A BILL TO BE ENTITLED
AN ACT to amend the banking laws of north carolina.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 53‑1(3a) reads as rewritten:
"(3a)	Limited Service Facility. – The term "limited service facility" means  a staffed physical location open to the public in this State in which  a bank established under the laws of this State or a bank or other depository institution established under the laws of any other state conducts any activity of a "branch" set forth in subdivision (1a) of this section, but which is not considered a branch by virtue of the fact that the bank does not engage in all activities of a branch at the location. A location is a limited service facility of a bank notwithstanding that it is operated by a third party if there exists an agreement between the third party and the bank pursuant to which the third party (i) takes deposits or offers loans as an agent of the bank or in the bank's name; or (ii) is obligated to sell or otherwise transfer to the bank all or a substantial portion of the loan or deposit production of that location."
SECTION 2.  G.S. 53‑17.2(e) reads as rewritten: 
"(e)	In the absence of the promulgation of rules under subsection (d), the conditions to be met for approval of the application for conversion should include the following:
(1)	Condition. The applicant's general condition must reflect adequate capital, liquidity, reserves, earnings, and asset composition necessary for safe and sound operation of the resulting bank.
(2)	Management. The management and the board of directors must be capable of supervising a sound banking operation and overseeing the changes that must be accomplished in the conversion from an association or savings bank to a bank.
(3)	Public Convenience. The  conversion will have a positive impact on the convenience of the public and will not substantially reduce the services available to the public in the market area.
(4)	Transition. Within a reasonable time after the effective date of the conversion, the resulting bank must divest itself of all assets and liabilities that do not conform to State banking law or rules. The length of this transition period shall be determined by the Commissioner and shall be specified when the application for conversion is approved.
In evaluating each of these conditions, the  Commissioner shall consider a comparison of the relevant financial ratios of the applicant with the average ratios of North Carolina banks of similar asset size. The Commissioner shall not approve a conversion where the applicant presents an undue supervisory concern or has not been operated in a safe and sound manner."
SECTION 3.  G.S. 53‑17.2(f) reads as rewritten:
"(f)	If the  Commissioner approves the plan of conversion, then the association or savings bank shall submit the plan to the stockholders or members as provided in subsection (g). After approval of the plan of conversion, the Commissioner of Banks shall supervise and monitor the conversion process and shall ensure that the conversion is conducted pursuant to law and the association's or savings bank's approved plan of conversion."
SECTION 4.  G.S. 53‑43 reads as rewritten:
"§ 53‑43.   Powers.

				
(a)	General Powers. – Except as otherwise specifically provided by this Chapter, a bank shall have the powers conferred upon corporations by the North Carolina Business Corporation Act, Chapter 55 of the General Statutes, including the power to:
(1)	Carry on the business of banking.
(2)	Make any investments authorized by G.S. 53-47 or any other section of this Chapter.
(3)	Engage in any other activities approved by rule, order, or interpretation of the Commissioner of Banks.
For the purposes of this section, the "business of banking" includes, without limitation, discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of indebtedness; receiving deposits; issuing, advising, and confirming letters of credit; receiving money for transmission; and loaning money on personal security or real or personal property.
(b)	Parity Powers. – A bank also has the power to engage:
(1)	As principal in any activity permissible for a national bank under any law, including the National Bank Act, 12 U.S.C. § 21, as well as activities recognized as permissible for a national bank in any regulation, official circular, bulletin, order or written interpretation issued by the Office of the Comptroller of the Currency.
(2)	As principal in any activity that is permissible, or determined by the Federal Deposit Insurance Corporation to be permissible, for a bank under the Federal Deposit Insurance Act, 12 U.S.C. § 1813, and regulations thereunder.
(3)	As principal in any activity that is permissible for a savings and loan association or savings bank organized, respectively, under Chapters 54B and 54C of the General Statutes, or that is permissible for a federally chartered savings association or federally chartered savings bank under the Home Owners' Loan Act of 1933, 12 U.S.C. § 1461 through 1468 and regulations thereunder.
(4)	In "trust business", as that term is defined by G.S. 53-301(50).
(5)	In any activity other than as principal pursuant to the Federal Deposit Insurance Act, 12 U.S.C. § 1813, and regulations thereunder.
(c)	Incidental Powers. – In addition to the other powers described in this section, a bank has the power to exercise all other powers that are reasonably necessary, convenient, or complementary to the exercise of the powers authorized in subsections (a) and (b) of this section.
(d)	Prior Approval Required. – Except as provided in subsection (e) of this section, a bank which proposes to engage in any new activity shall apply to the Commissioner of Banks for approval to engage in the activity before its commencement. If the activity will be conducted in a subsidiary in which the bank intends to make an investment, the bank shall apply to the Commissioner of Banks for approval to engage in the activity before entering into the investment. The bank shall not engage in the activity or make the investment unless and until the Commissioner of Banks issues a written approval of the application. For the purpose of this subsection, the terms "subsidiary" and "investment" have the same meanings as set forth in G.S. 53‑47.
An application for approval shall contain a description of the proposed activity and any other information required by the Commissioner of Banks. A copy of any notice or application the bank is required to file with any federal banking regulator shall also be provided to the Commissioner of Banks.
For the purposes of this section, a "new activity" is any business activity in which the bank is not currently engaged. The extension or relocation of an existing activity into a new department, division, or subsidiary of the bank shall not be considered a "new activity"; provided, however, that any investment in a subsidiary shall be subject to all applicable provisions of this Chapter pertaining to investments by banks, including G.S. 53-47.
(e)	Exceptions. – No application for approval to engage in a new activity shall be required, provided all of the following conditions are met as of the date the activity is commenced:
(1)	The activity is one described in subsection (a), (b), or (c) of this section.
(2)	The bank has received a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System in connection with its most recent examination.
(3)	No notice or application to engage in the activity is required to be filed by the bank with any federal banking regulator.
A bank commencing an activity without prior application and approval pursuant to this subsection shall notify the Commissioner of Banks in writing of the commencement of the activity no later than the 30th day after the earlier of (i) commencing the activity; or (ii) if applicable, making an investment in an entity through which the activity is to be conducted.
(f)	Continuing Authority of the Commissioner of Banks. – Nothing in this section shall be construed as being in derogation of the Commissioner of Banks' ongoing authority under this Chapter to take corrective action regarding the activities of any bank which the Commissioner deems appropriate in order to ensure the continued integrity, safety, and soundness of an individual bank and the State banking system in general."
SECTION 5.  G.S. 53‑47 reads as rewritten:
"§ 53‑47.  Limitations on subsidiary and other investments.
(a)	In addition to any powers or investments authorized by any other section of this Chapter, a bank may invest in the capital stock or other securities of any other state, national or foreign bank or trust company, and in any other industrial bank, savings bank, Morris Plan bank, savings and loan association, bankers' bank or other deposit taking entity chartered or existing under any federal, state, or foreign law including, but not limited to, the capital stock of clearing corporations defined in G.S. 25‑8‑102, the capital stock or other securities of central reserve banks whose capital stock exceeds one million dollars ($1,000,000) and the capital stock of an Edge or Agreement corporation. As used in this Chapter, the term "bankers' bank" means an insured depository financial institution, organized and chartered to do business exclusively with other banks and savings institutions, and the stock of which, or the stock of the holding company which controls such bank, is owned exclusively (except to the extent directors' qualifying shares are required by law) by banks or savings institutions. To constitute a central reserve bank as contemplated by this Chapter, at least fifty percent (50%) of the capital stock of such bank shall be owned by other banks. The investment of any bank in the capital stock of such central reserve bank or bank organized under the "Edge Act", (12 U.S.C. § 611 et seq.) shall at no time exceed ten percent (10%) of the paid‑in capital and permanent surplus of the bank making the investment.
(b)			
A bank may make an investment in a subsidiary that will be operated as a bank operating subsidiary or as a DPC subsidiary. Investments made pursuant to this subsection shall not be subject to the seventy-five percent (75%) of unimpaired capital fund limit contained in subsection (c) of this section.
(c)	A bank may invest up to, in the aggregate, seventy‑five percent (75%) of its unimpaired capital fund in  subsidiaries which are or will be primarily engaged in:
(1)	Activities permissible for national banks or bank holding companies under applicable laws, rules, regulations or orders;
(2)	Activities that are financial in nature or incidental to a financial activity, including the transmission or processing of information or data relating to such activities. For the purpose of this subsection, activities that are financial in nature include insurance activities, all forms of securities activities, including underwriting, distribution, and brokerage, and any other activities as the Commissioner of Banks shall determine by rule or order; or
(3)	Other activities determined by the Commissioner of Banks to be permissible for a bank or a bank operating subsidiary.
(c1)	A bank operating subsidiary may make an investment of any size in a lower tier subsidiary.
(c2)	A bank or bank operating subsidiary proposing to make an investment described in subsection (b), (c), or (c1) of this section shall give prior written notice to the Commissioner of Banks, providing such detail as the Commissioner may require. Unless the Commissioner of Banks, within 30 days following receipt of the notice, notifies the bank or bank operating subsidiary that the Commissioner objects to the proposed investment, the bank or bank operating subsidiary may complete the investment. However, the Commissioner of Banks may extend the period within which to object to the proposed investment if the Commissioner determines that it raises issues which require additional information or additional time for analysis. If the objection period is so extended, the bank or bank operating subsidiary may proceed with respect to the proposed investment.
(d)	Any state or national bank subsidiary which engages in an activity subject to licensure and/or regulation under other than Chapter 53 of the General Statutes shall be subject to licensure and/or regulation on a basis that does not arbitrarily discriminate by the appropriate regulatory agency which licenses and/or regulates nonbanks which engage in the same activity.
	.
(f)	The Commissioner of Banks shall monitor the impact of investment activities of banks under this section on the safety and soundness of such banks. Any stocks owned or hereafter acquired in excess of the limitations herein imposed shall be disposed of at public or private sale within six months after the date of acquiring the stocks, and if not so disposed of, they shall be charged to profit and loss account, and no longer carried on the books as an asset. The limit of time in which said stocks shall be disposed of or charged off the books of the bank may be extended by the Commissioner of Banks if in the Commissioner's judgment it is for the best interest of the bank that such extension be granted; provided that the limitations imposed in this section on the ownership of stock in or securities of corporations are suspended only to the extent that any bank operating under the supervision of the Commissioner of Banks may subscribe for and purchase shares of stock in or debentures, bonds, or other types of securities of any corporation organized under the laws of the United States for the purposes of insuring to depositors a part or all of their funds on deposit in banks where and to such extent as such stock or security ownership is required in order to obtain the benefits of such deposit insurance for its depositors.
(g)	The prior notice requirement of subsection (c2) of this section shall not apply if:
(1)	The bank has received a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System in connection with its most recent examination at the time of the investment; and
(2)	Each activity of the subsidiary in which the investment is to be made is either:
a.	One in which the bank is then engaged or has previously been engaged, directly or through a different subsidiary, and for which all necessary approvals of federal bank regulatory agencies and of the Commissioner of Banks have previously been obtained and remain in effect; or
b.	One for which no prior notice or application for approval to any federal banking regulator is required.
A bank that makes an investment pursuant to the exception created by this subsection shall nevertheless notify the Commissioner of Banks in writing of the investment within 30 days thereafter.
(h)	A bank may invest through purchase, lease, or otherwise in any interest in bank premises, furniture, equipment, and fixtures as may be necessary for the convenient transaction of its business. The total of all investments authorized by this subsection shall not exceed fifty percent (50%) of the bank's unimpaired capital fund; provided, however, that the value of leased bank premises, furniture, equipment, and fixtures shall be included in the bank's total investments only to the extent that the related lease may be capitalized under current generally accepted accounting principles consistently applied.
If any bank demonstrates to the satisfaction of the Commissioner of Banks that an investment of more than fifty percent (50%) of its unimpaired capital fund in its bank premises, furniture, equipment, and fixtures would promote the convenience of the general public in transacting its banking business and would not adversely affect the financial stability of the bank, the Commissioner of Banks may authorize the bank to invest more than fifty percent (50%) of its unimpaired capital funds in its bank premises, furniture, equipment, and fixtures.
(i)	A bank may purchase, hold, and convey real estate other than bank premises for the following purposes:
(1)	As security for loans made or moneys due to it when that real estate has been mortgaged to it in good faith.
(2)	When the real estate has been purchased at sales upon foreclosures of mortgages and deeds of trust held or owned by it, on judgments or decrees obtained and rendered for debts due to it, or in settlements affecting security of those debts. All real property referred to in this subdivision shall be sold by the bank within five years after it is acquired unless, upon application by the board of directors, the Commissioner of Banks extends the time within which the sale shall be made.
(j)	Nothing in this section shall be construed as being in derogation of the Commissioner of Banks' ongoing authority under this Chapter to take corrective action regarding the activities of any bank which the Commissioner deems appropriate in order to ensure the continued integrity, safety, and soundness of an individual bank and the State banking system in general.
(k)	The following definitions apply in this section:
(1)	"Bank operating subsidiary" means a subsidiary which:
a.	Is under the control of a bank; and
b.	Engages only in activities in which a bank may engage pursuant to G.S. 53-43.
(2)	"Bank premises" means any improved or unimproved real estate, whether or not open to the public, which is utilized, intended to be utilized, or has previously been utilized in connection with any activity or business in which the bank is or was engaged or intends to be engaged.
(3)	"Control" means an ownership interest in a subsidiary which:
a.	Constitutes more than fifty percent (50%) of the total ownership interests in the subsidiary; or
b.	Constitutes fifty percent (50%) or less of the total ownership interests in the subsidiary but is required to be consolidated with the bank pursuant to generally accepted accounting principles.
(4)	"DPC subsidiary" means any subsidiary in which the bank has acquired in good faith an ownership interest through foreclosure or other realization on collateral by way of a compromise of a disputed or contested claim or to avoid a loss in connection with a debt previously contracted.
(5)	"Lower-tier subsidiary" means any bank operating subsidiary in which a bank operating subsidiary has an ownership interest.
(6)	"Ownership interest" means any beneficial equity or similar interest, whether direct or indirect, including stock, limited or general partnership interests, or shares in a limited liability company.
(7)	"Subsidiary" means any corporation, partnership, business trust, association, joint venture, pool, syndicate, limited liability company, or any other similar business organization in which a bank has an ownership interest."
SECTION 6.  G.S. 53‑48 reads as rewritten:
"§ 53‑48.  Limitation of loans.
(a)	The total loans and extensions of credit, both direct and indirect, by a bank to a person, other than a municipal corporation for money borrowed, including in the liabilities of a firm the liabilities of the several members thereof, outstanding at one time and not fully secured, as determined in a manner consistent with subsection (b) of this section, by collateral having a market value at least equal to the amount of the loan or extension of credit shall not exceed the greater of fifteen percent (15%) of the unimpaired capital fund of the  bank or the percentage permitted for national banks in this State or by statute or regulation of the Comptroller of the Currency.
(b)	The total loans and extensions of credit, both direct and indirect, by a bank to a person outstanding at one time and fully secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the loan or extension of credit outstanding shall not exceed the greater of ten percent (10%) of the unimpaired capital fund of the bank or the percentage permitted for national banks by statute or regulation of the Comptroller of the Currency. This limitation shall be separate from and in addition to the limitation contained in subsection (a) of this section.
(c)	The discount of bills of exchange drawn in good faith against actual existing values, the discount of solvent trade acceptances or other solvent commercial or business paper actually owned by the person negotiating the same, loans or extensions of credit secured by a segregated deposit account in the lending bank, the purchase of bankers acceptances of the kind described in section 13 of the Federal Reserve Act and issued by other banks, and the purchase of any notes and the making of any loans, secured by not less than a like face amount of bonds of the United States, or an agency of the United States, or other obligations guaranteed by the United States Government, or State of North Carolina or certificates of indebtedness of the United States, or agency thereof, or other obligations guaranteed by the United States Government, shall not be considered as money borrowed within the meaning of this section: Provided, however, that the limitations of this section shall not apply to loans or obligations to the extent that they are secured or covered by guarantees or by commitments or agreements to take over or purchase the same, made by any federal reserve bank or by the United States or any department, board, bureau, commission or establishment of the United States, including any corporation wholly owned directly or indirectly by the United States.
(d)	For purposes of this section, the term "person" shall be deemed to include an individual, or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. Loans or extensions of credit to one person include loans made to other persons when the proceeds of the loans or extensions of credit are to be used for the direct benefit of the first person or the persons are engaged in a common enterprise. The Commissioner of Banks shall monitor the lending activities of banks under this section for undue credit concentrations and inadequate risk diversification which could adversely affect the safety and soundness of such banks."
SECTION 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, with the prior written approval of the Commissioner of Banks, may:
(1)	Establish a branch or limited service facility; or
(2)	Convert an existing limited service facility to a branch.
The application for approval to establish or convert a branch or limited service facility shall be in a form prescribed by the Commissioner of Banks and shall be accompanied by the application fee established by the Banking Commission by rule. Approval may be given or withheld by the Commissioner of Banks. In determining whether to give or withhold approval, the Commissioner of Banks shall take into account factors, including the financial history and condition of the applicant association, the adequacy of its capital structure, its future earnings prospects, and the general character of its management. The Commissioner of Banks shall not give approval pursuant to this subsection unless the Commissioner finds that:
(1)	The establishment or conversion of the branch or limited service facility will meet the needs and promote the convenience of the community to be served thereby; and
(2)	The probable volume of business and reasonable public demand in the community are sufficient to assure and maintain the solvency of the branch office or limited service facility and of the existing depository institutions in the community.(c)	(1)	A branch or limited service facility of a bank shall be operated under the control and direction of the board of directors and executive officers of the bank and under the name of the bank as set forth in its Certificate of Incorporation filed with the Office of the Secretary of State, except that the Commissioner of Banks may permit the operation of a branch or limited service facility under an assumed name under the conditions and terms imposed by the Commissioner if the Commissioner of Banks finds that the name will not result in confusion among customers of the bank or among the general public. 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 or conversion of a branch or limited service facility 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 subsection (f) of this section and (v) the business experience and reputation of bank management.
	
(d)	
Upon 30 days written notice to the Commissioner of Banks, a bank may discontinue any limited service facility  operation.
(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) of this section, shall not be applicable to the establishment of any such off‑premises terminal device or machine.
(e)	A bank may, upon resolution by the board of directors, discontinue a branch office subject to the following:
(1)	The bank shall notify the Commissioner in writing of its intent to close a branch not later than 90 days prior to the proposed closing date. Such notice shall include a detailed statement of the reasons for the decision to close a branch and statistical or other information in support of such reasons.
(2)	The bank shall provide a notice of its intent to close a branch to its customers. Such notice shall be posted in a conspicuous manner on the branch premises for a period of 30 days prior to the proposed closing date, and shall either be included in at least one of any regular account statements mailed to customers of such branch, or in a separate mailing to such customers. The later notice shall be given at least 90 days prior to the proposed closing date.
No branch shall be closed until approved by the Commissioner of Banks, provided, however, the consolidation of two or more branches into a single location in the same vicinity shall not be considered a closure subject to the provisions of this subsection.
(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."
SECTION 8.  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, except with the prior approval of the Commissioner. The Commissioner shall not give approval for a bank to purchase any portion of its shares of stock unless the Commissioner determines the bank will remain well-capitalized following the purchase. In approving a purchase, the Commissioner may impose any conditions that are prudent and necessary to protect the interests of the shareholders and creditors of the bank."
SECTION 9.  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 June 30 each year; provided, however, that any bank which has been open for business for fewer than 12 months as of June 30 of the current year shall hold its first annual meeting by not later than June 30 of the following 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 North Carolina Business Corporation Act."
SECTION 10.  G.S. 53‑99(b)(7b) reads as rewritten:
"(7b)	Records of applications,  examinations, and investigations of applicants, licensees, and exempt persons under the Mortgage Lending Act, Article 19A of this Chapter;".
SECTION 11.  G.S. 53‑115 reads as rewritten:
"§ 53‑115.  State Banking Commission to make rules and regulations.
(a)	The State Banking Commission is hereby authorized, empowered and directed to make all necessary rules  with respect to the establishment, operation, conduct, and termination of any and all activities and businesses that are subject to licensing, regulation, supervision, or examination by the Commissioner of Banks under this Chapter.
(b)	The rule‑making authority conferred on the State Banking Commission by this section shall be in addition to and not in derogation of any specific rule-making authority by any other provision of this Chapter."
SECTION 12.  G.S. 53‑160 reads as rewritten:
"§ 53‑160.  License to do business.
Before any such bank or trust company is authorized to act in any fiduciary capacity without bond, it must be licensed by the Commissioner of Banks of the State. For such license the  licensee, for the purpose of defraying necessary expenses of the Commissioner of Banks and the Commissioner's agents in supervising and examining the licensee, shall pay to the Commissioner of Banks an annual license fee not to exceed five hundred dollars ($500.00) as required by rule of the State Banking Commission. A national bank which has been granted trust powers by the Comptroller of the Currency or his duly authorized agent shall be annually licensed as required in this section and shall be granted a certificate of solvency which will meet the provisions of G.S. 53‑162 without examination by the Commissioner of Banks as required in G.S. 53‑161."
SECTION 13.  G.S. 53‑208.12 reads as rewritten:
"§ 53‑208.12.  Quarterly reports.
A licensee shall file for each calendar quarter, no later than 60 days after the quarter has ended, a report which contains the total number of authorized delegates in this State. In addition, a licensee shall promptly provide any additional information regarding any or all of its current and prior authorized delegates requested by the Commissioner."
SECTION 14.  G.S. 53‑243.02(c) reads as rewritten:
"(c)	The license of a loan officer is not effective during any period when that person is not employed by a mortgage broker or mortgage banker licensed under this Article. The license of an exclusive mortgage broker is not effective during any period when that person is not authorized to act as a single licensee or exempt person pursuant to G.S. 53‑243.05(c)(1a).
When a loan officer ceases to be employed by a mortgage broker or mortgage banker licensed under this Article, the loan officer and the mortgage broker or mortgage banker licensed under this Article by whom that person is employed shall promptly notify the Commissioner in writing. When the authority of an exclusive mortgage broker to act on behalf of the principal licensee or exempt person identified in G.S. 53‑243.05(c)(1a) has been terminated, the exclusive mortgage broker and the licensee or exempt person for whom the exclusive mortgage broker is an agent shall promptly notify the Commissioner in writing. The mortgage broker, mortgage banker, or exempt person's notice shall include a statement of the specific reason or reasons for, as applicable, the termination of the loan officer's employment or exclusive mortgage broker's authority.
A loan officer shall not be employed simultaneously by more than one mortgage broker or mortgage banker licensed under this Article."
SECTION 15.  G.S. 53‑243.05(a)(6) reads as rewritten:
"(6)	The applicant's consent to a federal and State criminal history record check and a set of the applicant's fingerprints in a form acceptable to the Commissioner. In the case of an applicant that is a corporation, partnership, limited liability company, association, or trust, each individual who has control of the applicant or who is the managing principal or a branch manager shall consent to a federal and State criminal history record check and submit a set of that individual's fingerprints pursuant to this subdivision. Refusal to consent to a criminal history record check constitutes grounds for the Commissioner to deny licensure to the applicant as well as to any entity (i) by whom or by which the applicant is employed, (ii) over which the applicant has control, or (iii) as to which the applicant is the current or proposed managing principal or a current or proposed branch manager."
SECTION 16.  G.S. 53‑243.06(b1) reads as rewritten:
"(b1)	When required by the Commissioner, each individual described in G.S. 53‑245.05(a)(6) shall furnish to the Commissioner his or her consent to a criminal history record check and a set of the his or her fingerprints in a form acceptable to the Commissioner. Refusal to consent to a criminal history record check may constitute grounds for the Commissioner to deny renewal of the license of the person as well as the license of any other person by which he or she is employed, over which he or she has control, or as to which he or she is the current or proposed managing principal or a current or proposed branch manager."
SECTION 17.  G.S. 53‑243.11 is amended by adding a new subdivision to read:
"(12)	To fail to comply with the mortgage loan servicing transfer, escrow account administration, or borrower inquiry response requirements imposed by sections 6 and 10 of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605 and § 2609, and regulations adopted thereunder by the Secretary of the Department of Housing and Urban Development."
SECTION 18.  G.S. 53‑243.12(a)(2) reads as rewritten:
"(2)	That any of the following circumstances apply to the applicant, licensee, or any partner, member, manager, officer, director, loan officer, managing principal, or any person occupying a similar status or performing similar functions or any person directly or indirectly controlling the applicant or licensee. The person:
a.	Has filed an application for license that, as of its effective date or as of any date after filing, contained any statement that, in light of the circumstances under which it was made, is false or misleading with respect to any material fact.
b.	Has violated or failed to comply with any provision of this Article, rule adopted by the Commissioner, or order of the Commissioner.
c.	Has been convicted of any felony, or, within the past 10 years, has been convicted of any misdemeanor involving mortgage lending or any aspect of the mortgage lending business, or any offense involving breach of trust, moral turpitude, or fraudulent or dishonest dealing.
d.	Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the mortgage lending business.
e.	Is the subject of an order of the Commissioner denying, suspending, or revoking that person's license as a mortgage broker or mortgage banker.
f.	Is the subject of an order entered within the past five years by the authority of any state with jurisdiction over that state's mortgage brokerage or mortgage banking industry denying or revoking that person's license as a mortgage broker or mortgage banking industry or denying or revoking that person's license as a mortgage broker or mortgage banker.
g.	Does not meet the qualifications or the financial responsibility, character, or general fitness requirements under G.S. 53‑243.05 or any bond or capital requirements under this Article.
h.	Has been the executive officer or controlling shareholder or owned a controlling interest in any mortgage broker or mortgage banker who has been subject to an order or injunction described in sub‑subdivision d., e., or f. of this subdivision.
i.	Has failed to pay the proper filing or renewal fee under this Article. However, the Commissioner may enter only a denial order under this sub‑subdivision, and the Commissioner shall vacate the order when the deficiency has been corrected."
SECTION 19.  G.S. 53‑243.12(g) reads as rewritten:
"(g)	If the Commissioner has reasonable grounds to believe that a licensee or other person has violated the provisions of this Article or that facts exist that would be the basis for an order against a licensee or other person, the Commissioner may at any time, either personally or by a person duly designated by the Commissioner, investigate or examine the loans and business of the licensee and examine the books, accounts, records, and files of any licensee or other person relating to the complaint or matter under investigation. The Commissioner may require any licensee or other person to submit a consent to a criminal history record check and a set of that person's fingerprints in a form acceptable to the Commissioner in connection with any examination or investigation. Refusal to submit the requested criminal history record check or a set of fingerprints shall be grounds for disciplinary action. The reasonable cost of this investigation or examination shall be charged against the licensee."
SECTION 20.  G.S. 53‑243.12(k) reads as rewritten:
"(k)	If the Commissioner finds that the managing principal, branch manager, or loan officer of a licensee had knowledge of or reasonably should have had knowledge of, or participated in, any activity that results in the entry of an order under this section suspending or withdrawing the license of a licensee, the Commissioner may prohibit the branch manager, managing  principal, or loan officer from serving as a branch manager, managing principal, or loan officer for any period of time the Commissioner deems necessary."
SECTION 21.  G.S. 53‑243.16 reads as rewritten:
"§ 53‑243.16.  Criminal history record checks.
(a)	The Department of Justice may provide a criminal record check to the Commissioner for any person who has applied for or holds a mortgage banker, mortgage broker, exclusive mortgage broker, or loan officer license through the Commissioner under this Article.
(b)	In addition, if a person described in subsection (a) of this section is a corporation, partnership, limited liability company, association, or trust, the Department of Justice may provide a criminal record check to the Commissioner for any person who has control of that person, or who is the managing principal or a branch manager of that person.
(c)	The Commissioner shall provide to the Department of Justice, along with the request, the fingerprints of the  person, any additional information required by the Department of Justice, and a form signed by the person consenting to the check of the criminal record and to the use of the fingerprints and other identifying information required by the State or national repositories. The  person's fingerprints shall be forwarded to the State Bureau of Investigation for a search of the State's criminal history record file, and the State Bureau of Investigation shall forward a set of the fingerprints to the Federal Bureau of Investigation for a national criminal history check. The Commissioner shall keep all information pursuant to this section privileged, in accordance with applicable State law and federal guidelines, and the information shall be confidential and shall not be a public record under Chapter 132 of the General Statutes.
The Department of Justice may charge a fee for each person for conducting the checks of criminal history records authorized by this section."
SECTION 22.  G.S. 53‑257(6) reads as rewritten:
"(6)	Reverse mortgage loan or loan. – A loan for a definite or indefinite term (i) secured by a first mortgage or first deed of trust on the principal residence of the  mortgagor located in North Carolina, (ii) the proceeds of which are disbursed to the mortgagor in one or more lump sums, or in equal or unequal installments, either directly by the lender or the lender's agent, and (iii) that requires no repayment until a future time, upon the earliest occurrence of one or more events specified in the reverse mortgage loan contract."
SECTION 23.  G.S. 53‑258 reads as rewritten:
"§ 53‑258.  Authority and procedures governing reverse mortgage loans.
(a)	Except as provided in subsection (b1) of this section, no person, firm, or corporation shall engage in the business of making reverse mortgage loans without first being approved as an authorized lender by the Commissioner.
(b)	An application for authorization to make reverse mortgage loans shall be in writing to the Commissioner and in the form prescribed by the Commissioner. The application shall contain the name and complete business address or addresses of the applicant. The application shall also include affirmation of financial solvency and all capitalization requirements that are required by the Commissioner. The application shall be accompanied by a nonrefundable fee, payable to the Commissioner, of five hundred dollars ($500.00).
(b1)	Each of the following lenders shall be considered authorized to engage in the business of making reverse mortgage loans without being required to apply pursuant to subsection (b) of this section and may represent to the public that it is so authorized:
(1)	The North Carolina Housing Finance Agency.
(2)	A bank, savings institution, or credit union formed under the laws of this or any other state or of the United States.
(3)	A wholly owned subsidiary of an entity described in subdivision (2) of this subsection.
Each lender listed in this subsection may, upon written request to the Commissioner of Banks, obtain written confirmation of its authority to engage in the business of making reverse mortgage loans. In the case of lenders listed in subdivisions (2) and (3) of this subsection, the request shall be accompanied by the fee set forth in subsection (d) of this section.
	(d)	The Commissioner shall, upon determination that an applicant should be authorized to make reverse mortgage loans, issue notice of this authority to the lender. The authority to issue reverse mortgage loans is valid for the period of time specified by the Commissioner. A lender to whom a notice of authority is issued shall display the notice prominently in any and all offices of the lender that make reverse mortgage loans. Authorizations issued under this section are nontransferable. Except for lenders described in subsection (b1) of this section, each lender to which an authorization is issued shall pay an annual renewal fee of two hundred fifty dollars ($250.00)."
SECTION 24.  G.S. 54B‑4(b) is amended by adding the following new subdivision to read:
"(32b)	"Limited service facility" means a staffed physical location open to the public in this State in which a State association conducts any activity of a "branch office" set forth in subdivision (7) of this subsection, but which is not considered a branch by virtue of the fact that the State association does not engage in all activities of a branch at the location. A location is a limited service facility of a State association notwithstanding that it is operated by a third party if there exists an agreement between the third party and the State association pursuant to which the third party (i) takes deposits or offers loans as an agent of the State association or in the State association's name; or (ii) is obligated to sell or otherwise transfer to the State association all or a substantial portion of the loan or deposit production of that location."
SECTION 25.  G.S. 54B‑22 reads as rewritten:
"§ 54B‑22.  Branch  offices and limited service facilities.
															
(a)	A State association, with the prior written approval of the Commissioner of Banks, may:
(1)	Establish a branch office or limited service facility; or
(2)	Convert an existing limited service facility to a branch office.
The application for approval to establish or convert a branch office or limited service facility shall be in a form prescribed by the Commissioner of Banks and shall be accompanied by the application fee established by the Banking Commission by rule. Approval may be given or withheld by the Commissioner of Banks. In determining whether to give or withhold approval, the Commissioner of Banks shall take into account factors including the financial history and condition of the applicant association, the adequacy of its capital structure, its future earnings prospects, and the general character of its management.
The Commissioner of Banks shall not give approval pursuant to this subsection unless the Commissioner finds that:
(1)	The establishment or conversion of the branch office or limited service facility will meet the needs and promote the convenience of the community to be served thereby; and
(2)	The probable volume of business and reasonable public demand in the community are sufficient to assure and maintain the solvency of the branch office or limited service facility and of the existing depository instructions in the community.
(b)	A branch or limited service facility of a State association shall be operated under the control and direction of the board of directors and executive officers of the State association and under the name of the State association as set forth in its Certificate of Incorporation filed with the Office of the Secretary of State, except that the Commissioner of Banks may permit the operation of a branch office or limited service facility under an assumed name under the conditions and terms imposed by the Commissioner if the Commissioner finds that the name will not result in confusion among customers of the State association or among the general public. The board of directors of the State association shall elect officers required to conduct the business of any branch or limited service facility.
The Commissioner of Banks shall not authorize the establishment or conversion of a branch office or limited service facility until the Commissioner is satisfied that the applicant State association has sufficient capital to maintain a minimum capital to asset ratio as the Commissioner of Banks may require. In determining the ratio, the Commissioner of Banks shall give due consideration to (i) the amount of capital required to support the association's projected growth, (ii) the association's earnings history and projected earnings, (iii) the quality of the association's assets, (iv) the amount of capital then invested by the State association in fixed assets, and (v) the business experience and reputation of the management.
(c)	Subject to rules adopted by the State Banking Commission with regard to its use, maintenance, and supervision, any State association may establish off the premises of any principal office, branch office, 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 an association or other terminal. The establishment and use of the device or machine shall not be deemed a branch or limited service facility, and the net worth requirements and standards for approval of a branch, all as set forth in this section, shall not be applicable to the establishment of any off-premises terminal device or machine."
SECTION 26.  G.S. 54C‑4(18) reads as rewritten:
"(18)	
	Limited service facility. – A staffed physical location open to the public in this State in which a State savings bank conducts any activity of a "branch office" set forth in subdivision (5) of this subsection, but which is not considered a branch by virtue of the fact that the State savings bank does not engage in all activities of a branch at the location. A location is a limited service facility of a State savings bank notwithstanding that it is operated by a third party if there exists an agreement between the third party and the State savings bank pursuant to which the third party (i) takes deposits or offers loans as an agent of the State savings bank or in the State savings bank's name; or (ii) is obligated to sell or otherwise transfer to the State savings bank all or a substantial portion of the loan or deposit production of that location."
SECTION 27.  G.S. 54C‑23 reads as rewritten:
"§ 54C‑23.  Branch offices and limited service facilities.
														
(a)	A State savings bank, with the prior written approval of the Commissioner of Banks, may:
(1)	Establish a branch office or limited service facility; or
(2)	Convert an existing limited service facility to a branch office.
The application for approval to establish or convert a branch office or limited service facility shall be in a form prescribed by the Commissioner of Banks and shall be accompanied by the application fee established by the Banking Commission by rule. Approval may be given or withheld by the Commissioner of Banks. In determining whether to give or withhold approval, the Commissioner of Banks shall take into account factors including the financial history and condition of the applicant State savings bank, the adequacy of its capital structure, its future earnings prospects, and the general character of its management.
The Commissioner of Banks shall not give approval pursuant to this subsection unless the Commissioner finds that:
(1)	The establishment or conversion of the branch office or limited service facility will meet the needs and promote the convenience of the community to be served thereby; and
(2)	The probable volume of business and reasonable public demand in the community are sufficient to assure and maintain the solvency of the branch office or limited service facility and of the existing depository instructions in the community.
(b)	A branch or limited service facility of a State savings bank shall be operated under the control and direction of the board of directors and executive officers of the State savings bank and under the name of the State savings bank as set forth in its Certificate of Incorporation filed with the Office of the Secretary of State, except that the Commissioner of Banks may permit the operation of a branch office or limited service facility under an assumed name under the conditions and terms imposed by the Commissioner if the Commissioner finds that the name will not result in confusion among customers of the State savings bank or among the general public. The board of directors of the State savings bank shall elect officers required to conduct the business of any branch or limited service facility.
The Commissioner of Banks shall not authorize the establishment or conversion of a branch office or limited service facility until the Commissioner is satisfied that the applicant State savings bank has sufficient capital to maintain a minimum capital to asset ratio as the Commissioner of Banks may require. In determining the ratio, the Commissioner of Banks shall give due consideration to (i) the amount of capital required to support the State savings bank's projected growth, (ii) the State savings bank's earnings history and projected earnings, (iii) the quality of the savings bank's assets, (iv) the amount of capital then invested by the State association in fixed assets, and (v) the business experience and reputation of the management.
(c)	Subject to rules adopted by the State Banking Commission with regard to its use, maintenance, and supervision, any State savings bank may establish off the premises of any principal office, branch office, 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 savings bank or other terminal. The establishment and use of the device or machine shall not be deemed a branch or limited service facility, and the net worth requirements and standards for approval of a branch, all as set forth in this section, shall not be applicable to the establishment of any off-premises terminal device or machine."
SECTION 28.  G.S. 54C‑27 is repealed.
SECTION 29.  G.S. 150B‑21.1 is amended by adding a new subsection to read:
"(a11)	Notwithstanding the provisions of subsection (a) of this section, the State Banking Commission, in accordance with the provisions of Article 8 of Chapter 53 of the General Statutes, may adopt a temporary rule for one or more of the following reasons:
(1)	To ensure the safe and sound management of the financial institutions under the Commissioner's supervision pursuant to Chapters 53, 54B, and 54C of the General Statutes.
(2)	To implement any provision of State or federal law for which the Commissioner of Banks or the State Banking Commission has been authorized to adopt rules.
(3)	To preserve the operational integrity of the system of regulated financial institutions serving the citizens of this State.
(4)	To prevent catastrophic loss to the interests of depositors, creditors, stockholders, or the public in their relations with the system of regulated financial institutions.
After having the proposed temporary rule published in the North Carolina Register and at least 30 days prior to adopting a temporary rule pursuant to this subsection, the Commission shall:
(1)	Notify persons on its mailing list maintained pursuant to G.S. 150B‑21.2(d) and any other interested parties of its intent to adopt a temporary rule;
(2)	Accept oral and written comments on the proposed temporary rule; and
(3)	Hold at least one public hearing on the proposed temporary rule.
When the State Banking Commission adopts a temporary rule pursuant to this subsection, the Commission shall submit the reference to this subsection as the agency's statement of need to the Codifier of Rules."
SECTION 30.  The Legislative Research Commission shall undertake a comprehensive study of those laws, including Chapters 53, 54B, 54C, and 24 of the General Statutes, which affect the establishment and operation of banks in North Carolina and shall make recommendations to the 2003 General Assembly, prior to the convening of the 2004 Regular Session as to which laws (i) are obsolete, unnecessary or duplicative, (ii) are unnecessarily inconsistent in the treatment of banks, savings and loan associations, and savings banks, and (iii) unnecessarily restrict, impede, or prohibit activities of banks, savings and loan associations, and savings banks or the ability of the Commissioner of Banks to regulate banks and savings institutions in an effective, efficient, and equitable manner.
In preparing its recommendations, the Commission shall actively solicit and consider information received from representatives of banks, savings and loan associations, savings banks, the State Banking Commission, the Commissioner of Banks and the Commissioner's staff, and the general public.
SECTION 31.  Section 30 of this act is effective when it becomes law. The remainder of this act becomes effective October 1, 2003, and applies to acts occurring and transactions or agreements entered into on or after that date.