State ex rel. Banking Commission v. Lexington State Bank

HIGGINS, Justice. As a condition precedent to the establishment of a branch, the Commissioner of Banks must find that such branch will meet the needs of the community and the probable volume of business will be sufficient to assure and maintain the solvency of such branch. G.S. 53-62 provides: “Such approval shall not be given until he (Commissioner) shall find (i) that the estab [110] lishment of such branch or teller’s window will meet the needs and promote the convenience of the community to be served by the bank, and (ii) that the probable volume of business and reasonable public demand in such community are sufficient to assure and maintain the solvency of said branch or teller’s window and of the existing bank or banks in said community.” We conclude from the wording of the pertinent statute that each application for a branch must be treated as a separate application and be approved or denied on the basis of the evidence relating thereto taken before the Commissioner or the Commission. The requirement is not met in the absence of a separate finding. We do not mean to say that two applications for branches may not be consolidated and heard together. What we do say is that under the statute the evidence and finding must be sufficient to support each application independent of the other. No provision is made in the act for the approval of any branch that fails to meet the requirements. The purpose is obvious. A branch may not be established which would be a financial failure or would endanger the solvency of another bank already in the field. The petitioner argues that solvency provisions of our statute are met if the parent bank and all its branches together meet the solvency test. Branch cites First Citizens Bank and Trust Company v. Camp, 409 F. 2d 1086 in support of the total solvency test. The decision of the Court of Appeals makes it clear that the decision applies only to the showing in the First Citizens case, calling attention to the absence of any North Carolina court decision construing G.S. 53-62. The solvency tests under the statute are twofold. Each new branch must not endanger the solvency of the parent bank and it must not endanger the solvency of another bank already in the field. We are governed by the provisions of the act as written. Fixing rules comes within the function of the General Assembly. Unless the rules violate some fundamental (constitutional) right, the Commissioner of Banks, the Banking Commission, and the courts are bound by them. The purpose to be accomplished by what appear to be rather stringent rules was to protect the solvency of banks. A bank failure is a major disaster to the community served by the bank. Some of the members of the General Assembly which rewrote G.S. 53-62 were old enough to recall the day in 1933 [111] when all banks were ordered closed because depositors were transferring funds from bank vaults to hiding places in their homes. It is well known that a rumor of insolvency may start a run on a bank. To minimize the danger, was the motivation for G.S. 53-62. The purpose was to require that each separate branch contribute to the solvency of the system. We conclude there must be an independent finding with respect to each branch. Manifestly two or more branches may not be lumped together and approved as a single unit. If two may be consolidated, then any number may be if the total meets the test. G.S. 53-62 requires that each branch meet the test. For the reasons heretofore assigned, it is now ordered that the applications be remanded to the Banking Commission for separate findings and conclusions as to each individual application for a branch. To that end the decision of the Court of Appeals is reversed and the proceeding will be remanded to the Banking Commission for disposition in accordance with this opinion. Reversed and remanded.