Chapter 1114: MUTUAL STATE BANKS

1114.01 Governance.

A mutual state bank and the rights and liabilities of its members shall be governed by its articles of incorporation, code of regulations, and bylaws and by this chapter.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.02 Formation; application for incorporation.

(A) Five or more natural persons, at least one of whom is a resident of this state, may, with the approval of the superintendent of financial institutions, incorporate a mutual state bank.

(B) The persons proposing to incorporate a mutual state bank shall apply for approval to incorporate the bank by submitting the application prescribed by the superintendent, which application shall include all of the following:

(1) The proposed articles of incorporation and code of regulations;

(2) An application for reservation of a name in accordance with section 1103.07 of the Revised Code, if reservation is desired by the incorporators and has not been previously filed;

(3) The location and a description of the proposed initial banking office;

(4) Information to demonstrate the proposed bank will satisfy the requirements of division (C) of section 1114.03 and any other provision of the Revised Code identified by the superintendent;

(5) Any other information the superintendent requires.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.03 Notice of proposed incorporation.

(A) Within ten days after receipt from the superintendent of financial institutions of notice of acceptance of an application for approval to incorporate a mutual state bank, the incorporators shall publish notice of the proposed incorporation in a newspaper of general circulation in the county where the bank's initial banking office is to be located. The incorporators shall publish the notice once a week for two weeks and furnish a certified copy of it to the superintendent. The notice shall specify the name of the proposed bank, its location, the amount of the proposed capital, the names of the incorporators, the address of the superintendent, and the date by which comments on the application must be filed with the superintendent, which date shall be thirty days after the date of the first publication of the notice.

(B) If any comments on the application are filed with the superintendent within the thirty-day period prescribed in division (A) of this section, the superintendent shall determine whether the comments are relevant to the requirements for incorporation of a mutual state bank and, if so, investigate the comments in the manner the superintendent considers appropriate.

(C) The superintendent shall examine all of the facts connected with the application to determine if all of the following requirements are met:

(1) The proposed articles of incorporation and code of regulations, application for reservation of name, applicable fees, and other items required meet the requirements of the Revised Code.

(2) The population and economic characteristics of the area primarily to be served afford reasonable promise of adequate support for the proposed bank.

(3) The competence, experience, and integrity of the proposed directors and officers are such as to command the confidence of the community and warrant the belief that the business of the proposed bank will be honestly and efficiently conducted.

(4) The capital of the proposed bank is adequate in relation to the amount and character of the anticipated business of the bank and the safety of prospective depositors.

(D) Within one hundred eighty days following the date of acceptance of the application, the superintendent shall approve or disapprove the incorporation of the proposed bank upon the basis of the examination. In giving approval, the superintendent may impose conditions to be met prior to the issuance of a certificate of authority to commence business under section 1114.07 of the Revised Code.

(E) If the superintendent approves the application, the superintendent shall make a certificate to that effect and forward the certificate and the articles of incorporation of the proposed bank to the secretary of state for filing.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.04 Articles of incorporation.

(A) A mutual state bank's articles of incorporation shall contain all of the following:

(1) The name of the bank;

(2) The place in this state where the bank's principal place of business is to be located;

(3) The purpose or purposes for which the bank is formed.

(B) The articles of incorporation may also set forth any lawful provision for the purpose of defining, limiting, or regulating the exercise of the authority of the bank, the incorporators, the directors, the officers, the members, and any provision that may be set forth in the bank's code of regulations.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.05 Authorized capital.

(A) As used in the section, "authorized capital" means the initial funding required to organize a mutual state bank.

(B) The authorized capital of a mutual state bank shall be of such amount as the superintendent of financial institutions may determine based upon the amount and character of the anticipated business of the bank and the safety of prospective depositors. In addition, the superintendent may, in the superintendent's discretion, fix the amount of the expense fund for operating losses to be created by nonrefundable contributions.

(C) The organization of the mutual state bank may be completed when a sum equal to five per cent of the authorized capital, as determined by the superintendent, is paid in and the names and addresses of its officers, its code of regulations, and its bylaws have been filed with and approved by the superintendent.

(D) Five years after the mutual state bank commences business, any remaining balance in the expense fund shall be transferred to retained earnings, if the bank is on a profitable operating basis as determined by the superintendent.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.06 Certificate of authority to commence business.

(A) A mutual state bank organized under this chapter shall not accept deposits, incur indebtedness, or transact any business other than business that is incidental to its organization until the bank receives a certificate of authority to commence business issued by the superintendent of financial institutions under section 1114.07 of the Revised Code.

(B) The bank shall file a report with the superintendent when it has done everything required by the superintendent before it can be authorized to commence business.

(C) Upon receipt of the report referred to in division (B) of this section, the superintendent shall examine the affairs of the bank and determine whether the bank has complied with all of the requirements necessary to entitle it to engage in business.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.07 Conditions for issuance of certificate.

(A) The superintendent of financial institutions shall issue a certificate of authority to commence business if both of the following conditions are met:

(1) The superintendent is satisfied, based upon the examination conducted pursuant to section 1114.06 of the Revised Code and any other facts within the knowledge of the superintendent, that the mutual state bank is otherwise entitled to commence business.

(2) The superintendent has received from the federal deposit insurance corporation written confirmation that it has approved the bank's application to become an insured bank as defined in section 3(h) of the "Federal Deposit Insurance Act," 92 Stat. 614 (1978), 12 U.S.C. 1813(h), as amended.

(B) The mutual state bank shall cause the certificate of authority to commence business to be published once a week for two consecutive weeks in a newspaper of general circulation in the county where the bank's initial banking office is located.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.08 Members; proxies.

(A) A depositor of a mutual state bank shall be a voting member and shall have such ownership interest in the bank as may be provided in the terms and conditions set forth in the articles of incorporation, code of regulations, and bylaws of the bank.

(B) The code of regulations of a mutual state bank may provide that all borrowers from the bank are members and, if so, shall provide for their rights and privileges.

(C)

(1) Unless otherwise provided in the articles of incorporation or code of regulations, a proxy granted by a depositor to the officers and directors of a mutual state bank shall expire on the date specified in the proxy. If no date is so specified, the authority granted by the proxy shall be perpetual.

(2) On and after the effective date of this section, the writing or verifiable communication appointing a proxy shall be separate and distinct from any deposit agreement, loan agreement, or any other agreement, statement, document, or disclosure provided by a mutual state bank to a depositor.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.09 Amendments to articles of incorporation.

(A) Before any member deposits have been received, the incorporators may, by unanimous written action and subject to the requirements of this section, adopt amendments to the mutual state bank's articles of incorporation or amended articles of incorporation to change any provision of, or add any provision that may properly be included in, the articles of incorporation.

(B) Amended articles of incorporation shall set forth all provisions required in, and only provisions that may properly be in, original articles of incorporation or amendments to articles of incorporation at the time the amended articles of incorporation are adopted, and shall state that they supersede the existing articles of incorporation.

(C)

(1) If the incorporators propose the adoption of any amendment to a mutual state bank's articles of incorporation or amended articles of incorporation, the bank shall send to the superintendent of financial institutions a copy of the proposed amendment or amended articles of incorporation for review and approval prior to adoption by the incorporators.

(2) Upon receiving a proposed amendment or amended articles of incorporation, the superintendent shall conduct whatever examination the superintendent considers necessary to determine if both of the following conditions are satisfied:

(a) The proposed amendment or amended articles of incorporation comply with the requirements of the Revised Code.

(b) The proposed amendment or amended articles of incorporation will not adversely affect the interests of the bank's depositors and creditors.

(3) Within forty-five days after receiving the proposed amendment or amended articles of incorporation, the superintendent shall notify the bank of the superintendent's approval or disapproval of the proposed amendment or amended articles of incorporation unless the superintendent determines additional information is required. In that event, the superintendent shall request the information in writing within twenty days after the date the proposed amendment or amended articles of incorporation were received. The bank shall have thirty days to submit the information to the superintendent. The superintendent shall notify the bank of the superintendent's approval or disapproval of the proposed amendment or amended articles of incorporation within forty-five days after the date the additional information is received. If the proposed amendment or amended articles of incorporation are disapproved by the superintendent, the superintendent shall notify the bank of the reasons for the disapproval.

(4) If the superintendent fails to approve or disapprove the proposed amendment or amended articles of incorporation within the time period required under division (C)(3) of this section, the proposed amendment or amended articles of incorporation shall be considered approved.

(5) If the proposed amendment or amended articles of incorporation are approved, in no event shall that approval be construed or represented as an affirmative endorsement of the amendment or amended articles of incorporation by the superintendent.

(D)

(1) Upon their adoption of any approved amendment to a mutual state bank's articles of incorporation, the incorporators shall send to the superintendent a certificate, signed by all the incorporators, containing a copy of the resolution adopting the amendment and a statement of the manner of and basis for its adoption.

(2) Upon their adoption of approved amended articles of incorporation, the incorporators shall send to the superintendent a copy of the amended articles of incorporation, accompanied by a certificate, signed by all the incorporators, containing a copy of the resolution adopting the amended articles of incorporation and a statement of the manner of and basis for its adoption.

(E) Upon receiving a certificate required by division (D) of this section, the superintendent shall conduct whatever examination the superintendent considers necessary to determine if the manner of and basis for the adoption of the amendment or amended articles of incorporation comply with the requirements of the Revised Code.

(F)

(1) Within thirty days after receiving a certificate required by division (D) of this section, the superintendent shall approve or disapprove the amendment or amended articles of incorporation. If the superintendent approves the amendment or amended articles of incorporation, the superintendent shall forward a certificate of that approval, a copy of the certificate required by division (D) of this section, and a copy of the amendment or amended articles of incorporation to the secretary of state, who shall file the documents. Upon filing by the secretary of state, the amendment or amended articles of incorporation shall be effective.

(2) If the superintendent fails to approve or disapprove the amendment or amended articles of incorporation within thirty days after receiving a certificate required by division (D) of this section, the bank shall forward a copy of the certificate and a copy of the amendment or amended articles of incorporation to the secretary of state, who shall file the documents. Upon filing by the secretary of state, the amendment or amended articles of incorporation shall be effective.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.10 Code of regulations.

Each mutual state bank shall have a code of regulations for its governance as a corporation, the conduct of its affairs, and the management of its property. The code of regulations shall be consistent with the law of this state and the bank's articles of incorporation.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.11 Member or director adoption of amendment to articles of incorporation.

(A)

(1) The code of regulations of a mutual state bank may provide for the amendment of its articles of incorporation or code of regulations, or the adoption of amended articles of incorporation or code of regulations, at any meeting of the members for which notice has been properly given in accordance with section 1114.12 of the Revised Code. The amendment or amended articles of incorporation or code of regulations shall be adopted by a two-thirds vote of the votes cast in person or by proxy at the meeting or, if the articles of incorporation or code of regulations provide or permit, by the affirmative vote of a greater or lesser proportion, but not less than a majority, of the voting members represented at such meeting. The number of votes that each member may cast shall be determined by the code of regulations.

(2) Unless precluded by its articles of incorporation or code of regulations, a mutual state bank may adopt an amendment to its articles of incorporation or code of regulations, or amended articles of incorporation or code of regulations, at any meeting authorized in writing by a majority of its members of record if all of the following conditions are met:

(a) Notice of the meeting is given in accordance with section 1114.12 of the Revised Code.

(b) The notice of the proposed action to be taken at the meeting is in a form approved by the superintendent of financial institutions.

(c) The proposed action is approved by a two-thirds vote of the votes cast authorizing the meeting.

(d) A majority of the members of record are present in person or by proxy at the meeting.

(B) The board of directors of a mutual state bank may adopt amended articles of incorporation or code of regulations to consolidate the original articles of incorporation or code of regulations and all previously adopted amendments to the articles of incorporation or code of regulations that are in force at the time.

(C)

(1) Amended articles of incorporation shall set forth all provisions required in, and only provisions that may properly be in, original articles of incorporation or amendments to articles of incorporation at the time the amended articles of incorporation are adopted, and shall state that they supersede the existing articles of incorporation.

(2) An amended code of regulations shall set forth all provisions required in, and only provisions that may properly be in, an original code of regulations or amendments to a code of regulations at the time the amended code of regulations is adopted, and shall state that it supersedes the existing code of regulations.

(D)

(1) If the members or board of directors propose the adoption of any amendment to the mutual state bank's articles of incorporation or code of regulations, or amended articles of incorporation or amended code of regulations, the bank shall send to the superintendent a copy of the proposed amendment, or the proposed amended articles of incorporation or code of regulations, for review and approval prior to adoption by the members or directors.

(2) Upon receiving a proposed amendment or proposed amended articles of incorporation or code of regulations, the superintendent shall conduct whatever examination the superintendent considers necessary to determine if both of the following conditions are satisfied:

(a) The proposed amendment or amended articles of incorporation or code of regulations comply with the requirements of the Revised Code.

(b) The proposed amendment or amended articles of incorporation or code of regulations will not adversely affect the interests of the bank's depositors and creditors.

(3) Within forty-five days after receiving the proposed amendment, or the proposed amended articles of incorporation or code of regulations, the superintendent shall notify the bank of the approval or disapproval unless the superintendent determines that additional information is required. In that event, the superintendent shall request the information in writing within twenty days after the date the proposed amendment, or the proposed amended articles of incorporation or code of regulations, was received. The bank shall have thirty days to submit the information to the superintendent. The superintendent shall notify the bank of the superintendent's approval or disapproval of the proposed amendment, or the proposed amended articles of incorporation or code of regulations, within forty-five days after the date the additional information is received. If the proposed amendment or proposed amended articles of incorporation or code of regulations are disapproved by the superintendent, the superintendent shall notify the bank of the reasons for the disapproval.

(4) If the superintendent fails to approve or disapprove the proposed amendment or proposed amended articles of incorporation or code of regulations within the time period required under division (D)(3) of this section, the proposed amendment or proposed amended articles of incorporation or code of regulations shall be considered approved.

(5) If the proposed amendment or amended articles of incorporation are approved, in no event shall that approval be construed or represented as an affirmative endorsement of the amendment or amended articles of incorporation by the superintendent.

(E)

(1) Upon adoption by the members of any approved amendment to a mutual state bank's articles of incorporation or code of regulations, or approved amended articles of incorporation or code of regulations, the bank shall send to the superintendent a certificate containing a copy of the members' resolution adopting the amendment or amended articles of incorporation or code of regulations and a statement of the manner of and basis for its adoption. If the board of directors proposed the amendment or the amended articles of incorporation or code of regulations, the certificate shall include a copy of the resolution adopted by the directors to propose the amendment or amended articles of incorporation or code of regulations to the members. The certificate shall be signed by the bank's authorized representatives in accordance with section 1103.19 of the Revised Code.

(2) Upon adoption by the board of directors of any approved amendment to a mutual state bank's articles of incorporation or code of regulations, or approved amended articles of incorporation or code of regulations, the bank shall provide to the superintendent a copy of the amendment or amended articles of incorporation or code of regulations, accompanied by a certificate containing a copy of the directors' resolution adopting the amendment or amended articles of incorporation or code of regulations and a statement of the manner of and basis for its adoption. The certificate shall be signed by the bank's authorized representatives in accordance with section 1103.19 of the Revised Code.

(F) Upon receiving a certificate required by division (E) of this section, the superintendent shall conduct whatever examination the superintendent considers necessary to determine if the manner of and basis for adoption of the amendment or amended articles of incorporation or code of regulations comply with the requirements of the Revised Code.

(G)

(1) Within thirty days after receiving a certificate required by division (E) of this section, the superintendent shall approve or disapprove the amendment or amended articles of incorporation or code of regulations. If the superintendent approves the amendment or amended articles of incorporation or code of regulations, the superintendent shall forward a certificate of that approval, a copy of the certificate required by division (E) of this section, and a copy of the amendment or amended articles of incorporation or code of regulations to the secretary of state, who shall file the documents. Upon filing by the secretary of state, the amendment or amended articles of incorporation or code of regulations shall be effective.

(2) If the superintendent fails to approve or disapprove the amendment or amended articles of incorporation or code of regulations within thirty days after receiving a certificate required by division (E) of this section, the bank shall forward a copy of the certificate and a copy of the amendment or amended articles of incorporation or code of regulations to the secretary of state, who shall file the documents. Upon filing by the secretary of state, the amendment or amended articles of incorporation or code of regulations shall be effective.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.12 Notice of meetings.

(A) Whenever members of a mutual state bank are required or authorized to elect directors or to take any other action at a meeting, either annual or special, notice of the meeting shall be given in either of the following ways:

(1) By publication, once each week on the same day of the week for three consecutive weeks immediately preceding the date of the meeting in a newspaper published in and of general circulation in the county in which the principal office of the bank is located, of a notice containing the name of the bank and the purpose, place, date, and hour of the meeting;

(2) By notice served upon or mailed to members as provided in section 1701.41 of the Revised Code.

(B) The notice required under division (A) of this section shall include a statement that, if a member granted a proxy to the officers and directors of the bank, the proxy is revocable at any time before the meeting or by attending the meeting and voting in person.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

1114.16 Liquidation or dissolution.

In the event of a liquidation or dissolution of a mutual state bank, the priority of claims shall be established by section 1125.24 of the Revised Code.

Added by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.