Could a South Carolina savings association convert directly into a state-chartered bank?

Plain-English summary

The banking commissioner asked the AG to revisit whether a South Carolina savings association could convert directly into a state-chartered bank. A June 1995 letter had said a court would likely uphold the board’s historical view that state law did not authorize the conversion. In December, the AG identified other statutory authority indicating that the board could permit it if the proposed conversion served the public interest and satisfied normal bank-charter requirements.

The opinion did not say conversion was automatic. It left a decision to the board and expressly declined to address requirements of the Federal Deposit Insurance Corporation. Its qualified conclusion coexisted with the earlier warning that a court might defer to the board’s historical interpretation.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Was direct savings-association conversion expressly authorized?

The AG noted that no provision expressly set out this conversion, but found corporate amendment and reorganization authority that could support board approval.

Could the banking board approve such a conversion?

The opinion said it might, if the public interest and ordinary state bank-charter requirements were met.

Would conversion avoid the usual bank-charter requirements?

No. The AG understood that an association would have to meet the same state requirements as a new bank applicant.

Did the opinion decide federal deposit-insurance rules?

No. A footnote expressly left those requirements unresolved.

Background and legal framework

The AG compared the board’s historic interpretation with provisions allowing savings associations to amend corporate documents or reorganize, and with the state bank-charter approval standard. The opinion treated the absence of a special conversion procedure as different from a categorical ban on approval.

Citations

• § 34-28-20; Section 33-10-101; Section 34-28-230; § 34-1-70.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/december-12-1995/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/12/1995dec12jacobs.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CH,.RLEs rvtoLoNY CoNDON
AITORNEY GENERAL

December 12, 1995

Mr. Louie A. Jacobs
Commissioner of Banking
State Board of Financial Institutions
1015 Sumter Street
Calhoun Building, 3rd Floor
Columbia, SC 29211
Dear Commissioner Jacobs:
Attached is a copy of the letter that I wrote to you dated June 19, 1995 which concluded that a Court would be likely to uphold the Board of Financial Institution's historic interpretation of south Carolina law as not authorizing conversions of State savings associations into State chartered banks. The letter noted the absence of any express authorization for this type of conversion. Nevertheless, other authority may permit the Board to authorize this type of conversion if it chooses to do so. A savings association appears to have authority as a corporate entity under State law to seek approval to convert and to convert its charter if approved. As noted in that earlier letter, § 34-2820 applies the terms of the Business Corporation Act to Savings associations when not in conflict with other State laws. Section 33-10-101 (1970) of that Act permits corporations to amend their articles of incorporation. Section 34-28-230 (1987) also permits savings associations " •.• to reorganize, to merge or consolidate into another association or company ••. " pursuant to a plan approved by the Board. The Board does not appear to be precluded from approving a savings association to bank conversion. My understanding is that if conversion were permitted, the savings association would have to meet the same requirements of State law that it would have to meet if it were applying for a bank charter as a start-up corporation. s.c. Code Ann. § 34-1-70 (1987). No purpose is indicated expressly or otherwise by State

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POST OFFICE Box 11549

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TELEPHONE:

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Mr. Louie A. Jacobs
December 12, 1995
Page 2

law which would be served by requiring the savings association to follow a less direct route than conversion to becoming a State bank. As noted in the June letter, the General Assembly has expressly provided for conversions other than savings association to bank, but this absence of authority may indicate only an intent not to provide a particular method or additional requirements for a savings association to bank conversion. Although the June letter concluded that the Board's historic interpretation of a lack of authority to approve these conversions would be given great weight by a Court, the above authority indicates that the Board may, nevertheless, approve the proposed conversion if it is in the public interest and otherwise meets the requirements of § 34-1-70. 1 This letter is an informal opinion. It has been written by the designated Assistant Deputy Attorney General and represents the opinion of the undersigned attorney as to the specific questions asked. It has not, however, been personally reviewed by the Attorney General nor officially published in the manner of a formal opinion. If you have any questions or need additional please let me know. Thank you for your assistance.

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Yours VEtrY truly,
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J. Emory . Smith, Jr.
Assistant Deputy Attorney General

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Attachments

1

No conclusion is expressed herein regarding requirements of the Federal Deposit Insurance Corporation (FDIC) which would have to be met if conversion is to occur.