Fla. Admin. Code Ann. R. 69U-105.405 - Regulatory Standards for Evaluating Applications

(1) Standards. In making its determination to approve or disapprove branch office applications, OFR shall consider the following criteria:

(a) The applicant has or agrees to provide sufficient capital accounts to support the state financial institution's deposit base, or in relation to the number and valuation of fiduciary accounts of the trust company, and the additional fixed asset proposal for such branch and its operations, without undue risk to its depositors or to its fiduciary account holders. Capital should equal or exceed the minimum level established by state or federal law or rule, whichever is greater, to be considered adequate. It should be noted, however, that other factors, including earnings, managerial capacity, asset condition, past performance, and degree of liquidity, among others, are important in assessing the overall capacity of a state financial institution to establish a branch office and may have an impact on the adequacy of capital. Therefore, OFR may require that the applicant provide additional capital as a condition of approval of the application. If the applicant is a proposed state financial institution or a state financial institution opened less than one year, OFR will normally require the state financial institution to increase its total capital accounts by an amount sufficient to support the additional costs associated with the start-up of a new branch office. These costs will include the cost of building or leasing of the office, additional overhead necessary until the branch office is profitable, and cover the minimum capital requirements on new branch office deposits.

(b) The applicant has sufficient earnings and earning prospects to support the anticipated expenses of such branch office, without jeopardizing the profitability position of the state financial institution, its retained earnings, or the dividend return to its shareholders. An annualized net profit to asset ratio of at least 0.5 percent for each of the four quarters preceding the application, is generally considered adequate to support the expansion for a branch office. The applicant will furnish to OFR supporting documentation of its compliance with the net profit to assets ratio as part of the application. In addition, major fluctuations in quarterly earnings used in the above calculation should be discussed as part of the application. The end of quarter figures as reported in the applicant's four most recent Consolidated Reports of Income will be used in computing compliance with this ratio. It should be noted, however, that factors such as liquidity, asset condition, managerial capacity, past performance, among others, are important in assessing the overall capacity of a state financial institution to establish a branch office and may, therefore, have an impact on the relative significance of a net profit to asset ratio above or below 0.5 percent. With respect to proposed state financial institutions or state financial institutions opened less than one year, OFR will rely on its analysis of all data submitted with the application for authority to organize, with emphasis upon the information which relates to prospects for successful operation.

(c) The applicant has sufficient depth and quality of management to operate the branch office without reducing its current level of services, or exceeding its managerial or operational capacity. With respect to proposed state financial institutions or state financial institutions opened less than one year, the applicant shall demonstrate that management has employed experienced staff to operate branch offices. The individual who will be charged with the responsibility for managing the day-to-day operation of the branch office must be identified and a detailed resume of his/her past experience provided to OFR for its review prior to proposing an opening date for the branch office.

(d) The name of the proposed branch office reasonably identifies the branch office as such, and is not likely to unduly confuse the public.

(e) The applicant is in substantial compliance with applicable laws governing its operations. The existence of any supervisory board resolutions, administrative order, or written agreement with supervisory authorities relating to the state financial institution's operations is an indication that the state financial institution is not in substantial compliance with applicable laws governing its operations and may be grounds for denial of the application.

(2) Insider Transactions. Any financial arrangements or transactions involving, directly or indirectly, the state financial institution directors, officers, shareholders owning 10 percent or more of the stock, or their relatives, their associates or interests ("insiders") must be fair, reasonable, fully disclosed, and comparable to similar arrangements which could have been made with unrelated parties. If the applicant is wholly owned by a registered financial institution holding company ("holding company"), transactions between the holding company and the applicant will not require the submission of appraisals, bids, or comparisons, provided that the lease or purchase by the holding company does not involve an insider of the state financial institution or holding company.

(a) Whenever any transaction between the state financial institution and an insider involves the purchase of real property, appraisals of land and improvements thereon shall be made by an independent state licensed or certified appraiser, and be dated no earlier than 6 months from the filing date of the application, and contain the qualifications of the appraiser.

(b) With respect to any lease arrangement between the state financial institution and an insider, the state financial institution must submit a lease appraisal by an independent state licensed or certified appraiser which demonstrates clearly that the leasing arrangements are made on substantially the same terms as those prevailing at the time for comparable transactions with non-insiders for similar commercial property. The appraisal must be dated no earlier than 6 months from the date of filing of the application, and contain the qualifications of the appraiser.

In lieu of an appraisal, the applicant may submit actual leases or lease comparisons for similar-type transactions as those proposed by applicant. Such leases or lease comparisons should indicate square footage lease rates which demonstrate clearly that the leasing arrangements are made on substantially the same terms as those prevailing at the time for comparable transactions with non-insiders for similar commercial property.

(c) With respect to transactions other than the purchase of real property or lease agreements (including, but not limited to, construction contracts, architect's fees, and real estate sales commissions), evidence of the reasonableness of the costs must be provided and may include the submission of competitive bids.

(3) Site Designation.

(a) All branch office applications shall identify the location of the proposed branch office. No application for a branch office shall be deemed complete until a proposed site has been designated by street address or legal description, or by identification of the vicinity in which the branch office will be located. If the location is identified by vicinity, the application must specifically delineate the boundaries of the vicinity in which the branch office will be located, and any final order of approval shall be subject to the subsequent designation of the exact street address or legal description.

(b) Relocation of branch office site prior to or following OFR approval. OFR shall be promptly notified of any change in the proposed branch office site. Such notice shall include schedules, as applicable, to amend the information provided in the original application. Any such relocation shall be subject to OFR review, but no additional filing fee shall be required.

(4) Opening. Should a branch office not be opened within 12 months after OFR approval of the application, such approval shall automatically expire, unless extended by OFR in the meantime for good cause shown. Subsequent to the approval by OFR and the Federal Deposit Insurance Corporation, Office of Thrift Supervision, or the Federal Reserve Board and at least 21 days prior to the desired opening date, OFR shall be given notice of the proposed opening date, together with confirmation of compliance with any conditions imposed by OFR.

Notes

Fla. Admin. Code Ann. R. 69U-105.405

Rulemaking Authority 655.012(3) FS. Law Implemented 655.762, 658.26(2)(a),(b), 665.013, 667.003 FS.

New 3-22-76, Formerly 3C-13.07, Amended 5-24-78, 7-27-81, 7-13-83, Formerly 3C-13.041, Amended 3-24-86, Formerly 3C-13.0041, Amended 8-14-94, 4-15-98, Formerly 3C-105.405.

New 3-22-76, Formerly 3C-13.07, Amended 5-24-78, 7-27-81, 7-13-83, Formerly 3C-13.041, Amended 3-24-86, Formerly 3C-13.0041, Amended 8-14-94, 4-15-98, Formerly 3C-105.405.