For immediate release

The Federal Reserve Board today announced its approval of the applications of CFBanc Holdings, Inc., and CFBanc Corporation to become bank holding companies by acquiring control of City First Bank of D.C., all in Washington, D.C. Attached is the Board's Order relating to this action.

CFBanc Holdings, Inc. Washington, D.C. CFBanc Corporation Washington, D.C. Order Approving Formation of Bank Holding Companies and Acquisition of a Bank CFBanc Holdings, Inc. ("Holdings") and CFBanc Corporation ("Corporation") have requested the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("BHC Act") (12 U.S.C. § 1842(a)(1)) to become bank holding companies by acquiring control of more than 25 percent of the voting shares of City First Bank of D.C., Washington, D.C. ("Bank"), a de novo national bank that will operate with a community development focus.1 Corporation would acquire all of the voting shares of Bank, and Holdings, a nonstock, nonprofit corporation organized under the laws of the District of Columbia, would acquire approximately 48 percent of the voting shares of Corporation.2 Notice of the applications, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 29,996 (1998)). The time for filing comments has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3 of the BHC Act. Holdings and Corporation are nonoperating corporations formed for the purpose of acquiring control of Bank, a de novo institution.3 The Board previously has noted that the establishment of a de novo bank enhances competition in the relevant banking market and is a positive consideration in an application under section 3 of the BHC Act.4 Accordingly, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market and that competitive considerations are consistent with approval. In light of all the facts of record, the Board also concludes that the financial and managerial resources and future prospects of Holdings, Corporation, and Bank, and the other supervisory factors that the Board is required to consider under section 3 of the BHC Act are consistent with approval of the proposal. Bank intends to operate with a community development focus and to seek to increase the availability of credit, capital, and financial services in low- and moderate-income neighborhoods and to low- and moderate-income individuals in the District of Columbia. Bank intends to serve the identified credit and banking needs of low- and moderate-income areas in the District of Columbia by offering a range of commercial, real estate, and consumer loans, as well as checking, savings, and other traditional deposit products. In light of Bank's objectives and all other facts of record, the Board concludes that convenience and needs are consistent with approval of the proposal. Based on the foregoing and all the facts of record, the Board has determined that the applications should be, and hereby are, approved. The Board's approval is expressly conditioned on compliance by all relevant parties with the commitments made in connection with the applications. For purposes of this action, the commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and as such, may be enforced in proceedings under applicable law. The transaction shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months following the effective date of this order, unless such periods are extended for good cause by the Board or by the Federal Reserve Bank of Richmond, acting pursuant to delegated authority.

By order of the Board of Governors,5 effective November 9, 1998. (signed) Robert deV. Frierson Robert deV. Frierson Associate Secretary of the Board

Footnotes 1 Bank would engage primarily in lending and other activities designed to promote the welfare of low- and moderate-income neighborhoods and individuals in the District of Columbia. 2 Georgetown University and the National Community Investment Fund ("NCIF"), a community development fund sponsored by Shorebank Corporation, Chicago, Illinois ("Shorebank"), propose to make investments in Corporation. Georgetown University, NCIF, and Shorebank have made a number of commitments, including commitments that the Board has relied on in previous cases, to limit the ability of these companies to exercise a controlling influence over Corporation or Bank. Based on these commitments, the fact that Holdings (which is a company independent of the other investors in Corporation) will control nearly 50 percent of the voting shares of Corporation, the purpose and nature of the activities of Bank, and all the other facts of record, the Board concludes that the facts do not warrant a conclusion at this time that Georgetown, NCIF, or Shorebank would control Corporation or Bank for purposes of the BHC Act. The Board expressly retains its authority to initiate a control proceeding if the facts presented at a later date indicate that any such entity in fact controls Corporation or Bank for purposes of the BHC Act. 3 The Federal National Mortgage Association ("Fannie Mae") proposes to acquire up to 4.9 percent of the voting shares and up to 9.9 percent of the total equity of Corporation. Section 18(s) of the Federal Deposit Insurance Act ("FDI Act") prohibits depository institutions from being an affiliate of, sponsored by, or accepting financial support directly or indirectly from Fannie Mae or any other Government-sponsored enterprise. 12 U.S.C. § 1828(s)(1). Section 18(s)(3), however, permits a Government-sponsored enterprise to provide financial assistance to a depository institution as permitted by the statutes governing the enterprise. See id. at § 1828(s)(3). In this case, Fannie Mae has not sponsored and would not be an affiliate of Bank. Fannie Mae also asserts that its purchase of Corporation stock is permissible under section 18(s)(3) of the FDI Act because the proposed investment is authorized under, and consistent with, the purposes of the Fannie Mae Charter Act. See 12 U.S.C. § § 1716, 1723a(a); 62 Federal Register 68,060 (1997). Fannie Mae's purchase of a noncontrolling interest in Corporation would increase the resources of Bank available for residential mortgage financing and, thus, appears consistent with the purposes of the Charter Act. See id. at § 1716. The Board notes, moreover, that Bank intends to focus its lending efforts on low- and moderate-income areas, and that Federal law encourages Fannie Mae to assist primary lenders to make housing credit available in areas with concentrations of low-income and minority families. See id. at § 4565(a). In light of all the facts of record, and after consulting with the Federal Deposit Insurance Corporation, the Board concludes that Fannie Mae's proposed investment in Corporation is permitted under section 18(s)(3) of the FDI Act. 4 See Wilson Bank Holding Company, 82 Federal Reserve Bulletin 568 (1996). 5 Voting for this action: Vice Chair Rivlin and Governors Kelley, Meyer, Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan.

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1998 Orders on banking applications