Powers of banks and savings banks. Every bank and savings bank shall, subject to the provisions of this act, have the following powers, whether or not such powers are specifically set forth in its certificate of incorporation: (1) To adopt a corporate seal, and to sue and be sued; (2) To issue cashier's checks, treasurer's checks, and money orders; to transmit funds; to guarantee signatures and endorsements; (3) To borrow money, and to pledge, mortgage or hypothecate its real or personal property as security therefor, and to execute and deliver all such instruments as may be necessary to evidence such borrowing, pledge, mortgage, or hypothecation; (4) To keep, maintain, and rent out for hire, at any location occupied by its principal office or any branch office, safe deposit boxes or other receptacles for the safekeeping of personal property. In exercising the powers authorized by this paragraph, the bank or savings bank shall have, but shall not be confined to, the same rights and remedies conferred upon safe deposit companies; (5) To invest in real property as purchaser of the fee or as lessee, and to hold, lease and convey such real property, or any interest therein, for the following purposes and no others: (a) Such as may be necessary or convenient for the use, operation, or housing of its principal office or any branch office, or an auxiliary office, or for the storage of records or other personal property, or for office space for use by its officers or employees, or which may be reasonably necessary for future expansion of its business, or which is otherwise reasonably incidental to the conduct of its business; and which may include, in addition to the space required for the transaction of its business, other space which may be let as a source of income. In exercising the powers conferred by this subparagraph, the bank or savings bank shall be subject to the limitations imposed by paragraph (13) of this section; (b) Such as may be conveyed to it in whole or part satisfaction of debts previously contracted in the course of its dealings; (c) Such as it shall purchase at sale under judgments and decrees in its favor, and on foreclosure of mortgages held by it; (d) Such as it shall purchase or acquire to minimize or prevent the loss or destruction of any lien or interest therein; and (e) Such as may be permitted for associations pursuant to subsections (4) and (21) of section 48 of the "Savings and Loan Act (1963)," P.L. 1963, c. 144 (C. 17:12B-48); provided that all real property not held for any purpose specified in subparagraph (a) of this paragraph, shall be sold within five years of its acquisition, or within five years after the time it ceases to be held for any purpose specified in subparagraph (a) of this paragraph, unless the commissioner shall extend the time within which such sale shall be made; (6) To be a member of the Federal Reserve System; to subscribe for, purchase, hold, and surrender such amounts of the capital stock of the Federal Reserve Bank organized within the district in which such bank or savings bank is located as may be required or as may be deemed advisable by such bank or savings bank; and to have and exercise all powers, privileges and options which are conferred by law upon such members; to comply with all requirements of federal legislation and the rules and regulations lawfully promulgated thereunder governing such membership, as such legislation and such rules and regulations may provide at the time of inception of such membership, and as the same may from time to time thereafter be amended or supplemented; and to assume and discharge all liabilities and obligations which may be required by reason of such membership; (7) To be a member of the Federal Deposit Insurance Corporation, or of any successor corporation having for its purpose the insurance of deposits, and to do all things, and assume and discharge all liabilities and obligations imposed upon such members by federal legislation or by rules and regulations lawfully promulgated pursuant thereto, as the same may provide at the inception of such membership, or as the same may thereafter be amended or supplemented; (8) To be a member of any federal agency hereafter created, membership in which is open to banking institutions, and the purpose of which is to afford advantages or safeguards to banking institutions, or to their depositors, and to comply with all the requirements and conditions imposed upon such members, except that the power by this paragraph conferred shall not be exercised unless the commissioner, with the concurrence of the banking advisory board, shall make a general order authorizing banks or savings banks, or both, to become and be such members, upon such terms and conditions as may in such order be prescribed; (9) To subscribe for, purchase and hold stock of one or more safe deposit companies which have been or may be organized to do business on or adjacent to premises occupied by the principal office or a branch office of the bank or savings bank; provided that (a) In the case of a savings bank, the amount so invested shall not exceed 5% of its surplus; and (b) In the case of a bank, the amount so invested shall not exceed 10% of its capital stock and surplus; and (c) Each purchase of such stock shall first have been authorized by a resolution, stating the number of shares to be purchased and the amount to be paid therefor, adopted by its board of directors or board of managers, and, in the case of a bank, approved by a majority in interest of its stockholders at any annual or special meeting; and (d) Each purchase of such stock by a bank or savings bank shall have been approved in writing by the commissioner; (10) To subscribe for, purchase and hold stock of not more than one fiduciary institution organized under any law of this State hereafter enacted; provided that (a) In the case of a savings bank, the amount so invested shall not exceed 10% of its surplus; and (b) In the case of a bank, the amount so invested shall not exceed 20% of its capital stock and surplus; and (c) Each purchase of such stock shall first have been authorized by a resolution, stating the number of shares to be purchased and the amount to be paid therefor, adopted by its board of directors or board of managers, and, in the case of a bank, approved by a majority in interest of its stockholders at any annual or special meeting; and (d) Each purchase of such stock by a bank or savings bank shall have been approved in writing by the commissioner; (11) To contribute to community funds, or to charitable, philanthropic, or benevolent instrumentalities conducive to public welfare, or civic betterment, or the economic advantage of the community, and to instrumentalities for the protection or advancement of the interests of banking institutions, such sums as its board of directors or board of managers may deem expedient and in the interests of such bank or savings bank; (12) To exercise all incidental powers, not specifically enumerated in this act, which shall be necessary or convenient to carry on the business of the bank or savings bank; (13) To invest in stock of a subsidiary of such bank or savings bank which holds title to real property of the kind in which such bank or savings bank could itself invest pursuant to subparagraph (a) of paragraph (5) of this section, and to make secured or unsecured loans to such subsidiary, without regard to the limitations imposed by Article 13; but no bank or savings bank shall, except with the prior approval of the commissioner (1) invest in real property including all capital leases, pursuant to subparagraph (a) of paragraph (5) of this section; or (2) invest in the stock or other securities of such subsidiary; or (3) make a loan to such subsidiary, if the aggregate of all such investments and loans, when added to any indebtedness otherwise owing by the subsidiary, will exceed the greater of (1) 50% of the capital funds of the bank or savings bank, or (2) the amount permitted to national banks for such investments. As used in this paragraph, "subsidiary" of a bank or savings bank means a corporation all of whose capital stock and other securities having voting rights are owned by such bank or savings bank, and whose powers are limited by its certificate of incorporation to the acquiring, holding, managing, selling, leasing, mortgaging, altering, improving and otherwise dealing in and with real property of the kind in which the bank or savings bank could itself invest pursuant to subparagraph (a) of paragraph (5) of this section; and "capital funds" means the aggregate of the capital stock, the principal amount owing on all capital notes, surplus and undivided profits of a bank, and the aggregate of the capital deposits, if any, and the surplus of a savings bank. Every subsidiary of a bank or savings bank shall be subject to examination by the commissioner as provided in the case of banks and savings banks pursuant to sections 260, 261, 262, 263, and 335, and the ultra vires or unlawful act of a subsidiary of a bank or savings bank shall be deemed to be the ultra vires or unlawful act of such bank or savings bank for the purposes of Article 42. In determining whether to give or withhold approval of an investment or loan in excess of the limitation imposed by this paragraph, the commissioner shall consider whether the making of such loan or investment is consistent with sound banking practice, having regard to (1) the ratio between the aggregate of such loans and investments and the capital funds of the bank or savings bank; (2) the benefits to the bank or savings bank reasonably to be anticipated from such investment or such loan; (3) the ratio between such aggregate capital funds and total deposits; and (4) such other factors as the commissioner shall consider germane to the protection of deposits. A violation of any provision of this paragraph by any bank, savings bank, or subsidiary of a bank or savings bank shall not impair the validity or sufficiency of any deed of conveyance, mortgage, or lease made by such bank, savings bank, or subsidiary, of real property owned by it; nor shall any other interest in such real property, acquired by or vested in any person claiming through or under such bank, savings bank, or subsidiary, or to which such person may be entitled, be impaired by reason of such violation; (14) To make or invest in any secondary mortgage loan as defined in section 1 of P.L. 1948, c. 67 (C. 17:9A-1). Secondary mortgage loans shall be repayable in installments under the same terms and conditions as provided for secondary mortgage loan licensees under the "Secondary Mortgage Loan Act," P.L. 1970, c. 205 (C. 17:11A-34 et seq.), only with respect to maximum term, maximum loan amount and maximum annual percentage rate of interest. The Commissioner of Banking shall have the power, in relation to a "secondary mortgage loan," to adopt, amend, alter or rescind regulations, the requirements of which, in his judgment, are necessary for the implementation of this paragraph; (15) To purchase, hold and invest in mortgages, obligations or other securities which are or have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 305 or 306 of the "Federal Home Loan Mortgage Corporation Act," Pub.L. 91-351 (12 U.S.C. s. 1454 or 12 U.S.C. s. 1455), to the same extent that the bank or savings bank may purchase, hold or invest in obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality thereof. L. 1948, c. 67, p. 201, s. 24. Amended by L. 1956, c. 222, p. 782, s. 1; L. 1963, c. 81, s. 4, eff. June 4, 1963; L. 1970, c. 63, s. 1, eff. May 20, 1970; L. 1981, c. 74, s. 4, eff. March 23, 1981; L. 1981, c. 153, s. 1, eff. May 22, 1981; L. 1981, c. 511, s. 6, eff. Jan. 12, 1982; L. 1983, c. 18, s. 1, eff. Jan. 21, 1983; L. 1985, c. 528, s. 14, eff. Jan. 21, 1986.