Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69U - FSC - Financial Institution Regulation › Chapter 69U-105 - LICENSING AND CHARTERING OF FINANCIAL INSTITUTIONS › Section 69U-105.505 - Regulatory Standards for Evaluating Applications

Current through Reg. 50, No. 138; July 16, 2024
(1) OFR shall approve or disapprove
				applications for authority to exercise trust powers. In considering such
				applications, the applicant's capacity to support such an undertaking is of
				major importance. The closing of a trust department does not present the same
				risk of loss to the public as does the failure of a financial institution.
				Therefore, the judgment of the applicant as to the viability of the proposed
				trust department will ordinarily be respected, provided that in the opinion of
				OFR, the applicant's capacity is sufficient or will be enhanced by the new
				activity.
(2) Standards. In making
				its determination, OFR shall consider the following criteria:
(a) The general condition of the applicant
				state bank or association is sufficient to support the proposed trust
				department. OFR will review the financial condition of the state bank or
				association utilizing all data available to it in assessing this criteria. In
				assessing general conditions concerning applications for authority to organize
				a state bank or association, OFR will also rely on its analysis of the
				materials including projections submitted with the application.
(b) The earnings and earning prospects of the
				applicant state bank or association, including the earning prospects of the
				proposed trust department, are sufficient to support the anticipated expenses
				and any anticipated operating losses of the trust department during its initial
				years. For a state bank or association, a net profit to asset ratio of 0.5
				percent or above for each of the four quarters preceding the date of the
				application is generally considered adequate to support expansion for a trust
				department. The applicant will furnish to OFR supporting documentation of its
				compliance with the net profit to assets ratio as part of the application. In
				addition, major fluctuations in quarterly earnings used in the above
				calculation should be discussed as part of the application. However, factors
				such as liquidity, asset condition, managerial capacity, past performance,
				among others, are important in assessing the overall capacity of a state bank
				or association to establish a trust department and may have an impact on the
				relative significance of a net profit to asset ratio above or below 0.5
				percent. With respect to proposed state banks or associations, OFR will rely on
				its analysis of all data submitted with the application for authority to
				organize, with emphasis upon the information which relates to prospects of
				successful operation.
(c) The
				capital structure of the state bank or association is adequate to support the
				trust department. Addition of a trust department adds responsibilities and
				liabilities of a kind not found in ordinary commercial banking or association
				activity. The financial institution must pledge to the Chief Financial Officer
				the amount required by section
				660.27(1),
				F.S., as a guarantee of sound operation of the trust department. This reduces
				capital protection for the balance of the state bank or association operations.
				Therefore, a state bank or association with trust powers should have a
				comparatively larger capital structure. Total capital accounts, excluding
				reserves, should equal or exceed 7.0 percent of total assets to be considered
				adequate to support the expansion for a trust department. However, other
				factors, including earnings, managerial capacity, asset condition, past
				performance, and degree of liquidity, among others, are important in assessing
				the overall capacity of a state bank or association to establish a trust
				department and may have an impact on the adequacy of the capital to assets
				ratio.
(d) The proposed senior
				trust officers have sufficient trust and related investment, financial,
				managerial experience, ability, and standing to operate the trust department.
				Trust operation is a highly specialized business and requires substantial trust
				experience on the part of the trust officer. Proposed officers shall have
				demonstrated abilities and experience commensurate with the position for which
				proposed.
(e) Provision has been
				made for the trust department to occupy suitable quarters at the location
				specified in the application. Applicant's estimation of space requirements for
				the trust department will ordinarily be respected, provided, that such
				allocated space is clearly identified as the trust department of the state bank
				or association.