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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY PAYNE, HESS, GABLER, MARSHALL, MUNDY AND SCHMOTZER, JUNE 18, 2012 |
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| REFERRED TO COMMITTEE ON COMMERCE, JUNE 18, 2012 |
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| AN ACT |
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1 | Amending the act of November 30, 1965 (P.L.847, No.356), |
2 | entitled "An act relating to and regulating the business of |
3 | banking and the exercise by corporations of fiduciary powers; |
4 | affecting persons engaged in the business of banking and |
5 | corporations exercising fiduciary powers and affiliates of |
6 | such persons; affecting the shareholders of such persons and |
7 | the directors, trustees, officers, attorneys and employes of |
8 | such persons and of the affiliates of such persons; affecting |
9 | national banks located in the Commonwealth; affecting persons |
10 | dealing with persons engaged in the business of banking, |
11 | corporations exercising fiduciary powers and national banks; |
12 | conferring powers and imposing duties on the Banking Board, |
13 | on certain departments and officers of the Commonwealth and |
14 | on courts, prothonotaries, clerks and recorders of deeds; |
15 | providing penalties; and repealing certain acts and parts of |
16 | acts," further providing for definitions, for persons |
17 | authorized to engage in business of receiving deposits and |
18 | money for transmission, for corporations authorized to act as |
19 | fiduciary, for retention of records and admissibility of |
20 | copies in evidence, for emergency powers and for |
21 | acquisitions, and offers to acquire, shares of banks, bank |
22 | and trust companies, trust companies and national banks; |
23 | repealing provisions relating to prohibition against certain |
24 | acquisitions, to legal holidays and to limitation on deposit |
25 | of Commonwealth funds; further providing for additional |
26 | powers of incorporated institutions related to conduct of |
27 | business, for persons bound by bylaws and execution of |
28 | instruments, for general lending powers, for direct leasing |
29 | of personal property and for limits on indebtedness of one |
30 | customer including purchased paper; repealing provisions |
31 | relating to installment loans including revolving credit |
32 | plans, to real estate loans, to authorizing certain loans for |
33 | commercial, business, professional, agricultural or nonprofit |
34 | purposes including revolving credit plans, to authorizing |
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1 | monthly interest loans for individuals, partnerships and |
2 | other unincorporated entities, to alternate basis for |
3 | interest charges by institutions, to charging interest at |
4 | rates permitted competing lenders, to notice of annual fees |
5 | and refunds on credit cards of affiliate banks, to |
6 | authorization of fees for revolving credit plans and to |
7 | extensions of credit to individuals, partnerships and |
8 | unincorporated associations; further providing for |
9 | application of chapter, for actions required, permitted or |
10 | prohibited in fiduciary capacity, for transfer of fiduciary |
11 | accounts and for investments; repealing provisions relating |
12 | to real estate loans; further providing for lending powers |
13 | and direct leasing of personal property; repealing provisions |
14 | relating to conditional powers of savings banks; providing |
15 | for pledges for deposits, limits on indebtedness of one |
16 | customer including purchased paper; further providing for |
17 | tentative trusts, for authorized offices, for authorization |
18 | of new branches, for approval of branch by department and for |
19 | branches outside Pennsylvania; repealing provisions relating |
20 | to branches acquired from the receiver of a closed |
21 | institution or from an institution in danger of closing; |
22 | further providing for articles of incorporation and for |
23 | certificate of authorization to do business; providing for |
24 | organization as a limited liability company; further |
25 | providing for minimum capital, for classes of shares, for |
26 | share certificates, for cash dividends, for redemption and |
27 | acquisition of redeemable shares and statement of reduction |
28 | of authorized shares, for audits and reports by directors or |
29 | trustees, accountants and internal auditors and for |
30 | prohibitions applicable to directors, trustees, officers, |
31 | employees and attorneys; repealing provisions relating to |
32 | indemnity and immunity of certain directors; providing for |
33 | standard of care and justifiable reliance; further providing |
34 | for articles of amendment, for authority to merge or |
35 | consolidate, for requirements for a merger or consolidation, |
36 | for mergers, consolidations and conversions of savings banks, |
37 | for right of shareholders to receive payment for shares |
38 | following a control transaction, for articles of conversion, |
39 | for voluntary dissolution prior to commencement of business, |
40 | for certificate of election for voluntary dissolution and for |
41 | articles of dissolution; repealing provisions relating to |
42 | examinations and reports, to examination of affiliates and |
43 | persons performing bank services, to relationship of |
44 | institutions and their personnel with officials and employees |
45 | of department and to additional powers of the Department of |
46 | Banking; and further providing for penalties and criminal |
47 | provisions applicable to directors, trustees, officers, |
48 | employees and attorneys of institutions and for penalties |
49 | applicable to persons subject to this act. |
50 | The General Assembly of the Commonwealth of Pennsylvania |
51 | hereby enacts as follows: |
52 | Section 1. Section 102(h), (p), (q), (z.1) and (bb.1) of the |
53 | act of November 30, 1965 (P.L.847, No.356), known as the Banking |
54 | Code of 1965, amended or added July 23, 1970 (P.L.597, No.199), |
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1 | June 16, 1994 (P.L.346, No.51) and July 6, 1995 (P.L.271, |
2 | No.39), are amended to read: |
3 | Section 102. Definitions |
4 | Subject to additional definitions contained in subsequent |
5 | chapters of this act which are applicable to specific chapters |
6 | or sections thereof, the following words and phrases when used |
7 | in this act shall have, unless the context clearly indicates |
8 | otherwise, the meanings given to them in this section: |
9 | * * * |
10 | (h) "Branch"--an office or other place of business, other |
11 | than the principal place of business, of an institution for the |
12 | transaction of any business of the institution, except any of |
13 | the following conducted or maintained with the approval of the |
14 | department: |
15 | (i) a temporary agency, |
16 | (ii) a school at which deposits are accepted by an |
17 | officer, employe or agent of the institution, |
18 | (iii) an office used solely for internal operations of |
19 | the institution to which the public is not admitted for the |
20 | conduct of banking business, |
21 | (iv) an automated teller machine, |
22 | (v) a [loan production] limited purpose banking office, |
23 | or |
24 | (vi) any other office which the department may determine |
25 | by rule or regulation. |
26 | * * * |
27 | (p) "Fiduciary"--an executor, administrator, guardian, |
28 | [committee,] receiver, trustee, assignee for the benefit of |
29 | creditors or one acting in a similar capacity. |
30 | (q) "Incorporated institution"--a bank, a bank and trust |
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1 | company, a trust company or a savings bank. The term includes a |
2 | bank, a bank and trust company, a trust company or a savings |
3 | bank that is organized as a limited liability company. |
4 | * * * |
5 | [(z.1) "Special institution"--any of the following: |
6 | (i) A State-chartered bank which meets all of the |
7 | following criteria: |
8 | (A) Has previously assumed or may assume deposit |
9 | liabilities of an entity which was subject to the |
10 | supervision of the department under the act of May 15, |
11 | 1933 (P.L.565, No.111), known as the "Department of |
12 | Banking Code," the act of December 14, 1967 (P.L.746, |
13 | No.345), known as the "Savings Association Code of 1967," |
14 | or this act and whose deposits were not insured by the |
15 | Federal Deposit Insurance Corporation or any other |
16 | Federal agency authorized by law to insure deposits. |
17 | (B) Is wholly owned directly or indirectly by an |
18 | agency or instrumentality of the Commonwealth, including |
19 | specifically, the State Workmen's Insurance Fund. |
20 | (C) Has deposits that are insured by the Federal |
21 | Deposit Insurance Corporation or any other Federal agency |
22 | authorized by law to insure deposits. |
23 | (ii) The nonprofit corporation created by the act of |
24 | April 6, 1979 (P.L.17, No.5), referred to as the Pennsylvania |
25 | Savings Association Insurance Corporation Act.] |
26 | * * * |
27 | [(bb.1) "Subsidiary"--a corporation controlled by an |
28 | institution which owns at least a majority of its shares.] |
29 | * * * |
30 | Section 2. Section 105(b) of the act is amended to read: |
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1 | Section 105. Persons Authorized to Engage in Business of |
2 | Receiving Deposits and Money for Transmission |
3 | * * * |
4 | (b) Exceptions--None of the following shall be deemed to be |
5 | engaged in the business of receiving money for deposit or |
6 | transmission within the meaning of subsection (a) of this |
7 | section: |
8 | (i) a club or hotel to the extent it receives money from |
9 | members or guests for temporary safekeeping, |
10 | (ii) an express, steamship or telegraph company to the |
11 | extent it receives money for transmission, |
12 | (iii) an attorney-at-law, real estate agent, fiscal |
13 | agent or attorney-in-fact to the extent he receives and |
14 | transmits money solely as an incident of his general business |
15 | or profession, [or] |
16 | (iv) a broker who is licensed under the laws of this |
17 | Commonwealth to the extent he engages in such activities |
18 | solely as an incident of the conduct of the brokerage |
19 | business[.], or |
20 | (v) a person licensed under the act of September 2, 1965 |
21 | (P.L.490, No.249), referred to as the Money Transmission |
22 | Business Licensing Law, to the extent such person engages in |
23 | the transmission of money by means of a transmittal |
24 | instrument for a fee or other consideration. |
25 | * * * |
26 | Section 3. Section 106(b) and (c) of the act, amended |
27 | November 22, 2000 (P.L.660, No.89), are amended to read: |
28 | Section 106. Corporations Authorized to Act as Fiduciary |
29 | * * * |
30 | (b) Foreign fiduciaries--No corporation or other legal |
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1 | entity existing under the laws of a state other than this |
2 | Commonwealth may act in this Commonwealth as fiduciary, except |
3 | that an incorporated institution possessing fiduciary powers |
4 | pursuant to the laws of another state shall have the same power |
5 | to engage in fiduciary activities within this Commonwealth as a |
6 | national banking association acting pursuant to 12 U.S.C. § 92a |
7 | or a Federal savings association 12 U.S.C. § 1464(n), provided |
8 | that: |
9 | (i) the state laws pursuant to which the incorporated |
10 | institution is operating provide equivalent privileges to an |
11 | incorporated institution chartered by the Commonwealth, |
12 | (ii) the incorporated institution complies with the |
13 | minimum capital requirements of section 1102, and |
14 | (iii) the incorporated institution provides written |
15 | notice to the department at least thirty days prior to the |
16 | commencement of fiduciary activities, which notice shall be |
17 | accompanied by documentation of its authorization to conduct |
18 | fiduciary activities issued by the appropriate regulatory |
19 | authority of the jurisdiction in which the institution is |
20 | chartered or organized, acknowledgment by the appropriate |
21 | regulatory authority of the jurisdiction in which the |
22 | institution is chartered or organized that equivalent |
23 | privileges are provided to incorporated institutions |
24 | chartered within this Commonwealth, proof the institution |
25 | complies with the minimum capital requirements of section |
26 | 1102 and a certificate of authority to do business in this |
27 | Commonwealth issued by the Department of State pursuant to 15 |
28 | Pa.C.S. Ch. 41 (relating to foreign business corporations). |
29 | (c) National banks and Federal savings banks--A national |
30 | bank or Federal savings bank located in this Commonwealth which |
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1 | has authority under the laws of the United States to act as |
2 | fiduciary may act as fiduciary in this Commonwealth. |
3 | * * * |
4 | Section 4. Section 108(a) of the act is amended to read: |
5 | Section 108. Retention of Records and Admissibility of Copies |
6 | in Evidence |
7 | (a) Requirement of retention--Every institution [and every |
8 | national bank located in this Commonwealth] shall retain in such |
9 | form and manner that they may be readily produced upon proper |
10 | demand each record of original or final entry, and each deposit |
11 | or withdrawal slip or ticket, for a period of seven years from |
12 | the date of the making of the last entry thereon, except that |
13 | coupons accompanying deposits in a club account, such as a |
14 | Christmas club or a vacation club, need not be so retained for |
15 | more than two years from the date of closing of such account. |
16 | * * * |
17 | Section 5. Section 111(b) of the act, amended July 23, 1970 |
18 | (P.L.597, No.199), is amended to read: |
19 | Section 111. Emergency Powers |
20 | * * * |
21 | (b) Whenever the Secretary of Banking is of the opinion that |
22 | circumstances or an emergency exists affecting all institutions |
23 | [and national banks] in the Commonwealth or in any parts |
24 | thereof, he may authorize by public announcement in such manner |
25 | as he shall determine institutions located in the area or areas |
26 | affected to close any or all of their offices. In addition, if |
27 | the secretary is of the opinion that only a particular |
28 | institution is affected but not those located in the area |
29 | generally, he may authorize the particular institution to close |
30 | its office or offices so affected. |
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1 | As used in this subsection, the phrase "circumstances or an |
2 | emergency" shall include but not be limited to any condition |
3 | which may interfere with the conduct of the normal operations of |
4 | an institution, poses a threat to the safety and security of the |
5 | personnel or property of the institution, interrupts |
6 | transportation or power facilities, involves war, riots, civil |
7 | commotion or other acts of lawlessness or violence, or is a |
8 | national or State occurrence of such magnitude as to justify |
9 | authorization of a bank closing. Any closing made pursuant to |
10 | this subsection shall be effective until the next business day |
11 | or for such longer period as may be authorized by the secretary |
12 | in his public announcement. |
13 | Section 6. Section 112 heading and (a)(iii) and (i)(ii) of |
14 | the act, amended May 18, 1988 (P.L.399, No.65), are amended to |
15 | read: |
16 | Section 112. Acquisitions, and Offers to Acquire, Shares of |
17 | Banks, Bank and Trust Companies[,] and Trust |
18 | Companies [and National Banks] |
19 | (a) Definitions for purpose of section--The following words |
20 | and phrases when used in this section shall have, unless the |
21 | context clearly indicates otherwise, the following meanings: |
22 | * * * |
23 | (iii) "Institution"--a bank, bank and trust company, |
24 | trust company[, national bank] or stock savings bank [located |
25 | in Pennsylvania]. |
26 | * * * |
27 | (i) Exemptions--No approval under this section shall be |
28 | required for an acquisition or proposal to acquire shares in the |
29 | case of either: |
30 | * * * |
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1 | (ii) a merger or consolidation which requires the |
2 | approval of the department [or the Comptroller of the |
3 | Currency of the United States]; |
4 | * * * |
5 | Section 7. Section 112.1 of the act, added December 18, 1986 |
6 | (P.L.1702, No.205), is repealed: |
7 | [Section 112.1. Prohibition Against Certain Acquisitions |
8 | (a) Certain acquisitions unlawful--Except as provided in |
9 | section 117, it shall be unlawful for a commercial bank, a bank |
10 | holding company, a thrift institution or a thrift institution |
11 | holding company to acquire a savings bank unless the acquiring |
12 | entity, and any savings and loan holding company or bank holding |
13 | company which directly or indirectly owns or controls the power |
14 | to vote five percent or more of its shares, is located in |
15 | Pennsylvania. |
16 | (b) Definitions--The terms in subsection (a) shall have the |
17 | same meaning as those terms have in section 117. |
18 | (c) Prior acquisitions--The prohibition in subsection (a) |
19 | shall not affect any acquisition effected prior to the effective |
20 | date of this act.] |
21 | Section 8. Sections 113(e) and 114 of the act, amended or |
22 | added March 4, 1982 (P.L.135, No.44), are repealed: |
23 | Section 113. Legal Holidays |
24 | * * * |
25 | [(e) National banks--This section shall apply to offices of |
26 | national banks located in Pennsylvania except to the extent that |
27 | Federal law specifically provides otherwise. |
28 | Section 114. Limitation on Deposit of Commonwealth Funds |
29 | The Treasury Department shall not deposit any Commonwealth |
30 | Funds in a financial institution subject to this act that |
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1 | unlawfully does not conform to the finance charge limitations in |
2 | the act of October 28, 1966 (1st Sp.Sess. P.L.55, No.7), known |
3 | as the "Goods and Services Installment Sales Act," provided that |
4 | there are other financial institutions in the Commonwealth |
5 | properly approved by the Board of Finance and Revenue which can |
6 | adequately collateralize and service Commonwealth Funds and |
7 | instruments.] |
8 | Section 9. Section 202(e) of the act, amended April 8, 1982 |
9 | (P.L.262, No.79), is amended to read: |
10 | Section 202. Additional Powers of Incorporated Institutions |
11 | Related to Conduct of Business |
12 | An incorporated institution shall have in addition to other |
13 | powers granted by this act or its articles and subject to the |
14 | limitations and restrictions contained in this act or in its |
15 | articles: |
16 | * * * |
17 | (e) Ownership of real property--the power to acquire and |
18 | hold such real property as it: |
19 | (i) occupies or intends to occupy for the transaction of |
20 | its business or partly so occupies and partly leases, |
21 | (ii) acquires for the purpose of providing parking |
22 | facilities for the use of its customers, officers and |
23 | employes, or |
24 | (iii) acquires solely or jointly with others for the |
25 | purpose of providing data processing facilities for the |
26 | institution or for the institution and others subject to the |
27 | limitation that the book value of all such real property, of |
28 | all furniture, fixtures and equipment acquired in connection |
29 | with any real property owned or leased by the institution, of |
30 | all alterations of buildings on real property owned or leased |
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1 | by the institution, of all shares of stock or corporations |
2 | acquired under subsection (d) of this section, and |
3 | investments in obligations of or for the benefit of |
4 | corporations described in subsection (d) of this section or |
5 | loans upon the security of the stock of such corporations |
6 | shall not exceed [twenty-five] one hundred percent of the |
7 | aggregate of surplus, unallocated reserves, undivided profits |
8 | and subordinated securities in the case of a mutual savings |
9 | bank, or [twenty-five] one hundred percent of the aggregate |
10 | of capital, surplus, undivided profits and capital securities |
11 | in the case of any other institution, or such larger amount |
12 | as may be approved by the department, and subject to the |
13 | requirement that estimates of costs of any building on real |
14 | property owned or leased by the institution shall be |
15 | submitted to the department for its approval prior to the |
16 | erection thereof; |
17 | * * * |
18 | Section 10. Sections 205(b), 303 and 304 of the act are |
19 | amended to read: |
20 | Section 205. Persons Bound by By-Laws; Execution of Instruments |
21 | * * * |
22 | (b) Without regard to any other form of execution provided |
23 | in the by-laws, an instrument in writing, or any assignment or |
24 | endorsement thereof, executed or entered into between an |
25 | incorporated institution and any person and signed by the |
26 | president and by the cashier or treasurer of the institution, |
27 | shall be held to have been properly executed for and in behalf |
28 | of the institution. [Except as otherwise required by statute, |
29 | the affixation of the corporate seal shall not be necessary to |
30 | the valid execution, assignment or endorsement by an institution |
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1 | of any instrument in writing.] |
2 | Section 303. General Lending Powers |
3 | (a) Definitions--As used in this section, the following |
4 | words and phrases shall have the meanings given to them in this |
5 | subsection: |
6 | "Credit device"--any card, check, identification code or |
7 | other means of identification contemplated by the agreement |
8 | governing a plan. |
9 | "Leasehold"--the interest, which is security for a loan, of a |
10 | lessee of real estate under a lease which on the date of the |
11 | loan has an unexpired term extending at least five years beyond |
12 | the maturity of the loan, or contains a right of renewal, which |
13 | may be exercised by the institution, extending at least five |
14 | years beyond the maturity of the loan. |
15 | "Loan"--a cash advance or loan to be paid to or for the |
16 | account of the customer. |
17 | "Plan" or "open-end credit plan"--a plan contemplating the |
18 | extension of credit under an account governed by an agreement |
19 | between an institution and a customer pursuant to which: |
20 | (i) the institution permits the customer and, if the |
21 | agreement governing the plan so provides, persons acting on |
22 | behalf of or with authorization from the customer from time |
23 | to time to make purchases or to obtain loans or both by use |
24 | of a credit device, |
25 | (ii) the amounts of purchases made and loans obtained |
26 | are charged to the customer's account under the plan, |
27 | (iii) the customer is required to pay the institution |
28 | the amounts of all purchases and loans charged to the |
29 | customer's account under the plan but has the privilege of |
30 | paying the amounts outstanding from time to time in full or |
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1 | in installments, and |
2 | (iv) interest may be charged and collected by the |
3 | institution from time to time on the outstanding unpaid |
4 | indebtedness under the plan. |
5 | "Purchases"--payments for property of whatever nature, real |
6 | or personal, tangible or intangible, and payments for services, |
7 | licenses, taxes, official fees, fines, private or governmental |
8 | obligations or any other thing of value. |
9 | "Truth in Lending"--the Truth in Lending Act (Public Law |
10 | 90-321, 15 U.S.C. § 1601 et seq.) and regulations promulgated |
11 | thereunder as in effect from time to time. The terms "finance |
12 | charge," "annual percentage rate," "credit card," "open-end |
13 | credit" and "closed-end credit" have the same coverage and |
14 | meanings as the definitions of those terms under Truth in |
15 | Lending. |
16 | (b) General rule-- |
17 | (i) An institution may, subject to any applicable |
18 | restriction under other provisions of this act, lend money, |
19 | extend credit and discount or purchase evidences of |
20 | indebtedness and agreements for the payment of money[.] at |
21 | such interest, finance charge, rate or terms authorized under |
22 | this section or at any interest, finance charge, rate or |
23 | terms permitted for any other financial institution or any |
24 | other lender regulated by any Federal or State supervisory |
25 | authority on the specified class of loan. |
26 | (ii) This section shall govern all direct and indirect |
27 | extensions of credit by an institution for personal, family, |
28 | household, business or agricultural purposes to an |
29 | individual, a partnership, a limited liability company or an |
30 | unincorporated association, whether as closed-end credit or |
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1 | open-end credit. |
2 | (c) Disclosures--In connection with any loan or extension of |
3 | credit, an institution shall make disclosures required by |
4 | applicable Federal law, including the Real Estate Settlement |
5 | Procedures Act of 1974 (Public Law 93-533, 88 Stat. 1724), the |
6 | Truth in Lending Act and the Equal Credit Opportunity Act |
7 | (Public Law 93-495, 15 U.S.C. § 1691 et seq.), in lieu of any |
8 | disclosure requirement that may be imposed under Pennsylvania |
9 | law. |
10 | (d) Agreements for extension of credit--An institution may |
11 | make a loan or extend credit pursuant to this section on the |
12 | basis of a written agreement. An agreement shall be fully |
13 | completed prior to signature by the customer. A completed copy |
14 | of the agreement, including related statements, notices and |
15 | documents, shall be given to the customer. An agreement shall |
16 | provide, if applicable: |
17 | (i) the amounts of the loan or available credit and the |
18 | procedure or means by which it may be obtained, |
19 | (ii) maturity provisions, installment payment |
20 | requirements, prepayment privileges and rebates of unearned |
21 | interest upon prepayment, |
22 | (iii) either the amounts or rates of interest, which may |
23 | be fixed or variable rates, or the basis for determining such |
24 | amounts or rates, which basis in the case of variable rates |
25 | must be an objectively determinable basis other than a basis |
26 | determined solely by the institution, |
27 | (iv) the method of determining balances of unpaid |
28 | indebtedness to which periodic rates of interest are |
29 | applicable which, in the case of an open-end credit plan, |
30 | may, if the agreement governing the plan so provides, include |
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1 | the amount of any interest and other charges, including |
2 | delinquency charges, which have accrued in the account, |
3 | (v) charges that may be imposed in addition to interest, |
4 | in such amounts as the agreement provides, or as established |
5 | in the manner the agreement provides, such as, but not |
6 | limited to, minimum charges, check charges and maintenance |
7 | charges related to extensions of credit pursuant to overdraft |
8 | check plans, a delinquency charge which may be assessed if |
9 | the loan or extension of credit is in default for more than |
10 | fifteen days and fees, extension charges and actual charges |
11 | that may be incurred on default, including, but not limited |
12 | to, court and other collection costs and reasonable attorney |
13 | fees. The additional charges may include a daily, weekly, |
14 | monthly, annual or other periodic charge for the privileges |
15 | made available to the customer under an open-end credit plan, |
16 | transaction charges for each separate purchase or loan under |
17 | the plan and a minimum charge for each scheduled billing |
18 | period under the plan, during any portion of which there is |
19 | an outstanding unpaid indebtedness under the plan, |
20 | (vi) collateral security and provisions relating to |
21 | collateral security, except that there may not be any |
22 | authorization for entry of judgment by confession nor any |
23 | acceleration of a loan or repossession of collateral unless |
24 | there is a default pursuant to the agreement, and |
25 | (vii) insurance coverages and premiums for insurance |
26 | coverages. |
27 | Such agreements shall be valid and enforceable, and an |
28 | institution may impose and collect the interest and other |
29 | charges provided in the agreement. |
30 | (e) Computation of interest--A fixed rate of interest |
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1 | included in a finance charge shall be computed either on a |
2 | simple interest basis by a generally accepted actuarial method, |
3 | including a method permitted for determination of an annual |
4 | percentage rate under Truth in Lending or, as to an extension of |
5 | credit with an initial maturity of not more than sixty months, |
6 | which is made within two years after the effective date of this |
7 | subsection, on an add-on or discount basis. The maximum amount |
8 | that may be charged on the basis of a variable rate of interest |
9 | shall be computed in accordance with or with reference to a |
10 | schedule or formula at the times and for the periods provided in |
11 | the agreement. The periodic rate of interest, as so varied, will |
12 | be applicable to all outstanding unpaid indebtedness under the |
13 | agreement from the effective date of the variation if so |
14 | provided in the agreement. |
15 | (f) Changes in terms--An institution may change the terms of |
16 | the agreement if: |
17 | (i) the agreement so provides, |
18 | (ii) there is compliance with applicable notice |
19 | requirements of Truth in Lending prior to the effective date |
20 | of the change, |
21 | (iii) the notice states that a customer for whose |
22 | account a change in terms does not become effective may pay |
23 | all outstanding amounts pursuant to the agreement as in |
24 | effect prior to the notice, and |
25 | (iv) in the case of an increase in a fixed rate of |
26 | interest or other charges payable by the customer under an |
27 | open-end credit plan, the customer incurs additional |
28 | indebtedness after the effective date of the change of terms. |
29 | If the agreement governing the plan so provides, a change of |
30 | terms pursuant to this subsection may, on and after the date it |
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1 | becomes effective as to an account, apply to all then |
2 | outstanding unpaid indebtedness. A change in the amount of |
3 | interest imposed in accordance with or with reference to a |
4 | schedule or formula for a variable rate of interest shall not be |
5 | deemed to be a change in terms, but a change in such schedule or |
6 | formula shall be deemed to be a change in terms. No change may |
7 | be made in a fixed rate of interest or other charges payable |
8 | with respect to the outstanding balance of indebtedness or in |
9 | the amount or due dates of required installment payments on |
10 | closed-end credit unless there is written consent of the |
11 | customer at the time of the change except for an extension of |
12 | any due date or an option granted by the institution to the |
13 | customer to omit payments and except as may be otherwise |
14 | provided in an agreement for an extension of credit which is not |
15 | for personal, family or household purposes. |
16 | (g) Prepayment-- |
17 | (i) A borrower or buyer may prepay an extension of |
18 | credit in full at any time. |
19 | (ii) If interest has been precomputed, then, in the |
20 | event of prepayment of an extension of credit, the |
21 | institution shall refund to the customer the unearned portion |
22 | of the precomputed interest. The refund shall be in an amount |
23 | not less than the amount of the unearned precomputed interest |
24 | calculated in accordance with a generally accepted actuarial |
25 | method, including a method permitted for determination of an |
26 | annual percentage rate under Truth in Lending, except that |
27 | the amount of the unearned interest on an extension of credit |
28 | with an initial maturity of not more than sixty months which |
29 | is made within two years after the effective date of this |
30 | section for which interest is computed on an add-on or |
|
1 | discount basis as permitted by subsection (e) may be |
2 | calculated in accordance with the "sum of the balances" |
3 | method and except that the customer shall not be entitled to |
4 | a refund which results in a net minimum charge of less than |
5 | an amount equal to the interest that would accrue in the |
6 | first month the extension of credit was scheduled to be |
7 | outstanding. The institution shall not be required to refund |
8 | the unearned portion of the interest if such amount is less |
9 | than one dollar ($1). |
10 | (iii) The amount of a refund under the "sum of the |
11 | balances" method is determined by multiplying the precomputed |
12 | interest by a fraction, the numerator of which is the sum of |
13 | the balances, including interest, of the extension of credit |
14 | scheduled to be outstanding after deducting the first of the |
15 | payments scheduled to be made on or after the date of |
16 | prepayment and the denominator of which is the sum of all the |
17 | unpaid balances, including interest, of the extension of |
18 | credit scheduled to be outstanding from its inception to and |
19 | including the maturity of the final installment. Intervals |
20 | between scheduled payments must be regular periods of one |
21 | month or less except that the interval between the inception |
22 | of an extension of credit and the due date of the first |
23 | scheduled payment may be: |
24 | (A) one month and fifteen days when the regular |
25 | payment interval is a month, |
26 | (B) one month when the regular payment interval is |
27 | less than a month but more than a week, or |
28 | (C) eleven days when the regular payment interval is |
29 | a week or less. |
30 | (h) Insurance--The agreement may provide for life, health, |
|
1 | accident, loss-of-income or other permissible insurance related |
2 | to an extension of credit under a group or individual policy |
3 | subject to the option of the customer to furnish required |
4 | insurance through an authorized insurer of the customer's choice |
5 | as provided in section 11 of the act of September 2, 1961 |
6 | (P.L.1232, No.540), known as the "Model Act for the Regulation |
7 | of Credit Life Insurance and Credit Accident and Health |
8 | Insurance," and, if premiums for the insurance are paid to the |
9 | institution, provisions shall be made for rebates of unearned |
10 | premiums, if any, upon prepayment. An institution may require |
11 | that insurance be maintained, from an insurer acceptable to the |
12 | institution, against loss or damage to property which is |
13 | collateral security for the extension of credit and against |
14 | liability arising out of the ownership or use of such property. |
15 | An institution may grant an extension of credit to finance the |
16 | premiums for the insurance. |
17 | (i) Extensions of credit through intermediaries--An |
18 | extension of credit to finance a sale of a motor vehicle, other |
19 | than through an open-end credit plan, may be made by an |
20 | institution through a seller licensed as an installment seller |
21 | under the act of June 28, 1947 (P.L.1110, No.476), known as the |
22 | "Motor Vehicle Sales Finance Act," as an intermediary if: |
23 | (i) the agreement governing the extension of credit |
24 | conspicuously provides that the extension of credit is made |
25 | by the institution to the buyer and is subject to the |
26 | provisions of this section, and |
27 | (ii) either the institution has made a commitment to |
28 | make the extension of credit or the agreement is subject to |
29 | acceptance by the institution within two business days after |
30 | the date of the agreement and the institution upon such |
|
1 | acceptance sends written notice to the buyer. The terms and |
2 | conditions under which the seller acts as an intermediary |
3 | between the institution and the buyer shall be determined by |
4 | written agreement between the institution and the seller. |
5 | An extension of credit made through an intermediary pursuant to |
6 | this section shall be subject to this act and other acts |
7 | governing transactions between banks and their customers and |
8 | shall not be subject to the provisions or requirements of any |
9 | other regulatory statute, rule or regulation. Neither a seller |
10 | who acts as an intermediary for an institution with respect to |
11 | an extension of credit nor an institution that makes an |
12 | extension of credit through a seller as an intermediary shall be |
13 | deemed to be in violation of licensing or other requirements of |
14 | any other regulatory statute, rule or regulation that would be |
15 | applicable to extensions of credits by such a seller or |
16 | contractor to its customers. |
17 | (j) Right of rescission--A person whose ownership interest |
18 | in that person's principal dwelling is subject to a lien or |
19 | security interest as collateral security for an extension of |
20 | credit subject to this section shall have a right of rescission |
21 | for the same types of transactions on the same terms and |
22 | conditions and for the same time periods as those provided for |
23 | the right of rescission under Truth in Lending. |
24 | (k) Statement of account--Upon the written request of the |
25 | customer, an institution shall provide, within ninety days after |
26 | the end of each calendar year, a statement of the customer's |
27 | account showing payments made during that year, the amount |
28 | applied to interest and the balance of the account at the end of |
29 | that year. |
30 | (l) Waiver of provisions--No provision of this section which |
|
1 | confers rights on the customer or any other person may be waived |
2 | or modified except to the extent and in the circumstances in |
3 | which Truth in Lending permits a consumer to waive or modify the |
4 | right of rescission. |
5 | (m) Balloon payments--No agreement for a loan or extension |
6 | of credit under this section containing terms of which principal |
7 | is repayable in installments may provide for a final payment |
8 | which is more than double the regularly scheduled payment |
9 | exclusive of overdue or extended payments, except in the case of |
10 | automobile financing transactions and real estate loans. |
11 | (n) Real estate loans-- |
12 | (i) An institution may, subject to the requirements of |
13 | this section, make or acquire a loan secured by a lien on |
14 | real estate, including a lease-hold, located in any state or |
15 | the District of Columbia, in a dependency or insular |
16 | possession of the United States or in the Commonwealth of |
17 | Puerto Rico for a term not to exceed forty years and in an |
18 | amount not to exceed ninety percent of the value of the loan |
19 | except that if the amount of the loan does not exceed one |
20 | hundred thousand dollars ($100,000) or is made in reliance |
21 | upon a private mortgage insurance or guarantee acceptable to |
22 | the department regardless of the amount of the loan, then one |
23 | hundred percent of the value of the loan, unless otherwise |
24 | subject to the supervisory loan-to-value limits established |
25 | by the Federal Deposit Insurance Corporation in 12 CFR Pt. |
26 | 365, Subpt. A, Appendix A (relating to interagency guidelines |
27 | for real estate lending policies). |
28 | (ii) The requirements for a loan subject to this |
29 | subsection shall be: |
30 | (A) the loan shall be evidenced by a bond, note or |
|
1 | other obligation, and the lien securing the loan shall be |
2 | obtained by a mortgage, deed of trust or judgment, |
3 | (B) the value of the real estate shall be determined |
4 | by a real estate appraiser qualified in the state where |
5 | the real estate is located who shall inspect the real |
6 | estate and state its value to the best of the appraiser's |
7 | judgment in a written report signed by the appraiser that |
8 | must be preserved in the records of the institution, |
9 | (C) insurance, as evidenced by a policy or binder or |
10 | a copy of either, against loss from fire on all buildings |
11 | on the real estate which are included in the appraised |
12 | value, issued by insurers acceptable to the institution |
13 | and authorized to do business where the real estate is |
14 | located and in form and amount satisfactory to the |
15 | institution, shall be maintained during the term of the |
16 | loan by or at the expense of the borrower, except that |
17 | the institution may at its own expense maintain such |
18 | insurance covering only its interest as lender, |
19 | (D) the borrower shall pay all expenses in |
20 | connection with the loan for title insurance, searches |
21 | and certificates, appraisal fees and fees for preparation |
22 | and recording of documents, and |
23 | (E) an institution may make a single delinquency |
24 | charge for each payment in arrears for a period of more |
25 | than fifteen days other than by reason of acceleration or |
26 | by reason of a delinquency on a prior payment. |
27 | (iii) The restrictions and requirements of this |
28 | subsection shall not apply to: |
29 | (A) a loan guaranteed at least to the extent of |
30 | twenty percent of the loan, or for which a written |
|
1 | commitment for the guarantee has been issued, by the |
2 | Veterans Administration pursuant to 38 U.S.C. (relating |
3 | to veterans' benefits), |
4 | (B) a loan insured, or for which a written |
5 | commitment to insure has been issued, pursuant to |
6 | national housing legislation, |
7 | (C) a loan insured, or for which a written |
8 | commitment to insure has been issued, by the Farmers Home |
9 | Administration pursuant to the Consolidated Farm and |
10 | Rural Development Act (Public Law 87-128, 75 Stat. 307), |
11 | (D) a loan made pursuant to the Small Business Act |
12 | (Public Law 85-536, 15 U.S.C. § 631 et seq.), |
13 | (E) an investment security acquired pursuant to |
14 | section 307, |
15 | (F) a loan in connection with which the institution |
16 | takes a real estate lien as security in the exercise of |
17 | banking prudence but as to which it is relying for |
18 | repayment on: |
19 | (1) the general credit of the obligor or of an |
20 | installment buyer or of a lessee of the real estate, |
21 | (2) collateral other than the real estate lien, |
22 | (3) a guaranty, or an agreement to take over or |
23 | purchase the loan in the event of default, by a |
24 | financially responsible person other than a person |
25 | engaged in the business of guaranteeing real estate |
26 | loans, or |
27 | (4) an agreement by a financially responsible |
28 | person to take over or purchase the loan, or to |
29 | provide funds for payment of the loan, within a |
30 | period of five years from the date of the loan |
|
1 | and there is a certificate of reliance setting forth the |
2 | applicable facts, or |
3 | (G) a residential mortgage loan secured by real |
4 | estate located in a low-income to moderate-income area. |
5 | (iv) The restriction of this subsection on the location |
6 | of real estate shall not apply in the case of a loan acquired |
7 | from a corporation or association of which the institution |
8 | owns more than fifty percent of the outstanding shares of |
9 | capital under section 311(d)(ii)(C), if such loan: |
10 | (A) is secured by a first lien on improved real |
11 | estate, including farm land, |
12 | (B) satisfies all requirements of this section other |
13 | than the restriction on location of real estate, and |
14 | (C) is serviced by the corporation or association |
15 | from which it is acquired. |
16 | Section 304. Direct Leasing of Personal Property |
17 | An institution may[, subject to regulation by the |
18 | department,] acquire and lease personal property pursuant to a |
19 | binding arrangement for the leasing of such property to a |
20 | customer upon terms requiring payment to the institution, during |
21 | the minimum period of the lease, of rentals which in the |
22 | aggregate will exceed the total expenditures by the institution |
23 | for or in connection with the acquisition, ownership, |
24 | maintenance and protection of the property. |
25 | Section 11. Section 306(b) and (e) of the act, amended July |
26 | 6, 1984 (P.L.621, No.128), are amended to read: |
27 | Section 306. Limits on Indebtedness of One Customer (Including |
28 | Purchased Paper) |
29 | * * * |
30 | (b) Indebtedness included--There shall be included in the |
|
1 | indebtedness of one customer to which the fifteen percent |
2 | limitation of this section applies: |
3 | (i) the aggregate rentals payable by the customer under |
4 | leases of personal property by the institution; |
5 | (ii) to the extent that they exceed fifteen percent of |
6 | the capital accounts of the institution, the aggregate |
7 | balances payable on all installment paper acquired by the |
8 | institution from the customer, irrespective of the legal |
9 | liability of the customer or absence of such liability; |
10 | (iii) to the extent that they exceed fifteen percent of |
11 | the capital accounts of the institution, obligations of the |
12 | customer as indorser or guarantor of notes (other than those |
13 | excluded by subsection (c)(ii) of this section) having a |
14 | maturity of not more than six months and actually owned by |
15 | the customer transferring the notes; |
16 | (iv) obligations of the customer by reason of |
17 | acceptances by the institution of drafts or bills of exchange |
18 | (other than those excluded by subsection (c)(v) of this |
19 | section); [and] |
20 | (v) all other liabilities, not otherwise excluded by |
21 | this section, of the customer to the institution, whether |
22 | direct or indirect, primary or secondary, under evidences of |
23 | indebtedness and agreements for the payment of money[.]; and |
24 | (vi) any credit exposure to a person arising from a |
25 | derivative transaction, repurchase agreement, reverse |
26 | repurchase agreement, securities lending transaction or |
27 | securities borrowing transaction between the institution and |
28 | the person. |
29 | * * * |
30 | (e) Definition--As used in this section [the term "capital |
|
1 | accounts" means the aggregate of capital, surplus, undivided |
2 | profits, capital securities and reserve for loan losses of the |
3 | institution. Reserve for loan losses shall mean that portion of |
4 | an institution's earnings set aside as a general reserve to |
5 | absorb possible future losses on loans as of the last complete |
6 | calendar or fiscal year, carried in an account captioned |
7 | "reserve for loan loss" or "reserve for bad debts."], the |
8 | following words and phrases shall have the meanings given to |
9 | them in this subsection: |
10 | "Capital accounts"--the aggregate of capital, surplus, |
11 | undivided profits, capital securities and reserve for loan |
12 | losses of the institution. Reserve for loan losses shall mean |
13 | that portion of an institution's earnings set aside as a general |
14 | reserve to absorb possible future losses on loans as of the last |
15 | complete calendar or fiscal year, carried in an account |
16 | captioned "reserve for loan loss" or "reserve for bad debts." |
17 | "Derivative transaction"--any transaction that is a contract, |
18 | agreement, swap, warrant, note or option that is based, in whole |
19 | or in part, on the value of, any interest in, or any |
20 | quantitative measure or the occurrence of any event relating to, |
21 | one or more commodities, securities, currencies, interest or |
22 | other rates, indices or other assets. |
23 | Section 12. Section 309 of the act, amended July 30, 1975 |
24 | (P.L.108, No.56) and May 21, 1980 (P.L.173, No.51), is repealed: |
25 | [Section 309. Installment Loans (Including Revolving Credit |
26 | Plans) |
27 | (a) Maximum rate--An institution may make a charge for an |
28 | installment loan which complies with the requirements of this |
29 | section, at a rate not in excess of six dollars ($6) per one |
30 | hundred dollars ($100) per annum computed on the original |
|
1 | principal amount for the period of the loan. If such loan is one |
2 | of a series of loans under an agreement ("revolving credit |
3 | plan") providing a maximum outstanding balance of all such loans |
4 | at any time, the institution may make a charge at a rate not in |
5 | excess of one percent per month on the actual outstanding |
6 | balance of the loan. |
7 | (b) Disclosure of charge--The institution shall inform the |
8 | borrower in writing: |
9 | (i) of the monthly rate of the charge under subsection |
10 | (a) of this section for a loan under a revolving credit plan, |
11 | and |
12 | (ii) of the dollar amount of its total charge under |
13 | subsection (a) of this section for any other installment loan |
14 | by a statement in an evidence of indebtedness or agreement in |
15 | connection with the loan or by any other method that complies |
16 | with requirements established by regulation of the department. |
17 | (c) Term--The term within which all loans which at any time |
18 | have been made under a revolving credit plan shall become due |
19 | shall be ten years from the date of the last loan made under the |
20 | plan. The term of any other installment loan shall be a period |
21 | not in excess of one hundred twenty months and fifteen days |
22 | calculated from the time of making the loan. The first |
23 | installment shall be scheduled no longer than forty-five days |
24 | after the time of making the loan. The aggregate period for |
25 | which the final maturity of any loan may be extended shall be |
26 | six months. |
27 | (d) Maximum amount--The original principal amount of any |
28 | loan, and the total of the principal balances of all loans to |
29 | one borrower outstanding at any time, for which a charge is made |
30 | pursuant to the authorization of this section shall not be in |
|
1 | excess of ten thousand dollars ($10,000). For any portion of one |
2 | or more loans to one borrower in excess of such amount, the |
3 | charge which the institution may make shall be governed by law |
4 | other than this section. |
5 | (e) Installments--The total amount payable on the loan shall |
6 | be payable in installments of substantially equal amounts at |
7 | substantially equal intervals of not more than three months |
8 | each, except that installments may be omitted, because of the |
9 | borrower's receipt of income on an intermittent basis, for a |
10 | total period which is not more than three months in each |
11 | calendar year, and except that in the case of a loan or loans |
12 | made under a revolving credit plan the amounts of installments |
13 | may be based on a percentage of the balance of all loans |
14 | outstanding under the plan. |
15 | (f) Permissible charges--An institution may receive in |
16 | advance the charge permitted under subsection (a) of this |
17 | section and in addition may make the following charges: |
18 | (i) premiums for insurance obtained in connection with |
19 | the loan, |
20 | (ii) a charge for each check or order used by the |
21 | customer to obtain the proceeds of loans under a revolving |
22 | credit plan in an amount not in excess of the institution's |
23 | current charge for a check sold for use against a deposit |
24 | account commonly called a "special checking account", |
25 | (iii) a single delinquency charge for each installment |
26 | in arrears for a period of more than fifteen days other than |
27 | by reason of acceleration or by reason of a delinquency on a |
28 | prior installment, in an amount not to exceed the lesser of |
29 | two dollars and fifty cents ($2.50) or five percent of the |
30 | amount of the installment, |
|
1 | (iv) a charge for an extension in an amount not to |
2 | exceed one percent of the unpaid balance of the loan for each |
3 | month of such extension or portion thereof in excess of |
4 | fifteen days, |
5 | (v) fees paid for filing documents in public offices in |
6 | connection with the loan, and |
7 | (vi) actual expenditures, including reasonable |
8 | attorneys' fees, for proceedings to collect the loan. |
9 | (g) Rebate of unearned charges--In the event of payment or |
10 | refinancing of the balance of a loan prior to maturity the |
11 | institution shall pay or credit a refund of the unearned portion |
12 | of the charge made pursuant to subsection (a) of this section in |
13 | an amount which shall be at least the amount computed, for the |
14 | unexpired period to the date of scheduled maturity, by the |
15 | accounting method known as "the sum of the digits" or "the rule |
16 | of 78" except that no such refund shall be required in an amount |
17 | less than one dollar ($1) or in any amount until the institution |
18 | has received a minimum charge of five dollars ($5) for the loan. |
19 | (h) Advertisement--The department may prohibit the further |
20 | use by an institution of any advertisement respecting |
21 | installment loans authorized by this section if it finds that |
22 | the form or content of such advertisement might mislead the |
23 | public. |
24 | (i) Insured loans--The requirements of this section shall |
25 | not apply to a loan insured pursuant to national housing |
26 | legislation.] |
27 | Section 13. Section 310 of the act, amended May 21, 1980 |
28 | (P.L.173, No.51), July 9, 1992 (P.L.430, No.90) and November 22, |
29 | 2000 (P.L.660, No.89), is repealed: |
30 | [Section 310. Real Estate Loans |
|
1 | (a) Permissible loans; term and maximum amount--An |
2 | institution may, subject to the requirements of this section, |
3 | make or acquire a loan secured by a lien on real estate |
4 | (including a lease-hold) located in any state or the District of |
5 | Columbia, in a dependency or insular possession of the United |
6 | States or in the Commonwealth of Puerto Rico: |
7 | (i) in the case of improved real estate, including farm |
8 | land, for a term not to exceed: |
9 | (A) ten years, if unamortized, or |
10 | (B) forty years, if the terms of the loan require |
11 | substantially equal payments at successive intervals of |
12 | not more than one year each and in an amount sufficient |
13 | to pay all principal of and interest on the loan within |
14 | the term of the loan, except that a loan to a commercial |
15 | or industrial borrower is exempted from the requirement |
16 | of substantially equal payments and the date of the |
17 | initial payment on a loan to such borrower may be |
18 | deferred for a period not in excess of five years from |
19 | the date of the loan; or |
20 | (ii) in the case of unimproved real estate to be |
21 | acquired or developed with the proceeds of the loan, for a |
22 | term not to exceed five years; and |
23 | (iii) in an amount not to exceed ninety percent of the |
24 | value of the loan except that if the amount of the loan does |
25 | not exceed one hundred thousand dollars ($100,000) or is made |
26 | in reliance upon a private mortgage insurance or guarantee |
27 | acceptable to the department regardless of the amount of the |
28 | loan, then one hundred percent of the value of the loan. |
29 | (b) Additional term for combination of construction and |
30 | permanent loans--In a case in which a loan subject to this |
|
1 | section is made to finance construction of an improvement and |
2 | such loan is combined with a permanent loan to continue after |
3 | completion of construction, the term of the construction loan or |
4 | that portion of the term not in excess of three years, shall not |
5 | be counted against the maximum term for the permanent loan |
6 | permitted under subsection (a) of this section but such combined |
7 | construction loan and permanent loan shall be subject to all |
8 | other requirements of this section. |
9 | (c) Leasehold loans--For the purpose of this section a |
10 | "leasehold" shall mean the interest, which is security for a |
11 | loan, of a lessee of real estate under a lease which on the date |
12 | of the loan has an unexpired term extending at least five years |
13 | beyond the maturity of the loan, or contains a right of renewal, |
14 | which may be exercised by the institution, extending at least |
15 | five years beyond the maturity of the loan. |
16 | (d) Requirements in connection with loans--The requirements |
17 | for a loan subject to this section shall be: |
18 | (i) the loan shall be evidenced by a bond, note or other |
19 | obligation and the lien securing such loan shall be obtained |
20 | by a mortgage, deed of trust or judgment; |
21 | (ii) the lien shall be a first lien (except for a lien |
22 | of taxes, assessments or charges which are not yet due or |
23 | which are payable without penalty) unless all prior liens are |
24 | held by the institution and the aggregate of all loans by the |
25 | institution secured by liens on the real estate satisfy all |
26 | other requirements of this section pertaining to such loans; |
27 | (iii) the value of the real estate shall be determined |
28 | either by a real estate appraiser qualified in the state |
29 | where the real estate is located who shall inspect the real |
30 | estate and state its value to the best of his judgment in a |
|
1 | written report signed by him which must be preserved in the |
2 | records of the institution or in the alternative by an |
3 | appraisal signed by two reputable persons who shall: |
4 | (A) be directors of the institution or selected in a |
5 | manner authorized by the directors, |
6 | (B) be familiar with real estate values in the |
7 | vicinity where the real estate is located, and |
8 | (C) inspect the real estate and state its value to |
9 | the best of their judgment in a written report which must |
10 | be preserved in the records of the institution. In the |
11 | event the appraisers arrive at different conclusions as |
12 | to the value of the real estate, it shall be permissible |
13 | to use the average of their two appraisals to determine |
14 | the value of the real estate: Provided, however, That |
15 | each valuation is stated in the report; |
16 | (iv) insurance, as evidenced by a policy or binder or a |
17 | copy of either, against loss from fire on all buildings on |
18 | the real estate which are included in the appraised value, |
19 | issued by insurers acceptable to the institution and |
20 | authorized to do business where the real estate is located |
21 | and in form and amount satisfactory to the institution, shall |
22 | be maintained during the term of the loan by or at the |
23 | expense of the borrower, except that the institution may at |
24 | its own expense maintain such insurance covering only its |
25 | interest as lender; |
26 | (v) the borrower shall pay all expenses in connection |
27 | with the loan for title insurance, searches and certificates, |
28 | appraisal fees and fees for preparation and recording of |
29 | documents; and |
30 | (vi) an institution may make a single delinquency charge |
|
1 | for each payment in arrears for a period of more than fifteen |
2 | days other than by reason of acceleration or by reason of a |
3 | delinquency on a prior payment. |
4 | (e) Excepted loans--The restrictions and requirements of |
5 | this section shall not apply to: |
6 | (i) a loan guaranteed at least to the extent of twenty |
7 | percent thereof, or for which a written commitment for such |
8 | guarantee has been issued, by the Veterans Administration |
9 | pursuant to the Veterans' Benefits Act: |
10 | (ii) a loan insured, or for which a written commitment |
11 | to insure has been issued, pursuant to national housing |
12 | legislation; |
13 | (iii) a loan insured, or for which a written commitment |
14 | to insure has been issued, by the Farmers Home Administration |
15 | pursuant to the Consolidated Farmers Home Administration Act; |
16 | (iv) a loan made pursuant to the Small Business Act; |
17 | (v) an investment security acquired pursuant to section |
18 | 307; or |
19 | (vi) a loan in connection with which the institution |
20 | takes a real estate lien as security in the exercise of |
21 | banking prudence but as to which it is relying for repayment |
22 | on: |
23 | (A) the general credit of the obligor or of an |
24 | installment buyer or of a lessee of the real estate, |
25 | (B) collateral other than the real estate lien, |
26 | (C) a guaranty, or an agreement to take over or |
27 | purchase the loan in the event of default, by a |
28 | financially responsible person other than a person |
29 | engaged in the business of guaranteeing real estate |
30 | loans, or |
|
1 | (D) an agreement by a financially responsible person |
2 | to take over or purchase the loan, or to provide funds |
3 | for payment thereof, within a period of five years from |
4 | the date of the loan |
5 | and there is a certificate of reliance setting forth the |
6 | applicable facts. |
7 | (vii) loans made pursuant to any secondary mortgage law |
8 | of the Commonwealth. |
9 | (viii) a residential mortgage loan secured by real |
10 | estate located in a low- to moderate-income area. |
11 | (f) Loans acquired from international banking subsidiary-- |
12 | The restriction of this section on the location of real estate |
13 | shall not apply in the case of a loan acquired from a |
14 | corporation or association of which the institution owns more |
15 | than fifty percent of the outstanding shares of capital under |
16 | subsection 311(d)(ii)(C), if such loan: |
17 | (i) is secured by a first lien on improved real estate, |
18 | including farm land, |
19 | (ii) satisfies all requirements of this section other |
20 | than the restriction on location of real estate, and |
21 | (iii) is serviced by the corporation or association from |
22 | which it is acquired. |
23 | (f.1) Variable interest rate loans--The requirements with |
24 | respect to payments under subsection (a)(i) of this section |
25 | shall not be applicable in the case of a variable interest rate |
26 | loan permitted by the act of January 30, 1974 (P.L.13, No.6), |
27 | referred to as the Loan Interest and Protection Law. |
28 | (f.2) Alternative payment terms--An institution may permit |
29 | exceptions to the requirements as to time and amount of payments |
30 | applicable under subsection (a)(i) as to: |
|
1 | (i) one payment in a calendar year and an aggregate of |
2 | five payments during the term of the loan, the aggregate |
3 | amount of which shall be added either to other regular |
4 | payments or to the final payment of the loan; or |
5 | (ii) a difference in the amount of substantially equal |
6 | payments at the intervals occurring during the first one- |
7 | quarter of the total term of the loan from the amount of |
8 | substantially equal payments at the intervals occurring |
9 | during the remainder of the term; or |
10 | (iii) in a case in which the principal amount of the |
11 | loan is distributed periodically to the borrower, a |
12 | requirement of payment of interest only from the dates of |
13 | such distributions of the principal amount and a requirement |
14 | for the payment of principal and interest, commencing not |
15 | more than three months after the last distribution, in |
16 | substantially equal payments at successive intervals of not |
17 | more than one year each and sufficient to pay all principal |
18 | of and interest on the loan within ten years after the date |
19 | of commencement of such payments.] |
20 | Section 14. Section 316 of the act, amended or added |
21 | November 27, 1968 (P.L.1104, No.345) and September 27, 1973 |
22 | (P.L.251, No.72), is repealed: |
23 | [Section 316. Authorizing Certain Loans for Commercial, |
24 | Business, Professional, Agricultural or Nonprofit |
25 | Purposes Including Revolving Credit Plans |
26 | (a) Maximum rate--An institution may make a charge for an |
27 | installment loan which complies with the requirements of this |
28 | section at a rate not in excess of five dollars ($5) per one |
29 | hundred dollars ($100) per annum computed on the original |
30 | principal amount for the period of the loan. If such loan is one |
|
1 | of a series of loans under an agreement ("revolving credit |
2 | plan") providing a maximum outstanding balance of all such loans |
3 | at any time, the institution may make a charge at a rate not in |
4 | excess of three-fourths of one percent per month on the actual |
5 | outstanding balance of the loan. |
6 | (b) Eligible borrowers--An installment loan for which the |
7 | charge authorized by this section may be made may be granted |
8 | only to a customer which is a nonprofit organization or to a |
9 | customer which is engaged in a commercial, business, |
10 | professional or agricultural enterprise for purposes of such |
11 | enterprise. |
12 | (c) Term--The term of the loan shall be a period not in |
13 | excess of seven years from the date of the loan. The aggregate |
14 | period for which the final maturity of the loan may be extended |
15 | shall be one year. |
16 | (d) Maximum amount--The original principal amount of any |
17 | loan, and the total of the principal balances of all loans to |
18 | one borrower outstanding at any time, for which charges are made |
19 | pursuant to the authorization of the section and of section 309, |
20 | shall not be in excess of fifty thousand dollars ($50,000). For |
21 | any portion of one or more loans to one borrower in excess of |
22 | such amount, the charge which the institution may make shall be |
23 | governed by law other than this section. |
24 | (e) Installments--The total amount payable on the loan shall |
25 | be payable in installments at substantially equal intervals of |
26 | not more than one year each. |
27 | (f) Permissible charges--An institution may receive in |
28 | advance the charge permitted under subsection (a) of this |
29 | section and in addition may make the following charges: |
30 | (i) premiums for insurance obtained in connection with |
|
1 | the loan, |
2 | (ii) a single delinquency charge for each installment in |
3 | arrears for a period of more than fifteen days other than by |
4 | reason of acceleration or by reason of a delinquency on a |
5 | prior installment, in an amount not to exceed the lesser of |
6 | fifteen dollars ($15) or five percent of the amount of the |
7 | installment, |
8 | (iii) a charge for an extension in an amount not to |
9 | exceed one percent of the unpaid balance of the loan for each |
10 | month of such extension or portion thereof in excess of |
11 | fifteen days, |
12 | (iv) fees paid for filing documents in public offices in |
13 | connection with the loan, and |
14 | (v) actual expenditures, including reasonable attorneys' |
15 | fees, for proceedings to collect the loan. |
16 | (g) Rebate of unearned charges--In the event of payment or |
17 | refinancing of the balance of a loan prior to maturity, the |
18 | institution shall pay or credit a refund of the unearned portion |
19 | of the charge made pursuant to subsection (a) of this section in |
20 | an amount which shall be at least the amount computed, for the |
21 | unexpired period to the date of scheduled maturity, by the |
22 | accounting method known as the "Sum of the Digits" or "The Rule |
23 | of 78," except that no such refund shall be required in an |
24 | amount less than one dollar ($1) or in any amount until the |
25 | institution has received a minimum charge of ten dollars ($10) |
26 | for the loan.] |
27 | Section 15. Section 317 of the act, added June 25, 1977 |
28 | (P.L.101, No.37), is repealed: |
29 | [Section 317. Authorizing Monthly Interest Loans for |
30 | Individuals, Partnerships and Other Unincorporated |
|
1 | Entities |
2 | (a) Maximum rate--An institution may make a charge for a |
3 | loan which complies with the requirements of this section at a |
4 | rate not in excess of one percent per month on the actual |
5 | outstanding principal balance of the loan. This provision shall |
6 | be in addition to and shall not be limited by other statutes |
7 | authorizing rates of interest on charges for credit except it |
8 | shall not be applicable to a residential mortgage loan for which |
9 | a maximum rate of interest is provided under the act of January |
10 | 30, 1974 (P.L.13, No.6), referred to as the Loan Interest and |
11 | Protection Law. An institution which makes a charge permitted by |
12 | this section may not also make a charge for the same transaction |
13 | under any other statutory provision. |
14 | (b) Eligible borrowers--A loan for which the charge |
15 | authorized by this section may be made may be granted only to an |
16 | individual, partnership or other unincorporated entity. |
17 | (c) Maximum amount--The original principal amount of any |
18 | loan, and the total of the principal balances of all loans to |
19 | one borrower outstanding at any time, for which charges are made |
20 | pursuant to the authorization of this section shall not be in |
21 | excess of ten thousand dollars ($10,000). The charge for the |
22 | portion of a loan to one borrower in excess of such amount, |
23 | shall be in accordance with law not contained in this section. |
24 | (d) Permissible charges--An institution may receive the |
25 | charge permitted under subsection (a) and, in addition, may make |
26 | the following charges: |
27 | (i) fees paid for filing documents in public offices in |
28 | connection with the loan, and |
29 | (ii) actual expenditures, including reasonable |
30 | attorney's fees, for proceedings to collect the loan.] |
|
1 | Section 16. Section 318 of the act, added May 21, 1980 |
2 | (P.L.173, No.51), is repealed: |
3 | [Section 318. Alternate Basis for Interest Charges by |
4 | Institutions |
5 | An institution may make a charge for a loan at a rate, for |
6 | the term of the loan, not in excess of the discount rate in |
7 | effect, at the time the loan is made, at the Federal Reserve |
8 | Bank of the Federal Reserve District in which the institution is |
9 | located plus five percent. The basis for charging interest under |
10 | this section is an optional alternative to other provisions of |
11 | this act and other statutes authorizing rates of interest or |
12 | charges for credit and is not limited by any of such other |
13 | provisions.] |
14 | Section 17. Sections 319 and 320 of the act, added April 8, |
15 | 1982 (P.L.262, No.79), are repealed: |
16 | [Section 319. Charging Interest at Rates Permitted Competing |
17 | Lenders |
18 | Any loans authorized by this act, other than loans secured by |
19 | a first lien mortgage on residential real estate, may be made at |
20 | such interest, finance charge, rate or terms herein authorized |
21 | or at any interest, finance charge, rate or terms permitted by |
22 | Pennsylvania law for any other financial institution or any |
23 | other lender regulated by any State or Federal supervisory |
24 | authority on the specified class of loan. |
25 | Section 320. Notice of Annual Fees and Refunds on Credit Cards |
26 | of Affiliate Banks |
27 | (a) Notice of annual fees--A bank which is an affiliate of |
28 | an institution, which is domiciled in a state whose law permits |
29 | an annual fee to be charged on a credit card issued by such |
30 | affiliate to Pennsylvania residents and which gives notice after |
|
1 | the effective date of this section that such an annual fee will |
2 | be charged shall, at least once in each subsequent year, give |
3 | written notice to each card holder in this State of the |
4 | procedure to follow if such card holder desires to terminate his |
5 | account in order not to incur such fee. Such notice shall be |
6 | given not less than sixty days prior to the beginning of the |
7 | annual period for which such fee is computed. |
8 | (b) Refunds--An affiliate of an institution shall in the |
9 | event of a credit balance in the account of a holder of a credit |
10 | card make a cash refund of such over-payment within thirty days |
11 | after demand by the card holder and in the event of failure to |
12 | make a refund within such thirty days shall pay interest at the |
13 | rate of five and one quarter percent on the amount of such |
14 | credit balance until the refund is made. |
15 | (c) Definition--The term "affiliate" shall have the meaning |
16 | given to it in section 102(a).] |
17 | Section 18. Section 321 of the act, added December 17, 1982 |
18 | (P.L.1367, No.313), is repealed: |
19 | [Section 321. Authorization of Fees for Revolving Credit Plans |
20 | Pursuant to an agreement with a customer, an institution may |
21 | charge on an annual or other periodic basis, fees for privileges |
22 | made available under a credit card or other revolving credit |
23 | plan which permits purchases or loans or both from time to time. |
24 | Such fees may not be in excess of fifteen dollars ($15) in any |
25 | twelve-month period for each credit card account or other |
26 | revolving credit plan and may be collected in addition to |
27 | interest, finance charges, service charges and other charges |
28 | permitted by law. At least fifteen days prior to the effective |
29 | date of any such fee or an increase in the amount thereof, an |
30 | institution shall mail or deliver to a customer a written notice |
|
1 | that the fee or increase will be incurred only if the customer |
2 | expressly agrees or if the customer or an authorized person uses |
3 | the plan by making a purchase or obtaining a loan after the |
4 | effective date stated in the notice. Such notice shall be given |
5 | in compliance with the disclosure requirements of the Federal |
6 | Truth in Lending Act and regulations thereunder.] |
7 | Section 19. Section 322 of the act, added December 28, 1994 |
8 | (P.L.1424, No.167), is repealed: |
9 | [Section 322. Extensions of Credit to Individuals, Partnerships |
10 | and Unincorporated Associations |
11 | (a) Definitions--As used in this section, the following |
12 | words and phrases shall have the meanings given to them in this |
13 | subsection: |
14 | "Credit device"--any card, check, identification code or |
15 | other means of identification contemplated by the agreement |
16 | governing a plan. |
17 | "Loans"--cash advances or loans to be paid to or for the |
18 | account of the customer. |
19 | "Plan" or "open-end credit plan"--a plan contemplating the |
20 | extension of credit under an account governed by an agreement |
21 | between an institution and a customer pursuant to which: |
22 | (i) the institution permits the customer and, if the |
23 | agreement governing the plan so provides, persons acting on |
24 | behalf of or with authorization from the customer from time |
25 | to time to make purchases or to obtain loans or both by use |
26 | of a credit device, |
27 | (ii) the amounts of purchases made and loans obtained |
28 | are charged to the customer's account under the plan, |
29 | (iii) the customer is required to pay the institution |
30 | the amounts of all purchases and loans charged to the |
|
1 | customer's account under the plan but has the privilege of |
2 | paying the amounts outstanding from time to time in full or |
3 | installments, and |
4 | (iv) interest may be charged and collected by the |
5 | institution from time to time on the outstanding unpaid |
6 | indebtedness under such plan. |
7 | "Purchases"--payments for property of whatever nature, real |
8 | or personal, tangible or intangible, and payments for services, |
9 | licenses, taxes, official fees, fines, private or governmental |
10 | obligations or any other thing of value. |
11 | "Truth in Lending"--the Federal Truth in Lending Act (Public |
12 | Law 90-321, 15 U.S.C. § 1601 et seq.) and regulations |
13 | promulgated thereunder as in effect from time to time. The terms |
14 | "finance charge," "annual percentage rate," "credit card," |
15 | "open-end credit" and "closed-end credit" have the same coverage |
16 | and meanings as the definitions of those terms under Truth in |
17 | Lending. |
18 | (b) Coverage--This section shall govern all direct and |
19 | indirect extensions of credit by an institution for personal, |
20 | family, household, business or agricultural purposes to an |
21 | individual, a partnership or an unincorporated association, |
22 | whether as closed-end credit or open-end credit, except |
23 | extensions of credit: |
24 | (i) which are secured by a first-lien, purchase money, |
25 | residential real estate mortgage, |
26 | (ii) which are student loans guaranteed by the |
27 | Pennsylvania Higher Education Assistance Agency, or |
28 | (iii) which are not subject to a maximum rate of |
29 | interest or finance charge or as to which the pleading of |
30 | usury as a defense is prohibited pursuant to Federal or State |
|
1 | law. |
2 | (c) Disclosures--In connection with an extension of credit, |
3 | an institution shall make applicable disclosures required by |
4 | Truth in Lending in lieu of any disclosure requirement which may |
5 | be imposed by Pennsylvania law. |
6 | (d) Agreements for extension of credit--An institution may |
7 | extend credit pursuant to this section on the basis of a written |
8 | agreement. An agreement shall be fully completed prior to |
9 | signature by the customer. A completed copy of such agreement, |
10 | including related statements, notices and documents, shall be |
11 | given to the customer. An agreement shall have the form and |
12 | contents required by Truth in Lending and shall, in addition, |
13 | provide if applicable: |
14 | (i) the amounts of available credit and the procedure or |
15 | means by which it may be obtained, |
16 | (ii) maturity provisions, installment payment |
17 | requirements, prepayment privileges and rebates of unearned |
18 | interest upon prepayment, |
19 | (iii) either the amounts or rates of interest, which may |
20 | be fixed or variable rates, or the basis for determining such |
21 | amounts or rates, which basis in the case of variable rates |
22 | must be an objectively determinable basis other than a basis |
23 | determined solely by the institution, subject to a maximum |
24 | rate of interest determined by the higher of the rate |
25 | established by the National Credit Union Administration Board |
26 | under 12 U.S.C. § 1757(5)(A)(vi) or the rate yielded by the |
27 | sum of the average percentage yield on United States Treasury |
28 | notes for a constant five-year maturity as published by the |
29 | Board of Governors of the Federal Reserve System rounded to |
30 | the nearer quarter of one percent, determined on the first |
|
1 | day of each calendar quarter, plus ten percent, |
2 | (iv) the method of determining balances of unpaid |
3 | indebtedness to which periodic rates of interest are |
4 | applicable which, in the case of an open-end credit plan, |
5 | may, if the agreement governing the plan so provides, include |
6 | the amount of any interest and other charges, including |
7 | delinquency charges, which have accrued in the account, |
8 | (v) charges which may be imposed in addition to |
9 | interest, in such amounts as the agreement provides, or as |
10 | established in the manner the agreement provides, such as, |
11 | but not limited to, minimum charges, check charges and |
12 | maintenance charges related to extensions of credit pursuant |
13 | to overdraft check plans, a delinquency charge of twenty |
14 | dollars ($20) or ten percent of each installment or payment, |
15 | whichever is higher, which is in default for more than |
16 | fifteen days and fees, extension charges and actual charges |
17 | that may be incurred on default, including, but not limited |
18 | to, court and other collection costs and reasonable attorney |
19 | fees. Such additional charges may include a daily, weekly, |
20 | monthly, annual or other periodic charge for the privileges |
21 | made available to the customer under an open-end credit plan, |
22 | transaction charges for each separate purchase or loan under |
23 | the plan and a minimum charge for each scheduled billing |
24 | period under the plan, during any portion of which there is |
25 | an outstanding unpaid indebtedness under the plan, |
26 | (vi) collateral security and provisions relating |
27 | thereto, except that there may not be any authorization for |
28 | entry of judgment by confession nor any acceleration of a |
29 | loan or repossession of collateral unless there is a default |
30 | pursuant to the agreement, and |
|
1 | (vii) insurance coverages and premiums therefor. |
2 | Such agreements shall be valid and enforceable, and an |
3 | institution may impose and collect the interest and other |
4 | charges provided therein. |
5 | (e) Computation of interest--A fixed rate of interest |
6 | included in a finance charge shall be computed either on a |
7 | simple interest basis by a generally accepted actuarial method, |
8 | including a method permitted for determination of an annual |
9 | percentage rate under Truth in Lending or, as to an extension of |
10 | credit with an initial maturity of not more than sixty months, |
11 | which is made within two years after the effective date of this |
12 | section, on an add-on or discount basis. The maximum amount that |
13 | may be charged on the basis of a variable rate of interest shall |
14 | be computed in accordance with or with reference to a schedule |
15 | or formula at the times and for the periods provided in the |
16 | agreement. The periodic rate of interest, as so varied, will be |
17 | applicable to all outstanding unpaid indebtedness under the |
18 | agreement from the effective date of the variation if so |
19 | provided in the agreement. |
20 | (f) Changes in terms--An institution may change the terms of |
21 | the agreement if: |
22 | (i) the agreement so provides, |
23 | (ii) there is compliance with applicable notice |
24 | requirements of Truth in Lending prior to the effective date |
25 | of the change, |
26 | (iii) such notice states that a customer for whose |
27 | account a change in terms does not become effective may pay |
28 | all outstanding amounts pursuant to the agreement as in |
29 | effect prior to the notice, and |
30 | (iv) in the case of an increase in a fixed rate of |
|
1 | interest or other charges payable by the customer under an |
2 | open-end credit plan, the customer incurs additional |
3 | indebtedness after the effective date of the change of terms. |
4 | If the agreement governing the plan so provides, a change of |
5 | terms pursuant to this subsection may, on and after the date it |
6 | becomes effective as to an account, apply to all then |
7 | outstanding unpaid indebtedness. A change in the amount of |
8 | interest imposed in accordance with or with reference to a |
9 | schedule or formula for a variable rate of interest shall not be |
10 | deemed to be a change in terms, but a change in such schedule or |
11 | formula shall be deemed to be a change in terms. No change may |
12 | be made in a fixed rate of interest or other charges payable |
13 | with respect to the outstanding balance of indebtedness or in |
14 | the amount or due dates of required installment payments on |
15 | closed-end credit unless there is written consent of the |
16 | customer at the time of the change except for an extension of |
17 | any due date or an option granted by the institution to the |
18 | customer to omit payments and except as may be otherwise |
19 | provided in an agreement for an extension of credit which is not |
20 | for personal, family or household purposes. |
21 | (g) Prepayment-- |
22 | (i) A borrower or buyer may prepay an extension of |
23 | credit in full at any time without any prepayment charge. |
24 | (ii) If interest has been precomputed, then, in the |
25 | event of prepayment of an extension of credit, the |
26 | institution shall refund to the customer the unearned portion |
27 | of the precomputed interest. The refund shall be in an amount |
28 | not less than the amount of the unearned precomputed interest |
29 | calculated in accordance with a generally accepted actuarial |
30 | method, including a method permitted for determination of an |
|
1 | annual percentage rate under Truth in Lending, except that |
2 | the amount of the unearned interest on an extension of credit |
3 | with an initial maturity of not more than sixty months which |
4 | is made within two years after the effective date of this |
5 | section for which interest is computed on an add-on or |
6 | discount basis as permitted by subsection (e) may be |
7 | calculated in accordance with the "sum of the balances" |
8 | method and except that the customer shall not be entitled to |
9 | a refund which results in a net minimum charge of less than |
10 | an amount equal to the interest that would accrue in the |
11 | first month the extension of credit was scheduled to be |
12 | outstanding. The institution shall not be required to refund |
13 | the unearned portion of the interest if such amount is less |
14 | than one dollar ($1). |
15 | (iii) The amount of a refund under the "sum of the |
16 | balances" method is determined by multiplying the precomputed |
17 | interest by a fraction, the numerator of which is the sum of |
18 | the balances, including interest, of the extension of credit |
19 | scheduled to be outstanding after deducting the first of the |
20 | payments scheduled to be made on or after the date of |
21 | prepayment and the denominator of which is the sum of all the |
22 | unpaid balances, including interest, of the extension of |
23 | credit scheduled to be outstanding from its inception to and |
24 | including the maturity of the final installment. Intervals |
25 | between scheduled payments must be regular periods of one |
26 | month or less except that the interval between the inception |
27 | of an extension of credit and the due date of the first |
28 | scheduled payment may be: |
29 | (A) one month and fifteen days when the regular |
30 | payment interval is a month, |
|
1 | (B) one month when the regular payment interval is |
2 | less than a month but more than a week, or |
3 | (C) eleven days when the regular payment interval is |
4 | a week or less. |
5 | (h) Insurance--The agreement may provide for life, health, |
6 | accident, loss-of-income or other permissible insurance related |
7 | to an extension of credit under a group or individual policy |
8 | subject to the option of the customer to furnish required |
9 | insurance through an authorized insurer of the customer's choice |
10 | as provided in section 11 of the act of September 2, 1961 |
11 | (P.L.1232, No.540), known as the "Model Act for the Regulation |
12 | of Credit Life Insurance and Credit Accident and Health |
13 | Insurance," and, if premiums for such insurance are paid to the |
14 | institution, provisions shall be made for rebates of unearned |
15 | premiums, if any, upon prepayment. An institution may require |
16 | that insurance be maintained, from an insurer acceptable to the |
17 | institution, against loss or damage to property which is |
18 | collateral security for the extension of credit and against |
19 | liability arising out of the ownership or use of such property. |
20 | An institution may grant an extension of credit to finance the |
21 | premiums for such insurance. |
22 | (i) Extensions of credit through intermediaries--An |
23 | extension of credit to finance a sale of a motor vehicle, other |
24 | than through an open-end credit plan, may be made by an |
25 | institution through a seller licensed as an installment seller |
26 | under the act of June 28, 1947 (P.L.1110, No.476), known as the |
27 | "Motor Vehicle Sales Finance Act," as an intermediary if: |
28 | (i) the agreement governing the extension of credit |
29 | conspicuously provides that the extension of credit is made |
30 | by the institution to the buyer and is subject to the |
|
1 | provisions of this section, and |
2 | (ii) either the institution has made a commitment to |
3 | make the extension of credit or the agreement is subject to |
4 | acceptance by the institution within two business days after |
5 | the date of the agreement and the institution upon such |
6 | acceptance sends written notice thereof to the buyer. The |
7 | terms and conditions under which the seller acts as an |
8 | intermediary between the institution and the buyer shall be |
9 | determined by written agreement between the institution and |
10 | the seller. |
11 | An extension of credit made through an intermediary pursuant to |
12 | this section shall be subject to this act and other acts |
13 | governing transactions between banks and their customers and |
14 | shall not be subject to the provisions or requirements of any |
15 | other regulatory statute, rule or regulation, and neither a |
16 | seller who acts as an intermediary for an institution with |
17 | respect to such an extension of credit nor an institution which |
18 | makes such an extension of credit through a seller as an |
19 | intermediary shall be deemed to be in violation of licensing or |
20 | other requirements of any other regulatory statute, rule or |
21 | regulation that would be applicable to extensions of credits by |
22 | such a seller or contractor to its customers. |
23 | (j) Right of rescission--A person whose ownership interest |
24 | in that person's principal dwelling is subject to a lien or |
25 | security interest as collateral security for an extension of |
26 | credit subject to this section shall have a right of rescission |
27 | for the same types of transactions on the same terms and |
28 | conditions and for the same time periods as those provided for |
29 | the right of rescission under Truth in Lending. |
30 | (k) Statement of account--Upon the written request of the |
|
1 | customer, an institution shall provide, within ninety days after |
2 | the end of each calendar year, a statement of the customer's |
3 | account showing payments made during such year, the amount |
4 | applied to interest and the balance of the account at the end of |
5 | such year. |
6 | (l) Waiver of provisions--No provision of this section which |
7 | confers rights on the customer or any other person may be waived |
8 | or modified except to the extent and in the circumstances in |
9 | which Truth in Lending permits a consumer to waive or modify the |
10 | right of rescission. |
11 | (m) Balloon payments--No agreement for an extension of |
12 | credit under this section containing terms of which principal is |
13 | repayable in installments may provide for a final payment which |
14 | is more than double the regularly scheduled payment exclusive of |
15 | overdue or extended payments, except in the case of automobile |
16 | financing transactions.] |
17 | Section 20. Section 401 of the act, amended July 6, 1995 |
18 | (P.L.271, No.39), is amended to read: |
19 | Section 401. Application of Chapter |
20 | This chapter shall apply to, and the word "institution" in |
21 | this chapter shall mean, a bank and trust company, an interstate |
22 | bank which has fiduciary powers under its law of incorporation, |
23 | a trust company and a savings bank that has fiduciary powers, |
24 | except that section 407 shall apply only to a trust company. The |
25 | powers conferred by this chapter on a bank and trust company or |
26 | savings bank that has fiduciary powers shall be independent of, |
27 | and shall not expand, the banking powers of such an institution. |
28 | Section 21. Section 403 introductory paragraph and (c) of |
29 | the act, amended April 16, 1981 (P.L.9, No.4), are amended to |
30 | read: |
|
1 | Section 403. Actions Required, Permitted or Prohibited in |
2 | Fiduciary Capacity |
3 | The following rules shall be applicable to an institution |
4 | acting in [the capacity of fiduciary] any capacity provided for |
5 | under section 402. |
6 | * * * |
7 | (c) Deposits of funds and security--The institution may |
8 | deposit funds of [a fiduciary] an account awaiting investment or |
9 | distribution in: |
10 | (i) a depository which is authorized by law to receive |
11 | deposits and is subject to supervision by public authorities, |
12 | or |
13 | (ii) if the institution is a bank and trust company or a |
14 | savings bank, in its commercial, savings or other department |
15 | where the funds may be used in the conduct of its business |
16 | and, for an account for which the institution is acting as a |
17 | fiduciary under section 402(a)(i), to the extent so deposited |
18 | in an amount in excess of insurance provided by the Federal |
19 | Deposit Insurance Corporation, shall be secured by a pledge |
20 | of obligations [of the United States or of the Commonwealth |
21 | of Pennsylvania or obligations for which the full faith and |
22 | credit of the United States is pledged, or by a pledge of |
23 | other securities approved by the department, with a market |
24 | value not less than the amount of the funds secured, for the |
25 | pro rata benefit of each account whose funds are so deposited |
26 | in the event of insolvency of the institution] or securities |
27 | that are permissible as an investment of the institution. |
28 | * * * |
29 | Section 22. Section 408 of the act, added December 18, 1984 |
30 | (P.L.1087, No.217), is amended to read: |
|
1 | Section 408. Transfer of Fiduciary Accounts |
2 | [(a) Definitions--The definitions set forth in section |
3 | 115(a) shall also apply to this section.] |
4 | (b) Transfer of accounts--[With] Provided that an |
5 | institution is directly involved in the transaction, with the |
6 | prior written approval of, and in accordance with the terms and |
7 | conditions of transfer prescribed by, the department, and upon |
8 | completion of the notice procedures of subsection (c) without |
9 | objection, a [Pennsylvania] bank holding company with a |
10 | subsidiary institution, national bank or Federal savings bank |
11 | located in this Commonwealth may cause the transfer of one or |
12 | more of the [fiduciary] accounts with a situs in this |
13 | Commonwealth and held in any capacity provided for under section |
14 | 402 of one or more of the institutions [or trust companies], |
15 | national banks or Federal savings banks controlled by such bank |
16 | holding company to either: |
17 | (i) another of such institutions [or trust companies], |
18 | national banks or Federal savings banks; or |
19 | (ii) a newly formed [trust company or] institution, |
20 | national bank or Federal savings bank also controlled by such |
21 | bank holding company. |
22 | (c) Notice procedure--[Prior] Notwithstanding the provisions |
23 | of 20 Pa.C.S. (relating to decedents, estates and fiduciaries), |
24 | prior to effecting a transfer of one or more [fiduciary] |
25 | accounts under subsection (b), a [Pennsylvania] bank holding |
26 | company shall cause notice that such a transfer will take place |
27 | to be given to the settlor of the account, or if the settlor is |
28 | deceased, to persons who are readily ascertainable as |
29 | beneficiaries of the account by their receipt of statements of |
30 | the account. Such notice shall also be given to any co-fiduciary |
|
1 | of the account. If the persons or their legal representatives or |
2 | guardians, in the case of minor children or incompetents, to |
3 | whom the notice required by this subsection has been given, do |
4 | not make written objection to the institution [or trust |
5 | company], national bank or Federal savings bank then acting as |
6 | fiduciary of the account or to the holding company which issued |
7 | the notice within 15 days of the date the notice was mailed, |
8 | then the holding company may complete the transfer of the |
9 | account. |
10 | (d) Effect of transfer--If a [Pennsylvania] bank holding |
11 | company completes a transfer as described in subsections (b) and |
12 | (c), the institution [or trust company], national bank or |
13 | Federal savings bank to which the fiduciary accounts of the |
14 | other institutions [or trust companies], national banks or |
15 | Federal savings banks have been transferred shall be |
16 | automatically substituted by reason of such transfer as |
17 | fiduciary of all accounts held in that capacity by such |
18 | transferring institutions [or trust companies], national banks |
19 | or Federal savings banks, without further action and without any |
20 | order or decree of any court or public officer and shall have |
21 | all the rights and be subject to all the obligations of such |
22 | transferring institutions [or trust companies], national banks |
23 | or Federal savings banks as fiduciary. |
24 | Section 23. Section 504(a.1) of the act, added December 21, |
25 | 1988 (P.L.1416, No.173), is amended to read: |
26 | Section 504. Investments |
27 | * * * |
28 | [(a.1) Investments authorized by Savings Association Code-- |
29 | Notwithstanding any other provision of this act, a savings bank |
30 | may make such investments as may be authorized for a savings |
|
1 | association by section 922 of the act of December 14, 1967 |
2 | (P.L.746, No.345), known as the Savings Association Code of |
3 | 1967.] |
4 | * * * |
5 | Section 24. Section 505 of the act, amended December 13, |
6 | 1979 (P.L.527, No.116), May 21, 1980 (P.L.173, No.51), December |
7 | 21, 1988 (P.L.1416, No.173) and November 22, 2000 (P.L.660, |
8 | No.89), is repealed: |
9 | [Section 505. Real Estate Loans |
10 | (a) Permissible loans; term and maximum amount--A savings |
11 | bank may, subject to the requirements of this section, make or |
12 | acquire a loan secured by a lien on real estate (including a |
13 | leasehold) located in any state or the District of Columbia, in |
14 | a dependency or insular possession of the United States or in |
15 | the Commonwealth of Puerto Rico: |
16 | (i) in the case of improved real estate, including farm |
17 | land, for a term not to exceed: |
18 | (A) ten years, if unamortized; or |
19 | (B) forty years, if the terms of the loan require |
20 | payments which are substantially equal except for the |
21 | last payment at successive intervals of not more than one |
22 | year each and in an amount sufficient to pay all |
23 | principal of and interest on the loan within the term of |
24 | the loan, except that a loan to a commercial or |
25 | industrial borrower is exempted from the requirement of |
26 | substantially equal payments and the date of the initial |
27 | payment on a loan to such borrower may be deferred for a |
28 | period not in excess of five years from the date of the |
29 | loan; or |
30 | (ii) in the case of unimproved real estate to be |
|
1 | acquired or developed with the proceeds of the loan, for a |
2 | term not to exceed five years; and |
3 | (iii) in an amount not to exceed ninety percent of the |
4 | value of the loan except that, if the amount of the loan does |
5 | not exceed one hundred thousand dollars ($100,000) or is made |
6 | in reliance upon a private mortgage insurance or guarantee |
7 | acceptable to the department regardless of the amount of the |
8 | loan, then one hundred percent of the value of the loan. |
9 | (b) Additional term for combination of construction and |
10 | permanent loans--In a case in which a loan subject to this |
11 | section is made to finance construction of an improvement and |
12 | such loan is combined with a permanent loan to continue after |
13 | completion of construction, the term of the construction loan, |
14 | or that portion of the term not in excess of three years, shall |
15 | not be counted against the maximum term for the permanent loan |
16 | permitted under subsection (a) of this section but such combined |
17 | construction loan and permanent loan shall be subject to all |
18 | other requirements of this section. |
19 | (c) Leasehold loans--For the purpose of this section a |
20 | "leasehold" shall mean the interest, which is security for a |
21 | loan, of a lessee of real estate under a lease which on the date |
22 | of the loan has an unexpired term extending at least five years |
23 | beyond the maturity of the loan, or contains a right of renewal, |
24 | which may be exercised by the savings bank, extending at least |
25 | five years beyond the maturity of the loan. |
26 | (d) Requirements in connection with loans--The requirements |
27 | for a loan subject to this section shall be: |
28 | (i) the loan shall be evidenced by a bond, note or other |
29 | obligation and the lien securing such loan shall be obtained |
30 | by a mortgage, deed of trust or judgment; |
|
1 | (ii) the lien shall be a first or second lien (except |
2 | for a lien of taxes, assessments or charges which are not yet |
3 | due or which are payable without penalty) unless all prior |
4 | liens are held by the savings bank. The aggregate of all |
5 | loans by the savings bank secured by liens on the real estate |
6 | shall satisfy all other requirements of this section |
7 | pertaining to such loans; |
8 | (iii) the value of the real estate shall be determined |
9 | by a real estate appraiser qualified in the state where the |
10 | real estate is located who shall inspect the real estate and |
11 | state its value to the best of his judgment in a written |
12 | report signed by him which must be preserved in the records |
13 | of the institution; |
14 | (iv) insurance against loss from fire on all buildings |
15 | on the real estate which are included in the appraised value, |
16 | issued by insurers acceptable to the savings bank and |
17 | authorized to do business where the real estate is located |
18 | and in form and amount satisfactory to the savings bank, |
19 | shall be maintained during the term of the loan by or at the |
20 | expense of the borrower, except that the savings bank may at |
21 | its own expense maintain such insurance covering only its |
22 | interest as lender; |
23 | (v) the borrower shall pay all expenses in connection |
24 | with the loan for title insurance, searches and certificates, |
25 | appraisal fees and fees for preparation and recording of |
26 | documents; and |
27 | (vi) a savings bank may make a single delinquency charge |
28 | for each payment in arrears for a period of more than fifteen |
29 | days other than by reason of acceleration or by reason of a |
30 | delinquency on a prior payment. |
|
1 | (e) Excepted loans--The restrictions and requirements of |
2 | this section shall not apply to: |
3 | (i) a loan secured by a lien on a dwelling for not more |
4 | than four families, in which the total of the borrowers |
5 | equity and any guarantee or written commitment for such |
6 | guarantee issued by the Veterans Administration pursuant to |
7 | the Veterans' Benefits Act, equals twenty percent or more of |
8 | the principal amount of the loan, |
9 | (ii) a loan secured by a lien on business property, in |
10 | which the total of the borrowers equity and any guarantee or |
11 | written commitment for such guarantee issued by the Veterans |
12 | Administration pursuant to the Veterans' Benefits Act equals |
13 | one-third or more of the principal amount of the loan, |
14 | (iii) a loan insured, or for which a written commitment |
15 | to insure has been issued, pursuant to national housing |
16 | legislation, or a loan for repair, alteration or improvement |
17 | of real estate made pursuant to section 506 (a)(ii), |
18 | (iv) a loan insured, or for which a written commitment |
19 | to insure has been issued, by the Farmers Home Administration |
20 | pursuant to the Consolidated Farmers Home Administration Act, |
21 | (v) an investment security, or |
22 | (vi) a loan which the savings bank is authorized to make |
23 | and in connection with which it takes a real estate lien as |
24 | security in the exercise of prudence but as to which it is |
25 | relying for repayment on: |
26 | (A) the general credit of the obligor or of an |
27 | installment buyer or of a lessee of the real estate, |
28 | (B) collateral other than the real estate lien, |
29 | (C) a guaranty, or an agreement to take over or |
30 | purchase the loan in the event of default, by a |
|
1 | financially responsible person other than a person |
2 | engaged in the business of guaranteeing real estate |
3 | loans, or |
4 | (D) an agreement by a financially responsible person |
5 | to take over or purchase the loan, or to provide funds |
6 | for payment thereof, within a period of five years from |
7 | the date of the loan |
8 | and there is a certificate of reliance setting forth the |
9 | applicable facts. |
10 | (vii) loans made pursuant to any secondary mortgage law |
11 | of the Commonwealth. |
12 | (f) Maximum rates--Loans including variable interest rate |
13 | loans may be made at rates of interest as authorized by the act |
14 | of January 30, 1974 (P.L.13, No.6), referred to as the Loan |
15 | Interest and Protection Law, or any other statute or at a |
16 | maximum rate of interest not in excess of the maximum lawful |
17 | interest rate permitted to be charged by a National Bank located |
18 | in Pennsylvania under 12 U.S.C. § 85. |
19 | (g) Variable interest rate loans--The requirements with |
20 | respect to payments under subsection (a)(i) of this section |
21 | shall not be applicable in the case of a variable interest rate |
22 | loan permitted by the act of January 30, 1974 (P.L.13, No.6), |
23 | referred to as the Loan Interest and Protection Law. |
24 | (h) Alternative payment terms--A savings bank may permit |
25 | exceptions to the requirements as to time and amount of payments |
26 | applicable under subsection (a)(i) as to: |
27 | (i) one payment in a calendar year and an aggregate of |
28 | five payments during the term of the loan, the aggregate |
29 | amount of which shall be added either to other regular |
30 | payments or to the final payment of the loan; or |
|
1 | (ii) a difference in the amount of substantially equal |
2 | payments at the intervals occurring during the first one- |
3 | quarter of the total term of the loan from the amount of |
4 | substantially equal payments at the intervals occurring |
5 | during the remainder of the term; or |
6 | (iii) in a case in which the principal amount of the |
7 | loan is distributed periodically to the borrower, a |
8 | requirement of payment of interest only from the dates of |
9 | such distributions of the principal amount and a requirement |
10 | for the payment of principal and interest, commencing not |
11 | more than three months after the last distribution, in |
12 | substantially equal payments at successive intervals of not |
13 | more than one year each and sufficient to pay all principal |
14 | of and interest on the loan within ten years after the date |
15 | of commencement of such payments: Provided, That in such case |
16 | the priority of the lien of any distribution and all other |
17 | amounts secured by the mortgage shall date from the recording |
18 | of the mortgage whether or not the mortgagee was legally |
19 | obligated to make such distribution of payment. |
20 | (i) Loans without regard to certain limitations--The |
21 | department may, by regulation, permit savings banks to make, |
22 | invest in, acquire, sell or otherwise deal with such loans on |
23 | the security of liens upon residential or nonresidential real |
24 | property (including leaseholds) as it considers consistent with |
25 | the purposes of this act, as set forth in section 103, without |
26 | regard to any of the conditions, restrictions, limitations or |
27 | requirements imposed upon real estate lending by this section.] |
28 | Section 25. Section 506 of the act, amended December 21, |
29 | 1988 (P.L.1416, No.173) and December 28, 1994 (P.L.1424, |
30 | No.167), is amended to read: |
|
1 | Section 506. Lending Powers; Direct Leasing of Personal |
2 | Property |
3 | (a) A savings bank may[: |
4 | (i) make loans on the collateral security of property in |
5 | which the savings bank is authorized to invest, in an amount |
6 | which shall not at any time exceed ninety percent of the |
7 | readily marketable value of the collateral; |
8 | (ii) make loans for repair, alteration or improvement of |
9 | real estate or for the purpose of mobile home financing |
10 | without the necessity for mortgage security, subject to the |
11 | following provisions: |
12 | (A) when such loans are insured or are the subject |
13 | of a written commitment to insure pursuant to national |
14 | housing legislation, they may be granted in such amounts |
15 | and upon such terms as are permitted by such legislation |
16 | or regulations issued thereunder, |
17 | (B) when any such loan is not insured under national |
18 | housing legislation, the principal amount thereof shall |
19 | not exceed the amount authorized under Title I of the |
20 | National Housing Act and the loan shall be evidenced by a |
21 | note or other written evidence of debt requiring |
22 | repayment in regular monthly installments over a period |
23 | not exceeding that authorized under Title I of the |
24 | National Housing Act. The note or other written evidence |
25 | of debt may contain a provision that if the borrower |
26 | shall sell the premises or assign his leasehold interest |
27 | therein or remove therefrom any improvements described in |
28 | the security agreement the entire balance remaining due |
29 | on the loan shall immediately become due and payable. The |
30 | annual interest rate for loans made under this subsection |
|
1 | shall not exceed the sum of the authorized interest rate |
2 | for loans insured under Title I of the National Housing |
3 | Act plus the annual rate for insurance on loans insured |
4 | under Title I of the National Housing Act or creditor |
5 | insurance applied to the loan. In addition to the |
6 | interest herein authorized a savings bank may make the |
7 | following charges in connection with said loan: |
8 | (1) premiums for insurance obtained in |
9 | connection with the loan, but not including any |
10 | charge for creditor insurance, if any, on such loan, |
11 | (2) a single delinquency charge for each |
12 | installment in arrears for a period of more than |
13 | fifteen days other than by reason of acceleration or |
14 | by reason of delinquency on a prior installment in an |
15 | amount not to exceed the lesser of five dollars ($5) |
16 | or five percent of the amount of the installment, |
17 | (3) a charge for an extension in an amount not |
18 | to exceed two percent of the unpaid balance of the |
19 | loan. Said charge may be imposed only one time during |
20 | the life of the loan, |
21 | (4) fees paid for filing documents in public |
22 | offices in connection with said loan, and |
23 | (5) actual expenditures, including reasonable |
24 | attorneys' fees, for proceedings to collect the |
25 | loans, |
26 | (C) the aggregate amount of all such loans held by |
27 | any one savings bank at one time with or without |
28 | insurance under national housing legislation shall not |
29 | exceed twenty percent of its total assets. Any such loan |
30 | made without such insurance shall also conform to rules |
|
1 | and regulations which may be prescribed from time to time |
2 | by the department, |
3 | (D) a loan is authorized under subsection (a)(ii)(B) |
4 | only if the savings bank retains in its files written |
5 | evidence that the loan is of the type that would be |
6 | insurable under Title I of the National Housing Act. Such |
7 | written evidence shall be retained in the files of the |
8 | savings bank while the loan is outstanding and for a |
9 | period of one year thereafter; |
10 | (iii) notwithstanding different provisions of any other |
11 | law, make loans secured by at least an equal amount of |
12 | deposits of the borrower in the savings bank at a rate of |
13 | interest at least one percent higher than the rate of |
14 | interest paid by the savings bank on said deposits, or make |
15 | loans secured by at least an equal amount of cash surrender |
16 | value of life insurance; |
17 | (iv) make loans to borrowers who are engaged in |
18 | commercial, industrial or financial enterprises or who are |
19 | nonprofit corporations, or associations, subject to the |
20 | prudent man rule of section 504(c) of this act: |
21 | (A) for terms not less than ten years, or |
22 | (B) in the case of a savings bank which has elected |
23 | to exercise the conditional powers provided in section |
24 | 513, for terms of less than ten years, except that the |
25 | total amount of such short term loans shall not exceed |
26 | twenty percent of the assets of the savings bank; |
27 | (v) enter into transactions with a member or nonmember |
28 | bank for the purpose of selling reserve balances of the |
29 | savings bank to such banks without limitation; |
30 | (vi) in the case of a savings bank which has elected to |
|
1 | exercise the conditional powers provided in section 513, make |
2 | secured or unsecured loans for personal, family or household |
3 | purposes, including loans reasonably incident to the |
4 | provision of such credit, and subject to regulation by the |
5 | department, issue credit cards, extend credit in connection |
6 | therewith, and otherwise engage in or participate in credit |
7 | card operations, except that the total amount of such loans |
8 | or extensions of credit shall not exceed thirty percent of |
9 | the assets of such savings bank; |
10 | (vii) make overdraft loans specifically related to |
11 | deposits which are subject to withdrawal by check or by |
12 | negotiable order of withdrawal; |
13 | (viii) make loans for the payment of educational |
14 | expenses; and |
15 | (ix) in any loan or extension of credit made under the |
16 | authority of this section, charge or impose any rate or |
17 | charge which could be imposed by a bank in connection with |
18 | any such loan or extension of credit, make agreements in the |
19 | same manner and with the same terms, provisions and |
20 | conditions as a bank and, in addition to the restrictions of |
21 | this section, shall be subject only to the same disclosure |
22 | and other requirements, restrictions and limitations imposed |
23 | upon a bank in connection with such loan or extension of |
24 | credit.] lend money, extend credit and discount or purchase |
25 | evidences of indebtedness and agreements for the payment of |
26 | money pursuant to section 303 and acquire and lease personal |
27 | property pursuant to a binding arrangement for the leasing of |
28 | that property to a customer upon terms requiring payment to |
29 | the savings bank, during the minimum period of the lease, of |
30 | rentals which in the aggregate will exceed the total |
|
1 | expenditures by the savings bank for or in connection with |
2 | the acquisition, ownership, maintenance and protection of the |
3 | property. |
4 | [(b) A savings bank may, subject to regulation by the |
5 | department, make investments in tangible personal property, |
6 | including, without limitation, vehicles, manufactured homes, |
7 | machinery, equipment or furniture, for rental or sale, but such |
8 | investment may not exceed ten percent of the assets of the |
9 | savings bank.] |
10 | Section 26. Section 513 of the act, added April 16, 1981 |
11 | (P.L.9, No.4), is repealed: |
12 | [Section 513. Conditional Powers of Savings Banks |
13 | (a) A savings bank which makes an election provided in |
14 | subsection (b) shall, in addition to its other powers under this |
15 | act, have the powers specified in section 504(b)(xiii), section |
16 | 506(a)(iv)(B) and (a)(vi) on the condition that it accepts the |
17 | requirements provided in subsection (c). |
18 | (b) An election to exercise the conditional powers provided |
19 | in this section shall be made by filing with the department a |
20 | written statement of such election in such form as the |
21 | department may provide. Such election shall become effective |
22 | upon publication thereof by the department in the Pennsylvania |
23 | Bulletin or at such later time following such publication as the |
24 | savings bank may specify in its election. |
25 | (c) Upon the effective date of an election by a savings bank |
26 | to exercise the conditional powers provided in this section, it |
27 | shall become subject to regulations which after giving due |
28 | consideration to the laws and regulations applicable to Federal |
29 | mutual savings banks, the department shall adopt and such |
30 | regulations shall impose on such savings banks requirements and |
|
1 | limitations with respect to the election of trustees by |
2 | depositors and the exercise of such conditional powers as are |
3 | deemed appropriate to protect the public interest in the |
4 | soundness and preservation of the banking system and to foster |
5 | competition among financial institutions in Pennsylvania, |
6 | including Federal mutual savings banks in this Commonwealth |
7 | existing under the laws of the United States and subject to the |
8 | regulations of the Federal Home Loan Bank Board. In the event of |
9 | future changes in such Federal law and regulation, the |
10 | department may amend the regulations required by this subsection |
11 | so as to assure that they continue to reflect the purpose of |
12 | this section. A savings bank may at any time rescind its |
13 | election by filing a notice with the department in such form as |
14 | it may provide. The department shall promptly publish in the |
15 | Pennsylvania Bulletin each such notice to rescind an election |
16 | which shall be effective on the date of such publication or on |
17 | such later date after publication as the savings bank may |
18 | specify in its notice.] |
19 | Section 27. The act is amended by adding sections to read: |
20 | Section 515. Pledges for Deposits |
21 | (a) Types of deposits--A savings bank may pledge assets as |
22 | security for deposits of: |
23 | (i) public funds, |
24 | (ii) funds of a pension fund for employes of a political |
25 | subdivision of the Commonwealth, |
26 | (iii) funds for which a political subdivision of the |
27 | Commonwealth or an officer or employe of the Commonwealth is |
28 | the custodian or trustee pursuant to statute, |
29 | (iv) funds held by the Secretary of Banking as receiver |
30 | or by the Insurance Commissioner as statutory liquidator, |
|
1 | (v) funds that are required to be secured by law or by |
2 | an order of a court, |
3 | (vi) in the case of a savings bank with trust powers, |
4 | funds held in a fiduciary capacity and deposited in its |
5 | commercial department pursuant to section 403(c) of this act, |
6 | and |
7 | (vii) funds held in a fiduciary capacity by a trust |
8 | company that is an affiliate of the savings bank. |
9 | (b) Other deposits--A savings bank may not pledge assets as |
10 | security for deposits other than those covered by subsection |
11 | (a). |
12 | Section 516. Limits on Indebtedness of One Customer, Including |
13 | Purchased Paper |
14 | (a) General limit--A savings bank shall not at any time |
15 | acquire indebtedness of any one customer, which includes an |
16 | individual or any legal entity, of the types specified in this |
17 | section, in an amount which together with all other such |
18 | indebtedness then held would exceed fifteen percent of the |
19 | capital accounts of the savings bank. If the department |
20 | determines at any time that the interests of a group of more |
21 | than one individual, partnership, unincorporated association or |
22 | corporation are so interrelated that they should be considered |
23 | as a unit for the purpose of extensions of credit, the total |
24 | indebtedness of that group acquired at any time shall be |
25 | combined and deemed indebtedness acquired from one customer in |
26 | applying the limitation of this section. A savings bank shall |
27 | not be deemed to have violated this section solely by reason of |
28 | the fact that the indebtedness of a group then held exceeds the |
29 | limitation of this section at the time of a determination by the |
30 | department that the indebtedness of that group must be combined |
|
1 | but the institution shall, if required by the department, |
2 | dispose of indebtedness of the group in the amount in excess of |
3 | the limitation of this section within such reasonable time as |
4 | shall be fixed by the department. |
5 | (b) Indebtedness included--There shall be included in the |
6 | indebtedness of one customer to which the fifteen percent |
7 | limitation of this section applies: |
8 | (i) the aggregate rentals payable by the customer under |
9 | leases of personal property by the savings bank, |
10 | (ii) to the extent that they exceed fifteen percent of |
11 | the capital accounts of the savings bank, the aggregate |
12 | balances payable on all installment paper acquired by the |
13 | savings bank from the customer, irrespective of the legal |
14 | liability of the customer or absence of such liability, |
15 | (iii) to the extent that they exceed fifteen percent of |
16 | the capital accounts of the savings bank, obligations of the |
17 | customer as indorser or guarantor of notes, other than those |
18 | excluded by subsection (c)(ii), having a maturity of not more |
19 | than six months and actually owned by the customer |
20 | transferring the notes, |
21 | (iv) obligations of the customer by reason of |
22 | acceptances by the savings bank of drafts or bills of |
23 | exchange, other than those excluded by subsection (c)(v), |
24 | (v) all other liabilities, not otherwise excluded by |
25 | this section, of the customer to the savings bank, whether |
26 | direct or indirect, primary or secondary, under evidences of |
27 | indebtedness and agreements for the payment of money, and |
28 | (vi) any credit exposure to a person arising from a |
29 | derivative transaction, repurchase agreement, reverse |
30 | repurchase agreement, securities lending transaction or |
|
1 | securities borrowing transaction between the savings bank and |
2 | the person. |
3 | (c) Indebtedness excluded--There shall be excluded from the |
4 | indebtedness of one customer to which the fifteen percent |
5 | limitation of this section applies: |
6 | (i) obligations in the form of negotiable drafts or |
7 | bills of exchange that have been drawn in good faith against |
8 | actually existing values in connection with the sale of goods |
9 | and which have been accepted or indorsed, |
10 | (ii) obligations arising out of the discount of |
11 | commercial or business paper actually owned by the customer |
12 | transferring it, |
13 | (iii) obligations drawn in good faith against actually |
14 | existing values and secured by goods in process of shipment, |
15 | (iv) obligations in the form of banker's acceptances of |
16 | other banks, |
17 | (v) obligations of the customer by reason of acceptances |
18 | by the savings bank for the customer's account, except to the |
19 | extent that the savings bank acquires those acceptances, |
20 | (vi) obligations secured by documents of title covering: |
21 | (A) livestock, |
22 | (B) readily marketable nonperishable staples for a |
23 | period of not more than ten months from the date of the |
24 | document of title, or |
25 | (C) readily marketable frozen or refrigerated |
26 | staples for a period of not more than six months from the |
27 | date of the document of the title if such property has a |
28 | market value of not less than one hundred fifteen percent |
29 | of the amount of the obligation secured thereby and is |
30 | fully covered by insurance, |
|
1 | (vii) obligations of, and obligations guaranteed by: |
2 | (A) the United States, |
3 | (B) the Commonwealth of Pennsylvania or a state |
4 | where the savings bank lawfully maintains branches, a |
5 | political subdivision of the Commonwealth or such state, |
6 | a public body of the Commonwealth or such state or a |
7 | public body of a political subdivision of the |
8 | Commonwealth or such state, or |
9 | (C) any state of the United States or any political |
10 | subdivision of the United States if the obligations or |
11 | guarantees are general obligations, |
12 | (viii) obligations to the extent secured by: |
13 | (A) obligations specified in clause (vii) of this |
14 | subsection, |
15 | (B) obligations that the savings bank would be |
16 | authorized to acquire without limit as investment |
17 | securities pursuant to section 504, |
18 | (C) obligations fully guaranteed by the United |
19 | States, |
20 | (D) guaranties, commitments or agreements to take |
21 | over or purchase made by any department, bureau, board, |
22 | commission or establishment of the United States or any |
23 | corporation owned directly or indirectly by the United |
24 | States, or |
25 | (E) loan agreements between a local public agency or |
26 | a public housing agency and an instrumentality of the |
27 | United States pursuant to national housing legislation |
28 | under which funds will be provided for payment of the |
29 | obligations secured by those loan agreements; |
30 | (ix) obligations secured by: |
|
1 | (A) at least a like amount of cash surrender value |
2 | of life insurance policies, or |
3 | (B) collateral that has a market value of not less |
4 | than one hundred twenty percent of the amount of the |
5 | obligations secured thereby to the extent of fifteen |
6 | percent of the aggregate of the capital accounts of the |
7 | institution; |
8 | (x) investment securities acquired pursuant to section |
9 | 504; |
10 | (xi) obligations of the kind covered by subsection (b) |
11 | (ii) of this section, as to which there is a certificate of |
12 | reliance on a primary obligor; |
13 | (xii) obligations of the customer as to which there is a |
14 | certificate of reliance on an obligor other than the |
15 | customer; |
16 | (xiii) transactions of the savings bank in connection |
17 | with the sale of reserve balances to a member or nonmember |
18 | bank; and |
19 | (xiv) an assignment of funds on deposit in the lending |
20 | savings bank. |
21 | (d) Regulation--The department may by regulation not |
22 | inconsistent with the provisions of this section and section |
23 | 1414(c) prescribe definitions of and requirements for |
24 | transactions included in or excluded from the indebtedness to |
25 | which the fifteen percent limitation of this section applies. |
26 | (e) Definitions--As used in this section, the following |
27 | words and phrases shall have the meanings given to them in this |
28 | subsection: |
29 | "Capital accounts"--the aggregate of capital, surplus, |
30 | undivided profits, capital securities and reserve for loan |
|
1 | losses of the savings bank. Reserve for loan losses shall mean |
2 | that portion of a savings bank's earnings set aside as a general |
3 | reserve to absorb possible future losses on loans as of the last |
4 | complete calendar or fiscal year, carried in an account |
5 | captioned "reserve for loan loss" or "reserve for bad debts." |
6 | "Derivative transaction"--any transaction that is a contract, |
7 | agreement, swap, warrant, note or option that is based, in whole |
8 | or in part, on the value of, any interest in or any quantitative |
9 | measure or the occurrence of any event relating to, one or more |
10 | commodities, securities, currencies, interest or other rates, |
11 | indices or other assets. |
12 | Section 28. Section 601 of the act, amended May 21, 1980 |
13 | (P.L.173, No.51), is amended to read: |
14 | Section 601. Application of Chapter |
15 | This chapter shall apply to, and the word "institution" in |
16 | this chapter shall mean: |
17 | (a) a bank, a bank and trust company, a savings bank[,] and |
18 | a private bank [and, to the extent permitted by applicable law, |
19 | a national bank located in this state--]for the purpose of all |
20 | of the provisions of this chapter, and |
21 | (b) a trust company[--] for the purpose of the provisions of |
22 | this chapter concerning safe-deposit agreements and for the |
23 | purpose of section 610. |
24 | Section 29. Section 605 of the act is amended to read: |
25 | Section 605. Tentative Trusts |
26 | (a) An institution may receive deposits in an account in the |
27 | names of one or more individuals described as trustees: |
28 | (i) for an individual or for [two individuals jointly or |
29 | for two individuals successively, for the first if he |
30 | survives all of the named depositors and for the second if he |
|
1 | does not] multiple individuals jointly or successively, or |
2 | (ii) for a non-profit organization without any notice of |
3 | the existence or of the terms of a trust other than such |
4 | description. |
5 | (b) Upon receipt of satisfactory proof of death of the |
6 | individual described as trustee, or of all of the individuals |
7 | described as trustees, in such account, the institution shall |
8 | pay the balance of the account and all interest thereon upon the |
9 | check, order or receipt: |
10 | (i) if the account is stated to be held in trust for one |
11 | beneficiary, of such beneficiary; |
12 | (ii) if the account is stated to be held in trust for |
13 | [two] multiple individuals jointly, of [both] all of such |
14 | individuals or, upon satisfactory proof of death of one of |
15 | them prior to the death of all the named depositors, of the |
16 | survivor, if the arrangement previously agreed upon between |
17 | the institution and the named depositors so provides; or |
18 | (iii) if the account is stated to be held in trust for |
19 | [two] multiple individuals successively, of the individual |
20 | first named as the beneficiary, or, upon satisfactory proof |
21 | of his death prior to the death of all the named depositors, |
22 | of the successive individual for whom the account is stated |
23 | to be held in trust in the alternative; |
24 | and, in the event any individual to whom such account is payable |
25 | is a minor, may make payment to the minor without the assent of |
26 | a parent or guardian, unless expressly provided otherwise in the |
27 | deposit arrangement, and with the same effect as though the |
28 | minor were an adult. |
29 | Section 30. Section 902 of the act, amended July 2, 1992 |
30 | (P.L.364, No.77), is amended to read: |
|
1 | Section 902. Authorized Offices |
2 | (a) General rule--Except as provided in subsection (b), an |
3 | institution may not maintain any office for the conduct of its |
4 | business other than: |
5 | (i) its principal place of business designated in its |
6 | articles, or in the case of a private bank in its certificate |
7 | of authorization [or in the case of an employes' mutual |
8 | banking association in a certificate issued by the |
9 | department], |
10 | (ii) branches authorized prior to the effective date of |
11 | this act or authorized pursuant to this act, and |
12 | (iii) offices, agencies and other places of business |
13 | which do not constitute branches as defined in this act. |
14 | (b) Affiliates--An institution may establish and operate as |
15 | a branch, any principal place of business or branch of an |
16 | affiliated State or national bank, savings bank, Federal savings |
17 | bank, State savings association or Federal savings and loan |
18 | association upon written approval by the department of an |
19 | application for approval in a form prescribed by the department |
20 | accompanied by any applicable fee. The department may issue |
21 | regulations under this subsection; however, the absence of |
22 | regulations shall not be a bar to consideration by the |
23 | department of an application filed under this subsection nor a |
24 | basis for denial of such an application. |
25 | (c) Institutions as agents for affiliates-- |
26 | (i) Any institution that is a subsidiary of a bank |
27 | holding company may receive deposits, renew time deposits, |
28 | close loans, service loans and receive payments on loans and |
29 | other obligations as an agent for an institution affiliate. |
30 | (ii) Notwithstanding any other provision of law, an |
|
1 | institution acting as an agent in accordance with paragraph |
2 | (i) for an institution affiliate shall not be considered to |
3 | be a branch of the affiliate. |
4 | (iii) An institution may not-- |
5 | (A) conduct any activity as an agent under paragraph |
6 | (i) which the institution is prohibited from conducting |
7 | as a principal under any applicable Federal or State law |
8 | or order, or |
9 | (B) as a principal, have an agent conduct any |
10 | activity under paragraph (i) which the institution is |
11 | prohibited from conducting under any applicable Federal |
12 | or State law or order. |
13 | (iv) No provision of this subsection may be construed as |
14 | affecting-- |
15 | (A) the authority of any institution to act as an |
16 | agent on behalf of any other institution under any other |
17 | provision of law, or |
18 | (B) whether an institution that conducts any |
19 | activity as an agent on behalf of any other institution |
20 | under any other provision of law shall be considered to |
21 | be a branch of such other institution. |
22 | (v) An agency relationship between institutions under |
23 | paragraph (i) shall be on terms that are consistent with safe |
24 | and sound banking practices and all applicable regulations or |
25 | orders of any appropriate Federal or State banking regulator. |
26 | Section 31. Section 904 of the act, amended July 6, 1995 |
27 | (P.L.271, No.39), is amended to read: |
28 | Section 904. Authorization of New Branches |
29 | (a) General rule--An institution may establish and maintain: |
30 | (i) branches maintained on the date of these amendments; |
|
1 | (ii) branches acquired from a predecessor in a merger, |
2 | consolidation or conversion; and |
3 | (iii) branches established with the prior written |
4 | approval of the department after the filing of an application |
5 | for approval in a form prescribed by the department |
6 | accompanied by any applicable fee and after investigation by |
7 | the department, except that department approval shall not be |
8 | required for national banks or Federal savings associations. |
9 | [(b) Reciprocity condition--A banking institution existing |
10 | under the laws of another jurisdiction may not establish a |
11 | branch in this Commonwealth unless the laws of the state where |
12 | it is located would permit an institution chartered under the |
13 | laws of this Commonwealth or a national bank located in this |
14 | Commonwealth to establish and maintain a branch in such other |
15 | state on substantially the same terms and conditions. |
16 | (c) Savings banks--A savings bank may establish and maintain |
17 | branches within any county of this Commonwealth or within any |
18 | state of the United States or the District of Columbia, subject |
19 | to the written approval of the department upon an application |
20 | for approval in a form prescribed by the department accompanied |
21 | by any applicable fee and after investigation by the |
22 | department.] |
23 | Section 32. Section 905(a) and (e) of the act are amended to |
24 | read: |
25 | Section 905. Approval of Branch by Department |
26 | (a) Investigation and discretionary hearings--Upon receipt |
27 | of an application for approval of a branch which satisfies the |
28 | requirements of this act, the department shall conduct such |
29 | investigation as it may deem necessary and, in its discretion, |
30 | may hold hearings before the department [or before the Banking |
|
1 | Board]. |
2 | * * * |
3 | (e) Discontinuance of branch--An institution may, pursuant |
4 | to a resolution of its board of directors or trustees or, in the |
5 | case of a private bank, its owners, and with [the] prior written |
6 | [approval of] notice to the department, discontinue the |
7 | operation of a branch [upon such prior public notice of at least |
8 | thirty days as the department shall prescribe]. The institution |
9 | shall deliver to the department a certificate of the |
10 | discontinuance of the branch in a form prescribed by the |
11 | department. |
12 | * * * |
13 | Section 33. Section 907(b) and (c) of the act, amended July |
14 | 23, 1970 (P.L.597, No.199) and November 22, 2000 (P.L.660, |
15 | No.89), are amended to read: |
16 | Section 907. Branches Outside Pennsylvania |
17 | * * * |
18 | (b) An institution may establish and maintain an office |
19 | outside the states of the United States with the prior written |
20 | approval of the department and subject to an agreement |
21 | satisfactory to the department providing for the times, method |
22 | and reimbursement of expenses of examination of such branch. At |
23 | any such branch, an institution shall have the power (without |
24 | regard to other provisions of this act) to engage in any |
25 | business or any activity permitted by applicable Federal law and |
26 | regulations. |
27 | (c) An institution may establish and maintain branches in |
28 | any other state, the District of Columbia or a territory or |
29 | possession of the United States upon receiving the prior written |
30 | approval of the department after filing an application and |
|
1 | paying a fee to the department in a form and amount prescribed |
2 | by the department, except no approval is required for national |
3 | banks or Federal savings associations under this subsection. |
4 | Section 34. Section 908 of the act, amended July 6, 1984 |
5 | (P.L.621, No.128), is repealed: |
6 | [Section 908. Branches Acquired from the Receiver of a Closed |
7 | Institution or from an Institution in Danger of |
8 | Closing |
9 | Any institution or national bank whose principal place of |
10 | business is located in Pennsylvania may maintain as a branch any |
11 | office which it acquires from an institution or national bank in |
12 | danger of closing or from the secretary, or public body of the |
13 | United States, as receiver, in conjunction with an assumption of |
14 | deposit liabilities of an institution or national bank in danger |
15 | of closing or a closed institution or national bank whether in |
16 | connection with a purchase of assets, through a merger or |
17 | consolidation or otherwise, without regard to the location of |
18 | the principal place of business of the acquiring institution or |
19 | national bank. The secretary or comptroller of the currency, as |
20 | appropriate, shall determine whether an institution is in danger |
21 | of closing and the secretary may make such a determination only |
22 | where the board of directors or trustees of the institution have |
23 | specified in writing that the institution is in danger of |
24 | closing. Until such time as an institution may establish |
25 | branches within any county in the Commonwealth, a branch office |
26 | acquired under the authority of this section may be relocated |
27 | within the same county but shall not be moved to a new location |
28 | in a contiguous or bicontiguous county unless that county is |
29 | also contiguous or bicontiguous to the county of the principal |
30 | place of business of the acquiring institution or national |
|
1 | bank.] |
2 | Section 35. Section 1004(b)(ii) of the act, amended December |
3 | 18, 1986 (P.L.1702, No.205), is amended to read: |
4 | Section 1004. Articles of Incorporation |
5 | * * * |
6 | (b) Contents--The articles shall set forth in the English |
7 | language: |
8 | * * * |
9 | (ii) the location and post office address of its |
10 | principal place of business, which shall be located within |
11 | this Commonwealth; |
12 | * * * |
13 | Section 36. Section 1010(b)(i) of the act, amended April 8, |
14 | 1982 (P.L.262, No.79), is amended to read: |
15 | Section 1010. Certificate of Authorization to Do Business |
16 | * * * |
17 | (b) The department shall issue to an institution a |
18 | certificate of authorization to do business when: |
19 | (i) except in the case of a mutual savings bank, capital |
20 | of the institution shall have been fully paid in, in an |
21 | amount specified by the department [and in no event less than |
22 | the minimum capital for the institution under the provisions |
23 | of section 1102] and, in addition, there shall have been paid |
24 | in: |
25 | (A) surplus in an amount not less than fifty percent |
26 | of the capital paid in, |
27 | (B) an expense fund in an amount fixed by the |
28 | department at not less than five percent of the capital |
29 | paid in, and |
30 | (C) the proceeds of capital securities, if any, |
|
1 | which were considered part of the capital structure of |
2 | the institution by the department under section 1007(a) |
3 | (vi) in giving its approval of the proposed institution; |
4 | * * * |
5 | Section 37. The act is amended by adding a section to read: |
6 | Section 1012. Organization as a Limited Liability Company |
7 | (a) General rule--Subject to any conditions or restrictions |
8 | as determined by the department, a bank, bank and trust company, |
9 | trust company or savings bank may be organized as a limited |
10 | liability company pursuant to 15 Pa.C.S. Ch. 89 (relating to |
11 | limited liability companies) in order to conduct the business of |
12 | a bank, bank and trust company, trust company or savings bank |
13 | subject to this act. |
14 | (b) Conflicts--In the event of a conflict between this act |
15 | and 15 Pa.C.S. Ch. 89 in relation to the conduct of the affairs |
16 | of an institution, the two statutes shall be construed together, |
17 | if possible, as one statute. In the event of any unresolvable |
18 | conflict, this act shall control as determined by the |
19 | department. |
20 | Section 38. Section 1102(b) of the act, amended April 8, |
21 | 1982 (P.L.262, No.79), is amended to read: |
22 | Section 1102. Minimum Capital |
23 | * * * |
24 | (b) New institutions--[The minimum capital of an] An |
25 | institution which is incorporated pursuant to this act, or [of a |
26 | bank which becomes a bank and trust company pursuant to this |
27 | act, or of a stock savings bank which is converted from a mutual |
28 | savings bank pursuant to this act, shall depend upon the |
29 | population, according to the last United States census, of the |
30 | city, incorporated town, borough or township where its principal |
|
1 | place of business is located and shall be as follows: |
2 3 | Population of Location of Principal Place of Business | Bank | Bank and Trust Company or Trust Company | 4 | Less than 6,000 | $ 50,000 | $150,000 | 5 | 6,000 to 50,000 | $100,000 | $200,000 | 6 | More than 50,000 | $200,000 | $300,000] |
|
7 | an institution that becomes subject to this act due to a |
8 | conversion, shall establish and maintain minimum capital in an |
9 | amount specified by the department. |
10 | Section 39. Section 1202(f)(i) of the act, amended December |
11 | 18, 1986 (P.L.1702, No.205), is amended to read: |
12 | Section 1202. Classes of Shares |
13 | * * * |
14 | (f) Filing of statement affecting class or series of |
15 | shares--Before any institution shall issue any shares of any |
16 | class or any series of any class of which the designations, |
17 | preferences, qualifications, privileges, limitations, redemption |
18 | provisions, options, conversion rights and other special rights, |
19 | if any, shall not have been set forth in the articles but shall |
20 | be provided for in a resolution or resolutions adopted by the |
21 | board of directors pursuant to authority expressly vested in it |
22 | by the articles, the institution shall: |
23 | (i) file with the department a statement executed [under |
24 | the seal of the institution and signed] by two duly |
25 | authorized officers of the institution, setting forth: |
26 | (A) the name of the institution, |
27 | (B) the resolution establishing and designating the |
28 | class or series and fixing and determining the relative |
29 | rights and preferences thereof, |
30 | (C) the aggregate number of shares of such class or |
|
1 | series established and designated by: |
2 | (I) such resolution, |
3 | (II) all prior statements, if any, filed under |
4 | this act with respect thereto, and |
5 | (III) any other provision of the articles, |
6 | (D) the date and manner of the adoption of such |
7 | resolution, and |
8 | * * * |
9 | Section 40. Sections 1205(b) and 1302(a) and (c) of the act |
10 | are amended to read: |
11 | Section 1205. Share Certificates |
12 | * * * |
13 | (b) Execution--Every share certificate shall be signed by |
14 | the president and secretary or by such officers as the by-laws |
15 | may provide [and sealed with the corporate seal which may be a |
16 | facsimile, engraved or printed], but if the certificate is |
17 | signed by a transfer agent or a registrar, the signature of any |
18 | officer of the institution on the certificate may be a |
19 | facsimile, engraved or printed. |
20 | * * * |
21 | Section 1302. Cash Dividends |
22 | (a) Authorized dividends--The board of directors of an |
23 | institution may, from time to time, declare, and the institution |
24 | may pay, dividends on its outstanding shares subject to the |
25 | restrictions of this act and to the restrictions, if any, in its |
26 | articles. Dividends may be declared and paid [only] out of |
27 | accumulated net earnings of the institution or accumulated net |
28 | earnings acquired as a result of a merger and transferred to |
29 | surplus, if used within seven years of the date of merger, and |
30 | may be paid in cash or property other than its own shares. |
|
1 | * * * |
2 | (c) Fund for dividends after merger, consolidation or |
3 | conversion--In determining the accumulated net earnings of an |
4 | institution which has been the resulting institution in a |
5 | merger, consolidation or conversion, the accumulated net |
6 | earnings immediately prior to the merger, consolidation or |
7 | conversion of each institution and national bank or Federal |
8 | savings bank which was a party to the merger or consolidation or |
9 | of the national bank or Federal savings bank which converted |
10 | into the institution may, to the extent not transferred to |
11 | capital or surplus of the resulting institution, be carried |
12 | forward as accumulated net earnings of the resulting |
13 | institution. |
14 | Section 41. Section 1306(b) of the act, amended December 18, |
15 | 1986 (P.L.1702, No.205), is amended to read: |
16 | Section 1306. Redemption and Acquisition of Redeemable Shares; |
17 | Statement of Reduction of Authorized Shares |
18 | * * * |
19 | (b) Shares subject to redemption which are redeemed or |
20 | otherwise acquired shall be canceled and shall not be reissued. |
21 | Immediately upon the redemption or other acquisition, the |
22 | institution shall deliver to the department a statement of |
23 | reduction of authorized shares which shall be signed by two duly |
24 | authorized officers [under its seal] and shall set forth: |
25 | (i) the aggregate number of shares of each class which |
26 | the institution had authority to issue and the number of |
27 | issued shares of each class, |
28 | (ii) the number of shares of each class subject to |
29 | redemption which have been canceled, |
30 | (iii) the aggregate number of shares of each class which |
|
1 | the institution has authority to issue after giving effect to |
2 | the reduction made by such cancellation, and |
3 | (iv) the provisions of the articles of the institution |
4 | which are to be changed by reason of the reduction of |
5 | authorized shares. |
6 | If the Department of Banking finds that the statement conforms |
7 | to law it shall deliver the statement with its written approval |
8 | to the Department of State for filing. Receipt thereof by the |
9 | Department of State shall have the effect of amending the |
10 | articles of the institution to the extent of the changes set |
11 | forth in the statement. The Department of State shall make and |
12 | retain a copy of the statement and shall send the approved |
13 | statement to the institution. |
14 | Section 42. Section 1407(a) of the act, amended July 30, |
15 | 1975 (P.L.108, No.56), is amended to read: |
16 | Section 1407. Audits and Reports by Directors or Trustees; |
17 | Accountants; Internal Auditors |
18 | (a) Annual audit--Except as provided in subsection (c) of |
19 | this section, the board of directors or trustees shall at least |
20 | once each year have made, by certified public accountants |
21 | selected by the institution and satisfactory to the department, |
22 | an audit of the books and affairs of the institution including |
23 | such matters as may be required by the department and including, |
24 | in the case of a bank and trust company, a savings bank or a |
25 | trust company, [if required by the department,] accounts held in |
26 | a fiduciary or other representative capacity. The department may |
27 | by regulation establish minimum standards for audits and reports |
28 | under this subsection (a). |
29 | * * * |
30 | Section 43. Section 1413(a) of the act, amended May 21, 1980 |
|
1 | (P.L.173, No.51), is amended to read: |
2 | Section 1413. Prohibitions Applicable to Directors, Trustees, |
3 | Officers, Employes and Attorneys |
4 | (a) No director, trustee, officer, employe or attorney of an |
5 | institution or of an affiliate of the institution shall: |
6 | (i) receive anything of value for procuring or |
7 | attempting to procure any loan from or investment by the |
8 | institution, or |
9 | [(ii) overdraw his deposit account in the institution, |
10 | except in accordance with an automatic system for transfer of |
11 | funds from another account or a written preauthorized |
12 | interest-bearing extension of credit that specifies a method |
13 | of repayment, or] |
14 | (iii) purchase, or directly or indirectly be interested |
15 | in purchasing, from the institution for less than its face |
16 | value any promissory note or other evidence of indebtedness |
17 | issued by the institution. |
18 | * * * |
19 | Section 44. Section 1417 of the act, added June 16, 1994 |
20 | (P.L.346, No.51), is repealed: |
21 | [Section 1417. Indemnity and Immunity of Certain Directors |
22 | (a) Indemnity-- |
23 | (i) The department shall have the power and its duty |
24 | shall be to procure, on behalf of the members of the board of |
25 | directors of special institutions as defined in section |
26 | 102(z.1)(i), directors' liability insurance or such other |
27 | contract of insurance providing for the indemnification of |
28 | these directors against any liability asserted against them |
29 | or incurred by them solely in their capacity or arising out |
30 | of their status as directors, including actions undertaken in |
|
1 | connection with the organization of the special institution. |
2 | (ii) The department shall have the power and its duty |
3 | shall be to procure, on behalf of the members appointed by |
4 | the Governor of the board of directors of special |
5 | institutions as defined in section 102(z.1)(ii), directors' |
6 | liability insurance or such other contract of insurance |
7 | providing for the indemnification of these directors against |
8 | any liability asserted against them or incurred by them |
9 | solely in their capacity or arising out of their status as |
10 | directors, including actions undertaken in connection with |
11 | the organization of the special institution. |
12 | (iii) The department is authorized to provide otherwise |
13 | for indemnification under this subsection in lieu of |
14 | directors' liability insurance. |
15 | (iv) Indemnification under this subsection includes, but |
16 | is not limited to, expenses and fees incurred in defending |
17 | any action or proceeding relating to their status as |
18 | directors. |
19 | (b) Immunity--Notwithstanding any other provision of law to |
20 | the contrary, the directors of a special institution shall be |
21 | deemed to be Commonwealth employes subject to and for all of the |
22 | purposes of 42 Pa.C.S. Ch. 85 (relating to matters affecting |
23 | government units). The immunity conferred under this subsection |
24 | shall apply to all actions of the directors in accordance with |
25 | subsection (a), including actions undertaken in connection with |
26 | the organization of the special institution. |
27 | (c) Applicability--This section shall apply to all actions |
28 | taken as members of the board of directors in accordance with |
29 | subsection (a) prior to the effective date of this section.] |
30 | Section 45. The act is amended by adding a section to read: |
|
1 | Section 1418. Standard of Care and Justifiable Reliance |
2 | Directors and officers of an institution shall be subject to |
3 | the provisions of 15 Pa.C.S. § 512 (relating to standard of care |
4 | and justifiable reliance) in the performance of their duties. |
5 | Section 46. Section 1504(a) of the act, amended April 8, |
6 | 1982 (P.L.262, No.79), is amended to read: |
7 | Section 1504. Articles of Amendment |
8 | (a) Upon the adoption of an amendment, articles of amendment |
9 | shall be signed by two duly authorized officers of the |
10 | institution [under its seal] and shall contain: |
11 | (i) the name of the institution, |
12 | (ii) the location and post office address of its |
13 | principal place of business, |
14 | (iii) the act of Assembly under which the institution |
15 | was incorporated and the date of its incorporation. |
16 | (iv) the time and place of the meeting of shareholders |
17 | or trustees at which the amendment was adopted and the kind |
18 | and period of notice given to the shareholders or trustees, |
19 | (v) except in the case of a mutual savings bank, the |
20 | number of shares entitled to vote on the amendment and if the |
21 | shares of any class are entitled to vote as a class, the |
22 | number of shares of each such class, |
23 | (vi) in the case of a mutual savings bank the number of |
24 | trustees who voted for and against the amendment and, in any |
25 | other case, the number of shares voted for or against the |
26 | amendment and if shares of any class are entitled to vote as |
27 | a class, the number of shares of each such class voted for |
28 | and against the amendment, and |
29 | (vii) the amendment adopted which shall be set forth in |
30 | full. |
|
1 | * * * |
2 | Section 47. Section 1601 of the act, amended December 18, |
3 | 1986 (P.L.1702, No.205), is amended to read: |
4 | Section 1601. Application of Chapter |
5 | This chapter shall apply to, and the word "institution" in |
6 | this chapter shall mean, an incorporated institution[, except |
7 | that section 1610 shall apply to a national bank as provided |
8 | therein]. |
9 | Section 48. Section 1602(a) of the act, amended July 6, 1995 |
10 | (P.L.271, No.39), is amended to read: |
11 | Section 1602. Authority to Merge or Consolidate |
12 | (a) Upon compliance with the requirements of this chapter |
13 | one or more institutions and one or more national banks, Federal |
14 | savings banks and interstate banks, without regard to whether |
15 | any such interstate bank maintains branches in this Commonwealth |
16 | at the time of a merger or consolidation, may merge or |
17 | consolidate into a national bank or Federal savings bank and, |
18 | with the approval by the department, may merge with or into an |
19 | institution or consolidate into a new institution or merge a |
20 | nonbank subsidiary into an institution, provided that the |
21 | institution can engage in activities conducted by the subsidiary |
22 | as principal, except that a trust company may enter into a |
23 | merger or consolidation only with another trust company, a bank |
24 | and trust company, a national bank or a Federal savings bank |
25 | which has fiduciary powers or a stock savings bank under section |
26 | 1609. |
27 | * * * |
28 | Section 49. Section 1603(f) of the act is amended to read: |
29 | Section 1603. Requirements for a Merger or Consolidation |
30 | The requirements for a merger or consolidation which must be |
|
1 | satisfied by the parties thereto are as follows: |
2 | * * * |
3 | (f) Articles of merger or consolidation--The articles of |
4 | merger or consolidation shall be signed by two duly authorized |
5 | officers of each party to the plan [under their respective |
6 | seals] and shall contain: |
7 | (i) the names of the parties to the plan and of the |
8 | resulting institution, |
9 | (ii) the location and post office address of the |
10 | principal place of business of each, |
11 | (iii) the votes by which the plan was adopted and the |
12 | time, place and notice of each meeting in connection with |
13 | such adoption, |
14 | (iv) the names and addresses of the first directors or |
15 | trustees of the resulting institution, |
16 | (v) in the case of a merger, any amendment of the |
17 | articles of the resulting institution, |
18 | (vi) in the case of a consolidation, the provisions |
19 | required in articles of incorporation of a new institution by |
20 | clauses (iii), (iv), (v), (viii) and (ix) of subsection |
21 | 1004(b) of this act, and |
22 | (vii) the plan. |
23 | * * * |
24 | Section 50. Section 1609(a), (b), (c), (e), (f), (g) and (i) |
25 | of the act, amended April 8, 1982 (P.L.262, No.79), December 18, |
26 | 1986 (P.L.1702, No.205) and June 16, 1994 (P.L.346, No.51), are |
27 | amended to read: |
28 | Section 1609. Mergers, Consolidations and Conversions of |
29 | Savings Banks |
30 | (a) Authority to merge, consolidate or convert-- |
|
1 | (i) upon compliance with the requirements of sections |
2 | 1602, 1603, 1604, 1605 and 1606, a savings bank may enter |
3 | into a merger or consolidation with one or more other savings |
4 | banks. In the event the book value of the total assets of the |
5 | acquired savings bank is less than one percent in excess of |
6 | the book value of the total liabilities, the resulting |
7 | institution may maintain as a branch, any office operated by |
8 | the acquired institution. |
9 | (ii) upon compliance with the requirements of this |
10 | section and other applicable law, one or more savings banks |
11 | and one or more associations may merge into a savings bank |
12 | [or into an association] or consolidate into a new savings |
13 | bank [or a new association]. The word "association" in this |
14 | chapter shall mean an association subject to the Savings |
15 | Association Code of 1967. |
16 | (iii) upon compliance with the requirements of this |
17 | section and other applicable law, |
18 | (A) one or more savings banks, one or more Federal |
19 | savings banks and one or more Federal savings and loan |
20 | associations may merge into a savings bank, Federal |
21 | savings bank or a Federal savings and loan association or |
22 | consolidate into a new savings bank, a new Federal |
23 | savings bank or a new Federal savings and loan |
24 | association, and |
25 | [(B) one or more savings banks may merge or |
26 | consolidate with a regional thrift institution, and, |
27 | after March 4, 1990, with a foreign thrift institution, |
28 | as those terms are defined in and subject to any |
29 | applicable limits of section 117, and] |
30 | (C) a business corporation which owns all of the |
|
1 | issued and outstanding shares of a savings bank may merge |
2 | into such savings bank. |
3 | (iv) the authority of a savings bank to merge or |
4 | consolidate into a Federal savings bank or Federal savings |
5 | and loan association shall be subject to the condition that |
6 | at the time of the transaction the laws of the United States |
7 | shall authorize a Federal savings bank or Federal savings and |
8 | loan association to merge or consolidate into a savings bank. |
9 | (v) upon compliance with the requirements of this |
10 | section and other applicable law, |
11 | [(A) a savings bank may be converted into an |
12 | association,] |
13 | (B) a savings bank may be converted into a Federal |
14 | savings bank or a Federal savings and loan association, |
15 | subject to the condition that at the time of the |
16 | transaction the laws of the United States shall authorize |
17 | a Federal savings bank or a Federal savings and loan |
18 | association to convert into a savings bank, or |
19 | (C) an association may convert to a savings bank. |
20 | [An association whose deposits were insured by the |
21 | Pennsylvania Savings Association Insurance Corporation |
22 | prior to conversion may maintain all existing branches |
23 | operating at the time application for conversion is made |
24 | if the application is made within ninety days of the |
25 | effective date of this subclause.] |
26 | (vi) upon compliance with the requirements of this |
27 | section and other applicable law and subject to the laws of |
28 | the United States, a Federal savings bank or a Federal |
29 | savings and loan association may be converted into a savings |
30 | bank [or an association]. |
|
1 | (vii) upon compliance with the requirements of this |
2 | section, a mutual savings bank may be converted into a stock |
3 | savings bank. A stock savings bank shall have authority, upon |
4 | compliance with the requirements of this section, to enter |
5 | into a merger or consolidation with one or more other stock |
6 | savings banks, banks, national banking associations, bank and |
7 | trust companies, trust companies or stock savings and loan |
8 | associations. |
9 | (viii) all mergers, consolidations and conversions in |
10 | which the resulting corporation is a savings bank [or an |
11 | association] shall be subject to the approval of the |
12 | department. |
13 | (ix) upon compliance with the requirements of 12 CFR Pt. |
14 | 708a (relating to bank conversions and mergers), other |
15 | applicable law and this section, a Federal or State credit |
16 | union may convert to a mutual savings bank. |
17 | (x) upon compliance with the requirements of this |
18 | section and other applicable law, |
19 | (A) a bank or bank and trust company may be |
20 | converted into a stock savings bank, provided, in the |
21 | case of a bank and trust company, that the resulting |
22 | savings bank will have fiduciary powers, or |
23 | (B) a savings bank may be converted into a bank or a |
24 | bank and trust company. |
25 | (b) Requirements for a merger, consolidation or conversion-- |
26 | The requirements for a merger, consolidation or conversion under |
27 | clauses (ii), (iii), (v), (vi) [or (vii)], (vii), (ix) or (x) of |
28 | subsection (a) which must be satisfied by the parties thereto |
29 | are as follows: |
30 | (i) the parties shall adopt a plan stating the method, |
|
1 | terms and conditions of the merger, consolidation or |
2 | conversion, including the rights under the plan of the |
3 | members, depositors and shareholders, if any, of each of the |
4 | parties, and any agreement concerning the merger or |
5 | consolidation. |
6 | (ii) if the proposed merger, consolidation or conversion |
7 | will result in a Federal savings bank, a savings bank[,] or a |
8 | Federal savings and loan association [or an association], |
9 | adoption of the plan by each party thereto shall require the |
10 | affirmative vote, |
11 | (A) in the case of a mutual savings bank, of at |
12 | least two-thirds of the trustees present at a meeting at |
13 | which the plan is proposed, and two-thirds of all the |
14 | trustees at a subsequent meeting held upon not less than |
15 | ten days' notice to all the trustees, |
16 | (B) in the case of a stock savings bank, of at least |
17 | a majority of the trustees, at a meeting held upon not |
18 | less than ten days' notice to all the trustees, and of |
19 | the shareholders entitled to cast at least two-thirds of |
20 | the votes which all shareholders are entitled to cast |
21 | thereon, at a meeting held upon not less than ten days' |
22 | notice to all shareholders, |
23 | (C) in the case of a Federal savings bank, a Federal |
24 | savings and loan association or an association, of two- |
25 | thirds of the entire membership of the board of |
26 | directors, |
27 | (D) in the case of any other party, such vote as is |
28 | required by law for merger, consolidation or conversion, |
29 | and |
30 | (E) in the case of the notice required to be given |
|
1 | to the trustees of a savings bank and to the shareholders |
2 | of a stock savings bank shall include a copy or summary |
3 | of the plan. The department may require such vote of the |
4 | members of an association as it deems proper. |
5 | (iii) any modification of a plan which has been adopted |
6 | shall be made by any method provided therein, or in the |
7 | absence of such provision by the same vote as that required |
8 | for adoption. |
9 | (iv) if a proposed merger, consolidation or conversion |
10 | will result in a savings bank [or an association], an |
11 | application for the required approval thereof by the |
12 | department shall be made in a manner prescribed by the |
13 | department. The department may require notice to be given to |
14 | such persons as it designates. There shall also be delivered |
15 | to the department: |
16 | (A) articles of merger, consolidation or conversion, |
17 | (B) applicable fees payable to the department in |
18 | connection with the articles and with the conduct of the |
19 | investigation required by subsection (e), |
20 | [(C) if the resulting corporation is an association, |
21 | any documents or other items required under the Savings |
22 | Association Code of 1967.] |
23 | (D) if the proposed name of the resulting savings |
24 | bank [or association] is not identical with the name of |
25 | one of the parties to the plan, evidence of reservation |
26 | of such name in the Department of State, and |
27 | (E) if there is any modification of the plan at any |
28 | time prior to the approval by the department, an |
29 | amendment of the application and, if necessary, of the |
30 | articles, signed in the same manner as the originals, |
|
1 | setting forth the modification of the plan, the method by |
2 | which such modification was adopted and any related |
3 | change in the provisions of the articles of merger, |
4 | consolidation or conversion. |
5 | (v) if a proposed merger, consolidation or conversion |
6 | will result in a national banking association, all |
7 | requirements of the applicable Federal law shall be met. |
8 | (c) Articles of merger, consolidation or conversion--The |
9 | articles of a merger, consolidation or conversion under clauses |
10 | (ii), (iii), (v), (vi) [or (vii)], (vii), (ix) or (x) of |
11 | subsection (a) shall be signed by two duly authorized officers |
12 | of each party to the plan [under their respective seals] and |
13 | shall contain: |
14 | (i) the names of the parties to the plan and of the |
15 | resulting savings bank [or association], |
16 | (ii) the location and post office address of the |
17 | principal place of business of each, |
18 | (iii) the votes by which the plan was adopted and the |
19 | time, place and notice of each meeting in connection with |
20 | such adoption, |
21 | (iv) the names and addresses of the first trustees of |
22 | the savings bank [or the names and addresses of the first |
23 | directors of the resulting association], |
24 | (v) in case of a merger, any amendment of the articles |
25 | of the resulting savings bank [or association], |
26 | [(vi) if the resulting corporation is an association, a |
27 | record of the employment contracts which are to be legally |
28 | binding on the resulting association,] |
29 | (vii) in the case of a consolidation, the provisions |
30 | required in articles of incorporation of a new savings bank |
|
1 | [or association] as the case may be, |
2 | (viii) in the case of a conversion, the provisions |
3 | required in the articles of incorporation of a new savings |
4 | bank [or association] as the case may be, |
5 | (ix) the plan. |
6 | * * * |
7 | (e) Approval of merger, consolidation or conversion by |
8 | department-- |
9 | (i) upon receipt of an application for approval of a |
10 | merger, consolidation or conversion under clauses (ii), |
11 | (iii), (v), (vi) [or (vii)], (vii), (ix) or (x) of subsection |
12 | (a) and of the supporting items required by clause (iv) of |
13 | subsection (b), the department shall conduct such |
14 | investigation as it may deem necessary to ascertain whether: |
15 | (A) the articles of merger, consolidation or |
16 | conversion and supporting items satisfy the requirements |
17 | of this act[, and if the Savings Association Code of 1967 |
18 | is applicable, the requirements of that act are |
19 | satisfied], |
20 | (B) the name of the resulting, new or converted |
21 | savings bank [or association] conforms with the |
22 | requirements of law, |
23 | (C) the plan and any modification thereof adequately |
24 | protect the interests of depositors, other creditors and |
25 | shareholders, if any, of a savings bank which is a party |
26 | to the plan, |
27 | (D) the requirements for a merger, consolidation or |
28 | conversion under all applicable laws have been satisfied |
29 | and the resulting corporation would satisfy the |
30 | requirements of this act applicable to it, and |
|
1 | (E) the merger, consolidation or conversion would be |
2 | consistent with adequate and sound banking and in the |
3 | public interest on the basis of |
4 | (1) the financial history and condition of the |
5 | parties to the plan, |
6 | (2) their prospects, |
7 | (3) the character of their management, |
8 | (4) the potential effect of the merger, |
9 | consolidation or conversion on competition, and |
10 | (5) the convenience and needs of the area |
11 | primarily to be served by the resulting corporation. |
12 | (ii) within sixty days after receipt of the application, |
13 | articles of merger, consolidation or conversion and the |
14 | applicable fee payable to the department, or within an |
15 | additional period of not more than thirty days an amendment |
16 | to the application, the department shall approve or |
17 | disapprove the application on the basis of its investigation. |
18 | The department shall immediately give to the parties to the |
19 | plan written notice of its decision and, in the event of |
20 | disapproval, a statement in detail of the reasons for its |
21 | decision. |
22 | (f) Procedure after approval by department; issuance of |
23 | certificate of merger, consolidation or conversion-- |
24 | (i) if the laws of the United States require the |
25 | approval of the merger, consolidation or conversion by any |
26 | Federal agency, the department shall after its approval |
27 | retain the articles of merger, consolidation or conversion |
28 | until it receives notice of the decision of such agency. If |
29 | such agency shall refuse to give its approval, the department |
30 | shall notify the parties to the plan that the department's |
|
1 | approval has been rescinded for that reason. If such agency |
2 | gives its approval, the Department of Banking shall |
3 | immediately deliver the articles of merger, consolidation or |
4 | conversion with its written approval to the Department of |
5 | State for filing as of a date and time specified by the |
6 | Department of Banking and shall notify the parties to the |
7 | plan. |
8 | (ii) if all the taxes, fees and charges required by law |
9 | shall have been paid and if the name of the resulting savings |
10 | bank [or association] continues to be reserved or is |
11 | available on the records of the Department of State, the |
12 | receipt of the articles by the Department of State with the |
13 | written approval of the Department of Banking shall |
14 | constitute filing of the articles of merger, consolidation or |
15 | conversion as of the date and time of receipt or as of any |
16 | later date and time specified by the Department of Banking. |
17 | The Department of State shall issue to the resulting |
18 | corporation a certificate of merger, consolidation or |
19 | conversion as of the date and time of filing with the |
20 | approved articles of merger, consolidation or conversion |
21 | attached thereto and shall make and retain a copy of such |
22 | certificate and articles. |
23 | (g) Effect of merger, consolidation or conversion-- |
24 | (i) as of the filing of the articles of merger, |
25 | consolidation or conversion in the Department of State, the |
26 | merger, consolidation or conversion shall be effective. |
27 | (ii) the certificate of merger, consolidation or |
28 | conversion shall be conclusive evidence of the performance of |
29 | all conditions precedent to the merger, consolidation or |
30 | conversion and of the existence or creation of the resulting |
|
1 | savings bank [or association], except as against the |
2 | Commonwealth. |
3 | (iii) when a merger, consolidation or conversion becomes |
4 | effective, the existence of each party to the plan, except |
5 | the resulting savings bank [or association], shall cease as a |
6 | separate entity but shall continue in, and the parties to the |
7 | plan shall be, a single corporation which shall be the |
8 | resulting savings bank [or association] and which shall have |
9 | without further act or deed, all the property, rights, |
10 | powers, duties and obligations of each party to the plan. |
11 | (iv) the articles of the resulting savings bank [or |
12 | association] shall be, in the case of a merger, the same as |
13 | its articles prior to the merger with any change stated in |
14 | the articles of merger, or in the case of a consolidation, |
15 | the provisions stated in the articles of consolidation. |
16 | (v) if the resulting corporation shall be a savings bank |
17 | it shall engage only in such business and it shall have only |
18 | such powers as it would have if it had been originally |
19 | incorporated under this act, except that it may engage in any |
20 | business and exercise any right that any party to the plan |
21 | which was an institution subject to this act could lawfully |
22 | exercise or engage in immediately prior to the merger, |
23 | consolidation or conversion. [If the resulting corporation |
24 | shall be a savings association such association shall have |
25 | the authority to engage thereafter only in such business and |
26 | exercise only such powers as it would have under original |
27 | incorporation under the Savings Association Code of 1967.] |
28 | (vi) no liability of any party to the plan or of its |
29 | trustees, officers, members or directors shall be affected, |
30 | nor shall any lien on any property of a party to the plan be |
|
1 | impaired, by the merger, consolidation or conversion. Any |
2 | claim existing or action pending by or against any party to |
3 | the plan may be prosecuted to judgment as if the merger, |
4 | consolidation or conversion had not taken place or the |
5 | resulting corporation may be substituted in its place. |
6 | * * * |
7 | [(i) Review of approval of a merger, consolidation or |
8 | conversion that results in a stock savings bank--The |
9 | department's approval of a merger, consolidation or conversion |
10 | that results in a stock savings bank shall not be reviewable |
11 | except by an appeal to the Commonwealth Court filed within |
12 | twenty days after notice of the approval appears in the |
13 | Pennsylvania Bulletin. In any such appeal, the department's |
14 | determination that the plan adequately protects the interests of |
15 | depositors of a mutual savings bank which is a party to the plan |
16 | shall be conclusive if: |
17 | (i) such depositors are given a preemptive right to buy |
18 | shares of the stock savings bank at fair market value or at |
19 | the price at which shares are sold to the public in a public |
20 | offering in connection with the conversion, or |
21 | (ii) such depositors are not given a preemptive right to |
22 | buy shares by reason of the determination referred to in |
23 | subsection (j) of this section, and the plan makes available |
24 | to the savings bank significant additional funds which are |
25 | junior in right to the deposits.] |
26 | * * * |
27 | Section 51. Section 1610(g) of the act, added December 18, |
28 | 1986 (P.L.1702, No.205), is amended to read: |
29 | Section 1610. Right of Shareholders to Receive Payment for |
30 | Shares Following a Control Transaction |
|
1 | * * * |
2 | [(g) Application--Subsections (a) through (f) shall apply to |
3 | any national bank located in Pennsylvania unless such |
4 | application is in conflict with an express provision of the |
5 | national banking laws.] |
6 | Section 52. Section 1701 of the act is amended to read: |
7 | Section 1701. Application of Chapter |
8 | This chapter shall apply to, and the word "institution" in |
9 | this chapter shall mean, a bank [and], a bank and trust company |
10 | and a trust company. |
11 | Section 53. Section 1704 of the act, amended July 6, 1995 |
12 | (P.L.271, No.39), is amended to read: |
13 | Section 1704. Articles of Conversion |
14 | The articles of conversion shall be signed by two duly |
15 | authorized officers of the national bank or interstate bank |
16 | [under its seal] and shall contain: |
17 | (a) its name and the name of the resulting institution, |
18 | (b) the location and post office address of its principal |
19 | place of business, |
20 | (c) the votes by which the plan of conversion was adopted and |
21 | the time, place and notice of each meeting in connection with |
22 | such adoption, |
23 | (d) the names and addresses of the first directors of the |
24 | resulting institution, |
25 | (e) the provisions required in articles of incorporation of a |
26 | new institution by clauses (iii), (iv), (v), (viii) and (ix) of |
27 | subsection 1004(b) of this act, and |
28 | (f) the plan of conversion. |
29 | Section 54. Sections 1802(a), 1804(a) and 1806(a) of the act |
30 | are amended to read: |
|
1 | Section 1802. Voluntary Dissolution Prior to Commencement of |
2 | Business |
3 | (a) Articles of dissolution--An institution which has not |
4 | transacted any business for which a certificate of authorization |
5 | is required under this act may propose to dissolve by a vote of |
6 | the holders of two-thirds of its shares and by delivering to the |
7 | department articles of dissolution which shall be executed by |
8 | two duly authorized officers or shareholders [under the seal of |
9 | the institution] and which shall contain: |
10 | (i) the date of incorporation of the institution, |
11 | (ii) a statement that it has not transacted any business |
12 | for which a certificate of authorization is required under |
13 | this act, |
14 | (iii) a statement that all liabilities of the |
15 | institution have been paid or provided for, |
16 | (iv) a statement that all amounts received on account of |
17 | capital, surplus and expense fund, less amounts disbursed for |
18 | expenses, have been returned to the persons entitled thereto, |
19 | and |
20 | (v) the number of shares entitled to vote on the |
21 | dissolution and the number of shares voted for and against it |
22 | respectively. |
23 | * * * |
24 | Section 1804. Certificate of Election for Voluntary Dissolution |
25 | (a) Contents of certificate--Immediately after the adoption |
26 | and approval of a plan of dissolution under section 1803 of this |
27 | act or, if the plan provides for continuance of the business of |
28 | the institution unless an assumption of its liabilities becomes |
29 | effective, immediately after such assumption becomes effective, |
30 | the institution shall deliver to the department, together with |
|
1 | applicable fees payable to the department, a certificate of |
2 | election to dissolve which shall be signed by two of its duly |
3 | authorized officers [under its seal] and which shall contain: |
4 | (i) the name of the institution, |
5 | (ii) the location and post office address of its |
6 | principal place of business, |
7 | (iii) the name and address of its officers and |
8 | directors, and |
9 | (iv) the number of shares entitled to vote on the plan |
10 | of dissolution and the number of shares voted for and against |
11 | the plan, respectively, and, if the shares of any class are |
12 | entitled to vote as a class, the number of shares of such |
13 | class and the number of shares of all other classes voted for |
14 | or against the plan, respectively. |
15 | * * * |
16 | Section 1806. Articles of Dissolution |
17 | (a) Contents--When all the liabilities of the institution |
18 | have been discharged and all of its remaining assets have been |
19 | distributed to its shareholders pursuant to section 1805, |
20 | articles of dissolution shall be signed by two duly authorized |
21 | officers of the institution [under its seal] and shall contain: |
22 | (i) the name of the institution and the post office |
23 | address of its principal place of business, |
24 | (ii) a statement that the institution has previously |
25 | delivered a certificate of election to dissolve to the |
26 | Department of Banking and the date on which the approved |
27 | certificate was filed in the Department of State, |
28 | (iii) a statement that all liabilities of the institution |
29 | have been discharged and that the remaining assets of the |
30 | institution have been distributed to its shareholders, and |
|
1 | (iv) a statement that there are no suits pending against |
2 | the institution. |
3 | * * * |
4 | Section 55. The heading of Chapter 20 of the act, amended |
5 | December 17, 1982 (P.L.1367, No.313), is repealed: |
6 | [CHAPTER 20 |
7 | PROVISIONS APPLICABLE TO DEPARTMENT OF BANKING] |
8 | Section 56. Sections 2001 and 2002 of the act, amended July |
9 | 6, 1995 (P.L.271, No.39), are repealed: |
10 | [Section 2001. Application of Chapter |
11 | This chapter shall apply to, and the word "institution" in |
12 | this chapter shall mean, an institution subject to this act and |
13 | an interstate bank except a national bank. |
14 | Section 2002. Examinations and Reports |
15 | (a) Frequency and scope of examinations--The department shall |
16 | examine all institutions at least once every two calendar years |
17 | and may examine any institution more frequently and at any time |
18 | it deems such action necessary or desirable for protection of |
19 | depositors, other creditors or shareholders. The examination |
20 | shall include a review of the accounts, records and affairs of |
21 | the institution, its compliance with law, such other matters as |
22 | the department may determine and in the case of a bank and trust |
23 | company or a trust company a review of accounts held in a |
24 | fiduciary or other representative capacity. In the case of an |
25 | interstate bank, the department may accept, in lieu of any |
26 | examination required by this section and any report required by |
27 | the act of May 15, 1933 (P.L.565, No.111), known as the |
28 | "Department of Banking Code," examinations and reports made |
29 | pursuant to the banking laws of the jurisdiction under which the |
30 | interstate bank exists, or examinations and reports which it |
|
1 | accepts under subsection (b) and, in its discretion, may make |
2 | such examinations and require such reports of Pennsylvania |
3 | operations of the interstate bank as it deems appropriate. |
4 | (b) Federal agencies--In the case of an institution which is |
5 | a member of the Federal Reserve System or in the case of an |
6 | institution whose deposits are insured by the Federal Deposit |
7 | Insurance Corporation, the department may accept, in lieu of any |
8 | examination required by this section and in lieu of any report |
9 | required by the Department of Banking Code, examinations and |
10 | reports made pursuant to the Federal Reserve Act or the Federal |
11 | Deposit Insurance Corporation Act. |
12 | (c) Department of Banking Code--Except as modified by the |
13 | provisions of this section, the provisions of the Department of |
14 | Banking Code governing examinations, reports and enforcement |
15 | powers of the department shall apply to institutions and |
16 | interstate banks which are not national banks. |
17 | (d) Agreements--Notwithstanding any other laws of this |
18 | Commonwealth, the Secretary of Banking may enter into |
19 | cooperative, coordinating and information-sharing agreements |
20 | with any other bank supervisory agencies with respect to the |
21 | periodic examination or other supervision of any branch in this |
22 | Commonwealth of an interstate bank or any branch of an |
23 | institution existing under the laws of this Commonwealth located |
24 | in another state. The Secretary of Banking may enter into joint |
25 | examinations or joint enforcement actions with the other bank |
26 | supervisory agencies having concurrent jurisdiction over an |
27 | interstate bank or any branch of an institution existing under |
28 | the laws of this Commonwealth.] |
29 | Section 57. Section 2003 of the act is repealed: |
30 | [Section 2003. Examination of Affiliates and Persons Performing |
|
1 | Bank Services |
2 | For the purpose of determining the condition of an |
3 | institution and information concerning it, the department may at |
4 | any time examine an affiliate of an institution to the same |
5 | extent that it may examine the institution under this act and |
6 | the department of Banking Code and may at any time examine a |
7 | person performing bank services for the institution to the |
8 | extent provided in section 107(d).] |
9 | Section 58. Section 2004 of the act, amended April 8, 1982 |
10 | (P.L.262, No.79), is repealed: |
11 | [Section 2004. Relationship of Institutions and Their Personnel |
12 | with Officials and Employes of Department |
13 | (a) Loans and Gifts--Except as provided in subsection (d) of |
14 | this section, an institution or any director, trustee, officer, |
15 | employe or attorney thereof shall not grant or give to the |
16 | Secretary of Banking, any official or employe of the department, |
17 | any deputy receiver or any employe of the Secretary of Banking |
18 | as receiver, none of whom shall receive, any sum of money or any |
19 | property as a gift or loan or otherwise, directly or |
20 | indirectly--subject to the penalty provisions of this act. This |
21 | subsection shall not apply to loans to employes of the |
22 | Department of Banking who function in a clerical or nondecision |
23 | making capacity with regard to institutions, including but not |
24 | limited to clerks, typists and stenographers. |
25 | (b) Interest in institutions--The Secretary of Banking, any |
26 | official or employe of the department, any deputy receiver or |
27 | any employe of the Secretary of Banking as receiver shall not |
28 | hold any office or position in, have any direct or indirect |
29 | pecuniary interest in, or directly or indirectly own shares or |
30 | securities issued by, an institution, except that the Secretary |
|
1 | of Banking may continue to own shares or securities issued by an |
2 | institution which are owned by him on the date of his |
3 | appointment and all shares or securities distributed by the |
4 | institution and received by him on account of the shares or |
5 | securities so owned--subject to the penalty provisions of this |
6 | act. |
7 | (c) Disclosure of interest of Secretary of Banking--In the |
8 | event of such ownership of shares or securities by the Secretary |
9 | of Banking, he shall disclose the ownership, amount and date of |
10 | acquisition of such shares or securities in writing to the |
11 | Secretary of the Commonwealth immediately after his appointment |
12 | and shall not during his term of office participate in any |
13 | decision or take any action concerning an institution in which |
14 | he owns such shares or securities other than actions or |
15 | decisions generally applicable to institutions or classes of |
16 | institutions. In the event of disqualification of the Secretary |
17 | of Banking from participation in any decision or action for such |
18 | reason, all authority vested in him by law shall for the purpose |
19 | of such decision or action be exercised by the senior Deputy |
20 | Secretary of Banking. |
21 | (d) Excepted transactions--The prohibitions of subsections |
22 | (a) and (b) of this section shall not apply to either: |
23 | (i) a loan subject to the provisions of this act secured |
24 | by a lien on the home of the Secretary of Banking, an |
25 | official or employe of the department, a deputy receiver or |
26 | an employe of the Secretary of Banking as receiver, or |
27 | (ii) a deposit account with an institution of any such |
28 | individual.] |
29 | Section 59. Section 2005 of the act, amended July 9, 1992 |
30 | (P.L.430, No.90), is repealed: |
|
1 | [Section 2005. Additional Powers of the Department of Banking |
2 | (a) Functions of department--The functions of the Department |
3 | of Banking shall be: |
4 | (i) To exercise the power to remove from his office or |
5 | position an officer, employe, director, trustee or attorney |
6 | of an institution pursuant to the provisions of section 501 |
7 | of the Department of Banking Code. |
8 | (ii) To exercise the power to suspend from his office or |
9 | position an officer, employe, director, trustee or attorney |
10 | of an institution if the Department of Banking serves written |
11 | notice under section 501 of the Department of Banking Code to |
12 | an institution, its officers, employe, director, trustee or |
13 | attorney of the department's intention to issue an order |
14 | under such clause. The department may suspend such party from |
15 | office or prohibit such party from further participation in |
16 | any manner in the conduct of the affairs of the institution |
17 | if the department: |
18 | (A) determines that such action is necessary for the |
19 | protection of the depository institution or the interests |
20 | of the depository institution's depositors; and |
21 | (B) serves such party with written notice of the |
22 | suspension order. |
23 | (b) Effect of order--Any suspension order issued under this |
24 | section shall become effective upon service and, unless a court |
25 | of competent jurisdiction issues a stay of such order, shall |
26 | remain in effect and enforceable until the date the department |
27 | dismisses the charges on the effective date of an order issued |
28 | by the department under section 501 of the Department of Banking |
29 | Code.] |
30 | Section 60. Sections 2102(a) and 2104 of the act are amended |
|
1 | to read: |
2 | Section 2102. Penalties and Criminal Provisions Applicable to |
3 | Directors, Trustees, Officers, Employes and Attorneys |
4 | of Institutions |
5 | (a) Violations of sections 1413, 1416[,] and 1912 [and 2004 |
6 | (a)]--A director, trustee, officer, employe or attorney of an |
7 | institution who wilfully violates any of the provisions of |
8 | sections 1413, 1416[,] or 1912 [or 2004 (a)] of this act shall |
9 | be guilty of a misdemeanor and shall upon conviction thereof be |
10 | subject to imprisonment for a period not exceeding one year, or |
11 | a fine not exceeding one thousand dollars ($1,000), or both; and |
12 | shall be subject to a further fine of a sum equal to: |
13 | (i) the amount of money or the value of the property |
14 | which he receives for procuring or attempting to procure a |
15 | loan or investment by the institution, in the case of a |
16 | violation of section 1413 (a) (i) or of section 1912 (a) (i); |
17 | (ii) the amount by which his deposit account in the |
18 | institution is overdrawn, in the case of a violation of |
19 | [section 1413 (a) (ii) or of] section 1912 (a) (ii); |
20 | (iii) the face value of the promissory note or other |
21 | evidence of indebtedness issued by the institution, in the |
22 | case of a violation of section 1413 (a) (iii) or section 1912 |
23 | (a) (iii); and |
24 | (iv) the amount of any profit which he receives on the |
25 | transaction, in the case of a violation of section 1416[; and |
26 | (v) the amount of money or value of the property given |
27 | directly or indirectly as a gift or loan or otherwise, in the |
28 | case of a violation of section 2004 (a)]. |
29 | * * * |
30 | Section 2104. Penalties Applicable to Persons Subject to This |
|
1 | Act |
2 | (a) Violations of sections 105, 106--Any person who wilfully |
3 | engages in the business of receiving deposits or money for |
4 | transmission, or who wilfully establishes a place of business |
5 | for such purpose, in violation of section 105 and any person |
6 | whom such person represents, and any corporation which wilfully |
7 | acts in a fiduciary capacity in violation of section 106, shall |
8 | be guilty of a [misdemeanor] felony and shall upon conviction |
9 | thereof be subject, in the case of an individual, to |
10 | imprisonment for a period not exceeding [one year] two years, or |
11 | a fine not exceeding [one thousand dollars ($1,000)] ten |
12 | thousand dollars ($10,000) per violation, or both, and, in the |
13 | case of any other person, to a fine not exceeding [five thousand |
14 | dollars ($5,000)] five hundred thousand dollars ($500,000). |
15 | [(b) Violations of section 2004 (a)--A violation of the |
16 | prohibitions of section 2004 (a) by the Secretary of Banking, an |
17 | official or employe of the department, a deputy receiver or an |
18 | employe of the Secretary of Banking as receiver shall constitute |
19 | sufficient ground for removal from office. In addition, any such |
20 | individual wilfully committing such violation shall be guilty of |
21 | a misdemeanor and shall upon conviction thereof be subject to |
22 | imprisonment for a period not exceeding one year, or a fine not |
23 | exceeding one thousand dollars ($1,000), or both; and shall be |
24 | subject to a further fine equal to the amount of money or value |
25 | of the property which such individual has directly or indirectly |
26 | received in violation of section 2004 (a).] |
27 | Section 61. This act shall take effect in 60 days. |
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