Senate Bill No. 292
(By Senator Kessler)
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[Introduced January 24, 2002; referred to the Committee
on Banking and Insurance.]
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A BILL to amend and reenact section thirteen, article four,
chapter thirty-one-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to amend
and reenact section two, article eight-c of said chapter,
all relating to the sale of insurance and annuities by
state-chartered banking institutions.
Be it enacted by the Legislature of West Virginia:
That section thirteen, article four, chapter thirty-one-a
of the code of West Virginia, one thousand nine hundred thirty-
one, as amended, be amended and reenacted; and that section two,
article eight-c of said chapter be amended and reenacted, all to
read as follows:
ARTICLE 4. BANKING INSTITUTIONS AND SERVICES GENERALLY.
§31A-4-13. Powers of state banking institutions generally.
(a) Any state-chartered banking institution has and may
exercise all of the powers necessary for, or incidental to, the
business of banking and without limiting or restricting such
general powers, it shall have has the right to buy or discount
promissory notes and bonds; negotiate drafts, bills of exchange
and other evidences of indebtedness; borrow money; receive
deposits on such terms and conditions as its officers may
prescribe; buy, sell or exchange bank notes, bullion or coin;
loan money on personal or other security; rent safe-deposit
boxes and receive on deposit for safekeeping jewelry, plate,
stocks, bonds and personal property of whatsoever description;
and provide customer services incidental to the business of
banking, including, but not limited to, the issuance and
servicing of and lending money by means of credit cards as
letters of credit or otherwise. Any state-chartered banking
institution may accept, for payment at a future date not to
exceed one year, drafts drawn upon it by its customers. Any
state-chartered banking institution may issue letters of credit,
with a specified expiration date or for a definite term,
authorizing the holders thereof to draw drafts upon it or its
correspondents, at sight or on time. Any such banking
institution may organize, acquire, own, operate, dispose of and
otherwise manage wholly owned subsidiary corporations or entities that are jointly owned with other insured depository
institutions for purposes incident to the banking powers and
services authorized by this chapter provided any wholly owned or
jointly owned entities are subject to federal and state
examination and supervision as if the activities are conducted
by the bank.
(b) Any state-chartered banking institution may acquire,
own, hold, use and dispose of real estate which may not be
carried on its books at a value greater than the actual cost:
Provided, That the property must be necessary for the convenient
transaction of its business, including any buildings, office
space or other facilities to rent as a source of income:
Provided, however, That the investment hereafter made may not
exceed sixty-five percent of the amount of its capital stock and
surplus, unless the consent in writing of the commissioner of
banking is first secured.
(c) Any state-chartered banking institution may acquire,
own, hold, use and dispose of real estate which shall be carried
on its books at the lower of fair value or cost as defined in
rules promulgated by the commissioner of banking, subject to the
following limitations:
(1) Such as may be mortgaged to it in good faith as security
for debts in its favor;
(2) Such as may be conveyed to it in satisfaction of debts
previously contracted in the course of its business dealings;
and
(3) Such as it may purchase at sales under judgments,
decrees, trust deeds or mortgages in its favor, or may purchase
at private sale, to secure and effectuate the payment of debts
due to it.
(d) The value at which any real estate is held may not be
increased by the addition thereto of taxes, insurance, interest,
ordinary repairs or other charges which do not materially
enhance the value of the property.
(e) Any real estate acquired by any such banking institution
under subdivisions (2) and (3), subsection (c) of this section
shall be disposed of by the banking institution at the earliest
practicable date, but the officers thereof shall have a
reasonable discretion in the matter of the time to dispose of
such the property in order to save the banking institution from
unnecessary losses: Provided, That in every case such the
property shall be disposed of within ten years from the time it
is acquired by the banking institution, unless an extension of
time is given in writing by the commissioner of banking.
(f) The sale of insurance by state-chartered banking
institutions is subject to the following:
Any state-chartered banking institution having its main or
a branch office in any place the population of which does not
exceed five thousand inhabitants, as shown by the last preceding
decennial census, through its employees or agents, may, from
that place or office, directly or through a controlled
subsidiary, act as agent for any fire, life, casualty, liability
or other insurance company authorized by the authorities of the
state to do business in this state, by soliciting and selling
insurance and collecting premiums on policies issued by such the
company; and may receive for services so rendered all
permissible fees or commissions as may be agreed upon between
the bank and the insurance company for which it may act as
agent: Provided, That no bank may in any case assume or
guarantee the payment on insurance policies issued through its
agency by its principal: Provided, however, That the bank may
not guarantee the truth of any statement made by an insured in
filing his, her or its application for insurance. For purposes
of this section, a "controlled subsidiary" is one in which the
state-chartered banking institution owns at least eighty percent
of all classes of stock. This provision is intended to give
state-chartered banking institutions parity with national banks
operating in this state with regard to the marketing and sale of
insurance, notwithstanding the prohibitions and limitations contained in article eight-c or elsewhere in this chapter, and
shall be construed consistently with interpretations of 12
U.S.C. §92, the regulations promulgated thereunder, and any
successor legislation or regulations relating to the sale of
insurance by national banks.
(g) Any state-chartered banking institution may, through its
employees or agents, market and sell, as agent, annuities,
either at its main office or at any of its branches. The
marketing and sale of annuities may be made by the bank, through
its employees or agents, directly, or through a controlled
subsidiary, as defined in subsection (f) of this section. This
provision is intended to give state-chartered banks parity with
national banks operating in this state with regard to the sale
of annuities. notwithstanding the prohibitions and limitations
contained in article eight-c or elsewhere in this chapter.
(h) Unless waived in writing by the commissioner, a
state-chartered bank may not invest or otherwise expend in
excess of ten percent of its capital and surplus calculated at
the end of the previous calendar year on the activities
permitted by subsections (f) and (g) of this section on an
aggregate basis together with any of its approved financially
related products and services. For purposes of this section,
approved financially related products and services means those products and services offered by a state-chartered bank pursuant
to an approved application submitted under article eight-c of
this chapter.
(i) The commissioner shall promulgate rules in accordance
with chapter twenty-nine-a of this code relating to the sale of
insurance or annuities, including, but not limited to, rules
requiring notice of the intention to engage in such activities
and relating to the policies and procedures state-chartered
banking institutions should adopt in connection with these
activities.
(j) Any state-chartered banking institution and its
employees or agents engaged in the sale of insurance or
annuities permitted hereby must also comply with all applicable
requirements for the sale of such products imposed by the West
Virginia commissioner of insurance and by any state or federal
securities regulator.
(k) No state-chartered banking institution may hereafter
invest more than twenty percent of the amount of its capital and
surplus in furniture and fixtures, whether the same be installed
in a building owned by the banking institution, or in quarters
leased by it, unless the consent in writing of the commissioner
of banking is first secured.
ARTICLE 8C. PROVISION OF FINANCIALLY-RELATED SERVICES BY BANKS AND BANK HOLDING COMPANIES.
§31A-8C-2. Financially-related defined.
The term "financially-related" includes:
(a) All products, services and activities offered or engaged
in by national banks or by any West Virginia state or federally
chartered thrift institution or credit union; except those
excluded by subsection (f) of this section;
(b) Equity investments in real estate development
activities, products and services;
(c) Securities underwriting and brokerage activities,
products and services; except those excluded by subsection (f)
of this section;
(d) Financial consulting activities, products and services;
(e) Any and all other activities, products and services
engaged in or offered by other providers of financial products
or services which may be deemed considered by the commissioner
of banking to be financially-related; except those excluded by
subsections (f) and (g) of this section.
(f) The term "financially-related" excludes products,
services or activities offered or engaged in by any insurer or
by any underwriter, agent, solicitor or broker of insurance,
which products, services or activities are regulated by the
department of insurance pursuant to chapter thirty-three of the West Virginia code except for such activities, products and
services permitted, engaged in or offered by a West Virginia
state chartered banking institution prior to the effective date
of this article.
(g) (f) The term "financially-related" also excludes
products, services or activities offered or engaged in by any
real estate agent, agency or broker, which products, services or
activities are regulated by the state real estate commission
pursuant to chapter forty-seven of the West Virginia code except
for such the activities, products and services permitted,
engaged in or offered by a West Virginia state chartered banking
institution prior to the effective date of this article or
permitted pursuant to subdivision (b) of this section.
NOTE: The purpose of this bill is to provide consistency
between two sections of the code relating to the sale and
marketing of insurance by banks.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.