Alabama State Banking Department Opinions on Interstate Courier Services

STATE OF ALABAMA STATE BANKING DEPARTMENT

March 20, 1997

SBD OPINION 97-2

TO: CHIEF EXECUTIVE OFFICERS OF ALL STATE-CHARTERED BANKS

SUBJECT: INTERSTATE OPERATION OF COURIER SERVICES

Background: SBD Opinion 97-1, issued February 4, 1997, allowed state-chartered banks to operate courier services and accept currency and coin. It also specified certain conditions with which the courier service had to comply. Condition 4 stated that the bank must provide written notice to this office prior to commencing the service. Under interstate branching, effective May 31, 1997, Alabama banks may seek to operate courier services across state lines. Condition 1 of Opinion 97-1 requires that such services only be offered where the bank is authorized to do a general banking business. This means that courier services operated in other states may be subject to the branching laws of those states. In this regard, condition 4 of the original Opinion 97-1 may not provide this office sufficient time to review the notice prior to commencement of the service.

Opinion: It is the opinion of the State Banking Department that state-chartered banks may provide their customers with courier services for the pickup of deposits under the conditions listed in SBD Opinion 97-1. However, if such courier services are to be conducted in states other than Alabama, the notice required in condition 4 of SBD Opinion 97-1 must be made ten (10) days prior to commencement of the service. If the bank has received no objection from the Superintendent within the ten-day period, it may commence such service.

The Superintendent may object to the offering of such service in another state where the branching laws of that state do not allow such service. The lack of an objection does not, however, constitute a waiver of the rights of the regulatory authority in the other state to object if such service is found to violate that state's branching laws.

[Signature] Wayne C. Curtis Superintendent of Banks

CENTER FOR COMMERCE • 401 ADAMS AVENUE • SUITE 680 • MONTGOMERY, AL 36130-1201 TELEPHONE (334) 242-3452 • FAX (334) 242-3500 OR BUREAU OF LOANS (334) 353-5961

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STATE OF ALABAMA STATE BANKING DEPARTMENT

February 4, 1997

SBD OPINION 97-1

TO: CHIEF EXECUTIVE OFFICERS OF ALL STATE CHARTERED BANKS

SUBJECT: COURIER SERVICES

Background: SBD Opinion 97-1 modifies and supersedes Opinion 89-2 which was issued August 24, 1989. Opinion 89-2 allowed state chartered banks in Alabama to provide courier services to their customers for the pickup of deposits, but specified a number of restrictive conditions, including a prohibition on acceptance of cash deposits.

The original opinion was issued pursuant to Section 5-5A-18.1 of the Alabama Banking Code which states in part: "Subject to the prior approval of the superintendent of banks of Alabama, state banks may make any loan or investment or exercise any power which they could make or exercise if incorporated or operating in this state as a federally chartered or regulated bank . . . "

Changes: It now appears inappropriate to restrict the acceptance of currency and coin if all the other conditions of the original opinion are met. It is also our opinion that the offering of such services is incident to the business of banking and consequently, as specified in Section 5-5A-18 of the Alabama Banking Code, the prior approval of the superintendent should not be required in order to conduct such activity.

Opinion: It is the opinion of the State Banking Department that state chartered banks may provide their customers with courier services, for the pickup of deposits, under the following conditions:

1. Such services may only be offered where the bank is authorized to do a general banking business. The service may be provided by the bank or in association with a licensed carrier.

2. The courier service must be subject to a written contract between the bank and its customer which, at a minimum, specifies:

(a) the courier is deemed to be an agent of the customer, and the bank shall not in any manner be held liable for any items placed in transit with the courier until such time as the bank takes delivery of the items;

CENTER FOR COMMERCE • 401 ADAMS AVENUE • SUITE 680 • MONTGOMERY, AL 36130-1201 TELEPHONE (334) 242-3452 • FAX (334) 242-3500 OR BUREAU OF LOANS (334) 353-5961

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(b) all items transmitted must be enclosed in a locked deposit bag, which must remain under dual control until such time as the bank has notified the customer of discrepancies, if any, between the contents of the bag and the deposit ticket thereof;

(c) all deposit items must be restrictively endorsed for deposit only and must be accompanied by a deposit ticket which lists the items;

(d) the specific charges for the courier service which shall be charged directly to the customer or reflected in account analysis formulas.

3. The bank or third party carrier providing such service must carry adequate fidelity, robbery, and hazard insurance commensurate with the associated risks of providing such service.

4. The bank must provide written notice to this office prior to commencing the service.

[Signature] Wayne C. Curtis Superintendent of Banks