Letter provides an exemption from calculating capital requirements in accordance with the Internal Ratings-Based and Advanced Measurement Approaches, 12 CFR Part 3, Subpart E, for U.S. Bank Trust Company, National Association, Portland, Oregon.

Washington, DC 20219

Interpretive Letter #1150

November 2014

September 29, 2014 12 CFR 3, Subpart E

Andrew Cecere

Chief Financial Officer

800 Nicollet Mall

BC-MN-H23G

Minneapolis, MN 55402

Subject: U.S. Bank Trust Company, National Association, Portland, Oregon; U.S. Bank Trust

National Association, SD, Sioux Falls, South Dakota; and U.S. Bank Trust National Association,

Wilmington, Delaware – Exemption from Internal Ratings-Based and Advanced Measurement

Approaches

Dear Mr. Cecere:

We are writing to exempt U.S. Bank Trust Company, National Association, Portland, Oregon

(Oregon Trust); U.S. Bank Trust National Association, SD, Sioux Falls, South Dakota (South

Dakota Trust); and U.S. Bank Trust National Association, Wilmington, Delaware (Delaware

Trust) from calculating their capital requirements in accordance with the Risk-Weighted Assets—

Internal Ratings-Based and Advanced Measurement Approaches (Basel III Advanced

Approaches Framework).1 Based on the facts and circumstances, the OCC determines that

application of the Basel III Advanced Approaches Framework is not appropriate for Oregon

Trust, South Dakota Trust, and Delaware Trust (the Bank(s)) based on the Banks’ risk profile

and scope of operations.

Discussion

OCC regulations provide that a bank that is subject to the Basel III Advanced Approaches

Framework must use that Framework to calculate its capital requirement “unless the Office of

the Comptroller of the Currency determines in writing that the application of [the Framework] is

not appropriate in light of the bank’s asset size, level of complexity, risk profile, or scope of

operations.”2 In considering this exemption, the OCC reviewed the Banks’ risk profiles, the

scope and size of operations, and the current capital levels and balance sheet

irement “unless the Office of

the Comptroller of the Currency determines in writing that the application of [the Framework] is

not appropriate in light of the bank’s asset size, level of complexity, risk profile, or scope of

operations.”2 In considering this exemption, the OCC reviewed the Banks’ risk profiles, the

scope and size of operations, and the current capital levels and balance sheet.

Based on the facts and circumstances reviewed by OCC supervisory staff, including an

evaluation of its risk profile, the OCC has determined that the application of the Basel III

1 12 C.F.R., part 3, subpart E.

2 12 C.F.R. § 3.100 (b)(2).

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Advanced Approaches Framework to the Banks is not appropriate, subject to the conditions

below. Applying the Basel III Advanced Approaches Framework would not meaningfully

enhance the banking group’s overall risk management due to the limited asset size, level of

complexity, scope of operations, and risk profile of these subsidiary banks. The scope of

operations of each of the banks is limited to trust powers. Credit and operational losses at these

banks has been and continues to be de minimis. Furthermore, as a condition to the OCC's

determination, discussed below, the Banks will be required to capture credit and operational loss

events as specified by the Basel III Advanced Approaches Framework in the event that the

Internal Ratings-Based and Advanced Measurement Approaches become appropriate for the

Banks.

Conditions on Approval for the Exemption from the Basel III Capital Framework

The OCC has determined that it will exempt the Banks from the Basel III Capital Framework

pursuant to 12 C.F.R. § 3.100 (b)(2),3 subject to the conditions set forth below. Each Bank must

meet these conditions, unless notified otherwise by the OCC.

1. The Banks will calculate their tier 1 and tier 2 capital under risk-based capital standards set

forth in 12 C.F.R

l III Capital Framework

The OCC has determined that it will exempt the Banks from the Basel III Capital Framework

pursuant to 12 C.F.R. § 3.100 (b)(2),3 subject to the conditions set forth below. Each Bank must

meet these conditions, unless notified otherwise by the OCC.

1. The Banks will calculate their tier 1 and tier 2 capital under risk-based capital standards set

forth in 12 C.F.R. part 3, subpart D, as applicable, as reported in the Banks’ Consolidated

Reports of Condition and Income (Call Reports), and any subsequent revisions thereto.

2. The Banks must continue to capture information on credit and operational loss events as

specified by 12 C.F.R. part 3, subpart E. The Banks must be able to provide the OCC with

all data submitted to its parent company that the parent company uses to comply with the

Basel III Advanced Approaches Framework.

3. The Banks are not required to fill out the FFIEC 101, but must continue to file the FFIEC

031 or 041 reports.

4. The Banks must provide its OCC Examiner-in-Charge with at least 60 days notice of their

intent to significantly deviate from or change their business plan or operations.

5. The Banks must provide an annual statement to the OCC that addresses whether the

exemption is still appropriate. The annual statements, which must be provided no later than

April 1st of each year, must include a description of the Banks’ asset size, level of

complexity, risk profile, and scope of operations in order to support the continuation of the

exemptions.

6. The OCC may rescind or modify this exemption if the OCC determines that application of

the risk-based capital standards set forth in 12 C.F.R. part 3, subpart D, as applicable, as

reported in the Banks’ Call Report, and any subsequent revisions thereto are no longer

appropriate for the Banks.

3 Id.

he continuation of the

exemptions.

6. The OCC may rescind or modify this exemption if the OCC determines that application of

the risk-based capital standards set forth in 12 C.F.R. part 3, subpart D, as applicable, as

reported in the Banks’ Call Report, and any subsequent revisions thereto are no longer

appropriate for the Banks.

3 Id.

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The above-listed conditions of this approval are conditions "imposed in writing by [the OCC] in

connection with any action on any application, notice, or other request" within the meaning of 12

U.S.C. § 1818 and, as such, are enforceable under 12 U.S.C. § 1818.

This exemption determination is based on the Banks' information available to the OCC as of

December 18, 2013. The OCC may rescind or modify this exemption if the OCC determines that

any representation, submission, or information provided by the Banks is not accurate, is not

fulfilled, or if the Banks fail to satisfy the conditions set forth above.

This exemption determination and the activities and communications by OCC employees in

connection with this determination, do not constitute a contract, express or implied, or any other

obligation binding upon the OCC, the United States, any agency or entity of the United States, or

any officer or employee of the United States, and do not affect the ability of the OCC to exercise

its supervisory, regulatory, and examination authorities under applicable law and regulations.

The non-contractual nature of the OCC’s communications with the Banks or with any of their

affiliates and the OCC’s continuing ability to exercise its supervisory, regulatory, and

examination authorities are terms and conditions that may not be waived or modified by any

employee or agent of the OCC or the United States.

If you have any questions about the approval or the conditions specified above, please do not

hesitate to contact Examiner-in-Charge Grace E. Dailey at (612) 303-4091

liates and the OCC’s continuing ability to exercise its supervisory, regulatory, and

examination authorities are terms and conditions that may not be waived or modified by any

employee or agent of the OCC or the United States.

If you have any questions about the approval or the conditions specified above, please do not

hesitate to contact Examiner-in-Charge Grace E. Dailey at (612) 303-4091.

Sincerely,

signed

Martin Pfinsgraff

Senior Deputy Comptroller

Large Bank Supervision