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Finance and Financial Institutions [Title 28]

DEVELOPMENT BANK OF AMERICAN SAMOA

Title 28

FINANCE AND FINANCIAL INSTITUTIONS

Chapters:

01 Development Bank of American Samoa

02 Territorial Bank of American Samoa
08 (Reserved)
09 U.S. Loan Agreements
10 Banks

11 Savings and Loan Institutions

12 Office of Financial Institutions
13 (Reserved)

14 A.S.G. Credit Facility Agreements
15 Loans

16 Escheat of unclaimed Bank deposits

Chapter 01

DEVELOPMENT BANK OF AMERICAN SAMOA

Sections:

28.0101 Purpose of Bank.

28.0102 Charter of Bank-Powers.

28.0103 Board-President.

28.0104 Audit.

28.0105 Capital investment-Loan guarantees.

28.0106 Existence for public benefit-Tax exempt status-Government not liable for Bank's obligation.

28.0107 Annual report required.

28.0108 Repealed.

28.0109 Assets and liabilities existing upon enactment of this chapter.

28.0110 Loans to aliens.

28.0111 Malfeasance of Director.

28.0112 Larceny and fraud-Penalty.

28.0101 Purpose of Bank.

In order to provide the people of American Samoa with lending and investment facilities and assist in the promotion of private enterprise and meet the needs of developing economy, the corporate body known as the "Development Bank of American Samoa", hereinafter referred to as "the Bank", is empowered under the charter of the Bank to carry out its purposes.

History: 1972, PL 12-67 § 1.

28.0102 Charter of Bank-Powers.

The charter of the Bank is as follows in this section and 28.0103 through 28.0105:

(a) The existence of the Bank shall be perpetual.

(b) The principal office of the Bank shall be located at Pago Pago, Tutuila, American Samoa.

(c) Subject to any existing limitation or limitations hereinafter enacted, the Bank, through its officers and agents, is authorized to engage in all banking functions, other than to receive deposits of money that will assist in the economic advancement of American Samoa.

(d) In performing the functions authorized in subsection (c), the Bank shall have and exercise all lawful powers normally exercised by banking corporations, including the following:

(1) to adopt, alter and use a corporate seal:

(2) to adopt and amend bylaws governing the conduct of its business and the exercise of its powers;

(3) to sue and be sued in its corporate name;

(4) to acquire in any lawful manner, real, personal, or mixed property, either tangible or intangible, to hold, maintain, use, and operate such property, and to sell, lease, or otherwise dispose of such property.

(e) The Board may, by majority vote of its entire membership, adopt, amend, or repeal by-laws of the Bank providing for the management of the business of the Bank, the organization, meetings, and procedures of the Board, the duties of the officers of the Bank, the officers required to furnish bonds and the amounts thereof, the form of the seal of the Bank, and the preparation and submission of required reports. Bylaws may not be adopted, amended or repealed except after 1 week's written notice to each Director.

History: 1972, PL 12-67 § 2, 3.

28.0103 Board-President.

(a) The affairs of the Bank must be managed and its corporate powers exercised by a Board of Directors, hereinafter referred to as "the Board", which consists of 10 members, 9 of whom are to be appointed by the Governor with the advice and consent of the Senate. The Chairman, who is a Board member, is elected by a majority of the Board. In the event of a vacancy for any reason whatsoever, the Governor may appoint a person to fill the vacancy until the next session of the Legislature. All Directors serve two year terms. All appointees may be reappointed to the Board and may be removed by the Governor for cause, provided the majority of the Board con-curs in the cause or causes offered. At least 4 of the Board members are representatives of private business or financial interests in American Samoa. The President of the Development Bank is a non-voting ex officio member of the Board of Directors. The President may not serve as Chairman of the Board of Directors.

(b) The Governor, with the approval of the Board, appoints a President of the Bank, with the advice and consent of the Senate. The President is responsible for the operation of the Bank with the assistance of such other officers and employees as the Board may authorize. The salary of the President and other officers is established by the Board.

History: 1972, PL 12-67 § 2, 3; 1973, PL 13-28 § 1; amd 1985, PL 19-3 § 1.

Amendments: 1973 Provided for approval by senate and omitted provisions relating to original appointments in subsection (a,).
1985 Increased board membership from 9 to 10; made general amendments to overall language of the section.

28.0104 Audit.

The books and records of the Bank shall be thoroughly examined and audited annually, following the end of the Bank's fiscal year, to show the statement of condition as of that fiscal year end and operations of the Bank for the 12-month period, by qualified independent certified public accountants, preferably of recognized international standing, appointed by the Board. The government shall have the right through qualified personnel in the Department of Administrative Services, or its auditing offices, to examine the affairs of the Bank at reasonable intervals, to insure that the Bank is operating its affairs on a sound businesslike basis.

History: 1972, PL 12-67 § 2, 3.

28.0105 Capital investment-Loan guarantees.

(a) The capital of the Bank, together with all funds and credits that it may obtain from any loans, credits, grants, or other advances from the United States Government, or any related instrumentality empowered to make funds avail-able to the Bank or any international finance institution or from private financial institutions that may provide loans or credits to the Bank, shall be available for investment by the Bank whether in the form of loans or stock in enter-prises controlled by private individuals, partner-ships, or corporations engaged in business or industry of whatever nature, that are deemed to conform to the objectives of furthering the economy of American Samoa except as may be limited by subsection (b). The loans or stock investments and all temporary short term in-vestments must be made on the terms and conditions that the management of the Bank may determine and shall be approved by the Board of Directors and must be based on prudent and sound business judgment, as to the capacity of the prospective borrowers to repay, and all stock investments made where, in the judgment of the board, the prospects of successful operation of the business or industry seem warranted. The loans or credits authorized by this section may be only to qualified borrowers who are American Samoans or permanent residents of American Samoa.

(b) The Bank may guarantee loans or equipment leases by qualified lenders or equipment leasing firms, and it may guarantee construction performance bonds by bonding companies to entities fully or majority owned or controlled by American Samoans who although having reasonable assurance of repayment, do not qualify for loans, leases, or performance bonds under the requirements imposed by the original lender, lessor or bonding agency. The guarantees by the Bank may not exceed in the aggregate at any one time a total of fifty percent (50%) of the capital and surplus (excluding undivided profits) of the Bank; nor may the aggregate of Bank loans to and guarantees for any person or entity, or group of persons or entities with a common ownership, business, or financial interest, exceed 10% of the Bank's capital and surplus unless the loan or the performance of a contract is secured directly or under right of assumption of collateral property, tangible or intangible, carrying a written and expert appraisal of at least 35 percent in excess of the amount guaranteed. All guarantees shall be approved by the Bank's Board of Directors. In making guarantees and thus assuming contingent liability, the Bank shall, consistent with conservative Banking principles, keep at all times a portion of its capital funds invested in securities of the Treasury or other agencies of the United States.

(c) Commercial, or non-residential, guarantees under this section shall not exceed 90 per-cent of the loan amount or the total encumbrance granted to secure such loan and guarantee, whichever is less.

(d) Guarantees of home loans under this section may, in the discretion of the Bank Board of Directors, exceed 90% of the loan amount, provided that such loan and guarantee is fully secured and collateralized by the home to be constructed or improved.

History: 1972, PL 12-67 § 2, 3; amd 1973, PL 13-28 § 1, 2; 1978, PL 15-78; 1980, PL 16-81 § 1; amd 1987, PL 20-21 § 1; amd 2007, PL 30-4.

Amendments: 1973 Subsection (a): amended generally.
Subsection (b): deleted provisions relating to investment of capital funds by Bank.
1978 Subsection (b): amended generally.
1980 Subsection (b): added "of the total encumbrance granted" to next to last sentence.
1987 Replaced "Loans" with "Loan guarantees" in section title. Subsection (b): replaced language concerning loan guarantees with clarifying language and required approval of all guarantees. Subsections (c) and (d): added.

Case Notes:
Common stock issued by government corporation to a Bank in exchange for retirement of debt was not improper and was within authority of corporation's board of directors. Fa'atiliga v. Lutali, 3 A.S.R.2d 139 (1986).

28.0106 Existence for public benefit-Tax exempt status-Government not liable for Bank's obligation.

The Bank exists and operates solely for the benefit of the public and is exempt from any taxes or assessments on any of its property, operations, or activities. The debts and obligations of the Bank are not debts or obligations of the government, the government may not be responsible for any such debts or obligations.

History: 1962, PL 7-11; 1969, PL 11-40.

28.0107 Annual report required.

(a) The Development Bank of American Samoa must prepare and file with the Governor and with the Legislature of American Samoa, annually, within 90 days after the close of its fiscal year, a report sworn to by an officer of the Bank stating:

(1) the name and address of the Bank;

(2) a profit and loss statement of the last fiscal year and a statement of its assets and liabilities as of the close of the year; and

(3) the names and addresses of all Directors and officers of the Bank.

(b) The report must be made available to the public by publication or otherwise.

History: 1971, PL 12-6 § 1.

28.0108 Economic development fund.

Repealed by PL 34-8 §2.

History: 2008, PL 30-27; 2015, PL 34-8 § 2.

28.0109 Assets and liabilities existing upon enactment of this chapter.

All assets and liabilities of the Bank existing at the time of the enactment of this chapter inure to the benefit of and are binding upon the Bank created by this chapter.

History: 1962, PL 7-11; 2008, PL 30-27.

28.0110 Loans to aliens.

A loan shall be made only if the manager of the Bank believes that there are reasonable prospects for its repayment. Prior to making a loan to an alien who entered American Samoa after 1955, the manager of the Bank shall consult with the immigration officer to deter-mine the status of residency of the alien.

History: 1968, PL 10-37; 2008, PL 30-27.

28.0111 Malfeasance of director.
(a) Any director who, under color of his office, violates any law or knowingly or negligently permits any officer, agent, or employee of the Bank to violate any law, or any provision of the Bank's charter or bylaws, shall be subject to removal from the board.

(b) Any American Samoan who has reason-able grounds to believe that a director is subject to removal under this section may petition the High Court of American Samoa for removal of the director. If the court finds that the respondent director is subject to removal under this section, the court shall order his removal and pro-vide for such other relief as the court deems just and appropriate.

History: 1962, PL 7-11; 1969, PL 11-40; 2008, PL 30-27.

28.0112 Larceny and fraud-Penalty.

Any director, officer, employee, or agent of the Bank who, with the intent to injure or de-fraud the Bank or any other person, embezzles, steals, or misapplies any moneys, funds, credits, or securities; makes any false entry in a book, report, or record; or performs any other fraudulent act; and any person who, with like intent, aids or abets any director, officer, employee or agent in any of the acts described in this section shall be fined not more than $3,000, or imprisoned for not more than 5 years, or both.

History: 1969, PL 11-40; 2008, PL 30-27.

Chapter 02

TERRITORIAL BANK OF AMERICAN SAMOA

Sections:

28.0201 Definitions.

28.0202 Purpose of Bank.

28.0203 Territorial Bancorp.

28.0204 Board of directors.

28.0205 Authority of the board of directors.

28.0206 Charter of the Bank—Powers.

28.0207 Chief Executive Officer.

28.0208 Audit.

28.0209 Reporting requirements.

28.0210 Lending limits—Capital adequacy ratios—Loans to insiders.

28.0211 Name in which business is conducted and titles taken—Execution of instruments.

28.0212 Civil Actions—Venue.

28.0213 Confidentiality of Bank records.

28.0214 American Samoa Government Funds and Income of the Bank.

28.0215 Tax exempt status.

28.0216 Capital of the Bank.

28.0217 Malfeasance of director.

28.0218 Larceny and fraud.

28.0201 Definitions.

The following definitions apply in this chapter:

(a) "Territorial Bancorp" or Bancorp" means the holding company established by this chapter to own, control, and operate the Territorial Bank of American Samoa.

(b) "Territorial Bank of American Samoa" or "Bank" means the financial entity created by this chapter as a wholly owned subsidiary of the Territorial Bancorp.

(c) "Board" refers to the Board of directors of the Territorial Bancorp. The Board may also constitute the board of directors of the Bank.

(d) "CEO" refers to the Chief Executive Officer of the Bank.

(e) "Holding Company" means a holding company is a parent corporation set up for the sole purpose of controlling another company's policies and management, rather than producing its own goods and services.

(f) "Tier 1 Capital" is the core measure of a bank's financial strength from a regulator's point of view. It is composed of core capital, which consists primarily of common stock and disclosed reserves (or retained earnings), but may also include non-redeemable non-cumulative preferred stock.

History: 2015, PL 34-4.

28.0202 Purpose of Bank.

In order to provide the residents of American Samoa with deposit, lending and investment opportunities, and to assist in the promotion of commerce and industry, the American Samoa Government shall engage in the business of banking under the name of the Territorial Bank of American Samoa to be owned, controlled, and operated by it through a holding company to be known as the Territorial Bancorp.

History: 2015, PL 34-4.

28.0203 Territorial Bancorp.

Territorial Bancorp is hereby established as the Holding Company for the Bank. Territorial Bancorp will operate, manage, and control the Bank, locate and maintain its places of business, the principal place of which must be within the territory of American Samoa, and to make and enforce bylaws, policies and procedures for the transaction of its business. The Bank is a wholly owned subsidiary of the Territorial Bancorp.

The business and financial services offered by the Bank, in addition to other matters specified in this chapter, may include activities that may traditional bank or bank holding company might lawfully engage in, except as restricted by the provisions of this chapter. This section may not in any way limit or qualify either the powers of Bancorp granted or the functions of the Bank as defined in this chapter. The powers of Bancorp and the functions of the Bank shall be implemented through actions taken and policies and procedures adopted by the Territorial

Bancorp Board of Directors and shall be subject to all applicable local and federal laws and regulations.

History: 2015, PL 34-4.

28.0204 Board of Directors.

The Territorial Bancorp Board of Directors shall consist of 7 voting members and the Bank CEO, who shall serve in an ex-officio capacity, and shall not have voting rights. The seven voting members shall be nominated by the Governor and confirmed by the Legislature.

The at-large members shall each serve for a four year term, and should possess knowledge of the financial services and banking industries. The initial at-large members shall be nominated for staggered terms.

The directors of the Territorial Bancorp may serve as the directors of the Bank, and shall be compensated at the rate of $5,000 per annum, except for the Chairman who shall be compensated at the rate of $6,000 per annum, and the CEO of the Bank, who shall receive no additional compensation beyond his salary as CEO.

The Chairman and other officers of the Board of Directors as may be called for in the by-laws of the Bank shall be selected from among the board members by a majority vote of the Board.

Duties of the Chairman:

(1) The Chairman shall determine the times and places for the holding of Board meetings.

(2) The Chairman shall preside at all meetings at which he or she is present.

(3) In the event of a tie vote the Chairman or other presiding board member shall be entitled to cast the tie-breaking vote.

Recess appointments may be made to fill vacancies caused by death, resignation, or removal for cause of an at-large director if the vacancy occurs while the Legislature is not in session. Recess appointments expire at the conclusion of the next following regular or special session of the Legislature if they are not confirmed during that session. Incumbents may continue to serve after the expiration of a term until a successor is appointed and confirmed. The at-large members may be re-appointed to the Board and may be removed by the Governor provided the majority of the Board concurs.

All Board business shall be conducted at meetings duly called by the Chairman. At any meeting a quorum shall be four board members. No business may be conducted unless a quorum is present.

History: 2015, PL 34-4.

28.0205 Authority of the Board of Directors.

The Board of Directors shall have the authority:

(a) To meet regularly with the management of the Bank to review the Bank's operations generally and to determine whether changes should be made to improve overall bank performance, management performance, customer service, and internal policies and procedures of the Bank.

(b) To review and implement as necessary recommendations relating to the establishment of additional objectives for the operation of the Bank.

(c) To appoint the CEO of the Bank as provided in Section 28.0207.

(d) To act and provide direction and guidance to the Bank management with respect to the powers and functions of the Bank.

(e) To determine policy and objectives for the Bank.

(f) To form committees consisting of any three or more directors or officers of the bank, or both, to carry out any directives given to the committees by the Board. At the minimum there shall be an Audit Committee, a Loan Committee, and an Asset and Liability Management Committee.

(g) To determine, after the close of each fiscal year, the allocation of any net earnings between retained earnings and the payment of a dividend to the American Samoa Government. The payment of any dividend to the government shall be subject to appropriation by the Legislature in the same manner as any other public funds.

Before taking office, and annually at the end of each fiscal year, each Board member shall certify to and file a personal financial statement with the Bank. This statement shall include disclosure of any personal financial interests that the Board member, or his or her immediate family (spouses and children), has in any business entity that is a customer of the bank.

History: 2015, PL 34-4.

28.0206 Charter of Bank—Powers.

The charter of the Bank is as follows:

(a) The existence of the Bank shall be perpetual.

(b) The principal office of the Bank shall be located in Tutuila, American Samoa with offices throughout the Territory of American Samoa.

(c) Subject to any existing limitations hereinafter enacted, the Bank, through its officers and agents, is authorized to engage in all banking functions, including receiving deposits of money.

(d) In performing the functions authorized in subsection (3), the Bank shall have and exercise all lawful powers normally exercised by banking corporations, including the following:

(1) To adopt, alter and use a corporate seal;

(2) To adopt and amend bylaws governing the conduct of its business and the exercise of its powers;

(3) To sue and be sued;

(4) To acquire in any lawful manner, real, personal, or mixed property, either tangible or intangible, to hold, maintain, use, and operate such property, and to sell, lease, mortgage, charge, or otherwise dispose of such property.

(5) The Board, by majority vote, adopts, amends, and repeals bylaws of the Bank and provides direction and guidance to management on Bank business. This includes the organizational structure of the Bank, meetings and procedures of the Board; reviewing the duties and responsibilities of the Bank's senior management team; the bonding of Bank officers; the form of the Bank seal; and preparation and submission of Bank reports.

(6) To execute, make, draw, accept, endorse, discount, issue, and negotiate checks, promissory notes, bills of exchange, bills of lading, bankers and other drafts, warrants, bonds, debentures, coupons, and other negotiable instruments and buy, sell, or otherwise deal in the same;

(7) Accept money on deposit at rates of interest as set by the Bank from time to time.

(e) The debts and obligations of the Bank are not the debts or obligations of the American Samoa Government.

History: 2015, PL 34-4.

28.0207 Chief Executive Officer.
(a) The Chief Executive Officer (CEO) shall be the administrative head of the Bank and shall be responsible for the effective and efficient management of the Bank in accordance with this chapter and any bylaws, directives and polices set forth by the Board. The CEO position shall be selected by the Board of Directors based on criteria that show that the applicant has the necessary qualifications, skills and experience to run a commercial bank. The terms and conditions of the employment of the CEO shall be determined by the Board.

(b) The CEO is responsible for the hiring of all Bank employees, including members of the senior management team, based on position descriptions as approved by the Board.

History: 2015, PL 34-4.

28.0208 Audit.

The Board shall contract with an independent certified public accounting firm for an annual audit of the Bank in accordance with generally accepted government auditing standards. The audit shall be conducted following the end of the Bank's fiscal year. The auditor selected shall prepare an audit report that includes financial statements presented in accordance with the Audit and Accounting guide for Depository and Lending Institutions as issued from time to time by the American Institute of Certified Public Accountants.

The American Samoa Government shall have the right through its Office of Financial Institutions to examine the affairs of the Bank at reasonable intervals to ensure that the Bank is operating in a safe and sound environment and is in compliance with applicable Federal and local banking laws and regulations.

History: 2015, PL 34-4.

28.0209 Reporting requirements.

(a) The Bank shall prepare and file annually with the Governor, the Legislature of American Samoa, and the Office of Financial Institutions, within 120 days after close of its fiscal year, a report of its condition sworn to by the CEO and the Chairman of the Board including:

(1) The name and address of the Bank;

(2) The Audited Financial and Profit and Loss Statement required by Section 28.0208; and

(3) The names and addresses of all directors and officers of the Bank.

This report shall also be made available to the general public by publication or otherwise.

(b) The Bank shall prepare and file quarterly with the Office of Financial Institutions, within 30 days of the end of each calendar quarter, a report substantially in the form of the Consolidated Report of Condition and Income as requires by the Federal Financial Institutions Examinations Council.

History: 2015, PL 34-4.

28.0210 Lending limits—Capital adequacy ratios—Loans to insiders.

(a) Lending limits: The Bank's total outstanding loans and extensions of credit to one borrower, as defined at 12 CFR 32.2, shall conform to its bylaws and internal policies and procedures, which shall be developed by the Board with due regard for the lending limits imposed by Federal law and regulation upon federally-related financial institutions. The Office of Financial Institutions shall examine the lending limits including concentrations of credit to a particular borrower as part of its safety and soundness and compliance examinations.

(b) Capital ratios: The Bank's Capital Adequacy Ratios of risk-weighted assets to common equity Tier 1 Capital, to Tier 1 Capital, and to Total Capital must conform to its policies and procedures and be in compliance with the Office of Financial Institution's minimum capital ratio requirements.

(c) Loans to insiders: The Bank shall make no extension of credit to Insiders, as defined in 12 CFR Chapter II, Subchapter A, Part 215, also known as "Regulation O", except in compliance with all the provisions, including reporting provisions of Regulation O, as they may be amended from time to time.

History: 2015, PL 34-4.

28.0211 Name in which business is conducted and titles taken—Execution of instruments.

All business of the Bank must be conducted in the name of the Territorial Bank of American Samoa. Title to property pertaining to the operation of the Bank shall be obtained and conveyed in the name of the Territorial Bank of American Samoa. All instruments shall be executed in the name of the Territorial Bank of American Samoa.

Within the scope of authority granted by the Board, the CEO may execute instruments of the Bank, including any instrument granting, conveying or otherwise affecting any interest in or lien upon real or personal property. Other officers or employees of the Bank may execute instruments on behalf of the Bank when authorized by the Board.

History: 2015, PL 34-4.

28.0212 Civil actions—Venue.

Civil actions may be brought against the Bank on account of claims for relief to have arisen out of transactions connected with the operation of the Bank upon condition that the provisions of this section are complied with. The action must be brought in the High Court of American Samoa.

In the case of vendor and service provider agreements, and loan participations involving multiple banks, the Bank may agree by contract to venue outside of American Samoa upon approval of its Board of Directors.

History: 2015, PL 34-4.

28.0213 Confidentiality of Bank records.

The following records of the Bank are confidential:

(a) Commercial or financial information of a customer, whether obtained directly or indirectly, except for routine credit inquiries or unless required by legal process. As used in this subsection, "customer" means any person who is transacting business with the Bank, including counter-parties, or has used or is using the services of the Bank, or for whom the Bank has acted as a fiduciary with respect to trust property.

(b) Internal or inter-agency communications which would not otherwise be available by law to a party other than in litigation with the Bank.

(c) Information contained in or related to Bank examinations, operating or condition reports prepared by, on behalf of, or for the use of the Office of Financial Institutions or any federal agency responsible for the regulation or supervision of any Bank activity.

(d) Information obtained from the Office of Financial Institutions which would not otherwise be available from that agency.

(e) The annual financial statement disclosures filed by members of the Bank's Board, or any of its officers.

History: 2015, PL 34-4.

28.0214 American Samoa Government Funds and Income of the Bank.