The Bank Slate


NY mutual applies to form municipal bank

Gouverneur Bancorp in Gouverneur, N.Y., is looking to form a municipal bank in conjunction with its pending acquisition of a commercial bank. 

The $133 million-asset parent of Gouverneur Savings and Loan Association applied for deposit insurance with the Federal Deposit Insurance Corp. for the proposed GS&L Municipal Bank. 

Gouverneur said in the application that it hopes to form the proposed bank in advance of its purchase of the $85 million-asset Citizens Bank of Cape Vincent. The deal was announced on Jan. 4; Gouverneur said in the application it hopes to close the acquisition in the second quarter. 

Gouverneur “has historically considered the municipal deposit market as an opportunity to help diversify [its] funding mix and to enhance its ties to the communities that it serves,” the application said. “The proposed acquisition of [Citizens Bank] has accelerated this previously identified strategic objective.” 

New York state law bars mutuals from working with municipalities, and Citizens Bank has about $24.2 million of municipal deposits on its balance sheet. 

Seneca-Cayuga Bancorp (now Generations Bancorp NY) applied in 2018 to create Generations Commercial Bank so it could accept deposits from municipalities and other public entities. The bank opened in early January. 

Rhinebeck Bancorp in Poughkeepsie, N.Y., and Dime Community Bancshares in Brooklyn, N.Y., considered taking similar routes. Dime withdrew its application after deciding it would be difficult to gain traction as a new entrant. 

Gouverneur said it plans to capitalize the municipal bank with $2.5 million. The board and management team would largely be the same as that of Gouverneur Savings. 

Gouverneur asked the FDIC to approve its application by June 1 so it can complete the acquisition on time.

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