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The Anchor Bank

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: The Anchor Bank Myrtle Beach, South Carolina

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Continue to Engage as Principal in an Activity Which Is Not Permissible for a National Bank

ORDER

The Board of Directors of the Federal Deposit Insurance Corporation ("FDIC") has fully considered all available facts and information relevant to Section 24 of the Federal Deposit Insurance Act, 12 U.S.C. 1831, and Part 362 of the FDIC's Rules and Regulations, 12 C.F.R. Part 362, relating to an application by The Anchor Bank, Myrtle Beach, South Carolina ("Bank"), for consent to continue to engage as principal in the activity of securing one depositor's non-public deposit accounts for the amount of the deposits that exceed the FDIC insurance limitation with the aggregate amount of the pledged assets not to exceed $500,000. This represents an activity which is not permissible for a national bank.

The Board of Directors, having found that the Bank is in compliance with applicable capital standards and that the activity to be continued does not appear to pose a significant risk to the applicable deposit insurance fund has concluded 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 consent to continue to engage in an activity that is not Permissible for a national bank be, and the same hereby is, approved subject to the following conditions:

1. That the Bank may continue to pledge assets to secure the non-public deposit accounts of one depositor which are currently collateralized but may not increase the amount of security pledged on this account or initiate any new activity on other depositors' accounts.

2. That the consent granted herein is based on the facts and circumstances presented or otherwise known to the FDIC in connection with this application. The Bank shall notify the FDIC of any significant change in facts or circumstances by the end of the month following such occurrences. If the facts and circumstances change significantly, the FDIC shall have the right to alter, suspend, or withdraw its approval.

That the consent granted herein shall be subordinate to any subsequent ruling, regulation, or policy of the FDIC that may be applicable to this activity such that the Bank shall comply, as applicable, with the requirements of such ruling, regulation, or policy irrespective of the approval contained herein.

Dated at Washington, D. C., this 22nd day of April, 1997.

BY ORDER OF THE BOARD OF DIRECTORS

Robert E. Feldman
Deputy Executive Secretary


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: The Anchor Bank Myrtle Beach, South Carolina

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Continue to Engage as Principal in an Activity Which Is Not Permissible for a National Bank

STATEMENT

Pursuant to the provisions of Section 24 of the Federal Deposit Insurance Act ("FDI Act"), The Anchor Bank, Myrtle Beach, South Carolina ("Bank"), has filed an application with the Federal Deposit Insurance Corporation ("FDIC"). The Bank requests the FDIC's consent to continue to collateralize the portion of one individual's aggregate non-public deposit accounts that exceeds the FDIC insurance limits.

The activity of pledging assets to secure non-public deposits is not a permissible activity for a national bank. State-chartered, FDIC-insured banks may not engage as principal in an activity prohibited to nationally-chartered banks unless they obtain consent from the FDIC. Consent may not be granted unless the bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance fund. South Carolina state law allows, by interpretation, state banks to pledge bank assets to secure both public and non-public deposits.

The Bank began the activity of pledging assets prior to the enactment of the Federal Deposit Insurance Corporation Improvement Act of 1991, which first imposed the activity limitations on state-chartered banks. The Bank engages in the activity in only one instance, to secure the uninsured portion of the aggregate deposits of one customer. The Bank has no written policies regarding this activity; however, the Bank does not wish to expand the activity beyond the current level. The Bank has made application pursuant to Part 362 of the FDIC's Rules and Regulations and requests permission to continue the activity indefinitely for the current account holder at the current level of pledged assets. The Bank has pledged assets with a value of $500,000. The deposit accounts are collateralized by U.S. Treasury Notes held in safekeeping by a correspondent bank subject to a recorded pledge to the depositor. The depositor does not have physical possession of the underlying assets.

The Bank, which meets the definition of "well-capitalized" within the meaning of Part 325 of the FDIC's Rules and Regulations, is in compliance with applicable capital standards with Tier I leverage, Tier I risk-based, and Total risk-based capital ratios of 7.13 percent, 9.58 percent and 11.95 percent, respectively, as of December 31, 1996. The Bank is in overall sound condition and is satisfactorily managed.

The Board of Directors ("Board") of the FDIC has reviewed all available information and has also taken into consideration the financial and managerial resources and future earnings prospects of the Bank. The Board also considered the risks associated with the activity of collateralizing deposits in excess of the FDIC deposit insurance limits and evaluated the specifics of the Bank's completed application accepted as filed on January 21, 1997.

For the reasons outlined above, the Board of Directors has concluded that the proposed activity of pledging Bank assets to secure the amount of one depositor's accounts in excess 'of the deposit insurance amount does not pose a significant risk to the Bank Insurance Fund nor safety and soundness concerns, provided certain conditions are observed, and therefore, approval of the application is warranted.

THE BOARD OF DIRECTORS
FEDERAL DEPOSIT INSURANCE CORPORATION



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