AN ACT RELATIVE TO CO-OPERATIVE BANKS.
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 26 of chapter 170 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out, in line 5, the word “co-operative”.
SECTION 2. Said chapter 170 is hereby further amended by striking out section 29, as so appearing, and inserting in place thereof the following section:-
Section 29. Any federal thrift bank may convert itself into a co-operative bank upon the same terms and conditions that from time to time shall apply under federal law and regulations to the conversion of a co-operative bank to a federal thrift bank; provided, however, that where authority is conferred upon the appropriate federal supervising authority, in the case of a conversion from a co-operative bank to a federal thrift bank, similar authority, in the case of a conversion from a federal thrift bank to a co-operative bank, unless otherwise expressly provided in this section, shall be conferred upon the commissioner. For purposes of this section, a federal thrift bank shall mean a federally chartered savings bank, savings and loan association or successor thrift institution chartered under the laws of the United States.
Any such federal thrift bank shall first give notice in writing to the commissioner of its intention to convert to a co-operative bank and shall submit such preliminary financial statements and other information concerning its assets, liabilities and affairs as the commissioner may request, together with a plan for proposed conversion showing the intended treatment of the various classes of its assets and liabilities before and after conversion. The commissioner, at the expense of the federal thrift bank, shall make such examination of its assets, liabilities and affairs as the commissioner may deem advisable in order to determine the qualifications of such federal thrift bank for doing the business of a co-operative bank.
The commissioner may establish the procedure to be followed by any such federal thrift bank converting into a co-operative bank; provided, however, that no such conversion shall become effective unless approved in writing by the commissioner. The commissioner shall not grant such approval until the commissioner has received notice from the Share Insurance Fund of the Co-operative Central Bank established under chapter 73 of the acts of 1934, hereinafter called the central bank, that arrangements satisfactory to it have been made for such conversion.
If an application for conversion is approved by the commissioner as above provided, such federal thrift bank shall cause to be filed with the state secretary the name, residence and post-office address of each of the officers and directors of such federal thrift bank, a copy of its proposed by-laws amended to conform with the requirements of section 7 and such other information as said secretary may require.
After approval of such conversion by the commissioner, and receipt by the commissioner of satisfactory evidence that all federal laws and regulations relative to such conversion have been or will be duly complied with, the commissioner shall cause to be filed with the state secretary a certificate of the commissioner’s approval. After receipt of such certificate by said state secretary, if the state secretary finds that the requirements of this section have been satisfactorily complied with, the state secretary shall so certify and upon receipt of a fee, the amount of which shall be determined annually by the secretary of administration and finance under section 3B of chapter 7, said state secretary shall issue to said officers and directors in such form as the state secretary may prescribe, a certificate of incorporation as a co-operative bank.
Simultaneously with the receipt of such certificate, such bank, hereinafter referred to as the succeeding corporation, shall become a member of the central bank and of the Share Insurance Fund thereof. Before such succeeding corporation shall commence business as a co-operative bank, it shall pay into the Reserve Fund of the central bank, established under chapter 45 of the acts of 1932, an amount equal to the deposit required of a member bank thereof of similar size, as of the date of said certificate, plus such additional amount based upon the surplus of said reserve fund, as the directors of the central bank, with the approval of the commissioner, shall determine to be equitable.
In addition to the payment to said reserve fund, the succeeding corporation shall pay to said Share Insurance Fund or make provision for payment thereto of such a sum as the directors of the central bank, with the approval of the commissioner, shall determine to be equitable; and provided, that the succeeding corporation shall pay to said Share Insurance Fund such proportion of any current annual assessment as shall have accrued to the date of said certificate.
After compliance with the foregoing requirements, the succeeding corporation shall thereafter be entitled to exercise all of the rights and privileges and shall be subject to all of the duties and obligations of a co-operative bank and shall conduct its business subject to this chapter and of other applicable laws; provided 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 laws not hereinbefore specifically provided for and which it shall be unable to comply with on or before said date.
SECTION 3. Section 1 of chapter 45 of the acts of 1932 is hereby amended by striking out the first paragraph, as amended by section 2 of chapter 323 of the acts of 1956, and inserting in place thereof the following paragraph:-
All the co-operative banks established under the laws of the commonwealth and subject to chapter 170 of the General Laws, hereinafter referred to as member banks, are hereby constituted a corporation under the name of the Co-operative Central Bank, hereinafter referred to as the central bank, to promote the elasticity and flexibility of the resources of the co-operative banks of the commonwealth by centralizing their reserve funds, to assist such member banks by providing financial or technical assistance, or holding investments which cannot readily be liquidated, by making loans to them secured by the pledge of mortgages or other securities legally held by such member banks. Any co-operative bank hereafter established under the authority of said chapter 170 shall upon its organization become a member bank. The assets of the central bank shall be divided into 2 separate and distinct funds, as follows: (a) the Reserve Fund, which shall consist of all assessments collected under section 6 and all investments thereof and all income thereon; and (b) the Share Insurance Fund, established by chapter 73 of the acts of 1934.
SECTION 4. The last paragraph of said section 1 of said chapter 45, as amended by section 10 of chapter 405 of the acts of 1985, is hereby amended by striking out the words “; provided, however, that within thirty days of the vote of the corporation to dissolve and liquidate the Share Insurance Fund, declared eligible for distribution, in accordance with section nine of said chapter seventy-three, and prior to any distribution to member banks, an excise of five million dollars shall be paid by the corporation to the commissioner of revenue as an excise for the privilege of dissolving and liquidating said fund in whole or in part. No such excise shall be paid for such privilege subsequent to the initial distribution made in accordance with said section nine. After payment of such excise, the balance of the proceeds declared eligible for distribution shall be distributed in accordance with said section nine. Such excise shall be subject to all other relevant provisions of applicable law consistent with the provisions of this section; provided, however, that the application of such relevant provisions shall in no way diminish the amount of such excise. The revenues received by the commonwealth from the excise imposed by this section shall be placed in a separate fund to be applied solely to defray the cost of the purposes set forth in chapter twenty-one E of the General Laws”.
SECTION 5. Said section 1 of said chapter 45, as so amended, is hereby further amended by adding the following paragraph:-
The term federal deposit insurance agency as used in this act shall mean Federal Deposit Insurance Corporation or any successor to such corporation.
SECTION 6. The first paragraph of section 2 of said chapter 45, as amended by section 1 of chapter 176 of the acts of 1984, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- There shall be a board of directors of the central bank consisting of not fewer than 9 directors but not more than 15 directors, who shall be elected by the member banks in the manner hereinafter provided for terms of 3 years except in the case of vacancies.
SECTION 7. Said section 2 of said chapter 45, as so appearing, is hereby amended by striking out, in line 10, the words “eleven members” and inserting in place thereof the following words:- a majority of the directors.
SECTION 8. Subsection (a) of said section 2 of said chapter 45, as amended by section 11 of chapter 405 of the acts of 1985, is hereby further amended by striking out, in line 1, the word “fifteen” and inserting in place thereof the following words:- not fewer than 7 directors but not more than 12.
SECTION 9. Subsection (b) of said section 2 of said chapter 45, as appearing in section 1 of chapter 176 of the acts of 1984, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- The delegates of the member banks shall elect from a list of persons nominated by such banks a number of directors equal to 1/5 the total number of directors serving on the board, rounded up to the nearest whole number, but which shall be not less than 2, none of whom shall be directors, officers, employees or agents of a member bank or a director, trustee or other officer of any other financial institution.
SECTION 10. Said chapter 45 is hereby further amended by striking out section 4, as amended by chapter 271 of the acts of 1991, and inserting in place thereof the following section:-
Section 4. There shall be a president, a treasurer and a clerk of the central bank and such other officers and committees thereof as the board of directors may deem necessary, which officers and committees shall be elected annually by the directors. The clerk of the central bank shall be clerk of the board of directors. The directors may fill any vacancies in said offices and committees until the next annual meeting. A person may serve in more than 1 office.
SECTION 11. The first sentence of section 6 of said chapter 45, as most recently amended by section 79 of chapter 371 of the acts of 1983, is hereby amended by striking out the words “a total of not more than seventy-five per cent of such reserve as such member bank is required to establish and maintain under section twenty-two of said chapter one hundred and seventy of the General Laws, computed on the basis of its total assets as appearing in its last preceding annual report to the commissioner” and inserting in place thereof the following words:- such amount as the directors may determine with the approval of the commissioner.
SECTION 12. Said section 6 of said chapter 45, as most recently amended by section 12 of chapter 405 of the acts of 1985, is hereby further amended by striking out the third sentence and inserting in place thereof the following sentence:- Said directors may at any time call for such proportion of the maximum deposits authorized to be required hereby as they may deem necessary; provided, that no member bank shall at any time be required to have on deposit with the central bank an amount equal to more than 3 per cent of such member bank’s total assets as shown annually by the list referred to in section 10.
SECTION 13. The first paragraph of section 7 of said chapter 45 is hereby amended by striking out, in line 6, the word “shareholders” and inserting in place thereof the following word:- depositors.
SECTION 14. Said section 7 of said chapter 45 is hereby further amended by striking out the third paragraph, as most recently amended by section 1 of chapter 116 of the acts of 1994, and inserting in place thereof the following 2 paragraphs:-
The central bank may, by a vote of its directors, borrow money and pledge its assets as security therefor.
The funds of the central bank may be invested only in: (a) bankers’ acceptances and bills of exchange of the kinds and maturities made eligible by law for rediscount with federal reserve banks; provided, that the same are accepted by a bank, banking association or trust company incorporated under the laws of the United States or the commonwealth; (b) obligations of the United States and federal agency obligations; (c) obligations of the commonwealth; (d) loans to member banks; such loans to be in such amounts and subject to such conditions as the directors may determine; and (e) deposits in member banks, national banks and in trust companies established under the laws of the commonwealth.
SECTION 15. The first paragraph of section 10 of said chapter 45, as most recently amended by section 81 of chapter 371 of the acts of 1983, is hereby amended by inserting, after the first sentence, the following sentence:- In lieu of providing such list, the commissioner may notify the central bank that the information required in such list is available to the central bank from a source maintained by the commissioner or a federal deposit insurance agency.
SECTION 16. Said chapter 45 is hereby further amended by adding the following section:-
Section 13. The central bank may indemnify its directors, officers, employees and other agents to whatever extent specified in or authorized by a by-law adopted under law. Such indemnification may include payment by the central bank of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay such payment if such person shall be adjudicated to be not entitled to indemnification under this section which undertaking may be accepted without reference to the financial ability of such person to make repayment. Any such indemnification may be provided even if the person to be indemnified is no longer an officer, director, trustee, employee or agent of the central bank.
No indemnification shall be provided for any person with respect to any matter as to which such person shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that such person’s action was in the best interests of the central bank.
The central bank may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or other agent of the central bank, against any liability incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the central bank would have the power to indemnify such person against such liability.
SECTION 17. Chapter 73 of the acts of 1934 is hereby amended by striking out section 1, as most recently amended by section 23 of chapter 405 of the acts of 1985, and inserting in place thereof the following section:-
Section 1. The Co-operative Central Bank, established by chapter 45 of the acts of 1932 hereinafter referred to as the central bank, shall in the manner herein provided establish a fund for the insurance of shares in co-operative banks established under the laws of the commonwealth, hereinafter referred to as member banks. For such purpose, in addition to the assessments hereinafter provided for, the directors of the central bank may, by assessments made from time to time upon the member banks determined under section 16, require each member bank to pay over in cash to the central bank a total of not more than 1 per cent of the deposits of such member bank as shown by its last preceding annual report to the commissioner of banks, hereinafter referred to as the commissioner, or as shown on the records of the federal deposit insurance agency, such assessments to be in addition to all other payments to the central bank required under said chapter 45. When and as determined by the board of directors of the central bank and approved by the commissioner, such bank shall pay to the central bank such assessment, if any, as authorized by the board of directors of the central bank and approved by the commissioner. If any member bank shall fail to pay any assessment lawfully required under this section, the treasurer of the central bank shall notify the commissioner of such failure and the commissioner shall forthwith notify such member bank in writing. The failure of such member bank to make such payment within 15 days after such notice from the commissioner shall constitute a violation of law within the meaning of section 12 of chapter 167 of the General Laws. All assessments under this section and all payments under sections 28 and 29 of chapter 170 of the General Laws shall be held as a fund to be known as the Share Insurance Fund and shall be in addition to all other payments to the central bank required under said chapter 45 and under said section 29 of said chapter 170. When the net fair value of the assets of said fund, as determined by the central bank and the commissioner, shall equal 3 per cent of the aggregate deposits of all member banks insured by the central bank no assessments shall be made, and if at any time the net fair value of the assets of said fund as so determined shall fall below such 3 per cent, the payment of such assessments, as hereinbefore provided, shall be resumed and shall be continued until the net fair value of such assets as so determined again equals such 3 per cent. The Share Insurance Fund shall be invested separately from the other funds of the central bank and shall not be liable for the obligations of the central bank other than those created by or under this act. Assets of the central bank not held in the Share Insurance Fund shall not be liable for any obligations created hereby or hereunder. All cost of administering the Share Insurance Fund shall be paid therefrom.
The term “federal deposit insurance agency” as used in this act shall mean Federal Deposit Insurance Corporation or any successor to such corporation.
SECTION 18. Section 1A of said chapter 73, inserted by section 2 of chapter 179 of the acts of 1980, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-
The directors may, to the extent which the commissioner deems desirable, review the financial condition of any member bank as it relates to deposit insurance and shall report thereon to the commissioner with the recommendations of the directors. The commissioner may, upon request of the directors and notwithstanding section 2 of chapter 167 of the General Laws, furnish to the directors for the purposes of the Share Insurance Fund, such factual information in the commissioner’s possession as the commissioner may deem to be of assistance in determining the financial condition of any member bank. The commissioner shall, to the extent permitted by federal law, furnish to the treasurer of the central bank 1 copy of the report of any examination of the books, securities, cash, assets and liabilities of any member bank made by the commissioner, under said section 2 of said chapter 167, in the form furnished to such bank as provided in said section 2 of said chapter 167. Every member bank shall furnish to the treasurer of the central bank 1 copy of any report or audit filed with the commissioner by such bank or caused by the commissioner to be made with respect to such bank, under section 14 of chapter 170 of the General Laws, in each case within 15 days after such report is filed with or otherwise furnished to the commissioner.
SECTION 19. The second paragraph of said section 1A of said chapter 73, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- If the directors determine that a special examination and audit, including a current appraisal of the assets, of any member bank would be in the interests of its depositors or in the interests of the sound and effective operation of the Share Insurance Fund, the board of directors by vote of at least two-thirds of its members, may request the commissioner to cause such special examination, audit and appraisal to be made; and if the commissioner determines that the same to be advisable the commissioner shall cause the examination and audit to be made by a certified public accountant in such form and manner as the commissioner may prescribe, together with a current appraisal of such member bank’s assets by a qualified person or persons, and the directors may furnish to the commissioner such evidence of current values of any or all of such member bank’s assets as they may deem material to the appraisal.
SECTION 20. The third paragraph of said section 1A of said chapter 73, as so appearing, is hereby amended by striking out, in line 47, the word “corporation” and inserting in place thereof the following words:- central bank.
SECTION 21. Section 3 of said chapter 73 is hereby amended by striking out the first paragraph, as most recently amended by section 2 of chapter 116 of the acts of 1994, and inserting in place thereof the following paragraph:-
The central bank may pay dividends to member banks and at such times as the directors may determine, subject to the prior approval of the commissioner of any such payment, rates and times and subject to the commissioner’s prior approval as to the terms, conditions and use of such payments to member banks, upon the amounts paid in by such banks to the Share Insurance Fund. The Fund may be invested by the central bank only as provided in subsections (a), (b), (c) and (e) of section 7 of chapter 45 of the acts of 1932, on such terms and conditions and at such valuations as the directors may determine. The central bank may by vote of its directors borrow money for the purposes of the Share Insurance Fund and pledge any assets in which such fund is invested as security for such loans.
SECTION 22. The second paragraph of said section 3 of said chapter 73, as amended by section 23A of chapter 405 of the acts of 1985, is hereby further amended by striking out the first and second sentences and inserting in place thereof the following sentence:- In the case of a merger or consolidation of a co-operative bank with 1 or more other co-operative banks under section 25 of chapter 170 of the General Laws, or in the case of a sale of assets of such bank to and the assumption of the liabilities by 1 or more other co-operative banks under section 7 or under section 24 of said chapter 170, the continuing bank shall succeed to any of the rights of the discontinuing bank in the assessments theretofore paid by the discontinuing bank; provided, however, that if the continuing bank is, and the discontinuing bank is not, a member of the federal deposit insurance agency section 14 shall apply to such assessments of the discontinuing bank as though such bank had become a member of a federal deposit insurance agency as provided in sections 11 to 14, inclusive.
SECTION 23. Said chapter 73 is hereby further amended by striking out section 3A, as most recently amended by section 12 of chapter 507 of the acts of 1980, and inserting in place thereof the following section:-
Section 3A. Whenever it shall appear to the commissioner that it is inadvisable or inexpedient for any member bank to continue to transact the business for which it is organized without receiving financial assistance as provided in this section, the commissioner may, in the commissioner’s discretion, so notify the central bank, and thereupon, if in the judgment of the directors of the central bank such action may reduce the risk or avert a threatened loss to the central bank, or may facilitate a merger or consolidation of such member bank with another member bank, or may facilitate the sale of the assets of such member bank to and the assumption of its liabilities by 1 or more other member banks, the central bank may, with the approval of the commissioner and in order to effect the purposes of this act, do any 1 or more of the following: (a) purchase from such member bank the whole or any part of, or any equitable or other interest in, its assets at the book value thereof, or at some other value mutually agreed upon by such member bank and said directors, notwithstanding that either of such values may exceed the market value of the assets so purchased, and upon such terms and conditions as said directors, with the approval of the commissioner, may determine; (b) make loans to such member bank, secured in whole or in part, in such amounts, and upon such terms and conditions, as said directors, with the approval of the commissioner, may determine; (c) pay to such member bank under an agreement entered into between such member bank and the central bank, with the approval of the commissioner, an amount not in excess of the difference between the book value of certain or all its assets and the fair value thereof as determined by said agreement, in consideration for which such member bank shall agree to write down such assets to such fair value and to pay over to the central bank so much of any net proceeds realized from the sale or other disposition of each and all such assets as is in excess of such fair value, such payment to be made in such amounts, at such times and upon such terms and conditions as said directors, with the approval of the commissioner, may determine; provided, that any amount paid by the central bank hereunder to such member bank and the agreement of such member bank to repay the excess, as hereinbefore provided, shall constitute liabilities of such member bank only to the extent of any such excess actually realized; (d) pay into the surplus account of such member bank under an agreement entered into between such member bank and the central bank, with the approval of the commissioner, an amount not in excess of the difference between the book value of certain or all its assets and the fair value thereof as determined by said agreement, such member bank being hereby authorized and empowered, notwithstanding any other general or special law to the contrary, to repay such amount to the central bank at such time or times and in such manner as such agreement may prescribe; provided, that any such payment made by the central bank to such member bank, and any agreement of such member bank to repay the same, shall constitute liabilities of such member bank only to the extent provided by said agreement; (e) make a deposit in such bank of such amount as the directors consider advisable which deposit shall not be subject to limits imposed by section 3 of chapter 167D of the General Laws or by the by-laws of the bank, and which may or may not be a subordinated deposit and may or may not be in accordance with an agreement that dividends thereon will be at a lower rate than is paid to other depositors; (f) assume any liabilities of such member bank; (g) make loans or contributions to or deposits in, or purchase any assets of, any financial institution which will acquire control of or merge or consolidate with such member bank or will purchase the assets and assume the liabilities of such member bank; (h) guarantee such member bank, or any financial institution which will acquire control of or merge or consolidate with such member bank or will purchase the assets and assume the liabilities of such member bank, against loss by reason of such acquisition of control, merger or consolidation or purchase of assets and assumption of liabilities; and (i) take any other action which the directors in their opinion consider appropriate to carry out the purposes of this section.
In addition to or apart from the financial assistance authorized under the preceding paragraph, the central bank by vote of at least 2/3 of its directors and in order to effect the purposes of this act may, by agreement with a member bank and with the approval of the commissioner, grant financial assistance to such member bank by any or all of the methods prescribed and subject to the terms, conditions and benefits contained in clauses (a) to (i) inclusive, of this section, for any of the purposes stated in this section or to provide reserve funds for the protection of depositors of such member bank; provided, that the total financial assistance granted to a member bank under the authority of this paragraph shall not at any 1 time exceed a sum equal to the greater of 5 per cent of the deposits of such bank or $500,000.
Such bank, by vote of at least 2/3 of its directors, may take any and all action necessary or advisable to enable it to carry out this section.
Notwithstanding section 27 of chapter 170 of the General Laws relative to voluntary dissolution and liquidation of a co-operative bank, in order to give effect to the purpose of this section and subject to the approval of the commissioner and of the central bank, such member bank may be dissolved and liquidate its affairs if authorized by vote of at least 2/3 of its directors; provided, that another depository institution, the deposits of which are insured by a federal deposit insurance agency, shall have assumed and agreed to pay the whole of the deposits of such member bank under section 24 of said chapter 170. A liquidating committee of 3 persons, subject to the approval of the central bank, shall thereupon be elected by and from said directors, and, under such regulations as may be prescribed by the commissioner, shall liquidate the remaining assets, and after satisfying or adjusting all debts of and claims against such member bank not assumed by such other co-operative bank, shall distribute the remaining proceeds among those entitled thereto proportionate to their respective interests therein. The supreme judicial court, or any justice thereof, shall have jurisdiction in equity to enforce this paragraph and to act upon all applications and in all proceedings thereunder.
At any time after 10 years from the date financial assistance shall have been granted to a member bank under this section, any unpaid balance thereof may be compromised or settled for such cash payment or other consideration as the central bank and the member bank, with the approval of the commissioner, may agree upon, and upon such compromise or settlement the member bank shall be released and discharged from any further obligation to repay the unpaid balance of such financial assistance except to the extent provided by such agreement. The supreme judicial court shall have jurisdiction in equity to approve any such agreement for compromise or settlement and to enforce this paragraph and to act upon all applications and in all proceedings thereunder.
SECTION 24. Section 3B of said chapter 73 is hereby repealed.
SECTION 25. Said chapter 73 is hereby further amended by striking out section 4, as most recently amended by section 2 of chapter 72 of the acts of 1981, and inserting in place thereof the following section:-
Section 4. Whenever it shall appear to the commissioner that any member bank is in an unsound or unsafe condition to transact the business for which it is organized, or that it is unsafe and inexpedient for it to continue to transact such business, the commissioner may so certify to the central bank, and upon receipt of such certificate the central bank shall, by notice in writing to the commissioner and to the bank, take possession and control immediately of the property and business of such bank and shall operate such bank, subject to such rules and regulations as the commissioner may prescribe, until the bank shall be turned back to the member bank under section 5, be consolidated with or have its assets and liabilities sold to another financial institution or until its affairs shall finally be liquidated. The central bank may, while thus carrying on such business, pay to such bank out of the Share Insurance Fund such sums as the central bank’s directors consider necessary for the protection of the bank’s depositors, and may order the same to be repaid when no longer required for that purpose, or may purchase assets from said bank to effect the purposes of this act on such terms and conditions and at such valuations as the directors, with the approval of the commissioner, may determine.
SECTION 26. Said chapter 73 is hereby further amended by striking out section 5 and inserting in place thereof the following section:-
Section 5. At any time after the central bank has taken over the control, possession and operation of any member bank, as provided in section 4, the central bank may, with the approval of the commissioner, turn back the control, possession and operation thereof to such member bank which may resume business free from any control by the central bank acquired under section 4, subject to such conditions as the commissioner may approve. The central bank shall not thus turn back the control, possession and operation of any bank until there has been repaid into the Share Insurance Fund all sums paid out by it from such fund to such bank or its depositors or until it has received security for such repayment satisfactory to the directors of the central bank.
SECTION 27. Said chapter 73 is hereby further amended by striking out section 6, as most recently amended by chapter 13 of the acts of 1982, and inserting in place thereof the following section:-
Section 6. The central bank, with the approval of the commissioner, may, and at the request of the commissioner shall, at any time after it has taken over the control, possession and operation of any member bank under section 4, discontinue the business of such bank and proceed to liquidate its affairs. The central bank shall in such event pay to the depositors of such bank, or make arrangements with the federal deposit insurance agency to pay, the full amount of their deposits at the date of the discontinuance of the business of the bank with interest from the last dividend date to the date of discontinuance at such rate as the directors shall determine, such payments to be made within 3 years from such discontinuance and at such times and in such installments as the directors with the approval of the commissioner shall determine. For such purpose the central bank shall use, in addition to the assets of the bank, such sums as may be required from the Share Insurance Fund. In the case of liquidation, the central bank shall be subject to such orders, rules and regulations as may be prescribed from time to time by the commissioner. The central bank shall collect all debts due and claims belonging to such bank and with the approval of the commissioner may sell or compound all bad or doubtful debts and with like approval may sell all or any part of the real or personal property of the bank on such terms as the commissioner may approve. To execute and perform the powers and duties conferred upon the central bank, it may in the name of any such bank prosecute and defend all suits and other legal proceedings and may in the name of the bank execute, acknowledge and deliver all deeds, assignments, leases and other instruments necessary and proper to effectuate any sale of real or personal property or any compromise approved by the commissioner and any deed or other instrument executed under the authority hereby given shall be valid and effectual for all purposes to the same extent as though executed by the officers of the bank by authority of its board of directors. The compensation of employees, counsel and other assistants, and all expenses incurred in connection with the liquidation of any such bank shall be fixed, subject to the approval of the commissioner, by the directors. The officers of the central bank and any other persons employed by the directors to liquidate the affairs of any member bank under this section shall give bond to the directors for the faithful performance of their duties in relation to such liquidation in such amount and with such surety or sureties as the commissioner may approve. The persons appointed for the purpose of liquidating the affairs of any such bank shall be subject to all the penalties to which agents appointed by the commissioner for the purpose of liquidating the affairs of a bank are now or may hereafter be subject. All accounts for which no claimant can be found after 6 years following the discontinuance of the business of any such bank shall, if no other provisions to care for said claim have been made, be turned over to the treasurer under chapter 200A of the General Laws. Said accounts may be reclaimed in the manner provided in section 10 of said chapter 200A but no interest shall be paid thereon for the time held by the commissioner.
SECTION 28. Section 6A of said chapter 73, inserted by section 5 of chapter 244 of the acts of 1938, is hereby amended by striking out, in lines 3, 11 and 14, the word “corporation” and inserting in place thereof, in each instance, the following words:- central bank.
SECTION 29. Said chapter 73 is hereby further amended by striking out section 7, as most recently amended by section 92 of chapter 371 of the acts of 1983, and inserting in place thereof the following section:-
Section 7. For the purpose of carrying out this act, the central bank may exercise all the powers, rights and franchises of any bank the control, possession and operation of which has been taken over by it under this act, and may exercise all the powers and rights of the depositors of such bank relative to a merger or consolidation conferred upon them by sections 24, 25, 26, 26A, 26B and 26D of chapter 170 of the General Laws. Notwithstanding any general or special law to the contrary, (a) with the approval of the commissioner, any member bank may advance or loan upon, or purchase, the whole or any part of the assets of any other member bank which is in possession of the central bank under this chapter or which has been the subject of a notice from the commissioner to the central bank as provided in section 3A, at such valuations and upon such terms and conditions as such member banks, by authorization of their boards of directors, may agree upon, and the member bank making such an advance, loan or purchase, for the purpose of effecting the same, may assume and agree to pay the whole or any part of the share and other liabilities of such other member bank upon such terms and conditions and subject to such adjustments as may be approved by the commissioner, and (b), with the approval of the commissioner, any member bank may advance or loan upon, or purchase, the whole or any part of the assets acquired or held by the central bank, and may participate in such an advance, loan or purchase with 1 or more other member banks, at such valuations and upon such terms and conditions as the central bank and such member bank or banks, by authorization of their boards of directors, may agree upon, and with like approval, the central bank may do any and all things and may take any and all action which its directors may consider necessary or advisable to give effect to this section; provided, that the approval of the commissioner shall not be required in the case of the purchase hereunder by a member bank from the central bank of any mortgage for a sum equal to the unpaid balance thereof. Upon the central bank taking possession of any member bank under this act, all rights and privileges of stockholders in such member bank shall terminate and each stockholder of any such member bank shall be entitled only to a pro rata portion of the surplus, if any, of the amount realized by the central bank upon the disposition of the assets of such member bank, over the total liabilities, including reserves for contingent liabilities, of such member bank. Upon the approval of the commissioner of the determination of such surplus, such determination shall become binding upon the central bank and the stockholders of such member bank.
SECTION 30. Said chapter 73 is hereby further amended by striking out section 8, as appearing in section 4 of chapter 179 of the acts of 1980, and inserting in place thereof the following section:-
Section 8. The directors of the central bank may make such rules and regulations, subject to the approval of the commissioner, as they may consider necessary in order to carry out this act, and for such purposes the commissioner may confer and advise with the directors and may furnish them such information, records, statements and reports of examination or copies thereof, relating to any member bank, as the directors may request.
SECTION 31. Said chapter 73 is hereby further amended by striking out section 9, as appearing in section 25 of chapter 405 of the acts of 1985, and inserting in place thereof the following section:-
Section 9. The central bank, at a special meeting called for this purpose and held under the by-laws and under section 5 of chapter 45 of the acts of 1932, may determine, by 4/5 vote of all member banks, that, as a fact, the deposits of all member banks are adequately insured by a federal deposit insurance agency and that the Share Insurance Fund is no longer needed for the insurance of deposits of member banks. If the commissioner concurs with such determination of fact, the commissioner shall declare any balance of such fund, after payment of losses, expenses and obligations of the central bank, eligible for distribution to member banks upon any dissolution and liquidation of the fund. When voting for the purposes provided in this section, each such member bank, by a delegate authorized by its board of directors, shall have 1 vote. Upon any such vote to dissolve and liquidate the Share Insurance Fund, the central bank shall distribute, over a period of not more than 12 months, the amount of the fund so voted for distribution to the then member banks pro rata based upon their total amounts of assessments paid into said fund.
SECTION 32. Said chapter 73 is hereby further amended by striking out section 10, as most recently amended by section 93 of chapter 371 of the acts of 1983, and inserting in place thereof the following section:-
Section 10. During such time as the Share Insurance Fund is insuring the deposits in any member bank under this act, sections 22 to 36, inclusive, of chapter 167 of the General Laws shall not, except as herein provided, apply to such member bank.
SECTION 33. Sections 11 and 12 of said chapter 73 are hereby repealed.
SECTION 34. Section 14 of said chapter 73 is hereby repealed.
SECTION 35. Said chapter 73 is hereby further amended by striking out section 16, as appearing in section 31 of chapter 405 of the acts of 1985, and inserting in place thereof the following section:-
Section 16. The portions of the deposits of all member banks which shall have become members of a federal deposit insurance agency, the amount covered by the insurance of the federal deposit insurance agency, hereinafter referred to as excess deposits, shall continue to be insured in full by the Share Insurance Fund, hereinafter referred to as excess insurance, subject to the following conditions and limitations:
(a) The board of directors may require each member bank to pay to the Share Insurance Fund an annual excess deposit insurance assessment on July 1 of a year computed upon such member bank’s excess deposits as of the preceding June 30, or such other date as shall be fixed by the directors and approved by the commissioner, as shown by a statement filed with the central bank and attested to by an authorized officer of such bank. The annual excess deposit insurance assessment, if any, 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 central bank and assigned to member banks. Any such risk based classifications, assessments and assignments shall become effective upon the approval of the commissioner. The criteria for such classifications of risk may include, but shall 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 considered necessary, including a classification of greater than normal loss exposure risk.
Whenever the central bank, 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 Share 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 1 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 Share Insurance Fund as loss payee, in such form and amount and issued by such reinsurers as the directors shall consider acceptable or, in lieu thereof, to reimburse the Share 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 consider 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 determined to constitute a greater than normal loss exposure risk to the Share Insurance Fund, the directors shall notify such bank in writing, including an explanation of the basis for said determination, and advise said bank of any of the requirements imposed under the preceding paragraph. In any such event, said member bank shall have the option to (A) comply within 60 days following such written notification, or (B) notify the central bank of its intention to withdraw from membership in the central bank. Upon such notification of intent to withdraw, such bank shall, if state-chartered, 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 1 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 central bank 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 central bank 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 central bank, except as otherwise provided in this act. All amounts paid by the withdrawing bank under section 1 and paragraph (a) and all amounts paid by such bank under section 6 of chapter 45 of the acts of 1932 shall be retained by the central bank 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 section 9, and may, with the approval of the commissioner, receive dividends on such retained assessments and deposits declared under section 5 of said chapter 45.
(b) During the time that such member bank is a member of a federal deposit insurance agency, it shall not be liable for any assessments to the Share Insurance Fund except as provided in paragraph (a).
(c) Notwithstanding section 10, sections 22 to 36, inclusive, of chapter 167 of the General Laws shall apply to a member bank so long as it is a member of and its deposits are insured in whole or in part in a federal deposit insurance agency.
(d) Upon payment by the Share Insurance Fund of all or any part of the portion of any deposit insured by the fund in any member bank, the fund shall be subrogated to the rights of the person to whom such insurance was so paid to receive the same distribution from the proceeds of assets and claims of such bank as would have been payable to said person on a claim for the portion of said person’s deposit so paid by the Share Insurance Fund, but said person shall retain the person’s right to receive distribution of so much of the person’s claim against said assets to which said person may be entitled after reimbursement pro rata of the claims for subrogation to the Share Insurance Fund as provided in this paragraph and to a federal deposit insurance agency as provided in section 6 of chapter 167F of the General Laws.
(e) Notwithstanding this section, if the federal deposit insurance agency is at any time a depositor, either directly or through any other governmental agency, in any member bank which is a member of a federal deposit insurance agency, the amounts deposited, directly or indirectly, by the federal deposit insurance agency shall not be insured to any extent by the Share Insurance Fund.
Approved, August 6, 2012.