Inside this issue: National Credit 2 Union Share Insurance Fund (NCUSIF) Assessments Federal Agencies 2 Issue Final Rules to Implement S.A.F.E. Act Requirements for Registration of Mortgage Loan Originators DBF Recognizes 3 2009 Employee Award Winners Customer Service 4 Stars for the Month of July Action on 5 Applications for the Month of July Contact 8 Information News and topics of interest to financial institutions regulated by the Department of Banking and Finance Monthly Bulletin #7 July 2010 Statement of Financial Accounting Standards Number 166 On January 1, 2010, Statement of Financial Accounting Standards Number 166 (FAS 166) took effect. According to FAS 166, all loan participations transferred after January 1, 2010, need to meet the definition of a "participating interest" in order to qualify for sales accounting treatment. Transfers that do not meet the definition of a participating interest are to be accounted for as secured borrowings. Among the criteria used to determine whether sales accounting can be applied to the transfer of a participating interest is whether the participation agreement is structured on a pro-rata basis as opposed to the use of last in first out (LIFO) or first in last out (FILO) provisions. Management is encouraged to consult with their accountants and reference the "Transfers of Financial Assets" section within the Call Report Glossary for additional details on the accounting and regulatory reporting treatment of participation loans under FAS 166. Despite this change in accounting treatment, the Department's treatment of participation loans for legal lending limit purposes has not changed. The Department will continue to evaluate circumstances in which the use of LIFO and FIFO provisions in participation agreements may pose an excessive risk to institutions involved in the transaction. At this time, and consistent with the Department's policy prior to FAS 166, we typically recognize a loan participation sale for legal lending limit purposes except in those cases where the participation agreement provides the purchasing institution preferential "first out" treatment in the event of a default. Under such a circumstance, the selling bank retains a higher potential for loss than the purchasing bank whenever the collateral values prove to be insufficient to satisfy the debt in full. In general, when losses are to be borne by the selling bank in a greater proportion than the purchasing bank, the loan participation sale is not recognized by the Department for legal lending limit purposes. DBF Outreach AND UPCOMING SPEAKING ENGAGEMENTS Commissioner Braswell will be speaking to the GBA President/CEO Roundtable at Idle Hour Country Club in Macon on August 25th and 27th. Senior Deputy Commissioner Steve Pleger will be speaking at the CBA Regulation & Taxation Committee meeting at CBA Headquarters in Atlanta on August 5th. Mr. Pleger will also be speaking to the GBA President/CEO Roundtable at Idle Hour Country Club in Macon on August 24th and 26th, and to the GCUA Idea Institute Conference at Brasstown Valley Resort in Young Harris on August 25th. Deputy Commissioner for Supervision Kevin Hagler will be participating as a panelist at the August 12th FDIC Asset Purchaser, Investor and Minority Depository Institution (AIM) seminar in Atlanta, Georgia. Mr. Hagler will also be participating as a panelist at the August 24th CBA Regulatory Reform Act Conference being held at the law offices of Alston + Bird LLP. "Safeguarding Georgia's Financial Services" Page 2 National Credit Union Share Insurance Fund (NCUSIF) Assessments National Credit Union Administration (NCUA) Letter to Credit Unions 10-CU-09 issued in June 2010 stated that the NCUA Board would consider an assessment for the NCUSIF later in 2010. This assessment will cover losses at natural person credit unions and is in addition to the 13.4 basis point Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment that credit unions were required to report on the June 30, 2010 Call Report. Separating NCUSIF and TCCUSF assessments is designed to improve transparency of the NCUA's assessment process with the TCCUSF being used to cover the costs of corporate credit union losses. The NCUA Board projects the NCUSIF assessment to be within the range of 10-to-25 basis points. The actual amount of the NCUSIF assessment will be based on four factors: 1) Losses in failed natural person credit unions; 2) Exposure to further losses indicated by trends in credit unions identified as being in troubled status; 3) Earning's on the NCUSIF's assets; and 4) Growth in insured shares. The NCUA recommends that credit unions budget for the financial impact of the NCUSIF assessment towards the middle of the 10-to -25 basis point range. It is expected that the assessment will be required to be reported on the September 30, 2010 Call Report. Management is encouraged to consult with their accountants on the specific accounting treatment for assessments. Federal Agencies Issue Final Rules to Implement S.A.F.E. Act Requirements for Registration of Mortgage Loan Originators On July 28, 2010, the Federal agencies ("agencies") issued final rules requiring residential mortgage loan originators ("MLOs") who are employees of national and state banks, savings associations, Farm Credit System institutions, credit unions, and certain of their subsidiaries (agency-regulated institutions) to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act). The S.A.F.E. Act requires MLOs who are employees of agency-regulated institutions to be registered with the Nationwide Mortgage Licensing System and Registry (NMLSR). The final rules take effect on October 1, 2010. The agencies anticipate that the registry could begin accepting federal registrations as early as January 28, 2011. Employees of agency-regulated institutions must not register until the agencies instruct them to do so. The agencies will provide an advance announcement of the date when the registry will begin accepting federal registrations, and agency-regulated institutions and their applicable employees will have 180 days from that date to comply with the initial registration requirements. Refer to the NMLSR website for further information and frequently asked questions: http://mortgage.nationwidelicensingsystem.org/fedreg/Pages/default.aspx Access the press release and final rules on the FDIC's website at: http://www.fdic.gov/news/news/press/2010/pr10170.html Page 3 DBF Recognizes 2009 Employee Award Winners During meetings and other events held around the state between May and July, the Department recognized winners of its 2009 Employee Recognition Awards. This annual awards process formally recognizes outstanding employee performance during the previous calendar year. Awards presented this year were in three categories, including: the "Jenny Neville" Customer Service Award; Leadership Award; and Gold Medal Awards. "I think it's essential that we reward and celebrate outstanding performance. The annual awards program is just one of several ways in which we try to showcase excellent service and leadership skills," said Commissioner Rob Braswell. The Jenny Neville Customer Service Award was presented to Deputy Commissioner for Non-Depository Financial Institutions Rod Carnes. This award is presented to an individual that has made exceptional contributions that exceeded expectations in delivering services to external and/or internal customers. The Leadership Award was presented to District Director Melissa Sneed. This award is presented to an individual that has exemplified and promoted outstanding leadership qualities and behaviors. Gold Medal Awards were presented to the following individuals: Accounting Director I, Renee Martin Supervisory Manager Mortgage Licensing Janet Anderson Administrative Assistant Merian Johnson Senior Assistant Financial Examiner Ryan Baker (District 1) Supervisory Examiner Harold Carney (District 2) Senior Financial Examiner Michael Bryan (District 4) Senior Financial Examiner Gloria Jack (District 3) Supervisory Examiner Joyce Jones (District 5) Capital Markets Specialist Ernie Coats (District 8) Gold Medal Award winners are selected each year from a list of nominees for their division or work area. This award is given to individuals who demonstrate one or more of the following criteria: Overall performance has consistently reflected a high level of service, trustworthiness, and respect; works effectively as part of a team to successfully accomplish a task or meet a goal; contributes to a group effort which has a significant impact on Department goals; and accepts responsibility and accountability in helping to advance the Department's mission, vision or goals. OFFICE CLOSING This is a reminder that the Department will be closed on Monday, September 6th for Labor Day. Page 4 CUSTOMER SERVICE STARS FOR THE MONTH OF JULY It is the Department's goal to provide excellent customer service by meeting and exceeding the expectations of our customers. Along those lines, we would like to recognize the following individuals for going above and beyond in serving our customers: District 3 Examination Team The Department received comments from a customer stating: "I just wanted to let you know that I appreciated the support of the State examiners at our recent examination. They are very hard working and knowledgeable. We appreciate the analysis performed by your staff in the areas of Liquidity, Capital, Earning, Sensitivity to Market Risk, and loans. They participated in meetings and offered excellent ideas to improve policies and procedures. I look forward to working with them again." Department/Mortgage Section The Department received comments from a customer stating: "This note is to thank the entire Department for the kind, courteous and professional assistance you have provided me since 2002. We are very fortunate in Georgia to have the kind of "State Department" that really works!! I am leaving the industry but I wanted to be sure to let the Department know of my respect for your attention to detail and your professional but kind assistance with every request I have made to many of you over the years." Senior Financial Examiner Janet Bryan (District 4) The Department received comments from a customer stating: "We especially want to thank your examiner, Janet Bryan, for all of her guidance and patience with our credit union. She has been very beneficial to the management of our credit union. Please extend our sincere thank you to Janet Bryan." Administrative Secretary Sheila Ball and Director of Communications and Planning Carol Webb The Department received comments from a customer stating: "Carol, Thank you for going out of your way to assist me. Georgia is the final state I need to research registration information for and it has been a challenging one. You have been a great help to me. Please also forward my thanks to Sheila for her positivity and exceptional demeanor on the phone. Thank you very much." CONGRATULATIONS AND GREAT JOB TO THIS MONTH'S CUSTOMER SERVICE STARS!! Page 5 Action on Applications for the Month of July: 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 July 2010. FINANCIAL INSTITUTION HeritageBank of the South Albany APPLICATIONS TO ESTABLISH A BRANCH OFFICE BRANCH OFFICE Valdosta Roosevelt Drive Branch Office 103 Roosevelt Drive Valdosta, GA 31602 Lowndes County APPROVAL 06-16-2010 BEGIN BUSINESS 07-05-2010 First State Bank of Blakely Blakely Bainbridge Branch Office 1200 East Shotwell Street Bainbridge, GA 39819 Decatur County 02-18-2010 07-01-2010 Community & Southern Bank Carrollton Riverwood Branch Office 3333 Riverwood Parkway, Suite 100 Atlanta, GA 30339 Cobb County Pending Greater Rome Bank Rome Calhoun Branch Office 305 West Belmont Drive Calhoun, GA 30701 Gordon County 07-21-2010 Southern Bank Sardis Gibson Branch Office 21 College Street Gibson, GA 30810 Glascock County 06-04-2010 07-29-2010 FINANCIAL INSTITUTION Synovus Bank Columbus Eastside Commercial Bank Conyers APPLICATIONS TO CHANGE LOCATION CHANGE LOCATION OF Baytree Branch Office From: 1731 Norman Drive Valdosta, GA 31601 Lowndes County To: 1518 Baytree Road Valdosta, GA 31602 Lowndes County APPROVAL Pending Duluth Branch Office From: 2905 Premiere Parkway, Suite 150 Duluth, GA 30097 Gwinnett County To: 3175 Satellite Boulevard Duluth, GA 30097 Gwinnett County 07-09-2010 EFFECTIVE Page 6 FINANCIAL INSTITUTION Global Commerce Bank Doraville CHANGE LOCATION OF Main Office From: 5150 Buford Highway, Suite B-130 Doraville, GA 30340 DeKalb County To: 7130 Buford Highway NE Doraville, GA 30340 DeKalb County APPROVAL 07-05-2010 EFFECTIVE PREVIOUS NAME Bank of Upson Thomaston Bank of Valdosta Valdosta NOTICE OF CHANGE IN NAME NEW NAME SouthCrest Bank Sunrise Bank APPROVAL Pending EFFECTIVE 07/30/2010 07/30/2010 FINANCIAL INSTITUTION (SURVIVOR) Alma Exchange Bank & Trust Alma, GA Alma Exchange Bank & Trust Alma, GA Alma Exchange Bank & Trust Alma, GA Bank of Upson Thomaston, GA Bank of Upson Thomaston, GA Bank of Upson Thomaston, GA Bank of Valdosta Valdosta, GA Bank of Valdosta Valdosta, GA FINANCIAL INSTITUTION MERGERS MERGED INSTITUTION Peoples State Bank & Trust Baxley, GA Citizens State Bank Kingsland, GA Pineland State Bank Metter, GA The First National Bank of Polk County Cedartown, GA Bank of Chickamauga Chickamauga, GA Peachtree Bank Maplesville, AL Peoples State Bank Jeffersonville, GA Sunrise Bank of Atlanta Atlanta, GA APPROVAL Pending EFFECTIVE Pending Pending Pending Pending Pending 07-30-2010 07-30-2010 07-30-2010 07-30-2010 Page 7 APPLICATIONS TO BECOME A BANK HOLDING COMPANY AND/OR TO ACQUIRE VOTING STOCK OF A FINANCIAL INSTITUTION FORMATIONS ONLY BANK HOLDING COMPANY State Bank Financial Corporation Atlanta, GA TO ACQUIRE State Bank and Trust Company Pinehurst, GA APPROVAL 07-09-2010 Heritage Financial Group, Inc. Baltimore, MD HeritageBank of the South Albany, GA Pending NOTIFICATION OF APPROVAL OF APPLICATION TO SERVE A RESIDENTIAL GROUP COMMON BOND CREDIT UNION Florida Commerce Credit Union Tallahassee RESIDENTIAL GROUP COMMON BOND Thomas County, GA APPROVAL 07-22-2010 CHECK CASHER LICENSES ISSUED CITY Ashburn Demorest McDonough Blackshear Conyers Lithia Springs Oglethorpe Tifton Atlanta Greenville Columbus Columbus Georgetown Cumming Valdosta Commerce Cumming APPLICANT NAME * CMM Properties, Inc. Community Lending & Finance Company, LLC Fastlane Superstore, LLC * Himanshi Food Mart, Inc. Honey Creek Check Cashing & Wireless, Inc. Jalaram Associates, LLC * Kala Vrund, LLC * Margarito de la Paz Maya Investments, Inc. Muntaha Rana, Inc. Sadhima, Inc. Sharoan Enterprises, Inc. * Shayona Food Corporation * TGAA, LLC * Vraj & Bhoomy Corporation * Warren's Package, Inc. ZV Services, LLC TRADE NAME Piggly Wiggly #136 Community Finance HIMANSHI FOOD MART Honey Creek Check Cashing Skyview Food Mart Wright's Grocery Taqueria Altamirano Exxon Food Mart Rana Tobacco and Convenience Store Jerry's Food Mart Wild Bill's Jewelry & Pawn Yogi Food Mart Citgo Quick Mart Enlace Latino * =Registered (O.C.G.A. 7-1-700 et al) GEORGIA DEPARTMENT OF BANKING AND FINANCE 2990 Brandywine Road Suite 200 Atlanta, Georgia 30341-5565 Phone: (770) 986-1633 Fax: (770) 986-1654 or 1655 Email: dbfpress@dbf.state.ga.us Page 8 The Department is the state agency that regulates and examines banks, credit unions, and trust companies chartered by the State of Georgia. The Department also has regulatory and/or licensing authority over mortgage brokers/processors, lenders and loan originators, money service businesses, international banking organizations, and bank holding companies conducting business in Georgia. Our Mission is to promote safe, sound, competitive financial services in Georgia through innovative, responsive regulation and supervision. Our Vision is to be the best financial services industry regulator in the country Progressive. Proactive. Service-Oriented. We're on the Web! Visit our website at: dbf.georgia.gov Sign-up to Receive this Publication: This publication is delivered to interested parties via e-mail and is also available from the Department's website at: http://dbf.georgia.gov under Publications, Financial Institutions Bulletin. If you would like to be added to our distribution list, please send an e-mail to dbfpress@dbf.state.ga.us and indicate your name, e-mail address, and the publication to which you wish to subscribe.