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Banks in Pa. switch to state charters for better relationships

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Sometimes, there just needs to be someone reliably returning messages and clearly answering questions, said Wes Weymers, president and CEO of The Gratz Bank.

The institution, a subsidiary of GNB Financial Services Inc., used to be known as The Gratz National Bank.

It changed the moniker for obvious reasons after it converted last year from a national to a state banking charter.

National and state charters don't bring with them substantively different frameworks of rules, he said. But with rules of any kind, they need to be clarified from time to time as they change or are applied to different situations.

Under the national charter and working with federal regulators, the results were messages that were sometimes returned after a lot of time elapsed or not at all, he said.

"When a new rule comes out, we want to comply, so we need to have a conversation about how to do that," Weymers said.

All told, a dozen institutions filed to change from national to state charters in Pennsylvania in 2011 and 2012.

They include Dauphin County-based GNB and Riverview Bank, a subsidiary of Perry County-based Riverview Financial Corp., according to the Pennsylvania Department of Banking and Securities.

Roughly three out of every four depository institutions in Pennsylvania have state charters, said Glenn Moyer, the department's secretary.

The trend toward these charters does not appear to be isolated to the commonwealth, Moyer said.

A representative from the Office of the Comptroller of the Currency, overseeing national banks and federal savings associations, issued a statement that its Pennsylvania examiners take seriously being timely and clear in relationships with financial institutions.

The country operates a dual banking system, in which an institution can choose a state charter or a national charter, Moyer said.

Most of the rules are relatively equivalent after changes during the last several decades brought parity to the systems, Moyer said.

Years ago, having a national charter brought with it a certain status, he said. But today, banks might increasingly value the chance to have a closer relationship with a state regulator.

Community banks often have a perception and a concern that there is a one-size-fits-all mentality to regulation at the federal level — regardless of whether that is indeed the case, he said.

There a few other advantages, such as lower fees charged by state regulators than national counterparts, Moyer said.

And a state-chartered bank doesn't need to keep all of its operations in the state, so it is allowed to open branches in other states, he said.

It can all add up to being a better choice for a bank's board of directors to switch, Moyer said.

Weymers said that less-expensive fees were not part of Gratz's rationale for switching.

It was because the communication between the federal regulator and bank management was found to be "less than acceptable," he said. Sometimes, messages would go entirely unreturned. In other cases, the responses the bank received were too vague.

Weymers joined Gratz in 2011 as senior lending officer. He had been president and CEO of the former Clearfield County-based Curwensville State Bank, which had a state charter. He found the regulatory communications there to be better.

Gratz contacted the state in the first part of 2012 about possibly converting to a state charter.

That was a Thursday, and state regulators had representatives at the bank's board meeting the following Tuesday, Weymers said.

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