SB 377--
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Session of 1997
SENATE BILL No. 377
By Committee on Ways and Means
2-24
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AN ACT enacting the savings bank act; jurisdiction and duties of bank
commissioner.
Be it enacted by the Legislature of the State of Kansas:
Section 1. This act shall be known and may be cited as the savings
bank act.
Sec. 2. As used in this act:
(a) ``Agency office'' means a place at which the business of a savings
bank is conducted other than by regularly employed personnel of the
savings bank, as provided under section 82(f).
(b) ``Articles'' means articles of incorporation, all amendments to ar-
ticles of incorporation, and agreements of consolidation and merger.
(c) ``Approved by the members'', for a mutual savings bank, means
approved by a majority of all votes cast at a duly held regular meeting or
special meeting.
(d) ``Affiliate'' means a corporation, business trust, association, or an
organization to which one or more of the following apply:
(1) A savings bank, directly or indirectly, owns or controls either a
majority of its voting shares or more than 50% of the number of shares
voted for the election of its directors, trustees or other persons exercising
similar functions at the preceding election, or controls in any manner the
election of a majority of its directors, trustees, or other persons exercising
similar functions;
(2) control of the organization is held, directly or indirectly, through
stock ownership or in any other manner, by the shareholders of a savings
bank who own or control either a majority of the shares of that savings
bank or more than 50% of the number of shares voted for the election
of directors of that savings bank at the preceding election, or by trustees
for the benefit of the shareholders of that savings bank, or by members
of the savings bank if it is a mutual savings bank.
(3) a majority of its directors, trustees or other persons holding similar
positions are directors of any one savings bank; or
(4) owns or controls, directly or indirectly, either a majority of the
shares of capital stock of any one savings bank or more than 50% of the
number of shares voted for the election of directors of that savings bank
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1 at the preceding election, or controls in any manner the election of a
2 majority of the directors of that savings bank, or for the benefit of whose
3 shareholders all or substantially all the capital stock of that savings bank
4 is held by trustees.
5 (e) ``Association'' means a federal savings association organized under
6 section 5 of the home owners' loan act, or a savings and loan association,
7 building and loan association, or homestead association, that is organized
8 under the laws of a state or the District of Columbia and whose deposits
9 are insured by the federal deposit insurance corporation.
10 (f) ``Bank'' means a state banking corporation organized or reorgan-
11 ized under the laws of Kansas.
12 (g) ``Bank holding company'' means a company as defined as bank
13 holding company under the laws of Kansas that is not a savings bank,
14 national banking association or association.
15 (h) ``Branch'' means a place of business, other than the principal of-
16 fice of a savings bank, at which the savings bank transacts business that
17 may be conducted at its principal office. Branch does not include a sub-
18 sidiary, service entity, agency office, loan production office, place where
19 only records are made, posted, or kept, place of business of a financial
20 institution with which the savings bank has an agency relationship under
21 section 63, or an automated teller machine if it is made available to two
22 or more federal or state chartered financial institutions under a state
23 statute which regulates electronic funds transfer facilities. The acceptance
24 of deposits in furtherance of a school thrift or savings plan by an officer,
25 employee, or agent of a savings bank at any school is not the establishment
26 or operation of a branch. The receipt of deposits by a messenger service
27 or the delivery by messenger service of items representing deposit ac-
28 count withdrawals or of loan proceeds is not the establishment or oper-
29 ation of a branch, whether or not the messenger service is owned or
30 operated by the savings bank.
31 (i) ``Capital'' means the stated par value of issued and outstanding
32 unimpaired common stock and the stated par value of issued and out-
33 standing unimpaired preferred stock.
34 (j) ``Commissioner'' means the state bank commissioner.
35 (k) ``Compliance review committee'' means both of the following:
36 (1) One or more persons assigned by management or appointed by
37 the board of directors or other governing body of a depository institution,
38 or of a subsidiary of a depository institution, or of a service corporation
39 or other service entity of a depository institution, for the purposes set
40 forth in section 62; or
41 (2) any other person to the extent the person acts in an investigatory
42 capacity at the direction of a compliance review committee.
43 (l) ``Compliance review documents'' means documents prepared in
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1 connection with a review or evaluation conducted by or for a compliance
2 review committee.
3 (m) ``Consolidate'', ``consolidated'', ``consolidating'' and ``consolida-
4 tion'' mean the consolidation or merger of two or more depository insti-
5 tutions.
6 (n) ``Consolidated savings bank'' means a savings bank that results
7 from a consolidation between a savings bank and one or more banks, out-
8 of-state banks, national banks, associations or savings banks.
9 (o) ``Consolidated organization'' means an organization that results
10 from a consolidation of consolidating organizations.
11 (p) ``Consolidating organizations'' means any combination of banks,
12 out-of-state banks, national banks, associations, savings banks, or state or
13 federal credit unions that have consolidated or are in the process of con-
14 solidation as provided in section 114 or 115.
15 (q) ``Depository institution'' means a bank, out-of-state bank, national
16 bank, association, savings bank, cooperative bank, industrial bank, or
17 credit union organized under the laws of this state, another state, the
18 District of Columbia, the United States, or a territory or protectorate of
19 the United States.
20 (r) ``Director'' means a director, trustee, or other person holding a
21 similar position with respect to an organization whether incorporated or
22 unincorporated. Director does not include an advisory director, honorary
23 director, director emeritus, or similar person, unless the person is oth-
24 erwise performing functions similar to those of a director.
25 (s) ``Fiduciary'' means a trustee, executor, administrator, guardian,
26 conservator, agent, receiver, trustee in bankruptcy, assignee for creditors,
27 or any holder of a similar position of trust. It also describes the relation-
28 ship of a director to a savings bank as stipulated in section 46.
29 (t) ``Foreign country'' means a country other than the United States
30 and includes a colony, dependency, or possession of a country other than
31 the United States.
32 (u) ``Impairment'' means a condition in which the value of the savings
33 bank's assets is less than the aggregate amount of the savings bank's lia-
34 bilities to creditors and depositors, less its capital, if the savings bank is a
35 stock savings bank, or a condition in which the value of the savings bank's
36 assets is less than the aggregate amount of the savings bank's liabilities to
37 creditors, and members, if the savings bank is a mutual savings bank.
38 (v) ``Incorporator'' means a person who signed the original articles of
39 incorporation.
40 (w) ``Loan production office'' means an office of the savings bank at
41 which only activities related to money lending are conducted, which is
42 not the principal office or a branch or an agency office or an office of an
43 affiliated depository institution.
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1 (x) ``Member'' means a person holding a savings account of a mutual
2 savings bank.
3 (y) ``Messenger service'' means a service such as a courier service or
4 an armored car service that picks up from or delivers to customers of one
5 or more depository institutions or one or more affiliates of a depository
6 institution cash, currency, checks, drafts, securities or other items relating
7 to transactions between or involving a depository institution or affiliate of
8 a depository institution and those customers, or that transfers cash, cur-
9 rency, checks, drafts, securities or other items or documents between
10 depository institutions or affiliates of depository institutions. The messen-
11 ger service may be owned and operated by one or more depository in-
12 stitutions or affiliates or by a third party.
13 (z) ``Mobile branch'' means a branch in which the location of the
14 physical structure of the branch is moved from time to time.
15 (aa) ``Mutual savings bank'' means a savings bank for which the arti-
16 cles of incorporation do not authorize the issuance of common or pre-
17 ferred stock.
18 (bb) ``National bank'' means a bank chartered by the federal govern-
19 ment under the national bank act.
20 (cc) ``Net profits'' means the remainder of all earnings from opera-
21 tions plus actual recoveries on loans and investments and other assets,
22 after deducting from the total all operating expenses, actual losses, ac-
23 crued dividends on preferred stock, if any, and all taxes.
24 (dd) ``Out-of-state bank'' means a banking corporation or savings
25 bank organized under the laws of another state, the District of Columbia,
26 or a territory of the United States whose principal office is located in a
27 state other than this state, the District of Columbia, a territory or a pro-
28 tectorate of the United States, and whose deposits are insured by the
29 federal deposit insurance corporation.
30 (ee) ``Person'' means an individual, corporation, limited liability com-
31 pany, governmental entity, partnership, limited liability partnership or
32 other legal entity.
33 (ff) ``Publication'', ``published'', and ``publish'' mean publication in a
34 newspaper printed in the English language and published and circulated
35 in the county where the depository institution is located or, if there is no
36 newspaper published and circulated in the county where the depository
37 institution is located, in any newspaper having general circulation in the
38 county.
39 (gg) ``Residential real estate'' means improved real property that is
40 used or intended to be used as a residence or residences and contains not
41 more than four dwelling units.
42 (hh) ``Savings bank'' means a state banking corporation organized or
43 reorganized under this act.
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1 (ii) ``Savings liability'' or ``deposit liability'' means the aggregate
2 amount of accounts of depositors, including interest accrued or credited
3 to the accounts, less redemptions and withdrawals.
4 (jj) ``Service entity'' means a stock corporation, mutual company, lim-
5 ited liability company, limited liability partnership or limited partnership
6 in which a savings bank has invested under section 70. Upon written
7 approval of the commissioner, a service entity may be a general partner-
8 ship.
9 (kk) ``Shareholder'' means the registered owner of any share or shares
10 of capital stock of a savings bank.
11 (ll) ``Stock savings bank'' means a savings bank for which the articles
12 of incorporation authorize the issuance of capital stock.
13 (mm) ``Subsidiary'' means a stock corporation, mutual company, lim-
14 ited liability company, limited liability partnership or limited partnership,
15 the controlling interests of which are more than 50% owned by one or
16 more federally insured depository institutions, and in which a savings bank
17 has an ownership interest, membership interest, or other legally enforce-
18 able interest which has the indicia of ownership. Upon written approval
19 of the commissioner, and subject to the ownership requirements set forth
20 in this subsection, a subsidiary may be a general partnership.
21 (nn) ``Surplus'' means the amount paid for issued and outstanding
22 common and preferred stock in excess of the stated par value, plus any
23 amount of transferred undivided profits, and any additional amounts paid
24 in or contributed to increase total capital.
25 (oo) ``Total capital'' means an amount equal to any capital, plus any
26 surplus, undivided profits and instruments of indebtedness authorized
27 under section 37.
28 (pp) ``Undivided profits'' means the amount of retained earnings and
29 any additional amounts held in capital reserve accounts of the savings
30 bank.
31 (qq) ``Value'' means the present worth of all rights to future benefits
32 arising from ownership.
33 (rr) ``Withdrawal value of a deposit account'' means the amount in-
34 vested in a deposit account, plus earnings, less lawful deductions.
35 Sec. 3. (a) The commissioner shall have jurisdiction over and execute
36 the laws relating to savings banks transacting business in this state.
37 (b) The commissioner shall maximize the capacity of savings banks in
38 this state to offer convenient and efficient financial services, to promote
39 home ownership and economic development, and to ensure that savings
40 banks remain competitive with other types of financial institutions and
41 providers of financial services.
42 (c) This act shall be liberally construed except for those provisions
43 that relate to safety and soundness of operations, investments, and man-
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1 agement.
2 Sec. 4. Unless the person is organized under this act, a person shall
3 not transact business under this act, do business under any name or title,
4 circulate, advertise, make representations or give information that indi-
5 cates or implies the operation of a business under this act.
6 Sec. 5. Unless the commissioner, for good cause shown, waives the
7 requirement, a savings bank shall secure insurance of its deposit accounts
8 backed by the full faith and credit of the United States government prior
9 to commencing business.
10 Sec. 6. (a) A savings bank shall satisfy one of the following asset tests.
11 (b) (1) An asset test requiring that not less than 50% of the total
12 assets of the savings bank, as measured by monthly averages calculated
13 at the close of each calendar month, in at least 9 months of the imme-
14 diately preceding 12-month period, consist of one or more of the follow-
15 ing:
16 (A) Loans that were made to purchase, refinance, construct, improve
17 or repair domestic residential housing, including single and multifamily
18 dwellings, or manufactured housing;
19 (B) home equity loans;
20 (C) real property acquired as a result of foreclosure or deed-in-lieu
21 of foreclosure with respect to loans described in this section;
22 (D) securities backed by or representing an interest in mortgages on
23 domestic residential housing, including single or multifamily dwellings,
24 or manufactured housing;
25 (E) shares of stock issued by any federal home loan bank;
26 (F) fifty percent of the dollar amount of the domestic residential
27 housing mortgage loans, including single or multifamily dwellings, origi-
28 nated by the savings bank and sold within 90 days of origination;
29 (G) investments both debt and equity in the capital stock or obliga-
30 tions of and any other security issued by any service entity or subsidiary
31 of the savings bank, if the service entity or subsidiary derives at least 80%
32 of its annual gross revenues from activities directly related to purchasing,
33 financing, refinancing, constructing, improving or repairing domestic res-
34 idential housing, including single or multifamily dwellings, or manufac-
35 tured housing;
36 (H) two hundred percent of the dollar amount of loans and invest-
37 ments to purchase, construct, or develop one to four family residences
38 the purchase price of which is, or is guaranteed to be, not greater than
39 60% of the median value of comparable newly constructed one to four
40 family residences within the savings bank's local community;
41 (I) two hundred percent of the dollar amount of loans for the pur-
42 chase, construction, development, or improvement of domestic residen-
43 tial housing, churches or other places of worship, schools, nursing homes,
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1 hospitals and facilities serving similar functions within a community, lo-
2 cated within a geographic region or neighborhood in which the credit
3 needs of low and moderate income residents are not being adequately
4 met at the time the relevant loan is made;
5 (J) loans to small businesses;
6 (K) loans for the purchase, construction, development, or improve-
7 ment of churches or other places of worship, schools, nursing homes,
8 hospitals and other facilities utilized for similar functions or services
9 within a community;
10 (L) loans for the purchase, construction, development or improve-
11 ment of facilities and residential developments dedicated to public use
12 or property used on a nonprofit basis for residents;
13 (M) loans for personal, family, household or education purposes;
14 (N) shares of stock issued by the federal home loan mortgage cor-
15 poration and the federal national mortgage association;
16 (O) loans secured by an interest in churches or other places of wor-
17 ship, schools, nursing homes, hospitals, educational, health, or welfare
18 institutions or facilities, facilities designed or used primarily for residential
19 purposes for students, residents, and persons under care, employees, or
20 members of the staff of the institutions or facilities and other facilities
21 utilized for similar functions or services within a community;
22 (P) cash and other highly liquid assets;
23 (Q) obligations of the United States or of a state or political subdi-
24 vision thereof, and stock or obligations of a corporation that is an instru-
25 mentality of the United States or of a state or political subdivision thereof,
26 but not including obligations the interest on which is excludable from
27 gross income under section 415 of the internal revenue code of 1986, as
28 amended;
29 (R) property acquired through the liquidation of defaulted loans de-
30 scribed in this section;
31 (S) loans made for the payment of expenses of college or university
32 education or vocational training, in accordance with order or declaratory
33 ruling of the commissioner;
34 (T) property used by the savings bank in the conduct of its business
35 of acquiring the savings of the public and investing in loans; or
36 (U) loans or extensions of credit for agricultural purposes.
37 (2) An asset test prescribed by order or declaratory ruling of the com-
38 missioner.
39 (b) If a multifamily dwelling securing a loan is used in part for non-
40 residential purposes, the entire loan is deemed a loan for domestic resi-
41 dential housing if the planned residential use exceeds 80% of the pro-
42 perty's planned use, determined as of the time the loan is made. Loans
43 made to finance the acquisition or development of land shall be consid-
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1 ered loans for domestic residential housing if there is reasonable assur-
2 ance that the property will become residential real property within a pe-
3 riod of three years from the date of acquisition of the land.
4 (c) In the event a savings bank does not satisfy either of the asset
5 tests of subsection (b), the savings bank shall promptly notify the com-
6 missioner in writing of the failure.
7 (d) A savings bank which fails to satisfy either of the asset tests of
8 subsection (b) may requalify as a savings bank by meeting the percentage
9 of total assets test in subsection (a)(1) for 9 of the 12 months following
10 notice to the commissioner, including the month the notice is given, or a
11 savings bank may requalify as a savings bank by meeting a requalification
12 test prescribed by order or declaratory ruling of the commissioner. The
13 savings bank shall promptly give notice to the commissioner as soon as
14 the savings bank requalifies or fails to requalify as a savings bank under
15 this subsection.
16 (e) If the savings bank fails to requalify as a savings bank under sub-
17 section (d), the savings bank shall make application with the appropriate
18 governmental agency to convert its charter, or liquidate, but may continue
19 to operate as a savings bank under an order of the commissioner for the
20 period of time stated in the order. If the savings bank fails to comply with
21 the order for continued operation, or upon expiration of the time pre-
22 scribed in the order without conversion of charter or liquidation, the
23 commissioner may appoint a conservator under section 110 or apply to
24 the district court for the county in which the savings bank is located for
25 the appointment of a receiver for the savings bank. The activities of the
26 conservator or receiver shall otherwise be governed by the provisions of
27 this act.
28 Sec. 7. The commissioner may appoint examiners and other employ-
29 ees for the carrying out of this act.
30 Sec. 8. (a) The commissioner may adopt rules and regulations in ad-
31 dition to those specifically provided for by this act as the commissioner
32 may consider necessary to effectuate and enforce this act.
33 (b) The commissioner may also issue orders and declaratory rulings
34 as the commissioner considers necessary to effectuate the purposes and
35 to execute and enforce the provisions of this act.
36 Sec. 9. (a) A savings bank together with its subsidiaries, service en-
37 tities, and entities the controlling interests of which are more than 50%
38 owned by subsidiaries or service entities or association service corpora-
39 tions, are subject to examination of the commissioner, with or without
40 prior notice, one or more times in each calendar year concerning the
41 conditions and affairs of the savings bank. The commissioner shall also
42 examine a savings bank under the commissioner's jurisdiction when re-
43 quested by its board of directors. In connection with an examination, the
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1 commissioner, or the commissioner's authorized agent, may examine on
2 oath a director, officer, agent, employee or shareholder of a savings bank
3 concerning the affairs and business of the savings bank. The commissioner
4 shall ascertain whether the savings bank transacts its business in the man-
5 ner prescribed by law and the rules and regulations. The commissioner,
6 or the commissioner's authorized agent, may make an examination of an
7 affiliate, subsidiary or service entity necessary to disclose fully the rela-
8 tionship between a savings bank and the affiliate, subsidiary or service
9 entity and the effect of the relationship upon the savings bank.
10 (b) The commissioner may examine the branch or branches located
11 in this state of an out-of-state bank under the federal deposit insurance
12 act.
13 (c) In fulfilling the requirements of subsections (a) and (b), the com-
14 missioner may use an examination made under the federal deposit insur-
15 ance act, or the law of another state governing the activities of out-of-
16 state banks in that state. The commissioner may require the savings bank
17 to furnish a copy of any report required by a federal or state bank regu-
18 latory agency.
19 (d) An examination required by this section shall include the fiduciary
20 activities of the savings bank.
21 (e) The commissioner may contract with other savings bank regula-
22 tory agencies to assist in the conduct of examinations of savings banks
23 with one or more branches located in other states and in examination of
24 out-of-state banks with one or more branches located in this state.
25 Sec. 10. (a) The commissioner shall periodically establish a schedule
26 of annual supervisory fees to be paid by savings banks. Annual supervisory
27 fees shall be based on the estimated cost of supervision of savings banks.
28 (b) Each savings bank shall pay an annual supervisory fee each cal-
29 endar year as determined by the commissioner.
30 (c) The commissioner shall provide an invoice of the annual super-
31 visory fee to each savings bank by July 1 of each year. The annual super-
32 visory fee shall be paid by August 15 of that year.
33 (d) If a savings bank does not receive a supervisory examination dur-
34 ing a calendar year for which a supervisory fee has been paid, it shall
35 receive a credit of not less than 30% or more than 70% of the fee against
36 its next annual supervisory fee. The supervisory fee credit shall be deter-
37 mined annually by the commissioner and shall be the same for all savings
38 banks.
39 (e) The initial supervisory fee for a savings bank that obtained a char-
40 ter as a result of a conversion shall be based on the total assets as reported
41 in its report of condition as of December 31 of the previous year under
42 the prior charter.
43 (f) The initial supervisory fee of a savings bank newly organized and
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1 chartered under this act, during the initial supervisory year, shall be the
2 minimum supervisory fee established by the commissioner.
3 (g) The commissioner shall periodically establish a schedule of fees,
4 beyond those charged for normal supervision, to be paid for applications,
5 special evaluations and analyses, and examinations, including examina-
6 tions of trust services and safe deposit and collateral deposit companies.
7 (h) The fees established under subsection (g) shall be equal to the
8 estimated cost to the office of state bank commissioner for conducting
9 the activity for which the fee is imposed.
10 (i) The commissioner may charge reasonable fees for furnishing and
11 certifying copies of documents or serving notices required by this act.
12 (j) To the extent any fees assessed under this act are unpaid when
13 due, the commissioner may, upon proper notice, maintain an action
14 against the savings bank for the recovery of the fees plus interest and
15 costs.
16 (k) The fees collected under this section are not refundable. The
17 commissioner shall remit all moneys received by or for the commissioner
18 from such examination fees to the state treasurer at least monthly. Upon
19 receipt of each remittance, the state treasurer shall deposit the entire
20 amount in the treasury. Twenty percent of each deposit shall be credted
21 to the state general fund and the balance shall be credited to the bank
22 commissioner fee fund. All expenditures from the bank commissioner fee
23 fund shall be made in accordance with appropriation acts upon warrants
24 of the director of accounts and reports issued pursuant to vouchers ap-
25 proved by the commissioner or by a person or persons designated by the
26 commissioner.
27 Sec. 11. The commissioner may petition the district court of the
28 county in which the examination is being carried on to issue a subpoena
29 requiring a person to appear before the commissioner and be examined
30 under oath with reference to any matter within the scope of an exami-
31 nation of a savings bank under this act, and to produce books, records,
32 or papers.
33 Sec. 12. (a) The commissioner and all deputies, agents and employ-
34 ees of the commissioner shall be bound by oath to keep secret all facts
35 and information obtained in the course of their duties, unless the person
36 is required by law to report upon, take official action, or testify in any
37 proceedings regarding the affairs of a savings bank.
38 (b) Notwithstanding subsection (a), the commissioner may make dis-
39 closure to persons at such times as is in the public interest within the
40 purposes of this act.
41 (c) The provisions of this section are not applicable to, and do not
42 prohibit the furnishing of information or documents to, federal, out-of-
43 state bank or association regulatory agencies.
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1 Sec. 13. (a) Except with respect to rules and regulations adopted
2 pursuant to this act, a cease and desist order made under sections 14 to
3 22, and an order made on an application seeking approval of the com-
4 missioner under sections 25, 26, 35, 59, 72, 114, 122, or 128 or an objec-
5 tion issued by the commissioner under section 77, a savings bank or an
6 interested party who is dissatisfied with an order, ruling, objection or
7 finding issued by the commissioner may request a reconsideration of the
8 order, ruling, objection or finding within 10 days after the issuance of the
9 order, ruling, objection or finding. Within 30 days after the receipt of a
10 written request for reconsideration, the commissioner shall set the matter
11 for a formal hearing unless a formal hearing has been held before the
12 issuance of the order, ruling, objection or finding. The commissioner may
13 conduct a formal hearing before the issuance of an order, ruling, objection
14 or finding.
15 (b) A hearing held under subsection (a) shall be conducted under the
16 administrative procedures act.
17 (c) The commissioner shall require an entity making an application
18 under sections 25, 26, 35, 59, 72, 114, 122, or 128 to give notice of the
19 application by publication. The applicant, within 10 days after the accep-
20 tance of an application, shall publish notice in the community or com-
21 munities in which the savings bank, or bank holding company, involved
22 in the subject application is located. Publication shall be one time per
23 week for two consecutive weeks in the form prescribed by the commis-
24 sioner. The interval between publications shall not be less than five days.
25 Proof of publication shall be filed with the commissioner within 10 days
26 after the date of the second publication of notice.
27 (d) An interested party who desires to protest the application shall
28 file a written notice of protest with the commissioner and with the ap-
29 plicant within 10 days after the date of the second publication of notice.
30 Within 30 days after the date of the second publication of notice, an
31 interested party who has filed a written notice of protest shall file with
32 the commissioner and with the applicant a written statement setting forth
33 all of the following:
34 (1) A list of specific items in the application that are the basis for the
35 protest and an explanation of the reasons for the protest;
36 (2) a statement of the facts supporting the reasons for the protest
37 including economic and financial data; and
38 (3) a request for oral argument if desired.
39 (e) Within 40 days after the date of the second publication of notice,
40 the applicant may file with the commissioner and with the parties that
41 have filed written notice of protest written material in response to the
42 written statement and may request oral argument before the commis-
43 sioner if oral argument has not been requested by an interested party
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1 who has filed a written notice of protest.
2 (f) Oral argument may be held at the commissioner's discretion if
3 neither the applicant nor an interested party requests oral argument.
4 (g) An oral argument, if scheduled as provided in this section, shall
5 be held within 55 days after the date of the second publication of notice.
6 (h) Only the applicant and those interested parties who have filed
7 written statements under subsection (d) may participate in the oral ar-
8 gument. Oral argument may be made by each party or by an authorized
9 representative. Oral argument shall be limited to issues raised in the ma-
10 terials submitted in connection with the application and the protest. One
11 hour shall be permitted to each participant other than the applicant for
12 oral argument. The applicant shall have as much time as all other partic-
13 ipants have been permitted. The commissioner shall have a stenographic
14 record made of the oral argument, with costs to be allocated equally
15 among the parties requesting oral argument unless otherwise provided
16 by order of the commissioner.
17 (i) The commissioner shall issue an order within 100 days after the
18 filing of the application. If an application is denied, or if a protested
19 application is approved, the commissioner shall provide a detailed written
20 explanation of the basis of the commissioner's decision. Appeal of an
21 order shall not be made by a party without first requesting a reconsid-
22 eration of the order under subsection (j).
23 (j) The applicant or an interested party who filed written statements
24 under subsection (d) and who participated in the oral argument, if held,
25 who is dissatisfied with an order of the commissioner or an institution
26 which is dissatisfied with an objection issued by the commissioner under
27 section 77, may within five days after the issuance of the order or objec-
28 tion, file with the commissioner a written request for reconsideration of
29 the order stating the reasons for the request. The commissioner, within
30 10 days of receiving the request for consideration, shall render a decision
31 on the request for reconsideration. If a petition for reconsideration is
32 granted, the commissioner shall grant the applicant and all interested
33 parties 10 days to file written arguments or briefs. The commissioner may
34 conduct an oral argument after granting a petition for reconsideration.
35 The argument shall be held within 10 days after granting the petition.
36 The commissioner shall issue a final order or objection or withdraw an
37 objection within 20 days after granting the petition for reconsideration.
38 Sec. 14. (a) If in the opinion of the commissioner a savings bank is
39 engaging, has engaged or is about to engage in an unsafe or unsound
40 practice in conducting the business of the savings bank or is violating, has
41 violated or is about to violate a law or rules and regulations, the commis-
42 sioner may issue and serve upon the savings bank a notice of charges in
43 respect to the practice or violation. The notice shall contain a statement
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1 of the facts constituting the alleged unsafe or unsound practice or viola-
2 tion, and shall fix a time and place at which a hearing will be held to
3 determine whether an order to cease and desist should issue against the
4 savings bank.
5 (b) The hearing shall be not earlier than 30 days or later than 60 days
6 after service of the notice unless another date is set by the commissioner
7 at the request of the savings bank. Unless the savings bank appears at the
8 hearing by a duly authorized representative, it shall be deemed to have
9 consented to the issuance of the cease and desist order.
10 (c) In the event of a consent, or if upon the record made at the
11 hearing, the commissioner finds that an unsafe or unsound practice or
12 violation specified in the notice of charges has been established, the com-
13 missioner may issue and serve upon the savings bank an order to cease
14 and desist from the practice or violation. The order may require the sav-
15 ings bank and its directors, officers, employees and agents to cease and
16 desist from the practice or violation and to take affirmative action to
17 correct the conditions resulting from the practice or violation.
18 (d) A cease and desist order becomes effective at the expiration of
19 30 days after the service of the order upon the savings bank, except in
20 the case of an order issued upon consent which shall become effective at
21 the time specified in the order, and shall remain effective and enforceable
22 as provided in the order, except to the extent it is stayed, modified, ter-
23 minated or set aside by action of the commissioner or a reviewing court.
24 (e) If the commissioner determines that an out-of-state bank branch
25 located in this state is acting in violation of the laws of this state or that
26 the activities of the branch are being conducted in an unsafe and unsound
27 manner, the commissioner may undertake enforcement actions and pro-
28 ceedings as would be permitted if the branch were a savings bank.
29 Sec. 15. (a) If the commissioner determines that the violation or un-
30 safe or unsound practice specified in the notice of charges served upon
31 the savings bank under section 14 is likely to cause insolvency or sub-
32 stantial dissipation of assets or earnings of the savings bank, or is likely to
33 otherwise seriously prejudice the interests of its depositors, the commis-
34 sioner may issue a temporary order requiring the savings bank to cease
35 and desist from the violation or practice. The order shall become effective
36 upon service upon the savings bank, unless set aside, limited, or sus-
37 pended by a court in proceedings authorized by subsection (b), and shall
38 remain effective and enforceable pending the completion of the admin-
39 istrative proceedings under the notice and until such time as the com-
40 missioner shall dismiss the charges specified in the notice or if a cease
41 and desist order is issued against the savings bank, until the effective date
42 of such order.
43 (b) No later than 10 days after the savings bank has been served with
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1 a temporary cease and desist order, the savings bank may apply to the
2 district court of the county in which the home office of the savings bank
3 is located for an injunction setting aside, limiting or suspending the en-
4 forcement, operation or effectiveness of the order pending the comple-
5 tion of the administrative proceedings pursuant to the notice of charges
6 served upon the savings bank under section 13 and the court shall have
7 jurisdiction to issue the injunction.
8 Sec. 16. (a) If in the opinion of the commissioner, a director or of-
9 ficer of a savings bank has committed a violation of law or rules and
10 regulations or of a cease and desist order that has become final, or has
11 engaged or participated in an unsafe or unsound practice in connection
12 with the savings bank, or has committed or engaged in an act, omission
13 or practice that constitutes a breach of such person's fiduciary duty as a
14 director or officer and the commissioner determines that the savings bank
15 has suffered or will probably suffer substantial financial loss or other dam-
16 age or that the interest of its depositors could be seriously prejudiced by
17 reason of the violation, practice or breach of fiduciary duty, the commis-
18 sioner may serve upon the director or officer a written notice of intention
19 to remove such person from office.
20 (b) If in the opinion of the commissioner a director or officer of a
21 savings bank, by conduct or practice with respect to another savings bank
22 or other business organization which resulted in substantial financial loss
23 or other damage, has evidenced personal unfitness to continue as a di-
24 rector or officer and if in the opinion of the commissioner, any other
25 person participating in the conduct of the affairs of any savings bank, by
26 conduct or practice with respect to such savings bank or other business
27 organization which resulted in substantial financial loss or other damage,
28 has evidenced personal unfitness to participate in the conduct of the af-
29 fairs of the savings bank, the commissioner may serve upon the director,
30 officer or other person a written notice of intention to remove such person
31 from office or to prohibit such person's further participation in any man-
32 ner in the conduct of the affairs of the savings bank.
33 (c) In addition to a notice sent under subsections (a) or (b), if the
34 commissioner deems it necessary for the protection of the savings bank
35 or the interests of its depositors that the director, officer or other person
36 be immediately suspended from office or prohibited from further partic-
37 ipation in any manner in the conduct of the affairs of the savings bank,
38 the commissioner may serve upon the director, officer or other person a
39 written notice suspending such person from office or prohibiting such
40 person from further participation in any manner in the conduct of affairs
41 of the savings bank. The suspension or prohibition shall become effective
42 upon service of the notice and, unless stayed by a court in proceedings
43 authorized by section 17, shall remain in effect pending the completion
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1 of the administrative proceedings under the notice served under subsec-
2 tions (a) or (b) and until such time as the commissioner dismisses the
3 charges specified in the notice or, if an order of removal or prohibition
4 is issued against the director, officer or other person, until the effective
5 date of the order. Copies of the notice shall also be served upon the
6 savings bank of the director or officer or in the conduct of whose affairs
7 such person has participated.
8 (d) A notice of intention to remove a director, officer or other person
9 from office or to prohibit participation in the conduct of the affairs of a
10 savings bank shall contain a statement of the facts constituting grounds
11 for the notice, and shall fix a time and place at which a hearing will be
12 held. The hearing shall be held not earlier than 30 days nor later than 60
13 days after the date of service of the notice, unless another date is set by
14 the commissioner at the request of the director, officer or other person
15 and for good cause shown.
16 (e) Unless the director, officer or other person appears at the hearing
17 in person or by a duly authorized representative, such person shall be
18 considered to have consented to the issuance of an order of removal or
19 prohibition. In the event of consent, or if upon the record made at the
20 hearing the commissioner finds that any of the grounds specified in the
21 notice have been established, the commissioner may issue an order of
22 suspension or removal from office, or prohibition from participation in
23 the conduct of the affairs of the savings bank. The order shall become
24 effective at the expiration of 30 days after service upon the savings bank
25 and the director, officer or other person, except in the case of an order
26 issued upon consent, which shall become effective at the time specified
27 in the order. The order shall remain effective and enforceable unless it
28 is stayed, modified, terminated or set aside by action of the commissioner
29 or a reviewing court.
30 Sec. 17. No later than 10 days after a director, officer or other person
31 has been suspended from office or prohibited from participation in the
32 conduct of the affairs of a savings bank under section 16, the director,
33 officer or other person may apply to the district court of the county in
34 which the home office of the savings bank is located for a stay of the
35 suspension or prohibition pending the completion of the administrative
36 proceedings under the notice served upon the director, officer or other
37 person under section 16.
38 Sec. 18. (a) If a director or officer of a savings bank or other person
39 participating in the conduct of the affairs of a savings bank is charged in
40 any information, indictment, warrant or complaint authorized by a county,
41 state or United States authority with the commission of or participation
42 in a felony involving dishonesty or breach of trust, the commissioner, by
43 written notice served upon the director, officer or other person, may
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1 suspend such person from office or prohibit such person from further
2 participation in any manner in the conduct of the affairs of the savings
3 bank. A copy of the notice shall also be served upon the savings bank.
4 (b) The suspension or prohibition shall remain in effect until the in-
5 formation, indictment, warrant or complaint is finally disposed of or until
6 terminated by the commissioner. If a judgment of conviction with respect
7 to the offense is entered against the director, officer or other person, and
8 the judgment is not subject to further appellate review, the commissioner
9 may issue and serve upon the director, officer or other person an order
10 removing such person from office or prohibiting such person from further
11 participation in any manner in the conduct of the affairs of the savings
12 bank.
13 (c) A copy of the order shall also be served upon the savings bank,
14 whereupon the director or officer shall cease to be a director or officer
15 of the savings bank.
16 (d) A finding of not guilty or other disposition of the charge shall not
17 preclude the commissioner from instituting proceedings to suspend or
18 remove the director, officer or other person from office or to prohibit
19 further participation in savings bank affairs, under section 16.
20 Sec. 19. If, because of the suspension or removal of one or more
21 directors under this act, the board of directors of a savings bank has less
22 than a quorum of directors, all powers and functions vested in or exer-
23 cisable by the board shall vest in and be exercisable by the remaining
24 directors on the board. If all of the directors of a savings bank are sus-
25 pended or removed under this act, the commissioner shall appoint per-
26 sons to serve temporarily as directors pending the termination of the
27 suspensions or removals, or until such time as their successors are duly
28 elected and take office.
29 Sec. 20. The commissioner may apply to the district court of the
30 county in which the home office of the savings bank is located, or in the
31 district court of Shawnee County, for the enforcement of an effective and
32 outstanding notice or order issued under sections 16 to 26, including any
33 temporary cease and desist order issued under section 17(a), and the
34 court shall have jurisdiction to order and require compliance with the
35 notice or order. Except as otherwise provided in this act, a court shall not
36 have jurisdiction to review, modify, suspend, terminate or set aside a
37 notice or order under this section.
38 Sec. 21. A service required or authorized to be made by the com-
39 missioner under sections 14 to 22 may be made by registered or certified
40 mail, or in any other manner reasonably calculated to give actual notice
41 as the commissioner provides. Copies of a notice or order served by the
42 commissioner upon a savings bank, any director or officer, or any other
43 person participating in the conduct of the savings bank's affairs shall also
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1 be sent to the appropriate federal supervisory authorities.
2 Sec. 22. In connection with a proceeding under section 14, 15(a), or
3 16, the commissioner shall provide the appropriate federal supervisory
4 authorities with notice of intent to institute a proceeding and the grounds
5 for the proceeding. An institution or other party who is the subject of a
6 notice or order issued by the commissioner under sections 14 to 22 shall
7 not have standing to raise the requirements of section 21 or this section
8 with respect to notifying federal supervisory authorities as ground for
9 attacking the validity of a notice or order.
10 Sec. 23. As used in sections 14 to 22:
11 (a) ``Cease and desist order which has become final'' and ``order
12 which has become final'' mean a cease and desist order or an order issued
13 by the commissioner with the consent of the institution, director, officer
14 or other person concerned or with respect to which no petition for review
15 of the action of the commissioner has been filed in a district court or with
16 respect to which the action of the court in which the petition is filed is
17 not subject to further review by the courts of the state.
18 (b) ``Violation'' includes any action, alone or with others, for or toward
19 causing, bringing about, participating in, counseling or aiding or abetting
20 a violation under sections 14 to 21.
21 Sec. 24. A corporation may be formed by one or more persons in
22 accordance with the laws of this state for the purpose of conducting a
23 savings bank business.
24 Sec. 25. (a) A person shall apply to the commissioner for permission
25 to organize a savings bank under this act. The application shall be on
26 forms prescribed by the commissioner and set forth such information as
27 the commissioner requires.
28 (b) After making application, the incorporators shall publish notice
29 twice and in consecutive weeks that the application has been made. The
30 notice shall set forth the names and addresses of the incorporators and
31 the proposed name and location of the savings bank to be organized. Proof
32 of the notice shall be furnished to the commissioner within 30 days after
33 the date of the application. The commissioner may waive the publication
34 requirements, if in the commissioner's opinion, the waiver is necessary
35 or appropriate in the public interest.
36 (c) The commissioner shall examine the information and statements
37 contained in the application as well as make any investigation as to the
38 conditions and circumstances surrounding or in any manner affecting or
39 pertaining to the organization of the savings bank sufficient to satisfy the
40 commissioner as to all of the following:
41 (1) Whether the character, responsibility, and fitness of the incor-
42 porators and of the proposed directors and officers, and their motives in
43 seeking to organize the savings bank are such as to command the confi-
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1 dence of the community and to warrant the belief that the business of
2 the proposed savings bank will be honestly and efficiently conducted;
3 (2) whether the convenience and needs of the public will be served
4 by the proposed savings bank;
5 (3) the likelihood of successful operation of the proposed savings
6 bank, giving consideration to, but not by way of limitation, all of the
7 following:
8 (A) Population density;
9 (B) economic characteristics of the area primarily to be served;
10 (C) the competition offered by existing savings banks, other financial
11 institutions and other providers of financial services; and
12 (4) whether the capital structure of the proposed savings bank meets
13 the requirements of section 30.
14 (d) The commissioner shall approve or disapprove the application in
15 writing within 100 days of the receipt of the application or the last amend-
16 ment or supplement to the application, except that in the case of an
17 application to organize a new bank under section 119 for the sole purpose
18 of consolidating or merging the new bank with or into an existing bank,
19 the commissioner shall approve or disapprove the application in writing
20 within 30 days of the receipt of the application or the last amendment or
21 supplement to the application. If the commissioner disapproves the ap-
22 plication, the applicants may appeal in the manner provided in section
23 13.
24 Sec. 26. (a) Any number of depository institutions may apply to in-
25 corporate a savings bank exclusively to serve depository institutions or
26 their officers, directors and employees.
27 (b) The commissioner shall examine the information contained in the
28 application and make any other investigation the commissioner considers
29 necessary pertaining to the organization of the new savings bank. The
30 commissioner shall issue to the applicants, within the time period pro-
31 vided in section 13, written notice of approval or disapproval of the ap-
32 plication.
33 (c) Except as otherwise provided by rule, a savings bank organized
34 under this section is not subject to the provisions of section 25, but shall
35 comply with all other provisions of this act.
36 (d) The shares of stock of a stock savings bank organized under this
37 section shall be owned exclusively by depository institutions.
38 (e) As used in this section, ``applicant'' means the depository institu-
39 tions making an application under this section.
40 (f) The commissioner may promulgate rules and regulations to im-
41 plement and enforce this section.
42 Sec. 27. (a) Following the date authorized by the commissioner for
43 the savings bank to commence business, the savings bank may reimburse
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1 the organizers for reasonable and necessary organizational expenses. Any
2 reimbursement under this section shall be predicated upon an accounting
3 of the organizational expenses by an independent certified public ac-
4 countant which shall be prepared in accordance with generally accepted
5 accounting principles.
6 (b) The commissioner may review the accounting of the organiza-
7 tional expenses and may order the organizers to restore any sums that
8 were reimbursed for other than reasonable and necessary expenses.
9 Sec. 28. (a) Upon approval of the application, at least two original
10 articles of incorporation executed by a majority of the applicants shall be
11 submitted to the commissioner. If the commissioner finds that the articles
12 conform to law and that all fees and charges have been paid as required
13 by law, the commissioner shall approve and file one of the original articles
14 in the commissioner's office and certify and forward one of the original
15 articles to the incorporators.
16 (b) As a condition for approving, certifying and distributing the arti-
17 cles of incorporation, the incorporators shall furnish evidence that a firm
18 commitment to insure deposit accounts up to the maximum permitted
19 by federal law has been issued by the federal deposit insurance corpo-
20 ration, unless the commissioner, for good cause shown, waives the re-
21 quirement to furnish the evidence.
22 (c) The articles of incorporation shall provide all of the following in-
23 formation:
24 (1) The name of the savings bank. The name shall not be similar to
25 the name of any other savings bank transacting business in this state that
26 would cause confusion;
27 (2) the county, city or township where the principal office of the
28 savings bank is to be located and conduct its business;
29 (3) the purpose or purposes of incorporation as provided in this act;
30 (4) the authorized number of shares of common and preferred stock
31 for a stock savings bank and one of the following:
32 (A) If the savings bank is to be authorized to issue only one class of
33 stock, the par value of the shares; and
34 (B) If the savings bank is to be authorized to issue more than one
35 class of stock, the number of shares of each class, the par value of each
36 class, and a statement of all designations, powers, preferences, rights,
37 qualifications, limitations and restrictions of each class.
38 (5) the names, places of residence, and addresses of the incorporators
39 and the number of shares subscribed for each incorporator;
40 (6) the period for which the savings bank is organized, which may be
41 in perpetuity; and
42 (7) any other provisions consistent with the business of banking and
43 for the conduct of the affairs of the savings bank.
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1 (d) If the commissioner approves and files the articles of incorpora-
2 tion under this act, the savings bank shall become a body corporate. A
3 savings bank shall not transact any business, except as is incidental and
4 necessary to its organization, until it has been authorized by the commis-
5 sioner to commence business.
6 (e) Except shareholders, members, officers and directors of a savings
7 bank, a person dealing with a savings bank organized under this act shall
8 not be charged with constructive notice of the contents of any articles or
9 papers by reason of a filing required under this act.
10 Sec. 29. (a) Within 30 days after the approval and filing of its articles
11 of incorporation, or such later time not to exceed one year as approved
12 by the commissioner, the savings bank shall notify the commissioner that
13 all of its capital and surplus has been fully paid in and that it has complied
14 with all the provisions of this act required to be complied with before a
15 savings bank shall be authorized to commence business.
16 (b) The commissioner shall make such examinations as the commis-
17 sioner deems necessary to verify the same and if it appears that the savings
18 bank is lawfully entitled to commence business, the commissioner, within
19 30 days after receiving the notice under this section, shall give to the
20 savings bank a certificate that the savings bank has complied with all of
21 the required provisions and is authorized to commence business.
22 (c) The application shall be deemed abandoned and of no further
23 effect if the savings bank fails to furnish the notice required by this section
24 within the specified time or fails to comply with the required provisions
25 within such period of time as the commissioner determines.
26 (d) The first meeting of every savings bank shall be called by a notice
27 signed by an incorporator designating the time and place of the meeting
28 and stating the purpose for which the meeting is called. The notice shall
29 be served on all the incorporators at least 5 days before the date set for
30 the meeting. If all the incorporators are present at the meeting or in
31 writing waive notice, then no notice shall be required for the first meeting.
32 Sec. 30. (a) A stock savings bank organized under this act shall have
33 capital in an amount as the commissioner considers adequate on the basis
34 of the population of the area to be served and the anticipated nature of
35 the stock savings bank's business but not less than $250,000.
36 (b) This section does not apply if the new stock savings bank is or-
37 ganized under section 119 for the sole purpose of effecting its consoli-
38 dation or merger with an existing bank or association having its principal
39 office in the same city as the new stock savings bank, and if upon com-
40 pletion of the consolidation or merger a bank holding company becomes
41 the owner of all of the outstanding voting shares of the consolidated or-
42 ganization. This section does apply to the consolidated organization.
43 (c) A stock savings bank shall not be authorized to commence busi-
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21
1 ness until it has surplus of at least 20% of its capital.
2 (d) A mutual savings bank shall not be authorized to commence busi-
3 ness until an aggregate minimum dollar amount and number of savings
4 accounts shall be subscribed for and paid in cash, as determined by the
5 commissioner.
6 (e) After organization each savings bank shall maintain adequate total
7 capital for the conduct of its business and the protection of its depositors.
8 The total capital of a savings bank shall be analyzed and appraised in
9 relation to the character of its management, the liquidity of assets, history
10 of earnings and of the retention of earnings, the potential volatility of the
11 deposit structure and the savings bank's capacity to furnish the broadest
12 service to the public.
13 (f) At all times a stock savings bank shall maintain surplus in an
14 amount which is equal to at least the amount of its capital, except as
15 provided in subsection (c) as to the initial surplus and except as provided
16 in section 39 and shall not reduce surplus without the approval of the
17 commissioner.
18 Sec. 31. A stock savings bank may issue shares of common stock and
19 preferred stock that may be divided into classes and the classes into series.
20 Sec. 32. The membership of a mutual savings bank shall consist
21 solely of every depositor or holder of a deposit account issued by the
22 savings bank.
23 Sec. 33. (a) A savings bank, with the approval of shareholders owning
24 2/3 of the stock of a stock savings bank who are entitled to vote, or with
25 the approval of 2/3 of the members of a mutual savings bank who are
26 entitled to vote, may issue capital notes, debentures and any other in-
27 strument of indebtedness, with or without warrants for preferred or com-
28 mon stock, convertible and nonconvertible, subordinated on insolvency,
29 liquidation or dissolution to all obligations except obligations to share-
30 holders or members, in such amounts and under such terms and condi-
31 tions as are approved by the commissioner on the basis of normal business
32 considerations.
33 (b) In connection with the issuance of convertible capital notes, de-
34 bentures or any other instrument of indebtedness, the commissioner may
35 grant approval for the savings bank to reserve a number of authorized
36 and unissued shares of capital stock as required for issuance in exchange
37 for capital notes and debentures with respect to which conversion privi-
38 leges exist.
39 (c) If capital notes, debentures or any other instrument of indebt-
40 edness are converted into shares of common or preferred stock, a verified
41 certificate executed by the president of the savings bank stating the
42 amount of the conversion, and any other information with respect to the
43 conversion as the commissioner requires, shall be filed in the office of
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1 the state bank commissioner.
2 (d) Outstanding capital notes, debentures and any other instrument
3 of indebtedness issued under this section shall be added to ``capital'' and
4 ``capital stock'' as the terms are used in sections 88, and 90 to 93, for the
5 purpose of computing the limitations contained in those sections based
6 on amounts of capital and capital stock.
7 Sec. 34. When a vote of the holders of shares of stock is required by
8 this act, those provisions shall apply only to the voting stock of the savings
9 bank, bank, out-of-state bank, national bank or association.
10 Sec. 35. Upon application and approval of the commissioner, a mu-
11 tual savings bank may amend its articles of incorporation to authorize the
12 issuance of stock and may issue stock. Conversion shall be accomplished
13 in accordance with section 128.
14 Sec. 36. (a) There shall be issued to every shareholder in a savings
15 bank, certificates of stock which shall be transferable on the books of the
16 savings bank in a manner as provided in the bylaws or articles of incor-
17 poration. A transfer of stock shall not be valid against the savings bank,
18 except with the consent of the board of directors, unless the registered
19 holder of the stock is liable as principal debtor, surety or otherwise to the
20 savings bank for any debt which is due and unpaid.
21 (b) If the registered holder of stock of a savings bank is liable to it as
22 principal debtor, surety, or otherwise for a debt that is due and unpaid,
23 the directors of the bank may sell a sufficient amount of the stock of the
24 delinquent shareholder in the same manner and with the same effect as
25 provided in section 94 in the case of an unpaid assessment on the stock
26 of the savings bank. This section does not prevent the savings bank from
27 bringing proceedings to recover the entire amount of the indebtedness
28 at any time before the sale or to recover the balance of the debt and costs
29 after the proceeds of sale have been applied against the debt and costs
30 or to recover the balance of the debt after the cancellation of the stock.
31 (c) The rights of a savings bank in its stock under this section shall
32 be subject to any pledge, sale or other transfer of the stock that is made
33 prior to the maturity of any indebtedness of the registered holder of the
34 stock to the savings bank and of that the savings bank has knowledge prior
35 to the maturity, whether or not the stock was transferred on the books
36 of the savings bank. Any stock of a savings bank that is pledged, sold or
37 otherwise transferred prior to the maturity of any indebtedness of the
38 registered holder of the stock to the savings bank and of which pledge,
39 sale or other transfer the savings bank has knowledge prior to the ma-
40 turity, may be transferred on the books of the savings bank after the
41 maturity without the consent of the board of directors of the savings bank.
42 (d) The rights of a savings bank in its stock under this section, in-
43 cluding the limitation on transferability if the registered holder is liable
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23
1 to the savings bank for any debt that is due and unpaid, shall not be
2 applicable with respect to any stock duly listed on any stock exchange.
3 (e) Certificates issued shall state all of the following:
4 (1) The name and location of the savings bank;
5 (2) the name of the holder of record of the stock;
6 (3) the number, par value and class of shares that the certificates
7 represent;
8 (4) if the savings bank issues stock of more than one class, the re-
9 spective rights, preferences, privileges, voting rights, powers, restrictions,
10 limitations and qualifications of each class of stock issued shall be stated
11 in full or in summary upon the front or back of the certificates or be
12 incorporated by a reference to the articles of incorporation set forth on
13 the front of the certificates.
14 (5) If the stock is not listed on an exchange, then no transfer shall be
15 valid against the savings bank so long as the registered holder is liable as
16 principal debtor, surety or otherwise to the savings bank, except with the
17 approval of the board of directors or except as otherwise provided in this
18 act.
19 (f) Every certificate issued shall be signed by the president or vice
20 president and cashier or assistant cashier of the savings bank or by other
21 officers as the bylaws of the savings bank shall provide.
22 (g) Notwithstanding any law, if a share certificate is signed by a trans-
23 fer agent or by a transfer agent and a registrar, the signature of any officers
24 of the savings bank required on the stock may be made by facsimile. If
25 an officer who has signed a share certificate or whose facsimile signature
26 is used ceases to be an officer, whether because of death, resignation or
27 otherwise, before the certificate has been delivered by the savings bank,
28 the certificate may be adopted by the savings bank and delivered as
29 though the person who signed it had not ceased to be an officer.
30 Sec. 37. (a) With the approval of the commissioner, and by a vote of
31 shareholders owning 2/3 of each class of the stock entitled to vote, a savings
32 bank may increase its capital stock to any sum approved by the commis-
33 sioner, either by an increase in the par value of the existing stock or by
34 the issuance of new stock, including preferred stock.
35 (b) An increase in capital is not valid until the whole amount of the
36 increase is paid in and notice has been transmitted to the commissioner
37 specifying the amount of the increase in capital stock and that it has been
38 duly paid in as a part of the capital of the savings bank.
39 (c) The certificate shall be conclusive evidence that the stock has
40 been duly and validly issued. In the case of the issuance of new stock, in
41 voting upon the increase of capital stock, the shareholders entitled to vote
42 shall have power, by the same statutory majority, to fix the value of, and
43 the price at which the increase of the capital stock shall be subscribed
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24
1 and paid for by the shareholders, but not less than par, as well as the time
2 and manner of the subscription and payment, and to authorize the direc-
3 tors to sell the capital stock.
4 (d) Notwithstanding the provisions of this section, a savings bank,
5 with the approval of the commissioner and by a vote of shareholders
6 owning 2/3 of each class of the stock entitled to vote, for the stated purpose
7 of providing stock options for one or more employees, may increase its
8 capital stock in an aggregate par value amount not to exceed at any one
9 time 5% of the par value of its then outstanding common capital stock.
10 The additional capital stock, when duly authorized, may be issued by the
11 savings bank from time to time for such purpose but for no other purpose,
12 as options are exercised and payment for the stock is received, free from
13 any preemptive rights to subscribe for stock.
14 Sec. 38. (a) By a vote of shareholders owning 2/3 of the stock entitled
15 to vote of the savings bank, a savings bank may reduce its capital stock to
16 an amount not less than that required by this act to authorize the for-
17 mation of the savings bank. The reduction may be accomplished by a
18 reduction in the par value of the existing stock or by a reduction in the
19 number of the shares of the stock. A reduction shall not be made until
20 the amount of the proposed reduction has been reported to and approved
21 by the commissioner.
22 (b) The approval of the commissioner shall be based upon a finding
23 by the commissioner that the security of existing creditors of the savings
24 bank will not be impaired by the proposed reduction. This section does
25 not discharge a savings bank that has decreased its capital stock from an
26 obligation or demand that is due from the savings bank.
27 (c) Retirement of preferred stock under the articles of incorporation
28 is not considered to be a reduction of capital under this section.
29 (d) A shareholder is not entitled to a distribution of cash or other
30 assets by reason of a reduction of the capital of a savings bank unless the
31 distribution has been approved by the commissioner and by the affir-
32 mative vote of at least 2/3 of the shares of each class of stock outstanding,
33 voting as classes.
34 Sec. 39. (a) The board of directors of a savings bank may declare and
35 pay dividends on the common stock of the savings bank subject to the
36 following restrictions:
37 (1) A cash dividend or dividend in kind shall not be declared or paid
38 unless the savings bank will have a surplus amounting to not less than
39 20% of its capital after the payment of the dividend;
40 (2) a cash dividend or dividend in kind shall not be declared by any
41 savings bank except out of net profits then on hand after deducting all
42 bad debts. Unless the debts are well secured and in process of collection
43 or the debts constitute claims against solvent estates in probate, debts
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1 due the savings bank on which interest is past due and unpaid for a period
2 of six months shall be considered bad debts under this section;
3 (3) a cash dividend or dividend in kind shall not be declared or paid
4 until the cumulative dividends on preferred stock, if any, have been paid
5 in full or preferred shareholders have waived their right to receive divi-
6 dends;
7 (4) if the surplus of a savings bank is less than the amount of its
8 capital, before the declaration of a cash dividend or dividend in kind, it
9 shall transfer to surplus not less than 10% of its net profits of the pre-
10 ceding half-year in the case of quarterly or semiannual dividends, or not
11 less than 10% of its net profits of the preceding two consecutive half-year
12 periods in the case of annual dividends. For the purpose of this section,
13 an amount transferred to a reserve account for the retirement of pre-
14 ferred stock of any bank out of its net profits for the periods is considered
15 to be additions to its surplus, if upon the retirement of the preferred
16 stock the amounts credited into the retirement reserve may then properly
17 be carried to surplus. The savings bank is obligated to credit to surplus
18 the amounts transferred into the retirement reserve on account of the
19 preferred stock as the stock is retired; and
20 (5) notwithstanding the limitations of this section, a savings bank with
21 the approval of the commissioner and by vote of shareholders owning 2/3
22 of the stock entitled to vote may increase its capital stock by declaration
23 of a stock dividend on the capital stock. After the increase the surplus of
24 the bank shall be at least equal to 20% of the capital stock as increased.
25 The increase shall not be effective until a certificate of the declaration of
26 the dividend, signed by the president, vice president, cashier or assistant
27 cashier of the savings bank, has been transmitted to and approved by the
28 commissioner.
29 (b) A savings bank may pay dividends on its preferred stock at a rate
30 as may be applicable without regard to the limitations of this section.
31 (c) A holding company that owns common or preferred stock of a
32 savings bank may waive its right to receive dividends and any payment in
33 lieu of dividends.
34 Sec. 40. (a) An annual meeting of the members of a mutual savings
35 bank shall be held at a time and place designated by or in the manner
36 provided in the bylaws.
37 (b) Special meetings of the members of a mutual savings bank may
38 be called at any time by the president or board of directors or by the
39 president, a vice president or the secretary upon the written request of
40 members holding of record in the aggregate at least 10% of the savings
41 deposits of the savings bank. The written request shall show the purposes
42 of the meeting and shall be delivered to the principal office of the mutual
43 savings bank addressed to the president.
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1 (c) In the consideration of all questions requiring action by the mem-
2 bers of a mutual savings bank, each member shall be entitled to cast one
3 vote for each $100, or fraction of each $100, of the withdrawal value of
4 the member's deposit account. A member is not entitled to cast more
5 than 1,000 votes, and votes shall not be cumulated for the election of
6 directors.
7 (d) In order that a mutual savings bank may determine the members
8 entitled to notice of any meeting to vote, or entitled to receive a distri-
9 bution or to exercise any rights in respect of any other lawful action, the
10 board of directors of the savings bank may fix, in advance, a record date
11 that is not more than nine months or less than six months prior to the
12 date of the meeting or more than nine months prior to any other action.
13 Sec. 41. (a) Each savings bank shall keep correct and complete books
14 and records of accounts.
15 (b) Each mutual savings bank shall maintain membership records
16 which shall show the name and address of the member and date of mem-
17 bership.
18 Sec. 42. (a) The annual meeting of the shareholders of every stock
19 savings bank shall be held at a time and place designated by or in the
20 manner provided in the bylaws. Special meetings of shareholders shall be
21 called and held as provided in the bylaws of the savings bank. At any
22 meeting, each shareholder entitled to vote shall be entitled to one vote
23 for each share held by him or her. A shareholder may vote at any meeting
24 of the savings bank by written proxy.
25 (b) Persons holding shares of stock of a savings bank in a fiduciary
26 capacity are entitled to vote the shares so held, unless the trust instrument
27 contains a provision to the contrary. Persons whose shares are pledged
28 are entitled to vote unless in the transfer by the pledgor on the books of
29 the savings bank such person has expressly empowered the pledgee to
30 vote the shares, in which case only the pledgee or the pledgee's proxy
31 may vote the shares.
32 (c) A shareholder shall not vote the shareholder's stock in any manner
33 except in person or by proxy. This prohibition shall not be construed to
34 apply to any voting trust agreement of shareholders with respect to the
35 voting of stock, which agreement has been approved by the commis-
36 sioner.
37 Sec. 43. The commissioner may call a meeting of the members or
38 shareholders of a savings bank for any purpose by giving a notice of the
39 time, place and purposes of the meeting at least three days prior to the
40 meeting to the members or shareholders either by personal service, reg-
41 istered mail sent to the shareholders' last known addresses as shown by
42 the books of the savings bank, or by publication at least once each week
43 for four consecutive weeks prior to the meeting.
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1 Sec. 44. (a) A stock savings bank shall keep and maintain a stock
2 ledger in which shall be correctly entered the name and address of each
3 shareholder of the savings bank, the number of shares held by each, the
4 date when the shareholder acquired the shares and the name of the trans-
5 feror. The board of directors of a savings bank may designate any cor-
6 poration authorized by law to act as transfer agent or registrar of shares
7 of corporations, to act as transfer agent or transfer agent and registrar of
8 the shares of the savings bank, but a corporation shall not be designated
9 to act in both capacities at the same time.
10 (b) Within two calendar weeks of a demand made by the commis-
11 sioner, a savings bank shall file with the commissioner a list containing
12 the name and address of each shareholder of the savings bank together
13 with the number of shares held by each according to its records as of the
14 close of business on the date of issuance of the demand. Within two
15 calendar weeks of a demand made for proper cause by any shareholder
16 being the record owner of at least 5% of the issued shares of the savings
17 bank or on the demand for proper cause of any person representing any
18 group who are the record owners of at least 5% of the issued shares of
19 the savings bank, the savings bank shall prepare and furnish the requestor
20 a list containing the name and address of each shareholder of the savings
21 bank together with the number of shares held by each according to its
22 records as of the close of business on the date of receipt of the demand.
23 Sec. 45. (a) A savings bank shall be managed by a board of not less
24 than five nor more than 25 directors who shall be elected in the first
25 instance by the incorporators at a meeting held before the savings bank
26 is authorized to commence business and afterwards at the annual meeting
27 of the members or shareholders. If for any reason an election is not held
28 at the annual meeting, then the election shall be held at any subsequent
29 meeting called for that purpose of which notice is given as provided in
30 the bylaws of the savings bank. The board of directors may fill a vacancy
31 that occurs in the board by death, resignation or otherwise for the current
32 year. Subject to limitations as to numbers, the shareholders or members
33 may elect directors not to exceed two less than the full board and the
34 unfilled directorships shall be considered as vacancies and filled by the
35 board of directors. Directors shall hold office until their successors are
36 elected and have qualified.
37 (b) The board of directors shall meet not less than six times per year
38 for the purpose of carrying out their duties under this act. The directors
39 shall designate the savings bank's chief executive officer at the first board
40 of directors meeting of each fiscal year. The board shall keep and record
41 minutes of each meeting. The minutes shall be signed by the presiding
42 officer and the secretary of the meeting. A majority of the board of di-
43 rectors constitutes a quorum for the transaction of business.
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1 (c) The commissioner may call a meeting of the board of directors of
2 a savings bank by giving a notice of the time, place and purpose of the
3 meeting at least three days prior to the meeting to the directors either
4 by personal service, registered mail sent to their last known addresses as
5 shown by the books of the savings bank, or publication at least once each
6 week for four consecutive weeks prior to the meeting.
7 Sec. 46. Each director prior to taking office shall take and subscribe
8 an oath that such person will diligently and honestly perform such per-
9 son's duties and will not knowingly violate, or permit to be violated, any
10 provisions of this act. The signed oath shall be transmitted to the com-
11 missioner.
12 Sec. 47. (a) A savings bank may contract for or purchase from a di-
13 rector, or from a firm of which the director is a member, securities or
14 other property when the purchase is made in the regular course of busi-
15 ness upon terms not less favorable to the savings bank than those offered
16 by others, or when the purchase is authorized by a majority of the board
17 of directors not interested in the sale of the securities or property. If a
18 director, or firm of which the director is a member, acting for or on behalf
19 of others, sells securities or other property to a savings bank, the com-
20 missioner may require a full disclosure to be made on forms prescribed
21 by the commissioner of all commissions or other considerations received.
22 When a director or firm sells securities or other property to the savings
23 bank, the commissioner may require full disclosure of all profits realized
24 from the sale.
25 (b) A savings bank may sell securities or other property to a director,
26 or to a firm of which the director is a member, in the regular course of
27 business on terms not more favorable to the director or firm than those
28 offered to others, when the sale is authorized by a majority of the board
29 of directors of a savings bank. This section shall not be construed as
30 authorizing a savings bank to purchase or sell securities or other property
31 that the savings bank is not otherwise authorized by law to purchase or
32 sell.
33 Sec. 48. (a) A director or an officer of a savings bank shall discharge
34 the duties of the position in good faith and with that degree of diligence,
35 care and skill that an ordinarily prudent person would exercise under
36 similar circumstances in a like position.
37 (b) In discharging duties, a director or an officer when acting in good
38 faith may rely upon the opinion of legal counsel for the savings bank,
39 upon the report of an independent appraiser selected with reasonable
40 care by the board or by an officer of the savings bank, upon financial
41 statements of the savings bank represented to such person to be correct
42 by the president or the officer of the savings bank having charge of its
43 books of account, or as stated in a written report by an independent public
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1 or certified public accountant or firm of accountants fairly to reflect the
2 financial condition of the savings bank.
3 (c) The articles of incorporation of a savings bank may contain a pro-
4 vision providing that a director is not personally liable to the savings bank
5 or its shareholders or members for monetary damages for a breach of the
6 director's fiduciary duty. The provision does not eliminate or limit the
7 liability of a director for any of the following:
8 (1) A breach of the director's duty of loyalty to the savings bank or
9 its shareholders or members;
10 (2) acts or omissions not in good faith or that involve intentional mis-
11 conduct or knowing violation of law; or
12 (3) a transaction from which the director derived an improper per-
13 sonal benefit.
14 (d) An action against a director or officer for failure to perform the
15 duties imposed by this section shall be commenced within three years
16 after the cause of action has accrued, or within two years after the time
17 when the cause of action is discovered or should reasonably have been
18 discovered, by the complainant, whichever occurs first.
19 Sec. 49. (a) A savings bank may indemnify a person who was or is a
20 party or is threatened to be made a party to a threatened, pending, or
21 completed action, suit, or proceeding, whether civil, criminal, adminis-
22 trative or investigative and whether formal or informal, other than an
23 action by or in the right of the savings bank, or by reason of the fact that
24 such person is or was a director, officer, employee or agent of the savings
25 bank or is or was serving at the request of the savings bank as a director,
26 officer, partner, trustee, employee or agent of another financial institu-
27 tion, foreign or domestic corporation, partnership, joint venture, trust or
28 other enterprise, whether for profit or not, against expenses, including
29 attorney fees, judgments, penalties, fines and amounts paid in settlement
30 actually and reasonably incurred by such person in connection with the
31 action, suit, or proceeding if the person acted in good faith and in a
32 manner the person reasonably believed to be in and not opposed to the
33 best interests of the savings bank or its members or shareholders, and in
34 a criminal action or proceeding, if the person had no reasonable cause to
35 believe the person's was unlawful. The termination of an action, suit or
36 proceeding by judgment, order, settlement or conviction, or upon a plea
37 of nolo contendere or its equivalent, does not create a presumption that
38 the person did not act in good faith and in a manner that the person
39 reasonably believed to be in and not opposed to the best interests of the
40 savings bank or its members or shareholders, and in a criminal action or
41 proceeding create a presumption that the person had reasonable cause
42 to believe that the person's conduct was unlawful.
43 (b) A savings bank may indemnify a person who was or is a party to
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1 or is threatened to be made a party to any threatened, pending or com-
2 pleted action or suit by or in the right of the savings bank to procure a
3 judgment in its favor or by reason of the fact that the person is or was a
4 director, officer, employee or agent of the savings bank or is or was serving
5 at the request of the savings bank as a director, officer, partner, trustee,
6 employee or agent of another financial institution, foreign or domestic
7 corporation, partnership, joint venture, trust or other enterprise, whether
8 for profit or not, against expenses, including actual and reasonable attor-
9 neys' fees and amounts paid in settlement incurred by the person in con-
10 nection with the action or suit if the person acted in good faith and in a
11 manner the person reasonably believed to be in and not opposed to the
12 best interests of the savings bank or its shareholders or members. Indem-
13 nification shall not be made for a claim, issue or matter in which the
14 person has been found liable to the savings bank unless the court in which
15 the action or suit was brought has determined upon application that the
16 person is fairly and reasonably entitled to indemnification for the expenses
17 that the court considers proper.
18 Sec. 50. (a) To the extent that a director, officer, employee or agent
19 of a savings bank has been successful on the merits or otherwise in de-
20 fense of an action, suit or proceeding described in section 49, or in de-
21 fense of any claim, issue or matter in the action, suit or proceeding, such
22 person shall be indemnified against expenses, including actual and rea-
23 sonable attorney fees, incurred by such person in connection with the
24 action, suit or proceeding and an action, suit or proceeding brought to
25 enforce the mandatory indemnification provided by this act.
26 (b) An indemnification under section 49, unless ordered by a court,
27 shall be made by the savings bank only as authorized in the specific case
28 upon a determination that indemnification of the director, officer, em-
29 ployee or agent is proper in the circumstances because the person has
30 met the applicable standard of conduct set forth in section 49. This de-
31 termination shall be made by any of the following:
32 (1) A majority vote of a quorum of the board consisting of directors
33 who were not parties to the action, suit or proceeding;
34 (2) if the quorum described in paragraph (1) is not obtainable, then
35 by a majority vote of a committee of directors who are not parties to the
36 action. The committee shall consist of not less than two disinterested
37 directors;
38 (3) independent legal counsel in a written opinion; or
39 (4) the shareholders or members.
40 (c) If a person is entitled to indemnification under section 53 for a
41 portion of expenses, including attorneys' fees, judgments, penalties, fines
42 and amounts paid in settlement, but not for the total amount of the ex-
43 penses, the savings bank may indemnify the person for the portion of the
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31
1 expenses, judgments, penalties, fines or amounts paid in settlement for
2 which the person is entitled to be indemnified.
3 Sec. 51. Expenses incurred in defending a civil or criminal action,
4 suit or proceeding described in section 49 may be paid by the savings
5 bank in advance of the final disposition of the action, suit or proceeding
6 upon receipt of an undertaking by or on behalf of the director, officer,
7 employee or agent to repay the expenses if it is ultimately determined
8 that the person is not entitled to be indemnified by the savings bank. The
9 undertaking shall be by unlimited general obligation of the person on
10 whose behalf advances are made but need not be secured.
11 Sec. 52. (a) The indemnification or advancement of expenses pro-
12 vided by or granted under this act is not exclusive of other rights to which
13 a person seeking indemnification or advancement of expenses may be
14 entitled under the articles of incorporation, the bylaws or a contractual
15 agreement. The total amount of expenses advanced or indemnified from
16 all sources combined shall not exceed the amount of actual expenses in-
17 curred by the person seeking indemnification or advancement of ex-
18 penses.
19 (b) The right to indemnification provided for under this act continues
20 for a person who ceases to be a director, officer, employee or agent and
21 shall inure to the benefit of the heirs, executors and administrators of the
22 person.
23 Sec. 53. (a) A savings bank has the power to purchase and maintain
24 insurance, including insurance issued by an affiliated insurer and insur-
25 ance for which premiums may be adjusted retroactively, in whole or in
26 part, based upon claims experience, or similar arrangements.
27 (b) A savings bank may also create a trust fund or other form of
28 funded arrangement on behalf of any person who is or was a director,
29 officer, employee or agent of the savings bank or is or was serving at the
30 request of the savings bank as a director, officer, partner, trustee, em-
31 ployee or agent of another foreign or domestic corporation, partnership,
32 joint venture, trust or other enterprise, whether for profit or not, against
33 any liability asserted against such person and incurred by the person in
34 any capacity or arising out of the person's status in that capacity, whether
35 or not the savings bank has the power to indemnify the person against
36 the liability under sections 49 to 52.
37 Sec. 54. (a) With the approval of the commissioner and by vote of a
38 majority of members or voting shares of the savings bank, a savings bank
39 may amend its articles of incorporation in any manner not inconsistent
40 with this act.
41 (b) An amendment is effective when certified copies of the amend-
42 ment in a form the commissioner requires signed by the president or a
43 vice president and the cashier or an assistant cashier, has been submitted
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32
1 to the commissioner and has been approved and filed by the commis-
2 sioner as with the original articles of incorporation.
3 (c) Notwithstanding subsection (b), an amendment that provides
4 solely for a change in the name of the savings bank is not subject to the
5 approval of the commissioner and shall be effective on the date it is filed
6 with the commissioner or at a later date specified in the amendment.
7 Sec. 55. (a) As used in sections 48 to 54:
8 (1) ``Fines'' shall include any excise taxes assessed on a person with
9 respect to an employee benefit plan;
10 (2) ``other enterprise'' shall include employee benefit plans;
11 (3) ``savings bank'' includes all savings banks, banks, out-of-state
12 banks, national banks and associations, absorbed in a consolidation or
13 merger and the consolidated savings bank, so that a person who is or was
14 a director, officer, employee or agent of the savings bank, bank, out-of-
15 state bank, national bank or association or is or was serving at the request
16 of the savings bank, bank, out-of-state bank, national bank or association
17 as a director, officer, partner, trustee, employee or agent of another sav-
18 ings bank, bank, out-of-state bank, national bank or association, foreign
19 or domestic corporation, partnership, joint venture, trust or other enter-
20 prise, whether for profit or not, shall hold the same position with respect
21 to the consolidated savings bank as the person would if the person had
22 served the consolidated savings bank in that capacity; and
23 (4) ``serving at the request of the savings bank'' shall include any serv-
24 ice as a director, officer, employee or agent of the savings bank which
25 imposes duties on, or involves services by, the director, officer, employee
26 or agent with respect to an employee benefit plan, its participants or
27 beneficiaries.
28 (b) A person who acted in good faith and in a manner the person
29 reasonably believed to be in the interest of the participants and benefi-
30 ciaries of an employee benefit plan shall be considered to have acted in
31 a manner not opposed to the best interests of the savings bank or its
32 shareholders or members as referred to in section 49.
33 Sec. 56. (a) A solvent savings bank may go into liquidation and be
34 closed upon expiration of its corporate charter or by the vote of a 2/3
35 majority of members or voting shares. In the event of a termination, the
36 last board of directors immediately upon expiration of its corporate char-
37 ter or adoption of the resolution by the members or shareholders shall
38 notify the commissioner of the action by filing with the commissioner in
39 quadruplicate a certificate of termination signed by a majority of the re-
40 maining members of the board of directors. The certificate shall be in
41 the form the commissioner requires.
42 (b) The members or shareholders shall designate one or more per-
43 sons to act as a liquidating agent or committee and the agent or committee
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1 shall conduct the liquidation in accordance with the law and under the
2 supervision of the commissioner and the board of directors.
3 (c) The agent or committee shall furnish to the savings bank a bond
4 satisfactory to the commissioner in form and amount.
5 (d) The liquidating agent or committee shall render to the commis-
6 sioner reports in a form and at such times as the commissioner requires.
7 The liquidating agent or committee shall make periodic reports not less
8 frequently than annually to the members or shareholders.
9 (e) At any lawfully convened meeting, by vote of a majority of mem-
10 bers or voting shares, the members or shareholders may remove the liq-
11 uidating agent or committee and appoint a new agent or a new committee.
12 (f) The commissioner may examine the affairs of a liquidating savings
13 bank at any time for the purpose of determining that the rights of the
14 depositors and creditors are being properly served. The expenses of the
15 examination shall be paid by the savings bank but shall not exceed $100
16 per day for each examiner and actual expenses incurred while making the
17 examination, to be credited to the bank commissioner fee fund.
18 (g) The liquidating agent or committee shall publish a notice once
19 each week for eight consecutive weeks informing depositors and creditors
20 to present their claims against the savings bank for payment. Proof of the
21 publication shall be filed with the commissioner by the liquidating agent
22 or committee. The provisions of this section with respect to publication
23 of notice shall not apply to a savings bank in voluntary liquidation which
24 disposes of sufficient assets to a state or national bank to pay its depositors
25 and creditors in full or if all of its liabilities are assumed by the state or
26 national bank.
27 (h) If the commissioner finds that a liquidation has been completed
28 in conformity with law and when all fees and charges have been paid as
29 required by law, the commissioner shall file one copy of the certificate of
30 termination in the office of the state bank commissioner and shall certify
31 and forward by mail one copy to the county clerk in the county in which
32 the bank is located and one copy to the liquidating agent or committee,
33 and the existence of the savings bank shall cease, subject to section 57.
34 Sec. 57. (a) A savings bank that commences voluntary liquidation
35 proceedings under section 60 shall continue to be a body corporate for
36 the further term of three years from the commencement of the proceed-
37 ings for the purpose of prosecuting and defending actions for or against
38 the savings bank and to enable it gradually to settle and close its affairs,
39 to dispose of and convey its property, and to divide its assets, but not for
40 the purpose of continuing the business for which it was organized.
41 (b) With respect to an action, suit or proceeding begun or com-
42 menced by or against the savings bank prior to the commencement of
43 voluntary liquidation proceedings, and with respect to any action, suit or
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34
1 proceeding begun or commenced by the savings bank within three years
2 after the commencement of voluntary liquidation proceedings, the sav-
3 ings bank shall be continued as a body corporate beyond the three-year
4 period and until any judgments, orders or decrees are fully executed.
5 (c) If the number of directors of a savings bank that has commenced
6 voluntary liquidation proceedings is less than the full number of directors
7 required or authorized by statute or by the bylaws of the savings bank for
8 any reason, a majority of the remaining surviving directors or the sole
9 surviving director, during the period of three years, shall possess the same
10 powers in acting for the savings bank under this section as the duly au-
11 thorized board of directors of the savings bank possessed before the com-
12 mencement of voluntary liquidation proceedings or during the term of
13 three years.
14 (d) A savings bank in liquidation under the laws of this state may
15 continue to be a body corporate for further terms upon application to the
16 commissioner. Extensions shall be from year to year at the discretion of
17 the commissioner until the liquidation is completed.
18 Sec. 58. (a) A savings bank whose term will expire by limitation, at
19 any time preceding the expiration of such term, by amendment of its
20 articles, may extend its corporate term for a limited period of time or in
21 perpetuity.
22 (b) A savings bank whose term has expired, but which has not been
23 wound up or dissolved and which has nevertheless inadvertently contin-
24 ued its active business beyond such term, may renew its corporate exis-
25 tence by amendment of its articles with the consent of at least 4/5 of its
26 members or the holders of at least 4/5 of its capital stock. The officers and
27 directors de facto shall do and perform all things required of officers and
28 directors de jure as respects calling a special meeting of the shareholders
29 and submitting to them the question of renewing the corporate existence.
30 (c) No savings bank de facto shall be permitted to renew its corporate
31 life unless the action is taken within three years after its term has expired
32 and renewal does not relieve the savings bank from any penalties that
33 may have accrued against it under the law of this state.
34 (d) A savings bank whose term has been extended or renewed shall
35 be the same savings bank and have the same members, shareholders,
36 directors and officers, enjoy all the rights, privileges, immunities and pow-
37 ers, and be subject to all the liabilities that it respectively possessed and
38 was subject to before the extension or renewal of its existence.
39 Sec. 59. (a) With the approval of the commissioner based upon an
40 examination of either the buying or selling organization, or both, and upon
41 the affirmative vote of a majority of the members of its board of directors
42 and 2/3 of its members or the holders of 2/3 of its stock entitled to vote, a
43 savings bank may do either or both of the following:
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35
1 (1) Sell all or substantially all of its assets of every kind, character and
2 description, including, but not limited to, its goodwill and corporate fran-
3 chises to another savings bank, bank, out-of-state bank, national bank or
4 association; or
5 (2) purchase all or substantially all of the assets of every kind, char-
6 acter and description, including, but not limited to, the goodwill and cor-
7 porate franchises and assume the liabilities of another savings bank, bank,
8 out-of-state bank, national bank or association.
9 (b) The consideration for a purchase and sale under this section may
10 include shares of stock of the purchasing savings bank, bank, out-of-state
11 bank, national bank or association. A purchase and sale shall not be made
12 to defeat or defraud any of the creditors of the organizations.
13 (c) Certified copies of all members', shareholders' and directors' pro-
14 ceedings under this section shall be filed with the commissioner and con-
15 tain in detail the particulars relating to the sale and purchase, including
16 a copy of the agreement of sale and purchase.
17 Sec. 60. (a) A savings bank may sell one or more of its branches to a
18 bank, out-of-state bank, national bank, association or savings bank located
19 in a state whose laws would permit a savings bank to purchase one or
20 more branches in that state of the purchasing depository institution.
21 (b) A savings bank may purchase one or more branches, without pur-
22 chasing all or substantially all of the depository institution, from a bank,
23 out-of-state bank, national bank, association or savings bank.
24 (c) A savings bank that purchases one or more branches under sub-
25 section (b) shall provide notice as required under section 77 before op-
26 erating the purchased branch or branches.
27 Sec. 61. There is no limit upon the amount or share of deposits held
28 or controlled in this state by any savings bank or holding company on a
29 consolidated basis.
30 Sec. 62. (a) A compliance review committee shall evaluate and seek
31 to improve all of the following:
32 (1) Loan policies or underwriting standards;
33 (2) asset quality;
34 (3) financial reporting to federal or state government or regulatory
35 agencies; and
36 (4) compliance with federal or state statutory or regulatory require-
37 ments.
38 (b) Except as provided in subsection (c), all of the following apply to
39 a compliance review committee:
40 (1) Compliance review documents are confidential and are not sub-
41 ject to discovery or admissible in evidence in a civil action;
42 (2) individuals serving on a compliance review committee or acting
43 under the direction of a compliance review committee shall not be re-
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1 quired to testify in a civil action about the contents of a compliance review
2 document or conclusions of a compliance review committee or about the
3 actions taken by a compliance review committee;
4 (3) compliance review documents delivered to individuals who are
5 not members of the compliance review committee, or to other entities
6 including state, federal or foreign governmental or regulatory agencies,
7 shall remain confidential and are not discoverable or admissible in evi-
8 dence in a civil action.
9 (c) This section does not apply to any civil action initiated by a federal
10 or state regulatory agency.
11 (d) This section shall not be construed to limit the testimony that can
12 be required about matters other than the contents of a compliance review
13 document or conclusions or actions of a compliance review committee.
14 This section does not limit the discovery or admissibility in a civil action
15 of any documents other than compliance review documents.
16 Sec. 63. (a) Except as otherwise provided by this act, a savings bank
17 may engage in the business of banking and exercise all powers incidental
18 to the business of banking or which further or facilitate the purposes of
19 a savings bank. A savings bank has all the powers conferred by this act
20 and granted by rules and regulations, order or declaratory ruling of the
21 commissioner, including, but not limited to, all of the following powers:
22 (1) To have a corporate seal, that may be altered, and to use the seal,
23 or a facsimile of it, by having it impressed, affixed or reproduced in any
24 manner;
25 (2) to have succession in perpetuity or for a limited period of time,
26 as fixed by its articles or until its affairs are finally wound up by liquidation,
27 forfeiture or dissolution as provided by this act;
28 (3) to make contracts;
29 (4) to sue and be sued, complain and defend in its corporate name
30 as fully as a natural person;
31 (5) to elect or appoint directors who shall appoint from their mem-
32 bers a president who shall perform duties as designated by the board, and
33 who shall serve as the chairperson of the board, unless the board desig-
34 nates another director to be chairperson in lieu of the president. The
35 board may appoint officers as the board considers necessary, who need
36 not be members of the board, define their duties, dismiss at pleasure and
37 appoint other officers to fill vacancies;
38 (6) to make, alter, amend and repeal bylaws not inconsistent with its
39 articles or with law for the administration and regulation of the affairs of
40 the savings bank;
41 (7) to have and exercise the powers and means appropriate to effect
42 the purpose for which the savings bank is incorporated;
43 (8) to make investments permitted by this act and those investments
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1 permitted by order or declaratory ruling of the commissioner;
2 (9) to make contributions and donations for the public welfare or for
3 religious, charitable, scientific or educational purposes, and, in connection
4 with the contributions and donations, establish and operate charitable
5 trusts;
6 (10) to purchase, take, lease as lessee, or otherwise acquire and to
7 own, hold and use, to sell, lease as lessor, pledge, grant a security interest
8 in, convey or otherwise dispose of personal property in connection with
9 the exercise of a power granted by this act;
10 (11) to act as agent of the United States or of an instrumentality or
11 agency of the United States, or of a state, for the sale or issue of bonds,
12 notes or other obligations of the United States, or of a state and to act as
13 a fiscal agent of the United States, a state, or as a treasury tax and loan
14 depository and perform all reasonable duties in those capacities as may
15 be prescribed or required by regulation of the secretary of the treasury
16 of the United States, or of the treasurer of a state, and to take other action
17 as necessary or proper to enable the savings bank to act under this par-
18 agraph;
19 (12) to become a member of the federal reserve system, to hold
20 shares of stock in a federal reserve bank, to take all actions incident to its
21 membership and to exercise all powers, not inconsistent with the provi-
22 sions of this act, conferred on member banks by the federal reserve act;
23 (13) to become an insured bank under the federal deposit insurance
24 act, and to take actions incident to an insured status under that act;
25 (14) to become a member and buy and hold stock of the federal home
26 loan bank as defined in section 2 of the federal home loan bank act, and
27 to exercise those powers conferred upon a federal home loan bank mem-
28 ber by the federal home loan bank that are consistent with this act;
29 (15) to sell mortgage loans to the federal national mortgage associa-
30 tion, the federal home loan mortgage corporation and the government
31 national mortgage association, or successors of the associations, or any
32 other secondary market loan purchaser and, in connection with these
33 associations, to make payments of capital contributions, required by law,
34 in the nature of subscriptions for stock of an association or successor of
35 the association, to receive stock evidencing the capital contributions, and
36 to hold or dispose of the stock;
37 (16) to conduct its business through subsidiaries, at the same location
38 or a location different from the savings bank. A subsidiary may engage in
39 all activities and make all investments permitted for a savings bank by this
40 act or by rules and regulations, order or declaratory ruling of the com-
41 missioner, except that a subsidiary may not accept deposits or engage in
42 trust activities unless specifically authorized by the commissioner or by
43 another statute of this state. In addition, a subsidiary may engage in ac-
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1 tivities specifically permitted for subsidiaries by order or declaratory rul-
2 ing of the commissioner. Except upon written approval of the commis-
3 sioner, a savings bank shall not be a general partner in a subsidiary;
4 (17) to engage in any aspect of the insurance and surety business as
5 an agent or broker, as provided under the insurance code of the state of
6 Kansas, and to own an insurance agency in whole or in part as provided
7 therein;
8 (18) to give its bond in a proceeding in any court in which it is a party
9 or upon an appeal in a proceeding, and to pledge assets as security for
10 the bond;
11 (19) notwithstanding any provision of this act, to acquire and hold
12 property, or a security interest in property, as protection against loss on
13 an evidence of indebtedness, on an agreement for the payment of money
14 or on an investment security previously acquired lawfully and in good
15 faith, subject to disposition of property within a period of 60 months after
16 the date of acquisition, or a longer period the commissioner approves;
17 (20) to service loans for others and to receive a fee for the service;
18 (21) to execute and deliver guarantees as may be incidental or usual
19 in carrying on the business of banking;
20 (22) to make, sell, purchase, arrange, participate in, invest in or oth-
21 erwise deal in loans or extensions of credit for consumer purposes, which
22 are unsecured or secured by liens or interests in personal property or real
23 estate;
24 (23) to make, sell, purchase, arrange, participate in, invest in or oth-
25 erwise deal in loans or extensions of credit for agricultural, business, cor-
26 porate or commercial purposes, which are unsecured or secured by liens
27 or interests in personal property or real estate;
28 (24) to borrow money from any source, assign or pledge any of its
29 assets or properties as collateral security subject to limitations stated in
30 section 101, and issue its notes, bonds and other obligations;
31 (25) to make deposits in a bank organized solely for the purpose of
32 providing banking services to financial institutions;
33 (26) to own and operate a messenger service or to own or invest in
34 an entity that operates a messenger service;
35 (27) to conduct business using electronic information processing, in-
36 cluding the electronic processing and execution of transactions between
37 a savings bank and its customers and a savings bank and other depository
38 institutions;
39 (28) to establish and operate a loan production office or loan pro-
40 duction offices within this state and outside this state as permitted by
41 section 78;
42 (29) to contract with a person or entity to act as an agent in an agency
43 office, as permitted by section 77(f);
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1 (30) to enter into principal and agent relationships with affiliated de-
2 pository institutions. A savings bank or an affiliated depository institution
3 in its capacity as an agent under this subsection may do all of the following:
4 (A) Receive deposits;
5 (B) permit withdrawals of deposits;
6 (C) renew time deposits;
7 (D) close loans;
8 (E) service loans;
9 (F) receive loan payments; and
10 (G) engage in any activity specifically authorized by this act or by
11 order or declaratory ruling of the commissioner;
12 (31) to sell money orders, travel checks, cashier's checks and similar
13 instruments drawn by it on its accounts or as agent for any organization
14 empowered to sell the instruments through agents within this state;
15 (32) to guarantee the signatures of customers and others;
16 (33) to operate a safe and collateral deposit company or department
17 under section 87;
18 (34) to engage directly in the real estate brokerage business;
19 (35) to own in whole or in part a real estate brokerage business; and
20 (36) to issue securities in the form of bonds, notes, debentures and
21 other evidence of indebtedness.
22 (b) The commissioner may adopt rules and regulations under section
23 8, or issue declaratory rulings, or issue orders, permitting savings banks
24 to exercise powers not authorized by this act. It is intended that this
25 subsection shall vest in the commissioner the discretion and authority to
26 authorize savings banks to exercise all powers appropriate and necessary
27 to compete with other depository financial institutions and other provid-
28 ers of financial services. In the exercise of the discretion permitted by
29 this subsection, the commissioner shall consider the ability of savings
30 banks to exercise any additional power in a safe and sound manner, the
31 authority of state and national banks, associations and state and federal
32 credit unions, operating under state or federal law or regulation, the pow-
33 ers of other competing entities providing financial services in this state
34 and any specific limitations on powers contained in this act or in any other
35 state law. On at least a quarterly basis, the commissioner shall give notice
36 to all savings banks of rules and regulations of the commissioner, or de-
37 claratory rulings or determinations or orders, issued or adopted under
38 this subsection.
39 Sec. 64. A savings bank that makes a loan the proceeds of which are
40 used or may be used by the borrower to finance the purchase, design,
41 manufacture, construction, repair, modification or improvement of real
42 property shall not be liable for any defect in the real property purchased,
43 designed, manufactured, constructed, repaired, modified or improved or
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1 for any loss or damage resulting from the failure of the borrower or any
2 agent or other person employed by the borrower to use due care in the
3 examination, design, manufacture, construction, repair, modification or
4 improvement of the real property.
5 Sec. 65. (a) Except as otherwise provided by this act and in its articles
6 of incorporation, a savings bank may make venture capital investments,
7 or may invest in equity securities of a professional investor a majority of
8 whose assets consist of venture capital investments.
9 (b) If a savings bank makes a venture capital investment under sub-
10 section (a), an officer or director of the savings bank shall not hold an
11 equity position in the financed company, and the savings bank shall not
12 invest more than 50% of the company.
13 (c) A savings bank's investment under subsection (a) in any one entity
14 shall not exceed an amount equal to 5% of the capital and surplus of the
15 savings bank, and all investments under subsection (a) shall not exceed
16 an amount equal to 10% of the capital and surplus of the savings bank.
17 (d) This section does not limit the authority of a savings bank to ex-
18 ercise lending or investment powers which are otherwise authorized by
19 law.
20 (e) As used in this section:
21 (1) ``Professional investor'' means an investment company registered
22 under the investment company act of 1940, a pension or profit sharing
23 trust or other institutional buyer or a person, partnership or other entity
24 a majority of whose resources are dedicated to investing in equity or debt
25 securities and whose net worth exceeds $500,000 prior to the savings
26 bank's investment; and
27 (2) ``venture capital'' means equity financing that is provided for start-
28 ing up or expanding a company, or related purposes such as financing for
29 seed capital, research and development, introduction of a product or
30 process into the marketplace, or similar needs requiring risk capital. A
31 venture capital investment shall not include the purchase of a share of
32 stock in a company if, on the date on which the share of stock is pur-
33 chased, the company has securities outstanding that are registered on a
34 national securities exchange under section 12(b) of title I of the securities
35 exchange act of 1934, that are registered or required to be registered
36 under section 12(g) of that act, or which would be required to be so
37 registered except for the exemptions in section 12(g)(2) of that act.
38 Sec. 66. (a) As used in this section:
39 (1) ``Investment security'' means a marketable obligation in the form
40 of a bond, note or debenture, commonly regarded as an investment se-
41 curity and which is salable under ordinary circumstances with reasonable
42 promptness at a fair value;
43 (2) ``secretary'' means the secretary of the United States department
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1 of housing and urban development.
2 (b) A savings bank may purchase investment securities for its own
3 account when in its prudent banking judgment, which may be based in
4 part upon estimates that it believes to be reliable, it determines that there
5 is adequate evidence that the obligor will be able to perform all it un-
6 dertakes to perform in connection with the securities, including all debt
7 service requirements, and that the securities may be sold with reasonable
8 promptness at a price which corresponds to their fair value. The purchase
9 of investment securities in which the investment characteristics are con-
10 sidered distinctly or predominantly speculative, or the purchase of in-
11 vestment securities that are in default, whether as to principal or interest,
12 is prohibited.
13 (c) A savings bank may purchase without limit one or more of the
14 following:
15 (1) Obligations of the United States, or obligations that are guaran-
16 teed fully as to principal and interest by the United States, or any general
17 obligations of any state or of any political subdivision of a state;
18 (2) obligations issued under authority of the federal farm credit act
19 of 1971;
20 (3) obligations issued by banks for cooperatives;
21 (4) obligations issued by the federal home loan banks;
22 (5) obligations insured by the secretary under title XI of the national
23 housing act;
24 (6) obligations insured by the secretary under section 207 of title II
25 of the national housing act, if the debentures to be issued in payment of
26 the insured obligations are guaranteed as to principal and interest by the
27 United States;
28 (7) obligations, participations or other instruments of or issued by the
29 federal national mortgage association or the government national mort-
30 gage association;
31 (8) mortgages, obligations or other securities that are or ever have
32 been sold by the federal home loan mortgage corporation pursuant to
33 section 305 or 306 of the federal home loan mortgage act, title III of the
34 emergency home finance act of 1970;
35 (9) obligations of a public housing agency, as defined in the United
36 States housing act of 1937, secured by any of the following:
37 (A) An agreement between the public housing agency and the sec-
38 retary in which the public housing agency agrees to borrow from the
39 secretary, and the secretary agrees to lend to the public housing agency,
40 before the maturity of the obligations, money in an amount which to-
41 gether with any other money irrevocably committed to the payment of
42 interest on such obligations will suffice to pay the principal of the obli-
43 gations with interest to maturity on the obligations which money under
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1 the terms of the agreement is required to be used for the purpose of
2 paying the principal of and the interest on the obligations at their matur-
3 ity;
4 (B) a pledge of annual contributions under an annual contributions
5 contract between the public housing agency and the secretary if the con-
6 tract contains the covenant by the secretary that is authorized by section
7 6(g) of title I of the United States housing act of 1937, and if the maximum
8 sum and the maximum period specified in the contract under section 6(g)
9 of the United States housing act of 1937 is not less than the annual amount
10 and the period for payment that are requisite to provide for the payment
11 when due of all installments of principal and interest on such obligations;
12 (C) a pledge of both annual contributions under an annual contri-
13 butions contract containing the covenant by the secretary that is author-
14 ized by section 6(g) of the United States housing act of 1937 and a loan
15 under an agreement between the local public housing agency and the
16 secretary in which the public housing agency agrees to borrow from the
17 secretary and the secretary agrees to lend to the public housing agency,
18 prior to the maturity of the obligations involved, money in an amount
19 which, together with any other money irrevocably committed under the
20 annual contributions contract to the payment of principal and interest on
21 the obligations, will suffice to provide for the payment when due of all
22 installments of principal and interest on the obligations, which money
23 under the terms of the agreement is required to be used for the purpose
24 of paying the principal and interest on the obligations at their maturity;
25 (10) obligations of a local public agency, as defined in former section
26 110(h) of part A of title I of the housing act of 1949, secured by an
27 agreement between the local public agency and the secretary in which
28 the local public agency agrees to borrow from the secretary and the sec-
29 retary agrees to lend to the local public agency, money in an aggregate
30 amount which, together with any other money irrevocably committed to
31 the payment of interest on the obligations, will suffice to pay, when due,
32 the interest on all installments, including the final installment, of the
33 principal of the obligations, which money under the terms of the agree-
34 ment is required to be used for the payments; or
35 (11) any other investment security authorized by order or declaratory
36 ruling of the commissioner.
37 (d) The total amount of investment securities of any one obligor or
38 maker, held by a savings bank for its own account under this subsection,
39 shall not exceed at any time 20% of its capital, surplus and subordinated
40 notes and debentures. This limitation shall not require a savings bank to
41 dispose of any securities lawfully held by it on the effective date of this
42 act. The statutory limitation on the amount of investment securities of
43 any one obligor or maker which may be held by a savings bank shall be
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1 determined on the basis of the par or face value of the securities. For
2 purposes of this section, capital notes or debentures shall not include
3 capital notes or debentures issued to or held by the federal deposit in-
4 surance corporation.
5 (e) A savings bank shall maintain in its credit files information ade-
6 quate to demonstrate that it has exercised prudence in making the de-
7 terminations and carrying out the transactions described in subsection
8 (b).
9 (f) If a savings bank purchases investment securities convertible into
10 stock or with stock purchase warrants attached, entries shall be made by
11 the savings bank at the time of purchase to write down the cost of the
12 securities to an amount that represents the investment value of the se-
13 curities considered independently of the conversion feature or attached
14 stock purchase warrants. A savings bank shall not purchase investment
15 securities that are convertible into stock at the option of the issuer.
16 (g) Subject to the exercise of prudent banking judgment, a savings
17 bank may engage in the underwriting of any of the following investment
18 securities:
19 (1) Obligations of the United States;
20 (2) general obligations of any state of the United States or a political
21 subdivision of the United States;
22 (3) obligations of the international bank for reconstruction and de-
23 velopment;
24 (4) obligations of the inter-American development bank;
25 (5) obligations of the Asian development bank;
26 (6) obligations of the Tennessee valley authority;
27 (7) obligations issued by any state or political subdivision or agency
28 of a state or political subdivision for housing, university or dormitory pur-
29 poses;
30 (8) obligations of the African development bank;
31 (9) obligations of the international finance corporation;
32 (10) other obligations listed in subsection (c); or
33 (11) other obligations authorized by order or declaratory ruling of the
34 commissioner.
35 (h) For the purposes of underwriting under subsection (g), prudence
36 shall require a consideration of the resources and obligations of the ob-
37 ligor and a determination that the obligor possesses resources sufficient
38 to provide for all required payments in connection with the obligation.
39 (i) For the purposes of underwriting under subsection (g), a savings
40 bank shall not underwrite any investment securities of a foreign country
41 that has been identified by the United States state department as engag-
42 ing in or sponsoring terrorism.
43 (j) The restrictions and limitations of this section do not apply to
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1 securities acquired through foreclosure on collateral, or acquired in good
2 faith by way of compromise of a doubtful claim or to avoid a loss in
3 connection with a debt previously contracted. This section does not limit
4 the investment authority of a savings bank granted by any other section
5 of this act.
6 (k) A savings bank may invest in other assets authorized by order or
7 declaratory ruling of the commissioner.
8 Sec. 67. A savings bank may invest not more than 10% of its total
9 assets in the acquisition and development of real estate for sale, or for
10 the improvement of real estate by construction or rehabilitation of resi-
11 dential or commercial units for sale or rental purposes. For purposes of
12 this section, a savings bank may purchase, take, lease as lessee or other-
13 wise acquire, and own, hold, use, sell, lease as lessor, pledge, grant a
14 security interest in, convey or otherwise dispose of real estate. The in-
15 vestment by a savings bank may be direct or indirect as a stockholder in
16 a corporation, member of a limited liability company, or limited partner
17 in a partnership or limited liability partnership.
18 Sec. 68. A savings bank may perform one or more of the following
19 services, and any other services permitted by order or declaratory ruling
20 of the commissioner:
21 (a) Provide life, health, and casualty insurance for officers and em-
22 ployees of financial institutions and operate bonus plans and retirement
23 benefit plans for those officers and employees;
24 (b) service mortgages and land contracts;
25 (c) originate and service mortgage loans, mortgages and land con-
26 tracts, on behalf of financial institutions, corporations and state or federal
27 agencies or instrumentalities;
28 (d) act as escrow agent or depository for other escrow agents or fi-
29 duciaries;
30 (e) credit analysis, appraising, construction loan inspection and ab-
31 stracting;
32 (f) research, studies and surveys;
33 (g) develop and operate storage facilities for microfilm or other du-
34 plicate records;
35 (h) advertising, brokerage and other services to procure and retain
36 both deposits and loans, but not pooling deposits or soliciting or pro-
37 moting pooled deposits;
38 (i) liquidity management, investment, advisory and consulting serv-
39 ices;
40 (j) establish, own, lease, operate or maintain electronic funds transfer
41 terminals;
42 (k) purchase office supplies, furniture and equipment;
43 (l) prepare local, state and federal tax returns for individuals or or-
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1 ganizations that are not corporations operated for profit;
2 (m) data processing services; and
3 (n) subject to applicable state or federal law, provide brokerage serv-
4 ices for the offer, sale or purchase of a security or commodity contract.
5 Sec. 69. (a) A savings bank that engages directly in the real estate
6 brokerage business or owns in whole or in part a real estate brokerage
7 business shall provide written notice of its licensure as a real estate broker
8 or its ownership of a real estate brokerage business to the commissioner
9 within 10 days of licensure or ownership. The notice required by this
10 subsection shall include the name and business address of the real estate
11 brokerage.
12 (b) A savings bank that engages directly in the real estate brokerage
13 business or owns in whole or in part a real estate brokerage business shall
14 not do any of the following:
15 (1) Impose a requirement, verbally or in writing, that a borrower
16 must contract for or enter into any other arrangement for real estate
17 brokerage services with a particular real estate broker;
18 (2) impose a requirement, verbally or in writing, that as a condition
19 of approving a loan a borrower shall contract or enter into any other
20 arrangement for real estate brokerage services;
21 (3) impose a requirement, verbally or in writing, that a real estate
22 brokerage customer shall make application for a loan or any other service
23 or services of a particular savings bank or any of its subsidiaries, agencies
24 or service entities;
25 (4) impose a requirement, verbally or in writing, that a condition of
26 providing real estate brokerage services is that the customer shall make
27 an application for a loan or any other arrangement for other services of
28 the savings bank or any of its subsidiaries, agencies or services entities;
29 (5) offer or provide more favorable consideration, terms or conditions
30 for any financial products or services to induce or attempt to induce a
31 person to enter into any arrangement for real estate brokerage services
32 with any particular real estate broker;
33 (6) offer or provide more favorable terms or conditions for any real
34 estate brokerage services to induce or attempt to induce a person to apply
35 for a loan or obtain any other services of a particular savings bank or any
36 of its subsidiaries, agencies or service entities; or
37 (7) any other activity prohibited by order or declaratory ruling of the
38 commissioner.
39 (c) A savings bank that engages directly in the real estate brokerage
40 business or owns in whole or in part a real estate brokerage business under
41 this section shall clearly disclose in writing to any person who applies for
42 credit related to a real estate transaction or applies for prequalification
43 or preapproval for credit related to a real estate transaction, that the
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1 person is not required to contract for or enter into an arrangement for
2 real estate brokerage services with a particular real estate broker. Com-
3 pliance with the disclosure requirements of this subsection shall not be
4 necessary when a person applies for credit or prequalification for credit
5 solely for the purpose of refinancing an existing indebtedness.
6 (d) A real estate brokerage that is affiliated with a savings bank shall
7 clearly disclose in writing, before the time an agency agreement for real
8 estate brokerage services is executed, that the person is not required to
9 apply, contract for or enter into any other arrangement for services of a
10 particular savings bank or any of its subsidiaries, agencies or service en-
11 tities.
12 (e) The requirements of subsections (c) and (d) do not apply when
13 the person has been given the controlled business arrangement disclosure
14 statement required by the real estate settlement procedures act of 1974.
15 (f) If the commissioner finds that a savings bank has violated this
16 section, the commissioner may issue an order requiring the savings bank
17 to cease and desist the activity that violates this section. If the commis-
18 sioner additionally finds that the violation was knowingly committed, the
19 commissioner may order any of the following:
20 (1) A civil fine of not more than $500 for each violation but not to
21 exceed an aggregate civil penalty of $10,000; or
22 (2) That restitution be made to a customer for actual damages directly
23 attributable to the acts that are found to be a violation of this section.
24 (g) An action under this section shall not be brought more than three
25 years after the occurrence of the violation that is the basis of the action.
26 Sec. 70. (a) Upon 30 days' notice to the commissioner, a savings bank
27 may invest in service entities that engage in activities described in sub-
28 sections (d) and (e). The maximum aggregate investment by a savings
29 bank in service entities shall be the lesser of 5% of the savings bank's total
30 assets or 75% of its capital and surplus, if it is a stock savings bank, or the
31 lesser of 5% of the savings bank's total assets or 75% of its total capital,
32 if it is a mutual savings bank.
33 (b) Except upon written approval of the commissioner, a savings bank
34 shall not invest as a general partner in a service entity. For purposes of
35 this section, investment in a service entity shall include loans by a savings
36 bank or its subsidiary to a service entity.
37 (c) Subject to the investment limit in subsection (a), a savings bank
38 or its subsidiary that has made an initial investment in a service entity
39 may make additional investments in that service entity without notice to
40 the commissioner.
41 (d) A service entity that directly, or through its wholly owned subsid-
42 iary, engages in any of the following activities or investments is a service
43 entity in which a savings bank may invest:
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1 (1) Services primarily for financial institutions that include any of the
2 following:
3 (A) Credit analysis, appraising, construction loan inspection and ab-
4 stracting;
5 (B) developing and administering personnel benefit programs, in-
6 cluding life insurance, health insurance and pension or retirement plans;
7 (C) research, studies and surveys;
8 (D) developing and operating storage facilities for microfilm or other
9 duplicate records;
10 (E) advertising, brokerage and other services to procure and retain
11 both savings accounts and loans, but not pooling savings accounts or so-
12 liciting or promoting pooled savings accounts;
13 (F) serving as escrow agent, including executing and delivering con-
14 veyances, reconveyances and transfers of title;
15 (G) providing liquidity management, investment, advisory and con-
16 sulting services;
17 (H) providing clerical, accounting and internal auditing services;
18 (I) establishing, owning, leasing, operating or maintaining remote
19 service units; and
20 (J) purchasing office supplies, furniture and equipment;
21 (2) real estate services that include any of the following:
22 (A) Maintaining and managing real estate, including real estate used
23 for agricultural purposes;
24 (B) managing owners' associations for condominium, cooperative,
25 planned unit development or other rental real estate projects;
26 (C) providing home ownership and financial counseling;
27 (D) providing relocation services;
28 (E) providing real estate brokerage services for property owned by a
29 person that owns an interest in the service entity, the service entity or its
30 wholly owned subsidiary, or a joint venture in which the service entity or
31 its wholly owned subsidiary participates;
32 (F) acquiring real estate for development or subdivision, for construc-
33 tion of improvements, for resale or leasing to others for construction or
34 for use as manufactured home sites;
35 (G) acquiring improved real estate or manufactured homes to be held
36 for rental or resale, or for remodeling, renovating, or demolishing and
37 rebuilding for sale or rental;
38 (H) acquiring, maintaining, and managing real estate, improved or
39 unimproved, to be used for offices and related facilities of a savings bank,
40 subsidiary or service entity, or of a person that owns an interest in the
41 savings bank, subsidiary or service entity, or for offices and related facil-
42 ities and for rental or sale, if the acquisition, maintenance, and manage-
43 ment is performed under a prudent program of property acquisition to
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1 meet either the present needs or reasonable future needs for office and
2 related facilities of the savings bank, subsidiary or service entity, or of the
3 person that owns an interest in the savings bank, subsidiary or service
4 entity; and
5 (I) real estate brokerage;
6 (3) securities brokerage and investment advisory services that include
7 execution of securities transactions on an agency or riskless principal basis,
8 and the provision of standardized and individualized investment advice
9 to individuals or entities;
10 (4) other investments that include any of the following:
11 (A) Investing in adjustable rate preferred stock and money market
12 preferred stock;
13 (B) investing in an entity that provides insurance in connection with
14 loans, and investing in an entity which reinsures a provider of the insur-
15 ance; or
16 (C) making voting and nonvoting investments in corporations and in
17 partnerships, whether as a general or limited partner, limited liability
18 companies and limited liability partnerships provided such other corpo-
19 ration or partnership or limited liability company engages only in activities
20 permissible for a savings bank or a service entity.
21 (5) other services that include any of the following:
22 (A) preparing state and federal tax returns for individuals or organi-
23 zations that are not corporations operated for profit;
24 (B) acting as an insurance broker or agent; or
25 (C) providing data processing services.
26 (6) offering credit card programs, debit card programs and similar
27 arrangements; and
28 (7) offering mutual fund investment products.
29 (e) A savings bank may also invest in service entities that engage di-
30 rectly or through a wholly owned subsidiary in activities determined by
31 order or declaratory ruling of the commissioner to be incidental to the
32 conduct of the business of a financial services provider, activities that
33 further or facilitate the purposes of a financial services provider, or which
34 provide services to a financial services provider. The commissioner shall
35 consider the ability of service entities to exercise any additional power in
36 a safe and sound manner. The commissioner shall also consider the ability
37 of service entities to compete with, or offer the same or similar services
38 as offered by, service corporations or service organizations of other pro-
39 viders of financial services. The commissioner shall give notice to all sav-
40 ings banks of rules and regulations adopted, or declaratory rulings or
41 determinations, or orders issued pursuant to this subsection.
42 Sec. 71. The powers granted in section 63 shall not be construed as
43 limiting any grant of authority made elsewhere by this act except as pro-
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1 vided in section 63. Except as otherwise provided in this act or in the
2 articles or in the bylaws, such powers shall be exercised by the board of
3 directors of the savings bank.
4 Sec. 72. Upon written notice to the commissioner, a savings bank
5 may change the location of its main office to any existing branch location
6 of the savings bank within the limits of the city, or township in which the
7 savings bank is located. With the prior written approval of the commis-
8 sioner, a savings bank may change the location of its principal office to
9 any other location within this state.
10 Sec. 73. (a) A savings bank shall not engage in any transaction with
11 respect to shares of the capital stock of any corporation unless specifically
12 authorized by this act or by the commissioner under section 63 or 70.
13 (b) A savings bank may purchase and sell securities and stock upon
14 the order of and for the account of a customer without recourse.
15 (c) A savings bank shall not make any loan or discount on the security
16 of the shares of its own capital stock, unless the security is necessary to
17 prevent loss upon a debt previously contracted in good faith.
18 (d) A savings bank may purchase or hold shares of its own stock if all
19 of the following apply:
20 (1) The savings bank is holding shares previously purchased until dis-
21 posed of in compliance with an existing stock option plan;
22 (2) the purchase or holding of the shares is necessary to prevent loss
23 upon a debt previously contracted in good faith; and
24 (3) the commissioner gives written approval to the savings bank to
25 purchase or hold shares for its own account.
26 Sec. 74. (a) A savings bank possessing a capital and surplus of
27 $1,000,000 or more may file application with the commissioner for per-
28 mission to exercise, upon conditions and under such rules and regulations,
29 orders, or declaratory rulings as are prescribed by the commissioner, any
30 of the following powers:
31 (1) To establish branches in foreign countries for the furtherance of
32 foreign commerce of the United States and to act, if required to do so,
33 as fiscal agents of the United States;
34 (2) to invest an amount not exceeding in the aggregate 10% of its
35 capital and surplus if it is a stock savings bank, or 10% of its total capital
36 if it is a mutual savings bank in the stock of one or more banking organ-
37 izations or corporations chartered or incorporated under the laws of the
38 United States or of any state, territory, or protectorate of the United
39 States, and principally engaged in international or foreign banking, or
40 banking either directly or through the agency, ownership or control of
41 foreign banks; and
42 (3) to acquire and hold, directly or indirectly, stock or other evidences
43 of ownership in one or more foreign banks that are not engaged, directly
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1 or indirectly, in any activity in the United States except as, in the judgment
2 of the commissioner, is incidental to the international or foreign business
3 of the foreign bank, and to make loans or extensions of credit to or for
4 the account of the foreign bank in the manner and within the limits pre-
5 scribed by the commissioner by order or declaratory ruling.
6 (b) An application under this section shall specify the name and cap-
7 ital and surplus of the bank filing it, the powers applied for and the places
8 where the banking operations are to be carried on. The commissioner
9 may approve or reject the application in whole or in part if for any reason
10 the granting of the application is considered inexpedient and from time
11 to time may increase or decrease the number of places where the banking
12 operations may be carried on.
13 (c) Every savings bank operating foreign branches under this section
14 shall furnish information concerning the condition of the branches to the
15 commissioner upon demand, and every savings bank investing in capital
16 stock of banking organizations or corporations as provided under this
17 section shall furnish information concerning the condition of the banking
18 organizations or corporations to the commissioner upon demand. The
19 commissioner may order special examinations of the branches, banking
20 organizations or corporations at such times as he or she deems best.
21 (d) Before a savings bank is permitted to purchase stock in a banking
22 organization or corporation under this section the banking organization
23 or corporation shall enter into an agreement or undertaking with the
24 commissioner to restrict their operations or conduct their businesses in
25 a manner or under such limitations and restrictions as the commissioner
26 prescribes. If at any time the commissioner has ascertained that such
27 orders or rulings are not being complied with, the commissioner may
28 institute an investigation of the matter and subpoena witnesses and doc-
29 uments and administer oaths. If the investigation results in establishing
30 the failure of the banking organization or corporation in question, or of
31 the savings bank which is a stockholder, to comply with the rules of the
32 commissioner, the commissioner may order the savings bank to dispose
33 of stockholdings in the banking organization or corporation.
34 (e) Orders or rulings issued by the commissioner, in addition to reg-
35 ulating powers which a foreign branch may exercise under other provi-
36 sions of law, may authorize a foreign branch, subject to such conditions
37 and requirements as the orders or rulings prescribe, to exercise any fur-
38 ther powers as may be usual in connection with the transaction of the
39 business of banking in the places where the foreign branch transacts busi-
40 ness. The orders or rulings shall not authorize a foreign branch to engage
41 in the general business of producing, distributing, buying, or selling
42 goods, wares, or merchandise. Except to such limited extent as the com-
43 missioner may deem to be necessary with respect to securities issued by
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1 any foreign government or any department, district, province, county,
2 possession, or other similar governmental organization or subdivision of
3 a foreign government, and any agency or instrumentality of any foreign
4 government or of any organization or subdivision, the orders or rulings
5 shall not authorize a foreign branch to engage or participate, directly or
6 indirectly, in the business of underwriting, selling, or distributing secu-
7 rities.
8 Sec. 75. (a) Notwithstanding K.S.A. 84-1-105 and amendments
9 thereto, a savings bank doing business in this state, that has one or more
10 branch offices in any foreign country shall be liable for contracts to be
11 performed at any branch offices and for deposits to be repaid at the
12 branch offices to no greater extent than a savings bank, banking corpo-
13 ration or other organization or association for banking purposes organized
14 and existing under the laws of the foreign country would be liable under
15 its laws. The laws of the foreign country for the purpose of this section
16 shall be considered to include all acts, decrees, regulations and orders
17 promulgated or enforced by an authority asserting governmental, military,
18 or police power of any kind at the place where any branch office is located,
19 whether or not the dominant authority is recognized as a de facto or de
20 jure government.
21 (b) If by action of a dominant authority that is not recognized by the
22 United States as the de jure government of the foreign territory con-
23 cerned, any property situated in or any amount to be received in the
24 foreign territory and carried as an asset of any branch office of the savings
25 bank in the foreign territory is seized, destroyed or canceled, then the
26 liability of the savings bank for any deposit received and to be repaid by
27 it, and for any contract made and to be performed by it, at any branch
28 office in the foreign territory shall be reduced pro tanto by the proportion
29 that the value, as shown by the books or other records of the savings bank
30 at the time of the seizure, destruction, or cancellation of the assets bears
31 to the aggregate of all the deposit and contract liabilities of the branch
32 offices of the savings bank in the foreign territory, as shown at such time
33 by the books or other records of the savings bank.
34 Sec. 76. (a) A savings bank may become the owner or lessor of per-
35 sonal property for the purpose of leasing the property or obtaining an
36 assignment of a lessor's interest in a lease of the property or permitting
37 the use of the property, and may incur additional obligations as may be
38 incident to becoming an owner or lessor of such property.
39 (b) Lease payments shall constitute rent rather than interest.
40 (c) This section shall not exempt from general property taxation any
41 personal property of a savings bank which is leased, loaned, or otherwise
42 made available to and used by a private individual, association, or cor-
43 poration in connection with a business conducted for profit. The personal
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1 property shall be subject to taxation in the same amount and to the same
2 extent as though the lessee or user were the owner of the property. Taxes
3 shall be assessed to the lessees or users of the property and collected in
4 the same manner as taxes assessed to owners of personal property, except
5 that the taxes shall not become a lien against the property. When due,
6 the taxes shall constitute a debt due from the lessee or user to the unit
7 of government for which the taxes were assessed.
8 (d) A savings bank shall not acquire personal property under this sec-
9 tion if the acquisition results in an inventory of personal property not
10 leased in excess of 20% of the savings bank's capital and surplus.
11 Sec. 77. (a) Upon written notice to the commissioner, a savings bank
12 may establish and operate one or more branches or mobile branches
13 within any state, the District of Columbia, or a territory or protectorate
14 of the United States, unless the commissioner objects in writing within
15 60 days after receipt of the written notice from the savings bank. The
16 commissioner may issue to the savings bank a written statement of intent
17 not to object. A savings bank may exercise at a branch in another state
18 the powers consistent with the safe and sound conduct of the business of
19 banking as authorized by order or declaratory ruling of the commissioner
20 and granted by the laws of the state where the branch is located.
21 (b) A branch of a savings bank, except for a mobile branch, shall not
22 be moved from one location to another without 30 days' advance written
23 notice to the commissioner.
24 (c) Upon written notice to the commissioner, a savings bank may
25 contract with one or more banks, out-of-state banks, national banks, as-
26 sociations, credit unions or other savings banks to act as a branch of the
27 savings bank, unless the commissioner objects in writing within 60 days
28 after receipt of the written notice from the savings bank. The commis-
29 sioner may issue to the savings bank a written statement of intent not to
30 object that will have the same effect as a failure by the commissioner to
31 object within the 60 days provided for under this subsection. This sub-
32 section shall not be construed to limit the powers granted to a savings
33 bank under section 63(a)(29).
34 (d) Upon written notice to the commissioner, one or more banks,
35 out-of-state banks, national banks, associations, credit unions or other
36 savings banks, may contract with a savings bank to act as a branch of the
37 bank, out-of-state bank, national bank, association, credit union or other
38 savings bank, unless the commissioner objects in writing within 60 days
39 after receipt of the written notice from the bank, out-of-state bank, na-
40 tional bank, association, credit union or other savings bank. The commis-
41 sioner may issue to the depository institution a written statement of intent
42 not to object that will have the same effect as a failure by the commis-
43 sioner to object within the 60 days provided for under this subsection.
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1 This subsection shall not be construed to limit the powers granted to a
2 savings bank under section 63(a)(29).
3 (e) An out-of-state bank located in a state, the District of Columbia
4 or a territory or protectorate of the United States whose laws permit the
5 establishment in that state, district, territory or protectorate of a branch
6 by a savings bank may establish and operate one or more branches in this
7 state.
8 (f) Upon 30 days' advance written notice to the commissioner, a sav-
9 ings bank may contract with a person or entity to act as an agent in an
10 agency office. The written notice shall include the name and address of
11 the person or entity who will act as agent for the savings bank, the location
12 of the agency office, when the agency office will be operational and the
13 activities in which the agency office will initially be engaged. A savings
14 bank may perform any of the following activities through an agency office:
15 (1) Accept a deposit to an existing account and record the addition
16 to the account or give other evidence of receipt as prescribed by the
17 savings bank;
18 (2) accept a withdrawal form and such other evidence required by
19 the savings bank from an account holder for transmission to the main
20 office or a branch office of the savings bank;
21 (3) solicit and accept a new account. Evidence of account ownership
22 shall be issued only by authority of the main office or a branch office of
23 the savings bank. An agent may obtain signature cards from the savings
24 bank for the account holder;
25 (4) solicit and accept an application for a loan or for a land contract
26 purchase. The agent shall submit the application to the main office or a
27 branch of the savings bank for processing and approval;
28 (5) disburse withdrawn or loaned funds, upon approval of each dis-
29 bursement by the savings bank;
30 (6) accept payment on a loan or on a land contract and issue evidence
31 of receipt as prescribed by the savings bank; or
32 (7) any other services as approved by order or declaratory ruling of
33 the commissioner.
34 (g) An agent in an agency office shall not possess an unissued or blank
35 authenticated savings account passbook or certificate or other evidence
36 of account ownership.
37 Sec. 78. (a) Without notice to or approval of the commissioner, a
38 savings bank may establish and operate a loan production office or loan
39 production offices.
40 (b) A savings bank may perform any of the following activities through
41 a loan production office:
42 (1) Receive loan applications;
43 (2) process loans;
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1 (3) assemble information related to the approval of loans;
2 (4) close loans;
3 (5) disburse loan proceeds approved by the principal office or a
4 branch;
5 (6) receive loan payments; and
6 (7) any other activities as approved by rules and regulations, order or
7 declaratory ruling of the commissioner.
8 Sec. 79. Notwithstanding any other provision of this act, a savings
9 bank that purchases or assumes all or substantially all of the assets or
10 liabilities of an eligible insured national or state chartered bank, savings
11 bank or association may retain and maintain the main premises, branches
12 or agency offices of the former national bank, state chartered bank or
13 association as branches of the purchasing savings bank, provided it as-
14 sumes the deposit liabilities of the eligible national bank, state chartered
15 bank, savings bank or association maintained at the main premises,
16 branches, or agency offices. The notice required by section 77(a) shall be
17 given for each main premises, branch, or agency office the purchasing
18 savings bank intends to operate as a new branch.
19 Sec. 80. If a savings bank permanently discontinues the operations
20 of any branch or agency office, all bills, checks and notes otherwise pre-
21 sentable for acceptance or payment, all deposits to be made or withdrawn,
22 all notices to stop payment of checks to be given, and similar functions,
23 shall be deemed transferable to, and treated as a part of, the principal
24 office of the savings bank. The savings bank shall give written notice to
25 the commissioner before discontinuing operations of any branch or
26 agency office.
27 Sec. 81. (a) Upon application, the commissioner may grant to a sav-
28 ings bank full trust powers, as provided in this section, but subject to the
29 conditions, limitations and restrictions in this section and sections 82 to
30 87.
31 (b) Upon approval of the application, the savings bank has the power
32 to conduct a trust business including, but not limited to, any of the fol-
33 lowing:
34 (1) In and by its corporate name to take, receive, hold, repay, recon-
35 vey and dispose of any effects and property, both real and personal, that
36 may be granted, committed, transferred or conveyed to it with its consent,
37 upon any terms or upon any trust at any time, by any person, including
38 minors, bodies corporate or by any court, including the federal courts, in
39 the state, and to administer, fulfill, and discharge the duties of the trust
40 for the remuneration as agreed upon;
41 (2) to act generally as agent for the transaction of business, the man-
42 agement of estates, the collection of rents, interest, dividends and money,
43 and the collection of principal and interest on mortgages, bonds, notes
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1 and securities for money and to enforce the payment thereof, and to act
2 as agent for the purpose of issuing, negotiating, registering, transferring
3 or countersigning the certificates of stock, bonds or other obligations of
4 any corporation, association or municipality and to manage any sinking
5 fund on the terms as agreed upon;
6 (3) to accept and to execute the offices of personal representative,
7 trustee, receiver, conservator, liquidating agent, assignee or guardian of
8 any minor, incompetent person, legally incapacitated person or person
9 subject to guardianship, subject to the laws of this state applicable to those
10 proceedings. In all cases when application is made to any court in this
11 state for the appointment of any trustee, receiver, personal representa-
12 tive, conservator or guardian of any minor, incompetent person, legally
13 incapacitated person or other person subject to conservatorship or guard-
14 ianship, the court may appoint the savings bank, with its consent, to hold
15 the office. The accounts of the savings bank as trustee, receiver, conser-
16 vator, liquidating agent, assignee, personal representative or guardian
17 shall be regularly settled and adjusted by the proper office or tribunals.
18 All proper, legal, usual and customary charges, costs and expenses shall
19 be allowed to the savings bank for the care and management of the estate
20 so committed to it. In case of appointment by any court, the savings bank
21 shall not be required to give any security except in the discretion of the
22 court, other than as provided in section 86 for deposit with the state
23 treasurer. If the court orders the savings bank to give security, the security
24 shall be a bond in an amount fixed by the court and with a surety company
25 authorized to do business in this state as surety on the bond, or with
26 personal surety or sureties on the bond satisfactory to the court. If any
27 savings bank is required, in the course of the administration of any trust,
28 to give a bond, whether as additional security, substituted security or
29 otherwise, the surety on the bond shall not be liable directly or indirectly
30 for any act or default committed by the savings bank prior to the date of
31 the filing and approval of the bond, or for the failure of the savings bank
32 to pay over on final settlement if the failure to pay over is due to an act
33 or default committed prior to the filing and approval of the bond, or for
34 the failure of the savings bank to collect from itself or from any prior
35 surety or sureties the amount of any loss due to any act or default com-
36 mitted by the savings bank prior to the date of the filing and approval of
37 the bond; and
38 (4) to exercise by its board of directors or authorized officers or agents
39 all incidental powers as are necessary to carry on a trust business.
40 Sec. 82. (a) As used in this section:
41 (1) ``Banking office'' means a main office or authorized branch of a
42 bank, out-of-state bank, national bank, association or savings bank;
43 (2) ``host savings bank'' means a bank, national bank, association or
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1 savings bank for which trust services are provided by any other bank, out-
2 of-state bank, national bank, association or savings bank; and
3 (3) ``trust service provider'' means a savings bank providing trust serv-
4 ices to any other bank, out-of-state bank, national bank, association or
5 savings bank.
6 (b) A savings bank granted full trust powers may contract by written
7 agreement with any bank, out-of-state bank, national bank, association or
8 other savings bank to carry on trust services in its name and for its account
9 at one or more of the banking offices of the bank, out-of-state bank,
10 national bank, association or other savings bank.
11 (c) A savings bank may contract by written agreement with any bank,
12 out-of-state bank, national bank, association or other savings bank exer-
13 cising full trust powers to carry on trust services at one or more of its
14 banking offices but in the name and for the account of the bank, out-of-
15 state bank, national bank, association or other savings bank.
16 (d) An agreement provided for in this section, including a lease or a
17 modification or extension of an agreement, is not effective as to any sav-
18 ings bank until it is approved in writing by the commissioner. The com-
19 missioner may approve the agreement upon consideration of the suffi-
20 ciency of the capital and surplus of the banks, out-of-state banks, national
21 banks, associations or savings banks, the need for trust services and other
22 facts or circumstances that the commissioner considers proper.
23 (e) Thirty days after a host savings bank mails a notice of substitution
24 as provided in subsection (f), a trust service provider shall be substituted
25 for a host savings bank as fiduciary or agent and succeed to the title of
26 assets held by a host savings bank in a fiduciary capacity for each account
27 in which the host savings bank, under the terms of a trust service agree-
28 ment approved by the commissioner, will no longer serve as fiduciary or
29 agent. A trust service provider shall not be substituted for the host savings
30 bank for an account in which the recipient of a notice of substitution with
31 respect to that account objects to the substitution under subsection (f).
32 (f) For an account in which a trust service provider is substituted for
33 a host savings bank under the terms of a trust service agreement, a written
34 notice of substitution shall be sent by the host savings bank by certified
35 mail. The notice of substitution shall include the date the notice was
36 mailed and explain that the trust service provider will not be substituted
37 for the host savings bank for the account if the recipient of the notice
38 sends a written objection to the host savings bank by first-class mail within
39 30 days after the date the notice was mailed. The notice of substitution
40 shall be sent to all of the following:
41 (1) For employee benefit plans, to the plan sponsors;
42 (2) for individual retirement accounts and retirement accounts for
43 the self-employed, to the account owners;
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1 (3) for agency and escrow accounts, to the principals;
2 (4) for securities for which a host savings bank serves as trustee, reg-
3 istrar, transfer agent or paying agent, to the issuers;
4 (5) for revocable trusts under agreement, to the settlors;
5 (6) for irrevocable trusts under agreement, to any co-fiduciary, to the
6 settlor, to each current income beneficiary who is an adult, and, if a cur-
7 rent income beneficiary is a minor, to a parent of the minor with whom
8 the minor resides or to the conservator or guardian of the minor. The
9 notice to the settlor shall not grant to the settlor any authority over the
10 trust or trustee that the settlor did not have before the notice, including
11 the authority to object to the substitution of a trust service provider for
12 a host savings bank. For purposes of this subdivision, ``current income
13 beneficiary'' means a person currently entitled to income or a person to
14 whom the trustee, in the trustee's discretion, may pay principal or income;
15 (7) for testamentary trusts, to the persons notified under paragraph
16 (6) and to the court that appointed the host savings bank as trustee;
17 (8) for conservatorships, to any co-fiduciary, to the protected person
18 for whom the conservatorship was created or, if the conservatorship was
19 created for a minor, to a parent of the minor with whom the minor resides
20 or to the guardian of the minor, and to the court that appointed the host
21 savings bank as conservator;
22 (9) for guardianships, to any co-fiduciary, to the minor or legally in-
23 capacitated person for whom the guardian was appointed if the ward is
24 at least 14 years of age, and to the court that appointed the host savings
25 bank as guardian; and
26 (10) for probate estates, to any co-fiduciary, to any interested party,
27 and to the court that appointed the host savings bank as personal repre-
28 sentative.
29 (g) Subsections (a), (e), and (f) apply to trust service agreements in
30 effect on or after the effective date of this act.
31 Sec. 83. (a) A savings bank exercising a trust power under sections
32 81 to 84 shall segregate all assets held in a fiduciary capacity from the
33 general assets of the bank, keep a separate set of books and records show-
34 ing in proper detail all transactions engaged under sections 81 to 84, and
35 at all times keep the savings bank's trust department business separate
36 and distinct from the savings bank's commercial banking business.
37 (b) Funds, at any time and from time to time, held in trust by the
38 savings bank, awaiting investment or other disposition, may be commin-
39 gled and consolidated, and may be deposited in other financial institutions
40 not affiliated with the savings bank as designated by the board of directors
41 or may be held at any time and from time to time by the savings bank
42 under a deposit relationship and used by the savings bank in the conduct
43 of the savings bank's individual corporate business but only to the extent
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1 and when the savings bank shall set aside for the protection of the owners
2 of the funds obligations of the United States, obligations that are guar-
3 anteed fully as to principal and interest by the United States, general
4 obligations of this state or of any political subdivision of this state, or other
5 securities approved by the commissioner equal at face value to the
6 amount of the funds held, less the amounts of the funds which are insured
7 by the federal deposit insurance corporation. If the savings bank fails, the
8 owners of the funds held in trust, awaiting investment or other disposi-
9 tion, shall have a lien on the securities set apart in addition to any other
10 claims against the savings bank.
11 Sec. 84. (a) In passing upon applications for permission to exercise
12 full fiduciary powers under section 81, the commissioner shall take into
13 consideration the following, and the commissioner may grant or refuse
14 the application accordingly:
15 (1) The sufficiency of the capital and surplus of the applying savings
16 bank;
17 (2) any other facts or circumstances that the commissioner deems
18 proper; and
19 (3) without regard to the capital and surplus requirements under sub-
20 section (a), the commissioner may grant to a savings bank the limited
21 trust power to act as executor, administrator, custodian, conservator,
22 guardian or to serve as a testamentary trustee.
23 Sec. 85. (a) Funds or property held by a savings bank as fiduciary
24 and available for investment shall be invested at the time and in the
25 manner specified by the agreement, instrument, or order creating or de-
26 fining the trust or other capacity in which the savings bank is acting or,
27 where the savings bank holds the funds or property as agent, as directed
28 or permitted by the savings bank's principal. In the absence of investment
29 specifications or limitations in the agreement, instrument or order, funds
30 or property held by a savings bank as fiduciary shall within a reasonable
31 time be invested in real or personal property, of whatever type or nature,
32 as an ordinarily prudent person of intelligence and integrity who is a
33 trustee of the money of others would purchase, in the exercise of reason-
34 able care, judgment and diligence under the conditions existing at the
35 time of purchase, having due regard, in the case of a purchase of secu-
36 rities, for the management, reputation and stability of the issuer and the
37 character of the particular securities.
38 (b) Except as otherwise provided by law, a court order, or the agree-
39 ment, instrument, or order creating or defining the trust, or other capacity
40 in which the savings bank is acting or with the consent of all interested
41 parties or their representatives, or where the savings bank holds the funds
42 or property as agent, as directed or permitted by the savings bank's prin-
43 cipal, funds or property held by a savings bank as fiduciary shall not be
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1 invested in any securities or other properties, real or personal, purchased
2 from the savings bank in its individual capacity or from any affiliate of the
3 bank.
4 (c) Notwithstanding a statutory or common law, except when the
5 agreement, instrument or order creating or defining the trust or other
6 capacity in which the savings bank or the savings bank and one or more
7 co-fiduciaries, is acting, prohibits the investment, a savings bank, or a
8 savings bank and one or more co-fiduciaries, may invest in a registered
9 investment company funds or property with respect to which the savings
10 bank, or the savings bank and one or more co-fiduciaries, exercises in-
11 vestment discretion, even though either or both of the following apply:
12 (1) The savings bank or an affiliate of the savings bank provides serv-
13 ices as investment adviser, sponsor, distributor, manager, custodian,
14 transfer agent, registrar or otherwise to the investment company and re-
15 ceives reasonable remuneration for those services; or
16 (2) the savings bank as fiduciary owns or controls a majority of the
17 voting shares of the investment company or a majority of the shares voted
18 for the election of its directors or trustees or the savings bank as fiduciary
19 otherwise controls the election of a majority of its directors or trustees.
20 (d) As used in subsection (c), ``registered investment company''
21 means an investment company that is registered under the investment
22 company act of 1940.
23 (e) For purposes of this section, a savings bank is considered to be
24 holding funds or property in a fiduciary capacity if it is holding the assets
25 as trustee, personal representative, custodian, conservator, guardian,
26 agent or in any other fiduciary capacity;
27 Sec. 86. The commissioner may issue orders or declaratory rulings
28 to enforce sections 81 to 85.
29 Sec. 87. (a) A savings bank may operate a safe deposit and storage
30 department or invest an amount not exceeding in the aggregate 15% of
31 its unimpaired capital and surplus, or 15% of its total capital in the case
32 of a mutual savings bank, in the stock of not more than one safe and
33 collateral deposit company organized under the laws of this state.
34 (b) If a savings bank operates a safe deposit and storage department,
35 the legal liability of the savings bank on account of any loss to a customer
36 shall not exceed the sum of $10,000 for any one box or compartment,
37 including all property accepted for storage outside of the box or com-
38 partment. The savings bank may contract with the renter to have the
39 renter assume all risks arising from the use of the box, compartment or
40 storage.
41 (c) The savings bank shall have a lien for unpaid rental and storage
42 charges on the contents of any box or compartment and any property
43 accepted for storage outside of the box or compartment. If the charges
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1 are not paid within one year from the date of accrual, then the savings
2 bank may sell the property at public auction upon like notice as is required
3 by law for sales on execution.
4 (d) After retaining from the proceeds of sale the amount of all charges
5 due and owing at the time of the sale and the reasonable expenses of the
6 sale, the savings bank shall pay any balance to the persons entitled to the
7 proceeds. The savings bank may fairly and in good faith purchase all or
8 part of the property at the sale.
9 Sec. 88. (a) A savings bank may lease, purchase, hold, and convey
10 real estate for any of the following purposes:
11 (1) For the convenient transaction of its business, including with its
12 banking offices other space in the same buildings to rent as lessor. With-
13 out the approval of the commissioner, a savings bank shall not invest in
14 premises of the savings bank or in the stock, bonds, debentures or other
15 obligations of any corporation holding the premises of the savings bank
16 or make loans to or upon the security of the stock, bonds and debentures
17 of any such corporation, if the aggregate of all investments and loans,
18 together with the amount of any indebtedness incurred in connection
19 with a bank premises real estate transaction by any such corporation
20 which is an affiliate of the savings bank, exceeds 2/3 of the capital and
21 surplus of the stock savings bank or 2/3 of the total capital of the mutual
22 savings bank;
23 (2) as permitted under section 66;
24 (3) for all purposes with regard to real estate conveyed to it in satis-
25 faction of debts previously contracted in the course of its business;
26 (4) for all purposes with regard to real estate purchased at sales under
27 judgments, decrees or mortgages held by the savings bank or purchased
28 to secure debts due to it;
29 (5) for all purposes with regard to real estate legally owned by the
30 savings bank on the effective date of this act;
31 (6) for all purposes with regard to real estate conveyed to it under
32 sections 80 through 85;
33 (7) for all purposes with regard to real estate acquired in connection
34 with the purchase by the savings bank of a land contract. At the termi-
35 nation of a land contract, the savings bank shall divest itself of the real
36 estate within one year after termination or such additional period as the
37 commissioner may approve;
38 (8) for all purposes with regard to real estate acquired upon the spe-
39 cific request and for the use of a customer by lease arrangement with the
40 savings bank. At the termination of a lease, the savings bank shall divest
41 itself of the real estate within one year after termination or such additional
42 period as the commissioner may approve; and
43 (9) any other purposes as may be permitted by order or declaratory
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1 ruling of the commissioner.
2 (b) Real estate shall be conveyed under the signature of the officers
3 authorized by its board to approve the conveyance.
4 (c) Real estate acquired under subsections (a) and (e) shall not be
5 held for a period longer than five years or such other period as approved
6 by the commissioner.
7 Sec. 89. (a) Savings banks may collect interest and charges on loans,
8 including open-end credit, as follows:
9 (1) As permitted by the uniform consumer credit code;
10 (2) on obligations purchased by the savings bank, the savings bank
11 may charge a discount;
12 (3) on a loan not covered by paragraph (1) or (2), a savings bank may
13 charge, collect and receive interest and other charges in the same manner
14 and at up to the maximum rate or amount permitted by law for the same
15 type of loans made by national banking associations authorized to do busi-
16 ness in this state;
17 (4) on a loan not covered by paragraph (1), (2) or (3), as otherwise
18 permitted by law.
19 (b) A savings bank or any officer or employee of the savings bank,
20 directly or indirectly, shall not take or receive more than the rate of in-
21 terest allowed by law in advance on its loans and discounts.
22 (c) Except as otherwise provided by law, an investigation fee or han-
23 dling charge in connection with any transaction shall not be considered
24 as interest.
25 (d) A savings bank may pay interest on any deposit that is payable on
26 demand, unless the commissioner by rules and regulations, or declaratory
27 ruling restricts the right of the savings bank to pay interest on demand
28 deposits or unless restricted by federal law.
29 Sec. 90. (a) A savings bank may accept drafts or bills of exchange
30 drawn upon it having not more than six months' sight to run, exclusive of
31 days of grace, if one or more of the following apply:
32 (1) The drafts or bills of exchange grow out of transactions involving
33 the importation or exportation of goods;
34 (2) the drafts or bills of exchange grow out of transactions involving
35 the domestic shipment of goods; or
36 (3) the drafts or bills of exchange are secured at the time of accep-
37 tance by a warehouse receipt or other such document conveying or se-
38 curing title covering readily marketable staples.
39 (b) Except as provided in subsection (c), a savings bank shall not
40 accept bills of exchange, or be obligated for a participation share in such
41 bills, in an amount equal at any time in the aggregate to more than 150%
42 of the capital and surplus of a stock savings bank and more than 150% of
43 the total capital of a mutual savings bank.
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1 (c) Under conditions as the commissioner may prescribe, the com-
2 missioner may authorize, by rules and regulations, order, or declaratory
3 ruling, a savings bank to accept bills of exchange, or be obligated for a
4 participation share in such bills, in an amount not exceeding at any time
5 in the aggregate 200% of the capital and surplus of a stock savings bank
6 and more than 200% of the total capital of a mutual savings bank.
7 (d) Notwithstanding subsections (b) and (c), with respect to any sav-
8 ings bank, the aggregate acceptances, including obligations for a partici-
9 pation share in the acceptances, growing out of domestic transactions shall
10 not exceed 50% of the aggregate of all acceptances, including obligations
11 for a participation share in the acceptances, authorized for the savings
12 bank under this section.
13 (e) A savings bank shall not accept bills of exchange, or be obligated
14 for a participation share in such bills, whether in a foreign or domestic
15 transaction, for any one person, partnership, corporation, association or
16 other entity in an amount equal at any time in the aggregate to more than
17 10% of the capital and surplus of a stock savings bank and more than 10%
18 of the total capital of a mutual savings bank, unless the savings bank is
19 secured either by attached documents or by some other actual security
20 growing out of the same transaction as the acceptance.
21 (f) If a savings bank issues an acceptance, the limitations of this sec-
22 tion do not apply to that portion of an acceptance that is issued by the
23 savings bank and is covered by a participation agreement sold to a bank,
24 out-of-state bank, national bank, association or other savings bank.
25 Sec. 91. (a) The total loans and extensions of credit by a stock savings
26 bank to a person at no time shall exceed 25% of the capital and surplus
27 of the stock savings bank.
28 (b) The total loans and extensions of credit by a mutual savings bank
29 to a person at no time shall exceed 25% of the total capital of the mutual
30 savings bank.
31 (c) If the commissioner determines that the interests of a group of
32 more than one person, copartnership, association or corporation are so
33 interrelated that they should be considered as a unit for the purpose for
34 which credit was extended, the total loans and extensions of credit of that
35 group acquired at any time shall be combined and considered loans and
36 extensions of credit acquired from one customer in applying the limita-
37 tions of this section through section 92.
38 (d) A savings bank is not considered to have violated this section
39 through section 92 solely by reason of the fact that the indebtedness of a
40 group then held exceeds the limitations of this section through section
41 92 at the time of a determination by the commissioner that the indebt-
42 edness of that group shall be combined, but if required by the commis-
43 sioner the savings bank shall make a reasonable attempt to dispose of
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1 indebtedness of the group in the amount in excess of the limitations
2 within a reasonable time determined by the commissioner.
3 (e) The limitations under subsections (a) and (b) shall not apply to
4 loans and extensions of credit described in sections 91 and 92.
5 (f) As used in this section and sections 92 and 93:
6 (1) ``Loan and extension of credit'' or ``loan or extension of credit''
7 includes all direct or indirect advances of funds to a person made on the
8 basis of an obligation of that person to repay the funds or repayable from
9 specific property pledged by or on behalf of the person. To the extent
10 specified by the commissioner, loan and extension of credit or loan or
11 extension of credit includes any liability of a savings bank to advance funds
12 to or on behalf of a person under a contractual commitment. Such term
13 also includes the cost of purchase of personal property for the purpose
14 of leasing the property to a person. Loan and extension of credit or loan
15 or extension of credit does not include investment securities held by a
16 savings bank under section 70.
17 (2) ``Person'' means an individual, partnership, association, corpora-
18 tion, governmental entity or any other legal entity.
19 Sec. 92. All of the following loans and extensions of credit are not
20 subject to a limitation based upon capital and surplus, or total capital
21 under section 90 or 91:
22 (a) A loan or extension of credit arising from the discount of com-
23 mercial or business paper evidencing an obligation to the person nego-
24 tiating it with recourse.
25 (b) The purchase of banker's acceptances of another bank of the kind
26 described in paragraph 7 of section 13 of the federal reserve act.
27 (c) A loan or extension of credit to a financial institution or to a re-
28 ceiver, conservator, or any other agent or supervising authority in charge
29 of the business and property of the financial institution, when the loan or
30 extension of credit is approved by the commissioner.
31 (d) A loan or extension of credit to a customer, secured or covered
32 by guarantees or by commitments or agreements to take over or to pur-
33 chase the loan or extension of credit, made by a federal reserve bank or
34 by the United States, or a department, bureau, board, commission, or
35 establishment of the United States, including a corporation wholly owned
36 directly or indirectly by the United States.
37 (e) A loan or extension of credit from one business day to the next to
38 a bank, out-of-state bank, national bank, association, or savings bank of
39 excess reserve balances from time to time maintained under section 19
40 of the federal reserve act.
41 (f) A loan or extension of credit secured by bonds, notes, certificates
42 of indebtedness, or treasury bills of the United States or by other obli-
43 gations fully guaranteed as to principal and interest by the United States.
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1 (g) A loan or extension of credit secured by a loan agreement between
2 a local public agency or a public housing agency and an instrumentality
3 of the United States pursuant to federal housing legislation under which
4 funds will be provided for payment of the obligation secured by the loan
5 agreement.
6 (h) A loan or extension of credit arising from securities purchased
7 under an agreement to resell.
8 (i) A loan or extension of credit to the student loan marketing asso-
9 ciation.
10 (j) A loan or extension of credit fully secured by a segregated deposit
11 account in the lending savings bank.
12 (k) A loan or extension of credit arising from the acceptance by a
13 savings bank of drafts or bills of exchange drawn upon the savings bank,
14 or a savings bank's participation in drafts or bills of exchange drawn upon
15 and accepted by a bank, out-of-state bank, national bank, association or
16 savings bank under section 89.
17 Sec. 93. All of the following limitations based upon capital and sur-
18 plus shall apply:
19 (a) Loans and extensions of credit to a customer secured by bills of
20 lading, warehouse receipts, or similar documents transferring or securing
21 title to readily marketable staples shall be subject to a limitation of 30%
22 of capital and surplus of a stock savings bank, or 30% of total capital of a
23 mutual savings bank, if the value of the staples securing the loans or
24 extensions of credit at all times equals or exceeds 115% of the outstanding
25 amount of the loans or extensions of credit. The staples shall be fully
26 covered by insurance if it is customary to insure the staples.
27 (b) Loans or extensions of credit to a customer secured by shipping
28 documents or instruments transferring or securing title covering livestock,
29 or giving a lien on livestock, if the value of the livestock securing the
30 obligation is not at any time less than 115% of the face amount of the
31 notes covered, shall be subject to a limitation of 30% of capital and surplus
32 of a stock savings bank, or 30% of total capital of a mutual savings bank.
33 Loans or extensions of credit arising from the discount by dealers in dairy
34 cattle of paper given in payment for dairy cattle, which paper carries a
35 full recourse indorsement or unconditional guarantee of the seller and
36 which are secured by the cattle being sold, shall be subject to a limitation
37 of 30% of capital and surplus.
38 (c) Loans or extensions of credit arising from the discount of nego-
39 tiable or nonnegotiable installment consumer paper which carries a full
40 recourse indorsement or unconditional guarantee by a person transferring
41 the paper, shall be subject to a limitation of 30% of capital and surplus
42 of a stock savings bank, or 30% of total capital of a mutual savings bank.
43 If the savings bank's files or the knowledge of its officers of the financial
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1 condition of each maker of the consumer paper is reasonably adequate,
2 and an officer of the savings bank designated for that purpose by the
3 board of directors of the savings bank certifies in writing that the savings
4 bank is relying primarily upon the responsibility of each maker for the
5 payment of the loans or extensions of credit, the limitations of this section
6 as to the loans and extensions of credit of each maker shall be the sole
7 applicable loan limitation. The certification shall be retained as part of
8 the records of the savings bank.
9 Sec. 94. (a) A stock savings bank whose capital, in the opinion of the
10 commissioner, has become impaired by losses or otherwise, within two
11 months after receiving notice of impairment from the commissioner, shall
12 correct the deficiency in the capital by an assessment upon the share-
13 holders pro rata on the amount of capital stock held by each. If a stock
14 savings bank fails to restore its capital within two months after receiving
15 notice from the commissioner or, within the same period, fails to take
16 steps to liquidate its business and affairs a receiver may be appointed for
17 the savings bank under this act. The commissioner may grant extensions
18 of time in order to allow the savings bank to meet the deficiency in the
19 capital.
20 (b) If any part of the capital of a savings bank consists of preferred
21 stock, the determination of whether or not the capital of the savings bank
22 is impaired and the amount of impairment shall be based upon the par
23 value of its stock even though the amount which the holders of the pre-
24 ferred stock shall be entitled to receive in the event of retirement or
25 liquidation shall be in excess of the par value of the preferred stock.
26 (c) The directors of a savings bank whose capital has become im-
27 paired by losses or otherwise shall levy within the two month period an
28 assessment upon the stock of the savings bank to repair the deficiency,
29 and give notice of the action of the commissioner and the amount of the
30 assessment that each shareholder must pay for the purpose of making
31 good the deficiency to each shareholder by written notice personally
32 served or mailed to the shareholder at the shareholder's last known ad-
33 dress as appears from the records of the savings bank.
34 (d) If the assessment is levied by the directors and a shareholder
35 refuses or neglects to pay the assessment under this section within 30
36 days from the date of the notice of the amount to be paid, the directors
37 of the savings bank shall sell the stock of the shareholder to the highest
38 bidder at either public or private sale in the manner provided for the
39 disposition of collateral under the uniform commercial code.
40 (e) A sale of stock under this section shall effect an absolute cancel-
41 lation of the outstanding certificates evidencing the stock sold and make
42 the certificates null and void and new certificates shall be issued by the
43 savings bank to the new purchaser. Out of the proceeds of the stocks sold,
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1 the directors shall pay the necessary costs of sale and the amount of
2 assessment levied on the stocks and any remaining balance shall be paid
3 to the person whose stock has been sold.
4 (f) The holders of preferred stock shall not be liable for assessments
5 to restore impairment in the capital of a savings bank.
6 Sec. 95. If the directors or officers of a savings bank knowingly vio-
7 late or knowingly permit any of the agents, officers or directors of a sav-
8 ings bank to violate this act or rules and regulations of the commissioner
9 made under this act, those directors or officers shall be liable in their
10 personal and individual capacity for all damages that the savings bank,
11 any shareholder or any other person sustains in consequence of the vio-
12 lation. Any action to recover damages shall be brought within three years
13 from the time of the violation.
14 Sec. 96. An officer or employee of a savings bank, in such person's
15 individual capacity, shall not act as agent in the sale of stock or other
16 securities to another person, or receive directly or indirectly any consid-
17 eration or commission resulting from the sale of stock or other securities
18 by others to the savings bank of which such person is employed, unless
19 authorized by order or declaratory ruling of the commissioner.
20 Sec. 97. An officer, director or employee of a savings bank shall not
21 receive any consideration or gratuity from a borrower for procuring a loan
22 from the savings bank.
23 Sec. 98. (a) The board of directors shall require every employee con-
24 cerned in the handling of money, accounts or securities of the savings
25 bank, who can be bonded, to be bonded by a surety company authorized
26 to do business in this state in an amount determined by the board. A
27 surety bond may cover one or more employees. The savings bank shall
28 pay for any surety bonds required of its employees.
29 (b) The commissioner shall require every savings bank to provide
30 reasonable protection and indemnity against burglary, defalcation, and
31 other reasonably required insurable losses. Whenever a savings bank re-
32 fuses to comply with the requirements of this section, the commissioner
33 may contract for the protection and indemnity and charge the costs to
34 the savings bank. If the charge is not paid, the commissioner shall collect
35 the costs in an action instituted by the attorney general.
36 Sec. 99. (a) The commissioner may require reports from a savings
37 bank whenever, in the commissioner's judgment, they are necessary to
38 inform the commissioner fully as to the condition of the savings bank.
39 The commissioner may require publication of reports and proof of pub-
40 lication by a date determined by the commissioner and in the manner
41 and form as the commissioner may prescribe, except that the commis-
42 sioner shall give a bank at least 30 days written notice of the date required
43 for the publication of reports.
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1 (b) A savings bank that does not make and transmit to the commis-
2 sioner a report required by this section shall be subject to a penalty de-
3 termined by the commissioner.
4 Sec. 100. Notwithstanding any other provision of law, the board of
5 directors of a savings bank, with the approval of the commissioner, may
6 regulate and prescribe the terms, conditions, bylaws and rules under
7 which deposits, other funds and assets may be received, conserved, paid
8 out, withdrawn or otherwise disposed of whenever in the opinion of the
9 commissioner an emergency exists in the affairs of a savings bank and the
10 action is advisable to conserve, safeguard and protect depositors, borrow-
11 ers, deposits, moneys, funds, assets and the business of the savings bank
12 and all parties in interest, including the public.
13 Sec. 101. (a) Except as otherwise provided in this section, a savings
14 bank or savings bank officer shall not give preference to a depositor or
15 creditor by pledging the assets of the savings bank as collateral security
16 or otherwise.
17 (b) A savings bank, with the written consent of the commissioner,
18 may pledge its assets in an amount not in excess of 10% of its total deposits
19 for the purpose of securing the following:
20 (1) Funds belonging to the United States or belonging to or being
21 administered by an officer, instrumentality, or agent of the United States,
22 funds of estates being administered by a federal court under a federal
23 bankruptcy law, and other funds when required or permitted to do so
24 under the laws of the United States or an order of a federal court; and
25 (2) surplus funds of the state held by the state treasurer.
26 (c) A savings bank shall not pledge its assets for the purpose of se-
27 curing funds belonging to any other political subdivision of this state.
28 (d) The requirements, restrictions and limitations imposed by this
29 section shall not apply to the pledging of an obligation of the United
30 States, direct or fully guaranteed, or both, for the purpose of securing a
31 deposit of the United States when the deposit is established coincidentally
32 with the purchase of an obligation of the United States by or through an
33 institution.
34 (e) A savings bank may pledge its assets to secure liabilities of all of
35 the following types:
36 (1) In the case of member banks, liabilities incurred under the federal
37 reserve act, chapter 6. In the case of nonmember banks, liabilities in-
38 curred through borrowing under the same conditions as are imposed
39 upon members of the federal reserve system by the federal reserve act,
40 chapter 6;
41 (2) in the case of federal home loan bank members, liabilities in-
42 curred under the federal home loan bank act, chapter 522;
43 (3) liabilities incurred under former section 202 of title II of the fed-
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1 eral farm loan act;
2 (4) liabilities incurred on account of a loan made with the express
3 approval of the commissioner under section 99(c);
4 (5) liabilities incurred on account of borrowings from one business
5 day to the next under section 19 of the federal reserve act, chapter 6; and
6 (6) liabilities incurred on account of securities sold under a repur-
7 chase agreement.
8 Sec. 102. Except where required or permitted under the federal re-
9 serve act, or the federal home loan bank act, a savings bank shall not
10 deposit an amount in excess of 10% of the capital and surplus of a stock
11 savings bank, or 10% of the total capital of a mutual savings bank, with
12 any other savings bank, state chartered bank, association or national bank.
13 A savings bank may deposit an amount not to exceed 15% of the capital
14 and surplus of a stock savings bank, or 15% of the total capital of a mutual
15 savings bank in any legal depository in a reserve city designated by the
16 commissioner.
17 Sec. 103. A transfer of any assets of a savings bank to its shareholders
18 or members, or to its creditors made after the commission of an act of
19 insolvency or made in contemplation of insolvency, with a view to pre-
20 venting the application of its assets in the manner prescribed by this act,
21 or with a view to the preference of one creditor over another, is null and
22 void.
23 Sec. 104. (a) Except as provided in subsection (b), a savings bank
24 that requires a mortgagor to maintain property or casualty insurance as a
25 condition to receiving a mortgage loan shall not require the amount of
26 the property or casualty insurance to be greater than the replacement
27 cost of the mortgaged building or buildings.
28 (b) A savings bank may require an amount of property or casualty
29 insurance that is required of the savings bank as a condition of a sale,
30 transfer or assignment of all or part of the mortgage to a third party. This
31 subsection does not require that the savings bank anticipate a sale, trans-
32 fer or assignment at the time the mortgage loan is made.
33 Sec. 105. (a) An overdraft existing for 90 days shall be charged off to
34 the profit and loss account of the savings bank at the expiration of that
35 time.
36 (b) A director or executive officer of a savings bank shall not know-
37 ingly overdraw such person's account.
38 (c) All debts due to a savings bank on which interest is past due and
39 unpaid for a period of six months, unless the debts are well secured and
40 in process of collection or the debts constitute claims against solvent es-
41 tates in probate, shall be charged off to the reserve for bad debts or the
42 profit and loss account of the savings bank at the expiration of that time.
43 Sec. 106. (a) If a savings bank has refused to pay its deposits or ob-
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1 ligations in accordance with the terms under which the deposits or obli-
2 gations were incurred, or whenever a savings bank becomes insolvent,
3 has refused to submit its books, papers and records for inspection by the
4 commissioner, appears to the commissioner to be in an unsafe or unsound
5 condition, or the appointment of a conservator is required under section
6 6(e), the commissioner shall either appoint a conservator under section
7 110 with the attorney general representing the commission, or shall apply
8 to the district court for the county in which the savings bank is located
9 for the appointment of a receiver for the savings bank.
10 (b) In a proceeding for the appointment of a receiver, the commis-
11 sioner shall request that the court appoint the federal deposit insurance
12 corporation as the receiver if the deposits in the savings bank are insured
13 to any extent by that corporation.
14 (c) The court may act upon the application without notice to any
15 person but if at any time it appears to the court that none of the claimed
16 reasons for receivership did in fact exist, the receivership shall be dis-
17 solved and the proceedings terminated.
18 (d) If the federal deposit insurance corporation accepts the appoint-
19 ment as receiver, it may act without bond.
20 Sec. 107. (a) Subject to court approval, a receiver may do any of the
21 following:
22 (1) Take possession of the books, records and assets of the savings
23 bank and collect all debts, dues and claims belonging to the savings bank;
24 (2) sue and defend, compromise and settle all claims involving the
25 savings bank;
26 (3) sell any and all real and personal property;
27 (4) exercise all fiduciary functions of the savings bank as of the date
28 of the commencement of the receivership;
29 (5) pay all expenses of the receivership, which expenses shall be a
30 first charge upon the assets of the savings bank and be fully paid before
31 any final distribution or payment of dividends to creditors or shareholders;
32 (6) pay ratably any and all debts of the savings bank, except that debts
33 not exceeding $50 in amount may be paid in full but the holders of such
34 debts shall not be entitled to interest on the debts;
35 (7) repay, ratably, any amount which may have been paid in by a
36 shareholder by reason of assessments made upon the stock of the savings
37 bank by order of the commissioner in accordance with this act;
38 (8) pay, ratably, to the shareholders or members of the savings bank
39 in proportion to the number of shares or membership interests held and
40 owned the balance of the net assets of the savings bank after payment or
41 provision for payments as provided under paragraphs (5), (6) and (7);
42 (9) borrow money as may be necessary or expedient in aiding the
43 liquidation of the savings bank and to secure the borrowings by the
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1 pledge, hypothecation, or mortgage of the assets of the savings bank; and
2 (10) exercise other powers and duties as provided by the court under
3 the laws of this state applicable to the appointment of receivers.
4 (b) The receiver from time to time shall report to the commissioner
5 with respect to all of the receiver's acts and proceedings in connection
6 with the receivership.
7 Sec. 108. The full and exclusive procedures for the liquidation of a
8 savings bank under this act shall be the procedures prescribed in this act
9 and a receiver or other liquidating agent shall not be appointed for such
10 purpose or for any savings bank or its assets and property except as ex-
11 pressly provided in this act.
12 Sec. 109. (a) If a savings bank has been closed and placed in receiv-
13 ership, and the federal deposit insurance corporation pays or makes avail-
14 able for payment the insured deposit liabilities of the closed savings bank,
15 the corporation, whether or not it has become receiver of the savings
16 bank, subrogated to all of the rights of the owners of the deposits against
17 the closed savings bank in the same manner and to the same extent as
18 subrogation of the corporation is provided for in the federal reserve act,
19 in the case of the closing of a national banking association.
20 (b) The rights of depositors and other creditors of the closed savings
21 bank shall be determined in accordance with the applicable provisions of
22 the laws of this state.
23 Sec. 110. (a) If any of the grounds set forth in section 112 authorizing
24 the appointment of a receiver exist or whenever the commissioner con-
25 siders it necessary in order to conserve the assets of a savings bank for
26 the benefit of the depositors and other creditors, the commissioner may
27 appoint a conservator for the savings bank and require of him or her a
28 bond and security as the commissioner considers necessary.
29 (b) The commissioner may appoint as conservator one of the bank
30 examiners of the office of state bank commissioner or some other com-
31 petent and disinterested person. The office of state bank commissioner
32 shall be reimbursed out of the assets of the conservatorship for all sums
33 expended by it in connection with the conservatorship as expenses or
34 otherwise.
35 (c) All expenses of a conservatorship shall be paid out of the assets
36 of the savings bank, upon the approval of the commissioner. The expenses
37 shall be a first charge upon the assets and shall be fully paid before any
38 final distribution or payment of dividends to creditors, shareholders or
39 members.
40 (d) The conservator, under the direction of the commissioner, shall
41 take possession of the books, records, and assets of the savings bank, and
42 take such action as may be necessary to conserve the assets of the savings
43 bank pending further disposition of its business as provided by law. The
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1 conservator shall have all the rights, powers and privileges of receivers of
2 banks appointed under this act and shall be subject to the obligations and
3 penalties, not inconsistent with this act with respect to conservators, to
4 which receivers are subject. During the time that the conservator remains
5 in possession of the savings bank, the rights of all parties with respect to
6 the savings bank, subject to other provisions of this act with respect to
7 conservators, shall be the same as if a receiver had been appointed. The
8 conservator may execute the discharge of any real estate mortgage held
9 as part of the assets of the savings bank.
10 (e) While a savings bank is in the hands of the conservator appointed
11 by the commissioner, the commissioner may require the conservator to
12 set aside and make available for withdrawal by depositors and payment
13 to other creditors, on a ratable basis, such amounts as in the opinion of
14 the commissioner may be used safely for that purpose. The commissioner
15 may permit the conservator to receive deposits. Deposits received while
16 the savings bank is in the hands of the conservator shall not be subject to
17 any limitation as to payment or withdrawal. The deposits and any new
18 assets acquired on account of the deposits shall be segregated and held
19 especially for the new deposits and not be used to liquidate any indebt-
20 edness of the savings bank existing at the time that a conservator was
21 appointed or any subsequent indebtedness incurred for the purpose of
22 liquidating any indebtedness of the savings bank existing at the time the
23 conservator was appointed. Deposits received while the savings bank is
24 in the hands of the conservator shall be kept on hand in cash, invested in
25 the direct obligations of the United States, or deposited in banks desig-
26 nated by the commissioner.
27 (f) With the prior approval of the commissioner, the conservator of
28 a savings bank may borrow money as necessary or expedient in aiding the
29 operation, reorganization, or liquidation of the savings bank, including
30 the payment of liquidating dividends, and may secure the loans by the
31 pledge, hypothecation or mortgage of the assets of the savings bank.
32 (g) If the commissioner is satisfied that it may be done safely and that
33 it would be in the public interest, the commissioner may terminate the
34 conservatorship and permit the savings bank to resume the transaction of
35 its business subject to such terms, conditions, restrictions and limitations
36 as the commissioner prescribes.
37 Sec. 111. (a) After 15 days from the date upon which the affairs of a
38 savings bank have been turned back to its board of directors by the con-
39 servator, either with or without being reorganized, the provisions of sec-
40 tion 110(e) with respect to the segregation of deposits shall no longer be
41 effective.
42 (b) Before the conservator turns back the affairs of the savings bank
43 to its board of directors, the commissioner shall publish a notice in form
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1 approved by the commissioner, stating the date on which the affairs of
2 the savings bank will be returned to its board of directors and that the
3 provisions of section 110(e) will not be effective after 15 days from that
4 date. On the date of the publication of the notice, the conservator shall
5 immediately send to every person who deposited money in the savings
6 bank after the appointment of a conservator, a copy of the notice by mail
7 addressed to the last known address of the person as shown by the records
8 of the savings bank. The conservator shall send similar notice in like man-
9 ner to every person making deposit in the savings bank under section
10 110(e) after the date of the newspaper publication and before the time
11 when the affairs of the bank are returned to its directors.
12 Sec. 112. (a) The commissioner may issue orders or declaratory rul-
13 ings the commissioner considers necessary in order to carry out the pro-
14 visions of this act as to receivers and conservators.
15 (b) All compensation and expenses allowed to reimburse the office
16 of state bank commissioner when a bank examiner acts as receiver or
17 conservator and all expenses for state supervision of receiverships and
18 conservatorships under this act shall be turned over to the state treasurer
19 and credited to a revolving fund to be held to reimburse the office of
20 state bank commissioner in connection with the provisions of this act with
21 respect to receivers and conservators of savings banks.
22 Sec. 113. (a) In a reorganization of a savings bank under a plan of a
23 kind that requires the consent of depositors and other creditors or of
24 shareholders or members or of both depositors and other creditors and
25 shareholders or members, the reorganization shall become effective when
26 both of the following occur:
27 (1) The commissioner is satisfied that the plan of reorganization is
28 fair and equitable as to all depositors, other creditors and shareholders
29 or members and is in the public interest and has approved the plan subject
30 to such conditions, restrictions and limitations as the commissioner re-
31 quires; and
32 (2) after reasonable notice of the reorganization as determined by the
33 commissioner, depositors and other creditors of the savings bank repre-
34 senting not less than 75% in amount of the sum of its total deposits and
35 other liabilities as shown by the books of the savings bank, or shareholders
36 owning at least 2/3 of its outstanding capital stock or 2/3 of the eligible
37 voting members if it is a mutual savings bank as shown by the books of
38 the savings bank, shall have consented in writing to the plan of reorgan-
39 ization. Claims of depositors or other creditors which will be satisfied in
40 full under the plan of reorganization shall not be included among the total
41 deposits and other liabilities of the savings bank in determining the 75%
42 of total deposits. The term ``reorganization'' as used in this section may
43 be construed to include the establishment of a new savings bank in con-
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1 formity with a plan of reorganization.
2 (b) When the reorganization becomes effective, all books, records
3 and assets of the savings bank shall be disposed of in accordance with the
4 plan and the affairs of the savings bank shall be conducted by its board
5 of directors in the manner provided by the plan and under the conditions,
6 restrictions and limitations that are prescribed by the commissioner.
7 (c) In a reorganization which has been approved and become effec-
8 tive, all depositors and other creditors and shareholders or members of
9 the savings bank, whether or not they have consented to the plan of
10 reorganization, shall be subject to and bound by its provisions and claims
11 of all depositors and other creditors shall be treated as if they had con-
12 sented to the plan or reorganization. The state or any department, agency
13 or political subdivision of the state holding a claim against the savings
14 bank is authorized to participate in a plan of reorganization as any other
15 creditor and shall be subject to and bound by its provisions as any other
16 creditor.
17 Sec. 114. (a) Subject to approval by the commissioner, a savings bank
18 may consolidate with any number of consolidating organizations to form
19 a consolidated savings bank.
20 (b) The approval of the commissioner shall be based on an exami-
21 nation or other appropriate analysis of each consolidating organization
22 and the agreement of consolidation. A consolidation shall not be made to
23 defeat or defraud any of the creditors of any of the consolidating organ-
24 izations.
25 (c) A majority of the directors of each organization proposing to con-
26 solidate may enter into an agreement, signed by them, or by their des-
27 ignated representative or representatives, and under the seals of the re-
28 spective organizations, prescribing the terms and conditions of
29 consolidation, the mode of carrying the consolidation into effect and stat-
30 ing other facts required or permitted by this act and other applicable law
31 that are to be set out in the articles, as can be stated in the case of a
32 consolidation, to be stated in such altered form as the circumstances of
33 the case require, as well as the manner of converting the shares or mem-
34 bership interest of each of the consolidating organizations, into shares or
35 membership interest of the consolidated organization, with other details
36 and provisions as are considered necessary.
37 (d) The proposed consolidation agreement shall be submitted to the
38 members or shareholders of each consolidating organization, at a separate
39 meeting called by the directors for the sole purpose of considering the
40 agreement. A notice indicating the time, place, and purpose of the meet-
41 ing shall be given by publication at least once a week for four consecutive
42 weeks preceding the date of the meeting. A copy of the notice shall also
43 be mailed to each member or shareholder of each consolidating organi-
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1 zation at his or her last known address as appears from the records of the
2 consolidating organizations, by registered or certified mail, at least 10 days
3 prior to the date of the meeting. Notice by publication or otherwise shall
4 not be required if it is waived. At the meeting the proposed consolidation
5 agreement shall be considered and a vote by ballot, in person or by proxy,
6 taken for the adoption or rejection of the agreement. At the meeting each
7 share of stock shall entitle the holder to one vote. If the votes of members
8 or shareholders of each consolidating organization representing a majority
9 of the total number of shares of each class of each consolidating organi-
10 zation's outstanding capital stock, or a majority of eligible voting members
11 of a mutual organization, are cast for the adoption of the agreement, that
12 fact shall be certified on the agreement by the cashier or assistant cashier,
13 secretary or assistant secretary of each of the consolidating organizations.
14 If the agreement is adopted and certified, it shall be acknowledged by
15 the president or a vice president of each of the consolidating organiza-
16 tions, before any officer authorized to take acknowledgment of deeds, to
17 be the respective act, deed and agreement of each of the consolidating
18 organizations. If a bank, out-of-state bank, national bank, association or
19 savings bank is a consolidating organization and approval is required by
20 the laws of another state or of the United States, that organization shall
21 furnish a certified copy of consent or approval of the appropriate state or
22 federal regulator of the consolidation to the commissioner. The consoli-
23 dation agreement required by this section shall be filed with the com-
24 missioner who shall certify upon the agreement the date it was filed. The
25 filing with the commissioner shall be the act of consolidation of the con-
26 solidating organizations. The consolidation agreement or a copy certified
27 by the commissioner is evidence of the agreement and act of consolidation
28 of the organizations and the observance and performance of all necessary
29 acts and conditions precedent to the consolidation. A bank holding com-
30 pany or thrift holding company that is the sole shareholder of all of the
31 outstanding issued stock of a savings bank, bank, out-of-state bank, na-
32 tional bank or association that is a consolidating organization in a proposed
33 consolidation may waive the shareholder meeting requirement of this
34 subsection.
35 (e) In affecting a consolidation, stock of the consolidated savings bank
36 may be issued in accordance with this act and as provided by the terms
37 of the consolidation agreement free from any preemptive rights of the
38 shareholders of the respective consolidating organizations.
39 Sec. 115. A savings bank may consolidate with any number of con-
40 solidating organizations to form a consolidated organization in accordance
41 with the laws under which the consolidated organization is chartered, if
42 all of the following apply:
43 (a) The consolidating organizations provide notice to the commis-
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1 sioner by filing a copy of the application for consolidation within 10 days
2 after the date the application is filed with the appropriate federal regu-
3 lator.
4 (b) The consolidated organization complies with section 116(c) with
5 respect to notice of consolidation, but that notice is limited to a court,
6 public tribunal, agency or officer of this state.
7 Sec. 116. (a) When filing and the approval of the consolidation agree-
8 ment as required by section 114 have been completed, the corporate
9 existence of each consolidating organization is merged into and continued
10 in the consolidated savings bank. To the extent authorized by this act, the
11 consolidated savings bank possesses all the rights, interests, privileges,
12 powers and franchises and is subject to all the restrictions, disabilities,
13 liabilities and duties of each of the consolidating organizations. The title
14 to all property, real, personal and mixed is transferred to the consolidated
15 savings bank, and shall not revert or be in any way impaired by reason of
16 this act.
17 (b) A consolidated savings bank holds and enjoys the same and all
18 rights of property, franchises and interests including appointments, des-
19 ignations and nominations and all other rights and interests in any fidu-
20 ciary capacity, in the same manner and to the same extent as those rights
21 and interests were held or enjoyed by each consolidating organization at
22 the time of the consolidation. If a consolidating organization at the time
23 of consolidation was acting under appointment of any court in a fiduciary
24 capacity, the consolidated savings bank is subject to removal by a court
25 of competent jurisdiction.
26 (c) A consolidated savings bank shall file with each court or other
27 public tribunal, agency or officer in any state by which any of the con-
28 solidating organizations shall have been appointed in the capacity of fi-
29 duciary or agent, and in the court file of each estate, suit or any other
30 proceeding in which any of them has been acting, an affidavit setting forth
31 the fact of consolidation, the name of each consolidating organization, the
32 name of the consolidated savings bank, the location of its main office and
33 the amount of its capital and surplus. This subsection does not require
34 filing of an affidavit related to any consolidating organization that after
35 the consolidation retains the same corporate name, charter and main of-
36 fice location.
37 Sec. 117. (a) Whether it maintains a presence in this state, a consol-
38 idated organization or any of its successors in interest are subject to serv-
39 ice of process in a proceeding in this state for enforcement of any obli-
40 gation incurred in this state by a consolidating organization that is or was
41 a party to a consolidation.
42 (b) An action or proceeding by or against a consolidating organization
43 in a court or any other public tribunal of this state may be prosecuted to
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1 judgment, as if consolidation had not taken place or the consolidated
2 organization may be substituted in the place of any consolidating organ-
3 ization whose existence has ceased.
4 Sec. 118. A savings bank, an out-of-state bank or a national bank that
5 consolidates its operations with one or more banks, out-of-state banks,
6 national banks, associations or savings banks may operate the consolidated
7 or acquired bank, out-of-state bank, national bank, association, or savings
8 bank branch or branches located in this state as a branch or branches of
9 the consolidated or acquired savings bank.
10 Sec. 119. (a) As used in this section:
11 (1) ``Existing association'' means a stock association engaged in the
12 savings and loan business or federal savings bank business prior to the
13 consolidation under this section;
14 (2) ``existing bank'' means a savings bank, national banking association
15 or state chartered bank engaged in the business of banking prior to the
16 consolidation under this section;
17 (3) ``new bank'' means a savings bank not engaged in the business of
18 banking prior to the consolidation under this section;
19 (b) Notwithstanding any other section of this act:
20 (1) Persons as provided in section 24 may organize and incorporate
21 as the incorporator or incorporators a new bank having its principal office
22 in the same city as the principal office of an existing bank or existing
23 association in the manner specified in section 25, but without regard to
24 section 25(b) and (c)(2), (3) and (5), and section 27, if the new bank is
25 organized for the sole purpose of affecting its consolidation under section
26 114 with an existing bank or existing association having its principal office
27 in the same city as the new bank and if upon completion of the consoli-
28 dation a bank holding company becomes the owner of all of the outstand-
29 ing voting shares of the consolidated organization, other than shares nec-
30 essary to qualify directors. The new bank and the existing bank may
31 consolidate under the charter of either bank. The new bank and the ex-
32 isting association shall consolidate under the charter of the new bank and
33 sections 114, 116 and 118 are applicable with respect to the consolidation
34 except that the agreement of consolidation may provide that shares of
35 either or both the consolidating organizations, in lieu of being converted
36 into shares of the consolidated organization, will be converted into shares
37 or other securities of the bank holding company.
38 (2) A shareholder of the existing bank or existing association who
39 votes against the consolidation, or who has given notice in writing to that
40 bank or association at or prior to the meeting called for the purpose of
41 considering the agreement of consolidation that such person dissents
42 from the consolidation, is entitled to receive in cash from the consolidated
43 organization the fair value of all shares held by such person, if and when
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1 the consolidation is consummated, upon written request made to the
2 consolidated organization at any time within 30 days after the date of
3 consummation of the consolidation, accompanied by the surrender of his
4 or her stock certificates. Upon the filing of the written request and the
5 surrender of stock certificates, the shareholder shall cease to have any of
6 the rights of a shareholder except the right to be paid the fair value of
7 such person's shares. The request having been made, shall not be with-
8 drawn except with the written consent of the consolidated organization.
9 The fair value of the shares shall be determined, as of the date on which
10 the meeting of shareholders of the existing bank or existing association
11 was held adopting the agreement of consolidation, by a qualified and
12 independent appraiser selected by the commissioner upon written appli-
13 cation filed by a dissenting shareholder entitled to receive the fair value
14 of such person's shares, or by the consolidated organization. The appraiser
15 selected shall file a written report of appraisal with the commissioner,
16 who in turn shall forward copies to all interested parties. The valuation
17 determined by the appraiser is final and binding on all parties as to the
18 fair value of the shares. The consolidated organization shall pay to each
19 dissenting shareholder entitled the fair value of such person's shares
20 within 30 days following the receipt of the written report of the appraiser.
21 The fees and expenses of the appraisal, which shall be approved by the
22 commissioner, shall be paid by the consolidated organization. The agree-
23 ment of consolidation shall provide the manner of disposing of the shares
24 of the existing bank or existing association surrendered by the dissenting
25 shareholders.
26 (3) The consolidated organization, whether it is the new bank or the
27 existing bank, shall have the right, notwithstanding any of the require-
28 ments, restrictions and limitations of section 77, or any other provision of
29 law, to retain and continue to operate or to establish and operate as its
30 principal office the principal office of the existing bank, and as its
31 branches all branches of the existing bank, that were legally operating
32 immediately prior to the consolidation or merger, whether the principal
33 office or the branch or branches could, at the time the consolidation or
34 merger becomes effective, have been established or reestablished con-
35 sistently with the requirements, restrictions and limitations of section 77,
36 or any other provision of law. For the purposes of this section, consoli-
37 dation and merger are interchangeable and each means and includes the
38 consolidation or merger of savings banks, federal or state savings and loan
39 associations, federal savings banks, state chartered banks or of national
40 banking associations in any manner provided by this act or by the national
41 bank laws.
42 Sec. 120. (a) As used in this section:
43 (1) ``Consolidation agreement'' means an agreement entered into
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1 among an existing bank or an existing association, a new bank, and a new
2 holding company that provides both of the following:
3 (A) That the existing bank or existing association and the new bank
4 will be consolidated or merged; and
5 (B) that upon consummation of the consolidation or merger, the
6 shares of capital stock of the existing bank or existing association will be
7 converted into or exchanged for shares of the capital stock or other se-
8 curities of the new holding company;
9 (2) ``existing association'' means a stock association that is a party to
10 a consolidation agreement and is engaged in the savings and loan business
11 prior to the consolidation or merger provided for in the consolidation
12 agreement;
13 (3) ``existing bank'' means a savings bank, national banking association
14 or state chartered bank that is a party to a consolidation agreement and
15 is engaged in the business of banking prior to the consolidation or merger
16 provided for in the consolidation agreement;
17 (4) ``new bank'' means a savings bank that is a party to a consolidation
18 agreement and is not engaged in the business of banking prior to the
19 consummation of the consolidation or merger provided for in the con-
20 solidation agreement;
21 (5) ``new holding company'' means a corporation that is not a savings
22 bank, association or national banking association and as to which all of
23 the following apply:
24 (A) The corporation is a party to a consolidation agreement;
25 (B) prior to its acquisition of an existing bank or existing association
26 under the consolidation agreement, the corporation does not have control
27 of a bank, an association or national banking association and has not trans-
28 acted any business except business incidental to its organization and to
29 the entering into, and performance of, the consolidation agreement;
30 (C) upon consummation of the consolidation or merger provided for
31 in the consolidation agreement, the corporation will become a bank hold-
32 ing company;
33 (D) immediately after its acquisition of an existing bank or existing
34 association pursuant to the consolidation agreement, the corporation will
35 not have control of more than one savings bank; and
36 (E) prior to the acquisition of an existing bank or existing association
37 under the consolidation agreement, the corporation is not, and immedi-
38 ately after acquisition of control of the existing bank or existing association
39 will not be, controlled by a bank holding company; and
40 (6) ``control'' means control as defined in section 2 of the bank hold-
41 ing company act of 1956.
42 (b) A new holding company may apply to the commissioner for ap-
43 proval of the terms and conditions of the issuance of the shares or other
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1 securities of the new holding company into which the shares of an existing
2 bank or existing association are to be converted, or for which the shares
3 of the existing bank or existing association are to be exchanged, under a
4 consolidation agreement, and for approval of the terms and conditions of
5 the conversion or exchange. The application for approval shall be in a
6 form, contain information, and be accompanied by documents as required
7 by the commissioner. Within 30 days after the application is filed, the
8 commissioner shall conduct a hearing upon the fairness of the terms and
9 conditions at which all persons to whom it is proposed to issue the se-
10 curities in the conversion or exchange shall have the right to appear.
11 Within 20 days after the hearing, the commissioner shall either approve
12 or disapprove the terms and conditions of the issuance and of the con-
13 version or exchange. This subsection shall not be construed to require a
14 new holding company to apply for or obtain the approval of the commis-
15 sioner of the terms and conditions of the issuance and conversion or
16 exchange of securities provided for in a consolidation agreement or to
17 make unlawful any transaction that is lawful without regard to this sub-
18 section.
19 Sec. 121. (a) Upon the affirmative votes of the shareholders repre-
20 senting 2/3 of the total number of shares of each class of its outstanding
21 capital stock, a savings bank may be converted under the laws of this state
22 into a stock association or under the laws of the United States into a
23 national banking association or federal savings bank.
24 (b) The conversion of a savings bank into a stock association or a
25 national banking association shall not release the savings bank from its
26 obligations to pay and discharge all the liabilities created by law or in-
27 curred by it before becoming a stock association or a national banking
28 association or any tax imposed by the laws of this state up to the date of
29 its becoming a stock association or a national banking association in pro-
30 portion to the time that has elapsed since the last preceding payment or
31 any assessment, penalty or forfeiture imposed or incurred under the laws
32 of this state up to the date of its becoming a stock association or a national
33 banking association. No conversion shall be made to defeat or defraud
34 any of the creditors of the savings bank.
35 (c) Certified copies of all proceedings by the directors and share-
36 holders of the stock association or savings bank shall be filed with the
37 commissioner in triplicate and in addition, the savings bank shall furnish
38 a certified copy of consent or approval of the comptroller of the currency
39 or office of thrift supervision to the conversion if the consent or approval
40 is required by federal law. One copy of the proceedings shall be filed with
41 the office of state bank commissioner and the commissioner shall certify
42 and forward one copy of the proceedings to the county clerk of the county
43 in which the converted savings bank is located.
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1 (d) Upon the affirmative votes of 2/3 of the total membership of a
2 mutual savings bank, the mutual savings bank may be converted under
3 the laws of this state into a mutual state savings and loan association or
4 under the laws of the United States into a mutual federal savings and loan
5 association or federal savings bank.
6 (e) The conversion of a mutual savings bank into a state or federal
7 mutual savings and loan association shall not release the mutual savings
8 bank from its obligations to pay and discharge all the liabilities created
9 by law or incurred by it before becoming a state or federal savings and
10 loan association or any tax imposed by the laws of this state up to the date
11 of its becoming a state or federal savings and loan association in propor-
12 tion to the time that has elapsed since the last preceding payment or any
13 assessment, penalty, or forfeiture imposed or incurred under the laws of
14 this state up to the date of its becoming a state or federal savings and
15 loan association. No conversion shall be made to defeat or defraud any
16 of the creditors of the mutual savings bank.
17 (f) Certified copies of all proceedings by the members of the mutual
18 savings bank shall be filed with the commissioner in triplicate, and in
19 addition the mutual savings bank shall furnish a certified copy of consent
20 or approval of the office of thrift supervision to the conversion if the
21 consent or approval is required by federal law. One copy of the proceed-
22 ings shall be filed with the office of state bank commissioner and the
23 commissioner shall certify and forward one copy of the proceedings to
24 the county clerk of the county in which the converted mutual savings
25 bank is located.
26 Sec. 122. (a) With the approval of the commissioner, subject to sec-
27 tion 12(c), and upon the affirmative votes of the shareholders represent-
28 ing 2/3 of the total number of shares of each class of its outstanding capital
29 stock, a national banking association, federal savings bank, federal savings
30 and loan association or other federally chartered shareholder owned fi-
31 nancial institution doing business in this state and having an unimpaired
32 capital and surplus sufficient to entitle it to become a savings bank under
33 the provisions of existing laws of this state may be converted into a savings
34 bank if the conversion is not in contravention of any laws of the United
35 States. In such case, the articles of incorporation may be executed by a
36 majority of the directors of the national banking association, federal sav-
37 ings bank, federal savings and loan association or other federally chartered
38 financial institution. A majority of the directors, after executing the arti-
39 cles of incorporation, shall have the power to execute all other papers and
40 to do whatever may be required to complete its organization as a savings
41 bank.
42 (b) The shares of the savings bank may continue to be for the same
43 amount each as they were before the conversion, and the directors may
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1 continue to be directors of the savings bank until others have been elected
2 or appointed under the laws of this state.
3 (c) The approval of the commissioner shall be based on an exami-
4 nation of the national banking association, federal savings bank, federal
5 savings and loan association or other federally chartered financial insti-
6 tutions and of the proceedings had by its directors and shareholders with
7 respect to the conversion.
8 (d) A conversion shall not be made to defeat or defraud any of the
9 creditors of the national banking association, federal savings bank, federal
10 savings and loan association or other federally chartered financial insti-
11 tution.
12 (e) Subject to conditions as the commissioner prescribes, the com-
13 missioner may permit the converted savings bank to retain and carry, at
14 a value determined by the commissioner, assets of the converting national
15 banking association, federal savings bank, federal savings and loan asso-
16 ciation or other federally chartered financial institution as do not conform
17 to the legal requirements relative to assets acquired and held by savings
18 banks.
19 Sec. 123. (a) With the approval of the commissioner, subject to sec-
20 tion 14(c), and upon the affirmative vote of shareholders representing 2/3
21 of the total number of shares of each class of its outstanding capital stock,
22 a state chartered commercial bank, state chartered savings and loan as-
23 sociation, or other state chartered shareholder-owned financial institution
24 having an unimpaired capital and surplus sufficient to entitle it to become
25 a savings bank under the provisions of existing laws of this state may be
26 converted into a savings bank. In such case, the articles of incorporation
27 may be executed by a majority of the directors of the state chartered
28 commercial bank, state chartered savings and loan association, or other
29 state chartered financial institution. A majority of the directors, after ex-
30 ecuting the articles of incorporation, may execute all other papers and do
31 whatever may be required to complete its organization as a savings bank.
32 (b) The shares or membership interests of the savings bank may con-
33 tinue to be for the same amount each as they were before the conversion,
34 and the directors may continue to be directors of the savings bank until
35 others have been elected or appointed under the laws of this state.
36 (c) The approval of the commissioner shall be based on an exami-
37 nation of the state chartered commercial bank, state chartered savings
38 and loan association, or other state chartered financial institution and of
39 the proceedings had by its directors and shareholders with respect to the
40 conversion.
41 (d) A conversion shall not be made to defeat or defraud any of the
42 creditors of the state chartered commercial bank, state chartered savings
43 and loan association or other state chartered financial institution.
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1 (e) Subject to conditions as the commissioner prescribes, the com-
2 missioner may permit the converted savings bank to retain and carry, at
3 a value determined by the commissioner, assets of the converting state
4 chartered commercial bank, state chartered savings and loan association
5 or other state chartered financial institution which do not conform to the
6 legal requirements relative to assets acquired and held by savings banks.
7 Sec. 124. (a) With the approval of the commissioner, subject to sec-
8 tion 12(c), and upon the affirmative votes of 2/3 of the total membership
9 of a mutual federal savings and loan association, mutual federal savings
10 bank or other member owned federally chartered financial institution
11 doing business in this state and having an unimpaired capital and surplus
12 sufficient to entitle it to become a savings bank under the provisions of
13 existing laws of this state may be converted into a mutual or stock savings
14 bank if the conversion is not in contravention of any laws of the United
15 States. In such case, the articles of incorporation may be executed by a
16 majority of the directors of the federal savings and loan association, fed-
17 eral savings bank or other member-owned federally chartered financial
18 institution. A majority of the directors, after executing the articles of in-
19 corporation, shall have the power to execute all other papers and to do
20 whatever may be required to complete its organization as a savings bank.
21 (b) The shares or membership interests of the savings bank may con-
22 tinue to be for the same amount each as they were before the conversion,
23 and the directors may continue to be directors of the savings bank until
24 others have been elected or appointed under the laws of this state.
25 (c) The approval of the commissioner shall be based on an exami-
26 nation of the federal savings and loan association, federal savings bank or
27 other member-owned federally chartered financial institution and of the
28 proceedings had by its directors and members with respect to the con-
29 version.
30 (d) A conversion shall not be made to defeat or defraud any of the
31 creditors of the federal savings and loan association, federal savings bank
32 or other member-owned federally chartered financial institution.
33 (e) Subject to conditions as the commissioner prescribes, the com-
34 missioner may permit the converted savings bank to retain and carry, at
35 a value determined by the commissioner, assets of the converting federal
36 savings and loan association, federal savings bank or other member-owned
37 federally chartered financial institution as do not conform to the legal
38 requirements relative to assets acquired and held by savings banks.
39 Sec. 125. (a) With the approval of the commissioner, subject to sec-
40 tion 12(c), and upon the affirmative votes of 2/3 of the total membership
41 of a mutual state savings and loan association, or mutual state savings
42 bank or other member owned state chartered financial institution having
43 an unimpaired capital and surplus sufficient to entitle it to become a
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1 savings bank under the provisions of existing laws of this state may be
2 converted into a mutual or stock savings bank. In such case, the articles
3 of incorporation may be executed by a majority of the directors of the
4 savings and loan association, or other member-owned state chartered fi-
5 nancial institution. A majority of the directors, after executing the articles
6 of incorporation, may execute all other papers and do whatever may be
7 required to complete its organization as a savings bank.
8 (b) The shares or membership interests of the savings bank may con-
9 tinue to be for the same amount each as they were before the conversion,
10 and the directors may continue to be directors of the savings bank until
11 others have been elected or appointed under the laws of this state.
12 (c) The approval of the commissioner shall be based on an exami-
13 nation of the savings and loan association or other member-owned state
14 chartered financial institution and of the proceedings had by its directors
15 and members with respect to the conversion.
16 (d) A conversion shall not be made to defeat or defraud any of the
17 creditors of the savings and loan association or other member-owned state
18 chartered financial institution.
19 (e) Subject to conditions as the commissioner prescribes, the com-
20 missioner may permit the converted savings bank to retain and carry, at
21 a value determined by the commissioner, assets of the converting savings
22 and loan association or other member-owned state chartered financial
23 institution which do not conform to the legal requirements relative to
24 assets acquired and held by savings banks.
25 Sec. 126. (a) If a conversion under sections 112 to 126 becomes ef-
26 fective, all the property of the converting organization, including all its
27 rights, title and interest in and to all property of whatsoever kind, whether
28 real, personal or mixed, and things in action, and every right, privilege,
29 and interest and asset of any conceivable value or benefit then existing,
30 belonging, or pertaining to it, or which would inure to it, shall immediately
31 by act of law and without any conveyance or transfer and without any
32 further act or deed, be vested in and become the property of the con-
33 verted organization, which shall have, hold, and enjoy the same in its own
34 right as fully and to the same extent as it was possessed, held, and enjoyed
35 by the converting organization.
36 (b) The converted organization shall be deemed to be a continuation
37 of the entity and of the identity of the converting organization. All the
38 rights, obligations, and relations of the converting organization to or in
39 respect to any person, estate, creditor, depositor, trustee or beneficiary
40 of any trust, and in, or in respect to, any executorship or trusteeship or
41 any other trust or fiduciary function, shall remain unimpaired.
42 (c) The converted organization shall succeed to all rights, obligations,
43 relations, trusts, duties and liabilities and shall execute and perform each
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1 and every trust and relation in the same manner as if the converted or-
2 ganization had itself assumed the trust or relation and the obligations and
3 liabilities.
4 (d) If the converting organization is acting as administrator, co-ad-
5 ministrator, executor, co-executor, trustee or co-trustee of or in respect
6 to any estate or trust being administered under the laws of this state, the
7 relation, as well as any other or similar fiduciary relations, and all rights,
8 privileges, duties and obligations shall remain unimpaired and shall con-
9 tinue into and in the converted organization from and as of the time of
10 taking effect of the conversion, irrespective of the date when the relation
11 may have been created or established and irrespective of the date of any
12 trust agreement or the date of the death of any testator or decedent whose
13 estate is being administered.
14 (e) A conversion shall not effect under the laws of this state a renun-
15 ciation or revocation of any letters of administration or letters testamen-
16 tary pertaining to the relation nor a removal or resignation from any ex-
17 ecutorship or trusteeship or other fiduciary relationship nor have the
18 effect as if the executor or trustee or other fiduciary had died or otherwise
19 become incompetent to act.
20 (f) A savings bank, national banking association, stock association or
21 federal savings bank resulting from a conversion under sections 122 to
22 126 shall have the right, notwithstanding any of the requirements, restric-
23 tions, and limitations of section 81 to the contrary, to retain and continue
24 to operate any and all branches of the converting organization that were
25 in lawful operation immediately prior to conversion, without being re-
26 quired to establish or reestablish any branch or branches under section
27 81 and irrespective of whether any branch or branches could, at the time
28 the conversion becomes effective, have been established or re-established
29 as a branch or branches of the converting or converted organization, con-
30 sistently with the requirements, restrictions, and limitations of section 76.
31 Sec. 127. The liability of any savings bank, national banking associ-
32 ation, stock association or federal savings bank or of the shareholders,
33 directors or officers thereof, or the rights or remedies of the creditors
34 thereof, or of persons transacting business with such entities, shall not be
35 lessened or impaired by virtue of the sale of all or substantially all of the
36 assets of such entities or by the consolidation of two or more organizations
37 or the conversion of an organization.
38 Sec. 128. (a) A mutual savings bank may apply to convert to a stock
39 savings bank. The application shall include a resolution of the board of
40 directors authorizing the application, proposed amendments to the arti-
41 cles of incorporation of the mutual savings bank to authorize the issuance
42 and sale of stock, a plan of conversion, and any other information as the
43 commissioner may require. Within 100 days of receipt of a completed
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1 application, the commissioner shall issue his or her approval or denial of
2 the proposed amendments to the articles of incorporation and the plan
3 of conversion, along with his or her preliminary approval or denial of the
4 conversion.
5 (b) Upon receipt of a preliminary approval to convert, a mutual sav-
6 ings bank shall obtain the affirmative vote of 2/3 of its total membership
7 authorizing the conversion in accordance with the preliminary approval
8 of the commissioner.
9 (c) Following the approval of its membership, the mutual savings
10 bank may request authorization of the commissioner to convert to a stock
11 savings bank. The request shall include a certified copy of the election
12 results of the membership along with a resolution of the board of directors
13 requesting approval to convert to a stock savings bank. Within 30 days of
14 receipt of a request to convert, the commissioner shall issue approval or
15 denial.
16 (d) The conversion of a mutual savings bank to a stock savings bank
17 shall not release the mutual savings bank from its obligations to pay and
18 discharge all the liabilities created by law or incurred by the mutual sav-
19 ings bank before becoming a stock savings bank or any tax imposed by
20 the laws of this state up to the date of the mutual savings bank becoming
21 a stock savings bank in proportion to the time which has elapsed since
22 the last preceding payment or any assessment, penalty, or forfeiture im-
23 posed or incurred under the laws of this state up to the date of the mutual
24 savings bank becoming a stock savings bank. A conversion shall not be
25 made to defeat or defraud any of the members or creditors of the mutual
26 savings bank.
27 Sec. 129. (a) The use of the word ``bank'', ``banker'', or ``banking'',
28 or words in any foreign language of similar meaning, as a designation or
29 name or part of a designation or name under which business is conducted
30 in this state, is restricted to a national bank, a savings bank subject to this
31 act, a bank, out-of-state bank, a bank holding company, a foreign bank
32 agency or a foreign bank branch, that is lawfully conducting business in
33 this state, except if the designation or name, taken as a whole, would not
34 imply a banking business.
35 (b) A savings bank subject to this act may use the phrase ``state savings
36 bank'', ``savings bank'', ``SB'' or ``SSB'' as part of a designation or name.
37 Sec. 130. (a) The powers, privileges, duties, and restrictions con-
38 ferred and imposed upon any institution existing and doing business un-
39 der the laws of this state to which this act is applicable are abridged,
40 enlarged, or modified as each particular case may require to conform to
41 this act.
42 (b) This act shall not be construed to affect the legality of investments
43 or of transactions made under any law in effect when the investments or
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1 transactions were made or to require the change of investments for those
2 named in this act, except by the sale or redemption of the securities to
3 prevent loss or embarrassment in the business of the institution, or un-
4 necessary loss or injury to the borrowers on the securities.
5 (c) An extension of any loan or investment shall not be made by any
6 institution, unless necessary to avoid loss or embarrassment as provided
7 in subsection (b).
8 Sec. 131. A savings bank subject to this act shall have the same tax
9 exemptions as a savings and loan association under the laws of Kansas.
10 Sec. 132. This act shall take effect and be in force from and after its
11 publication in the statute book.