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Target Bank (Proposed)

FEDERAL DEPOSIT INSURANCE CORPORATION

In Re: Target Bank (Proposed)
Salt Lake City, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)

STATEMENT

Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815), an application for Federal deposit insurance has been filed for Target Bank (the Bank), a proposed new Utah industrial bank, to be located at 299 South Main Street, 20th Floor, Salt Lake City, Salt Lake County, Utah.

The Bank will be a wholly-owned subsidiary of Target Corporation, a publicly traded company with its principal offices in Minneapolis, Minnesota. Target Corporation describes itself as an upscale discounter and operates 1,248 Target stores in 47 states. Target Corporation had 2003 revenues of over $48 billion.

The Bank will provide proprietary credit cards to businesses that shop at Target retail stores and will rely on its parent organization for financial and other support. In addition to formal written and operating policies, the Bank will ensure that all inter-company transactions are conducted at arms length in accordance with section 23B of the Federal Reserve Act. The Bank will maintain a board of directors independent of its holding company and its affiliates.

For the purposes of this proposal, capital is adequate, projections for future earnings prospects are favorable, management is considered satisfactory, and the investment in fixed assets is reasonable. Corporate powers to be exercised are consistent with the purpose of the Federal Deposit Insurance Act. No formal objections to this proposal have been filed and no undue risk to the insurance fund is apparent.

Accordingly, based upon careful evaluation of all available facts and information, the Associate Director, acting under delegated authority, has concluded that approval of the application is warranted, subject to certain prudential conditions.

ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION AND CONSUMER PROTECTION FEDERAL DEPOSIT INSURANCE CORPORATION


FEDERAL DEPOSIT INSURANCE CORPORATION

In Re: Target Bank (Proposed)
Salt Lake City, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)

ORDER

The undersigned, acting on behalf of the Board of Directors pursuant to delegated authority, has fully considered all available facts and information relevant to the factors of Section 6 of the Federal Deposit Insurance Act relating to the application for Federal deposit insurance for Target Bank (the Bank), a proposed new Utah industrial bank to be located at 299 South Main Street, 20th Floor, Salt Lake City, Salt Lake County, Utah, and has concluded that the application should be approved.

Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by the Bank for Federal deposit insurance be and the same hereby is approved subject to the following conditions:

1. That beginning paid-in capital funds of not less than $6,500,000 be provided and that a ratio of Tier 1 Leverage Capital to total assets of not less than 8 percent be maintained throughout the first three years of operation;

2. That prior to the effective date of deposit insurance, the organizers will have appointed and will thereafter maintain a board of directors, the majority of whom will be outside directors who are independent of Target Corporation and its affiliated entities. The directors must possess the knowledge, experience, and capability to carry out the responsibilities of the position in a safe and sound manner and independently of the activities of Target Corporation and its affiliated entities;

3. That prior to the effective date of deposit insurance, the Bank shall hire and retain, subject to the prior written non-objection of the appropriate Regional Director, a qualified chief credit officer. The Bank shall submit all appropriate background information on the selected candidate, who must possess the knowledge, experience, and capability to carry out the responsibilities of the position, given the projected size and complexity of the Bank's credit card portfolio;

4. That prior to the effective date of deposit insurance, Target Corporation and the Bank shall enter into a Capital Maintenance and Liquidity Agreement acceptable to the FDIC;

5. That any changes in proposed management or proposed ownership (10 percent or more of stock), including new acquisitions of or subscriptions to 10 percent or more of stock, will render this commitment null and void unless such proposal is approved by the FDIC Regional Director prior to opening of the Bank;

6. That the Bank will operate within the parameters of the business plan submitted to the FDIC. Furthermore, during the first three years of operations, the Bank will notify the Regional Director of any proposed major deviation or material change from the submitted plan 60 days before consummation of the change;

7. That no dividends will be paid by the Bank during the first three years of operations without the prior approval of the Regional Director;

8. That the Bank will obtain an audit of financial statements by an independent public accountant annually for at least the first three years after deposit insurance is effective, furnish a copy of any reports by the independent auditor (including any management letters) to the Regional Director within 15 days after their receipt by the Bank and notify the Regional Director within 15 days when a change in its independent auditor occurs;

9. That Federal deposit insurance shall not become effective unless and until the applicant has been established as an industrial bank (not a member of the Federal Reserve System), that it has authority to conduct a banking business, and that its establishment and operation as an industrial bank have been fully approved by the appropriate State Authority;

10. That until the conditional commitment herein granted becomes effective, the FDIC shall have the right to alter, suspend or withdraw said commitment should any interim development be deemed to warrant such action; and

11. That if Federal deposit insurance has not become effective within twelve months from the date of this ORDER, or unless, in the meantime, a request for an extension of time has been approved by the FDIC, the consent granted herein shall expire at the end of the said twelve-month period.

Dated at Washington, D.C. this 27 day of AUGUST 2004.

FEDERAL DEPOSIT INSURANCE CORPORATION

BY: Lisa K. Roy
Associate Director
Division of Supervision and Consumer Protection



Last Updated 03/24/2011 Legal@fdic.gov