July 19, 1994
Mr. David C. Worth Counsel, Savings Institutions Division North Carolina Department of Commerce 1110 Navaho Drive, Suite 301 Raleigh, NC 27609
Re: Advisory Opinion — Savings Bank Conversion to and Merger with Commercial Banks, G.S. §§ 53-12, 53-17.2 and C-47
Dear Mr. Worth:
You have requested an opinion of this office on the question of whether a savings bank, organized under Chapter 54C of the North Carolina General Statutes, i.e., a state savings bank, can convert to a bank organized under Chapter 53, a commercial bank, and subsequently merge with another commercial bank. For the reasons set forth below, we conclude that such a conversion and merger may be lawfully accomplished under North Carolina law.
DISCUSSION OF THE LEGAL ISSUES
As you know, this office has been called upon a number of times in recent years to consider various issues with regard to the conversion and merger of savings institutions (savings and loan associations and savings banks) into or with commercial banks. In an Advisory Opinion of January 7, 1993, by Senior Deputy Attorney General Ann Reed and Special Deputy Attorney General Henry T. Rosser, they conclude that a state savings bank could not merge directly with a commercial bank.
In your request for an opinion, you point out that the merger could be accomplished through a two step transaction: first, the conversion of a state chartered savings bank to a commercial bank, pursuant to G.S. §§54C-47 and 53-17.2, and secondly, subsequent merger of the resulting commercial bank with another bank, pursuant to G.S. §53-12.
A. Conversions Generally
In a January 23, 1991, Opinion by Special Deputy Attorney General Henry T. Rosser to former Savings Institution Administrator Robert Jacobson, Mr. Rosser distinguished conversions from mergers and indicated that they served different purposes, require different approaches and have different consequences. Both type of transactions are specifically dealt with in both Chapters 53 and 54C.
While we continue to believe that the General Assembly failed to effectuate the authority for a state savings bank to merge directly with a commercial bank, it appears, however, that such a merger may nevertheless be accomplished through the two-step process you have described as long as authority exists for the conversion of a state savings bank into a commercial bank.
Generally speaking, a conversion takes place when a single financial institution, through modification of the documents under which it was created, changes into another type of financial institution but maintains its corporate existence and identity. "The change is a transition and not a new creation." 10 Am. Jur. Banks §28 (1963).
B. Savings Bank Conversion to Commercial Bank
Effective October 1, 1993, Chapter 54C was amended by adding G.S. §54C-47, entitled "Conversion to bank." Subsection (a) provides in relevant part that "[a] State savings bank, upon a majority vote of its board of directors, may apply to the Administrator for permission to convert to a bank, as defined under G.S. 53-1(1) . . . . and for certification of appropriate amendments to its certificate of incorporation to effect the change." Sess. Laws 1993 c.163, s.7. Although the mirror provision in G.S. 53-17.2 provides that "[a]ny association, as defined at G.S. §54B-4 , may convert to a state bank . . . ." , the term association is now to be construed to include a state savings bank. G.S. §54C-4(a) was amended in 1992 to provide that "[e]xcept with respect to this Chapter [Chapter 54C] and Chapter 54B, the term "savings and loan association" when used in the General Statutes shall include savings banks chartered under this Chapter." Sess. Laws 1991 (Reg. Sess. 1992) c.829, s.4.
It is a canon of statutory construction that statutes which are in pari materia, that is, which relate or are applicable to the same subject matter, although enacted at different times must be construed together in order to ascertain legislative intent. 27 NC Index, Statutes §27 (1994). Furthermore, it is said that laws "…dealing with the same subject matter must be construed in pari materia, and harmonized, if possible, to give effect to each . . . . [a]nd any ambiguity should be resolved so as to effectuate the true legislative intent." Id at §27.
Equally important, there is a long line of North Carolina Supreme Court decisions which provide that when a statute on its face reveals legislative intent and purpose, the terms of that statute should be given a meaning that is consistent with that intent and purpose in a proper application of the statute to a particular factual situation. See, e.g. Ingram v. Johnson, 260 N.C. 697, 133 S.E.2d 662 (1963), In re Watson, 273 N.C. 629, 161 S.E.2d 1 (1968) and, Turlington v. McLeod, 323 N.C. 591, 374 S.E.2d 394 (1988). Therefore, when you construe G.S. §54C-47 together with
- G.S.
- §53-17.2, there is authority for a state savings bank to convert into a commercial bank.
- C.
- Bank to Bank Merger
- G.S.
- §53-12 provides that "[a] bank may merge or consolidate with or transfer its assets and liabilities to another bank." Reference to bank here is a bank as defined at G.S. §53-1(1), which for the purposes of this opinion is a commercial bank. The statute is clear and unambiguous. When a section of law dealing with a specific matter is clear and unambiguous on its face, it requires no construction. 27 NC Index Id. at §27, citing State ex rel Utilities Comm. vs. Lumbee Electric Membership Corp., 275 NC 250, 166 S.E.2d 663 (1969).
Since we conclude that a state savings bank may convert into a commercial bank, we see no reason why it could not thereafter merge with another such bank pursuant to G.S. §53-12. The Legislature has thus provided a method by which a merger can be accomplished. This conclusion is consistent with Mr. Rosser’s January 1991, opinion to Mr. Jacobson that a savings and loan association could convert into a bank and thereafter merge with another bank.
CONCLUSION
In summary, it is our opinion that a state savings bank, chartered under the provisions of Chapter
54C may, pursuant to G.S. §§53-17.2 and 54C-47, convert into a commercial bank operating
under Chapter 53. We are also of the opinion that once the state savings bank has converted to a
commercial bank, it may, pursuant to G.S. §53-12, thereafter merge with another such bank.
We trust that this addresses your questions to this office. If, however, we may be of further
assistance, please do not hesitate to let us know.
Andrew A. Vanore, Jr.
Chief Deputy Attorney General
L. McNeil Chestnut
Assistant Attorney General