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SB 66: "An Act relating to the authorizations for state financial institutions; relating to confidential financial records of depositors and customers of certain financial institutions; relating to the Alaska Banking Code, Mutual Savings Bank Act, Alaska Small Loans Act, and Alaska Credit Union Act; and providing for an effective date."

00 SENATE BILL NO. 66 01 "An Act relating to the authorizations for state financial institutions; relating to 02 confidential financial records of depositors and customers of certain financial 03 institutions; relating to the Alaska Banking Code, Mutual Savings Bank Act, Alaska 04 Small Loans Act, and Alaska Credit Union Act; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 07 to read: 08 PURPOSE. The primary purpose of this Act is to implement banking and other 09 financial institution reforms in AS 06 in response to P.L. 106-102 (Gramm-Leach-Bliley Act) 10 in order to further this state as an attractive place for investment and other commerce 11 involving banking and other financial institutions. 12 * Sec. 2. AS 06.01.020(a) is amended to read: 13 (a) Notwithstanding other provisions of this title, the department may by 14 order [REGULATION] authorize state financial institutions, except licensees subject

01 to AS 06.20 or AS 06.40, to exercise any of the powers conferred upon, or to be 02 subject to any of the limitations imposed upon, a federally chartered financial 03 institution doing business in this state with deposits insured by an agency of the 04 federal government, if the department finds that the exercise of the power or 05 imposition of the limitation both 06 (1) serves the public convenience and advantage; and 07 (2) equalizes and maintains the quality of competition between state 08 financial institutions and federally chartered financial institutions. 09 * Sec. 3. AS 06.01 is amended by adding a new section to read: 10 Sec. 06.01.028. Depositor and customer records confidential. (a) The 11 financial records of depositors and customers of financial institutions are confidential 12 and may not be disclosed except when 13 (1) the financial institution, customer, or depositor is compelled to 14 disclose the records by court order, administrative subpoena or order, or other process 15 issued under supervision of a court or an administrative agency; 16 (2) their disclosure is required by federal or state statute or regulation; 17 (3) disclosure is authorized in writing by the depositor or customer; 18 (4) disclosure is made to the holder of a negotiable instrument drawn 19 on the financial institution as to whether the drawer has sufficient funds in the 20 financial institution to cover the instrument; or 21 (5) an inquiry has been made by a financial institution or by a credit- 22 reporting agency regulated under 15 U.S.C. 1681-1681u (Fair Credit Reporting Act), 23 as amended, solely for the express purpose of determining the credit worthiness of the 24 depositor or customer as an applicant for credit, and the information disclosed by the 25 financial institution or the entity making the inquiry under this paragraph pertains only 26 to the payment habits of the depositor or customer in connection with loans and other 27 credit accommodations and does not pertain to records concerning deposit balances in 28 savings or checking accounts. 29 (b) Unless otherwise provided in this subsection, when disclosure of financial 30 institution records is required or allowed under (a)(1) or (2) of this section, the 31 financial institution shall notify the depositor or customer of the disclosure before the

01 disclosure is made. If notification before disclosure is not possible, the financial 02 institution shall notify the customer or depositor of the disclosure as soon as 03 practicable after the disclosure is made. However, notification either before or after 04 disclosure may not be made if disclosure is made under a subpoena, subpoena duces 05 tecum, search warrant issued by a court, or under a court order or subpoena issued at 06 the request of a grand jury, if the document requiring disclosure by one of these 07 processes on its face requires confidentiality. 08 (c) When disclosure of financial institution records is compelled by a court 09 order under (a)(1) of this section, the court shall provide in the order for the 10 reimbursement of the financial institution for the reasonable costs incurred in 11 complying with the order. 12 (d) A financial institution or any other person is liable to the depositor or 13 customer for intentional violations of this section in an amount equal to the greater of 14 $1,000 or actual damages caused by the disclosure of the confidential records of the 15 depositor or customer of the financial institution. A financial institution or other 16 person that takes an action under this section, relying in good faith on any provision of 17 this section, is not liable to any person for its actions. 18 * Sec. 4. AS 06.01.050(3) is amended to read: 19 (3) "financial institution" means an institution subject to the regulation 20 of the department under this title; "financial institution" includes commercial 21 banks, savings banks, credit unions, premium finance companies, small loan 22 companies, bank holding companies, financial holding companies, trust 23 companies, and savings and loan associations. 24 * Sec. 5. AS 06.01.050 is amended by adding a new paragraph to read: 25 (4) "state financial institution" means a financial institution that is 26 organized under this title, AS 10.13, or AS 44.81, or that is subject to examination by 27 the department under this title. 28 * Sec. 6. AS 06.05.005(a) is amended to read: 29 (a) The department shall 30 (1) exercise general supervision over all state financial institutions and 31 their subsidiaries and affiliated corporations;

01 (2) adopt regulations necessary to implement this chapter, including 02 regulations providing for the retention and preservation of state bank records; 03 (3) review and approve or disapprove applications for new state banks 04 under AS 06.05.344 [AS 06.05.345], new bank branches under AS 06.05.399, and 05 international bank branches or interstate state bank branches [BRANCH BANKS] 06 under AS 06.05.555; 07 (4) issue permits authorizing bank holding companies to do business in 08 this state under AS 06.05.235 and 06.05.570; 09 (5) determine for each state bank the amount of paid-in capital 10 necessary to operate under AS 06.05.305(a); 11 (6) review and approve transfers of state bank ownership under 12 AS 06.05.327; 13 (7) perform examinations of state banks, branch banks, and 14 subsidiaries under AS 06.01.015. 15 * Sec. 7. AS 06.05.050 is repealed and reenacted to read: 16 Sec. 06.05.050. Publication of reports. (a) Condensed forms of all reports 17 of condition required by AS 06.05.045(a) shall be immediately 18 (1) published by the state bank in a newspaper of general circulation 19 published in the place where the state bank is located; if a newspaper of general 20 circulation is not published in that place, the report shall be published in the 21 newspaper of general circulation published nearest to that place; or 22 (2) posted at 23 (A) the primary Internet website of the state bank; and 24 (B) in the lobby of the principal office and all branches of the 25 state bank. 26 (b) Notice of the publication or posting of the reports of condition under (a) of 27 this section shall be posted in the lobby of the principal office and all branches of the 28 state bank. Upon request, a copy of a report of condition shall be supplied to any 29 person at no cost. 30 * Sec. 8. AS 06.05.065(a) is amended to read: 31 (a) A bank examiner of the department who deals with the regulation of

01 financial institutions, a special agent selected by the department to do work relating to 02 financial institutions, the commissioner or deputy commissioner, or the director of 03 banking may not be an officer, employee, director, trustee, attorney, shareholder, or 04 partner of a financial institution, or receive, directly or indirectly, a payment or 05 gratuity from a financial institution. A person subject to this section may not borrow 06 money from a state financial institution [THAT HAS A CERTIFICATE OF 07 AUTHORITY UNDER THIS TITLE], except as provided in this section. 08 * Sec. 9. AS 06.05.065(b) is amended to read: 09 (b) A person subject to this section may 10 (1) be a depositor in a financial institution; 11 (2) purchase shares of a savings and loan association on the same 12 terms available to the public; 13 (3) be a member of an employee credit union; 14 (4) be indebted to a state financial institution upon an installment debt 15 incurred by the employee in the purchase of goods for personal use only and 16 transferred to the financial institution in the regular course of business, including debts 17 for household goods, mobile homes, motor vehicles, or boats; or 18 (5) retain a pre-existing extension of credit that was incurred 19 before commencement of the employment that subjected the person to this 20 section; any renegotiation of a pre-existing extension of credit shall be treated as 21 a new extension of credit that is subject to the prohibitions of this section [BE 22 INDEBTED TO A STATE FINANCIAL INSTITUTION FOR A MORTGAGE 23 LOAN SECURED BY THE PERSON'S PRIMARY RESIDENCE, IF THE LOAN 24 CLOSED BEFORE THE PERSON BECAME AN EMPLOYEE SUBJECT TO THIS 25 SECTION]. 26 * Sec. 10. AS 06.05.205 is repealed and reenacted to read: 27 Sec. 06.05.205. Loans and extensions of credit. (a) The total loans and 28 extensions of credit by a state bank to a person outstanding at one time and not fully 29 secured, as determined in a manner consistent with (b) of this section, by collateral 30 having a market value at least equal to the amount of the loan or extension of credit 31 may not exceed 15 percent of the unimpaired capital and unimpaired surplus of the

01 state bank. 02 (b) The total loans and extensions of credit by a state bank to a person 03 outstanding at one time and fully secured by readily marketable collateral having a 04 market value, as determined by reliable and continuously available price quotations, at 05 least equal to the amount of the money outstanding, may not exceed 10 percent of the 06 unimpaired capital and unimpaired surplus of the state bank. The limitation in this 07 subsection is separate from and in addition to the limitation contained in (a) of this 08 section. 09 (c) The limitations contained in (a) and (b) of this section are subject to the 10 following exceptions: 11 (1) loans or extensions of credit arising from the discount of 12 commercial or business paper evidencing an obligation to the person negotiating it 13 with recourse are not subject to a limitation based on unimpaired capital and 14 unimpaired surplus; 15 (2) the purchase of bankers' acceptances described in AS 06.05.275 16 and issued by other banks are not subject to a limitation based on unimpaired capital 17 and unimpaired surplus; 18 (3) loans or extensions of credit secured by bills of lading, warehouse 19 receipts, or similar documents transferring or securing title to readily marketable 20 staples are subject to a limitation of 35 percent of unimpaired capital and unimpaired 21 surplus in addition to the general limitations if the market value of the staples securing 22 each additional loan or extension of credit at all times equals or exceeds 115 percent of 23 the outstanding amount of the loan or extension of credit; in order to be considered 24 under this paragraph, the staples must be fully covered by insurance whenever it is 25 customary to insure those staples; 26 (4) loans or extensions of credit secured by bonds, notes, certificates of 27 indebtedness, or treasury bills of the United States or by other such obligations fully 28 guaranteed as to principal and interest by the United States are not subject to a 29 limitation based on unimpaired capital and unimpaired surplus; 30 (5) loans or extensions of credit to, or secured by unconditional takeout 31 commitments or guarantees of, any department, agency, bureau, board, commission,

01 or establishment of the United States or a corporation wholly owned directly or 02 indirectly by the United States are not subject to a limitation based on unimpaired 03 capital and unimpaired surplus; 04 (6) loans or extensions of credit secured by a segregated deposit 05 account in the lending state bank are not subject to a limitation based on unimpaired 06 capital and unimpaired surplus; 07 (7) loans or extensions of credit to a bank or to a receiver, conservator, 08 superintendent of banks, or other agent in charge of the business and property of that 09 bank, if approved by the department, are not subject to a limitation based on 10 unimpaired capital and unimpaired surplus; 11 (8) loans or extensions of credit arising from the discount of negotiable 12 or non-negotiable installment consumer paper that carries a full recourse endorsement 13 or unconditional guarantee by the person transferring the paper are subject under this 14 section to a maximum limitation equal to 25 percent of unimpaired capital and 15 unimpaired surplus, notwithstanding the collateral requirements set out in (b) of this 16 section; however, if the state bank's files or the knowledge of its officers of the 17 financial condition of each maker of that consumer paper is reasonably adequate, and 18 an officer of the state bank designated for that purpose by the board of directors of the 19 state bank certifies in writing that the state bank is relying primarily upon the 20 responsibility of each maker for payment of the loans or extensions of credit and not 21 upon any full or partial recourse endorsement or guarantee by the transferor, the 22 limitations of (a) and (b) of this section as to the loans or extensions of credit of each 23 such maker are the sole applicable loan limitations; 24 (9) loans or extensions of credit secured by shipping documents or 25 instruments transferring or securing title covering livestock or giving a lien on 26 livestock when the market value of the livestock securing the obligation is not at any 27 time less than 115 percent of the face amount of the note covered, are subject under 28 this section, notwithstanding the collateral requirements set out in (b) of this section, 29 to a maximum limitation equal to 25 percent of unimpaired capital and unimpaired 30 surplus; 31 (10) loans or extensions of credit, arising from the discount by dealers

01 in dairy cattle of paper given in payment for dairy cattle and carrying a full recourse 02 endorsement or unconditional guarantee of the seller, that are secured by the cattle 03 being sold, are subject under this section, notwithstanding the collateral requirements 04 set out in (b) of this section, to a maximum limitation equal to 25 percent of 05 unimpaired capital and unimpaired surplus. 06 (d) Except with the written prior approval of the department for an acquisition 07 or merger with another financial institution, or except with the written prior approval 08 of the department in order to prevent loss upon an indebtedness previously contracted 09 in good faith, a state bank may not 10 (1) accept as security for a loan the capital stock of the state bank; 11 (2) accept as security for a loan the capital stock of the state bank's 12 parent holding companies, unless the stock of the holding companies is publicly traded 13 on a nationally recognized exchange; or 14 (3) loan money that is to be used to purchase the capital stock of the 15 state bank or a parent holding company of the state bank. 16 (e) The department may adopt regulations to administer and carry out the 17 purposes of this section, including, notwithstanding any contrary provision of this 18 section, regulations to define or further define terms used in this section in order to 19 establish limits or requirements other than those specified in this section for particular 20 classes or categories of loans or extensions of credit. 21 (f) For purposes of this section, the department may determine when a loan 22 putatively made to a person shall be attributed to another person. 23 (g) In this section, "person" means an individual, sole proprietorship, 24 partnership, joint venture, association, trust, estate, business trust, corporation, or any 25 similar entity or organization. 26 * Sec. 11. AS 06.05.209(b) is amended to read: 27 (b) A state bank may issue a credit card or other similar credit granting device 28 to a customer for obtaining money, goods, services, or anything else of value, and 29 notwithstanding AS 45.45.010, the state bank, when credit is extended under this 30 section, may impose a service charge at a monthly rate as agreed upon by contract 31 between the state bank and the customer receiving the credit granting device

01 [THAT RESULTS IN AN ANNUAL RATE NOT IN EXCESS OF 17 PERCENT ON 02 THE OUTSTANDING BALANCE. HOWEVER, IN ADDITION, WHEN CASH IS 03 ADVANCED UNDER THIS SECTION, THE BANK MAY IMPOSE A SETUP 04 CHARGE THAT DOES NOT EXCEED THREE PERCENT OF THE FUNDS 05 ADVANCED, OR $12, WHICHEVER IS LESS, EXCEPT THAT ON LOANS OF 06 UNDER $100 A MINIMUM NOT EXCEEDING $3 MAY BE CHARGED]. 07 * Sec. 12. AS 06.05.210(a) is amended to read: 08 (a) Subject to the same terms and conditions applicable to other loans, a 09 director or executive [,] officer[, OR EMPLOYEE] of a state bank may borrow up to 10 $100,000, or up to $250,000 for the director's or executive [,] officer's [, OR 11 EMPLOYEE'S] primary residence from the state bank at the discretion of the chief 12 executive or managing officer of the state bank. A loan to a director or executive [,] 13 officer [, OR EMPLOYEE] that makes the total amount owed to the state bank by the 14 director or executive [,] officer [, OR EMPLOYEE] in excess of the limits in this 15 subsection, or loans of any amount to the chief executive or managing officer of the 16 state bank, shall have the prior approval of the board of directors, shall be reported to 17 the department within 30 days, and shall be secured by adequate collateral. 18 * Sec. 13. AS 06.05.210 is amended by adding a new subsection to read: 19 (c) Notwithstanding (a) of this section, loans to directors, executive officers, 20 and other officers and employees of a state bank are subject to the lending limits 21 imposed by AS 06.05.205 and any regulations adopted under that section. 22 * Sec. 14. AS 06.05 is amended by adding a new section to read: 23 Sec. 06.05.237. Financial holding company. Notwithstanding the provisions 24 of AS 06.05.235 and regulations adopted under that section, a holding company 25 formed under this title may apply to the Federal Reserve System for status as a 26 financial holding company. If the status is granted, the financial holding company has 27 powers as a financial holding company authorized by the Federal Reserve System if 28 (1) at the time of application, the holding company provides the 29 department with a complete copy of the application; 30 (2) the holding company provides the department copies of all 31 correspondence concerning the application;

01 (3) the holding company provides the department a copy of the 02 approval by the Federal Reserve System within 10 days after the holding company 03 receives that approval; and 04 (4) the department does not issue a letter denying financial holding 05 company status within 30 days after the approval by the Federal Reserve System. 06 * Sec. 15. AS 06.05.245 is amended to read: 07 Sec. 06.05.245. Disposition of property not needed in the conduct of a 08 banking business. All investments in real and personal property, regardless of how 09 acquired, not permitted [NECESSARY FOR THE CONVENIENT 10 TRANSACTION OR PROMOTION OF A BANKING BUSINESS] under 11 AS 06.05.230 that come [COMES] into the possession of a state bank shall be 12 disposed of as soon as possible. If the real or personal property is not sold within the 13 time limit set [PRESCRIBED] by the department in regulations, it shall be written off 14 and may not be carried as an asset of the state bank. 15 * Sec. 16. AS 06.05.272(b) is amended to read: 16 (b) Under this section, a state bank's total investment in its subsidiaries 17 may not exceed that which is permissible for a federally chartered bank's total 18 investment in all subsidiaries as set out in 12 U.S.C. 24a, as amended [BANK 19 MAY INVEST IN SUBSIDIARIES AN AMOUNT EQUAL TO THE LESSER OF 20 20 PERCENT OF ITS TOTAL ASSETS OR 50 PERCENT OF ITS TOTAL 21 CAPITAL ACCOUNTS]. Loans to subsidiaries are considered investments subject to 22 the limitations of this subsection. 23 * Sec. 17. AS 06.05.301(a) is amended to read: 24 (a) Except for national banks with a principal place of business in the state, 25 and interstate state banks and international banks with a certificate of authority under 26 AS 06.05.555, a corporation may not engage in the banking business unless the 27 corporation is organized under AS 10.06 (Alaska Corporations Code) and this title. 28 * Sec. 18. AS 06.05.350(d) is amended to read: 29 (d) Except as authorized under this section, a person may not 30 (1) engage in the business of receiving deposits, discounting evidences 31 of indebtedness, or receiving money for transmission;

01 (2) represent that the person is [, OR ACTS FOR,] a bank; or 02 (3) use any form of the word "bank" in its name unless it is a state 03 bank formed under this title or a bank formed under the authority of another 04 state or an agency of the federal government, or unless it is clear that the use does 05 not represent that the person is a bank; the prohibition in this paragraph does 06 not apply to a food bank, blood bank, or similar organization that cannot readily 07 be confused with a bank [AN ARTIFICIAL OR CORPORATE NAME THAT 08 PURPORTS TO BE OR SUGGESTS THAT IT IS THE NAME OF A BANK]. 09 * Sec. 19. AS 06.05.350 is amended by adding a new subsection to read: 10 (e) A person prohibited by (d) of this section from using any form of the word 11 "bank" in its name may apply to the commissioner for authority to do so. 12 * Sec. 20. AS 06.05.426(b) is amended to read: 13 (b) A state bank may establish, maintain, and operate an automated teller 14 machine at a location other than bank premises by notifying the department 30 days 15 before the date of establishment [WITH THE PRIOR APPROVAL OF THE 16 DEPARTMENT]. An automated teller machine operated off bank premises shall be 17 made available on a nondiscriminatory basis for use by other depository institutions 18 [BANKS] authorized to do business in the state and their customers, upon the 19 agreement of the other depository institutions [BANKS] to pay a fair and equitable 20 amount for the use of the machine. 21 * Sec. 21. AS 06.05.426(c) is repealed and reenacted to read: 22 (c) The notice required in (b) of this section shall include 23 (1) the location and general description of the surrounding area, 24 including a description of the business establishment, if any, in which the machine will 25 be located; 26 (2) the manner of operation and the kinds of transactions that the 27 machine will perform; 28 (3) the names of the other depository institutions that will share the 29 machine's services; and 30 (4) other information required by the department. 31 * Sec. 22. AS 06.05.426(d) is amended to read:

01 (d) A state bank may invest in a corporation organized to operate machines 02 that perform automated teller services for two or more depository institutions 03 [BANKS, IF EACH BANK OWNS PART OF THE CAPITAL STOCK OF THE 04 CORPORATION]. 05 * Sec. 23. AS 06.05.426 is amended by adding a new subsection to read: 06 (e) A person may not establish or operate an automated teller machine that 07 accepts deposits unless those deposits are insured by the Federal Deposit Insurance 08 Corporation or another agency of the United States that insures deposits. 09 * Sec. 24. AS 06.05.435(c) is amended to read: 10 (c) Unless otherwise approved by the department, each director of a state 11 bank shall own, in the director's own right or jointly with the director's spouse, free of 12 any encumbrance, common or preferred stock of the state bank or of a company 13 that controls the state bank that has an aggregate par value of at least $1,000, an 14 aggregate shareholder's equity of at least $1,000, or an aggregate fair market 15 value of at least $1,000 [CAPITAL STOCK OF THE BANK IN AN AMOUNT 16 EQUAL TO AT LEAST $1,000 IN PAR VALUE]. 17 * Sec. 25. AS 06.05.435 is amended by adding new subsections to read: 18 (h) In the case of a company that owns more than one bank, a director may use 19 the director's equity interest in the controlling company to satisfy, in whole or in part, 20 the equity interest requirement for one or all of the controlled banks. 21 (i) The value of the common or preferred stock held by a director of a state 22 bank or of a company that controls the state bank is valued as of the date purchased, or 23 as of the date on which the individual became a director, whichever value is greater. 24 * Sec. 26. AS 06.05.550 is amended to read: 25 Sec. 06.05.550. Authority of international bank, [OR] interstate state 26 bank, or interstate national bank to branch. (a) An international bank, or an 27 interstate state bank or interstate national bank whose deposits are insured by the 28 Federal Deposit Insurance Corporation[,] may acquire a branch bank as the result of a 29 merger or consolidation of the international bank, [OR] interstate state bank, or 30 interstate national bank with, or the purchase of all or substantially all of the assets 31 of, a state bank, a national bank with its principal office in this state, or a branch of the

01 state [BANK] or national bank, unless the state [BANK] or national bank is a recently 02 formed bank. 03 (b) An international bank may establish a new branch bank in this state or 04 acquire a recently formed bank, if the department approves the establishment or 05 acquisition before the establishment or acquisition occurs. An interstate state bank or 06 interstate national bank may not establish a branch bank in this state unless the 07 establishment occurs through an acquisition under (a) of this section of a bank located 08 in the state. An interstate state bank or interstate national bank may not establish a 09 new branch bank in this state. 10 (c) An interstate state bank, interstate national bank, or international bank 11 that opens, occupies, or maintains a branch bank in the state has the same powers 12 under the laws of the state as a state or national bank of the same type. 13 * Sec. 27. AS 06.05.555(a) is amended to read: 14 (a) Before acquiring a branch bank under AS 06.05.550(a) or establishing a 15 branch bank under AS 06.05.550(b), an interstate state bank or international bank 16 shall file an application with the department for and receive a certificate of authority to 17 operate a branch bank. The application must include 18 (1) all information and fees required under AS 06.05.399; 19 (2) the name of the bank and the address of its principal office; 20 (3) if an international bank, the country under whose laws it is 21 organized; 22 (4) the amount of the bank's capital actually paid in cash and the 23 amount subscribed for and unpaid; 24 (5) a complete and detailed statement of the bank's financial condition; 25 (6) the names of all other states and countries in which the bank is 26 admitted or qualified to do business; 27 (7) a copy of the bank's charter, articles of incorporation, and bylaws, 28 as applicable; 29 (8) if an international bank, evidence satisfactory to the department 30 that the bank is authorized to conduct a banking business under the laws of the country 31 of its organization, and the nature of the bank's business;

01 (9) a properly executed designation of the department as the bank's 02 agent for service of process in an action or proceeding arising out of a transaction 03 involving the branch bank; the designation must include the name and address of the 04 officer, agent, or other person to whom the department is to forward the process; and 05 (10) other information necessary or appropriate for the department to 06 determine whether the bank is entitled to a certificate of authority from the 07 department. 08 * Sec. 28. AS 06.05.555(b) is amended to read: 09 (b) The department shall notify the interstate state bank or international bank 10 of its action on the application. If the application and the accompanying documents do 11 not comply with the requirements of (a) of this section, the department shall return 12 them with an explanation of the noncompliance. If the department does not respond 13 within 30 days of its receipt of the application, the application is considered to be 14 accepted. 15 * Sec. 29. AS 06.05.555(c) is amended to read: 16 (c) The interstate state bank or international bank shall publish notice of the 17 application in the manner provided in AS 06.05.344(d) - (e). The notice must state the 18 proposed location of the branch bank. 19 * Sec. 30. AS 06.05.555(d) is amended to read: 20 (d) Upon acceptance of the application, the department shall conduct an 21 investigation to determine that 22 (1) if an interstate state bank, 23 (A) the laws of the home state of the bank authorize a state 24 bank of this state to acquire a branch bank in the home state without conditions 25 or restrictions on the operations of the branch bank; and 26 (B) the bank supervisor of the home state of the bank has 27 agreed to provide to the department the examination reports that the 28 department determines sufficient to permit the department to determine on a 29 current basis the financial condition of the bank; 30 (2) the proposal is consistent with a sound and competitive banking 31 system;

01 (3) the capital structure of the bank is adequate in relation to the 02 anticipated business and costs of operating the branch bank; 03 (4) the name of the bank is not deceptively similar to the name of 04 another branch bank or state bank and is not otherwise misleading; and 05 (5) the other requirements of this chapter have been met. 06 * Sec. 31. AS 06.05.555(e) is amended to read: 07 (e) Not later than 150 days after the department accepts an application by an 08 interstate state bank or international bank for a certificate of authority to operate a 09 branch bank, the department shall make a determination whether to approve the 10 application. Within 30 days after the second publication of the notice referred to in (c) 11 of this section, a person opposing the pending application may file written objections 12 with the department. When it approves or denies the application, the department shall 13 notify the bank and any other person who requested in writing to be notified, and if the 14 application is denied, the department shall state the reasons for its decision. 15 * Sec. 32. AS 06.05.555(f) is amended to read: 16 (f) The department shall issue a certificate of authority to an interstate state 17 bank or international bank to operate a branch bank if 18 (1) the conditions imposed by the department in granting the certificate 19 have been fulfilled; and 20 (2) the requirements of this chapter are satisfied. 21 * Sec. 33. AS 06.05 is amended by adding a new section to read: 22 Sec. 06.05.557. Notice filing for interstate national banks. An interstate 23 national bank acquiring a branch in this state under AS 06.05.550 shall file a notice of 24 the acquisition with the department along with a copy of the application filed with the 25 agency that primarily regulates the interstate national bank. The notice and copy of 26 the application shall be filed with the department at the same time the application is 27 filed with the agency that primarily regulates the interstate national bank. 28 * Sec. 34. AS 06.05.565(a) is amended to read: 29 (a) An interstate state bank or international bank operating a branch bank in 30 the state is subject to the provisions of this title, and the regulations adopted and orders 31 issued under this title, except for the residency requirements in AS 06.05.435(a).

01 * Sec. 35. AS 06.05.565(c) is amended to read: 02 (c) A branch bank of an interstate state bank or international bank operating 03 in the state is subject to examination under AS 06.01.015 and assessments under 04 AS 06.01.010. Assessments under AS 06.01.010(d) are based on the branch bank's 05 total deposits in the state. 06 * Sec. 36. AS 06.05.565(d) is amended to read: 07 (d) When the department considers it necessary to protect the public interest, 08 the department or a competent person designated by the department may examine an 09 interstate state bank or international bank with a branch in the state. The interstate 10 state bank or international bank shall pay an examination fee established under 11 AS 06.01.010. 12 * Sec. 37. AS 06.05.565(e) is amended to read: 13 (e) The department may require periodic reports from an interstate state 14 bank or an interstate national bank [OUT-OF-STATE DEPOSITORY 15 INSTITUTION] that maintains a branch in this state and from a bank holding 16 company that controls the interstate state bank or interstate national bank [OUT- 17 OF-STATE DEPOSITORY INSTITUTION]. The reports shall be made under oath 18 and filed as frequently as required by the department. The reports must contain the 19 information and detail that the department determines to be appropriate to assure 20 continuing compliance of the interstate state bank or interstate national bank 21 [OUT-OF-STATE DEPOSITORY INSTITUTION] with the provisions 22 [PROVISION] of this title. 23 * Sec. 38. AS 06.05.565 is amended by adding a new subsection to read: 24 (g) An interstate national bank operating a branch bank in this state is subject 25 to the provisions of AS 06.05.548 and 06.05.550, and the regulations adopted and 26 orders issued under these sections. 27 * Sec. 39. AS 06.05.570(a) is amended to read: 28 (a) An out-of-state bank holding company may acquire and own all or a 29 portion of the voting securities or other capital stock of, or all or substantially all of the 30 assets of, one or more state banks, domestic bank holding companies, or national 31 banks conducting a banking business in the state, unless the state bank or national

01 bank is a recently formed bank. Before an out-of-state bank holding company may 02 acquire a state bank or bank holding company of a state bank doing business in this 03 state, the out-of-state bank holding company shall apply for and obtain a permit from 04 the department. In considering whether to issue a permit, the department shall 05 consider the benefits to the public, the preservation of a competitive banking industry, 06 and the maintenance of a safe and sound bank industry. To assure full protection of 07 the public, the department may require an out-of-state bank holding company that 08 directly or indirectly owns, holds, or controls stock in a state bank or domestic bank 09 holding company to post a bond with the department under conditions established by 10 the department. The amount of the bond may not be more than the product obtained 11 by multiplying the amount of paid-in capital and paid-in surplus of the state bank or 12 domestic bank holding company by the percentage of state bank or domestic bank 13 holding company stock directly or indirectly owned, held, or controlled by the out-of- 14 state bank holding company. 15 * Sec. 40. AS 06.05.990(11) is amended to read: 16 (11) "domestic bank holding company" means a corporation subject to 17 AS 06.05.235 that maintains its principal office and place of business in the state and 18 that has control over a bank or another domestic bank holding company in one of the 19 following ways: 20 (A) the corporation directly or indirectly or acting through one 21 or more other persons owns, controls, or has power to vote 25 percent or more 22 of a class of voting securities of the bank or holding company; 23 (B) the corporation controls in any manner the election of a 24 majority of the directors or trustees of the bank or holding company; [OR] 25 (C) the department determines, after notice and opportunity for 26 hearing, that the corporation directly or indirectly exercises a controlling 27 influence over the management of the policies of the bank or holding 28 company; 29 * Sec. 41. AS 06.05.990(13) is amended to read: 30 (13) "financial institution" means an institution subject to the 31 regulation of the department under this title; "financial institution" includes

01 commercial banks, savings banks, credit unions, premium finance companies, 02 small loan companies, bank holding companies, financial holding companies, 03 trust companies, and savings and loan associations; 04 * Sec. 42. AS 06.05.990(19) is repealed and reenacted to read: 05 (19) "loan" includes an extension of credit resulting from direct or 06 indirect negotiations between a lender and a debtor; 07 * Sec. 43. AS 06.05.990(22) is amended to read: 08 (22) "recently formed bank" means a state bank or national bank that 09 conducts a banking business in the state and that commenced the banking business in 10 the state on or after July 1, 1982, and that has not been in existence and continuously 11 operating in the state for a period of three years or more; "recently formed bank" does 12 not include 13 (A) a bank organized solely for the purpose of facilitating 14 acquisition of a bank that either has been in existence and continuously 15 operating in the state as a bank for a three-year period, or was conducting a 16 banking business in the state on or before June 30, 1982; 17 (B) a state bank that the department determines was not created 18 directly or indirectly by an acquiring interstate state bank, interstate national 19 bank, international bank, or out-of-state bank holding company, and that does 20 not have the capacity to continue to conduct its business independently in a 21 manner consistent with the public interest and the interest of depositors, 22 creditors, and shareholders; or 23 (C) a national bank that the board of governors of the Federal 24 Reserve System, or their designee, determines is not chartered directly or 25 indirectly by an acquiring out-of-state bank holding company, and that does 26 not have the capacity to conduct its business independently in a manner 27 consistent with the public interest of depositors, creditors, and shareholders; 28 * Sec. 44. AS 06.05.990(24) is amended to read: 29 (24) "state financial institution" means a financial institution that is 30 organized under this title, AS 10.13, or AS 44.81, or that is subject to examination 31 by the department under this title;

01 * Sec. 45. AS 06.05.990 is amended by adding new paragraphs to read: 02 (29) "affiliates" with respect to a state bank, means 03 (A) a company that controls the state bank and another 04 company that is controlled by the company that controls the state bank; 05 (B) a bank subsidiary of the state bank; 06 (C) a company 07 (i) that is controlled directly or indirectly, by a trust or 08 otherwise, by or for the benefit of the shareholders who beneficially or 09 otherwise control, direct or indirectly, by trust or otherwise, the state 10 bank or a company that controls the state bank; or 11 (ii) in which a majority of its directors or trustees 12 constitute a majority of the persons holding that office with the state 13 bank or a company that controls the state bank; 14 (D) a company, including a real estate investment trust, that is 15 sponsored and advised on a contractual basis by the state bank or a subsidiary 16 or affiliate of the state bank; or a investment company with respect to which a 17 state bank or any affiliate of the state bank is an investment advisor as defined 18 in 15 U.S.C. 80a-2(a)(20), as amended; and 19 (E) a company that the department determines by order to have 20 a relationship with the state bank or a subsidiary or affiliate of the state bank, 21 such that covered transactions by the state bank or its subsidiary with that 22 company may be affected by the relationship of the state bank or its subsidiary; 23 (30) "extension of credit" means a negotiable instrument as defined in 24 AS 45.03.104; "extension of credit" includes promissory notes, acknowledgments of 25 advance, due bills, invoices, overdrafts, acceptances, and similar written or oral 26 obligations or evidence of debt whether secured or unsecured; 27 (31) "financial holding company" means an existing, or newly formed, 28 domestic bank holding company that has been approved as a financial holding 29 company by the Federal Reserve System and not denied that status by the department 30 under AS 06.05.237; 31 (32) "interstate national bank" means a national bank whose principal

01 office, as designated in its articles of incorporation, is not located in this state; 02 (33) "interstate state bank" means a corporation, partnership, or 03 association organized under the laws of another state and holding a charter, license, or 04 certificate of authority from another state to engage in a banking business. 05 * Sec. 46. AS 06.15.100 is repealed and reenacted to read: 06 Sec. 06.15.100. Prohibited conduct of trustees. A trustee may not 07 (1) receive remuneration as trustee except reasonable fees for 08 attendance at meetings of trustees or for services as a member of a committee of 09 trustees; 10 (2) use the position as trustee, or knowingly allow it to be used, to 11 obtain preferential terms in dealings with the mutual bank for which the person is 12 trustee; 13 (3) use the position as trustee, or knowingly allow it to be used, to 14 induce any actual or prospective borrower from the mutual bank for which the person 15 is trustee to purchase goods or services at a direct or indirect profit to the trustee. 16 * Sec. 47. AS 06.15 is amended by adding a new section to read: 17 Sec. 06.15.105. Trustee borrowing. A person may borrow money from the 18 mutual bank for which the person is trustee to the same extent that a director may 19 borrow money under AS 06.05.210. 20 * Sec. 48. AS 06.20.010 is amended by adding a new subsection to read: 21 (b) A person who is doing business under and as permitted by any law of the 22 state or of the United States relating to banks, savings banks, trust companies, building 23 and loan associations, or credit unions and who is exempt from the licensing 24 requirement in (a) of this section shall comply with all other provisions of this chapter. 25 * Sec. 49. AS 06.45.020(a) is amended to read: 26 (a) Seven or more natural persons who desire to form a credit union shall 27 subscribe before an officer competent to administer oaths, articles of incorporation in 28 duplicate that must state 29 (1) the name of the credit union; 30 (2) the location of the credit union and the territory in which it will 31 operate;

01 (3) the names and addresses of the subscribers to the certificate and the 02 number of shares each subscribed; 03 (4) the par value of the shares, which shall be a minimum of $5 each; 04 (5) the proposed field of membership specified in detail; 05 (6) the term of the existence of the credit union, which may be 06 perpetual; and 07 (7) the fact that the articles of incorporation are adopted to enable the 08 persons to avail themselves of the advantages of this chapter. 09 * Sec. 50. AS 06.45.060(5) is amended to read: 10 (5) make loans, the maturities of which may not exceed 20 [12] years 11 except as provided in this chapter, and extend lines of credit to its members, to other 12 credit unions, and to credit union organizations and participate with other credit 13 unions, credit union organizations, or financial organizations in making loans to credit 14 union members in accordance with the following: 15 (A) loans to members shall be made in conformity with 16 regulations adopted by the commissioner, except that 17 (i) a residential real estate loan which is made to finance 18 the acquisition of a one- to four-family dwelling for the principal 19 residence of a credit union member which is secured by a first lien on 20 the dwelling may have a maturity not exceeding 30 years; 21 (ii) a loan to finance the purchase of a mobile home, 22 which is secured by a first lien on the mobile home, to be used as the 23 residence of a credit union member, or for the repair, alteration, or 24 improvement of a residential dwelling that is the residence of a credit 25 union member shall have a maturity not to exceed 20 [15] years unless 26 the loan is insured or guaranteed under (iii) of this subparagraph; 27 (iii) a loan secured by the insurance or guarantee of the 28 federal government, of a state government, or an agency of either may 29 be made for the maturity and under the terms and conditions specified 30 in the law under which the insurance or guarantee is provided; 31 (iv) a loan or aggregate of loans to a director or member

01 of the supervisory or credit committee of the credit union making the 02 loan which exceeds $5,000 plus pledged shares shall be approved by 03 the board of directors; 04 (v) loans to other members for which directors or 05 members of the supervisory or credit committee act as guarantor or 06 endorser shall be approved by the board of directors when the loans 07 standing alone or when added to an outstanding loan or loans of the 08 guarantor or endorser exceed $5,000; 09 (vi) the rate of interest may not exceed the greater of 15 10 percent a year or the rate specified in AS 45.45.010(b); 11 (vii) the taking, receiving, reserving, or charging of a 12 rate of interest greater than is allowed by this paragraph, when 13 knowingly done, is considered a forfeiture of the entire interest that the 14 note, bill, or other evidence of debt carries with it, or that has been 15 agreed to be paid on the note, bill, or other evidence of debt; if a greater 16 rate of interest has been paid, the person by whom it has been paid or 17 the person's legal representatives may recover back from the credit 18 union taking or receiving it the entire amount of interest paid, but the 19 action must be commenced within two years from the time the usurious 20 collection was made; 21 (viii) a borrower may repay a loan before maturity in 22 whole or in part on any business day without penalty; 23 (ix) loans shall be paid or amortized under regulations 24 adopted by the commissioner that consider the needs or conditions of 25 the borrowers, the amounts and duration of the loans, the interests of 26 the members and the credit union, and other factors established in 27 regulations adopted by the commissioner; 28 (x) the total dollar amount of real estate loans and 29 mobile home loans outstanding may not exceed 25 percent of the assets 30 of the credit union without the written approval of the commissioner; 31 (xi) a credit union with assets of less than $3,000,000

01 may make real estate loans with maturities in excess of 15 years only 02 with the approval of the commissioner; 03 (B) a self-replenishing line of credit to a borrower may be 04 established to a stated maximum amount on terms and conditions that may be 05 different from terms and conditions established for another borrower; 06 (C) loans to other credit unions require the approval of the 07 board of directors of the loaning credit union; 08 (D) loans to credit union associations require the approval of 09 the board of directors of the credit union and may not exceed one percent of 10 the paid-in and unimpaired capital and surplus of the credit union; 11 (E) participation loans with other credit unions, credit union 12 associations, or financial organizations shall be made in accordance with 13 written policies of the board of directors of the credit union, except that a credit 14 union that originates a loan for which participation arrangements are made in 15 accordance with this section shall retain an interest not less than 10 percent of 16 the face amount of the loan; 17 * Sec. 51. AS 06.45.060(7) is amended by adding new subparagraphs to read: 18 (L) in bankers' acceptances issued by a financial institution 19 whose accounts are insured by an agency of the federal government; 20 (M) stock of a federal home loan bank; the investment must be 21 limited to the minimum amount of stock required for membership in a federal 22 home loan bank, plus any additional stock purchase required to obtain an 23 advance of funds from a federal home loan bank; 24 (N) in obligations of, or issued by, any state or political 25 subdivision of the state, except that a credit union may not invest more than 10 26 percent of its unimpaired capital and surplus in the obligations of any one 27 issuer, exclusive of general obligations of the issuer; in this subparagraph, 28 "political subdivision of the state" includes an agency, corporation, or 29 instrumentality of a state or political subdivision; 30 * Sec. 52. AS 06.45.060 is amended by adding a new paragraph to read: 31 (16) issue solicited or unsolicited credit cards or other similar credit

01 granting devices to a member for obtaining money, goods, services or anything else of 02 value; notwithstanding (5)(A)(vi) of this section and AS 45.45.010, when credit is 03 extended under this section, the credit union may impose a service charge at a monthly 04 rate as agreed upon by contract between the credit union and the member receiving the 05 credit granting device, but the credit union may not hold the member liable for charges 06 made on a credit card or other credit granting device before its acceptance by the 07 member; before an unsolicited card is considered accepted by the member, the 08 member shall execute and furnish to the credit union a written statement of 09 acceptance; in addition, a credit union may charge fees for credit cards or other similar 10 credit granting devices. 11 * Sec. 53. AS 06.45 is amended by adding a new section to read: 12 Sec. 06.45.295. Automated teller machines. (a) A state credit union may 13 establish, maintain, and operate an automated teller machine on the premises of the 14 main office or a branch office of the state credit union. 15 (b) A state credit union may establish, maintain, and operate an automated 16 teller machine at a location other than credit union premises by notifying the 17 department 30 days before the date of establishment. An automated teller machine 18 operated off credit union premises shall be made available on a nondiscriminatory 19 basis for use by other depository institutions authorized to do business in the state and 20 their customers, upon the agreement of the other depository institutions to pay a fair 21 and equitable amount for the use of the machine. 22 (c) The notice required in (b) of this section shall include 23 (1) the location and general description of the surrounding area, 24 including a description of the business establishment, if any, in which the machine will 25 be located; 26 (2) the manner of operation and the kinds of transactions that the 27 machine will perform; 28 (3) the names of the other depository institutions that will share the 29 machine's services; and 30 (4) other information required by the department. 31 (d) A state credit union may invest in a corporation organized to operate

01 machines that perform automated teller services for two or more depository 02 institutions. 03 (e) A person may not establish or operate an automated teller machine that 04 accepts deposits unless those deposits are insured by the National Credit Union Share 05 Insurance Fund or another agency of the United States that insures deposits. 06 * Sec. 54. AS 06.05.175, 06.05.005(4), 06.05.272(d), 06.05.990(18); and AS 06.20.330(a) 07 are repealed. 08 * Sec. 55. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to 11 (1) change the heading of AS 06.05.555 from "Certificate of authority for 12 interstate and international branching" to "Certificate of authority for interstate state bank and 13 international bank branching"; and 14 (2) change the heading of AS 06.05.565 from "Applicability of title to 15 interstate or international banks, to out-of-state depository institutions, and to bank holding 16 companies" to "Applicability of title to interstate state banks, interstate national banks, 17 international banks, and bank holding companies". 18 * Sec. 56. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: REGULATIONS. Notwithstanding sec. 58 of this Act, the 21 Department of Community and Economic Development may immediately proceed to adopt 22 regulations necessary to implement the changes made by this Act. The regulations take effect 23 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 24 statutory changes. 25 * Sec. 57. Section 56 of this Act takes effect immediately under AS 01.10.070(c). 26 * Sec. 58. Except as provided in sec. 57 of this Act, this Act takes effect July 1, 2001.