FIT Dept. of Banking and Finance 2990 Brandywine Road, Suit 200 Atlanta, GA 30341-5564 (770) 986-1633 Phone (770) 986-1655 Fax http://www.gadbf.org David G. Sorrell, Commissioner financial institutionS today news about all dbf regulated entities June 30, 2005 Monthly Bulletin #6 Commissioner Sorrell Testifies at the Hearing on the Financial Roundtable's Petition for FDIC Rulemaking Commissioner Sorrell stated that state and national banks must move together on parity to maintain a balanced dual banking system. Atlanta, GA, May 26, 2005: Commissioner David G. Sorrell testified before the FDIC at the Hearing on the Financial Roundtable's Petition for FDIC Rulemaking on May 26th regarding parity for state chartered banks. Concerns were expressed in the Commissioner's testimony regarding the competitive imbalance that has been created between the interstate state and national charters because of the recent preemption of state laws by the Office of the Comptroller of the Currency (OCC). In this Issue: o Commissioner Sorrell Testifies at the Hearing on the Financial Roundtable's Petition for FDIC Rulemaking. o Reynolds Testifies before House Subcommittee on H.R. 1042. o Department Issues Proposed Rulemaking and Opportunity to Comment. o FDIC Releases Central Data Repository (for Call Report) Enrollment FIL-552005. o Bank Holding Company Debt Issues. o Interest Only Mortgages o 2005 Examiners' Conference o Putting an End to Account- Hijacking and Identity Theft: Study Supplement. The Commissioner's concerns are focused on maintaining the viability and competitiveness of the state charter, especially one operating in an interstate banking environment. In so doing, the strength and viability of the dual chartering system for all banks is maintained. It's important that national and state banks have flexibility to address competitive market changes. Commissioner Sorrell stated, "Why not have parity for interstate bank subsidiaries? Level the playing field. Most banks don't want the OCC preemption rolled back, but want the state charter to have parity with the federal charter. Either way, the state and national system of interstate banking should be in equilibrium to best serve all the banks' customers and to maintain true choice in the dual banking system. This is a federal issue and needs a federal response. I urge the FDIC to give clear direction to the petitioner's request for rulemaking. No insured bank should be left behind in its ability to safely and soundly compete." The complete testimony may be viewed at www.gadbf.org/docs/TestimonyonRoundtablePetition.doc . Reynolds Testifies before House Subcommittee on H.R. 1042 George Reynolds, Senior Deputy Commissioner for the Georgia Department of Banking and Finance testified on behalf of NASCUS and state regulators on April 13 at a hearing of the House on Financial Institutions and Consumer Credit in support of H.R. 1042, the Net Worth Amendment for Credit Unions Act. Chairman George Reynolds, Mary Martha Fortney, and Sandra Troutman outside the Capitol Building following Reynolds' well-received testimony. Spencer Bachus (R-Ala.) introduced H.R. 1042 to alleviate problems posed by FASB 141 accounting rules. Reynolds' testimony keyed on the safety and soundness implications to credit unions if the Financial Standards Accounting Board (FASB) implements Rule 141, emphasizing that without the proposed amendment, a merger transaction between two credit unions will not allow the capital of the merging credit union to be added to the retained earnings of the surviving credit union. That would discourage mergers recommended by state regulators, a safety and soundness tool used by regulators that protect funds on deposit from American consumers and preserves the National Credit Union Share Insurance Fund. FASB recommended replacing the pooling method of accounting for the merger of mutuals with a purchase method. This would cause a drop in the surviving credit union's net worth, because after a merger assets would increase, but the capital of the credit union being merged would be booked differently on the balance sheet. This would effectively reduce the surviving credit union's net worth ratio. "While this bill is extremely brief, I cannot overemphasize the criticality of this change to the safety and soundness of credit unions," Reynolds said. He explained to the Subcommittee that the FASB change presents concerns for both credit unions and regulators. The proposed statutory language would amend the definition of net worth in the Federal Credit Union Act to include the combined retained earnings of both credit unions in a merger. "Regulators have been successful in using credit union mergers without cost implications to taxpayers, and without disruption to member services," Reynolds said. "So I do think it is a very serious issue." Madam Chairman JoAnn Johnson of the National Credit Union Administration and Robert Herz, chairman of the FASB also testified. Johnson spoke in support of H.R. 1042, and Herz testified that H.R. 1042 would not impact Generally Accepted Accounting Procedures (GAAP). Subcommittee members were receptive to the legislation, and remarked positively to the testimony presented. Chairman Bachus commented during the hearing that, "absolutely nothing negative has been said about this bill." Page 2 of 11 "This bill is a great example of non-controversial legislation, with bipartisan support," Bachus said. "I would hope we can get this bill on the House floor quickly, and then over to the Senate." George Reynolds testified for NASCUS on importance of passing H.R. 1042. NASCUS STATE LINE, The Biannual Edition, Third Quarter 2005, pp. 1 2. DEPARTMENT ISSUES PROPOSED COMMENT AND OPPORTUNITY TO Pursuant to the provisions of the Georgia Administrative Procedures Act, Official Code of Georgia Annotated (O.C.G.A.) Chapter 50-13 and by authority of O.C.G.A. 7-1-61, O.C.G.A. 7-1-663; O.C.G.A. 7-1-1012, and other cited statutes, the Georgia Department of Banking and Finance hereby gives notice of its intent to adopt new and amended rules. The enclosed proposed changes are in part responsive to law changes in the Department's Housekeeping Bill, SB 82, which was signed by the Governor on May 5, 2005, and effective on May 5, 2005. A synopsis and purpose precedes each proposed rule, with background information and explanation where applicable. Comments to the Department of Banking and Finance must be received by July 29, 2005, at the close of business. Please send all comments to: David G. Sorrell, Commissioner Georgia Department of Banking and Finance 2990 Brandywine Road, Suite 200 Atlanta, GA 30341-5565 Fax: (770) 986-1654 or 1655 The Department shall review all comments, may contact commenters to discuss their suggestions, and after the comment period has closed, will prepare the final rules. The Department will consider the proposed new rules for adoption at a meeting at 10:00 a.m. on Monday, August 15, 2005 at the offices of the Department of Banking and Finance at Suite 200, 2990 Brandywine Road, Atlanta, Georgia 30341. Notice and a copy of the final rules adopted will be e-mailed to persons who have made a special request and will be made available on our website at www.ganet.org/dbf/. Other interested parties may receive a copy of the final rule by contacting the Department at (770) 986-1633, after August 15, 2005. Page 3 of 11 FDIC releases Central Data Repository (for Call Report) Enrollment FIL-55-2005 DON'T MISS YOUR ENROLLMENT TIMEFRAME! The Federal Financial Institutions Examination Council (FFIEC) Call Report agencies (FDIC, FRB, and OCC) have created a secure, shared database for collecting, managing, validating, and distributing Call Report data. The new system, the Central Data Repository (CDR), will be implemented for the third Call Report period of 2005 and will be the ONLY method available for banks to submit their Call Reports. In preparation for the October 2005 implementation of the CDR, financial institutions will be required to enroll in the CDR during an eight-week period beginning in July. To ensure a smooth transition of reporting through the CDR, the enrollment process will be conducted in stages. Please see the FIL released by the FDIC at www.fdic.gov for more information and enrollment timeframes. Additional information on the CDR and the Call Report data modernization initiative is available at the FFIEC website, www.FFIEC.gov/FIND. Helpful materials on global enrollment, including a user guide with screen prints, are available on the CDR Web site under "Help" at CDR.FFIEC.GOV/CDR. Questions about the CDR or the global enrollment process can be submitted via the www.FFIEC.gov/FIND site or directed to the CDR Help Desk at 1-888-CDR-3111. HAVE YOU ENROLLED? Bank Holding Company Debt Issuance We have received notifications from the Federal Reserve Bank of Atlanta indicating a number of Georgia bank holding companies plan to issue, or recently have issued, trust preferred securities. Please be aware that approval of the Department should be obtained in writing prior to the bank holding company entering into any type of debt issuance that exceed requirements of Rule 80-6-1-.12. The request for approval of debt waiver should include: The total aggregate contractual debt obligations and the terms of the debt; The specific reason for borrowing and the proposed use of proceeds; Pro forma financial projections during the first five years of the debt service period showing that the bank holding company can service the debt without financially straining its subsidiary bank(s) including the following: o Pro forma parent company cash flow statement; o Pro forma parent only and consolidated balance and income statement; o Debt repayment source. If repayment source involves bank dividends, the schedule should show the bank(s) will remain well-capitalized during the debt repayment period; o Capital Plan and capital ratio; and Page 4 of 11 o At least one alternate repayment source. Specifically, Rule 80-6-1-.012 of the Department states: No Georgia bank holding company or holding company owning a Georgia bank may enter into contractual debt obligations which in the aggregate are dependent upon revenues produced by subsidiaries for annual servicing during the term of the debt in excess of fifty (50) percent of the average annual consolidated net operating earnings of such subsidiaries for the three fiscal years immediately preceding the date of the extension of credit. The Department, upon specific written request of the holding company, may waive this requirement. In issuing debt, we ask also that you remain mindful of the restrictions for payment of dividends by bank subsidiaries. If the dividends are to be paid outside of such regulatory restrictions, appropriate approval must be obtained prior to payment. Department Issues Guidance on Interest Only Mortgages. To view, go to http://www.gadbf.org/pdfdoc/interestonlyhomeloans.pdf 2005 EXAMINERS' CONFERENCE The top rated session of the 2005 Examiners' Conference was "How to Testify and Be Deposed" presented by Sharell Lewis, Assistant District Attorney, Macon Judicial Court. The conference program featured a wide array of timely and relevant sessions on topics such as negation skills, dealing with difficult people, prosecution of real estate fraud, real estate appraisals, conducting Bank Secrecy Act exams, loan updates, identity theft, how to gather information form non-license sources, Sarbanes-Oxley, fraud detecting software, overview of the revised BHC rating system, economic forecast, and an update on Check 21. Putting an End to Account-Hijacking and Identity Theft: Study Supplement Identity theft in general and account hijacking, spoofing, in particular continue to be significant problems for the financial services industry and consumers. Studies indicate that consumers are concerned about online security and may be receptive to using two-factor authentication. This Supplement discusses seven additional technologies that weren't discussed in the original study. These technologies, as well as those considered in the original study, may substantially reduce the level of account hijacking and other forms of identity theft. To review the study, please go to http://www.fdic.gov/consumers/consumer/idtheftstudysupp/index.html.This publication supplements the FDIC's study Putting an End to Account-Hijacking Identity Theft published on December 14, 2004. 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 June 2005. Page 5 of 11 APPLICATIONS FOR NEW FINANCIAL INSTITUTION FINANCIAL INSTITUTION Flint Community Bank Corner of Meredyth & Pointe North Albany, GA 31707 Dougherty County CAPITALIZATION APPROVAL DATE BEGIN BUSINESS DATE $ 9,500,000 Pending Sentry State Bank 245 Perimeter Center Parkway Suite 600 Atlanta, GA 30346 DeKalb County $ 35,000,000 Pending Southern Bank & Trust 160 Louise Street Clarkesville, GA 30523 Habersham County $ 9,500,000 Pending Eastside Commercial Bank 895 Iris Drive Conyers, GA 30094 Rockdale County $ 12,000,000 Pending Century Security Bank 5955 State Bridge Road Duluth, GA 30097 Fulton County $ 11,000,000 Pending Signature Bank of Georgia 1449 Dunwoody Village Parkway Dunwoody, GA 30338 DeKalb County $ 12,000,000 Pending FINANCIAL INSTITUTION (SURVIVOR) Habersham Bank Clarkesville, GA CMAR Credit Union Marietta, GA FINANCIAL INSTITUTION MERGERS MERGED INSTITUTION Liberty Bank & Trust Toccoa, GA Dixsea Federal Credit Union Atlanta, GA APPROVAL DATE Pending EFFECTIVE DATE 06-27-2005 Page 6 of 11 FINANCIAL INSTITUTION SunTrust Bank Atlanta SunTrust Bank Atlanta SunTrust Bank Atlanta SunTrust Bank Atlanta SunTrust Bank Atlanta SunTrust Bank Atlanta SunTrust Bank Atlanta SunTrust Bank Atlanta APPLICATIONS TO ESTABLISH A BRANCH OFFICE BRANCH OFFICE East Brandon Wal-Mart Branch Office 1208 E. Brandon Boulevard Brandon, FL 33511 Hillsborough County APPROVAL DATE Pending BEGIN BUSINESS DATE Barclay Branch Office 3236 Barclay Avenue Brooksville, FL 33601 Hernando County Pending Bartram Park Branch Office 13927 St. Augustine Road Jacksonville, FL 32258 Duval County 06-27-2005 Mulberry Wal-Mart Branch Office 6745 North Church Avenue Mulberry, FL 38860 Polk County 06-10-2005 Redman Parkway Wal-Mart Branch Office 2602 Jim L. Redman Parkway Plant City, FL 33566 Hillsborough County Pending Port Richey Wal-Mart Branch Office 8701 U.S. Highway 19 Port Richey, FL 34668 Pasco County Pending Citrus Wal-Mart Branch Office 6192 Gunn Highway Tampa, FL 33625 Hillsborough County Pending Baywinds Branch Office 9951 Okeechobee Boulevard West Palm Beach, FL 33411 Palm Beach County 06-23-2005 Page 7 of 11 United Community Bank Blairsville United Community Bank Blairsville PlantersFIRST Cordele Signature Bank of Georgia (IO) Dunwoody Crescent Bank and Trust Company Jasper Farmers and Merchants Bank Lakeland Rivoli Bank & Trust Macon First Coweta Bank Newnan Citizens Bank of Effingham Springfield Cleveland Highway Branch Office 5140 Cleveland Highway Clermont, GA 30527 Hall County Sandridge Court Branch Office 2157 Sandridge Court Gainesville, GA 30501 Hall County Perry Branch Office NE Intersection of Houston Lake Road and North Perry Parkway Perry, GA 31069 Houston County Sandy Springs Branch Office 227 Sandy Springs Place Atlanta, GA 30328 Fulton County North Bartow Branch Office 21 Eagle Parkway Adairsville, GA 30103 Bartow County South Patterson Branch Office 1201 South Patterson Valdosta, GA 31601 Lowndes County Griffin Branch Office 222 West Poplar Street Griffin, GA 30233 Spalding County Summer Grove Branch Office 16 Market Square Road Newnan, GA 30265 Coweta County Guyton Branch Office 109 W. Central Boulevard Guyton, GA 31312 Effingham County Page 8 of 11 06-01-2005 06-01-2005 06-03-2005 Pending 01-10-2005 06-21-2005 Pending 03-29-2005 06-10-2005 06-28-2005 01-06-2004 06-13-2005 FINANCIAL INSTITUTION Hamilton State Bank Braselton APPLICATIONS TO CHANGE LOCATION CHANGE LOCATION OF Hall County Branch Office APPROVAL DATE Pending From: To: 441-A E.E. Butler Parkway Gainesville GA 30501 Hall County Hall County Branch Office 854 Washington Street Gainesville GA 30501 Hall County Capital Bank Fort Oglethorpe From: To: Ringgold Branch Office 5038 Alabama Highway Ringgold GA 30736 Catoosa County 6345 Highway 41 Ringgold GA 30736-2641 Catoosa County 06-16-2005 EFFECTIVE DATE PREVIOUS NAME Newnan Coweta Bank Newnan SouthBank Woodstock NOTICE OF CHANGE IN NAME NEW NAME Neighborhood Community Bank Security Bank of North Metro APPROVAL DATE 03/15/2005 EFFECTIVE DATE 06/30/2005 06-01-2005 06-08-2005 PROPOSED NAME Columbus Community Bank APPLICATIONS FOR RESERVATION OF A NAME COUNTY APPLICANT Muscogee County Mr. John B. Kline President Kline & Associates P.O. Box 418 Decatur, GA 30031 Community Bank & Trust - West Georgia Troup County Ms. Kelly A. Howley Paralegal Suite 2800 1100 Peachtree Street Atlanta, GA 30309-4530 Page 9 of 11 Intercontinental Banc Corp Oakwood Bank & Trust DeKalb County Hall County Mr. Iretiolu Oniyide Principal 1009 Ferncliff Road Atlanta, GA 30324 Mr. Byron Richardson Principal Bank Resources, Inc. 2451 Cumberland Parkway Suite 3618 Atlanta, GA 30339 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 Hometown Community Bancshares, Inc. Braselton, GA Hometown Community Bank (IO) Braselton, GA Pending Mountain Valley Bancshares, Inc. Cleveland, GA Mountain Valley Community Bank Cleveland, GA Pending Sapelo Bancshares, Inc. Darien, GA Sapelo National Bank Darien, GA Pending GB Bank Group, Inc. Glennville, GA Glennville Bank Glennville, GA 06-06-2005 ACQUISITIONS CompuCredit Corporation Atlanta, GA Sentry State Bank (IO) Atlanta, GA Pending Habersham Bancorp Cornelia, GA Liberty Bank & Trust Toccoa, GA 06-30-2005 GB Bank Group, Inc. Tippins Bank & Trust Company 06-06-2005 Page 10 of 11 CITY Winder Lavonia Bethlehem Decatur Chamblee Winder Ellenwood Douglas Atlanta Winder Lilburn Dublin Atlanta Statham Atlanta East Point Norcross CHECK CASHER LICENSES ISSUED APPLICANT NAME TRADE NAME * Apple Package Ltd. Apple Package * Dhaban, Inc. Downtown Beverages Enara Group, Inc. Super H * Gbadebo, Adesola Joy Financial Center Glamour, Inc. Shell Mart * Ham, Su K McNeal Market Harmadia Walla, LLC Shell Food Mart Harrell, Linda S. S & H Check Cashing Kais Business, Inc. Big H Food Store Kashi, Inc. Kashi Oshima Corporation Oshima Corporation Rames, Inc. Williams Package Store Razia Group, Inc. Texaco * Shayona, Inc. Pat's BP Shivanand Corporation S & S Package Store * Spring Spark, Inc. East Point Package Uni Check Cashing, Inc. Uni Check Cashing * = Registered Exempt (O.C.G.A. 7-1-709) MONEY TRANSMITTER IPP of America, Inc. Fairfield, NJ MONEY TRANSMITTER LICENSES ISSUED APPROVAL DATE 06-28-2005 Page 11 of 11