Connecticut General Statutes 36a-275 – Investments in debt securities and debt mutual funds
(a) As used in this section, the term “debt securities” means (1) any marketable obligation evidencing indebtedness of any person in the form of direct, assumed or guaranteed bonds, notes or debentures or any security that has attributes similar to such marketable obligations; (2) any obligation identified by certificates of participation in investments described in subdivision (1) of this subsection in which a Connecticut bank could invest directly; or (3) repurchase agreements, and the term “debt mutual fund” means a partnership interest in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, provided the portfolios of such investment companies consist solely of investments described in subdivision (1) of this subsection.
Terms Used In Connecticut General Statutes 36a-275
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bank: means a Connecticut bank or a federal bank. See Connecticut General Statutes 36a-2
- Commissioner: means the Banking Commissioner and, with respect to any function of the commissioner, includes any person authorized or designated by the commissioner to carry out that function. See Connecticut General Statutes 36a-2
- Company: means any corporation, joint stock company, trust, association, partnership, limited partnership, unincorporated organization, limited liability company or similar organization, but does not include (A) any corporation the majority of the shares of which are owned by the United States or by any state, or (B) any trust which by its terms shall terminate within twenty-five years or not later than twenty-one years and ten months after the death of beneficiaries living on the effective date of the trust. See Connecticut General Statutes 36a-2
- Connecticut bank: means a bank and trust company, savings bank or savings and loan association chartered or organized under the laws of this state. See Connecticut General Statutes 36a-2
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Equity capital: means the excess of a Connecticut bank's total assets over its total liabilities, as defined in the instructions of the federal Financial Institutions Examination Council for consolidated reports of condition and income. See Connecticut General Statutes 36a-2
- Governing board: means the group of persons vested with the management of the affairs of a financial institution irrespective of the name by which such group is designated. See Connecticut General Statutes 36a-2
- Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Loan: includes any line of credit or other extension of credit. See Connecticut General Statutes 36a-2
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mutual: when used in conjunction with any institution that is a bank or out-of-state bank means any such institution without capital stock. See Connecticut General Statutes 36a-2
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: means an individual, company, including a company described in subparagraphs (A) and (B) of subdivision (11) of this section, or any other legal entity, including a federal, state or municipal government or agency or any political subdivision thereof. See Connecticut General Statutes 36a-2
- Reserves for loan and lease losses: means the amounts reserved by a Connecticut bank against possible loan and lease losses as shown on the bank's consolidated reports of condition and income. See Connecticut General Statutes 36a-2
- State: means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands. See Connecticut General Statutes 36a-2
(b) In addition to other investments authorized by this part, any Connecticut bank may purchase or hold for its own account debt securities and debt mutual funds without regard to any other liability to the Connecticut bank of the maker, obligor, guarantor or issuer of such debt securities and debt mutual funds, provided: (1) The debt securities and debt mutual funds are rated in the three highest rating categories by a rating service of such securities recognized by the commissioner or, if not so rated, are determined by the bank’s governing board to be a prudent investment; (2) unless the bank obtains the prior approval of the commissioner, the total amount of the debt securities and debt mutual funds of any one maker, obligor or issuer purchased or held by a Connecticut bank or for a Connecticut bank’s account may not exceed, at any time, twenty-five per cent of its total equity capital and reserves for loan and lease losses; and (3) the total amount of any debt securities and debt mutual funds purchased or held by a Connecticut bank or for a Connecticut bank’s account pursuant to this subsection may not exceed at any time twenty-five per cent of its assets.
(c) In addition to other investments authorized by this part, any Connecticut bank may purchase or hold for its own account the following debt securities and debt mutual funds without regard to any other liability to the Connecticut bank of the maker, obligor, guarantor or issuer of such debt securities and debt mutual funds, provided (1) the debt securities and debt mutual funds are rated in the three highest rating categories by a rating service recognized by the commissioner, or, if not so rated, determined by the bank’s governing board to be a prudent investment; (2) unless the bank obtains the prior approval of the commissioner, the total amount of the debt securities and debt mutual funds of any one maker, obligor or issuer purchased or held by a Connecticut bank or for a Connecticut bank’s account may not exceed, at any time, seventy-five per cent of its total equity capital and reserves for loan and lease losses; and (3) the total amount of any debt securities and debt mutual funds purchased or held by a Connecticut bank or for a Connecticut bank’s account pursuant to this subsection may not exceed at any time fifty per cent of its assets:
(A) General obligations of any agency of the United States, including government sponsored enterprises, which are not guaranteed fully as to principal and interest by the United States or for which the full faith and credit of the United States is not pledged for the payment of principal and interest;
(B) Residential mortgage pass-through securities and other residential mortgage-backed securities, including collateralized mortgage obligations and real estate investment conduits that are issued or guaranteed by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, provided said association or corporation is operating at the time of issuance or guarantee under the conservatorship or receivership of the Federal Housing Finance Agency; and
(C) Debt mutual funds, provided the portfolios of the investment companies consist solely of investments described in subparagraphs (A) and (B) of this subdivision.
(d) In addition to other investments authorized by this part, any Connecticut bank may purchase or hold for its own account the following debt securities and debt mutual funds without regard to any other liability to the Connecticut bank of the maker, obligor, guarantor or issuer of such debt securities and debt mutual funds, provided the debt securities and debt mutual funds are rated in the three highest rating categories by a rating service recognized by the commissioner or, if not so rated, determined by the bank’s governing board to be a prudent investment:
(1) The general obligations of the United States or this state;
(2) Securities which are guaranteed fully as to principal and interest by the United States or this state or for which the full faith and credit of the United States or this state is pledged for the payment of principal and interest;
(3) Securities, including repurchase agreements, the principal and interest of which are irrevocably secured by securities described in subdivisions (1) and (2) of this subsection; and
(4) Debt mutual funds, provided the portfolios of the investment companies consist solely of investments described in subdivisions (1) to (3), inclusive, of this subsection.