AS Title 6, Chapter 5: Alaska Banking Code

Chapter 05. Alaska Banking Code. Article 1. Department Powers, Bank Reports, Prohibited Interests, and Department Standards. Sec. 06.05.005. Powers of department. (a) The department shall (1) exercise general supervision over all state financial institutions and their subsidiaries and affiliated corporations; (2) adopt regulations necessary to implement this chapter, including regulations providing for the retention and preservation of state bank records; (3) review and approve or disapprove applications for new state banks under AS 06.05.344 , new bank branches under the regulations adopted under AS 06.05.399 , and international bank branches or interstate state bank branches under AS 06.05.555 ; (4) issue permits authorizing certain acquisitions by bank holding companies under AS 06.05.235 and 06.05.570; (5) determine for each state bank the amount of paid-in capital necessary to operate under AS 06.05.305 (a); (6) review and approve transfers of state bank ownership under AS 06.05.327 ; (7) perform examinations of state banks, branch banks, and subsidiaries under AS 06.01.015 . (b) The department may (1) relieve a bank from the examination requirements of AS 06.01.015 if the bank's deposits are insured by the Federal Deposit Insurance Corporation or another agency of the United States that insures bank deposits; (2) approve under AS 06.05.166 (f) the operation of a branch bank on a schedule different than normal banking days; (3) [Repealed, § 55 ch 75 SLA 2002.] (4) approve certain bank subsidiaries under AS 06.05.272 ; (5) approve under AS 06.05.205 (d) the acceptance by a bank of the bank's stock or of the stock of the bank's holding company as security for a loan in certain circumstances; (6) restrict the withdrawal of deposits from a state bank where the department finds that extraordinary circumstances make restriction necessary for the proper protection of depositors; (7) require a state bank to (A) maintain its capital and reserve accounts in amounts determined appropriate by the department, considering the size of the bank; (B) observe the methods and standards that the bank adopts for determining the value of various types of assets; (C) charge off part or all of an asset that has not been lawfully acquired; (D) write down an asset to its market value; (E) record liens and other interests in property; (F) obtain a financial statement from a borrower or prospective borrower to the extent that the bank can obtain the statement; (G) obtain insurance against damage to real property taken as security; (H) search, or obtain insurance of, the title to real property taken as security; (I) maintain adequate insurance against other risks as the department determines necessary and appropriate for the protection of depositors and the public; (J) charge off that portion of an asset classified as a loss, or charge off or reserve up to 50 percent of loans classified as doubtful, in a state or federal report of examination; or (K) charge off all debts owed to the bank in which interest is past due and unpaid for a period of six months, unless the debt principal is adequately secured and the bank is in the process of collection; (8) require the board of directors of a bank to hold a meeting under AS 06.05.438 (f); (9) order the removal of a board member of a bank under AS 06.05.435 (g); (10) order a bank to suspend the payment of dividends under AS 06.05.441 (b); (11) require a bank to increase its capital accounts under AS 06.05.305 (c); (12) take possession of a bank in the manner provided in AS 06.05.468 (c), and operate, reorganize, or liquidate the bank under AS 06.05.470 — 06.05.474 after taking possession under this paragraph; (13) issue an order under AS 06.01.030 that the department determines is necessary to ensure compliance with this chapter and regulations adopted under this chapter; and (14) exercise other powers expressly or implicitly granted in this chapter. (c) Notwithstanding the other provisions of this chapter, the department may not adopt a regulation that (1) places a restriction, including a requirement relating to collateralization, approval, reporting, or a monetary limit, on a credit card that a state bank issues to an officer of the state bank; or (2) sets a time limit on the disposal of real or personal property of a banking business. Sec. 06.05.010. Notice and hearing. [Repealed, § 54 ch 169 SLA 1978. For current law, see AS 06.01.030 .] Secs. 06.05.015 — 06.05.040. Powers over state banks; miscellaneous powers of department; bank examinations; banks exempt from examination; examination fee; examiner's oath. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.045. Bank reports to the department. (a) Each state bank shall make at least four reports of condition each year to the department on days designated by, and on forms prescribed by, the department. The report shall be signed by a duly authorized officer of the bank and shall be signed by at least three directors who certify under penalty of unsworn falsification in the second degree under AS 11.56.210 that they, and each of them, have personal knowledge of the facts stated in the report and that the facts are true. The reports must exhibit in detail and under appropriate heads the resources and liabilities of the bank and must be received by the department within 30 calendar days after the end of the period covered by the report. (b) The department may require special reports from a bank whenever in its judgment they are necessary in order to obtain a full knowledge of its condition. (c) Each state bank shall make at least one report of income and dividends to the department each year. The report shall be submitted to the department within 30 days following the end of the calendar year covered in the report. Sec. 06.05.050. Publication of reports. (a) Condensed forms of all reports of condition required by AS 06.05.045 (a) shall be immediately posted on the primary Internet website of the state bank and may also be (1) published by the state bank in a newspaper of general circulation published in the place where the state bank is located; if a newspaper of general circulation is not published in that place, the report may be published in the newspaper of general circulation published nearest to that place; or (2) posted in the lobby of the principal office and all branches of the state bank. (b) Notice of the publication or posting of the reports of condition under (a) of this section shall be posted on the primary Internet website of the state bank and may also be posted in the lobby of the principal office and all branches of the state bank. Upon request, a copy of a report of condition shall be supplied to any person at no cost. Secs. 06.05.055 , 06.05.060. Annual report of department; records of department. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.065. Financial institution interest of department officers and employees. (a) A bank examiner of the department who deals with the regulation of financial institutions, a special agent selected by the department to do work relating to financial institutions, the commissioner or deputy commissioner, or the director of banking may not be an officer, employee, director, trustee, attorney, shareholder, or partner of a financial institution, or receive, directly or indirectly, a payment or gratuity from a financial institution. A person subject to this section may not borrow money from a state financial institution, except as provided in this section. (b) A person subject to this section may (1) be a depositor in a financial institution; (2) purchase shares of a savings and loan association on the same terms available to the public; (3) be a member of an employee credit union; (4) be indebted to a state financial institution upon an installment debt incurred by the employee in the purchase of goods for personal use only and transferred to the financial institution in the regular course of business, including debts for household goods, mobile homes, motor vehicles, or boats; or (5) retain a preexisting extension of credit that was incurred before commencement of the employment that subjected the person to this section; any renegotiation of a preexisting extension of credit shall be treated as a new extension of credit that is subject to the prohibitions of this section. (c) This section does not limit the authority of an officer or employee of the department acting in the person's official capacity in the business of the department. (d) [Repealed, § 102 ch 26 SLA 1993.] (e) [Repealed, § 102 ch 26 SLA 1993.] (f) [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.070. Preservation of bank records. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.075. Standards. The department, in the exercise of its authority under this chapter, shall act in the interests of promoting and maintaining a sound and competitive banking system, the security of deposits and customers, the liquid position of banks, and the prevention of injurious credit expansions and contractions. Secs. 06.05.080 , 06.05.085. Effect of invalidity of order or regulation; limitation of personal liability. [Repealed, § 102 ch 26 SLA 1993.] Article 2. Banking Practices. Sec. 06.05.090. Certification of checks. (a) The check of a depositor may not be certified unless the amount of the check actually stands to the credit of the drawer. (b) Any check certified is a valid obligation against the bank when held by an innocent holder. (c) [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.095. Payment of items. If the balance in an account subject to withdrawal by or upon the order of a depositor is insufficient to pay an item presented for payment, a bank may select from the items that in the aggregate exceed the balance the items to be paid in the order convenient to the bank. Sec. 06.05.100. Deposit of minor or person under disability. Where a deposit is made in a bank by or on behalf of a minor or a person under disability in the name of the minor or person under disability, the bank may pay the money on check or order of that person as in other cases. Secs. 06.05.105 , 06.05.110. Deposits in two names; deposits in trust. [Repealed, § 5 ch 78 SLA 1972. For current law, see AS 13.33 .] Sec. 06.05.120. Notice of charges. A bank or other financial institution that levies a charge for the establishment or maintenance of personal nonbusiness demand deposit accounts shall clearly post a schedule of the charges in each of its places of business where these accounts are opened. Sec. 06.05.130. Final adjustment of statements of account. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.145. Adverse claim to bank deposit. Notice to a bank of an adverse claim to a deposit standing on its books to the credit of a person is ineffective unless the adverse claimant procures a restraining order, injunction or other appropriate process against the bank from a court in a cause where the person to whose credit the deposit stands is made a party or executes to the bank in form and with sureties acceptable to it a bond, indemnifying the bank from any liability, loss, damage, costs and expenses on account of the payment of the adverse claim or the dishonor of the check or other order of the person to whose credit the deposit stands on the books of the bank. This section does not apply where the person to whose credit the deposit stands is a fiduciary for the adverse claimant, and the facts constituting that relationship and the facts showing a reasonable belief on the part of the claimant that the fiduciary is about to misappropriate the deposit are made to appear by the affidavit of the claimant. Sec. 06.05.160. Transmitting money and foreign exchange. A bank may accept for transmission and transmit money, and may buy and sell foreign exchange to the extent necessary to meet the reasonably anticipated needs of customers. Sec. 06.05.165. Optional five-day week. [Repealed, § 1 ch 56 SLA 1971.] Sec. 06.05.166. Legal holidays and closings. (a) A bank organized under or doing business under the laws of the state or a national bank may remain closed on the legal holidays described in AS 44.12.010 — 44.12.025. The bank shall post a notice of holiday closing in the place of business affected at least seven days in advance. (b) If a contract by its terms requires the payment of money or the performance of a condition on a holiday allowed under (a) of this section by or at a state or national bank, payment may be made or the condition performed on the next succeeding business day with the same effect as if made or performed in accordance with the terms of the contract. (c) In an emergency, a bank may elect not to open any of its banking offices on a business or banking day or, having opened, to close any banking office. The bank shall notify the department of the nonopening or the closing before taking the action, if possible, and, in any event, not later than 15 days after the nonopening or closing. Any act relating to the banking office that has been closed for any period of time under this subsection may be performed on the next business day that the office is open for business. No liability or loss of rights of any kind on the part of any person, firm, or corporation or of the bank results from the nonopening or closing, and the rights of all parties are suspended during the nonopening or closing. (d) In addition to legal holidays, a bank's board of directors may declare a closing of the bank on any other normal business day, if the department authorizes the closure, the bank posts notice of the closing in the place of business affected at least 15 days in advance, and the bank maintains all normal processing and clearing operations on the closed day. (e) Under (a) or (d) of this section, a bank may not be closed for more than three consecutive days. (f) A bank may operate a branch bank on a different schedule approved by the department if the department determines that operation on a different schedule will provide better service or otherwise benefit the public. Sec. 06.05.175. Depositor and customer records confidential. [Repealed, § 55 ch 75 SLA 2002.] Sec. 06.05.180. Fiduciary and other powers authorized. Every bank organized under this chapter, subject to the restrictions and limitations of laws and the regulations of the department, may (1) act as trustee under any mortgage or bond issued by the state, or any municipality, body politic, or corporation, foreign or domestic, and accept and execute any municipal or corporate trust not prohibited by the laws of this state; (2) accept a trust from, and execute a trust for, a married person in respect to the married person's separate property, and act as agent in the management of the property or transact any business in relation to the property; (3) act under the order or appointment of a court of competent jurisdiction, including any probate court, as custodian, receiver, or trustee of the estate of a minor, and as depository of money paid into court for the benefit of any person, corporation, or party, and in any other fiduciary capacity; (4) act under the order or appointment of a court of competent jurisdiction, including any probate court, as trustee, custodian, receiver or committee of the estate of an incapacitated person, as defined in AS 13.26.005 , or of a spendthrift, or as receiver or committee of the property or estate of a person in insolvency or bankruptcy proceedings; (5) act as executor or administrator with or without the will annexed of the estate of a deceased person; (6) accept and execute any legal trust, duty, and power in regard to the holding, management, and disposition of any estate, real or personal, wherever located, and the rents and profits from it, or the sale of it, as may be granted or confided to it by a court of competent jurisdiction, including any probate court, or by any person, corporation, municipality, or other authority, and is accountable to all parties in interest for the faithful discharge of every trust, duty, or power which it may accept; (7) accept and execute any trust or power conferred upon it by any person or any body politic or domestic or foreign corporation, or any other authority, grant, assignment, transfer, devise, bequest, or otherwise, or which may be entrusted or committed or transferred to it by order of a court of competent jurisdiction, including any probate court; (8) receive, manage, hold, and dispose of according to the terms of any trust or power any property or estate, real or personal, which may be the subject of any such trust or power; (9) act as the fiscal or transfer agent of the United States or of any state, territory, municipality, or other body politic, and in this capacity may receive and disburse money, transfer, register, and countersign certificates of stocks, bonds, or other evidences of indebtedness; (10) whenever the instrument or power governing the fiduciary relationship directs, requires, authorizes, or permits investment in obligations of the United States government, or its agencies or instrumentalities, invest in those obligations either directly or in the form of securities of, or other interests in, an open-end or closed-end management type investment company or investment trust registered under 15 U.S.C. 80a-1 — 80a-64 (Investment Company Act of 1940) if (A) the portfolio of the investment company or investment trust is limited to (i) obligations of the United States government, or its agencies or instrumentalities; (ii) repurchase agreements fully collateralized by the obligations identified in (i) of this subparagraph; and (iii) securities of, or other interests in, other open-end or closed-end management type investment companies or investment trusts registered under 15 U.S.C. 80a-1 — 80a-64 whose portfolios are limited to the obligations and repurchase agreements identified in (i) and (ii) of this subparagraph; and (B) the investment company or investment trust takes delivery of the collateral for any repurchase agreement directly or through an authorized custodian. Secs. 06.05.185 — 06.05.195. Application of chapter to trust companies; supervision by the department; dissolution of trust companies. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.197. Nominees. (a) A state or national bank or a trust company, when acting in the state as a fiduciary or as a co-fiduciary with others, may with the consent of its co-fiduciary or co-fiduciaries, if any, who are hereby authorized to give such consent, cause any investment it holds as a fiduciary or co-fiduciary to be registered and held in the name of a nominee or nominees of the bank or trust company. The bank or trust company is liable for the acts of its nominee with respect to an investment registered in the nominee's name. (b) The records of the bank or trust company must at all times show the ownership of the investment registered and held in the name of its nominee. The bank or trust company shall retain possession and control of the investment and keep the investment separate and apart from its assets. Article 3. Reserves, Loans, Investments, Bank Service Corporations, Practices, and Services. Sec. 06.05.200. Reserves against deposits. (a) A bank shall maintain a reserve fund sufficient to maintain liquidity and meet all reasonable demands of depositors, as provided in regulations adopted by the department. (b) [Repealed, § 102 ch 26 SLA 1993.] (c) [Repealed, § 102 ch 26 SLA 1993.] (d) If the reserve fund of a bank falls below the amount required by the department to be maintained under this section, the department may prohibit the bank from making any new loans or other investments or paying any dividends until the bank's reserve fund has been restored to the amount required under this section. Sec. 06.05.205. Loans and extensions of credit. (a) The total loans and extensions of credit by a state bank to a person outstanding at one time and not fully secured, as determined in a manner consistent with (b) of this section, by collateral having a market value at least equal to the amount of the loan or extension of credit may not exceed 15 percent of the unimpaired capital and unimpaired surplus of the state bank. (b) The total loans and extensions of credit by a state bank to a person outstanding at one time and fully secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the money outstanding, may not exceed 10 percent of the unimpaired capital and unimpaired surplus of the state bank. The limitation in this subsection is separate from and in addition to the limitation contained in (a) of this section. (c) The limitations contained in (a) and (b) of this section are subject to the following exceptions: (1) loans or extensions of credit arising from the discount of commercial or business paper evidencing an obligation to the person negotiating it with recourse are not subject to a limitation based on unimpaired capital and unimpaired surplus; (2) the purchase of bankers' acceptances described in AS 06.05.275 and issued by other banks are not subject to a limitation based on unimpaired capital and unimpaired surplus; (3) loans or extensions of credit secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples are subject to a limitation of 35 percent of unimpaired capital and unimpaired surplus in addition to the general limitations if the market value of the staples securing each additional loan or extension of credit at all times equals or exceeds 115 percent of the outstanding amount of the loan or extension of credit; in order to be considered under this paragraph, the staples must be fully covered by insurance whenever it is customary to insure those staples; (4) loans or extensions of credit secured by bonds, notes, certificates of indebtedness, or treasury bills of the United States or by other such obligations fully guaranteed as to principal and interest by the United States are not subject to a limitation based on unimpaired capital and unimpaired surplus; (5) loans or extensions of credit to, or secured by unconditional takeout commitments or guarantees of, any department, agency, bureau, board, commission, or establishment of the United States or a corporation wholly owned directly or indirectly by the United States are not subject to a limitation based on unimpaired capital and unimpaired surplus; (6) loans or extensions of credit secured by a segregated deposit account in the lending state bank are not subject to a limitation based on unimpaired capital and unimpaired surplus; (7) loans or extensions of credit to a bank or to a receiver, conservator, superintendent of banks, or other agent in charge of the business and property of that bank, if approved by the department, are not subject to a limitation based on unimpaired capital and unimpaired surplus; (8) loans or extensions of credit arising from the discount of negotiable or non-negotiable installment consumer paper that carries a full recourse endorsement or unconditional guarantee by the person transferring the paper are subject under this section to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired surplus, notwithstanding the collateral requirements set out in (b) of this section; however, if the state bank's files or the knowledge of its officers of the financial condition of each maker of that consumer paper is reasonably adequate, and an officer of the state bank designated for that purpose by the board of directors of the state bank certifies in writing that the state bank is relying primarily upon the responsibility of each maker for payment of the loans or extensions of credit and not upon any full or partial recourse endorsement or guarantee by the transferor, the limitations of (a) and (b) of this section as to the loans or extensions of credit of each such maker are the sole applicable loan limitations; (9) loans or extensions of credit secured by shipping documents or instruments transferring or securing title covering livestock or giving a lien on livestock when the market value of the livestock securing the obligation is not at any time less than 115 percent of the face amount of the note covered are subject under this section, notwithstanding the collateral requirements set out in (b) of this section, to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired surplus; (10) loans or extensions of credit, arising from the discount by dealers in dairy cattle of paper given in payment for dairy cattle and carrying a full recourse endorsement or unconditional guarantee of the seller, that are secured by the cattle being sold are subject under this section, notwithstanding the collateral requirements set out in (b) of this section, to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired surplus. (d) Except with the written prior approval of the department for an acquisition or merger with another financial institution, or except with the written prior approval of the department in order to prevent loss upon an indebtedness previously contracted in good faith, a state bank may not (1) accept as security for a loan the capital stock of the state bank; (2) accept as security for a loan the capital stock of the state bank's parent holding companies, unless the stock of the holding companies is publicly traded on a nationally recognized exchange; or (3) loan money that is to be used to purchase the capital stock of the state bank or a parent holding company of the state bank. (e) The department may adopt regulations to administer and carry out the purposes of this section, including, notwithstanding any contrary provision of this section, regulations to define or further define terms used in this section in order to establish limits or requirements other than those specified in this section for particular classes or categories of loans or extensions of credit. (f) For purposes of this section, the department may determine when a loan putatively made to a person shall be attributed to another person. (g) In this section, “person” means an individual, sole proprietorship, partnership, joint venture, association, trust, estate, business trust, corporation, or any similar entity or organization. Sec. 06.05.206. Leasehold and development loans. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.207. Real estate loans. (a) A bank may, subject to the requirements of this chapter, make or acquire a loan secured primarily by a first lien on an interest in improved or unimproved real property, including leases, if (1) the making of the loan is consistent with written lending policies of the bank and regulations adopted by the department; (2) before the loan is made or acquired, the bank secures and maintains in its files, evidence of merchantable title and a determination of the value of the property by a person familiar with the real property values in the vicinity where the real property is located; and (3) insurance against loss from fire on all buildings on the real property that are included in the value of the property is acquired by the borrower or the bank and is not allowed to lapse. (b) A bank may, subject to the requirements of this chapter, make or acquire a loan secured by a junior lien on real property if (1) payments on the loan secured by all senior liens are current and the bank retains in its records a written report of the status and balance of the senior liens as of the date the junior lien loan is made or acquired; and (2) all requirements of (a) of this section are met. (c) In this section, “real property” includes a manufactured home that has become real property under AS 34.85.010 . In this subsection, “manufactured home” has the meaning given in AS 45.29.102 . Sec. 06.05.208. Revolving credit plans. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.209. Credit cards. (a) A bank is not prohibited from issuing unsolicited credit cards or other similar credit granting devices but the bank may not hold the customer liable for charges made on a credit card or other device before its acceptance by the customer. Before an unsolicited card is considered accepted by the customer, the customer shall execute and furnish to the bank a written statement of acceptance. (b) A state bank may issue a credit card or other similar credit granting device to a customer for obtaining money, goods, services, or anything else of value, and, notwithstanding AS 45.45.010 , the state bank, when credit is extended under this section, may impose a service charge at a monthly rate as agreed upon by contract between the state bank and the customer receiving the credit granting device. (c) In addition to charges authorized under (b) of this section, a bank may charge an annual fee for the issuance of a credit card or other similar credit granting device. Sec. 06.05.210. Loans to directors, officers, and employees. (a) Subject to the same terms and conditions applicable to other loans and to applicable federal law, a director or executive officer of a state bank may borrow up to $500,000 from the state bank at the discretion of the chief executive or managing officer of the state bank. A loan to a director or executive officer that makes the total amount owed to the state bank by the director or executive officer in excess of the limit in this subsection, or loans of any amount to the chief executive or managing officer of the state bank, shall have the prior approval of the board of directors and shall be reported to the department within 30 days. (b) [Repealed, § 102 ch 26 SLA 1993.] (c) Notwithstanding (a) of this section, loans to directors, executive officers, and other officers and employees of a state bank are subject to the lending limits imposed by AS 06.05.205 and the regulations adopted under that section. Sec. 06.05.211. Loans secured by forest tracts. (a) A bank may, subject to the requirements of this chapter, make or acquire a loan secured by a first lien on a forest tract if (1) the making of the loan is consistent with written lending policies of the bank and regulations adopted by the department; (2) before the loan is made or acquired, the bank secures and maintains in its files evidence of a determination of the value of the property; and (3) the loan is secured by an amortized mortgage, deed of trust, or assignment of a federal or state timber sale contract. (b) The aggregate of all loans made or acquired by a bank under this section may not exceed 50 percent of its combined capital, surplus, and undivided profits. (c) In this section, “forest tract” means a reasonably accessible tract of land primarily covered with marketable or potentially marketable growing timber having a recognized commercial value, which is safeguarded by fire protection, insect, pest, and disease control. Sec. 06.05.212. Overdrafts. (a) A director, officer, or employee of a state bank may not knowingly, wilfully, and persistently overdraw the director's, officer's, or employee's account or permit a customer to do so. (b) An overdraft of more than 30 days' standing may not be allowed as an asset of the bank. (c) The provisions of this section do not apply to an approved overdraft created under a check guaranty plan or other similar revolving credit plan. Sec. 06.05.215. Liability of directors and officers for certain loans. A director, executive officer, managing officer, or issuing officer of a state bank who knowingly or with gross negligence approves or permits the funds of the bank to be lent or overdrafts to be made in an unsafe or unsound manner, or in violation of an order of the department, the bank's lending policies, this title, or a regulation adopted under this title, is personally liable to the bank for all the loans and overdrafts. The bank may enforce the liability against the director or officer by an action in a court of competent jurisdiction. Sec. 06.05.220. Loans under Title I of the National Housing Act. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.225. Application of other laws to loans insured under national housing act. The laws of the state prescribing or limiting interest rates upon loans do not apply to loans insured under 12 U.S.C. 1706c (National Housing Act). Sec. 06.05.230. Investment in property and banking premises. A bank may acquire, purchase, hold, and convey real and personal property for the following purposes only: (1) that which is necessary for the convenient transaction of, or the promotion of, its business, including buildings containing banking offices, equipment, furniture and fixtures, art work, leasehold improvements, parking lots, and, with the prior approval of the department, real property reasonably anticipated to be necessary for future expansion of the bank, if the book asset value of the purchase or investment does not exceed 60 percent of the capital and surplus of the bank; (2) the satisfaction of or on account of debts previously contracted in the course of its business; (3) the purchase at sale under judgment, decree, lien, or mortgage foreclosure, against security held by it; (4) that which is necessary in connection with a negatively amortizing loan described under AS 45.45.010 (f). Sec. 06.05.231. Bank service corporations. (a) A bank may invest not more than 10 percent of its paid-in and unimpaired capital and surplus in a bank service corporation if (1) the bank submits an application requesting permission to invest in a bank service corporation to the department, accompanied by complete information concerning feasibility, rates, and competitive organizations, and the department consents in writing to the investment before it is made; and (2) the total investment under this section and AS 06.05.230 (1) does not exceed the combined capital, surplus, and undivided profits. (b) A bank may not employ or use the services of a bank service corporation unless the service corporation provides an adequate bond or insurance against liabilities arising from accounting or other activities performed by the service corporation affecting bank transactions and the bank gives written notice to the department, before any services are rendered, specifying the name and address of the bank service corporation and the nature of the activities to be performed. (c) The performance of a service for a bank by a bank, person, or organization other than the bank is subject to all laws and regulations governing performance and examination, in the same manner as if the bank were performing the services. (d) In this section, (1) “bank service corporation” means a corporation organized to perform bank services for two or more banks, each of which owns part of the capital stock of the corporation; (2) “bank services” means services for banks such as check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, and any clerical, bookkeeping, accounting, statistical, or similar functions performed by a bank for its customers. Sec. 06.05.232. Leasing of real and personal property. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.235. Bank holding companies. (a) Except as provided in this section or in AS 06.05.570 , it is unlawful for a person to own, control, or hold with power to vote 25 percent or more of a class of voting securities or other capital stock of one or more state banks or domestic bank holding companies subject to regulation under this chapter. However, when it becomes a bona fide necessity to avoid loss for a creditor to accept shares of stock in one or more state banks or domestic bank holding companies constituting more than 25 percent of the ownership or control of a state bank or domestic bank holding company in payment of indebtedness owing to the creditor, shares of stock may be accepted, but the shares of the one or more state banks or domestic bank holding companies exceeding that 25 percent shall be promptly disposed of under the supervision of the department. (b) A domestic bank holding company that maintains its principal office and place of business in the state and conducts its principal operations in the state, may acquire and own all or a portion of the voting securities or other capital stock of, or all or substantially all of the assets of, one or more banks or bank holding companies. The department may require a domestic bank holding company to post a bond with the department in an amount not more than the paid-in capital and paid-in surplus represented by the proportion of state bank stock directly or indirectly owned, held, or controlled by it, under conditions the department may prescribe, to assure full protection of the public. Before a domestic bank holding company may acquire a bank or bank holding company doing business in the state, the domestic bank holding company shall apply for and obtain a permit from the department. In considering whether to issue a permit, the department shall consider the benefits to the public, the preservation of a competitive banking industry, and the maintenance of a safe and sound bank industry. The domestic bank holding company is subject to an examination by the department or a competent person designated by the department when the department considers it necessary, but not less than once each year. The domestic bank holding company shall pay an examination fee under AS 06.01.010 . (c) [Repealed, § 102 ch 26 SLA 1993.] (d) [Repealed, § 102 ch 26 SLA 1993.] (e) [Repealed, § 102 ch 26 SLA 1993.] (f) [Repealed, § 102 ch 26 SLA 1993.] (g) For the purpose of this section and AS 06.05.570 , a trust company organized under AS 06.26 that is engaged in the business of banking shall be considered a state bank. (h) [Repealed, § 102 ch 26 SLA 1993.] (i) The provisions of this section do not apply to a person that (1) acquires or holds voting securities or other capital stock of a bank or bank holding company only for a reasonable period of time in connection with the underwriting of securities; (2) is a state agency; (3) is a trustee or agent of an independent federal financial regulatory agency; or (4) under a plan of financial restructuring that is intended to prevent the failure of a state bank and that is approved by the department, (A) acquires or receives 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan, and owns, controls, or holds, with the power to vote, the securities acquired or received in excess of 24.99 percent of that class for a period of time that permits the distribution or resale of the securities or other capital stock on a reasonable basis; or (B) purchases or receives securities under the plan and, after the purchase or receipt, owns, controls, or holds, with a power to vote, less than 25 percent of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan but subsequently, solely through the action or inaction of others, including the bank or bank holding company, owns, controls, or holds, with a power to vote, 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company; the exemption in this subparagraph does not apply if the department determines, after notice and opportunity for hearing under AS 06.01.030 , that the ownership, control, or holding of the securities or stock exceeding 24.99 percent of a class, other than under a plan to promptly dispose of the securities or stock under the supervision of the department, permits the organization in any manner to control the election of a majority of the board of directors or trustees, or to directly or indirectly exercise a controlling influence over the management or policies of the bank or bank holding company. Sec. 06.05.237. Financial holding companies. Notwithstanding the provisions of AS 06.05.235 and regulations adopted under that section, a holding company formed under this title may apply to the Federal Reserve System for status as a financial holding company. If the status is granted, the financial holding company has powers as a financial holding company authorized by the Federal Reserve System if (1) at the time of application, the holding company provides the department with a complete copy of the application; (2) the holding company provides the department with copies of all correspondence concerning the application; (3) the holding company provides the department with a copy of the approval by the Federal Reserve System within 10 days after the holding company receives the approval; and (4) the department does not issue a letter denying financial holding company status within 30 days after the approval by the Federal Reserve System. Sec. 06.05.238. Required directors' meetings and statements to the department. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.240. Acquisition of property to satisfy or protect previous loan. A state bank may take property of any kind to satisfy or protect a loan previously made in good faith and in the ordinary course of business. A bank may not take the capital stock of the bank or of the bank's parent holding companies unless it complies with AS 06.05.205 (d). The property shall be entered on the books at cost, or fair market value, whichever is less. Property acquired to satisfy or protect previous loans shall be disposed of over periods of time as the department may prescribe by regulation. Sec. 06.05.245. Disposition of property. All investments in real and personal property, regardless of how acquired, not permitted under AS 06.05.230 that come into the possession of a state bank shall be disposed of as soon as possible. Sec. 06.05.250. Limitation on cost of banking premises. [Repealed, § 10 ch 63 SLA 1969.] Sec. 06.05.255. Borrowing. (a) The aggregate amount of outstanding liabilities of a state bank for money borrowed exclusive of (1) capital notes and debentures issued under AS 06.05.307 , (2) obligations incurred in connection with the purchase of bank premises under AS 06.05.230 (1), and (3) agreements to repurchase securities, earlier sold by the bank, at the end of a stated period, may not at any time exceed 15 percent of the bank's total assets, or a larger amount if approved by the department. (b) Nothing in this section prevents a bank from rediscounting in good faith and endorsing any of its negotiable notes. (c) [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.260. Pledge, assignment, and transfer of assets. (a) A bank may not give preference to a depositor or creditor by pledging any of the assets of a bank as collateral security except (1) to the state to secure state funds, or to a municipal corporation or other public corporation, municipal utility or municipal utility board, or political subdivision of the state to secure its funds, and to the United States as may be required to make the bank a depository for United States funds; (2) to secure a mortgage or deed of trust in connection with the purchase of banking premises as provided in AS 06.05.230 , if the only property pledged is property purchased in the transaction; (3) to a federal reserve bank or federal home loan bank in the manner required by the applicable laws, regulations, and rules of the federal reserve bank or federal home loan bank, as applicable; (4) to a federally recognized tribe or a wholly owned subdivision or wholly owned subsidiary of a federally recognized tribe; (5) to a business enterprise that is wholly owned by a federally recognized tribe; (6) to an inter-tribal consortium as defined in 25 U.S.C. 3202; or (7) to a tribal organization as defined in 25 U.S.C. 5304. (b) [Repealed, § 102 ch 26 SLA 1993.] (c) A pledge, assignment, or transfer of any of the assets of a bank in violation of this section is null and void against the creditors of the bank. (d) A bank may pledge the assets of the bank (1) to a party to an interest rate swap agreement as collateral to secure the party's financial risk arising out of the agreement; the bank may make the pledge on the same terms and conditions applicable to a bank chartered by the United States in a pledge of assets in an interest rate swap agreement; (2) to allow the bank to enter into an interest rate swap agreement to manage the bank's risk of fluctuating interest rates, but not for a purpose that involves a high risk of loss. (e) In this section, (1) “federally recognized tribe” means a tribe that the United States Secretary of the Interior recognizes as an Indian tribe under 25 U.S.C. 5131 (Federally Recognized Indian Tribe List Act of 1994); (2) “interest rate swap agreement” means an agreement in which one stream of future interest payments is exchanged for another stream of future interest payments. Sec. 06.05.262. Assumption of liability. Except as expressly permitted in this chapter, a state bank may not assume liability as an insurer or as a guarantor or endorser of a security instrument or obligation unless the bank has a property interest in or with respect to the instrument or obligation. This section does not apply to warranty deeds issued by a bank. Sec. 06.05.265. Liability of directors for certain loans. Sec. 06.05.270. Investments and customer securities. (a) In addition to loans and acquisitions expressly authorized by this chapter, a state bank may deal in, underwrite, and invest in for its own account the obligations that the department by regulation authorizes the bank to deal in, underwrite, or invest in for its own account. (b) [Repealed, § 102 ch 26 SLA 1993.] (c) A state bank may purchase or sell, without recourse, any security upon the order of a customer and for the customer's account. Sec. 06.05.272. Bank subsidiaries. (a) A state bank may purchase or establish, and operate, one or more subsidiaries engaged in any of the following activities, if the subsidiary has the necessary licenses and permits and the operation is not detrimental to the bank's business: (1) real property ownership, development, and leasing; (2) securities brokerage; (3) other activities authorized in regulations adopted under this section; or (4) other activities approved by the department. (b) Under this section, a state bank's total investment in its subsidiaries may not exceed that which is permissible for a federally chartered bank's total investment in all subsidiaries as set out in 12 U.S.C. 24a, as amended. Loans to subsidiaries are considered investments subject to the limitations of this subsection. (c) A subsidiary of a state bank is subject to examination by the department as part of the examination of the bank under AS 06.01.015 . (d) [Repealed, § 55 ch 75 SLA 2002.] Sec. 06.05.275. Trade and bank acceptances. (a) [Repealed, § 102 ch 26 SLA 1993.] (b) A bank may discount, invest in, negotiate, and issue trade acceptances and bank acceptances if (1) the terms of the draft require presentation for payment within 180 days of issuance, exclusive of days of grace, and it is drawn to finance the purchase of goods with maturity and payment in accordance with the terms of the purchase agreement; (2) the terms of the draft require presentation for payment within 180 days of issuance, exclusive of days of grace, and it is secured by shipping documents transferring or securing title to goods, or by receipt of a licensed or bonded warehouse securing title to readily marketable goods; or (3) the draft is drawn by a bank outside the continental limits of the United States for the purpose of furnishing dollar exchange for trade and its terms require presentation for payment within 90 days of issuance. (c) [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.277. Providing services as agent.

(a) If a state bank complies with this section and if the department approves the provision of the services under this section, the state bank may agree to provide banking services as an agent for a depository institution. (b) A state bank that proposes to enter into an agency agreement under this section shall file with the department at least 60 days before the effective date of the agreement a request that the department approve the provision of the banking service. The request must include a (1) notice of intention to enter into an agency agreement with a depository institution; (2) description of the services proposed to be provided under the agency agreement; and (3) copy of the agency agreement (c) Except as provided by (d) of this section, the commissioner shall decide whether to approve a request submitted under (b) of this section and shall issue a decision within 60 days after receipt of the request. The department may ask for additional information after reviewing a request received under (b) of this section. If the department asks for additional information, the 60 days is calculated from the date the department receives the additional information. (d) When making its decision under (c) of this section, the department may consider the safety and soundness of the particular state bank and depository institution and whether providing the service is consistent with applicable federal and state law and with safe and sound banking practices. (e) Before approval under (c) or (f) of this section, the department shall give appropriate notice to the public of each request submitted to the department under (b) of this section. (f) If the department does not take action on a request submitted under (b) of this section within the time limit established in (c) of this section, the request is considered to have been approved by the department. (g) Notwithstanding the other provisions of this section, a state bank may not, under an agency agreement, provide by itself through an agent an activity that the state bank may not conduct under applicable state and federal law. (h) The department may order a state bank or another depository institution subject to this title to cease acting as an agent or principal under an agency agreement subject to this section if the department determines that the activity is inconsistent with safe and sound banking practices. Sec. 06.05.280. Fees connected with obtaining mortgage loans. (a) [Repealed, § 102 ch 26 SLA 1993.] (b) [Repealed, § 102 ch 26 SLA 1993.] (c) A director, officer, or employee of a bank may not receive a fee or other compensation of any kind in connection with obtaining a mortgage loan from a bank, except for services actually rendered as provided in this chapter. Article 4. Organization, Incorporation, Certification, Capital Structure, and General Powers, Limitations, and Requirements. Sec. 06.05.300. General corporate powers. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.301. Applicability of corporations code. (a) Except for national banks with a principal place of business in the state, and interstate state banks and international banks with a certificate of authority under AS 06.05.555 , a corporation may not engage in the banking business unless the corporation is organized under AS 10.06 (Alaska Corporations Code) and this title. (b) The provisions of AS 10.06 (Alaska Corporations Code) apply to state banks, except those provisions inconsistent with this chapter. The provisions inconsistent with this chapter include AS 10.06.010 (4) — (8), 10.06.105(a) and (d), 10.06.325, 10.06.356, 10.06.358 — 10.06.360, 10.06.370, 10.06.385 — 10.06.388, 10.06.420(i), 10.06.430, 10.06.453, 10.06.460(b), 10.06.485, 10.06.522 — 10.06.868, 10.06.915, 10.06.960, and 10.06.990(30) and (38). Sec. 06.05.305. Capital structure. (a) A corporation may not commence and operate a banking business in the state in a community with a population of 35,000 or more unless the corporation has paid-in capital in an amount acceptable to the department, but not less than $2,000,000, and paid-in surplus equal to 20 percent of paid-in capital. A corporation may not commence and operate as a bank in the state in a community with a population less than 35,000 unless the corporation has paid-in capital in an amount acceptable to the department, but not less than $1,000,000, and paid-in surplus equal to 20 percent of paid-in capital. A bank may not operate any branches unless it has an aggregate paid-in capital and paid-in surplus in amounts acceptable to the department. (b) The capital of a state bank may not be reduced to an amount less than is required by the department for capital under (a) of this section. A reduction of capital or the liability of the shareholders is not valid until it is approved by the department. (c) If a state bank fails to maintain its total capital accounts and loan loss reserves in an amount equal to the assets classified as substandard by the Federal Deposit Insurance Corporation or by the state in the bank's latest report of examination, the department shall consider the failure as endangering the safety of depositors and may direct the bank's directors to increase the capital accounts in an amount sufficient to cover substandard assets. Sec. 06.05.307. Capital notes or debentures. (a) A bank organized under the laws of this state may, with the approval of stockholders owning two-thirds of the stock of the bank entitled to vote or without this approval if authorized by its articles of incorporation, issue convertible or nonconvertible capital notes or debentures with the written consent of the department. The principal amount of notes and debentures outstanding at any time may not exceed 33 1/3 percent of the capital stock and surplus fund of the bank at the date of issue. The rate and term are subject to the approval of the department but in no event may the term be more than 20 years after the date of issue. (b) A bank may not retire capital notes or debentures if the retirement creates an impairment of its capital. Capital notes and debentures are subordinated in right of payment in the event of insolvency or liquidation of the bank to the prior payment of all deposits and all claims of other creditors except the holders of securities on a parity with the capital notes and debentures and the holders of securities expressly subordinated to the capital notes and debentures. (c) Bank assets may not be pledged to secure capital notes and debentures, but the bank may, for the security and the protection of the holders of the capital notes and debentures, agree through its board of directors to restrict the payment of dividends. (d) [Repealed, § 102 ch 26 SLA 1993.] (e) [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.310. Correction of impairment of capital. If the department determines that the order is necessary for the protection of depositors, the department may issue an order under AS 06.01.030 to require a state bank to increase its capital accounts or to reduce its deposits. In making a decision whether to issue an order under this section, the department shall consider the (1) quality of management; (2) quality and liquidity of assets; (3) history of earnings and retention of earnings; (4) quality and character of ownership; (5) potential volatility of deposit structure; (6) quality and cost of bank operations; and (7) capacity to meet present and future needs of the area served, considering the bank's competition. Sec. 06.05.315. Double stockholder liability. [Repealed, § 54 ch 169 SLA 1978.] Sec. 06.05.320. Bank purchases of own shares. Except in accordance with written approval of the department, a bank may not purchase its own capital stock. Sec. 06.05.325. Bank stock as personalty. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.327. Change in outstanding voting shares. Before a change may occur in the outstanding voting shares of a state bank that will result in a change in the control of the bank, or before any sales or transfers by or to a person, corporation or other legal entity of the aggregate of 10 percent or more of the voting shares of a state bank may be made, the transaction must be approved by the department. Sec. 06.05.330. Incorporators. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.335. Notice of intention to incorporate, establish branch bank or relocate. [Repealed, § 54 ch 169 SLA 1978.] Sec. 06.05.340. Certain remuneration prohibited. A bank may not pay directly or indirectly a fee, commission, or bonus of any kind for its promotion and organization or for securing a subscription to the original capital or to any increase in capital. However, this section does not prohibit the payment of reasonable compensation for legal, accounting, and econometric services, or payments to a securities broker-dealer registered under AS 45.56 for services that have been performed in connection with the sale of bank securities. Sec. 06.05.342. Subscriptions for shares. (a) Subscription agreements and accompanying prospectuses or offering circulars, whether for a proposed state bank or for an increase in capital of an existing state bank, shall be submitted to the department for approval before their use. The department shall determine whether the subscription agreements or offering circulars provide full and accurate disclosure of the material terms of the offering. The department may order the incorporators not to accept any stock subscriptions or to cease accepting subscriptions if the department determines that the incorporators are not acting lawfully or in good faith. (b) In the case of a proposed state bank, the incorporators shall submit a list of subscribers, providing the name, residence address, and occupation of each subscriber and the number of shares for which the person has subscribed. Sec. 06.05.344. Application for approval of state bank. (a) Before the department issues a certificate of incorporation under AS 10.06.910 for a state bank, the incorporators of a proposed state bank shall obtain the approval of the department. In applying for the approval, the incorporators shall file with the department (1) an application in the form and containing the information the department requires, including (A) for each incorporator and proposed director, and for each preincorporation subscriber of more than five percent of the capital stock, any past and present connection with a bank other than as a customer on terms generally available to the public; (B) the name, residence, and occupation of each preincorporation subscriber and the number of shares subscribed for by the subscriber; (C) the address of the proposed place of business of the bank or, if an address is not available, a legal description of the proposed place of business; and (2) the proposed articles of incorporation; and (3) all applicable fees, payable to the department, for the filing. (b) Investigation expenses incurred by the department in processing an application for approval of a proposed bank shall be charged to and paid by the applicant under AS 06.01.010 . When submitting the application to the department, the applicant shall pay to the department $2,000 in partial payment of the investigation expenses incurred by the department. If the investigation expenses incurred by the department are less than $2,000, the department shall promptly refund the excess to the applicant. (c) The department shall notify the incorporators of its decision whether to accept an application for a proposed state bank. If the application and accompanying documents required by (a) of this section do not conform to the requirements of this chapter and the regulations adopted under this chapter, the department shall return the documents with an explanation of the defects. If the department does not act within 30 days of receipt of the application, the application is considered to be accepted. Acceptance of the application does not constitute approval. (d) The incorporators shall publish notice of the department's acceptance of the application for a proposed state bank and acceptance of the articles of incorporation once each week for two successive weeks in a newspaper of general circulation published in the community proposed as the bank's principal place of business. If there is no newspaper of general circulation in the community, the notice shall be published in a newspaper of general circulation near the community. The first publication of the notice must appear within 15 days after the application and articles of incorporation have been accepted by the department. The notice must state (1) the name of the proposed state bank; (2) that the proposed bank is to be incorporated under this chapter and AS 10.06 ; (3) the purpose of the proposed bank; and (4) the names and addresses of the incorporators and the initial board of directors as the names and addresses appear in the articles of incorporation. (e) To prove that the publication required by (d) of this section was made, the incorporators shall file with the department an affidavit of the publisher of the newspaper in which the notice was published. (f) Upon acceptance of an application for approval of a proposed state bank, the department shall conduct an investigation to determine whether (1) the convenience and needs of the public will be served by the bank; (2) the population density and economic characteristics of the area primarily to be served by the bank afford reasonable promise of adequate support for the bank; (3) the character and fitness of the incorporators and the members of the initial board of directors command the confidence of the community and warrant the belief that the business of the bank will be honestly and efficiently conducted; (4) the proposed capital structure of the bank meets the requirements set by the department under AS 06.05.305 ; (5) the bank will have personnel with adequate knowledge and experience to conduct its business and officers of good character and financial responsibility; (6) the addition of the bank is not detrimental to a sound and competitive banking system; and (7) other relevant facts and circumstances exist that bear on the bank and its relation to the community. (g) The department shall approve or deny an application within six months after the application for approval has been accepted. The time may be extended by up to six additional months when the department determines that an extension is warranted by exceptional circumstances. Within 60 days after the second publication of the notice required by (d) of this section, a person opposing approval of the application may file written objections with the department. When it approves or denies the application, the department shall notify the incorporators and a person who requested in writing to be notified, and, if the application is denied, the department shall state the reasons for its decision and return all copies of the articles of incorporation. (h) If the department approves the application, the department shall endorse the approval on the articles of incorporation, file the articles of incorporation, and issue a certificate of incorporation under AS 10.06.910 . Sec. 06.05.345. Articles of incorporation. (a) In addition to those items required under AS 10.06.208 , the articles of incorporation of a state bank must specify (1) the judicial district in which the bank is to be located and the community where the bank is to conduct its principal place of business; (2) the amount of its capital stock, which shall be divided into shares having a par value of not less than $1 each; (3) that there will be at least five but no more than 25 directors; and (4) the period for which the bank is organized, if limited. (b) [Repealed, § 102 ch 26 SLA 1993.] (c) [Repealed, § 102 ch 26 SLA 1993.] (d) [Repealed, § 102 ch 26 SLA 1993.] (e) [Repealed, § 102 ch 26 SLA 1993.] (f) [Repealed, § 102 ch 26 SLA 1993.] (g) [Repealed, § 102 ch 26 SLA 1993.] (h) [Repealed, § 102 ch 26 SLA 1993.] (i) [Repealed, § 102 ch 26 SLA 1993.] (j) [Repealed, § 102 ch 26 SLA 1993.] (k) [Repealed, § 102 ch 26 SLA 1993.] (l) A bank may amend its articles of incorporation in a manner consistent with its articles and bylaws, AS 10.06 , and this chapter by a vote of its shareholders representing at least a majority of the capital at a regular meeting or at a special meeting called for the purpose. Sec. 06.05.350. Certificate of authority. (a) At any time after receiving a certificate of incorporation, a bank may apply to the department for a certificate of authority to engage in the banking business. Before receiving a certificate of authority, a bank may not perform an act other than to perfect its organization, obtain and equip a place of business, obtain subscriptions and payment for its shares, and otherwise prepare to do business. If a bank violates this subsection by transacting business before it receives a certificate of authority, the directors and officers who wilfully authorized or participated in the action are personally, jointly, and severally liable for the debts and liabilities of the bank incurred before the certificate of authority is issued. (b) The department shall issue a certificate of authority to engage in the banking business to a proposed state bank if, upon review of the information required by this chapter, including the following, it approves the application: (1) certification by an officer by affidavit that the capital and surplus required by the department have been fully paid in cash; (2) a list of all shareholders, giving the name, address, and number of shares held by each; (3) bylaws of the corporation; (4) evidence satisfactory to the department that the bank has complied with all the requirements of this chapter and any conditions imposed by the department and has advised the department in writing of any changes that have occurred in the facts reflected in the material it filed under AS 06.05.344 . (c) If the rights conferred by a certificate of authority are not exercised within one year from the date of its issuance, the certificate lapses. (d) Except as authorized under this section, a person may not (1) engage in the business of receiving deposits, discounting evidences of indebtedness, or receiving money for transmission; (2) represent that the person is a bank; or (3) use any form of the word “bank” in the person's name unless the person is a state bank formed under this title or a bank formed under the authority of another state or an agency of the federal government, or unless it is clear that the use does not represent that the person is a bank; the prohibition in this paragraph does not apply to a food bank, blood bank, or similar organization that cannot readily be confused with a bank. (e) A person prohibited by (d)(3) of this section from using any form of the word “bank” in its name may apply to the commissioner for authority to use a form of the word “bank” in its name. Sec. 06.05.355. Deposit insurance required. (a) The department shall require a state bank, at the time the bank applies for a certificate of authority under AS 06.05.350 , to become a member of the Federal Deposit Insurance Corporation. (b) A bank that is a member of the Federal Deposit Insurance Corporation may not voluntarily relinquish membership without the consent of the department. Request for the consent must be made at least 180 days before the proposed date of relinquishment. (c) Relinquishment of membership without giving notice and obtaining the department's consent, involuntary loss of membership, or failure to become a member after the department directs the bank to become a member constitutes cause for the department to take possession of the bank in the manner provided by this chapter. Sec. 06.05.360. Foreign persons engaged in banking. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.365. Application for charter. [Repealed, § 54 ch 169 SLA 1978.] Sec. 06.05.367. Banks of foreign nationals engaging in a banking business in the state. [Repealed, § 102 ch 26 SLA 1993.] Secs. 06.05.370 — 06.05.375. Charters; subscription calls. [Repealed, § 54 ch 169 SLA 1978.] Sec. 06.05.380. Affidavit of capital paid in. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.385. Organizational meeting; bylaws. (a) A state bank may not call an organizational meeting under AS 10.06.223 until all capital and surplus have been fully paid. (b) Bylaws shall be adopted and may be amended by a vote of the holders of a majority of the outstanding voting shares voted at a meeting of the shareholders. If not provided in the articles of incorporation, the bylaws must indicate the organizational structure of the bank and specifically designate the offices that will be held by the executive or managing officers of the bank. The bank shall file with the department copies of the original bylaws of the bank and any amendments adopted for the bylaws. Secs. 06.05.390 , 06.05.395. Reimbursement of officer, director or employee for expenses in defending suits; certificate of authority required. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.399. Changes of location; branch banks. A state bank may apply for and establish a branch bank, request a change of the location of the bank's principal office, or request a change of the location of a branch bank as allowed under regulations adopted by the department under this chapter. Secs. 06.05.400 — 06.05.425. Certificate of authority. [Repealed, § 54 ch 169 SLA 1978. For current law, see AS 06.05.350 , 06.05.399, and 06.05.466.] Sec. 06.05.426. Automated teller machines. (a) A state bank may establish, maintain, and operate an automated teller machine on the premises of the main office or a branch office of the bank. (b) A state bank may establish, maintain, and operate an automated teller machine at a location other than bank premises by notifying the department 30 days before the date of establishment. An automated teller machine operated off bank premises shall be made available on a nondiscriminatory basis for use by depositors of other depository institutions authorized to do business in the state, upon the agreement of the other depository institutions to pay a fair and equitable amount for the use of the machine. (c) The notice required in (b) of this section must include (1) the location and general description of the surrounding area, including a description of the business establishment, if any, in which the machine will be located; (2) the manner of operation and the kinds of transactions that the machine will perform; (3) the names of the other depository institutions that will share the machine's services; and (4) other information required by the department. (d) A state bank may invest in a corporation organized to operate machines that perform automated teller services for two or more depository institutions. (e) A person may not establish or operate an automated teller machine that accepts deposits unless those deposits are insured by the Federal Deposit Insurance Corporation or another agency of the United States that insures deposits. Article 5. Conduct of Corporate Affairs. Sec. 06.05.430. Meetings of stockholders. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.435. Directors. (a) The affairs of every bank incorporated under this chapter shall be managed by not less than five directors, nor more than 25. A majority of the board of directors shall be bona fide residents of the state, and a majority constitutes a quorum for the transaction of business. (b) [Repealed, § 102 ch 26 SLA 1993.] (c) Unless otherwise approved by the department, each director of a state bank shall own, in the director's own right or jointly with the director's spouse, free of any encumbrance, common or preferred stock of the state bank or of an entity that controls the state bank that has an aggregate par value of at least $1,000, an aggregate shareholder's equity of at least $1,000, or an aggregate fair market value of at least $1,000. (d) Each director shall take an oath that the director will faithfully and honestly perform the duties of the office and will not violate or permit to be violated any provisions of this chapter. The oath shall be filed annually in the office of the department. (e) [Repealed, § 102 ch 26 SLA 1993.] (f) A bank shall report within 30 days to the department a change in directors, including a statement of the business and professional affiliations of new directors. (g) The department may issue an order under AS 06.01.030 removing a person from the board of directors or prohibiting a person from being on the board, if the department determines that (1) due to the competence, experience, character, or integrity of the person, it is not in the best interests of the depositors or the public for the person to be or remain on the board; (2) the person is dishonest or reckless in managing the affairs of the bank; (3) the person has persistently violated this title, the regulations adopted under this title, or the orders of the department under this title or under the regulations adopted under this title; (4) the person has been indicted for a felony or other crime involving moral turpitude or breach of trust; or (5) the person has filed a petition in bankruptcy either in an individual capacity or in the name of a corporation in which the person owns a majority of the shares. (h) In the case of an entity that owns more than one bank, a director may use the director's equity interest in the controlling entity to satisfy, in whole or in part, the equity interest requirement for one or all of the controlled banks. (i) The value of the common or preferred stock held by a director of a state bank or of an entity that controls the state bank is valued as of the date purchased, or as of the date on which the individual became a director, whichever value is greater. Sec. 06.05.437. Officers. (a) The officers of a bank shall be chosen by the board of directors. An officer may not be appointed to serve for a period longer than one year. If a president of a bank or other chief officer responsible for the management of the bank is not a director, the officer must be an ex officio member of the board of directors without the power to vote. (b) A bank shall report within 30 days to the department any changes among executive officers, including in its report a statement of the business and professional affiliations of new executive officers. (c) If the department determines that an officer or employee of the bank has been negligent, dishonest, reckless, or incompetent in the performance of official duties, the department may order the board to remove the officer or employee from office, after giving the board and the officer or employee an opportunity for a hearing under AS 06.01.030 . If the board neglects or refuses to remove the officer or employee from office and if losses due to the negligence, dishonesty, recklessness, or incompetence of the officer or employee accrue to the bank after the neglect or refusal, the order of the department is conclusive evidence of the negligence of the board under this subsection in an action brought against the board, or a member of the board, for recovery of the losses. Sec. 06.05.438. Directors, meetings, and duties. (a) The board of directors of each bank shall hold a meeting at least once each calendar quarter of each calendar year. (b) The board of directors shall elect a secretary who shall keep a correct record of the minutes of each board meeting. The minutes shall state the date of each meeting, the names of the directors present, and the votes taken. The record of the meeting of the board of directors shall be subscribed to by the presiding officer and the secretary. The minutes shall be read and approved at the next succeeding meeting, and the minutes of that meeting shall show that fact. It is the duty of the bank examiner to examine the minutes of the board at the time of the bank's examination and to include in the report of examination any failure of the bank to comply with this section. (c) The board of directors shall designate at least one officer of the bank to prepare and submit to the board at each board meeting a report of the loans, overdrafts, and investments made by the bank in the preceding month or since the last report. The board of directors shall examine and pass upon the report and make it a part of the record of the meeting by recording the report in full in the minutes. (d) The board of directors shall appoint annually an examining committee of no less than three directors of which no more than one may be an active officer of the bank. The committee shall examine or cause to be examined the condition of the bank. A copy of the report shall be submitted to the department within 60 days after completion of the examination. (e) Unless prohibited by the articles or bylaws of the state bank, the board of directors or a committee of the board may validly conduct a meeting by communicating simultaneously with each other by means of conference telephones or similar communications equipment. (f) The department may require a meeting of the board of directors of a state bank to be held in the manner and at the time and place the department directs when, in the judgment of the department, a violation of this title has occurred or is about to occur. A report of an examination required or allowed by this title, the conclusions drawn from the examination by the department, recommendations made by the department, and other matters concerning the operation and condition of the bank may be presented to the board of directors by the department. If the department presents a report of examination or other information is presented to the board, each member of the board of directors shall furnish to the department a statement, on forms to be supplied by the department, that the member has read and is familiar with the recommendations of the department. Sec. 06.05.440. Authority to declare dividends. The directors of a bank transacting business in the state may declare a dividend out of the net profits, subject to any restrictions under AS 06.05.307 (c) and after complying with AS 06.05.441 — 06.05.445. Sec. 06.05.441. Conditions precedent to dividend declaration and payment. (a) Before a bank dividend is declared or the net profits for the period covered by the dividend disposed of, and after the restoration of any undivided profits or surplus under AS 06.05.442 , not less than one-fifth of these net profits shall be carried to the bank surplus account until the surplus account equals 100 percent of the paid-in capital of the bank. (b) The department may require a bank to suspend the payment of any dividends until all orders or requirements of this section and AS 06.05.442 have been complied with. Sec. 06.05.442. Excess losses; restoration of surplus; payment of dividends. A loss sustained by a bank in excess of its undivided profits and any capital contingency reserves shall be charged to its surplus account or, with the approval of the department, carried as negative undivided profits. The bank's undivided profits and surplus account shall thereafter be reimbursed from earnings, and no dividends may be declared or paid by the bank until any negative undivided profits are eliminated and the surplus account is restored to at least the amount from which the surplus was originally reduced. Sec. 06.05.443. Limitation on dividends. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.445. Net undivided profits and dividends. (a) A bank may not declare or pay a dividend in an amount greater than its net undivided profits then on hand. (b) In determining net profits for the purpose of declaring a dividend, a bank may not include in its calculations (1) loan loss reserves and losses in excess of reserves, including loans or other credits upon which interest for a period of six months is due and unpaid, unless the loan or credit is well secured and in the process of collection; (2) interest accrued but not collected on loans or other credits upon which the interest due is more than 90 days delinquent; (3) interest collected but not earned; (4) assets or depreciation that the department has required to be charged off; (5) the appreciation of any asset above its actual cost to the bank; and (6) any accrued expenses, interest or taxes due from the bank. Sec. 06.05.450. Shareholders list. Each bank shall keep a record of the name and residence of each shareholder of the bank, the class and number of shares held by each, the time when each person became a shareholder, and all transfers of stock, stating the time when made, the number of shares, and by whom transferred. A list of current shareholders shall be available for inspection in the bank office by any shareholder on demand. Sec. 06.05.455. Deposit insurance. [Repealed, § 54 ch 169 SLA 1978.] Sec. 06.05.460. Report upon inactive deposit accounts. [Repealed, § 14 ch 133 SLA 1986.] Sec. 06.05.462. Conversions, mergers, and consolidations. (a) A national bank located in the state may convert to a state bank or merge or consolidate with a state bank, and a state bank may merge or consolidate with another state bank, if the merger or consolidation is consistent with federal and state law and approved by the department. (b) Before merger or consolidation under (a) of this section, banks shall file with the department an application and other information and reports that the department requires. (c) The department, in the exercise of its power to approve or disapprove applications for merger or consolidation, shall act in the interests of promoting and maintaining a sound banking system, the security of deposits and customers, the preservation of the liquid position of banks, and in the interest of preventing injurious credit expansions and contractions. (d) A state bank converting to or merging or consolidating with a national bank shall submit a copy of the application for national charter or application to convert, merge, or consolidate to the department at the time those documents are forwarded to the comptroller of the currency. Sec. 06.05.463. [Renumbered as AS 06.05.120 .] Article 6. Dissolution, Reorganization, Liquidation, and Department Possession. Sec. 06.05.465. Voluntary liquidation; requirements for approval. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.466. Dissolution before commencement of business. If the department discovers, after it approves the articles of incorporation for a bank but before it issues a certificate of authority to the bank, a reason why a bank should not have been incorporated, or if a certificate of authority is not issued within the later of one year after the issuance of the certificate of incorporation or the time the department allows for satisfaction of conditions precedent to the issuance of a certificate of authority, the bank shall voluntarily dissolve under AS 10.06.605 — 10.06.625 or may be involuntarily dissolved by the department under AS 10.06.633 . Sec. 06.05.468. Department takeover. (a) A state bank may be closed and the department may take possession of the bank if the bank voluntarily places its affairs and assets under the department's control, or if the department finds (1) the bank has violated an order of the department; (2) the bank has violated a provision of this chapter or a regulation of the department adopted under this chapter; (3) the bank's capital is impaired or the bank is otherwise in an unsafe or unsound condition; (4) the bank's business is being conducted in an unlawful, unsafe, or unsound manner; (5) the bank is insolvent; (6) the bank is unable to continue normal operations; (7) a department examination of the bank is obstructed or impeded; (8) the bank holding company that controls the bank refuses to permit an examination as provided in AS 06.05.235 ; or (9) the bank has lost, or received notice of the termination or suspension of, its membership in the Federal Deposit Insurance Corporation or has relinquished its membership in the Federal Deposit Insurance Corporation without the consent of the department. (b) Except as provided in (d) of this section, before the department may take possession of a bank the department shall issue a notice to the board of directors of the bank under AS 06.01.030 (a) of the problems identified by the department and issue an order to the board under AS 06.01.030 (b) to correct the problems. The notice must also specify that failure to comply with the order may result in the department taking possession of the bank. (c) If a bank fails to comply with an order issued under (b) of this section, the department may take possession of the bank by posting upon the bank premises a notice stating that the department is assuming possession under this chapter. Department possession begins when the notice is posted. The notice shall also be filed in the superior court of the judicial district in which the bank is located. The department shall notify the local federal reserve bank if the bank is a member of the Federal Reserve System. (d) Notwithstanding the provisions of this section and AS 06.01.030 , if, in the opinion of the department, an emergency exists that will result in serious losses to the depositors, the department may take possession of a bank without prior hearing. Within two days after the department takes possession under this subsection, an interested party may file with the department an application for an order vacating the possession. The department shall grant the application if the department finds that the department's action was not authorized under this chapter. Sec. 06.05.470. Department in possession. (a) [Repealed, § 102 ch 26 SLA 1993.] (b) When the department has taken possession of a state bank, it is vested with the full and exclusive power of management and control, including the power to continue or discontinue the business, to stop or limit the payment of the bank's obligations, to employ necessary assistants, to execute any instrument in the name of the bank, to commence, defend, and conduct in the bank's name any action or proceeding in which the bank may be a party, to terminate the possession by restoring the bank to its board of directors, and to reorganize or liquidate the bank under this chapter. As soon as practicable after taking possession, the department shall make an inventory of the assets and file a copy of the inventory with the superior court. (c) When the department has taken possession, there shall be a postponement, until six months after the commencement of that possession, of the date upon which any period of limitation fixed by a statute or agreement would otherwise expire on a claim or right of action of the bank, or upon which an appeal must be taken or a pleading or other document must be filed by the bank in any pending action or proceeding. (d) [Repealed, § 102 ch 26 SLA 1993.] (e) [Repealed, § 4 ch 8 SLA 1987.] (f) [Repealed, § 102 ch 26 SLA 1993.] (g) A judgment, lien, or attachment may not be enforced against any asset of the bank while it is in possession of the department. Upon the election of the department in connection with a liquidation or reorganization, (1) any lien or attachment, other than an attorney's or mechanic's lien, obtained upon any asset of the bank during the department's possession or within four months before commencement of that possession, may be vacated, except liens created by the department while in possession; and (2) any transfer of an asset of the bank made after or in contemplation of its insolvency or in anticipation of the department's takeover, with intent to effect a preference of one creditor over another creditor or to prevent the distribution of the bank's assets according to law, is void. (h) The department may borrow money in the name of the bank in its possession and may pledge assets of the bank as security for the loan. (i) All necessary and reasonable expenses resulting from the department's possession of a bank and of its reorganization or liquidation shall be paid from the assets of the bank. (j) [Repealed, § 102 ch 26 SLA 1993.] (k) [Repealed, § 102 ch 26 SLA 1993.] (l) [Repealed, § 102 ch 26 SLA 1993.] (m) [Repealed, § 102 ch 26 SLA 1993.] (n) [Repealed, § 102 ch 26 SLA 1993.] (o) [Repealed, § 102 ch 26 SLA 1993.] (p) [Repealed, § 102 ch 26 SLA 1993.] (q) [Repealed, § 102 ch 26 SLA 1993.] (r) [Repealed, § 102 ch 26 SLA 1993.] (s) [Repealed, § 102 ch 26 SLA 1993.] (t) [Repealed, § 102 ch 26 SLA 1993.] (u) [Repealed, § 102 ch 26 SLA 1993.] (v) [Repealed, § 102 ch 26 SLA 1993.] (w) [Repealed, § 102 ch 26 SLA 1993.] (x) [Repealed, § 102 ch 26 SLA 1993.] (y) [Repealed, § 102 ch 26 SLA 1993.] (z) [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.471. Reorganization. (a) If the department decides to reorganize a state bank, the department, after according a hearing to all interested parties, shall enter an order proposing a reorganization plan. The department shall send a copy of the plan to each depositor and creditor who will not receive payment of a claim in full under the plan, and a notice that, unless within 30 days the plan is disapproved in writing by persons holding one-third or more of the aggregate amount of the claims, the department will reorganize the bank. (b) A plan of reorganization may not be prescribed under this chapter unless, in the opinion of the department, (1) the plan is fair to all classes of depositors, creditors, and shareholders; (2) subject to a fair adjustment for new capital that a class will pay under the plan, the face amount of the interest accorded to a class of depositors, creditors, or shareholders under the plan does not exceed the value of the assets at liquidation less the full amount of the claims of all prior classes; (3) the plan provides for the issuance of common stock in an amount that will provide an adequate ratio to deposits; (4) any exchange of new common stock for obligations or stock of the bank will be made (A) in the inverse order of the priorities in liquidation of the classes that will retain an interest in the bank; and (B) upon terms that adjust in a fair manner any change in the relative interest of the respective classes that will be produced by the exchange; (5) the plan assures the removal of a director, officer, or employee responsible for a problem identified by the department under AS 06.05.468 (a) — (b), including an unsafe, unsound, or unlawful action or the existence of an unsafe or unsound condition; (6) any merger or consolidation provided by the plan complies with this chapter. (c) When in the course of reorganization, supervening conditions render a plan of reorganization unfair or its execution impractical, the department may modify the plan or liquidate the bank. Sec. 06.05.472. Liquidation. (a) In liquidating a state bank, the department may exercise any power incidental to liquidating a bank, but it may not, without the approval of the superior court, (1) sell an asset of the bank having an appraised value in excess of $100,000; (2) compromise or release a claim that exceeds $100,000, exclusive of interest; (3) make full payment on a claim, other than a claim upon an obligation incurred by the department, before preparing and filing a schedule of the department's determinations under AS 06.05.473 (d)(3). (b) Within six months after beginning the liquidation of a bank, the department may terminate an executory contract for services or advertising to which the bank is a party or an obligation of the bank as a lessee. A lessor who receives 60 days' notice of the department's decision to terminate a lease does not have a claim for rent, other than rent accrued to the date of termination, or for damages due to the termination. (c) As soon as practical after beginning the involuntary liquidation of a bank, the department shall take the steps necessary to terminate all fiduciary positions held by the bank, to surrender all property held by the bank as a fiduciary, and to settle the fiduciary accounts of the bank. Sec. 06.05.473. Claims. (a) As soon as practical after beginning the liquidation of a state bank, the department shall (1) mail notice of the liquidation proceedings to the last known post office address of each depositor, creditor, lessee of a safe deposit box, or bailor of property; (2) post notice of the proceedings conspicuously on the premises of the bank; and (3) publish notice that the department determines to be appropriate for the proceedings. (b) The department shall mail with the notice sent under (a)(1) of this section a statement of the amount shown on the bank's books to be the claim of the depositor or creditor. The notice must also include a demand that a person who is entitled to property held by the bank as bailee or in a safe deposit box of the bank withdraw the property within 30 days. The notice must direct those depositors and creditors who claim amounts different from the amounts in the notice to file their claims with the bank under the procedure described in the notice and before a specified date. The specified day may not be less than 60 days from the date of the first publication of the notice. (c) A safe deposit box whose contents have not been removed within 30 days after demand shall be opened. The department shall retain the contents of the box and the other unclaimed property held by the bank as bailee until the conclusion of the liquidation proceedings. At the conclusion of the liquidation proceedings, the property held by the department under this subsection is considered abandoned, and the department shall turn the property over to the Department of Revenue for handling under AS 34.45.110 — 34.45.780. (d) Within six months after the last day specified in the notice for the filing of claims, or within a longer period if allowed by the superior court, the department shall (1) reject a claim that it determines to be invalid; (2) determine the amount, if any, owing to each known creditor or depositor and the priority class of the person's claim under this chapter; (3) prepare a schedule of its determinations for filing in the superior court; (4) publish a notice in a newspaper once each week for three successive weeks, of the times and places where the schedule of determinations will be available for inspection and the date when the department will file its schedule in court; the date may not be sooner than 30 days after the first publication. (e) Within 30 days after the filing with the superior court of the department's schedule under (d)(3) of this section, a creditor, depositor, or stockholder may file with the court an objection to a determination. The court shall hear and determine the filed objections after the notice to the department and interested claimants that the court establishes. If the court sustains an objection, the court shall direct that the schedule be modified appropriately. (f) After filing its schedule, the department may make partial distribution to the holders of the claims that are undisputed or are allowed by the court, if an adequate reserve is established for the payment of disputed claims. As soon as practicable after the determination of all objections, the department shall make the final distribution. (g) The following claims have priority in liquidation proceedings, in the order listed: (1) obligations incurred by the department in liquidating the bank; (2) wages and salaries of officers and employees earned during the three-month period preceding the department's possession in an amount not exceeding $3,000 for each person; (3) fees and assessments owed by the bank to the department; (4) deposits; (5) claims secured by assets pledged under AS 06.05.260 (a).

(h) After the payment of all other claims, including interest at the rate of 10.5 percent a year, the department shall pay claims that are otherwise valid but that were not filed within the time prescribed. (i) If the sum available for a class of creditors is insufficient to provide payment in full, the sum shall be distributed pro rata to the claimants in the class. (j) When the department has liquidated a bank, any assets remaining after all claims have been paid shall be distributed to the shareholders in accordance with their respective interests. (k) Unclaimed funds remaining after the completion of the liquidation by the department shall be handled under AS 34.45.110 — 34.45.780. (l) When the assets have been distributed in accordance with this chapter, the department shall file an accounting with the superior court. Upon approval of the account, the department is relieved of liability in connection with the liquidation, and the court shall cancel the certificate of authority of the bank and enter an order of dissolution. When the order is filed, the department shall issue a certificate of dissolution of the corporation. Sec. 06.05.474. Federal Deposit Insurance Corporation as receiver or liquidator. The department may appoint the Federal Deposit Insurance Corporation as receiver for a state bank that the department has taken possession of, if the deposits of the bank are insured by that corporation. Upon filing with the court a certificate indicating the acceptance of the appointment by the Federal Deposit Insurance Corporation, the possession of and title to all the assets, business, and property of the bank are transferred to that corporation. The department is then relieved of all responsibility and liability with respect to the reorganization or liquidation of the bank. The Federal Deposit Insurance Corporation may liquidate, reorganize, merge, or consolidate the bank in the manner permitted by the laws of the United States or by this chapter, and possesses all the rights, powers, duties, and obligations of the department in the liquidation, reorganization, merger, or consolidation of the bank under this chapter. Sec. 06.05.475. Subrogation of rights of depositors. [Repealed, § 54 ch 169 SLA 1978.] Secs. 06.05.480 — 06.05.510. Prohibited practices. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.515. Slander and libel of bank. [Repealed, § 21 ch 166 SLA 1978.] Secs. 06.05.520 — 06.05.530. Penalty; injunction; effect on existing banks. [Repealed, § 102 ch 26 SLA 1993.] Sec. 06.05.532. [Renumbered as AS 06.05.548 .] Sec. 06.05.535. [Renumbered as AS 06.05.910 .] Sec. 06.05.537. [Renumbered as AS 06.05.900 .] Sec. 06.05.540. [Renumbered as AS 06.05.990 .] Sec. 06.05.545. [Renumbered as AS 06.05.995 .] Article 7. International and Interstate Banks and Out-of-State Bank Holding Companies and Depository Institutions; Relationship with In-State Depository Institutions. Sec. 06.05.548. Concentration of deposits. (a) Unless expressly otherwise allowed under this title, an acquisition, a merger, or an ownership transaction is not permitted between a depository institution in this state and a depository institution in another state, if upon consummation of the acquisition, merger, or transaction the resulting depository institution, whether organized under state or federal law, controls 50 or more percent of the total amount of the deposits held by all depository institutions in this state. (b) The department may by regulation adopt a procedure that allows the department to waive the restriction in (a) of this section if the department finds that the purposes of this title will be fulfilled and the acquisition, merger, or transaction is in the public interest. Sec. 06.05.550. Authority of international bank, interstate state bank, or interstate national bank to branch. (a) An international bank, an interstate state bank, or an interstate national bank whose deposits are insured by the Federal Deposit Insurance Corporation may acquire a branch bank as the result of a merger or consolidation of the international bank, interstate state bank, or interstate national bank with, or the purchase of all or substantially all of the assets of, a state bank, a national bank with its principal office in this state, or a branch of the state bank or national bank, unless the state bank or national bank is a recently formed bank. (b) An international bank may establish a new branch bank in this state or acquire a recently formed bank if the department approves the establishment or acquisition before the establishment or acquisition occurs. An interstate state bank or interstate national bank may not establish a branch bank in this state unless the establishment occurs through an acquisition under (a) of this section of a bank located in the state. An interstate state bank or interstate national bank may not establish a new branch bank in this state. (c) An interstate state bank, interstate national bank, or international bank that opens, occupies, or maintains a branch bank in the state has the same powers under the laws of the state as a state or national bank of the same type. Sec. 06.05.555. Certificate of authority for interstate state bank and international bank branching. (a) Before acquiring a branch bank under AS 06.05.550 (a) or establishing a branch bank under AS 06.05.550 (b), an interstate state bank or international bank shall file an application with the department for and receive a certificate of authority to operate a branch bank. The application must include (1) all information and fees required under the regulations adopted under AS 06.05.399 ; (2) the name of the bank and the address of its principal office; (3) if an international bank, the country under whose laws it is organized; (4) the amount of the bank's capital actually paid in cash and the amount subscribed for and unpaid; (5) a complete and detailed statement of the bank's financial condition; (6) the names of all other states and countries in which the bank is admitted or qualified to do business; (7) a copy of the bank's charter, articles of incorporation, and bylaws, as applicable; (8) if an international bank, evidence satisfactory to the department that the bank is authorized to conduct a banking business under the laws of the country of its organization, and the nature of the bank's business; (9) a properly executed designation of the department as the bank's agent for service of process in an action or proceeding arising out of a transaction involving the branch bank; the designation must include the name and address of the officer, agent, or other person to whom the department is to forward the process; and (10) other information necessary or appropriate for the department to determine whether the bank is entitled to a certificate of authority from the department. (b) The department shall notify the interstate state bank or international bank of its action on the application. If the application and the accompanying documents do not comply with the requirements of (a) of this section, the department shall return them with an explanation of the noncompliance. If the department does not respond within 30 days of its receipt of the application, the application is considered to be accepted. (c) The interstate state bank or international bank shall publish notice of the application in the manner provided in AS 06.05.344 (d) — (e). The notice must state the proposed location of the branch bank. (d) Upon acceptance of the application, the department shall conduct an investigation to determine that (1) if an interstate state bank, (A) the laws of the home state of the bank authorize a state bank of this state to acquire a branch bank in the home state without conditions or restrictions on the operations of the branch bank; and (B) the bank supervisor of the home state of the bank has agreed to provide to the department the examination reports that the department determines sufficient to permit the department to determine on a current basis the financial condition of the bank; (2) the proposal is consistent with a sound and competitive banking system; (3) the capital structure of the bank is adequate in relation to the anticipated business and costs of operating the branch bank; (4) the name of the bank is not deceptively similar to the name of another branch bank or state bank and is not otherwise misleading; and (5) the other requirements of this chapter have been met. (e) Not later than 150 days after the department accepts an application by an interstate state bank or international bank for a certificate of authority to operate a branch bank, the department shall make a determination whether to approve the application. Within 30 days after the second publication of the notice referred to in (c) of this section, a person opposing the pending application may file written objections with the department. When it approves or denies the application, the department shall notify the bank and any other person who requested in writing to be notified, and, if the application is denied, the department shall state the reasons for its decision. (f) The department shall issue a certificate of authority to an interstate state bank or international bank to operate a branch bank if (1) the conditions imposed by the department in granting the certificate have been fulfilled; and (2) the requirements of this chapter are satisfied. (g) If the rights conferred by a certificate of authority issued under this section are not exercised within one year from the date of the issuance of the certificate under this section, the certificate lapses. Sec. 06.05.557. Notice filing for interstate national banks. An interstate national bank acquiring a branch in this state under AS 06.05.550 shall file a notice of the acquisition with the department along with a copy of the application filed with the agency that primarily regulates the interstate national bank. The notice and copy of the application shall be filed with the department at the same time the application is filed with the agency that primarily regulates the interstate national bank. Sec. 06.05.560. Asset requirements for international banks. (a) An international bank that operates one or more branch banks in the state shall maintain in the state assets in an amount acceptable to the department, except that the amount may not be less than the amount of deposits payable at or through the branch banks. (b) The department shall determine the value of the assets maintained by the international bank for purposes of this section. In making its determination, the department may include as assets currency, bonds, notes, debentures, drafts, bills of exchange, and other evidences of indebtedness owed by persons in the United States and collectible in the United States in United States currency or, with the approval of the department, in currency freely convertible into United States currency, but the department may not include as assets prepaid expenses, customers' liability on prepaid expenses, or amounts due from other offices, branches, or wholly owned subsidiaries of the international bank. (c) When the department takes possession of a branch bank of an international bank under AS 06.05.468 and 06.05.470, the assets of the international bank in the state shall be turned over to the department and disbursed as provided in AS 06.05.470 — 06.05.473. Sec. 06.05.565. Applicability of title to interstate state banks, interstate national banks, international banks, and bank holding companies. (a) An interstate state bank or international bank operating a branch bank in the state is subject to the provisions of this title and the regulations adopted and orders issued under this title, except for the residency requirements in AS 06.05.435 (a). (b) In meeting the reserve requirements of AS 06.05.200 (a) and applicable regulations, the bank shall maintain the required reserve fund in the state, except that assets held to meet the requirements of AS 06.05.560 (a) may be applied to meet the requirements of AS 06.05.200 . (c) A branch bank of an interstate state bank or international bank operating in the state is subject to examination under AS 06.01.015 and assessments under AS 06.01.010 . Assessments under AS 06.01.010 (d) are based on the branch bank's total deposits in the state. (d) When the department considers it necessary to protect the public interest, the department or a competent person designated by the department may examine an interstate state bank or international bank with a branch in the state. The interstate state bank or international bank shall pay an examination fee established under AS 06.01.010 . (e) The department may require periodic reports from an interstate state bank or an interstate national bank that maintains a branch in this state and from a bank holding company that controls the interstate state bank or interstate national bank. The reports shall be made under oath and filed as frequently as required by the department. The reports must contain the information and detail that the department determines to be appropriate to assure continuing compliance of the interstate state bank or interstate national bank with the provisions of this title. (f) The department may enter into cooperative, coordinating, or information-sharing agreements with other depository institution supervisory agencies or with an organization affiliated with or representing depository institution supervisory agencies, to handle the periodic examination or other supervision of a depository institution branch that is located in this state and owned by a depository institution organized in another state, or of a depository institution branch that is located in a host state and owned by a depository institution organized in this state. Under the agreements, the department may accept reports of examination and reports of investigation instead of conducting the department's own examinations or investigations. The department may enter into joint enforcement action agreements with other depository institution supervisory agencies having concurrent jurisdiction over a depository institution branch that is located in this state and owned by a depository institution organized in another state, or over a depository institution branch that is located in a host state and owned by a depository institution organized in this state. Notwithstanding the existence of an agreement under this subsection, the department may at any time make an examination or take supervisory or enforcement action independently if the department determines that the examination or action is necessary or appropriate to carry out the department's responsibilities under this title or to ensure compliance with the laws of this state. In this subsection, “host state” means a state, other than the state where the depository institution is organized, in which a depository institution maintains, or seeks to establish and maintain, a branch. (g) An interstate national bank operating a branch bank in this state is subject to the provisions of AS 06.05.548 and 06.05.550 and the regulations adopted and orders issued under those sections. Sec. 06.05.570. Out-of-state bank holding companies. (a) An out-of-state bank holding company may acquire and own all or a portion of the voting securities or other capital stock of, or all or substantially all of the assets of, one or more state banks, domestic bank holding companies, or national banks conducting a banking business in the state, unless the state bank or national bank is a recently formed bank. Before an out-of-state bank holding company may acquire a state bank or bank holding company of a state bank doing business in this state, the out-of-state bank holding company shall apply for and obtain a permit from the department. In considering whether to issue a permit, the department shall consider the benefits to the public, the preservation of a competitive banking industry, and the maintenance of a safe and sound bank industry. To assure full protection of the public, the department may require an out-of-state bank holding company that directly or indirectly owns, holds, or controls stock in a state bank or domestic bank holding company to post a bond with the department under conditions established by the department. The amount of the bond may not be more than the product obtained by multiplying the amount of paid-in capital and paid-in surplus of the state bank or domestic bank holding company by the percentage of state bank or domestic bank holding company stock directly or indirectly owned, held, or controlled by the out-of-state bank holding company. (b) When the department considers it necessary, the department or a competent person designated by the department may examine an out-of-state bank holding company directly or indirectly owning, holding, or controlling state bank stock or domestic bank holding company stock. The out-of-state bank holding company shall pay an examination fee established under AS 06.01.010 . (c) The provisions of this section do not apply to a company that (1) acquires or holds voting securities or other capital stock of a bank or bank holding company for only a reasonable period of time in connection with the underwriting of securities; (2) is an agency of the United States or of a state, or if the majority of the company is owned by the United States or a state; (3) is an independent federal financial regulatory agency or a trustee or agent of an independent federal financial regulatory agency; or (4) under a plan of financial restructuring that is intended to prevent the failure of a state bank and that is approved by the department, (A) acquires or receives 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan, and owns, controls, or holds, with the power to vote, the securities acquired or received in excess of 24.99 percent of that class for a period of time that permits the distribution or resale of the securities or other capital stock on a reasonable basis; or (B) purchases or receives securities under the plan and, after the purchase or receipt, owns, controls, or holds, with a power to vote, less than 25 percent of a class of voting securities or other capital stock of the bank or bank holding company subject to the plan, if subsequently, solely through the action or inaction of others, including the bank or bank holding company, owns, controls, or holds, with a power to vote, 25 percent or more of a class of voting securities or other capital stock of the bank or bank holding company; the exemption in this subparagraph does not apply if the department determines, after notice and opportunity for hearing under AS 06.01.030 , that the ownership, control, or holding of the securities or stock exceeding 24.99 percent of a class, other than under a plan to promptly dispose of the securities or stock under the supervision of the department, would permit the organization in any manner to control the election of a majority of the board of directors or trustees, or to directly or indirectly exercise a controlling influence over the management or policies of the bank or bank holding company. Article 8. General Provisions. Sec. 06.05.900. Copies of records for child support purposes. If a copy of a record concerning an individual who owes or is owed child support, including a record concerning assets and liabilities of the individual, prepared or maintained by a bank of this state is requested by the child support services agency established in AS 25.27.010 or the child support enforcement agency of another state, the bank shall provide the requesting agency with a certified copy of the record. If information is prepared or maintained by the bank in an electronic data base, the bank may provide the requesting agency a copy of the electronic record and a statement certifying its contents. The agency receiving information under this section may use the information only for child support purposes authorized under law. Sec. 06.05.910. Construction with subsequent legislation. No part of this chapter shall be considered to be impliedly repealed by subsequent legislation not specifically repealing it if that construction can be avoided. Sec. 06.05.990. Definitions. In this chapter, unless the context otherwise requires, (1) “automated teller machine,” means a staffed or unstaffed electronic device or terminal that permits a bank customer to accomplish various financial transactions, including depositing or withdrawing funds, making loans, and transferring funds between accounts, and includes a similar device or facility known or referred to by another name or designation, including customer-bank communication terminal, electronic fund transfer device, or 24-hour teller, but does not include a machine that is operated by more than one bank; (2) “bank” means a person doing a banking business, including persons subject to the law of this or another jurisdiction; (3) “banking” means performing activities that (A) include, at a minimum, soliciting, receiving, or accepting money or its equivalent on deposit, whether the deposit is made subject to a check or is evidenced by a certificate of deposit, passbook, note, receipt, or other writing; in this subparagraph, “deposit” does not include a deposit made by an agent for a principal; and (B) may also include the negotiation for and discounting of promissory notes or other evidences of indebtedness, selling and buying money or its equivalent, lending money on personal or real property or other security, or performing other similar financial operations; (4) “branch bank” includes an office, agency, or other place of business located in the state and at which deposits are received, checks are paid, or money is lent, but does not include the principal office of a bank or a remote service unit; in this paragraph, “remote service unit” means an automated teller machine, automated loan machine, automated device for receiving deposits, personal computer, telephone, or similar automated or electronic device that allows a customer of a bank to contact the bank to make deposits, make withdrawals, or perform other banking functions and that may be equipped with a telephonic device, a video device, or both; (5) “capital” means the amount of outstanding common stock plus outstanding and perpetual preferred stock; (6) “capital accounts” includes capital, surplus, undivided profits, and capital notes and debentures not maturing within one year from the date of the loan; (7) “commissioner” means the commissioner of commerce, community, and economic development or a designee of the commissioner; (8) “community” means a city, town, unincorporated village, or, in the absence of one of the foregoing, a trade area; (9) “department” means the Department of Commerce, Community, and Economic Development; (10) “depository institution” means a financial institution whose deposits are insured by an agency of the federal government; in this paragraph, “financial institution” includes institutions from outside the state that are not subject to the regulation of the department under this title; (11) “domestic bank holding company” means a corporation that maintains its principal office and place of business in the state and that has control over a bank or another domestic bank holding company in one of the following ways: (A) the corporation directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of a class of voting securities of the bank or holding company; (B) the corporation controls in any manner the election of a majority of the directors or trustees of the bank or holding company; or (C) the department determines, after notice and opportunity for hearing, that the corporation directly or indirectly exercises a controlling influence over the management of the policies of the bank or holding company; (12) “extension of credit” means a negotiable instrument, and includes promissory notes, acknowledgments of advance, due bills, invoices, overdrafts, acceptances, and similar written or oral obligations or evidence of debt whether secured or unsecured; in this paragraph, “negotiable instrument” has the meaning given in AS 45.03.104 ; (13) “fiduciary” means a trustee, agent, executor, administrator, committee, guardian or conservator for a minor or other incompetent person, a receiver, a trustee in bankruptcy, an assignee for creditors, or the holder of a similar position of trust; (14) “financial holding company” means an existing, or newly formed, domestic bank holding company that has been approved as a financial holding company by the Federal Reserve System and not denied that status by the department under AS 06.05.237 ; (15) “financial institution” means an institution subject to the regulation of the department under this title; in this paragraph, “institution” includes a commercial bank, savings bank, credit union, premium finance company, small loan company, bank holding company, financial holding company, trust company, and savings and loan association; (16) “good faith” means honesty in fact in the transaction and a reasonable ground for belief that the transaction is lawful, proper, or authorized; (17) “impaired capital” or “impairment of capital” means that the value of the bank's assets is less than the bank's liabilities plus 120 percent of the amount of the bank's paid-in capital; (18) “insolvent” means (A) bank assets having a value less than the bank's liabilities, other than liability on account of capital stock, capital notes, and debentures; (B) failure to increase total adjusted capital accounts or reserves after being ordered to do so under AS 06.05.305 (c); or (C) inability to meet obligations or demands as they become due in the ordinary course of business; (19) “international bank” means a corporation, partnership, or association that is organized and operates under the laws of a country other than the United States and that is authorized by its license or charter to carry on a banking business; (20) “interstate national bank” means a national bank whose principal office, as designated in its articles of incorporation, is not located in this state; (21) “interstate state bank” means a person organized under the laws of another state and holding a charter, license, or certificate of authority from another state to engage in a banking business; (22) “loan” includes an extension of credit resulting from direct or indirect negotiations between a lender and a debtor; (23) “national bank” means a bank chartered by the United States; (24) “out-of-state bank holding company” means a company that (A) is a bank holding company as defined in 12 U.S.C. 1841 (Bank Holding Company Act); is registered as a bank holding company with the Board of Governors of the Federal Reserve System, with the federal reserve bank of the Federal Reserve District in which the operations of the bank holding company are principally conducted, or with a Federal Reserve Bank that the Board of Governors may designate; maintains its principal office and place of business outside the state; and principally conducts its operations out of the state, as measured by total deposits held or controlled by it on the date on which it becomes an out-of-state bank holding company; or (B) a corporation, partnership, or association organized and operating under the laws of a country other than the United States; (25) “recently formed bank” means a state bank or national bank that conducts a banking business in the state and that commenced the banking business in the state on or after July 1, 1982, and that has not been in existence and continuously operating in the state for a period of three years or more; “recently formed bank” does not include (A) a bank organized solely for the purpose of facilitating acquisition of a bank that either has been in existence and continuously operating in the state as a bank for a three-year period, or was conducting a banking business in the state on or before June 30, 1982; (B) a state bank that the department determines was not created directly or indirectly by an acquiring interstate state bank, interstate national bank, international bank, or out-of-state bank holding company, and that does not have the capacity to continue to conduct its business independently in a manner consistent with the public interest and the interest of depositors, creditors, and shareholders; or (C) a national bank that the board of governors of the Federal Reserve System, or their designee, determines is not chartered directly or indirectly by an acquiring out-of-state bank holding company, and that does not have the capacity to conduct its business independently in a manner consistent with the public interest of depositors, creditors, and shareholders; (26) “state bank” means a bank organized under this chapter; (27) “state financial institution” means a financial institution that is organized under this title or that is subject to examination by the department under this title; (28) “subsidiary” means a corporation in which a bank owns more than 50 percent of the voting power of the corporation either directly or indirectly through one or more other subsidiaries of the bank; (29) “surplus” includes amounts paid in for stock in excess of the par value of the stock, which are generally called capital surplus or paid-in surplus, plus any amounts transferred to the account from undivided profits, which are generally called earned surplus; (30) “undivided profits” means the accumulated, undistributed net profit of a bank, including any residue after (A) provision for payment of taxes and expenses of operations; (B) transfers to reserves allocated to a particular asset or class of assets; (C) losses estimated or sustained on a particular asset or class of assets in excess of the amount of reserves allocated for the asset; (D) transfers to surplus and capital; and (E) amounts declared as dividends to shareholders; (31) “unsafe or unsound condition,” with respect to a bank, means insolvency; impairment of capital; operating in violation of law, order of the department, or its articles or bylaws; having less than the statutory or regulatory requirements for capital, surplus, or reserves; or another condition that the department determines threatens the safety of depositors or the soundness of the state banking system. Sec. 06.05.995. Short title. This chapter may be cited as the Alaska Banking Code.