A state bank may take property of any kind to satisfy or protect a loan previously made in good faith and in the ordinary course of business. Property acquired in satisfaction of a loan shall be held subject to the limitations in this section.

A. Stock shall be sold within one hundred eighty days or such period as the director may allow.

B. Real estate may be used in the banking business, subject to the conditions prescribed by the Banking Act for property purchased for such use, or may be rented. Real estate may be improved to facilitate its sale. Unless used in the banking business, real estate shall be sold within five years or such period as the director may allow.

C. Other property, the acquisition of which is not otherwise authorized by the Banking Act, shall be sold within one hundred eighty days or such longer period as the director may allow.

D. The property shall be entered on the books at cost or fair market value, whichever is less. Upon transfer to other real estate owned, fair value shall be substantiated by a current appraisal prepared by an independent, qualified appraiser. All instructions from the bank to the appraiser shall be in writing. The appraisal shall recite all of the bank’s instructions to the appraiser. If the property remains unsold, bank records shall be documented reflecting the bank’s diligent efforts to effect sale. On or before each annual anniversary from the date of acquisition while the property remains unsold, the bank shall obtain, from an independent qualified appraiser, a current appraisal or, in letter form, certification that the fair market value has not declined.

E. The requirements for an appraisal upon transfer to other real estate owned, subsequent annual anniversary appraisal or letter certification are waived if the entire property is recorded at or below the lower of five percent of the bank’s equity capital exclusive of valuation reserves or seventy-five thousand dollars ($75,000). The director may require an appraisal on a property of lesser value at his discretion.

F. For other real estate owned, recorded at or below two hundred fifty thousand dollars ($250,000), the appraisal requirements prescribed will be waived at the option of the bank if the original book value of the property is charged off at a rate of ten percent for the first year, fifteen percent for the second year, twenty percent for the third year, twenty-five percent for the fourth year and thirty percent for the fifth year.