(f) Any Federal savings association holding a charter issued by the Board prior to the effective date of this Act may continue to operate under such charter, but shall have the option of converting to any charter issued by the Board subsequent to such date: Provided, That if the Board shall find that any such conversion is in accordance with the requirements of the charter of such association and of Section 112, approval of such conversion shall not be withheld by the Board nor by the Federal Savings Insurance Corporation.

(g) Associations shall accumulate and maintain reserves in accordance with regulations prescribed by the Board. Associations may retain additional reasonable amounts which may be used for any proper corporate purpose.

SEC. 103. MEMBERS.-In the case of an association having members, all holders of the association's savings accounts or deposits and all borrowers therefrom shall be members. In the consideration of all questions requiring action by the members of such association, each holder of a savings account or deposit shall be permitted to cast one vote for each $100, or fraction thereof, of the withdrawal value thereof. A borrowing member shall be permitted, as a borrower, to cast one vote, and to cast the number of votes to which he may be entitled as the holder of a savings account or deposit. No member, however, shall cast more than 50 votes. Voting may be as provided by regulation of the Board. Any number of members present at a regular or special meeting of the members shall constitute a quorum. A majority of all votes cast at any meeting of members shall determine any question. The members who shall be entitled to vote at any meeting of the members shall be those holding accounts and borrowing members of record on the books of the association at the end of the calendar month next preceding the date of such meeting. The number of votes which each member shall be entitled to cast at any meeting of the members shall be determined from the books of the association as of the end of the calendar month next preceding the date of such meeting. Those who were members at the end of the calendar month next preceding the date of a meeting of members but who shall have ceased to be members prior to such meeting shall not be entitled to vote at such meeting.

SEC. 104. DIRECTORS.—(a) In the case of an association having members, the board of directors shall be elected by and from the members and shall consist of not less than seven nor more than fifteen directors. No person shall serve as a director of an association who is not a resident of the State in which the principal office of the association is located, except that one less than one-half of the entire board of directors may be residents of other States. Except with the written consent of the Board, no person shall serve as a director or officer of an association who has been convicted of any criminal offense involving dishonesty or a breach of trust. The members shall, by majority vote at their organizational meeting, elect a board of directors in three classes in the following manner: one-third for a term of one year; one-third for a term of two years; and onethird for a term of three years. The requirements of this section shall be satisfied if the number of directors in any one class does not exceed by more than one the number of directors in any other class. The office of any director shall become vacant if he shall cease for any reason to be a member.

(b) In the case of an association intended to operate without members, an initial board of directors shall be formed by the applicants for a charter to consist of not less than seven nor more than fifteen persons who meet the qualifications prescribed for directors in subsection (a) of this section. In such a case, the applicants for a charter shall exercise the powers conferred upon the members in subsection (a) of this section, and may in their discretion transfer all such powers to the board of directors subsequent to the initial election.

(c) The direction and control of the affairs of an association shall be vested in the directors. The directors may be a majority of a quorum adopt, amend, and rescind bylaws governing the affairs of the association, subject to the approval of the Board.

(d) The office of a director shall become vacant whenever he shall have failed to attend regular meetings of the directors for a period of six months, unless excused prior to or during such period by a resolution duly adopted by the directors. Any director may resign at any time by sending a written notice of such resignation to the principal office of the association addressed to the secretary. Unless otherwise specified therein such resignation shall take effect upon. receint thereof by the secretary. Any director may be removed either with or without cause at any time by a two-thirds majority of all votes cast at any meeting of members called for such purposes. Any director, after an opportunity

afforded him for being heard, may be removed for cause by a two-thirds vote of the total number of directors authorized, at any regular meeting or at any special meeting called for such purpose.

(e) Directors and officers occupy a fiduciary relationship to the association of which they are directors or officers, and the Board is authorized to issue such rules and regulations as in its considered opinion are required to assure that directors and officers do not engage or participate, directly or indirectly, in any business or transactions conducted on behalf of or involving the association, which would result in a conflict of their own personal interests with those of the association which they serve; and without limitation by any of the specific provisions of any of the subsections hereof, the Board may (i) prohibit practices which in its considered opinion would constitute such conflicts of interest, (ii) require the disclosure by directors, officers, and employees of their personal interest, directly or indirectly, in any business or transactions on behalf of or involving the association and of their control of or active participation in enterprises with activities related to the business of the association, and (iii) otherwise implement the purposes and objectives of this subsection and prevent evasions thereof. The following restrictions governing the conduct of directors and officers are expressly specified, but such specification is not to be construed as in any way excusing such persons from the observance of any other aspect of the general fiduciary duty owed by them to the association which they serve:

(1) No person acting as an officer or director of an association shall hold office as a member, director, or officer of another thrift institution.

(2) No director shall receive remuneration as director except reasonable compensation for serving in the capacity of director or for service as a member of a committee of directors, except that nothing herein contained shall be deemed to prohibit or in any way limit any right of a director who is also an officer of or attorney for the association from receiving compensation for service as an officer or attorney.

(3) No director or officer shall have any interest, directly or indirectly, in the proceeds of a loan or of a purchase or sale made by the association, unless such loan, purchase or sale is authorized expressly by resolution of the board of directors, provided such resolution is approved by vote of at least two-thirds of the directors of the association, any interested director taking no part in such vote.

(4) No director or officer shall have any interest, direct or indirect, in the purchase at less than its face value of any evidence of a savings account, deposit or other indebtedness issued by the association.

(5) No director, association, or officer thereof shall require, as a condition to the granting of any loan or the extension of any other service by the association, that the borrower or any other person undertake a contract of insurance or any other agreement, or understanding with respect to the furnishing of any other goods or services, with any specific company, agency, or individual.

(6) No director, officer, or employee shall solicit, accept, or agree to accept, directly or indirectly, from any person other than the association any gratuity, compensation, or other personal benefit for any action taken by the association or for endeavoring to procure any such action.

(f) No association shall deposit any of its funds except with a depositary approved by a vote of a majority of all directors of the association, exclusive of any director who is an officer, partner, director, or trustee of the depositary so designated.

SEC. 105. GENERAL POWERS.-(a) For the purpose of carrying out its functions under this Act, an association shall have the following powers: to have indefinite succession; to adopt and use a corporate seal; to sue and be sued, complain and defend in any court of law or equity; to acquire, hold, sell, dispose of, and convey real and personal estate consistent with its objects and powers; to mortgage, pledge, or lease any real or personal estate; to borrow money up to a maximum of fifty (50) percent of its withdrawable accounts, and such additional amounts as the Board may authorize; to take property by gifts, devise, or bequests; to appoint officers, agents, and employees as its business shall require and to allow them suitable compensation; to provide for life, health, and casualty insurance for officers and employees and to adopt and operate bonus plans and retirement benefits for such officers, directors, and employees; to become a member of, own stock in, deal with, or make payments or contributions to any organization or service corporation to the extent that such organization assists in furthering or

facilitating the association's purposes or powers, and to comply with reasonable conditions of eligibility; to maintain and let safes, boxes, or other receptacles for the safekeeping of personal property; to sell money orders and travel checks drawn by it on its bank accounts or as agent for any organization empowered to sell such instruments through agents within the state of domicile; to accept savings and lend or invest its funds as provided in this Act; to sell loans and investments; to service loans and investments for others; to act as agent for others in any transaction incidental to the operation of its business; to act as trustee or fiduciary as herein provided; when designated for that purpose by the Secretary of the Treasury, to be a depositary of public money, except receipts from customs, under such regulations as may be prescribed by said Secretary; to be employed as a fiscal agent of the Government; and to perform all such reasonable duties as depositary of public money and as fiscal agent of the Government as may be required of it.

(b) In addition to the powers expressly enumerated or defined in this Act, an association shall have power to do all things reasonably necessary or appropriate to the exercise of the aforementioned powers and other powers as authorized by this Act.

SEC. 106. SAVINGS ACCOUNTS AND SAVINGS DEPOSITS.-(a) A Federal savings association shall acquire its capital in the form of such savings accounts or deposits as are authorized in its charter, and may issue a passbook or other evidence of its obligation to repay.

(b) Subject to regulation by the Board, an association may classify its savers according to the character, amount, duration, or regularity of their dealings with the association, may agree with its savers in advance to pay an additional rate of earnings on accounts based on such classification, and shall regulate such earnings in such manner that each saver shall receive the same ratable portion of earnings.

(c) Each association may—

(1) decline any sums offered as savings; and

(2) repay any savings at any time, subject to any limitations which the Board may impose in accordance with this Act.

(d) Except as otherwise provided in this Act, an association may pay earnings on its accounts from net earnings and undivided profits at such rate and at such intervals as shall be approved by its directors.

(e) An association may at any time by resolution of its directors require that up to ninety days' advance notice be given to it by each saver before the withdrawal of any savings or portion thereof; and whenever the directors shall adopt such resolution, no savings need be paid until the expiration of the notice period applicable thereto in accordance with such resolution. An association shall notify the Board in writing on the day of adoption of such resolution by the directors. Notwithstanding adoption of such resolution by the directors, an association may, in its discretion, permit withdrawal on a uniform basis of all or any part of all accounts prior to the expiration of the notice period prescribed by such resolution. Any such resolution may be rescinded at any time. An association, the charter of which does not provide otherwise, which has failed for 90 days after a withdrawal application has been filed with it to pay such withdrawal application in full, shall be deemed to be in default, and the Board may, in its discretion, forthwith take possession of the property and business of such association.

(f) Without regard to any provision of subsection (e) of this section, the Board may further limit and regulate withdrawals of accounts from any association if the Board shall find that such limitation and regulation are necessary because of the existence of unusual and extraordinary circumstances. The Board shall enter such findings on its records.

(g) In order to prevent the closing of an association determined by the Federal Savings Insurance Corporation to be in danger of closing, or in order to reopen a closed association, the Board may authorize the Federal Savings Insurance Corporation to take such action as may be necessary to put such association in a sound and solvent condition.

(h) The savings accounts or deposits of Federal savings associations shall be lawful investments, and may be accepted as security, for all public funds of the United States, fiduciary and trust funds under the authority or control of the United States or officers or employees thereof, and for the funds of all corporations organized under the laws of the United States, notwithstanding any

limitation of law upon the investment of any such funds or upon the acceptance of security for the investment or deposit of any such funds.

SEC. 107. INVESTMENT IN SECURITIES.-Federal savings associations shall have power to invest in securities as follows:

(a) Without limit, in obligations of, or guaranteed as to principal and interest by, the United States or any State; in stock or obligations of any Federal Home Loan Bank or Banks; in stock or obligations of the Federal Savings Insurance Corporation; in stock or obligations of a national mortgage association or any successor or successors thereto; in obligations of, or guaranteed as to principal and interest by, the Dominion of Canada or any Province thereof, provided that the principal and interest of any such obligations are payable in United States funds; in obligations issued or guaranteed by the International Bank for Reconstruction and Development or by the Inter-American Development Bank; in demand, time, or savings deposits, shares or accounts, or other obligations of any bank, trust company, or savings association the accounts of which are insured by a Federal agency; in bankers' acceptances which are eligible for purchase by Federal Reserve banks;

(b) Not in excess of 25 percent of its assets in (1) bonds, notes or other evidences of indebtedness which are a general obligation of or guaranteed as to principal and interest by, any agency or instrumentality of the United States not specified in subparagraph (a) or of any State, or of any city, town, village, county, district, or other municipal corporation or political subdivision of any State, or of any public instrumentality or public authority of any one or more of the foregoing, and (2) other stocks, securities, and obligations which the Board shall approve and place on a list to be contained in the published regulations, subject to such limitations and restrictions of general applicability as may be prescribed in said regulations, and the Board is directed to publish such a list. An association holding investments which are so listed by the Board shall not be required to dispose of the same if at a later time the Board shall remove such investments from the list.

SEC. 108. INVESTMENT IN LOANS.-Federal savings associations shall have power to invest in loans and other investments as follows:

(a) Loans secured by their savings accounts or deposits.

(b) Evidences of indebtedness secured by first liens upon real property in any State held in fee or in a leasehold extending or renewable automatically for a priod of at least 15 years beyond the date specified for the final principal payment of such indebtedness, subject to the following conditions:

(1) No association shall make a loan on the security of real estate to one borrower, as such term is defined by the Board, if the sum of (i) the amount of such loan and (ii) the total balances of all outstanding loans on the security of real estate owed to such association by such borrower exceeds an amount equal to 10 percent of such association's withdrawable accounts or an amount equal to the sum of such association's nonwithdrawable accounts, surplus, undivided profits, and reserves for losses, whichever amount is less: Provided, That, notwithstanding any other limitation of this sentence, any such loan may be made if the sum of (i) and (ii) does not exceed $100,000; (2) An association may (i) participate with one or more financial institutions, trusts, or pension funds in any note, bond, or other evidence of indebtedness secured by a mortgage or deed of trust of the type in which such association is authorized to invest on its own account: Provided, That the participating interest of such association is not subordinated or inferior to any other participating interest; and (ii) participate in the same securities with other than financial institutions, trusts, or pension funds: Provided, That the participating interest of such association is superior to the participating interests of such other participants;

(3) The aggregate balances outstanding of loans and other investments secured by real estate located outside the primary lending area of an association shall at no time exceed ten (10) percent of the assets of the association, unless with the approval of the Board, except that (i) loans insured or guaranteed in whole or in part by a Federal agency and (ii) loans in which an association owns or has purchased no more than a ninety-five (95) percent participation interest shall not be subject to this restriction.

(4) Loans and other investments secured by first lien on primarily residential property, as such term is defined by the Board, shall average annually at least fifty (50) percent of all outstanding loans and investments, unless otherwise approved by the Board.

(c) Loans secured by the pledge of loans or investments of a type in which the association is authorized to invest: Provided, That the loans and investments so pledged shall be subject to all restrictions which would be applicable were the association to invest directly in such loans or investments;

(d) Loans secured by the pledge of policies of life insurance, but not exceeding the cash value of such policies;

(e) Property improvement loans made pursuant to the provisions of any title of the National Housing Act, and, subject to such regulations as the Board may prescribe, other loans, secured or unsecured, to home owners and other property owners for maintenance, repair, alteration, modernization, improvement, furnishing, or equipment of their properties;

(f) An amount not exceeding fiifteen (15) percent of the assets of the association in notes, with or without security, for any purpose: Provided, That no such note shall represent indebtedness in excess of $3,000.

(g) Such real property or interests therein as the directors may deem necessary or convenient for the conduct of the business of the association, but the amount so invested shall not exceed the aggregate amount of the surplus, undivided profits and reserves of the association: Provided, That the Board may authorize a greater amount to be so invested.

(h) An amount not exceeding the sum of its reserves and undivided profits in the purchase and development of real estate for the purpose of producing income or for sale or for improvement thereof and the erection of buildings thereon for sale or rental purposes. Title to such real estate shall be taken and held in the name of the association and such title immediately shall be recorded in accordance with law.

SEC. 109. ACCESS TO BOOKS AND RECORDS: COMMUNICATION WITH MEMBERS.— (a) In the case of an association operating with members, every member shall have the right to inspect such books and records of an association as pertain to his loan or savings account. Otherwise, the right of inspection and examination of the books and records of any association shall be limited (1) to the Board or its authorized representatives, (2) to persons duly authorized to act for the association, and (3) to any Federal instrumentality or agency authorized to inspect or examine the books and records of an association. The books and records pertaining to savings accounts, deposits, and loans shall be kept confidential by the association, its directors, officers, and employees, and by the Board, its examiners and representatives, except where the disclosure thereof shall be compelled by a court of competent jurisdiction, and no member or any other person shall have access to the books and records or shall be furnished or shall possess a partial or complete list of the members except upon express action and authority of the board of directors.

(b) In the event, however, that any member or members of an association desire to communicate with the other members of the association with reference to any question pending or to be presented for consideration at a meeting of the members, the association shall furnish upon request a statement of the approximate number of members of the association at the time of such request, and an estimate of the cost of forwarding such communication. The requesting member or members shall then submit the communication to the Board which, if it finds it to be appropriate, truthful and in the best interests of the association and all its members, shall execute a certificate setting out such findings, forward the certificate together with the communication to the association, and direct that the communication be prepared and mailed by the association to the members upon the requesting members or members' payment to it of the expenses of such preparation and mailing.

SEC. 110. BRANCH OFFICES.-(a) An association, with the approval of the Board, may establish and operate one or more branch offices.

(b) Before approving the establishment and operation of a branch office by an association, the Board shall make with respect thereto the findings required prior to the granting of a charter to an association.

(c) Notwithstanding any provision of this Act, an association resulting from conversion, consolidation, or merger may retain and operate any one or more offices in operation on the date of such conversion, consolidation, or merger, and, in addition, may retain any and all unexercised branch rights or privileges enjoyed prior to such date.

SEC. 111. LIMITED TRUST POWERS.-The Board shall be authorized to grant by special permit to an association applying therefor, when not in contravention of the law of the State where the principal office of the association is located,