Chapters

CHAPTER 412 [CODE OF FINANCIAL INSTITUTIONS]

Contents 412:1-100 Short title 412:1-101 Purpose 412:1-102 Scope and application of chapter 412:1-103 Application to existing financial institutions 412:1-104 Names 412:1-105 Deposits 412:1-106 Headings; references 412:1-107 Particular provisions prevail 412:1-108 Jurisdiction conferred upon circuit court 412:1-109 Definitions 412:2-100 Commissioner of financial institutions; division of financial institutions 412:2-100.5 Powers of the commissioner 412:2-101 Deputy commissioner, acting commissioner 412:2-102 Examiners and other personnel 412:2-103 Disqualifications 412:2-104 Confidentiality of information possessed by commissioner 412:2-105 Fees 412:2-105.1 Hawaii financial institutions; fees; penalty 412:2-105.2 Hawaii financial institutions; assessments; fees; penalty 412:2-106 Public or private hearings 412:2-107 Rules 412:2-108 Alternative mortgage loans rules 412:2-109 Compliance resolution fund; financial institution examiners 412:2-110 Emergency applications 412:2-111 Commissioner's power to subpoena 412:2-200 Examinations 412:2-201 Use of federal examinations 412:2-300 Enforcement actions 412:2-301 Joint enforcement with federal regulatory agency 412:2-302 Cease and desist orders; grounds for issuance 412:2-303 Permanent cease and desist orders; procedure; hearing; enforcement 412:2-304 Temporary cease and desist orders; effective date; hearing; enforcement 412:2-305 Consent cease and desist orders 412:2-306 Removal or prohibition of institution-affiliated party; grounds 412:2-307 Removal or prohibition of institution-affiliated party; procedure; hearing; enforcement 412:2-308 Order of immediate suspension; procedure; effective date; hearing; enforcement 412:2-309 Consent order of removal or prohibition 412:2-310 Removal, prohibition, or suspension; effect of order 412:2-311 Suspension or revocation of charter or license 412:2-312 Suspension or revocation; procedure; hearing; enforcement 412:2-313 Consent suspension and revocation order 412:2-314 Action to correct capital and surplus impairment 412:2-315 National or state emergencies 412:2-400 Grounds for appointment of conservator or receiver 412:2-401 Appointment of conservator or receiver; judicial review 412:2-402 Additional grounds for appointment 412:2-403 Who may serve as conservator or receiver 412:2-404 Federal insurer as conservator or receiver; subrogation 412:2-405 Removal or replacement of conservator or receiver 412:2-406 Compensation and expenses of conservator or receiver 412:2-407 Stay of judicial proceedings 412:2-408 Duties and powers of conservator 412:2-409 Conservator's segregation of deposits 412:2-410 Supervised reorganization 412:2-411 Termination of conservatorship 412:2-412 Duties and powers of receiver 412:2-413 No interest on deposits of an institution in receivership 412:2-414 Optional court supervision 412:2-415 Notice of receivership; filing of claims 412:2-416 Liquidation by receiver; priority of claims 412:2-417 Final accounting and discharge 412:2-418 Transfer of assets in contemplation of insolvency void 412:2-419 Treatment of lessors 412:2-420 Claims for wrongful termination of employment 412:2-421 Bailments and safe deposit boxes in receivership 412:2-500 Definitions 412:2-501 Commissioner's determination of failing institution 412:2-502 Solicitation of purchasers 412:2-503 Applications to purchase 412:2-504 Granting of application; criteria for approval 412:2-505 Waiver of statewide concentration limits under the Bank Holding Company Act of 1956, as amended 412:2-506 Charter or license 412:2-507 Expedited approvals 412:2-508 Provisional approval to organize 412:2-509 Effect of merger or acquisition on prior business, title and obligations 412:2-510 Commissioner's powers 412:2-511 Modification of time periods 412:2-512 Repealed 412:2-600 Applicability of part 412:2-601 Violation of chapter 412:2-602 Copying records of Hawaii financial institutions 412:2-603 Disclosures of records of Hawaii financial institutions 412:2-604 Concealment 412:2-605 Repealed 412:2-606 Witness; failure to testify or produce records 412:2-606.5 Financial institution name fraud 412:2-607 Deception; false statements 412:2-608 Misapplication of funds 412:2-609 Imposition of administrative fines; assessment 412:2-609.5 Imposition of administrative fines on persons who are not Hawaii financial institutions; assessment 412:2-610 Compromise or modification of administrative fines; 412:2-611 Action to recover administrative fines; deposit to compliance resolution fund 412:3-100 Applicability of this part 412:3-101 Name of financial institution 412:3-102 Change of name 412:3-103 Repealed 412:3-104 Qualifications of directors 412:3-105 Election and appointment of executive officers 412:3-106 Residency of chief executive officer 412:3-107 Meetings of the board 412:3-108 Generally accepted accounting principles 412:3-109 Charging down assets 412:3-110 Holding of assets 412:3-111 Maintenance of books and records 412:3-111.5 Request for information by the commissioner 412:3-112 Submissions to commissioner 412:3-113 Repealed 412:3-114 Duty to report illegal acts 412:3-114.5 Mandatory reporting of suspected financial abuse of an elder 412:3-115 Repealed 412:3-200 Applicability of part 412:3-201 Application for preliminary approval to organize a financial institution 412:3-202 Additional requirements for holding company 412:3-203 Deferral of application requirements 412:3-204 Publication of notice 412:3-205 Informational and comment proceeding on application 412:3-206 Grant of preliminary approval to organize a financial institution 412:3-207 Denial of preliminary approval to organize 412:3-208 Repealed 412:3-209 Paid-in capital and surplus 412:3-210 Repealed 412:3-211 Time limit to complete organization 412:3-212 Final application for charter or license 412:3-213 Denial of charter or license 412:3-300 Applicability of part 412:3-301 Application for license 412:3-302 Publication of notice 412:3-303 Informational and comment proceeding 412:3-304 Grant of approval 412:3-305 Denial of license 412:3-306 Paid-in capital and surplus 412:3-400 Applicability of part 412:3-401 Applicability of Hawaii Business Corporation Act 412:3-402 Capital stock 412:3-403 Dividends and other capital distributions 412:3-500 Prohibition of business at unauthorized locations 412:3-501 Authorized places of business 412:3-502 Foreign financial institution 412:3-503 Opening or relocating principal office, branch, or agency 412:3-504 Notice and deadline for opening or relocating principal office, branch, or agency 412:3-505 Opening or relocating out-of-state branch or agency 412:3-506 Opening or relocating a support facility 412:3-507 Closing branch or agency; temporary closures and relocations 412:3-508 Closing a support facility 412:3-509 Out-of-state branch or agency 412:3-600 Applicability of this part 412:3-601 No conversions, mergers, consolidations, acquisitions, assumptions, voluntary cessations of 412:3-602 Definitions 412:3-603 Procedure for applications pursuant to this part 412:3-604 Shareholder or member vote 412:3-605 Notice to credit union member 412:3-606 Conversion from State to comparable federal financial institution 412:3-607 Conversion from federal to comparable Hawaii financial institution 412:3-608 Conversion to another type of financial institution 412:3-609 Merger or consolidation of Hawaii financial institutions 412:3-610 Effect of conversion, merger, or consolidation 412:3-611 Merger or consolidation of financial institution holding companies 412:3-612 Acquisition of control of financial institution or financial institution holding company 412:3-613 Sale or acquisition of assets and transfer or assumption of liabilities 412:3-614 Sale or transfer of charter or license prohibited 412:3-615 Nonconforming assets or business 412:3-616 Authority for expedited conversion, merger, consolidation, acquisition, or assumption 412:3-617 Voluntary cessation of business; dissolution 412:3-618 Injunctions 412:4-100 Law applicable 412:4-101 Forms of deposit 412:4-102 Deposit account statements 412:4-103 Statements presumed correct after one year; statute of limitations 412:4-104 Federal deposit insurance required 412:4-105 Accounts held in more than one name 412:4-106 Fiduciary accounts 412:4-107 Accounts of minors 412:4-108 No notice of incapacity 412:4-109 Checks drawn or transfers or withdrawals made by authorized persons 412:4-110 Checks drawn or transfers or withdrawals made by intoxicated persons 412:4-111 Accounts of deceased nonresidents 412:4-112 Pledging of assets 412:5-100 Definition 412:5-101 Necessity for bank charter 412:5-200 General powers 412:5-201 Powers granted under federal law 412:5-202 Membership in federal banks 412:5-203 Operating subsidiaries 412:5-204 Acceptances of drafts and bills of exchange 412:5-205 Authority to engage in trust business 412:5-205.5 Insurance and annuities powers 412:5-205.6 Requirements of banks engaging in insurance activities 412:5-205.7 Securities powers 412:5-206 International banking facilities 412:5-300 Applicability of part 412:5-301 General requirements for loans 412:5-302 Limitations on loans and extensions of credit to one borrower 412:5-303 Loans to executive officers, directors, principal shareholders and affiliates 412:5-304 General requirement for investments 412:5-305 Permitted investments 412:5-306 Deposits made by banks 412:5-400 Definitions 412:5-401 Required approval 412:5-402 Procedure to obtain approval 412:5-403 Examination and regulation 412:5-404 Termination of authority of intra-Pacific bank 412:5-405 Termination of authority of intra-Pacific bank holding company 412:5-406 Paid-in capital and surplus 412:5-407 Same powers and duties as banks 412:5A-100 Applicability of other provisions of this chapter 412:5A-200 Scope and definitions 412:5A-201 Application; fee; approval 412:5A-202 Majority ownership by bank 412:5A-203 Paid-in capital and surplus 412:5A-204 Prohibition of business in United States 412:5A-205 Powers and duties 412:5A-206 Acceptance of deposits and reserves 412:5A-207 Deposit of corporate funds 412:5A-208 Limitation on investments 412:5A-209 Acquisition of stock in competing corporation 412:5A-210 Acquisition of stock to save a loss 412:5A-211 Prohibited corporate activities 412:5A-212 Improper discounting of loans 412:5A-213 Improper fixing of commodity prices 412:5A-214 Misrepresentation of state liability for bonds 412:5A-300 to 316 Repealed 412:6-100 Definition 412:6-101 Necessity for savings bank charter 412:6-200 General powers 412:6-201 Powers granted under federal law 412:6-202 Membership in federal home loan bank 412:6-203 Service corporations 412:6-204 Operating subsidiaries 412:6-300 Applicability of part 412:6-301 General requirements for loans 412:6-302 Requirements and limits for certain loans 412:6-303 Limitations on loans and extensions of credit to one borrower 412:6-304 Loans and extensions of credit to executive officers, directors, principal shareholders and 412:6-305 General requirement for investments 412:6-306 Permitted investments 412:6-307 Deposits made by savings banks 412:7-100 Definition 412:7-101 Necessity for savings and loan association charter 412:7-200 General powers 412:7-201 Powers granted under federal law 412:7-202 Membership in federal home loan bank 412:7-203 Service corporations 412:7-204 Operating subsidiaries 412:7-300 Applicability of part 412:7-301 General requirements for loans 412:7-302 Requirements and limits for certain loans 412:7-303 Limitations on loans and extensions of credit to one borrower 412:7-304 Loans and extensions of credit to executive officers, directors, principal shareholders and 412:7-305 General requirement for investments 412:7-306 Permitted investments 412:7-307 Deposits made by savings and loan associations 412:7-400 to 408 Repealed 412:8-100 Applicability of article 412:8-101 Definitions 412:8-102 Necessity for trust company charter 412:8-103 Authority to serve as trustee 412:8-200 General powers 412:8-201 Fiduciary powers 412:8-202 Acting as agent 412:8-203 Use of nominees 412:8-204 Agreement between trust companies and banks 412:8-300 Applicability of part 412:8-301 Permitted investments of capital and surplus 412:8-302 Deposits made by trust companies 412:8-400 General requirements 412:8-401 Trust funds awaiting investment 412:8-402 Common trust fund investments 412:8-403 Disclosure of fees 412:9-100 Definitions 412:9-101 Necessity for financial services loan company license 412:9-102 Annual license fee 412:9-103 Display of license 412:9-200 General powers 412:9-201 Powers that require regulatory approval 412:9-202 Prohibitions 412:9-300 General requirements for loans and extensions of credit 412:9-301 Interest computation methods 412:9-302 Interest rates 412:9-303 Effect of excessive interest 412:9-304 Consumer loan charges 412:9-305 Open-end consumer loans 412:9-306 Refunds on prepayment of a precomputed loan 412:9-307 Fraction of a month 412:9-308 Repayment terms 412:9-309 Assignments, sale or pledge of loans 412:9-400 Special powers of a depository financial services loan company 412:9-401 Required reserve for a depository financial services loan company 412:9-402 Membership in federal home loan bank 412:9-403 Service corporations 412:9-404 Limitations on loans and extensions of credit to one borrower 412:9-405 Loans and extensions of credit fully secured by real property 412:9-406 Repealed 412:9-407 Limits on transactions with affiliates, executive officers, directors or principal shareholders 412:9-408 General requirement for investments 412:9-409 Permitted investments 412:9-410 Deposits made by depository financial services loan companies 412:9-500 Prohibitions 412:9‑501 Registration of nondepository financial services loan companies with NMLS 412:10-100 Definitions 412:10-101 Necessity for credit union charter 412:10-102 Capital stock or surplus 412:10-103 Application for charter 412:10-104 Articles and bylaws 412:10-105 Disclosure of information 412:10-106 Deposit and share insurance 412:10-107 Grant of approval 412:10-108 Denial of charter 412:10-109 Membership 412:10-110 Membership meetings 412:10-111 Voting 412:10-112 Board of directors 412:10-113 No compensation of directors or committee members 412:10-114 Credit committee 412:10-115 Credit manager 412:10-116 Loan officers 412:10-117 Supervisory committee 412:10-118 Record of officials 412:10-119 Conflicts of interest 412:10-120 Suspension or removal of officials 412:10-121 Central credit unions 412:10-122 Taxation 412:10-123 Fiscal year 412:10-124 Conducting business outside this State 412:10-125 Credit union advisory board 412:10-200 General powers 412:10-201 Powers granted under federal law 412:10-202 Credit union service organizations 412:10-203 Sale or purchase of obligations or notes 412:10-204 Sale or purchase of assets 412:10-300 Applicability of other provisions of this chapter 412:10-301 Share accounts and membership shares 412:10-302 Dividends 412:10-303 Deposit accounts 412:10-304 Withdrawals 412:10-305 Minor accounts 412:10-306 Joint accounts 412:10-307 Trust accounts 412:10-308 Payable-on-death accounts 412:10-309 Liens 412:10-310 Dormant accounts 412:10-400 Applicability of part 412:10-401 General requirements for loans 412:10-402 Loans to members 412:10-403 Interest rates 412:10-404 Other charges 412:10-405 Applications 412:10-406 Prepayment of loan 412:10-407 Limitations on obligations of one borrower 412:10-408 Loans to officials 412:10-409 Real estate mortgage loans 412:10-410 Lines of credit 412:10-411 Loans to other credit unions 412:10-412 Participation loans 412:10-413 Other loan programs 412:10-500 Applicability of part 412:10-501 General requirement for investments 412:10-502 Permitted investments 412:10-503 Deposits made by credit unions 412:10-600 Regular reserve 412:10-601 Special reserves 412:10-602 Risk assets 412:10-700 Insurance for members 412:10-701 Liability insurance for officers 412:10-702 Group purchasing 412:10-703 Money-type instruments 412:10-704 Retirement accounts 412:10-800 Application of part 412:10-801 Purposes 412:10-802 Membership 412:10-803 Organization 412:10-804 Management and operation of corporate credit union 412:10-805 Powers 412:10-806 Participation in central system 412:10-807 Collection on loans to members 412:10-808 Meetings 412:11-100 Applicability of article 412:11-101 Registration and reporting of financial institution 412:11-102 Examination of financial institution holding company 412:11-103 Use of state or federal examinations 412:11-104 Service of process 412:11-105 Sanctions for failure to register or submit reports 412:11-106 Injunctions 412:12-100 Purpose 412:12-101 Definitions 412:12-102 Authority of Hawaii state banks to establish interstate branches by merger 412:12-103 Authority of Hawaii state banks to establish a de novo interstate branch or acquire an interstate 412:12-104 Authority of out-of-state banks to establish interstate branches in Hawaii by merger 412:12-105 Authority of out-of-state banks to establish a de novo interstate branch or acquire an interstate 412:12-106 No concentration limit under Hawaii state law; waiver of federal concentration limits 412:12-107 Powers; additional branches 412:12-108 Examinations; periodic reports; cooperative agreements; assessment of fees 412:12-109 Enforcement 412:12-110 Notice of subsequent merger, etc. 412:13-100 Title and purpose 412:13-101 Application to existing foreign banks 412:13-102 Definitions 412:13-200 Purpose 412:13-201 Branches and agencies of foreign banks; necessity of licensure 412:13-202 Application to establish and maintain a branch or agency; contents 412:13-203 Application to establish and maintain a branch or agency; manner of filing and determination 412:13-204 Denial of license 412:13-205 Amended license to establish and maintain a branch or agency 412:13-206 Application fees 412:13-207 No concurrent maintenance of federal branches or agencies 412:13-208 Powers of branch and agency 412:13-209 Filing of amendments to articles of incorporation 412:13-210 Separate assets 412:13-211 Disclosure of lack of deposit insurance 412:13-212 Limitations on payment of interest on deposits 412:13-213 Pledge of assets 412:13-214 Asset maintenance 412:13-215 Representative office of foreign banks; necessity of licensure 412:13-216 Representative office; application 412:13-217 Representative office; factors for approval of application 412:13-218 Representative office; permissible activities 412:13-219 Posting of license 412:13-220 Licenses not transferable 412:13-221 Change of control of foreign bank 412:13-222 Relocation of office; written application necessary 412:13-223 Examination; payment of fees 412:13-224 Supervision and enforcement 412:13-225 Reports 412:13-226 Books, accounts, and records 412:13-227 Voluntary closure of branch, agency, or representative office; application 412:13-228 Suspension or revocation of license; grounds; procedures 412:13-229 Immediate suspension or revocation 412:13-230 Seizure of foreign bank's property and business; liquidation 412:13-300 Purposes 412:13-301 Establishment of interstate branches in this State by out-of-state foreign banks 412:14-100 Automated teller machine fees

     §412:1-109  Definitions.  As used in this chapter, except as otherwise specifically provided herein:

     "Affiliate" with respect to an existing or proposed financial institution or a financial institution holding company, means any company that controls the financial institution or the financial institution holding company and any other company that is under common control with the financial institution or the financial institution holding company.  The following shall not be considered to be an affiliate:

     (1)  Any company, other than a financial institution, that is a subsidiary of a financial institution;

     (2)  Any company engaged solely in holding or leasing the premises of a financial institution;

     (3)  Any company engaged solely in conducting a safe deposit business;

     (4)  Any company engaged solely in holding obligations of the United States or its agencies or obligations fully guaranteed by the United States or its agencies as to principal and interest; and

     (5)  Any company where control results from the exercise of rights arising out of a bona fide debt previously contracted, but only for the period of time specifically authorized under applicable state or federal law or regulation.

     "Aggregate net contribution to capital" of a company means the sum of amounts employed to purchase capital stock of a company and to make contributions to the company's capital and surplus, less amounts received upon the sale or redemption of capital stock of the company or received in distributions with respect to the company's capital stock other than amounts received in distributions from the accumulated net earnings of the company.

     "Aggregate outstanding investment" in a company means the sum of amounts employed to purchase capital stock of a company, to make contributions to the company's capital and surplus and to invest in obligations of the company, less amounts received upon the sale or redemption of capital stock of the company, amounts received in distributions with respect to the company's capital stock other than distributions from the accumulated net earnings of the company, and amounts received to retire obligations of the company.

     "Appropriate federal regulatory agency" means, with respect to a financial institution or financial institution holding company, any one or more regulatory agencies of the federal government referred to in the following sentence which either (1) insures the deposits of the financial institution or financial institution holding company, or (2) has the power and duty to conduct periodic general examinations of the affairs of the financial institution or financial institution holding company by virtue of the legal characterization of the financial institution or financial institution holding company under federal law, and not by virtue of the fact of affiliation of the financial institution or financial institution holding company with any other person or an alleged violation of a specific law.  Subject to the preceding sentence, an appropriate federal regulatory agency may include the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Federal Reserve Board, the National Credit Union Administration, the Consumer Financial Protection Bureau, or any regulatory agency of the federal government which shall succeed to the insurance or supervisory duties of one of the foregoing.

     "Capital" means:

     (1)  The aggregate par value or other amount received and allocated to the issued and outstanding capital stock of a financial institution; or

     (2)  The total amount of a credit union's outstanding and unimpaired membership shares or share accounts.

     "Capital stock" means the units of interest, whether or not having a par value, common or preferred, legally issued by a financial institution or other corporation, which represents a fractional ownership interest in the institution or corporation. The term does not include shares or membership in a credit union.

     "Circuit court" means the court established in each of the judicial circuits of this State pursuant to chapter 603 and which has jurisdiction under section 412:1-108 over a matter.

     "Commissioner" means the commissioner of financial institutions of this State.

     "Common stock" means all capital stock of a financial institution or other corporation that is not preferred stock.

     "Company" means any corporation, partnership, trust (business or otherwise), association, joint venture, pool syndicate, unincorporated organization, or any form of business entity not specifically listed herein and, unless specifically excluded, a financial institution; provided that "company" does not mean any trust existing on July 1, 1993, which under its terms must terminate within twenty-five years, or not later than twenty-one years and ten months after the death of individuals living on the effective date of the trust.

     "Comparable financial institution" means:

     (1)  In the case of a bank that is a Hawaii financial institution, a national banking association, and vice versa;

     (2)  In the case of a savings and loan association or savings bank that is a Hawaii financial institution, a federal savings and loan association or federal savings bank, and vice versa; and

     (3)  In the case of a credit union that is a Hawaii financial institution, a federal credit union, and vice versa.

     "Conservator" means a person appointed by the commissioner to take possession and control of a Hawaii financial institution for a temporary period in order to preserve and protect the assets of the institution for the benefit of its depositors, beneficiaries, creditors, and shareholders or members.

     "Control" means, unless the context clearly requires otherwise, directly or indirectly, solely or through another person or transaction, or in concert with another:

     (1)  Owning or having the power to vote twenty-five per cent or more of any class of voting securities;

     (2)  Owning or having the power to exercise twenty-five per cent or more of the votes of a mutual association, credit union, or other entity whose voting rights are not determined by voting securities;

     (3)  Owning or having the power to vote ten per cent or more of any class of voting securities if:  (A) the issuer of that class of securities has issued any class of securities under section 12 of the Securities Exchange Act of 1934, as amended; or (B) immediately after the acquisition, no other person will own a greater percentage of that class of voting securities;

     (4)  Having the power to elect by any means a majority of the directors; or

     (5)  Having the power to exercise a dominant influence over management, if so determined by the commissioner after notice and a hearing.

     No depository institution or trust company shall be deemed to own or control a company by virtue of its ownership or control of shares in a fiduciary capacity, unless that depository institution or trust company has sole voting power over a sufficient number of voting securities of the company to constitute control hereunder.

     "Deposit" or "deposits" means money or its equivalent received or held by a person in the usual course of business and for which it has given or is obligated to give credit, either conditionally or unconditionally, to a demand, checking, savings, time, passbook, negotiable order of withdrawal, thrift, or share account, or which is evidenced by its passbook, certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument, or a check, draft, or share draft drawn against a deposit account and certified by a person, on which the person is primarily liable.  A deposit includes all funds underlying prepaid access cards or stored value cards and other nontraditional access mechanisms to the extent that the funds have been placed in a depository institution.

     "Depository institution" means a financial institution that is authorized to accept deposits under its chartering or licensing authority and includes a bank, savings bank, savings and loan association, depository financial services loan company, credit union, or intra-Pacific bank.

     "Director" means any member of the board of directors of a financial institution, whether or not receiving compensation.  An advisory director is not considered a director if the advisory director (1) is not elected by the shareholders of the financial institution, (2) is not authorized to vote on matters before the board of directors, and (3) provides solely general policy advice to the board of directors.

     "Division" means the division of financial institutions of the department of commerce and consumer affairs of this State.

     "Executive officer" of a financial institution means a person who participates or has authority to participate (other than in the capacity of a director) in major policymaking functions of the financial institution, whether or not:  (1) the officer has an official title, (2) the title designates the officer as an assistant, or (3) the officer is serving without salary or other compensation.  The chairperson of the board, the president, every vice president, the secretary, and the treasurer of a financial institution are considered executive officers, unless (1) the officer is excluded, by resolution of the board of directors or by the bylaws of the financial institution, from participation (other than in the capacity of a director) in major policymaking functions of the financial institution, and (2) the officer does not actually participate in such major policymaking functions.  An executive officer of a financial institution includes an executive officer of any subsidiary of the financial institution, unless the executive officer of the subsidiary (1) is excluded (by name or by title) from participation in major policymaking functions of the financial institution by resolutions of the boards of directors of both the subsidiary and the financial institution, and (2) does not actually participate in such major policymaking functions.

     "Federal" means belonging to, part of, or related to the government of the United States of America.

     "Federal financial institution" means a national banking association, federal savings bank, federal savings and loan association or federal credit union.

     "Federal Home Loan Bank" means a federal home loan bank created and organized under the authority of the Federal Home Loan Bank Act.

     "Federal Reserve Bank" means a federal reserve bank created and organized under the authority of the Federal Reserve Act.

     "Federal Reserve Board" means the Board of Governors of the Federal Reserve System created and described in the Federal Reserve Act.

     "Financial institution" means a Hawaii financial institution, and unless the context indicates otherwise, a federal financial institution or foreign financial institution.

     "Financial institution holding company" means a holding company which controls a Hawaii financial institution or which controls another financial institution holding company.  The following persons shall not be deemed to come within the definition of a financial institution holding company:

     (1)  A registered dealer who acts as an underwriter or member of a selling group in a public offering of the voting securities of a financial institution or of a financial institution holding company;

     (2)  A person who acts as proxy for the sole purpose of voting at a designated meeting of the security holders of a financial institution or of a financial institution holding company;

     (3)  A person who acquires control of a financial institution or of a financial institution holding company by devise or descent; or

     (4)  A pledgee of a voting security of a financial institution or of a financial institution holding company who does not have the right, as pledgee, to vote such voting security.

     "Financial institution subsidiary" means:  (1) a financial institution that is controlled by a financial institution holding company, or (2) a financial institution holding company that is controlled by another holding company.

     "Foreign financial institution" means a person, other than a Hawaii financial institution or a federal financial institution whose operations are principally conducted in this State, which is authorized to engage under the laws of its jurisdiction of organization, or does engage, in the business of accepting deposits or making loans or engaging in the trust business.

     "Hawaii financial institution" means:

     (1)  A corporation or credit union that holds a charter or license under this chapter or under prior Hawaii law, authorizing it to accept deposits, to make loans in excess of the rates permitted in chapter 478, or to engage in the business of a trust company; or

     (2)  A resulting bank as defined in article 12,

and includes a corporation or credit union existing and chartered as a Hawaii financial institution or licensed to transact business in this State on July 1, 1993.  A Hawaii financial institution may be a bank, resulting bank as defined in article 12, savings bank, savings and loan association, depository financial services loan company, nondepository financial services loan company, trust company, credit union, or intra-Pacific bank.

     "Holding company" means any company which controls another company.

     "Impaired capital and surplus" or similar language relating to impairment of capital or surplus, means that a financial institution has less than the minimum amount of capital and surplus required under this chapter for that type of financial institution.

     "In concert with another" means (1) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or (2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement, or other arrangement, whether written or otherwise.

     "Insolvency" means, with respect to a financial institution, that the value of its assets is insufficient to pay its depositors and its creditors.

     "Institution-affiliated party" means any of the following:

     (1)  Any director, officer, employee or controlling shareholder of, or agent for, or other person that controls a financial institution;

     (2)  Any person who has filed or is required to file an application to become a financial institution with the commissioner or an application to acquire control of a Hawaii financial institution or financial institution holding company with the commissioner;

     (3)  Any shareholder, consultant, joint venture partner, and any other person as determined by the commissioner (by rule or case-by-case) who participates in the conduct of the affairs of a financial institution; or

     (4)  Any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in any of the following which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the financial institution:

         (A)  Any violation of law or rule,

         (B)  Any breach of fiduciary duty, or

         (C)  Any unsafe or unsound practice.

     "Loans and extensions of credit" by a financial institution means any direct or indirect advance of funds (including obligations of makers and endorsers arising from the discounting of commercial paper) to or for the benefit of a person made on the basis of any obligation of that person to repay the funds.  "Loans and extensions of credit" includes a contractual commitment to advance funds.  "Contractual commitment to advance funds" means (1) an obligation to make payments, directly or indirectly, to a third party contingent upon default by the financial institution's customer in the performance of an obligation under the terms of that customer's contract with the third party or upon some other stated condition, or (2) 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 or other similar arrangements; but does not include commercial letters of credit and similar instruments where the issuer expects the beneficiary, to draw upon the issuer, which do not guaranty payment of a money obligation, and which do not provide for payment in the event of default of the account party.

     "Obligation" means any bond, debt, debenture, loan, note or similar undertaking.

     "Obligor" means a person owing an obligation.

     "Open to the public" means accessible or available to the general public during regular business hours without special permission.

     "Operations are principally conducted" where total deposits placed with a person together with deposits placed with its subsidiaries are largest.

     "Paid-in capital" means the amount of capital actually received by the financial institution for its capital stock, membership shares or share accounts, as the case may be.

     "Passbook" means any book, statement of account, or other record used by a financial institution to record deposits, withdrawals, interest, dividends and changes.

     "Person" means a natural person, entity or organization, including without limitation an individual, corporation, joint venture, partnership, sole proprietorship, association, cooperative, estate, trust, or governmental unit.

     "Preferred stock" means capital stock in a financial institution or other corporation which entitles its holders to some preference or priority over the owners of common stock, usually with respect to dividends or asset distributions in liquidation.

     "Principal shareholder" means a person other than a financial institution, that, directly or indirectly, or acting through or in concert with another, owns, controls, or has the power to vote more than ten per cent of any class of voting securities of a financial institution.  Shares owned or controlled by a member of an individual's immediate family are considered to be held by the individual.  As used in this definition "immediate family" means the spouse of an individual, the individual's minor children, and any of the individual's children (including adults) residing in the individual's home.

     "Receiver" means a person appointed by the commissioner to take possession and control of a Hawaii financial institution for the purpose of liquidating and winding up the affairs of the institution.

     "Related interest" means (1) a company that is controlled by a person or (2) a political or campaign committee that is controlled by a person or the funds or services of which will benefit a person.

     "Retained earnings" means the net income of a financial institution earned since its inception which has not been distributed to its shareholders or transferred or allocated to capital stock or surplus or, as the case may be, the accumulated deficits of the financial institution.  The term "retained earnings" is interchangeable with the term "undivided profits".

     "State" or "this State" means the State of Hawaii, its political subdivisions, agencies, and departments.

     "Stock financial institution" means a financial institution that issues shares of capital stock as evidence of fractional ownership in the institution.  The term does not include credit unions.

     "Subsidiary" means a corporation, joint venture, partnership, or other company that is controlled by another corporation.

     "Surplus" means an amount received by a financial institution for its capital stock, membership shares, or share accounts, as the case may be:  (1) in excess of the par value of any shares having par value; or (2) in excess of the amount allocated to shares without par value, membership shares or share accounts.  "Surplus" also means an amount transferred or allocated to the financial institution's surplus from retained earnings, and, unless the context otherwise clearly requires, "surplus" includes retained earnings, whether or not transferred or allocated to surplus. [L 1993, c 350, pt of §1; gen ch 1993; am L 1995, c 51, §1; am L 1999, c 245, §1; am L 2001, c 170, §2; am L 2006, c 228, §4; am L 2013, c 172, §2]

 

Revision Note

 

  In definitions of "company" and "Hawaii financial institution", "July 1, 1993" substituted for "the effective date of this chapter".