The completion of Brookline Bancorp’s conversion from a federal to state charter has some wondering whether the three-bank holding company represents a “new wave” of banks eager take up state charters and ditch the U.S. Office of the Comptroller of the Currency as their primary overseer.
The bank itself even says it wouldn’t be surprised if other federally chartered banks weren’t doing some serious soul searching too.
“Because of the changes that occurred last year, a lot of institutions are looking at their charter to see what’s right for them,” Michael McCurdy, Brookline’s general counsel, told Banker & Tradesman.
About a year ago, what was the Office of Thrift Supervision was killed in favor of the OCC, which had no prior experience regulating small banks.
Of course, all the rules and regulations are the same, but smaller banks may feel more comfortable dealing primarily with state regulators instead of the OCC – which despite being led by former Massachusetts banking commissioner Thomas Curry, has long regulated the nation’s largest banks.
In Brookline’s case, its board asked, “How do we perceive ourselves?” McCurdy said. “Brookline is a big part of the Boston area, (the board) made a choice to change before we were too deeply involved with the OCC.”
McCurdy said simple familiarity is what convinced Brookline’s board to make the change. Massachusetts regulators are more familiar with the bank, its business and its customers, he said. The advantages of that closeness are worth the eight months it took for the conversion to be reviewed.
Keeping It Local
The OCC’s New York-based Northeastern office is responsible for regulating national banks headquartered in New England, Delaware, the District of Columbia, northeast Kentucky, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Puerto Rico, the Virgin Islands, Virginia and West Virginia.
Last year, state Division of Banks officials told Banker & Tradesman they were concerned about the OCC’s ability to relate to smaller community banks.
The $2.7 billion Brookline Bank was the largest federally chartered savings bank in the commonwealth before the conversion.
“Supervision by a state regulator may provide oversight with greater understanding of the local market and the challenges that community banks face,” Massachusetts Banking Commissioner David Cotney said in a statement regarding the Brookline conversion.
The division oversees about 220 banks and credit unions with more than $320 billion in total assets.
In addition to converting Brookline Bank to a state charter, Brookline Bancorp converted wholly owned subsidiary the First National Bank of Ipswich to a state chartered trust company from a national bank, and will change its name to First Ipswich Bank.
Brookline Bancorp also owns Bank Rhode Island.
According to the division, Brookline’s is the first such conversion in Massachusetts since 2001. That was also the year Brookline converted from a state to a federal charters.
Along with its switch to the state charter, Brookline Bank was also approved to become a member of the Federal Reserve system. The Fed will be the bank’s regulator for federal purposes. Ipswich was already a Fed member.
