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Interpretations and Actions: April 2004

Vol. 17, No. 4

Interpretive Letters

Letter No. Topic
986 Letter discusses the distinction between technology advisory services that are part of the business of banking (advice on processing banking, financial or economic data) and can be offered to anyone versus advisory services that are incidental and, thus can be offered only to customers of linked banking products (advice on general technology that customers can use to connect to on-line bank services). 02/24/2003
987 Letter opines that in most instances second mortgages liens will not constitute recourse because second mortgage liens generally do not function as credit enhancements under the risk-based capital guidelines. 03/17/2003
988 Letter examines various synthetic securitizations using credit derivatives. Reaffirms application of Joint Agency Guidance on Synthetic Collateralized Loan Obligations, OCC Bulletin 99-43 (November 15, 1999) (as amended), and a final rule on the Capital Treatment of Recourse, Direct Credit Substitutes, and Residual Interests in Asset Securitizations, 66 Fed. Reg. 59621 (November 29, 2001), to synthetic securitizations of residential mortgage loans that employ credit default swaps (CDS) and credit linked notes (CLN) to provide credit protection to mezzanine positions. It also concludes that mezzanine credit protection provided by the bank in a government sponsored enterprise (GSE) transaction are considered credit support under the recourse provisions in final rule amending the risk-based capital guidelines. 07/28/2003
989 Letter states that the actual operating income of a multifamily residential property must be used by the bank in order to determine whether the loan secured by a first mortgage on a multifamily residential property would satisfy the annual net operating income (debt service ratio) requirements, and therefore, quality for the 50 percent risk weight under the risk-based capital guidelines 08/18/2003
990 Letter concludes that merchant processing intangible assets (MPI) do not satisfy the separability, valuation, and marketability criteria, and therefore, would not constitute a qualifying intangible asset permitted to count as Tier 1 capital under the risk-based capital guidelines 10/17/2003

Starting this month, the OCC will incorporate community development letters in Interpretations and Actions that reflect precedent setting investments made by banks under 12 CFR 24 authority. These letters summarize community development investments consistent with the public welfare requirements of the regulation.

Community Development Investment Letters

Letter No. Topic
2003-1 A national bank may purchase an equity interest in a limited liability company (LLC) whose primary purpose is to invest in an operating company that employs individuals, which employment is expected to qualify the operating for federal employment tax credits, including the Work Opportunity Credit, the Welfare to Work Credit, and the Renewal Community Employment Credit. 09/26/2003

Corporate Decisions

Letter No. Topic
2004-7 Application to merge Security Trust Company, N.A., Phoenix, Arizona, into its nonbank affiliate, STC Resolutions, Inc. (Control Number 2004 WE 12 0003), 03/31/2004

Approvals with Conditions Enforceable under 12 U.S.C. 1818

Letter No. Topic
626 Application to merge American Investment Financial of Salt Lake City, Utah with and into American Investment Bank, National Association, Salt Lake City, Utah. (Control Number 2004 WE 02 0004), 03/01/2004
627 Application to establish a new uninsured national trust bank, which will engage solely in fiduciary activities with the title of PennRock Financial Advisors, National Association, Blue Ball, Pennsylvania and the request to establish the new bank as an operating subsidiary of Blue Ball National Bank, Blue Ball, Pennsylvania. (Control Numbers 2003 NE 01 0021 & 2003 NE 08 026), 03/01/2004
628 Application to establish a new national bank with the title of Bank of Louisa, National Association, Louisa, Virginia. (Control Number 2004 SO 01 0001), 03/02/2004
629 Application to establish a new national bank with the title of Post Oak Bank, National Association, Houston, Texas. (Control Number 2004 SO 01 0004), 03/05/2004
630 Application by Treasury Bank, National Association, Alexandria, Virginia, to increase its capital surplus by up to $250 million. (Control Number 2004 NE 12 0068), 03/25/2004
631 Application to establish a new national bank with the title of Flint River National Bank, Camilla, Georgia. (Control Number 2004 SO 01 0003), 03/26/2004

Final Enforcement Actions

Enclosed is a copy of the OCC's news release number 2004-33, announcing the availability of enforcement actions. Copies of the final actions are available by writing to the OCC, Public Reference Room, Mailstop 1-5, Washington, D.C. 20219. When ordering, specify the appropriate enforcement action number.

Community Reinvestment Act (CRA) Performance Evaluations

Enclosed is a list of CRA performance evaluations that became public during the period of March 15 through April 14, 2004.

PLEASE NOTE: Interpretive Letters and No-Objection Letters reflect the views of the Comptroller's legal staff. Corporate Decisions, CRA Decisions and Conditional Approvals are from the Licensing department. The Community Development Investment Letters are from the office of Community Affairs. The list of CRA Ratings is from the Communications Division. For copies of the CRA evaluations, you may either contact the bank directly, or you may write to the Office of the Comptroller of the Currency (OCC) in any of three ways: by mail to the OCC, Attn: Public Information Room, Mail Stop 1-5, Washington, D.C. 20219; by fax to (202) 874-4448; or by e-mail to You may also write to the OCC for copies of enforcement actions and charters with standard conditions.

Members of the news media are encouraged to cite the letter number when reporting or summarizing documents from this package. This helps us to process single requests based upon your citation in a more timely manner.

The Office of the Comptroller of the Currency publishes INTERPRETATIONS AND ACTIONS monthly. Subscriptions are available at a rate of $175 per year by writing to the Comptroller of the Currency, ATTN: Accounts Receivable, Mailstop 4-8, 250 E Street, S.W., Washington, DC 20219. Prepayment is requested. Suggestions, comments or questions may be sent to Jacqueline J. England, Communications Division, Comptroller of the Currency, Mail Stop 3-2, Washington, DC 20219.