ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 243
(Senators Minard, Jenkins and McCabe, original sponsors)
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[Passed March 7, 2006; in effect ninety days from passage.]
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AN ACT to amend and reenact §31A-8-5 of the Code of West Virginia,
1931, as amended, relating to allowing banks to own shares of
their own stock in certain circumstances.
Be it enacted by the Legislature of West Virginia:
That §31A-8-5 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL REVIEW;
UNLAWFUL ACTS; PENALTIES.
§31A-8-5. Dealing in own stock; stock purchases; limitations;
exceptions.
(a) No banking institution shall make any loan or discount any
obligation on the security of the shares of its own capital stock,
unless taken as a pledge to prevent loss upon a debt previously
contracted lawfully and in good faith; and all shares of its stock, held in such manner, shall, within six months after the time of the
pledge, be sold or disposed of at public or private sale.
(b) A banking institution may purchase its equity securities
in an amount up to ten percent of its net worth in any twelve-month
period or restructure its ownership interests for a legitimate
corporate purpose without the prior approval of the commissioner,
so long as the bank remains well-capitalized under federal
regulatory guidelines before and after the purchase or
restructuring, the bank is well-managed, the bank is not the
subject of any unresolved supervisory issues and the transaction
does not constitute a change in control of the banking institution
that must be reported pursuant to section four of this article.
The banking institution must apply for approval for the purchase of
equity securities, on a form prescribed by the commissioner, if the
gross consideration for the purchase, when aggregated with the net
consideration paid by the banking institution for all such
purchases during the preceding twelve months, is equal to ten
percent or more of the bank's net worth. For purposes of this
section, "net consideration" is the gross consideration paid by the
banking institution for all of its equity securities purchased
during the period minus the gross consideration received for all of
its equity securities sold during the period. The commissioner
shall approve or deny the application after considering whether the
proposed purchase would constitute an unsafe or unsound practice.
(c) Any banking institution and any officer thereof who
violates any provision of this section shall be guilty of a misdemeanor and subject to penalties provided in section fifteen of
this article.