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Interpretations and Actions: July 2008

Vol. 21, No. 7

Interpretive Letters

Letter No. Topic
1099 Letter addresses how the asset quality test will apply to a liquidity facility under the OCC's and Federal Reserve's risk-based capital rules. Specifically, the letter clarifies how the credit conversion factor applicable to a liquidity facility will be determined. If a liquidity facility is deemed to be an "eligible" facility, the bank may use a 10 percent conversion factor, when converting the unused portion of the facility to an on-balance sheet credit risk equivalent amount. The letter clarifies how the asset quality test for eligibility should be applied when the underlying assets contain equity securities. Because the 90 days past due criterion is not applicable to an equity security, an alternative asset quality test was needed when the liquidity facility covers a conduit that contains margin loans on equity securities. Specifically, as long as the margin loans that might be purchased at par under the provisions of the liquidity facility are over-collateralized by at least 25 percent, the liquidity facility will be an eligible facility. 05/11/2007
1100 Letter concludes that interest rates and fees constituting interest that may be imposed under 12 U.S.C. ยง 85 by a national bank operating subsidiary permissibly may be based on the usury laws of the parent bank's home state under circumstances where parent bank may charge home state rates, even though the operating subsidiary has no offices in that home state. 05/05/2008
1101 Letter concludes that the Bank may act as a financial intermediary in customer-driven, perfectly matched, cash-settled derivative transactions referencing risk indices associated with designated types of natural events and catastrophes. The Bank's role is to negotiate a financial contract with one customer and an offsetting contract with a second customer. By engaging in the described activities, the Bank will not be providing insurance in a state as principal, as generally prohibited by GLBA section 302. Before the Bank may engage in the transactions, the Bank must notify its EIC, in writing, of the proposed activities and must receive written notification of the EIC's supervisory no-objection. 07/07/2008

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

Letter No. Topic
856 Application by Raymond James Trust, National Association, St. Petersburg, Florida to merge with Raymond James Trust Company West, Tacoma, Washington, under the charter and title of Raymond James Trust, National Association (Control Number 2008 NE 02 014), 05/22/2008
857 Application to establish a new national bank with the title of "New Horizon Bank, National Association" headquartered in Powhatan, Virginia (Control Number 2008 NE 01 0002), 06/12/2008
858 Application to establish a new national bank with the title of "CornerStone Bank, National Association" headquartered in Lexington, Virginia (Control Number 2008 NE 01 0003), 06/12/2008
859 Applications by Mellon Bank, N.A., and certain affiliates to combine and reorganize their banking and trust business lines (Control Numbers 2008 NE 05 0041 & 0042; 2008 NE 02 0006 - 0009 & 0013; 2008 NE 01 0007; 2008 NE 08 0007; 2008 NE 12 0065, 0069 - 0070, & 008; and 2008 NE 04 0002), 06/13/2008
860 Application to establish a new national bank with the title of "Heritage Bank, National Association" headquartered in New York, New York (Control Number 2008 NE 01 0001), 06/18/2008
861 Application of First Gulf Bank, N.A., Pensacola, Florida to sell substantially all of its assets and liabilities to RBC Bank (USA), Raleigh, North Carolina (Control Number 2008 SO 12 0097), 06/19/2008
862 Application to establish a new national bank with the title of "Coastal Carolina National Bank" headquartered in Myrtle Beach, South Carolina (Control Number 2008 NE 01 006), 06/20/2008
863 Application to establish a new national bank with the title of "Semoran National Bank" headquartered in Fern Park, Florida (Control Number 2008 SO 01 0001), 06/25/2008
864 Applications from JPMorgan Chase Bank, National Association, Columbus, Ohio to acquire four operating subsidiaries from The Bear Stearns Companies, Inc., that engage in various derivative and mortgage lending activities (Control Numbers 2008 ML 08 0010, 0011, and 0012), 06/30/2008
865 Applications by Bank of America, National Association, Charlotte, North Carolina for a material noncash contribution to surplus and to reduce permanent capital (Control Numbers 2008 ML 12 0139 and 0140), 06/30/2008
866 Application by First National Bank of Arizona, Scottsdale, Arizona for a material noncash contribution (Control Number 2008WE 12 0128), 06/30/2008

Final Enforcement Actions

Enclosed is a copy of the OCC's news release number 2008-89, announcing the availability of enforcement actions. Copies of the final actions are available by writing to the OCC, Public Information Room, Mail Stop 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 June 15, 2008 through July 14, 2008.

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 office of Licensing. 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 timelier manner.

The Office of the Comptroller of the Currency publishes INTERPRETATIONS AND ACTIONS monthly. Subscriptions are available at a rate of $200 per year by writing to the Comptroller of the Currency, ATTN: Financial Management, Accounts Receivable, Mail Stop FM-2, Washington, DC 20219. Prepayment is requested. Suggestions, comments or questions may be sent to Jacqueline J. England, Comptroller of the Currency, Communications Division, Mail Stop 3-2, Washington, DC 20219.