Two New York-based banks have been approved to convert from national charters to New York state charters. The New York State Department of Financial Services (NYSDFS) approved Jeffersonville Bancorp, Inc. the holding company for the First National Bank of Jeffersonville, for conversion to a state charter effective Dec. 21, 2012, and the bank now operates under the name Jeff Bank. It will fall under the purview of the FDIC and the Federal Reserve Board.
Flushing Financial Corporation, the parent holding company for Flushing Savings Bank, received Federal Reserve approval to convert from a savings and loan holding company to a bank holding company. This was the final approval required to merge Flushing Savings Bank with and into Flushing Commercial Bank. The combined bank is to be named Flushing Bank and will be a New York state-chartered, full-service commercial bank. The NYSDFS and the FDIC had previously approved the bank's application to merge the two banks and operate the combined bank as a full-service commercial bank. The transaction was expected to be completed on Feb. 28, 2013.
Both banks issued statements saying they expected some annual cost savings as a result of their conversions. Additionally, both banks stated that they expect to benefit from NYSDFS oversight, due to its more local orientation.
Banks operating in New York have the choice of having either a state or federal charter. Last year, the NYSDFS reported a surge in applications from federally chartered banks seeking state charters. That trend was linked to changes in regulation at both the state and federal levels.
Mergers and expansion plans may also be behind the trend. A federal charter limits commercial lending to 10 percent of bank assets; the state charter does not. Additionally, state charter reciprocal agreements allow banks to operate outside their home state.■