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Minnesota Legislature

Office of the Revisor of Statutes

48.61 AUTHORIZED INVESTMENTS FOR STATE BANKS AND TRUST COMPANIES.
    Subdivision 1. Agricultural credit corporations. Any bank or trust company organized
under the laws of this state is authorized to invest not to exceed 20 percent of its capital and
surplus in the capital stock of any agricultural credit corporation organized under the laws of this
state, and entitled to discount privileges with any federal intermediate bank organized under the
laws of the United States.
    Subd. 2. Small business investment companies. Any such bank or trust company may invest
not to exceed five percent of its capital and surplus in shares of stock in small business investment
companies organized under the provisions of the Small Business Investment Act of 1958.
    Subd. 3. Banks or bank holding companies. The bank or trust company may invest not
to exceed ten percent of its capital and surplus in shares of stock in any banks or bank holding
companies wherein the stock of the banks or bank holding companies is (1) owned exclusively
by bank holding companies or banks, and (2) at least 51 percent of the voting stock is owned or
controlled by bank holding companies or banks authorized to do business in the state of Minnesota.
    Subd. 4. Limited partnerships, limited liability companies, corporations, or community
welfare projects. Any such bank or trust company may make equity or debt investments in
limited partnerships, limited liability companies, corporations, or projects designed primarily to
promote community welfare, such as the rehabilitation or development of economically depressed
residential, commercial, or industrial areas. A bank or trust company investment in any one
limited partnership, limited liability company, corporation, or project shall not exceed five percent
of its capital and surplus and its aggregate investment in all such limited partnerships, limited
liability companies, corporations, or projects shall not exceed ten percent of its capital and surplus.
    Subd. 5. Investment companies. In the absence of an express provision to the contrary,
whenever any statute, rule, charter, trust indenture, authorizing resolution, or other instrument
governing the investment of funds of a banking institution, as defined in section 48.01, subdivision
2
, directs, requires, authorizes, or permits direct investment in certain obligations, investment in
these obligations may be made either directly or in the form of securities of, or other interests in,
an investment company registered under the Federal Investment Company Act of 1940, whose
shares are registered under the Federal Securities Act of 1933.
Shares of investment companies whose portfolios contain investments which are subject
to limits under other state law or rule as direct investments may only be held in an amount not
in excess of 20 percent of the banks' capital stock and paid in surplus in each such investment
company. These obligations shall be carried at the lower of cost or market on the banks' books
and adjusted to market on a quarterly basis.
    Subd. 6. Federal Agricultual Mortgage Corporation. Any bank may invest in the voting
stock of the Federal Agricultural Mortgage Corporation created pursuant to the Agricultural
Credit Act of 1987, Public Law 100-233, in an amount not to exceed the greater of ten percent
of the bank's capital and surplus or the amount required by the Federal Agricultural Mortgage
Corporation for the bank to qualify for its participation in the corporation's programs.
    Subd. 7. Subsidiaries. (a) A state bank or trust company may organize, acquire, or invest in
a subsidiary located in this state for the purposes of engaging in one or more of the following
activities, subject to the prior written approval of the commissioner:
(1) any activity, not including receiving deposits or paying checks, that a state bank is
authorized to engage in under state law or rule or under federal law or regulation unless the
activity is prohibited by the laws of this state;
(2) any activity that a bank clerical service corporation is authorized to engage in under
section 48.89; and
(3) any other activity authorized for a national bank, a bank holding company, or a
subsidiary of a national bank or bank holding company under federal law or regulation of general
applicability, and approved by the commissioner.
(b) A bank or trust company subsidiary may engage in an activity under this section only
upon application together with a filing fee of $250 and with the prior written approval of the
commissioner. In approving or denying a proposed activity, the commissioner shall consider the
financial and management strength of the bank or trust company, the current written operating
plan and policies of the proposed subsidiary corporation, the bank or trust company's community
reinvestment record, and whether the proposed activity should be conducted through a subsidiary
of the bank or trust company.
(c) The aggregate amount of funds invested in either an equity or loan capacity in all of the
subsidiaries of the bank or trust company authorized under this subdivision shall not exceed 50
percent of the capital stock and paid in surplus of the bank or trust company.
(d) A subsidiary organized or acquired under this subdivision is subject to the examination
and enforcement authority of the commissioner under chapters 45 and 46 to the same extent as a
state bank or trust company.
(e) For the purposes of this section, "subsidiary" means a corporation of which at least 20
percent of the voting shares are owned or controlled by the bank or trust company.
    Subd. 8. Parity with national banks. A state bank or trust company may invest in any
securities that are authorized investments for national banks on May 27, 1989, subject to the same
restrictions as apply to national banks. The commissioner may authorize a state bank or trust
company to invest in any securities that become authorized investments for national banks after
May 27, 1989, subject to the same restrictions as apply to national banks. This authority is in
addition to the investment authority granted to state banks under other provisions of state law.
    Subd. 9. Merger with subsidiaries; authority. (a) Notwithstanding any other law to the
contrary, a bank may merge a subsidiary authorized and established according to this section into
itself if it owns 100 percent of the outstanding voting stock.
(b) A merger of a subsidiary authorized by subdivision 1 must conform to the procedures
in section 302A.621.
(c) Before filing the articles of merger with the secretary of state, the merger plan must be
filed with and approved in writing by the commissioner who shall determine that:
(1) the provisions of section 302A.621 are followed; and
(2) the merger will not have an undue adverse effect on the safety and soundness of the bank.
    Subd. 10. Subsidiaries organized for purposes of corporate reorganization. A subsidiary
may be organized solely for purposes of liquidating assets in a reorganization subject to the
following conditions:
(1) the subsidiary must be a bank holding company whose assets and liabilities and
subsidiary bank control have been removed; and
(2) the operations of the subsidiary must be limited to the time period reasonably related to
the completion of the reorganization.
History: (7677-1) 1935 c 174; 1963 c 153 s 9; 1969 c 772 s 6; 1974 c 421 s 1; 1980 c 445 s
1; 1981 c 116 s 1; 1982 c 632 s 2; 1985 c 187 s 1; 1985 c 248 s 70; 1987 c 349 art 1 s 17,18;
1988 c 631 s 4; 1989 c 129 s 2; 1989 c 341 art 2 s 1; 1993 c 257 s 21-23; 1995 c 202 art 1 s 10;
art 2 s 19; 1997 c 157 s 28,29; 2001 c 56 s 6