Sec. 4. (a) Except as otherwise provided in this article, the business of dealing in investment securities by any bank or trust company is limited to purchasing and selling securities without recourse, solely upon the order and for the account of customers and in no event for its own account. A bank or trust company may not underwrite or guarantee all or any part of any issue of securities other than obligations issued or guaranteed by or on behalf of the state or any political subdivision of the state or any agency or instrumentality of either. A bank or trust company may purchase for its own account and sell investment securities under such limitations and restrictions as the department prescribes by regulation, rule, policy, or guidance, but in no event may the total amount of the investment securities of any one (1) obligor or maker, purchased or held by a bank or trust company for its own account, exceed at any time ten percent (10%) of the amount of the total equity capital of the bank or trust company. The limitations imposed by this section do not apply to the direct or indirect obligations of the United States or the direct obligations of a United States territory or insular possession or of the state of Indiana or any municipal corporation or taxing district in Indiana. A bank or trust company may purchase for its own account and sell shares of stock in federal or state chartered small business investment companies that have received a permit or license to operate under the federal Small Business Investment Act (15 U.S.C. § 681). However, a bank or trust company may not acquire shares in any small business investment company if, upon the making of that acquisition, the aggregate amount of shares in small business investment companies then held by the bank would exceed five percent (5%) of its total equity capital.

     (b) A bank or trust company may purchase for its own account and sell:

(1) shares of open-end investment companies the portfolios of which consist solely of securities that are eligible for purchase and sale by national banking associations; and

(2) collateralized obligations that are eligible for purchase and sale by national banking associations. However, a bank or trust company may purchase for its own account and sell the obligations only to the extent that a national banking association can purchase and sell those obligations.

     (c) A bank or trust company may deposit its funds in:

(1) a federally chartered savings association;

(2) a savings association or other entity organized and operated according to federal law or the laws of any state or the District of Columbia; or

(3) a bank organized and operated according to federal law or the laws of any state or the District of Columbia;

the accounts of which are insured by the Federal Deposit Insurance Corporation.

     (d) A bank or trust company may not purchase for its own account any bond, note, or other evidence of indebtedness that is commonly designated as a security that is speculative in character or that has speculative characteristics. For the purposes of this subsection, a security is speculative or has speculative characteristics if at the time of purchase the security:

(1) is rated below the first four (4) rating classes by a generally recognized security rating service;

(2) is in default; or

(3) is otherwise considered speculative by the director.

     (e) A bank or trust company may purchase for its own account a security that is not rated by a generally recognized security rating service if:

(1) the bank or trust company at the time of purchase obtains financial information that is adequate to document the investment quality of the security; and

(2) the security is not otherwise considered speculative by the director.

     (f) Except as otherwise authorized by this title, a bank or trust company may not acquire for its own account, whether by purchase or otherwise, any share of stock of a corporation that is not a subsidiary of that bank or trust company unless the acquisition is considered expedient to prevent loss from a debt previously contracted in good faith. Any shares of stock or other ownership interest in a corporation or another entity thus acquired by a bank or trust company and that would not have been eligible for acquisition shall be sold and disposed of within six (6) months from the date of acquisition unless the director grants an extension of time for the sale and disposition.

     (g) Notwithstanding any other provision of this article, a bank or trust company may purchase for its own account shares of stock of a banker’s bank insured by the Federal Deposit Insurance Corporation or a holding company that owns or controls a banker’s bank insured by the Federal Deposit Insurance Corporation. For the purposes of this subsection, a “banker’s bank” is a bank (as defined in IC 28-2-14-2):

(1) the stock of which is owned exclusively by other banks (as defined in IC 28-2-14-2), or by a bank holding company the stock of which is owned exclusively by other banks (as defined in IC 28-2-14-2); and

(2) that is engaged exclusively in providing services to other banks (as defined in IC 28-2-14-2), and to their officers, directors, and employees.

A bank’s or trust company’s holdings of the stock of an insured banker’s bank or of a holding company that owns or controls an insured banker’s bank may not exceed ten percent (10%) of the capital and surplus of the bank or trust company. A bank or trust company may not purchase the stock of an insured banker’s bank or of a holding company that owns or controls an insured banker’s bank if, after the purchase, the bank or trust company would own more than five percent (5%) of any class of voting securities of the banker’s bank or holding company.

     (h) Notwithstanding any other provision of this article, a bank or trust company may invest in a casualty insurance company organized solely for the purpose of insuring banks, trust companies, and bank holding companies and their officers and directors from and against liabilities, including those covered by bankers’ blanket bonds and director and officer liability insurance and other public liability insurance. The investment must take the form of:

(1) the purchase for the bank’s or trust company’s own account of shares of stock of the casualty insurance company or shares of stock of an association of banks organized for the purpose of funding the casualty insurance company; or

(2) loans to such an association of banks.

The total investment of any bank or trust company under this subsection may not exceed five percent (5%) of the capital and surplus of the bank or trust company.

     (i) Any bank or trust company may establish or acquire a subsidiary that engages in:

(1) the sale, distribution, or underwriting of securities issued by investment companies (as defined in Section 3 of the Investment Company Act of 1940 (15 U.S.C. §§ 80a-3); or

(2) the underwriting or distribution of securities backed by or representing an interest in mortgages.

     (j) As used in this section, “total equity capital” means unimpaired capital stock, unimpaired surplus, unimpaired undivided profits, subordinated debt that has been approved by the state or federal regulatory agencies, and one hundred percent (100%) of loan reserves.

     (k) The department may define an investment security by department policy or by rule.

     (l) A bank or trust company may establish a trading account for the purchase and resale of securities that are otherwise eligible for purchase or resale by the bank or trust company. The trading account must comply with the requirements established by policy or rule of the department.

     (m) A bank or trust company that purchases a security for its own account shall maintain sufficient records of the security to allow the security to be properly identified by the department for examination purposes.

Formerly: Acts 1933, c.40, s.173; Acts 1935, c.5, s.26; Acts 1937, c.33, s.18; Acts 1959, c.125, s.1; Acts 1965, c.356, s.10; Acts 1967, c.260, s.11; Acts 1971, P.L.394, SEC.28. As amended by P.L.141-1984, SEC.7; P.L.265-1985, SEC.2; P.L.169-1986, SEC.1; P.L.36-1987, SEC.8; P.L.165-1988, SEC.1; P.L.164-1988, SEC.3; P.L.8-1991, SEC.11; P.L.42-1993, SEC.27; P.L.176-1996, SEC.12; P.L.192-1997, SEC.4; P.L.79-1998, SEC.44; P.L.192-2003, SEC.3; P.L.89-2011, SEC.34; P.L.27-2012, SEC.51; P.L.186-2015, SEC.29; P.L.159-2017, SEC.31.