Orders issued under Bank Holding Company Act - Legal Developments - Allied Irish Banks P.L.C. to acquire share of M&T's subsidiary banks

Federal Reserve Bulletin,  May, 2003  by Robert DeV. Frierson

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Applicants have also requested the Board's permission under section 4 to acquire interests in the following savings associations: voting authority over 5.74 percent of the voting shares of First Bell Bancorp, Inc., Pittsburgh, parent company of Bell Federal Savings and Loan Association, Bellevue, both in Pennsylvania; voting authority over 5.67 percent of the voting shares of Quaker City Bancorp, Inc., parent company of Quaker City Bank, both in Whittier, California; and voting authority over 6.1 percent of the voting shares of Hawthorne Financial Corporation, parent company of Hawthorne Savings, F.S.B., both in El Segundo, California.

(2.) Asset data for FBRG are as of September 30, 2002.

(3.) Asset data for Bank are as of December 31, 2002. Deposit and ranking data are as of June 30, 2002.

(4.) 12 U.S.C. [section] 1842(c)(1).

(5.) See 12 U.S.C. [subsection] 856--860.

(6.) Under the IR Code, the amount of non-REIT assets that a REIT may hold in a taxable REIT subsidiary, which is subject to taxation at ordinary corporate rates, is limited to 20 percent of the REIT's total assets. See 12 U.S.C. [section] 856(c). A REIT is also required to distribute 90 percent of its net income to its shareholders each year. See 12 U.S.C. [section] 857(a). Holdings, which would be the parent of Bancorp and Bank, would be organized as a taxable REIT subsidiary.

(7.) Applicants note that income earned by a taxable REIT subsidiary is not subject to the mandatory distribution requirement until paid as a dividend to the REIT Moreover, funds invested by a REIT in its taxable REIT subsidiary are not subject to the mandatory distribution requirement.

(8.) See 12 U.S.C. [section] 2903(a)(2).

(9.) The commenter expressed concern about several institutions in which Applicants would hold less than a 10 percent voting interest by asserting that Home Mortgage Disclosure Act (12 U.S.C. [section] 2801 et seq.) ("HMDA") data reported by Hingham Institution for Savings ("Hingham") and Bell Federal Savings and Loan Association ("Bell") revealed a pattern of excluding African-American and Hispanic communities and individuals in the Boston, Massachusetts, and Pittsburgh, Pennsylvania, Metropolitan Statistical Areas ("MSA"). The commenter also made a similar allegation based on a review of the HMDA data of Pacific Crest Mortgage Company for loans made in the Riverside County, California, MSA. Pacific Crest Mortgage is not affiliated with any company involved in this proposal.

The commenter also objected to one institution's participation in a loan program based on anticipated tax refunds. The Board notes that neither FBRG nor its subsidiaries or affiliates makes this type of loan.

(10.) The Interagency Questions and Answers Regarding Community Reinvestment provide that a CRA examination is an important and often controlling factor in the consideration of an institution's CRA record. See 66 Federal Register 36,620 and 36,639 (2001).

(11.) Rushmore converted to a national bank immediately prior to its acquisition by FBRG in 2001.