9-1101. (a) Any bank hereby is authorized to exercise by its board of directors or duly authorized officers or agents, subject to law, the following powers:
(1) To receive and to pay interest on deposits. The commissioner, with approval of the state banking board, may by rules and regulations fix maximum rates of interest to be paid on deposit accounts other than accounts for public moneys;
(2) to buy, sell, discount or negotiate domestic currency, gold, silver, foreign currency, bullion, commercial paper, bills of exchange, notes and bonds. Foreign currency shall not be bought, sold, discounted or negotiated for investment purposes;
(3) to make all types of loans, subject to the loan limitations contained in the state banking code;
(4) (A) to buy and sell:
(i) Bonds, securities or other evidences of indebtedness, including temporary notes, of the United States of America;
(ii) bonds, securities or other evidences of indebtedness, including temporary notes, fully guaranteed, directly or indirectly, by the United States of America; or
(iii) general obligation bonds of any state of the United States of America or any municipality or quasi-municipality thereof.
(B) No bank shall invest in bonds, securities or other evidences of indebtedness in excess of 15% of capital stock paid in and unimpaired and the unimpaired surplus fund of such bank if:
(i) The direct and overlapping indebtedness of such municipality or quasi-municipality is in excess of 10% of its market value, excluding therefrom all valuations on intangibles and homestead exemption valuation; or
(ii) any bond, security, or evidence of indebtedness of any such municipality or quasi-municipality that has been in default in the payment of principal or interest within 10 years prior to the time that any bank acquires any such bonds, security or evidence of indebtedness;
(5) to buy and sell investment securities which are evidences of indebtedness limited to buying and selling without recourse marketable obligations evidencing indebtedness of any state or federal agency, including revenue bonds issued pursuant to K.S.A. 76-6a15, and amendments thereto, or the state armory board in the form of bonds, notes or debentures or both. The total amount of such investment securities of any one obligor or maker held by such bank shall at no time exceed 25% of the capital stock, surplus, undivided profits, 100% of the allowance for loan and lease loss, capital notes and debentures and reserve for contingencies of such bank, except that this limit shall not apply to obligations of the United States government or any agency thereof;
(6) to buy and sell investment securities which are evidences of indebtedness limited to buying and selling without recourse marketable obligations evidencing indebtedness of any person, copartnership, association or corporation. The total amount of such investment securities of any one obligor or maker held by such bank shall at no time exceed 25% of the capital stock surplus, undivided profits, 100% of the allowance for loan and lease loss, capital notes and debentures and reserve for contingencies of such bank;
(7) to subscribe to, buy, hold and sell stock of:
(A) The federal national mortgage association in accordance with the national housing act;
(B) the federal home loan mortgage corporation in accordance with the federal home loan mortgage corporation act;
(C) the federal agricultural mortgage corporation, provided no bank's investment in such corporation shall exceed 5% of the bank's capital stock, surplus and undivided profits; and
(D) a federal home loan bank. Any bank may also become a member of a federal home loan bank;
(8) to subscribe to, buy and own stock in one or more small business investment companies in Kansas as otherwise authorized by federal law, except that in no event shall any bank acquire shares in any small business investment company if, upon the acquisition, the aggregate amount of shares in small business investment companies then held by the bank would exceed 5% of the bank's capital and surplus;
(9) to subscribe to, buy and own stock in any agricultural credit corporation or livestock loan company, or its affiliate, organized pursuant to the provisions of the laws of the United States providing for the information and operation of agricultural credit corporations and livestock loan companies, in an amount not exceeding either the undivided profits or 10% of the capital stock and surplus and undivided profits from such bank, whichever is greater;
(10) to buy, hold and sell any type of investment securities not enumerated in this section with approval of the commissioner and upon such conditions and under such regulations as are prescribed by the state banking board;
(11) to act as escrow agent;
(12) to subscribe to, acquire, hold and dispose of stock of a corporation the purpose of which is to acquire, hold and dispose of loans secured by real estate mortgages, and to acquire, hold and dispose of the debentures and capital notes of such corporation. No bank's investment in such stock, debentures and capital notes shall exceed 2% of its capital stock, surplus and undivided profits;
(13) to purchase and sell securities and stock without recourse solely upon the order, and for the account, of customers;
(14) to subscribe to, acquire, hold and dispose of any class of stock, debentures and capital notes of MABSCO agricultural services, inc. or any similar corporation the purpose of which is to acquire, hold and dispose of agricultural loans originated by Kansas banks. No bank's investment in such stock, debentures and capital notes shall exceed 2% of its capital stock, surplus and undivided profits;
(15) to engage in financial future contracts on United States government and agency securities subject to such rules and regulations as the commissioner may prescribe pursuant to K.S.A. 9-1713, and amendments thereto, to promote safe and sound banking practices;
(16) to subscribe to, buy and own stock in a bankers' bank organized under the laws of the United States, this state or any other state, or a one bank holding company which owns or controls such a bankers' bank, except no bank's investment in such stock shall exceed 10% of its capital stock, surplus and undivided profits;
(17) to buy, hold and sell shares of an open-end investment company in a manner consistent with the parameters outlined by the office of the comptroller of the currency in banking circular 220, as such circular was issued on November 21, 1986;
(18) subject to the prior approval of the commissioner and subject to such rules and regulations as are adopted by the commissioner pursuant to K.S.A. 9-1713, and amendments thereto, to promote safe and sound banking practices, a bank may establish a subsidiary which engages in the following securities activities:
(A) Selling or distributing stocks, bonds, debentures, notes, mutual funds and other securities;
(B) issuing and underwriting municipal bonds;
(C) organizing, sponsoring and operating mutual funds; or
(D) acting as a securities broker-dealer;
(19) to subscribe to, buy and own stock in an insurance company incorporated prior to 1910, under the laws of Kansas, with corporate headquarters in this state, which only provides insurance to financial institutions. The investment in such stock shall not exceed 2% of the bank's capital stock, surplus and undivided profits;
(20) to purchase and hold an interest in life insurance policies and, to the extent applicable, to purchase and hold an annuity in a manner consistent with the parameters outlined in the interagency statement of the purchase and risk management of life insurance, issued by the office of the comptroller of the currency, the board of governors of the federal reserve system, the federal deposit insurance corporation and the office of the thrift supervision on December 7, 2004; and set out in the respective agencies' issuances, including the federal deposit insurance corporation financial institution letter 127-2004, effective December 7, 2004, subject to the following limitations:
(A) The cash surrender value of any life insurance policy or policies underwritten by any one life insurance company shall not at any time exceed 15% of the total of the bank's capital stock, surplus, undivided profits, 100% of the allowance for loan and lease losses, capital notes and debentures and reserve for contingencies, unless the bank has obtained the prior approval of the commissioner;
(B) the cash surrender value of life insurance policies, in the aggregate from all companies, cannot at any time exceed 25% of the total of the bank's capital stock, surplus, undivided profits, 100% of the allowance for loan and lease losses, capital notes and debentures and reserve for contingencies, unless the bank has obtained the prior approval of the state bank commissioner;
(C) the limitations set forth in subparagraphs (A) and (B) shall not apply to any life insurance policy in place prior to July 1, 1993; and
(D) for the purposes of subsections (a)(20)(A) and (a)(20)(B), intangibles, such as goodwill, shall not be included in the calculation of capital;
(21) act as an agent and receive deposits, renew time deposits, close loans, service loans and receive payments on loans and other obligations for any company which is a subsidiary, as defined in K.S.A. 9-519, and amendments thereto, of the bank holding company which owns the bank. Nothing in this subsection shall authorize a bank to conduct activities as an agent which the bank or the subsidiary would be prohibited from conducting as a principal under any applicable federal or state law. Any bank which enters or terminates any agreement pursuant to this subsection shall within 30 days of the effective date of the agreement or termination provide written notification to the commissioner which details all parties involved and services to be performed or terminated;
(22) to make loans to the bank's stockholders or the bank's controlling holding company stockholders on the security of the shares of the bank or the bank's controlling bank holding company, but loans on the security of the shares of the bank may occur only if the bank would have extended credit to such stockholder on exactly the same terms without the bank shares pledged as collateral;
(23) to make investments in and loans to community and economic development entities as defined in K.S.A. 9-701, and amendments thereto, subject to the limitations prescribed by community reinvestment act pub. l. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.;
(24) to participate in a school savings deposit program authorized under K.S.A. 9-1138, and amendments thereto;
(25) with prior approval of the commissioner, to control or hold an interest in a financial subsidiary.
(A) The financial subsidiary may engage in one or more of the following activities:
(i) Lending, exchanging, transferring, investing for others or safeguarding money or securities;
(ii) acting as agent or broker for purposes of insuring, guaranteeing or indemnifying against loss, harm, damage, illness, disability, death or providing annuities as agent or broker subject to the requirements of chapter 40 of the Kansas Statutes Annotated, and amendments thereto;
(iii) issuing or selling instruments representing interests in pools or assets permissible for a bank to hold directly;
(iv) operating a travel agency; and
(v) activities that are financial in nature as determined by the commissioner.
(B) Such activities do not include:
(i) Insuring, guaranteeing or indemnifying against loss, harm, damage, illness, disability, death or providing or issuing annuities the income of which is subject to tax treatment under 26 U.S.C. § 72;
(ii) real estate development or real estate investment, except as otherwise expressly authorized by Kansas law; or
(iii) any activity permitted for financial holding companies under 12 U.S.C. § 1843(k)(4)(H) and (I).
(C) As used in subsection (a)(25), "control" means:
(i) Directly or indirectly owning, controlling or having power to vote 25% or more of any class of the voting shares of a financial subsidiary;
(ii) controlling in any manner the election of a majority of the directors or trustees of the financial subsidiary; or
(iii) otherwise directly or indirectly exercising a controlling influence over the management or policies of the financial subsidiary, as determined by the commissioner;
(26) to maintain and operate a postal substation on banking premises, in accordance with the rules and regulations of the United States postal service. The bank may advertise the services of the substation for the purpose of attracting customers to the bank and receive income therefrom. The bank shall keep the books and records of the substation separate from the records of other banking operations;
(27) with prior approval of the commissioner, to invest in foreign bonds an amount not to exceed 1% of the bank's capital stock and surplus as long as such bonds comply with the form and definition of investment securities;
(28) to act as an agent for any credit life, health and accident insurance, sometimes referred to as credit life and disability insurance, and mortgage life and disability insurance in connection with extensions of credit and only as a source of protection for such extension of credit;
(29) to act as agent for any fire, life or other insurance company authorized to do business in this state at any approved office of the bank which is located in any place the population does not exceed 5,000 inhabitants. Such insurance may be sold to existing and potential customers of the bank regardless of the geographic location of the customers;
(30) to become a stockholder and member of the federal reserve bank of the federal reserve district where such bank is located;
(31) with prior approval of the commissioner, to acquire the stock of, or establish and operate a subsidiary to acquire the stock of, another insured depository institution or the holding company of the insured depository institution provided such acquisition is incidental to a reorganization otherwise authorized by the law of this state and which occurs nearly simultaneously with such acquisition;
(32) with prior approval of the commissioner, to establish and operate a subsidiary for the purpose of owning, holding and managing all or part of the bank's securities portfolio provided the parent bank owns 100% of the stock of the subsidiary and the subsidiary shall not own, hold or manage securities for any party other than the parent bank. The subsidiary shall be subject to:
(A) All banking laws and rules and regulations applicable to the parent bank unless otherwise provided;
(B) consolidation with the parent bank of pertinent book figures for the purpose of applying all applicable statutory limitations including, but not limited to, capital requirements, owning and holding real estate and legal lending limitations;
(C) examination and supervision by the commissioner, the cost and responsibility of which will be attributable to the parent bank; and
(D) any additional terms or conditions required by the commissioner to address any legal or safety and soundness concerns;
(33) with prior approval of the commissioner, to establish or acquire operating subsidiaries for the purpose of engaging in any activity which is part or incidental to the business of banking as long as the parent bank owns at least 50% of the stock of the subsidiary. The subsidiary shall be subject to:
(A) All banking laws and regulations applicable to the parent bank unless otherwise provided;
(B) consolidation with the parent bank of pertinent book figures for the purpose of applying all applicable statutory limitations including, but not limited to, capital requirements, owning and holding real estate and legal lending limitations;
(C) examination and supervision by the commissioner the cost and responsibility of which will be attributable to the parent bank; and
(D) any additional terms or conditions required by the commissioner to address any legal or safety and soundness concerns;
(34) to invest in, without limitation, obligations of or obligations which are insured as to principal and interest by or evidences of indebtedness that are fully collateralized by obligations of the federal home loan banks, the federal national mortgage association, the government national mortgage association, the federal home loan mortgage corporation, the student loan marketing association and the federal farm credit banks;
(35) any bank or trust company may invest in bonds or notes secured by mortgages which in turn are insured or upon which there is a commitment to insure by the federal housing administration, or any successor thereto, in debentures issued by the federal housing administration or any successor, and in obligations of national mortgage associations; and
(36) to buy tax credits for certain historic structure rehabilitation expenditures pursuant to K.S.A. 79-32,211, and amendments thereto. The total amount of such tax credits held by a bank shall at no time exceed 25% of the capital stock, surplus, undivided profits, 100% of the allowance for loan and lease loss, capital notes and debentures and reserve for contingencies of such bank.
(b) Any bank hereby is authorized to exercise by the bank's board of directors or duly authorized officers or agents, subject to approval by the commissioner, any incidental power necessary to carry on the business of banking.
History: L. 1947, ch. 102, § 30; L. 1949, ch. 110, § 1; L. 1955, ch. 64, § 1; L. 1957, ch. 70, § 1; L. 1957, ch. 71, § 1; L. 1959, ch. 58, § 1; L. 1961, ch. 63, § 1; L. 1965, ch. 75, § 1; L. 1967, ch. 69, § 1; L. 1969, ch. 61, § 1; L. 1971, ch. 32, § 1; L. 1973, ch. 44, § 1; L. 1973, ch. 45, § 1; L. 1975, ch. 44, § 12; L. 1982, ch. 50, § 1; L. 1983, ch. 46, § 2; L. 1984, ch. 49, § 1; L. 1984, ch. 48, § 4; L. 1985, ch. 56, § 2; L. 1985, ch. 57, § 1; L. 1986, ch. 332, § 9; L. 1987, ch. 54, § 5; L. 1988, ch. 59, § 2; L. 1988, ch. 60, § 1; L. 1988, ch. 61, § 1; L. 1988, ch. 62, § 1; L. 1991, ch. 47, § 2; L. 1993, ch. 31, § 2; L. 1994, ch. 202, § 1; L. 1995, ch. 19, § 4; L. 1995, ch. 250, § 2; L. 1997, ch. 180, § 10; L. 2001, ch. 87, § 5; L. 2003, ch. 57, § 1; L. 2004, ch. 8, § 1; L. 2010, ch. 29, § 1; L. 2015, ch. 38, § 44; L. 2016, ch. 54, § 21; L. 2017, ch. 52, § 1; L. 2018, ch. 75, § 21; July 1.
Source or prior law:
9-101, 9-111.
Revisor's Note:
This section was also amended by L. 1995, ch. 79, § 14 and L. 1995, ch. 33, § 1, but those versions were repealed by L. 1995, ch. 250, § 3.
Cross References to Related Sections:
Repurchase agreements with state banks authorized, see 9-1131.
Transfer of home loan servicing agent, see 58-2337 through 58-2341.
Law Review and Bar Journal References:
Real estate loans, opinion of attorney general, 8 K.L.R. 171 (1959).
"Consumer Law—Limitations on the Validity of Future Advance Clauses in Mortgage Contracts," 23 K.L.R. 745, 746, 749 (1975).
Attorney General's Opinions:
Interest rate futures contracts and forward placement contracts are not investment securities under state banking code. 82-68.
Corrupt practices; corporations in banking business; corporate contributions. 82-280.
Merger of bank with general business corporation. 83-29.
Bank code; insolvency defined. 83-84.
Contributions by holding companies not carrying on banking business. 84-84.
Mutual funds may not be used as securities for the deposit of state and municipal funds. 87-98.
Investment certificates of investment companies' restrictions on investments. 88-166.
CASE ANNOTATIONS
1. Paragraph (4) referred to; dragnet type clause in mortgage did not extend to cover future advances. Emporia State Bank & Trust Co. v. Mounkes, 214 Kan. 178, 180, 519 P.2d 618.
2. Subsection (4) cited; future advances under mortgage had priority over liens attaching after recording but before advances made. First Nat'l Bank in Wichita v. Fink, 241 Kan. 321, 324, 736 P.2d 909 (1987).
3. Subsequent notes based on future advance clause secured only to maximum amount stated in mortgage. Mark Twain Kansas City Bank v. Cates, 248 Kan. 700, 710, 810 P.2d 1154 (1991).
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