New York Banking Law
Article 10-B
Savings and Loan Bank
of the State of New York
Section 432. Incorporation; organization certificate.
433. Proposed by-laws.
434. When corporate existence begins; conditions precedent to
commencing business.
435. General powers.
436. Restrictions on powers.
437. Redemption of bonds and notes; procedure in event of
default.
438. Surplus account.
439. Membership; liability; transfer of shares.
440. Commissions and payment of expenses.
441. Qualifications and disqualification of directors; oath of
directors.
442. Number of directors; filling of vacancies; change of
number.
443. Amendment of by-laws.
444. Annual meeting; notice; voting.
445. Preference of credits.
446. Exemptions.
S 432. Incorporation; organization certificate. When authorized by the
superintendent as provided in article two of this chapter, ten or more
savings and loan associations, the aggregate resources of which shall
not be less than five million dollars, may form the Savings and Loan
Bank of the State of New York. Each of such associations shall
subscribe, acknowledge and submit to the superintendent at his office an
organization certificate in duplicate which shall specifically state:
1. The name, "Savings and Loan Bank of the State of New York."
2. The place in the state of New York where its business is to be
transacted.
3. The number of shares for which each association has subscribed
which shall amount in the aggregate to not less than one hundred
thousand dollars.
4. The number of directors of such savings and loan bank, which shall
not be less than seven nor more than fifteen, and the names of the
persons who shall be its directors until the first annual meeting. The
certificate shall recite that the directors possess the qualifications
specified in section four hundred forty-one of this article.
5. The name and location of the principal office of each savings and
loan association subscribing the certificate and the aggregate resources
of each such association.
S 433. Proposed by-laws. The incorporators shall subscribe and
acknowledge and submit to the superintendent at his office proposed
by-laws in duplicate, which shall prescribe the manner in which the
business of such savings and loan bank shall be conducted with reference
to the following matters: 1. The date during the month of January of the
annual meeting of shareholders; the manner of calling special meetings,
and the number of members which shall constitute a quorum.
2. The number, manner of election and qualifications of directors,
subject to the provisions of section four hundred forty-one of this
article; the method of division into classes for the purpose of
electing, as nearly as may be, an equal number of directors each year;
the removal or suspension of directors; the filling of vacancies in the
board of directors, and the number of directors which shall constitute a
quorum, which shall not be less than five.
3. The meetings, powers and duties of directors; the appointment or
election of committees.
4. The officers; the manner of their election; their terms of office,
duties and compensation; and the bonds which shall be required of
officers.
5. The annual commission that may be charged each member, subject to
the limitations of section four hundred forty of this article.
6. The minimum amount of shares necessary to qualify for membership.
7. The minimum amount of shares necessary to qualify for extension of
credit.
8. The manner of voting, subject to the limitations of section four
hundred forty-four of this article.
9. The transfer of membership, subject to the limitations of section
four hundred thirty-nine of this article.
10. The manner in which the by-laws may be altered or amended.
S 434. When corporate existence begins; conditions precedent to
commencing business. When the superintendent shall have endorsed his
approval on the organization certificate as provided in article two of
this chapter, the corporate existence of the Savings and Loan Bank of
the State of New York shall begin and it shall then have power to elect
officers and transact such other business as relates to its
organization; but such savings and loan bank shall transact no other
business until: 1. Subscriptions to its shares aggregating one hundred
thousand dollars shall have been paid in cash and an affidavit stating
that such subscriptions have been so paid, subscribed and sworn to by
its two principal officers, shall have been filed in the clerk`s office
of the county of New York, and a certified copy thereof in the office of
the superintendent.
2. The superintendent shall have duly issued to it the authorization
certificate specified in article two of this chapter.
S 435. General powers. The savings and loan bank shall, subject to the
restrictions and limitations contained in this article and its by-laws,
have the following powers: 1. To issue, sell and redeem bonds and notes
secured by bonds and first mortgages made to or held by its members and
to issue, sell and redeem debenture bonds and notes.
2. To receive money or property from its members and from other
associations, corporations and persons with whom it has contracts,
engagements or undertakings, in instalments or otherwise; to enter into
any contract, engagement or undertaking with such associations,
corporations or persons for the withdrawal of such money or property,
with any increase thereof, or for the payment to them or to any
association, corporation or person of any sum of money, at any time,
either fixed or uncertain; to lend money to its members upon the
security of their promissory notes with or without collateral.
3. To invest its capital and other funds in investments in which its
member savings and loan associations are authorized to invest under
article ten of this chapter; and in securities in which investments are
authorized to be made by savings banks.
4. To receive by assignment from its members and to deposit in trust
with the comptroller of the state of New York to be held by him as
security for its and their outstanding obligations any first mortgages
on real estate and the bonds secured thereby that are legally receivable
by its members; to empower such members as agents of the savings and
loan bank, to collect and immediately pay over to the savings and loan
bank the dues, interest and other sums payable under the terms,
conditions and covenants of the bonds and mortgages or, prior to a
default upon any such bond and mortgage so assigned and when adequate
security has been given to the savings and loan bank by any such member,
to retain such collections until a payment to the savings and loan bank
from such member becomes due; to return to, or permit such member to
retain any sums of money so collected in excess of the amount required
to meet the obligations of such member.
5. To purchase in its own name, hold and convey real property for the
following purposes and no others: (a) A plot whereon there is or may be
erected a building suitable for the convenient transaction of its
business from portions of which not required for its own use a revenue
may be derived.
(b) Such as shall be mortgaged to it in good faith, by way of security
for loans made by it or moneys due to it.
(c) Such as shall be conveyed to it for debts previously contracted in
the course of its business, and such as it shall purchase at sales under
judgments, decrees or mortgages held by it.
6. To designate as depositaries of its funds any bank, trust company,
or savings bank, or any national bank located in this state.
7. To sue and to be sued in all courts and to participate in actions
and proceedings, whether judicial, arbitrative or otherwise, in like
cases as natural persons.
8. To have a corporate seal, and to alter such seal at pleasure and to
use it by causing it or a facsimile to be affixed or impressed or
reproduced in any other manner.
9. To elect or appoint officers, employees and other agents of the
savings and loan bank, define their duties, fix their compensation, and
to indemnify corporate personnel.
10. To have perpetual existence.
11. To have and exercise all other powers necessary or appropriate in
conducting business of the savings and loan bank.
S 436. Restrictions on powers. The savings and loan bank shall not: 1.
Do a general deposit business except with its members.
2. Invest more than twenty-five per centum of its surplus account in
real estate occupied, or to be occupied, by it as a place of business,
without the written approval of the superintendent.
3. Incur any indebtedness, except for the purpose of making loans to
its members or purchasing from its members those investments made by
them under article ten of this chapter, upon any bonds or notes, secured
or unsecured, with a maturity exceeding three years or in an aggregate
amount exceeding five times its capital.
4. Incur any indebtedness upon bonds or notes, secured or unsecured,
for the purpose of making loans to its members unless the amount of any
such bonds or notes which are secured shall not be in excess of eighty
per centum of the value of the collateral security pledged therefor to
such savings and loan bank; and any such bonds or notes which are
unsecured shall not have a maturity in excess of three years.
5. Purchase from its members mortgage loans which were originated less
than five years prior to date of such purchase, nor incur indebtedness
for the purchase from its members of mortgage loans which were
originated five years or more prior to the date of such purchase by the
issuance of bonds or notes, secured or unsecured, with a maturity
exceeding five years.
S 437. Redemption of bonds and notes; procedure in event of default.
1. All bonds and notes issued by the savings and loan bank may be
called on any interest day at one hundred two and one-half per centum
and interest by giving notice of not less than sixty days in a newspaper
published in the city of New York or on such notice, in such manner and
at such time and price, not to exceed one hundred five per centum and
interest, as may be specified in such bonds or notes.
2. In the event of any default for more than ninety days in the
payment of the principal of, or for more than ninety days in the payment
of any instalment of interest upon, any bond or note issued by the
savings and loan bank, the superintendent may, in his discretion, and
shall, upon the request in writing of the holders of said obligations in
default to the amount of fifty thousand dollars, forthwith take
possession of and proceed to liquidate the savings and loan bank. Upon
such liquidation he shall be entitled in the name of the savings and
loan bank to enforce all of its rights and securities and to collect and
realize upon all of its assets, including all mortgages assigned to the
savings and loan bank by its several members, and deposited with the
comptroller of the state of New York, up to the amounts advanced by the
savings and loan bank to the several members thereon. Upon any such
liquidation all said obligations then issued and outstanding shall
forthwith become due and payable equally and ratably out of all the
assets of the savings and loan bank in advance of any other debts
thereof not specifically preferred by law.
S 438. Surplus account. 1. The savings and loan bank shall accumulate
from its profits a surplus account by carrying thereto annually a sum
equal to one-half of one per centum of its capital, until such surplus
account shall be equal to at least fifteen per centum of its capital.
2. The guaranty fund on June thirtieth, nineteen hundred thirty-nine
shall be transferred to the surplus account and shall constitute the
surplus account at that date.
S 439. Membership; liability; transfer of shares. 1. Membership in the
savings and loan bank shall be limited to savings and loan associations,
except, that the directors of the savings and loan bank may, in their
discretion, permit federal savings and loan associations located in this
state to be or become members of the savings and loan bank. Every member
shall pay one hundred dollars for each share of the capital of the
savings and loan bank issued to it.
2. Members of the savings and loan bank shall not be individually
liable for the payment of its debts.
3. Shares shall not be transferable, except that a member, which is
not liable to the savings and loan bank for any direct obligation may
transfer its shares therein to another savings and loan association, by
and with the consent of the board of directors of the savings and loan
bank; or it may retire from membership and receive back such sums as it
has paid for its shares, upon giving one year`s notice in writing to the
savings and loan bank of such intention, provided, however, that no
withdrawal shall be permitted by the board of directors, which shall
reduce the total amount of the capital of the savings and loan bank
below five hundred thousand dollars. The board of directors may, in
their discretion, waive such notice, in the event of the liquidation of
any member, and pay back such sums as it has paid for its shares even
though such payment should result in a reduction of capital below five
hundred thousand dollars. Any member liable to the savings and loan bank
for any direct obligation which holds shares in excess of the number
required by the by-laws of the savings and loan bank, may transfer such
excess shares to another savings and loan association, by and with the
consent of the board of directors of the savings and loan bank; or it
may, by and with the consent of the board of directors of the savings
and loan bank, withdraw such excess shares and receive back such sum as
it has paid for such excess shares, upon giving one year`s notice in
writing to the savings and loan bank of such intention, provided,
however, that no withdrawal of shares shall be permitted by the board of
directors, which shall reduce the total amount of the capital of the
savings and loan bank below five hundred thousand dollars.
S 440. Commissions and payment of expenses. The savings and loan bank
may charge each member an annual commission, not to exceed one-half of
one per centum, upon the outstanding bonds and notes issued in its
behalf, provided, however, that the rate of commission in any year shall
be the same on all outstanding obligations in respect to which a
commission is charged; or in lieu of charging such commissions the
expenses incurred on account of any such obligations may be charged to
the member on whose behalf such obligations are issued.
S 441. Qualifications and disqualification of directors; oath of
directors. 1. At least three-fourths of the directors of the savings and
loan bank must reside in the state of New York during their term of
office, and all must be citizens of the United States. No person shall
be elected a director unless he is the owner in good faith and in his
own right on the books of a member savings and loan association of
shares having a book value of not less than two hundred dollars and has
been nominated by such member savings and loan association for that
office; and every person elected to be a director who, after such
election, shall hypothecate, pledge or cease to be the owner in his own
right of such qualifying shares shall cease to be a director of the
savings and loan bank, and his office shall be vacant.
2. Each director, when appointed or elected, shall take an oath that
he will, so far as the duty devolves upon him, diligently and honestly
administer the affairs of the savings and loan bank, and will not
knowingly violate, or willingly permit to be violated, any of the
provisions of law applicable to such corporation and that he is the
owner in good faith and in his own right on the books of the savings and
loan association which nominated him of shares having a book value not
less than two hundred dollars, and that the same is not hypothecated, or
in any way pledged as security for any loan or debt and, in case of
re-election that such shares were not hypothecated or in any way pledged
as security for any loan or debt during his previous term. Such oath
shall be subscribed by the directors making it, certified by an officer
authorized by law to administer oaths, and immediately transmitted to
the superintendent.
S 442. Number of directors; filling of vacancies; change of number. 1.
The number of directors of the savings and loan bank shall be not less
than seven nor more than fifteen.
2. All vacancies in the office of director shall be filled by election
by the members except as provided in this section. Vacancies not
exceeding one-third of the whole number of the board may be filled by
the affirmative vote of a majority of the directors then in office, and
the directors so elected may hold office until such vacancies are filled
by the members at a special or annual election; or when the number of
directors is nine or more, two vacancies may, with the consent of the
superintendent, be left unfilled until the next annual election.
3. The number of directors may be changed within the limits provided
in subdivision one of this section by amendment of the by-laws.
S 443. Amendment of by-laws. The by-laws may be altered or amended,
from time to time, provided such alterations or amendments shall have
first received the written approval of the superintendent and shall
thereafter have been duly adopted at a meeting of the directors.
A copy of any such alteration or amendment shall be filed in the
office of the superintendent within thirty days after such adoption.
S 444. Annual meeting; notice; voting. The annual meeting of the
shareholders for the election of directors shall be held in January in
each year at a place within the state to be determined by the board of
directors. Notice of the time and place of holding such election shall
be given by publication thereof, at least once in each week for two
successive weeks immediately preceding such election, in a newspaper
published in the city of New York and by mailing a copy of such notice
postage prepaid to each shareholder of the savings and loan bank not
less than ten nor more than forty days before the holding of such
meeting. Each member shall be entitled to one vote, and to such
additional votes not exceeding one vote for every share of the capital
standing in its name on the books of the savings and loan bank as the
by-laws may prescribe. Such vote or votes may be cast by mail when so
provided in the by-laws.
S 445. Preference of credits. In case of the insolvency or voluntary
or involuntary liquidation of any bank, trust company or savings and
loan association, its assets shall be applied in the first place ratably
and proportionately to the payment in full of any sum or sums of money
deposited therewith by the savings and loan bank or due to the savings
and loan bank for subscriptions, sinking funds, interest and principal
of bonds, or guaranty of mortgages, notes secured or unsecured or any
other obligations due to the savings and loan bank, but not to an amount
exceeding that authorized to be so deposited or contracted by the
provisions of this chapter, and in accordance and on an equality with
any other preference provided for in this chapter.
S 446. Exemptions. The bonds and notes issued by the savings and loan
bank and the savings and loan bank itself, together with its capital,
accumulations and funds, shall have the same exemption from taxation as
other institutions for savings. No law which taxes corporations in any
form, or the shares thereof, or the accumulations therein, shall be
deemed to include the savings and loan bank or its issues of bonds or
notes unless they are specifically named in such law.