(a) A trust company may not act as a fiduciary unless the trust company has paid-in capital in an amount acceptable to the department, but not less than $400,000, and paid-in surplus equal to 20 percent of paid-in capital. The trust company shall hold its unimpaired capital as security for the faithful discharge of the fiduciary duties undertaken by the trust company and for the claims of creditors.

(b) The department may by order require or permit adjustment to capital for a proposed or existing trust company if the department finds the condition and operations of an existing trust company or the proposed scope or type of operations of a proposed trust company requires adjustment to capital to protect the safety and soundness of the trust company. The safety and soundness factors to be considered by the department in the exercise of its discretion to adjust capital include

(1) the nature and type of business conducted;

(2) the nature and degree of liquidity of the assets held by the trust company other than trust assets;

(3) the amount of fiduciary assets being managed;

(4) the type of fiduciary assets held and the depository of those assets;

(5) the complexity of the fiduciary duties and degree of discretion undertaken;

(6) the competence and experience of management;

(7) the extent and adequacy of internal controls;

(8) the presence or absence of annual unqualified audits by an independent certified public accountant;

(9) the reasonableness of the trust company's plans for retaining or acquiring additional capital; and

(10) the existence and adequacy of insurance held by the trust company to protect its customers, beneficiaries, and grantors.

(c) If the department orders a trust company to increase or adjust its capital, the order must state the date by which the increase or adjustment must be made. An order under this subsection does not prohibit the trust company from later applying to the department to reduce capital requirements for the trust company under (b) of this section.

(d) Subject to (b) of this section, a trust company to which the department issues a certificate of authority shall at all times maintain capital in at least the amount required under (a) of this section, as increased or decreased under (b) of this section.

(e) A trust company may not reduce or increase its outstanding capital through dividend, redemption, issuance of shares, or otherwise without the prior written approval of the department, unless otherwise permitted by this chapter.

(f) Prior approval by the department is not required for a decrease in surplus caused by incurred losses that exceed undivided profits. A decrease to surplus as a result of losses shall be replaced before payment of further dividends.