BANKING CODE OF 1965 - OMNIBUS AMENDMENTS
                 Act of Dec. 18, 1990, P.L. 766, No. 191              Cl. 07
                             Session of 1990
                               No. 1990-191

                                  AN ACT

     SB 1512

     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," permitting the formation of mutual holding companies;
        authorizing mergers of savings bank holding companies and
        their wholly owned subsidiary savings banks; further
        providing for legal holidays; authorizing certain banks to
        become members of a Federal Home Loan Bank; providing for
        change of location; providing for pledges for deposits; and
        providing for reciprocal interstate operations for savings
        banks.

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

        Section 1.  Section 113(a) and (b) of the act of November 30,
     1965 (P.L.847, No.356), known as the Banking Code of 1965,
     amended March 4, 1982 (P.L.135, No.44) and December 13, 1985
     (P.L.331, No.89), are amended to read:
      Section 113.  Legal Holidays
        (a)  Fixed holidays--An institution shall observe as a legal
     holiday:
            (i)  New Year's Day (January 1);
            (i.1)  Dr. Martin Luther King, Jr. Day (the third Monday
        in January);
            (ii)  Memorial Day (the last Monday in May);
            (iii)  Independence Day (July 4);
            (iv)  Labor Day (the first Monday in September);
            (v)  Thanksgiving Day (the fourth Thursday in November);
            (vi)  Christmas Day (December 25);
            (vii)  each Sunday, except for such activities or conduct
        of business at such locations as the bank may elect;
            (viii)  each Monday following an Independence Day, a
        Christmas Day or New Year's Day which occurs on a Sunday; and
            (ix)  each day specifically appointed by the President of
        the United States or the Governor of the Commonwealth as a
        legal holiday or as a bank holiday.
        (b)  Optional holidays--An institution may at its option
     observe as a legal holiday:
            (i)  Lincoln's Birthday (February 12);
            (ii)  Washington's Birthday (the third Monday in
        February);
            (iii)  Good Friday;
            (iv)  Flag Day (June 14);
            (v)  Columbus Day (the second Monday in October);
            (vi)  Election Day (the first Tuesday after the first
        Monday in November);
            (vii)  Veterans' Day (November 11);
            (viii)  each Saturday either as a half-holiday after 12
        o'clock noon or as a full holiday;
            (ix)  each Monday following an Independence Day, a
        Christmas Day or New Year's Day which occurs on a Saturday;
        and
            (x)  each day which the department permits all
        institutions by public announcement, or an individual
        institution by written permission, to observe as a legal
        holiday.
        * * *
        Section 2.  The act is amended by adding a section to read:
      Section 115.1.  Mutual Holding Companies
        (a)  In general--Notwithstanding any other provision of this
     act, a savings bank organized under this act in mutual form may
     reorganize so as to become a holding company by:
            (i)  chartering a subsidiary stock savings bank, the
        stock of which is wholly owned by the mutual savings bank at
        the time of the reorganization; and
            (ii)  transferring the substantial part of its assets and
        liabilities, including all of its liabilities which are
        insured by any deposit insurance corporation, to the
        subsidiary stock savings bank.
        (b)  Trustees' approval of plan required--A reorganization is
     not authorized under this section unless a plan providing for
     such reorganization has been approved by the affirmative vote of
     two-thirds of the board of trustees of the mutual savings bank.
        (c)  Notice to, and approval by, the department--
            (i)  At least sixty days prior to taking any action
        described in subsection (a), a mutual savings bank seeking to
        establish a mutual holding company shall provide written
        notice to the department. The notice shall contain such
        relevant information as the department shall require by
        regulation or by specific request in connection with any
        particular notice.
            (ii)  Upon receipt of an application for approval of a
        plan of reorganization authorized by this section, the
        department shall conduct such investigation as it may deem
        necessary to determine whether:
                (A)  the plan satisfies the requirements of this act;
            and
                (B)  the plan adequately protects the interests of
            depositors, borrowers and creditors.
            (iii)  Within sixty days after receipt of the
        application, the department shall approve or disapprove the
        application on the basis of its investigation and shall
        immediately give to the savings bank written notice of its
        decision, and in the event of disapproval, a statement in
        detail of such grounds therefor as are permitted by paragraph
        (iv).
            (iv)  The department may disapprove any proposed holding
        company formation only if:
                (A)  the plan providing for such reorganization fails
            to comply, or as implemented would fail to comply, with
            such regulations as the department may promulgate from
            time to time;
                (B)  such disapproval is necessary to prevent unsafe
            or unsound practices;
                (C)  the financial or management resources of the
            resulting mutual holding company or the resulting savings
            bank warrant disapproval; or
                (D)  the savings bank fails to furnish the
            information required under paragraph (i).
            (v)  At the time of the transaction described in
        subsection (a), a savings bank may, with the approval of the
        department, retain capital assets at the holding company
        level to the extent that such capital assets are not needed
        by the subsidiary stock savings bank in order for the
        subsidiary to satisfy applicable regulatory requirements.
        (d)  Permitted activities--A mutual holding company may
     engage only in the following activities:
            (i)  investing in the stock of one or more financial
        institution subsidiaries;
            (ii)  acquiring one or more additional financial
        institution subsidiaries through the merger of such financial
        institution subsidiaries into a subsidiary of the holding
        company;
            (iii)  subject to subsection (e), merging with or
        acquiring another holding company, one of whose subsidiaries
        is a financial institution subsidiary;
            (iv)  investing in a corporation the capital stock of
        which is available for purchase by a savings bank under
        Federal law or under this act;
            (v)  engaging in such activities as are permitted, by
        statute or regulation, to a holding company of a federally
        chartered insured mutual institution under Federal law; and
            (vi)  engaging in such other activities as may be
        permitted by the department.
        (e)  Limitations on certain activities of acquired holding
     companies--
            (i)  If a mutual holding company acquires or merges with
        another holding company pursuant to subsection (d)(iii), the
        holding company acquired or the holding company resulting
        from such merger or acquisition may invest in only those
        assets and engage in only those activities which are
        authorized under subsection (d).
            (ii)  Not later than two years following a merger or
        acquisition described in subsection (d)(iii), the acquired
        holding company or the holding company resulting from such
        merger or acquisition shall:
                (A)  dispose of any asset which is an asset in which
            a mutual holding company may not invest under subsection
            (d); and
                (B)  cease any activity which is an activity in which
            a mutual holding company may not engage under subsection
            (d).
        (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. 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.
        (g)  Definitions--The following words and phrases when used
     in this section shall have, unless the context clearly indicates
     otherwise, the following meanings:
            (i)  "Mutual holding company"--a corporation organized as
        a holding company under this section.
            (ii)  "Financial institution subsidiary"--a savings
        association, a Federal savings and loan association or
        savings bank which is located in Pennsylvania, a bank, a bank
        and trust company, a trust company, a savings bank, a
        regional thrift institution or, after March 4, 1990, a
        foreign thrift institution.
        Section 3.  Section 117 of the act, amended or added December
     18, 1986 (P.L.1702, No.205) and May 18, 1988 (P.L.399, No.65),
     is amended to read:
      Section 117.  Authorization of [Regional,] Reciprocal
                            Interstate Operations of Savings Banks
        (a)  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)  "Acquire"--to acquire (as defined in section
        112(a)(i)) five percent or more of the voting stock of an
        entity and shall also mean a merger or consolidation or a
        purchase of assets and an assumption of liabilities, other
        than in the regular course of business.
            (ii)  "Bank holding company"--the same meaning as that
        term has under the Bank Holding Company Act of 1956, 12
        U.S.C. § 1841(a).
            (iii)  "Branch"--an office which performs the functions
        described in section 102(h).
            (iv)  "Control"--the power, directly or indirectly, to
        direct the management or policies of an entity or to vote
        twenty-five percent or more of any class of voting securities
        of an entity.
            (v)  "Entity"--any corporation, partnership, association
        or similar organization, including banks and thrift
        institutions.
            (vi)  "Foreign association"--a savings and loan
        association or building and loan association located in and
        organized and operating under the laws of a state other than
        Pennsylvania and a Federal association, as defined in 12
        U.S.C. § 1462(d), that is located in a state other than
        Pennsylvania.
            (vii)  "Foreign savings bank"--a savings bank located in
        and organized and operating under the laws of a state other
        than Pennsylvania.
            (viii)  "Foreign thrift institution"--a foreign savings
        bank or a foreign association.
            (ix)  "Foreign thrift institution holding company"--an
        entity which controls one or more foreign thrift institutions
        and is located in a state other than Pennsylvania.
            [(vi)] (x)  "Pennsylvania savings bank"--a savings bank
        as defined in section 102(x).
            [(vii)] (xi)  "Pennsylvania savings bank holding
        company"--an entity which controls one or more Pennsylvania
        savings banks and is located in Pennsylvania.
            [(viii)] (xii)  "Region"--the States of Delaware,
        Indiana, Kentucky, Maryland, New Jersey, Ohio, Virginia and
        West Virginia, and the District of Columbia.
            [(ix)] (xiii)  "Regional association"--a savings and loan
        association or building and loan association located in and
        organized and operating under the laws of a state in the
        region and a Federal association, as defined in 12 U.S.C. §
        1462(d), that is located in the region.
            [(x)] (xiv)  "Regional savings bank"--a savings bank
        located in and organized and operating under the laws of a
        state in the region.
            [(xi)] (xv)  "Regional thrift institution"--a regional
        savings bank or a regional association.
            [(xii)] (xvi)  "Regional thrift institution holding
        company"--an entity which controls one or more regional
        thrift institutions and is located in a state in the region.
            [(xiii)] (xvii)  "Savings and loan holding company"--as
        defined in 12 U.S.C. § 1730a(a)(1)(D).
            [(xiv)] (xviii)  "State"--includes the District of
        Columbia.
            [(xv)] (xix)  State in which an entity is "located"--
                (A)  with regard to a thrift institution, the state
            in which its deposits are largest; and
                (B)  with regard to a thrift institution holding
            company, a savings bank holding company, a savings and
            loan holding company or a bank holding company, the state
            in which the total deposits of its subsidiaries,
            including commercial banks, are largest.
        Provided, that an entity or its legal successor that is
        located in Pennsylvania on the effective date of this
        legislation shall be deemed thereafter to be located in
        Pennsylvania regardless of the location of its deposits or
        the deposits of its subsidiaries if said entity has not been
        either acquired by an entity located outside of Pennsylvania
        or a party to a merger or consolidation transaction in which
        the holders of its voting shares immediately prior to the
        transaction held less than fifty percent of the voting shares
        of any class of stock in the entity surviving after, or
        resulting from, the merger or consolidation.
        (b)  Acquisitions by [regional] foreign thrift institutions
     and [regional] foreign thrift institution holding companies--A
     [regional] foreign thrift institution or [regional] foreign
     thrift institution holding company may acquire a Pennsylvania
     savings bank or a Pennsylvania savings bank holding company if:
            (i)  the law of the state where the acquiring thrift
        institution or thrift institution holding company is located
        and the law of the state where any savings and loan holding
        company or bank holding company which directly or indirectly
        owns or controls the power to vote five percent or more of
        its shares is located satisfies, in each case, the
        reciprocity requirement of subsection (d);
            (ii)  the acquiring thrift institution or thrift
        institution holding company and any savings and loan holding
        company or bank holding company which directly or indirectly
        owns or controls the power to vote five percent or more of
        its shares is, in each case, located in a state in the region
        or in Pennsylvania, except that the requirement of location
        in the region or in Pennsylvania will not be applicable to an
        acquisition consummated after March 4, 1990; and
            (iii)  approval has been received from the department.
        When considering a proposed acquisition by a [regional]
        foreign thrift institution or a [regional] foreign thrift
        institution holding company, the department shall give
        specific attention to the effect of the acquisition on the
        availability, in this Commonwealth, of those banking and
        basic transaction account services set forth in subsections
        (i) and (j).
        (c)  Branching by [regional] foreign savings banks--
            (i)  A [regional] foreign savings bank may, with the
        prior written approval of the department, maintain as a
        branch any office acquired as part of an acquisition effected
        under this section or section 114 of the Savings Association
        Code of 1967.
            (ii)  A [regional] foreign savings bank may establish and
        maintain branches in this Commonwealth if:
                (A)  the state in which it is located and the state
            in which any savings and loan holding company or bank
            holding company which directly or indirectly owns or has
            the power to vote five percent or more of its shares is
            located satisfies, in each case, the reciprocity
            requirement of subsection (d);
                (B)  the savings bank and any savings and loan
            holding company or bank holding company which directly or
            indirectly owns or controls the power to vote five
            percent or more of its shares is, in each case, located
            in a state in the region or in Pennsylvania, except that
            the requirement of location in the region or in
            Pennsylvania will not be applicable with respect to a
            branch established after March 4, 1990; and
                (C)  the branch is approved by the department in the
            same manner and subject to the same conditions as are
            applicable to de novo branches of Pennsylvania savings
            banks under sections 904 and 905.
        (d)  Reciprocity requirement--
            (i)  The law of another state is reciprocal under this
        section to the extent the department determines it to be so.
        The department's determination under this subsection shall
        include, but is not limited to:
                (A)  with regard to acquisitions, whether the law of
            that other state authorizes Pennsylvania savings banks
            and Pennsylvania savings bank holding companies to
            acquire [regional] foreign thrift institutions and
            [regional] foreign thrift institution holding companies
            located in that state on terms and conditions reasonably
            equivalent to those applicable to acquisitions by
            [regional] foreign thrift institutions and [regional]
            foreign thrift institution holding companies of
            Pennsylvania savings banks or Pennsylvania savings bank
            holding companies and whether the law of that other state
            imposes conditions on the acquisition by Pennsylvania
            savings banks or Pennsylvania savings bank holding
            companies of [regional] foreign thrift institutions or
            [regional] foreign thrift institution holding companies
            located in that state that are substantially more onerous
            than those imposed on the same acquisitions by thrift
            institutions or thrift institution holding companies
            located in that state; and
                (B)  with regard to branching, whether the law of
            that other state authorizes Pennsylvania savings banks to
            establish or maintain branches in that state on terms and
            conditions reasonably equivalent to those applicable to
            the establishment or maintenance of branches in
            Pennsylvania by savings banks located in that state, and
            reasonably equivalent to those applicable to the
            establishment and maintenance of branches in that state
            by a savings bank located in that state.
            (ii)  The department need not determine that the law of
        another state fails to meet the reciprocity requirement of
        this subsection solely by reason of the fact that that law
        does not allow Pennsylvania savings banks or Pennsylvania
        savings bank holding companies to engage in a particular type
        of branching or acquisition, or imposes conditions on such
        branching or acquisition that are substantially more onerous
        than those imposed on the same activities of savings banks or
        savings bank holding companies located in that state.
        However, in such circumstances, the department shall find
        reciprocity only after imposing on the savings banks and
        savings bank holding companies located in that state
        conditions and limitations on branching and acquisitions in
        Pennsylvania substantially similar to those imposed on
        branching and acquisitions in that state by Pennsylvania
        savings banks and savings bank holding companies.
            (iii)  The department may determine that the law of
        another state is not reciprocal regarding a particular type
        of branching or acquisition if the law of that other state
        does not allow all Pennsylvania savings banks or,
        alternatively, all Pennsylvania savings bank holding
        companies to engage on equal terms with each other in the
        particular type of branching or acquisition.
        (e)  Authority of the department--In addition to the powers
     granted elsewhere in this section and in other provisions of
     Pennsylvania law, the department is authorized to impose any
     conditions or requirements it deems appropriate, in light of the
     purposes of this act, on thrift institutions and thrift
     institution holding companies acquired or operating directly or
     indirectly in Pennsylvania under this section. Such conditions
     or requirements include, but are not limited to, provisions for
     examinations, reports and the payment of fees. The department
     may accept examinations and other reports of Federal and state
     regulators and may enter into agreements with Federal and state
     regulators for the exchange of information, including
     examination reports.
        (f)  Change in circumstances--If a [regional] foreign thrift
     institution or [regional] foreign thrift institution holding
     company [located in another state] which has acquired a
     Pennsylvania savings bank or Pennsylvania savings bank holding
     company or has established a branch in Pennsylvania under this
     section shall have a change of circumstances so that it no
     longer satisfies the conditions of subsections (b) and (c)
     (either by reason of a change in the place in which it is
     located or by reason of acquisition by a savings and loan
     holding company or a bank holding company located in a state
     which does not satisfy the conditions of subsections (b) and (c)
     of five percent or more of its voting shares, or the power to
     vote those shares), said [regional] foreign thrift institution
     or [regional] foreign thrift institution holding company shall
     divest each Pennsylvania savings bank, savings bank holding
     company and branch it has acquired or established prior to
     entering into a voluntary combination which causes such change
     of circumstances or within one year (or such longer period of
     not more than an additional year as the department may allow in
     writing) after the occurrence of an event, other than a
     voluntary combination, which causes the change in circumstances.
        (g)  Effect of invalidity--The purpose of this section is
     solely to authorize reciprocal[, regional] interstate operations
     by savings banks and associations, and this section shall not be
     construed to authorize any acquisition or the establishment of
     any branch by any entity located in another state except as
     expressly provided in this section. In the event that any
     limitation on the geographical location of entities granted
     acquisition or branching powers by this section is held to be
     invalid by a final order of a court which is not subject to
     further review or appeal, the authorization of this section
     shall terminate immediately. Any acquisition or branch
     establishment consummated pursuant to this section prior to such
     termination shall not be affected thereby.
        (h)  Acquisitions in other states by Pennsylvania savings
     banks and Pennsylvania savings bank holding companies--A
     Pennsylvania savings bank or Pennsylvania savings bank holding
     company which proposes to acquire a thrift institution or thrift
     institution holding company located in another state shall file
     an application for approval by the department in such form and
     upon payment of such fee as the department shall prescribe and
     shall supplement such application with such additional
     information as the department may reasonably request. The
     department shall conduct such investigation as it deems
     necessary to determine whether to approve or disapprove the
     application. The investigation shall include consideration of
     the effects the proposed acquisition would have on the
     availability, in this Commonwealth, of those banking services
     and basic transaction account services set forth in subsections
     (i) and (j). Within sixty days after receipt of the application
     or within a longer period, not in excess of thirty days, after
     receipt from the applicant of additional information requested
     by the department, the department shall approve or disapprove
     the proposed acquisition and give written notice of its decision
     to the applicant. In approving an acquisition under this
     section, the department may place conditions upon such approval
     and incorporate such terms and agreements as are deemed
     necessary to effect the purposes of this act.
        (i)  Availability of banking services--The department shall
     have the authority to assure that interstate thrift acquisitions
     authorized by this section will not diminish reasonable
     availability of banking services to all segments of the public
     and economy of this Commonwealth, with special emphasis on
     economic development and the financing of enterprises to the end
     that employment opportunities will be either increased or, where
     there is the prospect of reduction, retained. Upon receipt of an
     application for approval of an acquisition by an institution or
     company located in another state under subsection (b) or
     approval of an acquisition in another state by a Pennsylvania
     savings bank or savings bank holding company under subsection
     (h), the department shall review the credit practices and
     policies of each Pennsylvania savings bank or savings bank
     holding company which is involved in the proposed transaction.
     Such review shall determine the overall performance of such
     company or institution in providing credit and financial
     services to individuals and business enterprises in the
     communities which it serves in the light of its role as a thrift
     institution, its resources, its capital and its income, the
     particular needs of such communities, competition and
     alternative sources of credit. With respect to individuals,
     there shall be a review of consumer loans, residential
     mortgages, home improvement loans and student loans,
     particularly to residents of low-income and moderate-income
     neighborhoods. With respect to business enterprises, there shall
     be a review of extensions of credit and investments intended to
     promote economic development and creation, or retention where
     there is the prospect of reduction, of employment opportunities,
     including, without limitation, Small Business Administration and
     other small business loans, industrial development loans,
     financing of employe stock option plans and leveraged buyouts of
     businesses by employes, financing of nonprofit community
     development projects, loans and investments intended to maintain
     existing businesses and to encourage economic expansion and job
     opportunities, and loans and investments to promote
     participation by businesses in this Commonwealth in
     international trade and to increase exports. The review by the
     department shall also include all other activities of the
     institution or company deemed to be suitable to its particular
     circumstances and the communities served. If the department
     determines that the overall performance of the institution or
     company has not been materially deficient and that it justifies
     the conclusion that the institution or company does and will
     provide suitable credit and financial services to its
     communities, it may approve the application without imposing any
     terms or conditions but otherwise may impose such terms and
     conditions as it deems appropriate to improve such overall
     performance over a stated period of time. The department shall,
     from time to time, review the continuing overall performance of
     each such institution or company after an acquisition and, if it
     finds that its overall performance has not continued to be
     satisfactory, shall issue such order to the applicant as it
     deems appropriate.
        (j)  Availability of basic transaction account services--The
     department shall have the authority to assure that thrift
     institution holding companies and thrift institutions that
     become part of interstate banking organizations by reason of
     acquisitions requiring approval under this section make basic
     transaction account services available to the public. For this
     purpose the department shall obtain, from all sources available
     to it or through such studies as it may commission, adequate
     information to determine:
            (i)  The needs of the public and, in particular,
        individuals with low or moderate income, for a basic checking
        or other transaction account.
            (ii)  The principal characteristics that such an account
        should have, such as the number of checks, deposits and other
        items for which a minimum charge may be made, the amount or
        rate of such minimum charge and the forms of identification
        that may be required for opening and using such an account.
            (iii)  The existing availability of basic accounts with
        some or all of such principal characteristics currently
        offered by depository institutions, including applicants
        under this section, in separate communities of this
        Commonwealth.
     An applicant shall, at the request of the department, supply
     information to the department with respect to such accounts
     offered by the applicant and by each institution which is a
     subsidiary of the applicant. The department may approve an
     application prior to the time it has acquired the information
     required by this section, but the applicant and each institution
     which is a subsidiary of the applicant shall be subject, both
     before and after an approval of the acquisition under this
     section, to requirements imposed by the department, from time to
     time, to assure to the public, in the communities served by the
     institution, the continuing availability of the basic
     transaction account services which the department has determined
     the public needs.
        (k)  Advisory Commission--For the purpose of advising the
     department in the conduct of its functions under subsections (i)
     and (j), the advisory commission established by section 116(k)
     is empowered and directed to 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). All decisions and determinations made under this
     section shall be made by the department. In evaluating an
     application which would result in an interstate acquisition or
     an interstate branch, the department shall consider the
     following regulatory criteria:
            (i)  capital adequacy;
            (ii)  asset quality;
            (iii)  management ability and effectiveness;
            (iv)  earnings quantity and quality;
            (v)  liquidity;
            (vi)  ability to meet the needs of the community;
            (vii)  effect of the transaction upon competition;
            (viii)  existence of insider transactions;
            (ix)  adequacy of all disclosures relating to the
        transactions; and
            (x)  resistance to external economic and financial
        conditions.
     The department shall not approve the application for any such
     interstate acquisition or interstate branch, unless the
     evaluation determines that all of the institutions involved in
     the transaction are in compliance with all relevant regulatory
     criteria. These regulatory criteria shall apply to all
     interstate acquisition and interstate branch applications
     involving the following institutions: a Pennsylvania savings
     bank, a Pennsylvania savings bank holding company, a foreign
     association, a foreign savings bank, a foreign thrift
     institution or a foreign thrift institution holding company.
        Section 4.  Section 203 of the act is amended by adding a
     subsection to read:
      Section 203.  Additional Powers Related to Conduct of Business
                            of Incorporated Institutions Other Than
                            Trust Companies
        A bank, a bank and trust company and a savings bank 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:
        * * *
        (e)  Membership in Federal Home Loan Bank--The power to
     become a member of the Federal Home Loan Bank System, to hold
     shares of stock in a Federal Home Loan Bank, to take all actions
     incident to maintenance of such membership and to exercise all
     powers, not inconsistent with provisions of this act, conferred
     on member banks.
        Section 5.  Section 311(d) of the act, amended December 21,
     1988 (P.L.1416, No.173), is amended to read:
      Section 311.  Transactions With Respect to Shares of Corporate
                            Stock and Capital Securities
        * * *
        (d)  Ownership--An institution may acquire and hold:
            (i)  shares of stock of a Federal Reserve Bank, without
        limitation of amount;
            (ii)  shares of stock of:
                (A)  the Federal National Mortgage Association, the
            Government National Mortgage Association, the Federal
            Home Loan Mortgage Corporation, the Student Loan
            Marketing Association, a corporation authorized to be
            created pursuant to Title IX of the Housing and Urban
            Development Act of 1968 or any other such corporations or
            agencies as may from time to time be approved by the
            department,
                (B)  a bank, a bank and trust company or a trust
            company subject to this act, a national bank located in
            Pennsylvania or a Pennsylvania bank holding company--to
            the extent of ten percent of the sum of the par value of
            the issued and outstanding shares of any such issuer,
            and, for purposes of this limitation, the shares owned by
            all the affiliates of a Pennsylvania bank holding company
            shall be aggregated to determine whether the ten percent
            limitation is reached,
                (B.1)  a subsidiary corporation engaged in the
            functions or activities that an institution is authorized
            to carry on, if the shares are acquired with the prior
            written approval of, and in accordance with the terms and
            conditions of transfer prescribed by, the department, or
                (C)  a corporation organized under the laws of the
            United States or of any state or any foreign country and
            principally engaged, directly or indirectly, in
            international or foreign banking or financial operations
            or in banking or financial operations in a dependency, or
            insular possession of the United States or in the
            Commonwealth of Puerto Rico, if the shares are acquired
            with the prior written approval of, and in accordance
            with the terms and conditions prescribed by, the
            department in an amount the cost of which to the
            institution for the shares of any such association or
            corporation so acquired or held is not in excess of ten
            percent of the aggregate of the capital, surplus and
            capital securities of the institution and in the case of
            shares covered by clause (B) of this subsection (d)(ii),
            in an amount the cost of which to the institution for the
            shares of all such issuers so acquired or held is not in
            excess of the lesser of ten percent of the total assets
            of the institution or one hundred percent of the
            aggregate of the capital, surplus and capital securities
            of the institution;
            (iii)  shares of stock of small business investment
        companies organized pursuant to the Small Business Investment
        Act, in an amount the cost of which is not in excess of one
        percent of the aggregate of the capital, surplus and capital
        securities of the institution;
            (iv)  in the case of a bank and trust company, shares of
        stock of a corporation organized under the laws of the
        Commonwealth for the purpose of conducting a title insurance
        business to which the institution has transferred the assets
        of its title insurance business, in an amount:
                (A)  the cost of which is not in excess of the lesser
            of (1) ten percent of the aggregate of the capital,
            surplus and capital securities of the institution or (2)
            double the minimum amount of capital and paid-in surplus
            required for the incorporation of such corporation, or
                (B)  with the prior approval of the department, the
            cost of which is not in excess of fifteen percent of the
            aggregate of the capital, surplus and capital securities
            of the institution;
            (v)  shares of stock of business development credit
        corporations to the extent provided by the Business
        Development Credit Corporation Law;
            (vi)  shares of stock of a corporation organized to
        promote the public welfare and community development, expand
        the economy or provide for social reform, subject to
        regulation by the department;
            (vii)  shares of stock of a clearing corporation as
        defined in Article 8 of the Uniform Commercial Code;
            (viii)  shares of stock of a stock savings bank located
        in Pennsylvania;
            (ix)  shares of stock of a corporation engaged
        exclusively in activities not prohibited by this act, which
        shares have been held continuously since November 30, 1965;
        [and]
            (x)  shares of stock of a savings association, a Federal
        savings and loan association or a Federal savings bank,
        located in Pennsylvania, provided that an institution may
        hold no more than ten percent of the outstanding shares of
        the common stock of such savings association, Federal savings
        and loan association or Federal savings bank[.]; and
            (xi)  shares of stock of a Federal Home Loan Bank,
        without limitation of amount.
        * * *
        Section 6.  Sections 312 and 314(b) of the act are amended to
     read:
      Section 312.  Pledges For Deposits
        (a)  An institution may pledge assets as security for
     deposits of:
            (i)  public funds,
            (ii)  funds of a pension fund for employes of a political
        subdivision of the Commonwealth,
            (iii)  funds for which a political subdivision of the
        Commonwealth or an officer or employe thereof is the
        custodian or trustee pursuant to statute,
            (iv)  funds held by the Secretary of Banking as receiver
        or by the Insurance Commissioner as statutory liquidator,
            (v)  funds which are required to be secured by law or by
        an order of a court, [and]
            (vi)  in the case of a bank and trust company, funds held
        in a fiduciary capacity and deposited in its commercial
        department pursuant to subsection 403 (c) of this act[.], and
            (vii)  funds held in a fiduciary capacity by a trust
        company which is an affiliate of the institution.
        (b)  An institution may not pledge assets as security for
     deposits other than those covered by subsection (a) of this
     section.
      Section 314.  Borrowings
        * * *
        (b)  The aggregate amount of outstanding liabilities of an
     institution for money borrowed exclusive of:
            (i)  liabilities to a Federal Reserve Bank on account of
        money borrowed or rediscounts,
            (ii)  liabilities on account of the acquisition of
        reserve balances at a Federal Reserve Bank or other reserve
        agent from a member or non-member bank,
            (iii)  liabilities on account of agreements to repurchase
        securities sold by the institution (commonly known as
        "repurchase agreements") [and],
            (iv)  liabilities which do not constitute or result from
        the borrowing of money under definitions prescribed by
        regulation of the department, and
            (v)  liabilities to a Federal Home Loan Bank on account
        of money borrowed or rediscounts
     shall not at any time exceed the aggregate of the amount of its
     capital and one-half of the amount of its surplus.
        Section 7.  Section 504(b)(xiii) of the act, amended December
     21, 1988 (P.L.1416, No.173), is amended to read:
      Section 504.  Investments
        * * *
        (b)  Authority under this act or other statutes--Except as
     otherwise provided in its articles, a savings bank may, in
     addition to investments authorized by its articles, other
     provisions of this act or other statutes, make investments in:
            * * *
            (xiii)  in the case of a savings bank which has elected
        to exercise the conditional powers provided in section 513,
        capital stock, securities or other obligations of any service
        corporation, subject to the following limitations:
                (A)  the entire capital stock of the service
            corporation shall be available for purchase by, or be
            transferable to, only savings banks, savings and loan
            associations organized under the laws of this
            Commonwealth, Federal savings banks and savings and loan
            associations having their home offices in this
            Commonwealth, [or] regional thrift institutions, as that
            term is defined in section 117, or, after March 4, 1990,
            foreign thrift institutions, as that term is defined in
            section 117,
                (B)  unless authorized by the department a savings
            bank shall not have an aggregate outstanding investment
            in the capital stock, securities or obligations of
            service corporations the cost of which exceeds three
            percent of the assets of the savings bank at the time of
            acquisition of such stock, securities or obligations,
                (C)  a service corporation qualifying for investment
            under this subsection may engage in the following
            activities:
                    (1)  originating, purchasing, selling and
                servicing loans upon real estate and participating
                interests therein,
                    (2)  performing clerical, bookkeeping,
                accounting, statistical or similar functions,
                primarily for financial institutions,
                    (3)  acquisition and development of real estate,
                principally for construction of housing or for resale
                to others for such construction or for use as mobile
                home sites, either separately or in conjunction with
                others provided that such development shall be
                completed within five years of the commencement of
                development, unless that period is extended by the
                department,
                    (4)  acquiring interests in improved residential
                real estate and mobile homes to be held for rental,
                and
                    (5)  any other activity authorized by the
                department by regulation; and
            * * *
        Section 8.  Section 903(a) of the act, amended March 4, 1982
     (P.L.135, No.44) and April 8, 1982 (P.L.262, No.79), is amended
     to read:
      Section 903.  Change of Location of Office
        (a)  Change of principal place of business--An institution
     may, with the prior written approval of the department and, in
     the case of an incorporated institution by amendment of its
     articles, change the location of its principal place of business
     to a new location[:
            (i)  in the same city, incorporated town, borough or
        township, or
            (ii)  in the same county or in a county contiguous
        thereto if
                (A)  the total of its surplus, unallocated reserves
            and undivided profits in the case of a mutual savings
            bank, or its net worth in the case of a private bank or
            employes' mutual banking association, at least equals a
            minimum amount specified by the department,
                (B)  in the case of any other institution, its
            capital and surplus are at least equal to the minimum
            capital and surplus which would be required by this act
            upon original incorporation with a principal place of
            business in the city, incorporated town, borough or
            township of the new location and, if the institution has
            branches, it has the additional capital and surplus
            required by this act for the establishment of such
            branches, or
                (C)  the institution has not previously changed the
            location of its principal place of business to a new
            location in a county contiguous to the county where the
            institution was originally chartered to do business. If
            an institution has made a previous change, it may
            relocate to the county where it was originally chartered
            to do business or to any county contiguous thereto.]
     anywhere in this Commonwealth.
        * * *
        Section 9.   Section 1609(a)(iii) of the act, amended
     December 18, 1986 (P.L.1702, No.205), is amended to read:
      Section 1609.  Mergers, Consolidations and Conversions of
                            Savings Banks
        (a)  Authority to merge, consolidate or convert--
            * * *
            (iii)  upon compliance with the requirements of this
        section and other applicable law,
                (A)  one or more savings banks, one or more Federal
            savings banks and one or more Federal savings and loan
            associations may merge into a savings bank, Federal
            savings bank or a Federal savings and loan association or
            consolidate into a new savings bank, a new Federal
            savings bank or a new Federal savings and loan
            association, [and]
                (B)  one or more savings banks may merge or
            consolidate with a regional thrift institution, and,
            after March 4, 1990, with a foreign thrift institution,
            as those terms are defined in and subject to any
            applicable limits of section 117[.], and
                (C)  a business corporation which owns all of the
            issued and outstanding shares of a savings bank may merge
            into such savings bank.
            * * *
        Section 10.  Section 1808(a)(i) of the act is amended to
     read:
      Section 1808.  Involuntary Dissolution
        (a) Issuance of certificate of dissolution by department--In
     the event that:
            (i) a certificate of authorization has not been issued to
        a newly incorporated institution within [two years] one year
        after the date of its incorporation or such longer time as
        the department may allow for satisfaction of conditions
        precedent to the issuance of a certificate,
            * * *
        Section 11.  This act shall take effect immediately.

     APPROVED--The 18th day of December, A. D. 1990.

     ROBERT P. CASEY