HB474 (2019) Detail

Relative to principal offices of trust companies and banking and trusts insurance.


CHAPTER 169

HB 474 - FINAL VERSION

 

19Mar2019... 0360h

2019 SESSION

19-0777

11/10

 

HOUSE BILL 474

 

AN ACT relative to principal offices of trust companies and banking and trusts insurance.

 

SPONSORS: Rep. Luneau, Merr. 10

 

COMMITTEE: Commerce and Consumer Affairs

 

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ANALYSIS

 

This bill redefines the fidelity bond, errors and omissions liability insurance, and reporting requirements for banks and credit unions.  The bill also defines "principal office" in the Trust Company Act and makes various technical amendments to the banking laws.  

 

This bill is a request of the banking department.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19Mar2019... 0360h 19-0777

11/10

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to principal offices of trust companies and banking and trusts insurance.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

169:1  Bank and Credit Union Regulation and Enforcement; Definitions.  Amend RSA 383-A:2-201(b) to read as follows:

(b)  Whenever a federal law or rule is referenced by incorporation in the Bank and Credit Union [Regulatory Enforcement] Act, the Depository Bank Act, the Trust Company Act, the Family Trust Company Act, or the Credit Union Act, the reference is to the law or rule as may be amended from time to time.

169:2  Bank and Credit Union Regulation and Enforcement; Organization of State Banks; Application.  Amend RSA 383-A:3-305(a) to read as follows:

(a)  The organizer of a state bank shall apply for a charter by filing an application under RSA 383-A:6-602.  The commissioner shall prescribe the form of the application.  The form shall specify information required to process the application for the type of state bank to be organized.  The information shall include: the name of the state bank; the address of [the state] a depository bank's principal office; the state bank's registered agent and registered office; the name and address of each organizer; the name, address, background, and experience of the proposed directors and the executive officers; for trust companies and family trust companies, the proposed work location for each executive officer where the executive officer will conduct trust business; the name, address, and equity interest of each person holding 10 percent or more of the state bank's voting interests or other beneficial interests; the proposed organizational documents, including the organizational instrument executed by the organizer; a capital plan for the first 5 years of operations, including a statement as to the amount of the proposed initial capital, an explanation as to why that amount of capital is adequate for its business operations, and the sources and uses of capital; a business plan describing the business of the state bank, the customers or markets that it intends to serve, and its business strategy for the first 5 years of operation; pro forma financial statements for the first 5 years of operations; and any other facts or circumstances deemed relevant to the application by the commissioner.

169:3  Bank and Credit Union Regulation and Enforcement; Investigative Powers.  Amend RSA 383-A:3-306 to read as follows:

383-A:3-306  Investigative Powers.  For the purpose of any investigation under RSA 383-A, RSA 383-B, RSA 383-C, and RSA 383-D, [and RSA 383-E,] the commissioner shall have the power to subpoena witnesses and administer oaths in any adjudicative proceedings and the power to compel, by subpoena duces tecum, the production of all books, records, files, and other documents and materials relevant to his or her investigation.

169:4  Bank and Credit Unions; Organization of State Banks; Material Change in Operating Conditions.  Amend RSA 383-A:3-318 to read as follows:

383-A:3-318  Material Change in Operating Conditions.  If a board of directors of a [state] depository bank proposes to make a material change in the business plan, capital plan, or other factors considered by the commissioner in granting a charter to the [state] depository bank within 5 years of its receipt of a certificate to engage in business under RSA 383-A:3-315, then the board of directors may not make the change unless it submits an application seeking approval of the change to the commissioner as provided in RSA 383-A:6-602 and it is permitted to do so by the commissioner.

169:5  Banks and Banking; Capital, Fidelity Bond, and Errors and Omissions Insurance; Fidelity Bond and Errors and Omissions Liability Insurance.  Amend RSA 383-A:4-405 and 4-406 to read as follows:

383-A:4-405  Fidelity Bond.

(a)  A state bank or credit union shall maintain a fidelity bond that provides protection against losses from (i) any dishonest or criminal act of any person, including any of its directors, officers, employees, and agents, and (ii) any act such as robbery, burglary, or forgery by a person not associated with the bank or credit union.

(b)  Except as provided in (c), the fidelity bond shall be issued by:

(1)  An insurer licensed under the laws of the state; or

(2)  A foreign surplus lines insurer authorized to sell insurance in this state and licensed by any state, district, or territory of the United States.

(c)  The issuer of a fidelity bond may be a person other than as described in (b)(1) and (2) if, under the terms of the policy, the issuer unconditionally consents to:

(1)  The resolution of any claim or dispute involving the policy by a court located in this state; and

(2)  The personal jurisdiction of the courts located in this state in connection with any matter involving the policy.

(d)  The board of directors shall review the fidelity bond annually, or more often as circumstances require, to evaluate the adequacy of the amount of coverage.

(e)  A state bank or credit union shall give notice to the commissioner in accordance with RSA 383-A:6-602 if the coverage under the fidelity bond is decreased by 25 percent or more [under RSA 383-A:6-602] in any 12-month period.

[(b)] (f) From time to time, the commissioner may reduce or increase the amount of the fidelity bond that a state bank or credit union is required to maintain.  At no time shall the amount fall below the minimum required by the commissioner.

[(c)] (g)  The policy shall require that the fidelity [insurer notify the commissioner within 10 days after the cancellation or nonrenewal of the fidelity bond] bond insurer provide 10 days' notice to the commissioner before cancellation or nonrenewal of the fidelity bond shall take effect.

383-A:4-406  Errors and Omissions Liability Insurance.

(a)  A state bank or credit union shall maintain a liability policy that insures against losses that any of its customers incurs by reason of the errors and omissions of the state bank or credit union or any of its directors, officers, employees, and agents.

(b)  Except as provided in subsection (c), the errors and omissions liability policy shall be issued by:

(1)  An insurer licensed under the laws of this state; or

(2)  A foreign surplus lines insurer authorized to sell insurance in this state and licensed by any state, district, or territory of the United States.

(c)  The issuer of the errors and omissions liability policy may be a person other than as described in (b) if, under the terms of the policy, the issuer unconditionally consents to:

(1)  The resolution of any claim or dispute involving the policy by a court located in this state; and

(2)  The personal jurisdiction of the courts located in this state in connection with any matter involving the policy.

(d)  The board of directors shall review the errors and omissions liability policy annually, or as circumstances require, to evaluate the adequacy of the amount of coverage.

(e)  A state bank or credit union shall give notice to the commissioner in accordance with RSA 383-A:6-602 if coverage under the errors and omissions liability policy is decreased by 25 percent or more [under RSA 383-A:6-602] in any 12-month period.  

[(b)] (f)  From time to time, the commissioner may reduce or increase the amount of errors and omissions liability insurance coverage that a state bank or credit union is required to maintain.  At no time shall the amount of insurance fall below the minimum required by the commissioner.

[(c)] (g)  The policy shall require that the errors and omissions liability insurer [notify the commissioner within 10 days after the notice of cancellation or nonrenewal of the insurance policy] provide 10 days' notice to the commissioner before cancellation or nonrenewal of the errors and omissions liability shall take effect.

169:6  Banks and Banking; Management and Operations; Reports of Condition.  Amend RSA 383-A:5-510 to read as follows:

383-A:5-510  Reports of Condition.

(a)  Each calendar year, each state bank or credit union shall balance its books at the close of business on the last business day in December [in each year] and, within 30 calendar days thereafter, shall [make reports to the commissioner, upon forms furnished by the commissioner, showing the true conditions of the state bank or credit union at that time.  The commissioner shall prescribe what information the reports shall contain including those forms required by federal regulating agencies and shall seasonably furnish forms upon which they shall be made.] file with the commissioner an annual report.  The annual report shall be signed by an authorized officer of the state bank or credit union, attesting that the information provided is accurate to the best of his or her knowledge, and shall contain the following information:

(1)  The name and contact information for the institution and each branch, principal office, trust office, and main office, including information concerning any branch, principal office, trust office, or main office which opened, closed, or relocated during the year.

(2)  The name of each person who is a director or trustee.

(3)  The name of each person who is an executive officer.

(4)  The name of each subsidiary of the institution.

(5)  The name and contact information for each service entity.

(6)  The name and contact information for any affiliated holding company.

(7)  With respect to any fidelity bond or errors and omissions liability policy maintained to satisfy requirements in banking acts, the legal name and contact information for the insurance company that issued the coverage, the amount of coverage, and the amount of the deductible.

(8)  With respect to any liquidation pledge the trust company maintains, the name and contact information for the person holding the liquidation pledge and the fair market value of the liquidation pledge as of the last business day of the year.

(9)  With respect to any surety bond that a trust company maintains for the benefit of the commissioner, the name and contact information for the person issuing the surety bond, and the amount of the surety.

(10)  With respect to any other funds that a trust company maintains for the benefit of the commissioner, the name and contact information for the person holding the funds, and the fair market value of the funds as of the last business day of the year.

(b)  Quarterly, each state bank or credit union shall balance its books at the close of business on the last business day in March, June, [and] September, and December, [each year] and, within 30 calendar days after the end of each of those calendar quarters, shall [make reports to the commissioner, upon forms furnished by the commissioner, showing the true conditions of the state bank or credit union at that time.  The commissioner shall prescribe what information the reports shall contain including those forms required by federal regulating agencies and shall seasonably furnish forms upon which they shall be made.] file with the commissioner a quarterly report, as follows:

(1)  In the case of a depository bank, the quarterly report form shall be submitted using the applicable "Consolidated Reports of Condition and Income" developed by the Federal Financial Institutions Examination Council.

(2)  In the case of a credit union, the quarterly report form shall be submitted using the "Call Report Form 5300" developed by the National Credit Union Administration.  

(3)  In the case of a trust company or family trust company, the quarterly report form shall be submitted using the following sections of the "Consolidated Reports of Condition and Income" developed by the Federal Financial Institutions Examination Council:

a.  Signature page with attestation;

b.  Contact Information for the Reports of Condition and Income;

c.  USA PATRIOT Act Section 314(a) Anti-Money Laundering Contact Information;

d.  Schedule RI-Income Statement;

e.  Schedule RI-A—Changes in Bank Equity Capital;

f.  Schedule RI-E—Explanations;

g.  Schedule RC—Balance Sheet;

h.  Schedule RC-B—Securities;

i.  Schedule RC-F—Other Assets;

j.  Schedule RC-G—Other Liabilities; and

k.  Schedule RC-T—Fiduciary and Related Services.

(c)  The commissioner shall have the power to adopt rules relating to reporting under this article, including any additional reporting requirements, and may by rule waive reporting requirements when the commissioner determines such information is not relevant to the determination of the true conditions of the state bank or credit union.

169:7  Banks and Credit Union Regulation and Enforcement; Order to Show Cause; Cease and Desist Order.  Amend RSA 383-A:9-903(c) to read as follows:

(c)  Valid delivery of any order under this article shall be by hand or certified mail to the person at the last known principal office or main office address if a depository bank or credit union, [or] by hand or certified mail to the legal representative of the person, or for a trust company or family trust company to an executive officer.

169:8  Banks and Banking; Depository Bank Act; General Provisions; Commissioner.  Amend RSA 383-B:1-104 to read as follows:

383-B:1-104  Commissioner.  The commissioner shall have the powers necessary or incidental to performing all of the commissioner's duties under this chapter, including the power to adopt rules as provided in this chapter in accordance with RSA 541-A.  All rules previously adopted by the commissioner relating to the subject matter of this chapter shall be subject to RSA 541-A:17[, except for rules adopted under RSA 394-A:7 which shall continue in full force and effect until amended or repealed].

169:9  Depository Bank Act; Mutual Banks and Mutual Holding Companies; Reorganization of a Mutual Bank as a Mutual Holding Company.  Amend the introductory paragraph of RSA 383-B:6-609 to read as follows:

A mutual bank may reorganize as a mutual holding company owning a subsidiary bank under a plan of reorganization, by taking or causing to be taken the following actions:

169:10  Depository Bank Act; Mutual Banks and Mutual Holding Companies; Continuation of Operations and Depositor Interest.  Amend RSA 383-B:6-615 to read as follows:

383-B:6-615  Continuation of Operations and Depositor Interest.  

(a)  The commissioner may permit any newly created, wholly-owned subsidiary bank of a mutual holding company under RSA 383-B:6-609 to represent that it is a continuation of the operations of the mutual bank which was its organizer, provided such representation does not violate RSA 383-A:7-701 and is consistent with the operations of the new subsidiary bank under the plan of reorganization.

(b)  The depositors of the mutual bank immediately prior to the reorganization shall be entitled to deposits in the subsidiary bank of the mutual holding company of like amounts, interest rates, and other terms, without interruption of interest, and the deposits shall continue to be insured by the Federal Deposit Insurance Corporation up to the maximum amount provided by law.  The depositors of the mutual bank immediately before the reorganization, shall, by virtue of the reorganization, have proprietary interests in the net worth of the mutual holding company of the same nature, rights, and proportions as the proprietary interests which they had in the mutual bank, in lieu of the former interests.

169:11  Trust Company Act; Definitions.  Amend RSA 383-C:2-201(b)(7) to read as follows:

(7)  "Trust office" means a place of business of a trust company[, other than its principal office,] at which trust business is conducted, but shall not include an office that provides only administrative services or support for its trust business.  The commissioner may define by rule which administrative services or support for a trust business would qualify for exemption from this definition and the procedure for requesting such exemption.

169:12  Trust Company Act; Required Capital, Fidelity Bond, Liability Insurance Generally.  Amend RSA 383-C:5-501 to read as follows:

383-C:5-501  Required Capital, Fidelity Bond, Liability Insurance Generally.  A trust company shall maintain the level of capital required under RSA 383-C:5-502, a fidelity bond under RSA 383-A:4-405, an errors and omissions liability insurance policy under RSA 383-A:4-406, and a liquidation pledge under RSA 383-C:5-503.  The commissioner shall consider a trust company's safety and soundness and the protection of the trust company's clients in determining the appropriate amounts of required capital, fidelity bond coverage, errors and omissions liability insurance coverage, and liquidation pledge for the trust company.  In addition to the requirements in RSA 383-A:4-405 and RSA 383-A:4-406, any insurance deductible shall be reasonable and shall not jeopardize the safe and sound operation of the trust company.

169:13  Trust Company Act; Dissolution; Application for Dissolution.  Amend RSA 383-C:10-1004(a) to read as follows:

(a)  Before a trust company may dissolve its charter under RSA [383-A:10-1002] 383-C:10-1002 or RSA [383-A:10-1003] 383-C:10-1003, the trust company shall file with the commissioner an application for dissolution.

169:14  Trust Company Act; Reports and Other Filings.  Amend RSA 383-C:13-1301 to read as follows:

383-C:13-1301  Reports and Other Filings.  

(a)  A trust company shall file with the commissioner reports of condition as required under RSA 383-A:5-510 and copies of other documents as required under RSA 383-A:5-511.

(b)  A trust company shall, at the same time it files the annual report of condition pursuant to RSA 383-A:5-510, report to the commissioner the work address and other contact information where each executive officer of the trust company conducts trust business and the residential address of all directors, which information shall be kept confidential by the commissioner pursuant to RSA 383:10-b.

(c)  A trust company shall have a continuing obligation to update the information reported pursuant to subsection (b) within 30 days of any change.

(d)  A trust company failing to report the information required pursuant to subsections (b) and (c) within the prescribed time period shall pay to the commissioner a penalty of $50 for each day such a report is overdue.

169:15  Family Trust Company Act; Capital and Insurance; General.  Amend RSA 383-D:6-601 to read as follows:

383-D:6-601  General.  A family trust company shall maintain the required capital under RSA 383-D:6-602, a fidelity bond under RSA 383-A:4-405, and an errors and omissions liability insurance policy under RSA 383-A:4-406.  For purposes of determining the appropriate amounts of required capital, fidelity bond coverage, and errors and omissions liability insurance coverage, the commissioner shall consider the family trust company's safety and soundness and shall give primary consideration to the liability insurance coverage, which [provide] provides the primary protections for a family trust company's family clients.  In addition to the requirements in RSA 383-A:4-405 and RSA 383-A:4-406, any insurance deductible shall be reasonable and shall not jeopardize the safe and sound operation of the family trust company.  RSA 383-C:5-501 shall not apply to family trust companies.

169:16  New Subparagraphs; Family Trust Company Act; Reports and Certification.  Amend RSA 383-D:10-1001 by inserting after subparagraph (d) the following new subparagraphs:

(e)  A family trust company shall, at the same time it files the annual report of condition pursuant to RSA 383-A:5-510, report to the commissioner the work address and other contact information where each executive officer of the family trust company conducts trust business and the residential address of all directors, which information shall be kept confidential by commissioner pursuant to RSA 383:10-b.

(f)  A family trust company shall have a continuing obligation to update the information reported pursuant to subsection (e) within 30 days of any change.

(g)  A family trust company failing to report the information required pursuant to subsections (e) and (f) within the prescribed time period shall pay to the commissioner a penalty of $50 for each day such a report is overdue.

169:17  Family Trust Company Act; Judicial Dissolution.  Amend RSA 383-D:12-1203(d) to read as follows:

(d)  Venue for a judicial proceeding under this section is in the county of this state in which the family trust company's [principal] trust office is located or, if it does not have a [principal] trust office in this state, its registered office.

169:18  Credit Union Act; Definitions.  Amend RSA 383-E:2-201(b)(1) to read as follows:

(1)  "Branch office" means a place or location, other than its [principal] main office, at which a credit union receives the money of its members on deposit and in payment of shares or makes loans or receives payments on loans, but shall not include an office that provides only administrative services or support for its activities.  The commissioner may define by rule which administrative services or support for a credit union's activities would qualify for exemption from this definition and the procedure for requesting such exemption.

169:19  Effective Date.  

I.  Sections 1, 3, 4, 6-10, 13, and 18 of this act shall take effect upon its passage.

II.  The remainder of this act shall take effect 60 days after its passage.

 

Approved: July 10, 2019

Effective Date:

I. Sections 1,3,4,6-10,13 and 18 shall take effect July 10, 2019.

II. Remainder shall take effect September 8, 2019.

Links

HB474 at GenCourtMobile
HB474 Discussion

Action Dates

Date Body Type
Feb. 5, 2019 House Hearing
Feb. 6, 2019 House Exec Session
March 8, 2019 House Exec Session
House Floor Vote
March 19, 2019 House Floor Vote
April 16, 2019 Senate Hearing
May 2, 2019 Senate Floor Vote

Bill Text Revisions

HB474 Revision: 6515 Date: Dec. 3, 2019, 1:27 p.m.
HB474 Revision: 5813 Date: May 2, 2019, 12:43 p.m.
HB474 Revision: 5590 Date: March 19, 2019, 2:18 p.m.
HB474 Revision: 4694 Date: Jan. 10, 2019, 3:36 p.m.

Docket

Date Status
Jan. 3, 2019 Introduced 01/03/2019 and referred to Commerce and Consumer Affairs HJ 3 P. 15
Feb. 5, 2019 Public Hearing: 02/05/2019 11:00 am LOB 302
Feb. 6, 2019 Subcommittee Work Session: 02/06/2019 09:30 am LOB 302
Feb. 6, 2019 ==RECESSED== Executive Session: 02/06/2019 02:00 pm LOB 302
Feb. 26, 2019 Subcommittee Work Session: 02/26/2019 02:30 pm LOB 302
March 8, 2019 Executive Session: 03/08/2019 01:30 pm LOB 302-304
Committee Report: Ought to Pass with Amendment # 2019-0360h (Vote 20-0; CC)
March 19, 2019 Committee Report: Ought to Pass with Amendment # 2019-0360h for 03/19/2019 (Vote 20-0; CC) HC 16 P. 5
March 19, 2019 Amendment # 2019-0360h: AA VV 03/19/2019 HJ 10 P. 7
March 19, 2019 Ought to Pass with Amendment 2019-0360h: MA VV 03/19/2019 HJ 10 P. 7
March 28, 2019 Introduced 03/28/2019 and Referred to Commerce; SJ 12
April 16, 2019 Hearing: 04/16/2019, Room 100, SH, 02:15 pm; SC 18
May 2, 2019 Committee Report: Ought to Pass, 05/02/2019; SC 20
May 2, 2019 Ought to Pass: MA, VV; OT3rdg; 05/02/2019; SJ 15
June 6, 2019 Enrolled (In recess 06/06/2019); SJ 20
June 6, 2019 Enrolled 06/06/2019 HJ 18 P. 47
July 10, 2019 Signed by Governor Sununu 07/10/2019; Chapter 169; Sec. 1/3/4/6-10/13/18 Eff: 07/10/2019 II. Rem. Eff: 09/08/2019