An Act To Make Changes to the Banking Laws
Maine Legislature, Session 122, LD 0587
Committee: Insurance and Financial Services
Sponsors: SULLIVAN, SNOWE-MELLO, HARLOW, PERRY, PILON, RICHARDSON
Amends: 9-B MRSA §131, 9-B MRSA §231, 8 MRSA §3, 8 MRSA §342, 8 MRSA §412-A, 8 MRSA §445, 9-B MRSA §864, 9-B MRSA §882, 9-B MRSA §1019-A

Legislative Document 
No. 587 
S.P. 196 
In Senate, February 3, 2005 
An Act To Make Changes to the Banking Laws 
Submitted by the Department of Professional and Financial Regulation pursuant to Joint 
Rule 204. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Senator SULLIVAN of York. 
JOY J. O'BRIEN 
Secretary of the Senate 
Cosponsored by Senator: SNOWE-MELLO of Androscoggin, Representatives: HARLOW of 
Portland, McKANE of Newcastle, PERRY of Calais, PILON of Sa co, RICHARDSON of 
Warren. 
Prinled on m:yclcd paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 9-B MRSA §131, sub-§32. as repealed and replaced by PL 
1975, c. 666, §4, is amended to read: 
32. 
Savinqs account. "Savings account" or "savings deposit" 
means a depositor account in a financial institution in which 
the depositor is not required by the deposit contract, but may at 
any time be required by the financial institution, to give notice 
in writing of an intended withdrawal not less than 
~Q 1 days 
before such withdrawal is made and whieh that is not payable on a 
specified date or at the expiration of a specified time after the 
date of deposit. 
Sec. 2. 9·B MRSA §131, sub-§37, as amended by PL 1997, c. 398, 
Pt. A, §26, is further amended to read: 
37. 
Service corporation. 
"Service corporation" means 
a 
corporation, limited liability company or limited partnership 
substantially all the activities of which consist of originating, 
purchasing, 
selling 
and 
servicing 
loans 
and 
participation 
interests 
therein: 
or 
clerical, 
bookkeeping, 
accounting 
and 
statistical 
or 
similar 
functions 
related 
to 
a 
financial 
institution or real estate activities: or management, personnel, 
marketing 
or 
investment 
counseling 
related 
to 
a 
financial 
institution 
or 
real 
estate 
activities; 
or 
establishing 
or 
operating one 
or more satellite facilities; 
or 
any activity 
authorized by the superintendent by rule or order that has been 
authorized under federal law for service corporations owned or 
controlled by national banks, 
federally chartered savings 
and 
loan associations, federally chartered savings banks or federally 
chartered credit unions. 
The purpose of authorizing any such 
activity is to maintain competitive equality between feder:J.lly 
chartered and state-chartered institutions. 
Sec. 3. 9-B MRSA §231. sub-§l. 'B. as repealed and replaced by 
PL 1995, c. 628, §16, is amended to read: 
B. 
The superintendent may restrict the withdrawal of funds 
from one or more financial institutions in an order issued 
under paragraph A if, in the opinion of the superintendent, 
extraordinary circumstances make such action necessary and 
appropriate for the protection of depositors, 
shateheJ,El.ets 
investors or the public. 
Sec. 4. 9-B MRSA §231. sub-§3. 1IA, as enacted by PL 1975, c. 
500, §l, is amended to read: 
A. 
Whenever, 
violation or 
in the 
practice 
opinion of the superintendent, 
the 
set forth in subsection 1 requires 
immediate 
action 
for 
the 
protection 
of 
depositors 
or 
sRaFeRelaeFs 
investor~, 
or 
wReFe--SQeR 
the 
violation or 
practice, or the continuation thereof, is likely to cause 
insolvency 
or 
substantial dissipation 
of 
the 
assets 
or 
earnings of the institution, the superintendent may issue 
orders 
pursuant 
to 
subsection 
lL 
which 
sRall 
become 
effective 
upon 
service thereof, 
without prior notice or 
hearing. 
Sec. 5. 9-8 MRSA §3L2, sub-§5, ,D, as enacted by PL 1997, c. 
398, Pt. C, §7, is amended to read: 
D. 
All initial and subsequent capital contributions must be 
in the 
form 
of 
cash, 
unless otherwise 
approved 
by 
the 
superintendent. 
Sec. 6. 9-8 MRSA §342, sub-§l"H is enacted to read: 
H. 
Upon approval of the superintendent and evidence that 
the converting institution has complied with all applicable 
state 
and 
federal 
laws, 
rules 
and 
regulations, 
the 
superintendent shall issue to the resulting institution a 
certificate 
specifying 
the 
name 
of 
the 
converting 
institution and shall file a copy of the certificate with 
the Secretary of State. 
This certificate, onCe filed, is 
conclusive evidence of the conversion and of the correctness 
of all proceedings relating to the conversion in all courts 
and 
places. 
Unless 
a 
later 
date 
is 
specified in 
the 
certificate, the conversion is effective upon issuance of 
the certificate. 
Sec. 7. 9-8 MRSA §412-A, sub-§3, as enacted by PL 1997, c. 
398, Pt. I, §3, is repealed. 
Sec. 8. 9-8 MRSA §412-A, sub-§3-A is enacted to read: 
3-A. 
Apprnval. 
Any 
issuance considered as capital under 
subsection 1 or under rules adopted under subsection 1 must be 
submitted to the superintendent for the superintendent's approval 
at least 10 days prior to issuance and include any documentation 
the superintendent considers necessary. 
Sec. 9. 9-8 MRSA §445, sub-§l, as amended by PL 1997, c. 22, 
§12, is further amended to read: 
1. 
Authorization. 
A financial institution may establish, 
acquire 
or 
invest 
in 
the 
ea~~t:.a1---s-t;eel!; 
equity 
interest, 
obligations or other securities of 
a 
service corporation, 
as 
defined in section 131, or otherwise participate in or uti1ize 
the service of such a corporation. 
A service corporation may be 
owned by one or more institutions engaged in the business of 
banking. 
Sec. 10. 9-B MRSA §864, sub-§2, 1JA, as enacted by PL 1993, c. 
99, §2, is amended to read: 
A. 
The 
service 
corporation is 
structured 
eeFpeFa~ieR-~-J~mi~~--par~~r&hipr-~~-eFQeF 
credit union's exposure to loss; and 
as--ei1;aeF--a 
to limit the 
Sec. 11. 9-B MRSA §882, as amended by PL 1997, c. 108, §14, 
is repealed and the following enacted in its place: 
Saa2. Use of term "credit union" 
1. 
Use of term authorized. 
A person, if duly authorized 
under the laws of this State, another state or the United States 
to conduct the business of banking as a credit union, may use as 
a part of the name or 
this State the 
term 
reguire the filing of 
paragraph in the form 
the superintendent may 
title under which it conducts business in 
"credit union." 
The 
superintendent may 
supporting documentation relating to this 
and manner and containing any information 
prescribe. 
2. 
Use 
of 
term 
prohibited. 
Except 
as 
provided 
in 
subsection L 
a person may not use the term "credit union" as 
part of the name 
or title under which business is conducted or 
as 
a 
designation of 
such 
a 
business 
without prior written 
approval of the superintendent. 
In determining whether to grant 
written permission, the superintendent shall consider whether the 
business to be conducted is similar to the business of banking 
and whether using those terms or any derivatives of those terms 
could be deceptive or otherwise injurious to public interest. 
3. 
Violation: penalty. 
A person who violates any provision 
of this section is subject to a civil penalty of not more than 
$10,000 for each violation. 
4. 
Exception. 
This section does not prohibit the use of 
any name by a person who received written permission from the 
superintendent to use the name prior to the effective date of 
this section. 
Sec. 12. 9-B MRSA §1019-A~ sub-§§l and 2, as enacted by PL 
1991, c. 386, §27, are amended to read: 
1. 
Issuance of stock, capital notes or debentures. 
The 
issuance of pFefen;ee.--&toeelf eguity interest, capital notes or 
debentures with an original maturity of 
years or greater. 
Notice must be provided at least 10 days prior to issuance and 
must contain a copy of any United States Securities and Exchange 
Commission 
filings, 
private 
placement 
memoranda 
or 
other 
documents describing the proposed issue to potential investors; 
aBe 
2. 
Purchase of own capital stock. 
The purchase of shares 
of any type of its own eaFi-ta.J.--s-t::eek equity interest. 
Notice 
must contain such information as required by the superintendentTL 
and 
Sec. 13. 9·B MRSA §1019·A, sub·§3 is enacted to read: 
3. 
Exception requiring approval. 
The issuance of equity 
interest or 
capital 
notes 
by 
a 
Maine 
financial 
institution 
holding company that is not required to file notice with the 
United States Securities and Exchange Commission. 
Issuance under 
this 
subsection 
also 
requires 
prior 
approval 
of 
the 
superintendent. 
A Maine financial institution hOlding company 
may not purchase or 
redeem its equity interests without the 
superintendent's 
prior 
written 
approval 
if 
the 
gross 
consideration for purchase or redemption, 
when aggregated with 
the net consideration paid by the company for all such purchases 
or redemptions during the preceding 12 months, is equal to 10% or 
more 
of the company's consolidated net worth. 
Sec. 14. 9·B MRS A §121S. 2nd~, as enacted by PL 1997, c. 398, 
Pt. J, §2, is amended to read: 
If the holding company is not deemed to be 
a 
financial 
institution holding 
company 
under 
chapter 
by 
virtue 
of 
controlling financial institutions other than nondepository trust 
companies, 
the superintendent may examine the holding company-,-
including 
its 
subsidiaries 
and 
affiliates, 
to 
the 
extent 
necessary 
to 
determine 
the 
soundness 
and 
viability 
of 
the 
nondepository trust company. 
Sec. 15. 9·B MRSA §1226. 2nd~, as enacted by PL 1997, c. 398, 
Pt. J, §2, is amended to read: 
If the holding company is not deemed to be 
a 
financial 
institution holding 
company 
under 
chapter 
by 
virtue 
of 
controlling financial institutions other than a merchant bank, 
the superintendent may examine the holding company, including its 
subsidiaries and affiliates, to the extent necessary to determine 
the soundness and viability of the merchant bank. 
SUMMARY 
This bill makes several changes to the banking laws in the 
Maine Revised Statutes, Title 9-B. 
1. 
The bill amends the definitions of "savings account" and 
"service corporation." 
2. 
The bill clarifies that the Superintendent of Financial 
Institutions 
may 
restrict 
withdrawal 
of 
funds 
to 
protect 
investors. 
3. 
The bill clarifies that both initial and subsequent 
capital contributions to organize a financial institution must be 
in 
the 
form 
of 
cash, 
unless 
otherwise 
approved 
by 
the 
Superintendent of Financial Institutions. 
4. 
The bill enacts language establishing a certificate that 
is evidence of conversion from a federal to a state charter that 
will be filed with the Secretary of State. 
5. 
The bill changes the current notification procedure for 
issuance of new bank capital to an approval process. 
6. 
The 
bill 
replaces 
"preferred stock" in several 
the term "equity interest," 
banking laws. 
the 
terms 
"capital 
stock" 
sections of the banking laws 
which is 
a 
defined term in 
and 
with 
the 
7. 
The bill clarifies that a credit union may organize or 
invest 
in 
a 
service 
corporation 
regardless 
of 
its business 
structure so long as it is structured to limit the credit union's 
exposure to loss. 
8. 
The bill clarifies the law governing the use of the 
restricted term "credit union," bringing the law into confOl-mance 
with the provisions governing use of other restricted terms: 
"bank," "savings" and "trust." 
9. 
The bill incorporates a provision that requires only 
those Maine financial institution holding companies that do not 
have 
to 
file 
notice 
with 
the 
United 
States 
Securities 
and 
Exchange 
Commission 
to 
first 
receive 
approval 
of 
the 
superintendent before issuance of equity interest or capital 
notes. 
10. 
The bill clarifies the authority of the superintendent 
to examine a holding company of a nondepository trust company or 
merchant bank, including its subsidiaries and affiliates.