In providing authority for the establishment of mutual savings banks it is the intent of the legislature to make available the benefits of mutual savings banking, thereby encouraging the practice of thrift and promoting the accumulation of funds for investment to develop the economy. For the accomplishment of these purposes, the legislature intends by this chapter to vest in mutual banks those powers generally possessed by state-chartered mutual savings banks and to grant authority to the Department of Commerce, Community, and Economic Development to define powers and to adopt regulations designed to enable mutual savings banks to perform their functions and to carry out the above purposes, subject to the provisions of AS 06.05 (Alaska Banking Code) that are not inconsistent with this chapter.
AS 06.15.020. Chartering of Mutual Banks.Upon written application by five signatories from among not less than 21 individuals acting in the capacity of qualified corporators named in the application, the department may issue a charter for a mutual bank.
AS 06.15.030. Issuance of Charter.A charter shall be issued if the department finds that a mutual bank will serve a useful purpose in the community in which it is proposed to be established, that there is reasonable expectation of its financial success, and that its operation will not unduly injure existing banking institutions.
AS 06.15.040. Qualification of Corporators.(a) Each corporator shall be an individual, not of unsound mind or capacity, whom the department finds to be of financial responsibility and good character. Without in any way limiting, by enactment of this section, the general regulatory power granted the department by this or any other act, the department may regulate the activities of corporators and prescribe standards of conduct for corporators in their dealings with their mutual bank.
(b) At least a majority of the corporators shall be residents of this state.
AS 06.15.050. Corporators.At their organizational meeting, the corporators shall adopt rules governing their activities as corporators, and may amend the rules from time to time. The rules shall establish the number of corporators and shall prescribe that any number of corporators not less than one-quarter of those at the time in office shall constitute a quorum for the purpose of doing business. At the organizational meeting, or an adjournment thereof, the corporators shall, by majority vote of those present, elect one-third of the total number of corporators to serve for a term of four years, one-third to serve for a term of seven years, and one-third to serve for a term of 10 years. Thereafter each corporator shall be elected for a term of 10 years so that the term of not more than one-third of the corporators will expire in any three-year period. The office of any corporator who becomes of unsound mind and capacity becomes vacant. Successor and additional corporators shall be elected by a majority vote of the corporators present at a duly constituted meeting. A corporator may be removed from office for cause upon the affirmative vote of two-thirds of the total number of corporators.
AS 06.15.060. Trustees.The corporators shall elect a board of trustees from among their number, consisting of not less than seven nor more than 25, or one-half of all the corporators minus one, whichever is less. A majority of the trustees shall be residents of this state.
AS 06.15.070. Terms of Trustees.The corporators shall, by a majority vote of those present at their organizational meeting, elect a board of trustees in the following manner: one-third for a term of one year; one-third for a term of two years; and one-third for a term of three years. Thereafter trustees shall be elected to serve for a term of three years. The office of any trustee becomes vacant if the trustee ceases to hold office as a corporator.
AS 06.15.080. Management and Control of Mutual Bank; Bylaws.The management and control of the affairs of a mutual bank is vested in the board of trustees. The board of trustees may adopt, amend and repeal bylaws governing the affairs of the mutual bank.
AS 06.15.090. Failure to Attend Meetings.The office of a trustee becomes vacant if the trustee fails to attend regular meetings of the trustees for a period of six months, unless excused during that period by a resolution adopted by the trustees.
AS 06.15.100. Prohibited Conduct of Trustees.A trustee may not
(1) receive remuneration as trustee except reasonable fees for attendance at meetings of trustees or for services as a member of a committee of trustees;
(2) use the position as trustee, or knowingly allow it to be used, to obtain preferential terms in dealings with the mutual bank for which the person is trustee;
(3) use the position as trustee, or knowingly allow it to be used, to induce an actual or prospective borrower from the mutual bank for which the person is trustee to purchase goods or services at a direct or indirect profit to the trustee.
A person may borrow money from the mutual bank for which the person is trustee to the same extent that a director may borrow money under AS 06.05.210.
AS 06.15.110. Trustee as Officer or Attorney.Nothing contained in AS 06.15.100 prohibits or limits any right of a trustee who is also an officer or attorney of the mutual bank from receiving compensation for services as an officer or attorney.
AS 06.15.120. Exceptions.Upon application by a mutual bank, an exception may be granted to any prohibition contained in AS 06.15.100 following a determination by the department that the exception sought is equitable, is supported by evidence, and is in the best interests of the depositors of the mutual bank.
AS 06.15.130. Deposit of Funds.A mutual bank may not deposit any of its funds except with a depositary approved by vote of a majority of all the trustees, exclusive of any trustee who is an officer, partner, director or trustee of the depositary.
AS 06.15.140. Commencement of Operation.(a) A mutual bank may not begin operation until the department has given its approval to do so. The department may not grant approval to begin operation until the mutual bank has qualified as an insured bank under the Federal Deposit Insurance Act and complied with the provisions of AS 06.05 (Alaska Banking Code) that are not inconsistent with this chapter. A mutual bank that ceases to be qualified under this subsection shall immediately stop operation.
(b) A mutual bank may not commence operation until it has deposited in cash to its credit as an expense fund such sums as the department may require. The deposit shall be evidenced by transferable deferred payment certificates.
Article 02. BANKING PRACTICES
AS 06.15.150. Surplus Requirements.The department may not issue a charter until there is deposited not less than $50,000 in cash to the credit of the mutual bank. The amount of the deposit constitutes the initial surplus. All amounts advanced as initial surplus shall be evidenced by transferable deferred payment certificates. The department shall approve the maturity, amount of installment repayment, and interest rate of each certificate.
AS 06.15.160. Additions to Surplus.As soon as practicable after the close of each fiscal year during its first 10 years of operation, each mutual bank shall credit to surplus at least 10 percent of its net earnings before interest for the preceding fiscal year. At the close of each fiscal year thereafter, each mutual bank shall credit to surplus a proportion of its net earnings for the preceding fiscal year, not exceeding 10 percent, as the department may prescribe by regulation. These credits to surplus shall be made only until surplus equals 12 percent of deposit liabilities. Thereafter and so long as surplus equals 12 percent of deposit liabilities the mutual bank may credit further amounts to surplus as it may determine.
AS 06.15.170. Limitation On Use of Surplus.The surplus of an operating mutual bank may be used only for the purpose of meeting losses.
AS 06.15.180. Borrowing.A mutual bank may borrow from any source and in any manner amounts without limit that are required to satisfy its obligations to its depositors. It may borrow for other purposes an aggregate outstanding amount not to exceed
(1) five percent of its total assets at the time of borrowing, exclusive of any sums borrowed under AS 06.15.140 - 06.15.170;
(2) 15 percent of its total assets if borrowing from the Federal Home Loan Bank.
A mutual bank may accept savings deposits to be held solely and absolutely in its own right by or in trust or other fiduciary capacity for any person, including an adult or minor individual, male or female, single or married, a partnership, nonprofit organization, association, fiduciary, corporation, or political subdivision or public or governmental unit. The bank may issue a passbook or other evidence of its obligation to repay the savings deposits.
AS 06.15.210. Right to Reject, Repay, and Classify Deposits.A mutual bank may
(1) reject any sums offered for deposit;
(2) repay any deposit at any time; and
(3) classify and differentiate among deposits on any bases that it may determine.
A mutual bank may pay interest on deposits from net earnings and undivided profits at the rates and intervals that its trustees approve.
AS 06.15.230. Withdrawal of Deposits.A mutual bank may at a time by resolution of its board of trustees require that up to 90 days' advance notice be given to it by each depositor before the withdrawal of any deposit or portion thereof. If the board of trustees adopts a resolution, a deposit does not need to be paid until the expiration of the notice period specified in the resolution. A mutual bank shall notify the department in writing on the day of the adoption of the resolution. Notwithstanding adoption of the resolution, a mutual bank may permit withdrawal of all or a part of any deposit prior to the expiration of the notice period prescribed by the resolution. The resolution may be rescinded at any time.
AS 06.15.240. Investments Authorized.Subject to the provisions of this chapter and regulations under this chapter, a mutual bank may invest in
(1) obligations of the United States and those for which the faith of the United States is pledged to provide for the payment of the interest and principal, obligations for which annual contributions to be paid under contract by the United States government or any of its instrumentalities in accordance with an Act of Congress entitled the 'Housing Act of 1949,' are pledged as security for the payment of the interest and principal, and obligations of any agency of the United States;
(2) obligations of any state of the United States and those for which the faith of any state of the United States is pledged to provide for the payment of the interest and principal;
(3) obligations of a city, village, town, county, department, agency, district, authority, commission or other public body of any state of the United States, subject to the exercise of the same degree of care and prudence that persons prompted by self-interest generally exercise in their own affairs;
(4) any property improvement note issued under the provisions of Title I of the National Housing Act and any other real property improvement note in a principal amount not in excess of $15,000, not including interest;
(5) obligations of the Dominion of Canada or provinces of the Dominion of Canada payable in United States funds;
(6) the stocks, bonds, and other securities of
(A) a corporation licensed under AS 10.13; or
(B) a corporation attempting to become licensed under AS 10.13 if the corporation intends to use the proceeds to fulfill the tasks necessary to become licensed under AS 10.13.
Subject to the provisions of this chapter and regulations under this chapter, a mutual bank may invest in first mortgages on unencumbered real property, including leasehold estates, subject to the following limitations:
(1) an investment in mortgages executed by any one mortgagor may not exceed in the aggregate two percent of the assets of the mutual bank at the time the investment is made, or $37,500 on a single family dwelling or $50,000 on a multiple family dwelling or other improved realty, whichever is greater;
(2) an investment in any one mortgage may not exceed two percent of the assets of the mutual bank at the time the investment is made, or as specified in (1) of this section, whichever is greater, or more than 80 percent of the appraised value of a one- to four-family residence securing a conventional loan; however, a mutual bank may make 95 percent of appraised value loans if the term of the loan does not exceed 30 years from the date of the first payment, and if the first payment date is no later than 60 days following final disbursement of the loan, and the loan is secured by an amortized mortgage, deed of trust, or other instrument under the terms of which the installment payments are sufficient to amortize the entire principal of the loan within the period ending on the date of its maturity and, in addition, the loan is either
(A) insured by mortgage insurance in an amount equal to 20 percent of the loan issued by a mortgage insurer authorized to do business in Alaska; or
(B) the loan is secured in addition to the amortized mortgage by a savings account held by the lending institution in an amount equal to 10 percent of the loan or other collateral acceptable to the department;
(3) except as provided in (2) of this section, an investment may not be made in a conventional loan secured by a mortgage on a one- to four-family residence unless the mortgaged property is located inside this state and the mortgage has a maturity not exceeding 30 years from the date of the first payment, and if the first payment date is no later than 60 days following final disbursement of the loan;
(4) an investment may not be made in a conventional loan if the aggregate unpaid principal of all conventional loans exceeds 80 percent of deposits plus all borrowings from the Federal Home Loan Bank;
(5) participation in mortgage loans with others as co-mortgagees may not be permitted except with one or more financial institutions, trusts, or pension funds;
(6) an investment may not be made in a mortgage upon a leasehold unless
(A) the leasehold has an unexpired term of not less than 21 years;
(B) the principal amount of the mortgage loan is not in excess of 70 percent of the appraised value of the leasehold; and
(C) provision is made for complete amortization of the loan within an unexpired term by periodic payments as the department may prescribe.
AS 06.15.260. Investment in Bankers' Acceptances.Subject to the provisions of this chapter and regulations under this chapter a mutual bank may invest in bankers' acceptances that have been accepted by a bank, trust company, national bank, investment company, or banking corporation organized under the laws of the United States or of any state, which is a member of the Federal Reserve System.
AS 06.15.270. Investment in Corporate Securities.(a) Subject to the provisions of this chapter and regulations under this chapter a mutual bank may invest in corporate securities, subject to the exercise of the same degree of care and prudence that persons prompted by self-interest generally exercise in their own affairs, and subject to the following limitations:
(1) a mutual bank may not invest in any corporate obligation, other than under AS 06.15.280 , that will mature by its terms within one year from the date of its issuance, or if issued or made in series or repayable in installments, has an average maturity of less than one year;
(2) a mutual bank may not invest in
(A) stocks an amount greater than 10 percent of its assets or 100 percent of its surplus and undivided profits, whichever is less;
(B) common stock an amount greater than six percent of its assets or 60 percent of its surplus and undivided profits, whichever is less;
(C) the common and preferred stocks of one issuer an amount greater than one percent of its assets; or
(D) more than two percent of the total issued and outstanding shares of stock of any one issuer.
(b) The limitations of this section do not apply to a mutual bank's investments in a wholly owned subsidiary corporation that owns or leases real or personal property for the purpose of providing a building and facilities to be used primarily for the conduct of the authorized banking activities of the mutual bank.
AS 06.15.280. Investment in Promissory Notes.Subject to the provisions of this chapter and regulations under this chapter, a mutual bank may invest in a promissory note, subject to the following limitations:
(1) a promissory note payable to the order of the mutual bank that is
(A) secured by the assignment of one or more mortgages in which a mutual bank may invest if the amount so invested in the note does not exceed 90 percent of the principal sum secured by the mortgages; the assignment of a mortgage taken as security for the note shall be recorded or registered in the office of the proper recording officer of the recording precinct in which the real property described in the mortgage is located;
(B) secured by any of the bonds or other securities in which a mutual bank may invest if the amount invested in the note does not exceed 90 percent of the market value of the bonds or other securities at the time of the investment;
(C) secured by an insurance policy to the extent of the policy's cash surrender value;
(D) made by a savings and loans association that has been incorporated three years or more and has an accumulated capital of at least $50,000;
(2) a promissory note payable to the order of the mutual bank within one year from its date that is secured by the assignment of a deposit in a federally insured thrift institution if the amount of the investment in the note is not in excess of the amount of the deposit.
Article 03. BRANCHES, CONVERSION, MERGER, AND CONSOLIDATION
AS 06.15.290. Establishment of Branches.A mutual bank may, with the approval of the department, establish and operate branches inside the state. Before approving the establishment and operation of a branch office, the department shall make the findings required before the granting of a charter to a mutual bank with respect to the branch proposed.
AS 06.15.300. Conversion of Thrift Institution to Mutual Bank.Any thrift institution other than a mutual bank may, with the approval of the department, convert itself into a mutual bank upon the affirmative vote of not less than a majority of the votes cast by those entitled to vote upon its affairs at a duly called and held meeting and shall thereupon possess the powers of and be subject to the duties imposed upon mutual banks under the provisions of this chapter. Before approving a conversion, the department shall determine that the thrift institution seeking conversion has the ability to discharge the duties and conform to the restrictions upon mutual banks and has previously so conformed to the extent required by the department. However, the institution may retain and service all accounts lawfully held by it on the date of its conversion.
AS 06.15.310. Conversion of Mutual Bank to Thrift Institution.A mutual bank may, with the approval of the regulatory authority having jurisdiction over the creation of the thrift institution and upon the affirmative vote of a majority of its corporators, convert itself into a thrift institution organized under federal law or the laws of this state.
AS 06.15.320. Merger and Consolidation of Mutual Banks.Two or more mutual banks may, with the approval of the department, and upon the affirmative vote of not less than two-thirds of the corporators of each such mutual bank, enter into an agreement of merger or consolidation. Thereafter the merger or consolidation shall be effective under the terms of the agreement.
AS 06.15.330. Condition of Department Approval.Before approving a merger or consolidation the department shall give consideration to the purposes of this chapter and the prospects of the surviving or consolidated mutual bank for financial success and its ability to discharge the duties and conform to the restrictions imposed upon a mutual bank.
AS 06.15.340. Transfer and Exercise of Rights.All rights, franchises, and property interests of the merged or consolidating mutual banks are transferred to and vested in the surviving or consolidated mutual bank by virtue of the merger or consolidation without the requirement under this chapter of a deed or other instrument of transfer. The surviving or consolidated mutual bank may exercise all rights and privileges of the merged or consolidating mutual banks in accordance with the terms of the merger or consolidation agreement. The surviving or consolidated mutual bank is responsible for all debts and obligations of the merged or consolidating mutual bank under the terms of the merger or consolidation agreement.
Article 04. GENERAL POWERS OF MUTUAL BANKS
AS 06.15.350. General Powers.A mutual bank
(1) shall have indefinite succession;
(2) may adopt and use a seal;
(3) may sue and be sued;
(4) may adopt, amend, and repeal rules and regulations governing the manner in which its business may be conducted and the manner in which the powers vested in it may be exercised;
(5) may make and carry out contracts and agreements, provide benefits to its personnel, and take other action, as it considers necessary or desirable in the conduct of its business;
(6) may appoint and fix the compensation of officers, attorneys, and employees desirable for the conduct of its business, define their authority and duties, delegate to them the powers the trustees determine, require bonds of them as the trustees designate and fix their penalties and pay the premiums on the bonds;
(7) may acquire by purchase or lease real property or interest therein as the trustees consider necessary or desirable for the conduct of its business, and sell, lease, or otherwise dispose of real property or interest therein;
(8) may exercise the powers of a bank granted under AS 06.05 (Alaska Banking Code); and
(9) may convert from a mutual bank to a capital stock bank under a plan approved by the department.
The enumeration of powers in AS 06.15.350 does not exclude other powers appropriate for the achievement of the objects and purposes of a mutual bank under this chapter. With the approval of the department, a mutual bank may provide for the exercise of other powers in its bylaws, rules, or regulations.
Article 05. GENERAL PROVISIONS
AS 06.15.370. Definitions.In this chapter,
(1) 'conventional loan' means a loan secured by a first mortgage on unencumbered real property or leasehold estate other than a loan guaranteed or insured by a federal agency;
(2) 'department' means the Department of Commerce, Community, and Economic Development;
(3) 'financial institution' means a thrift institution, a commercial bank, a trust company, or an insurance company;
(4) 'mutual bank' means a mutual savings bank chartered under this chapter;
(5) 'thrift institution' means a cooperative bank, a homestead association, a mutual savings and loan association, or a mutual bank.
This chapter may be cited as the Mutual Savings Bank Act.
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