§412:9-409  Permitted investments.  (a) To the extent specified in this subsection, a depository financial servicesloan company may invest its own assets in:

(1)  Securities and obligations of the United Statesgovernment and any agency of the United States government whose debtobligations are fully and explicitly guaranteed as to the timely payment ofprincipal and interest by the full faith and credit of the United States,including without limitation Federal Reserve Banks, the Government National MortgageAssociation, the Department of Veterans Affairs, the Federal HousingAdministration, the United States Department of Agriculture, the Export-ImportBank, the Overseas Private Investment Corporation, the Commodity CreditCorporation, and the Small Business Administration;

(2)  Bonds, notes, mortgage backed securities, andother debt obligations of the Federal Home Loan Mortgage Corporation, theFederal National Mortgage Association, and the Federal Home Loan Banks;

(3)  Securities and obligations of United Statesgovernment-sponsored agencies which are originally established or chartered bythe United States government to serve public purposes specified by the Congressbut whose debt obligations are not explicitly guaranteed by the full faith andcredit of the United States, including without limitation Banks forCooperatives, the Federal Agricultural Mortgage Corporation, Federal FarmCredit Banks, Federal Intermediate Credit Banks, Federal Land Banks, theFinancing Corporation, the Resolution Funding Corporation, the Student LoanMarketing Association, the Tennessee Valley Authority, the United States PostalService, and securities and obligations of the Federal Home Loan MortgageCorporation, the Federal National Mortgage Association, and the Federal HomeLoan Banks that are not bonds, notes, mortgage backed securities, or other debtobligations of the Federal Home Loan Mortgage Corporation, the Federal NationalMortgage Association, and the Federal Home Loan Banks; provided that the totalamount invested in obligations of any one issuer shall not exceed twenty percent of the depository financial services loan company's capital and surplus;and

(4)  Securities and obligations of quasi-United Statesgovernmental institutions, including without limitation the International Bankfor Reconstruction and Development (World Bank), the Inter-American DevelopmentBank, the Asian Development Bank, the African Development Bank, the EuropeanInvestment Bank, and other multilateral lending institutions in which the UnitedStates government is a shareholder or contributing member; provided that thetotal amount invested in any one issuer shall not exceed twenty per cent of thedepository financial services loan company's capital and surplus.

(b)  A depository financial services loancompany may invest its own assets in bonds, securities, or similar obligationsissued by this State or any county of this State, through an appropriate agencyor instrumentality.

(c)  To the extent specified in thissubsection, a depository financial services loan company may invest its ownassets in bonds or similar obligations issued by any state of the United Statesother than this State, the District of Columbia, or any territory or possessionof the United States, by municipal governments of these states, territories, orpossessions, or by any foreign country or political subdivision of thatcountry; provided that:

(1)  The bond, note, or warrant has been issued incompliance with the constitution and laws of that government;

(2)  There has been no default in payment of eitherprincipal or interest on any of the general obligations of that government fora period of five years immediately preceding the date of the investment; and

(3)  The total amount invested in the obligations ofany one issuer by a depository financial services loan company shall not exceedtwenty per cent of the depository financial services loan company's capital andsurplus.

(d)  To the extent specified in thissubsection, a depository financial services loan company may invest its ownassets in notes, bonds, and other obligations of any corporation which at thetime of the investment is incorporated under the laws of the United States orany state or territory thereof or the District of Columbia; provided that the aggregateamount invested by a depository financial services loan company under thissubsection and subsections (e) and (g)(3) in any one corporation shall notexceed twenty per cent of the depository financial services loan company'scapital and surplus.

(e)  To the extent specified in thissubsection, a depository financial services loan company may invest its ownassets in securities of investment grade quality.  The term "investmentgrade" means notes, bonds, certificates of interest or participation, beneficialinterests, mortgage or receivable-related securities, and other obligationsthat are commonly understood to be of investment grade quality including,without limitation, those securities that are rated within the four highestgrades by any nationally-recognized rating service or unrated securities ofsimilar quality as reasonably determined by the depository financial servicesloan company in its prudent judgment, which may be based in part upon estimateswhich it believes to be reliable.  Investment grade does not includeinvestments which are predominantly speculative in nature.  The aggregateamount invested by a depository financial services loan company under thissubsection and subsections (d) and (g)(3) in any one company or other issuer shallnot exceed twenty per cent of the depository financial services loan company'scapital and surplus.  Subject to the approval of the commissioner, the twentyper cent limitation shall not apply to investment grade securities securedentirely by mortgage loans originated by the depository financial services loancompany.  In approving any transaction under this section, the commissioner mayimpose any conditions to ensure the safety and soundness of the institution.

(f)  To the extent specified in this subsection,a depository financial services loan company may purchase, hold, convey, sell,or lease real or personal property as follows:

(1)  The real property in or on which the business ofthe depository financial services loan company is carried on, other space inthe same property to rent as a source of income; permanent or vacationresidences or recreational facilities for its officers and employees; otherreal property necessary for the accommodation of the depository financialservices loan company's business, including but not limited to parkingfacilities, data processing centers, and real property held for future usewhere the depository financial services loan company in good faith expects toutilize the property as depository financial services loan company premises;provided, if the depository financial services loan company ceases to use anyreal property and improvements thereon for one of the foregoing purposes, it,within five years thereafter, shall sell the real property or cease to carry itas an asset; provided further, the property, without the approval of thecommissioner, shall not exceed seventy-five per cent of the depositoryfinancial services loan company's capital and surplus;

(2)  Personal property used in or necessary for theaccommodation of the depository financial services loan company's business,including but not limited to furniture, fixtures, equipment, vaults, and safetydeposit boxes; provided that the depository financial services loan company'sinvestment in furniture and fixtures, without the approval of the commissioner,shall not exceed twenty-five per cent of the depository financial services loancompany's capital and surplus;

(3)  Personal property and fixtures which thedepository financial services loan company acquires for purposes of leasing tothird parties and any real property interests that is incidental thereto;

(4)  Any real property or tangible personal propertythat may come into its possession as security for loans or in the collection ofdebts; or that may be purchased by or conveyed to the depository financialservices loan company in satisfaction of or on account of debts previouslycontracted in the course of its business, when the property was held assecurity by the depository financial services loan company; and

(5)  The seller's interest under an agreement of sale,as that term is defined in sections 501-101.5 and 502-85 including, withoutlimitation, the reversionary interest in the real property and the right toincome under the agreement of sale, with or without recourse to the seller.

Except as otherwise authorized in this section,any tangible personal property coming into the possession of any depositoryfinancial services loan company pursuant to paragraph (4) shall be disposed ofas soon as practicable and, without the written consent of the commissioner,shall not be considered a part of the assets of the depository financialservices loan company after the expiration of two years from the date ofacquisition.

Except as otherwise authorized in this section,any real property acquired by a depository financial services loan companypursuant to paragraph (4) shall be sold or exchanged for other real property bythe depository financial services loan company within five years after title theretohas vested in it by purchase or otherwise, or within any further time that maybe extended by the commissioner.

Any depository financial services loan companyacquiring any real property in any manner other than provided by this sectionimmediately, upon receiving notice from the commissioner, shall charge the sameto profit and loss, or otherwise remove the same from the assets, and when anyloss impairs the capital and surplus of the depository financial services loancompany, the impairment shall be made good in the manner provided in thischapter.

(g)  To the extent specified in thissubsection, a depository financial services loan company may invest its ownassets in capital stock of:

(1)  Service corporations as set forth in thisarticle;

(2)  A corporation whose stock is acquired orpurchased to save a loss on a preexisting debt secured by the stock; provided,that the stock shall be sold within twelve months of the date acquired orpurchased, or within any further time that may be granted by the commissioner;

(3)  Companies listed on the New York or Americanstock exchanges or on the National Association of Securities Dealers AutomatedQuotations; provided that the aggregate amount invested by a depositoryfinancial services loan company under this paragraph and subsections (d) and(e) in any one corporation shall not exceed twenty per cent of the depositoryfinancial services loan company's capital and surplus.

(h)  To the extent specified in thissubsection, a depository financial services loan company may invest its ownassets in securities issued by a diversified investment management company (asdefined in the Investment Company Act of 1940), commonly known as a diversifiedmutual fund.  The fund must have been in existence for at least five years. The aggregate amount invested by a depository financial services loan companyunder this subsection in any one diversified mutual fund shall not exceedtwenty per cent of the depository financial services loan company's capital andsurplus.

(i)  To the extent specified herein, adepository financial services loan company may invest its own assets in limitedpartnerships, limited liabilitypartnerships, limited liability companies, or corporations formed toinvest in residential properties that will qualify for the low income housingtax credit under section 42 of the Internal Revenue Code of 1986, as amended,and under chapters 235 and 241; provided that the total amount invested by adepository financial services loan company under this subsection in any onelimited partnership, limited liabilitypartnership, limited liability company, or corporation shall not,without the prior approval of the commissioner, exceed two per cent of thedepository financial services loan company's capital and surplus and theaggregate amount invested under this subsection shall not, without the priorapproval of the commissioner, exceed five per cent of the depository financialservices loan company's capital and surplus.  In no case shall the aggregateamount invested by a depository financial services loan company under thissubsection exceed ten per cent of the depository financial services loancompany's capital and surplus. [L 1993, c 350, pt of §1; am L 1995, c 27, §1and c 48, §4; am L 1997, c 258, §18; am L 2001, c 170, §12; am L 2006, c 228,§43; am L 2009, c 107, §6]

 

Revision Note

 

  Subsection (i) redesignated pursuant to §23G-15(1).