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Virginia National Bank (Proposed)

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Virginia National Bank (Proposed) Charlottesville, Albemarle County, Virginia

Application for Federal Deposit Insurance (Bank Insurance Fund)

ORDER

The Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC") has fully considered all available facts and information relevant to the factors contained in Section 6 of the Federal Deposit Insurance Act and relating to the application for Federal deposit insurance, with membership in the Bank Insurance Fund, for Virginia National Bank, a proposed new bank to be located at 222 East Main Street Charlottesville, Albemarle County, Virginia, 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 on behalf of Virginia National 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 $12,500,000 shall be provided;

2. 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 the stock, shall render this approval null and void unless such proposal is approved by the FDIC prior to opening of the bank;

3. That during the first three years of operation the bank shall maintain not less than an 8 percent Tier 1 capital ratio;

4. That Federal deposit insurance shall not become effective unless and until the bank has been established as a national bank, that it has authority to conduct a banking business, and that its establishment and operation as a bank have been fully approved by the Office of the Comptroller of the Currency;

5. That until the bank commences business, the FDIC shall have the right to alter, suspend, or withdraw said. approval should any interim development be deemed to warrant such action; and

6. That if Federal deposit insurance has not become effective within 12 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 shall expire at the end of said 12 month period.

Dated at Washington, D. C., this 26th day of June, 1998.

BY ORDER OF THE BOARD OF DIRECTORS

Robert E. Feldman

Executive Secretary


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Virginia National Bank (Proposed) Charlottesville, Albemarle County, Virginia

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, with membership in the Bank Insurance Fund, has been filed on behalf of Virginia National Bank, a proposed new bank to be located at 222 East Main Street, Charlottesville, Albemarle County, Virginia ("Bank").

The Bank's primary market area is the City of Charlottesville and the surrounding Albemarle County.. A review of the Bank's Community Reinvestment Act Statement and other available information indicates that no inconsistencies with the purposes of the Community Reinvestment Act appear to exist.

Initial capitalization is adequate, and acceptable deposit growth and operating profits are projected within a reasonable time period. The factors relating to the general character and fitness of management, and risk to the deposit insurance fund have been favorably resolved.

The application, as submitted, includes a Stock Option Plan for the Bank's organizers, president, chairman of the board, and other unspecified employees. The Stock Option Plan was established in order to compensate the organizers for the financial support they provided during the Bank's initial stages of organization and to attract and retain qualified personnel. There is no provision in the Federal Deposit Insurance Corporation's ("FDIC") Statement of Policy regarding applications for deposit insurance to accommodate the granting of stock benefits to reward organizers for their financial support during a bank's initial stages of organization. The issuance of stock benefits to organizers and outside directors who will not be involved in the active management of the bank is also not in accord with the Statement of Policy.

While the proposed stock benefits will not be tied to specific performance by active management as provided in the Statement of Policy, such stock benefits are acceptable under the FDIC's proposed revisions to the Statement of Policy. The FDIC's Board of Directors ("Board"), in the proposed revisions to the Statement of Policy and in recent Federal deposit insurance applications involving stock benefit plans, has concluded that such plans are not objectionable if such plans represent reasonable compensation for the time, expertise, or financial commitment of the organizers and outside directors. In this particular case, the stock benefits for organizers and outside directors are not considered objectionable because they do not raise significant safety and soundness issues, represent a potential breach of fiduciary duty, or represent undue risk to the Bank Insurance Fund.

Accordingly, based on the evaluation of all available facts and information, the Board has concluded that approval of the application is warranted, subject to the conditions listed in the ORDER.

THE BOARD OF DIRECTORS
FEDERAL DEPOSIT INSURANCE CORPORATION



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