interagency bank merger act application - occ.treas.gov · 11.05.2017 · 333639 trust company of...
TRANSCRIPT
OMB No. for FDIC 3064-0015 Expires May 31, 2015 OMB No. for FRB 7100-0171 Expires September 30, 2013
INTERAGENCY BANK MERGER ACT APPLICATION
Public reporting burden for this collection of information is estimated to average 30 and 18 hours for nonaffiliate and affiliate transactions, respectively, including the time to gather and maintain data in the required form, to review instructions, and to complete the information collection. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Paperwork Reduction Act, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, NW, Washington, DC 20429; Secretary, Board of Governors of the Federal Reserve System, 20th and C Streets, NW, Washington, DC 20551; or Licensing Activities Division, Comptroller of the Currency, 400 7th Street, S.W., Washington, DC 20219; and to the Office of Management and Budget, Paperwork Reduction Project, Washington, DC 20503.
An organization or a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
General Information and Instructions
Preparation and Use This application is used to effect a merger transaction under section 18(c) of the Federal Deposit Insurance Act (FDIA), as amended (12 U.S.C. 1828(c)), and for national banks using other sources of merger authority, such as 12 U.S.C. 215, 215a. “Merger transaction” includes a merger, consolidation, assumption of deposit liabilities, and certain asset transfers between or among two or more institutions. An application is required for merger transactions between or among affiliated institutions (affiliate transactions) as well as for merger transactions between or among nonaffiliated institutions.
An affiliate transaction refers to a merger transaction between institutions that are commonly controlled. It includes a business combination between a depository institution and an affiliated interim institution. Applicants proposing affiliate transactions are not required to complete questions 12 through 14 of this form.
All questions must be answered with complete and accurate information that is subject to verification. If the answer is "none," "not applicable," “not available,” or "unknown," so state. Answers of “not available” or "unknown" should be explained.
The questions in the application are not intended to limit the Applicant's presentation, nor are the questions intended to duplicate information supplied on another form or in an exhibit. A cross- reference to the information is acceptable. Any cross-reference must be made to a specific location in the documents, so the information can be found easily. Supporting information for all relevant factors, setting forth the basis for Applicant's conclusions, should accompany the application. The regulatory agency may request additional information.
The application must be submitted to the appropriate regulatory agency of the depository institution that would survive the proposed transaction (Resultant Institution). All inquiries on preparation of the application should be directed to that agency which, in some circumstances, may modify the information requested.
For additional information regarding the processing procedures and guidelines and any supplemental information that may be required, please refer to the appropriate regulatory
OMB no. OCC 1557-0014
agency's procedural guidelines (that is, Comptroller’s Licensing Manual, the FDIC’s Rules and Regulations [12 C.F.R. 303] and Statement of Policy on Bank Merger Transactions, contact the agency directly for specific instruction or visit its Web site at www.fdic.gov, www.occ.treas.gov, and www.federalreserve.gov.
Interim Charters and Federal Deposit Insurance An interim state or federal depository institution charter may be used to facilitate a merger or consolidation. An interim institution is one that does not operate independently but exists, usually for a very short period of time, solely as a vehicle to accomplish a combination (for example, to facilitate the acquisition of 100 percent of the voting shares of an existing depository institution). The processing procedures and guidelines for chartering an interim institution may be found in the guidelines of the appropriate regulatory agency.
Applicants should contact the FDIC to discuss relevant deposit insurance requirements. An application for deposit insurance is not required in connection with a merger (other than a purchase and assumption) between a federally chartered interim institution and an existing FDIC-insured depository institution, including those instances in which the resulting institution is to operate under the charter of the federal interim institution. However, an application for deposit insurance is required if a state-chartered interim bank or savings association is to be insured. Mergers between an FDIC-insured institution and a noninsured institution are subject to FDIC approval under section 18(c)(1) of the FDIA (12 U.S.C. 1828(c)(1)).
In making its determination to grant deposit insurance under section 5(a) of the FDIA (12 U.S.C. 1815(a)), the FDIC will consider the factors enumerated in section 6 of the FDIA (12 U.S.C. 1816). If applying for deposit insurance under section 5(a), check the appropriate boxes on the top of Page 1 of this form and include with this application any additional relevant information.
Establishment of Branches and Branch Closings This Interagency Bank Merger Act Application will be deemed to constitute an application pursuant to section 9 of the Federal Reserve Act (12 U.S.C. 321) in the case of state member banks, section 18(d) of the FDIA (12 U.S.C. 1828(d)) for state nonmember banks, and 12 U.S.C. 36 for national banks to operate the Target Institution’s main office and branches as branches of the Applicant.
If a branch is closed as a result of a merger, consolidation, or other combination, refer to the Interagency Policy Statement on Branch Closings and applicable law for branch closure notice requirements (12 U.S.C. 1831r-1).
Notice of Publication An Applicant must publish notice of the proposed acquisition in a newspaper of general circulation in the community or communities in which the main office of each of the parties to the transaction is located (12 U.S.C. 1828(c)(3)). A copy of the affidavit(s) of publication should be submitted to the appropriate regulatory agency. Contact the appropriate regulatory agency for the specific requirements of the notice of publication.
Compliance An Applicant is expected to comply with all representations and commitments made in the application.
Transactions subject to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. 18a), which applies to certain very large transactions, require a pre-merger filing with the Federal Trade Commission and the Department of Justice. Refer to the Federal Trade Commission’s Web site for specific details (http://www.ftc.gov/bc/hsr/hsr.htm).
Confidentiality Any Applicant desiring confidential treatment of specific portions of the application must submit a request in writing with the application. The request must discuss the justification for the requested treatment. The Applicant's reasons for requesting confidentiality should specifically demonstrate the harm (for example, loss of competitive position, invasion of privacy) that would result from public release of information (5 U.S.C. 552). Information for which confidential treatment is requested should be: (1) specifically identified in the public portion of the application (by reference to the confidential section); (2) separately bound; and (3) labeled "Confidential." The Applicant should follow the same procedure when requesting confidential treatment for the subsequent filing of supplemental information to the application.
The Applicant should contact the appropriate regulatory agency for specific instructions regarding requests for confidential treatment. The appropriate regulatory agency will determine whether the information will be treated as confidential and will advise the Applicant of any decision to make available to the public information labeled as "Confidential."
INTERAGENCY BANK MERGER ACT APPLICATION
Check all that apply:
Type of Filing Form of Transaction Filed Pursuant To
� Affiliate/Corporate Reorganization � Merger � 12 U.S.C. 1828(c) � Combination with Interim � Consolidation � 12 U.S.C. 215, 215a-c
Depository Institution � Purchase and Assumption � 12 U.S.C. 1815(a) � Nonaffiliate Combination � Branch Purchase and Assumption � Other_____________ � Other � Other
Applicant Depository Institution
_____________________________________________________________________________________________ Name Charter/Docket Number
_____________________________________________________________________________________________ City State Zip Code
Target Institution(s) Charter/Docket No. Name City State
Resultant Institution (if different than Applicant)
_____________________________________________________________________________________________ Name Charter/Docket Number
_____________________________________________________________________________________________ Street
____________________________________________________________________________________________ City State Zip Code
Contact Person
_____________________________________________________________________________________________ Name Title/Employer
_____________________________________________________________________________________________ City State Zip Code
_____________________________________________________________________________________________ Telephone Number Fax Number E-mail Address
X X
X
E*TRADE Savings Bank 718000
Arlington
Arlington
VA 22203-0000
333639 Trust Company of America Centennial CO
E*TRADE Savings Bank 718000
VA
DC
22203-0000
671 North Glebe Road Ballston Tower
AttorneyBrian Christiansen
Washington
202-371-7852 202-661-9154
20005
INTERAGENCY BANK MERGER ACT APPLICATION
1. Describe the transaction’s purpose, structure, significant terms and conditions, and financingarrangements, including any plan to raise additional equity or incur debt. Also provide theapproximate approval date needed to consummate.
2. Provide a copy of (a) the executed merger or transaction agreement, including anyamendments, (b) any board of directors' resolutions related to the transaction, and (c) interimcharter, names of organizers, and related documents, if applicable.
See attachments for completed Interagency Bank Merger Act application and responsiveexhibits. Certification by Skadden Arps provided solely to facilitate electronic filing viaCATS. Certification as to content of application provided by the parties in attachedInteragency Bank Merger Act application.
3. Describe any issues regarding the permissibility of the proposal with regard to applicablestate or Federal laws or regulations (for example, nonbank activities, branching, qualifiedthrift lender’s test).
4. Describe any nonconforming or impermissible assets or activities that Applicant or ResultantInstitution may not be permitted to retain under relevant law or regulation, including themethod of and anticipated time period for divestiture or disposal.
5. Provide the indicated financial information and describe the assumptions used to prepare the projected statements, including those about the effect of the merger transaction. Material changes between the date of the financial statements and the date of the application should be disclosed. If there are no material changes, a statement to that effect should be made.
a. Pro Forma Balance Sheet, as of the end of the most recent quarter and for the first year of
operation after the transaction. Indicate separately for the Applicant and Target Institution each principal group of assets, liabilities, and capital accounts; debit and credit adjustments (explained by footnotes) reflecting the proposed acquisition; and the resulting pro forma combined balance sheet. Goodwill and all other intangible assets should be listed separately on the balance sheet. Indicate the amortization period and method used for any intangible asset and the accretion period of any purchase discount on the balance sheet.
b. Projected Combined Statement of Income for the first year of operation following consummation.
c. Pro Forma and Projected Regulatory Capital Schedule, as of the end of the most recent quarter and for the first year of operation, indicating:
• Each component item for Tier 1 (Core) and Tier 2 (Supplementary) Capital, Subtotal
for Tier 1 and Tier 2 Capital (less any investment in unconsolidated or nonincludable subsidiaries), Total Capital (include Tier 3 if applicable).
• Total risk-weighted assets • Capital Ratios: (1) Tier 1 capital to total risk-weighted assets; (2) Total capital to
total risk-weighted assets; and (3) Tier 1 capital to average total consolidated assets (leverage ratio).
6. List the directors and senior executive officers of the Resultant Institution and provide thename, address, position with and shares held in Resultant Institution or holding company, andprincipal occupation (if a director).
7. Describe how the proposal will meet the convenience and needs of the community. For thecombining institutions, list any significant anticipated changes in services or products thatwill result from the consummation of the transaction. If any services or products will bediscontinued, describe and explain the reasons.
8. Discuss the programs, products, and activities of the Applicant or the Resultant Institutionthat will meet the existing or anticipated needs of its community(ies) under the applicablecriteria of the Community Reinvestment Act (CRA) regulation, including the needs oflow- and moderate-income geographies and individuals. For an Applicant or TargetInstitution that has received a CRA composite rating of "needs to improve" or "substantialnoncompliance" institution-wide or, where applicable, in a state or a multi-state MSA, or hasreceived an evaluation of less than satisfactory performance in an MSA or in the non-MSAportion of a state in which the applicant is expanding as a result of the combination, describethe specific actions, if any, that have been taken to address the deficiencies in the institution'sCRA performance record since the rating.
9. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 imposesadditional considerations for certain interstate mergers between insured banks. Savingsassociations are not subject to 12 U.S.C. 1831u. If subject to these provisions, discussauthority; compliance with state age limits and host state(s) filing requirements; andapplicability of nationwide and statewide concentration limits. In addition, discuss any otherrestrictions that the states seek to apply (including state antitrust restrictions).
b. List all approved, but unopened branch(es) of the target institution(s), including the popular name, street address, city, county, state, and ZIP code. Also include the date the current federal and state agencies granted approval(s).
10. This application will be deemed to constitute an application pursuant to 12 CFR 5.30, 5.31,and 12 USC 36 to establish and maintain the branches listed in the application.
a. List all offices that will be established or retained as branches, including the main or home office, of the target institution(s) in the Manage Branch section of the application. You will be required to provide the following information: popular name, street address, city, county, state, and ZIP code for each location being established or retained (branches acquired in a Purchase and Assumption transaction).
c. List all banking offices, including branches and or the main or home office, that will be closed or consolidated as a result of the proposal to the extent the information is available and indicate the effect on the branch customers served. For each branch, list the popular name, street address, city, county, state, and ZIP code. In addition, indicate the date you sent or anticipate sending the Advance Branch Closing and Customer Notices to the OCC and the customer.
If a branch is closed as a result of a merger, consolidation, or other combination, refer to the Joint Policy Statement on Branch Closing Notices and Policies, which can be found in the Appendix of the “Branch Closings” booklet of the Manual, and applicable law for branch closure notice requirements (12 USC 1831r-1).
11. As a result of this transaction, if the Applicant will be or will become affiliated with acompany engaged in insurance activities that is subject to supervision by a stateinsurance regulator, provide:
a. The name of company.
b. A description of the insurance activity that the company is engaged in and hasplans to conduct.
c. A list of each state and the lines of business in that state in which the companyholds, or will hold, an insurance license. Indicate the state where the companyholds a resident license or charter, as applicable.
If a nonaffiliate transaction, the Applicant also must reply to items 12 through 14.
12. Discuss the effects of the proposed transaction on existing competition in the relevantgeographic market(s) where Applicant and Target Institution operate. Applicant shouldcontact the appropriate regulatory agency for specific instructions to complete thecompetitive analysis.
13. If the proposed transaction involves a branch sale or any other divestiture of all or anyportion of the bank, savings association or nonbank company (in the case of a merger under12 U.S.C. 1828(c)(1)) to mitigate competitive effects, discuss the timing, purchaser, andother specific information.
14. Describe any management interlocking relationships (12 U.S.C. 3201-3208) that currentlyexist or would exist following consummation. Include a discussion of the permissibility ofthe interlock with regard to relevant laws and regulations.
CERTIFICATION We hereby certify that our board of directors, by resolution, has authorized the filing of this application, and that to the best of our knowledge, it contains no misrepresentations or omissions of material facts. In addition, we agree to notify the agency if the facts described in the filing materially change prior to receiving a decision or prior to consummation. Any misrepresentation or omission of a material fact constitutes fraud in the inducement and may subject us to legal sanctions provided by 18 U.S.C. 1001 and 1007. We acknowledge that approval of this application is in the discretion of the appropriate federal banking agency. Actions or communications, whether oral, written, or electronic, by an agency or its employees in connection with this filing, including approval of the application if granted, do not constitute a contract, either express or implied, or any other obligation binding upon the agency, other federal banking agencies, the United States, any other agency or entity of the United States, or any officer or employee of the United States. Such actions or communications will not affect the ability of any federal banking agency to exercise its supervisory, regulatory, or examination powers under applicable law and regulations. We further acknowledge that the foregoing may not be waived or modified by any employee or agent of a federal banking agency or of the United States. Signed this day of , . by (Applicant) ______________________________ (Signature of Authorized Officer)1 _____________________________ (Typed Name) ______________________________ (Title) by ______________________________ (Target Institution) (Signature of Authorized Officer)1
______________________________ (Typed Name) ______________________________ (Title)
1In multiple-step combinations, applicants should ensure that authorized officers of the combining institutions sign.
E*TRADE Savings Bank
Lori Sher
Secretary
Trust Company of America
Joshua Pace
Chief Executive Officer
by ______________________________ (Target Institution) (Signature of Authorized Officer)1
______________________________ (Typed Name) ______________________________ (Title) by ______________________________ (Target Institution) (Signature of Authorized Officer)1
______________________________ (Typed Name) ______________________________ (Title) by ______________________________ (Target Institution) (Signature of Authorized Officer)1
______________________________ (Typed Name) ______________________________ (Title) by ______________________________ (Target Institution) (Signature of Authorized Officer)1
______________________________ (Typed Name) ______________________________ (Title) 1In multiple-step combinations, applicants should ensure that authorized officers of the combining institutions sign
COMPTROLLER OF THE CURRENCY
SUPPLEMENT TO INTERAGENCY BANK MERGER ACT APPLICATION
All OCC Applicants should provide the following supplemental information with their application:
15. If any of the combining institutions have entered into commitments with communityorganizations, civic associations, or similar entities concerning providing bankingservices to the community, describe the commitment.
16. If the Resultant Institution will not assume the obligations entered into by the TargetInstitution, explain the reasons and describe the impact on the communities to beaffected.
17. If acquiring a non-national bank subsidiary, provide the information and analysis of the subsidiary's activities that would be required if it were established pursuant to 12 C.F.R. 5.34 or 5.39.
18. If applicable, provide the information to satisfy the requirements of 12 C.F.R.
163.22(d)(1)(vi).
FEDERAL RESERVE SYSTEM
SUPPLEMENT TO INTERAGENCY BANK MERGER ACT APPLICATION With respect to question 6, FRB Applicants should consult with FRB staff regarding whether any biographical or financial information should be submitted with respect to any new principal shareholders, directors, and senior executive officers. The Certification on page 5 need not be provided by the Target Institution. FRB Applicants should modify their Certification accordingly. In addition, all FRB Applicants should provide the following supplemental information with their application: 15. If the pro forma consolidated assets of Applicant’s parent holding company are less than
$150 million and parent company long-term debt will exceed 30 percent of parent company equity capital accounts on a pro forma basis, provide cash flow projections for the parent company which clearly demonstrate the ability to reduce the long-term debt-to-equity ratio to 30 percent or less within 12 years of consummation.
FEDERAL DEPOSIT INSURANCE CORPORATION
SUPPLEMENT TO INTERAGENCY BANK MERGER ACT APPLICATION All FDIC Applicants should provide the following supplemental information with their application: 15. This section supplements question 12 of the Interagency Bank Merger Act Application for
transactions between nonaffiliated parties. Additional guidance relating to the FDIC’s consideration of the competitive factors in a proposed merger transaction is contained in the FDIC’s Rules and Regulations (12 C.F.R. 303 Subpart D) and Statement of Policy on Bank Merger Transactions (2 FDIC Law, Regulations, and Related Acts 5145), which may be found at http://www.fdic.gov/regulations/laws/rules/index.html.
I. Delineation of the relevant geographic market(s).
The relevant geographic market includes the areas in which the offices to be acquired are located and from which those offices derive the predominant portion of their loans, deposits, or other business. The relevant geographic market also includes the areas where existing and potential customers impacted by the proposed merger may practically turn for alternative sources of banking services.
(a) Prepare schedules for the Applicant Institution and Target Institution showing the total
number of accounts and total dollar volume of deposits2 for each municipality or census tract, where applicable, according to the recorded address of the depositor (do not submit supporting data). Small amounts may be aggregated and identified as “other.” If the Applicant Institution is a multi-office institution, Applicant Institution deposit information should be provided only for those offices within or proximate to the area(s) described below under paragraph (b).
2 In most cases, total deposits will serve as an adequate proxy for the overall share of banking business in the relevant geographic market area; however, other analytical proxies may be appropriate in certain cases (for example, a merger transaction involving trust companies).
(b) Identify those areas where existing and potential customers of the offices to be acquired may practically turn for alternative sources of banking services. If consideration of the availability of such alternative banking services results in a market area considerably different from that indicated by the sources of deposits, discuss and provide necessary supporting information.
(c) Using the information collected in paragraphs (a) and (b), provide a narrative description of the delineated relevant geographic market(s).
(d) Provide any additional information necessary to support the delineated relevant geographic market(s). Supporting information may include relevant demographic information, locations of major employers, retail trade statistics, and/or information on traffic patterns. Applicants should consult with the applicable FDIC Regional Office in determining whether additional information is necessary.
II. Competition in the relevant geographic market(s).
(a) Prepare a schedule of participating and competing banking institutions’ offices, divided into three sections: (i) Applicant Institution offices within or proximate to the relevant geographic
market(s);
(ii) Target Institution offices within or proximate to the relevant geographic market(s); and
(iii) Competitor banking offices located or competing within the delineated relevant
geographic market(s)
To the extent known, also include banking offices approved but not yet open. The following presentation format is suggested:
Distance and Direction From Nearest Office
Name and Location of Banking Office
Total Deposits
Applicant Institution
Target Institution
(b) For each office listed in paragraph (a), provide the street address; total deposits as
reported in the most recent FDIC Summary of Deposits Data Book (http://www2.fdic.gov/sod/index.asp); and distance and general direction from the nearest office of Applicant and Target Institution. In cases where the delineated relevant geographic market includes a significant portion of a larger metropolitan area, provide only a listing of financial institutions and the aggregate total deposits of all offices operated by each within the delineated relevant geographic market(s).
(c) Discuss the extent and intensity of competition in the delineated relevant geographic
market(s) provided by nonbank institutions, such as other depository institutions (for example, credit unions) and non-depository institutions (for example, finance companies, or government agencies). For those institutions regarded as competing in the delineated relevant geographic market(s), provide name, address, and services supplied.
Checklist Questions Community Reinvestment Commitments An applicant completing either the Interagency Bank Merger Act Application or the Business Combination Application—Streamlined must respond to the following two questions and, if applicable, provide the requested information. 1. Have any of the combining institutions entered into commitments with community
organizations, civic associations, or similar entities to provide banking services to the community?
Yes No If the answer is yes, describe the commitment.
2. Will the resulting bank assume all the commitments described in the previousquestion?
Yes No If the answer is no, explain the reasons and describe the impact on the communitiesto be affected.
Competitive Factors - Removal from Expedited Processing
Although an application may initially qualify for expedited processing, it could be removed from expedited processing if there are competitive issues that warrant additional review. Each applicant that submits a Competitive Analysis for an unaffiliated business combination must answer the following questions:
1. Does the HHI for any relevant banking market increase by more than 200 pointswith a post-acquisition HHI of at least 1800?
Yes No
2. Excluding markets in which the acquiring bank has 35 percent or more of thedeposits, will the resulting bank have greater than 35 percent of the deposits in arelevant market?
Yes No
A yes answer for either question indicates the application will be removed from expedited processing for additional competitive review.
__________________________ Electronically Signed By
__________________________ Filing Control Number
__________________________ Filing Type
__________________________ Institution Charter Number
__________________________ Institution
OCC Certification
__________________________ Title
__________________________ Date and Time
[Electronically Signed]
We hereby certify that our board of directors, by resolution, has authorized the filing ofthis application, and that to the best of our knowledge, it contains no misrepresentationsor omissions of material facts. In addition, we agree to notify the agency if the factsdescribed in the filing materially change prior to receiving a decision or prior toconsummation. Any misrepresentation or omission of a material fact constitutes fraud inthe inducement and may subject us to legal sanctions provided by 18 USC 1001 and1007.
We acknowledge that approval of this application is in the discretion of the appropriatefederal banking agency. Actions or communications, whether oral, written, or electronic,by an agency or its employees in connection with this filing, including approval of theapplication if granted, do not constitute a contract, either express or implied, or anyother obligation binding upon the agency, other federal banking agencies, the UnitedStates, any other agency or entity of the United States, or any officer or employee of theUnited States. Such actions or communications will not affect the ability of any federalbanking agency to exercise its supervisory, regulatory, or examination powers underapplicable law and regulations. We further acknowledge that the foregoing may not bewaived or modified by any employee or agent of a federal banking agency or of theUnited States.
Brian Christiansen
AttorneyBusiness Combination -Non-Affiliate Merger
12/4/2017 6:50 PM GMT+00:00 718000
E*TRADE Savings Bank 2017-NE-Combination-300822
Documents Provided by Bank at Time of Submission
If no documents follow this page, the submitted application did not include any public attachments.
ETRADE Savings Bank - TCA - Vols A and B (12-4-17) - PUBLIC.pdf
1247028.05-WASSR02A - MSW
APPLICATION
to the
OFFICE OF THE COMPTROLLER OF THE CURRENCY
by
E*TRADE SAVINGS BANK
to acquire by merger
TRUST COMPANY OF AMERICA
Volume A
December 4, 2017
PUBLIC
1
1247028.05-WASSR02A - MSW
TABLE OF CONTENTS
REQUEST FOR CONFIDENTIAL TREATMENT
CONTACT INFORMATION
EXHIBITS
VOLUME A
Overview 1
Interagency Bank Merger Act Application 2
Form of Newspaper Notice 3
CRA Policy 4
Deposit Market Share Information 5
Directors and Senior Executive Officers 6
Pro Forma and Projected Financial Information 7
Key Diligence Findings, Takeaways and
Integration
8
Corporate Approvals – E*TRADE Savings Bank 9
Corporate Approvals – TCA 10
VOLUME B
Agreement and Plan of Merger 11
PUBLIC
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1247028.05-WASSR02A - MSW
REQUEST FOR CONFIDENTIAL TREATMENT
The parties respectfully request confidential treatment for the information
included in the confidential portion of these applications and in any other documents marked
"confidential" or for which confidential treatment may otherwise be requested
(the "Confidential Material"). The Confidential Material contains highly sensitive, non-public, business, financial, supervisory, and personal information regarding the parties
to the proposed transactions. The Confidential Material includes information regarding
business and investment plans that are not otherwise available to the public, counterparties, and competitors. Disclosure of the Confidential Material would create a competitive
disadvantage for the parties. If they obtained Confidential Material, competitors and other
market participants would be able to develop business and investment strategies to the disadvantage of the parties. In addition, the Confidential Material contains confidential
supervisory information related to the parties. Disclosure of the Confidential Material
would weaken the parties' ability to provide comprehensive and detailed information as part
of the important confidential supervisory relationship.
Accordingly, the Confidential Material is exempt from disclosure under the
Freedom of Information Act (5 U.S.C. § 552(b)(4), (6), (8)), the Colorado Open Records Act
(§ 24-72-204(2)(a)(VII), (3)(a)(IV)), analogous state laws, and their implementing regulations. The Confidential Material may also be exempt from disclosure under other
provisions of law. The parties request that the agencies notify them of any request for
disclosure of the Confidential Material and, prior to any such disclosure, provide the parties with an opportunity to respond.
PUBLIC
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1247028.05-WASSR02A - MSW
CONTACT INFORMATION
Brian D. Christiansen
Partner
Skadden, Arps, Slate, Meagher & Flom LLP 1440 New York Avenue, NW
Washington, DC 20005
tel: 202.371.7852 email: [email protected]
Lori Sher
Secretary
E*TRADE Savings Bank 671 N. Glebe Road, 15th Floor
Arlington, VA 22203
tel: 703.236.8254 email: [email protected]
PUBLIC
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1247028.05-WASSR02A - MSW
EXHIBIT 1
Overview
PUBLIC
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1247028.05-WASSR02A - MSW
Summary financial information for ETSB is provided below.
E*TRADE Savings Bank 9/30/17 ($ 000s)
Total assets 2,827,660
Total liabilities 2,120,027
Total deposits 2,115,399
Total equity capital 707,633
Tier 1 leverage ratio 34.76%
Common equity tier 1 risk-based capital ratio 144.48%
Tier 1 risk-based capital ratio 144.48%
Total risk-based capital ratio 144.60%
Net income (nine months ended 9/30/17) 7,571
3 Trust Company of America
TCA is an FDIC-insured, non-member, state-chartered trust company
headquartered in Centennial, Colorado. Founded in 1972, TCA provides technology
solutions and custody services to unaffiliated, independent registered investment advisers
("RIAs") and their respective customers. TCA does not provide investment advice or have any investment discretion. Rather, TCA acts as a service provider and custodian to assist
RIAs in serving their respective customers. TCA also acts as a directed custodian and
recordkeeper for a limited number of 401(k) plans managed by unaffiliated, independent RIAs.
3 As of September 2017, TCA had approximately $17 billion in institutional assets
under custody and over 180 active RIAs on its platform. Additional information about TCA
is available at <www.trustamerica.com>.
TCA is a wholly owned subsidiary of TCA Financial Corporation
("TCAF"). TCAF is a privately held Colorado corporation. TCAF is not a bank holding
company because TCA is not treated as a "bank" for purposes of the Bank Holding
Company Act of 1956.4
3 TCA does not serve as trustee or designated administrator of any such plans.
4 TCA has represented to ETSB that TCA's activities are limited to those set forth in
section 2(c)(2)(D) of the Bank Holding Company Act of 1956. See 12 U.S.C. 1841(c)(2)(D).
PUBLIC
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1247028.05-WASSR02A - MSW
Summary financial information for TCA is provided below.
Trust Company of America
9/30/17 ($ 000s)
Total assets 824,008
Total liabilities 780,863
Total deposits 777,943
Total equity capital 43,146
Tier 1 leverage ratio 6.07%
Common equity tier 1 risk-based capital ratio 22.43%
Tier 1 risk-based capital ratio 22.43%
Total risk-based capital ratio 22.43%
Net income (nine months ended 9/30/17) 11,855
4 The Proposed Transaction
This section describes the business rationale for the transaction, ETSB's key
diligence findings, and the corporate steps of the transaction.
4.1 Business Rationale
ETFC and ETSB have been searching for optimal ways to generate inorganic growth in related scalable businesses, such as the RIA and custody spaces. The
proposed transaction is consistent with this strategy for the following reasons:
Provides (1) capabilities to enter the advisors services space, (2) channel to
accelerate asset growth, and (3) new asset-based revenue streams. More specifically:
o Provides functionality to generate new sources of revenue and asset growth
over time through a superior technology and custody platform in service of
independent RIAs.
o Entry into this growing segment of the industry, and bolsters ability to retain
existing customers and assets in need of higher touch services.
o Custody platform provides additional opportunities in the advisor services space, including setting up an RIA referral program, attracting RIA service
provider customers (e.g. turnkey asset management providers, technology
providers), and attracting RIA customers (provided conflict of interest considerations are addressed).
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Primary sources of value include minimal expense synergies due to limited
overlap, acceleration in growth driven by E*TRADE brand, and tax basis step-
up. Additional synergies include cross-selling margin lending, non-purpose lending, and options capabilities to TCA's RIA customers.
After the transaction, ETFC and ETSB will remain well capitalized and
profitable, even after the absorption of initial acquisition costs.
4.2 Key Diligence Findings
ETSB conducted a diligence review of TCA and is comfortable that it can
prudently integrate and manage the acquired assets, operations, and business. A summary of
key diligence findings and takeaways is provided at Exhibit 8
4.3 Enterprise Risk Management
The Enterprise Risk Management ("ERM") framework of ETFC and its subsidiaries, including ETSB, is designed to identify, assess, and manage the risks inherent
in its business model. Consistent adoption of the ERM framework lays the foundation for a
strong and sustainable culture of risk management. The organization takes a comprehensive approach to risk management, fully integrating risk management with strategic, operational,
financial, and customer management in order to align goals and responsibilities across the
organization. Risk is managed systematically across the entire organization as well as at the
business and transactional level. This comprehensive approach ensures that risk-based decision-making is supported at all levels of the organization. This holistic risk management
approach includes five principal components: (1) risk transparency and insight, (2) risk
ownership and appetite, (3) risk-centric decisions and processes, (4) risk organization and governance, and (5) risk culture. Focusing on the five components allows the organization
to effectively manage risks across the ten key risk types (Credit, Liquidity, Market,
Operational, Information Security, Data Management, Strategic, Reputational, Legal, and
Regulatory and Compliance) and across all business units.
ETFC and its subsidiaries, including ETSB, seek to ensure that risk taking
activities within the organization are clearly understood, commensurate with anticipated
rewards, and within the parameters of the Risk Appetite Statement. The Risk Appetite Statement serves three main purposes: (1) provides a common framework and language for
discussing risk, (2) ensures common understanding of the nature and level of risk
undertaken, and (3) meets external stakeholders’ needs for clear and consistent positioning around risk taking. The organization's aggregate risk appetite is low and varies across risk
dimensions. The organization seeks to accept and manage risk in-line with its strategic plan.
The organization focuses on accelerating growth of its core brokerage business to drive
organic growth and improve market share, as well as generating robust earnings growth and healthy returns on capital to deliver long-term value for stakeholders while remaining
adequately capitalized and liquid even during periods of stress.
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The desired integration end state for TCA is to incorporate all TCA
activities, practices and processes into the organization's existing ERM framework. This includes compliance with all corporate risk polices, including the Risk Appetite Statement,
as well as the execution of all ERM processes, including third party oversight, risk and
control self-assessments, business continuity planning, model risk management and others.
Risk limits, required reporting and governance for TCA activities will be established and incorporated in the ERM framework. Additionally, the integration contemplates a training
plan for all TCA personnel to ensure understanding of ETFC and its subsidiaries, including
ETSB, risk practices and risk culture.
4.4 Legal Steps
The transaction will follow a simple legal structure. At the closing, TCA will merge into ETSB, with ETSB as the surviving entity. In exchange, ETFC will make a
cash payment to TCAF of approximately $275 million, subject to certain adjustments to
account for changes between signing and closing. Other than the merger of TCA, neither
ETFC nor ETSB are acquiring any ownership interest in any other entity.5
ETSB also intends to change its corporate title to "E*TRADE Advisory
Services FSB" at closing. ETSB's corporate title change will be completed at or about
closing in accordance with 12 C.F.R. § 5.22(f)-(g) and 12 C.F.R. § 5.42.
A copy of the Agreement and Plan of Merger is provided at Exhibit 11.
Both parties have already obtained all necessary corporate governance and shareholder
approvals, copies of which are provided at Exhibits 9 and 10.
5 Regulatory and Legal Considerations
This section addresses some of the important statutory and regulatory
factors that are to be considered in evaluating these applications.
5.1 Effect on Competition
The proposed transaction will not result in a monopoly or have a significant effect on competition in any relevant market. ETSB and TCA do not have banking offices
or branches in any common state, metropolitan statistical area, or banking market defined by
the Federal Reserve. The transaction will not have any effect on the deposit-share HHI in any banking market defined by the Federal Reserve. Market share information for both
ETSB and TCA is provided at Exhibit 5.
5 The broker-dealer subsidiary of TCAF, TCAdvisor Network, Inc., will assign certain contracts to
a nonbank affiliate of ETFC.
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5.2 Financial Resources
The strong capital base, earnings, and future prospects of ETSB support approval of this application. The current and projected financial condition of ETSB
demonstrates capital in excess of well capitalized levels. The future prospects of ETSB are
strong. ETSB has been profitable for more than 31 consecutive quarters. The transaction will help grow ETSB's business and enhance ETSB's profitability and financial condition.
Under conservative assumptions, ETSB will continue to meet all of the supervisory
expectations for a satisfactory institution.
5.3 Managerial Resources
The competence, experience, and integrity of the officers and directors of
ETSB support approval of this application. ETSB is part of a broader banking organization with a robust corporate governance, compliance, and enterprise-wide risk management
program. ETSB's senior management team has the ability to effectively integrate TCA into
this infrastructure and to manage and implement sustainable, corrective actions to remediate any weaknesses identified at TCA. As a result of the proposed transaction, Joshua Pace, the
current Chief Executive Officer of TCA, will join the board of directors of ETSB and serve
as its President. ETSB has a qualified and experienced board of directors. Information regarding the senior executive officers and directors is provided at Exhibit 6.
5.4 Convenience and Needs of the Community
The convenience and needs of the community support approval of this application. The transaction will allow ETSB to expand its product offerings to RIAs and
their respective customers, who will be able to take advantage of the broader capabilities
available from ETFC and its affiliates.
ETSB received a "Satisfactory" rating in its most recent examination under
the Community Reinvestment Act ("CRA"). ETSB will remain committed to meeting the
credit needs of the communities in which it operates, including the needs of low- and moderate-income geographies and individuals, consistent with the CRA. A copy of ETSB's
CRA Policy is provided at Exhibit 4.
TCA is not subject to the CRA because it is a trust company.6 ETSB
intends to retain TCA's single office in Colorado as a non-branch office. Thus, the transaction will not have any effect on ETSB's CRA assessment area.
5.5 Anti-Money Laundering
ETSB has, and will continue to have, a strong record in preventing money
laundering and terrorism financing. ETSB maintains an anti-money laundering program as
required by the Bank Secrecy Act and USA PATRIOT Act. ETSB has made investments to ensure it continues to operate consistent with the letter and spirit of these important laws and
regulations. TCA's operations will be converted to ETSB's BSA/AML program as soon as
practicable following closing of the transaction.
6 12 C.F.R. 25.11(c)(3) (exclusion for certain special purpose banks).
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5.6 Financial Stability
Section 604 of the Dodd-Frank Act added as a statutory consideration risk to the stability of the United States banking or financial system. The proposed transaction
does not increase systemic risk or adversely affect financial stability. The proposed
transaction is a small acquisition. Among other things, the proposed transaction is an acquisition of less than $10 billion of assets and results in a combined institution with less
than $100 billion of assets.7
Neither institution engages in complex, unusual, or unique activities for which there are few substitutes. Neither institution engages in any material cross-border
transactions. Neither institution engages in underwriting or dealing in securities or
derivatives. The transaction does not increase the complexity or inter-connectedness of U.S.
financial system. The resulting institution will remain a domestic bank that, in the event of failure, could be readily resolved by the FDIC in its traditional capacity as receiver.
5.7 Impact on the Deposit Insurance Fund
The transaction will not unduly increase risk to the Deposit Insurance Fund.
After the transaction, ETSB will remain well capitalized and will continue to meet the
expectations for a satisfactory institution. The proposed transaction will enhance ETSB's franchise and improve its future prospects, thereby reducing risk to the Deposit Insurance
Fund.
6 Conclusion
Approval of this application is supported by the regulatory considerations
described above. ETSB is, and will continue to be, a well-capitalized, profitable, and
satisfactory institution committed to serving the needs of its communities. The transaction will contribute to ETSB's financial condition and future prospects.
The parties respectfully request that the OCC approve this application on or
before March 14, 2018, which will facilitate a quarter-end closing.
7 See Federal Reserve Board Order Approving People's United Financial, Inc. to Acquire Suffolk
Bancorp (Mar. 16, 2017) ("[T]he Board's experience has shown that proposals involving an
acquisition of less than $10 billion in assets, or that result in a firm with less than $100 billion in
total assets, are generally not likely to create institutions that pose systemic risks. Transactions
below either of these asset thresholds have typically not involved, or resulted in, firms with
activities, structures, and operations that are complex or opaque. Such transactions have also not materially increased the interconnectedness or complexity of the financial system. Accordingly,
the Board now presumes that a proposal does not raise material financial stability concerns if the
assets involved fall below either of the aforementioned size thresholds, absent evidence that the
transaction would result in a significant increase in interconnectedness, complexity, cross-border
activities, or other risk factors.").
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EXHIBIT 2
Interagency Bank Merger Act Application
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INTERAGENCY BANK MERGER ACT APPLICATION
Check all that apply: Type of Filing Form of Transaction Filed Pursuant To
Affiliate/Business Reorg X Merger X 12 USC 1828(c)
USC 1815(d)(2) 12 Consolidation Combination with Interim
Depository Institution Purchase and Assumption 12 USC 1815(d)(3)
X Nonaffiliate Combination Purchase of Assets Only 12 USC 215, 215a
USC 215a-1 12 ___________ :Other __________________ :Other
USC 215a-3 12
USC 215c 12
Other
Applicant Depository Institution E*TRADE Savings Bank FDIC Certificate: 58119
federal savings bank OCC Charter No.: 718000
671 N. Glebe Road
Arlington, VA 22203
Target Institution
Trust Company of America FDIC Certificate: 33639 Colorado trust company
7103 S. Revere Parkway
Centennial, CO 80112
Resultant Institution (if different than Applicant)
same as applicant (to be renamed E*TRADE Advisory Services FSB)
Contact Persons
Brian D. Christiansen Partner
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, NW
Washington, DC 20005 tel: 202.371.7852
email: [email protected]
Lori Sher Secretary
E*TRADE Savings Bank
671 N. Glebe Road, 15th Floor
Arlington, VA 22203 tel: 703.236.8254
email: [email protected]
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INTERAGENCY BANK MERGER ACT APPLICATION
1. Describe the transaction's purpose, structure, significant terms and conditions, and financing arrangements, including any plan to raise additional equity or incur debt. Also provide the approximate approval date needed to consummate.
The purpose, structure, and significant terms and conditions of the transaction are described in the Overview at Exhibit 1. The parties respectfully request that the OCC approve this application on or before March 14, 2018, which will facilitate a quarter-end closing.
2. Provide a copy of (a) the executed merger or transaction agreement, including any amendments, (b) any board of directors' resolutions related to the transaction, and (c) interim charter, names of organizers, and related documents, if applicable.
The executed Agreement and Plan of Merger is provided at Exhibit 11. Copies of corporate governance approvals are provided at Exhibits 9 and 10. The proposed transaction does not involve an interim charter.
3. Describe any issues regarding the permissibility of the proposal with regard to applicable state or Federal laws or regulations (for example, nonbank activities, branching, qualified thrift lender's test).
ETSB is not aware of any issues regarding the permissibility of the proposal under applicable state or federal laws or regulations. Colorado law authorizes TCA, as a Colorado limited liability company, to merge with ETSB as a federal savings bank.8 As a federal savings bank, ETSB as the resulting institution will continue to comply with the qualified thrift lender ("QTL") test. The Thrift Investment Percentage of the resulting institution on a pro forma combined basis as of September 30, 2017, would be XXXX.
4. Describe any nonconforming or impermissible assets or activities that Applicant or Resultant Institution may not be permitted to retain under relevant law or regulation, including the method of and anticipated time period for divestiture or disposal.
ETSB is not aware of any nonconforming or impermissible assets or activities that it may not be permitted to retain under relevant law or regulation. Although TCA currently exists as a state-chartered trust company with fiduciary powers, ETSB does not believe that TCA's activities require ETSB to obtain fiduciary powers pursuant to OCC regulations at 12 C.F.R. part 150. Under OCC
8 Colorado Revised Statutes 11-109-206. As of October 19, 2017, TCA was a Colorado
corporation. TCA will convert to a limited liability company prior to consummation of the merger.
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regulations, a federal savings bank acts in a "fiduciary capacity" for purposes of part 150 when it acts in any of the following capacities:
(a) Trustee.
(b) Executor.
(c) Administrator.
(d) Registrar of stocks and bonds.
(e) Transfer agent.
(f) Assignee.
(g) Receiver.
(h) Guardian or conservator of the estate of a minor, an incompetent person, an absent person, or a person over whose estate a court has taken jurisdiction, other than under bankruptcy or insolvency laws.
(i) A fiduciary in a relationship established under a state law that is substantially similar to the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act as published by the American Law Institute.
(j) Investment adviser, if you receive a fee for your investment advice.
(k) Any capacity in which you have investment discretion on behalf of another.
(l) Any other similar capacity that the OCC may authorize under 12 U.S.C. 1464(n).9
TCA has confirmed to ETSB that TCA does not act in any of the capacities enumerated above. For example, TCA does not serve as trustee or provide investment advice. TCA serves without any investment discretion as a custodian for customer assets and certain employee benefit plans.10 The OCC has made clear that acting in these custodial capacities does not require fiduciary powers.11
9 12 C.F.R. § 150.30. 10 TCA does not serve as trustee or designated administrator of any employee benefit plans.
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5. Provide the indicated financial information and describe the assumptions used
to prepare the projected statements, including those about the effect of the
merger transaction. Material changes between the date of the financial
statements and the date of the application should be disclosed. If there are no
material changes, a statement to that effect should be made.
a. Pro Forma Balance Sheet, as of the end of the most recent quarter and for
the first year of operation after the transaction. Indicate separately for the
Applicant and Target Institution each principal group of assets, liabilities,
and capital accounts; debit and credit adjustments (explained by footnotes)
reflecting the proposed acquisition; and the resulting pro forma combined
balance sheet. Goodwill and all other intangible assets should be listed
separately on the balance sheet. Indicate the amortization period and
method used for any intangible asset and the accretion period of any
purchase discount on the balance sheet.
b. Projected Combined Statement of Income for the first year of operation
following consummation.
c. Pro Forma and Projected Regulatory Capital Schedule, as of the end of the
most recent quarter and for the first year of operation, indicating:
Each component item for Tier 1 (Core) and Tier 2 (Supplementary)
Capital, Subtotal for Tier 1 and Tier 2 Capital (less any investment in
unconsolidated or nonincludable subsidiaries), Total Capital (include Tier 3
if applicable).
Total risk-weighted assets.
11 Comptroller's Handbook: Retirement Plan Products and Services, p 92 (Feb. 2014) ("Banks do
not need fiduciary powers when acting as a custodian to an IRA or to any other type of custodial
account. For purposes of … 12 CFR 150 for federal savings associations, however, the bank is a
fiduciary with respect to an IRA if the bank is named trustee, exercises investment discretion, or
otherwise acts in a 'fiduciary capacity' as defined in … 12 CFR 150.30 … Federal savings
associations are not required to have fiduciary powers to serve as a trustee for an IRA (12 CFR
150.580)."); Comptroller's Handbook: Custody Services, p 11 (Jan. 2002) ("Custody is generally
not considered a fiduciary capacity under 12 CFR 9. However, a custodian may perform
functions that are fiduciary in nature. For example, a custodian exercising discretion in managing
a securities lending cash collateral pool would be acting in a fiduciary capacity and must comply
with the relevant provisions of 12 CFR 9."); Comptroller's Handbook: Retirement Plan Products and Services, p 4 (Feb. 2014) ("Banks may provide custody services to retirement plans. …The
bank is not a fiduciary unless the bank as custodian performs a function that is fiduciary in
nature."); Comptroller's Handbook: Retirement Plan Products and Services, p 70 (Feb. 2014)
("Recordkeepers … act at the direction of the plan fiduciary; they have no fiduciary status in
regards to employee benefit plans.")
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Capital Ratios: (1) Tier 1 capital to total risk-weighted assets; (2) Total
capital to total risk-weighted assets; and (3) Tier 1 capital to average total
consolidated assets (leverage ratio).
Pro forma and projected financial information is provided at Exhibit 7.
6. List the directors and senior executive officers of the Resultant Institution and
provide the name, address, position with and shares held in Resultant
Institution or holding company, and principal occupation (if a director).
Information regarding the directors and senior executive officers of the resulting
institution is provided at Exhibit 6. As a result of the proposed transaction, Joshua Pace, the current Chief Executive Officer of TCA, will join the board of directors of
ETSB and serve as its President.
7. Describe how the proposal will meet the convenience and needs of the
community. For the combining institutions, list any significant anticipated
changes in services or products that will result from the consummation of the
transaction. If any services or products will be discontinued, describe and
explain the reasons.
The convenience and needs of the community support approval of this application.
The transaction will allow ETSB to expand its product offerings to RIAs and their respective customers, who will be able to take advantage of the broader capabilities
available from ETFC and its affiliates. When appropriate, ETSB expects to expand
the offerings to TCA customers to include existing services at ETSB. However, ETSB does not anticipate discontinuing any significant services or products now
offered by TCA.
8. Discuss the programs, products, and activities of the Applicant or the Resultant
Institution that will meet the existing or anticipated needs of its community(ies)
under the applicable criteria of the Community Reinvestment Act (CRA)
regulation, including the needs of low- and moderate-income geographies and
individuals.
The CRA policy provided at Exhibit 4 provides information regarding the programs,
products, and activities of ETSB that meet the needs of its communities.
For an Applicant or Target Institution that has received a CRA composite
rating of "needs to improve" or "substantial noncompliance" institution-wide
or, where applicable, in a state or a multi-state MSA, or has received an
evaluation of less than satisfactory performance in an MSA or in the non-MSA
portion of a state in which the applicant is expanding as a result of the
combination, describe the specific actions, if any, that have been taken to
address the deficiencies in the institution's CRA performance record since the
rating.
ETSB received a "Satisfactory" rating in its most recent examination under the
Community Reinvestment Act ("CRA"). ETSB will remain committed to meeting
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the credit needs of the communities in which it operates, including the needs of low-
and moderate-income geographies and individuals, consistent with the CRA.
TCA is not subject to the CRA because it is a trust company.12
ETSB intends to
retain TCA's single office in Colorado as a non-branch office. Thus, the transaction
will not have any effect on ETSB's CRA assessment area.
More than four years ago, ETSB maintained interstate branches in twelve states.
ETSB undertook a broad rationalization of its business and cost structure. That initiative included closing ETSB's interstate branches in September 2013 so that
ETSB now maintains only its home office in Arlington, Virginia. ETSB's closing of
its interstate branches complied with section 42 of the Federal Deposit Insurance Act and the Joint Policy Statement on Branch Closing Notices and Policies, which
takes into account any adverse impact on the community.13
The OCC's most recent
CRA examination of ETSB covered the period from January 1, 2013, to
December 31, 2014, which includes the period during which this branch rationalization took place. That examination concluded that ETSB has an overall
"Satisfactory" record, but the sub-rating for certain states was "Needs to Improve."14
The CRA examination acknowledged that as of October 1, 2013, ETSB's assessment areas would not include these states and would consist solely of two metropolitan
divisions within the Washington-Alexandria-Arlington DC-VA-MD-WV
metropolitan statistical area. ETSB received an "Outstanding" rating for these two metropolitan divisions, which were collectively referred to as the District of
Columbia. Since that time, ETSB has operated successfully and consistent with the
terms and spirit of the CRA. A copy of ETSB's CRA Policy is provided at
Exhibit 4.
9. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
imposes additional considerations for certain interstate mergers between
insured banks. Savings associations are not subject to 12 U.S.C. 1831u. If
subject to these provisions, discuss authority; compliance with state age limits
and host state(s) filing requirements; and applicability of nationwide and
statewide concentration limits. In addition, discuss any other restrictions that
the states seek to apply (including state antitrust restrictions).
Not applicable. ETSB is a federal savings association and will be the resulting
institution.
12 12 C.F.R. 25.11(c)(3) (exclusion for certain special purpose banks)
13 12 U.S.C. 1831r-1; 64 Fed. Reg. 39444 (Jun. 29, 1999).
14 For the nine-month period covered by the CRA examination report from January 1, 2013 to
September 30, 2013, ETSB received "Satisfactory" ratings with respect to California, Illinois,
Minnesota, New York, Pennsylvania, and Texas. During that same period, ETSB received
"Needs to Improve" ratings with respect to Arizona, Colorado, Florida, Georgia, Michigan, and
Oregon.
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10. List all offices that (a) will be established or retained as branches, including the
main office, of the Target Institution, (b) are approved but unopened
branch(es) of the Target Institution, including the date the current federal and
state agencies granted approval(s), and (c) are existing branches that will be
closed as a result of the proposal to the extent the information is available and
indicate the effect on the branch customers served. For each branch, list the
popular name, street address, city, county, state, and ZIP code.
TCA has no branches. ETSB does not intend for TCA's main office to become a
branch office. Instead, TCA's main office will be retained as an administrative office of ETSB. The current main office of ETSB in Arlington, Virginia, will
remain the main office of the resulting institution.
11. As a result of this transaction, if the Applicant will be or will become affiliated
with a company engaged in insurance activities that is subject to supervision by
a state insurance regulator, provide:
a. The name of company.
b. A description of the insurance activity that the company is engaged in and has
plans to conduct.
c. A list of each state and the lines of business in that state in which the company
holds, or will hold, an insurance license. Indicate the state where the company
holds a resident license or charter, as applicable.
The transaction will not result in ETSB becoming affiliated with any new company engaged in insurance activities.
If a nonaffiliate transaction, the Applicant also must reply to items 12 through 14.
12. Discuss the effects of the proposed transaction on existing competition in the
relevant geographic market(s) where Applicant and Target Institution operate.
Applicant should contact the appropriate regulatory agency for specific
instructions to complete the competitive analysis.
The proposed transaction will not result in a monopoly or have a significant effect
on competition in any relevant market. ETSB and TCA do not have banking offices
or branches in any common state, metropolitan statistical area, or banking market
defined by the Federal Reserve. The transaction will not have any effect on the deposit-share HHI in any banking market defined by the Federal Reserve. Market
share information for both ETSB and TCA is provided at Exhibit 5.
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13. If the proposed transaction involves a branch sale or any other divestiture of all
or any portion of the bank, savings association or nonbank company (in the
case of a merger under 12 U.S.C. 1828(c)(1)) to mitigate competitive effects,
discuss the timing, purchaser, and other specific information.
Not applicable. The transaction does not involve a branch sale or other divestiture
to mitigate competitive effects.
14. Describe any management interlocking relationships (12 U.S.C. 3201-3208) that
currently exist or would exist following consummation. Include a discussion of
the permissibility of the interlock with regard to relevant laws and regulations.
Not applicable. ETSB is not aware of any existing or pro forma management
interlocks that would be created by the transaction.
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COMPTROLLER OF THE CURRENCY
SUPPLEMENT TO INTERAGENCY BANK MERGER ACT APPLICATION
All OCC Applicants should provide the following supplemental information with their
application:
15. If any of the combining institutions have entered into commitments with
community organizations, civic associations, or similar entities concerning
providing banking services to the community, describe the commitment.
Not applicable. Neither ETSB nor TCA has entered into any such commitments.
16. If the Resultant Institution will not assume the obligations entered into by the
Target Institution, explain the reasons and describe the impact on the
communities to be affected.
Not applicable.
17. If acquiring a non-national bank subsidiary, provide the information and
analysis of the subsidiary's activities that would be required if it were established pursuant to 12 C.F.R. 5.34 or 5.39.
Not applicable. TCA does not have any subsidiaries.
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EXHIBIT 3
Form of Newspaper Notice
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Form of Newspaper Notice
The following notice will be published in newspapers of general circulation in Arlington, Virginia and Centennial, Colorado, on or about December 6, 2017, one week after the first notice, and 25 days after the first notice. Notice is given that application was made on or about December 4, 2017, to the Office of the Comptroller of the Currency for consent to merge Trust Company of America, located in Centennial, Colorado, into E*TRADE Savings Bank, located in Arlington, Virginia. The main office of E*TRADE Savings Bank, as the resulting bank of the merger, will be located in Arlington, Virginia. The main office of Trust Company of America, which is located at 7103 South Revere Parkway, Centennial, CO 80112, will cease to operate as a main office and will become a non-branch office of E*TRADE Savings Bank. Upon completion of the transaction, it is expected that E*TRADE Savings Bank will be renamed E*TRADE Advisory Services FSB. This notice is published pursuant to 12 USC 1828(c) and 12 CFR 5. Anyone may submit written comments on this application by January 5, 2018, to the Director of District Licensing, Office of the Comptroller of the Currency; 340 Madison Avenue, Fifth Floor, New York, New York 10173-0002; tel: (212) 790-4055; fax: (571)-293-4010; [email protected]. The public may find information about the filing (including the closing date of the comment period) in the OCC's Weekly Bulletin available at www.occ.gov. The public file is available for inspection in the district office during regular business hours. Written requests for a copy of the public file on the application should be sent to the Director of District Licensing at the address above. E*TRADE Savings Bank Arlington, Virginia Trust Company of America Centennial, Colorado
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EXHIBIT 4
CRA Policy
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INTERNAL USE ONLY
E*TRADE BankCommunity Reinvestment Act Policy
Version 5
APPROVAL STATUS
Approval date May 11, 2017
Policy owner VP, Bank Chief Compliance Officer
Approval requestor SVP, Enterprise Chief Compliance Officer
Approving body E*TRADE Bank Board of Directors
Next update Annual update required (minimum)
Version history (Amended and restated)
Version 5 – May 11, 2017Version 4 – February 4, 2016Version 3 – February 5, 2015Version 2 – February 6, 2014Version 1 – December 6, 2012
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May 11, 2017 Community Reinvestment Act Policy Page 2
Table of Contents
I. SUMMARY.......................................................................................................................................... 3
II. PURPOSE AND SCOPE .................................................................................................................... 3
III. LEGAL / REGULATORY .................................................................................................................... 3
IV. COMMUNITY REINVESTMENT ACT POLICY .................................................................................. 3A. DEFINITIONS AND ACRONYMS ..........................................................................................3B. COMMUNITY DEVELOPMENT ASSESSMENT AREA........................................................4C. COMMUNITY DEVELOPMENT ACTIVITY............................................................................4D. PERFORMANCE CONTEXT .................................................................................................5E. DATA COLLECTION AND REPORTING ..............................................................................6F. PUBLIC FILE AND PUBLIC NOTICE....................................................................................6G. INFORMATION AND COMMUNICATION .............................................................................6H. EXCEPTIONS TO POLICY ....................................................................................................6
V. ROLES AND RESPONSIBILITIES..................................................................................................... 7
VI. ESCALATION ..................................................................................................................................... 9
VII. GOVERNANCE................................................................................................................................... 9
VIII. RELATED POLICIES / PROCEDURES ............................................................................................. 9
APPENDIX A: DESIGNATION OF BANKS’ CRA OFFICERS................................................................. 10
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May 11, 2017 Community Reinvestment Act Policy Page 3
E*TRADE BANKCommunity Reinvestment Act Policy
Effective May 11, 2017
I. SUMMARY
This Community Reinvestment Act (“CRA”) Policy (the “Policy”) applies to E*TRADE Bank (“ETB”) andE*TRADE Savings Bank (“ETSB”), each individually a “Bank,” and collectively “Banks”. For the avoidance of doubt, while the Policy refers to the Banks, each Bank is required to adhere to this Policy as a separate and distinct entity. The Policy applies to the lending, investment and service activities of the Banks in connection with the CRA.
The CRA and implementing regulations promulgated by the Office of the Comptroller of the Currency (“OCC”) for federal savings associations require such institutions to meet the credit needs of the communities they serve, including Low and Moderate Income (“LMI”) individuals, and those who reside in those communities.
II. PURPOSE AND SCOPE
The purpose of this Policy is to affirm the commitment of the Banks to invest in and support activities that promote community development, including affordable housing, community services, especially financial literacy and education, economic development and the revitalization and stabilization of underserved communities. This Policy also outlines the Banks’ role in facilitating activities undertaken for the CRA.
The Banks’ CRA Officers (the “CRA Officers”) are identified in Appendix A.
III. LEGAL / REGULATORY
This Policy is intended to be consistent with all applicable legal requirements regarding its subject matter, including the CRA (12 USC § 2901 et seq.).
IV. COMMUNITY REINVESTMENT ACT POLICY
A. DEFINITIONS AND ACRONYMS
Definitions of significant terms used in this Policy include:
Community Development – activities that are implemented to do any of the following:
Promote affordable housing for LMI individuals or families;Provide community services targeted to LMI individuals or families;Stimulate economic development promoted by financial intermediaries that in turn finance or assist small businesses and/or small farms; and/orRevitalize or stabilize LMI and rural/underserved communities.
Community Development Area – the geographic area determined by the CRA Officers where the Banks will focus resources to meet the community development objectives of this Policy.
CRA Committee – the Banks’ CRA Committee, a management committee of ETB.
LMI – income that is less than 80% of the median family income for a Metropolitan Statistical Area(“MSA”).
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B. COMMUNITY DEVELOPMENT ASSESSMENT AREA
CRA Assessment Area – The Banks’ designated CRA Assessment Area is comprised of the Washington, DC MSA (#47900) that includes:
District of Columbia;Maryland counties of Charles, Calvert, Frederick, Montgomery and Prince George’s;Virginia counties of Arlington, Clarke, Culpeper, Fairfax, Fauquier, Loudoun, Prince William, Rappahannock, Spotsylvania, Stafford, Warren and the City of Alexandria, City of Fairfax, City of Falls Church, City of Fredericksburg, City of Manassas and City of Manassas Park; and West Virginia county of Jefferson.
Outside Assessment Area – As determined by the CRA Officers, in conjunction with applicable Bank’s Management (consisting of the officers of the applicable Bank) and its primary regulator, the OCC, other assessment areas may be considered beyond the designated assessment area where the Banks can receive credit for community development activities under the CRA (e.g. statewide or regional funds).
C. COMMUNITY DEVELOPMENT ACTIVITY
To the extent set forth in the Banks’ business plan (if applicable), the Banks may focus on the following types of lending, investment, and service opportunities in fulfillment of the objectives of this Policy:
1. Lending
Community development loans may include one or more of the following, and may be made directly or as part of a Bank-established program-related investment:
Financial intermediaries that lend to or invest in LMI areas or LMI individuals in order to promote community development;Loans to organizations serving primarily LMI housing or other community development needs within the Banks’ CRA Assessment Area or Outside Assessment Area;Loans to construct or rehabilitate community facilities that are located in LMI areas or that serveprimarily LMI individuals;Loans to financial intermediaries, including Community Development Financial Institutions (“CDFIs”), Community Development Corporations (“CDCs”), and community loan funds or pools;Loans to local, state, and tribal governments for community development activities; and/orLoans to finance environmental clean-up or redevelopment of an industrial site as part of an effort to revitalize an LMI community in which the property is located.
2. Investments
Community development investments and grants may include one or more of the following:
Financial intermediaries that lend to or invest in LMI areas or LMI individuals in order to promote community development;Financial intermediaries, including CDFIs, CDCs, loan funds, and CRA-qualified mutual funds, that lend or invest in CRA-related investments;Organizations engaged in affordable housing rehabilitation and construction, including multifamily rental housing;Organizations, including, for example, Small Business Investment Companies, specialized Small Business Urban Investment Companies, and Rural Business Investment Companies that promote economic development by financing small businesses;
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Community development venture capital companies that promote economic development by financing small businesses;Facilities that promote community development by providing community services for LMI individuals, such as youth programs, homeless centers, soup kitchens, health care facilities, battered women’s centers, and alcohol and drug recovery centers;Projects eligible for low-income housing tax credit;State and municipal obligations, such as revenue bonds, that specifically support affordable housing or other community development;Not-for-profit organizations serving LMI housing or other community development needs, such as counseling for credit, homeownership, home maintenance, and other financial literacy programs; and/orOrganizations supporting activities essential to the capacity of LMI individuals or geographies to utilize credit or to sustain economic development, such as day care operations and job training programs that enable LMI individuals to find and retain work.
3. Service
Community development services may include one or more of the following:
Providing technical assistance on financial matters to nonprofit, tribal or government organizations serving LMI housing or economic revitalization and development needs;Providing technical assistance on financial matters to small businesses or community development organizations, including organizations and individuals who apply for loans or grants under the Federal Home Loan Bank’s Affordable Housing Program;Making available employees or other Bank representatives to provide financial services/technical assistance to organizations facilitating affordable housing construction and rehabilitation or development of affordable housing;Providing credit counseling, homebuyer and home-maintenance counseling, financial planning or other financial services education to promote community development and affordable housing, including credit counseling to assist LMI borrowers in avoiding foreclosure on their homes;Establishing school savings programs or developing or teaching financial education or literacy curricula for LMI individuals; and/orProviding foreclosure prevention programs to LMI homeowners who are facing foreclosure on their primary residence with the objective of providing affordable, sustainable, long-term loan modifications and restructurings.
Examples of technical assistance activities that might be provided to community development organizations include:
Serving on a loan review committee;Assisting in marketing financial services, including development of advertising and promotions, publications, workshops and conferences; andAssisting with fundraising efforts, including the solicitation or arrangement of investments from third-party donors.
D. PERFORMANCE CONTEXT
The Banks shall develop and maintain a broad range of contextual information related to their CRA performance. This information may include, but is not limited to, economic, demographic, institution and community-specific information to understand the applicable Banks’ record of performance in the assessment area and nationally.
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E. DATA COLLECTION AND REPORTING
The Banks shall work with the business units in the collection, maintenance and reporting of data as required by the CRA and prescribed by the Banks’ federal regulator, the OCC. The CRA Officers areresponsible for implementing and maintaining adequate procedures for the Banks to collect, maintain,and report all required CRA data.
F. PUBLIC FILE AND PUBLIC NOTICE
1. Public File
The Banks shall maintain a public file that includes the following information:
All written comments received from the public relating to CRA performance and response to them for the current year and each of the prior two calendar years, except those that reflect adversely on the good name or reputation of any persons other than the Banks;Within 30 days of receipt, a copy of the public section of the Banks’ most recent CRA Performance Evaluation prepared by the OCC;A map of each of the Banks’ designated assessment areas;A list of any branches, branches opened and closed during the current year and each of the prior two calendar years, and their street addresses and geographies;A list of services (including hours of operation, available credit and deposit products, and transaction fees) offered by the Banks;CRA and Home Mortgage Disclosure Act disclosure statements for the prior two calendar years, when posted by the regulatory authorities; andIf the Banks have elected to have one or more categories of consumer loans or installment sale or lease transactions considered under the lending test, for each of these categories and for each of the prior two calendar years, the number and total dollar amount of loans, installment sale, and or lease transactions:
To low, moderate, middle and upper-income individuals;Located in low-, moderate-, middle- and upper-income census tracts; andLocated inside the Banks’ assessment areas and outside the Banks’ assessment area.
The applicable CRA Officer is responsible for maintaining the public file at the Banks’ main office in Arlington, Virginia and shall make a copy of it available to the public upon request, free of charge.
2. Public Notice
The Banks shall display a copy of the CRA Notice prescribed by the CRA regulation in their main offices.
G. INFORMATION AND COMMUNICATION
The CRA Officers shall communicate to the CRA Committee information regarding major changes in corporate strategy, the regulatory environment, or financial conditions that necessitate changes in this Policy.
H. EXCEPTIONS TO POLICY
ETB’s Board of Directors (“Board”) acknowledges that exceptional circumstances may develop requiring management to deviate from authorized activities in order to maintain the sound management of the Banks. Exceptions to the Policy shall be communicated by the CRA Officer of the applicable Bank in writing in a timely and accurate manner to seek approval from the CRA Committee. The CRA Committee shall report such approved exceptions to the Enterprise Risk Management Committee (“ERMC”) for further approval.
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V. ROLES AND RESPONSIBILITIES
Within the corporate structure, authorization has been given to the following to carry out the responsibilities outlined below:
ETB BOARD OF DIRECTORS RESPONSIBILITIES
ETB Board is responsible for:
Reviewing, challenging, and approving this Policy at least annually.
ETB RISK OVERSIGHT COMMITTEE (“ROC”) RESPONSIBILITIES
ETB’s ROC is responsible for:
Reviewing, challenging, and approving this Policy at least annually.
ENTERPRISE RISK MANAGEMENT COMMITTEE (“ERMC”) RESPONSIBILITIES
The ERMC is responsible for:
Reviewing, challenging, and approving this Policy at least annually; andReviewing and approving exceptions to this Policy as reported by the CRA Committee.
CRA COMMITTEE RESPONSIBILITIES
The CRA Committee is responsible for:
Reviewing, challenging, and approving this Policy at least annually; Reviewing and approving exceptions to this Policy as requested by the CRA Officers;Reporting approved exceptions to the Policy to the ERMC; andReviewing and discussing, at its meetings, the following when applicable:
Regulatory changes to the CRA;Modifications to the CRA assessment area;Internal governance;Plan production to goals; and Community grants.
POLICY OWNER RESPONSIBILITIES
The Policy Owner is responsible for:
Reviewing and approving this Policy at least annually; and Presenting or appointing a designee to present this Policy to the appropriate committees for approval.
BANK MANAGEMENT (OFFICERS OF THE BANKS) RESPONSIBILITIES (AS APPLICABLE TO EACH LEGAL ENTITY)
Bank Management or their designee is responsible for:
Overseeing all CRA related matters.
Bank Management through this Policy, delegates these responsibilities to the CRA Officers of the Banks.
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BANKS’ CRA OFFICERS RESPONSIBILITIES
The CRA Officers, with the assistance of the Compliance Department are responsible for:
Developing a CRA plan for each Bank that is consistent with the Bank’s business plan (if applicable)to (i) to achieve a Satisfactory or Outstanding CRA rating under the community development CRA test, based on community development loans, qualified investments, and community development services, and (ii) to comply with the recordkeeping and reporting requirements of the CRA and to maintain records adequately supporting the CRA-qualifying nature of all loans and investments made and services provided and performed by the Banks; andSeeking opportunities for and making recommendations to Bank Management to assist the Banks in meeting their CRA obligations. At a minimum, the CRA Officers shall, for each Bank:
Document compliance examination activities and performance;Analyze and report compliance performance versus benchmarks and peer group performance;Prepare required responses to regulatory agencies;Establish and monitor reporting and disclosure controls in response to regulatory requirements;Conduct CRA-related compliance training on at least an annual basis to ensure knowledge and awareness of CRA requirements;Research, formulate and recommend programs, loans, investments, and services that respond to community development needs in the communities that are part of the Bank’s CRA Assessment Area;Participate in and support community activities which provide compliance and financial value;Establish and maintain contacts within the public and private communities, to include local government, non-profit organizations and community advisory groups;Utilize networks and data resources for compliance current events, trends and future developments; andEstablish a projected budget to address the goals and initiatives outlined in this Policy.
TREASURY DEPARTMENT RESPONSIBILITIES (AS APPLICABLE TO EACH LEGAL ENTITY)
The Treasury Department is responsible for:
Conducting due diligence for each CRA-related investment opportunity;Finalizing all the closing documents for each investment;Ensuring CRA-related investments are within the limits established in ETFC’s Investment Policy;Allocating the investments between the two entities, ETB and ETSB; andIncluding CRA production and progress to planned goals reporting in its monthly report for the Asset Liability Committee.
COMPLIANCE DEPARTMENT RESPONSIBILITIES (AS APPLICABLE TO EACH LEGAL ENTITY)
The Compliance Department is responsible for:
Assisting the CRA Officers with CRA related matters when needed; Working with the CRA Officers to produce monthly reports on CRA production and progress to planned goals; and Informing the appropriate personnel of any new regulations which would impact this Policy and the associated activity.
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INTERNAL AUDIT DEPARTMENT RESPONSIBILITIES (AS APPLICABLE TO EACH LEGAL ENTITY)
The Internal Audit Department is responsible for:
Conducting and completing internal audits of all CRA activities in accordance with the Board-approved Internal Audit plan. The Internal Audit Department will prepare a written report outlining the audit scope and results to ETB’s Audit Committee and the appropriate legal entity’s Board, as appropriate.
VI. ESCALATION
The chain of communication, from top to bottom, is:
Chairperson of ETB Board or its designeeETB PresidentE*TRADE Financial Corporation (“ETFC”)’s Chief Risk Officer (the “CRO”)SVP, Enterprise Chief Compliance Officer (the “CCO”)Each Banks’ CRA Officers
Any violation of or non-compliance with this Policy shall be reported to the CRA Officers immediately.
It is the responsibility of CRA Officer of the applicable Bank to report any violations of or non-compliance with this Policy to the CCO, CRO, the CRA Committee, and ERMC. The CCO or CRO, in turn, will inform the applicable Board or a designated committee thereof of such violations or non-compliance, if appropriate.
VII. GOVERNANCE
The governance and oversight for the CRA Policy is provided by:
ETB Board and ROC which review and approve this Policy; and
Senior Executives and Management Committees, including the CRA Officers, CCO, CRO, CRA Committee, Bank Management, and ERMC, whose roles and responsibilities are more fully described in Section V and VI of this Policy.
VIII. RELATED POLICIES / PROCEDURES
This Policy is to be read and applied in conjunction with other applicable ETFC and ETB policies and/or procedures, including, but not limited to:
ETFC’s Corporate Giving Policy;ETFC’s Third Party Oversight Policy;ETB’s Fair Lending Policy;ETFC’s Enterprise Risk Management Policy;ETFC’s Reputational Risk Policy;ETFC’s Enterprise Compliance Policy; ETFC’s Record Management Policy;ETFC’s Investment Policy;Enterprise Risk Appetite Statement; andCode of Professional Conduct.
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APPENDIX A: DESIGNATION OF BANKS’ CRA OFFICERS
Currently and as of November 13, 2013, Vickie Tassan serves as ETB’s CRA Officer.
Currently and as of January 1, 2014, Vickie Tassan serves as ETSB’s CRA Officer.
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EXHIBIT 5
Deposit Market Share Information
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CASSIDI™Competitive Analysis and Structure Source Instrument for Depository Institutions
Federal Reserve Bank of St. Louis
Report Date: Friday, December 01, 2017
10:12:1 EST.
E*TRADE SAVINGS BANK
ARLINGTON, VA
Fed ID 3441677
Total Deposits** : $1,614.186
** Deposit data (in millions of dollars) is as of June 30, 2016
Holding Company:
ETB HOLDINGS, INC.(ARLINGTON, VA)
Name Address City County State Zip Code Banking Market Deposits**E*TRADE SAVINGS BANK 671 North Glebe Road ARLINGTON ARLINGTO
NVA 22203 Washington, DC-MD-VA-
WV$1614.1860
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CASSIDI™Competitive Analysis and Structure Source Instrument for Depository Institutions
Federal Reserve Bank of St. Louis
Report Date: Friday, December 01, 2017
10:11:28 EST.
TRUST COMPANY OF AMERICA
CENTENNIAL, CO
Fed ID 1977248
Total Deposits** : $634.659
** Deposit data (in millions of dollars) is as of June 30, 2016
Holding Company:
TRUST COMPANY OF AMERICA(CENTENNIAL, CO)
Name Address City County State Zip Code Banking Market Deposits**TRUST COMPANY OF AMERICA 7103 SOUTH REVERE PARKWAY CENTENNIAL ARAPAHO
ECO 80112 Denver-Boulder, CO $634.6590
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EXHIBIT 6
Directors and Senior Executive Officers of the Resulting Institution
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