ORDERS ISSUED UNDER BANK MERGER ACT.

United Bank of Philadelphia Philadelphia, Pennsylvania

Order Approving Acquisition and Establishment of Branches

United Bank of Philadelphia ("United"), a state member bank,(1) has applied under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. [sections] 1828(c)) (the "Bank Merger Act") to acquire four branches of First Union National Bank, Charlotte, North Carolina ("First Union") Philadelphia, Pennsylvania. United also has applied under section 9 of the Federal Reserve Act (12 U.S.C. [sections] 321) to establish branches at the locations of the branches to be acquired, as described in the Appendix.

Notice of the applications, affording interested persons an opportunity to submit comments, has been given in accordance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the acquisitions were requested from the United States Attorney General and the other federal banking agencies. The time for filing comments has expired, and the Board has considered the application and all facts of record in light of the factors set forth in the Bank Merger Act and section 9 of the Federal Reserve Act.

The Bank Merger Act prohibits the Board from approving an application if the proposal would result in a monopoly or would be in furtherance of an attempt to monopolize the business of banking.(2) The Bank Merger Act also prohibits the Board from approving a proposal that would substantially lessen competition or tend to create a monopoly in any relevant market, unless the Board finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effects of the transaction in meeting the convenience and needs of the community to be served.(3)

United is the 58th largest depository institution in the Philadelphia market,(4) controlling deposits of $107.5 million, representing less than 1 percent of total deposits controlled by depository institutions in the market ("market deposits").(5) First Union is the largest depository institution in the market, controlling deposits of $25.6 billion, representing approximately 37.6 percent of market deposits. The four branches that United proposes to acquire control approximately $61.1 million of deposits, representing less than 1 percent of market deposits. On consummation of the proposal, United would become the 40th largest depository institution in the Philadelphia banking market, controlling deposits of $168.6 million, representing less than 1 percent of market deposits. The Herfindahl-Hirschman Index ("HHI") would not increase and would be 1767 after consummation of the proposal. The proposal would be consistent with the Department of Justice Merger Guidelines ("DOJ Guidelines"),(6) and the Department has advised the Board that consummation of the proposal would not likely have a significant adverse effect on competition in any relevant banking market. The other federal banking agencies also have been afforded an opportunity to comment and have not objected to consummation of the proposal.

After carefully reviewing these and all other facts of record, the Board concludes that consummation of the proposed transaction would not be likely to result in a significantly adverse effect on competition or on the concentration of banking resources in the Philadelphia banking market or any other relevant banking market. Accordingly, the Board has determined that competitive factors are consistent with approval.

In reviewing this proposal under the Bank Merger Act and section 9 of the Federal Reserve Act, the Board also has considered the financial and managerial resources and future prospects of United. The Board has reviewed these factors in light of all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the bank.

The Board has stated and continues to believe that capital adequacy is an especially important factor in analyzing the expansion proposals of banking organizations.(7) The Board notes that United has raised additional capital in anticipation of and as part of the proposal and would remain well capitalized on consummation of the proposal. The Board also has carefully considered projections provided by United of the financial benefits that are expected to result from the proposal, including projected operating revenues and expenses. Based on all the facts of record, including the commitments provided by United in connection with this case, the Board concludes that considerations relating to the financial and managerial resources and future prospects of United are consistent with approval.

The Bank Merger Act also requires the Board to consider the convenience and needs of the communities to be served. In considering this factor, the Board has reviewed United's record of performance under the Community Reinvestment Act, 12 U.S.C. [sections] 2901 et seq. ("CRA"). United received an "outstanding" rating at its most recent examination for CRA performance by the Federal Reserve Bank of Philadelphia, as of March 1997.

The Board also notes United's role in serving the banking and credit needs of low-income individuals and minority individuals in Philadelphia. Sixty-six percent of the census tracts in United's service area are designated as low-income. United offers products and services tailored to meet the needs of the community it serves, including checking accounts with no monthly service charges for customers who maintain a $100 minimum balance. United and its affiliates also provide traditionally underserved individuals with credit counseling and financial workshops that address such subjects as personal finances, small business financial management, and the fundamentals of maintaining a banking relationship. Based on its review, and for the reasons discussed above, the Board concludes that convenience and needs considerations, including the CRA performance records of the institutions involved, are consistent with approval.

As part of its review of the proposal under section 9 of the Federal Reserve Act, the Board also has considered the location of each of the branches to be established by United. As a state member bank, United is authorized to establish a branch at the location of each branch it proposes to acquire. The proposal also is consistent with all other provisions of section 9 of the Federal Reserve Act and the Board's regulations thereunder.(8)

Based on the foregoing and all the facts of record, the Board has determined that the proposal should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by United with all the commitments made in connection with the applications. For purposes of this action, the commitments and conditions relied on in reaching this decision are conditions imposed in writing by the Board and, as such, may be enforced in proceedings under applicable law.

The acquisition of the branches may not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended by the Board or by the Federal Reserve Bank of Philadelphia, acting pursuant to delegated authority.

By order of the Board of Governors, effective September 7, 1999.

Voting for this action: Chairman Greenspan and Governors Kelley, Meyer, Ferguson, and Gramlich.

ROBERT DEV. FRIERSON

Associate Secretary of the Board

(1.) United is a wholly owned subsidiary of United Bancshares, Inc., Philadelphia, Pennsylvania.

(2.) 12 U.S.C. [sections] 1828(c)(5)(A).

(3.) 12 U.S.C. [sections] 1828(c)(5)(B).

(4.) The Philadelphia banking market comprises Philadelphia, Bucks, Chester, Delaware, and Montgomery Counties, in Pennsylvania; and Burlington, Camden, Gloucester, and Salem Counties and the southwestern portion of Mercer County, in New Jersey.

(5.) In this context, depository institutions include community banks, savings banks, and savings associations. All deposit data are as of June 30, 1998, and are adjusted for structural changes since that date. Market share data are based on calculations that include the deposits of thrift institutions 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, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).

(6.) Under the DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is between 1000 and 1800 is considered to be moderately concentrated. 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.

(7.) See, e.g., Deutsche Bank AG, 85 Federal Reserve Bulletin 509, 511 (1999); Chemical Banking Corporation, 82 Federal Reserve Bulletin 239, 243 (1996); BankAmerica Corporation, 78 Federal Reserve Bulletin 338, 343 (1992).

(8.) See 12 C.F.R. 208.6

Appendix

Branch locations to be acquired by United Bank of Philadelphia, all in Philadelphia, Pennsylvania

(1) 1620 Wadsworth Avenue.

(2) 2836 West Girard Avenue.

(3) 3945-49 Chestnut Street.

(4) 1501 North Broad Street.

Orders Issued Under International Banking Act

Caixa Geral de Depositos S.A. Lisbon, Portugal

Order Approving Establishment of a Branch

Caixa Geral de Depositos S.A. ("Bank"), Lisbon, Portugal, 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. [sections] 3105(d)) to establish a state-licensed branch in New York, New York. The Foreign Bank Supervision Enhancement Act of 1991 ("FBSEA"), 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 submit comments, has been published in a newspaper of general circulation in New York, New York (The New York Times, April 7, 1999). The time for filing comments has expired, and all comments have been considered.

Bank, with assets of approximately $57 billion as of year-end 1998, is the largest banking organization in Portugal. Founded in 1876 to serve as the tax collector for the State of Portugal, Bank is now a full-service financial institution that is wholly owned by the Portuguese State. Within Portugal, Bank has one bank subsidiary, several nonbank subsidiaries, and more than 500 branches. Outside Portugal, Bank has branches in France, Luxembourg, and Cape Verde and representative offices in several countries. Bank also controls three banks in Spain, two in Brazil, and one in each of Mozambique and France. One of Bank's Brazilian subsidiaries, Banco Bandeirantes S.A., has a branch in New York and a representative office in Miami. Bank has no other banking or nonbanking operations in the United States.

Through the proposed branch, Bank intends to provide services to companies seeking to do business with a Portuguese bank in New York and to banks in Portuguese-speaking countries that do not have a U.S. presence. The branch also would provide U.S.-dollar products and services to Bank's affiliates.

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 the United States and has furnished to the Board the information it needs to assess the application adequately. The Board generally also must determine that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor.(1) The Board also may take into account additional standards as set forth in the IBA and Regulation K.(2)

Bank engages directly in the business of banking outside the United States through its banking operations in Portugal and elsewhere. Bank also has provided the Board with the information necessary to assess the application through submissions that address the relevant issues.

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 and 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.(3) The Board has made the following findings with regard to the supervision of Bank.

Supervision of Portuguese credit institutions, including Bank, is the responsibility of the Bank of Portugal, Portugal's central bank. The Bank of Portugal requires Bank to submit a semiannual consolidated financial statement and an annual report on a consolidated and nonconsolidated basis. Bank also must submit monthly and/or quarterly information on solvency and liquidity, risk exposure, administrative organization, and foreign branches. The Bank of Portugal conducts on-site inspections of Bank and its domestic financial subsidiaries.(4) Previous examinations of Bank have included reviews of risk concentration, risk management, credit quality, credit approval systems, internal audit procedures, accounting control, and capital ratios.

Control of Bank's operations, implemented through borrower, counterparty, issuer, and country limits, is subject to oversight by Bank's head office. Meetings between head office management and management of Bank's subsidiaries and foreign offices occur on a regular basis, and the head office also monitors the budgetary outlay for these operations. Bank's central auditing department annually prepares an auditing plan to which all offices and subsidiaries must conform. The results of all internal audits are provided to the Bank of Portugal in an annual report on Bank's internal control systems, which is supplemented by ongoing contact between Bank's management and staff of the Bank of Portugal.

Bank's total exposure to its affiliates or to any particular client or group of connected clients may not exceed a certain percentage of Bank's capital. Such large exposures must be reported to the Bank of Portugal.

An annual audit is conducted by independent external auditors on Bank's activities and policies, both domestic and foreign. In addition, Bank has a statutory auditor that issues a monthly opinion on Bank's accounts. These external audit reports are made available to the Bank of Portugal, and external auditors are under a statutory duty to report to the Bank of Portugal any facts that might constitute a serious breach of the law, affect the continuous functioning of the credit institution, or lead the auditor to express reservations on or to refuse to certify the accounts.

Bank also is subject to an annual inspection conducted by the Tribunal de Contas, an independent court that is part of the judicial branch of the Portuguese government. The Tribunal de Contas reviews and audits state-owned companies and state holdings in private limited companies. The aim of the Tribunal de Contas is to safeguard against any impropriety involving the use of state funds and to guarantee the application of sound management practices and internal control procedures.

Based on all the facts of record, the Board concludes that Bank is subject to comprehensive supervision on a consolidated basis by its home country supervisor.

The Board has taken into account the additional standards set forth in the IBA and in Regulation K.(5) Bank has provided the Board with the information necessary to assess the application through submissions that address the relevant issues. In addition, the Bank of Portugal has granted Bank approval to establish the proposed branch.

Portugal's risk-based capital standards conform to E.U. capital standards which are consistent with those established by the Basle Capital Accord. Bank's capital exceeds the minimum levels that would be required by the Basle Capital 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 consistent with approval, and Bank appears to have the experience and capacity to support the proposed branch. In addition, Bank has established controls and procedures in the branch to ensure compliance with applicable U.S. law, and controls and procedures for its worldwide operations generally.

Finally, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities about access to information. Bank has committed to make available to the Board such information on the operations of Bank and any affiliate of Bank 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 may be prohibited or impeded by law or otherwise, Bank has committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties in connection with disclosure of certain information. In addition, subject to certain conditions, the Bank of Portugal 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, the Board has concluded that Bank has provided adequate assurances of access to any necessary information the Board may request.

On the basis of all the facts of record, and subject to the commitments made by Bank and the terms and conditions set forth in this order, the Board has determined that Bank's application to establish a state-licensed branch in New York should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank or any of its affiliates subsequently interfere with the Board's ability to determine and enforce compliance by Bank or its affiliates with applicable federal statutes, the Board may require or recommend termination of any of Bank's direct or indirect activities in the United States. Approval of this application also is specifically conditioned on Bank's compliance with the commitments made in connection with this application and with the conditions in this order.(6) The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision and may be enforced in proceedings against Bank, its offices, and its affiliates under applicable law.

By order of the Board of Governors, effective September 27, 1999.

Voting for this action: Chairman Greenspan and Governors Kelley, Meyer, Ferguson, and Gramlich.

ROBERT DEV. FRIERSON

Associate Secretary of the Board

(1.) See 12 U.S.C. [sections] 3105(d)(2).

(2.) See 12 U.S.C. [sections] 3105(d)(3), (4); 12 C.F.R. 211.24(c).

(3.) See 12 C.F.R. 211.24(c)(1). 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.

(4.) Foreign subsidiaries of Bank are directly supervised by the competent authorities in their respective host states. Bank's domestic insurance subsidiary is supervised by the Portuguese Insurance Institute, which is required by law to submit to the Bank of Portugal any information necessary for the consolidated supervision of Bank.

(5.) See 12 U.S.C. [sections] 3105(d)(3), (4); 12 C.F.R. 211.24(c)(2).

(6.) The Board's authority to approve the establishment of the proposed office parallels the continuing authority of the State of New York to license offices of a foreign bank. The Board' s approval of this application does not supplant the authority of the State of New York and its agent, the New York State Banking Department, to license the proposed office of Bank in accordance with any terms or conditions that the New York State Banking Department may impose.3