INTER-OFFICE COMMUNICATION DATE: October 15, 1! TO: Walt Kinsey oA FROM: Carl Morstadt CSM \or SUBJECT: Mellon National of Florida, Inc. As an aid to our examiners who will shortly be examining the books and records of Mellon National of Florida, Inc., I present this memorandum which basically lists permissible and impermissible activities. The key question is whether any trust activities are performed as principal or whether the activities are merely as an adjunct'to the parent bank's trust department for the purpose of facilitating better service. Activities which are an adjunct to facilitate better service fall within the servicing exempton. The legislative history of the servicing exemption of the Bank Holding Company Act, Section 4(c) (1), indicates that it includes the following activities: auditing, iz appraising, investment counseling, advertising, public relations, developing new business, operations, preparing tax returns, and personnel. Basically, our examiners can consider public relations activities, advertising, investment counseling and the development of new business as permissible activities. Activities which are impermissible are fiduciary functions prohibited by §664.411, appearing in Chapter 80-260, Laws Of Florida. These impermissible activities include, but are-not limited to, the following: (a) acting as a personal representative (executor or administrator) of the estate of a decedent; (b) acting as a guardian; (c) acting as a trustee under any will; (a) acting as a trustee of any real estate; : (e) acting as a receiver or trustee by court appointment; HI (f) acting as assignee, receiver or trustee under an assignment for the benefit of creditors; (g) acting as fiscal agent, transfer agent or registrar of any municipal or private corporation. = The areas in which I believe our examiners are most likely to find impermissible activities are investment management and execution of trust documents. » 7Memorandum to Walt Kinsey October 15, 1980 Page Two * Our examiners should be especially alerted to the possibility that some trust documents constituting an acceptance on the part of Mellon Bank, N.A., may have been executed in Boca Raton, Florida, rather than sent to Pittsburgh, Pennsylvania, for acceptance by signature of authorized bank officers. In the investment management area, our examiners should be alerted to the possibility of the following: (a) execution of buy and sell orders; (b) selection of securities for customers’ accounts and account investment review and evaluation of performance; (c) collection of dividends and interest, periodic deposit of income to account, remittance to customers, or reinvestment; (da) collection of called bonds, transaction for customers of subscription rights, conversion privileges, reorganizations, stock splits, and stock dividends; (e) bookkeeping, receipt of deposits, and exchange or delivery of securities; ' (£) receipt of annuities, rents, royalties or similar payments; : (g) safekeeping of securities. The purchase and sale of securities, as well as their actual physical possession, bookkeeping and collection functions would be beyond the scope of the servicing exemption and cannot properly be conducted in Boca Raton. Examiners should also watch for any banking activities such as receiving deposits, paying checks, extending credit as well as conducting a trust department. All such banking activities do not qualify under the servicing exemption and are strictly prohibited activities. cu/tw ce: S. Craig Kiser Mike Basile Prank Wollett Jerry Oliver Bruce Berger