(1) OFR shall approve or disapprove applications for authority to exercise trust powers. In considering such applications, the applicant’s capacity to support such an undertaking is of major importance. The closing of a trust department does not present the same risk of loss to the public as does the failure of a financial institution. Therefore, the judgment of the applicant as to the viability of the proposed trust department will ordinarily be respected, provided that in the opinion of OFR, the applicant’s capacity is sufficient or will be enhanced by the new activity.
    (2) Standards. In making its determination, OFR shall consider the following criteria:
    (a) The general condition of the applicant state bank or association is sufficient to support the proposed trust department. OFR will review the financial condition of the state bank or association utilizing all data available to it in assessing this criteria. In assessing general conditions concerning applications for authority to organize a state bank or association, OFR will also rely on its analysis of the materials including projections submitted with the application.
    (b) The earnings and earning prospects of the applicant state bank or association, including the earning prospects of the proposed trust department, are sufficient to support the anticipated expenses and any anticipated operating losses of the trust department during its initial years. For a state bank or association, a net profit to asset ratio of 0.5 percent or above for each of the four quarters preceding the date of the application is generally considered adequate to support expansion for a trust department. The applicant will furnish to OFR supporting documentation of its compliance with the net profit to assets ratio as part of the application. In addition, major fluctuations in quarterly earnings used in the above calculation should be discussed as part of the application. However, factors such as liquidity, asset condition, managerial capacity, past performance, among others, are important in assessing the overall capacity of a state bank or association to establish a trust department and may have an impact on the relative significance of a net profit to asset ratio above or below 0.5 percent. With respect to proposed state banks or associations, OFR will rely on its analysis of all data submitted with the application for authority to organize, with emphasis upon the information which relates to prospects of successful operation.
    (c) The capital structure of the state bank or association is adequate to support the trust department. Addition of a trust department adds responsibilities and liabilities of a kind not found in ordinary commercial banking or association activity. The financial institution must pledge to the Chief Financial Officer the amount required by Florida Statutes § 660.27(1), as a guarantee of sound operation of the trust department. This reduces capital protection for the balance of the state bank or association operations. Therefore, a state bank or association with trust powers should have a comparatively larger capital structure. Total capital accounts, excluding reserves, should equal or exceed 7.0 percent of total assets to be considered adequate to support the expansion for a trust department. However, other factors, including earnings, managerial capacity, asset condition, past performance, and degree of liquidity, among others, are important in assessing the overall capacity of a state bank or association to establish a trust department and may have an impact on the adequacy of the capital to assets ratio.
    (d) The proposed senior trust officers have sufficient trust and related investment, financial, managerial experience, ability, and standing to operate the trust department. Trust operation is a highly specialized business and requires substantial trust experience on the part of the trust officer. Proposed officers shall have demonstrated abilities and experience commensurate with the position for which proposed.
    (e) Provision has been made for the trust department to occupy suitable quarters at the location specified in the application. Applicant’s estimation of space requirements for the trust department will ordinarily be respected, provided, that such allocated space is clearly identified as the trust department of the state bank or association.
Rulemaking Authority Florida Statutes § 655.012(3). Law Implemented 660.26(5) FS. History-New 7-5-83, Formerly 3C-2.05, 3C-2.005, Amended 8-14-94, Formerly 3C-105.505.