Title 17.

Chapter 9A.

§§11-13-

C.17:9A-20.1 to

17:9A-20.3

§16-C.17:9A-133.1

§27-C.17:9A-2.1

ARTICLE 50.

BANK ACQUISITIONS

§§28-36-

C.17:9A-409 to

17:9A-417

ARTICLE 51. OPERATION OF

FOREIGN BANKS

§§37-86-

C.17:9A-418 to

17:9A-467

§§89,93-

C.17:12B-24.1 &

17:12B-24.2

§98-C.17:12B-198.1

§101-C.17:12B-3.1

§102-Repealer


P.L. 1996, CHAPTER 17, approved April 17, 1996

Senate No. 307 (First Reprint)

 


 

 

 

 

 

P.L. 1996, CHAPTER 17, approved April 17, 1996

Senate No. 307 (First Reprint)

 

 

An Act concerning banking and revising parts of the statutory law.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. Section 1 of P.L.1970, c.236 (C.17:9-41) is amended to read as follows:

    1. In this act, unless the context otherwise requires:

    "Association" means any State or federally chartered savings and loan association;

    "Capital funds" means (a) in the case of a State bank or national bank or capital stock savings bank, the aggregate of the capital stock, surplus and undivided profits of the bank or savings bank; (b) in the case of a mutual savings bank, the aggregate of the capital deposits, if any, and the surplus of the savings bank; and (c) in the case of an association, the aggregate of all reserves required by any law or regulation, and the undivided profits, if any, of the association;

    "Commissioner" means the Commissioner of Banking;

    "Defaulting depository" means a public depository as to which an event of default has occurred;

    "Eligible collateral" means:

    (a) Obligations of any of the following:

    (1) The United States;

    (2) Any agency or instrumentality of the United States, including, but not limited to, the Student Loan Marketing Administration, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Housing Administration and the Small Business Administration;

    (3) The State of New Jersey or any of its political subdivisions;

    (4) Any other governmental unit; or

(b) Obligations guaranteed or insured by any of the following, to the extent of that insurance or guaranty:

    (1) The United States;

    (2) Any agency or instrumentality of the United States, including, but not limited to, the Student Loan Marketing Administration, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Housing Administration and the Small Business Administration;

    (3) The State of New Jersey or any of its political subdivisions; or

    (c) Obligations now or hereafter authorized by law as security for public deposits;

    (d) Obligations in which the State, political subdivisions of the State, their officers, boards, commissions, departments and agencies may invest pursuant to an express authorization under any law authorizing the issuance of those obligations; or

    (e) Any other obligations as may be approved by the commissioner by regulation or by specific approval;

    "Event of default" means issuance of an order of a supervisory authority or of a receiver restraining a public depository from making payments of deposit liabilities;

    "Governmental unit" means any county, municipality, school district or any public body corporate and politic created or established under any law of this State by or on behalf of any one or more counties or municipalities, or any board, commission, department or agency of any of the foregoing having custody of funds;

    "Maximum liability" of a public depository means, with respect to any event of default, a sum equal to 5% of the average daily balance of collected public funds held on deposit by the depository during the six-month period ending on the last day of the month next preceding the occurrence of such event of default;

    "Net deposit liability" means the deposit liability of a defaulting depository to a governmental unit after deduction of any deposit insurance with respect thereto;

    "Obligations" means any bonds, notes, capital notes, bond anticipation notes, tax anticipation notes, temporary notes, loan bonds, mortgage related securities, or mortgages;

    "Public depository" means a State or federally chartered bank, [a national bank, a] savings bank or an association located in this State

or a state or federally chartered bank, savings bank or an association located in another state with a branch office in this State, the deposits of which are insured by the Federal Deposit Insurance Corporation [or the Federal Savings and Loan Insurance Corporation, as the case may be,] and which receives or holds public funds on deposit;

    "Public funds" means the funds of any governmental unit, but does not include deposits held by the State of New Jersey Cash Management Fund;

    "Valuation date" means December 31 and June 30.

(cf: P.L.1986, c.161, s.1)

 

    2. Section 1 of P.L.1948, c.67 (C.17:9A-1) is amended to read as follows:

    1. As used in this act, and except as otherwise expressly provided in this act:

    (1) "Bank" shall include the following:

    (a) Every corporation heretofore organized pursuant to the act entitled "An act concerning banks and banking (Revision of 1899)," approved March 24, 1899;

    (b) Every corporation heretofore organized pursuant to the act entitled "An act concerning trust companies (Revision of 1899)," approved March 24, 1899;

    (c) Every corporation heretofore organized pursuant to chapter 4 of Title 17 of the Revised Statutes;

    (d) Every corporation, other than a savings bank, heretofore authorized by any general or special law of this State to transact business as a bank or as a trust company, or as both;

    (e) Every corporation hereafter organized pursuant to article 2 of this act;

    (2) "Banking institution" shall mean a bank, an out-of-State bank having a branch office in this State, an out-of-country bank having a branch office in this State, savings bank, and a national banking association having its principal or a branch office in this State;

    (3) "Board of managers" of a savings bank shall include the board of trustees of a savings bank;

    (4) "Capital stock" shall include both common stock and preferred stock;

    (5) "Certificate of incorporation," unless the context requires otherwise, shall mean:

    (a) The certificate of incorporation, together with all amendments thereto, of every bank and savings bank organized pursuant to any general law of this State;

    (b) The charter, together with all amendments thereto, of every bank and savings bank organized pursuant to any special law of this State;

    (6) "Commissioner" shall mean the Commissioner of Banking of New Jersey;

    (7) "Department" shall mean the Department of Banking of New Jersey;

    (8) "Fiduciary" shall include trustee, executor, administrator, receiver, guardian, assignee, and every other person occupying any other lawful office or employment of trust;

    (9) "Manager" of a savings bank shall include a trustee of a savings bank;

    (10) "Municipality" shall mean a city, town, township, village, and borough of this State;

    (11) "Population" shall mean the population as determined by the latest federal census or as determined by the commissioner from other information which he may deem reliable;

    (12) "Qualified bank" shall mean:

    (a) A bank or an out-of-State bank with a branch office in New Jersey which has heretofore been authorized or which shall hereafter be authorized to exercise any of the powers authorized by section 28 of P.L.1948, c.67 (C.17:9A-28);

    (b) A savings bank which has heretofore been authorized or which shall hereafter be authorized to exercise any of the powers authorized by section 28 of P.L.1948, c.67 (C.17:9A-28); and

    (c) A national banking association having its principal or a branch office in this State authorized to act as a fiduciary;

    (13) "Savings bank" shall include the following:

    (a) Every corporation heretofore organized pursuant to the act entitled "An act concerning savings banks," approved April 12, 1876;

    (b) Every corporation heretofore organized pursuant to the act entitled "An act concerning savings banks," approved May 2, 1906;

    (c) Every corporation heretofore organized pursuant to chapter 6 of Title 17 of the Revised Statutes;

    (d) Every corporation, other than a bank, authorized by any general or special law of this State to carry on the business of a savings bank or institution or society for savings;

    (e) Every corporation hereafter organized pursuant to article 3 of [this act] P.L.1948, c.67 (C.17:9A-7 and 17:9A-8) or P.L.1982, c.9 (C.17:9A-8.1 et seq.);

    (14) "Branch office" of a bank or savings bank shall mean an office, unit, station, facility, terminal, space or receptacle at a fixed location other than a principal office, however designated, at which any business that may be conducted in a principal office of a bank or savings bank may be transacted. "Branch office" includes full branch offices, minibranch offices and communication terminal branch offices;

    (15) "Full branch office" means a branch office of a bank or savings bank not subject to the limitations or restrictions imposed upon minibranch offices or communication terminal branch offices;

    (16) "Minibranch office" means a branch office of a bank or savings bank which does not occupy more than 500 square feet of floor space and which does not contain more than four teller stations, manned by employees of the bank or savings bank;

    (17) "Communication terminal branch office" means a branch office of a bank or savings bank which is either manned by a bona fide third party under contract to a bank or savings bank or unmanned and which consists of equipment, structures or systems, by means of which information relating to financial services rendered to the public is transmitted and through which transactions with banks and savings banks are consummated, either instantaneously or otherwise;

    (18) "Secondary mortgage loan" means a loan made to an individual, association, joint venture, partnership, limited partnership association, or any other group of individuals however organized, except a corporation, which is secured in whole or in part by a lien upon any interest in real property, including, but not limited to, shares of stock in a cooperative corporation, created by a security agreement, including a mortgage indenture, or any other similar instrument or document, which real property is subject to one or more prior mortgage liens and which is used as a dwelling, including a dual purpose or combination type dwelling which is also used as a business or commercial establishment, and has accommodations for not more than six families, except that a loan which: (a) is to be repaid in 90 days or less; (b) is taken as security for a home repair contract executed in accordance with the provisions of P.L.1960, c.41 (C.17:16C-62 et seq.); or (c) is the result of the private sale of a dwelling, if title to the dwelling is in the name of the seller and the seller has resided in said dwelling for at least one year, if the buyer is purchasing said dwelling for his own residence and, as part of the purchase price, executes a secondary mortgage in favor of the seller, shall not be included within the definition of "secondary mortgage loan";

    (19) With respect to savings banks, "director" and "board of directors" may be used to mean "manager" and "board of managers," respectively.

    (20)1["De novo branch" means a branch office of a foreign bank in this State which is originally established as a branch office, and does not become a branch office of the foreign bank as a result of the acquisition by the foreign bank of an insured depository institution or a branch office of an insured depository institution or the conversion, merger, or consolidation of any such institution or branch office.

    (21)]1 "Foreign bank" means a company, other than a banking institution, organized under the laws of the United States, another state, or a foreign government, which is authorized by the laws under which it is organized to exercise some or all of the powers specified in paragraph (4) of section 24 of P.L.1948, c.67 (C.17:9A-24), paragraphs (4), (5) and (13) of section 25 of P.L.1948, c.67 (C.17:9A-25), and paragraphs (3) through (9), inclusive, of section 28 of P.L.1948, c.67 (C.17:9A-28).

    1[(22)] (21)1 "Home state" means:

    (a) with respect to a national bank, the state in which the main office is located; and

    (b) with respect to a state bank, the state by which the bank is chartered.

    1[(23)] (22)1 "Host state" means, with respect to a bank, a state, other than the home state of the bank, in which the bank maintains, or seeks to establish and maintain, a branch office.

For purposes of this subsection and subsection (22), "bank" means a bank as defined in the Federal Deposit Insurance Act, 12 U.S.C. §1813(a)(2).

    1[(24)] (23)1"Out-of-State bank" means a state bank, as defined in the Federal Deposit Insurance Act, 12 U.S.C. §1813(a)(2), with a home state other than New Jersey.     1[(25)] (24)1 "Out-of-country bank" means a bank chartered under the laws of a country other than the United States.

    1[(26)] (25)1 "Interstate merger transaction" means:

    (1) The merger or consolidation of banks with different home states, and the conversion of branches of any bank involved in the merger or consolidation into branches of the resulting bank; or

    (2) The purchase of all or substantially all of the assets, the assumption of all or substantially all of the liabilities, or both, including all or substantially all of the branches, of a bank whose home state is different from the home state of the acquiring bank.

    1[(27)] (26)1 "State" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands.

    1[(28)] (27)1 "Resulting bank" means a state or federally chartered bank or state chartered savings bank that has resulted from an interstate merger transaction pursuant to P.L.1948, c.67 (C.17:9A-1 et seq.).

(cf: P.L.1992, c.187, s.1)

 

    3. Section 19 of P.L.1948, c.67 (C.17:9A-19) is amended to read as follows:

    19. A. Any bank or savings bank may, pursuant to a resolution of its board of directors or board of managers, establish and maintain branch offices, subject to the conditions and limitations of this article.

    B. [No bank or savings bank shall establish or maintain a branch office which is located outside the municipality in which it maintains its principal office, except that a bank or savings bank may establish and maintain a branch office or offices anywhere in the State:

    (1) When such bank is a receiving bank as defined in section 132 or a receiving savings bank as defined in section 205, and each proposed branch will be established at a location occupied by the principal office or a branch office of a merging bank, as defined in section 132; or a merging savings bank, as defined in section 205; or

    (2) When each proposed branch will be established at a location occupied by the principal office or a branch office of a banking institution in liquidation or in contemplation of liquidation.] (Deleted by amendment, P.L. , c. .)(pending before the Legislature as this bill.)

    (3) (Deleted by amendment.)

    C. No bank shall hereafter establish a full branch office unless its capital [stock and surplus shall at least equal the minimum capital stock and surplus required by section 4 on the organization of a bank to transact business at the location occupied by the principal office of the bank proposing to establish such full branch office, plus at least $100,000.00 of capital stock for each full branch office maintained or proposed to be established by such bank] shall equal or exceed the minimum capital established by the commissioner by regulation.

    D. No savings bank shall hereafter establish a full branch office unless its [surplus shall at least equal the minimum capital deposits required by section 8 on the organization of a savings bank to transact business at the location occupied by the principal office of the savings bank proposing to establish such full branch office, plus at least $100,000.00 of surplus for each full branch office maintained or proposed to be established by such savings bank] capital shall equal or exceed the minimum capital established by the commissioner by regulation.

    E. (Deleted by amendment.)

    F. (Deleted by amendment.)

    G. (Deleted by amendment.)

    H. (Deleted by amendment.)

    I. (Deleted by amendment.)

    J. (Deleted by amendment.)

    K. A bank or savings bank may establish a full branch office, a minibranch office, or communications terminal branch office anywhere in this State[, provided that no bank or savings bank shall, except as provided in subsection B. of this section, establish a full branch office or a minibranch office in a municipality, other than that in which it maintains its principal office, which has a population of less than 10,000, and in which another banking institution maintains its principal office. For purposes of this subsection, the principal office of each bank or national banking association which is a subsidiary of a bank holding company which controls two or more banking institutions shall be deemed to be a branch office.

    The commissioner, upon application, may set aside the population requirement set forth above for full branch offices or minibranch offices].

    L. Except as otherwise provided by law, no foreign bank [as defined in section 315] shall establish, operate or maintain in this State any full branch office, minibranch office or communication terminal branch office.

(cf: P.L.1981, c.24, s.1)

 

    4. Section 1 of P.L.1989, c.245 (C.17:9A-19.2) is amended to read as follows:

    1. [A banking] a. An insured depository institution located in this State may accept deposits and conduct other banking business as agent for any [other banking institution which is also a subsidiary of the same bank holding company or savings bank holding company] affiliate, without being required to obtain a license as a branch office of the [other banking institution] affiliate or foreign bank; and may provide customer information to [the bank holding company or savings bank holding company of which it is a subsidiary or to] any [other subsidiary thereof] affiliate solely for use in conducting business with the customer. [A customer shall have the right to treat the processing of a transaction by a bank acting as agent pursuant to this section as processing by the customer's bank for all purposes, including the date and time of processing.] For purposes of this [act, "subsidiary" and "bank holding company" shall have the same meaning as set forth in section 1 of P.L.1986, c.6 (C.17:9A-373), and "savings bank holding company" shall mean a "mutual savings bank holding company" or a "capital stock savings bank holding company" as set forth in section 1 of P.L.1987, c.201 (C.17:9A-382)] section, "control" shall be construed consistently with the provisions of paragraph (2) of subsection (a) of section 2 of the "Bank Holding Company Act of 1956," 12 U.S.C. §1841(a)(2); "insured depository institution" shall have the same meaning as set forth in the "Federal Deposit Insurance Act," 12 U.S.C. §1813; "foreign bank," "agency," and "branch" shall have the same meaning as set forth in the "International Banking Act of 1978," 12 U.S.C. §3101 et seq.; and "affiliate" means a company which controls, is controlled by or under common control with another company, and includes a United States branch or agency of a foreign bank.

    b. The commissioner shall have the authority to request from any insured depository institution information with respect to its activities as an agent, including a request for a copy of any agreement of an insured depository institution to act as an agent for an affiliate.

(cf: P.L.1989, c.245, s.1)

 

    5. Section 20 of P.L.1948, c.67 (C.17:9A-20) is amended to read as follows:

    20. A. (1) Before any full branch office shall be established [except those branches established pursuant to paragraph (1) of subsection B. of section 19], the bank or savings bank shall file written application in the department for the commissioner's approval thereof. If, after such investigation or hearings, or both, as the commissioner may determine to be advisable, [he] the commissioner shall find:

    [(1)] (a) That the bank or savings bank has complied with the requirements of section 19 of P.L.1948, c.67 (C.17:9A-19);

    [(2)] (b) That the interests of the public will be served to advantage by the establishment of such full branch office; [and]

    [(3)] (c) That conditions in the locality in which the proposed full branch office is to be established afford reasonable promise of successful operation; and

    (d) That the applicant has achieved sufficient compliance, as defined by the commissioner by regulation, with the "Community Reinvestment Act of 1977," 12 U.S.C. §2901 et seq.;

the commissioner shall, within 90 days after the filing of the application, approve such application.

    (2) To determine if an applicant meets the requirements of subparagraph (c) of paragraph (1) of this subsection A., the commissioner shall consider only the costs of purchasing, constructing, leasing or otherwise establishing the proposed office including the costs for staffing, furniture and equipment needed therefor and the effect of these costs on the operations of the applicant as a whole.

    (3) The applicant need not demonstrate an ability to operate the proposed office at a profit within a definable period of time based on the generation of new deposits from the market area to be entered except to the extent that losses suffered at the proposed office could affect the safety and soundness of the applicant's overall operations.

    B. Before any minibranch office shall be established, the bank or savings bank shall file a written application on forms supplied by the commissioner. A duly adopted resolution of the board of directors or managers authorizing such application shall accompany the application. Notice of such application shall be published in accordance with procedural rules and regulations of the department. Within 20 days after said notice is published, any person or banking institution having objections to the application shall submit detailed written factual and legal grounds for the objection to the commissioner. There shall be no hearing required to be held by the commissioner in connection with such application. The commissioner, after considering the application and written objections and such investigation as [he] the commissioner deems advisable, shall approve the application, if [he] the commissioner shall find

    (1) That the convenience and needs of the public will be served to advantage by the establishment of such minibranch office; and

    (2) That the costs of establishing such minibranch office, including (a) construction and alteration costs; (b) the cost of real property to be acquired in connection therewith or rental to be paid for space to be occupied by such office; (c) the cost of purchasing or renting and installing the equipment to be used in the operation of such office; and (d) the cost of manning such office, shall not in the aggregate exceed such sum as the commissioner shall deem reasonable, taking into consideration the capital and surplus of the bank, or the surplus of the savings bank.

     C. Before any communication terminal branch office shall be established, the bank or savings bank shall file in the department written notice of the proposed establishment [which shall consist of a resolution duly adopted by the board of directors or board of managers] and such other information as the commissioner shall require. [No hearing shall be held by the commissioner in connection with such application. Within 45 days after receipt of the application, the commissioner shall approve the application unless he finds that the establishment is contrary to the interest of the public.]

    D. Any bank or savings bank may participate in the establishment, maintenance or use of one or more communication terminal branch offices with one or more financial institutions whose deposits are insured by [either] the Federal Deposit Insurance Corporation [or the Federal Savings and Loan Insurance Corporation]. The commissioner may require a bank or savings bank to participate with one or more insured financial institutions, at a reasonable cost, if the institution requesting participation maintains a principal, full branch or minibranch office located within 5 miles of the proposed site.

    E. A bank or savings bank shall provide insurance protection under its bonding program for transactions involving such communication terminal branch offices.

    F. [A bank which maintains a communication terminal branch office shall be deemed to have come into possession and to have received such deposits at the time when they are placed in the receptacle.](Deleted by amendment, P.L. , c. .)(pending before the Legislature as this bill.)

    G. The commissioner shall have the power to make, amend and repeal rules and regulations concerning the establishment, maintenance and operation of full branch offices, minibranch offices and communication terminal branch offices not inconsistent with the provisions of this act. The regulations so made shall also be directed toward the creation, operation and maintenance of a substantial competitive parity between banking institutions and other financial institutions in all matters relating to the establishment, operation, and maintenance of branch offices.

(cf: P.L.1975, c.148, s.3)

 

    6. Section 21 of P.L.1948, c.67 (C.17:9A-21) is amended to read as follows:

    21. A. The failure of a bank, out-of-State bank or savings bank to open and operate a branch office within [six months] one year after the commissioner approves the application therefor shall automatically terminate the right of the bank, out-of-State bank or savings bank to open the branch office, and it shall make no further application to establish a branch office at such location, or in the area which would be served by a bank, out-of-State bank or savings bank doing business at such location, until after the expiration of one year from the date of such approval; except that, for good cause shown, the commissioner may, in [his] the commissioner's discretion, on application of the bank, out-of-State bank or savings bank made before the expiration of [such six months] the one year period, extend for additional periods, not in excess of six months each, the time within which such branch office may be opened.

    B. A bank , out-of-State bank or savings bank may discontinue a branch office upon resolution of its board of directors or board of managers. Upon the adoption of such a resolution, the bank, out-of-State bank or savings bank shall file a certificate in the department specifying the location of the branch office to be discontinued, and the date upon which the discontinuance shall be effective.

    C. Whenever the commissioner shall find that a branch office is not open for the transaction of business during such hours or days as [he] the commissioner shall determine are reasonably necessary for the banking needs of the area served by such branch office, the commissioner may, by order, direct the bank , out-of-State bank or savings bank to keep such branch office open during such hours or days, and, upon the failure of the bank , out-of-State bank or savings bank to comply with such order, the commissioner may, after giving the bank , out-of-State bank or savings bank reasonable opportunity to be heard, make an order forfeiting the right of the bank , out-of-State bank or savings bank to maintain the branch office, and, upon the service of the order upon the bank , out-of-State bank or savings bank, it shall cease to maintain such branch office. An order of the commissioner made pursuant to this subsection shall be subject to review, hearing and relief in the Superior Court, in a proceeding in lieu of prerogative writ.

(cf: P.L.1953, c.17, s.15)

 

    7. Section 22 of P.L.1948, c.67 (C.17:9A-22) is amended to read as follows:

    22. A. Upon filing an application therefor in the department, and upon obtaining the approval of the commissioner thereto a bank or savings bank may change the location of its principal office or of a branch office [to a location within the same municipality in which such principal office or such branch office is located, and may change the location of its principal office to a location in a municipality other than that in which it maintains its principal office, but not more than 30 miles distant from such principal office] located in this State to another location in this State. Upon filing an application therefor in the department, and upon obtaining the approval of the commissioner thereto, an out-of-State bank with a branch office located in this State may change the location of a branch office in this State to another location in this State, and a bank or savings bank with a branch office located outside this State may change the location of a branch office to another location in that state.

    B. If it shall appear from the application, or if the commissioner shall find from such proof as [he] the commissioner may require, or from such investigation as [he] the commissioner may cause to be made, that the area which would be served by such office after its change in location would not be substantially different from the area theretofore served by such office, [he] the commissioner shall approve the application.

    C. If it shall appear to the commissioner, from the application, or from such proof as [he] the commissioner may require, or from such investigation as [he] the commissioner may cause to be made, that the proposed location will be so far removed from the place then occupied by such principal office or by such branch office that the area which would be served by such office after its change in location would be substantially different from the area theretofore served by it, [he] the commissioner shall not approve such application unless, after such investigation or hearing, or both, as the commissioner may determine to be advisable, [he] the commissioner shall find that the interests of the public will be served to advantage by such change in location, and that conditions in the locality to which removal is proposed afford reasonable promise of successful operation.

    D. [No bank shall change the location of its principal office pursuant to subsection C of this section unless, following the approval of the commissioner, it shall amend its certificate of incorporation to effect such change.] No savings bank shall change the location of its principal office pursuant to subsection C. of this section unless, prior to making application to the commissioner for his approval, the change in location is approved by a vote of two-thirds of its board of managers then in office.

(cf: P.L.1979, c.226, s.1)

 

    8. Section 23 of P.L.1948, c.67 (C.17:9A-23) is amended to read as follows:

    23. A bank or savings bank may, without satisfying the requirements of section 22 of P.L.1948, c.67 (C.17:9A-22), change the location of its principal office to a location in this State then occupied by a branch office maintained by it. After such a change, the bank or savings bank may maintain a branch office at the location formerly occupied by its principal office, or it may discontinue business at such location. Such bank or savings bank shall file a certificate of such change in the department within 1 week from the date such change is made. A change in location effected pursuant to this section shall not be subject to the limitations imposed by subsections C or D of section 19 of P.L.1968, c.67 (C.17:9A-19). No change in location shall be made under this section without prior written approval of the commissioner which the commissioner shall not withhold unless [he] the commissioner shall find that such change will not be in the public interest.

(cf: P.L.1970, c.165, s.3)

 

    9. Section 2 of P.L.1952, c.179 (C.17:9A-23.2) is amended to read as follows:

    2. [Each auxiliary office shall be located in the same municipality as that in which the bank or savings bank maintains the office to which such auxiliary office is an adjunct.] No auxiliary office shall be established or maintained at a location which is outside this State or more than [2,000 feet] one mile from the office of the bank or savings bank to which such auxiliary office is an adjunct; nor shall any such auxiliary office be established within 1,000 feet of the principal office or a branch office of another banking institution without the written consent of such other banking institution. Such consent, once given, shall thereafter be irrevocable, regardless whether it was given gratuitously or for a valuable consideration. No bank or savings bank shall be required to discontinue an auxiliary office for the reason that, after its establishment pursuant to this act, another banking institution has established its main office or a branch office within 1,000 feet of such auxiliary office.

(cf: P.L.1962, c.101, s.1)

 

    10. Section 3 of P.L.1961, c.67 (C.17:9A-23.11) is amended to read as follows:

    3. a. A branch office established pursuant to this act may be located [in a municipality other than the municipality in which the applying bank maintains its principal office, but no bank shall establish any such branch office outside the county in which it maintains its principal office] anywhere in this State.

    b. No branch office established pursuant to this act shall be removed to a location outside the installation on which it has been established.

    c. The principal office of the bank may not be interchanged with any branch office established pursuant to this act.

    d. [In determining whether a banking institution maintains its principal office or a branch office in a municipality within the meaning of section 19B(3) of the act to which this act is a supplement, a branch office established pursuant to this act shall be disregarded.](Deleted by amendment, P.L. , c. .)(pending before the Legislature as this bill.)

    e. The right to maintain a branch office established pursuant to this act shall cease and the branch office shall be discontinued when the authority to maintain it under Federal law or regulation ceases.

    f. A branch office maintained pursuant to this act shall not be deemed to be a branch as an adjunct of which an auxiliary office may be established.

(cf: P.L.1961, c.67, s.3.)

 

    11. (New section) a. A bank or savings bank may, pursuant to a resolution of its board of directors, establish and maintain a branch office or branch offices outside this State, subject to the conditions and limitations of sections 19 and 20 of P.L.1948, c.67 (C.17:9A-19 and 17:9A-20).

    b. No bank or savings bank shall establish a branch office outside this State unless the laws of the jurisdiction where the branch is to be established do not prohibit the establishment of the branch.

    c. A bank or savings bank which establishes a branch office outside this State shall have such additional powers in that state as permitted to banks or savings banks, as applicable, in the state in which the branch is located.

 

    1[12. (New section) a. An out-of-State bank without a branch office in this State may apply to establish a de novo branch office in this State by filing with the department a copy of the application the out-of-State bank filed with the regulator in its home state and the application it filed with the responsible federal bank supervisory agency.

    b. The commissioner shall approve the application if the out-of-State bank is adequately capitalized as of the date of the application, will be adequately capitalized and managed after the branch is established, has published notice of the application in accordance with procedural rules and regulations of the department, and has achieved sufficient compliance, as defined by the commissioner by regulation, with the Community Reinvestment Act of 1977, 12 U.S.C. §2901 et seq.

    c. A national bank without a branch office in this State may establish a de novo branch office in this State by application to the Comptroller of the Currency so long as the national bank is adequately capitalized as of the date of the application, will be adequately capitalized and managed after the branch is established and has achieved satisfactory compliance with the Community Reinvestment Act of 1977, 12 U.S.C. §2901 et seq.]1

 

    1[13.] 12.1 (New section) An out-of-State bank that opens, occupies or maintains a branch office in this State shall have in this State only the powers a bank chartered in this State has.

 

    1[14.] 13.1 (New section) a. An out-of-State bank with at least one branch office in this State, and a national bank with at least one branch office in this State, may establish and maintain additional branch offices in this State as long as the out-of-State bank or national bank is adequately capitalized as of the date of the application, will be adequately capitalized and managed after the branch is established, and has achieved sufficient compliance with the "Community Reinvestment Act of 1977," 12 U.S.C. §2901 et seq.

    b. An out-of-State bank or national bank branching in New Jersey pursuant to this section, shall publish notice of the application in New Jersey in the appropriate trade journals.

 

    1[15.] 14.1 Section 1 of P.L.1968, c.149 (C.17:9A-23.50) is amended to read as follows:

    1. [A.] As used in this act unless the context requires otherwise,

    (a) "Commissioner" means the Commissioner of Banking [and Insurance] and any other person lawfully exercising the powers of such commissioner;

    (b) "Bank" includes banks, out-of-State banks and savings banks, and, to the extent the provisions hereof are not inconsistent with and do not infringe upon paramount Federal law governing national banks, "bank" also includes national banks;

    (c) "Officers" means the person or persons designated by the board of directors of a bank or the board of managers or trustees of a savings bank or the board of directors or managers or trustees of an out-of-State bank, as appropriate, to act for the bank, out-of-State bank or savings bank in carrying out the provisions of this act;

    (d) "Emergency" means any condition which interferes with the conduct of normal business operations at one or more or all offices of a bank or banks, or which poses an imminent or existing threat to the safety and security of persons or property, or both. Without limiting the generality of the foregoing, an emergency may arise as a result of any one or more of the following: fire; flood; wind, rain or snow storms; labor disputes; power failures; transportation failures; war; and riots, civil commotions, and other acts of lawlessness or violence;

    (e) "Office" means any place at which a bank transacts business or conducts operations related to the transaction of business;

    (f) "Person" includes natural persons, corporations, partnerships and associations.

(cf: P.L.1968, c.149, s.1)

 

    1[16.] 15.1 Section 9 of P.L.1981, c.153 (C.17:9A-24a) is amended to read as follows:

    9. The commissioner shall have the power to make, amend, and repeal regulations permitting banks to exercise any power, right, benefit, or privilege permitted to national or state banks, provided that such power, right, benefit, or privilege is not contrary to law. Such regulations shall be in substantial conformity with similar rules or regulations of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation, as applicable.

(cf: P.L.1981, c.153, s.9)

 

    1[17.] 16.1 (New section) a. One or more banks or savings banks may, with the approval of the commissioner, enter into an interstate merger transaction with an out-of-State bank or banks pursuant to section 11 of P.L.1982, c.9 (C.17:9A-8.11), article 21 of "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-132 et seq.) or article 31 of "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-199 et seq.), as applicable.

    b. Except as otherwise expressly provided in this subsection b., an interstate merger transaction shall not be permitted if, upon consummation of the transaction, the resulting state or federally chartered bank or savings bank, including all federally insured depository institutions that would be affiliates as defined in subsection (k) of section (2) of the federal "Bank Holding Company Act of 1956," 12 U.S.C. 1841(k), would control 30 percent or more of the total amount of deposits held by insured depository institutions in this State. The commissioner may by regulation adopt a procedure whereby the foregoing limitation on control of deposits may be waived for good cause.

    c. The commissioner shall not permit before June 1, 1997, an interstate merger transaction involving one or more banks or savings banks and an out-of-State bank or banks unless the home state of each bank involved in the transaction has in effect, as of the date of the approval of such transaction, a law that applies equally to all out-of-state banks and expressly permits interstate merger transactions with all out-of-state banks.

    d. The commissioner shall not permit on or after June 1, 1997, an interstate merger transaction involving one or more banks or savings banks and an out-of-State bank or banks if the home state of any bank or savings bank involved in the merger transaction has enacted a law after September 29, 1994, and before June 1, 1997, that applies equally to all out-of-State banks and expressly prohibits merger transactions involving out-of-State banks.

    e. An out-of-State bank may, with the approval of the commissioner, acquire a branch office of a bank, out-of-State bank, national bank or savings bank, and the branch shall be treated, for purposes of this section, as a bank or savings bank, as appropriate.

    f. A bank or savings bank may, with the approval of the commissioner, acquire an out-of-State branch office of a bank, savings bank or an out-of-State bank, and the branch shall be treated, for purposes of this section, as an out-of-State bank.

    g. Any out-of-State bank which shall be the resulting bank in an interstate merger transaction shall file with the commissioner in a manner consistent with regulations promulgated by the commissioner for this purpose.

 

    1[18.] 17.1 Section 148 of P.L.1948, c.67 (C.17:9A-148) is amended to read as follows:

    148. A. As used in subsection B. of this section, "applicable Federal law" means the laws of the United States, as presently enacted and as hereafter from time to time supplemented or amended, governing the merger or consolidation of a bank organized under State laws into a national banking association, under the charter of such association; and, as used in subsection C. of this section, "applicable Federal law" means the laws of the United States, as presently enacted and as hereafter from time to time supplemented or amended, governing the merger or consolidation of a national banking association into a bank organized under State laws, under the charter of such bank.

    B. One or more banks may, without the approval of the commissioner or of any other officer, department, board or agency of this State, merge into or consolidate with a national banking association under the charter of such association, with the approval of the holders of at least 2/3 of the capital stock of each such bank entitled to vote. A majority of the directors of each such bank shall, within 10 days after such approval has been given, file in the department a certificate over their signatures that such approval has been given, and that the bank intends to act in pursuance thereof. Except as otherwise provided in subsection D. of this section, a merger or consolidation authorized by this subsection shall be effected solely in the manner and with the effect provided by applicable Federal law, and no such merger or consolidation shall be subject to sections 132 through 147 of P.L.1948, c.67 (C.17:9A-132 through 17:9A-147) or to any other law of this State; but a copy of the agreement or merger or consolidation certified by the comptroller of the currency shall be evidence, and may be recorded, as provided by section 138 of P.L.1948, c.67 (C.17:9A-138). Upon the taking effect of the merger or consolidation, the bank shall be deemed to have surrendered its charter.

    C. One or more national banking associations, or one or more national banking associations together with one or more banks may, with the approval of the commissioner as provided by section 136 of P.L.1948, c.67 (C.17:9A-136), merge into a bank, or may consolidate with a bank under the charter of such bank. Each bank which is a party to such a merger or consolidation as a merging bank or as the receiving bank shall, in all respects, comply with and be subject to the provisions of sections 134 through 147 of P.L.1948, c.67 (C.17:9A-134 through 17:9A-147), in the same manner and with the same effect as if all the parties to such merger or consolidation were banks; the rights, duties, obligations, powers and privileges of each such bank, whether such bank is a merging bank or the receiving bank, and of its or their depositors, other creditors, stockholders and all other persons in interest, shall be as prescribed and defined by sections 134 through 137 of P.L.1948, c.67 (C.17:9A-134 through 17:9A-137); and except as in this subsection otherwise provided in respect to national banking associations, every provision contained in sections 134 through 137 of P.L.1948, c.67 (C.17:9A-134 through 17:9A-137) shall be applicable to a merger or consolidation effected pursuant to this subsection, notwithstanding that a national banking association is a party to such a merger or consolidation. Each national banking association which is a party to a merger or consolidation authorized by this subsection shall comply with and be subject to the provisions of applicable Federal law, and the rights, duties, obligations, powers and privileges of such national banking association, and of its depositors, other creditors, stockholders and all other persons in interest, shall be as prescribed and defined by such applicable Federal law.

    D. National banking associations may, under the laws of the United States, merge into or consolidate with a bank organized under State laws, without approval by any United States authority other than an authority empowered by United States law to approve or disapprove of a merger between, or a consolidation of, State-chartered banks.

    E. Except as otherwise expressly provided in this subsection E., an interstate merger transaction shall not be permitted if, upon consummation of the transaction, the resulting state or federally chartered bank or savings bank, including all federally insured depository institutions that would be affiliates as defined in subsection (k) of section (2) of the federal "Bank Holding Company Act of 1956," 12 U.S.C. 1841(k), would control 30 percent or more of the total amount of deposits held by insured depository institutions in this State. The commissioner may by regulation adopt a procedure whereby the foregoing limitation on control of deposits may be waived for good cause.

    F. Before June 1, 1997, a merger involving a bank and a national banking association without a branch office in New Jersey shall not be not permitted unless the home state of each institution involved in the transaction has in effect, as of the date of the approval of that transaction, a law that applies equally to all out-of-state banks and expressly permits interstate merger transactions with all out-of-state banks. On or after June 1, 1997, a merger involving a bank and a national banking association without a branch office in New Jersey, shall not be not permitted if the home state of any institution involved in the transaction has enacted a law after September 29, 1994 and before June 1, 1997, that applies equally to all out-of-state banks and expressly prohibits merger transactions involving out-of-state banks.

    G. A national banking association without a principal or branch office in New Jersey may acquire a branch office of a bank, and the branch shall be treated, for the purposes of this section, as a bank. A bank may acquire an out-of-State branch office of a national banking association, and the branch shall be treated, for purposes of this section, as a national banking association.

(cf: P.L.1973, c.211, s.4)

 

    1[19.] 18.1 Section 256 of P.L.1948, c.67 (C.17:9A-256) is amended to read as follows:

    256. A. Every bank and out-of-State bank with a branch office in this State shall make and file in the department, not less than two reports during each year, in the form prescribed by the commissioner.

    B. Every report filed pursuant to subsection A of this section shall state in detail and under appropriate heads the assets and liabilities of the bank or out-of-State bank at the close of business on any day specified by the commissioner, and shall be filed in the department within ten days after the receipt by the bank or out-of-State bank of a request therefor. The report shall be attested by the signatures of at least three directors who are not officers of the bank or out-of-State bank, and shall be verified by the oaths of at least two officers of the bank or out-of-State bank. The commissioner may extend for not more than ten days the time within which such report shall be filed.

    C. The commissioner shall have power to call for special reports from a bank or out-of-State bank when, in [his] the commissioner's judgment, such special reports are necessary in order to obtain a full and complete knowledge of its condition.

    D. A bank or out-of-State bank which fails to make and transmit a report required by this section shall be subject to a penalty of [one hundred dollars] $100 for each day during which such failure continues, to be recovered with costs by the State in any court of competent jurisdiction in a civil action prosecuted by the Attorney-General.

    E. The commissioner may waive the requirements of this section if the bank or out-of-State bank files a similar report with federal regulators and adequate provision is made for the commissioner to have access to that filing.

(cf: P.L.1953, c.17, s.38)

 

    1[20.] 19.1 Section 258 of P.L.1948, c.67 (C.17:9A-258) is amended to read as follows:

    258. A summary of [each report filed pursuant to subsection A of section 256, in such form as the commissioner shall prescribe, shall be published once by the bank in a newspaper published and circulated in the municipality in which the bank maintains its principal office, or, if there be no such newspaper, then in one published in the county in which the bank maintains its principal office, or in an adjoining county, and which has a general circulation in such municipality. The publication shall be made within two weeks after the filing of the report, and the cost thereof shall be paid by the bank. Proof of publication shall be made and filed in the department] the report of assets and liabilities as of the end of the most recent fiscal year, required to be submitted to the department pursuant to the section 256 of P.L.1948, c.67 (C.17:9A-256), shall be readily available to customers of the bank.

(cf: P.L.1948, c.67, s.258)

 

    1[21.] 20.1 Section 260 of P.L.1948, c.67 (C.17:9A-260) is amended to read as follows:

    260. A. The commissioner shall, whenever and as often as [he] the commissioner shall deem it advisable, cause the affairs of every bank, and every out-of-State bank with a branch office in New Jersey, to be examined to determine whether the bank or out-of-State bank is conducting its business in conformity with the laws of this State and its certificate of incorporation, and with safety to its depositors, other creditors and the public.

    B. The officers and employees of every bank and out-of-State bank being examined shall exhibit to the examiners all its securities, books, records and accounts and shall otherwise facilitate the examination so far as it may be in their power.

    C. The commissioner, a deputy commissioner, and every examiner assigned by the commissioner or by a deputy commissioner to examine the affairs of a bank or out-of-State bank may administer an oath to any person whose testimony is required for the purposes of the examination. The commissioner or deputy commissioner may compel the appearance of any person for the purposes of examination, by subpoena ad testificandum and the production of books, papers, documents, or other records by subpoena duces tecum.

    D. For banks or out-of-State banks with branches in New Jersey and one or more other states, the commissioner may contract with the state banking regulator in the other state or states where branch offices are located to conduct cooperative exams. Pursuant to those agreements, examiners of the department may examine branch offices of banks and out-of-State banks both in New Jersey and in other states, and examiners of other state banking regulators may examine branch offices of banks and out-of-state banks both in New Jersey and in other states. The fees for these examinations may be shared pursuant to a contract or agreement among the regulators.

(cf: P.L.1948, c.67, s.260)

 

    1[22.] 21.1 Section 264 of P.L.1948, c.67 (C.17:9A-264) is amended to read as follows:

    264. Every report and copy of a report of examination of a bank or out-of-State bank made by or under the supervision of the commissioner, and every report and copy thereof made by a bank or out of state bank pursuant to subsection C. of section 256 of P.L.1948, c.67 (C.17:9A-256) shall be confidential, and shall not be made public by any officer, director or employee of a bank, and shall not be subject to subpoena or to admission into evidence in any action or proceeding in any court, except pursuant to an order of the court made upon notice to the commissioner and after affording the commissioner an opportunity to advise the court of reasons for excluding from evidence such report or any portion thereof. The court shall order the issuance of a subpoena for the production or admission into evidence of any such report or portion thereof, only if it is satisfied that (1) it is material and relevant to the issues in the proceedings, and (2) the ends of justice and public advantage will be subserved thereby. This section shall not prohibit the commissioner from sharing a report of examination with another state or federal regulator so long as provision is made for retaining the confidentiality of the report. This section shall not apply to any action or proceeding instituted by the commissioner or Attorney General pursuant to any law of this State.

(cf: P.L.1948, c.67, s.264)

 

    1[23.] 22.1 Section 267 of P.L.1948, c.67 (C.17:9A-267) is amended to read as follows:

    267. A. If the commissioner finds that a bank, or an out-of-State bank with a branch in this State, is violating the provisions of its certificate of incorporation, or is conducting its business in violation of any law of this State or another state where it is transacting business, or in an unsafe manner, [he] the commissioner shall order the bank to cease its ultra vires, unlawful or unsafe practices, as the case may be.

    B. An order of the commissioner made pursuant to subsection A of this section shall be subject to review, hearing and relief in the Superior Court by a proceeding in lieu of prerogative writ. The institution of proceedings for review in the Superior Court shall suspend the accrual of the penalties provided for by section 268 of P.L.1948, c.67 (C.17:9A-268) until the final determination of such proceedings.

(cf: P.L.1953, c.97, s.1)

 

    1[24.] 23.1 Section 268 of P.L.1948, c.67 (C.17:9A-268) is amended to read as follows:

    268. A bank, or out-of-State bank with a branch in this State, which continues to violate the provisions of its certificate of incorporation or which continues to conduct its business in violation of any law of this State, or another state where it is transacting business, or in an unsafe manner, after having been ordered by the commissioner to cease such practices, shall be liable to a penalty of [one thousand dollars ($1,000.00)]$1,000 to be recovered with costs by the State in any court of competent jurisdiction in a civil action prosecuted by the Attorney-General, and it shall be liable to a like penalty for each day's additional default from and after the time specified in the order. The penalty provided by this section shall be in addition to and not in lieu of any other provision of law applicable upon a bank's or out-of-State bank's failure to comply with an order of the commissioner.

(cf: P.L.1953, c.17, s.42)

 

    1[25.] 24.1 Section 316 of P.L.1948, c.67 (C.17:9A-316) is amended to read as follows:

    316. A. [No] Except as otherwise provided pursuant to section 1 of P.L.1989, c.245 (C.17:9A-19.2) and sections 1[38 through 87 ] 37 through 861of P.L. c. (C. )(pending before the Legislature as this bill), no foreign bank organized under the laws of a foreign government shall transact any business in this State.

    B. A foreign bank, other than one excluded by subsection A of this section, may transact business in this State only as executor or as testamentary trustee or guardian, and then only when named in a decedent's will or codicil thereto. Before transacting such business in this State, a foreign bank shall secure from the commissioner a certificate of authority to transact such business. The commissioner shall not issue a certificate of authority to a foreign bank unless a qualified bank is permitted to transact business as executor, or as testamentary trustee or guardian, when named in a will or codicil thereto, in the jurisdiction in which the foreign bank has its principal office.

     C. No foreign bank shall maintain an office in this State, except that a foreign bank may maintain one or more service facilities in this State, provided that the foreign bank performs only back office operations at the service facility and does not transact business with its customers or the public at the service facility. Prior to opening a service facility in this State, a foreign bank shall register the service facility with the commissioner, which registration shall include the address of the proposed service facility and the name and address of the foreign bank's agent in this State for service of process. No foreign bank organized under the laws of a foreign government which has an office licensed as a representive office pursuant to sections 1[56 and 57] 55 and 561 of P.L. , c. (C. )(pending before the Legislature as this bill), shall be required to register under this subsection as a service facility. Each service facility shall comply with the requirements and pay the fees that the commissioner establishes by regulation. Each service facility shall be subject to examination by the department to determine whether the foreign bank has operated the service facility in accordance with the provisions of this subsection, the costs of which examination shall be paid by the foreign bank at the department's per diem rate for examinations of depository institutions. The commissioner may, upon notice and a hearing, order a foreign bank to close any service facility operated in violation of the provisions of this subsection or of other any law. [An entity which is affiliated, either directly or indirectly, with a foreign bank and intends to engage in back office operations in this State shall register and be regulated pursuant to this subsection as if it were a foreign bank.] Any entity acting as an agent pursuant to section 1 of P.L.1989, c.245 (C.17:9A-19.2) shall not be required to register and be regulated pursuant to this subsection C.

    D. For the purposes of this section, the term "transact business" shall not include back office operations and the term "back office operations" shall include [only] the following activities: data processing, record-keeping, accounting, check and deposit sorting and posting, computation and posting of interest, other similar clerical and statistical functions, [and] producing and mailing correspondence or documents [provided that the correspondence or documents do not include the address of the service facility] and such other similar activities that the commissioner approves.

    E. (1) For the purposes of Article 44 of "The Banking Act of 1948," P.L.1948 c.67, (C.17:9A-315 through 17:9A-332), a foreign bank, including one organized under the laws of a foreign country, shall not be deemed to transact business or maintain an office in this State by virtue of conducting business in this State through an agent in this State which is an insured depository institution affiliate or other agent.

    (2) Nothing in this section or in the "Banking Act of 1948," P.L.1948, c.67 (C.17:9A-1 et seq.) shall prohibit a foreign bank, including one organized under the laws of a foreign country, from owning and operating in this State, as a subsidiary, a State or federally chartered bank and the ownership and operation of, and the sharing of directors, officers and employees with that subsidiary shall not constitute transacting business in this State.

(cf: P.L.1991, c.74, s.1)

 

    1[26.] 25.1 Section 334 of P.L.1948, c.67 (C.17:9A-334) is amended to read as follows:

    334. A foreign bank shall pay to the commissioner for the use of the State a fee, to be prescribed by the commissioner by regulation, in an amount not less than or not more than, the following minimum and maximum amounts:


                                                                        Minimum Maximum

    (1) For filing a copy of its

certificate of incorporation or

amendment thereof or other

change therein .........                                     $50.00 $250.00

 

    (2) For filing a statement of

its financial condition ...                                50.00 250.00

 

    (3) For filing a power of

attorney ...                                                        25.00 75.00

 

    (4) For each substitution of

securities pursuant to sub-

section B. of section 320 of

P.L.1948, c.67 (C.17:9A-320)                     25.00 100.00

 

    (5) For registering a back

office                                                   500.00

 

    The commissioner shall charge for the issuance of a certificate of authority or a certificate of renewal of a certificate of authority such fee as [he] the commissioner shall prescribe by rule or regulation, not to exceed $1,500.00. The certificate shall run from the date of issuance to the end of the biennial period. When the initial certificate is issued in the second year of the biennial certification period, the certificate fee shall be an amount equal to one-half of the fee for the biennial certification period.

    The commissioner may by rule or regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) impose other fees and charges, including assessments and fees for application and examinations, on out-of-State banks establishing branch offices or agency offices in this State.

(cf: P.L.1988, c.73, s.2)

 

    1[27.] 26.1 Section 2 of P.L.1969, c.118 (C.17:9A-356) is amended to read as follows:

    2. (1) An acquiring corporation may [, subject to the provisions of An act concerning the ownership of bank stock in certain cases, defining certain terms in relation thereto, imposing certain restrictions on such ownership, providing for the enforcement of the act and for punishment of violations thereof, approved June 5, 1957 (P.L.1957, c.70),] acquire ownership of all the outstanding shares of the capital stock of one or more banks in the manner provided by this act.

    (2) Shares of capital stock of an acquiring corporation, or other securities convertible into such shares, may be issued or delivered in exchange for shares of capital stock of one or more participating banks pursuant to a plan of acquisition without first being offered to existing shareholders of the acquiring corporation, (i) except, in the case of an acquiring corporation organized on or after January 1, 1969, as otherwise provided in its certificate of incorporation, or (ii) if, in the case of an acquiring corporation organized prior to January 1, 1969, its certificate of incorporation, as amended, so provides.

    (3) The method of acquiring bank shares authorized by this act is not exclusive, but is in addition to any other lawful methods for the acquisition of bank shares by corporations.

(cf: P.L.1969, c.118, s.2)

 

    1[28.] 27.1 (New section) The commissioner is authorized to enter into contracts with bank supervisors of other states for the purpose of establishing effective and efficient supervisory and regulatory structures and practices with respect to the provisions of sections 1 through 1[27] 261 of this 1[1995] 19961 amendatory and supplementary act.

 

    1[29.] 28.1 (New section) As used in sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill):

    "Acquire" means:

    (1) That a company merges or consolidates with a bank holding company;

    (2) That a company assumes direct or indirect ownership or control of:

            (a) more than 25 percent of any class of voting shares of a bank holding company or a bank, if the acquiring company was not a bank holding company prior to that acquisition;

            (b) more than 5 percent of any class of voting shares of a bank holding company or a bank, if the acquiring company was a bank holding company prior to that acquisition;

            (c) all or substantially all of the assets of a bank holding company or a bank; or

    (3) That a company takes any other action that results in the direct or indirect acquisition or control by that company of a bank holding company or a bank.

    "Affiliate," "bank," "company," and "subsidiary" have the meanings set forth in section 2 of the federal "Bank Holding Company Act of 1956," 12 U.S.C. §1841.

    "Bank holding company" has the meaning set forth in subsection (a) of section 2 of the federal "Bank Holding Company Act of 1956," 12 U.S.C. §1841(a) and, unless the context requires otherwise, includes a New Jersey bank holding company, an out-of-State bank holding company and a foreign bank holding company.

    "Bank supervisory agency" means any of the following:

    (1) The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and any successor to these agencies; and

    (2) Any agency of another state with primary responsibility for chartering and supervising banks.

    "Branch" has the meaning set forth in section 1 of P.L.1948, c.67 (C.17:9A-1).

    "Control" shall be construed consistently with the provisions of paragraph (2) of subsection (a) of section 2 of the "Bank Holding Company Act of 1956," 12 U.S.C. §1841(a)(2).

    "Commissioner" means the Commissioner of Banking.

    "Deposit" has the meaning set forth in the "Federal Deposit Insurance Act," 12 U.S.C. §1813.

    "Depository institution" means any institution included for any purpose within the definitions of "insured depository institution" as set forth in the "Federal Deposit Insurance Act," 12 U.S.C. §1813(c)(2) and (3).

    "Foreign bank holding company" means a bank holding company that is organized under the laws of a country other than the United States, including any territory or possession thereof.

     "New Jersey bank" means a bank that is:

    (1) organized under P.L.1948, c.67 (C.17:9A-1 et seq.); or

    (2) organized under federal law and having its principal place of business in this State.

    "New Jersey bank holding company" means a bank holding company that:

    (1) has its principal place of business in this State; and

    (2) is not controlled by a bank holding company other than a New Jersey bank holding company.

    "Out-of-State bank holding company" means:

    (1) a bank holding company that is not a New Jersey bank holding company; and

    (2) unless the context requires otherwise, includes a foreign bank holding company.

    "Person" has the meaning given it pursuant to R.S.1:1-2.

    "Principal place of business" of a bank holding company means the state in which the total deposits of its bank subsidiaries are the greatest.

    "State" means any state, territory, or other possession of the United States, including the District of Columbia.

 

    1[30.] 29.1 (New section) Sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill) set forth the conditions under which a person may acquire a New Jersey bank or New Jersey bank holding company. Sections 1[29 through 37] 28 through 361 are intended not to discriminate against out-of-State bank holding companies or against foreign bank holding companies in any manner that would violate subsection (d) of section 3 of the federal "Bank Holding Company Act of 1956," 12 U.S.C. §1842(d), as amended effective September 29, 1995.

 

    1[31.] 30.1 (New section) a. Except as otherwise expressly permitted by federal law, no person may acquire a New Jersey bank holding company or a New Jersey bank without the prior approval of the commissioner.

    b. The prohibitions in subsection a. of this section shall not apply if the acquisition is made:

    (1) in a transaction arranged by the commissioner or another bank supervisory agency to prevent the insolvency or closing of the acquired bank; or

    (2) in a transaction in which a bank forms its own bank holding company, if the ownership rights of the former bank shareholders are substantially similar to those of the shareholders of the new bank holding company.

    c. In a transaction for which the commissioner's approval is not required under this section, the parties shall give written notice to the commissioner at least 15 days before the effective date of the acquisition, unless a shorter period of notice is required under applicable federal law.

 

    1[32.] 31.1 (New section) a. A person that proposes to make an acquisition under sections 1[29 through 37] 28 through 361 of P.L   , c. (C. ) (pending before the Legislature as this bill) shall:

    (1) file with the commissioner an application in the form that the commissioner requires; and

    (2) pay to the commissioner an application fee prescribed by the commissioner.

     b. To the extent consistent with the effective discharge of the commissioner's responsibilities, the forms established under sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill) for application and reporting shall conform to those established by the Board of Governors of the Federal Reserve System under the federal "Bank Holding Company Act of 1956," 12 U.S.C. §1841 et seq.

    c. In connection with an application received under this section, the commissioner shall:

    (1) require that prior notice of the application be published in a daily newspaper of general circulation and provide an opportunity for public comment; and

    (2) make the application available for public inspection to the extent required or permitted under applicable State or federal law.

    d. If the applicant is an out-of-State bank holding company it shall submit with the application proof that the applicant has complied with or is exempted from the requirements of N.J.S.14A:13-3 and N.J.S.14A:13-4, requiring registration by foreign corporations doing business in this State.

 

    1[33.] 32.1 (New section) a. In deciding whether to approve an application for a proposed acquisition under sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill), the commissioner shall consider whether the acquisition may:

    (1) be detrimental to the safety and soundness of the New Jersey bank or New Jersey bank holding company to be acquired;

    (2) result in an undue concentration of resources or a substantial reduction of competition in this State; or

    (3) have a significantly adverse impact on the convenience and needs of the community or communities in this State that are served by the New Jersey bank or New Jersey bank holding company.

    b. Except as otherwise provided in this section, the commissioner shall not approve an acquisition under sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill) if upon consummation of the transaction, the applicant, including any depository institution affiliated with the applicant, would control 30 percent or more of the total amount of deposits held by depository institutions in this State.

    c. The commissioner may by regulation adopt a procedure whereby the limitation on control of deposits set forth in subsection b. of this section may be waived for good cause shown.

 

    1[34.] 33. 1 (New section) a. The commissioner shall decide whether to approve an acquisition under sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill) within 60 days after receipt of a completed application, provided, that if the commissioner requests additional information from the applicant following receipt of a completed application, the time limit for decision by the commissioner shall be the later of:

    (1) the date set forth above in this subsection, or

    (2) 30 days after the commissioner's receipt of the requested additional information.

    b. The commissioner may in the commissioner's discretion hold a public hearing in connection with an application.

    c. If the commissioner holds a public hearing in connection with an application, the time limits specified in subsection a. of this section shall be extended to 30 days after the conclusion of the public hearing.

    d. An application shall be deemed approved if the commissioner takes no action on the application within the time limits specified in this section.

 

    1[35.] 34.1 (New section) a. To the extent specified by the commissioner by regulation, order or written request:

    (1) each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company shall submit to the commissioner one or more copies of each report filed with any bank supervisory agency, except for any report the disclosure of which would be prohibited by applicable federal or state law, within 15 days after the filing thereof with that agency; and

    (2) each person that controls a New Jersey bank or a New Jersey bank holding company that does not file a report with any other bank supervisory agency shall file an annual report with the commissioner.

    b. At the request of the commissioner, to the extent permitted by applicable state and federal law, each bank holding company or person that controls a New Jersey bank or a New Jersey bank holding company shall provide to the commissioner copies of the reports of examination of any New Jersey bank or New Jersey bank holding company.

 

    1[36.] 35.1 (New section) The commissioner may enforce the provisions of sections 1[29 through 37] 28 through 361 of P.L. , c.     (C.    )(pending before the Legislature as this bill) by any appropriate action in the Superior Court of this State, including an action for civil money penalties, injunctive relief or divestment.

 

    1[37.] 36.1 (New section) In order to carry out the purposes of sections 1[29 through 37] 28 through 361 of P.L. , c.  (C.    ) (pending before the Legislature as this bill) the commissioner may:

    a. Adopt regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.);

    b. Enter into cooperative, coordinating or information-sharing agreements with any other bank supervisory agency or any organization affiliated with or representing one or more bank supervisory agencies;

    c. Accept any report of examination or investigation by another bank supervisory agency having concurrent jurisdiction over a New Jersey bank holding company or any New Jersey bank in lieu of conducting the commissioner's own examination or investigation of that bank holding company or bank;

    d. Enter into joint examinations or joint enforcement actions with any other bank supervisory agency having concurrent jurisdiction over any New Jersey bank holding company or New Jersey bank; provided, however, that the commissioner may take any such action independently if the commissioner determines that the action is necessary or appropriate to carry out the commissioner's responsibilities under sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill) and to ensure compliance with the laws of this State; and

    e. May assess supervisory and examination fees that shall be payable by New Jersey banks and New Jersey bank holding companies in connection with the commissioner's performance of the commissioner's duties under sections 1[29 through 37] 28 through 361 of P.L. , c. (C. )(pending before the Legislature as this bill) and in accordance with regulations adopted by the commissioner. These fees may be shared with other bank supervisory agencies or any organizations affiliated with or representing one or more bank supervisory agencies in accordance with agreements between them and the commissioner.

 

    1[38.] 37.1 (New section) a. Sections 1[38 through 87] 37 through 861 of P.L , c. (C. )(pending before the Legislature as this bill) shall govern the establishment and operation in New Jersey of offices and certain commercial lending company affiliates of banks organized under the laws of a foreign country except that the operation of such foreign banks through subsidiary banks or depository institutions organized under the laws of the United States or any state of the United States, the deposits of which are insured by the Federal Deposit Insurance Corporation or any successor thereto, shall be governed by the other provisions of "The Banking Act of 1948," P.L. 1948, c. 67 (C. 17:9A-1 et seq.).

    b. For purposes of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill), unless the context clearly requires otherwise, the following terms shall be interpreted and applied in the same manner as the Federal Reserve interprets and applies the terms with respect to foreign banks and foreign banking organizations: "agency;" "branch;" "commercial lending company;" "to establish;" "foreign bank;" "foreign banking organization;" "office or office of a foreign bank;" "representative office;" and "subsidiary."

    c. The provisions of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill) are intended to authorize foreign banks to establish and operate branches, agencies, commercial lending company affiliates and representative offices in this State and generally to ensure that interstate branches of foreign banks may be established and operated in this State to the extent consistent with the provisions of section 5 of the "International Banking Act of 1978," 12 U.S.C. §3103, and the regulations of the Federal Reserve promulgated thereunder, 12 CFR §211.20 et seq., and under terms and conditions that are generally comparable to and no less favorable than those applicable to the establishment of interstate federal branches in this State by foreign banks.

    d. As provided in subsection e. of this section, a foreign bank may establish a branch or agency in this State in the same manner (including by merger or other transactions under the Federal Deposit Insurance Act, 12 U.S.C. §1831u, and comparable provisions of the laws of this State, with New Jersey banks or other institutions) as, and subject generally to the same criteria, standards, conditions, requirements and procedures applicable to the establishment of interstate branches in this State by an out-of-State bank having the same home state in the United States as the foreign branch or agency, notwithstanding any provisions of the laws or regulations of this State to the contrary.

    e. In interpreting the provisions of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill), the commissioner:

    (1) generally shall apply to the establishment of an initial office of a foreign bank whether or not the initial office is an interstate branch, and any subsequent intrastate offices of a foreign bank, the same criteria, standards, conditions, requirements and procedures applicable to the establishment of an initial branch in New Jersey by an out-of-State bank, and of subsequent intrastate branches in this State by an out-of-State bank;

    (2) may apply any other criterion, standard, condition, requirement or provision of the laws or regulations of this State that is determined by the commissioner to be substantially equivalent to or consistent with a criterion, standard, condition, requirement or provision of federal law or regulation generally applicable to the establishment of offices in the United States by foreign banks or specifically applicable to the establishment of an office in the United States by the applicant foreign bank;

    (3) may by regulation or order allow a foreign bank:

    (a) to acquire an individual branch of any "insured bank," as that term is defined in the "Federal Deposit Insurance Act," 12 U.S.C. §1813(h), or of any other depository institution, including another foreign bank, without acquiring the entire bank or other institution;

    (b) to acquire or merge with another foreign bank maintaining a branch or agency in this State and thereafter continue each operation as its own; or

    (c) to acquire or establish an interstate office through any other means not inconsistent with section 5 of the "International Banking Act of 1978," 12 U.S.C. §3103.

    For purposes of this section, "out-of-State bank" shall have the meaning given that term pursuant to section 1 of P.L.1948, c.67 (C.17:9A-1).

 

    1[39.] 38.1 (New section) As used in sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill):

    "Agency" means any place of business of a foreign bank at which credit balances are maintained, checks are paid, money is lent, or, to the extent not prohibited by federal law, deposits are accepted from a person or entity that is not a citizen or resident of the United States. Obligations shall not be considered credit balances unless they are:

    (1) Incidental to, or arise out of the exercise of, other lawful banking powers;

    (2) To serve a specific purpose;

    (3) Not solicited from the general public;

    (4) Not used to pay routine operating expenses such as salaries, rent, or taxes in the United States;

    (5) Withdrawn within a reasonable period of time after the specific purpose for which they were placed has been accomplished; and

    (6) Drawn upon in a manner reasonable in relation to the size and nature of the account.

    "Banking Act" means "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-1 et seq.).

    "Banking subsidiary," with respect to a specified foreign bank, means a bank that is a subsidiary as the terms "bank" and "subsidiary" are defined in section 2 of the federal "Bank Holding Company Act of 1956," 12 U.S.C. §1841.

    "Branch" means any place of business of a foreign bank at which deposits are received and that is not an agency, as that term is defined in this section.

    "Business in this State", when used with respect to a foreign bank which is licensed to establish one or more agencies or branch offices, includes, without limitation, the aggregate business of all those offices and agencies.

     "Change the status of an office" means convert a representative office into a branch or agency, or an agency into a branch, or the reverse of the foregoing, but does not include renewal of the license of an existing office.

    "Commercial lending company" means any organization, other than a bank or an organization operating under section 25 of the Federal Reserve Act, 12 U.S.C. 601-604a, organized under the laws of any state of the United States or a foreign country, that maintains credit balances permissible for an agency and engages in the business of making commercial loans. Commercial lending company includes any company chartered under Article XII of the banking law of the State of New York.

    "Commissioner" means the Commissioner of Banking of New Jersey.

    "Controlling person," when used with respect to a foreign bank, means any person who, directly or indirectly, controls that bank.

    "Department" means the Department of Banking of New Jersey.

    "To establish" or "establish" means to:

    (1) Open and conduct business through an office;

    (2) Acquire directly, through merger, consolidation, or similar transaction with another foreign bank, the operations of an office that is open and conducting business;

    (3) Acquire an office through the acquisition of a foreign bank subsidiary that will cease to operate in the same corporate form following the acquisition;

    (4) Change the status of an office; or

    (5) Relocate an office from one physical location to another, unless the new office is in the same building as the existing office.

    "Executive officer," when used with respect to a foreign bank or a controlling person of a foreign bank, means the chief executive officer, the chief operating officer, the chief financial officer, and any other person who participates or has authority to participate in major policy-making functions of such bank or controlling person. "Executive officer," when used with respect to a foreign bank, includes the head of the international division, or, if there is no such division, the closest equivalent division or unit of that bank.

    "Federal agency" has the meaning set forth in section 1(b) of the "International Banking Act of 1978," 12 U.S.C. §3101.

    "Federal branch" has the meaning set forth in section 1(b) of the "International Banking Act of 1978," 12 U.S.C. §3101.

    "FDIC" means the Federal Deposit Insurance Corporation established pursuant to "Federal Deposit Insurance Act," 12 U.S.C. §1811 et seq.

    "Federal Reserve" means the Board of Governors of the Federal Reserve System.

    "Foreign country" means any nation other than the United States, including, without limitation, any subdivision, territory, trust territory, dependency, or possession of any such nation. With respect to banks which do not have deposit insurance with the FDIC, "foreign country" also includes Puerto Rico, Guam, American Samoa, the Virgin Islands, and any territory, trust territory, dependency, or insular possession of the United States.

     "Foreign bank" means an organization that is organized under the laws of a foreign country and that engages directly in the business of banking outside of the United States. The term "foreign bank" does not include a central bank of a foreign country that does not engage in a commercial banking business in the United States through an office.

    "Foreign banking organization" means a foreign bank that operates a branch, agency or commercial lending company subsidiary in the United States or that controls a bank in the United States and any company of which such foreign bank is a subsidiary.

    "License" means a license issued under sections 1[38 through 87] 37 through 861 of P.L. , c. (C. ) (pending before the Legislature as this bill), authorizing a foreign bank or a commercial lending company to establish and to maintain an office; to be "licensed" means to be issued or to hold a license; and to be "licensed to transact business in this State," when used with respect to a foreign bank or a commercial lending company, means that the bank is licensed to establish an agency or branch office or commercial lending company.

    "Loans and extensions of credit" means all direct and indirect advances of funds to a person made on the basis of any obligation of that person to repay funds.

    "Office" or "office of a foreign bank" means any branch, agency, representative office, or commercial lending company subsidiary of a foreign bank in the United States.

    "Organization" means a corporation, government, partnership, association, or any other entity.

    "Person" means an individual or an organization.

    "Primary office," when used with respect to a foreign bank which is licensed to establish a single office, means that office and, when used with respect to a foreign bank which is licensed to establish two or more offices, means one of those offices which that bank has designated as its primary office in accordance with section 1[52] 511 of P.L. , c. (C. )(pending before the Legislature as this bill).

    "Representative office" means any place of business of a foreign bank that is not a branch, agency, or subsidiary of the foreign bank.

    "State of the United States" means any state of the United States or the District of Columbia.

    "Subsidiary" means an organization, 25 percent or more of whose voting shares is directly or indirectly owned, controlled, or held with the power to vote by a company, including a foreign bank or foreign banking organization, or any organization that is otherwise controlled or capable of being controlled by a foreign bank or foreign banking organization.

 

    1[40.] 39.1 (New section) a. For purposes of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill), offices of foreign banks are divided into classes and ranked in ascending order, as follows:

    (1) Representative office.

    (2) Commercial lending company.

    (3) Agency.

     (4) Branch.

    b. For purposes of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill):

    (1) Changing a lower class office into a higher class office shall be treated as establishing the higher class office, but not as closing the lower class office.

    (2) Changing a higher class office into a lower class office shall be treated as closing the higher class office, but not as establishing the lower class office.

    c. In the case of changing a higher class office into a lower class office, when the application for approval to close the higher class office has been approved and all conditions precedent to the closing have been fulfilled, the foreign bank may change the higher class office into the lower class office, and the commissioner shall issue a license authorizing the bank to establish the lower class office.

 

    1[41.] 40.1 (New section) Fees shall be paid to, and collected by, the commissioner as follows:

    a. The fee for filing with the commissioner an application by a foreign bank which is not licensed to transact business in this State for approval to establish a branch office shall be $3,000.

    b. The fee for filing with the commissioner an application by a foreign bank or commercial lending company which is not licensed to transact business in this State for approval to establish an agency or an office of a commercial lending company shall be $2,500.

    c. The fee for filing with the commissioner an application by a foreign bank which is licensed to transact business in this State for approval to establish a branch office shall be $2,000.

    d. The fee for filing with the commissioner an application by a foreign bank or commercial lending company which is licensed to transact business in this State for approval to establish an agency or an office of a commercial lending company shall be $1,500.

    e. The fee for filing with the commissioner an application by a foreign bank for approval to establish a representative office shall be $1,500.

    f. The fee for filing with the commissioner an application by a foreign bank or commercial lending company which is licensed to establish an agency, branch or commercial lending company office for approval to relocate or to close that office shall be $1,000.

    g. The fee for filing with the commissioner an application by a foreign bank which is licensed to establish a representative office for approval to relocate or to close that representative office shall be $500.

    h. The fee for issuing a license shall be $300.

    i. The commissioner, by regulation, shall have the power to increase the fees set forth above and to set and to charge additional fees, including but not limited to, annual assessment fees.

 

    1[42.] 41.1 (New section) a. Each application filed with the commissioner under sections 1[38 through 87] 37 through 861 of P.L.    , c. (C. )(pending before the Legislature as this bill) or under any regulation or order issued under sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill) shall be in such form, shall contain the information, be signed in the manner, and, if the commissioner so requires, be verified in the manner the commissioner may by regulation or order require.

    b. Without limiting the foregoing, the commissioner shall require as part of the application all of the information submitted to the Federal Reserve in connection with any application and may require only the information in the form submitted to the Federal Reserve as these are required pursuant to the "Bank Holding Company Act of 1956," 12 U.S.C. §1841 et seq., the "International Banking Act of 1978," 12 U.S.C. §3101 et seq. and regulation K, 12 CFR §211.20 et seq., issued by the Federal Reserve.

 

    1[43.] 42.1 (New section) a. In this section, "act" includes, without limitation, omission.

    b. For purposes of making findings on an application by a foreign bank or commercial lending company for approval to establish an office:

    (1) The commissioner may, in the absence of credible evidence to the contrary, find that the directors, executive officers, and any controlling person of the bank and the directors and executive officers of any controlling person of the bank are each of good character and sound financial standing.

    (2) The commissioner may find that the bank, a director, executive officer, or a controlling person of the bank, or director or executive officer of a controlling person of the bank is not of good character if that person:

    (a) Has been convicted of, or has pleaded nolo contendere to, any crime involving an act of fraud or dishonesty:

    (b) Has consented to or suffered a judgment in any civil action based upon conduct involving an act of fraud or dishonesty;

    (c) Has consented to or suffered the suspension or revocation of any professional, occupational, or vocational license based upon conduct involving an act of fraud or dishonesty;

    (d) Has willfully made or caused to be made in any application or report filed with the commissioner or in any proceeding before the commissioner, any statement which was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or has willfully omitted to state in any such application or report any material fact which was required to be stated therein; or

    (e) Has willfully committed any violation of, or has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of, any provision of this section or of any regulation or order issued under this section.

    c. Paragraph (2) of subsection b., of this section shall not be deemed to be an exclusive list of the grounds upon which the commissioner may find, for purposes of making findings on an application by a foreign bank or commercial lending company for approval to establish an office, that such bank or company, a director, executive officer, or controlling person of the bank, or a director or executive officer of a controlling person of the bank or company, is not of good character.

 

    1[44.] 43.1 (New section) a. Each foreign bank and commercial lending company which is licensed to establish an office shall file with the commissioner reports as and when the commissioner may by regulation or order require.

    b. Each report filed with the commissioner under sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill) or under any regulation or order issued thereunder shall be in the form, contain the information, be signed in the manner, and, if the commissioner so requires, be verified in the manner the commissioner may by regulation or order require.

 

    1[45.] 44.1 (New section) Each foreign bank and commercial lending company which is licensed to establish an office shall make, keep, and preserve at an office or at any other place as the commissioner may by regulation or order approve, the books, accounts, and other records relating to the business of the office, in the form, manner, and for the time the commissioner may by regulation or order provide.

 

    1[46.] 45.1 (New section) a. No foreign bank which is licensed to establish an agency or branch office shall concurrently establish a federal agency or federal branch in this State.

    b. No foreign bank which establishes a federal agency or federal branch in this State shall concurrently be licensed to establish an agency or branch office in this State.

 

    1[47.] 46.1 (New section) A foreign bank or commercial lending company may open one or more offices in this State. Each office shall be separately licensed and each office of a separate class shall be separately maintained.

 

    1[48.] 47.1 (New section) a. (1) No foreign bank, other than a foreign bank which is licensed to establish an agency or branch office, shall be issued a license to establish a representative office or commercial lending company unless it shall have first filed with the commissioner, in the form as the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner to be the bank's or commercial lending company's attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors which arises out of the activities in this State of the representative office or commercial lending company after the appointment has been filed, with the same force and validity as if served personally on the bank or its successor, as the case may be.

    (2) Any foreign bank, other than a foreign bank which is licensed to establish an agency or branch office or which establishes a federal agency or federal branch in this State, which establishes a representative office or commercial lending company and which has not filed with the commissioner an appointment pursuant to paragraph (1) of this subsection a., shall be deemed by the establishment of that office to have appointed the commissioner as its attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors which arises out of the activities in this State of the representative office or commercial lending company with the same force and validity as if served personally on the bank or its successor, as the case may be.

     b. (1) No foreign bank shall be issued a license to establish an agency or branch office unless it shall have first filed with the commissioner, in a form as the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner to be the bank's attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors which arises after the appointment has been filed, with the same force and validity as if served personally on the bank or its successor, as the case may be.

    (2) Any foreign bank which establishes an agency or branch office, other than a federal agency or federal branch, and which has not filed with the commissioner an appointment pursuant to paragraph (1) of this subsection b. shall be deemed by the establishment of that office to have appointed the commissioner as its attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors with the same force and validity as if served personally on the bank or its successor, as the case may be.

    c. Service may be made on a foreign bank which has appointed or is deemed to have appointed the commissioner as its attorney for service of process by leaving a copy of the process at any office of the commissioner. However, this service is not effective unless (1) the party making the service, who may be the commissioner, forthwith sends notice of the service and a copy of the process by registered or certified mail to the foreign bank at its last address on file with the commissioner at any of its offices in this State or at its primary office wherever located, and (2) an affidavit of compliance with this subsection c. by the party making service is filed in the case on or before the return date, if any, or within such further time as the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allow.

 

    1[49.] 48.1 (New section) No license shall be transferable or assignable.

 

    1[50.] 49.1 (New section) Each foreign bank and commercial lending company which is licensed to establish an office shall post its license in a conspicuous place at that office.

 

    1[51.] 50.1 (New section) a. Each foreign bank and commercial lending company which is licensed to establish an office shall assign to that office a popular name which consists of a specific designation by name, number or both, and shall post the popular name and the name of the bank in a conspicuous place at the office.

    b. The popular name that a foreign bank assigns to a representative office which it is licensed to establish shall include the term "representative office."

    c. The popular name that a foreign bank assigns to an agency which it is licensed to establish shall not include the term "branch" unless that term is modified by the word "foreign" or "overseas" or by a similar word.

    d. Each foreign bank which is licensed to establish a commercial lending company shall select a popular name that includes the term "commercial lending company" and shall post with that popular name a clear expression of whether the foreign bank is liable for the debts and obligations of the commercial lending company.

 

    1[52.] 51.1 (New section) Whenever a foreign bank is licensed to establish two or more offices it shall designate one of those offices as its primary office.

 

    1[53.] 52.1 (New section) Each foreign bank and commercial lending company which is licensed to establish an office shall conduct all of the business of that office in a single building or in a single building and adjoining buildings. However, for good cause and with the approval of the commissioner, the bank may conduct part of the business of the office elsewhere in the same vicinity.

 

    1[54.] 53.1 (New section) a. The department shall have the right to examine each office which the commissioner licenses under section 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill). The department shall insure that each office which is licensed hereunder is examined by either the Federal Reserve or the department as often as the commissioner deems it advisable. The costs of any examination by the department shall be assessed to the bank or commercial lending company which is the holder of the license. The examination fees shall be assessed in the same manner and on the same basis as examination fees are assessed for banks or trust companies organized under the Banking Act.

    b. The commissioner may contract with the Federal Reserve or the bank examination officials in any other state of the United States or in any other foreign country to conduct cooperative examinations. Every report and copy of a report of examination of a foreign bank or office of a foreign bank made by or under the supervision of the commissioner, and every report and copy thereof made by a bank pursuant to the requirement of the commissioner, shall be confidential, and shall not be made public by any officer, director or employee of a foreign bank, and shall not be subject to subpoena or to admission into evidence in any action or proceeding in any court, except pursuant to an order of the court made upon notice to the commissioner and after affording the commissioner an opportunity to advise the court of reasons for excluding from evidence that report or any portion thereof. The court shall order the issuance of a subpoena for the production or admission into evidence of any report or portion thereof, only if it is satisfied that (1) it is material and relevant to the issues in the proceedings, and (2) the ends of justice and public advantage will be subserved thereby. This section shall not prohibit the commissioner from sharing a report of examination with another state or federal regulator or a bank regulator from a foreign country, or other person, so long as provision is made for retaining the confidentiality of the report. This section shall not apply to any action or proceeding instituted by the commissioner or Attorney General pursuant to any law of this State.

 

    1[55.] 54.1 (New section) A foreign bank or commercial lending company which makes a loan or extends credit from an office in this State, or books a loan or extension of credit in this State, shall comply with any applicable interest rate limitations imposed by the laws of this State or the United States which would be applicable to that loan if made by a commercial bank organized under the Banking Act. When transacting business in this State, an office of a foreign bank shall comply with all other laws and regulations of the State governing the business in which the office is engaged, unless the commissioner, for good cause shown, exempts the office by regulation or order from compliance.

 

    1[56.] 55.1 (New section) a. No foreign bank shall establish a representative office in this State unless it is licensed to establish a representative office at that place.

    b. (1) No person shall establish a representative office in this State as representative of a foreign bank unless that bank is licensed to establish the office as a representative office.

    (2) For purposes of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill), if any person establishes an office in this State as representative of a foreign bank, that foreign bank shall be deemed to establish the office as a representative office.

    c. Neither subsection a. nor subsection b. of this section shall prohibit a foreign bank which establishes a federal agency or federal branch in this State from establishing one or more representative offices in this State.

 

    1[57.] 56.1 (New section) a. (1) No foreign bank shall establish a representative office unless the commissioner shall have first approved the establishment of that office and issued a license authorizing the foreign bank to establish the office.

    (2) Paragraph (1) of this subsection a. shall not prohibit a foreign bank which establishes a federal agency or federal branch in this State from establishing one or more representative offices in this State.

    b. If the commissioner finds the following with respect to an application by a foreign bank to establish a representative office, the commissioner shall approve the application:

    (1) That the bank, any controlling person of the bank, the directors and executive officers of the bank or of any controlling person of the bank, and the proposed management of the office are each of good character and sound financial standing;

    (2) That the financial history and condition of the bank are satisfactory;

    (3) That the management of the bank and the proposed management of the office are adequate;

    (4) That it is reasonable to believe that, if licensed to establish the office, the bank will operate the office in compliance with all applicable laws, regulations, and orders; and

    (5) That the bank's establishment of the office will promote the public convenience and advantage.

    (6) Such other standards as the commissioner may by regulation require.

    If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a foreign bank to establish a representative office has been approved and all conditions precedent to the issuance of a license authorizing the foreign bank to establish the representative office have been fulfilled, the commissioner shall issue the license.


    1[58.] 57.1 (New section) a. No foreign bank which is licensed to establish a representative office shall relocate its office unless the commissioner shall have first approved the relocation and issued a license authorizing the foreign bank to establish the office at the new site.

    b. If the commissioner finds the following with respect to an application by a foreign bank to relocate a representative office, the commissioner shall approve the application:

    (1) If the new site of the office is in the same vicinity as the old site, that the relocation of the office will not be substantially detrimental to the public convenience and advantage; or

    (2) If the new site of the office is not in the same vicinity as the old site:

    (a) that the relocation of the office from the old site will not be substantially detrimental to the public convenience and advantage in the area which is primarily served by the office at the old site; and

    (b) that the relocation of the office to the new site will promote the public convenience and advantage.

    If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a foreign bank to relocate a representative office has been approved and all conditions precedent to the issuance of a license authorizing such bank to establish the office at the new site have been fulfilled, the commissioner shall issue the license.

    d. Promptly after a foreign bank which is licensed to establish a representative office relocates its office, the bank shall surrender to the commissioner the license which authorized it to establish the office at the old site.

 

    1[59.] 58.1 (New section) A foreign bank which is licensed to establish a representative office may, subject to regulations the commissioner may prescribe, engage in representational functions at that office but shall not solicit or accept deposits or credit balances or otherwise transact business at the office.

 

    1[60.] 59.1 (New section) a. (1) No foreign bank which is licensed to establish a representative office shall close its office unless the commissioner shall have first approved the closing.

    (2) Paragraph (1) of this subsection a. shall not prohibit a foreign bank which is licensed to establish a representative office from closing the office in accordance with sections 1[80 through 86] 79 through 851 of P.L. , c. (C. )(pending before the Legislature as this bill).

    b. If the commissioner finds, with respect to an application by a foreign bank to close a representative office, that the closing of that office will not be substantially detrimental to the public convenience and advantage, the commissioner shall approve the application. If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a foreign bank to close a representative office has been approved and all conditions precedent to the closing have been fulfilled, that bank may close the office and shall promptly thereafter surrender to the commissioner the license which authorized it to establish the office.

 

    1[61.] 60.1 (New section) Any office of a foreign bank existing in this State on the effective date of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill) which had been previously approved by the commissioner shall be granted a license by the commissioner as a representative office for purposes of that act.

 

    1[62.] 61.1 (New section) a. No foreign bank shall transact business in this State except at an agency or branch office which it is licensed to establish and at which it is permitted by sections 1[38 through 87] 37 through 861 of P.L. , c. (C. )(pending before the Legislature as this bill) to transact that business.

    b. Subsection a. of this section shall not be deemed to prohibit:

    (1) Any foreign bank which establishes a federal agency or federal branch in this State from transacting at that federal agency or federal branch such business as it may be authorized to transact under applicable federal laws and regulations;

    (2) Any foreign bank from carrying on the activities described in paragraph (2) of N.J.S. 14A:13-3;

    (3) Any foreign bank which does not establish an agency or branch office from making, in this State, loans secured by liens on real or personal property located in this State or enforcing those loans in this State; or

    (4) Any foreign bank which does not establish an agency or branch office from transacting trust business in this State if the trust business is not conducted from an office or location in this State and that trust business is limited to trust business permitted by, and conducted pursuant to a certificate of authority issued by the commissioner in accordance with subsection B. of section 316 of P.L.1948, c.67 (C.17:9A-316 B.).

 

    1[63.] 62.1 (New section) a. (1) No foreign bank shall establish an agency or branch office unless the commissioner shall have first approved the establishment of that office and issued a license authorizing the bank to establish the office.

    (2) Paragraph (1) of this subsection a. shall not prohibit a foreign bank from establishing a federal agency or federal branch in this State.

    b. If the commissioner finds the following with respect to an application by a foreign bank to establish an agency or branch office, the commissioner shall approve that application:

    (1) That the bank, any controlling person of the bank, the directors and executive officers of the bank or of any controlling person of the bank, and the proposed management of the office are each of good character and sound financial standing;

    (2) That the financial history and condition of the bank are satisfactory;

    (3) That the management of the bank and the proposed management of the office are adequate;

    (4) That it is reasonable to believe that, if licensed to establish the office, the bank will operate the office in a safe and sound manner and in compliance with all applicable laws, regulations, and orders;

    (5) That the bank's plan to establish and to operate the office affords reasonable promise of successful operation; and

    (6) That the bank's establishment of the office will promote the public convenience and advantage.

    If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a foreign bank to establish an agency or branch office has been approved and all conditions precedent to the issuance of a license authorizing the bank to establish the office have been fulfilled, the commissioner shall issue the license.

 

    1[64.] 63.1 (New section) a. No foreign bank which is licensed to establish an agency or branch office shall relocate that office unless the commissioner shall have first approved the relocation and issued a license authorizing the bank to establish the office at the new site.

    b. If the commissioner finds the following with respect to an application by a foreign bank to relocate any agency or branch office, the commissioner shall approve the application:

    (1) If the new site of the office is in the same vicinity as the old site:

    (a) That it will not be unsafe or unsound for the bank to relocate the office; and

    (b) That the relocation of the office will not be substantially detrimental to the public convenience and advantage, or that the relocation is necessary in the interests of the safety and soundness of the bank; or

    (2) If the new site of the office is not in the same vicinity as the old site:

    (a) That the bank's plan to relocate the office and to establish the office at the new site affords reasonable promise of successful operation;

    (b) That the relocation of the office from the old site will not be substantially detrimental to the public convenience and advantage in the area which is primarily served by the office at the old site, or that the relocation is necessary in the interests of the safety and soundness of the bank; and

    (c) That the relocation of the office to the new site will promote the public convenience and advantage.

    If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a foreign bank to relocate an agency or branch office has been approved and all conditions precedent to the issuance of a license authorizing the bank to establish the office at the new site have been fulfilled, the commissioner shall issue the license.

    d. Promptly after a foreign bank which is licensed to establish an agency or branch office relocates the office, the bank shall surrender to the commissioner the license which authorized it to establish the office at the old site.

 

    1[65.] 64.1 (New section) a. A foreign bank which is licensed to establish an agency or branch office may transact banking business at that office, subject to the following:

    (1) If the office is an agency, the bank shall not transact the business of accepting deposits, other than deposits of: (a) a foreign nation; (b) an agency or instrumentality of a foreign nation; or (c) a person which resides, is domiciled, and maintains its principal place of business in a foreign nation. For purposes of this paragraph "person" means any individual, proprietorship, joint venture, partnership, trust, business trust, syndicate, association, joint stock company, corporation, or any other organization or any branch or division thereof.

    (2) If the office is a branch office, the bank shall not transact the business of accepting any deposits other than: (a) deposits of the kind described in paragraph (1) of this subsection a.; (b) deposits of $100,000 or more; (c) deposits of less then $100,000 which the branch is permitted to accept under applicable federal law; or (d) deposits the acceptance of which the commissioner determines by regulation or order does not constitute engaging in domestic retail deposit activities requiring deposit insurance protection.

    (3) If the office is an agency or branch office or commercial lending company, the bank or lending company may maintain credit balances as those obligations are defined under the term "agency" in section 1[39] 381 of P.L. , c. (C. )(pending before the Legislature as this bill).

    (4) In any case, the bank or commercial lending company shall not transact any business which it is not authorized to transact or is prohibited from transacting under the laws of its domicile or which banks organized under the laws of this State are not authorized to transact or are prohibited from transacting.

    b. No foreign bank which is licensed to establish an agency or branch office shall transact any trust business at that office unless the commissioner expressly authorizes the trust business by order upon a finding by the commissioner that the agency or branch is qualified to transact such business under standards similar to those required to obtain a charter for a trust company under the Banking Act.

    c. All provisions of the Banking Act shall apply to any foreign bank or commercial lending company licensed to transact business in this State, unless the commissioner by regulation or order otherwise specifies.

    d. (1) Any provisions of the Banking Act which are applicable to or with respect to foreign banks licensed to transact business in this State, whether by law, regulation or order, shall be applied with any changes in interpretation or application as may be necessary or appropriate.

    (2) Without limiting the provisions of paragraph (1) of this subsection d., for purposes of any provision of the Banking Act, which are applicable to or with respect to a foreign bank or commercial lending company licensed to transact business in this State:

    (a) "Approved by, or approval of, the board" means approved or ratified by the board of the bank, by a committee of the board authorized to exercise the powers of the board with respect to the particular matter, or by an officer of the bank who is assigned to the head office of the bank and who has authority over the bank's business in this State, including authority to approve or ratify the particular matter.

     (b) "Principal office" means the primary office of the bank.

    (c) "Shareholders' equity" means the shareholders' equity of the bank or, if the bank has no shareholders' equity, the closest equivalent account or accounts.

    e. Whenever any provision of the Banking Act, which is applicable to or with respect to a foreign bank or commercial lending company licensed to transact business in this State limits the amount of any assets or liabilities of the bank, including, by way of example, the amount of borrowings of, obligations to, or investment of the bank or commercial lending company, for purposes of calculating the amount of such assets or liabilities, only assets or liabilities of the agencies or branch offices of the bank or commercial lending company shall be included, and the assets and liabilities of offices of the bank or commercial lending company outside this State shall be excluded.

 

    1[66.] 65.1 (New section) a. Whenever the commissioner calls for a report of condition or income from commercial banks organized under the laws of this State, the commissioner shall call for a like report from each foreign bank which is licensed to transact business in this State.

    b. Whenever a foreign bank which is licensed to transact business in this State files with the commissioner a report called for under subsection a. of this section, that report shall be readily available to the customers of the office of the bank.

    c. The statement of condition shall be in the form, contain the information, and be signed in the manner, and, if the commissioner so requires by regulation or order, be verified in the manner the commissioner may by regulation or order require.

 

    1[67.] 66.1 (New section) Each foreign bank which is licensed to establish an agency or branch office shall, in accordance with the regulations the commissioner may prescribe, give notice that deposits in that office are not insured by the Federal Deposit Insurance Corporation.

 

    1[68.] 67.1 (New section) a. If a foreign bank is licensed to establish a depository agency or branch office and such office is not subject to the regulations of the Depository Institutions Deregulation Committee established pursuant to the "Depository Institutions Deregulation Act of 1980," 12 U.S.C. §3501 et seq., Regulation Q of the Federal Reserve, 12 CFR §217 et seq., or Part 329 of the regulations of the Federal Deposit Insurance Corporation, 12 CFR §329 et seq., the bank shall, with respect to deposits accepted at the office, comply with the regulations regarding maximum interest rates on deposits, prepayment of time deposits, and related matters the commissioner may prescribe as being necessary and appropriate to establish competitive equality between foreign banks and banks organized under the laws of this State which are subject to the regulations of the Depository Institutions Deregulation Committee, Regulation Q of the Federal Reserve, or Part 329 of the regulations of the Federal Deposit Insurance Corporation.

    b. Whenever the commissioner adopts a regulation or order of repeal of a regulation under subsection a. of this section, the commissioner may, without describing specific facts showing the need for immediate action, make the regulation or order of repeal effective immediately.

 

    1[69.] 68.1 (New section) a. Each foreign bank which is licensed to transact business in this State shall keep the assets of that business separate and apart from the assets of its business outside this State.

    b. The creditors of the business in this State of a foreign bank which is licensed to transact business in this State shall be entitled to priority over other creditors with respect to the assets of the foreign banks's business in this State.


    1[70.] 69.1 (New section) a. In this section:

    (1) "Adjusted liabilities," when used with respect to a foreign bank, means the liabilities of the bank's business in this State, excluding: (a) accrued expenses; (b) any liability to an office, whether in or outside of this State, or subsidiary of the bank; and (c) such other liabilities as the commissioner may by regulation or order exclude.

    (2) "Applicable minimum," when used with respect to eligible assets deposited or to be deposited with an approved depository by a foreign bank, means the amount as the commissioner may from time to time by regulation or order determine to be necessary for the establishment of sound financial condition, for the protection of the interests of creditors of the bank's business in this State, or for the protection of the public interest.

    However, in the case of a foreign bank which is licensed to establish an agency or a branch office, the applicable minimum shall in no event be less than the greater of (a) 5 percent of the adjusted liabilities of the bank or (b) $1,000,000.

    (3) "Approved depository," when used with respect to a foreign bank, means a bank organized under the laws of this State or a national bank headquartered in this State which has been selected by such foreign bank and approved by the commissioner for the purpose of acting as the approved depository of the foreign bank and which has filed with the commissioner, in the form as the commissioner may by regulation or order prescribe, an agreement to comply with all applicable provisions of this section and of any regulation or order issued under this section.

    (4) "Eligible assets" when used with respect to a foreign bank, means any of the following:

    (a) Cash.

    (b) Any investment security which by regulation is eligible for investment by a commercial bank organized under the Banking Act.

    (c) Any negotiable certificate of deposit which: (i) has a maturity of not more than one year, (ii) is payable in the United States, and (iii) is issued by a bank organized under the laws of a state of the United States, by a national bank, or by a branch office of a foreign bank which is located in the United States.

    (d) Any commercial paper which is payable in the United States and which is rated P-1 or its equivalent by a nationally recognized rating service; provided, however, that any conflict in rating shall be resolved in favor of the lower rating.

    (e) Any banker's acceptance which is payable in the United States and which is eligible for discount with a Federal Reserve bank.

     (f) Any other asset which the commissioner by regulation or order determines to be eligible.

    Notwithstanding the foregoing provisions of this paragraph, "eligible asset," when used with respect to a foreign bank, does not include any instrument the issuer of which: (i) is, or is affiliated with, the foreign bank; (ii) is domiciled in, or controlled by a bank or other person domiciled in, the same foreign nation as the foreign bank; or (iii) is, or is controlled by, the foreign nation. For purposes of the foregoing provision, to be "affiliated" means to control, to be controlled by, or to be under common control with.

    b. For purposes of this section:

    (1) The amount of adjusted liabilities of a foreign bank's business in this State shall be computed for the period, in the manner, and on the basis as the commissioner may by regulation or order prescribe.

    (2) Any eligible asset shall be valued at the lesser of market or par.

    c. (1) Before any foreign bank is licensed to transact business in this State, the bank shall deposit, and each foreign bank which is licensed to transact business in this State shall maintain on deposit, with an approved depository, eligible assets having a value in an amount not less than the applicable minimum.

    (2) Whenever a foreign bank which is licensed to transact business in this State ceases to be so licensed, the bank shall thereafter establish on deposit, with an approved depository, eligible assets having a value in an amount not less than the applicable minimum for the period of time the commissioner may determine to be necessary for the protection of creditors of the bank's business in this State or for the protection of the public interest.

    d. (1) No foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section shall withdraw any of those eligible assets except with the prior approval of the commissioner.

    (2) No approved depository which holds eligible assets on deposit from a foreign bank pursuant to this section shall release any of those eligible assets except with the prior approval of the commissioner or as otherwise provided in subsection h. of this section.

    e. Any foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section shall be entitled to receive any income paid on such eligible assets, unless the commissioner shall have suspended or revoked its license to transact business in this State or taken possession of its property and business in this State.

    f. (1) Whenever a foreign bank deposits eligible assets with, or withdraws eligible assets from, an approved depository pursuant to this section, the bank shall do so in accordance with the procedures and requirements the commissioner may by regulation or order prescribe.

    (2) Whenever an approved depository receives, holds, or releases eligible assets pursuant to this section, the approved depository shall do so in accordance with the procedures and requirements the commissioner may by regulation or order prescribe and shall file with the commissioner reports as and when the commissioner may by regulation or order require.

    g. Whenever a foreign bank establishes eligible assets on deposit with an approved depository pursuant to this section:

    (1) The eligible assets shall be deemed to be pledged to the commissioner for the benefit of the creditors of the bank's business in this State; and, notwithstanding any provision of the Uniform Commercial Code, N.J.S.12A:1-101 et seq., to the contrary, the commissioner, for the benefit of the creditors, shall be deemed to have a security interest in those eligible assets.

    (2) The eligible assets shall be free from any lien, charge, right of setoff, credit, or preference in connection with any claim of the approved depository against the bank.

    h. (1) If the commissioner takes possession of the property and business of a foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section, the approved depository shall, upon order of the commissioner, release those eligible assets to the commissioner, as liquidator of the property and business of the bank.

    (2) If a foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section fails to pay any judgement creditor of its business in this State and the commissioner has not taken possession of the property and business of the bank, the approved depository shall release the eligible assets to the commissioner, and the commissioner shall make the disposition of the eligible assets, as a court of competent jurisdiction of this State or of the United States may order for the benefit of that judgement creditor. For purposes of this paragraph, "judgement creditor of its business in this State" means a person to whom the bank is required to pay money under a judgement which: (a) arose out of the bank's business in this State; (b) has been entered by a court of competent jurisdiction of this State or of the United States; (c) has become final, in that all possibility of direct attack on that judgement by way of appeal, motion for new trial, motion to vacate, or petition for extraordinary writ has been exhausted; and (d) has remained unpaid for a period of not less than 60 days after becoming final.

 

    1[71.] 70.1 (New section) a. In this section:

    (1) "Adjusted liabilities," when used with respect to a foreign bank which is licensed to establish an agency or a branch office this State, means the liabilities of that bank's business in this State, excluding: (a) accrued expenses; (b) any liability to an office, whether in or outside of this State, or majority-owned subsidiary of the bank; and (c) such other liabilities as the commissioner may by regulation or order exclude.

    (2) "Eligible assets" means any asset which the commissioner by regulation or order determines to be eligible for purposes of this section. However, "eligible asset," when used with respect to a foreign bank which is licensed to establish an agency or a branch office, includes: (a) any asset which the bank establishes on deposit pursuant to section 1[70] 691 of P.L. , c. (C. )(pending before the Legislature as this bill); and (b) any reserves which the bank establishes with respect to its business in this State in accordance with requirements prescribed by the Federal Reserve.

    b. For purposes of this section, the amount of eligible assets and the amount of adjusted liabilities of a foreign bank which is licensed to establish an agency or a branch office in this State shall each be computed for the period, in the manner, and on the basis as the commissioner may be regulation or order prescribe.

    c. A foreign bank licensed to establish an agency or a branch office in this State shall hold at its agency or branch offices in this State or at such other places as the commissioner may approve, eligible assets in the amount, if any, as the commissioner may from time to time by regulation or order determine to be necessary for the interests of creditors of the bank's business in this State, or for the protection of the public interest. However, in no event shall the amount exceed 108 percent of the adjusted liabilities of the bank's business in this State.

    d. If the commissioner finds, with respect to a foreign bank licensed to establish an agency or a branch office in this State, that such action is necessary for the establishment of sound financial condition, for the protection of the public interest, the commissioner may order the bank to place all or part of the eligible assets which the bank is required to hold under subsection c. of this section in the custody of a bank organized under the laws of this State or a national bank headquartered in this State that the commissioner may designate.

 

    1[72.] 71.1 (New section) a. (1) No foreign bank which is licensed to establish an agency or branch office shall close its office unless the commissioner shall have first approved the closing.

    (2) Paragraph (1) of this subsection a. shall not prohibit a foreign bank which is licensed to establish an agency or branch office from closing that office in accordance with sections 1[80 through 86] 79 through 851 of P.L. , c. (C. )(pending before the Legislature as this bill).

    b. If the commissioner finds the following with respect to an application by a foreign bank to close an agency or branch office, the commissioner shall approve the application:

    (1) That it will not be unsafe or unsound for the bank to close the office; and

    (2) That the closing of the office will not be substantially detrimental to the public convenience and advantage or that the closing of the office is necessary in the interests of the safety and soundness of the bank.

    If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a foreign bank to close an agency or branch office has been approved and all conditions precedent to the closing have been fulfilled, the bank may close the office and shall promptly thereafter surrender to the commissioner the license which authorized it to establish the office.

 

    1[73.] 72.1 (New section) a. No commercial lending company shall transact business in this State except at an office it is licensed to establish and at which it is permitted by sections 1[73 through 79] 72 through 781 of P.L. , c. (C. )(pending before the Legislature as this bill) to transact such business.

    b. Subsection a. of this section shall not prohibit:

    (1) Any commercial lending company from carrying on the activities described in paragraph (2) of N.J.S.14A:13-3;

    (2) Any commercial lending company from making in this State loans secured by liens on real or personal property located in this State or enforcing those loans in this State; or

    (3) Any commercial lending company from transacting trust business in this State so long as the trust business is not conducted from any office or location in this State and that trust business is limited to trust business permitted by, and conducted pursuant to a certificate of authority issued by the commissioner in accordance with subsection B. of section 316 of P.L.1948, c.67 (C.17:9A-316 B.).

    c. No person shall establish an office in this State for a commercial lending company unless the commercial lending company is licensed to transact business in this State. For purposes of this section, if anyone establishes an office to act on behalf of or solicit business for a commercial lending company in this State, the office shall be deemed to be the office of the commercial lending company regardless of whether the business of the commercial lending company is transacted at that office.

 

    1[74.] 73.1 (New section) a. No foreign bank and no commercial lending company shall establish an office of a commercial lending company in this State unless the commissioner shall have first approved the establishment of that office and issued a license authorizing the commercial lending company to maintain the office.

    b. If the commissioner finds the following with respect to an application by a commercial lending company to establish a commercial lending company, the commissioner shall approve that application:

    (1) That the commercial lending company, any controlling person of the commercial lending company, the directors and executive officers of the commercial lending company or of any controlling person of the commercial lending company, and the proposed management of the office are each of good character and sound financial standing;

    (2) That the financial history and condition of the commercial lending company are satisfactory;

    (3) That the management of the commercial lending company and the proposed management of the office are adequate;

    (4) That it is reasonable to believe that, if licensed to establish the office, the commercial lending company will operate the office in a safe and sound manner and in compliance with all applicable laws, regulations, and orders; and

    (5) That the commercial lending company's establishment of the office will promote the public convenience and advantage.

    If the commissioner finds otherwise, the commissioner shall deny the application. The commissioner may, in approving any application, condition the issuance of the license upon the compliance by the commercial lending company with any provisions of sections 1[62 through 72] 61 through 711 or sections 1[80 through 86] 79 through 851 of P.L. , c. (C. )(pending before the Legislature as this bill) applicable to branches and agencies.

 

    1[75.] 74.1 (New section) a. No commercial lending company which is licensed to establish a commercial lending office shall relocate that office unless the commissioner shall have first approved that relocation and issued a license authorizing the commercial lending company to establish the office at the new site.

    b. If the commissioner finds the following with respect to an application by a commercial lending company to relocate a commercial lending office, the commissioner shall approve the application

    (1) If the new site of the office is in the same vicinity as the old site, that the relocation of the office will not be substantially detrimental to the public convenience and advantage; or

    (2) If the new site of the office is not in the same vicinity as the old site:

    (a) That the relocation of the office from the old site will not be substantially detrimental to the public convenience and advantage in the area which is primarily served by the office at the old site; and

    (b) That the relocation of the office to the new site will promote the public convenience and advantage.

    If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a commercial lending company for approval to relocate a commercial lending office has been approved and all conditions precedent to the issuance of a license authorizing the commercial lending company to establish an office at the new site have been fulfilled, the commissioner shall issue the license.

    d. Promptly after a commercial lending company which is licensed to establish a commercial lending office relocates its office, that commercial lending company shall surrender to the commissioner the license which authorized it to establish an office at the old site.

 

    1[76.] 75.1 (New section) A commercial lending company which is licensed to establish a commercial lending office may, subject to such regulations or orders as the commissioner may prescribe, engage in representational functions at the commercial lending office for a foreign bank but shall not solicit or accept deposits or credit balances or otherwise transact business at the office on behalf of a foreign bank.

 

    1[77.] 76.1 (New section) a. (1) No commercial lending company which is licensed to establish a commercial lending office shall close its office unless the commissioner shall have first approved the closing.

    (2) Paragraph (1) shall not prohibit a commercial lending company which is licensed to establish a commercial lending office from closing its office in accordance with section 1[80 through 86] 79 through 851 of P.L. , c. (C. )(pending before the Legislature as this bill).

    b. If the commissioner finds, with respect to an application by a commercial lending company to close a commercial lending office, that the closing of the office will not be substantially detrimental to the public convenience and advantage, the commissioner shall approve the application. If the commissioner finds otherwise, the commissioner shall deny the application.

    c. Whenever an application by a commercial lending company to close a commercial lending office has been approved and all conditions precedent to that closing have been fulfilled, the commercial lending company may close its office and shall promptly thereafter surrender to the commissioner the license which authorized it to establish the office.

 

    1[78.] 77.1 (New section) The powers of a commercial lending company in this State shall be limited as provided in section 1[65] 641 and elsewhere in sections 1[38 through 87] 37 through 861 of P.L.    , c. (C. )(pending before the Legislature as this bill).

 

    1[79.] 78.1 (New section) The commissioner shall have the power to grant to any organization which is organized under the laws of this State, including but not limited to a corporation, limited partnership, limited liability company, joint venture or partnership, the right to operate as a commercial lending company if the commercial lending company : will be licensed under sections 1[73 through 78] 72 through 771 of P.L. , c. (C. )(pending before the Legislature as this bill); is a subsidiary of a foreign bank; and agrees in its certificate of incorporation or organization or similar document to limit its activities to those permitted to a commercial lending company under sections 1[38 through 87] 37 through 861 of P.L. , c.      (C.      )(pending before the Legislature as this bill) and Regulation K promulgated by the Federal Reserve, 12 CFR §211 et seq. Any such grant shall be issued in connection with and as part of a license for a commercial lending office hereunder.

 

    1[80.] 79.1 (New section) a. Except as provided in subsection b. of this section, any foreign bank which holds a license to establish an office may voluntarily surrender that license by filing the license and a report with the commissioner. However, any foreign bank which holds licenses to establish two or more offices may not voluntarily surrender less than all of those licenses.

    b. If the commissioner has reason to doubt a foreign bank's ability or willingness to pay in full the claims of its creditors, the commissioner shall take action as provided pursuant to section 1[86] 851 of P.L. , c. (C. )(pending before the Legislature as this bill).

    c. (1) Except as otherwise provided in paragraph (2) of this subsection c., a voluntary surrender of a license shall be effective on the 30th day after that license and the report called for in subsection a. of this section are filled with the commissioner or on such earlier date as the commissioner may by order specify.

    (2) If a proceeding to revoke or suspend a license is pending at the time when that license and the report called for in subsection a. of this section are filed with the commissioner or if a proceeding to revoke or suspend a license or to impose conditions upon the surrender of a license is instituted before the 30th day after the license and the report called for in subsection a. of this section are filed with the commissioner, the voluntary surrender of the license shall become effective at the time and upon the conditions as the commissioner may by order specify.

 

    1[81.] 80.1 (New section) If, after notice and a hearing, the commissioner finds that any person has violated any provision of sections 1[38 through 87] 37 through 861 of P.L. , c. (C. ) (pending before the Legislature as this bill) or of any regulation or order issued thereunder, the commissioner may order that person to pay to the commissioner a civil penalty in an amount as the commissioner may specify; except that the amount of the civil penalty shall not exceed $100,000 for each violation or, in the case of a continuing violation, $100,000 for each day for which the violation continues.

 

    1[82.] 81.1 (New section) If, after notice and a hearing, the commissioner finds any of the following with respect to a foreign bank or commercial lending company which is licensed to establish an office, the commissioner may issue an order suspending or revoking the license of the bank or commercial lending company:

    a. That the bank or commercial lending company has violated any provision of sections 1[38 through 87] 37 through 861 of P.L.    , c.     (C. )(pending before the Legislature as this bill) or of any regulation or order issued thereunder or any provision of any other applicable law, regulation, or order;

    b. That the bank or commercial lending company, in case it is licensed to transact business in this State, is transacting that business in an unsafe or unsound manner or, in any case, is transacting business elsewhere in an unsafe or unsound manner;

    c. That the bank or commercial lending company is in unsafe or unsound condition;

    d. That the bank or commercial lending company has ceased to operate its office;

    e. That the bank or commercial lending company is insolvent in that it has ceased to pay its debts in the ordinary course of business, it cannot pay its debts as they become due, or its liabilities exceed its assets;

    f. That the bank or commercial lending company has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted in writing its inability to pay its debts as they become due;

    g. That the bank or commercial lending company has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or that any person has applied for any such relief under any such law against the bank or commercial lending company and the bank or commercial lending company has by any affirmative act approved of or consented to the action or the relief has been granted.

    h. That a receiver, liquidator, or conservator has been appointed for the bank or commercial lending company or that any proceeding for such an appointment or any similar proceeding has been initiated in the place where the bank or commercial lending company is domiciled;

    i. That the existence of the bank or commercial lending company or the authority of the bank or commercial lending company to transact banking business or lending under the laws of the place where the bank or commercial lending company is domiciled has been suspended or terminated; or

    j. That any fact or condition exists which, if it had existed at the time when the bank or commercial lending company applied for its license to transact business in this State, would have been grounds for denying the application.

 

    1[83.] 82.1 (New section) a. If the commissioner finds that any of the factors set forth in section 1[82] 811 of P.L. , c. (C.     )(pending before the Legislature as this bill) is true with respect to any foreign bank or commercial lending company which is licensed to establish an office and that it is necessary, for the protection of the interests of creditors of the bank's or company's business in this State, or for the protection of the public interest, that the commissioner immediately suspend or revoke the license of the bank or commercial lending company, the commissioner may issue an order suspending or revoking the license of the bank or commercial lending company.

    b. (1) Within 30 days after an order is issued pursuant to subsection a. of this section, the foreign bank or commercial lending company to which the order is issued may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence that hearing within 15 business days after that application is filed with the commissioner, or within such longer period to which the bank consents, the order shall be deemed rescinded. Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded.

    (2) The right of any foreign bank or commercial lending company to which an order is issued under subsection a. of this section to petition for judicial review of that order shall not be affected by the failure of the bank or company to apply to the commissioner for a hearing on the order pursuant to paragraph (1) of this subsection b.

 

    1[84.] 83.1 (New section) Any foreign bank or commercial lending company whose license to establish an office is suspended or revoked shall immediately surrender its license to the commissioner.

 

    1[85.] 84.1 (New section) a. Any foreign bank or commercial lending company to which an order is issued under section 1[82 or 83] 81 or 821 of P.L. , c. (C. )(pending before the Legislature as this bill), may apply to the commissioner to modify or rescind the order. The commissioner shall not grant the application unless he finds that it is in the public interest to do so and that it is reasonable to believe that the bank or commercial lending company will, if and when it is again licensed to establish an office, comply with all applicable provisions of sections 1[80 through 86] 79 through 851 of P.L. , c. (C. )(pending before the Legislature as this bill) and of any regulation or order issued thereunder.

    b. The right of any foreign bank or commercial lending company to which an order is issued under section 1[82 or 83] 81 or 821 of P.L. , c. (C. )(pending before the Legislature as this bill) to petition for judicial review of that order shall not be affected by the failure of that bank or commercial lending company to apply to the commissioner pursuant to subsection a. of this section to modify or rescind the order.

 

    1[86.] 85.1 (New section) a. If the commissioner finds that any of the factors set forth in section 1[82] 811 of P.L. , c. (C. ) (pending before the Legislature as this bill) or in subsection b. of section 1[80] 791 of P.L. , c. (C. )(pending before the Legislature as this bill) is true with respect to any foreign bank which is licensed to transact business in this State and that it is necessary for the protection of the interests of the creditors of the bank's business in this State or for the protection of the public interest that the commissioner take immediate possession of the property and business of the bank, the commissioner may by order forthwith take possession of the property and business of the bank and retain possession until the bank resumes business in this State or is finally liquidated. The bank may, with the consent of the commissioner, resume business in this State upon such conditions as the commissioner may prescribe.

    b. (1) Whenever the commissioner takes possession of the property and business of a foreign bank pursuant to subsection a. of this section, that bank may, within 10 days apply to the Superior Court in the county in which the primary office of the bank is located to enjoin further proceedings. The court may, after ordering the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order him to surrender the property and business of the bank to the bank or make such further order as may be just.

    (2) The judgement of the court may be appealed by the commissioner or by the bank in the manner provided by law for appeals from the judgement of a Superior Court. In case the commissioner appeals the judgement of the court, an appeal shall operate as a stay of the judgement, and the commissioner shall not be required to post any bond.

    c. Whenever the commissioner takes possession of the property and business of a foreign bank pursuant to subsection a. of this section, the commissioner shall conserve or liquidate the property and business of that bank pursuant to the receivership provisions of the Banking Act, including Article 42 of "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-266 et seq.), and these provisions shall apply as if the bank were a bank organized under the Banking Act.

    d. When the commissioner has completed the liquidation of the property and business of a foreign bank, the commissioner shall transfer any remaining assets to the bank in accordance with the orders the court may issue. However, if the bank has an office in another state of the United States which is in liquidation and the assets of that office appear to be insufficient to pay in full the creditors of the office, the court shall order the commissioner to transfer to the liquidator of the office that amount of any such remaining assets as appears to be necessary to cover the insufficiency; if there are two or more such offices and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to the offices, the court shall order the commissioner to distribute the remaining assets among the liquidators of those offices in any manner the court finds equitable.

    e. The commissioner may apply the provisions of this section to a commercial lending company, in which case these provisions shall take precedence over any other provisions of state law applying to the commercial lending company.

 

    1[87.] 86.1 (New section) The commissioner shall, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), issue the rules, regulations and orders the commissioner deems necessary in order to perform the commissioner's duties and functions under sections 1[38 to 87] 37 through 861 of P.L. , c. (C. ) (pending before the Legislature as this bill.)

 

    1[88.] 87.1 Section 5 of P.L.1963, c.144 (C.17:12B-5) is amended to read as follows:

    5. The following words and phrases as used in this act, unless a different meaning is plainly required by the context, shall have the following meaning:

    (1) "State association" shall mean any savings and loan association, building and loan association, or any corporation, however named, now or hereafter operating pursuant to the provisions of this act.

    (2) "Federal association" shall mean a savings and loan association organized pursuant to an Act of Congress approved June 30, 1933, entitled "Home Owners' Loan Act of 1933" or any subsequent Act of Congress.

    (3) "Association" shall mean [both] a State association [and] , a Federal association having its principal office or a branch office in this State , and an out-of State association having a branch office in this State.

    (4) "Insured association" shall mean an association whose savings members' accounts or savings deposits are insured by the Federal [Savings and Loan] Deposit Insurance Corporation.

    (5) "Board" shall mean the board of directors of any association.

    (6) "Commissioner" shall mean the Commissioner of Banking of the State of New Jersey, or such other official as may hereafter be charged by State law with the supervision of State associations.

    (7) "Member" shall mean a person who holds an account or a savings deposit in a mutual association as a savings member or as a borrowing member.

    (8) "Savings member" shall mean a member who holds an account or a savings deposit representing savings in an association.

    (9) "Borrowing member" shall mean a member to whom money of the association is loaned or one who is the owner of property upon which the association holds a mortgage.

    (10) "Account" shall mean the record of the financial transactions of a member or depositor as shown on the books of the association.

    (11) "Direct reduction loan" shall mean a loan the principal of which is repayable in periodical installments.

    (12) "Sinking fund loan" shall mean a loan, the principal of which is contracted to be repaid with the participation value of an installment account pledged as collateral security for the payment of the loan.

    (13) "Straight mortgage loan" shall mean a loan, the principal of which is repayable upon a fixed day and upon which no interim amortization is required.

    (14) "Account loan" shall mean a loan secured by the pledge of an account and the shares, if any, issued in connection therewith.

    (15) "Capital" of a mutual State association shall mean the aggregate participation value of all savings members' accounts. It shall not be limited and shall be accumulated only by payments by savings members, plus dividends credited to their accounts.

    (16) "Participation value" of an account shall mean the amount paid by a savings member on such account, plus dividends or interest credited thereto, less payments of withdrawals and retirements therefrom and any other amounts lawfully deductible therefrom.

    (17) "Withdrawal value" of an account shall mean the participation value of such an account, at the time application for withdrawal of the account is filed, less such part, if any, of the dividends or interest then credited to such account as the association is authorized to retain upon withdrawal.

    (18) "Gross income" shall have the meaning ascribed to it in section 6 of this act.

    (19) "Net income" shall have the meaning ascribed to it in section 7 of this act.

    (20) "Federal Savings and Loan Insurance Corporation" shall mean the corporation so named, organized pursuant to an Act of Congress, or any Federal corporation, instrumentality or agency which succeeds to the powers and functions of the Federal Savings and Loan Insurance Corporation or undertakes to discharge the purposes for which said corporation was created.

    (21) "Federal Home Loan Bank Board" shall mean the board so named, organized pursuant to an Act of Congress, or any Federal corporation, instrumentality or agency which succeeds to the powers and functions of the Federal Home Loan Bank Board, or which is formed to carry out the purposes for which such board was created.

    (22) "Change in the bylaws" includes new bylaws and revisions, amendments, supplements and repealers of existing bylaws.

    (23) "Principal office," "branch office" and "auxiliary office" shall have the meanings ascribed to them in section 8 of this act.

    (24) "Agency" shall have the meaning ascribed to it in section 9 of this act.

    (25) "Per capita assets" shall have the meaning ascribed to it in section 10 of this act.

    (26) "Population." Where in this act the population of a municipality, a county, or the State is mentioned, the population figure shall be the last current population estimate as furnished to the commissioner by any official agency of the State or Federal Government.

    (27) "Municipality." The word municipality shall include cities, towns, townships, villages and boroughs.

    (28) "First lien" shall have the meaning ascribed to it in section 11 of this act.

    (29) "Foreign association" shall mean any association or corporation conducting the business of a savings and loan association, however designated, [not incorporated under the provisions of this act,] except [a Federal] an association.

     (30) "Department" shall mean the Department of Banking of New Jersey.

    (31) "Mutual association" shall mean any State association organized pursuant to the provisions of this act without capital stock.

    (32) "Capital stock association" shall have the meaning ascribed to it in section 15 of P.L.1974, c.137 (C.17:12B-244).

    (33) "Capital stock" shall have the meaning ascribed to it in section 15 of P.L.1974, c.137 (C.17:12B-244).

    (34) "Stockholder" shall have the meaning ascribed to it in section 15 of P.L.1974, c.137 (C.17:12B-244).

    (35) "Secondary mortgage loan" means a loan made to an individual, association, joint venture, partnership, limited partnership association, or any other group of individuals however organized, except a corporation, which is secured in whole or in part by a lien upon any interest in real property created by a security agreement, including a mortgage, indenture, or any other similar instrument or document, which real property is subject to one or more prior mortgage liens and which is used as a dwelling, including a dual purpose or combination type dwelling which is also used as a business or commercial establishment, and has accommodations for not more than 6 families, except that a loan which:                 (a) is to be repaid in 90 days or less; (b) is taken as security for a home repair contract executed in accordance with the provisions of P.L.1960, c.41 (C.17:16C-62 et seq.); or (c) is the result of the private sale of a dwelling if title to the dwelling is in the name of the seller and the seller has resided in said dwelling for at least 1 year if the buyer is purchasing said dwelling for his own residence and, as part of the purchase price, executes a secondary mortgage in favor of the seller, shall not be included within the definition of "secondary mortgage loan."

    (36) 1["De novo branch" means a branch of a foreign association in this State which is originally established as a branch , and does not become a branch of the foreign association as a result of the acquisition by the foreign association of an insured depository institution or a branch of an insured depository institution or the conversion, merger or consolidation of any such institution or branch.

    (37)]1 "Federal Deposit Insurance Corporation" means the corporation so named, organized pursuant to an Act of Congress, or any federal corporation, instrumentality or agency which succeeds to the powers and functions of the Federal Deposit Insurance Corporation or undertakes to discharge the purposes for which said corporation was created.

    1[(38)] (37)1 "Home state" with respect to an out-of-State association means the state by which the association is chartered. "Home state" with respect to a federal association means the state in which the principal office is located.

    1[(39)] (38)1 "Out-of-State association" means a savings and loan association or building and loan association insured by the Federal Deposit Insurance Corporation and chartered under the laws of a state other than New Jersey, but not a bank as defined in 12 U.S.C. §1813(a)(2).

    1[(40)] (39)1 "State" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands.

    1[(41)] (40)1 "Resulting association" means a state or federally chartered association that has resulted from an interstate merger transaction pursuant to P.L.1963, c.144 (C.17:12-1 et seq.).

(cf: P.L.1981, c.74, s.1)

 

    1[89.] 88.1 Section 24 of P.L.1963, c.144 (C.17:12B-24) is amended to read as follows:

    24. A. No State association shall hereafter establish or operate a branch office or offices, other than as provided by the conditions and limitations of sections 24 through 27 of this act without the prior written approval of the commissioner; provided, however, that any association operating an authorized branch office at the effective date of this act may continue to do so.

    (1) An association operating a branch office approved prior to the effective date of this act with conditions or restrictions imposed on its operation may upgrade such office by notifying the commissioner at least 30 days before such upgrading. A branch office is considered upgraded if the association is relieved of any of the conditions or restrictions imposed on operation of the office when it opened. If within 30 days of receipt of the notice, the commissioner does not notify the association of his objection which would require the association to submit an application or additional information before upgrading, the association may upgrade the office.

    (2) An approved, but unopened branch office as of the effective date of this amendatory act may open and operate in the same manner as a branch office approved subsequent to the effective date of this amendatory act.

    (3) Any application which deals with offices of a State association filed with the commissioner prior to the effective date of this amendatory act shall continue to be processed as any application filed subsequent to the effective date of this amendatory act; however, the commissioner may request such additional information as may be necessary to comply with the requirements of this amendatory act.

    B. An association may apply for a branch office regardless of the number of branch applications it has pending before the commissioner. Within 15 days after submission of any branch application to the commissioner, the applying State association shall give notice of such application by publication of a notice of such application in a newspaper published within the municipality in which it is proposed to locate the branch office if there be one or, if there be no such newspaper, in a newspaper published in the county and having a substantial circulation in the municipality. The notice shall be in a form approved by the commissioner, and shall include the name of the applying association and the location, as precisely as possible, in the municipality where such branch office is to be located. For good cause, the commissioner may dispense with the notice requirements of this section.

    No less than 30 days after filing with the commissioner the proof of publication of the aforementioned notice within 90 days thereafter, the commissioner shall announce his decision upon such application and file in his office a written memorandum stating the reasons therefor, which shall be open to public inspection; and he shall forthwith thereafter give written notice thereof to the applicant.

    C. [The commissioner shall approve an application only if, in his opinion, the branch can be established without undue injury to properly conducted existing local thrift and home financing institutions; the policies, condition and operation of the applying State association afford no basis for supervisory objection, and the proposed branch will open within 12 months of approval unless otherwise allowed by the commissioner. In addition, in considering whether to approve an application, the commissioner shall take into account the State association's record of helping to meet the credit needs of its entire community, including low-to-moderate income neighborhoods pursuant to Part 563e of the regulations promulgated by the Federal Savings and Loan Insurance Corporation. Assessment of a State association's record of performance may be the basis for denying an application] The commissioner shall approve the application if the commissioner finds that:

    (1) the State association's capital equals or exceeds the minimum capital established by the commissioner by regulation;

    (2) the interests of the public will be served to advantage by the establishment of the full branch office;

    (3) conditions in the locality in which the proposed full branch office is to be established afford reasonable promise of successful operation. To determine if an applicant meets this requirement, the commissioner shall consider only the costs of purchasing, constructing, leasing or otherwise establishing the proposed office, including the costs for staffing, furniture and equipment needed therefor and the effect of these costs on the operations of the applying institution as a whole. The applicant need not demonstrate an ability to operate the proposed office at a profit within a definable period of time based on the generation of new deposits from the market area to be entered except to the extent that losses suffered at the proposed office could affect the safety and soundness of the applicant's overall operations; and

    (4) that the applicant has achieved sufficient compliance as defined by the commissioner by regulation with the provisions of the "Community Reinvestment Act of 1977," 12 U.S.C. §2901 et seq.

    D. [Persons may submit communications and answers to protests only as provided in this subsection or as requested by the commissioner.

    (1) Within 10 days of the last day of publication of notice of application, or 30 days after that day if an extension is requested in writing within the 10-day period, any person may file a communication in favor or protest of the application by furnishing 4 copies to the commissioner.

    (2) Within 10 days after filing a protest, the commissioner shall advise the protestant and the State association, in writing, whether the protest is considered substantial.

    (3) A protest is substantial only if it is in writing, filed on time, and contains at least the following:

     (a) A summary of the reasons for protest;

    (b) The specific matters in the application to which the protestant objects, and the reasons for each objection;

    (c) Facts supporting the protest, including relevant economic or financial data;

    (d) Any adverse effects on the protestant which may result from the approval of the application.

    (4) The commissioner shall determine whether a protest is substantial and shall not considered protests which are not consider substantial in his assessment of the merits of the application.

    (5) The applying State association may file an answer to any protest until 15 days after receipt of written notice from the commissioner that such protest is considered substantial by furnishing 4 copies of the answer to the commissioner.](Deleted by amendment, P.L. , c. .)(Pending before the Legislature as this bill.)

    E. The commissioner shall conduct such investigation or hearing, or both, as [he] the commissioner may deem advisable. The commissioner may adopt, amend, alter or rescind regulations prescribing the form of protest to applications and the procedures to be followed in the event that the commissioner elects to hold a hearing in connection with an application for a branch office, and such other regulations as [he] the commissioner may deem necessary with respect to the provisions of this section. [Such regulations shall be in substantial conformity with similar rules and regulations promulgated by the Federal Home Loan Bank Board.]

(cf: P.L.1981, c.376, s.3)

 

    1[90. (New section) a. An out-of-State association without a branch office in this State may apply to establish a de novo branch in this State by filing with the department a copy of the application the association filed with the regulator in its home state and the application it filed with the Federal Deposit Insurance Corporation, and any other information the commissioner may require.

    b. The commissioner shall approve the application if the out-of-State association is adequately capitalized as of the date of the application, will be adequately capitalized and managed after the branch is established, and has achieved sufficient compliance, as defined by the commissioner by regulation, with the provisions of the "Community Reinvestment Act of 1977," 12 U.S.C. §2901 et seq.

    c. An out-of-State association without a branch office in this State may not establish a de novo branch office in New Jersey unless the home state of the out-of-State association has in effect, as of the date of approval of such application, a law that permits de novo branching into that state by an association whose home state is New Jersey.]1

 

    1[91.] 89.1 (New section) a. Upon filing an application therefor in the department, and upon obtaining the approval of the commissioner thereto a State association may change the location of its principal office or of a branch office located in this State to another location in this State. Upon filing an application therefor in the department, and upon obtaining the approval of the commissioner thereto, an out-of-State association with a branch office located in this State may change the location of a branch office in this State to another location in this State, and an association with a branch office located outside this State may change the location of a branch office to another location in that State.

    b. If it shall appear from the application, or if the commissioner shall find from such proof as the commissioner may require, or from such investigation as the commissioner may cause to be made, that the area which would be served by the principal or branch office after its change in location would not be substantially different from the area theretofore served by that office, the commissioner shall approve the application.

    c. If it shall appear to the commissioner, from the application, or from such proof as the commissioner may require, or from such investigation as the commissioner may cause to be made, that the proposed location will be so far removed from the place then occupied by the principal office or by the branch office that the area which would be served by that office after its change in location would be substantially different from the area theretofore served by it, the commissioner shall not approve the application unless, after an investigation or hearing, or both, as the commissioner may determine to be advisable, the commissioner shall find that the interests of the public will be served to advantage by the change in location, and that conditions in the locality to which removal is proposed afford reasonable promise of successful operation.

    d. The failure to open and operate a relocated office within 12 months after the commissioner approves the application therefor, shall automatically terminate the right to open the relocated office, except that, for good cause shown, the commissioner may, at the commissioner's discretion, extend for additional periods, not to exceed 12 months each time, the time within which the relocated office may be opened, provided that the initial application shall be made before the expiration of 12 months from the date authority is granted to relocate the principal office and any subsequent application shall be made before the expiration of any subsequent period for which permission to extend has been granted by the commissioner.

 

    1[92.] 90.1 Section 30 of P.L.1963, c.144 (C.17:12B-30) is amended to read as follows:

    30. [Each auxiliary office shall be located in the same municipality as that in which the State association operates the office to which such auxiliary office is an adjunct.] No auxiliary office shall be established or operated at a location which is outside this State or more than [1,500] one mile from the office of the State association to which such auxiliary office is an adjunct; nor shall any such auxiliary office be established within [1,500] 1,000 feet of the principal office or a branch office of another association, without the written consent of such association. Such consent, once given, shall thereafter be irrevocable, regardless whether it was given gratuitously or for a valuable consideration. No State association shall be required to discontinue an auxiliary office for the reason that, after its establishment pursuant to this act, another association has established its principal office or a branch office within [1,500] 1,000 feet of such auxiliary office.

(cf: P.L.1963, c.144, s.30)

 

    1[93.] 91.1 Section 31 of P.L.1963, c.144 (C.17:12B-31) is amended to read as follows:

    31. No business shall be transacted at an auxiliary office other than

    (a) the receipt of payments, deposits of currency, checks and other items;

    (b) the payment of withdrawals;

    (c) the cashing of checks, drafts and other items; and

    (d) the issuance of money orders or travelers' checks.

(cf: P.L.1963, c.144, s.31)

 

    1[94.] 92.1 Section 1 of P.L.1968, c.150 (C.17:12B-46.1) is amended to read as follows:

    1. A. The following words as used in this act, unless a different meaning is plainly required by the context, shall have the following meaning:

    (1) "Commissioner" means the Commissioner of Banking [and Insurance] or any other person lawfully exercising the powers of such commissioner;

    (2) "Association" means any State savings and loan association operating pursuant to the "Savings and Loan Act (1963)" P.L.1963, c.144 (C.17:12B-1 et seq.) and any out-of-State association with a branch office in this State;

    (3) "Officers" means the person or persons designated by the board of directors of an association to act for the association in carrying out the provisions of this act;

    (4) "Emergency" means any condition which makes the transaction of business, at one or more or all of the offices of an association or associations, contrary to the welfare and security of such office or offices or contrary to the health, safety or security of persons working in or making use of such office or offices. Without limiting the generality of the foregoing, an emergency may arise when any condition poses an imminent or existing threat to the welfare, safety or security of persons or property or both, such as any one or more of the following: forces of the natural elements, fire, explosions, epidemics, power failures, labor disputes, transportation failures, war, riots, civil commotions, and other acts of lawlessness or violence;

    (5) "Office" means any place at which an association transacts business or conducts operations related to the transaction of business;

    (6) "Person" includes natural persons, corporations, partnerships and associations.

    B. This act shall apply to Federal savings and loan associations having their principal offices or a branch office in this State to the extent that the provisions of this act are not inconsistent with and do not infringe upon Federal laws, rules or regulations.

(cf: P.L.1968, c.150, s.1)

 

    1[95.] 93.1 (New section) a. An out-of-State association that opens, occupies or maintains a branch office in this State shall have in this State only the powers a State association has in this State.

    b. A State association that owns, occupies or maintains a branch office outside this state shall have in that State such additional powers as permitted to associations chartered in the state in which the branch is located.

 

    1[96.] 94.1 Section 170 of P.L.1963, c.144 (C.17:12B-170) is amended to read as follows:

    170. Every State association shall make available to its members annually, upon request, a report of its financial condition as of the end of its fiscal year[, either

    (1) By mailing or delivering to each member, a statement of assets and liabilities, and a statement of operations, or

    (2) By publishing a statement of its assets and liabilities at least once in a newspaper published or circulating in the municipality in which the principal office of the State association is located and by furnishing to any member upon request, a statement of assets and liabilities, and a statement of operations].

(cf: P.L.1963, c.144, s.170)

 

    1[97.] 95.1 Section 172 of P.L.1963, c.144 (C.17:12B-172) is amended to read as follows:

    172. Every State association and every out-of-State association with a branch office in this State shall be subject to the examination, inspection and supervision of the department[, and the]. The commissioner shall, either personally or by a person appointed by [him] the commissioner, visit and examine every State association at least once every 2 years, or [oftener] more often if deemed expedient. When deemed advisable, the examiner shall verify the liabilities of the State association to its members by an inspection and verification of their accounts. The commissioner shall promptly communicate the result of every examination to the president of the State association examined, who shall present the same to the board at the next regular meeting, or a special meeting, if deemed advisable, or if so directed by the commissioner. The action taken thereon by the board shall thereupon be promptly communicated by the president to the commissioner.

    Every report and copy of a report of examination of a State association and out-of-State association made by or under the supervision of the commissioner, shall be confidential, and shall not be made public by any officer, director or employee of a State association or out-of-State association, and shall not be subject to subpoena or to admission into evidence in any action or proceeding in any court, except pursuant to an order of the court made upon notice to the commissioner an opportunity to advise the court of reasons for excluding from evidence such report or any portion thereof. The court shall order the issuance of a subpoena for the production or admission into evidence of any such report or portion thereof, only if it is satisfied that (1) it is material and relevant to the issues in the proceedings, and (2) the ends of justice and public advantage will be subserved thereby. This section shall not apply to any action or proceeding instituted by the commissioner or Attorney General pursuant to any law of this State.

    For associations or out-of-State associations with branch offices in this State and also in one or more other states, the commissioner may contract with the state regulator in the other state or states where branch offices are located to conduct cooperative examinations. Pursuant to those agreements, examiners of the department may examine branch offices of associations and out-of-State associations in New Jersey and in other states, and examiners of other state regulators may examine branch offices of associations and out-of-state associations in New Jersey and other states. The fees for these examinations may be shared pursuant to a contract or agreement among the regulators.

(cf: P.L.1963, c.144, s.172)

 

    1[98.] 96.1 Section 173 of P.L.1963, c.144 (C.17:12B-173) is amended to read as follows:

    173. The officers, directors and employees of the State association or an out-of-State association shall exhibit its books, papers and securities to the commissioner or the person appointed by him to conduct the examination, and otherwise facilitate the same so far as it may be in their power so to do. The commissioner and every examiner may administer an oath or affirmation to any person whose testimony is required on any examination, and compel the appearance of any person for the purpose of examination, and the production of books, papers and documents, by subpoena. [The subpoena may be served by any police officer or constable of the municipality in which such person resides.]

    If any person shall fail to obey the subpoena, give testimony, answer questions or produce any books, papers or documents as required, the Superior Court may, upon ex parte application, make an order compelling him to do so.

(cf: P.L.1963, c.144, s.173)


    1[99.] 97.1 Section 178 of P.L.1963, c.144 (C.17:12B-178) is amended to read as follows:

    178. If it shall appear to the commissioner that a State association or an out-of-State association has violated any law of this State or of its home state, or any of its by-laws, or is conducting its business in an unsafe or unauthorized manner, he may order it in writing to discontinue its illegal or unsafe practices. Such order shall be sent to the State association's president, who shall present it to the board at its next regular meeting, or at a special meeting, if he deems it advisable, or if the commissioner so directs. The board's action thereon shall be promptly communicated by the president to the commissioner.

    A State association or out-of-State association which fails or refuses to comply with an order of the commissioner issued pursuant to this section within the time limited in such order, shall be liable to a penalty of $500.00 to be recovered with costs by the State in any court of competent jurisdiction in a civil action prosecuted by the Attorney General.

(cf: P.L.1963, c.144, s.178)

 

    1[100.] 98.1 (New section) a. One or more State associations may, with the approval of the commissioner, merge with an out-of-State association or associations, or with a federal association or associations, each with their principal office outside of this State, pursuant to sections 198 through 212 of P.L.1963, c.144 (C.17:12B-198 through 17:12B-212).

    b. The commissioner may not permit a merger involving an association and an out-of-State association or federal association unless the home state of each out-of-State association and federal association involved in the transaction has in effect, as of the date of the approval of such transaction, a law that permits interstate merger transactions with associations whose home state is this State.

    c. A resulting association that is an out-of-State association shall file with the commissioner in a manner which is consistent with regulations adopted by the commissioner for this purpose.

 

    1[101.] 99.1 Section 214 of P.L.1963, c.144 (C.17:12B-214) is amended to read as follows:

    214. a. Foreign associations shall not transact the business of a savings and loan association within this State, or maintain an office within this State, except as authorized pursuant to subsection b. of this section, for the purpose of transacting such business. It shall be unlawful for any person to transact business within this State on behalf of such associations; provided, however, the purchase, acquisition, holding, sale, assignment, transfer, servicing, collecting and enforcement of obligations or any interest therein secured by real estate mortgages or other instruments in the nature of a mortgage, covering real property located in this State, or the foreclosure of such instruments, or the acquisition of title to such property by foreclosure, or otherwise, as a result of default under such instruments, or the holding, protection, rental, maintenance and operation of said property so acquired, or the disposition thereof by a foreign association, or back office operations shall not be considered as transacting business within the meaning of this article.

    b. A foreign association may maintain one or more service facilities in this State, provided that the foreign association performs only back office operations at the service facility and does not transact business with its customers or the public at the service facility. Prior to opening a service facility in this State, a foreign association shall register the service facility with the commissioner, which registration shall include the address of the proposed service facility and the name and address of the foreign association's agent in this State for service of process. Each service facility shall comply with the requirements and pay the fees that the commissioner establishes by regulation. Each service facility shall be subject to examination by the department to determine whether the foreign association has operated the service facility in accordance with the provisions of this subsection, the costs of which examination shall be paid by the foreign association at the department's per diem rate for examinations of depository institutions. The commissioner may, upon notice and a hearing, order a foreign association to close any service facility operated in violation of the provisions of this subsection or of any other law. An entity which is affiliated, either directly or indirectly, with a foreign association and intends to engage in back office operations in this State shall register and be regulated pursuant to this subsection as if it were a foreign association.

    c. For the purposes of this section, the term "transact business" shall not include back office operations and the term "back office operations" shall include [only] the following activities: data processing, record-keeping, accounting, check and deposit sorting and posting, computation and posting of interest, other similar clerical and statistical functions, [and] producing and mailing correspondence or documents [provided that the correspondence or documents do not include the address of the service facility] and such other activities as the commissioner approves.

    d. For the purposes of this section, a foreign association shall not be deemed to transact business or maintain an office in this State based solely on the activities of an agent in this State.

(cf: P.L.1991, c.74, s.3)

 

    1[102.] 100.1 Section 226 of P.L.1963, c.144 (c.17:12B-226) is amended to read as follows:

    226 A. Every State association shall pay to the commissioner for the use of the State a fee, to be prescribed by the commissioner by regulation in an amount not less than or not more than, the following minimum and maximum amounts:

                                                                         Minimum Maximum

    (1) Annual report or

certificates where required...                         $ 50.00 $100.00

    (2) Dissolution proceedings                     250.00 1,500.00

    (3) Any new corporation filing:

    (a) mutual association.......                         5,000.00 10,000.00

    (b) stock association ....                             10,000.00 20,000.00

    (4) Any proceeding under

section 204 of P.L.1963,

c.144 (C.17:12B-204), pertaining

to bulk sales...                                                500.00 1,500.00

    (5) Any proceeding under

section 198 of P.L.1963,

c.144 (C.17:12B-198), pertaining

to mergers, per association                             1,500.00 4,000.00

    (6) Any application for a

branch office, except that no

fee shall be paid under this

paragraph with respect to a

branch office acquired as a

result of a merger or bulk

purchase...                                                       1,000.00 3,000.00

    (7) Application to interchange

a principal and branch office

when such interchange involves

two separate municipalities...                         500.00 1,500.00

    (8) Application for change

of name ....                                                       50.00 250.00

    (9) Certifications by the

commissioner, of papers or

records on file with the department,

plus $2.00 per page for each

certification ...                                             25.00 100.00

    (10) Application to interchange

a principal and a branch office

within the same municipality...                     250.00 1,000.00

    (11) Application to change

location of principal office

pursuant to subsection (2) of

section 40 of P.L.1963, c.144

(C.17:12B-40)...                                             500.00 2,000.00


                                                                        Minimum Maximum

    (12) Application to change

location of branch office beyond

1,500 feet and in same municipality

pursuant to subsection (1) of

section 4 of P.L.1965, c.127

(C.17:12B-27.1)...                                         250.00 1,000.00

    (13) Application to change

location of branch office

pursuant to subsection (2) of

section 4 of P.L.1965, c.127

(C.17:12B-27.1)...                                         500.00 2,000.00

    (14) Conversions...                                  3,500.00 10,000.00

    (15) Sharing Facilities                             100.00 500.00

    (16) Application for approval

of savings and loan holding

company...                                                      2,000.00 5,000.00

    (17) Filing of any other

certificate...                                                    50.00 250.00

    (18) For issuance of any other

approval by the commissioner,

plus a per diem...                                           100.00 250.00

    (19) For filing plans of

acquisition, stock, savings and

loan and existing holding

companies...                                                    1,500.00 4,000.00

    (20) In addition to the above

fees, a per diem charge may be

assessed when a special investigation

of a filing is required.

    B. Every State association shall defray all expenses incurred in making an examination of its affairs as provided in this act, and the commissioner may maintain an action, in the name of the State, against the association, for the recovery of such expenses, in a court of competent jurisdiction.

    C. The commissioner may by rule or regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) impose other fees and charges, including assessments and fees for applications and examinations, on out-of-State associations establishing and operating a branch office in this State.

(cf: P.L.1988, c.73, s.3)

 

    1[103.] 101.1 (New section) The Commissioner is authorized to enter into contracts with association supervisiors of other states for the purpose of establishing effective and efficient supervisory and regulatory structures and practices with respect to the provisions of sections 1[88 through 102] 87 through 1001 of this 1[1995] 19961 amendatory and supplementary act.

 

     1[104.] 102.1 The following are repealed:

    Section 1 of P.L.1963, c.88 (C.17:9A-22.1);

    Section 1 of P.L.1971, c.26 (C.17:9A-23.14);

    Sections 259 and 315 of P.L.1948, c.67 (C.17:19A-259 and 17:9A-315);

    Sections 1 through 3, 6 and 11 of P.L.1957, c.70 (C.17:9A-344 through 17:9A-346; 17:9A-349; and 17:9A-354);

    Section 3 of P.L.1981, c.484 (C.17:9A-345a);

    Section 2 of P.L.1968, c.426 (C.17:9A-345.2);

    Section 5 of P.L.1986, c.4 (C.17:9A-348.1);

    P.L.1986, c.5 (C.17:9A-370 et seq.);

    P.L.1986, c.6 (C.17:9A-373 et seq.); and

    Section 4 of P.L.1965, c.127 (C.17:12B-27.1).

 

    1[105.] 103.1 This act shall take effect immediately .

 

 

 

Provides for interstate banking and branching, permits insured depositories to act as agent for affiliates and provides for certain types of foreign bank entry.