Legal developments.

FINAL RULE--AMENDMENT TO REGULATION Z

The Board of Governors of the Federal Reserve System (Board) is amending 12 C.F.R. Part 226, the staff commentary that interprets the requirements of Regulation Z (Truth in Lending). The Board is required to adjust annually the dollar amount that triggers requirements for certain home mortgage loans bearing fees above a certain amount. The Home Ownership and Equity Protection Act of 1994 (HOEPA) sets forth rules for home-secured loans in which the total points and fees payable by the consumer at or before loan consummation exceed the greater of $400 or 8 percent of the total loan amount. In keeping with the statute, the Board has annually adjusted the $400 amount based on the annual percentage change reflected in the Consumer Price Index that is in effect on June 1. The adjusted dollar amount for 2004 is $499.

Effective January 1, 2004, 12 C.F.R. Part 226 is amended as follows:

Part 226--Truth in Lending (Regulation Z)

1. The authority citation for Part 226 continues to read as follows:

Authority: 12 U.S.C. 3806; 15 U.S.C. 1604 and 1637(c)(5).

2. In Supplement I to Part 226, under Section 226.32--Requirements for Certain Closed-End Home Mortages, under Paragraph 32(a)(l)(ii), paragraph 2. ix. is added.

Supplement I to Part 226--Official Staff Interpretations

Subpart E--Special Rules for Certain Home Mortgage Transactions

Section 226.32--Requirements for Certain Closed-End Home Mortgages

32(a) Coverage

Paragraph 32(a)(1)(ii)

2. Annual adjustment of $400 amount.

ix. For 2004, $499, reflecting a 2.22 percent increase in the CPI-U from June 2002 to June 2003, rounded to the nearest whole dollar.

FINAL RULE--AMENDMENT TO REGULATION CC

The Board of Governors is amending 12 C.F.R. Part 229, Appendix A of its Regulation CC (Availability of Funds and Collection of Checks). The Board of Governors is amending Appendix A of Regulation CC to delete the reference to the Pittsburgh check processing office of the Federal Reserve Bank of Cleveland and reassign the Federal Reserve routing symbols currently listed under that office to the head office of the Federal Reserve Bank of Cleveland. These amendments reflect the restructuring of check processing operations within the Federal Reserve System. The Board also is amending appendices A and E of Regulation CC to replace all references to Thomson Financial Publishing Inc. with more general references to "an agent of the American Bankers Association."

Effective November 1, 2003, 12 C.F.R. Part 229 is amended as follows:

Part 229--Availability of Funds and Collection of Checks (Regulation CC)

1. The authority citation for Part 229 continues to read as follows:

Authority: 12 U.S.C. 4001 et seq.

2. The first sentence of A. and the Fourth Federal Reserve District routing symbol list in Appendix A are revised to read as follows:

Appendix A to Part 229--Routing Number Guide to Next-Day Availability Checks and Local Checks.

A. Each bank is assigned a routing number by an agent of the American Bankers Association.

3. Appendix E is amended by removing the phrase "Thomson Financial Publishing Inc." in sections II.DD., XVIII.A.2.b.ii., and XXII.B.2.b.i. and adding the phrase "an agent of the American Bankers Association" in its place.

ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT

Orders Issued Under Section 3 of the Bank Holding Company Act

Woori Finance Holdings Co., Ltd. Seoul, Korea

Woori Bank Seoul, Korea

Order Approving the Formation of a Bank Holding Company and the Acquisition of a Bank

Woori Finance Holdings Co., Ltd. ("WFH") has requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") (12 U.S.C. [section] 1842) to become a bank holding company and acquire indirectly all the voting shares of Panasia Bank, National Association, Fort Lee, New Jersey ("Panasia"). Woori and ("Woori"), a wholly owned subsidiary of WFH and a bank holding company within the meaning of the BHC Act, has also requested the Board's approval under section 3 to acquire indirectly all the voting shares of Panasia. (1)

Notice of the proposals, affording interested persons an opportunity to submit comments, has been published (68 Federal Register 14,658 and 17,808 (2003)). The time for filing comments has expired, and the Board has considered the proposal in light of the factors set forth in section 3 of the BHC Act.

WFH is a Korean financial holding company controlled by the Korea Deposit Insurance Company ("KDIC"). (25) With total consolidated assets of $97 billion, WFH is the second largest banking organization in Korea. (3) Woori, with total consolidated assets of $74 billion, is WFH's lead subsidiary bank and the third largest bank in Korea. In the United States, Woori operates agencies in New York City and Los Angeles. Woori America, with total assets of $354 million, controls approximately $319 million in deposits, representing less than 1 percent of total deposits in insured depository institutions in the United States ("total U.S. insured deposits"). (4) Woori America operates branches in New York and New Jersey. (5)

Panasia, with total assets of $213 million, controls $187 million in deposits, representing less than 1 percent of total U.S. insured deposits. Panasia serves Korean-American communities in the New York City, Philadelphia, and Washington, D.C. metropolitan areas. (6)

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank holding company or bank located in a state other than the home state of the applicant if certain conditions are met. For purposes of the BHC Act, the home state of WFH and Woori ("Applicants") is New York, (26) and Panasia is located in New Jersey, Pennsylvania, and Virginia. (8) Based on a review of all the facts of record, including a review of relevant federal and state statutes, the Board finds that all conditions for an interstate acquisition enumerated in section 3(d) are met in this case. (9) Accordingly, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Factors Under the Bank Holding Company Act

The BHC Act sets forth the factors that the Board must consider when reviewing the formation of bank holding companies or the acquisition of banks. These factors are the competitive effects of the proposal in the relevant geographic markets; the convenience and needs of the communities to be served, including the records of performance of the insured depository institutions involved in the transaction under the Community Reinvestment Act ("CRA"); (10) the financial and managerial resources and future prospects of the companies and banks involved in the proposal; the availability of information to determine and enforce compliance with the BHC Act and other applicable federal banking laws; and, in the case of applications involving a foreign bank such as Woori, whether the foreign bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor. (11)

The Board has considered these factors in light of a record that includes information provided by Applicants, confidential supervisory and examination information, and publicly reported financial and other information. The Board also has consulted with and considered information provided by the primary home country supervisor of Woori.

Competitive Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly or be in furtherance of a monopoly. The BHC Act also prohibits the Board from approving a proposed bank acquisition that would substantially lessen competition in any relevant banking market unless the anticompetitive effects of the proposal in that banking market are clearly outweighed in the public interest by the probable effects of the proposal in meeting the convenience and needs of the community to be served. (12)

Woori America and Panasia compete directly in the New York--New Jersey Metropolitan banking market ("New York banking market"). (13) Consummation of the proposal would be consistent with the Department of Justice Merger Guidelines ("DOJ Guidelines") and Board policies and precedent. (14) In light of all the facts of record, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market, and that competitive considerations are consistent with approval. (15)

Convenience and Needs Considerations

The Board has carefully considered the effect of the proposal on the convenience and needs of the communities to be served in light of all the facts of record, including the records of the relevant depository institutions under the CRA. As provided in the CRA, the Board evaluates the record of an institution in light of examinations of the CRA performance records of the institution by the appropriate federal supervisory agencies. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor. (16)

The Board notes that Woori America and Panasia received "satisfactory" ratings at their most recent CRA performance examinations. (17) Based on all the facts of record, the Board concludes that considerations relating to the convenience and needs of the communities to be served are consistent with approval.

Financial Managerial and Other Supervisory Factors

The BHC Act requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in an acquisition. (18) In assessing the financial and managerial strength of Applicants and the banks to be acquired, the Board has reviewed information provided by Applicants, confidential supervisory and examination information, and publicly reported and other financial information. In addition, the Board has consulted relevant supervisory authorities in Korea. (19)

In evaluating financial factors in expansion proposals by banking organizations, the Board consistently has considered capital adequacy to be especially important. Woori America is well capitalized and would remain so on consummation of the proposal. The capital ratios of WFH and Woori would continue to exceed the minimum levels required under the Basel Capital Accord and are considered equivalent to the capital ratios that would be required of a U.S. banking organization. The Board notes that the proposed transaction is relatively small and would be financed by Woori with internally available funds.

The Board has reviewed supervisory information from the home country authorities responsible for supervising Woori, as well as reports of examination from the appropriate federal and state supervisors of Woori America and the U.S. operations of Woori concerning the proposal and the managerial resources of Applicants and Woori America. Based on all the facts of record, the Board concludes that the financial and managerial resources and future prospects of Applicants, Woori America, and Panasia are consistent with approval under section 3 of the BHC Act.

Section 3 of the BHC Act also provides that the Board may not approve an application involving a foreign bank unless the bank is subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home country. (20) In this light, the Board has considered the following information. In early 1997, the Korean economy experienced difficulties in the financial sector. (21) To address these difficulties, the Korean government took measures to reform the financial sector, including restructuring bank regulation and supervision through the establishment of a new supervisory authority for Korean financial institutions, the Financial Supervisory Commission ("FSC"). The FSC is responsible for promulgating supervisory regulations, making policy decisions about supervision, and imposing sanctions on financial institutions. The Korean Financial Supervisory Service ("FSS"), the executive body of the FSC, is responsible for regulation and supervision of Korean financial institutions. The FSS has a broad range of supervisory and enforcement tools to carry out its supervisory functions.

In addition to restructuring the supervisory agencies, Korea has instituted several new requirements and prudential limitations applicable to banks that are intended to address gaps in the supervisory system that became evident during and after the financial crisis in 1997. The changes include a new asset quality assessment framework, tighter limitations on loans to a single borrower and to conglomerates (including through trust accounts), limits on loans to a shareholder that owns more than 10 percent of a financial holding company or a bank, a prompt corrective action framework, measures to strengthen of capital requirements, and improvements in accounting policies to bring them more into accordance with international accounting standards.

The FSS also has instituted restrictions on relationships between Korean banks and their affiliates. Transactions between a bank and its subsidiaries must be on terms that are fair and reasonable. In addition, Korean banks are generally prohibited from making a loan to any officer or employee of the bank or of its subsidiaries.

Financial holding companies were introduced in Korea by legislation that became effective in 2000. (22) Prior approval from the FSS is required to establish a financial holding company and before the company may invest in subsidiaries. Supervision of financial holding companies currently consists of consolidated reporting requirements and annual examinations.

The FSS has primary responsibility for the supervision of WFH and Woori. The FSS conducts annual on-site examinations of Woori, and targeted examinations when considered necessary. The examinations cover areas such as capital adequacy, liquidity, asset quality, and risk management processes. These examinations include a review of Woori's internal audit function and internal audit reports. Woori's foreign branches and subsidiaries are also subject to on-site examination.

Woori is subject to extensive reporting requirements by the FSS, including information filed monthly, quarterly, semiannually and annually. These reports include information on overseas branches and subsidiaries. The FSS also reviews Woori's internal and external audit reports.

Under Korean law, banks are subject to limitations on loans to one borrower or a group of borrowers under common control. With respect to affiliate transactions, a bank is limited to an aggregate exposure to related parties of 20 percent of the bank's capital.

In addition, several other regulators oversee Korean banks, including Woori. The KDIC, the Bank of Korea, and the Korean Financial Intelligence Unit all have limited authority to conduct special examinations of Korean financial institutions. Korean financial supervisors, including Korea's Securities and Futures Commission, share supervisory information about Korean financial institutions as appropriate.

Based on this finding and all the facts of record, the Board concludes that Woori is subject to comprehensive supervision on a consolidated basis by its home country supervisor. (23)

In addition, section 3 of the BHC Act requires the Board to determine that a foreign bank has provided adequate assurances that it will make available to the Board such information on its operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compliance with the BHC Act. (24) The Board has reviewed the restrictions on disclosure in relevant jurisdictions in which WFH and Woori have material operations and has communicated with relevant government authorities concerning access to information. In addition, WFH and Woori have committed to make available to the Board such information on their operations and the operations of their affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the IBA, and other applicable federal laws. WFH and Woori also have committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable WFH and its affiliates to make such information available to the Board. In light of these commitments, the Board concludes that WFH and Woori have provided adequate assurances of access to any appropriate information that the Board may request. For these reasons, and based on all the facts of record, the Board concludes that the supervisory factors it is required to consider under section 3(c)(3) of the BHC Act are consistent with approval.

Conclusion

Based on the foregoing and in light of all the facts of record, the Board has determined that the applications should be, and hereby are, approved. In reaching this conclusion, the Board has considered all the facts of record in light of the factors that it is required to consider under the BHC Act and other applicable statutes. The Board's approval is specifically conditioned on compliance by Applicants with all the representations and commitments made in connection with the applications, commitments referred to in this order, and the receipt of all other regulatory approvals. These representations, commitments, and conditions are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The transaction shall not be consummated before the fifteenth calendar day after the effective date of this order, and the proposal may not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of New York, acting pursuant to delegated authority.

By order of the Board of Governors, effective August 4, 2003.

Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Bies, Olson, Bernanke, and Kohn. Absent and not voting: Governor Gramlich.

(1.) Woori owns all of the capital stock of Woori America Bank, New York, New York ("Wood America"), a state-chartered nonmember bank. Under the proposal, Woori America would acquire all the voting shares of Panasia, and Panasia immediately would be merged with and into Wood America. The proposed merger has been approved by the Federal Deposit Insurance Corporation ("FDIC") pursuant to the Bank Merger Act, and the New York State Banking Department.

(2.) In 2002, the KDIC sold approximately 12 percent of the voting shares of WFH in a public offering, and it now owns approximately 88 percent of WFH. Under Korea's Financial Holding Companies Act, the KDIC is required to divest fully its ownership in WFH by the end of 2005.

(3.) Foreign asset and ranking data are as of December 31, 2002, and use exchange rates then in effect.

(4.) Domestic asset data are as of March 31, 2003, and deposit data are as of December 31, 2002. Insured depository institutions include all insured banks, savings banks, and savings associations.

(5.) Woori America has its head office and two branches in New York City and branches in Fort Lee and Ridgefield, New Jersey.

(6.) Panasia, currently a subsidiary of National Penn Bancshares, Boyertown, Pennsylvania, operates offices in Fort Lee, Palisades Park, and Closter, New Jersey; Philadelphia and Cheltenham, Pennsylvania; and Annandale, Virginia.

(7.) A bank holding company's home state is the state in which the total deposits of all banking subsidiaries of such company were the largest on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 12 U.S.C. [section] 1841(o)(4)(C).

(8.) For purposes of section 3(d), the Board considers a bank to be located in the states in which the bank is chartered, headquartered, or operates a branch.

(9.) Applicants meet the capital and managerial requirements established under applicable law. 12 U.S.C. [section] 1842(d)(1)(A). On consummation of the proposal, Applicants would control less than 10 percent of total U.S. insured deposits and would not exceed applicable deposit limitations in any state as established under state and federal law. 12 U.S.C. [section] 1842(d)(2). None of the relevant states specifies a minimum period of time a bank to be acquired through an interstate acquisition must have been in existence. 12 U.S.C. [section] 1842(d)(1)(B). All other requirements of section 3(d) of the BHC Act would be met on consummation of the proposal.

(10.) 12 U.S.C. [section] 2901 etseq.

(11.) 12 U.S.C. [section] 1842(c).

(12.) 12 U.S.C. [Section] 1842(c)(1).

(13.) The New York banking market is defined as New York City; Bronx, Dutchess, Kings, Nassau, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, and a portion of Mercer Counties in New Jersey; Pike County in Pennsylvania; and Fairfield and portions of Litchfield and New Haven Counties in Connecticut.

(14.) Under the DOJ Guidelines, 49 Federal Register 26,823 (1984), a market is considered unconcentrated if the post-merger Herfindahl-Hirschman Index ("HHI") is below 1000. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers or acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose lenders and other nondepository financial institutions.

(15.) Woori America controls deposits of $296 million in the New York banking market, representing less than 1 percent of total deposits in depository institutions in the market ("market deposits"), and Panasia controls deposits of $141 million in the market. On consummation of the proposal, Woori America would be the 79th largest depository institution in the New York banking market, controlling deposits of $437 million, representing less than 1 percent of market deposits. The HHI would remain unchanged at 960 after consummation of the proposal, and numerous competitors would remain in the market. Deposit and market share data are as of June 30, 2002, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984).

(16.) lnteragency Questions and Answers Regarding Community Reinvestment, 66 Federal Register 36,620 and 36,639 (200l).

(17.) Woori America received a "satisfactory" CRA performance rating from the FDIC, as of November 1997; and Panasia received a "satisfactory" CRA performance rating from the OCC, as of September 2002.

(18.) 12 U.S.C. [section] 1842(c)(2).

(19.) The Korean Financial Supervisory Service has indicated that it has no objection to the acquisition of Panasia by Applicants, and the proposal has been approved by Korea's Ministry of Finance and Economy.

(20.) 12 U.S.C. [section] 1842(c)(3)(B). Under Regulation Y, the Board uses the standards enumerated in Regulation K to determine whether a foreign bank that has applied under section 3 of the BHC Act is subject to consolidated home country supervision. See 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines that the bank is supervised or regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations of the bank, including its relationship to any affiliates, to assess the bank's overall financial condition and its compliance with law and regulation. See 12 C.F.R. 211.24(c)(1).

(21.) In the aftermath of Korea's financial crisis, the Board determined that the Korean authorities were actively working to establish a framework for consolidated supervision in connection with applications to establish branches. Housing & Commercial 83 Federal Reserve Bulletin 935 (1997), Kookmin Bank, 86 Federal Reserve Bulletin 291 (2000) and 87 Federal Reserve Bulletin 786 (2001). As noted below, there have been significant reforms of the Korean bank supervisory regime since 1997. The International Monetary Fund ("IMF") recently conducted a Financial System Stability Assessment for Korea in which it reviewed compliance by Korea with the Basel Core Principles for Effective Banking Supervision. The IMF staff concluded that the supervisory and regulatory regime for the financial sector has been substantially strengthened, and recent reforms have helped achieve a high degree of observance of international standards and codes. See IMF Country Report No. 03/81 (March 2003).

(22.) A Korean financial holding company may only engage in activities through its subsidiaries, unless the activities concern the management of those subsidiaries and related businesses.

(23.) The FSS also has supervisory authority with respect to WFH and its nonbanking subsidiaries. The FSS conducts inspections of WFH and its subsidiaries and requires WFH to submit reports about its operations on a consolidated basis. The FSS also may review transactions between WFH and its subsidiaries and has authority to require WFH to take measures necessary to ensure the safety and soundness of the WFH organization.

(24.) 12 U.S.C. [section] 1842(c)(3)(A).

ROBERT DEV. FRIERSON Deputy Secretary of the Board

Orders Issued Under Section 4 of the Bank Holding Company Act

Arvest Bank Group, Inc. Bentonville, Arkansas

Order Approving the Acquisition of a Savings Association

Arvest Bank Group, Inc. ("Arvest"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act") has requested the Board's approval under section 4(c)(8) and 4(j) of the BHC Act (12 U.S.C. [Section] 1843(c)(8) and 1843(j)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire Superior Financial Corp., Little Rock ("Superior"), and its wholly owned subsidiary, Superior Federal Bank, FSB, Fort Smith ("Thrift"), both in Arkansas. Arvest would thereby engage in operating a savings association. Arvest also proposes to acquire the nondepository subsidiaries of Superior and engage in a variety of nonbanking activities in accordance with the BHC Act and applicable Board regulations. (1)

Notice of the proposal, affording interested persons an opportunity to comment, has been published in the Federal Register (68 Federal Register 39,952 (2003)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4 of the BHC Act.

Arvest, with total assets of $4.9 billion, operates depository institutions in Arkansas, Missouri, and Oklahoma. (2) Arvest is the second largest depository organization in Arkansas, controlling deposits of $2.3 billion, representing 6.5 percent of total deposits of insured depository institutions in the state ("state deposits"). (3) Arvest is the seventh largest depository organization in Oklahoma, controlling deposits of $1.6 billion, representing 4 percent of state deposits.

Superior operates depository institutions in Arkansas and Oklahoma. Superior is the eighth largest depository organization in Arkansas, controlling deposits of $875.4 million, representing 2.5 percent of state deposits. In Oklahoma, Superior is the twentieth largest depository organization, controlling deposits of $323.1 million, representing less than 1 percent of state deposits.

On consummation of the proposal, Arvest would remain the second largest depository organization in Arkansas, controlling deposits of $3.2 billion, representing 9 percent of state deposits, and would become the sixth largest depository organization in Oklahoma, controlling deposits of $2 billion, representing 4.8 percent of state deposits.

The Board previously has determined by regulation that the operation of a savings association by a bank holding company is closely related to banking for purposes of section 4(c)(8) of the BHC Act. (4) The Board requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies under section 4 of the BHC Act. Arvest has committed to conform all the activities of Superior to those permissible under section 4(c)(8) of the BHC Act and Regulation Y. In addition, the Board has determined that extending credit, providing securities brokerage services, providing credit insurance, and providing general insurance in a town with a population of 5000 or less are activities that are closely related to banking. (5) Arvest has committed to conduct each of the activities in accordance with the Board's regulations and orders governing them.

In reviewing the proposal, the Board is required by section 4(j)(2)(A) of the BHC Act to determine that the acquisition of Superior and Thrift by Arvest "can reasonably be expected to produce benefits to the public ... that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." (6) As part of its evaluation of a proposal under these public interest factors, the Board reviews the financial and managerial resources of the companies involved, the effect of the proposal on competition in the relevant markets, the record of the relevant insured depository institutions under the Community Reinvestment Act (12 U.S.C. [section] 2901 et seq.) ("CRA"), and other public interest factors.

Financial and Managerial Considerations

The Board has carefully reviewed the financial and managerial resources of the institutions involved. The Board has considered, among other things, confidential reports of examination and supervisory information from their primary federal supervisors that assess the financial and managerial resources of the organizations, and information from Arvest. The Board notes that Arvest is and will remain well capitalized on consummation of the proposal. Based on all the facts of record, the Board concludes that the financial and managerial resources of the institutions involved are consistent with approval of the proposal.

Competitive Considerations

As part of the its consideration of the public interest factors under section 4 of the BHC Act, the Board has considered carefully the competitive effects of the proposal in light of all the facts of record. (7) Arvest and Superior compete directly in five banking markets. (8) The Board has reviewed carefully the competitive effects of the proposal in each of these banking markets in light of all the facts of record, including the number of competitors that would remain in the market, the relative share of total deposits in depository institutions in the market ("market deposits") that Arvest would control, (9) the concentration level of market deposits and the increase in this level as measured by the Herfindahl--Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Merger Guidelines"), (10) and other characteristics of the markets.

Consummation of the proposal would be consistent with the DOJ Guidelines in all five banking markets. After consummation of the proposal, four of these markets would remain moderately concentrated as measured by the HHI. (11)

The Fayetteville/Springdale banking market, however, is highly concentrated. Arvest is the largest depository organization in the market, controlling approximately $1.9 billion in deposits, representing 42.2 percent of market deposits. Superior is the twentieth largest depository organization in the market, controlling deposits of $16.6 million, representing less than 1 percent of market deposits. On consummation of the proposal, Arvest would remain the largest depository organization in the market, controlling deposits of $1.9 billion, representing 42.8 percent of market deposits.

The HHI would increase 48 points to 2073 in the Fayetteville/Springdale banking market, consistent with the DOJ Guidelines. In addition, 20 other depository institutions would remain in the market, and factors indicate that the Fayetteville/Springdale market is attractive for entry. Since 1997, the Fayetteville-Springdale metropolitan statistical area ("MSA") has had the highest annual average rates of increase in population and per-capita income of any MSA in Arkansas. Two commercial banks have also entered the market de novo since 2000.

Based on all the facts of record, the Board concludes that consummation of the proposal would not result in any significantly adverse effects on competition or on the concentration of banking resources in the Fayetteville/ Springdale banking market or in any other relevant banking market.

The Board also has considered the effects of the proposed transaction on competition for nonbanking activities. To the extent that Arvest and Superior offer different types of nonbanking products or services, the proposal would not result in a significant loss of competition. Arvest and Superior compete directly in providing insurance agency and securities brokerage services. The markets for these nonbanking activities are regional or national in scope and are unconcentrated. The record in this case also indicates that there are numerous providers of these services. Based on all the facts of record, the Board concludes that consummation of the proposal would have a de minimis effect on competition for these nonbanking activities.

CRA Record of Performance

In acting on notices to acquire a savings association, the Board also reviews the records of performance of the relevant insured depository institutions under the CRA. (12) The CRA requires the federal supervisory agencies to encourage financial institutions to help meet the credit needs of local communities in which they operate, consistent with their safe and sound operation, and requires the appropriate federal financial supervisory agency to take into account an institution's record of meeting the credit needs of its entire community, including low--and moderate-income neighborhoods, in evaluating bank expansionary proposals.

Arvest's only subsidiary insured depository institution, Arvest Bank, Fayetteville, Arkansas, received a "satisfactory" rating at its most recent CRA performance evaluation by the Federal Reserve Bank of St. Louis, as of September 2002. Thrift received a "satisfactory" rating at its most recent CRA performance evaluation by the Office of Thrift Supervision, as of January 2001. Based on all the facts of record, the Board concludes that the CRA performance records of the institutions involved are consistent with approval of the proposal.

Other Considerations

As part of its evaluation of the public interest factors, the Board also has reviewed carefully the public benefits and possible adverse effects of the proposal. The record indicates that consummation of the proposal would result in benefits to consumers and businesses currently served by Superior. Superior's consumer and commercial customers would have access to Arrest's expanded lines of products and services. The Board notes that there are also public benefits to be derived from allowing capital markets to operate so that bank holding companies can make potentially profitable investments in nonbanking companies and from permitting banking organizations to allocate their resources in the manner they consider to be most efficient when such investments and actions are consistent, as in this case, with the relevant considerations under the BHC Act. (13)

Based on the foregoing and all the facts of record, the Board has determined that consummation of the proposal can reasonably be expected to produce public benefits that would outweigh any potential adverse effects under the standard of review set forth in section 4(j)(2) of the BHC Act.

Conclusion

Based on the foregoing, the Board has determined that the proposal should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by Arvest with all the commitments made in connection with the notice. The Board's determination also is subject to all the conditions in Regulation Y, including those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the Board in reaching this decision are conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The transaction may not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or the Federal Reserve Bank of St. Louis, acting pursuant to delegated authority.

By order of the Board of Governors, effective August 22, 2003.

Voting for this action: Vice Chairman Ferguson and Governors Gramlich, Bies, Olson, Bernanke, and Kohn. Absent and not voting: Chairman Greenspan.

(1.) Arvest would acquire Superior Finance Company, Superior Financial Services, Inc., and Southwest Protective Life Insurance Company, all in Fort Smith, and Superior Insurance Services, Paris, Arkansas. These subsidiaries engage in the following nonbanking activities: extending credit, providing securities brokerage services, providing credit insurance, and providing insurance agency activities in a town with a population of 5000 or less pursuant to sections 225.28(b)(1), (7)(i), (11)(i), and (11)(iii) of Regulation Y (12 C.F.R. 225.28(b)(1), (7)(i), (11)(i), and (11)(iii)).

(2.) Asset data are as of March 31, 2003.

(3.) Deposit and market share data are as of June 30, 2002. In this context, depository institutions include commercial banks, savings banks, and savings associations.

(4.) 12 C.F.R. 225.28(b)(4)(ii).

(5.) 12 C.F.R. 225.28(b)(1), (7)(i), (11)(i), and (11)(iii).

(6.) 12 U.S.C. [section] 1843(j)(2)(A).

(7.) See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin (1991).

(8.) The markets are dascribed in Appendix A.

(9.) Market share data are based on calculations in which the deposits of thrift institutions are included at 50 percent before consummation. The Board has previously indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board regularly has included thrift deposits in the calculation of market share on a 50 percent weighted basis. Because Superior's deposits are being acquired by a commercial banking organization, they are included at 100 percent in the calculation of Arrest's post-consummation share of market deposits. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990).

(10.) Under these guidelines, 49 Federal Register 26,823 (1984), a market is considered moderately concentrated if the post-merger HHI is between 1000 and 1800 and highly concentrated if the post-merger HHI is more than 1800. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal thresholds for an increase in the HHI when screening bank mergers and acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose and other nondepository financial entities.

(11.) These markets and the competitive effects of the proposal on the concentration of banking resources in the markets are described in Appendix B.

(12.) See, e.g., Citigroup Inc., 88 Federal Reserve Bulletin 485 (2002); Banc One Corporation, 83 Federal Reserve Bulletin 602 (1997).

(13.) See BB&T Corporation, 87 Federal Reserve Bulletin 545 (2001).

ROBERT DEV. FRIERSON Deputy Secretary of the Board

Appendix A

Banking Markets in which Arvest and Superior Compete Directly

Arkansas

Fayetteville-Springdale

Benton, Madison, and Washington Counties.

Fort Smith (AR-OK)

Crawford and Sebastian Counties and the city of Mansfield in Arkansas, and Sequoyah County and the northern half of LeFlore County in Oklahoma.

Harrison

Boone, Marion, Newton, and Searcy Counties.

Little Rock

Pulaski and Saline Counties; the townships of Magness, Ward, Caroline, York, Oak Grove, and Butler in Lonoke County; and the townships of El Paso, Royal, and Union in White County.

Oklahoma

Tulsa

The Tulsa Ranally Metro Area; Mayes County, excluding the towns of Disney, Langley, Pensacola, and Spavinaw; and the northern half of Okmulgee County, including the towns of Okmulgee, Beggs, and Morris.

Appendix B

Certain Banking Markets in which Arvest and Superior Compete

Arkansas

Fort Smith (AR-OK)

Arvest is the fourteenth largest depository organization in the market, controlling deposits of approximately $63.5 million, representing 2.2 percent of market deposits. Superior is the fourth largest depository organization in the market, controlling deposits of $164.6 million, representing 5.8 percent of market deposits. On consummation of the proposal, Arvest would become the third largest depository organization in the market, controlling deposits of approximately $392.7 million, representing 13 percent of market deposits. The HHI would not increase.

Harrison

Arvest is the third largest depository organization in the market, controlling deposits of approximately $129 million, representing 16.7 percent of market deposits. Superior is the eleventh largest depository organization in the market, controlling deposits of $9.8 million, representing 1.3 percent of market deposits. On consummation of the proposal, Arvest would become the largest depository organization in the market, controlling deposits of approximately $148.7 million, representing 19 percent of market deposits. The HHI would increase by 54 points to 1370.

Little Rock

Arvest is the eleventh largest depository organization in the market, controlling deposits of approximately $161.3 million, representing 2.5 percent of market deposits. Superior is the thirteenth largest depository organization in the market, controlling deposits of $156.1 million, representing 2.5 percent of market deposits. On consummation of the proposal, Arvest would become the fifth largest depository organization in the market, controlling deposits of approximately $473.4 million, representing 7.3 percent of market deposits. The HHI would not increase.

Oklahoma

Tulsa

Arvest is the fifth largest depository organization in the market, controlling deposits of approximately $535 million, representing 5 percent of market deposits. Superior is the thirty-ninth largest depository organization in the market, controlling deposits of $29.7 million, representing less than 1 percent of market deposits. On consummation of the proposal, Arvest would remain the fifth largest depository organization in the market, controlling deposits of approximately $594.5 million, representing 5.6 percent of market deposits. The HHI would not increase.

ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT

CITIC Ka Wah Bank Limited Hong Kong Special Administrative Region People's Republic of China

Order Approving Establishment of Branches

CITIC Ka Wah Bank Limited ("Bank"), (1) Hong Kong S.A.R., the People's Republic of China, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 7(d) of the IBA (12 U.S.C. [section]3105(d)) to establish branches in New York, New York, and Los Angeles, California. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a branch in the United States.

Notice of the application, affording interested persons an opportunity to comment, has been published in newspapers of general circulation in New York, New York (New York Post, August 23, 2002, and November 11, 2002), and Los Angeles, California (Pasadena Star-News, August 26, 2002). The time for filing comments has expired, and all comments have been considered.

Bank, with total assets of $9.3 billion, (2) engages primarily in commercial and retail banking in Hong Kong. In January 2002, all of Bank's shares were acquired by CITIC Ka Wah Bank Limited ("CKWB"), Hong Kong, S.A.R., the People's Republic of China. Under an internal reorganization in November 2002, CKWB transferred substantially all its banking business to Bank, and Bank assumed CKWB's name. (3) CKWB had branches in New York, New York, and Los Angeles, California, and substantially all the assets and liabilities of these branches have been transferred to Bank as part of the reorganization. (4) On November 4, 2002, the Federal Reserve System granted Bank's request to proceed with the acquisition of the banking business of CKWB before final action on Bank's application to establish offices in the United States. (5)

As discussed above, Bank conducts business as CITIC Ka Wah Bank Limited and is a wholly owned subsidiary of CITIC FHC. China International Trust & Investment Corporation ("CITIC"), Beijing, People's Republic of China, a state-owned enterprise, holds 55 percent of the shares of CITIC FHC, and no other shareholder holds more than 5 percent of the shares. CITIC's business is predominantly financial in nature, including investments in two commercial banks, a securities finn, trust and leasing companies, and an insurance company, and it also has investments in industrial and nonfinancial services companies. (6)

Bank's New York branch engages in commercial and retail lending, wholesale deposit services, loan participations and syndications, funds transfer and remittance services, trade financing, foreign exchange and money market trading, domestic and international bank facilities, and safe deposit box services. The Los Angeles branch engages in lending and other financing activities, but only takes deposits permitted for a corporation organized under section 25A of the Federal Reserve Act (12 U.S.C. [section]611 et seq.).

In order to approve an application by a foreign bank to establish a branch in the United States, the IBA and Regulation K require the Board to determine that the foreign bank applicant engages directly in the business of banking outside of the United States and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [section]3105(d)(2); 12 C.F.R. 211.24). (7) The Board may also take into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. [section]3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)-(3)).

The IBA includes a limited exception to the general requirement relating to comprehensive, consolidated supervision (12 U.S.C. [section]3105(d)(6)). This exception provides that if the Board is unable to find that a foreign bank seeking to establish a branch, agency, or commercial lending company is subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in its home country, the Board may nevertheless approve the application if: (i) the appropriate authorities in the home country of the foreign bank are actively working to establish arrangements for the consolidated supervision of such bank; and (ii) all other factors are consistent with approval (12 U.S.C. [section]3105(d)(6)(A)). In deciding whether to exercise its discretion to approve an application under authority of this exception, the Board shall also consider whether the foreign bank has adopted and implemented procedures to combat money laundering. The Board also may take into account whether the home country of the foreign bank is developing a legal regime to address money laundering or is participating in multilateral efforts to combat it (12 U.S.C. [section]3105(d)(6)(B)).

As noted above, Bank engages directly in the business of banking outside the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues.

With respect to supervision by home country authorities, the Board previously has determined, in connection with applications involving other banks in Hong Kong, that those banks were subject to comprehensive supervision on a consolidated basis by the Hong Kong Monetary Authority ("HKMA"), the principal supervisory authority of banks in Hong Kong. (8) Bank is supervised by the HKMA on substantially the same terms and conditions as those other banks. In this case, however, Bank is part of a large financial group headquartered in the People's Republic of China. This group, headed by Bank's ultimate parent, CITIC, includes a bank in the People's Republic of China. Although the HKMA has authority to limit transactions by Bank with its affiliates and to obtain information from them, the HKMA does not have supervisory responsibility for CITIC.

Hong Kong is a member of the Financial Action Task Force and subscribes to its recommendations on measures to combat money laundering. In accordance with these recommendations, Hong Kong has enacted laws and created legislative and regulatory standards to deter money laundering. Money laundering is a criminal offense in Hong Kong, and financial institutions are required to establish internal policies, procedures, and systems for the detection and prevention of money laundering throughout their worldwide operations. Bank has policies and procedures to comply with these laws and regulations. Bank's compliance with applicable laws and regulations is monitored by the HKMA and Bank's internal and external auditors.

Based on all the facts of record, it has been determined that Bank's home jurisdiction supervisory authority is actively working, in conjunction with the relevant supervisory authorities of the People's Republic of China, to establish arrangements for the consolidated supervision of Bank, and that considerations relating to the steps taken by Bank and its home jurisdiction to combat money laundering are consistent with approval under this standard. (9)

The additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. [section]3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)-(3)) have also been taken into account. The HKMA has no objection to the establishment of the proposed branches.

Hong Kong's risk-based capital standards are consistent with those established by the Basel Capital Accord. Bank's capital is in excess of the minimum levels that would be required by the Accord and is considered equivalent to capital that would be required of a U.S. banking organization. Managerial and other financial resources of Bank also are considered consistent with approval, and Bank appears to have the experience and capacity to support the proposed branches. In addition, Bank has established controls and procedures for the proposed branches to ensure compliance with U.S. law, as well as controls and procedures for its worldwide operations generally.

With respect to access to information about Bank's operations, the restrictions on disclosure in relevant jurisdictions in which Bank operates have been reviewed and relevant government authorities have been communicated with regarding access to information. Bank and its ultimate parent have committed to make available to the Board such information on the operations of Bank and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law or otherwise, Bank and its ultimate parent have committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties for disclosure of such information. In addition, subject to certain conditions, the HKMA may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, it has been determined that Bank has provided adequate assurances of access to any necessary information that the Board may request.

On the basis of all the facts of record, and subject to the commitments made by Bank and its ultimate parent, as well as the terms and conditions set forth in this order, Bank's application to establish branches is hereby approved. (10) Should any restrictions on access to information on the operations or activities of Bank and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its affiliates with applicable federal statutes, the Board may require termination of any of Bank's direct or indirect activities in the United States. Approval of this application also is specifically conditioned on compliance by Bank and its ultimate parent with the commitments made in connection with this application and with the conditions in this order. (11) The commitments and conditions referred to above are conditions imposed in writing in connection with this decision and may be enforced in proceedings under 12 U.S.C. [section]1818 against Bank and its affiliates.

By order, approved pursuant to authority delegated by the Board, effective August 6, 2003.

(1.) Bank, formerly known as The Hongkong Chinese Bank Limited, assumed the name of its former parent bank after tiling the application and now conducts business as CITIC Ka Wah Bank Limited.

(2.) Asset data are as of December 31, 2002.

(3.) CKWB became a financial holding company over Bank and was renamed CITIC International Financial Holdings Limited ("CITIC FHC").

(4.) Bank could not retain the FDIC-insured status of CKWB's New York branch after the transfer. Accordingly, the insured deposits at CKWB's New York branch were not transferred to Bank's New York branch.

(5.) Prior Board approval generally is required for the establishment of branches by foreign banks. Regulation K provides that "to establish" an office means, among other things, to acquire directly, through merger, consolidation, or similar transaction with another foreign bank, the operations of an office that is open and conducting business. 12 C.F.R. [section]211.21(k). The regulation further provides that under certain circumstances, a branch may be established through merger, consolidation, or similar transaction before receiving Board approval. 12 C.F.R. [section]211.24(a)(6).

(6.) CITIC is a qualifying foreign banking organization within the meaning of Regulation K (12 C.F.R. [section]211.23).

(7) In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (v) evaluate prudential standards. such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination.

(8.) See Bank of East Asia, Ltd., 84 Federal Reserve Bulletin 886 (1998); Hong Kong and Shanghai Banking Co., 81 Federal Reserve Bulletin 902 (1995); Liu Chong Hing Bank, Ltd., 81 Federal Reserve Bulletin 905 (1995); Dah Sing Bank, Ltd., 80 Federal Reserve Bulletin 182 (1994).

(9.) In reaching this view, the oversight of Bank's parent companies has been considered. Financial holding companies in Hong Kong are subject to the supervision of the HKMA and, accordingly, the HKMA supervises CITIC FFIC. The Hong Kong Banking Ordinance also contains restrictions on transactions with affiliates.

(10.) Approved by the Director of the Division of Banking Supervision and Regulation, with the concurrence of the General Counsel, pursuant to authority delegated by the Board.

(11.) The Board's authority to approve the establishment of the proposed branches parallels the continuing authority of the Office of the Comptroller of the Currency to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the Office of the Comptroller of the Currency to license the proposed offices of Bank in accordance with any terms or conditions that it may impose.

ROBERT DE V. FRIERSON Deputy Secretary of the Board

PENDING CASES INVOLVING THE BOARD OF GOVERNORS

This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party.

Tavera v. Von Nothaus, et al., No. 03-763 (D. Oregon, filed June 5, 2003). Civil rights action for violation of rights in connection with the plaintiff's prosecution for passing "Liberty dollar coins" as lawful money.

Apffel v. Board of Governors, No. 03-343 (S.D. Texas, filed May 20, 2003). Freedom of Information Act case.

Albrecht v. Board of Governors, No. 02-5325 (D.C. Cir., filed October 18, 2002). Appeal of district court order dismissing challenge to the method of funding of the retirement plan for certain Board employees.

Community Bank & Trust v. United States, No. 01-571C (Ct. Fed. Cl., filed October 3, 2001). Action challenging on constitutional grounds the failure to pay interest on reserve accounts held at Federal Reserve Banks.

Artis v. Greenspan, No. 01-CV-0400 (EGS) (D.D.C., complaint filed February 22, 2001). Employment discrimination action. On August 15, 2001, the district court consolidated the action with Artis v. Greenspan, No. 99-CV-2073 (EGS) (D.D.C., filed August 3, 1999), also an employment discrimination action.

Fraternal Order of Police v. Board of Governors, No. 1:98CV03116 (WBB) (D.D.C., filed December 22, 1998). Declaratory judgment action challenging Board regulation on labor-management relations at Reserve Banks.

Fourth Federal Reserve District
[Federal Reserve Bank of Cleveland]

Head Office

0410       2410
0412       2412
0430       2430
0432       2432
0433       2433
0434       2434

Cincinnati Branch

0420       2420
0421       2421
0422       2422
0423       2423

Columbus Office

0440       2440
0441       2441
0442       2442

INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM--(April 1, 2003-June 30, 2003)

                                        Merged or Acquired
Applicant                               Bank of Activity

BB&T Corporation                        First Virginia Banks, Inc.,
  Winston-Salem, North Carolina           Falls Church, Virginia
                                        First Virginia Bank,
                                          Falls Church, Virginia
Charles Schwab Corporation,             Charles Schwab Bank, National
  San Francisco, California               Association,
                                          Reno, Nevada
HSH Nordbank Aktiengesellschaft,        To establish a branch in
  Hamburg/Kiel, Germany                   New York, New York
The Royal Bank of Scotland Group plc,   Port Financial Corp.,
  Edinburg, Scotland                      Brighton, Massachusetts
The Royal Bank of Scotland plc,         Cambridge Bancorp,
  Edinburg, Scotland                      Cambridge, Massachusetts
RBSG International Holdings Ltd.,       Cambridge Trust Company,
  Edinburg, Scotland                      Cambridge, Massachusetts
Citizens Financial Group, Inc.,         Cambridge Trust Company,
  Province, Rhode Island                  Cambridge, Massachusetts
Union Bank of Israel Ltd.,              To establish a representative
  Tel Aviv, Israel                        office in New York, New York

                                                           Bulletin
                                                           Volume
Applicant                               Date of Approval   and Page

BB&T Corporation                        May 13, 2003       89,335
  Winston-Salem, North Carolina
Charles Schwab Corporation,             April 7, 2003      89,300
  San Francisco, California
HSH Nordbank Aktiengesellschaft,        May 30, 2003       89,344
  Hamburg/Kiel, Germany
The Royal Bank of Scotland Group plc,   June 30, 2003      89,386
  Edinburg, Scotland
The Royal Bank of Scotland plc,
  Edinburg, Scotland
RBSG International Holdings Ltd.,
  Edinburg, Scotland
Citizens Financial Group, Inc.,
  Province, Rhode Island
Union Bank of Israel Ltd.,              April 10, 2003     89,302
  Tel Aviv, Israel

APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT
By Federal Reserve Banks

Recent applications have been approved by the Federal Reserve Banks
as listed below. Copies are available upon request to the Reserve
Banks.

Section 3

Applicant(s)                       Bank(s)

Alpha Financial Group, Inc.        Alpha Financial Group, Inc.,
  Employee Stock Ownership Plan,     Toluca, Illinois
  Toluca, Illinois                 Alpha Community Bank,
                                     Toluca, Illinois
Arthur Financial Corporation,      Arthur State Bank,
  Union, South Carolina              Union, South Carolina
Blackhawk Bancorp, Inc.,           DunC Corp.,
  Beloit, Wisconsin                  Rockford, Illinois
                                   First Bank, bc,
                                     Capron, Illinois
Campbell Hill Bancshares, Inc.,    Southwest Illinois Bancshares,
  Campbell Hill, Illinois            Inc., Coulterville, Illinois
                                   The First National Bank of
                                     Coulterville, Illinois
Carver Financial Corporation,      The Carver State Bank,
  Savannah, Georgia                  Savannah, Georgia
Coastal Financial Corporation,     Coastal Community Bank,
  Everett, Washington                Everett, Washington
Coffeyville Bancorp, Inc.,         CSB Bancorp, Inc.,
  Coffeyville, Kansas                Coffeyville, Kansas
                                   Community State Bank,
                                     Coffeyville, Kansas
Cornerstone Bancshares, Inc.,      Heritage Bank of the Ozarks,
  Lebanon, Missouri                  Lebanon, Missouri
Country Bank Holding Company,      Country Bank,
  Inc.,                              New York, New York
  New York, New York
FOJ Partners, LP,                  Arthur Financial Corporation,
  Union, South Carolina              Union, South Carolina
FOJ Partners II, LP,
  Union, South Carolina
FOJ Management Company LLC,
  Union, South Carolina
JCO Partners, LP,
  Union, South Carolina
JCO Partners II, LP,
  Union, South Carolina
JCO Ventures, LLC,
  Union, South Carolina
HAO Partners, LP,
  Union, South Carolina
HAO Partners II, LP,
  Union, South Carolina
HAO Management Company LLC,
  Union, South Carolina
Frances W. Arthur Irrevocable
  Trust #2 for the Benefit of
  Frances Oxner Jorgenson,
  Union, South Carolina
Heartland Financial USA, Inc.,     Arizona Bank & Trust,
  Dubuque, Iowa                      Mesa, Arizona
Heritage Oaks Bancorp,             Hacienda Bank,
  Paso Robles, California            Santa Maria, California
Hume Bancshares Acquisition Corp., Hume Bancshares, Inc.,
  St. Louis, Missouri                Hume, Missouri
                                   Hume Bank,
                                     Hume, Missouri
Industry Bancshares, Inc.,         Fayetteville Bancshares, Inc.,
  Industry, Texas                    Fayetteville, Texas
Industry Holdings, Inc.,           Fayetteville Bank,
  Wilmington, Delaware               Fayetteville, Texas
Lakeland Bancorp,                  CSB Financial Corporation,
  Oak Ridge, New Jersey              Teaneck, New Jersey
                                   Community State Bank,
                                     Teaneck, New Jersey
Lauritzen Corporation,             First National of Nebraska, Inc.,
  Omaha, Nebraska                    Omaha, Nebraska
Marco Community Bancorp, Inc.,     Marco Community Bank,
  Marco Island, Florida              Marco Island, Florida
Mercantile Bancorp, Inc.,          Mid-America Bancorp, Inc.,
  Quincy, Illinois                   Leawood, Kansas
                                   Heartland Bank,
                                     Leawood, Kansas
Merchants and Manufacturers        Random Lake Bancorp, Limited,
  Bancorporation Inc.,               Random Lake, Wisconsin
  Brookfield, Wisconsin            Wisconsin State Bank,
Merchant Merger Corp.,               Random Lake, Wisconsin
  Brookfield, Wisconsin
Merchants and Manufacturers        Reedsburg Bancorporation, Inc.,
  Bancorporation Inc.,               Reedsburg, Wisconsin
  Brookfield, Wisconsin            Reedsburg Bank,
Merchants New Merger Corp.,          Reedsburg, Wisconsin
  Brookfield, Wisconsin
Oswego Community Bank Employee     Oswego Bancshares, Inc.,
  Stock Ownership Plan,              Oswego, Illinois
  Oswego, Illinois                 Oswego Community Bank,
                                     Oswego, Illinois
Pebblespring Holding Company,      Eagle National Bank,
  Berwyn, Pennsylvania               Upper Darby, Pennsylvania
Peoples Bancshares Corp.,          Peoples Trust and Savings Bank,
  Boonville, Indiana                 Boonville, Indiana
Red River Bancshares, Inc.,        Bank of Lecompte,
  Alexandria, Louisiana              Lecompte, Louisiana
TeamCo, Inc.,                      Oak Lawn Bank,
  Oak Lawn, Illinois                 Oak Lawn, Illinois
Tradition Bancshares, Inc.,        Tradition Bank,
  Houston, Texas                     Houston, Texas
Tradition Bancshares, of           First National Bank of Bellaire,
  Delaware, Inc.,                    Houston, Texas
  Wilmington, Delaware
United Bankshares, Inc.,           George Mason Bankshares, Inc.,
  Charleston, West Virginia          Fairfax, Virginia
                                   Sequoia Bancshares, Inc.,
                                   Bethesda, Maryland

Applicant(s)                       Reserve Bank    Effective Date

Alpha Financial Group, Inc.        Chicago         July 31, 2003
  Employee Stock Ownership Plan,
  Toluca, Illinois
Arthur Financial Corporation,      Richmond        August 22, 2003
  Union, South Carolina
Blackhawk Bancorp, Inc.,           Chicago         August 5, 2003
  Beloit, Wisconsin
Campbell Hill Bancshares, Inc.,    St. Louis       August 27, 2003
  Campbell Hill, Illinois
Carver Financial Corporation,      Atlanta         August 13, 2003
  Savannah, Georgia
Coastal Financial Corporation,     San Francisco   August 18, 2003
  Everett, Washington
Coffeyville Bancorp, Inc.,         Kansas City     August 8, 2003
  Coffeyville, Kansas
Cornerstone Bancshares, Inc.,      St. Louis       August 20, 2003
  Lebanon, Missouri
Country Bank Holding Company,      New York        July 31, 2003
  Inc.,
  New York, New York
FOJ Partners, LP,                  Richmond        August 22, 2003
  Union, South Carolina
FOJ Partners II, LP,
  Union, South Carolina
FOJ Management Company LLC,
  Union, South Carolina
JCO Partners, LP,
  Union, South Carolina
JCO Partners II, LP,
  Union, South Carolina
JCO Ventures, LLC,
  Union, South Carolina
HAO Partners, LP,
  Union, South Carolina
HAO Partners II, LP,
  Union, South Carolina
HAO Management Company LLC,
  Union, South Carolina
Frances W. Arthur Irrevocable
  Trust #2 for the Benefit of
  Frances Oxner Jorgenson,
  Union, South Carolina
Heartland Financial USA, Inc.,     Chicago         July 31, 203
  Dubuque, Iowa
Heritage Oaks Bancorp,             San Francisco   August 18, 2003
  Paso Robles, California
Hume Bancshares Acquisition Corp., Kansas City     August 6, 2003
  St. Louis, Missouri
Industry Bancshares, Inc.,         Dallas          July 31, 2003
  Industry, Texas
Industry Holdings, Inc.,
  Wilmington, Delaware
Lakeland Bancorp,                  New York        August 6, 2003
  Oak Ridge, New Jersey
Lauritzen Corporation,             Kansas City     August 7, 2003
  Omaha, Nebraska
Marco Community Bancorp, Inc.,     Atlanta         July 25, 2003
  Marco Island, Florida
Mercantile Bancorp, Inc.,          St. Louis       August 6, 2003
  Quincy, Illinois
Merchants and Manufacturers        Chicago         August 21, 2003
  Bancorporation Inc.,
  Brookfield, Wisconsin
Merchant Merger Corp.,
  Brookfield, Wisconsin
Merchants and Manufacturers        Chicago         August 21, 2003
  Bancorporation Inc.,
  Brookfield, Wisconsin
Merchants New Merger Corp.,
  Brookfield, Wisconsin
Oswego Community Bank Employee     Chicago         August 22, 2003
  Stock Ownership Plan,
  Oswego, Illinois
Pebblespring Holding Company,      Philadelphia    August 15, 2003
  Berwyn, Pennsylvania
Peoples Bancshares Corp.,          St. Louis       August 6, 2003
  Boonville, Indiana
Red River Bancshares, Inc.,        Atlanta         August 14, 2003
  Alexandria, Louisiana
TeamCo, Inc.,                      Chicago         August 21, 2003
  Oak Lawn, Illinois
Tradition Bancshares, Inc.,        Dallas          August 7, 2003
  Houston, Texas
Tradition Bancshares, of
  Delaware, Inc.,
  Wilmington, Delaware
United Bankshares, Inc.,           Richmond        August 26, 2003
  Charleston, West Virginia

Section 4

Applicant(s)                         Nonbanking Activity/Company

Bank of Hawii Corporation,           Chicago Equity Partners,
  Honolulu, Hawaii                     Chicago, Illinois
First National Bank of Berryville    To engage in leasing personal
  Employee Stock Ownership Plan,       property
  Berryville, Arkansas
First Caroll Bankshares, Inc.,
  Berryville, Arkansas
Hinsbrool Bancshares, Inc.,          To engage de novo in extending
  Glen Ellyn, Illinois                 credit and servicing loans
Southwest Bancorp, Inc.,             SNB Bank of Wichita,
  Stillwater, Oklahoma                 Wichita, Kansas
West Bancorporation, Inc.,           WB Capital Management Inc.,
  West Des Moines, Iowa                West Des Moines, Iowa

Applicant(s)                         Reserve Bank    Effective Date

Bank of Hawii Corporation,           San Francisco   August 21, 2003
  Honolulu, Hawaii
First National Bank of Berryville    St. Louis       August 12, 2003
  Employee Stock Ownership Plan,
  Berryville, Arkansas
First Caroll Bankshares, Inc.,
  Berryville, Arkansas
Hinsbrool Bancshares, Inc.,          Chicago         August 12, 2003
  Glen Ellyn, Illinois
Southwest Bancorp, Inc.,             Kansas City     August 18, 2003
  Stillwater, Oklahoma
West Bancorporation, Inc.,           Chicago         August 8, 2003
  West Des Moines, Iowa

Sections 3 and 4

Applicant(s)                         Nonbanking Activity/Company

The South Financial Group, Inc.,     MountainBank Financial
  Greenville, South Carolina           Corporation
                                       Hendersonville, North Carolina

Applicant(s)                         Reserve Bank    Effective Date

The South Financial Group, Inc.,     Richmond        August 7, 2003
  Greenville, South Carolina

APPLICATIONS APPROVED UNDER BANK MERGER ACT
By Federal Reserve Banks

Recent applications have been approved by the Federal Reserve Banks as
listed below. Copies are available upon request to the Reserve Banks.

Applicant(s)                           Bank(s)

Dallas Investment Company,             Perry Investment Company,
  Caroll, Iowa                           Caroll, Iowa
Planters Bank and Trust Company        First Virginia Bank-Southwest,
  of Virginia,                           Roanoke, Virginia
  Stauton, Virginia                    First Virginia Bank-Colonial,
                                         Richmond, Virginia
Red River Bank,                        Bank of Lecompte,
  Alexandria, Louisiana                  Lecompte, Louisiana
Second Bank & Trust,                   First Virginia Bank-Blue Ridge,
  Culpeper, Virginia                     Stauton, Virginia
Suburban Community Bank,               UNB Acquisition National Bank,
  Chalfont, Pennsylvania                 Souderton, Pennsylvania
United Bank,                           SequoiaBank,
  Fairfax, Virginia                      Bethesda, Maryland
Univest Corporation of Pennsylvania,   Suburban Community Bank,
  Soudeton, Pennsylvania                 Chalfont, Pennsylvania
Univest National Bank,
  Soudeton, Pennsylvania

Applicant(s)                           Reserve Bank   Effective Date

Dallas Investment Company,             Chicago        August 6, 2003
  Caroll, Iowa
Planters Bank and Trust Company        Richmond       August 26, 2003
  of Virginia,
  Stauton, Virginia
Red River Bank,                        Atlanta        August 14, 2003
  Alexandria, Louisiana
Second Bank & Trust,                   Richmond       August 26, 2003
  Culpeper, Virginia
Suburban Community Bank,               Philadelphia   August 20, 2003
  Chalfont, Pennsylvania
United Bank,                           Richmond       August 26, 2003
  Fairfax, Virginia
Univest Corporation of Pennsylvania,   Philadelphia   July 25, 2003
  Soudeton, Pennsylvania
Univest National Bank,
  Soudeton, Pennsylvania

To Readers of the Legal Developments Section of the Bulletin

The materials currently contained in the Legal Developments section of the Federal Reserve Bulletin are also available in various publications, in press releases, and on the Board's web site. The Board's Legal Developments web site, launched in September 2002, provides a convenient way of gaining access to material that has been published in the Bulletin for many years. The site is updated as orders and actions are finalized.

* Selected rulemaking actions (proposed and final) are first issued as press releases, which are available on the Board's web site at www.federalreserve.gov/boarddocs/ press/bcreg/2003/. They are then published in the Federal Register (www.gpoaccess.gov/fr/index.html). On the Board's site, they can also be found in the Legal Developments section of the Banking Information and Regulation page at www.federalreserve.gov/boarddocs/ legaldevelopmants/rulemaking/. Interested persons may view proposals published for comment and comments received at www.federalreserve.gov/generalinfo/foia/ ProposedRegs.cfm. Comments on proposals may also be submitted through this web site, by electronic mail, or in writing.

* Board orders issued under the Bank Holding Company Act, the Bank Merger Act, the Federal Reserve Act, and the International Banking Act are issued as attachments to press releases, which are available from 1996 on the Board's web site at www.federalreserve.gov/boarddocs/ press/orders/2003/. Board orders issued under the Bank Holding Company Act can also be found at www.federalreserve.gov/boarddocs/legaldevelopments/ ordersbhc/. Board orders issued under the Bank Merger Act, the Federal Reserve Act, and the International Banking Act, can also be found at www.federalreserve.gov/ boarddocs/legaldevelopmants/ordersother/.

* Applications approved under the Bank Holding Company Act, the Bank Merger Act, the Federal Reserve Act, and the International Banking Act are listed in the Board's weekly H.2 release "Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received," which is available in paper copies by subscription from Publications Fulfillment and on the Board's web site at www.federalreserve.gov/releases/h2.

* Enforcement actions are issued as press releases. Actions since 1997 are available at www.federalreserve.gov/ boarddocs/press/enforcement/2003/; actions since 1989 can be located by going to "Enforcement Actions" from the Banking and Information and Regulation page at www.federalreserve.gov/boarddocs/enforcement/.

Paper copies of these documents are also available upon request from the Board's Freedom of Information Office. Requests may be submitted by facsimile (202-872-7565); online at www.federalreserve.gov/generalinfo/foia/ request.cfm; or by mail to the Secretary, Board of Governors of the Federal Reserve System, Freedom of Information Office, Washington, DC 20551.

Pending cases are listed in the Board's Annual Report in the "Litigation" chapter and on the web site at www.federalreserve.gov/boarddocs/legaldevelopments/ cases.him.

Because it is available elsewhere in a more timely fashion, much of the material currently being published in the Legal Developments section of the Bulletin will no longer be included in the Bulletin when it becomes a quarterly. Only Board orders will be included.