BULLETIN NO. 02-05
TO: ALL NEW JERSEY DEPOSITORIES
FROM: DONALD BRYAN, ACTING COMMISSIONER
RE: CAPITAL REQUIREMENTS FOR NEW AND RECENTLY-CHARTERED DEPOSITORIES
The Department of Banking and Insurance ("Department") has adopted an amendment to N.J.A.C. 3:1 regarding capital requirements for new depositories applying for charters. This amendment, effective upon publication in the February 4, 2002 New Jersey Register, increases the required capital for new depositories, and reduces the amount and duration of the capital-to-assets ratio. The Department wishes to notify all depositories, but in particular those depositories that have been chartered in the last five years and are operating under the 5 year/10% capital ratio, that they may seek amendment of their order approving their charter under N.J.A.C. 3:1-2.18(a)5 to permit an 8% capital ratio.
The rules effective on February 4 provide a mechanism whereby new depositories may reduce their capital ratio requirement after three years of operation. In light of this change for new depositories, existing depositories in their fourth or fifth year of operation may apply to reduce their capital ratio requirement to a level applicable to established depository institutions pursuant to N.J.A.C. 3:4-1.1 et seq.
The availability of these options will prevent existing, recently-chartered depositories from being placed at a competitive disadvantage with depositories chartered after February 4, 2002. A request from a depository chartered prior to February 4, 2002 for amendment of its charter shall be supported by (1) a new or revised business plan and (2) a certified statement that the reduced ratio and timeframe is consistent with a well managed and well capitalized institution, and that the lower capital ratio requirement will benefit the institution.
_1/29/02 ___ /s/ Donald Bryan _______Acting Commissioner