A National Bank Is A Citizen Only of The State Where Its Home Office Is Located

A National Bank Is A Citizen Only of The State Where Its Home Office Is Located

by Onyinyechi Muilenburg

The United States Court of Appeals for the Ninth Circuit recently held that a national bank is a citizen only of the state where its home office is located.  See, Rouse v. Wachovia Mortg., FSB, No. 12-55278, 2014 WL 1243869 (9th Cir. Mar. 27, 2014).  The issue was whether a national bank is a citizen of both the state in which its principal place of business is located and the state where its main office is located as designated by the bank’s articles of association.  The Ninth Circuit concluded that a national bank is a citizen only of the state in which its main office is located.  Unlike state-chartered banks or other corporations whose citizenship is governed by 28 U.S.C. § 1322, the citizenship of nationally chartered banks is governed by 28 U.S.C. § 1348, which provides in pertinent part: “All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.”  28 U.S.C. § 1348.

The circuits are split over whether national banks are citizens of every state in which they operate a branch for purposes of diversity jurisdiction.  Both the Fifth Circuit and the Seventh Circuit have held that national banks are not “located” in every state where the bank has a branch.  Horton v. Bank One, N.A., 387 F.3d 426, 431 (5th Cir. 2004); Firstar Bank, N.A. v. Faul, 253 F.3d 982, 993-94 (7th Cir. 2001).  By contrast, the Fourth Circuit and the Second Circuit have held that a national bank is a citizen of the state in which its main office is located as well as every state in which it has a branch.  Wachovia Bank, N.A. v. Schmidt, 388 F.3d 414, 432 (4th Cir. 2004); World Trade Ctr. Props., LLC v. Hartford Fire Ins. Co., 345 F.3d 154, 161 (2d Cir. 2003).  Generally speaking, Texas cases are in the jurisdiction of the Fifth Circuit.

The Supreme Court has addressed the issue of whether a federally chartered national bank is a citizen of every state where its main office is designated and held “that a national bank, for § 1348 purposes, is a citizen of the state in which its main office, as set forth in its articles of association, is located.”  Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 307 (2006).

No information in this article is intended to constitute legal advice. For specific legal advice, please contact an attorney.

If you have any questions or would like more information about the citizenship of nationally chartered banks, please contact William “Pat” Huttenbach at 713.220.9184 or phuttenbach@hirschwest.com.