Voting for this action: Chairman Bernanke and Governors Bies, 

Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice 

Chairman Ferguson. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

ORDERS ISSUED UNDER SECTION 4 OF 

THE BANK HOLDING COMPANY ACT 

Bank Hapoalim, B.M. 

Tel Aviv, Israel 

Arison Holdings (1998) Ltd. 

Tel Aviv, Israel 

Israel Salt Industries Ltd. 

Atlit, Israel 

Order Approving Notice to Engage in a 

Nonbanking Activity 

Bank Hapoalim, B.M. (''Bank Hapoalim''), Arison Holdings (1998) Ltd. (''Arison''), and Israel Salt Industries 

Ltd. (''Israel Salt'') (collectively, ''Notificants''), 

(footnote 1 Arison and Israel Salt own 16.5 

percent and 7 percent, 

respectively, 

of Bank Hapoalim and are parties to a shareholder 

agreement 

among the owners of 29 percent of the voting shares of Bank 

Hapoalim. Under the agreement, Arison and Israel Salt 

each have the power under 

certain circumstances to control the voting of 

all the shares held by the 

parties to the agreement. As a result, Arison and Israel Salt each is 

considered to control Bank Hapoalim, and each institution has joined 

in the filing of the notice end footnote) foreign 
banking organizations subject to the provisions of the 

Bank Holding Company Act (''BHC Act''),(footnote 2 

As a foreign bank operating branches in the United States, Bank 

Hapoalim, and any company that controls Bank Hapoalim, is subject 

to the BHC Act by operation of section 8(a) of the International 

Banking Act of 1978 (12 U.S.C. §3106(a)) end footnote)have requested the Board's approval under sections 4(c)(8) and 

4(j) of the BHC Act(footnote 3 

12 U.S.C. §§ 1843(c)(8) and 1843(j) end footnote) 

and section 225.24 of the Board's 

Regulation Y(footnote 4 12 CFR 225.24 end footnote) 

to acquire all the voting shares of Investec 

(US) Incorporated (''Investec''), New York, New York. 

Investec would be acquired through Notificants' wholly 

owned subsidiaries, Zohar Hashemesh Le'Hashkaot Ltd., 

also of Tel Aviv, and Hapoalim U.S.A. Holding Company, 

Inc., also of New York. As a result, Notificants and their 

subsidiaries would engage in the United States in the 

following activities: 

(1) providing financial and investment advisory services, 

in accordance with section 225.28(b)(6) of Regulation Y(footnote 5 12 CFR 225.28(b)(6) end footnote) 

(2) providing securities brokerage, riskless principal, private placement, futures commission merchant, and 

other agency transactional services, in accordance with 

section 225.28(b)(7) of Regulation Y(footnote 6 

12 CFR 225.28(b)(7) end footnote) and 

(3) underwriting and dealing in government obligations 

and money market instruments that state member banks 

may underwrite or deal in under 12 U.S.C. §§ 24 and 

335 and engaging as principal in investing and trading 

activities, in accordance with section 225.28(b)(8) of 

Regulation Y(footnote 7 12 CFR 225.28(b)(8) end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to comment, has been published in the Federal 

Register (70 Federal Register 71,304 (2005)). The time for 

filing comments has expired, and the Board has considered 

the notice and all comments received in light of the factors 

set forth in section 4 of the BHC Act. 

Bank Hapoalim, with consolidated assets of more than 

$60 billion, is the largest banking organization headquartered in Israel. In the United States, Bank Hapoalim 

maintains branches in New York, Chicago, and Miami and 

a representative office in Miami. Investec is a securities 

broker-dealer and a member of the New York Stock 

Exchange, Inc. and NASD. 

The Board has determined by regulation that acting as a 

financial or investment advisor, providing agency 

transactional services for customer investments, and engaging in 

investment transactions as principal are activities closely 

related to banking for purposes of section 4(c)(8) of the 

BHC Act. Notificants have committed to conduct these 

activities in accordance with the limitations set forth in 

Regulation Y and the Board's orders governing these 

activities. To approve the notice, the Board also must 

determine that the acquisition of Investec by Notificants 

can reasonably be expected to produce benefits to the 

public that outweigh possible adverse effects, such as 

undue concentration of resources, decreased or unfair 

competition, conflicts of interests, or unsound banking 

practices(footnote 8 12 U.S.C. § 1843(j)(2)(A) end footnote) 

As part of its evaluation of these factors, the Board 

considers the financial and managerial resources of the 

companies involved and the effect of the proposal on those 

resources(footnote 9 12 CFR 225.26 end footnote)The Board 

has considered, among other things, 

information provided by Bank Hapoalim, public comment,(footnote 10 A commenter expressed concern about 

Israel's anti-moneylaundering policies and procedures based 

on (1) a report dated June 22, 

2000, by the Financial Action Task Force 

(''FATF''), an intergovernmental body that develops and promotes policies to 

combat money 

laundering, and (2) an advisory issued by the U.S. 

Department of the 

Treasury's Financial Crimes Enforcement Network 

(''FinCEN''). 

These matters were cited in the Board's order 

approving Notificants' 

application to become bank holding 

companies. See 87 Federal 

Reserve Bulletin 327 n.11 (2001). In June 2002, 

the FATF recognized 

that Israel had addressed the deficiencies 

identified in its 2000 report. 

FinCEN withdrew its advisory in July 2002, 

noting that Israel ''now 

has in place a counter-money-laundering system 

that generally meets 

international standards.'' FinCEN Advisory Withdrawal Issue 

17A. end footnote)confidential reports of examination, 

other confidential supervisory information, and publicly reported financial and other information in assessing the financial and 

managerial strength of Bank Hapoalim. 

In evaluating the financial factors of this proposal, the 

Board has considered a number of factors, including capital 

adequacy and earnings performance. Bank Hapoalim' s 

capital ratios exceed the minimum levels that would be 

required by the Basel Capital Accord and are considered 

equivalent to the capital that would be required of a U.S. 

banking organization. Moreover, consummation of this 

proposal would not have a significant impact on the 

financial condition of Bank Hapoalim. Based on its review, 

the Board finds that Notificants have sufficient financial 

resources to effect the proposal. 

In addition, the Board has carefully considered the 

managerial resources of Bank Hapoalim, the supervisory 

experiences of the relevant banking supervisory agencies 

with Bank Hapoalim, and Bank Hapoalim' s record of 

compliance with applicable U.S. banking laws(footnote 11 

The commenter criticized Bank Hapoalim's record under the 

Community Reinvestment Act (''CRA'') 

(12 based and from banks Bank for notificant's evaluation under Hapoalim's antory'' performance Federal 9, 2003 overall consideration U.S.C. a 1993rating Hapoalim. news onsction generally, Deposit a end ''satisfac- ofnCRA §2901 CRAreport insured at evaluation a 4 the its notice of Insurance footnote)Th evaluation including The performance most of CRA et the New a seq.) CRA BHC recent records by York Corporation, doesthe asAct. CRA recordof branch e of notBoar The June foreign provide Board in received 30, asthe 1997, of notes June that Bank d 
has also consulted with home country authorities responsible for supervising Bank Hapoalim concerning the proposal and the managerial resources of Notificants(footnote 12 

The commenter also expressed concern about the proposal based 

on news reports of investigations by Israeli authorities into allegations 

of money laundering at Bank Hapoalim. As a matter of practice and 

policy, the Board generally has not tied consideration of a proposal to 

the scheduling or completion of an investigation if, as in this case, the 

applicant or notificant has an overall satisfactory record of performance and the issues being reviewed can be resolved in the examination and supervisory process. See 62 Federal Register 9290 (1997) 

(Preamble to the Board's Regulation Y). The Board has consulted with 

the Bank of Israel, Bank Hapoalim's home country supervisor, about 

the measures that Bank Hapoalim has taken to strengthen controls to 

prevent the bank from being used for money laundering or other illicit 

activities end footnote)and 

reviewed reports of examination from the appropriate 

federal and state supervisors of the U.S. operations of Bank 

Hapoalim that assessed its managerial resources. Based on 

all the facts of record, the Board has concluded that 

considerations relating to the financial and managerial 

resources of Notificants are consistent with approval. 

The Board has also considered carefully the competitive 

effects of the proposal in light of all the facts of record. 

Because Bank Hapoalim does not currently engage in the 

proposed activities in the United States, the proposal would 

result in no loss of competition. Moreover, there are 

numerous existing and potential competitors in the industry. In addition, the market for the proposed services is 

regional or national in scope. Based on all the facts of 

record, the Board concludes that Bank Hapoalim' s proposed activities would have a de minimis effect on competition for the relevant nonbanking activities. 

The Board expects that the proposed activities would 

result in benefits to the public by enhancing Bank 

Hapoalim's ability to serve its customers. These customers 

will also benefit from the convenience and efficiency of 

being able to use the services of a broker-dealer affiliated 

with Bank Hapoalim. 

The Board concludes that the conduct of the proposed 

nonbanking activities within the framework of Regulation Y and Board precedent is not likely to result in adverse 

effects, such as undue concentration of resources, decreased 

or unfair competition, conflicts of interests, or unsound 

banking practices, that would outweigh the public benefits 

of the proposal discussed above. Accordingly, based on all 

the facts of record, the Board has determined that the 

balance of the public-benefits factor that it must consider 

under section 4(j) of the BHC Act is consistent with 

approval of the proposal. 

Based on the foregoing, the Board has determined that 

the notice should be, and hereby is, approved(footnote 13 

The commenter requested that the Board hold a public meeting 

or hearing on the proposal. Section 4 of the BHC Act and the Board's 

rules thereunder provide for a hearing on a notice to acquire nonbanking companies if there are disputed issues of material fact that cannot 

be resolved in some other manner (12 CFR 225.25(a)(2)). Under its 

rules, the Board also may, in its discretion, hold a public meeting if 

appropriate to allow interested persons an opportunity to provide 

relevant testimony when written comments would not adequately 

present their views. The Board has considered carefully the 

commenter's request in light of all the facts of record. In the Board's view, the 

commenter had ample opportunity to submit its views, and, in fact, 

submitted written comments that the Board has considered carefully in 

acting on the proposal. The commenter's request fails to demonstrate 

why the written comments do not present its views adequately and 

fails to identify disputed issues of fact that are material to the Board's 

warranted decision these hearing indetermined that thisreasons, on would case. the andthat Accordingly, proposal be based a clarified public on s deniedmeeting all by the the a request public endfacts or hearing footnote)In ofmeeting for record, a public is or not the reachin hearing. required meeting Board For has or g

its conclusion, the Board has considered all the facts of 

record in light of the factors that it is required to consider 

under the BHC Act. The Board's approval is specifically 

conditioned on compliance by Notificants with the conditions imposed in this order and the commitments made to 

the Board in connection with the notice. The Board's 

approval is also subject to all the conditions set forth in 

Regulation Y, including those in sections 225.7 and 

225.25(c),(footnote 14 12 CFR 225.7 and 225.25(c) end footnote) 

and to the Board's authority to require such 

modification or termination of the activities of the Notificants or any of their subsidiaries as the Board finds 

necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's 

regulations and orders issued thereunder. For purposes of 

these actions, the conditions and commitments are deemed 

to be conditions imposed in writing by the Board in 

connection with its findings and decision and, as such, may 

be enforced in proceedings under applicable law. 

This transaction shall not be consummated later than 

three months after the effective date of this order unless 

such period is extended for good cause by the Board or the 

Federal Reserve Bank of New York, acting pursuant to 

delegated authority. 

By order of the Board of Governors, effective March 10, 

2006. 

Voting for this action: Chairman Bernanke and Governors Bies, 

Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice 

Chairman Ferguson. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Societe Generale 

Paris, France 

Order Approving Notice to Engage in 

Activities Complementary to a Financial 

Activity 

Societe Generale, a foreign bank that is treated as a 

financial holding company (''FHC'') for purposes of the 

Bank Holding Company Act (''BHC Act''),(footnote 1 ) 

has requested 

the Board's approval under section 4 of the BHC Act and 

the Board's Regulation Y to engage in physical commodity 
trading in the United States(footnote 2 12 U.S.C. § 1843; 

12 CFR Part 225 end footnote)Societe Generale currently 

conducts physical commodity trading and related activities 

outside the United States(footnote 3 Societe Generale will enter into physical commodity trades in the 

United States through its indirect, wholly owned non banking subsidiary, Societe Generale Energie (USA) Corp. (''SGE''), New York, New 

York. SGE currently engages in some physical commodities activities 

in the United States, pursuant to authority under Regulation K, that are 

related to the foreign physical commodities activities of its parent 

company, Societe Generale Energie (S.A.). 

See 12 CFR 211.23(f)(5) end footnote) 

Regulation Y authorizes a bank holding company 

(''BHC'') to engage as principal in derivative contracts 

based on financial and non financial assets (''Commodity 

Derivatives''). Under Regulation Y, a BHC may engage in 

such activities involving Commodity Derivatives subject to 

certain restrictions that are designed to limit the BHC' s 

activity to trading and investing in financial instruments 

rather than dealing directly in physical non financial commodities (''Permissible Commodity Derivatives Activities'' ). Under these restrictions, a BHC generally is not 

allowed to take or make delivery of non financial commodities underlying Commodity Derivatives. In addition, BHCs 

generally are not permitted to purchase or sell non financial 

commodities in the spot market. 

The BHC Act, as amended by the Gramm-Leach-Bliley 

Act (''GLB Act''), permits a BHC to engage in activities 

that the Board had determined were closely related to 

banking, by regulation or order, prior to November 12, 

1999(footnote 4 12 U.S.C. § 1843(c)(8) end footnote) 

The BHC Act permits an FHC to engage in a broad 

range of activities that are defined in the statute to be 

financial in nature(footnote 5 The Board determined 

by regulation before November 12, 1999, 

that engaging as principal in Commodity Derivatives Activities, 

subject to certain restrictions, was closely related to banking. Accordingly, engaging as principal in Permissible Commodity Derivatives 

Activities is a financial activity for purposes of the BHC Act. See 

12 U.S.C. § 1843(k)(4)(F) end footnote) 

Moreover, the BHC Act allows FHCs 

to engage in any activity that the Board determines, in 

consultation with the Secretary of the Treasury, to be 

financial in nature or incidental to a financial activity(footnote 

6 12 U.S.C. § 1843(k)(1)(A) end footnote) 

In addition, the BHC Act permits FHCs to engage in any 

activity that the Board (in its sole discretion) determines is 

complementary to a financial activity and does not pose a 

substantial risk to the safety or soundness of depository 

institutions or the financial system generally(footnote 

7 12 U.S.C. § 1843(k)(1)(B) end footnote)This authority is intended to allow the Board to permit FHCs to 

engage, on a limited basis, in an activity that appears to be 

commercial rather than financial in nature but that is 

meaningfully connected to a financial activity in a manner 

that complements the financial activity(footnote 8 

See 145 Cong. Rec. H11529 (daily ed. Nov. 4, 1999) (Statement 

of Chairman Leach) (''It is expected that complementary activities 

would not be significant relative to the overall financial activities of 

the organization.'') end footnote)The BHC Act 

provides that any FHC seeking to engage in a complementary activity must obtain the Board's prior approval under 

section 4(j) of the BHC Act(footnote 9 12 U.S.C. § 1843(j) end footnote) 

Societe Generale regularly engages in Permissible Commodity Derivatives Activities based on a variety of commodities and physical commodity transactions outside the 

United States and, through SGE, engages in limited physical commodities activities in the United States pursuant to 

authority under Regulation K(footnote 10 12 CFR 211.23(f)(5) 

end footnote) 

Societe Generale plans to 

expand its physical commodity transactions operations in 

the United States and, therefore, has requested that the 

Board permit it to engage in physical commodity trading 

activities in the United States involving commodities such 

as natural gas, crude oil, and electricity and to take and 

make delivery of physical commodities to settle Commodity Derivatives (''Commodity Trading Activities'')(footnote 11 

Societe Generale has committed that on receiving approval from 

the Board to conduct Commodity Trading Activities in the United 

States as an activity complementary to a financial activity, it will 

conduct such activities pursuant to section 4 authority only, consistent 

with the limitations placed by the Board on such activities end footnote)The 

Board previously has determined that Commodity Trading 

Activities involving a particular commodity complement 

the financial activity of engaging regularly as principal in 

Commodity Derivatives based on that commodity(footnote 12 

Deutsche Bank AG, 92 Federal Reserve Bulletin C54 (2006); 

JPMorgan Chase & Co., 92 Federal Reserve Bulletin C57 (2006); 

Barclays Bank PLC, 90 Federal Reserve Bulletin 511 (2004); UBS AG, 

90 Federal Reserve Bulletin 215 (2004); and Citigroup Inc., 89 Federal Reserve Bulletin 508 (2003). For example, Commodity Trading 

Activities involving all types of crude oil would be complementary to 

engaging regularly as principal in Commodity Derivatives based on 

Brent crude oil. end footnote)In 

light of the foregoing and all other facts of record, the 

Board believes that Commodity Trading Activities are 

complementary to the Permissible Commodity Derivatives 

Activities of Societe Generale. 

To authorize Societe Generale to engage in Commodity 

Trading Activities as a complementary activity under the 

GLB Act, the Board also must determine that the activities 

do not pose a substantial risk to the safety or soundness of 

depository institutions or the U.S. financial system generally(footnote 13 12 U.S.C. § 1843(k)(1)(B) end footnote) 

In addition, the Board must determine that the 

performance of Commodity Trading Activities by Societe 

Generale ''can reasonably be expected to produce benefits 

to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible 

adverse effects, such as undue concentration of resources, 

decreased or unfair competition, conflicts of interests, or 

unsound banking practices(footnote 14 12 U.S.C. § 1843(j)(2) 

(A) end footnote) 

Approval of the proposal would likely benefit Societe 

Generale's customers by enhancing Societe Generale's 

ability to provide efficiently a full range of commodityrelated services. Approving Commodity Trading Activities 

for Societe Generale also would enable it to improve its 

understanding of physical commodity and commodity derivatives markets and its ability to serve as an effective 

competitor in those markets. 
The Board has evaluated the financial resources of 

Societe Generale and its subsidiaries. Societe Generale's 

capital levels exceed the minimum levels that would be 

required under the Basel Capital Accord and are considered 

equivalent to the capital levels that would be required of a 

U.S. banking organization. 

Based on all the facts of record, the Board believes 

that Societe Generale has the managerial expertise and 

internal control framework to manage adequately the 

risks of taking and making delivery of physical commodities as proposed. The Board notes that Societe Generale 

has established and maintained policies for monitoring, 

measuring, and controlling the credit, market, settlement, 

reputational, legal, and operational risks involved in its 

Commodity Trading Activities. These policies address 

key areas, such as counterparty-credit risk, value-at-risk 

methodology, and internal limits with respect to commodity trading, new business and new product approvals, and 

identification of transactions that require higher levels of 

internal approval. The policies also describe critical internal control elements, such as reporting lines, and the 

frequency and scope of internal audits of Commodity 

Trading Activities. Societe Generale has integrated the 

risk management of Commodity Trading Activities into 

its overall risk-management framework. 

As a condition of this order, to limit the potential safety 

and soundness risks of Commodity Trading Activities, the 

market value of commodities held by Societe Generale as a 

result of Commodity Trading Activities must not exceed 

5 percent of Societe Generale's consolidated tier 1 capital 

(as calculated under its home country standard)(footnote 15 

Societe Generale would be required to include in this 5 percent limit the market value of any commodities it holds as a result of 

a failure of reasonable efforts to avoid taking delivery under section 225.28(b)(8)(ii)(B) of Regulation Y (12 CFR 225.28(b)(8)(ii)(B)). 

end footnote)Societe 

Generale also must notify the Federal Reserve Bank of 

New York if the market value of commodities held by 

Societe Generale as a result of its Commodity Trading 

Activities exceeds 4 percent of its tier 1 capital. 

In addition, Societe Generale may take and make delivery only of physical commodities for which derivative 

contracts have been authorized for trading on a U.S. futures 

exchange by the Commodity Futures Trading Commission 

(''CFTC'') (unless specifically excluded by the Board) or 

that have been specifically approved by the Board(footnote 16 

The particular commodity derivative contract that Societe 

Generale takes to physical settlement need not be exchange traded, but 

(in the absence of specific Board approval) futures or options on 

futures on the commodity underlying the derivative contract must have 

been authorized for exchange trading by the CFTC. 

The CFTC publishes annually a list of CFTC-authorized commodity contracts. See Commodity Futures Trading Commission, FY 2004 

Annual Report to Congress 109. With respect to granularity, the Board 

intends this requirement to permit Commodity Trading Activities 

involving all types of a listed commodity. For example, Commodity 

Trading Activities involving any type of coal or coal derivative 

contract would be permitted, even though the CFTC has authorized 

only Central Appalachian coal end footnote)This 

requirement is designed to prevent Societe Generale from 

becoming involved in dealing in finished goods and other 

items, such as real estate, that lack the fungibility and 

liquidity of exchange-traded commodities. 

To minimize the exposure of Societe Generale to additional risks, including storage, transportation, legal, and 

environmental risks, Societe Generale would not be authorized (i) to own, operate, or invest in facilities for the 

extraction, transportation, storage, or distribution of commodities; or (ii) to process, refine, store, or otherwise alter 

commodities in the United States. In conducting its Commodity Trading Activities, Societe Generale has committed 

to use appropriate storage and transportation facilities 

owned and operated by third parties(footnote 17 

Approving Commodity Trading Activities 

as a complementary 

activity, subject to limits and conditions, 

would not in any way restrict 

the existing authority of Societe Generale 

to deal in foreign exchange, 

precious metals, or any other bankeligible commodity end footnote) 

Societe Generale and its Commodity Trading Activities 

also remain subject to the general securities, commodities, 

and energy laws and the rules and regulations (including 

the antifraud and anti manipulation rules and regulations) of 

the Securities and Exchange Commission, the CFTC, and 

the Federal Energy Regulatory Commission. 

Permitting Societe Generale to engage in the limited 

amount and types of Commodity Trading Activities described above, on the terms described in this order, would 

not appear to pose a substantial risk to Societe Generale, 

depository institutions, or the U.S. financial system generally. Through its existing authority to engage in Permissible 

Commodity Derivatives Activities, Societe Generale already may incur the price risk associated with commodities. Permitting Societe Generale to buy and sell commodities in the spot market or physically settle Commodity 

Derivatives would not appear to increase significantly its 

potential exposure to commodity-price risk. 

For these reasons, and based on Societe Generale's 

policies and procedures for monitoring and controlling the 

risks of Commodity Trading Activities, the Board concludes that consummation of the proposal would not pose a 

substantial risk to the safety or soundness of depository 

institutions or the financial system generally and can 

reasonably be expected to produce benefits to the public 

that would outweigh any potential adverse effects. 

Based on all the facts of record, including the representations and commitments made to the Board by Societe 

Generale in connection with the notice, and subject to the 

terms and conditions set forth in this order, the Board has 

determined that the notice should be, and hereby is, approved. The Board' s determination is subject to all the 

conditions set forth in Regulation Y, including those in 

section 225.7,(footnote 18 12 CFR 225.7 end footnote) 

and to the Board's authority to require 

modification or termination of the activities of a BHC or 

any of its subsidiaries as the Board finds necessary to 

ensure compliance with, or to prevent evasion of, the 

provisions and purposes of the BHC Act and the Board's 

regulations and orders issued thereunder. The Board's 

decision is specifically conditioned on compliance with all 

the commitments made to the Board in connection with the 
notice, including the commitments and conditions discussed in this order. The commitments and conditions 

relied on in reaching this decision shall be deemed to be 

conditions imposed in writing by the Board in connection 

with its findings and decision and, as such, may be enforced 

in proceedings under applicable law. 

By order of the Board of Governors, effective March 15, 

2006. 

Voting for this action: Chairman Bernanke and Governors Bies, 

Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice 

Chairman Ferguson. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

ORDERS ISSUED UNDER SECTIONS 3 AND 

4 OF THE BANK HOLDING COMPANY ACT 

BB&T Corporation 

Winston-Salem, North Carolina 

Order Approving the Merger of Bank 

Holding Companies 

BB&T Corporation (''BB&T''), a financial holding company within the meaning of the Bank Holding Company 

Act (''BHC Act''), has requested the Board's approval 

under section 3 of the BHC Act(footnote 1 12 U.S.C. 

§ 1842 end footnote)to acquire Main Street 

Banks, Inc. (''Main Street''), Atlanta, and its subsidiary 

bank, Main Street Bank, Covington, both of Georgia. 

BB&T also has requested the Board's approval under 

sections 4(c)(8) and 4(j) of the BHC Act(footnote 2 12 U.S.C. 

§§ 1843(c)(8) and 1843(j) end footnote)and section 225.28(b)(14) of the Board's Regulation Y(footnote 3 

12 CFR 225.28(b)(14) end footnote)to acquire 

Main Street's subsidiary, MSB Payroll Solutions, LLC 

(''MSB Data''), Alpharetta, Georgia, and thereby engage in 

permissible data-processing activities(footnote 4 In addition, 

BB&T proposes to acquire Main Street's non banking 

insurance agency and underwriting subsidiary in accordance with 

section 4(k) of the BHC Act (12 U.S.C. § 1843(k)) end footnote) 

Notice of the proposal, affording interested persons an 

opportunity to submit comments, has been published in the 

Federal Register (71 Federal Register 3094 (2006)). The 

time for filing comments has expired, and the Board has 

considered the application and notice and all comments 

received in light of the factors set forth in sections 3 and 4 

of the BHC Act. 

BB&T, with total consolidated assets of approximately 

$109.2 billion, is the 17th largest depository organization in 

the United States(footnote 5 Asset and nationwide ranking data 

are as of December 31, 2005. 

Statewide deposit and ranking data are as of June 30, 2005, and reflect 

merger activity through February 24, 2006. In this context, insured 

depository institutions include commercial banks, savings banks, and 

savings associations. end footnote)BB&T operates subsidiary insured 

depository institutions in Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, North Carolina, Tennessee, West 

Virginia, and the District of Columbia. In Georgia, BB&T 

is the sixth largest depository organization, controlling 

deposits of $4.7 billion, which represent 3.2 percent of the 

total amount of deposits of insured depository institutions 

in the state (''state deposits''). 

Main Street, with total consolidated assets of approximately $2.4 billion, operates one depository institution, 

Main Street Bank, which has branches only in Georgia. 

Main Street Bank is the ninth largest insured depository 

institution in Georgia, controlling deposits of $1.7 billion, 

which represent approximately 1.2 percent of state 

deposits. 

On consummation of this proposal, BB&T would remain 

the 17th largest insured depository organization in the 

United States, with total consolidated assets of approximately $111.9 billion. BB&T would become the fifth 

largest depository organization in Georgia, controlling 

deposits of approximately $6.3 billion, which represent 

approximately 4.3 percent of state deposits(footnote 6 

Branch Banking and Trust Company (''BB&T Bank''), WinstonSalem, North Carolina, a subsidiary bank of BB&T, has received 

approval from the Federal Deposit Insurance Corporation (''FDIC'') to 

merge with Main Street Bank, with BB&T Bank as the survivor. 

BB&T has indicated that it anticipates consummating that merger 

approximately four months after acquiring Main Street. end footnote) 

INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the bank 

holding company' s home state if certain conditions are 

met. For purposes of the BHC Act, the home state of BB&T 

is North Carolina(footnote 7 A bank holding company's home 

state is the state in which the 

total deposits of all banking subsidiaries 

of such company were the 

largest on July 1, 1966, or the date 

on which the company became a 

bank holding company, whichever is 

later (12 U.S.C. § 1841(o)(4)(C)) 

end footnote)and Main Street Bank is located in 

Georgia(footnote 8 For purposes of section 3(d) of the 

BHC Act, the Board considers 

a bank to be located in the states in which the bank is chartered, 

headquartered, or operates a branch. See 

12 U.S.C. §§ 1841(o)(4)-(7) 

and 1842(d)(1)(A) and (d)(2)(B) end footnote) 

Based on a review of all the facts of record, including 

relevant state statutes, the Board finds that all conditions 

for an interstate acquisition enumerated in section 3(d) of 

the BHC Act are met in this case9footnote 9 See 12 U.S.C. 

§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and 

(B). BB&T is adequately capitalized and adequately managed, as 

defined by applicable law. Main Street Bank has been in existence and 

operated for the minimum period of time required by applicable state 

law (three years). See Ga. Code Ann. § 7-1-608(a)(2). On consummation of the proposal, BB&T would control less than 10 percent of the 

total amount of deposits of insured depository institutions (''total 

deposits'') in the United States. BB&T would also control less than 

30 percent of total deposits in Georgia. All other requirements of 

section 3(d) would be met on consummation 

of the proposal end footnote) 

In light of all the facts of 

record, the Board is permitted to approve the proposal under this provision. 
COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act prohibits the Board from 

approving a proposal that would result in a monopoly or 

would be in furtherance of an attempt to monopolize the 

business of banking in any relevant banking market. The 

BHC Act also prohibits the Board from approving a bank 

acquisition that would substantially lessen competition in 

any relevant banking market, unless the anticompetitive 

effects of the proposal are clearly outweighed in the public 

interest by the probable effect of the proposal in meeting 

the convenience and needs of the community to be served 

(footnote 10 12 U.S.C. § 1842(c)(1) end footnote) 

BB&T and Main Street compete directly in the Atlanta 

Area and the Athens Area banking markets in Georgia 

(footnote 11 These banking markets are described in Appendix A. end footnote) 

The Board has reviewed carefully the competitive effects of 

the proposal in both banking markets in light of all the facts 

of record. In particular, the Board has considered the 

number of competitors that would remain in the markets, 

the relative shares of total deposits in depository institutions in the markets (''market deposits'') controlled by 

BB&T and Main Street,(footnote 12 Deposit and market 

share data are as of June 30, 2005, and are 

based on calculations in which the deposits of thrift institutions are 

included at 50 percent. The Board previously has indicated that thrift 

institutions have become, or have the potential to become, significant 

competitors of commercial banks. See, e.g., Midwest Financial Group, 

75 Federal Reserve Bulletin 386, 387 (1989); National City Corporation, 70 Federal Reserve Bulletin 743, 744 (1984). Thus, the Board 

regularly has included thrift deposits in the market share calculation on 

a 50 percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal 

Reserve Bulletin 52, 55 (1991) end footnote)the concentration 

level of market 

deposits and the increase in this level as measured by the 

Herfindahl-Hirschman Index (''HHI'') under the Department of Justice Merger Guidelines (''DOJ Guidelines''), 

(footnote 13 Under the DOJ Guidelines, 

a market is considered unconcentrated if the post-merger HHI 

is under 1000, moderately concentrated 

if the post-merger HHI is between 1000 and 1800, and highly 

concentrated if the post-merger HHI exceeds 1800. The Department of 

Justice (''DOJ'') has informed the Board that a bank merger or 

acquisition generally will not be challenged (in the absence of other 

factors indicating anticompetitive effects) unless the post-merger HHI 

is at least 1800 and the merger increases the HHI more than 200 

points. The DOJ has stated that the higher than normal HHI thresholds 

for screening bank mergers and acquisitions for anticompetitive effects 

implicitly recognize the competitive effects of limited-purpose and 

other non depository financial entities end footnote) 

and other characteristics of the markets. 

Consummation of the proposal would be consistent with 

Board precedent and within the thresholds in the DOJ 

Guidelines in both banking markets. After consummation, 

each market would remain unconcentrated, as measured by 

the HHI. In addition, the increase in concentration would 

be small, and numerous competitors would remain in each 

market(footnote 14 The effect of the proposal on the 

concentration of banking 

resources in each market is described in Appendix B end footnote) 

The DOJ also has reviewed the anticipated competitive 

effects of the proposal and has advised the Board that 

consummation of the transaction likely would not have a 

significantly adverse effect on competition in any relevant 

banking market. In addition, the appropriate banking agencies have been afforded an opportunity to comment and 

have not objected to the proposal. 

Based on all the facts of record, the Board concludes that 

consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in the Atlanta Area or Athens Area 

banking markets or in any other relevant banking market. 

Accordingly, the Board has determined that competitive 

considerations are consistent with approval. 

FINANCIAL, MANAGERIAL, AND SUPERVISORY 

CONSIDERATIONS 

Section 3 of the BHC Act requires the Board to consider the 

financial and managerial resources and future prospects of 

the companies and depository institutions involved in the 

proposal and certain other supervisory factors. The Board 

has considered these factors in light of all the facts of 

record, including confidential reports of examination and 

other supervisory information received from the federal 

and state supervisors of the organizations involved, publicly reported and other financial information, information 

provided by BB&T, and public comments received on the 

proposal(footnote 15 A commenter expressed concern 

about BB&T's relationships 

with unaffiliated pawn shops and other non traditional providers of 

financial services. As a general matter, the activities of the consumer 

finance businesses identified by the commenter are permissible, and 

the businesses are licensed by the states where they operate. BB&T 

has stated that it does not focus on marketing credit services to such 

non traditional providers and that it makes loans to those firms under 

the same terms, circumstances, and due diligence procedures applicable to BB&T's other small business borrowers. BB&T has also 

represented that it does not play any role in the lending practices, 

credit review, or other business practices of those firms end footnote) 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non banking 

operations. The Board considers a variety of factors in this 

evaluation, including capital adequacy, asset quality, and 

earnings performance. In assessing financial factors, the 

Board consistently has considered capital adequacy to be 

especially important. The Board also evaluates the financial 

condition of the combined organization at consummation, 

including its capital position, asset quality, and earnings 

prospects, and the impact of the proposed funding of the 

transaction. 

The Board has carefully considered the proposal under 

the financial factors. BB&T, all its subsidiary banks, and 

Main Street Bank are well capitalized and would remain so 

on consummation of the proposal. Based on its review of 

the record, the Board finds that BB&T has sufficient 

financial resources to effect the proposal. The proposed 

transaction is structured as a share exchange. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 
organization. The Board has reviewed the examination 

records of BB&T, Main Street, and their subsidiary banks, 

including assessments of their management, riskmanagement systems, and operations. In addition, the 

Board has considered its supervisory experiences and those 

of the other relevant banking supervisory agencies with the 

organizations and their records of compliance with applicable banking law. BB&T, Main Street, and their subsidiary 

depository institutions are considered to be well managed. 

The Board also has considered BB&T's plans for implementing the proposal, including the proposed management 

after consummation. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposal are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on a proposal under section 3 of the BHC Act, the 

Board also must consider the effects of the proposal on the 

convenience and needs of the communities to be served and 

take into account the records of the relevant insured 

depository institutions under the Community Reinvestment 

Act (''CRA'')(footnote 16 12 U.S.C. § 2901 etseq.; 

12 U.S.C. § 1842(c)(2). end footnote)The CRA requires 

the federal financial 

supervisory agencies to encourage insured depository institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and 

sound operation, and requires the appropriate federal financial supervisory agency to take into account a relevant 

depository institution' s record of meeting the credit needs 

of its entire community, including low- and moderateincome (''LMI'') neighborhoods, in evaluating bank expansionary proposals(footnote 17 12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including evaluations of the CRA performance 

records of BB&T's subsidiary banks and Main Street Bank, 

data reported by BB&T under the Home Mortgage Disclosure Act (''HMDA''),(footnote 

12 U.S.C. § 2801 etseq end footnote)other information provided by 

BB&T, confidential supervisory information, and public 

comment received on the proposal. A commenter opposed 

the proposal and alleged, based on 2004 HMDA data, that 

BB&T engaged in discriminatory treatment of minority 

individuals in its home mortgage lending. 

A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations 

by the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution' s most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution' s overall record of performance under the CRA by its appropriate federal 

supervisor(footnote 19 

See Interagency Questions and Answers Regarding Community 

Reinvestment, 66 Federal Register 36,620, 36,640 (2001) end footnote) 

BB&T's largest subsidiary bank, as measured by total 

deposits, is BB&T Bank(footnote 20 

As of December 31, 2005, BB&T Bank accounted for approximately 67.2 percent of the total domestic deposits of BB&T's four 

subsidiary banks end footnote)The bank received an ''outstanding'' rating by the FDIC, at its most recent CRA performance evaluation, as of December 20, 2004. BB&T's 

remaining subsidiary banks all received ''satisfactory'' 

ratings at their most recent CRA evaluations(footnote 21 

Appendix C lists the most recent CRA ratings of BB&T's other 

subsidiary banks end footnote)Main Street 

Bank received a ''satisfactory'' rating at its most recent 

CRA performance evaluation by the FDIC, as of December 14, 2004. BB&T has represented that its CRA and 

consumer compliance programs would be implemented at 

the operations acquired from Main Street after the merger 

of BB&T Bank and Main Street Bank. 

B. HMDA and Fair Lending Record 

The Board has carefully considered the lending record and 

HMDA data of BB&T in light of public comment about its 

record of lending to minorities. A commenter alleged, 

based primarily on 2004 HMDA data, that BB&T had 

disproportionately denied applications for HMDAreportable loans by African-American and Latino applicants. The commenter also asserted that BB&T made 

higher-cost loans(footnote 22 Beginning January 1, 2004, 

the HMDA data required to be 

reported by lenders were expanded to include pricing information for 

loans on which the annual percentage rate (APR) exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 or more percentage 

points for first-lien mortgages and 5 or more percentage points for 

second-lien mortgages (12 CFR 203.4) end footnote)more 

frequently to African Americans 

and Latinos than to nonminorities(footnote 23 

The commenter also expressed concern about referrals of loan 

applicants to Lendmark Financial Services (''LFS''), a non bank 

subsidiary of BB&T that makes sub prime loans. BB&T has represented that it might refer to LFS applications denied by a BB&T 

subsidiary bank that do not meet the bank's underwriting guidelines. 

Before making a referral, however, these applications undergo an 

internal second-review procedure. In addition, BB&T notes that LFS 

has a policy to refer applicants who meet the Freddie Mac underwriting guidelines to BB&T's subsidiary banks end footnote) 

The Board has analyzed the 2004 HMDA data reported by BB&T's subsidiary 

banks in the Metropolitan Statistical Areas (''MSAs'') of 

Atlanta-Sandy Springs-Marietta, Charlotte-GastoniaConcord, Durham, Raleigh-Cary, Washington-ArlingtonAlexandria, and Winston-Salem; and in their assessment 

areas statewide in Georgia, Kentucky, Maryland, and North 

Carolina(footnote 24 

In addition, the Board analyzed 2004 HMDA data reported by 

LFS in the Charlotte-Gastonia-Concord MSA and statewide in North 

Carolina end footnote) 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 
groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

BB&T or its subsidiaries are excluding or imposing higher 

costs on any racial or ethnic group on a prohibited basis. 

The Board recognizes that HMDA data alone, even with 

the recent addition of pricing information, provide only 

limited information about the covered loans(footnote 25 The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, 

therefore, have limitations that make them an inadequate 

basis, absent other information, for concluding that an 

institution has engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA data 

for an institution indicate disparities in lending and believes 

that all lending institutions are obligated to ensure that their 

lending practices are based on criteria that ensure not only 

safe and sound lending but also equal access to credit by 

creditworthy applicants regardless of their race. Because of 

the limitations of HMDA data, the Board has considered 

these data carefully and taken into account other information, including examination reports that provide on-site 

evaluations of compliance by BB&T's subsidiary banks 

with fair lending laws. In the fair lending reviews that were 

conducted in conjunction with the most recent CRA performance evaluations of those banks, examiners noted no 

substantive violations of applicable fair lending laws. 

The record also indicates that BB&T has taken steps to 

ensure compliance with fair lending and other consumer 

protection laws. BB&T employs an internal second-review 

process for home loan applications that would otherwise be 

denied and analyzes its HMDA data periodically. Furthermore, BB&T monitors its compliance with fair lending 

laws by analyzing disparities in its rates of lending for 

select products and markets, and by conducting a more 

extensive internal comparative file review when merited. 

Finally, BB&T provides fair lending training to its lending 

personnel, including training to help ensure that loan 

originators consistently disseminate credit-assistance information to applicants. 

The Board also has considered the HMDA data in light 

of other information, including the CRA performance 

records of each of BB&T's subsidiary banks. Their established efforts and records demonstrate that BB&T is 

active in helping to meet the credit needs of its entire 

communities. 

C. Conclusion on CRA Performance Records 

The Board has carefully considered all the facts of record, 

including reports of examination of the CRA records of the 

institutions involved, information provided by BB&T, comments received on the proposal, and confidential supervisory information. BB&T represented that the proposed 

transaction would provide Main Street customers with 

expanded products and services. Based on a review of the 

entire record, and for the reasons discussed above, the 

Board concludes that considerations relating to the convenience and needs factor and the CRA performance records 

of the relevant depository institutions are consistent with 

approval. 

NONBANKING ACTIVITIES 

As noted, BB&T also has filed a notice under sections 4(c)(8) and 4(j) of the BHC Act to engage in 

data-processing activities through the acquisition of MSB 

Data, which provides payroll services to small businesses. 

The Board has determined by regulation that financial and 

banking data-processing activities are permissible for a 

bank holding company under Regulation Y, 

(footnote 26 12 CFR 225.28(b)(14) end footnote) and BB&T 

has committed to conduct these activities in accordance 

with the limitations set forth in Regulation Y and the 

Board's orders governing these activities. 

To approve this notice, the Board must also determine 

that the performance of the proposed activities by BB&T 

'' can reasonably be expected to produce benefits to the 

public . . . that outweigh possible adverse effects, such as 

undue concentration of resources, decreased or unfair 

competition, conflicts of interests, or unsound banking 

practices.'(footnote 27 See 12 U.S.C. § 1843(j)(2)(A) end footnote) 

As part of its evaluation of these factors, the 

Board has considered the financial and managerial resources 

of BB&T and Main Street and their subsidiaries, and the 

effect of the proposed transaction on their resources. For 

the reasons noted above, and based on all the facts of 

record, the Board has concluded that financial and managerial considerations are consistent with approval of the 

notice. 

The Board also has carefully considered the competitive 

effects of BB&T's proposed acquisition of MSB Data in 

light of all the facts of record. BB&T and Main Street both 

engage in activities related to data processing. The market 

for the activity is regional or national in scope and 

unconcentrated. The record in this case also indicates that there 

are numerous providers of these services. Accordingly, the 

Board concludes that BB&T's acquisition of MSB Data 

would not have a significantly adverse effect on competition in any relevant market. 

The acquisition of MSB Data by BB&T would benefit 

the public by allowing BB&T to offer expanded payroll 

products and services to customers in the Atlanta area. 

After consummation, BB&T intends to merge MSB Data 

with and into BB&T's data-processing subsidiary, BB&T 

Payroll Services, Inc. BB&T represented that this merger 

would provide customers of MSB Data with access to 

BB&T' s more advanced technology and software systems 

on which to run their payroll systems and expanded support 

for the payroll services that are offered. Customers also 
would have access to additional payroll products and 

services, such as payroll cards and a secure online payroll 

service. 

The Board concludes that the conduct of the proposed 

non banking activities within the framework of Regulation Y and Board precedent can reasonably be expected to 

produce public benefits that would outweigh any likely 

adverse effects. Accordingly, based on all the facts of 

record, the Board has determined that the balance of the 

public benefits factor under section 4(j)(2) of the BHC Act 

is consistent with approval(footnote 28 

A commenter asserted that the Board should, in the context of 

the current proposal, review BB&T's recently announced plans to 

acquire the assets of FSB Financial Ltd. (''FSB''), Arlington, Texas, a 

non banking company that purchases automobile-loan portfolios. The 

FSB acquisition is not related to the current proposal. Moreover, if the 

FSB acquisition is consummated under authority of section 4(k) of the 

BHC Act, the acquisition would not require prior approval of the 

Federal Reserve System. BB&T would require prior Federal Reserve 

System approval if the acquisition were proposed under sections 4(c)(8) and 4(j) of the BHC Act, and the transaction would be 

reviewed in light of the requirements and standards discussed above end footnote) 

CONCLUSION 

Based on the foregoing and all facts of record, the Board 

has determined that the application and notice should be, 

and hereby are, approved(footnote 29 

A commenter requested that the Board hold a public hearing or 

meeting on the proposal. Section 3 of the BHC Act does not require the 

Board to hold a public hearing on an application unless the appropriate 

supervisory authority for any of the banks to be acquired makes a 

timely written recommendation of denial of the application. The Board 

has not received such a recommendation from any supervisory authority. The Board's regulations provide for a hearing under section 4 of 

the BHC Act if there are disputed issues of material fact that cannot be 

resolved in some other manner (12 CFR 225.25(a)(2)). Under its rules, 

the Board also may, in its discretion, hold a public meeting or hearing 

on an application to acquire a bank if a meeting or hearing is necessary 

or appropriate to clarify factual issues related to the application and to 

provide an opportunity for testimony (12 CFR 225.16(e)). The Board 

has considered carefully the commenter's request in light of all the 

facts of record. In the Board's view, the commenter had ample 

opportunity to submit comments on the proposal and, in fact, submitted written comments that the Board has considered carefully in acting 

on the proposal. The request fails to identify disputed issues of fact 

that are material to the Board's decision that would be clarified by a 

public meeting or hearing. Moreover, the commenter's request fails to 

demonstrate why its written comments do not present its views 

adequately or why a meeting or hearing otherwise would be necessary 

or appropriate. For these reasons, and based on all the facts of record, 

the Board has determined that a public hearing or meeting is not 

required or warranted in this case. Accordingly, the request for a public 

hearing or meeting on the proposal is denied end footnote) 

In reaching its conclusion, the 

Board has considered all the facts of record in light of the 

factors that it is required to consider under the BHC Act. 

The Board's approval is specifically conditioned on compliance by BB&T with the conditions imposed in this order 

and the commitments made to the Board in connection with 

the application and notice. The Board's approval of the 

non banking aspects of the proposal is also subject to all the 

conditions set forth in Regulation Y, including those in 

sections 225.7 and 225.25(c),30 and to the Board's authority 

to require such modification or termination of the activities 

of the bank holding company or any of its subsidiaries as 

the Board finds necessary to ensure compliance with, and 

to prevent evasion of, the provisions of the BHC Act and 

the Board's regulations and orders issued thereunder. For 

purposes of this action, the conditions and commitments 

are deemed to be conditions imposed in writing by the 

Board in connection with its findings and decision herein 

and, as such, may be enforced in proceedings under 

applicable law. 

The proposed banking acquisitions may not be consummated before the 15th calendar day after the effective date 

of this order, and no part of the proposal may be consummated later than three months after the effective date of this 

order, unless such period is extended for good cause by the 

Board or the Federal Reserve Bank of Richmond, acting 

pursuant to delegated authority. 

By order of the Board of Governors, effective March 27, 

2006. 

Voting for this action: Chairman Bernanke and Governors Bies, 

Olson, Kohn, Warsh, and Kroszner. Absent and not voting: Vice 

Chairman Ferguson. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix A 

GEORGIA BANKING MARKETS IN WHICH BB&T 

AND MAIN STREET COMPETE DIRECTLY 

Athens Area 

Clarke, Jackson, Madison, Oconee, and Oglethorpe counties; and Barrow County, excluding the cities of Auburn 

and Winder. 

Atlanta Area 

Bartow, Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, 

Paulding, Rockdale, and Walton counties; Hall County, 

excluding the town of Clermont; the towns of Auburn and 

Winder in Barrow County; and the town of Luthersville in 

Meriwether County. 

Appendix B 

MARKET DATA FOR GEORGIA BANKING 

MARKETS 

Athens Area 

BB&T operates the 17th largest depository institution in 

the Athens Area banking market, controlling deposits of 

$47.4 million, which represent 1.5 percent of market 

deposits. Main Street operates the 11th largest depository 
institution in the market, controlling deposits of approximately $106.9 million, which represent 3.3 percent of 

market deposits. After consummation of the proposal, 

BB&T would become the eighth largest depository organization in the market, controlling deposits of approximately 

$154.3 million, which represent approximately 4.8 percent 

of market deposits. The HHI would increase 10 points, to 

888. Twenty-two bank and thrift competitors would remain 

in the banking market. 

Atlanta Area 

BB&T operates the sixth largest depository institution in 

the Atlanta Area banking market, controlling deposits of 

$2.1 billion, which represent 2.4 percent of market deposits. Main Street operates the seventh largest depository 

institution in the market, controlling deposits of approximately $1.6 billion, which represent 1.8 percent of market 

deposits. After consummation of the proposal, BB&T 

would become the fifth largest depository organization in 

the market, controlling deposits of approximately $3.7 billion, which represent approximately 4.1 percent of market 

deposits. The HHI would increase 8 points, to 1557. One 

hundred and eight bank and thrift competitors would 

remain in the banking market. 

Appendix C 

CRA PERFORMANCE EVALUATIONS OF BB&T'S BANKS 

Heading row column 1Bank column 2 CRA Rating 

column 3 Date column 4 Supervisor end heading row 

Branch Banking and Trust Company,Winston-Salem, 

North Carolina CRA Rating:Outstanding Date:December 2004 

Supervisor:FDIC 

Branch Banking and Trust Company of South Carolina 

Greenville, South Carolina CRA Rating:Satisfactory 

Date:December 2004 Supervisor:FDIC 

Branch Banking and Trust Company of Virginia,Richmond, 

Virginia CRA Rating:Satisfactory Date:December 2004 

Supervisor:FDIC 

BB&T Bankcard Corporation,Columbus, Georgia 

CRA Rating:Satisfactory Date:May 2005 Supervisor:FDIC 

Marshall & Ilsley Corporation 

Milwaukee, Wisconsin 

Order Approving the Merger of Bank 

Holding Companies 

Marshall & Ilsley Corporation (''M&I''), a financial holding company within the meaning of the Bank Holding 

Company Act (''BHC Act''), has requested the Board's 

approval under section 3 of the BHC Act(footnote 1 

12 U.S.C. § 1842 end footnote)to acquire Gold 

Banc Corporation, Inc. (''Gold Banc'') and its subsidiary 

bank, Gold Bank, both of Leawood, Kansas(footnote 2 

The Board also approved today a separate application by M&I to 

acquire Trustcorp Financial, Inc., St. Louis, and its subsidiary bank, 

Missouri State Bank and Trust Company, Clayton, both of Missouri, 

under section 3 of the BHC Act. See Marshall & Ilsley Corporation, 

92 Federal Reserve Bulletin C79 (2006). end footnote)M&I also has 

requested the Board' s approval under sections 4(c)(8) and 

4(j) of the BHC Act(footnote 3 12 U.S.C. §§4(c)(8) and 4(j). 

end footnote)and sections 225.28(b)(5), (b)(6), 

(b)(7), and (b)(8) of the Board's Regulation Y(footnote 

4 12 CFR 225.28 (b)(5)-(b)(8) end footnote)to acquire 

the non banking subsidiaries of Gold Banc and thereby 

engage in permissible investment advisory, securities brokerage, underwriting, and trust activities. In addition, 

M&I's subsidiary bank, M&I Marshall & Ilsley Bank 

(''M&I Bank''), Milwaukee, Wisconsin, a state member 

bank, has requested the Board's approval under 

section 18(c) of the Federal Deposit Insurance Act (''Bank 

Merger Act'')(footnote 5 12 U.S.C. § 1828(c) end footnote) 

to merge with Gold Bank, with M&I Bank 

as the surviving entity. M&I Bank has also applied under 

section 9 of the Federal Reserve Act (''FRA'') to establish 

and operate branches at Gold Bank's main office and 

branch locations(footnote 6 12 U.S.C. §§321 and 1831u. 

These branches are listed in the 

appendix. end footnote) 

Notice of the proposals, affording interested persons an 

opportunity to submit comments, has been published in the 

Federal Register (70 Federal Register 72,433 (2005)) and 

in local newspapers in accordance with relevant statutes 

and the Board' s Rules of Procedure(footnote 7 12 CFR 262.3(b) 

end footnote)As required by the 

BHC Act and the Bank Merger Act, reports on the competitive effects of the mergers were requested from the United 

States Attorney General and the appropriate banking agencies. The time for filing comments has expired, and the 

Board has considered the applications and notice and all 

comments received in light of the factors set forth in 

sections 3 and 4 of the BHC Act, the Bank Merger Act, and 

the FRA. 

M&I, with total consolidated assets of approximately 

$46.3 billion, operates four subsidiary insured depository 

institutions in Arizona, Florida, Illinois, Minnesota, Missouri, Nevada, and Wisconsin. In Wisconsin, M&I is the 

largest depository organization, controlling deposits of 

approximately $18.3 billion, which represent 18.1 percent 
of the total amount of deposits of insured depository 

institutions in the state (''state deposits'')(footnote 8 

Asset data are as of December 31, 2005. State deposit and ranking 

data are as of June 30, 2005, and reflect merger activity through 

January 23, 2006. In this context, insured depository institutions 

include commercial banks, savings banks, 

and savings associations. end footnote)In Florida, M&I 

is the 287th largest depository organization, controlling 

deposits of approximately $37 million, which represent less 

than 1 percent of state deposits. In Missouri, M&I is the 

ninth largest depository organization, controlling deposits 

of approximately $1.6 billion, which represent 1.7 percent 

of state deposits. 

Gold Banc, with total consolidated assets of approximately $4.2 billion, operates one depository institution, 

Gold Bank, which has branches in Florida, Kansas, Missouri, and Oklahoma. Gold Banc is the fifth largest depository organization in Kansas, controlling deposits of approximately $1.5 billion, which represent 3.1 percent of 

state deposits. In Florida, Gold Banc is the 44th largest 

depository organization, controlling deposits of approximately $829 million. In Missouri, Gold Banc is the 36th 

largest depository organization, controlling deposits of 

approximately $394.4 million. 

On consummation of the proposals, M&I would have 

consolidated assets of $50.5 billion. In Florida, M&I would 

become the 42nd largest depository organization, controlling deposits of $866 million, which represent less than 

1 percent of state deposits. In Missouri, M&I would 

become the seventh largest depository organization, controlling deposits of $2 billion, which represent 2.2 percent 

of state deposits. 

INTERSTATE ANALYSIS 

Section 3(d) of the BHC Act allows the Board to approve 

an application by a bank holding company to acquire 

control of a bank located in a state other than the home state 

of such bank holding company if certain conditions are 

met(footnote 9 12 U.S.C. § 1842(d) end footnote) 

For purposes of the BHC Act, the home state of M&I 

is Wisconsin,(footnote 10 

Under section 3(d) of the BHC Act, a bank holding company's 

home state is the state in which the total deposits of all subsidiary 

banks of the company were the largest on July 1, 1966, or the date on 

which the company became a bank holding company, whichever is 

later (12 U.S.C. § 1841(o)(4)(C)). end footnote) 

and Gold Bank is located in Florida, 

Kansas, Missouri, and Oklahoma(footnote 11 

For purposes of section 3(d) of the BHC Act, the Board 

considers a bank to be located in states in which the bank is 

headquartered or operates a branch. See 12 U.S.C. §§ 1841(o)(4)-(7) 

and 1842(d)(1)(A)-(d)(2)(B) end footnote) 

Section 44 of the Federal Deposit Insurance Act (''FDI 

Act'') authorizes banks with different home states to merge 

under certain conditions unless, before June 1, 1997, the 

home state of one of the banks involved in the transaction 

adopted a law expressly prohibiting merger transactions 

involving out-of-state banks(footnote 12 12 U.S.C. § 1831u.12 

U.S.C. § 1831u. end footnote)For purposes of section 44 

of the FDI Act, the home state of M&I Bank is Wisconsin, 

and the home state of Gold Bank is Kansas(footnote 13 

Under section 44 of the FDI Act, a state member bank's home 

state is the state where it is chartered (12 U.S.C. § 1831u(g)(4)) 

end footnote)Neither 

Wisconsin nor Kansas has a law prohibiting merger transactions involving out-of-state banks applicable to the 

proposals(footnote 14 In 1997, the Kansas State 

bank commissioner issued an order 

specifically authorizing Kansas banks to engage in interstate merger 

transactions. See State of Kan. State Bank Comm'r, Special Order 

1997-2, (May 30, 1997) end footnote) 

Based on a review of all the facts of record, including a 

review of relevant state statutes, the Board finds that all 

conditions for an interstate acquisition enumerated in section 3(d) of the BHC Act and section 44 of the FDI Act are 

met in this case(footnote 15 12 U.S.C. §§ 1842(d)(1)(A)-(B), 

1842(d)(2)(A)-(B); 12 U.S.C. 

§ 1831u(a)-(b). M&I and M&I Bank are adequately capitalized and 

adequately managed, as defined by applicable law. Gold Bank has 

been in existence and operated for the minimum period of time 

required by applicable state law. See Fla. Stat. §628.295 (three years); 

Kan. Stat. Ann. § 9-541 (five years); and Mo. Rev. Statutes § 362.077 

(five years). Oklahoma does not have a minimum age requirement 

applicable to the proposals. On consummation of the proposals, M&I 

and M&I Bank would control less than 10 percent of the total amount 

of deposits of insured depository institutions in the United States. M&I 

and M&I Bank also would control less than 30 percent of the total 

amount of deposits of insured depository institutions in each relevant 

state. See Fla. Stat. §628.295(8); Mo. Rev. Statutes §362.915. All 

other requirements of sections 3(d) and 44 would be met on consummation of the proposals end footnote)In light of all the facts of 

record, the Board 

is permitted to approve the proposals under both statutes. 

COMPETITIVE CONSIDERATIONS 

Section 3 of the BHC Act and the Bank Merger Act prohibit 

the Board from approving a proposal that would result in a 

monopoly or would be in furtherance of an attempt to 

monopolize the business of banking in any relevant banking market. These acts also prohibit the Board from approving a bank acquisition that would substantially lessen 

competition in any relevant banking market, unless the 

anticompetitive effects of the proposals are clearly outweighed in the public interest by the probable effect of the 

proposals in meeting the convenience and needs of the 

community to be served(footnote 

16 12 U.S.C. § 1842(c)(1); 12 U.S.C. § 1828(c)(5) end footnote) 

M&I and Gold Banc do not compete in any relevant 

banking market. Based on all the facts of record, the Board 

concludes that consummation of the proposals would not 

have a significantly adverse effect on competition or on the 

concentration of resources in any relevant banking market. 

Accordingly, based on all the facts of record, the Board has 

determined that competitive considerations are consistent 

with approval. 

FINANCIAL AND MANAGERIAL RESOURCES 

AND FUTURE PROSPECTS 

Section 3 of the BHC Act and the Bank Merger Act require 

the Board to consider the financial and managerial resources 

and future prospects of the companies and depository 
institutions involved in the proposals and certain other 

supervisory factors. The Board has considered these factors 

in light of all the facts of record, including confidential 

reports of examination, other supervisory information from 

the primary federal and state banking supervisors of the 

organizations involved in the proposals, publicly reported 

and other financial information, information provided by 

M&I, and public comment on the proposals(footnote 17 A commenter expressed concern about relationships of M&I, 

Gold Banc, and their subsidiaries with unaffiliated alternative-financialservice providers. As a general matter, the activities of the consumer 

finance businesses identified by the commenter are permissible, and 

the businesses are licensed by the states where they operate. M&I 

stated that one of the relationships referenced by the commenter no 

longer exists and that any current relationships with such providers of 

non traditional financial services are limited to extensions of credit to 

those businesses. M&I also stated that loans to those businesses 

represent less than 1 percent of the loan portfolios of M&I and Gold 

Banc and would not have a material impact on the financial or 

managerial resources of the organization end footnote) 

In evaluating financial factors in expansion proposals by 

banking organizations, the Board reviews the financial 

condition of the organizations involved on both a parentonly and consolidated basis, as well as the financial condition of the subsidiary banks and significant non banking 

operations. In this evaluation, the Board considers a variety 

of measures, including capital adequacy, asset quality, and 

earnings performance. In assessing financial factors, the 

Board consistently has considered capital adequacy to be 

especially important. The Board also evaluates the financial 

condition of the combined organization at consummation, 

including its capital position, asset quality, and earnings 

prospects, and the impact of the proposed funding of the 

transaction. 

The Board carefully considered the proposals under the 

financial factors. M&I and each of its subsidiary depository 

institutions are well capitalized and would remain so on 

consummation of the proposals. Based on its review of the 

record, the Board finds that M&I has sufficient financial 

resources to effect the proposals. The proposal to acquire 

Gold Banc is structured as a partial share exchange and 

partial cash purchase, and M&I will fund the cash portion 

by incurring long-term debt. 

The Board also has considered the managerial resources 

of the organizations involved and the proposed combined 

organization. The Board has reviewed the examination 

records of M&I, Gold Banc, and their subsidiary depository 

institutions, including assessments of their management, 

risk-management systems, and operations. In addition, the 

Board has considered its supervisory experiences and those 

of the other relevant banking supervisory agencies with the 

organizations and their records of compliance with applicable banking law. M&I, Gold Banc, and their subsidiary 

depository institutions are considered to be well managed. 

The Board also has considered M&I's plans for implementing the proposals, including the proposed management 

after consummation. 

Based on all the facts of record, the Board has concluded 

that considerations relating to the financial and managerial 

resources and future prospects of the organizations involved in the proposals are consistent with approval, as are 

the other supervisory factors under the BHC Act. 

CONVENIENCE AND NEEDS CONSIDERATIONS 

In acting on proposals under section 3 of the BHC Act and 

the Bank Merger Act, the Board also must consider the 

effects of the proposals on the convenience and needs of the 

communities to be served and take into account the records 

of the relevant insured depository institutions under the 

Community Reinvestment Act (''CRA'' )(footnote 18 

12 U.S.C. §2901 et seq.; 12 U.S.C. § 1842(c)(2); 12 U.S.C. 

§ 1828(c)(5) end footnote)The CRA requires the federal financial supervisory agencies to encourage insured depository institutions to help meet the credit 

needs of the local communities in which they operate, 

consistent with their safe and sound operation, and requires 

the appropriate federal financial supervisory agency to take 

into account a relevant depository institution's record of 

meeting the credit needs of its entire community, including 

low- and moderate-income (''LMI'') neighborhoods, in 

evaluating bank expansionary proposals(footnote 19 

12 U.S.C. §2903 end footnote) 

The Board has considered carefully all the facts of 

record, including reports of examination of the CRA performance records of the subsidiary depository institutions of 

M&I and Gold Banc, data reported by M&I and Gold Banc 

under the Home Mortgage Disclosure Act (''HMDA''),(footnote 

20 12 U.S.C. § 2801 etseq. end footnote) 

other information provided by M&I and Gold Banc, confidential supervisory information, and public comment received on the proposals. The Board received two comments 

on the proposals. One commenter alleged, based primarily 

on 2004 HMDA data, that M&I, through its subsidiary 

depository institutions and non bank lending subsidiary, and 

Gold Bank engaged in discriminatory treatment of minority 

individuals in their home mortgage lending. The other 

commenter contended that M&I Bank provided a low 

number of home mortgage loans to African Americans in 

the Milwaukee-Waukesha Primary Metropolitan Statistical 

Area ("PMSA'') and that Gold Bank's amount of home 

mortgage lending to LMI borrowers in Kansas City was 

insufficient(footnote 21 The commenter also 

criticized M&I Bank' s home mortgage 

lending to LMI borrowers in Kansas City. The Board notes that no 

portion of the Kansas City Metropolitan Statistical Area ('' MSA'') has 

been a part of M&I Bank's assessment area end footnote) 

This commenter also expressed concern that 

M&I Bank's investments in LMI communities have been 

limited in nature and should be expanded(footnote 22 

The commenter stated that some homeowner counselors had 

advised that M&I Bank's policies include a "skip pay'' feature for 

delinquent borrowers but that the bank rarely allowed that feature to be 

exercised. M&I responded that this "skip pay'' feature is not an option 

in collecting a debt from a delinquent borrower. Rather, it is a 

promotional program for certain M&I Bank loans that allows delinquent borrowers to miss a payment. M&I stated, however, that the 

bank offers delinquent installment loan borrowers the option to defer a 

payment if necessary, with a corresponding extension of the loan term 

to account for the missed payment end footnote) 
A. CRA Performance Evaluations 

As provided in the CRA, the Board has evaluated the 

convenience and needs factor in light of the evaluations 

by the appropriate federal supervisors of the CRA performance records of the relevant insured depository institutions. An institution' s most recent CRA performance evaluation is a particularly important consideration in the 

applications process because it represents a detailed, onsite evaluation of the institution' s overall record of performance under the CRA by its appropriate federal 

supervisor(footnote 23 See Interagency 

Questions and Answers Regarding Community 

Reinvestment, 71 Federal Register 12,424 and 36,639 (2001) end footnote) 

M&I Bank, M&I's largest subsidiary depository institution as measured by total deposits, received an overall 

''outstanding'' rating at its most recent CRA performance 

evaluation by the Federal Reserve Bank of Chicago, as of 

August 11, 2003 (''2003 CRA Evaluation''). All M&I's 

other subsidiary depository institutions received '' satisfactory'' ratings at their most recent CRA performance evaluations(footnote 24 Southwest Bank of St. 

Louis received an overall ''satisfactory'' 

rating at its most recent CRA performance evaluation by the Federal 

Reserve Bank of St. Louis, as of August 11, 2003. M&I Bank FSB 

(''M&I FSB''), Las Vegas, Nevada, received an overall ''satisfactory'' 

rating at its most recent CRA performance evaluation by the Office of 

Thrift Supervision (''OTS''), as of February 23, 2005. M&I Bank of 

Mayville, Mayville, Wisconsin, is a special-purpose bank that is not 

evaluated under the CRA end footnote) 

Gold Bank received a ''satisfactory'' rating at its 

most recent CRA performance evaluation by the Federal 

Reserve Bank of Kansas City, as of January 24, 2005 

('' 2005 Gold Bank CRA Evaluation''). 

M&I represented that it will implement its CRA policies, 

procedures, and programs throughout the combined organization. This implementation will be carried out by local and 

regional CRA committees with coordinated oversight from 

M&I's corporate CRA committee, which is the current 

model for M&I's CRA program(footnote25 

M&I has stated that it will retain Gold Banc's Community 

Development Officer to maintain connections in the communities that 

Gold Banc currently serves end footnote) 

B. CRA Performance of M&I Bank 

As noted, M&I Bank received an ''outstanding'' overall 

CRA performance rating in the 2003 CRA Evaluation 

(footnote 26 In the 2003 CRA Evaluation, examiners included the lending of 

M&I Mortgage Corp. (''M&I Mortgage''), M&I FSB's nationwide 

mortgage subsidiary, in its evaluation of M&I Bank's performance 

under the CRA lending test. Examiners also included the lending of 

M&I Community Development Corporation (''M&I CDC''), 

a subsidiary of M&I, in the evaluation of M&I Bank's community development lending activity under the CRA lending test. In addition, the 

investments of M&I CDC and Marshall & Ilsley Foundation (''M&I 

Foundation''), another subsidiary of M&I, were included in the 

evaluation of M&I Bank's performance under the investment test. 

M&I Bank, M&I CDC, and M&I Foundation are collectively referred 

to as ''M&I Bank.'' The evaluation period for HMDA-reportable, 

small business, and small farm loans was January 1, 2001, through 

December 31, 2002. The evaluation period for community development lending was August 1, 2001, through July 31, 2003. The 

evaluation period for the investment and services tests was August 1 

through July 31, 2003 end footnote) 

Under the lending test, M&I Bank received an overall 

rating of ''high satisfactory,'' and examiners commended 

M&I Bank for having a generally strong distribution of 

loans among borrowers of different income levels and a 

high level of community development lending in both 

Wisconsin and Minnesota. Examiners also commended the 

bank's extensive use of innovative or flexible lending 

practices in meeting the credit needs of its assessment 

areas. In M&I Bank's Wisconsin assessment area, the bank 

also received a ''high satisfactory'' rating for the lending 

test, and examiners commended the bank's strong responsiveness to community credit needs, particularly for its 

distribution of loans to borrowers of different income levels 

and to business and farms of different sizes. 

In the Milwaukee-Waukesha PMSA, examiners considered the geographic distribution of M&I Bank's HMDAreportable, small business, and small farm lending to be 

adequate. Examiners noted that the percentage of the 

bank's total number of home improvement loans in LMI 

geographies exceeded the percentages for lenders in the 

aggregate (''aggregate lenders'') during the evaluation 

period(footnote 27 The lending data of the aggregate 

lenders represent the cumulative lending for all financial institutions that reported HMDA data in a 

given market. end footnote)Although the percentages of the 

bank' s total 

number of home purchase and home refinance loans in LMI 

census tracts in the Milwaukee-Waukesha PMSA fell below the percentages for the aggregate lenders, examiners 

noted that the bank's geographic distribution of such loans 

had significantly improved since 2001. They concluded 

that the bank's lending levels in the Milwaukee-Waukesha 

PMSA were not unreasonable, because owner-occupied 

housing units in such census tracts represented only 

14.9 percent of total housing units, and the bank faced 

strong competition from other lenders(footnote 28 

A commenter commended M&I Bank's smallbusiness lending 

in the Milwaukee area in 2004, noting that the 

bank exceeded the 

performance of its peers in making small-business loans 

and lending to 

small businesses in LMI census tracts end footnote) 

In the 2003 CRA Evaluation, M&I Bank received ''outstanding'' ratings under the investment test overall and for 

its assessment areas in Wisconsin. Examiners reported that 

the bank made qualified investments totaling $7.9 million 

and charitable donations totaling more than $1.2 million 

during the evaluation period. Examiners commended the 

bank for focusing its investment efforts on areas that 

demonstrated the greatest need, such as the bank' s assessment areas in the Milwaukee-Waukesha PMSA and the 

Madison MSA. 

M&I represented that, from August 2003 to July 2005, 

M&I Bank made approximately $15.7 million in qualified 

investments and grants in the bank's assessment areas, 

including investments of approximately $5.3 million in 

the Milwaukee area, which represented a significant 

increase since the 2003 CRA Evaluation. In addition, as 

noted by a commenter, M&I CDC received the ''Vision 

Award'' from the Milwaukee Awards for Neighborhood 
Development Innovation and the Local Initiatives Support 

Corporation in 2004 for its investments in affordable 

housing. 

In the 2003 CRA Evaluation, M&I Bank also received 

an ''outstanding'' rating for the service test, based on its 

distribution of branches and ATMs, accessibility of delivery systems, record of opening and closing branch offices, 

and innovativeness of products and services. Examiners 

noted that approximately 12 percent of M&I Bank's 

branches and 16 percent of its ATMs were in LMI census 

tracts(footnote 29 

A commenter expressed appreciation for M&I Bank's active 

presence in some of Milwaukee's lowest-income communities and its 

participation in economic development organizations end footnote) 

Examiners commended the bank for having an 

''excellent'' level of community development services and 

for providing support to various organizations within its 

combined assessment area, including providing seminars 

and consulting services for first-time home buyers, facilitating affordable housing, and supporting organizations that 

assist LMI families, small businesses, and small farm 

owners. 

C. CRA Performance of Gold Bank 

As noted previously, Gold Bank received an overall'' satisfactory'' rating in the 2005 Gold Bank CRA Evaluation 

(footnote 30 The evaluation period for HMDA-reportable, small business, 

and small farm loans was from January 1, 2003, through September 30, 2004. The evaluation period for community development loans 

and the service and investment tests was from October 28, 2002, 

through January 24, 2005. Gold Bank's performance in its Kansas City 

multi state MSA assessment area ("Kansas City MSA'') received 

significantly greater weight from examiners, because a majority of the 

bank's total deposits and loans were concentrated in that assessment 

area end footnote) 

Under the lending test, examiners gave Gold Bank a ''high 

satisfactory'' rating and commended the bank's geographic 

loan distribution, noting that the overall geographic distribution of HMDA-reportable and small business loans reflected a favorable penetration in LMI census tracts across 

the bank's assessment areas. They also found that the bank's 

overall distribution of loans among borrowers of different 

income levels was good and consistently exceeded the 

performance of the aggregate lenders in the majority of the 

bank's assessment areas. Examiners also found that Gold 

Bank's community-development lending performance was 

adequate and generally responsive to assessment-area credit 

needs. 

In the Kansas City MSA, Gold Bank received an 

''outstanding'' rating on the lending test. Examiners commended the bank's "excellent'' responsiveness to assessment area credit needs, geographic distribution of loans, 

and distribution of loans among individuals of different 

income levels. Examiners reported that the percentage of 

the bank's home purchase loans in LMI census tracts in 

2003 significantly exceeded the percentage for the aggregate lenders. 

Gold Bank received a ''high satisfactory'' rating on the 

investment test in the 2005 Gold Bank CRA Evaluation, 

with examiners particularly commending the bank's performance in the Kansas City MSA. Examiners concluded that 

the bank exhibited adequate responsiveness to community 

development needs in the Kansas City MSA through its 

donation and grant activity. During the review period, the 

bank provided 39 qualified investments totaling $8.1 million, including 34 grants and donations(footnote 31 

A commenter criticized Gold Bank's investmentperformance 

record and investment rating because of credit Gold 

Bank received in 

its 2005 CRA Evaluation from the Kansas City Reserve 

Bank for 

making an investment in multi family housing revenue 

bonds that were 

ultimately intended to benefit LMI residents. The 

Board has consulted 

with the Kansas City Reserve Bank on this matter. 

Through no fault of 

Gold Bank, the bonds were called and no multi 

family housing was 

constructed. Gold Banc made various, timely public 

disclosures 

regarding the impairment of the bonds and also timely 

notified the 

Kansas City Reserve Bank. The Board notes that M&I 

represented that 

it would implement its CRA policies, procedures, 

and programs, 

including its CRA investment programs, throughout 

the areas served 

by Gold Bank after consummation of the proposals 

end footnote) 

Gold Bank received a "low satisfactory'' rating on the 

service test. Examiners reported that the bank's offices 

were generally accessible to all portions of its assessment 

areas, including LMI geographies, although branches and 

ATMs were predominantly located in middle- and upperincome areas. 

D. HMDA and Fair Lending Record 

The Board has carefully considered the lending record and 

HMDA data of M&I and Gold Banc in light of public 

comment received on the proposals. A commenter alleged, 

based primarily on 2004 HMDA data, that M&I Bank, 

M&I Mortgage, and M&I FSB denied the home mortgage 

and refinance applications of minority applicants more 

frequently than those of non minority applicants and made 

higher-cost loans more frequently to minority borrowers 

than non minority borrowers nationwide in the Milwaukee 

and St. Louis MSAs, and statewide in Missouri, Ohio, and 

Wisconsin(footnote 32 Beginning January 1, 2004, 

the HMDA data required to be 

reported by lenders were expanded to include 

pricing information for 

loans on which the annual percentage rate (APR) 

exceeds the yield for 

U.S. Treasury securities of comparable maturity 3 

or more percentage 

points for first-lien mortgages and 5 or more percentage 

points for 

second-lien mortgages (12 CFR 203.4) end footnote) 

The same commenter also alleged that Gold 

Bank denied home mortgage applications of AfricanAmerican and Latino borrowers more frequently than 

non minority applicants in the Kansas City MSA. Another 

commenter expressed concern that the amount of mortgage 

lending by M&I Bank to African Americans in the Milwauvada keM&nationwid PMSA aggregat inCounty-Kenosh statewid geTh thei MS I, Bank Ohio e Boar ; threeA assessmen i lenders e are e an ,n M& ,MSA an d Arizona ha da i lagge dI County s Wisconsin n Mortgage . analyze thei s ot area ,f Illinois Appleton dr primar behin , Madison ds 200 , i M& . In,d Minnesota th yn4 th assessmen addition , HMD I Oshkosh-Neenah FSB e Milwaukee-Waukesh e, performanc an,A and dat St , th ,d Missouri t areasthei a.e Louis reporte Boar r affiliate e, o includ , Lak d;,f anNe ha dth by daes-
analyzed 2004 HMDA data reported by Gold Bank in its 

assessment areas in the Kansas City MSA and statewide in 

Kansas, Missouri, and Oklahoma. 

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, 

or pricing among members of different racial or ethnic 

groups in certain local areas, they provide an insufficient 

basis by themselves on which to conclude whether or not 

M&I or Gold Banc is excluding or imposing higher costs 

on any racial or ethnic group on a prohibited basis. The 

Board recognizes that HMDA data alone, even with the 

recent addition of pricing information, provide only limited information about the covered loans(footnote 33 

The data, for example, do not account for the possibility that an 

institution's outreach efforts may attract a larger proportion of marginally qualified applicants than other institutions attract and do not 

provide a basis for an independent assessment of whether an applicant 

who was denied credit was, in fact, creditworthy. In addition, credit 

history problems, excessive debt levels relative to income, and high 

loan amounts relative to the value of the real estate collateral (reasons 

most frequently cited for a credit denial or higher credit cost) are not 

available from HMDA data end footnote)HMDA data, 

therefore, have limitations that make them an inadequate 

basis, absent other information, for concluding that an 

institution has engaged in illegal lending discrimination. 

The Board is nevertheless concerned when HMDA 

data for an institution indicate disparities in lending and 

believes that all lending institutions are obligated to ensure that their lending practices are based on criteria that 

ensure not only safe and sound lending but also equal 

access to credit by creditworthy applicants regardless of 

their race. Because of the limitations of HMDA data, the 

Board has considered these data carefully and taken into 

account other information, including examination reports 

that provide on-site evaluations of compliance by M&I 

and Gold Banc with fair lending laws. The Board also 

consulted with the OTS, the primary regulator of M&I 

FSB, and considered the compliance examination records 

of M&I's and Gold Banc's subsidiary depository institutions. Examiners noted no evidence of illegal credit discrimination by any of M&I's or Gold Banc's subsidiary 

depository institutions. 

The record also indicates that M&I, Gold Banc, their 

subsidiary depository institutions, and their non bank lending subsidiaries have taken steps to ensure compliance 

with fair lending and other consumer protection laws. 

M&I represented that it has centralized programs in place 

to monitor and manage compliance that feature periodic 

reviews of all consumer lending programs, the tracking of 

applicable laws and regulations, ongoing compliance-risk 

analyses, the development of programs to train personnel 

involved in consumer lending, and oversight of the creation and use of consumer lending forms for its depository and lending institutions. M&I also represented that it 

has ongoing, comprehensive training programs to ensure 

that regulatory requirements and policies are updated to 

reflect changes in law and internal policies or procedures 

and are clearly communicated to personnel. In addition, 

M&I represented that its internal audit department periodically performs independent testing and validation of 

the compliance performance of M&I's various business 

units to ensure compliance with fair lending and other 

consumer protection laws and to measure the effectiveness of internal controls. After consummation of the 

proposed transaction, M&I stated that it would implement 

its centralized compliance-related policies and procedures 

across the combined organization, thereby ensuring that 

all areas have the same compliance monitoring and independent testing processes. In addition, critical functions, 

such as underwriting of consumer and mortgage loans, 

also would be performed centrally to provide consistent 

application of policies and procedures across the 

organization. 

The Board also has considered the HMDA data in light 

of other information, including the CRA lending programs 

of M&I and Gold Banc and the overall CRA performance 

records of their subsidiary depository and lending institutions. These established efforts and records demonstrate 

that the institutions are active in helping to meet the credit 

needs of their entire communities. 

E. Conclusion on CRA Performance Records 

The Board has carefully considered all the facts of record, 

(footnote One commenter requested that the Board 

condition its approval 

of the proposals on certain community reinvestment 

and other commitments by M&I. As the Board previously has explained, 

an applicant 

must demonstrate a satisfactory record of performance 

under the CRA 

without reliance on plans or commitments for future 

actions. The 

Board has consistently stated that neither the CRA 

nor the federal 

banking agencies' CRA regulations require 

depository institutions to 

make pledges or enter into commitments or 

agreements with any 

organization. See, e.g., JPMorgan Chase & Co., 

90 Federal Reserve 

Bulletin 352 (2004); Wachovia Corporation, 91 

Federal Reserve 

Bulletin 77 (2005); The Toronto-Dominion Bank, 

92 Federal Reserve 

Bulletin C100 (2006). In this case, as in past cases, 

the Board has 

focused instead on the demonstrated CRA performance 

records of 

M&I's subsidiaries and the programs that they have 

in place to serve 

the credit needs of their assessment areas when the 

Board reviewed the 

proposals under the convenience and needs factor. 

In reviewing future 

applications by M&I under this factor, the Board 

similarly will review 

the actual CRA performance records of M&I's 

subsidiaries and the 

programs they have in place to meet the credit needs of their 

communities at that time end footnote) 

including reports of examination of the CRA records of the 

NONBANKING thBase relatin performanc M&institution Gol confidentia acces discusse arofe th proposal consisten dId alsBanc se og t BH tondo ao aabove ha s th broade involved l revie e,C supervisor comment s record ste Acwoul witfiled convenienc ACTIVITIES ,w thhtr t o arraapproval adse provid ofo notic , Boar thinformatio acquir yfsy th receive information e o entir efed relevan financial an e unde conclude . customer eed Gol record need drn o section provide t depositor d product .n M& Banc' s th s facto s, tha an oefIs Golproposals d represente 4(c)(8 td fo consideration r bs an ano yrdy institution th Ban d M& d th) services en an reasonbankin ek CR ,dI witan tha4(jA g dhs). t
subsidiaries, Gold Capital Management, Inc. ('' Gold Capital'' ) and Gold Trust Company ("Gold Trust'')(footnote 

35 M&I also would acquire Gold Banc's remaining non banking 

activities and businesses, such as Gold Capital's insurance agency 

services, broker-dealer activities, and distribution and management 

services for open-end investment companies, and Gold Merchant 

Banc, Inc., a subsidiary of Gold Banc that engages in merchant 

banking activities, under section 4(k) of the BHC Act and the 

post-transaction notice procedures of section 225.87 of Regulation Y 

12 U.S.C. § 1843(k)(4)(H); 12 CFR 225.87; 12 CFR Subpart J end footnote) 

Gold 

Capital engages in investment advisory, securities brokerage, and government securities underwriting activities. 

Gold Trust is a non depository trust company engaged in 

trust services. 

The Board has determined by regulation that financial 

and investment advisory services, securities brokerage 

services, underwriting government obligations, and trust 

company services are permissible for bank holding companies under Regulation Y(footnote 36 See 12 CFR 225.28(b)(5)-

(b)(8) end footnote)M&I has committed to 

conduct these activities in accordance with the Board's 

regulations and orders for bank holding companies engaged in these activities. 

To approve this notice, the Board must determine that 

M&I's acquisition of Gold Capital and Gold Trust and the 

performance of the proposed activities ''can reasonably be 

expected to produce benefits to the public . . . that outweigh 

possible adverse effects, such as undue concentration of 

resources, decreased or unfair competition, conflicts of 

interests, or unsound banking practices(footnote 37 See 

12 U.S.C. § 1843(j)(2)(A) end footnote)As part of its 

evaluation of these factors, the Board has considered the 

financial and managerial resources of M&I, its subsidiaries, 

and the companies to be acquired, and the effect of the 

proposed transaction on those resources. For the reasons 

noted above, and based on all the facts of record, the Board 

concludes that the financial and managerial considerations 

are consistent with approval of the notice. 

The Board has considered the competitive effects of 

M&I's proposed acquisition of Gold Capital and Gold 

Trust in light of all the facts of record. Gold Capital 

engages in non banking activities through its offices in 

Kansas and Gold Bank's retail branches in Florida, Kansas, 

Missouri, and Oklahoma. M&I engages in similar non 

banking activities through the offices of its non banking subsidiary companies(footnote 38 M&I Brokerage Services, Inc., 

which provides securities brokerage and investment advisory services, has 

an office in Milwaukee end footnote)and at the branches 

of its banking subsidiaries in Arizona, Florida, Illinois, Minnesota, Missouri, 

Nevada, and Wisconsin. Gold Trust also provides its trust 

services at Gold Bank's branches, and M&I provides trust 

services through Marshall & Ilsley Trust Company National 

Association at its offices in Indianapolis, Indiana, and at the 

branches and offices of M&I's subsidiary banks. The 

record indicates that the markets for these activities, which 

include investment advisory, securities brokerage, government securities underwriting, and trust services, are regional or national in scope and that the markets are 

unconcentrated with numerous competitors. Accordingly, 

the Board concludes that M&I's acquisition of Gold Capital and Gold Trust would have a de minimis effect on 

competition for these nonbanking activities in any relevant 

market. 

In addition, the Board has reviewed carefully the public benefits of the proposed acquisition of Gold Banc. The 

proposals would allow M&I to provide an expanded 

range of trust and investment products and services to 

Gold Banc's customers, including trust and administrative 

services for retirement plans, secured working-capital lending, leasing, and data-processing services. In addition, the 

proposals would enable M&I to offer an expanded physical presence to its own customers through Gold Banc's 

network. 

Based on all of the facts of record, the Board has 

determined that consummation of the nonbanking proposal 

can reasonably be expected to produce public benefits that 

would outweigh possible adverse effects under the standard 

of review in section 4(j)(2) of the BHC Act. 

BRANCHES 

As previously noted, M&I Bank has also applied under 

section 9 of the FRA to establish branches at the locations 

listed in the appendix. The Board has assessed the factors it 

is required to consider when reviewing an application 

under section 9 of the FRA and the Board's Regulation H 

and finds those factors to be consistent with approval(footnote 

39 end footnote) 

CONCLUSION 

Based on the foregoing and all facts of record, the Board 

has determined that the applications and notice should be, 

and hereby are, approved(footnote 40 

A commenter requested that the Board hold a public hearing 

or meeting on the proposals. Section 3 of the BHC Act does not 

require the Board to hold a public hearing on an application unless 

the appropriate supervisory authority for any of the banks to be 

acquired makes a timely written recommendation of denial of the 

application. The Board has not received such a recommendation 

from any supervisory authority. The Board's regulations provide for 

a hearing under section 4 of the BHC Act if there are disputed issues 

of material fact that cannot be resolved in some other manner 

(12 CFR 225.25(a)(2)). The Bank Merger Act and the FRA do not 

require the Board to hold a public hearing or meeting. Under its 

rules, the Board also may, in its discretion, hold a public meeting or 

hearing on an application to acquire a bank if a meeting or hearing 

is necessary or appropriate to clarify factual issues related to the 

application and to provide an opportunity for testimony (12 CFR 

225.16(e)). The Board has considered carefully the commenter's 

request in light of all the facts of record. In the Board's view, the 

commenter had ample opportunity to submit comments on the 

proposals and, in fact, submitted written comments that the Board 

has considered carefully in acting on the proposals. The request fails 

to identify disputed issues of fact that are material to the Board's 

decision and would be clarified by a public meeting or hearing. 

Moreover, the commenter's request fails to demonstrate why its 

written comments do not present its views adequately or why a 

meeting or hearing otherwise would be necessary or appropriate. For 

these reasons, and based on all the facts of record, the Board has 

determined that a public hearing or meeting is not required or warranted 

in this case. Accordingly, the request for a public hearing 

or meeting on the proposals is denied end footnote) In reaching its conclusion, the 
Board has considered all the facts of record in light of the 

factors that it is required to consider under the BHC Act, 

the Bank Merger Act, and other applicable statutes. The 

Board's approval is specifically conditioned on compliance 

by M&I with the conditions imposed in this order and the 

commitments made to the Board in connection with the 

applications and notice. The Board' s approval of the nonbanking aspects of the proposals also is subject to all the 

conditions set forth in Regulation Y, including those in 

sections 225.7 and 225.25(c),(footnote 41 12 CFR 225.7 and 225.25(c) end footnote)and to the Board's authority 

to require such modification or termination of the activities 

of a bank holding company or any of its subsidiaries as the 

Board finds necessary to ensure compliance with and to 

prevent evasion of the provisions of the BHC Act and the 

Board' s regulations and orders issued thereunder. For 

purposes of this action, the conditions and commitments 

are deemed to be conditions imposed in writing by the 

Board in connection with its findings and decision herein 

and, as such, may be enforced in proceedings under 

applicable law. 

The proposed banking acquisitions may not be consummated before the 15th calendar day after the effective date 

of this order, and no part of the proposal may be consummated later than three months after the effective date of this 

order, unless such period is extended for good cause by the 

Board or the Federal Reserve Bank of Chicago, acting 

pursuant to delegated authority. 

By order of the Board of Governors, effective March 13, 

2006. 

Voting for this action: Chairman Bernanke, Vice Chairman Ferguson, and Governors Bies, Olson, Kohn, Warsh, and Kroszner. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Appendix 

MAIN OFFICE AND BRANCHES TO BE 

ACQUIRED BY M&I 

Florida 

Charlotte County 

1777 Tamiami Trail, Murdock 

Hillsborough County 

301 North Tamiami Trail, Ruskin 

601 North Ashley Drive, Tampa 

Manatee County 

2525 Manatee Avenue, West Bradenton 

5503 Manatee Avenue, West Bradenton 

4502 Cortez Road, West Bradenton 

4115 U.S. Highway 301 East, Ellenton 

1301 8th Avenue West, Palmetto 

6821 15th Street East, Sarasota 

Sarasota County 

1201 South Beneva Road, Sarasota 

240 South Pineapple Avenue, Sarasota 

Kansas 

Crawford County 

417 North Broadway, Pittsburg 

Fourth and Walnut Streets, Pittsburg 

Johnson County 

8840 State Line, Leawood 

11301 Nall, Leawood 

1511 West 101st Terrace, Lenexa 

15203 West 119th Street, Olathe 

9529 Antioch Road, Overland Park 

12080 Blue Valley Parkway, Overland Park 

6333 Long, Shawnee 

7225 Renner Road, Shawnee 

21900 Shawnee Mission Parkway, Shawnee 

Missouri 

Buchanan County 

2211 North Belt Highway, Saint Joseph 

4305 Frederick Boulevard, Saint Joseph 

Clay County 

105 North Stewart Court, Suite 100, Liberty 

Jackson County 

18800 East Highway 40, Independence 

800 West 47th Street, Kansas City 

1201 North West Briarcliff Parkway, Kansas City 

Oklahoma 

Tulsa County 

2500 West Edison Street, Tulsa 

11032 South Memorial, Tulsa 

5120 South Garnett, Tulsa 

ORDERS ISSUED UNDER 

INTERNATIONAL BANKING ACT 

Banco Latinoamericano de Exportaciones 

S.A. 

Panama City, Republic of Panama 

Order Approving Establishment of a 

Representative Office 

Banco Latinoamericano de Exportaciones S.A. (''Bank''), 

Panama City, Republic of Panama, a foreign bank within 
the meaning of the International Banking Act (''IBA''), has 

applied under section 10(a) of the IBA(12 U.S.C. § 3107(a)) 

to establish a representative office in Miami, Florida. The 

Foreign Bank Supervision Enhancement Act of 1991, 

which amended the IBA, provides that a foreign bank must 

obtain the approval of the Board to establish a representative office in the United States. 

Notice of the application, affording interested persons an 

opportunity to submit comments, has been published in a 

newspaper of general circulation in Miami (The Miami 

Herald, April 15, 2005). The time for filing comments has 

expired, and all comments received have been considered. 

Bank, with total consolidated assets of approximately 

$3.2 billion,(footnote 1 Data are as of December 31, 2005 end footnote) 

is the third largest bank in Panama and 

focuses on the provision of trade finance services(footnote 

2 Bank was established by central banks in the region to finance 

trade throughout Latin America. Bank has three classes of shares. The 

ownership of the first class of shares is restricted to central banks or 

state-owned financial institutions in Latin America. Other financial 

institutions may hold the second class of shares. The third class of 

shares is publicly traded on the New York Stock Exchange end footnote)Bank 

operates representative offices in Argentina, Brazil, and 

Mexico. In the United States, Bank operates an agency in 

New York, New York. 

The proposed representative office would act as a liaison 

between Bank's head office in Panama and its existing and 

prospective customers in the United States. The office 

would engage in representative functions in connection 

with the products and services offered by Bank, solicit new 

business, provide information to U.S.-based companies 

about conducting business in Latin America, and perform 

preliminary and servicing steps in connection with lending. 

The IBA and Regulation K require that the Board, in 

acting on an application by a foreign bank to establish a 

representative office, take into account whether (1) the 

foreign bank has furnished the information the Board needs 

to assess the application adequately; (2) the foreign bank 

and any foreign bank parent engage directly in the business 

of banking outside of the United States; and (3) the foreign 

bank and any foreign bank parent are subject to comprehensive supervision on a consolidated basis by their home 

country supervisors (12 U.S.C. §§3107 and 3105(d)(2); 

12 CFR 211.24(d)(2))(footnote 3 In assessing the 

supervision standard, the Board considers, 

among other factors, the extent to which the home country supervisors: (i) ensure that the bank has adequate procedures for monitoring 

and controlling its activities worldwide; (ii) obtain information on 

the condition of the bank and its subsidiaries and offices through 

regular examination reports, audit reports, or otherwise; (iii) obtain 

information on the dealings with and relationship between the bank 

and its affiliates, both foreign and domestic; (iv) receive from the 

bank financial reports that are consolidated on a worldwide basis or 

comparable information that permits analysis of the bank's financial 

condition on a worldwide consolidated basis; and (v) evaluate prudential standards, such as capital adequacy and risk asset exposure, 

on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements 

may inform the Board's determination end footnote) 

The Board also may take into 

account additional standards set forth in the IBA and 

Regulation K (12 U.S.C. §3105(d)(3)-(4); 12 CFR 

211.24(c)(2)). The Board will consider that the supervision 

standard has been met where it determines that the applicant bank is subject to a supervisory framework that is 

consistent with the activities of the proposed representative 

office, taking into account the nature of such activities(footnote 

4 See, e.g., Banco Financiera Comercial Hondurena, S.A., 91 Federal Reserve Bulletin 444 (2005); Jamaica National Building Society, 

88 Federal Reserve Bulletin 59 (2002); and RHEINHYP Rheinische 

Hypothekenbank AG, 87 Federal Reserve Bulletin 558 (2001); see also 

Promstroybank of Russia, 82 Federal Reserve Bulletin 599 (1996); 

Komercni Banka, a.s., 82 Federal Reserve Bulletin 597 (1996); and 

Commercial Bank Ion Tiriac, S.A., 82 Federal Reserve Bulletin 592 

(1996) end footnote) 

This is a lesser standard than the comprehensive, consolidated supervision standard applicable to applications to 

establish branch or agency offices of a foreign bank. The 

Board considers the lesser standard sufficient for approval 

of representative office applications, because representative 

offices may not engage in banking activities (12 CFR 

211.24(d)(2)). 

As noted above, Bank engages directly in the business of 

banking outside the United States. Bank also has provided 

the Board with information necessary to assess the application through submissions that address the relevant issues. 

Bank has provided the following information regarding 

home country supervision. Bank is supervised by the 

Superintendency of Banks of the Republic of Panama 

(''Superintendency''). The Superintendency is responsible 

for the regulation, supervision, and examination of financial institutions operating in Panama. The Superintendency implements legislation concerning capital adequacy, liquidity, asset classification, and large credit and 

foreign-currency exposures. The Superintendency has the 

authority to impose remedial measures, including civil 

money penalties, against banks that violate Panamanian 

banking laws and regulations. 

The Superintendency supervises and regulates Bank 

through a combination of on-site examinations and off-site 

monitoring. On-site examinations are conducted annually 

and cover the Bank's overall financial condition, capital 

adequacy, asset quality, corporate governance, and compliance with the law. Off-site monitoring of Bank is conducted 

by the Superintendency through the review of required 

weekly, monthly, quarterly, and annual reports. Bank is also 

subject to quarterly external audits 

(footnote 5 External auditors are subject to standards established by the 

Superintendency. end footnote)These audits cover 

internal controls, risk management, asset quality, and the 

preparation of financial statements. 

Based on all the facts of record, including the information above, it has been determined that Bank is subject to a 

supervisory framework that is consistent with the activities 

of the proposed representative office, taking into account 

the nature of such activities. 

The additional standards set forth in section 7 of the IBA 

and Regulation K (see 12 U.S.C. § 3105(d)(3)-(4); 12 CFR 

211.24(c)(2)) have also been taken into account. The 

Superintendency has no objection to the establishment of 

the proposed representative office. 
With respect to the financial and managerial resources of 

Bank, taking into consideration its record of operations in 

its home country, its overall financial resources, and its 

standing with its home country supervisor, financial and 

managerial factors are consistent with approval of the 

proposed representative office. Bank has capital that exceeds 

the Basel minimums. Bank appears to have the experience 

and capacity to support the proposed representative office 

and has established controls and procedures for it to ensure 

compliance with U.S. law. 

Panama has enacted laws based on the general recommendations of the Financial Action Task Force. Panama is a 

member of the Caribbean Financial Action Task Force and 

participates in other international fora that address the 

prevention of money laundering(footnote 6 

Panama is a party to the 1988 UN Convention Against the Illicit 

Traffic of Narcotics and Psychotropic Substances, the UN International Convention Against Transnational Organized Crime, and the 

UN International Convention for the Suppression of the Financing of 

Terrorism. Panama is also a member of the Organization of American 

States Inter-American Drug Abuse Control Commission end footnote) 

Money laundering is a 

criminal offense in Panama, and banks are required to 

establish internal policies and procedures for the detection 

and prevention of money laundering. The Superintendency 

requires banks to adopt know-your-customer policies, report suspicious transactions to Panama's Financial Intelligence Unit, and maintain records. Bank states that it has 

established anti-money-laundering policies and procedures, 

which include the implementation of know-your-customer 

policies, suspicious-activity-reporting procedures, and related training programs and manuals. These policies and 

procedures are reviewed by the Superintendency and by 

Bank's internal and external auditors. 

With respect to access to information on Bank's operations, the restrictions on disclosure in relevant jurisdictions 

in which Bank operates have been reviewed, and relevant 

government authorities have been communicated with regarding access to information. Bank has committed to 

make available to the Board such information on the 

operations of Bank and any of its affiliates as the Board 

deems necessary to determine and enforce compliance with 

the IBA, the Bank Holding Company Act of 1956, as 

amended, and other applicable federal law. To the extent 

that the provision of such information to the Board may be 

prohibited by law or otherwise, Bank has committed to 

cooperate with the Board to obtain any necessary consents 

or waivers that might be required from third parties for 

disclosure of such information. In addition, subject to 

certain conditions, the Superintendency may share information on Bank's operations with other supervisors, including 

the Board. In light of these commitments and other facts of 

record, and subject to the condition described below, it has 

been determined that Bank has provided adequate assurances of access to any necessary information that the Board 

may request. 

Based on the foregoing and all the facts of record, and 

subject to the commitments made by Bank and the terms 

and conditions set forth in this order, Bank's application to 

establish the representative office is hereby approved(footnote 

7 Approved by the director of the Division of Banking Supervision 

and Regulation, with the concurrence of the General Counsel, pursuant 

to authority delegated by the Board. See 12 CFR 265.7(d)(12) end footnote) 

Should any restrictions on access to information on the 

operations or activities of Bank or any of its affiliates 

subsequently interfere with the Board's ability to obtain 

information to determine and enforce compliance by Bank 

or its affiliates with applicable federal statutes, the Board 

may require or recommend termination of any of Bank's 

direct and indirect activities in the United States. Approval 

of the application also is specifically conditioned on compliance by Bank with the conditions imposed in this order 

and the commitments made to the Board in connection with 

this application(footnote 8 The Board's authority to 

approve the establishment of the 

proposed representative office parallels the continuing 

authority of the 

state of Florida to license 

offices of a foreign bank. The Board's 

approval of this application 

does not supplant the authority of the state 

of Florida or its agent, the Florida Office of Financial Regulation, to 

license the proposed office of Bank in accordance with any terms or 

conditions that it may impose end footnote)For purposes of this action, 

these commitments and conditions are deemed to be conditions imposed 

in writing by the Board in connection with its finding and 

decision and, as such, may be enforced in proceedings 

under applicable law. 

By order, approved pursuant to 

authority delegated by 

the Board, effective March 27, 2006. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Banco Popular Espanol, S.A. 

Madrid, Spain 

Order Approving Establishment 

of a Representative Office 

Banco Popular Espanol, S.A. (''Bank''), Madrid, Spain, a 

foreign bank within the meaning of the International Banking Act (''IBA''), has applied under section 10(a) of the 

IBA (12 U.S.C. §3107(a)) to establish a representative 

office in Miami, Florida. The Foreign Bank Supervision 

Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the 

Board to establish a representative office in the United 

States. 

Notice of the application, affording interested persons an 

opportunity to submit comments, has been published in a 

newspaper of general circulation in Miami (The Miami 

Herald, July 29, 2005). The time for filing comments has 

expired, and all comments received have been considered. 

Bank, with total consolidated assets of approximately 

$88.3 billion,(footnote 1 Unless otherwise indicated, data are as of 

December 31, 2004 end footnote)is the lead bank of the third largest commercial banking group in Spain and provides wholesale and 

retail banking services through a network of branches in 
Spain, Portugal, and France(footnote 2 Bank also 

owns controlling interests in ten bank subsidiaries and 

owns non bank subsidiaries that engage in activities related to securities and mutual funds, asset management, insurance, leasing, factoring, and venture capital end footnote)Bank also has representative 

offices in Asia, Latin America, Canada, and elsewhere in 

Europe. 

The proposed representative office would serve as a 

liaison between Bank's existing and prospective customers 

in Spain and the United States. The office would also 

promote the Bank's services to potential customers in the 

United States and Latin America, provide information to 

customers concerning their accounts, inform U.S.- and 

Spanish-owned businesses of business opportunities existing in Spain, and receive applications for extensions of 

credit and other banking services on behalf of Bank. 

The IBA and Regulation K require that the Board, in 

acting on an application by a foreign bank to establish a 

representative office, take into account whether (1) the 

foreign bank has furnished the information the Board needs 

to assess the application adequately; (2) the foreign bank 

and any foreign bank parent engage directly in the business 

of banking outside of the United States; and (3) the foreign 

bank and any foreign bank parent are subject to comprehensive supervision on a consolidated basis by their home 

country supervisors (12 U.S.C. §3105(d)(2); 12 CFR 

211.24(d)(2))(footnote 3 In assessing the supervision standard, 

the Board considers, 

among other of comprehensive, consolidated supervision, the extent to 

which the home country supervisors: (i) ensure that the bank has 

adequate procedures for monitoring and controlling its activities 

worldwide; (ii) obtain information on the condition of the bank and its 

subsidiaries and offices through regular examination reports, audit 

reports, or otherwise; (iii) obtain information on the dealings with and 

relationship between the bank and its affiliates, both foreign and 

domestic; (iv) receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits 

analysis of the bank's financial condition on a worldwide consolidated 

basis; and (v) evaluate prudential standards, such as capital adequacy 

and risk asset exposure, on a worldwide basis. These are indicia of 

comprehensive, consolidated supervision. No single factor is essential, 

and other elements may inform the Board's determination. 

4. See Banco Bilbao Vizcaya Argentaria, S.A. , 91 Federal Reserve 

Bulletin 258 (2005); Banco Pastor, S.A., 87 Federal Reserve Bulletin 

555 (2001); Caja de Ahorros de Valencia, Castellon y Alicante, 

84 Federal Reserve Bulletin 231 (1998); Banco Exterior de Espana 

S.A., 81 Federal Reserve Bulletin 616 (1995); Corporacion Bancaria 

de Espana, 81 Federal Reserve Bulletin 598 (1995); Banco Santander 

S.A., 79 Federal Reserve Bulletin 622 (1993); Banco de Sabadell S.A., 

79 Federal Reserve Bulletin 366 (1993) end footnote) 

The Board also may take into account 

additional standards set forth in the IBA and Regulation K 

(12 U.S.C. §3105(d)(3)-(4); 12 CFR 211.24(c)(2)). 

As noted above, Bank engages directly in the business of 

banking outside the United States. Bank also has provided 

the Board with information necessary to assess the application through submissions that address the relevant issues. 

With respect to supervision by home country authorities, 

the Board previously has determined, in connection with 

applications involving other banks in Spain, that those 

banks were subject to home country supervision on a 

consolidated basis.4 Bank is supervised by the Bank of 

Spain on substantially the same terms and conditions as 

those other banks. Based on all the facts of record, including the above information, it has been determined that 

Bank is subject to comprehensive supervision on a consolidated basis by its home country supervisor. 

The additional standards set forth in section 7 of the IBA 

and Regulation K (see 12U.S.C. § 3105(d)(3)-(4); 12 CFR. 

211.24(c)(2)) have also been taken into account. The Bank 

of Spain has no objection to the establishment of the 

proposed representative office. 

With respect to the financial and managerial resources of 

Bank, taking into consideration its record of operations in 

its home country, its overall financial resources, and its 

standing with its home country supervisor, financial and 

managerial factors are consistent with approval of the 

proposed representative office. Bank appears to have the 

experience and capacity to support the proposed representative office and has established controls and procedures for 

the proposed representative office to ensure compliance 

with U.S. law, as well as controls and procedures for its 

worldwide operations generally. 

Spain is a member of the Financial Action Task Force 

and subscribes to its recommendations regarding measures 

to combat money laundering and international terrorism. In 

accordance with these recommendations, Spain has enacted 

laws and created legislative and regulatory standards to 

deter money laundering, terrorist financing, and other illicit 

activities. Money laundering is a criminal offense in Spain, 

and credit institutions are required to establish internal 

policies, procedures, and systems for the detection and 

prevention of money laundering throughout their worldwide operations. Bank has policies and procedures to 

comply with these laws and regulations that are monitored 

by governmental entities responsible for anti-moneylaundering compliance. 

With respect to access to information on Bank's operations, the restrictions on disclosure in relevant jurisdictions 

in which Bank operates have been reviewed, and relevant 

government authorities have been communicated with regarding access to information. Bank has committed to 

make available to the Board such information on the 

operations of Bank and any of its affiliates as the Board 

deems necessary to determine and enforce compliance with 

the IBA, the Bank Holding Company Act of 1956, as 

amended, and other applicable federal law. To the extent 

that the provision of such information to the Board may be 

prohibited by law or otherwise, Bank has committed to 

cooperate with the Board to obtain any necessary consents 

or waivers that might be required from third parties for 

disclosure of such information. In addition, subject to 

certain conditions, the Bank of Spain may share information on Bank's operations with other supervisors, including 

the Board. In light of these commitments and other facts of 

record, and subject to the condition described below, it has 

been determined that Bank has provided adequate assurances of access to any necessary information that the Board 

may request. 

Based on the foregoing and all the facts of record, and 

subject to the commitments made by Bank and the terms 
and conditions set forth in this order, Bank's application to 

establish the representative office is hereby approved(footnote 5 

Approved by the director of the Division of Banking Supervision 

and Regulation, with the concurrence ofthe General Counsel, pursuant 

to authority delegated by the Board. See 12 CFR 265.7(d)(12) end footnote) 

Should any restrictions on access to information on the 

operations or activities of Bank or any of its affiliates 

subsequently interfere with the Board' s ability to obtain 

information to determine and enforce compliance by Bank 

or its affiliates with applicable federal statutes, the Board 

may require or recommend termination of any of Bank's 

direct and indirect activities in the United States. Approval 

of the application also is specifically conditioned on compliance by Bank with the conditions imposed in this order 

and the commitments made to the Board in connection with 

this application( footnote 6 The Board's authority 

to approve the establishment of the 

proposed representative office parallels the continuing authority of the 

state of Florida to license offices of a foreign bank. The Board's 

approval of this application doe 

s not supplant the authority of the state 

of Florida or its agent, the Florida 

Office of Financial Regulation, to 

license the proposed office of Bank in 

accordance with any terms or 

conditions that it may impose end footnote) 

For purposes of this action, 

these commitments and conditions are deemed 

to be conditions imposed 

in writing by the Board in 

connection with its finding and 

decision and, as such, may be 

enforced in proceedings 

under applicable law. 

By order, approved pursuant to 

authority delegated by 

the Board, effective February 8, 2006. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Caja de Ahorros de Galicia, Caixa Galicia 

A Coruna, Spain 

Order Approving Establishment 

of an Agency 

Caja de Ahorros de Galicia, Caixa Galicia (''Bank''), A 

Coruna, Spain, a foreign bank within the meaning of the 

International Banking Act (''IBA''), has applied under 

section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish 

an agency in Miami, Florida. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, 

provides that a foreign bank must obtain the approval of 

the Board to establish an agency in the United States. 

Notice of the application, affording interested persons 

an opportunity to comment, has been published in a 

newspaper of general circulation in Miami (Miami Daily 

Business Review, July 28, 2005). The time for filing 

comments has expired, and all comments received have 

been considered. 

Bank, a savings bank with total assets of approximately 

$42 billion,(footnote 1 Asset data are as of June 30, 2005 end footnote) 

is the 11th largest bank in Spain(footnote 2 Spanish savings 

banks are generally organized as mutual entities 

and do not have shareholders. Bank's operations are controlled and 

governed by a general assembly and a board of directors. The 

160-member general assembly includes representatives of the municipalities in which Bank operates (25 percent); Bank's depositors 

(40 percent); representatives designated by 34 regional civic organizations (25 percent); and Bank's employees (10 percent). Bank's board 

of directors is composed of 21 board members, proportionally representing the entities comprising the general assembly end footnote)Bank 

provides wholesale and retail banking services through 

more than 700 branches throughout Spain. Bank also engages through its subsidiaries in real estate, insurance, 

venture capital, information technology, transportation, and 

utilities services, as well as manufacturing and energyrelated activities. Outside Spain, Bank operates branches in 

Portugal and Switzerland and representative offices in 

France, England, Switzerland, Mexico, Argentina, and Venezuela. Bank currently does not have any operations in the 

United States. 

The proposed agency would offer deposit and investment management services, largely for Latin American 

customers. The agency would also provide corporate banking and foreign trade services to companies. 

Under the IBA and Regulation K, in acting on an 

application by a foreign bank to establish a branch, the 

Board must consider whether the foreign bank (1) engages directly in the business of banking outside the 

United States; (2) has furnished to the Board the information it needs to assess the application adequately; and 

(3) is subject to comprehensive supervision or regulation 

on a consolidated basis by its home country supervisor 

(12 U.S.C. §3105(d)(2); 12 CFR 211.24)(footnote 3 

In assessing this standard, the Board considers, among other 

factors, the extent to which the home country supervisors: (i) ensure 

that the bank has adequate procedures for monitoring and controlling 

its activities worldwide; (ii) obtain information on the condition of the 

bank and its subsidiaries and offices through regular examination 

reports, audit reports, or otherwise; (iii) obtain information on the 

dealings with and relationship between the bank and its affiliates, both 

foreign and domestic; (iv) receive from the bank financial reports that 

are consolidated on a worldwide basis or comparable information that 

permits analysis of the bank's financial condition on a worldwide 

consolidated basis; and (v) evaluate prudential standards, such as 

capital adequacy and risk asset exposure, on a worldwide basis. These 

are indicia of comprehensive, consolidated supervision. No single 

factor is essential, and other elements may inform the Board's 

determination end footnote)The Board 

also considers additional standards set forth in the IBA 

and Regulation K (12 U.S.C. §3105(d)(3)-(4); 12 CFR 

211.24(c)(2)-(3)). 

As noted above, Bank engages directly in the business of 

banking outside the United States. Bank also has provided 

the Board with information necessary to assess the application through submissions that address the relevant issues. 

With respect to supervision by home country authorities, 

the Federal Reserve previously has determined, in connection with applications involving other banks in Spain, that 

those banks were subject to home country supervision on a 
consolidated basis(footnote 4 See Banco Bilbao Vizcaya Argentaria, 

S.A., 91 Federal Reserve 

Bulletin 258 (2005); Caixa de Aforros de Vigo, 88 Federal Reserve 

Bulletin 132 (2002) end footnote)Bank is supervised by the Bank of 

Spain on substantially the same terms and conditions as 

those other banks. Based on all the facts of record, it has 

been determined that Bank is subject to comprehensive 

supervision on a consolidated basis by its home country 

supervisor. 

The Board has also taken into account the additional 

standards set forth in section 7 of the IBA and Regulation K 

(see 12 U.S.C. §3105(d)(3)-(4); 12 CFR 211.24(c)(2)-(3)). 

The Bank of Spain has no objection to the establishment of 

the proposed agency. 

Spain's risk-based capital standards are consistent with 

those established by the Basel Capital Accord. Bank's 

capital is in excess of the minimum levels that would be 

required by the Basel Capital Accord and is considered 

equivalent to capital that would be required of a U.S. 

banking organization. Managerial and other financial 

resources of Bank also are considered consistent with 

approval, and Bank appears to have the experience and 

capacity to support the proposed agency. In addition, Bank 

has established controls and procedures for the proposed 

agency to ensure compliance with U.S. law, as well as 

controls and procedures for its worldwide operations 

generally. 

Spain is a member of the Financial Action Task Force 

and subscribes to its recommendations on measures to 

combat money laundering. In accordance with those recommendations, Spain has enacted laws and created legislative and regulatory standards to deter money laundering. 

Money laundering is a criminal offense in Spain, and 

financial institutions are required to establish internal 

policies, procedures, and systems for the detection and 

prevention of money laundering throughout their worldwide operations. Bank has policies and procedures to 

comply with these laws and regulations that are monitored by governmental entities responsible for anti-moneylaundering compliance. 

With respect to access to information about Bank's 

operations, the Board has reviewed the restrictions on 

disclosure in relevant jurisdictions in which Bank operates 

and has communicated with relevant government authorities regarding access to information. Bank has committed 

to make available to the Board such information on the 

operations of Bank and any of its affiliates that the Board 

deems necessary to determine and enforce compliance with 

the IBA, the Bank Holding Company Act, and other 

applicable federal law. To the extent that the provision of 

such information to the Board may be prohibited by law or 

otherwise, Bank has committed to cooperate with the 

Board to obtain any necessary consents or waivers that 

might be required from third parties for disclosure of such 

information. In light of these commitments and other facts 

of record, and subject to the condition described below, it 

has been determined that Bank has provided adequate 

assurances of access to any necessary information that the 

Board may request. 

On the basis of all the facts of record, and subject to the 

commitments made by Bank, as well as the terms and 

conditions set forth in this order, Bank's application to 

establish an agency in Miami, Florida, is hereby approved(foote 5 

Approved by the director of the Division of Banking Supervision 

and Regulation, with the concurrence ofthe General Counsel, pursuant 

to authority delegated by the Board end footnote) 

Should any restrictions on access to information on the 

operations or activities of Bank and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its 

affiliates with applicable federal statutes, the Board may 

require termination of any of Bank's direct or indirect 

activities in the United States. Approval of this application 

also is specifically conditioned on compliance by Bank with 

the commitments made in connection with this application 

and with the conditions in this order(footnote 6 The Board's 

authority to approve the establishment of the 

proposed agency parallels the continuing authority 

of the state of 

Florida to license offices 

of a foreign bank. The Board's 

approval of 

this application does not supplant 

the authority of the state of Florida 

Department of Financial Services to license the proposed 

agency of 

Bank in accordance with any terms or conditions that 

it may impose end footnote) 

The commitments and 

conditions referred to above are conditions imposed in 

writing by the Board in connection with this decision and 

may be enforced in proceedings under 12 U.S.C. § 1818 

against Bank and its affiliates. 

By order, approved pursuant to 

authority delegated by 

the Board, effective March 20, 2006. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Caja de Ahorros del Mediterraneo 

Alicante, Spain 

Order Approving Establishment of an 

Agency 

Caja de Ahorros del Mediterraneo (''Bank''), a foreign 

bank within the meaning of the International Banking Act 

(''IBA''), has applied under section 7(d) of the IBA 

(12 U.S.C. §3105(d)) to establish an agency in Miami, 

Florida. The Foreign Bank Supervision Enhancement Act 

of 1991, which amended the IBA, provides that a foreign 

bank must obtain the approval of the Board to establish an 

agency in the United States. 

Notice of the application, affording interested persons an 

opportunity to comment, has been published in a newspaper of general circulation in Miami (The Miami Herald, 

October 21, 2005). The time for filing comments has 

expired, and all comments received have been considered. 

Bank, with total assets of approximately $54 billion,1 is 
the fifth largest savings bank in Spain(footnote 2 Spanish 

savings banks are generally organized as mutual entities 

and do not have shareholders. Bank's operations are controlled and 

governed by a general assembly, a board of directors, and a control 

commission. The 180-member general assembly includes representatives of the municipalities in which Bank operates (24 percent); 

Bank's depositors (36 percent); representatives designated by the 

parliament of the community of Valencia and other communities in 

which the founding entities of Caja de Ahorros del Mediterraneo 

(''CAM'') are located (27 percent); and Bank's employees (13 percent). Bank's board of directors is composed of 20 board members, 

proportionally representing the entities comprising the general assembly. Bank's ten-member control commission overseas the board of 

directors and is the administrator of elections end footnote)Bank is the top-tier 

company of CAM, which is the ninth largest banking 

organization in Spain. CAM provides a broad range of 

banking, financial, and other services primarily in Spain. 

Bank maintains representative offices in seven countries 

and operates several nonbank subsidiaries in the Cayman 

Islands that issue bonds. Bank does not have any operations 

in the United States and would be a qualifying foreign 

banking organization under Regulation K. 

The Miami agency would offer commercial banking, 

private banking, and correspondent banking services targeted primarily at Spanish customers. The agency also 

would coordinate CAM's access to U.S. capital markets. 

Under the IBA and Regulation K, in acting on an 

application by a foreign bank to establish a branch, the 

Board must consider whether the foreign bank (1) engages directly in the business of banking outside the 

United States; (2) has furnished to the Board the information it needs to assess the application adequately; and 

(3) is subject to comprehensive supervision or regulation 

on a consolidated basis by its home country supervisor 

(12 U.S.C. §3105(d)(2); 12 CFR 211.24)( footnote 3 

In assessing this standard, the Board considers, among other 

indicia of comprehensive, consolidated supervision, the extent to 

which the home country supervisors: (i) ensure that the bank has 

adequate procedures for monitoring and controlling its activities 

worldwide; (ii) obtain information on the condition of the bank and its 

subsidiaries and offices through regular examination reports, audit 

reports, or otherwise; (iii) obtain information on the dealings with and 

relationship between the bank and its affiliates, both foreign and 

domestic; (iv) receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits 

analysis of the bank's financial condition on a worldwide consolidated 

basis; and (v) evaluate prudential standards, such as capital adequacy 

and risk asset exposure, on a worldwide basis. No single factor is 

essential, and other elements may inform the Board's determination 

end footnote)The Board 

also considers additional standards as set forth in the IBA 

and Regulation K (12 U.S.C. §3105(d)(3)-(4); 12 CFR 

211.24(c)(2)-(3)). 

As noted above, Bank engages directly in the business 

of banking outside the United States. Bank also has 

provided the Board with information necessary to assess 

the application through submissions that address the relevant issues. With respect to supervision by home country 

authorities, the Federal Reserve previously has determined, in connection with applications involving other 

banks in Spain, that those banks were subject to home 

country supervision on a consolidated basis.(footnote 

4 See Caja de Ahorros de Galicia, Caixa Galic, 92 Federal Reserve 

Bulletin C132 (2006); Banco Popular Espanol, S.A., 92 Federal 

Reserve Bulletin C130 (2006); Banco Bilbao Vizcaya Argentaria, S.A., 

91 Federal Reserve Bulletin 258 (2005); Banco Pastor, S.A., 87 Federal Reserve Bulletin 555 (2001); Caja de Ahorros de Valencia, 

Castellan y Alicante, 84 Federal Reserve Bulletin 231 (1998); Banco 

Exterior de Espana S.A., 81 Federal Reserve Bulletin 616 (1995); 

Corporacion Bancaria de Espana, 81 Federal Reserve Bulletin 598 

(1995); Banco Santander S.A., 79 Federal Reserve Bulletin 622 

(1993); and Banco de Sabadell S.A., 79 Federal Reserve Bulletin 366 

(1993) end footnote)Bank is 

supervised by the Bank of Spain on substantially the 

same terms and conditions as those other banks. Based on 

all the facts of record, it has been determined that Bank is 

subject to comprehensive supervision on a consolidated 

basis by its home country supervisor. 

The Board has also taken into account the additional 

standards set forth in section 7 of the IBA and Regulation K 

(see 12 U.S.C. § 3105(d)(3)-(4); 12CFR211.24(c)(2)-(3)). 

The Bank of Spain has no objection to the establishment of 

the proposed agency. 

Spain's risk-based capital standards are consistent with 

those established by the Basel Capital Accord. Bank's 

capital is in excess of the minimum levels that would be 

required by the Basel Capital Accord and is considered 

equivalent to capital that would be required of a U.S. 

banking organization. Managerial and other financial 

resources of Bank are consistent with approval, and Bank 

appears to have the experience and capacity to support the 

proposed agency. In addition, Bank has established controls 

and procedures for the proposed agency to ensure compliance with U.S. law, as well as controls and procedures for 

its worldwide operations generally. 

Spain is a member of the Financial Action Task Force 

and subscribes to its recommendations on measures to 

combat money laundering. In accordance with these recommendations, Spain has enacted laws and created legislative 

and regulatory standards to deter money laundering. Money 

laundering is a criminal offense in Spain, and financial 

institutions are required to establish internal policies, procedures, and systems for the detection and prevention of 

money laundering throughout their worldwide operations. 

Bank has policies and procedures to comply with these 

laws and regulations that are monitored by governmental 

entities responsible for anti-money-laundering compliance. 

With respect to access to information about Bank's 

operations, the Board has reviewed the restrictions on 

disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government 

authorities regarding access to information. Bank and its 

top-tier parent have committed to make available to the 

Board such information on the operations of Bank and 

any of its affiliates that the Board deems necessary to 

determine and enforce compliance with the IBA, the 

Bank Holding Company Act, and other applicable federal 

law. To the extent that the provision of such information 

to the Board may be prohibited by law or otherwise, 

Bank and its top-tier parent have committed to cooperate 
with the Board to obtain any necessary consents or waivers that might be required from third parties for disclosure of such information. In light of these commitments 

and other facts of record, and subject to the condition 

described below, it has been determined that Bank has 

provided adequate assurances of access to any necessary 

information that the Board may request. 

On the basis of all the facts of record, and subject to the 

commitments made by Bank, as well as the terms and 

conditions set forth in this order, Bank's application to 

establish an agency in Miami, Florida, is hereby approved 

(footnote 5 Approved by the director of the Division of Banking Supervision 

and Regulation, with the concurrence of the General Counsel, pursuant 

to authority delegated by the Board end footnote) 

Should any restrictions on access to information on the 

operations or activities of Bank and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its 

affiliates with applicable federal statutes, the Board may 

require termination of any of Bank's direct or indirect 

activities in the United States. Approval of this application 

also is specifically conditioned on compliance by Bank 

with the commitments made in connection with this application and with the conditions in this order(footnote 6 

The Board's authority to approve the establishment of the 

proposed agency parallels the continuing authority of the state of 

Florida to license offices of a foreign bank. The Board's approval of 

this application does not 

supplant the authority of the Florida Office of 

Financial Regulation to license the 

proposed agency of Bank in 

accordance with any terms or 

conditions that it may impose end footnote ) 

The commitments and conditions referred to 

above are conditions 

imposed in writing by the 

Board in connection with this 

decision and may be enforced 

in proceedings under 

12 U.S.C. § 1818 against 

Bank and its affiliates. 

By order, approved pursuant to 

authority delegated by 

the Board, effective March 30, 2006. 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

Kreditanstalt fur Wiederaufbau 

Frankfurt, Germany 

Order Approving Establishment of a 

Representative Office 

Kreditanstalt fur Wiederaufbau, (''Bank''), Frankfurt, Germany, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. §3107(a)) to establish a 

representative office in New York, New York. The Foreign 

Bank Supervision Enhancement Act of 1991, which 

amended the IBA, provides that a foreign bank must obtain 

the approval of the Board to establish a representative 

office in the United States. 

Notice of the application, affording interested persons an 

opportunity to submit comments, has been published in a 

newspaper of general circulation in New York (The New 

York Times, July 27, 2005), and the time for filing comments has expired. 

Bank, with total consolidated assets of approximately 

$445 billion, is the seventh largest bank in Germany(footnote 

1 Asset data are as of December 31, 2004 end footnote)As a 

government-owned development bank(footnote 2 The 

federal government of Germany owns 80 percent of the 

shares of Bank. The remaining 20 percent of Bank's 

shares is owned 

by various state governments in Germany. 

3. Bank intends to divest the IPEX-Bank 

division by 2008. The 

European Commissioner for Competition 

determined that the IPEXBank division engages in activities that are 

inconsistent with Bank' s 

status as a government-owned development 

bank end footnote) 

Bank engages primarily in lending and financing activities in furtherance of 

public sector initiatives, such as providing loans for housing, small businesses, and municipal infrastructure, and 

provides various other services, such as disbursing German 

government loans and grants to developing countries and 

providing advisory services in connection with privatizations. Bank also engages in export and project finance 

through a division of the Bank known as 

IPEX-Bank(footnote 

3 Bank intends to divest the IPEX-Bank 

division by 2008. The 

European Commissioner for Competition 

determined that the IPEXBank division engages in activities that are inconsistent with Bank' s 

status as a government-owned development bank end footnote)It 

has representative offices in Brazil, China, Thailand, and 

Turkey that primarily serve its IPEX-Bank division. In the 

United States, Bank operates KfW International Finance, 

Inc., Wilmington, Delaware, a funding vehicle established 

to access U.S. capital markets. 

The proposed representative office primarily would act 

as a liaison with existing and potential customers and 

conduct market research for the IPEX-Bank division of 

Bank. Additionally, the proposed representative office 

would support Bank's activities with developing countries 

by acting as a liaison with multinational organizations 

located in the United States, such as the United Nations, the 

World Bank, and the International Monetary Fund. 

Under the IBA and Regulation K, in acting on an 

application by a foreign bank to establish a representative 

office, the Board shall take into account whether (1) the 

foreign bank has furnished the information the Board needs 

to assess the application adequately; (2) the foreign bank 

and any foreign bank parent engage directly in the business 

of banking outside of the United States; and (3) the foreign 

bank and any foreign bank parent are subject to comprehensive supervision on a consolidated basis by their home 

country supervisors (12 U.S.C. §3107(a)(2); 12 CFR 

211.24(d)(2)). The Board also may take into account 

additional standards set forth in the IBA and Regulation K 

(12 U.S.C. §3105(d)(3)-(4); 12 CFR 211.24(c)(2))(footnote 

4 In assessing the supervision standard, the Board considers, 

among other factors, the extent to which the home country supervisors: 

(i) ensure that the bank has adequate procedures for monitoring and 

controlling its activities worldwide; (ii) obtain information on the 

condition of the bank and its subsidiaries and offices through regular 

examination reports, audit reports, or otherwise; (iii) obtain information on the dealings with and relationship between the bank and its 

affiliates, both foreign and domestic; (iv) receive from the bank 

financial reports that are consolidated on a worldwide basis or consolidated supervision. comparable condition tial worldwide inform standards, the No on basis. information a singleBoard's such worldwide These as factor capital are determination that consolidated is indicia essential, permits adequacy of analysis comprehensive, and basis; and end other risk andof fotnote)The asset theelments (v) bank's evaluate exposure, may financial pruden- on a 
Board will consider that the supervision standard has been 

met where it determines that the applicant bank is subject to 

a supervisory framework that is consistent with the activities of the proposed representative office, taking into 

account the nature of such activities(footnote 5 

See, e.g., Banco Financiera Comercial Hondurena, S.A., 91 Federal Reserve Bulletin 444 (2005); Nacional Financiera, S.N.C., 

91 Federal Reserve Bulletin 295 (2005); Jamaica National Building 

Society, 88 Federal Reserve Bulletin 59 (2002); RHEINHYP Rheinische Hypothekenbank AG, 87 Federal Reserve Bulletin 558 (2001); 

see also Promstroybank of Russia, 82 Federal Reserve Bulletin 599 

(1996); Komercni Banka, a.s., 82 Federal Reserve Bulletin 597 

(1996); Commercial Bank Ion Tiriac, S.A., 82 Federal Reserve Bulletin 592 (1996) end footnote)This is a lesser 

standard than the comprehensive, consolidated supervision 

standard applicable to applications to establish branch or 

agency offices of a foreign bank. The Board considers the 

lesser standard sufficient for approval of representative 

office applications, because representative offices may not 

engage in banking activities (12 C.F.R. 211.24(d)(2)). 

As noted above, Bank engages directly in the business 

of banking outside the United States. Bank also has 

provided the Board with information necessary to assess 

the application through submissions that address the relevant issues. 

With respect to supervision by home country authorities, 

the Board has considered the following information. The 

Bundesanstalt fur Finanzdiestleistungsaufsicht (''BaFin'') 

is the primary regulator of commercial banks in Germany, 

and the Board has previously considered the supervisory 

regime in Germany for commercial banks(footnote 6 

See, e.g., Deutsche Genossenschafts-HypothekenbankAG, 92 Federal Reserve Bulletin C61 (2006) end footnote)Bank is not 

considered a commercial bank under German law. Rather, 

it is a development bank established pursuant to a special 

statute, and its primary regulator is the Federal Ministry of 

Finance (''MoF''). Although it is exempt from many of the 

legal provisions that govern commercial banks, Bank has 

voluntarily subjected itself to the guidelines that BaFin has 

established for commercial banks with respect to lending 

and trading activities, and internal audit, and as noted 

below, compliance with these guidelines is subject to 

annual audit. Bank is required by law to maintain minimum 

capital of €3.75 billion, and is prohibited from distributing 

profits. The MoF has authority to adopt all measures 

necessary to ensure that Bank's business conforms with all 

applicable laws. 

The MoF exercises its supervision in consultation with 

the Federal Ministry of Economics and Labor. The Ministers of Finance and of Economics and Labor alternate as 

chairmen and deputy chairmen of Bank's supervisory 

board. The MoF may at any time request on-site examinations by third parties or conduct examinations itself, and 

such examinations can encompass all business areas, 

including subsidiaries and foreign offices. MoF officials 

meet with Bank officials at least biweekly, including, on 

occasion, at Bank's foreign offices, to discuss Bank's 

strategy, new fields of activity, new products, and related 

issues. 

The MoF also monitors Bank's condition through a 

review of required regulatory reports. These include quarterly financial reports and risk reports, annual audited 

consolidated financial statements that are filed with a report 

from the external auditor, results of internal audit reviews, 

and regular reports regarding risk analysis and measures 

taken to prevent money laundering. 

Bank is subject to an annual external audit by auditors 

appointed by the MoF. The scope of the external audit 

includes the bank's consolidated financial statements, internal controls, including controls to prevent money laundering, and compliance with BaFin's guidelines for lending, 

trading activities, and internal audit. Inasmuch as Bank is a 

government-owned entity, the Federal Court of Auditors 

also has the discretion to audit Bank's financial statements. 

The results of such audits are reported to the upper and 

lower houses of parliament and to the MoF. 

Based on all the facts of record, it has been determined 

that Bank is subject to a supervisory framework that is 

consistent with the activities of the proposed representative office, taking into account the nature of such activities. 

The additional standards set forth in section 7 of the 

IBA and Regulation K (see 12 U.S.C. §3105(d)(3)-(4); 

12 CFR 211.24(c)(2)) have also been taken into account. 

The MoF has authorized Bank to establish the proposed 

office. 

With respect to the financial and managerial resources of 

Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources, 

and its standing with its home country supervisors, financial and managerial factors are consistent with approval of 

the proposed representative office. Bank appears to have 

the experience and capacity to support the proposed representative office and has established controls and procedures 

for the proposed representative office to ensure compliance 

with U.S. law, as well as controls and procedures for its 

worldwide operations generally. 

Germany is a member of the Financial Action Task 

Force and subscribes to its recommendations regarding 

measures to combat money laundering and international 

terrorism. In accordance with these recommendations, Germany has enacted laws and created legislative and regulatory standards to deter money laundering, terrorist financing, or other illicit activities. Money laundering is a 

criminal offense in Germany, and Bank is subject to laws 

that require it to establish internal policies, procedures, and 

systems for the detection and prevention of money laundering throughout its worldwide operations. Bank has policies 

and procedures to comply with these laws and regulations, 

which include reporting suspicious transactions promptly 

to the German Financial Intelligence Unit and other appropriate law enforcement authorities. 

With respect to access to information on Bank's operations, the restrictions on disclosure in relevant jurisdictions 

in which Bank operates have been reviewed, and relevant 
government authorities have been communicated with regarding access to information. Bank has committed to 

make available to the Board such information on the 

operations of Bank and any of its affiliates that the Board 

deems necessary to determine and enforce compliance with 

the IBA, the Bank Holding Company Act of 1956, as 

amended, and other applicable federal law. To the extent 

that the provision of such information to the Board may be 

prohibited by law or otherwise, Bank has committed to 

cooperate with the Board to obtain any necessary consents 

or waivers that might be required from third parties for 

disclosure of such information. In addition, subject to 

certain conditions, the MoF may share information on 

Bank's operations with other supervisors, including the 

Board. In light of these commitments and other facts of 

record, and subject to the condition described below, it has 

been determined that Bank has provided adequate assurances of access to any necessary information that the Board 

may request. 

On the basis of all the facts of record, and subject to the 

commitments made by Bank and the terms and conditions 

set forth in this order, Bank's application to establish the 

representative office is hereby approved(footnote 7 

Approved by the director of the Division of Banking Supervision 

and Regulation, with the concurrence of the General Counsel, pursuant 

to authority delegated by the Board end footnote)Should any restrictions on access to information on the operations or 

activities of Bank or any of its affiliates subsequently 

interfere with the Board's ability to obtain information to 

determine and enforce compliance by Bank or its affiliates 

with applicable federal statutes, the Board may require or 

recommend termination of any of Bank's direct and indirect activities in the United States. Approval of this application also is specifically conditioned on compliance by 

Bank with the commitments made in connection with this 

application and with the conditions in this order(footnote 8 The Board's authority to approve the establishment of the 

proposed representative office parallels the continuing authority of the 

state of New York to license offices of a foreign bank. The Board's 

approval of this application does not supplant the authority of the state 

of New York or its agent, 

the New York State Banking 

Department 

(''Department''), to license the 

proposed office of Bank in accordance 

with any terms or conditions that the 

Department may impose end footnote)The 

commitments and conditions 

referred to above are conditions imposed in writing by 

the Board in connection with 

its decision and may be 

enforced in proceedings against 

Bank and its affiliates 

under 12 U.S.C. § 1818. 

By order, approved 

pursuant to authority 

delegated by 

the Board, effective 

January 3, 2006. 

JENNIFER J. JOHNSON 

Secretary of the Board 

FINAL ENFORCEMENT DECISIONS 

ISSUED BY THE BOARD 

IN THE MATTER OF A NOTICE TO 

PROHIBIT FURTHER PARTICIPATION 

AGAINST 

Oyeacholem Moseri, 

Former Employee, 

First North American National Bank, 

Kennesaw, Georgia (Closed) 

Docket No. OCC-AA-EC-05-72 

FINAL DECISION 

This is an administrative proceeding pursuant to the Federal Deposit Insurance Act (''the FDI Act'') in which the 

Office of the Comptroller of the Currency of the United 

States of America (''OCC'') seeks to prohibit the Respondent, Oyeacholem Moseri (''Respondent''), from further 

participation in the affairs of any financial institution based 

on actions he took while employed at First North American 

National Bank, Kennesaw, Georgia (the ''Bank''). Under 

the FDI Act, the OCC may initiate a prohibition proceeding 

against a former employee of a national bank, but the Board 

must make the final determination whether to issue an order 

of prohibition. 

Upon review of the administrative record, the Board 

issues this Final Decision adopting the Recommended 

Decision (''Recommended Decision'') of Administrative 

Law Judge Ann Z. Cook (the ''ALJ''), and orders the 

issuance of the attached Order of Prohibition. 

I. Statement of the Case 

A. Statutory and Regulatory Framework 

Under the FDI Act and the Board's regulations, the ALJ is 

responsible for conducting proceedings on a notice of 

charges (12 U.S.C. § 1818(e)(4)). The ALJ issues a recommended decision that is referred to the deciding agency 

together with any exceptions to those recommendations 

filed by the parties. The Board makes the final findings of 

fact, conclusions of law, and determination whether to issue 

an order of prohibition in the case of prohibition orders 

sought by the OCC. Id.; 12 CFR 263.40. 

The FDI Act sets forth the substantive basis upon which 

a federal banking agency may issue against a bank official 

or employee an order of prohibition from further participation in banking. To issue such an order, the Board must 

make each of three findings: (1) that the respondent engaged in identified misconduct, including a violation of law 

or regulation, an unsafe or unsound practice, or a breach of 
fiduciary duty; (2) that the conduct had a specified effect, 

including financial loss to the institution or gain to the 

respondent; and (3) that the respondent's conduct involved 

either personal dishonesty or a willful or continuing disregard for the safety or soundness of the institution (12 U.S.C. 

§ 1818(e)(1)(A)-(C)). 

An enforcement proceeding is initiated by filing and 

serving on the respondent a notice of intent to prohibit. 

Under the OCC's and the Board's regulations, the respondent must file an answer within 20 days of service of the 

notice (12 CFR 19.19(a) and 263.19(a)). Failure to file an 

answer constitutes a waiver of the respondent' s right to 

contest the allegations in the notice, and a final order may 

be entered unless good cause is shown for failure to file a 

timely answer (12 CFR 19.19(c)(1) and 263.19(c)(1)). 

B. Procedural History 

On August 31, 2005, the OCC served upon Respondent a 

Notice of Intention to Prohibit Further Participation and 

Notice of Assessment of a Civil Money Penalty ('' Notice'') 

that sought, inter alia, an order of prohibition against 

Respondent based on his conduct while employed at the 

Bank. The Notice directed Respondent to file a written 

answer within 20 days of the date of service of the Notice 

in accordance with 12 CFR 19.19(a) and (b), and warned 

that failure to do so would constitute a waiver of his right to 

appear and contest the allegations. The Notice was served 

in accordance with the OCC rules by overnight delivery, 

and was signed for by an individual named ''Moseri.'' In 

addition, on September 22, 2005, the OCC served the 

notice upon Respondent's relative and co-resident, Jane 

Moseri, at Respondent's personal residence. Nonetheless, 

Respondent failed to file an answer within the 20-day 

period or thereafter. 

On November 23, 2005, Enforcement Counsel filed a 

Motion for Entry of an Order of Default against Respondent. On November 29, 2005, the ALJ issued an Order to 

Show Cause, providing Respondent until December 19, 

2005, to file an answer to the Notice and to show good 

cause for having failed to do so previously. To date, 

Respondent has not filed any reply to the Order to Show 

Cause or answered the Notice. 

C. Respondent's Actions 

The Notice alleges that Respondent was employed as a 

collections officer for Bank. His sole responsibility was to 

help Bank collect funds from delinquent credit card account 

holders by telephoning customers whose accounts were on 

a Bank-generated list of delinquent accounts. Respondent 

had no responsibility over non delinquent accounts, nor did 

he have permission to view or alter any information 

contained in the records of non delinquent account holders. 

Nonetheless, Respondent improperly viewed the personal 

account records of more than 600 customers whose accounts 

were non delinquent. Further, during the period AugustSeptember 2000, Respondent improperly viewed and altered the personal account records of at least 11 additional 

customers whose accounts were also non delinquent. These 

alterations, detailed in the ALJ's Recommended Decision, 

included changing the address and telephone number of 

non delinquent accounts to Respondent's personal residence and other addresses, the issuance and activation of 

new cards to some of those accounts, and illegitimate 

charges to two of those cards totaling $1,359.74. 

II. Discussion 

The OCC's Rules of Practice and Procedure set forth the 

requirements of an answer and the consequences of a 

failure to file an answer to a Notice. Under the Rules, 

failure to file a timely answer ''constitutes a waiver of [a 

respondent's] right to appear and contest the allegations in 

the notice'' (12 CFR 19.19(c)). If the ALJ finds that no 

good cause has been shown for the failure to file, the judge 

'' shall file .. . a recommended decision containing the 

findings and the relief sought in the notice.'' Id. An order 

based on a failure to file a timely answer is deemed to be 

issued by consent. Id. 

In this case, Respondent failed to file an answer to the 

Notice despite notice to him of the consequences of such 

failure, and also failed to respond to the ALJ's Order to 

Show Cause. Respondent's failure to file an answer constitutes a default. 

Respondent' s default requires the Board to consider the 

allegations in the Notice as uncontested. The allegations in 

the Notice, described above, meet all the criteria for entry 

of an order of prohibition under 12 U.S.C. § 1818(e). Itwas 

a breach of fiduciary duty, unsafe and unsound practice, 

and violation of law or regulation, for Respondent to view 

non delinquent credit card account holder information; alter 

account addresses and telephone numbers in such accounts; 

and request (or cause to be requested) new or replacement 

credit cards to be issued to some of the altered accounts. 

Respondent's actions resulted in loss to the Bank and 

financial gain to the Respondent, in that he incurred (or 

caused to be incurred) illegitimate charges totaling at least 

$1,359.74 on two of the altered accounts. Finally, such 

actions also exhibit personal dishonesty and willful disregard for the safety and soundness of the Bank. 

Accordingly, the requirements for an order of prohibition have been met and the Board hereby issues such an 

order. 

CONCLUSION 

For these reasons, the Board orders the issuance of the 

attached Order of Prohibition. 

By Order of the Board of Governors, this 23rd day of 

March, 2006. 

BOARD OF GOVERNORS OF THE 

FEDERAL RESERVE SYSTEM 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 
IN THE MATTER OF A NOTICE TO 

PROHIBIT FURTHER PARTICIPATION 

AGAINST 

Oyeacholem Moseri, 

Former Employee, 

First North American National Bank, 

Kennesaw, Georgia (Closed) 

Docket No. OCC-AA-EC-05-72 

ORDER OF PROHIBITION 

WHEREAS, pursuant to section 8(e) of the Federal Deposit 

Insurance Act, as amended, (the ''FDI Act'') (12 U.S.C. 

§ 1818(e)), the Board of Governors of the Federal Reserve 

System (''the Board'') is of the opinion, for the reasons set 

forth in the accompanying Final Decision, that a final Order 

of Prohibition should issue against OYEACHOLEM 

MOSERI (''Moseri''), a former employee and institutionaffiliated party, as defined in Section 3(u) of the FDI Act 

(12 U.S.C. § 1813(u)), of First North American National 

Bank, Kennesaw, Georgia. 

NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to section 8(e) of the FDI Act, 12 U.S.C. § 1818(e), 

that: 

1. In the absence of prior written approval by the Board, 

and by any other federal financial institution regulatory 

agency where necessary pursuant to section 8(e)(7)(B) 

of the FDI Act (12 U.S.C. § 1818(e)(7)(B)), Moseri is 

hereby prohibited: 

(a) from participating in any manner in the conduct of 

the affairs of any institution or agency specified in 

section 8(e)(7)(A) of the FDI Act (12 U.S.C. 

§ 1818(e)(7)(A)), including, but not limited to, any 

insured depository institution, any insured depository institution holding company or any U.S. branch 

or agency of a foreign banking organization; 

(b) from soliciting, procuring, transferring, attempting 

to transfer, voting or attempting to vote any proxy, 

consent, or authorization with respect to any voting 

rights in any institution described in subsection 8(e)(7)(A) of the FDI Act (12 U.S.C. 

§ 1818(e)(7)(A)); 

(c) from violating any voting agreement previously 

approved by any federal banking agency; or 

(d) from voting for a director, or from serving or acting 

as an institution-affiliated party as defined in section 3(u) of the FDI Act (12 U.S.C. § 1813(u)), such 

as an officer, director, or employee in any institution 

described in section 8(e)(7)(A) of the FDI Act 

(12 U.S.C. § 1818(e)(7)(A)). 

2. Any violation of this Order shall separately subject 

Moseri to appropriate civil or criminal penalties or both 

under section 8 of the FDI Act (12 U.S.C. § 1818). 

3. This Order, and each and every provision hereof, is and 

shall remain fully effective and enforceable until expressly stayed, modified, terminated, or suspended in 

writing by the Board. 

This Order shall become effective at the expiration of 

30 days after service is made. 

By Order of the Board of Governors, this 23rd day of 

March, 2006. 

BOARD OF GOVERNORS OF THE 

FEDERAL RESERVE SYSTEM 

ROBERT DEV. FRIERSON 

Deputy Secretary of the Board 

IN THE MATTER OF 

Jean Peyrelevade, 

A former institution-affiliated party of 

CREDIT LYONNAIS, S.A., 

Paris, France 

Docket Nos. 03-041-CMP-I, 03-041-B-I, 03-

041-E-I 

ORDER TO CEASE AND DESIST ISSUED UPON 

CONSENT 

WHEREAS, pursuant to Section 8(b) of the Federal Deposit Insurance Act, as amended (the '' FDI Act'') (12 U.S.C. 

section 1818(b)), the Board of Governors of the Federal 

Reserve System (the ''Board of Governors'') issues this 

consent Order to Cease and Desist (the ''Order'') against 

Jean Peyrelevade (''Peyrelevade''), a former institutionaffiliated party, as defined in Sections 3(u) and 8(b)(4) of 

the FDI Act (12 U.S.C. sections 1813(u) and 1818(b)(4)), 

of Credit Lyonnais, S.A., Paris, France (''Credit Lyonnais''), a foreign bank; 

WHEREAS, the Board of Governors, on December 18, 

2003, issued a combined Notice of Charges and of Hearing, 

Notice of Assessment of Civil Money Penalties, and Notice 

of Intent to Prohibit (the ''December 18, 2003, Notice'') 

against Peyrelevade. The December 18, 2003, Notice alleges that Peyrelevade participated in violations of law and 

regulation and engaged in unsafe and unsound practices 

with respect to alleged violations by Credit Lyonnais in 

connection with its alleged acquisition and retention of 

indirect control of voting shares of the successor to the 

Executive Life Insurance Company of California. Peyrelevade has denied the allegations; 

WHEREAS, Peyrelevade and the United States Attorney 

for the Central District of California have entered into a 

plea agreement in accordance with the principles of North 

Carolina v. Alford, 400 U.S. 25 (1970) and United States v. 
Alber, 56 F.3d 1106 (9th Cir. 1995) related to certain 

matters set forth in the December 18, 2003, Notice which, 

if accepted by the United States District Court for the 

Central District of California, will result in Peyrelevade 

being precluded from participating in the conduct of the 

affairs of an insured depository institution in the United 

States pursuant to 12 U.S.C. section 1829 and paying a fine 

of $500,000; 

WHEREAS, pursuant to the provisions of this Order, 

Peyrelevade has agreed to certain limitations and restrictions regarding his participation in the conduct of the affairs 

of foreign banks in the United States; 

WHEREAS, this Order resolves the proceedings initiated by the December 18, 2003, Notice; and 

WHEREAS, by affixing his signature hereunder, 

Peyrelevade has consented to the issuance of this Order by 

the Board of Governors, has agreed to comply with each 

and every provision of this Order, and has waived any 

and all rights he might otherwise have pursuant to 

12 U.S.C. section 1818 or 12 C.F.R. Part 263, or otherwise (a) to a hearing for the purpose of taking evidence 

with respect to any matter implied or set forth in the 

December 18, 2003 Notice or herein; (b) to obtain judicial review of this Order or any provision hereof; and (c) 

to challenge or contest in any manner the basis, issuance, 

validity, effectiveness, or enforceability of this Order or 

any provisions hereof. 

NOW, THEREFORE, before the introduction of any 

testimony or adjudication of, or finding on, any issue of fact 

or law implied herein, and without this Order constituting 

an admission by Peyrelevade of any allegation made or 

implied by the Board of Governors in connection with this 

proceeding, and solely for the purpose of settlement of this 

proceeding and to avoid protracted or extended proceedings: 

IT IS HEREBY ORDERED, pursuant to section 8(b) of 

the FDI Act that: 

1. Peyrelevade shall not, directly or indirectly, violate the 

Bank Holding Company Act 12 U.S.C. section 1841 

et seq., as amended (the ''BHC Act'') or any rules or 

regulations issued pursuant thereto. 

2. Without the prior written approval of the Board of 

Governors and the appropriate federal banking agency, 

Peyrelevade shall not serve or function as an officer, 

director, employee, or agent of any United States 

branch or agency, United States commercial lending 

company, or other United States subsidiary of a foreign 

bank that is subject to the provisions of 12 U.S.C. 

section 3106(a). 

3. Without the prior approval of the Board of Governors 

and the appropriate federal banking agency, while 

serving as an officer, director, or employee outside of 

the United States of a foreign bank that is subject to 

12 U.S.C. section 3106(a), or any subsidiary of a 

foreign bank that is subject to 12 U.S.C. section 3106(a) (collectively, a ''Foreign Banking Organization''), Peyrelevade shall not: 

(a) assume direct reporting responsibility for the management of any United States branch, agency, or 

United States commercial lending company or 

other United States subsidiary of a Foreign Banking Organization; 

(b) participate, directly or indirectly, in any audit of 

any United States branch, agency, or United States 

commercial lending company or other United 

States subsidiary of a Foreign Banking Organization, or participate in any review of or response to 

such an audit, provided that, Peyrelevade may 

provide information to persons conducting such 

audits upon the request of such persons; and 

(c) participate in any manner in any decision by a 

Foreign Banking Organization with respect to the 

acquisition or retention by the Foreign Banking 

Organization of 5 percent or more of the voting 

shares of any United States company, unless he: 

(i) consults experienced outside counsel to advise him on the implications of the acquisition 

or retention under the BHC Act, and makes 

full disclosure to such counsel on all material 

aspects of the transaction that may affect its 

treatment under the BHC Act; 

(ii) notifies the Board of Governors in writing of 

his involvement in the transaction before it is 

completed, separate from any other notification or application requirements applicable to 

the Foreign Banking Organization; and 

(iii) promptly thereafter produces to the Board of 

Governors, upon request, all documentation 

describing the terms of the proposed transaction and his role in it. 

4. Within ten days of this Order, Peyrelevade shall designate an agent in the United States acceptable to the 

Board of Governors with respect to the service of 

process in connection with the enforcement of this 

Order. 

5. Peyrelevade irrevocably consents to the jurisdiction of 

the Board of Governors with respect to any aspect of 

this Order or any violation thereof. 

6. The provisions of this Order shall not bar, estop, or 

otherwise prevent the Board of Governors or any other 

U.S. federal or state agency or department from taking 

any other action affecting Peyrelevade; provided, however, the Board of Governors shall take no further 

action against Peyrelevade based on or with respect to: 

(i) any matters set forth in the December 18, 2003 

Notice; (ii) any of the '' Specified Acts or Omissions,'' 

attached as Exhibit B to the Plea Agreement; or (iii) 

any facts encompassed in the allegations recited in the 

Order to Cease and Desist and Order of Assessment of 

Civil Money Penalty issued by the Board of Governors 

against Credit Lyonnais, dated December 18, 2003. 

7. This Order shall become effective upon the acceptance 

of the Plea Agreement by the United States District 

Court for the Central District of California. In the event 

that the Plea Agreement is rejected by the United 

States District Court for the Central District of California, this Order shall be null and void and shall not be 
construed as an admission of guilt, liability, or any 

alleged factual matter referenced herein nor as a waiver 

of any potential defense that otherwise might be available to Peyrelevade. In the event that this Order 

becomes effective, each provision of this Order shall 

remain effective and enforceable until stayed, modified, terminated or suspended by the Board of Governors. Peyrelevade may apply to the Board of Governors to have this Order terminated, modified, or 

amended. 

8. No amendment to the provisions of this Order shall be 

effective unless made in writing by the Board of 

Governors and Peyrelevade. 

9. No representations, either oral or written, except those 

provisions as set forth herein, were made to induce any 

of the parties to agree to the provisions as set forth 

herein. 

10. All communications regarding this Order shall be 

addressed to: 

(a) Richard M. Ashton 

Deputy General Counsel 

Board of Governors of the Federal Reserve System 

20th and C Streets, NW 

Washington, DC 20551 

(b) Mr. Robert A. O'Sullivan 

Senior Vice President 

Federal Reserve Bank of New York 

33 Liberty Street 

New York, NY 10045 

(c) Mr. Jean Peyrelevade 

c/o John L. Douglas and 

John E. Stephenson, Jr. 

Alston & Bird LLP 

1201 W. Peachtree Street 

Atlanta, GA 30309-3424 

By Order of the Board of Governors of the Federal 

Reserve System, effective this 19th day of January 2006. 

BOARD OF GOVERNORS OF THE 

FEDERAL RESERVE SYSTEM 

JENNIFER J. JOHNSON 

Secretary of the Board 

(signed) 

Jean Peyrelevade