A recent court victory concerning branching rights in Oklahoma may give the Office of the Comptroller of the Currency important ammunition in a legal battle it is waging in Texas.
In a July 29 decision, the U.S. District Court for the Western District of Oklahoma ruled that the OCC acted legally when it let a bank use the controversial 30-mile rule to relocate its headquarters.
In November, the agency let First National Bank of Sayre use the loophole to move its main office from Sayre, Okla., to its loan production office in Elk City, Okla.
Two banks in that community - First National Bank and Trust of Elk City and Bank of Western Oklahoma - sued the OCC, claiming it violated an Oklahoma law prohibiting a bank from establishing a branch in a town already serviced by another institution's main office. The Sayre bank's new main office was in effect a branch, they argued. The court disagreed.
Monday's ruling is significant because it could aid the OCC's appeal of another federal court decision that banned a national bank from using the 30-mile rule to relocate its main office.
In that case, U.S. District Court Judge Barefoot Sanders overturned an OCC decision authorizing Commercial National Bank of Texarkana to move it headquarters into Texas while retaining its Arkansas operations as branches.
Judge Sanders ruled that the OCC ignored section 36 of the National Bank Act, which allows federally chartered institutions to branch only to the extent that a state bank can operate branches.
In its defense, the OCC argued that section 36 is irrelevant when an institution uses the provision in section 30 of the same act that allows a national bank to move its headquarters anywhere within a 30-mile radius.
Monday's court decision affirmed the OCC's argument.
"The plain language of (section 30) implies that it operates independently of any other provision," the court wrote. The ruling also said that courts should generally defer to the OCC's interpretation of the National Bank Act.
"We will certainly be citing this as additional evidence in support of our position," OCC Chief Counsel Julie Williams said in an interview Thursday. "It is a very helpful additional precedent for one of the crucial issues in the Texarkana case."
The Comptroller's Office on July 1 asked the U.S. Court of Appeals for the Fifth Circuit to reverse the Texarkana ruling. While the court has agreed to hear the appeal, it has not yet scheduled a hearing.