COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 254
(By Senators Manchin and Helmick)
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[Originating in the Committee on Banking and Insurance;
reported February 9, 1995.]
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A BILL to amend and reenact sections twelve-c and thirteen,
article eight, chapter thirty-one-a of the code of West
Virginia, one thousand nine hundred thirty-one, as
amended, relating to providing for out-of-state loan
production office operations in West Virginia; and
allowing for limited indemnification of officers,
directors and employees by banking institutions.
Be it enacted by the Legislature of West Virginia:
That sections twelve-c and thirteen, article eight,
chapter thirty-one-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted to read as follows:
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL
REVIEW; UNLAWFUL ACTS; PENALTIES.
§31A-8-12c. Loan origination offices permitted.
(a) Origination of loans by employees or agents of a banking institution at offices other than that banking
institution's principal office or branch bank is permitted:
Provided, That any such loans originating at said office are
approved and made at the banking institution's principal place
of business or branch bank.
(b) Origination of loans by employees or agents of a
federally-insured depository institution of banking chartered
outside the state of West Virginia at nonbranch offices within
this state is permitted:
Provided, That a license is obtained
pursuant to section five, article two of this chapter and that
any such loans originating at the office are approved and made
at the banking institution's principal place of business or
branch bank:
Provided, however, That any consumer loans made
in this manner conform with state consumer protection laws.
The commissioner of banking may examine the operations of such
offices and collect fees for their examination in the amount
of fifty dollars per hour of examiner time. A loan production
office authorized under this section or by federal law may
indicate its bank affiliation notwithstanding section two,
article four of this chapter.
§31A-8-13. Banking institution not to be surety;
hypothecation and other dealings with securities and
assets limited.
No banking institution shall become or be accepted as
surety on any bond or undertaking required by the laws or by the courts of this state or any other state or shall become
surety or guarantor of any person for the discharge of any
duty in any position or the performance of any contract or
undertaking. No banking institution shall pledge, hypothecate
or deliver any of its assets of any description whatsoever to
any person to indemnify him as surety for such banking
institution or as surety for any other person. But a bank may
pledge, hypothecate, deliver or deposit securities to
guarantee deposits of the United States, or any agency or
instrumentality thereof, the state of West Virginia, or any
agency or instrumentality thereof, or any county, district,
municipal corporation or other governmental agency or
instrumentality, and the deposits of a bankrupt's estate made
pursuant to an order of a court of bankruptcy, and, with the
consent in writing of the commissioner of banking, may pledge,
hypothecate, deliver or deposit securities or assets to
guarantee deposits made by receivers of closed or insolvent
banking institutions; and the receiver of a closed or
insolvent banking institution, if the proceeding be not in
court, with the consent in writing of the commissioner of
banking, and if the proceeding be in court, with the consent
in writing of the commissioner of banking and the approval of
the court, may accept securities or assets of a banking
institution to secure deposits made by such receiver. In
every such case, the hypothecation of such securities or assets shall be by proper legal transfer as collateral
security to protect and indemnify by trust any and all loss in
case of any default on the part of the banking institution in
its capacity as a depository for any such deposits as
aforesaid, and such collateral security shall be released only
by order of record of the public officer or public body, or by
the receiver of a closed or insolvent banking institution, if
the proceeding be not in court, with the consent in writing of
the commissioner of banking, and if the proceeding be in
court, with the consent in writing of the commissioner of
banking and the approval of the court, when satisfied that
full and faithful accounting and payment of all the moneys has
been made under the provisions hereof. The public officer or
public body, or the receiver of a closed or insolvent banking
institution, shall make ample provision for the safekeeping of
such hypothecated securities or assets, and the interest
thereon when paid shall be turned over to the banking
institution, so long as it is not in default as aforesaid.
The foregoing shall not prevent the hypothecation of the
securities or assets of any banking institution to secure the
repayment of money borrowed from another banking institution;
nor shall the foregoing prevent a bank's indemnification of
its officers, directors or employees by purchase of insurance
or otherwise, to the extent that such indemnification is
permitted to that institution under federal law. Indemnification articles or bylaws must conform to, or be more
restrictive than, that set forth in section nine, article one,
chapter thirty-one of this code. The commissioner reserves
the right to prohibit or limit, by regulation or order, any
indemnification payment for reasons of safety and soundness or
nonconformity to the bank's articles of incorporation or
bylaws or to the restrictions placed on indemnification
contained in this section or other applicable state law.
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