General Provisions

Capital Requirements of New Depositories Applying for Charters

Adopted Amendments: N.J.A.C. 3:1-2.1, 2.18 and 2.19

Proposed: October 15, 2001 at 33 N.J.R. 3598(a)

Adopted: January 4, 2002 by Donald Bryan, Acting Commissioner

Department of Banking and Insurance

Filed: January 4, 2002 as R.2002 d.38, without change

Authority: N.J.S.A.17:1-8.1, 17:1-15e, 17:9A-4, 17:9A-8, 17:12B-20 and


Effective Date: February 4, 2002

Expiration Date: March 6, 2006


Summary of Public Comments and Agency Responses:

The Department of Banking and Insurance ("Department") received written comments from Samuel J. Damiano, President of the New Jersey League-Community and Savings Bankers and from James Hyman, President and CEO of the Hopewell Valley Community Bank.

COMMENT: One commenter supported the proposed amendments and noted that the increased capital requirement for new depositories from $5,000,000 to $6,000,000 and the increased capital requirement incident to the purchase of a failed depository from $4,000,000 to $5,000,000 is an important ingredient in preventing failures.

RESPONSE: The Department notes and appreciates the support for the amendments.

COMMENT: Two commenters suggested that the proposed rule amendments should apply retroactively to depositories currently operating under the existing five-year, 10 percent capital rule to prevent these banks from being placed at a competitive disadvantage by the proposed amendments.

RESPONSE: The proposed amendments only address depositories that receive their charter after the effective date of these amendments. The request by the commenters is beyond the scope of the proposed amendment.

The Department notes that existing depositories received their charters based on business plans submitted under the existing capital requirements and said requirements are conditions of approval. N.J.A.C. 3:1-2.18(a)5 currently allows a depository to request that the Department permit a lower ratio and therefore provides an existing mechanism for recently chartered depositories. For requests made by a recently chartered depository to the Department to permit a lower capital ratio instead of the 10 percent ratio, the Department would expect the request to be supported by a new or revised business plan and a certified statement that the reduced ratio is consistent with a well-managed and well-capitalized institution.

Federal Standards Statement

The adopted amendments do not contain standards or requirements that exceed standards or requirements imposed by Federal law. These rules continue to apply to New Jersey depositories certain Federal standards, set forth at 12 C.F.R 325.2.

Full text of adoption follows: