GENERAL ASSEMBLY OF NORTH CAROLINA
1995 SESSION

CHAPTER 296
SENATE BILL 1086

AN ACT TO ALLOW BANKS TO MAKE LOANS SECURED BY SHARES OF ITS OWN STOCK OR THAT OF ITS PARENT HOLDING COMPANY UNDER CERTAIN CIRCUMSTANCES.

The General Assembly of North Carolina enacts:

Section 1.  G.S. 53-64 reads as rewritten:
"§ 53-64.  Loans secured by bank's own stock or stock of parent bank holding company.
(a)	It shall be lawful for a bank to make a loan secured by the pledge of its own shares of stock or the stock of its parent holding company; provided that whenever any bank shall exercise its security interest in the shares of the bank or its parent holding company upon a loan default or other transfer, it shall dispose of all of such shares of stock within a period of six months.  If such stock has not been disposed of within six months, the same shall be charged to profit and loss and no longer carried as an asset of the bank.  The Commissioner may extend the six-month period not to exceed an additional six months.
(b)	A bank may not make a loan to finance the purchase of or to carry its stock or the stock of its parent holding company.  For purposes of this subsection, the phrase 'to carry' shall have the meaning set forth in 12 C.F.R. Part 221, by the Board of Governors of the Federal Reserve System.
(c)	A bank may not purchase any portion of its shares of stock, nor the stock of its parent holding company, unless the same is purchased or pledged to the bank to prevent a loss upon a debt previously contracted in good faith.  In the event the bank shall become the owner of its shares, or those of its parent holding company, the bank shall dispose of the same as provided in subsection (a) of this section.” 

Sec. 2.  This act becomes effective upon ratification.
In the General Assembly read three times and ratified this the 20th day of June, 1995.

─────────────────── 
Dennis A. Wicker
President of the Senate

─────────────────── 
Harold J. Brubaker
Speaker of the House of Representatives