HOUSE AMENDED
PRIOR PRINTER'S NOS. 93, 1071, 1408 PRINTER'S NO. 2283
No. 95 Session of 1997
INTRODUCED BY HOLL, JANUARY 21, 1997
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, NOVEMBER 16, 1998
AN ACT
1 Amending the act of December 14, 1967 (P.L.746, No.345),
2 entitled "An act relating to and regulating the business of
3 savings associations heretofore designated under other acts
4 and special charters variously as building and loan
5 associations and savings and loan associations; defining the
6 rights, powers, duties, liabilities, and immunities of such
7 associations; affecting persons engaged in the business of
8 savings associations; affecting the members, account holders
9 and borrowers of such associations; affecting Federal savings
10 and loan associations whose principal office is located in
11 the Commonwealth; prohibiting the transaction of business in
12 this Commonwealth by foreign savings associations; conferring
13 powers and imposing duties on certain departments and
14 officers of the Commonwealth and on the courts, recorders of
15 deeds; creating a Savings Association Board and defining its
16 powers and duties; prohibiting certain actions and imposing
17 penalties, and repealing certain acts," adding or amending
18 certain definitions; providing for conversion to federally
19 insured status; further providing for refund of capital
20 deposits, for alternate conversion procedures, for
21 dissolution of associations, for appointment of directors and
22 for the dissolution of the Pennsylvania Savings Association
23 Insurance Corporation; and making repeals.
24 The General Assembly of the Commonwealth of Pennsylvania
25 hereby enacts as follows:
26 Section 1. Section 102(5.2) of the act of December 14, 1967
27 (P.L.746, No.345), known as the Savings Association Code of
1 1967, added April 9, 1982 (P.L.334, No.94), is amended and the
2 section is amended by adding clauses to read:
3 Section 102. Definitions.--The following words and phrases
4 when used in this act shall have, unless the context clearly
5 indicates otherwise, the meanings given to them in this section:
6 * * *
7 (5.2) "Capital deposit," the contributions paid by a
8 savings association to the Pennsylvania Savings Association
9 Insurance Corporation's central insurance fund, consisting of
10 capital contributions by each member savings association in an
11 amount equal to not less than two percent of the total savings
12 on deposit with each member.
13 [(5.2)] (5.3) "Capital surplus," the amount paid to an
14 association for the purchase of permanent reserve fund stock in
15 excess of its par value.
16 * * *
17 (19.2) "PSAIC," the Pennsylvania Savings Association
18 Insurance Corporation established by the act of April 6, 1979
19 (P.L.17, No.5), referred to as the Pennsylvania Savings
20 Association Insurance Corporation Act.
21 * * *
22 Section 2. Section 823 of the act, amended July 9, 1992
23 (P.L.414, No.89), is amended to read:
24 Section 823. Account Insurance.--(a) Each association
25 subject to this act shall obtain insurance of accounts as soon
26 as the association can qualify for such coverage as provided by
27 the [Federal Savings and Loan Insurance Corporation or by any
28 other public or private corporation authorized by law to insure
29 accounts of savings associations and approved by the Department
30 of Banking.] Federal Deposit Insurance Corporation or the
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1 National Credit Union Administration.
2 (a.1) Notwithstanding any provision to the contrary, no
3 association may conduct the business of an association after
4 thirty months from the effective date of this subsection, unless
5 its deposits are insured by the Federal Deposit Insurance
6 Corporation or National Credit Union Administration.
7 (a.2) A PSAIC insured association shall receive a refund of
8 its capital deposit, to the extent that it exists, from the
9 PSAIC pursuant to the following conditions:
10 (1) An association, which files an application for Federal
11 deposit insurance with the Federal Deposit Insurance Corporation
12 no later than eighteen months from the effective date of this
13 subsection, and which application is deemed to be substantially
14 complete by the Federal Deposit Insurance Corporation, at such
15 time as the association shall withdraw from the PSAIC.
16 (2) An association which, no later than eighteen months from
17 the effective date of this subsection, files an application with
18 the department pursuant to Article XI and/or any appropriate
19 Federal regulator to merge or consolidate with an existing
20 federally insured institution, and which application is deemed
21 to be substantially complete by the department and/or any
22 appropriate Federal regulator, at such time as the association
23 withdraws from the PSAIC.
24 (3) An association which files a certificate of election to
25 dissolve no later than eighteen months from the effective date
26 of this subsection, at such time as the association withdraws
27 from the PSAIC.
28 (4) An association which files an application to merge or
29 convert pursuant to the provisions of section 1101.1, and which
30 application is deemed to be substantially complete by the
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1 department and/or any appropriate Federal regulator no later
2 than eighteen months from the effective date of this subsection,
3 at such time as the association shall withdraw from the PSAIC.
4 (5) An association which fails to file a substantially
5 complete application for Federal deposit insurance with the
6 Federal Deposit Insurance Corporation or fails to file a
7 substantially complete application to merge or consolidate with
8 a federally insured institution or fails to file a substantially
9 complete application to merge with or convert to a credit union
10 pursuant to section 1101.1 or fails to file a certificate of
11 election to dissolve no later than eighteen months from the
12 effective date of this subsection, shall receive a refund of its
13 capital deposit to the extent that it exists pursuant to the
14 provisions of section 823.2(c).
15 (a.3) Upon a PSAIC insured association's application to the
16 department, the deadline for obtaining Federal insurance as set
17 forth in subsection (a) may be extended for a period deemed
18 appropriate by the department. The department's discretion in
19 granting the extension shall be based on whether:
20 (1) The association has filed an application for extension
21 of the deadline at least thirty days prior to the deadline set
22 forth in subsection (a).
23 (2) The association has complied with the filing
24 requirements of this section.
25 (3) The association is in compliance with all other
26 provisions of this act.
27 (4) The department determines that the association has been
28 diligent in fulfilling its obligations under this act.
29 (5) The department determines that the association has
30 replied in a timely fashion to all reasonable requests for
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1 information from any regulatory agency.
2 (6) Other compelling reasons relative to this act which the
3 department deems appropriate.
4 (b) An association which is not insured or which loses its
5 insurance may become the subject of a charter revocation
6 proceeding by the department.
7 Section 3. The act is amended by adding sections to read:
8 Section 823.1. Dissolution.--Notwithstanding section 1207, a
9 PSAIC insured association which fails to file a substantially
10 complete application for Federal insurance of its accounts as an
11 insured institution or an application with the department or any
12 Federal banking regulator as required by law for merger with an
13 existing federally insured institution or an application to
14 merge with or convert to a credit union within the time period
15 set forth in section 823 may be subject to the imposition of a
16 plan of dissolution by the department. The distribution of
17 assets shall be in accordance with section 1208. Additionally,
18 the department may appoint a conservator to the association who
19 shall have full authority to wind up the affairs of the
20 association, including filing dissolution documents with the
21 department or other relevant agency. The board of directors and
22 the members shall have no authority upon appointment of a
23 conservator.
24 Section 823.2. PSAIC.--(a) Notwithstanding any provision of
25 law to the contrary, including, without limitation, the
26 provisions of the act of April 6, 1979 (P.L.17, No.5), referred
27 to as the Pennsylvania Savings Association Insurance Corporation
28 Act, or any bylaws, rules or regulations issued pursuant
29 thereto, a PSAIC insured association which complies with the
30 filing requirements of section 823 shall withdraw from the PSAIC
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1 by providing written notice of withdrawal to the board of
2 directors of the PSAIC, and shall receive a refund of the
3 association's capital deposit to the extent that it exists
4 within sixty days of the written notice.
5 (b) Notwithstanding any provision of the Pennsylvania
6 Savings Association Insurance Corporation Act or any law to the
7 contrary, in addition to the eight directors elected by the <--
8 member associations as provided in section 4(a) of the
9 Pennsylvania Savings Association Insurance Corporation Act, the
10 directors may appoint five additional directors of the PSAIC,
11 subject to a thirty-day period of nonobjection by the
12 department, to CONTRARY, ALL OF THE PSAIC CORPORATE POWERS SHALL <--
13 BE EXERCISED BY A BOARD OF DIRECTORS, THE NUMBER AND
14 QUALIFICATIONS OF WHICH SHALL BE ESTABLISHED BY THE PSAIC'S
15 BYLAWS. IN ADDITION TO THE DIRECTORS ELECTED BY THE MEMBER
16 ASSOCIATIONS AS PROVIDED IN THE BYLAWS OF THE PSAIC, THE
17 DIRECTORS SHALL APPOINT UP TO FIVE ADDITIONAL DIRECTORS OF THE
18 PSAIC AT SUCH TIME AS THE DEPARTMENT DEEMS APPROPRIATE, SUBJECT
19 TO WRITTEN APPROVAL OF EACH ADDITIONAL DIRECTOR BY THE
20 DEPARTMENT WITHIN SIXTY DAYS OF RECEIPT BY THE DEPARTMENT OF
21 WRITTEN NOTICE FROM THE PSAIC THAT IT HAS SELECTED SUCH A
22 DIRECTOR. THE FIVE ADDITIONAL DIRECTORS OF THE PSAIC SHALL
23 represent the public interest and serve for a term of four years
24 or until replaced. The terms shall commence on the date of the
25 first meeting of the board of directors held following their
26 appointment. Any director so appointed shall not be affiliated,
27 either directly or indirectly, with any PSAIC member
28 association; shall have a general knowledge of savings and loan <--
29 associations THE FINANCIAL SERVICES INDUSTRY; shall be a <--
30 registered voter of and shall reside in this Commonwealth. Any
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1 vacancy occurring in the term of any director shall be filled by
2 the directors within sixty days.
3 (c) Notwithstanding any provision of the Pennsylvania
4 Savings Association Insurance Corporation Act or any other law
5 to the contrary, the board of directors of the PSAIC shall
6 proceed to dissolve the PSAIC under 15 Pa.C.S. Ch. 59 Subch. F
7 (relating to voluntary dissolution and winding up) at such time
8 when all member associations have withdrawn from the PSAIC, by
9 the adoption of a resolution. At such time, the board of
10 directors of the PSAIC may elect to reimburse the capital
11 deposit of an association which did not comply with the
12 provisions of section 823. At such time that the PSAIC has no
13 outstanding liabilities, the PSAIC may distribute its retained
14 earnings to the associations which were members of the PSAIC on
15 June 30, 1996. The retained earnings of the PSAIC shall be
16 distributed on a pro rata basis. The pro rata distribution shall
17 be calculated by dividing an association's capital deposit
18 liabilities as of June 30, 1996, by the total capital deposits
19 of all associations belonging to the PSAIC on June 30, 1996.
20 Section 4. Section 1101 of the act is amended by adding a
21 subsection to read:
22 Section 1101. Mergers, Consolidations, Conversions and
23 Reorganizations.--* * *
24 (b.3) Notwithstanding any law to the contrary, upon
25 compliance with the requirements of this article, and any other
26 law, one or more associations with savings accounts insured by
27 the PSAIC may merge or consolidate into a bank, bank and trust
28 company, savings bank, or interstate bank as those terms are
29 defined in section 102 of the act of November 30, 1965 (P.L.847,
30 No.356), known as the Banking Code of 1965, or a national bank.
19970S0095B2283 - 7 -
1 Section 5. The act is amended by adding a section to read:
2 Section 1101.1. Credit Union Merger and Conversion
3 Procedures for PSAIC Insured Associations.--(a) A PSAIC insured
4 association which files an application to merge or convert into
5 a credit union may merge or convert with the approval of the
6 department. The department shall impose reasonable conditions
7 and requirements on the association relating to the merger with
8 or conversion to a credit union, including, but not limited to,
9 the following:
10 (1) The association shall approve the merger or conversion
11 plan by the affirmative vote of two-thirds of the entire
12 membership of the board of directors of the association and such
13 vote of the members as the department may require.
14 (2) The department shall approve the merger or conversion
15 plan.
16 (3) The merging or converting association must qualify for
17 share insurance by the National Credit Union Administration
18 Share Program.
19 (b) Upon receipt of an application for approval of merger or
20 conversion, the department shall conduct such investigation as
21 it may deem necessary in order to ensure that the merger or
22 conversion would be consistent with adequate and sound credit
23 union practices and in the public interest.
24 (c) If the department approves the articles of merger or
25 conversion, it shall register its approval thereon and shall
26 forthwith forward the articles to the Department of State for
27 filing. As of the filing of the articles in the Department of
28 State, the merger or conversion shall be effective, and the
29 existence of the association shall cease as a separate entity
30 but shall continue in, and the parties to the plan shall be, a
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1 single corporation which shall be the resulting credit union and
2 which shall have without further act or deed all property,
3 rights, powers, duties and obligations of each party to the
4 plan.
5 (d) The membership of the resulting credit union may permit
6 individuals who, at the time of merger or conversion, were
7 members, savings account holders, directors, officers, employees
8 or borrowers of the association to become members of the
9 resulting credit union.
10 (e) Rights of dissenting members shall be determined
11 pursuant to section 1109.
12 (f) Notwithstanding any provision of this act to the
13 contrary, a credit union which results from a merger or
14 conversion is permitted to hold assets of the association even
15 though such assets do not conform with the requirements of this
16 act. However, except with the permission of the Secretary of
17 Banking, the credit union must divest itself of all assets which
18 do not conform with the requirements of this act within five
19 years of the effective date of the merger or conversion.
20 Section 6. Section 1602 of the act is amended to read: <--
21 SECTION 6. SECTIONS 1401(A) AND 1602 OF THE ACT ARE AMENDED <--
22 TO READ:
23 SECTION 1401. EXAMINATIONS AND REPORTS.--(A) THE DEPARTMENT
24 SHALL EXAMINE ALL ASSOCIATIONS AT LEAST ONCE [EACH YEAR] EVERY
25 TWO CALENDAR YEARS AND MAY EXAMINE ANY ASSOCIATION MORE
26 FREQUENTLY AND AT ANY TIME IT DEEMS SUCH ACTION NECESSARY OR
27 DESIRABLE FOR PROTECTION OF MEMBERS OR CREDITORS. THE
28 EXAMINATION SHALL INCLUDE A REVIEW OF THE ACCOUNTS, RECORDS AND
29 AFFAIRS OF THE ASSOCIATION, ITS COMPLIANCE WITH LAW AND SUCH
30 OTHER MATTERS AS THE DEPARTMENT MAY DETERMINE. FOR THIS PURPOSE
19970S0095B2283 - 9 -
1 THE DEPARTMENT MAY EXAMINE A PERSON WHICH IS PERFORMING SERVICES
2 FOR AN ASSOCIATION.
3 * * *
4 Section 1602. Specific Repeals.--(a) The following acts and
5 all amendments thereof are hereby repealed absolutely.
6 (1) The act of May 5, 1933 (P.L.457), known as the "Building
7 and Loan Code."
8 (2) The act of June 24, 1939 (P.L.746), entitled "An act
9 authorizing Federal savings and loan associations to issue share
10 accounts in the name of certain minors and in the joint names of
11 two or more persons, and validating the acquittances of such
12 minors and validating the acquittances of either person in a
13 joint account, under certain conditions; and outlining the
14 procedure for the payment of share accounts issued in the name
15 of a trustee following the death of the trustee."
16 (3) The act of April 6, 1979 (P.L.17, No.5), referred to as
17 the Pennsylvania Savings Association Insurance Corporation Act.
18 (b) The following parts of acts are hereby repealed to the
19 extent specified:
20 (1) Sections 301, 401A, 402B, 501A, 501B, 501C, 503A, 503C
21 and 1011B of the act of May 15, 1933 (P.L.565), known as the
22 "Department of Banking Code," as applicable to savings
23 associations, savings and loan associations and building and
24 loan associations.
25 (2) Section 504B of the act of May 15, 1933 (P.L.565,
26 No.111), known as the "Department of Banking Code," is repealed
27 insofar as it applies to nonfederally insured savings
28 associations.
29 (3) Section 4(b) 4 of the act of April 6, 1979 (P.L.17, <--
30 No.5), referred to as the Pennsylvania Savings Association
19970S0095B2283 - 10 -
1 Insurance Corporation Act, is repealed.
2 Section 7. This act shall take effect as follows:
3 (1) The amendment of section 1602(a)(3) of the act shall
4 take effect on the date of filing of articles of dissolution
5 as provided for in section 823.2 of the act.
6 (2) The remainder of this act shall take effect
7 immediately.
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