Orders issued under Bank Holding Company Act - Legal Developments - acquisition of RBC Centura Bank by Royal Bank of Canada

Federal Reserve Bulletin,  August, 2002  by Robert DeV. Frierson

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Competitive Considerations

As part of the Board's review under the Bank Merger Act and its consideration of the public interest factors under section 4 of the BHC Act, the Board has considered carefully the competitive effects of the proposal in light of all the facts of record. Bank and Tucker compete directly in the Atlanta, Georgia, banking market ("Atlanta banking market"). (12) Bank is the 27th largest depository institution in the market, controlling $204.2 million in deposits, representing less than 1 percent of total deposits in depository institutions in the market ("market deposits"). Tucker is the 13th largest depository institution in the market, controlling $414.8 million in deposits, representing less than 1 percent of market deposits. On consummation of the proposal, Bank would become the eighth largest depository institution in the Atlanta banking market, controlling $1 billion in deposits, representing 1.8 percent of market deposits. (13)

The Herfindahl-Hirschman Index ("HHI") for the Atlanta banking market would not increase, the market would remain moderately concentrated, and numerous competitors would remain in the market. (14) The Department of Justice has reviewed the proposal and advised the Board that consummation would not likely have a significantly adverse effect on competition in any relevant market. No other agency has indicated that competitive issues are raised by this proposal.

Based on all the facts of record, the Board concludes that consummation of the proposal would not result in any significantly adverse effects on competition or on the concentration of banking resources in the Atlanta banking market or in any other relevant banking market.

Convenience and Needs Considerations

In acting on this proposal, the Board also must consider the convenience and needs of the communities to be served and take into account the records of performance of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. [section] 2901 et seq.) ("CRA"). The CRA requires the federal 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 financial 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 expansionary proposals. The Board has considered carefully the convenience and needs factor and the CRA performance records of Bank and Tucker in light of all the facts of record, including public comments received on the effect of the proposal on the communities to be served by the combined organization.

Two community groups submitted comments on the proposal. One commenter commended Bank on its improvement in meeting the credit needs of African Americans throughout Bank's North Carolina assessment areas. The commenter noted in particular Bank's increase in its percentage of African-American applicants in North Carolina from 1999 to 2000 and Bank's general decrease in denial disparity ratios for African Americans in North Carolina from 1999 to 2000. The commenter also noted that in almost all North Carolina Metropolitan Statistical Areas ("MSAs") in which Bank operates, the percentage of African-American borrowers in Bank's loan portfolio increased from 1999 to 2000. Finally, the commenter noted that Bank's percentage of LMI applicants in North Carolina increased from 1999 to 2000.