Letter 39: Placement of Night Depositories
Recently this office has been asked a number of questions regarding the placement of night depositories at locations other than at a bank's home office. Specifically, this office has been asked whether a traditional night depository facility would qualify for approval as a branch, or as a paying and receiving station under Wisconsin banking statutes. Additionally, we have been asked whether a bank may provide a night depository facility free of charge to the owners of shopping centers, or in other similar areas with a potential for a large number of merchant customers. The mall owner or other recipient of the night depository would then contract with a courier service for delivery of deposits from the facility to the bank and would encourage local merchants to participate in that arrangement.
The ability to accept deposits is one of the most significant features of the business of banking. Sec. 224.02, Wis. Stats. Under current law, banks may accept deposits at their home offices, at their authorized branches and at paying and receiving stations, and through customer bank communication terminals. Banks may not avoid the statutory limitations on the physical locations at which they may conduct banking business by arrangements, contractual or otherwise, which emphasize the form of the relationship over its substance. For example, a bank may not avoid statutory limitations on branching by operating a courier service which picks up deposits for delivery to the bank under a contractual arrangement with depositors to the effect that no deposit is accepted until physically delivered to the bank's premises. First National Bank in Plant City v. Dickenson, 396 U.S. 122 (1969). Similarly, a bank may not avoid the physical restrictions on the location of deposit taking facilities by having a courier service operated as a subsidiary of a one bank holding company. Jackson v. First National Bank of Gainesville, 430.F.2d 1200 (5th Cir. 1970). Banks may not avoid statutory limitations on the locations at which they may conduct banking business through these devices, including the donation of deposit taking facilities to others who will ostensibly operate them independently of the bank's supervision.
Banks may, of course, accept deposits through customer bank communications terminals --electronic banking facilities--pursuant to Sec. 221.04(1)(k), Wis. Stats. Under the statutes, participation in an electronic funds transfer system must operate in accordance with the requirements of Bkg. Ch. 13, Wisconsin Administrative Code. Commercial deposits may be accepted at an electronic funds transfer terminal. Such a terminal may include a night depository as long as it is electronically accessible, available to any bank participating in the system, and capable of completing an electronic deposit to the customer's bank and generating a receipt for the deposit. See Banking Letter #27. This letter does not alter those requirements.
This office has reviewed the question of whether a night depository facility could qualify as a branch under Sec. 221.04(1)(j), Wis. Stats. The statute does not specifically enumerate the number of banking services which must be present before a proposed facility may receive regulatory approval under the statute. Nor is there any need, at this juncture, for this office to develop a comprehensive listing of all the banking activities which must be available to the general public before a particular branch application would be approved. Certainly a branch would offer a wider range of services than would a paying and receiving station. It is the position of this office that the branching statute contemplates that a branch facility offer to the general public more than the mere ability to accept commercial deposits for subsequent transmission to the bank. As a result, this office would not approve a branch application for the creation of a facility which is essentially nothing more than a traditional night depository box.
Sec. 221.14(4m), Wis. Stats., provides that a bank may establish remote facilities for paying and receiving only. Such a facility may be attended or unattended. The establishment of such a facility requires specific approval of the Commissioner and the Banking Review Board. These facilities may be established within one mile of a bank's home office or of its branch offices. However, if the real estate of the main or branch office is within a federal standard metropolitan statistical area containing a first class city, the paying and receiving facility may not be located more than one-half mile from the bank or its branches.
In contrast to the branching statute, this section clearly contemplates a facility which is quite limited in the services which it provides. The statutes authorize only paying and receiving services at these locations. To date this office has, to my knowledge, never received an application under this subsection for the creation of a facility the services of which are limited to either paying or receiving. However, it is my opinion that the integrity of the statute would not be substantially impaired were such an application to be approved. As a result, I would not be adverse to approving or recommending to the Banking Review Board that it approve an application for the establishment of a paying and receiving station, which otherwise met the statutory requirements of Sec. 221.14(4m), Wis. Stats., in the nature of a traditional night depository, the unattended services of which are limited to accepting commercial deposits for subsequent transport to the placing bank.
Bkg. Ltr. #39, February 7, 1984, Commissioner Dixon