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§ 504. Investments

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 7 P.S. Banks and BankingEffective: December 24, 2012

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 7 P.S. Banks and Banking (Refs & Annos)
Banking Code of 1965 (Refs & Annos)
Chapter 5. Savings Bank Powers (Refs & Annos)
Effective: December 24, 2012
7 P.S. § 504
§ 504. Investments
Currentness
(a) Authority under articles--A savings bank may make such investments as may be authorized by its articles subject to compliance with the requirements of this act as to investments in shares of stock and in real estate loans.
(a.1) Deleted by 2012, Oct. 24, P.L. 1336, No. 170, § 23, effective in 60 days [Dec. 24, 2012].
(b) Authority under this act or other statutes--Except as otherwise provided in its articles, a savings bank may, in addition to investments authorized by its articles, other provisions of this act or other statutes, make investments in:
(i) obligations of the United States or of the District of Columbia or obligations for which the full faith and credit of the United States is pledged;
(ii) obligations of the Federal National Mortgage Association, a Federal Land Bank, a Federal Home Loan Bank, a Bank for Cooperatives, a Federal Intermediate Credit Bank, the Tennessee Valley Authority, the International Bank for Reconstruction and Development, the Inter-American Development Bank and the Asian Development Bank, or any other such corporations or agencies as may from time to time be approved by the Department of Banking;
(iii) obligations of any state of the United States or of any political subdivision of any state, obligations for which the full faith and credit of any state or of any political subdivision of any state is pledged and obligations of any authority existing under the laws of the Commonwealth of Pennsylvania--subject to the prudent man rule;
(iv) obligations of any corporation or similar entity existing under the laws of the United States, any state or the District of Columbia--subject to the prudent man rule;
(v) bankers' acceptances and bills of exchange eligible for purchase in the open market by a Federal Reserve Bank which have been accepted by a member of a Federal Reserve Bank, subject to a limit for all acceptances by one acceptor held at any time of twenty-five percent of the capital and surplus of such acceptor and to a limit for the aggregate of all acceptances held at any time of five percent of the book value of the assets of the savings bank;
(vi) shares of preferred stock, guaranteed stock or common stock of a corporation or similar entity existing under the laws of the United States, any state or the District of Columbia, subject to:
(A) the prudent man rule,
(B) a limit for the aggregate cost of all shares acquired pursuant to this subsection (vi) of the lesser of seven and one-half percent of the book value of the assets of the savings bank or seventy-five percent of the aggregate of its:
(I) surplus, unallocated reserves, undivided profits and subordinated securities, in the case of a mutual savings bank, or
(II) capital, surplus and capital securities, in the case of a stock savings bank, at the time of acquisition of each of such shares,
(C) a limit for the aggregate cost of all shares of one issuer of one-fifth of one percent of the book value of the assets of the savings bank at the respective times of acquisition of each of such shares, and
(D) a limit for the aggregate number of shares of one issuer of five percent of the total number of issued and outstanding shares of such issuer at the respective times of acquisition of each of such shares;
(vii) obligations of the Pennsylvania Housing Agency;
(viii) real estate loans made pursuant to this chapter; and
(ix) personal property leased to customers pursuant to this chapter.
(x) corporations formed to promote the public welfare and community development, expand the economy and provide for social reform, subject to regulation by the department.
(xi) investment securities which are direct obligations in the form of bonds, notes or debentures issued, assumed or guaranteed by the State of Israel to the same extent as that permitted to national banks under Federal Law (12 U.S.C. 24), subject to the same restrictions and limitations imposed on national banks by such law, and subject to such additional restrictions and limitations as may be imposed by regulation of the department.
(xii) shares of stock of a clearing corporation as defined in Article 8 of the Uniform Commercial Code.1
(xiii) in the case of a savings bank which has elected to exercise the conditional powers provided in section 513,2 capital stock, securities or other obligations of any service corporation, subject to the following limitations:
(A) the entire capital stock of the service corporation shall be available for purchase by, or be transferable to, only savings banks, savings and loan associations organized under the laws of this Commonwealth, Federal savings banks and savings and loan associations having their home offices in this Commonwealth, regional thrift institutions, as that term is defined in section 117,3 or, after March 4, 1990, foreign thrift institutions, as that term is defined in section 117,
(B) unless authorized by the department a savings bank shall not have an aggregate outstanding investment in the capital stock, securities or obligations of service corporations the cost of which exceeds three percent of the assets of the savings bank at the time of acquisition of such stock, securities or obligations,
(C) a service corporation qualifying for investment under this subsection may engage in the following activities:
(1) originating, purchasing, selling and servicing loans upon real estate and participating interests therein,
(2) performing clerical, bookkeeping, accounting, statistical or similar functions, primarily for financial institutions,
(3) acquisition and development of real estate, principally for construction of housing or for resale to others for such construction or for use as mobile home sites, either separately or in conjunction with others provided that such development shall be completed within five years of the commencement of development, unless that period is extended by the department,
(4) acquiring interests in improved residential real estate and mobile homes to be held for rental, and
(5) any other activity authorized by the department by regulation; and
(xiv) ownership interests in improved or unimproved real estate of any type held for development, rental or sale, subject to the prudent man rule of subsection (c), provided that development shall be completed within five years of the commencement of the development unless that period is extended by the department, and provided that the direct cost of the total of all such ownership interests shall not exceed one percent of the assets of the savings bank measured at the time investment is made, unless authorized by the department.
(c) Prudent man rule--Investments which are stated to be subject to the prudent man rule shall be made in the exercise of that degree of judgment and care under the circumstances then prevailing which men of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income to be derived therefrom as well as the probable safety of their capital.
(d) Other investment--The department may, by regulation, permit a savings bank with the prior written approval of the department, to make investments that are not otherwise authorized by this act or that do not comply with the conditions, restrictions, limitations or requirements provided elsewhere in this act, but the total amount of such investments may not exceed three percent of the assets of the savings bank: Provided, however, That no one investment shall exceed one percent of assets of the savings bank. The regulations may include such conditions, restrictions, limitations or requirements as the department deems necessary and appropriate.

Credits

1965, Nov. 30, P.L. 847, No. 356, § 504. Amended 1968, Nov. 27, P.L. 1104, No. 345, § 3; 1973, Sept. 27, P.L. 253, No. 72, § 6, imd. effective; 1973, Dec. 3, P.L. 378, No. 135, § 1, imd. effective; 1974, Oct. 10, P.L. 716, No. 240, § 2, imd. effective; 1981, April 16, P.L. 9, No. 4, § 2, imd. effective; 1982, April 8, P.L. 262, No. 79, § 7, imd. effective; 1988, Dec. 21, P.L. 1416, No. 173, §§ 5 to 7, effective in 30 days; 1990, Dec. 18, P.L. 766, No. 191, § 7, imd. effective; 2012, Oct. 24, P.L. 1336, No. 170, § 23, effective in 60 days [Dec. 24, 2012].

Footnotes

1
13 Pa.C.S.A. § 8101 et seq.
2
7 P.S. § 513.
3
7 P.S. § 117.
7 P.S. § 504, PA ST 7 P.S. § 504
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
End of Document