Orders issued under federal reserve act: the Annapolis Banking and Trust Company Annapolis, Maryland - Legal Developments

Federal Reserve Bulletin, Feb, 2002 by Jennifer J. Johnson

Order Approving Operation of Mobile Branch

The Annapolis Banking and Trust Company ("Bank"), a state member bank, has given notice under section 9 of the Federal Reserve Act ("Act") (12 U.S.C. [section] 321 et seq.) of its intention to operate a mobile branch by providing a courier service to collect noncash deposits from business customers in Annapolis and Anne Arundel County, all in Maryland.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published in accordance with the Board's Rules of Procedure (12 C.F.R. 262.3(b)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors specified in the Act.

Bank is a wholly owned subsidiary of Mercantile Bankshares Corporation, Baltimore, Maryland. Mercantile is the third largest banking organization in Maryland, controlling deposits of approximately $6.7 billion, representing 9.8 percent of banking deposits in the state. If Bank were a stand-alone institution, it would rank as the 26th largest banking organization in Maryland, controlling deposits of approximately $282.4 million, representing less than 1 percent of banking deposits in the state. (1)

Community Reinvestment Act Considerations

In acting on an application to establish a branch, the Board is required to take into account the Bank's record under the Community Reinvestment Act ("CRA"). (2) The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and sound operation, and requires the appropriate federal supervisory authority to assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income ("LMI") neighborhoods, in evaluating branch applications.

A. CRA Performance Examination

As provided in the CRA, the Board evaluates the performance of an institution in light of examinations by the appropriate federal supervisors of the CRA performance record of the institution. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor. (3) Bank received a "satisfactory" rating at its most recent CRA examination by the Federal Reserve Bank of Richmond as of April 2001.

B. CRA Performance Record

Bank operates eleven full-service branches in Anne Arundel County. Examiners found that Bank offered a full range of credit services, including consumer, small business, residential mortgage, home improvement, and commercial loans. The majority of Bank's loans by number and dollar amount were to residents in Bank's assessment area, and examiners assessed Bank's lending activities as responsive to local credit demand. Examiners concluded that the geographic distribution of Bank's lending indicated adequate penetration in LMI census tracts. Bank also has formed partnerships with other area banks and provided $200,000 toward a $3.4 million line of credit to the Anne Arundel Economic Development Corporation ("AAEDC"). The line of credit funded direct loans to local businesses and supported loan guarantees by AAEDC to repay the bank debt of local businesses.

Examiners considered Bank's level of participation in community development investment activities adequate to serve the needs of its assessment area. Bank purchased four Maryland Community Development Administration bonds, which provided funds to finance the purchase of or refinance owner-occupied, single-family residences in Maryland by borrowers with limited income. Since its previous examination, Bank also has made $18,900 in qualifying grants and donations to local organizations that serve primarily LMI individuals or areas.

Examiners considered Bank's branch locations and business hours to be convenient and to meet the needs of residents and businesses in its assessment area. (4) Nine ATMs are available to local residents and provide 24-hour nationwide network access. Telephone banking services and a bank-by-mail program are offered, Examiners noted that Bank offered low-cost checking and savings accounts that featured a low opening balance and low monthly fees. The Bank also offered direct deposit for payroll, Social Security, or other recurring payments. Examiners commented favorably on Bank's systems for delivering retail banking services, which were found to be available to all portions of the assessment area, including moderate-income census tracts. Furthermore, examiners determined that Bank offered a level of community development services that was adequate for the institution's size, location, and financial capacity. Accordingly, Bank received a "high satisfactory" rating under the service test component of its CRA performance evaluation.