Senate Bill No. 224
(By Senators Helmick, Bowman, Kessler, Minard, Fanning, Ross,
Sharpe, Anderson, Minear and Sprouse)
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[Introduced January 26, 1999;
referred to the Committee on Banking and Insurance;
and then to the Committee on Finance.]
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A BILL to amend and reenact section two, article three, chapter
thirty-one-a of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; to amend and reenact section
twelve, article eight of said chapter; to further amend said
article by adding thereto a new section, designated section
twelve-d; and to amend and reenact section three, article
eight-e of said chapter, all relating to branch banking;
authorizing the board of banking and financial institutions
to receive and hear appeals from parties adversely affected
by an order of the commissioner issued under section twelve- d, article eight, chapter thirty-one-a of said bill;
reducing the examination and investigation fee of applicants
for a branch bank and authorizing the commissioner to require examinations of financial institutions that are
merged into a state-chartered bank; providing new standards
for an applicant state-chartered banking institution to
qualify for branch banking; providing an alternative
procedure for a banking institution to establish a branch
bank by de novo construction or lease; and procedures for
interstate branching by West Virginia state banks.
Be it enacted by the Legislature of West Virginia:
That section two, article three, chapter thirty-one-a of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; that section twelve, article
eight of said chapter be amended and reenacted; that said article
be further amended by adding thereto a new section, designated
section twelve-d; and that section three, article eight-e of said
chapter amended and reenacted, all to read as follows:
ARTICLE 3. BOARD OF BANKING AND FINANCIAL INSTITUTIONS.
§31A-3-2. General powers and duties.
(a) In addition to other powers conferred by this chapter,
the board shall have has the power to:
(1) Regulate its own procedure and practice;
(2) Promulgate reasonable rules to implement any provision
of this article such rules to be promulgated in accordance with
the provisions of article three, chapter twenty-nine-a of this
code;
(3) Advise the commissioner in all matters within his or her
jurisdiction;
(4) Study the organization, programs and services of
financial institutions and the laws relating thereto in this
state and in other jurisdictions, and to report and recommend to
the governor and the Legislature all such changes and amendments
in laws, policies and procedures relating thereto as may be by it
deemed it considers proper;
(5) Grant permission and authority to a financial
institution:
(A) To participate in a public agency hereafter created
under the laws of this state or of the United States, the purpose
of which is to afford advantages or safeguards to financial
institutions or to depositors therein, and to comply with all
lawful requirements and conditions imposed upon such those
participants;
(B) To engage in any financial institution activity, services, procedures and practices in which financial
institutions of the same type subject to the jurisdiction of the
federal government may hereafter be authorized by federal laws,
rules or regulations to engage, notwithstanding any contrary
provision of this code; and
(C) To pay interest on demand deposits of the United States
or any agency thereof, if the payment of such interest shall be
is permitted under any applicable federal law, rule or
regulation.
Any permission and authority granted by the board pursuant
to this subdivision shall cease and terminate upon the
adjournment of the next regular session of the Legislature,
unless the Legislature shall at such session enact enacts
legislation authorizing the financial institution participation,
activity, services and procedures or payment of interest with
respect to which such permission and authority were granted, in
which event such the permission and authority shall continue in
effect until the effective date of such the legislation; and
(6) Seek judicial enforcement to compel compliance with any
of its orders and to seek and obtain civil penalties as set forth
under this chapter.
(b) The board shall further have also has the power, by
entering appropriate orders, to:
(1) Restrict the withdrawal of deposits from any financial
institution when, in the judgment of the board, extraordinary
circumstances make such the restrictions necessary for the
protection of creditors of and depositors in the affected
institution;
(2) Compel the holder of shares in any corporate financial
institution to refrain from voting said the shares on any matter
when, in the judgment of the board, such the order is necessary
to protect the institution against reckless, incompetent or
careless management, to safeguard funds of depositors in the
institution or to prevent willful violation of any applicable law
or of any rule and regulation or order issued thereunder. In
such a case the shares of such a the holder shall may not be
counted in determining the existence of a quorum or a percentage
of the outstanding shares necessary to take any corporate action;
(3) Approve or disapprove applications to incorporate and
organize state banking institutions in accordance with the
provisions of sections six and seven, article four of this
chapter;
(4) Approve or disapprove applications to incorporate and
organize state-chartered bankers' banks in accordance with the
provisions of sections six and seven, article four of this
chapter;
(5) Exempt a bankers' bank from any provision of this
chapter if the board finds that such the provision is
inconsistent with the purpose for which a bankers' bank is
incorporated and organized and that the welfare of the public or
any banking institution or other financial institution would not
be jeopardized thereby;
(6) Revoke the certificate of authority, permit, certificate
or license of any state banking institution to engage in business
in this state if such that institution shall fail or refuse fails
or refuses to comply with any order of the commissioner entered
pursuant to the provisions of paragraph (A) or (B), subdivision
(15), subsection (c), section four, article two of this chapter,
or at the board's election to direct the commissioner to apply to
any court having jurisdiction for a prohibitory or mandatory
injunction or other appropriate remedy to compel obedience to
such order;
(7) Suspend or remove a director, officer or employee of any financial institution who is or becomes ineligible to hold such
that position under any provision of law or rule and regulation
or order, or who willfully disregards or fails to comply with any
order of the board or commissioner made and entered in accordance
with the provisions of this chapter or who is dishonest or
grossly incompetent in the conduct of financial institution
business;
(8) To receive from state banking institutions applications
to establish branch banks by the purchase of the business and
assets and assumption of the liabilities of, or merger or
consolidation with, another banking institution, or by the
construction, lease or acquisition of branch bank facilities in
an unbanked area; examine and investigate such applications, to
hold hearings thereon, and to approve or disapprove such
applications, all in accordance with section twelve, article
eight of this chapter;
(9) Approve or disapprove the application of any state bank
to purchase the business and assets and assume the liabilities
of, or merge or consolidate with, another state banking
institution in accordance with the provisions of section seven,
article seven of this chapter;
(10) Approve or disapprove the application of any state bank
to purchase the business and assets and assume the liabilities of
a national banking association, or merge or consolidate with a
national banking association to form a resulting state bank in
accordance with the provisions of section seven, article seven of
this chapter; and
(11) In addition to any authority granted pursuant to
section twelve, article eight of this chapter, incident to the
approval of an application pursuant to subdivisions (7) or (8) of
this subsection, permit the bank the application of which is so
approved to operate its banking business under its name from the
premises of the bank the business and assets of which have been
purchased and the liabilities of which have been assumed by such
applicant bank or with which such the applicant bank has merged
or consolidated: Provided, That such this permission may be
granted only if the board has made the findings required by
subsection (f), section three of this article and such applicant
bank has no common directors or officers nor common ownership of
stock exceeding ten percent of total outstanding voting stock
with the bank whose business and assets are being purchased and
liabilities assumed, or with whom such the applicant bank is being merged; and
(12) To receive an appeal from any party who is adversely
affected by an order of the commissioner issued pursuant to
section twelve-d, article eight of this chapter, and hold
hearings in accordance with the provisions of article five,
chapter twenty-nine-a of this code.
(c) No A provision of this section shall may not be
construed to alter, reduce or modify the rights of shareholders,
or obligations of a banking institution in regard to its
shareholders, as set forth in section one hundred seventeen,
article one, chapter thirty-one of this code and section seven,
article seven of this chapter, and other applicable provisions of
this code.
(d) Any order entered by the West Virginia board of banking
and financial institutions pursuant to this section is a matter
of public record.
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL REVIEW;
UNLAWFUL ACTS; PENALTIES.
§31A-8-12. Procedure for authorization of branch banks;
temporary offices at colleges and universities;
limitations and restrictions; examinations and hearings; standards of review; penalties for violation of
section.
(a) No A banking institution shall may not engage in
business in this state at any place other than at its principal
office in this state, at a branch bank in this state, at a
customer bank communication terminal permitted by section
twelve-b of this article or at any loan origination office
permitted by section twelve-c of this article:
(1) Acceptance of a deposit or allowing a withdrawal at the
banking offices of any subsidiary affiliate, as defined in
section one, article eight-a of this chapter, for credit or debit
to the customer's account at any other subsidiary of the same
bank holding company is permissible and does not constitute
branch banking. In addition, the conduct of activity at branch
offices as an agent for any bank subsidiary of the same bank
holding company shall be permitted to the same extent allowed by
federal law for national banks pursuant to 12 U.S.C. §1828, and
does not constitute branch banking; nor shall such does this
activity constitute a violation of section forty-two, article
four of this chapter: Provided, That no a banking institution
may not utilize that agency relationship to evade state consumer protection laws, including usury laws, or any other applicable
laws of this state, or to conduct any activity that is not
financially-related, as that term is defined by section two,
article eight-c of this chapter;
(2) A banking institution located in a county where there is
also a higher educational institution as defined in section two,
article one, chapter eighteen-b of this code, may establish a
temporary business office on the campus of any such educational
institution located in such the county for the limited purposes
of opening accounts and accepting deposits for a period not in
excess of four business days per semester, trimester or quarter:
Provided, That prior to opening any temporary office, a banking
institution must first obtain written permission from the
institution of higher education. The term "business days", for
the purpose of this subsection, means days exclusive of
Saturdays, Sundays and legal holidays as defined in section one,
article two, chapter two of this code;
(3) Any banking institution which on the first day of
January, one thousand nine hundred eighty-four, was authorized to
operate an off-premises walk-in or drive-in facility, pursuant to
the law then in effect, may, as of the seventh day of June, one thousand nine hundred eighty-four, operate such facility as a
branch bank and it shall is not be necessary, for the continued
operation of such the branch bank, to obtain additional
approvals, notwithstanding the provisions of subsection (d) of
this section and subdivision (6), subsection (b), section two,
article three of this chapter.
(b) Except for a bank holding company, it shall be is
unlawful for any individual, partnership, society, association,
firm, institution, trust, syndicate, public or private
corporation, or any other legal entity, or combination of
entities acting in concert, to directly or indirectly own,
control or hold with power to vote, twenty-five percent or more
of the voting shares of each of two or more banks, or to control
in any manner the election of a majority of the directors of two
or more banks.
(c) A banking institution may establish branch banks either
by:
(1) The construction, lease or acquisition of branch bank
facilities within any county of this state; or
(2) The purchase of the business and assets and assumption
of the liabilities of, or merger or consolidation with, another banking institution.
(d) Notwithstanding any other provision of this chapter to
the contrary, Subject to and in furtherance of the board's
authority under the provisions of subdivision (6), subsection
(b), section two, article three of this chapter, and subsection
(g) of this section, the board, by order, may approve or
disapprove the application of any state banking institution to
establish a branch bank.
(e) The main office or a branch of a West Virginia state
banking institution may not be relocated without the approval by
order of the commissioner.
(f) Any banking institution which is authorized to establish
branch banks pursuant to this section may provide the same
banking services and exercise the same powers at each such branch
bank as may be provided and exercised at its principal banking
house.
(g) The board shall, upon receipt of any application to
establish a branch bank under the provisions of this section,
provide notice of such the application to all banking
institutions. A banking institution may, within ten days after
receipt of such the notice, file a petition to intervene and shall, if it so files such a petition, thereupon become a party
to any hearing relating thereto before the board.
(h) The commissioner shall prescribe the form of the
application for a branch bank under the provisions of this
section and shall collect an examination and investigation fee of
one thousand five hundred dollars for each filed application for
a branch bank that is to be established by the construction,
lease or acquisition of a branch bank facility, and two thousand
five one hundred dollars for a branch bank that is to be
established by the purchase of the business and assets and
assumption of the liabilities of, or merger or consolidation with
another banking institution. Notwithstanding the above, if the
merger or consolidation is between an existing banking
institution and a bank newly incorporated solely for the purpose
of facilitating the acquisition of the existing banking
institution, the commissioner shall collect an examination and
investigation fee of five one hundred dollars. The commissioner
may require an examination of a financial institution or an
office of a financial institution that is being merged into a
state-chartered bank. If an examination is required, the
applicant is responsible for paying the examination costs at a rate of fifty dollars per examiner hour. The board shall
complete the examination and investigation within ninety days
from the date on which such the application and fee are received,
unless the board requests in writing additional information and
disclosures concerning the proposed branch bank from the
applicant banking institution. in which event such If the board
makes that request, the ninety-day period shall be extended for
an additional period of thirty days plus the number of days
between the date of such the request and the date such the
additional information and disclosures are received.
(i) Upon completion of the examination and investigation
with respect to such the application, the board shall, if a
hearing be required pursuant to subsection (j) of this section,
forthwith give notice and hold a hearing pursuant to the
following provisions:
(1) Notice of such hearing shall must be given to the
banking institution with respect to which the hearing is to be
conducted in accordance with the provisions of section two,
article seven, chapter twenty-nine-a of this code, and such the
hearing and the administrative procedures in connection therewith
shall be are governed by all of the provisions of article five, chapter twenty-nine-a of this code, and shall must be held at a
time and place set by the board but shall may not be less than
ten nor more than thirty days after such the notice is given;
(2) At any such the hearing a party may represent himself or
herself or be represented by an attorney at law admitted to
practice before any circuit court of this state;
(3) After such the hearing and consideration of all the
testimony and evidence, the board shall make and enter an order
approving or disapproving the application, which order shall be
accompanied by findings of fact and conclusions of law as
specified in section three, article five, chapter twenty-nine-a
of this code, and a copy of such the order and accompanying
findings and conclusions shall be served upon all parties to such
the hearing, and their attorneys of record, if any.
(j) No A state banking institution may not establish a
branch bank until the board, following an examination,
investigation, notice and hearing, enters an order approving an
application for that branch bank: Provided, That no such a
hearing shall be is required with respect to any application to
establish a branch bank which is approved by the board unless a
banking institution has timely filed a petition to intervene pursuant to subsection (g) of this section. The order shall be
accompanied by findings of fact that:
(1) Public convenience and advantage will be promoted by the
establishment of the proposed branch bank;
(2) Local conditions assure reasonable promise of successful
operation of the proposed branch bank and of those banks and
branches thereof already established in the community;
(3) Suitable physical facilities will be provided for the
branch bank;
(4) (1) The applicant state-chartered banking institution
satisfies such reasonable and appropriate requirements as to
sound financial condition as the commissioner or board may from
time to time establish; by regulation
(5) (2) The establishment of the proposed branch bank would
not result in a monopoly, nor be in furtherance of any
combination or conspiracy to monopolize the business of banking
in any section of this state; and
(6) (3) The establishment of the proposed branch bank would
not have the effect in any section of the state of substantially
lessening competition, nor tend to create a monopoly or in any
other manner be in restraint of trade, unless the anticompetitive effects of the establishment of that proposed branch bank are
clearly outweighed in the public interest by the probable effect
of the establishment of the proposed branch bank in meeting the
convenience and needs of the community to be served by that
proposed branch bank. If the branch results from the merger or
acquisition of banking institutions, the findings of fact
required in subdivisions (1) through (3) of this subsection may
be based on the performance and suitability of the previous
banking offices;
(4) The applicant state-chartered banking institution meets
a satisfactory standard of compliance with federal and state
community reinvestment act requirements as evidenced by its most
recent state or federal examination;
(5) The applicant state-chartered banking institution meets
a satisfactory standard of compliance with federal and state
consumer compliance law and regulations as evidenced by its most
recent state or federal regulatory examination; and
(6) The applicant state-chartered banking institution meets
acceptable standards for investment in premises and fixed assets
as permitted by section thirteen, article four of this chapter.
(k) Any party who is adversely affected by the order of the board shall be is entitled to judicial review thereof in the
manner provided in section four, article five, chapter twenty- nine-a of this code. Any such party adversely affected by a
final judgment of a circuit court following judicial review as
provided in the foregoing sentence may seek review thereof by
appeal to the supreme court of appeals in the manner provided in
article six, chapter twenty-nine-a of this code.
(l) Pursuant to the resolution of its board of directors and
with the prior written approval of the commissioner, a state
banking institution may discontinue the operation of a branch
bank upon at least thirty days prior public notice given in such
form and manner as the commissioner prescribes.
(m) Any violation of any provision of this section shall
constitute is a misdemeanor offense punishable by applicable
penalties as provided in section fifteen of this article.
ARTICLE 8E. INTERSTATE BRANCHING BY DE NOVO ENTRY AND
ACQUISITION OF BRANCHES.
§31A-8-12d. Expedited procedure for authorization of de novo
branch banks.
(a) As an alternative to using the procedures established in
subdivisions (g) through (j) of section twelve of this article, a banking institution desiring to establish a branch bank by de
novo construction or lease may file a notice, containing
information as prescribed by the commissioner, of its intent
which must be received by the commissioner at least thirty-five
days prior to the date on which the proposed branch will be
established accompanied by a fee of two hundred fifty dollars.
The commissioner must provide written notice of his or her
acceptance or rejection of the branch notice prior to the
expiration of the thirty-five day period. However, if the
commissioner requests additional information from the branching
institution, the period for the commissioner's consideration of
the notice shall be extended an additional fifteen days from the
time the information requested is received by the commissioner.
(b) A state banking institution may not establish a branch
bank under this section until the commissioner provides written
approval of the notice for that branch bank. The commissioner's
approval or rejection of the notice must be accompanied by
findings of fact on whether the proposed branch:
(1) Satisfies such reasonable and appropriate requirements
as to sound financial condition as the commissioner or board,
from time to time, may establish;
(2) Meets a satisfactory standard of compliance with federal
and state community reinvestment act requirements as evidenced by
its most recent state or federal examination;
(3) Meets a satisfactory standard of compliance with federal
and state consumer compliance law and regulations as evidenced by
its most recent state or federal regulatory examination; and
(4) Meets the acceptable standards for investment in
premises and fixed assets as permitted by section thirteen,
article four of this chapter.
(c) Any party who is adversely affected by an action of the
commissioner issued pursuant to the provisions of this section
may appeal to the board of banking and financial institutions
which must, after holding a hearing pursuant to the provisions of
subdivision (12), subsection (b), section two, article three of
this chapter, affirm, reverse or modify the order of the
commissioner. Any party who is adversely affected by an order of
the board of banking and financial institutions issued pursuant
to the provisions of this subsection is entitled to judicial
review in the same manner as provided by the provisions of
subsection (k), section twelve of this article.
§31A-8E-3. Interstate branching by West Virginia state banks through de novo establishment or acquisition of branches in other states.
(a) Beginning on the thirty-first day of May, one thousand
nine hundred ninety-seven, and with the prior approval upon
order of the board, pursuant to the procedures and standards
established in either section twelve or section twelve-d, article
eight of this chapter, any West Virginia state bank may establish
and maintain a de novo branch or acquire a branch in a state
other than West Virginia, if the new branch is in conformity
with, and would be permitted under the laws of the state where
the branch is to be located.
(b) A West Virginia state bank desiring to establish and
maintain a branch in another state under this section shall file
an application a notice on a form prescribed by the commissioner
and pay the branch application notice fee set forth in subsection
(h) (a), section twelve twelve-d, article eight of this chapter.
If the board finds that: (i) The applicant has the financial and
managerial resources sufficient to undertake the proposed
expansion without adversely affecting its safety or soundness,
including that local conditions assure reasonable promise of
successful operation of the proposed bank branch; (ii) any new officers and directors resulting from the creation of the branch
bank are qualified by character, experience and financial
responsibility to direct and manage the expanded bank; (iii) the
proposed branch offices will provide suitable physical facilities
for their intended business; (iv) establishment of the proposed
branch bank would not result in a substantial reduction of
competition in any section of this state unless the
anticompetitive effects of the proposed action are clearly
outweighed in the public interest by the probable effect of the
action in meeting the convenience and needs of the community to
be served, or result in a monopoly, or would be in furtherance of
any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any section of this state;
(v) the establishment of the proposed branch is consistent with
the convenience and needs of the communities to be served by the
branch and is otherwise in the public interest; and (vi) the new
branch is in conformity with, and would be permitted under the
laws of the state where the branch is to be located, it may
approve the application. In acting on the application, the board
shall consider the views of the appropriate bank supervisory
agencies. The applicant bank may establish the branch when it has received the board's written approval by entry of an order
granting the application. The findings required herein shall
supplant any other findings of fact otherwise required by
subdivisions (1) through (6), subsection (j), section twelve,
article eight of this chapter.
NOTE: This bill amends the branch banking laws by changing
the standards for establishing a branch bank and by providing for
an expedited regulatory approval procedure for de novo branches
comparable to the procedure required by the Federal Deposit
Insurance Corporation. It also authorizes the Board of Banking
and Financial Institutions to receive and hear appeals from
parties adversely affected by an order of the commissioner issued
under section twelve-d, article eight, chapter thirty-one-a;
reduces the examination and investigation fee of applicants for
a branch bank; authorizes the commissioner to require
examinations of financial institutions that are merged into a
state-chartered bank; provides new standards for an applicant
state-chartered banking institution to qualify for branch
banking; provides an alternative procedure for a banking
institution to establish a branch bank by de novo construction or
lease; and provides procedures for interstate branching by West
Virginia state banks.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§31A-8-12d is new; therefore strike-throughs and
underscoring have been omitted.
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