Banking Interpretations


January 25, 2008 


Re: Home Office Protection

Dear [---]:

This letter is in response to your September 7, 2007, inquiry to the New York State Banking Department ("the Department"). In your letter, you explained that you represent [---] (“[---] National”), and you requested the Department's opinion as to whether [---] National may open and establish a branch in the incorporated village of Montebello, New York. As you know, Provident Municipal Bank, a New York state chartered commercial bank, has its principal office in the village of Montebello and is afforded home office protection in the village.  Provident Municipal Bank is a wholly owned subsidiary of Provident Bank, a federal thrift institution, owned by Provident New York Bancorp.

Banking Law Section 105 must be examined in order to answer this question.  Section 105(1) prohibits a bank from opening and occupying a branch office in any community with a population of less than fifty thousand in which is located the principal office of any 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 3-A of the Banking Law) (emphasis added).  This section of law is relevant because national banks are subject to the same branching restrictions as New York state-chartered commercial banks (12 USC 36(c)).
At issue in this case is the definition of a bank holding company pursuant to Article 3-A, Banking Law Section 141. Banking Law Section 141(3) defines a "bank holding company" as any company which (a) directly or indirectly, or through a subsidiary or subsidiaries, owns, controls or holds with the power to vote (i) ten per centum or more of the voting stock of a company which is or becomes a bank holding company by virtue of this article, or (ii) ten per centum or more of the voting stock of each of two or more banking institutions, or (iii) if such company is a banking institution, more than ten per centum of the voting stock of anyone banking institution.*  A "banking institution" as defined in Banking Law Section 141(1), means a bank, a trust company or a national banking association and also includes a stock-form savings bank or a stock-form savings and loan association. However, when defined in Banking Law Section 2(4), a stock-­form savings bank is one which is subject to the provision of Article 6 of the Banking Law, and the term does not include federal thrift institutions. Accordingly, since federal thrift institutions are not considered banking institutions for purposes of defining a bank holding company under Banking Law Section 141, Provident Bank is not considered a banking institution, and, therefore, Provident Municipal is not owned by a bank holding company and should be afforded home office protection for its principal office in Montebello, New York.

In your letter, you also assert that, since the Banking Law does not afford home office protection to principal-offices of federally chartered savings associations, the protection should not be extended to a wholly ­owned commercial bank subsidiary of the federal savings association. There is no such exception within the Banking Law. Although Provident Municipal is a subsidiary of a federal savings association, it is a separate entity which is a New York state chartered commercial bank and as such, its principal office is entitled to home office protection.
I trust that this has been responsive to your inquiry.

Very truly yours,

Megan Prendergast
Associate Attorney

cc:  Tammy Mahoney, Esq.
      Office of the Comptroller of the Currency

      Steve Kupfer
      Economist, NYSBD

*    Alternative definitions of "bank holding company", not relevant here, are based on other forms of control.