As described below you state that Investors, a New Jersey state-chartered bank, is proposing to acquire 17 branches from [---] a nationally-chartered bank. Three branches are located in New York state and two of the three NY branches to be acquired have been in existence for less than 5 years.
You note that under the Riegle-Neal Act, the acquisition of a branch of an insured bank without the acquisition of the bank is permissible only if authorized by the state in which the branch is located. You also note that Banking Law Section 223-a addresses branch acquisitions by out-of-state banks. Banking Law Section 223-a provides in pertinent part that "An acquisition transaction in which the resulting or consolidated corporation is an out-of-state bank is hereby prohibited if the effect thereof is to terminate the separate existence of a New York bank that has been chartered less than five years, unless the superintendent finds that the New York bank to be acquired was not chartered directly or indirectly by the out-of-state bank, its officers, directors or principal stockholders, or any other person in a position to exercise control over such out-of-state bank....." You ask for guidance on applicable New York state filing requirements.
Concerning whether Banking Law 223-a would be applicable to the above-described transaction, we do not believe so, on several grounds. First, Investors is only acquiring branches of [---] in New York, which will not result in the extinguishment of a charter Section 223-a has never been interpreted to prohibit the acquisition of less-than-five year old branches, assuming such branches were legitimately established branches. Second, even if the charter were being extinguished, as you point out, it does not appear to be the case that [---] was established directly or indirectly by the acquiror. Finally, Section 223-a technically only refers to the extinguishment of a charter of a "New York bank", which is defined in Article V-C only to include New York State-chartered banks. On this last point, however, we would point out that the Department has recognized this drafting shortcoming in Section 223-a and has proposed legislative language to substitute the words "New York bank" with "banking institution" in that Section so that the prohibited acquisitions described by 223-a would also extend to a described transaction that extinguished the charter of a federally-chartered banking institution.
With regard to New York filing requirements, Banking Law Section 225.2 requires that "In the case of any other acquisition transaction authorized by this article, the out-of-state bank shall file with the superintendent a copy of any application filed with the appropriate state supervisor and appropriate federal banking agency." Therefore, Investors should file with the Banking Department copies of the applications it submits to New Jersey and the FDIC.
I trust that this is responsive to your inquiry.
Christine M. Tomczak, Esq.