What powers do Arizona state banks have? And what are the pros and cons of a national versus a state charter for financial institutions?
The powers of Arizona banks, like those of any regulated enterprise, are set forth by the legislature. Two provisions in Arizona law are noteworthy and serve to make Arizona a relatively attractive place to do business. A.R.S. 6-184.1 establishes that a bank may exercise the powers derived from its existence as an Arizona corporation, except as prohibited by law. Thus, banks may, for instance, sell insurance. In addition, Arizona state banks are subject to A.R.S. 6-184.2, sometimes called the “Parity Provision.” Under this, state banks may exercise any power and engage in any activity that a national bank may carry out, unless state law explicitly prohibits that activity. For banks, credit unions, and savings and loan associations, the advantages of a state charter include greater access to legislators and regulators as well as the possibility of lower annual assessments. Institutions generally choose a national charter if their operation is interstate.
