Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
March 11, 2020
S. 1115
S. Printed 3/11/20--S. [SEC 3/12/20 11:35 AM]
Read the first time February 19, 2020.
To whom was referred a Bill (S. 1115) to amend the Code of Laws of South Carolina, 1976, by adding Section 34-1-150 so as to provide requirements for an applicant seeking permission to organize, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
RONNIE W. CROMER for Committee.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 34-1-150 SO AS TO PROVIDE REQUIREMENTS FOR AN APPLICANT SEEKING PERMISSION TO ORGANIZE A BANK; BY ADDING SECTION 34-1-160 SO AS TO PROVIDE CONDITIONS THAT MUST BE MET IN ORDER TO AUTHORIZE THE ORGANIZATION OF A PROPOSED BANK; BY ADDING SECTION 34-1-170 SO AS TO PROVIDE FOR THE REQUIREMENTS OF THE ARTICLES OF INCORPORATION OF A PROPOSED BANK; BY ADDING SECTION 34-1-180 SO AS TO PROVIDE THE REQUIREMENTS FOR THE BOARD OF FINANCIAL INSTITUTIONS TO APPROVE A CHARTER FOR A PROPOSED BANK; BY ADDING SECTION 34-1-190 SO AS TO PROVIDE THAT THE BOARD SHALL DECIDE WHETHER TO UPHOLD OR OVERTURN ITS APPROVAL OR DENIAL OF AN APPLICATION; BY ADDING SECTION 34-1-200 SO AS TO PROVIDE THE REQUIREMENTS FOR ISSUING A BANK CHARTER; BY ADDING SECTION 34-1-210 SO AS TO PROVIDE THAT A REMOTE SERVICE UNIT IS NOT CONSIDERED A BRANCH OF A BANK; TO AMEND SECTION 34-3-350, RELATING TO THE REVIEW OF REPORTS OF EXAMINATIONS, SO AS TO PROVIDE THAT THE COMMISSIONER OF BANKING SHALL FORWARD A COPY OF THE REPORT TO THE CHIEF EXECUTIVE; TO AMEND SECTION 34-3-360, RELATING TO THE FORM OF NOTICE TO A CASHIER, SO AS TO REPLACE "STATE BOARD OF BANK CONTROL" WITH "COMMISSIONER OF BANKING" AND TO REPLACE "CASHIER" WITH "CHIEF EXECUTIVE"; TO AMEND SECTION 34-3-370, RELATING TO THE FORM OF REPORT TO THE STATE BOARD, SO AS TO REPLACE "STATE BOARD OF BANK CONTROL" WITH "COMMISSIONER OF BANKING" AND TO REPLACE "PRESIDENT OR CASHIER" WITH "CHIEF EXECUTIVE"; TO AMEND SECTION 34-3-380, RELATING TO REPORTS OF CONDITION, SO AS TO REPLACE "PRESIDENT OR CASHIER" WITH "CHIEF EXECUTIVE OR CHIEF FINANCIAL OFFICER" AND TO PROVIDE THAT TWO DIRECTORS SHALL VERIFY THE REPORT; TO AMEND SECTION 34-3-810, RELATING TO THE CONVERSION OF A NATIONAL BANK OR NON-SOUTH CAROLINA STATE BANK INTO A SOUTH CAROLINA STATE BANK, SO AS TO PERMIT ANOTHER STATE'S BANK TO CONVERT INTO A SOUTH CAROLINA STATE BANK AND TO REQUIRE BOARD APPROVAL AND TO REQUIRE A NATIONAL OR OTHER STATE BANKING CORPORATION TO FILE AN APPLICATION OF CONVERSION; TO AMEND SECTION 34-3-820, RELATING TO THE TIMING OF THE CORPORATE EXISTENCE OF THE STATE BANK, SO AS TO INCLUDE REFERENCES TO A NON-SOUTH CAROLINA STATE BANK CONVERTING TO A SOUTH CAROLINA STATE BANK; TO AMEND SECTION 34-3-830, RELATING TO THE TRANSFER OF ASSETS TO THE SOUTH CAROLINA STATE BANK, SO AS TO INCLUDE REFERENCES TO A NON-SOUTH CAROLINA STATE BANK CONVERTING TO A SOUTH CAROLINA STATE BANK; TO AMEND SECTION 34-3-840, RELATING TO THE DIRECTORS AND ORGANIZATION OF A NATIONAL BANKING CORPORATION OR STATE BANKING CORPORATION, SO AS TO PROVIDE THAT UNLESS OTHERWISE ELECTED BY THE SHAREHOLDERS OF THE NATIONAL BANKING CORPORATION OR STATE BANKING CORPORATION, THE DIRECTORS AND OFFICERS IN OFFICE AT THE TIME OF ITS DISSOLUTION ARE THE DIRECTORS AND OFFICERS OF THE BANK CREATED; TO AMEND SECTION 34-9-10, RELATING TO THE AMOUNT OF CAPITAL STOCK TO BE PAID IN CASH, SO AS TO PROVIDE PAYMENT OF UNITED STATES CURRENCY AND TO DELETE A PROVISION THAT REQUIRES NO AUTHORIZED BUT UNISSUED CAPITAL STOCK MAY BE ISSUED WITHOUT APPROVAL BY THE BOARD; TO AMEND SECTION 34-9-40, RELATING TO MINIMUM CAPITAL STOCK REQUIREMENTS, SO AS TO PROVIDE THAT A BANKING COMPANY OR CORPORATION MUST HAVE MINIMUM CAPITAL IN THE AMOUNT REQUIRED BY THE STATE BOARD OF FINANCIAL INSTITUTIONS; TO AMEND SECTION 34-11-60, RELATING TO FRAUDULENT CHECKS, SO AS TO REMOVE THE REQUIREMENT THAT A HOME TELEPHONE NUMBER IS NECESSARY TO ESTABLISH PRIMA FACIE EVIDENCE AGAINST A DEFENDANT; TO AMEND SECTION 34-13-140, RELATING TO THE RESTRICTIONS ON LOAN OR DISCOUNT ON OR PURCHASE OF A BANK'S OWN STOCK, SO AS TO PROVIDE AN EXCEPTION TO THE RESTRICTION IF THE PURCHASE IS APPROVED BY THE BOARD OF FINANCIAL INSTITUTIONS OR IF THE BANKING ASSOCIATION HOLDS THE OUTSTANDING SHARES AS TREASURY STOCK; TO AMEND SECTION 34-26-350, RELATING TO THE PRINCIPAL PLACE OF BUSINESS OF A CREDIT UNION, SO AS TO PROVIDE THAT THE MAINTENANCE OF THE FACILITY MUST BE REASONABLY NECESSARY TO FURNISH SERVICE TO ITS MEMBERS OR POTENTIAL MEMBERS; TO AMEND SECTION 34-26-530, RELATING TO AN APPLICATION FOR MEMBERSHIP TO A CREDIT UNION, SO AS TO REMOVE A REQUIREMENT FOR MEMBERSHIP OFFICERS TO APPROVE APPLICATIONS; TO AMEND SECTION 34-26-640, RELATING TO BOARD MEETINGS, SO AS TO PROVIDE THAT THE BOARD MUST MEET AT LEAST QUARTERLY; TO AMEND SECTION 34-26-645, RELATING TO THE DUTIES OF THE BOARD, SO AS TO REMOVE THE DUTY TO ESTABLISH TITLES FOR SENIOR MANAGEMENT POSITIONS; TO AMEND SECTION 34-26-1220, RELATING TO THE CONVERSION OF A CREDIT UNION, SO AS TO PROVIDE THAT THE ASSETS AND LIABILITIES OF THE CREDIT UNION WILL VEST IN AND BECOME THE PROPERTY OF THE SUCCESSOR CREDIT UNION; TO REPEAL CHAPTER 12 OF TITLE 34 RELATING TO COUNTY AND MULTI-COUNTY CHECK CLEARING HOUSES; TO REPEAL SECTION 34-1-70 RELATING TO THE APPROVAL OF CHARTERS OF BANKS, BUILDING AND LOAN ASSOCIATIONS, SAVINGS AND LOAN ASSOCIATIONS, AND SAVINGS BANKS; TO REPEAL SECTION 34-3-60 RELATING TO BRANCH BANK IDENTIFICATION; TO REPEAL SECTION 34-9-70 RELATING TO CERTAIN PAID-IN CAPITAL REQUIREMENTS AND EXCEPTIONS; TO REPEAL SECTION 34-9-80 RELATING TO THE ISSUANCE OF PREFERRED STOCK; TO REPEAL SECTION 34-11-40 RELATING TO THE DUPLICATE FOR LOST OR DESTROYED TIME CERTIFICATE OF DEPOSITS; AND TO REPEAL SECTION 34-11-50 RELATING TO THE DUPLICATE FOR ANY LOST OR DESTROYED CERTIFICATE OF DEPOSIT OR SAVINGS ACCOUNT BOOK.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 1, Title 34 of the 1976 Code is amended by adding:
"Section 34-1-150. (A) An applicant for permission to organize a bank, building and loan association, savings and loan association, or savings bank and for a charter shall file an application with the Board of Financial Institutions. The application must be in the form required by the board and must contain information as the board requires, set forth in sufficient detail to enable the board to evaluate the applicant's satisfaction of the criteria set forth in Section 34-1-180. The applicant shall pay a nonrefundable application fee as prescribed by the board at the time of filing the application.
(B) An applicant for permission to establish a branch bank, branch building and loan association, branch savings and loan association, or branch savings bank shall file an application with the board. The application must be in the form required by the board and must contain information, set forth in sufficient detail, to enable the board to evaluate whether the establishment of a branch would serve the public interest, taking into consideration local circumstances and conditions at the place where the applicant proposes to do business.
(C) Upon receipt of an application to organize or to establish a branch of a bank, building and loan association, savings and loan association, or savings bank, the board shall conduct an examination of the applicant and any other matters considered relevant by the board. The board may require additional information and may require the amendment of the application in the course of the examination. An applicant's failure to furnish all required information or to pay any required fee within thirty days after filing the application may be considered an abandonment of the application.
Section 34-1-160. (A) With the approval of the board, the organizers may file articles of incorporation for the proposed bank, building and loan association, savings and loan association, or savings bank with the Secretary of State. The board shall authorize the organization of the proposed bank, building and loan association, savings and loan association, or savings bank if the commissioner is satisfied that each of the following conditions are met:
(1) the application is complete;
(2) the examination as provided for in Section 34-1-150(C) indicates that the requirements for the issuance of a charter to the applicant as described in Section 34-1-180 are reasonably likely to be satisfied; and
(3) the proposed name of the proposed bank, building and loan association, savings and loan association, or savings bank is not likely to mislead the public as to its character or purpose and is not the same as a name already adopted by an existing depository institution or trust institution operating in this State.
(B) If the board approves the organization of the proposed bank, building and loan association, savings and loan association, or savings bank, the board shall issue a certificate to the Secretary of State. The Secretary of State shall transmit to the board a certified copy of the filed articles of incorporation of the proposed bank, building and loan association, savings and loan association, or savings bank.
(C)(1) Unless and until the board approves and issues a charter to the proposed bank, building and loan association, savings and loan association, or savings bank, it may not transact any business except as is incidental and necessary to its organization or the application for a charter or preparation for commencing the business of banking.
(2) All funds, other than its operational expense fund from which to pay organizational expenses, and paid-for shares of the proposed bank, building and loan association, savings and loan association, or savings bank must be placed in escrow under a written escrow agreement with a third-party escrow agent satisfactory to the commissioner.
(3) All funds for shares placed into escrow and all dividends or interest on the funds may be removed from escrow only with the commissioner's approval except to the extent that the funds are refunded to subscribers or as otherwise required by law.
(D) A proposed bank, building and loan association, savings and loan association, or savings bank is subject to the jurisdiction of the commissioner and the board.
Section 34-1-170. (A) The articles of incorporation of a proposed bank, building and loan association, savings and loan association, or savings bank must be signed and acknowledged by or on behalf of an organizer and must contain the following:
(1) the information required to be set forth in articles of incorporation under Title 33;
(2) any provision consistent with Title 33 and other applicable law that the organizers elect to set forth for the regulation of the internal affairs of the proposed bank, building and loan association, savings and loan association, or savings bank and that the board authorizes or requires; and
(3) any provision the board requires or authorizes as a substitute for a provision that otherwise would be required by Title 33.
(B) Before the chartering of a proposed bank, building and loan association, savings and loan association, or savings bank, the articles of incorporation filed under the provisions of Section 34-1-160 must be sufficiently certified to the FDIC or any other applicable regulatory agencies that the proposed bank, building and loan association, savings and loan association, or savings bank is a legal entity.
Section 34-1-180. (A) The board may approve a charter for a proposed bank, building and loan association, savings and loan association, or savings bank only when the board determines that all of the following requirements have been satisfied or are reasonably probable to be satisfied within a reasonable period of time specified by the board in the order of approval:
(1) The proposed bank, building and loan association, savings and loan association, or savings bank has solicited or will solicit subscriptions for purchases of shares sufficient to provide an amount of required capital satisfactory to the board for the commencement of the business of banking.
(2) All prior public solicitations for purchases of shares and all future solicitations will be solicited with appropriate disclosure, taking into account all the circumstances of the public solicitation, including a prominent statement in any solicitation document to the effect that the solicitation has not been approved by the board and that a representation to the contrary is a criminal offense.
(3) All payments for purchases of shares in a bank, building and loan association, savings and loan association, or savings bank in organization are made in United States currency.
(4) The proposed bank, building and loan association, savings and loan association, or savings bank has an operational expense fund from which to pay organizational expenses, in an amount determined by the board to be sufficient for the safe and sound operation of the proposed bank, building and loan association, savings and loan association, or savings bank while the charter application is pending.
(5) The proposed bank, building and loan association, savings and loan association, or savings bank has been formed for legitimate and lawful business purposes.
(6) The character, competence, and experience of the organizers, proposed directors, proposed officers, and initial holders of more than ten percent of the voting securities of the proposed bank, building and loan association, savings and loan association, or savings bank will command the confidence of the public.
(7) The proposed officers and directors, as a group, have degrees of character, competence, and experience sufficient to justify a belief that the proposed bank, building and loan association, savings and loan association, or savings bank is free from improper or unlawful influence and otherwise will operate safely, soundly, and in compliance with law.
(8) The anticipated volume and nature of business of the proposed bank, building and loan association, savings and loan association, or savings bank projected in the application are reasonable and indicate a reasonable probability of safe, sound, and profitable operation of the proposed bank, building and loan association, savings and loan association, or savings bank.
(9) If the proposed bank, building and loan association, savings and loan association, or savings bank intends to conduct 'trust business', trust powers should be granted based on consideration of the various factors set forth in Chapter 21, Title 34 for considering applications and setting capital for a trust institution.
(B) The board's determination that the requirements described in subsection (A) are reasonably probable of satisfaction may be based on partial satisfaction of the requirements at a level set by the board as a prerequisite for approval of the charter, and also may be based on presentation of a plan for the full satisfaction of the requirements.
(C) If the board determines that the proposed bank, building and loan association, savings and loan association, or savings bank has satisfied or is reasonably probable to satisfy the requirements for issuance of a charter, the board shall issue an order approving the application for a charter. The board may, in the order approving the proposed bank, building and loan association, savings and loan association, or savings bank's charter, impose other reasonable conditions or restrictions upon the proposed bank, building and loan association, savings and loan association, or savings bank or the new bank, building and loan association, savings and loan association, or savings bank, consistent with this chapter.
(D) If the board determines that the proposed bank, building and loan association, savings and loan association, or savings bank has not satisfied and is not reasonably probable of satisfying the requirements for issuance of a charter or if the board determines that the application to establish a branch does not meet the requirements, the board shall issue an order denying approval of the application, pending a request for a hearing by the applicant. The applicant may, within ten days of issuance of the order, give notice of appeal of this decision to the board.
Section 34-1-190. (A) The board shall decide whether to uphold or overturn its denial of an application within sixty days after receipt of the applicant's request for a hearing. However, if the board requests additional information from the applicant following receipt, the time limit for decision by the board must be the later of:
(1) the date set forth in this subsection; or
(2) thirty days after the board's receipt