Banking Interpretations

NYSBL Sections 225(1)

September 9, 2005

[ ]

Re: Acquisition of [ ] Savings Bank Branch

Dear [ ]:

This letter is in response to your August 26, 2005 letter to Superintendent Taylor regarding [ ] Bank's, [ ]B's") planned acquisition of the [ ], New York branch (the [ ] Branch) of [ ] Savings Bank, [ ] New York. We understand that you are requesting the Banking Department's ("Department's") confirmation that such acquisition would be permissible under New York Banking Law ("NYBL").

As you have described the transaction, [ ]B would, on the day of closing, purchase and assume Iiability for certain certificates of deposit ("CDs") presently held by the [ ] Branch. You have advised us that [ ]B will purchase approximately 35 CDs (some may be redeemed prior to the closing date) having an aggregate principal balance of approximately $550,000. We further understand that, as an inducement to remain with [ ]B, [ ]B will offer to pay bonuses, at the CD's maturity, to those CD holders whose accounts are transferred on the date of closing. You have further advised that [ ]SB will not offer such CD holders any inducement, prior to the closing date, to remain with [ ]SB.

[ ]B will also acquire a sublease for the [ ] branch from [ ]SB in exchange for a sublease fee of $10,000. In addition, [ ]B will purchase [ ]SB’s right, title and interest in the fixtures and leasehold improvements located at the Hannibal Branch for $23,000. You have advised the Department that, upon consummation of the acquisition, [ ]B will exercise its right to terminate the sublease and pay a termination fee of [ ] per month for each month remaining n the sublease. [ ]B will then relocate the purchased branch to [ ] New York.

We understand that [ ]B is a Pennsylvania national bank, and that it will be filing the appropriate applications with the Office of the Comptroller of the Currency at the appropriate time.

Turning to our analysis of whether the proposed transaction complies with Article 5-C of the New York Banking Law ("NYBL"), we begin with NYBL § 225(1). That section permits an "out-of-state bank" to engage in an "acquisition transaction" with a New York bank, and further, allows it to maintain as a branch the place of business of any such New York bank that it purchases in the transaction, subject to the requirements of Article 5-C. An out-of state national bank qualifies as an "out-of-state bank". NYBL § 222(1). An "acquisition transaction," for purposes of Article 5-C, is defined to include a purchase of assets and assumption of liabilities of "all or part of a banking institution." NYBL § 222 (7).

After review of your submission on behalf of [ ]B, the Department is of the opinion that the proposed transaction would constitute the sale of "all or part of a banking institution" to [ ]B under Article 5-C of the NYBL. Pursuant to NYBL § 225 (2), [ ]B will be required to file with the Department a copy of any application filed with other state and/or federal bank regulators.

We would note that the age restriction provisions of NYBL § 223 (a) would not apply to this transaction because it o only applies when a "New York bank" is eliminated. We understand that [ ]SB will continue to operate as a New York bank.

Based on the foregoing, including your representation of the terms and conditions of the proposed transaction, the Department would interpose no objection to the purchase by [ ]B of the [ ] branch of [ ]SB.

We trust that this letter is sufficient for you purposes. If it is not, please contact the undersigned at (212) 709-1659.

Very truly yours,

Bryan Farrell
Assistant Counsel

cc: OCC Northeast District