Banking Development District Application Instructions
Pursuant to current Banking Law, only banks, trust companies or national banks (which includes savings banks and savings and loan associations), and credit unions, whether state or federally chartered, are eligible to participate in the BDD program. If a bank or credit union already has an open branch within a proposed BDD area, the existing branch will be eligible for participation in the BDD program only if the branch opened after December 31, 1996. A bank or credit union must complete an application in partnership with local government (county, town, city or village) for the designation of an area as a BDD.
The application must clearly define the geographical boundaries of the proposed district and must demonstrate not only that the community is in serious need of banking services, but also that this need is not being met by existing nearby financial institutions. The applicant also must show that by establishing a new branch in the proposed district, the institution is prepared to meet the specific, identified unmet need and that there is strong community support for the BDD designation.
A bank or credit union may simultaneously submit an application to their regulator to open a new branch in the BDD (the branch application process ensures that the institution meets overall regulatory standards such as capital, asset base, management, earnings and liquidity requirements).
The establishment of a branch in a BDD shall be subject to all applicable state and federal laws regarding the establishment of branch offices. Required branch application fees otherwise owed by state-chartered entities may be waived.
BDD requirements are in addition to any requirements established by the Department of Taxation and Finance and the New York State Comptroller with respect to the deposit of public funds and the New York State Board of Real Property Services with respect to real property tax exemptions that may be available to banks within a Banking Development District.
Review & Approval Process
The New York State Superintendent of Financial Services approves all BDD designation applications.
Once the Department receives an application, in addition to reviewing the application, the Department conducts a site visit of the proposed district. Once a BDD designation application has been deemed complete by the Department, a public notice of receipt of application is published in the Department’s Weekly Bulletin. The Department then has 60 days to issue a determination on the application. If approved, the applicant will then be directed to contact the State Comptroller’s office to finalize the terms for deposit of the public funds (see below).
In addition, the superintendent will notify the local government, the banking institution, the state comptroller, the commissioner of taxation and finance, the commissioner of real property tax services, the chairman of the empire state development corporation, the chairman of the senate banking committee, the senate majority leader, speaker of the assembly, and chairman of the assembly banks committee.
Deposit and Collateral Policies & Procedures
The Below Market Rate Program
If approved, an applicant will be directed to contact the State Comptroller’s office to finalize the terms for deposit of funds.
Bank and credit union branches approved for a BDD designation are eligible to receive up to $10 million in subsidized deposits from the state of New York.
The $10 million in deposits must be collateralized in accordance with state law and general municipal law 10.
The initial deposit is for a four-year period; however the branch is required to submit a report highlighting the branch’s activities on an annual basis. The Department responds to the institution with a determination on the extent to which the institution’s activities and outcomes meet its BDD goals, and the extent to which other considerations may need to be made in order to meet the financial services needs in the community. If the branch is performing satisfactorily, after the initial four-year period has passed, the BDD deposits must either be returned to the State Comptroller, or renewed by the branch (see below for renewal request process).
The Market Rate Program
BDD branches may also request that the State Comptroller deposit non-subsidized, market rate deposits in the amount of up to $25 million in the branch.
For subsidized deposits, once the initial four-year period has ended, a BDD branch may request renewal of its deposits. Renewal requests must be made annually prior to the maturation date of the deposits. The renewal process allows the Department to assess each branch’s progress in meeting the identified needs articulated in the original BDD application.
To request a renewal, a branch must complete a BDD Renewal of State Deposits Application and prepare a written statement describing, among other things, new initiatives the branch undertook and new, low-cost bank products the branch developed during the preceding year. All of these materials are submitted to both the Department and the State Comptroller.
The Department reviews the submission and determines whether the branch has made adequate progress towards reaching its stated goals. Where sufficient progress is found, the Department recommends renewal for an additional year. Where insufficient progress is demonstrated, the Department may recommend renewal with a one-year probation and given specific directions for improvement. If no improvement is made upon completion of the probation, the Department may recommend to the State Comptroller that the deposits not be renewed.
Currently, there is no limitation on the number of times that a BDD branch may request renewal of the BDD deposits. Similarly, there are no limits on the number of districts that a bank may seek to establish in the state. Thus, several banks have been approved to establish multiple BDD branches.
Application Forms & Instructions