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If the state banking board determines that such investments would be detrimental to the interests of a bank's depositors, it may direct the bank to divest itself of such subsidiary investments. In addition, the state banking board has power to authorize state banks to engage directly or indirectly in any activity in which such banks could engage were they operated as national banks at the time such authority is granted, notwithstanding any restriction elsewhere contained in this code. Any officer, director, or employee of any bank who invests or uses its funds contrary to this title is guilty of a class A misdemeanor.

* HB 1080 (N.D.C.C. § 6-03-13.3); Relating to factors the state banking board must consider for a banking facility relocation. Under N.D.C.C. § 6-03-13.3, when the state banking board considers an application of a bank that wishes to maintain and operate a facility separate and apart from its banking house or to move an established facility to another location, the board must consider:(1) the convenience, needs, and welfare of the people of the community and area served; (2) the financial strength of the bank in relation to the cost of establishing and maintaining such separate facility; and (3) whether other banks will be seriously injured by the approval of the application. This bill amends this section by adding the following italicized language: When considering an application for relocating an existing facility to another location within the same corporate city limits, the state banking board may consider only subsection 2 as a factor for approval.
COMMENT: Obviously, if considering the financial strength of the bank in relation to the cost of establishing and maintaining a separate facility is the only permissible consideration of the banking board, it is easier for a bank to relocate an existing facility to another site in town. Effective August 1, 2001.

* HB 1126 (N.D.C.C. § 43-10.1-03.1); Relating to pre-need funeral contracts. This bill creates a new section that requires payments upon a pre-need funeral contract to be deposited in or transferred to a trust company or federally insured bank, credit union, or savings and loan association in this state, within 10 days. The deposit must be placed in an FDIC or NCUA insured CD or negotiable debt obligation of the US. The funds may be released or transferred by the institution to the depositor upon the death of the person for whose benefit the funds were paid.

A certified copy of the death certificate must be furnished to the institution as evidence of death. The funds may be released or transferred by the institution to the person making the payment, before the death of the person for whose benefit the funds are paid, upon a 5-day written notice by registered or certified mail made by the institution to the depositor or transferor at the request of the person making the payment. An institution receiving such a deposit or transfer shall keep a complete record of the deposit or transfer, showing the name of the depositor or transferor, name of the person making payment, name of the person for whose benefit payment is made, and any other pertinent information.
COMMENT: This amendment sets out specific record-keeping obligations for financial institutions. The law is effective August 1, 2001.

* SB 2143 (Various sections of N.D.C.C. Ch. 26.1-37); Relating to consumer credit insurance. This bill makes many changes to the chapter addressing consumer credit insurance. One change is the amendment to N.D.C.C. § 26.1-37-01, providing that this chapter may be cited as the "Consumer Credit Insurance Model Act" and providing that consumer credit insurance issued or sold in connection with loans/credit transactions for personal, family, or household purposes are subject to this chapter, except insurance written in connection with a credit transaction (1) secured by a first mortgage; (2) made to finance the purchase of real property or the construction of a dwelling thereon or to refinance a prior credit transaction made for such purpose; (3) transactions involving extensions of credit primarily for business or commercial purposes; (4) insurance on motor vehicles designed for highway use and on mobile homes; (5) creditor-placed insurance; (6) insurance sold as an isolated transaction and not for insuring debtors of the creditor; (7) insurance for which no identifiable charge is made to the debtor; and (8) insurance on accounts receivable.

There are many other amendments, which take effect August 1, 2001, and a summary would exceed our newsletter space. If your institution writes consumer credit insurance, we recommend that you obtain a copy of the bill to familiarize yourself with the provisions, and contact our office for a synopsis. The credit insurance amendments generally clarify some things that were not crystal-clear before, and also provide some solid definitions for terms that were not previously defined.