HAR §16-25-35. Criteria for proposed institutions

The criteria applied to applications relating to proposed institutions may include, but are not limited to: (1) General character of management. The quality of an institution's management is vital and perhaps the single most important element in determining the applicant's acceptability as a proposed institution. If the management of the proposed institution does not have an operating record as a functioning unit to assist in forming a judgment, the management review may require an evaluation of the individual officers and directors. Shareholders who subscribe to ten per cent or more of the aggregate par value of stock to be issued may also exert an influence in the management of the proposed institution, and an evaluation of those shareholders may also be appropriate in reviewing the general character of management. (A) Among the information to be considered in evaluating each officer and director, and each shareholder subscribing to ten per cent or more of the stock to be issued are: (i) Their current and past business experiences, financial capacities, and financial interests; 25-16 §16-25-35 (ii) Their proposed duties and responsibilities as related to their business experience and capabilities; (iii) Their familiarity with the community or trade area; and (iv) Any financing arrangements to purchase stock of the proposed institution. (B) The following information may also be evaluated in reviewing the proposed management: (i) Arrangements such as buy-sell, voting trust, or proxy agreements between various individuals or other entities; (ii) Plans for management changes prior to opening or after the commencement of operations; and (iii) Plans for financing the businesses or personal interests of certain officers and directors. (2) Adequacy of capital structure. A proposed institution must have: (A) A minimum capital structure of the amount dictated by statute; (B) Sufficient balances in shareholder equity accounts against which initial start-up costs and foreseeable contingencies can be charged; and (C) An adequate capital structure as related to its proposed type and volume of business, projected growth, and projected level of earnings. For institutions whose deposits will be federally insured, capital shall be at a level no less than that which is required by the applicable federal law or regulation for newly organized institutions. (3) Financial history and condition. The pro forma statement of the proposed institution as of the beginning of business, a schedule and appraisal of all assets with which the proposed institution intends to begin business, and projected financial statements for the first three years of operation shall be considered in analyzing this factor. Some consideration may also be given to the history of other companies presently and formerly operating in the area of the applicant, if pertinent. (4) Future earnings prospects. Detailed estimates of operating income and expenses for the first three years of operation and the assumptions used in determining the projections shall be analyzed. Information shall include the applicant's plans for payment of cash dividends, bonuses, director's fees, retainers fees, and the accounting 25-17