Could a national bank serving a South Carolina military base open banking facilities off the base?

Plain-English summary

The banking commissioner asked about an out-of-state national bank selected to serve the Marine Corps Recruit Depot in South Carolina. In 1996, the AG recognized the federal government’s authority to place banking facilities within a military installation. It drew a boundary at the base: if the bank established substantial banking facilities beyond the installation’s physical limits, South Carolina’s branch-banking restrictions would apply under the opinion’s analysis.

The opinion did not find that the bank had already opened an off-base branch. It addressed the anticipated scope of operations and suggested checking the bank’s plans with federal and bank officials. Its conclusion turned on the physical location and nature of any additional facility.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could the federally selected bank operate a facility on the base?

The AG described federal authority to establish banking facilities on military installations as well founded.

Did the base facility authorize a civilian-community branch automatically?

No. The opinion said substantial facilities beyond the installation would be subject to state branch-banking limits.

Did a federal bank charter eliminate state banking restrictions?

The AG said a federally chartered bank was not wholly immune from state law, particularly as to an off-base facility.

Background and legal framework

The opinion distinguished banking within the federal installation from branch operations in the surrounding state jurisdiction. It cited federal provisions on national-bank branches and the place where a bank may conduct its general business, along with decisions recognizing state authority over branch banking outside the base.

Citations

• 12 U.S.C. Section 36; 12 U.S.C. Section 81.
• State of Texas v. Nat. Bank of Commerce of San Antonio.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/january-8-1996-1/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/12/96jan8jacobs.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CHARLES MOLONY CONDON
ATTORNEY GENERAL

January 8, 1996

The Honorable Louie A. Jacobs
.Commissioner of Banking
Board of Financial Institutions
101 S Sumter, Street, Room 309
Columbia, South Carolina 29201
Re: Informal Opinion
Dear Commissioner Jacobs:
You have requested our advice regarding the scope of authority of an out-of-state bank which has been selected by the federal government to serve Marine Corps Recruit Depot, Paris Island (hereafter MCRD). Apparently, the Fort Sill National Bank of Fort Sill, Oklahoma, will establish a facility at MCRD Paris Island. Although the authority of the federal government to establish banking facilities on military installations is well founded, the issue you have raised is critical to an understanding of the services which Fort Sill National may provide to its customers. Clearly, as a general matter, the South Carolina General Assembly possesses broad authority to regulate the operation of banks in South Carolina. Floyd v. Thornton, 220 S.C. 414, 68 S.E.2d 334 (1951); Am. Trust Co. v. S. C. State Bd. of Bank Control, 381 F. Supp. 313 (D.S. C. 1974); FDIC v. American Bank Shares, 460 F. Supp. 549 (D. S. C. 1978). While this regulatory power apparently does not extend to banking operations within the confines of MCRD Paris Island, any attempt by Fort Sill National to establish a ·facility outside the physical limits of the base would fall within the South Carolina Legislature's authority to circumscribe branch banking. To that end, even a bank which is federally chartered is not completely immunized from state law. FDIC v. Raffa, 882 F. Supp. 1236 (D. Conn. 1995).

RF.~1BERT C . D~NIS B l'ILDING

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POST OFFICE Box 11549

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COLD1BIA. S.C. 29211-1549

TELEPHONE:

803-734-3970

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FACSIMiLE: 803-253-6283

The Honorable Louie A. Jacobs
Page 2
January 8, 1996
Specifically, 12 U.S.C. Section 36 provides the conditions upon which a national banking association may retain or establish and operate a branch or branches. Subsection (c) in pertinent part states:
[a] national banking association may, with the approval of the Comptro11er of the Currency, establish and operate new branches: (I) Within the limits of the city, town or village in which said association is situated, if such establishment.and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point within the State in which said association is. situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks. Although the courts have rejected the application of Section 36 to branches established on military installations, see, ~ State of Texas v. Nat. Bank of Commerce of San Antonio, 290 F.2d 229 (Sth Cir. 1961) this section clearly contemplates state authority to regulate branch banking within state regulatory jurisdiction. This office has previously opined that the logical application of Section 36 prohibits national banks from establishing branch banks across state lines. Op. Atty. Gen., November 13, 1979. Moreover, 12 U.S.C. Section 81 provides that "[t]he general business of each national banking association shall be transacted in the place specified in its organization certificate and in the branch or branches, if any, established or maintained by it in accordance with the provisions of section 36 of this title." Based upon the reasoning and authority cited above, the Fort Sill National bank would be subject to whatever limitations and restrictions are imposed by state law should the bank attempt to establish substantial banking facilities beyond the physical confines of MCRD Paris Island. Thus, you may wish to consult with the Bank's officials, as well as the Treasury Department, in an effort to insure that the Branch does not intend to expand into the civilian community. This letter is an infonnal opinion only. It has been written by a designated Assistant Deputy Attorney General and represents the position of the undersigned attorney as to the specific questions asked. It has not, however, been personally scrutinized by the Attorney General nor officially published in the manner of a formal opinion.

The Honorable Louie A. Jacobs

Page 3
January 8, 1996
With kind regards, I am
Very truly yours,

Wb--

Robert D. Cook
Assistant Deputy Attorney General
RDC/an