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Banking Interpretations

NYSBL 105 and 240 and 396

May 15, 2006

[ ]

Re: Principal Office

Dear [ ]:

In your letter, dated March 17, 2006, and further communications, you have requested clarification of the term “Principal Office” as referred to in Banking Law Section 105. You have explained that you represent a real estate company and have dealt with a nationally chartered bank that has expressed an interest in opening a branch at a location that falls within the area that the Banking Department has designated as the home office protected area for another bank. As you know from my letter, dated March 1, 2006, generally, under Section 105, once a principal office is in existence, another bank is prevented from opening a branch within that city or incorporated or unincorporated village with a population of fifty thousand or less. The limitations set forth in Banking Law Section 105 regarding home office protection rules apply to the opening of a branch and do not apply when a bank intends to open a principal office within the designated home office protected area.

The term “Principal Office” is not specifically defined in the Banking Law. As can be deduced from the wording of Banking Law Section 105, however, any full service banking office of the bank other than the principal office is a branch office. Pursuant to Section 4001 of the Banking Law, when a state chartered bank is formed, an organization certificate must be filed with the Banking Department. The organization certificate must include the principal office where the bank will be located. This location is designated by the bank but there is only one location that can be designated the principal office. Should the bank choose to change the location of or re-designate its principal office, the bank must file an application with the Banking Department for a change of location or change of designation of principal office pursuant to Banking Law Section 28 and Supervisory Procedure G 105.

I trust that this has been helpful. Please contact me at (212)709-1674 if you have any additional questions.

Very truly yours,

Megan Prendergast
Associate Attorney

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