ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 2281
(By Delegates H. White, Douglas, Collins, Varner,
Stalnaker and Willison)
[Passed March 4, 1999; in effect ninety days from passage.]
AN ACT 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;
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 be 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 has the power to:
(1) Regulate its own procedure and practice;
(2) Promulgate reasonable rules to implement any provision
of this article 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 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 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 interest is permitted
under any applicable federal law, rule or regulation.
Any permission and authority granted by the board pursuant
to this subdivision shall terminate upon the adjournment of the
next regular session of the Legislature, unless the Legislature
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 the permission and authority shall
continue in effect until the effective date of 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 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 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 the shares on any matter when,
in the judgment of the board, 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 the holder 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 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 that institution 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 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 the applicant bank has merged or
consolidated: Provided, That 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 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) A provision of this section 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) A banking institution 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 does this activity
constitute a violation of section forty-two, article four of this
chapter: Provided, That 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 educational
institution located in 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 is not necessary, for the continued operation
of 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 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) 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 the application to all banking institutions.
A banking institution may, within ten days after receipt of the
notice, file a petition to intervene and shall, if it files 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
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 five 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 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 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. 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 the request and the date the additional information
and disclosures are received.
(i) Upon completion of the examination and investigation
with respect to 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 hearing 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 the hearing and the
administrative procedures in connection therewith are governed by
all of the provisions of article five, chapter twenty-nine-a of
this code, and must be held at a time and place set by the board
but may not be less than ten nor more than thirty days after the
notice is given;
(2) At 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 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 the order and accompanying findings and conclusions
shall be served upon all parties to the hearing, and their
attorneys of record, if any.
(j) 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 a hearing is not 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) 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;(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;
(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;
(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 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 is a
misdemeanor offense punishable by applicable penalties as
provided in section fifteen of this article.
§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 applicant bank:
(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 taken pursuant to the criteria established by
subsection (b) of this section may appeal within ten business
days of the commissioner's decision 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.
ARTICLE 8E. INTERSTATE BRANCHING BY DE NOVO ENTRY AND ACQUISITION OF BRANCHES.
§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 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
a notice on a form prescribed by the commissioner and pay the
branch notice fee set forth in subsection (a), section twelve-d,
article eight of this chapter.