First National Community Bancorp, Inc., incorporated in 1997, is a Pennsylvania
business corporation and a registered bank holding company headquartered in
Dunmore, Pennsylvania. In certain circumstances, however, First National Community
Bancorp, Inc. uses the term “Company” to refer to itself.
The Company became an active bank holding company on July 1, 1998 when it acquired
ownership of First National Community Bank (the “Bank”). The Bank
is a wholly-owned subsidiary of the Company. The Company’s primary activity
consists of owning and operating the Bank, which provides practically all of
the Company’s earnings as a result of its banking services.
Established as a national banking association in 1910, the Bank operated 19
full-service branch offices within three contiguous counties, Lackawanna, Luzerne
and Wayne, its primary market area located in the Northeast section of the state.
The Company is a bank holding company registered with, and subject to regulation
by, the Reserve Bank and the Board of Governors of the Federal Reserve System
(“FRB”). The Bank Holding Company Act of 1956, as amended (the “BHCA”),
and other federal laws subject bank holding companies to restrictions on the
types of activities in which they may engage, and to a range of supervisory
requirements and activities, including regulatory enforcement actions for violations
of laws and regulations and unsafe and unsound banking practices.
The BHCA requires approval of the FRB for, among other things, the acquisition
by a proposed bank holding company of control of more than five percent (5%)
of the voting shares, or substantially all the assets, of any bank or the merger
or consolidation by a bank holding company with another bank holding company.
The BHCA also generally permits the acquisition by a bank holding company of
control or substantially all the assets of any bank located in a state other
than the home state of the bank holding company, except where the bank has not
been in existence for the minimum period of time required by state law; but
if the bank is at least 5 years old, the FRB may approve the acquisition.
With certain limited exceptions, a bank holding company is prohibited from acquiring
control of any voting shares of any company which is not a bank or bank holding
company and from engaging directly or indirectly in any activity other than
banking or managing or controlling banks or furnishing services to or performing
services for its authorized subsidiaries. A bank holding company may, however,
engage in, or acquire an interest in a company that engages in, activities that
the FRB has determined by order or regulation to be so closely related to banking
or managing or controlling banks as to be properly incident thereto. In making
such a determination, the FRB is required to consider whether the performance
of such activities can reasonably be expected to produce benefits to the public,
such as convenience, increased competition or gains in efficiency, which outweigh
possible adverse effects, such as undue concentration of resources, decreased
or unfair competition, conflicts of interest or unsound banking practices. The
FRB is also empowered to differentiate between activities commenced de novo
and activities commenced by the acquisition, in whole or in part, of a going
concern. Some of the activities that the FRB has determined by regulation to
be closely related to banking include making or servicing loans, performing
certain data processing services, acting as a fiduciary or investment or financial
advisor, and making investments in corporations or projects designed primarily
to promote community welfare.
Subsidiary banks of a bank holding company are subject to certain restrictions
imposed by the Federal Reserve Act on any extensions of credit to the bank holding
company or any of its subsidiaries, or investments in the stock or other securities
thereof, and on the taking of such stock or securities as collateral for loans
to any borrower. Further, a holding company and any subsidiary bank are prohibited
from engaging in certain tie-in arrangements in connection with the extension
of credit. A subsidiary bank may not extend credit, lease or sell property,
or furnish any services, or fix or vary the consideration for any of the foregoing
on the condition that: (i) the customer obtain or provide some additional credit,
property or services from or to such bank other than a loan, discount, deposit
or trust service; (ii) the customer obtain or provide some additional credit,
property or service from or to the bank holding company or any other subsidiary
of the bank holding company; or (iii) the customer not obtain some other credit,
property or service from competitors, except for reasonable requirements to
assure the soundness of credit extended.
The Bank, as a national bank, is a member of the Federal Reserve System and
its accounts are insured up to the maximum legal limit by the Deposit Insurance
Fund of the FDIC. The Bank is subject to regulation, supervision and regular
examination by the OCC. The regulations of these agencies and the FDIC govern
most aspects of the Bank’s business, including required reserves against
deposits, loans, investments, mergers and acquisitions, borrowings, dividends
and location and number of branch offices. State laws may also apply to the
Bank to the extent that federal law does not preempt the state law. The laws
and regulations governing the Bank generally have been promulgated to protect
depositors and the Deposit Insurance Fund, and not for the purpose of protecting
shareholders.
The Bank offers a variety of loans, including residential real estate loans,
construction, land acquisition and development loans, commercial real estate
loans, commercial and industrial loans, loans to state and political subdivisions,
and consumer loans, generally to individuals and businesses in its primary market
area.
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