It is enacted by the General Assembly as follows

SECTION 1. Section 19-1-1 of the General Laws in Chapter 19-1 entitled "Definitions and Establishment of Financial Institutions" is hereby amended to read as follows:

19-1-1. Definitions. -- Unless otherwise specified, the following terms shall have the following meaning throughout this title.

"Agreement to Form" shall mean the agreement to form a financial institution or the agreement to form a credit union, as applicable, pursuant to this title, and shall also include, for financial institutions organized prior to December 31, 1995, the articles of incorporation or the agreement of association of the financial institution, where applicable.

"Board of Bank Incorporation" shall mean the Board of Bank Incorporation as constituted under this title or the predecessor of said board of bank incorporation.

"Branch" shall mean any office or place of business, other than the main office or customer-bank-communication-terminal outlets as provided for in this title, at which deposits are received, or checks paid or money lent.

"Credit Union" shall mean a credit union duly organized under the laws of this state.

"Director" shall mean the director of the department of business regulation.

"Division of Banking" shall mean the division within the department of business regulation responsible for the supervision and examination of regulated institutions and/or licensees under chapter 14 of this title.

"Federal Credit Union" shall mean a credit union duly organized under the laws of the United States.

"Financial Institution" shall mean any entity, other than a credit union, duly organized under the laws of this state which has the statutory authority to accept money on deposit pursuant to title 19, including {DEL those entities DEL} {ADD an entity ADD} which {DEL are DEL} {ADD is ADD} prohibited from accepting deposits {DEL only DEL} by its own by-laws or agreement to form; the term shall include, but not be limited to banks, trust companies, savings banks, loan and investment banks and savings and loan associations.

"Main office" shall mean, in the case of financial institutions or credit unions, the location stated in the agreement to form, as amended, and, otherwise, the location recognized by the institution's primary banking regulator as its main office.

"Person" shall mean individuals, partnerships, corporations, limited liability companies or any other entity however organized.

"Regulated Institution" shall mean any financial institution, credit union or other insured-deposit-taking institution which is authorized to do business in this state {ADD including one (1) authorized ADD} by operation of an interstate banking statute which allowed its original entry.

{ADD "Retail installment contract" shall mean any security agreement negotiated or executed in this state or under the laws of this state including but not limited to any agreement in the nature of a mortgage, conditional sale contract, or any other agreement whether or not evidenced by any written instrument to pay the retail purchase price of goods, or any part thereof, in installments over any period of time and pursuant to which any security interest is retained or taken by the retail seller for the payment of the purchase price, or any part thereof, of the retail installment contract.

"Retail seller" shall mean any person who sells or contracts to sell any goods under a retail installment contract to a retail buyer. ADD}

"Superintendent" shall mean the associate director and superintendent of banking in the department of business regulation.

"Unimpaired Capital" shall mean the sum of all capital and allowance accounts minus estimated losses on assets, calculated in accordance with generally accepted accounting principals.

SECTION 2. Sections 19-2-11, 19-2-12 and 19-2-13 of the General Laws in Chapter 19-2 entitled "Creation and Expansion" are hereby amended to read as follows:

19-2-11. Establishment of branches. -- Any {DEL regulated institution DEL} {ADD financial institution or credit union ADD} may establish a branch or branches within this state at any other place than its main office upon obtaining the approval of the director or his or her designee. The director or his or her designee shall decide, upon consideration of factors consistent with the creation of such {DEL regulated institution DEL} {ADD financial institution or credit union ADD} , whether to issue a certificate of public convenience and advantage.

19-2-12. Relocation of branches. -- Any {DEL regulated institution DEL} {ADD financial institution or credit union ADD} may relocate a branch upon written application being made to the director or his or her designee, provided that such relocated branch is:

(a) To be located within the same city or town as the existing branch; or

(b) To be located within a one (1) mile radius of the existing branch; and

(c) The existing branch will be closed upon construction and/or occupancy of the relocated branch.

The director or his or her designee shall review all written applications for relocation of branches and may approve such at his or her discretion.

19-2-13. Merger. -- (a) Any financial institution may, subject to the approval of the director or his or her designee, to be given on such notice, and terms as the director or his or her designee may require:

(1) merge into or consolidate with another regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States.

(2) purchase substantially all of the assets and assume substantially all of the liabilities of another regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States; or

(3) acquire more than fifty percent (50%) of the stock of another regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States.

Provided, however, that any such transaction shall be undertaken pursuant to a plan which has been approved by an affirmative vote of two-thirds (2/3) of the board of directors and, in the case of a mutually owned financial institution, two thirds (2/3) of the board of directors or trustees and a majority vote of the depositors of the mutual owned financial institutions present in person or by proxy, at a meeting called by the board of directors or trustees. {ADD For the purpose of this section, unless otherwise required under applicable provisions of federal banking law, the depositor shall be deemed to be the individual whose tax identification number or social security number is used by the bank for interest reporting purposes to the Internal Revenue Service. ADD}

(b) The director or his or her designee shall consider:

(1) the fairness to the owners of such financial institutions;

(2) the financial condition of the financial institutions; and

(3) the public convenience and advantage.

All regulated institutions merged under the provisions of this chapter shall comply with the relevant provisions of section 7-1.1-65 through 69.

The original of the agreement to form bearing the approval of the director or his or her designee shall be filed with the director or his or her designee and duplicates shall be filed with the secretary of state, who shall upon payment to him or her of twenty-five dollars ($25.00) issue a certificate of merger or certificate of consolidation pursuant to the provisions of section 7-1.1-68. Upon the issuance of such certificate or upon such later date, not more than thirty (30) days after the filing of the articles of merger or articles of consolidation as may be set forth in such articles, the merger or consolidation shall be effected pursuant to the provisions of section 7-1.1-69. Any shareholder of a financial institution which is a party to a plan requiring approval under this section shall have the right to dissent from the action involved, in accordance with the provisions of section 7-1.1-73, and any shareholder who elects to exercise such right in compliance with the provisions of section 7-1.1-74 shall be entitled to the rights of dissenting shareholders on the terms and conditions set forth in section 7-1.1-74. References to "articles of incorporation" in chapter 1.1 of title 7 shall be deemed to refer to the "Agreement to Form" of the financial institution involved.

SECTION 3. Section 19-3-7 of the General Laws in Chapter 19-3 entitled "Powers and Operations" is hereby amended to read as follows:

19-3-7. Holding or ownership of real estate. -- (a) Any financial institution may directly or indirectly purchase, own, or otherwise acquire interests in real estate, improved or unimproved, and improve, develop, redevelop, hold, and manage the real estate and any improvements on it, and mortgage, rent, lease, option, sell, or otherwise dispose of it and/or any interest in it, provided however that no financial institution shall invest more than five percent (5%) of its assets in investments authorized in this subsection. {ADD This limitation excludes real estate owned, held or leased for the convenient transaction of the financial institution's business. ADD}

(b) A financial institution may hold real estate acquired by the foreclosure of a mortgage owned by it, or by purchase at sales made under the provisions of the mortgage, or upon judgments for debts due to it, or in settlements effected to secure debts. All such real estate shall be sold by the financial institution within five (5) years after the title is vested in it, unless the time is extended as provided in the case of non-legal investments.

SECTION 4. Sections 19-4-1, 19-4-2 and 19-4-3 of the General Laws in Chapter 19-4 entitled "Regulatory Oversight" are hereby amended to read as follows:

19-4-1. Examination on application by depositors, stockholders, directors, or trustees. -- Upon the written application, under oath, to the director or his or her designee by depositors representing five percent (5%) of the deposits of any {DEL regulated DEL} {ADD financial ADD} institution, as shown by the last published return of the {DEL regulated DEL} {ADD financial ADD} institution, or upon the written application to the director or his or her designee of persons holding at least twenty-five percent (25%) of the outstanding capital stock of any regulated institution, or upon the written application to the director or his or her designee of at least one-third in number of the board of directors or trustees of any regulated institution, setting forth their interest and the reasons for making an examination, and requesting him or her to examine the regulated institution, the director or his or her designee may make or cause to be made a full investigation or examination of its affairs as provided by law.

19-4-2. Periodic examinations -- Access to vaults and records. -- (a) The director or his or her designee shall, whenever he or she considers it advisable, but at least once in each year, examine each regulated institution. {ADD However, the director may extend the examination period for eligible financial institutions to at least once every eighteen (18) months. For purposes of this section, an eligible financial institution means a financial institution with total assets of less than two hundred fifty million dollars ($250,000,000) which has not experienced a change in control in the last twelve (12) month period and which is: well capitalized; well managed; highly rated by state and federal banking regulatory agencies; and not subject to a formal enforcement proceeding or order. In addition, the director may also consider such other factors which may be considered by federal banking regulatory agencies when those agencies determine whether financial institutions qualify for an extended examination cycle. ADD} At each examination the director or his or her designee(s) shall have free access to all books, records, papers, assets and any other information deemed necessary by the director or his or her designee to ascertain the regulated institution's condition, its ability to fulfill its obligations, and whether it has complied with the provisions of law.

(b) The total cost of an examination made pursuant to this section shall be paid by the examined party, and shall be one hundred fifty percent (150%) of the salary and benefits of the examining personnel engaged in the examination and shall be paid to the director to and for the use of the division of banking. The assessment shall be in addition to any taxes and fees otherwise payable to the state. The total examination fees under this section payable in any one (1) year shall not exceed {DEL sixty-five thousand dollars ($65,000) DEL} {ADD one hundred thousand dollars ($100,000) ADD} for any one (1) regulated institution.

(c) The director or his or her designee is hereby authorized to accept in his or her discretion the report of any examination conducted by any federal banking regulatory or federal deposit insuring agencies or other state banking regulatory agency in lieu of an examination by the director or his or her designee.

19-4-3. Records of examinations and reports. -- The director or his or her designee shall preserve a full record of each examination. The records and information contained in reports of the regulated institution, other than information required by law to be filed, {DEL shall DEL} {ADD may ADD} be provided {DEL to DEL} {ADD by ADD} the director or his or her designee {DEL , DEL} {ADD to the regulated institution examined ADD} and upon written request, to the federal bureau of investigation, the United States attorney general, federal bank regulatory or federal deposit insuring agencies, other state banking regulatory agencies, or the Rhode Island attorney general.

The imparting of such information by the director or his or her designee other than according to the provisions of this chapter shall be sufficient cause for his or her removal, and any such deputy, assistant, or officer, who except in the discharge of his or her official duty and other than as set out above, shall impart any such information shall be liable for a fine of not exceeding one thousand dollars ($1,000) and any such deputy or assistant may also be removed from office or employment by the director or his or her designee. Such records, examinations, and reports are not subject to the access to public records act.

SECTION 5. Sections 19-5-14 and 19-5-24 of the General Laws in Chapter 19-5 entitled "Credit Unions" are hereby amended to read as follows:

19-5-14. Powers and duties of supervisory committee. -- (a) The supervisory committee shall make or cause to be made an annual audit and shall submit a report of that audit to the board of directors and a summary of the report to the members at the next annual meeting of the credit union.

(b) If in the unanimous opinion of the supervisory committee there is a violation of this chapter or of the bylaws, or any practice of the credit union is unsafe or unauthorized, the supervisory committee by unanimous vote may suspend the credit committee, any director, or any officers elected by the board of directors. Notice thereof shall be given to the director or his or her designee and the deposit insuring agency within twenty-four (24) hours of such vote.

{ADD (c) If the supervisory committee of a credit union is elected by the membership, the supervisory committee shall fill vacancies in its own number until the next annual meeting of the credit union members. If the supervisory committee of a credit union is appointed by the board of directors, the board of directors shall fill vacancies in accordance with the credit union's by-laws. ADD}

19-5-24. Merger. -- Any credit union may, with approval of the director or his or her designee, merge with another credit union under the agreement to form of the surviving credit union, pursuant to any plan agreed upon by two-thirds (2/3) vote of those members {ADD of the board of directors of each credit union joining in the merger ADD} present at a meeting called for {DEL the DEL} {ADD that ADD} purpose{ADD . ADD} {DEL , and DEL} {ADD Additionally, the merger must be ADD} approved by the affirmative vote of members representing two-thirds (2/3) of the members present of the credit union to be merged {DEL , DEL} either at a meeting of the members duly called for that purpose or in writing{ADD , and if such merger has a significant impact on the surviving credit union, as determined by the director or his or her designee, the merger must also be approved by the affirmative vote of members representing two-thirds (2/3) of the members present of the surviving credit union, either at a meeting of the members duly called for that purpose or in writing ADD} . The credit union being merged shall be required to mail notice of the meeting to its members. Notice of such {ADD members' ADD} meeting shall be mailed to all members of the surviving credit union in the discretion of the director or his or her designee. The director or his or her designee may waive any or all of the foregoing requirements with respect to notice or to votes of members of the merged credit union or the surviving credit union in order to avert insolvency or imminent failure.

Upon approval by the director or his or her designee and after such votes by the boards of directors and approval of the members of the credit union to be merged, the president and clerk or secretary of each credit union shall execute in triplicate a certificate of merger, which shall set forth all of the following:

(a) The time and place of the meeting of the board of directors at which the plan was agreed upon;

(b) The vote in favor of adoption of the plan;

(c) A copy of the resolution or other action by which the plan was agreed upon;

(d) The time and place of the meeting of the members at which the plan agreed upon was approved, if applicable;

(e) The vote by which the plan was approved by the members, if applicable and;

(f) The date the merger was approved by the director or his or her designee.

The certificates, in triplicate, and a copy of the plan of merger agreed upon shall be forwarded to the director or his or her designee and a copy of the certificate, certified by him or her, shall be returned to the merging credit unions within thirty (30) days. Upon any such merger so effected, all property, property rights, and interest of the merged credit union shall vest in the surviving credit union without deed, endorsement, or other instrument of transfer, and all debts, obligations and liabilities of the merged credit union shall be deemed to have been assumed by the surviving credit union under whose agreement to form the merger was effected.

SECTION 6. Sections 19-7-2, 19-7-4, 19-7-5 and 19-7-6 of the General Laws in Chapter 19-7 entitled "Interstate Banking, Interstate Branching and Bank Holding Company Mergers and Acquisitions" are hereby amended to read as follows:

19-7-2. Acquisitions authorized. -- (a) An out-of-state bank or bank holding company may acquire direct or indirect ownership or control of more than five percent (5%) of the voting stock of one or more financial institutions or Rhode Island bank holding companies, if the following conditions are met:

(1) The laws of the state in which the out-of-state bank is located, or in which operations of the bank subsidiaries of an out-of-state bank holding company are principally conducted, expressly authorize, under conditions no more restrictive than those imposed by the laws of Rhode Island, as determined by the director or his or her designee, the acquisition by a Rhode Island bank holding company or a financial institution of direct or indirect ownership or control of more than five percent (5%) of the voting stock of banks located in that state or bank holding companies, the operations of the bank subsidiaries of which are principally conducted in that state.

(2) The acquisition, including all of the terms and conditions thereof, shall have been approved in advance by the director or his or her designee as in the public interest, pursuant to a written order evidencing such approval. In determining whether the approval of a proposed acquisition by an out-of-state bank or bank holding company is in the public interest, the director or his or her designee shall consider, in addition to such other factors as he or she may in his or her discretion determine, whether the acquisition shall promote the safety and soundness of the financial institution whose voting stock is to be acquired and the {DEL needs and DEL} convenience {ADD and advantage ADD} of communities served by that financial institution, and whether the acquisition is likely to have a significant impact upon the state's economy, employment levels, and tax base. Any financial institution or Rhode Island bank holding company which is the subject of an acquisition hereunder shall be a party to the proceedings of the director or his or her designee and shall be entitled to seek judicial review of any final decision of the director or his or her designee. The procedures for notice and the conducting of hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by this title.

(b) The provisions of subsection (a) shall apply to mergers, acquisitions, consolidations, or purchases of assets and assumptions of liabilities irrespective of whether the transactions under those sections involve an out-of-state bank or out-of-state bank holding company.

(c) The provisions of this section shall only apply after September 29, 1995 to the extent consistent with and not preempted by federal law.

19-7-4. Interstate mergers of mutual financial institutions. -- (a) Any financial institution organized without capital stock may, subject to the approval of the director or his or her designee, merge or consolidate with one (1) or more institutions, if:

(1) each of which is organized without capital stock and is either a financial institution or an out-of-state bank; and

(2) at least one (1) of which is an out-of-state bank, pursuant to a plan of merger or consolidation complying with the provisions of this section; provided, however, the following conditions shall apply prior to June 1, 1997 to the extent consistent with and not preempted by federal law.

(i) that the law of the state in which each such out-of-state bank has its principal office expressly permits such a merger or consolidation and

(ii) the law of the state in which each such out-of-state bank has its principal office expressly authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director or his or her designee, a financial institution organized without capital stock under the laws of this state to be the successor bank of such a merger or consolidation.

(b) The plan of merger or consolidation shall conform to the relevant provisions of section 7-1.1-65 or 7-1.1-66, and to such other requirements as may be imposed by the laws applicable to each such bank not organized under the laws of this state.

(c) The plan of merger or consolidation shall require approval as follows:

(1) with respect to a mutual savings bank by a two-thirds (2/3) vote of the board of trustees thereof and majority vote of the depositors of the mutual savings bank present in person or by proxy, at a meeting called by the board of trustees; and

(2) with respect to each such bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized. Thereafter, articles of merger or consolidation complying with the applicable provisions of section 7-1.1-68 and the applicable provisions of the laws under which each bank not organized under the laws of this state is organized shall be executed in accordance with such provisions and presented to the director or his or her designee for approval by filing three (3) originals thereof with the director or his or her designee.

(d) Upon receipt of the articles of merger or consolidation, the director or his or her designee shall furnish the applicant a form of notice specifying the names of the constituent banks and assigning a date and place for public hearing on the plan of merger or consolidation. The applicant shall publish such notice at least once a week for three (3) successive weeks, in one (1) or more newspapers designated by the director or his or her designee. Upon a finding that the public interest so requires, the director or his or her designee may lessen the period and the manner prescribed for giving notice. In determining whether to approve a proposed merger or consolidation, the director or his or her designee shall consider whether such merger or consolidation is consistent with the safety and soundness of, and the {DEL needs and DEL} convenience {ADD and advantage ADD} of the communities served by, each such institution. The procedures for conducting hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by the applicable provisions of this title.

(e) If the director or his or her designee approves the merger or consolidation in accordance with subsection (d) hereof, he or she shall endorse his or her approval upon each original of the articles of merger or articles of consolidation and shall deliver the articles to the applicant. One (1) original of the articles of merger or articles of consolidation bearing such approval in writing shall be filed with the director or his or her designee. Two (2) originals shall be filed with the secretary of state, who shall upon payment to him or her of twenty-five dollars ($25.00) issue a certificate of merger or certificate of consolidation pursuant to the provision of section 7-1.1-68. Upon the issuance of the certificate or upon such later date, not more than thirty (30) days after the filing with the secretary of state of the articles of merger or articles of consolidation, as may be set forth in the plan, the merger or consolidation shall be effected pursuant to the provisions of this chapter with the effects set forth therein. At any time prior to the filing of the articles or merger or articles of consolidation with the secretary of state, the merger or consolidation may be abandoned pursuant to the provisions therefor, if any, set forth in the plan of merger or consolidation.

(f) A merger or consolidation may be approved and effected pursuant to the provisions of this section, notwithstanding that the capital to liabilities ratio of the constituent banks exceeds such percentage of any of the other constituent banks, and no constituent bank having such excess of percentage shall be required to pay an extra dividend or make any distribution to its shareholders or depositors, nor shall any such shareholder or depositor have any appraisal or dissenting right with respect to the merger or consolidation.

(g) If the successor bank of such a merger or consolidation is to be organized under laws other than the laws of this state, it shall file the following with the director or his or her designee contemporaneously with the application for approval of the merger or consolidation:

(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any of its predecessor financial institutions; and

(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state.

19-7-5. General effect of merger or consolidation. -- Upon the merger or consolidation of a financial institution with one (1) or more banks in accordance with the provisions of this chapter:

(a) All of the property of each predecessor bank, including all its right, title, and interest in and to all assets of any conceivable value or benefit then existing, belonging or pertaining to it, shall immediately, by act of law and without conveyance or transfer, and without any further act or deed, {ADD be ADD} vested in and become that of the successor bank, which shall have, hold, and enjoy the right, privilege, interest, or asset in its own right as fully and to the same extent as when it was possessed, held, or enjoyed by the predecessor bank; and the successor bank shall be deemed to be a continuation of the entity and identity of the predecessor bank, and all the rights, obligations, and relations of the predecessor bank to or in respect to any person, estate, creditor, depositor, trustee, or beneficiary of any trust and, in respect to any executorship or trusteeship or trust or other fiduciary function, including appointments, designations, and nominations, shall remain unimpaired. The successor bank shall succeed to all such rights, obligations, relations, and trusts including appointments, designations and nominations, and the duties and liabilities connected therewith, and shall execute and perform each and every such trust and relation in the same manner as if the successor bank had itself assumed the trust or relation, including the obligations and liabilities connected therewith. If the predecessor bank be acting as administrator, co-administrator, executor, co-executor, trustee or co-trustee of, or in respect to, any estate or trust being administered under the laws of this state and, to the extent permitted by the laws thereof, the laws of any other state, such relations as well as any other similar fiduciary relations, and all rights, privileges, duties, and obligations connected therewith shall remain unimpaired and shall continue into and in the successor bank, irrespective of the date when any such relation may have been created or established, irrespective of the date of any trust agreement relating thereto or the death of any testator or decedent whose estate is being administered.

(b) Nothing done in connection with the merger or consolidation of such bank shall, in respect to any executorship, trusteeship or similar fiduciary relation, be deemed to be or to effect, under the laws of this state, a renunciation of any letters of administration or letters testamentary pertaining to that relation, or a removal or resignation from any executorship or trusteeship, nor shall such act or any other thing done be deemed to be of the same effect as if the executor or trustee had died or otherwise become incompetent to act.

(c) A pending action or other judicial proceeding to which any of the constituent banks is a party shall not be deemed to have abated or to have discontinued by reason of the merger or consolidation, but may be prosecuted to final judgment, order, or decree in the same manner as if the merger or consolidation had not occurred; or the successor bank may be substituted as a party to any action or proceeding to which the predecessor bank was a party, and any judgment, order, or decree may be rendered for or against the successor bank that might have been rendered for or against the predecessor bank, if the merger or consolidation had not occurred.

(d) After merger or consolidation, a foreclosure of a mortgage begun by any predecessor bank may be completed by the successor bank, and publication begun by the predecessor bank may be continued in the name of the successor bank. Any certificate of possession, affidavit of sale, or foreclosure deed relative to the foreclosure shall be executed by the proper officers in behalf of whichever of the constituent banks actually took possession or made the sale, but any such instrument executed on behalf of the successor bank shall recite that it is the successor of the predecessor bank which commenced the foreclosure.

(e) A new name may be adopted as the name of the successor bank as part of the plan of merger or consolidation, and it shall, without further action, become the name of the successor bank upon the effective date of the merger or consolidation.

(f) The offices and branches of any bank merged or consolidated under the provisions of this chapter may be maintained as branch offices of the successor bank with the written permission of, and under such conditions, if any, as set forth by, the director or his or her designee, whether or not the branch offices shall be in more than one (1) state.

19-7-6. Interstate purchases of assets and assumptions of liabilities. -- (a) In addition to any other power granted under the laws of this state, a financial institution may, with the approval of the director or his or her designee, purchase all or part of the assets of, and assume all or part of the liabilities of, and out-of-state bank and operate any office or branch of the out-of-state bank acquired in connection therewith.

(b) An out-of-state bank may, with the approval of the director or his or her designee, purchase substantially all of the assets and assume substantially all of the liabilities of a financial institution and operate any office or branch of the bank acquired in connection therewith; provided, however, that the law of the state in which the out-of-state bank has its principal office;

(1) permits such a purchase of assets, assumption of liabilities, and operation of offices and branches, and

(2) authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director or his or her designee, a financial institution to purchase assets, assume liabilities, and operate offices and branches in such state. No out-of-state bank shall apply to the director or his or her designee for approval of such a purchase, assumption, and operation unless the purchase, assumption and operation shall first be approved as follows:

(A) with respect to financial institutions having capital stock, by the board of directors and shareholders thereof pursuant to the applicable provisions of section 7-1.1-72, except that such purchase, assumption, and operation must receive the affirmative vote of two-thirds (2/3) or more of the shareholders entitled to vote thereon;

(B) with respect to a mutual savings bank organized under this title, by a two-thirds (2/3) vote of the board of trustees thereof and a majority vote of the depositors of the mutual savings bank present in person or by proxy, at a meeting called by the board of trustees; and

(C) with respect to each such bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized.

(c) Upon the filing of an application to purchase assets and assume liabilities under this section, together with duplicate originals of the agreement of purchase and assumption entered into in connection therewith, the director or his or her designee shall furnish the applicant a form of notice specifying the names of the purchasing financial institution and the selling financial institution and the location of the offices or branches to be acquired and assigning a date and place for public hearing on the application. The applicant shall publish such notice at least once a week for three (3) successive weeks, in one (1) or more newspapers designated by the director or his or her designee. Upon a finding that the public interest so requires, the director or his or her designee may lessen the period and the manner prescribed for giving notice.

In determining whether to approve the application, the director or his or her designee shall consider whether the purchase, assumption, and operation is consistent with the safety and soundness of, and the {DEL needs and DEL} convenience {ADD and advantage ADD} of the communities served by, each financial institution that is a party to the agreement. The procedures for conducting hearings by the director or his or her designee and the rights of appeal from decisions of the director or his or her designee shall be governed by the applicable provisions of this title. If the director or his or her designee approves the application, he or she shall endorse his or her approval upon each original of the agreement of purchase and assumption and shall deliver the agreement to the applicant. One (1) original of the agreement bearing the director's or his or her designee's approval in writing shall be filed with the director or his or her designee and the other shall be retained by the applicant as evidence of the approval. The applicant shall cause notice of any abandonment of a transaction approved pursuant to this subsection to be filed with the director or his or her designee, and in the event of such abandonment, any approval granted hereunder shall be null and void.

(d) A shareholder of a selling financial institution shall have the right to dissent from the corporate action involved in accordance with the provisions of section 7-1.1-73 and on the terms and conditions set forth in section 7-1.1-74. No shareholder or depositor of a financial institution without capital stock which is a party to an agreement of purchase and assumption shall have any appraisal or dissenting right with respect to such corporate action.

(e) An out-of-state bank that is to be the purchasing bank shall file the following with the director or his or her designee contemporaneously with the filing of any application for approval under this section:

(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any obligation assumed by it; and

(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state.

(f) The offices or branches acquired pursuant to an agreement of purchase and assumption approved by the director or his or her designee may be operated as branch offices of the purchasing bank with the written permission of, and under such conditions, if any, as may be approved by the director or his or her designee, whether or not the branch offices shall be in more than one (1) state.

SECTION 7. Section 19-8-6 of the General Laws in Chapter 19-8 entitled "Depository Change in Control Act" is hereby amended to read as follows:

19-8-6. Notice of change in control. -- Whenever such a change in control occurs, each regulated institution shall report promptly to the appropriate banking regulator any change or replacement of its chief executive officer or any {DEL director DEL} {ADD directors ADD} occurring in the next twelve (12) month period. Said report shall contain a statement of the past and current business and professional affiliations of the new chief executive officer or directors.

SECTION 8. Sections 19-9-1, 19-9-4 and 19-9-16 of the General Laws in Chapter 19-9 entitled "Community Obligations and Banking Offenses" are hereby amended to read as follows:

19-9-1. Definitions. -- For purposes of this chapter:

The term "Lending Institution" shall include {ADD any ADD} regulated {DEL institutions, credit unions, banks, trust companies, savings banks, loan and investment companies, DEL} {ADD institution ADD} and any person which makes loans of money or negotiates the lending of money for another in any state or jurisdiction.

19-9-4. Credit needs of local communities. -- Each regulated institution, as defined herein, to which the Community Reinvestment Act of 1977, United States Public Laws 95-128 [12 U.S.C. sections 2901 to 2905], and as subsequently amended from time to time, applies, shall file with the division of banking, a copy of each report and document which it is required to prepare for or file with one or more federal agencies pursuant to the provisions of that law and the rules and regulations promulgated thereunder. Each regulated institution, as defined herein, to which the Community Reinvestment Act of 1977, United States Public Laws 95-128 [12 U.S.C. sections 2901 to 2905], and as subsequently amended from time to time, does not apply, shall file with the division of banking such reports as it may require, but in substantially the same form as the reports required to be filed pursuant to the Community Reinvestment Act by the regulated institutions to which the act applies. Where a regulated institution has filed such reports or documents with the division of banking an update of the reports or documents shall be required at such time as the regulated institution requests the director or his or her designee to take any action on any application to which the provisions of this title apply.

(a) When taking any action on an application made by a regulated institution under this title, the director or his or her designee shall take into account, among other factors, an assessment, in writing, of the record of performance of the regulated institution in helping to meet the credit needs of its entire community, consistent with safe and sound operation of the regulated institution and an assessment of the economic impact of the matter which is the subject of the application. The assessment and any written communications from the division of banking to a regulated institution relating to the assessment shall be made available to the public upon request. In making the assessment, the director or his or her designee shall review all reports and documents filed with the division of banking pursuant to this section and any signed, written comments received by it or the division of banking which specifically relate to the regulated institution's performance in helping to meet the credit needs of its community. In addition, the director or his or her designee shall consider the following factors in assessing a regulated institution's record of performance:

(1) The most recent public Community Reinvestment Act rating by the applicable federal banking regulatory agency;

(2) Any practices intended to discourage application for types of credit set forth in the regulated institution's Community Reinvestment Act statement(s);

(3) The geographic distribution of the regulated institution's credit extensions, credit applications, and credit denials;

(4) Evidence of prohibited discriminatory or other illegal credit practices;

(5) The regulated institution's participation, including investments, in local community development and redevelopment projects or programs;

(6) The regulated institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans and small business or small farm loans within its community or the purchase of such loans originated in its community;

(7) The regulated institution's participation in governmental-insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;

(8) The effect of the matter which is the subject of the application upon the economy of the neighborhood, city or town, region, or state, including number of and types of jobs and tax base;

(9) Other factors that, in the judgment of the director or his or her designee, reasonably bear upon the extent to which a regulated institution is helping to meet the credit needs and economy of the entire community.

(b) In assessing the record of performance of a regulated institution pursuant to the provision of subdivision (a), the director or his or her designee may, where he or she deems it appropriate, if not otherwise required by law, provide for public hearing when an objection to the regulated institution's application has been submitted.

(c) An assessment of a regulated institution's record of performance under subdivision (a) may be the basis for denying an application under the provisions of this section.

(d) When taking an action pursuant to subdivision (a), the director or his or her designee shall request from the applicant regulated institution and from the appropriate federal bank regulatory authorities any documents other than those required to be filed with the division of banking by this section or by other applicable statutes or regulations.

(e) {DEL Notwithstanding DEL} {ADD For purposes of this section only and notwithstanding ADD} any other provision of this title of the general laws or any other law of the state of Rhode Island to the contrary, the term {DEL "Regulated Institution" DEL} {ADD "regulated institution" ADD} shall not include credit unions {DEL not open to the general public through its own by-laws DEL} {ADD whose by-laws significantly limit the field of membership, as determined by the director or his or her designee ADD} .

The director or his or her designee is hereby authorized and empowered to promulgate rules and regulations effectuating the provisions of this section.

19-9-16. Replacement of lost or destroyed passbook. -- When any person to whom a passbook, share certificate, membership certificate, stock certificate, deposit certificate, or other form of investment contract has been issued by any regulated institution, or by any insured-deposit-taking-institution duly organized under the laws of the United States, states in writing, under oath, to the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, which issued such book, certificate, or other form of investment contract, {DEL that the book, certificate, or other form of investment contract DEL} {ADD that the book, certificate, or other form of investment contract DEL} has not been hypothecated, but has been lost or destroyed, and shall make written application for the issue of a duplicate book, certificate, or other form of investment contract{ADD , then ADD} {DEL and of the written application, by advertising in a newspaper published in or nearest to, or of general circulation in, the city or town where the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States is located, or if the book, certificate, or other form of investment contract has been issued by a branch of the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States is located, then in a newspaper published in or nearest to, or of general circulation in, the city or town where such branch is located, and if the book, certificate, or other form of investment contract shall not be presented to the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, which issued it, and the existence of the passbook, certificate, or other form of investment contract shall not have been made known to the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States within fifteen (15) days after the date of the advertisement, DEL} the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, may {DEL upon proof that public notice by advertisement has been given, DEL} issue a duplicate book, certificate, or other form of investment contract therefor, and upon such delivery, the regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States, shall be discharged from all liability on account of the issue of the original book, certificate, or other form of investment contract. References in this section to an issuing regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States shall be taken to include any successor regulated institution or insured-deposit-taking-institution duly organized under the laws of the United States.

SECTION 9. Sections 19-14-1 and 19-14-26 of the General Laws in Chapter 19-14 entitled "Licensed Activities" are hereby amended to read as follows:

19-14-1. Definitions. -- For purposes of this chapter and chapters 14.1, 14.2, 14.3, 14.4 and 14.5:

"Check" shall mean any check, draft, money order, personal money order, or other instrument for the transmission or payment of money. For the purposes of check cashing, travelers checks or foreign denomination instruments shall not be considered checks. "Check cashing" means providing currency for checks.

"Deliver" shall mean to deliver a check to the first person who in payment for the check makes or purports to make a remittance of or against the face amount thereof, whether or not the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer signs the check.

"Electronic money transfer" shall mean receiving money for transmission within the United States or to locations abroad by any means, including but not limited to wire, facsimile or other electronic transfer system.

"Lender" shall mean any person who makes or funds a loan with such person's own funds, regardless whether such person is the nominal mortgagee or creditor on the instrument evidencing the loan.

{ADD The term "lender" shall also include any person engaged in a transaction whereby such person makes or funds a loan using the proceeds of an advance under a line of credit over which proceeds such person has dominion and control and for the repayment of which such person is unconditionally liable. Such a transaction is not a table funding transaction. A person is deemed to have dominion and control over the proceeds of an advance under a line of credit used to fund a loan regardless of whether (1) such person may contemporaneously with or shortly following the funding of the loan assign or deliver to the line of credit lender one (1) or more loans funded by the proceeds of an advance to such person under the line of credit; or (2) the proceeds of an advance are delivered directly to the settlement agent by the line of credit lender, unless the settlement agent is the agent of the line of credit lender; or (3) one (1) or more loans funded by the proceeds of an advance under the line of credit is purchased by the line of credit lender; or (4) under such circumstances as set forth in regulations adopted by the director or his or her designee pursuant to this chapter. ADD}

"Licensee" shall mean an entity licensed under this chapter.

"Loan" shall mean any advance of money or credit, including but

(a) Loans secured by mortgages;

(b) Insurance premium finance contracts;

(c) The purchase or acquisition or retail installment contracts or advances to the holders thereof;

(d) Educational loans; or

(e) Any other advance of money.

"Loan broker" shall mean any person who, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells a loan for others in the primary market, or offers to do so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a {ADD table funding ADD} transaction{ADD . ADD} {DEL commonly called "table funding" wherein there is a contemporaneous advance of funds by a lender and an assignment by such mortgagee or creditor of the loan to such lender. DEL}

"Personal money order" shall mean any instrument for the transmission or payment of money in relation to which the purchaser or remitter appoints or purports to appoint the seller thereof as his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed by the seller or by the purchaser or remitter or some other person.

"Primary market" shall mean the market wherein loans are made to borrowers by lenders, whether or not through a loan broker or other conduit.

"Principal owner" shall mean any person who owns, controls, votes or has a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock of a licensee.

"Sell" shall mean to sell, to issue, or to deliver a check.

"Small loan lender" shall mean a lender engaged in the business of making small loans.

"Small loan" shall mean a loan of less than five thousand dollars ($5,000), not secured by real estate, made pursuant to the provisions of chapter 19-14.2.

{ADD "Table funding transaction" shall mean a transaction wherein there is a contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of the loan to such lender. ADD}

19-14-26. Penalty for violations. -- (a) Any person and the several members, officers, directors, agents and employees thereof, who shall knowingly violate or participate in the violation of any of the applicable provisions of this title or any regulation promulgated thereunder, shall be guilty of a misdemeanor and upon conviction thereof shall be punishable by a fine of not more than one thousand dollars ($1,000) or by imprisonment of not more than one (1) year, or both. Each violation shall constitute a separate offense. Complaints under the provisions of this chapter may be made by the director or his or her designee and shall not be required to give surety for costs. The attorney-general shall prosecute all complaints under this chapter.

(b) Any {DEL contract of DEL} {ADD person who makes or brokers a ADD} loan not invalid for any other reason {DEL , in the brokering, or making of which any act shall have been done which DEL} {ADD who knowingly ADD} violates section 19-14-2, shall {DEL be voidable DEL} in the discretion of the court, {DEL and the lender or loan broker shall DEL} {ADD forfeit and ADD} have no right to collect or receive any interest, fees or charges whatsoever.

{ADD The amount of such interest, fees or charges previously collected shall be credited to the principal balance of the loan then due and owing or paid to the debtor, at the option of the holder of the loan. ADD}

SECTION 10. Sections 19-14.1-2, 19-14.1-5 and 19-14.1-10 of the General Laws in Chapter 19-14.1 entitled "Lenders and Loan Brokers" are hereby amended to read as follows:

19-14.1-2. Maximum rate of interest. -- Every lender may lend or loan broker may negotiate the lending of any sum of money and may charge, contract for and receive points, fees, charges and interest on the unpaid balance of the loan at a rate not to exceed that provided in section 6-26-2, or as otherwise permitted under applicable federal law or regulation.

Rebates of {DEL prepaid DEL} finance charges on precomputed loans, made for an original term of sixty (60) months or less, may be calculated on the method commonly referred to as the rule of 78 or sum of the digits. Rebates of {DEL prepaid DEL} finance charges on precomputed loans, made for an original term greater than {DEL sixty-one (61) DEL} {ADD sixty (60) ADD} months, must be at least the amount as would be produced by the application of the rule of anticipation.

19-14.1-5. Instrument evidencing loan, contents. -- No loan document shall contain:

(a) Any acceleration clause under which any part or all of the unpaid balance of the obligation not yet matured may be declared due and payable because the holder deems himself or herself to be insecure;

(b) Any power of attorney to confess judgment or any other power of attorney except a statutory power of sale;

(c) Any provision whereby the debtor waives any rights accruing to him or her under the provisions of this title or any other law expressly prohibiting such waiver;

(d) {DEL Any DEL} {ADD Except for a change in the payment schedule as a result of the borrower's default or delinquency, or pursuant to an agreement involving a court proceeding, any ADD} requirement that more than one installment be payable in any one installment period {DEL , or, except for an open-end loan, variable-rate loan, change in the payment schedule as a result of the borrower's default or delinquency, or pursuant to an agreement involving a court proceeding, that the amount of any installment be greater or lesser than that of any other installment, except for the final installment which may be in a greater or lesser amount DEL} ; or

(e) Any assignment of or order for the payment of any salary, wages, commission or other compensation for services, or any part thereof, earned or to be earned.

19-14.1-10. Special exemptions. -- (a) The licensing provisions of chapter 14 shall not apply to:

(1) Nonprofit charitable, educational or religious corporations or associations;

(2) Any person who makes less than six (6) loans in this state in any consecutive twelve (12) month period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker; or,

(3) Person(s) acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license.

(b) The provisions of chapter 14 and chapter 14.1 shall not apply to:

(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;

(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;

(3) Loans principally secured by accounts receivable and/or business inventory;

(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;

(5) Education-purpose loans made by the Rhode Island Health and Educational Building Corporation as vested in chapter 38.1 of title 45 or the Rhode Island Student Loan Authority as vested in chapter 62 of title 16;

(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring such from federal bank receivers or liquidators; {DEL or DeL}

(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services or insurance for a part or all of the purchase price {DEL . DEL} {ADD ; or ADD}

{ADD (8) Any state or federal agency which makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract. ADD}

SECTION 11. Section 6-27-4 of the General Laws in Chapter 6-27 entitled "Truth in Lending and Retail Selling" is hereby amended to read as follows:

6-27-4. Maximum charge -- Refunds. -- (a) No creditor shall impose a finance charge in excess of an amount equal to eighteen percent (18%) simple interest per annum. This subsection shall not apply to any transaction in connection with which the finance charge does not exceed ten dollars ($10.00). Notwithstanding the provision of any retail installment contract to the contrary, a buyer may prepay in full the unpaid balance thereof at any time before its final due date and, if the buyer does so, shall receive a refund credit thereon for the prepayment. The amount of the refund credit of {DEL prepaid DEL} finance charges on precomputed loans, made for an original term of sixty (60) months or less, may be calculated on the method commonly referred to as the rule of 78's or sum of the digits. Refund credits of {DEL prepaid DEL} finance charges on precomputed loans, made for an original term greater than sixty (60) months, must be at least the amount as that produced by the rule of anticipation.

(b) Where the amount of refund credit is less than one dollar ($1.00), no refund credit need be made.

(c) Notwithstanding any contrary provision of law, the maximum finance charge which may be applied under a revolving or open-end credit plan in connection with a transaction arising out of a retail sale of consumer goods, including the retail sale of gasoline, or services shall not exceed the rate or rates agreed to by the creditor and a retail buyer compared on the average daily balance of the open-end or revolving account or the unpaid balance of such account outstanding as of the end of the current billing cycle. Regardless of any agreement to the contrary, a transaction under a revolving or open-end credit plan is subject to this section whenever a solicitation for the extension of credit is made by a creditor whose primary activity in Rhode Island is soliciting Rhode Island customers through the mails, and the solicitation originates outside Rhode Island but is directed to and received by a retail buyer who resides, and responds to such solicitation, in Rhode Island.

(d) This section shall not apply to any person doing business under and as permitted by any general or special law of this state or of the United States relating to financial institutions, credit unions or licensees pursuant to title 19, chapter 44 of title 6 entitled "Rental-Purchase Agreements," and section 6-26-2.

(e) Under each revolving or open-end credit plan a late fee not to exceed twelve dollars ($12.00) may be assessed on each minimum payment not paid in full within forty (40) days following the billing date of the statement on which such minimum payment first appears.

SECTION 12. This act shall take effect upon passage.