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Banking Interpretations

NYSBL 234(1)

To: Examiner Lo — Community & Regional Banks Division

From: Sharon Cherry, Associate Attorney — Legal Division

Date: September 16, 2005

Subject: [ }Community Bank — Notice of Intent to Form a New Division

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Issue

Does [ ] Community Bank require approval from the Banking Department in order to establish a new division called "Perfect Health Savings Bank"?

Recommendation

The bank does not need approval from the Department in order to establish a division called Perfect Health Savings Bank.

Background

[ ] Community Bank has notified the Department that it intends to offer health savings account ("HSA") banking services through a newly established division called "Perfect Health Savings Bank, a division of [ ] Community Bank." The Bank expects to accumulate HSA tax-qualified deposits from various sources including employers, employees, insurance companies and other sources.

Reasoning

The New York State Banking Law and regulations do not require savings banks to obtain approval from the Department in order to establish divisions within the bank. A division of the bank is not a separate legal entity such as a subsidiary.

Noted: S.A.K.

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