17-5501.   Powers of association generally.Every association incorporated pursuant to or operating under theprovisions of this act shall have all the powers enumerated, authorizedand permitted by this act and such other rights, privileges and powersas may be incidental to or necessary for the accomplishment of theobjects and purposes of the association. Among others, every associationshall have the following powers: (a) To sue and be sued, complain anddefend in any court of law or equity.

      (b)   To purchase, hold and convey real and personal estate consistentwith its objects and powers; and to mortgage, pledge or lease any realor personal estate; and to take property by gifts, devise or bequest.

      (c)   To have a corporate seal, which may be affixed by imprint,facsimile or otherwise.

      (d)   To appoint officers, agents and employees as its business shallrequire, and allow them suitable compensation.

      (e)   To adopt and amend bylaws as provided in this act.

      (f)   To insure its shares or deposits with the federal savings andloan insurance corporation or with an insurer approved by the statecommissioner of insurance under the provisions of this act for suchpurpose, and qualify as a member of a federal home loan bank.

      (g)   To accept savings and investments as payments on shares ordeposits as provided in this act.

      (h)   Subject to such prohibitions,limitations and conditions as the commissioner may by regulation provide,an association may make loans to members on the security of savings accountsand loans specifically related to transaction accounts.

      (i)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation prescribe, any such association may make home loans onthe security of liens upon residential real property in an amount which,when added to the amount unpaid upon prior mortgages, liens or encumbrances,if any, upon such real estate does not exceed the appraised value thereof. No such loan shall be made directly or indirectly to a director or officerexcept a single loan on a home property.

      (j)   Oneloan may be made to an officer, director or employee,in addition to a home loan, but no such loan secured by real estate mortgageshall be made to an officer, director or employee which at the time ofgranting such advance shall exceed 5% of the net worth accounts ofsuch association or $90,000 whichever is the smaller. Any negotiable orderof withdrawal, share or deposit loan or real estate loan made to anyofficer, director or employee must be approved by the board ofdirectors and such approval entered upon the minutes of the meetingapproving same. All such loan restrictions applicable to loans made toan officer, director or employee of a savings and loan association shallapply to any and all loans made to any general or limited partnership,corporation, trust or association if an officer, director or employee ofthe savings and loan association is a general or limited partner, or theowner, member or stockholder of 10% or more of the stockor other evidence of ownership of the entity shown as obligor on theloan.

      (k)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation prescribe, an association shall have authority to investin the following:

      (1) Investments in obligations of or fully guaranteedas to principal and interest by, the United States;

      (2) investments in thestocks and bonds of a federal home loan bank or in the stock of the federalnational mortgage association;

      (3) investments in mortgages, obligationsor other securities which are or ever have been sold by the federal homeloan mortgage corporation pursuant to section 305 or 306 of the federalhome loan mortgage corporation act;

      (4) investments in obligations, participations,securities or other instruments of or issued by or fully guaranteed as toprincipal and interest by the federal national mortgage association, thestudent loan marketing association or the government national mortgage association,or any other agency of the United States and an association may issue andsell securities which are guaranteed pursuant to section 306(g) of the nationalhousing act;

      (5) investments in the time deposits, certificates oraccounts of any bank the deposits of which areinsured by the federal deposit insurance corporation, or in the savingsaccounts, certificates or other accounts of any institution the accountsof which are insured by the federal savings and loan insurancecorporation;

      (6) investments in obligations of, or issued by, anystate or any politicalsubdivision thereof including any agency, corporation or instrumentalityof a state or political subdivision, except that an association may notinvest more than 10% of its capital and surplus in obligations of any oneissuer, exclusive of investments in general obligations of any issuer;

      (7) purchase of loans secured by liens on improved real estate which areinsured under provisions of the national housing act, or insured as providedin the servicemen's readjustment act of 1944 or 38 U.S.C. chapter 37;

      (8) loansmade for the repair, equipping, alteration or improvement of any residentialreal property, and loans made for the purpose of manufactured home financing;

      (9) loans as to which the association has the benefit of insurance undersection 240 of the national housing act, or of a commitment or agreementtherefor;

      (10) loans to financial institutions with respect to which theUnited States or an agency or instrumentality thereof has any function ofexamination or supervision, or to any broker or dealer registered with thesecurities and exchange commission, secured by loans, obligations or investmentsin which the association has the statutory authority to invest directly;

      (11) investments which at the time of making, are assets eligible for inclusiontoward the satisfaction of any liquidity requirement imposed by the federalhome loan bank board, but only to the extent the investment is permittedto be so included underregulations of the federal home loan bank board or is otherwise authorized;

      (12) investments in shares of stock issued by a corporation authorized tobe created pursuant to title IX of the housing and urban development actof 1968, and investments in any partnership, limited partnership, or jointventure formed pursuant to section 907(a) or 907(c) of such act;

      (13) loansas to which the association has the benefit of any guarantee under titleIV of the housing and urban development act of 1968, under part B of theurban growth and new community development act of 1970, or under section802 of the housing and community development act of 1974 as in effect onor after the date of enactment of the depository institutions deregulationand monetary control act of 1980, or of a commitment of agreement therefor;

      (14) investments in, commitments to invest in, loans to, or commitmentsto lend to any state housing corporation, provided that such obligationsor loans are secured directly or indirectly through an agent or fiduciary,by a first lien on improved real estate which is insured under the provisionsof the national housing act and that inthe event of default, the holder of such obligations or loans would havethe right directly or indirectly through an agent or fiduciary, to causeto be subject to the satisfaction of such obligations or loans the realestate described in the first lien or the insurance proceeds under the nationalhousing act;

      (15) invest in, redeem or hold shares or certificatesin any open-end management investment company which is registered with thesecurities and exchange commission under the investment company act of 1940and the portfolio of which is restricted by such management company's investmentpolicy, changeable only if authorized by shareholder vote, solely to anysuch investments as an association by law or regulation may, without limitationas to percentage of assets, invest in, sell, redeem, hold, or otherwisedeal with;

      (16)stock obligations, or other securities of any small business investmentcompany formed pursuant to section 301(d) of the small business investmentact of 1958, for the purpose of aiding members of the federal home loanbank system. Such investments shall not exceed an aggregateinvestment of 1% of the assets of the association;

      (17) in othersecurities approved by the commissioner.

      (l)   Without restriction upon the general powers of the associationto invest in:

      (1) Real estate whereon there is or may be erected abuilding or buildings for the transaction of the business of theassociation, from portions of which, not required for its own use, arevenue may be derived by rentals or otherwise. An association mayinvest in such real estate an amount representing the cost of land andimprovements not exceeding the sum of its net worth accounts. It may, however,invest in such real estate, a larger sum withthe approval of the commissioner;

      (2) real estate purchased at sheriff'ssale or at any other sale, public or private, judicial or otherwise,upon which the association has a lien or claim, legal or equitable;

      (3)real estate accepted by the association in satisfaction of any debt;

      (4)real estate acquired by the association in exchange for real estateowned by the association;

      (5) real estate acquired by the association inconnection with salvaging the value of property owned by theassociation;

      (6) title to all real estate shall be taken and held in thename of the association and such title shall immediately be recorded inaccordance with law.

      (m)   If and when an association is not a member of a federal homeloan bank, to borrow not more than an aggregate amount equal to 1/4of its capital on the date of borrowing. If and when anassociation is a member of a federal home loan bank, to secure advancesof not more than an aggregate amount equal to its capital. Within anamount equal to its capital, the association may borrow from sourcesother than such federal home loan bank an aggregate amount not in excessof 25% of its capital. A subsequent reduction of capitalshall not affect in any way outstanding obligations for borrowed money.All such loans and advances may be secured by property of theassociation.

      (n)   To repurchase and redeem shares in accordance with theprovisions of this act.

      (o)   To pay a bonus to members in accordance with the provisions ofthe bylaws.

      (p)   If and when an association is a member of a federal home loanbank, to act as fiscal agent of the United States, and when designatedfor that purpose by the secretary of the treasury, it shall performunder such regulations as such secretary may prescribe, all suchreasonable duties as fiscal agent of the United States as such secretarymay require, and shall have power to act as agent for any otherinstrumentality and as agent of the state in accordance with the laws ofthis state.

      (q)   To dissolve, merge or reorganize in the manner provided in thisact.

      (r)   To sell and assign notes and mortgages without recourse, exceptthat notes and mortgages may be assigned with recourse to any federalhome loan bank of which the association is a member.

      (s)   Subject to suchprohibitions, limitations and conditions as the commissioner may prescribe,the following loans or investments are permitted:

      (1)   An association may make commercial real estate loans on the securityof liens upon other improved real estate. The resulting aggregateof such loans shall not exceed an amount equal to 40% of such association's assets;

      (2)   an association may make secured or unsecured loans for personal, familyor household purposes, including loans reasonably incident to the provisionof such credit, and may invest in, sell or hold commercial paperand corporate debt securities, as defined and approved by the commissioner. The resulting aggregate of such loans shall not exceed an amount equalto 30% of such association's assets;

      (3)   an association may invest in tangible personal property, including,without limitation, vehicles, manufactured homes, machinery, equipment orfurniture, for rental or sale. The resulting aggregate of such investmentsshall not exceed an amount equal to 10% of such association's assets;

      (4)   an association may make secured or unsecured loans for commercial,corporate, business or agriculture purposes. No association may make loansto one borrower under the authority of this paragraph in excess of the amounta national bank having identical total capital and surplus could lend suchborrower. The resulting aggregate of such loans made by an associationand by a corporation owned by the association under paragraph (2) of subsection(z) of this section shall not exceed an amount equal to 5% of such association'sassets prior to January 1, 1984, or 10% of such association's assets thereafter.

      (t)   Any association may, upon adoption of such a loan plan by itsboard of directors, make or purchase:

      (1)   Any unsecured loan at least20% of which isguaranteed under the provisions of the servicemen's readjustment act of1944, as now or hereafter amended;

      (2)   simple interest, discount or gross charge loans for propertyalteration, repair, equipping or improvement without the security of alien upon such property, subject to such prohibitions, limitations andconditions as the commissioner may by regulation prescribe. Theresulting aggregate amount of all such loans shall not exceed an amountequal to 20% of such association's assets. Noassociation may make any unsecured loan to a director, officer oremployee of the association, or to any person or firm regularly servingthe association in the capacity of attorney, except for thealteration, repair, equipping or improvement of the home or combinationof home and business property owned and occupied by such borrowingdirector, officer, employee, attorney or firm;

      (3)   line of credit real estate loans for home property, secured orunsecured, subject to such prohibitions, limitations and conditions asthe commissioner may by regulation prescribe. The resulting aggregateamount of all such loans shall not exceed an amount greater than 5%of the association's assets or all of its net worth accounts.

      (u)   Subject to such prohibitions, limitations and conditions as thecommissioner may by regulation prescribe, any such association may sellto, purchase from or participate with other lenders in loans of any typethat such an association may otherwise make if the other participantsare approved federal housing administration lenders, instrumentalitiesor corporations owned wholly or in part by the United States or thisstate, or are associations or corporations insured by the federalsavings and loan association corporation or the federal depositinsurance corporation. Such loans may be outside the regular lendingarea of such association.

      (v)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation prescribe, the following loans or investments are permitted,but the authority conferred in the following paragraphs is limited to anamount not to exceed 5% of the assets of the association for each paragraph:

      (1)   Loans made for the payment of educational expenses;

      (2)   investments in real property and obligations secured by liens on realproperty located within a geographic area or neighborhood receiving concentrateddevelopment assistance by a local government under title I of the housingand community development act of 1974, except that no investment under thisparagraph in such real property may exceed an aggregate investment of 2%of the assets of the association;

      (3)   loans upon the security of or respecting real property or intereststherein used for primarily residential or farm purposes that do not otherwisecomply with the limitations of this section;

      (4)   investments not exceeding the greater of: (A) The sum of the association'snet worth accounts; or (B) five percent of the assets of the association,in loans the principal purpose of which is to provide financing with respectto what is or is expected to become primarily residential real estate where:(i) The association relies substantially for repayment on the borrower'sgeneral credit standing and forecast of income without other security; or(ii) the association relies on other assurances for repayment, includingbut not limited to a guaranty or similar obligation of a third party. Investmentsunder this subsection shall not be included in any percentage of assetsor other percentage referred to in this section.

      (w)   Subject to such prohibitions, limitations and conditions as thecommissioner may by regulation prescribe, any such association may makeany loan for the purpose of mobile home financing.

      (x)   Subject to such prohibitions, limitations and conditions as thecommissioner may by regulation prescribe, any such association maymaintain safety deposit boxes and rent the same for public use.

      (y)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation prescribe, any such association may issue credit cards,extend credit in connection therewith, and otherwise engagein or participate in credit card operations.

      (z)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation prescribe, any such association shall have the power andauthority to make the following additional loans and other investments tothe extent authorized as follows:

      (1)   An association whose net worth accounts in the aggregate exceed 5%of its withdrawable capital is authorized to invest in, lend to or to commititself to lend to, any business development credit corporation incorporatedin the state of Kansas, but the aggregate amount of such investments,loans and commitments of any such association shall not exceed 1/2%of the total outstanding loans of the association or $250,000, whichever is less;

      (2)   investments in the capital stock, obligations or other securitiesof any corporation organized under the laws of the state of Kansas, if theentire capital stock of such corporation is available for purchase onlyby savings and loan associations of Kansas and by federal associations havingtheir home offices in the state of Kansas. No association may make anyinvestment under this paragraph if its aggregate outstanding investmentunder this paragraph would exceed 3% of the assets of the association.Any investment permitted under thisparagraph which exceeds 2% of assets shall be used primarilyfor community, inner-city or community development purposes;

      (3)   investments in: (A) Loans secured by mortgages for which the associationhas the benefit of insurance under title X of the national housing act orof a commitment or agreement for such insurance;

      (B)   investments in housing project loans having the benefit of any guarantyunder section 221 of the foreign assistance act of 1961 or loans havingthe benefit of any guaranty under section 224 of such act, or any commitmentor agreement with respect to such loans made pursuant to either of suchsections and in the share capital and capital reserve of the inter-Americansavings and loan bank. This authority extends to the acquisition, holding,and disposition of loans having the benefit of any guaranty under section221 or 222 of such act, or of any commitment or agreement for any such guaranty;

      (C)   investments under subparagraph (A) of this paragraph shall not beincluded in any percentage of assets or other percentage referred to inthis subsection. Investments under subparagraph (B) of this paragraph shallnot exceed, in the case of any association, 1% of the assets of such association;

      (4)   an association whose net worth in aggregate exceeds that amount whichis determined by the national housing act is authorized to invest in obligationswhich constitute prudent investments, as defined by the commissioner, ofKansas and its political subdivisions thereof, including any agency, corporationor instrumentality if the proceeds of such obligations are to be used forrehabilitation, financing or the construction of residential real estate,and the aggregate amount of all investments under this paragraph shall notexceed the amount of the association's net worth accounts.

      (aa)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation provide an association may engage in financialfutures transactions and financial options transactions.

      (bb)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation provide an association may establish or maintain a dataprocessing office with functions limited to providing data processing servicesfor its own use or primarily for other depository institutions without observingthe application and approval procedures for branch offices as provided forin K.S.A. 17-5225, and amendments thereto. An association may participatewith others in establishing or maintaining a data processing office, exceptthat the association may participate in establishing or maintaininga data processing office controlled by an entity not subject to a federalor state agency regulating financial institutions only if such entity hasagreed in writing with the commissioner that it will permit and pay forsuch examination of the office as the commissioner deems necessary, andthat it will make available for such purposes any records in its possessionrelating to the operation of the office.

      (cc)   Subject to such prohibitions, limitations and conditions as the commissionermay by regulation provide an association may provide correspondentservices primarily to other depository institutions. An association mayreceive noninterest-bearing deposits from correspondent institutions foruse as compensating balances, for settlement purposes or for other purposesincidental to a correspondent relationship. Such deposits may be payableon demand and subject to withdrawal by negotiable or transferable instrument,order or authorization. Such deposits shall not give rise to voting rightsor other rights of membership in a mutual association. An association maymaintain a noninterest-bearing account at any institution whose accountsare insured by the federal savings and loan insurance corporation or thefederal deposit insurance corporation, and an association may maintain suchan account at an institution whose accounts are insured pursuant to a statedeposit insurance program if such account is necessary or incidental toa correspondent relationship.

      (dd) (1)   Subject to such prohibitions, limitations and conditions asthe commissioner may by regulation provide an association:

      (A) May becomethe legal or beneficial owner of tangible personal property or real propertyfor the purpose of leasing such property;

      (B) may obtain an assignment ofa lessor's interest in a lease of such property; and

      (C) may incur obligationsincidental to its position as the legal or beneficial owner and lessor ofthe leased property if the lease is a net, full-payout lease representinga noncancelable obligation of the lessee, notwithstanding the possible earlytermination of the lease and at the expiration of the lease, the association'sinterest in the property shall be liquidated or released on a net basisas soon as practicable;

      (2)   a lease of tangible personal property made to a natural person forpersonal, family or household purposes pursuant to this subsection shallbe subject to all limitations applicable to the amount of an association'sinvestment in consumer loans. A lease made for commercial, corporate, businessor agricultural purposes pursuant to this subsection shall be subject toall limitations applicable to the amount of an association's investmentin commercial loans. A lease of residential or commercial real propertymade pursuant to this subsection shall be subject to all limitations applicableto the amount of an association's investment in residential or commercialreal property loans;

      (3)   for the purposes of this subsection:

      (A)   "Net lease" means a lease under which the association will not,directly or indirectly, provide or be obligated to provide for:

      (i)   The servicing, repair or maintenance of the leased property duringthe lease term;

      (ii)   the purchasing of parts and accessories for the leased property,except that improvements and additions to the lease property may be leasedto the lessee upon its request in accordance with the full-payout requirementsof this section;

      (iii)   the loan of replacement or substitute property while the leasedproperty is being serviced;

      (iv)   the purchasing of insurance for the lessee, except where the lesseehas failed to discharge a contractual obligation to purchase or maintain insurance; or

      (v)   the renewal of any license, registration or filing for the propertyunless such action by the association is necessary to protect its interestas an owner or financer of the property;

      (B)   "full-payout lease" means a lease from which the lessor can reasonablyexpect to realize a return of its full investment in the leased property,plus the estimated cost of financing the property over the term of the lease,from rentals, estimated tax benefits and the estimated residual value ofthe property at the expiration of the initial term of the lease. The estimatedresidual value of the property shall not exceed 25% for personal propertyor 20% for real property, of the acquisition cost of the property to thelessor unless the estimated residual value is guaranteed by a manufacturer,the lessee or a third party not an affiliate of the association and theassociation makes the determination that the guarantor has the resourcesto meet the guarantee. In all cases, however, both the estimated residualvalue of the property and that portion of the estimated residual value reliedupon by the lessor to satisfy the requirements of a full-payout lease mustbe reasonable in light of the nature of the leased property and all relevantcircumstances so that realization of the lessor's full investment plus thecost of financing the property depends primarily on the creditworthinessof the lessee and of any guarantor of the residual value, and on the residualmarket value of the leased property. The maximum term of a full-payoutlease shall be 40 years;

      (4)   if, in good faith, an association believes that there has been anunanticipated change in conditions which threaten its financial positionby significantly increasing its exposure to loss, the provisions of thissubsection shall not prevent the association:

      (A)   As the owner and lessor under a net, full-payout lease, from takingreasonable and appropriate action to salvage or protect the value of theproperty of its interest arising under the lease;

      (B)   as the assignee of a lessor's interest in a lease, from becomingthe owner and lessor of the leased property pursuant to its contractualright, or from taking any reasonable and appropriate action to salvage orprotect the value of the property or its interest arising under the lease; or

      (C)   from including any provisions in a lease, or from making any additionalagreements, to protect its financial position or investment in the circumstancesset forth in this paragraph.

      History:   L. 1943, ch. 133, § 79; L. 1947, ch. 188, § 1; L.1949, ch. 193, § 1; L. 1955, ch. 140, § 3; L. 1961, ch. 125, § 2; L.1963, ch. 145, § 1; L. 1965, ch. 156, § 3; L. 1969, ch. 131, § 3; L.1971, ch. 82, § 1; L. 1972, ch. 68, § 1; L. 1973, ch. 97, § 1; L.1975, ch. 141, § 1; L. 1975, ch. 142, § 3; L. 1978, ch. 83, § 1;L. 1981, ch. 105, § 5; L. 1983, ch. 86, § 3; April 21.