THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

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

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

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,

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

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

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

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",

"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.

(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.