Department of Banking and Finance bulletin, Feb. 28, 2005

. . .BULLETIN. . .BULLETIN. . .BULLETIN. . .BULLETIN. . .

STATE OF GEORGIA
DEPARTMENT OF BANKING AND FINANCE
2990 Brandywine Road, Suite 200 Atlanta, Georgia 30341-5565

DAVID G. SORRELL, COMMISSIONER

Phone: (770) 986-1633

Fax: (770) 986-1655

Internet Address: http://www.gadbf.org
February 28, 2005
The following is a summary of official action taken on applications by State Financial Institutions under Chapter 7-1 of the Code of Georgia and petitions for Certificate of Incorporation of Financial Institutions and other matters of interest during the month of February 2005.
IN THIS ISSUE:
Investments in Student Loan Marketing Association and Sallie Mae Corporation Federal Agencies Issue Final Guidance on Overdraft Protection Programs Confidentiality of Financial Institution Supervisory Ratings Real Estate Brokers and Unlawful Residential Mortgage Activities

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APPLICATIONS FOR NEW FINANCIAL INSTITUTION

FINANCIAL INSTITUTION Northside Bank 7741 Adairsville Highway Adairsville, GA 30103 Bartow County

CAPITALIZATION APPROVAL DATE

$ 10,000,000

Pending

BEGIN BUSINESS DATE

Sentry State Bank 245 Perimeter Center Parkway, Suite 600 Atlanta, GA 30346 DeKalb County

$ 35,000,000

Pending

Hometown Community Bank 6700 Highway 53 Braselton, GA 30517 Jackson County

$ 9,500,000

02-21-2005

Georgia Heritage Bank Jimmy Campbell Parkway & Thomas Murphy Drive Dallas, GA 30132 Paulding County

$ 12,000,000

Pending

Cornerstone Bank of Georgia Highway 138 & Spring Street Monroe, GA 30655 Walton County

$ 11,750,000

Withdrawn 02-09-2005

American Southern Bank 1450 Mansell Road Roswell, GA 30076 Fulton County

$ 8,000,000

Pending

PREVIOUS NAME The Buckhead Community Bank, NA

FINANCIAL INSTITUTION CONVERSIONS

CONVERTED TO The Buckhead Community Bank Atlanta Fulton County

APPROVAL DATE Pending

EFFECTIVE DATE

FINANCIAL INSTITUTION SunTrust Bank Atlanta

APPLICATIONS TO ESTABLISH A BRANCH OFFICE

BRANCH OFFICE Pan Am Safeway In-Store Branch Office 3043 Nutley Street Fairfax, VA 22031 Fairfax County

APPROVAL DATE
02-21-2005

BEGIN BUSINESS DATE

SunTrust Bank Atlanta

Colonial Boulevard Wal-Mart Office 4770 Colonial Boulevard Ft. Myers, FL 33912 Lee County

10-18-2004

02-16-2005

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FINANCIAL INSTITUTION SunTrust Bank Atlanta

BRANCH OFFICE Holly Oaks/Wal-Mart Branch Office 1441 Hutchinson Park Drive Jacksonville, FL 32225 Duval County

SunTrust Bank Atlanta

Normandy/Wal-Mart Branch Office 6830 Normandy Boulevard Jacksonville, FL 32205 Duval County

SunTrust Bank Atlanta

Sandalwood/Wal-Mart Branch Office 11900 Atlantic Boulevard Jacksonville, FL 32225 Duval County

SunTrust Bank Atlanta

Ocoee Wal-Mart Branch Office 10500 West Colonial Drive Ocoee, FL 34761 Orange County

SunTrust Bank Atlanta

Orange Park/Wal-Mart Branch Office 1505 County Road 220 Orange Park, FL 32003 Clay County

SunTrust Bank Atlanta

South Sebastian-Indian River Branch Office 9601 U.S. Highway One Sebastian, FL 32958 Indian River County

SunTrust Bank Atlanta

Waldorf Marketplace Safeway In-Store Branch Office 11380 Plaza Drive Waldorf, MD 20603 Charles County

SunTrust Bank Atlanta

Winter Garden Branch Office West Colonial Drive & Daniels Road Winter Garden, FL 34787 Orange County

United Community Bank Blairsville

Trion Branch Office 14031 Highway 27 Trion, GA 30753 Chattooga County

Colony Bank Southeast Broxton

Savannah Branch Office 7011 Hodgson Memorial Drive Savannah, GA 31406 Chatham County

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APPROVAL DATE
Pending

BEGIN BUSINESS DATE

Pending

Pending

01-06-2005

02-23-2005

Pending

10-12-2004

02-07-2005

02-21-2005

11-17-2003

02-28-2005

02-24-2005

02-08-2005

FINANCIAL INSTITUTION Georgia Heritage Bank (I.O.) Dallas

BRANCH OFFICE West Cobb Branch Office Hwy 20 Marietta, Georgia 30132 Cobb County

APPROVAL DATE
Pending

BEGIN BUSINESS DATE

Horizon Bank Decatur

Decatur Branch Office 2175 Lawrenceville Highway Decatur, GA 30033 DeKalb County

02-16-2005

First Georgia Community Bank Jackson

Covington Branch Office 3147 Highway 278 Covington, GA 30014 Newton County

Pending

New Southern Bank Macon

Monroe Street Branch Office 494 Monroe Street Macon, GA 31201 Bibb County

12-19-2003

02-07-2005

FINANCIAL INSTITUTION The Coastal Bank of Georgia Brunswick

APPLICATIONS TO CHANGE LOCATION

CHANGE LOCATION OF North Brunswick Branch Office From: 4501 Altama Avenue Brunswick GA 31525 Glynn County To: Scranton Road & Scranton Connector Brunswick GA 31525 Glynn County

APPROVAL DATE EFFECTIVE DATE 02-03-2005

United Bank Zebulon

Madison Branch Office From: 1690 Eatonton Highway
Madison GA 30650 Morgan County To: 256 North Main Street Madison GA 30650 Morgan County

02-24-2005

PREVIOUS NAME Peoples Community Bank Colquitt
PROPOSED NAME Bank of Ellijay

NOTICE OF CHANGE IN NAME
NEW NAME PCB, The Community Bank

APPROVAL EFFECTIVE

DATE

DATE

02-28-2005

APPLICATIONS FOR RESERVATION OF A NAME

COUNTY Gilmer County

APPLICANT Mr. Brent H. Baker, President Brent Baker, Inc. 6020 Rose Hill Court Cumming, GA 30041

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PROPOSED NAME Flint Community Bank

COUNTY Dougherty County

APPLICANT Mr. Byron Richardson, Principal BankResources, Inc. 2451 Cumberland Parkway, Suite 3618 Atlanta, GA 30339-6157

FINANCIAL INSTITUTION (SURVIVOR) United Community Bank
Blairsville, GA

FINANCIAL INSTITUTION MERGERS
MERGED INSTITUTION Liberty National Bank Conyers, GA

APPROVAL EFFECTIVE

DATE

DATE

02-02-2005 02-04-2005

Etowah Valley Federal Credit Union Cartersville, GA

All Star Credit Union Cartersville, GA

02-16-2005

Peoples Community Bank Colquitt, GA

Peoples Community Bank Columbia, AL

02-28-2005

Peoples Community Bank Colquitt, GA

PCB, The Community Bank Malone, FL

02-28-2005

The Southern Federal Credit Union Fayetteville, GA Crescent Bank and Trust Company Jasper, GA GE Capital Consumer Card Co. Mason, OH

Tara Credit Union Fayetteville, GA Futurus Bank, N. A. Alpharetta, GA Monogram Credit Card Bank of Georgia Alpharetta, GA

02-16-2005 Pending
01-31-2005 02-07-2005

APPLICATIONS TO BECOME A BANK HOLDING COMPANY AND/OR TO ACQUIRE VOTING STOCK OF A FINANCIAL INSTITUTION

BANK HOLDING COMPANY

TO ACQUIRE

APPROVAL DATE

FORMATIONS Capitol Bancorp Limited Lansing, MI

Peoples State Bank Jeffersonville, GA

Pending

ACQUISITIONS CompuCredit Corporation Atlanta, GA

Sentry State Bank (IO) Atlanta, GA

Pending

Synovus Financial Corp. Columbus, GA

Cohutta Banking Company of Tennessee (IO) Chattanooga, TN

02-22-2005

APPLICATIONS FOR NEW SALE OF CHECK

CHECK SELLER
Custom House Currency Exchange Ltd. Victoria, British Columbia, Canada

APPROVAL DATE 02-07-2005

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CITY Dalton Atlanta Atlanta Atlanta Marietta East Ellijay Savannah Suwanee Smyrna Dalton Dalton Calhoun Dalton Norcross Conyers Duluth Savannah McDonough

CHECK CASHER LICENSES ISSUED

APPLICANT NAME * Alarcon, Rito
Classic Petroleum, Inc. Epiphany Funding, LLC Georgia Cash America, Inc. * Heily, Inc. * Hilltop Beverage, LLC Lawrence Stevens, Inc. * Lawrenceville-Suwanee LLC * Mala Tilva, Inc. * Meet One, Inc. * Morales, Juan A. National Title Pawn of Calhoun, Inc. National Title Pawn of Cleveland, Inc. * Omega Gems & Electronics, Inc. RS & S Investments, Inc. Roshani, Inc. * Southeast Air Vac, Inc. VSPA Corporation

TRADE NAME Carniceria Loa #1 Busy Bee Epiphany Check Cashing Cash America Pawn Elite Package Store Hilltop Package Skidaway Check Cashing Beverage SuperStore Spring Road Package Store Antioch Convenience Store Morales Income Tax National Title Pawn of Calhoun National Title Pawn of Cleveland E-Z Check Cashing RS & S Investments Duluth Shell Bull & Derenne Check Cashing Henry County BP

* = Registered Exempt (O.C.G.A. 7-1-709)

NOTICES

Investments in Student Loan Marketing Association and Sallie Mae Corporation
Sallie Mae Corporation (SLM) was created by Congress in 1972 as a government-sponsored enterprise (GSE) known as the Student Loan Marketing Association (SLMA). SLM began privatizing its operations in 1997, a process it completed at the end of 2004 when it terminated all ties to the federal government.
SLM is now a wholly private company and its common stock trades on the New York Stock Exchange under the symbol SLM. It is the nation's leading provider of education funding. SLM has diversified its business beyond student loans to include guarantor servicing, debt collection and consumer finance.
Effective with the privatization, investments in and obligations of SLM Corporation are no longer considered obligations of the United States Government, nor any corporation owned directly by the United States Government.
No obligations of SLM Corporation may be acquired after February 28, 2005 by State-chartered financial institutions. In order to provide an ample opportunity for supervised financial institutions to divest of obligations of SLM Corporation currently held, a "grandfather period" of one year is being established. Financial institutions must divest of holdings no later than February 28, 2006, unless permission is received in the interim to hold such investments beyond the 2006 deadline. Requests for permission to continue to hold such investments shall be made in writing, and include:
1. A complete description of the obligation held; 2. The extent of any continued guarantee by the United States Government or agency thereof; 3. A summary of efforts made to divest of the investment prior to February 28, 2006; and
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4. Reasons why continuing to hold such obligations are in the best interests of the financial institution.
Previous determinations of eligibility for investment in issues or obligations of the Student Loan Marketing Association, a GSE, shall not extend to issues or obligations of SLM Corporation, a wholly private, publicly traded company.
Specific authority to determine eligibility for pledging of obligations to secure state deposits is reserved for the Georgia State Depository Board. In those situations where the Department has the discretion to interpret and apply State law, SLM Corporation obligations are not considered eligible for pledging, effective February 28, 2005, absent authoritative legal interpretations to the contrary. Ineligibility for pledging shall not be subject to a grandfather privilege.
Federal Agencies Issue Final Guidance on Overdraft Protection Programs
On February 18, 2005, the federal bank and credit union regulatory agencies announced final joint guidance to assist insured depository institutions in the disclosure and administration of overdraft protection programs.
Depository institutions may offer overdraft protection programs to transaction account customers as an alternative to traditional ways of covering overdrafts. In response to concerns about the marketing, disclosure, and implementation of these programs, the agencies published for comment proposed interagency guidance on overdraft protection programs in June 2004. The final joint guidance responds to comments received by consumer and community groups, individual consumers, depository institutions, trade associations, vendors offering overdraft protection products, other industry representatives, and state agencies.
The final joint guidance contains three primary sections: Safety and Soundness Considerations; Legal Risks; and Best Practices. The safety and soundness discussion seeks to ensure that financial institutions offering overdraft protection programs adopt adequate policies and procedures to address credit, operational, and other associated risks.
The legal risks discussion alerts institutions of the need to comply with all applicable federal and state laws, and advises institutions to have their overdraft protection programs reviewed by legal counsel to ensure overall compliance prior to implementation. Several federal consumer compliance laws are outlined in the guidance. Note that this interagency guidance characterized overdraft protection programs as credit, although not subject to all of the consumer disclosure requirements of the Truth-in-Lending Act and focusing on the risks involved in offering this product.
The Department intends to look more closely at this guidance and how it interacts with AG Opinion 2003-9. The AG Opinion concentrated its discussion on the time value of money aspect of an overdraft program, and although the "credit" aspect is part of the analysis, both elements need to be present before a charge will be considered interest.
The guidance does raise concerns, however, about the charges for the product, because the federal regulators have, to some extent and at least for federal law purposes, already decided the "credit" portion of the analysis. This may focus more attention on the "time value of money" part of the state law. The Department suggests that financial institutions look carefully at their overdraft programs to be sure they comply with both state and federal law. Consultation with legal counsel may be advisable.
The best practices section addresses the marketing and communications that accompany the offering of overdraft protection programs as well as the disclosure and operation of these programs. Some of these best practices include: avoiding the promotion of poor account management; providing a clear explanation of the discretionary nature of the overdraft protection program; clearly disclosing fees; explaining the impact of transaction clearing policies on the overdraft fees consumers may incur; and monitoring program usage. The agencies also advise insured depository institutions to distinguish overdraft protection services from "free" account features, to prominently distinguish balances from overdraft protection funds availability, and to alert consumers before a transaction triggers any fees.
The guidance is being issued by the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC). It will be
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published shortly in the Federal Register. The Federal Register Notice can be found at: http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050218/attachment.pdf.
Confidentiality of Financial Institution Supervisory Ratings
Federal Banking Agencies Issue Advisory on Confidentiality of Supervisory Ratings
On February 28, 2005, the federal banking and thrift agencies issued an interagency advisory to remind financial institutions that they are prohibited by law from disclosing their CAMELS rating and other nonpublic supervisory information without permission from the appropriate federal banking agency. Today's advisory is prompted by insurers who have requested or required banks and savings associations to disclose their CAMELS rating during the underwriting process for directors and officers liability coverage.
As a result of actions by insurers, the agencies have requested the assistance of the National Association of Insurance Commissioners (NAIC) in notifying insurance companies that the practice of requesting or requiring CAMELS ratings should be discontinued.
Report of Examination by the Department of Banking and Finance is Strictly Confidential
A report of examination made by an examiner of the Department of Banking and Finance for use in the supervision of an institution is CONFIDENTIAL and may not be disclosed to the public pursuant to State law. The report is the property of the Department of Banking and Finance and is furnished to the institution examined for its confidential use. Under no circumstances shall the institution, or any of its directors, officers, or employees disclose or make public in any manner the report or any portion thereof. If a subpoena or other legal process is received calling for production of this report, the Department of Banking and Finance should be notified immediately. The attorney at whose instance the process was issued and, if necessary, the court which issued it, should be advised of these restrictions and referred to Section 7-1-70 of the Financial Institutions Code of Georgia.
Real Estate Brokers and Unlawful Residential Mortgage Activities
A question often comes up regarding the activities of real estate agents/brokers as to whether or not certain mortgage related types of activities by real estate agents are permitted without requiring the agent to have a mortgage license, or even if the type of activity is permitted at all.
Under the Georgia Residential Mortgage Act, although a real estate broker may refer consumers to a mortgage broker or mortgage lender, Georgia law prohibits a real estate broker from accepting any fee or compensation in any form whatsoever for directly or indirectly negotiating, placing, or finding a mortgage for a Georgia consumer. O.C.G.A. Section 7-1-1001 (4). In order for a real estate broker to receive compensation legally for such services, that real estate broker must first obtain a mortgage broker or mortgage lender license or demonstrate that he, she, or it is exempt from GRMA's licensing requirements. Compensating a real estate broker for such services will subject a Georgia licensed mortgage broker or mortgage lender to revocation procedures as such conduct constitutes engaging in residential mortgage activities with an unlicensed person. O.C.G.A. Section 7-1-1002.
In addition, it has come to the attention of the Department that some institutions and mortgage licensees may compensate real estate companies for mortgage business referrals, regardless of whether or not an application is made. Such compensation is often paid on a monthly flat fee basis or on a number of referrals made basis, etc. regardless of whether or not a closing occurs. It would appear that such activity is a violation of the Real Estate Settlement Procedures Act (RESPA), Section 8(a) which provides that:
"[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."
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Real estate agents working with your institution need to be aware of their need for a mortgage license in order to receive a fee for "brokering" activity, and all settlement service providers to a mortgage transaction need to be aware of these kickback provisions of RESPA. Should you need additional information regarding RESPA, please contact the Atlanta HUD office at 404/331-5001 or visit the RESPA web site at http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm. Back to Top
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