Bill Text: PA HB1969 | 2011-2012 | Regular Session | Introduced

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Bill Title: Further providing for additional powers of incorporated institutions related to conduct of business; providing for ownership of property; and further providing for names permitted to be used and for prohibition of adoption, use or advertisement of certain names, titles and descriptions.

Spectrum: Slight Partisan Bill (Republican 15-5)

Status: (Introduced - Dead) 2011-11-09 - Referred to COMMERCE [HB1969 Detail]

Download: Pennsylvania-2011-HB1969-Introduced.html

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PRINTER'S NO. 2721
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1969 Session of2011
INTRODUCED BY HESS, FARRY, DALEY, FLECK, MARSHALL, CUTLER, KRIEGER, STERN, STURLA, BOYD, QUINN AND YOUNGBLOOD, NOVEMBER 9, 2011
REFERRED TO COMMITTEE ON COMMERCE, NOVEMBER 9, 2011
AN ACT
Amending the act of November 30, 1965 (P.L.847, No.356),
entitled "An act relating to and regulating the business of
banking and the exercise by corporations of fiduciary powers;
affecting persons engaged in the business of banking and
corporations exercising fiduciary powers and affiliates of
such persons; affecting the shareholders of such persons and
the directors, trustees, officers, attorneys and employes of
such persons and of the affiliates of such persons; affecting
national banks located in the Commonwealth; affecting persons
dealing with persons engaged in the business of banking,
corporations exercising fiduciary powers and national banks;
conferring powers and imposing duties on the Banking Board,
on certain departments and officers of the Commonwealth and
on courts, prothonotaries, clerks and recorders of deeds;
providing penalties; and repealing certain acts and parts of
acts," further providing for additional powers of
incorporated institutions related to conduct of business;
providing for ownership of property; and further providing
for names permitted to be used and for prohibition of
adoption, use or advertisement of certain names, titles and
descriptions.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 202(d) and (e) of the act of November 30,
1965 (P.L.847, No.356), known as the Banking Code of 1965,
amended April 8, 1982 (P.L.262, No.79), are amended to read:
Section 202. Additional Powers of Incorporated Institutions
Related to Conduct of Business
An incorporated institution shall have in addition to other
powers granted by this act or its articles and subject to the
limitations and restrictions contained in this act or in its
articles:
* * *
(d) Stock in corporation holding realty and facilities--the
power to acquire and hold in an amount approved by the
Department, shares of stock of a corporation which owns real
property which the institution could acquire and hold in its own
name under [clauses (i), (ii) and (iii) of subsection (e) of
this section] section 207 and shares of stock of a corporation
solely for the purpose of providing data processing facilities
for the institution or for the institution and others;
[(e) Ownership of real property--the power to acquire and
hold such real property as it:
(i) occupies or intends to occupy for the transaction of
its business or partly so occupies and partly leases,
(ii) acquires for the purpose of providing parking
facilities for the use of its customers, officers and
employes, or
(iii) acquires solely or jointly with others for the
purpose of providing data processing facilities for the
institution or for the institution and others subject to the
limitation that the book value of all such real property, of
all furniture, fixtures and equipment acquired in connection
with any real property owned or leased by the institution, of
all alterations of buildings on real property owned or leased
by the institution, of all shares of stock or corporations
acquired under subsection (d) of this section, and
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investments in obligations of or for the benefit of
corporations described in subsection (d) of this section or
loans upon the security of the stock of such corporations
shall not exceed twenty-five percent of the aggregate of
surplus, unallocated reserves, undivided profits and
subordinated securities in the case of a mutual savings bank,
or twenty-five percent of the aggregate of capital, surplus,
undivided profits and capital securities in the case of any
other institution, or such larger amount as may be approved
by the department, and subject to the requirement that
estimates of costs of any building on real property owned or
leased by the institution shall be submitted to the
department for its approval prior to the erection thereof;]
* * *
Section 2. The act is amended by adding a section to read:
Section 207. Ownership of Property
(a) Investment in real estate necessary for the transaction
of business--An incorporated institution may invest in real
estate that is necessary for the transaction of its business.
(b) Permissible means of holding--An incorporated
institution may acquire and hold real estate under this section
by any reasonable and prudent means, including ownership in fee,
a leasehold estate or in an interest in a cooperative,
condominium or planned community. The incorporated institution
may hold this real estate directly or through one or more
subsidiaries.
(c) Fixed assets--An incorporated institution may own fixed
assets necessary for the transaction of its business, such as
fixtures, furniture and data processing equipment.
(d) Investment in bank premises--An incorporated institution
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may invest in bank premises or in certain bank premises related
investments, loans or indebtedness, according to the procedures
under subsection (e).
(e) Application requirement for investment in bank
premises--An incorporated institution shall submit an
application to the department to invest in bank premises, or in
the stock, bonds, debentures or other obligations of any
corporation holding the premises of the incorporated
institution, or to make loans to or upon the security of the
stock of the corporation, if the aggregate of all the
investments and loans, together with the indebtedness incurred
by the corporation that is an affiliate of the incorporated
institution, as defined under section 221a of the Banking Act of
1933 (48 Stat. 162, 12 U.S.C. § 221a), will exceed the amount of
the capital stock of the incorporated institution.
(f) Contents of application--The application shall include
all of the following:
(i) A description of the incorporated institution's
present investment in bank premises.
(ii) The investment in bank premises that the
incorporated institution intends to make and the business
reason for making the investment.
(iii) The amount by which the incorporated institution's
aggregate investment will exceed the amount of the
incorporated institution's capital stock.
(g) Approval of application--An application for incorporated
institution investment in bank premises or in certain bank
premises' related investments, loans or indebtedness, as
described in this section, is deemed approved as of the
thirtieth day after the filing is received by the department,
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unless the department notifies the incorporated institution
prior to that date that the filing presents a significant
supervisory or compliance concern or raises a significant legal
or policy issue. An approval for a specified amount under this
section remains valid up to that amount until the department
notifies the incorporated institution otherwise.
(h) Notice process--Notwithstanding subsection (e), an
incorporated institution that is rated 1 or 2 under the Uniform
Financial Institutions Rating System (CAMELS) may make an
aggregate investment in bank premises up to one hundred fifty
percent of the incorporated institution's capital and surplus
without the department's prior approval, provided that the
incorporated institution is well capitalized as defined in 12
CFR Pt. 325 (relating to capital maintenance) and will continue
to be well capitalized after the investment or loan is made.
However, the incorporated institution shall notify the
department in writing of the investment within thirty days after
the investment or loan is made. The written notice must include
a description of the incorporated institution's investment.
(i) Option to purchase--An unexercised option to purchase
bank premises or stock in a corporation holding bank premises is
not an investment in bank premises. An incorporated institution
must receive department approval to exercise the option if the
price of the option and the incorporated institution's other
investments in bank premises exceed the amount of the
incorporated institution's capital stock.
(j) Lease financing of public facilities--An incorporated
institution may purchase or construct a municipal building,
school building or other similar public facility and, as holder
of legal title, lease the facility to a municipality or other
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public authority having resources sufficient to make all rental
payments as they become due. The lease agreement must provide
that the lessee will become the owner of the building or
facility upon the expiration of the lease.
(k) Purchase of employe's residence--To facilitate the
efficient use of incorporated institution personnel, an
incorporated institution may purchase the residence of an
employee who has been transferred to another area in order to
spare the employe a loss in the prevailing real estate market.
The incorporated institution shall arrange for early divestment
of title to the property.
(l) Definitions for purpose of section--The following words
and phrases when used in this section shall have, unless the
context clearly indicates otherwise, the following meanings:
(i) "Bank premises"--includes the following:
(A) Premises that are owned and occupied, or to be
occupied, if under construction, by the incorporated
institution, its branches or its consolidated
subsidiaries.
(B) Capitalized leases and leasehold improvements,
vaults and fixed machinery and equipment.
(C) Remodeling costs to existing premises.
(D) Real estate acquired and intended, in good
faith, for use in future expansion.
(E) Parking facilities that are used by customers or
employes of the incorporated institution, its branches
and its consolidated subsidiaries.
(ii) "Capital and surplus"--
(A) a bank's tier 1 and tier 2 capital calculated
under the risk-based capital standards set forth in
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Appendix A to 12 CFR Pt. 325 (relating to capital
maintenance) as reported in the bank's consolidated
report of condition and income filed under section
1817(a) of the Federal Deposit Insurance Act (64 Stat.
873, 12 U.S.C. § 1817(a)); and
(B) The balance of a bank's allowance for loan and
lease losses not included in the bank's tier 2 capital,
for purposes of the calculation of risk-based capital
described in paragraph (A), as reported in the bank's
consolidated report of condition and income filed under
section 1817(a) of the Federal Deposit Insurance Act.
(iii) "Capital stock"--the amount of common stock
outstanding and unimpaired plus the amount of perpetual
preferred stock outstanding and unimpaired.
(iv) "Real estate"--includes the following:
(A) Premises that are owned and occupied, or to be
occupied, if under construction, by the incorporated
institution, its branches or its consolidated
subsidiaries.
(B) Real estate acquired and intended, in good
faith, for use in future expansion.
(C) Parking facilities that are used by customers or
employes of the incorporated institution, its branches
and its consolidated subsidiaries.
Section 3. Section 802 of the act, amended July 6, 1984
(P.L.621, No.128) and repealed in part May 21, 1980 (P.L.173,
No.51), is amended to read:
Section 802. Names Permitted to Be Used
(a) The name of an institution:
(i) may be in any language but shall be expressed in
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English letters or characters;
(ii) in the case of a bank, bank and trust company or
savings bank, shall contain in English the word "bank" or
"banking" and [shall not contain either of the words "trust"
or "savings"] may contain the word "trust" if the bank, bank
and trust company or savings bank acts in a fiduciary or
other representative capacity as authorized under Chapter 4;
[(iii) in the case of a bank and trust company, shall
contain in English one or more of the words "bank",
"banking", "trust" or "trusts", and shall not contain the
word "savings";]
(iv) in the case of a trust company, shall contain in
English the words "trust company" or "company for trusts" and
shall not contain any of the words "bank", "banking" or
"savings";
[(v) in the case of a savings bank, shall contain in
English the words "savings bank" or "savings" and may contain
the word "trust" if the savings bank acts in a fiduciary or
other representative capacity as authorized in Chapter 4 of
this act;]
(vi) in the case of a private bank, shall contain in
English the words "private bank" or "unincorporated bank"
and shall not contain either of the words "trust" or
"savings";
(viii) shall not contain any word which may deceptively
lead to the conclusion that the institution is authorized to
perform any act or conduct any business which it is not
authorized to perform or conduct or which is forbidden to it
by law, its articles or otherwise;
(ix) shall not contain any of the words "Government",
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"Official", "Federal", "National" or "United States" [or any
abbreviation of any such word]; and
(x) shall not be a name which would be unavailable for
use by a business corporation under section 202(B) of the
Business Corporation Law (dealing with names the same as, or
deceptively similar to, certain other names).
(b) An institution may, without regard to the provisions of
subsection (a) of this section, use:
(i) its name legally in use on the effective date of
this act, or
(ii) a name legally in use on the effective date of this
act by another institution which is adopted by:
(A) an institution which is the resulting
institution in a plan of merger or consolidation to which
the institution using the name is a party, or
(B) an institution which is incorporated under this
act in pursuance of a plan of segregating the banking
business and the trust business of the institution using
the name.
(C) An institution may adopt fictitious names
permitted under 54 Pa.C.S. Ch. 3 (relating to fictitious
names), provided that the fictitious names do not violate
subsection (a)(viii) or (ix).
Section 4. Section 805 of the act, amended July 6, 1984
(P.L.621, No.128), is amended to read:
Section 805. Prohibition of Adoption, Use or Advertisement of
Certain Names, Titles and Descriptions
(a) Deceptive names--No person shall adopt, use or advertise
any name, title or description which is deceptively similar to
the name of an institution subject to this act.
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(b) Use of "bank", "banking" or "trust"--No person engaged in
a financial business and having an office located in
Pennsylvania shall adopt, use or advertise any name, title or
description which contains any of the words "bank", "banking",
"banker" or "trust" or the plural of any of such words except:
(i) an institution subject to this act,
(ii) a Federal Reserve Bank,
(iii) a national bank,
(iv) a Federal Intermediate Credit Bank, Federal Land
Bank, Federal Home Loan Bank or a Bank for Cooperatives,
(v) the International Bank for Reconstruction and
Development,
(vi) the Inter-American Development Bank, or
(vii) a Pennsylvania bank holding company.
(c) Names in prior use--A person may, without regard to the
provisions of subsections (a) and (b) of this section, use:
(i) its name legally in use on the effective date of this
act, or
(ii) in the case of a corporation, a name legally in use
on the effective date of this act by another corporation
which is adopted by the resulting corporation in a plan of
merger or consolidation to which the corporation using the
name is a party.
(d) Duty of Department of State--The Department of State
shall not approve as a corporate name, or register as a
fictitious name, any name which would violate the provisions of
this [section] chapter.
Section 5. This act shall take effect in 60 days.
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