OCC signs off on Fifth Third’s switch to national bank

Dive Brief:

Fifth Third Bank's conversion to a national charter was approved Tuesday by the Office of the Comptroller of the Currency (OCC).
The $169 billion-asset, Cincinnati-based bank becomes the first financial institution to switch from a state to a national charter in nearly a year and a half.
The shift comes during a year when the bank completed a merger with Chicago-based MB Financial and as it expands further into the Southeast.

Dive Insight:

Financial institutions that have switched charters in recent years typically have shifted away from the OCC, either to save on regulatory and exam fees or in hopes of less stringent oversight.

"Going to state and credit union regulators is clearly a search for the next best thing," Jim Gilkeson, a former regulator at the OCC who now teaches at the University of Central Florida, told The New York Times in 2012.

Historically, a national charter offered banks a federal preemption of state laws. But the Dodd-Frank Act curtailed the availability of that benefit and diminished the difference between national and state charters.

About 68% of the 780 community banks that changed charters between 1995 and 2015 left the OCC, according to a paper from the Dallas Fed. Thirty-five savings-and-loan associations applied to switch from a national to a state charter in the first eight months after the Dodd-Frank Act closed their previous regulator, the Office of Thrift Supervision, the Times reported.

"The national bank charter continues to have great value in providing banks a flexible regulatory framework that enables them to successfully conduct their businesses across the nation under a single prudential supervisor and meet the needs of the customers and communities they serve in a safe, sound, and fair manner," Comptroller of the Currency Joseph Otting said in a statement.

Fifth Third applied in May to switch from an Ohio state charter. American Express National Bank in Salt Lake City was the last bank to switch to a national charter, in April 2018, according to American Banker.