Kentucky Statutes 286.3-100 – Investment of bank funds — Property that may be held
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A bank may:
(1) Hold personal property that has been transferred to it as collateral for the payment of any debt;
(2) Acquire and hold title to real estate, provided:
(a) The real estate is necessary or appropriate for the transaction of legitimate business; and
(b) The cost of the real estate, including furniture and fixtures, shall not exceed forty percent (40%) of the total paid-in capital, unimpaired surplus and undivided profits (determined on accrual basis). The investment may exceed the bank’s forty percent (40%) limit with prior written approval of the commissioner;
(3) Acquire and hold for not longer than ten (10) years, any real estate conveyed to it in satisfaction of debts previously contracted in the course of its business, or that it may purchase under a judgment in its favor. A bank acquiring real estate in satisfaction of debts previously contracted in the course of business shall write down the acquisition at ten percent (10%) per year;
(4) Invest in the bonds of any federal home loan bank;
(5) Invest in obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks and banks for cooperatives under the Act of Congress known as the Farm Credit Act of 1971, 85 Stat. 583, 12 U.S.C. § 2001 and amendments thereto;
(6) Invest, subject to the approval of the commissioner, in the capital stock or bonds or both of any domestic realty corporation organized or existing for the sole purpose of acquiring and holding title to real property used by the bank, through lease or otherwise, for the transaction of the bank’s legitimate business;
(7) Purchase, hold, and convey the shares of any open end registered investment company registered under the Investment Company Act of 1940, or a series of the company, whose shares are registered under the Securities Act of 1933 and whose investments are limited to:
(a) Bonds or other interest-bearing obligations of the United States, or those for the payment of the principal and interest on which the faith and credit of the United States is pledged;
(b) Stocks, bonds, or other interest-bearing or dividend-yielding obligations issued or guaranteed as to the payment of principal and interest or dividend by any instrumentality presently or hereafter incorporated by authority of an Act of Congress;
(c) General obligation bonds or revenue bonds issued and guaranteed as to payment of principal and interest by any state, county, or municipal governments legally authorized to issue these instruments of indebtedness;
(d) Any other obligations in which national banking associations organized under the laws of the United States are permitted to invest in directly;
(8) Purchase and hold shares of a bank service corporation as that term is used in the
Bank Service Corporation Act (12 U.S.C. § 1861) and any amendments thereto; (9) Invest in:
(a) Bonds or other interest-bearing obligations of the United States, or those for the payment of the principal and interest on which the faith and credit of the United States is pledged;
(b) Stocks, bonds, or other interest-bearing or dividend-yielding obligations issued or guaranteed as to the payment of principal and interest or dividend by any instrumentality presently or hereafter incorporated by authority of an Act of Congress;
(c) General obligation bonds or revenue bonds issued and guaranteed as to payment of principal and interest by any state, county, or municipal governments legally authorized to issue such instruments of indebtedness;
(10) (a) Invest in other real estate in the bank’s generally accepted banking market. For purposes of this section, “the bank’s generally accepted banking market” means the geographic banking market at the time the investment is made as defined by the Federal Reserve Bank in the Federal Reserve District in which the bank is located. The investment shall not exceed ten percent (10%) of the bank’s actual paid-in capital and surplus, calculated at the time the investment is made, for each real estate investment; and
(b) Investment in other real estate not to exceed ten percent (10%) of the bank’s actual paid-in capital and surplus, calculated at the time the investment is made, for each real estate investment, if the bank has acquired the real estate in satisfaction of a debt previously contracted and the investment is for the purpose of improving the real estate for sale. Any real estate acquired in satisfaction of a debt previously contracted and improved by the bank shall be disposed of within five (5) years of the date of acquisition, with the commissioner authorized to extend the disposition upon written request of the bank for good cause shown on a year-to-year basis not exceeding an additional five (5) years;
(11) Own or operate a discount brokerage service either through the bank or a bona fide subsidiary of the bank;
(12) Own or operate a travel agency either through the bank or a bona fide subsidiary of the bank;
(13) Invest, with the prior approval of the commissioner, in the capital stock or bonds of a trust company; and
(14) Own or operate a courier service, either through the bank or a bona fide subsidiary of the bank, in any county where the bank has its principal office or a branch.
(15) Except for real estate provided in subsection (3) of this section, acquire and hold for not more than one (1) year, or for an additional period allowed in writing by the commissioner, any assets taken as security for debts previously contracted in the ordinary course of business.
Investments in accordance with subsections (7) and (9) of this section are subject to KRS
286.3-280 and 286.3-290. For purposes of computing the maximum investment of a bank in bonds, notes, and other investments, book value shall be used. For deep discount bonds or zero coupon bonds, accreted book value shall be used.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 622, effective July 15, 2010; and ch. 28, sec. 10, effective July 15, 2010. — Amended 2000 Ky. Acts ch. 279, sec. 3, effective July 14, 2000. — Amended 1996 Ky. Acts ch. 338, sec. 10, effective July 15, 1996. — Amended 1992 Ky. Acts ch. 77, sec. 2, effective July 14, 1992. — Amended 1986
Ky. Acts ch. 351, sec. 1, effective July 15, 1986; ch. 444, sec. 6, effective July 15,
1986; and ch. 472, sec. 2, effective July 15, 1986. — Amended 1984 Ky. Acts ch.
324, sec. 11, effective July 13, 1984. — Amended 1982 Ky. Acts ch. 251, sec. 7, effective April 1, 1982. — Amended 1976 Ky. Acts ch. 107, sec. 1. — Amended 1974
Ky. Acts ch. 382, sec. 1. — Amended 1970 Ky. Acts ch. 209, sec. 5, effective June
18, 1970. — Amended 1966 Ky. Acts ch. 77, sec. 1. — Amended 1960 Ky. Acts ch.
153, sec. 1. — Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. sec. 582.
Formerly codified as KRS § 287.100.
Legislative Research Commission Note (7/15/2010). This section was amended by
2010 Ky. Acts chs. 24 and 28, which do not appear to be in conflict and have been codified together.
Legislative Research Commission Note (7/15/2010). A reference to the “executive director” of financial institutions in subsection (15) of this section, as amended by
2010 Ky. Acts ch. 28, sec. 10, has been changed in codification to the “commissioner” of financial institutions to reflect the reorganization of certain parts of the Executive Branch, as set forth in Executive Orders 2009-535 and 2009-1086 and confirmed by the General Assembly in 2010 Ky. Acts ch. 24. This change was made by the Reviser of Statutes pursuant to 2010 Ky. Acts ch. 24, sec. 1938.
Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.
(1) Hold personal property that has been transferred to it as collateral for the payment of any debt;
Terms Used In Kentucky Statutes 286.3-100
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Capital stock: shall mean , at any particular time, the sum of:
(a) The par value of all shares of the corporation having a par value that have been issued. See Kentucky Statutes 286.3-010 - Commissioner: means the commissioner of financial institutions. See Kentucky Statutes 286.3-010
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means either a for-profit corporation or limited liability company. See Kentucky Statutes 286.3-010
- Domestic: when applied to a corporation, partnership, business trust, or limited liability company, means all those incorporated or formed by authority of this state. See Kentucky Statutes 446.010
- Federal: refers to the United States. See Kentucky Statutes 446.010
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Personal property: All property that is not real property.
- real estate: includes lands, tenements, and hereditaments and all rights thereto and interest therein, other than a chattel interest. See Kentucky Statutes 446.010
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Statute: A law passed by a legislature.
- Stock: means the corporation's shares. See Kentucky Statutes 286.3-010
- Surplus: means the amount of consideration received by the corporation for all shares issued without par value that has not been allocated to capital stock or the amount of consideration received by the corporation in excess of par value for all shares with a par value, or both. See Kentucky Statutes 286.3-010
- Trust company: includes every corporation authorized by this subtitle to do a trust business. See Kentucky Statutes 286.3-010
- Undivided profits: means the composite of the bank's net retained earnings from current and prior years' operations. See Kentucky Statutes 286.3-010
- Year: means calendar year. See Kentucky Statutes 446.010
(2) Acquire and hold title to real estate, provided:
(a) The real estate is necessary or appropriate for the transaction of legitimate business; and
(b) The cost of the real estate, including furniture and fixtures, shall not exceed forty percent (40%) of the total paid-in capital, unimpaired surplus and undivided profits (determined on accrual basis). The investment may exceed the bank’s forty percent (40%) limit with prior written approval of the commissioner;
(3) Acquire and hold for not longer than ten (10) years, any real estate conveyed to it in satisfaction of debts previously contracted in the course of its business, or that it may purchase under a judgment in its favor. A bank acquiring real estate in satisfaction of debts previously contracted in the course of business shall write down the acquisition at ten percent (10%) per year;
(4) Invest in the bonds of any federal home loan bank;
(5) Invest in obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks and banks for cooperatives under the Act of Congress known as the Farm Credit Act of 1971, 85 Stat. 583, 12 U.S.C. § 2001 and amendments thereto;
(6) Invest, subject to the approval of the commissioner, in the capital stock or bonds or both of any domestic realty corporation organized or existing for the sole purpose of acquiring and holding title to real property used by the bank, through lease or otherwise, for the transaction of the bank’s legitimate business;
(7) Purchase, hold, and convey the shares of any open end registered investment company registered under the Investment Company Act of 1940, or a series of the company, whose shares are registered under the Securities Act of 1933 and whose investments are limited to:
(a) Bonds or other interest-bearing obligations of the United States, or those for the payment of the principal and interest on which the faith and credit of the United States is pledged;
(b) Stocks, bonds, or other interest-bearing or dividend-yielding obligations issued or guaranteed as to the payment of principal and interest or dividend by any instrumentality presently or hereafter incorporated by authority of an Act of Congress;
(c) General obligation bonds or revenue bonds issued and guaranteed as to payment of principal and interest by any state, county, or municipal governments legally authorized to issue these instruments of indebtedness;
(d) Any other obligations in which national banking associations organized under the laws of the United States are permitted to invest in directly;
(8) Purchase and hold shares of a bank service corporation as that term is used in the
Bank Service Corporation Act (12 U.S.C. § 1861) and any amendments thereto; (9) Invest in:
(a) Bonds or other interest-bearing obligations of the United States, or those for the payment of the principal and interest on which the faith and credit of the United States is pledged;
(b) Stocks, bonds, or other interest-bearing or dividend-yielding obligations issued or guaranteed as to the payment of principal and interest or dividend by any instrumentality presently or hereafter incorporated by authority of an Act of Congress;
(c) General obligation bonds or revenue bonds issued and guaranteed as to payment of principal and interest by any state, county, or municipal governments legally authorized to issue such instruments of indebtedness;
(10) (a) Invest in other real estate in the bank’s generally accepted banking market. For purposes of this section, “the bank’s generally accepted banking market” means the geographic banking market at the time the investment is made as defined by the Federal Reserve Bank in the Federal Reserve District in which the bank is located. The investment shall not exceed ten percent (10%) of the bank’s actual paid-in capital and surplus, calculated at the time the investment is made, for each real estate investment; and
(b) Investment in other real estate not to exceed ten percent (10%) of the bank’s actual paid-in capital and surplus, calculated at the time the investment is made, for each real estate investment, if the bank has acquired the real estate in satisfaction of a debt previously contracted and the investment is for the purpose of improving the real estate for sale. Any real estate acquired in satisfaction of a debt previously contracted and improved by the bank shall be disposed of within five (5) years of the date of acquisition, with the commissioner authorized to extend the disposition upon written request of the bank for good cause shown on a year-to-year basis not exceeding an additional five (5) years;
(11) Own or operate a discount brokerage service either through the bank or a bona fide subsidiary of the bank;
(12) Own or operate a travel agency either through the bank or a bona fide subsidiary of the bank;
(13) Invest, with the prior approval of the commissioner, in the capital stock or bonds of a trust company; and
(14) Own or operate a courier service, either through the bank or a bona fide subsidiary of the bank, in any county where the bank has its principal office or a branch.
(15) Except for real estate provided in subsection (3) of this section, acquire and hold for not more than one (1) year, or for an additional period allowed in writing by the commissioner, any assets taken as security for debts previously contracted in the ordinary course of business.
Investments in accordance with subsections (7) and (9) of this section are subject to KRS
286.3-280 and 286.3-290. For purposes of computing the maximum investment of a bank in bonds, notes, and other investments, book value shall be used. For deep discount bonds or zero coupon bonds, accreted book value shall be used.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 622, effective July 15, 2010; and ch. 28, sec. 10, effective July 15, 2010. — Amended 2000 Ky. Acts ch. 279, sec. 3, effective July 14, 2000. — Amended 1996 Ky. Acts ch. 338, sec. 10, effective July 15, 1996. — Amended 1992 Ky. Acts ch. 77, sec. 2, effective July 14, 1992. — Amended 1986
Ky. Acts ch. 351, sec. 1, effective July 15, 1986; ch. 444, sec. 6, effective July 15,
1986; and ch. 472, sec. 2, effective July 15, 1986. — Amended 1984 Ky. Acts ch.
324, sec. 11, effective July 13, 1984. — Amended 1982 Ky. Acts ch. 251, sec. 7, effective April 1, 1982. — Amended 1976 Ky. Acts ch. 107, sec. 1. — Amended 1974
Ky. Acts ch. 382, sec. 1. — Amended 1970 Ky. Acts ch. 209, sec. 5, effective June
18, 1970. — Amended 1966 Ky. Acts ch. 77, sec. 1. — Amended 1960 Ky. Acts ch.
153, sec. 1. — Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. sec. 582.
Formerly codified as KRS § 287.100.
Legislative Research Commission Note (7/15/2010). This section was amended by
2010 Ky. Acts chs. 24 and 28, which do not appear to be in conflict and have been codified together.
Legislative Research Commission Note (7/15/2010). A reference to the “executive director” of financial institutions in subsection (15) of this section, as amended by
2010 Ky. Acts ch. 28, sec. 10, has been changed in codification to the “commissioner” of financial institutions to reflect the reorganization of certain parts of the Executive Branch, as set forth in Executive Orders 2009-535 and 2009-1086 and confirmed by the General Assembly in 2010 Ky. Acts ch. 24. This change was made by the Reviser of Statutes pursuant to 2010 Ky. Acts ch. 24, sec. 1938.
Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.