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The Dual Banking System: Benefits of Being a State-Chartered Bank

June 08, 2021 12:00 AM

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Under the dual banking system in the United States, banks are afforded a choice in primary regulator and under which laws they will be chartered: state or federal. The coexistence of these two parallel systems allows for healthy market competition.

In Pennsylvania, the Department of Banking and Securities is the state regulatory agency responsible for supervising state-chartered banks. About three out of four banks headquartered in Pennsylvania are chartered by the department. There are many benefits to becoming a Pennsylvania state-chartered bank, including:

Regulatory access and responsiveness. State-chartered banks share closer geographic proximity to the department, providing for more direct and timely communication. Our staff, myself included, are personally accessible to staff of state-chartered banks. Bank directors, leadership, and staff are able to directly reach the decision makers impacting their banks. Open lines of communication with our banks help the department fulfill its mission of ensuring safety and soundness.

Understanding the Pennsylvania market. Regionally located bank examiners live in the areas in which they work and are familiar with local areas and economic conditions. These Pennsylvanians are able to better understand Pennsylvania banks and the issues affecting the local community. We understand community banking because we are part of the community.    

Parity provisions permit state-chartered banks equal powers to national bank. Pennsylvania state-chartered banks have equal rights and privileges to banks operating under a federal charter in the state. Act 89 of 2000 (PDF) provides Pennsylvania state-chartered banks parity with the powers of national banks, federal thrifts, and state-chartered banks in other states as authorized by the Federal Deposit Insurance Corporation (FDIC). The department has a proven history of working with the state General Assembly to enact new legislation and update statutes that are responsive to the needs of Pennsylvania banks and consumers.

Lower assessment costs. In general, the department’s assessments are significantly lower than the fees assessed for federally chartered banks. This means banks are realizing the benefits of being a state-chartered bank and equal rights and privileges to federally chartered banks, at a tremendous value and cost savings.

If you are interested in starting or converting to a state-chartered bank, contact the department’s Bureau of Bank Supervision at 717-783-8240 or

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