CHAPTER 665
POWERS, LOANS AND INVESTMENTS

PART I
POWERS

      Sec. 36a-250. Powers of Connecticut banks. (a) Except as otherwise provided in subsection (b) of this section, a Connecticut bank may:

      (1) Transact a general banking business and exercise by its governing board or duly authorized officers or agents, subject to applicable law, all such incidental powers as are necessary thereto. The express powers authorized for a Connecticut bank under subdivisions (2) to (41), inclusive, of this subsection do not preclude the existence of additional powers deemed to be incidental to the transaction of a general banking business pursuant to this subdivision;

      (2) (A) Receive deposits as authorized by and subject to the provisions of sections 36a-290 to 36a-305, inclusive, section 36a-307, sections 36a-315 to 36a-323, inclusive, and sections 36a-330 to 36a-338, inclusive, including: (i) Savings deposits; (ii) time deposits; (iii) demand deposits; (iv) public funds or money held in a fiduciary capacity; (v) school savings funds; and (vi) club deposits; and (B) pay interest or dividends thereon;

      (3) Act as a depository of court and trust funds;

      (4) Purchase and sell coins and bullion;

      (5) Receive for safekeeping or otherwise all kinds of personal property, including papers, documents and evidences of indebtedness;

      (6) Conduct a safe deposit business on its banking premises;

      (7) Act (A) as guardian or conservator of the estate of any person, but not of the person, (B) as a trustee, receiver, executor or administrator, or (C) in any other fiduciary capacity, all without bond unless a bond is ordered by the court;

      (8) Act as agent or attorney in fact for the holders of securities or the owners of real estate;

      (9) Act as transfer agent or registrar of stocks and bonds;

      (10) Execute and deliver signature guaranties as may be incidental or usual in the transfer of investment securities;

      (11) Act as agent, fiscal agent or trustee for any corporation or for holders of bonds, notes or other securities, and pledge assets to secure deposits in its banking department when (A) made by it as trustee under a trust indenture for the holders of revenue bonds issued by this state, any municipality, district, municipal corporation or authority or political subdivision thereof, and the express provisions of the authority or its political subdivision, and the express provisions of the trust indenture require the deposit to be so secured, (B) made by it as fiscal agent for a housing authority in connection with a federally-assisted housing project and federal regulations or other requirements call for the deposits to be so secured, or (C) made by it to secure deposits in individual retirement accounts and qualified retirement plan accounts, established in accordance with the applicable provisions of the Internal Revenue Code of 1986, or any prior or subsequent corresponding internal revenue code of the United States, as from time to time amended, where such deposits exceed the maximum of federal deposit insurance available for such accounts;

      (12) Act as fiscal agent for this state or any of its political subdivisions when authorized by the executive head of this state or of the political subdivision;

      (13) Act as agent (A) in the collection of taxes for any qualified treasurer of any taxing district or qualified collector of taxes or (B) for any electric, electric distribution, gas, water or telephone company operating within this state in receiving moneys due that company for utility services furnished by it;

      (14) Act as agent for the sale, issue and redemption of obligations of the United States and pledge assets to the United States or to the proper federal reserve bank for its obligations as that agent;

      (15) (A) Act as agent for an insured depository institution affiliate in receiving deposits, renewing time deposits, closing loans, servicing loans and receiving payments on loans and other obligations, and in so doing shall not be considered to be a branch of such affiliate;

      (B) A Connecticut bank may not conduct any activity as an agent under subparagraph (A) of this subdivision which such bank is prohibited from conducting as a principal;

      (16) Act as treasurer of any organization exempt from federal income taxation under Section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

      (17) Establish a charitable fund, either in the form of a charitable trust or a nonprofit corporation to assist in making charitable contributions, provided (A) the trust or nonprofit corporation is exempt from federal income taxation and may accept charitable contributions under Section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (B) the trust or nonprofit corporation's operations shall be disclosed fully to the commissioner upon request, and (C) the trust department of the bank or one or more directors or officers of the bank act as trustees or directors of the fund;

      (18) In the discretion of a majority of its governing board, make contributions or gifts to or for the use of any corporation, trust or community chest, fund or foundation created or organized under the laws of the United States or of this state and organized and operated exclusively for charitable, educational or public welfare purposes, or of any hospital which is located in this state and which is exempt from federal income taxes and to which contributions are deductible under Section 501(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

      (19) Discount, purchase and sell accounts receivable, negotiable and nonnegotiable promissory notes, drafts, bills of exchange and other forms of indebtedness;

      (20) (A) Accept for payment at future dates drafts drawn upon it, and (B) except as provided in section 36a-299, sell or issue without charge negotiable checks or drafts drawn by or on the bank. Negotiable checks or drafts drawn, sold or issued by a bank may be drawn on that bank or be payable by or through another bank or out-of-state bank;

      (21) Make secured and unsecured loans and issue letters of credit as authorized by and subject to section 36a-260;

      (22) (A) Issue credit cards and debit cards and enter into card agreements with the bank's card holders and with other card issuers, (B) lend money to individuals, honor drafts and similar orders drawn or accepted, whether by written instrument or electronic transmission, and pay and agree to pay obligations incurred in connection with those agreements, (C) become affiliated with any credit card corporation or association, and (D) subject to sections 36a-155 to 36a-159, inclusive, where applicable, provide electronic fund transfer facilities and services and enter into agreements with customers and other persons regarding the provision of such facilities;

      (23) Provide home banking services to customers as provided in section 36a-170;

      (24) Contract for and pay the premiums upon life insurance in the amount of the unpaid balance due on loans;

      (25) Borrow money and pledge assets therefor, and pledge assets to secure trust funds on deposit awaiting investment;

      (26) Enter into leases of personal property acquired upon the specific request of and for the use of a prospective lessee;

      (27) Make investments as authorized by this title;

      (28) Sell to any person, including any state or federal agency or instrumentality, any loan or group of loans legally owned by the bank, repurchase any such loan or group of loans, and act as collecting, remitting and servicing agent in connection with any such loans and charge for its acts as agent. Any such bank is authorized to purchase the minimum amount of capital stock of the applicable agency or instrumentality if required by that entity to be purchased in connection with the assignment of loans to that entity and to hold and dispose of that stock;

      (29) With the approval of the commissioner, deal in and underwrite, to the same extent as is permitted to a national banking association, obligations of: (A) The United States or any of its agencies; (B) any state or any political subdivision or instrumentality of the state; or (C) Canada, any province of Canada or any political subdivision of Canada;

      (30) Issue and sell securities which (A) are guaranteed by the Federal National Mortgage Association or any other agency or instrumentality authorized by state or federal law to create a secondary market with respect to loans of the type originated by the bank, or (B) subject to the approval of the commissioner, relate to loans originated by the bank and are guaranteed or insured by a financial guaranty insurance company or comparable private entity;

      (31) Subject to the approval of the commissioner, authorize the issuance and sale of evidences of indebtedness, including debentures, debt instruments of all maturities and capital notes, at such times, in such amount and upon such terms as are determined by the governing board, provided the issuance of such evidences of indebtedness which are payable on demand or mature within five years of their issuance or which are effected in the ordinary course of business do not require the approval of the commissioner. The proceeds of such evidences of indebtedness which mature after five years of their issuance which are subordinate to the claims of depositors upon liquidation of the bank shall be considered part of its capital for the purpose of computing any loan, deposit or investment limitation under this title;

      (32) With the approval of and upon such conditions and under such regulations as may be prescribed or adopted by the commissioner, establish and maintain one or more mutual funds and offer to the public shares or participations therein;

      (33) (A) With the written approval of the commissioner, acquire, alter or improve real estate for present or future use in the business of the bank. Such approval shall not be required in case of the alteration or improvement of real estate already owned or leased by the bank or a corporation controlled by it as provided in subsection (d) of section 36a-276, if the expenditure for such purposes does not in any one calendar year exceed five per cent of the bank's equity capital and reserves for loan and lease losses or seven hundred fifty thousand dollars, whichever is less.

      (B) With the written approval of the commissioner, purchase real estate adjoining any parcel of real estate then owned by it and acquired in the usual course of business, provided the aggregate of all investments and loans authorized in this subparagraph and in subparagraph (A) of this subdivision and in the equipment used by such bank in its operations, together with the amount of any indebtedness incurred by any corporation holding real estate of the bank and such bank's proportionate share, computed according to stock ownership, of any indebtedness incurred by any service corporation, does not exceed fifty per cent of the equity capital and reserves for loan and lease losses of the bank, unless the commissioner finds that the rental income from any part of the premises not occupied by the bank will be sufficient to warrant larger investment;

      (34) Convey any real estate owned by it at the price and upon such terms of payment as its governing board or an authorized committee thereof determines and sets forth in the bank's records. If any such sale is wholly or partly for credit, a note secured by a first mortgage on the real estate may evidence that credit. With the written approval of the commissioner, the bank may accept other real estate in whole or in part for any such conveyance;

      (35) Establish and maintain an international banking facility, as defined in regulations adopted by the Board of Governors of the Federal Reserve System, subject to such regulations as the commissioner may adopt, in accordance with chapter 54, to specify, and impose restrictions upon, the types of activities in which the international banking facility may engage;

      (36) Join the Federal Reserve System;

      (37) With the approval of the commissioner, join the Federal Home Loan Bank System and borrow funds as provided under federal law;

      (38) Even if not expressly authorized to exercise fiduciary powers, act as trustee or custodian of a plan which qualifies as part of a retirement plan for self-employed individuals or an individual retirement account under the provisions of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, if the governing instrument limits the investment of the funds held pursuant to such plan to the following investments: (A) Savings deposits and time deposits; and (B) with respect to retirement plans for self-employed individuals, notes of members in such plans which evidence the indebtedness of such members for funds borrowed from the plans. Funds held pursuant to any plan which so qualifies may be deposited in any Connecticut bank without regard to any statutory limit on the amount which such bank may have on deposit from one depositor;

      (39) Sell insurance and fixed and variable annuities directly, sell insurance and such annuities indirectly through a subsidiary, or enter into arrangements with third-party marketing organizations for the sale by such third-party marketing organizations of insurance or such annuities on the premises of the Connecticut bank or to customers of the Connecticut bank; provided (A) such insurance and annuities are issued or purchased by or from an insurance company licensed in accordance with section 38a-41, and (B) the Connecticut bank, subsidiary or third-party marketing organization, and any officer or employee thereof, shall be licensed as required by section 38a-769 before engaging in any of the activities authorized by this subdivision. As used in this subdivision, "annuities" and "insurance" have the same meanings as set forth in section 38a-1, except that "insurance" does not include title insurance. The provisions of this subdivision do not authorize a Connecticut bank or a subsidiary of a Connecticut bank to underwrite insurance or annuities;

      (40) With the prior written approval of the commissioner, engage in closely related activities, unless the commissioner determines that any such activity shall be conducted by a subsidiary of the Connecticut bank, utilizing such organizational, structural or other safeguards as the commissioner may require, in order to protect the Connecticut bank from exposure to loss. As used in this subdivision, "closely related activities" means those activities that are closely related to the business of banking, are convenient and useful to the business of banking, are reasonably related to the operation of a Connecticut bank or are financial in nature including, but not limited to, business and professional services, data processing, courier and messenger services, credit-related activities, consumer services, services related to real estate, financial consulting, tax planning and preparation, community development activities, any activities reasonably related to such activities, or any activity permitted under the Bank Holding Company Act of 1956, 12 USC Section 1841 et seq., as from time to time amended, or the Home Owners' Loan Act of 1933, 12 USC Section 1461 et seq., as from time to time amended, or the regulations promulgated under such acts as from time to time amended; and

      (41) Engage in any activity that a federal bank or an out-of-state bank may be authorized to engage in under federal or state law, provided the Connecticut bank shall file with the commissioner prior written notice of its intention to engage in such activity. Such notice shall include a description of the activity, a description of the financial impact of the activity on the Connecticut bank, citation of the legal authority to engage in the activity under federal or state law, a description of any limitations or restrictions imposed on such activity under federal or state law, and any other information that the commissioner may require. The Connecticut bank may engage in such activity unless the commissioner disapproves such activity not later than thirty days after the notice is filed. The commissioner may adopt regulations in accordance with chapter 54 to ensure that any such activity is conducted in a safe and sound manner with adequate consumer protections. The provisions of this subdivision do not authorize a Connecticut bank or a subsidiary of a Connecticut bank to sell title insurance.

      (b) A trust bank shall not be authorized to exercise any of the powers enumerated in this section to the extent that such exercise would cause it to function otherwise than in a fiduciary capacity, including, but not limited to, receiving or holding deposits of any kind, other than in a fiduciary capacity, or making loans or otherwise extending credit, other than in a fiduciary capacity.

      (c) A Connecticut bank which is authorized to exercise fiduciary powers pursuant to subsection (a) of this section shall exercise such powers in compliance with the provisions of sections 36a-350 to 36a-353, inclusive, 36a-365 to 36a-372, inclusive, 36a-380 to 36a-386, inclusive, and 36a-395 to 36a-399, inclusive.

      (P.A. 94-122, S. 115, 340; P.A. 95-155, S. 20, 29; P.A. 96-39, S. 1, 3; 96-44, S. 2; P.A. 97-317, S. 1, 4; P.A. 98-28, S. 112, 117; 98-178, S. 1; P.A. 99-158, S. 5, 6; P.A. 02-47, S. 15; P.A. 04-136, S. 33; P.A. 05-288, S. 204; P.A. 06-10, S. 4.)

      History: P.A. 94-122 effective January 1, 1995; P.A. 95-155 amended Subsec. (a) by adding Subdiv. (14) re acting as an agent for an insured depository institution, renumbering the remaining Subdivs. accordingly, effective June 27, 1995; P.A. 96-39 added Subsec. (a)(38) re sale of annuities, effective May 2, 1996; P.A. 96-44 amended Subsec. (a) re bank investments, deleting references throughout section to investments in stocks, bonds, notes etc. and substituting provision in Subdiv. (26) to authorize investments permissible under title 36a; P.A. 97-317 amended Subdiv. (38) re sale of insurance, deleted former Subsec. (b) re prohibition on engaging in insurance business, and redesignated former Subsecs. (c) and (d) as Subsecs. (b) and (c), effective July 8, 1997; P.A. 98-28 amended Subsec. (a)(12) by adding electric distribution companies, effective July 1, 1998; P.A. 98-178 amended Subsec. (a) by adding new Subdiv. (4) re purchase and sale of coins and bullion and by redesignating existing Subdivs. (4) to (38) as Subdivs. (5) to (39); P.A. 99-158 made a technical change in Subsec. (a)(1) and by added Subsecs.(a)(40) re closely related activities and (41) re authorized activities of federal banks; P.A. 02-47 made a technical change in Subsec. (a)(11) and added provisions re engaging in activities that an out-of-state bank may be authorized to engage in under state law in Subsec. (a)(41); P.A. 04-136 amended Subsec. (b) to substitute "trust bank" for "Connecticut bank which is organized to function solely in a fiduciary capacity", effective May 12, 2004; P.A. 05-288 made technical changes in Subsec. (a)(38), effective July 13, 2005; P.A. 06-10 amended Subsec. (a)(33) to modify calculation used to determine amount a bank may expend to acquire, alter or improve real estate for use in bank business in any one calendar year without commissioner's written approval by substituting $750,000 for $500,000, to provide exception from written approval requirement for alteration or improvement of real estate leased by the bank and to make technical changes, effective May 2, 2006.

      See Sec. 38a-775 re licensing of banks, out-of-state banks or subsidiaries, affiliates, officers or employees of such banks to sell annuities.

      Sec. 36a-251. Transactions requiring commissioner's approval. Maximum aggregate investments. Section 36a-251 is repealed.

      (P.A. 94-122, S. 116, 340; P.A. 95-70, S. 1, 8; P.A. 96-44, S. 9.)

      Sec. 36a-251a. Actions taken pursuant to commissioner's discretionary powers. Annual report. The commissioner shall submit an annual report to the joint standing committee of the General Assembly having cognizance of matters relating to banks no later than January first. The report shall summarize the commissioner's actions taken pursuant to section 36a-70, 36a-139a or subdivisions (40) and (41) of subsection (a) of section 36a-250.

      (P.A. 00-40; P.A. 03-84, S. 25; P.A. 04-8, S. 3.)

      History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 04-8 made technical changes, effective April 16, 2004.

      Secs. 36a-252 and 36a-252a. Transferred to Chapter 664c, Part II, Secs. 36a-139 and 36a-139a.

      Secs. 36a-253 to 36a-259. Reserved for future use.

PART II
LOANS

      Sec. 36a-260. Loans. Loan policies. Loan review policies. Assessment of loan reviews. (a) A Connecticut bank may make secured and unsecured loans, except as otherwise expressly limited by sections 36a-261 to 36a-266, inclusive.

      (b) At least once a year, the governing board of each Connecticut bank shall adopt a loan policy governing loans made pursuant to sections 36a-260 to 36a-266, inclusive. The governing board of each Connecticut bank shall develop and implement internal controls that are reasonably designed to ensure compliance with such loan policy. The loan policy shall require applications for all loans, and address the categories and types of secured and unsecured loans offered by the bank, the manner in which loans will be made and approved, underwriting guidelines and collateral requirements, and, in accordance with safety and soundness, acceptable standards for title review, title insurance and appraiser qualifications, policies for the approval and selection of appraisers, appraisal and evaluation standards, and the bank's administration of the appraisal and evaluation process. The loan policy and any loan made pursuant to the policy shall be subject to the examination of the commissioner concerning safe and sound banking practices.

      (c) The governing board of each Connecticut bank shall adopt a loan review policy that is designed to ensure that all material loans made by the Connecticut bank pursuant to sections 36a-260 to 36a-266, inclusive, are reviewed. The policy shall establish appropriate standards, consistent with prudent risk management principles, for the review to address the bank's compliance with the loan policy adopted pursuant to subsection (b) of this section and the need for plans to implement special collection, workout, divestiture or other means of bringing such loans into compliance with the loan policy. The loan review policy shall be appropriate to the size of the Connecticut bank, its financial condition and the nature and scope of its activities. The governing board shall also adopt, as part of the loan review policy, standards for determining which loans are material for purposes of this subsection. When adopting the materiality standards, the governing board shall consider, where appropriate, the inclusion of standards based on the size of the loan in relation to the Connecticut bank's total capital and reserves for loan and lease losses, and such other factors that may present material risks to the institution. The loan review policy and any loan reviewed pursuant to such policy shall be subject to the examination of the commissioner concerning safe and sound banking practices. At least semiannually, the governing board of each Connecticut bank or a committee designated by such board shall conduct an assessment of the loan reviews. The minutes of the meeting of such governing board or committee shall recite the results of the assessment of the loan reviews.

      (P.A. 94-122, S. 117, 340; P.A. 03-259, S. 17.)

      History: P.A. 94-122 effective January 1, 1995; P.A. 03-259 designated existing provisions as Subsec. (a), replacing "36a-265" with "36a-266" therein, and added Subsec. (b) re adoption of loan policy and Subsec. (c) re adoption of loan review policy.

      Sec. 36a-261. (Formerly Sec. 36-99). Mortgage loans. (a) As used in this section, the term "mortgage loan" means a loan, line of credit or letter of credit secured wholly or substantially by a lien on or interest in real estate, including a leasehold interest, for which the lien or interest is central to the extension of credit, but does not include the following loan transactions:

      (1) Loans that are to be sold by the Connecticut bank promptly after origination by such bank, without extended recourse for payment default, to a financially responsible third party, provided such loans shall be considered mortgage loans for purposes of purchases and participations by a Connecticut bank if such loans otherwise qualify as mortgage loans under this subsection.

      (2) Loans for which a lien on or interest in real estate is taken as additional collateral through an abundance of caution by the Connecticut bank, including loans pursuant to which the bank takes a blanket lien on all or substantially all of the assets of the borrower, and the value of the real estate is low relative to the aggregate value of all collateral.

      (3) Loans made to manufacturing, industrial or commercial borrowers with a lien or interest in real estate taken as all or a portion of the collateral to directly or indirectly secure such loans, when the bank looks for repayment out of the operations of the borrower's business, relying on the borrower's general credit standing and the borrower's forecast of operations.

      (b) (1) The assets of Connecticut banks may be invested in mortgage loans, subject to the general limitations set forth in this section.

      (2) Any such mortgage loan shall be secured either by (A) a first mortgage which is a first lien or (B) a mortgage which is subordinate to another mortgage or other mortgages, provided, in the case of a loan secured by a mortgage which is subordinate to another mortgage or other mortgages, which other mortgage or mortgages are held by a person other than the Connecticut bank, the real estate securing such loan is (i) residential real estate, or (ii) nonresidential real estate provided the loan does not exceed, at the time of origination, a loan-to-value ratio of fifty per cent, or (iii) nonresidential real estate in a loan transaction which, at the time of origination, exceeds a loan-to-value ratio of fifty per cent, provided the aggregate amount of all such loans made pursuant to this subparagraph (B)(iii) does not exceed, at the time of origination, twenty-five per cent of the equity capital and reserves for loan and lease losses of the Connecticut bank. A loan which was included within the aggregate limit of subparagraph (B)(iii) of this subdivision subsequently may be excluded if the loan is repaid or if the applicable loan-to-value ratio is reduced to fifty per cent or below because of a reduction in principal or senior liens, additional contributions of real estate collateral, or an increase in equity value substantiated by a current suitable appraisal or evaluation.

      (c) "Real estate", as used in this section, includes refrigerating equipment, dishwashing equipment, stoves and clothes washing machines, hereinafter called "household equipment", used on the premises at the time of execution of the mortgage or substituted after the mortgage is executed if such equipment is specifically declared in the mortgage deed to be used as a part of the mortgaged realty, and if such mortgage declares that household equipment substituted for the original household equipment mentioned in such mortgage shall be part of the mortgaged realty.

      (d) The real estate shall be unencumbered, except to the extent that prior mortgages are permitted by subdivision (2) of subsection (b) of this section. A satisfactory certificate of title or other suitable form of title review issued by a suitable person approved by such Connecticut bank, or a satisfactory policy of title insurance, shall be filed with the lending bank until the loan is paid or until the loan is sold. The following are not encumbrances within the meaning of this section: (1) Reservations to the United States of America of fissionable materials, (2) leases, provided the impact of the lease is adequately reflected in the appraisal or evaluation required by subsection (e) of this section, and (3) easements, restrictions, interests and other rights (A) which do not materially adversely affect the marketability of the real estate, (B) which are otherwise adequately reflected in the appraisal or evaluation required by subsection (e) of this section, (C) where the attendant risks are satisfactorily insured under an acceptable policy of title insurance, or (D) which the bank otherwise reasonably determines do not present a material adverse risk after consideration of the relevant underwriting risks for the loan or class of loans. Connecticut banks shall adopt and implement a real estate lending policy which reflects, in accordance with safe and sound banking principles, consideration of acceptable standards for title review and title insurance.

      (e) The real estate shall be appraised or otherwise suitably evaluated, before any loan is made on its security, by one or more suitable persons who are familiar with real estate values in the community where the real estate is located. Such persons shall be approved by the governing board of the Connecticut bank making the loan, or by a management committee, board committee or agent appropriately designated by such governing board in accordance with the appraisal policy required by this subsection, provided, if the loan under consideration is a loan to be insured or guaranteed by a governmental agency, the appraiser may be one who appraised the property for the governmental agency. Such appraisal or evaluation shall be in writing, shall state the amount at which the property has been appraised or evaluated and shall be filed with the Connecticut bank until the loan is paid or until the loan is sold. Connecticut banks shall adopt and implement an appraisal policy which reflects, in accordance with safe and sound banking principles, consideration of appraiser qualifications, procedures for the approval and selection of appraisers, appraisal and evaluation standards, and the bank's administration of the appraisal and evaluation process.

      (f) Notwithstanding the provisions of subdivision (2) of subsection (h) of this section, the Connecticut bank, in its discretion and for such a period as it deems advisable, may excuse the borrower on a mortgage loan from amortization of the principal of such loan.

      (g) Loans not exceeding fifty per cent of the value of the real estate may be made without further restriction than is set forth in subsections (a) to (f), inclusive, of this section. The requirements of this section relating to the relationship between the loan amount and the value of the real estate shall be calculated on the basis of the aggregate amount of such loan plus the unpaid amount of any obligation secured by any prior mortgages or liens and the amount of any advancements permissible under any loan secured by such prior mortgage or mortgages in relation to the value of the real estate interest.

      (h) Loans not exceeding ninety per cent of the value of the real estate may be made subject to the following additional limitations set forth in subdivisions (1) and (2) of this subsection. (1) No loan shall be made until the person or persons liable on the note have filed with the bank a satisfactory financial statement which shall be kept on file. (2) All such loans shall require repayment of principal and payment of interest in at least consecutive semiannual installments of principal and interest, such payments to be sufficient to pay the loan in full not later than forty-two years from the date of the first payment and the first payment to be made within twenty-four months of the date of the note. The requirements for semiannual principal payments pursuant to this subdivision are not applicable to: (A) Consumer revolving loan agreements made pursuant to subsection (c) of section 49-2, (B) alternative mortgage loans made pursuant to section 36a-265, (C) loans which may be demanded at any time and which are secured by residential real estate and (D) any other loan or class of loans determined by the commissioner not to be subject to such requirements.

      (i) The following mortgage loans may be made without regard to the ninety per cent loan-to-value limit set forth in subsection (h) of this section:

      (1) Loans guaranteed or insured by the United States government or its agencies, provided the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the applicable loan-to-value limit.

      (2) Loans backed by the full faith and credit of a state government, provided the amount of the assurance is at least equal to the portion of the loan that exceeds the applicable loan-to-value limit.

      (3) Loans guaranteed or insured by a state, municipal or local government, or its agency, provided (A) the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the applicable loan-to-value limit and (B) the bank has determined that the guarantor or insurer has the financial capacity and willingness to perform under the terms of the guaranty or insurance agreement.

      (4) Loans that are renewed, refinanced, or restructured without the advancement of new funds or an increase in a line of credit, except for reasonable closing costs.

      (5) Loans that are renewed, refinanced, or restructured in connection with a workout situation, either with or without the advancement of new funds, where such action is consistent with safe and sound banking practices and is a part of a clearly defined and well documented program to achieve orderly liquidation of the debt, reduce risk of loss or maximize recovery of the loan.

      (6) Loans that facilitate the sale of real estate acquired by the Connecticut bank in the ordinary course of collecting a debt previously contracted in good faith.

      (7) Loans where the Connecticut bank does not rely principally on the real estate as security.

      (8) Loans where all or part of such loan is made in primary reliance upon the mortgage insurance policy of a private mortgage guaranty company, licensed by the Insurance Commissioner to do business in this state and approved by the commissioner.

      (9) Loans or loan programs which are determined by the governing board of the Connecticut bank, or by a management committee or board committee appropriately designated by such governing board, to be prudent under the circumstances after consideration of the relevant underwriting risks, provided (A) the aggregate amount of all such loans, calculated at the time of origination of each such loan, does not exceed one hundred per cent of the bank's equity capital and reserves for loan and lease losses, (B) the aggregate amount of all such loans, calculated at the time of origination of each such loan, other than loans secured by one-to-four-family residential property, does not exceed thirty per cent of the bank's equity capital and reserves for loan and lease losses, (C) the aggregate amount of all such loans is included in the percentage of assets limitation specified in subsection (s) of this section, and (D) the bank makes a notation of such determination and the reasons therefor in the applicable loan file. A loan which is included within the aggregate limits of this subsection may subsequently be excluded if the applicable loan-to-value limit is satisfied because of a reduction in principal or senior liens, additional contribution of real estate collateral or increases in equity value substantiated by a current suitable appraisal or evaluation.

      (j) Loans made under this section may be for the purpose of building upon or improving the property of the borrower, and may be made in installments advanced at the discretion of the lending institution as the work progresses; provided at no time shall the ratio of the amount loaned to the then total value exceed fifty per cent or the ratio the final loan is to bear to the value of the completed property, whichever is the greater. Loans made to finance the construction of buildings and having a maturity of not more than twenty-four months or having a maturity of not more than thirty-six months if approved by the commissioner are not subject to the limitations imposed by this subsection.

      (k) Connecticut banks are authorized to make and invest in any mortgage loan, including construction and improvement loans, insured by the Federal Housing Administrator without regard to the limitations and restrictions of this section, except that such loans are subject to the following limitations: (1) In the case of loans secured by a first mortgage on real estate, the contract of insurance shall contain a provision that the debentures to be issued by the Federal Housing Administrator in settlement of such insurance, in the event of the foreclosure or default of any such loan or mortgage, shall be fully guaranteed as to payment of principal and interest by the government of the United States, (2) if the bank has a commitment for such insurance, issued by the Federal Housing Administration, it may grant a loan to a borrower for the purpose of building upon or improving the property of the borrower, the money so borrowed to be advanced at the discretion of the bank in installments as the work progresses, provided the total of all advances made does not exceed eighty per cent of the value of the property on the date of each advance or the proportion that the final loan is to bear to the final estimated value of the property, whichever is greater, except that the final advance may be in such an amount that the total of all advances made may equal but not exceed the amount of such commitment. The final advance shall not be made until the buildings or improvements have been inspected and approved by the Federal Housing Administration for an insured loan.

      (l) Subject to such regulations and restrictions as the commissioner finds necessary and proper, and subject to the limitations, restrictions and privileges contained in this subsection, Connecticut banks are authorized to make and invest in any loan which the Administrator of Veterans' Affairs guarantees, makes a commitment to guarantee, or insures pursuant to Title III of an Act of Congress entitled "Servicemen's Readjustment Act of 1944", as amended, without regard to the limitations and restrictions of this title. (1) Each such loan shall be subject to the provisions of this title prescribing the maximum limits, in amount, of: (A) A loan or loans to or total liability of any one individual, and (B) a loan upon the security of real estate, with relation to the appraised value of such real estate. (2) Each such loan shall be secured by a mortgage on real estate, except that a loan pursuant to Section 501, 502 or 503 of the Servicemen's Readjustment Act of 1944, as amended, for the purpose of repairing, altering or improving a building or buildings, and a loan pursuant to Section 505(a) of said act, need not be secured by a lien on real property.

      (m) (1) Additional sums, as evidenced by a note or notes signed by the then owner of record of the mortgaged premises, may be advanced by a Connecticut bank to such owner and shall be a part of the mortgage debt due the mortgagee, provided (A) such advancements shall not exceed the difference between the indebtedness at the time of the advance and the original mortgage debt, (B) the original mortgage deed shall have been recorded after October 1, 1951, and shall contain specific provisions granting this right, and (C) the terms of repayment of such advancements shall not extend the time of repayment beyond the maturity of the original mortgage debt. If the then owner of record is other than the original mortgagor, neither the original mortgagor nor any other former owner of the mortgaged premises is liable on such advancements.

      (2) Advancements may also be made by writing open-end mortgages in accordance with the provisions of section 49-2.

      (n) (1) Connecticut banks may participate with other lenders, which may be corporations, business trusts, pension trusts, governments or government agencies, in mortgage loans which Connecticut banks are permitted to invest in under this section, but the amount of the participating interest of any Connecticut bank in any one such loan shall not exceed the amount which such bank would be permitted to invest individually in any one loan of the same class under this section, and the amount of the participating interests shall be included in determining whether or not such bank is exceeding its loan limits.

      (2) Connecticut banks may participate in mortgage loans only pursuant to a written agreement between all the participating lenders and the servicing agent for such loan and the servicing agent may impose a service charge therefor.

      (o) Any Connecticut bank may grant a loan secured by a first mortgage on property of the borrower without regard to the limitations and restrictions on loans imposed by this section, if the borrower has an agreement with a housing authority created under section 8-40, secured by a commitment of the United States Department of Housing and Urban Development, pursuant to which the borrower is to construct housing upon the property and the housing authority is to purchase the property upon completion of construction, the money so borrowed to be advanced at the discretion of the bank as construction progresses, provided the ratio of the total of all advances made to the amount of the agreed purchase price at no time exceeds ninety per cent of the ratio of the value of the property to the expected value of the property upon completion of construction.

      (p) If a loan made under this section is secured by a mortgage on income-producing real estate and if the Connecticut bank relies upon such real estate or income production as primary security for the loan, the bank need not require that any person be personally liable on the note, in which case the bank shall retain in its files, in lieu of the financial statements required by subdivision (1) of subsection (h) of this section, such income projection statements, tenants' financial statements and other credit information as the bank deems necessary.

      (q) Subject to such regulations as the commissioner may adopt, Connecticut banks may make mortgage loans secured by leasehold interests, provided the leasehold estate securing such mortgage loan has a remaining term at the time such mortgage loan is originated by the bank which does not expire prior to the maturity of the mortgage loan obligation. The term of the leasehold estate shall not include any period for which the lease may grant an option of renewal.

      (r) Any Connecticut bank may, in connection with any mortgage loan made by it, contract with the mortgagor for interest to be paid currently or to accrue, and, if such interest is to accrue, for the interest to be added to the mortgage debt on which interest may be charged and collected. Accrued interest which is added to the mortgage debt shall be secured by the mortgage to the same extent as the principal of the mortgage debt.

      (s) The assets of a Connecticut bank may be invested in mortgage loans which do not conform to the requirements of this section, provided the governing board of the Connecticut bank, or a management committee or board committee appropriately designated by such governing board, has reviewed the nonconforming aspects of the particular mortgage loan or mortgage loan program and has determined such mortgage loan or mortgage loan program to be prudent under the circumstances and all such mortgage loans outstanding at the time of origination when combined with the loans made pursuant to subdivision (9) of subsection (i) of this section, do not exceed eight per cent of the assets of the bank. The bank shall make a notation of the prudence determination and the reasons for such determination in the applicable loan file. A loan which was included within the percentage of assets limitation of this subsection subsequently may be excluded if the loan is repaid or if the nonconforming aspects are eliminated or otherwise cease to exist.

      (1949 Rev., S. 5818, 5819; 1949, S. 516a-519a; 1951, 1953, 1955, S. 2679d; 1957, P.A. 89; 1959, P.A. 11, S. 1; 14; 74, S. 1; 1961, P.A. 81; 82; 93; 101, S. 1-3; 1963, P.A. 70; 94; 119, S. 1, 2; February, 1965, P.A. 76, S. 1; 99; 135; 163, S. 1; 209, S. 1; 222; 359, S. 1; 1967, P.A. 67, S. 1; 357; 427, S. 2; 434, S. 2; 461, S. 22; 1969, P.A. 87; 223, S. 1-3; 255; 265, S. 2; 504, S. 13-15; 1971, P.A. 310, S. 1; 1972, P.A. 114, S. 2; P.A. 73-167, S. 1, 2; 73-224, S. 1, 2; 73-669, S. 1, 2; P.A. 74-62, S. 1, 2; 74-101, S. 1, 2; P.A. 75-56, S. 2, 3; 75-200, S. 1-4; P.A. 76-28, S. 1, 2; 76-33, S. 2, 3; P.A. 77-74, S. 2, 3; 77-614, S. 161, 163, 610; P.A. 78-121, S. 97, 98, 113; P.A. 79-75; 79-126; P.A. 80-482, S. 247, 345, 348; P.A. 81-120, S. 6-10, 13; 81-391, S. 4; P.A. 85-368, S. 1-3, 5; 85-379, S. 20, 53; P.A. 86-268, S. 2, 7; P.A. 87-9, S. 2, 3; P.A. 90-21; P.A. 91-357, S. 24, 78; P.A. 92-12, S. 37; P.A. 94-122, S. 118, 340; P.A. 95-70, S. 2, 8; P.A. 96-44, S. 3.)

      History: 1959 acts made the following changes: In Subsec. (5), the loan limit was changed from $10,000 to $15,000, in Subsec. (11)(a) the limit was changed from $15,000 to $20,000, in Subsec. (11)(d) the maximum term of loans was changed from 20 to 25 years and in Subsec. (15) the loan limit was changed from 10% to 15%; 1961 acts made the following changes: In Subsec. (6) (b) was added, in Subsec. (7) the investment limit was changed from 70% to 85% and the exception added, in Subsec. (8) the amount of principal indebtedness was changed from 40% to 50%, in Subsec. (13) the opening clause is new, in Subsec. (14) the reference to Subsec. (7) is new and former clause c. of Subdiv. (1) was deleted, in Subsec. (15) the provision re guarantee by the administrator of veterans' affairs was changed from a 50% minimum guarantee and the maximum amount of loan changed from $15,000 to $20,000; 1963 acts added Subsec. (17), added proviso re loans secured by mortgage accepted by administrator of veterans' affairs in Subsec. (15) and raised limit from 15% to 25% of assets in that Subsec., increased loan limit from 66.66% to 75% of real estate's value in Subsec. (10) and changed wording slightly in provision re due date of loan and changed per cent of loan which must be current balance to avoid classification as loan in Subsec. (11) from 66.66% to 75% of property's value; 1965 acts changed mile limit on loans outside state from 25 to 50 from home office of lending institution in Subsec. (1) and added Subdiv. (b) in that Subsec. re first mortgages, increased dollar limit on loans from $20,000 to $30,000 and bank's loan limit from 25% to 35% of assets in Subsec. (15) and deleted requirement that loan be approved by administrator of veterans' affairs beforehand, substituted "partially guaranteed" loans for "portions of loans guaranteed" in Subsec. (7), allowed loans for 90% rather than 80% of real estate's value in Subsec. (11) and increased maximum amount from $20,000 to $25,000 in Subdiv. (a), added provision re copy of sales agreement in Subdiv. (c) and required owner's residency in Subdiv. (e) of that Subsec., deleted requirement in Subsec. (17) that bank commissioner approve agreements between participating banks and allowed any "qualified" bank to be servicing agent "whether or not it is a participating bank", deleted limit on individual loan of the greater of $20,000 or 0.5% of bank's assets and, in Subsec. (5) replaced $15,000 limit on loan to one entity with new limits depending on whether loan is to one entity or for parcel of land; 1967 acts repealed Subsec. (6) re guaranties for loans, renumbering as necessary, made Subsec. (11)(e) applicable with respect to condominiums, substituted "greater" for "less" in provision re total of advances under Subsec. (13) and deleted references to state bank and trust companies and their savings departments throughout section; 1969 acts included savings and loan associations and building and loan associations as qualified banks in Subsec. (16)(d)(2), deleted requirement that loans exceeding 70% of assets be insured by FHA or guaranteed under Servicemen's Readjustment Act of 1944 in Subsec. (6), changed period for final payment from 25 to 30 years and first payment from 18 to 24 months after issuance in Subsec. (9), changed loan limit from $25,000 to $35,000, total limit on bank loans from 10% to 25% of assets, period for final payment from 25 to 30 years and first payment from 1 year to 24 months in all cases (where previously first payment date depended on type of loan) in Subsec. (10), inserted new Subsec. (12) and renumbered as necessary and added Subsecs. (18) and (19), inserting references as necessary in Subsecs. (9) and (10); 1971 act changed maturity date in Subsec. (1)(b) to 10 years; 1972 act applied Subsec. (17) to "lenders" rather than qualified banks and qualified participating banks and increased limit in Subdiv. (b) from 5% to 10% of assets, restricting savings bank interests above 5% of assets to residential real estate; P.A. 73-167 rephrased Subsec. (15) and deleted $30,000 limit on individual loans; P.A. 73-224 increased limit in Subsec. (10)(a) from $35,000 to $45,000; P.A. 73-669 specified permission to invest in loans secured by first mortgage which savings banks may invest in under Subsec. (15); P.A. 74-62 deleted requirement that residential property be "detached" dwellings in Subsec. (10)(e); P.A. 74-101 changed percentage of assets which may be lent in Subsec. (5) from 1% to 2%; P.A. 75-56 deleted $45,000 limit on loans in Subsec. (10) and provision requiring that loans be secured by mortgage on fully-completed, single-family residence within 50 miles of association's place of business; P.A. 75-200 changed loan limit from 75% to 80% of real estate's value and period for final payment from 30 to 42 years in Subsec. (9), similarly changed final payment period in Subsec. (10) and changed 10% and 5% limits in Subsec. (17)(b) to 25% and 10%, respectively; P.A. 76-28 changed percentage of property's value in Subsec. (10)(a) from 75% to 80%; P.A. 76-33 repealed Subsec. (6) re total investment limit; P.A. 77-74 allowed appraisal by one person where previously at least two were required in Subsecs. (2) and (4); P.A. 77-614 placed banking commissioner and insurance commissioner within the department of business regulation and made their respective departments divisions within that department, effective January 1, 1979; P.A. 78-121 made technical changes, deleting reference to repealed Subsec. (6) in Subsec. (18) and revising reference to Subsec. (10) in Subsec. (19); P.A. 79-75 changed limit on interests of savings banks in Subsec. (17)(b) from 25% to 60% of assets and deleted restriction re savings banks' interests in mortgage loans whereby all amounts over 10% of assets must be in residential real estate; P.A. 79-126 added "notwithstanding" clause in Subsec. (7) and removed provision limiting deferral of amortization to cases where, after reappraisal, principal indebtedness is 50% or less of property's value; P.A. 80-482 restored banking and insurance divisions as independent departments and abolished the department of business regulation; P.A. 81-120 amended Subsec. (1) to delete the requirement that loans must be secured by a first mortgage and to permit loans to be secured by a mortgage subordinate to another mortgage if the real estate is residential and the amount of the loan does not exceed certain limits, amended Subsec. (3) to provide that the real estate may be encumbered by permissible prior mortgages, amended Subsec. (14) to delete the requirement that loans pursuant to the Servicemen's Readjustment Act be secured by a first or second mortgage, amended Subsec. (15) to delete the requirement that loans secured by mortgages on real estate outside the state must be secured by first mortgages, and amended Subsec. (17) to delete the requirement that participation loans secured by a mortgage on real estate located anywhere in the United States must be secured by a first mortgage; P.A. 81-391 added Subsec. (20) permitting the accrual of interest on mortgage loans and the addition of such accrued interest to the mortgage debt; P.A. 85-368 and P.A. 85-379 amended Subsec. (10) to increase from 25% to 35% the aggregate amount of assets a savings bank may invest in uninsured mortgage loans up to 90% of real estate value; P.A. 85-368 also added Subsec. (21) re the granting of unrestricted mortgage loans up to 90% of real estate value, amending Subsec. (11) to refer to Subsec. (21), and P.A. 85-379 also repealed Subsec. (5); P.A. 86-268 amended Subsec. (9) and (10) to authorize and validate mortgage payment schedules provided such schedule required at least semiannual payments; (Revisor's note: Pursuant to P.A. 87-9 "banking department" was changed editorially by the Revisors to "department of banking"); P.A. 90-21 amended Subsec. (15) to require loans secured by a mortgage on real estate located outside of the state which exceed 10% of the assets of the savings bank and exceed 80% of the value of the real estate to be insured or guaranteed; P.A. 91-357 made technical changes; P.A. 92-12 redesignated Subsecs., Subdivs. and Subparas. and made technical changes; P.A. 94-122 added a new Subsec. (a) defining "mortgage loan", renumbered former Subsec. (a) as Subsec. (b), deleted former Subsec. (a)(2) re savings banks' mortgage loans, deleted former Subsec. (a)(3) referring to leaseholds as mortgages, renumbered former Subsec. (a)(4) as Subdiv. (2) and allowed subordinate liens in connection with all residential loans, nonresidential loans with a loan-to-value ratio of less than 50% and other nonresidential loans as long as all such loans do not in the aggregate exceed 25% of the bank's equity capital and loss reserves, renumbered former Subsec. (b) as Subsec. (c) and included "dishwashing equipment" as qualifying household equipment, renumbered former Subsec. (c) as Subsec. (d) and broadened and made uniform the exemptions to the requirement that real estate be unencumbered and required a satisfactory certificate of title or other suitable form of title review for all mortgage loans, renumbered former Subsec. (d) as Subsec. (e) and allowed real estate to be "otherwise suitably evaluated" before a loan is made and required all banks to adopt an appraisal policy, renumbered former Subsecs. (e) and (f) as Subsecs. (f) and (g) and clarified that the calculation of all loan-to-value ratios must include any prior mortgages or liens, deleted former Subsec. (g) re restrictions for savings banks' mortgage loans, deleted the requirements that savings banks' escrow tax and insurance payments on loans between 80% and 90% and that loans with between 80% and 90% loan-to-value ratios make up no more than 35% of the banks' assets in Subsec. (h), added exemptions (A) through (D) to the requirement that mortgage loans be amortized in Subsec. (h), consolidated existing exemptions to loan-to-value limits for government guaranteed loans and added exemptions parallel to those allowed under FDIC rules in new Subsec. (i), renumbered former Subsec. (i) as Subsec. (j) and made uniform the provisions for construction loans, deleted former Subsec. (j), made uniform the provisions re loans insured by the FHA in Subsec. (k), made uniform the provisions re veterans' loans and deleted references to savings banks' geographic limits and an outdated aggregate limit on residential loans in Subsec. (l), deleted Subsec. (m) re a 35% of assets limit on savings banks' out-of-state mortgage loans and other limits, renumbered former Subsec. (n) as Subsec. (m) and made uniform powers concerning future advances, renumbered former Subsec. (o) as Subsec. (n) and removed the limit on savings banks' participations of 60% of assets, removed geographic limits on savings banks' participation loans, deleted the requirement that there be no subordinate interests in savings banks' participation loans and clarified that a service charge is optional, renumbered former Subsecs. (p) and (q) as Subsecs. (o) and (p), added new Subsec. (q), deleted former Subsec. (s) re loan leeway provisions, added new Subsec. (s), and made technical changes, effective January 1, 1995; Sec. 36-99 transferred to Sec. 36a-261 in 1995; P.A. 95-70 amended Subsec. (b)(2) re mortgages held by a person other than a Connecticut bank, re the subsequent exclusions from the aggregate limit, and to make a technical correction in Subpara. (B)(iii), added Subsec. (d)(3)(D) re material adverse risk, amended Subsec. (e) to require approval of appraisers, to add the reference to management and board committees and agent, and to require the appraisal policy to include procedures for approving and selecting appraisers, amended Subsec. (i)(9) to add "or loan programs", to add the reference to management and board committees, and to add "real estate" before "collateral" and amended Subsec. (s) to add the reference to management and board committees and to add provision re exclusion from the percentage of asset limitations, effective May 31, 1995; P.A. 96-44 amended Subsec. (i)(9)(C) to reference the percentage of assets limitation in Subsec. (s), amended Subsec. (s) re certain loans limited to 8% of the bank's assets, and made other changes re bank investments.

      See Sec. 36a-759 re minority of veterans, spouses and widows for purposes of Servicemen's Readjustment Act.

      Annotations to former section 36-99:

      Meaning of "unencumbered". 112 C. 656. Cited. 119 C. 128. Only person qualified to issue certificate of title would be attorney at law. 128 C. 332. Cited. 150 C. 339.

      Cited. 30 CS 56.

      Sec. 36a-262. (Formerly Sec. 36-98b). Limitations on liabilities of any one obligor. Exemptions. (a) Except as otherwise provided in this section, the total direct or indirect liabilities of any one obligor that are not fully secured, however incurred, to any Connecticut bank, exclusive of such bank's investment in the investment securities of such obligor, shall not exceed at the time incurred fifteen per cent of the equity capital and reserves for loan and lease losses of such bank. The total direct or indirect liabilities of any one obligor that are fully secured, however incurred, to any Connecticut bank, exclusive of such bank's investment in the investment securities of such obligor, shall not exceed at the time incurred ten per cent of the equity capital and reserves for loan and lease losses of such bank, provided this limitation shall be separate from and in addition to the limitation on liabilities that are not fully secured. For purposes of this section, a liability shall be considered to be fully secured if it is secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the liability. For purposes of determining the limitations of this section, in computing the liabilities of an obligor, a liability is incurred at the time of the closing of the transaction, unless such closing is preceded by a legally binding written commitment to enter into the transaction, in which case such liability is incurred at the time of commitment and is net of any liabilities of the obligor to such bank that will be paid with the proceeds of the commitment at the time of closing. The limitations provided for in this subsection may be exceeded for a period of time not to exceed six hours if at the closing of any transaction at which such obligor incurs such liabilities to a Connecticut bank in excess of such limitations, such bank immediately assigns or participates out to one or more other persons an amount that constitutes not less than the excess over the applicable limitation. Obligations as endorser or guarantor of negotiable or nonnegotiable installment consumer paper which carry an agreement to repurchase on default, unless the bank's sole recourse is to an agreed reserve held by it, in which case the liability shall be excluded, a full recourse endorsement or an unconditional guarantee by the person, partnership, association or corporation transferring the same, shall be subject under this section to a limitation of fifteen per cent of the bank's equity capital and reserves for loan and lease losses in addition to the applicable limitations of this section with respect to the makers of such obligations; provided, upon certification by an officer of the bank designated for that purpose by the governing board that the responsibility of each maker of such obligations has been evaluated and the bank is relying primarily upon each such maker for the payment of such obligations, the limitations of this section as to the obligations of each maker shall be the sole applicable loan limitation; and provided such certification shall be in writing and shall be retained as part of the records of such bank.

      (b) Liabilities of one obligor shall be attributed to another person and each such person shall be deemed to be an obligor when proceeds of a loan are to be used for the direct benefit of the other person, to the extent of the proceeds to be so used, or a common enterprise is deemed to exist between such persons. For purposes of this section, the proceeds of a loan to an obligor shall be deemed to be used for the direct benefit of another person and shall be attributed to the person when the proceeds, or assets purchased with the proceeds, are transferred to another person, other than in a bona fide arm's length transaction where the proceeds are used to acquire property, goods or services. For purposes of this section, a common enterprise shall be deemed to exist and liabilities of separate obligors shall be aggregated:

      (1) When the expected source of repayment for each liability is the same for each obligor and neither obligor has another source of income from which the liability, together with the obligor's other liabilities, may be fully repaid. An employer shall not be treated as a source of repayment under this subdivision because of wages and salaries paid to an employee, unless the standards of subdivision (2) of this subsection are met;

      (2) When loans are made (A) to obligors who are related directly or indirectly through common control, including where one obligor is directly or indirectly controlled by another obligor; and (B) substantial financial interdependence exists between or among the obligors. Substantial financial interdependence is deemed to exist when fifty per cent or more of one obligor's gross receipts or gross expenditures, on an annual basis, are derived from transactions with the other obligor. Gross receipts and expenditures include gross revenues, expenses, intercompany loans, dividends, capital contributions, and similar receipts or payments;

      (3) When separate persons borrow from a Connecticut bank to acquire a business enterprise of which such obligors will own more than fifty per cent of the voting securities or voting interests, in which case a common enterprise is deemed to exist between the obligors for purposes of combining the acquisition loans; or

      (4) When the commissioner determines, based upon an evaluation of the facts and circumstances of particular transactions, that a common enterprise exists.

      (c) Loans to an obligor and its subsidiary, or to different subsidiaries of an obligor shall not be aggregated unless either the direct benefit or the common enterprise test is met. For purposes of this subsection, a corporation or a limited liability company is a subsidiary of an obligor if the obligor owns or beneficially owns directly or indirectly more than fifty per cent of the voting securities or voting interests of the corporation or company.

      (d) Loans to a partnership, joint venture, limited liability company or association shall be deemed to be loans to each member of the partnership, joint venture, limited liability company or association. This provision shall not apply to limited partners in limited partnerships or to members of joint ventures, limited liability companies or associations unless the partners or members, by the terms of the partnership or membership agreement, are held generally liable for the debts or actions of the partnership, joint venture, limited liability company or association, and such terms are valid under applicable law. Loans to partners or members of a partnership, joint venture, limited liability company or association are not attributed to the partnership, joint venture, limited liability company or association unless either the direct benefit or the common enterprise test is met. Both the direct benefit and common enterprise tests are met between a partner or member of a partnership, joint venture, limited liability company or association and such partnership, joint venture, limited liability company or association, when loans are made to the partner or member to purchase an interest in the partnership, joint venture, limited liability company or association. Loans to partners or members of a partnership, joint venture, limited liability company or association are not attributed to other members of the partnership, joint venture, limited liability company or association unless either the direct benefit or the common enterprise test is met.

      (e) Loans to foreign governments and their agencies and instrumentalities shall be aggregated only if the loans fail to meet either the means test or the purpose test at the time the loan is made. The means test is met if the obligor has resources or revenue of its own sufficient to service its debt obligations. If the government's support, excluding guarantees by a central government of the obligor's debt, exceeds the obligor's annual revenues from other sources, it shall be presumed that the means test has not been satisfied. The purpose test is met if the purpose of the loan is consistent with the purposes of the obligor's general business. In order to show that the means test or the purpose test has been satisfied, a Connecticut bank shall, at a minimum, retain in its files the following items:

      (1) A statement, accompanied by supporting documentation, describing the legal status and the degree of financial and operational autonomy of the borrowing entity;

      (2) Financial statements for the borrowing entity for a minimum of three years prior to the date the loan or extension of credit was made or for each year that the borrowing entity has been in existence, if less than three;

      (3) Financial statements for each year the loan is outstanding;

      (4) The bank's assessment of the obligor's means of servicing the loan, including specific reasons in support of that assessment. The assessment shall include an analysis of the obligor's financial history, its present and projected economic and financial performance, and the significance of any financial support provided to the obligor by third parties, including the obligor's central government; and

      (5) A loan agreement or other written statement from the obligor which clearly describes the purpose of the loan. The written representation shall ordinarily constitute sufficient evidence that the purpose test has been satisfied. However, when, at the time the funds are disbursed, the bank knows or has reason to know of other information suggesting the obligor will use the proceeds in a manner inconsistent with the written representation, it may not, without further inquiry, accept the representation.

      (f) Obligations of the United States or this state, or of any town, city, borough or legally established district in this state which has the power to levy taxes for the payment of such obligations, shall not be subject to any limitation based upon such equity capital and reserves for loan and lease losses.

      (g) Obligations of any one obligor, with the exception of loans secured by mortgage of real estate and insured by the Federal Housing Administrator, which are secured or covered by guaranties, or by commitments or agreements to take over or to purchase, made by the United States or the Federal Reserve Bank or by any department, bureau, board, commission or establishment of the United States, including any corporation wholly owned, directly or indirectly by the United States, which, at the time of making such guaranty or commitment or agreement to take over or purchase, is authorized by law to enter into contracts with any financing institution guaranteeing such financing institution against loss of principal and interest on loans, taxes or advances or agreeing to take over or purchase the same, shall not be subject to any limitation based upon such equity capital and reserves for loan and lease losses.

      (h) Obligations of any one obligor secured by the pledge of direct or fully guaranteed obligations of the United States shall be limited to fifty per cent of such equity capital and reserves for loan and lease losses; except that obligations secured by the pledge of direct or fully guaranteed obligations of the United States which will mature in not more than eighteen months shall not be subject under this section to any limitation based upon such equity capital and reserves for loan and lease losses.

      (i) Any Connecticut bank may accept drafts or bills of exchange drawn upon it having not more than six months' sight to run, exclusive of days of grace, which grow out of transactions involving the importation or exportation of goods, or which grow out of transactions involving the domestic shipment of goods, provided shipping documents conveying or securing title are attached at the time of acceptance, or which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering readily marketable staples. No Connecticut bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its equity capital and reserves for loan and lease losses; provided the commissioner may authorize any Connecticut bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred per cent of its equity capital and reserves for loan and lease losses; provided further, the aggregate of acceptances growing out of domestic transactions shall in no event exceed fifty per cent of such equity capital and reserves for loan and lease losses.

      (j) The following shall not be subject under this section to any limitation based upon such equity capital and reserves for loan and lease losses: (1) Obligations in the form of bankers' acceptances of other banks, provided such acceptances have at the time of discount not more than six months' sight, exclusive of days of grace, and are endorsed by at least one other bank; (2) obligations resulting from the purchase of securities subject to a resale agreement; and (3) the rental obligation of a lessee of real or personal property under a lease made or held by such bank.

      (k) Obligations of any one obligor which are secured by a first mortgage on real estate shall be limited to fifty per cent of such equity capital and reserves for loan and lease losses, provided the total obligations to any one obligor to which this subsection and subsection (a) of this section apply shall not exceed fifty per cent of such equity capital and reserves for loan and lease losses. Loans made to manufacturing, industrial or commercial borrowers when the bank looks for repayment out of the operations of the borrowers' business, relying primarily on the borrowers' general credit standing and forecast of operation, shall not be considered to be secured by a mortgage on real estate for purposes of this subsection, even though such loan may be secured by a mortgage on real estate.

      (P.A. 85-379, S. 41; P.A. 86-403, S. 103, 132; P.A. 91-357, S. 23, 78; P.A. 92-97, S. 2, 4; P.A. 94-122, S. 119, 340; P.A. 03-259, S. 18; P.A. 04-8, S. 4.)

      History: P.A. 86-403 made technical changes; P.A. 91-357 made technical changes in Subsec. (a); P.A. 92-97 added provisions in Subsec. (a) specifying when a liability is incurred for purposes of determining limitations of section; P.A. 94-122 consolidated the limits on loans to one obligor for all banks using the savings banks section as a base, deleted Subsecs. (f) and (h) and renumbered former Subsecs. (g) and (i) as Subsecs. (f) and (g), clarified in Subsec. (g) that certain commercial loans secured by mortgages are still limited to the 15% of equity capital and loss reserves limit on loans to one obligor and cannot take advantage of the 50% of equity capital and loss reserves limit on first mortgage loans to any one obligor, and made technical changes, effective January 1, 1995; Sec. 36-98b transferred to Sec. 36a-262 in 1995; P.A. 03-259 amended Subsec. (a) by deleting provision re computing liabilities of a partnership and a general partner, added new Subsecs. (b) to (e) re attribution of liabilities of obligors, aggregation of loans to an obligor and its subsidiaries, loans to a partnership, joint venture, limited liability company or association, and aggregation of loans to foreign governments and their agencies and instrumentalities, and redesignated existing Subsecs. (b) to (g) as new Subsecs. (f) to (k); P.A. 04-8 made a technical change in Subsec. (b)(1), effective April 16, 2004.

      Sec. 36a-263. Insider loans. (a) As used in this section, "executive officer" has the meaning given to such term in 12 CFR 215.2 of Subpart A of Federal Reserve Board Regulation O, 12 CFR Part 215, as from time to time amended. With the exception of Sections 215.7 and 215.13 of Subpart A of Federal Reserve Board Regulation O, 12 CFR Part 215, as from time to time amended, Connecticut banks are subject to and shall comply with the restrictions contained in 12 CFR Sections 337.3 and 349, as from time to time amended, and no executive officer, director or principal shareholder of a Connecticut bank or any of its affiliates shall knowingly receive, or knowingly permit any of such person's related interests to receive, from a Connecticut bank, directly or indirectly, any extension of credit that violates such restrictions. No executive officer, director, employee, agent or other person shall participate in any conduct of the affairs of the bank that violates this subsection.

      (b) If the commissioner finds it necessary in the interests of the safety and soundness of Connecticut banks and of depositors, the commissioner may adopt regulations, in accordance with chapter 54, providing for further requirements governing extensions of credit to directors, executive officers, principal shareholders, and the related interests and associates of such persons.

      (c) The commissioner may require Connecticut banks to file periodic reports with the commissioner regarding the indebtedness owing to such banks by directors, executive officers and principal shareholders of the respective banks, or any related interests or associates of such persons. These reports shall include such information as the commissioner may require.

      (d) The commissioner may take enforcement action with respect to violations of this section.

      (P.A. 94-122, S. 120, 340; P.A. 03-259, S. 19.)

      History: P.A. 94-122 effective January 1, 1995; P.A. 03-259 amended Subsec. (a) by defining "executive officer" and adding prohibitions on extension of credit that violates restrictions, and participation in conduct of affairs of bank that violates Subsec. (a).

      Sec. 36a-264. (Formerly Sec. 36-68). Loans secured by own stock or stock of holding company prohibited. Exception. A capital stock Connecticut bank shall not make any loan on or discount any paper secured by a pledge of its own stock or of the stock of a holding company of which such bank is an affiliate, unless such pledge shall be necessary to prevent loss upon a debt previously contracted by such bank in good faith.

      (1949 Rev., S. 5792; 1969, P.A. 504, S. 20; P.A. 83-273, S. 1, 2; P.A. 85-379, S. 5; P.A. 94-122, S. 121, 340.)

      History: 1969 act prohibited pledge of stock of bank holding company of which company in question is an affiliate as security for loan, etc. and defined "bank holding company"; P.A. 83-273 allowed state banks and trust companies to accept pledges of their own stock or that of their bank holding company as security for loans if the pledge is necessary to prevent loss on a previously existing debt; P.A. 85-379 replaced references to "bank and trust company" and "banks" with references to "capital stock bank" and "capital stock banks" and replaced references to "bank holding company" with references to "holding company"; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-68 transferred to Sec. 36a-264 in 1995.

      Annotations to former section 36-68:

      Refers to specific pledge not inconsistent with lien for stockholder's debt. 26 C. 157. Prohibition of loans on its stock implies prohibition of purchase of stock by corporation. 52 C. 99. Corporation is forbidden by implication to purchase its stock. Id.

      Sec. 36a-265. (Formerly Sec. 36-9g). Alternative mortgage loan. (a)(1) "Mortgage loan" means a loan secured by a first mortgage on one, two, three or four family, owner-occupied residential real property;

      (2) "Standard mortgage loan" means a mortgage loan authorized by section 36a-261 or section 36a-457b for the Connecticut bank or Connecticut credit union making such loan;

      (3) "Alternative mortgage loan" means a mortgage loan which is a reverse annuity mortgage loan or graduated payment mortgage loan, other than a standard mortgage loan;

      (4) "Reverse annuity mortgage loan" means a mortgage loan in which loan proceeds are advanced to the mortgagors, in installments, either directly or indirectly, and which together with unpaid interest, if any, is to be repaid in accordance with subdivision (2) of subsection (e) of this section; and

      (5) "Graduated payment mortgage loan" means a mortgage loan, other than a standard mortgage loan, in which principal and interest payments, if any, and the making of additional advances, if any, are designed to reflect the prospective increasing or decreasing income of the mortgagor.

      (b) Notwithstanding any other provision of the general statutes, Connecticut banks and Connecticut credit unions may make alternative mortgage loans in accordance with this section. The provisions of the general statutes governing standard mortgage loans by a Connecticut bank or Connecticut credit union making such loans shall apply to alternative mortgage loans unless inconsistent with the provisions of this section. Nothing in this section shall be construed to prohibit a Connecticut bank or Connecticut credit union from making any loan which is not an alternative mortgage loan, provided such loan otherwise complies with the general statutes.

      (c) A Connecticut bank or Connecticut credit union making an alternative mortgage loan may contract with the mortgagor for interest to be paid currently or to accrue, and if accrued, for accrued interest to be added to the mortgage debt on which interest may be charged and collected. Such accrued interest which is added to the mortgage debt shall be secured by the mortgage to the same extent as the principal of such alternative mortgage debt. No instrument evidencing an alternative mortgage loan and no deed granting an alternative mortgage shall contain any provision imposing a penalty for prepayment of such loan.

      (d) (1) Each Connecticut bank and Connecticut credit union that offers or makes any type of alternative mortgage loan shall disclose to each person who requests an application for a mortgage loan or who states that such person is a prospective mortgage loan applicant such information concerning all types of mortgage loans, including each type of alternative mortgage loan, offered by such bank or credit union as the commissioner shall prescribe by regulations. The commissioner may prescribe forms for such disclosure.

      (2) Each prospective mortgage loan applicant shall have the choice of applying for a standard mortgage loan or any type of alternative mortgage loan offered by such Connecticut bank or Connecticut credit union.

      (e) (1) If the mortgagee or its assignee and the mortgagor agree, any installment payment of either the loan proceeds or any annuity purchased with the loan proceeds of a reverse annuity mortgage loan may be reduced by an amount used for partial repayment of the mortgage debt, except as provided in subdivision (2) of this subsection.

      (A) Notwithstanding any such reduction, each mortgagor shall receive a cash payment in each installment for the term of the annuity or, if no annuity, for the term during which the mortgagee contracted with the mortgagor to advance loan proceeds; and

      (B) No repayments of any part of the mortgage debt shall be required from the mortgagor after termination of the period during which loan proceeds or any annuity purchased with the loan proceeds are advanced to the mortgagor.

      (2) If the mortgagee or its assignee and the mortgagor agree, and at the option of the mortgagee, advances under a reverse annuity mortgage loan may terminate and the entire unpaid balance of the loan plus accrued interest may become due and payable upon the occurrence of any of the following events:

      (A) The death of the last surviving mortgagor;

      (B) The sale or other transfer of the real estate securing the loan to a person other than any of the original mortgagors; or

      (C) Any other occurrence which materially decreases the value of the property securing the loan or which will have the likely effect of causing the loan not to be repaid. Any such additional occurrence shall be clearly recited in the mortgage deed.

      (f) Every graduated payment mortgage loan offered or made by a Connecticut bank or Connecticut credit union shall provide for interest at a specified rate or a series of specified rates.

      (g) The commissioner may adopt such regulations pursuant to chapter 54 as the commissioner deems necessary to carry out the provisions of this section.

      (P.A. 78-114, S. 1-7; P.A. 79-158, S. 1; P.A. 88-65, S. 47; P.A. 94-122, S. 122, 340; P.A. 96-109, S. 3; P.A. 02-73, S. 77.)

      History: P.A. 79-158 clarified applicability of definitions in Subsec. (a), clarified applicability of provisions to alternative mortgage loans in Subsec. (b), added provisions re interest on alternative loans in Subsec. (c), required disclosure to persons requesting mortgage loan applications in Subsec. (d), required commissioner to review mortgage deed re default provisions and inserted new Subdiv. (3) in Subsec. (e), renumbering former Subdiv. (3) accordingly, inserted new Subsec. (f) and relettered former Subsecs. (f) and (g) accordingly; P.A. 88-65 made a technical change in Subsec. (a)(5), deleted obsolete Subsec. (e), re prototype plans for alternative mortgage loans and relettered remaining Subsecs; P.A. 94-122 deleted the definition of financial institution, renumbered the remaining definitions and made technical changes, effective January 1, 1995; Sec. 36-9g transferred to Sec. 36a-265 in 1995; P.A. 96-109 made a technical change, adding reference to Sec. 36a-442 in Subsec. (a)(2); P.A. 02-73 amended Subsec. (a)(2) by replacing reference to Sec. 36a-442 with reference to Sec. 36a-457b.

      Annotations to former section 36-9g:

      Cited. 190 C. 756.

      Cited. 38 CS 8.

      Sec. 36a-266. (Formerly Sec. 36-101). Investment in loans for repairs or reconstruction of property damaged by emergency. A Connecticut bank may invest its assets in loans, the proceeds of which are to be used solely for the repair or reconstruction of property damaged as a result of an emergency, upon such terms and conditions and for such period as the commissioner may prescribe, provided such terms and conditions appear to the commissioner to be in the best interests of the public. An emergency for purposes of this section means conditions arising from damage to housing or business as a result of a local catastrophe of a type not ordinarily covered by hazard insurance and is deemed to be in existence upon proclamation by the Governor.

      (November, 1955, S. N214; 1961, P.A. 420; 1967, P.A. 461, S. 24; P.A. 77-614, S. 161, 610; P.A. 78-121, S. 83, 113; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 123, 340.)

      History: 1961 act authorized loans for repairs required by emergencies, not confined to 1955 floods; 1967 act deleted references to state bank and trust companies and their savings departments; P.A. 77-614 replaced bank commissioner with banking commissioner, effective January 1, 1979; P.A. 78-121 substituted "governing board" for "board of directors or trustees"; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 94-122 consolidated the authority for all banks to make emergency loans for housing damaged by disasters, effective January 1, 1995; Sec. 36-101 transferred to Sec. 36a-266 in 1995.

      Secs. 36a-267 to 36a-274. Reserved for future use.

PART III
INVESTMENTS

      Sec. 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.

      (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 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;

      (4) 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; and

      (5) Debt mutual funds, provided the portfolios of the investment companies consist solely of investments described in subdivisions (1) to (4), inclusive, of this subsection.

      (P.A. 94-122, S. 124, 340; P.A. 95-70, S. 3, 8; P.A. 96-44, S. 4; 96-271, S. 206, 254; P.A. 97-35, S. 1; P.A. 98-177, S. 1; 98-178, S. 2.)

      History: P.A. 94-122 effective January 1, 1995; P.A. 95-70 amended Subsec. (b) to delete the references re the designation of debt securities and to make the 15% maximum applicable to the entire subsection, deleted Subsec. (c) re a security or portfolio that ceases to meet the restrictions of Subsec. (b), added a new Subsec. (c)(1) excluding debt securities specified in Subparas. (A), (B) and (C) from restrictions in Subsec. (b), renumbered former Subsec. (d) as Subsec. (c)(2), amended Subsec. (c)(2) to delete Subdivs. (1), (2) and (3) re exclusions from certain investment restrictions and to substitute as exclusions certain general obligations of federal and specified federally-related organizations, to delete reference to Subsec. (b)(2), to add references to Subsec. (b)(3) and (4), and to renumber Subsec. (d)(4) as Subsec. (c)(3), and added a new Subsec. (d) re requirements on governing board re investments under this section, effective May 31, 1995; P.A. 96-44 made numerous changes re investments in debt securities and added provisions re debt mutual funds, amended Subsec. (a) to substitute "any obligation" for "obligations" and to define "debt mutual fund", and amended Subdiv. (c)(4) to include "government sponsored enterprises"; P.A. 96-271 amended Subsec. (c) to add provision in Subdiv. (3) specifically defining "state" and delete provision that referred to Sec. 33-284(v) for definition of "state", effective January 1, 1997, but failed to take effect, Subdiv. (3) having been deleted in its entirety by P.A. 96-44; P.A. 97-35 redefined "debt securities" to include repurchase agreements; P.A. 98-177 made technical changes in Subsec. (a); P.A. 98-178 amended Subsec. (a) by deleting phrase "commonly known as investment securities", adding language re attributes similar to marketable obligations and making technical changes.

      Sec. 36a-276. Investments in equity securities and equity mutual funds. (a) As used in this section: (1) "Equity security" means any stock or similar security, certificate of interest or participation in any profit-sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership interest, interest in a joint venture or certificate of interest in a business trust; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any put, call, straddle or other option or privilege of buying such a security from or selling such a security to another without being bound to do so, but excludes a debt mutual fund, as defined in section 36a-275, and an equity mutual fund; and (2) "equity 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 which is 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, but excludes a debt mutual fund, as defined in section 36a-275.

      (b) In addition to other investments authorized by sections 36a-275 to 36a-277, inclusive, and 36a-280, any Connecticut bank may purchase or hold for its own account equity securities and equity mutual funds, without regard to any other liability to the Connecticut bank of the issuer of such equity securities and equity mutual funds, provided: (1) The total amount of equity securities and equity mutual funds of any one 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 (2) the total amount of any equity securities and equity 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 sections 36a-275 to 36a-277, inclusive, and 36a-280, any Connecticut bank may purchase or hold for its own account, without regard to any other liability to the Connecticut bank of the issuer, ten per cent or more of the equity securities, including convertible securities, of a bank, out-of-state bank or holding company in accordance with law.

      (d) In addition to other investments authorized by sections 36a-275 to 36a-277, inclusive, and 36a-280, any Connecticut bank, with the approval of the commissioner, may purchase or hold for its own account, without regard to any other liability to the Connecticut bank of the issuer, a controlling interest in a corporation or other entity, the functions of which are limited to one or more of the functions which the bank may carry on directly in the exercise of its express or incidental powers. For purposes of this subsection, a "controlling interest" means at least fifty-one per cent of the equity securities issued by the corporation or other entity, unless the commissioner determines that under the circumstances, a lesser percentage constitutes effective working control of the corporation or other entity.

      (e) The bank shall notify the commissioner, in writing, twenty-four hours prior to making any investment under subsections (b) and (c) of this section which would result in such bank having invested in the aggregate in twenty-five per cent or more of the equity securities of a corporation.

      (P.A. 94-122, S. 125, 340; P.A. 95-70, S. 4, 8; 95-155, S. 21, 29; P.A. 96-44, S. 5.)

      History: P.A. 94-122 effective January 1, 1995; P.A. 95-70 amended Subsec. (b)(2) by deleting reference to laws and supervisory authority governing the bank and by adding a holding company to the list, amended Subsec. (c) by deleting reference to Subsec. (e), amended Subsec. (d) by changing "ten" to "fifteen", and by renumbering the Subdiv. and adding Subdiv. (3) re determination of prudence, amended Subsec. (e) by adding references to Subsec. (b)(1) and (c), by deleting reference to time of investment re the rating, by deleting reference to the opinion of the bank and instead requiring a determination by the governing board re prudence, by deleting the sentence re review and retention of investments that are not prudent, by adding a new Subdiv. (2) re bank's investment policy, and by renumbering Subsec. (e)(2) to Subsec. (f), amended Subsec. (f) by deleting references to Subsec. (e), (f)(1)(A) and (f)(1)(B), by adding references to Subsec. (d)(3) and (e)(1), and by adding the provision re divestiture, effective May 31, 1995; P.A. 95-155 amended Subsec. (a)(2) to add proviso re five-year requirement, to add references to the general statutes and to delete the requirement re approval, effective June 27, 1995; P.A. 96-44 replaced prior provisions re investments in equity securities with new provisions, and added provisions re equity mutual funds and re controlling interests in entities carrying on functions within bank powers.

      Sec. 36a-277. Social purpose investments. In addition to other investments authorized by sections 36a-275 and 36a-276, this section and section 36a-280, any Connecticut bank may purchase or hold for its own account the following securities, without regard to any other liability to the Connecticut bank of the obligor, maker, guarantor or issuer of such securities, provided the total amount of the securities of any one maker, obligor or issuer held by a Connecticut bank or for a Connecticut bank's account may not exceed, at any time, ten per cent of its equity capital and reserves for loan and lease losses:

      (1) Equity securities, as defined in section 36a-276, and debt securities, as defined in section 36a-275, of companies licensed or that have applied to be licensed as "small business investment companies", under the federal Small Business Investment Act of 1958, 15 USC Section 661 et seq., as from time to time amended, and which qualify as companies financing disadvantaged persons under 15 USC Section 681(d), as from time to time amended;

      (2) Equity securities, as defined in section 36a-276, and debt securities, as defined in section 36a-275, of companies licensed or that have applied to be licensed as "small business investment companies", under the federal Small Business Investment Act of 1958, 15 USC Section 661 et seq., as from time to time amended;

      (3) Debt securities issued by corporations certified by the commissioner to be organized and operated solely for the purpose of providing assistance which will contribute to the public welfare by facilitating the acquisition and maintenance of ownership of homes by individuals whose ability to own their own homes is hampered because of social or economic disadvantages, which debt securities are backed by mortgage loans made by the issuing corporations;

      (4) Shares of stock and debt securities issued by the National Corporation for Housing Partnerships or by any other corporation created pursuant to Title IX of the Housing and Urban Development Act of 1968; limited partnership interests in The National Housing Partnership or in any other limited partnership formed pursuant to Section 907(a) of that act; and any partnership, limited partnership, or joint venture formed pursuant to Section 907(c) of that act;

      (5) Shares of stock and debt securities of corporations, and equity interests in and debt securities of, partnerships and limited partnerships, engaged solely in acquiring and rehabilitating housing;

      (6) Debt securities or equity securities of a corporation, all the equity securities of which corporation are to be owned by one or more Connecticut banks and which corporation is organized and operated for the purpose of developing, and stimulating and assisting the development of, by any means and in any capacity, by itself or jointly with others, low and moderate income housing in this state;

      (7) Debt securities or equity securities of closed-end investment companies which provide capital to racial or ethnic minority-owned businesses and institutions;

      (8) Debt securities or equity securities of development corporations or similar organizations organized to promote the business prosperity and economic welfare of this state and to encourage the location and development of new business, industry and commerce at least in part within the municipality where the main office or a branch of such bank is located; and

      (9) Debt securities or equity securities that are social purpose investments, provided before making any such investment, the bank shall obtain the certification of the commissioner that the investment is a social purpose investment. For purposes of this section, a "social purpose investment" means an investment which contributes to the public welfare by facilitating the provision of a service or facility needed by residents of the area in which an office of the bank making the investment is located.

      (P.A. 94-122, S. 126, 340; P.A. 95-70, S. 5, 8; P.A. 96-44, S. 6; P.A. 97-35, S. 2; P.A. 99-7.)

      History: P.A. 94-122 effective January 1, 1995; P.A. 95-70 amended Subdiv. (1) by changing "minority enterprise small business investment companies" to "small business investment companies", effective May 31, 1995; P.A. 96-44 rewrote section re bank investments, inserted new Subdiv. (2) re investments in "small business investments companies", deleted population minimum in Subdiv. (5), and inserted "debt securities or equity securities" in several locations; P.A. 97-35 deleted former Subdiv. (7) re investment in small business investment companies and renumbered former Subdivs. (8), (9) and (10) as Subdivs. (7), (8) and (9); P.A. 99-7 amended Subdivs. (1) and (2) by changing "shares of stock" to "equity securities", adding definition references and making provisions applicable to equity securities of companies that have applied to be licensed as small business investment companies.

      Secs. 36a-278 and 36a-279. Investment in commercial paper. Leeway. Sections 36a-278 and 36a-279 are repealed.

      (P.A. 94-122, S. 127, 128, 340; P.A. 95-70, S. 6, 8; P.A. 96-44, S. 9.)

      Sec. 36a-280. Investment policy of bank governing board. Review by board. (a) At least once a year, the governing board of each Connecticut bank shall adopt an investment policy governing investments made pursuant to sections 36a-275 to 36a-277, inclusive. No Connecticut bank shall make any investment pursuant to said sections unless the purchase and holding of such investment is consistent with the Connecticut bank's investment policy. The policy shall establish standards for the making of prudent investments, which standards shall include, but not be limited to, (1) the rating of individual investments by rating services recognized by the commissioner, if any, and (2) standards for diversification of the Connecticut bank's investment portfolio among industry categories. The policy shall provide for frequent and periodic review by the Connecticut bank of investments made pursuant to this policy, and shall provide for the reasonable and expeditious divestiture of investments which the bank, upon its review, no longer deems prudent or consistent with the Connecticut bank's investment policy. The investment policy and any investment made pursuant to the policy shall be subject to the supervision of the commissioner concerning safe and sound banking practices.

      (b) At least semiannually, the governing board of each Connecticut bank shall review investments made by the Connecticut bank pursuant to sections 36a-275 to 36a-277, inclusive. The minutes of the meetings of such governing board shall recite the results of each such review. The governing board shall cause the Connecticut bank to use reasonable efforts to divest as expeditiously as possible any investment which the governing board, upon its semiannual review, no longer deems prudent or consistent with the Connecticut bank's investment policy.

      (P.A. 96-44, S. 1.)

      Secs. 36a-281 to 36a-284. Reserved for future use.

PART IV
MISCELLANEOUS POWERS. LIMITATIONS

      Sec. 36a-285. (Formerly Sec. 36-142). Savings banks life insurance. (a) As used in this section, unless the context otherwise requires: "Insurance bank" means a savings bank which has established an insurance department; "savings department" means any department of an insurance bank in which any business done by savings banks other than that provided for by this section is conducted; "insurance department" means the department of an insurance bank in which the business of issuing life insurance and the granting of annuities is conducted pursuant to this section; "The Savings Bank Life Insurance Company" or "company" means the corporation chartered under the name of The Savings Bank Life Insurance Company by special act of the General Assembly; and "agency bank" means a savings bank which acts as agent for an insurance bank or for The Savings Bank Life Insurance Company.

      (b) Any savings bank may, upon complying with the provisions set forth in this section, establish an insurance department if its governing board, at a meeting specially called for the purpose, has voted to do so by a two-thirds vote of the directors present at such meeting and voting. The notice of such meeting shall be given at least thirty days prior to the date of the meeting and shall be otherwise in accordance with any bylaws governing the calling of special meetings of the governing board. Statements of such vote, certified and sworn to by the president or vice president of the savings bank, shall be filed with the commissioner and the Insurance Commissioner within thirty days after the adoption thereof; and, if the commissioners find that such vote is in conformity with law, and that such savings bank has entered into a reinsurance agreement as required by subsection (c) of this section, the commissioners shall issue a joint certificate declaring such insurance department established.

      (c) Each insurance bank and each savings bank proposing to establish an insurance department, as one party, and The Savings Bank Life Insurance Company, as the other party, shall enter into and comply with the terms of a reinsurance agreement providing substantially as follows:

      (1) The company shall reinsure the mortality and morbidity risk of each life insurance policy and annuity contract issued or to be issued by such bank.

      (2) The company shall prepare and furnish to such bank such forms of life insurance policies and annuity contracts as may from time to time be desirable, and such forms shall be the exclusive forms used for their intended purposes by such bank.

      (3) The company shall prepare and furnish to such bank forms of blanks for applications for life insurance policies and annuity contracts and for proofs of loss, all forms of books of record and of account, all schedules and reports not otherwise provided for, and all other forms necessary or appropriate for the efficient conduct of the business of the insurance department of such bank, and those forms, blanks, books, schedules and reports shall be the exclusive ones used for their intended purposes by such bank.

      (4) The company shall, in accordance with law, and with the approval of the Insurance Commissioner, determine, prepare or procure and furnish to such bank, tables of: (A) Premium rates for all life insurance policies; (B) purchase rates for all annuities; (C) surrender charges; (D) collection fees; (E) amounts which may be loaned on life insurance policies; (F) reinsurance premiums to be charged by the company; and (G) reserves to be held under life insurance policies and annuity contracts. Such rates, charges, fees, loan amounts and reserves shall be the exclusive ones used for their intended purposes by such bank.

      (5) The company shall prescribe the standards of health or acceptability of applicants for insurance and annuity contracts to be issued by such bank and shall have the right to decline any class or classes of risk or reject any particular application or applications.

      (6) No life insurance policy or annuity contract shall be delivered or issued for delivery by such bank without the prior approval of the company.

      (7) Such bank shall not make any payment of any death or disability claim without the prior approval of the company unless such payment shall be made pursuant to a judgment or decree of a court of competent jurisdiction.

      (8) The company shall defend any legal or equitable action or proceeding involving or arising out of any life insurance policy or annuity contract issued by such bank, and the company in its discretion may institute and prosecute in the name of such bank any legal or equitable action or proceeding to rescind any life insurance policy or annuity contract. Such bank shall cooperate with the company in its defense, or institution and prosecution, as the case may be, of any such action or proceeding, the expense of which shall be borne by the company.

      (9) The company shall furnish to such bank the services of an actuary and of a medical director.

      (d) (1) An insurance department, after the issue of the certificate provided for in subsection (b) of this section, shall be entitled to exercise all the powers conferred, and shall be subject to all the limitations imposed by this section, and may make and issue policies upon the lives of persons and grant or sell annuities, with all the rights, powers and privileges and subject to all duties, liabilities and restrictions in respect to the conduct of the business of life insurance conferred or imposed by the general statutes relating to domestic legal reserve life insurance companies, so far as the same are applicable and except as is otherwise provided in this section, and such insurance department shall be exempt from the provisions of section 38a-41. An insurance department shall, in all respects, except as is otherwise provided in this section, be managed as savings banks are managed under the laws of this state.

      (2) The assets of a savings department shall be liable only for and applicable only to the payment and satisfaction of the liabilities, obligations and expenses of such department. The assets of an insurance department shall be liable only for and applicable only to the payment and satisfaction of the liabilities, obligations and expenses of such department. Every insurance policy and annuity contract issued by an insurance bank shall contain on its face the following statement: "The only assets of this bank which are liable for and applicable to the payment and satisfaction of the liabilities, obligations and expenses of the insurance department of this bank are the assets of the insurance department of this bank." A savings department and an insurance department shall be kept distinct in matters of accounting and of investment, and no assets of either department, except as otherwise provided in this section, shall be transferred to the other. Expenses pertaining to the conduct of both departments shall be apportioned by the governing board equitably between the two departments. The business of an insurance department may be carried on in the same building as that of the savings department, or, with the approval of the Insurance Commissioner, in a different building.

      (3) Any savings bank may act as an agent of an insurance bank or as agent of The Savings Bank Life Insurance Company. No savings bank or employee of a savings bank may solicit, negotiate or effect coverage of savings bank life insurance unless such savings bank or employee is licensed by the Insurance Commissioner in accordance with the provisions of section 38a-769 to sell savings bank life insurance. Except as otherwise permissible under applicable law, no savings bank or employee of a savings bank may sell any other type of insurance. Any other party licensed to sell life insurance under section 38a-769 may be authorized to sell savings bank life insurance by The Savings Bank Life Insurance Company.

      (4) No policy or annuity contract shall be issued except upon the life of a resident of this state or of a person regularly employed therein, or of the spouse or children residing in the household of a person regularly employed within this state; but any policy or contract so issued may be continued in force by the payment of premiums notwithstanding the termination of such residence or employment.

      (5) Except as otherwise provided in this section, the assets of an insurance department shall be invested or loaned, in the same manner and to the same extent as the assets of Connecticut banks are permitted to be invested or loaned, but such assets shall not be invested in the surplus fund of any insurance department. The assets of an insurance department may also be loaned upon policies of insurance or annuity contracts issued by such insurance department or by another insurance department or by any legal reserve life insurance company authorized to do business in this state. Uninvested assets may be deposited with any bank, provided such bank shall have been designated as a depository by vote of a majority of all the directors, excluding any director who is an officer or director of the depository so designated.

      (6) (A) The surplus of any insurance department, whether created from net profits or advances, shall be maintained and held or used, so far as necessary, to meet losses occasioned by unexpectedly great mortality, depreciation in securities or other causes. Such surplus shall also be maintained and held or used for the maintenance of a stable dividend scale, and for the payment of settlement or maturity dividends or both, in such manner and in such amounts as may, from time to time, be directed by the governing board subject to the approval of the Insurance Commissioner. (B) Upon the thirty-first day of December in each year, or as soon thereafter as may be practicable, each insurance department shall ascertain the net profits earned by such insurance department during such year. After setting aside such sums as are deemed advisable for the accumulation of a surplus, each such department shall annually distribute the remainder, if any, of such net profits equitably among the holders of its policies and annuity contracts, such distribution to be made at the option of the policyholder in accordance with the terms of such policyholder's policy or annuity contract.

      (7) Any insurance bank may, at any time, discontinue the issuance of insurance policies and annuity contracts, if its governing board, at a meeting specially called for the purpose, has voted so to do by a two-thirds vote of the directors present at such meeting and voting. The notice of such meeting shall be given at least thirty days prior to the date thereof and shall be otherwise in accordance with any bylaws governing the calling of special meetings of the governing board. A copy of the vote to discontinue such business, certified to by the secretary of the bank and sworn to by its president or vice president and its treasurer or assistant treasurer, shall be filed with the Insurance Commissioner and with The Savings Bank Life Insurance Company within five days after the meeting at which such vote was cast. A bank which has so voted shall reinsure all of its outstanding policies and annuity contracts either in another insurance bank or in The Savings Bank Life Insurance Company, in either case upon terms and conditions which the Insurance Commissioner shall deem satisfactory to assure the carrying out of the provisions of such policies and annuity contracts. If the insurance bank's savings department is declared insolvent or acquired by a bank that is not permitted to issue savings bank life insurance, the company shall arrange to transfer all affected outstanding policies to another insurance bank or to the company with the approval of the commissioner and the Insurance Commissioner.

      (e) (1) No policy of life or endowment insurance issued by any insurance bank shall become forfeit or void for nonpayment of premiums after six months' premiums have been paid thereon; and, in case of default in the payment of any subsequent premium, then, without any further stipulation or act, such policy shall be binding upon such bank at the option of the insured, either (A) for the cash surrender value, which shall be equal to the reserve less a surrender charge of not more than one per cent of the face amount of the policy, and which shall be increased by the value of any dividend additions or dividends then standing to the credit of the policy, and which shall be decreased by any indebtedness; or (B) for the amount of paid-up insurance which the cash surrender value, as defined in subparagraph (A), will purchase as a net single premium for the life or endowment insurance, as the case may be, provided by the policy; or (C) for an amount of paid-up term insurance which the cash surrender value, as defined in subparagraph (A), will purchase as a net single premium, but if such cash value is greater than the net single premium for such term insurance to the original date of maturity of the policy, the excess shall be used to purchase a paid-up pure endowment maturing at the original date of maturity of the policy. If no election is made, the option contained in subparagraph (C) shall be deemed to be elected by such insured. If the policy provides for both insurance and annuity, the provisions of this subdivision shall apply only to that part of the policy providing insurance. Said provisions shall not apply to annuity or pure endowment contracts, with or without return of premiums or of premiums and interest, whether simple or compound, or to survivorship annuity contracts or survivorship insurance contracts, but each policy providing for a deferred annuity on the life of the insured alone shall, unless paid for by a single premium, provide that, in the event of the nonpayment of any premium after six months' premiums have been paid, the annuity shall automatically become converted into a paid-up annuity for such proportion of the original annuity as the period for which premiums have been paid bears to the total period for which premiums are required to be paid under the policy.

      (2) Policies and annuity contracts may be signed on behalf of an insurance bank by such officer or employee thereof as the governing board may, from time to time, determine.

      (f) Any savings bank may invest not more than five per cent of its equity capital in stocks, obligations or other securities of The Savings Bank Life Insurance Company. Such investment may include advances to the surplus of the company.

      (g) (1) The Insurance Commissioner shall, and the commissioner may, at least once every five years and whenever they deem it expedient, either alone or together, personally or by deputy or assistant, examine each insurance department. During such examination, they shall have free access to the vaults, books and papers and shall thoroughly inspect and examine the affairs of any such department in order to ascertain its condition, its transactions and its ability to fulfill its obligations and whether it has complied with all the provisions of law applicable to it. Insurance departments shall be subject to the provisions of the insurance law concerning examinations, and copies of all reports on examinations shall be forwarded by the Insurance Commissioner to the commissioner and The Savings Bank Life Insurance Company.

      (2) The Insurance Commissioner or such commissioner's deputy may summon the directors, officers or agents of any insurance bank and such other witnesses as the Insurance Commissioner thinks proper, and examine them relative to the affairs, transactions and conditions of the insurance department and, for such purpose, may administer oaths. Any person who, without justifiable cause, refuses to appear and testify when so required, or who obstructs the Insurance Commissioner in the performance of the Insurance Commissioner's duty, shall be fined not more than one thousand dollars or imprisoned not more than one year.

      (3) If upon examination, any insurance department appears to the commissioner and to the Insurance Commissioner to be insolvent, or if they find its condition to be such as to render the continuance of its business hazardous to the public or to the holders of its policies or contracts, or if such insurance department appears to such commissioners to have exceeded its powers or to have failed to comply with any provision of law, such commissioners, jointly, but not separately, may apply to the Superior Court, which shall have jurisdiction in equity of such applications, for an injunction to restrain such insurance department, in whole or in part, from further proceeding with its business. The court may appoint one or more receivers to take possession of the property of the insurance department, subject to such direction as may, from time to time, be prescribed by the court without in any respect affecting the operations of the savings department of such insurance bank.

      (4) The Insurance Commissioner shall prepare, annually, from such reports concerning insurance departments, and submit to the Governor in the annual report of his department, a statement of the condition of each insurance department and shall make such suggestions as the Insurance Commissioner considers expedient relative to the condition of each such insurance department visited by the Insurance Commissioner and to the manner in which the same is conducted.

      (h) Each insurance department shall annually, on or before the first day of March, file with the Insurance Commissioner a statement showing its financial condition on the last business day of December. Such annual statement shall be in the form required by the Insurance Commissioner and shall contain such information as the Insurance Commissioner prescribes. The assets and liabilities of such insurance department shall be computed and allowed in such statement in accordance with the rules governing domestic legal reserve life insurance companies, except as otherwise provided in this section. Two officers of each insurance bank shall make oath that the annual report of the insurance department is correct to the best of their knowledge and belief. The Insurance Commissioner may also, at any time, require each insurance bank to make such other statement of condition or furnish such other information as the Insurance Commissioner deems necessary or expedient.

      (i) Insurance departments shall be taxed by this state in the same manner and at the same rates as domestic mutual life insurance companies and shall be charged the same fees as are imposed upon domestic mutual life insurance companies under section 38a-11.

      (1949 Rev., S. 5859; 1949, S. 2032c-2034c; 1951, S. 2030c, 2031c, 2035c; 1953, S. 2036c; 1955, S. 2705d; 1957, P.A. 187; 1959, P.A. 502; 1963, P.A. 489, S. 1-3; P.A. 74-88; P.A. 77-354, S. 1, 2; 77-614, S. 161, 163, 610; P.A. 78-121, S. 81, 82, 112, 113; P.A. 80-482, S. 248, 348; P.A. 81-345; P.A. 84-166; 84-199; P.A. 87-9, S. 2, 3; 87-247, S. 1, 2; P.A. 88-65, S. 60; P.A. 89-77; P.A. 91-111; P.A. 92-12, S. 47; P.A. 94-122, S. 129, 340; P.A. 97-34, S. 1, 2.)

      History: 1959 act amended Subsec. (4) (a) 2. d. by adding reference to life of spouse of payor; 1963 act deleted definitions of "fund trustees" and "fund" and inserted definition of "Savings Bank Life Insurance Company" in Subsec. (1), revising references to fund and trustees as necessary throughout section, inserted new Subsec. (3) re reinsurance agreements, renumbering accordingly, included in Subsec. (4), formerly (3), reference to agency banks and provision re required statement on insurance policies and annuity contracts, made reinsurance of outstanding policies and annuity contracts mandatory, rather than optional and rewrote provisions re such matters in said Subsec. (4), repealed former Subsecs. (5) to (12) (all of which concerned the Savings Bank Life Insurance Fund of Connecticut), inserted new Subsec. (6) re investment limits, renumbered former Subsecs. (13) to (15) accordingly, allowing examination of insurance departments every five, rather than three, years in Subsec. (7), formerly (13) and added new Subsecs. (10) and (11); P.A. 74-88 substituted "spouse" for "wife" in Subsec. (4)(d); P.A. 77-354 added policy limits of $10,000 effective January 1, 1978, and $15,000 effective January 1, 1981, and increased limit on annuity contracts from $200 to $2,000 in Subsec. (5); P.A. 77-614 placed banking commissioner (formerly called bank commissioner) and insurance commissioner within the department of business regulation and made their respective departments divisions within said department, effective January 1, 1979; P.A. 78-121 substituted references to governing board and its members for references to directors and trustees in Subsecs. (1) and (7) and repealed Subsec. (11); P.A. 80-482 restored banking and insurance divisions as independent departments with commissioners as their heads and abolished the department of business regulation; P.A. 81-345 amended Subsec. (5)(a) to increase as of January 1, 1983, the individual policy limit to $25,000 and the group policy limit to $50,000, and to permit on or after January 1, 1986, additional increases in the individual and group policy limits depending upon the percentage increase in the consumer price index; P.A. 84-166 included "stock" savings banks within definition of "savings bank" in Subsec. (1); P.A. 84-199 amended Subsec. (5)(a) to increase the maximum amount which can be paid by an insurance bank under any one contract in any one year from $1,000 to $5,000 and to establish an annual aggregate limit of $20,000 per applicant; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 87-247 added Subsec. (4)(c)(2) re licensing savings banks and their employees and prohibiting the sale of other types of insurance and amended Subsec. (5)(a) to delete the references to the consumer price index and increase as of January 1, 1988, the individual policy limit to $100,000 and the group policy limit to $200,000; P.A. 88-65 repealed Subsec. (10) re merger of Savings Bank Life Insurance Fund of Connecticut and Savings Bank Life Insurance Company; P.A. 89-77 amended Subsec. (5) to increase the maximum amount which can be paid by an insurance bank under any one contract from $5,000 to $20,000; P.A. 91-111 amended Subsec. (5)(a) to authorize insurance banks to make annuity payments outside of life contingency options that exceed $20,000; P.A. 92-12 redesignated Subsecs., Subdivs. and Subparas. and made technical changes; P.A. 94-122 made technical changes, deleted Subsec. (d)(6), renumbered former Subdivs. (7) and (8) as Subdivs. (6) and (7), and in Subdiv. (7) specified that if a savings bank with a SBLI department becomes insolvent or is acquired by one not authorized to do SBLI business, the bank must transfer its outstanding policies to one that is so authorized, with the banking and insurance commissioners' approval, effective January 1, 1995; Sec. 36-142 transferred to Sec. 36a-285 in 1995; P.A. 97-34 amended Subsec. (e) by deleting former Subdiv. (1) re policy limits and renumbering former Subdivs. (2) and (3) as Subdivs. (1) and (2), effective May 6, 1997.

      Sec. 36a-286. Investments and loans held by Connecticut banks on January 1, 1995. Each investment and loan held by a Connecticut bank on January 1, 1995, which qualified as an authorized investment or loan at the time it was acquired or committed for, shall be deemed qualified as an authorized investment under this title. Each specific transaction which was lawfully entered into by a Connecticut bank and was in effect on January 1, 1995, shall continue to be permitted under this title until its modification, expiration or termination pursuant to its terms.

      (P.A. 94-122, S. 130, 340.)

      History: P.A. 94-122 effective January 1, 1995.

      Sec. 36a-287. Compliance with federal Currency and Foreign Transactions Reporting Act. Each Connecticut bank shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq., as from time to time amended, and any regulations adopted thereunder, as from time to time amended.

      (P.A. 03-259, S. 29.)

      Secs. 36a-288 and 36a-289. Reserved for future use.