Washington Administrative Code › Title 208 - Financial Institutions, Department of (See also Titles 50, 419, and 460) › Chapter 208-514 - Mutual savings banks › Section 208-514-020 - Introduction

Current through Register Vol. 24-14, July 15, 2024
This chapter implements the authority of the director of the
						department of financial institutions (the "director") under
						chapters
						32.08, 32.34, and
						34.05 RCW to enact regulations
						concerning the organization and operation of mutual holding companies. It
						addresses only those features of the organization and operation of mutual
						holding companies and their subsidiary stock savings banks that are not
						governed by
						Title
						32 RCW. Among the provisions
						that must be considered are:
(1)Chapter 32.32 RCW for the chartering of a
					mutual savings bank and the conversion of a mutual savings bank to a stock
					savings bank;
(2)Title
					32 RCW generally for the
					operations of any such savings bank; and
(3)Chapter 32.34 RCW for any merger or
					acquisition of assets involving a mutual holding company or banking subsidiary
					of a mutual holding company.
In addition, the director has determined that formation of a
						business trust is not the sole and exclusive method by which a state savings
						bank may form a mutual holding company ("MHC").
Under
						RCW
						   32.34.050, a state savings bank is allowed to
						form a business trust that, in turn, is authorized to become a MHC. However,
						based on the statutory authority granted to the director under that statute as
						well as chapters 32.08
						and 34.05 RCW, the
						director has determined that utilization of a business trust is not the
						exclusive procedure for creation of MHCs.
By enacting
						RCW
						   32.08.142, the legislature evidenced a clear
						intent that state-chartered savings banks not be placed at a competitive
						disadvantage to federally chartered savings banks. While the state Constitution
						prohibits automatic incorporation into state law of federal laws enacted after
						adoption of
						RCW
						   32.08.142, that restriction does not
						invalidate the legislative intent that state institutions not be placed at an
						undue competitive disadvantage with federal savings banks.
Conditioning MHC formation on the utilization of a business
						trust to act as the MHC is potentially disadvantageous to state savings banks
						in view of:
(a) The absence of state
					statutory and regulatory guidance concerning the governance and authority of
					trusts when acting as holding companies;
(b) The uncertainty of regulations of such
					trusts as MHCs; and
(c) The
					potential federal tax uncertainties that would arise by utilizing a trust in
					connection with a tax free reorganization into a mutual holding company.
In addition, business trusts are permitted by statute
						(chapter
						23.90 RCW) to exercise the
						general powers of domestic corporations, including the power to merge into a
						domestic corporation. As a result, the director has determined that the scope
						of chapter 32.34 RCW and the incidental powers clause of
						RCW
						   32.08.140 make it convenient or useful in
						connection with a savings bank's performance of its specifically enumerated
						powers to accomplish a MHC reorganization, to utilize either a corporation
						formed under the laws of the state of Washington or a business
						trust.