IN
Indiana Senate Bill SB0408

Indiana 2022 Regular Session

Indiana Senate Bill SB0408 Compare Versions

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1+*SB0408.1*
2+January 21, 2022
3+SENATE BILL No. 408
4+_____
5+DIGEST OF SB 408 (Updated January 20, 2022 7:48 pm - DI 55)
6+Citations Affected: IC 28-1; IC 28-6.1; IC 28-15.
7+Synopsis: Community investments by financial institutions. Amends
8+the statute authorizing a bank or trust company to make investments in
9+community based economic development to also authorize investments
10+in: (1) any community and economic development entity, community
11+development project, or other public welfare investment; and (2) tax
12+equity finance transactions; subject to the investments being made in
13+compliance with applicable federal regulations and any regulation, rule,
14+policy, or guidance adopted by the department of financial institutions.
15+Authorizes savings banks and savings associations to engage in tax
16+equity finance transactions.
17+Effective: July 1, 2022.
18+Zay, Bohacek
19+January 12, 2022, read first time and referred to Committee on Insurance and Financial
20+Institutions.
21+January 20, 2022, amended, reported favorably — Do Pass.
22+SB 408—LS 6818/DI 101 January 21, 2022
123 Second Regular Session of the 122nd General Assembly (2022)
224 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
325 Constitution) is being amended, the text of the existing provision will appear in this style type,
426 additions will appear in this style type, and deletions will appear in this style type.
527 Additions: Whenever a new statutory provision is being enacted (or a new constitutional
628 provision adopted), the text of the new provision will appear in this style type. Also, the
729 word NEW will appear in that style type in the introductory clause of each SECTION that adds
830 a new provision to the Indiana Code or the Indiana Constitution.
931 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
1032 between statutes enacted by the 2021 Regular Session of the General Assembly.
11-SENATE ENROLLED ACT No. 408
12-AN ACT to amend the Indiana Code concerning financial
13-institutions.
33+SENATE BILL No. 408
34+A BILL FOR AN ACT to amend the Indiana Code concerning
35+financial institutions.
1436 Be it enacted by the General Assembly of the State of Indiana:
15-SECTION 1. IC 28-1-11-3.1, AS AMENDED BY P.L.73-2016,
37+1 SECTION 1. IC 28-1-11-3.1, AS AMENDED BY P.L.73-2016,
38+2 SECTION 17, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
39+3 JULY 1, 2022]: Sec. 3.1. (a) Any bank or trust company shall have the
40+4 power to discount, negotiate, sell and guarantee promissory notes,
41+5 bonds, drafts, acceptances, bills of exchange, and other evidences of
42+6 debt; to buy and sell, exchange, coin and bullion; to loan money; to
43+7 borrow money and to issue its notes, bonds, or debentures to evidence
44+8 any such borrowing and to mortgage, pledge, or hypothecate any of its
45+9 assets to secure the repayment thereof; to receive savings deposits and
46+10 deposits of money subject to check, and deposits of securities or other
47+11 personal property from any person or corporation, upon such terms as
48+12 may be agreed upon by the parties; to contract for and receive on loans
49+13 and discounts the highest rate of interest allowed by the laws of this
50+14 state to be contracted for and received by individuals; to accept, for
51+15 payment at a future date, drafts drawn upon it by its customers and to
52+16 issue letters of credit authorizing the holders thereof to draw drafts
53+17 upon it or its correspondents at sight or on time, however, the letter of
54+SB 408—LS 6818/DI 101 2
55+1 credit must state a specific expiration date; and to exercise all the
56+2 powers incidental and proper or which may be necessary and usual in
57+3 carrying on a general banking business, but it shall have no right to
58+4 issue bills to circulate as money.
59+5 (b) Subject to such regulations, rules, policies, and guidance as the
60+6 department finds to be necessary and proper, any bank or trust
61+7 company shall have the following powers:
62+8 (1) To make such loans and advances of credit and purchases of
63+9 obligations representing loans and advances of credit as are
64+10 eligible for insurance by the federal housing administrator, and to
65+11 obtain such insurance.
66+12 (2) To make such loans secured by mortgages on real property or
67+13 leasehold, as the federal housing administrator insures or makes
68+14 a commitment to insure, and to obtain such insurance.
69+15 (3) To purchase, invest in, and dispose of notes or bonds secured
70+16 by mortgage or trust deed insured by the federal housing
71+17 administrator or debentures issued by the federal housing
72+18 administrator, or bonds or other securities issued by national
73+19 mortgage associations.
74+20 (4) To extend credit to any state agency, with the approval of the
75+21 department, notwithstanding any other provisions or limitations
76+22 of IC 28-1. No law of this state prescribing the nature, amount, or
77+23 form of security or requiring security upon which loans or
78+24 advances of credit may be made, or prescribing or limiting
79+25 interest rates upon loans or advances of credit, or prescribing or
80+26 limiting the period for which loans or advances of credit may be
81+27 made, shall be deemed to apply to loans, advances of credit, or
82+28 purchases made pursuant to subdivisions (1), (2), and (3) and this
83+29 subdivision.
84+30 (5) To purchase, take, hold, and dispose of notes, and mortgages
85+31 securing such notes, made to any joint stock land bank heretofore
86+32 incorporated, in any case in which not less than ninety-nine
87+33 percent (99%) of the stock of said joint stock land bank is owned
88+34 by the bank or trust company at the time such notes or mortgages
89+35 be acquired by the bank or trust company; and upon dissolution
90+36 of any such joint stock land bank, or at any stage in the process of
91+37 such dissolution, any bank or trust company then owning not less
92+38 than ninety-nine percent (99%) of the stock of such joint stock
93+39 land bank may take, hold, and dispose of any notes, mortgages, or
94+40 other assets of such joint stock land bank of whatsoever nature,
95+41 including real estate, wheresoever situated, which such joint stock
96+42 land bank shall assign, transfer, convey, or otherwise make over
97+SB 408—LS 6818/DI 101 3
98+1 to such bank or trust company by way of final or partial
99+2 distribution of its assets to its stockholders upon such dissolution
100+3 or in connection with the process of such dissolution. No law of
101+4 this state prescribing the nature, amount, location, or form of
102+5 security, or requiring security upon which loans or advances of
103+6 credit may be made, or prescribing or limiting interest rates upon
104+7 loans or advances of credit, or prescribing or limiting the period
105+8 for which loan or advances of credit may be made, or prescribing
106+9 any ratio between the amount of any loan and the appraised value
107+10 of the security for such loan, or requiring periodical reductions of
108+11 the principal of any loan, shall be deemed to apply to loans, notes,
109+12 mortgages, real estate, or other assets mentioned in this
110+13 subdivision.
111+14 (6) To adopt stock purchase programs for employees and to grant
112+15 options to purchase, and to issue and sell, shares of its capital
113+16 stock to its employees, or to a trustee on their behalf (which may
114+17 be the bank or trust company issuing such capital stock), without
115+18 first offering the same to its shareholders, for such consideration,
116+19 not less than par value, and upon such terms and conditions as
117+20 shall be approved by its board of directors and by the holders of
118+21 a majority of its shares entitled to vote with respect thereto, and
119+22 by the department. In the absence of actual fraud in the
120+23 transaction, the judgment of the directors as to the consideration
121+24 for the issuances of such options and the sufficiency thereof shall
122+25 be conclusive. Any bank or trust company exercising the powers
123+26 granted in this subsection may, to the extent approved by the
124+27 department, have authorized and unissued stock required to fulfill
125+28 any stock option or other arrangement authorized herein.
126+29 (7) Subject to such restrictions as the department may impose, to
127+30 become the owner or lessor of personal or real property acquired
128+31 upon the request and for the use of a customer and to incur such
129+32 additional obligations as may be incident to becoming an owner
130+33 or lessor of such property.
131+34 (8) To purchase or construct buildings and hold legal title thereto
132+35 to be leased to municipal corporations or other public authorities,
133+36 for public purposes, having resources sufficient to make payment
134+37 of all rentals as they become due. Each lease agreement shall
135+38 provide that upon expiration, the lessee will become the owner of
136+39 the building.
137+40 (8.1) To purchase, hold, and convey real estate in accordance with
138+41 section 5 of this chapter.
139+42 (9) Subject to section 3.2 of this chapter, to exercise the rights and
140+SB 408—LS 6818/DI 101 4
141+1 privileges (as defined in section 3.2(a) of this chapter) that are or
142+2 may be granted to national banks domiciled in Indiana.
143+3 (10) Pursuant to its lending authority, to engage directly or
144+4 indirectly in any tax equity finance transaction permissible
145+5 for a national bank or federal savings association under 12
146+6 CFR 7.1025. The authority to engage in tax equity finance
147+7 transactions under this subdivision is separate from, and does
148+8 not limit, any investment authorities available to a bank or
149+9 trust company. A tax equity finance transaction is subject to
150+10 the substantive legal requirements of a loan, including,
151+11 without limitation, IC 28-1-13.
152+12 (c) Any rule made and promulgated under and pursuant to this
153+13 section may apply to one (1) or more banks or trust companies or to one
154+14 (1) or more localities in the state as the department, in its discretion,
155+15 may determine.
156+16 SECTION 2. IC 28-1-11-14, AS AMENDED BY P.L.73-2016,
157+17 SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
158+18 JULY 1, 2022]: Sec. 14. (a) As used in this section, "community based
159+19 economic development" refers to activities that seek to address
160+20 economic development through affordable housing development or the
161+21 rehabilitation of qualified rehabilitated buildings or certified historic
162+22 structures, or that seeks to address economic causes of poverty within
163+23 specific geographic areas, revitalizing the economic and social base of
164+24 low income communities through activities that include:
165+25 (1) small business and micro-enterprise support;
166+26 (2) commercial, industrial, and retail revitalization, retention, and
167+27 expansion;
168+28 (3) capacity development and technical assistance support for
169+29 community development corporations;
170+30 (4) employment and training efforts;
171+31 (5) human resource development; and
172+32 (6) social service enterprises.
173+33 (b) As used in this section, "community development corporation"
174+34 means a private, nonprofit corporation:
175+35 (1) whose board of directors is comprised primarily of community
176+36 representatives and business, civic, and community leaders; and
177+37 (2) whose principal purpose includes the provision of:
178+38 (A) housing;
179+39 (B) community based economic development projects; and
180+40 (C) social services;
181+41 that primarily benefit low-income individuals and communities.
182+42 (c) As used in this section, "capital and surplus" has the meaning set
183+SB 408—LS 6818/DI 101 5
184+1 forth in IC 28-1-1-3(10).
185+2 (d) As used in this section, "community and economic
186+3 development entity" has the meaning set forth in 12 CFR 24.2(c).
187+4 (e) As used in this section, "community development project"
188+5 has the meaning set forth in 12 CFR 24.2(d).
189+6 (f) As used in this section, "public welfare investment" means
190+7 any investment permitted by 12 CFR 24.3.
191+8 (g) As used in this section, "tax equity finance transaction" has
192+9 the meaning set forth in 12 CFR 7.1025(b)(3).
193+10 (d) (h) Subject to the limitations of this section, other laws, and any
194+11 regulation, rule, policy, or guidance adopted by the department
195+12 concerning investments in community based economic development,
196+13 any bank or trust company may invest directly or indirectly in equity
197+14 investments in a corporation, a limited partnership, a limited liability
198+15 company, or another entity organized as:
199+16 (1) a community development corporation;
200+17 (2) an entity formed primarily to support community based
201+18 economic development;
202+19 (3) an entity qualifying for the new markets tax credits under 26
203+20 U.S.C. 45D;
204+21 (4) an entity approved by the director as being formed for a
205+22 predominantly civic, community, or public purpose and that:
206+23 (A) primarily benefits low and moderate income individuals;
207+24 (B) primarily benefits low and moderate income areas;
208+25 (C) primarily benefits areas targeted for redevelopment by a
209+26 government entity; or
210+27 (D) is a qualified investment under 12 CFR 25.23 for purposes
211+28 of the Community Reinvestment Act of 1977 (12 U.S.C. 2901
212+29 et seq.); or
213+30 (5) an entity making qualified rehabilitation expenditures with
214+31 respect to a qualified rehabilitated building or certified historic
215+32 structure, as such terms are defined in section 47 of the Internal
216+33 Revenue Code of 1986 or a similar state historic tax credit
217+34 program, as provided for in Section 619(d)(1)(E) of the
218+35 Dodd-Frank Wall Street Reform and Consumer Protection Act
219+36 (12 U.S.C. 1851(d)(1)(E)).
220+37 (i) Subject to any regulation, rule, policy, or guidance adopted
221+38 by the department, any bank or trust company may invest directly
222+39 or indirectly in any:
223+40 (1) community and economic development entity;
224+41 (2) community development project; or
225+42 (3) other public welfare investment;
226+SB 408—LS 6818/DI 101 6
227+1 as long as the investment is in compliance with 12 CFR 24.
228+2 (e) (j) Except as provided in subsection (f), (k), the aggregate of all
229+3 equity investments by a bank or trust company under subsection (d)
230+4 subsections (h) and (i) may not exceed:
231+5 (1) five percent (5%) of the capital and surplus of the bank or
232+6 trust company without the prior written approval of the director;
233+7 and
234+8 (2) fifteen percent (15%) of the capital and surplus of the bank or
235+9 trust company under any circumstances.
236+10 (f) (k) In determining whether to permit the aggregate of all equity
237+11 investments by a bank or trust company under subsection (d)
238+12 subsections (h) and (i) to exceed five percent (5%) of the capital and
239+13 surplus of the bank or trust company under subsection (e)(1), (j)(1), the
240+14 director shall consider whether:
241+15 (1) the aggregate of all equity investments under subsection (d)
242+16 subsections (h) and (i) will pose a significant risk to the affected
243+17 deposit insurance fund; and
244+18 (2) the bank or trust company is adequately capitalized.
245+19 (g) (l) A bank or trust company shall not make any investment under
246+20 this section if the investment would expose the bank or trust company
247+21 to unlimited liability.
248+22 SECTION 3. IC 28-6.1-6-3 IS AMENDED TO READ AS
249+23 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 3. (a) A savings bank
250+24 may loan money.
251+25 (b) Subject to any regulation, rule, policy, or guidance adopted
252+26 by the department, pursuant to its lending authority, a savings
253+27 bank may engage directly or indirectly in any tax equity finance
254+28 transaction permissible for a national bank or federal savings
255+29 association under 12 CFR 7.1025. The authority to engage in tax
256+30 equity finance transactions under this subsection is separate from,
257+31 and does not limit, any investment authorities available to a
258+32 savings bank. A tax equity finance transaction is subject to the
259+33 substantive legal requirements of a loan, including, without
260+34 limitation, IC 28-6.1-9.
261+35 SECTION 4. IC 28-15-2-1, AS AMENDED BY P.L.27-2012,
262+36 SECTION 111, IS AMENDED TO READ AS FOLLOWS
263+37 [EFFECTIVE JULY 1, 2022]: Sec. 1. (a) Savings associations may do
264+38 the following:
265+39 (1) Accept deposit accounts.
266+40 (2) Issue evidence of deposit account ownership.
267+41 (3) Declare and distribute earnings to members.
268+42 (4) Pay, in part or in full, withdrawal requests of deposit accounts.
269+SB 408—LS 6818/DI 101 7
270+1 (5) Subject to the provisions and restrictions of 12 U.S.C. 84 and
271+2 12 CFR 32:
272+3 (A) Make loans to members on the security of deposit
273+4 accounts.
274+5 (B) Make property improvement loans.
275+6 (C) Make other loans as provided under IC 28-15-8.
276+7 (D) Make mortgage loans.
277+8 (E) Accept additional collateral on mortgage loans.
278+9 (F) Purchase and sell loans.
279+10 (G) Negotiate loan servicing agreements.
280+11 (H) Purchase and sell participating interests in loans.
281+12 (I) Issue letters of credit with specific expiration dates.
282+13 (J) Make secured or unsecured loans, which are partially
283+14 insured or guaranteed in any manner by any state of the United
284+15 States, the United States government, or any of its agencies or
285+16 government sponsored enterprises.
286+17 (K) Purchase commercial paper that is denominated in United
287+18 States currency and that:
288+19 (i) is rated by at least one (1) nationally recognized
289+20 investment rating service in one (1) of the two (2) highest
290+21 grades; or
291+22 (ii) meets another standard of creditworthiness determined
292+23 to be appropriate by the director.
293+24 (L) Make, purchase, or participate in alternative mortgage
294+25 loans as provided in IC 28-15-11.
295+26 (M) Subject to any regulation, rule, policy, or guidance
296+27 adopted by the department and pursuant to its lending
297+28 authority, engage directly or indirectly in any tax equity
298+29 finance transaction permissible for a national bank or
299+30 federal savings association under 12 CFR 7.1025. The
300+31 authority to engage in tax equity finance transactions
301+32 under this clause is separate from, and does not limit, any
302+33 investment authorities available to a savings association. A
303+34 tax equity finance transaction is subject to the substantive
304+35 legal requirements of a loan, including, without limitation,
305+36 IC 28-15-6.
306+37 (6) Acquire and sell real estate in satisfaction of debts previously
307+38 contracted.
308+39 (7) Acquire real estate for the convenient transaction of its
309+40 business. A savings association has the same powers under this
310+41 subdivision as a bank or trust company has under IC 28-1-11-5.
311+42 (8) Notwithstanding any other law, establish, maintain, or relocate
312+SB 408—LS 6818/DI 101 8
313+1 one (1) or more branch offices by following the provisions of
314+2 IC 28-2-13, IC 28-2-17, or IC 28-2-18 as if the savings association
315+3 were a bank.
316+4 (9) Become a member in any agency or instrumentality of the
317+5 federal government. For the purposes of this subdivision,
318+6 membership in an agency or instrumentality of the federal
319+7 government may include:
320+8 (A) purchasing stock;
321+9 (B) purchasing notes and debentures; or
322+10 (C) borrowing money.
323+11 (10) Subject to any limitations imposed by the department
324+12 through policy:
325+13 (A) invest the money deposited in the savings association in
326+14 the shares of the capital stock, bonds, debentures, notes, or
327+15 other obligations of a federal home loan bank of the United
328+16 States;
329+17 (B) become a member of the federal home loan bank of the
330+18 district in which Indiana is located or an adjoining district;
331+19 (C) borrow money from:
332+20 (i) a federal home loan bank described in clause (B);
333+21 (ii) the Federal Deposit Insurance Corporation; or
334+22 (iii) any other corporation;
335+23 (D) transfer, assign to, and pledge with a federal home loan
336+24 bank described in clause (B), the Federal Deposit Insurance
337+25 Corporation, or any other corporation any of the bonds, notes,
338+26 contracts, mortgages, securities, or other property of the
339+27 savings association held or acquired as security for the
340+28 payment of loans entered into under clause (C); and
341+29 (E) exercise all rights, powers, and privileges conferred upon,
342+30 and do all things and perform all acts required of, members or
343+31 shareholders of a federal home loan bank by the Federal Home
344+32 Loan Bank Act (12 U.S.C. 1421 through 1449).
345+33 (11) Subject to the provisions and restrictions of 12 U.S.C. 24 and
346+34 12 CFR 1, invest in the following types of securities:
347+35 (A) Bonds, notes, certificates, and other valid obligations of
348+36 the United States government or any agency of the United
349+37 States government.
350+38 (B) Accounts offered by federally insured banks, savings
351+39 banks, and savings associations.
352+40 (C) Bonds, notes, or other evidences of indebtedness that are
353+41 general obligations supported by the full faith and credit of any
354+42 state in the United States or any city, town, or other political
355+SB 408—LS 6818/DI 101 9
356+1 subdivision in any state in the United States if the obligations:
357+2 (i) have been assigned one (1) of the four (4) highest grades
358+3 by a nationally recognized investment rating service; or
359+4 (ii) meet another standard of creditworthiness determined to
360+5 be appropriate by the director.
361+6 (D) Shares of stock of a subsidiary that does not exercise a
362+7 power or engage in any activity that is not authorized for the
363+8 savings association. The investment power granted by this
364+9 subdivision is separate from the investment power granted by
365+10 IC 28-15-9.
366+11 (E) Corporate debt securities that are denominated in United
367+12 States currency and that:
368+13 (i) are rated by at least one (1) nationally recognized
369+14 investment rating service in one (1) of the four (4) highest
370+15 grades; or
371+16 (ii) meet another standard of creditworthiness determined to
372+17 be appropriate by the director.
373+18 Corporate debt securities in which a savings association
374+19 invests under this clause must be convertible into stock at the
375+20 sole option of the holder, and a savings association is
376+21 prohibited from exercising the conversion option.
377+22 (F) Shares of open end investment companies that are eligible
378+23 for purchase by national banks.
379+24 (G) Bankers' acceptances that are eligible for purchase by
380+25 national banks.
381+26 (12) For the purpose of:
382+27 (A) check and deposit sorting and posting;
383+28 (B) computation and posting of interest and other credits and
384+29 charges;
385+30 (C) preparation and mailing of checks, statements, notices, and
386+31 similar items; or
387+32 (D) other clerical, bookkeeping, accounting, statistical, or
388+33 similar functions performed by a savings association;
389+34 invest in a corporation organized in any state to perform those
390+35 functions for two (2) or more savings associations, each of which
391+36 owns a portion of the capital stock of the corporation. The total
392+37 investment of a savings association under this subdivision may
393+38 not exceed ten percent (10%) of the capital and surplus of the
394+39 savings association. A savings association may not invest in this
395+40 type of corporation unless the corporation furnishes assurances to
396+41 the department that it will subject itself to examination by the
397+42 department to the same extent as if the services were performed
398+SB 408—LS 6818/DI 101 10
399+1 by the savings association.
400+2 (13) Lend money to other savings associations:
401+3 (A) the deposits of which are insured by the Federal Deposit
402+4 Insurance Corporation; and
403+5 (B) that are incorporated and operating under the laws of any
404+6 state or of the United States.
405+7 (14) Borrow money and mortgage or pledge its property to secure
406+8 payment.
407+9 (15) Issue subordinated notes or debentures.
408+10 (16) Assess and collect interest, fees, and other charges.
409+11 (17) Insure its deposit accounts with the Federal Deposit
410+12 Insurance Corporation or its successor.
411+13 (18) Act as an agent for the United States or its instrumentalities.
412+14 (19) Accept property for safe keeping or escrow.
413+15 (20) Rent or lease safe deposit boxes.
414+16 (21) Issue and sell checks, drafts, money orders, and other
415+17 instruments for the transmission or payment of money.
416+18 (22) Exercise all the powers that:
417+19 (A) are incidental and proper; or
418+20 (B) may be necessary and usual;
419+21 in carrying on the business of the savings association.
420+22 (23) Purchase or construct buildings, hold legal title to the
421+23 buildings, and lease the buildings for public purposes to
422+24 municipal corporations or other public authorities that have
423+25 resources sufficient to make payment of all rentals as they become
424+26 due. Each lease agreement entered into under this subdivision
425+27 must provide that, upon expiration, the lessee will become the
426+28 owner of the building.
427+29 (24) Open or establish automated teller machines at any location.
428+30 An automated teller machine opened or established under this
429+31 subdivision may be owned and operated individually or jointly on
430+32 a cost sharing or fee basis.
431+33 (25) Act:
432+34 (A) in any fiduciary capacity in which a bank or trust company
433+35 is permitted to act under this title; and
434+36 (B) as an agent for the sale of real estate, without bond or other
435+37 security.
436+38 (26) Accept and maintain demand deposit accounts if the savings
437+39 association is insured by the Federal Deposit Insurance
438+40 Corporation or its successor.
439+41 (27) Without the approval of the department, to the extent
440+42 authorized by the board of directors of the savings association,
441+SB 408—LS 6818/DI 101 11
442+1 establish or maintain agencies that:
443+2 (A) only service and originate, but do not approve, loans and
444+3 contracts; or
445+4 (B) manage or sell real estate owned by the savings
446+5 association.
447+6 An agency established or maintained under this subdivision may
448+7 offer any services not referred to in this subdivision with the
449+8 approval of the department, except for accepting payment on
450+9 savings accounts. An agency shall maintain records of all
451+10 business it transacts and transmit copies to a branch or home
452+11 office of the savings association.
453+12 (b) Subject to any limitations or restrictions that the department or
454+13 a federal regulator may impose by regulation, rule, policy, or guidance,
455+14 a savings association may purchase and hold life insurance as follows:
456+15 (1) Life insurance purchased or held in connection with employee
457+16 compensation or benefit plans approved by the savings
458+17 association's board of directors.
459+18 (2) Life insurance purchased or held to recover the cost of
460+19 providing preretirement or postretirement employee benefits
461+20 approved by the savings association's board of directors.
462+21 (3) Life insurance on the lives of borrowers.
463+22 (4) Life insurance held as security for a loan.
464+23 (5) Life insurance that a national bank may purchase or hold
465+24 under 12 U.S.C. 24 (Seventh).
466+SB 408—LS 6818/DI 101 12
467+COMMITTEE REPORT
468+Madam President: The Senate Committee on Insurance and
469+Financial Institutions, to which was referred Senate Bill No. 408, has
470+had the same under consideration and begs leave to report the same
471+back to the Senate with the recommendation that said bill be
472+AMENDED as follows:
473+Page 1, between the enacting clause and line 1, begin a new
474+paragraph and insert:
475+"SECTION 1. IC 28-1-11-3.1, AS AMENDED BY P.L.73-2016,
16476 SECTION 17, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
17477 JULY 1, 2022]: Sec. 3.1. (a) Any bank or trust company shall have the
18478 power to discount, negotiate, sell and guarantee promissory notes,
19479 bonds, drafts, acceptances, bills of exchange, and other evidences of
20480 debt; to buy and sell, exchange, coin and bullion; to loan money; to
21481 borrow money and to issue its notes, bonds, or debentures to evidence
22482 any such borrowing and to mortgage, pledge, or hypothecate any of its
23483 assets to secure the repayment thereof; to receive savings deposits and
24484 deposits of money subject to check, and deposits of securities or other
25485 personal property from any person or corporation, upon such terms as
26486 may be agreed upon by the parties; to contract for and receive on loans
27487 and discounts the highest rate of interest allowed by the laws of this
28488 state to be contracted for and received by individuals; to accept, for
29489 payment at a future date, drafts drawn upon it by its customers and to
30490 issue letters of credit authorizing the holders thereof to draw drafts
31491 upon it or its correspondents at sight or on time, however, the letter of
32492 credit must state a specific expiration date; and to exercise all the
33493 powers incidental and proper or which may be necessary and usual in
34494 carrying on a general banking business, but it shall have no right to
35495 issue bills to circulate as money.
36-SEA 408 2
37496 (b) Subject to such regulations, rules, policies, and guidance as the
38497 department finds to be necessary and proper, any bank or trust
39498 company shall have the following powers:
40499 (1) To make such loans and advances of credit and purchases of
41500 obligations representing loans and advances of credit as are
42501 eligible for insurance by the federal housing administrator, and to
43502 obtain such insurance.
44503 (2) To make such loans secured by mortgages on real property or
45504 leasehold, as the federal housing administrator insures or makes
46505 a commitment to insure, and to obtain such insurance.
47506 (3) To purchase, invest in, and dispose of notes or bonds secured
48507 by mortgage or trust deed insured by the federal housing
508+SB 408—LS 6818/DI 101 13
49509 administrator or debentures issued by the federal housing
50510 administrator, or bonds or other securities issued by national
51511 mortgage associations.
52512 (4) To extend credit to any state agency, with the approval of the
53513 department, notwithstanding any other provisions or limitations
54514 of IC 28-1. No law of this state prescribing the nature, amount, or
55515 form of security or requiring security upon which loans or
56516 advances of credit may be made, or prescribing or limiting
57517 interest rates upon loans or advances of credit, or prescribing or
58518 limiting the period for which loans or advances of credit may be
59519 made, shall be deemed to apply to loans, advances of credit, or
60520 purchases made pursuant to subdivisions (1), (2), and (3) and this
61521 subdivision.
62522 (5) To purchase, take, hold, and dispose of notes, and mortgages
63523 securing such notes, made to any joint stock land bank heretofore
64524 incorporated, in any case in which not less than ninety-nine
65525 percent (99%) of the stock of said joint stock land bank is owned
66526 by the bank or trust company at the time such notes or mortgages
67527 be acquired by the bank or trust company; and upon dissolution
68528 of any such joint stock land bank, or at any stage in the process of
69529 such dissolution, any bank or trust company then owning not less
70530 than ninety-nine percent (99%) of the stock of such joint stock
71531 land bank may take, hold, and dispose of any notes, mortgages, or
72532 other assets of such joint stock land bank of whatsoever nature,
73533 including real estate, wheresoever situated, which such joint stock
74534 land bank shall assign, transfer, convey, or otherwise make over
75535 to such bank or trust company by way of final or partial
76536 distribution of its assets to its stockholders upon such dissolution
77537 or in connection with the process of such dissolution. No law of
78538 this state prescribing the nature, amount, location, or form of
79-SEA 408 3
80539 security, or requiring security upon which loans or advances of
81540 credit may be made, or prescribing or limiting interest rates upon
82541 loans or advances of credit, or prescribing or limiting the period
83542 for which loan or advances of credit may be made, or prescribing
84543 any ratio between the amount of any loan and the appraised value
85544 of the security for such loan, or requiring periodical reductions of
86545 the principal of any loan, shall be deemed to apply to loans, notes,
87546 mortgages, real estate, or other assets mentioned in this
88547 subdivision.
89548 (6) To adopt stock purchase programs for employees and to grant
90549 options to purchase, and to issue and sell, shares of its capital
91550 stock to its employees, or to a trustee on their behalf (which may
551+SB 408—LS 6818/DI 101 14
92552 be the bank or trust company issuing such capital stock), without
93553 first offering the same to its shareholders, for such consideration,
94554 not less than par value, and upon such terms and conditions as
95555 shall be approved by its board of directors and by the holders of
96556 a majority of its shares entitled to vote with respect thereto, and
97557 by the department. In the absence of actual fraud in the
98558 transaction, the judgment of the directors as to the consideration
99559 for the issuances of such options and the sufficiency thereof shall
100560 be conclusive. Any bank or trust company exercising the powers
101561 granted in this subsection may, to the extent approved by the
102562 department, have authorized and unissued stock required to fulfill
103563 any stock option or other arrangement authorized herein.
104564 (7) Subject to such restrictions as the department may impose, to
105565 become the owner or lessor of personal or real property acquired
106566 upon the request and for the use of a customer and to incur such
107567 additional obligations as may be incident to becoming an owner
108568 or lessor of such property.
109569 (8) To purchase or construct buildings and hold legal title thereto
110570 to be leased to municipal corporations or other public authorities,
111571 for public purposes, having resources sufficient to make payment
112572 of all rentals as they become due. Each lease agreement shall
113573 provide that upon expiration, the lessee will become the owner of
114574 the building.
115575 (8.1) To purchase, hold, and convey real estate in accordance with
116576 section 5 of this chapter.
117577 (9) Subject to section 3.2 of this chapter, to exercise the rights and
118578 privileges (as defined in section 3.2(a) of this chapter) that are or
119579 may be granted to national banks domiciled in Indiana.
120580 (10) Pursuant to its lending authority, to engage directly or
121581 indirectly in any tax equity finance transaction permissible
122-SEA 408 4
123582 for a national bank or federal savings association under 12
124583 CFR 7.1025. The authority to engage in tax equity finance
125584 transactions under this subdivision is separate from, and does
126585 not limit, any investment authorities available to a bank or
127586 trust company. A tax equity finance transaction is subject to
128587 the substantive legal requirements of a loan, including,
129588 without limitation, IC 28-1-13.
130589 (c) Any rule made and promulgated under and pursuant to this
131590 section may apply to one (1) or more banks or trust companies or to one
132591 (1) or more localities in the state as the department, in its discretion,
133-may determine.
134-SECTION 2. IC 28-1-11-14, AS AMENDED BY P.L.73-2016,
135-SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
136-JULY 1, 2022]: Sec. 14. (a) As used in this section, "community based
137-economic development" refers to activities that seek to address
138-economic development through affordable housing development or the
139-rehabilitation of qualified rehabilitated buildings or certified historic
140-structures, or that seeks to address economic causes of poverty within
141-specific geographic areas, revitalizing the economic and social base of
142-low income communities through activities that include:
143-(1) small business and micro-enterprise support;
144-(2) commercial, industrial, and retail revitalization, retention, and
145-expansion;
146-(3) capacity development and technical assistance support for
147-community development corporations;
148-(4) employment and training efforts;
149-(5) human resource development; and
150-(6) social service enterprises.
151-(b) As used in this section, "community development corporation"
152-means a private, nonprofit corporation:
153-(1) whose board of directors is comprised primarily of community
154-representatives and business, civic, and community leaders; and
155-(2) whose principal purpose includes the provision of:
156-(A) housing;
157-(B) community based economic development projects; and
158-(C) social services;
159-that primarily benefit low-income individuals and communities.
160-(c) As used in this section, "capital and surplus" has the meaning set
161-forth in IC 28-1-1-3(10).
162-(d) As used in this section, "community and economic
163-development entity" has the meaning set forth in 12 CFR 24.2(c).
164-(e) As used in this section, "community development project"
165-SEA 408 5
166-has the meaning set forth in 12 CFR 24.2(d).
167-(f) As used in this section, "public welfare investment" means
168-any investment permitted by 12 CFR 24.3.
169-(g) As used in this section, "tax equity finance transaction" has
170-the meaning set forth in 12 CFR 7.1025(b)(3).
171-(d) (h) Subject to the limitations of this section, other laws, and any
172-regulation, rule, policy, or guidance adopted by the department
173-concerning investments in community based economic development,
174-any bank or trust company may invest directly or indirectly in equity
175-investments in a corporation, a limited partnership, a limited liability
176-company, or another entity organized as:
177-(1) a community development corporation;
178-(2) an entity formed primarily to support community based
179-economic development;
180-(3) an entity qualifying for the new markets tax credits under 26
181-U.S.C. 45D;
182-(4) an entity approved by the director as being formed for a
183-predominantly civic, community, or public purpose and that:
184-(A) primarily benefits low and moderate income individuals;
185-(B) primarily benefits low and moderate income areas;
186-(C) primarily benefits areas targeted for redevelopment by a
187-government entity; or
188-(D) is a qualified investment under 12 CFR 25.23 for purposes
189-of the Community Reinvestment Act of 1977 (12 U.S.C. 2901
190-et seq.); or
191-(5) an entity making qualified rehabilitation expenditures with
192-respect to a qualified rehabilitated building or certified historic
193-structure, as such terms are defined in section 47 of the Internal
194-Revenue Code of 1986 or a similar state historic tax credit
195-program, as provided for in Section 619(d)(1)(E) of the
196-Dodd-Frank Wall Street Reform and Consumer Protection Act
197-(12 U.S.C. 1851(d)(1)(E)).
198-(i) Subject to any regulation, rule, policy, or guidance adopted
199-by the department, any bank or trust company may invest directly
200-or indirectly in any:
201-(1) community and economic development entity;
202-(2) community development project; or
203-(3) other public welfare investment;
204-as long as the investment is in compliance with 12 CFR 24.
205-(e) (j) Except as provided in subsection (f), (k), the aggregate of all
206-equity investments by a bank or trust company under subsection (d)
207-subsections (h) and (i) may not exceed:
208-SEA 408 6
209-(1) five percent (5%) of the capital and surplus of the bank or
210-trust company without the prior written approval of the director;
211-and
212-(2) fifteen percent (15%) of the capital and surplus of the bank or
213-trust company under any circumstances.
214-(f) (k) In determining whether to permit the aggregate of all equity
215-investments by a bank or trust company under subsection (d)
216-subsections (h) and (i) to exceed five percent (5%) of the capital and
217-surplus of the bank or trust company under subsection (e)(1), (j)(1), the
218-director shall consider whether:
219-(1) the aggregate of all equity investments under subsection (d)
220-subsections (h) and (i) will pose a significant risk to the affected
221-deposit insurance fund; and
222-(2) the bank or trust company is adequately capitalized.
223-(g) (l) A bank or trust company shall not make any investment under
224-this section if the investment would expose the bank or trust company
225-to unlimited liability.
226-SECTION 3. IC 28-6.1-6-3 IS AMENDED TO READ AS
592+may determine.".
593+Page 3, delete lines 12 through 21.
594+SB 408—LS 6818/DI 101 15
595+Page 3, line 22, delete "(k)" and insert "(j)".
596+Page 3, line 22, delete "(l)," and insert "(k),".
597+Page 3, line 24, delete "(h), (i), and (j)" and insert "(h) and (i)".
598+Page 3, line 30, delete "(l)" and insert "(k)".
599+Page 3, line 32, delete "(h), (i), and (j)" and insert "(h) and (i)".
600+Page 3, line 34, delete "(k)(1)," and insert "(j)(1),".
601+Page 3, line 36, delete "(h), (i), and (j)" and insert "(h) and (i)".
602+Page 3, line 39, delete "(m)" and insert "(l)".
603+Page 3, after line 41, begin a new paragraph and insert:
604+"SECTION 3. IC 28-6.1-6-3 IS AMENDED TO READ AS
227605 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 3. (a) A savings bank
228606 may loan money.
229607 (b) Subject to any regulation, rule, policy, or guidance adopted
230608 by the department, pursuant to its lending authority, a savings
231609 bank may engage directly or indirectly in any tax equity finance
232610 transaction permissible for a national bank or federal savings
233611 association under 12 CFR 7.1025. The authority to engage in tax
234612 equity finance transactions under this subsection is separate from,
235613 and does not limit, any investment authorities available to a
236614 savings bank. A tax equity finance transaction is subject to the
237615 substantive legal requirements of a loan, including, without
238616 limitation, IC 28-6.1-9.
239617 SECTION 4. IC 28-15-2-1, AS AMENDED BY P.L.27-2012,
240618 SECTION 111, IS AMENDED TO READ AS FOLLOWS
241619 [EFFECTIVE JULY 1, 2022]: Sec. 1. (a) Savings associations may do
242620 the following:
243621 (1) Accept deposit accounts.
244622 (2) Issue evidence of deposit account ownership.
245623 (3) Declare and distribute earnings to members.
246624 (4) Pay, in part or in full, withdrawal requests of deposit accounts.
247625 (5) Subject to the provisions and restrictions of 12 U.S.C. 84 and
248626 12 CFR 32:
249627 (A) Make loans to members on the security of deposit
250628 accounts.
251-SEA 408 7
252629 (B) Make property improvement loans.
253630 (C) Make other loans as provided under IC 28-15-8.
254631 (D) Make mortgage loans.
255632 (E) Accept additional collateral on mortgage loans.
256633 (F) Purchase and sell loans.
257634 (G) Negotiate loan servicing agreements.
258635 (H) Purchase and sell participating interests in loans.
259636 (I) Issue letters of credit with specific expiration dates.
637+SB 408—LS 6818/DI 101 16
260638 (J) Make secured or unsecured loans, which are partially
261639 insured or guaranteed in any manner by any state of the United
262640 States, the United States government, or any of its agencies or
263641 government sponsored enterprises.
264642 (K) Purchase commercial paper that is denominated in United
265643 States currency and that:
266644 (i) is rated by at least one (1) nationally recognized
267645 investment rating service in one (1) of the two (2) highest
268646 grades; or
269647 (ii) meets another standard of creditworthiness determined
270648 to be appropriate by the director.
271649 (L) Make, purchase, or participate in alternative mortgage
272650 loans as provided in IC 28-15-11.
273651 (M) Subject to any regulation, rule, policy, or guidance
274652 adopted by the department and pursuant to its lending
275653 authority, engage directly or indirectly in any tax equity
276654 finance transaction permissible for a national bank or
277655 federal savings association under 12 CFR 7.1025. The
278656 authority to engage in tax equity finance transactions
279657 under this clause is separate from, and does not limit, any
280658 investment authorities available to a savings association. A
281659 tax equity finance transaction is subject to the substantive
282660 legal requirements of a loan, including, without limitation,
283661 IC 28-15-6.
284662 (6) Acquire and sell real estate in satisfaction of debts previously
285663 contracted.
286664 (7) Acquire real estate for the convenient transaction of its
287665 business. A savings association has the same powers under this
288666 subdivision as a bank or trust company has under IC 28-1-11-5.
289667 (8) Notwithstanding any other law, establish, maintain, or relocate
290668 one (1) or more branch offices by following the provisions of
291669 IC 28-2-13, IC 28-2-17, or IC 28-2-18 as if the savings association
292670 were a bank.
293671 (9) Become a member in any agency or instrumentality of the
294-SEA 408 8
295672 federal government. For the purposes of this subdivision,
296673 membership in an agency or instrumentality of the federal
297674 government may include:
298675 (A) purchasing stock;
299676 (B) purchasing notes and debentures; or
300677 (C) borrowing money.
301678 (10) Subject to any limitations imposed by the department
302679 through policy:
680+SB 408—LS 6818/DI 101 17
303681 (A) invest the money deposited in the savings association in
304682 the shares of the capital stock, bonds, debentures, notes, or
305683 other obligations of a federal home loan bank of the United
306684 States;
307685 (B) become a member of the federal home loan bank of the
308686 district in which Indiana is located or an adjoining district;
309687 (C) borrow money from:
310688 (i) a federal home loan bank described in clause (B);
311689 (ii) the Federal Deposit Insurance Corporation; or
312690 (iii) any other corporation;
313691 (D) transfer, assign to, and pledge with a federal home loan
314692 bank described in clause (B), the Federal Deposit Insurance
315693 Corporation, or any other corporation any of the bonds, notes,
316694 contracts, mortgages, securities, or other property of the
317695 savings association held or acquired as security for the
318696 payment of loans entered into under clause (C); and
319697 (E) exercise all rights, powers, and privileges conferred upon,
320698 and do all things and perform all acts required of, members or
321699 shareholders of a federal home loan bank by the Federal Home
322700 Loan Bank Act (12 U.S.C. 1421 through 1449).
323701 (11) Subject to the provisions and restrictions of 12 U.S.C. 24 and
324702 12 CFR 1, invest in the following types of securities:
325703 (A) Bonds, notes, certificates, and other valid obligations of
326704 the United States government or any agency of the United
327705 States government.
328706 (B) Accounts offered by federally insured banks, savings
329707 banks, and savings associations.
330708 (C) Bonds, notes, or other evidences of indebtedness that are
331709 general obligations supported by the full faith and credit of any
332710 state in the United States or any city, town, or other political
333711 subdivision in any state in the United States if the obligations:
334712 (i) have been assigned one (1) of the four (4) highest grades
335713 by a nationally recognized investment rating service; or
336714 (ii) meet another standard of creditworthiness determined to
337-SEA 408 9
338715 be appropriate by the director.
339716 (D) Shares of stock of a subsidiary that does not exercise a
340717 power or engage in any activity that is not authorized for the
341718 savings association. The investment power granted by this
342719 subdivision is separate from the investment power granted by
343720 IC 28-15-9.
344721 (E) Corporate debt securities that are denominated in United
345722 States currency and that:
723+SB 408—LS 6818/DI 101 18
346724 (i) are rated by at least one (1) nationally recognized
347725 investment rating service in one (1) of the four (4) highest
348726 grades; or
349727 (ii) meet another standard of creditworthiness determined to
350728 be appropriate by the director.
351729 Corporate debt securities in which a savings association
352730 invests under this clause must be convertible into stock at the
353731 sole option of the holder, and a savings association is
354732 prohibited from exercising the conversion option.
355733 (F) Shares of open end investment companies that are eligible
356734 for purchase by national banks.
357735 (G) Bankers' acceptances that are eligible for purchase by
358736 national banks.
359737 (12) For the purpose of:
360738 (A) check and deposit sorting and posting;
361739 (B) computation and posting of interest and other credits and
362740 charges;
363741 (C) preparation and mailing of checks, statements, notices, and
364742 similar items; or
365743 (D) other clerical, bookkeeping, accounting, statistical, or
366744 similar functions performed by a savings association;
367745 invest in a corporation organized in any state to perform those
368746 functions for two (2) or more savings associations, each of which
369747 owns a portion of the capital stock of the corporation. The total
370748 investment of a savings association under this subdivision may
371749 not exceed ten percent (10%) of the capital and surplus of the
372750 savings association. A savings association may not invest in this
373751 type of corporation unless the corporation furnishes assurances to
374752 the department that it will subject itself to examination by the
375753 department to the same extent as if the services were performed
376754 by the savings association.
377755 (13) Lend money to other savings associations:
378756 (A) the deposits of which are insured by the Federal Deposit
379757 Insurance Corporation; and
380-SEA 408 10
381758 (B) that are incorporated and operating under the laws of any
382759 state or of the United States.
383760 (14) Borrow money and mortgage or pledge its property to secure
384761 payment.
385762 (15) Issue subordinated notes or debentures.
386763 (16) Assess and collect interest, fees, and other charges.
387764 (17) Insure its deposit accounts with the Federal Deposit
388765 Insurance Corporation or its successor.
766+SB 408—LS 6818/DI 101 19
389767 (18) Act as an agent for the United States or its instrumentalities.
390768 (19) Accept property for safe keeping or escrow.
391769 (20) Rent or lease safe deposit boxes.
392770 (21) Issue and sell checks, drafts, money orders, and other
393771 instruments for the transmission or payment of money.
394772 (22) Exercise all the powers that:
395773 (A) are incidental and proper; or
396774 (B) may be necessary and usual;
397775 in carrying on the business of the savings association.
398776 (23) Purchase or construct buildings, hold legal title to the
399777 buildings, and lease the buildings for public purposes to
400778 municipal corporations or other public authorities that have
401779 resources sufficient to make payment of all rentals as they become
402780 due. Each lease agreement entered into under this subdivision
403781 must provide that, upon expiration, the lessee will become the
404782 owner of the building.
405783 (24) Open or establish automated teller machines at any location.
406784 An automated teller machine opened or established under this
407785 subdivision may be owned and operated individually or jointly on
408786 a cost sharing or fee basis.
409787 (25) Act:
410788 (A) in any fiduciary capacity in which a bank or trust company
411789 is permitted to act under this title; and
412790 (B) as an agent for the sale of real estate, without bond or other
413791 security.
414792 (26) Accept and maintain demand deposit accounts if the savings
415793 association is insured by the Federal Deposit Insurance
416794 Corporation or its successor.
417795 (27) Without the approval of the department, to the extent
418796 authorized by the board of directors of the savings association,
419797 establish or maintain agencies that:
420798 (A) only service and originate, but do not approve, loans and
421799 contracts; or
422800 (B) manage or sell real estate owned by the savings
423-SEA 408 11
424801 association.
425802 An agency established or maintained under this subdivision may
426803 offer any services not referred to in this subdivision with the
427804 approval of the department, except for accepting payment on
428805 savings accounts. An agency shall maintain records of all
429806 business it transacts and transmit copies to a branch or home
430807 office of the savings association.
431808 (b) Subject to any limitations or restrictions that the department or
809+SB 408—LS 6818/DI 101 20
432810 a federal regulator may impose by regulation, rule, policy, or guidance,
433811 a savings association may purchase and hold life insurance as follows:
434812 (1) Life insurance purchased or held in connection with employee
435813 compensation or benefit plans approved by the savings
436814 association's board of directors.
437815 (2) Life insurance purchased or held to recover the cost of
438816 providing preretirement or postretirement employee benefits
439817 approved by the savings association's board of directors.
440818 (3) Life insurance on the lives of borrowers.
441819 (4) Life insurance held as security for a loan.
442820 (5) Life insurance that a national bank may purchase or hold
443-under 12 U.S.C. 24 (Seventh).
444-SEA 408 President of the Senate
445-President Pro Tempore
446-Speaker of the House of Representatives
447-Governor of the State of Indiana
448-Date: Time:
449-SEA 408
821+under 12 U.S.C. 24 (Seventh).".
822+Renumber all SECTIONS consecutively.
823+and when so amended that said bill do pass.
824+(Reference is to SB 408 as introduced.)
825+ZAY, Chairperson
826+Committee Vote: Yeas 9, Nays 0.
827+SB 408—LS 6818/DI 101