Session of 1998
                   
SENATE BILL No. 681
         
By Committee on Ways and Means
         
2-26
            9             AN ACT concerning banks and trust companies; amending K.S.A. 1997
10             Supp. 9-1102 and repealing the existing section.
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12       Be it enacted by the Legislature of the State of Kansas:
13           Section 1. K.S.A. 1997 Supp. 9-1102 is hereby amended to read as
14       follows: 9-1102. (a) Any bank or trust company may own, purchase, lease,
15       hold, encumber or convey real property and certain personal property
16       subject to the following:
17           (1) Own suitable building, furniture and fixtures, stock in a single
18       trust company organized under the laws of the state of Kansas, and stock
19       in a safe deposit company organized under the laws of the state of Kansas,
20       and stock in a corporation organized under the laws of this state owning
21       real estate all or a part of which is occupied or to be occupied by the bank
22       or trust company;
23           (2) purchase, hold, encumber and convey real estate or lease, as lessor
24       or lessee, any building or buildings. Any real estate not necessary for the
25       bank's or trust company's accommodation in the transaction of its busi-
26       ness shall be disposed of or charged off its books by the bank or trust
27       company not later than seven years after its acquisition unless the state
28       bank commissioner authorizes the bank or trust company to retain such
29       real estate on its books for a period not to exceed an additional two years;
30           (3) a bank's or trust company's total investment or ownership at all
31       times in any one or more of the following shall not exceed 1/2 of its un-
32       impaired capital stock, surplus, undivided profits and capital notes and
33       debentures, and any such excess shall be removed from the bank's or
34       trust company's books unless approval is granted by the state bank com-
35       missioner:
36           (A) The book value of real estate plus all encumbrances thereon;
37           (B) the book value of furniture and fixtures;
38           (C) the book value of stock in a safe deposit company;
39           (D) the book value of stock in a trust company; or
40           (E) the book value of stock in a corporation organized under the laws
41       of this state owning real estate occupied by the bank or trust company
42       and advances to such corporation acquired or made after July 1, 1973.
43       Except that any real estate not necessary for the accommodation of the

SB 681

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  1       bank's or trust company's business shall be disposed of or charged off its
  2       books according to paragraph (2).
  3           (4) Notwithstanding paragraph (a)(3), a bank that is rated 1 or 2
  4       under the Uniform Financial Institutions Rating System (CAMELS) may
  5       make an aggregate investment in the items listed in (a)(3) of this section,
  6       up to 150% of the bank's capital stock, surplus, and undivided profits
  7       without requesting prior approval of the commissioner, provided the bank
  8       is well capitalized and will continue to be well capitalized after the in-
  9       vestment is made. The bank shall notify the commissioner in writing of
10       the investment within 30 days after the investment is made. The written
11       notice must include a description of the bank's investment.
12           (b) Any bank or trust company may acquire real estate in satisfaction
13       of any debts due it and may purchase real estate in satisfaction of any
14       debts due it, and may purchase real estate at judicial sales, but no bank
15       or trust company shall bid at any judicial sale a larger amount than is
16       necessary to protect its debts and costs. No real estate or interest in oil
17       and gas leasehold acquired in the satisfaction of debts or upon judicial
18       sales shall be carried as a book asset of the bank or trust company for
19       more than 10 years. At the termination of the 10 years such real estate
20       shall be charged off. The commissioner may grant an extension not to
21       exceed four years, if in the commissioner's judgment it will be to the
22       advantage of the bank or trust company to carry the real estate as an asset
23       for such extended period. Any such extensions issued shall be reviewed
24       by the commissioner on an annual basis.
25           (c) For the purpose of this section, a bank is deemed to be well cap-
26       italized if the bank:
27           (1) Has a total risk-based capital ratio of 10.0% or greater;
28           (2) has a Tier 1 risk-based capital ratio of 6.0% or greater;
29           (3) has a leverage ratio of 5.0% or greater; and
30           (4) is not subject to any written agreement, order, capital directive or
31       prompt corrective action directive issued by the commissioner or a federal
32       bank regulator to meet and maintain a specific capital level for any capital
33       measures.
34           Sec. 2. K.S.A. 1997 Supp. 9-1102 is hereby repealed.
35           Sec. 3. This act shall take effect and be in force from and after its
36       publication in the Kansas register.
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