Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Indirectly Engage as Principal Through a Wholly-Owned Subsidiary in Activities That May Not Be Permissible for a National Bank.
The undersigned, acting under delegated authority, has fully considered all available facts and information relevant to Section 24 of the Federal Deposit Insurance Act, 12 U.S.C. § 1831 a, and Part 362 of the FDIC's Rules and Regulations relating to the application by Bank of Louisiana, New Orleans, Louisiana ("the Bank"), for consent to indirectly engage in activities through a proposed, wholly-owned subsidiary, BOL Assets, L.L.C. ("Subsidiary"), to be formed for the purpose of holding other real estate originally acquired for debts previously contracted but which will be held more than 10 years. This activity may not be permissible for a subsidiary of a national bank. The investment is permissible under state of Louisiana laws. The Division of Supervision has approved the application, subject to certain conditions.
Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by the Bank for consent to engage in real estate activities through its wholly-owned subsidiary, BOL Assets, L.L.C., be and hereby is approved, subject to the following conditions:
(1) The investment in real estate shall be held indirectly through a single, wholly-owned subsidiary organized for the purpose of holding such investments;
(2) That the Bank shall take the necessary steps to operate the Subsidiary in a manner so as to ensure its separate corporate existence as a wholly-owned subsidiary that:
(a) Meets applicable statutory or regulator capital requirements and has sufficient operating capital in light of the normal operations that are reasonably foreseeable for a business of its size and character within the industry;
(b) Maintains separate accounting and other business records;
(c) Observes separate business entity formalities such as separate board of members meetings;
(d) Conducts business pursuant to independent policies and procedures designed to inform customers and prospective customers of the Subsidiary that the Subsidiary is a separate organization from the Bank, and that the Bank is not responsible for and does not guarantee the obligations of the Subsidiary;
(e) Has a current written business plan that is appropriate to the type and scope of business conducted by the Subsidiary;
(f) Has only one business purpose; and
(g) Has qualified management and employees for the type of activity contemplated; (3) The real estate held by the Subsidiary shall be limited to the property currently held;
(4) Without prior written approval of the FDIC's Memphis Regional Director, neither the Bank nor any of its subsidiaries may extend credit to the Subsidiary, purchase any debt instruments issued by the Subsidiary, or originate any other transaction that is used to benefit the Subsidiary, other than an annual capital expenditure of $1,000 to ensure that adequate property insurance coverage is maintained;
(5) That neither the Bank nor the Subsidiary may enter into any transaction with the Bank's executive officers, directors, principal shareholders, or related interests of such persons which relate to the Subsidiary's activities unless the transactions are on terms and conditions that are substantially the same as those prevailing at the time for comparable transactions with persons not affiliated with the Bank;
(6) Unless an extension of time is approved in writing by the FDIC's Memphis Regional Director for good cause, the real estate held by the subsidiary must be disposed of within one year of the expiration of the existing life estate; and,
(7) In the event the facts and circumstances presented or otherwise known to the FDIC in connection with this request change significantly, the FDIC retains the ability to alter, suspend, or withdraw its approval.
Dated at Washington, D.C., this day of December, 2001.
BY ORDER OF THE ASSOCIATE DIRECTOR OF THE DIVISION OF SUPERVISION
John M. Lane
FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Bank of Louisiana
New Orleans, Louisiana
Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Indirectly Engage as Principal Through a Wholly-Owned Subsidiary in Activities That May Not Be Permissible for a National Bank
Pursuant to the provisions of section 24 of the Federal Deposit Insurance Act, the Bank of Louisiana, New Orleans, Louisiana ("the Bank"), has filed an application with the Federal Deposit Insurance Corporation ("FDIC") seeking permission to indirectly engage in an activity not permissible for a national bank through BOL Assets, L.L.C., a proposed wholly-owned subsidiary (Subsidiary"). National banks are generally allowed to hold other real estate acquired for debts previously contracted for a ten-year period of time. The bank is seeking permission to continue to hold, through the proposed Subsidiary, a parcel of residential real estate acquired ten years ago for debts previously contracted and subject to a life estate. The Bank requests permission to continue to hold title to the property, through Subsidiary, until such time as the life estate interest is extinguished. The life estate holder is an 87 year-old widower, and his life estate interest ends at the time of either his death or vacating the property. If required to divest of its interest in the subject real property prior to termination of the life estate, it is believed that the Bank would sustain substantial loss on this asset. The Bank has not had any lending or insider activities relating to the property since it was acquired and none are expected to occur in
State of Louisiana law allows parcels of other real estate to be held by state-chartered banks, or their subsidiaries, in excess of ten years if the asset is written-down to a de minimus value. The Bank has written-down this investment to $1 to comply with State law.
Neither insured state banks nor their subsidiaries may engage as principal in an activity prohibited to national banks unless consent has been obtained 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 funds.
Based on a careful review of all available facts and information, including the stated intent of the Bank, the Division of Supervision has concluded that the proposed activity, through a wholly-owned subsidiary, does not pose a significant risk to the Bank Insurance Fund, and, therefore, approval of the application subject to the conditions in the Order is warranted.
THE ASSOCIATE DIRECTOR OF THE DIVISION OF SUPERVISION
FEDERAL DEPOSIT INSURANCE CORPORATION