USA Statutes : arizona
Title : Banks and Financial Institutions
Chapter : SAVINGS AND LOAN ASSOCIATIONS
6-401 Definitions
In this chapter, unless the context otherwise requires:
1. "Account" means withdrawable capital deposited with or invested in an
association in accordance with any plan authorized by the provisions of this chapter
unless such term is otherwise designated or qualified.
2. "Aggregate withdrawal value" means the sum of all payments made on all accounts
of the association, all dividends and bonuses credited or allocated to such accounts and
all dividends credited to "divided profits" for subsequent crediting to accounts upon
maturity, less all withdrawals, retirements and other proper deductions from accounts and
all unpaid charges on the accounts.
3. "Association" means every association to which this chapter applies as defined
in the section concerning scope of chapter.
4. "Community" means a city, incorporated town, unincorporated town, community or
village.
5. "Continuing association" means the association which continues to exist after a
merger of associations has been effected.
6. "Federal association" means a savings and loan association or savings
association operating under the laws and regulations of the United States.
7. "Impaired" or "impairment", with respect to capital, means a condition in which
the value of the association's assets is less than the aggregate amount of the
association's liabilities to creditors, the aggregate value of its accounts and the
aggregate par value of its guaranty capital.
8. "Improved real estate" means real estate which is, or which from the proceeds of
the loan will become, a home, combination of home and business property or other improved
real estate.
9. "Insurance corporation" means the federal deposit insurance corporation or such
other instrumentality of, or corporation chartered by, the United States as may be
established for the purpose of insuring the accounts of savings and loan associations.
10. "Insured association" means an association, the accounts of which are insured
wholly or in part by an insurance corporation.
11. "Investment" means to put funds to use in order to secure profits.
12. "Mail" or "mailed" means, with respect to a writing or notice, deposit in a
United States post-office mailing facility in this state with postage prepaid and
correctly addressed to the proper person at his address stated on the association's
records or otherwise agreed upon or if no address has been so established then to the
last known address.
13. "Merger" includes consolidation.
14. "Merging association" means an association which plans or effects a merger with
one or more other associations in accordance with the provisions of this chapter
concerning merger.
15. "Other improved real estate" means real estate other than a home or combination
home and business property which, because of its state of improvement, or improvement
from the proceeds of the loan, will produce sufficient income to maintain the property
and retire the loan in accordance with the terms of the loan.
16. "Participating interests" means the purchase or acquisition of an interest in an
existing permanent mortgage loan.
17. "Prior act" means any statute of this state which, prior to the effective date
of this chapter, has governed the formation or operation of associations of the type
described in the section of this chapter concerning scope of the chapter.
18. "Profits" means, as determined by the application of proper accounting
principles, gross income less the aggregate of operating and other expenses, losses
actually sustained and not charged to reserves under the provisions of this chapter and
interest paid or accrued on borrowings and non-recurring charges.
19. "Publication", "publish" or "published" means printed in the English language in
a newspaper of general circulation published in the community in which the association's
business office is located or if no such newspaper exists in said community then in the
county in which such business office is located. Unless otherwise specified in this
chapter publication shall be made once each week for two successive weeks.
20. "Total assets" means the total value of all loan contracts without deduction for
the withdrawal value of any accounts of the association held as collateral for loans and
the total value of all other assets of the association as determined by the application
of proper accounting principles.
21. "Withdrawal value" of an account means the sum of all payments made by the
holder on the account and all dividends and bonuses credited or allocated to such account
less all withdrawals, retirements and other proper deductions from the account and all
unpaid charges on the account.
6-402 Scope of chapter; application to federalassociations and federal savings banks
A. This chapter applies to all existing savings and loan associations, and other
similar associations and savings banks by whatever name called, organized under this or
any prior act.
B. Every federal savings and loan association and federal savings bank shall have
all the rights, powers and privileges and shall be entitled to the same exemptions and
immunities as savings and loan associations organized under the laws of this state unless
prohibited by federal law. In addition to all other rights, powers and privileges,
savings and loan associations organized under the laws of the state, whose accounts are
insured by an instrumentality of the United States, shall have all the rights, powers and
privileges and shall be entitled to the same exemptions and immunities as federal savings
and loan associations doing business in this state unless prohibited by this chapter.
6-403 Prohibitions
Except as authorized under this title:
1. No person or group of persons shall transact business within the scope of this
chapter or do any business under any name or title, or circulate or use any advertising
or make any representation or give any information to any person, which indicates or
reasonably implies the operation of a business which is within the scope of this chapter.
2. No foreign savings and loan association or savings bank shall be admitted or
allowed to maintain an office in this state to transact the business of a savings and
loan association or savings bank.
6-404 General corporate powers
An association operating under this chapter shall be a body corporate and politic
and shall have all of the specific powers conferred by this chapter and as provided for
under the general laws of this state and, in addition to these powers, the following
powers:
1. To obtain and maintain insurance of the association's accounts by an insurance
corporation, as defined in this chapter, and to comply with all the regulations and
requirements of such insurance corporation.
2. Notwithstanding the provisions of article 4 of this chapter, to designate part
or all of the guaranty capital of the association as part of its federal insurance
reserve established for the sole purpose of absorbing losses which the insurance
corporation may require.
3. To become a member of a federal home loan bank and to have all powers of such a
member which are not inconsistent with the provisions of this chapter.
4. To act as a fiscal agent for the United States when duly designated for that
purpose, and as such agent to perform such reasonable functions as may be required of it.
5. To become a member of or deal with any corporation or agency of the United
States to the extent that such agency assists in furthering or facilitating the
association's purposes or powers, and to that end to purchase stock or securities thereof
or deposit money therewith and to comply with any other conditions of membership or
credit.
6. To make donations in reasonable amounts for the public welfare or for
charitable, scientific, religious or educational purposes.
7. To adopt and operate reasonable insurance, bonus, profit sharing and retirement
plans for officers and employees.
8. To reject any application for membership, to retire accounts by enforced
retirement as provided in this chapter and the bylaws and to limit the issuance of or
payments on accounts, subject however to contractual obligations.
6-405.01 Capital notes and debentures
A. With prior approval of the superintendent an association may issue and sell its
capital notes or debentures.
B. Capital notes and debentures legally issued by an association may be converted
into shares of guaranty capital in accordance with such provision therefor as may be made
in such capital notes and debentures with prior approval of the superintendent.
C. Capital notes and debentures shall be an unsecured indebtedness of the
association and shall be subordinate to the claims of depositors, account holders and all
other creditors of the association, regardless of whether the claims of depositors,
account holders or other creditors arose before or after the issuance of such debentures
or capital notes. In the event of liquidation, all depositors, account holders and other
creditors of the association shall be entitled to be paid in full before any payment
shall be made on account of principal or interest on such capital notes or
debentures. No payment shall at any time be made on account of the principal thereof if
the payment is prohibited by regulation of the insurance corporation.
D. Subject to a requirement in the articles of incorporation of the association, or
an amendment thereto, and if authorized by the superintendent, convertible capital notes
and debentures may be issued without offer thereof to existing stockholders.
E. The amounts of outstanding capital notes and debentures legally issued by any
association shall be treated as if guaranty capital.
6-405 Power to borrow
A. No insured institution shall borrow an aggregate amount exceeding one half the
amount paid in and credited on accounts, except that with prior approval of the
superintendent, any such association may borrow without limitation upon such terms and
conditions as may be required by the lender. No action of an insured institution in
obtaining funds through borrowing, in accordance with the provisions of this section,
shall be deemed a violation hereof if its aggregate borrowings exceed the limitation of
this section because of a subsequent reduction in the amounts paid in and credited on
accounts.
B. A debt incurred by the association in violation of this section is not invalid
or illegal as to the rights of the lender.
6-406 Incidental powers
An association also shall have any power conferred on a corporation by the general
corporation laws of the state, and any power not prohibited by law, which is reasonably
incident to the accomplishment of the express powers conferred upon the association by
this chapter.
6-407 Applicants and initial capital
A. Any five or more adult individuals, residents of this state, may apply for a
permit to organize an association under this article. The minimum initial capital which
an association must have shall be determined by the superintendent, but in no event shall
it be less than the amount determined by the following table, based upon the population
of the community in which the association's business office is to be located:
Population Minimum
More than Not more than capital
00 10,000 $ 50,000.00
10,000 50,000 100,000.00
50,000 ------ 200,000.00
B. If the association's business office is to be located in an unincorporated area
more than five miles from the limits of any community, then the required minimum capital
shall be that for a community of ten thousand population or less; otherwise, the required
capital shall be that of the community to which it is adjacent, or if near several
communities, that of the community with the highest population classification in the
above schedule. Minimum capital to be paid in may consist of withdrawable capital and
guaranty capital as provided in this chapter. If the capital of the association to be
organized includes guaranty capital, the amount of minimum initial guaranty capital shall
not be less than fifty thousand dollars, and not less than one hundred thousand dollars
if the association is to be located in a county with more than seventy-five thousand
population.
6-408 Application for permit toorganize
The application for a permit to organize an association shall be addressed to the
superintendent in such form as he shall provide; shall be in duplicate, personally signed
by each applicant and verified under oath by each applicant. The applicants shall submit
with their application statements, exhibits, maps, and other data, which data shall be
sufficiently detailed and comprehensive to enable the superintendent to pass upon the
application.
6-409 Findings and hearings
If the superintendent does not deny the application on the basis of the data
submitted by the applicants and any other information in his possession, the applicants
shall publish a notice of intention to organize in such form as the superintendent shall
prescribe. The superintendent may hear evidence to determine his findings at any time
prior to the issuance of a permit to organize.
6-410 Superintendent's approval and issuance ofpermit to organize
The superintendent shall not approve the application and issue a permit to organize
unless he shall find:
1. A need exists for an association, and that the public convenience and advantage
will be promoted by the proposed association, in the community or area of operation
stated in the application.
2. The proposed capital meets the requirements of this chapter.
3. The general character of the proposed management is such as to assure reasonable
probability of the success of the association.
4. The name of the proposed association is not the same as, or deceptively similar
to, the name of any other association or bank in the community or area of operation.
5. Such association can be established without undue injury to properly conducted
existing associations.
6-411 Subscription to capital and temporaryorganization
Upon receipt of the permit to organize an association, the applicants shall
constitute the organization committee and shall perfect a temporary organization by
electing a chairman, vice chairman, and a secretary, who shall act as the temporary
officers of such association until their successors are duly elected and qualified. Such
temporary officers thereupon shall proceed to:
1. Secure subscriptions for the required amount of capital in form and manner
approved by the superintendent.
2. Call a meeting of subscribers, who shall adopt articles of incorporation and
elect directors to serve until the first annual meeting of the association and until
their successors are elected and qualified.
3. The directors so elected shall proceed to:
(a) Organize as a board and qualify as directors.
(b) Adopt by-laws.
(c) Elect officers pursuant to the by-laws.
(d) Collect subscriptions to the required capital, but only after the persons
designated to collect such subscriptions have been bonded as provided in section 6-420.
(e) Take such other action as may be necessary to complete the organization.
(f) Report the completion of the organization to the superintendent. Unless such
report is made to the superintendent within six months after the date of the permit to
organize, the permit shall be deemed revoked and any subscriptions collected shall be
refunded unless the superintendent, upon good cause shown, shall extend the time for
filing such report for a fixed period which shall not exceed three months.
6-412 Completion of organization
A. When the board of directors has organized as provided in this chapter and the
report of such organization has been filed with the superintendent, he shall make a
thorough examination into the affairs of the proposed association, and if he approves the
articles of incorporation and is satisfied that all the requirements of this chapter have
been complied with, and that no intervening circumstance has occurred to change the
superintendent's findings made pursuant to this chapter, upon payment into the
superintendent's office of the fees for such examination, he shall issue a certificate
authorizing the filing of the articles of incorporation with the corporation commission
and the taking of the other steps required by title 10, to complete the formation of a
corporation. Upon the appointment of a statutory agent and the issuance of a certificate
of incorporation by the corporation commission and the payment into escrow with a
responsible corporate escrow agent approved by the superintendent of the amount of the
initial capital required by this chapter, the superintendent shall issue a permit
conditioned upon the association securing within twelve months from the date of such
permit insurance of its insurable accounts by the federal deposit insurance corporation,
or any successor instrumentality, pursuant to the laws of the United States and the rules
and regulations of such corporation.
B. Unless such insurance is secured within such period the permit shall be deemed
revoked unless the superintendent, upon good cause shown, shall extend the time for
securing such insurance for a single fixed period which shall not exceed six months. The
association shall not operate as a savings and loan association under the laws of this
state or transact any other business than that necessary to secure such insurance until
it has secured such insurance. If such insurance is not secured within the time provided
by this chapter or as extended by the superintendent, all amounts collected as
subscriptions to the required capital shall be returned to the subscribers without
reduction.
C. All existing associations doing business under this chapter shall, within one
year from the effective date of this chapter, submit to the superintendent evidence of
their having insurance of accounts with an instrumentality of the United States;
provided, however, that if an existing association has filed a bona fide application for
such insurance after the effective date of this chapter and diligently pursues its
application, and additional time is required for the granting of such insurance, the
superintendent may extend said one-year period for not to exceed an additional six
months.
6-413 Contents of articles ofincorporation
A. The articles of incorporation shall set forth:
1. The name of the association.
2. The location of the principal place of business.
3. The general nature of the business to be transacted.
4. The authorization, if any, to issue withdrawable shares, the aggregate amount of
which may be unlimited.
5. The authorization, if any, to issue guaranty shares, the aggregate number
thereof, and the par value per share, if any.
6. The date of the annual meeting of the members which shall not be more than one
hundred fifty days after the close of the association's fiscal year.
7. The quorum required for action of members if a quorum other than specified in
this chapter is desired.
8. The names, residences and post-office addresses of the incorporators, who shall
be the individuals who made and filed with the superintendent the application for a
permit to organize.
9. The time of commencement and termination of the association, which shall be
governed by the general corporation laws of the state, with the right of renewal of
existence.
10. By what officers the affairs of the association are to be conducted and the time
of their election. The number of directors shall not be less than five nor more than
twenty-five.
11. The highest amount of indebtedness or liability, direct or contingent, to which
the association may at any time subject itself which shall not exceed one-half of the
accounts and paid-in guaranty stock without prior approval of the superintendent.
12. That the private property of the shareholders is exempt from the debts and
obligations of the association.
13. Any other provision not inconsistent with law, which the subscribers may desire
for the internal regulation of the affairs of the association.
14. The articles need not set forth any of the powers which this chapter confers.
B. The articles of incorporation may:
1. Provide that the guaranty shares be divided into different kinds or classes.
2. Define the designations, preferences, rights and limitations of each kind or
class.
3. Define the voting rights of the different types of members.
4. Restrict the power to vote to holders of guaranty shares or to one or more kinds
or classes of guaranty shares.
6-414 Members
A. The membership of an association shall consist of:
1. Every holder of an account or one or more shares of guaranty capital issued by
the association.
2. Every borrower from the association, as long as his loan remains unpaid and he
remains liable to the association for the payment thereof, and every obligor of an
investment made by the association. Each of such members shall be known as a borrowing
member.
B. Each joint ownership and each joint obligation shall constitute one membership.
6-415 Members' meetings
A. Each annual meeting of the members shall be held at the time specified in the
articles of incorporation; but the failure to hold an annual meeting at the time so
specified shall not work a forfeiture or dissolution of the association. The board of
directors, or the holders of not less than twenty per cent of the outstanding guaranty
shares or of the withdrawal value of all withdrawable capital of the association, or such
other person or persons as may be designated by the by-laws, may call a special meeting
of the members. Every annual or special meeting shall be held at the business office of
the association, or in such other place within the same county as shall be specifically
designated in the notice of such meeting. Notice of an annual or any special meeting
shall be published twice, and the last publication shall be not less than ten days nor
more than forty days before the date of the meeting. Such notice shall state the place,
day, hour and purpose of the meeting.
B. A quorum at any meeting of the members shall consist of the members present in
person or represented by proxy, who are entitled to cast a majority of the total number
of votes which all members of the association are entitled to cast at such meeting;
except that the articles of incorporation may specify some other quorum requirement, but
not less than one-third of such total number of votes. Any meeting, including one at
which a quorum is not present, may be adjourned by majority vote to a specified date
without further notice.
C. Voting at a meeting may be either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise specifically provided in
the proxy.
D. Unless the articles of incorporation provide otherwise, in the determination of
all questions requiring ascertainment of the members entitled to vote and of the number
of outstanding shares, the following rules shall apply:
1. The date of determination shall be as provided in section 6-416.
2. Each person holding one or more accounts shall have the vote of one share for
each one hundred dollars of the aggregate withdrawal value of such accounts, and shall
have the vote of one share for any fraction of one hundred dollars.
3. Each holder of guaranty shares shall have one vote for each guaranty share which
he holds.
4. Each borrowing member as such shall have the vote of one share in addition to
any vote which he may have otherwise.
5. Shares owned by the association shall not be counted or voted.
6-416 Record date for voting, dividend andother purposes
For the purpose of determining the holders of accounts and of shares of guaranty
capital, and membership entitled to notice of or to vote at any meeting of the members,
or in order to make a determination of the members, holders, or other persons for any
other proper purpose, the by-laws may provide for a record date, not less than ten days
nor more than forty days before the meeting, or other event or transaction with regard to
which the determination is to be made; and such determination shall be made as of the
close of business on such record date. If the by-laws do not provide for a record date,
the board of directors may fix such a date for each such determination, within the time
stated above; and if the board of directors shall fail to so fix a date, the record date
for a meeting shall be the date on which the first notice of meeting is given. Accounts
withdrawn or retired after such record date shall not be voted or counted in determining
the number of accounts outstanding. This section shall be applicable to the dividend
payments on guaranty capital, but dividends on accounts shall be governed by section
6-442.
6-417 Directors
The business affairs of the association shall be exercised by its board of
directors, which shall be elected, and shall exercise its powers, as follows:
1. The board of directors shall consist of the number of directors fixed by the
articles of incorporation but shall be not less than five nor more than twenty-five; all
directors shall be bona fide members of the association, and at all times at least
two-thirds of the directors shall be residents of this state.
2. Directors shall be elected as provided in the by-laws of the association and
shall serve until their successors are elected and qualified. In all elections of
directors cumulative voting shall be permitted as provided in the Constitution of
ARIZONA.
3. In the event of a vacancy on the board of directors from any cause, the
remaining directors shall have full power and authority to continue the management of the
association, and to fill any such vacancy.
4. The board of directors shall hold regular meetings as provided in the
by-laws. Special meetings may be held as provided in the by-laws, and also upon call by
the superintendent after not less than twelve hours' notice by personal or mail service
to each director.
5. A majority of the board of directors shall constitute a quorum for the
transaction of business unless a greater number is required in the by-laws. The act of
the majority of the directors present at a meeting at which a quorum is present shall be
the act of the board of directors, unless the act of a greater number is required by law,
the articles of incorporation, or the by-laws.
6. The board of directors shall have all powers which are necessary and proper to
enable the association to accomplish its purpose.
7. The board of directors may adopt or amend by-laws, but no by-laws shall be
effective until it has been submitted to and approved by the superintendent as being in
conformity with this chapter. Each adopted amendment shall be subject to the same
inquiry by the superintendent as the corresponding provision in the original by-laws of
the association. The superintendent may require approval by a majority vote of the
members for an amendment changing the location of the business office of the association.
6-418 Waiver of notice
Whenever notice is required to be given under this chapter, a waiver thereof in
writing signed by the person or persons entitled to said notice shall be deemed
equivalent thereto.
6-419 Officers
A. The officers of an association shall consist of a president, one or more vice
presidents, secretary, treasurer, and such other officers as the by-laws shall provide,
to be elected by the directors. If the by-laws so provide, any two or more offices may
be held by the same person, except that one person shall not hold the offices of
president and vice president or president and secretary. The duties and powers of the
secretary set forth in this chapter may be exercised by any other officer designated by
the board of directors.
B. The existence of an association shall not terminate by reason of the failure to
elect officers at the time mentioned in the by-laws, and each officer shall hold his
office until his successor is elected and qualified.
6-420 Bonds of officers and employees
A. Every person appointed or elected to any position requiring the receipt,
payment, management or use of money belonging to an association, or whose duties permit
him to have access to or custody of any of its money or securities or whose duties permit
him regularly to make entries in the books or other records of the association, before
assuming his duties, shall become bonded in some fidelity insurance company licensed to
do business in this state and approved by the superintendent. Each such bond shall be on
a form or forms as the superintendent shall require and in such amount as the board of
directors shall fix and approve.
B. Nothing contained herein shall preclude the superintendent from proceeding
against an association as provided in this chapter should he believe that is is being
conducted in an unsafe manner in that the form or amount of bonds so fixed and approved
by the board of directors is inadequate to give reasonable protection to the association.
6-421 Access to books and records;communication with members
A. Every member or holder of capital shall have the right to inspect such books and
records of the association as pertain to his account. Otherwise, the right of inspection
and examination of the books and records shall be limited to the superintendent, as
provided in this chapter, and to any federal instrumentality or agency authorized to
inspect or examine the books and records of an insured association, and no other person
shall have access to the books and records or shall be entitled to a list of the members,
except upon express authority of the board of directors.
B. If any member desires to communicate with the other members of the association
with reference to any question pending or to be presented at a meeting of the members,
the association shall give him upon request a statement of the approximate number of
members entitled to vote at such meeting and an estimate of the cost of preparing and
mailing such communication. The requesting member then shall submit the communication to
the superintendent who, if he finds it to be appropriate and truthful, shall direct that
it be prepared and mailed to the members, upon the requesting member's payment or
adequate provision for payment of the expenses of such preparation and mailing.
6-422 Types of capital; personalproperty
A. The capital of an association may be represented by capital notes and
debentures, accounts or guaranty capital, as provided in this article and as authorized
by the articles of incorporation.
B. All accounts, capital notes and debentures and guaranty capital shall be
personal property in the hands of their holders, transferable as provided in this chapter
and the bylaws of the association.
6-423 Accounts
A. An association may maintain all types of deposit accounts and prescribe those
terms and conditions relating to the accounts as are permissible for the association to
maintain the insurance of its deposits by the federal deposit insurance corporation.
B. Accounts are:
1. Withdrawable and subject to enforced retirement as provided in this
article. This chapter does not prevent the withdrawal of funds from an association by
negotiable or nonnegotiable order.
2. Entitled to dividends as provided in this article.
3. Nonassessable for either debts or losses of the association.
4. Issued on such plan or plans of payment and in such series or classes as the
bylaws may provide, which plan or plans of payment may include:
(a) Regular installment plan with agreed weekly or monthly payments, with dividends
credited to or in behalf of the account until the ultimate value agreed upon in the
subscription is reached.
(b) Full paid plan with one single payment of one hundred dollars per unit and
dividends payable in cash unless by agreement credited to the account.
(c) Prepaid plan with one single payment in such amount per unit as is set forth in
the bylaws and dividends credited to such account until the ultimate value of one hundred
dollars per unit is reached.
(d) Optional plan with payments in such amount or amounts and at such times as the
holder may elect and dividends credited to such account unless by agreement payable in
cash.
(e) Any other plan of payment which the superintendent may approve as conforming to
sound savings and loan practice.
6-424 Shares of guaranty capital; nature;consideration
A. Shares of guaranty capital shall constitute a secondary reserve out of which
losses shall be paid after all other available reserves have been exhausted, and such
shares shall be:
1. Nonwithdrawable, except as provided in section 6-428, until all liabilities of
the association have been satisfied in full, including payment of the withdrawal value of
all accounts.
2. Entitled to dividends only as provided in section 6-442.
B. The consideration for the issuance of shares of guaranty capital may be paid to
the association, or a wholly owned subsidiary of the association, in whole or in part, in
cash, in other property, tangible or intangible, including promissory notes, or in labor
or services actually performed for the association. Shares are deemed to be fully paid
and nonassessable if payment of the consideration for which the shares are to be issued
has been received by the association or a wholly owned subsidiary of the association. In
the absence of bad faith in the valuation of the consideration, the judgment of the board
of directors or the shareholders, as the case may be, as to the value of the
consideration received for shares is conclusive.
6-425 Shares of guaranty capital; authorizationof issuance; minimum amount
A. An association may provide for the issuance of shares of guaranty capital,
either by its original articles of incorporation or by an amendment thereto.
B. The aggregate initial guaranty capital of an association being organized under
this chapter shall be not less than the minimum initial guaranty capital required under
the provisions of section 6-407.
C. In the case of an association which shall at any time be operating and its
original articles of incorporation authorize the issuance of guaranty shares but the
association has issued no guaranty shares, or in the case of an association already in
operation which amends its articles to authorize the issuance of guaranty shares, the
aggregate initial guaranty capital shall be not less than either:
1. The initial guaranty capital required under the provisions of section 6-407.
2. An amount which, together with the amount of surplus and all reserves required
or designated as available for losses, equals in the aggregate not less than the required
capital and reserves necessary to obtain and maintain insurance of accounts by the
insurance corporation, whichever shall be greater.
D. In the case of an association already in operation and having issued and
outstanding guaranty shares, the aggregate guaranty capital shall be an amount not less
than an amount which, together with the amount of surplus, amount of outstanding capital
notes and debentures, and all reserves required or designated for use for losses, equals
in the aggregate not less than the required capital and reserves necessary to obtain and
maintain insurance of accounts by the insurance corporation.
E. Any plan for the issuance of shares of guaranty capital shall be subject to the
approval of the superintendent as being in conformity with the provisions of this
chapter, and the rules and regulations of the superintendent pertaining thereto.
6-426 Shares of guaranty capital; rights ofexisting shareholders
When an association already in operation amends its articles of incorporation to
authorize the issuance of shares of guaranty capital, or when an association already in
operation with provision in its original articles of incorporation for the issuance of
guaranty shares but which has not issued any guaranty shares, proposes to issue such
shares:
A. The association shall mail notice to each shareholder who was entitled to vote
at the meeting at which the amendment was adopted, or, in the case of an association
which is authorized by its original articles of incorporation to issue guaranty shares
but has not issued any such shares, to each stockholder of the association on the date of
the adoption of the resolution of the board of directors proposing to issue such shares,
giving him the prior right for at least sixty days after the date of such notice, to
subscribe to the initial issue of shares of guaranty capital, in the same proportion
which the withdrawal value of such holder's account bears to the aggregate withdrawal
value of all accounts in the association. Such rights to subscribe shall be
transferable. No fraction of an original share of guaranty capital need be issued, but
in such case fractional subscription rights may be combined to authorize the subscription
to one or more whole share of guaranty capital. Fractional subscription rights need not
be issued for an account the withdrawal value of which is less than ten dollars.
B. The board of directors shall determine, as of the day prior to the effective
date of the amendment, or as of the date of the adoption of the resolution authorizing
the issuance of such shares in case the original articles of incorporation provide for
such shares, the total amount of loss reserves, undivided profits, and unallocated
reserves after making allowances for accrued dividends and expenses, losses not provided
for, and such similar items as are chargeable against the income of the association since
the last previous apportionment date. The amount so fixed shall constitute a segregated
surplus of the association and may be retained in, or allocated to, such reserve
accounts, undivided profits accounts, or surplus accounts as may be lawful; and other
earnings of the association accruing after the effective date may be allocated to said
segregated surplus and an equal amount then may be transferred to any other unsegregated
account.
C. Such segregated surplus shall be available for losses from the depreciation of
securities or otherwise, except that any loss resulting from operations, including loans
and investments made or purchased after the effective date of the amendment, or the date
of the adoption of the resolution authorizing the issuance of such shares in case the
original articles of incorporation so provide, shall be charged first to loss reserves
and undivided profits created after such date until the same are exhausted.
D. If the association merges with another as provided in this chapter the balance
of such segregated surplus shall continue to be held in a segregated account or accounts
for the same use and disposition as though no merger had occurred.
E. If the association liquidates or effects a sale of all or substantially all of
its assets within fifteen years from the effective date of the amendment authorizing the
initial issuance of shares of guaranty capital, or from the date of the adoption of the
resolution in case the original articles of incorporation provide for such shares, and
each holder of the account on the day prior to such effective date who has continued to
remain such a holder without interruption, or who has transferred his account from one
type or class of account to another, or whose account has been retired by enforced
retirement, shall be entitled to an amount, in addition to the withdrawal value of his
account, in such proportion of the unused balance of the segregated surplus as he would
have been entitled to had the association liquidated on the effective date of such
amendment, or the date of the adoption of the resolution, as the case may be.
6-427 Shares of guaranty capital;advertisement; sales; collection of subscription
A. All prospectae and advertising matter regarding the subscription for shares of
guaranty capital shall include a statement to the effect that such shares of guaranty
capital are not insured.
B. No association shall pay to any person any commission or other compensation for
obtaining any subscription to or sale of shares of guaranty capital without the prior
approval of the superintendent.
C. The board of directors shall establish a separate account to receive all funds
paid in for shares of guaranty capital, and shall maintain such account until further
action is authorized as follows:
1. When the aggregate amount of such funds equals or exceeds the amount of the
minimum initial guaranty capital which the association must obtain, and either the board
of directors has decided by resolution to proceed under the guaranty capital plan, or one
year has elapsed from the date on which the issuance of shares of guaranty capital was
authorized and the board has taken no action, then the separate account may be terminated
and the funds may be transferred to the association's general account.
2. If the aggregate amount of such funds fails to reach the amount of the minimum
initial guaranty capital which the association must obtain and one year has elapsed from
the date on which the issuance of shares of guaranty capital was authorized; or if the
board of directors, within such one-year period, has decided by resolution to abandon the
guaranty capital plan, then the funds in the separate account shall be returned to the
respective subscribers and shall not become a liability of the association or its
officers or directors.
6-428 Retirement or reduction of shares ofguaranty capital
A. The board of directors of an association operating with guaranty capital may
propose an amendment to the articles of incorporation providing for the retirement of all
of the guaranty capital, and a detailed plan for effectuating such amendment. The
resulting capital of the association shall be not less than the minimum initial capital
which the association, if it were being organized, would be required to have under the
provisions of this chapter concerning applicants and initial capital. The proposal shall
be submitted to the superintendent for his approval.
B. If the superintendent approves the proposal, the association's board of
directors may request in writing an appraisal of the value of the shares of guaranty
capital; and the superintendent then shall cause such an appraisal to be made and receive
therefor the fees for a special examination as provided by section 6-125, allowing proper
credit to such shares from the association's segregated surplus, if any exists, and from
other reserves and undivided profits. The value of the shares of guaranty capital so
determined may be considered in the further proceedings under this section.
C. The proposal then may be submitted to the members at an annual or special
meeting. It shall be adopted upon receiving in the affirmative the votes of the holders
of two-thirds or more of the outstanding shares of guaranty capital, and also two-thirds
or more of the total number of votes which all other members of the association are
entitled to cast thereon. The proposal shall become effective upon completion of the
procedure provided in this chapter for the amendment of articles of incorporation.
D. An association may amend its articles of incorporation, in accordance with the
procedure provided in this chapter for such amendments, to reduce its shares of guaranty
capital, but in no event to an amount which is less than the minimum guaranty capital
which the association would be required by this chapter to issue if it were newly
authorized to issue guaranty capital.
6-429 Issuance, delivery, and transfer ofcertificates and account books
A. An association may evidence an account by one or more appropriate certificates.
B. The holder of an account may transfer his rights in the account absolutely or
conditionally to any other person eligible to hold the same by written
assignment. Notwithstanding the effectiveness of such a transfer between the parties to
the transfer, the association may treat the holder of record as the owner of the account
for payment, voting and all other purposes until the assignment and any accompanying
certificate or account books have been received by the association with a request for the
transfer on the association's records.
C. Account certificates, account books and any other evidences of membership are
negotiable or nonnegotiable and not subject to, but shares of guaranty capital
certificates are subject to, the provisions of title 47, chapter 8.
D. All certificates and account books delivered to the holders as prescribed by
this article are subject to garnishment, attachment and execution as provided by the laws
of this state.
E. If the holder of an account, or the personal representative of any such person,
files with the association an affidavit to the effect that his account book or
certificate has been lost or destroyed, and that the account book or certificate has not
been pledged or assigned either in whole or in part, then the association may issue a
substitute account book or certificate in the name of the holder, with a statement that
the account book or certificate is issued in lieu of the one lost or destroyed. The
association is not liable thereafter with respect to the original account book or
certificate, but the board of directors may require a bond in sufficient amount to
indemnify the association against any loss which might result from the issuance of the
substitute account book or certificate.
6-430 Who may hold capital andmembership
Accounts, shares of guaranty capital, and membership in an association may be held:
1. By any person in his own right, regardless of his age or marital status, or by
two or more of such persons.
2. By a government or governmental instrumentality when authorized by law.
6-432 Effect of payment to minor orfiduciary
A. Unless the written agreement provides otherwise, or unless the association has
had written notice of the terms under which a fiduciary holds an account, the association
may pay the value thereof and dividends thereon:
1. To any minor who is the holder of such account.
2. To such fiduciary who is the holder of such account without becoming liable to
any beneficiary for such payment.
B. In each of the foregoing instances the receipt or acquittance of the person or
persons to whom payment is made in accordance with the provisions of this section shall
be a complete discharge of the association's obligation as to the amount so paid.
6-433 Payment on disability or death of holderin his own right of account
A. If the holder in his own right of an account becomes disabled and a conservator
has been appointed, by a court of competent jurisdiction, and has qualified then the
association may pay the value of such account and dividends thereon to the
conservator. Until the association has actual knowledge that a conservator has been
appointed, it may pay to the protected person personally and his receipt or acquittance
therefor shall be a complete discharge of the association as to the amount so paid.
B. Upon the death of a holder in his own right of an account, the association, upon
receipt of proper estate tax waivers, may pay the value thereof and dividends thereon:
1. To the personal representative of such deceased holder, if and when qualified,
in the manner provided in this chapter for the voluntary withdrawal of account generally.
2. To the successor of such deceased holder upon presentation of an affidavit
pursuant to section 14-3971.
6-434 Shares and accounts of certainassociations as legal investments; deposit of fiduciarymonies
A. All accounts of a federal savings and loan association and all accounts of a
savings and loan association operating under the provisions of this chapter, whose
accounts are insured by the federal deposit insurance corporation, as provided in title
IV of the national housing act, as now or hereafter amended, are legal investments for
the funds of executors, administrators, guardians, receivers and trustees of every kind
and nature and insurance companies, and such associations are qualified to act as trustee
or custodian within the provisions of the federal self-employed individual's tax
retirement act of 1962, as amended.
B. Monies held by a savings and loan association as fiduciary may be deposited to
the credit of the savings and loan association on time or demand account with itself or
with any bank or other savings and loan association the deposits of which are insured by
instrumentalities of, or corporations chartered by, the United States for the purpose of
insuring the accounts of banks or savings and loan associations. Unless otherwise
provided by the writing creating the trust, if the monies are deposited with itself the
savings and loan association shall secure the deposits with securities described in
section 6-446, subsection A, paragraphs 1 and 2 or other security approved by the
superintendent for such a purpose, in the amount of the deposit, less the amount by which
the deposits are insured by the federal deposit insurance corporation or such other
instrumentality of, or corporation chartered by, the United States as may be established
for the purpose of insuring the accounts of savings and loan associations.
6-435 Voluntary withdrawal of accounts
A. A holder of an account may make application for withdrawal of, and the
association may pay, all or any part of the withdrawal value thereof at any time.
B. If the association has insufficient funds in the treasury and from current
receipts to pay all matured accounts and applications for withdrawal within thirty days
after such accounts mature or payment is requested, then the board of directors shall
provide by resolution:
1. The amount of money available in each calendar month to pay maturities and
withdrawals, in accordance with safe and required operating procedure; but after making
provision for expenses, debts, obligations, and cash dividends on accounts, due or to
become due, not less than fifty per cent of the remainder of such treasury funds and
current receipts shall be made available for the payment of withdrawals and maturities.
2. For a list of matured accounts in order of maturity, and if in the same series,
in order of issuance in such series; and also of applications for withdrawals in
chronological order of filing. Separate lists may be established for such purposes, in
which event the resolution shall provide the proportion of available money which shall be
applied to each list.
3. For a maximum sum, which shall not exceed one thousand dollars, which may be
paid to any one holder at any one time; and if any holder's application for withdrawal or
for payment of matured shares exceeds the sum so fixed, then he shall be paid in his turn
the sum so fixed, and his application, reduced by such payment, shall be deemed refiled
in its order as if filed on the date of such payment. Such limited payment may be made
on a fixed date in each month and such refiling and renumbering, as the case may be, may
take place on the same date in each subsequent month as long as any applications remain
unpaid.
4. For a maximum sum, which shall not exceed two hundred dollars, which may be paid
on any application for withdrawal or to any one holder of matured shares in any calendar
month, regardless of the order of application.
C. Accounts pledged as sole security for a loan shall be subject to the withdrawal
provisions of this section, but amounts available for payment on the application for
withdrawal shall be applied first to the repayment of the loan balance.
D. Accounts may be accepted by the association in payment or part payment for any
real estate or other assets owned by the association; but if the association has a list
of withdrawals, or withdrawals and maturities, such sale of assets shall be to the
highest bidder, and at least ten days' notice of the proposed sale shall be given by mail
to all holders of accounts whose names appear on the withdrawal or maturity list.
E. No holder shall have more than one application for withdrawal in effect at any
one time; but a holder may cancel his application or reduce the amount thereof at any
time as to any amount not yet paid.
F. The holder of accounts for which application for withdrawal has been made does
not become a creditor by reason of such application.
G. The board of directors of any association operating on the serial plan or with
regular installment or prepaid shares on which dividends have not been credited directly
to the share accounts, may determine by resolution the portion of profits which may be
paid to withdrawing members.
H. Notwithstanding any other provision of this chapter, a savings and loan
association may offer payment order accounts, approved for federal associations doing
business in this state, and authorizing withdrawals therefrom by written drafts payable
to third parties, subject to conditions, limitations and restrictions as the
superintendent may by rule prescribe.
6-436 Maturity of shares
A. When a regular installment or prepaid share reaches maturity value by reason of
payments or dividend credits, or both, all payments thereon by the holder shall
cease. The association either shall pay to the holder the maturity value of such share,
in accordance with the provisions of this article, or shall mail a notice to the holder
at his last known address as it appears on the association's records, to the effect that
he is entitled to receive payment for such share or to transfer the same or such portion
thereof, as the directors may specify, into other accounts, and that if he takes neither
action within sixty days after the date on which such notice is mailed, the value of such
share may be held in a creditor account without interest or dividends, available for the
holder upon his application, or the board of directors may transfer such share to another
account of equivalent value on which dividends shall accrue as on a new account opened on
the transfer date.
B. If the association has insufficient funds to make immediate payment upon the
date of maturity of any shares, such shares shall be listed in the order of their
respective dates of maturity, and shall be paid in the manner provided in section
6-435. Shares in the same series maturing on the same date shall be listed, as of such
date, in the order in which they were issued in that series. From the date of maturity
until payment, dividends shall be apportioned to such matured shares at a rate to be
determined by resolution of the board of directors. Dividends so apportioned shall be
accumulated to the credit of such shares and shall be paid to the holder at the time when
the shares are paid, but the rate of such dividends shall not exceed the highest rate
being currently apportioned to any other shares.
6-437 Enforced retirement of accounts
A. The board of directors, when authorized by the by-laws, and in conformity with
the provisions of this section and of the by-laws, may retire on any dividend payment
date any accounts, which have not been pledged as security for loans, by enforcing the
retirement thereof.
B. Thirty days' prior written notice of such enforced retirement shall be given to
the holder of an account to be retired and the holder shall not be entitled to further
dividends after the dividend payment date on which such account is to be retired, but
such holder shall be paid the full withdrawal value of his account plus the dividend
apportioned thereto as of the date fixed for retirement. All accounts upon which
applications for voluntary withdrawal have been received, and all shares which have
matured, shall be paid first in accordance with the provisions of this article.
6-438 Authorized charges applicable tomembers
An association may charge initial membership fee and a fee for transfer of
membership or capital, as may be authorized by the by-laws, but no such fee shall exceed
twenty-five cents per share or per one hundred dollars of the account.
6-439 Accounts subject to liens
Every account shall be subject to a lien for the payment of such charges as lawfully
may accrue thereon under the provisions of this chapter, and the by-laws may prescribe
the manner of enforcing such lien, but no member shall be responsible for any losses
which the then existing assets of the association shall not be sufficient to satisfy, or
for any unpaid installment upon his account which is not yet due under the terms of his
subscription.
6-440 Apportionment of profits
The board of directors may apportion the profits of the association as the bylaws
may prescribe, and each apportionment shall be made in accordance with the following
procedure:
1. Proper allocation first shall be made to accrued interest on accounts.
2. Proper allocation then shall be made to any reserves required by law or the
superintendent.
3. Additional allocations then may be made to such special reserves as the board of
directors may have established.
4. Dividends then may be declared if the bylaws so provide on shares of guaranty
capital, in accordance with the provisions of this chapter.
5. The residue of such profits may be held as undivided profits.
6-442 Dividends and interest
A. Subject to the restrictions set forth in this section and the association's
bylaws, an association from time to time may determine the term, rate and amount of
interest to be paid on accounts, and for that purpose may establish reasonable
classifications of accounts, based on any of the following:
1. The types or classes of such accounts.
2. The length of time accounts are continued in effect.
3. The size of initial payments on accounts.
4. The minimum balances of accounts during apportionment periods.
5. The frequency and extent of the activity of accounts.
6. Such other classifications as the superintendent may approve, and the
superintendent is authorized to prepare model plans of classifications for adoption by
associations.
B. An association shall determine the method of calculating the amount of interest
on accounts, and the date on which the interest is to be declared or credited, but no
payment or credit shall be made more than ten days before the end of any apportionment
period, except upon a matured bonus plan account or as approved by rules of the
superintendent.
C. Dividends may be declared and paid on shares of guaranty capital as permitted
from time to time by the laws governing corporations organized in this state, except that
dividends payable other than in the association's own stock may be paid out as a
distribution, as defined in section 10-140, only with the approval of the superintendent
or as approved by rules of the superintendent.
6-443 Bonus plans
For the purpose of encouraging thrift, systematic savings and long-term investment,
the board of directors may establish by resolution bonus plans for holders of
accounts. The board then shall transfer from the periodical profits of the association
additional amounts to a bonus reserve, from which reserve payments to holders complying
with such plans shall be paid. Every bonus so paid shall be deemed a premium and shall
not be construed as a dividend. The bonus plan adopted by the board of directors shall
be either one prescribed by the regulations of the federal deposit insurance corporation
or its successor instrumentality or shall be in accordance with the following provisions:
1. The holder shall agree to make regular payments at least monthly, of any
predetermined amount, until the payments, together with dividends apportioned thereto,
equal two hundred times the agreed monthly payment and without a delay of more than
thirty days in any payment, without a prepayment of more than twelve months and without
making application for withdrawal of all or any part of the account. At the end of the
bonus period, the holder shall receive, in addition to the regular monthly payments and
dividends apportioned thereto, a bonus at the rate of one per cent per annum computed on
the withdrawal value of the account at each apportionment of profits. If the holder
applies for withdrawal of his account in part or in full or fails to meet any and all the
other terms of his bonus agreement after such account, including dividends apportioned
thereto, has reached:
(a) At least fifty but less than one hundred times the agreed monthly payment upon
his account in accordance with the terms thereof, such holder shall be entitled to
receive one-fourth of the bonus allocable to such account.
(b) At least one hundred but less than one hundred fifty times the agreed monthly
payment upon his account in accordance with the terms thereof, such holder shall be
entitled to receive one-half of such bonus allocable to such account.
(c) At least one hundred fifty but less than two hundred times the agreed monthly
payment upon his account in accordance with the terms thereof, such holder shall be
entitled to receive three-fourths of such bonus allocable to such account.
2. The holder shall subscribe to a long-term investment plan providing that if he
maintains in his account an agreed minimum balance either:
(a) For a period of four years, he shall be paid a bonus of one-half of one per
cent per annum.
(b) For a period of eight years, he shall be paid a bonus of one per cent per
annum.
The plan may state the minimum and maximum balances on which a bonus may be paid.
3. If the association effects an enforced retirement of an account which is under a
bonus plan before the bonus becomes payable according to the plan, the portion of the
bonus reserve allocable to the account shall be paid to the holder.
6-444 Promotional activities prohibited
After the effective date hereof, an association shall not give for the opening of,
or increasing the amount of, any account, any give-away that has a monetary value in
excess of the sum fixed for specified classes of accounts by rule of the
superintendent. The monetary value of any give-away so given shall be the cost thereof
to the association and the association shall keep in its records for a period of at least
two years suitable evidence of such cost. If the give-away is purchased or obtained by
the association together with, in connection with, or at the same time as another item or
other items from the same supplier, not identical therewith, such value shall be deemed
to be the then current regular selling price or charge of the supplier on separate sales
or dispositions thereof in the quantity included, and the association shall in such case
obtain, and keep in its records for a period of at least two years, a signed statement by
such supplier of such regular selling price or charge. As used in the foregoing
provisions of this section, the term "give" means to give, to sell or dispose of for less
than full monetary value as hereinbefore defined, or with any agreement or undertaking,
contingent or otherwise, for repurchase or redemption, whether total or partial, or to
offer, promise, or agree to do any of the foregoing. The term "give-away" means any
money, property, service, or other thing of value, whether tangible or intangible. The
term "account" means shares of an association of whatsoever class or designation,
accounts, share account, investment certificate, share subscription, and credit to the
account of the maker thereof other than credit on account of a loan by the association.
6-446 Other investments and powers
A. An association may invest funds as follows:
1. In an account of any state or federal association, the accounts of which are
insured by an insurance corporation.
2. In obligations of or fully guaranteed by the United States, in stock or
obligations of federal home loan banks or in stocks or obligations of the federal
national mortgage association or other agencies of the United States approved by rule of
the superintendent.
3. In any of the following where the aggregate amount invested in all such
investments does not exceed twenty per cent of the association's total assets:
(a) Bonds or other direct obligations of or guaranteed as to principal and interest
by this state.
(b) Obligations which by the laws of this state are made legal investments for
savings and loan associations.
(c) Bonds or other evidences of indebtedness which are direct general obligations
of any county, incorporated city or town, school district, improvement district or other
political subdivision or municipal corporation of this state and, subject to such rules
as the superintendent may adopt, readily marketable corporate debt securities of the type
commonly regarded as investment securities which were publicly distributed when issued
and which are publicly traded at the time of acquisition by the association and loans or
securities which meet standards of sound lending practices.
4. In certificates of deposit issued by any bank which is a member of the federal
deposit insurance corporation provided that the purchase or renewal of certificates
issued by banks which do not have their principal offices in this state are governed by
such rules as the superintendent may prescribe.
5. In accordance with the provisions of this paragraph and any rules of the
superintendent, any ARIZONA association may invest in the capital stock, obligations or
other securities of any service corporation, under whatever laws organized, if the entire
corporate stock of such service corporation is available for purchase only by savings and
loan associations of this state and federal savings and loan associations having their
home office in this state, but no association may make any investment under this section
if its aggregate outstanding investment under this section, determined as prescribed by
the rules of the superintendent, would thereupon exceed six per cent of its assets and
provided that any investment in excess of five per cent of its assets serves primarily
community, inner-city or community development purposes. The superintendent shall
prescribe rules under this authority to effectuate the intent of section 6-402,
subsection B. If a service corporation engages in an activity which is not permissible
under this section for a service corporation in which an association may invest, an
association having an investment in such service corporation shall dispose of such
investment promptly unless, within ninety days following notice to such association, the
impermissible activity is discontinued. The service corporation shall file a certified
audit as provided in section 6-477, and the superintendent may examine service
corporations as provided in section 6-476.
6. With or without security, make loans, advance credit and purchase obligations
representing loans and advances of credit for the payment of expenses of community
college, college or university education, but no association may have loans under this
paragraph, exclusive of any loan which is or which at the time of its making was
otherwise authorized, aggregating at any one time more than five per cent of its total
assets. An association making a loan under this paragraph may require a comaker or
comakers, insurance, guaranty under a government student loan guarantee plan or other
protection against contingencies. The borrower shall certify to the association that the
proceeds of the loan are to be used by a full-time student solely for the payment of
expenses of community college, college or university education at an institution which
provides an education program for which it awards a bachelor's degree or provides not
less than a two-year program which is acceptable for full credit toward such a degree.
7. Notwithstanding any other provision of this article, but subject to such
prohibitions, limitations, conditions and restrictions as the superintendent may
prescribe, an association may do any of the following:
(a) Invest in primarily residential real property, including interests in such real
property, located within this state.
(b) Acquire, develop and improve such property or interests in the property for
primarily residential usage.
(c) Hold, sell or otherwise dispose of, lease, improve and operate any such
property or any interest in the property. An association shall not make any investment
under this paragraph if its aggregate outstanding investment would exceed ten per cent of
its assets. As used in this paragraph, "improve" shall include any type of improvement
other than the construction of residential housing.
8. Subject to chapter 1, article 4 of this title, in any class of capital stock of
any bank or savings and loan association, under whatever laws organized, or any
corporation which directly or indirectly acting through one or more persons owns or has
the power to vote twenty-five per cent or more of any class of voting stock of any such
bank or savings and loan association.
9. In an amount not exceeding ten per cent of the association's assets, in any
other investments not prohibited by rules adopted by the superintendent. No investment
made under the authority of this paragraph may be made in a service corporation referred
to in paragraph 5 of this subsection. An investment made under the authority of this
paragraph may be made or continued for the purpose of creating or acquiring, directly or
through any affiliate or subsidiary, any obligation of a purchaser of consumer goods
created in the acquisition of such goods or any monetary obligation of a member of the
association.
B. Notwithstanding any other provision of law, but except as provided in subsection
A, paragraphs 5 and 7 of this section, an association shall have the following powers:
1. To offer and accept savings accounts or other accounts for fixed, minimum or
indefinite periods of time or in the form of demand or transaction accounts including
overdraft privileges incident thereto to any person or entity.
2. To make, invest in or acquire loans or participating interests in loans, secured
or unsecured, of any type and for any purpose to any person or entity.
3. To make, invest in or acquire loans upon the security of any residential or
nonresidential property interest, of any priority, whether fee or leasehold to any person
or entity.
4. To make or acquire loans upon the security of, or invest in, commercial paper,
securities and other corporate debt obligations of any type.
5. To issue debt or equity securities for cash or other consideration.
6. To acquire, invest in or hold real or personal property for rental or sale,
which at the time of such acquisition or investment would not exceed twenty per cent of
an association's assets, and to enter into or create lease financing arrangements with
respect to such property.
7. To act as trustee, executor, administrator, personal representative,
conservator, guardian or custodian, or in any other fiduciary capacity, to offer trust or
fiduciary services incident thereto and to receive reasonable compensation therefor.
C. The association in the exercise of such powers provided herein may do so without
regard to geographic limitations and on terms and provisions in accordance with this
section unless restricted by rules of the superintendent.
D. An association shall not invest in or acquire a loan or a participating interest
in a loan originated or acquired by an affiliate or by a subsidiary of a related holding
company or companies other than a service corporation qualified as provided in this
section. Before making an investment in or acquiring a loan or a participating interest
in a loan the association shall evaluate the creditworthiness of the obligor in the same
manner as though the association were originating the loan. The association shall
document and retain the credit review in the loan file.
E. All of the provisions of this section are subject to section 33-1571.
6-449 General loan contract provisions
A. Each loan, and any agreement for securing the same, shall be evidenced by one or
more written instruments, consistent with sound lending practices in the locality, and
whenever recording of such an agreement is necessary to establish priority over the claim
of any third party, the agreement shall be recorded.
B. The loan contract terms shall afford full protection to the association and
shall include, among other things, provisions for:
1. The payment of taxes, assessments, other governmental levies, maintenance and
repairs, granting the association the right to make payments thereon or for any other
item which, if unpaid, would create a lien prior to that of the loan contract.
2. Adequate insurance to cover the usual risks on the property offered as security
for the loan, and in such form, coverage and amounts and in such company or companies as
the board of directors may approve.
3. The right to repay the loan in whole or in part at any time, but the association
may require payment of not more than six months' advance interest on that part of the
aggregate amount of all prepayments on a loan in one year which exceeds the amount
otherwise payable in such year under the terms of the loan.
C. The loan contract may provide for:
1. An assignment of rents.
2. Additional or future advances to be made at the option of the parties up to a
total amount stated in the recorded security instrument.
3. Regular periodical payments to create a separate trust fund in the association
to pay when due all taxes, assessments, insurance premiums, ground rents, and other
current charges against the real estate security, and the application or crediting of
such payments. All such funds so collected shall be promptly deposited in a separate
trust bank account.
4. The payment or deduction of a premium charge for property insurance, life
insurance or health and accident insurance assigned as collateral, mortgage guaranty
insurance or insurance of mortgages by the United States or any instrumentality thereof,
actual costs of title examination or title insurance, appraisal, credit report, survey,
drawing of papers, closing of loan, and other necessary incidental services in such
reasonable amounts as are actually charged and as may be fixed by the board of directors,
all of which shall be itemized on a loan settlement sheet delivered to the borrower at
the time of closing the loan; but no person regularly serving the association shall
receive from the association or other source any fee or compensation of any kind in
connection with procuring a particular loan from or by such association.
5. A single initial service charge, premium or discount and a charge or penalty for
nonpayment when due of agreed payments upon any loan, but no such charges, penalties or
discount shall, when added to the interest charge of such loan, over the contractual term
of the loan, exceed in the aggregate the applicable interest rate of this state, and no
such charge or penalty shall be either compounded or cumulated. All such charges and
penalties shall be accounted for as a part of the receipts of the association.
6. Any other covenant or agreement which the association may deem necessary or
which is customary in the locality.
7. The charges herein authorized to be made shall be in addition to interest
authorized by law and shall not be deemed as included therein, except as prohibited by
section 44-1205 and subsection C, paragraph 5 of this section.
D. If any payment required to be made by the borrower to discharge the performance
of any obligation under the loan contract is not made, or if any fund created for such
payment is insufficient to discharge the obligation completely, the association may
advance the same and add the required amount to the unpaid balance of the loan as of the
first day of the month during which such advance was made, and the advance and interest
thereon shall be secured by the security instrument.
E. The first payment on any regular installment loan, a construction loan, insured
loan, or guaranteed loan shall begin at such time as fixed by rules and regulations of
the superintendent.
6-450 Modification agreements
The association at any time may enter into a written agreement with the borrower to
modify, in any manner not inconsistent with the provisions of this chapter, the terms of
a loan as to the amount, time, or method of the payments to be made, the interest rate,
and any other provisions of the loan contract, and the loan contract and the security
instrument shall not be prejudiced by the making of any such modification, even if such a
modification was not provided for in the loan contract.
6-451 Servicing of loans
An association may contract to service a loan in any manner unless restricted by
regulations prescribed by the superintendent and shall require sufficient compensation to
reimburse the association for all expenses incurred under such contract.
6-452 Purchase of real or personal property atforced sale
An association may purchase, at any sheriff's or other judicial sale, either public
or private, any real or personal property upon which the association has any mortgage,
lien, or other encumbrance or in which the association has any other interest or accept a
deed in lieu of such foreclosure. The association thereafter may repair, improve, sell,
convey, lease, mortgage, exchange, or otherwise dispose of real or personal property so
acquired, in the best interests of the association, without limitation.
6-453 Purchase of real estate for office andrental purposes
An association may invest in land upon which to erect an office building, an office
building or buildings and appurtenances, for the transaction of such association's
business, or for the transaction of such business and for rental, but no such investment
may be made if the total amount of all investments of the association in such building or
buildings exceeds the aggregate amount of the association's outstanding shares of
guaranty capital, reserves available for losses and surplus, unless the superintendent,
upon a proper showing, shall approve a larger amount consistent with the needs of the
association's business and its immediate expansion. An association shall not purchase an
office building, or any part thereof, or land upon which to erect an office building,
from an affiliated institution, from an officer, director or employee of such
association, or from a corporation or association in which any officer, director or
employee is a stockholder or is an officer, director or employee, or from a partnership
in which any officer, director or employee is a partner, without the prior written
approval of the superintendent.
6-454 Appraisal of real estate owned
At the time of acquisition by purchase, foreclosure or otherwise, an association
shall cause to be appraised, in the manner, and by appraisers appointed in accordance
with section 6-457, each parcel of real estate acquired and shall keep a signed copy of
such appraisal in its records. An association shall not carry real estate on its books
for a sum in excess of the total amount actually invested by the association on account
of such real estate, including reasonable advances, costs and improvements, but excluding
accrued and uncollected interest.
6-456 Effect of unauthorized investments andloans; liability of officers
A. Every loan or other investment made in violation of this chapter shall be due
and payable according to its terms, and the obligation thereof shall not be impaired.
B. Every director or officer of an association who knowingly shall violate,
participate in, or assent to, or who knowingly shall permit any of the officers or agents
of the association to make investments not authorized by this chapter, shall be liable
individually for all damage which the association or its members sustain in consequence
of such violation.
6-457 Appraisals
Every appraisal or reappraisal of property which an association is required to make
shall be made as follows:
1. In accordance with the superintendent's rules and regulations on
appraisals. Each appraisal shall be filed and preserved by the association during the
life of the loan.
2. In the case of an insured or guaranteed loan, by any appraiser appointed by any
lending, insuring or guaranteeing agency of the United States or of the state of ARIZONA
which shall insure or guarantee such loan, wholly or in part. A copy of any appraisal or
of the commitment or certificate of the insuring or guaranteeing agency shall be filed
and preserved by the association during the life of the loan.
3. The superintendent may, when good cause exists, cause an independent appraisal
to be made of any property upon which a loan has been made. The reasonable travel and
subsistence expenses and compensation to such appraisers not in excess of comparable fees
paid for the same or similar appraisals in the same area shall be paid by the association
owning or holding such property as mortgagee.
6-458 Acknowledgments
No acknowledgment of a deed, mortgage, or other instrument shall be invalid because
such acknowledgment was taken before an officer authorized by the laws of this state to
acknowledge conveyances, who is also a member, director, employee, or officer of an
association which is a party to such deed, mortgage, or other instrument.
6-459 Amendment of articles ofincorporation
An association may amend its articles of incorporation from time to time, in
accordance with the procedure prescribed in this article; but the articles of
incorporation, as amended, shall conform to all legal requirements which pertain to
original articles adopted at the time of such amendment. Any number of amendments may be
submitted to the members, and voted upon by them, at one meeting.
6-460 Procedure to amend articles ofincorporation
The procedure to effect an amendment of articles of incorporation shall be as
follows:
1. The board of directors shall adopt a resolution setting forth the proposed
amendment and directing that it be submitted to a vote at a meeting of the members, which
may be an annual or a special meeting.
2. The proposed amendment, or a summary of the changes to be effected thereby,
shall be set forth in the notice of meeting as prescribed in section 6-415.
3. The proposed amendment will be adopted upon receiving, in the affirmative, a
majority or more of the total number of votes which all members of the association are
entitled to cast, except that an amendment effecting a retirement of all shares of
guaranty capital must receive the vote specified in section 6-428. A report of
proceedings, verified by the president or a vice president and attested by the secretary
and setting forth the notice given, the amendment adopted, the vote thereon, and the
total number of votes which all members of the association were entitled to cast thereon,
shall be filed promptly with the superintendent.
4. Each adopted amendment shall be subject to the same inquiry by the
superintendent as the corresponding provision in the original articles of incorporation,
including, but not limited to, the availability of a proposed new name of the
association. If the superintendent approves an amendment, he shall issue to the
association a certificate setting forth the amendment and his approval thereof, which
shall then be filed with the corporation commission and a certified copy thereof recorded
in the office of the county recorder of the county where the principal office of the
association is located. When so filed and recorded the amendment shall become effective.
5. No amendment of articles of incorporation shall affect any existing cause of
action either in favor of or against the association, or any pending action in which the
association shall be a party, or the existing rights of persons other than members of the
association; and if the amendment has changed the name of the association, no action
brought by or against the association under its former name shall be abated for that
reason.
6-461 Existing associations; adoption ofarticles and by-laws
Any existing association may, at an annual or special meeting, amend its present
articles of incorporation or other instruments concerning organization by adopting
articles of incorporation containing the provisions enumerated in section 6-413. The
procedure to be followed in adopting or amending articles of incorporation shall be that
prescribed in section 6-460.
6-462 Conversion from state to federalassociation
Any association operating under this chapter may become a federal association
pursuant to the laws and regulations of the United States and in accordance with the
following procedure:
1. The board of directors shall approve a plan of conversion by resolution adopted
by majority vote of all of the directors. The plan shall set forth, among other terms:
(a) A financial statement of the association as of the last business day of the
month preceding the adoption of the plan.
(b) The disposition of withdrawable capital and guaranty capital, if any.
(c) Adjustments, if any, in the value of accounts when exchanged for comparable
accounts in the federal association.
(d) The disposition of any segregated surplus established under the provisions of
section 6-426.
(e) The disposition of any obligations or liabilities.
2. Such plan and resolution shall be submitted to the superintendent at least
fifteen days prior to the members' meeting at which action of members is to be taken.
3. If the plan of conversion provides for no adjustment in the accounts of members
and all obligations and liabilities are to be assumed by the federal association, the
superintendent's approval of the plan of conversion shall not be required.
4. If the plan of conversion adjusts values of any type of capital, or if the
association has a segregated surplus, such plan of conversion shall be subject to the
approval of the superintendent. Approval shall be given in such case if the
superintendent finds that the plan is equitable and protects the rights of all persons
affected, including such contingent interests as theretofore may have been created in the
segregated surplus, if any.
5. After receipt of such approval from the superintendent, if required, the plan of
conversion may be submitted at an annual or special meeting of the members. The plan
will be adopted upon receiving, in the affirmative, fifty-one per cent or more of the
total number of votes which all members of the association are entitled to cast. A
report of proceedings at such meeting, certified by the president or a vice president and
attested by the secretary, shall be filed promptly with the superintendent.
6. Within ninety days after the date of such meeting, the association shall take
the action prescribed and authorized by the laws and regulations of the United States to
complete its conversion to a federal association.
7. Upon receipt of a federal charter, the association shall file promptly with the
superintendent and the corporation commission either a copy of said charter or a
certificate of the appropriate federal officer setting forth the facts concerning the
issuance of such charter and upon recording said charter in the same manner as is
required for the association's articles of incorporation, the association shall cease to
be a state chartered association.
6-463 Conversion from federal to stateassociation
A. Any federal association may become an association operating under this chapter,
pursuant to the laws and regulations of the United States and in accordance with the
following procedure:
1. The board of directors shall by a majority vote of all the directors adopt by
resolution a plan of conversion which shall set forth among other terms:
(a) A financial statement of the association as of the last business day of the
month preceding the adoption of the plan.
(b) The disposition of the withdrawable value of all accounts, general and other
reserves and surplus.
(c) The disposition of any obligation or liabilities.
(d) The disposition of the assets of the association.
2. Such plan and resolution shall be submitted to the superintendent at least
fifteen days prior to the members' meeting at which action of the members is to be
taken. If the superintendent, after appropriate examination, shall find that the
association complies sufficiently with the requirements of this chapter to entitle it to
become an association operating under this chapter, he shall approve the plan of
conversion. He may prescribe terms and conditions, to be fulfilled either prior to or
after the conversion, to cause the association to conform with the requirements of this
chapter.
3. After receipt of the superintendent's approval, the plan of conversion may be
submitted at an annual or special meeting of the members; and the plan will be adopted
upon receiving, in the affirmative, fifty-one per cent or more of the total number of
votes which all members of the association are entitled to cast. Thereupon, such action
shall be taken by the members to adopt articles of incorporation, to elect directors, to
adopt by-laws, and to elect officers, as is prescribed for a new association in article 2
of this chapter. A report of proceedings at such meeting, certified by the president or
a vice-president and attested by the secretary, shall be filed promptly with the
superintendent.
4. If the superintendent finds that such proceedings have been in accordance with
the provisions of this section, he shall issue a certificate authorizing the filing of
the articles of incorporation with the corporation commission and the taking of the other
steps required by title 10, to complete the formation of a corporation. Upon the
issuance of a certificate of incorporation by the corporation commission, the
superintendent shall issue a certificate of conversion.
5. The expenses of any examination made by or at the direction of the
superintendent in connection with such conversion shall be paid by the converting
association as a fee for special examination as authorized by section 6-125.
B. The conversion shall be effective upon the compliance with the laws and
regulations of the United States and the provisions of this section.
6-464 Effect of conversion
When an association effects a conversion in accordance with either of the two
preceding sections, the corporate functions of such association shall not be interrupted;
but the identity of the association under a new name and new jurisdiction shall continue,
together with all of the obligations and liabilities of the association with such
revision of the corporate structure as may have been authorized; and all of its rights
and interests in and to every kind of property, real, personal or mixed, shall continue
without the necessity of a deed or other transfer. Any reference to the association
before conversion, contained in any writing, whether executed or effective before or
after the conversion, shall be deemed a reference also to the association after
conversion, if not inconsistent with the other provisions of such writing. No pending
action or other judicial proceeding to which the association is a party shall be abated
or discontinued by reason of such conversion, but the same may be prosecuted to final
judgment, order, or decree in the same manner as if such conversion had not occurred.
6-465 Merger of associations orcorporations
A. An association operating under this chapter may merge into or with one or more
associations, whether operating under this chapter or otherwise, or into or with any
other corporation, except a corporation or association operating an insurance business,
other than title insurance, pursuant to title 20. The board of directors of each merging
association or corporation, by resolution adopted by a majority vote of all members of
such board, must approve the plan of merger, which shall set forth:
1. The name of each merging association or corporation, and the name of the
continuing association or corporation and the location of its principal office.
2. The amount of capital, reserves, and undivided profits of the continuing
association or corporation, and the kinds of shares and other types of capital to be
issued thereby.
3. The articles of incorporation of the continuing association or corporation.
4. A detailed pro forma financial statement of the assets and liabilities of the
continuing association or corporation.
5. The manner and basis of converting the capital of each merging association or
corporation into capital of the continuing association or corporation.
6. The other terms and conditions of the merger and the method of effectuating the
same.
7. Such other provisions with respect to the merger as appear necessary or
desirable, or as the superintendent may reasonably require to enable him to discharge his
duties with respect to such merger.
B. The plan of merger adopted shall be submitted to the superintendent for
approval, together with a certified copy of the authorizing resolution of each board of
directors, showing approval by a majority of the entire board of each merging association
operating under this chapter and evidence of proper action by the board of any other
merging association or corporation. The superintendent may make or cause to be made an
examination of the affairs of each of the merging associations or corporations. The
superintendent may approve the plan of merger if, after appropriate inquiry into the
affairs of each of the merging associations or corporations, he finds that:
1. If the resulting association or corporation is an association operating under
this chapter, the continuing association meets the requirements of this chapter as to the
organization of a new association including insurance of accounts as required by section
6-412, subsection C.
2. The plan provides an adequate capital structure.
3. The plan is fair to all persons affected.
4. The plan meets the approval of the insurance corporation, if such approval is
required.
C. If the superintendent disapproves the plan of merger, he shall state his
objections in writing and give the merging associations or corporations an opportunity to
amend the plan of merger to eliminate such objections.
D. Except as provided by subsection F of this section, after approval by the
superintendent, the plan of merger shall be submitted to a vote of the members of each
merging association operating under this chapter and to the members or stockholders of
any other merging association or corporation to the extent required by the laws and rules
applicable to the other merging association or corporation. Each meeting of the members
of an association operating under this chapter shall be called and held in accordance
with section 6-415. The plan shall be approved by the members of an association
operating under this chapter if the plan receives, in the affirmative, a majority of the
total number of votes which all members of the association are entitled to cast or such
greater percentage of the votes as the articles of incorporation of the association
require. Each meeting of any other association or corporation shall be called and held,
and the required majority must be obtained, in accordance with the law and regulations
applicable to such association or corporation.
E. A report of proceedings at the meeting of the members or stockholders of each
association or corporation, certified by the president or a vice-president and attested
by the secretary thereof, and setting forth the notice given and time of mailing thereof,
the vote on the plan of merger, and the total number of votes which all members or
stockholders of the association or corporation were entitled to cast thereon, shall be
filed in duplicate with the superintendent, except that if no member or stockholder vote
is required by an association or corporation, the association or corporation shall file a
report to that effect, in duplicate, certified by the president or vice-president and
attested by the secretary of the association or corporation. Any report filed under this
subsection shall be accompanied by the plan of merger, duly executed by each merging
association or corporation. The superintendent thereupon shall issue to the continuing
association or corporation a certificate of merger, setting forth the name of each
merging association or corporation and the name of the continuing association or
corporation, and the articles of incorporation of the continuing association or
corporation.
F. Unless required by its articles of incorporation, a vote of the members of the
continuing association or corporation is not necessary to authorize a merger if either:
1. No shares of common stock are to be issued by the continuing association or
corporation and no shares, securities or obligations convertible into such stock are to
be issued or delivered under the plan of merger.
2. The authorized but unissued shares or the treasury shares of common stock of the
continuing association or corporation to be issued or delivered under the plan of merger
plus those initially issuable on conversion of any other shares, securities and
obligations to be issued or delivered under the plan do not exceed twenty per cent of the
shares of common stock of the association or corporation outstanding immediately before
the effective date of the merger. If a plan of merger is adopted pursuant to this
subsection, a statement that the plan has been so adopted and that, as of the date of the
statement, the outstanding shares of the continuing association or corporation were such
as to render this subsection applicable shall be certified by the president or
vice-president and attested by the secretary and shall be attached to the plan of
merger. The plan so approved and the statement described in this subsection shall be
filed in duplicate with the superintendent.
G. The merger shall become effective upon the filing with the corporation
commission of the certificate of merger in the same manner as articles of incorporation,
and the recording of a copy thereof certified by the corporation commission in each
county in this state in which the business office of any of the merging associations or
corporations was located, and in the county in which the business office of the
continuing association or corporation is located, if any.
H. The expenses of any examination made by or at the direction of the
superintendent in connection with a proposed merger shall be paid by the merging
association or corporation in accordance with the fees fixed for special examination by
section 6-125.
I. If the continuing association or corporation is to be governed by the laws of
any jurisdiction other than this state, it shall comply with the applicable provisions of
the laws under which it is organized and shall comply with the laws of this state with
respect to foreign corporations if it is to transact business in this state.
6-466 Effect of merger
A. The continuing association or corporation shall be considered the same business
and corporate entity as each merging association or corporation, with all of the
property, rights, powers, duties, and obligations of each merging association or
corporation, except as otherwise provided by the articles of incorporation of the
continuing association or corporation.
B. All liabilities of each of the merging associations or corporations are
liabilities of the continuing association or corporation. All of the rights, franchises,
and interests of each of the merging associations or corporations in and to every kind of
property, real, personal or mixed, shall vest automatically in the continuing association
or corporation, without any deed or other transfer.
C. Any reference to a merging association or corporation in any writing, whether
executed or effective before or after the merger, shall be deemed a reference to the
continuing association or corporation, if not inconsistent with the other provisions of
such writing.
D. No pending action or other judicial proceeding to which any merging association
or corporation is a party shall be abated or discontinued by reason of the merger, but
may be prosecuted to final judgment, order or decree in the same manner as if the merger
had not occurred.
6-467 Authority to liquidate
An association may liquidate voluntarily in accordance with a plan of voluntary
liquidation which has been adopted in the manner provided in this article.
6-468 Decision as to liquidation; adoption ofplan
A. At any annual or special meeting of the members, the members may vote to
liquidate the association, and may adopt a plan of liquidation which has been approved by
the board of directors, or proposed by one or more shareholders, or submitted by the
superintendent; or may elect a committee of three persons to prepare and submit a plan,
and thereafter may adopt such plan. No plan except one submitted by the superintendent
shall be adopted unless it has been filed with the superintendent at least ten days
before the vote of the members is taken thereon.
B. A plan will be adopted upon receiving in the affirmative two-thirds or more of
the total number of votes which all members of the association are entitled to cast.
C. The plan of voluntary liquidation shall provide for the full liquidation of the
association, setting forth the powers, duties, manner of filling vacancies, and
succession of the liquidators and authorizing them to:
1. Advance funds of the association to preserve, protect, or purchase at any sale
any asset in which the association has an interest.
2. Sell, convey, lease, mortgage, or exchange any assets for other assets.
3. Sell and dispose of any assets at public sale to the highest and best bidder or
at private sale for the highest price obtainable.
4. Accept withdrawable capital of the association to apply upon the purchase price
of any assets, but only for such relative values as may be approved by the superintendent
from time to time. Notice by single publication or by mailing, stating the time, place
and terms of the sale, shall be given to all holders of withdrawable capital prior to the
sale.
5. Pay out of the proceeds of liquidation all expenses and services necessary to
the liquidation, and also compensation of the liquidators; but such compensation of the
liquidators, exclusive of compensation for legal services and other specialized
employment, shall not exceed in the aggregate three per cent of the proceeds of
liquidation.
6-469 Election of liquidators; report;supervision
A. Upon adoption of a plan of voluntary liquidation, the members shall proceed to
elect, with cumulative voting permitted as in elections of directors, not more than three
liquidators, who shall have full power to execute the plan. The procedure thereafter
shall be as follows:
1. A report of proceedings at the meeting of members, certified by the presiding
officer of the meeting and attested by the secretary of the meeting, and setting forth
the notice given and time of mailing thereof, the vote on the plan of voluntary
liquidation, the total number of votes which all members of the association were entitled
to cast thereon, and the names of the liquidators elected, shall be filed in triplicate
with the superintendent, together with the plan.
2. If the superintendent finds that the plan and proceedings are in accordance with
this article, that the bonds of the liquidators are sufficient, and that the plan is not
unfair to any person affected, he shall attach his certificate of approval to the plan
and shall forward one copy to the liquidators, and in the case of an insured association,
one copy to the insurance corporation.
3. The expenses of any examination made by or at the direction of the
superintendent in connection with any voluntary dissolution shall be paid as a claim by
the liquidators in accordance with the fees fixed for special examinations by section
6-125.
4. The plan shall become effective upon filing with the corporation commission of
the superintendent's certificate of approval.
B. The liquidation of the association shall be subject to the supervision and
examination of the superintendent.
6-470 Protection and liquidation ofassets
The liquidators are authorized to advance funds of the association and to take such
other action as is advisable to preserve, protect, or purchase at any sale any real
estate or other asset upon which the association may hold any lien or encumbrance or in
which it may have an interest. The liquidators may sell, convey, lease, mortgage or
exchange any assets so purchased or other assets; and in furtherance of the liquidation
of the association, may sell and dispose of any of its assets at public sale to the
highest and best bidder; or may sell any such assets at private sale for the highest
price obtainable. No purchaser shall be required to ascertain the application of the
purchase price.
6-471 Filing and payment of claims
A. The liquidators shall fix a time for all persons having claims against the
association, other than as members thereof, to present such claims, and shall cause
notice to be published, requiring all persons to present the claims on or before such
date, and within five days after the first publication shall mail a copy of such notice
to each person whose name appears on the association's records as having a claim. Each
claim shall be in writing and verified by the claimant or a duly authorized agent. A
claim may be presented at any time on or before the date fixed in the published notice,
but any claim not so presented shall be barred. Upon the disallowance of any claim, the
liquidators immediately shall notify the claimant of such fact, and the claimant may
institute suit to establish such claim at any time before the final distribution.
B. Whether a member files or does not file a claim with respect to an interest
which he has as such member, the liquidators shall determine from the records of the
association the amount of such member's claim. Any such member may examine the
association's records pertaining to his own claim. The records of the association shall
be prima facie evidence of each such claim or interest, and no member shall be entitled
to a greater claim or proportionate interest in the association unless and until the
liquidators shall have agreed to a correction of the records pertaining to such claim or
interest, or shall be ordered to correct such records by a court of competent
jurisdiction. The liquidators shall require all members to present their certificates or
account books for verification and endorsement upon payment of any liquidating dividend
or distribution; and upon final distribution, such certificates or account books shall be
surrendered to the liquidators.
C. Claims having a preference in law shall be given preference in payment; except
that no payment of less than ten dollars need be made until final distribution. No
distribution shall be made on claims for withdrawable capital until such preferred claims
have been paid or provided for in full, or during the pendency of any suit unless
sufficient funds are segregated to pay any judgment which may be rendered in such
suit. Ratable payments and distributions on withdrawable capital may be made at any time
after the time fixed for the presentment and allowance of claims has elapsed. Holders of
guaranty capital, if any, shall participate in the liquidation of the remaining assets
after payment or provision for payment has been made in full to all creditors, holders of
withdrawable capital, and any claims which the holders may have in the balance of any
segregated reserves. Final distribution shall be made in accordance with section 6-472.
6-472 Final distribution anddissolution
When all assets have been liquidated and all expenses, claims and holders of
withdrawable capital have been paid, dissolution of the association shall be accomplished
in the following manner:
1. The liquidators shall file with the superintendent the duly verified final
report of their acts and proposed final distribution.
2. Upon the superintendent's approval of the final report, the liquidators shall
publish notice of the proposed final distribution and shall allow any holder of shares of
guaranty capital to examine the records of the association to ascertain his proper share
of such distribution. Any such shareholder who fails to commence, before the date fixed
for final distribution, appropriate judicial proceedings to contest such distribution,
shall be barred from contesting the same thereafter. The liquidators shall proceed to
make final distribution on the date fixed therefor, except that such distribution shall
be deferred until final disposition of any pending judicial action affecting the
distribution, and payment, of any judgment entered therein.
3. When final distribution has been made, except as to any money due to, but
unclaimed by, any creditor, member, or other person, the liquidators shall deposit such
unclaimed money with the superintendent, for payment to the person or persons entitled
thereto upon application and proof of right as provided by law.
4. The liquidators also shall deliver to the superintendent all books of account
and other records of the association, for preservation for at least two years and
destruction thereafter as provided by law.
5. Upon completion of the foregoing procedure, the liquidators shall be
discharged. The superintendent thereupon shall issue a certificate of dissolution of the
association and shall file a copy thereof with the corporation commission and record a
copy in the office of the county recorder of each county in which the original articles
of incorporation were recorded. Upon such filing and recording, the dissolution shall be
effective. No fees shall be required for such filing and recording.
6-474 Accounting practices and records
A. Every association shall maintain in this state a detailed record of all
transactions of the association at its home office, or at a branch office or at a central
accounting or computer center servicing one or more associations, provided that general
accounting records and their maintenance shall not be transferred by an association from
its home office to a branch office, or from a branch office to its home office or to
another branch office or to a central accounting or computer center, unless and until:
1. The board of directors of the association has by resolution authorized such
transfer and maintenance.
2. The association has sent a certified copy of the resolution required by
paragraph 1 to the superintendent.
B. Each branch office shall keep detailed records of all transactions at such
branch office and shall furnish full control records to the home office, or such branch
office or central accounting or computer center as has been designated by appropriate
resolution of the board of directors adopted and filed as provided in subsection A.
C. Every association shall observe such generally accepted accounting principles
and practices as are approved by the superintendent.
D. No association by any system of accounting or any device of bookkeeping shall,
either directly or indirectly, enter any of its assets upon its books in the name of any
other person, partnership, association or corporation, or under any title or designation
that is not truly descriptive of such assets.
E. The superintendent may order that assets in the aggregate, to the extent that
such assets have depreciated in value, be charged off or that a special reserve or
reserves equal to such depreciation in value be set up by transfers from undivided
profits.
F. Except notes secured by first lien mortgages insured or guaranteed, wholly or in
part, by an agency of the United States government, all bonds or other interest bearing
obligations purchased by the association shall be carried at par with provision for
amortization of premiums and discounts.
6-475 Branch office
A. A branch office is a legally established place of business of the association,
other than the home office, authorized by the board of directors and approved by the
superintendent, at which payments on, and withdrawal from, accounts and loan payments may
be accepted and applications for loans may be received, and at which account books and
membership certificates may be issued and loans may be closed.
B. Each association shall be operated from the home office, which shall be the
association's principal place of business. All branch offices shall be subject to
direction from the home office.
C. An association may establish or acquire a branch office in any location, whether
within or outside this state, with the approval of the superintendent. An association
shall make an application for establishment or acquisition of a branch office in writing
in the form the superintendent prescribes and supported by the information, data and
records the superintendent requires to make the findings necessary for approval. Each
application for approval of the establishment and maintenance of a branch office shall
state the proposed location of the branch office, the need for the branch office, the
functions to be performed in the branch office, the estimated annual expense of the
branch office, and the mode of payment for the branch office. Each such application
shall be accompanied by a budget of the association for the current dividend period and
for the next succeeding semiannual period, which reflects the estimated additional
expense of the maintenance of such a branch office. The superintendent shall approve the
application if the superintendent finds that the prospects for a successful operation of
the branch office are favorable.
D. An association shall not establish or maintain an automated teller machine
without the prior written approval of the superintendent. An association shall accompany
each application for approval of the establishment and maintenance of an automated teller
machine with the fee prescribed by section 6-126. 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. The superintendent shall approve the application if the superintendent
finds that the prospects for a successful operation of the automated teller machine are
favorable.
6-476 Examination
The superintendent shall make a report of each examination to the board of directors
of the association examined, and if the affairs of the association are not being
conducted in accordance with this chapter, he may require the directors, officers, or
employees to take any necessary corrective action. In the interests of the members of
the association, the superintendent may prepare a statement of the condition of the
association, and may mail the same to the members or may require a single publication
thereof.
6-477 Audit by public accountant
An audit of the affairs of the association 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
association'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.
6-478 Reports to superintendent andmembers
A. Every association operating under this chapter shall file with the
superintendent within sixty days following the close of each fiscal year of such
association, a statement showing its financial condition at the close of the fiscal year
and its operations for the year then ended. Each such statement shall be on forms
prescribed by the superintendent and in conformity with generally accepted accounting
principles, and shall be verified under oath by the secretary and certified by a
committee of three or more members who are not officers of the association, or by a
licensed certified public accountant appointed by the board of directors, or by two
officers of the association.
B. Every association shall file also such other reports as the superintendent may
require from time to time.
C. Within sixty days after the date of such statement, the association either shall
mail to each member the annual statement of condition, or a condensed form thereof
approved by the superintendent, or shall publish the same at least once.
6-479 Information to federalauthorities
The superintendent may give copies of reports of his examinations of an association,
and copies of the association's reports to him, and any other information which he has
concerning the association, to the federal home loan bank, or its successor
instrumentality, of which the association is a member, or to the insurance corporation
which has insured the association's capital. No such action by the superintendent shall
relieve the association from compliance with any requirements of such federal
instrumentality concerning examinations or reports, or limit the superintendent's powers
to examine or to require reports from the association.
6-482 Receiver; appointment; transfer ofassets; powers; liability
A. If the court grants a petition for receivership filed by the superintendent, the
superintendent shall be appointed as receiver and may forthwith take possession of the
property and business of the association and retain possession until the association
resumes business or its affairs are finally liquidated, but if the association has the
insurance protection provided by title IV of the national housing act, as now or
hereinafter amended, the court may tender to the federal deposit insurance corporation
the appointment as receiver, or as co-receiver with the superintendent.
B. Upon the acceptance by the insurance corporation of the appointment as receiver
or co-receiver, possession of and title to all the assets, property and business of the
insured association shall automatically pass to and be vested in the insurance
corporation as receiver, or in the insurance corporation and the superintendent jointly
as co-receivers, as the case may be. Thereupon the insurance corporation, if it is
receiver, or the insurance corporation and the superintendent equally and jointly, if the
insurance corporation is co-receiver, shall have and possess, and may exercise:
1. All the powers and privileges provided by the laws of this state or otherwise
with respect to the superintendent as receiver of a savings and loan association.
2. Accumulatively and additionally to each of the foregoing, all of the rights,
powers, privileges and authority which were held or possessed by the association and its
officers, directors, members and creditors.
3. All the rights, privileges, powers and authority conferred upon or vested in it,
or intended so to be, by federal statutes.
C. The receiver or receivers may also make loans on the security of, or may
purchase at public or private sale or otherwise, bid at any receiver's or liquidator's
sale, and liquidate or sell, all or any part of the assets of the insured association,
and, in the event of the purchase of any assets of an association of which it is receiver
or co-receiver, it shall bid for and pay a fair and reasonable price.
D. Except as otherwise in writing specifically agreed by the receiver or receivers,
no transaction, contract, undertaking or agreement, and no exercise by the receiver or
receivers, or either of them, of any of the rights, powers, privileges or authority by
this article or otherwise vested in them as receivers, or with respect to any
receivership or liquidation, shall constitute a personal debt, obligation or liability of
or on the part of the receiver or receivers or either of them.
6-483 Procedure for liquidation; rights ofshare transferor
A. The liquidation under this article of an association, and a receivership
thereof, may, at the discretion of the receiver or receivers, be conducted and carried
out in full or in part in the same manner as provided in this title for the liquidation
of or receivership for an insolvent bank.
B. Regardless of whether the federal deposit insurance corporation serves as
receiver or co-receiver of any insured association, when it pays or makes available for
payment the liabilities of the insured association in receivership which are insured by
it, it shall, upon the surrender and transfer to it of any account or investment
certificate insured by it, be subrogated with respect to the account or investment
certificate. The surrender and transfer of the account or investment certificate,
however, shall not affect any right which the transferor thereof may have in any portion
of the account or investment certificate which is uninsured, or any right to participate
in the distribution of the net proceeds remaining from the disposition of the assets of
the insured association, but if different provisions from the foregoing provisions of
this and the preceding sentence would be applicable if the association were a federal
savings and loan association, then the provisions shall be applicable under the laws of
this state to the extent that they can validly be made so applicable. In any event the
rights of the holders of accounts or investment certificates of the insured association
shall be determined in accordance with the applicable provisions of the laws of this
state.
C. The procedure provided for in this article for the liquidation of savings and
loan associations shall be exclusive, and no receiver shall be appointed by any court of
this state to take charge of the affairs of an association except as provided in this
article.
6-484 Illegal use of name;classification
No person shall use the name "building and loan company", "building and loan
association", "savings and loan company", or "savings and loan association" unless
complying with the provisions of this title. A person using a name embodying any
combination of the words "building and loan association" or "savings and loan
association", or acting as agent for that person, is guilty of a class 2 misdemeanor,
unless complying with the provisions of this title.
6-486 Rehabilitation of associations;definition of plan
A. When the business, property and affairs of any association are in the possession
of the superintendent for liquidation, or when an association is in an unsafe or unsound
condition, the association may be rehabilitated, readjusted or reorganized in accordance
with any plan proposed and approved as provided in this article.
B. The term "plan" as used in this article means a plan for the rehabilitation,
readjustment or reorganization of an association or for the readjustment, modification or
reorganization of the rights or interests of any or all of the investors and creditors
of, or other persons, interested in the association.
C. Without limiting the generality of the foregoing provisions of this article, a
plan may provide in respect to all or any part of the business, property or affairs of
the association for any one or more of the following:
1. The retention thereof by the superintendent as a conservator, if the business,
property or affairs are in his possession for liquidation.
2. The delivery thereof to the superintendent as a conservator, or for liquidation.
3. The transfer thereof to any person or to a trustee.
6-487 Proposal of plan; petition; notice ofhearing
A. A plan may be proposed by the superintendent or by an association subject to the
approval of the superintendent. If proposed by an association, the proposal shall be
through its board of directors, or by the holders of accounts equal in amount to not less
than fifty per cent of the total accounts of the association, or by the holders of not
less than a majority of the outstanding shares of guaranty capital of the association, if
any.
B. The plan shall be presented by the proponents to the superior court of the
county in which the principal place of business of the association is located, with a
petition that the court determine the fairness of the plan and the conditions requisite
to the plan becoming operative. The petition shall set forth the plan and the fact that
it has been proposed or approved by the superintendent and any other facts which are
deemed material to a consideration of the fairness of the plan.
C. Upon filing the petition, the court shall fix the time and place for hearing it,
and shall direct the association to deliver to the proponents, or, in the discretion of
the court, to the superintendent, a list of the names and addresses of the holders of
accounts, holders of shares of guaranty capital, if any, creditors of the association,
and of all other persons affected by the plan, and the association shall comply with the
direction.
D. Thereafter the proponents of the plan, not less than twenty days before the date
fixed for the hearing, shall mail or cause to be mailed to each of the persons shown on
the list furnished pursuant to direction of the court and to all other persons affected
by the plan, notice of the time and place fixed by the court for the hearing and either a
copy of the plan or a summary thereof. Any summary shall be prepared or approved by the
superintendent. The notices shall be mailed, postage prepaid, to the respective
addresses as shown on the list, or if no address is there shown, to the last known
available address. The proponents of the plan shall also post notice of the time and
place fixed for the hearing in three public places in the county not less than twenty
days before the day fixed for the hearing and shall publish the notice at least once in a
newspaper of general circulation published in the county not less than twenty nor more
than thirty days prior to the day fixed for the hearing.
E. A copy of the plan shall be kept by the superintendent available for public
inspection, and he shall take other steps as he deems necessary for making the plan and
all notices and facts in connection therewith available to the interested parties.
6-488 Hearing; fairness of plan
A. At the time and place fixed for the hearing, or at the time and place to which
the hearing may be continued by the court, the court shall hear the parties interested
therein and, if it deems it necessary, may take testimony relative thereto and may accept
proof in affidavit form as to any fact or circumstance material thereto. The hearing
shall be conducted, among other things, upon the fairness of the terms and conditions of
the issuance of all securities to be issued pursuant to the plan and of the exchange
thereof for outstanding shares of guaranty capital, accounts, claims or property
interests, or partly in such exchange and partly for cash. All persons to whom it is
proposed to issue securities in the exchange shall have the right to appear and be heard
at the hearing.
B. No plan shall be approved by the superintendent or by the court unless the
superintendent or the court is satisfied that the plan is feasible, fair and equitable
and does not discriminate in favor of any class of holders of accounts or of shares of
guaranty capital, creditors or other persons affected thereby.
6-489 Consents required for plan to operate;exceptions
A. After completion of the hearing provided by section 6-488, the court shall
approve, modify or disapprove the plan. The plan shall not become operative unless and
until it has been approved in its original or modified form by the court, nor unless and
until the plan has been consented to, either in person or by a duly appointed agent,
attorney or committee of the following persons:
1. If the association has shares of guaranty capital outstanding, then by the
holders of a majority of the outstanding shares of guaranty capital.
2. By the holders of two-thirds in amount of the total accounts of all classes of
the association.
3. If the association has creditors, then by two-thirds of each class of creditors
of the association.
4. By two-thirds in amount of each class of other persons, if any, affected by the
plan.
B. Consents required by subsection A are not required:
1. In the case of the holder of an account, creditor or other person affected, or
of any class of holders of accounts, creditors or other persons affected, if the rights
of the person or class are not materially affected by the plan, or if the plan provides
for the payment in cash of the amount of the right or interest of such person or class.
2. From holders of shares of guaranty capital of an association if the value of the
assets of the association is less than the liabilities thereof, including the total
amount of all outstanding accounts but excluding the amount of the outstanding shares of
guaranty capital, or if the business property and affairs of the association are then in
the possession of the superintendent.
6-490 Time of giving consents; jurisdiction ofcourt
A. The consents required by section 6-489 may be given before the plan is presented
to the court, or after the presentation and before the court has approved it, or after
approval. If, at the time the plan is approved by the court, the required consents have
not been given, the order of court may provide that upon satisfactory proof of the fact
that the required consents have been given, a further order may be entered ex parte
providing that the plan shall become operative which shall be binding upon the
superintendent, the association, all holders of accounts and of shares of guaranty
capital, creditors, and all other persons affected thereby.
B. The superior court in which the petition is pending is given jurisdiction to
determine all questions required to be determined in respect to any plan including,
without limiting the generality of the foregoing, the following:
1. Whether a plan, either in its original or modified form, is fair and equitable.
2. Whether it discriminates in favor of any class of holders of accounts, creditors
or other persons affected thereby.
3. Whether it is feasible.
4. Whether the terms and conditions of the proposed issuance and exchange of
securities thereunder are fair and to approve or disapprove the terms and conditions.
5. The total liabilities of the association.
6. The conditions requisite to the plan becoming operative, including jurisdiction
to determine, for the purposes of the plan and the consents, the division of the
creditors and other persons affected by the plan into classes according to the nature of
their respective claims and interests.
6-491 Effect of approval and consents
A. When a plan has been approved by the court and the required consents given, the
plan shall be binding upon the superintendent, the association, the holders of accounts
and shares of guaranty capital, and creditors of the association and all other persons
affected thereby, and the association and such persons shall be conclusively deemed to
have consented to the terms and conditions of the plan whether or not all of the persons
have actually consented thereto and whether or not all of them have received notice of
the plan or the hearing. Such steps shall be taken by the superintendent, the
association and all other persons affected by the plan, and all acts shall be done, all
instruments executed and all securities issued, as may be required by the plan so
approved and as may be necessary or desirable for consummation of the plan.
B. The superintendent shall supervise and direct, subject to the order of the
court, the consummation of the plan. He shall have and may exercise the same authority
and power with respect to the business, property or affairs of an association retained by
or delivered to him pursuant to any plan which he may have with respect to the business,
property and affairs of any association of which he has taken possession. The
superintendent shall have and may exercise the same authority and power with respect to
an association formed pursuant to any plan, or to which the business, property or affairs
may be returned or transferred pursuant to any plan, as he would have of the association
if it had been formed or had acquired its business, property and affairs by means other
than a plan.
6-492 Appeals
A. An appeal from an order of the superior court approving a plan shall not be
effectual for any purpose, unless within thirty days after the entry of the order the
appellant files with the clerk of the court a bond with a surety company authorized by
law to transact business in this state as surety thereon to the effect that the
appellant, in the event the order is affirmed on appeal, will pay all costs and expenses,
including attorneys' fees, arising from the appeal, and also all losses and damages to
the holders of accounts and shares of guaranty capital, creditors and other persons
affected by the plan, arising from any delay in consummating the plan caused by the
appeal. The form and amount of the bond shall be approved by the superior court, but the
bond shall not be for an amount less than one per cent of the total liabilities of the
association.
B. Appeals from orders approving plans shall be given preference to other appeals
except contested election cases and cases in which the state is a party.
6-493 Securities defined; power to issue underplan
A. The term "securities", as used in this article in respect to any plan, includes
not only shares of guaranty capital and evidences of accounts issuable by an association
under the laws of this state, but also shares of stock of one or more classes issuable by
corporations generally, and bonds, notes, debentures, evidences of indebtedness,
certificates of interest or participation and collateral trust certificates.
B. An association may issue, pursuant to a plan approved under this article, any
one or more of the above mentioned kinds of securities.
6-494 Authority of fiduciaries
An executor, administrator, guardian, receiver, trustee of any kind or nature, and
an insurance company may consent to any plan or exchange any shares of guaranty capital,
accounts, creditors' claims or other rights or claims for securities issued pursuant to
any plan and may continue to hold as a legal investment securities so received.
6-495 Reservation of powers tolegislature
The legislature shall have power to amend, repeal, or modify this chapter, and such
amendments or modifications shall be binding upon any and all associations operating
under this chapter.
6-496 Applicability of other statutes
Whenever in any statute the terms "savings and loan", "building and loan", "mutual
building and loan", or other similar names are used with reference to associations
organized for the purpose of associations incorporated or operating under this chapter,
such reference shall be applicable to associations operating under this
chapter. Whenever in any statute the terms "members", "shareholders", or "investors" are
used in connection with such associations, however named, the same shall refer to members
and holders of capital of associations operating under this chapter.
6-497 Effect on existing associations
With respect to any existing association:
1. The valid articles of incorporation, bylaws, shares, contracts and obligations
of such association shall continue in full force and effect; but the association shall be
operated and regulated in accordance with the provisions of this chapter.
2. If the association accepts the benefits of, or avails itself of the powers given
by, this chapter, the association shall be subject to the provisions and requirements of
this chapter in every particular, as if the association had been organized under this
chapter.
