2438-S.PL

AN ACT Relating to technical corrections made necessary by the creation of the department of financial institutions; and amending RCW 11.102.010, 11.110.073, 19.100.010, 19.110.020, 21.30.010, 21.30.380, 30.04.010, 30.04.030, 30.04.060, 30.04.070, 30.04.075, 30.04.111, 30.04.120, 30.04.125, 30.04.127, 30.04.130, 30.04.180, 30.04.210, 30.04.212, 30.04.215, 30.04.220, 30.04.230, 30.04.232, 30.04.238, 30.04.240, 30.04.270, 30.04.290, 30.04.310, 30.04.405, 30.04.410, 30.04.450, 30.04.455, 30.04.465, 30.04.470, 30.04.475, 30.04.550, 30.04.560, 30.04.565, 30.04.570, 30.04.575, 30.04.900, 30.08.010, 30.08.020, 30.08.030, 30.08.040, 30.08.050, 30.08.060, 30.08.070, 30.08.080, 30.08.082, 30.08.083, 30.08.084, 30.08.088, 30.08.090, 30.08.092, 30.08.095, 30.08.120, 30.08.140, 30.08.160, 30.08.180, 30.08.190, 30.12.010, 30.12.030, 30.12.040, 30.12.042, 30.12.044, 30.12.047, 30.12.050, 30.12.060, 30.12.070, 30.12.100, 30.12.180, 30.12.240, 30.20.005, 30.20.090, 30.36.020, 30.36.030, 30.36.040, 30.40.020, 30.42.020, 30.42.030, 30.42.060, 30.42.070, 30.42.080, 30.42.090, 30.42.100, 30.42.105, 30.42.115, 30.42.120, 30.42.130, 30.42.140, 30.42.160, 30.42.210, 30.42.220, 30.42.230, 30.42.240, 30.42.250, 30.42.260, 30.42.290, 30.42.300, 30.42.310, 30.42.320, 30.42.330, 30.43.010, 30.43.020, 30.43.045, 30.44.010, 30.44.020, 30.44.030, 30.44.040, 30.44.050, 30.44.060, 30.44.070, 30.44.080, 30.44.090, 30.44.100, 30.44.130, 30.44.140, 30.44.150, 30.44.160, 30.44.170, 30.44.180, 30.44.190, 30.44.200, 30.44.210, 30.44.220, 30.44.230, 30.44.240, 30.44.250, 30.44.260, 30.44.270, 30.44.280, 30.46.010, 30.46.020, 30.46.030, 30.46.040, 30.46.050, 30.46.060, 30.46.070, 30.46.090, 30.46.100, 30.49.030, 30.49.040, 30.49.060, 30.49.070, 30.49.090, 30.49.100, 30.49.110, 30.49.120, 30.56.020, 30.56.030, 30.56.040, 30.56.050, 30.56.060, 30.56.080, 30.56.090, 30.60.010, 30.60.020, 30.60.030, 30.60.901, 31.04.015, 31.04.045, 31.04.055, 31.04.075, 31.04.085, 31.04.093, 31.04.105, 31.04.115, 31.04.145, 31.04.155, 31.04.165, 31.04.175, 31.04.185, 31.04.902, 31.12.005, 31.12.015, 31.12.035, 31.12.045, 31.12.055, 31.12.065, 31.12.075, 31.12.085, 31.12.095, 31.12.105, 31.12.115, 31.12.125, 31.12.136, 31.12.195, 31.12.206, 31.12.215, 31.12.306, 31.12.335, 31.12.355, 31.12.385, 31.12.406, 31.12.415, 31.12.425, 31.12.435, 31.12.445, 31.12.455, 31.12.465, 31.12.475, 31.12.506, 31.12.516, 31.12.526, 31.12.535, 31.12.545, 31.12.555, 31.12.565, 31.12.575, 31.12.585, 31.12.595, 31.12.615, 31.12.625, 31.12.635, 31.12.655, 31.12.665, 31.12.675, 31.12.685, 31.12.695, 31.12.705, 31.12.715, 31.12.725, 31.12.905, 31.12A.010, 31.12A.040, 31.12A.050, 31.12A.070, 31.12A.080, 31.12A.090, 31.12A.100, 31.12A.120, 31.12A.140, 31.13.030, 31.24.080, 31.24.120, 31.30.010, 31.30.020, 31.30.150, 31.30.160, 31.30.170, 31.30.180, 31.30.190, 31.30.200, 31.30.210, 31.30.230, 31.30.240, 31.30.250, 31.30.260, 31.30.270, 31.35.010, 31.35.020, 31.35.030, 31.35.050, 31.35.060, 31.35.070, 31.35.080, 31.35.090, 31.35.100, 31.35.900, 31.40.010, 31.40.020, 31.40.030, 31.40.050, 31.40.060, 31.40.070, 31.40.080, 31.40.090, 31.40.100, 31.40.110, 31.40.120, 31.40.130, 31.40.900, 31.45.010, 31.45.020, 31.45.030, 31.45.040, 31.45.050, 31.45.060, 31.45.070, 31.45.080, 31.45.090, 31.45.100, 31.45.110, 31.45.120, 31.45.140, 31.45.150, 31.45.160, 31.45.170, 31.45.180, 31.45.200, 31.45.900, 32.04.020, 32.04.030, 32.04.040, 32.04.050, 32.04.080, 32.04.085, 32.04.110, 32.04.211, 32.04.220, 32.04.250, 32.04.260, 32.04.280, 32.04.290, 32.04.300, 32.08.010, 32.08.020, 32.08.030, 32.08.040, 32.08.050, 32.08.060, 32.08.061, 32.08.070, 32.08.080, 32.08.090, 32.08.116, 32.08.130, 32.08.140, 32.08.210, 32.08.215, 32.08.230, 32.12.010, 32.12.020, 32.12.050, 32.12.060, 32.12.070, 32.16.020, 32.16.060, 32.16.080, 32.16.090, 32.16.093, 32.16.095, 32.16.097, 32.16.140, 32.20.035, 32.20.280, 32.20.290, 32.24.010, 32.24.020, 32.24.030, 32.24.040, 32.24.050, 32.24.060, 32.24.070, 32.24.080, 32.24.090, 32.24.100, 32.32.010, 32.32.015, 32.32.020, 32.32.025, 32.32.030, 32.32.040, 32.32.055, 32.32.060, 32.32.075, 32.32.105, 32.32.130, 32.32.150, 32.32.175, 32.32.210, 32.32.215, 32.32.220, 32.32.222, 32.32.228, 32.32.230, 32.32.235, 32.32.240, 32.32.250, 32.32.255, 32.32.265, 32.32.270, 32.32.275, 32.32.280, 32.32.285, 32.32.295, 32.32.300, 32.32.305, 32.32.310, 32.32.315, 32.32.325, 32.32.340, 32.32.345, 32.32.350, 32.32.360, 32.32.370, 32.32.375, 32.32.395, 32.32.400, 32.32.410, 32.32.415, 32.32.420, 32.32.425, 32.32.430, 32.32.450, 32.32.455, 32.32.465, 32.32.470, 32.32.475, 32.32.485, 32.32.490, 32.32.495, 32.32.500, 32.32.525, 32.34.010, 32.34.020, 32.34.040, 32.34.050, 32.40.010, 32.40.020, 32.40.030, 33.04.002, 33.04.005, 33.04.010, 33.04.020, 33.04.025, 33.04.030, 33.04.042, 33.04.044, 33.04.048, 33.04.052, 33.04.054, 33.04.060, 33.04.110, 33.08.010, 33.08.050, 33.08.055, 33.08.060, 33.08.070, 33.08.080, 33.08.090, 33.08.100, 33.08.110, 33.12.010, 33.12.014, 33.12.060, 33.12.140, 33.16.040, 33.16.120, 33.16.130, 33.20.130, 33.20.150, 33.20.170, 33.24.010, 33.24.025, 33.24.360, 33.24.370, 33.28.020, 33.32.020, 33.32.030, 33.32.050, 33.36.060, 33.40.010, 33.40.020, 33.40.030, 33.40.040, 33.40.050, 33.40.070, 33.40.075, 33.40.080, 33.40.110, 33.40.120, 33.40.130, 33.40.150, 33.43.010, 33.44.020, 33.44.090, 33.44.125, 33.44.130, 33.46.020, 33.46.030, 33.46.040, 33.46.050, 33.46.060, 33.46.080, 33.46.130, 33.48.100, 33.48.110, 33.48.130, 33.48.150, 33.48.160, 33.48.170, 33.48.180, 33.48.190, 33.48.200, 33.48.210, 33.48.230, 33.48.240, 33.48.250, 33.48.260, 33.48.280, 33.48.320, 39.58.010, 43.19.015, 43.24.020, 43.24.024, 43.163.010, 43.163.110, 46.01.011, 46.01.050, 48.18A.060, 48.18A.070, 58.19.030, and 70.37.020.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 11.102.010 and 1985 c 30 s 79 are each amended to read as follows:

Any bank or trust company qualified to act as fiduciary in this state, or in any other state if affiliated with a bank or trust company qualified to act as fiduciary in this state, may establish common trust funds for the purpose of furnishing investments to itself and its affiliated or related bank or trust company as fiduciary, or to itself and its affiliated or related bank or trust company, and others, as cofiduciaries; and may, as such fiduciary or cofiduciary, invest funds which it lawfully holds for investment in interests in such common trust funds, if such investment is not prohibited by the instrument, judgment, decree, or order creating such fiduciary relationship, and if, in the case of cofiduciaries, the bank or trust company procures the consent of its cofiduciary or cofiduciaries to such investment: PROVIDED, That any bank or trust company qualified to act as fiduciary in the state of its charter, which is not a member of the federal reserve system, shall, in the operation of such common trust fund, comply with the rules and regulations as made from time to time by the ((~~supervisor of banking~~)) director of financial institutions in the state where chartered and in Washington the ((~~supervisor~~)) director is hereby authorized and empowered to make such rules and regulations as he or she may deem necessary and proper in the premises.

"Affiliated" as used in this section means two or more banks or trust companies:

(1) In which twenty-five percent or more of their voting shares, excluding shares owned by the United States or by any company wholly owned by the United States, are directly or indirectly owned or controlled by a holding company; or

(2) In which the election of a majority of the directors is controlled in any manner by a holding company.

Sec. 2. RCW 11.110.073 and 1985 c 30 s 119 are each amended to read as follows:

The following trustees shall be exempt from the provisions of RCW 11.110.070, but shall file the information required in RCW 11.110.060:

(1) A bank or trust company subject to examination by the ((~~supervisor of banking~~)) director of financial institutions of the state of Washington, the comptroller of the currency of the United States or the board of governors of the federal reserve system; which such bank or trust company is acting as trustee, executor or court-appointed fiduciary: PROVIDED, That a bank or trust company which is a co-fiduciary of a trust shall be deemed to be the sole fiduciary of such trust under this section, if the bank or trust company is custodian of the books and records of the trust and has the responsibility for preparing the reports and returns which are filed with the internal revenue service;

(2) The governing body of a nonprofit community foundation or other nonprofit foundation incorporated for charitable purposes, contributions to which are currently allowed as charitable deductions under the United States income tax laws;

(3) The governing body of a hospital which is nonprofit and charitable, other than a hospital initially formed as a trustee pursuant to or in connection with the terms of a charitable trust.

Sec. 3. RCW 19.100.010 and 1991 c 226 s 1 are each amended to read as follows:

When used in this chapter, unless the context otherwise requires:

(1) "Advertisement" means any written or printed communication or any communication by means of recorded telephone messages or spoken on radio, television, or similar communication media published in connection with an offer or sale of a franchise.

(2) "Affiliate" means a person controlling, controlled by, or under common control with another person, every officer or director of such person, and every person occupying a similar status or performing similar functions.

(3) "Director" means the director of ((~~licensing~~)) financial institutions.

(4) "Franchise" means:

(a) An agreement, express or implied, oral or written, by which:

(i) A person is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan prescribed or suggested in substantial part by the grantor or its affiliate;

(ii) The operation of the business is substantially associated with a trademark, service mark, trade name, advertising, or other commercial symbol designating, owned by, or licensed by the grantor or its affiliate; and

(iii) The person pays, agrees to pay, or is required to pay, directly or indirectly, a franchise fee.

(b) The following shall not be construed as a franchise within the meaning of this chapter:

(i) The payment of a reasonable service charge to the issuer of a credit card by an establishment accepting or honoring such credit card or any transaction relating to a bank credit card plan;

(ii) Actions or transactions otherwise permitted, prohibited or regulated under laws administered by the insurance commissioner of this state;

(iii) Any motor vehicle dealer franchise subject to the provisions of chapter 46.70 RCW.

(5) "Marketing plan" means a plan or system concerning an aspect of conducting business. A marketing plan may include one or more of the following:

(a) Price specifications, special pricing systems or discount plans;

(b) Sales or display equipment or merchandising devices;

(d) Promotional or advertising materials or cooperative advertising;

(e) Training regarding the promotion, operation, or management of the business; or

(f) Operational, managerial, technical, or financial guidelines or assistance.

(6) "Bank credit card plan" means a credit card plan in which the issuer of credit cards is a national bank, state bank, trust company or any other banking institution subject to the supervision of the ((~~supervisor of banking~~)) director of financial institutions of this state or any parent or subsidiary of such bank.

(7) "Franchisee" means a person to whom a franchise is offered or granted.

(8) "Franchisor" means a person who grants a franchise to another person.

(9) "Subfranchise" means an agreement, express or implied, oral or written, by which a person pays or agrees to pay, directly or indirectly, a franchisor or affiliate for the right to grant, sell or negotiate the sale of a franchise.

(10) "Subfranchisor" means a person to whom a subfranchise is granted.

(11) "Franchise broker" means a person who directly or indirectly engages in the business of the offer or sale of franchises. The term does not include a franchisor, subfranchisor, or their officers, directors, or employees.

(12) "Franchise fee" means any fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business or to continue a business under a franchise agreement, including, but not limited to, the payment either in lump sum or by installments of an initial capital investment fee, any fee or charges based upon a percentage of gross or net sales whether or not referred to as royalty fees, any payment for the mandatory purchase of goods or services or any payment for goods or services available only from the franchisor, or any training fees or training school fees or charges; however, the following shall not be considered payment of a franchise fee: (a) the purchase or agreement to purchase goods at a bona fide wholesale price; (b) the purchase or agreement to purchase goods by consignment; if, and only if the proceeds remitted by the franchisee from any such sale shall reflect only the bona fide wholesale price of such goods; (c) a bona fide loan to the franchisee from the franchisor; (d) the purchase or agreement to purchase goods at a bona fide retail price subject to a bona fide commission or compensation plan that in substance reflects only a bona fide wholesale transaction; (e) the purchase or lease or agreement to purchase or lease supplies or fixtures necessary to enter into the business or to continue the business under the franchise agreement at their fair market or rental value; (f) the purchase or lease or agreement to purchase or lease real property necessary to enter into the business or to continue the business under the franchise agreement at the fair market or rental value; (g) amounts paid for trading stamps redeemable in cash only; (h) amounts paid for trading stamps to be used as incentives only and not to be used in, with, or for the sale of any goods.

(13) "Person" means a natural person, corporation, partnership, trust, or other entity and in the case of an entity, it shall include any other entity which has a majority interest in such an entity or effectively controls such other entity as well as the individual officers, directors, and other persons in act of control of the activities of each such entity.

(14) "Publish" means publicly to issue or circulate by newspaper, mail, radio, or television or otherwise to disseminate to the public.

(15) "Sale or sell" includes every contract of sale, contract to sell, or disposition of a franchise.

(16) "Offer or offer to sell" includes every attempt or offer to dispose of or solicitation of an offer to buy a franchise or an interest in a franchise.

Sec. 4. RCW 19.110.020 and 1981 c 155 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Business opportunity" means the sale or lease of any product, equipment, supply, or service which is sold or leased to enable the purchaser to start a business; and:

(a) The seller represents that the seller will provide locations or assist the purchaser in finding locations, on premises neither owned nor leased by the purchaser or seller, for the use or operation of vending machines, display racks, cases, or similar devices or coin-operated amusement machines or similar devices; or

(b) The seller represents that the seller will purchase any product made, produced, fabricated, assembled, modified, grown, or bred by the purchaser using, in whole or part, any product, equipment, supply, or service sold or leased to the purchaser by the seller; or

(c) The seller guarantees that the purchaser will earn an income greater than or equal to the price paid for the business opportunity; or

(d) The seller represents that if the purchaser pays a fee exceeding three hundred dollars directly or indirectly for the purpose of the seller providing a sales or marketing program, the seller will provide such a program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid for the business opportunity.

(2) "Person" includes an individual, corporation, partnership, joint venture, or any business entity.

(3) "Seller" means a person who sells or leases a business opportunity.

(4) "Purchaser" means a person who buys or leases a business opportunity.

(5) "Director" means the director of ((~~the department of licensing~~)) financial institutions.

(6) "Guarantee" means an undertaking by the seller to refund all or a portion of the purchase price paid for the business opportunity.

Sec. 5. RCW 21.30.010 and 1987 c 243 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Administrator" means the person designated by the director in accordance with the provisions of RCW 21.20.460.

(2) "Board of trade" means any person or group of persons engaged in buying or selling any commodity or receiving any commodity for sale on consignment, whether such person or group of persons is characterized as a board of trade, exchange, or other form of marketplace.

(3) "Director" means the director of ((~~the department of licensing~~)) financial institutions.

(4) "Commodity broker-dealer" means, for the purposes of registration in accordance with this chapter, any person engaged in the business of making offers, sales, or purchases of commodities under commodity contracts or under commodity options.

(5) "Commodity sales representative" means, for the purposes of registration in accordance with this chapter, any person authorized to act and acting for a commodity broker-dealer in effecting or attempting to effect a transaction in a commodity contract or commodity option.

(6) "Commodity exchange act" means the act of congress known as the commodity exchange act, as amended, codified at 7 U.S.C. Sec. 1 et seq.

(7) "Commodity futures trading commission" means the independent regulatory agency established by congress to administer the commodity exchange act.

(8) "CFTC rule" means any rule, regulation, or order of the commodity futures trading commission in effect on October 1, 1986, and all subsequent amendments, additions, or other revisions thereto, unless the administrator, within ten days following the effective date of any such amendment, addition, or revision, disallows the application thereof by rule or order.

(9) "Commodity" means, except as otherwise specified by the director by rule or order, any agricultural, grain, or livestock product or by-product, any metal or mineral (including a precious metal set forth in subsection (17) of this section), any gem or gemstone (whether characterized as precious, semiprecious, or otherwise), any fuel (whether liquid, gaseous, or otherwise), any foreign currency, and all other goods, articles, products, or items of any kind. However, the term commodity does not include (a) a numismatic coin whose fair market value is at least fifteen percent higher than the value of the metal it contains, (b) real property or any timber, agricultural, or livestock product grown or raised on real property and offered or sold by the owner or lessee of such real property, or (c) any work of art offered or sold by art dealers, at public auction, or offered or sold through a private sale by the owner thereof.

(10) "Commodity contract" means any account, agreement, or contract for the purchase or sale, primarily for speculation or investment purposes and not for use or consumption by the offeree or purchaser, of one or more commodities, whether for immediate or subsequent delivery or whether delivery is intended by the parties, and whether characterized as a cash contract, deferred shipment or deferred delivery contract, forward contract, futures contract, installment or margin contract, leverage contract, or otherwise. Any commodity contract offered or sold shall, in the absence of evidence to the contrary, be presumed to be offered or sold for speculation or investment purposes. A commodity contract shall not include any contract or agreement which requires, and under which the purchaser receives, within twenty-eight calendar days from the payment in good funds of any portion of the purchase price, physical delivery of the total amount of each commodity to be purchased under the contract or agreement.

(11) "Commodity option" means any account, agreement, or contract giving a party thereto the right to purchase or sell one or more commodities and/or one or more commodity contracts, whether characterized as an option, privilege, indemnity, bid, offer, put, call, advance guaranty, decline guaranty or otherwise, but does not include a commodity option traded on a national securities exchange registered with the United States securities and exchange commission.

(12) "Commodity merchant" means any of the following, as defined or described in the commodity exchange act or by CFTC rule:

(a) Futures commission merchant;

(b) Commodity pool operator;

(d) Introducing broker;

(e) Leverage transaction merchant;

(f) An associated person of any of the foregoing;

(g) Floor broker; and

(h) Any other person (other than a futures association) required to register with the commodity futures trading commission.

(13) "Financial institution" means a bank, savings institution, or trust company organized under, or supervised pursuant to, the laws of the United States or of any state.

(14) "Offer" or "offer to sell" includes every offer, every attempt to offer to dispose of, or solicitation of an offer to buy, to purchase, or to acquire, for value.

(15) "Sale" or "sell" includes every sale, contract of sale, contract to sell, or disposition, for value.

(16) "Person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government, but does not include a contract market designated by the commodity futures trading commission or any clearinghouse thereof or a national securities exchange registered with the United States securities and exchange commission (or any employee, officer, or director of such contract market, clearinghouse, or exchange acting solely in that capacity).

(17) "Precious metal" means:

(a) Silver, in either coin, bullion, or other form;

(b) Gold, in either coin, bullion, or other form;

(d) Such other items as the director may specify by rule or order.

Sec. 6. RCW 21.30.380 and 1986 c 14 s 39 are each amended to read as follows:

The administration of this chapter shall be under the director of the department of ((~~licensing~~)) financial institutions.

Sec. 7. RCW 30.04.010 and 1959 c 106 s 1 are each amended to read as follows:

Certain terms used in this title shall have the meanings ascribed in this section.

"Banking" shall include the soliciting, receiving or accepting of money or its equivalent on deposit as a regular business.

"Bank," unless a different meaning appears from the context, means any corporation organized under the laws of this state engaged in banking, other than a trust company or a mutual savings bank.

"Branch bank" means any office of deposit or discount maintained by any bank or trust company, domestic or otherwise, other than its principal place of business, regardless of whether it be in the same city or locality.

The term "trust business" shall include the business of doing any or all of the things specified in RCW 30.08.150 (2), (3), (4), (5), (6), (7), (8), (9), (10) and (11).

"Trust company," unless a different meaning appears from the context, means any corporation organized under the laws of this state engaged in trust business.

A "savings account" is an account of a bank in respect of which, (1) a passbook, certificate or other receipt may be required by the bank to be presented whenever a deposit or withdrawal is made and (2) the depositor at any time may be required by the bank to give notice of an intended withdrawal before the withdrawal is made.

"Savings bank" shall include (1) any bank whose deposits shall be limited exclusively to savings accounts, and (2) the department of any bank or trust company that accepts, or offers to accept, deposits for savings accounts in accordance with the provisions of this title.

"Commercial bank" shall include any bank other than one exclusively engaged in accepting deposits for savings accounts.

"Person" unless a different meaning appears from the context, shall include a firm, association, partnership or corporation, or the plural thereof, whether resident, nonresident, citizen or not.

((~~"Supervisor" means the state supervisor of banking~~)) "Director" means the director of financial institutions.

"Foreign bank" and "foreign banker" shall include:

(1) Every corporation not organized under the laws of the territory or state of Washington doing a banking business, except a national bank;

(2) Every unincorporated company, partnership or association of two or more individuals organized under the laws of another state or country, doing a banking business;

(3) Every other unincorporated company, partnership or association of two or more individuals, doing a banking business, if the members thereof owning a majority interest therein or entitled to more than one-half of the net assets thereof are not residents of this state;

(4) Every nonresident of this state doing a banking business in his or her own name and right only.

Sec. 8. RCW 30.04.030 and 1986 c 279 s 1 are each amended to read as follows:

The ((~~supervisor~~)) director shall have power to adopt uniform rules ((~~and regulations~~)) in accordance with the administrative procedure act, chapter 34.05 RCW, to govern examinations and reports of banks and trust companies and the form in which they shall report their assets, liabilities, and reserves, charge off bad debts and otherwise keep their records and accounts, and otherwise to govern the administration of this title. ((He)) The director shall mail a copy of the rules ((~~and regulations~~)) to each bank and trust company at its principal place of business.

The ((~~supervisor~~)) director shall have the power, and broad administrative discretion, to administer and interpret the provisions of this title to facilitate the delivery of financial services to the citizens of the state of Washington by the banks and trust companies subject to this title.

Sec. 9. RCW 30.04.060 and 1989 c 180 s 1 are each amended to read as follows:

(1) The ((~~supervisor, the deputy supervisor, or a bank examiner~~)) director, assistant director, or an examiner shall visit each bank and each trust company at least once every eighteen months, and oftener if necessary, for the purpose of making a full investigation into the condition of such corporation, and for that purpose they are hereby empowered to administer oaths and to examine under oath any director, officer, employee, or agent of such corporation. The ((~~supervisor~~)) director may make such other full or partial examinations as deemed necessary and may examine any bank holding company that owns any portion of a bank or trust company chartered by the state of Washington and obtain reports of condition for any bank holding company that owns any portion of a bank or trust company chartered by the state of Washington. The ((~~supervisor~~)) director may visit and examine into the affairs of any nonpublicly held corporation in which the bank, trust company, or bank holding company has an investment or any publicly held corporation the capital stock of which is controlled by the bank, trust company, or bank holding company; may appraise and revalue such corporations' investments and securities; and shall have full access to all the books, records, papers, securities, correspondence, bank accounts, and other papers of such corporations for such purposes. The ((~~supervisor~~)) director may, in his or her discretion, accept in lieu of the examinations required in this section the examinations conducted at the direction of the federal reserve board or the Federal Deposit Insurance Corporation. Any willful false swearing in any examination is perjury in the second degree.

(2) The ((~~supervisor~~)) director may enter into cooperative and reciprocal agreements with the bank regulatory authorities of the United States, any state, the District of Columbia, or any trust territory of the United States for the periodic examination of domestic bank holding companies owning banking institutions in other states, the District of Columbia, or trust territories, and subsidiaries of such domestic bank holding companies, or of out-of-state bank holding companies owning a bank or trust company the principal operations of which are conducted in this state. The ((~~supervisor~~)) director may accept reports of examination and other records from such authorities in lieu of conducting his or her own examinations. The ((~~supervisor~~)) director may enter into joint actions with other regulatory bodies having concurrent jurisdiction or may enter into such actions independently to carry out his or her responsibilities under this title and assure compliance with the laws of this state.

Sec. 10. RCW 30.04.070 and 1955 c 33 s 30.04.070 are each amended to read as follows:

The ((~~supervisor~~)) director shall collect from each bank, mutual savings bank, trust company or industrial loan company for each examination of its condition the estimated actual cost of such examination.

Sec. 11. RCW 30.04.075 and 1989 c 180 s 2 are each amended to read as follows:

(1) All examination reports and all information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations of banks, trust companies, or alien banks, and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff from other state or federal bank regulatory authorities with whom the ((~~supervisor~~)) director has entered into agreements pursuant to RCW 30.04.060(2), and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff relating to examination and supervision of bank holding companies owning a bank in this state or subsidiaries of such holding companies, is confidential and privileged information and shall not be made public or otherwise disclosed to any person, firm, corporation, agency, association, governmental body, or other entity.

(2) Subsection (1) of this section notwithstanding, the ((~~supervisor~~)) director may furnish all or any part of examination reports prepared by the ((~~supervisor's~~)) director's office to:

(a) Federal agencies empowered to examine state banks, trust companies, or alien banks;

(b) Bank regulatory authorities with whom the ((~~supervisor~~)) director has entered into agreements pursuant to RCW 30.04.060(2), and other bank regulatory authorities who are the primary regulatory authority or insurer of accounts for a bank holding company owning a bank, trust company, or national banking association the principal operations of which are conducted in this state or a subsidiary of such holding company; provided that the ((~~supervisor~~)) director shall first find that the reports of examination to be furnished shall receive protection from disclosure comparable to that accorded by this section;

(c) Officials empowered to investigate criminal charges subject to legal process, valid search warrant, or subpoena. If the ((~~supervisor~~)) director furnishes any examination report to officials empowered to investigate criminal charges, the ((~~supervisor~~)) director may only furnish that part of the report which is necessary and pertinent to the investigation, and the ((~~supervisor~~)) director may do this only after notifying the affected bank, trust company, or alien bank and any customer of the bank, trust company, or alien bank who is named in that part of the examination or report ordered to be furnished unless the officials requesting the report first obtain a waiver of the notice requirement from a court of competent jurisdiction for good cause;

(d) The examined bank, trust company, or alien bank, or holding company thereof;

(e) The attorney general in his or her role as legal advisor to the ((~~supervisor~~)) director;

(f) Liquidating agents of a distressed bank, trust company, or alien bank;

(g) A person or organization officially connected with the bank as officer, director, attorney, auditor, or independent attorney or independent auditor;

(h) The Washington public deposit protection commission as provided by RCW 39.58.105.

(3) All examination reports furnished under subsections (2) and (4) of this section shall remain the property of the ((~~division of banking~~)) department of financial institutions, and be confidential and no person, agency, or authority to whom reports are furnished or any officer, director, or employee thereof shall disclose or make public any of the reports or any information contained therein except in published statistical material that does not disclose the affairs of any individual or corporation: PROVIDED, That nothing herein shall prevent the use in a criminal prosecution of reports furnished under subsection (2) of this section.

(4) The examination report made by the ((~~division of banking~~)) department of financial institutions is designed for use in the supervision of the bank, trust company, or alien bank. The report shall remain the property of the ((~~supervisor~~)) director and will be furnished to the bank, trust company, or alien bank solely for its confidential use. Under no circumstances shall the bank, trust company, or alien bank or any of its directors, officers, or employees disclose or make public in any manner the report or any portion thereof, to any person or organization not connected with the bank as officer, director, employee, attorney, auditor, or candidate for executive office with the bank. The bank may also, after execution of an agreement not to disclose information in the report, disclose the report or relevant portions thereof to a party proposing to acquire or merge with the bank.

(5) Examination reports and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations, or obtained from other state and federal bank regulatory authorities with whom the ((~~supervisor~~)) director has entered into agreements pursuant to RCW 30.04.060(2), or relating to examination and supervision of bank holding companies owning a bank, trust company, or national banking association the principal operations of which are conducted in this state or a subsidiary of such holding company, or information obtained as a result of applications or investigations pursuant to RCW 30.04.230, shall not be subject to public disclosure under chapter 42.17 RCW.

(6) In any civil action in which the reports are sought to be discovered or used as evidence, any party may, upon notice to the ((~~supervisor~~)) director, petition the court for an in camera review of the report. The court may permit discovery and introduction of only those portions of the report which are relevant and otherwise unobtainable by the requesting party. This subsection shall not apply to an action brought or defended by the ((~~supervisor~~)) director.

(7) This section shall not apply to investigation reports prepared by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff concerning an application for a new bank or trust company or an application for a branch of a bank, trust company, or alien bank: PROVIDED, That the ((~~supervisor~~)) director may adopt rules making confidential portions of the reports if in the ((~~supervisor's~~)) director's opinion the public disclosure of the portions of the report would impair the ability to obtain the information which the ((~~supervisor~~)) director considers necessary to fully evaluate the application.

(8) Every person who violates any provision of this section shall be guilty of a gross misdemeanor.

Sec. 12. RCW 30.04.111 and 1986 c 279 s 3 are each amended to read as follows:

The total loans and extensions of credit by a bank or trust company to a person outstanding at any one time shall not exceed twenty percent of the capital and surplus of such bank or trust company. The following loans and extensions of credit shall not be subject to this limitation:

(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;

(2) Loans or extensions of credit secured by bonds, notes, certificates of indebtedness, or treasury bills of the United States or by other such obligations wholly guaranteed as to principal and interest by the United States;

(3) 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 any corporation wholly owned directly or indirectly by the United States;

(4) Loans or extensions of credit fully secured by a segregated deposit account or accounts in the lending bank;

(5) Loans or extensions of credit secured by collateral having a readily ascertained market value of at least one hundred fifteen percent of the outstanding amount of the loan or extension of credit;

(6) Loans or extensions of credit secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples shall be subject to a limitation of thirty-five percent of capital and 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 one hundred fifteen percent of the outstanding amount of the loan or extension of credit. The staples shall be fully covered by insurance whenever it is customary to insure the staples;

(7) The purchase of bankers' acceptances of the kind described in section 13 of the federal reserve act and issued by other banks shall not be subject to any limitation based on capital and surplus;

(8) The unpaid purchase price of a sale of bank property, if secured by such property.

For the purposes of this section "capital" shall include the amount of common stock outstanding and unimpaired, the amount of preferred stock outstanding and unimpaired, and capital notes or debentures issued pursuant to chapter 30.36 RCW.

For the purposes of this section "surplus" shall include capital surplus, reflecting the amounts paid in excess of the par or stated value of capital stock, or amounts contributed to the bank other than for capital stock, and amounts transferred to surplus from undivided profits pursuant to resolution of the board of directors.

The term "person" shall include an individual, sole proprietor, partnership, joint venture, association, trust, estate, business trust, corporation, sovereign government or agency, instrumentality, or political subdivision thereof, or any similar entity or organization.

The ((~~supervisor~~)) director may prescribe rules to administer and carry out the purposes of this section, including rules to define or further define terms used in this section and to establish limits or requirements other than those specified in this section for particular classes or categories of loans or extensions of credit, and to determine when a loan putatively made to a person shall, for purposes of this section, be attributed to another person.

Sec. 13. RCW 30.04.120 and 1986 c 279 s 4 are each amended to read as follows:

The shares of stock of every bank and trust company shall be deemed personal property. No such corporation shall hereafter make any loan or discount on the security of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; in which case the stocks so purchased or acquired shall be sold at public or private sale, or otherwise disposed of, within six months from the time of its purchase or acquisition. Except as hereinafter provided or otherwise permitted by law, nothing herein contained shall authorize the purchase by any such bank or trust company for its own account of any shares of stock of any corporation, except a federal reserve bank of which such corporation shall become a member, and then only to the extent required by such federal reserve bank: PROVIDED, That any bank or trust company may purchase, acquire and hold shares of stock in any other corporation which shares have been previously pledged as security to any loan or discount made in good faith and such purchase shall be necessary to prevent loss upon a debt previously contracted in good faith and stock so purchased or acquired shall be sold at public or private sale or otherwise disposed of within two years from the time of its purchase or acquisition. Any time limit imposed in this section may be extended by the ((~~supervisor~~)) director upon cause shown. Banks and trust companies are authorized to make loans on the security of the capital stock of a bank or trust company other than the lending corporation.

Sec. 14. RCW 30.04.125 and 1986 c 279 s 5 are each amended to read as follows:

Unless otherwise prohibited by law, any state bank or trust company may invest in the capital stock of corporations organized to conduct the following businesses:

(1) A safe deposit business: PROVIDED, That the amount of investment does not exceed fifteen percent of its capital stock and surplus;

(2) A corporation holding the premises of the bank or its branches: PROVIDED, That without the approval of the ((~~supervisor~~)) director, the investment of such stock shall not exceed, together with all loans made to the corporation by the bank, a sum equal to the amount permitted to be invested in the premises by RCW 30.04.210;

(3) Stock in a small business investment company licensed and regulated by the United States as authorized by the small business act, Public Law 85-536, 72 Statutes at Large 384, in an amount not to exceed five percent of its capital and surplus;

(4) Capital stock of a banking service corporation or corporations. The total amount that a bank may invest in the shares of such corporation may not exceed ten percent of its capital and surplus. A bank service corporation may not engage in any activity other than those permitted by the bank service corporation act, 12 U.S.C. Sec. 1861, et seq., as subsequently amended and in effect on June 11, 1986. The performance of any service, and any records maintained by any such corporation for a bank, shall be subject to regulation and examination by the ((~~supervisor~~)) director and appropriate federal agencies to the same extent as if the services or records were being performed or maintained by the bank on its own premises;

(5) Capital stock of a federal reserve bank to the extent required by such federal reserve bank;

(6) A corporation engaging in business activities that have been determined by the board of governors of the federal reserve system or by the United States congress to be closely related to the business of banking, as of June 11, 1986;

(7) A governmentally sponsored corporation engaged in secondary marketing of loans and the stock of which must be owned in order to participate in its marketing activities;

(8) A corporation in which all of the voting stock is owned by the bank and that engages exclusively in nondeposit-taking activities that are authorized to be engaged in by the bank or trust company.

Sec. 15. RCW 30.04.127 and 1987 c 498 s 1 are each amended to read as follows:

(1) A bank or trust company, alone or in conjunction with other entities, may form, incorporate, or invest in corporations or other entities, whether or not such other corporation or entity is related to the bank or trust company's business. The aggregate amount of funds invested, or used in the formation of corporations or other entities under this section shall not exceed ten percent of the assets or fifty percent of the net worth, whichever is less, of the bank or trust company. For purposes of this subsection, "net worth" means the aggregate of capital, surplus, undivided profits, and all capital notes and debentures which are subordinate to the interest of depositors.

(2) A bank or trust company may engage in an activity permitted under this section only with the prior authorization of the ((~~supervisor~~)) director. In approving or denying a proposed activity, the ((~~supervisor~~)) director shall consider the financial and management strength of the institution, the convenience and needs of the public, and whether the proposed activity should be conducted through a subsidiary or affiliate of the bank. The ((~~supervisor~~)) director may not authorize under this section and no bank or trust company may act as an insurance or travel agent unless otherwise authorized by state statute.

Sec. 16. RCW 30.04.130 and 1986 c 279 s 6 are each amended to read as follows:

Any debt due a bank or trust company on which interest is one year or more past due and unpaid, unless such debt be well secured and in the course of collection by legal process or probate proceedings, or unless such debt be represented by or secured by bonds or other collateral having a readily ascertainable market value shall be considered a bad debt, and shall be charged off of the books of such corporation. Such assets shall be carried on the books of such corporation at such value as the ((~~supervisor~~)) director may from time to time direct, but in no event shall such carrying value exceed the market value thereof. A judgment held by a bank or trust company shall not be considered an asset of the corporation after two years from the date of its rendition unless with the written permission of the ((~~supervisor~~)) director specifying an additional period: PROVIDED, That time consumed by any appeal shall be excluded.

All assets or portion thereof that the ((~~supervisor~~)) director may have required a bank or trust company to charge off shall be charged off. No bank or trust company shall enter or at any time carry on its books any of its assets at a valuation exceeding the actual cost. However, accreting the discount on securities is permitted on a pro rata basis, over the life of the security.

Sec. 17. RCW 30.04.180 and 1986 c 279 s 8 are each amended to read as follows:

No bank or trust company shall declare or pay any dividend to an amount greater than its net profits then on hand.

The board of directors of any bank or trust company may declare a dividend out of so much of the undivided profits of such bank or trust company as they shall judge expedient: PROVIDED, HOWEVER, That before any such dividend is declared or the net profits in any way disposed of, not less than one-tenth of such net profits shall be carried to a surplus fund until the amount in such surplus fund shall be equal to twenty-five percent of the paid-in common stock of such bank or trust company: PROVIDED, FURTHER, That for the purposes of this section, any amounts paid into a fund for the retirement of any preferred stock of any such bank and trust company out of its net profits for such period or periods shall be deemed to be additions to its surplus fund if, upon the retirement of such preferred stock, the amounts so paid into such retirement fund may then properly be carried to surplus. In any such case the bank and trust company shall be obligated to transfer to surplus the amounts so paid into such retirement fund on account of the preferred stock as such stock is retired: PROVIDED FURTHER, That the ((~~supervisor~~)) director shall in his or her discretion have the power to require any bank or trust company to suspend the payment of any and all dividends until all requirements that may have been made by the ((~~supervisor~~)) director shall have been complied with; and upon such notice to suspend dividends no bank or trust company shall thereafter declare or pay any dividends until such notice has been rescinded in writing. A dividend is payable in property or capital stock.

Sec. 18. RCW 30.04.210 and 1986 c 279 s 9 are each amended to read as follows:

A bank or trust company may purchase, hold, and convey real estate for the following purposes:

(1) Such as shall be necessary for the convenient transaction of its business, including with its banking offices other space in the same building to rent as a source of income: PROVIDED, That any bank or trust company shall not invest for such purposes more than the greater of: (a) Fifty percent of its capital, surplus, and undivided profits; or (b) one hundred twenty-five percent of its capital stock without the approval of the ((~~supervisor~~)) director.

(2) Such as shall be purchased or conveyed to it in satisfaction, or on account of, debts previously contracted in the course of its business.

(3) Such as it shall purchase at sale under judgments, decrees, liens, or mortgage foreclosures, from debts owed to it.

(4) Such as a trust company receives in trust or acquires pursuant to the terms or authority of any trust.

(5) Such as it may take title to or for the purpose of investing in real estate conditional sales contracts.

(6) Such as shall be purchased, held, or conveyed in accordance with RCW 30.04.212 granting banks the power to invest directly or indirectly in unimproved or improved real estate.

No real estate specified in subdivision (4) shall be considered an asset of the bank or trust company holding the same in trust nor shall any real estate except that specified in subdivision (1) be carried as an asset on the bank's or trust company's books for a longer period than five years from the date title is acquired thereto, unless an extension of time be granted by the ((~~supervisor~~)) director.

Sec. 19. RCW 30.04.212 and 1985 c 329 s 5 are each amended to read as follows:

(1) In addition to the powers granted under RCW 30.04.210 and subject to the limitations and restrictions contained in this section and in RCW 30.60.010 and 30.60.020, a bank:

(a) May acquire any interest in unimproved or improved real property;

(b) May construct, alter, and manage improvements of any description on real estate in which it holds a substantial equity interest.

(2) The powers granted under subsection (1) of this section do not include, and a bank may not:

(a) Manage any real property in which the bank does not own a substantial equity interest;

(b) Engage in activities of selling, leasing, or otherwise dealing in real property as an agent or broker; or

(c) Acquire any equity interest in any one to four-family dwelling that is used as a principal residence by the owner of the dwelling; however, this shall not prohibit a bank from making loans secured by such dwelling where all or part of the bank's anticipated compensation results from the appreciation and sale of such dwelling.

(3) The aggregate amount of funds invested under this section shall not exceed two percent of a bank's capital, surplus, and undivided profits. Such percentage amount shall be increased based upon the most recent community reinvestment rating assigned to a bank by the ((~~supervisor~~)) director in accordance with RCW 30.60.010, as follows:

(a) Excellent performance: Increase to 10%

(b) Good performance: Increase to 8%

(d) Inadequate performance: Increase to 3%

(e) Poor performance: No increase

(4) For purposes of this section only, each bank will be deemed to have been assigned a community reinvestment rating of "1" for the period beginning with January 1, 1986, and ending December 31, 1986. Thereafter, each bank will be assigned an annual rating in accordance with RCW 30.60.010, which rating shall remain in effect for the next succeeding year and until the ((~~supervisor~~)) director has conducted a new investigation and assigned a new rating for the next succeeding year, the process repeating on an annual basis.

(5) No bank may at any time be required to dispose of any investment made in accordance with this section due to the fact that the bank is not then authorized to acquire such investment, if such investment was lawfully acquired by the bank at the time of acquisition.

(6) The ((~~supervisor~~)) director shall limit the amount that may be invested in a single project or investment and may adopt any rule necessary to the safe and sound exercise of powers granted by this section.

Sec. 20. RCW 30.04.215 and 1986 c 279 s 10 are each amended to read as follows:

(1) Notwithstanding any other provisions of law, in addition to all powers enumerated by this title, and those necessarily implied therefrom, a bank may engage in other business activities that have been determined by the board of governors of the federal reserve system or by the United States Congress to be closely related to the business of banking, as of June 11, 1986. At least thirty days before investment in corporations or other entities under this chapter, notification by letter shall be made to the ((~~supervisor~~)) director in accordance with such terms and conditions as the ((~~supervisor~~)) director might establish by rule.

(2) A bank that desires to perform an activity that is not expressly authorized by subsection (1) of this section shall first apply to the ((~~supervisor~~)) director for authorization to conduct such activity. Within thirty days of the receipt of this application, the ((~~supervisor~~)) director shall determine whether the activity is closely related to the business of banking, whether the public convenience and advantage will be promoted, whether the activity is apt to create an unsafe or unsound practice by the bank and whether the applicant is capable of performing such an activity. If the ((~~supervisor~~)) director finds the activity to be closely related to the business of banking and the bank is otherwise qualified, ((he)) the director shall forthwith inform the applicant that the activity is authorized. If the ((~~supervisor~~)) director determines that such activity is not closely related to the business of banking or the bank is not otherwise qualified, ((he)) the director shall forthwith inform the applicant in writing. The applicant shall have the right to appeal from an unfavorable determination in accordance with the procedures of the Administrative Procedure Act, chapter 34.05 RCW. In determining whether a particular activity is closely related to the business of banking, the ((~~supervisor~~)) director shall be guided by the rulings of the board of governors of the federal reserve system and the comptroller of the currency in making determinations in connection with the powers exercisable by bank holding companies, and the activities performed by other commercial banks or their holding companies. Any activity which may be performed by a bank, except the taking of deposits, may be performed by a corporation, all of the outstanding stock of which is owned by the bank.

(3) In addition to all powers enumerated by this title, and those necessarily implied therefrom, a bank may engage in other business activities that are determined by the ((~~supervisor~~)) director, by ((~~regulation~~)) rule adopted pursuant to chapter 34.05 RCW, to be closely related to the business of banking, or necessary or convenient thereto, and the exercise thereof will promote the public convenience and advantage. Provided, however, that such other business activities shall also have been determined by the board of governors of the federal reserve system or by the United States congress to be closely related to the business of banking.

Sec. 21. RCW 30.04.220 and 1955 c 33 s 30.04.220 are each amended to read as follows:

Every corporation, which on March 10, 1917, was actually and publicly engaged in banking or trust business in this state in full compliance with the laws hereof, which were in force immediately prior to March 10, 1917, may, if it otherwise complies with the provisions of this title, continue its said business, subject to the terms and regulations hereof and without amending its articles of incorporation, although its name and the amount of its capital stock, the number or length of terms of its directors or the form of its articles of incorporation do not comply with the requirements of this title: PROVIDED,

(1) That any such bank, which was by the ((~~supervisor~~)) director lawfully permitted to operate, although its capital stock was not fully paid in, shall pay in the balance of its capital stock at such times and in such amounts as the ((~~supervisor~~)) director may require;

(2) That, except with written permission of the ((~~supervisor~~)) director, any bank or trust company which shall amend its articles of incorporation must in such event comply with all the requirements of this title.

Sec. 22. RCW 30.04.230 and 1987 c 420 s 2 are each amended to read as follows:

(1) A corporation or association organized under the laws of this state or licensed to transact business in the state may acquire any or all shares of stock of any bank, trust company, or national banking association. Nothing in this section shall be construed to prohibit the merger, consolidation, or reorganization of a bank or trust company in accordance with this title.

(2) Unless the terms of this section or RCW 30.04.232 are complied with, an out-of-state bank holding company shall not acquire more than five percent of the shares of the voting stock or all or substantially all of the assets of a bank, trust company, or national banking association the principal operations of which are conducted within this state.

(3) As used in this section a "bank holding company" means a company that is a bank holding company as defined by the Bank Holding Company Act of 1956, as amended (12 U.S.C. Sec. 1841 et seq.). An "out-of-state bank holding company" is a bank holding company that principally conducts its operations outside this state, as measured by total deposits held or controlled by its bank subsidiaries on the date on which it became a holding company. A "domestic bank holding company" is a bank holding company that principally conducts its operations within this state, as measured by total deposits held or controlled by its bank subsidiaries on the date on which it became a bank holding company.

(4) Any such acquisition referred to under subsection (2) of this section by an out-of-state bank holding company requires the express written approval of the ((~~supervisor of banking~~)) director. Approval shall not be granted unless and until the following conditions are met:

(a) An out-of-state bank holding company desiring to make an acquisition referred to under subsection (2) of this section and the bank, trust company, national banking association, or domestic bank holding company parent thereof, if any, proposed to be acquired shall file an application in writing with the ((~~supervisor of banking~~)) director. The ((~~supervisor~~)) director shall by rule establish the fee schedule to be collected from the applicant in connection with the application. The fee shall not exceed the cost of processing the application. The application shall contain such information as the ((~~supervisor of banking~~)) director may prescribe by rule as necessary or appropriate for the purpose of making a determination under this section. The application and supporting information and all examination reports and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting its investigation shall be confidential and privileged and not subject to public disclosure under chapter 42.17 RCW. The application and information may be disclosed to federal bank regulatory agencies and to officials empowered to investigate criminal charges, subject to legal process, valid search warrant, or subpoena. In any civil action in which such application or information is sought to be discovered or used as evidence, any party may, upon notice to the ((~~supervisor~~)) director and other parties, petition for an in camera review. The court may permit discovery and introduction of only those portions that are relevant and otherwise unobtainable by the requesting party. The application and information shall be discoverable in any judicial action challenging the approval of an acquisition by the ((~~supervisor~~)) director as arbitrary and capricious or unlawful.

(b) The ((~~supervisor of banking~~)) director shall find that:

(i) The bank, trust company, or national banking association that is proposed to be acquired or the domestic bank holding company controlling such bank, trust company, or national banking association is in such a liquidity or financial condition as to be in danger of closing, failing, or insolvency. In making any such determination the ((~~supervisor~~)) director shall be guided by the criteria developed by the federal regulatory agencies with respect to emergency acquisitions under the provisions of 12 U.S.C. Sec. 1828(c);

(ii) There is no state bank, trust company, or national banking association doing business in the state of Washington or domestic bank holding company with sufficient resources willing to acquire the entire bank, trust company, or national banking association on at least as favorable terms as the out-of-state bank holding company is willing to acquire it;

(iii) The applicant out-of-state bank holding company has provided all information and documents requested by the ((~~supervisor~~)) director in relation to the application; and

(iv) The applicant out-of-state bank holding company has demonstrated an acceptable record of meeting the credit needs of its entire community, including low and moderate income neighborhoods, consistent with the safe and sound operation of such institution.

(i) The financial institution structure of this state; and

(ii) The convenience and needs of the public of this state.

(5) Nothing in this section may be construed to prohibit, limit, restrict, or subject to further regulation the ownership by a bank of the stock of a bank service corporation or a banker's bank.

Sec. 23. RCW 30.04.232 and 1985 c 310 s 1 are each amended to read as follows:

(1) In addition to an acquisition pursuant to RCW 30.04.230, an out-of-state bank holding company may acquire more than five percent of the voting stock or all or substantially all of the assets of a bank, trust company, or national banking association, the principal operations of which are conducted within this state, if the following terms or conditions are fulfilled:

(a) The bank, trust company, or national banking association, the voting stock of which is to be acquired, shall have been conducting business for a period of not less than three years;

(b) The laws of the state in which the out-of-state bank holding company principally conducts its operations permit a domestic bank holding company to acquire more than five percent of the shares of the voting stock or all or substantially all of the assets of a bank, trust company, or national banking association, the principal operations of which are conducted within that state, and permit the operation of the acquired bank, trust company, or national banking association within that state on terms and conditions no less favorable than other banks, trust companies, or national banking associations doing a banking business within that state;

(c) The ((~~supervisor of banking~~)) director, upon the request of any person, shall adopt a rule making a determination whether the law, of a particular state or states meets the qualifications of (b) of this subsection.

(2) As used in this section, the terms "bank holding company," "domestic bank holding company," and "out-of-state bank holding company" shall have the meanings provided in RCW 30.04.230.

Sec. 24. RCW 30.04.238 and 1986 c 279 s 12 are each amended to read as follows:

(1) Notwithstanding any other provision of this title, a bank, with the prior approval of the ((~~supervisor~~)) director, may purchase shares of its own capital stock.

(2) When a bank purchases such shares, its capital accounts shall be reduced appropriately. The shares shall be held as authorized but unissued shares.

Sec. 25. RCW 30.04.240 and 1979 c 45 s 1 are each amended to read as follows:

(1) Every corporation doing a trust business shall maintain in its office a trust department in which it shall keep books and accounts of its trust business, separate and apart from its other business. Such books and accounts shall specify the cash, securities and other properties, real and personal, held in each trust, and such securities and properties shall be at all times segregated from all other securities and properties except as otherwise provided in this section. Any person connected with a bank or trust company who shall, contrary to this section or any other provision of law, commingle any funds or securities of any kind held by such corporation in trust, for safekeeping or as agent for another, with the funds or assets of the corporation shall be guilty of a felony.

(2) Notwithstanding any other provisions of law, any fiduciary holding securities in its fiduciary capacity or any state bank, national bank, or trust company holding securities as fiduciary or as custodian for a fiduciary is authorized to deposit or arrange for the deposit of such securities: (a) In a clearing corporation (as defined in Article 8 of the Uniform Commercial Code, chapter 62A.8 RCW); (b) within another state bank, national bank, or trust company having trust power whether located inside or outside of this state; or (c) within itself. When such securities are so deposited, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation or state bank, national bank, or trust company holding the securities as the depository, with any other such securities deposited in such clearing corporation or depository by any person, regardless of the ownership of such securities, and certificates of small denomination may be merged into one or more certificates of larger denomination. The records of such fiduciary and the records of such state bank, national bank, or trust company as a fiduciary or as custodian for a fiduciary shall at all times show the name of the party for whose account the securities are so deposited. Ownership of, and other interests in, such securities may be transferred by bookkeeping entries on the books of such clearing corporation, state bank, national bank, or trust company without physical delivery or alteration of certificates representing such securities. A state bank, national bank, or trust company so depositing securities pursuant to this section shall be subject to such rules and regulations as, in the case of state chartered banks and trust companies, the ((~~supervisor of banking~~)) director and, in the case of national banking associations, the comptroller of the currency may from time to time issue. A state bank, national bank, or trust company acting as custodian for a fiduciary shall, on demand by the fiduciary, certify in writing to the fiduciary the securities so deposited by such state bank, national bank, or trust company in such clearing corporation or state bank, national bank, or trust company acting as such depository for the account of such fiduciary. A fiduciary shall, on demand by any party to a judicial proceeding for the settlement of such fiduciary's account or on demand by the attorney for such party, certify in writing to such party the securities deposited by such fiduciary in such clearing corporation or state bank, national bank, or trust company acting as such depository for its account as such fiduciary.

This subsection shall apply to any fiduciary holding securities in its fiduciary capacity, and to any state bank, national bank, or trust company holding securities as a custodian, managing agent, or custodian for a fiduciary, acting on March 14, 1973 or who thereafter may act regardless of the date of the agreement, instrument, or court order by which it is appointed and regardless of whether or not such fiduciary, custodian, managing agent, or custodian for a fiduciary owns capital stock of such clearing corporation.

Sec. 26. RCW 30.04.270 and 1955 c 33 s 30.04.270 are each amended to read as follows:

Each official communication, directed by the ((~~supervisor~~)) director or by one of his ((~~deputies~~)) or her assistants to any bank, trust company, mutual savings bank or industrial loan company or to any officer thereof relating to an investigation or examination conducted by the banking department or containing suggestions or recommendations relative to the conduct of the business of the bank, trust company, mutual savings bank or industrial loan company shall be submitted by the officer receiving it to the board of directors at the next meeting of such board and shall be duly noted in the minutes of the meeting of such board.

Sec. 27. RCW 30.04.290 and 1973 1st ex.s. c 53 s 36 are each amended to read as follows:

A foreign corporation, whose name contains the words "bank," "banker," "banking," or "trust," or whose articles of incorporation empower it to do a banking or trust business and which desires to engage in the business of loaning money on mortgage securities or in buying and selling exchange, coin, bullion or securities in this state may do so, but only upon filing with the ((~~supervisor~~)) director and with the secretary of state a certified copy of a resolution of its governing board to the effect that it will not engage in banking or trust business in this state, which copy shall be duly attested by its president and secretary. Such corporation shall also comply with the general corporation laws of this state relating to foreign corporations doing business herein. Nothing herein shall prevent operations by an alien bank in this state in conformance with chapter 30.42 RCW, RCW 30.04.290 and 30.40.020; nor after July 16, 1973 authorize the transaction of business in this state by an alien bank in any manner except in accordance with the provisions of chapter 30.42 RCW, RCW 30.04.290 and 30.40.020.

Sec. 28. RCW 30.04.310 and 1988 c 25 s 1 are each amended to read as follows:

Every bank or trust company which violates or fails to comply with any provision of chapters 30.04 through 30.22, 30.44, and 11.100 RCW or any lawful direction or requirement of the ((~~supervisor~~)) director shall be subject, in addition to any penalty now provided, to a penalty of not more than one hundred dollars for each offense, to be recovered by the attorney general in a civil action in the name of the state. Each day's continuance of the violation shall be a separate and distinct offense.

Sec. 29. RCW 30.04.405 and 1986 c 279 s 15 are each amended to read as follows:

(1) It is unlawful for any person to acquire control of a bank until thirty days after filing with the ((~~supervisor~~)) director a copy of the notice of change of control required to be filed with the federal deposit insurance corporation or a completed application. The notice or application shall be under oath and contain substantially all of the following information plus any additional information that the ((~~supervisor~~)) director may prescribe as necessary or appropriate in the particular instance for the protection of bank depositors, borrowers, or shareholders and the public interest:

(a) The identity, banking and business experience of each person by whom or on whose behalf acquisition is to be made;

(b) The financial and managerial resources and future prospects of each person involved in the acquisition;

(d) The source and amount of the funds or other consideration used or to be used in making the acquisition, and a description of the transaction and the names of the parties if any part of these funds or other consideration has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition;

(e) Any plan or proposal which any person making the acquisition may have to liquidate the bank, to sell its assets, to merge it with any other bank, or to make any other major change in its business or corporate structure for management;

(f) The identification of any person employed, retained, or to be compensated by the acquiring party, or by any person on its behalf, who makes solicitations or recommendations to shareholders for the purpose of assisting in the acquisition and a brief description of the terms of the employment, retainer, or arrangement for compensation; and

(g) Copies of all invitations for tenders or advertisements making a tender offer to shareholders for the purchase of their stock to be used in connection with the proposed acquisition.

(2) Notwithstanding any other provision of this section, a bank or domestic bank holding company as defined in RCW 30.04.230 need only notify the ((~~supervisor~~)) director of an intent to acquire control and the date of the proposed acquisition of control at least thirty days before the date of the acquisition of control.

(3) When a person, other than an individual or corporation, is required to file an application under this section, the ((~~supervisor~~)) director may require that the information required by subsection (1)(a), (b), and (f) of this section be given with respect to each person, as defined in RCW 30.04.400(3), who has an interest in or controls a person filing an application under this subsection.

(4) When a corporation is required to file an application under this section, the ((~~supervisor~~)) director may require that information required by subsection (1)(a), (b), and (f) of this section be given for the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of twenty-five percent or more of the outstanding voting securities of the corporation.

(5) If any tender offer, request, or invitation for tenders or other agreements to acquire control is proposed to be made by means of a registration statement under the Securities Act of 1933 (48 Stat. 74, 15 U.S.C., Sec. 77(a)), as amended, or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C., Sec. 78(a)), as amended, the registration statement or application may be filed with the ((~~supervisor~~)) director in lieu of the requirements of this section.

(6) Any acquiring party shall also deliver a copy of any notice or application required by this section to the bank proposed to be acquired within two days after the notice or application is filed with the ((~~supervisor~~)) director.

(7) Any acquisition of control in violation of this section shall be ineffective and void.

(8) Any person who willfully or intentionally violates this section or any rule adopted pursuant thereto is guilty of a gross misdemeanor pursuant to chapter 9A.20 RCW. Each day's violation shall be considered a separate violation, and any person shall upon conviction be fined not more than one thousand dollars for each day the violation continues.

Sec. 30. RCW 30.04.410 and 1989 c 180 s 3 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may disapprove the acquisition of a bank or trust company within thirty days after the filing of a complete application pursuant to RCW 30.04.405 or an extended period not exceeding an additional fifteen days if:

(a) The poor financial condition of any acquiring party might jeopardize the financial stability of the bank or might prejudice the interests of the bank depositors, borrowers, or shareholders;

(b) The plan or proposal of the acquiring party to liquidate the bank, to sell its assets, to merge it with any person, or to make any other major change in its business or corporate structure or management is not fair and reasonable to the bank's depositors, borrowers, or stockholders or is not in the public interest;

(c) The banking and business experience and integrity of any acquiring party who would control the operation of the bank indicates that approval would not be in the interest of the bank's depositors, borrowers, or shareholders;

(d) The information provided by the application is insufficient for the ((~~supervisor~~)) director to make a determination or there has been insufficient time to verify the information provided and conduct an examination of the qualification of the acquiring party; or

(e) The acquisition would not be in the public interest.

(2) An acquisition may be made prior to expiration of the disapproval period if the ((~~supervisor~~)) director issues written notice of intent not to disapprove the action.

(3) The ((~~supervisor~~)) director shall set forth the basis for disapproval of any proposed acquisition in writing and shall provide a copy of such findings and order to the applicants and to the bank involved. Such findings and order shall not be disclosed to any other party and shall not be subject to public disclosure under chapter 42.17 RCW unless the findings and/or order are appealed pursuant to chapter 34.05 RCW.

(4) Whenever such a change in control occurs, each party to the transaction shall report promptly to the ((~~supervisor~~)) director any changes or replacement of its chief executive officer, or of any director, that occurs in the next twelve-month period, including in its report a statement of the past and present business and professional affiliations of the new chief executive officer or directors.

Sec. 31. RCW 30.04.450 and 1977 ex.s. c 178 s 1 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may issue and serve upon a bank or trust company a notice of charges if in the opinion of the ((~~supervisor~~)) director any bank or trust company:

(a) Is engaging or has engaged in an unsafe or unsound practice in conducting the business of the bank or trust company;

(b) Is violating or has violated the law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director in connection with the granting of any application or other request by the bank or trust company or any written agreement made with the ((~~supervisor~~)) director; or

(c) Is about to do the acts prohibited in (a) or (b) of this subsection when the opinion that the threat exists is based upon reasonable cause.

(2) The notice shall contain a statement of the facts constituting the alleged violation or violations or the practice or practices and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the bank or trust company. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the ((~~supervisor~~)) director at the request of the bank or trust company.

Unless the bank or trust company shall appear at the hearing by a duly authorized representative it shall be deemed to have consented to the issuance of the cease and desist order. In the event of this consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the bank or trust company an order to cease and desist from the violation or practice. The order may require the bank or trust company and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the bank to take affirmative action to correct the conditions resulting from the violation or practice.

(3) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the bank or trust company concerned except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided therein unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 32. RCW 30.04.455 and 1977 ex.s. c 178 s 2 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director determines that the acts specified in RCW 30.04.450 or their continuation is likely to cause insolvency or substantial dissipation of assets or earnings of the bank or trust company or to otherwise seriously prejudice the interests of its depositors, the ((~~supervisor~~)) director may also issue a temporary order requiring the bank or trust company to cease and desist from the violation or practice. The order shall become effective upon service on the bank or trust company and shall remain effective unless set aside, limited, or suspended by a court in proceedings under RCW 30.04.460 pending the completion of the administrative proceedings under the notice and until such time as the ((~~supervisor~~)) director shall dismiss the charges specified in the notice or until the effective date of a cease and desist order issued against the bank or trust company under RCW 30.04.450.

Sec. 33. RCW 30.04.465 and 1977 ex.s. c 178 s 4 are each amended to read as follows:

In the case of a violation or threatened violation of a temporary cease and desist order issued under RCW 30.04.455, the ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the bank or trust company for an injunction to enforce the order, and the court shall issue an injunction if it determines that there has been a violation or threatened violation.

Sec. 34. RCW 30.04.470 and 1977 ex.s. c 178 s 8 are each amended to read as follows:

(1) Any administrative hearing provided in RCW 30.04.450 or 30.12.042 may be held at such place as is designated by the ((~~supervisor~~)) director and shall be conducted in accordance with chapter 34.05 RCW. The hearing shall be private unless the ((~~supervisor~~)) director determines that a public hearing is necessary to protect the public interest after fully considering the views of the party afforded the hearing.

Within sixty days after the hearing the ((~~supervisor~~)) director shall render a decision which shall include findings of fact upon which the decision is based and shall issue and serve upon each party to the proceeding an order or orders consistent with RCW 30.04.450 or 30.12.042, as the case may be.

Unless a petition for review is timely filed in the superior court of the county of the principal place of business of the affected bank or trust company under subsection (2) of this section and until the record in the proceeding has been filed as therein provided, the ((~~supervisor~~)) director may at any time modify, terminate, or set aside any order upon such notice and in such manner as he or she shall deem proper. Upon filing the record, the ((~~supervisor~~)) director may modify, terminate, or set aside any order only with permission of the court.

The judicial review provided in this section for an order shall be exclusive.

(2) Any party to the proceeding or any person required by an order issued under RCW 30.04.450, 30.04.455, 30.04.465, or 30.12.042 to refrain from any of the violations or practices stated therein may obtain a review of any order served under subsection (1) of this section other than one issued upon consent by filing in the superior court of the county of the principal place of business of the affected bank or trust company within ten days after the date of service of the order a written petition praying that the order of the ((~~supervisor~~)) director be modified, terminated, or set aside. A copy of the petition shall be immediately served upon the ((~~supervisor~~)) director and the ((~~supervisor~~)) director shall then file in the court the record of the proceeding. The court shall have jurisdiction upon the filing of the petition, which jurisdiction shall become exclusive upon the filing of the record to affirm, modify, terminate, or set aside in whole or in part the order of the ((~~supervisor~~)) director except that the ((~~supervisor~~)) director may modify, terminate, or set aside an order with the permission of the court. The judgment and decree of the court shall be final, except that it shall be subject to appellate review under the rules of court.

(3) The commencement of proceedings for judicial review under subsection (2) of this section shall not operate as a stay of any order issued by the ((~~supervisor~~)) director unless specifically ordered by the court.

(4) Service of any notice or order required to be served under RCW 30.04.450, 30.04.455, 30.12.040 or 30.12.042 shall be accomplished in the same manner as required for the service of process in civil actions in superior courts of this state.

Sec. 35. RCW 30.04.475 and 1977 ex.s. c 178 s 9 are each amended to read as follows:

The ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the bank or trust company affected for the enforcement of any effective and outstanding order issued under RCW 30.04.450, 30.04.455, 30.04.465, or 30.12.042, and the court shall have jurisdiction to order compliance therewith.

No court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any order or to review, modify, suspend, terminate, or set aside any order except as provided in RCW 30.04.460 and 30.04.470.

Sec. 36. RCW 30.04.550 and 1986 c 279 s 40 are each amended to read as follows:

A state banking corporation may, with the approval of the ((~~supervisor of banking~~)) director and the affirmative vote of the shareholders of such corporation owning at least two-thirds of each class of shares entitled to vote under the terms of such shares, be reorganized to become a subsidiary of a bank holding company or a company that will, upon consummation of such reorganization, become a bank holding company, as defined in the federal bank holding company act of 1956, as amended.

Sec. 37. RCW 30.04.560 and 1986 c 279 s 42 are each amended to read as follows:

If the shareholders approve the reorganization by a two-thirds vote of each class of shares entitled to vote under the terms of such shares, and if it is thereafter approved by the ((~~supervisor~~)) director and consummated, any shareholder of the banking corporation who has voted shares against such reorganization at such meeting or has given notice in writing at or prior to such meeting to the banking corporation that he or she dissents from the plan of reorganization and has not voted in favor of the reorganization, shall be entitled to receive the value of the shares determined as provided in RCW 30.04.565. Such dissenter's rights must be exercised by making written demand which shall be delivered to the corporation at any time within thirty days after the date of shareholder approval, accompanied by the surrender of the appropriate stock certificates.

Sec. 38. RCW 30.04.565 and 1982 c 196 s 4 are each amended to read as follows:

The value of the shares of a dissenting shareholder who has properly perfected dissenter's rights shall be ascertained as of the day prior to the date of the shareholder action approving such reorganization by three appraisers, one to be selected by the owners of two-thirds of the dissenting shares, one by the board of directors of the acquiring bank holding company, and the third by the two so chosen. The valuation agreed upon by any two appraisers shall govern. If the appraisal is not completed within ninety days after the effective date of the reorganization, the ((~~supervisor of banking~~)) director shall cause an appraisal to be made which shall be final and binding upon all parties.

Sec. 39. RCW 30.04.570 and 1982 c 196 s 5 are each amended to read as follows:

The reorganization and exchange authorized by RCW 30.04.550 through 30.04.570 shall become effective as follows:

(1) If the board of directors and shareholders of the state banking corporation and the board of directors of the acquiring corporation approve the plan of reorganization, then both corporations shall apply for the approval of the ((~~supervisor of banking~~)) director, providing such information as the ((~~supervisor~~)) director by ((~~regulation~~)) rule may prescribe.

(2) If the ((~~supervisor~~)) director approves the reorganization, the ((~~supervisor~~)) director shall issue a certificate of reorganization to the state banking corporation.

(3) Upon the issuance of a certificate of reorganization by the ((~~supervisor~~)) director, or on such later date as shall be provided for in the plan of reorganization, the shares of the state banking corporation shall be deemed to be exchanged in accordance with the plan of reorganization, subject to the rights of dissenters under RCW 30.04.560 and 30.04.565.

Sec. 40. RCW 30.04.575 and 1986 c 279 s 44 are each amended to read as follows:

Prior to the approval of the reorganization, the ((~~supervisor~~)) director, upon request of the board of directors of the bank, or not less than ten percent of its shareholders, shall hold a public hearing at which bank shareholders and other interested parties may appear. Notice of the public hearing shall be sent to each shareholder and otherwise publicized in accordance with the administrative procedure act, chapter 34.05 RCW.

The approval of the reorganization by the ((~~supervisor of banking~~)) director shall be conditioned on a finding that the terms of the reorganization are fair to the shareholders and other interested parties.

Sec. 41. RCW 30.04.900 and 1987 c 498 s 2 are each amended to read as follows:

(1) The director ((~~of general administration~~)) shall study the financial institution structure in the state and report to the governor and the appropriate standing committees of the house of representatives and the senate on changes which should be made to enable state chartered financial institutions to remain safe and sound and yet be competitive with other federally chartered and nonchartered financial institutions. In conducting the study the director shall consider:

(a) The powers which financial institutions under state regulatory authority should be entitled to exercise;

(b) The level of supervision that is necessary to assure safe and sound financial institutions without unnecessarily restricting the operation of the institutions;

(c) Whether the distinction among commercial banks, savings banks, and savings and loan associations should be retained, and if so, whether there should continue to be differences in their powers;

(d) The general corporate powers that should be authorized for financial institutions; and

(e) Any other matters deemed by the director to be relevant.

(2) The director, in conducting the study required by subsection (1) of this section shall consult with ((~~the supervisor of banking, with the supervisor of savings and loans and with~~)) representatives from all types of financial institutions, including large and small, urban and rural, commercial banks, savings banks, and savings and loan associations and credit unions. The director shall also advise the appropriate standing committees of the house of representatives and the senate of all meetings held to consider the study conducted under this section.

(3) The director shall submit the report required by subsection (1) of this section not later than November 1, 1987.

Sec. 42. RCW 30.08.010 and 1986 c 279 s 17 are each amended to read as follows:

When authorized by the ((~~supervisor~~)) director, as hereinafter provided, five or more natural persons, citizens of the United States, may incorporate a bank or trust company in the manner herein prescribed. No bank or trust company shall incorporate for less amount nor commence business unless it has a paid-in capital stock, surplus and undivided profits in the amount as may be determined by the ((~~supervisor~~)) director after consideration of the proposed location, management, and the population and economic characteristics for the area, the nature of the proposed activities and operation of the bank or trust company, and other factors deemed pertinent by the ((~~supervisor~~)) director. Each bank and trust company shall before commencing business have subscribed and paid into it in the same manner as is required for capital stock, an amount equal to at least ten percent of the capital stock above required, that shall be carried in the undivided profit account and may be used to defray organization and operating expenses of the company. Any sum not so used shall be transferred to the surplus fund of the company before any dividend shall be declared to the stockholders.

Sec. 43. RCW 30.08.020 and 1986 c 279 s 18 are each amended to read as follows:

Persons desiring to incorporate a bank or trust company shall file with the ((~~supervisor~~)) director a notice of their intention to organize a bank or trust company in such form and containing such information as the ((~~supervisor~~)) director shall prescribe by ((~~regulation~~)) rule, together with proposed articles of incorporation, which shall be submitted for examination to the ((~~supervisor~~)) director at his or her office in Olympia.

The proposed articles of incorporation shall state:

(1) The name of such bank or trust company.

(2) The city, village or locality and county where the head office of such corporation is to be located.

(3) The nature of its business, whether that of a commercial bank, or a trust company.

(4) The amount of its capital stock, which shall be divided into shares of a par or no par value as may be provided in the articles of incorporation.

(5) The names and places of residence and mailing addresses of the persons who as directors are to manage the corporation until the first annual meeting of its stockholders.

(6) If there is to be preferred or special classes of stock, a statement of preferences, voting rights, if any, limitations and relative rights in respect of the shares of each class; or a statement that the shares of each class shall have the attributes as shall be determined by the bank's board of directors from time to time with the approval of the ((~~supervisor~~)) director.

(7) Any provision granting the shareholders the preemptive right to acquire additional shares of the bank and any provision granting shareholders the right to cumulate their votes.

(8) Any provision, not inconsistent with law, which the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the corporation, including any provision restricting the transfer of shares and any provision which under this title is required or permitted to be set forth in the bylaws.

(9) Any provision the incorporators elect to so set forth, not inconsistent with law or the purposes for which the bank is organized, or any provision limiting any of the powers granted in this title.

It shall not be necessary to set forth in the articles of incorporation any of the corporate powers granted in this title. The articles of incorporation shall be signed by all of the incorporators and acknowledged before an officer to take acknowledgments.

Sec. 44. RCW 30.08.030 and 1973 1st ex.s. c 104 s 5 are each amended to read as follows:

When the notice of intention to organize and proposed articles of incorporation complying with the foregoing requirements have been received by the ((~~supervisor~~)) director, together with the fees required by law, ((he)) the director shall ascertain from the best source of information at his or her command and by such investigation as he or she may deem necessary, whether the character, responsibility and general fitness of the persons named in such articles are such as to command confidence and warrant belief that the business of the proposed bank or trust company will be honestly and efficiently conducted in accordance with the intent and purpose of this title, whether the resources in the neighborhood of such place and in the surrounding country afford a reasonable promise of adequate support for the proposed bank and whether the proposed bank or trust company is being formed for other than the legitimate objects covered by this title.

Sec. 45. RCW 30.08.040 and 1981 c 302 s 15 are each amended to read as follows:

After the ((~~supervisor~~)) director shall have satisfied himself or herself of the above facts, and, within six months of the date the notice of intention to organize has been received in his or her office, ((he)) the director shall notify the incorporators to file executed and acknowledged articles of incorporation with ((~~him~~)) the director in triplicate. Unless the ((~~supervisor~~)) director otherwise consents in writing, such articles shall be in the same form and shall contain the same information as the proposed articles and shall be filed with ((~~him~~)) the director within ten days of such notice. Within thirty days after the receipt of such articles of incorporation, ((he)) the director shall endorse upon each of the triplicates thereof, over his or her official signature, the word "approved," or the word "refused," with the date of such endorsement. In case of refusal ((he)) the director shall forthwith return one of the triplicates, so endorsed, together with a statement explaining the reason for refusal to the person from whom the articles were received, which refusal shall be conclusive, unless the incorporators, within ten days of the issuance of such notice of refusal, shall request a hearing pursuant to the Administrative Procedure Act, chapter 34.05 RCW, as now or hereafter amended.

Sec. 46. RCW 30.08.050 and 1986 c 279 s 19 are each amended to read as follows:

In case of approval the ((~~supervisor~~)) director shall forthwith give notice thereof to the proposed incorporators and file one of the triplicate articles of incorporation in his or her own office, and shall transmit another triplicate to the secretary of state, and the last to the incorporators. Upon receipt from the proposed incorporators of the same fees as are required for filing and recording other articles of incorporation the secretary of state shall file such articles and record the same. Upon the filing of articles of incorporation approved as aforesaid by the ((~~supervisor~~)) director, with the secretary of state, all persons named therein and their successors shall become and be a corporation, which shall have the powers and be subject to the duties and obligations prescribed by this title, and whose existence shall continue from the date of the filing of such articles until terminated pursuant to law; but such corporation shall not transact any business except as is necessarily preliminary to its organization until it has received a certificate of authority as provided herein.

Sec. 47. RCW 30.08.060 and 1986 c 279 s 20 are each amended to read as follows:

Before any bank or trust company shall be authorized to do business, and within ninety days after approval of the articles of incorporation or such other time as the ((~~supervisor~~)) director may allow, it shall furnish proof satisfactory to the ((~~supervisor~~)) director that such corporation has a paid-in capital in the amount determined by the ((~~supervisor~~)) director, that the requisite surplus or reserve fund has been accumulated or paid in cash, and that it has in good faith complied with all the requirements of law and fulfilled all the conditions precedent to commencing business imposed by this title. If so satisfied, and within thirty days after receipt of such proof, the ((~~supervisor~~)) director shall issue under his or her hand and official seal, in triplicate, a certificate of authority for such corporation. The certificate shall state that the corporation therein named has complied with the requirements of law, that it is authorized to transact the business of a bank or trust company, or both, as the case may be: PROVIDED, HOWEVER, That the ((~~supervisor~~)) director may make his or her issuance of the certificate to a bank or trust company authorized to accept deposits, conditional upon the granting of deposit insurance by the federal deposit insurance corporation, and in such event, shall set out such condition in a written notice which shall be delivered to the corporation.

One of the triplicate certificates shall be transmitted by the ((~~supervisor~~)) director to the corporation and one of the other two shall be filed by the ((~~supervisor~~)) director in the office of the secretary of state and shall be attached to ((~~said~~)) the articles of incorporation: PROVIDED, HOWEVER, That if the issuance of the certificate is made conditional upon the granting of deposit insurance by the federal deposit insurance corporation, the ((~~supervisor~~)) director shall not transmit or file the certificate until such condition is satisfied.

Sec. 48. RCW 30.08.070 and 1986 c 279 s 21 are each amended to read as follows:

Every corporation heretofore or hereafter authorized by the laws of this state to do business as a bank or trust company, which corporation shall have failed to organize and commence business within six months after certificate of authority to commence business has been issued by the ((~~supervisor~~)) director, shall forfeit its rights and privileges as such corporation, which fact the ((~~supervisor~~)) director shall certify to the secretary of state, and such certificate of forfeiture shall be filed and recorded in the office of the secretary of state in the same manner as the certificate of authority: PROVIDED, That the ((~~supervisor~~)) director may, upon showing of cause satisfactory to him or her, issue an order under his or her hand and seal extending for not more than three months the time within which such organization may be effected and business commenced, such order to be transmitted to the office of the secretary of state and filed and recorded therein.

Sec. 49. RCW 30.08.080 and 1961 c 280 s 1 are each amended to read as follows:

At any time not less than one year prior to the expiration of the time of the existence of any bank, trust company or mutual savings bank, it may by written application to the ((~~supervisor~~)) director, signed and verified by a majority of its directors and approved in writing by the owners of not less than two-thirds of its capital stock, apply to the ((~~supervisor~~)) director for leave to file amended articles of incorporation, extending its time of existence. Prior to acting upon such application, the ((~~supervisor~~)) director shall make such investigation of the applicant as he or she deems necessary. If ((he)) the director determines that the applicant is in sound condition, that it is conducting its business in a safe manner and in compliance with law and that no reason exists why it should not be permitted to continue, he or she shall issue to the applicant a certificate authorizing it to file amended articles of incorporation extending the time of its existence until such time as it be dissolved by the act of its shareholders owning not less than two-thirds of its stock, or until its certificate of authority becomes revoked or forfeited by reason of violation of law, or until its affairs be taken over by the ((~~supervisor~~)) director for legal cause and finally wound up by him or her. Otherwise ((he)) the director shall notify the applicant that he or she refuses to grant such certificate. The applicant may appeal from such refusal in the same manner as in the case of a refusal to grant an original certificate of authority. Otherwise the determination of the ((~~supervisor~~)) director shall be conclusive.

Upon receiving a certificate, as hereinabove provided, the applicant may file amended articles of incorporation, extending the time of its existence for the term authorized, to which shall be attached a copy of the certificate of the ((~~supervisor~~)) director. Such articles shall be filed in the same manner and upon payment of the same fees as for original articles of incorporation.

Should any bank, trust company or mutual savings bank fail to continue its existence in the manner herein provided and be not previously dissolved, the ((~~supervisor~~)) director shall at the end of its original term of existence immediately take possession thereof and wind up the same in the same manner as in the case of insolvency.

Sec. 50. RCW 30.08.082 and 1986 c 279 s 22 are each amended to read as follows:

(1) Notwithstanding any other provisions of law and if so authorized by its articles of incorporation or amendments thereto made in the manner provided in the case of a capital increase, any bank or trust company may, pursuant to action taken by its board of directors from time to time with the approval of the ((~~supervisor~~)) director, issue shares of preferred or special classes of stock with the attributes and in such amounts and with such par value, if any, as shall be determined by the board of directors from time to time with the approval of the ((~~supervisor~~)) director. No increase of preferred stock shall be valid until the amount thereof shall have been subscribed and actually paid in and a certificate of increase is received from the ((~~supervisor~~)) director.

(2) If provided in its articles of incorporation, a bank or trust company may issue shares of preferred or special classes having any one or several of the following provisions:

(a) Subjecting the shares to the right of the bank or trust company to repurchase or retire any such shares at the price fixed by the articles of incorporation for the repurchase or retirement thereof;

(b) Entitling the holders thereof to cumulative, noncumulative, or partially cumulative dividends;

(d) Having preference in the assets of the bank or trust company over any other class or classes of shares upon the voluntary or involuntary liquidation of the bank or trust company;

(e) Having voting or nonvoting rights; and

(f) Being convertible into shares of any other class or into shares of any series of the same or any other class, except a class having prior or superior rights and preferences as to dividends or distribution of assets upon liquidation.

Sec. 51. RCW 30.08.083 and 1986 c 279 s 23 are each amended to read as follows:

(1) If the articles of incorporation shall expressly vest authority in the board of directors, then, to the extent that the articles of incorporation shall not have established series, and fixed and determined the variations in the relative rights and preferences as between series, the board of directors have authority to divide any or all of the classes into series and, within the limitation set forth in this section and in the articles of incorporation, fix and determine the relative rights and preferences of the shares of any series so established.

(2) In order for the board of directors to establish a series, where authority to do so is contained in the articles of incorporation, the board of directors shall adopt a resolution setting forth the designation of the series and fixing and determining the relative rights and preferences thereof, or so much thereof as is not fixed and determined by the articles of incorporation.

(3) Prior to the issue of any shares of a series established by resolution adopted by the board of directors, the corporation shall file and execute in the manner provided in this section a statement setting forth:

(a) The name of the bank;

(b) A copy of the resolution establishing and designating the series, and fixing and determining the relative rights and preferences thereof;

(d) That the resolution was duly adopted by the board of directors.

(4) The statement shall be executed in triplicate by the bank by one of its officers and shall be delivered to the ((~~supervisor~~)) director. If the ((~~supervisor~~)) director finds that the statement conforms to law, the ((~~supervisor~~)) director shall, when all fees have been paid as provided in this title:

(a) Endorse on each of the triplicate originals the word "Filed," and the effective date of the filing thereof;

(b) File two of the originals; and

(5) Upon the filing of the statement by the ((~~supervisor~~)) director with the secretary of state, the resolution establishing and designating the series and fixing and determining the relative rights and preferences thereof shall become effective and shall constitute an amendment of the articles of incorporation.

Sec. 52. RCW 30.08.084 and 1986 c 279 s 24 are each amended to read as follows:

Notwithstanding any other provisions of law, whether relating to restriction upon the payment of dividends upon capital stock or otherwise, the holders of shares of preferred or special classes of stock shall be entitled to receive such dividends on the purchase price received by the bank or trust company for such stock as may be provided by the articles of incorporation or by the board of directors of the bank or trust company with the approval of the ((~~supervisor~~)) director.

No dividends shall be declared or paid on common stock until cumulative dividends, if any, on the shares of preferred or special classes of stock shall have been paid in full; and, if the ((~~supervisor~~)) director takes possession of a bank or trust company for purposes of liquidation, no payments shall be made to the holders of the common stock until the holders of the shares of preferred or special classes of stock shall have been paid in full such amount as may be provided under the terms of said shares plus all accumulated dividends, if any.

Sec. 53. RCW 30.08.088 and 1986 c 279 s 27 are each amended to read as follows:

The authorized but unissued shares shall not become a part of the capital stock until they have been issued and paid for. Prior to the issuance of authorized but unissued stock, the bank shall notify the ((~~supervisor~~)) director of the proposed issuance and the consideration to be received therefor and receive the ((~~supervisor's~~)) director's approval thereof, except that such notification and such approval shall not be required if the authorized but unissued stock is issued to employees of the bank pursuant to approved stock option, stock purchase, stock bonus or other similar plans approved by the ((~~supervisor~~)) director.

Sec. 54. RCW 30.08.090 and 1987 c 420 s 3 are each amended to read as follows:

Any bank or trust company may amend its articles of incorporation, in any manner not inconsistent with the provisions of this title, by a vote of the stockholders representing two-thirds of each class of shares entitled to vote under the terms of the shares at any regular meeting, or special meeting duly called for that purpose in the manner prescribed by its bylaws. A certificate of the fact and the terms of the amendment shall be executed by a majority of the directors and filed as required herein for articles of incorporation. No amendment shall be made whereby a bank becomes a trust company unless such bank shall first receive permission from the ((~~supervisor~~)) director.

Sec. 55. RCW 30.08.092 and 1987 c 420 s 4 are each amended to read as follows:

A bank or trust company may increase or decrease its capital stock by amendment to its articles of incorporation. No issuance of capital stock shall be valid, until the amount thereof shall have been actually paid in and a certificate of increase is received from the ((~~supervisor~~)) director. No reduction of the capital stock shall be made to an amount less than is required for capital by the ((~~supervisor~~)) director.

Banks having authorized but unissued stock shall disclose on all statements of condition the amount of authorized stock, and the amount of issued and paid-in stock, as certified by the ((~~supervisor~~)) director. The ((~~supervisor~~)) director shall certify to each bank having authorized but unissued stock the amount of its issued and paid-in capital stock, and this amount shall be used in all statements of condition and in computing the capital of the bank for purposes of determining loan or investment limits until a new certificate is issued by the ((~~supervisor~~)) director. In cases where a bank issued authorized but unissued stock as permitted by this title, a new certificate need not be requested upon each stock issue. However, if the bank so requests and the ((~~supervisor~~)) director approves, a certificate of issued and paid-in capital stock shall be issued by the ((~~supervisor~~)) director. A new certificate must be requested at such time as any increase of paid-in capital stock represents five percent of the authorized capital stock and at such time as there is no remaining authorized but unissued stock.

Sec. 56. RCW 30.08.095 and 1981 c 302 s 19 are each amended to read as follows:

The ((~~supervisor~~)) director shall collect in advance fees for the following services:

For filing application for certificate of authority and attendant investigation as outlined in the law;

For filing application for certificate conferring trust powers upon a state or national bank;

For filing articles of incorporation, or amendments thereof, or other certificates required to be filed in his or her office;

For filing merger agreement and attendant investigation;

For filing application to relocate main office or branch and attendant investigation;

For issuing a certificate of increase or decrease of capital stock;

For issuing each certificate of authority;

For furnishing copies of papers filed in his or her office, per page.

The ((~~supervisor~~)) director shall establish the amount of the fee for each of the above transactions, and for other services rendered ((~~by the division of banking by rules and regulations promulgated pursuant to the Administrative Procedure Act, chapter 34.05 RCW, as now or hereafter amended~~)).

Every bank or trust company shall also pay to the secretary of state for filing any instrument with him or her the same fees as are required of general corporations for filing corresponding instruments, and also the same license fees as are required of general corporations.

Sec. 57. RCW 30.08.120 and 1955 c 33 s 30.08.120 are each amended to read as follows:

Before any such national bank shall engage in such trust business, it shall file a certificate with the ((~~supervisor~~)) director, wherein it agrees to conform to all the regulations and restrictions of this title relating to trust companies and trust business, including the examination of its trust business by the ((~~supervisor~~)) director and the payment of the fees therefor, herein prescribed for the examination of banks and trust companies. Upon the filing of such a certificate in a form to be approved by the ((~~supervisor~~)) director, such national bank shall be subject to all the regulations and restrictions of this title relative to trust companies and trust business.

Sec. 58. RCW 30.08.140 and 1986 c 279 s 29 are each amended to read as follows:

Upon the issuance of a certificate of authority to a bank, the persons named in the articles of incorporation and their successors shall thereupon become a corporation and shall have power:

(1) To adopt and use a corporate seal.

(2) To have perpetual succession.

(3) To make contracts.

(4) To sue and be sued, the same as a natural person.

(5) To elect directors who, subject to the provisions of the corporation's bylaws, shall have power to appoint such officers as may be necessary or convenient, to define their powers and duties and to dismiss them at pleasure, and who shall also have general supervision and control of the affairs of such corporation.

(6) To make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of its affairs.

(7) To invest and reinvest its funds in marketable obligations evidencing the indebtedness of any person, copartnership, association, or corporation in the form of bonds, notes, or debentures commonly known as investment securities except as may by regulation be limited by the ((~~supervisor~~)) director.

(8) To discount and negotiate promissory notes, drafts, bills of exchange and other evidences of debt, to receive deposits of money and commercial paper, to lend money secured or unsecured, to issue all forms of letters of credit, to buy and sell bullion, coins and bills of exchange.

(9) To take and receive as bailee for hire upon terms and conditions to be prescribed by the corporation, for safekeeping and storage, jewelry, plate, money, specie, bullion, stocks, bonds, mortgages, securities and valuable paper of any kind and other valuable personal property, and to rent vaults, safes, boxes and other receptacles for safekeeping and storage of personal property.

(10) If the bank be located in a city of not more than five thousand inhabitants, to act as insurance agent. A bank exercising this power may continue to act as an insurance agent notwithstanding a change of the population of the city in which it is located.

(11) To accept drafts or bills of exchange drawn upon it having not more than six months sight to run, which grow out of transactions involving the importation or exportation of goods; or which grow out of transactions involving the domestic shipment of goods, providing shipping documents conveying or securing title are attached at the time of acceptance; or which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title to readily marketable staples. No bank shall accept, either in a foreign or a domestic transaction, for any one person, company, firm or corporation, to an amount equal at any one time in the aggregate to more than ten percent of its paid up and unimpaired capital stock and surplus unless the bank is secured by attached documents or by some other actual security growing out of the same transaction as the acceptance; and no bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its paid up and unimpaired capital stock and surplus: PROVIDED, HOWEVER, That the ((~~supervisor~~)) director, under such general regulations applicable to all banks irrespective of the amount of capital or surplus, as ((he)) the director may prescribe may authorize any bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred percent of its paid up and unimpaired capital stock and surplus: PROVIDED, FURTHER, That the aggregate of acceptances growing out of domestic transactions shall in no event exceed fifty percent of such capital stock and surplus.

(12) To accept drafts or bills of exchange drawn upon it, having not more than three months sight to run, drawn under regulations to be prescribed by the ((~~supervisor~~)) director by banks or bankers in foreign countries or dependencies or insular possessions of the United States for the purpose of furnishing dollar exchange as required by the usages of trade in the respective countries, dependencies or insular possessions. Such drafts or bills may be acquired by banks in such amounts and subject to such regulations, restrictions and limitations as may be provided by the ((~~supervisor~~)) director: PROVIDED, HOWEVER, That no bank shall accept such drafts or bills of exchange referred to in this subdivision for any one bank to an amount exceeding in the aggregate ten percent of the paid up and unimpaired capital and surplus of the accepting bank unless the draft or bill of exchange is accompanied by documents conveying or securing title or by some other adequate security, and that no such drafts or bills of exchange shall be accepted by any bank in an amount exceeding at any time the aggregate of one-half of its paid up and unimpaired capital and surplus: PROVIDED FURTHER, That compliance by any bank which is a member of the federal reserve system of the United States with the rules, regulations and limitations adopted by the federal reserve board thereof with respect to the acceptance of drafts or bills of exchange by members of such federal reserve system shall be a sufficient compliance with the requirements of this subdivision or paragraph relating to rules, regulations and limitations prescribed by the ((~~supervisor~~)) director.

(13) To have and exercise all powers necessary or convenient to effect its purposes.

(14) To serve as custodian of an individual retirement account and pension and profit sharing plans qualified under internal revenue code section 401(a), the assets of which are invested in deposits of the bank or trust company or are invested, pursuant to directions from the customer owning the account, in securities traded on a national securities market: PROVIDED, That the bank or trust company shall accept no investment responsibilities over the account unless it is granted trust powers by the ((~~supervisor~~)) director.

(15) To be a limited partner in a limited partnership that engages in only such activities as are authorized for the bank.

Sec. 59. RCW 30.08.160 and 1955 c 33 s 30.08.160 are each amended to read as follows:

Any trust company receiving moneys for investment, and for which it shall give its bonds as in RCW 30.08.150(12) provided, shall within ten days after any regular report is called for from banks or trust companies by the ((~~supervisor~~)) director, make a statement of its total liability, on all bonds issued and then in force, certified by its board of directors, and shall at the same time deposit with the state treasurer, for the benefit of the holders of such bonds or obligations, sufficient securities or money so that it will have on deposit with said state treasurer a sufficient amount of said securities, which may be exchanged for other securities as necessity may require, or money to, at any time, pay all of said liability. In the event of its failure to make such deposits, it shall cease doing such business: PROVIDED, That whenever money shall have been deposited with the treasurer, it may be withdrawn at any time upon a like amount of securities being deposited in its stead: AND PROVIDED FURTHER, That the securities deposited shall consist of such securities as are by this title permitted for the investment of trust funds.

Sec. 60. RCW 30.08.180 and 1955 c 33 s 30.08.180 are each amended to read as follows:

Every bank and trust company shall make at least three regular reports each year to the ((~~supervisor~~)) director, as of the dates which he or she shall designate, according to form prescribed by him or her, verified by the president, manager or cashier and attested by at least two directors, which shall exhibit under appropriate heads the resources and liabilities of such corporation. The dates designated by the ((~~supervisor~~)) director shall be the dates designated by the comptroller of the currency of the United States for reports of national banking associations. Each such report in condensed form, to be prescribed by the ((~~supervisor~~)) director, shall be published once in a newspaper of general circulation, published in a place where the corporation is located, or if there be no newspaper published in such place, then in some newspaper published in the same county.

Every such corporation shall also make such special reports as the ((~~supervisor~~)) director shall call for.

Sec. 61. RCW 30.08.190 and 1977 c 38 s 1 are each amended to read as follows:

Every regular report shall be filed with the ((~~supervisor~~)) director within thirty days from the date of issuance of the notice therefor and proof of publication of such report shall be filed with the ((~~supervisor~~)) director within forty days from such date. Every special report shall be filed with the ((~~supervisor~~)) director within such time as shall be specified by ((~~him~~)) the director in the notice therefor.

Every bank and trust company which fails to file any report, required to be filed as aforesaid, or to file proof of publication of any report required to be published, within the time herein specified, shall be subject to a penalty of fifty dollars per day for each day's delay. A civil action for the recovery of any such penalty may be brought by the attorney general in the name of the state.

Sec. 62. RCW 30.12.010 and 1987 c 420 s 1 are each amended to read as follows:

Every bank and trust company shall be managed by not less than five directors, who need not be residents of this state. Directors shall be elected by the stockholders and hold office for such term as is specified in the articles of incorporation, not exceeding three years, and until their successors are elected and have qualified. In the first instance the directors shall be those named in the articles of incorporation and afterwards, those elected at the annual meeting of the stockholders to be held at least once each year on a day to be specified by the bank's or trust company's bylaws. Shareholders may not cumulate their votes unless the articles of incorporation specifically so provide. If for any cause no election is held at that time, it may be held at an adjourned meeting or at a subsequent meeting called for that purpose in the manner prescribed by the corporation's bylaws. The directors shall meet at least once each quarter and whenever required by the ((~~supervisor~~)) director. A majority of the then serving board of directors shall constitute a quorum for the transaction of business. At all stockholders' meetings, each share shall be entitled to one vote, unless the articles of incorporation provide otherwise. Any stockholder may vote in person or by written proxy.

Immediately upon election, each director shall take, subscribe, swear to, and file with the ((~~supervisor~~)) director an oath that he or she will, so far as the duty devolves upon him or her, diligently and honestly administer the affairs of such corporation and will not knowingly violate or willingly permit to be violated any provision of law applicable to such corporation. Vacancies in the board of directors shall be filled by the board.

Sec. 63. RCW 30.12.030 and 1986 c 279 s 33 are each amended to read as follows:

(1) Except as otherwise permitted by the ((~~supervisor~~)) director under specified terms and conditions, the board of directors of each bank and trust company shall direct and require good and sufficient surety company fidelity bonds issued by a company authorized to engage in the insurance business in the state of Washington on all active officers and employees, whether or not they draw salary or compensation, which bonds shall provide for indemnity to such bank or trust company, on account of any losses sustained by it as the result of any dishonest, fraudulent or criminal act or omission committed or omitted by them acting independently or in collusion or combination with any person or persons. Such bonds may be individual, schedule or blanket form, and the premiums therefor shall be paid by the bank or trust company.

(2) The said directors shall also direct and require suitable insurance protection to the bank or trust company against burglary, robbery, theft and other similar insurance hazards to which the bank or trust company may be exposed in the operations of its business on the premises or elsewhere.

The said directors shall be responsible for prescribing at least once in each year the amount or penal sum of such bonds or policies and the sureties or underwriters thereon, after giving due consideration to all known elements and factors constituting such risk or hazard. Such action shall be recorded in the minutes of the board of directors.

Sec. 64. RCW 30.12.040 and 1977 ex.s. c 178 s 5 are each amended to read as follows:

The ((~~supervisor~~)) director may serve upon a director, officer, or employee of any bank or trust company a written notice of the ((~~supervisor's~~)) director's intention to remove the person from office or to prohibit the person from participation in the conduct of the affairs of the bank or trust company, or both, whenever:

(1) In the opinion of the ((~~supervisor~~)) director any director, officer, or employee of any bank or trust company has committed or engaged in:

(a) Any violation of law or rule or of a cease and desist order which has become final;

(b) Any unsafe or unsound practice in connection with the bank or trust company; or

(c) Any act, omission, or practice which constitutes a breach of his or her fiduciary duty as director, officer, or employee; and

(2) The ((~~supervisor~~)) director determines that:

(a) The bank or trust company has suffered or may suffer substantial financial loss or other damage; or

(b) The interests of its depositors could be seriously prejudiced by reason of the violation or practice or breach of fiduciary duty; and

(c) The violation or practice or breach of fiduciary duty is one involving personal dishonesty, recklessness, or incompetence on the part of the director, officer, or employee.

Sec. 65. RCW 30.12.042 and 1977 ex.s. c 178 s 6 are each amended to read as follows:

A notice of an intention to remove a director, officer, or employee from office or to prohibit his or her participation in the conduct of the affairs of a bank or trust company shall contain a statement of the facts which constitute grounds therefor and shall fix a time and place at which a hearing will be held. The hearing shall be set not earlier than ten days nor later than thirty days after the date of service of the notice unless an earlier or later date is set by the ((~~supervisor~~)) director at the request of the director, officer, or employee for good cause shown or of the attorney general of the state.

Unless the director, officer, or employee appears at the hearing personally or by a duly authorized representative, the person shall be deemed to have consented to the issuance of an order of removal or prohibition or both. In the event of such consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any of the grounds specified in the notice have been established, the ((~~supervisor~~)) director may issue such orders of removal from office or prohibition from participation in the conduct of the affairs of the bank or trust company as the ((~~supervisor~~)) director may consider appropriate.

Any order shall become effective at the expiration of ten days after service upon the bank and the director, officer, or employee concerned except that an order issued upon consent shall become effective at the time specified in the order.

An order shall remain effective except to the extent it is stayed, modified, terminated, or set aside by the ((~~supervisor~~)) director or a reviewing court.

Sec. 66. RCW 30.12.044 and 1977 ex.s. c 178 s 7 are each amended to read as follows:

If at any time because of the removal of one or more directors under this chapter there shall be on the board of directors of a bank or trust company less than a quorum of directors, all powers and functions vested in or exercisable by the board shall vest in and be exercisable by the director or directors remaining until such time as there is a quorum on the board of directors. If all of the directors of a bank or trust company are removed under this chapter, the ((~~supervisor~~)) director shall appoint persons to serve temporarily as directors until such time as their respective successors take office.

Sec. 67. RCW 30.12.047 and 1977 ex.s. c 178 s 10 are each amended to read as follows:

Any present or former director, officer, or employee of a bank or trust company or any other person against whom there is outstanding an effective final order served upon the person and who participates in any manner in the conduct of the affairs of the bank or trust company involved; or who directly or indirectly solicits or procures, transfers or attempts to transfer, or votes or attempts to vote any proxies, consents, or authorizations with respect to any voting rights in the bank or trust company; or who, without the prior approval of the ((~~supervisor~~)) director, votes for a director or serves or acts as a director, officer, employee, or agent of any bank or trust company shall upon conviction for a violation of any order, be guilty of a gross misdemeanor punishable as prescribed under chapter 9A.20 RCW, as now or hereafter amended.

Sec. 68. RCW 30.12.050 and 1986 c 279 s 34 are each amended to read as follows:

A director, officer, employee or other agent of any bank shall not purchase, or be interested in the purchase, directly or indirectly, of any of its assets without the previous consent of a majority of disinterested directors of the bank: PROVIDED, That if the fair market value of the asset or assets exceed ten thousand dollars, not less than ten days' prior notice of the sale shall be given to the ((~~supervisor~~)) director.

Sec. 69. RCW 30.12.060 and 1985 c 305 s 6 are each amended to read as follows:

(1) Any bank or trust company shall be permitted to make loans to any employee of such corporation, or to purchase, discount or acquire, as security or otherwise, the obligation or debt of any employee to any other person, to the same extent as if the employee were in no way connected with the corporation. Any bank or trust company shall be permitted to make loans to any officer of such corporation, or to purchase, discount or acquire, as security or otherwise, the obligation or debt of any officer to any other person: PROVIDED, That the total value of the loans made and obligation acquired for any one officer shall not exceed such amount as shall be prescribed by the ((~~supervisor of banking~~)) director pursuant to regulations adopted in accordance with the Administrative Procedure Act, chapter 34.05 RCW, as now or hereafter amended: AND PROVIDED FURTHER, That no such loan shall be made, or obligation acquired, in excess of five percent of a bank's capital and unimpaired surplus or twenty-five thousand dollars, whichever is larger, unless a resolution authorizing the same shall be adopted by a vote of a majority of the board of directors of such corporation prior to the making of such loan or discount, and such vote and resolution shall be entered in the corporate minutes. In no event shall the loan or obligation acquired exceed five hundred thousand dollars in the aggregate without prior approval by a majority of the corporation's board of directors. No loan in excess of five percent of a bank's capital and unimpaired surplus or twenty-five thousand dollars, whichever is larger, shall be made by any bank or trust company to any director of such corporation nor shall the note or obligation in excess of five percent of a bank's capital and unimpaired surplus or twenty-five thousand dollars, whichever is larger, of such director be discounted by any such corporation, or by any officer or employee thereof in its behalf, unless a resolution authorizing the same shall be adopted by a vote of a majority of the entire board of directors of such corporation exclusive of the vote of such interested director, and such vote and resolution shall be entered in the corporate minutes. In no event may the loan or obligation acquired exceed five hundred thousand dollars in the aggregate without prior approval by a majority of the corporation's board of directors.

Each bank or trust company shall at such times and in such form as may be required by the ((~~supervisor~~)) director, report to the ((~~supervisor~~)) director all outstanding loans to directors of such bank or trust company.

The amount of any endorsement or agreement of suretyship or guaranty of any such director to the corporation shall be construed to be a loan within the provisions of this section. Any modification of the terms of an existing obligation (excepting only such modifications as merely extend or renew the indebtedness) shall be construed to be a loan within the meaning of this section.

(2) "Unimpaired surplus," as used in this section, consists of the sum of the following amounts:

(a) Fifty percent of the reserve for possible loan losses;

(b) Subordinated notes and debentures;

(d) Undivided profits; and

(e) Reserve for contingencies and other capital reserves, excluding accrued dividends on preferred stock.

Sec. 70. RCW 30.12.070 and 1955 c 33 s 30.12.070 are each amended to read as follows:

The ((~~supervisor~~)) director may at any time, if in his or her judgment excessive, unsafe or improvident loans are being made or are likely to be made by a bank or trust company to any of its directors, or to any corporation, copartnership or association of which such director is a stockholder, member, co-owner, or in which such director is financially interested, or like discounts of the notes or obligations of any such director, corporation, copartnership or association are being made or are likely to be made, require such bank or trust company to submit to him or her for approval all proposed loans to, or discounts of the note or obligation of, any such director, corporation, copartnership or association, and thereafter such proposed loans and discounts shall be reported upon such forms and with such information concerning the desirability and safety of such loans or discounts and of the responsibility and financial condition of the person, corporation, copartnership or association to whom such loan is to be made or whose note or obligation is to be discounted and of the amount and value of any collateral that may be offered as security therefor, as the ((~~supervisor~~)) director may require, and no such loan or discount shall be made without his or her written approval thereon.

Sec. 71. RCW 30.12.100 and 1955 c 33 s 30.12.100 are each amended to read as follows:

Every officer, director or employee or agent of any bank or trust company who, for the purpose of concealing any fact or suppressing any evidence against himself or herself, or against any other person, abstracts, removes, mutilates, destroys or secretes any paper, book or record of any bank or trust company, or of the ((~~supervisor~~)) director, or of anyone connected with his or her office, shall be guilty of a felony.

Sec. 72. RCW 30.12.180 and 1955 c 33 s 30.12.180 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director shall notify the board of directors of a bank or trust company to levy an assessment upon the stock of such corporation and the holders of two-thirds of the stock shall consent thereto, such board shall, within ten days from the issuance of such notice, adopt a resolution for the levy of such assessment, and shall immediately upon the adoption of such resolution serve notice upon each stockholder, personally or by mail, at his or her last known address, to pay such assessment; and that if the same be not paid within twenty days from the date of the issuance of such notice, his or her stock will be subject to sale and all amounts previously paid thereon shall be subject to forfeiture. If any stockholder fail within said twenty days to pay the assessment as provided in this section, it shall be the duty of the board of directors to cause a sufficient amount of the capital stock of such stockholder to be sold to make good the deficiency. The sale shall be held at such time and place as shall be designated by the board of directors and shall be either public or private, as the board shall deem best. At any time after the expiration of sixty days from the expiration of said twenty-day period the ((~~supervisor~~)) director may require any stock upon which the assessment remains unpaid to be canceled and deducted from the capital of the corporation. If such cancellation shall reduce the capital of the corporation below the minimum required by this title or its articles of incorporation the capital shall, within thirty days thereafter be increased to the required amount by original subscription, in default of which the ((~~supervisor~~)) director may take possession of such corporation in the manner provided by law in case of insolvency.

Sec. 73. RCW 30.12.240 and 1989 c 180 s 7 are each amended to read as follows:

If the directors of any bank shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the bank to violate any of the provisions of this title or any lawful regulation or directive of the ((~~supervisor of banking~~)) director, and if the directors are aware that such facts and circumstances constitute such violations, then each director who participated in or assented to the violation is personally and individually liable for all damages which the state or any insurer of the deposits sustains due to the violation.

Sec. 74. RCW 30.20.005 and 1981 c 192 s 23 are each amended to read as follows:

Deposits made by individuals in a national bank, state bank, trust company, or other banking institution subject to the supervision of the ((~~supervisor of banking~~)) director are governed by chapter 30.22 RCW.

Sec. 75. RCW 30.20.090 and 1981 c 192 s 25 are each amended to read as follows:

Notice to any national bank, state bank, trust company, mutual savings bank or bank under the supervision of the ((~~supervisor of banking~~)) director, doing business in this state of an adverse claim to a deposit standing on its books to the credit of any person may be disregarded without liability by said bank or trust company unless said adverse claimant shall also either procure a restraining order, injunction or other appropriate process against said bank or trust company from a court of competent jurisdiction in a cause therein instituted by him or her wherein the person to whose credit the deposit stands is made a party and served with summons or shall execute to said bank or trust company, in form and with sureties acceptable to it, a bond, in an amount which is double either the amount of said deposit or said adverse claim, whichever is the lesser, indemnifying said bank or trust company from any and all liability, loss, damage, costs and expenses, for and on account of the payment of such adverse claim or the dishonor of the check or other order of the person to whose credit the deposit stands on the books of said bank or trust company: PROVIDED, That where the person to whose credit the deposit stands is a fiduciary for such adverse claimant, and the facts constituting such relationship, and also the facts showing reasonable cause of belief on the part of said claimant that the said fiduciary is about to misappropriate said deposit, are made to appear by the affidavit of such claimant, the bank or trust company shall without liability refuse to deliver such property for a period of not more than five business days from the date that the bank received the adverse claimant's affidavit, without liability for the sufficiency or truth of the facts alleged in the affidavit, after which time the claim shall be treated as any other claim under this section.

This section shall not apply to accounts subject to chapter 30.22 RCW.

Sec. 76. RCW 30.36.020 and 1979 c 106 s 5 are each amended to read as follows:

With the approval of the ((~~supervisor~~)) director, any bank, trust company or mutual savings bank may at any time, through action of its board of directors or trustees, issue and sell its capital notes or debentures. Such capital notes or debentures shall be subordinate to the claims of depositors and other creditors. The holders of capital notes or debentures issued by a bank or trust company shall have such conversion rights as may be provided in the articles of incorporation with the approval of the ((~~supervisor~~)) director.

Sec. 77. RCW 30.36.030 and 1955 c 33 s 30.36.030 are each amended to read as follows:

Where any bank, trust company or mutual savings bank has issued and has outstanding capital notes or debentures, it may carry its capital stock on its books at a sum less than par, and it shall not be considered impaired so long as the amount of such capital notes or debentures equals or exceeds the impairment as found by the ((~~supervisor~~)) director.

Sec. 78. RCW 30.36.040 and 1955 c 33 s 30.36.040 are each amended to read as follows:

Before such capital notes or debentures are retired or paid by the bank, trust company or mutual savings bank, any existing impairment of its capital stock must be overcome or corrected to the satisfaction of the ((~~supervisor~~)) director.

Sec. 79. RCW 30.40.020 and 1986 c 279 s 39 are each amended to read as follows:

A bank or trust company may, with the approval of the ((~~supervisor~~)) director, establish and operate branches anywhere within the state. A bank having a paid-in capital of not less than one million dollars may, with the approval of the ((~~supervisor~~)) director, establish and operate branches in any foreign country. The ((~~supervisor's~~)) director's approval of a branch within this state shall be conditioned on a finding that the resources in the neighborhood of the proposed location and in the surrounding country offer a reasonable promise of adequate support for the proposed branch and that the proposed branch is not being formed for other than the legitimate objects covered by this title. The ((~~supervisor's~~)) director's approval of a branch in a foreign country shall be conditioned on a finding that the proposed location offers a reasonable promise of adequate support for the proposed branch, ((~~[and]~~)) and that the proposed branch is not being formed for other than the legitimate objects covered by this title.

Sec. 80. RCW 30.42.020 and 1983 c 3 s 48 are each amended to read as follows:

For the purposes of this chapter, the following terms shall be defined as follows:

(1) "Alien bank" means a bank organized under the laws of a foreign country and having its principal place of business in that country, the majority of the beneficial ownership and control of which is vested in citizens of countries other than the United States of America.

(2) "Office" means a branch or agency of an alien bank carrying on business in this state pursuant to this chapter.

(3) "Branch" means an office of an alien bank that is exercising the powers authorized by RCW 30.42.105, 30.42.115, and 30.42.155.

(4) "Agency" means an office of an alien bank that is exercising the powers authorized by RCW 30.42.180.

(5) "Bureau" means an alien bank's operation in this state exercising the powers authorized by RCW 30.42.230.

((~~(6) "Supervisor" means the supervisor of banking of the state of Washington.~~))

Sec. 81. RCW 30.42.030 and 1973 1st ex.s. c 53 s 3 are each amended to read as follows:

An alien bank shall not establish and operate an office or bureau in this state unless it is authorized to do so by the ((~~supervisor~~)) director and unless it first complies with all of the provisions of this chapter and then only to the extent expressly permitted by this chapter.

Sec. 82. RCW 30.42.060 and 1973 1st ex.s. c 53 s 6 are each amended to read as follows:

An alien bank shall not hereafter open an office in this state until it has met the following conditions:

(1) It has filed with the ((~~supervisor~~)) director an application in such form and containing such information as shall be prescribed by the ((~~supervisor~~)) director.

(2) It has designated the ((~~supervisor~~)) director by a duly executed instrument in writing, its agent, upon whom process in any action or proceeding arising out of a transaction with the Washington office may be served. Such service shall have the same force and effect as if the alien bank were a Washington corporation and had been lawfully served with process within the state. The ((~~supervisor~~)) director shall forward by mail, postage prepaid, a copy of every process served upon him or her under the provisions of this subdivision, addressed to the manager or agent of such bank at its office in this state.

(3) It has allocated and assigned to its office within this state paid-in capital of not less than two hundred thousand dollars or such larger amounts as the ((~~supervisor~~)) director in his or her discretion may require.

(4) It has filed with the ((~~supervisor~~)) director a letter from its chief executive officer guaranteeing that the alien bank's entire capital and surplus is and shall be available for all liabilities and obligations of its office doing business in this state.

(5) It has paid the fees required by law and established by the ((~~supervisor~~)) director pursuant to RCW 30.08.095.

(6) It has received from the ((~~supervisor~~)) director his or her certificate authorizing the transaction of business in conformity with this chapter.

Sec. 83. RCW 30.42.070 and 1982 c 95 s 1 are each amended to read as follows:

The capital allocated as required in RCW 30.42.060(3) shall be maintained within this state at all times in cash or in ((~~supervisor~~)) director approved interest bearing bonds, notes, debentures, or other obligations: (1) Of the United States or of any agency or instrumentality thereof, or guaranteed by the United States; or (2) of this state, or of a city, county, town, or other municipal corporation, or instrumentality of this state or guaranteed by this state, or such other assets as the ((~~supervisor~~)) director may approve. Such capital shall be deposited with a bank qualified to do business in and having its principal place of business within this state, or in a national bank qualified to engage in banking in this state. Such bank shall issue a written receipt addressed and delivered to the ((~~supervisor~~)) director reciting that such deposit is being held for the sole benefit of the United States domiciled creditors of such alien bank's Washington office and that the same is subject to his or her order without offset for the payment of such creditors. For the purposes of this section, the term "creditor" shall not include any other offices, branches, subsidiaries, or affiliates of such alien bank. Subject to the approval of the ((~~supervisor~~)) director, reasonable arrangements may be made for substitution of securities. So long as it shall continue business in this state in conformance with this chapter and shall remain solvent, such alien bank shall be permitted to collect all interest and/or income from the assets constituting such allocated capital.

Should any securities so depreciate in market value and/or quality as to reduce the deposit below the amount required, additional money or securities shall be deposited promptly in amounts sufficient to meet such requirements. The ((~~supervisor~~)) director may make an investigation of the market value and of the quality of any security deposited at the time such security is presented for deposit or at any time thereafter. The ((~~supervisor~~)) director may make such charge as may be reasonable and proper for such investigation.

Sec. 84. RCW 30.42.080 and 1973 1st ex.s. c 53 s 8 are each amended to read as follows:

Every alien bank maintaining an office in this state shall keep the assets of its Washington office entirely separate and apart from the assets of its other operations as though the Washington office was conducted as a separate and distinct entity. Every such alien bank shall keep separate books of account and records for its Washington office and shall observe with respect to such office the applicable requirements of this chapter and the applicable rules and regulations of the ((~~supervisor~~)) director. The United States domiciled creditors of such alien bank's Washington office shall be entitled to priority with respect to the assets of its Washington office before such assets may be used or applied for the benefit of its other creditors or transferred to its general business.

Sec. 85. RCW 30.42.090 and 1973 1st ex.s. c 53 s 9 are each amended to read as follows:

The ((~~supervisor~~)) director may give or withhold his or her approval of an application by an alien bank to establish an office in this state at his or her discretion. ((~~His~~)) The director's decision shall be based on the information submitted to his or her office in the application required by RCW 30.42.060 and such additional investigation as the ((~~supervisor~~)) director deems necessary or appropriate. Prior to granting approval to said application, ((he)) the director shall have ascertained to his or her satisfaction that all of the following are true:

(1) The proposed location offers a reasonable promise of adequate support for the proposed office;

(2) The proposed office is not being formed for other than legitimate objects;

(3) The proposed officers of the proposed office have sufficient banking experience and ability to afford reasonable promise of successful operation;

(4) The reputation and financial standing of the alien bank is such as to command the confidence and warrant belief that the business of the proposed office will be conducted honestly and efficiently in accordance with the intent and purpose of this chapter, as set forth in RCW 30.42.010;

(5) The principal purpose of establishing such office shall be within the intent of this chapter.

The ((~~supervisor~~)) director shall not grant an application for an office of an alien bank unless the law of the foreign country under which laws the alien bank is organized permits a bank with its principal place of business in this state to establish in that foreign country a branch, agency or similar operation.

Sec. 86. RCW 30.42.100 and 1985 c 305 s 7 are each amended to read as follows:

If the ((~~supervisor~~)) director approves the application, he or she shall notify the alien bank of his or her approval and shall file certified copies of its charter, certificate or other authorization to do business with the secretary of state. Upon such filing, the ((~~supervisor~~)) director shall issue a certificate of authority stating that the alien bank is authorized to conduct business through a branch or agency in this state at the place designated in accordance with this chapter. Each such certificate shall be conspicuously displayed at all times in the place of business specified therein.

The office of the alien bank must commence business within six months after the issuance of the ((~~supervisor's~~)) director's certificate: PROVIDED, That the ((~~supervisor~~)) director for good cause shown may extend such period for an additional time not to exceed three months.

Sec. 87. RCW 30.42.105 and 1982 c 95 s 4 are each amended to read as follows:

An approved branch of an alien bank shall have the same power to make loans and guarantee obligations as a state bank chartered pursuant to Title 30 RCW: PROVIDED, HOWEVER, That the base for computing the applicable loan limitation shall be the entire capital and surplus of the alien bank. The ((~~supervisor~~)) director may adopt rules ((~~and regulations~~)) limiting the amount of loans to full-time employees of the branch.

Sec. 88. RCW 30.42.115 and 1985 c 305 s 8 are each amended to read as follows:

(1) Any branch of an alien bank that received approval of its branch application pursuant to RCW 30.42.090, or that had filed its branch application pursuant to RCW 30.42.060, on or before July 27, 1978, and any approved branch of an alien bank that has designated Washington as its home state pursuant to section 5 of the International Banking Act of 1978, shall have the same power to solicit and accept deposits as a state bank chartered pursuant to Title 30 RCW, except that acceptance of initial deposits of less than one hundred thousand dollars shall be limited to deposits of the following:

(a) Any business entity, including any corporation, partnership, association, or trust, that engages in commercial activity for profit: PROVIDED, That there shall be excluded from this category any such business entity that is organized under the laws of any state or the United States, is majority-owned by United States citizens or residents, and has total assets, including assets of majority owned subsidiaries, of less than one million five hundred thousand dollars as of the date of the initial deposit;

(b) Any governmental unit, including the United States government, any state government, any foreign government and any political subdivision or agency of the foregoing;

(d) Any draft, check, or similar instrument for the transmission of funds issued by the branch;

(e) Any depositor who is not a citizen of the United States and who is not a resident of the United States at the time of the initial deposit;

(f) Any depositor who established a deposit account on or before July 1, 1982, and who has continuously maintained the deposit account since that date: PROVIDED, That this subparagraph (f) of this subsection shall be effective only until July 1, 1985;

(g) Any other person: PROVIDED, That the amount of deposits under this subparagraph (g) of this subsection may not exceed four percent of the average of the branch's deposits for the last thirty days of the most recent calendar quarter, excluding deposits in the branch of other offices, branches, agencies, or wholly owned subsidiaries of the alien bank.

(2) As used in subsection (1) of this section, "initial deposit" means the first deposit transaction between a depositor and the branch. Different deposit accounts that are held by a depositor in the same right and capacity may be added together for purposes of determining the dollar amount of that depositor's initial deposit.

(3) Approved branches of alien banks, other than those described in subsection (1) of this section, may solicit and accept deposits only from foreign governments and their agencies and instrumentalities, persons, or entities conducting business principally at their offices or establishments abroad, and such other deposits that:

(a) Are to be transmitted abroad;

(b) Consist of collateral or funds to be used for payment of obligations to the branch;

(c) Consist of the proceeds of collections abroad that are to be used to pay for exported or imported goods or for other costs of exporting or importing or that are to be periodically transferred to the depositor's account at another financial institution;

(d) Consist of the proceeds of extensions of credit by the branch; or

(e) Represent compensation to the branch for extensions of credit or services to the customer.

(4) A branch may accept deposits, subject to the limitations set forth in subsections (1) and (3) of this section, only upon the same terms and conditions (including nature and extent of such deposits, withdrawal, and the payment of interest thereon) that banks organized under the laws of this state which are members of the Federal Reserve System may accept such deposits. Any branch that is not subject to reserve requirements under regulations of the Federal Reserve Board shall maintain deposit reserves in this state, pursuant to rules adopted by the ((~~supervisor~~)) director, to the same extent they must be maintained by banks organized under the laws of this state which are members of the Federal Reserve System.

Sec. 89. RCW 30.42.120 and 1982 c 95 s 2 are each amended to read as follows:

A branch shall not commence to transact in this state the business of accepting deposits or transact such business thereafter unless it has met the following requirements:

(1) It has obtained federal deposit insurance corporation insurance covering its eligible deposit liabilities within this state, or in lieu thereof, made arrangements satisfactory to the ((~~supervisor~~)) director for maintenance within this state of additional capital equal to not less than five percent of its deposit liabilities, computed on the basis of the average daily net deposit balances covering semimonthly periods as prescribed by the ((~~supervisor pursuant to RCW 30.04.090~~)) director. Such additional capital shall be deposited in the manner provided in RCW 30.42.070.

(2) It holds in this state currency, bonds, notes, debentures, drafts, bills of exchange, or other evidences of indebtedness or other obligations payable in the United States or in United States funds or, with the approval of the ((~~supervisor~~)) director, in funds freely convertible into United States funds or such other assets as are approved by the ((~~supervisor~~)) director, in an amount not less than one hundred percent of the aggregate amount of liabilities of such alien bank payable at or through its office in this state. When calculating the value of the assets so held, credit shall be given for the amounts deposited pursuant to RCW 30.42.060(3) and 30.42.120(1), but there shall be excluded all amounts due from the head office and any other branch, agency, or other office or wholly-owned subsidiary of the bank, except those amounts due from such offices or subsidiaries located within the United States and payable in United States dollars.

(3) If deposits are not insured by the federal deposit insurance corporation, then that fact shall be disclosed to all depositors pursuant to rules ((~~and regulations~~)) of the ((~~supervisor~~)) director.

(4) If the branch conducts an international banking facility, the deposits of which are exempt from reserve requirements of the federal reserve banking system, the liabilities of that facility shall be excluded from the deposit and other liabilities of the branch for the purposes of subsection (1) of this section.

Sec. 90. RCW 30.42.130 and 1973 1st ex.s. c 53 s 13 are each amended to read as follows:

The ((~~supervisor~~)) director may take possession of the office of an alien bank for the reasons stated and in the manner provided in chapter 30.44 RCW. Upon the ((~~supervisor~~)) director taking such possession of a branch, no deposit liabilities of which are insured by the federal deposit insurance corporation, the amounts deposited pursuant to RCW 30.42.120(1) shall thereupon become the property of the ((~~supervisor~~)) director, free and clear of any and all liens and other claims, and shall be held by ((~~him~~)) the director in trust for the United States domiciled depositors of the office in this state of such alien bank. Upon obtaining the approval of the superior court of Thurston county, the ((~~supervisor~~)) director shall reduce such deposited capital to cash and as soon as practicable distribute it to such depositors.

If sufficient cash is available, such distribution shall be in equal amounts to each such depositor: PROVIDED, That no such depositor receives more than the amount of his or her deposit or an amount equal to the maximum amount insured by the federal deposit insurance corporation, whichever is less. If sufficient cash is not available, such distribution shall be on a pro rata basis to each such depositor: PROVIDED, That no such depositor receives more than the maximum amount insured by the federal deposit insurance corporation. If any cash remains after such distribution, it shall be distributed pro rata to those depositors whose deposits have not been paid in full: PROVIDED, That no depositor receives more than the amount of his deposit. For purposes of this section, the term "depositor" shall not include any other offices, subsidiaries or affiliates of such alien bank.

The term "deposit" as used in this section shall mean the unpaid balance of money or its equivalent received or held by the branch in the usual course of its business and for which it has given or is obligated to give credit, either conditionally or unconditionally to a demand, time or savings account, or which is evidenced by its certificate of deposit, or a check or draft drawn against a deposit account and certified by the branch, or a letter of credit or traveler's checks on which the branch is primarily liable.

Claims of depositors and creditors shall be made and disposed of in the manner provided in chapter 30.44 RCW in the event of insolvency or inability of the bank to pay its creditors in this state. The capital deposit of the bank shall be available for claims of depositors and creditors. The claims of depositors and creditors shall be paid from the capital deposit in the following order or priority:

(1) Claims of depositors not paid from the amounts deposited pursuant to RCW 30.42.120(1);

(2) Claims of Washington domiciled creditors;

(3) Other creditors domiciled in the United States; and

(4) Creditors domiciled in foreign countries.

The ((~~supervisor~~)) director shall proceed in accordance with and have all the powers granted by chapter 30.44 RCW.

Sec. 91. RCW 30.42.140 and 1982 c 95 s 3 are each amended to read as follows:

The ((~~supervisor, deputy supervisor, or a bank examiner~~)) director, without previous notice, shall visit the office of an alien bank doing business in this state pursuant to this chapter at least once in each year, and more often if necessary, for the purpose of making a full investigation into the condition of such office, and for that purpose they are hereby empowered to administer oaths and to examine under oath any director or member of its governing body, officer, employee, or agent of such alien bank or office. The ((~~supervisor~~)) director shall make such other full or partial examination as he or she deems necessary. The ((~~supervisor~~)) director shall collect, from each alien bank for each examination of the conditions of its office in this state, the estimated actual cost of such examination.

Sec. 92. RCW 30.42.160 and 1975 1st ex.s. c 285 s 3 are each amended to read as follows:

An alien bank may purchase, hold and convey real estate for the following purposes and no other:

(1) Such as shall be necessary for the convenient transaction of its business, including with its banking offices other apartments in the same building to rent as a source of income: PROVIDED, That not to exceed thirty percent of its capital and surplus and undivided profits may be so invested without the approval of the ((~~supervisor~~)) director.

(2) Such as shall be purchased or conveyed to it in satisfaction, or on account of, debts previously contracted in the course of business.

(3) Such as it shall purchase at sale under judgments, decrees, liens or mortgage foreclosures, against securities held by it.

(4) Such as it may take title to or for the purpose of investing in real estate conditional sales contracts.

(5) Such as shall be convenient for the residences of its employees.

No real estate except that specified in subsections (1) and (5) of this section may be carried as an asset on the corporation's books for a longer period than five years from the date title is acquired thereto, unless an extension of time be granted by the ((~~supervisor~~)) director.

Sec. 93. RCW 30.42.210 and 1973 1st ex.s. c 53 s 21 are each amended to read as follows:

(1) Application procedure. An alien bank shall not establish and operate a bureau in this state unless it is authorized to do so and unless it has met the following conditions:

(a) It has filed with the ((~~supervisor~~)) director an application in such form and containing such information as shall be prescribed by the ((~~supervisor~~)) director;

(b) It has paid the fee required by law and established by the ((~~supervisor~~)) director pursuant to RCW 30.08.095;

(c) It has received from the ((~~supervisor his~~)) director a certificate authorizing the applicant bank to establish and operate a bureau in conformity herewith.

(2) Upon receipt of the bank's application, and the conducting of such examination or investigation as the ((~~supervisor~~)) director deems necessary and appropriate and being satisfied that the opening of such bureau will be consistent with the purposes of this chapter, the ((~~supervisor~~)) director may grant approval for the bureau and issue ((~~his~~)) a certificate authorizing the alien bank to establish and operate a bureau in the state of Washington.

Sec. 94. RCW 30.42.220 and 1973 1st ex.s. c 53 s 22 are each amended to read as follows:

If the ((~~supervisor~~)) director approves the application, he or she shall notify the alien bank of his or her approval and shall file certified copies of its charter, certificate, or other authorization to do business with the secretary of state and with the recording officer of the county in which the bureau is to be located. Upon such filing, the ((~~supervisor~~)) director shall issue a certificate of authority stating that the alien bank is authorized to operate a bureau in this state at the place designated in accordance with this chapter. No such certificate shall be transferable or assignable. Such certificate shall be conspicuously displayed at all times in the place of business specified therein.

A bureau of an alien bank must commence business within six months after the issuance of the ((~~supervisor's~~)) director's certificate: PROVIDED, That the ((~~supervisor~~)) director for good cause shown may extend such period for an additional time not to exceed three months.

Sec. 95. RCW 30.42.230 and 1973 1st ex.s. c 53 s 23 are each amended to read as follows:

An alien bank may have as many bureaus in this state as the ((~~supervisor~~)) director will authorize. A bureau in this state may provide information about services offered by the alien bank, its subsidiaries and affiliates and may gather and provide business and economic information. A bureau may not take deposits, make loans or transact other commercial or banking business in this state.

Sec. 96. RCW 30.42.240 and 1973 1st ex.s. c 53 s 24 are each amended to read as follows:

The ((~~supervisor~~)) director is empowered to examine the bureau operations of an alien bank whenever he or she deems it necessary. The ((~~supervisor~~)) director shall collect from such alien bank the estimated actual cost of such examination.

Sec. 97. RCW 30.42.250 and 1973 1st ex.s. c 53 s 25 are each amended to read as follows:

An alien bank may operate temporary facilities at trade fairs or other commercial events of short duration without first obtaining the approval of the ((~~supervisor~~)) director: PROVIDED, That the activities of such temporary facility are limited solely to the dissemination of information: AND PROVIDED FURTHER, If an alien bank engages in such activity, it shall notify the ((~~supervisor~~)) director in writing prior to opening of the nature and location of such facility. The ((~~supervisor~~)) director is empowered to investigate the operation of such temporary facility if he or she deems it necessary, and to collect from the alien bank the estimated actual cost thereof.

Sec. 98. RCW 30.42.260 and 1973 1st ex.s. c 53 s 26 are each amended to read as follows:

(1) An office of an alien bank shall file the following reports with the ((~~supervisor~~)) director within such times and in such form as the ((~~supervisor~~)) director shall prescribe by rule ((~~or regulation~~)):

(a) A statement of condition of the office;

(b) A capital position report of the office;

(2) An office of an alien bank shall publish such reports as the ((~~supervisor by regulation~~)) director by rule may prescribe.

(3) An alien bank operating a bureau in this state shall file a copy of the alien bank's annual financial report with the ((~~supervisor~~)) director as soon as possible following the end of each fiscal year and shall file such other material as the ((~~supervisor~~)) director may prescribe by rule ((~~or regulation~~)).

Sec. 99. RCW 30.42.290 and 1973 1st ex.s. c 53 s 29 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall have the responsibility for assuring compliance with the provisions of this chapter. An alien bank that conducts business in this state in violation of any provisions of this chapter shall be guilty of a misdemeanor and in addition thereto shall be liable in the sum of one hundred dollars per day that each such offense continues, such sum to be recovered by the attorney general in a civil action in the name of the state.

(2) Every person who shall knowingly subscribe to or make or cause to be made any false entry in the books of any alien bank office or bureau doing business in this state pursuant to this chapter or shall knowingly subscribe to or exhibit any false or fictitious paper or security, instrument or paper, with the intent to deceive any person authorized to examine into the affairs of any such office or bureau or shall make, state or publish any false statement of the amount of the assets or liabilities of any such office or bureau shall be guilty of a felony.

(3) Every director or member of the governing body, officer, employee or agent of such alien bank operating an office or bureau in this state who conceals or destroys any fact or otherwise suppresses any evidence relating to a violation of this chapter is guilty of a felony.

(4) Any person who transacts business in this state on behalf of an alien bank which is subject to the provisions of this chapter, but which is not authorized to transact such business pursuant to this chapter is guilty of a misdemeanor and in addition thereto shall be liable in the sum of one hundred dollars per day for each day that such offense continues, such sum to be recovered by the attorney general in a civil action in the name of the state.

Sec. 100. RCW 30.42.300 and 1973 1st ex.s. c 53 s 30 are each amended to read as follows:

If the ((~~supervisor~~)) director finds that any alien bank to which he or she has issued a certificate to operate an office or bureau in this state pursuant to this chapter has violated any law((,)) or rule ((~~or regulation~~)), or has conducted its affairs in an unauthorized manner, or has been unresponsive to the ((~~supervisor's~~)) director's lawful orders or directions, or is in an unsound or unsafe condition, or cannot with safety and expediency continue business, or if he or she finds that the alien bank's country is unjustifiably refusing to allow banks qualified to do business in and having their principal office within this state to operate offices or similar operations in such country, the ((~~supervisor~~)) director may suspend or revoke the certificate of such alien bank and notify it of such suspension or revocation.

Sec. 101. RCW 30.42.310 and 1973 1st ex.s. c 53 s 31 are each amended to read as follows:

An alien bank licensed to maintain an office or bureau in this state pursuant to this chapter may apply to the ((~~supervisor~~)) director for leave to change the location of its office or bureau. Such applications shall be accompanied by an investigation fee as established in accordance with RCW 30.42.330. Leave for a change of location shall be granted if the ((~~supervisor~~)) director finds that the proposed new location offers reasonable promise of adequate support for the office.

Sec. 102. RCW 30.42.320 and 1973 1st ex.s. c 53 s 32 are each amended to read as follows:

The ((~~supervisor~~)) director shall have power to adopt uniform rules ((~~and regulations~~)) to govern examination and reports of alien bank offices and bureaus doing business in this state pursuant to this chapter and the form in which they shall report their assets, liabilities, and reserves, charge off bad debts and otherwise keep their records and accounts and otherwise to govern the administration of this chapter.

Sec. 103. RCW 30.42.330 and 1973 1st ex.s. c 53 s 33 are each amended to read as follows:

The ((~~supervisor~~)) director shall collect in advance from an alien bank for filing its application for an office or a bureau and the attendant investigation, and for such other applications, approvals or certificates provided herein, such fee as shall be established by ((~~rules and regulations promulgated~~)) rule adopted pursuant to the administrative procedure act, chapter 34.05 RCW, as now or hereafter amended. The alien bank shall also pay to the secretary of state and the county recording officer for filing instruments as required by this chapter the same fees as are charged general corporations for the filing of similar instruments and also the same license fees as are required of foreign corporations doing business in this state.

Sec. 104. RCW 30.43.010 and 1986 c 279 s 45 are each amended to read as follows:

As used in this chapter the term "financial institution" means any bank or trust company established in this state pursuant to Title 12, United States Code, chapter 2, or Title 30 RCW, any mutual savings bank established in this state pursuant to Title 32 RCW, any savings and loan association established in this state pursuant to Title 12, United States Code, chapter 12, or Title 33 RCW, and any credit union established in this state pursuant to Title 12, United States Code, chapter 14 or chapters 31.12 and 31.13 RCW.

((As used in this chapter, the term "supervisor" means, if applicable to banks, trust companies, or mutual savings banks, the supervisor of banking and, if applicable to savings and loan associations and credit unions, the supervisor of savings and loan associations, or the National Credit Union Administration in the case of federally chartered credit unions.))

As used in this chapter, the term "satellite facility" means an unmanned facility at which transactions, including, but not being limited to account transfers, payments, and instructions for deposits and withdrawals may be conducted and which is not a part of a branch or main office of the financial institution: PROVIDED, That such a facility shall not be construed to be the establishment of a branch: PROVIDED FURTHER, That an unmanned facility which is connected to a dispenser of goods or services and that originates or communicates funds transfer instructions for the payment of such goods or services shall not be a "satellite facility."

Sec. 105. RCW 30.43.020 and 1981 c 83 s 1 are each amended to read as follows:

A financial institution may, subject to the conditions hereof, and with the approval of the appropriate ((~~supervisor~~)) director, provide satellite facilities in addition to its main office and such branches as are authorized by law. The ((~~supervisor's~~)) director's approval shall be conditioned on a finding that the public convenience will be served by the proposed satellite facility. A satellite facility may be located anywhere within the state of Washington and, subject to RCW 30.43.045, may be located anywhere outside the state of Washington.

Sec. 106. RCW 30.43.045 and 1981 c 83 s 2 are each amended to read as follows:

Subject to the approval of the ((~~appropriate supervisor~~)) director, a financial institution may operate or use satellite facilities located outside the state of Washington, and, subject to the approval of the ((~~appropriate supervisor~~)) director, satellite facilities located within the state of Washington may be made available to banks, trust companies, mutual savings banks, savings and loan associations, and credit unions which do not have offices in this state.

The ((~~supervisor's~~)) director's approval shall be conditioned on a finding that the public convenience will be served by the proposed use or operation of the satellite facility. The ((~~supervisor~~)) director shall not grant approval for the use or operation of satellite facilities by banks, trust companies, mutual savings banks, savings and loan associations, and credit unions which do not have offices in this state unless like facilities located in the jurisdiction in which these institutions are organized are made available on a reciprocal basis for the benefit of financial institutions which have offices in this state.

The ((~~supervisor's~~)) director's approval of the use or operation of satellite facilities located within the state of Washington by banks, trust companies, mutual savings banks, savings and loan associations, and credit unions which do not have offices in this state is not approval or authority to conduct or transact any other business in this state by these banks, trust companies, mutual savings banks, savings and loan associations, and credit unions which is not otherwise permitted by the laws of this state.

Sec. 107. RCW 30.44.010 and 1955 c 33 s 30.44.010 are each amended to read as follows:

Whenever it shall in any manner appear to the ((~~supervisor~~)) director that any bank or trust company has violated any provision of law or is conducting its business in an unsafe manner or that it refuses to submit its books, papers, or concerns to lawful inspection or that any director or officer thereof refuses to submit to examination on oath touching its concerns, or that it has failed to carry out any authorized order or direction of an examiner, the ((~~supervisor~~)) director may give notice to the bank or trust company so offending or delinquent or whose director or officer is thus offending or delinquent to correct such offense or delinquency and if such bank or trust company fails to comply with the terms of such notice within thirty days from the date of its issuance or within such further time as ((~~said supervisor~~)) the director may allow, then the ((~~supervisor~~)) director may take possession of such bank or trust company as in case of insolvency.

Sec. 108. RCW 30.44.020 and 1955 c 33 s 30.44.020 are each amended to read as follows:

Whenever it shall in any manner appear to the ((~~supervisor of banking~~)) director that any offense or delinquency referred to in RCW 30.44.010 renders a bank or trust company in an unsound or unsafe condition to continue its business or that its capital or surplus is reduced or impaired below the amount required by its articles of incorporation or by this title, or that it has suspended payment of its obligations or is insolvent, ((~~said supervisor~~)) the director may notify such bank or trust company to levy an assessment on its stock or otherwise to make good such impairment or offense or other delinquency within such time and in such manner as he or she may specify or if he or she deems necessary he or she may take possession thereof without notice.

The board of directors of any such bank or trust company, with the consent of the holders of record of two-thirds of the capital stock expressed either in writing or by vote at a stockholders' meeting called for that purpose, shall have power and authority to levy such assessment upon the stockholders pro rata and to forfeit the stock upon which any such assessment is not paid, in the manner prescribed in RCW 30.12.180.

Sec. 109. RCW 30.44.030 and 1955 c 33 s 30.44.030 are each amended to read as follows:

Within ten days after the ((~~supervisor~~)) director takes possession thereof, a bank or trust company may serve a notice upon the ((~~supervisor~~)) director to appear before the superior court of the county wherein such corporation is located and at a time to be fixed by said court, which shall not be less than five nor more than fifteen days from the date of the service of such notice, to show cause why such corporation should not be restored to the possession of its assets. Upon the return day of such notice, or such further day as the matter may be continued to, the court shall summarily hear said cause and shall dismiss the same, if it be found that possession was taken by the ((~~supervisor~~)) director in good faith and for cause, but if it find that no cause existed for the taking possession of such corporation, it shall require the ((~~supervisor~~)) director to restore such bank or trust company to possession of its assets and enjoin him or her from further interference therewith without cause.

Sec. 110. RCW 30.44.040 and 1955 c 33 s 30.44.040 are each amended to read as follows:

Upon taking possession of any bank or trust company, the ((~~supervisor~~)) director shall forthwith give written notice thereof to all persons having possession of any assets of such corporation. No person knowing of the taking of such possession by the ((~~supervisor~~)) director shall have a lien or charge for any payment thereafter advanced or clearance thereafter made or liability thereafter incurred against any of the assets of such corporation.

Sec. 111. RCW 30.44.050 and 1955 c 33 s 30.44.050 are each amended to read as follows:

Upon taking possession of any bank or trust company, the ((~~supervisor~~)) director shall proceed to collect the assets thereof and to preserve, administer and liquidate the business and assets of such corporation. With the approval of the superior court of the county in which such corporation is located, he or she may sell, compound or compromise bad or doubtful debts, and upon such terms as the court shall direct borrow, mortgage, pledge or sell all or any part of the real estate and personal property of such corporation. He or she shall deliver to each purchaser or lender an appropriate deed, mortgage, agreement of pledge or other instrument of title or security. If real estate is situated outside of said county, a certified copy of the orders authorizing and confirming the sale or mortgage thereof shall be filed for record in the office of the auditor of the county in which such property is situated. He or she may appoint special ((~~deputy supervisors~~)) assistants and other necessary agents to assist in the administration and liquidation of such corporation, a certificate of such appointment to be filed with the clerk of the county in which such corporation is located. He or she shall require each special ((~~deputy~~)) assistant to give a surety company bond, conditioned as he or she shall provide, the premium of which shall be paid out of the assets of such corporation. He or she may also employ an attorney for legal assistance in such administration and liquidation.

Sec. 112. RCW 30.44.060 and 1955 c 33 s 30.44.060 are each amended to read as follows:

The ((~~supervisor~~)) director shall publish once a week for four consecutive weeks in a newspaper which he or she shall select, a notice requiring all persons having claims against such corporation to make proof thereof at the place therein specified not later than ninety days from the date of the first publication of said notice, which date shall be therein stated. He or she shall mail similar notices to all persons whose names appear as creditors upon the books of the corporation. He or she may approve or reject any claims, but shall serve notice of rejection upon the claimant by mail or personally. An affidavit of service of such notice shall be prima facie evidence thereof. No action shall be brought on any claim after three months from the date of service of notice of rejection.

Claims of depositors may be presented after the expiration of the time fixed in the notice, and, if approved, shall be entitled to their proportion of prior dividends, if there be funds sufficient therefor, and shall share in the distribution of the remaining assets.

After the expiration of the time fixed in the notice the ((~~supervisor~~)) director shall have no power to accept any claim except the claim of a depositor, and all claims except the claims of depositors shall be barred.

Sec. 113. RCW 30.44.070 and 1955 c 33 s 30.44.070 are each amended to read as follows:

Upon taking possession of such corporation, the ((~~supervisor~~)) director shall make an inventory of the assets in duplicate and file one in his or her office and one in the office of the county clerk. Upon the expiration of the time fixed for the presentation of claims, he or she shall make a duplicate list of claims presented, segregating those approved and those rejected, to be filed as aforesaid. He or she shall also make and file a supplemental list of claims at least fifteen days before the declaration of any dividend, and in any event at least every six months.

Sec. 114. RCW 30.44.080 and 1955 c 33 s 30.44.080 are each amended to read as follows:

Objection may be made by any interested person to any claim approved by the ((~~supervisor~~)) director, which objection shall be determined by the court upon such notice to the claimant and objector as the court shall prescribe.

Sec. 115. RCW 30.44.090 and 1955 c 33 s 30.44.090 are each amended to read as follows:

At any time after the expiration of the date fixed for the presentation of claims, the ((~~supervisor~~)) director, subject to the approval of the court, may declare one or more dividends out of the funds remaining in his or her hands after the payment of expenses.

Sec. 116. RCW 30.44.100 and 1955 c 33 s 30.44.100 are each amended to read as follows:

No receiver shall be appointed by any court for any bank or trust company nor shall any assignment of any bank or trust company for the benefit of creditors be valid, excepting only that a court otherwise having jurisdiction may in case of imminent necessity appoint a temporary receiver to take possession of and preserve the assets of such corporation. Immediately upon any such appointment, the clerk of such court shall notify the ((~~supervisor~~)) director by telegraph and mail of such appointment and the ((~~supervisor~~)) director shall forthwith take possession of such bank or trust company, as in case of insolvency, and such temporary receiver shall upon demand of the ((~~supervisor~~)) director surrender up to him or her such possession and all assets which shall have come into the hands of such receiver. The ((~~supervisor~~)) director shall in due course pay such receiver out of the assets of such corporation such amount as the court shall allow.

Sec. 117. RCW 30.44.130 and 1955 c 33 s 30.44.130 are each amended to read as follows:

All expenses incurred by the ((~~supervisor~~)) director in taking possession, administering and winding up any such corporation, including the expenses of ((~~deputies and other~~)) assistants and reasonable fees for any attorney who may be employed ((~~by him~~)) in connection therewith, and the reasonable compensation of any special ((~~deputy~~)) assistant placed in charge of such corporation shall be a first charge upon the assets thereof. Such charges shall be fixed by the ((~~supervisor~~)) director, subject to the approval of the court.

Sec. 118. RCW 30.44.140 and 1955 c 33 s 30.44.140 are each amended to read as follows:

When all proper claims of depositors and creditors (not including stockholders) have been paid, as well as all expenses of administration and liquidation and proper provision has been made for unclaimed or unpaid deposits and dividends, and assets still remain in his or her hands, the ((~~supervisor~~)) director shall call a meeting of the stockholders of such corporation, giving thirty days' notice thereof, by one publication in a newspaper published in the county where such corporation is located. At such meeting, each share shall entitle the holder thereof to a vote in person or by proxy. A vote by ballot shall be taken to determine whether the ((~~supervisor~~)) director shall wind up the affairs of such corporation or the stockholders appoint an agent to do so. The ((~~supervisor~~)) director, if so required, shall wind up such corporation and distribute its assets to those entitled thereto. If the appointment of an agent is determined upon, the stockholders shall forthwith select such agent by ballot. Such agent shall file a bond to the state of Washington in such amount and so conditioned as the ((~~supervisor~~)) director shall require. Thereupon the ((~~supervisor~~)) director shall transfer to such agent the assets of such corporation then remaining in his or her hands, and be relieved from further responsibility in reference to such corporation. Such agent shall convert the assets of such corporation into cash and distribute the same to the parties thereunto entitled, subject to the supervision of the court. In case of his or her death, removal or refusal to act, the stockholders may select a successor with like powers.

Sec. 119. RCW 30.44.150 and 1955 c 33 s 30.44.150 are each amended to read as follows:

Any dividends to depositors or other creditors of such bank or trust company remaining uncalled for and unpaid in the hands of the ((~~supervisor~~)) director for six months after order of final distribution, shall be deposited in a bank or trust company to his or her credit, in trust for the benefit of the persons entitled thereto and subject to the supervision of the court shall be paid by him or her to them upon receipt of satisfactory evidence of their right thereto.

All moneys so deposited remaining unclaimed for five years after deposit shall escheat to the state for the benefit of the permanent school fund and shall be paid by the ((~~supervisor~~)) director into the state treasury. It shall not be necessary to have the escheat adjudged in a suit or action.

Sec. 120. RCW 30.44.160 and 1955 c 33 s 30.44.160 are each amended to read as follows:

Any bank or trust company may place itself under the control of the ((~~supervisor~~)) director to be liquidated as herein provided by posting a notice on its door as follows: "This bank (trust company) is in the hands of the State ((~~Supervisor of Banking~~)) Director of Financial Institutions."

Immediately upon the posting of such notice, the officers of such corporation shall notify the ((~~supervisor~~)) director thereof by telegraph and mail. The posting of such notice or the taking possession of any bank or trust company by the ((~~supervisor~~)) director shall be sufficient to place all of its assets and property of every nature in his or her possession and bar all attachment proceedings.

Sec. 121. RCW 30.44.170 and 1955 c 33 s 30.44.170 are each amended to read as follows:

Any bank or trust company may, upon receipt of written permission from the ((~~supervisor~~)) director, go into voluntary liquidation by a vote of its stockholders owning two-thirds of its capital stock. When such liquidation is authorized, the directors of such corporation shall publish in a newspaper published in the place where such corporation is located, once a week for four consecutive weeks, a notice requiring creditors of such corporation to present their claims against it for payment.

Sec. 122. RCW 30.44.180 and 1955 c 33 s 30.44.180 are each amended to read as follows:

Whenever any bank or trust company shall voluntarily liquidate, any dividends to depositors or other creditors of such bank or trust company remaining uncalled for and unpaid at the conclusion of the liquidation shall be transmitted to the ((~~supervisor~~)) director and shall be deposited by him or her in a bank or trust company to his or her credit in trust for the benefit of the persons entitled thereto, and shall be paid by him or her to them upon receipt of satisfactory evidence of their right thereto.

Sec. 123. RCW 30.44.190 and 1955 c 33 s 30.44.190 are each amended to read as follows:

Whenever any bank or trust company shall be liquidated, voluntarily or involuntarily, and shall retain in its possession at the conclusion of the liquidation, uncalled for and unclaimed personal property left with it for safekeeping, such property shall, in the presence of at least one witness, be inventoried by the liquidating agent and sealed in separate packages, each package plainly marked with the name and last known address of the person in whose name the property stands on the books of the bank or trust company. If the property is in safe deposit boxes, such boxes shall be opened by the liquidating agent in the presence of at least one witness, and the property inventoried, sealed in packages and marked as above required. All the packages shall be transmitted to the ((~~supervisor~~)) director, together with certificates signed by the liquidating agent and witness or witnesses, listing separately the property standing in the name of any one person on the books of the bank or trust company, together with the date of inventory, and name and last known address of the person in whose name the property stands.

Sec. 124. RCW 30.44.200 and 1955 c 33 s 30.44.200 are each amended to read as follows:

Upon receiving possession of the packages, the ((~~supervisor~~)) director shall cause them to be opened in the presence of at least one witness, the property reinventoried, and the packages resealed, and held for safekeeping. The liquidated bank, its directors, officers, and shareholders, and the liquidating agent shall thereupon be relieved of responsibility and liability for the property so delivered to and received by the ((~~supervisor~~)) director. The ((~~supervisor~~)) director shall send immediately to each person in whose name the property stood on the books of the liquidated bank or trust company, at his or her last known address, in a securely closed, postpaid and registered letter, a notice that the property listed will be held in his or her name for a period of not less than two years. At any time after the mailing of such notice, and before the expiration of two years, such person may require the delivery of the property so held, by properly identifying himself or herself and offering evidence of his or her right thereto, to the satisfaction of the ((~~supervisor~~)) director.

Sec. 125. RCW 30.44.210 and 1985 c 469 s 15 are each amended to read as follows:

After the expiration of two years from the time of mailing the notice, the ((~~supervisor~~)) director shall mail in a securely closed postpaid registered letter, addressed to the person at his or her last known address, a final notice stating that two years have elapsed since the sending of the notice referred to in RCW 30.44.200, and that the ((~~supervisor~~)) director will sell all the property or articles of value set out in the notice, at a specified time and place, not less than thirty days after the time of mailing the final notice. Unless the person shall, on or before the day mentioned, claim the property, identify himself or herself and offer evidence of his or her right thereto, to the satisfaction of the ((~~supervisor~~)) director, the ((~~supervisor~~)) director may sell all the property or articles of value listed in the notice, at public auction, at the time and place stated in the final notice: PROVIDED, That a notice of the time and place of sale has been published once within ten days prior to the sale in a newspaper of general circulation in the county where the sale is held. Any such property held by the ((~~supervisor~~)) director, the owner of which is not known, may be sold at public auction after it has been held by the ((~~supervisor~~)) director for two years, provided, that a notice of the time and place of sale has been published once within ten days prior to the sale in a newspaper of general circulation in the county where the sale is held.

Sec. 126. RCW 30.44.220 and 1955 c 33 s 30.44.220 are each amended to read as follows:

The proceeds of such sale shall be deposited by the ((~~supervisor~~)) director in a bank or trust company to his or her credit, in trust for the benefit of the person entitled thereto, and shall be paid by him or her to such person upon receipt of satisfactory evidence of his or her right thereto.

Sec. 127. RCW 30.44.230 and 1955 c 33 s 30.44.230 are each amended to read as follows:

Whenever the personal property held by a liquidated bank or trust company shall consist either wholly or in part, of documents, letters, or other papers of a private nature, such documents, letters, or papers shall not be sold, but shall be retained by the ((~~supervisor~~)) director for a period of five years, and, unless sooner claimed by the owner, may be thereafter destroyed in the presence of the ((~~supervisor~~)) director and at least one other witness.

Sec. 128. RCW 30.44.240 and 1955 c 33 s 30.44.240 are each amended to read as follows:

A bank or trust company may for the purpose of voluntary liquidation transfer its assets and liabilities to another bank or trust company, by a vote, or with the written consent of the stockholders of record owning two-thirds of its capital stock, but only with the written consent of the ((~~supervisor~~)) director and upon such terms and conditions as he or she may prescribe. Upon any such transfer being made, or upon the liquidation of any such corporation for any cause whatever or upon its being no longer engaged in the business of a bank or trust company, the ((~~supervisor~~)) director shall terminate its certificate of authority, which shall not thereafter be revived or renewed. When the certificate of authority of any such corporation shall have been revoked, it shall forthwith collect and distribute its remaining assets, and when that is done the ((~~supervisor~~)) director shall certify the fact to the secretary of state, whereupon the corporation shall cease to exist and the secretary of state shall note that fact upon his or her records.

Sec. 129. RCW 30.44.250 and 1955 c 33 s 30.44.250 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director has taken possession of a bank or trust company for any cause, he or she may wind up such corporation and cancel its certificate of authority, unless enjoined from so doing, as herein provided. Or if at any time within ninety days after taking possession, he or she shall determine that all impairment and delinquencies have been made good, and that it is safe and expedient for such corporation to reopen, he or she may permit such corporation to reopen upon such terms and conditions as he or she shall prescribe. Before being permitted to reopen, every such corporation shall pay all of the expenses of the ((~~supervisor~~)) director, as herein elsewhere defined.

Sec. 130. RCW 30.44.260 and 1955 c 33 s 30.44.260 are each amended to read as follows:

Where any files, records, documents, books of account or other papers have been taken over and are in the possession of the ((~~supervisor~~)) director in connection with the liquidation of any insolvent banks or trust companies under the laws of this state, the ((~~supervisor~~)) director may, in his or her discretion at any time after the expiration of one year from the declaration of the final dividend, or from the date when such liquidation has been entirely completed, destroy any of the files, records, documents, books of account or other papers which may appear to the ((~~supervisor~~)) director to be obsolete or unnecessary for future reference as part of the liquidation and files of his or her office.

Sec. 131. RCW 30.44.270 and 1973 1st ex.s. c 54 s 1 are each amended to read as follows:

The federal deposit insurance corporation is hereby authorized and empowered to be and act without bond as receiver or liquidator of any bank or trust company the deposits in which are to any extent insured by that corporation and which shall have been closed on account of inability to meet the demands of its depositors. In the event of such closing, the ((~~supervisor of banking~~)) director may appoint the federal deposit insurance corporation as receiver or liquidator of such bank or trust company. If the corporation accepts such appointment, it shall have and possess all the powers and privileges provided by the laws of this state with respect to a liquidator of a bank or trust company, its depositors and other creditors, and be subject to all the duties of such liquidator, except insofar as such powers, privileges, or duties are in conflict with the provisions of the federal deposit insurance act, as now or hereafter amended.

Sec. 132. RCW 30.44.280 and 1973 1st ex.s. c 54 s 2 are each amended to read as follows:

The pendency of any proceedings for judicial review of the ((~~supervisor's~~)) director's actions in taking possession and control of a bank or trust company and its assets for the purpose of liquidation shall not operate to defer, delay, impede, or prevent the payment or acquisition by the federal deposit insurance corporation of the deposit liabilities of the bank or trust company which are insured by the corporation. During the pendency of any proceedings for judicial review, the ((~~supervisor of banking~~)) director shall make available to the federal deposit insurance corporation such facilities in or of the bank or trust company and such books, records, and other relevant data of the bank or trust company as may be necessary or appropriate to enable the corporation to pay out or to acquire the insured deposit liabilities of the bank or trust company. The federal deposit insurance corporation and its directors, officers, agents, and employees, and the ((~~supervisor of banking,~~)) director and his or her agents and employees shall be free from liability to the bank or trust company, its directors, stockholders, and creditors for or on account of any action taken in connection herewith.

Sec. 133. RCW 30.46.010 and 1975 1st ex.s. c 87 s 1 are each amended to read as follows:

For the purposes of this chapter the following terms shall be defined as follows:

(1) "Unsafe condition" shall mean and include, but not be limited to, any one or more of the following circumstances:

(a) If a bank's capital is impaired or impairment of capital is threatened;

(b) If a bank violates the provisions of Title 30 RCW or any other law or regulation applicable to banks;

(c) If a bank conducts a fraudulent or questionable practice in the conduct of its business that endangers the bank's reputation or threatens its solvency;

(d) If a bank conducts its business in an unsafe or unauthorized manner;

(e) If a bank violates any conditions of its charter or any agreement entered with the ((~~supervisor~~)) director; or

(f) If a bank fails to carry out any authorized order or direction of the ((~~bank~~)) examiner or the ((~~supervisor~~)) director.

(2) "Exceeded its powers" shall mean and include, but not be limited to the following circumstances:

(a) If a bank has refused to permit examination of its books, papers, accounts, records, or affairs by the ((~~supervisor, his deputy~~)) director, assistant director, or duly commissioned examiners; or

(b) If a bank has neglected or refused to observe an order of the ((~~supervisor~~)) director to make good, within the time prescribed, any impairment of its capital.

(3) "Consent" includes and means a written agreement by the bank to either supervisory direction or conservatorship under this chapter.

Sec. 134. RCW 30.46.020 and 1975 1st ex.s. c 87 s 2 are each amended to read as follows:

If upon examination or at any other time it appears to the ((~~supervisor~~)) director that any bank is in an unsafe condition and its condition is such as to render the continuance of its business hazardous to the public or to its depositors and creditors, or if such bank appears to have exceeded its powers or has failed to comply with the law, or if such bank gives its consent, then the ((~~supervisor~~)) director shall upon his or her determination (1) notify the bank of his or her determination, and (2) furnish to the bank a written list of the ((~~supervisor~~)) director requirements to abate his or her determination, and (3) if the ((~~supervisor~~)) director makes further determination to directly supervise, he or she shall notify the bank that it is under the supervisory direction of the ((~~supervisor~~)) director and that the ((~~supervisor~~)) director is invoking the provisions of this chapter. If placed under supervisory direction the bank shall comply with the lawful requirements of the ((~~supervisor~~)) director within such time as provided in the notice of the ((~~supervisor~~)) director, subject however, to the provisions of this chapter. If the bank fails to comply within such time the ((~~supervisor~~)) director may appoint a conservator as hereafter provided.

Sec. 135. RCW 30.46.030 and 1975 1st ex.s. c 87 s 3 are each amended to read as follows:

During the period of supervisory direction the ((~~supervisor~~)) director may appoint a representative to supervise such bank and may provide that the bank may not do any of the following during the period of supervisory direction, without the prior approval of the ((~~supervisor~~)) director or the appointed representative.

(1) Dispose of, convey or encumber any of the assets;

(2) Withdraw any of its bank accounts;

(3) Lend any of its funds;

(4) Invest any of its funds;

(5) Transfer any of its property; or

(6) Incur any debt, obligation, or liability.

Sec. 136. RCW 30.46.040 and 1975 1st ex.s. c 87 s 4 are each amended to read as follows:

After the period of supervisory direction specified by the ((~~supervisor~~)) director for compliance, if he or she determines that such bank has failed to comply with the lawful requirements imposed, upon due notice and hearing or by consent of the bank, the ((~~supervisor~~)) director may appoint a conservator, who shall immediately take charge of such bank and all of its property, books, records, and effects. The conservator shall conduct the business of the bank and take such steps toward the removal of the causes and conditions which have necessitated such order, as the ((~~supervisor~~)) director may direct. During the pendency of the conservatorship the conservator shall make such reports to the ((~~supervisor~~)) director from time to time as may be required by the ((~~supervisor~~)) director, and shall be empowered to take all necessary measures to preserve, protect, and recover any assets or property of such bank, including claims or causes of actions belonging to or which may be asserted by such bank, and to deal with the same in his or her own name as conservator, and shall be empowered to file, prosecute, and defend any suit and suits which have been filed or which may thereafter be filed by or against such bank which are deemed by the conservator to be necessary to protect all of the interested parties for a property affected thereby. The ((~~supervisor~~)) director, or any newly appointed ((~~deputy~~)) assistant, may be appointed to serve as conservator. If the ((~~supervisor~~)) director, however, is satisfied that such bank is not in condition to continue business in the interest of its depositors or creditors under the conservator as above provided, the ((~~supervisor~~)) director may proceed with appropriate remedies provided by other provisions of this title.

Sec. 137. RCW 30.46.050 and 1975 1st ex.s. c 87 s 5 are each amended to read as follows:

All costs incident to supervisory direction and the conservatorship shall be fixed and determined by the ((~~supervisor~~)) director and shall be a charge against the assets of the bank to be allowed and paid as the ((~~supervisor~~)) director may determine.

Sec. 138. RCW 30.46.060 and 1975 1st ex.s. c 87 s 6 are each amended to read as follows:

During the period of the supervisory direction and during the period of conservatorship, the bank may request the ((~~supervisor~~)) director to review an action taken or proposed to be taken by the representative or conservator; specifying wherein the action complained of is believed not to be in the best interest of the bank, and such request shall stay the action specified pending review of such action by the ((~~supervisor~~)) director. Any order entered by the ((~~supervisor~~)) director appointing a representative and providing that the bank shall not do certain acts as provided in RCW 30.46.030 and 30.46.040, any order entered by the ((~~supervisor~~)) director appointing a conservator, and any order by the ((~~supervisor~~)) director following the review of an action of the representative or conservator as herein above provided shall be subject to review in accordance with the administrative procedure act of the state of Washington.

Sec. 139. RCW 30.46.070 and 1975 1st ex.s. c 87 s 7 are each amended to read as follows:

Any suit filed against a bank or its conservator, after the entrance of an order by the ((~~supervisor~~)) director placing such bank in conservatorship and while such order is in effect, shall be brought in the superior court of Thurston county and not elsewhere. The conservator appointed hereunder for such bank may file suit in any superior court or other court of competent jurisdiction against any person for the purpose of preserving, protecting, or recovering any asset or property of such bank including claims or causes of action belonging to or which may be asserted by such bank.

Sec. 140. RCW 30.46.090 and 1975 1st ex.s. c 87 s 9 are each amended to read as follows:

If the ((~~supervisor~~)) director determines to act under authority of this chapter, the sequence of his or her acts and proceedings shall be as set forth in this chapter. However, it is the purpose and substance of this chapter to authorize administrative discretion‑-to allow the ((~~supervisor~~)) director administrative discretion in the event of unsound banking operations‑-and in furtherance of that purpose the ((~~supervisor~~)) director is hereby authorized to proceed with regulation either under this chapter or under any other applicable provisions of law or under this chapter in connection with other law, either as such law is now existing or is hereinafter enacted, and it is so provided.

Sec. 141. RCW 30.46.100 and 1975 1st ex.s. c 87 s 10 are each amended to read as follows:

The ((~~supervisor~~)) director is empowered to adopt and promulgate such reasonable rules ((~~and regulations~~)) as may be necessary for the implementation of this chapter and its purposes.

Sec. 142. RCW 30.49.030 and 1955 c 33 s 30.49.030 are each amended to read as follows:

This section is applicable where there is to be a resulting state bank.

Upon approval by the ((~~supervisor of banking~~)) director, state or national banks may be merged to result in a state bank, or a national bank may convert into a state bank as hereafter prescribed, except that the action by a national bank shall be taken in the manner prescribed by and shall be subject to limitations and requirements imposed by the law of the United States which shall also govern the rights of its dissenting shareholders.

Sec. 143. RCW 30.49.040 and 1986 c 279 s 49 are each amended to read as follows:

This section is applicable where there is to be a resulting state bank, except in the case of reorganization and exchange as authorized by this title.

(1) The board of directors of each merging state bank shall, by a majority of the entire board, approve a merger agreement which shall contain:

(a) The name of each merging state or national bank and location of each office;

(b) With respect to the resulting state bank, (i) the name and location of the principal and other offices; (ii) the name and mailing address of each director to serve until the next annual meeting of the stockholders; (iii) the name and mailing address of each officer; (iv) the amount of capital, the number of shares and the par value, if any, of each share; and (v) the amendments to its charters and bylaws;

(c) Provisions governing the exchange of shares of the merging state or national banks for such consideration as has been agreed to in the merger agreement;

(d) A statement that the agreement is subject to approval by the ((~~supervisor of banking~~)) director and the stockholders of each merging state or national bank;

(e) Provisions governing the manner of disposing of the shares of the resulting state bank if such shares are to be issued in the transaction and are not taken by dissenting shareholders of merging state or national banks;

(f) Such other provisions as the ((~~supervisor of banking~~)) director requires to discharge his or her duties with respect to the merger;

(2) After approval by the board of directors of each merging state bank, the merger agreement shall be submitted to the ((~~supervisor of banking~~)) director for approval, together with certified copies of the authorizing resolutions of each board of directors showing approval by a majority of the entire board and evidence of proper action by the board of directors of any merging national bank;

(3) Within sixty days after receipt by the ((~~supervisor of banking~~)) director of the papers specified in subsection (2) of this section, the ((~~supervisor of banking~~)) director shall approve or disapprove of the merger agreement, and if no action is taken, the agreement shall be deemed approved. The ((~~supervisor of banking~~)) director shall approve the agreement if it appears that:

(a) The resulting state bank meets the requirements of state law as to the formation of a new state bank;

(b) The agreement provides an adequate capital structure including surplus in relation to the deposit liabilities of the resulting state bank and its other activities which are to continue or are to be undertaken;

(d) The merger is not contrary to the public interest.

If the ((~~supervisor of banking~~)) director disapproves an agreement, he or she shall state his or her objections and give an opportunity to the merging state or national banks to amend the merger agreement to obviate such objections.

Sec. 144. RCW 30.49.060 and 1955 c 33 s 30.49.060 are each amended to read as follows:

A merger which is to result in a state bank shall, unless a later date is specified in the agreement, become effective after the filing with and upon the approval of the ((~~supervisor of banking~~)) director of the executed agreement together with copies of the resolutions of the stockholders of each merging state or national bank approving it, certified by the bank's president or a vice president and a secretary. The charters of the merging banks, other than the resulting bank, shall thereupon automatically terminate.

The ((~~supervisor of banking~~)) director shall thereupon issue to the resulting state bank a certificate of merger specifying the name of each merging state or national bank and the name of the resulting state bank. Such certificate shall be conclusive evidence of the merger and of the correctness of all proceedings therefor in all courts and places, and may be recorded in any office for the recording of deeds to evidence the new name in which the property of the merging state or national bank is held.

Sec. 145. RCW 30.49.070 and 1955 c 33 s 30.49.070 are each amended to read as follows:

Except as provided in RCW 30.49.100, a national bank located in this state which follows the procedure prescribed by the laws of the United States to convert into a state bank shall be granted a state charter by the ((~~supervisor of banking~~)) director if he or she finds that the bank meets the standards as to location of offices, capital structures, and business experience and character of officers and directors for the incorporation of a state bank.

The national bank may apply for such charter by filing with the ((~~supervisor of banking~~)) director a certificate signed by its president and cashier and by a majority of the entire board of directors, setting forth the corporate action taken in compliance with the provisions of the laws of the United States governing the conversion of a national to a state bank, and the articles of incorporation, approved by the stockholders, for the government of the bank as a state bank.

Sec. 146. RCW 30.49.090 and 1955 c 33 s 30.49.090 are each amended to read as follows:

The owner of shares of a state bank which were voted against a merger to result in a state bank, or against the conversion of a state bank into a national bank, shall be entitled to receive their value in cash, if and when the merger or conversion becomes effective, upon written demand made to the resulting state or national bank at any time within thirty days after the effective date of the merger or conversion, accompanied by the surrender of the stock certificates. The value of such shares shall be determined, as of the date of the shareholders' meeting approving the merger or conversion, by three appraisers, one to be selected by the owners of two-thirds of the dissenting shares, one by the board of directors of the resulting state or national bank, and the third by the two so chosen. The valuation agreed upon by any two appraisers shall govern. If the appraisal is not completed within ninety days after the merger or conversion becomes effective, the ((~~supervisor of banking~~)) director shall cause an appraisal to be made.

The expenses of appraisal shall be paid by the resulting state bank.

The resulting state or national bank may fix an amount which it considers to be not more than the fair market value of the shares of a merging or the converting bank at the time of the stockholders' meeting approving the merger or conversion, which it will pay dissenting shareholders of the bank entitled to payment in cash. The amount due under such accepted offer or under the appraisal shall constitute a debt of the resulting state or national bank.

Sec. 147. RCW 30.49.100 and 1955 c 33 s 30.49.100 are each amended to read as follows:

Where a resulting state bank is not to exercise trust powers, the ((~~supervisor of banking~~)) director shall not approve a merger or conversion until satisfied that adequate provision has been made for successors to fiduciary positions held by the merging state or national banks or the converting state or national bank.

Sec. 148. RCW 30.49.110 and 1955 c 33 s 30.49.110 are each amended to read as follows:

If a merging or converting state or national bank has assets which do not conform to the requirements of state law for the resulting state bank or carries on business activities which are not permitted for the resulting state bank, the ((~~supervisor of banking~~)) director may permit a reasonable time to conform with state law.

Sec. 149. RCW 30.49.120 and 1955 c 33 s 30.49.120 are each amended to read as follows:

Without approval by the ((~~supervisor of banking~~)) director no asset shall be carried on the books of the resulting state bank at a valuation higher than that on the books of the merging or converting state or national bank at the time of its last examination by a state examiner or national bank examiner before the effective date of the merger or conversion.

Sec. 150. RCW 30.56.020 and 1955 c 33 s 30.56.020 are each amended to read as follows:

The ((~~supervisor of banking~~)) director is hereby empowered, upon the written application of the directors of a bank, if in his or her judgment the circumstances warrant it, to authorize a bank to postpone, for a period of ninety days and for such further period or periods as he or she may deem expedient, the payment of such proportions or amounts of the demands of its depositors from time to time as he or she may deem necessary. The period or periods of postponement and the proportions or amounts of the demands to be deferred shall be determined by him or her according to the ability of the bank to pay withdrawals. By the regulations prescribed for deferred payments, the ((~~supervisor~~)) director may classify accounts and limit payments to depositors of the several classes differently. The ((~~supervisor's~~)) director's orders, regulations and directions shall be in writing and be filed in his or her office, and copies thereof shall be delivered to the bank and be forthwith posted in a conspicuous place in the banking room.

Sec. 151. RCW 30.56.030 and 1955 c 33 s 30.56.030 are each amended to read as follows:

During postponement of payments the bank shall remain open for business and be in charge of its officers, but shall not make any loans, investments or expenditures except such as the ((~~supervisor~~)) director will approve as necessary to conserve its assets and pay the cost of operation. The bank's failure during a period of postponement to repay deposits existing at the commencement of the period, shall not authorize or require the ((~~supervisor~~)) director to take charge of or liquidate the bank, nor constitute ground for the appointment of a receiver.

Sec. 152. RCW 30.56.040 and 1955 c 33 s 30.56.040 are each amended to read as follows:

Deposits received during a period of postponement and for sixty days thereafter shall be kept separate from other assets of the bank, shall not draw interest, shall not be loaned or invested except by depositing with reserve banks or investing in liquid securities approved by the ((~~supervisor~~)) director, and shall be withdrawable upon demand. If during a postponement of payments, or at the expiration thereof, the ((~~supervisor~~)) director shall take charge of the bank for liquidation, deposits made during the period of postponement shall be deemed trust funds and be repaid to the depositors forthwith.

Sec. 153. RCW 30.56.050 and 1955 c 33 s 30.56.050 are each amended to read as follows:

At the request of the directors of a bank, the ((~~supervisor~~)) director may propose a plan for its reorganization, if in his or her judgment it would be for the best interests of the bank's creditors and of the community which the bank serves. The plan may contemplate such temporary ratable reductions of the demands of depositors and other creditors as would leave its reserve adequate and its capital and surplus unimpaired after the charging off of bad and doubtful debts; and also may contemplate a postponement of payments as in a case falling within RCW 30.56.020. The plan shall be fully described in a writing, the original of which shall be filed in the office of the ((~~supervisor~~)) director and several copies of which shall be furnished the bank, where one or more copies shall be kept available for inspection by stockholders, depositors and other creditors.

Sec. 154. RCW 30.56.060 and 1955 c 33 s 30.56.060 are each amended to read as follows:

If, within ninety days after the filing of the plan, creditors having unsecured demands against the bank aggregating not less than three-fourths of the amount of the unsecured demands of all its creditors, approved the plan, the ((~~supervisor~~)) director shall have power to declare the plan to be in effect. Thereupon the unsecured demands of creditors shall be ratably reduced according to the plan and appropriate debits shall be made in the books. The right of a secured creditor to enforce his or her security shall not be affected by the operation of the plan, but the amount of any deficiency to which he or she may be entitled shall be reduced as unsecured demands were reduced. If the plan contemplates a temporary postponement of payments, RCW 30.56.020, 30.56.030 and 30.56.040 shall be applicable, and the bank shall comply therewith and conduct its affairs accordingly.

Sec. 155. RCW 30.56.080 and 1955 c 33 s 30.56.080 are each amended to read as follows:

The failure of a bank operating under such a plan to pay to a creditor at any time a sum greater than the plan then requires, shall not constitute a default nor authorize or require the ((~~supervisor~~)) director to take charge of or liquidate the bank nor entitle the creditor to maintain an action against the bank.

Sec. 156. RCW 30.56.090 and 1955 c 33 s 30.56.090 are each amended to read as follows:

If the net assets of a bank operating under such a plan are sufficient to provide the capital and surplus of a newly organized bank in the same place, the ((~~supervisor~~)) director, under such reasonable conditions as he or she shall prescribe, may approve the incorporation of a new bank and permit it to take over the assets and business and assume the liabilities of the existing bank.

Sec. 157. RCW 30.60.010 and 1985 c 329 s 2 are each amended to read as follows:

(1) In conducting an examination of a bank chartered under Title 30 RCW, the ((~~supervisor of banking, deputy supervisor, or examiner~~)) director shall investigate and assess the record of performance of the bank in meeting the credit needs of the bank's entire community, including low and moderate-income neighborhoods. The ((~~supervisor~~)) director shall accept, in lieu of an investigation or part of an investigation required by this section, any report or document that the bank is required to prepare or file with one or more federal agencies by the act of Congress entitled the "Community Reinvestment Act of 1977" and the regulations promulgated in accordance with that act, to the extent such reports or documents assist the ((~~supervisor~~)) director in making an assessment based upon the factors outlined in subsection (2) of this section.

(2) In making an investigation required under subsection (1) of this section, the ((~~supervisor~~)) director shall consider, independent of any federal determination, the following factors in assessing the bank's record of performance:

(a) Activities conducted by the institution to ascertain credit needs of its community, including the extent of the institution's efforts to communicate with members of its community regarding the credit services being provided by the institution;

(b) The extent of the institution's marketing and special credit related programs to make members of the community aware of the credit services offered by the institution;

(c) The extent of participation by the institution's board of directors in formulating the institution's policies and reviewing its performance with respect to the purposes of the Community Reinvestment Act of 1977;

(d) Any practices intended to discourage applications for types of credit set forth in the institution's community reinvestment act statement(s);

(e) The geographic distribution of the institution's credit extensions, credit applications, and credit denials;

(f) Evidence of prohibited discriminatory or other illegal credit practices;

(g) The institution's record of opening and closing offices and providing services at offices;

(h) The institution's participation, including investments, in local community development projects;

(i) The institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans, and small business or small farm loans within its community, or the purchase of such loans originated in its community;

(j) The institution's participation in governmentally insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;

(k) The institution's ability to meet various community credit needs based on its financial condition, size, legal impediments, local economic condition, and other factors;

(l) Other factors that, in the judgment of the ((~~supervisor~~)) director, reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire community.

(3) The ((~~supervisor~~)) director shall include as part of the examination report, a summary of the results of the assessment required under subsection (1) of this section and shall assign annually to each bank a numerical community reinvestment rating based on a one through five scoring system. Such numerical scores shall represent performance assessments as follows:

(a) Excellent performance: 1

(b) Good performance: 2

(d) Inadequate performance: 4

(e) Poor performance: 5

Sec. 158. RCW 30.60.020 and 1985 c 329 s 3 are each amended to read as follows:

Whenever the ((~~supervisor of banking~~)) director must approve or disapprove of an application for a new branch or satellite facility; for a purchase of assets, a merger, an acquisition or a conversion not required for solvency reasons; or for authority to engage in a business activity, the ((~~supervisor~~)) director shall consider, among other factors, the record of performance of the applicant in helping to meet the credit needs of the applicant's entire community, including low and moderate-income neighborhoods. Assessment of an applicant's record of performance may be the basis for denying an application.

Sec. 159. RCW 30.60.030 and 1985 c 329 s 7 are each amended to read as follows:

The ((~~supervisor of banking~~)) director shall adopt all rules necessary to implement sections 2 through 6 of this act by January 1, 1986.

Sec. 160. RCW 30.60.901 and 1985 c 329 s 13 are each amended to read as follows:

This act shall take effect on January 1, 1986, but the ((~~supervisor of banking and the supervisor of savings and loans~~)) director may immediately take such steps as are necessary to ensure that this act is implemented on its effective date.

Sec. 161. RCW 31.04.015 and 1991 c 208 s 2 are each amended to read as follows:

The definitions set forth in this section apply throughout this chapter unless the context clearly requires a different meaning.

(1) "Person" includes individuals, partnerships, associations, trusts, corporations, and all other legal entities.

(2) "License" means a single license issued under the authority of this chapter with respect to a single place of business.

(3) "Licensee" means a person to whom one or more licenses have been issued.

(4) ((~~"Supervisor" means the supervisor of banking of the department of general administration~~)) "Director" means the director of financial institutions.

(5) "Insurance" means life insurance, disability insurance, property insurance, involuntary unemployment insurance, and such other insurance as may be authorized by the insurance commissioner.

(6) "Add-on method" means the method of precomputing interest payable on a loan whereby the interest to be earned is added to the principal balance and the total plus any charges allowed under this chapter is stated as the loan amount, without further provision for the payment of interest except for failure to pay according to loan terms. The ((~~supervisor~~)) director may adopt by rule a more detailed explanation of the meaning and use of this method.

(7) "Simple interest method" means the method of computing interest payable on a loan by applying the annual percentage interest rate or its periodic equivalent to the unpaid balances of the principal of the loan outstanding for the time outstanding with each payment applied first to any unpaid penalties, fees, or charges, then to accumulated interest, and the remainder of the payment applied to the unpaid balance of the principal until paid in full. In using such method, interest shall not be payable in advance nor compounded. The ((~~supervisor~~)) director may adopt by rule a more detailed explanation of the meaning and use of this method.

Sec. 162. RCW 31.04.045 and 1991 c 208 s 5 are each amended to read as follows:

(1) Application for a license under this chapter must be in writing and in the form prescribed by the ((~~supervisor~~)) director. The application must contain at least the following information:

(a) The name and the business and the residence addresses of the applicant;

(b) If the applicant is a partnership or association, the name of every member;

(d) The street address, county, and municipality where business is to be conducted; and

(e) Such other information as the ((~~supervisor~~)) director may require by rule.

(2) At the time of filing an application for a license under this chapter, each applicant shall pay to the ((~~supervisor~~)) director an investigation fee and the initial year's license fee in an amount determined by rule of the ((~~supervisor~~)) director to be sufficient to cover the ((~~supervisor's~~)) director's costs in administering this chapter.

(3) Each applicant shall file and maintain a surety bond, approved by the ((~~supervisor~~)) director, in the penal sum of one hundred thousand dollars, executed by the applicant as obligor and by a surety company authorized to do a surety business in this state as surety, whose liability as such surety shall not exceed the penal sum in the aggregate. The bond shall run to the state of Washington as obligee for the use and benefit of the state and of any person or persons who may have a cause of action against the obligor under this chapter. The bond shall be conditioned that the obligor as licensee will faithfully conform to and abide by this chapter and all the rules adopted under this chapter. The bond will pay to the state and any person or persons having a cause of action against the obligor all moneys that may become due and owing to the state and those persons under and by virtue of this chapter. In lieu of a surety bond, if the applicant is a Washington business corporation, the applicant may maintain unimpaired capital, surplus, and long-term subordinated debt in an amount that at any time its outstanding promissory notes or other evidences of debt (other than long-term subordinated debt) in an aggregate sum do not exceed three times the aggregate amount of its unimpaired capital, surplus, and long-term subordinated debt. The ((~~supervisor~~)) director may define qualifying "long-term subordinated debt" for purposes of this section.

Sec. 163. RCW 31.04.055 and 1991 c 208 s 6 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall issue and deliver a license to the applicant to make loans in accordance with this chapter at the location specified in the application if, after investigation, the ((~~supervisor~~)) director finds that the applicant has paid all required fees, has complied with RCW 31.04.045, and that the financial responsibility, experience, character, and general fitness of the applicant are such as to command the confidence of the community and to warrant a belief that the business will be operated honestly, fairly, and efficiently within the purposes of this chapter.

(2) If the ((~~supervisor~~)) director does not find the conditions of subsection (1) of this section have been met, the ((~~supervisor~~)) director shall not issue the license. The ((~~supervisor~~)) director shall notify the applicant of the denial and return to the applicant the bond posted and the sum paid by the applicant as a license fee, retaining the investigation fee to cover the costs of investigating the application. The ((~~supervisor~~)) director shall approve or deny every application for license under this chapter within sixty days from the filing of a complete application with the fees and the approved bond.

Sec. 164. RCW 31.04.075 and 1991 c 208 s 8 are each amended to read as follows:

The licensee may not maintain more than one place of business under the same license, but the ((~~supervisor~~)) director may issue more than one license to the same licensee upon application by the licensee in a form and manner established by the ((~~supervisor~~)) director. A licensee who has five licensed locations shall not be required to maintain a bond in a penal sum exceeding ten thousand dollars for each additionally licensed location.

Whenever a licensee wishes to change the place of business to a street address other than that designated in the license, the licensee shall give written notice to the ((~~supervisor~~)) director and shall obtain the ((~~supervisor's~~)) director's approval.

Sec. 165. RCW 31.04.085 and 1991 c 208 s 9 are each amended to read as follows:

A licensee shall, for each license held by any person, on or before the twentieth day of each December, pay to the ((~~supervisor~~)) director an annual license fee. At the same time the licensee shall file with the ((~~supervisor~~)) director the required bond or otherwise demonstrate compliance with RCW 31.04.045.

Sec. 166. RCW 31.04.093 and 1991 c 208 s 10 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may revoke a license issued under this chapter if the ((~~supervisor~~)) director finds that:

(a) The licensee has failed to pay any fee due the state of Washington, has failed to maintain in effect the bond or permitted substitute required under this chapter, or has failed to comply with any specific order or demand of the ((~~supervisor~~)) director lawfully made and directed to the licensee in accordance with this chapter;

(b) The licensee, either knowingly or without the exercise of due care, has violated any provision of this chapter or any rule adopted under this chapter; or

(c) A fact or condition exists that, if it had existed at the time of the original application for the license, clearly would have allowed the ((~~supervisor~~)) director to deny the application for the original license. The ((~~supervisor~~)) director may revoke or suspend only the particular license with respect to which grounds for revocation or suspension may occur or exist unless the ((~~supervisor~~)) director finds that the grounds for revocation or suspension are of general application to all offices or to more than one office operated by the licensee, in which case, the ((~~supervisor~~)) director may revoke or suspend all of the licenses issued to the licensee.

(2) A licensee may surrender a license by delivering to the ((~~supervisor~~)) director written notice of surrender, but the surrender does not affect the licensee's civil or criminal liability, if any, for acts committed before the surrender.

(3) The revocation, suspension, or surrender of a license does not impair or affect the obligation of a preexisting lawful contract between the licensee and a borrower.

(4) Every license issued under this chapter remains in force and effect until it has been surrendered, revoked, or suspended in accordance with this chapter. However, the ((~~supervisor~~)) director may on his or her own initiative reinstate suspended licenses or issue new licenses to a licensee whose license or licenses have been revoked if the ((~~supervisor~~)) director finds that the licensee meets all the requirements of this chapter.

Sec. 167. RCW 31.04.105 and 1993 c 190 s 1 are each amended to read as follows:

Every licensee may:

(1) Lend money at a rate that does not exceed twenty-five percent per annum as determined by the simple interest method of calculating interest owed;

(2) In connection with the making of a loan, charge the borrower a nonrefundable, prepaid, loan origination fee not to exceed four percent of the first twenty thousand dollars and two percent thereafter of the principal amount of the loan advanced to or for the direct benefit of the borrower, which fee may be included in the principal balance of the loan;

(3) Agree with the borrower for the payment of fees for title insurance, appraisals, recording, reconveyance, and releasing when such fees are actually paid by the licensee to a third party for such services or purposes and may include such fees in the amount of the loan. However, no charge may be collected unless a loan is made, except for reasonable fees properly incurred in connection with the appraisal of property by a qualified, independent, professional, third-party appraiser selected by the borrower and approved by the lender or in the absence of borrower selection, selected by the lender;

(4) Charge and collect a penalty of ten cents or less on each dollar of any installment payment delinquent ten days or more;

(5) Collect from the debtor reasonable attorneys' fees, actual expenses, and costs incurred in connection with the collection of a delinquent debt, a repossession, or a foreclosure when a debt is referred for collection to an attorney who is not a salaried employee of the licensee;

(6) Make open-end loans as provided in this chapter;

(7) Charge and collect a fee for dishonored checks in an amount approved by the ((~~supervisor~~)) director; and

(8) In accordance with Title 48 RCW, sell insurance covering real and personal property, covering the life or disability or both of the borrower, and covering the involuntary unemployment of the borrower.

Sec. 168. RCW 31.04.115 and 1993 c 405 s 1 are each amended to read as follows:

(1) As used in this section, "open-end loan" means an agreement between a licensee and a borrower that expressly states that the loan is made in accordance with this chapter and that provides that:

(a) A licensee may permit the borrower to obtain advances of money from the licensee from time to time, or the licensee may advance money on behalf of the borrower from time to time as directed by the borrower;

(b) The amount of each advance and permitted charges and costs are debited to the borrower's account, and payments and other credits are credited to the same account;

(d) The borrower has the privilege of paying the account in full at any time without prepayment penalty or, if the account is not in default, in monthly installments of fixed or determinable amounts as provided in the agreement.

(2) Interest charges on an open-end loan shall not exceed twenty-five percent per annum computed in each billing cycle by any of the following methods:

(a) By converting the annual rate to a daily rate, and multiplying the daily rate by the daily unpaid principal balance of the account, in which case each daily rate is determined by dividing the annual rate by three hundred sixty-five;

(b) By multiplying a monthly rate by the average daily unpaid principal balance of the account in the billing cycle, in which case the monthly rate is one-twelfth of the annual rate, and the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle; or

(c) By converting the annual rate to a daily rate, and multiplying the daily rate by the average daily unpaid principal balance of the account in the billing cycle, in which case the daily rate is determined by dividing the annual rate by three hundred sixty-five, and the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle.

For all of the methods of computation specified in this subsection, the billing cycle shall be monthly, and the unpaid principal balance on any day shall be determined by adding to the balance unpaid, as of the beginning of that day, all advances and other permissible amounts charged to the borrower, and deducting all payments and other credits made or received that day. A billing cycle is considered monthly if the closing date of the cycle is on the same date each month, or does not vary by more than four days from that date.

(3) In addition to the charges permitted under subsection (2) of this section, the licensee may contract for and receive an annual fee, payable each year in advance, for the privilege of opening and maintaining an open-end loan account. Except as prohibited or limited by this section, the licensee may also contract for and receive on an open-end loan any additional charge permitted by this chapter on other loans, subject to the conditions and restrictions otherwise pertaining to those charges.

(4)(a) If credit life or credit disability insurance is provided, the additional charge for credit life insurance or credit disability insurance shall be calculated in each billing cycle by applying the current monthly premium rate for the insurance, at the rate approved by the insurance commissioner to the entire outstanding balances in the borrower's open-end loan account, or so much thereof as the insurance covers using any of the methods specified in subsection (2) of this section for the calculation of interest charges; and

(b) The licensee shall not cancel credit life or disability insurance written in connection with an open-end loan because of delinquency of the borrower in the making of the required minimum payments on the loan, unless one or more of the payments is past due for a period of ninety days or more; and the licensee shall advance to the insurer the amounts required to keep the insurance in force during that period, which amounts may be debited to the borrower's account.

(5) A security interest in real or personal property may be taken to secure an open-end loan. Any such security interest may be retained until the open-end account is terminated. The security interest shall be promptly released if (a) there has been no outstanding balance in the account for twelve months and the borrower either does not have or surrenders the unilateral right to create a new outstanding balance; or (b) the account is terminated at the borrower's request and paid in full.

(6) The licensee may from time to time increase the rate of interest being charged on the unpaid principal balance of the borrower's open-end loans if the licensee mails or delivers written notice of the change to the borrower at least thirty days before the effective date of the increase unless the increase has been earlier agreed to by the borrower. However, the borrower may choose to terminate the open-end account and the licensee shall allow the borrower to repay the unpaid balance incurred before the effective date of the rate increase upon the existing open-end loan account terms and interest rate unless the borrower incurs additional debt on or after the effective date of the rate increase or otherwise agrees to the new rate.

(7) The licensee shall deliver a copy of the open-end loan agreement to the borrower at the time the open-end account is created. The agreement must contain the name and address of the licensee and of the principal borrower, and must contain such specific disclosures as may be required by rule of the ((~~supervisor~~)) director. In adopting the rules the ((~~supervisor~~)) director shall consider Regulation Z promulgated by the board of governors of the federal reserve system under the federal consumer credit protection act.

(8) Except in the case of an account that the licensee deems to be uncollectible, or with respect to which delinquency collection procedures have been instituted, the licensee shall deliver to the borrower at the end of each billing cycle in which there is an outstanding balance of more than one dollar in the account, or with respect to which interest is imposed, a periodic statement in the form required by the ((~~supervisor~~)) director. In specifying such form the ((~~supervisor~~)) director shall consider Regulation Z promulgated by the board of governors of the federal reserve system under the federal consumer credit protection act.

Sec. 169. RCW 31.04.145 and 1991 c 208 s 15 are each amended to read as follows:

For the purpose of discovering violations of this chapter or securing information lawfully required under this chapter, the ((~~supervisor~~)) director may at any time, either personally or by a designee, investigate the loans and business and examine, wherever located, the books, accounts, records, and files used in the business of every licensee and of every person who is engaged in the business described in RCW 31.04.035, whether the person acts or claims to act as principal or agent, or under or without the authority of this chapter. For that purpose the ((~~supervisor~~)) director and designated representative shall have free access to the offices and places of business, books, accounts, papers, records, files, safes, and vaults of all such persons. The ((~~supervisor~~)) director and persons designated by the ((~~supervisor~~)) director may require the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or the subject matter of any investigation, examination, or hearing. The ((~~supervisor~~)) director shall make such an examination of the affairs, business, office, and records of each licensee at least once each eighteen months. The licensee so examined shall pay to the ((~~supervisor~~)) director the actual cost of examining and supervising each licensed place of business.

Sec. 170. RCW 31.04.155 and 1991 c 208 s 16 are each amended to read as follows:

The licensee shall keep and use in the business such books, accounts, and records as will enable the ((~~supervisor~~)) director to determine whether the licensee is complying with this chapter and with the rules adopted by the ((~~supervisor~~)) director under this chapter. The ((~~supervisor~~)) director shall have free access to such books, accounts, and records wherever located. Every licensee shall preserve the books, accounts, and records for at least two years after making the final entry on any loan recorded in them.

Each licensee shall on or before the first day of March each year file a report with the ((~~supervisor~~)) director giving such relevant information as the ((~~supervisor~~)) director reasonably may require concerning the business and operations during the preceding calendar year of each licensed place of business conducted by the licensee within the state. The report must be made under oath and must be in the form prescribed by the ((~~supervisor~~)) director, who shall make and publish annually an analysis and recapitulation of the reports.

Sec. 171. RCW 31.04.165 and 1991 c 208 s 17 are each amended to read as follows:

(1) The ((~~supervisor~~)) director has the power, and broad administrative discretion, to administer and interpret this chapter to facilitate the delivery of financial services to the citizens of this state by loan companies subject to this chapter. The ((~~supervisor~~)) director shall adopt all rules necessary to ensure complete and full disclosure by licensees of lending transactions governed by this chapter.

(2) If it appears to the ((~~supervisor~~)) director that a licensee is conducting business in an injurious manner or is violating any provision of this chapter, the ((~~supervisor~~)) director may direct the discontinuance of any such injurious or illegal practice.

Sec. 172. RCW 31.04.175 and 1991 c 208 s 18 are each amended to read as follows:

(1) Every licensee that fails to file a report that is required to be filed by this chapter within the time required under this chapter is subject to a penalty of fifty dollars per day for each day's delay. The attorney general may bring a civil action in the name of the state for recovery of any such penalty.

(2) A person who violates, or knowingly aids or abets the violation of any provision of this chapter for which no penalty has been prescribed, and a person who fails to perform any act that it is made his or her duty to perform under this chapter and for which failure no penalty has been prescribed, is guilty of a gross misdemeanor. No person who has been convicted for the violation of the banking laws of this state or of the United States may be permitted to engage in the business, or become an officer or official, of any licensee in this state.

(3) No provision imposing civil penalties or criminal liability under this chapter or rule adopted under this chapter applies to an act taken or omission made in good faith in conformity with a written notice, interpretation, or examination report of the ((~~supervisor~~)) director or his or her agent.

Sec. 173. RCW 31.04.185 and 1991 c 208 s 19 are each amended to read as follows:

All rules adopted under or to implement the provisions of law repealed by sections 23 and 24, chapter 208, Laws of 1991 remain in effect until amended or repealed by the ((~~supervisor~~)) director.

Sec. 174. RCW 31.04.902 and 1991 c 208 s 25 are each amended to read as follows:

(1) Sections 1 through 23 of this act shall take effect January 1, 1992, but the ((~~supervisor~~)) director shall take such steps and adopt such rules as are necessary to implement this act by that date.

(2) Section 24 of this act shall take effect January 1, 1993.

Sec. 175. RCW 31.12.005 and 1984 c 31 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, as used in this chapter:

(1) "Board" means the board of directors of a credit union.

(2) "Branch" means any office, other than the principal place of business, maintained by a credit union for the purpose of providing services directly to its members. "Branch" does not include a facility that is limited to an electronic funds transferring machine that can be operated without the assistance of an employee of a credit union.

(3) "Credit union" means a credit union organized and operating under this chapter.

(4) "Director" means the director of financial institutions.

(5) "Employees" means the principal operating officer and other operating personnel of a credit union.

((~~(5)~~)) (6) "Federal credit union" means a credit union organized and operating under the laws of the United States.

((~~(6)~~)) (7) "Officers" means the officers of the board of a credit union who are elected under RCW 31.12.265.

((~~(7)~~)) (8) "Shares" and "deposits" are synonymous and interchangeable. Shares and deposits of a credit union shall be subject to such terms and conditions as established by the board of the credit union.

((~~(8) "Supervisor" means the supervisor of savings and loan associations appointed under RCW 43.19.100, or the duly authorized agent of the supervisor of savings and loan associations.~~))

(9) "Supervisory committee" means a committee having the powers and duties set forth in RCW 31.12.326 through 31.12.355. Supervisory committees are the statutory successors of auditing committees.

Sec. 176. RCW 31.12.015 and 1984 c 31 s 3 are each amended to read as follows:

A credit union is a cooperative society organized for the purposes of promoting thrift among its members and creating a source of credit for them at fair and reasonable rates of interest. The ((~~supervisor~~)) director is the state's credit union regulatory authority whose purpose is to protect the members' financial interests, the integrity of credit unions as cooperative institutions, and the interests of the general public, and to ensure that state-chartered credit unions remain viable and competitive in this state.

Sec. 177. RCW 31.12.035 and 1984 c 31 s 5 are each amended to read as follows:

Seven or more persons who reside in this state may apply to the ((~~supervisor~~)) director for permission to organize a credit union. The ((~~supervisor~~)) director shall approve the application if it is in compliance with this chapter.

Sec. 178. RCW 31.12.045 and 1984 c 31 s 6 are each amended to read as follows:

(1) Membership in a credit union shall be limited to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district. The ((~~supervisor~~)) director may adopt rules: (a) Reasonably defining "common bond"; and (b) setting forth standards for the approval of charters.

(2) The ((~~supervisor~~)) director may approve the inclusion within the field of membership of a credit union a group having a separate common bond if the ((~~supervisor~~)) director determines that the group is not of sufficient size or resources to support a viable credit union of its own.

Sec. 179. RCW 31.12.055 and 1984 c 31 s 7 are each amended to read as follows:

(1) Persons applying for the organization of a credit union shall execute articles of incorporation stating:

(a) The initial name of the proposed credit union and its location;

(b) That the duration of the credit union is perpetual;

(c) That the purpose of the credit union is to engage in the business of a credit union and any other lawful activities permitted to a credit union by applicable laws and rules;

(d) The number of its directors, which shall not be less than five nor greater than fifteen, and the names, occupations, and addresses of the persons who are to serve as the initial directors;

(e) The names, occupations, and addresses of the subscribers to the articles of incorporation, and a statement of the number of shares which each has agreed to take; and

(f) The initial par value of the shares of the credit union.

(2) Applicants shall submit the articles of incorporation in triplicate to the ((~~supervisor~~)) director.

Sec. 180. RCW 31.12.065 and 1984 c 31 s 8 are each amended to read as follows:

(1) Persons applying for the organization of a credit union shall adopt bylaws that are consistent with this chapter and that prescribe the manner in which the business of the credit union shall be conducted. The bylaws shall include:

(a) The name of the credit union;

(b) The purposes of the credit union;

(c) The qualifications for membership in the credit union, including the minimum number of shares, if any, required for membership status, and the standards and procedures for expelling a member who has failed to maintain the minimum number of shares;

(d) The number of directors and supervisory committee members, and the length of terms they serve;

(e) The frequency of regular meetings of the board and the supervisory committee, and the manner in which members of the board or supervisory committee are to be notified of meetings;

(f) The powers and duties of the officers elected by the board;

(g) The timing of the annual meeting and the manner in which members are to be notified of membership meetings, including special membership meetings;

(h) The number of members constituting a quorum at a membership meeting; and

(i) Other matters considered appropriate by the applicants to be included in the bylaws.

(2) Applicants shall submit the bylaws in duplicate to the ((~~supervisor~~)) director.

Sec. 181. RCW 31.12.075 and 1984 c 31 s 9 are each amended to read as follows:

(1) When articles of incorporation and bylaws complying with the requirements of RCW 31.12.055 and 31.12.065 have been filed with the ((~~supervisor~~)) director, the ((~~supervisor~~)) director shall:

(a) Determine whether the articles of incorporation and bylaws are consistent with the purposes and requirements of this chapter; and

(b) Determine the feasibility of the credit union, taking into account surrounding facts and circumstances pertaining to a successful operation of a credit union.

The ((~~supervisor~~)) director may establish by rule, as a prerequisite to approval of a proposed credit union, specific criteria consistent with the purposes and policies of this chapter.

(2) If the ((~~supervisor~~)) director is satisfied with the determinations made under subsection (1)(a) and (b) of this section, the ((~~supervisor~~)) director shall endorse each of the articles of incorporation "approved" and indicate the date the approval is granted, and return two sets of articles and one set of bylaws to the applicants.

(3) If the ((~~supervisor~~)) director is not satisfied with the determinations made under subsection (1)(a) and (b) of this section, the ((~~supervisor~~)) director shall endorse each of the articles of incorporation "refused," indicate the date of and reasons for the refusal, and return two copies of the articles of incorporation with one copy of the bylaws to the person from whom they were received. The ((~~supervisor~~)) director shall at the time of returning the copies of the articles of incorporation and bylaws also provide notice to the applicant of the applicant's right to appeal the refusal under chapter 34.05 RCW. The refusal is conclusive unless the applicant requests a hearing under chapter 34.05 RCW.

(4) The ((~~supervisor~~)) director shall accept or refuse the articles of incorporation within sixty days of receipt.

Sec. 182. RCW 31.12.085 and 1993 c 269 s 12 are each amended to read as follows:

(1) Upon the approval of the ((~~supervisor~~)) director under RCW 31.12.075(2), the applicants shall file a copy of the articles of incorporation with the secretary of state. Upon receipt of the approved articles of incorporation and a twenty dollar filing fee to be provided by the applicants, the secretary of state shall file and record the articles of incorporation. The applicants shall in writing promptly notify the ((~~supervisor~~)) director of the exact date of the filing.

(2) Upon the filing and recording of the approved articles of incorporation with the secretary of state, the persons named in the articles of incorporation and their successors may operate as a credit union, which shall have the powers and be subject to the duties and obligations of this chapter. A credit union shall not conduct business until the articles have been recorded by the secretary of state.

(3) A credit union shall organize and begin business within six months of the date that its articles of incorporation are filed and recorded with the secretary of state or its charter shall become void, unless the ((~~supervisor~~)) director for cause grants an extension of the six-month period. The ((~~supervisor~~)) director shall not grant a single extension exceeding three months, but may grant as many extensions to a credit union as circumstances require.

Sec. 183. RCW 31.12.095 and 1984 c 31 s 11 are each amended to read as follows:

In order to simplify the organization of credit unions the ((~~supervisor~~)) director shall cause to be prepared forms of articles of incorporation and bylaws consistent with this chapter and, upon written application of seven residents of this state, shall supply to the applicants, at no cost, blank forms of the suggested articles of incorporation and bylaws.

Sec. 184. RCW 31.12.105 and 1984 c 31 s 12 are each amended to read as follows:

The articles of incorporation of a credit union may be amended, with the approval of the ((~~supervisor~~)) director, by a resolution of the board. Amendments to the articles of incorporation shall be filed with the ((~~supervisor~~)) director and the secretary of state.

Sec. 185. RCW 31.12.115 and 1984 c 31 s 13 are each amended to read as follows:

(1) Subject to the approval of the ((~~supervisor~~)) director under subsection (2) of this section, the bylaws of a credit union may be amended by the board of directors at any regular meeting or at a special meeting called for that purpose. An amendment of the bylaws requires the affirmative vote of two-thirds of the total members of the board. At least seven days before a meeting at which an amendment to the bylaws is to be voted upon, a copy of the proposed amendment, together with a written notice of the meeting as provided in the bylaws, shall be served upon each member of the board either personally or by mail to the director's last known post office address.

(2) An amendment to the bylaws of a credit union shall not become operative until it has been approved by the ((~~supervisor~~)) director. The ((~~supervisor~~)) director shall approve or disapprove an amendment within thirty days of receipt.

Sec. 186. RCW 31.12.125 and 1990 c 33 s 564 are each amended to read as follows:

A credit union may:

(1) Issue shares to and receive deposits from its members as provided in this chapter and the bylaws of the credit union;

(2) Make loans to its members as provided in this chapter and the bylaws of the credit union;

(3) Pay dividends or interest to its members;

(4) Impose reasonable charges for the services it provides to its members;

(5) Impose financing charges and reasonable late charges in the event of default on loans in accordance with the bylaws of the credit union and recover reasonable costs and expenses, including reasonable attorneys' fees incurred both before and after judgment, incurred in the collection of sums due it if provided for in the note or agreement signed by the borrower;

(6) Acquire, lease, hold, assign, pledge, hypothecate, sell, or otherwise dispose of a possessory interest in personal property and, with the prior written permission of the ((~~supervisor~~)) director, in real property, so long as the property is necessary or incidental to the operation of the credit union. The written permission of the ((~~supervisor~~)) director is not required for the acquisition and disposition of property through the collection of loans secured by the property;

(7) Deposit and invest funds in excess of the amount approved for loans to members as provided in this chapter;

(8) Borrow money, up to a maximum of fifty percent of its paid-in and unimpaired capital and surplus;

(9) Discount or sell any of its assets, or purchase any or all of the assets of another credit union. A credit union may not discount or sell more than ten percent of its assets without the prior written approval of the ((~~supervisor~~)) director;

(10) Accept deposits of deferred compensation of its members under the terms and conditions of RCW 28A.400.240 and 41.04.250(2);

(11) Act as fiscal agent for and receive payments on shares and deposits from the federal government or this state, and any agency or political subdivision thereof;

(12) Engage in activities and programs as requested by the federal government, this state, and any political subdivision thereof, when the activities or programs are not inconsistent with this chapter;

(13) Hold membership in other credit unions organized under this chapter or other laws and in associations controlled by or fostering the interests of credit unions, including a central liquidity facility organized under state or federal law; and

(14) Exercise such incidental powers as are necessary or requisite to enable it to carry on effectively the business for which it is incorporated.

Sec. 187. RCW 31.12.136 and 1987 c 338 s 1 are each amended to read as follows:

(1) Notwithstanding any other provision of law, a credit union may exercise any of the powers or authority conferred as of July 26, 1987, upon a federal credit union doing business in this state.

(2) In addition to the powers conferred under subsection (1) of this section, the ((~~supervisor~~)) director may by rule authorize credit unions to exercise any of the powers conferred at the time of the adoption of the rule upon a federal credit union doing business in this state if the ((~~supervisor~~)) director finds that the exercise of power serves the convenience and advantage of depositors and borrowers of state-chartered credit unions, and maintains the fairness of competition and parity between state-chartered credit unions and federal‑chartered credit unions.

(3) Before exercising a power under subsection (1) or (2) of this section, the board of a credit union shall adopt a resolution identifying and formally adopting that power.

Sec. 188. RCW 31.12.195 and 1987 c 338 s 3 are each amended to read as follows:

(1) A special meeting of a credit union may be called by a majority of the board, a majority vote of the supervisory committee, or upon written application of at least ten percent or two thousand, whichever is less, of the voting members of a credit union. A request for a special meeting of a credit union shall be in writing and shall state specifically the purpose or purposes for which the meeting is called. If the special meeting is being called for the removal of a director the notice shall state the name of the director whose removal is sought.

(2) Upon receipt of a request for a special meeting, the secretary of the credit union shall designate the time and place at which the special meeting will be held. The designated place of the meeting shall be a reasonable location within the county in which the principal office of the credit union is located. The designated time of the meeting shall be no sooner than twenty nor later than thirty days after the request is received by the secretary. The secretary shall within ten days of receipt of the request give notice of the meeting, including the purpose for which the meeting is called, as provided in the bylaws. A willful violation of this section constitutes a violation of this chapter and constitutes grounds sufficient for the suspension and removal of the secretary under RCW 31.12.575.

(3) Except as provided in this subsection, the chairman or president of the board shall preside over special meetings. If the purpose of the special meeting includes the proposed removal of the chairman or president from the board, the next highest ranking officer of the board whose removal is not sought shall preside over the special meeting. If the removal of all of the officers of the board is sought, the chairman of the supervisory committee shall preside over the special meeting. After every special meeting, the chairman of the supervisory committee shall report to the ((~~supervisor~~)) director the results of the special meeting and whether the special meeting was conducted in a fair manner in accordance with the bylaws of the credit union and with customary rules of parliamentary procedure.

(4) Voting by mail ballot on issues to be presented at a special meeting is prohibited except with regard to mergers under RCW 31.12.695. Voting by mail ballot on a merger under RCW 31.12.695 may be authorized by the board in accordance with rules established by the ((~~supervisor~~)) director.

Sec. 189. RCW 31.12.206 and 1984 c 31 s 22 are each amended to read as follows:

Members of a credit union who are calling for a special meeting, the purpose of which is to remove a majority of the board, may file a petition with the ((~~supervisor~~)) director setting forth the reasons for which removal is sought and seeking the issuance of a cease and desist order. The ((~~supervisor~~)) director may, after reviewing the merits of the petition, issue a cease and desist order prohibiting the directors and employees of the credit union from conducting any credit union business outside the scope of the usual daily affairs of the credit union. The cease and desist order shall remain in effect until revoked or modified by the ((~~supervisor~~)) director or until the conclusion of the special meeting.

Sec. 190. RCW 31.12.215 and 1984 c 31 s 23 are each amended to read as follows:

A credit union desiring to establish a branch shall submit to the ((~~supervisor~~)) director a notice of intent to establish a branch on a form provided by the ((~~supervisor~~)) director at least thirty days before conducting business at the branch.

Sec. 191. RCW 31.12.306 and 1984 c 31 s 32 are each amended to read as follows:

(1) Each director, committee member, and employee of a credit union shall be bonded in an amount and with surety and conditions established by the ((~~supervisor~~)) director.

(2) When the bond coverage under subsection (1) of this section is suspended or terminated, the board of the affected credit union shall notify the ((~~supervisor~~)) director in writing within five days of having received notice of the suspension or termination.

Sec. 192. RCW 31.12.335 and 1984 c 31 s 35 are each amended to read as follows:

The supervisory committee of a credit union shall:

(1) Meet as often as necessary and at least quarterly;

(2) Keep fully informed as to the financial condition of the credit union;

(3) Cause to be made semiannually a complete examination of the cash, the credit union accounts, including income and expense, and the members' share accounts in accordance with rules adopted by the ((~~supervisor~~)) director; and

(4) Report its findings and recommendations to the board and make an annual report to the members at the annual meeting.

Sec. 193. RCW 31.12.355 and 1984 c 31 s 37 are each amended to read as follows:

Within forty-five days after the end of the fiscal year of a credit union, the supervisory committee of a credit union shall make a report to the ((~~supervisor~~)) director on a form provided by the ((~~supervisor~~)) director. A credit union that fails to submit the report within the time prescribed, or that fails to submit other reports within thirty days of a written request by the ((~~supervisor~~)) director, shall pay to the state five dollars for each day until the report is submitted. The penalty for any single delinquency shall not exceed one hundred dollars and may be waived by the ((~~supervisor~~)) director.

Sec. 194. RCW 31.12.385 and 1984 c 31 s 40 are each amended to read as follows:

Shares purchased and deposits made in a credit union by an individual are governed by chapter 30.22 RCW. An individual member may purchase shares and make deposits in a credit union in an amount that does not exceed five hundred dollars or twenty percent of the total shares of the credit union, whichever is greater. A fraternal organization, partnership, or corporation that is a member may purchase shares and make deposits in an amount that does not exceed twenty percent of the assets of the credit union, unless the ((~~supervisor~~)) director authorizes a greater amount. A credit union may require from a member ninety days notice of the intention to withdraw shares or deposits. The notice requirement may be extended with the written consent of the ((~~supervisor~~)) director.

Sec. 195. RCW 31.12.406 and 1987 c 338 s 6 are each amended to read as follows:

(1) A credit union may make loans to its members with the approval of a credit committee or loan officer. A credit union shall not make loans to a fraternal organization, partnership, or corporation in excess of the total shares of the organization, partnership, or corporation without the written consent of the ((~~supervisor~~)) director.

(2) A credit union may make to individual members:

(a) Personal loans secured by the note of the member or other adequate security, including, but not limited to, equity interests in real estate, automobiles, boats, motorhomes, and travel trailers. The aggregate of personal loans to one member shall be limited to five thousand dollars or two and one-half percent of the assets of the credit union, whichever is greater, unless the ((~~supervisor~~)) director approves in writing a greater loan amount;

(b) Student loans under student loan programs of this state or the United States;

(c) Loans for the acquisition of a modular home or mobile home as defined by RCW 82.50.010, secured by a first security interest in that modular home or mobile home, owned by the member. A loan under this subsection shall not exceed eighty‑five percent of the purchase price or of the appraised value of the modular home or mobile home, whichever is less;

(d) Residential real estate loans under RCW 31.12.415;

(e) Loans to its members under an act of congress known as the "FHA Title I, National Housing Act of 1934," June 27, 1934 (12 U.S.C. Sec. 1701 to 1750, inc.); and

(f) Loans to credit union members in participation with other credit unions, credit union organizations, or financial organizations. The credit union which originates a loan under this subsection shall retain an interest of at least ten percent of the face amount of the loan unless the loan is a real estate loan in which case there is no retention requirement.

(3) Personal loans shall be given preference, and in the event there are not sufficient funds available to satisfy all approved loan applicants, further preference shall be given to small loans.

Sec. 196. RCW 31.12.415 and 1984 c 31 s 43 are each amended to read as follows:

(1) For purposes of this section a residential real estate loan is a loan secured by a first mortgage, deed of trust, real estate contract, or other first lien on the borrower's interest in a one-to-four family dwelling, including an individual cooperative unit, or a loan made for the construction of the dwelling. The dwelling shall be insured by hazard insurance in an amount at least as great as the credit union's interest in the dwelling or the value of the dwelling, whichever is less. A residential real estate loan shall not exceed ten thousand dollars or two and one-half percent of the assets of the credit union, whichever is greater, without the approval of the ((~~supervisor~~)) director.

(2) Except for loans made with the intent of sale on the secondary market, the total amount of loans held by a credit union under this section shall not exceed:

(a) Ten percent of its total assets if its total assets are less than one hundred thousand dollars;

(b) Twenty percent of its total assets if its total assets are greater than one hundred thousand dollars but less than one million dollars; or

Sec. 197. RCW 31.12.425 and 1987 c 338 s 7 are each amended to read as follows:

(1) The capital or surplus funds in excess of the amount for which loans are approved may be deposited or invested in any of the following ways, so long as the investment has not been in default as to principal or interest within five years prior to the date of purchase:

(a) Accounts in banks or trust companies, including national banks located in this state, or other states, the accounts of which are insured by the federal deposit insurance corporation. The deposits made by a credit union under this subsection may exceed the insurance limits established by the federal deposit insurance corporation;

(b) Bonds, securities, or other investments that are fully guaranteed as to principal and interest by the United States government, and general obligations of this state and its political subdivisions;

(c) Obligations issued by corporations designated under Section 9101 of Title 31 U.S.C., or obligations, participations or other instruments issued and guaranteed by the federal national mortgage association;

(d) Participations or obligations which have been subjected by one or more government agencies to a trust or trusts for which an executive department, agency, or instrumentality of the United States has been named to act as trustee;

(e) Shares, share certificates, or share deposits of other credit unions or savings and loan associations organized or authorized to do business under the laws of this state, other states, or the United States, the accounts of which are insured or guaranteed by the federal savings and loan insurance corporation, the national credit union administration, the Washington credit union share guaranty association, or another insurer approved by the ((~~supervisor~~)) director. The deposits made by a credit union under this subsection may exceed the insurance or guarantee limits established by the organization insuring or guaranteeing the institution into which the deposits are made;

(f) Common trust funds whose investment portfolios consist of securities issued or guaranteed by the federal government or an agency of the government;

(g) Up to two percent of a corporation owned by the Washington credit union league;

(h) Shares, stocks, loans, or other obligations of an organization of which the membership or ownership is confined primarily to credit unions and the purpose of which is to strengthen, advance, or provide services to the credit union industry. An investment under subsection (1)(h) of this section shall be limited to one percent of the total paid-in and unimpaired capital and surplus of the credit union, but a credit union may, in addition to the investment, lend to the organization an amount not exceeding an additional one percent of the total paid-in and unimpaired capital and surplus of the credit union;

(i) Loans to other credit unions organized or authorized to do business under the laws of this state, other states, or the United States. The aggregate of loans issued under this subsection shall be limited to twenty-five percent of the paid‑in and unimpaired capital of the lending credit union; or

(j) Other investments authorized in accordance with rules adopted by the ((~~supervisor~~)) director consistent with this chapter.

(2) The board may appoint an investment committee to make and manage the investments under this section. An investment committee shall remain subject to the supervision of the board.

Sec. 198. RCW 31.12.435 and 1984 c 31 s 45 are each amended to read as follows:

(1) A credit union may invest a reasonable amount of its funds in real property or leasehold interests for its own use in conducting business if:

(a) The aggregate of its regular reserve and its undivided earnings equals five percent of the total of its share accounts;

(b) The board approves the investment in real property for its own use in conducting business by a two-thirds majority vote of the total number of directors;

(c) The total investment in the property does not exceed seven and one-half percent of the aggregate of its share and deposit accounts; and

(d) The ((~~supervisor~~)) director approves of the investment in writing.

(2) The ((~~supervisor~~)) director may waive the restrictions of this section. The restrictions of this section do not affect investments existing as of July 1, 1984.

Sec. 199. RCW 31.12.445 and 1984 c 31 s 46 are each amended to read as follows:

(1) At the end of each accounting period and before the payment of dividends to members, a credit union shall set apart as a regular reserve an amount in accordance with subsection (2) of this section.

(2)(a) If a credit union has been in operation for four or more years and has assets of at least five hundred thousand dollars it shall reserve ten percent of gross income until the regular reserve equals four percent of outstanding loans and then shall reserve five percent of gross income until the regular reserve equals six percent of outstanding loans.

(b) If a credit union has been in operation for less than four years or has assets of less than five hundred thousand dollars, it shall reserve ten percent of gross income until the regular reserve equals seven and one-half percent of outstanding loans and then shall reserve five percent of gross income until the regular reserve equals ten percent of outstanding loans.

(c) The ((~~supervisor~~)) director may authorize a credit union falling under subsection (2)(b) of this section to follow the reserving requirements for credit unions falling under subsection (2)(a) of this section.

(d) In computing outstanding loans for purposes of reserving, a credit union may exclude loans secured by shares and loans insured or guaranteed by the federal government or the government of this state to the extent of the security, insurance, or guarantee.

(3) When the regular reserve falls below the percentage of outstanding loans required under subsection (2) of this section, a credit union shall replenish the regular reserve by again reserving a portion of gross income as set forth in subsection (2) of this section.

(4) The regular reserve and the investments thereof shall be held to meet contingencies or losses in the business of the credit union and shall not be distributed to its members except in the case of dissolution or with the permission of the ((~~supervisor~~)) director.

Sec. 200. RCW 31.12.455 and 1984 c 31 s 47 are each amended to read as follows:

A credit union may with the approval of the ((~~supervisor~~)) director, in lieu of complying with the requirements of RCW 31.12.445, comply with the reserve requirements and regulations of the national credit union administration.

Sec. 201. RCW 31.12.465 and 1984 c 31 s 48 are each amended to read as follows:

The ((~~supervisor~~)) director may, if deemed necessary, require a credit union to establish a liquidity reserve of up to five percent of unimpaired capital. The liquidity reserve shall be in cash or investments with maturities of one year or less.

Sec. 202. RCW 31.12.475 and 1984 c 31 s 49 are each amended to read as follows:

The ((~~supervisor~~)) director may require a credit union to charge-off or set-up a special reserve fund for such delinquent loans or other assets as in the ((~~supervisor's~~)) director's opinion require such action.

Sec. 203. RCW 31.12.506 and 1984 c 31 s 52 are each amended to read as follows:

(1) Except as provided in subsections (2) and (3) of this section, a credit union shall not pay or become liable to pay as salaries, fees, wages, or other compensation to officers, directors, agents, attorneys, and employees and for rent, advertising, and all other operating expenses, sums of money in excess of ten percent of the average amount of assets of the credit union during the prior twelve months.

(2) Subsection (1) of this section notwithstanding, a credit union shall not be limited in its expenditures to a sum less than six hundred dollars in a calendar year.

(3) The ((~~supervisor~~)) director may waive the restrictions of subsection (1) of this section if, in the ((~~supervisor's~~)) director's opinion: (a) Circumstances warrant a waiver, and (b) waiver will not jeopardize the financial condition of the credit union.

Sec. 204. RCW 31.12.516 and 1984 c 31 s 53 are each amended to read as follows:

The powers of supervision and examination of credit unions are vested in the ((~~supervisor~~)) director. The ((~~supervisor~~)) director shall require each credit union to conduct business in compliance with this chapter and other laws that apply to credit unions, and has the power to commence and prosecute actions and proceedings, to enjoin violations, and to collect sums due the state of Washington from a credit union authorized to conduct business under this chapter.

Sec. 205. RCW 31.12.526 and 1984 c 31 s 54 are each amended to read as follows:

(1) A credit union organized and qualified as a credit union in another state which has not had its authority to operate in another state suspended or revoked may operate as a credit union under this chapter if:

(a) The ((~~supervisor~~)) director has approved an application to do business in this state;

(b) A credit union organized under the laws of this state is permitted to do business in the state in which the credit union is organized;

(c) The interest rate charged by the credit union on loans made to members residing in this state does not exceed the maximum interest rate permitted in the state in which the credit union is organized, or exceed the maximum interest rate which a credit union organized in this state is permitted to charge on similar loans, whichever is lower;

(d) The credit union has secured surety bond and fidelity bond coverages satisfactory to the ((~~supervisor~~)) director;

(e) The credit union has secured for the share accounts of its members insurance or other surety satisfactory to the ((~~supervisor~~)) director;

(f) The credit union submits to the ((~~supervisor~~)) director an annual audit or examination report of its most recently completed fiscal year; and

(g) The credit union complies with all other provisions of this chapter and rules adopted by the ((~~supervisor~~)) director.

(2) The ((~~supervisor~~)) director shall disapprove an application filed under this section or, upon reasonable notice and an opportunity for hearing, suspend or revoke the approval of an application, if the ((~~supervisor~~)) director finds that the standards of organization, operation, and regulation of the credit union do not reasonably conform with the standards under this chapter or that at least fifty percent of the members of the credit union are, or are reasonably expected to be, residents of this state. In considering the standards of organization, operation, and regulation of the credit union, the ((~~supervisor~~)) director may consider the laws and regulations of the state in which the credit union is organized. A decision under this subsection may be appealed under chapter 34.05 RCW.

(3) In implementing this section, the ((~~supervisor~~)) director may cooperate with the administrators of the credit union laws in other states and may share with the administrators the information received in the administration of this chapter.

(4) The ((~~supervisor~~)) director shall adopt rules for the periodic examination and investigation of the affairs of an out-of-state credit union operating in this state. The costs of examination and supervision shall be fully borne by the out-of-state credit union.

Sec. 206. RCW 31.12.535 and 1984 c 31 s 55 are each amended to read as follows:

The ((~~supervisor~~)) director may adopt such rules as are reasonable or necessary to carry out the purposes of this chapter. Chapter 34.05 RCW shall wherever applicable govern the rights, remedies, and procedures respecting the administration of this chapter.

Sec. 207. RCW 31.12.545 and 1984 c 31 s 56 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall make an examination and full investigation into the affairs of each credit union at least once every eighteen months, unless the ((~~supervisor~~)) director determines with respect to a credit union that a less frequent examination schedule will satisfactorily protect the financial stability of the credit union and will satisfactorily assure compliance with the provisions of this chapter. The actual cost of examination and supervision shall be paid by the credit union examined. The ((~~supervisor~~)) director may waive all or a portion of the examination costs payable by the credit union, in light of the time and expense of the examination and the ability of the credit union to pay the costs. The examination costs with respect to the first examination of a credit union with assets under two hundred thousand dollars shall not be payable by that credit union.

(2) The ((~~supervisor~~)) director may accept in lieu of an examination under subsection (1) of this section the report of an examiner authorized to examine a credit union under the laws of the United States or another state or the report of an accountant, satisfactory to the ((~~supervisor~~)) director, who has made and submitted a report of the condition of the affairs of a credit union and, if approved, the report shall have the same force and effect as an examination under subsection (1) of this section.

(3) Communications from the ((~~supervisor~~)) director to the board of a credit union regarding an examination or report shall be read before the board at its first meeting following the receipt of the communication and the fact that the communication was read before the board shall be noted in the minutes of the meeting. The board shall promptly respond to the ((~~supervisor~~)) director either by stating that steps have been taken to comply with the communication or by stating that the board objects to the communication and stating the reasons for the objection.

Sec. 208. RCW 31.12.555 and 1984 c 31 s 57 are each amended to read as follows:

The ((~~supervisor~~)) director may investigate the affairs of a credit union service organization in which a credit union has an interest. A person or an entity that is not a credit union that has an interest in a credit union service organization in which a credit union has an interest is deemed to have consented to the investigation. For the purposes of this section and RCW 31.12.565, a sole proprietorship, partnership, or corporation that is primarily in the business of managing one or more credit unions shall be considered to be a credit union service organization.

Sec. 209. RCW 31.12.565 and 1984 c 31 s 58 are each amended to read as follows:

(1) Examination reports and information obtained by the ((~~supervisor's~~)) director's staff in conducting examinations of credit unions and credit union service organizations are confidential and privileged information and not subject to public disclosure under chapter 42.17 RCW.

(2) Notwithstanding subsection (1) of this section, the ((~~supervisor~~)) director may furnish examination reports prepared by the ((~~supervisor's~~)) director's office to:

(a) Federal agencies empowered to examine state-chartered credit unions;

(b) Officials empowered to investigate criminal charges. The ((~~supervisor~~)) director may furnish only that part of the report which is necessary and pertinent to the investigation, and only after notifying the affected credit union and members of the credit union who are named in that part of the examination report that the report is being furnished to the officials, unless the officials requesting the report obtain a waiver of the notice requirement for good cause from a court of competent jurisdiction;

(d) The attorney general in his or her role as legal advisor to the ((~~supervisor~~)) director;

(e) Prospective merger partners or liquidating agents of a distressed credit union;

(f) Credit union administrators in other states regarding an out-of-state chartered credit union doing business in this state under this chapter, or regarding a credit union chartered under this chapter doing business in another state;

(g) Accounting firms under contract with the credit union;

(h) Companies that have bonded the credit union to the extent that information is relevant to the renewal of the bond coverage or to a claim under the bond coverage; or

(i) Companies, associations, or agencies insuring or guaranteeing the shares of or deposits in the credit union.

(3) Examination reports furnished under subsection (2) of this section remain the property of the ((~~supervisor's~~)) director's office and no person, agency, or authority to whom reports are furnished or any officer, director, or employee thereof may disclose or make public the reports or information contained in the reports except in published statistical information that does not disclose the affairs of an individual or corporation, except that nothing prevents the use in a criminal prosecution of reports furnished under subsection (2)(b) of this section.

(4) In a civil action in which the reports are sought to be discovered or used as evidence, a party upon notice to the ((~~supervisor~~)) director, may petition the court for an in-camera review of the reports. The court may permit discovery and introduction of only those portions of the report which are relevant and otherwise unobtainable by the requesting party. This subsection does not apply to an action brought or defended by the ((~~supervisor~~)) director.

(5) This section does not apply to investigation reports prepared by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff concerning an application for a new credit union or a notice of intent to establish a branch of a credit union, except that the ((~~supervisor~~)) director may adopt rules making confidential portions of the reports if in the ((~~supervisor's~~)) director's opinion the public disclosure of that portion of the report would impair the ability to obtain information the ((~~supervisor~~)) director considers necessary to fully evaluate the application.

(6) Any person who knowingly violates a provision of this section is guilty of a gross misdemeanor.

Sec. 210. RCW 31.12.575 and 1984 c 31 s 59 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may suspend a director or the principal operating officer of a credit union if, in the opinion of the ((~~supervisor~~)) director, the director or principal operating officer is dishonest, inefficient, incompetent, is willfully disobeying orders of the ((~~supervisor~~)) director, or is in any way violating this chapter or the bylaws of the credit union. The ((~~supervisor~~)) director shall give prompt notice of and the reasons for the suspension to the board of the affected credit union.

(2) Unless the ((~~supervisor~~)) director specifically provides otherwise in the order of suspension, an order of suspension shall take effect immediately. The suspended person shall be prohibited from all aspects of the operation of the credit union. The suspended person shall be barred from the credit union premises and shall surrender the possession of all property and records of the credit union. A person who knowingly violates an order of suspension or who knowingly aids in the violation of an order of suspension shall be guilty of a gross misdemeanor.

(3) Upon receipt of the notice of suspension, the board shall within twenty days call a meeting of its members to consider the causes of the suspension. The board shall give at least seven days' notice of the time and place of the meeting to the ((~~supervisor~~)) director unless the ((~~supervisor~~)) director agrees to accept shorter notice. If the board finds the ((~~supervisor's~~)) director's objection to be well-founded, the board shall remove the suspended person immediately.

(4) If the board fails to remove the suspended person as provided in subsection (3) of this section, the ((~~supervisor~~)) director may remove that person after reasonable notice and an opportunity to be heard under chapter 34.05 RCW. The suspension shall remain in effect for twenty days after the board meeting at which the board considers the suspension, during which time the ((~~supervisor~~)) director may call a hearing under this subsection. If the ((~~supervisor~~)) director calls a hearing, the suspension shall remain in effect until the time of the hearing.

Sec. 211. RCW 31.12.585 and 1984 c 31 s 60 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may issue and serve upon a credit union a notice of charges if in the opinion of the ((~~supervisor~~)) director the credit union:

(a) Is engaging or has engaged in an unsafe or unsound practice in conducting the business of the credit union;

(b) Is violating or has violated a material provision of any law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director in connection with the granting of any application or other request by the credit union or any written agreement made with the ((~~supervisor~~)) director; or

(c) Is about to do the acts prohibited in (a) or (b) of this subsection if the opinion that the threat exists is based upon reasonable cause.

(2) The notice shall contain a statement of the facts constituting the alleged violation or the practice and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the credit union. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the ((~~supervisor~~)) director at the request of the credit union.

Unless the credit union appears at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease and desist order. In the event of this consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the credit union an order to cease and desist from the violation or practice. The order may require the credit union and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the credit union to take affirmative action to correct the conditions resulting from the violation or practice.

(3) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the credit union concerned except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided therein unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 212. RCW 31.12.595 and 1984 c 31 s 61 are each amended to read as follows:

If the ((~~supervisor~~)) director determines that the act specified in RCW 31.12.585 is likely to cause insolvency or substantial dissipation of assets or earnings of the credit union or to otherwise seriously prejudice the interests of its depositors, members, or shareholders, the ((~~supervisor~~)) director may issue a temporary order requiring the credit union to cease and desist from the violation or practice. The order shall become effective upon service on the credit union and shall remain effective unless set aside, limited, or suspended by a court in proceedings under RCW 31.12.605 pending the completion of the administrative proceedings under the notice and until the ((~~supervisor~~)) director dismisses the charges specified in the notice or until the effective date of a cease and desist order issued against the credit union under RCW 31.12.585.

Sec. 213. RCW 31.12.615 and 1984 c 31 s 63 are each amended to read as follows:

In the case of a violation or threatened violation of a temporary cease and desist order issued under RCW 31.12.595, the ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the credit union for an injunction to enforce the order, and the court shall issue an injunction if it determines that there has been a violation or threatened violation.

Sec. 214. RCW 31.12.625 and 1984 c 31 s 64 are each amended to read as follows:

(1) An administrative hearing provided in RCW 31.12.585 shall be conducted in accordance with chapter 34.05 RCW. The hearing shall be private unless the ((~~supervisor~~)) director determines that a public hearing is necessary to protect the public interest after fully considering the views of the party afforded the hearing.

(2) Within sixty days after the hearing, the ((~~supervisor~~)) director shall render a decision which shall include findings of fact upon which the decision is based and the ((~~supervisor~~)) director shall issue and serve upon each party to the proceeding an order or orders consistent with RCW 31.12.585.

Sec. 215. RCW 31.12.635 and 1984 c 31 s 65 are each amended to read as follows:

(1) It is unlawful for a person to perform any of the following acts:

(a) To knowingly subscribe to, make, or cause to be made a false statement or entry in the books of a credit union;

(b) To knowingly make a false statement or entry in a report required to be made to the ((~~supervisor~~)) director; or

(c) To knowingly exhibit a false or fictitious paper, instrument, or security to a person authorized to examine a credit union.

(2) A violation of this section is a class C felony under chapter 9A.20 RCW.

Sec. 216. RCW 31.12.655 and 1984 c 31 s 67 are each amended to read as follows:

The ((~~supervisor~~)) director may request a special meeting of the board of a credit union if the ((~~supervisor~~)) director believes that a special meeting is necessary for the welfare of the credit union or the purposes of this chapter. The ((~~supervisor's~~)) director's request for a special meeting shall be made in writing to the secretary of the board and the request shall be handled in the same manner as a call for a special meeting under RCW 31.12.195. The ((~~supervisor~~)) director may require the attendance of all of the directors of the board at the special meeting, and an absence of a director unexcused by the ((~~supervisor~~)) director constitutes a violation of this chapter.

Sec. 217. RCW 31.12.665 and 1984 c 31 s 68 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may attend a regular or special meeting of the board of a credit union if the ((~~supervisor~~)) director believes that attendance at the meeting is necessary for the welfare of the credit union or the purposes of this chapter or if the board has requested the ((~~supervisor's~~)) director's attendance. The ((~~supervisor~~)) director shall provide reasonable notice to the board before attending a meeting.

(2) A communication from the ((~~supervisor~~)) director to the board shall upon the request of the ((~~supervisor~~)) director be read to the board at its next meeting and the fact that the communication was read shall be noted in the minutes.

Sec. 218. RCW 31.12.675 and 1984 c 31 s 69 are each amended to read as follows:

(1) The articles of incorporation of a credit union may be suspended or revoked, the credit union placed in involuntary liquidation, and a liquidating agent appointed upon a finding by the ((~~supervisor~~)) director that the credit union is insolvent.

(2) Except as otherwise provided in this chapter, the ((~~supervisor~~)) director, before suspending or revoking the articles of incorporation of a credit union and placing the credit union in liquidation, shall issue and serve notice on the credit union concerned of the intention to suspend or revoke the articles and an order directing the credit union to show cause why its articles of incorporation should not be suspended or revoked, in accordance with chapter 34.05 RCW.

(3) If the ((~~supervisor~~)) director finds that the credit union is insolvent and the credit union fails to adequately show cause, the articles of incorporation shall be suspended or revoked and the credit union placed in involuntary liquidation. The ((~~supervisor~~)) director shall serve on the credit union an order directing the suspension or revocation and an order directing the involuntary liquidation and appointment of a liquidating agent under RCW 31.12.685, and a statement of the findings on which the order is based.

(4) The suspension or revocation shall be immediate and complete. Once the articles of incorporation are suspended or revoked, the credit union shall cease conducting business. The credit union may not accept any payment on shares or deposits, may not grant or pay out any new or previously approved loans, may not invest any of its assets, and may not declare or pay out any previously declared dividends. The liquidating agent of a credit union whose articles have been suspended or revoked may accept payments on loans previously paid out and may accept income from investments already made.

Sec. 219. RCW 31.12.685 and 1984 c 31 s 70 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall designate the liquidating agent in the order directing the involuntary liquidation of the credit union under RCW 31.12.675. On receipt of the order placing the credit union in involuntary liquidation, the officers and directors of the credit union concerned shall deliver to the liquidating agent possession and control of all books, records, assets, and property of the credit union.

(2) The liquidating agent shall proceed to convert the assets to cash, collect all debts due to the credit union and wind up its affairs in accordance with the instructions and procedures issued by the ((~~supervisor~~)) director. If a liquidating agent agrees to absorb and serve the membership of a distressed credit union the ((~~supervisor~~)) director may approve a pooling of assets and liabilities rather than a distribution of assets.

(3) The liquidating agent shall cause to be published notice of liquidation once a week for three consecutive weeks in a newspaper of general circulation in the county in which the principal place of business of the liquidating credit union is located. The notice of liquidation shall inform creditors of the liquidating credit union how to make a claim upon the liquidating agent and that if a claim is not made upon the liquidating agent within thirty days of the last date of publication the creditor's claim shall be barred. The liquidating agent shall provide personal notice of liquidation to the creditors of record informing them that if they fail to make a claim upon the liquidating agent within thirty days of the service of the notice, the creditor's claim shall be barred. If a creditor fails to make a claim upon the liquidating agent within the times required to be specified in the notices of liquidation the creditor's claim shall be barred. All contingent liabilities of the liquidated credit union shall be discharged upon the ((~~supervisor's~~)) director's order to liquidate the credit union. The liquidating agent shall, upon completion, certify to the ((~~supervisor~~)) director that the distribution or pooling of assets of the credit union is complete.

Sec. 220. RCW 31.12.695 and 1987 c 338 s 8 are each amended to read as follows:

(1) For purposes of this section the merging credit union is the credit union whose charter ceases to exist upon merging with the continuing credit union. The continuing credit union is the credit union whose charter continues upon merging with the merging credit union.

(2) A credit union may be merged with another credit union with the approval of the ((~~supervisor~~)) director and in accordance with requirements the ((~~supervisor~~)) director may prescribe. The merger shall be approved by two-thirds majority vote of the board of each credit union and two-thirds majority vote of those members of the merging credit union voting on the merger at a special membership meeting called by the merging credit union board or by mail ballot as provided in RCW 31.12.195(4). The requirement of approval by the members of the merging credit union may be waived if in the ((~~supervisor's~~)) director's opinion the merging credit union is in imminent danger of insolvency.

(3) The property, rights, and interests of the merging credit union transfer to and vest in the continuing credit union without deed, endorsement, or instrument of transfer, although instruments of transfer may be used if their use is deemed appropriate. The debts and obligations of the merging credit union that are known or reasonably should be known are assumed by the continuing credit union. The continuing credit union shall cause to be published notice of merger once a week for three consecutive weeks in a newspaper of general circulation in the county in which the principal place of business of the merging credit union is located. The notice of merger shall inform creditors of the merging credit union how to make a claim on the continuing credit union and that if a claim is not made upon the continuing credit union within thirty days of the last date of publication creditors' claims that are not known by the continuing credit union may be barred. Unless a claim is filed as requested by the notice, or unless the debt or obligation is known or reasonably should be known by the continuing credit union, the debts and obligations of the merging credit union are discharged. Upon merger the charter of the merging credit union ceases to exist.

Sec. 221. RCW 31.12.705 and 1984 c 31 s 72 are each amended to read as follows:

(1) A credit union chartered under the laws of this state may convert itself into a federal credit union chartered under the laws of the United States as authorized by the federal credit union act. The conversion shall be approved by two-thirds majority vote of the members present at any regular or special membership meeting called for that purpose by the board. The meeting shall be held within thirty days of being called and the secretary shall notify the members and the ((~~supervisor~~)) director of the meeting and its purpose as provided by the bylaws at least twenty days prior to the meeting.

(2) If the conversion is approved by the members a copy of the resolution certified by the board shall be filed with the ((~~supervisor~~)) director within ten days of approval. The board may effect the conversion from a state-chartered credit union to a federal‑chartered credit union upon terms agreed by the board and the proper federal authorities as provided by federal laws, rules, and regulations.

(3) A certified copy of the federal credit union charter or authorization issued to the credit union by the proper federal authority shall be filed in the ((~~supervisor's~~)) director's office and thereupon the state-chartered credit union ceases to exist except for the purpose of winding up its affairs and prosecuting or defending any litigation by or against the state-chartered credit union. For all other purposes the credit union is converted into a federal-chartered credit union and the state-chartered credit union may execute, acknowledge, and deliver to the successor federal credit union the instruments of transfer, conveyance, and assignment that are necessary or desirable to complete the conversion, and the property, tangible or intangible, and all rights, titles, and interests that are agreed to by the board and the proper federal authorities.

(4) Procedures, similar to those contained in subsections (1) through (3) of this section, prescribed by the ((~~supervisor~~)) director shall be followed when a credit union chartered under the laws of this state merges with or converts to a credit union chartered under the laws of another state.

Sec. 222. RCW 31.12.715 and 1984 c 31 s 73 are each amended to read as follows:

(1) A federal credit union located and conducting business in this state which becomes inoperative because of a change in the laws under which it is chartered or which is authorized to dissolve or convert to a state-chartered credit union in accordance with federal law may convert into a state-chartered credit union.

(2) The board of the federal credit union shall file with the ((~~supervisor~~)) director proposed articles of incorporation and proposed bylaws, as provided by this chapter for organizing a new state‑chartered credit union. If approved by the ((~~supervisor~~)) director the federal-chartered credit union shall become a state-chartered credit union under the laws of this state and the assets and liabilities of the credit union vest in and become the property of the successor state‑chartered credit union subject to all existing liabilities against the federal-chartered credit union. Shareholders and members of the federal credit union may become shareholders and members of the successor state-chartered credit union.

(3) Procedures, similar to those contained in subsections (1) and (2) of this section, prescribed by the ((~~supervisor~~)) director shall be followed when a credit union chartered under the laws of another state wishes to merge with or convert to a credit union chartered under the laws of this state.

Sec. 223. RCW 31.12.725 and 1984 c 31 s 74 are each amended to read as follows:

(1) At a meeting specially called for the purpose of liquidation, upon the recommendation of at least two-thirds of the total members of the board of a credit union, the members of a credit union may by a two-thirds vote of the members present elect to liquidate the credit union.

(2) Upon a vote to liquidate under subsection (1) of this section, a committee of three shall be elected to liquidate the assets of the credit union. The committee shall act under the direction of the ((~~supervisor~~)) director and may be reasonably compensated by the board of the credit union. Each share of the credit union shall be entitled to its proportionate part of the assets in liquidation after all deposits and debts have been paid. The assets of the liquidating credit union shall not be subject to contingent liabilities. Upon distribution of the assets, the credit union shall cease to exist except for the purpose of discharging existing liabilities and obligations.

(3) Funds representing unclaimed dividends in liquidation and remaining in the hands of the liquidating committee for six months after the date of the final dividend shall be deposited, together with all the books and papers of the credit union, with the ((~~supervisor~~)) director. The ((~~supervisor~~)) director may one year after receipt destroy such records, books, and papers as, in the ((~~supervisor's~~)) director's judgment, are obsolete or unnecessary for future reference. The funds may be deposited in one or more trust companies, mutual savings banks, savings and loan associations, or national or state banks to the credit of the ((~~supervisor~~)) director in trust for the members of the liquidating credit union entitled to the funds. The ((~~supervisor~~)) director may pay to a person entitled to it that person's portion of the funds upon the receipt of satisfactory evidence that the person is entitled to a portion of the funds. In case of doubt or of conflicting claims, the ((~~supervisor~~)) director may require an order of the superior court of the county in which the credit union was located authorizing and directing the payment of the funds. The ((~~supervisor~~)) director may apply the interest earned by the funds toward defraying the expenses incurred in the holding and paying of the funds. Five years after the receipt of the funds, the funds still remaining with the ((~~supervisor~~)) director shall be escheated to the state.

Sec. 224. RCW 31.12.905 and 1984 c 31 s 81 are each amended to read as follows:

This act shall take effect on July 1, 1984. The ((~~supervisor of savings and loans~~)) director may immediately take such steps as are necessary to ensure that this act is implemented on its effective date.

Sec. 225. RCW 31.12A.010 and 1985 c 7 s 98 are each amended to read as follows:

As used in this chapter, unless the context otherwise requires, the terms defined in this section shall have the meanings indicated.

(1) "Assessment" means the amount levied by the association against its members in order to carry out its stated purposes.

(2) "Association" means the credit union share guaranty association created in RCW 31.12A.020.

(3) "Board" means board of directors of the guaranty association.

(4) "Contracted guarantees" means those liabilities specifically agreed to by the association for providing assistance to member credit unions or for indemnifying any other entity against loss because of its participation in the absorption or liquidation of a distressed member credit union.

(5) "Credit union" means a credit union organized and authorized under laws contained in chapter 31.12 RCW, as now or hereafter amended.

(6) "Director" means the director of financial institutions.

(7) "Initial member" means a member qualified by the ((~~supervisor~~)) director within sixty days after September 1, 1975, but not yet ratified by the board.

((~~(7)~~)) (8) "Member" means a member of the guaranty association, ratified by the board.

((~~(8)~~)) (9) "Share account" of a credit union shareholder includes the share and/or deposit accounts and the share and/or deposit certificates of which the shareholder is owner of record with the credit union.

((~~(9)~~)) (10) "Shareholder" includes both members and nonmembers of a credit union, who have either shares and/or deposits in the credit union, including deposits of deferred compensation as referred to in RCW 31.12.125(10).

((~~(10) "Supervisor" means the state supervisor of the division of savings and loan associations, or his successor in the event of a departmental restructuring.~~))

(11) "Transfer" means entering on the credit union's books of account a decrease to one account and a corresponding increase to another account.

Sec. 226. RCW 31.12A.040 and 1982 c 67 s 4 are each amended to read as follows:

(1) Every credit union meeting the following qualifications is eligible for membership in the association:

(a) Must be in business as a duly authorized credit union.

(b) Must be operating in compliance with applicable laws and the rules ((~~and regulations~~)) of the ((~~supervisor~~)) director.

(2) Prior to the operative date stated in subsection (3) of this section, application for membership shall be made by the credit union in writing to the association on forms designed and furnished by the association, and filed with the secretary. An application fee, as fixed in the bylaws, payable to the order of the association, shall accompany each such application. If the application is found to be:

(a) Complete, and the applicant qualified for membership: The association shall issue and deliver to the applicant a certificate of membership in appropriate form.

(b) Incomplete: The association shall require the applicant to refile said application in its entirety within thirty days.

(c) Not qualified: The association shall notify said applicant within thirty days of filing: PROVIDED, That said applicant will be allowed to meet qualification standards under conditions as provided in the bylaws of the association.

(3) The initial membership of the association shall be comprised of all those credit unions qualified under subsection (1) of this section by the ((~~supervisor~~)) director within sixty days after September 1, 1975, with final ratification by the initial board of directors subject to full compliance of all qualifications for membership within one hundred twenty days after September 1, 1975.

(4) Membership in either this association or the federal share insurance program under the national credit union administration shall be mandatory.

Sec. 227. RCW 31.12A.050 and 1983 c 48 s 2 are each amended to read as follows:

(1) Funding of the association shall be by transfers to a share guaranty association contingency reserve as follows:

(a) Credit unions approved by the ((~~supervisor~~)) director and ratified by the board for membership subsequent to those initial members shall establish a share guaranty association contingency reserve by transferring from their guaranty fund an amount equal to one-half of one percent of the total guaranteeable outstanding share and deposit balances as of the date of membership. When one member credit union is merged into another member credit union, the continuing credit union shall include in its share guaranty contingency reserve the share guaranty contingency reserve of the merged credit union. A nonmember credit union merging with a member credit union must transfer into the share guaranty contingency reserve of the continuing credit union an amount equal to one-half of one percent of the total ((~~quaranteeable~~)) guaranteeable outstanding share and deposit balances of the nonmember credit union as of the effective date of the merger, as determined by the ((~~supervisor~~)) director.

(b) On the first business day of each year, member credit unions shall make a transfer of an amount sufficient to adjust the contingency reserve to a level of one-half of one percent of the guaranteeable outstanding share and deposit balances as of December 31st of the previous year. If the member's guaranteeable outstanding share and deposit balances decrease from the previous year, any excess which may then appear in the contingency reserve may be transferred to the guaranty fund.

(c) The board may require one additional transfer during the calendar year of an amount not to exceed one-half of one percent of the guaranteeable outstanding share and deposit balances as of December 31st of the previous year. Credit unions which have merged during the year and credit unions which have joined during the year will be subject to the one additional transfer, even if that required transfer occurred before ratification of the joining member or the merger of the two credit unions. The transfer will be based on the guaranteeable share and deposit balances of those credit unions as of the following dates:

(i) For new members, the balances as of the date of membership;

(ii) For members that merge, the sum of the balances as of December 31st of the previous year;

(iii) For a nonmember merging with a member, the sum of the member's balances as of December 31st of the previous year, and of the nonmember's balances as of the effective date of the merger.

(2) Sums specified in subsection (1) of this section may be offset from the statutory transfer requirement to the guaranty fund and shall be retained in the credit union share guaranty contingency reserve as an integral part of its guaranty fund until such time and if necessary to be drawn for the purposes set forth in this chapter.

(3) Members' share guaranty association contingency reserve funds shall be invested in investments as permitted in the bylaws of the association.

(4) The board, in concurrence with the ((~~supervisor~~)) director, may also suspend or diminish the transfer in any given period after reaching a normal operating sufficiency as provided in the bylaws.

(5) Membership in this association may be terminated upon approval by a majority of the credit union members responding to such a proposal and subject further to acceptance by the national credit union administration of continued share insurance coverage under the national credit union administration share insurance program. Notice of such intentions shall be in writing to the association's board of directors at least twelve months prior to such contemplated action: PROVIDED, That in the event that the credit union board has voted to recommend to the membership liquidation, conversion from state to federal credit union charter, or merger with or conversion to a credit union organized under the laws of another state, the liquidating, converting, or merging member will notify the association in writing within seven days after the credit union board has taken such action. Share guarantee coverage through the association will terminate with the effective date of the new charter or completion of the liquidation or merger as determined by the ((~~supervisor~~)) director.

(6) Except for a credit union merging with a member credit union, any credit union terminating membership in the association shall be assessed its pro rata share of the difference, if any, between the association's current liability for contracted guarantees and the amount from previous assessments currently held for contracted guarantees by the association. Such difference shall be determined by the ((~~supervisor~~)) director at the time the membership is terminated. If the amount of the assessment exceeds the amount of the actual obligation when finalized, the excess shall be refunded in the same proportion as paid.

Sec. 228. RCW 31.12A.070 and 1975 1st ex.s. c 80 s 9 are each amended to read as follows:

(1) Within thirty days after the operative date of this chapter, the ((~~supervisor~~)) director shall call a first meeting of the initial members of the association for the purpose of electing directors and shall give written notice of the time and place of such meeting. The meeting shall be held within sixty days after such operative date, at a place in this state selected by the ((~~supervisor~~)) director and of convenience to members. The ((~~supervisor~~)) director shall preside at the meeting.

(2) The initial board of directors shall meet within thirty days after the first meeting of members, to elect officers, consider bylaws, and transact such other business relating to the association as may properly come before it.

Sec. 229. RCW 31.12A.080 and 1975 1st ex.s. c 80 s 10 are each amended to read as follows:

(1) The first bylaws of the association shall be as adopted by its initial board, and the board shall so adopt bylaws within three months after the association has become operative. All bylaws, and amendments thereof, shall be promptly filed with, and are subject to the approval of, the ((~~supervisor~~)) director, and shall be approved if found by the ((~~supervisor~~)) director to be reasonable, and fair and equitable to the association and its members. Among the customary, useful, and desirable provisions the bylaws shall provide:

(a) For the date and place of holding the annual meeting of members.

(b) Procedure for holding of special meetings.

(d) For quorum requirements.

(e) For qualifications of directors, for procedures for nomination, election and removal of directors; and number, term and compensation of directors.

(f) For the bonding of any individual who may be expected to handle funds for the association.

(g) Qualifications for membership.

(h) Duties of officers.

(i) Application fees and assessment fees.

(j) Fines, if any.

(k) Coverage loss limits.

(l) Powers and duties of the board.

(m) Types of investments, liquidity, and normal operating sufficiency.

(n) Such other regulations as may be deemed necessary.

(2) After adoption of initial bylaws by the board, the bylaws shall be subject to amendments only by vote of the members. The secretary-treasurer of the association shall promptly file all bylaws and amendments with the ((~~supervisor~~)) director. No bylaws or amendments thereto, except the adoption of initial bylaws, shall be effective until approved by the ((~~supervisor~~)) director as hereinabove in this section provided.

Sec. 230. RCW 31.12A.090 and 1982 c 67 s 7 are each amended to read as follows:

(1) In the event a member of the association is placed in liquidation, either voluntary or involuntary, the ((~~supervisor~~)) director or his or her representative shall determine as soon as is reasonably possible the probable assessment, if any, resulting therefrom to its shareholders. If an assessment seems to be indicated, the ((~~supervisor~~)) director or his or her representative shall promptly inform the association in writing of the probable amount of such assessment. In determining the probable assessment for the liquidating member, charges, if any, for services of the ((~~supervisor~~)) director or his or her representative, or his or her staff, as well as accrued but unpaid interest or dividends on share accounts, shall not be deemed liabilities of the liquidating credit union; and, with the consent of the association, all illiquid holdings (furniture, fixtures and other personal property) of the liquidating member, at the fair recoverable value thereof, as determined by the ((~~supervisor~~)) director or his or her representative, may be excluded as assets. In determining the assessment as to a particular share account, the ((~~supervisor~~)) director or his or her representative shall first deduct the amount of any accrued and currently payable obligation of the shareholder to the liquidating credit union.

(2) Within thirty days after receipt by the association of the foregoing information, the board shall notify the remaining members of the association of the aggregate amount required to make good the probable net loss to share accounts, subject to the following conditions:

(a) The amount of loss to be made good to any shareholder shall not be less than provided by the national credit union administration share insurance program, with authority vested in the association to increase the coverage.

(b) To the amount of the assessment as otherwise determined pursuant to this section, the board may add such amount as it may deem to be reasonably necessary to cover its clerical, mailing and other expense connected with the assessment and distribution of the proceeds thereof to shareholders of the liquidating credit union, not to exceed actual costs of such mailing and clerical services.

(c) The amount of the assessment shall be prorated among the assessed members against their share guaranty contingency reserve: PROVIDED, That members shall not be liable for any amount of assessment exceeding their share guaranty contingency reserve or for any assessments exceeding those permitted in RCW 31.12A.050 as now or hereafter amended.

(d) That a plan for an orderly and expeditious liquidation be presented to the board of directors for their consideration and approval. In cases where a central or other eligible credit union is authorized to act as liquidator or liquidating agent, the association would provide an indemnity against loss to such authorized credit union.

(3) In case of liquidation the board shall cause written notice to each member only if a potential assessment is indicated and the probable amount of such contingency as it relates to a percentage of their total share guaranty contingency reserve. The actual assessment shall be paid by members upon completion of liquidation or sooner, as determined by the board of directors. In all cases the total reserve structure of a liquidating credit union, including its share guaranty contingency reserve, shall be utilized in concluding the liquidation.

Sec. 231. RCW 31.12A.100 and 1975 1st ex.s. c 80 s 12 are each amended to read as follows:

(1) Upon collection in full of the amount assessed against members as provided for in RCW 31.12A.090, or other provision satisfactory to the board, the association shall conclude the liquidation subject to acceptance by the ((~~supervisor~~)) director.

(2) If illiquid holdings of the liquidating member have not been included as assets in determining net loss to share accounts, as provided for in RCW 31.12A.090(1), the association shall be subrogated to all rights of shareholders with respect to such holdings and to the extent of the value thereof so excluded and reflected in the assessment of association members; and the officers of the liquidating member or other persons having authority with respect thereto shall execute such conveyances, assignments, or other documents as may be requested by the association to facilitate recovery by the association in due course of the amount of its interest in such assets or so much thereof as may in fact be recoverable. The association shall have the right to bring and maintain suit or other action in its own name for the enforcement of any right of the insolvent member or its shareholders with respect to any such asset.

Sec. 232. RCW 31.12A.120 and 1975 1st ex.s. c 80 s 14 are each amended to read as follows:

(1) Within sixty days after expiration of each calendar year, the association shall render a report in writing of its financial affairs and transactions for the year, and of its financial condition at year-end. The association shall furnish a copy of the report to each member and to the ((~~supervisor~~)) director.

(2) The financial affairs of the association shall be subject to examination by the ((~~supervisor~~)) director at such intervals as he or she may deem advisable in relation to the extent of the association's activities. The cost of examination shall be borne by the association. In lieu of his or her own examination, the ((~~supervisor~~)) director may accept the report of any competent accountant, satisfactory to the ((~~supervisor~~)) director.

Sec. 233. RCW 31.12A.140 and 1975 1st ex.s. c 80 s 16 are each amended to read as follows:

There shall be no separate and individual liability on the part of and no cause of action of any nature shall arise against any member insurer, agents or employees of the association, the board of directors, or the ((~~supervisor~~)) director or his or her representatives, for any action taken by them in the performance of their powers and duties under this chapter.

Sec. 234. RCW 31.13.030 and 1977 ex.s. c 207 s 2 are each amended to read as follows:

Notwithstanding any other provision of law, the central credit union may adopt bylaws enabling it to exercise any of the powers, as now existing or hereafter conferred upon, a federally chartered central credit union doing business in this state which is subject to the regulations of the administrator of the national credit union administration, or the successor or successors of him or her, if the ((~~supervisor~~)) director finds that the exercise of such power:

(1) Serves the public convenience and advantage; and

(2) Equalizes and maintains the quality of competition between the state chartered central credit union and any federally chartered central credit union.

Sec. 235. RCW 31.24.080 and 1963 c 162 s 8 are each amended to read as follows:

The articles of incorporation may be amended by the votes of the stockholders and the members of the corporation, voting separately by classes, and such amendments shall require approval by the affirmative vote of two‑thirds of the votes to which the stockholders shall be entitled and two-thirds of the votes to which the members shall be entitled: PROVIDED, That no amendment of the articles of incorporation which is inconsistent with the general purposes expressed herein or which authorizes any additional class of capital stock to be issued, or which eliminates or curtails the right of the ((~~state supervisor of banking~~)) director to examine the corporation or the obligation of the corporation to make reports as provided in RCW 31.24.120, shall be made: PROVIDED, FURTHER, That no amendment of the articles of incorporation which increases the obligation of a member to make loans to the corporation, or makes any charge in the principal amount, interest rate, maturity date, or in the security or credit position of an outstanding loan of a member to the corporation, or affects a member's right to withdraw from membership as provided herein, or affects a member's voting rights as provided herein, shall be made without the consent of each membership affected by such amendment.

Within thirty days after any meeting at which an amendment of the articles of incorporation has been adopted, articles of amendment signed and sworn to by the president, treasurer, and a majority of the directors, setting forth such amendment and due adoption thereof, shall be submitted to the secretary of state, who shall examine them and if he finds that they conform to the requirements of this chapter, shall so certify and endorse his or her approval thereon. Thereupon, the articles of amendment shall be filed in the office of the secretary of state and no such amendment shall take effect until such articles of amendment shall have been filed as aforesaid.

Sec. 236. RCW 31.24.120 and 1963 c 162 s 12 are each amended to read as follows:

The corporation shall be examined at least once annually by the ((~~state supervisor of banking~~)) director and shall make reports of its condition not less than annually to ((~~said state supervisor of banking~~)) the director and more frequently upon call of the ((~~state supervisor of banking~~)) director, who in turn shall make copies of such reports available to the state insurance commissioner and the governor; and the corporation shall also furnish such other information as may from time to time be required by the ((~~state supervisor of banking~~)) director and secretary of state. The corporation shall pay the actual cost of ((~~said~~)) the examinations. The ((~~state supervisor of banking~~)) director shall exercise the same power and authority over corporations organized under this chapter as is now exercised over banks and trust companies by the provisions of the Title 30 RCW, where the provisions of Title 30 RCW are not in conflict with this chapter.

Sec. 237. RCW 31.30.010 and 1986 c 284 s 1 are each amended to read as follows:

The director of ((~~general administration~~)) financial institutions, by rule, shall provide for the establishment, incorporation, operation, and regulation of a borrower-owned corporate entity to be known as the Washington land bank. The Washington land bank shall be patterned after the federal land banks organized under the Farm Credit Act of 1971, as amended, within state constitutional limits. The Washington land bank shall be organized by eligible borrowers and shall be designed to accomplish the objective of furnishing sound, adequate, and constructive long-term credit to farmer and rancher borrowers in the state of Washington. For purposes of this chapter, "farmer and rancher" includes producers of privately cultured aquatic products.

Sec. 238. RCW 31.30.020 and 1986 c 284 s 2 are each amended to read as follows:

The Washington land bank shall be a body corporate and, subject to regulation as provided by rules promulgated by the director of ((~~general administration~~)) financial institutions, shall have the power to:

(1) Adopt and use a corporate seal.

(2) Have succession until dissolved under this chapter or rules promulgated pursuant to RCW 31.30.010.

(3) Make contracts.

(4) Sue and be sued.

(5) Acquire, hold, dispose, and otherwise exercise all the usual incidents of ownership of real and personal property necessary or convenient to its business.

(6) Make and participate in loans, make commitments for credit, accept advance payments, and provide services and other assistance as authorized in this chapter, and charge fees therefor.

(7) Operate under the direction of its board of directors.

(8) Elect by its board of directors a president, any vice‑president, a secretary, and a treasurer, and provide for such other officers, employees, and agents as may be necessary, define their duties, and require surety bonds or make other provision against losses occasioned by employees.

(9) Prescribe by its board of directors its bylaws not inconsistent with law providing for the classes of its stock and the manner in which its stock shall be issued, transferred, and retired; its officers, employees, and agents are elected or provided for; its property acquired, held, and transferred; its loans and appraisals made; its general business conducted; and the privileges granted it by law exercised and enjoyed.

(10) Borrow money and issue notes, bonds, debentures, or other obligations of such character, terms, conditions, and rates of interest as may be determined.

(11) Participate with one or more other lenders, including federal land banks existing under the Farm Credit Act of 1971, as amended, in loans that the corporation is authorized to make under this chapter.

(12) Deposit its securities and its current funds with any member bank of the federal reserve system or any insured state nonmember bank as defined in section 2 of the Federal Deposit Insurance Act and pay fees therefor and receive interest thereon as may be agreed.

(13) Buy and sell obligations of or insured by the United States or of any agency thereof, and, as may be authorized by its board of directors and by rule promulgated pursuant to RCW 31.30.010, (a) sell to other lenders interests in loans, (b) buy from other lenders interests in loans which the corporation could make directly under this chapter, and (c) make other investments.

(14) Conduct studies and make and adopt standards for lending.

(15) Amend and modify loan contracts, documents, and payment schedules, and release, subordinate, or substitute security for any of them.

(16) Exercise by its board of directors or authorized officers, employees, or agents all such incidental powers as may be necessary or expedient to carry on the business of the corporation.

Sec. 239. RCW 31.30.150 and 1987 c 420 s 5 are each amended to read as follows:

(1) The Washington land bank shall be examined by the ((~~department of general administration, division of banking~~)) director of financial institutions, at such times as the ((~~supervisor~~)) director may determine, but in no event less than once each year. Such examinations shall include, but are not limited to, an analysis of credit and collateral quality and capitalization of the institution, and an appraisal of the effectiveness of the institution's management and application of policies for the carrying out ((~~[of]~~)) of the requirements of chapter 31.30 RCW, and servicing all eligible borrowers. At the direction of the ((~~supervisor~~)) director, the ((~~division of banking~~)) department of financial institutions shall examine the condition of any organization with which the Washington land bank contemplates making a loan or discounting paper. For the purposes of this chapter, bank analysts shall be subject to the same requirements, responsibilities, and penalties as are applicable to examiners under Title 30 RCW, the Federal Reserve Act, and Federal Deposit Insurance Act, and other provisions of law and shall have the same powers and privileges as are vested in such examiners by law.

(2) The Washington land bank shall make and publish an annual report of condition. Each such report shall contain financial statements prepared in accordance with generally accepted accounting principles and contain such additional information as may be required by the board of directors. Such financial statements shall be audited by an independent certified public accountant.

Sec. 240. RCW 31.30.160 and 1987 c 420 s 6 are each amended to read as follows:

The Washington land bank shall make at least three regular reports each year to the ((~~supervisor~~)) director, as of the dates designated, according to form prescribed, verified by the president, vice-president, or secretary and attested by at least two directors, which shall exhibit under appropriate heads the resources and liabilities of the bank. Each such report in condensed form, to be prescribed by the ((~~supervisor~~)) director, shall be published once in a newspaper of general circulation, published in a place where the corporation is located, or if there be no newspaper published in such place, then in some newspaper published in the same county. The Washington land bank shall also make such special reports as the ((~~supervisor~~)) director shall call for.

Sec. 241. RCW 31.30.170 and 1987 c 420 s 7 are each amended to read as follows:

Failure of the Washington land bank to file any report, required to be filed as aforesaid within the time herein specified, shall be subject to a penalty of fifty dollars per day for each day's delay. A civil action for the recovery of any such penalty may be brought by the attorney general in the name of the state.

Sec. 242. RCW 31.30.180 and 1987 c 420 s 8 are each amended to read as follows:

The ((~~supervisor~~)) director of financial institutions shall collect from the Washington land bank for application and investigations and for each examination of its condition a fee as set by ((~~applicable regulation of the division of banking~~)) rule.

Sec. 243. RCW 31.30.190 and 1987 c 420 s 9 are each amended to read as follows:

(1) All examination reports and all information obtained by the ((~~supervisor~~)) director of financial institutions and the ((~~supervisor's~~)) director's staff in conducting examinations of the Washington land bank is confidential and privileged information and shall not be made public or otherwise disclosed to any person, firm, corporation, agency, association, governmental body, or other entity.

(2) Subsection (1) of this section notwithstanding, the ((~~supervisor~~)) director may furnish all or any part of examination reports prepared by the ((~~supervisor's~~)) director's office to:

(a) Officials empowered to investigate criminal charges subject to legal process, valid search warrant, or subpoena. If the ((~~supervisor~~)) director furnishes any examination report to officials empowered to investigate criminal charges, the ((~~supervisor~~)) director may only furnish that part of the report which is necessary and pertinent to the investigation, and the ((~~supervisor~~)) director may do this only after notifying the Washington land bank and any customer of the Washington land bank who is named in that part of the examination or report ordered to be furnished unless the officials requesting the report first obtain a waiver of the notice requirement from a court of competent jurisdiction for good cause;

(b) The Washington land bank;

(d) A person or organization officially connected with the Washington land bank as officer, director, attorney, auditor, or independent attorney or independent auditor.

(4) The examination report made by the ((~~division of banking~~)) department of financial institutions is designed for use in the supervision of the Washington land bank. The report shall remain the property of the ((~~supervisor~~)) director and will be furnished to the Washington land bank for its confidential use. Under no circumstances shall the Washington land bank, or any of its directors, officers, or employees disclose or make public in any manner the report or any portion thereof, to any person or organization not connected with the Washington land bank as officer, director, employee, attorney, auditor, or candidate for executive office with the bank.

(5) Examination reports and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations shall not be subject to public disclosure under chapter 42.17 RCW.

(7) This section shall not apply to investigation reports prepared by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff concerning an application for establishment of the Washington land bank: PROVIDED, That the ((~~supervisor~~)) director may adopt rules making confidential portions of the reports if in the ((~~supervisor's~~)) director's opinion the public disclosure of the portions of the report would impair the ability to obtain the information which the ((~~supervisor~~)) director considers necessary to fully evaluate the application.

(8) Every person who violates any provision of this section shall be guilty of a gross misdemeanor.

Sec. 244. RCW 31.30.200 and 1987 c 420 s 10 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may issue and serve upon the Washington land bank a notice of charges if in the opinion of the ((~~supervisor~~)) director, the Washington land bank:

(a) Is engaging or has engaged in an unsafe or unsound practice in conducting its business;

(b) Is violating or has violated the law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director in connection with the granting of any application or other request by the bank or any written agreement made with the ((~~supervisor~~)) director; or

(c) Is about to do the acts prohibited in (a) or (b) of this subsection when the opinion that the threat exists is based upon reasonable cause.

(2) The notice shall contain a statement of the facts constituting the alleged violation or violations or the practice or practices and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the bank. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the ((~~supervisor~~)) director at the request of the bank.

Unless the bank shall appear at the hearing by a duly authorized representative it shall be deemed to have consented to the issuance of the cease and desist order. In the event of this consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the bank an order to cease and desist from the violation or practice. The order may require the bank and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the bank to take affirmative action to correct the conditions resulting from the violation or practice.

(3) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the bank except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided therein unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 245. RCW 31.30.210 and 1987 c 420 s 11 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director determines that the acts specified in RCW 31.30.200 or their continuation is likely to cause insolvency or substantial dissipation of assets or earnings of the bank, the ((~~supervisor~~)) director may also issue a temporary order requiring the bank to cease and desist from the violation or practice. The order shall become effective upon service on the bank and shall remain effective unless set aside, limited, or suspended by a court in proceedings under RCW 31.30.180 pending the completion of the administrative proceedings under the notice and until such time as the ((~~supervisor~~)) director shall dismiss the charges specified in the notice or until the effective date of a cease and desist order issued against the bank pursuant to RCW 31.30.180.

Sec. 246. RCW 31.30.230 and 1987 c 420 s 13 are each amended to read as follows:

In the case of a violation or threatened violation of a temporary cease and desist order issued, the ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the bank for an injunction to enforce the order, and the court shall issue an injunction if it determines that there has been a violation or threatened violation.

Sec. 247. RCW 31.30.240 and 1987 c 420 s 14 are each amended to read as follows:

(1) Any administrative hearing may be held at such place as is designated by the ((~~supervisor~~)) director and shall be conducted in accordance with chapter 34.05 RCW. The hearing shall be private unless the ((~~supervisor~~)) director determines that a public hearing is necessary to protect the public interest after fully considering the views of the party afforded the hearing.

Unless a petition for review is timely filed in the superior court of the county of the principal place of business of the bank and until the record in the proceeding has been filed as therein provided, the ((~~supervisor~~)) director may at any time modify, terminate, or set aside any order upon such notice and in such manner as deemed proper. Upon filing the record, the ((~~supervisor~~)) director may modify, terminate, or set aside any order only with permission of the court.

The judicial review provided in this section for an order shall be exclusive.

(2) Any party to the proceeding or any person required by an order to refrain from any of the violations or practices stated therein may obtain a review of any order served under subsection (1) of this section other than one issued upon consent by filing in the superior court of the county of the principal place of business of the bank within ten days after the date of service of the order a written petition praying that the order of the ((~~supervisor~~)) director be modified, terminated, or set aside. A copy of the petition shall be immediately served upon the ((~~supervisor~~)) director and the ((~~supervisor~~)) director shall then file in the court the record of the proceeding. The court shall have jurisdiction upon the filing of the petition, which jurisdiction shall become exclusive upon the filing of the record to affirm, modify, terminate, or set aside in whole or in part the order of the ((~~supervisor~~)) director except that the ((~~supervisor~~)) director may modify, terminate, or set aside an order with the permission of the court. The judgment and decree of the court shall be final, except that it shall be subject to appellate review under the rules of court.

Sec. 248. RCW 31.30.250 and 1987 c 420 s 15 are each amended to read as follows:

The ((~~supervisor~~)) director may serve upon a director, officer, or employee of the Washington land bank a written notice of the ((~~supervisor's~~)) director's intention to remove the person from office or to prohibit the person from participation in the conduct of the affairs of the bank whenever:

(1) In the opinion of the ((~~supervisor~~)) director any director, officer, or employee of the bank has committed or engaged in:

(a) Any violation of law or rule or of a cease and desist order which has become final;

(b) Any unsafe or unsound practice in connection with the bank; or

(c) Any act, omission, or practice which constitutes a breach of his or her fiduciary duty as director, officer, or employee; and

(2) The ((~~supervisor~~)) director determines that:

(a) The bank has suffered or may suffer substantial financial loss or other damage; or

(b) The interests of its investors could be seriously prejudiced by reason of the violation or practice or breach of fiduciary duty; and

(c) The violation or practice or breach of fiduciary duty is one involving personal dishonesty, recklessness, or incompetence on the part of the director, officer, or employee.

Sec. 249. RCW 31.30.260 and 1987 c 420 s 16 are each amended to read as follows:

A notice of an intention to remove a director, officer, or employee from office or to prohibit participation in the conduct of the affairs of the bank shall contain a statement of the facts which constitute grounds therefor and shall fix a time and place at which a hearing will be held. The hearing shall be set not earlier than ten days nor later ((~~then [than]~~)) than thirty days after the date of service of the notice unless an earlier or later date is set by the ((~~supervisor~~)) director at the request of the director, officer, or employee for good cause shown or of the attorney general of the state.

Unless the director, officer, or employee appears at the hearing personally or by a duly authorized representative, the person shall be deemed to have consented to the issuance of an order of removal or prohibition or both. In the event of such consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any of the grounds specified in the notice have been established, the ((~~supervisor~~)) director may issue such orders of removal from office or prohibition from participation in the conduct of the affairs of the bank as the ((~~supervisor~~)) director may consider appropriate.

An order shall remain effective except to the extent it is stayed, modified, terminated, or set aside by the ((~~supervisor~~)) director or a reviewing court.

Sec. 250. RCW 31.30.270 and 1987 c 420 s 17 are each amended to read as follows:

If at any time because of the removal of one or more directors under this chapter there shall be on the board of directors of the bank less than a quorum of directors, all powers and functions vested in or exercisable by the board shall vest in and be exercisable by the director or directors remaining until such time as there is a quorum on the board of directors. If all of the directors of the bank are removed under this chapter, the ((~~supervisor~~)) director shall appoint persons to serve temporarily as directors until such time as their respective successors take office.

Sec. 251. RCW 31.35.010 and 1990 c 134 s 1 are each amended to read as follows:

The legislature finds and declares that nondepository agricultural lenders can enhance their access to working capital for the purpose of financing agricultural borrowers by using the United States farmers home administration loan guaranty program. The farmers home administration loan guaranty program provides financing to agricultural borrowers needing working capital and longer term financing for the purchase of real estate, agricultural production expenses, debt refinancing, equipment, and the purchase of other fixed assets. Loans can be made to agricultural borrowers by nondepository lenders and guaranteed by the farmers home administration only if the state provides an ongoing opportunity for examination of such entities to confirm good lending practices and solvency.

It is the intent of the legislature to empower the ((~~supervisor of banking~~)) director of financial institutions to examine nondepository agricultural lenders for the purpose of allowing such lenders to qualify for participation in the farmers home administration loan guaranty program.

Sec. 252. RCW 31.35.020 and 1990 c 134 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Agricultural lender" means a Washington corporation incorporated under Title 23B or 24 RCW and qualified as such under this chapter and the jurisdiction of the federal government agency sponsoring the loan guaranty program.

(2) ((~~"Supervisor" means the state supervisor of banking~~)) "Director" means the director of financial institutions.

(3) "Loan guaranty program" means the farmers home administration loan guaranty program, or any other government program for which the agricultural lender is eligible and which has as its function the provision, facilitation, or financing of agricultural business operations.

Sec. 253. RCW 31.35.030 and 1990 c 134 s 3 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall administer this chapter. The ((~~supervisor~~)) director may issue orders and adopt rules that, in the opinion of the ((~~supervisor~~)) director, are necessary to execute, enforce, and effectuate the purposes of this chapter. Rules to enforce the provisions of this chapter shall be adopted under the administrative procedure act, chapter 34.05 RCW.

(2) An application filed with the ((~~supervisor~~)) director under this chapter shall be in such form and contain such information as required by the ((~~supervisor~~)) director by rule and be consistent with the requirements of the loan guaranty program.

(3) After the ((~~supervisor~~)) director is satisfied that the applicant has satisfied all the conditions necessary for approval, the ((~~supervisor~~)) director shall issue a license to the applicant authorizing it to be an agricultural lender under this chapter.

(4) Any change of control of an agricultural lender shall be subject to the approval of the ((~~supervisor~~)) director. Such approval shall be subject to the same criteria as the criteria for approval of the original license. For purposes of this subsection, "change of control" means directly or indirectly, alone or in concert with others, to own, control, or hold the power to vote ten percent or more of the outstanding voting stock of an agricultural lender or the power to elect or control the election of a majority of the board of directors of an agricultural lender.

(5) The ((~~supervisor~~)) director may deny, suspend, or revoke a license if the agricultural lender violates any provision of this chapter or any rules promulgated pursuant to this chapter.

Sec. 254. RCW 31.35.050 and 1990 c 134 s 5 are each amended to read as follows:

(1) The ((~~supervisor~~)) director is authorized to charge a fee for the estimated direct and indirect costs for examination and supervision by the ((~~supervisor~~)) director of an agricultural lender or a subsidiary of an agricultural lender. Excess examiner time shall be billed at a reasonable rate established by rule.

(2) All such fees shall be deposited in the banking examination fund and administered consistent with the provisions of RCW ((~~43.19.095~~)) 43.320.110.

Sec. 255. RCW 31.35.060 and 1990 c 134 s 6 are each amended to read as follows:

(1) An agricultural lender shall keep books, accounts, and other records in such form and manner as required by the ((~~supervisor~~)) director. These records shall be kept at such place and shall be preserved for such length of time as specified by the ((~~supervisor~~)) director by rule.

(2) Not more than ninety days after the close of each calendar year, or within a period specified by the ((~~supervisor~~)) director, an agricultural lender shall file with the ((~~supervisor~~)) director a report containing the following:

(a) Financial statements, including the balance sheet, the statement of income or loss, the statement of changes in capital accounts, and the statement of changes in financial position; and

(b) Other information that the ((~~supervisor~~)) director may require.

(3) Each agricultural lender shall provide for a loan loss reserve sufficient to cover projected loan losses that are not guaranteed by the United States government or any agency thereof.

Sec. 256. RCW 31.35.070 and 1990 c 134 s 7 are each amended to read as follows:

(1) The ((~~supervisor, the deputy supervisor, or a bank examiner~~)) director shall visit each agricultural lender at least every twenty-four months for the purpose of assuring that the agricultural lender remains in compliance with and qualified for the loan guaranty program.

(a) The ((~~supervisor~~)) director may accept timely audited financial statements and other timely reports the ((~~supervisor~~)) director determines to be relevant and accurate as part of a full and complete examination of the agricultural lender. The ((~~supervisor~~)) director shall make an independent review of loans guaranteed by the loan guaranty program.

(b) The agricultural lender shall be exempt from examination under this subsection if it terminates its activities under the loan guaranty program and no loans guaranteed by the loan guaranty program remain on the books. This exemption becomes effective upon notification to the ((~~supervisor~~)) director. The ((~~supervisor~~)) director shall confirm termination of activities under the loan guaranty program with the appropriate federal agency.

(c) All examination reports and all information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations of an agricultural lender are confidential to the same extent bank examinations are confidential under RCW 30.04.075.

(d) All examination reports may be shared with other state or federal agencies consistent with chapter 30.04 RCW.

(2) A director, officer, or employee of an agricultural lender or of a subsidiary of an agricultural lender being examined by the ((~~supervisor~~)) director or a person having custody of any of the books, accounts, or records of the agricultural lender or of the subsidiary shall facilitate the examination so far as it is in his or her power to do so.

(3) If in the ((~~supervisor's~~)) opinion of the director it is necessary in the examination of an agricultural lender or of a subsidiary of an agricultural lender, the ((~~supervisor~~)) director may retain any certified public accountant, attorney, appraiser, or other person to assist the ((~~supervisor~~)) director. The agricultural lender being examined shall pay the fees of a person retained by the ((~~supervisor~~)) director under this subsection.

Sec. 257. RCW 31.35.080 and 1990 c 134 s 8 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall adopt rules to enforce the intent and purposes of this chapter. Such rules shall include, but not be limited to, the following:

(a) Disclosure of conflicts of interest;

(b) Prohibition of false statements made to the ((~~supervisor~~)) director on any form required by the ((~~supervisor~~)) director or during any examination; or

(2) A violation of any provision of this chapter or any rule of the ((~~supervisor~~)) director adopted under this chapter by an agent, employee, officer, or director of the agricultural lender shall be punishable by a fine, established by the ((~~supervisor~~)) director, not to exceed one hundred dollars for each offense. Each day's continuance of the violation shall be a separate and distinct offense. All fines shall be credited to the banking examination fund.

(3) The ((~~supervisor~~)) director may issue and serve upon an agricultural lender a notice of charges if, in the opinion of the ((~~supervisor~~)) director, the agricultural lender is violating or has violated the law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director or any written agreement made by the ((~~supervisor~~)) director.

(a) The notice shall contain a statement of the facts constituting the alleged violation or practice and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the agricultural lender. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the ((~~supervisor~~)) director at the request of the agricultural lender.

Unless the agricultural lender appears at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease and desist order. In the event of consent or if, upon the record made at the hearing, ((~~[the supervisor]~~)) the director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the agricultural lender an order to cease and desist from the violation or practice. The order may require the agricultural lender and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the agricultural lender to take affirmative action to correct the conditions resulting from the violation or practice.

(b) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the agricultural lender concerned, except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided in the order unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 258. RCW 31.35.090 and 1990 c 134 s 9 are each amended to read as follows:

If, in the opinion of the ((~~supervisor~~)) director, an agricultural lender violates or there is reasonable cause to believe that an agricultural lender is about to violate any provision of this chapter or any rule adopted under this chapter, the ((~~supervisor~~)) director may bring an action in the appropriate court to enjoin the violation or to enforce compliance. Upon a proper showing, a restraining order, ((~~[or]~~)) or preliminary or permanent injunction, shall be granted, and a receiver or a conservator may be appointed for the agricultural lender or the agricultural lender's assets.

Sec. 259. RCW 31.35.100 and 1990 c 134 s 10 are each amended to read as follows:

All agricultural lenders shall notify their members at the time of membership and annually thereafter that their investment in the agricultural lender, although regulated by the ((~~supervisor~~)) director, is not insured, guaranteed, or protected by any federal or state agency.

Sec. 260. RCW 31.35.900 and 1990 c 134 s 11 are each amended to read as follows:

If any provision of this act or its application to any person or circumstance is held invalid or, if in the written opinion of the farmers home administration, is contrary to the intent and purposes of the loan guaranty program, the ((~~supervisor~~)) director shall not enforce such provision, but the remainder of the act or the application of the provision to other persons or circumstances shall not be affected.

Sec. 261. RCW 31.40.010 and 1989 c 212 s 1 are each amended to read as follows:

The legislature finds and declares that small and moderate-size companies can enhance their access to working capital and to capital for acquiring and equipping commercial and industrial facilities by using the United States small business administration national small business loan program known as the 7(a) loan guaranty program. The 7(a) loan guaranty program provides financing to small firms needing working capital and longer term financing for equipment and other fixed assets. Such loans can be made to small businesses by nondepository lenders and guaranteed by the small business administration only if the state provides for the on-going regulation and examination of such entities.

It is the intent of the legislature that the ((~~supervisor of banking license~~)) director of financial institutions, regulate, and subject to on-going examination, nondepository lenders for the purpose of allowing such lenders to participate in the small business administration's 7(a) loan guaranty program.

Sec. 262. RCW 31.40.020 and 1989 c 212 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Licensee" means a Washington corporation licensed under the terms of this chapter.

(2) ((~~"Supervisor" means the state supervisor of banking~~)) "Director" means the director of financial institutions.

Sec. 263. RCW 31.40.030 and 1989 c 212 s 3 are each amended to read as follows:

(2) Whenever the ((~~supervisor~~)) director issues an order or a license under this chapter, the ((~~supervisor~~)) director may impose conditions that are necessary, in the opinion of the ((~~supervisor~~)) director, to carry out the purposes of this chapter.

(3) An application filed with the ((~~supervisor~~)) director under this chapter shall be in such a form and contain such information as the ((~~supervisor~~)) director may require.

(4) Any change of control of a licensee shall be subject to the approval of the ((~~supervisor~~)) director. Such approval shall be subject to the same criteria as the criteria for approval of the original license. For purposes of this subsection, "change of control" means directly or indirectly, alone or in concert with others, to own, control, or hold the power to vote ten percent or more of the outstanding voting stock of a licensee or the power to elect or control the election of a majority of the board of directors of the licensee.

Sec. 264. RCW 31.40.050 and 1989 c 212 s 5 are each amended to read as follows:

After a review of information regarding the directors, officers, and controlling persons of the applicant for a license, a review of the applicant's business plan, including at least three years of detailed financial projections and other relevant information, and a review of such additional information as is considered relevant by the ((~~supervisor~~)) director, the ((~~supervisor~~)) director shall approve an application for a license if, and only if, the ((~~supervisor~~)) director determines that:

(1) The applicant is capitalized in an amount that is not less than five hundred thousand dollars and that such sum is adequate for the applicant to transact business as a nondepository 7(a) lender and that in evaluating the capital position of the applicant the ((~~supervisor~~)) director may consider and include the net worth of any corporate shareholder of the applicant corporation if the shareholder guarantees the liabilities of the applicant: PROVIDED, That such corporate shareholder be subject to the reporting requirements of RCW 31.40.080;

(2) Each director, officer, and controlling person of the applicant is of good character and sound financial standing; that the directors and officers of the applicant are competent to perform their functions with respect to the applicant; and that the directors and officers of the applicant are collectively adequate to manage the business of the applicant as a nondepository 7(a) lender;

(3) The business plan of the applicant will be honestly and efficiently conducted in accordance with the intent and purposes of this chapter; and

(4) The proposed activity possesses a reasonable prospect for success.

Sec. 265. RCW 31.40.060 and 1989 c 212 s 6 are each amended to read as follows:

(1) Either by itself or in concert with a director, officer, principal shareholder, or affiliate, or with another licensee, a licensee shall not hold control of a business firm to which it has made a loan under section 7(a) of the federal small business investment act of 1958, 15 U.S.C. Sec. 636(a), except that, to the extent necessary to protect the licensee's interest as creditor of the business firm, a licensee that provides financing assistance to a business firm may acquire and hold control of that business firm. Unless the ((~~supervisor~~)) director approves a longer period, a licensee holding control of a business firm under this section shall divest itself of the interest which constitutes holding control as soon as practicable or within five years after acquiring that interest, whichever is sooner.

(2) For the purposes of subsection (1) of this section, "hold control" means alone or in concert with others:

(a) Ownership, directly or indirectly, of record or beneficially, of voting securities greater than:

(i) For a business firm with outstanding voting securities held by fewer than fifty shareholders, forty percent of the outstanding voting securities;

(ii) For a business firm with outstanding voting securities held by fifty or more shareholders, twenty-five percent of the outstanding voting securities;

(b) Being able to elect or control the election of a majority of the board of directors.

Sec. 266. RCW 31.40.070 and 1989 c 212 s 7 are each amended to read as follows:

(1) The ((~~supervisor~~)) director is authorized to charge a fee for the estimated direct and indirect costs of the following:

(a) An application for a license and the investigation thereof;

(b) An application for approval to acquire control of a licensee and the investigation thereof;

(c) An application for approval for a licensee to merge with another corporation, an application for approval for a licensee to purchase all or substantially all of the business of another person, or an application for approval for a licensee to sell all or substantially all of its business or of the business of any of its offices to another licensee and the investigation thereof;

(d) An annual license;

(e) An examination by the ((~~supervisor~~)) director of a licensee or a subsidiary of a licensee. Excess examiner time shall be billed at a reasonable rate established by rule.

(2) A fee for filing an application with the ((~~supervisor~~)) director shall be paid at the time the application is filed with the ((~~supervisor~~)) director.

(3) All such fees shall be deposited in the banking examination fund and administered consistent with the provisions of RCW ((~~43.19.095~~)) 43.320.110.

Sec. 267. RCW 31.40.080 and 1989 c 212 s 8 are each amended to read as follows:

(1) A licensee shall keep books, accounts, and other records in such a form and manner as the ((~~supervisor~~)) director may require. These records shall be kept at such a place and shall be preserved for such a length of time as the ((~~supervisor~~)) director may specify.

(2) Not more than ninety days after the close of each calendar year or within a period specified by the ((~~supervisor~~)) director, a licensee shall file with the ((~~supervisor~~)) director a report containing the following:

(a) Financial statements, including the balance sheet, the statement of income or loss, the statement of changes in capital accounts and the statement of changes in financial position; and

(b) Other information that the ((~~supervisor~~)) director may require.

(3) Each licensee shall provide for a loan loss reserve sufficient to cover projected loan losses which are not guaranteed by the United States government or any agency thereof.

Sec. 268. RCW 31.40.090 and 1989 c 212 s 9 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall examine each licensee not less than once each year.

(2) The ((~~supervisor~~)) director may with or without notice and at any time during regular business hours examine a licensee or a subsidiary of a licensee.

(3) A director, officer, or employee of a licensee or of a subsidiary of a licensee being examined by the ((~~supervisor~~)) director or a person having custody of any of the books, accounts, or records of the licensee or of the subsidiary shall otherwise facilitate the examination so far as it is in his or her power to do so.

(4) If in the ((~~supervisor's~~)) director's opinion it is necessary in the examination of a licensee, or of a subsidiary of a licensee, the ((~~supervisor~~)) director may retain any certified public accountant, attorney, appraiser, or other person to assist the ((~~supervisor~~)) director. The licensee being examined shall pay the fees of a person retained by the ((~~supervisor~~)) director under this subsection.

Sec. 269. RCW 31.40.100 and 1989 c 212 s 10 are each amended to read as follows:

If the ((~~supervisor~~)) director denies an application, the ((~~supervisor~~)) director shall provide the applicant with a written statement explaining the basis for the denial.

Sec. 270. RCW 31.40.110 and 1989 c 212 s 11 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall adopt rules to enforce the intent and purposes of this chapter. Such rules shall include, but need not be limited to, the following:

(a) Disclosure of conflicts of interest;

(b) Prohibition of false statements made to the ((~~supervisor~~)) director on any form required by the ((~~supervisor~~)) director or during any examination requested by the ((~~supervisor~~)) director; or

(2) A violation of any provision of this chapter or any rule of the ((~~supervisor~~)) director adopted under this chapter by an agent, employee, officer, or director of the licensee shall be punishable by a fine, established by the ((~~supervisor~~)) director, not to exceed one hundred dollars for each offense. Each day's continuance of the violation shall be a separate and distinct offense. Each such fine shall be credited to the ((~~bank~~)) banking examination fund.

Sec. 271. RCW 31.40.120 and 1989 c 212 s 12 are each amended to read as follows:

If, in the opinion of the ((~~supervisor~~)) director, a person violates or there is reasonable cause to believe that a person is about to violate any provision of this chapter or any rule adopted under this chapter, the ((~~supervisor~~)) director may bring an action in the appropriate court to enjoin the violation or to enforce compliance. Upon a proper showing, a restraining order, preliminary or permanent injunction, shall be granted, and a receiver or a conservator may be appointed for the defendant or the defendant's assets.

Sec. 272. RCW 31.40.130 and 1989 c 212 s 13 are each amended to read as follows:

The ((~~supervisor~~)) director may deny, suspend, or revoke a license if the applicant or holder violates any provision of this chapter or any rules promulgated pursuant to this chapter.

Sec. 273. RCW 31.40.900 and 1989 c 212 s 16 are each amended to read as follows:

If any provision of this act or its application to any person or circumstance is held invalid or, if in the written opinion of the small business administration, is contrary to the intent and purposes of the 7(a) loan guaranty program, the ((~~supervisor~~)) director shall not enforce such provision but the remainder of the act or the application of the provision to other persons or circumstances shall not be affected.

Sec. 274. RCW 31.45.010 and 1993 c 143 s 1 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Check casher" means an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of cashing checks, drafts, money orders, or other commercial paper serving the same purpose.

(2) "Check seller" means an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of or selling checks, drafts, money orders, or other commercial paper serving the same purpose.

(3) "Licensee" means a check casher or seller licensed by the ((~~supervisor~~)) director to engage in business in accordance with this chapter. For purposes of the enforcement powers of this chapter, including the power to issue cease and desist orders under RCW 31.45.110, "licensee" also means a check casher or seller who fails to obtain the license required by this chapter.

(4) ((~~"Supervisor" means the supervisor of banking~~)) "Director" means the director of financial institutions.

Sec. 275. RCW 31.45.020 and 1991 c 355 s 2 are each amended to read as follows:

(1) This chapter does not apply to:

(a) Any bank, trust company, savings bank, savings and loan association, or credit union;

(b) The cashing of checks, drafts, or money orders by any corporation, partnership, association, or person who cashes checks, drafts, or money orders as a convenience, as a minor part of its customary business, and not for profit;

(c) The issuance or sale of checks, drafts, or money orders by any corporation, partnership, or association that has a net worth of not less than three million dollars as shown by audited financial statements; and

(d) The issuance or sale of checks, drafts, money orders, or other commercial paper serving the same purpose by any agent of a corporation, partnership, or association described in (c) of this subsection.

(2) Upon application to the ((~~supervisor~~)) director, the ((~~supervisor~~)) director may exempt a corporation, partnership, association, or other person from any or all provisions of this chapter upon a finding by the ((~~supervisor~~)) director that although not otherwise exempt under this section, the applicant is not primarily engaged in the business of cashing or selling checks and a total or partial exemption would not be detrimental to the public.

Sec. 276. RCW 31.45.030 and 1993 c 176 s 1 are each amended to read as follows:

(1) Except as provided in RCW 31.45.020, no check casher or seller may engage in business without first obtaining a license from the ((~~supervisor~~)) director in accordance with this chapter.

(2) Each application for a license shall be in writing in a form prescribed by the ((~~supervisor~~)) director and shall contain the following information:

(a) The legal name, residence, and business address of the applicant and, if the applicant is a partnership, association, or corporation, of every member, officer, and director thereof;

(b) The location where the initial registered office of the applicant will be located in this state;

(c) The complete address of any other locations at which the applicant proposes to engage in business as a check casher or seller;

(d) Such other data, financial statements, and pertinent information as the ((~~supervisor~~)) director may require with respect to the applicant, its directors, trustees, officers, members, or agents.

(3) Any information in the application regarding the personal residential address or telephone number of the applicant is exempt from the public records disclosure requirements of chapter 42.17 RCW.

(4) The application shall be filed together with an investigation and supervision fee established by rule by the ((~~supervisor~~)) director. Such fees collected shall be deposited to the credit of the banking examination fund in accordance with RCW ((~~43.19.095~~)) 43.320.110.

(5)(a) Before granting a license to sell checks, drafts, or money orders under this chapter, the ((~~supervisor~~)) director shall require that the licensee file with the ((~~supervisor~~)) director a surety bond running to the state of Washington, which bond shall be issued by a surety insurer which meets the requirements of chapter 48.28 RCW, and be in a format acceptable to the ((~~supervisor~~)) director. The ((~~supervisor~~)) director shall adopt rules to determine the penal sum of the bond that shall be filed by each licensee. The bond shall be conditioned upon the licensee paying all persons who purchase checks, drafts, or money orders from the licensee the face value of any check, draft, or money order which is dishonored by the drawee bank, savings bank, or savings and loan association due to insufficient funds or by reason of the account having been closed. The bond shall only be liable for the face value of the dishonored check, draft, or money order, and shall not be liable for any interest or consequential damages.

The bond shall be continuous and may be canceled by the surety upon the surety giving written notice to the ((~~supervisor~~)) director and licensee of its intent to cancel the bond. The cancellation is effective thirty days after the notice is received by the ((~~supervisor~~)) director. Whether or not the bond is renewed, continued, reinstated, reissued, or otherwise extended, replaced, or modified, including increases or decreases in the penal sum, it shall be considered one continuous obligation, and the surety upon the bond shall not be liable in an aggregate or cumulative amount exceeding the penal sum set forth on the face of the bond. In no event shall the penal sum, or any portion thereof, at two or more points in time be added together in determining the surety's liability. The bond shall not be liable for any liability of the licensee for tortious acts, whether or not such liability is imposed by statute or common law, or is imposed by contract. The bond shall not be a substitute or supplement to any liability or other insurance required by law or by the contract. If the surety desires to make payment without awaiting court action against it, the penal sum of the bond shall be reduced to the extent of any payment made by the surety in good faith under the bond.

Any person who is a purchaser of a check, draft, or money order from the licensee having a claim against the licensee for the dishonor of any check, draft, or money order by the drawee bank, savings bank, or savings and loan association due to insufficient funds or by reason of the account having been closed, may bring suit upon such bond or deposit in the superior court of the county in which the check, draft, or money order was purchased, or in the superior court of a county in which the licensee maintains a place of business. Jurisdiction shall be exclusively in the superior court. Any such action must be brought not later than one year after the dishonor of the check, draft, or money order on which the claim is based. In the event valid claims against a bond or deposit exceed the amount of the bond or deposit, each claimant shall only be entitled to a pro rata amount, based on the amount of the claim as it is valid against the bond, or deposit, without regard to the date of filing of any claim or action.

(b) In lieu of the surety bond required by this section, the applicant may file with the ((~~supervisor~~)) director a deposit consisting of cash or other security acceptable to the ((~~supervisor~~)) director in an amount equal to the penal sum of the required bond. The ((~~supervisor~~)) director may adopt rules necessary for the proper administration of the security. A deposit given instead of the bond required by this section shall not be deemed an asset of the licensee for the purpose of complying with the liquid asset provisions of this chapter.

(c) Such security may be sold by the ((~~supervisor~~)) director at public auction if it becomes necessary to satisfy the requirements of this chapter. Notice of the sale shall be served upon the licensee who placed the security personally or by mail. If notice is served by mail, service shall be addressed to the licensee at its address as it appears in the records of the ((~~supervisor~~)) director. Bearer bonds of the United States or the state of Washington without a prevailing market price must be sold at public auction. Such bonds having a prevailing market price may be sold at private sale not lower than the prevailing market price. Upon any sale, any surplus above amounts due shall be returned to the licensee, and the licensee shall deposit with the ((~~supervisor~~)) director additional security sufficient to meet the amount required by the ((~~supervisor~~)) director. A deposit given instead of the bond required by this section shall not be deemed an asset of the licensee for the purpose of complying with the liquid asset provisions of this chapter.

Sec. 277. RCW 31.45.040 and 1991 c 355 s 4 are each amended to read as follows:

(1) The ((~~supervisor~~)) director shall conduct an investigation of every applicant to determine the financial responsibility, experience, character, and general fitness of the applicant. The ((~~supervisor~~)) director shall issue the applicant a license to engage in the business of cashing or selling checks, or both, if the ((~~supervisor~~)) director determines to his or her satisfaction that:

(a) The applicant is financially responsible and appears to be able to conduct the business of cashing or selling checks in an honest, fair, and efficient manner with the confidence and trust of the community; and

(b) The applicant has the required bonds.

(2) The ((~~supervisor~~)) director may refuse to issue a license if he or she finds that the applicant, or any person who is a director, officer, partner, agent, or substantial stockholder of the applicant, has been convicted of a felony in any jurisdiction or is associating or consorting with any person who has been convicted of a felony in any jurisdiction. The term "substantial stockholder" as used in this subsection, means a person owning or controlling ten percent or more of the total outstanding shares of the applicant corporation.

(3) No license may be issued to an applicant whose license to conduct business under this chapter had been revoked by the ((~~supervisor~~)) director within the twelve-month period preceding the application.

(4) A license issued under this chapter shall be conspicuously posted in the place of business of the licensee. The license is not transferable or assignable.

(5) A license issued in accordance with this chapter remains in force and effect through the remainder of the calendar year following its date of issuance unless earlier surrendered, suspended, or revoked.

(6) The ((~~supervisor's~~)) director's investigation and fees required under this chapter shall differentiate between check cashing and check selling activities and take into consideration the level of risk and potential harm to the public related to each such activity.

Sec. 278. RCW 31.45.050 and 1991 c 355 s 5 are each amended to read as follows:

(1) A license may be renewed upon the filing of an application containing such information as the ((~~supervisor~~)) director may require and by the payment of a fee in an amount determined by the ((~~supervisor~~)) director as necessary to cover the costs of supervision. Such fees collected shall be deposited to the credit of the ((~~bank [banking]~~)) banking examination fund in accordance with RCW ((~~43.19.095~~)) 43.320.110. The ((~~supervisor~~)) director shall renew the license in accordance with the standards for issuance of a new license.

(2) If a licensee intends to do business at a new location, to close an existing place of business, or to relocate an existing place of business, the licensee shall provide written notification of that intention to the ((~~supervisor~~)) director no less than thirty days before the proposed establishing, closing, or moving of a place of business.

Sec. 279. RCW 31.45.060 and 1991 c 355 s 6 are each amended to read as follows:

(1) A schedule of the fees and the charges for the cashing and selling of checks, drafts, money orders, or other commercial paper serving the same purpose shall be conspicuously and continuously posted in every location licensed under this chapter. The licensee shall provide to its customer a receipt for each transaction. The receipt must include the name of the licensee, the type and amount of the transaction, and the fee or fees charged for the transaction.

(2) Each licensee shall keep and maintain such business books, accounts, and records as the ((~~supervisor~~)) director may require to fulfill the purposes of this chapter. Every licensee shall preserve such books, accounts, and records for at least two years.

(3) A check, draft, or money order sold by a licensee shall be drawn on an account of a licensee maintained at a bank, savings bank, or savings and loan association authorized to do business in the state of Washington.

Sec. 280. RCW 31.45.070 and 1991 c 355 s 7 are each amended to read as follows:

(1) Except for the activities of a pawnbroker as defined in RCW 19.60.010, no licensee may engage in a loan business or the negotiation of loans or the discounting of notes, bills of exchange, checks, or other evidences of debt on the same premises where a check cashing or selling business is conducted, unless such loan business is a properly licensed consumer finance company or industrial loan company office or other lending activity permitted in the state of Washington and is physically separated from the check cashing or selling business in a manner approved by the ((~~supervisor~~)) director.

(2) No licensee may at any time cash or advance any moneys on a postdated check or draft. However, a licensee may cash a check payable on the first banking day following the date of cashing if:

(a) The check is drawn by the United States, the state of Washington, or any political subdivision of the state, or by any department or agency of the state or its subdivisions; or

(b) The check is a payroll check drawn by an employer to the order of its employee in payment for services performed by the employee.

(3) No licensee may agree to hold a check or draft for later deposit. A licensee shall deposit all checks and drafts cashed by the licensee as soon as practicable.

(4) No licensee may issue or cause to be issued any check, draft, or money order, or other commercial paper serving the same purpose, that is drawn upon the trust account of a licensee without concurrently receiving the full principal amount, in cash, or by check, draft, or money order from a third party believed to be valid.

(5) No licensee may advertise, print, display, publish, distribute, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, any statement or representation that is false, misleading, or deceptive, or that omits material information, or that refers to the supervision of the licensee by the state of Washington or any department or official of the state.

(6) Each licensee shall comply with all applicable federal statutes governing currency transaction reporting.

Sec. 281. RCW 31.45.080 and 1991 c 355 s 8 are each amended to read as follows:

(1) All funds received by a licensee or its agents from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose constitute trust funds owned by and belonging to the person from whom they were received or to the person who has paid the checks, drafts, money orders, or other commercial paper serving the same purpose.

(2) All such trust funds shall be deposited in a bank, savings bank, or savings and loan association located in Washington state in an account or accounts in the name of the licensee designated "trust account," or by some other appropriate name indicating that the funds are not the funds of the licensee or of its officers, employees, or agents. Such funds are not subject to attachment, levy of execution, or sequestration by order of a court except by a payee, assignee, or holder in due course of a check, draft, or money order sold by a licensee or its agent. Funds in the trust account, together with funds and checks on hand and in the hands of agents held for the account of the licensee at all times shall be at least equal to the aggregate liability of the licensee on account of checks, drafts, money orders, or other commercial paper serving the same purpose that are sold.

(3) The ((~~supervisor~~)) director shall adopt rules requiring the licensee to periodically withdraw from the trust account the portion of trust funds earned by the licensee from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose. If a licensee has accepted, in payment for a check, draft, money order, or commercial paper serving the same purpose issued by the licensee, a check or draft that is subsequently dishonored, the ((~~supervisor~~)) director shall prohibit the withdrawal of earned funds in an amount necessary to cover the dishonored check or draft.

(4) If a licensee or its agent commingles trust funds with its own funds, all assets belonging to the licensee or its agent are impressed with a trust in favor of the persons specified in subsection (1) of this section in an amount equal to the aggregate funds that should have been segregated. Such trust continues until an amount equal to the necessary aggregate funds have been deposited in accordance with subsection (2) of this section.

(5) Upon request of the ((~~supervisor~~)) director, a licensee shall furnish to the ((~~supervisor~~)) director an authorization for examination of financial records of any trust fund account established for compliance with this section.

(6) The ((~~supervisor~~)) director may adopt any rules necessary for the maintenance of trust accounts, including rules establishing procedures for distribution of trust account funds if a license is suspended, terminated, or not renewed.

Sec. 282. RCW 31.45.090 and 1991 c 355 s 9 are each amended to read as follows:

(1) Each licensee shall submit to the ((~~supervisor~~)) director, in a form approved by the ((~~supervisor~~)) director, a report containing financial statements covering the calendar year or, if the licensee has an ((~~a [an]~~)) established fiscal year, then for such fiscal year, within one hundred five days after the close of each calendar or fiscal year. The licensee shall also file such additional relevant information as the ((~~supervisor~~)) director may require.

(2) A licensee whose license has been suspended or revoked shall submit to the ((~~supervisor~~)) director, at the licensee's expense, within one hundred five days after the effective date of such surrender or revocation, a closing audit report containing audited financial statements as of such effective date for the twelve months ending with such effective date.

(3) The ((~~supervisor~~)) director shall adopt rules specifying the form and content of such audit reports and may require additional reporting as is necessary for the ((~~supervisor~~)) director to ensure compliance with this chapter.

Sec. 283. RCW 31.45.100 and 1991 c 355 s 10 are each amended to read as follows:

The ((~~supervisor~~)) director may at any time investigate the business and examine the books, accounts, records, and files of any licensee or person who the ((~~supervisor~~)) director has reason to believe is engaging in the business governed by this chapter. The ((~~supervisor~~)) director shall collect from the licensee, the actual cost of the examination.

Sec. 284. RCW 31.45.110 and 1991 c 355 s 11 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may issue and serve upon a licensee a notice of charges if, in the opinion of the ((~~supervisor~~)) director, any licensee:

(a) Is engaging or has engaged in an unsafe or unsound practice in conducting the business governed by this chapter;

(b) Is violating or has violated the law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director in connection with the granting of any application or other request by the licensee or any written agreement made with the ((~~supervisor~~)) director; or

(c) Is about to do the acts prohibited in (a) or (b) of this subsection when the opinion that the threat exists is based upon reasonable cause.

(2) The notice shall contain a statement of the facts constituting the alleged violation or violations or the practice or practices and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should be issued against the licensee. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the ((~~supervisor~~)) director at the request of the licensee.

Unless the licensee personally appears at the hearing or by a duly authorized representative, the licensee is deemed to have consented to the issuance of the cease and desist order. In the event of this consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the licensee an order to cease and desist from the violation or practice. The order may require the licensee and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the licensee to take affirmative action to correct the conditions resulting from the violation or practice.

(3) A cease and desist order becomes effective upon the expiration of ten days after the service of the order upon the licensee concerned, except that a cease and desist order issued upon consent becomes effective at the time specified in the order and remains effective as provided in the order unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 285. RCW 31.45.120 and 1991 c 355 s 12 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director determines that the acts specified in RCW 31.45.110 or their continuation is likely to cause insolvency or substantial injury to the public, the ((~~supervisor~~)) director may also issue a temporary order requiring the licensee to cease and desist from the violation or practice. The order becomes effective upon service upon the licensee and remains effective unless set aside, limited, or suspended by a court under RCW 31.45.130 pending the completion of the administrative proceedings under the notice and until such time as the ((~~supervisor~~)) director dismisses the charges specified in the notice or until the effective date of the cease and desist order issued against the licensee under RCW 31.45.110.

Sec. 286. RCW 31.45.140 and 1991 c 355 s 14 are each amended to read as follows:

In the case of a violation or threatened violation of a temporary cease and desist order issued under RCW 31.45.120, the ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the licensee for an injunction.

Sec. 287. RCW 31.45.150 and 1991 c 355 s 15 are each amended to read as follows:

Whenever as a result of an examination or report it appears to the ((~~supervisor~~)) director that:

(1) The capital of any licensee is impaired;

(2) Any licensee is conducting its business in such an unsafe or unsound manner as to render its further operations hazardous to the public;

(3) Any licensee has suspended payment of its trust obligations;

(4) Any licensee has refused to submit its books, papers, and affairs to the inspection of the ((~~supervisor~~)) director or the ((~~supervisor's~~)) director's examiner;

(5) Any officer of any licensee refuses to be examined under oath regarding the business of the licensee;

(6) Any licensee neglects or refuses to comply with any order of the ((~~supervisor~~)) director made pursuant to this chapter unless the enforcement of such order is restrained in a proceeding brought by such licensee;

the ((~~supervisor~~)) director may immediately take possession of the property and business of the licensee and retain possession until the licensee resumes business or its affairs are finally liquidated as provided in RCW 31.45.160. The licensee may resume business upon such terms as the ((~~supervisor~~)) director may prescribe.

Sec. 288. RCW 31.45.160 and 1991 c 355 s 16 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director has taken possession of the property and business of a licensee, the ((~~supervisor~~)) director may petition the superior court for the appointment of a receiver to liquidate the affairs of the licensee. During the time that the ((~~supervisor~~)) director retains possession of the property and business of a licensee, the ((~~supervisor~~)) director has the same powers and authority with reference to the licensee as is vested in the ((~~supervisor~~)) director with respect to industrial loan companies, and the licensee has the same rights to hearings and judicial review as are granted to industrial loan companies.

Sec. 289. RCW 31.45.170 and 1991 c 355 s 17 are each amended to read as follows:

Every licensee violating or failing to comply with any provision of this chapter or any lawful direction or requirement of the ((~~supervisor~~)) director is subject, in addition to any penalty otherwise provided, to a penalty of not more than one hundred dollars for each offense, to be recovered by the attorney general in a civil action in the name of the state. Each day's continuance of the violation is a separate and distinct offense.

Sec. 290. RCW 31.45.180 and 1991 c 355 s 18 are each amended to read as follows:

Any person who violates or participates in the violation of any provision of the rules or orders of the ((~~supervisor~~)) director or of this chapter is guilty of a misdemeanor.

Sec. 291. RCW 31.45.200 and 1991 c 355 s 20 are each amended to read as follows:

The ((~~supervisor~~)) director has the power, and broad administrative discretion, to administer and interpret the provisions of this chapter to ensure the protection of the public.

Sec. 292. RCW 31.45.900 and 1991 c 355 s 24 are each amended to read as follows:

This act shall take effect January 1, 1992. The ((~~supervisor~~)) director shall take such steps as are necessary to ensure that this act is implemented on its effective date.

Sec. 293. RCW 32.04.020 and 1985 c 56 s 1 are each amended to read as follows:

The use of the term "savings bank" in this title refers to mutual savings banks and converted mutual savings banks only.

The use of the words "mutual savings" as part of a name under which business of any kind is or may be transacted by any person, firm, or corporation, except such as were organized and in actual operation on June 9, 1915, or as may be thereafter organized and operated under the requirements of this title is hereby prohibited.

The use of the term ((~~"supervisor"~~)) "director" in this title refers to the ((~~supervisor of banking~~)) director of financial institutions.

The use of the word "branch" in this title refers to an established manned place of business or manned mobile facility or other manned facility of a savings bank, other than the principal office, at which deposits may be taken.

Sec. 294. RCW 32.04.030 and 1985 c 56 s 2 are each amended to read as follows:

A savings bank, with the written approval of the ((~~supervisor~~)) director, may establish and operate branches in any place within the state.

A savings bank desiring to establish a branch shall file a written application therefor with the ((~~supervisor~~)) director, who shall approve or disapprove the application.

The ((~~supervisor's~~)) director's approval shall be conditioned on a finding that the resources in the market area of the proposed location offer a reasonable promise of adequate support for the proposed branch and that the proposed branch is not being formed for other than the legitimate purposes under this title. A branch shall not be established or permitted if the capital of the savings bank, including paid-in surplus, guaranty fund, and undivided profits, is less than the aggregate paid-in capital which would be required by law as a prerequisite to the establishment and operation of an equal number of branches in like locations by a commercial bank. If the application for a branch is not approved, the savings bank shall have the right to appeal in the same manner and within the same time as provided by RCW 32.08.050 and 32.08.060. The savings bank when delivering the application to the ((~~supervisor~~)) director shall transmit to the ((~~supervisor~~)) director a check in an amount established by rule to cover the expense of the investigation. A savings bank shall not move any branch more than two miles from its existing location without prior approval of the ((~~supervisor~~)) director. Not less than twenty days prior to the date on which it opens any office at which it will transact business, a mutual savings bank shall give written notice to the ((~~supervisor~~)) director of the location and business hours of this office. No such notice shall become effective until it has been delivered to the office of the ((~~supervisor~~)) director.

The board of trustees of a savings bank, after notice to the ((~~supervisor~~)) director, may discontinue the operation of a branch. The savings bank shall keep the ((~~supervisor~~)) director informed in the matter and shall notify the ((~~supervisor~~)) director of the date operation of the branch is discontinued.

Sec. 295. RCW 32.04.040 and 1985 c 469 s 16 are each amended to read as follows:

Any savings bank may make a written application to the ((~~supervisor~~)) director for leave to change its place of business to another place in the same county. The application shall state the reasons for the proposed change, and shall be signed and acknowledged by a majority of its board of trustees. If the proposed place of business is within the limits of the city or town in which the present place of business of the savings bank is located, the change may be made upon the written approval of the ((~~supervisor~~)) director; if beyond the limits, notice of intention to make the application, signed by two principal officers of the savings bank, shall be published once a week for two successive weeks immediately preceding the application in a newspaper of general circulation in the city of Olympia and shall be published in like manner in a newspaper to be designated by the ((~~supervisor~~)) director, of general circulation in the county in which the present place of business of the bank is located. If the ((~~supervisor~~)) director grants his or her certificate authorizing the change of location, which in his or her discretion he or she may do, the savings bank shall cause the certificate to be published once in each week for two successive weeks in the newspapers in which the notice of application was published. When the requirements of this section have been fully complied with, the savings bank may, upon or after the day specified in the certificate, remove its property and effects to the location designated therein, and thereafter its principal place of business shall be the location so specified; and it shall have all the rights and powers in the new location which it possessed at its former location.

Sec. 296. RCW 32.04.050 and 1977 ex.s. c 241 s 1 are each amended to read as follows:

A savings bank shall render to the ((~~supervisor~~)) director, in such form as he or she shall prescribe, at least three regular reports each year exhibiting its resources and liabilities as of such dates as the ((~~supervisor~~)) director shall designate, which shall be the dates designated by the comptroller of the currency of the United States for reports of national banking associations. Every such report, in a condensed form to be prescribed by the ((~~supervisor~~)) director, shall be published once in a newspaper of general circulation, published in the place where the bank is located. A savings bank shall also make such special reports as the ((~~supervisor~~)) director shall call for. A regular report shall be filed with the ((~~supervisor~~)) director within thirty days and proof of the publication thereof within forty days from the date of the issuance of the call for the report. A special report shall be filed within such time as the ((~~supervisor~~)) director shall indicate in the call therefor. A savings bank that fails to file within the prescribed time any report required by this section or proof of the publication of any report required to be published shall be subject to a penalty to the state of fifty dollars for each day's delay, recoverable by a civil action brought by the attorney general in the name of the state.

Sec. 297. RCW 32.04.080 and 1955 c 80 s 2 are each amended to read as follows:

A mutual savings bank may provide for pensions for its disabled or superannuated employees and may pay a part or all of the cost of providing such pensions in accordance with a plan adopted by its board of trustees and approved in writing by the ((~~supervisor of banking~~)) director. Whenever the trustees of the bank shall have formulated and adopted a plan providing for such pensions it shall, within ten days thereafter, transmit the same to the ((~~supervisor of banking~~)) director. The ((~~supervisor of banking~~)) director shall thereupon examine such plan and investigate the feasibility and practicability thereof and within thirty days of the receipt thereof by him or her notify the bank in writing of his or her approval or rejection of the same. After the approval of the ((~~supervisor~~)) director the mutual savings bank shall be authorized and empowered to put such plan into effect. The board of trustees of a savings bank may set aside from current earnings reserves in such amounts as the board shall deem wise to provide for the payment of future pensions.

Sec. 298. RCW 32.04.085 and 1971 ex.s. c 222 s 1 are each amended to read as follows:

Any pension payment or retirement benefits payable by a mutual savings bank to a former officer or employee, or to a person or persons entitled thereto by virtue of service performed by such officer or employee, in the discretion of a majority of all the trustees of such bank, may be supplemented from time to time. Whenever the trustees of the bank shall have formulated and adopted a plan providing for such supplemental payments, within ten days thereafter ((~~said~~)) the trustees shall transmit the same to the ((~~supervisor of banking~~)) director. The ((~~supervisor of banking~~)) director shall thereupon examine such plan and investigate the feasibility and practicability thereof and, within thirty days of the receipt thereof by him or her, notify the bank in writing of his or her approval or rejection of the same. After the approval of the ((~~supervisor~~)) director the mutual savings bank shall be authorized and empowered to put such plan into effect. The board of trustees of a savings bank may set aside from current earnings, reserves in such amounts as the board shall deem appropriate to provide for the payments of future supplemental payments.

Sec. 299. RCW 32.04.110 and 1955 c 13 s 32.04.110 are each amended to read as follows:

Every trustee, officer, employee, or agent of any savings bank who for the purpose of concealing any fact suppresses any evidence against himself or herself, or against any other person, or who abstracts, removes, mutilates, destroys, or secretes any paper, book, or record of any savings bank, or of the ((~~supervisor of banking~~)) director, or anyone connected with his or her office shall be guilty of a felony.

Sec. 300. RCW 32.04.211 and 1989 c 180 s 4 are each amended to read as follows:

(1) The ((~~supervisor, the deputy supervisor, or a bank examiner~~)) director, assistant director, or an examiner shall visit each savings bank at least once every eighteen months, and oftener if necessary, for the purpose of making a full investigation into the condition of such corporation, and for that purpose they are hereby empowered to administer oaths and to examine under oath any director, officer, employee, or agent of such corporation. The ((~~supervisor~~)) director may make such other full or partial examinations as deemed necessary and may examine any holding company that owns any portion of a savings bank chartered by the state of Washington and obtain reports of condition for any holding company that owns any portion of a savings bank chartered by the state of Washington. The ((~~supervisor~~)) director may visit and examine into the affairs of any nonpublicly held corporation in which the savings bank or holding company has an investment or any publicly held corporation the capital stock of which is controlled by the savings bank or holding company; may appraise and revalue such corporations' investments and securities; and shall have full access to all the books, records, papers, securities, correspondence, bank accounts, and other papers of such corporations for such purposes. The ((~~supervisor~~)) director may, in his or her discretion, accept in lieu of the examinations required in this section the examinations conducted at the direction of the federal reserve board or the Federal Deposit Insurance Corporation. Any willful false swearing in any examination is perjury in the second degree.

(2) The ((~~supervisor~~)) director may enter into cooperative and reciprocal agreements with the bank regulatory authorities of the United States, any state, the District of Columbia, or any trust territory of the United States for the periodic examination of domestic savings banks or holding companies owning banking institutions in other states, the District of Columbia, or trust territories, and subsidiaries of such domestic savings banks and holding companies, or of out-of-state holding companies owning a savings bank the principal operations of which are conducted in this state. The ((~~supervisor~~)) director may accept reports of examination and other records from such authorities in lieu of conducting his or her own examinations. The ((~~supervisor~~)) director may enter into joint actions with other regulatory bodies having concurrent jurisdiction or may enter into such actions independently to carry out his or her responsibilities under this title and assure compliance with the laws of this state.

Sec. 301. RCW 32.04.220 and 1989 c 180 s 5 are each amended to read as follows:

(1) All examination reports and all information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations of mutual savings banks, and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff from other state or federal bank regulatory authorities with whom the ((~~supervisor~~)) director has entered into agreements pursuant to RCW 32.04.211, and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff relating to examination and supervision of holding companies owning a savings bank in this state or subsidiaries of such holding companies, is confidential and privileged information and shall not be made public or otherwise disclosed to any person, firm, corporation, agency, association, governmental body, or other entity.

(2) Subsection (1) of this section notwithstanding, the ((~~supervisor~~)) director may furnish all or any part of examination reports prepared by the ((~~supervisor's~~)) director's office to:

(a) Federal agencies empowered to examine mutual savings banks;

(b) Bank regulatory authorities with whom the ((~~supervisor~~)) director has entered into agreements pursuant to RCW 32.04.211, and other bank regulatory authorities who are the primary regulatory authority or insurer of accounts for a holding company owning a savings bank the principal operations of which are conducted in this state or a subsidiary of such holding company; provided that the ((~~supervisor~~)) director shall first find that the reports of examination to be furnished shall receive protection from disclosure comparable to that accorded by this section;

(c) Officials empowered to investigate criminal charges subject to legal process, valid search warrant, or subpoena. If the ((~~supervisor~~)) director furnishes any examination report to officials empowered to investigate criminal charges, the ((~~supervisor~~)) director may only furnish that part of the report which is necessary and pertinent to the investigation, and the ((~~supervisor~~)) director may do this only after notifying the affected mutual savings bank and any customer of the mutual savings bank who is named in that part of the report of the order to furnish the part of the examination report unless the officials requesting the report first obtain a waiver of the notice requirement from a court of competent jurisdiction for good cause;

(d) The examined savings bank or holding company thereof;

(e) The attorney general in his or her role as legal advisor to the ((~~supervisor~~)) director;

(f) Liquidating agents of a distressed savings bank;

(g) A person or organization officially connected with the savings bank as officer, director, attorney, auditor, or independent attorney or independent auditor;

(h) The Washington public deposit protection commission as provided by RCW 39.58.105.

(3) All examination reports furnished under subsections (2) and (4) of this section shall remain the property of the ((~~division of banking~~)) department of financial institutions, and be confidential, and no person, agency, or authority to whom reports are furnished or any officer, director, or employee thereof shall disclose or make public any of the reports or any information contained therein except in published statistical material that does not disclose the affairs of any individual or corporation: PROVIDED, That nothing herein shall prevent the use in a criminal prosecution of reports furnished under subsection (2) of this section.

(4) The examination report made by the ((~~division of banking~~)) department of financial institutions is designed for use in the supervision of the mutual savings bank, and the ((~~supervisor~~)) director may furnish a copy of the report to the mutual savings bank examined. The report shall remain the property of the ((~~supervisor~~)) director and will be furnished to the mutual savings bank solely for its confidential use. Under no circumstances shall the mutual savings bank or any of its trustees, officers, or employees disclose or make public in any manner the report or any portion thereof, to any person or organization not connected with the savings bank as officer, director, employee, attorney, auditor, or candidate for executive office with the bank. The savings bank may also, after execution of an agreement not to disclose information in the report, disclose the report or relevant portions thereof to a party proposing to acquire or merge with the savings bank.

(5) Examination reports and information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations, or from other state and federal bank regulatory authorities with whom the ((~~supervisor~~)) director has entered into agreements pursuant to RCW 32.04.211, or relating to examination and supervision of holding companies owning a savings bank the principal operations of which are conducted in this state or a subsidiary of such holding company, shall not be subject to public disclosure under chapter 42.17 RCW.

(7) This section shall not apply to investigation reports prepared by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff concerning an application for a new mutual savings bank or an application for a branch of a mutual savings bank: PROVIDED, That the ((~~supervisor~~)) director may adopt rules making confidential portions of the reports if in the ((~~supervisor's~~)) director's opinion the public disclosure of the portions of the report would impair the ability to obtain the information which the ((~~supervisor~~)) director considers necessary to fully evaluate the application.

(8) Every person who violates any provision of this section shall forfeit the person's office or employment and be guilty of a gross misdemeanor.

Sec. 302. RCW 32.04.250 and 1979 c 46 s 1 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may issue and serve upon a mutual savings bank a notice of charges if in the opinion of the ((~~supervisor~~)) director any mutual savings bank:

(a) Is engaging or has engaged in an unsafe or unsound practice in conducting the business of the mutual savings bank;

(b) Is violating or has violated the law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director in connection with the granting of any application or other request by the mutual savings bank or any written agreement made with the ((~~supervisor~~)) director; or

(c) Is about to do the acts prohibited in (a) or (b) of this subsection when the opinion that the threat exists is based upon reasonable cause.

(2) The notice shall contain a statement of the facts constituting the alleged violation or violations or the practice or practices and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the mutual savings bank. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice, unless a later date is set by the ((~~supervisor~~)) director at the request of the mutual savings bank.

Unless the mutual savings bank shall appear at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease and desist order. In the event of this consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the mutual savings bank an order to cease and desist from the violation or practice. The order may require the mutual savings bank and its trustees, officers, employees, and agents to cease and desist from the violation or practice and may require the mutual savings bank to take affirmative action to correct the conditions resulting from the violation or practice.

(3) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the mutual savings bank concerned, except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided therein, unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 303. RCW 32.04.260 and 1979 c 46 s 2 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director determines that the acts specified in RCW 32.04.250 or their continuation is likely to cause insolvency or substantial dissipation of assets or earnings of the mutual savings bank or to otherwise seriously prejudice the interest of its depositors, the ((~~supervisor~~)) director may also issue a temporary order requiring the mutual savings bank to cease and desist from the violation or practice. The order shall become effective upon service on the mutual savings bank and, unless set aside, limited, or suspended by a court in proceedings under RCW 32.04.270, shall remain effective pending the completion of the administrative proceedings under the notice and until such time as the ((~~supervisor~~)) director shall dismiss the charges specified in the notice or until the effective date of a cease and desist order issued against the mutual savings bank under RCW 32.04.250.

Sec. 304. RCW 32.04.280 and 1979 c 46 s 4 are each amended to read as follows:

In the case of a violation or threatened violation of a temporary cease and desist order issued under RCW 32.04.260, the ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the mutual savings bank for an injunction to enforce the order. The court shall issue an injunction if it determines there has been a violation or threatened violation.

Sec. 305. RCW 32.04.290 and 1979 c 46 s 5 are each amended to read as follows:

(1) Any administrative hearing provided in RCW 32.04.250 or 32.16.093 may be held at such place as is designated by the ((~~supervisor~~)) director and shall be conducted in accordance with chapter 34.05 RCW. The hearing shall be private unless the ((~~supervisor~~)) director determines that a public hearing is necessary to protect the public interest after fully considering the views of the party afforded the hearing.

Within sixty days after the hearing, the ((~~supervisor~~)) director shall render a decision which shall include findings of fact upon which the decision is based and shall issue and serve upon each party to the proceeding an order or orders consistent with RCW 32.04.250 or 32.16.093, as the case may be.

Unless a petition for review is timely filed in the superior court of the county of the principal place of business of the affected mutual savings bank under subsection (2) of this section, and until the record in the proceeding has been filed as provided therein, the ((~~supervisor~~)) director may at any time modify, terminate, or set aside any order upon such notice and in such manner as he or she shall deem proper. Upon filing the record, the ((~~supervisor~~)) director may modify, terminate, or set aside any order only with permission of the court.

The judicial review provided in this section shall be exclusive for orders issued under RCW 32.04.250 and 32.16.093.

(2) Any party to the proceeding or any person required by an order, temporary order, or injunction issued under RCW 32.04.250, 32.04.260, 32.04.280, or 32.16.093 to refrain from any of the violations or practices stated therein may obtain a review of any order served under subsection (1) of this section other than one issued upon consent by filing in the superior court of the county of the principal place of business of the affected mutual savings bank within ten days after the date of service of the order a written petition praying that the order of the ((~~supervisor~~)) director be modified, terminated, or set aside. A copy of the petition shall be immediately served upon the ((~~supervisor~~)) director and the ((~~supervisor~~)) director shall then file in the court the record of the proceeding. The court shall have jurisdiction upon the filing of the petition, which jurisdiction shall become exclusive upon the filing of the record, to affirm, modify, terminate, or set aside in whole or in part the order of the ((~~supervisor~~)) director except that the ((~~supervisor~~)) director may modify, terminate, or set aside an order with the permission of the court. The judgment and decree of the court shall be final, except that it shall be subject to appellate review under the rules of court.

(4) Service of any notice or order required to be served under RCW 32.04.250, 32.04.260, or 32.16.093, or under RCW 32.16.090, as now or hereafter amended, shall be accomplished in the same manner as required for the service of process in civil actions in superior courts of this state.

Sec. 306. RCW 32.04.300 and 1979 c 46 s 6 are each amended to read as follows:

The ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the mutual savings bank affected for the enforcement of any effective and outstanding order issued under RCW 32.04.250 or 32.16.093, and the court shall have jurisdiction to order compliance therewith.

No court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any such order, or to review, modify, suspend, terminate, or set aside any such order, except as provided in RCW 32.04.270, 32.04.280, and 32.04.290.

Sec. 307. RCW 32.08.010 and 1955 c 13 s 32.08.010 are each amended to read as follows:

When authorized by the ((~~supervisor~~)) director, as hereinafter provided, not less than nine nor more than thirty persons may form a corporation to be known as a "mutual savings bank." Such persons must be citizens of the United States; at least four‑fifths of them must be residents of this state, and at least two‑thirds of them must be residents of the county where the bank is to be located and its business transacted. They shall subscribe and acknowledge an incorporation certificate in triplicate which shall specifically state:

(1) The name by which the savings bank is to be known, which name shall include the words "mutual savings bank";

(2) The place where the bank is to be located, and its business transacted, naming the city or town and county;

(3) The name, occupation, residence, and post office address of each incorporator;

(4) The sums which each incorporator will contribute in cash to the initial guaranty fund, and to the expense fund respectively, as provided in RCW 32.08.090 and 32.08.100;

(5) A declaration that each incorporator will accept the responsibilities and faithfully discharge the duties of a trustee of the savings bank, and is free from all the disqualifications specified in RCW 32.16.010.

Sec. 308. RCW 32.08.020 and 1955 c 13 s 32.08.020 are each amended to read as follows:

At the time of executing the incorporation certificate, the proposed incorporators shall sign a notice of intention to organize the mutual savings bank, which shall specify their names, the name of the proposed corporation, and its location as set forth in the incorporation certificate. The original of such notice shall be filed in the office of the ((~~supervisor~~)) director within sixty days after the date of its execution, and a copy thereof shall be published at least once a week for four successive weeks in a newspaper designated by the ((~~supervisor~~)) director, the publication to be commenced within thirty days after such designation. At least fifteen days before the incorporation certificate is submitted to the ((~~supervisor~~)) director for examination, as provided in RCW 32.08.030, a copy of such notice shall be served upon each savings bank doing business in the city or town named in the incorporation certificate, by mailing such copy (postage prepaid) to such bank.

Sec. 309. RCW 32.08.030 and 1955 c 13 s 32.08.030 are each amended to read as follows:

After the lapse of at least twenty-eight days from the date of the first due publication of the notice of intention to incorporate, and within ten days after the date of the last publication thereof, the incorporation certificate executed in triplicate shall be submitted for examination to the ((~~supervisor~~)) director at his or her office in Olympia, with affidavits showing due publication and service of the notice of intention to organize prescribed in RCW 32.08.020.

Sec. 310. RCW 32.08.040 and 1955 c 13 s 32.08.040 are each amended to read as follows:

When any such certificate has been filed for examination the ((~~supervisor~~)) director shall thereupon ascertain from the best source of information at his or her command, and by such investigation as he or she may deem necessary, whether the character, responsibility, and general fitness of the person or persons named in such certificate are such as to command confidence and warrant belief that the business of the proposed bank will be honestly and efficiently conducted in accordance with the intent and purpose of this title, and whether the public convenience and advantage will be promoted by allowing such proposed bank to be incorporated and engage in business, and whether greater convenience and access to a savings bank would be afforded to any considerable number of depositors by opening a mutual savings bank in the place designated, whether the population in the neighborhood of such place, and in the surrounding country, affords a reasonable promise of adequate support for the proposed bank, and whether the contributions to the initial guaranty fund and expense fund have been paid in cash. After the ((~~supervisor~~)) director has satisfied himself or herself by such investigation whether it is expedient and desirable to permit such proposed bank to be incorporated and engage in business, he or she shall within sixty days after the date of the filing of the certificate for examination indorse upon each of the triplicates thereof over his or her official signature the word "approved" or the word "refused," with the date of such indorsement. In case of refusal he or she shall forthwith return one of the triplicates so indorsed to the proposed incorporators from whom the certificate was received.

Sec. 311. RCW 32.08.050 and 1979 ex.s. c 57 s 6 are each amended to read as follows:

From the ((~~supervisor's~~)) director's refusal to issue a certificate of authorization, the applicants or a majority of them, may within thirty days from the date of the filing of the certificate of refusal with the secretary of state, appeal to a board of appeal composed of the governor or the governor's designee, the attorney general and the ((~~supervisor of banking~~)) director by filing in the office of the ((~~supervisor~~)) director a notice that they appeal to such board from his or her refusal. The procedure upon the appeal shall be such as the board may prescribe, and its determination shall be certified, filed, and recorded in the same manner as the ((~~supervisor's~~)) director's, and shall be final.

Sec. 312. RCW 32.08.060 and 1981 c 302 s 26 are each amended to read as follows:

In case of approval, the ((~~supervisor~~)) director shall forthwith give notice thereof to the proposed incorporators, and file one of the duplicate certificates in his or her own office, and shall transmit the other to the secretary of state. Upon receipt from the proposed incorporators of the same fees as are required for filing and recording other incorporation certificates, the secretary of state shall file the certificate and record the same. Upon the filing of said incorporation certificate in duplicate approved as aforesaid in the offices of the ((~~supervisor~~)) director and the secretary of state, the persons named therein and their successors shall thereupon become and be a corporation, which corporation shall have the powers and be subject to the duties and obligations prescribed in this title and its corporate existence shall be perpetual, unless sooner terminated pursuant to law, but such corporation shall not receive deposits or engage in business until authorized so to do by the ((~~supervisor~~)) director as provided in RCW 32.08.070.

Sec. 313. RCW 32.08.061 and 1981 c 302 s 27 are each amended to read as follows:

A mutual savings bank may amend its incorporation certificate to extend the period of its corporate existence for a further definite time or perpetually by a resolution adopted by a majority vote of its board of trustees. Duplicate copies of the resolution, subscribed and acknowledged by the president and secretary of such bank, shall be filed in the office of the ((~~supervisor~~)) director within thirty days after its adoption. If the ((~~supervisor~~)) director finds that the resolution conforms to law he or she shall, within sixty days after the date of the filing thereof, endorse upon each of the duplicates thereof, over his or her official signature, his or her approval and forthwith give notice thereof to the bank and shall file one of the certificates in his or her own office and shall transmit the other to the secretary of state. Upon receipt from the mutual savings bank of the same fees as are required of general corporations for filing corresponding instruments, the secretary of state shall file the resolution and record the same. Upon the filing of said resolution in duplicate, approved as aforesaid in the offices of the ((~~supervisor~~)) director and the secretary of state, the corporate existence of said bank shall continue for the period set forth in said resolution unless sooner terminated pursuant to law.

Sec. 314. RCW 32.08.070 and 1981 c 302 s 28 are each amended to read as follows:

Before a mutual savings bank shall be authorized to do any business the ((~~supervisor~~)) director shall be satisfied that the corporation has in good faith complied with all the requirements of law and fulfilled all the conditions precedent to commencing business imposed by this title. If satisfied that the corporation has in good faith complied with all the requirements of law, and fulfilled all the conditions precedent to commencing business imposed by this title, the ((~~supervisor~~)) director shall within six months after the date upon which the proposed organization certificate was filed with him or her for examination, but in no case after the expiration of that period, issue under his or her hand and official seal in triplicate an authorization certificate to such corporation. Such authorization certificate shall state that the corporation therein named has complied with all the requirements of law, that it is authorized to transact at the place designated in its certificate of incorporation, the business of a mutual savings bank. One of the triplicate authorization certificates shall be transmitted by the ((~~supervisor~~)) director to the corporation therein named, and the other two authorization certificates shall be filed by the ((~~supervisor~~)) director in the same public offices where the certificate of incorporation is filed, and shall be attached to said incorporation certificate.

Sec. 315. RCW 32.08.080 and 1955 c 13 s 32.08.080 are each amended to read as follows:

Before such corporation shall be authorized to receive deposits or transact business other than the completion of its organization, the ((~~supervisor~~)) director shall be satisfied that:

(1) The incorporators have made the deposit of the initial guaranty fund required by this title;

(2) ((~~That~~)) The incorporators have made the deposit of the expense fund required by RCW 32.08.090 and if the ((~~supervisor~~)) director shall so require, have entered into the agreement or undertaking with him or her and have filed the same and the security therefor as prescribed in said section;

(3) ((~~That~~)) The corporation has transmitted to the ((~~supervisor~~)) director the name, residence, and post office address of each officer of the corporation;

(4) ((~~That~~)) Its certificate of incorporation in triplicate has been filed in the respective public offices designated in this title.

Sec. 316. RCW 32.08.090 and 1955 c 13 s 32.08.090 are each amended to read as follows:

Before any mutual savings bank shall be authorized to do business, its incorporators shall create an expense fund from which the expense of organizing such bank and its operating expenses may be paid, until such time as its earnings are sufficient to pay its operating expenses in addition to such dividends as may be declared and credited to its depositors from its earnings. The incorporators shall deposit to the credit of such savings bank in cash as an expense fund the sum of five thousand dollars. They shall also enter into such an agreement or undertaking with the ((~~supervisor~~)) director as trustee for the depositors with the savings bank as he or she may require to make such further contributions in cash to the expense fund as may be necessary to pay its operating expenses until such time as it can pay them from its earnings, in addition to such dividends as may be declared and credited to its depositors. Such agreement or undertaking shall fix the maximum liability assumed thereby which shall be a reasonable amount approved by the ((~~supervisor~~)) director and the same shall be secured to his or her satisfaction, which security in his or her discretion may be by a surety bond executed by a domestic or foreign corporation authorized to transact within this state the business of surety. The agreement or undertaking and security shall be filed in the office of the ((~~supervisor~~)) director. Such agreement or undertaking and such security need not be made or furnished unless the ((~~supervisor~~)) director shall require the same. The amounts contributed to the expense fund of said savings bank by the incorporators or trustees shall not constitute a liability of the savings bank except as hereinafter provided.

Sec. 317. RCW 32.08.116 and 1982 c 5 s 2 are each amended to read as follows:

A savings bank not having net earnings or undivided profits or other surplus may pay interest and dividends from its guaranty fund upon prior written approval of the ((~~supervisor~~)) director, which approval shall not be withheld unless the ((~~supervisor~~)) director has determined that such payments would place the savings bank in an unsafe and unsound condition.

Sec. 318. RCW 32.08.130 and 1955 c 13 s 32.08.130 are each amended to read as follows:

When the portion of the guaranty fund created from earnings amounts to not less than five thousand dollars (including in the case of a savings bank converted from a building and loan or savings and loan association or society the amount of the initial guaranty fund), the board of trustees, with the written consent of the ((~~supervisor~~)) director, may establish a reimbursement fund from which to repay contributors to the expense fund and the initial guaranty fund (excepting the initial guaranty fund in the case of a bank converted from a building and loan or savings and loan association or society), and may transfer to the reimbursement fund any unexpended balance of contributions to the expense fund. At the close of each dividend period the trustees may place to the credit of the reimbursement fund not more than one percent of the net earnings of the bank during that period. Payments from the reimbursement fund may be made from time to time in such amounts as the board of trustees shall determine, and shall be made first to the contributors to the expense fund in proportion to their contributions thereto until they shall have been repaid in full, and then shall be made to the contributors to the guaranty fund in proportion to their contributions thereto until they shall have been repaid in full. In case of the liquidation of the savings bank before the contributions to the expense fund and the initial guaranty fund have been fully repaid as above contemplated, any portion of the contributions not needed for the payment of the expenses of liquidation and the payment of depositors in full shall be paid to the contributors to the expense fund in proportion to their contributions thereto until they have been repaid in full, and then shall be paid to the contributors to the guaranty fund in proportion to their contributions thereto until they have been repaid in full.

Sec. 319. RCW 32.08.140 and 1981 c 86 s 2 are each amended to read as follows:

Every mutual savings bank incorporated under this title shall have, subject to the restrictions and limitations contained in this title, the following powers:

(1) To receive deposits of money, to invest the same in the property and securities prescribed in this title, to declare dividends in the manner prescribed in this title, and to exercise by its board of trustees or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of a savings bank.

(2) To issue transferable certificates showing the amounts contributed by any incorporator or trustee to the guaranty fund of such bank, or for the purpose of paying its expenses. Every such certificate shall show that it does not constitute a liability of the savings bank, except as otherwise provided in this title.

(3) To purchase, hold and convey real property as prescribed in RCW 32.20.280.

(4) To pay depositors as hereinafter provided, and when requested, pay them by drafts upon deposits to the credit of the savings bank in any city in the United States, and to charge current rates of exchange for such drafts.

(5) To borrow money in pursuance of a resolution adopted by a vote of a majority of its board of trustees duly entered upon its minutes whereon shall be recorded by ayes and noes the vote of each trustee, for the purpose of repaying depositors, and to pledge or hypothecate securities as collateral for loans so obtained. Immediate written notice shall be given to the (~~supervisor~~)) director of all amounts so borrowed, and of all assets so pledged or hypothecated.

(6) Subject to such regulations and restrictions as the ((~~supervisor~~)) director finds to be necessary and proper, to borrow money in pursuance of a resolution adopted by a vote of a majority of its board of trustees duly entered upon its minutes whereon shall be recorded by ayes and noes the vote of each trustee, for purposes other than that of repaying depositors and to pledge or hypothecate its assets as collateral for any such loans, provided that no amount shall at any time be borrowed by a savings bank pursuant to this subsection (6), if such amount, together with the amount then remaining unpaid upon prior borrowings by such savings bank pursuant to this subsection (6), exceeds thirty percent of the assets of the savings bank.

The sale of securities or loans by a bank subject to an agreement to repurchase the securities or loans shall not be considered a borrowing. Borrowings from federal, state, or municipal governments or agencies or instrumentalities thereof shall not be subject to the limits of this subsection.

(7) To collect or protest promissory notes or bills of exchange owned by such bank or held by it as collateral, and remit the proceeds of the collections by drafts upon deposits to the credit of the savings bank in any city in the United States, and to charge the usual rates or fees for such collection and remittance for such protest.

(8) To sell gold or silver received in payment of interest or principal of obligations owned by the savings bank or from depositors in the ordinary course of business.

(9) To act as insurance agent for the purpose of writing fire insurance on property in which the bank has an insurable interest, the property to be located in the city in which the bank is situated and in the immediate contiguous suburbs, notwithstanding anything in any other statute to the contrary.

(10) To let vaults, safes, boxes or other receptacles for the safekeeping or storage of personal property, subject to laws and regulations applicable to, and with the powers possessed by, safe deposit companies.

(11) To elect or appoint in such manner as it may determine all necessary or proper officers, agents, boards, and committees, to fix their compensation, subject to the provisions of this title, and to define their powers and duties, and to remove them at will.

(12) To make and amend bylaws consistent with law for the management of its property and the conduct of its business.

(13) To wind up and liquidate its business in accordance with this title.

(14) To adopt and use a common seal and to alter the same at pleasure.

(15) To do all other acts authorized by this title.

Sec. 320. RCW 32.08.210 and 1975 1st ex.s. c 265 s 1 are each amended to read as follows:

A mutual savings bank shall have the power to act as trustee under:

(1) A trust established by an inter vivos trust agreement or under the will of a deceased person.

(2) A trust established in connection with any collective bargaining agreement or labor negotiation wherein the beneficiaries of the trust include the employees concerned under the agreement or negotiation, or a trust established in connection with any pension, profit sharing, or retirement benefit plan of any corporation, partnership, association, or individual, including but not limited to retirement plans established pursuant to the provisions of the act of congress entitled "Self-Employed Individuals Tax Retirement Act of 1962", as now constituted or hereafter amended, or plans established pursuant to the provisions of the act of congress entitled "Employee Retirement Income Security Act of 1974", as now constituted or hereafter amended.

A mutual savings bank may be appointed to and accept the appointment of personal representative of the last will and testament, or administrator with will annexed, of the estate of any deceased person and to be appointed and to act as guardian of the estate of minors and incompetent and disabled persons.

The restrictions, limitations and requirements in Title 30 RCW shall apply to a mutual savings bank exercising the powers granted under this section insofar as the restrictions, limitations, and requirements relate to exercising the powers granted under this section. The incidental trust powers to act as agent in the management of trust property and the transaction of trust business in Title 30 RCW shall apply to a mutual savings bank exercising the powers granted under this section insofar as the incidental powers relate to exercising the powers granted under this section.

Before engaging in trust business, a mutual savings bank shall apply to the ((~~supervisor of banking~~)) director on such form as he or she shall determine and pay the same fee as required for a state bank to engage in trust business. In considering such application the ((~~supervisor~~)) director shall ascertain from the best source of information at his or her command and by such investigation as he or she may deem necessary whether the management and personnel of the mutual savings bank are such as to command confidence and warrant belief that the trust business will be adequately and efficiently conducted in accordance with law, whether the resources in the neighborhood of such place and in the surrounding country afford a reasonable promise of adequate support for the proposed trust business and whether the resources of the mutual savings bank are sufficient to support the conduct of such trust business, and that the mutual savings bank has and maintains, in addition to its guaranty fund, undivided profits against which the depositors have no prior claim in an amount not less than would be required of a state bank or trust company, which undivided profits shall be eligible for investment in the same manner as the guaranty fund of a mutual savings bank. Within sixty days after receipt of such application, the ((~~supervisor~~)) director shall either approve or refuse the same and forthwith return to the mutual savings bank a copy of the application upon which his or her decision has been endorsed. The ((~~supervisor~~)) director shall not be required to approve or refuse an application until thirty days after any appropriate approval has been obtained from a federal regulatory agency. The applicant shall have the right to appeal from an unfavorable determination in accordance with the procedures of the administrative procedure act, chapter 34.05 RCW, as now or hereafter amended. A mutual savings bank shall not use the word "trust" in its name, but may use the word "trust" in its business or advertising.

Sec. 321. RCW 32.08.215 and 1985 c 56 s 4 are each amended to read as follows:

No mutual savings bank or wholly owned subsidiary thereof shall act as trustee for common trust funds established for the benefit of more than one beneficiary under more than one trust agreement, unless the savings bank or subsidiary trust company shall first give written notice to the ((~~supervisor~~)) director, at least sixty days prior to the creation of any such fund.

Sec. 322. RCW 32.08.230 and 1981 c 86 s 13 are each amended to read as follows:

Any mutual savings bank engaging in any activity contemplated in RCW 32.08.225, whereby it holds or purchases subordinated securities, issues letters of credit to secure a portion of any sale or issue of loans sold or exchanged, or in any manner acts as a partial guarantor or insurer or repurchaser of any loans sold or exchanged, shall do so only in accordance with such reasonable restrictions and requirements as the ((~~supervisor of banking~~)) director shall require and shall report and carry such transactions on its books and records in such manner as the ((~~supervisor~~)) director shall require. In establishing any requirements and restrictions hereunder, the ((~~supervisor~~)) director shall consider the effect the transaction and the reporting thereof will have on the safety and soundness of the mutual savings bank engaging in it.

Sec. 323. RCW 32.12.010 and 1981 c 192 s 27 are each amended to read as follows:

Deposits made by individuals in a mutual savings bank under this chapter are governed by chapter 30.22 RCW. In addition, other deposits which a savings bank may establish include but are not limited to the following:

(1) Deposits in the name of, or on behalf of, a partnership or other form of multiple ownership enterprise.

(2) Deposits in the name of a corporation, society, or unincorporated association.

(3) Deposits maintained by a person, society, or corporation as administrator, executor, guardian, or trustee under a will or trust agreement.

Every such bank may limit the aggregate amount which an individual or any corporation or society may have to his or her or its credit to such sum as such bank may deem expedient to receive; and may in its discretion refuse to receive a deposit, or may at any time return all or any part of any deposits or require the withdrawal of any dividends or interest. Any account in excess of one hundred thousand dollars may only be accepted or held in accordance with such regulations as the ((~~supervisor~~)) director may establish.

Sec. 324. RCW 32.12.020 and 1985 c 56 s 6 are each amended to read as follows:

The sums deposited with any savings bank, together with any dividends or interest credited thereto, shall be repaid to the depositors thereof respectively, or to their legal representatives, after demand in such manner, and at such times, and under such regulations, as the board of trustees shall prescribe, subject to the provisions of this section and chapter 30.22 RCW. Such regulations shall be posted in a conspicuous place in the room where the business of such savings bank shall be transacted, and shall be available to depositors upon request. All such rules and regulations, and all amendments thereto, from time to time in effect, shall be binding upon all depositors.

(1) Such bank may at any time by a resolution of its board of trustees require a notice of not more than six months before repaying deposits, in which event no deposit shall be due or payable until the required notice of intention to withdraw the same shall have been personally given by the depositor: PROVIDED, That such bank at its option may pay any deposit or deposits before the expiration of such notice. But no bank shall agree with its depositors or any of them in advance to waive the requirement of notice as herein provided: PROVIDED, That the bank may create a special class of depositors who shall be entitled to receive their deposits upon demand.

(2) Except as provided in subdivisions (3), (4), and (5) of this section the savings bank shall not pay any dividend, or interest, or deposit, or portion thereof, or any check drawn upon it by a depositor unless the certificate of deposit is produced or bears a legend stating it may be paid without production, or the passbook of the depositor is produced and the proper entry is made therein, at the time of the payment.

(3) The board of trustees of any such bank may by its bylaws provide for making payments in cases of loss of passbook or certificate of deposit, or other exceptional cases where the passbooks or certificates of deposit cannot be produced without loss or serious inconvenience to depositors, the right to make such payments to cease when so directed by the ((~~supervisor~~)) director upon his or her being satisfied that such right is being improperly exercised by any such bank; but payments may be made at any time upon the judgment or order of a court.

(4) The board of trustees of any such bank may by its bylaws provide for making payments to depositors at their request, of dividends or interest payable on any deposit, without requiring the production of the passbook or certificate of deposit of the depositor, and any payment made in accordance with any such request and the receipt or acquittance of the one to whom such payment is made shall be a valid and sufficient release and discharge to such savings bank for all payments made on account of such request prior to receipt by such savings bank of notice in writing not to pay such sums in accordance with the terms of such request.

(5) The issuance of a passbook or certificate of deposit may be omitted for any account if an adequate record thereof is maintained, in lieu of a passbook or certificate of deposit, on which shall be entered deposits, withdrawals, and interest credited: PROVIDED, That in any event a passbook shall be issued upon the request of any passbook account depositor.

Sec. 325. RCW 32.12.050 and 1985 c 56 s 7 are each amended to read as follows:

(1) No savings bank shall by any system of accounting, or any device of bookkeeping, directly or indirectly, enter any of its assets upon its books in the name of any other individual, partnership, unincorporated association, or corporation, or under any title or designation that is not in accordance with the actual facts.

(2) The bonds, notes, mortgages, or other interest bearing obligations purchased or acquired by a savings bank, shall not be entered on its books at more than the actual cost thereof, and shall not thereafter be carried upon its books for a longer period than until the next declaration of dividends, or in any event for more than one year, at a valuation exceeding their present cost as determined by amortization, that is, by deducting from the cost of any such security purchased for a sum in excess of the amount payable thereon at maturity and charging to "profit and loss" a sufficient sum to bring it to par at maturity, or adding to the cost of any such security purchased at less than the amount payable thereon at maturity and crediting to "profit and loss" a sufficient sum to bring it to par at maturity.

(3) No such bank shall enter, or at any time carry on its books, the real estate and the building or buildings thereon used by it as its place of business at a valuation exceeding their actual cost to the bank.

(4) Every such bank shall conform its methods of keeping its books and records to such orders in respect thereof as shall have been made and promulgated by the ((~~supervisor~~)) director. Any officer, agent, or employee of any savings bank who refuses or neglects to obey any such order shall be punished as hereinafter provided.

(5) Real estate acquired by a savings bank, other than that acquired for use as a place of business, may be entered on the books of the bank at the actual cost thereof but shall not be carried beyond the current dividend period at an amount in excess of the amount of the debt in protection of which such real estate was acquired, plus the cost of any improvements thereto.

An appraisal shall be made by a qualified person of every such parcel of real estate within six months from the date of conveyance. If the value at which such real estate is carried on the books is in excess of the value found on appraisal the book value shall, at the end of the dividend period during which such appraisal was made, be reduced to an amount not in excess of such appraised value.

(6) No such bank shall enter or carry on its books any asset which has been disallowed by the ((~~supervisor~~)) director or the trustees of such bank, or any debt owing to it which has remained due without prosecution and upon which no interest has been paid for more than one year, or on which a judgment has been recovered which has remained unsatisfied for more than two years, unless the ((~~supervisor~~)) director upon application by such savings bank has fixed a valuation at which such debt may be carried as an asset, or unless such debt is secured by first mortgage upon real estate, in which latter case it may be carried at the actual cash value of such real estate as determined by written appraisal signed by two or more persons appointed by the board of trustees and filed with it.

(7) Notwithstanding the prohibitions of this section, a savings bank may maintain its books and records and may enter and carry on its books any asset or liability at any valuation in accordance with any accounting rules promulgated or adopted by the federal deposit insurance corporation or the financial accounting standards board or the ((~~supervisor of banking~~)) director.

Sec. 326. RCW 32.12.060 and 1955 c 13 s 32.12.060 are each amended to read as follows:

Any debt due a savings bank on which interest is one year or more past due and unpaid, unless such debt is well secured and in course of collection by legal process or probate proceedings, shall be considered a bad debt, and shall be charged off of the books of such bank. A judgment held by a savings bank shall not be considered an asset of the corporation after two years from the date of its rendition, unless with the written permission of the ((~~supervisor~~)) director specifying an additional period: PROVIDED, That time consumed by any appeal shall be excluded.

Sec. 327. RCW 32.12.070 and 1955 c 80 s 3 are each amended to read as follows:

(1) Gross current operating earnings. Every savings bank shall close its books, for the purpose of computing its net earnings, at the end of any period for which a dividend is to be paid, and in no event less frequently than semiannually. To determine the amount of gross earnings of a savings bank during any dividend period the following items may be included:

(a) All earnings actually received during such period, less interest accrued and uncollected included in the last previous calculation of earnings;

(b) Interest accrued and uncollected upon debts owing to it secured by authorized collateral, upon which there has been no default for more than one year, and upon corporate bonds, or other interest bearing obligations owned by it upon which there is no default;

(d) Any profits actually received during such period from the sale of securities, real estate or other property owned by it;

(e) Such other items as the ((~~supervisor~~)) director, in his or her discretion and upon his or her written consent, may permit to be included.

(2) Net current earnings. To determine the amount of its net earnings for each dividend period the following items shall be deducted from gross earnings:

(a) All expenses paid or incurred, both ordinary and extraordinary, in the transaction of its business, the collection of its debts and the management of its affairs, less expenses incurred and interest accrued upon its debts deducted at the last previous calculation of net earnings for dividend purposes;

(b) Interest paid or accrued and unpaid upon debts owing by it;

(c) The amounts deducted through amortization from the cost of bonds or other interest bearing obligations purchased above par in order to bring them to par at maturity;

(d) Contributions to any corporation or any community chest fund or foundation organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual and no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation. The total contributions for any calendar year shall not exceed a sum equal to one-half of one percent of the net earnings of such savings bank for the preceding calendar year.

The balance thus obtained shall constitute the net earnings of the savings bank for such period.

(3) Earnings paid by a savings bank on deposits may be referred to as "dividends" or as "interest".

Sec. 328. RCW 32.16.020 and 1955 c 13 s 32.16.020 are each amended to read as follows:

(1) Each trustee, whether named in the certificate of authorization or elected to fill a vacancy, shall, when such certificate of authorization has been issued, or when notified of such election, take an oath that he will, so far as it devolves on him or her, diligently and honestly administer the affairs of the savings bank, and will not knowingly violate, or willingly permit to be violated, any of the provisions of law applicable to such savings bank. Such oath shall be subscribed by the trustee making it and certified by the officer before whom it is taken, and shall be immediately transmitted to the ((~~supervisor~~)) director and filed and preserved in his or her office.

(2) Prior to the first day of March in each year, every trustee of every savings bank shall subscribe a declaration to the effect that he or she is, at the date thereof, a trustee of the savings bank, and that he or she has not resigned, become ineligible, or in any other manner vacated his or her office as such trustee. Such declaration shall be acknowledged in like manner as a deed to be entitled to record and shall be transmitted to the ((~~supervisor~~)) director and filed in his or her office prior to the tenth day of March in each year.

Sec. 329. RCW 32.16.060 and 1955 c 13 s 32.16.060 are each amended to read as follows:

The board of trustees of every savings bank may, by resolution incorporated in its bylaws, increase or reduce the number of trustees named in the original charter or certificate of authorization.

(1) The number may be increased to a number designated in the resolution not exceeding thirty: PROVIDED, That reasons therefor are shown to the satisfaction of the ((~~supervisor~~)) director and his or her written consent thereto is first obtained.

(2) The number may be reduced to a number designated in the resolution but not less than nine. The reduction shall be effected by omissions to fill vacancies occurring in the board.

Sec. 330. RCW 32.16.080 and 1955 c 13 s 32.16.080 are each amended to read as follows:

(1) Whenever, in the judgment of three-fourths of the trustees, the conduct and habits of a trustee of any savings bank are of such character as to be injurious to such bank, or he or she has been guilty of acts that are detrimental or hostile to the interests of the bank, he or she may be removed from office, at any regular meeting of the trustees, by the affirmative vote of three-fourths of the total number thereof: PROVIDED, That a written copy of the charges made against him or her has been served upon him or her personally at least two weeks before such meeting, that the vote of such trustees by ayes and noes is entered in the record of the minutes of such meeting, and that such removal receives the written approval of the ((~~supervisor~~)) director which shall be attached to the minutes of such meeting and form a part of the record.

(2) The office of a trustee of a savings bank shall immediately become vacant whenever he or she:

(a) Fails to comply with any of the provisions of RCW 32.16.020 relating to his or her official oath and declaration;

(b) Becomes disqualified for any of the reasons specified in RCW 32.16.010(2);

(c) Has failed to attend the regular meetings of the board of trustees, or to perform any of his or her duties as trustee, for a period of six successive months, unless excused by the board for such failure;

(d) Violates any of the provisions of RCW 32.16.070 imposing restrictions upon trustees and officers, except subsection (2)(c) thereof.

(3) A trustee who has forfeited or vacated his or her office shall not be eligible to reelection, except when the forfeiture or vacancy occurred solely by reason of his or her:

(a) Failure to comply with the provisions of RCW 32.16.020, relating to his or her official oath and declaration; or

(b) Neglect of his or her official duties as prescribed in subsection (2)(c) of this section; or

(c) Disqualification through becoming a nonresident, or becoming a trustee, officer, clerk or other employee of another savings bank, or becoming a director of a bank, trust company, or national banking association under the circumstances specified in RCW 32.16.070(1)(b) and such disqualification has been removed.

Sec. 331. RCW 32.16.090 and 1979 c 46 s 7 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director finds that:

(1) Any trustee, officer, or employee of any mutual savings bank has committed or engaged in:

(a) A violation of any law, rule, or cease and desist order which has become final;

(b) Any unsafe or unsound practice in connection with the mutual savings bank; or

(c) Any act, omission, or practice which constitutes a breach of his or her fiduciary duty as trustee, officer, or employee; and

(2) The ((~~supervisor~~)) director determines that:

(a) The mutual savings bank has suffered or may suffer substantial financial loss or other damage; or

(b) The interests of its depositors could be seriously prejudiced by reason of the violation, practice, or breach of fiduciary duty; and

(3) The ((~~supervisor~~)) director determines that the violation, practice, or breach of fiduciary duty is one involving personal dishonesty, recklessness, or incompetence on the part of the trustee, officer, or employee;

Then the ((~~supervisor~~)) director may serve upon the trustee, officer, or employee of any mutual savings bank a written notice of the ((~~supervisor's~~)) director's intention to remove the person from office or to prohibit the person from participation in the conduct of the affairs of the mutual savings bank.

Sec. 332. RCW 32.16.093 and 1979 c 46 s 8 are each amended to read as follows:

A notice of an intention to remove a trustee, officer, or employee from office or to prohibit his or her participation in the conduct of the affairs of a mutual savings bank shall contain a statement of the facts which constitute grounds therefor and shall fix a time and place at which a hearing will be held. The hearing shall be set not earlier than ten days nor later than thirty days after the date of service of the notice unless an earlier or later date is set by the ((~~supervisor~~)) director at the request of the trustee, officer, or employee for good cause shown or at the request of the attorney general of the state.

Unless the trustee, officer, or employee appears at the hearing personally or by a duly authorized representative, the person shall be deemed to have consented to the issuance of an order of removal or prohibition or both. In the event of such consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any of the grounds specified in the notice have been established, the ((~~supervisor~~)) director may issue such orders of removal from office or prohibition from participation in the conduct of the affairs of the mutual savings bank as the ((~~supervisor~~)) director may consider appropriate.

Any order under this section shall become effective at the expiration of ten days after service upon the mutual savings bank and the trustee, officer, or employee concerned except that an order issued upon consent shall become effective at the time specified in the order.

An order shall remain effective except to the extent it is stayed, modified, terminated, or set aside by the ((~~supervisor~~)) director or a reviewing court.

Sec. 333. RCW 32.16.095 and 1979 c 46 s 9 are each amended to read as follows:

If at any time because of the removal of one or more trustees under this chapter there shall be on the board of trustees of a mutual savings bank less than a quorum of trustees, all powers and functions vested in, or exercisable by the board shall vest in, and be exercisable by the trustee or trustees remaining, until such time as there is a quorum on the board of trustees. If all of the trustees of a mutual savings bank are removed under this chapter, the ((~~supervisor~~)) director shall appoint persons to serve temporarily as trustees until such time as their respective successors take office.

Sec. 334. RCW 32.16.097 and 1979 c 46 s 10 are each amended to read as follows:

Any present or former trustee, officer, or employee of a mutual savings bank or any other person against whom there is outstanding an effective final order issued under RCW 32.16.093, which order has been served upon the person, and who, in violation of the order, (1) participates in any manner in the conduct of the affairs of the mutual savings bank involved; or (2) directly or indirectly solicits or procures, transfers or attempts to transfer, or votes or attempts to vote any proxies, consents, or authorizations with respect to any voting rights in the mutual savings bank; or (3) without the prior approval of the ((~~supervisor~~)) director, votes for a trustee or serves or acts as a trustee, officer, employee, or agent of any mutual savings bank, shall be guilty of a gross misdemeanor, and, upon conviction, shall be punishable as prescribed under chapter 9A.20 RCW.

Sec. 335. RCW 32.16.140 and 1989 c 180 s 9 are each amended to read as follows:

Sec. 336. RCW 32.20.035 and 1989 c 97 s 2 are each amended to read as follows:

Except as may be limited by the ((~~supervisor~~)) director by rule, a mutual savings bank may invest its funds in obligations of the United States, as authorized by RCW 32.20.030, 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 the federal investment company act of 1940, as now or hereafter amended, if both of the following conditions are met:

(1) The portfolio of the investment company or investment trust is limited to obligations of the United States and to repurchase agreements fully collateralized by such obligations; and

(2) The investment company or investment trust takes delivery of the collateral for any repurchase agreement either directly or through an authorized custodian.

Sec. 337. RCW 32.20.280 and 1981 c 86 s 4 are each amended to read as follows:

A mutual savings bank may invest its funds in real estate as follows:

(1) A tract of land whereon there is or may be erected a building or buildings suitable for the convenient transaction of the business of the savings bank, from portions of which not required for its own use revenue may be derived: PROVIDED, That the cost of the land and building or buildings for the transaction of the business of the savings bank shall in no case exceed fifty percent of the guaranty fund, undivided profits, reserves, and subordinated securities of the savings bank, except with the approval of the ((~~supervisor~~)) director; and before the purchase of such property is made, or the erection of a building or buildings is commenced, the estimate of the cost thereof, and the cost of the completion of the building or buildings, shall be submitted to and approved by the ((~~supervisor~~)) director. "The cost of the land and building or buildings" means the amounts paid or expended therefor less the reasonable depreciation thereof taken by the bank against such improvements during the time they were held by the bank.

(2) Such lands as shall be conveyed to the savings bank in satisfaction of debts previously contracted in the course of its business.

(3) Such lands as the savings bank shall purchase at sales under judgments, decrees, or mortgages held by it.

All real estate purchased by any such savings bank, or taken by it in satisfaction of debts due it, under this section, shall be conveyed to it directly by name, or in the name of a corporation all of the stock of which is owned by the bank, or in such other manner as the bank shall determine to be in the best interest of the bank, and the conveyance shall be immediately recorded in the office of the proper recording officer of the county in which such real estate is situated.

(4) Every parcel of real estate purchased or acquired by a savings bank under subsections (2) and (3) of this section, shall be sold by it within five years from the date on which it was purchased or acquired, or in case it was acquired subject to a right of redemption, within five years from the date on which the right of redemption expires, unless:

(a) There is a building thereon occupied by the savings bank and its offices,

(b) The ((~~supervisor~~)) director, on application of the board of trustees of the savings bank, extends the time within which such sale shall be made, or

(c) The property is held by the bank as an investment under the provisions of RCW 32.20.285, as now or hereafter amended.

Sec. 338. RCW 32.20.290 and 1967 c 145 s 8 are each amended to read as follows:

No savings bank shall deposit any of its funds with any bank, trust company, or other moneyed corporation or concern which has not been approved by the ((~~supervisor~~)) director as a depositary for the savings bank's funds and designated a depositary by vote of a majority of the trustees of the savings bank, exclusive of any trustee who is an officer, director, or trustee of or who owns more than one-half of one percent of the outstanding stock in the depositary so designated.

Sec. 339. RCW 32.24.010 and 1955 c 13 s 32.24.010 are each amended to read as follows:

If the trustees of any solvent mutual savings bank deem it necessary or expedient to close the business of such bank, they may, by affirmative vote of not less than two-thirds of the whole number of trustees, at a meeting called for that purpose, of which one month's notice has been given, either personally or by mailing such notice to the post office address of each trustee, declare by resolution their determination to close such business and pay the moneys due depositors and creditors and to surrender the corporate franchise. Subject to the approval and under the direction of the ((~~supervisor~~)) director, such savings bank may adopt any lawful plan for closing up its affairs, as nearly as may be in accordance with the original plan and objects.

Sec. 340. RCW 32.24.020 and 1981 c 302 s 29 are each amended to read as follows:

When the trustees, acting under the provisions of RCW 32.24.010, have paid the sums due respectively to all creditors and depositors, who, after such notice as the ((~~supervisor of banking~~)) director shall prescribe, claim the money due and their deposits, the trustees shall make a transcript or statement from the books in the bank of the names of all depositors and creditors who have not claimed or have not received the balance of the credit due them, and of the sums due them, respectively, and shall file such transcript with the ((~~supervisor~~)) director and pay over and transfer all such unclaimed and unpaid deposits, credits, and moneys to the ((~~supervisor~~)) director. The trustees shall then report their proceedings, duly verified, to the superior court of the county wherein the bank is located, and upon such report and the petition of the trustees, and after notice to the attorney general and the ((~~supervisor~~)) director, and such other notice as the court may deem necessary, the court shall adjudge the franchise surrendered and the existence of the corporation terminated. Certified copies of the judgment shall be filed in the offices of the secretary of state and the ((~~supervisor of banking~~)) director and shall be recorded in the office of the secretary of state.

Sec. 341. RCW 32.24.030 and 1985 c 56 s 14 are each amended to read as follows:

An unconverted mutual savings bank may for the purpose of consolidation, acquisition, pooling of assets, merger, or voluntary liquidation arrange for its assets and liabilities to become assets and liabilities of another mutual savings bank, by the affirmative vote or with the written consent of two-thirds of the whole number of its trustees, but only with the written consent of the ((~~supervisor~~)) director and upon such terms and conditions as he or she may prescribe.

Upon any such transfer being made, or upon the liquidation of any such mutual savings bank for any cause whatever, or upon its being no longer engaged in the business of a mutual savings bank, the ((~~supervisor~~)) director shall terminate its certificate of authority, which shall not thereafter be revived or renewed. When the certificate of authority of any such corporation has been revoked, it shall forthwith collect and distribute its remaining assets, and when that is done, the ((~~supervisor~~)) director shall certify the fact to the secretary of state, whereupon the corporation shall cease to exist and the secretary of state shall note the fact upon his or her records.

In case of the consolidation with or voluntary liquidation of a mutual savings bank by another mutual savings bank, as herein provided, any sums advanced by its incorporators, or others, to create or maintain its guaranty fund or its expense fund shall not be liabilities of such mutual savings bank unless the mutual savings bank, so assuming its liabilities shall specifically undertake to pay the same, or a stated portion thereof.

Sec. 342. RCW 32.24.040 and 1955 c 13 s 32.24.040 are each amended to read as follows:

Whenever it appears to the ((~~supervisor~~)) director that any mutual savings bank is conducting its business in an unsafe manner or that it refuses to submit its books, papers, or concerns to lawful inspection, or that any trustee or officer thereof refuses to submit to examination on oath touching its concerns, or that it has failed to carry out any authorized order or direction of the ((~~supervisor~~)) director, such ((~~supervisor~~)) director may give notice to the mutual savings bank so offending or delinquent or whose trustee or officer is thus offending or delinquent to correct such offense or delinquency, and if the mutual savings bank fails to comply with the terms of such notice within thirty days from the date of its issuance, or within such further time as the ((~~supervisor~~)) director may allow, then the ((~~supervisor~~)) director may take possession of such mutual savings bank as in the case of insolvency.

Sec. 343. RCW 32.24.050 and 1955 c 13 s 32.24.050 are each amended to read as follows:

Whenever it appears to the ((~~supervisor~~)) director that any offense or delinquency referred to in RCW 32.24.040 renders a mutual savings bank in an unsound or unsafe condition to continue its business, or that it has suspended payment of its obligations, or is insolvent, such ((~~supervisor~~)) director may take possession thereof without notice.

Upon taking possession of any mutual savings bank, the ((~~supervisor~~)) director shall forthwith proceed to liquidate the business, affairs, and assets thereof and such liquidation shall be had in accordance with the provisions of law governing the liquidation of insolvent banks and trust companies.

Sec. 344. RCW 32.24.060 and 1955 c 13 s 32.24.060 are each amended to read as follows:

Within ten days after the ((~~supervisor~~)) director takes possession thereof, a mutual savings bank may serve notice upon such ((~~supervisor~~)) director to appear before the superior court in the county wherein such corporation is located, at a time to be fixed by said court, which shall not be less than five nor more than fifteen days from the date of the service of such notice, to show cause why such corporation should not be restored to the possession of its assets. Upon the return day of such notice, or such further day as the matter may be continued to, the court shall summarily hear said cause and shall dismiss the same, if it finds that possession was taken by the ((~~supervisor~~)) director in good faith and for cause, but if it finds that no cause existed for the taking possession of such corporation, it shall require the ((~~supervisor~~)) director to restore the bank to the possession of its assets and enjoin him or her from further interference therewith without cause.

Sec. 345. RCW 32.24.070 and 1955 c 13 s 32.24.070 are each amended to read as follows:

No receiver shall be appointed by any court for any mutual savings bank, nor shall any assignment of any such bank for the benefit of creditors be valid, excepting only that a court otherwise having jurisdiction may in case of imminent necessity appoint a temporary receiver to take possession of and preserve the assets of the mutual savings bank. Immediately upon any such appointment, the clerk of the court shall notify the ((~~supervisor~~)) director by telegram and mail of such appointment and the ((~~supervisor~~)) director shall forthwith take possession of the mutual savings bank, as in case of insolvency, and the temporary receiver shall upon demand of the ((~~supervisor~~)) director surrender up to him or her such possession and all assets which have come into his or her hands. The ((~~supervisor~~)) director shall in due course pay such receiver out of the assets of the mutual savings bank such amount as the court shall allow.

Sec. 346. RCW 32.24.080 and 1985 c 56 s 15 are each amended to read as follows:

Every transfer of its property or assets by any mutual savings bank in this state, made (1) after it has become insolvent, (2) within ninety days before the date the ((~~supervisor~~)) director takes possession of such savings bank under RCW 32.24.050 or the federal deposit insurance corporation is appointed as receiver or liquidator of such savings bank under RCW 32.24.090, and (3) with the view to the preference of one creditor over another or to prevent equal distribution of its property and assets among its creditors, shall be void. Every trustee, officer, or employee making any such transfer shall be guilty of a felony.

Sec. 347. RCW 32.24.090 and 1973 1st ex.s. c 54 s 3 are each amended to read as follows:

The federal deposit insurance corporation is hereby authorized and empowered to be and act without bond as receiver or liquidator of any mutual savings bank the deposits in which are to any extent insured by that corporation and which shall have been closed on account of inability to meet the demands of its depositors. In the event of such closing, the ((~~supervisor of banking~~)) director may appoint the federal deposit insurance corporation as receiver or liquidator of such mutual savings bank. If the corporation accepts such appointment, it shall have and possess all the powers and privileges provided by the laws of this state with respect to a liquidator of a mutual savings bank, its depositors and other creditors, and be subject to all the duties of such liquidator, except insofar as such powers, privileges, or duties are in conflict with the provisions of the federal deposit insurance act, as now or hereafter amended.

Sec. 348. RCW 32.24.100 and 1973 1st ex.s. c 54 s 4 are each amended to read as follows:

The pendency of any proceedings for judicial review of the ((~~supervisor's~~)) director's actions in taking possession and control of a mutual savings bank and its assets for the purpose of liquidation shall not operate to defer, delay, impede, or prevent the payment or acquisition by the federal deposit insurance corporation of the deposit liabilities of the mutual savings bank which are insured by the corporation. During the pendency of any proceedings for judicial review, the ((~~supervisor of banking~~)) director shall make available to the federal deposit insurance corporation such facilities in or of the mutual savings bank and such books, records, and other relevant data of the mutual savings bank as may be necessary or appropriate to enable the corporation to pay out or to acquire the insured deposit liabilities of the mutual savings bank. The federal deposit insurance corporation and its directors, officers, agents, and employees, the ((~~supervisor of banking~~)) director, and his or her agents and employees shall be free from liability to the mutual savings bank, its directors, stockholders, and creditors for or on account of any action taken in connection herewith.

Sec. 349. RCW 32.32.010 and 1981 c 85 s 1 are each amended to read as follows:

This chapter shall exclusively govern the conversion of mutual savings banks to capital stock savings banks. No mutual savings bank may convert to the capital stock form of organization without the prior written approval of the ((~~supervisor~~)) director pursuant to this chapter, except that the ((~~supervisor~~)) director may waive requirements of this chapter in appropriate cases.

Sec. 350. RCW 32.32.015 and 1981 c 85 s 2 are each amended to read as follows:

The ((~~supervisor~~)) director may prescribe under this chapter such forms as the ((~~supervisor~~)) director deems appropriate for use by a mutual savings bank seeking to convert to a capital stock savings bank pursuant to this chapter.

Sec. 351. RCW 32.32.020 and 1981 c 85 s 3 are each amended to read as follows:

(1) If an applicant finds that compliance with any provision of this chapter would be in conflict with applicable federal law, the ((~~supervisor~~)) director shall grant or deny a request of noncompliance with the provision. The request may be incorporated in the application for conversion; otherwise, the applicant shall file the request in accordance with the requirements of the ((~~supervisor~~)) director.

(2) In making any such request, the applicant shall:

(a) Specify the provision or provisions of this chapter with respect to which the applicant desires waiver;

(b) Furnish an opinion of counsel demonstrating that applicable federal law is in conflict with the specified provision or provisions of this chapter; and

(c) Demonstrate that the requested waiver would not result in any effects that would be inequitable or detrimental to the applicant, its account holders, or other financial institutions or would be contrary to the public interest.

Sec. 352. RCW 32.32.025 and 1985 c 56 s 16 are each amended to read as follows:

As used in this chapter, the following definitions apply, unless the context otherwise requires:

(1) Except as provided in RCW 32.32.230, an "affiliate" of, or a person "affiliated" with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

(2) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to shares, and the number of units if relating to any other kind of security.

(3) An "applicant" is a mutual savings bank which has applied to convert pursuant to this chapter.

(4) The term "associate", when used to indicate a relationship with any person, means (a) any corporation or organization (other than the applicant or a majority-owned subsidiary of the applicant) of which the person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (b) any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity, and (c) any relative who would be a "class A beneficiary" ((~~under RCW 83.08.005~~)) if the person were a decedent.

(5) The term "broker" means any person engaged in the business of effecting transactions in securities for the account of others.

(6) The term "capital stock" includes permanent stock, guaranty stock, permanent reserve stock, any similar certificate evidencing nonwithdrawable capital, or preferred stock, of a savings bank converted under this chapter or of a subsidiary institution or holding company.

(7) The term "charter" includes articles of incorporation, articles of reincorporation, and certificates of incorporation, as amended, effecting (either with or without filing with any governmental agency) the organization or creation of an incorporated person.

(8) Except as provided in RCW 32.32.230, the term "control" (including the terms "controlling", "controlled by", and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

(9) The term "dealer" means any person who engages either for all or part of his or her time, directly or indirectly, as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person.

(10) The term "director" means any director of a corporation, any trustee of a mutual savings bank, or any person performing similar functions with respect to any organization whether incorporated or unincorporated.

(11) The term "eligibility record date" means the record date for determining eligible account holders of a converting mutual savings bank.

(12) The term "eligible account holder" means any person holding a qualifying deposit as determined in accordance with RCW 32.32.180.

(13) The term "employee" does not include a director or officer.

(14) The term "equity security" means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.

(15) The term "market maker" means a dealer who, with respect to a particular security, (a) regularly publishes bona fide, competitive bid and offer quotations in a recognized interdealer quotation system; or (b) furnishes bona fide competitive bid and offer quotations on request; and (c) is ready, willing, and able to effect transaction in reasonable quantities at his or her quoted prices with other brokers or dealers.

(16) The term "material", when used to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which an average prudent investor ought reasonably to be informed before purchasing an equity security of the applicant.

(17) The term "mutual savings bank" means a mutual savings bank organized and operating under Title 32 RCW.

(18) Except as provided in RCW 32.32.435, the term "offer", "offer to sell", or "offer of sale" shall include every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value. These terms shall not include preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are or are to be in privity of contract with an applicant.

(19) The term "officer", for purposes of the purchase of stock in a conversion under this chapter or the sale of this stock, means the chairman of the board, president, vice president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer, and any other person performing similar functions with respect to any organization whether incorporated or unincorporated.

(20) Except as provided in RCW 32.32.435, the term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof.

(21) The term "proxy" includes every form of authorization by which a person is or may be deemed to be designated to act for a stockholder in the exercise of his or her voting rights in the affairs of an institution. Such an authorization may take the form of failure to dissent or object.

(22) The terms "purchase" and "buy" include every contract to purchase, buy, or otherwise acquire a security or interest in a security for value.

(23) The terms "sale" and "sell" include every contract to sell or otherwise dispose of a security or interest in a security for value; but these terms do not include an exchange of securities in connection with a merger or acquisition approved by the ((~~supervisor~~)) director of financial institutions.

(24) The term "savings account" means deposits established in a mutual savings bank and includes certificates of deposit.

(25) Except as provided in RCW 32.32.435, the term "security" includes any note, stock, treasury stock, bond, debenture, transferable share, investment contract, voting-trust certificate, or in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase any of the foregoing.

(26) The term "subscription offering" refers to the offering of shares of capital stock, through nontransferable subscription rights issued to: (a) Eligible account holders as required by RCW 32.32.045; (b) supplemental eligible account holders as required by RCW 32.32.055; (c) directors, officers, and employees, as permitted by RCW 32.32.140; and (d) eligible account holders and supplemental eligible account holders as permitted by RCW 32.32.145.

(27) A "subsidiary" of a specified person is an affiliate controlled by the person, directly or indirectly through one or more intermediaries.

(28) ((~~The term "supervisor" means the supervisor of banking.~~

~~(29)~~)) The term "supplemental eligibility record date" means the supplemental record date for determining supplemental eligible account holders of a converting savings bank required by RCW 32.32.055. The date shall be the last day of the calendar quarter preceding ((~~supervisor~~)) director of financial institutions approval of the application for conversion.

((~~(30)~~)) (29) The term "supplemental eligible account holder" means any person holding a qualifying deposit, except officers, directors, and their associates, as of the supplemental eligibility record date.

((~~(31)~~)) (30) The term "underwriter" means any person who has purchased from an applicant with a view to, or offers or sells for an applicant in connection with, the distribution of any security, or participates or has a direct or indirect participation in the direct or indirect underwriting of any such undertaking; but the term does not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers commission. The term "principal underwriter" means an underwriter in privity of contract with the applicant or other issuer of securities as to which that person is the underwriter.

Terms defined in other chapters of this title, when used in this chapter, shall have the meanings given in those definitions, to the extent those definitions are not inconsistent with the definitions contained in this chapter unless the context otherwise requires.

Sec. 353. RCW 32.32.030 and 1981 c 85 s 5 are each amended to read as follows:

No application for conversion may be approved by the ((~~supervisor~~)) director if:

(1) The plan of conversion adopted by the applicant's board of directors is not in accordance with this chapter;

(2) The conversion would result in a reduction of the applicant's net worth below requirements established by the ((~~supervisor~~)) director;

(3) The conversion may result in a taxable reorganization of the applicant under the United States Internal Revenue Code of 1954, as amended; or

(4) The converted savings bank does not meet the insurance requirements as established by the ((~~supervisor~~)) director.

Sec. 354. RCW 32.32.040 and 1985 c 56 s 17 are each amended to read as follows:

A converted savings bank or a holding company organized pursuant to chapter 32.34 RCW shall issue and sell capital stock at a total price equal to the estimated pro forma market value of the stock issued in connection with the conversion, based on an independent valuation, as provided in RCW 32.32.305. In the conversion of a mutual savings bank or holding company, either of which is in the process of merging with, being acquired by, or consolidating with a stock savings bank, or a savings bank holding company owned by stockholders, or a subsidiary thereof, the following subsections apply:

(1) The price per share of the shares offered for subscription and issued in the conversion shall be not less than the price reported for stock which is listed on a national or regional stock exchange, or the bid price for stock which is traded on the NASDAQ system, as of the day before any public offering or other completion of the sale of stock in the conversion: PROVIDED, That for stock not so listed and not traded on the NASDAQ system, and any stock whose price has been affected, as of the day specified above, by a violation of RCW 32.32.225, the price per share shall be determined by the ((~~supervisor~~)) director, upon the submission of such information as the ((~~supervisor~~)) director may request.

(2) The independent valuation as provided in RCW 32.32.305 shall determine the aggregate value of shares for which subscription rights are granted pursuant to RCW 32.32.045, 32.32.050, and 32.32.055, rather than a price per share or number of shares as provided in RCW 32.32.290, 32.32.325, and 32.32.330. This independent valuation may be replaced by a demonstration, to the satisfaction of the ((~~supervisor~~)) director, of the fairness of the price of the shares issued.

Sec. 355. RCW 32.32.055 and 1981 c 85 s 10 are each amended to read as follows:

In plans involving an eligibility record date that is more than fifteen months prior to the date of the latest amendment to the application for conversion filed prior to the ((~~supervisor~~)) director approval, a supplemental eligibility record date shall be determined whereby each supplemental eligible account holder of the converting savings bank shall receive, without payment, nontransferable subscription rights to purchase supplemental shares in an amount equal to the greatest of two hundred shares, one-tenth of one percent of the total offering of shares, or fifteen times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of capital stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the supplemental eligible account holder and the denominator is the total amount of the qualifying deposits of all supplemental eligible account holders in the converting savings bank on the supplemental eligibility record date.

(1) Subscription rights received pursuant to this section shall be subordinated to all rights received by eligible account holders to purchase shares pursuant to RCW 32.32.045 and 32.32.050.

(2) Any nontransferable subscription rights to purchase shares received by an eligible account holder in accordance with RCW 32.32.045 shall be applied in partial satisfaction of the subscription rights to be distributed pursuant to this section.

(3) In the event of an oversubscription for supplemental shares pursuant to this section, shares shall be allocated among the subscribing supplemental eligible account holders as follows:

(a) Shares shall be allocated among subscribing supplemental eligible account holders so as to permit each such supplemental account holder, to the extent possible, to purchase a number of shares sufficient to make the supplemental account holder's total allocation (including the number of shares, if any, allocated in accordance with RCW 32.32.045) equal to one hundred shares.

(b) Any shares not allocated in accordance with subsection (3)(a) of this section shall be allocated among the subscribing supplemental eligible account holders on such equitable basis, related to the amounts of their respective qualifying deposits, as may be provided in the plan of conversion.

Sec. 356. RCW 32.32.060 and 1981 c 85 s 11 are each amended to read as follows:

Any shares of the converting savings bank not sold in the subscription offering shall either be sold in a public offering through an underwriter or directly by the converting savings bank in a direct community marketing, subject to the applicant demonstrating to the ((~~supervisor~~)) director the feasibility of the method of sale and to such conditions as may be provided in the plan of conversion. The conditions shall include, but not be limited to:

(1) A condition limiting purchases by each officer and director or their associates in this phase of the offering to one-tenth of one percent of the total offering of shares.

(2) A condition limiting purchases by any person and that person's associates in this phase of the offering to a number of shares or a percentage of the total offering so long as the limitation does not exceed two percent of the shares to be sold in the total offering.

(3) A condition that any direct community offering by the converting savings bank shall give a preference to natural persons residing in the counties in which the savings bank has an office. The methods by which preference shall be given shall be approved by the ((~~supervisor~~)) director.

Sec. 357. RCW 32.32.075 and 1981 c 85 s 14 are each amended to read as follows:

No officer or director, or their associates, may purchase without the prior written approval of the ((~~supervisor~~)) director the capital stock of the converted savings bank except from a broker or a dealer registered with the Securities and Exchange Commission for a period of three years following the conversion. This provision shall not apply to negotiated transactions involving more than one percent of the outstanding capital stock of the converted savings bank.

As used in this section, the term "negotiated transactions" means transactions in which the securities are offered and the terms and arrangements relating to any sale of the securities are arrived at through direct communications between the seller or any person acting on the seller's behalf and the purchaser or the purchaser's investment representative. The term "investment representative" means a professional investment adviser acting as agent for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction.

Sec. 358. RCW 32.32.105 and 1981 c 85 s 20 are each amended to read as follows:

The plan of conversion adopted by the applicant's board of directors may be amended by the board of directors with the concurrence of the ((~~supervisor~~)) director at any time prior to final approval of the ((~~supervisor~~)) director and may be terminated with the concurrence of the ((~~supervisor~~)) director at any time prior to issuance of the authorization certificate by the ((~~supervisor~~)) director.

Sec. 359. RCW 32.32.130 and 1981 c 85 s 25 are each amended to read as follows:

The plan of conversion shall contain no provision which the ((~~supervisor~~)) director determines to be inequitable or detrimental to the applicant, its savings account holders, or other savings banks or to be contrary to the public interest.

Sec. 360. RCW 32.32.150 and 1985 c 56 s 20 are each amended to read as follows:

Any insignificant residue of shares not sold in the subscription offering or in a public offering referred to in RCW 32.32.060 may be sold in such other manner as provided in the plan with the ((~~supervisor's~~)) director's approval.

Sec. 361. RCW 32.32.175 and 1981 c 85 s 34 are each amended to read as follows:

The ((~~supervisor~~)) director may approve such other equitable provisions as are necessary to avert imminent injury to the converting savings bank.

Sec. 362. RCW 32.32.210 and 1985 c 56 s 21 are each amended to read as follows:

No converted savings bank may repurchase any of its capital stock from any person unless the repurchase is approved by the ((~~supervisor~~)) director either in advance or at the time of repurchase.

Sec. 363. RCW 32.32.215 and 1985 c 56 s 22 are each amended to read as follows:

Except as provided in RCW 32.32.222, no converted savings bank may declare or pay a cash dividend unless the declaration or payment of the dividend would be in accordance with the requirements of RCW 30.04.180 and would not have the effect of reducing the net worth of the converted savings bank below (1) the amount required for the liquidation account or (2) the amount required by the ((~~supervisor~~)) director.

Sec. 364. RCW 32.32.220 and 1985 c 56 s 23 are each amended to read as follows:

Except as provided in RCW 32.32.222, no converted savings bank may, without the prior approval of the ((~~supervisor~~)) director, for a period of ten years after the date of its conversion, declare or pay a cash dividend on its capital stock in an amount in excess of one-half of the greater of:

(1) The savings bank's net income for the current fiscal year; or

(2) The average of the savings bank's net income for the current fiscal year and not more than two of the immediately preceding fiscal years.

For purposes of this chapter, "net income" shall be determined by generally accepted accounting principles.

Sec. 365. RCW 32.32.222 and 1985 c 56 s 24 are each amended to read as follows:

A converted mutual savings bank may pay dividends on preferred stock at the rate or rates agreed in connection with the issuance of preferred stock if such issuance has been approved by the ((~~supervisor~~)) director.

Sec. 366. RCW 32.32.228 and 1989 c 180 s 6 are each amended to read as follows:

(1) As used in this section, the following definitions apply:

(a) "Control" means directly or indirectly alone or in concert with others to own, control, or hold the power to vote twenty-five percent or more of the outstanding stock or voting power of the controlled entity;

(b) "Acquiring party" means the person acquiring control of a bank through the purchase of stock;

(c) "Person" means any individual, corporation, partnership, group acting in concert, association, business trust, or other organization.

(2)(a) It is unlawful for any person to acquire control of a converted savings bank until thirty days after filing with the ((~~supervisor~~)) director a completed application. The application shall be under oath or affirmation, and shall contain substantially all of the following information plus any additional information that the ((~~supervisor~~)) director may prescribe as necessary or appropriate in the particular instance for the protection of bank depositors, borrowers, or shareholders and the public interest:

(i) The identity and banking and business experience of each person by whom or on whose behalf acquisition is to be made;

(ii) The financial and managerial resources and future prospects of each person involved in the acquisition;

(iii) The terms and conditions of any proposed acquisition and the manner in which the acquisition is to be made;

(iv) The source and amount of the funds or other consideration used or to be used in making the acquisition, and a description of the transaction and the names of the parties if any part of these funds or other consideration has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition;

(v) Any plan or proposal which any person making the acquisition may have to liquidate the bank, to sell its assets, to merge it with any other bank, or to make any other major change in its business or corporate structure or management;

(vi) The identification of any person employed, retained, or to be compensated by the acquiring party, or by any person on its behalf, who makes solicitations or recommendations to shareholders for the purpose of assisting in the acquisition and a brief description of the terms of the employment, retainer, or arrangement for compensation;

(vii) Copies of all invitations for tenders or advertisements making a tender offer to shareholders for the purchase of their stock to be used in connection with the proposed acquisition; and

(viii) Such additional information as shall be necessary to satisfy the ((~~supervisor~~)) director, in the exercise of the ((~~supervisor's~~)) director's discretion, that each such person and associate meets the standards of character, responsibility, and general fitness established for incorporators of a savings bank under RCW 32.08.040.

(b) Notwithstanding any other provision of this section, a bank or bank holding company which has been in operation for at least three consecutive years or a converted mutual savings bank or the holding company of a mutual savings bank need only notify the ((~~supervisor~~)) director and the savings bank to be acquired of an intent to acquire control and the date of the proposed acquisition of control at least thirty days before the date of the acquisition of control.

(c) When a person, other than an individual or corporation, is required to file an application under this section, the ((~~supervisor~~)) director may require that the information required by (a) (i), (ii), (vi), and (viii) of this subsection be given with respect to each person, as defined in subsection (1)(c) of this section, who has an interest in or controls a person filing an application under this subsection.

(d) When a corporation is required to file an application under this section, the ((~~supervisor~~)) director may require that information required by (a) (i), (ii), (vi), and (viii) of this subsection be given for the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of twenty-five percent or more of the outstanding voting securities of the corporation.

(e) If any tender offer, request, or invitation for tenders or other agreements to acquire control is proposed to be made by means of a registration statement under the securities act of 1933 (48 Stat. 74, 15 U.S.C. Sec. 77(a)), as amended, or in circumstances requiring the disclosure of similar information under the securities exchange act of 1934 (48 Stat. 881, 15 U.S.C. Sec. 78(a)), as amended, the registration statement or application may be filed with the ((~~supervisor~~)) director in lieu of the requirements of this section.

(f) Any acquiring party shall also deliver a copy of any notice or application required by this section to the savings bank proposed to be acquired within two days after such notice or application is filed with the ((~~supervisor~~)) director.

(g) Any acquisition of control in violation of this section shall be ineffective and void.

(h) Any person who willfully or intentionally violates this section or any rule adopted under this section is guilty of a gross misdemeanor pursuant to chapter 9A.20 RCW. Each day's violation shall be considered a separate violation, and any person shall upon conviction be fined not more than one thousand dollars for each day the violation continues.

(3) The ((~~supervisor~~)) director may disapprove the acquisition of a savings bank within thirty days after the filing of a complete application pursuant to subsections (1) and (2) of this section or an extended period not exceeding an additional fifteen days if:

(a) The poor financial condition of any acquiring party might jeopardize the financial stability of the savings bank or might prejudice the interest of depositors, borrowers, or shareholders;

(b) The plan or proposal of the acquiring party to liquidate the savings bank, to sell its assets, to merge it with any person, or to make any other major change in its business or corporate structure or management is not fair and reasonable to its depositors, borrowers, or stockholders or is not in public interest;

(c) The banking and business experience and integrity of any acquiring party who would control the operation of the savings bank indicates that approval would not be in the interest of the savings bank's depositors, borrowers, or shareholders;

(e) The acquisition would not be in the public interest.

An acquisition may be made prior to expiration of the disapproval period if the ((~~supervisor~~)) director issues written notice of intent not to disapprove the action.

The ((~~supervisor~~)) director shall set forth the basis for disapproval of any proposed acquisition in writing and shall provide a copy of such findings and order to the applicants and to the bank involved. Such findings and order shall not be disclosed to any other party and shall not be subject to public disclosure under chapter 42.17 RCW unless the findings and/or order are appealed pursuant to chapter 34.05 RCW.

Whenever such a change in control occurs, each party to the transaction shall report promptly to the ((~~supervisor~~)) director any changes or replacement of its chief executive officer or of any director occurring in the next twelve-month period, including in its report a statement of the past and current business and professional affiliations of the new chief executive officer or directors.

(4)(a) For a period of ten years following the acquisition of control by any person, neither such acquiring party nor any associate shall receive any loan or the use of any of the funds of, nor purchase, lease, or otherwise receive any property from, nor receive any consideration from the sale, lease, or any other conveyance of property to, any savings bank in which the acquiring party has control except as provided in (b) of this subsection.

(b) Upon application by any acquiring party or associate subject to (a) of this subsection, the ((~~supervisor~~)) director may approve a transaction between a converted savings bank and such acquiring party, person, or associate, upon finding that the terms and conditions of the transaction are at least as advantageous to the savings bank as the savings bank would obtain in a comparable transaction with an unaffiliated person.

(5) Except with the consent of the ((~~supervisor~~)) director, no converted savings bank shall, for the purpose of enabling any person to purchase any or all shares of its capital stock, pledge or otherwise transfer any of its assets as security for a loan to such person or to any associate, or pay any dividend to any such person or associate. Nothing in this section shall prohibit a dividend of stock among shareholders in proportion to their shareholdings. In the event any clause of this section is declared to be unconstitutional or otherwise invalid, all remaining dependent and independent clauses of this section shall remain in full force and effect.

Sec. 367. RCW 32.32.230 and 1985 c 56 s 26 are each amended to read as follows:

(1) No conversion may be approved by the ((~~supervisor~~)) director unless the plan of conversion provides that the converted savings bank shall enter into an agreement with the ((~~supervisor~~)) director, in form satisfactory to the ((~~supervisor~~)) director, which shall provide that for a period of three years following the conversion any company significantly engaged in an unrelated business activity, either directly or through an affiliate thereof, shall not be permitted, regardless of the form of the transaction, to acquire control of the converted savings bank. Any acquisition of a converted savings bank shall also comply with RCW 32.32.228.

(2) As used in this section:

(a) The term "affiliate" means any person or company which controls, is controlled by, or is under common control with, a specified company.

(b) A person or company shall be deemed to have "control" of:

(i) A savings bank if the person directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, or holds with power to vote, or holds proxies representing, more than twenty-five percent of the voting shares of the savings bank, or controls in any manner the election of a majority of the directors of the bank;

(ii) Any other company if the person directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, or holds with power to vote, or holds proxies representing, more than twenty-five percent of the voting shares or rights of the other company, or controls in any manner the election or appointment of a majority of the directors or trustees of the other company, or is a general partner in or has contributed more than twenty-five percent of the capital of the other company;

(iii) A trust if the person is a trustee thereof; or

(iv) A savings bank or any other company if the ((~~supervisor~~)) director determines, after reasonable notice and opportunity for hearing, that the person directly or indirectly exercises a controlling influence over the management or policies of the savings bank or other company.

(c) A company shall be deemed to be "significantly engaged" in an unrelated business activity if its unrelated business activities would represent, on either an actual or a pro forma basis, more than fifteen percent of its consolidated net worth at the close of this preceding fiscal year or of its consolidated net earnings for such fiscal year.

(d) The term "unrelated business activity" means any business activity not authorized for a savings bank or any subsidiary thereof.

Sec. 368. RCW 32.32.235 and 1981 c 85 s 46 are each amended to read as follows:

To the extent permitted by applicable federal or state law, a plan of conversion may provide for a provision in the charter of the converted savings bank containing, in substance, the restriction set forth in RCW 32.32.230. There may also be included a restriction providing that the charter provision may be amended only by a vote of up to seventy-five percent of the votes eligible to be cast at a regular or special meeting of shareholders of the converted savings bank. If the converted savings bank elects to adopt the foregoing optional charter provision, the ((~~supervisor~~)) director shall impose, as a condition to approval of the conversion, a requirement that the converted savings bank fully enforce the charter provision.

Sec. 369. RCW 32.32.240 and 1981 c 85 s 47 are each amended to read as follows:

A savings bank which is considering converting pursuant to this chapter and its directors, officers, and employees shall keep this consideration in the strictest confidence and shall only discuss the potential conversion as would be consistent with the need to prepare information for filing an application for conversion. Should this confidence be breached the ((~~supervisor~~)) director may require remedial measures including:

(1) A public statement by the savings bank that its board of directors is currently considering converting pursuant to this chapter;

(2) Providing for an eligibility record date which shall be as of such a date prior to the adoption of the plan by the converting savings bank's board of directors as to assure the equitability of the conversion;

(3) Limitation of the subscription rights of any person violating or aiding the violation of this section to an amount deemed appropriate by the ((~~supervisor~~)) director; and

(4) Any other actions the ((~~supervisor~~)) director may deem appropriate and necessary to assure the fairness and equitability of the conversion.

Sec. 370. RCW 32.32.250 and 1981 c 85 s 49 are each amended to read as follows:

Promptly after the adoption of a plan of conversion by not less than two-thirds of its board of directors, the savings bank shall:

(1) Notify its account holders of the action by publishing a statement in a newspaper having general circulation in each community in which an office of the savings bank is located and/or by mailing a letter to each of its account holders; and

(2) Have copies of the adopted plan of conversion available for inspection by its account holders at each office of the savings bank.

The savings bank may also issue a press release with respect to the action. Copies of the proposed statement, letter, and press release are not required to be filed with the ((~~supervisor~~)) director but may be submitted to the ((~~supervisor~~)) director for comment. Copies of the definitive statement, letter, and press release shall be filed with the ((~~supervisor~~)) director as part of the application for conversion.

Sec. 371. RCW 32.32.255 and 1981 c 85 s 50 are each amended to read as follows:

The statement, letter, and press release of the applicant issued pursuant to RCW 32.32.250, unless otherwise authorized by the ((~~supervisor~~)) director, shall contain only (but need not contain all of) the following:

(1) A statement that the board of directors has adopted a plan to convert the savings bank from a mutual savings bank to a capital stock savings bank;

(2) A statement that the plan of conversion is subject to approval by the ((~~supervisor of banking~~)) director and by the appropriate federal regulatory authority or authorities (naming such an authority or authorities) before the plan can become effective and that account holders of the applicant will have an opportunity to file written comments including objections and materials supporting the objections with the ((~~supervisor~~)) director;

(3) A statement that the plan of conversion is contingent upon obtaining favorable tax rulings from the Internal Revenue Service or an appropriate tax opinion;

(4) A statement that there is no assurance that the approval of the ((~~supervisor of banking~~)) director or the approval of any appropriate federal authority or authorities will be obtained, and also no assurance that the favorable tax rulings or tax opinion will be received;

(5) The proposed record date for determining the eligible account holders entitled to receive nontransferable subscription rights to purchase capital stock of the applicant;

(6) A brief statement describing the circumstances that would require supplemental eligible account holders to receive nontransferable subscription rights to purchase capital stock of the applicant;

(7) A brief description of the plan of conversion;

(8) The par value and approximate number of shares of capital stock to be issued and sold under the plan of conversion;

(9) A brief statement as to the extent to which directors, officers, and employees will participate in the conversion;

(10) A statement that savings account holders will continue to hold accounts in the converted savings bank identical as to dollar amount, rate of return, and general terms and that their accounts will continue to be insured by the Federal Deposit Insurance Corporation;

(11) A statement that borrowers' loans will be unaffected by conversion and that the amount, rate, maturity, security, and other conditions will remain contractually fixed as they existed prior to conversion;

(12) A statement that the normal business of the savings bank in accepting savings and making loans will continue without interruption; that the converted savings bank will continue after conversion to conduct its present services to savings account holders and borrowers under current policies to be carried on in existing offices and by the present management and staff;

(13) A statement that the plan of conversion may be substantively amended or terminated by the board of directors with the concurrence of the ((~~supervisor of banking~~)) director; and

(14) A statement that questions of account holders may be answered by telephoning or writing to the savings bank.

Sec. 372. RCW 32.32.265 and 1985 c 56 s 27 are each amended to read as follows:

Upon determination that an application for conversion is properly executed and is not materially incomplete, the ((~~supervisor~~)) director shall advise the applicant, in writing, to publish notices of the filing of the application. Promptly after receipt of the advice, the applicant shall furnish a written notice of the filing to each eligible account holder and also publish a notice of the filing in a newspaper printed in the English language and having general circulation in each community in which an office of the applicant is located, as follows:

NOTICE OF FILING OF AN APPLICATION

FOR APPROVAL TO CONVERT TO A

STOCK SAVINGS BANK

Notice is hereby given that, pursuant to chapter 32.32 of the Revised Code of Washington

...............................................

(fill in name of applicant)

has filed an application with the ((~~Supervisor of Banking~~)) Director of Financial Institutions for approval to convert to the stock form of organization. Copies of the application have been delivered to (address) .

Written comments, including objections to the plan of conversion and materials supporting the objections, from any account holder of the applicant or aggrieved person, will be considered by the ((~~supervisor~~)) director if filed within twenty business days after the date of this notice. Failure to make written comments in objection may preclude the pursuit of any administrative or judicial remedies. Three copies of the comments should be sent to the aforementioned. The proposed plan of conversion and any comments thereon will be available for inspection by any account holder of the applicant at (address) . A copy of the plan may also be inspected at each office of the applicant.

If a significant number of the applicant's account holders speak a language other than English and a newspaper in that language is published in the area served by the applicant, an appropriate translation of the notice shall also be published in that newspaper. A notice sent by mail may be accompanied by the statement that the converting institution will not mail a subscription offering circular to an eligible account holder or a supplemental eligible account holder unless the eligible account holder or the supplemental eligible account holder, prior to the commencement of the subscription offering, requests the subscription offering circular by returning a postcard. The issuer of stock in the conversion shall pay the postage of this postcard and shall inform the eligible account holder or supplemental eligible holder that the postage is paid.

Sec. 373. RCW 32.32.270 and 1981 c 85 s 53 are each amended to read as follows:

Promptly after publication of the notices prescribed in RCW 32.32.265, the applicant shall file with the ((~~supervisor~~)) director the notice and affidavit of publication from each newspaper publisher in the manner the ((~~supervisor~~)) director shall require.

Sec. 374. RCW 32.32.275 and 1981 c 85 s 54 are each amended to read as follows:

Should the applicant desire to submit any information it deems to be of a confidential nature regarding any item or a part of any exhibit included in any application under this chapter, the information pertaining to the item or exhibit shall be separately bound and labeled "confidential", and a statement shall be submitted therewith briefly setting forth the grounds on which the information should be treated as confidential. Only general reference thereto need be made in that portion of the application which the applicant deems not to be confidential. Applications under this chapter shall be made available for inspection by the public, except for portions which are bound and labeled "confidential" and which the ((~~supervisor~~)) director determines to withhold from public availability under RCW 42.17.250 through 42.17.340. The applicant shall be advised of any decision by the ((~~supervisor~~)) director to make public information designated as "confidential" by the applicant. Even though sections of the application are considered "confidential" as far as public inspection thereof is concerned, to the extent the ((~~supervisor~~)) director deems necessary the ((~~supervisor~~)) director may comment on the confidential submissions in any public statement in connection with the ((~~supervisor's~~)) director's decision on the application without prior notice to the applicant.

Sec. 375. RCW 32.32.280 and 1981 c 85 s 55 are each amended to read as follows:

No offer to sell securities of an applicant pursuant to a plan of conversion may be made prior to approval by the ((~~supervisor~~)) director of the application for conversion. No sale of these securities in the subscription offering may be made except by means of the final offering circular for the subscription offering. No sale of unsubscribed securities may be made except by means of the final offering circular for the public offering or direct community marketing. The offering of shares in the direct community marketing may commence during the subscription offering upon the declaration of effectiveness by the ((~~supervisor~~)) director of the offering circular proposed for the community offering. This section shall not apply to preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are to be in privity of contract with the applicant.

Sec. 376. RCW 32.32.285 and 1981 c 85 s 56 are each amended to read as follows:

Any preliminary offering circular for the subscription offering, the public offering, or the direct community marketing which has been filed with the ((~~supervisor~~)) director may be distributed to eligible account holders or supplemental eligible account holders and to others in connection with the offering after the ((~~supervisor~~)) director has advised the applicant in writing that the application is properly executed and is not materially incomplete under RCW 32.32.265. No final offering circular may be distributed until the offering circular has been declared effective by the ((~~supervisor~~)) director.

Sec. 377. RCW 32.32.295 and 1981 c 85 s 58 are each amended to read as follows:

The ((~~supervisor~~)) director shall review the price information required under RCW 32.32.290 in determining whether to give approval to an application for conversion. No representations may be made in any manner that the price information has been approved by the ((~~supervisor~~)) director or that the shares of capital stock sold pursuant to the plan of conversion have been approved or disapproved by the ((~~supervisor~~)) director or that the ((~~supervisor~~)) director has passed upon the accuracy or adequacy of any offering circular covering the shares.

Sec. 378. RCW 32.32.300 and 1981 c 85 s 59 are each amended to read as follows:

Underwriting commissions shall not exceed an amount or percentage per share acceptable to the ((~~supervisor~~)) director. No underwriting commission may be allowed or paid with respect to shares of capital stock sold in the subscription offering; however, an underwriter may be reimbursed for accountable expenses in connection with the subscription offering where the public offering is so small that reasonable underwriting commissions thereon would not be sufficient to cover total accountable expenses. The term "underwriting commissions" includes underwriting discounts.

Sec. 379. RCW 32.32.305 and 1981 c 85 s 60 are each amended to read as follows:

In considering the pricing information required under RCW 32.32.290, the ((~~supervisor~~)) director shall apply the following guidelines:

(1) The materials shall be prepared by persons independent of the applicant, experienced and expert in the area of corporate appraisal, and acceptable to the ((~~supervisor~~)) director;

(2) The materials shall contain data which are sufficient to support the conclusions reached therein;

(3) The materials shall contain a complete and detailed description of the appraisal methodology employed; and

(4) To the extent that the appraisal is based on a capitalization of the pro forma income of the converted savings bank, the materials shall indicate the basis for determination of the income to be derived from the proceeds of the sale of stock and demonstrate the appropriateness of the earnings multiple used, including assumptions made as to future earnings growth. To the extent that the appraisal is based on comparison of the capital stock of the applicant with outstanding capital stock of existing stock savings banks or stock savings and loan associations, the materials shall demonstrate the appropriate comparability of the form and substance of the outstanding capital stock and the appropriate comparability of the existing stock savings banks and stock savings and loan associations in terms of such factors as size, market area, competitive conditions, profit history, and expected future earnings.

Sec. 380. RCW 32.32.310 and 1981 c 85 s 61 are each amended to read as follows:

In addition to the information required in RCW 32.32.305, the applicant shall submit information demonstrating to the satisfaction of the ((~~supervisor~~)) director the independence and expertise of any person preparing materials under RCW 32.32.305. However, a person will not be considered as lacking independence for the reason that the person will participate in effecting a sale of capital stock under the plan of conversion or will receive a fee from the applicant for services rendered in connection with the appraisal.

Sec. 381. RCW 32.32.315 and 1981 c 85 s 62 are each amended to read as follows:

Promptly after the ((~~supervisor~~)) director has declared the offering circular for the subscription offering effective, the applicant shall distribute order forms for the purchase of shares of capital stock in the subscription offering to all eligible account holders, supplemental eligible account holders (if applicable), and other persons who may subscribe for the shares under the plan of conversion.

Sec. 382. RCW 32.32.325 and 1981 c 85 s 64 are each amended to read as follows:

The maximum subscription price stated on each order form distributed pursuant to RCW 32.32.315 shall be the amount to be paid when the order form is returned. The maximum subscription price and the actual subscription price shall be within the subscription price range stated in the ((~~supervisor's~~)) director's approval and the offering circular. If either the maximum subscription price or the actual subscription price is not within this subscription price range, the applicant shall obtain an amendment to the ((~~supervisor's~~)) director's approval. If appropriate, the ((~~supervisor~~)) director shall condition the giving of amended approval by requiring a resolicitation of order forms. If the actual public offering price is less than the maximum subscription price stated on the order form, the actual subscription price shall be correspondingly reduced and the difference shall be refunded to those who have paid the maximum subscription price.

Sec. 383. RCW 32.32.340 and 1981 c 85 s 67 are each amended to read as follows:

The sale of all shares of capital stock of the converting savings bank to be made under the plan of conversion, including any sale in a public offering or direct community marketing, shall be completed as promptly as possible and within forty-five calendar days after the last day of the subscription period, unless extended by the ((~~supervisor~~)) director.

Sec. 384. RCW 32.32.345 and 1981 c 85 s 68 are each amended to read as follows:

An applicant that desires to convert in accordance with this chapter shall file copies of an application for approval in the form and number prescribed by the ((~~supervisor~~)) director.

Sec. 385. RCW 32.32.350 and 1981 c 85 s 69 are each amended to read as follows:

Any application for approval that is improperly executed, or that does not contain copies of a plan of conversion, amendments to the charter of the applicant in the form of new articles of incorporation, and preliminary offering circulars for the subscription offering and for the public offering or direct community marketing shall not be accepted for filing and shall be returned to the applicant. Any application for approval containing a materially incomplete plan of conversion or offering circular may be returned by the ((~~supervisor~~)) director to the applicant.

Sec. 386. RCW 32.32.360 and 1981 c 85 s 71 are each amended to read as follows:

The form of the application shall comply with the requirements of the ((~~supervisor~~)) director.

Sec. 387. RCW 32.32.370 and 1981 c 85 s 73 are each amended to read as follows:

The representations specified in RCW 32.32.365 shall not be deemed to have been made by any director of the applicant who did not sign the application or any amendment thereto, if, and only to the extent that, the director files with the ((~~supervisor~~)) director within ten business days after the filing of the application or amendment a statement describing those portions of the filing as to which he or she does not so represent.

Sec. 388. RCW 32.32.375 and 1981 c 85 s 74 are each amended to read as follows:

Every application shall furnish information in accordance with this chapter and with the requirements and forms prescribed by the ((~~supervisor~~)) director.

Sec. 389. RCW 32.32.395 and 1981 c 85 s 78 are each amended to read as follows:

The form and contents of any filing made under this chapter need conform only to the applicable requirements and forms prescribed by the ((~~supervisor~~)) director then in effect, and contain the information, including financial statements, required at the time the filing is made, notwithstanding subsequent changes, except as otherwise provided in any such amendment or in RCW 32.32.400.

Sec. 390. RCW 32.32.400 and 1981 c 85 s 79 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director prohibits by order or otherwise the use of any filing under this chapter, the form and contents of any filing used thereafter shall conform to the requirements of the order.

Sec. 391. RCW 32.32.410 and 1981 c 85 s 81 are each amended to read as follows:

If any person who has not signed an application is named in the offering circular as about to become a director, the written consent of this person shall be filed with the ((~~supervisor~~)) director in the form the ((~~supervisor~~)) director prescribes.

Sec. 392. RCW 32.32.415 and 1981 c 85 s 82 are each amended to read as follows:

The date on which any documents are actually received by the office of the ((~~supervisor of banking~~)) director of financial institutions shall be the date of filing thereof.

Sec. 393. RCW 32.32.420 and 1981 c 85 s 83 are each amended to read as follows:

(1) The staff of the ((~~supervisor~~)) director shall be available for conferences with prospective applicants or their representatives in advance of filing an application to convert. These conferences may be held for the purpose of discussing generally the problems confronting an applicant in effecting conversion or to resolve specific problems of an unusual nature.

(2) Prefiling review of an application may be refused by the staff of the ((~~supervisor~~)) director if the review would delay the examination and processing of material which has already been filed or would favor certain applicants at the expense of others. In any conference under this section, the staff of the ((~~supervisor~~)) director shall not undertake to prepare material for filing but shall limit itself to indicating the kind of information required, leaving the actual drafting to the applicant and its representatives.

Sec. 394. RCW 32.32.425 and 1981 c 85 s 84 are each amended to read as follows:

From the ((~~supervisor's~~)) director of financial institutions' refusal to approve an application for conversion, the applicant may, within thirty days from the date of the mailing by the ((~~supervisor~~)) director of financial institutions of notice of refusal to approve, appeal to a board of appeal composed of the governor or the governor's designee, the attorney general, and the ((~~supervisor of banking~~)) director of financial institutions by filing in the office of the ((~~supervisor~~)) director of financial institutions a notice that it appeals to this board from the ((~~supervisor's~~)) director of financial institutions' refusal. The procedure upon the appeal shall be such as the board may prescribe, and its determination shall be certified, filed, and recorded in the same manner as the ((~~supervisor's~~)) director of financial institutions', and shall be final.

Sec. 395. RCW 32.32.430 and 1981 c 85 s 85 are each amended to read as follows:

The applicant shall file such postconversion reports concerning its conversion as the ((~~supervisor~~)) director may require.

Sec. 396. RCW 32.32.450 and 1981 c 85 s 89 are each amended to read as follows:

No person for a period of three years following the date of the conversion may directly or indirectly offer to acquire or acquire the beneficial ownership of more than ten percent of any class of an equity security of any savings bank converted in accordance with this chapter without the prior written approval of the ((~~supervisor of banking~~)) director of financial institutions.

Sec. 397. RCW 32.32.455 and 1981 c 85 s 90 are each amended to read as follows:

RCW 32.32.440 and 32.32.445 shall not apply to a transfer, agreement or understanding to transfer, offer, or announcement of an offer or intent to make an offer which (1) pertains only to securities to be purchased pursuant to RCW 32.32.060, 32.32.150, or 32.32.175; and (2) has prior written approval of the ((~~supervisor~~)) director.

Sec. 398. RCW 32.32.465 and 1981 c 85 s 92 are each amended to read as follows:

Unless made applicable by the ((~~supervisor~~)) director by prior advice in writing, the prohibition contained in RCW 32.32.450 shall not apply to any offer or announcement of an offer which if consummated would result in acquisition by a person, together with all other acquisitions by the person of the same class of securities during the preceding twelve-month period, of not more than one percent of the same class of securities.

Sec. 399. RCW 32.32.470 and 1981 c 85 s 93 are each amended to read as follows:

The ((~~supervisor~~)) director shall not approve an application involving an offer for, an announcement thereof, or an acquisition of any security of a converted savings bank submitted under RCW 32.32.450 if the ((~~supervisor~~)) director finds that the offer frustrates the purposes of this chapter, is manipulative or deceptive, subverts the fairness of the conversion, is likely to result in injury to the savings bank, is not consistent with savings banking under Title 32 RCW, or is otherwise violative of law or regulation.

Sec. 400. RCW 32.32.475 and 1981 c 85 s 94 are each amended to read as follows:

For willful violation or assistance of such a violation of any provision of RCW 32.32.440 through 32.32.470, any person who (1) has any connection with the management of a converting or converted savings bank, including any director, officer, employee, attorney, or agent, or (2) controls more than ten percent of the outstanding shares of any class of equity security or voting rights thereto of a converting or converted savings bank shall be subject to a civil penalty of not more than five hundred dollars (which penalty shall be cumulative to any other remedies) for each day that the violation continues, which penalty the ((~~supervisor~~)) director may recover by suit or otherwise for the ((~~supervisor's~~)) director's own use. The ((~~supervisor~~)) director in his or her discretion may, at any time before collection of the penalty (whether before or after the bringing of any action or other legal proceedings, the obtaining of any judgment or other recovery, or the issuance or levy of any execution or other legal process thereof), compromise or remit in whole or in part the penalty.

Sec. 401. RCW 32.32.485 and 1981 c 85 s 96 are each amended to read as follows:

(1) An application for conversion under this chapter shall include amendments to the charter of the converting savings bank. The charter of the converted savings bank, as amended, shall be known after the conversion as the articles of incorporation of the converted savings bank. The articles of incorporation may limit or permit the preemptive rights of a shareholder to acquire unissued shares of the converted savings bank and may thereafter by amendment limit, deny, or grant to shareholders of any class of stock the preemptive right to acquire additional shares of the converted savings bank whether then or thereafter authorized. The articles of incorporation shall contain such other provisions not inconsistent with this chapter as the board of directors of the converting savings bank shall determine and as shall be approved by the ((~~supervisor~~)) director of financial institutions.

(2) When all of the stock of a converting savings bank has been subscribed for in accordance with the plan and any amendments thereto, the board of trustees shall thereupon issue the stock and shall cause to be filed with the ((~~supervisor of banking~~)) director of financial institutions, in quadruplicate, a certificate subscribed and acknowledged by the persons who are to be directors of the converted savings bank, stating:

(a) That all of the stock of the converted mutual savings bank has been issued;

(b) That the attached articles of incorporation have been executed by all of the persons who are to be directors of the converted mutual savings bank;

(c) The place where the bank is to be located and its business transacted, naming the city or town and county, which city or town shall be the same as that where the principal place of business of the mutual savings bank has theretofore been located;

(d) The name, occupation, residence, and post office address of each signer of the certificate;

(e) The amount of the assets of the mutual savings bank, the amount of its liabilities, and the amount of its guaranty fund and nondivided profits as of the first day of the current calendar month; and

(f) A declaration that each signer will accept the responsibilities and faithfully discharge the duties of a director of the converted savings bank and is free from all the disqualifications specified in the laws applicable to converted mutual savings banks.

(3) Upon the filing of the certificate in quadruplicate, the ((~~supervisor of banking~~)) director of financial institutions shall, within thirty days thereafter, if satisfied that the corporation has complied with all the provisions of this chapter, issue in quadruplicate an authorization certificate stating that the corporation has complied with all the requirements of law, and that it has authority to transact at the place designated in its articles of incorporation the business of a converted mutual savings bank. One of the ((~~supervisor's~~)) director of financial institutions' quadruplicate certificates of authorization shall be attached to each of the quadruplicate articles of incorporation, and one set of these shall be filed and retained by the ((~~supervisor of banking~~)) director of financial institutions, one set shall be filed in the office of the county auditor of the county in which the bank is located, one set shall be filed in the office of the secretary of state, and one set shall be transmitted to the bank for its files. Upon the receipt from the corporation of the same fees as are required for filing and recording other incorporation certificates or articles the county auditor and secretary of state shall record the same; whereupon the conversion of the mutual savings bank shall be deemed complete, and the signers of the articles of incorporation and their successors shall be a corporation having the powers and being subject to the duties and obligations prescribed by the laws of this state applicable to converted mutual savings banks, and the time of existence of the corporation shall be perpetual, unless terminated pursuant to law.

Sec. 402. RCW 32.32.490 and 1985 c 56 s 28 are each amended to read as follows:

Amendments to the articles of incorporation of the converted savings bank shall be made only with the approvals of the ((~~supervisor~~)) director, of two-thirds of the directors of the savings bank, and of the holders of a majority of each class of the outstanding shares of capital stock or such greater percentage of these shares as may be specified in the articles of the converted savings bank.

Sec. 403. RCW 32.32.495 and 1985 c 56 s 29 are each amended to read as follows:

(1) Every converted savings bank shall be managed by not less than five directors, except that a bank having a capital of fifty thousand dollars or less may have only three directors. Directors shall be elected by the stockholders and hold office for one year and until their successors are elected and have qualified. In the first instance the directors shall be those named in the articles of incorporation and afterwards, those elected at the annual meeting of the stockholders to be held at least once each year on a day to be specified by the converted savings bank's bylaws but not later than May 15th of each year. If for any cause an election is not held at that time, it may be held at an adjourned meeting or at a subsequent meeting called for that purpose in the manner prescribed by the corporation's bylaws. Each director shall be a resident of a state of the United States. The directors shall meet at least nine times each year and whenever required by the ((~~supervisor~~)) director. A majority of the board of directors shall constitute a quorum for the transaction of business. At all stockholders' meetings, each share shall be entitled to one vote, unless the articles of incorporation provide otherwise. Any stockholder may vote in person or by written proxy.

(2) If the board of directors consists of nine or more members, in lieu of electing the entire number of directors annually, the converted savings bank's articles of incorporation or bylaws may provide that the directors be divided into either two or three classes, each class to be as nearly equal in number as possible, the term of office of directors of the first class to expire at the first annual meeting of shareholders after their election, that of the second class to expire at the second annual meeting after their election, and that of the third class, if any, to expire at the third annual meeting after their election. At each annual meeting after such classification, the number of directors equal to the number of the class whose term expires at the time of such meeting shall be elected to hold office until the second succeeding annual meeting, if there are two classes, or until the third succeeding annual meeting, if there are three classes. A classification of directors shall not be effective prior to the first annual meeting of shareholders.

(3) Immediately upon election, each director shall take, subscribe, swear to, and file with the ((~~supervisor~~)) director an oath that he or she will, so far as the duty devolves upon him or her, diligently and honestly administer the affairs of the corporation and will not knowingly violate or willingly permit to be violated any provision of law applicable to the corporation.

(4) A vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors. A director elected to fill a vacancy shall be elected for the unexpired term of the director's predecessor in office. A directorship to be filled by reason of an increase in the number of directors may be filled by the board of directors for a term of office continuing only until the next election of directors by the shareholders.

Sec. 404. RCW 32.32.500 and 1985 c 56 s 31 are each amended to read as follows:

A mutual savings bank or bank converted under this chapter may merge with, consolidate with, convert into, acquire the assets of, or sell its assets to any other financial institution chartered under Titles 30, 32, or 33 RCW or under the National Bank Act, as amended, or the National Housing Act, as amended, or to a holding company thereof, subject to (1) the approval of the ((~~supervisor of banking~~)) director of financial institutions if the surviving institution is one chartered under Title 30 or 32 RCW, or (2) approval of the ((~~supervisor of savings and loans~~)) director of financial institutions if the surviving institution is one chartered under Title 33 RCW, or (3) if the surviving institution is to be a national bank, the comptroller of currency under 12 U.S.C. Sec. 35, 12 U.S.C. Sec. 215, 12 U.S.C. Sec. 215a, and 12 U.S.C. Sec. 1828c, or (4) if the surviving institution is to be a federal savings and loan association, the Federal Home Loan Bank Board under 12 U.S.C. Sec. 1464 (d)(11), or (5) if the surviving institution is to be a bank holding company, the Federal Reserve Board under 12 U.S.C. Sec. 1842 (a) and (d).

In the case of a liquidation, acquisition, merger, consolidation, or conversion of a converted savings bank, chapter 32.34 RCW shall apply.

Sec. 405. RCW 32.32.525 and 1983 c 44 s 4 are each amended to read as follows:

After July 26, 1981, no converted savings bank may make any loan or discount on the security of its own capital stock, nor be the purchaser or holder of any such shares, unless the security or purchase is necessary to prevent loss upon a debt previously contracted in good faith, in which case the stocks so purchased or acquired shall be sold at public or private sale, or otherwise disposed of, within six months from the time of its purchase or acquisition. The prohibitions of this section do not apply to a purchase of shares approved by the ((~~supervisor~~)) director pursuant to RCW 32.32.210.

Sec. 406. RCW 32.34.010 and 1983 c 45 s 1 are each amended to read as follows:

(1) A domestic savings bank formed under this title may convert itself into a federal mutual or stock savings bank. The conversion shall be effected:

(a) In the case of a mutual savings bank, by the vote of two-thirds of the trustees at a regular or special meeting of the trustees called for such purpose;

(b) In the case of a stock savings bank, by the vote of a majority of the stockholders present, in person or by proxy, at a regular or special meeting of the stockholders called for such purpose.

(2) Notice of the meeting, stating the purpose thereof, shall be given the ((~~supervisor~~)) director at least thirty days prior to the meeting. If the conversion is authorized by the trustees or stockholders at the meeting, the trustees or stockholders are authorized and shall effect such action, and the officers of the savings bank shall execute all proper conveyances, documents, and other papers necessary or proper thereunto. If conversion is authorized, a copy of the minutes of the meeting shall be filed forthwith with the ((~~supervisor~~)) director.

(3) Upon consummation of the conversion, the successor federal savings bank shall succeed to all right, title, and interest of the mutual or stock bank in and to its assets and to its liabilities to the creditors of the savings bank. Upon the conversion, after the execution and delivery of all instruments of transfer, conveyance, and assignment, the domestic savings bank shall be deemed dissolved.

(4) Every federal savings bank, the home office of which is located in this state, and the savings accounts therein, have all the rights, powers, and privileges and are entitled to the same immunities and exemptions as pertain to savings banks organized under the laws of this state.

Sec. 407. RCW 32.34.020 and 1983 c 45 s 2 are each amended to read as follows:

(1) A federal savings bank, the home office of which is located in this state, may convert itself into a domestic savings bank under this title upon approval by the ((~~supervisor of banking~~)) director. For any such conversion, the federal savings bank shall proceed as provided in this chapter for the conversion of a domestic savings bank into a federal savings bank. The conversion shall be effected by the vote of a majority of the members or stockholders present, in person or by proxy, at a regular or special meeting of the members or stockholders called for such purpose.

(2) Upon consummation of the conversion, the successor domestic savings bank shall succeed to all right, title, and interest of the federal savings bank in and to its assets, and to its liabilities to the creditors of such federal savings bank.

Sec. 408. RCW 32.34.040 and 1985 c 56 s 34 are each amended to read as follows:

(1) No savings bank having capital stock may establish a holding company to own all its stock without the approval of the ((~~supervisor~~)) director. Upon tender of their shares of the converted savings bank, the shareholders of the savings bank shall receive all the shares of the holding company which are outstanding at the time of this tender.

(2) Any company owning more than twenty-five percent of the outstanding voting stock of a savings bank doing business under this Title 32 RCW shall, in addition to the restrictions of RCW 32.32.228, be subject to regulation as a savings bank holding company. Any savings bank holding company which is not subject to regulation by the federal reserve board or the federal home loan bank board, and all holding company subsidiaries engaging in businesses which are not subject to regulation or licensing by the federal home loan bank board, the ((~~supervisor of savings and loan associations~~)) director, the commissioner of insurance, or the administrator authorized to regulate loan companies doing business under Title 31 RCW, will be subject to such regulation of accounting practices and of the qualifications of directors and officers, and such inspection and visitation by the ((~~supervisor of banking~~)) director as the ((~~supervisor~~)) director shall deem appropriate, subject to the limitations imposed on regulation, inspection, and visitation of a savings bank under this title. In addition, any savings bank holding company and all holding company subsidiaries will be subject to visitation by the ((~~supervisor of banking~~)) director as such shall deem appropriate, subject to the limitations imposed on visitation of a savings bank under this Title 32 RCW and under the supremacy clause of the Constitution of the United States. The savings bank subsidiary of this holding corporation may engage in subsequent mergers, consolidations, acquisitions, and conversions, only to the extent authorized by RCW 32.32.500, and only upon complying with the applicable requirements in RCW 32.34.030 and this chapter.

(3) In the event a savings bank forms a subsidiary to carry out any of the powers of savings banks under this title, any institution with which this subsidiary merges shall continue to be subject to regulation, inspection, and visitation by the ((~~supervisor of savings and loans~~)) director if the subsidiary is authorized to do business by Title 33 RCW.

Sec. 409. RCW 32.34.050 and 1985 c 56 s 35 are each amended to read as follows:

A savings bank not having capital stock may establish a business trust for the benefit of its depositors, with the approval of the ((~~supervisor~~)) director and subject to such rules ((~~and regulations~~)) as the ((~~supervisor~~)) director may adopt. The ((~~supervisor~~)) director may permit this business trust to become a mutual holding company owning all shares of an interim stock savings bank, the sole purpose of which shall be to merge into the mutual savings bank that formed the business trust. The depositors in an unconverted savings bank which has merged with the subsidiary of such a mutual holding company, in the event of a later conversion of this mutual holding company to the stock form, shall retain all their rights to their deposits in the savings bank, and shall also receive, without payment, nontransferrable rights to subscribe for the stock of the holding company, and rights to a liquidation account maintained by the holding company in proportion to their deposits in the savings bank, to the same extent that they would receive these rights in a stock conversion of the savings bank as prescribed in chapter 32.32 RCW.

Sec. 410. RCW 32.40.010 and 1985 c 329 s 8 are each amended to read as follows:

(1) In conducting an examination of a savings bank chartered under Title 32 RCW, the ((~~supervisor of banking, deputy supervisor, or examiner~~)) director shall investigate and assess the record of performance of the savings bank in meeting the credit needs of the savings bank's entire community, including low and moderate-income neighborhoods. The ((~~supervisor~~)) director shall accept, in lieu of an investigation or part of an investigation required by this section, any report or document that the savings bank is required to prepare or file with one or more federal agencies by the act of Congress entitled the "Community Reinvestment Act of 1977" and the regulations promulgated in accordance with that act, to the extent such reports or documents assist the ((~~supervisor~~)) director in making an assessment based upon the factors outlined in subsection (2) of this section.

(b) The extent of the institution's marketing and special credit related programs to make members of the community aware of the credit services offered by the institution;

(c) The extent of participation by the institution's board of directors or board of trustees in formulating the institution's policies and reviewing its performance with respect to the purposes of the Community Reinvestment Act of 1977;

(d) Any practices intended to discourage applications for types of credit set forth in the institution's community reinvestment act statement(s);

(e) The geographic distribution of the institution's credit extensions, credit applications, and credit denials;

(f) Evidence of prohibited discriminatory or other illegal credit practices;

(g) The institution's record of opening and closing offices and providing services at offices;

(h) The institution's participation, including investments, in local community development projects;

(i) The institution's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans and small business or small farm loans within its community, or the purchase of such loans originated in its community;

(j) The institution's participation in governmentally insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;

(k) The institution's ability to meet various community credit needs based on its financial condition, size, legal impediments, local economic condition, and other factors;

(l) Other factors that, in the judgment of the ((~~supervisor~~)) director, reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire community.

(3) The ((~~supervisor~~)) director shall include as part of the examination report, a summary of the results of the assessment required under subsection (1) of this section and shall assign annually to each savings bank a numerical community reinvestment rating based on a one through five scoring system. Such numerical scores shall represent performance assessments as follows:

(a) Excellent performance: 1

(b) Good performance: 2

(d) Inadequate performance: 4

(e) Poor performance: 5

Sec. 411. RCW 32.40.020 and 1985 c 329 s 9 are each amended to read as follows:

Sec. 412. RCW 32.40.030 and 1985 c 329 s 10 are each amended to read as follows:

The ((~~supervisor of banking~~)) director shall adopt all rules necessary to implement RCW 32.40.010 and 32.40.020 by January 1, 1986.

Sec. 413. RCW 33.04.002 and 1982 c 3 s 1 are each amended to read as follows:

The legislature finds that the statutory law relating to savings and loan associations has not been generally updated or modernized since 1945; and, as a result, many changes to Title 33 RCW should now be made with respect to the powers and duties of the ((~~supervisor~~)) director; to the provisions relating to the organization, management and conversion of savings and loan associations; and to the powers and restrictions placed upon savings and loan associations to make investments. While it is the intent of the legislature to grant permissive investment powers to state-chartered savings and loan associations, it does not intend these associations to abandon the residential financing market in Washington. It, therefore, finds that the powers granted in ((~~this act~~)) chapter 3, Laws of 1982 are for the purpose of updating and modernizing the law relating to savings and loan associations, thereby creating a more secure and responsive financial environment in which the residential home buyer will continue to obtain financing.

Sec. 414. RCW 33.04.005 and 1982 c 3 s 2 are each amended to read as follows:

Unless the context requires otherwise, the definitions in this section apply throughout this title.

(1) "Branch" means an established manned place of business or a manned mobile facility or other manned facility of an association, other than the principal office, at which deposits may be taken.

(2) "Depositor" means a person who deposits money in an association.

(3) "Domestic association" means a savings and loan association which is incorporated under the laws of this state.

(4) "Federal association" means a savings and loan association which is incorporated under federal law.

(5) "Foreign association" means a savings and loan association organized under the laws of another state.

(6)(a) "Member," in a mutual association, means a depositor or any other person who is a member of a class of persons granted membership rights by the articles of incorporation or bylaws.

(b) "Member," in a stock association, means a stockholder or any other person who is a member of a class of persons granted membership rights by the articles of incorporation or bylaws.

(7) "Mutual association" means an association formed without authority to issue stock.

(8) "Savings and loan association," "savings association" or "association," unless otherwise restricted, means a domestic or foreign association and includes a stock or a mutual association.

(9) "Stock association" means an association formed with the authority to issue stock.

(10) "Department" means department of financial institutions.

(11) "Director" means director of financial institutions.

Sec. 415. RCW 33.04.010 and 1982 c 3 s 3 are each amended to read as follows:

Whenever, in this title or any prior acts relating to savings and loan associations, the term "supervisor" or "supervisor of savings and loans" appears, it is understood that the director of ((~~the department of general administration~~)) financial institutions may act for and in lieu of the supervisor of savings and loans, if there is no supervisor of savings and loan associations duly qualified to act.

Sec. 416. RCW 33.04.020 and 1982 c 3 s 4 are each amended to read as follows:

The ((~~supervisor~~)) director:

(1) Shall be charged with the administration and enforcement of this title and shall have and exercise all powers necessary or convenient thereunto;

(2) Shall issue to each association doing business hereunder, when it shall have paid its annual license fee and be duly qualified otherwise, a certificate of authority authorizing it to transact business;

(3) Shall require of each association an annual statement and such other reports and statements as the ((~~supervisor~~)) director deems desirable, on forms to be furnished by the ((~~supervisor~~)) director;

(4) Shall require each association to conduct its business in compliance with the provisions of this title;

(5) Shall visit and examine into the affairs of every association, at least once in each biennium; may appraise and revalue its investments and securities; and shall have full access to all the books, records, papers, securities, correspondence, bank accounts, and other papers of such association for such purposes. The ((~~supervisor~~)) director may accept in lieu of an examination the report of the examining division of the federal home loan bank board, or the report of the savings and loan department of another state, which has made and submitted a report of the condition of the affairs of the association, and if approved, the report shall have the same force and effect as though the examination were made by the ((~~supervisor~~)) director or one of his or her appointees;

(6) May accept or exchange any information or reports with the examining division of the federal home loan bank board or other like agency which may insure the accounts in an association or to which an association may belong or with the savings and loan department of another state which has authority to examine any association doing business in this state;

(7) May visit and examine into the affairs of any nonpublicly-held corporation in which the association has a material investment and any publicly-held corporation the capital stock of which is controlled by the association; may appraise and revalue its investments and securities; and shall have full access to all the books, records, papers, securities, correspondence, bank accounts, and other papers of such corporation for such purposes;

(8) May, in the ((~~supervisor's~~)) director's discretion, administer oaths to and to examine any person under oath concerning the affairs of any association or nonpublicly-held corporation in which the association has a material investment and any publicly-held corporation the capital stock of which is controlled by an association and, in connection therewith, to issue subpoenas and require the attendance and testimony of any person or persons at any place within this state, and to require witnesses to produce any books, papers, documents, or other things under their control material to such examination; and

(9) Shall have power to commence and prosecute actions and proceedings to enforce the provisions of this title, to enjoin violations thereof, and to collect sums due to the state of Washington from any association.

Sec. 417. RCW 33.04.025 and 1982 c 3 s 5 are each amended to read as follows:

The ((~~supervisor~~)) director shall adopt uniform rules ((~~and regulations~~)) in accordance with the administrative procedure act, chapter 34.05 RCW, to govern examinations and reports of associations and the form in which they shall report their assets, liabilities, and reserves, charge off bad debts and otherwise keep their records and accounts, and otherwise to govern the administration of this title. ((He)) The director shall mail a copy of the rules ((~~and regulations~~)) to each savings and loan association at its principal place of business. The person doing the mailing shall make and file his or her affidavit thereof in the office of the ((~~supervisor~~)) director.

Sec. 418. RCW 33.04.030 and 1945 c 235 s 96 are each amended to read as follows:

In event any person shall refuse to appear in compliance with any subpoena issued by the ((~~supervisor~~)) director or shall refuse to testify thereunder, the superior court of the state of Washington for the county in which such witness was required by said subpoena to appear, upon application of the ((~~supervisor~~)) director, shall have jurisdiction to compel such witness to attend and testify and to punish for contempt any witness not complying with the order of the court.

Sec. 419. RCW 33.04.042 and 1982 c 3 s 7 are each amended to read as follows:

(1) The ((~~supervisor~~)) director may issue and serve upon an association a notice of charges if in the opinion of the ((~~supervisor~~)) director the association:

(a) Is engaging or has engaged in an unsafe or unsound practice in conducting the business of the association;

(b) Is violating or has violated a material provision of any law, rule, or any condition imposed in writing by the ((~~supervisor~~)) director in connection with the granting of any application or other request by the association or any written agreement made with the ((~~supervisor~~)) director; or

(c) Is about to do the acts prohibited in (a) or (b) of this subsection if the opinion that the threat exists is based upon reasonable cause.

(2) The notice shall contain a statement of the facts constituting the alleged violation or violations or the practice or practices and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the association. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the ((~~supervisor~~)) director at the request of the association.

Unless the association appears at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease and desist order. In the event of this consent or if upon the record made at the hearing the ((~~supervisor~~)) director finds that any violation or practice specified in the notice of charges has been established, the ((~~supervisor~~)) director may issue and serve upon the association an order to cease and desist from the violation or practice. The order may require the association and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the association to take affirmative action to correct the conditions resulting from the violation or practice.

(3) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the association concerned except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided therein unless it is stayed, modified, terminated, or set aside by action of the ((~~supervisor~~)) director or a reviewing court.

Sec. 420. RCW 33.04.044 and 1982 c 3 s 8 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director determines that the acts specified in RCW 33.04.042 or their continuation is likely to cause insolvency or substantial dissipation of assets or earnings of the association or to otherwise seriously prejudice the interests of its depositors, the ((~~supervisor~~)) director may also issue a temporary order requiring the association to cease and desist from the violation or practice. The order shall become effective upon service on the association and shall remain effective unless set aside, limited, or suspended by a court in proceedings under RCW 33.04.046 pending the completion of the administrative proceedings under the notice and until such time as the ((~~supervisor~~)) director shall dismiss the charges specified in the notice or until the effective date of a cease and desist order issued against the association under RCW 33.04.042.

Sec. 421. RCW 33.04.048 and 1982 c 3 s 10 are each amended to read as follows:

In the case of a violation or threatened violation of a temporary cease and desist order issued under RCW 33.04.044, the ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the association for an injunction to enforce the order, and the court shall issue an injunction if it determines that there has been a violation or threatened violation.

Sec. 422. RCW 33.04.052 and 1982 c 3 s 11 are each amended to read as follows:

(1) Any administrative hearing provided in RCW 33.04.042 may be held at such place as is designated by the ((~~supervisor~~)) director and shall be conducted in accordance with chapter 34.05 RCW. The hearing shall be private unless the ((~~supervisor~~)) director determines that a public hearing is necessary to protect the public interest after fully considering the views of the party afforded the hearing.

Within sixty days after the hearing, the ((~~supervisor~~)) director shall render a decision which shall include findings of fact upon which the decision is based and the ((~~supervisor~~)) director shall issue and serve upon each party to the proceeding an order or orders consistent with RCW 33.04.042.

Unless a petition for review is timely filed in the superior court of the county of the principal place of business of the affected association under subsection (2) of this section and until the record in the proceeding has been filed as therein provided, the ((~~supervisor~~)) director may at any time modify, terminate, or set aside any order upon such notice and in such manner as the ((~~supervisor~~)) director deems proper. Upon filing the record, the ((~~supervisor~~)) director may modify, terminate, or set aside any order only with permission of the court.

The judicial review provided in this section for an order shall be exclusive.

(2) Any party to the proceeding or any person required by an order issued under RCW 33.04.042, 33.04.044 or 33.04.048 to refrain from any of the violations or practices stated therein may obtain a review of any order served under subsection (1) of this section other than one issued upon consent by filing in the superior court of the county of the principal place of business of the affected association within ten days after the date of service of the order a written petition praying that the order of the ((~~supervisor~~)) director be modified, terminated, or set aside. A copy of the petition shall be immediately served upon the ((~~supervisor~~)) director and the ((~~supervisor~~)) director shall then file in the court the record of the proceeding. The court shall have jurisdiction upon the filing of the petition, which jurisdiction shall become exclusive upon the filing of the record to affirm, modify, terminate, or set aside in whole or in part the order of the ((~~supervisor~~)) director except that the ((~~supervisor~~)) director may modify, terminate, or set aside an order with the permission of the court. The judgment and decree of the court shall be final, except that it is subject to appellate review under the rules of court.

(4) Service of any notice or order required to be served under RCW 33.04.042 or 33.04.044 shall be accomplished in the same manner as required for the service of process in civil actions in superior courts of this state.

Sec. 423. RCW 33.04.054 and 1982 c 3 s 12 are each amended to read as follows:

The ((~~supervisor~~)) director may apply to the superior court of the county of the principal place of business of the association affected for the enforcement of any effective and outstanding order issued under RCW 33.04.042, 33.04.044, or 33.04.048, and the court shall have jurisdiction to order compliance therewith.

Sec. 424. RCW 33.04.060 and 1988 c 202 s 32 are each amended to read as follows:

An association may petition the superior court of the state of Washington for Thurston county for the review of any decision, ruling, requirement or other action or determination of the ((~~supervisor~~)) director, by filing its complaint, duly verified, with the clerk of the court and serving a copy thereof upon the ((~~supervisor~~)) director. Upon the filing of the complaint, the clerk of the court shall docket the same as a cause pending therein.

The ((~~supervisor~~)) director may answer the complaint and the petitioner reply thereto, and the cause shall be heard before the court as in other civil actions. Both the petitioner and the ((~~supervisor~~)) director may seek appellate review of the decision of the court to the supreme court or the court of appeals of the state of Washington.

Sec. 425. RCW 33.04.110 and 1982 c 3 s 6 are each amended to read as follows:

(1) Except as otherwise provided in this section, all examination reports and all information obtained by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff in conducting examinations of associations are confidential and privileged information and shall not be made public or otherwise disclosed to any person, firm, corporation, agency, association, governmental body, or other entity.

(2) Subsection (1) of this section notwithstanding, the ((~~supervisor~~)) director may furnish in whole or in part examination reports prepared by the ((~~supervisor's~~)) director's office to federal agencies empowered to examine state associations, to savings and loan supervisory agencies of other states which have authority to examine associations doing business in this state, to the attorney general in his or her role as legal advisor to the ((~~supervisor~~)) director, to the examined association as provided in subsection (4) of this section, and to officials empowered to investigate criminal charges. If the ((~~supervisor~~)) director furnishes any examination report to officials empowered to investigate criminal charges, the ((~~supervisor~~)) director may only furnish that part of the report which is necessary and pertinent to the investigation, and the ((~~supervisor~~)) director may do this only after notifying the affected savings and loan association and any customer of the savings and loan association who is named in that part of the report of the order to furnish the part of the examination report unless the officials requesting the report first obtain a waiver of the notice requirement from a court of competent jurisdiction for good cause. The ((~~supervisor~~)) director may also furnish in whole or in part examination reports concerning any association in danger of insolvency to the directors or officers of a potential acquiring party when, in the ((~~supervisor's~~)) director's opinion, it is necessary to do so in order to protect the interests of members, depositors, or borrowers of the examined association.

(3) All examination reports furnished under subsection (2) of this section shall remain the property of the ((~~division of savings and loan associations~~)) department of financial institutions and, except as provided in subsection (4) of this section, no person, agency, or authority to whom reports are furnished or any officer, director, or employee thereof shall disclose or make public any of the reports or any information contained therein except in published statistical material that does not disclose the affairs of any individual or corporation: PROVIDED, That nothing herein shall prevent the use in a criminal prosecution of reports furnished under subsection (2) of this section.

(4) The examination report made by the ((~~division of savings and loan associations~~)) department of financial institutions is designed for use in the supervision of the association, and the ((~~supervisor~~)) director may furnish a copy of the report to the savings and loan association examined. The report shall remain the property of the ((~~supervisor~~)) director and will be furnished to the association solely for its confidential use. Neither the association nor any of its directors, officers, or employees may disclose or make public in any manner the report or any portion thereof without permission of the board of directors of the examined association. The permission shall be entered in the minutes of the board.

(7) This section shall not apply to investigation reports prepared by the ((~~supervisor~~)) director and the ((~~supervisor's~~)) director's staff concerning an application for a new association or an application for a branch of an association. The ((~~supervisor~~)) director may adopt rules making confidential portions of such reports if in the ((~~supervisor's~~)) director's opinion the public disclosure of the portions of the report would impair the ability to obtain the information which the ((~~supervisor~~)) director considers necessary to fully evaluate the application.

(8) Every person who intentionally violates any provision of this section is guilty of a gross misdemeanor.

Sec. 426. RCW 33.08.010 and 1959 c 280 s 1 are each amended to read as follows:

No person, firm, company, association, fiduciary, co-partnership, or corporation, either foreign or domestic, shall organize as, carry on or conduct the business of an association except in conformity with the terms and provisions of this title or unless incorporated as a savings and loan association under the laws of the United States or use in name or advertising any of the following:

Any collocation employing either or both of the words "building" or "loan" with one or more of the words "saving", "savings", "thrift", or words of similar import except in conformity with this title;

Any collocation employing one or more of the words "saving", "savings", "thrift" or words of similar import, with one or more of the words "association", "institution", "society", "company", "corporation", or words of similar import, or abbreviations thereof except in conformity with this title or unless authorized to do business under the laws of this state or of the United States relating to savings and loan associations, banks, or mutual savings banks; nor shall the word "federal" be used as a part of such name unless the user is incorporated as a savings and loan association under the laws of the United States.

Neither shall the words "saving", or "savings", be used in any name or advertising or to represent in any manner to indicate that ((~~his or its~~)) the business is of the character or kind of business carried on or transacted by an association or which is calculated to lead any person to believe that ((~~his or its~~)) the business is that of an association unless authorized to do business under the laws of this state or of the United States relating to savings and loan associations, banks, or mutual savings banks.

Every person who, and every director and officer of every corporation which, to the knowledge of such director or officer, violates any provision of this section, shall be guilty of a gross misdemeanor. Such conduct shall also be deemed a nuisance and subject to abatement in the manner prescribed by law at the instance of the ((~~state supervisor of savings and loan associations~~)) director of financial institutions or any other public body or officer authorized to do so.

The provisions of this section shall have no application to use of any word or collocation of words or to any representation or advertising which had been adopted and lawfully used by any person, firm, company, association, fiduciary, co-partnership or corporation lawfully engaged in business at ((~~[on]~~)) on March 24, 1959.

Sec. 427. RCW 33.08.050 and 1982 c 3 s 16 are each amended to read as follows:

The incorporators shall deliver to the ((~~supervisor~~)) director triplicate originals of the articles of incorporation and duplicate copies of its proposed bylaws.

Sec. 428. RCW 33.08.055 and 1982 c 3 s 17 are each amended to read as follows:

When the incorporators of a domestic association deliver the articles of incorporation and bylaws to the ((~~supervisor~~)) director, the incorporators shall submit an application for a certificate of incorporation, signed and verified by the incorporators, together with the filing fee. The application shall set forth:

(1) The names and addresses of the incorporators and proposed directors and officers of the association;

(2) A statement of the character, financial responsibility, experience, and fitness of the directors and officers to engage in the association business;

(3) Statements of estimated receipts, expenditures, earnings, and financial condition of the association for the first two years or such longer period as the ((~~supervisor~~)) director may require;

(4) A showing that the association will have a reasonable chance to succeed in the market area in which it proposes to operate;

(5) A showing that the public convenience and advantage will be promoted by the formation of the proposed association; and

(6) Any other matters the ((~~supervisor~~)) director may require.

Sec. 429. RCW 33.08.060 and 1982 c 3 s 18 are each amended to read as follows:

Upon receipt of the articles of incorporation and bylaws, the ((~~supervisor~~)) director shall proceed to determine, from all sources of information and by such investigation as he or she may deem necessary, whether:

(1) The proposed articles and bylaws comply with all requirements of law;

(2) The incorporators and directors possess the qualifications required by this title;

(3) The incorporators have available for the operation of the business at the specified location sufficient cash assets;

(4) The general fitness of the persons named in the articles of incorporation are such as to command confidence and warrant belief that the business of the proposed association will be honestly and efficiently conducted in accordance with the intent and purposes of this title;

(5) The public convenience and advantage will be promoted by allowing such association to be incorporated and engage in business in the market area indicated; and

(6) The population and industry of the market area afford reasonable promise of adequate support for the proposed association.

For the purpose of this investigation and determination, the incorporators, when delivering the articles and bylaws to the ((~~supervisor~~)) director, shall pay to the ((~~supervisor~~)) director an investigation fee, the amount of which shall be established by rule of the ((~~supervisor~~)) director.

Sec. 430. RCW 33.08.070 and 1988 c 202 s 33 are each amended to read as follows:

The ((~~supervisor~~)) director, not later than six months after receipt of the proposed articles and bylaws shall endorse upon each copy thereof the word "approved" or "refused" and the date thereof. In case of refusal, he or she shall forthwith return one copy of the articles and bylaws to the incorporators, and the refusal shall be final unless the incorporators, or a majority of them, within thirty days after the refusal, appeal to the superior court of Thurston county. The appeal may be accomplished by the incorporators preparing a notice of appeal, serving a copy of it upon the ((~~supervisor~~)) director, and filing the notice with the clerk of the court, whereupon the clerk, under the direction of the judge, shall give notice to the appellants and to the ((~~supervisor~~)) director of a date for the hearing of the appeal. The appeal shall be tried de novo by the court. At the hearing a record shall be kept of the evidence adduced, and the decision of the court shall be final unless appellate review is sought as in other cases.

Sec. 431. RCW 33.08.080 and 1982 c 3 s 19 are each amended to read as follows:

If the ((~~supervisor~~)) director approves the incorporation of the proposed association, the ((~~supervisor~~)) director shall forthwith return two copies of the articles of incorporation and one copy of the bylaws to the incorporators, retaining the others as a part of the files of the ((~~supervisor's~~)) director's office. The incorporators, thereupon, shall file one set of the articles with the secretary of state and retain the other set of the articles of incorporation and the bylaws as a part of its minute records, paying to the secretary of state such fees and charges as are required by law. Upon receiving an original set of the approved articles of incorporation, duly endorsed by the ((~~supervisor~~)) director as herein provided, together with the required fees, the secretary of state shall issue the secretary of state's certificate of incorporation and deliver the same to the incorporators, whereupon the corporate existence of the association shall begin. Unless an association whose articles of incorporation and bylaws have been approved by the ((~~supervisor~~)) director shall engage in business within two years from the date of such approval, its right to engage in business shall be deemed revoked and of no effect. In the ((~~supervisor's~~)) director's discretion, the two-year period in which the association must commence business may be extended for a reasonable period of time, which shall not exceed one additional year.

Sec. 432. RCW 33.08.090 and 1982 c 3 s 20 are each amended to read as follows:

The members, at any meeting called for the purpose, may amend the articles of incorporation of the association by a majority vote of the members present, in person or in proxy. The amended articles shall be filed with the ((~~supervisor~~)) director and be subject to the same procedure of approval, refusal, appeal, and filing with the secretary of state as provided for the original articles of incorporation. Proposed amendments of the articles of incorporation shall be submitted to the ((~~supervisor~~)) director at least thirty days prior to the meeting of the members.

If the amendments include a change in the association's corporate name, the association shall give notice by mail to each association doing business within this state at its principal place of business of the filing of the amended articles. Persons interested in protesting an amendment changing the association's corporate name may contact the ((~~supervisor~~)) director in person or by writing prior to a date which shall be given in the notice.

Sec. 433. RCW 33.08.100 and 1967 c 49 s 1 are each amended to read as follows:

The bylaws adopted by the incorporators and approved by the ((~~supervisor~~)) director shall be the bylaws of the association. The members, at any meeting called for the purpose, may amend the bylaws of the association on a majority vote of the members present, in person or by proxy, or the directors at any regular or special meeting called under the provisions of RCW 33.16.090 may amend the bylaws of the association on a two-thirds majority vote of the directors. Proposed amendments of the bylaws shall be submitted to the ((~~supervisor~~)) director in duplicate at least thirty days prior to the meeting at which the amendments will be considered. The ((~~supervisor~~)) director shall endorse thereon the word "approved" or "disapproved" and return one copy to the association within the thirty day period prior to the meeting. Amendments of the bylaws which have been approved by the ((~~supervisor~~)) director shall become effective after being adopted by the board or the members. The ((~~supervisor~~)) director shall be advised of the effective date.

Sec. 434. RCW 33.08.110 and 1982 c 3 s 21 are each amended to read as follows:

An association with the written approval of the ((~~supervisor~~)) director, may establish and operate branches in any place within the state.

An association desiring to establish a branch shall file a written application therefor with the ((~~supervisor~~)) director, who shall approve or disapprove the application within four months after receipt.

The ((~~supervisor's~~)) director's approval shall be conditioned on a finding that the resources in the market area of the proposed location offer a reasonable promise of adequate support for the proposed branch and that the proposed branch is not being formed for other than the legitimate purposes under this title. A branch shall not be established or permitted if the contingent fund, loss reserves and guaranty stock are less than the aggregate paid-in capital which would be required by law as a prerequisite to the establishment and operation of an equal number of branches in like locations by a commercial bank. If the application for a branch is not approved, the association shall have the right to appeal in the same manner and within the same time as provided by RCW 33.08.070 as now or hereafter amended. The association when delivering the application to the ((~~supervisor~~)) director shall transmit to the ((~~supervisor~~)) director a check in an amount established by rule to cover the expense of the investigation. An association shall not move any office more than two miles from its existing location without prior approval of the ((~~supervisor~~)) director.

The board of directors of an association, after notice to the ((~~supervisor~~)) director, may discontinue the operation of a branch. The association shall keep the ((~~supervisor~~)) director informed in the matter and shall notify the ((~~supervisor~~)) director of the date operation of the branch is discontinued.

Sec. 435. RCW 33.12.010 and 1982 c 3 s 22 are each amended to read as follows:

An association shall have the same capacity to act as possessed by natural persons. An association has authority to perform such acts as are necessary or proper to accomplish its purposes.

In addition to any other power an association may have, an association has authority:

(1) To have and alter a corporate seal;

(2) To continue as an association for the time limited in its articles of incorporation or, if no such time limit is specified, then perpetually;

(3) To sue or be sued in its corporate name;

(4) To acquire, hold, sell, dispose of, pledge, mortgage, or encumber property, as its interests and purposes may require;

(5) To conduct business in this state and elsewhere as may be permitted by law and, to this end, to comply with any law, regulation, or other requirements incident thereto;

(6) To acquire capital in the form of deposits, shares, or other accounts for fixed, minimum or indefinite periods of time as are authorized by its bylaws, and may issue such passbooks, statements, time certificates of deposit, or other evidence of accounts;

(7) To pay interest;

(8) To charge reasonable service fees for services provided as part of its business;

(9) To borrow money and to pledge, mortgage, or hypothecate its properties and securities in connection therewith;

(10) To collect or protest promissory notes or bills of exchange owned or held as collateral by the association;

(11) To let vaults, safes, boxes, or other receptacles for the safekeeping or storage of personal property, subject to the laws and regulations applicable to and with the powers possessed by safe deposit companies; and to act as escrow holder;

(12) To act as fiscal agent for the United States of America; to purchase, own, vote, or sell stock in, or act as fiscal agent for any federal home loan bank, the federal housing administration, home owners' loan corporation, or other state or federal agency, organized under the authority of the United States or of the state of Washington and authorized to loan to or act as fiscal agent for associations or to insure savings accounts or mortgages; and in the exercise of these powers, to comply with any requirements of law or rules or orders promulgated by such federal or state agency and to execute any contracts and pay any charges in connection therewith;

(13) To procure insurance of its mortgages and of its accounts from any state or federal corporation or agency authorized to write such insurance and, in the exercise of these powers, to comply with any requirements of law or rules or orders promulgated and to execute any contracts and pay any premiums required in connection therewith;

(14) To loan money and to sell any of its notes or other evidences of indebtedness, together with the collateral securing the same;

(15) To make, adopt, and amend bylaws for the management of its property and the conduct of its business;

(16) To deposit moneys and securities in any other association or any bank or savings bank or other like depository;

(17) To dissolve and wind up its business;

(18) To collect or compromise debts due to it and, in so doing, to apply to the indebtedness the accounts of the debtors, and to receive, as collateral or otherwise, other securities, property or property rights of any kind or nature;

(19) To become a member of, deal with, or make reasonable payments or contribution to any organization to the extent that such organization assists in furthering or facilitating the association's purposes, powers or community responsibilities, and to comply with any reasonable conditions of eligibility;

(20) To sell money orders, travelers checks and similar instruments as agent for any organization empowered to sell such instruments through agents within this state and to receive money for transmission through a federal home loan bank;

(21) To service loans and investments for others;

(22) To sell and to purchase mortgages or other loans, including participating interests therein;

(23) To use abbreviations, words or symbols in connection with any document of any nature and on checks, proxies, notices and other instruments which abbreviations, words, or symbols shall have the same force and legal effect as though the respective words and phrases for which they stand were set forth in full for the purposes of all statutes of the state and all other purposes;

(24) To conduct a trust business under rules adopted by the ((~~supervisor~~)) director pursuant to chapter 34.05 RCW; and

(25) To exercise, by and through its board of directors and duly authorized officers and agents, all such incidental powers as may be necessary to carry on the business of the association.

The powers granted in this section shall not be construed as limiting or enlarging any grant of authority made elsewhere by this title.

Sec. 436. RCW 33.12.014 and 1982 c 3 s 24 are each amended to read as follows:

Notwithstanding any other provision of law, in addition to all powers, express or implied, that an association has under this title, the ((~~supervisor~~)) director may make reasonable rules authorizing an association to exercise any of the powers conferred at the time of the adoption of the rules upon a federal savings and loan association doing business in this state, or may modify or reduce reserve or other requirements if an association is insured by the federal savings and loan insurance corporation, if the ((~~supervisor~~)) director finds that the exercise of the power:

(1) Serves the convenience and advantage of depositors and borrowers; and

(2) Maintains the fairness of competition and parity between state-chartered savings and loan associations and federally-chartered savings and loan associations.

Sec. 437. RCW 33.12.060 and 1985 c 239 s 1 are each amended to read as follows:

(1) An association shall make no loan to or sell to or purchase any real property or securities from:

(a) Any director, officer, agent, or employee of an association;

(b) Any former director or incorporator of the association within one year of the termination of the relationship without the prior written approval of the ((~~supervisor~~)) director;

(c) Any party involved, either directly or indirectly, in a stock tender offer for acquisition of the association, as determined by the ((~~supervisor~~)) director, without the prior written approval of the ((~~supervisor~~)) director; or

(d) Any public officer or public employee whose duties have to do with the supervision, regulation, or insurance of the association or its savings accounts.

(2) The provisions of subsection (1) of this section shall not apply to:

(a) Loans secured by the pledge or assignment of the savings account of the borrowing member;

(b) Loans made to directors, officers, agents, or employees of the association upon their property which is occupied principally by such director, officer, agent, or employee as a home, the amount of such loan to be based upon the appraised value of said property as established by two independent appraisers who are not officers, agents, directors, employees, or appraisers of the association;

(c) Loans made to directors, officers, or employees of the association upon their mobile dwelling, which is occupied principally by such director, officer, or employee as a home, the amount of such loan to be based upon the appraised value of the dwelling as established by two independent appraisers who are not directors, officers, employees, or appraisers of the association;

(d) Loans made to directors, officers, or employees of the association for home or property repairs, alterations, improvements, or additions, or home furnishings or appliances, for a residence which is occupied principally by such director, officer, or employee as a home;

(e) Loans made to directors, officers, or employees of the association for the payment of expenses of vocational training or college or university education; nor to

(f) Any other loans made to directors, officers, or employees of the association: PROVIDED, That the total value of the loans made or obligations acquired under authority of this section for any one director, officer, or employee shall not exceed such amount as prescribed by the ((~~supervisor~~)) director under ((~~regulations~~)) rules adopted under the administrative procedure act, chapter 34.05 RCW. No loan may be made, credit extended, or obligation acquired unless the board of directors of the association has approved a resolution authorizing the same by a majority vote at a meeting of the board held within sixty days prior to the making or acquisition of the loan or obligation, and the vote and resolution shall be entered in the corporate minutes.

(3) A loan to or a purchase or sale to or from a partnership or corporation fifteen percent of which is owned by any one director, officer, agent, or employee of the association or twenty-five percent of which is owned by any combination of directors, officers, agents, or employees of the association shall be deemed a loan to or a purchase or sale to or from such director, officer, agent, or employee within the meaning of this section except when the transaction occurred without the knowledge or against the protest of such director, officer, agent, or employee of the association.

Sec. 438. RCW 33.12.140 and 1982 c 3 s 26 are each amended to read as follows:

Before any association is authorized to receive deposits or transact any business, its incorporators shall create an expense fund, in such amount as the ((~~supervisor~~)) director may determine, from which the expense of organizing the association and its operating expenses may be paid until such time as its earnings are sufficient to pay its operating expenses, and the incorporators shall enter into an undertaking with the ((~~supervisor~~)) director to make such further contributions to the expense fund as may be necessary to pay its operating expenses until such time as it can pay them from its earnings.

Before any mutual association is authorized to receive deposits or transact any business, its incorporators shall create a contingent fund for the protection of its members against investment losses, in an amount to be determined by the ((~~supervisor~~)) director.

The contingent fund shall consist of payments in cash made by the incorporators as provided in this section and of all sums credited thereto from the earnings of the association as hereinafter required.

Prior to the liquidation of any mutual association the contingent fund shall not be encroached upon in any manner except for losses and for the repayment of contributions made by the incorporators.

No repayment of the contribution of incorporators to the contingent fund shall be made until the net balance credited to the contingent fund from earnings of the association, after such repayment, equals five percent of the amount due members.

The incorporators may receive interest upon the amount of their contributions to the contingent fund at the same rate as is paid, from time to time, to savings members.

The amounts contributed to the contingent fund by the incorporators shall not constitute a liability of the association except as hereinafter provided, and any loss sustained by the association in excess of that portion of the contingent fund created from earnings may be charged against such contributions pro rata.

Sec. 439. RCW 33.16.040 and 1982 c 3 s 30 are each amended to read as follows:

If the ((~~supervisor~~)) director shall notify the board of directors of any association in writing, that he or she has information that any director, officer, or employee of such association is dishonest, reckless, or incompetent or is failing to perform any duty of his or her office, the board shall meet and consider such matter forthwith and the ((~~supervisor~~)) director shall have notice of the time and place of such meeting. If the board shall find the ((~~supervisor's~~)) director's objection to be well founded, such director, officer, or employee shall be removed immediately. If the board does not remove the director, officer, or employee against whom the objections have been filed, or if the board fails to meet, consider or act upon the objections within twenty days after receiving the same, the ((~~supervisor~~)) director may forthwith or within twenty days thereafter, remove such individual by complying with the administrative procedure act, chapter 34.05 RCW. If the ((~~supervisor~~)) director feels that the public interest or safety of the association requires the immediate removal of such individual, the ((~~supervisor~~)) director may petition the superior court for a temporary injunction suspending the performance of the individual as a director pending the administrative procedure hearing.

Sec. 440. RCW 33.16.120 and 1982 c 3 s 35 are each amended to read as follows:

The board of directors shall cause to be prepared, from the books of the association, a statement of assets and of liabilities, at the end of the association's fiscal year.

The board shall also cause to be prepared, certified, and filed with the ((~~supervisor~~)) director, upon blanks to be furnished by the ((~~supervisor~~)) director, such reports and statements as the ((~~supervisor~~)) director, from time to time, may require.

Sec. 441. RCW 33.16.130 and 1979 c 113 s 4 are each amended to read as follows:

The board of directors of every association shall procure a bond or bonds, covering all of its active officers, agents, and employees, whether or not they draw salary or compensation, with duly qualified corporate surety authorized to do business in the state of Washington, conditioned that the surety will indemnify and save harmless the association against any and all loss or losses arising through the larceny, theft, embezzlement, or other fraudulent or dishonest act or acts of any such officer, agent, or employee. Such bond coverage may provide for a deductible amount from any loss which otherwise would be recoverable from the corporate surety. A deductible amount may be applied separately to one or more bonding agreements. The bond shall not provide for more than one deductible amount from all losses caused by the same person or caused by the same persons acting in collusion or combination in cases in which such losses result from dishonesty of employees (as defined in the bond).

Such bond or bonds shall be in such amount, as to each of said officers or employees, as the directors shall deem advisable, and said bond or bonds shall be subject to the approval of the ((~~supervisor~~)) director and shall be filed with him or her. The board shall review such bond, or bonds, at its regular meeting in January of each year, and by resolution determine such bond coverage for the ensuing year.

Sec. 442. RCW 33.20.130 and 1945 c 235 s 53 are each amended to read as follows:

When any savings member shall have neither paid in nor withdrawn any funds from his or her savings account in the association for seven consecutive years, and his or her whereabouts is unknown to the association and he or she shall not respond to a letter from the association inquiring as to his or her whereabouts, sent by registered mail to his or her last known address, the association may transfer his or her account to a "Dormant Accounts" fund. Any savings account in the "Dormant Accounts" fund shall not participate in the earnings of the association except by permissive action of the directors of the association. The member, or his or her or its executor, administrator, successors or assigns, may claim the amount so transferred from his or her account to the dormant accounts fund at any time after such transfer. Should the association be placed in liquidation while any savings account shall remain credited in the dormant accounts fund and before any valid claim shall have been made thereto, as hereinabove provided, such savings account so credited, upon order of the ((~~supervisor~~)) director and without any other escheat proceedings, shall escheat to the state of Washington.

Sec. 443. RCW 33.20.150 and 1982 c 3 s 41 are each amended to read as follows:

The deposits paid into an association, together with any interest credited thereon, shall be repaid to the depositors thereof respectively, or to their legal representatives, upon request.

If, in the judgment of the board, circumstances warrant deferment of the payment of withdrawals from savings accounts to a later date, thereafter withdrawals shall be paid proportionately, on a percentage basis, to all depositors requesting withdrawal until full withdrawal requests are paid to all depositors. A board resolution of deferment shall not affect the payments of withdrawals from federal tax and loan accounts.

The board shall, however, have the right in its discretion, where need is shown, to pay not exceeding one hundred dollars to any account holder in one month.

If, upon examination, the ((~~supervisor~~)) director finds that further postponement of withdrawals is unwarranted, the ((~~supervisor~~)) director may order the association to resume full payment of withdrawals and cancel all written withdrawal requests. Such order shall be in writing.

The association's failure, during a period of postponement, to pay withdrawal requests shall not authorize the ((~~supervisor~~)) director to take charge of or liquidate the association.

Sec. 444. RCW 33.20.170 and 1945 c 235 s 99 are each amended to read as follows:

The ((~~supervisor~~)) director further is empowered, if in his or her judgment the circumstances warrant it, to issue in writing a declaration that an acute business depression, state of panic, or economic emergency exists, in which event the directors of any association, state or federal, within the state may limit withdrawals by resolution, subject to the following conditions; that incoming funds shall be applied:

First, to the payment of operating expenses, indebtedness, taxes, insurance, and to the necessary charges for the protection of the association and its investments;

Second, to the payment to members of emergency withdrawals not exceeding twenty-five dollars per month to any member. The board of directors of any association, with the prior written approval of the ((~~supervisor~~)) director, by resolution may authorize the payment of emergency withdrawals not exceeding one hundred dollars per month to any member;

Third, to the payment of dividends on the savings of its members;

Fourth, three-fourths of all remaining receipts of the association, except interest payments, shall be applied to the payment of withdrawals, until all withdrawal requests have been paid.

All such withdrawal payments shall be made to members having withdrawal requests on file in proportion to the amount of such withdrawal requests.

Sec. 445. RCW 33.24.010 and 1982 c 3 s 45 are each amended to read as follows:

An association may invest its funds only as provided in this chapter.

It shall not invest more than two and a half percent of its assets in any loan or obligation to any one person, except with the written approval of the ((~~supervisor~~)) director.

Sec. 446. RCW 33.24.025 and 1989 c 97 s 3 are each amended to read as follows:

Except as may be limited by the ((~~supervisor~~)) director by rule, an association may invest its funds in obligations of the United States, as authorized by RCW 33.24.020, 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 the federal investment company act of 1940, as now or hereafter amended, if both of the following conditions are met:

(1) The portfolio of the investment company or investment trust is limited to obligations of the United States and to repurchase agreements fully collateralized by such obligations; and

(2) The investment company or investment trust takes delivery of the collateral for any repurchase agreement either directly or through an authorized custodian.

Sec. 447. RCW 33.24.360 and 1982 c 3 s 54 are each amended to read as follows:

(1) It is unlawful for any acquiring party to acquire control of an association until thirty days after the date of filing with the ((~~supervisor~~)) director an application containing substantially all of the following information and any additional information that the ((~~supervisor~~)) director may prescribe as necessary or appropriate in the public interest or for the protection of deposit account holders, borrowers or stockholders:

(a) The identity, character, and experience of each acquiring party by whom or on whose behalf acquisition is to be made;

(b) The financial and managerial resources and future prospects of each acquiring party involved in the acquisition;

(d) The source and amount of the funds or other consideration used or to be used in making the acquisition and, if any part of these funds or other consideration has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a description of the transaction and the names of the parties. However, where a source of funds is a loan made in the lender's ordinary course of business, if the person filing the statement so requests, the ((~~supervisor~~)) director shall not disclose the name of the lender to the public;

(e) Any plans or proposals which any acquiring party making the acquisition may have to liquidate the association to sell its assets, to merge it with any company, or to make any other major changes in its business or corporate structure or management;

(f) The identification of any persons employed, retained or to be compensated by the acquiring party, or by any person on his or her behalf, who makes solicitations or recommendations to stockholders for the purpose of assisting in the acquisition, and brief description of the terms of such employment, retainer, or arrangements for compensation;

(g) Copies of all invitations for tenders or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition.

When an unincorporated company is required to file the statements under (1) (a), (b), and (f) of this section, the ((~~supervisor~~)) director may require that the information be given with respect to each partner of a partnership or limited partnership, by each member of a syndicate or group, and by each person who controls a partner or member. When an incorporated company is required to file the statements under (1) (a), (b), and (f) of this section, the ((~~supervisor~~)) director may require that the information be given for the corporation and for each officer and director of the corporation and for each person who is directly or indirectly the beneficial owner of twenty-five percent or more of the outstanding voting securities of the corporation. If any tender offer, request or invitation for tenders or other agreement to acquire control is proposed to be made by means of a registration statement under the federal securities act of 1933 (48 Stat. 74, 15 U.S.C. Sec. 77a), as amended, or in circumstances requiring the disclosure of similar information under the federal securities exchange act of 1934 (48 Stat. 881; 15 U.S.C. Sec. 77b), as amended, or in an application filed with the federal home loan bank board requiring similar disclosure, such registration statement or application may be filed with the ((~~supervisor~~)) director in lieu of the requirements of this section.

(2) The ((~~supervisor~~)) director shall give notice by mail to all associations doing business within the state of the filing of an application to acquire control of an association. The association shall transmit a check to the ((~~supervisor~~)) director for two hundred dollars when filing the application to cover the expense of notification. Persons interested in protesting the application may contact the ((~~supervisor~~)) director in person or by writing prior to a date which shall be given in the notice.

Sec. 448. RCW 33.24.370 and 1982 c 3 s 55 are each amended to read as follows:

The ((~~supervisor~~)) director may within thirty days after the date of filing of the application under RCW 33.24.360, file an action or proceeding in superior court to prevent the pending acquisition of control if the ((~~supervisor~~)) director finds any of the following:

(1) The acquisition would substantially lessen competition or would in any manner be in restraint of trade or would result in a monopoly, or would be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the savings and loan business in any part of the state of Washington, unless the ((~~supervisor~~)) director also finds that the anticompetitive effects of the proposed acquisition are clearly outweighed in the public interest by the probable effect of the acquisition in meeting the convenience and needs of the community to be served;

(2) The poor financial condition of any acquiring party might jeopardize the financial stability of the association being acquired or might prejudice the interests of the depositors, borrowers, or stockholders of the association or is not in the public interest;

(3) The plan or proposal under which the acquiring party intends to liquidate the association, to sell its assets, or to merge it with any person or company, or to make any other major change in its business or corporate structure or management, is not fair and reasonable to the association's depositors, borrowers, or stockholders or is not in the public interest; or

(4) The competence, experience and integrity of any acquiring party who would control the operation of the association indicates that approval would not be in the interest of the association's depositors, borrowers, or stockholders nor in the public interest.

Sec. 449. RCW 33.28.020 and 1982 c 3 s 57 are each amended to read as follows:

The ((~~supervisor~~)) director shall collect from each association a fee, the amount of which shall be set by rule, to cover the actual cost of examinations and supervision.

Sec. 450. RCW 33.32.020 and 1982 c 3 s 59 are each amended to read as follows:

Unless prohibited by the laws of the state in which it is incorporated, a foreign association or like corporation authorized to do business in this state which, by the laws of the state in which it is incorporated, is required to be examined or to make reports to officers of such state, after each such examination or on the making of each such report, shall furnish to the ((~~supervisor~~)) director a copy of such examination or report, certified by the officer of the state making such examination or receiving the report.

Sec. 451. RCW 33.32.030 and 1982 c 3 s 60 are each amended to read as follows:

Except as to those matters relating strictly to its internal management which are governed by provisions of the law of the state of its incorporation inconsistent with this title, a foreign association or like corporation authorized to transact business in this state shall conduct its business in conformance with the provisions of this title and all requirements of the ((~~supervisor~~)) director.

All agreements made by any foreign association or like corporation doing business in this state with any resident of this state shall be deemed and construed to be made within this state.

Sec. 452. RCW 33.32.050 and 1945 c 235 s 84 are each amended to read as follows:

No foreign savings and loan association or like corporation shall do business in this state until it shall file with the ((~~supervisor~~)) director a written irrevocable power of attorney providing that service upon the ((~~supervisor~~)) director of any process issued against it by any court in this state shall constitute valid service of such process upon it. Such service shall be had by serving upon the ((~~supervisor~~)) director two copies of such summons or other process, together with the sum of two dollars. The ((~~supervisor~~)) director, upon receipt of any such summons or other process, shall forthwith transmit, by registered mail, one copy thereof to the principal office of such foreign association or corporation.

Sec. 453. RCW 33.36.060 and 1982 c 3 s 65 are each amended to read as follows:

Any person who, for the purpose of concealing any material fact, suppresses any evidence or abstract, removes, mutilates, destroys, or secretes any book, paper or record of an association, or of the ((~~supervisor~~)) director, or of anyone connected with the association or the office of the ((~~supervisor~~)) director, is guilty of a class C felony as provided in chapter 9A.20 RCW.

Sec. 454. RCW 33.40.010 and 1949 c 20 s 9 are each amended to read as follows:

Any domestic association may determine to enter upon voluntary liquidation, to transfer its assets and liabilities to another association, to merge with another association, to segregate its assets into classes, to charge off its losses in excess of its reserves.

Any such liquidation, transfer, merger, segregation, or charge-off shall be effected by the vote of a majority in amount of the members present, in person or by proxy, at any regular or special meeting of the members called for such purpose. Notice of such meeting, stating the purpose thereof, shall be given the ((~~supervisor~~)) director at least thirty days prior to the meeting and to the members pursuant to the provisions contained in RCW 33.20.010.

If such liquidation, transfer, merger, segregation, or charge-off be authorized by the members at the meeting, the directors of the association are authorized and shall effect such action, and the officers of the association shall execute all proper conveyances, documents, and other papers necessary or proper thereunto.

Sec. 455. RCW 33.40.020 and 1982 c 3 s 66 are each amended to read as follows:

Whenever it appears to the ((~~supervisor~~)) director that any domestic association is in an unsound condition or is conducting its business in an unsafe manner or is refusing to submit its books, papers, or concerns to lawful inspection, or that any director or officer thereof refuses to submit to examination on oath touching its concerns and affairs or that it has failed to carry out any authorized order or direction of the ((~~supervisor~~)) director, the ((~~supervisor~~)) director may give notice to the association so offending or delinquent or whose director or officer is thus offending or delinquent to correct such offense or delinquency and, if such association or such director or officer fails to correct the condition, offense, or delinquency within a reasonable time, as determined by the ((~~supervisor~~)) director, the ((~~supervisor~~)) director may take possession of the association.

Sec. 456. RCW 33.40.030 and 1945 c 235 s 104 are each amended to read as follows:

Whenever it shall appear to the ((~~supervisor~~)) director that any association is in an unsound or unsafe condition to continue business or is insolvent, the ((~~supervisor~~)) director may take possession thereof without notice.

Sec. 457. RCW 33.40.040 and 1982 c 3 s 67 are each amended to read as follows:

Upon the ((~~supervisor~~)) director taking possession of any domestic association, the ((~~supervisor~~)) director shall proceed to liquidate the association unless, in the ((~~supervisor's~~)) director's discretion, the ((~~supervisor~~)) director shall determine to call a meeting of the members to consider either a proportionate charge-off against the deposit accounts to permit the association thereafter to continue in business, or whether the association should proceed to voluntary liquidation under the management of its board of directors. In such event, if the ((~~supervisor~~)) director approves the decision of a majority in amount of the members present and voting, the ((~~supervisor~~)) director shall order such action to be taken.

During any period of voluntary liquidation, the ((~~supervisor~~)) director may take possession of the association and its assets and complete the liquidation whenever, in the ((~~supervisor's~~)) director's discretion, this seems advisable.

Sec. 458. RCW 33.40.050 and 1982 c 3 s 68 are each amended to read as follows:

Whenever the ((~~supervisor~~)) director determines to liquidate the affairs of a domestic association, the ((~~supervisor~~)) director shall cause the attorney general to present to the superior court of the county in which the association has its principal place of business a written petition setting forth the date of the taking of possession, the reasons therefor, and other material facts concerning the affairs of the association and, if the court determines that the association should be liquidated, it shall appoint the ((~~supervisor~~)) director, or other responsible person as recommended by the ((~~supervisor~~)) director, as the liquidator of the association and fix and require a bond to be given by the liquidator conditioned for the faithful performance of the duties as such liquidator, but if the association has the insurance protection provided by Title IV of the National Housing Act, as now or hereafter amended, the court upon the request of the ((~~supervisor~~)) director may tender to the federal savings and loan insurance corporation the appointment as liquidator.

Upon the filing with and approval by the court of the bond, the ((~~supervisor~~)) director or other person appointed shall enter upon the duties as liquidator of the affairs of the association, and, under the direction of the court, shall administer and liquidate the assets thereof and apply the same to the payment of the expenses of liquidation and the debts of the association, and distribute the remainder to the deposit accounts proportionately.

If the court tenders the appointment as liquidator to the federal savings and loan insurance corporation, and if the insurance corporation accepts the appointment, it shall have and possess all the powers and privileges provided by the laws of this state with respect to a liquidator of an association, its depositors and other creditors, and be subject to all the duties of such liquidator, except insofar as such powers, privileges, or duties are in conflict with the provisions of Title IV of the National Housing Act, as now or hereafter amended. In any liquidation proceeding in which the insurance corporation is the liquidator, it may proceed to liquidate without being subject to the control of the court and without bond.

Sec. 459. RCW 33.40.070 and 1982 c 3 s 69 are each amended to read as follows:

The liquidator, upon the approval of the court, may sell, discount, or compromise debts of the association and claims against its debtors. The liquidator, with the approval of the court, may lease, operate, repair, exchange, or sell, either for cash or upon terms, the real and personal property of the association.

The liquidator, with the approval of the court, when funds are available, may pay savings members whose balances amount to not more than five dollars, the full amount of the balances.

Checks issued or payments held by the liquidator which remain undelivered for six months following the final liquidation dividend shall be deposited with the ((~~supervisor~~)) director, after which the liquidator shall be discharged by the court. During ten years thereafter, the ((~~supervisor~~)) director shall deliver the checks or payments, or the ((~~supervisor's~~)) director's own checks in lieu thereof, to the payee, or his or her legal representative, upon receipt of satisfactory evidence of the payee's right thereto. After the ten years, the ((~~supervisor~~)) director shall cancel all such checks or payments remaining in the ((~~supervisor's~~)) director's possession and issue a check against the account for the amount thereof, payable to the state treasurer, and deliver it to the state treasurer. Such payment shall escheat to the state, without further legal proceedings.

Sec. 460. RCW 33.40.075 and 1982 c 3 s 70 are each amended to read as follows:

All funds received by the ((~~supervisor~~)) director from liquidations may be invested by the ((~~supervisor~~)) director. The earnings from the moneys so held may be applied toward defraying the expenses incurred in the liquidations.

Sec. 461. RCW 33.40.080 and 1945 c 235 s 109 are each amended to read as follows:

Upon the termination of any liquidation proceeding, any files, records, documents, books of account, or other papers in the possession of the liquidator shall be surrendered into the possession of the ((~~supervisor~~)) director, who, in his or her discretion at any time after the expiration of one year, may destroy any of such files, records, documents, books of account or other papers which appear to him or her to be obsolete or unnecessary for future reference.

Sec. 462. RCW 33.40.110 and 1982 c 3 s 71 are each amended to read as follows:

In a voluntary liquidation of a domestic association, checks issued in the liquidation or funds representing liquidating dividends or otherwise which remain undelivered for six months following the final liquidating dividend, shall be deposited with the ((~~supervisor~~)) director, together with any files, records, documents, books of account, or other papers of the association. The ((~~supervisor~~)) director, at any time after one year from delivery, may destroy any of such files, records, documents, books of account, or other papers which appear to the ((~~supervisor~~)) director to be obsolete or unnecessary for future reference. During ten years thereafter, the ((~~supervisor~~)) director shall deliver such checks, or the ((~~supervisor's~~)) director's own checks in lieu thereof, or portions of such funds to the payee, or the payee's legal representative, upon receipt of satisfactory evidence of the payee's right thereto. After the ten years, the ((~~supervisor~~)) director shall cancel all such checks remaining in the ((~~supervisor's~~)) director's possession and issue a check payable to the state treasurer for the amount thereof together with any other liquidating funds, and deliver them to the state treasurer. Such payment shall escheat to the state without further legal proceedings.

Sec. 463. RCW 33.40.120 and 1988 c 202 s 34 are each amended to read as follows:

The court, upon notice and hearing, may remove the liquidator for cause. Appellate review of the order of removal may be sought as in other civil cases.

During the pendency of any appeal, the director of ((~~general administration~~)) financial institutions shall act as liquidator of the association, without giving any additional bond for the performance of the duties as such liquidator.

If such order of removal shall be affirmed, the director of ((~~general administration~~)) financial institutions shall name another liquidator for the association, which nominee, upon qualifying as required for receivers generally, shall succeed to the position of liquidator of the association.

Sec. 464. RCW 33.40.130 and 1982 c 3 s 73 are each amended to read as follows:

Savings deposits received by an association, during a period or periods of postponement of payment of withdrawals or of acute business depression, panic or economic emergency under authorization or declaration of the ((~~supervisor~~)) director as hereinbefore provided, shall be repaid to the depositors paying in such savings before any liquidation dividends shall be declared or paid if, during such period or periods or at the expiration thereof, the ((~~supervisor~~)) director takes charge of the association for liquidation, as provided in this title.

Sec. 465. RCW 33.40.150 and 1985 c 239 s 2 are each amended to read as follows:

(1) The ((~~supervisor of savings and loans~~)) director of financial institutions, after exercising the authority granted in RCW 33.16.040, may appoint provisional officers and directors, in whole or in part, of an association.

(2) Notice of the appointment shall be served upon the association, and the appointment shall take effect immediately and shall remain in effect until a successor is chosen in accordance with the association's bylaws.

Sec. 466. RCW 33.43.010 and 1982 c 3 s 74 are each amended to read as follows:

Any domestic association may convert itself into a federal mutual or stock savings and loan association. Any such conversion shall be effected by the vote of a majority in amount of the members present, in person or by proxy, at any regular or special meeting of the members called for such purpose. Notice of such meeting, stating the purpose thereof, shall be given the ((~~supervisor~~)) director at least thirty days prior to the meeting and to the members pursuant to the provisions contained in RCW 33.20.010.

If such conversion be authorized by the members at the meeting, the directors of the association are authorized and shall effect such action, and the officers of the association shall execute all proper conveyances, documents, and other papers necessary or proper thereunto.

If conversion be authorized, a copy of the minutes of the meeting shall be filed forthwith with the ((~~supervisor~~)) director.

Upon consummation of such conversion, the successor federal savings and loan association shall succeed to all right, title, and interest of the domestic association in and to its assets, and to its liabilities to the creditors and members of the association. Upon such conversion, after the execution and delivery of all instruments of transfer, conveyance and assignment, the domestic association shall be deemed dissolved.

Sec. 467. RCW 33.44.020 and 1982 c 3 s 75 are each amended to read as follows:

Any association organized under the laws of this state, or under the laws of the United States, may, if it has obtained the approval, required by law or regulation, of any federal agencies, including the federal home loan bank board and the federal savings and loan insurance corporation, be converted into a savings bank or commercial bank in the following manner:

(1) The board of directors of such association shall pass a resolution declaring its intention to convert the association into a savings bank or commercial bank and shall apply to the ((~~supervisor of banking~~)) director of financial institutions for leave to submit to the members of the association the question whether the association shall be converted into a savings bank or a commercial bank. A duplicate of the application to the ((~~supervisor of banking~~)) director of financial institutions shall be filed with the ((~~supervisor of savings and loan associations~~)) director of financial institutions, except that no such filing shall be required in the case of an association organized under the laws of the United States. The application shall include a proposal which sets forth the method by and extent to which membership or stockholder interests, as the case may be, in the association are to be converted into membership or stockholder interests, as the case may be, in the savings bank or commercial bank, and the proposal shall allow for any member or stockholder to withdraw the value of his or her interest at any time within sixty days of the completion of the conversion. The proposal shall be subject to the approval of the ((~~supervisor of banking~~)) director of financial institutions and shall conform to all applicable regulations of the federal home loan bank board, the federal savings and loan insurance corporation, the federal deposit insurance corporation, or other federal regulatory agency.

(2) Thereupon the ((~~supervisor of banking~~)) director of financial institutions shall make the same investigation and determine the same questions as would be required by law to make and determine in case of the submission to the ((~~supervisor of banking~~)) director of financial institutions of a certificate of incorporation of a proposed new savings bank or commercial bank, and the ((~~supervisor of banking~~)) director of financial institutions shall also determine ((~~after conference with the supervisor of savings and loan associations~~)) whether by the proposed conversion the business needs and conveniences of the members of the association would be served with facility and safety, except that no such conference shall be pertinent to such investigation or determination in the case of an association organized under the laws of the United States. After the ((~~supervisor of banking~~)) director of financial institutions determines whether it is expedient and desirable to permit the proposed conversion, the ((~~supervisor of banking~~)) director of financial institutions shall, within sixty days after the filing of the application, endorse thereon over the official signature of the ((~~supervisor of banking~~)) director of financial institutions the word "granted" or the word "refused", with the date of such endorsement and shall immediately notify the secretary of such association of his or her decision. If an application to convert to a mutual savings bank is granted, the ((~~supervisor of banking~~)) director of financial institutions shall require the applicants to enter into such an agreement or undertaking with the ((~~supervisor of banking~~)) director of financial institutions as trustee for the depositors with the mutual savings bank to make such contributions in cash to the expense fund of the mutual savings bank as in the ((~~supervisor's~~)) director of financial institutions judgment will be necessary then and from time to time thereafter to pay the operating expenses of the mutual savings bank if its earnings should not be sufficient to pay the same in addition to the payment of such dividends as may be declared and credited to depositors from its earnings.

If the application is denied by the ((~~supervisor of banking~~)) director of financial institutions, the association, acting by a two-thirds majority of its board of directors, may, within thirty days after receiving the notice of the denial, appeal to the superior court in the manner prescribed in RCW 34.05.570.

(3) If the application is granted by the ((~~supervisor of banking~~)) director of financial institutions or by the court, as the case may be, the board of directors of the association shall, within sixty days thereafter, submit the question of the proposed conversion to the members of the association at a special meeting called for that purpose. Notice of the meeting shall state the time, place and purpose of the meeting, and that the only question to be voted upon will be, "shall the (naming the association) be converted into a savings bank or commercial bank under the laws of the state of Washington?" The vote on the question shall be by ballot. Any member may vote by proxy or may transmit the member's ballot by mail if the bylaws provide a method for so doing. If two-thirds or more in number of the members voting on the question vote affirmatively, then the board of directors shall have power, and it shall be its duty, to proceed to convert such association into a savings bank or commercial bank; otherwise, the proposed conversion shall be abandoned and shall not be again submitted to the members within three years from the date of the meeting.

(4) If authority for the proposed conversion has been approved by the members as required by this section, the directors shall, within thirty days thereafter, subscribe and acknowledge and file with the ((~~supervisor of banking~~)) director of financial institutions in triplicate a certificate of reincorporation, stating:

(a) The name by which the converted corporation is to be known.

(b) The place where the bank is to be located and its business transacted, naming the city or town and county, which city or town shall be the same as that where the principal place of business of the corporation has theretofore been located.

(d) The amount of the assets of the corporation, the amount of its liabilities and the amount of its contingent, reserve, expense, and guaranty fund, as applicable, as of the first day of the then calendar month.

(e) A declaration that each signer will accept the responsibilities and faithfully discharge the duties of a trustee or director of the bank, and is free from all the disqualifications specified in the laws applicable to savings banks or commercial banks.

(f) Such other items as the ((~~supervisor of banking~~)) director of financial institutions may require.

(5) Upon the filing of the certificate in triplicate, the ((~~supervisor of banking~~)) director of financial institutions shall, within thirty days thereafter, if satisfied that all the provisions of this chapter have been complied with, issue in triplicate an authorization certificate stating that the corporation has complied with all the requirements of law, and that it has authority to transact at the place designated in its certificate of incorporation the business of a savings bank or commercial bank. One of the ((~~supervisor's~~)) director of financial institutions certificates of authorization shall be attached to each of the certificates of reincorporation, and one set of these shall be filed and retained by the ((~~supervisor of banking~~)) director of financial institutions, one set shall be filed in the office of the secretary of state, and one set shall be transmitted to the bank for its files. Upon the receipt from the corporation of the same fees as are required for filing and recording other incorporation certificates or articles, the secretary of state shall file the certificates and record the same; whereupon the conversion of the association shall be deemed complete, and the signers of said reincorporation certificate and their successors shall thereupon become and be a corporation having the powers and being subject to the duties and obligations prescribed by the laws of this state applicable to savings banks or commercial banks, as the case may be. The time of existence of the corporation shall be perpetual unless provided otherwise in the articles of incorporation of the association or unless sooner terminated pursuant to law.

Sec. 468. RCW 33.44.090 and 1982 c 3 s 77 are each amended to read as follows:

All mortgages, notes and other securities of any association that has been converted into a savings bank or commercial bank, shall on request of the bank, be delivered to it by the ((~~supervisor of savings and loan associations~~)) director of financial institutions or under the ((~~supervisor's~~)) director's direction by any depositary having possession thereof. Every such bank shall, as soon as practicable and within such time and by such methods as the ((~~supervisor of banking~~)) director may direct, cause its organization, its securities and investments, the character of its business and its methods of transacting the same to conform to the laws applicable to savings banks or commercial banks, as applicable.

Sec. 469. RCW 33.44.125 and 1982 c 3 s 78 are each amended to read as follows:

If, in the opinion of the ((~~supervisor of savings and loans and the supervisor of banking~~)) director of financial institutions, it is necessary for any of the requirements of this chapter to be waived in order to permit an association which is in danger of failing to convert its charter to that of a commercial bank or a savings bank so that the association may be acquired by a commercial bank or a savings bank or a bank holding company, then the ((~~supervisor of savings and loans and the supervisor of banking~~)) director may waive any such requirement.

Sec. 470. RCW 33.44.130 and 1982 c 3 s 79 are each amended to read as follows:

The ((~~supervisor of savings and loan associations and the supervisor of banking~~)) director of financial institutions shall adopt such rules under the administrative procedure act, chapter 34.05 RCW, as are necessary to implement this chapter in a manner which protects the relative interests of members, depositors, borrowers, stockholders, and creditors.

Sec. 471. RCW 33.46.020 and 1982 c 3 s 81 are each amended to read as follows:

Any bank may be converted into an association in the following manner:

(1) The trustees or directors of the bank shall pass, by at least a two-thirds favorable vote of all trustees or directors, a resolution declaring its intention to convert the bank into an association, specifying in such resolution the type of association and whether the association is to be organized under the laws of this state, or is to be organized under the laws of the United States of America. If the association is to be a state association the bank shall apply to the ((~~supervisor of savings and loan associations~~)) director of financial institutions for authority to convert into an association. The application shall include a proposal which sets forth the method by and extent to which membership or stockholder interests, as the case may be, in the bank are to be converted into membership or shareholder interest, as the case may be, in the association, and the proposal shall allow for any member or stockholder to withdraw the value of his or her interest at any time within sixty days of the completion of the conversion. The proposal is subject to the approval of the ((~~supervisor of savings and loans~~)) director of financial institutions and shall conform to all applicable regulations of the federal deposit insurance corporation, the federal home loan bank board, the federal savings and loan insurance corporation, or other federal regulatory agency.

(2) ((A duplicate of the application made to the supervisor of savings and loan associations, or such application as may be filed with the federal home loan bank board or other federal agency, shall be filed with the supervisor of banking.

~~(3)~~)) The ((~~supervisor of savings and loan associations~~)) director of financial institutions shall, in the case of an application to convert into a state association, make the same investigation and determine the same questions as he or she would be required by law to make in determining the case of submission to him or her of articles of incorporation of a proposed new state association, and shall also determine((~~, after conference with the supervisor of banking,~~)) whether the proposed conversion would serve the needs and conveniences of the depositors of the bank.

(4) The ((~~supervisor of savings and loan associations~~)) director of financial institutions shall grant or deny the application within sixty days of its date of filing and shall immediately notify the secretary of the bank of the decision.

Sec. 472. RCW 33.46.030 and 1982 c 3 s 82 are each amended to read as follows:

If the application to become a domestic mutual association is granted, the ((~~supervisor of savings and loan associations~~)) director of financial institutions shall require the applicant to enter into an agreement or undertaking with the ((~~supervisor~~)) director, as trustee for the members of the association, to make such cash contributions to an expense fund of the mutual association as in the ((~~supervisor's~~)) director's judgment will be necessary then and from time to time thereafter to pay the operating expenses of the association if its earnings should not be sufficient to pay the same in addition to the payment of such dividends as may be declared and credited to members from its earnings.

Sec. 473. RCW 33.46.040 and 1982 c 3 s 83 are each amended to read as follows:

If the application is denied by the ((~~supervisor of savings and loan associations~~)) director of financial institutions, the bank, acting by a two-thirds majority of its trustees or directors, may, within thirty days after receiving notice of such denial, appeal to the superior court of Thurston county pursuant to the provisions of the administrative procedure act, chapter 34.05 RCW.

Sec. 474. RCW 33.46.050 and 1982 c 3 s 84 are each amended to read as follows:

If the application is granted by the ((~~supervisor of savings and loan associations~~)) director of financial institutions, or by the court, the trustees or directors of the bank shall, within thirty days thereafter, subscribe, acknowledge, and file with the ((~~supervisor of savings and loan associations~~)) director of financial institutions, in triplicate, a certificate of reincorporation stating:

(1) The name by which the association is to be known;

(2) The place where the association is to be located and its business transacted, naming the city or town and the county, which city or town shall be the same as that where the principal place of business of the bank has theretofore been located;

(3) The name, occupation, residence, and post office address of each signer of the certificate;

(4) The amount of the assets of the association, the amount of its liabilities, and the amount of its contingent, expense, or guaranty fund, as applicable, as of the first day of the calendar month during which the certificate is filed; and

(5) A declaration that each signer will accept the responsibilities and faithfully discharge the duties of a director of the association, and is free from all the disqualifications specified in the laws applicable to savings and loan associations.

Sec. 475. RCW 33.46.060 and 1982 c 3 s 85 are each amended to read as follows:

Upon filing the certificate in triplicate as provided in RCW 33.46.050, the ((~~supervisor of savings and loan associations~~)) director of financial institutions shall, within thirty days thereafter, if satisfied that all the provisions of this chapter have been complied with, issue in triplicate an authorization certificate stating that the association has complied with all of the requirements of law, and that it has authority to transact, at the place or places designated in its certificate, the business of an association. The ((~~supervisor of savings and loan associations~~)) director of financial institutions shall retain one set of the triplicate originals of the certificate of reincorporation and of the certificate of authorization and shall transmit the other two sets to the association, which shall retain one set, and file one set with the secretary of state, paying the required fees. Upon such filings being made, the conversion of the bank to the association shall be deemed complete and consummated, and the association shall thereupon be a corporation having the powers and being subject to the duties and obligations prescribed by the laws of this state applicable to state associations, and the time of existence of such association shall be perpetual, unless sooner terminated.

Sec. 476. RCW 33.46.080 and 1982 c 3 s 87 are each amended to read as follows:

All mortgages, notes, and other securities of any bank that has been converted into an association shall, on request of the association, be delivered to it by the ((~~supervisor of banking~~)) director of financial institutions or, under the direction of the ((~~supervisor of banking~~)) director, by any depository having possession thereof. If the association is a state association it shall, as soon as practicable and within such time and by such methods as the ((~~supervisor of savings and loan associations~~)) director may direct, cause its organization, its securities and investments, the character of its business, and its methods of transacting the same to conform to the laws applicable to state associations.

Sec. 477. RCW 33.46.130 and 1982 c 3 s 90 are each amended to read as follows:

Sec. 478. RCW 33.48.100 and 1982 c 3 s 96 are each amended to read as follows:

A domestic stock association may convert to a domestic mutual association under the provisions of applicable statutes and regulations of proper federal and state supervisory authorities. In the event of compliance with such statutes and regulations an appraisal of the stock shall be made by the ((~~supervisor~~)) director, upon written request of the directors of the association, and the appropriate value of the stock may be given consideration in the proceedings to convert by giving credit to such stock from surplus and other reserves.

Sec. 479. RCW 33.48.110 and 1982 c 3 s 97 are each amended to read as follows:

Any mutual association, either domestic or federal, operating in the state of Washington may convert itself into a domestic stock association. The conversion shall be effected by the vote of two-thirds of the members present and voting in person or by proxy at any regular or special meeting of the members called for such purpose. Notice of such meeting, stating the purpose thereof, shall be given to the ((~~supervisor~~)) director and to each member by mailing notice to the member's last known address at least thirty days prior to the meeting.

At the meeting, the members may adopt a resolution amending its articles of incorporation and bylaws to provide for operation under this chapter as a stock association.

Upon adoption of the resolution, members shall be given notice of the proposed change and shall be offered, for a period of sixty days following the date of the meeting, the right to subscribe for the proposed stock, pro rata to their deposits in such mutual association, and such right shall be transferable. In the event that the total stock required has not, at the end of the sixty day period, been fully subscribed, the unsubscribed portion shall be offered to any former subscribers for such stock.

When the stock has been fully subscribed and paid for, certified copies of the documents relating to the conversion shall be submitted to the ((~~supervisor~~)) director for his or her approval of the conversion proceedings. Upon notification by the ((~~supervisor~~)) director that the ((~~supervisor~~)) director approves the conversion, the directors shall adopt a resolution declaring the association to be a stock association and thereafter it shall be such.

The ((~~supervisor~~)) director shall adopt such rules under chapter 34.05 RCW, the administrative procedure act, as are necessary to implement this section in a manner which protects the relative interests of members, depositors, borrowers, stockholders, and creditors.

Sec. 480. RCW 33.48.130 and 1955 c 122 s 14 are each amended to read as follows:

The directors of an association which has voted to amend its charter or convert to another type of institution, may withdraw the application at any time prior to the issuance of the amended charter, by adopting a proper resolution and forwarding a copy to the ((~~supervisor~~)) director.

Sec. 481. RCW 33.48.150 and 1973 c 130 s 6 are each amended to read as follows:

No subscriptions or funds from proposed stockholders of any proposed association, prior to its incorporation and prior to a decision by the ((~~supervisor~~)) director on its application for approval of its articles of incorporation, may be solicited or taken until a verified application for an organizing permit has been filed and a permit has been issued by the ((~~supervisor~~)) director authorizing such subscription or collection of funds and then, only in accordance with the terms of such permit.

Sec. 482. RCW 33.48.160 and 1973 c 130 s 7 are each amended to read as follows:

The application for an organizing permit under RCW 33.48.150 shall be in writing, verified as provided by law for the verification of pleadings and shall be filed in the office of the ((~~supervisor~~)) director. Such application shall be signed by the proposed incorporators and shall include the following:

(1) The names and addresses of its proposed directors, officers and incorporators, to the extent known;

(2) The proposed location of its office;

(3) A copy of any contract proposed to be used for the solicitation of stock subscriptions and funds for its preincorporation expenses;

(4) A copy of any advertisement, circular, or other written matter proposed to be used for soliciting stock subscriptions and funds for its preincorporation expenses;

(5) A statement of the total funds proposed to be solicited and collected prior to incorporation and an itemized estimate of the preincorporation expenses proposed to be paid;

(6) A list of the names and addresses and amounts of each of the known proposed stockholders and contributors to the fund for preincorporation expenses; and

(7) Such additional information as the ((~~supervisor~~)) director may require.

Sec. 483. RCW 33.48.170 and 1982 c 3 s 100 are each amended to read as follows:

The ((~~supervisor~~)) director may impose conditions in the ((~~supervisor's~~)) director's organizing permit issued under RCW 33.48.150 concerning the deposit in escrow of funds collected pursuant to said permit, the manner of expenditure of such funds and such other conditions as he or she deems reasonable and necessary or advisable for the protection of the public and the subscribers to such stock or funds for preincorporation expenses.

Sec. 484. RCW 33.48.180 and 1982 c 3 s 101 are each amended to read as follows:

No association shall sell, take subscriptions for, or issue any stock until the association applies for and secures from the ((~~supervisor~~)) director a permit authorizing it to sell stock.

This section does not apply to an offering involving less than five hundred thousand dollars nor to an offering made under a registration statement filed under the federal securities act of 1933 (48 Stat. 74; 15 U.S.C. Sec. 77a).

Sec. 485. RCW 33.48.190 and 1973 c 130 s 9 are each amended to read as follows:

No issued and outstanding stock of an association shall be sold or offered for sale to the public, nor shall subscriptions be solicited or taken for such sales until the association or the selling stockholders have applied for and secured from the ((~~supervisor~~)) director a permit authorizing the sale of the guaranty stock.

This section shall not apply to an offering involving less than ten percent of the issued and outstanding guaranty stock of an association and less than five hundred thousand dollars nor to an offering made under a registration statement filed under the Securities Act of 1933 (48 Stat. 74; 15 U.S.C. Sec. 77a).

Sec. 486. RCW 33.48.200 and 1982 c 3 s 102 are each amended to read as follows:

An application for a permit to sell stock shall be in writing and shall be filed in the office of the ((~~supervisor~~)) director by the association.

The application shall include the following:

(1) Regarding the association:

(a) The names and addresses of its officers;

(b) The location of its office;

(d) A copy of all minutes of any proceedings of its directors, shareholders, or stockholders relating to or affecting the issue of such stock;

(2) Regarding the offering:

(a) The names and addresses of the selling stockholders and of the officers of any selling corporation and the partners of any selling partnership;

(b) A copy of any contract concerning the sale of the stock;

(c) A copy of a prospectus or advertisement or other description of the stock prepared for distribution or publication in accordance with requirements prescribed by the ((~~supervisor~~)) director;

(d) A brief description of the method by which the stock is to be offered for sale including the offering price and the underwriting commissions and expense, if any; and

(3) Such additional information as the ((~~supervisor~~)) director may require.

Sec. 487. RCW 33.48.210 and 1982 c 3 s 103 are each amended to read as follows:

Upon the filing of the application for a permit to sell stock, the ((~~supervisor~~)) director shall examine the application and other papers and documents filed therewith and he or she may make a detailed examination, audit, and investigation of the association and its affairs. If the ((~~supervisor~~)) director finds that the proposed plan for the issue and sale of such stock is fair, just and equitable, the ((~~supervisor~~)) director shall issue to the applicant a permit authorizing it to issue and dispose of its stock in such amounts and for such considerations and upon such terms and conditions as the ((~~supervisor~~)) director may provide in the permit. If the ((~~supervisor~~)) director does not so find he or she shall deny the application and notify the applicant in writing of his or her decision.

Sec. 488. RCW 33.48.230 and 1982 c 3 s 105 are each amended to read as follows:

With respect to sales of stock by an association, the ((~~supervisor~~)) director may impose conditions requiring the impoundment of the proceeds from the sale of stock, limiting the expense in connection with the sale of such stock, and other conditions as he or she deems reasonable and necessary or advisable to insure the disposition of the proceeds from the sale of such stock in the manner and for the purposes provided in the permit.

Sec. 489. RCW 33.48.240 and 1982 c 3 s 106 are each amended to read as follows:

The ((~~supervisor~~)) director may amend, alter, suspend, or revoke any permit issued under RCW 33.48.150 if there is a violation of the terms and conditions of the permit or if the ((~~supervisor~~)) director determines that the subscription or proposed issue and sale is no longer fair, just, and equitable.

Sec. 490. RCW 33.48.250 and 1985 c 239 s 3 are each amended to read as follows:

An association may purchase stock issued by it in an amount not to exceed the amount of earned surplus or undivided profits available for dividends on its stock if: The stock so purchased is included for federal estate tax purposes in determining the gross estate of a decedent, and the amount paid for such purchase is entitled to be treated under section 303 of the Internal Revenue Code of 1954 (68A Stat. 3; 26 U.S.C. Sec. 1), or other applicable federal statute or the corresponding provision of any future federal revenue law, as a distribution in full payment in exchange for the stock so purchased, or such purchase is with the prior consent of the ((~~supervisor~~)) director, or such purchase is pursuant to a put option contained in a plan which has been approved by the ((~~supervisor~~)) director establishing an employee stock ownership plan for the association and its employees pursuant to the provisions of the act of congress entitled "Employee Retirement Income Security Act of 1974", as now constituted or hereafter amended, or Section 409 of the Internal Revenue Code of 1954, as now constituted or hereafter amended. Stock so purchased until sold shall be carried as treasury stock. Upon the purchase of any stock issued by the association, an amount equal to the purchase price shall be set aside from earned surplus or undivided profits available for dividends to a specific reserve account established for this purpose. Upon sale of any of such stock, the amount relating thereto in the specific reserve account shall be returned to the surplus or undivided profits account (as the case may be) and shall be available for dividends. Reacquired stock shall not be resold at less than its reacquisition cost, without the specific approval of the ((~~supervisor~~)) director, and shall not be resold or reissued except in accordance with RCW 33.48.220 through 33.48.240.

Sec. 491. RCW 33.48.260 and 1982 c 3 s 108 are each amended to read as follows:

With the prior consent of the ((~~supervisor~~)) director, the stock of an association may be reduced by resolution of the board of directors approved by the vote or written consent of the holders of a majority in amount of the outstanding stock of the association to such amount as the ((~~supervisor~~)) director approves.

Sec. 492. RCW 33.48.280 and 1982 c 3 s 110 are each amended to read as follows:

An association may, by action of its board of directors and with the prior approval of the ((~~supervisor~~)) director, apply any part or all of any paid-in or contributed surplus or any surplus created by reduction of stock to the reduction or writing off of any deficit arising from losses or diminution in value of its assets, or may transfer to or designate as a part of its federal insurance account or any other reserve account irrevocably established for the sole purpose of absorbing losses, any part or all of any paid-in or contributed surplus or any surplus created by reduction of stock.

Sec. 493. RCW 33.48.320 and 1982 c 3 s 112 are each amended to read as follows:

If, in the opinion of the ((~~supervisor~~)) director, it is necessary for any of the requirements of this chapter to be waived in order to permit an association which is in danger of failing to convert its charter from a mutual association to a stock association or from a stock association to a mutual association so that the association may be acquired by an association or a savings and loan holding company, then the ((~~supervisor~~)) director may waive any such requirement.

Sec. 494. RCW 39.58.010 and 1984 c 177 s 10 are each amended to read as follows:

In this chapter, unless the context otherwise requires:

(1) "Public funds" means moneys under the control of a treasurer or custodian belonging to, or held for the benefit of, the state or any of its political subdivisions, municipal corporations, agencies, courts, boards, commissions, or committees, including moneys held as trustee, agent, or bailee;

(2) "Qualified public depositary," "public depositary," or "depositary" means a financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has been approved by the commission to hold public deposits, and which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability. Addition of the word "bank" denotes a bank, trust company, or national banking association and the word "thrift" denotes a savings and loan association, mutual savings bank, or stock savings bank;

(3) "Loss" means the issuance of an order by a regulatory or supervisory authority or a court of competent jurisdiction (a) restraining a qualified public depositary from making payments of deposit liabilities or (b) appointing a receiver for a qualified public depositary;

(4) "Commission" means the Washington public deposit protection commission created under RCW 39.58.030;

(5) "Eligible collateral" means securities which are enumerated in RCW 39.58.050(5) and (6) as eligible collateral for public deposits;

(6) The "maximum liability" of a qualified public depositary on any given date means a sum equal to ten percent of (a) all public deposits held by the qualified public depositary on the then most recent commission report date, or (b) the average of the balances of said public deposits on the last four immediately preceding reports required pursuant to RCW 39.58.100, whichever amount is greater, less any assessments paid to the commission pursuant to this chapter since the then most recent commission report date;

(7) "Public funds available for investment" means such public funds as are in excess of the anticipated cash needs throughout the duration of the contemplated investment period;

(8) "Investment deposits" means time deposits and savings deposits of public funds available for investment;

(9) "Treasurer" shall mean the state treasurer, a county treasurer, a city treasurer, a treasurer of any other municipal corporation, and the custodian of any other public funds;

(10) "Financial institution" means a branch of a bank engaged in banking in this state in accordance with RCW 30.04.300, and any state bank or trust company, national banking association, stock savings bank, mutual savings bank, or savings and loan association located in this state and lawfully engaged in business;

(11) "Commission report" means a formal accounting rendered by all qualified public depositaries to the commission in response to a demand for specific information made upon all depositaries by the commission detailing pertinent affairs of each depositary as of the close of business on a specified date, which is the "commission report date." "Commission report due date" is the last day for the timely filing of a commission report;

(12) ((~~"Supervisor" means either the supervisor of banks or the supervisor of savings and loan associations or both depending upon context and usage in accordance with applicable statutory authority~~)) "Director" means the director of financial institutions;

(13) "Net worth" of a depositary means (a) for a bank depositary, the aggregate of capital, surplus, undivided profits and all capital notes and debentures which are subordinate to the interest of depositors, and (b) for a thrift depositary, the aggregate of such capital stock, guaranty fund, general reserves, surplus, undivided profits, and capital notes and debentures which are subordinate to the interest of depositors, as are eligible for inclusion in otherwise determining the net worth of a mutual savings bank, stock savings bank, or savings and loan association.

Sec. 495. RCW 43.19.015 and 1984 c 29 s 2 are each amended to read as follows:

The director of ((~~general administration~~)) financial institutions shall have the power and duties of the director of public institutions contained in the following chapters of RCW: Chapter 33.04 RCW concerning savings and loan associations; and chapter 39.32 RCW concerning purchase of federal property.

Sec. 496. RCW 43.24.020 and 1989 1st ex.s. c 9 s 314 are each amended to read as follows:

The director of licensing shall administer all laws with respect to the examination of applicants for, and the issuance of, licenses to persons to engage in any business, profession, trade, occupation, or activity except for health professions.

((~~This shall include the administration of all laws pertaining to the regulation of securities and speculative investments.~~))

Sec. 497. RCW 43.24.024 and 1979 c 158 s 96 are each amended to read as follows:

The director of licensing may delegate to the assistant director of the business and professions administration in the department of licensing authority to promulgate rules and regulations relating to the licensing of persons engaged in businesses and professions ((~~and to the administration of laws pertaining to the regulation of securities~~)). The director may delegate the authority to issue and sign licenses, certificates, permits and renewals thereof pertaining to those activities transferred to the business and professions administration in the department of licensing pursuant to RCW 46.01.050.

Sec. 498. RCW 43.163.010 and 1989 c 279 s 2 are each amended to read as follows:

As used in this chapter, the following words and terms have the following meanings, unless the context requires otherwise:

(1) "Authority" means the Washington economic development finance authority created under RCW 43.163.020 or any board, body, commission, department or officer succeeding to the principal functions of the authority or to whom the powers conferred upon the authority shall be given by law;

(2) "Bonds" means any bonds, notes, debentures, interim certificates, conditional sales or lease financing agreements, lines of credit, forward purchase agreements, investment agreements, and other banking or financial arrangements, guaranties, or other obligations issued by or entered into by the authority. Such bonds may be issued on either a tax-exempt or taxable basis;

(3) "Borrower" means one or more public or private persons or entities acting as lessee, purchaser, mortgagor, or borrower who has obtained or is seeking to obtain financing either from the authority or from an eligible banking organization that has obtained or is seeking to obtain funds from the authority to finance a project. A borrower may include a party who transfers the right of use and occupancy to another party by lease, sublease or otherwise, or a party who is seeking or has obtained a financial guaranty from the authority;

(4) "Eligible banking organization" means any organization subject to regulation by the ((~~state supervisor of banking or the state supervisor of savings and loans~~)) director of financial institutions, any national bank, federal savings and loan association, and federal credit union located within this state;

(5) "Eligible export transaction" means any preexport or export activity by a person or entity located in the state of Washington involving a sale for export and product sale which, in the judgment of the authority: (a) Will create or maintain employment in the state of Washington, (b) will obtain a material percent of its value from manufactured goods or services made, processed or occurring in Washington, and (c) could not otherwise obtain financing on reasonable terms from an eligible banking organization;

(6) "Eligible farmer" means any person who is a resident of the state of Washington and whose specific acreage qualifying for receipts from the federal department of agriculture under its conservation reserve program is within the state of Washington;

(7) "Financing document" means an instrument executed by the authority and one or more persons or entities pertaining to the issuance of or security for bonds, or the application of the proceeds of bonds or other funds of, or payable to, the authority. A financing document may include, but need not be limited to, a lease, installment sale agreement, conditional sale agreement, mortgage, loan agreement, trust agreement or indenture, security agreement, letter or line of credit, reimbursement agreement, insurance policy, guaranty agreement, or currency or interest rate swap agreement. A financing document also may be an agreement between the authority and an eligible banking organization which has agreed to make a loan to a borrower;

(8) "Plan" means the general plan of economic development finance objectives developed and adopted by the authority, and updated from time to time, as required under RCW 43.163.090.

Sec. 499. RCW 43.163.110 and 1989 c 279 s 12 are each amended to read as follows:

Notwithstanding any other provision of this chapter, the authority shall not:

(1) Give any state money or property or loan any state money or credit to or in aid of any individual, association, company, or corporation, or become directly or indirectly the owner of any stock in or bonds of any association, company, or corporation;

(2) Issue bills of credit or accept deposits of money for time or demand deposit, administer trusts, engage in any form or manner in, or in the conduct of, any private or commercial banking business, or act as a savings bank or savings and loan association other than as provided in this chapter;

(3) Be or constitute a bank or trust company within the jurisdiction or under the control of the ((~~division of banking of the state~~)) director of financial institutions, the comptroller of the currency of the United States of America or the treasury department thereof;

(4) Be or constitute a bank, broker or dealer in securities within the meaning of, or subject to the provisions of, any securities, securities exchange or securities dealers' law of the United States of America or the state;

(5) Engage in the financing of housing as provided for in chapter 43.180 RCW;

(6) Engage in the financing of health care facilities as provided for in chapter 70.37 RCW; or

(7) Engage in financing higher education facilities as provided for in chapter 28B.07 RCW.

Sec. 500. RCW 46.01.011 and 1979 c 158 s 113 are each amended to read as follows:

The legislature finds that the department of licensing administers laws relating to the licensing and regulation of professions, businesses, ((~~securities,~~)) gambling, and other activities in addition to administering laws relating to the licensing and regulation of vehicles and vehicle operators, dealers, and manufacturers. The laws administered by the department have the common denominator of licensing and regulation and are directed toward protecting and enhancing the well-being of the residents of the state.

Sec. 501. RCW 46.01.050 and 1979 c 158 s 116 are each amended to read as follows:

All powers, functions and duties vested by law in the division of professional licensing in the department of licensing on August 9, 1969, other than those enumerated in RCW 46.01.040, shall be transferred to the business and professions administration hereby created consisting of the divisions of ((~~securities,~~)) real estate((,)) and professional licensing, within the department of licensing.

Sec. 502. RCW 48.18A.060 and 1973 1st ex.s. c 163 s 7 are each amended to read as follows:

No person shall be or act as an agent for the solicitation or sale of variable contracts except while duly appointed and licensed under the insurance code as a life insurance agent with respect to the insurer, and while duly licensed as a security salesman or securities broker under a license issued by the ((~~administrator of securities~~)) director of financial institutions pursuant to the securities act of this state; except that any person who participates only in the sale or offering for sale of variable contracts which fund corporate plans meeting the requirements for qualification under sections 401 or 403 of the United States internal revenue code need not be licensed pursuant to the securities act of this state.

Sec. 503. RCW 48.18A.070 and 1969 c 104 s 7 are each amended to read as follows:

Notwithstanding any other provision of law, the commissioner shall have sole and exclusive authority to regulate the issuance and sale of variable contracts; except for the examination, issuance or renewal, suspension or revocation, of a security salesman's license issued to persons selling variable contracts. To carry out the purposes and provisions of this chapter he or she may independently, and in concert with the ((~~state securities administrator~~)) director of financial institutions, issue such reasonable rules and regulations as may be appropriate.

Sec. 504. RCW 58.19.030 and 1979 c 158 s 209 are each amended to read as follows:

(1) Unless the method of disposition is adopted for the purpose of evasion of this chapter, the provisions of this chapter shall not apply to land and offers or dispositions:

(a) By a purchaser of developed lands for his or her own account in a single or isolated transaction;

(b) If fewer than ten separate lots, parcels, units, or interests in developed lands are offered by a person in a period of twelve months;

(d) On which there is a residential, commercial, or industrial building, or as to which there is a legal obligation on the part of the seller to construct such a building within two years from date of disposition;

(e) To any person who acquires such lot, parcel, unit or interest therein for the purpose of engaging in the business of constructing residential, commercial, or industrial buildings or for the purpose of resale or lease or other disposition of such lots to persons engaged in such business or businesses;

(f) Any lot, parcel, unit or interest if the development is located within an area incorporated prior to January 1, 1974;

(g) Pursuant to court order; or

(h) As cemetery lots or interests.

(2) Unless the method of disposition is adopted for the purpose of evasion of this chapter, the provisions of this chapter shall not apply to:

(a) Offers or dispositions of evidence of indebtedness secured by a mortgage or deed of trust of real estate;

(b) Offers or dispositions of securities or units of interest issued by a real estate investment trust regulated under any state or federal statute;

(c) A development as to which the director has waived the provisions of this chapter ((~~as provided in RCW 58.19.040~~));

(d) Offers or dispositions of securities currently registered with the ((~~business and professions administration in the~~)) department of ((~~licensing~~)) financial institutions;

(e) Offers or dispositions of any interest in oil, gas, or other minerals or any royalty interest therein if the offers or dispositions of such interests are regulated as securities by the United States or by the ((~~business and professions administration in the~~)) department of ((~~licensing~~)) financial institutions.

Sec. 505. RCW 70.37.020 and 1989 c 65 s 1 are each amended to read as follows:

As used in this chapter, the following words and terms have the following meanings, unless the context indicates or requires another or different meaning or intent and the singular of any term shall encompass the plural and the plural the singular unless the context indicates otherwise:

(1) "Authority" means the Washington health care facilities authority created by RCW 70.37.030 or any board, body, commission, department or officer succeeding to the principal functions thereof or to whom the powers conferred upon the authority shall be given by law.

(2) "Bonds" mean bonds, notes or other evidences of indebtedness of the authority issued pursuant hereto.

(3) "Health care facility" means any land, structure, system, machinery, equipment or other real or personal property or appurtenances useful for or associated with delivery of inpatient or outpatient health care service or support for such care or any combination thereof which is operated or undertaken in connection with hospital, clinic, health maintenance organization, diagnostic or treatment center, extended care facility, or any facility providing or designed to provide therapeutic, convalescent or preventive health care services, and shall include research and support facilities of a comprehensive cancer center, but excluding, however, any facility which is maintained by a participant primarily for rental or lease to self-employed health care professionals or as an independent nursing home or other facility primarily offering domiciliary care.

(4) "Participant" means any city, county or other municipal corporation or agency or political subdivision of the state or any corporation, hospital, comprehensive cancer center, or health maintenance organization authorized by law to operate nonprofit health care facilities, or any affiliate, as defined by regulations promulgated by the director of the department of ((~~licensing~~)) financial institutions pursuant to RCW 21.20.450, which is a nonprofit corporation acting for the benefit of any entity described in this subsection.

(5) "Project" means a specific health care facility or any combination of health care facilities, constructed, purchased, acquired, leased, used, owned or operated by a participant, and alterations, additions to, renovations, enlargements, betterments and reconstructions thereof.