GENERAL ASSEMBLY OF NORTH CAROLINA
1989 SESSION

CHAPTER 187
HOUSE BILL 413

AN ACT TO AUTHORIZE ESTABLISHMENT OF LIMITED SERVICE FACILITIES BY BANKS, TO MODIFY BANKING HOLIDAYS, AND TO MAKE TECHNICAL CHANGES TO THE BANKING LAWS.

The General Assembly of North Carolina enacts:

Section 1.  G.S. 53-1 reads as rewritten:
"§ 53-1. 'Bank,' 'surplus,' 'undivided profits,' and other words defined.
The following definitions shall be applied to the terms used in this Chapter:
(1)	Bank. – The term 'bank' shall be construed to mean any corporation, other than savings and loan associations, savings banks, industrial banks, and credit unions, receiving, soliciting or accepting money or its equivalent on deposit as a business.
(1a)	Branch. – The term 'branch' means an office of any bank in which deposits are received, monies are paid, and loans are made.  Any of the functions or services authorized to be engaged in by a bank may be carried out in a branch.
(2)	Demand Deposits. – The term 'demand deposits' means all deposits, the payment of which can be legally required within 30 days.
(3)	Insolvency. – The term 'insolvency' means:
a.	When a bank cannot meet its deposit liabilities as they become due in the regular course of business;
b.	When the actual cash market value of its assets is insufficient to pay its liabilities to depositors and other creditors;
c.	When its reserve shall fall under the amount required by this Chapter, and it shall fail to make good such reserve within 30 days after being required to do so by the Commissioner of Banks;
d.	Whenever the undivided profits and surplus shall be inadequate to cover losses of the bank, whereby an impairment of the capital stock is created.
(3a)	Limited Service Facility. – The term 'limited service facility' means an office of a bank in which deposits are received, monies are paid, or other duties and functions of a teller are performed.  Loan applications shall be taken in a limited service facility but notes may not be executed nor loan proceeds disbursed in a limited service facility.
(4)	Net Earnings. – The term 'net earnings' means the excess of the gross earnings of any bank over the expenses and losses chargeable against such earnings during any dividend period.
(5)	Practical Banker. – The term 'practical banker' means an officer or employee of a bank actively engaged in performing duties in managing or supervising or assisting in managing or supervising the conducting of a banking business, including any such banker who is in a retired status from such duties.
(6)	Surplus. – The term 'surplus' means a fund created pursuant to the provisions of this Chapter by a bank from payments by stockholders or from its net earnings or undivided profits which, to the amount specified and by any additions thereto set apart and designated as such, is not available for the payment of dividends, and cannot be used for the payment of expenses or losses so long as such bank has undivided profits.
(7)	Time Deposits. – The term 'time deposits' means all deposits, the payment of which cannot be legally required within 30 days.
(8)	Undivided Profits. – The term 'undivided profits' means the credit balance of the profit and loss account of any bank.
(9)	Unimpaired Capital Fund. – The term 'unimpaired capital fund' means the total of the amount of unimpaired common stock, preferred stock, surplus, undivided profits, reserve for contingencies and other capital reserves (excluding accrued dividends on preferred stock and limited life preferred stock), mandatory convertible instruments, allowance for possible loan losses, and the amount of capital debentures or notes, convertible or otherwise, having an average original maturity of at least seven years, which have been specifically designated as part of the bank's unimpaired capital fund by resolution duly adopted by the board of directors of the bank; provided, that upon payment of such capital debentures or notes or upon accumulation of funds in a sinking fund for amortization of such debentures or notes,  unimpaired capital fund shall be reduced by the amount of such payment or accumulation. The terms and conditions of any issue of or prepayment of capital debentures or notes must have the prior written approval of the Commissioner of Banks affirming that in his opinion such issue or prepayment is in the best interest of the depositors, creditors and stockholders of the bank."
Sec. 2.  G.S. 53-2 reads as rewritten:
"§ 53-2. How incorporated.
Any number of persons, not less than five, who may be desirous of forming a company and engaging in the business of establishing, maintaining, and operating banks of discount and deposit to be known as commercial banks, or operating banks engaged in doing a trust and fiduciary business, shall be incorporated in the manner following and in no other way; that is to say, such persons shall, by a certificate of incorporation under their hands and seals set forth:
(1)	The name of the corporation; no name shall be used already in use by another existing corporation organized under the laws of this State or of the Congress, or so nearly similar thereto as to lead to uncertainty or confusion.
(2)	The location of its principal office in this State.
(3)	The nature of its business, whether that of a commercial bank, trust company, or a combination of both such classes of business.
(4)	The amount of its authorized common capital stock, the number of shares into which it is divided, the par value of each share; and the amount of common capital stock with which it will commence business. The amount of capital required to charter a bank shall be determined as herein set forth by the Commissioner of Banks who shall give due consideration to (i) the population of the proposed bank's trade area, (ii) the total deposits of those depository financial institutions already operating in the proposed bank's trade area, (iii) the economic conditions and outlook within the proposed bank's trade area, (iv) the business experience and reputation of the proposed bank's management, (v) the business experience and reputation of the proposed bank's incorporators and proposed directors, (vi) the type and nature of business activities proposed to be engaged in, and (vii) the proposed bank's projected deposit growth and profitability.  Except as otherwise provided, the amount of common capital stock required to charter a bank shall not be less than two million dollars ($2,000,000); provided, however, such amount of capital may be increased or decreased in the discretion of the Commissioner of Banks who, after considering the above enumerated criteria, determines that a greater capital requirement is necessary or that a smaller capital requirement will provide a sufficient capital base.  In addition to the required capital, every bank shall have a paid in surplus of at least fifty percent (50%) of its common capital stock.  The capital and paid in surplus required to charter a bank shall be exclusive of any organizational expenses.  This subdivision shall not apply to banks organized and doing business prior to its adoption or amendment; provided, however, the Banking Commission is hereby authorized and directed to adopt rules and regulations to keep any original required minimum capital funds intact to the end that they remain in and with the bank as a protection for depositors.
(5)	The names and post-office addresses of subscribers for stock, and the number of shares subscribed by each; the aggregate of such subscriptions shall be the amount of the capital with which the company will commence business.
(6)	Period, if any, limited for the duration of the company."
Sec. 3.  G.S. 53-7 reads as rewritten:
"§ 53-7. Statement filed before beginning business.
Before such company shall begin the business of banking, banking and trust, fiduciary, or surety business, there shall be filed with the Commissioner of Banks a statement under oath by the president, cashier, or secretary, containing the names of all the directors and officers, with the date of their election or appointment, term of office, residence, and post-office address of each, the amount of capital stock of which each is the owner in good faith and the amount of money paid in on account of the capital stock. Nothing shall be received in  payment of capital stock but money."
Sec. 4.  Article 2 of Chapter 53 of the General Statutes is amended by adding a new section to read:
"§ 53-9.1. Deposit insurance.
(a)	Notwithstanding any other provision of law, no bank established under this Article shall engage in the business of banking without first securing insurance on its deposits from the Federal Deposit Insurance Corporation or any successor corporation created by an act of Congress.
(b)	In order to secure deposit insurance as required by this section, a bank may enter into such contracts, incur such obligations, and generally do anything as may be necessary or appropriate in order to take advantage of any memberships, loans, subscriptions, contracts, grants, rights, or privileges that may at any time be available to banks or to their depositors, creditors, stockholders, conservators, receivers, or liquidators, as provided in Section 8 of the Federal Banking Act of 1933 (Section 12B of the Federal Reserve Act as amended) or in any other act or resolution of Congress, to aid, regulate, or safeguard banking institutions and their depositors.  In order to secure deposit insurance as required by this section, a bank may also subscribe for and acquire stock, debentures, bonds, or any other securities of the Federal Deposit Insurance Corporation and may comply with the lawful regulations and requirements that may be imposed by the Federal Deposit Insurance Corporation."
Sec. 5.  G.S. 53-43(5) is repealed.
Sec. 6.  G.S. 53-43.3 reads as rewritten:
"§ 53-43.3. Officers and employees; share purchase and option plans.
Subject to any applicable rules or regulations of the State Banking Commission, a bank (i) may grant options to purchase, sell or enter into agreements to sell shares of its capital stock to its officers, directors, or employees, or all of such groups, for a consideration of not less than one hundred percent (100%) of the fair market value of the shares on the date the option is granted and (ii) may, pursuant to the terms of a stock purchase plan for the benefit of officers and employees, sell shares of the bank's capital stock for a consideration of not less than eighty-five percent (85%) of the fair market value of the shares on the date the purchase price is fixed.  Provided, any stock option plan for the benefit of officers, directors, and employees or any stock purchase plan for the benefit of officers and employees shall not be effective until adopted by the board of directors of the bank and approved by the holders of at least two-thirds of the particular class or classes of stock entitled to vote on such proposal and by the Commissioner of Banks.  In no event shall the option to purchase such shares be for a consideration less than the par value thereof."
Sec. 7.  G.S. 53-62 reads as rewritten:
"§ 53-62. Establishment of branches; limited service facilities; and off-premises customer-bank communications terminals.
(a)	The word 'capital' as used in this section means capital stock and unimpaired surplus.
(b)	A bank doing business under this Chapter may establish branches or limited service facilities within this State after having first obtained the written approval of the Commissioner of Banks, which approval may be given or withheld by the Commissioner of Banks, in his discretion. The Commissioner of Banks, in exercising such discretion, shall take into account, but not by way of limitation, such factors as the financial history and condition of the applicant bank, the adequacy of its capital structure, its future earnings prospects, and the general character of its management. Such approval shall not be given until he shall find (i) that the establishment of such branch or limited service facility will meet the needs and promote the convenience of the community to be served by the bank, and (ii) that the probable volume of business and reasonable public demand in such community are sufficient to assure and maintain the solvency of said branch or limited service facility and of the existing bank or banks in said community.
(c)	(1)	A branch or limited service facility of a bank shall be operated as a branch or office of and under the name of the bank, and under the control and direction of the board of directors and executive officers of the bank. The board of directors of the bank shall elect such officers as may be required to properly conduct the business of any branch or limited service facility.
(2)	The Commissioner of Banks shall not authorize the establishment of a branch until he is satisfied that the applicant bank has sufficient capital to maintain a minimum capital to asset ratio as the Commissioner of Banks, in his discretion, may require.  In determining such ratio the Commissioner of Banks shall give due consideration to (i) the amount of capital required to support the bank's projected growth, (ii) the bank's earnings history and projected earnings, (iii) the quality of the bank's assets, (iv) compliance with the fixed asset limitation contained in G.S. 53-43(3), and (v) the business experience and reputation of bank management.
(3)	The Commissioner of Banks may, on written application by a bank, in his discretion authorize the bank to establish a limited service facility after considering the criteria and making the findings required in subsection (b).
	(d)	A limited service facility, upon written request to the Commissioner of Banks, and after meeting the requirements of subsection (c) may convert to a branch.  If branch status is granted then the branch shall be subject to all of the conditions and requirements of that type of banking office.
Upon 30 days written notice to the Commissioner of Banks, a bank may discontinue any limited service facility operation; Provided, however, if a limited service facility has within five years preceding the proposed closing date been a branch of any bank, it shall comply with the requirements of subsection (e) below before closing.
(d1)	Subject to such rules and regulations as may be prescribed by the State Banking Commission with regard to their use, maintenance and supervision, any bank may establish off the premises of any principal office, branch or limited service facility a customer-bank communications terminal, point-of-sale terminal, automated teller machine, automated banking facility or other direct or remote information-processing device or machine, whether manned or unmanned, through or by means of which information relating to any financial service or transaction rendered to the public is stored and transmitted, instantaneously or otherwise, to or from a bank or other nonbank terminal; and the establishment and use of such a device or machine shall not be deemed a branch or limited service facility, and the capital requirements and standards for approval of a branch or limited service facility, all as set forth in subsections (b) and (c) above, shall not be applicable to the establishment of any such off-premises terminal device or machine; provided, however, that no bank, savings and loan association, savings bank, credit union or any other financial institution which is not domiciled in North Carolina may establish in North Carolina any information processing device or machine described in this subsection.
(e)	A bank may discontinue a branch office upon resolution of its board of directors or board of managers.  Upon the adoption of such a resolution, the bank shall file a certification with the Commissioner of Banks specifying the location of the branch office to be discontinued and the date upon which it is proposed that the discontinuance shall be effective.  This certificate must state the reasons for the closing of such branch and indicate that the needs and conveniences of the community would still be adequately met.  Notice stating the intention to discontinue said branch shall be published in a newspaper serving such community once a week for four consecutive weeks before any certificate requesting discontinuance is filed with the Commissioner of Banks.  No such branch may be discontinued until approved by the Commissioner of Banks, who shall first hold a public hearing thereon, if so requested by any interested party.
(f)	Any action taken by the Commissioner of Banks pursuant to this section shall be subject to review by the State Banking Commission which shall have the authority to approve, modify or disapprove any action taken or recommended by the Commissioner of Banks."
Sec. 8.  G.S. 53-67 reads as rewritten:
"§ 53-67. Banks controlled by boards of directors.
The corporate powers, business, and property of banks doing business under this Chapter shall be exercised, conducted, and controlled by its board of directors, which shall meet at least quarterly. Such board shall consist of not less than five directors, to be chosen by the stockholders, and shall hold office for the term for which they are elected, and until their successors are elected and qualified. The annual meeting of stockholders for the election of directors shall be held at such time as may be designated by the charter or the bylaws of the bank but shall be held not later than the thirtieth day of June in each year. In addition to the foregoing powers relating to the fixing of the number and the election of directors, the stockholders of a bank, at any stockholders' meeting, special or annual, may authorize not more than two additional directorships which may be left unfilled and to be filled in the discretion of the directors of the institution during the interval between such stockholders' meetings. Aside from the specific provisions of this section, the number, election, term and classification of the directors of banks doing business under this Chapter shall be governed by the provisions of the Business Corporation Act."
Sec. 9.  G.S. 53-77.1 is repealed.
Sec. 10.  Chapter 53 of the General Statutes is amended by adding a new section to read:
"§ 53-77.1A. Days and hours of operation.
(a)	A bank as defined at G.S. 53-1 or G.S. 53-136, including national banking associations and Federal Reserve banks, or any branch of the foregoing, located in this State, shall operate not less than five days per week.  On one day of the week each bank and its branches shall remain open for not less than seven hours, three of which shall be after 3 o'clock p.m.
(b)	In addition to the minimum hours required of a bank and its branches in subsection (a), a bank and its branches may operate on such days and during such hours as the bank deems appropriate.
(c)	A limited service facility may operate on such days of the week and during such hours as the bank deems appropriate.
(d)	A bank shall give such notice of the days and hours during which it and its branches and limited service facilities shall operate as required by the Commissioner of Banks."
Sec. 11.  G.S. 53-77.2A reads as rewritten:
"§ 53-77.2A. Legal banking holidays.
(a)	Any bank, as defined by G.S. 53-1 or G.S. 53-136, including national banking associations or any branch or limited service facility of any of the foregoing located in this State shall observe as legal banking holidays the following:
(1)	New Year's Day, January 1;
(2)	Monday, January 2, when January 1 (New Year's Day)	            falls on a Sunday;
(3) 	Monday, January 3, when January 1 (New Year's Day) falls on a Saturday;
(4) 	President's Day, the third Monday in February;
(4a)	Good Friday;
(5) 	Memorial Day, the last Monday in May;
(6) 	Independence Day, July 4;
(7) 	Monday, July 5, when July 4 (Independence Day) falls on a Sunday;
(8) 	Friday, July 3, when July 4 (Independence Day) falls on a Saturday;
(9) 	Labor Day, the first Monday in September;
(10)	Thanksgiving Day, the fourth Thursday in November;
(11)	Christmas Day, December 25;
(12)	Monday, December 26, when December 25 (Christmas
	Day) falls on a Sunday;
(13)	Monday, December 27, when December 25 (Christmas Day) falls on a Saturday.
(b)	A bank as defined in subsection (a) may, in addition to the above-named legal banking holidays, observe as legal public holidays Martin Luther King Jr.'s Birthday, the third Monday of January, and Veterans Day, November 11.
(b1)	When a legal public holiday falls on a Friday, a bank as defined in subsection (a) may close the Saturday and Sunday immediately following such holiday, and when a legal holiday falls on a Monday, a bank as defined in subsection (a) may close the Saturday and Sunday immediately preceding such holiday."
Sec. 12.  G.S. 53-77.3(b) reads as rewritten:
"(b)	Whenever the Commissioner of Banks is of the opinion that an emergency exists, or is impending, in this State or in any part or parts of this State, he may authorize banks located in the affected area or areas to close any or all of their offices. In addition, if the Commissioner is of the opinion that an emergency exists, or is impending, which affects, or may affect, a particular bank or banks, or a particular office or offices thereof, but not banks located in the area generally, he may authorize the particular bank or banks, or  office or offices so affected, to close.  In addition, the Commissioner of Banks may in the interest of national defense authorize any bank, or any of its offices, to open or close, for the transaction of business. The office or offices so closed shall remain closed until the Commissioner declares that the emergency has ended, or until such earlier time as the officers of the bank determine that one or more offices, previously closed because of the emergency, should reopen, and, in either event, for such further time thereafter as may reasonably be required to reopen.
In the event communications systems should be so disrupted as to make it impossible or impractical for a bank official to communicate with the Commissioner of Banks, the bank officer or manager or other person in charge of any such bank or branch bank may close said office without prior approval of the Commissioner of Banks provided he gives prompt notice thereof to the Commissioner as soon as communications have been restored."
Sec. 13.  G.S. 53-78 reads as rewritten:
"§ 53-78. Appointment of executive and loan committees by directors.
The board of directors shall appoint an executive committee or committees, each of which shall be composed of at least three of its members with such duties and powers as are defined by the regulations or bylaws, who shall serve until their successors are appointed. Such executive committee or committees shall meet as often as the board of directors may require, except that the executive committee or committees shall meet at least once during each month in which there is no meeting of the board of directors,  and approve or disapprove all loans and investments. All loans and investments shall be made under such rules and regulations as the board of directors may prescribe.
The board of directors may appoint, in addition to the executive committee or committees, a general loan committee, the membership of which shall include at least three directors and such officers of the bank as may be appointed, with such duties and powers with respect to making loans and investments as are defined in the bylaws or by resolution of the board of directors, the members of such general loan committee to serve until their successors are appointed. Such general loan committee, if appointed, shall meet as often as the bylaws or resolution of the board of directors may require, which shall not be less frequently than once each month, and approve or disapprove all such loans and investments as may be required by the bylaws or by resolution of the board of directors to be submitted to the general loan committee. The board of directors of any bank, which has branches, may appoint, in addition to a general loan committee, a loan committee for the parent bank and for any branch, each of which committees shall include at least three members who are officers or members of the board of managers for such parent bank or branch, with such duties and powers with respect to approving or disapproving loans and investments as may be defined in the bylaws or by resolution of the board of directors, and under such rules and regulations as the board of directors may prescribe. Such loans and investments as are authorized or approved by a general loan committee or either of the other loan committees hereinabove provided for may, but need not, be approved or disapproved by the executive committee or committees. All loans and investments made, however, shall be authorized or approved by either the executive committee or committees, a general loan committee, or one of the other loan committees herein provided for."
Sec. 14.  G.S. 53-85 reads as rewritten:
"§ 53-85. Shareholders' book.
The directors shall provide a book in which shall be kept the name and resident address of each shareholder of record, the number of shares held by each, the time when such person became a shareholder, together with all transfer of stock, stating the time when made, the number of shares and by whom transferred, which book shall be subject to the inspection of the directors, officers, and shareholders of record of the bank at all times during the usual hours for the transaction of business."
Sec. 15.  G.S. 53-105 reads as rewritten:
"§ 53-105. Reports of condition.
Every bank shall make to the Commissioner of Banks not less than four reports during each year in the manner and form prescribed by the Commission by regulation.  Each such report shall exhibit in detail and under appropriate heads the resources, assets, and liabilities of such bank at the close of business on any past day by the Commissioner of Banks specified, and shall be transmitted to the Commissioner of Banks within 10 days after the receipt of a request or requisition therefor from the Commissioner of Banks; provided, however, the Commissioner of Banks may extend the time for a period not to exceed 30 days for any bank to transmit the reports heretofore required whenever in his judgment such extension is necessary; and in a form prescribed by the Commissioner of Banks; a summary of such report shall be published in a newspaper published in the place where  the bank is located, or if there is no newspaper in the place, then in the nearest one published thereto in the county in which such bank is established. Proof of such publication shall be furnished the Commissioner of Banks in such form as may be prescribed by him."
Sec. 16.  G.S. 53-108 reads as rewritten:
"§ 53-108. List of shareholders of record to be kept.
Every bank doing business under this Chapter shall at all times keep a correct list of its shareholders of record and whenever called upon by the Commissioner of Banks or his duly authorized agent, make available for examination a correct list of all its shareholders of record, the address of each, and the number of shares held by each. Whenever the word 'shareholders' is used in this section, the same shall be deemed to include, to the extent available, shareholders of any corporations which own ten percent (10%) or more of the capital stock of any bank doing business under this Chapter or a lesser amount when required by the Commissioner."
Sec. 17.  G.S. 53-128 reads as rewritten:
"§ 53-128. Willfully and maliciously making derogatory reports.
Any person who shall willfully and maliciously make, circulate, or transmit to another or others any statement, rumor, or suggestion, written, printed, or by word of mouth, which is directly or by inference false and derogatory to the financial condition, or affects the solvency or financial standing of any bank, or who shall counsel, aid, procure, or induce another to state, transmit, or circulate any such statement or rumor shall be guilty of a misdemeanor, and upon conviction thereof shall be fined or imprisoned, or both, in the discretion of the court."
Sec. 18.  This act shall become effective July 1, 1989.
In the General Assembly read three times and ratified this the 1st day of June, 1989.