FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Interim Henry County Bank, Inc.
Application for Federal Deposit Insurance and Applications for Consent to Merge
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Sections 5 and 18(c) and other provisions of the Federal Deposit Insurance ("FDI") Act, an application has been filed on behalf of Interim Henry County Bank, Inc. ("Interim Bank"), Pleasureville, Kentucky, a proposed new state bank in organization, for deposit insurance with membership in the Bank Insurance Fund ("BIF"), and for consent to merge with USAccess Bank, Inc. ("USAccess"), Louisville, Kentucky, a state bank with membership in the BIF. Also, an application has been filed on behalf of The Peoples Bank & Trust Company ("Peoples Bank"), Greensburg, Kentucky, a state bank with membership in the BIF, for consent to merge with Interim Bank. Notices of the proposed transactions, in a form approved by the FDIC, have been published pursuant to the FDI Act.
Essentially a corporate reorganization, the proposal would provide a means by which Porter Bancorp, Inc. ("Porter Bancorp"), Shepherdsville, Kentucky, lead company in an eight-bank, five-bank holding company chain banking organization presently controlling USAccess with total resources of $244,026,000 and total deposits of $210,685,000 as of June 30, 2000, and Peoples Bank with total resources of $87,992,000 and total deposits of $74,249,000 as of June 30, 2000, will transfer the community banking operations1 of USAccess to Peoples Bank. The proposed transaction would allow Porter Bancorp to segregate Internet banking operations from traditional banking operations, enabling USAccess to focus on its Internet banking operations and to facilitate capital raising programs. The proposal would not affect the structure of banking or the concentration of banking resources within the relevant markets. Deposit services offered by Peoples Bank would not differ materially from those presently offered by USAccess.
The proposed transaction will occur in several steps, occurring virtually simultaneously, as follows:
1. Porter Bancorp will form a wholly-owned, second-tier holding company, USAccess Holdings, Inc. ("Holdings"), Louisville, Kentucky.
2. Porter will contribute its ownership of USAccess common stock to Holdings, in exchange for all of the common stock of Holdings.
3. USAccess will form a wholly-owned state chartered bank subsidiary (Interim Bank) and transfer substantially all of its community banking assets, liabilities, and capital to Interim Bank in exchange for all of the capital stock of Interim Bank.
4. USAccess will distribute, in the form of a special dividend, all of the capital stock of Interim Bank to Holdings.
5. Holdings will distribute, in the form of a special dividend, all of the capital stock of Interim Bank to Porter Bancorp.
6. Interim Bank will be merged with and into Peoples Bank.
A review of available information, including the Community Reinvestment Act ("CRA") Statements of the applicants, discloses no inconsistencies with the purposes of the CRA. The resultant bank is expected to continue to meet the credit needs of its entire community, consistent with the safe and sound operation of the institution.
In connection with the applications, the FDIC has also taken into consideration the competitive effects of the proposed transaction; the financial and managerial resources and future prospects of the merging institutions; and the convenience and needs of the community to be served. For purposes of this proposal, the investment in fixed assets is reasonable, capital is adequate, future earnings prospects are favorable, and management is considered satisfactory. Corporate powers to be exercised are consistent with the purposes of the Federal Deposit Insurance Act. No formal objections to the proposal have been filed and no undue risk to the Bank Insurance Fund is apparent. Having found favorably on all factors required to be considered pertinent to each application and having considered all other relevant information, including any reports on the competitive factors furnished by the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Director of the Office of Thrift Supervision, and the Attorney General of the United States, it is the FDIC's judgment that the applications should be and hereby are approved, subject to the following conditions:
1. That beginning paid-in capital funds of not less than $9,428,000 be contributed to Interim Bank by USAccess, and that after the capital contribution, the Tier 1 capital to assets ratio of USAccess shall be maintained at not less than eight percent during the first three years following approval of these applications;
2. That any changes in proposed management or proposed ownership (10 percent or more of stock), including new acquisitions of or subscriptions to 10 percent or more of stock, will render this commitment null and void unless such proposal is approved by the Regional Director of the FDIC's Memphis Regional Office ("Regional Director") prior to opening of the bank;
3. That USAccess shall operate within the parameters of the strategic plan submitted to the FDIC. Furthermore, during the first three years after approval of the applications, USAccess shall notify the Regional Director and the State Banking Commissioner of any proposed major deviation or material change from the submitted plan 60 days before consummation of the change;
4. That the Federal deposit insurance shall not become effective unless and until the Interim Bank has been granted a charter as a state nonmember bank, that it has authority to conduct a banking business, and that its establishment and operation as a bank has been fully approved by the state authority;
5. That the applications filed with the Federal Reserve related to the establishment of Holdings, the acquisition of Holdings by Porter, and the acquisition of Interim Bank by USAccess, Holdings, and Porter, are approved by the Federal Reserve;
6. That the transaction shall not be consummated less than fifteen calendar days after the date of this Order or later than six months after the date of this Order, unless such period is extended for good cause by the FDIC;
7. That until the conditional commitment herein granted for deposit insurance and for consent to merge becomes effective, the FDIC shall have the right to alter, suspend, or withdraw said commitment should any interim development be deemed by the FDIC to warrant such action; and
8. That if Federal deposit insurance has not become effective within twelve months from the date of the ORDER, or unless, in the meantime, the FDIC approves a request for an extension of time, the consent granted shall expire at the end of the said twelve-month period.
By Order of the Associate Director of the Division of Supervision, acting pursuant to delegated authority for the Board of Directors of the FDIC.
Dated at Washington, D.C., this day of April 2001.
John M. Lane
Division of Supervision
1 The community banking operation of USAccess Bank consists of two branches, located at 645 Elm Street, Eminence, Henry County, Kentucky 40019, and 5440 Castle Highway (also known as 421 Main Street), Pleasureville, Henry County, Kentucky 40057, with aggregate total assets of $76,605,000 and total deposits of $66,733,000, as of June 30, 2000.