NORTH CAROLINA GENERAL ASSEMBLY

1967 SESSION

 

 

CHAPTER 789

SENATE BILL 210

 

 

AN ACT TO AMEND THE STATE BANKING LAWS.

 

The General Assembly of North Carolina do enact:

 

Section 1.  G.S. 53-2 is hereby amended by adding the following sentence at the end of subdivision (4) of said Section:

"The Banking Commission is hereby authorized and directed to adopt rules and regulations to keep such original required minimum capital funds intact to the end that they remain in and with the bank as a protection for depositors."

Sec. 2.  G.S. 53-4 is hereby amended by deleting the words "he has reason to believe" immediately following the word "investigation" in line 7 and inserting the words "he finds" in lieu thereof; by inserting the word "than" after the word "other" in line 8; by adding the words "and directors, officers, and other managerial officials" after the word "corporation" in line 11; by transferring the last sentence of subdivision (5) of said Section to be a complete separate unnumbered paragraph immediately following subdivision (5) and immediately preceding the last paragraph of said Section; and by deleting the words "to his satisfaction" immediately following the word "ascertained" in the third line of the last paragraph.

Sec. 3.  G.S. 53-10, as the same appears in the 1965 Supplement to the General Statutes, is hereby amended by designating the text of the present Section as subsection (a) and adding a new subsection, to be designated subsection (b), and to read as follows:

"(b)      A bank may, with the approval of the Commissioner of Banks and by the vote of the holders of at least two-thirds of the stock of the particular class or classes of stock entitled to vote on such proposal, amend its charter to authorize an increase in the common stock of the bank in the category of authorized but unissued stock in an amount not to exceed ten per cent (10%) of the outstanding shares of such class or classes of stock and shares so authorized shall be deemed released from pre-emptive rights. Such authorized but unissued stock may be issued from time to time to officers or employees of the bank pursuant to a stock option or stock purchase plan adopted in accordance with this chapter."

Sec. 4.  G.S. 53-12 is hereby amended by striking out the word "examination" in lines 11, 15, and 17 and inserting the word "investigation" in lieu thereof, and by inserting after the word "protected" in line 13 the words "and find such consolidation is in the public interest,".

Sec. 5.  Article 5 of Chapter 53 of the General Statutes is hereby amended by adding a new Section at the end thereof, to be designated as G.S. 53-42.1, and to read as follows:

"G.S. 53-42.1.  Report of Changes in Ownership or Management. (a) Whenever a change occurs in the outstanding voting stock of any bank which will result in a change in the control of the bank, the president or other chief executive officer of such bank shall report such facts to the Commissioner of Banks within 24 hours after obtaining knowledge of such change in the control of the bank. As used in this Section the term 'control' means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policy of the bank, or a change in the ownership of as much as ten per cent (10%) of the outstanding voting stock in any bank.

"(b)      Whenever a loan or loans are made by a bank, which loan or loans are, or are to be, secured by ten per cent (109%) or more of the voting stock of a bank, the president or other chief executive officer of the bank which makes the loan or loans shall report such fact to the Commissioner of Banks within 24 hours after obtaining knowledge of such loan or loans, except when the borrower has been the owner of record of the stock for a period of one year or more, or the stock is of a newly organized bank prior to its opening.

"(c)       The reports required in subsection (a) and (b) of this Section shall contain whatever information is available to inform the Commissioner of Banks of the effect of the transaction upon control of the bank whose stock is involved and shall contain, when known by the person making the report, the number of shares involved, the identity of the sellers (or transferors) and purchasers (or transferees) of record, the identity of the beneficial owners of the shares involved, the purchase price, the total number of shares owned by the sellers (or transferors) and purchasers (or transferees) of record, both immediately prior to and after the transaction being reported, and the total number of shares owned by the beneficial owners of the shares involved, both immediately prior to and after the transaction being reported, and the identity of borrowers, the name of the bank issuing the stock securing the loan, the number of shares securing the loan and the amount of the loan or loans, and such reports shall be in addition to any reports that may be required pursuant to other provisions of law.

"(d)      Each bank shall report to the Commissioner of Banks within 24 hours any changes in chief executive officers or directors, including in its report a statement of the past and current business and professional affiliations of new chief executive officers or directors."

Sec. 6.  G.S. 53-43 is hereby amended by adding the following numbered subdivisions at the end thereof:

"(8)      To issue, advise and confirm letters of credit authorizing the beneficiaries thereof to draw upon the institution or its correspondents.

"(9)      To receive money for transmission.

"(10)    To become a member of a clearing house association and to pledge assets required for its qualification.

"(11)    To provide for the performance of bank service corporation services, such as data processing services and bookkeeping, subject to such rules and regulations as may be adopted by the State Banking Commission."

Sec. 7.  Chapter 53 of the General Statutes is hereby amended by adding immediately after Section 53-43.2 the following Sections, to be numbered and to read as follows:

"G.S. 53-43.3.  Officers and Employees; Share Purchase and Option Plans. Subject to any applicable rules or regulations of the State Banking Commission, a bank may grant options to purchase, sell or enter into agreements to sell shares of its capital stock to its officers or employees, or both, for a consideration of not less than one hundred per cent (100%) of the fair market value of the shares on the date the option is granted, or, if pursuant to a stock purchase plan, eighty-five per cent (85%) of the fair market value of the shares on the date the purchase price is fixed, pursuant to the terms of an officer-employee restricted stock option plan or an officer-employee stock purchase plan which has been adopted by the board of directors of the bank and approved by the holders of at least two-thirds of the particular class or classes of stock entitled to vote on such proposal and by the Commissioner of Banks. In no event shall the option to purchase such shares be for a consideration less than the par value thereof. Stock options issued hereunder shall qualify as restricted stock options under the Internal Revenue Code of 1954, and corresponding provisions of subsequent United States law."

"G.S. 53-43.4.  Issuance of Capital Notes and Debentures. A bank shall have authority to issue capital notes or debentures, convertible or otherwise, subject to such regulations as the Banking Commission may adopt with respect thereto."

"G.S. 53-43.5.  Minors' Deposits and Safe-Deposit Agreements. (a) Deposits. A bank may operate a deposit account in the name of a minor or in the name of two or more persons, one or more of whom are minors, with the same effect upon its liability as if such minors were of full age. This Section shall not affect the law governing transactions with minors in cases outside the scope of this Section.

"(b)      Dealings with minor. A bank may lease a safe-deposit box to and in connection therewith deal with a minor with the same effect as if leasing to and dealing with a person of full legal capacity. This Section shall not affect the law governing transactions with minors in cases outside the scope of this Section.

"(c)       Safe-deposit agreements. An institution may rent a safe-deposit box or other receptacle for safe deposit of property to, and receive property for safe deposit from, a married minor and spouse, whether adult or minor, jointly. This Section shall not affect the law governing transactions with minors in cases outside the scope of this Section."

"G.S. 53-43.6.  School Thrift or Savings Plan. (a) A bank may arrange for the collection of savings from school children by the principal of the school, by the teachers, or by collectors, pursuant to regulations issued by the State Banking Commission and approved, in the case of public schools, by the board of education or board of trustees of the city or district in which the school is situated. The principal, teacher, or person authorized by the bank to make collections from the school children shall be the agent of the bank and the bank is liable to the pupil for all deposits made with such principal, teacher, or other authorized person to the same extent as if the deposits were made directly with the bank.

"(b)      The acceptance of deposits in furtherance of a school thrift or savings plan by an officer, employee or agent of a bank at any school shall not be construed as the establishment or operation of a branch or branch facility."

"G.S. 53-43.7.  Safe-Deposit Boxes; Unpaid Rentals; Procedure; Escheats. (a) If the rental due on a safe-deposit box has not been paid for one year, the lessor may send a notice by registered mail to the last known address of the lessee stating that the safe-deposit box will be opened and its contents stored at the expense of the lessee unless payment of the rental is made within 30 days. If the rental is not paid within 30 days from the mailing of the notice, the box may be opened in the presence of an officer of the lessor and of a notary public who is not a director, officer, employee or stockholder of the lessor. The contents shall be sealed in a package by the notary public who shall write on the outside the name of the lessee and the date of the opening. The notary public shall execute a certificate reciting the name of the lessee, the date of the opening of the box and a list of its contents. The certificate shall be included in the package and a copy of the certificate shall be sent by registered mail to the last known address of the lessee. The package shall then be placed in the general vaults of the lessor at a rental not exceeding the rental previously charged for the box.

"(b)      Any documents or writings of a private nature, and having little or no apparent value need not be offered for sale, but shall be retained, unless claimed by the owner, for the period specified for unclaimed deposits, after which they may be destroyed.

"(c)       If the contents of the safe-deposit box have not been claimed within two years of the mailing of the certificate, the lessor may send a further notice to the last known address of the lessee stating that, unless the accumulated charges are paid within 30 days, the contents of the box will be sold at public auction at a specified time and place, or, in the case of securities listed on a stock exchange, will be sold upon the exchange on or after a specified date and that unsalable items will be destroyed. The time, place and manner of sale shall also be posted conspicuously on the premises of the lessor and advertised once in a newspaper of general circulation in the community. If the articles are not claimed, they may then be sold in accordance with the notice.

"(d)      The balance of the proceeds, after deducting accumulated charges, including the expense of advertising and conducting the sale, together with any money discovered in the box shall be deposited to the credit of the lessee in any account maintained by him, or if none, shall be deemed a deposit account with the bank or trust company operating the safe-deposit facility, or in the case of a subsidiary safe-deposit company, a bank or trust company owning stock therein, and shall be identified on the books of the bank as arising from the sale of contents of a safe-deposit box. When any such deposit is surrendered as unclaimed deposits, the lessor shall also send to the Commissioner a copy of the certificate and an itemized statement of the amount received and the deductions. Any items remaining unsold may be destroyed.

"(e)       The deposits or proceeds from sales referred to in the preceding paragraph shall be subject to all the provisions of G.S. 116-24, relating to the escheat of bank deposits.

"(f)       A copy of this Section shall be printed on every contract for rental of a safe-deposit box."

Sec. 8.  G.S. 53-46 (is hereby rewritten to read as follows:

"G.S. 53-46.  Limitations on Investments in Securities. The investment in any bonds or other debt obligations of any one firm, individual, or corporation, unless it be the obligations of the United States, or agency thereof, or other obligations guaranteed by the United States Government, State of North Carolina, or other state of the United States, or of some city, town, township, county, school district, or other political subdivision of the State of North Carolina, shall at no time be more than twenty per cent (20%) of the unimpaired capital and permanent surplus of any bank to an amount not in excess of two hundred and fifty thousand dollars ($250,000.00); and not more than ten per cent (10%) of the unimpaired capital and permanent surplus in excess of two hundred and fifty thousand dollars ($250,000.00)."

Sec. 9.  G.S. 53-48 is hereby amended by inserting a comma after the words "United States" in line 13 and adding the words "or an agency of the United States, or other obligations guaranteed by the United States Government," and by adding after the words "United States," in line 14 the words "or agency thereof, or other obligations guaranteed by the United States Government,".

Sec. 10.  G.S. 53-50 is hereby rewritten to read as follows:

"G.S. 53-50.  Requirement of Reserve Fund. (a) A bank which is not a member of the Federal Reserve System shall maintain at all times a reserve fund in an amount equal to at least fifteen per cent (15%) of the aggregate amount of its demand deposits and five per cent (5%) of the aggregate amount of its other deposits. The amount of the required reserve for each day shall be computed on the basis of average daily deposits covering such biweekly or shorter periods as shall be fixed by regulation of the Banking Commission.

"(b)      A bank which is a member of the Federal Reserve System shall maintain at all times a reserve fund in accordance with the requirements applicable to a member bank under the laws of the United States.

"(c)       A bank shall give written notice to the Commissioner of Banks, in the manner prescribed by the Commissioner for such notice, of any deficiency in the reserve fund required under subsection (a) or (b) of this Section within three business days after the close of any scheduled averaging period during which such deficiency occurs."

Sec. 11.  G.S. 53-62 is hereby amended by striking out the words "he shall have ascertained to his satisfaction" following the word "until" in line 9 of subsection (b) and inserting the words "he shall find" in lieu thereof, and by striking out the word "and" after the word "cashier" in line 4 of subsection (c) and inserting the word "or" in lieu thereof.

"G.S. 53-62 is hereby further amended by redesignating subsection(e) to be subsection (f), and inserting a new subsection (e) to read as follows:

'(e)       A bank may discontinue a branch office or teller's window upon resolution of its board of directors or board of managers. Upon the adoption of such a resolution, the bank shall file a certification with the Commissioner of Banks specifying the location of the branch office or teller's window to be discontinued and the date upon which it is proposed that the discontinuance shall be effective. This certificate must state the reasons for the closing of such branch or teller's window and indicate that the needs and conveniences of the community would still be adequately met. Notice stating the intention to discontinue said branch or teller's window shall be published in a newspaper serving such community once a week for four consecutive weeks before any certificate requesting discontinuance is filed with the Commissioner of Banks. No such branch or teller's window may be discontinued until approved by the Commissioner of Banks, who shall first hold a public hearing thereon, if so requested by any interested party.'"

Sec. 12.  G.S. 53-67 is hereby amended by adding the following sentence at the end of said Section:

"In addition to the foregoing powers relating to the fixing of the number and the election of directors, the stockholders of a bank, at any stockholders' meeting, special or annual, may authorize not more than two additional directorships which may be left unfilled and to be filled in the discretion of the directors of the institution during the interval between such stockholders' meetings."

Sec. 13. G.S. 53-77.2 is hereby amended by redesignating subsection (g) to be subsection (h), and by inserting a new subsection (g) to read as follows:

"(g)       After a five-day week basis has been ordered pursuant to this Section with respect to any bank or banks, the above procedure shall be applicable with respect to any subsequent request to revert to a six-day week basis, and such reversion may be ordered by the Commissioner if he shall find that the best interest of the commercial banks and the public will be served by a six-day week for commercial banks."

Sec. 14.  G.S. 53-84 is hereby amended by adding a new paragraph at the end thereof to read as follows:

"A bank may deposit funds in a bank of a foreign country, but such deposits shall not constitute any part of its reserve as defined in G.S. 53-51."

Sec. 15.  G.S. 53-91 is hereby amended by striking out the period at the end thereof, inserting a semicolon in lieu thereof, and adding the following words:

"Provided, further, that it shall not be necessary to require collateral or other security with respect to loans, the total of which to an individual borrower, does not exceed twenty-five hundred dollars ($2500.00) made pursuant to this Section; provided, further, that in no event shall a loan in excess of twenty-five hundred dollars ($2500.00) be made by any bank to any officer of such bank."

Sec. 16.  G.S. 53-92 is hereby amended by rewriting the second sentence of the second paragraph thereof, to read as follows: "Not more than five members of the said Commission shall be practical bankers, and the remainder of the membership of the said Commission shall be selected so as to fully represent the consumer, industrial, manufacturing, professional, business and farming interests of the State." The amendment contained in this Section shall not apply to members currently serving under appointments made prior to the effective date of this Act, but shall apply to their successors only.

Sec. 17.  G.S. 53-117 is hereby amended by striking out the period at the end of the first sentence, inserting a comma in lieu thereof, and adding the words "provided the Commissioner of Banks may extend this period to 15 months when, in his opinion, an emergency condition exists that necessitates such action."

Sec. 18.  G.S. 53-139 is hereby rewritten to read as follows:

"G.S. 53-139.  Capital Stock. The amount of capital stock with which any industrial bank shall commence business shall not be less than fifty per cent (50 9) of that which would be required of a commercial bank under the provisions of G.S. 53-2."

Sec. 19.  (a) G.S. 53-141 is hereby amended by rewriting subdivision (4) thereof to read as follows:

"(4)      To establish branch offices or places of business within the county in which its principal office is located, and elsewhere in the State, after having first obtained the written approval of the Commissioner of Banks, which approval may be given or withheld by the Commissioner of Banks in his discretion. The Commissioner of Banks, in exercising such discretion, shall take into account, but not by way of limitation, such factors as the financial history and condition of the applicant bank, the adequacy of its capital structure, its future earnings prospects, and the general character of its management. Such approval shall not be given until he shall find (i) that the establishment of such branch or teller's window will meet the needs and promote the convenience of the community to be served by the bank, and (ii) that the probable volume of business and reasonable public demand in such community are sufficient to assure and maintain the solvency of said branch or teller's window and of the existing bank or banks in said community. Provided, that the Commissioner of Banks shall not authorize the establishment of any branch the paid-in capital of whose parent bank is not sufficient in amount to provide for capital in an amount equal to that required with respect to the establishment of branches of commercial banks under the provisions of G.S. 53-62. For the purposes of this paragraph, the provisions of G.S. 53-62 as to the meaning of the word 'capital' shall be applicable.

"A bank may discontinue a branch office upon resolution of its board of directors or board of managers. Upon the adoption of such a resolution, the bank shall file a certification with the Commissioner of Banks specifying the location of the branch office to be discontinued and the date upon which it is proposed that the discontinuance shall be effective. This certificate must state the reasons for the closing of such branch and indicate that the needs and convenience of the community would still be adequately met. Notice stating the intention to discontinue the said branch shall be published in a newspaper serving said community once a week for four consecutive weeks before a certificate requesting a discontinuance is filed with the Commissioner of Banks. No such branch may be discontinued until approved by the Commissioner of Banks, who shall first hold a public hearing thereon, if so requested by any interested party."

(b)        Subdivision (7) of said G.S. 53-141 is hereby rewritten to read as follows:

"(7)      Subject to the approval of the State Banking Commission, to solicit, receive and accept money or its equivalent on deposit subject to check; provided, however, no such approval shall be given unless and until such industrial bank meets the capital requirements of a commercial bank as set forth in G.S. 53-2."Sec. 20. G.S. 53-160 is hereby amended by striking out the period at the end thereof, inserting a colon in lieu thereof and adding the following words: "Provided, however, that a national bank which has been granted trust powers by the Comptroller of the Currency or his duly authorized agent shall be annually licensed as required in this Section and shall be granted a certificate of solvency which will meet the provisions of Section 53-162 without examination by the Commissioner of Banks as required in Section 53-161."

Sec. 21.  G.S. 53-1 is hereby amended by redesignating subdivisions (5), (6) and (7) as (6), (7) and (8), respectively, and inserting a new subdivision (5) to read as follows:

"(5)      Practical Banker. The term 'practical banker' means an officer or employee of a bank actively engaged in performing duties in managing or supervising or assisting in managing or supervising the conducting of a banking business, including any such banker who is in a retired status from such duties."

Sec. 22.  All laws and clauses of laws in conflict with this Act are hereby repealed.

Sec. 23.  This Act shall become effective upon its ratification.

In the General Assembly read three times and ratified, this the 15th day of June, 1967.