BANKING CODE OF 1965 - AMEND
                  Act of Jun. 16, 1994, P.L. 346, No. 51              Cl. 07
                             Session of 1994
                               No. 1994-51

     HB 2650

                                  AN ACT

     Amending the act of November 30, 1965 (P.L.847, No.356),
        entitled "An act relating to and regulating the business of
        banking and the exercise by corporations of fiduciary powers;
        affecting persons engaged in the business of banking and
        corporations exercising fiduciary powers and affiliates of
        such persons; affecting the shareholders of such persons and
        the directors, trustees, officers, attorneys and employes of
        such persons and of the affiliates of such persons; affecting
        national banks located in the Commonwealth; affecting persons
        dealing with persons engaged in the business of banking,
        corporations exercising fiduciary powers and national banks;
        conferring powers and imposing duties on the Banking Board,
        on certain departments and officers of the Commonwealth and
        on courts, prothonotaries, clerks and recorders of deeds;
        providing penalties; and repealing certain acts and parts of
        acts," providing for indemnity and immunity of certain
        directors; and further providing for mergers, consolidations
        and conversions of savings banks.

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

        Section 1.  Section 102 of the act of November 30, 1965
     (P.L.847, No.356), known as the Banking Code of 1965, is amended
     by adding a subsection to read:
      Section 102.  Definitions
        Subject to additional definitions contained in subsequent
     chapters of this act which are applicable to specific chapters
     or sections thereof, the following words and phrases when used
     in this act shall have, unless the context clearly indicates
     otherwise, the meanings given to them in this section:
        * * *
        (z.1)  "Special institution"--any of the following:
            (i)  A State-chartered bank which meets all of the
        following criteria:
                (A)  Has previously assumed or may assume deposit
            liabilities of an entity which was subject to the
            supervision of the department under the act of May 15,
            1933 (P.L.565, No.111), known as the "Department of
            Banking Code," the act of December 14, 1967 (P.L.746,
            No.345), known as the "Savings Association Code of 1967,"
            or this act and whose deposits were not insured by the
            Federal Deposit Insurance Corporation or any other
            Federal agency authorized by law to insure deposits.
                (B)  Is wholly owned directly or indirectly by an
            agency or instrumentality of the Commonwealth, including
            specifically, the State Workmen's Insurance Fund.
                (C)  Has deposits that are insured by the Federal
            Deposit Insurance Corporation or any other Federal agency
            authorized by law to insure deposits.
            (ii)  The nonprofit corporation created by the act of
        April 6, 1979 (P.L.17, No.5), referred to as the Pennsylvania
        Savings Association Insurance Corporation Act.
        * * *
        Section 2.  The act is amended by adding a section to read:
      Section 1417.  Indemnity and Immunity of Certain Directors
        (a)  Indemnity--
            (i)  The department shall have the power and its duty
        shall be to procure, on behalf of the members of the board of
        directors of special institutions as defined in section
        102(z.1)(i), directors' liability insurance or such other
        contract of insurance providing for the indemnification of
        these directors against any liability asserted against them
        or incurred by them solely in their capacity or arising out
        of their status as directors, including actions undertaken in
        connection with the organization of the special institution.
            (ii)  The department shall have the power and its duty
        shall be to procure, on behalf of the members appointed by
        the Governor of the board of directors of special
        institutions as defined in section 102(z.1)(ii), directors'
        liability insurance or such other contract of insurance
        providing for the indemnification of these directors against
        any liability asserted against them or incurred by them
        solely in their capacity or arising out of their status as
        directors, including actions undertaken in connection with
        the organization of the special institution.
            (iii)  The department is authorized to provide otherwise
        for indemnification under this subsection in lieu of
        directors' liability insurance.
            (iv)  Indemnification under this subsection includes, but
        is not limited to, expenses and fees incurred in defending
        any action or proceeding relating to their status as
        directors.
        (b)  Immunity--Notwithstanding any other provision of law to
     the contrary, the directors of a special institution shall be
     deemed to be Commonwealth employes subject to and for all of the
     purposes of 42 Pa.C.S. Ch. 85 (relating to matters affecting
     government units). The immunity conferred under this subsection
     shall apply to all actions of the directors in accordance with
     subsection (a), including actions undertaken in connection with
     the organization of the special institution.
        (c)  Applicability--This section shall apply to all actions
     taken as members of the board of directors in accordance with
     subsection (a) prior to the effective date of this section.
        Section 3.  Section 1609(a) and (b) of the act, amended July
     6, 1984 (P.L.606, No.125), July 6, 1984 (P.L.621, No.128), July
     10, 1986 (P.L.1393, No.119), December 18, 1986 (P.L.1702,
     No.205) and December 18, 1990 (P.L.766, No.191), are amended to
     read:
      Section 1609.  Mergers, Consolidations and Conversions of
                    Savings Banks
        (a)  Authority to merge, consolidate or convert--
            (i)  upon compliance with the requirements of sections
        1602, 1603, 1604, 1605 and 1606, a savings bank may enter
        into a merger or consolidation with one or more other savings
        banks. In the event the book value of the total assets of the
        acquired savings bank is less than one percent in excess of
        the book value of the total liabilities, the resulting
        institution may maintain as a branch, any office operated by
        the acquired institution.
            (ii)  upon compliance with the requirements of this
        section and other applicable law, one or more savings banks
        and one or more associations may merge into a savings bank or
        into an association or consolidate into a new savings bank or
        a new association. The word "association" in this chapter
        shall mean an association subject to the Savings Association
        Code of 1967.
            (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,
                (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.
            (iv)  the authority of a savings bank to merge or
        consolidate into a Federal savings bank or Federal savings
        and loan association shall be subject to the condition that
        at the time of the transaction the laws of the United States
        shall authorize a Federal savings bank or Federal savings and
        loan association to merge or consolidate into a savings bank.
            (v)  upon compliance with the requirements of this
        section and other applicable law,
                (A)  a savings bank may be converted into an
            association,
                (B)  a savings bank may be converted into a Federal
            savings bank or a Federal savings and loan association,
            subject to the condition that at the time of the
            transaction the laws of the United States shall authorize
            a Federal savings bank or a Federal savings and loan
            association to convert into a savings bank, or
                (C)  an association may convert to a savings bank. An
            association whose deposits were insured by the
            Pennsylvania Savings Association Insurance Corporation
            prior to conversion may maintain all existing branches
            operating at the time application for conversion is made
            if the application is made within ninety days of the
            effective date of this subclause.
            (vi)  upon compliance with the requirements of this
        section and other applicable law and subject to the laws of
        the United States, a Federal savings bank or a Federal
        savings and loan association may be converted into a savings
        bank or an association.
            (vii)  upon compliance with the requirements of this
        section, a mutual savings bank may be converted into a stock
        savings bank. A stock savings bank shall have authority, upon
        compliance with the requirements of this section, to enter
        into a merger or consolidation with one or more other stock
        savings banks, banks, national banking associations, bank and
        trust companies, trust companies or stock savings and loan
        associations.
            (viii)  all mergers, consolidations and conversions in
        which the resulting corporation is a savings bank or an
        association shall be subject to the approval of the
        department.
        (b)  Requirements for a merger, consolidation or conversion--
     The requirements for a merger, consolidation or conversion under
     clauses (ii), (iii), (v), (vi) or (vii) of subsection (a) which
     must be satisfied by the parties thereto are as follows:
            (i)  the parties shall adopt a plan stating the method,
        terms and conditions of the merger, consolidation or
        conversion, including the rights under the plan of the
        members, depositors and shareholders, if any, of each of the
        parties, and any agreement concerning the merger or
        consolidation.
            (ii)  if the proposed merger, consolidation or conversion
        will result in a Federal savings bank, a savings bank, a
        Federal savings and loan association or an association,
        adoption of the plan by each party thereto shall require the
        affirmative vote,
                (A)  in the case of a mutual savings bank, of at
            least two-thirds of the trustees present at a meeting at
            which the plan is proposed, and two-thirds of all the
            trustees at a subsequent meeting held upon not less than
            ten days' notice to all the trustees,
                (B)  in the case of a stock savings bank, of at least
            a majority of the trustees, at a meeting held upon not
            less than ten days' notice to all the trustees, and of
            the shareholders entitled to cast at least two-thirds of
            the votes which all shareholders are entitled to cast
            thereon, at a meeting held upon not less than ten days'
            notice to all shareholders,
                (C)  in the case of a Federal savings bank, a Federal
            savings and loan association or an association, of two-
            thirds of the entire membership of the board of
            directors,
                (D)  in the case of any other party, such vote as is
            required by law for merger, consolidation or conversion,
            and
                (E)  in the case of the notice required to be given
            to the trustees of a savings bank and to the shareholders
            of a stock savings bank shall include a copy or summary
            of the plan. The department may require such vote of the
            members of an association as it deems proper.
            (iii)  any modification of a plan which has been adopted
        shall be made by any method provided therein, or in the
        absence of such provision by the same vote as that required
        for adoption.
            (iv)  if a proposed merger, consolidation or conversion
        will result in a savings bank or an association, an
        application for the required approval thereof by the
        department shall be made in a manner prescribed by the
        department. The department may require notice to be given to
        such persons as it designates. There shall also be delivered
        to the department:
                (A)  articles of merger, consolidation or conversion,
                (B)  applicable fees payable to the department in
            connection with the articles and with the conduct of the
            investigation required by subsection (e),
                (C)  if the resulting corporation is an association,
            any documents or other items required under the Savings
            Association Code of 1967.
                (D)  if the proposed name of the resulting savings
            bank or association is not identical with the name of one
            of the parties to the plan, evidence of reservation of
            such name in the Department of State, and
                (E)  if there is any modification of the plan at any
            time prior to the approval by the department, an
            amendment of the application and, if necessary, of the
            articles, signed in the same manner as the originals,
            setting forth the modification of the plan, the method by
            which such modification was adopted and any related
            change in the provisions of the articles of merger,
            consolidation or conversion.
            (v)  if a proposed merger, consolidation or conversion
        will result in a national banking association, all
        requirements of the applicable Federal law shall be met.
        * * *
        Section 4.  The provisions of this act are severable. If any
     provision of this act or its application to any person or
     circumstance is held invalid, the invalidity shall not affect
     other provisions or applications of this act which can be given
     effect without the invalid provision or application.
        Section 5.  This act shall take effect immediately.

     APPROVED--The 16th day of June, A. D. 1994.

     ROBERT P. CASEY