RE: Bank of Greensburg
Greensburg, St. Helena, Louisiana
Application Pursuant to Section 24 of the
Federal Deposit Insurance Act for Consent to Indirectly
Engage as Principal in Real Estate Activities Which
May Not Be Permissible for a Subsidiary of a National Bank
Pursuant to the provisions of section 24 of the Federal Deposit Insurance ("FDI") Act, Bank of Greensburg, Greensburg, Louisiana ("Greensburg") has filed an application with the Federal Deposit Insurance Corporation ("Corporation") . The applicant requests the Corporation's consent to engage as principal indirectly through its wholly-owned subsidiary, Greensburg Holding Company, a wholly-owned subsidiary of the bank to be established for the sole purpose of managing and leasing one real estate parcel held for investment purposes.
The leasing of investment property may not be a permissible activity for a National bank or a subsidiary of 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. Louisiana State law permits the holding of real estate investments in a subsidiary but establishing the subsidiary requires prior approval. The approval by the FDIC of the subject application is not intended to allow the bank to engage in an activity at the subsidiary level in a manner or in an amount which is inconsistent with that allowed by Louisiana State law.
In 1965, Greensburg's subsidiary purchased a parcel of real estate for the express purpose of renovating, leasing and holding the property for investment purposes. In early 1991, prior to the passage of the passage on December 19, 1991 of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), the subsidiary transferred the property to the bank and the subsidiary was dissolved. The bank requests permission from the FDIC to transfer the subject real estate parcel to the reactivated wholly-owned subsidiary, Greensburg Holding Company, for the sole purpose of holding and managing the subject property.
A review of available information discloses no inconsistencies with the purposes of the FDI Act or with applicable state laws. In connection with this application, the Corporation has also taken into consideration the financial and managerial resources and future earnings prospects of the institution associated with the continued holding of this real estate parcel and the risks associated with owning and leasing this particular property.
Greensburg is in compliance with applicable capital standards and the subsidiary's activity of leasing one parcel of real estate held for investment purposes and the level of activity do not pose a significant risk to the Bank Insurance Fund nor do they present safety and soundness concerns. The book value of the parcel of real estate held is nominal, representing only 1.7% of Greensburg's Tier 1 capital and .27% of the bank's total assets as of December 31, 1994.
Based upon careful evaluation of all available facts and information and the de minimis nature of the activity, the Associate Director, acting under delegated authority, has concluded that the activities to be conducted do not pose a significant risk to the Bank Insurance Fund and approval of the application is warranted subject to the restrictions discussed below.
Greensburg shall notify the FDIC of any significant change in facts or circumstances, and the FDIC shall have the right to alter, suspend, or withdraw its approval upon receiving such notification. In addition, transactions between Greensburg and the subsidiary that would be covered transactions for purposes of Sections 23A and 23B of the Federal Reserve Act, 12 U.S.C. §371c and 371-c, if the subsidiary were an affiliate of Greensburg under Sections 23A and 23B, shall not exceed the amount limitations and shall be made in accordance with the other restrictions of Section 23A and 23B to the same extent as though the subsidiary were an affiliate of Greensburg.