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Banking Interpretations

NYSBL 105, 240, 396

December 28, 2005

[ ]

Re: Home Office Protection

Dear [ ]:

Your letter, dated November 25, 2005, to the Superintendent of the Banking Department has been referred to me for response. I understand from your letter and further communications between the Banking Department and [ ], that [ ] a New York State-chartered savings bank, is interested in opening a branch office at 1 West Main Street, Smithtown, New York. As you know, the Bank of Smithtown has its principal office at 1 East Main Street, approximately 50 feet away from the proposed location. In your letter, you seek our confirmation of your analysis, which, for the reasons outlined below, we are unable to provide. For informational purposes, the relevant Section of the Banking Law at issue in this case is Section 240, which reads as follows:

Section 240.2 — No savings bank or trustee, officer, agent or employee thereof, shall transact any part of its usual business of banking at any place other than its principal office, except as follows:

(c) Except for the city or village in which its principal office is located, no branch office may be opened and occupied pursuant to paragraph (a) of this subdivision in any city or village with a population of fifty thousand or less and in which is located the principal office of a bank, trust company or national banking association, other than a bank holding company, if such bank holding company is a banking institution, or a banking subsidiary of a bank holding company, as such terms "bank holding company", "banking institution" and "banking subsidiary" are defined in article three-A of this chapter. Section 240.4 – The term "village" as used in this section shall mean either an incorporated or unincorporated village. [see also, Section 2 of the New York Village Law.]

In your letter, you state that your research shows that the population of the Town of Smithtown is more than 30,000 (although 50,000 is the relevant population number contained in Section 240(2)(c)). You have asked the Banking Department to confirm that since the population of the Town of Smithtown is more than the population limit, the home office protection would not apply. However, this is not the case. Section 240(2)(c) of the Banking Law allows for home office protection in a city or village (emphasis added) with a population of 50,000 or less. The definition of "village" in Section 240.4 includes an "unincorporated village". The population that you make reference to is the population of the Town of Smithtown, which is 115,715 according to the 2000 Census. The potential area for purposes of ascertaining whether or not the Bank of Smithtown is entitled to home office protection is not the Town of Smithtown but the smaller hamlet of Smithtown, one of several such hamlets comprising the Town of Smithtown. It is possible that the hamlet of Smithtown might be determined to be an unincorporated village for the purposes of Section 240, utilizing the standards for such a determination that are contained in Section 2 of the New York Village Law. According to the 2000 Census, the population of the hamlet of Smithtown is 26,901, which would be within the limits of Banking Law Section 240.

You also ask in your letter if it would be possible for the Bank of Smithtown to waive its home office protection. The Banking Department takes the position that a bank entitled to home office protection may waive its protection, so long as it waives this protection as to all present and future entrants into the home office protected area. Thus, the Bank of Smithtown may waive its potential home office protection but only in the form of a general waiver as to any and all banks interested in entering the area. The Banking Department will not recognize a limited waiver, specific only to [ ] or any other specific savings bank, or where Section 105 is involved, any other specific bank or trust company.

I trust that this has been responsive to your inquiry. If you have any questions, please contact me at (212) 709-1674.

Very truly yours,

Megan Prendergast
Associate Attorney

cc: Dan Muccia

 

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