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
