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  • Acts
  • 1999
  • Chapter 64 AN ACT RELATIVE TO SAVINGS BANK DEPOSIT INSURANCE.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is to provide forthwith for the establishment of risk based classifications for certain banks, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. Section 23 of chapter 32 of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by striking out, in line 99, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 2. Section 7 of chapter 121A of the General Laws, as so appearing, is hereby amended by striking out, in lines 51 and 52, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 3. Section 2 of chapter 167 of the General Laws, as so appearing, is hereby amended by striking out, in line 112, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 4. Section 24 of said chapter 167, as so appearing, is hereby amended by striking out, in lines 34 and 35, and in lines 41 and 42, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 5. Section 40 of said chapter 167, as so appearing, is hereby amended by striking out, in lines 28 and 29, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 6. Section 6 of chapter 167F of the General Laws, as so appearing, is hereby amended by striking out, in line 8, the words "of the Mutual Savings Central Fund, Inc.,".

SECTION 7. Section 5 of chapter 168 of the General Laws, as so appearing, is hereby amended by striking out, in lines 46 and 47, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 8. Section 27A of said chapter 168, as so appearing, is hereby amended by striking out, in line 7, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 9. Section 34A of said chapter 168, as so appearing, is hereby amended by striking out, in lines 98 and 99 and in line 102, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 10. Section 34B of said chapter 168, as so appearing, is hereby amended by striking out, in line 173, the words "Mutual Savings Central" and inserting in place thereof the following words:- Depositors Insurance.

SECTION 11. Said section 34B of said chapter 168, as so appearing, is hereby further amended by striking out, in line 181, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 12. Said section 34B of said chapter 168, as so appearing, is hereby further amended by striking out, in lines 185 and 186, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 13. Section 34D of said chapter 168, as so appearing, is hereby amended by striking out, in lines 76 and 77, the words "Mutual Savings Central" and inserting in place thereof the following words:- Depositors Insurance.

SECTION 14. Said section 34D of said chapter 168, as so appearing, is hereby further amended by striking out, in lines 84 and 85, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 15. Said section 34D of said chapter 168, as so appearing, is hereby further amended by striking out, in line 89, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 16. Section 36 of said chapter 168, as so appearing, is hereby amended by striking out, in lines 29, 34, 38 and 39, 39 and 40, 41, 56 and 65, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 17. Section 37 of said chapter 168, as so appearing, is hereby amended by striking out, in lines 36 and 37, 43, 47, 48 and 50, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 18. Section 38 of said chapter 168, as so appearing, is hereby amended by striking out, in lines 26 and 27 and in line 61, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 19. Section 39 of said chapter 168, as so appearing, is hereby amended by striking out, in line 20, the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 20. The first sentence of the first paragraph of section 1 of chapter 44 of the acts of 1932, as appearing in section 2 of chapter 324 of the acts of 1956, is hereby amended by striking out the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 21. Section 2 of said chapter 44, as most recently amended by chapter 154 of the acts of 1993, is hereby further amended by striking out the third sentence and inserting in place thereof the following two sentences:- At all meetings of the corporation and of the election districts, each member bank shall be represented by such person as its board of trustees, board of directors, board of investment or executive committee shall designate. At each such meeting, each member bank shall have one vote for each $10,000,000 or fraction thereof of excess deposits insured, as shown by its most recent report to the commissioner or to the corporation, whichever is later, to a maximum number of 25 votes.

SECTION 22. Section 2A of said chapter 44, as inserted by said chapter 154, is hereby amended by striking out the first three sentences and inserting in place thereof the following four sentences:- Unless otherwise provided in the by-laws pursuant to section 2, the board of directors shall consist of 16 members, 12 of whom shall be elected from among the operating officers of the member banks, and four of whom shall be public directors elected in accordance with section 3. For the purpose of the election of directors who shall serve as representatives of the member banks and unless otherwise provided in the by-laws, each of the counties of Essex, Hampden, Middlesex, Suffolk and Worcester shall constitute an individual election district, the counties of Barnstable, Bristol, Dukes County, Nantucket, Norfolk and Plymouth, as a group, shall constitute an election district, and the counties of Berkshire, Franklin and Hampshire, as a group, shall constitute an election district. Unless otherwise provided in the by-laws, each election district shall elect one director from among the operating officers of the member banks whose main offices are located therein, and all member banks, as a group, shall elect five at-large directors from a list of operating officers nominated by such banks and filed with the board of directors not later than 60 days prior to the annual meeting of the corporation; provided, however, that no more than two directors shall be elected from any one election district, and no more than one director shall be elected from any one member bank or from any two or more banks under common control. For the purposes of this section, the term "operating officer" shall mean a person holding the office of chairman, president or chief executive officer of a member bank.

SECTION 23. Section 4 of said chapter 44 is hereby amended by striking out the second sentence, inserted by section 8 of chapter 405 of the acts of 1985, and inserting in place thereof the following sentence:- No part of the income, surplus, undivided profits or other reserves held by the Depositors Insurance Fund in the Liquidity Fund may be subject to withdrawal, except when a member bank is in liquidation.

SECTION 24. The first sentence of section 1 of chapter 43 of the acts of 1934 is hereby amended by striking out the words "Mutual Savings Central Fund, Inc., established by chapter forty-four of the acts of nineteen hundred and thirty-two" and inserting in place thereof the following words:- Depositors Insurance Fund, established by section 1 of chapter 44 of the acts of 1932.

SECTION 25. Section 10 of said chapter 43, as most recently amended by section 16 of chapter 405 of the acts of 1985, is hereby further amended by striking out the sixth sentence and inserting in place thereof the following sentence:- When voting for the purposes provided in this section, each member bank shall have one vote for each $10,000,000 or fraction thereof of excess deposits, as shown by its most recent report to the commissioner or the corporation, whichever is later, to a maximum number of 25 votes.

SECTION 26. The first sentence of section 12 of said chapter 43, as appearing in section 17 of said chapter 405, is hereby amended by striking out the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 27. The first sentence of section 13 of said chapter 43, as appearing in section 18 of said chapter 405, is hereby amended by striking out the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 28. Paragraph (a) of section 15 of said chapter 43, as appearing in section 20 of said chapter 405, is hereby amended by striking out the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 29. Section 17 of said chapter 43, as appearing in section 22 of said chapter 405, is hereby amended by striking out paragraph (a) and inserting in place thereof the following paragraph:-

(a) On October 31 of each year, each member bank shall pay to the Deposit Insurance Fund an annual excess deposit insurance assessment computed upon such member bank's excess deposits as of the preceding September 30, or such other date as shall be fixed by directors and approved by the commissioner, as shown by a statement filed with the corporation and attested to by an authorized officer of such bank. The annual excess deposit insurance assessment for any year may be established as a single, uniform rate for all member banks or as a schedule of differing rates to be assessed on the basis of risk classifications established by the corporation and assigned to member banks. Any such risk-based classifications, assessments and assignments shall become effective upon the approval thereof by the commissioner. The criteria for such classifications of risk may include, but need not be limited to, the following: the bank's so-called CAMELS rating; foreign country activity; types of deposit accounts held; amount of excess deposits held; level of capital; balance sheet composition; diversification and quality of loan and investment portfolios; level, severity and trend of classified assets; level, trend and stability of earnings; ability to meet liquidity needs; compliance with law, regulations, and regulatory and supervisory actions and classifications; and such other factors as, in the opinion of the directors and the commissioner, are deemed necessary, including a classification of greater than normal loss exposure risk.

Whenever the corporation, by a two-thirds vote of the full membership of its board of directors, determines that a member bank constitutes a greater than normal loss exposure risk to the Deposit Insurance Fund, it shall inform the commissioner of such determination and the basis therefor. If the commissioner concurs in such determination, the directors may require such member bank to do any one or more of the following: (i) pay an additional, non-refundable excess deposit insurance risk assessment; (ii) pay a capital contribution which shall be retained as additional capital; (iii) provide collateral acceptable to the directors to minimize any loss which might be incurred; (iv) secure reinsurance, naming the Deposit Insurance Fund as loss payee, in such form and amount and issued by such reinsurers as the directors shall deem acceptable or, in lieu thereof, to reimburse the Deposit Insurance Fund for the cost of its acquisition of such reinsurance; (v) reduce the amount of excess deposits held by such member bank in such amount and in such time period as the directors shall prescribe; or (vi) take such other actions as the directors deem appropriate. The amount, terms and conditions of any such required actions shall become effective when approved by the commissioner.

Whenever a member bank has been so determined to constitute a greater than normal loss exposure risk to the Deposit Insurance Fund, the directors shall notify such bank in writing thereof, including an explanation of the basis for said determination, and advise said bank of any of the requirements imposed pursuant to the preceding paragraph. In any such event, said member bank shall have the option (a) of complying therewith within 60 days following such written notification, or (b) notifying the corporation of its intention to withdraw from membership therein. Upon such notification of intent to withdraw, such bank shall convert to a state-chartered trust company charter in the manner hereinafter prescribed. Upon said conversion, such bank shall be referred to as a former member bank, and its membership and excess deposit insurance coverage shall cease on a date set by the directors, with the approval of the commissioner, subject to the following conditions: (1) each insured excess deposit in such bank on the date of cessation of insurance coverage, other than a term deposit, shall continue to be insured for one year after said date; and (2) each term deposit in said bank on said date shall continue to be insured until maturity; provided, however, that such bank shall be liable to the corporation for the cost of such coverage during said time periods at the assessed rate approved by the commissioner; and provided, further, that with the approval of the commissioner, the corporation may make arrangements with the holders of term deposits for an early withdrawal of such term deposits without penalty; and (3) said bank shall give written notice to its depositors of the cessation of its excess insurance coverage in such manner as the commissioner shall prescribe.

Upon any such withdrawal from membership, a former member bank shall not retain, succeed to or acquire any rights with respect to the assets of the corporation, except as otherwise provided herein. All amounts paid by the withdrawing bank pursuant to section 1 and paragraph (a) and all amounts paid by such bank pursuant to section 4 of chapter 44 of the acts of 1932 shall be retained by the corporation as a charge for the insurance of such bank's deposits and for the availability of liquidity assistance while it was a member bank; provided, however, that such bank shall participate in any distribution made under the provisions of section 10, and may, with the approval of the commissioner, receive dividends on such retained assessments and deposits declared pursuant to section 3 and to section 4 of said chapter 44.

The provisions of paragraph (a) shall apply to a federal member bank, as defined in paragraph (e) of section 17; provided, however, that nothing contained in said paragraph (a) shall be construed so as to affect or limit the authority of the commissioner or the directors pursuant to sections 19 and 20.

The establishment of said risk classifications, the assignment thereof to member banks and the notice of any additional actions to be taken, as provided for herein, shall be completed and effective not later than 90 days after the effective date of this act.

SECTION 30. Said chapter 43 is hereby further amended by inserting after section 17 the following section:-

Section 17A. Notwithstanding any general or special law to the contrary, a member bank, which has notified the corporation of its intention to withdraw pursuant to section 17, if in stock form, including a bank that is a subsidiary banking institution of a mutual holding company established pursuant to chapter 167H of the General Laws, shall, by operation of law, become a trust company subject to the provisions of chapter 172 of the General Laws; provided, however, that if such bank is in mutual form, it shall immediately reorganize into a mutual holding company pursuant to said chapter 167H and the subsidiary banking institution of such mutual holding company shall, by operation of law, become a trust company subject to the provisions of said chapter 172. No such conversion shall become effective until it has been approved, in writing, by the commissioner.

Upon the conversion of a withdrawing bank into a trust company, the corporate existence of such bank shall not terminate, but such trust company shall be deemed to be a continuation of the entity of the bank so converted and all property of said bank including its right, title and interest in and to all property of whatsoever kind, whether real, personal or mixed, and things in action, and every right, privilege, interest and asset of any conceivable value or benefit then existing, or pertaining to it, or which would inure to it, shall immediately, by act of law and without any conveyance or transfer and without any further act or deed, remain and be vested in and continue and be the property of such trust company into which said bank has converted itself, and such trust company shall have, hold and enjoy the same in its own right as fully and to the extent as the same was held, possessed and enjoyed by the converting bank, and such trust company, as of the effective date of said conversion, shall continue to have and succeed to all the rights, obligations and relations of said converting bank. All pending actions and other judicial proceedings to which said converting bank is a party shall not be deemed to have been abated or to have been discontinued by reasons of such conversion, but may be prosecuted to final judgment, order or decree in the same manner as if such conversion into such trust company had not been made, and such trust company resulting from such conversion may continue such action in its corporate name as a trust company, and any judgment, order or decree may be rendered for or against it which might have been rendered for or against such converting bank theretofore involved in such judicial proceedings.

After compliance with the foregoing requirements, the succeeding corporation shall thereafter be entitled to exercise all of the rights and privileges, shall be subject to all of the duties and obligations of a trust company, and shall conduct its business subject to the provisions of chapter 172 of the General Laws and of other applicable laws; provided, however, that, with the approval of the commissioner, the succeeding corporation shall have reasonable time after the effective date of the conversion within which to comply with any particular provisions of such laws not hereinbefore specifically provided for and which it shall be unable to comply with on or before said date.

SECTION 31. Section 19 of said chapter 43, added by section 22A of chapter 405 of the acts of 1985, is hereby amended by striking out paragraph (g) and inserting in place thereof the following paragraph:-

(g) Such bank shall pay to the Deposit Insurance Fund excess deposit insurance assessments in the manner prescribed in paragraph (a) of section 17.

SECTION 32. Section 21 of said chapter 43 is hereby repealed.

SECTION 33. The first sentence of section 1 of chapter 283 of the acts of 1945, as amended by chapter 210 of the acts of 1968, is hereby further amended by striking out the words "Mutual Savings Central Fund, Inc.", each time they appear, and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 34. The fourth sentence of the first paragraph of section 2 of said chapter 283 is hereby amended by striking out the words "Mutual Savings Central Fund, Inc.", each time they appear, and inserting in place thereof, in each instance, the following words:- Depositors Insurance Fund.

SECTION 35. The sixth sentence of the first paragraph of said section 2 of said chapter 283 is hereby amended by striking out the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 36. Paragraph (c) of the first paragraph of section 3 of said chapter 283 is hereby amended by striking out the words "Mutual Savings Central Fund, Inc." and inserting in place thereof the following words:- Depositors Insurance Fund.

SECTION 37. Notwithstanding the provisions of any other general or special law, rule or regulation to the contrary, the corporation may compromise or otherwise settle any claims relating to rights to receive dividends from or to participate in distributions to be made by the corporation established by section 1 of chapter 44 of the acts of 1932, including without limitation rights with respect to distributions to be made pursuant to section 10 of chapter 43 of the acts of 1934, that a bank, which withdraws pursuant to section 29 of this act and such bank would have been eligible to withdraw from membership in said corporation if the classifications provided for in this act had been in effect on June 30, 1999, would otherwise hold; provided, however, that any such compromise or settlement entered into shall extinguish all rights of any type held by such bank in said corporation, including the Liquidity Fund and the Deposit Insurance Fund thereof; and provided, further, that the terms of any such compromise or settlement, including the amount and timing of any payments to be made pursuant thereto, shall be subject to the approval of the commissioner. The authority herein granted shall expire 60 days after the effective date of the establishment of said risk based classifications, the assignment thereof to member banks and the notice of additional assessments to member banks assigned a classification of greater than normal loss exposure risk pursuant to section 29 of this act; provided, however, that any such compromise or settlement with any bank, which has provided said notification of withdrawal at any time during said 60 day period, may be consummated at any time prior or subsequent to the termination of said period.

Approved August 26, 1999.