The Office of the Comptroller of the Currency has given a West Virginia bank permission to sell printing services to nonbank customers.

The order is significant because it spells out for the first time how the agency decides whether a bank may use excess capacity to offer nonbanking products and services to other businesses.

"This was an attempt to lay out what qualifies as a good faith acquisition of excess capacity," said James Gillespie, OCC assistant chief counsel.

City National Bank of Charleston bought a local printing company Jan. 30 to produce checks, loan payment coupons, and other documents for itself and nine other subsidiaries of its parent, City Holding Co.

City National officials said their corporate use is not enough to keep the printing operation busy, and they plan to drum up extra revenue by offering services to unaffiliated banks and nonbanks.

The OCC said City National had to meet three requirements to win regulatory approval to offer the printing services to nonbanks. First, it had to show that it was cheaper to buy a printing operation than start one from scratch.

Second, it had to prove that the extra capacity could not be divested without "undue economic loss." Finally, the bank had to demonstrate it will need the excess capacity in the "foreseeable future" to meet internal demand for printing services.

City National, with $462 million of assets, and its sister banks are expected to use 85% of the capacity of Jarrett/Aim Communications Inc. Through expansion, City National expects to absorb the excess in five years, bank officials said.

National banks are permitted to engage in printing services or other nonbanking activities only to meet their own business needs or to sell those services to other banks. Restrictions on commercial activities generally prohibit them from soliciting nonbank businesses. However, banks with extra capacity have been permitted to offer printing and other commercial services such as leasing spare office space and unused long- distance communications lines. Banks even have been allowed to sell mail- sorting and messenger services.

"A bank acquiring an asset in good faith to conduct its banking business should be permitted to make full economic use of the property," wrote OCC Chief Counsel Julie L. Williams in the City National opinion, which was issued in December and released last week.

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