SESSION OF 2024
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2560
As Recommended by House Committee on
Financial Institutions and Pensions
Brief*
HB 2560 would amend the State Banking Code and
provisions pertaining to trust companies to address the
abandonment or expiration of certain applications and allow
an originating trustee to have its principal place of business
outside of Kansas.
Abandonment and Expiration of Applications
The bill would provide that, if an applicant fails to
complete any application under the State Banking Code
within 60 days after being notified that the application is
incomplete, such application would be considered abandoned
and the application fee would not be refunded. The bill would
permit such applicant to reapply at any time.
The bill would also require a bank or trust company to
engage in the activity requiring an application and approval
by the State Bank Commissioner (Commissioner) or the State
Banking Board within 18 months from the date of approval. If
the bank or trust company fails to comply with this activity
deadline, the bill would require the application to be deemed
expired and a new application, application fee, and approval
to be required.
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*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org Extension of Deadline
The bill would permit the Commissioner to extend the
application deadline indefinitely, if approval from another state
or federal regulator is necessary for the bank or trust
company to engage in the activity, or up to 180 days for good
cause. The State Banking Board would be permitted to
designate the Commissioner to determine the completeness
of any application requiring Board approval or deem as
expired any Board-approved application.
Change of Control or Merger—Applications
The bill would modify an application provision for a
person acquiring control or a bank or trust company
undertaking a merger transaction to provide that, if the
Commissioner does not act on the complete application
within the 60-day period prior to the proposed change of
control or merger and the applicant has received approval
from all other applicable federal and state agencies, the
application will stand approved.
Trust Companies—Definitions
The bill would amend the definition of “originating
trustee” to remove language requiring such trustee (e.g., trust
company, bank, national banking association, savings and
loan association, or savings bank) to have its principal place
of business in this state. The bill would further permit either
the contracting trustee or the originating trustee to have its
principal place of business in this state.
Background
The bill was introduced by the House Committee on
Financial Institutions and Pensions at the request of a
representative of the Office of the State Bank Commissioner
(OSBC).
2- 2560 House Committee on Financial Institutions and Pensions
In the House Committee hearing, a representative of the
OSBC provided proponent testimony, stating the bill would
allow the agency to abandon incomplete applications and
declare approved applications expired. The conferee noted a
handful of incomplete and unimplemented applications tie up
a substantial amount of time for the OSBC’s Applications and
Statistics Manager and leadership and on the State Banking
Board. A representative of Midwest Trust also appeared as a
proponent, stating the bill would allow Kansas trust
companies to bring in many accounts from out of state in an
efficient manner by creating a legal mechanism that permits
the irrevocable transfer of fiduciary accounts to another trust
company or bank.
Written-only proponent testimony was submitted by a
representative of the Trust Division of the Kansas Bankers
Association.
No other testimony was provided.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget, the OSBC estimates the bill would increase
revenues in the Bank Commissioner Fee Fund by $500 in FY
2025. Under the provisions of the bill, the agency would be
authorized to charge an application fee when an applicant
with a previously abandoned or expired application reapplies.
The OSBC notes its Consumer and Mortgage Lending (CML)
Division currently has this authority and approximately 2.5
percent of CML applications are considered abandoned. The
Banking Division receives approximately 40 to 45 applications
each year. Assuming the Banking Division would have 2.5
percent of its applications abandoned, the OSBC estimates at
least one application will be abandoned each year beginning
in FY 2025 and that one application would be reinstated with
a fee of $500. Any fiscal effect associated with enactment of
3- 2560 the bill is not reflected in The FY 2025 Governor’s Budget
Report.
Financial institutions; State Banking Code; application abandonment; application
expiration; State Bank Commissioner; State Banking Board; trust companies;
originating trustee; principal place of business
4- 2560