Pennsylvania Act 1992-90 — BANKING CODE OF 1965 - OMNIBUS AMENDMENTS

Act text

BANKING CODE OF 1965 - OMNIBUS AMENDMENTS
                  Act of Jul. 9, 1992, P.L. 430, No. 90               Cl. 07
                             Session of 1992
                               No. 1992-90

     SB1007

                                  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 the duties of the Advisory
        Commission, for nonconforming loans, for the regulation of
        mutual holding companies, for requirements in connection with
        real estate loans, for residency requirements of directors or
        trustees and for the powers of the department.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Section 115.1(f) of the act of November 30, 1965
     (P.L.847, No.356), known as the Banking Code of 1965, added
     December 18, 1990 (P.L.766, No.191), is amended to read:
      Section 115.1.  Mutual Holding Companies
        * * *
        (f)  Regulation--The department shall have the authority to
     issue rules, regulations and orders as may be necessary to
     properly administer this section. Until the department has
     adopted regulations pursuant to this section, the department
     shall not approve any application by a savings bank for approval
     of a plan of reorganization into a mutual holding company,
     except that, the department may approve, prior to the adoption
     of such regulations, but subject to such terms and conditions as
     it deems necessary to carry out the purposes of this act, a plan
     of reorganization by a savings bank that has a CAMEL composite
     rating of one or two under the Uniform Financial Institutions
     Rating System (or an equivalent rating by the department under a
     comparable rating system). The regulations adopted under this
     section shall be no less restrictive than those promulgated by
     the Office of Thrift Supervision for federally chartered savings
     banks.
        * * *
        Section 2.  Section 116(k) of the act, added June 25, 1986
     (P.L.259, No.69), is amended to read:
      Section 116.  Authorization of Reciprocal Interstate Banking
        * * *
        (k)  Establishment of Advisory Commission--For the purpose of
     advising the department in the conduct of its functions under
     subsections (i) and (j) and as otherwise provided in this
     subsection, there is hereby established an Advisory Commission
     which shall consist of nine individuals selected as follows:
     five members appointed by the Governor, one of whom may be
     selected from a list of at least three names submitted by the
     Pennsylvania Bankers Association, one of whom may be selected
     from a list of at least three names submitted by the Association
     of Savings Institutions, one of whom may be selected from a list
     of at least three names submitted by the Pennsylvania Credit
     Union League, one of whom shall have been selected by the
     Governor to broadly represent business interests and one of whom
     shall have been selected by the Governor to broadly represent
     consumer interest; and one member each appointed by the
     President pro tempore and the Minority Leader of the Senate and
     the Speaker and Minority Leader of the House of Representatives.
     The term of the initial member of the Advisory Commission shall
     be until December 31, 1988, and the term of each member
     thereafter shall be two calendar years. The Secretary of Banking
     shall meet with the Advisory Commission at least quarterly for
     the first year and thereafter [at least annually] three times a
     year. Each member shall be entitled to receive travel and
     related expenses and such per diem honorarium as the department
     shall determine to be paid from the fees received by the
     department under this section. The Advisory Commission shall
     provide information, opinions and recommendations as to
     guidelines the department may establish, from time to time, for
     the purpose of determining the overall performance of an
     institution or company under subsection (i) and the availability
     of basic transaction account services under subsection (j). In
     addition, the Advisory Commission shall submit to the department
     a minimum of three reports each year. Each report shall include
     recommendations relative to banking operations in this
     Commonwealth. All decisions and determinations made under this
     section shall be made by the department.
        * * *
        Section 3.  Section 310(d) of the act, amended May 21, 1980
     (P.L.173, No.51), is amended and subsection (e) is amended by
     adding a clause to read:
      Section 310.  Real Estate Loans
        * * *
        (d)  Requirements in connection with loans--The requirements
     for a loan subject to this section shall be:
            (i)  the loan shall be evidenced by a bond, note or other
        obligation and the lien securing such loan shall be obtained
        by a mortgage, deed of trust or judgment;
            (ii)  the lien shall be a first lien (except for a lien
        of taxes, assessments or charges which are not yet due or
        which are payable without penalty) unless all prior liens are
        held by the institution and the aggregate of all loans by the
        institution secured by liens on the real estate satisfy all
        other requirements of this section pertaining to such loans;
            (iii)  the value of the real estate shall be determined
        either by a real estate appraiser qualified in the state
        where the real estate is located who shall inspect the real
        estate and state its value to the best of his judgment in a
        written report signed by him which must be preserved in the
        records of the institution or in the alternative by an
        appraisal signed by two reputable persons who shall:
                (A)  be directors of the institution or selected in a
            manner authorized by the directors,
                (B)  be familiar with real estate values in the
            vicinity where the real estate is located, and
                (C)  inspect the real estate and state its value to
            the best of their judgment in a written report which must
            be preserved in the records of the institution. In the
            event the appraisers arrive at different conclusions as
            to the value of the real estate, it shall be permissible
            to use the average of their two appraisals to determine
            the value of the real estate: Provided, however, That
            each valuation is stated in the report;
            (iv)  [Insurance] insurance, as evidenced by a policy or
        binder or a copy of either, against loss from fire on all
        buildings on the real estate which are included in the
        appraised value, issued by insurers acceptable to the
        institution and authorized to do business where the real
        estate is located and in form and amount satisfactory to the
        institution, shall be maintained during the term of the loan
        by or at the expense of the borrower, except that the
        institution may at its own expense maintain such insurance
        covering only its interest as lender; [and]
            (v)  the borrower shall pay all expenses in connection
        with the loan for title insurance, searches and certificates,
        appraisal fees and fees for preparation and recording of
        documents[.]; and
            (vi)  an institution may make a single delinquency charge
        for each payment in arrears for a period of more than fifteen
        days other than by reason of acceleration or by reason of a
        delinquency on a prior payment.
        (e)  Excepted loans--The restrictions and requirements of
     this section shall not apply to:
            * * *
            (viii)  a residential mortgage loan secured by real
        estate located in a low- to moderate-income area.
        * * *
        Section 4.  Section 1403(b) of the act is amended to read:
      Section 1403.  Number, Qualifications and Eligibility of
                    Directors or Trustees
        * * *
        (b)  Qualifications--Each director or trustee shall be a
     citizen of the United States: Provided, however, That this
     citizenship requirement may be waived for not more than twenty
     percent of the total number of directors of an institution or
     trustees of a savings bank with the prior written approval of
     the department, and at least two-thirds of the directors or
     trustees [shall be residents of Pennsylvania] must have resided
     in Pennsylvania or within one hundred miles of the location of
     the institution for at least one year immediately preceding
     their election and must be residents of Pennsylvania or reside
     within one hundred miles of the location of the institution
     during their continuance in office.
        * * *
        Section 5.  Section 2005 of the act, amended December 17,
     1982 (P.L.1367, No.313), is amended to read:
      Section 2005.  Additional Powers of the Department of Banking
        (a)  Functions of department--The functions of the Department
     of Banking shall be:
            (i)  To exercise the power to remove from his office or
        position an officer, employe, director, trustee or attorney
        of an institution pursuant to the provisions of section 501
        of the Department of Banking Code.
            (ii)  To exercise the power to suspend from his office or
        position an officer, employe, director, trustee or attorney
        of an institution if the Department of Banking serves written
        notice under section 501 of the Department of Banking Code to
        an institution, its officers, employe, director, trustee or
        attorney of the department's intention to issue an order
        under such clause. The department may suspend such party from
        office or prohibit such party from further participation in
        any manner in the conduct of the affairs of the institution
        if the department:
                (A)  determines that such action is necessary for the
            protection of the depository institution or the interests
            of the depository institution's depositors; and
                (B)  serves such party with written notice of the
            suspension order.
        (b)  Effect of order--Any suspension order issued under this
     section shall become effective upon service and, unless a court
     of competent jurisdiction issues a stay of such order, shall
     remain in effect and enforceable until the date the department
     dismisses the charges on the effective date of an order issued
     by the department under section 501 of the Department of Banking
     Code.
        Section 6.  This act shall take effect in 30 days.

     APPROVED--The 9th day of July, A. D. 1992.

     ROBERT P. CASEY