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(a) In order to protect liquidity, a state bank shall maintain a reserve fund equal to 15 percent of the bank's total deposits, exclusive of deposits that are secured under AS 06.05.260 (a)(1).
(b) Only the following may be used in computing the reserves required under (a) of this section:
(1) vault cash;
(2) deposits of the bank held by a federal home loan bank or federal reserve bank;
(3) certificates of deposit that mature in less than six months;
(4) unencumbered government securities under 3 AAC 02.205(a) (1) - (a)(6); and
(5) the amount due from good and solvent banks located in the state or within the United States, the deposits of which are insured by the FDIC, including coin, demand balances with other banks located in the United States, federal funds sold, overnight repurchase agreements, clearings, and cash items in the process of collection.
(c) The computation of reserves shall be made on the basis of average daily net deposit balances covering biweekly (14-day) periods.
(d) If a bank's reserve fund falls below 15 percent of the bank's total deposits, as calculated under this section, the department will consider that the bank is in danger of becoming illiquid, and that the bank is operating in an unsafe and unsound manner. The bank shall submit to the department, within 15 days after the department notifies the bank of its determination, a business plan to correct the condition and bring the bank into compliance with the requirements of this section.
History: Eff. 1/17/69, Register 28; am 12/13/70, Register 36; am 7/30/82, Register 83; am 1/10/94, Register 129
Authority: AS 06.05.005 (a)
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Last modified 7/05/2006