PERMANENT RULES
FINANCIAL INSTITUTIONS
Date of Adoption: August 22, 2000.
Purpose: Housekeeping changes and recodifying Title 50 WAC as a chapter of Title 208 WAC.
Citation of Existing Rules Affected by this Order: Amending Title 50 WAC.
Statutory Authority for Adoption: RCW 30.04.030 and 43.320.040.
Adopted under notice filed as WSR 00-13-101 on June 21, 2000 (published on July 5, 2000).
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 7, Amended 57, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 7, Amended 57, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0. Effective Date of Rule: Thirty-one days after filing.
August 22, 2000
John L. Bley
Director
OTS-4090.2
AMENDATORY SECTION(Amending Order 2, filed 12/23/68)
WAC 50-12-030
Definitions and characterization of time
deposits.
The term "time deposits" means "time certificates of deposit" and, "time deposits, open account," as defined below.
(1) Time certificates of deposit. The term "time certificate of deposit" means a deposit evidenced by a negotiable or nonnegotiable instrument which provides on its face that the amount of such deposit is payable:
(a) On a certain date, specified in the instrument, not less than thirty days after the date of the deposit; or
(b) At the expiration of a specified period not less than thirty days after the date of the instrument; or
(c) Upon written notice to be given not less than thirty days before the date of repayment.
(2) Time deposits, open account. The term "time deposit, open account," means a deposit, other than a "time certificate of deposit," with respect to which there is in force a written contract with the depositor that neither the whole nor any part of such deposit may be withdrawn, by check or otherwise, prior to the date of maturity, which shall be not less than thirty days after the date of the deposit, or prior to the expiration of the period of notice which must be given by the depositor in writing not less than thirty days in advance of withdrawals.
A time deposit is a deposit and therefore not subject to
individual bank and trust company lending limits, as proscribed
by RCW 30.04.110. However, before a bank or trust company may
deposit its funds with another bank in the form of a time
deposit, the depository bank must first be appointed a depository
by a vote of a majority of the directors of the depositing bank
and approved as a depository by the ((supervisor of banking))
director of the department of financial institutions.
If a bank acquires a time deposit with a bank that has not
been approved as a depository by the ((supervisor of banking))
director of the department of financial institutions, such
transaction shall be considered to be an investment and subject
to the bank's lending limitation.
[Order 2, § 50-12-030, filed 12/23/68.]
(1)
The ((supervisor)) director shall collect the following fees:
(a) Hourly charges for services plus actual expenses for review of application and attendant investigation for:
(i) New bank or trust company;
(ii) Conversion to a state chartered institution;
(iii) Alien bank to establish and operate an office or bureau in the state;
(iv) Certificate conferring trust powers;
(v) Branch;
(vi) A satellite facility or facilities which are to be used by its own customers or customers of another bank;
(vii) A network system of satellite facilities as defined in WAC 50-40-010(4) or modification of a previously approved network system made in accordance with WAC 50-40-060 (1) or (2);
(viii) Merger, consolidation, or reorganizational agreement;
(ix) Relocation of main office or branch;
(x) An out-of-state bank holding company acquisition and control of more than five percent of the shares of voting stock or substantially all of the assets of a bank, trust company, national banking association or bank holding company, the principal operations of which are conducted within this state;
(xi) The purchase or sale of a branch;
(xii) Voluntary or involuntary liquidation of a bank or trust company pursuant to chapter 30.44 RCW or for acting as conservator of a bank or trust company pursuant to chapter 30.46 RCW;
(xiii) Conversion from a mutual savings bank to a stock savings bank;
(xiv) Notice of change of control.
(b) Hourly charges for opinions rendered regarding interpretations of statutes and rules.
(c) $100.00 for issuing the following certificates:
(i) Branch certificate;
(ii) Increase or decrease of capital stock certificate;
(iii) Certificate of authority;
(iv) Satellite facility;
(v) Certificate of good standing;
(vi) Other.
(d) $100.00 for filing articles of incorporation, or
amendments thereof, or other certificates required to be filed
with the ((supervisor)) director.
(e) Fifty cents per page for furnishing copies of papers
filed with the ((supervisor)) director.
(2) The hourly fee for services shall be $90.00 per employee
hour expended. The ((supervisor)) director may require a lump
sum payment in advance to cover the anticipated cost of review
and investigation of the activities described in subsection
(1)(a) and (b) of this section. In no event shall the lump sum
payment required under this section exceed actual amounts derived
in subsection (1)(a) and (b) of this section.
[Statutory Authority: RCW 30.08.095. 91-18-055, § 50-12-045, filed 8/30/91, effective 9/30/91; 90-12-008, § 50-12-045, filed 5/25/90, effective 6/25/90.]
A mutual savings bank may accept or hold accounts in excess of one hundred thousand dollars on the following terms and conditions:
(1) Such accounts in the aggregate are placed in assets of similar maturity;
(2) The following records are maintained at all times with respect to each such account:
(a) The name(s) and address(es) of the depositor(s);
(b) The manner in which the account is held;
(c) The amount of the initial deposit;
(d) The contemplated time of withdrawal, if known;
(e) The interest rate; and
(f) Such other information available to the mutual savings
bank as the ((supervisor)) director may from time to time require
in order to carry out the duties of his office;
(3) A separate report maintained showing at all times the aggregate total of all such accounts accepted or held; and
(4) Asset liquidity records and controls are maintained. The ((supervisor)) director may from time to time impose such
requirements or restrictions as he deems appropriate in
connection with accepting or holding one or more such accounts,
based upon the nature and size of the account, the condition of
the mutual savings bank accepting the same, the general economic
conditions then existing, and such other factors as the
((supervisor)) director may deem relevant to the prudent
operation of the mutual savings bank accepting or holding the
account.
[Order 29, § 50-12-060, filed 10/2/75; Order 7 and Emergency Order 6, § 50-12-060, filed 1/7/70.]
In determining whether an asset of a bank, mutual savings bank or trust company is bankable all of the circumstances of the asset shall be weighed, including but not limited to the following:
(1) Character of the borrower
(2) Capacity of the borrower
(3) Capital of the borrower
(4) Collateral, sufficiency of
(5) Economic conditions pertaining to the type of business in which the borrower is engaged
(6) Conformance to general banking standards as then currently practiced in the banking industry.
If, in the examination of a bank, mutual savings bank or
trust company, an examiner finds an asset which in his opinion,
after weighing all the circumstances of the asset, is
nonbankable, the ((supervisor)) director may require that such
asset be charged off the books of the bank, mutual savings bank
or trust company.
Within fifteen days following the next meeting of the board
of directors following receipt of written notice from the
((supervisor)) director to charge off such asset, but in no event
more than forty-five days following receipt of such written
notice, the bank, mutual savings bank or trust company, shall
write the same off as an asset or file a written statement with
the ((supervisor)) director explaining why, in its opinion, the
asset should not be so treated. After considering such written
statement and within ten days after receipt thereof, the
((supervisor)) director will notify the bank in writing of his
decision as to the treatment of the asset.
[Order 9, § 50-12-070, filed 5/9/72.]
Nothing in WAC
((50-12-110, 50-12-115, or 50-12-116)) 208-512-110, 208-512-115,
or 208-512-116 shall limit the authority of a bank or trust
company to invest in corporations or entities, with the prior
authorization of the ((supervisor)) director, pursuant to RCW 30.04.___, (section 1, chapter 498, Laws of 1987).
[Statutory Authority: RCW 30.08.140. 87-24-042 (Order 71), § 50-12-117, filed 11/25/87.]
The division of ((banking))
banks, hereinafter referred to as the "division," after due and
proper notice, and pursuant to chapter 30.60 RCW hereby adopts
and promulgates the following rules and regulations, effective
January 1, 1986.
[Statutory Authority: Chapter 30.60 RCW, RCW 30.04.212 and 30.04.214. 87-02-010 (Order 66), § 50-12-120, filed 12/30/86.]
For purposes of interpreting and administering the provisions and procedures contained herein, the definitions of terms used shall be identical to the corresponding definitions set forth in the Community Reinvestment Act of 1977, Public Law 95-128, sections 801-806, 12 U.S.C. 2901, et seq. and regulations promulgated pursuant thereto; provided, these definitions are not inconsistent with the context used, or otherwise defined, in this regulation.
The term "division" means the division of ((banking)) banks
of the state of Washington. The term "supervisor" means the
((supervisor of banking)) director of the department of financial
institutions.
[Statutory Authority: Chapter 30.60 RCW, RCW 30.04.212 and 30.04.214. 87-02-010 (Order 66), § 50-12-140, filed 12/30/86.]
In connection with its examination of a bank, the division shall assess the record of performance of the bank in helping to meet the credit needs of its entire community, including low-income and moderate-income neighborhoods, consistent with safe and sound operation of the bank. The division will review the bank's Community Reinvestment Act statement(s) and any other written and signed reports, documents, or comments prepared or filed by the bank with the division, or one or more federal bank regulatory agencies, and will use this material as part of or in lieu of an investigation as set forth by RCW 30.60.010. The foregoing material, together with such additional information as may be deemed necessary and obtained by investigation performed by the division, will be considered in assessing the bank's record of performance, based upon the following factors:
(1) 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;
(2) 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;
(3) 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;
(4) Any practices intended to discourage applications for types of credit set forth in the institution's Community Reinvestment Act statement(s);
(5) The geographic distribution of the institution's credit extensions, credit applications and credit denials;
(6) Evidence of prohibited discriminatory or other illegal credit practices;
(7) The institution's record of opening and closing offices and providing services at offices;
(8) The institution's participation, including investments, in local community development projects;
(9) 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;
(10) The institution's participation in governmentally insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;
(11) The institution's ability to meet various community credit needs based on its financial condition, size, legal impediments, local economic condition, and other factors;
(12) 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.
[Statutory Authority: Chapter 30.60 RCW, RCW 30.04.212 and 30.04.214. 87-02-010 (Order 66), § 50-12-150, filed 12/30/86.]
(1) Based upon the
foregoing investigation and assessment, the ((supervisor))
director shall annually assign to the bank a numerical community
reinvestment rating based on a one through five scoring system in
accordance with RCW 30.60.010. Such numerical scores shall
represent performance assessments as follows:
| (a) | Excellent performance: | 1 |
| (b) | Good performance: | 2 |
| (c) | Satisfactory performance: | 3 |
| (d) | Inadequate performance: | 4 |
| (e) | Poor performance: | 5 |
| (a) | Excellent performance-rating (1): | 10% limitation |
| (b) | Good performance-rating (2): | 8% limitation |
| (c) | Satisfactory performance-rating (3): | 6% limitation |
| (d) | Inadequate performance-rating (4): | 3% limitation |
| (e) | Poor performance-rating (5): | no investment |
No bank may at any time be required to dispose of any investment made in accordance with this section because the bank is not then authorized to acquire such investment, if such investment was lawfully acquired by the bank at the time of acquisition.
[Statutory Authority: Chapter 30.60 RCW, RCW 30.04.212 and 30.04.214. 87-02-010 (Order 66), § 50-12-160, filed 12/30/86.]
The division 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-income and moderate-income neighborhoods in determining the approval or disapproval for the following applications:
(1) For a new branch or satellite facility;
(2) For a purchase of assets;
(3) For a merger;
(4) For an acquisition;
(5) For authority to engage in a business activity;
(6) For a conversion from a national bank to a state-chartered bank; and
(7) Such other application as the ((supervisor)) director
may consider appropriate.
The performance record need not be considered for subsections (2), (3), and (4) of this section where solvency and safety soundness of the bank is threatened. Assessment of an institution's CRA performance may be a basis for denying an application.
[Statutory Authority: Chapter 30.60 RCW, RCW 30.04.212 and 30.04.214. 87-02-010 (Order 66), § 50-12-200, filed 12/30/86.]
The division of ((banking))
banks, hereinafter referred to as the "division," after due and
proper notice, and pursuant to the provisions of RCW 30.04.111
hereby adopts and promulgates the following rules and
regulations, effective September 9, 1987.
[Statutory Authority: RCW 30.04.111. 87-20-022 (Order 69), § 50-12-210, filed 9/30/87.]
(1) 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.
(2) The term "loans and extensions of credit" means any
direct or indirect advance of funds to a person made on a basis
of any obligation of that person to repay the funds, or repayable
from specific property pledged by or on behalf of a person. "Loans and extensions of credit" also includes a "contractual
commitment to advance funds" as that term is defined in this
section, and includes a renewal, modification, or extension of
the maturity date of a loan or extension of credit. Provided,
the term "loan or extension of credit" does not include a
renewal, extension or restructuring of an existing loan, with
interest paid current and no further advance of funds, by a bank
under the direction and control of a conservator appointed by the
((supervisor)) director.
(3) The term "contractual commitment to advance funds" means:
(a) An obligation on the part of the bank to make payments (directly or indirectly) to a designated third party contingent upon a default by the bank's customer in the performance of an obligation under the terms of that customer's contract with the third party; or
(b) An obligation to guarantee or stand as surety for the benefit of a third party. The term includes, but is not limited to, standby letters of credit, guarantees, puts, and other similar arrangements. Undisbursed loan funds, loan commitments not yet drawn upon which do not fall under this definition, and commercial letters of credit or similar instruments are not considered contractual commitments to advance funds.
(4) The term "readily marketable collateral" means financial instruments and bullion which are saleable under ordinary circumstances with reasonable promptness at a fair market value determined by daily quotations based on actual transactions on an auction or a similarly available daily bid and ask price market.
(5) The term "financial instruments" shall include stocks, notes, bonds, and debentures traded on a national securities exchange, "OTC margin stocks" (as defined in Regulation U of the Federal Reserve Board), commercial paper, negotiable certificates of deposit, bankers' acceptances, and shares in money market and mutual funds of the type which issue shares in which banks may perfect a security interest.
(6) The term "current market value" means the bid or closing price listed for an item in a regularly published listing or an electronic reporting service.
(7) The term "capital" will 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.
(8) The term "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.
(9) The term "subsidiary" means:
(a) Any company twenty-five percent or more of whose voting shares (excluding shares owned by the United States or by any company wholly owned by the United States) is directly or indirectly owned or controlled by such person, or is held by it with power to vote;
(b) Any company the election of a majority of whose directors is controlled in any manner by such person; or
(c) Any company with respect to the management or policies of which such person has power, directly or indirectly, to exercise a controlling influence, as determined by the division, after notice and opportunity for hearing.
[Statutory Authority: RCW 30.04.111. 88-16-066 (Order 74), § 50-12-230, filed 8/1/88; 87-20-022 (Order 69), § 50-12-230, filed 9/30/87.]
(1) Loans or extensions of credit
by a state bank to a person outstanding at one time and fully
secured by readily marketable collateral having a market value,
as determined by reliable and continuously available price
quotations, shall not be subject to any limitations based on
capital and surplus. However, if the total of such loans and
extensions of credit, together with loans made under general
limitations pursuant to WAC ((50-12-240)) 208-512-240 exceed
forty-five percent, the division of ((banking)) banks will review
the credits as a possible concentration, with regard to both risk
diversification within the bank's asset structure and
diversification or other risk in the marketable collateral
securing the loan. This limitation shall be separate and in
addition to the general twenty percent limitation set forth in
WAC ((50-12-240)) 208-512-240.
(2) Each loan or extension of credit based on the foregoing limitation shall be secured by readily marketable collateral having a current market value of at least one hundred fifteen percent of the amount of the loan or extension of credit at all times.
(3) Financial instruments may be denominated in foreign currencies which are freely convertible to United States dollars. If collateral is denominated and payable in a currency other than that of the loan or extension of credit which it secures, the bank's procedures must require that the collateral be revalued at least monthly, using appropriate foreign exchange rates, in addition to being repriced at current market value.
(4) Each bank must institute adequate procedures to ensure that the collateral value fully secures the outstanding loan at all times. If collateral values fall below one hundred fifteen percent of the outstanding loan, to the extent that the loan is no longer in conformance with this section and exceeds the general twenty percent limitation, the loan must be brought into conformance within five business days, except where judicial proceedings, regulatory actions, or other extraordinary occurrences prevent the bank from taking actions.
[Statutory Authority: RCW 30.08.140. 87-24-042 (Order 71), § 50-12-250, filed 11/25/87. Statutory Authority: RCW 30.04.111. 87-20-022 (Order 69), § 50-12-250, filed 9/30/87.]
The division of ((banking)) banks, after due and proper notice,
and pursuant to the general rule-making authority in RCW 30.04.030 hereby adopts and promulgates the following rules and
regulations.
[Statutory Authority: RCW 30.04.030. 90-10-074, § 50-12-310, filed 5/2/90, effective 6/2/90.]
(1) A bank located in a city of not more than five thousand inhabitants may act as insurance agent from an office in that city. A bank exercising this power may continue to act as insurance agent notwithstanding a change of the population of the city in which it is located.
(2) A trust company may act as an insurance agent pursuant to its powers under RCW 30.08.150(3) "to act as attorney in fact or agent of any corporation, foreign or domestic, for any purpose, statutory or otherwise."
(3) A bank may engage in insurance 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. These activities include, but are not limited to:
(a) General insurance agency activities conducted by a bank
with total assets of fifty million dollars or less, provided,
however, that such bank may not engage in the sale of life
insurance or annuities. For purposes of this exception "total
assets" is determined by the latest consolidated report of
condition filed with the ((supervisor of banking)) director of
the department of financial institutions. This exception ceases
when the value of the assets of the bank exceed fifty million
dollars. The insurance agency license must be surrendered and
the assets sold or otherwise disposed of within three years
unless otherwise extended by the ((supervisor of banking))
director of the department of financial institutions.
(b) A bank may act as agent for life, disability, and involuntary unemployment insurance if the insurance is limited to assuring the repayment of the outstanding balance due on a specific extension of credit by the bank.
(c) A bank may act as agent for property insurance on loan collateral, provided such insurance is limited to assuring repayment of the outstanding balance of the extension of credit and such extension of credit is not more than ten thousand dollars (twenty-five thousand dollars to finance the purchase of a residential manufactured home and which is secured by such home) increased by the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers published monthly by the Bureau of Labor Statistics for the period beginning on January 1, 1982, and ending on December 31 of the year preceding the year of the extension of credit.
(4) A bank or trust company may engage in any insurance agency activity lawfully engaged in by national banks located in the state of Washington.
[Statutory Authority: RCW 30.04.030. 90-10-074, § 50-12-350, filed 5/2/90, effective 6/2/90.]
It
shall be considered an unsafe and unsound practice in conducting
the affairs of the bank or trust company if in the opinion of the
((supervisor)) director the insurance agency activities of the
bank or bank subsidiary are:
(1) A violation of any applicable state or federal consumer protection law; or
(2) A violation of any applicable state or federal statute prohibiting anticompetitive activities.
[Statutory Authority: RCW 30.04.030. 90-10-074, § 50-12-370, filed 5/2/90, effective 6/2/90.]
The following sections of the Washington Administrative Code
are recodified as follows:
| Old WAC number | New WAC number |
| 50-12-020 | 208-512-020 |
| 50-12-030 | 208-512-030 |
| 50-12-045 | 208-512-045 |
| 50-12-050 | 208-512-050 |
| 50-12-060 | 208-512-060 |
| 50-12-070 | 208-512-070 |
| 50-12-080 | 208-512-080 |
| 50-12-090 | 208-512-090 |
| 50-12-100 | 208-512-100 |
| 50-12-110 | 208-512-110 |
| 50-12-115 | 208-512-115 |
| 50-12-116 | 208-512-116 |
| 50-12-117 | 208-512-117 |
| 50-12-120 | 208-512-120 |
| 50-12-130 | 208-512-130 |
| 50-12-140 | 208-512-140 |
| 50-12-150 | 208-512-150 |
| 50-12-160 | 208-512-160 |
| 50-12-170 | 208-512-170 |
| 50-12-180 | 208-512-180 |
| 50-12-190 | 208-512-190 |
| 50-12-200 | 208-512-200 |
| 50-12-210 | 208-512-210 |
| 50-12-220 | 208-512-220 |
| 50-12-230 | 208-512-230 |
| 50-12-240 | 208-512-240 |
| 50-12-250 | 208-512-250 |
| 50-12-260 | 208-512-260 |
| 50-12-270 | 208-512-270 |
| 50-12-280 | 208-512-280 |
| 50-12-290 | 208-512-290 |
| 50-12-300 | 208-512-300 |
| 50-12-310 | 208-512-310 |
| 50-12-320 | 208-512-320 |
| 50-12-330 | 208-512-330 |
| 50-12-340 | 208-512-340 |
| 50-12-350 | 208-512-350 |
| 50-12-360 | 208-512-360 |
| 50-12-370 | 208-512-370 |
OTS-4091.2
AMENDATORY SECTION(Amending Order 36, filed 7/8/76)
WAC 50-14-010
Facilitating loans -- Real property.
For purposes of this section the following words shall have the following meanings:
(1) "Foreclosed property" means real estate or interest therein, or other property used in connection therewith acquired through foreclosure or similar action, deed of trust sales, or by deed in lieu of any thereof.
(2) "Facilitating loan" means a loan or real estate contract covering foreclosed property made by a mutual savings bank to the purchaser of the foreclosed property.
(3) "Loan limits" means the limitations on investments imposed by RCW 32.20.410.
A mutual savings bank may make a facilitating loan for not
in excess of the sale price of the property if the board of
trustees or officers or committees designated by the board deem
it prudent to dispose of the property in that manner. Facilitating loans shall not be deemed violations of RCW 32.20.250 or 32.20.260, nor shall the division of ((banking))
banks require facilitating loans to be classified as loans made
pursuant to RCW 32.20.255. Until such time as a facilitating
loan conforms to the requirements of RCW 32.20.250, 32.20.255 or
32.20.260, or other investment statutes relating to mutual
savings bank, it shall be carried on the books and records of the
bank as "Other real estate loans - Debts previously contracted,"
and shall not be carried at more than the value of the property
securing it. Facilitating loans shall be included in determining
the amounts invested which are subject to the loan limits to the
extent of the value at which they are carried on the books of the
bank. The bank may, however, make facilitating loans regardless
of the loan limits.
[Order 36, § 50-14-010, filed 7/8/76.]
This chapter implements the
authority of the ((supervisor of banking)) director of the
department of financial institutions (the "((supervisor))
director") under chapters 32.08, 32.34, and 34.05 RCW to enact
regulations concerning the organization and operation of mutual
holding companies. It addresses only those features of the
organization and operation of mutual holding companies and their
subsidiary stock savings banks that are not governed by Title 32
RCW. Among the provisions that must be considered are:
(1) Chapter 32.32 RCW for the chartering of a mutual savings bank and the conversion of a mutual savings bank to a stock savings bank;
(2) Title 32 RCW generally for the operations of any such savings bank; and
(3) Chapter 32.34 RCW for any merger or acquisition of assets involving a mutual holding company or banking subsidiary of a mutual holding company.
In addition, the ((supervisor)) director has determined that
formation of a business trust is not the sole and exclusive
method by which a state savings bank may form a mutual holding
company ("MHC").
Under RCW 32.34.050, a state savings bank is allowed to form
a business trust that, in turn, is authorized to become a MHC. However, based on the statutory authority granted to the
((supervisor)) director under that statute as well as chapters
32.08 and 34.05 RCW, the ((supervisor)) director has determined
that utilization of a business trust is not the exclusive
procedure for creation of MHCs.
By enacting RCW 32.08.142, the legislature evidenced a clear intent that state-chartered savings banks not be placed at a competitive disadvantage to federally chartered savings banks. While the state Constitution prohibits automatic incorporation into state law of federal laws enacted after adoption of RCW 32.08.142, that restriction does not invalidate the legislative intent that state institutions not be placed at an undue competitive disadvantage with federal savings banks.
Conditioning MHC formation on the utilization of a business trust to act as the MHC is potentially disadvantageous to state savings banks in view of:
(a) The absence of state statutory and regulatory guidance concerning the governance and authority of trusts when acting as holding companies;
(b) The uncertainty of regulations of such trusts as MHCs; and
(c) The potential federal tax uncertainties that would arise by utilizing a trust in connection with a tax free reorganization into a mutual holding company.
In addition, business trusts are permitted by statute
(chapter 23.90 RCW) to exercise the general powers of domestic
corporations, including the power to merge into a domestic
corporation. As a result, the ((supervisor)) director has
determined that the scope of chapter 32.34 RCW and the incidental
powers clause of RCW 32.08.140 make it convenient or useful in
connection with a savings bank's performance of its specifically
enumerated powers to accomplish a MHC reorganization, to utilize
either a corporation formed under the laws of the state of
Washington or a business trust.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-020, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-020, filed 2/28/92, effective 3/30/92.]
(1) The definitions in RCW 32.32.025 shall apply to any transaction under these rules unless the context requires otherwise and except as provided herein.
(2) The reorganization of a mutual savings bank into mutual holding company form ("reorganization") and the subsequent conversion of the MHC into stock form or the offering of common stock of a subsidiary of a MHC that will cause the MHC to hold less than fifty-one percent of the issued and outstanding common stock of the stock savings bank ("conversion to stock form") shall be governed by chapter 32.32 RCW, except as provided in these rules.
(3) The term "mutual holding company" shall mean the business trust or mutually owned corporation, or the successor of either, originally established by a savings bank to serve as the holding company of a stock savings bank subsidiary, provided that a MHC shall at all times own fifty-one percent or more of the issued and outstanding common stock of a stock savings bank subsidiary that is the successor by merger or purchase to substantially all of the assets and all of the deposits and other liabilities of the savings bank that has reorganized into a mutual holding company pursuant to RCW 32.34.050 and these rules.
(4) To achieve the intent of RCW 32.34.050 in a manner that
ensures consistency with chapter 32.32 RCW, and acting pursuant
to RCW 32.32.010, the ((supervisor)) director hereby waives or
modifies to the extent set forth in these rules the applicability
of the following provisions of chapter 32.32 RCW as they relate
to the organization and operation of mutual holding companies and
their stock savings bank subsidiaries: RCW 32.32.035, 32.32.045
through 32.32.070, 32.32.085, 32.32.090, 32.32.095, 32.32.110,
32.32.120, 32.32.135 through 32.32.160, 32.32.185 through
32.32.205, 32.32.240 through 32.32.275, 32.32.315, 32.32.320,
32.32.330, 32.32.335, 32.32.355, 32.32.440, and 32.32.485.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-030, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-030, filed 2/28/92, effective 3/30/92.]
(1) Notwithstanding any other provision of law, and
in accordance with the general requirements set forth in WAC
((50-14-050 through 50-14-140)) 208-514-050 through 208-514-140,
a mutual savings bank may reorganize under a plan of
reorganization so as to cause its deposit-taking and one or more
other activities to be conducted by a stock savings bank
subsidiary of a mutual holding company, which subsidiary is
formed for such purpose. The plan of reorganization must be
adopted by the bank's trustees and submitted to and approved by
the ((supervisor)) director as provided in these rules.
(2) Except to the extent that such provisions are inconsistent with these rules, the new stock savings bank subsidiary of the mutual holding company shall be subject to the same provisions of Title 32 RCW as apply to other stock savings banks.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-040, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-040, filed 2/28/92, effective 3/30/92.]
(1) A reorganization of a mutual savings bank pursuant to these rules shall be approved by not less than two-thirds of the board of trustees of the mutual savings bank.
(2)(a) A mutual savings bank proposing a reorganization
pursuant to these rules shall provide the ((supervisor)) director
with written notice of such proposed reorganization. Such notice
shall include (i) a copy of the plan of reorganization approved
by the board of trustees pursuant to subsection (1) of this
section, (ii) the proposed incorporation and authorization
certificates for the mutual holding company and/or the stock
savings bank subsidiary, as appropriate, and (iii) such other
information as the ((supervisor)) director shall require. The
((supervisor)) director shall approve or disapprove the plan of
reorganization within sixty days of acceptance of a completed
plan of reorganization.
(b) In determining whether to approve the plan of
reorganization, the ((supervisor)) director shall consider:
(i) Whether the formation of the mutual holding company would be in the interests of the depositors of the mutual savings bank proposing to reorganize;
(ii) Whether the reorganization would promote safe and sound banking practices;
(iii) Whether the reorganization would serve the public interest;
(iv) Whether the financial and management resources of the mutual savings bank proposing to reorganize are sufficient to warrant approval of the reorganization; and
(v) Whether the mutual savings bank proposing to reorganize either fails to furnish any information required under (a) of this subsection or furnishes information containing any statement that, at the time and in the circumstances under which it was made, was false or misleading with respect to any material fact or omits any material fact necessary to make statements therein not false or misleading.
(c) When the ((supervisor)) director shall have determined
to approve or disapprove the plan of reorganization, the
((supervisor)) director shall so advise the mutual savings bank
in writing and, if appropriate, shall endorse approval on the
incorporation and authorization certificates and cause the same
to be filed in such manner and in the respective offices provided
in chapter 32.08 RCW. Upon the filing of the authorization
certificate as provided in RCW 32.08.080, the existence of the
mutual holding company and/or stock savings bank, as appropriate,
shall commence. As used in these rules, the term "authorization
certificate" shall include an amended authorization certificate.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-050, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-050, filed 2/28/92, effective 3/30/92.]
(1)(a) The plan of reorganization may authorize the formation of a MHC by:
(i) The organization by or at the discretion or request of the mutual savings bank of a business trust or mutual corporation that shall serve as a MHC, the organization by the MHC of a stock savings bank subsidiary and the transfer to such stock savings bank of substantially all of the mutual savings bank's assets and liabilities, including all of its deposit liabilities, in accordance with these rules;
(ii) The organization by or at the direction or request of the mutual savings bank of a business trust or mutual corporation that shall serve as the MHC, and the organization by such MHC of a stock savings bank subsidiary that merges with the mutual savings bank; or
(iii) The reorganization of the mutual savings bank under
any other method approved by the ((supervisor)) director.
(b) For the purposes of (a) of this subsection and when
authorized by the ((supervisor)) director, as hereinafter
provided, the trustees of the mutual holding company, consisting
of five or more natural persons who are citizens of the United
States, may incorporate an interim stock savings bank subsidiary
in the manner herein prescribed. No savings bank shall
incorporate for less amount nor commence business unless it has a
paid-in capital stock in such amount as may be determined by the
((supervisor)) director after consideration of the proposed
transaction.
(i) Persons desiring to incorporate an interim stock savings
bank shall file with the ((supervisor)) director a notice of
their intention to organize a savings bank in such form and
containing such information as the ((supervisor)) director shall
prescribe by regulation or otherwise require, together with
proposed articles of incorporation and bylaws, which shall be
submitted for examination to the ((supervisor)) director at his
office in Olympia. The proposed articles of incorporation shall
state:
(A) The name of such savings bank.
(B) The city, village or locality and county where the head office of such savings bank is to be located.
(C) The nature of its business (i.e., that of a savings bank).
(D) 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.
(E) The names, places of residence, and mailing addresses of the persons who as directors are to manage the bank until the first annual meeting of its shareholders.
(F) 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.
(G) 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.
(H) 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, without limitation, any provision restricting the transfer of shares.
(I) Any provision the incorporators elect to so set forth, not inconsistent with law or with the purposes for which the bank is organized, or any provision limiting any of the powers granted in the applicable provisions of the Revised Code of Washington.
It shall not be necessary to set forth in the articles of incorporation any of the corporate powers granted in the applicable provisions of the Revised Code of Washington. The articles of incorporation shall be signed by all of the incorporators and acknowledged before an officer authorized to take acknowledgements.
(ii) 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 own
office, 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 the
applicable provisions of the Revised Code of Washington, 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
necessary or convenient to its organization and preparation to
engage in business, until it has received from the ((supervisor))
director a certificate of authority to engage in the banking
business as a stock savings bank.
(c) For the purposes of (a) of this subsection, WAC
((50-14-080)) 208-514-080 permits a newly organized stock savings
bank to issue to persons other than its parent MHC, an amount of
common stock and securities convertible into common stock that,
in the aggregate, does not exceed forty-nine percent of the
issued and outstanding common stock of such stock savings bank
upon completion of the offering. Issued and outstanding
securities that are convertible into common stock shall be
considered issued and outstanding common stock for purposes of
computing the forty-nine percent limitation. This subsection
shall not limit the authority of such stock savings bank to issue
equity or debt securities other than common stock and securities
convertible into common stock.
(2) In connection with the reorganization of a mutual
savings bank as provided in WAC ((50-14-040)) 208-514-040, the
MHC may acquire assets of the mutual savings bank to the extent
that such assets are not then required to be transferred to (or
retained by) the stock savings bank in order to satisfy capital
or reserve requirements of any applicable state or federal law or
regulation.
(3) A stock savings bank whose outstanding common stock is at least fifty-one percent but less than one hundred percent owned by a mutual holding company shall have at least one director, but no more than two-fifths of its directors, who are "unaffiliated directors" who shall represent the interests of the minority shareholders. An "unaffiliated director" is a director who is not:
(a) An officer or employee of the stock savings bank (or any affiliate thereof); or
(b) An officer, trustee, or employee of the mutual holding company.
If the incorporation certificate or bylaws of the stock savings bank provide that the board of directors shall be divided into two or more classes, then to the extent possible, each class shall contain the same number of unaffiliated directors as each other class.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-060, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-060, filed 2/28/92, effective 3/30/92.]
(1) Upon the formation of a MHC:
(a) The MHC shall possess all the rights, powers, and privileges (except deposit-taking powers) and shall be subject to all the limitations, not inconsistent with these rules, of a mutual savings bank under Title 32 RCW; and
(b) The MHC shall be subject to the limitations imposed by the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841, et seq.) or, in the case of a MHC resulting from the reorganization of a savings bank that elected either before or after such reorganization to be treated as a savings association (as defined in 12 U.S.C. Section 1467a), such mutual holding company shall be subject to the limitations imposed by the savings and loan holding company provisions of the Home Owners' Loan Act (12 U.S.C. Section 1467a).
(2) Notwithstanding any inconsistent provisions of Title 32
RCW, and subject to the express approval of (or additional rules
promulgated by) the ((supervisor)) director, a MHC may:
(a) Merge with, acquire, or purchase the assets of a mutual holding company established pursuant to these rules or the savings and loan holding company provisions of the Home Owners' Loan Act (12 U.S.C. Section 1467a);
(b) Acquire or purchase the assets or stock of a stock savings bank, commercial bank, credit union, stock savings and loan association, stock federal savings bank, or stock federal savings and loan association;
(c) Acquire a mutual savings bank, mutual savings and loan association, federal mutual savings bank, or federal mutual savings and loan association through the merger of such institution with a stock subsidiary of such mutual holding company;
(d) Convert to a stock holding company pursuant to the
provisions of a plan which is approved by the ((supervisor))
director, preserves the subscription and liquidation account
rights of depositors of the mutual savings bank who then remain
depositors of the stock savings bank and otherwise complies with
WAC ((50-14-130)) 208-514-130; and
(e) Engage in any other acquisition or combination,
specifically permitted by the ((supervisor)) director, including
a merger into or sale of assets to another mutual or stock
corporation.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-070, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-070, filed 2/28/92, effective 3/30/92.]
(1) Any offering of
shares of voting securities by a MHC which converts to stock form
or of common stock of a stock savings bank subsidiary of a MHC
that will cause the holding company to hold less than fifty-one
percent of the issued and outstanding common stock of the stock
savings bank upon completion of the offering (a "subsequent
offering") shall be governed by the rules prescribed in chapter 32.32 RCW, except to the extent that those rules are explicitly
waived or modified by the ((supervisor)) director.
(2) Any offering of shares of any class of stock of a stock
savings bank subsidiary of a MHC that will not cause the MHC to
hold less than fifty-one percent of the issued and outstanding
common stock of the stock savings bank upon completion of the
offering may be accomplished through either a public distribution
or by means of a limited distribution or placement of the
securities, none of which methods of offering will require the
stock of the savings bank subsidiary to be offered to members of
the unconverted mutual savings bank or of the MHC. Any such
offering shall comply with the disclosure requirements of chapter 32.32 RCW, shall be made by means of an offering circular
approved by the ((supervisor)) director, and shall be sold at a
price that is approved (a) by the ((supervisor)) director in the
case of the initial offering of shares to persons other than the
MHC, and in such case based upon a proposed price range
established by qualified persons who are independent of the bank
and (b) by the board of directors in the case of other offerings
contemplated by this subsection.
(3) The procedures to follow in conducting a subsequent
offering may, with the ((supervisor's)) director's approval,
differ from those set forth in chapter 32.32 RCW.
(4) Notwithstanding any contrary provision of Title 32 RCW, there shall be no requirement to use an underwriter in an offering made pursuant to subsection (2) of this section, though such use is permissible.
(5) Subject to approval of the ((supervisor)) director, a
stock savings bank subsidiary of a MHC may declare or pay a cash
dividend that is payable only to shareholders of the stock
savings bank other than the MHC.
(6) Notwithstanding any contrary provision of Title 32 RCW, no offering circular used in connection with an offering pursuant to subsection (2) of this section shall be required to set forth the estimated subscription price range of the shares being offered.
(7) A stock savings bank subsidiary of a MHC may issue and, consistent with these rules, any person may acquire any amount of preferred stock of the bank.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-080, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-080, filed 2/28/92, effective 3/30/92.]
(1) Upon a conversion
to stock form, as such conversion is defined in WAC ((50-14-030))
208-514-030(2), by a MHC or a stock savings bank subsidiary of a
MHC, depositors of the stock savings bank at the record date of
the conversion to stock form who continuously have been
depositors since the reorganization, or were depositors of any
savings association subsequently acquired by a MHC at a time when
the association was in mutual form and remained depositors of the
stock savings bank, shall receive, without payment,
nontransferable rights to subscribe for stock of the converted
MHC or the converted stock savings bank to be sold in the
subsequent offering, to the extent that such depositors would
have received those rights pursuant to RCW 32.32.045 in a stock
conversion of the savings bank as prescribed in chapter 32.32 RCW; provided, however, that such depositors who are not
shareholders of the stock savings bank at the record date for the
subsequent offering shall have priority rights, not inconsistent
with the provisions of chapter 32.32 RCW, to subscribe for shares
to be issued in the subsequent offering in accordance with a plan
approved by the ((supervisor)) director or made pursuant to
subsequent rules to be promulgated by the ((supervisor))
director.
(2) For purposes of this section, an "eligible account holder" is any depositor of a stock savings bank at the record date for a conversion to stock form of the bank or the MHC who has continuously owned in such bank one or more accounts valued in the aggregate of fifty dollars or more since the date that the trustees of the unconverted mutual savings bank approved the reorganization or the date that the bank's predecessor mutual association was acquired by the MHC.
(3) Nothing in chapter 32.34 RCW or chapter ((50-14))
208-514 WAC shall be construed to authorize or require that
depositors in a mutual savings bank that reorganizes as a MHC be
offered stock in the stock savings bank subsidiary except as
provided in subsection (1) of this section.
(4) Depositors in a mutual savings bank that reorganizes as a MHC with a stock savings bank subsidiary shall become depositors in such subsidiary when the mutual savings bank merges with or transfers its assets and liabilities to the stock savings bank.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-090, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-090, filed 2/28/92, effective 3/30/92.]
The
authority for a stock savings bank subsidiary of a MHC to issue
stock shall be subject to the following limitations, unless
otherwise approved by the ((supervisor)) director.
(1) The stock sold in the reorganization shall be sold at a
total price equal to the estimated pro forma market value of such
stock, based on an independent valuation as provided in WAC
((50-14-080)) 208-514-080(2) and any stock sold in a later
offering shall be sold at its fair value as determined by the
board of directors of the stock savings bank.
(2) The aggregate amount of issued and outstanding common stock of the stock savings bank owned or controlled by persons other than the MHC at the close of any proposed issuance shall be forty-nine percent or less than the savings bank's total outstanding common stock.
(3) The aggregate amount of common stock acquired in the proposed issuance, plus all prior issuances of the savings bank, by any nontax-qualified employee stock benefit plan of the savings bank or any insider (which for the purpose of these rules will mean an officer, director, or associate of an officer or director) of the savings bank (exclusive of any stock acquired by said plan or insider and his or her associates in the secondary market) shall not exceed ten percent of the outstanding shares of common stock of the savings bank held by persons other than the savings bank's MHC parent at the close of the proposed issuance. In calculating the number of shares held by any insider or associate, shares held by any tax-qualified or nontax-qualified employee stock benefit plan of the savings bank that are attributable to such person shall not be counted.
(4) The aggregate amount of stock, whether common or preferred, acquired in the proposed issuance, plus all prior issuances of the savings bank, by any nontax-qualified employee stock benefit plan of the savings bank or any insider of the savings bank and his or her associates (exclusive of any stock acquired by said plan or insider and his or her associates in the secondary market) shall not exceed ten percent of the stockholders' equity of the savings bank held by persons other than the MHC parent at the close of the proposed issuance.
(5) The aggregate amount of common stock acquired in the proposed issuance, plus all prior issuances of the savings bank, by any one or more tax-qualified employee stock benefit plans of the savings bank (exclusive of any stock acquired by such plans in the secondary market) shall not exceed ten percent of the outstanding shares of common stock of the savings bank held by persons other than the MHC parent at the close of the proposed issuance.
(6) The aggregate amount of stock, whether common or preferred, acquired in the proposed issuance, plus all prior issuances of the savings bank, by any one or more tax-qualified employee stock benefit plans of the savings bank (exclusive of any stock acquired by such plans in the secondary market) shall not exceed ten percent of the stockholders' equity of the savings bank held by persons other than the MHC parent at the close of the proposed issuance.
(7) The aggregate amount of common stock acquired in the proposed issuance, plus all prior issuances of the savings bank by all nontax-qualified employee stock benefit plans of the savings bank and insiders of the savings bank (exclusive of any stock acquired by said plans and by insiders in the secondary market) shall not exceed thirty-five percent of the outstanding shares of common stock of the savings bank held by persons other than the MHC parent at the close of the proposed issuance if the savings bank has less than fifty million dollars in total assets prior to the issuance or twenty-five percent of such outstanding shares if the savings bank has more than five hundred million dollars in total assets before the issuance. If the savings bank has between fifty million dollars and five hundred million dollars in total assets before the issuance, the maximum percentage shall be equal to thirty-five percent minus one percent multiplied by the quotient of total assets less fifty million dollars divided by forty-five million dollars. In calculating the number of shares held by insiders and their associates, shares held by any tax-qualified or nontax-qualified employee stock benefit plan of the savings bank that are attributable to such persons shall not be counted.
(8) The aggregate amount of stock, whether common or preferred, acquired in the proposed issuance, plus all prior issuances of the savings bank, by all nontax-qualified employee stock benefit plans of the savings bank, insiders of the savings bank, and associates of insiders of the savings bank (exclusive of any stock acquired by said plans and by insiders in the secondary market) shall not exceed thirty-five percent of the stockholders' equity of the savings bank held by persons other than the association's mutual holding company parent at the close of the proposed issuance if the savings bank has less than fifty million dollars in total assets before the issuance or twenty-five percent of such stockholders' equity if the savings bank has more than five hundred million dollars in total assets prior to the issuance. If the savings bank has between fifty million dollars and five hundred million dollars in total assets before the proposed issuance, the maximum percentage shall be equal to thirty-five percent minus one percent multiplied by the quotient of total assets less fifty million dollars divided by forty-five million dollars.
(9) Shares of authorized but unissued stock of a stock savings bank subsidiary of a MHC may be reserved to satisfy and may be issued pursuant to any stock-based incentive plan for employees, directors, and others approved by the savings bank's board of directors and a majority of its stockholders.
(10) If, at the close of any stock issuance, the stock savings bank has holders of record of its outstanding voting securities that would require registration under the Securities Exchange Act of 1934, then such requirement shall be met.
(11) For a period of three years following the proposed
issuance, no insider of the savings bank shall sell, without the
((supervisor's)) director's prior written approval, any stock of
the savings bank purchased in connection with the reorganization
except that the personal representative of such insider may sell
shares in the event of the death of the insider.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-100, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-100, filed 2/28/92, effective 3/30/92.]
(1) The mutual holding company may retain or acquire
assets of the mutual savings bank only to the extent permitted by
the ((supervisor)) director.
(2) A stock savings bank established in connection with a reorganization shall reserve no authorized but unissued shares, except as necessary to satisfy a stock option plan or issue securities convertible into stock.
(3) A plan of reorganization shall contain the provisions referenced in RCW 32.32.035, except that it need not provide for the sale of any stock and the aggregate price of any stock sold shall bear the same proportion to total estimated pro forma market value of the subsidiary savings bank(s) determined by an independent appraisal that the shares sold bear to the total issued and outstanding shares of the savings bank(s).
[Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-120, filed 2/28/92, effective 3/30/92.]
(1) If approved by the ((supervisor))
director, a MHC may convert to a stock form holding company.
(2) The MHC shall adopt a plan of conversion which the
((supervisor)) director finds to be in accordance with the
provisions of chapter 32.32 RCW and these rules.
(3) The conversion must include such provisions requiring
the exchange of shares of the subsidiary savings bank(s) for
shares of the resulting stock holding company as the
((supervisor)) director finds to be fair to members of the MHC
who possess subscription rights and to stockholders of the
subsidiary banks.
[Statutory Authority: RCW 32.34.040 - [32.34].050 and chapters 32.08 and 34.05 RCW. 93-13-142, § 50-14-130, filed 6/23/93, effective 7/24/93. Statutory Authority: RCW 32.34.040 - [32.34.]050. 92-06-041, § 50-14-130, filed 2/28/92, effective 3/30/92.]
The following sections of the Washington Administrative code
are recodified as follows:
| Old WAC Number | New WAC Number |
| 50-14-010 | 208-514-010 |
| 50-14-020 | 208-514-020 |
| 50-14-030 | 208-514-030 |
| 50-14-040 | 208-514-040 |
| 50-14-050 | 208-514-050 |
| 50-14-060 | 208-514-060 |
| 50-14-070 | 208-514-070 |
| 50-14-080 | 208-514-080 |
| 50-14-090 | 208-514-090 |
| 50-14-100 | 208-514-100 |
| 50-14-110 | 208-514-110 |
| 50-14-120 | 208-514-120 |
| 50-14-130 | 208-514-130 |
| 50-14-140 | 208-514-140 |
OTS-4092.2
AMENDATORY SECTION(Amending Order 21, filed 8/6/73)
WAC 50-28-020
Operations and procedures.
A notice of
intention to incorporate a bank or trust company shall be filed
with the ((supervisor)) director at the division of ((banking))
banks in Olympia. As a matter of general procedure, it has been
found desirable and is recommended that interested groups visit
the office of the ((supervisor)) director for a round-table
discussion of statutory and other requirements, the forms,
documentation and general information needed, the fees payable to
the ((supervisor of banking)) division of banks and the secretary
of state, plus a general discussion of the primary market area
the applicants wish to serve and of economic resources of that
area together with a brief review of existing financial
institutions now serving that area.
[Order 21, § 50-28-020, filed 8/6/73.]
The notice of
intention to organize a state bank or trust company shall be
filed with the ((supervisor)) director in duplicate, on a form
furnished by the division of ((banking)) banks. It is the
established policy of the division of ((banking)) banks to
require diligent and timely completion and submission of forms,
schedules, surveys, economic studies, maps and all supporting
data deemed necessary and required to conduct the statutory
investigation. For the purpose of expediting the investigation
and correlating said investigation with that of the Federal
Deposit Insurance Corporation, in the event deposits of the
proposed bank or trust company are to be insured by that agency,
the schedules, statements and supporting data shall be organized
under six basic general headings or factors:
(1) Financial history and condition.
(a) Pro forma statement of condition - beginning of business.
(b) Premises to be occupied by proposed bank, whether owned or leased, whether permanent or temporary, details as to description, costs, from whom purchased or leased, insurance coverage, estimated annual depreciation. If property is to be purchased or leased from a director, officer, a large shareholder, or an interest of any such, complete details should be furnished.
(c) Details as to proposed investment in and rental of furniture, fixtures and equipment.
(d) Relationships and associations with proposed bank of any of the sellers or lessors of land, buildings or equipment, either directly or indirectly.
(e) Organization expenses (which should not be borrowed from any source) - complete and detailed accounting is required for all expenses related to organization, including detailed account of actual legal work performed together with any additional costs anticipated prior to opening or costs incurred or work performed during the organization period for which disbursement has been deferred beyond the opening date.
(2) Adequacy of the capital structure.
(a) Proposed allocations within total capital structure.
(i) Amount of paid-in common capital stock (No. shares x par value).
(ii) Amount of paid-in surplus.
(iii) Amount of paid-in undivided profits.
(iv) Amount of other segregations, including the organization or expense fund, if planned.
(b) Minimum capital requirements of state law (RCW 30.08.010 as amended by chapter 104, Laws of 1973).
(c) The adequacy (deemed reasonable) of the proposed capital structure is evaluated, in part, by:
(i) The population of the community to be served.
(ii) Ratio the projected net total capital structure will bear to the estimated volume of deposits at the end of each of the first three years of operations.
(3) Future earnings prospects. A detailed projection of earnings and expenses is to be submitted showing the breakdown of income and expenses for each of the first three years of operations. Provision should be made for the bad debt reserve (loan losses) based upon the major types of loaning demands the proposed bank expects to serve and total loans expected by the end of the first, second and third years of operations.
(4) General character of management.
(a) A financial report and a biographical report for each officer and director is required together with a report by each officer and director stating the number of shares to be purchased, the total cost of such shares and details as to source and financing terms for such portion as not paid in cash. (If disclosure of any of the proposed officers would jeopardize current employment, include the information in a special "CONFIDENTIAL SECTION.")
(b) The subscribers (proposed shareholders) are to be listed alphabetically with name and address, occupation and number of shares being purchased indicated by number of shares and total subscription price. The list should indicate "D" for the directors designee, "O" for officers.
(c) For any subscribers for 5% or more of the proposed capital stock, the financing terms are required as for directors and officers.
(d) The membership of the committees of the directorate are to be designated and duties outlined, including:
(i) Loan and/or executive committee.
(ii) Investment committee.
(iii) Audit committee.
(e) Management of the proposed bank will report:
(i) Name of principal correspondent bank or banks and basis upon which the selection was made.
(ii) Determination that sufficiency of surety bond coverage conforms with generally accepted banking practices.
(f) Any changes contemplated in the proposed directorate or active management during the first year are to be reported, or, if none, so state.
(5) Convenience and needs of the community to be served.
(a) Applicants have the responsibility of developing as fully as possible the economic support and justification for the proposed bank including:
(i) The community and "surrounding country" (the trade territory or market area) which the proposed bank will serve, including the geographic boundaries within which all or most of the bank's potential customers reside.
(1) Furnish a detail map of such area pinpointing and indexing each financial institution (banks and savings and loan associations and mutual savings bank, whether head office or branch office).
(2) Provide list or recapitulation of subscribers residing in or closely identified with the area to be served.
(3) Provide estimates of the total deposits anticipated during the early period of operations together with totals expected by the end of each of the first three years. The latter should be segregated:
(a) Demand deposits.
(b) Savings passbook accounts.
(c) Other time deposits.
(d) Public funds.
(e) Recapitulation as to total demand and total time.
(4) The economic characteristics of the trade territory specified above for the most recent five-year period where possible... including manufacturing, agricultural and other industrial data, construction activity, retail and wholesale sales, housing starts, school population, census figures and projections.
(5) Such additional data relating to the trade area considered relevant and indicating support for the proposed bank as may be obtained from such sources as local offices of utilities, planning commission, chamber of commerce or trade associations, traffic surveys, county auditor, title insurance company, etc. (In the event an economic survey or feasibility study has been prepared it may provide most of the information needed.)
(ii) List principal business and industries of the market area by name of company, type of business, average number of employees, approximate annual payroll and annual sales. If significant, furnish details as to public employment of the area, including schools, military, U.S., state, county, municipal or other.
(b) List all banks, branches, trust companies, mutual savings banks and branches, together with savings and loan associations presently serving in the proposed market area and surrounding country, including any authorized but unopened offices, indicating "N/A" for information determined unobtainable:
(i) Name of the financial institution.
(ii) Location.
(iii) Distance (road miles or city blocks) from proposed site.
(iv) Direction from site.
(v) Date established.
(vi) Date of latest statement available.
(vii) Deposits: Demand, time and total.
(viii) Loans: Commercial, consumer, real estate secured and total to extent available.
(6) Consistency of corporate powers. In addition to the proposed articles of incorporation submitted with the notice of intention to organize, the proposed bylaws should be submitted together with articles of incorporation and complete details for any proposed affiliate (i.e., a premises holding company).
[Order 21, § 50-28-030, filed 8/6/73.]
The required field
investigation will be undertaken promptly upon submission of the
notice of intention to organize a bank or trust company
accompanied by statutory fees, provided the required
documentation is determined by preliminary review to be complete
in all respects. If, in the judgment of the ((supervisor))
director, matters of substantive nature are missing or incomplete
the notice of intent to organize and submitted documents may be
returned to the correspondent of record. If the matters deemed
incomplete be of relatively minor nature the applicants may be
notified in writing thereof and given a reasonable time to make
corrections or submit additional information or schedules
required. For purposes of section 5, chapter 104, Laws of 1973
1st ex. sess. (RCW 30.08.030), a notice of intention to organize
a bank or trust company shall not be deemed to be received by the
((supervisor)) director unless and until all of the information
required by the ((supervisor)) director has been provided to him.
[Order 21, § 50-28-050, filed 8/6/73.]
The division of
((banking)) banks hereby adopts for use of all persons requesting
permission to organize a state bank or trust company, the form
attached hereto as Appendix No. 1, entitled "Notice of intention
to organize a state bank or trust company."
[Order 21, § 50-28-060, filed 8/6/73.]
The subscription agreement with prospective purchasers of
the capital stock of a proposed new bank or trust company shall
not contain any agreement for any amount to be paid in advance
for the purpose of defraying organization costs. No payment on
subscription for stock shall be made until the articles of
incorporation have been approved by the ((supervisor of banking))
director of the department of financial institutions and filed
with the secretary of state.
[Order 30, § 50-28-070, filed 10/2/75.]
[Order 21, Appendix I -- Form (codified as WAC 50-28-990), filed 8/6/73.]
The following sections of the Washington Administrative Code
are recodified as follows:
| Old WAC number | New WAC number |
| 50-28-010 | 208-528-010 |
| 50-28-020 | 208-528-020 |
| 50-28-030 | 208-528-030 |
| 50-28-040 | 208-528-040 |
| 50-28-050 | 208-528-050 |
| 50-28-060 | 208-528-060 |
| 50-28-070 | 208-528-070 |
| 50-28-990 | 208-528-990 |
OTS-4094.2
AMENDATORY SECTION(Amending WSR 99-01-119, filed 12/18/98,
effective 1/18/99)
WAC 50-36-020
Administration of fiduciary powers.
(1)(a) The board of directors is responsible for the proper exercise of fiduciary powers by the trust company. All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in a fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the trust company in the exercise of its fiduciary powers, are the responsibility of the board. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of such of the trust company's fiduciary powers as it may consider proper to assign to such director(s), officer(s), employee(s) or committee(s) as it may designate.
(b) No fiduciary account shall be accepted without the prior approval of the board, or of the director(s), officer(s) or committee(s) to whom the board may have designated the performance of that responsibility. A written record shall be made of such acceptances and of the relinquishment or closing out of all fiduciary accounts. Upon the acceptance of an account for which the trust company has investment responsibilities a prompt review of the assets shall be made. The board shall also ensure that at least once during every calendar year thereafter, all the assets held in or for each fiduciary account where the bank has investment responsibilities are reviewed to determine the advisability of retaining or disposing of such assets.
(2) All officers and employees taking part in the operation of the trust department shall be adequately bonded.
(3) Every qualified fiduciary subject to this regulation and exercising fiduciary powers in this state shall designate, employ or retain legal counsel who shall be readily available to pass upon fiduciary matters and to advise the trust company and its trust department.
(4)(a) The trust department may utilize personnel and facilities of other departments of the trust company or its affiliates, and other departments of the trust company may utilize the personnel and facilities of the trust department or its affiliates only to the extent not prohibited by law and as long as the separate identity of the trust department is preserved.
(b) Agency agreements. Pursuant to a written agreement, a trust company exercising fiduciary powers may perform services related to the exercise of fiduciary powers for another trust company or other entity, and may purchase services related to the exercise of fiduciary powers from another trust company or other entity.
(5) Fiduciary records shall be kept separate and distinct
from other records of the trust company and maintained in
compliance with the provisions of RCW 30.04.240. All fiduciary
records shall be kept and retained for such time as to enable the
fiduciary to furnish such information or reports with respect
thereto as may be required by the ((supervisor of banking))
director.
(6) Every such fiduciary shall keep an adequate record of all pending litigation to which it is a party in connection with its exercise of fiduciary powers.
[Statutory Authority: RCW 43.320.010, 43.329.040 and 30.04.030. 99-01-119, § 50-36-020, filed 12/18/98, effective 1/18/99; Order 22, § 50-36-020, filed 8/14/73.]
Collective investments of funds or other property held by such qualified fiduciary (and referred to in this paragraph as "collective investment funds") shall be administered as follows:
(1) Each collective investment fund shall be established and
maintained in accordance with a written plan (referred to herein
as the plan) which shall be approved by a resolution of the trust
company's board of directors or by a committee authorized by the
board and filed with the ((supervisor of banking)) director of
the department of financial institutions. The plan shall contain
appropriate provisions not inconsistent with the rules and
regulations of the ((supervisor of banking)) director of the
department of financial institutions as to the manner in which
the fund is to be operated, including provisions relating to the
investment powers and a general statement of the investment
policy of the trust company with respect to the fund; the
allocation of income, profits and losses; the terms and
conditions governing the admission or withdrawal of
participations in the fund; the auditing of accounts of the bank
with respect to the fund; the basis and method of valuing assets
in the fund, setting forth specific criteria for each type of
asset; the minimum frequency for valuation of assets of the fund;
the period following each such valuation date during which the
valuation may be made (which period in usual circumstances should
not exceed 10 business days); the basis upon which the fund may
be terminated; and such other matters as may be necessary to
define clearly the rights of participants in the fund. A copy of
the plan shall be available at the principal office of the trust
company for inspection during all banking hours, and upon request
a copy of the plan shall be furnished to any person.
(2) Property held by a bank in its capacity as trustee of
retirement, pension, profit sharing, stock bonus, or other trusts
which are exempt from federal income taxation under any
provisions of the Internal Revenue Code may be invested in
collective investment funds established under the provisions of
subparagraph (a) or (b) of WAC ((50-36-040)) 208-536-040, subject
to the provisions herein contained pertaining to such funds, and
may qualify for tax exemption pursuant to section 584 of the
Internal Revenue Code. Assets of retirement, pension, profit
sharing, stock bonus, or other trusts which are exempt from
federal income taxation by reason of being described in section
401 of the code may be invested in collective investment funds
established under the provisions of subparagraph (b) of WAC
((50-36-040)) 208-536-040, if the fund qualifies for tax
exemption under Revenue Ruling 56-267 and following rulings.
(3) All participants in the collective investment fund shall be on the basis of a proportionate interest in all of the assets. In order to determine whether the investment of funds received or held by a trust company as fiduciary in a participation in a collective investment fund is proper, the trust company may consider the collective investment fund as a whole and shall not, for example, be prohibited from making such investment because any particular asset is nonincome producing.
[Statutory Authority: RCW 43.320.010, 43.329.040 and 30.04.030. 99-01-119, § 50-36-050, filed 12/18/98, effective 1/18/99; Order 22, § 50-36-050, filed 8/14/73.]
(1) A trust company administering a collective
investment fund shall at least once during each period of 12
months prepare a financial report of the fund which shall be
filed with the ((supervisor of banking)) director of the
department of financial institutions within 90 days after the end
of the fund's fiscal year. This report, based upon the above
audit, shall contain a list of investments in the fund showing
the cost and current market value of each investment; a statement
for the period since the previous report showing purchases, with
cost; sales, with profit or loss and any other investment
changes; income and disbursements; and an appropriate notation as
to any investments in default.
(2) The financial report may include a description of the
fund's value on previous dates, as well as its income and
disbursements during previous accounting periods. No predictions
or representations as to future results may be made. In
addition, as to funds described in WAC ((50-36-040)) 208-536-040,
neither the report nor any other publication of the trust company
shall make reference to the performance of funds other than those
administered by the trust company.
(3) A copy of the financial report shall be furnished, or
notice shall be given that a copy of such report is available and
will be furnished without charge upon request, to each person to
whom a regular periodic accounting would ordinarily be rendered
with respect to each participating account. A copy of such
financial report may be furnished to prospective customers. The
cost of printing and distribution of these reports will be borne
by the trust company. In addition, a copy of the report shall be
furnished upon request to any person for a reasonable charge. The fact of the availability of the report for any fund described
in WAC ((50-36-040)) 208-536-040 may be given publicity solely in
connection with the promotion of the fiduciary services of the
trust company.
(4) Except as herein provided, the trust company shall not advertise or publicize its collective investment fund(s); provided, however, that publication in a newspaper, periodical, or other medium of the net asset value of collective investment fund(s) for which a daily net asset value is available, shall not be considered an advertisement or publication prohibited by this section. Restraint is required in fiduciary advertisements to preclude the violation of securities laws including the Mutual Fund Reform Act.
[Statutory Authority: RCW 43.320.010, 43.329.040 and 30.04.030. 99-01-119, § 50-36-080, filed 12/18/98, effective 1/18/99; Order 22, § 50-36-080, filed 8/14/73.]
(1) A trust company administering a collective investment fund shall have the exclusive management thereof, except as a prudent person might delegate responsibilities to others.
(2) No trust company shall have any interest in a collective investment fund other than in its fiduciary capacity. Except for temporary net cash overdrafts or as otherwise specifically provided herein, it may not lend money to a fund, sell property to, or purchase property from a fund. No assets of a collective investment fund may be invested in stock or obligations, including time or savings deposits, of the bank or any of its affiliates: Provided, That such deposits may be made of funds awaiting investment or distribution. Subject to all other provisions of this part, funds held by a trust company as fiduciary for its own employees may be invested in a collective investment fund.
(3) A trust company may not make any loan on the security of a participation in a fund. If because of a creditor relationship or otherwise the trust company acquires an interest in a participation in a fund, the participation shall be withdrawn on the first date on which such withdrawal can be effected. However, in no case shall an unsecured advance until the time of the next valuation date to an account holding a participation be deemed to constitute the acquisition of an interest by the bank.
(4) Any trust company administering a collective investment fund may purchase for its own account from such fund any devaluated fixed income investment held by such fund, if in the judgment of the board of directors the cost of segregation of such investment would be greater than the difference between its market value and its principal amount plus interest and penalty charges due. If the trust company elects to so purchase such investment, it must do so at its market value or at the sum of cost, accrued unpaid interest, and penalty charges, whichever is greater.
(5) Except in the case of collective investment funds
described in paragraph (b) of WAC ((50-36-040)) 208-536-040:
(a) No funds or other property shall be invested in a participation in a collective investment fund if as a result of such investment the participant would have an interest aggregating in excess of 10 percent of the then market value of the fund: Provided, That in applying this limitation if two or more accounts are created by the same person or persons and as much as one-half of the income or principal of each account is payable or applicable to the use of the same person or persons, such accounts shall be considered as one;
(b) No investment for a collective investment fund shall be
made in stocks, bonds, or other obligations of any closely held
corporation, as may be determined by the ((supervisor of
banking)) director of the department of financial institutions,
or, of any one person, firm, or corporation if as a result of
such investment the total amount invested in stocks, bonds, or
other obligations issued or guaranteed by such person, firm, or
corporation would aggregate in excess of 10 percent of the then
market value of the fund: Provided, That this limitation shall
not apply to investments in direct obligations of the United
States or its agencies or other obligations fully guaranteed by
the United States or its agencies as to principal and interest:
And Provided Further, That this limitation shall not apply to
investments in 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:
(i) The portfolio of the investment company or investment trust is limited to such obligations of, or fully guaranteed by, the United States or its agencies and to repurchase agreements fully collateralized by such obligations; and
(ii) The investment company or investment trust takes delivery of the collateral for any repurchase agreement either directly or through an authorized custodian;
(6) In addition to the investments permitted under WAC
((50-36-040)) 208-536-040, funds or other property received or
held by a trust company as fiduciary may be invested
collectively, to the extent not prohibited by law, as follows:
(a) In shares of a mutual trust investment company, organized and operated pursuant to a statute that specifically authorizes the organization of such companies exclusively for the investment of funds held by corporate fiduciaries, commonly referred to as a "bank fiduciary fund."
(b) In a single real estate loan, a direct obligation of the United States, or an obligation fully guaranteed by the United States, or in a single fixed amount security, obligation or other property, either real, personal or mixed, of a single issue: Provided, That the trust company owns no participation in the loan or obligation and has no interest in any investment therein except in its capacity as fiduciary.
(c) In a common trust fund maintained by the trust company
for the collective investment of cash balances received or held
by a trust company in its capacity as trustee, executor,
administrator, or guardian, which the trust company considers to
be individually too small to be invested separately to advantage.
The total investment for such fund must not exceed $1,000,000;
the number of participating accounts is limited to 100, and no
participating account may have an interest in the fund in excess
of $1,000,000: Provided, That in applying these limitations if
two or more accounts are created by the same person or persons
and as much as one-half of the income or principal of each
account is presently payable or applicable to the use of the same
person or persons, such account shall be considered as one: And
Provided, That no fund shall be established or operated under
this subparagraph for the purpose of avoiding the provisions of
chapter ((50-36)) 208-536 WAC.
(d) In any investment specifically authorized by court
order, or authorized by the instrument creating the fiduciary
relationship, in the case of trusts created by a corporation, its
subsidiaries or affiliates or by several individual settlors who
are closely related: Provided, That such investment is not made
under this subparagraph for the purpose of avoiding any provision
of this regulation, in particular, but not limited to the
provisions beginning with new section WAC ((50-36-040))
208-536-040.
(e) In such other manner as shall be approved in writing by
the ((supervisor of banking)) director of the department of
financial institutions.
[Statutory Authority: RCW 43.320.010, 43.329.040 and 30.04.030. 99-01-119, § 50-36-090, filed 12/18/98, effective 1/18/99. Statutory Authority: RCW 30.04.030. 90-07-011, § 50-36-090, filed 3/13/90, effective 4/13/90; Order 22, § 50-36-090, filed 8/14/73.]
The following sections of the Washington Administrative Code
are recodified as follows:
| Old WAC number | New WAC number |
| 50-36-010 | 208-536-010 |
| 50-36-020 | 208-536-020 |
| 50-36-030 | 208-536-030 |
| 50-36-040 | 208-536-040 |
| 50-36-050 | 208-536-050 |
| 50-36-060 | 208-536-060 |
| 50-36-070 | 208-536-070 |
| 50-36-080 | 208-536-080 |
| 50-36-090 | 208-536-090 |
| 50-36-100 | 208-536-100 |
| 50-36-110 | 208-536-110 |
| 50-36-120 | 208-536-120 |
OTS-4095.2
AMENDATORY SECTION(Amending WSR 91-18-054, filed 8/30/91,
effective 9/30/91)
WAC 50-44-005
Determination of collection
method -- Principles.
When determining a revision to the
collection method, the ((supervisor)) director shall consider but
not be limited to the following principles.
(1) The revenue to be collected shall be sufficient to allow
the division of ((banking)) banks to achieve its statutory
mission to examine institutions within all required time periods.
(2) Regulatory costs shall be apportioned in a manner consistent with the state of Washington's overall policy commitments to rural and economically distressed areas, promoting the delivery of financial services to those areas.
(3) No industry or institution shall bear a disproportionate share of regulatory costs.
(4) There shall be a significant correlation between assessments and examination costs across institutions.
(5) The division of ((banking)) banks shall have sufficient
resources to maintain a competent and motivated staff.
(6) Such other principles as the ((supervisor)) director may
deem relevant.
[Statutory Authority: RCW 30.04.070 and 30.08.095. 91-18-054, § 50-44-005, filed 8/30/91, effective 9/30/91.]
The requirement of RCW 30.04.070 and 30.08.095 that the
((supervisor)) director collect from each bank, mutual savings
bank, stock savings bank, trust company, or industrial loan
company, the costs of the division, shall be met in accordance
with the procedures established in this chapter. Costs shall be
recouped by the following methods: Semiannual asset charges in
order to recoup nondirect bank examination related expenses (RCW 30.08.095, giving the ((supervisor)) director the authority to
charge for other services rendered), and an hourly charge for the
estimated actual cost of examination determined by a rate
specified herein times the number of hours spent by division
personnel in regular or extraordinary examinations.
[Statutory Authority: RCW 30.04.070 and 30.08.095. 90-12-007, § 50-44-010, filed 5/25/90, effective 6/25/90. Statutory Authority: RCW 30.04.030. 83-20-072 (Order 55), § 50-44-010, filed 10/3/83; 82-24-074 (Order 48), § 50-44-010, filed 12/1/82. Statutory Authority: RCW 34.04.070. 82-02-037 (Order 45), § 50-44-010, filed 12/31/81.]
A semiannual charge for assets will be used to recoup nondirect bank examination related expenses (RCW 30.08.095). The semiannual charge for assets will be computed upon the asset value reflected in the most recent report of condition. The rate of such charge shall be as set forth in the following schedules:
(1) Commercial banks, mutual savings banks, and stock savings banks.
The rate of such charge shall be based on the total asset value as reflected in the report of condition due for that period provided, the director may adjust such rates if the director determines that a disproportionate amount of revenue is being collected by such rate. In no event shall the amount of revenue collected from any one bank exceed one hundred thirty-three thousand four hundred ninety dollars per assessment period.
| If the bank's total assets are: |
The assessment is: |
||||
| Over | But not Over |
This Amount | Plus | Of
Excess Over |
|
| Million | Million | Million | |||
| 0 | 500 | 0 | .00001408 | 0 | |
| 500 | 1000 | 7040 | .0000135 | 500 | |
| 1000 | —– | 13,790 | .0000133 | 1000 | |
(2) Alien banks.
The rate of such charge shall be .000035189 of the total asset value as reflected in the report of condition due for that period provided, the director may adjust such rate if the director determines that a disproportionate amount of revenue is being collected by such rate.
(3) The director's office shall forward by United States
mail a notice to each financial institution showing the manner of
calculating the asset charge due and a worksheet for such
purposes. The notices shall be mailed ((with the blank)) each
June and December ((report of condition)). The asset charge
shall be calculated by the financial institution and forwarded to
the division of banks with the applicable report. A completed
copy of the worksheet shall be included with the assessment. An
additional two hundred dollar penalty shall be assessed if the
amount is not paid by the time such report of condition or notice
of assessment is due.
[Statutory Authority: RCW 43.320.010, 43.329.040 and 30.04.030. 96-04-022, § 50-44-020, filed 1/30/96, effective 3/1/96. Statutory Authority: RCW 30.04.070 and 30.08.095. 91-18-054, § 50-44-020, filed 8/30/91, effective 9/30/91; 90-12-007, § 50-44-020, filed 5/25/90, effective 6/25/90. Statutory Authority: RCW 30.04.030 and 31.04.150. 89-09-004 (Order 77), § 50-44-020, filed 4/6/89. Statutory Authority: RCW 30.04.030. 83-20-072 (Order 55), § 50-44-020, filed 10/3/83; 82-24-074 (Order 48), § 50-44-020, filed 12/1/82. Statutory Authority: RCW 34.04.070. 82-02-037 (Order 45), § 50-44-020, filed 12/31/81.]
Each bank,
mutual savings bank, trust company, alien bank, or industrial
loan company shall pay to the ((supervisor)) director the
following fees:
(1) For regular examinations, including extraordinary
examinations for the express purpose of examining unusual
conditions or circumstances, including extensions of regular
examinations wherein conditions may warrant extension of time
required in the examination beyond normal allotted time and such
other reviews as determined by the ((supervisor)) director;
sixty-five dollars per hour. The ((supervisor)) director may
charge the actual cost of examinations performed under personal
service contracts by third parties.
(2) For electronic data processing examination, trust
examination, or other examination requiring specialized
expertise, ninety dollars per hour. Electronic data processing
centers and trust companies are exempt from the asset assessment
provisions of WAC ((50-44-020)) 208-544-020(1) if such centers or
companies are not a part of the assets of the bank as reported in
the report of condition.
(3) The ((supervisor)) director shall submit a statement for
the foregoing charges following the completion of any applicable
examination, and the charges shall be paid not later than thirty
days after submission of such statement.
(4) These charges shall become effective for invoicing that occurs after the effective date of this rule, provided such invoicing relates to examinations occurring on or after July 1, 1991.
[Statutory Authority: RCW 30.04.070 and 30.08.095. 91-18-054, § 50-44-030, filed 8/30/91, effective 9/30/91; 90-12-007, § 50-44-030, filed 5/25/90, effective 6/25/90. Statutory Authority: RCW 30.12.060. 85-19-052 (Order 62), § 50-44-030, filed 9/13/85. Statutory Authority: RCW 34.04.070. 82-02-037 (Order 45), § 50-44-030, filed 12/31/81.]
(1) Definitions. For purposes of this provision, the following terms, or the plural thereof, shall have the meaning ascribed.
(a) "Rural community" is a community of population less than ten thousand inhabitants located in a county without a metropolitan sampling area ("MSA"), as established by the United States Office of Management and Budget.
(b) "Economically distressed area" is a county with an unemployment rate that is twenty percent above the state-wide average for the previous three years; or a community that has experienced sudden and severe or long-term and severe loss of employment, or erosion of its economic base due to decline of its dominant industries; or an area within a county which area:
(i) Is composed of contiguous census tracts;
(ii) Has a minimum population of five thousand persons;
(iii) Has at least seventy percent of its families and unrelated individuals with incomes below eighty percent of the county's median income for families and unrelated individuals; and
(iv) Has an unemployment rate which is at least forty percent higher than the county's unemployment rate.
(c) "Located" means the institution's primary market area where at least sixty percent of the institution's deposits are booked.
(2) Limit on assessment. If an institution is located in a
rural community or economically distressed area, and if the
charges assessed under WAC ((50-44-020)) 208-544-020(1) relating
to a semiannual asset charge and WAC ((50-44-030)) 208-544-030(1)
relating to the hourly examination fee, exceed ninety-five
percent of the assessment charge applicable for a two-year period
of the office of the comptroller of the currency ("OCC") or its
successor then the assessments paid in excess of such amount
shall be rebated to the institution pursuant to subsection (5) of
this section unless abated by the supervisor as provided in
subsection (6) of this section.
(3) Determination. For purposes of determining rebate entitlement, the total of semiannual assessments and examination fees are determined by adding the monthly average semiannual assessment and the monthly average of the examination fees for any twenty-four month period after June 1, 1990. The monthly average is determined by dividing the semiannual assessment fee by six and applying the monthly average to the previous six months. The monthly average examination fee is determined by dividing the examination fee for each examination during the averaging period by the number of months between each such examination and the previous examination as determined by the date of the examinations and applying the monthly average to those months. The OCC charge is determined in the same manner.
(4) Rebate. The rebate is determined by the difference between the sum of the applicable monthly average state charges for the twenty-four month period minus ninety-five percent of the sum of the applicable monthly average OCC charge for the same period, as each are determined in subsection (3) of this section. The total amounts of all rebates shall not exceed three-quarters of one percent of the current biennium budget.
(5) Petition. Entitlement of the rebate shall occur only
upon petition and proof to the ((supervisor)) director during the
first month of the last quarter of the current biennium.
(6) Rebate abatement. At the discretion of the
((supervisor)) director, all or part of the rebate determined
under subsection (4) of this section may be denied if the
((supervisor)) director determines that:
(a) The institution required a substantially greater than average amount of supervisory time for reasons other than as a result of economic, legal, regulatory, or other conditions beyond the control of competent management;
(b) The institution required a substantially greater than average amount of examination time for an institution of its size for reasons other than as a result of economic, legal, regulatory, or other conditions beyond the control of competent management;
(c) Examinations or investigations were performed by third parties under personal services contracts; or
(d) Such other factors as the ((supervisor)) director may
deem equitable or relevant.
(7) Institutions may become eligible to receive a rebate on or after April 1, 1993, for amounts paid on or after the 1991-1993 biennium and such eligibility shall continue for two years thereafter.
[Statutory Authority: RCW 30.04.070 and 30.08.095. 91-18-054, § 50-44-050, filed 8/30/91, effective 9/30/91; 90-12-007, § 50-44-050, filed 5/25/90, effective 6/25/90.]
The
((supervisor)) director shall maintain a minimum cash balance in
the banking fund (RCW 43.19.095) of at least one month's
allotment. One month's allotment is based upon the current
biennium budget divided by twenty-four months. In the event the
banking fund balance drops below this figure the ((supervisor))
director shall declare the next semiannual asset assessment due;
payment within thirty days of such declaration. The
((supervisor)) director shall bill each institution based on the
most current report of condition and payment shall be in lieu of
the next regularly scheduled asset assessment.
[Statutory Authority: RCW 30.04.070 and 30.08.095. 91-18-054, § 50-44-060, filed 8/30/91, effective 9/30/91.]
The following sections of the Washington Administrative Code
are recodified as follows:
| Old WAC number | New WAC number |
| 50-44-005 | 208-544-005 |
| 50-44-010 | 208-544-010 |
| 50-44-020 | 208-544-020 |
| 50-44-025 | 208-544-025 |
| 50-44-030 | 208-544-030 |
| 50-44-037 | 208-544-037 |
| 50-44-039 | 208-544-039 |
| 50-44-050 | 208-544-050 |
| 50-44-060 | 208-544-060 |
OTS-4096.2
AMENDATORY SECTION(Amending Order 56, filed 10/3/83)
WAC 50-48-010
Authority and purpose.
These regulations are
promulgated pursuant to section 9, chapter 157, Laws of 1983, to
establish a procedure under which an out-of-state bank holding
company which desires 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, national banking association or
bank holding company, the principal operations of which are
conducted within this state, may apply to the ((supervisor))
director for approval of such acquisition.
[Statutory Authority: RCW 30.04.230 as amended by 1983 c 157 § 9. 83-20-073 (Order 56), § 50-48-010, filed 10/3/83.]
An application for
approval of such acquisition shall be submitted jointly by the
acquiring bank holding company and the domestic institution or
bank holding company to be acquired. The application need not be
in any particular format, but must set forth all the information
required under these regulations. The application shall include
a copy of the agreement setting forth the plan of merger or
acquisition, including certified copies of the resolutions of the
respective boards of directors of parties to the agreement
approving same. The application shall also include a statement
authorizing any federal or state regulatory agency to make
available to the ((supervisor)) director any and all information
which such agency may have relating to the applicants or any of
their subsidiaries.
[Statutory Authority: RCW 30.12.060. 85-19-052 (Order 62), § 50-48-020, filed 9/13/85. Statutory Authority: RCW 30.04.230 as amended by 1983 c 157 § 9. 83-20-073 (Order 56), § 50-48-020, filed 10/3/83.]
Unless included in other information required
by this chapter, the application shall set forth the name and
main office address of all operating subsidiaries of both the
acquiring bank holding company and the bank, trust company,
national banking association or domestic bank holding company to
be acquired. In addition, the application shall set forth the
name, office address, and telephone of one or more persons
designated by each applicant to be its official representative in
connection with the application. All contact between the
((supervisor's)) director's office and the applicant should,
except in extraordinary circumstances, be through such
representatives.
[Statutory Authority: RCW 30.04.230 as amended by 1983 c 157 § 9. 83-20-073 (Order 56), § 50-48-030, filed 10/3/83.]
The applicant out-of-state bank holding company shall
make available for review by the ((office of the supervisor))
division of banks the following:
(a) Any current file which it or its principal banking subsidiary or subordinate is required to maintain by regulations promulgated by the appropriate federal financial supervisory authority (as defined in 12 U.S.C. § 2902(1)) for purposes of the Community Reinvestment Act (12 U.S.C. § 2902 et seq.).
(b) Copies of all internal documents having to do with the proposed merger or acquisition, including, without limitation, memoranda or analyses together with conclusions and recommendations to management and all financial or other information from which such memoranda, analyses, conclusions, recommendations or other documents were prepared.
[Statutory Authority: RCW 30.04.230 as amended by 1983 c 157 § 9. 83-20-073 (Order 56), § 50-48-060, filed 10/3/83.]
The bank, trust company, national banking
association or domestic bank holding company to be acquired shall
make available to the ((supervisor)) director all internally
generated reports relating to the operation of any or all
operating subsidiaries during the immediately preceding two-year
period.
[Statutory Authority: RCW 30.04.230 as amended by 1983 c 157 § 9. 83-20-073 (Order 56), § 50-48-070, filed 10/3/83.]
The ((supervisor)) director may consult with appropriate federal
regulatory agencies in connection with any application filed
hereunder and shall consider any information received from such
agency or agencies in ruling upon the application.
[Statutory Authority: RCW 30.04.230 as amended by 1983 c 157 § 9. 83-20-073 (Order 56), § 50-48-090, filed 10/3/83.]
The ((supervisor of banking)) director of the
department of financial institutions, having reviewed the laws of
the following states as they relate to a domestic (Washington)
bank holding company acquiring 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 such
states, has determined, pursuant to RCW 30.04.232, that the laws
of such states allow a domestic bank holding company to acquire a
bank, trust company, or national banking association, the
principal operations of which are conducted within such states,
and permit the operation of the acquired bank, trust company, or
national banking association within such states on terms and
conditions no less favorable than other banks, trust companies,
or national banking associations doing a banking business within
such states: (1) Alaska, (2) Arizona, (3) California, (4)
Colorado, (5) Connecticut, (6) Idaho, (7) Illinois, (8) Kentucky,
(9) Louisiana, (10) Maine, (11) Massachusetts, (12) Michigan,
(13) Nebraska, (14) Nevada, (15) New Hampshire, (16) New Jersey,
(17) New Mexico, (18) New York, (19) North Dakota, (20) Ohio,
(21) Oklahoma, (22) Oregon, (23) Pennsylvania, (24) Rhode Island,
(25) South Dakota, (26) Tennessee, (27) Texas, (28) Utah, (29)
Vermont, (30) West Virginia, and (31) Wyoming.
Other states not listed shall be reviewed on a case-by-case basis.
[Statutory Authority: RCW 30.04.232 (1)(c). 93-07-113, § 50-48-100, filed 3/23/93, effective 4/23/93. Statutory Authority: RCW 30.04.232. 87-13-015 (Order 68), § 50-48-100, filed 6/9/87; 87-10-047 (Order 67), § 50-48-100, filed 5/5/87.]
The following sections of the Washington Administrative Code
are recodified as follows:
| Old WAC number | New WAC number |
| 50-48-010 | 208-548-010 |
| 50-48-020 | 208-548-020 |
| 50-48-030 | 208-548-030 |
| 50-48-040 | 208-548-040 |
| 50-48-050 | 208-548-050 |
| 50-48-060 | 208-548-060 |
| 50-48-070 | 208-548-070 |
| 50-48-080 | 208-548-080 |
| 50-48-090 | 208-548-090 |
| 50-48-100 | 208-548-100 |
OTS-4097.2
AMENDATORY SECTION(Amending WSR 90-01-001, filed 12/7/89,
effective 1/7/90)
WAC 50-56-010
Purpose.
The purpose of this chapter shall
be to provide guidelines for application for a license to operate
a nondepository small business lending venture under the auspices
of the federal Small Business Administration (SBA) guaranty
program known as the 7(a) loan guaranty program. Specifics of
the program are set forth in section 7(a) of the federal "Small
Business Investment Act of 1958," 15 U.S.C., part 636(a). These
rules also establish other regulatory oversight guidelines and
provide for fees. These rules are promulgated under the general
rule-making authority of the state ((supervisor of banking))
director of the department of financial institutions, and are
required under legislation passed by the legislature (section
3(1), chapter 212, Laws of 1989.)
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-010, filed 12/7/89, effective 1/7/90.]
An application for
state license to operate a nondepository small business lending
venture to qualify for participation in the SBA 7(a) program
shall be filed with the ((supervisor at the division of banking))
director of the department of financial institutions and shall
include such fees as established elsewhere in these rules. As a
matter of general procedure, it is recommended that interested
parties visit the office of the ((supervisor)) director prior to
submitting their application to review statutory and other
requirements for this action.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-020, filed 12/7/89, effective 1/7/90.]
Applicants may use the
same documentation as required by the SBA for their approval of
the lender to the extent that such documentation meets the
requirements of statute and these rules unless waived by the
((supervisor)) director. The application must contain the
following:
(1) Applicant's name, address, and telephone number.
(2) A statement that the applicant is incorporated under the Washington Business Corporation Act or the Washington Nonprofit Corporation Act and a copy of applicant's Articles of Incorporation and Bylaws, properly certified.
(3) A list of officers, directors, associates, and all holders of ten or more percent of any class of the applicant's capital stock.
(4) A statement of personal history of all those listed in subsection (3) of this section. SBA Form 1081 or its equivalent may be used.
(5) A copy of the most recent audited financial statement of any entity other than a natural person holding ten or more percent of any class of stock of the applicant.
(6) An organizational chart showing the relationship of the applicant to its affiliates, as well as the applicant's internal organizational structure.
(7) Copies of the last three audited financial statements of the applicant, and supporting tax returns.
(8) Applicant's business plan which should include at a minimum:
(a) A detailed pro forma financial projection for at least three years of operations.
(b) A market study of the intended geographical area of operations.
(c) An explanation of applicant's method of funding loans, including the unguaranteed portion.
(d) An outline of loan servicing procedures proposed.
(e) Copies of written policies and procedures to be used,
which must include policies requiring disclosure of conflicts of
interest of affiliates, directors, officers, and employees;
prohibiting false statements or representations to the
((supervisor)) director; and preventing fraud or undue influence
by the licensee.
(9) Certified copy of a resolution by the applicant's board of directors designating the person(s) authorized to act on behalf of applicant.
(10) An opinion of independent counsel that the applicant is in compliance with applicable state and federal laws in the formation and organization of the company, with applicable securities laws, and is chartered to conduct its business in the proposed operating area.
(11) Such marketing materials as may have been prepared that portray the nature of applicant's operations.
(12) Copies of all bonds in effect for directors, officers, and employees.
(13) Other such information as the ((supervisor)) director
may require.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-030, filed 12/7/89, effective 1/7/90.]
Licensees shall maintain an adequate financial condition.
(1) Minimum capital (unimpaired paid-in capital, surplus,
and undivided profits) shall be in the amount of five hundred
thousand dollars or five and one-half percent of total assets,
whichever is greater, or a greater amount should the
((supervisor)) director determine that applicant's business plan
or economic conditions require a greater amount to conduct the
business of a 7(a) lender. The ((supervisor)) director may
consider and include the net worth of any corporate shareholder
of the applicant if the shareholder agrees to unconditionally
guarantee the liabilities of the applicant and that shareholder
agrees to the reporting requirements set forth in WAC
((50-56-060)) 208-556-060.
(2) Capital below the required amount precludes the
presentation of additional loans to the SBA for guaranty without
the written consent of the ((supervisor)) director.
(3) Licensees shall maintain a reserve for anticipated loan losses appropriate to its needs, based on the following factors:
(a) The volume and mix of the existing loan portfolio, including the volume and severity of nonperforming loans and adversely classified credits, as well as an analysis of net charge-offs experienced on previously classified loans.
(b) The extent to which loan renewals and extensions are used to maintain loans on a current basis and the degree of risk associated with such loans.
(c) The trend in loan growth, including any rapid increase in loan volume within a relatively short time period.
(d) General and local economic conditions affecting the collectibility of the licensee's loans.
(e) Previous loan loss experience by loan type, including net charge-offs as a percent of average loans over the past several years.
(f) The relationship and trend over the past several years of recoveries as a percent of previous year's charge-offs.
(g) Available outside information of a comparable nature regarding the loan portfolios of other such lenders.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-040, filed 12/7/89, effective 1/7/90.]
Licensees shall maintain records in
a fashion consistent with a financial institution and shall have
them at all times readily accessible to the ((supervisor))
director. Records shall be preserved under the following
schedule:
(1) Preserve permanently:
(a) All general and subsidiary ledgers reflecting asset, liability, capital stock and surplus and income and expense accounts.
(b) All general and special journals or other records forming the basis for entries in such ledgers.
(c) Articles of incorporation, bylaws, stock registers, licenses, and minutes of board of directors meetings.
(2) Preserve for at least six years following final disposition of the related loan:
(a) All applications for financing.
(b) Financing instruments.
(c) Lending participation agreements.
(d) Escrow agreements.
(e) All other documents and supporting material relating to such loans, including correspondence.
Records and other documents in subsections (1) and (2) of this section may be preserved by reproduction. Provided, however, that the licensee shall prepare a duplicate reproduction which shall be stored separately from the original for the time required. If such reproductions are used, the licensee shall maintain at all times facilities for the projection and reproduction of such records.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-050, filed 12/7/89, effective 1/7/90.]
Licensees shall submit the
following reports to the ((supervisor)) director:
(1) Annual audits prepared in accordance with generally
accepted accounting principles which shall be certified unless
the ((supervisor)) director makes other provision in writing in
advance.
(2) Quarterly financial reports which shall include a balance sheet and income and expense statement for both the period and year to date.
(3) A notification of any suit or proceeding involving fraud or dishonesty where the licensee or an employee may be a party, or where an adverse judgment could contribute materially to the impairment of the licensee's capital. Such notification must be forwarded with copies of the complaint within thirty days of the filing of such action.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-060, filed 12/7/89, effective 1/7/90.]
The ((supervisor)) director
will conduct examinations of licensees as provided by statute and
will forward a report of examination to the licensee's board of
directors for information and action as appropriate. These
examination reports and all subsequent and related correspondence
are the property of the ((supervisor)) director and will be
subject to the same confidentiality requirements as established
for financial institutions regulated by the division of
((banking)) banks.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-070, filed 12/7/89, effective 1/7/90.]
The cost of regulation of nondepositary lenders licensed under Title 31 RCW, shall be borne by the licensees under the following schedule:
(1) Application fee. A fee of two thousand dollars must accompany an application for this license to cover the cost of investigation.
(2) Acquisition of control approval fee. A fee of two thousand dollars must accompany any request for acquisition of control of a licensee to cover the cost of investigation which will be conducted to the same degree as an initial application approval.
(3) Business combination fee. Other business combinations
must be approved by the ((supervisor)) director. Costs of
investigation will be borne by the licensee and will be based on
actual staff costs of the division of ((banking)) banks, which
are fifty dollars per hour per examiner assigned.
(4) Examination and supervision fees. Examination and supervision fees shall be billed based on rates charged commercial banks for examination costs and semiannual asset charges in chapter 50-44 WAC.
[Statutory Authority: 1989 c 212 § 3(1). 90-01-001, § 50-56-080, filed 12/7/89, effective 1/7/90.]
The following sections of the Washington Administrative Code
are recodified as follows:
| Old WAC number | New WAC number |
| 50-56-010 | 208-556-010 |
| 50-56-020 | 208-556-020 |
| 50-56-030 | 208-556-030 |
| 50-56-040 | 208-556-040 |
| 50-56-050 | 208-556-050 |
| 50-56-060 | 208-556-060 |
| 50-56-070 | 208-556-070 |
| 50-56-080 | 208-556-080 |