2003 Minnesota Statutes

     50.14 Authorized securities. 

    Subdivision 1.  Except as it relates to the investment of 
 trust funds by corporate trustees or by individual trustees, the 
 term "authorized securities" whenever used in the statutes and 
 laws of this state shall be understood as referring to the 
 following described securities in which the directors of any 
 savings bank shall invest the money deposited therein and which 
 at the time of the purchase thereof are included in one or more 
 of the following classes. 

    Subd. 2.  Class one shall be:  

    (a) the bonds or other interest bearing obligations of the 
 United States, or in securities for the payment of which and 
 interest thereon the faith of the government is pledged; 

    (b) shares of an investment company registered under the 
 Investment Company Act of 1940, whose shares are registered 
 under the Securities Act of 1933, provided that the only 
 investments of that company are in obligations of the United 
 States government, in obligations fully guaranteed by the United 
 States government, or in obligations of instrumentalities of the 
 United States government such as the Federal National Mortgage 
 Association, the Federal Home Loan Banks, the Federal Land 
 Banks, the Federal Intermediate Credit Banks, or the Banks for 
 Cooperatives; 

    (c) the bonds or other interest bearing securities of the 
 Dominion of Canada, provided that the full faith and credit of 
 the Dominion of Canada is pledged for the payment thereof and 
 provided further that they are payable in United States dollars 
 within the United States. 

    Subd. 3.  Class two shall be the bonds or notes of any 
 state which has not defaulted in the payment of any bonded debt 
 within ten years prior to the making of such investment; and in 
 the highway revenue bonds or certificates of such states payable 
 out of irrevocably pledged special revenues to be derived from 
 gasoline or other motor fuel taxes or motor vehicle license 
 fees, provided that such revenues during the most recent fiscal 
 year of such state (next preceding the date of such investment) 
 were equal to at least 1-1/4 times the interest, principal, and 
 sinking fund requirements of such revenue bonds or certificates 
 during such fiscal year. 

    Subd. 4.  Class three shall be:  

    (a) the bonds, certificates of indebtedness, or other 
 interest bearing obligations, payable out of a levy of ad 
 valorem taxes, of any county, city, town, or any school 
 district, drainage district, or other district, or of any board 
 of any municipality, or of any public authority, created 
 pursuant to law for public purposes in Minnesota, without regard 
 to any debt limits other than those in section 475.53; 

    (b) the bonds, certificates of indebtedness or other 
 interest-bearing obligations, payable out of a levy of ad 
 valorem taxes, of any county, city, town, or school, drainage or 
 other district, or public authority, created pursuant to law for 
 public purposes in any state of the United States other than 
 Minnesota, provided that the total bonded indebtedness of the 
 county, municipality, district or authority, after deducting the 
 amount of all sinking funds and of all revenue bonds or 
 certificates (including among revenue bonds and certificates 
 those which pledge the full faith and credit of the issuer, if 
 the net revenues applicable to the payment of the bonds or 
 certificates during the three fiscal years immediately preceding 
 the date of purchase exceeded by at least five percent the 
 amount required to pay principal and interest on those bonds or 
 certificates during that period), shall not exceed ten percent 
 of its assessed value; and provided further that if the county, 
 municipality, district or authority is of any state other than 
 Iowa, Wisconsin, North Dakota, or South Dakota, it contains at 
 least 3,500 inhabitants; 

    (c) the bonds, certificates or other interest-bearing 
 obligations, payable out of special revenues, of any county, 
 city, town, or school, drainage, or other district, or public 
 authority, created pursuant to law for public purposes in any 
 state of the United States, provided that:  

    (1) if the county, municipality, district or authority is 
 of any state other than Minnesota, it contains at least 3,500 
 inhabitants; 

    (2) the obligations were issued to finance the purpose of 
 construction of or addition to a public enterprise furnishing 
 water, sewer, lighting, power, gas, or road facilities, from 
 which revenue is to be derived; 

    (3) the governing body or other legally constituted 
 authority has covenanted or is required by law to establish and 
 maintain rates to yield sufficient revenue for the payment of 
 operating expenses, maintenance expenses, and principal and 
 interest on the revenue obligations and to pledge that revenue 
 irrevocably for those purposes; 

    (4) at the date of investment the public enterprise has 
 been in operation for at least three years; and 

    (5) during the preceding three fiscal years its annual net 
 earnings, after payment of operating expenses and maintenance 
 expenses, have been on the average at least 1-1/4 times the 
 average annual interest, principal, and sinking fund 
 requirements on the revenue obligations during the period from 
 the end of its most recent fiscal year to the final maturity of 
 the obligations; and 

    (d) the bonds or other interest-bearing obligations, 
 payable from revenues other than ad valorem taxes as 
 contemplated in clause (a), validly issued by any state or 
 insular possession of the United States, or by any agency, 
 instrumentality, municipality, or governmental or public 
 subdivision, district, corporation, commission, board, council, 
 or authority of whatsoever kind, created for public purposes by 
 or pursuant to the laws of any state, provided that the bonds or 
 other interest-bearing obligations are at the time of purchase 
 rated among the highest three quality categories, not applicable 
 to bonds or other interest-bearing obligations in default as to 
 principal, used by a nationally recognized rating agency for 
 rating the quality of similar bonds or other interest-bearing 
 obligations, and are not rated lower by any other such agency.  

    Subd. 5.  (1) Class four shall be: 

    (a) notes or bonds secured by mortgages or trust deeds on 
 unencumbered real estate, whether in fee or in a leasehold of a 
 duration not less than ten years beyond the maturity of the 
 loan, in any state of the United States, worth at least the 
 amount loaned thereon; 

    (b) notes or bonds secured by mortgages or trust deeds on 
 unencumbered real estate in clause (1)(a) where the notes or 
 bonds do not exceed 80 percent of the appraised value of the 
 security for the same, provided that the notes or bonds are 
 payable in installments aggregating not less than five percent 
 of the original principal a year in addition to the interest; 
 or, are payable on a regular amortization basis in equal 
 installments, including principal and interest, these 
 installments to be payable monthly in amounts that the debt will 
 be fully paid in not to exceed 30 years if the security is 
 nonagricultural real estate, and these installments to be 
 payable annually or semiannually in amounts that the debt will 
 be fully paid in not to exceed 25 years if the security is 
 agricultural real estate.  A construction loan is deemed 
 amortized as required by this clause if the first installment 
 thereon is payable not later than 18 months after the date of 
 the first advance in the case of residential construction or not 
 later than 36 months after the date of the first advance in the 
 case of nonresidential construction; and 

    (c) notes or bonds secured by mortgages or trust deeds on 
 unencumbered real estate in clause (1)(a) which are in an 
 original principal amount of $100,000 or more and which do not 
 exceed 95 percent of the appraised value of the security for the 
 same which may be payable in the manner as the directors of the 
 savings bank prescribe, provided that construction loans made by 
 a savings bank pursuant to this clause (1)(c) do not exceed in 
 the aggregate five percent of the assets of the savings bank. 

    (2) Class four investments shall be made only on report of 
 a committee directed to investigate the same and report its 
 value, according to the judgment of its members, and its report 
 shall be preserved among the bank's records. 

    (3) Notwithstanding anything to the contrary in clause 
 (1)(b), a savings bank organized under the laws of this state 
 may invest in notes or bonds secured by mortgages or trust deed 
 where the notes or bonds do not exceed 95 percent of the 
 appraised value of the security for the same.  Except as 
 modified herein, the other provisions of clause (1)(b) apply. 

    (4) For purposes of this subdivision, real estate is deemed 
 unencumbered if the only existing mortgage or lien against the 
 real estate is a first mortgage lien in favor of the savings 
 bank making a second mortgage loan or if the total unpaid 
 aggregate of all outstanding liens against the same real estate 
 does not exceed 80 percent of its appraised value. 

    (5) Renegotiable rate notes or bonds secured by mortgages 
 or trust deeds where the notes or bonds do not exceed 95 percent 
 of the appraised value of the security for the same. 

    For the purposes of this clause, a renegotiable rate 
 mortgage loan is a loan issued for a term of three years to five 
 years, secured by a mortgage maturing in not to exceed 30 years, 
 and automatically renewable at equal intervals after the 
 original loan term which may be up to six months shorter or 
 longer than subsequent terms.  The loan must be repayable in 
 equal monthly installments of principal and interest during the 
 loan term, in an amount at least sufficient to amortize a loan 
 with the same principal and at the same interest rate over the 
 remaining life of the mortgage. 

    In the mortgage documents, the savings bank must grant to 
 the borrower an option to renew the loan for a new term, but not 
 beyond the maturity date of the mortgage, at a new interest rate 
 which shall be the savings bank's current market rate of 
 interest on similar loans determined 60 days before the due date 
 of the loan:  provided, that the maximum interest rate increase 
 shall be equal to one-half of one percent per year multiplied by 
 the number of years in the loan term with a maximum net increase 
 of five percent over the life of the mortgage.  Interest rate 
 increases are optional with the savings bank; net decreases from 
 the previous loan term are mandatory. 

    The borrower may not be charged costs connected with the 
 renewal of the loan. 

    Sixty days before the due date of the loan, the savings 
 bank shall send a written notification to the borrower 
 containing the following information:  (i) The date on which the 
 entire balance of borrower's loan is due and payable; (ii) a 
 statement that the loan will be renewed automatically by the 
 savings bank at the rate specified in the notice unless the 
 borrower pays the loan by the due date; (iii) the amount of the 
 monthly payment, calculated according to the new rate determined 
 at the time of notice; (iv) a statement that the borrower may 
 prepay the loan without penalty at any time after the original 
 loan becomes due and payable; and (v) the name and phone number 
 of a savings bank employee who will answer the borrowers' 
 questions concerning the information in the notice. 

    An applicant for a renegotiable rate mortgage loan must be 
 given, at the time an application is requested, written 
 disclosure materials prepared in reasonably simple terms that 
 contain at least the following information:  (i) An explanation 
 of how a renegotiable rate mortgage differs from a standard 
 fixed rate mortgage; (ii) an example of a renegotiable rate 
 mortgage indicating the maximum possible interest rate increase 
 and monthly payment calculated on that rate at the time of the 
 first renewal; and (iii) an explanation of how the savings bank 
 determines what the rate will be at the end of each loan term. 

    (6) An investment in notes or bonds secured by mortgages or 
 trust deeds on real estate in fee or in a leasehold may exceed 
 the 80 percent requirement in paragraph (1), clause (b), and the 
 95 percent requirement in paragraph (2), if the amount of the 
 loan in excess of those limits is insured or guaranteed by a 
 private mortgage insurer that the Federal Home Loan Mortgage 
 Corporation or the Federal National Mortgage Association has 
 determined to be a qualified private insurer. 

    Subd. 6.  Class five shall be notes secured by such bonds 
 or mortgages, as the bank under this section is authorized to 
 invest in, but no such bond or mortgage shall be taken as 
 collateral security for more than its par value, nor shall the 
 aggregate amount of securities taken be less than the full 
 amount loaned thereon, and no such loan shall be made for a 
 longer time than one year, nor to a greater amount to any one 
 person than three percent of the total deposits of the bank.  No 
 such bank shall loan in the aggregate, on the security specified 
 in this paragraph, more than one-fourth of its deposits. 

    Subd. 7.  Class six shall be the "eligible obligations" of 
 "qualifying railroad corporations," both as hereinafter defined. 

    (a) A "qualifying railroad corporation" shall be one which 
 at the time of investment 

    (1) Shall have been incorporated under the laws of the 
 United States or of any state thereof or of the District of 
 Columbia, and 

    (2) Shall own or operate within the United States not less 
 than 500 miles of standard gauge railroad lines exclusive of 
 sidings, or shall have had, for its five preceding fiscal years, 
 average gross railway operating revenues of at least $10,000,000 
 annually, or shall own or operate railroad terminal property 
 located in a city within the United States having at least 
 200,000 population, and 

    (3) Shall not have been in default in the payment of any 
 part of the principal or interest owing by it upon any part of 
 its funded indebtedness, at any times during its current fiscal 
 year and its five consecutive fiscal years immediately prior 
 thereto, except that if the corporation shall have been 
 reorganized in receivership or bankruptcy within such period 
 such corporation shall not have been in such default since the 
 effective date of reorganization, and 

    (4) Shall not have fixed interest obligations in excess of 
 60 percent of the total sum of (a) its fixed interest 
 obligations, (b) obligations, if any, bearing interest on a 
 contingent basis, (c) preferred stock, if any, at par or stated 
 value, (d) common stock at par or stated value and (e) earned 
 surplus, and 

    (5) Shall have had net earnings (a) in its five fiscal 
 years immediately preceding time of purchase, of an average 
 annual amount not less than 1-1/2 times the fixed charges of the 
 year immediately preceding time of purchase, and (b) in four of 
 its five fiscal years immediately preceding time of purchase and 
 in its fiscal year immediately preceding time of purchase, not 
 less than the fixed charges of those respective years, except 
 that if the corporation shall have been reorganized in 
 receivership or bankruptcy within such period, its net earnings 
 for each year shall have been not less than the fixed charges of 
 the reorganized company.  As used herein "net earnings" shall be 
 defined as gross operating and nonoperating income of a railroad 
 corporation or its predecessor corporation, minus traffic and 
 transportation expenses, maintenance, depreciation, rent of 
 equipment and joint facilities, and other operating expenses, 
 and taxes excluding income and profits taxes.  As used herein 
 "fixed charges" shall be defined as interest on debt on which 
 there is an unqualified obligation to pay interests, leased line 
 rentals and amortization of debt discount and expense, except 
 that if a corporation has been reorganized in receivership or 
 bankruptcy within five years prior to time of purchase "fixed 
 charges" shall be the fixed charges of the reorganized company. 

    (b) "Eligible obligations" shall be bonds, notes or other 
 obligations which 

    (1) Shall have been issued by a qualifying railroad 
 corporation, or shall have been assumed or guaranteed as to 
 principal and interest by a qualifying railroad corporation, and 

    (2) Shall bear interest at a fixed rate, and 

    (3) Shall have a definite maturity date, and 

    (4) Shall be secured by either (a) a lien upon railroad 
 lines which shall be a first lien upon at least two-thirds of 
 the total mileage covered by such lien and upon at least 100 
 miles of main lines or (b) a first mortgage or lien on railroad 
 terminal property and assumed or guaranteed as to principal and 
 interest by two or more qualifying railroad corporations. 

    (c) No savings bank shall invest in securities of class six 
 to an amount exceeding in the aggregate 15 percent of its 
 deposits; nor in securities of class six secured by lien upon 
 railroad lines, issued, guaranteed, or assumed by any one 
 railroad corporation to an amount exceeding two percent of its 
 deposits; nor in securities of class six secured by lien upon 
 any one railroad terminal property to an amount exceeding one 
 percent of its deposits. 

    The requirements set forth herein governing investments in 
 securities under this subdivision shall affect only those 
 securities acquired after the effective date of Laws 1945, 
 chapter 140. 

    Subd. 8.  Class seven shall be farm loan bonds issued by 
 any federal land bank, or by a joint stock land bank in the 
 federal reserve district in which Minnesota is situated, in 
 accordance with the provisions of an act of Congress of the 
 United States of July 17, 1916, known and designated as "The 
 Federal Farm Loan Act," and acts amendatory thereto; stocks, 
 bonds, and obligations of the Federal Home Loan Banks 
 established by act of Congress known as the Federal Home Loan 
 Bank Act approved July 22, 1932, and acts amendatory thereto; 
 and bonds issued by the federal land banks, federal intermediate 
 credit banks, and the banks for cooperatives in accordance with 
 the provisions of an act of Congress of the United States known 
 as the Farm Credit Act of 1971, and acts amendatory thereto. 

    Subd. 9.  Class eight shall be bankers' acceptances of the 
 kind and character following: 

    (a) Bankers acceptances of the kind and maturities made 
 eligible by law for rediscount with or purchase by federal 
 reserve banks, providing the same are accepted or endorsed by a 
 bank, or trust company incorporated under the laws of this 
 state; or by any bank or trust company in the United States 
 which is a member of the federal reserve system. 

    (b) Not more than 20 percent of the assets of any savings 
 bank shall be invested in such acceptances.  Not more than seven 
 percent of the aggregate amount credited to the depositors of 
 any savings bank shall be invested in the acceptances of or 
 deposited with a trust and banking company or with a national 
 bank of which a trustee of such savings bank is a director. 

    Subd. 10.  Class nine shall be railroad equipment trust 
 obligations, comprising bonds, notes or certificates, which when 
 issued are secured by new standard gauge rolling stock purchased 
 or leased by any railroad incorporated in the United States or 
 in Canada, or by the receiver or trustee of any such railroad, 
 or by any corporation engaged in the business of leasing or 
 furnishing railroad rolling stock, provided, that the entire 
 issue of such obligations: 

    (a) Is required to be paid, in United States dollars within 
 the United States, within 15 years from date of issue in 
 approximately equal annual or semiannual installments commencing 
 not later than three years after the date of issue, and 

    (b) Is of an aggregate amount not exceeding 80 percent of 
 the cost of the equipment securing such issue; but if issued 
 originally in an amount which exceeded such 80 percent, then 
 investment in the obligations of such issue shall nevertheless 
 be authorized as soon as or at any time after all the unpaid 
 obligations of such issue are reduced to or are less than 50 
 percent of the cost of the equipment securing such issue. 

    Subd. 11.  Class ten shall be the bonds of any corporation 
 which at the time of such investment is incorporated under the 
 laws of the United States or any state thereof, or the District 
 of Columbia, and transacting the business of supplying 
 electrical energy, or artificial gas, or natural gas purchased 
 from another corporation and supplied in substitution for or in 
 mixture with artificial gas, for light, heat, power and other 
 purposes, or transacting any or all of such business, provided 
 that at least 75 percent of the gross operating revenues of any 
 such corporation are derived from such business and that not 
 more than 15 percent of the gross operating revenues are derived 
 from any one kind of business other than supplying electricity 
 or gas or electricity and gas, and provided further that such 
 corporation, if operating outside of Minnesota, is subject to 
 regulation by a public utilities commission or public utility 
 commissioner or other similar regulatory body duly established 
 by the laws of the United States or the states or state in which 
 such corporation operates, subject to the following conditions: 

    (a) Such corporation shall have all franchises necessary to 
 operate in the territory in which at least 75 percent of its 
 gross income is earned, which franchises either shall be 
 indeterminate permits or agreements with, or subject to the 
 jurisdiction of, a public utilities commission or other duly 
 constituted regulatory body, or shall extend at least five years 
 beyond the maturity of such bonds, and such corporation shall 
 file with the commissioner of commerce or make public each year 
 a statement and a report giving the income account covering the 
 previous fiscal year and the balance sheet showing in reasonable 
 detail the assets and liabilities at the end of such fiscal year.

    (b) The book value of the outstanding capital stock of such 
 corporation shall at the time of such investment be equal to at 
 least two-thirds of its total funded debt. 

    (c) Such corporation shall have been in existence for a 
 period of not less than eight fiscal years and at no time within 
 such period of eight fiscal years next preceding the date of 
 such investment shall said corporation have failed to pay 
 promptly and regularly the matured principal and interest of all 
 its indebtedness direct, assumed or guaranteed, but the period 
 of life of the corporation, together with the period of life of 
 any predecessor corporation or corporations from which a 
 substantial portion of its property was acquired by 
 consolidation, merger, purchase, or as a successor corporation, 
 shall be considered together in determining the required period. 

    (d) For a period of five fiscal years next preceding the 
 date of such investment the net earnings of such corporation 
 shall have been each year not less than twice the annual 
 interest charges on its total funded debt applicable to that 
 period, and for such period the gross operating revenues of any 
 such corporation shall have averaged per year not less than 
 $1,000,000. 

    (e) In determining the qualifications of any bond under 
 this subdivision where a corporation shall have acquired its 
 property or any substantial portion thereof within five years 
 immediately preceding the date of such investment by 
 consolidation, merger, purchase or as a successor corporation, 
 the gross operating revenues, net earnings and interest charges 
 of the predecessor or constituent corporations shall be 
 consolidated and adjusted so as to ascertain whether the 
 requirements of paragraph (d) have been complied with. 

    (f) The gross operating revenues and expenses of a 
 corporation for the purpose of this subdivision shall be 
 respectively the total amount earned from the operation of, and 
 the total expense of maintaining and operating, all property 
 owned and operated or leased and operated by such corporation, 
 as determined by the system of accounts prescribed by the public 
 utility commission or other similar regulatory body having 
 jurisdiction in the matter.  The gross operating revenues and 
 expenses, as defined above, of subsidiary companies must be 
 included, provided that all the mortgage bonds and a controlling 
 interest in stock or stocks of such subsidiary companies are 
 pledged as part security for the mortgage debt of the principal 
 corporation. 

    (g) The net earnings of a corporation for the purpose of 
 this subdivision shall be the balance obtained by deducting from 
 its gross operating revenues its operating and maintenance 
 expenses, taxes other than federal and state income taxes, 
 rentals, depreciation and provision for renewals and retirements 
 of the physical assets of the corporation, and by adding to said 
 balance its income from securities and miscellaneous sources, 
 but not, however, to exceed 15 percent of said balance.  The 
 term "funded debt" shall be construed to mean all 
 interest-bearing debt excepting therefrom unsecured obligations 
 maturing within one year of date of issue. 

    (h) Such bonds must be part of an original issue of not 
 less than $1,000,000 and must be mortgage bonds secured by a 
 first or refunding mortgage secured by property owned and 
 operated by the corporation issuing or assuming them, or must be 
 underlying mortgage bonds secured by property owned and operated 
 by the corporation issuing or assuming them, provided that such 
 bonds are to be refunded by a junior mortgage providing for 
 their retirement and provided further that the bonds under such 
 junior mortgage comply with the requirements of this subdivision 
 and that such underlying mortgage either is a closed mortgage or 
 remains open solely for the issuance of additional bonds which 
 are to be pledged under such junior mortgage.  The aggregate 
 principal amount of bonds secured by such first or refunding 
 mortgage plus the principal amount of all the underlying 
 outstanding bonds shall not exceed 60 percent of the value of 
 the physical property owned as shown by the books of the 
 corporation and subject to the lien of such mortgage or 
 mortgages securing the total mortgage debt, provided that if a 
 refunding mortgage, it must provide for the retirement on or 
 before the date of their maturity of all bonds secured by prior 
 liens on the property.  No such savings bank shall loan upon or 
 invest in bonds of such public utility companies in an amount 
 exceeding in the aggregate ten percent of its deposits and 
 surplus, nor exceeding five percent thereof in the bonds of any 
 one public utility company. 

    Subd. 12.  Class eleven shall be the bonds of any 
 corporation which at the time of such investment is incorporated 
 under the laws of the United States or any state thereof, or the 
 District of Columbia, and authorized to engage, and engaging, in 
 the business of furnishing telephone service in the United 
 States, provided that such corporation is subject to regulation 
 by a public utility commission or similar federal or state 
 regulatory body duly established by the laws of the United 
 States or the states or state in which such corporation 
 operates, subject to the following conditions: 

    (a) Such corporation shall have been in existence for a 
 period of not less than eight fiscal years and at no time within 
 such period of eight fiscal years next preceding the date of 
 such investment shall said corporation have failed to pay 
 promptly and regularly the matured principal and interest of all 
 its indebtedness direct, assumed or guaranteed, but the period 
 of life of the corporation, together with the period of life of 
 any predecessor corporation or corporations from which a 
 substantial portion of its property was acquired by 
 consolidation, merger, purchase or as a successor corporation, 
 shall be considered together in determining the required period; 
 and such corporation shall file with the commissioner of 
 commerce or make public in each year a statement and a report 
 giving the income account covering the previous fiscal year and 
 the balance sheet showing in reasonable detail the assets and 
 liabilities at the end of such fiscal year. 

    (b) The book value of the outstanding capital stock of such 
 corporation shall at the time of such investment be equal to at 
 least two-thirds of its total funded debt. 

    (c) For a period of five fiscal years next preceding the 
 date of such investment the net earnings of such corporation 
 shall have been each year not less than twice the annual 
 interest charges on its total funded debt applicable to that 
 period, and for such period, the gross operating revenues of any 
 such corporation shall have averaged per year not less than 
 $5,000,000. 

    (d) In determining the qualifications of any bond under 
 this subdivision where a corporation shall have acquired its 
 property or any substantial portion thereof within five years 
 immediately preceding the date of such investment by 
 consolidation, merger, purchase or as a successor corporation, 
 the gross operating revenues, net earnings and interest charges 
 of the predecessor or constituent corporations shall be 
 consolidated and adjusted so as to ascertain whether the 
 requirements of paragraph (c) have been complied with. 

    (e) The gross operating revenues and expenses of a 
 corporation for the purpose of this subdivision shall be 
 respectively the total amount earned from the operation of, and 
 the total expense of maintaining and operating, all property 
 owned and operated or leased and operated by such corporation, 
 as determined by the system of accounts prescribed by the public 
 utility commission or similar federal or state regulatory body 
 having jurisdiction in the matter. 

    (f) The net earnings of a corporation for the purpose of 
 this subdivision shall be the balance obtained by deducting from 
 its gross operating revenues its operating and maintenance 
 expenses, taxes, other than federal and state income taxes, 
 rentals, depreciation and provision, for renewals and 
 retirements of the physical assets of the corporation, and by 
 adding to said balance its income from securities and 
 miscellaneous sources, but not, however, to exceed 15 percent of 
 said balance.  The term "funded debt" shall be construed to mean 
 all interest-bearing debt excepting therefrom unsecured 
 obligations maturing within one year of date of issue. 

    (g) Such bonds must be a part of an original issue or of a 
 subsequent series of bonds of the aggregate amount of not less 
 than $5,000,000, both the original issue and the subsequent 
 series being protected by the same mortgage provisions, and must 
 be secured by a first or refunding mortgage, and the aggregate 
 principal amount of bonds secured by such first or refunding 
 mortgage plus the principal amount of all the underlying 
 outstanding bonds shall not exceed 60 percent of the value of 
 the property, real and personal, owned absolutely as shown by 
 the books of the corporation and subject to the lien of such 
 mortgage, provided that if a refunding mortgage, it must provide 
 for the retirement of all bonds secured by prior liens on the 
 property.  Not more than 33-1/3 percent of the property 
 constituting the specific security for such bonds may consist of 
 stock or unsecured obligations of affiliated or other telephone 
 companies, or both.  No such savings banks shall loan upon or 
 invest in bonds of such telephone companies in an amount 
 exceeding in the aggregate ten percent of its deposits and 
 surplus, nor exceeding five percent thereof in the bonds of any 
 one telephone company. 

    Subd. 13.  Class twelve shall be:  (a) bonds and 
 obligations of the Federal Home Loan Banks established by Act of 
 Congress known as the Federal Home Loan Bank Act, approved July 
 23, 1932, and Acts amendatory thereto, and in bonds and 
 obligations of the Home Owners' Loan Corporation established by 
 Act of Congress known as the Home Owners' Loan Act of 1933, and 
 Acts amendatory thereto; 

    (b) certificates of deposits of any bank or trust company, 
 however organized, the deposits of which are insured in whole or 
 in part by the Federal Deposit Insurance Corporation, to the 
 extent that such certificates of deposit are fully insured; 

    (c) loans secured by its own passbooks or other evidences 
 of indebtedness; 

    (d) shares, accounts, or certificates of any savings 
 association, however organized, the accounts of which are 
 insured in whole or in part by the federal savings and loan 
 insurance corporation, to the extent that such shares, accounts, 
 or certificates are fully insured. 

    Subd. 14.  (a) The district court, upon petition of a 
 trustee under a will or other instrument may, if the trust does 
 not otherwise provide, authorize the trustee to invest the 
 income or principal of the trust fund in policies of life or 
 endowment insurance or annuity contracts issued by a life 
 insurance company duly authorized to transact business in the 
 state, on the life of any beneficiary of the trust or on the 
 life of any person in whose life such beneficiary has an 
 insurable interest. 

    (b) The district court, upon the application of a guardian, 
 may authorize the guardian to invest income or principal of the 
 estate of the ward in policies of life or endowment insurance or 
 annuity contracts, issued by a life insurance company duly 
 authorized to transact business in the state, on the life of the 
 ward or on the life of a person in whose life the ward has an 
 insurable interest. 

    Subd. 15.  Class thirteen shall be obligations payable in 
 United States dollars issued or fully guaranteed by 
 International Bank for Reconstruction and Development. 

    Subd. 16.  Class fourteen shall be obligations payable in 
 United States dollars issued or fully guaranteed by the Asian 
 Development Bank. 

    Subd. 17.  Class fifteen shall be obligations payable in 
 United States dollars issued or fully guaranteed by the 
 Inter-American Development Bank. 

    Subd. 18.  Class sixteen shall be obligations payable in 
 United States dollars issued or fully guaranteed by the African 
 Development Bank.  

    HIST: (7714) RL s 3022; 1907 c 468 s 7,8; 1913 c 124 s 1; 1913 
 c 506 s 1; 1917 c 88 s 1; 1919 c 181 s 1; 1923 c 421 s 1; 1927 c 
 368 s 1; 1927 c 422 s 1; 1931 c 296 s 1; 1933 c 256 s 1,2; 1933 
 c 307 s 1; 1933 c 368 s 1; Ex1934 c 50 s 1; 1939 c 105 s 1; 1939 
 c 141 s 1; 1939 c 409 s 1; 1941 c 380 s 1-3; 1943 c 197 s 1; 
 1943 c 635 s 6; 1945 c 140 s 1; 1951 c 344 s 1; 1953 c 261 s 1; 
 1953 c 496 s 1; 1957 c 601 s 22; 1959 c 88 s 15; 1959 c 601 s 1; 
 1961 c 298 s 5,6; 1963 c 153 s 10; 1965 c 46 s 2; 1965 c 315 s 
 1; 1969 c 51 s 1; 1973 c 123 art 5 s 7; 1973 c 426 s 1; 1973 c 
 497 s 2; 1974 c 27 s 1; 1974 c 64 s 1-3; 1976 c 2 s 33; 1977 c 5 
 s 1; 1978 c 674 s 11; 1980 c 524 s 1; 1980 c 551 s 1; 1980 c 599 
 s 2; 1980 c 614 s 123; 1980 c 618 s 12; 1Sp1981 c 4 art 2 s 6; 
 1983 c 289 s 114 subd 1; 1984 c 382 s 2; 1984 c 655 art 1 s 92; 
 1986 c 444; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s 20; 1990 
 c 480 art 9 s 2; 1995 c 171 s 41-44; 1995 c 189 s 8; 1995 c 202 
 art 1 s 25; 1996 c 277 s 1; 2003 c 2 art 4 s 1