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4000 - Advisory Opinions

Sharing of Branch Locations By Insured Bank and Affiliated Savings Association


August 15, 1990

Jeffrey M. Kopchik, Senior Attorney

This is in response to your letter of July 18, 1990 to Douglas H. Jones, Esq. concerning the above-captioned topic.

It is our understanding from your letter that your client, *** ("Bank"), a state-chartered, non-member bank with its headquarters located in ***, would like to open branches in the offices of several thrift institutions which are being acquired by ***. *** is a registered bank holding company which owns all of the outstanding stock of the Bank. *** would like to merge each of the thrift institutions it is acquiring (collectively the "Associations") into the Bank pursuant to section 5(d)(3) of the Federal Deposit Insurance Act (the "Act"), but cannot lawfully do so until after August 9, 1991. Accordingly, assuming that the Bank acquires the necessary regulatory approvals, your client anticipates establishing and maintaining Bank and Association branches in the same physical locations until on or shortly after August 9, 1991.

In your letter, you advise us that (1) it is your client's intention to apply for the appropriate prior approvals from the FDIC's regional office, (2) separate financial records will be maintained for each Bank and Association operating out of the same office, (3) separate Bank and Association employees, respectively, will accept deposits by customers of each institution, and (4) official bank and savings association signs will be placed in "appropriate" places in each branch office.

During our telephone conversation of August 8, 1990, you confirmed that the Bank intends to operate one teller line at each of the branches in question. However, a rope divider will be utilized to indicate to customers that certain tellers are employees of the Bank and will only transact Bank business, while other tellers are employees of the Association and will only transact Association business. The official bank sign will be displayed in front of each Bank teller and the official savings association sign will be displayed in front of each Association teller. The official savings association sign will also be displayed on or adjacent to the office's main entrance. The official bank sign will only be displayed in front of the Bank tellers. You also informed me that your client has not made a decision concerning what type of corporate logo sign(s) will be displayed outside and inside these offices. Furthermore, it is my understanding from our telephone conversation that your client has not decided whether to assign other Bank personnel, e.g. customer service representatives, to these offices. In the event that the Bank decides to do so, or to have the Bank teller act as a customer service representative, that employee's desk or work area would be clearly identified as part of the Bank.

While we are not aware of any provision of the Act which prohibits a state chartered commercial bank from operating a branch office within the same physical location as a savings association branch office, the FDIC still maintains several concerns. First, your client's intentions with regard to the actual final arrangement of these branch offices are still somewhat vague. Also, FDIC regulation Part 328.4(e) provides that "[a]n insured savings association shall not display the bank sign at its principal place of business or at any of its branches."

It is the Legal Division staff's opinion the Bank may establish a branch office in the same physical location as an Association office, assuming of course that all appropriate prior applications are filed with and approved by the FDIC regional office as well as the State of North Carolina Banking Commission, provided that there is a clear demarcation between the facilities and personnel of the Bank and the Association so as to clearly identify each institution to customers entering the office. In addition, banking transactions on behalf of each institution may only be handled by employees of that institution and all account records, etc. shall be separately maintained. With regard to Part 328.4(e) of the FDIC's regulations, cited above, it is the Legal Division staff's opinion that the requirements of this part can be satisfied if the official bank sign is displayed only within the Bank's clearly demarcated and separate physical areas, e.g. in front of a Bank teller or at a Bank customer service representative's desk, in such a way as to not engender any customer confusion concerning the status of each institution.

If you have any further questions with regard to this issue, please feel free to contact me at 202-898-3872.

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