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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Banks and Financial Institutions
Chapter : BANK ORGANIZATION AND REGULATION
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6-181 Declaration of purposes
The purposes of this chapter, which shall govern judicial and administrative
interpretation and application of the provisions of this chapter, are to provide for:
1. Safe and sound conduct of banks.
2. Conservation of bank assets.
3. Maintenance of public confidence in banks.
4. Protection of the interests of depositors and fiduciary beneficiaries and of the
interest of the public in the soundness and preservation of the banking system.
5. Opportunity for banks to remain competitive with each other, with financial
institutions existing under other laws of this state and with banking and financial
institutions existing under the laws of other states, the United States and foreign
countries.
6. Opportunity for banks to serve effectively the convenience and needs of their
depositors, borrowers and other customers, to participate in and promote the economic
progress of ARIZONA and the United States and to improve and expand their services and
facilities for those purposes.
7. Opportunity for management of banks to exercise business judgment in conducting
banking affairs subject to the provisions of this chapter.
8. Simplification and modernization of the law governing banking and governing the
exercise of fiduciary and other representative powers by banks.
9. Implementation and execution of the provisions of this chapter by the full
utilization of the rule making and administrative discretions of the superintendent.
6-182 Transition
All banks shall be operated in accordance with the provisions of this chapter,
except that transactions validly entered into before the effective date of this chapter
and the rights, duties and interests flowing from them remain valid thereafter and may be
terminated, completed, consummated or enforced as required or permitted by any statute
amended or repealed by the law by which this chapter was enacted as though such amendment
or repeal had not occurred.
6-183 Rights, powers and privileges of nationalbanks
Except as prohibited by federal law, a national bank with a banking office in this
state shall have all the rights, powers and privileges and shall be entitled to the same
exemptions and immunities as banks holding banking permits under this chapter.
6-184 General corporate and banking powers;incidental powers; deposit insurance; federal reserve and home loanbank membership; agency relationship
A. A corporation holding a banking permit under this chapter may:
1. Except as prohibited by law, exercise the powers derived from its existence as
an ARIZONA corporation.
2. Except as prohibited by law, exercise any power and engage in any activity which
it could exercise or engage in if it were a national banking association with a banking
office in this state.
3. Directly or through a bank subsidiary engage in any lawful activity which is
reasonably related or incidental to banking. All activities in which any bank was
lawfully engaged directly or through a subsidiary on December 31, 1971 are declared to be
incidental and related to banking for the purposes of this paragraph.
4. Do the acts necessary to obtain and maintain insurance of its deposits by the
federal deposit insurance corporation.
5. Do the acts necessary to acquire and hold membership in the federal reserve
system or the federal home loan bank.
6. Except as prohibited by law, directly or through a bank subsidiary, make any
loan or investment, offer accounts or engage in any business activity authorized for
national banking associations, federal savings banks, or state or federally chartered or
licensed savings and loan associations doing business in this state. This paragraph is
subject to section 33-1571.
7. Except as prohibited by law and subject to such rules as the superintendent may
adopt, through a bank subsidiary, invest in real estate in the state or interests
therein, including corporations, partnerships, and joint ventures which acquire, develop,
improve, hold, lease, operate and sell real estate. This paragraph is subject to section
33-1571.
B. An in-state financial institution or an out-of-state financial institution may
act as an agent of any other in-state financial institution or out-of-state financial
institution that is a subsidiary of the same holding company for purposes of conducting
the activities authorized by this subsection. This subsection applies regardless of
whether the affiliated entities share the same home state. An in-state financial
institution or an out-of-state financial institution entering into an agency relationship
shall notify the superintendent of that agency relationship at least ten days before the
effective date of that agency relationship. Agency relationships among affiliates shall
be consistent with safe and sound business practices and shall comply with all applicable
laws and rules. An in-state financial institution or an out-of-state financial
institution acting as an agent is not deemed to be a branch of the affiliate solely
because of activities lawfully conducted pursuant to this subsection. An in-state
financial institution or an out-of-state financial institution that is acting as an agent
for an affiliated entity may do any of the following:
1. Receive deposits.
2. Renew time deposits.
3. Service loans.
4. Receive payments on loans and other obligations.
5. Perform other customary banking services with the prior approval of the
superintendent.
C. An in-state financial institution or an out-of-state financial institution
acting as an agent as prescribed by subsection B of this section on behalf of an
affiliated financial institution may not do any of the following:
1. Open demand, savings or time accounts.
2. Evaluate or approve loans.
3. Disburse loan monies.
4. Conduct any activity as an agent that it is prohibited from conducting as a
principal under any applicable law or rule.
D. An in-state financial institution or an out-of-state financial institution that
is acting as a principal as prescribed by subsection B of this section may not have its
affiliated entity act as an agent on its behalf in conducting any of the following:
1. Any activity that is prohibited to the principal.
2. Any activity that is prohibited to the agent.
6-185 Board of directors' meetings; review;report of failure of quorum to meet
A meeting of the board of directors of a bank shall be called each month or each
quarter. The superintendent shall designate for each bank whether the board shall meet
monthly or quarterly. The superintendent may change the designation at any time without
providing the bank advanced notice. At the meetings, the board shall review the loans
and investments and other material activities of the bank or review a report thereof
prepared under the direction of the board as a regular item of business. The board shall
keep minutes of all meetings including a record of attendance. If at any required
meeting a majority of the members are not present, the bank shall notify the
superintendent in writing of that fact.
6-186 Annual audit and report
A. An audit of the affairs of the bank including an out-of-state bank shall be
made annually as of the end of its fiscal year by or under the direction of the board of
directors. The superintendent may prescribe certain minimum requirements of the audit and
shall require the filing of a copy of the report covering the audit with the
superintendent. The audit shall be filed with the superintendent not more than one
hundred twenty days after the end of the bank's or out-of-state bank's fiscal year,
unless the superintendent extends the time period for good cause shown. The audit is not
a substitute for or in lieu of the examination by the superintendent required by section
6-122.
B. An out-of-state bank may satisfy an audit requirement by filing with the
superintendent a copy of the audit report that is required by its home state regulator
within fifteen days after filing that report with the home state.
6-187 Authority to declare dividends;limitation
The board of directors of a bank may declare dividends as permitted by the general
laws governing ARIZONA corporations, except that dividends payable other than in the
bank's own stock may be paid out of capital surplus only with the approval of the
superintendent.
6-188 Bonds and insurance; coverage
The board of directors shall require protection and indemnity for the bank against
defalcation, forgery, theft and other similar insurable losses, with corporate insurance
or surety companies authorized to do business in this state. Coverage against
defalcation shall include all active officers and employees of the bank whether or not
they draw salary or compensation.
6-189 Capital obligations; approval;convertibility
A. A capital obligation is an unsecured indebtedness of the bank subordinate to the
claims of depositors and all other creditors of the bank regardless of whether the claims
arose before or after the issuance of the note or debenture representing the capital
obligation. In the event of liquidation all depositors and other creditors of the bank
are to be paid in full before any payment of principal or interest is made on capital
obligations.
B. No capital obligations shall be incurred without the prior order of approval of
the superintendent. Capital obligations authorized by such order may be retired in
accordance with the mandatory payment provisions of the obligation without further
authorization. No payment shall be made under an optional right of payment reserved to
the bank without the separate authorization of the superintendent which may be granted in
his initial order of approval or by subsequent order.
C. Capital obligations may be convertible into shares of any class of stock in
accordance with their terms approved by the superintendent. No shareholder has any
preemptive right to purchase capital obligations or to purchase stock issued upon
conversion of capital obligations unless provided by the articles of incorporation or
specified in the corporate authority to incur the obligation.
6-190 Bank offices; standards and term ofapproval; closing; automated teller machines
A. A bank may establish banking offices anywhere in the world with the
authorization of the superintendent and upon such conditions as he may prescribe. An
application for a banking office shall be in writing in such form as the superintendent
prescribes supported by such information, data and records as the superintendent may
require to make the findings necessary for approval.
B. In granting the application for a banking office the superintendent shall be
guided by the standards prescribed for the issuance of a banking permit insofar as such
standards are reasonably applicable.
C. The failure of a bank to open and operate a banking office within one year after
the superintendent approves the application shall automatically terminate the approval,
except that the superintendent, for good cause shown in writing made before the
expiration of the one year period, may extend for additional periods not in excess of six
months each the time in which the banking office may be opened.
D. A bank may permanently close less than all of its banking offices on compliance
with such requirements of notice as have been prescribed by the superintendent and such
closing shall terminate the authority to maintain the office which is closed.
E. A bank shall not establish or maintain an automated teller machine without the
prior written approval of the superintendent. The application shall state the proposed
location of the automated teller machine, the need for the automated teller machine, the
functions to be performed by the automated teller machine, the estimated annual expense
of the automated teller machine and the mode of payment by the automated teller
machine. After considering the application, the superintendent may approve the
application if he finds that the establishment and maintenance of the automated teller
machine are advisable and in the public interest.
F. A bank may, without the approval of the superintendent and through contractual
agreement with one or more other banks or automated teller machine providers, join in the
operation of automated teller machine networks.
6-191 Foreign banking offices; additionalpowers; separate accounts; additional offices; definition
A. In addition to its other powers, a bank may through any foreign banking office
act as fiscal agent of the United States and, except as prohibited or limited by
regulations of the superintendent, exercise such powers as are usual in connection with
the business of banking in the places where such foreign banking office transacts its
business.
B. The accounts of each foreign banking office shall be maintained independently of
the accounts of all other banking offices and the profit or loss of the office for each
fiscal year shall be recorded as a separate item in the general ledger of the bank.
C. A bank having a foreign banking office may, on thirty days' notice to the
superintendent or such shorter notice as may be approved by him in individual cases,
establish such additional banking office or offices as specified in the notice in the
same country without filing an application for approval, unless otherwise ordered by the
superintendent.
D. For the purposes of this section, the term "foreign banking office" means a
banking office in a foreign country or in a dependency or insular possession of the
United States.
6-192 Investments in international and foreignbanking and financing corporations; limitation; consent;exceptions
A. No bank may, without the consent of the superintendent, invest in stock or other
evidence of ownership in any of the following:
1. Corporations organized under the laws of the United States or any state and
principally engaged in international or foreign banking or in other international or
foreign financial operations, or in banking or other financial operations in a dependency
or insular possession of the United States, either directly or through the agency,
ownership or control of local institutions in foreign countries, or in such dependencies
or insular possessions.
2. Banks organized under the laws of a foreign country or a dependency or insular
possession of the United States. No investment shall be made in a foreign bank if it is
engaged directly or indirectly in any activity in the United States unless the activity
is in the judgment of the superintendent incidental to the international or foreign
business of such bank.
B. The aggregate amount invested in all banks and corporations described in
subsection A of this section shall not exceed, at the time any such investment is made,
twenty-five per cent of the capital account of the bank as defined in section 6-351.
C. The consent of the superintendent for any investment under subsection A of this
section shall be subject to such conditions as he prescribes in his order of approval and
the investment shall be subject to his regulations.
D. The provisions of subsections A and B of this section shall not apply to shares
or evidences of ownership acquired by a bank in the regular course of securing or
collecting a debt contracted in good faith but shares or evidence of ownership acquired
in collecting a debt shall be disposed of within a reasonable time unless otherwise
lawfully held under subsections A and B of this section.
6-193 Bank and holding company subsidiaries;powers
A subsidiary of a bank or a nonbank subsidiary of a holding company may:
1. Deal in and underwrite all obligations issued or guaranteed by or on behalf of a
state or a political subdivision of a state or an agency or instrumentality of either a
state or political subdivision.
2. Organize, sponsor, operate and control an investment company, as defined in
section 3 of the investment company act of 1940 (15 United States Code section 80a-3),
and underwrite, deal in, sell and distribute, as principal or agent, or both, the
securities of such an investment company.
3. Deal in and underwrite:
(a) Promissory notes secured by real estate mortgages.
(b) Credit obligations secured by real or personal property or manufactured
housing.
(c) Participation interests in such notes and credit obligations.
(d) Mortgage related payment bonds secured by such notes or participation
interests.
4. Underwrite, deal in, sell and distribute, as principal or agent, or both,
commercial paper issued by any entity.
6-201 Authority to engage in banking business;exception
A. No person, except a national banking association with its home office in this
state or bank authorized to do business in this state pursuant to section 6-217 or
section 6-322, subsection A, shall engage in the banking business in this state without a
banking permit.
B. For the purposes of this section, a person engaged in the business of receiving
money on deposit subject to payment by check or any other form of order or request or on
presentation of a certificate of deposit or any other evidence of debt is engaged in the
banking business.
C. Nothing in this section shall prohibit a savings and loan association qualified
to do business in this state from performing any acts authorized by chapter 3 of this
title, a credit union qualified to do business in this state from performing any act
authorized by chapter 4 of this title, a licensee or authorized delegate under chapter 12
of this title from performing any act regulated by that chapter or a trust company
qualified to do business in this state that maintains savings accounts or time deposits
pursuant to section 6-882 from performing any act authorized by chapter 8 of this title.
6-202 Existing banks
The authority under which an existing bank is engaged in the banking business or the
banking and trust business under the laws of this state prior to the effective date of
this article shall continue in full force and effect. The superintendent may, and shall
upon request, issue a banking permit to such bank to evidence such authority without any
further act on the part of the bank or the payment of any fee.
6-203 Application for banking permit
An application for a banking permit or amendment to a banking permit shall be in
writing, in such form as the superintendent may prescribe, and shall be supported by such
information, data and records as the superintendent may require to make the findings
necessary for the issuance or amendment of the permit.
6-204 Issuance of banking permit; trustbusiness; conditional approval; hearing; banker's bank;definitions
A. Upon the filing of an application for a banking permit the superintendent shall
make or cause to be made an investigation and examination of the facts concerning the
applicant. Except as provided in subsection F, the superintendent shall issue the permit
if, but only if, he finds:
1. The applicant is a corporation organized under the laws of this state having
powers and purposes to engage in the banking business.
2. The deposits of the bank will be insured by the federal deposit insurance
corporation when the bank commences business.
3. The ability and integrity of the persons involved in the organization and
management of the proposed bank are such as to demonstrate that it will be operated in a
sound and lawful manner.
4. The applicant has paid in capital which is adequate for its prospective
business.
5. The need for the bank in the community or area where the bank will be located is
such as to demonstrate the favorable prospect for a sound banking operation.
B. An application which is not denied or approved by the superintendent within
ninety days after the application is filed with the superintendent is deemed to be
approved by the superintendent as of the first day after the period.
C. A banking permit may initially or by amendment include the authority of a bank
to engage in the trust business.
D. The superintendent may approve the application conditioned upon specific
requirements being met, but a permit shall not be issued unless such conditions have been
met within the time specified in the order or any extension.
E. The permit may be granted or denied without a hearing, but the superintendent
may, and shall at the request of the applicant, fix a date for a hearing on the
application. At the hearing any person may be heard with reference to the facts to be
investigated.
F. The superintendent shall not issue a banking permit pursuant to subsection A for
a banker's bank unless all of the following apply:
1. The stock of the applicant is owned exclusively by one or more state or
nationally chartered banks or, if the stock is owned by a holding company, the holding
company's stock is owned exclusively by one or more state or nationally chartered banks.
2. The applicant engages in or will engage exclusively in providing banking
services to or for other depository institutions or their holding companies and the
directors, officers or employees of the depository institutions.
3. The applicant offers or will offer correspondent banking services for other
depository institutions or their holding companies.
4. The applicant is fully insured by the federal deposit insurance corporation.
5. No single entity acquires or retains at any time ownership, control or power to
vote more than ten per cent of any class of voting securities of the banker's bank.
G. For purposes of this section:
1. "Banker's bank" means an entity that is owned exclusively by one or more state
or nationally chartered banks or bank holding companies and that exclusively provides
banking services to or for other depository institutions and their holding companies.
2. "Nationally chartered bank" means a bank or savings bank chartered by the office
of the comptroller of the currency or the office of thrift supervision.
6-205 Term of permit; surrender;revocation
A. A banking permit shall be valid until surrendered to the superintendent or
revoked by him.
B. No banking permit may be surrendered to the superintendent until such time as
the superintendent finds that all of the deposit liabilities of the bank have been
satisfied in full or assumed by another bank.
C. A banking permit expires automatically when a bank is placed in receivership.
6-211 Definitions
In this article, unless the context otherwise requires:
1. "Converting bank" means a bank converting from a national to a state bank, or
the reverse.
2. "In-state financial institution" means a state or national bank or savings and
loan association with its home office in this state, or holding company with its home
office in this state.
3. "Merger" includes consolidation.
4. "National bank" means a national banking association located in this state.
5. "Out-of-state financial institution" means a state or national bank or savings
and loan association with its home office in a state other than this state, or holding
company with its home office in a state other than this state.
6. "Resulting bank" means the bank resulting from a merger or conversion.
7. "State bank" means a corporation holding a banking permit under the laws of this
state.
6-212 Resulting national bank
Nothing in the law of this state shall restrict the right of a state bank to merge
with or convert into a national bank. The action to be taken by such merging or
converting state bank and its rights and liabilities and those of its stockholders shall
be as prescribed at the time of the action by the law of the United States, but the state
bank shall give notice to the superintendent of the adoption by its board of directors of
any plan of merger or conversion.
6-215 Retention of nonconforming assets;permission; maximum value
If a merging or converting bank has assets which do not conform to the requirements
of law for a state bank or if assets acquired by a state bank in the transaction of its
assuming deposit liabilities of another bank do not conform to such legal requirements,
the superintendent may permit the resulting bank to retain such assets for a reasonable
time, but shall fix the maximum value at which the assets may be carried by the resulting
or assuming bank.
6-216 Continuation of business and corporateentity
A resulting state bank shall be considered the same business and corporate entity as
each merging bank or converting bank. All rights of property, franchises and interests
of each merging bank or the converting bank shall be transferred to and vested in the
resulting state bank by virtue of such merger or conversion without any deed or other
transfer. The resulting state bank, without any order or other action on the part of any
court, shall hold and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests as
trustee, executor, administrator, conservator, guardian, registrar of stocks and bonds,
assignee, receiver and in every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises and interests were held or enjoyed by any one of
the merging banks or the converting bank at the time of the merger or conversion. Any
reference to the merging bank or converting bank in any contract, will or other document,
whether executed or effective before or after the merger or conversion, shall be a
reference to the resulting bank.
6-217 Emergency acquisition of in-statefinancial institution
A. Notwithstanding any other provisions of law, an in-state financial institution
or out-of-state financial institution may acquire an in-state financial institution if
the superintendent determines that both of the following exist:
1. The in-state financial institution proposed to be acquired is in danger of being
placed in receivership by the superintendent or the relevant federal agency.
2. The acquisition is necessary to protect the financial interests of the in-state
financial institution's depositors and creditors.
B. The superintendent shall make his final determination under this section in
writing.
6-231 Deposit accounts
A bank may maintain all types of deposit accounts and prescribe such terms and
conditions relating to the accounts as are permissible for the bank to maintain the
insurance on its deposits by the federal deposit insurance corporation.
6-232 Powers of attorney; notice of revocation;payment after notice
A. A bank may continue to recognize any act of a depositor's agent as authorized by
the depositor in writing to the bank until the bank receives a written notice of
revocation signed by the individual depositor who granted the authority or, in the case
of a corporation, partnership or association, evidence satisfactory to the bank of such
revocation.
B. Notwithstanding that a bank has received written notice of revocation of the
authority of such agent, it may, until ten days after receipt of such notice, pay any
item made, drawn, accepted or indorsed by such agent prior to such revocation, provided
that such item is otherwise properly payable.
6-233 Adverse claim to bank deposit; courtorder required; definitions
A. Notice to a bank of an adverse claim is not sufficient to require the bank to
refuse to honor the order of any person to whose credit the account stands or who has
prior authority on the books of the bank to operate the account, nor is such notice
sufficient to require the bank to recognize the adverse claimant in any respect, unless
the bank is directed to do so by a lawful order of a court in the United States. In the
absence of such court order the bank may refuse to honor the order on the account by any
person.
B. For the purposes of this section:
1. "Adverse claim" means a claim by any person who asserts the right to all or part
of a deposit account to the exclusion of anyone to whose credit the account stands on the
records of the bank. "Adverse claim" also includes conflicting claims of any persons to
the right to operate an account.
2. "Adverse claimant" means any person asserting an adverse claim.
6-234 Deposit of minor; school savingplan
A. A bank may operate a deposit account in the name of a minor or in the name of
two or more persons, one or more of whom are minors, and all rights and liabilities of
the bank and any depositor arising out of such account and any act of the parties in
relation thereto shall be of the same legal effect as if the minor is of full legal age.
B. Subject to such regulations as the superintendent may prescribe for the
protection of depositors, a bank may contract with the proper authorities of any
elementary or secondary school, or of any institution caring for minors, for the
participation by the bank in any school or institutional thrift or savings plan, and it
may accept deposits at such a school or institution, either by its own collector or by
any representative of the school or institution who becomes the agent of the bank for
such purpose.
6-235 Bank deposits in two or more names;payment to survivor
Bank deposits may be made in the name of two or more persons, including minors,
payable to either or any of them, or payable to either or any of the survivors or the
sole survivor, and the deposits or any part thereof and any interest thereon, may be paid
to or on order of any of the persons whether the other or others are living or not. The
receipt, order or acquittance of the persons so paid is a valid and sufficient release
and discharge to the bank for any payments so made.
6-236 Payment of deposits in trust
Bank deposits may be made in the name of one or more persons as trustees for one or
more persons designated as beneficiaries. The account and any balance thereof which
exists from time to time shall be held as a trust account and unless otherwise agreed
between the trustees and the bank:
1. Any such trustee during the trustee's lifetime may change any of the designated
beneficiaries by a written direction accepted by the bank.
2. The deposit or any part thereof with interest may be paid to or on the order of
any trustee whether any other trustee or beneficiary is living or not. Any such payment
shall constitute a lawful revocation of the trust as to the amount withdrawn and the
receipt order or acquittance of the person so paid is a valid and sufficient release and
discharge of the bank as to the amount so paid.
3. Upon the death of the last surviving trustee the deposit or any part thereof
with interest may be paid to or on order of any of the persons designated as
beneficiaries who are living at the death of the last surviving trustee and the receipt
order or acquittance of the person so paid is a valid and sufficient release and
discharge of the bank as to the amount so paid.
6-237 Payment of deposit to foreign personalrepresentative
If the deposit account is with one person and if within sixty days from the date of
death of such depositor, no personal representative of such decedent, qualified in this
state, has delivered a certified copy of letters testamentary or letters of
administration to the bank, the bank may pay the balance of the account of the deceased
depositor to the depositor's domiciliary personal representative qualified in another
state upon the presentation of letters testamentary or letters of administration
certified by the appointing court.
6-241 Banking days; notice; closing
A. A bank is authorized to fix from time to time the days and hours when each of
its banking offices that are located in this state will be open to the public for its
banking business. The days and hours need not be the same for each office. The bank
shall notify the superintendent of the days and hours of each banking office and of any
change in the scheduled days and hours of each office. The bank shall give further notice
by whatever means it selects as best calculated to advise the public of any change.
B. In an emergency or threat of an emergency or other circumstances beyond the
control of the bank which would imperil persons or property or impede normal operations,
all or any of its banking offices that are located in this state may be or remain
closed. Notice of the closing shall be given to the superintendent as promptly as
conditions will permit. The superintendent may order the reopening of any office on his
finding that conditions justifying the closing under this subsection do not then exist.
C. Any day on which a bank shall pursuant to this section be or remain closed shall
with respect to the bank be deemed a legal holiday.
D. Any office of a bank may be closed under subsection A or B, even though other
offices of the bank are open, but any day of such closing shall not be a legal holiday in
respect to any acts to be performed by or at the bank on such day unless the act is to be
performed only by or at the office which is closed.
E. Where pursuant to agreement or law any act is to be performed by or at a bank on
any day when such bank shall pursuant to this section be or remain closed, the act may be
performed on the next succeeding banking day with the effect as though performed on the
appointed day.
F. Nothing in any law of this state shall in any manner whatsoever affect the
validity of or render void or voidable the payment, satisfaction or acceptance of any
check or other negotiable instrument or any other transaction by a bank because done or
performed on any holiday or partial holiday or during any time other than regular banking
hours, but nothing in this subsection shall be construed to compel a bank to perform any
of the acts or transactions aforesaid except at its own option.
G. This section applies to out-of-state banks.
6-242 Preservation of bank records;regulations; disposal
A. Every bank shall retain its corporate and business records in accordance with
regulations of the superintendent. The regulations shall classify the records, establish
permissible methods for effective and economical preservation of information contained in
the records if the originals are destroyed pursuant to regulation, and prescribe the
minimum periods of time each record or permitted substitute shall be preserved.
B. In issuing his regulations under subsection A, the superintendent shall
consider:
1. Actions at law and administrative proceedings in which the production of bank
records might be necessary or desirable.
2. Statutes of limitation applicable to such action or proceedings.
3. The availability of information contained in bank records from other sources.
4. Such other matters as he shall deem pertinent in order that his regulations will
require banks to retain records for as short a period of time as is commensurate with the
interests of bank customers and shareholders and of the people of this state in having
bank records available.
C. A bank may dispose of any record or permitted substitute which has been retained
for the applicable record prescribed in accordance with the terms of this section, and
shall thereafter be under no duty to produce such record in any action or proceeding.
6-243 Acquisition of property to satisfy orprotect loans
Except as specifically prohibited by law, a bank may take property of any kind to
secure or satisfy or partially secure or partially satisfy an obligation to the bank.
6-244 Borrowing by bank; treatment ascapital
A bank may borrow money and issue evidence of indebtedness, but no borrowings shall
be treated as capital except in compliance with section 6-189.
6-245 Pledge of assets; rediscount; exceptionto requirement of security
A. A bank may pledge, mortgage or otherwise hypothecate its assets:
1. To qualify the bank to act as a fiscal agent for any governmental entity.
2. To secure deposits which are required by law to be secured.
3. To secure borrowings from one business day to the next from another bank.
4. To secure borrowings from a federal reserve bank or any federal agency.
5. To secure other obligations, exclusive of deposits, provided the aggregate value
of the assets as carried on the books of the bank encumbered for purposes other than
those specified in paragraphs 1 through 4 of this subsection shall not exceed the capital
account of the bank except with the approval of the superintendent.
B. The provisions of subsection A shall not prohibit or limit the sale or
rediscount of commercial paper or securities with endorsement, guarantee or agreement to
repurchase.
C. Whenever by the law of this state a bank is required to provide security for
deposits in the form of collateral, surety bond or any other form, such security is not
required to the extent such deposits are insured by the federal deposit insurance
corporation. For the purposes of this subsection, acceptable security for deposits
includes:
1. Certificates of deposit insured by an agent or instrumentality of the United
States.
2. Interest bearing savings deposits in banks and savings and loan associations
doing business in this state whose accounts are federally insured.
3. United States government obligations.
4. Municipal bonds and bonds issued by a state, county or school district.
5. Obligations for which the payment of principal and interest is guaranteed by the
United States or by an agency or instrumentality of the United States.
6. Registered warrants if offered as security for monies of the county by which
they are issued.
7. First mortgages and trust deeds together with the promissory notes or other
evidences of indebtedness described in the instruments on improved, otherwise
unencumbered real estate located in this state if no single mortgage or trust deed
represents more than ten per cent of the total collateral security and the promissory
note or other evidence of indebtedness secured by the mortgage or trust deed has been in
existence for at least three years and no default with respect to the promissory note or
other evidence of indebtedness has occurred during its existence.
6-246 Permitted investments;limitations
A. In addition to other investments authorized by law, a bank or trust company
that is acting as a fiduciary may invest and reinvest in the securities of an open-end or
closed-end management investment company or investment trust that is registered under the
investment company act of 1940 (15 United States Code section 80a-1), as amended, if the
portfolios of that investment company or investment trust consist of investments
permitted by the applicable fiduciary instrument. A bank or trust company may invest in
these securities notwithstanding that the bank or trust company, or an affiliate of the
bank or trust company, provides services to the investment company or investment trust as
an investment adviser, custodian, transfer agent, registrar, sponsor, distributor,
administrator, manager or otherwise and receives reasonable remuneration for those
services.
B. A bank or trust company that invests and reinvests in the securities of an
open-end or closed-end management investment company or investment trust authorized under
subsection A of this section shall disclose in the statement of the fiduciary account to
all persons whose funds are invested in the investment company or investment trust that
the bank or trust company provides services for and receives fees from the open-end or
closed-end management company or investment trust.
C. A bank may purchase for its own account any class of equity securities issued by
a banker's bank, as defined in section 6-204, if the aggregate investment does not exceed
ten per cent of the bank's capital. 6-271 Reserves against deposits; rule;limitations
Banks which are not members of the federal reserve system shall maintain such legal
reserves as are from time to time fixed by rule of the superintendent, not to exceed
fourteen per cent of demand deposits or seven per cent of time and savings deposits.
6-272 Deposits exempt from reserverequirement
In determining the legal reserves required by this article a bank may deduct from
its gross deposits such deposits as are lawfully secured and each deposit balance due to
another bank to the extent of a reciprocal deposit due from such other bank.
6-273 Form of reserves; limitations
Legal reserves shall consist of:
1. Cash.
2. Cash items in the process of collection payable immediately upon presentation in
the United States.
3. Unpledged obligations of the United States maturing not more than six months
from the date such obligation is used for reserve purposes at par.
4. Net deposit balances with each reserve depository in this state, exclusive of
deposits not payable on demand unless evidenced by a negotiable certificate of deposit
maturing not more than six months from the date the certificate is used for reserve
purposes.
5. Net deposit balances with each out-of-state reserve depository, exclusive of
deposits not payable on demand unless evidenced by a negotiable certificate of deposit
maturing not more than six months from the date the certificate is used for reserve
purposes, in an amount either approved by the superintendent in writing or not more than
the amount fully insured by the federal deposit insurance corporation or the national
credit union administration or any successor agency.
6-275 Computation of reserves
Compliance with reserve requirements shall be determined as of the close of business
on the first Thursday following the effective date of this chapter and every alternate
Thursday thereafter on the basis of the average daily reserves maintained during the
fourteen day period ending on such Thursday and the average daily net deposit balances
for the fourteen day period ending on the Tuesday previous to such Thursday.
6-321 Definitions
In this article, unless the context otherwise requires:
1. "Acquire" as applied to an in-state financial institution means any of the
following actions or transactions:
(a) The merger or consolidation of an in-state financial institution with an
out-of-state financial institution.
(b) The acquisition by an out-of-state financial institution of the direct or
indirect ownership or control of voting shares of an in-state financial institution if,
after the acquisition, the out-of-state financial institution will directly or indirectly
own or control more than fifteen per cent of the outstanding voting shares of the
acquired in-state financial institution.
(c) The direct or indirect acquisition of all or substantially all of the assets of
an in-state financial institution.
(d) The taking of any other action that would result in the direct or indirect
control of an in-state financial institution.
2. "Control" means direct or indirect ownership of or power to vote fifteen per
cent or more of the outstanding voting shares of an in-state financial institution or to
control in any manner the election of a majority of the directors of an in-state
financial institution.
3. "De novo entry" means a newly established bank or savings and loan association
which is not created through the acquisition of or merger with an in-state financial
institution and control is through an out-of-state financial institution.
4. "Filed with the superintendent" means when the complete application including
any amendments or supplements containing all the information in the form required by the
superintendent is received by the superintendent.
5. "In-state financial institution" means a state or federal bank, savings bank or
savings and loan association with its home office in this state, or holding company with
its home office in this state.
6. "Out-of-state financial institution" means a state or federal bank, savings bank
or savings and loan association with its home office in a state other than this state, or
holding company with its home office in a state other than this state.
6-322 Interstate acquisitions; approval ofsuperintendent; exception
A. Except as otherwise expressly permitted by federal law, an out-of-state
financial institution shall not acquire an in-state financial institution unless the
superintendent has approved the acquisition. The superintendent shall not approve an
acquisition unless the superintendent has determined that deposits held in this state
will be insured by the federal deposit insurance corporation when business in this state
is commenced.
B. For those out-of-state financial institutions required to obtain approval from
the superintendent as prescribed by subsection A, the acquiring financial institution
shall submit to the superintendent a written application for approval in the form the
superintendent prescribes. The acquiring financial institution shall accompany the
application with such information, data and records as the superintendent may require in
order to make the determination. In an interstate transaction, the superintendent may
accept an application that is in the form and manner prescribed by the state or federal
agency that is the primary regulator of the applicant and that is supplemented as
necessary to allow the superintendent to determine whether to deny or approve the
application. The superintendent shall adopt rules prescribing the form and the
information, data or records that the superintendent requires. In evaluating
applications for acquisition pursuant to subsection F, the superintendent may give
consideration to the potential impact of the acquisition on the financial stability of
the acquiring institution.
C. A newly established in-state financial institution created for the purpose of
acquiring all or substantially all the assets of a former in-state financial institution
from an out-of-state financial institution shall not constitute a de novo entry if the
acquisition by the newly established in-state financial institution is completed within
ninety days of the date on which the out-of-state financial institution acquired all or
substantially all of the assets of the former in-state financial institution.
D. In the case of an out-of-state financial institution that is not required to
obtain the approval of the superintendent, the out-of-state financial institution shall
give written notice of the acquisition to the superintendent ten days before the
effective date of the acquisition, unless a shorter time is prescribed by federal law.
E. From and after August 31, 2001, an out-of-state financial institution may
acquire a branch of an in-state financial institution for operation as a branch without
acquiring the entire in-state financial institution or its permit. A branch of an
in-state financial institution is not eligible to be acquired unless it has been in
continuous operation Five or more years.
F. Notwithstanding subsection E, an out-of-state financial institution may acquire
a branch of an in-state financial institution without acquiring the entire institution if
all of the following apply:
1. The financial institution proposed to be acquired is in danger of being placed
in receivership.
2. The acquisition is necessary to protect the financial interests of the in-state
financial institution's depositors and creditors.
3. The terms of the acquisition are acceptable to the relevant federal agency.
4. The superintendent approves the acquisition pursuant to this section in writing.
6-324 De novo entry by certain financialinstitutions
An out-of-state financial institution may establish a bank, savings and loan
association or holding company in this state through de novo entry subject to the
applicable laws of this state. An in-state financial institution may not be acquired for
operation as a branch by an out-of-state financial institution until it has been in
continuous operation for five or more years on the date of the proposed acquisition.
6-325 Failure to act on application asapproval
The superintendent shall rule on any application submitted under section 6-322 not
later than sixty days following the date the application is filed with the
superintendent. If the superintendent fails to rule on the application within the
required sixty day period, the failure to rule shall be deemed a final decision of the
superintendent approving the application.
6-326 Denial of application; grounds
The superintendent shall deny an application for acquisition of an in-state
financial institution if the superintendent finds any of the following:
1. The financial condition of the acquiring out-of-state financial institution is
such that it may jeopardize the financial stability of the in-state financial institution
or prejudice the interests of the depositors, beneficiaries, creditors or shareholders of
the in-state financial institution.
2. Any plan or proposal to liquidate the in-state financial institution, to merge
or consolidate the in-state financial institution or to make any other major change in
the business, corporate structure or management of the in-state financial institution is
not fair and reasonable to the depositors, beneficiaries, creditors or shareholders of
the in-state financial institution.
3. The applicant has exhibited, or has acquired a reputation for, such lack of
honesty or integrity to indicate that it would not be in the interest of the depositors,
beneficiaries, creditors or shareholders of the in-state financial institution or in the
interest of the public to permit such applicant to control the in-state financial
institution.
4. The applicant neglects, fails or refuses to furnish to the superintendent any
information requested by the superintendent.
5. The applicant fails to obtain any required approval from a federal or state
agency with authority over any of the financial institutions that are participating in
the transaction.
6. The acquisition is contrary to law.
6-327 Applicable laws and rules; cooperativeagreements; contracting exemption
A. Any bank, savings and loan association, out-of-state financial institution or
holding company doing business as such in this state is subject to the applicable laws of
this state and all the rules adopted pursuant to such laws, including examination and
supervision by the superintendent.
B. In the case of an acquisition to create a branch in this state, the acquisition
is prohibited unless the home state of the out-of-state financial institution permits
reciprocal acquisitions for the same purposes.
C. An out-of-state financial institution that acquires an in-state financial
institution or an out-of-state financial institution that is the result of a merger with
an in-state financial institution may do either of the following subject to applicable
state and federal laws:
1. Continue to operate the in-state financial institution.
2. Convert any existing principal banking office or any or all branches in this
state into a branch of the out-of-state financial institution.
D. An in-state branch of an out-of-state financial institution shall comply with
the laws of the institution's home state, or shall comply with federal law in the case of
a federally chartered institution. The laws of the institution's home state apply,
except as follows:
1. The laws of this state apply if necessary to preserve the safety and sound
operation of a branch in this state or to otherwise protect the citizens of this state.
2. Any laws of this state regarding community reinvestment, consumer protection,
fair lending and intrastate branching apply to a branch in this state of an out-of-state
financial institution to the same extent that those laws apply to an in-state financial
institution.
3. An out-of-state financial institution that is authorized to operate a branch in
this state may engage in activity only to the extent permissible for an in-state
financial institution.
E. Subsection D does not limit the jurisdiction or authority of the superintendent
to examine, supervise and regulate an out-of-state financial institution that is
operating or seeking to operate a branch in this state or to take any action or issue any
order with respect to that branch.
F. An out-of-state bank that operates a branch in this state shall do both of the
following:
1. Obtain a grant of authority to transact business in this state and comply with
all other applicable filing requirements prescribed by title 10 to the same extent as any
other entity transacting business in this state.
2. Provide written notice to the superintendent of the out-of-state bank's grant of
authority to transact business in this state.
G. The superintendent may adopt rules, including the imposition of reasonable
application and examination fees, to implement and administer this article.
H. The superintendent may do any of the following:
1. Examine, supervise and regulate a branch operated in this state by an
out-of-state bank and take any action or issue any order with respect to that branch.
2. Examine, supervise and regulate a branch operated in another state by a bank and
take any action or issue any order with respect to that branch.
3. Coordinate these activities with any other state or federal agency that shares
jurisdiction over that financial institution.
4. Coordinate the examination, supervision and regulation of any in-state financial
institution with the examination, supervision and regulation of a branch or affiliated
financial institution that is operating in another state by doing any of the following:
(a) Contracting with an agency that shares jurisdiction over the financial
institution to retain its examiners at a reasonable rate of compensation.
(b) Offering the services of the department's examiners at a reasonable rate of
compensation to an agency that shares jurisdiction over the financial institution.
(c) Collecting fees on behalf of or receiving payment of fees through an agency
that has jurisdiction over the financial institution.
5. Enter into cooperative agreements with federal and state regulatory authorities
for the examination and supervision of any acquired or de novo entry bank, savings and
loan association or holding company and may accept reports of examination and other
records from those authorities instead of conducting an examination.
I. The department is exempt from title 41, chapter 23 in contracting for examiners
pursuant to subsection H, paragraph 4, subdivision (a).
6-328 Deposit concentration limits
A. Neither an out-of-state financial institution nor an in-state financial
institution shall acquire another out-of-state financial institution or in-state
financial institution if either of the following conditions exist:
1. The resulting out-of-state financial institution, in-state financial institution
or affiliation would control thirty per cent or more of the bank deposits held in this
state.
2. One of the out-of-state financial institutions or in-state financial
institutions in the acquisition already controls thirty per cent or more of the bank
deposits held in this state.
B. Subsection A does not apply to any interstate acquisition involving only already
affiliated entities.
C. The superintendent, by order and on findings of fact and conclusions of law, may
waive the deposit concentration limit prescribed by subsection A. In determining whether
to waive the deposit concentration limit, the superintendent shall not discriminate
against out-of-state financial institutions and shall not grant a waiver unless the
superintendent finds that the waiver will promote any of the following:
1. The availability of financial services.
2. The marketability of in-state financial institutions.
3. Another public interest.
6-329 Deposit production offices
A. Except as prescribed by subsection B of this section, a person shall not
establish or operate a deposit production office or similar office in this state for the
purpose of soliciting deposits or similar evidence of indebtedness or participation
interests in indebtedness.
B. This section does not apply to activities conducted at the main office or a
branch of an affiliated financial institution that is acting as an agent as prescribed by
section 6-184.
C. In determining whether an activity is prohibited by this section, the
superintendent shall consider the factors specified in the Riegle-Neal interstate banking
and branching efficiency act of 1994, section 109 (c)(2) (P.L. 103-328; 108 Stat. 2338;
12 United States Code section 1835a(c)(2)).
6-330 Rights, powers and privileges ofout-of-state banks
Except as prohibited by federal law, an out-of-state bank that has a banking office
in this state has all of the rights, powers and privileges and is entitled to the same
exemptions and immunities as a comparable in-state financial institution that holds a
permit under this title and is subject to all of the provisions of this title to the same
extent as a comparable in-state financial institution.
6-331 Enforcement
A. If the superintendent determines that a branch that is maintained in this state
by an out-of-state bank is being operated in violation of any law of this state or any
rule adopted by this state or that the branch is being operated in an unsafe or unsound
manner, the superintendent has authority to take all enforcement actions against that
branch as if the branch were regulated pursuant to section 6-201.
B. The superintendent shall promptly notify the regulatory agency of the
out-of-state bank's home state of each enforcement action taken against the out-of-state
bank and to the extent practicable shall consult and cooperate with the regulatory
agencies of the out-of-state bank in pursuing and resolving any enforcement actions.
6-351 Definitions
In this article, unless the context otherwise requires:
1. "Capital" means the aggregate primary capital and secondary capital.
2. "Obligation" means a primary or contingent liability for the payment of money.
3. "Person" includes an individual, a corporation, government or governmental
subdivision or agency, business trust, estate, trust, partnership, joint venture or
association or any other legal or commercial entity.
4. "Primary capital" means the aggregate of the following:
(a) Common and perpetual preferred stock.
(b) Capital surplus.
(c) Undivided profits.
(d) Contingency and other capital reserves.
(e) The allowance for loan and lease losses.
(f) Mandatory convertible debt only to the extent that it does not exceed twenty
per cent of the aggregate of subdivisions (a) through (e) of this paragraph.
5. "Secondary capital" means the aggregate of the following:
(a) Limited life preferred stock.
(b) Subordinated notes and debentures.
(c) Mandatory convertible debt not included in primary capital.
6-352 Limitations of obligations to a bank;exceptions; definitions
A. A bank may lend to a single borrower an amount equal to not more than fifteen
per cent of its capital, plus an amount equal to an additional ten per cent of its
capital if the additional amounts are fully secured by readily marketable collateral
which has a market value, as determined by reliable and continuously available price
quotations, at least equal to the amount of the loan.
B. Each bank shall institute adequate procedures to ensure compliance with
subsection A.
C. The limitations of subsection A do not apply to:
1. Obligations incurred by the assignment, endorsement or guarantee of the
obligation of a third person, including an agreement to purchase the third person's
obligation or the collateral therefor, if the bank has evaluated the financial condition
and responsibility of the third person and as a result of such evaluation accepts the
obligation in reliance primarily upon the third person for payment. In such case the
obligations of the third person to the bank shall be the sole applicable limitation.
2. Obligations, whether general obligations or payable from revenues or special
assessment, of the United States or any agency or instrumentality thereof, a federal
reserve bank, a state of the United States or a subdivision, instrumentality or public
authority organized under the laws of such state.
3. Obligations to the extent they are secured by the guarantee, insurance or other
like commitment of the United States, an agency or instrumentality of the United States,
a federal reserve bank, a state of the United States or a subdivision, instrumentality or
public authority organized under the laws of such state, whether the commitment provides
for payment in cash or in obligations described in paragraph 2 of this subsection.
4. Obligations to the extent they are secured by any obligation described in
paragraphs 2 and 3 of this subsection at the value thereof, not exceeding face value, at
the time the obligation to the bank is created.
5. Obligations to the extent they are secured by deposits in the bank.
6. Obligations which are outstanding in the regular process of bank collection or
clearing transactions.
7. Obligations of a qualified reserve depository of the bank, unless the
superintendent has by specific order excluded or limited the obligations of such
depository from the exemption of this paragraph.
8. Any obligation created in the sale by the bank of any of its property where the
bank retains title, lien or security interest in the property sold to secure the
obligation.
9. Any obligation under the lease by the bank of any personal property acquired by
the bank in collecting an obligation to it or the lease of any of its real property or
banking equipment.
10. That portion of the obligations of a person to the bank which exceed the
aggregate funds paid and the value of property delivered by the bank in creating the
obligation.
11. Any obligation exempt by rule of the superintendent or arising from the sale of
any assets of the bank in a transaction which has been approved by the superintendent.
D. If the bank participates in an obligation with another obligee, the limitations
of this section shall be applicable only to the extent of the bank's participation.
E. If the value of collateral for a loan which is required to be fully secured under
subsection A falls below one hundred per cent of the outstanding loan, the loan must be
brought into conformance within five business days, except if judicial proceedings,
regulatory actions or other extraordinary occurrences prevent the bank from taking
action.
F. For the purposes of this section:
1. A renewal of a loan or a modification and extension of original repayment terms
are not deemed to be a new loan or an extension of credit except in instances in which
interest on the renewed loan or extension of credit is capitalized or additional money is
advanced.
2. "Readily marketable collateral" means financial instruments or bullion which are
saleable under ordinary circumstances with reasonable promptness at a fair market value
determined by quotations based on actual transactions of an auction or a similarly
available daily bid and asked price market.
3. "Financial instruments" includes stocks, bonds and debentures traded on a
national securities exchange, over the counter margin stocks as defined in regulation U
of the federal reserve board, commercial paper, notes, negotiable certificates of
deposit, banker's acceptance and shares in money market and mutual funds of the type in
which banks may perfect a security interest.
4. Financial instruments may be denominated in foreign currencies which are freely
convertible to United States dollars. If denominated and payable in a currency other
than that of the loan or extension of credit which it secures, the bank's procedures
adopted pursuant to subsection B shall require that the collateral be revalued at least
monthly using appropriate foreign exchange rates in addition to being valued at current
market value.
6-353 Obligations of directors, officers andemployees; reports
A. No bank shall make any loan to any of its own directors, officers or employees
which shall cause the outstanding loans of the bank to such person to exceed one per cent
of the capital account of the bank unless the loan is expressly authorized by the board
of directors with any interested director taking no part in such vote. Any loan in
violation of this subsection shall be payable on demand to the extent required to bring
the loan into compliance with this subsection.
B. Each bank shall include with but not as a part of each report of condition to
the superintendent a report of the obligations to the bank of each director and officer
outstanding at the date of the report of condition, if the aggregate obligations of such
person, exclusive of obligations outstanding in the regular process of bank collection
transactions, exceeds the lesser of fifty thousand dollars or one per cent of the capital
account of the bank.
6-354 Loans on capital stock or capitalobligations of a bank
No bank shall take or hold its capital stock or its capital obligations as security
for an obligation to the bank unless such security is necessary to prevent loss on an
obligation previously contracted.
6-355 Change loans
A bona fide change loan of ten thousand dollars or less, for a term not to exceed
four days, which entails the services of furnishing coins or currency in specific amounts
required by the borrower, may be compensated for, at the option of the bank, in lieu of
interest, by a service charge of not more than fifteen dollars.
6-381 Authority of bank to engage in the trustbusiness
A bank may not engage in the trust business unless authorized by its banking
permit. A bank which engages in the trust business is subject to the provisions of
chapter 8 of this title in the administration of its trust accounts.
6-382 Powers of bank as fiduciary
The prohibitions, limitations and restrictions on the transactions of a bank in
dealing with its general assets shall not be applicable to a bank in the exercise of its
powers as a fiduciary over assets held in such capacity or with respect to obligations
incurred in such capacity against the credit of the trust.
6-383 Identification and segregation offiduciary assets
Except as may be otherwise provided by law or by the writing creating the trust, a
bank holding any asset as a fiduciary shall segregate all such assets from the general
assets of the bank and shall maintain such safekeeping methods and records that the
assets of each trust may be readily identified and distinguished from the assets of any
other trust. Trust assets may be held in the name of nominees of the bank whether the
bank is the sole fiduciary or acting with others, but the bank shall be responsible for
the acts of any such nominee.
6-384 Deposit of fiduciary funds
Cash held by a bank as fiduciary may be deposited to the credit of the bank as such
fiduciary on time or demand account with itself or with any other bank the deposits of
which are insured by the federal deposit insurance corporation. Unless otherwise
provided by the writing creating the trust, if such funds are deposited with itself the
bank shall secure such deposits with securities described in section 6-352, subsection A,
paragraph 2, or other security approved by the superintendent for the purpose, in the
amount of the deposit, subject to subsection C of section 6-245.
6-385 Substitution of corporatefiduciary
Any fiduciary capacity of a trust company, a bank or a savings and loan association
as trustee, executor, administrator, guardian, conservator, registrar of stocks and
bonds, assignee, receiver or any other fiduciary capacity may be transferred to and
assumed by a bank authorized under its banking permit to conduct trust business in this
state or a savings and loan association authorized to conduct trust business in this
state, without any order or other action on the part of any court or interested person,
with the approval of the superintendent to the extent the substitution is specified in
the order of approval. The superintendent's order of approval shall be conclusive
evidence of the authority of the assuming bank or savings and loan association to hold
and enjoy all rights of property, franchises and interests, including appointments,
designations and nominations, and all other rights and interests in each such fiduciary
capacity in the same manner and to the same extent as such rights, franchises and
interests were held or enjoyed by the bank, savings and loan association or trust
company for which the assuming bank or savings and loan association has been
substituted. The substitution of fiduciary provided in this section is to assure a
continuity of fiduciary administration and is supplemental to other rights and powers of
substitution which require no approval by the superintendent. Substitution by order of
the superintendent shall not affect the authority of the court having jurisdiction over
the trust to determine the right of any other person to succeed to the fiduciary capacity
of the assuming bank or savings and loan association.
6-386 Investment by fiduciaries; governmentalobligations
In the absence of an express provision to the contrary, if an indenture or other
governing instrument directs, requires, authorizes or permits investment in United States
government obligations, a bank, trust company, trust department or other fiduciary may
invest in the obligations, either directly or in the form of securities or other
interests in any open end or closed end management type investment company or investment
trust registered under the investment company act of 1940 (54 Stat. 789; 15 United States
Code sections 80a-1 through 80a-64) if the portfolio of the investment company or
investment trust is limited to United States government obligations and repurchase
agreements fully collateralized by United States government obligations and the
investment company or investment trust takes delivery of the collateral for any
repurchase agreement either directly or through an authorized custodian.
6-391 Unauthorized conduct of banking business;false representation
It is unlawful for any person to engage in this state in the banking business as
defined in section 6-201 or to make use of the word "bank" or any other words in a manner
reasonably calculated to convey the impression that the person is engaged in the banking
business in this state, unless the act is done by or on behalf of a person having
authority under section 6-201.
6-394 Prohibited ownership or control of afinancial institution and interest in insurer insuring deposits;assets and reserves of insurer
A. No person may own or control a financial institution and at the same time have
an interest in an insurer that directly or indirectly insures or purports to insure the
deposit accounts of the financial institution.
B. No insurer of the deposit accounts of a financial institution other than a
federal insurance corporation shall have and maintain assets and reserves equaling less
than fifty per cent of the withdrawal accounts or investment certificates of the insured
financial institution.
6-395.01 Powers of superintendent in possession
When the superintendent has taken possession of a bank and until the appointment and
qualification of the receiver, or the adjudication that no ground for the receivership
exists, the superintendent shall be vested with the full and exclusive power of
management and control. The superintendent shall immediately close the bank for the
acceptance and withdrawal of deposits, but shall otherwise have the power to continue or
to discontinue the business, to stop or to limit the payment of its obligations, to
employ any necessary assistants, to execute any instrument in the name of the bank, to
commence, defend and conduct in its name any action or proceeding in which the bank may
be a party.
6-395.02 Federal deposit insurance corporation as receiver
If the court grants the application for receivership of a bank it shall first tender
the appointment as receiver to the federal deposit insurance corporation, which is
authorized to qualify and act without bond. If the corporation accepts the appointment
it shall have all of the powers, privileges and duties as such receiver provided by the
laws of this state except insofar as such powers, privileges and duties are in conflict
with the provisions of the federal deposit insurance act as amended, which act shall
control. If the corporation does not accept the appointment, the superintendent shall be
appointed receiver.
6-395.03 Federal deposit insurance corporation power pending judicial proceedings
The federal deposit insurance corporation may pay out and acquire the insured
deposit liabilities of a bank notwithstanding the possession by the superintendent or the
pendency of receivership proceedings and for such purposes shall have the use of the
facilities and records of the bank. The federal deposit insurance corporation and its
directors, officers, agents and employees, the superintendent and the receiver and the
respective agents and employees of each, shall be free from liability to the bank, its
directors, stockholders and creditors, for or on account of any action authorized by this
section.
6-395.04 Right of subrogation of federal deposit insurance corporation
The federal deposit insurance corporation shall be subrogated to the rights of
depositors upon payment of their claims to the extent required by the law of the United
States as a condition of the authority to insure deposits or make such payment.
6-395.05 Effect of receivership proceedings on liens and limitations
A. Every lien against any asset of a bank obtained by attachment, judgment, levy or
other legal or equitable process or proceedings after the filing of the application for
the appointment of a receiver under this article shall be null and void as to the
receiver and to any purchaser from the receiver where the sale is ordered by the court to
be free and clear of such liens.
B. A receiver, upon his appointment shall be vested by operation of law with the
title to all of the assets of the bank as of the time of filing of the application for
the appointment of the receiver; and as to all assets of the bank, whether or not coming
into his physical possession, upon which a creditor of the bank could have obtained a
lien by legal or equitable proceedings at the time of filing of the application for the
appointment of the receiver, the receiver shall be vested as of the time of such filing
with all of the rights, remedies and powers of a creditor then holding a lien thereon by
such proceedings, whether or not such a creditor actually exists.
C. Upon the filing of the application for the appointment of a receiver under this
article there shall be a postponement for a period of six months of the date upon which
any period of limitations fixed by statute or agreement would otherwise expire on a claim
or right of action of the bank or upon which an appeal must be taken or a pleading or
other document must be filed by the bank in any pending action or proceeding.
6-395.06 Rights, powers and duties of a receiver
A. After taking possession of the bank, the receiver may do any of the following in
its own name, in the name of the bank, in the name of both or otherwise:
1. Collect all obligations and money due the bank.
2. Exercise and possess all the rights, powers and privileges of the bank and its
officers and directors.
3. Institute or otherwise participate in any legal proceeding by or against the
receiver or the bank, or in which the bank or its creditors have an interest, and in
every way represent the bank and its creditors.
4. Be the custodian of all monies coming into the receiver's possession, but it may
deposit any part of those monies in a bank instituted by the federal deposit insurance
corporation.
5. Invest or reinvest those portions of the monies and assets of the bank as the
receiver deems appropriate.
6. Revise or settle any obligation on those terms and conditions that the receiver
deems appropriate.
7. Sell, compound, compromise or assign debts due the bank on those terms and
conditions that the receiver deems appropriate.
8. Negotiate settlements of claims against the bank on those terms and conditions
that the receiver deems appropriate.
9. Settle, compromise or obtain the release of claims against the bank for cash or
other consideration.
10. Sell, exchange, encumber or otherwise deal with any real or personal property
that has come into the bank's possession by any means on the basis of reasonable market
value without notice for cash or on those terms and conditions that the receiver deems
appropriate.
11. Execute, acknowledge and deliver any deed or other instrument necessary or
proper for any purpose.
B. Any deed or other instrument executed pursuant to subsection A, paragraph 11 is
valid for all purposes as if it had been executed as the act and deed of the bank.
C. The receiver may disburse monies for any of the following:
1. The discharge of any taxes, assessments or charges of any nature against the
bank or the receiver or on any asset or other property in which the bank or the receiver
has an interest.
2. The protection or improvement of any asset or other property of the bank.
3. The costs and expenses of the liquidation and for exercising the receiver's
rights, powers, privileges and duties.
4. Debts and interest owed by the bank that arise out of the liquidation or
otherwise.
5. The costs and expenses of the operation of the bank.
D. Notwithstanding the grant or denial of any power or duty prescribed in this
chapter, the receiver has those rights, powers, privileges, immunities and duties
authorized or imposed from time to time in specific cases by order of the court.
6-395.07 Sale of bank assets; authority to borrow monies; injunction; hearing
A. The receiver may sell all or any part of the bank's assets to another bank, to a
savings and loan association, to the federal deposit insurance corporation or to an
instrumentality of the United States government. The receiver may borrow from the
federal deposit insurance corporation, an instrumentality of the United States government
or a private insurer which insures or guarantees the bank's investment certificates any
amount necessary to facilitate the assumption of investment certificate liabilities by a
newly chartered or existing bank, assigning any part or all of the assets of the bank as
security for that loan.
B. If the receiver has taken possession of the property and business of a bank,
that bank, within ten days after the taking, if it deems itself aggrieved, may apply to
the court in the county in which the principal place of business of the bank is located
to enjoin further proceedings. The receiver may exercise all powers granted by this
article during the ten day period after taking possession of the property and business of
the bank. The court, after ordering the receiver to show cause why further proceedings
should not be enjoined and after a hearing and a determination of the facts on the
merits, may dismiss the application or enjoin the receiver from further proceedings and
direct the receiver to surrender the property and business to the bank or make such
further order as the court determines.
6-395.08 Rejection of contracts and leases on liquidation
The receiver may at his election reject any executory contract to which the bank is
a party or any obligation of the bank as a lessee of real or personal property. The
claim of a lessor for damages for injury resulting from the rejection of an unexpired
lease of real property or for damages or indemnity under a covenant in such lease shall
in no event be allowed in any amount exceeding the rent reserved by the lease, without
acceleration, for six months after the date of surrender or reentry, plus the amount of
the unpaid rent accrued to such date.
6-395.09 Notice to claimants on liquidation
As soon after the commencement of liquidation as practicable the receiver shall
cause notice of the liquidation to be published in a newspaper of general circulation in
each county in which the bank has an office, once a week for eight successive weeks. The
notice shall demand that all persons who have claims against the bank present them to the
receiver and make legal proof thereof, in accordance with the procedure prescribed in the
notice. The receiver shall mail a copy of the notice at the address shown on the records
of the bank, to each person who appears from the records to be a creditor of the bank,
with the advice of the nature and amount of the purported indebtedness, provided that the
notice in respect to any indebtedness to which the federal deposit insurance corporation
claims complete subrogation need be made only to the corporation. The receiver's advice
of a purported indebtedness shall not bind the receiver on the validity or the amount of
any claim based thereon.
6-395.10 Disposition of unclaimed property
A. As soon after the commencement of liquidation as practicable the receiver shall
cause notice to be given by mail to each person at the address shown on the records of
the bank who appears from the records to be a bailor of property held by the bank or a
lessee of a safety deposit repository. The notice shall demand that the property held by
the bank as bailee or located in its safe deposit repositories be withdrawn by a date
certain and, if appropriate, the notice shall designate the name of the bank that has
assumed the obligations of the closed bank as bailee or repository lessor and the place
where the repository or property will be located after a specified date.
B. If the obligations of the closed bank as repository lessor have not been assumed
by another bank, the safety deposit repository, the contents of which have not been
removed before the date specified in the notice under subsection A of this section, shall
be opened by the receiver in the manner provided for repositories upon which the payment
of rental is in default. The unclaimed contents of the repositories together with all
unclaimed property held by the bank as bailee shall be delivered by the receiver to the
clerk of the court having jurisdiction of the receivership to be disposed of pursuant to
section 44-302, subsection A, paragraph 11 if not thereafter claimed.
6-395.11 Priority of claims; interest
A. Claims allowed in a proceeding under this article shall be paid in the following
order:
1. Costs and expenses of the administration of the receivership and liquidation.
2. Taxes due to this state.
3. Claims with priority under the laws of this state and under federal law.
4. Claims of creditors that are fully secured including contract claims for
interest to the date of payment.
5. Claims of depositors.
6. Claims of general creditors.
7. Claims on obligations that are subordinated to the claims of general creditors.
B. Claims that are approved shall bear interest calculated as provided by law or by
judgment from the date that the court grants the superintendent's application for the
appointment of a receiver for that bank to the extent that monies are available to pay
that interest. If monies are not available to pay interest, the interest shall be
prorated. Interest owed shall receive the same priority as the claim on which it
accrues, but interest on a claim shall not be paid until all claims within that same
class have received payment of the full principal amount of the claim.
C. Any monies remaining after the payment of claims as provided in this section
shall be returned to the stockholders of the bank as prescribed by this article.
6-395.12 Payment of claims and distribution to stockholders on liquidation
From time to time after full provision has been made for the payment of disputed
claims and claims having priority, the receiver shall make ratable distribution on all
claims that have been proved to his satisfaction or adjudicated in a court of competent
jurisdiction. After all claims have been finally settled and paid, the balance of the
assets shall be distributed to the stockholders of the bank in proportion to the stock by
them respectively held.
6-395.13 Voluntary liquidation and dissolution
A bank may voluntarily dissolve and wind up its affairs as any other corporation
under the provisions of title 10, but no plan of liquidation or dissolution shall be
submitted to the stockholders until the superintendent upon application by the bank finds
that the bank has assets of such form and amount as to permit the satisfaction in full of
the claims of all depositors in accordance with their rights and that the plan contains
proper provision for such satisfaction.
6-395.14 Voidable transactions
A transaction that occurs within six months of the date on which the superintendent
takes possession of a bank is voidable by the receiver if the transaction has the effect
of enabling a creditor, affiliate, officer, director, stockholder or employee, or a
relative of any of those persons, to obtain a preference over any other creditor of the
bank.
6-395.15 Notice of taking; effect
On taking possession of the property and business of a bank, the receiver shall give
notice of the taking to all persons who hold any assets of that bank. The notice
required by this section is not a prerequisite to taking possession. A person who knows
of the taking may not claim a lien or charge against any assets of the bank for any
subsequent payment, advance or clearance or for any other subsequent liability.
6-395 Possession by superintendent andreceivership
If the status of a bank as an insured bank is terminated by the federal deposit
insurance corporation or the superintendent finds that a bank is in such an unsafe or
unsound condition that it is or will become unable to meet the anticipated demands of its
depositors and that the condition cannot be corrected by the procedures of chapter 1,
article 5 of this title or section 6-137, the superintendent may immediately take
possession and control of the bank and in such event shall, through the attorney general,
apply to the superior court for the appointment of a receiver for the bank. The court
may act upon the application forthwith and without notice to any person. If at any time
the court finds that no ground for receivership exists, the receivership shall be
dissolved and the superintendent's possession terminated.
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