Orders issued under bank holding company act.

Orders Issued Under Section 3 of the Bank Holding Company Act

Canadian Imperial Bank of Commerce Toronto, Canada

CIBC World Markets Inc. Toronto, Canada

CIBC Delaware Holdings Inc. New York, New York

Amicus Holdings Inc. Falls Church, Virginia

Order Approving Acquisition of Shares of a Bank Holding Company

Canadian Imperial Bank of Commerce ("CIBC"), CIBC World Markets Inc. ("World Markets"), CIBC Delaware Holdings Inc. ("Delaware Holdings"), and Amicus Holdings Inc. ("Amicus Holdings") (collectively, "Applicants"), all bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have requested the Board's approval under section 3 of the BHC Act (12 U.S.C. [section] 1842(a)(3)) to acquire a majority of the voting shares of Juniper Financial Corp. ("Juniper"), also a bank holding company, and thereby acquire control of Juniper's wholly owned subsidiary, Juniper Bank, both in Wilmington, Delaware.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (66 Federal Register 34,933 (2001)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

CIBC, with consolidated assets of $183 billion, is the second largest banking organization headquartered in Canada. (2) Through Amicus Holdings, CIBC owns CIBC National Bank, Maitland, Florida ("CIBC National"), and Amicus FSB, Cicero, Illinois ("Amicus Bank"). CIBC National, with total assets of $428 million, controls deposits of $132 million, representing less than 1 percent of total deposits of insured depository institutions in Florida ("state deposits"). (3) Amicus Bank, with total assets of $185.6 million, controls deposits of $44.5 million, representing less than 1 percent of state deposits in Illinois. CIBC also operates a state-licensed branch in Chicago, Illinois; agencies in New York, New York, and Los Angeles, California; and a representative office in Houston, Texas. In addition, CIBC engages in a broad range of permissible nonbanking activities in the United States.

Juniper became a bank holding company in May 2001. (4) Juniper currently operates, and purchases certain receivables from, the Internet-based credit card division of Columbus Bank & Trust, Columbus, Georgia, and CIBC has stated that Juniper Bank would use the proceeds from CIBC's proposed investment in Juniper to acquire the credit card division's assets and liabilities and for other purposes.

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 located in a state other than the home state of such bank holding company if certain conditions are met. For purposes of the BHC Act, the home state of CIBC is Florida, and Juniper Bank is located in Delaware. (5) All the conditions for an interstate acquisition enumerated in section 3(d) are met in this case. (6) Based on a review of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Competitive Considerations

CIBC and Juniper do not compete directly in any banking market. Based on 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.

Financial, Managerial, and Supervisory Considerations

The BHC Act requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in acquisition proposals and to consider certain supervisory factors. (7) In assessing the financial and managerial strength of CIBC and its subsidiaries, the Board has reviewed information provided by CIBC, confidential supervisory and examination information, and publicly reported and other financial information. In addition, the Board has consulted with relevant supervisory authorities in Canada. The capital ratios of CIBC exceed the minimum levels that would be required under the Basle Capital Accord and are considered equivalent to the capital ratios that would be required of a U.S. banking organization. Juniper is, and on consummation of the proposal would remain, well capitalized. In light of these and all the facts of record, the Board concludes that the financial and managerial resources and future prospects of Applicants and Juniper are consistent with approval.

Section 3 of the BHC Act also provides that the Board may not approve an application involving a foreign banking organization unless it is "subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home country." (8) The home country supervisor of CIBC is Canada's Office of the Superintendent of Financial Institutions ("OSFI"), which is responsible for the prudential supervision and regulation of federally regulated Canadian financial institutions. In approving applications under the BHC Act and the IBA, the Board previously has determined that Canadian banks, including CIBC, are subject to comprehensive consolidated supervision by the OSFI. (9) In this case, the Board finds that the OSFI continues to supervise CIBC in substantially the same manner as it supervised Canadian banks at the time of those previous determinations. Based on this finding and all the facts of record, the Board concludes that CIBC continues to be subject to comprehensive supervision on a consolidated basis by its home country supervisor.

In addition, section 3 of the BHC Act requires the Board to determine that a foreign banking organization 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. (10) The Board has reviewed the restrictions on disclosure in relevant jurisdictions in which CIBC operates and has communicated with relevant government authorities concerning access to information. In addition, CIBC previously has committed to make available to the Board such information on the operations of CIBC and its affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the IBA, and other applicable federal law. CIBC also previously has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable CIBC to make such information available to the Board. In light of these commitments, the Board concludes that CIBC has provided adequate assurances of access to any appropriate information that the Board may request. Based on these and all the facts of record, the Board concludes that the supervisory factors it is required to consider are consistent with approval.

Convenience and Needs Considerations

In acting on a proposal under section 3 of the BHC Act, the Board is required to consider the effect of the proposal on the convenience and needs of the community to be served and to take into account the records of the relevant depository institutions under the Community Reinvestment Act ("CRA"). (11) The Board has carefully considered the convenience and needs factor and the CRA performance records of CIBC's U.S. subsidiary depository institutions in light of all the facts of record, including a submission the Board received from a commenter. (12)

Amicus Bank received a "satisfactory" rating from its primary federal supervisor, the Office of Thrift Supervision ("OTS"), at its most recent evaluation for CRA performance, as of August 1998 ("1998 Amicus Bank Evaluation"). (13) In the 1998 Amicus Bank Evaluation, examiners identified no violations of the substantive provisions of the antidiscrimination laws. CIBC National commenced operations in October 1999 and has not yet been examined for CRA performance.

CRA Performance of CIBC National.

Lending. According to data provided by CIBC, from January 1 through August 13, 2001, CIBC National has purchased 268 home purchase loans, and 74.6 percent of these loans were to low- and moderate-income ("LMI") individuals and 38.4 percent were in LMI census tracts. CIBC has represented that CIBC National offers a full range of affordable mortgage products through correspondent lenders, including programs that offer low and/or flexible downpayments.

CIBC has reported that CIBC National's community development loans and loan commitments totaled more than $10.5 million for the period from January 1, 2000, through July 31, 2001. These loans include a $5 million line of credit to a community reinvestment corporation ("CRC") for construction financing of an affordable housing development and two LMI multifamily housing loans totaling more than $2.2 million that CIBC National purchased from a CRC.

Investment. CIBC has stated that CIBC National made qualified community development investments of more than $3.4 million from January 1, 2000, through July 31, 2001. CIBC National's purchase of securities backed by mortgage loans to LMI areas or LMI borrowers accounted for almost $2.2 million of this total.

Service. CIBC National currently operates through its main office and 122 banking pavilions in supermarkets. (14) CIBC has indicated that 19.5 percent of these locations are in LMI census tracts, and that CIBC National has never closed a branch or a banking pavilion. CIBC has represented that CIBC National offers customers a selection of financial products, including free checking with no minimum balance and mutual funds with a $100 minimum investment.

CIBC also has indicated that CIBC National employees serve on the boards of directors of several community development corporations and other nonprofit agencies, and that CIBC National has presented homebuying and financial literacy seminars to underserved populations.

CRA Performance of Amicus Bank.

Lending. The 1998 Amicus Bank Evaluation examined the CRA performance of the institution under the standards applicable to small savings associations. (15) Examiners reported that the bank's loan-to-deposit ratio during the evaluation period averaged 85.2 percent, which approximated the 86.3 percent ratio for similarly sized institutions in the central United States during the same period. (16) The bank originated $35.6 million in mortgage loans from January 1, 1996, through June 30, 1998, a loan origination level that examiners considered to be extremely high for an institution of Amicus Bank's asset size.

Examiners characterized the institution's record of lending in low- and moderate-income ("LMI") geographies as acceptable, noting that, during the evaluation period, Amicus Bank originated 49 percent of its HMDA-reportable loans in moderate income census tracts, compared with the 16.8 percent of these originations in such tracts by all lenders in 1996. (17) Examiners reported that the institution originated 56.1 percent of its HMDA-reportable loans during the evaluation period to LMI borrowers, compared with 31.9 percent for lenders in the aggregate in the institution's assessment area in 1996. Examiners also stated that Amicus Bank offered a number of flexible mortgage products to assist LMI borrowers, including loans with down payments of 3 percent of the home purchase price, and loan terms that permitted the use of affordable housing grants to fund portions of down payments.

Data from CIBC indicate that Amicus Bank originated 202 home purchase loans from January 1, 2000, through August 13, 2001. Approximately 72.7 percent of these loans were made to LMI borrowers, and 51.5 percent were made in LMI census tracts. CIBC has stated that Amicus Bank continues to offer low-down payment mortgage loans and also plans to introduce the same selection of affordable mortgage products currently offered by CIBC National. CIBC also has represented that from January 1 through August 13, 2001, Amicus Bank had originated two community development loans in 2001, totaling more than $550,000 and had approved an additional $4.1 million in such loans.

Investment. Before its acquisition by CIBC in 2000, Amicus Bank qualified as a small savings association for CRA evaluation purposes and, accordingly, was not evaluated under the investment test. CIBC has represented that Amicus Bank has made a total of $114,000 in donations to community development organizations during the first seven months of 2001, and that the bank also is considering making equity investments in certain community development organizations.

Service. Amicus Bank currently operates through its main office, two branches, and 64 banking pavilions in supermarkets. CIBC has stated that 22.4 percent of these locations are in LMI census tracts, and that Amicus Bank has never closed a branch or a banking pavilion. CIBC also has represented that Amicus Bank employees serve on the boards of directors of several community organizations and have conducted seminars for individuals seeking employment.

Conclusion on Convenience and Needs Factor

The Board has considered carefully the entire record in its review of the convenience and needs factor under the BHC Act. (18) Based on all the facts of record, including the relevant CRA performance evaluations, the public comment received, and information provided by CIBC, the Board concludes that considerations relating to convenience and needs, including the CRA performance records of the banks involved in the proposal, are consistent with approval.

Conclusion

Based on the foregoing and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by Applicants with all the commitments made in connection with the application. The Board's approval also is specifically conditioned on CIBC's compliance with the commitments it previously made regarding access to information and on the Board's receiving access to information on the operations or activities of CIBC and any of its affiliates that the Board deems to be appropriate to determine and enforce CIBC's compliance with applicable federal statutes. If any restrictions on access to information on the operations or activities of CIBC and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by CIBC or its affiliates with applicable federal statutes, the Board may require termination of any of CIBC's direct or indirect activities in the United States. All the commitments and conditions on which the Board relied in granting its approval, including the commitments and conditions specifically described above, 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, or later than three months after the effective date of this order, unless the Board or the Federal Reserve Bank of New York, acting pursuant to delegated authority, extends such period for good cause.

By order of the Board of Governors, effective August 17, 2001.

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

ROBERT DEV. FRIERSON Deputy Secretary of the Board

First Western Bancorp, Inc. Huron, South Dakota

Order Approving the Acquisition of a Bank Holding Company

First Western Bancorp, Inc. ("First Western") has requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") (12 U.S.C. [section] 1842) to acquire at least 74.8 percent of the voting shares of American Bank Shares, Inc. "American"), and thereby acquire American's subsidiary bank, American State Bank ("American Bank"), both in Rapid City, South Dakota.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (66 Federal Register 33,543 (2001)). The time for filing comments has expired and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

First Western, with total consolidated assets of $477 million, operates subsidiary banks in South Dakota and Nebraska. First Western operates the 12th largest depository organization in South Dakota, controlling deposits of $327.9 million, representing approximately 2.5 percent of total deposits in insured depository institutions in the state ("state deposits"). (1) American, with total consolidated assets of $137 million, operates the 23rd largest depository institution in South Dakota, controlling $107.5 million in deposits, representing less than 1 percent of total state deposits. After consummation of the proposal, First Western would control the ninth largest depository organization in South Dakota, controlling deposits of $435.4 million, representing approximately 3.4 percent of state deposits.

Competitive Considerations

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

First Western and American compete directly in the Rapid City, South Dakota, banking market ("Rapid City market"). (3) The Board has carefully reviewed the competitive effects of the proposal in this market in light of all the facts of record. In particular, the Board has considered the projected increase in the concentration of total deposits in insured depository institutions in this market ("market deposits") (4) as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"), (5) the number of competitors that would remain in the market, and other characteristics of the market.

First Western operates the second largest depository organization in the Rapid City market, controlling $327.9 million in market deposits, representing approximately 19.2 percent of market deposits. American operates the sixth largest depository institution in the market, controlling $107.5 million in deposits, representing approximately 6.3 percent of market deposits. On consummation of the proposed acquisition, First Western would continue to operate the second largest depository organization in the Rapid City market, controlling $435.4 million in deposits, representing approximately 25.5 percent of market deposits. The HHI would increase by 241 points to 1958, and the market would become highly concentrated.

Several mitigating factors indicate that the increase in market concentration, as measured by the HHI, is not likely to have a significantly adverse effect on competition. A large number of financial institutions, relative to the size of total market deposits, would compete in the Rapid City market. At least 10 banking organizations, other than First Western, and one thrift institution would remain in the market. In addition, four of the other banking organizations would each control more than 10 percent of market deposits.

The Rapid City market also has recently experienced de novo entry. In 2000, a banking organization entered the market by establishing a new branch. The Rapid City market, which includes one of the two Metropolitan Statistical Areas ("MSAs") in South Dakota, also appears to be attractive for future entry. (6) From 1990 to 2000, the population growth rate in the Rapid City market and the Rapid City MSA exceeded the statewide rate. In addition, the population growth rate for the Rapid City MSA is projected to increase by more than twice the projected statewide rate from 2000 to 2005.

The Board also has considered the competitive effect of credit unions operating in the Rapid City market. Sixteen credit unions operate in the market and together control more than 20 percent of market deposits, which is more than twice the national average of 8.5 percent for market deposits controlled by credit unions. The largest credit union controls more than 12 percent of market deposits and offers a full range of retail banking products. The credit union's membership is open to all persons who live, work, worship, or attend school in three counties, or in a large town in a fourth county, in the banking market. More than 60 percent of the residents in the Rapid City market are potential members of this credit union.

The Board believes that the foregoing considerations, including the number and strength of competitors that would remain in the Rapid City market after consummation of the proposal, the structure and attractiveness of that market, and other factors mitigate the potential anticompetitive effects of the proposal. The Board also has considered the views of the Department of Justice and other banking agencies. The Department of Justice has advised the Board that consummation of the proposal would not likely have a significantly adverse effect on competition in any relevant banking market. The Federal Deposit Insurance Corporation ("FDIC") and the Office of the Comptroller of the Currency ("OCC") have been afforded an opportunity to comment and have not objected to the consummation of the proposal.

Based on these and all the facts of record, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the Rapid City banking market, or in any other relevant banking market, and that competitive factors are consistent with approval.

Financial, Managerial, and Other Considerations

Section 3 of the BHC Act also requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in the proposal, the convenience and needs of the communities to be served, and certain supervisory factors. The Board has reviewed carefully these factors in light of all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations and confidential financial information provided by First Western. Based on these and all the facts of record, the Board concludes that the financial and managerial resources and future prospects of First Western, American, and their subsidiary banks are consistent with approval, as are the other supervisory factors that the Board must consider under the BHC Act.

In considering the convenience and needs factor, the Board has reviewed the records of performance of the subsidiary banks of First Western and American under the Community Reinvestment Act (12 U.S.C. [section] 2901 et seq.). (7) Based on all the facts of record, the Board concludes that convenience and needs considerations, including the CRA performance records of the relevant institutions, are consistent with approval of the proposal.

Based on the foregoing and all the facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval of the proposal is conditioned on compliance by First Western with the commitments made in connection with the application. 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 transaction shall 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 for good cause by the Board or the Federal Reserve Bank of Minneapolis, acting pursuant to delegated authority.

By order of the Board of Governors, effective August 9, 2001.

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

ROBERT DEV. FRIERSON Deputy Secretary of the Board

Orders Issued Under Sections 3 and 4 of the Bank Holding Company Act

First Union Corporation Charlotte, North Carolina

Wachovia Corporation Winston-Salem, North Carolina

Order Approving the Merger of Bank Holding Companies

First Union Corporation ("First Union"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. [section] 1842) to merge with Wachovia Corporation ("Wachovia") and thereby acquire Wachovia's subsidiary banks, (1) including its lead subsidiary bank, Wachovia Bank, National Association, Winston-Salem, North Carolina ("Wachovia Bank"). (2) First Union also has requested the Board's approval under sections 4(c)(8) and 4(j) of the BHC Act (12U. S.C. [subsection] 1843(c)(8) and 1843(j)) and section 225.24 of the Board's Regulation Y to acquire Wachovia's subsidiary savings association, Atlantic Savings Bank, FSB, Hilton Head Island, South Carolina ("Atlantic"). In addition, First Union has filed notices under section 25A of the Federal Reserve Act (12 U.S.C. [subsection] 611-631), section 4(c)(13) of the BHC Act (12 U.S.C. [section] 1843(c)(13)), and subpart A of the Board's Regulation K (12 CFR 211, subpart A) to acquire an Edge corporation and certain foreign investments controlled by Wachovia. (3)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (66 Federal Register 27,144, and 29,326 (2001)). The time for filing comments has expired, and the Board has considered the proposal and all comments received during the comment period in light of the factors set forth in sections 3 and 4 of the BHC Act. (4)

First Union, with total consolidated assets of $252.9 billion, is the sixth largest commercial banking organization in the United States, controlling approximately 4.1 percent of total banking assets of insured commercial banks in the United States ("total U.S. banking assets"). (5) First Union operates subsidiary banks in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and Washington, D.C., which control $136.2 billion in total deposits, representing approximately 3.4 percent of total deposits in all insured depository institutions in the United States ("total U.S. insured deposits"). (6)

Wachovia, with total consolidated assets of $75.6 billion, is the 15th largest commercial banking organization in the United States, controlling approximately 1.3 percent of total U.S. banking assets. Wachovia's subsidiary banks and savings association operate in six Southeastern states and in Delaware, and control $39.8 billion in deposits, representing approximately 1 percent of total U.S. insured deposits.

On consummation of the proposal and after accounting for the proposed divestitures discussed in this order, the combined organization would become the fourth largest commercial banking organization in the United States, with total consolidated assets of $328.5 billion, representing approximately 5.4 percent of total U.S. banking assets, and would control total deposits of $174.5 billion, representing approximately 4.4 percent of total U.S. insured deposits. The combined organization would be named Wachovia Corporation ("New Wachovia"), would be headquartered in Charlotte, and would have a significant presence throughout the Mid-Atlantic and Southeast regions of the United States.

The Board is required to review each proposal filed under the BHC Act using standards specified in the Act. These standards relate to the competitive impact of the proposal, the financial and managerial resources and future prospects of the companies and banks concerned, the convenience and needs of the community to be served, and the availability of information needed to determine and enforce compliance with the BHC Act and other applicable federal banking laws. (7) In addition, the Board is permitted to approve an acquisition that involves banks in a state outside the acquiring bank holding company's home state only if certain specified conditions are met.

Based on this consideration and subject to First Union's commitments and the conditions established by the Board as described below, the Board has concluded that First Union's proposal satisfies the criteria set out in the BHC Act. Accordingly, the Board has determined to approve the applications and notices filed by First Union, subject to the fulfillment of First Union's commitments and the conditions established herein by the Board. The Board's review as discussed in this order is limited to applying the statutory factors set out in the BHC Act to the proposal as currently constituted and presented to the Board, and the Board expresses no view on any matter regarding this transaction other than those statutory factors.

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 located in a state other than the bank holding company's home state if certain conditions are met. For purposes of the BHC Act, the home state of First Union is North Carolina, (8) and the subsidiary banks of Wachovia are located in Delaware, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia. (9) The Board has reviewed the interstate banking laws of each state in which First Union would acquire banking operations and consulted with the appropriate banking regulator in each of those states about the permissibility of the proposed transaction under applicable state law.

All the conditions enumerated in section 3(d) for an interstate acquisition are met in this case. First Union is at least adequately capitalized and adequately managed, as defined by applicable law. (10) In addition, the subsidiary banks of Wachovia that First Union would acquire in an interstate transaction have been in existence for the minimum period of time required by applicable law. (11) On consummation of the proposal, and after accounting for the proposed divestitures, New Wachovia and its affiliates would control less than 10 percent of the total amount of deposits in insured depository institutions in the United States and less than 30 percent, or the applicable percentage established by state law, of total deposits in each state in which the insured depository institutions of both First Union and Wachovia are located. (12) All other requirements of section 3(d) would be met on consummation of the proposal. (13) Accordingly, based on all the facts of record, section 3(d) of the BHC Act does not prohibit the Board from approving the proposed transaction.

Competitive Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly or would be in furtherance of any attempt to monopolize the business of banking in any relevant banking market. 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 Board finds that the anticompetitive effects of the proposal clearly are outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. (14)

First Union and Wachovia have depository institutions that compete directly in sixty banking markets in six states. (15) To reduce the potential that the proposal would have adverse effects on competition, First Union has committed to divest 38 branches (the "divestiture branches"), with at least $1.5 billion in deposits, in 13 banking markets (the "divestiture markets"). (16) The Board has reviewed carefully the competitive effects of the proposal in each of the banking markets in which First Union and Wachovia compete directly 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 New Wachovia would control, (17) the concentration level of market deposits and the increase in this level as measured by the HHI under the DOJ Guidelines, (18) the size and likely effect of the proposed divestiture in relevant banking markets, and other characteristics of the markets. (19)

As more fully discussed below, of the 60 banking markets in which First Union and Wachovia compete, after accounting for the proposed divestitures the proposal would be consistent with threshold levels established by the DOJ Guidelines in 54 banking markets. These 54 banking markets are discussed in the Appendices. Each of the six remaining markets is discussed in detail below.

A. Certain Banking Markets without Divestitures

Consummation of the proposal would be consistent with the DOJ Guidelines in 44 banking markets without any divestiture by First Union. (20) After consummation of the proposal, one of these banking markets would remain unconcentrated and thirty-one would be moderately concentrated as measured by the HHI. (21) The remaining 12 banking markets would be highly concentrated as measured by the HHI, but the increase in the HHI would be less than the 200-point threshold level, which would be consistent with the DOJ Guidelines. (22)

B. Certain Banking Markets with Divestitures

After accounting for the divestitures First Union has proposed to mitigate the potential for adverse competitive effects, consummation of the merger would be consistent with the DOJ Guidelines in ten of the banking markets in which divestitures are proposed. (23) Three of these markets would remain moderately concentrated on consummation of the proposal. The Hickory, North Carolina, market would remain moderately concentrated and the HHI would increase less than 200 points. In the Savannah, Georgia-South Carolina, and Wilkes, North Carolina, banking markets, the change in the HHI would be slightly more than 200 points, but the resulting moderately concentrated level would remain below 1800. The remaining seven banking markets would be highly concentrated on consummation of the transaction, but the change in the HHI in each of these markets would be 200 points or less. (24)

C. Six Banking Markets in which Special Scrutiny is Appropriate

The proposal would exceed the DOJ Guidelines in three banking markets in which no divestitures are proposed. These markets are Durham-Chapel Hill and Statesville, both in North Carolina, and Richmond, Virginia. The proposal also would exceed the DOJ Guidelines in three markets in which divestitures are proposed: Asheville, Elizabeth City, and Winston-Salem, all in North Carolina. For each of these six markets, the Board has considered whether other factors either mitigate the competitive effects of the proposal or indicate that the proposal would have a significantly adverse effect on competition in the market. The number and strength of factors necessary to mitigate the competitive effects of a proposal depend on the level and size of the increase in concentration in a banking market. (25) In each of these markets, the Board has identified a number of factors that indicate the proposal would not have a significantly adverse effect on competition despite the increase in and resulting level of the HHI or the resulting market share.

Asheville. First Union operates the largest depository institution in the Asheville banking market, controlling deposits of $1 billion, representing approximately 27.9 percent of market deposits. (26) Wachovia operates the second largest depository institution in the market, controlling deposits of 812.7 million, representing 22.7 percent of market deposits. To mitigate competitive effects, First Union proposes to divest 12 branches with at least $433,877,000 in deposits in the Asheville market to an out-of-market banking organization. On consummation of the proposal and after accounting for the proposed divestitures, New Wachovia would operate the largest depository institution in the banking market, controlling deposits of $1.4 billion, representing approximately 38.5 percent of market deposits. The HHI would increase by 334 points to 2014. (27)

A number of factors indicate that the proposal is not likely to have significantly adverse competitive effects in the Asheville banking market. Most important is the structure of the market after consummation of the proposal. In addition to New Wachovia, at least eleven banks and four savings associations would remain in the market, and an out-of-market purchaser of the divestiture branches would become the third largest competitor, controlling 12.1 percent of market deposits. The second largest competitor in the market would control 14.9 percent of market deposits and operates 19 branches in the market. The fourth and fifth largest competitors in the Asheville market control 8.7 percent and 5.7 percent of market deposits, respectively.

In addition, the Asheville banking market is attractive for entry. Four firms have entered the market de novo in the last five years. Deposits in the market increased by 30 percent from June 1997 to June 2000, which exceeded the nationwide increase in deposits during the same period. Moreover, in 2000, the average level of per capita income in the market exceeded the average per capita income levels for Metropolitan Statistical Areas ("MSAs") in North Carolina and for the United States as a whole.

Durham-Chapel Hill. First Union operates the sixth largest depository institution in the Durham-Chapel Hill banking market, controlling deposits of $280 million, representing 6.5 percent of market deposits. Wachovia operates the second largest depository institution in the market, controlling deposits of $661 million, representing 15.4 percent of market deposits. On consummation of the proposal, New Wachovia would operate the second largest depository institution in the banking market, controlling deposits of $942 million, representing 22 percent of market deposits. The HHI would increase by 201 points to 2186.

A number of factors indicate that the proposal would not have a significantly adverse effect on competition in the Durham-Chapel Hill banking market. Thirteen banks, including the bank that would be owned by New Wachovia, and two savings associations would remain in the market. One remaining competitor would be larger than New Wachovia, and the third, fourth, and fifth largest competitors each would control more than 9 percent of market deposits.

In addition to the favorable structure of the Durham-Chapel Hill market, several factors indicate that the market is attractive for entry. Since June 2000, one bank has entered the market through expansion of its branch network. Moreover, in 2000, the average per capita income in the Durham-Chapel Hill banking market exceeded the average per capita income in North Carolina's MSAs.

Elizabeth City. First Union operates the third largest depository institution in the Elizabeth City banking market, controlling deposits of $64 million, representing 12 percent of market deposits. Wachovia operates the second largest depository institution in the market, controlling deposits of $120 million, representing 22.5 percent of market deposits. To mitigate competitive effects in the Elizabeth City market, First Union proposes to divest one branch with at least $17,420,000 in the market to an out-of-market banking organization. On consummation of the proposal and after accounting for the proposed divestitures, New Wachovia would operate the largest depository institution in the banking market, controlling deposits of $166 million, representing approximately 31.3 percent of market deposits. The HHI would increase by 336 points to 1889.

A number of factors indicate that the proposal is not likely to have a significantly adverse effect on competition in the Elizabeth City banking market. A divestiture to an out-of-market firm would not reduce the number of competitors in the market. In addition to New Wachovia, seven banks and two savings associations would remain in the banking market. The second, third, and fourth largest depository institutions in the market control approximately 23.4 percent, 11.6 percent, and 10.7 percent of market deposits, respectively. The Elizabeth City market also appears to be somewhat attractive for entry, as one competitor has entered the market since 1998. Moreover, the average rate of deposit growth in the market exceeded the average rate of deposit growth in the non-MSA portions of North Carolina and in the United States as a whole from June 1997 to June 2000.

Statesville. First Union operates the third largest depository institution in the Statesville banking market, controlling deposits of $129 million, representing approximately 16.7 percent of market deposits. Wachovia operates the sixth largest depository institution in the market, controlling deposits of $61 million, representing approximately 7.9 percent of market deposits. On consummation of the proposal, New Wachovia would operate the second largest depository institution in the banking market, controlling deposits of $191 million, representing approximately 24.7 percent of market deposits. The HHI would increase by 265 points to 1850.

A number of factors demonstrate that the proposal is not likely to have a significantly adverse effect on competition in the Statesville banking market. Seven banks, including the bank that would be owned by New Wachovia, and one thrift organization would remain in the market. The largest and third largest competitors in the banking market control 26 percent and 18.2 percent of market deposits, respectively. Three other banking organizations in the market have market shares that exceed 7 percent.

In addition, several factors indicate that the Statesville market is attractive for entry. One competitor has entered the market de novo since September 1998. In addition, between 1996 and 1999, the population of the Statesville banking market increased at a rate almost three times greater than the average rate of increase for the non-MSA counties in North Carolina. Moreover, the average per capita income level in the market exceeded the average level of per capita income for North Carolina's non-MSA counties.

Winston-Salem. First Union operates the third largest depository institution in the Winston-Salem banking market, controlling deposits of $464 million, representing approximately 4.6 percent of market deposits. Wachovia operates the second largest depository institution in the market, controlling deposits of $3.9 billion, representing approximately 38.1 percent of market deposits. To mitigate competitive effects in the Winston-Salem market, First Union proposes to divest six branches with at least $204,597,000 in deposits in the market either to an in-market banking organization, provided that the change in the HHI is 201 points or less, or to an out-of-market banking organization. On consummation of the proposal, and after accounting for the proposed divestiture to a banking organization with existing operations in the Winston-Salem market, New Wachovia would operate the largest depository institution in the banking market, controlling deposits of $4.1 billion, representing approximately 40.7 percent of market deposits. The HHI would increase by 201 points to 3268. (28)

Several factors indicate that the proposal is not likely to have a significantly adverse effect on competition in the Winston-Salem banking market. Fifteen banks, including New Wachovia's bank, and two savings associations would remain in the market. In addition, the Winston-Salem banking market is attractive for entry. Three banking organizations entered the market de novo in 1996 and 1997, and three additional firms have entered the market de novo since 1998. The market also is one of the largest banking markets in the state, and in 2000, the per capita income in the market exceeded the average per capita income level for all MSAs in North Carolina.

Richmond. First Union operates the fourth largest depository institution in the Richmond banking market, controlling deposits of $1.8 billion, representing approximately 12.9 percent of market deposits. Wachovia operates the second largest depository institution in the market, controlling deposits of $2.3 billion, representing approximately 16.8 percent of market deposits. On consummation of the proposal, New Wachovia would operate the largest depository institution in the banking market, controlling deposits of $4.1 billion, representing approximately 29.7 percent of market deposits. The HHI would increase by 435 points to 1864.

A number of factors, particularly the structure of the Richmond banking market, indicate that the proposal is not likely to have a significantly adverse effect on competition in the market. In addition to New Wachovia's bank, twenty-two banks and three savings associations would remain in the banking market. The second, third, and fourth largest depository institutions in the market control approximately 24.9 percent, 15.3 percent, and 8.7 percent of market deposits, respectively. The Richmond banking market also is attractive for entry, as evidenced by the de novo entry of eight depository institutions in the market since 1998.

D. Views of Other Agencies and Conclusion

The Department of Justice also has conducted a detailed review of the potential competitive effects of the proposal. The Department has advised the Board that, in light of the proposed divestitures, consummation of the proposal would not be likely to have a significantly adverse effect on competition in any relevant banking market. The Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC") have been afforded an opportunity to comment and have not objected to consummation of the proposal.

The Board has reviewed carefully all the facts of record, including public comments on the competitive effects of the proposal and, for the reasons discussed in this order, has concluded that consummation of the proposal would not have a significantly adverse affect on competition or on the concentration of banking resources in any of the 60 banking markets in which First Union and Wachovia compete directly or in any other relevant banking market. Accordingly, based on all the facts of record and subject to completion of the proposed divestitures, the Board has determined that competitive factors are consistent with approval of the proposal.

Financial, Managerial, and Other Supervisory Factors

Section 3 of the BHC Act requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in the proposal and certain other supervisory factors. The Board has considered these factors carefully in light of all the facts of record, including reports of examination and other confidential supervisory information assessing the financial and managerial resources of the organizations and other information provided by First Union and Wachovia. The Board also has considered carefully public comments submitted regarding financial and managerial considerations.

In evaluating financial factors in expansion proposals by banking organizations, the Board consistently has considered capital adequacy to be especially important. (29) The Board notes that First Union, Wachovia, and all their subsidiary depository institutions are and on consummation of the proposal would remain well capitalized, as defined in the relevant regulations of the federal banking agencies. The proposed acquisition is structured as an exchange of shares of Wachovia for shares of First Union, and neither First Union nor Wachovia would incur any debt as a result of the transaction.

The Board also has considered the managerial resources of First Union and Wachovia and the examination reports of the federal banking agencies that supervise these organizations, including their subsidiary depository institutions. (30) First Union, Wachovia, and all their subsidiary depository institutions are well managed, (31) and New Wachovia would select its senior management from among the senior executives of First Union and Wachovia, thus providing the combined organization with officers that are experienced and knowledgeable in the operations and markets of both companies. In addition, First Union and its subsidiary depository institutions have remained well managed during and after integration with a number of acquired organizations. The appropriate federal banking agencies previously have found that First Union, Wachovia, and their subsidiaries each have appropriate risk management systems in place, and New Wachovia would retain these systems to identify and manage various types of financial risk. Moreover, First Union and Wachovia have indicated that they are devoting significant managerial resources to address all aspects of the merger process.

Based on the foregoing and all the facts of record, including confidential reports of examination and other supervisory information and the plans for integrating the two companies, the Board has concluded that considerations relating to the financial and managerial resources of First Union, Wachovia, and their respective banking subsidiaries are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act.

Convenience and Needs Considerations

In acting on proposals under section 3 of the BHC Act, and on proposals to acquire a savings association, the Board is required to consider the effects of the proposal on the convenience and needs of the communities to be served and take into account the records of the relevant depository institutions under the Community Reinvestment Act ("CRA"). (32) The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of local communities in which they operate, consistent with safe and sound operation, and requires the appropriate federal supervisory agency to take into account an institution's record of meeting the credit needs of its entire community, including low- and moderate-income ("LMI") neighborhoods, in evaluating bank expansion proposals. The Board has carefully considered the convenience and needs factor and the CRA performance records of the subsidiary depository institutions of First Union and Wachovia in light of all the facts of record, including public comments received on the effect the proposal would have on the communities to be served by the combined organization.

A. Summary, of Public Comments

The Board received 57 public comments on the proposal. Thirty-four supported the proposal or remarked favorably on First Union's or Wachovia's CRA-related activities. (33) Among these commenters, 16 members of Congress and several nonprofit organizations commended First Union and Wachovia for their CRA ratings and for a recently announced $35-billion community lending and investment initiative by New Wachovia (the "Community Initiative"). Several nonprofit organizations representing minority individuals asserted that one or both institutions have favorable records of promoting diversity among their workforce and their vendors. Commenters also related favorable experiences working in partnership with one or both institutions on programs to fund construction of affordable housing, to assist first-time homebuyers, or to support the development of microenterprises. Several nonprofit organizations also cited with approval the service of employees of one or both institutions as board members or volunteers with their organizations.

Fifteen commenters either opposed the proposal, requested that the Board approve the merger subject to conditions that the commenter suggested, or expressed concerns about the records of First Union, Wachovia, or both in meeting the convenience and needs of the communities they serve. Some of these commenters criticized the Community Initiative and expressed disappointment with the results of a similar initiative that First Union announced in 1998, in connection with its merger with CoreStates Financial Corp., Philadelphia, Pennsylvania ("CoreStates"). Commenters also expressed concern that the proposal would result in branch closings that would adversely affect LMI or predominantly minority communities.

Based on data submitted under the Home Mortgage Disclosure Act, 12 U.S.C. [section] 2801 et seq. ("HMDA"), several commenters also alleged that First Union and Wachovia engaged in disparate treatment of minority individuals in home mortgage lending. Commenters also criticized the lending practices of First Union's subprime lending subsidiaries, particularly The Money Store, Inc., Union, New Jersey ("Money Store"), and raised objections to First Union's credit relationships with other subprime lenders. (34)

B. CRA Performance Examinations

As provided in the CRA, the Board has evaluated the records of both First Union and Wachovia in serving the convenience and needs of their communities in light of examinations by the appropriate federal supervisors of the CRA performance records of the relevant institutions. 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 CRA performance by its primary federal supervisor. (35)

In recent years, First Union and Wachovia have acquired other banking organizations and consolidated their subsidiary banks. (36) The most recent CRA performance evaluations of their respective lead subsidiary banks predate the current structure of the organizations. Therefore, the Board has consulted with the appropriate supervisors of the subsidiary insured depository institutions, and has carefully evaluated information submitted by First Union and Wachovia about the CRA performance of these institutions since the dates of their most recent CRA performance evaluations. (37)

All of First Union's subsidiary banks received ratings of "satisfactory" or better at the most recent examinations of their CRA performance. (38) In particular, First Union's lead bank, First Union National Bank, Charlotte, North Carolina ("FUNB"), which now accounts for approximately 91 percent of the total consolidated assets of First Union, received an "outstanding" rating at its most recent CRA performance evaluation by the OCC, as of May 1997 ("1997 FUNB Evaluation"). (39) First Union Bank of Delaware, Wilmington, Delaware ("FUBDE"), received a "satisfactory" rating at its most recent CRA performance evaluation by the FDIC, as of December 1998 ("1998 FUBDE Evaluation"). (40)

All of Wachovia's insured depository subsidiaries also received either "outstanding" or "satisfactory" ratings at the most recent examinations of their CRA performance. (41) Wachovia Bank, Winston-Salem, North Carolina, which is Wachovia's lead bank and now represents approximately 93 percent of the total consolidated assets controlled by Wachovia, received an "outstanding" rating at its most recent CRA performance evaluation by the OCC, as of June 1997 ("1997 Wachovia Bank Evaluation").

Examiners noted no evidence of prohibited discrimination or other illegal credit practices at any of the insured depository institutions involved in this proposal and found no substantive violations of the fair lending laws. Examiners also reviewed the assessment areas delineated by the insured depository subsidiaries of First Union and Wachovia and did not report that these assessment areas were unreasonable or reflected an arbitrary exclusion of LMI areas.

C. First Union's CRA Performance Record

CRA Record of FUNB.

Lending. The 1997 FUNB Evaluation reported that FUNB and its affiliates originated $1.2 billion of HMDA-related loans in FUNB's assessment areas during the period covered by the evaluation. (42) Examiners stated that the geographic distribution of mortgage lending by FUNB and its affiliates reflected satisfactory penetration in each of FUNB's assessment areas. In 1995, FUNB and its affiliates originated 12 percent of their HMDA-related loans in LMI census tracts, which compared favorably with the 12.7 percent of originations for such loan products by all lenders in LMI census tracts. In the twelve-month period ending October 31, 1996, FUNB and its affiliates originated 16 percent of their HMDA-related loans in LMI census tracts.

First Union has further improved its performance since the 1997 FUNB Evaluation. The current geographic distribution of First Union's mortgage lending reflects a favorable degree of penetration in its assessment areas. In 2000, First Union originated more than 74,900 HMDA-related loans, of which 17.2 percent were in LMI census tracts, and 34.2 percent were made to LMI borrowers. By comparison, of all HMDA-related loans originated in 2000 in First Union's assessment areas by all lenders, 13.1 percent were originated in LMI areas and 31.9 percent were made to LMI borrowers. (43)

In the 1997 FUNB Evaluation, Examiners reported that FUNB offered several proprietary programs, including its Affordable Home Mortgage Loan and its Neighborhood Development Mortgage, which featured flexible mortgage terms for LMI borrowers. Examiners also cited FUNB's Community Partnership Mortgage, under which the bank offered affordable mortgage loans in conjunction with nonprofit organizations. Moreover, FUNB participated in government-sponsored affordable housing programs, and during the evaluation period made mortgage loans totaling $52.6 million through programs sponsored by the Federal Housing Administration ("FHA"), the Veterans Administration ("VA"), the Federal National Mortgage Association ("Fannie Mae"), and the United States Department of Housing and Urban Development ("HUD").

First Union has represented that in 1999 and 2000, its mortgage loan originations through its five proprietary affordable home mortgage loan products totaled $1.6 billion. (44) These products included the Affordable Mortgage Loan, the Neighborhood Development Mortgage, and the Community Partnership Mortgage, all mentioned in the 1997 FUNB Evaluation. First Union's other two proprietary affordable mortgage products involved partnerships between First Union and three nonprofit organizations to originate home mortgages in economically underserved areas. (45) First Union also has stated that in its assessment area in 2000, it originated more than $395 million in FHA loans and more than $94 million in VA loans.

In connection with the 1997 Evaluation, examiners noted that FUNB engaged in lending to small businesses, including businesses in LMI census tracts. (46) As of October 1996, FUNB had originated 18 percent of its loans to small businesses, totaling $42 million, in LMI census tracts. From January 1995 through October 1996, the bank also made approximately $7 million in loans through programs sponsored by the Small Business Administration ("SBA").

In 2000, First Union originated more than 29,900 small business loans in its assessment area, and 17.8 percent of these loans were made to businesses in LMI census tracts. (47) By comparison, 15.9 percent of all small business loans originated in First Union's assessment areas by all lenders in 2000 were in LMI areas. First Union has stated that it also offers loans secured by residential property to small business owners otherwise lacking collateral, and that from 1998 through 2000, it originated almost 5,400 such loans, totaling more than $1.16 billion. First Union also has represented that it originated $245 million in SBA loans during the year 2000.

Community development lending by FUNB during the period covered by the 1997 FUNB Evaluation totaled 78 projects, supporting affordable housing efforts, small business loan pools, and economic rehabilitation programs for depressed urban areas, that represented approximately $31 million in loans. These activities included a $2.6 million loan to the East Carolina Community Development Corporation to construct a 44-unit apartment complex for the elderly in Morehead, North Carolina, and a $5 million commitment to the Charlotte-Mecklenburg Housing Partnership for development of affordable housing for LMI households in the City of Charlotte and Mecklenburg County.

First Union has represented that its community development lending in 1998, 1999, and 2000 totaled more than $1.29 billion, more than 89 percent of which was in First Union's designated assessment areas. In 1998, this lending included a $10 million credit to the National Consumer Cooperative Bank for an affordable housing development loan pool and a $7.5 million construction loan for a library to be used primarily by LMI individuals in Nashville. In 1999, these loans included a $8.5 million credit for renovation of an office/warehouse building in an economically distressed area of the Washington, D.C., metropolitan area, and a $9.6 million loan to provide affordable housing in LMI neighborhoods in metropolitan Atlanta. First Union's community development loans in 2000 included a $7.6 million credit to a nonprofit organization in the Greensboro, North Carolina, area to provide community services to LMI families, and a $5 million loan to a provider of Head Start and Early Head Start services in the Allentown, Pennsylvania, area.

Investment. First Union has reported that its qualified community development investments for the period January 1, 1997, through September 30, 2000, totaled more than $1 billion. First Union has represented further that low-income housing tax credits accounted for almost $720 million of this total and led to the creation of more than 24,000 housing units. First Union also has stated that its direct investments during this period have totaled $144 million and include investments in minority-owned banks and institutions certified by the Department of the Treasury as Community Development Financial Institutions.

Service. Examiners reported that FUNB provided banking services to all segments of its assessment area, noting that approximately 25 percent of FUNB's 237 branches were in LMI census tracts. (48) During the evaluation period, FUNB closed twenty-five branches, including five in LMI census tracts, and examiners concluded that these closures had not adversely affected the level of services available in LMI areas. (49)

Examiners also noted FUNB's involvement in programs to teach financial management skills to students in elementary, middle, and high schools. First Union has represented that its automated teller machines feature Spanish language instructions, and that it is in the process of developing a comprehensive Spanish language financial website.

First Union has stated that in 2000, it launched its Communities First initiative, which provides free computer training to individuals who might otherwise remain untrained, and offers computer equipment to community groups for use by low-income individuals and others. First Union also has represented that its employees provided more than 33,000 hours of service on the boards of community organizations from 1998 through 2000.

CRA Record of FUBDE.

Lending. As part of the 1998 FUBDE Evaluation, examiners rated the lending activities of FUBDE "low satisfactory." (50) Examiners reported that FUBDE and its affiliates made $17.6 million in HMDA-related loans in FUBDE's assessment area during the evaluation period and found that the distribution of these loans reflected adequate geographic penetration in the assessment area. (51) Examiners noted that 8.8 percent of these loans were made to borrowers in LMI tracts, a percentage somewhat lower than the percentage of loans that all lenders made in the assessment area in 1996 and 1997. (52) Examiners also stated that from January 1996 through December 22, 1998, FUBDE originated $16.9 million in loans under First Union's proprietary affordable mortgage programs.

Data indicate that from 1998 through 2000, First Union originated more than 2,800 HMDA-related loans in its assessment area in Delaware, and of these, 43.4 percent were to LMI borrowers and 11.6 percent were made in LMI census tracts. By comparison, of the more than 71,200 HMDA-related loans made in First Union's assessment area in Delaware in 1998 through 2000, 39 percent were to LMI borrowers and 10.8 percent were in LMI census tracts.

In connection with the 1998 FUBDE Evaluation, examiners noted that the percentage of loans to small businesses had increased significantly during the evaluation period. Examiners found that 53.6 percent of FUBDE's business lending during the evaluation period was to small businesses. Examiners also reported that more than 68 percent of the small business loans that FUBDE extended during the evaluation period were in amounts of $100,000 or less. FUBDE also originated 49 SBA loans, totaling $8.2 million.

Data indicate that from 1998 through 2000, First Union originated almost 1,130 small business loans in its assessment area in Delaware, and of these, approximately 24 percent were to businesses in LMI census tracts. By comparison, of the more than 27,230 small business loans by all lenders in First Union's assessment area in Delaware in 1998 through 2000, approximately 14 percent were in LMI census tracts.

The 1998 FUBDE Evaluation also concluded that FUBDE sustained an adequate level of community development lending. FUBDE's qualified community development lending during the evaluation period totaled $3.96 million, which included a $1.5 million loan commitment to a community development financial institution, and a $1.2 million commitment to a community development corporation to finance construction of affordable multifamily housing in Delaware.

Investment. FUBDE received a rating of "high satisfactory" for its qualified investments during the evaluation period, which totaled slightly over $2 million. Examiners reported that FUBDE had made grants to community organizations that serve community development purposes and noted FUBDE's $1.95 million equity fund commitment with the Delaware Community Investment Corporation, an entity which had as of the date of the evaluation indirectly funded construction of 723 units of affordable rental housing in Delaware.

Service. Examiners rated FUBDE "high satisfactory" under the service test. The evaluation reported that 21 percent of FUBDE's 24 branches were in LMI census tracts, and that the closing of one branch and the consolidation of two other branches did not appear to have adversely affected accessibility in LMI areas or for LMI individuals. Examiners also noted that FUBDE provided financial seminars and counseling to firs-time homebuyers in LMI areas, and that FUBDE employees served on the boards of four local nonprofit organizations involved in community development activities.

D. Wachovia's CRA Performance Record

CRA Record of Wachovia Bank.

Lending. The 1997 Wachovia Bank Evaluation stated that Wachovia maintained a good and increasing level of home purchase and home improvement lending in Wachovia Bank's assessment areas during the evaluation period. (53) Examiners described as "very good" or "excellent" the distribution of Wachovia's HMDA-related loans to borrowers in low-income census tracts during the evaluation period, and also reported that Wachovia's other HMDA-related lending statistics were reasonable.

Since that examination, Wachovia has represented that it originated almost 58,700 HMDA-related loans from 1998 through 2000, totaling more than $8.6 billion. Of these loans, 9.7 percent were secured by properties in LMI census tracts and 25.8 percent were extended to LMI borrowers.

The 1997 Wachovia Bank Evaluation noted that Wachovia offered special types of loans with terms modified to meet community credit needs. Wachovia made some of these loans under its Neighborhood Revitalization Program ("NRP"), which was open to applicants with 70 percent or less of HUD median family income, and required lower down payments and permitted higher debt-to-income ratios than conventional home mortgage loans. (54) During the evaluation period, Wachovia's NRP loans in North Carolina, South Carolina, and Georgia totaled $164 million. (55) In the 1997 evaluation, examiners also described Wachovia as an active participant in government loan programs, noting that Wachovia had originated more than $97 million in FHA loans and more than $129 million in VA loans during the examination period. Examiners reported that Wachovia also participated in loan programs of Fannie Mae, the North Carolina Housing Finance Authority, and the Farmers Home Administration.

Information from Wachovia indicates that the institution originated $186 million in NRP loans from January 1999 through March 22, 2001. Wachovia has represented that it continues to participate in Fannie Mae, FHA, and VA lending programs and that from 1998 through 2000, it originated more than $125 million in FHA loans and more than $90 million in VA loans in its combined assessment area.

Examiners stated that Wachovia Bank was an active small business lender in 1996, making more than 17,000 business loans in amounts of $100,000 or less, and making more than 7,000 loans to small businesses. Wachovia has represented that from 1998 through 2000, it originated more than 67,400 in small business loans, totaling more than $6.1 billion. (56) Approximately 18.2 percent of these loans by number were to businesses in LMI census tracts, and 63.4 percent by number were to small businesses.

The 1997 evaluation noted that Wachovia Bank offered flexible underwriting criteria through its proprietary Small Business Loan Program, and, in 1996, originated loans totaling more than $12 million through this program in North Carolina, South Carolina, and Georgia. Examiners also reported that Wachovia Bank originated 164 SBA loans totaling more than $29.5 million during the evaluation period. Wachovia has represented that in 2000, it originated $21.2 million of SBA loans, and was the largest SBA lender in North Carolina and South Carolina, the second largest SBA lender in Virginia, and the fourth largest SBA lender in Georgia.

Examiners described Wachovia's level of participation in community development activities as exceptional. Wachovia's community development lending during the evaluation period in North Carolina, South Carolina, and Georgia totaled $308 million. Examiners cited Wachovia's role as a leader of a consortium of Atlanta banks that formed a $20 million loan pool to finance multifamily housing for LMI individuals in the greater Atlanta area. Wachovia also provided more than $50 million in financing for affordable multifamily housing units in Georgia (Atlanta), and in North Carolina (Greensboro, Charlotte, Carrboro, and Asheville), and funded $22.5 million in redevelopment projects in Georgia (Cartersville and Atlanta) and in seven South Carolina municipalities.

Wachovia has represented that its community development lending for a three-year period ending in December 2000 totaled a little more than $2 billion. (57) In 1997, Wachovia established a proprietary community development corporation that has provided more than $230 million in financing to community development projects.

Investment. Wachovia's community development investments during the evaluation period totaled $168 million, and included investments of $8.5 million in low-income housing tax credits for affordable housing initiatives in North Carolina and South Carolina. Wachovia has stated that its community development investments from 1998 through June 2001 total $197 million.

Service. At the time of the 1997 evaluation, Wachovia Bank maintained 462 branches in North Carolina, South Carolina, and Georgia, and 22 percent of these branches were in LMI census tracts. Examiners stated that Wachovia Bank's record of opening and closing banking offices had not adversely affected the level of services in LMI neighborhoods. Examiners reported that Wachovia closed 35 branches from January 1, 1996, through March 31, 1997, including 12 in LMI census tracts. Management stated in the course of the evaluation that some of the closures were attributable to consolidations that had resulted from acquisitions. Examiners found that Wachovia Bank personnel were properly following Wachovia's bank closure policy, and that the branch closure analyses required by the policy had resulted in the installation of automated teller machines near the sites of several closed branches and the decision to continue to operate a branch in South Carolina.

CRA Record of FNBA.

FNBA engages primarily in issuing credit cards for Wachovia and has been designated as a limited purpose bank by the OCC for purposes of assessing its CRA performance. (58) The performance test for limited purpose banks evaluates an institution's record of community development lending, investments, and services in its designated assessment area. (59)

Examiners characterized the level of FNBA's complex community development loans and investments as very good. During the evaluation period of March 1995 through June 1997, FNBA made or committed to make community development loans and investments totaling approximately $3.1 million, which examiners noted was equivalent to 33 percent of FNBA's total net income for 1995 and 1996. FNBA made a number of these community development investments through the Delaware Community Investment Corporation ("DCIC"), a multibank community development corporation initiating affordable housing projects in FNBA's assessment area. Examiners noted that FNBA's financial commitment to DCIC compared favorably with financial commitments by other limited purpose banks participating in DCIC.

FNBA's community development lending during the evaluation period totaled more than $1.3 million, which included $629,000 in loans and loan commitments to a DCIC loan pool to develop more than 1000 units of affordable housing. Examiners also noted a $350,000 commitment by FNBA to a DCIC loan pool to rehabilitate commercial properties in economically distressed areas targeted for revitalization.

FNBA's community development investments during the evaluation period totaled more than $1.7 million. Examiners noted that FNBA committed to invest $450,000 in a DCIC low-income housing tax credit investment fund to create 289 affordable housing units. FNBA also maintained a $100,000 deposit in a credit union primarily serving LMI individuals and purchased $935,000 in Delaware mortgage revenue bonds that funded 400 mortgages to LMI first-time homebuyers. In addition, FNBA provided $259,000 to various community development organizations.

Examiners reported that FNBA employees served on committees and boards of directors of a number of organizations involved in community development efforts. FNBA also was a founding contributor to a University of Delaware training program for individuals involved in community development and provided funding and technical assistance to a foundation developing prototype rehabilitation plans for homes in FBNA's assessment area.

Wachovia has represented that FBNA funded a total of more than $943,000 in community development loans and investments through DCIC from 1998 through 2000. Wachovia has stated that in 1998, FBNA committed to lend or invest $500,000 in a DCIC-sponsored urban renewal loan fund intended to provide short-term financing for property acquisition and site control for urban renewal and revitalization projects in Delaware. Wachovia also has represented that in 2000, FBNA committed to invest $500,000 in a low-income housing tax credit equity fund sponsored by DCIC.

Wachovia has noted that FBNA maintained a $100,000 deposit in a Wilmington community development credit union from 1998 through 2000. In addition, Wachovia has stated FBNA made $371,000 during 1998, 1999, and 2000. Wochovia also has indicated that FBNA employees continue to serve on committee and boards of directors of several organizations involved in community development.

CRA Record of Atlantic.

Lending. Atlantic reported assets of $496.9 million as of March 31, 2001. In the 2001 Atlantic Evaluation, examiners rated the lending activities of Atlantic "high satisfactory." Examiners noted that 1-4 unit residential mortgages represented 75 percent of Atlantic's total assets as of December 31, 2000, compared with 47.3 percent of assets for Atlantic's peer group. In 2000, Atlantic originated 13.2 percent of its HMDA-related loans in its assessment area to moderate-income borrowers, although moderate-income families accounted for an estimated 12.8 percent of all families in this area.

Examiners stated that Atlantic offered a number of credit products designed to meet the credit needs of LMI individuals. During the evaluation period of January 1999 through March 2001, Atlantic originated 56 mortgage loans totaling more than $4.8 million through its Atlantic Advantage program. (60) Atlantic also participated in the First-Time Homebuyer's Program of the Federal Home Loan Bank of Atlanta, and from January 2000 through April 12, 2001, originated or committed to originate 14 loans totaling more than $1 million through this program. In addition, examiners noted Atlantic's participation in loan guarantee programs through a rural housing program, which featured flexible debt-to-income ratios and did not require downpayments.

Examiners reported that Atlantic originated six community development loans during the evaluation period, totaling more than $2.9 million. Five of the loans financed the purchase or construction of 25 units of rental housing affordable to LMI individuals. The remaining loan financed the renovation of an office building which was in an economically underserved portion of Atlantic's assessment area, to house several minority-owned enterprises and the Community Development Corporation of Hilton Head, South Carolina ("Hilton Head CDC").

Investment. Examiners rated Atlantic "outstanding" under the investment test and described its level of qualified investments as highly responsive to the community development needs of LMI individuals. In December 1999, Atlantic purchased a $1 million housing revenue bond from a South Carolina state agency. Atlantic also made more than $73,000 in financial contributions in 1999 and 2000 to community organizations that provided affordable housing initiatives and social services to LMI individuals. More than $38,000 of these contributions were made pursuant to Atlantic's Awards for Community Excellence program, an initiative examiners described as innovative.

Service. Atlantic received a rating of "outstanding" under the service test based on what examiners considered to be a very high level of community development services. Since its previous evaluation, Atlantic had hired a special affordable housing loan officer, who provides credit management and individual budgeting counseling to LMI applicants to assist them in the mortgage application process. Employees of Atlantic participated in first-time homebuyer seminars offered in conjunction with the Hilton Head CDC and offered financial education and small business education classes. Examiners also noted the service of Atlantic executives on the boards of a number of community organizations, including several dealing with affordable housing or community development matters.

E. HMDA Data and Fair Lending Record

The Board also has carefully considered the lending records of First Union and Wachovia in light of comments on 1999 HMDA data reported by the organizations' subsidiaries. (61) Data indicate that the number of applications for HMDA-related loans has decreased from 1998 to 2000 for First Union and Wachovia, as it has for lenders in the aggregate. (62)

Data indicate that in 2000, in 11 of the 13 states in its assessment area, First Union originated a higher percentage of HMDA-related loans in LMI areas and to LMI borrowers than did lenders in the aggregate. However, the percentages of First Union's HMDA-related loans to African Americans in 2000 were lower than the percentages for lenders in the aggregate in 10 of the 13 states in First Union's assessment area, and the percentages to Hispanics were lower than the percentages for lenders in the aggregate in 8 of the 13 states. First Union's denial disparity ratios for African Americans in 2000 were lower than the denial disparity ratios of lenders in the aggregate in 7 of the 13 states, and were almost identical in two others. (63) First Union's denial disparity ratios for Hispanics in 2000 were equal to or lower than the denial disparity ratios of lenders in the aggregates in 5 of the 13 states.

Year 2000 HMDA data indicate that the percentage of Wachovia's HMDA-related loans to LMI borrowers was lower than the percentage for lenders in the aggregate in each of the five states examined. The percentage of Wachovia's HMDA-related loans to African Americans in 2000 exceeded the percentages for lenders in the aggregate only for Virginia, and the percentage to Hispanics was lower than the percentages for lenders in the aggregate in all five states. Wachovia's denial disparity ratios in 2000 for African Americans and for Hispanics were higher than the denial disparity ratios of lenders in the aggregate in all five states.

The Board is concerned when the record of an institution indicates disparities in lending and believes that all banks are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending but also equal access to credit by creditworthy applicants regardless of their race or income level. (64) The Board recognizes, however, that HMDA data alone provide an incomplete measure of an institution's lending in its community because these data cover only a few categories of housing-related lending. HMDA data, moreover, provide only limited information about the covered loans. (65) HMDA data, therefore, have limitations that make them an inadequate basis, absent other information, for concluding that an institution has not assisted adequately in meeting its community's credit needs or has engaged in illegal lending discrimination.

Because of the limitations of HMDA data, the Board has considered these data carefully in light of other information. As discussed, examiners found the insured depository institutions involved in this transaction to be in compliance with fair lending laws at the most recent examinations of these institutions and discovered no evidence of prohibited discrimination or other illegal credit practices. (66) In conjunction with the 1997 FUNB Evaluation, examiners reviewed a sample of more than 1000 HMDA-related applications received by First Union's mortgage company and subsidiary banks in 1995 and did not detect any instances of racial discrimination. Examiners also sampled 350 of First Union's automobile loan applications and did not detect any instances of gender discrimination. In conjunction with the 1997 Wachovia Bank Evaluation, examiners reviewed a sample of approximately 250 HMDA-related applications, and almost 400 applications for other types of loans, and detected no instances of disparate treatment or illegal credit practices based on race or gender.

The record also indicates that First Union and Wachovia have taken a number of affirmative steps to ensure compliance with fair lending laws. First Union has represented that its fair lending program includes the use of logistic regression analysis of lending data, review of policies and procedures, testing by mystery customers, and regular training of employees. First Union also has stated that it established a subprime fair lending program to address customer complaints, broker relationships and servicing issues associated with First Union's subprime lending. Wachovia has represented that its fair lending compliance program features reviews of underwriting criteria, second analyses of rejected applications, regression modeling of portfolios, and ongoing training, among other strategies. The Board also has considered the HMDA data in light of First Union's and Wachovia's overall lending records, which demonstrate that the organizations' subsidiary banks significantly assist the communities that they serve in meeting their credit needs, including LMI areas in those communities.

F. Conclusion on Convenience and Needs Factor

The Board has carefully considered all facts of record, including the public comments received, responses to comments, and reports of examinations of the CRA performance of the institutions involved, in reviewing the proposal's effect on the convenience and needs of the communities to be served by the combined organization. (67) Based on all the facts of record and for the reasons discussed above, the Board concludes that considerations relating to the convenience and needs factor, including the CRA performance records of the relevant depository institutions, are consistent with approval of the proposal. (68)

Nonbanking Activities

First Union also has filed notice under sections 4(c)(8) and 4(j) of the BHC Act to acquire Atlantic and thereby engage in the activity of operating a savings association. (69) New Wachovia would engage through Atlantic in accepting deposits and offering a full line of banking products, including home mortgage loans. (70) The Board has determined by regulation that the activity of owning, controlling, or operating a savings association is permissible for a bank holding company, provided that the savings association engages only in taking deposits, making loans, and engaging in other activities that are permissible for a bank holding company to conduct under section 4(c)(8) of the BHC Act. First Union has committed to operate Atlantic in accordance with the Board's rules.

In order to approve First Union's notice to acquire Atlantic, the Board is required by section 4(j)(2)(A) of the BHC Act to determine that the acquisition "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." (71)

As part of its evaluation of these factors, the Board considers the financial condition and managerial resources of the notificant, its subsidiaries, and the companies to be acquired, and the effect of the proposed transaction on those resources. For the reasons discussed above and based on all the facts of record, the Board has concluded that financial and managerial considerations are consistent with approval of the notice. In addition, as noted above, Atlantic received a "satisfactory" performance rating from the OTS at its most recent CRA examination, as of January 1, 1999.

The Board also has considered the competitive effects of the proposed acquisition of Atlantic by First Union. Atlantic has its headquarters and two branches in the Beaufort banking market, where it directly competes with First Union. Atlantic also has a loan production office in Charleston, where FUNB operates branches. The Board considered this presence in its analysis of the competitive effects of the transaction discussed above. (72)

For the reasons discussed above, the Board has concluded that the proposal, including First Union's acquisition of Atlantic, would not have any significantly adverse competitive effects in the Beaufort or Charleston markets, or in any other relevant banking market. Based on all the facts of record, the Board, therefore, concludes that it is unlikely that significantly adverse competitive effects would result from First Union's acquisition of Atlantic.

First Union has indicated that the combined strengths of First Union and Wachovia would create a stronger and more geographically diversified organization that could offer customers of both organizations a wider range of products through a stronger and more efficient operational network.

The Board has concluded that the ownership of Atlantic within the framework of Regulation Y and Board precedent is not likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices, that would outweigh the public benefits of the proposal, such as increased customer convenience and gains in efficiency. Accordingly, based on all the facts of record the Board has determined that the balance of public benefits the Board must consider under section 4(j) of the BHC Act is favorable and consistent with approval of the notice.

First Union also has provided notice under section 25A of the Federal Reserve Act and section 211.4 of the Board's Regulation K (12 C.F.R. 211.4) of its intention to acquire Wachovia International Banking Corporation, an inactive Edge corporation controlled by Wachovia. In addition, First Union has given notice under section 4(c)(13) of the BHC Act and section 211.5 of Regulation K (12 C.F.R. 211.5) to acquire certain foreign investments held by Wachovia. (73) The Board concludes that all the factors it is required to consider under the Federal Reserve Act, the BHC Act, and the Board's Regulation K in connection with this proposal are consistent with approval.

Conclusion

Based on the foregoing and after considering all the facts of record, the Board has determined that the application and notices should be, and hereby are, approved. (74) In reaching its 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. (75) The Board's approval specifically is conditioned on compliance by First Union with all the commitments made in connection with the application and notices, including the branch divestiture commitments discussed in this order, and the conditions set forth in this order and the above-noted Board regulations and orders. The Board's approval of the nonbanking aspects of the proposal also is subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), and the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. These 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 acquisition of the subsidiary banks of Wachovia may 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 Richmond, acting pursuant to delegated authority.

By order of the Board of Governors, effective August 13, 2001.

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

Appendix A

Banking Markets in which First Union and Wachovia
Compete Directly

A. Delaware

Wilmington        New Castle County in Delaware and Cecil
(DE-MD)           County in Maryland.

B. The District of Columbia

Washington        The Washington, D.C. Ranally Metro Area ("RMA");
(DC-MD-           the non-Ranally Metro Area ("non-RMA") portions
VA-WV)            of Fauquier and Loudon Counties in Virginia;
                  Calvert, Charles, and St. Mary's Counties in
                  Maryland; and the independent cities of Alexandria,
                  Fairfax, Falls Church, and Manassas, all in
                  Virginia; and Jefferson County, in West Virginia.

C. Florida

Brevard           Brevard County.

Fort Myers        Lee County, excluding the towns on Gasparilla
                  Island; and the town of Immokalee in Collier County.

Fort Pierce       St. Lucie and Martin Counties, excluding the towns
                  of Indiantown and Hobe Sound in Martin County.

Gainesville       Alachua, Gilchrist, and Levy Counties.

Miami-            Broward and Dade Counties.
Ft. Lauderdale

Ocala             Marion County and the town of Citrus Springs in
                  Citrus County.

Orlando           Orange, Osceola, and Seminole Counties; the western
                  half of Volusia County; and the towns of Clermont
                  and Groveland in Lake County.

Tampa Bay         Hernando, Hillsborough, Pasco, and Pinellas
                  Counties.

West Palm         Palm Beach County east of Loxahatchee and the towns
Beach             of Indiantown, and Hobe Sound in Martin County.

D. Georgia

Atlanta           Bartow, Cherokee, Clayton, Cobb, Coweta, DeKalb,
                  Douglas, Fayette, Forsyth, Fulton, Gwinnett,
                  Henry, Newton, Paulding, Rockdale, and Walton
                  Counties; Hall County, excluding the town of
                  Clermont; and the towns of Auburn and Winder in
                  Barrow County.

Augusta           Columbia, McDuffie, and Richmond Counties in
(GA-SC)           Georgia; and Aiken and Edgefield Counties in
                  South Carolina.

Dalton            Murray and Whitfield Counties.

Savannah          Bryan, Chatham, and Effingham Counties.

E. North Carolina

Asheville         The Asheville RMA and the non-RMA portions of
                  Buncombe and Henderson Counties.

Burlington        The Burlington RMA and the non-RMA
                  portion of Alamance County.

Charlotte-        The Charlotte RMA and the non-RMA portion of
Rock Hill         Carbarrus County in North Carolina.
(NC-SC)

Dare              Dare County.

Durham-Chapel     The Durham RMA and the non-RMA portions of Chatham,
Hill              Durham, and Orange Counties.

Elizabeth City    Camden, Pasquotank, and Perquimans Counties.

Fayetteville      The Fayetteville RMA and the non-RMA portion of
                  Cumberland County.

Greensboro-       The Greensboro-High Point RMA and the non-RMA
High Point        portions of the counties of Davidson,
                  excluding the portion in the
                  Winston-Salem RMA, and Randolph.

Greenville        The Greenville RMA and the non-RMA portion of Pitt
                  County.

Haywood           Haywood County, excluding the portion in the
                  Asheville RMA.

Hickory           The Hickory RMA and the non-RMA portion of
                  Alexander, Burke, and Caldwell Counties.

Jackson           Jackson County.

Martinsville      The Martinsville RMA; and the non-RMA portion of
(NC-VA)           Henry County and the independent city of
                  Martinsville, both in Virginia.

Monroe            Anson County and Union County, excluding the
                  portion of Union County located in the Charlotte
                  RMA.

Moore             Moore County.

Raleigh           The Raleigh RMA and the non-RMA portions of
                  Franklin, Johnston, and Wake Counties; and
                  Harnett County, excluding the portion in the
                  Fayetteville RMA.

Robeson           Robeson County, excluding the portion in the
                  Fayetteville RMA.

Rocky Mount       The Rocky Mount RMA and the non-RMA portions of
                  Edgecombe, Nash and Wilson Counties.

Salisbury         The Salisbury RMA and the non-RMA portion of Rowan
                  County, excluding the portion in the Charlotte RMA.

Stanly            Stanly County.

Statesville       Iredell County, excluding the portions in the
                  Charlotte and Hickory RMAs.

Wilkes            Wilkes County.

Wilmington        The Wilmington RMA; Pender County; Brunswick County,
                  excluding the portion in the Myrtle Beach-Conway
                  RMA.

Winston-Salem     The Winston-Salem RMA and the non-RMA portions of
                  Davie and Stokes Counties.

F. South Carolina

Beaufort          Beaufort County.

Charleston        The Charleston RMA and the non-RMA portions of
                  Berkeley and Charleston Counties.

Columbia          The Columbia RMA and the non-RMA portion of
                  Lexington and Richland Counties.

Florence          The Florence RMA and the non-RMA portion of Florence
                  Counties.

Georgetown        Georgetown County, excluding the portion in the
                  Myrtle Beach-Conway RMA.

Greenville        The Greenville RMA and the non-RMA portion of
                  Greenville and Pickens Counties.

Greenwood         The Greenwood RMA and the non-RMA portion of
                  Greenwood County.

Myrtle Beach-     The Myrtle Beach-Conway RMA and the non-RMA
Conway            portion of Horry County.

York              York County, excluding portion in the Charlotte RMA.

G. Virginia

Abingdon          Washington County, excluding the portion in the
                  Johnson City-Kingsport-Bristol RMA.

Bedford           Bedford County, excluding the portions in the
                  Lynchburg and Roanoke RMAs; and the independent
                  city of Bedford.

Charlottesville   The Charlottesville RMA; the independent city of
                  Charlottesville; the non-RMA portion of Albemarle
                  County; and Fluvanna, Greene, and Nelson Counties.

Fredericksburg    Caroline, King George, Spotsylvania, and Stafford
                  Counties, excluding the portion of Stafford County
                  in the Washington, D.C. RMA; the independent
                  city of Fredericksburg; and the towns of Colonial
                  Beach, Leedstown, Oak Grove, and Potomac Beach in
                  Westmoreland County.

Harrisonburg      The independent city of Harrisonburg and Rockingham
                  County.

Newport           The Newport News-Hampton RMA; the non-RMA portions
                  of James City and

News-Hampton      Matthews Counties; and the independent cities of
                  Hampton, Newport News, Poquoson, and Williamsburg.

Norfolk-          The Norfolk-Portsmouth RMA, the independent
Portsmouth        Portsmouth cities of Chesapeake, Norfolk,
(VA-NC)           Portsmouth, Suffolk, and Virginia Beach, all in
                  Virginia; and Currituck County in North Carolina.

Pulaski-          Montgomery and Pulaski Counties and the
Radford           independent city of Radford.

Richmond          The Richmond RMA, the non-RMA portions of
                  Chesterfield, Dinwiddie, Goochland, Hanover,
                  Henrico, Powhatan and Prince George Counties;
                  the independent cities of Colonial Heights,
                  Hopewell, Petersburg, and Richmond; and Charles
                  City, King and Queen, King William, and New
                  Kent Counties.

Roanoke           The Roanoke RMA; the non-RMA portions
                  Botetourt and Roanoke Counties; the
                  independent cities of Roanoke and Salem;
                  and the town of Boones Mill in Franklin
                  County.

Smyth             Smyth County.

Winchester        The independent city of Winchester, Clarke and
(VA-WV)           Frederick Counties, and the town of Strasburg
                  in Shenandoah County, all in Virginia; and
                  Hampshire County in West Virginia.

Appendix B

Certain Banking Markets without Divestitures

Delaware

Wilmington        First Union operates the eighth largest
                  institution in the market, controlling deposits of
                  approximately $1 billion, representing 2.3 percent
                  of market deposits. (1) Wachovia operates the
                  thirtieth largest depository institution in the
                  market, controlling deposits of approximately
                  $477,000, representing less than 1 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the eighth largest depository institution
                  in the market, controlling deposits of
                  approximately $1 billion, representing
                  2.3 percent of market deposits. The HHI
                  would remain unchanged at 2390.

Florida

Brevard First     Union operates the second largest depository
                  institution in the market, controlling
                  deposits of $910 million representing
                  22.3 percent of market deposits. Wachovia
                  operates the fifth largest depository institution
                  in the market, controlling deposits of
                  $249 million, representing 6.1 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $1.2 billion,
                  representing 28.4 percent of market
                  deposits. The HHI would increase by
                  272 points to 1752.

Fort Myers        First Union operates the second largest
                  depository institution in the market, controlling
                  deposits of $963 million, representing
                  16.8 percent of market deposits.
                  Wachovia operates the eighteenth largest
                  depository institution in the market, controlling
                  deposits of $26 million, representing
                  less than 1 percent of market deposits.
                  On consummation of the proposal, New
                  Wachovia would operate the second largest
                  depository institution in the market,
                  controlling deposits of $988 million, representing
                  17.2 percent of market deposits.
                  The HHI would increase by 15 points to
                  1476.

Fort Pierce       First Union operates the fourth largest depository
                  institution in the market, controlling
                  deposits of $404 million, representing
                  12.2 percent of market deposits. Wachovia
                  operates the tenth largest depository institution
                  in the market, controlling deposits
                  of $62 million, representing 1.9 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the fourth largest depository institution
                  in the market, controlling deposits of
                  $466 million, representing 14 percent of
                  market deposits. The HHI would increase
                  by 46 points to 1405.

Gainesville       First Union operates the largest depository
                  institution in the market, controlling
                  deposits of $470 million, representing
                  23.3 percent of market deposits. Wachovia
                  operates the sixteenth largest depository
                  institution in the market, controlling deposits
                  of $22 million, representing 1.1 percent
                  of market deposits. On consummation
                  of the proposal, New Wachovia would operate
                  the largest depository institution
                  in the market, controlling deposits of
                  $491 million, representing 24.4 percent of
                  market deposits. The HHI would increase
                  by 50 points to 1321.

Miami-Fort        First Union operates the second largest
Lauderdale        depository institution in the market, controlling
                  deposits of $9.1 billion, representing
                  15.9 percent of market deposits.
                  Wachovia operates the fourteenth largest
                  depository institution in the market, controlling
                  deposits of $940 million, representing
                  1.6 percent of market deposits. On
                  consummation of the proposal, New
                  Wachovia would operate the second largest
                  depository institution in the market,
                  controlling deposits of $10 billion, representing
                  17.5 percent of market deposits.
                  The HHI would increase by 52 points to
                  1096.

Ocala             First Union operates the fourth largest depository
                  institution in the market, controlling
                  deposits of $230 million, representing
                  8.8 percent of market deposits. Wachovia
                  operates the fifteenth largest depository
                  institution in the market, controlling deposits
                  of $17 million, representing less than
                  1 percent of market deposits. On consummation
                  of the proposal, New Wachovia
                  would operate the fourth largest depository
                  institution in the market, controlling
                  deposits of $246 million, representing
                  9.5 percent of market deposits. The HHI
                  would increase by 12 points to 1398.

Orlando           First Union operates the third largest depository
                  institution in the market, controlling
                  deposits of $2.1 billion, representing
                  14.4 percent of market deposits. Wachovia
                  operates the twelfth largest depository institution
                  in the market, controlling deposits
                  of $171 million, representing 1.2 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the third largest depository institution
                  in the market, controlling deposits of
                  $2.3 billion, representing 15.6 percent of
                  market deposits. The HHI would increase
                  by 35 points to 1672.

Tampa Bay         First Union operates the second largest
                  depository institution in the market, controlling
                  deposits of $4 billion, representing
                  13.3 percent of market deposits. Wachovia
                  operates the thirty-first largest depository
                  institution in the market, controlling deposits
                  of $88 million, representing less
                  than 1 percent of market deposits. On consummation
                  of the proposal, New Wachovia
                  would operate the second largest depository
                  institution in the market,
                  controlling deposits of $4 billion, representing
                  13.6 percent of market deposits.
                  The HHI would increase by 8 points to
                  1347.

West Palm         First Union operates the second largest
Beach             depository institution in the market, controlling
                  deposits of $3.2 billion, representing
                  18.1 percent of market deposits.
                  Wachovia operates the third largest depository
                  institution in the market, controlling
                  deposits of $1.7 billion, representing
                  9.6 percent of market deposits. On consummation
                  of the proposal, New Wachovia
                  would operate the largest depository
                  institution in the market, controlling
                  deposits of $4.9 billion, representing
                  27.6 percent of market deposits. The HHI
                  would increase by 346 points to 1381.

Georgia

Atlanta           First Union operates the fourth largest depository
                  institution in the market, controlling
                  deposits of $6.8 billion, representing
                  12.7 percent of market deposits. Wachovia
                  operates the third largest depository institution
                  in the market, controlling deposits
                  of $8.3 billion, representing 15.6 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $15.1 billion,
                  representing 28.3 percent of market
                  deposits. The HHI would increase by
                  396 points to 1472.

Augusta           First Union operates the largest depository
                  institution in the market, controlling
                  deposits of $779 million, representing
                  19.7 percent of market deposits. Wachovia
                  operates the fifth largest depository institution
                  in the market, controlling deposits of
                  $367 million, representing 9.3 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $1.1 billion,
                  representing 29 percent of market
                  deposits. The HHI would increase by
                  367 points to 1652.

Dalton            First Union operates the eighth largest depository
                  institution in the market, controlling
                  deposits of $79 million, representing
                  5.8 percent of market deposits. Wachovia
                  operates the second largest depository institution
                  in the market, controlling deposits
                  of $268 million, representing 19.6 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $347 million,
                  representing 25.4 percent of market
                  deposits. The HHI would increase by
                  227 points to 1583.

North Carolina

Burlington        First Union operates the seventh largest
                  depository institution in the market, controlling
                  deposits of $101 million, representing
                  6.1 percent of market deposits.
                  Wachovia operates the third largest depository
                  institution in the market, controlling
                  deposits of $235 million, representing
                  14.1 percent of market deposits. On consummation
                  of the proposal, New Wachovia
                  would operate the largest depository
                  institution in the market, controlling
                  deposits of $335 million, representing
                  20.2 percent of market deposits. The HHI
                  would increase by 171 points to 1335.

Charlotte-        First Union operates the second largest
Rock Hill         depository institution in the market, controlling
                  deposits of $7.4 billion, representing
                  18.3 percent of market deposits.
                  Wachovia operates the fourth largest depository
                  institution in the market, controlling
                  deposits of $1.6 billion, representing
                  4 percent of market deposits. On consummation
                  of the proposal, New Wachovia
                  would operate the second largest depository
                  institution in the market, controlling
                  deposits of $9.1 billion, representing
                  22.3 percent of market deposits. The HHI
                  would increase by 147 points to 4002.

Dare              First Union operates the fifth largest depository
                  institution in the market, controlling
                  deposits of $23 million, representing
                  4.1 percent of market deposits. Wachovia
                  operates the second largest depository institution
                  in the market, controlling deposits
                  of $111 million, representing 19.5 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the second largest depository institution
                  in the market, controlling deposits of
                  $134 million, representing 23.7 percent of
                  market deposits. The HHI would increase
                  by 161 points to 2984.

Fayetteville      First Union operates the sixth largest depository
                  institution in the market, controlling
                  deposits of $95 million, representing
                  5.8 percent of market deposits. Wachovia
                  operates the fifth largest depository institution
                  in the market, controlling deposits of
                  $131 million, representing 8 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the fourth largest depository institution
                  in the market, controlling deposits of
                  $226 million, representing 13.8 percent of
                  market deposits. The HHI would increase
                  by 93 points to 2041.

Greensboro-       First Union operates the fifth largest depository
High Point        institution in the market, controlling
                  deposits of $714 million, representing
                  9 percent of market deposits. Wachovia
                  operates the second largest depository institution
                  in the market, controlling deposits
                  of $1.4 billion, representing 17.1 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $2.1 billion,
                  representing 26.1 percent of market
                  deposits. The HHI would increase by
                  307 points to 1407.

Greenville        First Union operates the ninth largest depository
                  institution in the market, controlling
                  deposits of $24 million, representing
                  2.2 percent of market deposits. Wachovia
                  operates the second largest depository institution
                  in the market, controlling deposits
                  of $269 million, representing 24.2 percent
                  of market deposits. On consummation of
                  the proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $293 million,
                  representing 26.3 percent of market
                  deposits. The HHI would increase by
                  104 points to 1897.

Monroe            First Union operates the ninth largest depository
                  institution in the market, controlling
                  deposits of $28 million, representing
                  2.9 percent of market deposits. Wachovia
                  operates the eighth largest depository institution
                  in the market, controlling deposits
                  of $50 million, representing 5.2 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the fourth largest depository institution
                  in the market, controlling deposits of
                  $77 million, representing 8.1 percent of
                  market deposits. The HHI would increase
                  by 30 points to 1898.

Moore             First Union operates the fifth largest depository
                  institution in the market, controlling
                  deposits of $65 million, representing
                  6 percent of market deposits. Wachovia
                  operates the third largest depository institution
                  in the market, controlling deposits
                  of $85 million, representing 7.9 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the third largest depository institution
                  in the market, controlling deposits of
                  $150 million, representing 13.8 percent of
                  market deposits. The HHI would increase
                  by 94 points to 2145.

Raleigh           First Union operates the sixth largest depository
                  institution in the market, controlling
                  deposits of $746 million, representing
                  8.8 percent of market deposits. Wachovia
                  operates the largest depository institution
                  in the market, controlling deposits of
                  $1.6 billion, representing 18.5 percent of
                  market deposits. On consummation of the
                  proposal, New Wachovia would operate
                  the largest depository institution in the
                  market, controlling deposits of $2.3 billion,
                  representing 27.2 percent of market