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Release Date: March 11, 1998


For immediate release

The Federal Reserve Board announced today its approval of the application of Regions Financial Corporation, Birmingham, Alabama, to merge with First State Corporation, Albany, Georgia ("FSC"), and thereby acquire FSC's subsidiary banks: First Bank & Trust Company, Albany, Georgia, and First Bank & Trust Company, Cordele, Georgia.

Attached is the Board's Order relating to this action.


Regions Financial Corporation
Birmingham, Alabama

Order Approving Merger of Bank Holding Companies and Acquisition of Banks

Regions Financial Corporation ("Regions"), Birmingham, Alabama, 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. 1842) to merge with First State Corporation, Albany, Georgia ("FSC"), and thereby acquire FSC's subsidiary banks: First Bank & Trust Company, Albany, Georgia ("FB&T-Albany"), and First Bank & Trust Company, Cordele, Georgia ("FB&T-Cordele").

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 5805 (1998)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in the BHC Act.

Regions, with total consolidated assets of approximately $24 billion, operates banks in Alabama, Florida, Georgia, Louisiana, South Carolina, and Tennessee.1 Regions is the largest commercial banking organization in Alabama, controlling deposits of approximately $8.8 billion, representing approximately 19.4 percent of total deposits in commercial banking organizations in the state ("state deposits"). It is the sixth largest commercial banking organization in Georgia, controlling deposits of approximately $3.8 billion, representing approximately 5.3 percent of Georgia state deposits. FSC is the 17th largest commercial banking organization in Georgia, controlling deposits of $373.7 million, representing less than 1 percent of Georgia state deposits. On consummation of the proposal, Regions would remain the sixth largest commercial banking organization in Georgia.

Interstate Analysis
Section 3(d) of the BHC Act, as amended by Section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-Neal Act"),2 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 Regions is Alabama, and FSC controls banks in Georgia.3 All of the conditions for an interstate acquisition enumerated in section 3(d) are met in this case.4 In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Competitive, Financial and Managerial Considerations
Regions and FSC do not compete 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 in any relevant banking market.

The Board also has considered the financial and managerial resources and future prospects of Regions, FSC, and their respective subsidiary banks in light of all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations and financial information provided by Regions. The Board notes that Regions is in satisfactory financial condition and would remain so after consummation of the proposal. Reports of examination assessing the managerial resources of Regions and its subsidiaries indicate that this factor is consistent with approval. Based on all the facts of record, the Board concludes that considerations related to the financial and managerial resources and future prospects of Regions, FSC, and their respective subsidiary banks are consistent with approval under the BHC Act, as are other supervisory factors the Board must consider under the BHC Act.

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. The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. 2901 et seq.) ("CRA").

CRA Performance Examinations
As provided in the CRA, the Board has evaluated the convenience and needs factor in light of examinations of the CRA performance records of the relevant institutions by their primary federal supervisors. An institution's most recent CRA performance evaluation is a particularly important consideration in the application process, because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its primary federal supervisor.5 The Board has reviewed the records of performance of the subsidiary banks of Regions and FSC in light of all the facts of record.

Regions's lead bank, which accounts for approximately 65 percent of the company's consolidated assets, received an "outstanding" rating from its primary federal supervisor, the Federal Deposit Insurance Corporation ("FDIC"), at its most recent evaluation for CRA performance, as of September 1996. Regions's other banks each received a "satisfactory" or better rating from their primary federal supervisor at their most recent evaluation for CRA performance. In addition, FB&T-Albany and FB&T-Cordele received "outstanding" CRA performance ratings from the FDIC as of July 1996 ("July 1996 Examination") and January 1996, respectively.

Comments on Performance Record of FB&T-Albany
The Board did not receive comments on the CRA performance records of Regions's banks. The Board received comments generally contending that FB&T-Albany was inadequately serving the credit needs of low- to moderate-income ("LMI") census tracts and the credit needs of small businesses owned by African Americans.6 Commenter also indicated that FB&T-Albany did not have a branch in an Albany census tract with a predominately minority population.

In the July 1996 Examination, examiners concluded that FB&T-Albany effectively assisted in meeting the credit needs of its communities by originating residential, small business and small farm loans, and that the bank's loans were reasonably dispersed throughout its delineated communities, including LMI neighborhoods. Examiners particularly commended the bank's efforts in assisting the credit needs of small businesses. As of July 1996, FB&T-Albany had $63 million outstanding in small business loans, including eight loans under programs sponsored by the Small Business Administration that totalled approximately $1.1 million. The bank also allocated $1 million for a loan program administered by the Albany Dougherty Inner City Authority for the purpose of providing loans at below-market rates to improve inner city businesses.

Examiners found no evidence of practices under the bank's loan policies and procedures that discouraged applications for the types of credit set forth in the CRA statement and no evidence of discriminatory or other illegal credit practices.7 FB&T-Albany's branches also were found to be readily accessible to all areas of its delineated communities. Examiners favorably noted that the bank had six full-service branches in Albany and that four of the branches were in or near LMI areas.

Conclusion on Convenience and Needs
The Board has carefully considered the entire record in its review of the convenience and needs factor under the BHC Act.8 Based on all the facts of record, including Commenter's submission and the relevant reports of examination, the Board concludes that considerations relating to convenience and needs, including the CRA performance records of the relevant institutions, are consistent with approval.

Conclusion
Based on the foregoing and all the facts of record, the Board has determined that the application should be, and hereby is, approved.9 The Board's approval of the proposal is specifically conditioned on compliance by Regions with all the commitments made in connection with this application. For purposes of this action, the commitments and conditions relied on in reaching this decision are deemed to be conditions imposed in writing by the Board and, as such, may be enforced in proceedings under applicable law.

The proposal shall not be consummated before the fifteenth calendar day following 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 by the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority.

By order of the Board of Governors,10 effective March 11, 1998.

(signed) Jennifer J. Johnson

Jennifer J. Johnson

Deputy Secretary of the Board


Footnotes

1 All banking data are as of September 30, 1997.

2 Pub. L. No. 103-328, 108 Stat. 2338 (1994).

3 A bank holding company's home state is that state in which the operation of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 12 U.S.C. 1841(o)(4)(C).

4 See 12 U.S.C. 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Regions is adequately capitalized and adequately managed, as defined by the Riegle-Neal Act. FSC's banks have been in existence and continuously operated for the minimum period required under Georgia law. See Ga. Code Ann. 7-1-628.3 (1997) (5 years). On consummation of the proposal, Regions would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits of insured depository institutions in Georgia. All other requirements of section 3(d) of the BHC Act also would be met on consummation of the proposal.

5 The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act provides that a CRA examination is an important and often controlling factor in the consideration of an institution's CRA record and that reports of these examinations will be given great weight in the applications process. See 54 Federal Register 13,742 and 13,745 (1989).

6 An individual ("Commenter") submitted comments on behalf of Business Research and Development & Associates and the Albany-Dougherty National Association for the Advancement of Colored People.

7 Although examiners noted technical violations of the Fair Housing Act, they concluded that the violations did not indicate any discriminatory practices and that bank was in compliance with the substantive provisions of anti-discrimination laws and regulations. Bank has initiated steps to correct the violations.

8 Commenter also alleges that FB&T-Albany does not have a sufficient number of African Americans on its board of directors and in management. The BHC Act does not authorize the Board to adjudicate disputes that arise in areas of employment discrimination. Under the regulations of the Department of Labor, FSC and FB&T-Albany are required to file reports with the Equal Employment Opportunity Commission ("EEOC") covering all employees, and the EEOC has jurisdiction for determining whether companies are in compliance with equal employment opportunity statutes. See 41 C.F.R. 60-1.7(a), 60-1.40.

9 Commenter has requested that the Board hold a public hearing or meeting on the application. Section 3(b) of the BHC Act does not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial. The Board has not received such a recommendation from the FDIC or any state supervisory authority.

Under its rules, the Board also may, in its discretion, hold a public hearing or meeting on an application to acquire a bank if necessary or appropriate to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 225.16(e). The Board has carefully considered Commenter's request in light of all the facts of record. In the Board's view, Commenter has had ample opportunity to submit his views, and has submitted written comments that have been carefully considered by the Board in acting on the application. Commenter's request fails to demonstrate why his written presentation does not adequately present his evidence, allegations, or views. Commenter also fails to indicate why a public meeting or hearing is necessary for the proper presentation or consideration of his views. For these reasons, and based on all the facts of record, the Board has determined that a public hearing or meeting is not required or warranted in this case. Accordingly, the request for a hearing or meeting on the proposal is hereby denied.

10 Voting for this action: Chairman Greenspan, and Governors Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: Vice Chair Rivlin and Governor Kelley.

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