Commercial National Bank of Little Rock v. Board of Governors of the Federal Reserve System

Under the Bank Holding Act of 1956, national banks and bank holding companies had to abide by state restrictions regarding branch banking. The First Arkansas Bankstock Corporation (the company) was a one-bank holding company. The company owned Worthen Bank and Trust Company (Worthen). The company sought to acquire Arkansas First National Bank, so it applied to the Board of Governors of the Federal Reserve System (the board) (defendants) for permission to become a bank holding company. The company and Worthen were both located in Little Rock, Arkansas, and Arkansas First was located in Hot Springs, Arkansas, which was a significant distance away from Little Rock. The company planned for some future cooperation between the two banks, Worthen and Arkansas First, but the two banks were to stay independent. The two banks would continue to have separate boards of directors, their own capital and loan limits, independent management, and distinct operations. The United States Comptroller of the Currency recommended approval of the company’s application. However, several banks, including Commercial National Bank of Little Rock (plaintiff) filed protests against the company’s application. The board held a public presentation regarding the application and ultimately approved the company’s application to become a bank holding company. Four of the protesting banks (plaintiffs) filed a petition for review of the board’s order that approved the application. The protesting banks argued that Arkansas branch-banking laws prohibited bank holding companies from owning or controlling more than one bank and thus the Bank Holding Company Act applied to the company to restrict it from owning or controlling more than one branch bank within Arkansas.