SECTION 2. Examination of banks

(a)(1) The commissioner, either personally or by his examiners or such other assistants that he designates, shall, at least once in each calendar year, or at least once in an 18–month period in the case of a bank which is well capitalized as defined in 12 U.S.C. § 1831(o) and the regulations adopted under that section, or as authorized under subsection (d), make a thorough examination of the books, securities, cash, assets and liabilities and ascertain the condition of all banks under the commissioner's supervision, including out-of-state branches, the ability of each bank to fulfill its obligations and whether it has complied with all applicable laws. The commissioner may also, whenever he considers it expedient, make or cause to be made, at the expense of the bank, any further examinations or audits by his examiners or by certified public accountants or public accountants approved by him and subject to his direction and not connected with the bank. The commissioner may also, whenever he considers it expedient, appoint individuals certified as real estate appraisers by the Society of Real Estate Appraisers or a similar successor society to make, at the expense of the bank, appraisals of real estate securing loans of the bank. When the commissioner appoints an appraiser, he shall so notify the bank of the date on which he has requested submission of the appraisal report to him. The bank may then appoint an appraiser who may submit the report of his appraisal to the commissioner on the same date.

(2) The commissioner or the person making the examination shall, at the time of the examination, have free access to the vaults, investments, cash, books and papers. In making an examination, the commissioner shall have access to the vaults, books and papers of each of the bank's affiliates and may make any examination of the affairs of its affiliates that may be necessary to disclose fully the relations between the bank and its affiliates and the effect of this relationship upon the affairs of the bank.

(b)(1) The commissioner shall preserve a full record of an examination of a bank, including a statement of its condition. All records of investigations and reports of examinations by the commissioner, including workpapers, information derived from the reports or responses to the reports and any copies of the records in the possession of a bank under the supervision of the commissioner, shall be confidential and privileged communications, shall not be subject to subpoena and shall not be a public record under clause Twenty-sixth of section 7 of chapter 4. For the purposes of this paragraph, records of investigations and reports of examinations shall include records of investigation and reports of examinations conducted by a financial regulatory agency of the federal government or of a state or a foreign government which are considered confidential by the agency or foreign government and which are in possession of the commissioner. In a proceeding before a court, the court may issue a protective order to seal the record protecting the confidentiality of these records, other than a record on file with the court or filed in connection with the court proceeding, and the court may exclude the public from any portion of the proceeding at which the record may be disclosed.

(2) Copies of reports of these examinations shall be furnished to the bank for its use only and shall not be exhibited to any other person, organization or agency without the prior written approval of the commissioner. The commissioner may, in his discretion, furnish to the Chief National Bank Examiner, the Federal Reserve Bank of Boston, the Federal Deposit Insurance Corporation, the Depositors Insurance Fund, the Cooperative Central Bank, the Massachusetts Credit Union Share Insurance Corporation, the National Credit Union Administration, the federal Bureau of Consumer Financial Protection or any successors to these entities, any other bank regulatory or law enforcement agency, or the banking departments of other states or foreign countries, any information, reports and statements relating to the institutions under his supervision that he considers appropriate.

(c)(1) An annual charge shall be paid by each bank under the supervision of the commissioner which shall be based on the total amount of assets held by each bank as stated on the most recent report to the commissioner filed before December 31 of the preceding year. The charge assessed to all such banks shall be determined based on a calculation of the amount that would be sufficient to pay for the operations of the division of banks in the amount set forth in the division's appropriation for the fiscal year, and each bank shall pay the charge within 30 days after receiving notice from the commissioner of the charge assessed. The notice shall be issued annually by the commissioner on January 31. The charge shall be determined annually by the secretary of administration and finance under section 3B of chapter 7, with the assistance of the commissioner, and may contain such classifications and differentiations based upon the financial condition of such banks as he considers appropriate. Classifications of individual institutions shall be exempt from section 10 of chapter 66. The annual charge shall be paid, on a pro rata basis, by the successor of any bank which is merged into, or whose assets are purchased and its deposit liabilities are assumed by, a federally-chartered or out-of-state bank during the preceding year. No annual charge shall be collected from a bank which has been in operation for 1 year or less. The aggregate amount of charges assessed by the division of banks for a fiscal year under this section and other applicable fee provisions shall not be less than the aggregate amount of revenues for the fiscal year as estimated for the division of banks or its successor agency in section 1B of the general appropriation act for that fiscal year.

(2) If the assessment in a fiscal year by the division of banks is insufficient to pay for the operations of the division of banks in the amount set out in its annual appropriation and any additional appropriations for that fiscal year, the division of banks shall assess the remaining amount upon all depository and nondepository financial institutions under the supervision of the division. This assessment shall be determined by regulations of the secretary of administration and finance under section 3B of chapter 7, with the assistance of the commissioner, and may contain such classifications and differentiations based upon the regulatory condition of each institution as the commissioner considers necessary. The classifications of individual institutions shall be exempt from section 10 of chapter 66. The assessment shall be paid within 30 days after notice from the commissioner of the amount due.

(3) The expense of the examination of the affairs of an affiliate of a bank, including all monies expended by the commonwealth for personal services and the proportion of the general overhead of the division of banks and loan agencies, including travel, hotel and meal allowances and other costs that are determined by the commissioner to be attributable to the examination or audit, shall be paid by the affiliate examined. For the purposes of this section, ''affiliate'' shall include holding company affiliates, but shall not include any person or corporation the control of which is held by a bank when acting in a fiduciary capacity.

(d) Notwithstanding any general or special law to the contrary, the commissioner may establish a tiered regulatory structure for the supervision and examination of savings banks, co-operative banks and trust companies. The criteria for the tiered regulatory structure may include, but shall not be limited to, the following: asset size; level of capital; balance sheet composition; the rating under the Uniform Financial Institutions Rating System, so-called CAMELS rating; record of performance under the community reinvestment act in section 14; compliance with laws and regulations; and such other factors as the commissioner may determine. In establishing the tiered regulatory structure the commissioner shall seek to effect cost reductions and reduce the regulatory burden for savings banks, co-operative banks and trust companies. The commissioner may promulgate rules and regulations necessary to carry out this subsection.