CHAPTER 19

FORMERLY

SENATE BILL NO. 44

AN ACT TO AMEND TITLES 5 AND 30 OF THE DELAWARE CODE RELATING TO BANKS AND OTHER FINANCIAL INSTITUTIONS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each house thereof concurring therein):

Section 1. Amend subsection (c) of §105 of Title 5 of the Delaware Code by inserting the words and punctuation ", payment for costs and expenses in acting as a receiver, reimbursement for expenses incurred in the operation of the office" after the words "examination fees" and before the words "and any investigation fees" in the first sentence thereof

Section 2. Amend subsection (e) of §I05 of Title 5 of the Delaware Code by deleting the words "approved by" and inserting in lieu thereof the words "submitted to" after the words "Commissioner and" and before the words "the Council".

Section 3. Amend subsection (b) of §I24 of Title 5 of the Delaware Code by deleting the word "to" and inserting in lieu thereof the words "with other regulatory authorities with respect to any institution subject to the Commissioner's supervision, which cooperative agreements may" after the words "cooperative agreements" and before the word "include", and by inserting the words "with respect to any institution subject to the Commissioner's supervision, which joint action, among other things, may be" after the words "regulatory authorities" and before the words "to assure".

Section 4. Amend subsection (a) of §127 of Title 5 of the Delaware Code by adding at the end thereof the following sentences: "The examination fees provided by this subsection shall be due and payable when invoiced by the Commissioner. If any institution shall fail to pay the examination fee due under this section on or before 30 days after the invoice date, a penalty of 0.05 percent shall be assessed for each day that the examination fee shall remain unpaid after such date,"

Section 5. Amend subsection (b) of §127 of Title 5 of the Delaware Code by adding at the end thereof the following sentence: "If any institution shall fail to pay the supervisory assessment due under this section on or before the August 1 due date, a penalty of 0.05 percent shall be assessed for each day that the supervisory assessment shall remain unpaid after such date."

Section 6. Amend subsection (d) of §127 of Title 5 of the Delaware Code by deleting the words "Secretary of Finance and inserting in lieu thereof the words "Secretary of State" at both places at which such words appear in that subsection.

Section 7. Amend subsection (d) of §136 of Title 5 of the Delaware Code by inserting in the third sentence thereof the words "in this State" after the words "principal place of business" and before the words "during normal working hours", and by inserting the words and punctuation "or, with respect to a financial institution that does not maintain a place of business in this State, by hand delivering the order to the registered agent in this State (or, if there is none, the Secretary of State, as provided in Title 8) and, within 7 days of such delivery, depositing in the United States mails, by registered mail, postage prepaid, a true and attested copy of the order, together with a statement that service is being made pursuant to this section, addressed to such financial institution at its address as the same appears on the records in the Commissioner's office" after the word "hours" and before the period.

Section 8. Amend subsection (d) of §I43 of Title 5 of the Delaware Code by inserting in the third sentence thereof the words "in this State" after the words "principal place of business" and before the words "during normal working hours", and by inserting the words and punctuation "or, with respect to a financial institution that does not maintain a place of business in this State, by hand delivering the notice of civil penalty to the registered agent in this State (or, if there is none, the Secretary of State, as provided in Title 8) and, within 7 days of such delivery, depositing in the United States mails, by registered mail, postage prepaid, a true and attested copy of the notice, together with a statement that service is being made pursuant to this section, addressed to such financial institution at its address as the same appears on the records in the Commissioner's office" after the word "hours" and before the period.

Section 9. Amend subsection (b) of §160 of Title 5 of the Delaware Code by inserting the words and punctuation ";provided, however, that no acquisition shall be authorized by this subsection (b) on or after January 1, 1997" after the word "acquired" and before the period.

Section 10. Amend Chapter 3 of Title 5 of the Delaware Code by redesignating that chapter as Chapter 34 of Title 5 of the Delaware Code, and amend §§ 301, 302, 303, 304, 305, 306, 307, 308, 309 and 310 of Title 5 of the Delaware Code by redesignating those sections, respectively, as §§ 3401, 3402, 3403, 3404, 3405, 3406, 3407, 3408, 3409 and 3410 of Title 5 of the Delaware Code.

Section 11. Amend subsection (2) of §3401 (formerly §301) of Title 5 of the Delaware Code by deleting the text of that subsection in its entirety and inserting in lieu thereof the words and punctuation "'Insured institution' means an insured depository institution (as defined in the Federal Deposit Insurance Act at 12 U.S.C. §1813(c)(2)) or an insured credit union (as defined in the Federal Credit Union Act at 12 U.S.C. §1752(7)) authorized by law to do business in this State."

Section 12. Amend subsection (b) of §3402 (formerly §302) of Title 5 of the Delaware Code by changing the reference to "003" to "§3403", by changing the reference to "§304" to "0404", and by deleting the words "financial institution" wherever such words appear in that subsection and inserting in lieu thereof the words "insured institution".

Section 13. Amend subsection (c) of §3402 (formerly §302) of Title 5 of the Delaware Code by changing the reference to "§304" to "0404", and by deleting the words "financial institution" wherever such words appear in that subsection and inserting in lieu thereof the words "insured institution".

Section 14. Amend subsection (a) of §3403 (formerly §303) of Title 5 of the Delaware Code by changing the reference to "§304" to "0404".

Section 15. Amend subsection (b) of §3403 (formerly §303) of Title 5 of the Delaware Code by deleting the words "financial institution" wherever such words appear in that subsection and inserting in lieu thereof the words "insured institution".

Section 16. Amend §3405 (formerly §305) of Title 5 of the Delaware Code by deleting the words "financial institution" from the second sentence of that section and inserting in lieu thereof the words "insured institution".

Section 17. Amend subsection (a) of §3406 (formerly §306) of Title 5 of the Delaware Code by deleting the words "financial institutions" from the first sentence of that subsection and inserting in lieu thereof the words "insured institutions", and by changing the reference to "§301" to "§3401".

Section 18. Amend §3407 (formerly §307) of Title 5 of the Delaware Code by deleting the words "financial institutions" from the first sentence of that section and inserting in lieu thereof the words "insured institutions".

Section 19. Amend §701 of Title 5 of the Delaware Code by deleting from the first sentence thereof the number and words "Chapters 10 or" and inserting in lieu thereof the word "Chapter".

Section 20. Amend §745 of Title 5 of the Delaware Code by deleting from the second sentence thereof the words "this chapter" and inserting in lieu thereof the words "the law of this State" after the words "organized under" and before the words "shall not", by inserting at the end of the second sentence thereof the words and punctuation ";provided, however, that this requirement shall not apply to trust companies organized under the laws of this State prior to February 28, 1933 and authorized by a certificate issued by the State Bank Commissioner to transact the business of a trust company on January 1, 1997" after the number "$500,000" and before the period, and by deleting from the third sentence thereof the words "corporation organized under this chapter" and inserting in lieu thereof the words "such bank, trust company or limited purpose trust company" after the word "every" and before the words "shall have".

Section 21. Amend subsection (b) of §749 of Title 5 of the Delaware Code by deleting from the first sentence thereof the words "as capital stock for a corporation organized under this chapter' after the words and numbers "prescribed by §745 of this title" and before the closed parenthesis, and by inserting in the third sentence thereof the words and date "and authorized by a certificate issued by the State Bank Commissioner to transact the business of a trust company on January 1, 1997" after the date "February 28, 1933" and before the words "to any amount".

Section 22. Amend §768 of Title 5 of the Delaware Code by deleting the number "10" after the word "Chapter" and inserting in lieu thereof the number "15".

Section 23. Amend paragraph (1) of subsection (a) of §770 of Title 5 of the Delaware Code by deleting the fourth sentence thereof in its entirety, beginning with the words "No certificate" and ending with the words "to be established".

Section 24. Amend subsection (a) of §772 of Title 5 of the Delaware Code by deleting the words and punctuation ", with prior approval of the Commissioner," and inserting in lieu thereof the words and punctuation "or resulting bank (as defined in §795 of this chapter)" after the word "bank" and before the words may install", and by inserting the words and punctuation ", provided that such bank shall provide written notice thereof to the Commissioner within 30 days after such automated service branch is installed or operated" after the word "State" and before the period at the end of that subsection.

Section 25. Amend subsection (b) of §772 of Title 5 of the Delaware Code by deleting in their entirety the first two sentences of that subsection.

Section 26. Amend §772 of Title 5 of the Delaware Code by deleting subsection (d) thereof in its entirety.

Section 27. Amend subsection (c) of §784 of Title 5 of the Delaware Code by inserting the words and punctuation "; provided, however, that before the expiration of such 30-day period or any extension thereof, the Commissioner in the Commissioner's sole discretion may by order extend such period for up to an additional 30 days in order to enable the Commissioner to fulfill the Commissioner's responsibilities with respect to the merger' after the word "approved" and before the period at the end of the first sentence thereof.

Section 28. Amend §786 of Title 5 of the Delaware Code by inserting in the title thereof the words "banks and federal savings associations" after the word "national" and before the words "into state banks".

Section 29. Amend subsection (a) of §786 of Title 5 of the Delaware Code by inserting the words "or federal savings association (as defined in the Home Owners' Loan Act, as amended, at 12 U.S.C. §1462)" after the words "national bank" and before the words "located in this State, and by deleting the remaining text of that subsection after the words "may be granted a state charter" and inserting in lieu thereof the words and punctuation "with the approval of the State Bank Commissioner; provided, however, that the conversion shall be deemed approved if no action is taken by the State Bank Commissioner within 30 days after receipt of the completed application in accordance with subsection (b) of this section. Notwithstanding any other provision of this title, a state bank resulting from the conversion of a national bank or federal savings association may retain and exercise all the powers and rights of the converting national bank or federal savings association, in addition to all the powers and rights available to a state bank under this Title."

Section 30. Amend subsection (b) of §786 of Title 5 of the Delaware Code by inserting in the first paragraph thereof the words "or federal savings association" after the words "national bank" and before the words "may apply", and by inserting in subparagraph (1) thereof the words "bank or federal savings association" after the word "national" and before the words "to a state bank".

Section 31. Delete existing §793 of Title 5 of the Delaware Code; provided, however, that any consumer credit bank formed under Chapter 10 of Title 5 of the Delaware Code that converted to become a bank deemed as having been formed under Chapter 7 of Title 5 of the Delaware Code shall be unaffected by the deletion of that section.

Section 32. Renumber existing §793A of Title 5 of the Delaware Code as new §793 of Title 5 of the Delaware Code.

Section 33. Amend subsection (7) of §795 of Title 5 of the Delaware Code by deleting the words and numbers "has become a Delaware state bank pursuant to §793 of after the words "consumer credit bank which" and before the words this title", and inserting in lieu thereof the words "became a Delaware state bank pursuant to", and by deleting the reference to "§793A" and inserting in lieu thereof a reference to "§793".

Section 34. Amend subsection (13) of §795 of Title 5 of the Delaware Code by deleting the words, numbers and punctuation "bank, as defined in the Bank Holding Company Act of 1956, as amended (12 U.S.C. § 1841 et seq.), that is chartered under the laws of any of the United States other than this State." and inserting in lieu thereof the words, numbers and punctuation "State bank, as defined in the Federal Deposit Insurance Act, as amended, at 12 § 1813(a), that is not chartered under the laws of this State."

Section 35. Amend §795N of Title 5 of the Delaware Code by inserting the words "and retain any branch office in this State or otherwise continue to conduct a banking business in this State" after the words "out-of-state bank" and before the period.

Section 36. Amend subsection (a) of §803 of Title 5 of the Delaware Code by deleting from the first sentence thereof the words "and Chapter 10 of this title" after the words "as provided in this Chapter" and before the comma.

Section 37. Amend subsection (a) of §852 of Title 5 of the Delaware Code by deleting the words "Chapters 7 and 10" and inserting in lieu thereof the words "Chapter 7" after the word "and" and before the words "of this title".

Section 38. Delete §853 of Title 5 of the Delaware Code.

Section 39. Amend §904 of Title 5 of the Delaware Code by deleting the word and punctuation "; publication" from the title thereof.

Section 40. Amend subsection (a) of §904 of Title 5 of the Delaware Code by deleting the number "3" and inserting in lieu thereof the number "2" after the words "at least" and before the word "directors" in the first sentence thereof.

Section 41. Amend subsection (a) of §909 of Title 5 of the Delaware Code by inserting the words and punctuation ", in the case of a bank (including a bank and trust company and a savings bank), the bank's Tier 1 and Tier 2 capital included in the bank's risk-based capital under the capital guidelines of the appropriate federal banking agency, plus the balance of the bank's allowance for loan and lease losses not included in the bank's Tier 2 capital for purposes of the calculation of risk-based capital by the appropriate federal banking agency, based on the bank's most recent consolidated report of condition filed under 12 U.S.C. §1817(a)(3), or, in the case of a trust company (other than a bank and trust company)," after the words "total capital, which for this purpose means" and before the words "the sum of the capital", and by deleting the words and punctuation "or, in the case of a mutual savings bank, the sum of the surplus, undivided profit and the valuation portion of the loan loss reserve accounts of the lender" after the words "accounts of the lender" and before the colon.

Section 42. Delete §92I of Title 5 of the Delaware Code.

Section 43. Delete §934 and §935 of Title 5 of the Delaware Code; provided, however, that this deletion shall not affect any right to indemnification otherwise provided by those sections.

Section 44. Amend subsection (8) of §941 of Title 5 of the Delaware Code by adding at the end of that subsection the words and punctuation "Purchases and loans may be included in outstanding unpaid indebtedness as of such time as may be specified in the agreement governing the plan."

Section 45. Amend §943 of Title 5 of the Delaware Code by deleting the second and third sentences of that section and inserting in lieu thereof the following:

"Periodic interest may be calculated using an average daily balance, two-cycle average daily balance, adjusted balance or previous balance method or using any other balance computation method provided for in the agreement governing the plan. Periodic billing cycles may be established in such manner and shall have such duration, as may be specified in the agreement governing the plan."

Section 46. Amend §944 of Title 5 of the Delaware Code by inserting in the second sentence thereof the words "the first day of the billing cycle that contains" after the words "on or after and before the words the effective date".

Section 47. Amend subsection (a) of §945 of Title 5 of the Delaware Code by deleting the word "and" at the end of subparagraph (8) thereof, by changing the period at the end of subparagraph (9) to a semi-colon and by adding new subparagraphs (10) and (11) as follows:

"(10) Prepayment charges authorized under subsection (b) of this section; and

(11) Subject to any limitations contained in this subchapter, such other fees and charges as are set forth in the agreement governing the plan."

Section 48. Amend §945 of Title 5 of the Delaware Code by redesignating subsection (b) thereof as subsection (c) and by adding a new subsection (b) as follows:

"(b) An individual borrower may pay the outstanding unpaid indebtedness charged to the borrower's account under a plan in full at any time. Except for a charge imposed to terminate a plan if the agreement governing the plan so provides, a bank may not impose any prepayment charge in connection with the payment of outstanding unpaid indebtedness in full by an individual borrower. A bank may charge and collect any prepayment penalty or charge specified in the agreement governing the plan in connection with the payoff and termination of a plan that is secured by a real estate mortgage. The terms of prepayment of the outstanding unpaid indebtedness relating to a revolving credit plan involving a borrower other than an individual borrower shall be as the bank and the borrower may agree."

Section 49. Amend subsection (a) of §950 of Title 5 of the Delaware Code by inserting in the second sentence thereof the words "§943 and" after the words "pursuant to" and before the words "§944 of this title".

Section 50. Amend §952 of Title 5 of the Delaware Code by deleting the text of that section in its entirety and inserting in lieu thereof the following:

"(a) Unless the agreement governing a revolving credit plan otherwise provides, (i) a bank may at any time and from time to time amend the terms of such agreement in any respect and (ii) any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower's account under the plan, including any such indebtedness that arose prior to the effective date of the amendment. An agreement governing a revolving credit plan may be amended pursuant to the provisions of this section regardless of whether the plan is active or inactive or whether additional borrowings are available thereunder. Any amendment that does not increase the rate or rates of periodic interest charged by a bank to a borrower under §943 or §944 of this title may become effective as determined by the bank, subject to compliance by the bank with any applicable notice requirements under the Truth in Lending Act (15 U.S.C. §§1601 et seq.), and the regulations promulgated thereunder, as in effect from time to time.

(b) (1) If an amendment increases the rate or rates of periodic interest charged by a bank to a borrower under §943 or §944 of this title; the bank shall mail or deliver to the borrower, at least 15 days before the effective date of the amendment, a clear and conspicuous written notice that shall describe the amendment and shall also set forth the effective date thereof and any applicable information required to be disclosed pursuant to the following provisions of this section.

(2) Any amendment that increases the rate or rates of periodic interest charged by a bank to a borrower under §943 or §944 of this title may become effective as to a particular borrower if the borrower does not, within 15 days of the earlier of the mailing or delivery of the written notice of the amendment (or such longer period as may be established by the bank), furnish written notice to the bank that the borrower does not agree to accept such amendment. The notice from the bank shall set forth the address to which a borrower may send notice of the borrower's election not to accept the amendment and shall include a statement that, absent the furnishing of notice to the bank of non-acceptance within the referenced 15 day (or longer) time period, the amendment will become effective and apply to such borrower. As a condition to the effectiveness of any notice that a borrower does not accept such amendment, the bank may require the borrower to return to it all credit devices. If after 15 days from the mailing or delivery by the bank of a notice of an amendment (or such longer period as may have been established by the bank as referenced above) a borrower uses a plan by making a purchase or obtaining a loan, notwithstanding that the borrower has prior to such use furnished the bank notice that the borrower does not accept an amendment, the amendment may be deemed by the bank to have been accepted and may become effective as to the borrower as of the date that such amendment would have become effective but for the furnishing of notice by the borrower (or as of any later date selected by the bank).

(3) Any amendment that increases the rate or rates of periodic interest charged by a bank to a borrower under §943 or §944 of this title may, in lieu of the procedure referenced in paragraph (2) of this subsection (b), become effective as to a particular borrower if the borrower uses the plan after a date specified in the written notice of the amendment that is at least 15 days after the mailing or delivery of the notice (but that need not be the date the amendment becomes effective) by making a purchase or obtaining a loan, provided that the notice from the bank includes a statement that the described usage after the referenced date will constitute the borrower's acceptance of the amendment.

(4) Any borrower who furnishes timely notice electing not to accept an amendment in accordance with the procedures referenced in paragraph (2) of this subsection (b) and who does not subsequently use the plan, or who fails to use such borrower's plan as referenced in paragraph (3) of this subsection (b), shall be permitted to pay the outstanding unpaid indebtedness in such borrower's account under the plan in accordance with the rate or rates of periodic interest charged by a bank to a borrower under §943 or §944 of this title without giving effect to the amendment; provided, however, that the bank may convert the borrower's account to a closed end credit account as governed by subchapter III of this chapter, on credit terms substantially similar to those set forth in the then-existing agreement governing the borrower's plan.

(5) Notwithstanding the other provisions of this subsection (b), no notice required by this subsection (b) of an amendment of an agreement governing a revolving credit plan shall be required, and any amendment may become effective as of any date agreed upon between a bank and a borrower, with respect to any amendment that is agreed upon between the bank and the borrower, either orally or in writing.

(c) For purposes of this section, the following are examples of amendments that shall not be deemed to increase the rate or rates of periodic interest charged by a bank to a borrower under §943 or §944 of this title:

(1) A decrease or increase in the required number or amount of periodic installment payments;

(2) A change in the schedule or formula used under a variable rate plan under section 944 of this title provided that the initial interest rate resulting from such change is not an increase from the rate in effect on the date immediately preceding the effective date of the change;

(3) A change from a variable rate to a fixed rate or from a fixed rate to a variable rate if the resulting rate on the date of change is not an increase from the rate in effect immediately prior to the change;

(4) A change from a daily periodic rate to a periodic rate other than daily or from a periodic rate other than daily to a daily periodic rate; and

(5) A change in the method of determining the outstanding unpaid indebtedness upon which periodic interest is calculated (including, without limitation, a change with respect to the date by which or the time period within which a new balance or any portion thereof must be paid to avoid additional periodic interest).

(d) The procedures for amendment by a bank of the terms of a plan to which a borrower other than an individual borrower is a party may, in lieu of the foregoing provisions of this section, be as the agreement governing the plan may otherwise provide."

Section 51. Amend §965 of Title 5 of the Delaware Code by changing the period at the end of subsection (2) to a semicolon and adding new subsections (3), (4) and (5) as follows:

"(3) Returned payment charges;

(4) Documentary evidence charges; and

(5) Subject to any limitations contained in this subchapter, such other fees and charges as are set forth in the agreement governing, or the bond, note or other evidence of, the loan."

Section 52. Amend §968 of Title 5 of the Delaware Code by inserting in the second sentence thereof the words "§963 and" after the words "pursuant to" and before the words "§964 of this title".

Section 53. Delete all the provisions of Chapter 10 of Title 5 of the Delaware Code; provided, however, that any bank originally formed pursuant to that chapter shall be unaffected by the deletion of that chapter.

Section 54. Amend subsection (a) of §1101 of Title 5 of the Delaware Code by deleting from the first sentence thereof the words and punctuation "(which for the purposes of this chapter has the same meaning as in §795 of this title)", by deleting from the first sentence thereof the words and punctuation "(which for the purposes of this chapter has the same meaning as in §795 of this title, and in addition shall also mean the branch offices in this State of out-of-state banks)", and by inserting between the existing first and second sentences thereof the following:

"For the purposes of this chapter, "out-of-state bank" shall have the same meaning as in §795 of this title. Also for the purposes of this chapter, "resulting branch" shall have the same meaning as in §795 of this title and, in addition, shall also mean the branch offices in this State of out-of-state banks."

Section 55. Further amend subsection (a) of §1101 of Title 5 of the Delaware Code by inserting the word "or" after the semicolon at the end of subparagraph (1)6.2., and by adding a new subparagraph (1)6.3., as follows:

"3. Derived from business activities carried on outside the State, which subsidiary, foreign branch or other branch established outside of this State is subject to shares. tax under the laws of another state; provided, however, that in the case of any subsidiary engaged in the sale, distribution or underwriting of, or dealing in, securities, the amount of income excluded pursuant to this sub-subparagraph b.3. shall in no event exceed 50 percent of such subsidiary's net operating income before taxes;"

Section 56. Amend § 1102 of Title 5 of the Delaware Code by designating all of the existing text of that section as subsection (a) thereof, and by adding to that section a new subsection (b), as follows:

"(b) Every banking organization (or out-of-state bank that operates a resulting branch in this State), trust company, or federal savings bank not headquartered in this State but maintaining branches in this State failing to comply with subsection (a) of this section shall be subject to a penalty of $25 for each day that it continues in such failure; unless the Commissioner is satisfied that such failure was not willful. Any penalty that may be imposed by the Commissioner hereunder shall be paid to the State Treasurer for deposit in the General Fund."

Section 57. Amend subsection (a) of § 1104 of Title 5 of the Delaware Code by adding the following sentences at the end of that subsection:

"Every banking organization (or out-of-state bank that operates a resulting branch in this State), trust company, or federal savings bank not headquartered in this State but maintaining branches in this State failing to file the tentative return covering estimated bank franchise tax liability required by this subsection shall be subject to a penalty of $25 for each day that it continues in such failure; unless the Commissioner is satisfied that such failure was not willful. Any penalty that may be imposed by the Commissioner hereunder shall be paid to the State Treasurer for deposit in the General Fund."

Section 58. Amend subparagraph (1) of subsection (c) of §1104 of Title 5 of the Delaware Code by deleting the number, words and punctuation "1-1/2 percent per month, or fraction thereof," and inserting in lieu thereof the number and words "0.05 percent per day".

Section 59. Amend subsection (e) of § 1104 of Title 5 of the Delaware Code by deleting the number and words "1-1/2 percent shall be assessed for each month or fraction thereof' and inserting in lieu thereof the number and words "0.05 percent shall be assessed for each day".

Section 60. Amend subsection (a) of § 1105 of Title 5 of the Delaware Code by deleting the words and punctuation "net income for years beginning before January 1, 1983, or taxable income for years beginning after December 31, 1982, as defined in this chapter," and inserting in lieu thereof the words "taxable income", and by deleting the words and punctuation "net income for years beginning before January 1, 1983, or taxable income for years beginning after December 31, 1982, as applicable," wherever such words and punctuation appear in that subsection and inserting in lieu thereof the words "taxable income".

Section 61. Amend subsection (d) of § 1537 of Title 5 of the Delaware Code by deleting the reference to "§793A" and inserting in lieu thereof a reference to "§793".

Section 62. Amend § 1544 of Title 5 of the Delaware Code by deleting the reference to "§793A" and inserting in lieu thereof a reference to "§793".

Section 63. Amend subsection (5) of §2214 of Title 5 of the Delaware Code by adding at the end of that subsection the words and punctuation "Purchases and loans may be included in outstanding unpaid indebtedness as of such time as may be specified in the agreement governing the plan."

Section 64. Amend §2216 of Title 5 of the Delaware Code by deleting the second and third sentences of that section and inserting in lieu thereof the following:

"Periodic interest may be calculated using an average daily balance, two-cycle average daily balance, adjusted balance or previous balance method or using any other balance computation method provided for in the agreement governing the plan. Periodic billing cycles may be established in such manner and shall have such duration, as may be specified in the agreement governing the plan."

Section 65. Amend §2217 of Title 5 of the Delaware Code by inserting in the second sentence thereof the words "the first day of the billing cycle that contains" after the words "on or after" and before the words "the effective date".

Section 66. Amend subsection (a) of §2218 of Title 5 of the Delaware Code by deleting the word "and" at the end of subparagraph (4) thereof, by redesignating subparagraph (5) as subparagraph (6), and by adding a new subparagraph (5) as follows:

"(5) Prepayment charges authorized by subsection (b) of this section; and"

Section 67. Amend §2218 of Title 5 of the Delaware Code by redesignating subsection (b) thereof as subsection (c) and by adding a new subsection (b) as follows:

"(b) A borrower may pay the outstanding unpaid indebtedness charged to the borrower's account under a plan in full at any time. Except for a charge imposed to terminate a plan if the agreement governing the plan so provides, a licensee may not impose any prepayment charges in connection with the payment of outstanding unpaid indebtedness in full by a borrower. A licensee may charge and collect any prepayment penalty or other charge specified in the agreement governing the plan in connection with the payoff and termination of a plan that is secured by a real estate mortgage."

Section 68. Amend subsection (a) of §2222 of Title 5 of the Delaware Code by inserting in the second sentence thereof the words 12216 and" after the words "pursuant to" and before the words "§2217 of this title".

Section 69. Amend §2224 of Title 5 of the Delaware Code by deleting the text of that section in its entirety and inserting in lieu thereof the following:

"(a) Unless the agreement governing a revolving credit plan otherwise provides, (i) a licensee may at any time and from time to time amend the terms of such agreement in any respect and (ii) any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower's account under the plan, including any such indebtedness that arose prior to the effective date of the amendment. An agreement governing a revolving credit plan may be amended pursuant to the provisions of this section regardless of whether the plan is active or inactive or whether additional borrowings are available thereunder. Any amendment that does not increase the rate or rates of periodic interest charged by a licensee to a borrower under §2216 or §2217 of this title shall become effective as determined by the licensee, subject to compliance by the licensee with any applicable notice requirements under the Truth in Lending Act (15 U.S.C. §§1601 et seq.), and the regulations promulgated thereunder, as in effect from time to time.

(b) (1) If an amendment increases the rate or rates of periodic interest charged by a licensee to a borrower under §2216 or §2217 of this title, the licensee shall mail or deliver to the borrower, at least 15 days before the effective date of the amendment, a clear am) conspicuous written notice that shall describe the amendment and shall also set forth the effective date thereof and any applicable information required to be disclosed pursuant to the following provisions of this section.

(2) Any amendment that increases the rate or rates of periodic interest charged by a licensee to a borrower under §2216 or §2217 of this title shall become effective as to a particular borrower if the borrower does not, within 15 days of the earlier of the mailing or delivery of the written notice of the amendment (or such longer period as may be established by the licensee), furnish written notice to the licensee that the borrower does not agree to accept such amendment. The notice from the licensee shall set forth the address to which a borrower may send notice of the borrower's election not to accept the amendment and shall include a statement that, absent the furnishing of notice to the licensee of non-acceptance within the referenced 15 day (or longer) time period, the amendment will become effective and apply to such borrower. As a condition to the effectiveness of any notice that a borrower does not accept such amendment, the licensee may require the borrower to return to it all credit devices. If after 15 days from the mailing or delivery by the licensee of a notice of an amendment (or such longer period as may have been established by the licensee as referenced above) a borrower uses a plan by making a purchase or obtaining a loan, notwithstanding that the borrower has prior to such use furnished the licensee notice that the borrower does not accept an amendment, the amendment may be deemed by the licensee to have been accepted and may become effective as to the borrower as of the date that such amendment would have become effective but for the furnishing of notice by the borrower (or as of any later date selected by the licensee).

(3) Any amendment that increases the rate or rates of periodic interest charged by a licensee to a borrower under §2216 or §2217 of this title may, in lieu of the procedure referenced in paragraph (2) of this subsection (b), become effective as to a particular borrower if the borrower uses the plan after a date specified in the written notice of the amendment that is at least 15 days after the mailing or delivery of the notice (but that need not be the date the amendment becomes effective) by making a purchase or obtaining a loan, provided that the notice from the licensee includes a statement that the described usage after the referenced date will constitute the borrower's acceptance of the amendment.

(4) Any borrower who furnishes timely notice electing not to accept an amendment in accordance with the procedures referenced in paragraph (2) of this subsection (b) and who does not subsequently use the plan, or who fails to use such borrower's plan as referenced in paragraph (3) of this subsection (b), shall be permitted to pay the outstanding unpaid indebtedness in such borrower's account under the plan in accordance with the rate or rates of periodic interest charged by a licensee to a borrower under §2216 or §2217 of this title without giving effect to the amendment; provided, however, that the licensee may convert the borrower's account to a closed end credit account as governed by subchapter III of this chapter, on credit terms substantially similar to those set forth in the then-existing agreement governing the borrower's plan.

(5) Notwithstanding the other provisions of this subsection (b), no notice required by this subsection (b) of an amendment of an agreement governing a revolving credit plan shall be required, and any amendment may become effective as of any date agreed upon between a licensee and a borrower, with respect to any amendment that is agreed upon between the licensee and the borrower, either orally or in writing.

(c) For purposes of this section, the following are examples of amendments that shall not be deemed to increase the rate or rates of periodic interest charged by a licensee to a borrower under §2216 or §2217 of this title:

(1) A decrease or increase in the required number or amount of periodic installment payments;

(2) A change in the schedule or formula used under a variable rate plan under section 2217 of this title provided that the initial interest rate resulting from such change is not an increase from the rate in effect on the date immediately preceding the effective date of the change;

(3) A change from a variable rate to a fixed rate or from a fixed rate to a variable rate if the resulting rate on the date of change is not an increase from the rate in effect immediately prior to the change;

(4) A change from a daily periodic rate to a periodic rate other than daily or from a periodic rate other than daily to a daily periodic rate; and

(5) A change in the method of determining the outstanding unpaid indebtedness upon which periodic interest is calculated (including, without limitation, a change with respect to the date by which or the time period within which a new balance or any portion thereof must be paid to avoid additional periodic interest)."

Section 70. Amend the title of Chapter 23 of Title 5 of the Delaware Code by deleting the words and punctuation ",DRAFTS AND MONEY ORDERS" and inserting in lieu thereof the words AND TRANSMISSION OF MONEY".

Section 71. Amend §2302 of Title 5 of the Delaware Code by inserting at the end of that section a new subsection (8), as follows:

"(8) "Accelerated Mortgage Payment Provider" means any person who, in accordance with a written contract, receives funds from a mortgagor to transmit, on behalf of such mortgagor, to a lender or servicer, in order to exceed regularly scheduled minimum payment obligations under the terms of the indebtedness."

Section 72. Amend subsection (a) of §2304 of Title 5 of the Delaware Code by deleting the words, numbers and punctuation any of the following: (1) Banks" and inserting in lieu thereof the word "banks", by deleting the semi-colon after the words "agent authorized to do business in this State" and inserting in lieu thereof a period, and by deleting existing subparagraph (2) thereof in its entirety.

Section 73. Amend §2309 of Title 5 of the Delaware Code by deleting the title and text of that section in their entirety, and inserting in lieu thereof the following:

§2714 Surety Bonds and Irrevocable Letters of Credit.

(a) Surety Bonds.

(1) Every licensee shall file with the Commissioner, in a form satisfactory to the Commissioner, an original corporate surety bond, with surety provided by a corporation authorized to transact business in this State, in the principal sum of $25,000 and in an additional principal sum of $5,000 for each location, in excess of one, at which the applicant proposes to conduct a business licensed by this chapter, but in no event shall the bond be required to be in excess of $250,000.

(2) No bond shall be accepted unless the following requirements are

satisfied:

(i) The term of the bond shall be commensurate with the license period or continuous;

(ii) The expiration date of the bond shall not be earlier than midnight of the date on which the license expires; and

(iii) The bond shall run to the State, for the benefit of the Office of the State Bank Commissioner and for the benefit of all consumers injured by any wrongful act, omission, default, fraud or misrepresentation by a licensee in the course of its activity as a licensee. Compensation under the bond shall be for amounts which represent actual losses and shall not be payable for claims made by business creditors, third-party service providers, agents or persons otherwise in the employ of the licensee. Surety claims shall be paid to the Office of the State Bank Commissioner by the insurer not later than 90 days after receipt of a claim. Claims paid after 90 days shall be subject to daily interest at the legal rate. The aggregate liability of the surety on the bond, exclusive of any interest which accrues for payments made after 90 days, shall in no event exceed the amount of such bond.

(3) If the licensee changes its surety company or the bond is otherwise amended, the licensee shall immediately provide the Commissioner with the amended original copy of the surety bond. No cancellation of an existing bond by a surety shall be effective unless written notice of its intention to cancel is filed with the Commissioner at least thirty (30) days before the date upon which cancellation shall take effect.

(4) The Commissioner may require potential claimants to provide such documentation and affirmations as the Commissioner shall determine to be necessary and appropriate. In the event the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.

(5) When a surety company receives a claim against the bond of a licensee, it shall immediately notify the Commissioner and shall not pay any claim unless and until it receives notice to do so from the Commissioner.

(6) The Commissioner shall have a period of two calendar years after the effective date of cancellation or termination of the surety bond by the insurer to submit claims to the insurer.

(b) Irrevocable Letters of Credit.

In lieu of requiring the filing of a surety bond, the Commissioner may, at the Commissioner's discretion, accept from a licensee an irrevocable letter of credit.

(1) Such irrevocable letter of credit shall be provided by an insured depository institution (as defined in the Federal Deposit Insurance Act at 12 U.S.C. §1813(c)) acceptable to the Commissioner, in a form satisfactory to the Commissioner in the principal sum of $25,000 and in an additional principal sum of $5,000 for each location, in excess of one, at which the applicant proposes to conduct a business licensed by this chapter, but in no event shall such irrevocable letter of credit be required to be in excess of $250,000.

(2) No irrevocable letter of credit shall be accepted unless the following requirements are satisfied:

(i) The irrevocable letter of credit shall run to the State, for the benefit of the Office of the State Bank Commissioner and for the benefit of all consumers injured by the wrongful act, omission, default, fraud or misrepresentation by a licensee in the course of its activity as a licensee. Compensation under the irrevocable letter of credit shall be for amounts which represent actual losses and shall not be payable for claims made by business creditors, third-party service providers, agents or persons otherwise in the employ of the licensee. The aggregate liability of the insured depository institution issuing the irrevocable letter of credit shall in no event exceed the amount of such irrevocable letter of credit; and

(ii) Draws upon such irrevocable letter of credit shall be available by sight drags thereunder, in amounts determined by the Commissioner, up to the aggregate amount of the irrevocable letter of credit. Such drafts shall be paid in accordance with §5-112(1) of Title 6 of the Delaware Code.

(3) The Commissioner may require potential claimants to provide such documentation and affirmations as the Commissioner shall determine to be necessary and appropriate. In the event the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.

(4) The Commissioner may refuse release of an irrevocable letter of credit, following the surrender of a license, up to two (2) years atter the effective date of such termination of licensure."

Section 74. Amend §2312 of Title 5 of the Delaware Code by designating all of the existing text of that section as subsection "(a)" thereof, and by inserting at the end of that section a new subsection "(b)", as follows:

(b) Each licensee engaged in the business of receiving money for transmission shall be liable for payment of all amounts received for transmission."

Section 75. Amend §23I3 of Title 5 of the Delaware Code by inserting at the end of that section a new subsection "(c)", as follows:

(c) In lieu of the provisions of subsection (b) of this section, every accelerated mortgage payment provider may furnish an annual statement to a mortgagor of the transmittals. Each such statement shall identify the dates money was received for transmission and the amounts thereof, the dates transmittals were made to the lender on behalf of the mortgagor and the amounts thereof, and the name and address of the lender or recipient of such transmittals."

Section 76. Amend §2314 of Title 5 of the Delaware Code by deleting the words "In furtherance of the foregoing" from the beginning of the second sentence thereof and capitalizing the first letter of the word "the", which becomes the first word in that sentence.

Section 77. Amend §2714 of Title 5 of the Delaware Code by deleting the title and text of that section in their entirety, and inserting in lieu thereof the following:

"§2714 Surety Bonds and Irrevocable Letters of Credit.

(a) Surety Bonds.

(1) Every licensee shall file with the Commissioner, in a form satisfactory to the Commissioner, an original corporate surety bond, with surety provided by a corporation authorized to transact business in this State, in the principal sum of $5,000.

( 2) No bond shall be accepted unless the following requirements are satisfied:

(i) The term of the bond shall be commensurate with the license period or continuous;

(ii) The expiration date of the bond shall not be earlier than midnight of the date on which the license expires; and

(iii) The bond shall run to the State, for the benefit of the Office of the State Bank Commissioner and for the benefit of all consumers injured by any wrongful act, omission, default, fraud or misrepresentation by a licensee in the course of its activity as a licensee. Compensation under the bond shall be for amounts which represent actual losses and shall not be payable for claims made by business creditors, third-party service providers, agents or persons otherwise in the employ of the licensee. Surety claims shall be paid to the Office of the State Bank Commissioner by the insurer not later than 90 days after receipt of a claim. Claims paid after 90 days shall be subject to daily interest at the legal rate. The aggregate liability of the surety on the bond, exclusive of any interest which accrues for payments made after 90 days, shall in no event exceed the amount of such bond.

(3) If the licensee changes its surety company or the bond is otherwise amended, the licensee shall immediately provide the Commissioner with the amended original copy of the surety bond. No cancellation of an existing bond by a surety shall be effective unless written notice of its intention to cancel is filed with the Commissioner at least thirty (30) days before the date upon which cancellation shall take effect.

(4) The Commissioner may require potential claimants to provide such documentation and affirmations as the Commissioner shall determine to be necessary and appropriate. In' the event the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.

(5) When a surety company receives a claim against the bond of a licensee, it shall immediately notify the Commissioner and shall not pay any claim unless and until it receives notice to do so from the Commissioner.

(6) The Commissioner shall have a period of two calendar years after the effective date of cancellation or termination of the surety bond by the insurer to submit claims to the insurer.

(b) Irrevocable Letters of Credit.

In lieu of requiring the filing of a surety bond, the Commissioner may, at the Commissioner's discretion, accept from a licensee an irrevocable letter of credit.,

(1) Such irrevocable letter of credit shall be provided by an insured depository institution (as defined in the Federal Deposit Insurance Act at 12 U.S.C. §I 813(c)) acceptable to the Commissioner, in a form satisfactory to the Commissioner in the principal sum of $5,000.

(2) No irrevocable letter of credit shall be accepted unless the following requirements are satisfied:

(i) The irrevocable letter of credit shall run to the State, for the benefit of the Office of the State Bank Commissioner and for the benefit of all consumers injured by the wrongful act, omission, default, fraud or misrepresentation by a licensee in the course of its activity as a licensee. Compensation under the irrevocable letter of credit shall be for amounts which represent actual losses and shall not be payable for claims made by business creditors, third-party service providers, agents or persons otherwise in the employ of the licensee. The aggregate liability of the insured depository institution issuing the irrevocable letter of credit shall in no event exceed the amount of such irrevocable letter of credit; and

(ii) Draws upon such irrevocable letter of credit shall be available by sight drafts thereunder, in amounts determined by the Commissioner, up to the aggregate amount of the irrevocable letter of credit. Such drafts shall be paid in accordance with §5-112(1) of Title 6 of the Delaware Code.

(3) The Commissioner may require potential claimants to provide such documentation and affirmations as the Commissioner shall determine to be necessary and appropriate. In the event the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.

(4) The Commissioner may refuse release of an irrevocable letter of credit, following the surrender of a license, up to two (2) years after the effective date of such termination of licensure."

Section 78. Amend subsection (e) of §2902 of Title 5 of the Delaware Code by inserting thc words and punctuation "In case there is a change of name but no change in corporate structure, the Commissioner shall endorse such name change on the license without charge." between the existing first and second sentences thereof, and by inserting in the existing second sentence thereof the word "otherwise" after the words "Such license shall not be" and before the words "transferable or assignable".

Section 79. Amend subsection (b) of §2909 of Title 5 of the Delaware Code by deleting from the first sentence thereof the reference to "§2907" and inserting in lieu thereof a reference to "§2908".

Section 80. Amend paragraph (7) of subsection (a) of §1903 of Title 30 of the Delaware Code by deleting the reference to "§1101(a)(3) and (4) of Title 5" and inserting in lieu thereof a reference to "§1101(a)(1)d. and §1101(a)(1)e. of Title 5".

Section 81. If any provision of this Act or the application of any section or part thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Act that can be given effect without the invalid provision or application.

Section 82. This Act shall take effect immediately upon its adoption.

Approved April 23, 1997