As Amended by Senate Committee
Session of 2024
HOUSE BILL No. 2560
By Committee on Financial Institutions and Pensions
Requested by Brock Roehler on behalf of the State Bank Commissioner
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AN ACT concerning financial institutions; relating to the state banking
code; providing when an application is considered abandoned or
expired; allowing an originating trustee to have such trustee's principal
place of business outside of Kansas; amending K.S.A. 9-535, 9-806, 9-
1721 and 9-2107 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 9-535 is hereby amended to read as follows: 9-535.
(a) The commissioner shall approve the application if the commissioner
determines that the application favorably meets each and every factor
prescribed in K.S.A. 9-534, and amendments thereto, the proposed
acquisition is in the interest of the depositors and creditors of the Kansas
state chartered bank or bank holding company that has an ownership
interest in a Kansas state chartered bank which that is the subject of the
proposed acquisition and in the public interest generally. Otherwise, the
application shall be denied.
(b) If the commissioner denies the application, the applicant shall
have the right to a hearing before the state banking board to be conducted
in accordance with the Kansas administrative procedure act. The state
banking board shall render the board's decision affirming or rescinding the
determination of the commissioner. Any action of the state banking board
pursuant to this section is subject to review in accordance with the Kansas
judicial review act.
Sec. 2. K.S.A. 9-806 is hereby amended to read as follows: 9-806. (a)
If the applicant fails to complete any application under the state banking
code within 60 days after being notified that the application is incomplete,
such application shall be considered abandoned and the application fee
shall not be refunded. An applicant whose application is abandoned under
this section may reapply at any time.
(b) Except as provided by subsection (c), the bank or trust company
shall engage in the activity requiring an application and approval by the
commissioner or state banking board within 18 months from the date of
approval. If the bank or trust company fails to engage in the activity
within 18 months from the date of the approval, the application shall be
deemed expired and a new application, application fee and approval is
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required. The provisions of this subsection do not apply to applications
approved under K.S.A. 9-1601, and amendments thereto.
(c) Any newly organized bank or trust company which that did not
begin business within 120 days after a certificate of authority has been
issued to such bank or trust company by the commissioner shall not
engage in the banking business or the business of a trust company without
again obtaining a certificate of authority from the commissioner.
(d) The commissioner may extend the deadline under subsection (b)
or (c):
(1) Indefinitely, if approval from another state or federal regulator is
necessary for the bank or trust company to engage in the activity; or
(2) up to 180 days for good cause.
(e) The state banking board may designate the commissioner to
determine the completeness of any application requiring state banking
board approval or deem as expired any state banking board approved
application.
Sec. 3. K.S.A. 9-1721 is hereby amended to read as follows: 9-1721.
(a) The person proposing to acquire control or a bank or trust company
undertaking a merger transaction, hereinafter referred to as the applicant,
shall file an a complete application with the commissioner at least 60 days
prior to the proposed change of control or merger transaction. If the
commissioner does not act on the complete application within the 60-day
time period and the applicant has received approval from all other
applicable federal and state agencies, the application shall stand approved.
The commissioner may, for any reason, extend the time period to act on an
application for an additional 30 days. The time period to act on an
application may be further extended if the commissioner determines that
the applicant has not furnished all the information required under K.S.A.
9-1722, and amendments thereto, or that, in the commissioner's judgment,
any material information submitted is substantially inaccurate. The
commissioner may waive the 60-day prior notice requirement if the
acquired bank or trust company is under a formal corrective action.
(b) Upon the filing of an application, the commissioner shall make an
investigation of the applicant for the change of control or merger
transaction. The commissioner may deny the application if the
commissioner finds the:
(1) Proposed change of control or merger transaction would result in
a monopoly or would be in furtherance of any combination or conspiracy
to monopolize or attempt to monopolize the business of banking or trust
services in any part of this state;
(2) financial condition of the applicant might jeopardize the financial
stability of the bank or trust company or prejudice the interests of the
depositors of a bank;
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(3) competence, experience or integrity of the applicant or of any of
the proposed management personnel of the bank or trust company or
resulting bank or trust company indicates it would not be in the interest of
the depositors of the bank, the clients of trust services, or in the interest of
the public; or
(4) applicant neglects, fails or refuses to furnish the commissioner
with all of the information required by the commissioner.
(c) Upon service of an order denying an application, the applicant
shall have the right to a hearing to be conducted in accordance with the
Kansas administrative procedure act before the state banking board. Any
final order of the commissioner pursuant to this section is subject to
review in accordance with the Kansas judicial review act.
Sec. 4. K.S.A. 9-2107 is hereby amended to read as follows: 9-2107.
(a) As used in this section:
(1) "Contracting trustee" means any trust company, as defined in
K.S.A. 9-701, and amendments thereto, any bank that has been granted
trust authority by the commissioner under K.S.A. 9-1602, and amendments
thereto, any national bank chartered to do business in Kansas that has been
granted trust authority by the comptroller of the currency under 12 U.S.C.
§ 92a, any bank that has been granted trust authority or any trust company,
regardless of where such bank or trust company is located, that is
controlled, as defined in K.S.A. 9-1612, and amendments thereto, by the
same bank holding company as any trust company, state bank or national
bank chartered to do business in Kansas, which accepts or succeeds to any
fiduciary responsibility as provided in this section;
(2) "originating trustee" means any trust company, bank, national
banking association, savings and loan association or savings bank which
that has trust powers and its principal place of business is in this state and
which places or transfers any fiduciary responsibility to a contracting
trustee as provided in this section; and
(3) "financial institution" means any bank, national banking
association, savings and loan association or savings bank which that has
its principal place of business in this state but which that does not have
trust powers.
(b) Any contracting trustee and any originating trustee may enter into
an agreement by which the contracting trustee, without any further
authorization of any kind, succeeds to and is substituted for the originating
trustee as to all fiduciary powers, rights, duties, privileges and liabilities
with respect to all accounts for which the originating trustee serves in any
fiduciary capacity, except as may be provided otherwise in the agreement.
Notwithstanding the provisions of this section, no contracting trustee with
a home office outside the state of Kansas shall enter into an agreement
except with an originating trustee which is commonly controlled as
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defined in K.S.A. 9-1612, and amendments thereto, by the same bank
holding company either the contracting trustee or the originating trustee
shall have its principal place of business in this state.
(c) Unless the agreement expressly provides otherwise, upon the
effective date of the substitution:
(1) The contracting trustee shall be deemed to be named as the
fiduciary in all writings, including, without limitation, trust agreements,
wills and court orders, which pertain to the affected fiduciary accounts;
and
(2) the originating trustee is absolved from all fiduciary duties and
obligations arising under such writings and shall discontinue the exercise
of any fiduciary duties with respect to such writings, except that the
originating trustee is not absolved or discharged from any duty to account
required by K.S.A. 59-1709, and amendments thereto, or any other
applicable statute, rule of law, rules and regulations or court order, nor
shall the originating trustee be absolved from any breach of fiduciary duty
or obligation occurring prior to the effective date of the agreement.
(d) The agreement may authorize the contracting trustee:
(1) To establish a trust service desk at any office of the originating
trustee at which the contracting trustee may conduct any trust business and
any business incidental thereto and which the contracting trustee may
otherwise conduct at its principal place of business; and
(2) to engage the originating trustee as the agent of the contracting
trustee, on a disclosed basis to customers, for the purposes of providing
administrative, advertising and safekeeping services incident to the
fiduciary services provided by the contracting trustee.
(e) Any contracting trustee may enter into an agreement with a
financial institution providing that the contracting trustee may establish a
trust service desk as authorized by subsection (d) in the offices of such
financial institution and which provides such financial institution, on a
disclosed basis to customers, may act as the agent of contracting trustee for
purposes of providing administrative services and advertising incident to
the fiduciary services to be performed by the contracting trustee.
(f) No activity authorized by subsections (b) through (e) shall be
conducted by any contracting trustee, originating trustee or financial
institution until an application for such authority has been submitted to and
approved by the commissioner. The application shall be in the form and
contain the information required by the commissioner, which shall at a
minimum include certified copies of the following documents:
(1) The agreement;
(2) the written action taken by the board of directors of the
originating trustee or financial institution approving the agreement;
(3) all other required regulatory approvals;
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(4) proof of publication of notice that the applicant intends to file or
has filed an application pursuant to this section. The notice shall be
published in a newspaper of general circulation in the county where the
principal office of the originating trustee or financial institution is located.
The notice shall be in the form prescribed by the commissioner and shall
contain the name of the applicant contracting trustee and the originating
trustee, 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 days after the date of the second
publication; and
(5) a certification by the parties to the agreement that written notice
of the proposed substitution was sent by first-class mail to each co-
fiduciary, each surviving settlor of a trust, each ward of a guardianship,
each person that has sole or shared power to remove the originating trustee
as fiduciary and each adult beneficiary currently receiving or entitled to
receive a distribution of principle or income from a fiduciary account
affected by the agreement, and that such notice was sent to each such
person's address as shown in the originating trustee's records. An
unintentional failure to give such notice shall not impair the validity or
effect of any such agreement, except an intentional failure to give such
notice shall render the agreement null and void as to the party not
receiving the notice of substitution.
(g) A contracting trustee making application to the commissioner for
approval of any agreement pursuant to this section shall pay to the
commissioner a fee, in an amount established pursuant to K.S.A. 9-1726,
and amendments thereto, to defray the expenses of the commissioner in
the examination and investigation of the application. The commissioner
shall remit all moneys received under this section to the state treasurer in
accordance with the provisions of K.S.A. 75-4215, and amendments
thereto. Upon receipt of each such remittance, the state treasurer shall
deposit the entire amount in the state treasury to the credit of the bank
investigation fund. The moneys in the bank investigation fund shall be
used to pay the expenses of the commissioner, or designee, in the
examination and investigation of such applications and any unused balance
shall be transferred to the bank commissioner fee fund.
(h) Upon the filing of a complete application with the commissioner,
the commissioner shall make or cause to be made, a careful examination
and investigation of the proposed agreement. If the commissioner finds
any of the following matters unfavorably, the commissioner may deny the
application:
(1) The reasonable probability of usefulness and success of the
contracting trustee; and
(2) the financial history and condition of the contracting trustee
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including the character, qualifications and experience of the officers
employed by the contracting trustee.
(i) The commissioner shall render approval or disapproval of the
application within 90 days of receiving a complete application.
(j) Upon service of an order denying an application, the applicant
shall have the right to a hearing to be conducted in accordance with the
Kansas administrative procedure act before the state banking board. Any
final order of the commissioner pursuant to this section is subject to
review in accordance with the Kansas judicial review act.
(k) When the commissioner determines that any contracting trustee
domiciled in this state has entered into a contracting agreement in violation
of the laws governing the operation of such contracting trustee, the
commissioner may take such action as available under K.S.A. 9-1714, 9-
1805, 9-1807 or 9-1809, and amendments thereto, to remedy such
violation.
(l) Any party entitled to receive a notice under subsection (f)(5) may
file a petition in the court having jurisdiction over the fiduciary
relationship, or if none, in the district court in the county where the
originating trustee has its principal office, seeking to remove any
contracting trustee substituted or about to be substituted as fiduciary
pursuant to this section. Unless the contracting trustee files a written
consent to its removal or a written declination to act subsequent to the
filing of the petition, the court, upon notice and hearing, shall determine
the best interest of the petitioner and all other parties concerned and shall
fashion such relief as the court deems appropriate in the circumstances,
including the awarding of reasonable attorney fees. The right to file a
petition under this subsection shall be in addition to any other rights to
remove the fiduciary provided by any other statute or regulation or by the
writing creating the fiduciary relationship. If the removal of the fiduciary
is prompted solely as a result of the contracting agreement, any reasonable
cost associated with such removal and transfer shall be paid by the
originating trustee or financial institution entering into the agreement.
Sec. 5. K.S.A. 9-535, 9-806, 9-1721 and 9-2107 are hereby repealed.
Sec. 6. This act shall take effect and be in force from and after its
publication in the statute book Kansas register.
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