Session Law

Identifying Information:L. 2001 ch. 087
Other Identifying Information:2001 House Bill 2482
Tax Type:Other
Brief Description:An Act relating to banks and banking; concerning the powers and duties of the state banking board and the state bank commissioner; amending K.S.A. 9-812, 9-908, 9-912, 9-1101a, 9-1127b, 9-1127c, 9-1127d and 9-1714 and K.S.A. 2000 Supp. 9-904, 9-1101, 9-1111, 9-1111b, 9-1801, 9-1804 and 74-3004 and repealing the existing sections, also repealing K.S.A. 9-1001 and 9-1806.
Keywords:


Body:

CHAPTER 87

HOUSE BILL No. 2482

(Amended by Chapter 167)


An Act relating to banks and banking; concerning the powers and duties of the state banking

board and the state bank commissioner; amending K.S.A. 9-812, 9-908, 9-912, 9-1101a,

9-1127b, 9-1127c, 9-1127d and 9-1714 and K.S.A. 2000 Supp. 9-904, 9-1101, 9-1111,

9-1111b, 9-1801, 9-1804 and 74-3004 and repealing the existing sections, also repealing

K.S.A. 9-1001 and 9-1806.




Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 9-812 is hereby amended to read as follows: 9-812.

A bank corporation shall not change its name until such name change has

been submitted to and approved by the state banking board bank com-

missioner.

Sec. 2. K.S.A. 2000 Supp. 9-904 is hereby amended to read as fol-

lows: 9-904. (a) The capital stock of any bank or trust company may be

reduced to the minimum provided by law for a new bank or trust company

by resolution adopted by the stockholders representing 2/3 of the voting

stock of such bank or trust company, except that no such reduction shall

become effective until the commissioner approves the same.

(b) With prior approval of the state banking board bank commis-

sioner, a bank or trust company may reduce its capital stock below the

minimum amount allowed by subsection (a) by transferring capital stock

to its surplus fund. No such reduction shall be approved unless the state

banking board bank commissioner finds:

(1) The proposed reduction is necessary to provide greater opera-

tional flexibility to an adequately capitalized, well-managed institution;

(2) the proposed reduction does not result in or is not in furtherance

of a reduction in the institution's capital to an amount below 8% of total

deposits for a bank or below $250,000 for a trust company;

(3) the proposed reduction is not intended to delay, prevent or be in

lieu of capital stock impairment or a stockholder's assessment pursuant

to K.S.A. 9-906 and amendments thereto; and

(4) the proposed reduction poses no significant risk to the financial

stability, safety or soundness of the institution.

(c) After the commissioner or state banking board has approved such

reduction a certificate signed by the president and cashier of the bank or

trust company setting forth the result of such reduction of its capital stock,

the names of its stockholders and the amount of stock held by each, shall

be filed with the secretary of state and a duplicate shall be filed with the

commissioner.

(d) Whenever the capital stock of any bank or trust company shall

be reduced as herein provided, every stockholder, owner or holder of any

stock certificate shall surrender the same for cancellation and shall be

entitled to receive a new certificate for such person's proportion of the

new stock. No dividends shall be paid to any such stockholder until the

old certificate is surrendered.

Sec. 3. K.S.A. 9-908 is hereby amended to read as follows: 9-908.

Any bank or trust company may issue preferred stock of one or more

classes in such amounts as shall be approved by the state banking board

bank commissioner. The holders of 2/3 in amount of the common stock of

such bank or trust company must approve such issuance at a meeting held

for that purpose and for which notice by registered mail must be given

to each stockholder by mailing such notice at least five days in advance

of the date of the meeting. No issue of preferred stock shall be valid until

the par value of all stock so issued shall be paid in. With the approval of

the state banking board the common stock may be reduced below the

requirements contained in K.S.A. 9-901a, and amendments thereto. No

preferred stock shall be retired unless the common stock shall be in-

creased in an amount equal to the amount of the preferred stock retired.

All preferred stock shall be retired consistent with safety to the depositors.

Sec. 4. K.S.A. 9-912 is hereby amended to read as follows: 9-912.

Any losses sustained by a bank or trust company in excess of its undivided

profits may be charged to its surplus fund. Any bank or trust company,

after receiving approval from the commissioner, may declare a stock div-

idend from its surplus fund, but no such dividend shall reduce the surplus

fund to an amount less than 30% of the resulting total capital and any

bank or trust company may reduce its surplus with permission of the state

banking board bank commissioner.

Sec. 5. K.S.A. 2000 Supp. 9-1101 is hereby amended to read as fol-

lows: 9-1101. Any bank hereby is authorized to exercise by its board of

directors or duly authorized officers or agents, subject to law, all such

powers, including incidental powers, as shall be necessary to carry on the

business of banking, and:

(1) To receive deposits and to pay interest thereon at rates which

need not be uniform. The state bank commissioner, with approval of the

state banking board, may by regulations of general application fix maxi-

mum rates of interest to be paid on deposit accounts other than accounts

for public moneys;

(2) to buy and sell exchange, gold, silver, foreign coin, bullion, com-

mercial paper, bills of exchange, notes and bonds;

(3) to buy and sell bonds, securities, or other evidences of indebt-

edness of the United States of America or those fully guaranteed, directly

or indirectly, by it, and general obligation bonds of the state of Kansas or

any municipality or quasi-municipality thereof, and of other states, and

of municipalities or quasi-municipalities in other states of the United

States of America. No bank shall invest an amount in excess of 15% of its

capital stock paid in and unimpaired and the unimpaired surplus fund of

such bank in bonds, securities or other evidences of indebtedness of any

municipality or quasi-municipality of any other state or states of the

United States of America: (a) If and when the direct and overlapping

indebtedness of such municipality or quasi-municipality is in excess of

10% of its assessed valuation, excluding therefrom all valuations on in-

tangibles and homestead exemption valuation; (b) or if any bond, security,

or evidence of indebtedness of any such municipality or quasi-munici-

pality 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;

(4) to make all types of loans, including loans on real estate, subject

to the loan limitations contained in this act. Every real estate loan shall

be secured by a mortgage or other instrument constituting a lien, or the

full equivalent thereof, upon the real estate securing the loan, according

to any lawful or well recognized practice, which is best suited to the

transaction. The mortgage may secure future advances. The lien of such

mortgage shall attach upon its execution and have priority from time of

recording as to all advances made thereunder until such mortgage is re-

leased of record. The lien of such mortgage shall not exceed at any one

time the maximum amount stated in the mortgage;

(5) to discount and negotiate bills of exchange, negotiable notes and

notes not negotiable;

(6) to buy and sell investment securities which are evidences of in-

debtedness. The buying and selling of investment securities shall be lim-

ited to buying and selling without recourse marketable obligations evi-

dencing indebtedness of any person, copartnership, association,

corporation, or 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, commonly

known as investment securities, under such further definition of the term

``investment securities'' as prescribed by the board, but the total amount

of such investment securities of any one obligor or maker held by such

bank shall at no time exceed 15% of the capital stock paid in and unim-

paired and the unimpaired surplus fund of such bank except that this

limit shall not apply to obligations of the United States government or

any agency thereof. If the obligor is a state agency including any agency

issuing revenue bonds pursuant to K.S.A. 76-6a15, and amendments

thereto, or the state armory board, the total amount of such investment

securities shall at no time exceed 25% of the capital stock paid in and

unimpaired and the unimpaired surplus fund of such bank;

(7) to subscribe to, buy and own such stock of the federal national

mortgage association as required by title 3, section 303 of the federal act

known as the national housing act as amended by section 201 of public

law No. 560, of the United States (68 Stat. 613-615), known as the housing

act of 1954, or amendments thereto;

(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 making of that acquisition the aggregate

amount of shares in small business investment companies then held by

the bank would exceed 5% of its capital and surplus. Nothing in this act

contained shall prohibit any bank from holding and disposing of such real

estate and other property as it may acquire in the collection of its assets;

(9) to subscribe to, buy and own stock in any agricultural credit cor-

poration or livestock loan company, or its affiliate, organized pursuant to

the provisions of the laws of the United States providing for the infor-

mation 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 subscribe to, buy and own stock in minbanc capital corpora-

tion, a company formed for the purpose of providing capital to minority-

owned banks. No bank's investment in such stock shall exceed 2% of its

capital and surplus;

(11) to buy, hold, and sell any type of investment securities not enu-

merated in this section with approval of the commissioner and upon such

conditions and under such regulations as are prescribed by the state bank-

ing board;

(12) to act as escrow agent;

(13) to subscribe to, acquire, hold and dispose of stock of a corpo-

ration having as its purpose the acquisition, holding and disposition 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 in-

vestment in such stock, debentures and capital notes shall exceed 2% of

its capital stock, surplus and undivided profits and such investment shall

be carried on the books of the bank as directed by the commissioner;

(14) to purchase and sell securities and stock without recourse solely

upon the order, and for the account, of customers;

(15) 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 having as its purpose the acquisition, holding and

disposition 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. Such investment shall

be carried on the books of the bank as directed by the commissioner;

(16) to buy, hold and sell mortgages, stock, obligations and other se-

curities which are issued or guaranteed by the federal home loan mort-

gage corporation under sections 305 and 306 of the federal act known as

the federal home loan mortgage corporation act (P.L. 91-351);

(17) to buy, hold and sell obligations or other instruments or securi-

ties, including stock, issued or guaranteed by the student loan marketing

association created by (P.L. 92-318) of the United States;

(18) to engage in financial future contracts on United States govern-

ment and agency securities subject to such rules and regulations as the

state bank commissioner may prescribe pursuant to K.S.A. 9-1713, and

amendments thereto, to promote safe and sound banking practices;

(19) to subscribe to, buy and own stock in a state or federally char-

tered bankers' bank or a one bank holding company which owns or con-

trols such a bankers' bank, except no bank's investment in such stock shall

exceed 10% of its capital stock, surplus and undivided profits;

(20) subject to such rules and regulations as the state bank commis-

sioner may adopt pursuant to K.S.A. 9-1713, and amendments thereto,

to promote safe and sound banking practices, upon recorded prior ap-

proval by the board of directors of the initial investment in a specific

company and pursuant to an investment policy approved by the board of

directors which specifically provides for such investments to buy, hold

and sell shares of an open-end investment company registered with the

federal securities and exchange commission under the federal investment

company act of 1940 and the federal securities act of 1933 and of a pri-

vately offered company sponsored by an affiliated commercial bank, the

shares of which are purchased and sold at par and the assets of which

consist solely of securities which may be purchased by the bank for its

own account. Such shares may be purchased without limit if the assets of

the company consist solely of and are limited to obligations that are eli-

gible for purchase by the bank without limit. If the assets of the company

include securities which may be purchased by the bank subject to limi-

tation, such shares may be purchased subject to the limitation applicable

to purchase by the bank of such securities;

(21) subject to the prior approval of the state bank commissioner and

the state banking board and subject to such rules and regulations as are

adopted by the state bank 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, mu-

tual funds and other securities, (b) issuing and underwriting municipal

bonds, (c) organizing, sponsoring and operating mutual funds, (d) acting

as a securities broker-dealer;

(22) to subscribe to, acquire, hold and dispose of stock of any class

of the federal agricultural mortgage corporation, a corporation having as

its purpose the acquisition, holding and disposition of loans secured by

agricultural real estate mortgages. No bank's investment in such corpo-

ration shall exceed 5% of its capital stock, surplus and undivided profits

and such investment shall be carried on the books of the bank as directed

by the commissioner;

(23) 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 in-

stitutions. The investment in such stock shall not exceed 2% of the bank's

capital stock, surplus and undivided profits;

(24) to purchase and hold an interest in life insurance policies on the

life of its executive officers and directors, and to purchase life insurance

policies for the sole purpose of providing employee deferred compensa-

tion and benefit plans subject to the limitations listed herein. If the bank

has the authority to direct the investments of the cash surrender value of

the policy, those investments shall be limited solely to assets which may

be directly purchased by the bank for its own account. The limitations

set forth in paragraphs (a) and (b) of this subsection do not apply to any

such life insurance policies in place before July 1, 1993. Funding for the

payment of employee compensation and benefit plans as well as the ben-

efits derived may be made or split in a joint manner between the bank,

employee or bank holding company as in ``split dollar'' or other insurance

plans:

(a) Life insurance purchased and held on the life of executive officers

and directors are subject to the following limitations:

(i) The cash surrender value of any life insurance policy on an exec-

utive officer or director underwritten by any one life insurance company

cannot at any time exceed 15% of the bank's capital stock, surplus, un-

divided profits, loan loss reserve, capital notes and debentures and reserve

for contingency, unless the bank has obtained the prior approval of the

state bank commissioner;

(ii) the cash surrender value of life insurance policies on executive

officers or directors, in the aggregate from all companies, cannot at any

time exceed 25% of the bank's capital stock, surplus, undivided profits,

loan loss reserve, capital notes and debentures and reserve for contin-

gency, unless the bank has obtained the prior approval of the state bank

commissioner;

(iii) the authority to hold life insurance on any executive officer ceases

if the executive officer is no longer employed by the bank or no longer

meets the definition of an executive officer;

(iv) the authority to hold life insurance on a director ceases when that

director is no longer a member of the board of directors;

(v) the bank's board of directors must approve and document the

purchase of any life insurance, including the reasonableness of such pur-

chase; and

(vi) except as part of a reasonable compensation or benefit plan, a

bank is not authorized to purchase life insurance as an estate management

device for the benefit of officers, directors or employees who are also

controlling shareholders of the bank.

(b) Life insurance purchased for the sole purpose of providing de-

ferred compensation and benefit plans are subject to the following limi-

tations:

(i) The bank may purchase individual or group policies for the sole

purpose of providing deferred compensation agreements entered into

with its officers and employees;

(ii) the bank may purchase policies on directors to fund a deferred

directors fees program;

(iii) the board of directors must approve and document such deferred

plans including the reasonableness of the plans;

(iv) the bank is not authorized to hold the policies unless specifically

approved by the state banking board bank commissioner if no liability

exists under the deferred compensation plans;

(v) the cash surrender value of any life insurance policy purchased

for the sole purpose of providing deferred compensation and benefit

plans, underwritten by any one life insurance company, cannot exceed at

any time, 15% of the bank's capital stock, surplus, undivided profits, loan

loss reserve, capital notes and debentures and reserve for contingency,

unless the bank has obtained the prior approval of the state bank com-

missioner; and

(vi) the cash surrender value of life insurance policies purchased for

the sole purpose of providing deferred compensation and benefit plans,

in the aggregate from all companies, cannot at any time exceed 25% of

the bank's capital stock, surplus, undivided profits, loan loss reserve, cap-

ital notes and debentures and reserve for contingency, unless the bank

has obtained the prior approval of the state bank commissioner;

(25) subject to such rules and regulations as the state bank commis-

sioner may adopt pursuant to K.S.A. 9-1713 and amendments thereto to

promote safe and sound banking practices, to act as an agent and receive

deposits, renew time deposits, close loans, service loans, and receive pay-

ments on loans and other obligations for any company which is a subsid-

iary, as defined in subsection (d) of K.S.A. 9-519 and amendments thereto

of the bank holding company which owns the bank. Nothing in this sub-

section 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 ter-

minates 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;

(26) to make loans to the bank's stockholders or the stockholders of

the bank's controlling bank holding company on the security of the shares

of the bank or shares of the bank's controlling bank holding company,

with the limitation that this may occur only if the bank would have ex-

tended credit to such stockholder on exactly the same terms without the

shares pledged as collateral, and provided the shares pledged are not a

director's qualifying shares per K.S.A. 9-1117, and amendments thereto;

(27) to make investments in and loans to community development

corporations (CDCs) and community development projects (CD pro-

jects) as defined in K.S.A. 9-701 and amendments thereto, subject to the

limitations prescribed by the comptroller of the currency as interpreted

by rules and regulations which shall be adopted by the state bank com-

missioner as provided by K.S.A. 9-1713 and amendments thereto; and

(28) to participate in a school savings deposit program authorized

under K.S.A. 2000 Supp. 9-1138.; and

(29) with prior approval of the commissioner, to offer through one or

more financial subsidiaries any products or services which a national bank

may offer through its financial subsidiaries, subject to safety and sound-

ness requirements imposed by the commissioner. As used in this para-

graph, ``financial subsidiary'' shall have the same meaning given to such

term under the Gramm-Leach Bliley act of 1999 (P.L. 106-102).

Sec. 6. K.S.A. 9-1101a is hereby amended to read as follows: 9-

1101a. In accordance with normal business considerations and upon ap-

proval of stockholders owning two-thirds 2/3 of the voting stock of the

bank, the bank may issue convertible or nonconvertible capital notes or

debentures in such amounts and under such terms and conditions as shall

be approved by the state banking board: Provided, bank commissioner,

except that the principal amount of capital notes or debentures outstand-

ing at any time shall not exceed an amount equal to one hundred percent

(100%) 100% of the bank's paid-in capital stock plus fifty percent (50%)

50% of the amount of its unimpaired surplus fund. Capital notes or de-

bentures which are by their terms expressly subordinated to the prior

payment in full of all deposit liabilities of the bank shall be considered as

part of the unimpaired capital funds of the bank for purpose of the com-

putation of the bank's loan limit.

Sec. 7. K.S.A. 2000 Supp. 9-1111 is hereby amended to read as fol-

lows: 9-1111. The general business of every bank shall be transacted at

the place of business specified in its certificate of authority and at one or

more branch banks established and operated as provided in this section.

Except for the establishment or operation of a trust branch bank or the

relocation of an existing trust branch bank pursuant to K.S.A. 2000 Supp.

9-1135, and amendments thereto, it shall be unlawful for any bank to

establish and operate any branch bank or relocate an existing branch bank

except as hereinafter provided. Notwithstanding the provisions of this

section, any location at which a depository institution, as defined by K.S.A.

9-701, and amendments thereto, receives deposits, renews time deposits,

closes loans, services loans or receives payments on loans or other obli-

gations, as agent, for a bank pursuant to subsection (25) of K.S.A. 9-1101,

and amendments thereto, or other applicable state or federal law, or is

authorized to open accounts or receive deposits under subsection (28) of

K.S.A. 9-1101, and amendments thereto, shall not be deemed to be a

branch bank:

(a) For the purposes of this section, the term ``branch bank'' means

any office, agency or other place of business located within this state,

other than the place of business specified in the bank's certificate of

authority, at which deposits are received, checks paid, money lent or trust

authority exercised, if approval has been granted by the state bank com-

missioner, under K.S.A. 9-1602, and amendments thereto;

(b) after first applying for and obtaining the approval of the state

banking board, one or more branch banks may be established and oper-

ated anywhere within this state by a bank incorporated under the laws of

this state

(b) establishment of a new branch or relocation of an existing branch

for eligible banks:

(1) After first applying for and obtaining the approval of the com-

missioner, an eligible bank incorporated under the laws of this state, may

establish and operate one or more branch banks or relocate an existing

branch bank, anywhere within this state;

(2) the application shall include the nature of the banking business to

be conducted at the proposed branch bank, the primary geographical area

to be served by it, the personnel and office facilities to be provided at the

proposed branch bank and other information the commissioner may re-

quire;

(3) the application shall include the name selected for the proposed

branch bank. The name selected for the proposed branch bank shall not

be the name of any other bank or branch bank doing business within a

15 mile radius of the same city or town, nor shall the name selected be

required to contain the name of the applicant bank. If the name selected

for the proposed branch bank does not contain the name of the applicant

bank, the branch bank shall provide in the public lobby of such branch

bank, a public notice that it is a branch bank of the applicant bank;

(4) the application shall include proof of publication of notice that the

applicant bank intends to file or has filed an application to establish a

branch bank or relocate an existing branch bank. The notice shall be

published in a newspaper of general circulation in the county where the

applicant bank proposes to locate the branch bank. The notice shall be in

the form prescribed by the commissioner and at a minimum shall contain

the name and address of the applicant bank, the location of the proposed

branch and a solicitation for written comments. The notice shall be pub-

lished on the same day for two consecutive weeks and provide for a com-

ment period of not less than 10 days after the date of the second publi-

cation;

(5) upon receipt of the application, and following expiration of the

comment period, the commissioner may hold a hearing in the county in

which the applicant bank seeks to operate the branch bank. The applicant

shall publish notice of the time, date and place of such hearing in a news-

paper of general circulation in the county where the applicant bank pro-

poses to locate the branch bank, not less than 10 nor more than 30 days

prior to the date of the hearing, and proof of publication shall be filed

with the commissioner. At any such hearing, all interested persons shall

be allowed to present written and oral evidence to the commissioner, or

the commissioner's designee, in support of or in opposition to the branch

bank. Upon completion of a transcript of the testimony given at any such

hearing, the transcript shall be filed in the office of the commissioner;

(6) if the commissioner determines a public hearing is not warranted,

the commissioner shall approve or disapprove the application within 15

days after receipt of a complete application but not prior to the end of the

comment period. If a public hearing is held, the commissioner shall ap-

prove or disapprove the application within 60 days after consideration of

the complete application and the evidence gathered during the commis-

sioner's investigation. The period for consideration of the application may

be extended if the commissioner determines the application presents a

significant supervisory concern. If the commissioner finds that:

(A) There is a reasonable probability of usefulness and success of the

proposed branch bank; and

(B) the applicant bank's financial history and condition is sound, the

new branch or relocation shall be granted, otherwise, it shall be denied;

(7) within 15 days after any final action of the commissioner approv-

ing or disapproving an application, the applicant, or any adversely af-

fected or aggrieved person who provided written comments during the

specified comment period, may request a hearing with the state banking

board. Upon receipt of a timely request, the board shall conduct a hearing

in accordance with the provisions of the Kansas administrative procedure

act. Any decision of the state banking board is subject to review in ac-

cordance with the act for judicial review and civil enforcement of agency

actions;

(c) establishment of a new branch or relocation of an existing branch

for banks which do not meet the definition of ``eligible bank'':

(1) After first applying for and obtaining the approval of the state

banking board, a bank incorporated under the laws of this state, which

does not meet the definition of ``eligible bank,'' may establish and operate

one or more branch banks, or relocate an existing branch bank, anywhere

within this state;

(c) (2) an application under paragraph (1) of this subsection, to es-

tablish and operate a branch bank or to relocate an existing branch bank

shall be in such form and contain such information as the rules and reg-

ulations of the state bank commissioner, adopted pursuant to K.S.A. 9-

1713, and amendments thereto, shall provide;

(d) (3) the application shall include estimates of the annual income

and expenses of the proposed branch bank, the annual volume of business

to be transacted by it, the nature of the banking business to be conducted

at the proposed branch bank, the primary geographical area to be served

by it and the personnel and office facilities to be provided at the proposed

branch bank;

(e) (4) the application shall include the name selected for the pro-

posed branch bank. The name selected for the proposed branch bank

shall not be the name of any other bank or branch bank doing business

in within a 15 mile radius of the same city or town, nor shall the name

selected be required to contain the name of the applicant bank. If the

name selected for the proposed bank does not contain the name of the

applicant bank, the branch bank shall provide in the public lobby of such

branch bank, a public notice that it is a branch bank of the applicant bank;

(f) (5) the application shall include an affidavit proof of publication

of notice that applicant bank intends to file an application to establish a

branch bank or relocate an existing branch bank. The notice shall be

published in a newspaper of general circulation in the county where the

applicant bank proposes to locate the branch bank. The notice shall be

in the form prescribed by the state banking board and at a minimum shall

contain, the name and address of the applicant bank, the location of the

proposed branch, and a solicitation for written comments concerning the

proposed branch be submitted to the state banking board, and provide

for a comment period of not less than 10 days prior to the board's final

consideration of the application. The notice shall be published on the same

day for two consecutive weeks and provide for a comment period of not

less than 10 days after the date of the second publication;

(g) (6) upon receipt of an application meeting the above require-

ments, if there is any written objection to the application filed with the

board and following the expiration of the comment period, within 60 days

after receipt of the application, the state banking board shall may hold a

hearing in the county in which the applicant bank seeks to establish and

operate a branch bank. If there is no written objection filed with the board

within the time period specified under subsection (f), the board may hold

a hearing on the application in such county. Notice of the time, date and

place of such hearing if one is to be held shall be published in a newspaper

of general circulation in such county by the bank seeking to establish and

operate the county where the applicant bank proposes to locate the branch

bank not less than 10 or more than 30 days prior to the date of the hearing,

and an affidavit proof of publication thereof shall be filed with the com-

missioner. Not less than 10 days or more than 30 days prior to any such

date of the hearing, the commissioner shall give notice of the time, date

and place of such hearing by registered or certified mail to all banks and

national banking associations having their principal places of business or

branch banks in the county wherein the applicant bank seeks to locate a

branch bank. At any such hearing, all interested persons shall be allowed

to present written and oral evidence to the board in support of or in

opposition to the application. Upon completion of a transcript of the tes-

timony given at any such hearing, the transcript shall be filed in the office

of the commissioner and copies shall be furnished to the members of the

state banking board not less than 14 10 days prior to the meeting of the

board at which the application will be considered;

(h) (7) the state banking board shall approve or disapprove the ap-

plication, within 90 days after consideration of the application and the

evidence gathered during the board's investigation. If the board finds that:

(1) There is or will be at the time the branch bank is opened the need

for the same in the community to be served by it;

(2) (A) There is a reasonable probability of usefulness and success of

the proposed branch bank; and

(3) (B) the applicant bank's financial history and condition is sound;

and

(4) the proposed branch bank can be established without undue in-

jury to properly conducted existing banks and national banking associa-

tions, the application shall be granted, otherwise, the application shall be

denied;

(i) (8) any final action of the board approving or disapproving an ap-

plication shall be subject to review in accordance with the act for judicial

review and civil enforcement of agency actions upon the petition of the

applicant or any adversely affected or aggrieved person who appeared

and offered evidence at the hearing upon the application provided written

comments during the specified comment period;

(j) (d) any branch bank lawfully established and operating on the ef-

fective date of this act may continue to be operated by the bank then

operating the branch bank and by any successor bank;

(k) (e) branch banks which have been established and are being main-

tained by a bank at the time of its merger into or consolidation with

another bank or at the time its assets are purchased and its liabilities are

assumed by another bank may continue to be operated by the surviving,

resulting or purchasing and assuming bank. The surviving, resulting or

purchasing and assuming bank, with approval of the state bank commis-

sioner, may establish and operate a branch bank or banks at the site or

sites of the merged, constituent or liquidated bank or banks;

(l) (f) any state bank or national banking association having its prin-

cipal office and main banking house in this state may provide and engage

in banking transactions by means of remote service units wherever lo-

cated, which remote service units shall not be considered to be branch

banks authorized herein. Any banking transaction effected by use of a

remote service unit shall be deemed to be transacted at a bank and not

at a remote service unit;

(m) (g) as a condition to the operation and use of any remote service

unit in this state, a state bank or national banking association, each here-

inafter referred to as a bank, which desires to operate or enable its cus-

tomers to utilize a remote service unit must agree that such remote serv-

ice unit will be available for use by customers of any other bank or banks

upon the request of such bank or banks to share its use and the agreement

of such bank or banks to share all costs, including a reasonable return on

capital expenditures incurred in connection with its development, instal-

lation and operation. The owner of the remote service unit, whether a

bank or any other person, shall make the remote service unit available

for use by other banks and their customers on a nondiscriminatory basis,

conditioned upon payment of a reasonable proportion of all costs, includ-

ing a reasonable return on capital expenditures incurred in connection

with the development, installation and operation of the remote service

unit. Notwithstanding the foregoing provisions of this subsection, a re-

mote service unit located on the property owned or leased by the bank

where the principal place of business of a bank, or an attached auxiliary

teller facility or branch bank of a bank, is located need not be made

available for use by any other bank or banks or customers of any other

bank or banks;

(n) (h) for purposes of this section, ``remote service unit'' means an

electronic information processing device, including associated equip-

ment, structures and systems, through or by means of which information

relating to financial services rendered to the public is stored and trans-

mitted, whether instantaneously or otherwise, to a bank and which, for

activation and account access, is dependent upon the use of a machine-

readable instrument in the possession and control of the holder of an

account with a bank. The term shall include ``online'' computer terminals

and ``offline'' automated cash dispensing machines and automated teller

machines, but shall not include computer terminals or automated teller

machines or automated cash dispensing machines using systems in which

account numbers are not machine read and verified. Withdrawals by

means of ``offline'' systems shall not exceed $300 per transaction and shall

be restricted to individual not corporate or commercial accounts.;

(i) for purposes of this section, ``eligible bank'' means a state bank that

meets the following criteria:

(1) Received a composite rating of 1 or 2 under the uniform financial

institutions rating system as a result of its most recent federal or state

examination;

(2) meets the following three criteria for a well capitalized bank:

(A) Has a total risk based capital ratio of 10% or greater;

(B) has a tier one risk based capital ratio of 6% or greater; and

(C) has a leverage ratio of 5% or greater; and

(3) is not subject to a cease and desist order, consent order, prompt

corrective action directive, written agreement, memorandum of under-

standing or other administrative agreement with its primary federal reg-

ulator or the office of the state bank commissioner.

Sec. 8. K.S.A. 2000 Supp. 9-1111b is hereby amended to read as

follows: 9-1111b. A bank making application to the state banking board

or the commissioner for approval of a branch bank shall pay to the state

bank commissioner a fee, in an amount established by rules and regula-

tions adopted by the commissioner, to defray the expenses of the board,

commissioner or other designees in the examination and investigation of

the application. The commissioner shall remit all amounts received under

this section to the state treasurer who shall deposit the same to a separate

special account in the state treasury for each application. The moneys in

each such account shall be used only to pay the expenses of the board,

commissioner or other designees in the examination and investigation of

the application to which it relates and any unused balance shall be trans-

ferred to the bank commissioner fee fund.

Sec. 9. K.S.A. 9-1127b is hereby amended to read as follows: 9-

1127b. (a) A bank service corporation may provide to any person any

service authorized by this section, except that a bank service corporation

shall not take deposits.

(b) Except with the prior approval of the state bank commissioner

and the state banking board, a bank service corporation shall not perform

the services authorized by this section in any state other than this state

and all shareholders of a bank service corporation shall be located in this

state.

(c) A bank service corporation in which a state bank is a shareholder

shall perform only those services that such state bank shareholder is au-

thorized to perform under the law of this state and shall perform such

services only at locations in this state in which such bank shareholder

could be authorized to perform such services.

(d) A bank service corporation in which a national bank is a share-

holder shall perform only those services that such national bank share-

holder is authorized to perform under federal law and shall perform such

services only at locations in this state at which such national bank share-

holder could be authorized to perform such services.

(e) A bank service corporation that has both national bank and state

bank shareholders shall perform only those services that may lawfully be

performed by both its national bank shareholder or shareholders under

federal law and its state bank shareholder or shareholders under the law

of this state and shall perform such services only at locations in this state

at which both its state bank and national bank shareholders could be

authorized to perform such services.

(f) Notwithstanding the other provisions of this section or any other

provision of law, other than the provisions of federal branching law and

the branching law of this state regulating the geographic location of banks

to the extent that those laws are applicable to an activity authorized by

this subsection, a bank service corporation may perform at any geographic

location any service, other than deposit taking, that the board of governors

of the federal reserve system has determined, by regulation, to be per-

missible for a bank holding company under section 4(c)(8) of the federal

bank holding company act.

Sec. 10. K.S.A. 9-1127c is hereby amended to read as follows: 9-

1127c. (a) No state bank shall invest in the capital stock of a bank service

corporation that performs any service under the authority of subsections

(c), (d) or (e) of K.S.A. 9-1127b, and amendments thereto, without the

prior approval of the state bank commissioner and the state banking

board.

(b) No state bank shall invest in the capital stock of a bank service

corporation that performs any service under authority of subsection (f) of

K.S.A. 9-1127b, and amendments thereto, and no bank service corpora-

tion shall perform any activity under subsection (f) and K.S.A. 9-1127b,

and amendments thereto, without the prior approval of the state bank

commissioner and the state banking board.

(c) In determining whether to approve or deny any application for

prior approval under this section, the state bank commissioner and the

state banking board are is authorized to consider the financial and man-

agerial resources and future prospects of the bank or banks and bank

service corporation involved, including the financial capability of the bank

to make a proposed investment under this act, and possible adverse af-

fects such as undue concentration of resources, unfair or decreased com-

petition, conflicts of interest or unsafe or unsound banking practices.

(d) In the event the state bank commissioner and the state banking

board fail fails to act on any application under this section within 90 days

of the submission of a complete application to them, the application shall

be deemed approved.

Sec. 11. K.S.A. 9-1127d is hereby amended to read as follows: 9-

1127d. (a) Whenever a bank, or any subsidiary or affiliate of such bank

that is subject to examination by the state bank commissioner, causes to

be performed for itself, by contract or otherwise, any services authorized

under this act on or off its premises:

(1) Such performance shall be subject to regulation and examination

by the state bank commissioner to the same extent as if such services

were being performed by the bank itself on its own premises; and

(2) the bank shall notify the state bank commissioner of the existence

of the service relationship within 30 days after the making of such service

contract or the performance of the service, whichever occurs first.

(b) The state bank commissioner and, with the approval of the state

banking board are, is authorized to adopt such rules and regulations as

may be necessary to enable them to administer and carry out the purpose

of this act and to prevent evasions thereof.

Sec. 12. K.S.A. 9-1714 is hereby amended to read as follows: 9-1714.

Whenever the state bank commissioner shall determine that the business

of any bank or trust company is being conducted in an unlawful or un-

sound manner, such commissioner may appoint a special deputy bank

commissioner who shall immediately take charge of the operation of such

bank or trust company for the purpose of correcting any unlawful or

unsound condition or operation. Such appointment shall be made in ac-

cordance with the provisions of K.S.A. 77-536, and amendments thereto.

After appointment, the special deputy bank commissioner shall continue

to serve under the direction of the commissioner for such period of time

as may be deemed reasonable and necessary by the commissioner, or

until relieved by order of the state banking board, and, during such pe-

riod, such special deputy bank commissioner's salary, which shall be de-

termined by the commissioner, and expenses shall be borne by the bank

or trust company under supervision. After such appointment, any such

bank or trust company shall have the right within 15 days from the date

of the notice of such appointment to appeal in writing to the state banking

board, and upon such appeal, the state banking board shall fix a date for

a hearing, which hearing shall be within 30 days from the date of such

appeal and shall be conducted in accordance with the provisions of the

Kansas administrative procedure act. The board shall render an order as

to the correctness or incorrectness of the commissioner's decision to take

over the conduct of such bank or trust company, and the order of such

board shall be final and conclusive.

Sec. 13. K.S.A. 2000 Supp. 9-1801 is hereby amended to read as

follows: 9-1801. (a) No bank or trust company hereafter shall be organized

or incorporated under the laws of this state, nor shall any such institution

transact either a banking business or a trust business in this state, until

the application for its incorporation and application for authority to do

business has been submitted to and approved by the board. The board

shall approve or disapprove the organization and establishment of any

such institution in the city or town in which the same is sought to be

located. The form for making any such application shall be prescribed by

the board and any application made to the board shall contain such in-

formation as it shall require. The board shall not approve any such ap-

plication until it first investigates and examines such application and the

applicants.

(b) If upon the dissolution, insolvency or appointment of a receiver

of any bank, trust company, national bank association, savings and loan

association, savings bank or credit union, it is the opinion of the commis-

sioner that by reason of the loss of services in the community, an emer-

gency exists which may result in serious inconvenience or losses to the

depositors or the public interest in the community, the commissioner may

accept and approve an application for incorporation and application for

authority to do business from applicants for the organization and estab-

lishment of a successor bank or trust company, subject to confirmation

and subsequent approval by the board. Upon approval of an application

for the organization and establishment of any such successor bank or trust

company, the commissioner shall no later than the next regular meeting

of the board submit such application to the board for its confirmation and

approval.

Sec. 14. K.S.A. 2000 Supp. 9-1804 is hereby amended to read as

follows: 9-1804. (a) No bank or trust company incorporated under the

laws of this state shall change its place of business, from one city or town

to another or from one location to another within the same city or town,

without the prior approval of the state banking board. Any such bank or

trust company desiring to change its place of business shall file written

application with the board office of the state bank commissioner in such

form and containing such information as the board and the commissioner

shall require. Notice of the proposed relocation shall be published in a

newspaper of general circulation in the county where the main bank or

trust company is currently located and in the county to which the bank

or trust company proposes to relocate. The notice shall be in the form

prescribed by the commissioner and at a minimum shall contain the name

and address of the applicant bank or trust company, the address of the

proposed new location and a solicitation for written comments. The notice

shall be published on the same day for two consecutive weeks and provide

for a comment period of not less than 10 calendar days after the date of

the second publication. The applicant shall provide proof of publication

to the commissioner.

(b) If the applicant is an eligible bank or an eligible trust company,

the commissioner shall examine and investigate the application. If the

commissioner determines:

(1) There is a reasonable probability of usefulness and success of the

bank or trust company in the proposed location; and

(2) the applicant bank's or trust company's financial history and con-

dition is sound, the application shall be approved, otherwise, it shall be

denied.

(c) Within 15 days after any final action of the commissioner ap-

proving or disapproving an application, the applicant, or any adversely

affected or aggrieved person who provided written comments during the

specified comment period, may request a hearing with the state banking

board. Upon receipt of a timely request, the board shall conduct a hearing

in accordance with the provisions of the Kansas administrative procedure

act. Any decision of the state banking board is subject to review in ac-

cordance with the act for judicial review and civil enforcement of agency

actions.

(d) If a bank does not meet the definition of an eligible bank or a trust

company does not meet the definition of an eligible trust company, the

state banking board shall examine and investigate the application, and

shall inquire into the public necessity for such bank or trust company in

the community wherein it is proposed to locate the same, and shall ap-

prove or disapprove the application. If the board determines:

(1) There is a reasonable probability of usefulness and success of the

bank or trust company in the proposed location; and

(2) the applicant bank's or trust company's financial history and con-

dition is sound, the application shall be approved, otherwise, it shall be

denied.

(e) Any final action of the board approving or disapproving an ap-

plication shall be subject to review in accordance with the act for judicial

review and civil enforcement of agency actions upon the petition of the

applicant, or any adversely affected or aggrieved person who provided

written comments during the specified comment period.

(f) The expenses of such examination and investigation shall be paid

by the bank or trust company which shall deposit with the commissioner

a fee in an amount established by rules and regulations adopted by the

commissioner. Any members of the board who make such an examination

or investigation shall be paid the sum of $35 per diem for the time they

actually are engaged in performing their duties as members of such board,

and in addition shall be paid all their actual and necessary expenses in-

curred in the performance of such duties from such funds. The commis-

sioner shall remit all amounts received under this section to the state

treasurer who shall deposit the same to a separate special account in the

state treasury for each application. The moneys in each such account shall

be used only to pay the expenses of the examination and investigation to

which it relates, and any unused portion of such deposit shall be trans-

ferred to the bank commissioner fee fund.

(g) For purposes of this section:

(1) ``Eligible bank'' means a state bank that meets the following cri-

teria:

(A) Received a composite rating of 1 or 2 under the uniform financial

institutions rating system as a result of its most recent federal or state

examination;

(B) meets the following three criteria for a well capitalized bank:

(i) Has a total risk based capital ratio of 10% or greater;

(ii) has a tier one risk based capital ratio of 6% or greater; and

(iii) has a leverage ratio of 5% or greater; and

(C) is not subject to a cease and desist order, consent order, prompt

corrective action directive, written agreement, memorandum of under-

standing or other administrative agreement with its primary federal reg-

ulator or the office of the state bank commissioner; and

(2) ``eligible trust company'' means a state chartered trust company

that meets the following criteria:

(A) Received a composite rating of 1 or 2 under the uniform intera-

gency trust rating system as a result of its most recent state examination;

and

(B) is not subject to a cease and desist order, consent order, written

agreement, memorandum of understanding or other administrative agree-

ment with the office of the state bank commissioner.

Sec. 15. K.S.A. 2000 Supp. 74-3004 is hereby amended to read as

follows: 74-3004. (a) There is hereby created a state banking board which

shall be composed of nine members. Six members of the board shall be

bankers with not less than five years' actual banking experience in a state

bank in this state and three shall represent the public interest in the

regulation, operation and control of state banks and trust companies. All

members representing the public interest shall be selected from the state

at large. No nonbanker member shall concurrently serve as an officer or

director in any state or national bank or trust company wherever located.

One of the nine members shall be elected annually as chairperson of the

board. The board shall be appointed by the governor. Persons appointed

to the board shall be subject to confirmation by the senate as provided

in K.S.A. 75-4315b, and amendments thereto. Except as provided by

K.S.A. 46-2601, and amendments thereto, no person appointed to the

board shall exercise any power, duty or function as a member of the board

until confirmed by the senate. No more than five members of the board

shall be from the same political party. Subject to the provisions of K.S.A.

75-4315c, and amendments thereto, of the six banker members, the gov-

ernor shall appoint one from each Kansas congressional district as pres-

ently constituted and the remainder from the state at large. Appointment

of nonbanker members shall be made with due consideration for achiev-

ing representation of the various geographic sectors of the state.

(b) Except as provided by subsection (c), terms of members of the

board shall be for three years. Each member shall serve until a successor

is appointed and confirmed. No person shall serve more than two terms

as a member of the board. In the event of a vacancy on the board, the

governor shall appoint a new member of the same qualification to fill the

unexpired term.

(c) The terms of members who are serving on the board on the ef-

fective date of this act shall expire on March 15, of the year in which such

member's term would have expired under the provisions of this section

prior to amendment by this act. Thereafter, members shall be appointed

for terms of three years and until their successors are appointed and

confirmed.

Sec. 16. K.S.A. 9-812, 9-908, 9-912, 9-1001, 9-1101a, 9-1127b, 9-

1127c, 9-1127d, 9-1714 and 9-1806 and K.S.A. 2000 Supp. 9-904, 9-1101,

9-1111, 9-1111b, 9-1801, 9-1804 and 74-3004 are hereby repealed.

Sec. 17. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 3, 2000.


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Date Composed: 09/25/2001 Date Modified: 09/25/2001