Chapter 1109: BANKS - POWERS

1109.01 Bank powers, rights and privileges generally.

(A) A bank may use, exercise, and enjoy all of the powers, rights, and privileges of a corporation as set forth in section 1701.13 of the Revised Code, unless otherwise provided in its articles of incorporation and except as otherwise expressly limited by Chapters 1101. to 1127. of the Revised Code. The powers authorized under this division include the power to receive any property of any description, or any interest in property, by gift, devise, or bequest, and to make donations for the public welfare or for charitable, scientific, or educational purposes.

(B) A bank may perform all acts necessary to carry into effect the powers authorized by Title XI [11] of the Revised Code and the purposes for which the bank was created.

Cite as R.C. § 1109.01

Effective Date: 01-01-1997

1109.02 Additional and incidental powers.

(A) In addition to exercising the powers and performing the acts authorized under Chapters 1101. to 1127. of the Revised Code, a bank has and may exercise all powers and perform all acts attendant to the business of banking as set forth in those chapters.

(B) A bank has and may exercise all powers, perform all acts, and provide all services that are otherwise a part of or incidental to the business of banking.

Cite as R.C. § 1109.02

Effective Date: 01-01-1997

1109.021 [Repealed].

Cite as R.C. § 1109.021

Effective Date: 09-27-1996

1109.03 Federal deposit insurance corporation and federal reserve requirements.

(A) No bank shall transact business in this state unless its deposit accounts are insured by the federal deposit insurance corporation, except a bank that by the terms of its articles of incorporation or articles of association is not permitted to solicit or accept deposits other than trust funds. Each bank whose deposit accounts are insured by the federal deposit insurance corporation shall maintain that insurance as a condition of doing business in this state.

(B) Each bank doing business in this state shall comply with the reserve requirements of the "Federal Reserve Act of 1913," as amended.

(C) Any bank doing business in this state may become a member of the federal reserve system and do all things necessary to maintain that membership in accordance with the "Federal Reserve Act of 1913," as amended.

(D) Any bank doing business in this state may become a member of a federal home loan bank and do all things necessary to maintain that membership in accordance with the "Federal Home Loan Bank Act of 1932," 47 Stat. 725, 12 U.S.C.A. 1421 , as amended. A bank may purchase and hold stock in a federal home loan bank in excess of the amount required for membership, if that purchase and holding of stock is consistent with the financial condition of the bank and prudent banking practice.

Cite as R.C. § 1109.03

Effective Date: 01-01-1997

1109.04 [Repealed].

Cite as R.C. § 1109.04

Effective Date: 01-01-1997

1109.05 Deposit contracts.

(A) A bank may receive money on deposit and may establish the terms and conditions of each deposit contract. A bank may receive demand deposits subject to withdrawal or to payment upon the depositor's check, order, or other authorization.

(B) At the time of opening a deposit account, a bank shall provide the depositor a statement containing the existing terms and conditions of the deposit contract. The statement may be set forth on the depositor's signature card. Before effecting any change in the terms and conditions of a deposit contract, a bank shall send written notice of the change to each depositor with whom the bank has a deposit contract of the kind to be changed. Depositors and any other owners of interests in deposit accounts shall be bound by all changes banks make in their deposit contracts.

(C) For each deposit account a bank shall, at minimum, do either of the following:

(1) Periodically send to each deposit customer a written report of the customer's deposit account;

(2) Issue a passbook on which deposits, interest, payments, and withdrawals can be recorded.

(D) A bank may secure deposits in the manner and to the extent provided or authorized by law or any lawful order of a court having custody of money and ordering money to be deposited.

(E)

(1) A bank may serve as a depository for public funds of this state, other states of the United States, political subdivisions of this state and other states of the United States, the United States, agencies of the United States, foreign nations, political subdivisions of foreign nations, multinational organizations, and subdivisions of multinational organizations.

(2) A bank may provide security for the public funds described in division (E)(1) of this section if that is a condition imposed by law for their deposit.

Cite as R.C. § 1109.05

Effective Date: 01-01-1997

1109.051 [Repealed].

Cite as R.C. § 1109.051

Effective Date: 01-01-1968

1109.06 Designating on signature card deposit is in trust for another.

(A) Whenever a depositor opens or modifies the ownership of a deposit account by designating on the signature card the deposit is in trust for another, and no further notice of the existence and terms of a legal and valid trust is given in writing to the bank, both of the following apply:

(1) The designation on the signature card constitutes clear and convincing evidence of both of the following:

(a) The depositor-trustee's intent is to create a revocable trust for the benefit of the person for whom the account is designated.

(b) One of the terms of the trust is that, on the death of the depositor-trustee, the balance of the deposit account belongs to the person for whose benefit the account was designated.

(2) No written instrument, other than the signature card, is required to establish the trust.

(B) Upon the death of the depositor-trustee of a deposit account designated as provided in division (A) of this section, all of the following apply:

(1) No part of the account shall pass and descend to the depositor-trustee's estate unless the estate is the person's for whose benefit the account was designated.

(2) The bank may pay all or any part of the account balance to the person designated on the signature card as the person for whose benefit the account was maintained.

(3) The receipt or acquittance of the person designated on the signature card as the person for whose benefit the account was maintained is sufficient to release and discharge the bank for any payments from the account to that person.

Cite as R.C. § 1109.06

Effective Date: 01-01-1997

1109.07 Deposits payable to survivor - deposits payable on death.

(A) When a deposit is made in the name of two or more persons, payable to either or the survivor, the bank may pay all of the deposit, any part of the deposit, or any interest earned on the deposit, to either of the named persons, or the guardian of the estate of either of the named persons, whether or not the other person is living. The receipt or acquittance of the person paid is a sufficient release and discharge of the bank for any payments made from the account to that person.

(B) A bank may enter into a written contract with a natural person for the proceeds of the person's deposits to be payable on the death of that person to another person or to any entity or organization in accordance with the terms, restrictions, and limitations set forth in sections 2131.10 and 2131.11 of the Revised Code.

Cite as R.C. § 1109.07

Effective Date: 08-29-2000

1109.08 Safes, vaults, safe deposit boxes, night depositories.

(A) A bank may provide safes, vaults, safe deposit boxes, night depositories, and other secure receptacles for the uses, purposes, and benefits of its customers, on the terms and conditions the bank prescribes.

(B) A bank may, on the terms and conditions the bank prescribes, receive tangible property and evidence of tangible or intangible property for safekeeping using any of the following:

(1) The bank's safes, vaults, and other secure receptacles;

(2) The safes, vaults, and other secure receptacles of another bank or of a safekeeping agent or custodian that is qualified under rules adopted by the superintendent of financial institutions;

(3) The bank's own safekeeping system or the safekeeping system of another bank or of a safekeeping agent or custodian that is qualified under rules adopted by the superintendent;

(4) A recognized title or registration system, on the terms and conditions the bank prescribes.

Cite as R.C. § 1109.08

Effective Date: 01-01-1997

1109.09 Accounts and safe deposit box rentals for minors.

(A) A bank may do any of the following:

(1) Accept deposits made by or on behalf of any minor and open an account however payable in the name of one or more persons, one or more or all of whom are minors, or in the name of another person as trustee for a minor, whether or not the deposit is made or the account is opened by the minor;

(2) Enter into an agreement to rent a safe deposit box to a minor;

(3) Accept the appointment of a minor as agent or deputy on any deposit or safe deposit box by any person, including a minor, maintaining the deposit or safe deposit box.

(B) When a bank enters into a deposit contract or safe deposit box rental agreement with a minor, all of the following apply:

(1) The terms and conditions of the deposit contract or safe deposit box rental agreement are binding on the minor the same as a person of legal age who enters into a deposit contract or rents a safe deposit box.

(2) The relationship between the bank and the minor regarding the deposit contract or safe deposit box rental agreement is in all respects the same as if the minor were a person of legal age.

(3) The bank shall incur no liability for any transaction regarding the deposit or safe deposit box solely because of doing business with a minor.

Cite as R.C. § 1109.09

Effective Date: 01-01-1997

1109.10 Claims adverse to deposits or property.

If any claim not clearly consistent with the terms of any applicable authority on file with a bank is made to any deposit, safe deposit box, property held in safekeeping, security, obligation, or other property in the bank's possession or control, in whole or in part, by any person, including any depositor, individual, or group of individuals, whether or not authorized to draw on or exercise any right or control with respect to the property, the bank is not required to recognize the claim without one of the following:

(A) A court order, issued by a court of competent jurisdiction and served on the bank, enjoining or restraining the bank from taking any action with respect to the property or instructing the bank to pay the balance of the, provide access to the safe deposit box, or deliver the property as provided in the order;

(B) A bond in the form and amount and with sureties satisfactory to the bank, indemnifying the bank against any liabilities, loss, and expenses it might incur because of its recognition of the claim or because of its refusal, due to the claim, to honor or recognize any right with respect to the property.

Cite as R.C. § 1109.10

Effective Date: 01-01-1997

1109.11 Deposits entered as U.S. money.

All deposits of money, or its equivalent, made with a bank shall be entered on its books only in terms of money of the United States.

Cite as R.C. § 1109.11

Effective Date: 01-01-1997

1109.12 to 1109.14 [Repealed].

Cite as R.C. § 1109.12 to 1109.14

Effective Date: 01-01-1997

1109.15 Permitted transactions.

(A)

(1) Subject to the restrictions and limitations of the Revised Code, a bank may do any of the following:

(a) Loan money, with or without security, and payable on demand, at maturity, in installments, or by any combination of these;

(b) Issue, advise, and confirm letters of credit authorizing the beneficiaries of the letters to draw upon the bank or its correspondents;

(c) Purchase open accounts, whether or not the accounts represent an evidence of debt.

(2) Subject to the margin requirements the superintendent of financial institutions may prescribe by rule, a bank may make loans secured by stocks, bonds, or other securities.

(B) Subject to sections 1109.22 , 1109.32 , and 1109.47 of the Revised Code and any rules the superintendent prescribes, a bank may purchase obligations of any kind with or without recourse.

(C) A bank may acquire personal property for lease to others, if the transaction, as a whole, has the character of an extension of credit.

(D)

(1) Subject to division (D)(2) of this section, any other restrictions and limitations of the Revised Code, and any restrictions or requirements established by the superintendent, a bank may enter into a debt suspension agreement or debt cancellation contract with a borrower or borrowers in connection with any loan or extension of credit.

(2) A bank shall not offer or finance, directly or indirectly, a debt suspension agreement or debt cancellation contract requiring a lump sum, single payment for the agreement or contract payable at the outset of the agreement or contract, if the debt subject to the agreement or contract is secured by one to four family, residential real property.

(3) For purposes of division (D) of this section, "debt cancellation contract" and "debt suspension agreement" have the same meanings as in 12 C.F.R part 37.

(E) Unless otherwise expressly agreed in writing, the relationship between a bank and its obligor, with respect to any extension of credit, is that of a creditor and debtor, and creates no fiduciary or other relationship between the parties.

Cite as R.C. § 1109.15

Effective Date: 01-01-1997; 04-06-2007

1109.16 Standards for extensions of credit.

(A) The superintendent of financial institutions shall adopt rules prescribing standards for extensions of credit that are either of the following:

(1) Secured by liens on interests in real estate;

(2) Made for the purpose of financing the construction of either a building or improvements to real estate.

(B) In prescribing the standards required by division (A) of this section, the superintendent shall consider all of the following:

(1) The risk the extensions of credit pose to the federal deposit insurance funds;

(2) The need for banks to operate in a safe and sound manner;

(3) The availability of credit.

(C) In prescribing the standards required by division (A) of this section, the superintendent may differentiate among types of loans on the basis of any of the following:

(1) Statutory requirements;

(2) Risk to the deposit insurance funds;

(3) The safety and soundness of banks.

(D) The superintendent shall not adversely evaluate an investment or a loan made by a bank, or consider a loan to be nonperforming, solely because the loan is secured by or the investment is in commercial, residential, or industrial property, unless the investment or loan may affect the bank's safety and soundness.

Cite as R.C. § 1109.16

Effective Date: 01-01-1997

1109.17 Accepting drafts or bills of exchange.

(A)

(1) A bank may accept drafts or bills of exchange drawn on it and may purchase acceptances of drafts or bills of exchange issued by other banks and participations in acceptances of drafts or bills of exchange issued by other banks, subject to the following limitations:

(a) For acceptances of drafts or bills of exchange described in division (B)(1) of this section, the limitations in division (B)(2) of this section apply.

(b) For acceptances of drafts or bills of exchange satisfying the requirements of division (C)(1) of this section, the limitations in division (C)(2) apply.

(c) For all other acceptances of drafts or bills of exchange, the limitations on loans and extensions of credit to a person in section 1109.22 of the Revised Code apply to both of the following:

(i) A bank's total outstanding obligations for any one person on acceptances of drafts or bills of exchange that the bank has issued and on acceptances of drafts or bills of exchange and participations in acceptances of drafts or bills of exchange issued by other banks and that the bank has purchased;

(ii) A bank's total outstanding obligations on acceptances of drafts or bills of exchange issued by any one other bank.

(2) For purposes of applying the limitations imposed by division (A)(1) of this section, a bank's obligation on an acceptance of a draft or bill of exchange does not include the portion of an acceptance of a draft or bill of exchange issued by the bank that is covered by a participation agreement sold to another.

(B)

(1) Subject to the limitations in division (B)(2) of this section, a 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, that are any of the following:

(a) From transactions involving the importation or exportation of goods;

(b) From transactions involving the domestic shipment of goods;

(c) Secured at the time of acceptance by a warehouse receipt or other documentation conveying or securing title covering readily marketable staples.

(2)

(a) Except as provided in division (B)(2)(b) of this section, no bank shall accept drafts or bills of exchange, or be obligated for a participation share for drafts or bills of exchange under division (B)(1) of this section, in an amount equal at any time in the aggregate to more than one hundred fifty per cent of the bank's capital.

(b) The superintendent of financial institutions, under conditions the superintendent may prescribe, may authorize a bank to accept or be obligated for a participation share in drafts or bills of exchange under division (B)(1) of this section, in an amount not exceeding at any time in the aggregate two hundred per cent of the bank's capital.

(3) Notwithstanding division (B)(2) of this section, a bank's aggregate acceptances of drafts or bills of exchange, including obligations for a participation share in drafts or bills of exchange, under division (B)(1) of this section, that arise from domestic transactions shall not exceed fifty per cent of the aggregate of all acceptances of drafts or bills of exchange, including obligations for a participation share in drafts or bills of exchange, the bank is permitted under division (B) of this section.

(4) No bank shall accept drafts or bills of exchange or be obligated for a participation share in drafts or bills of exchange under division (B)(1) of this section, whether from a foreign or domestic transaction, for any one person, partnership, corporation, association, or other entity in an amount equal at any time in the aggregate to more than ten per cent of the bank's capital, unless the bank is secured either by attached documents or by some other actual security arising from the same transaction as the acceptance.

(C)

(1) Subject to the limitations set forth in division (C)(2) of this section, a bank may accept drafts or bills of exchange drawn upon it having not more than three months' sight to run, exclusive of days of grace, and drawn under conditions the superintendent may prescribe, by banks or bankers in foreign countries or dependencies or insular possessions of the United States, for the purpose of furnishing dollar exchange as required by the usages of trade in the respective countries, dependencies, or insular possessions.

(2)

(a) No bank shall accept drafts or bills of exchange under division (C)(1) of this section for any one bank in an aggregate amount exceeding ten per cent of the accepting bank's capital, unless the draft or bill of exchange is accompanied by documents conveying or securing title or other adequate security.

(b) No bank shall accept drafts or bills of exchange under division (C)(1) of this section in an aggregate amount exceeding fifty per cent of the accepting bank's capital.

Cite as R.C. § 1109.17

Effective Date: 01-01-1997

1109.18 Extending credit pursuant to revolving credit agreement.

(A) A bank may extend credit to a customer pursuant to a revolving credit agreement allowing the customer to access the credit from time to time, subject to a limitation on the outstanding balance of the credit accessed and without regard to whether the customer has previously accessed and repaid the credit. A revolving credit agreement may authorize the customer to access the credit extended by either or both of the following:

(1) Purchasing goods or services from a seller by means of the bank's commitment to advance to the seller the payment for the goods and services purchased by the customer;

(2) Obtaining an advance of funds by the bank or by another in reliance on the bank's commitment to pay the funds advanced to the customer.

(B) The terms of a revolving credit agreement may permit the bank to charge, collect, and receive any finance charge or other fee or charge permitted by section 1109.20 of the Revised Code. A revolving credit agreement shall specify the manner in which the bank will compute the loan balance on which interest and finance charges are assessed as permitted by section 1109.20 of the Revised Code. A revolving credit agreement may permit the bank to charge a minimum monthly finance charge of one dollar for any month for which there is an unpaid balance on the customer's account.

(C) The bank shall supply to its customer under a revolving credit agreement a statement as of the beginning or end of each period in which there is any unpaid balance on the customer's account, which period may be a calendar month or other regular period not in excess of thirty-one days. The statement shall include the following:

(1) The unpaid balance under the agreement at the beginning and end of the period;

(2) The date and amount of each advance made by the bank for the account of the customer during the period;

(3) The cash purchase price and the date of each purchase of goods or services with respect to which advances for the account of the customer were made during the period;

(4) All payments made by the customer to the bank and any other credits to the customer during the period;

(5) The amount of all charges made against the customer during the period;

(6) A legend to the effect that the customer may at any time pay the unpaid balance without incurring further charges.

Cite as R.C. § 1109.18

Effective Date: 01-01-1997

1109.181 Charges under revolving credit agreement.

(A) As used in this section:

(1) "Revolving credit agreement" means an agreement pursuant to which a bank contemplates repeated transactions and the amount of credit that may be extended pursuant to the agreement is made available to the extent that any outstanding balance is repaid. "Revolving credit agreement" does not include an agreement secured by a residential mortgage.

(2) "Residential mortgage" means an obligation to pay a sum of money evidenced by a note or agreement and secured by a lien upon real property located within this state containing two or fewer residential units or on which two or fewer residential units are to be constructed, including such an obligation on a residential condominium or cooperative unit.

(B) Notwithstanding any limitations contained in sections 1109.18 , 1109.20 , or any other section of the Revised Code, a bank may charge interest, fees, and other charges under a revolving credit agreement at the same or lower rates or amounts that a bank located in another state may charge its revolving credit customers in this state.

Cite as R.C. § 1109.181

Added by 129th General AssemblyFile No.109, HB 322, §1, eff. 9/4/2012.

1109.19 [Repealed].

Cite as R.C. § 1109.19

Effective Date: 01-01-1997

1109.20 Interest and finance charge rates.

(A) A bank may contract for and receive interest or finance charges at any rate or rates agreed upon or consented to by the parties to the loan contract, extension of credit, or revolving credit agreement, but not exceeding an annual percentage rate of twenty-five per cent. In addition, a bank may charge, collect, and receive, as interest, other fees and charges that are agreed upon by the bank and the borrower, including, but not limited to, periodic membership fees, cash advance fees, charges for exceeding a designated credit limit, charges for late payments, charges for the return of a dishonored check or other payment instrument, guarantee fees, origination fees, processing fees, application fees, and prepayment fees. Any fees and charges charged, collected, or received by a bank in accordance with this division shall not be included in the computation of the annual percentage rate or the rates of interest or finance charges for purposes of applying the twenty-five per cent limitation.

The computation of the loan balance on which interest and finance charges are assessed and the method of compounding interest on the balance shall be as agreed upon by the bank and the borrower.

(B) For the purposes of section 85 of the "National Bank Act," 48 Stat. 191 (1933), 12 U.S.C.A. 85 , and section 521 of the "Depository Institutions Deregulation and Monetary Control Act of 1980," 94 Stat. 132, 12 U.S.C.A. 1831d , both of the following apply:

(1) All the interest and finance charges and other fees and charges authorized under division (A) of this section are deemed to be interest and may be charged, collected, and received as interest by a bank.

(2) All terms, conditions, and other provisions authorized by this section and other provisions contained in any agreement with the borrower, including, but not limited to, terms, conditions, and other provisions relating to the method of determining the balance upon which interest or finance charges are applied, time periods within which fees and charges may be avoided, reasons for default and rights to cure any default, rights to accelerate payments, account cancellation, choice of law, and change-in-terms requirements, are deemed to be material to the determination of the interest rate.

(C) Any agreement between a bank and a borrower, wherever the borrower's place of residence, shall be governed solely by the laws of this state and federal law, unless otherwise provided for in the agreement.

(D) Subject to any requirements under applicable federal law, a bank and a borrower may specify in their agreement any terms and conditions for modifying or amending the agreement.

(E) Except as provided in section 1343.011 of the Revised Code, the charging, collection, or receipt of the interest and finance charges, and other fees and charges authorized under this section are deemed not to violate any provision of the Revised Code that prescribes, regulates, or limits any fee, charge, rate of interest, or finance charges.

Cite as R.C. § 1109.20

Effective Date: 01-01-1997

1109.21 [Repealed].

Cite as R.C. § 1109.21

Effective Date: 01-01-1997

1109.22 Total loans and extensions of credit to person outstanding at any one time.

(A) As used in this section:

(1) "Derivative transaction" includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.

(2) "Loans and extensions of credit" shall include all of the following:

(a) All direct or indirect advances of funds made on the basis of any obligation of a person to repay the funds or repayable from specific property pledged by or on behalf of the person ;

(b) To the extent specified by the superintendent of financial institutions, any liability of a bank to advance funds to or on behalf of a person pursuant to a contractual commitment;

(c) Any credit exposure to a person arising from a derivative transaction between the person and a bank.

(3) "Person" includes an individual; sole proprietorship; partnership; joint venture; association; trust; estate; business trust; corporation; government; agency, instrumentality, or political subdivision of a government; limited liability company; or any similar entity or organization.

(B) Except as provided in divisions (C), (D), (E), and (F) of this section:

(1) The total loans and extensions of credit by a bank to a person outstanding at any one time and not fully secured, as determined in a manner consistent with division (B)(2) of this section, by collateral having a market value at least equal to the amount of the loans and extensions of credit to that person that are outstanding shall not exceed fifteen per cent of the unimpaired capital of the bank.

(2) The total loans and extensions of credit by a bank to a person outstanding at one time and fully 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 loans and extensions of credit to that person outstanding shall not exceed ten per cent of the unimpaired capital of the bank.

(3) The limitation set forth in division (B)(2) of this section is separate from and in addition to the limitation set forth in division (B)(1) of this section.

(C) No limitation based on capital applies to loans and extensions of credit by a bank to a person that are any of the following types:

(1) Loans or extensions of credit arising from the discount of commercial or business paper evidencing an obligation to the person negotiating it with recourse;

(2) The purchase of bankers' acceptances of the kinds described in division (B) or (C) of section 1109.17 of the Revised Code and issued by other banks;

(3) Loans or extensions of credit secured by bonds, notes, certificates of indebtedness, treasury bills of the United States, or other obligations fully guaranteed as to principal and interest by the United States;

(4) Loans or extensions of credit to or secured by unconditional takeout commitments or guarantees of any department, agency, bureau, board, commission, or establishment of the United States or any corporation wholly owned, directly or indirectly, by the United States;

(5) Loans or extensions of credit secured by a segregated deposit account in the lending bank;

(6) Loans or extensions of credit to any financial institution or to any receiver, conservator, superintendent of financial institutions, or other agent in charge of the business and property of a financial institution, when the loans or extensions of credit are approved by the superintendent of financial institutions of this state;

(7) Loans or extensions of credit to the student loan marketing association.

(D) A bank may make loans and extensions of credit secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples subject to the general limitations of division (B) of this section, and may make additional loans and extensions of credit secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples, if all of the following apply:

(1) The market value of the staples securing each additional loan or extension of credit at all times equals or exceeds one hundred fifteen per cent of the outstanding amount of the loan or extension of credit.

(2) The staples are fully covered by insurance whenever it is customary to insure staples of that kind.

(3) The total amount of the bank's additional loans and extensions of credit outstanding to one person at any time does not exceed thirty-five per cent of the bank's capital.

(E) Subject to divisions (E)(1) and (2) of this section, a bank may make loans and extensions of credit arising from the discount of negotiable or nonnegotiable installment consumer paper.

(1) If the paper carries a full recourse endorsement or unconditional guarantee by the person transferring the paper, the total amount of the installment consumer paper transferred by one person a bank may hold at one time shall not exceed twenty-five per cent of the bank's capital, and the collateral requirements of division (B)(2) of this section do not apply.

(2) The limitations set forth in division (B) of this section apply only to the loans and extensions of credit of each maker of negotiable or nonnegotiable installment consumer paper, and not to obligations arising from any full or partial recourse endorsement or guarantee by the transferor discounting the consumer paper to the bank, if both of the following apply:

(a) The bank's files are, or the knowledge of its officers of the financial condition of each maker of the consumer paper is, reasonably adequate.

(b) An officer of the bank designated for that purpose by the bank's board of directors certifies in writing that the bank is relying primarily upon the responsibility of each maker for payment of the loans or extensions of credit and not upon any full or partial recourse endorsement or guarantee by the transferor.

(F) Without regard to the collateral requirements of division (B) of this section, a bank may have loans and extensions of credit to one person outstanding at one time not exceeding twenty-five per cent of the bank's capital of the following types:

(1) Loans and extensions of credit secured by shipping documents or instruments transferring or securing title covering livestock or giving a lien on livestock, when the market value of the livestock securing the obligation is not at any time less than one hundred fifteen per cent of the face amount of the note covered;

(2) Loans and extensions of credit that arise from the discount by dealers in dairy cattle of paper given in payment for dairy cattle, if the paper carries a full recourse endorsement or unconditional guarantee of the seller, and the loans and extensions of credit are secured by the cattle being sold.

(G)

(1) The superintendent may adopt rules to administer and carry out the purposes of this section, including , but not limited to, the following:

(a) Rules defining or further defining terms used in this section, including expanding or limiting the definition of "person" defined in division (A) of this section;

(b) Rules establishing limits or requirements other than those specified in this section for particular classes or categories of loans or extensions of credit;

(c) Rules relating to credit exposure arising from derivative transactions.

(2) The superintendent may determine when a loan putatively made to a person is, for purposes of this section, to be attributed to another person.

Cite as R.C. § 1109.22

Amended by 129th General AssemblyFile No.167, SB 333, §1, eff. 3/22/2013.

Effective Date: 01-01-1997

1109.23 Extending credit to executive officers, directors, principal shareholders or to related interests.

(A) No bank may extend credit to any of its executive officers, directors, or principal shareholders, or to any of their related interests, except as authorized by this section.

(B)

(1) A bank may extend credit to any of its executive officers, directors, or principal shareholders, or to any of their related interests, only if all of the following apply to the extension of credit:

(a) The extension of credit is made on substantially the same terms, including interest rates and collateral, as those terms prevailing at the time for comparable transactions by the bank with persons who are not executive officers, directors, principal shareholders, or employees of the bank.

(b) The extension of credit does not involve more than the normal risk of repayment or present other unfavorable features.

(c) The bank follows credit underwriting procedures that are not less stringent than those applicable to comparable transactions by the bank with persons who are not executive officers, directors, principal shareholders, or employees of the bank.

(2) Nothing in division (B)(1) of this section shall be construed to prohibit any extension of credit made pursuant to a benefit or compensation program that meets both of the following conditions:

(a) The program is widely available to all employees of the bank;

(b) The program does not give preference to any officer, director, or principal shareholder of the bank, or to any related interest of an officer, director, or principal shareholder, over other employees of the bank.

(C) A bank may extend credit to any of its executive officers, directors, or principal shareholders, or to any of their related interests, in an amount that, when aggregated with the amount of all outstanding extensions of credit by the bank to the executive officer, director, or principal shareholder and that person's related interests, would exceed an amount prescribed by the superintendent of financial institutions, only if both of the following conditions are met:

(1) The extension of credit has been approved in advance by a majority vote of the bank's entire board of directors.

(2) The executive officer, director, or principal shareholder, who or whose related interest would be obligated on the extension of credit, has abstained from participating, directly or indirectly, in the deliberations or voting on the extension of credit.

(D) A bank may extend credit to any of its executive officers, directors, or principal shareholders, or to any of their related interests, only if the extension of credit is in an amount that, when aggregated with the amount of all outstanding extensions of credit by the bank to the executive officer, director, or principal shareholder and that person's related interests, would not exceed the limit on loans to a single borrower established by section 1109.22 of the Revised Code.

(E)

(1) A bank may extend credit to any of its executive officers, directors, or principal shareholders, or to any of their related interests, if the extension of credit is in an amount that, when aggregated with the amount of all outstanding extensions of credit by the bank to all of its executive officers, directors, principal shareholders, and their related interests, would not exceed the bank's unimpaired capital.

(2) The superintendent may prescribe a limit that is more stringent than the limit contained in division (E)(1) of this section.

(3) The superintendent may make exceptions to division (E)(1) of this section for banks with less than one hundred million dollars in deposits, if the superintendent determines that the exceptions are important to avoid constricting the availability of credit in small communities or to attract directors to those banks. In no case may the aggregate amount of all outstanding extensions of credit by a bank to all of its executive officers, directors, principal shareholders, and their related interests, be more than two times the bank's unimpaired capital.

(F)

(1) If any executive officer or director of a bank has an account at the bank, the bank may not pay from that account an amount exceeding the funds on deposit in the account.

(2) Division (F)(1) does not prohibit the bank from paying funds in accordance with either of the following:

(a) A written, preauthorized, interest-bearing extension of credit specifying a method of repayment;

(b) A written preauthorized transfer of funds from another account of the executive officer or director at that bank.

(G) No executive officer, director, or principal shareholder shall knowingly receive, or knowingly permit any of that person's related interests to receive, from a bank, directly or indirectly, any extension of credit not authorized under this section.

(H)

(1) Subject to division (H)(2) of this section, for purposes of this section, any executive officer, director, or principal shareholder of any company of which the bank is a subsidiary, or of any other subsidiary of that company, is deemed to be an executive officer, director, or principal shareholder, respectively, of the bank.

(2) The superintendent may make exceptions to the application of division (H)(1) of this section for any person who is an executive officer or director of a subsidiary of a company that controls a bank, if both of the following apply:

(a) The person does not have authority to participate, and does not participate, in major policymaking functions of the bank.

(b) The assets of the subsidiary do not exceed ten per cent of the consolidated assets of the company that controls the bank, and the subsidiary is not controlled by any other company.

(I) For purposes of this section:

(1) "Bank" includes any subsidiary of a bank.

(2)

(a) "Company" means any corporation, partnership, business or other trust, association, joint venture, pool syndicate, sole proprietorship, unincorporated organization, or other business entity.

(b) "Company" does not include either of the following:

(i) A bank, savings bank, or savings association, the deposits of which are insured by the federal deposit insurance corporation;

(ii) A corporation the majority of the shares of which are owned by the United States or by any state of the United States.

(3) "Control" of a company or bank by a person means the person, directly or indirectly, or acting through or in concert with one or more persons, meets any of the following:

(a) The person owns, controls, or has the power to vote twenty-five per cent or more of any class of the company's or bank's voting securities.

(b) The person controls in any manner the election of a majority of the company's or bank's directors.

(c) The person has the power to exercise a controlling influence over the company's or bank's management or policies.

(4) "Executive officer" means a person who participates or has the authority to participate, other than as a director, in major policymaking functions of a company or bank.

(5) To "extend credit" or to make an "extension of credit" means to make or renew any loan, to grant a line of credit, or to enter into any similar transaction as a result of which an executive officer, director, or principal shareholder, or any of that person's related interests, becomes obligated, directly, indirectly, or by any means whatsoever, to pay money or its equivalent to the bank.

(6) "Principal shareholder" means a person who, directly or indirectly, or acting through or in concert with one or more persons, owns, controls, or has the power to vote more than ten per cent of any class of voting securities of a bank or company, other than a company of which the bank is a subsidiary.

(7) "Related interest" of a person means either of the following:

(a) Any company controlled by that person;

(b) Any political committee or campaign committee that is controlled by that person or the funds or services of which will benefit that person.

(8) "Subsidiary" means any company of which a bank or company meets any of the following:

(a) The bank or company owns twenty-five per cent or more of the voting shares of the company.

(b) The bank or company controls in any manner the election of a majority of the directors of the company.

(c) The bank or company has the power, directly or indirectly, to exercise a controlling influence with respect to the management or policies of the company.

Cite as R.C. § 1109.23

Effective Date: 09-29-1999

1109.24 Extending credit to executive officer - reports.

(A) Except as authorized by this section, no bank may extend credit in any manner to any of its own executive officers. No executive officer of a bank may become indebted to that bank except by means of an extension of credit the bank is authorized by this section to make. Any extension of credit made pursuant to this section shall be promptly reported to the bank's board of directors and may be made only if all of the following apply:

(1) The bank would be authorized to make the extension of credit to other borrowers.

(2) The extension of credit is on terms that are not more favorable than those afforded to other borrowers.

(3) The executive officer has submitted a detailed, current financial statement.

(4) The extension of credit is made on the condition that it shall become due and payable on demand of the bank at any time when the executive officer is indebted to any other bank or banks on account of extensions of credit of any one of the three categories referred to in divisions (B), (C), and (D) of this section in an aggregate amount greater than the amount of credit of the same category the bank being served as an executive officer could extend to the executive officer.

(B) With the specific prior approval of its board of directors, a bank may make a loan to any of its executive officers if, at the time the loan is made, both of the following apply:

(1) The loan is secured by a first lien on a dwelling that is expected, after the loan is made, to be owned by the executive officer and used as the executive officer's residence.

(2) No other loan by the bank to the executive officer under the authority of this division is outstanding.

(C) A bank may make extensions of credit to any executive officer of the bank to finance the education of the executive officer's children.

(D) A bank may make extensions of credit not otherwise specifically authorized by this section to any of the bank's executive officers in an amount prescribed by the superintendent of financial institutions.

(E) Except to the extent permitted by division (D) of this section, a bank may not extend credit to a partnership in which one or more of the bank's executive officers are partners having, individually or together, a majority interest. For purposes of division (D) of this section, the full amount of the credit extended shall be considered to have been extended to each executive officer of the bank who is a member of the partnership.

(F) Whenever an executive officer of a bank becomes indebted to any bank or banks, other than the bank served as an executive officer, on account of extensions of credit of any one of the categories referred to in divisions (B), (C), and (D) of this section in an aggregate amount greater than the aggregate amount of credit of the same category that could lawfully be extended to the executive officer by the bank served as an executive officer, the executive officer shall make a written report to the board of directors of the bank stating all of the following:

(1) The date and amount of each extension of credit by any other bank or banks to the executive officer;

(2) The security for each extension of credit;

(3) The purposes for which the proceeds of the extensions of credit have been or are to be used.

(G) This section does not prohibit any executive officer of a bank from endorsing or guaranteeing any loan or other asset previously acquired by the bank in good faith, for the protection of the bank, or incurring any indebtedness to the bank for the purpose of either protecting the bank against loss or giving financial assistance to the bank.

(H) Each bank shall include with, but not as part of, each report of condition made to the superintendent pursuant to section 1121.21 of the Revised Code, a report of all loans made under the authority of this section by the bank since the bank's previous report of condition.

(I) Each day any extension of credit in violation of this section exists is a continuation of the violation for purposes of section 1121.35 of the Revised Code.

Cite as R.C. § 1109.24

Effective Date: 01-01-1997

1109.25 Bank's own stock as security or payment.

(A) No bank shall lend money on the security of shares of its own stock or accept shares of its own stock in satisfaction of a debt, unless necessary to prevent loss on a debt previously contracted in good faith.

(B) A bank that accepts shares of its own stock as allowed by division (A) of this section shall retire or dispose of the shares at the time and in the manner required by the superintendent of financial institutions.

(C) For purposes of this section, the superintendent may determine that stock of a person that controls a bank, if the stock is not readily marketable, is the functional equivalent of stock of the bank and, therefore, subject to divisions (A) and (B) of this section.

Cite as R.C. § 1109.25

Effective Date: 01-01-1997

1109.26 Owning or holding real estate or stock acquired in satisfaction of debt.

(A)

(1) A bank may own or hold for not more than five years any real estate it acquires by foreclosure, conveyance in lieu of foreclosure, or other legal proceedings relating to loan security interests or otherwise in satisfaction of a debt previously contracted. The superintendent of financial institutions may, upon application by a bank, grant the bank the power to hold the real estate for a longer time.

(2) The superintendent may, at any time, require a bank to obtain an independent qualified appraisal of real estate the bank owns or holds in accordance with division (A)(1) of this section.

(3) Real estate sold on contract, but with title remaining in the name of the bank, shall not be considered real estate held by the bank for the purpose of divisions (A)(1) and (2) of this section.

(B)

(1) A bank may own or hold for not more than five years stock of companies either acquired in securing satisfaction of a debt previously contracted in good faith or taken on a refinancing plan involving an investment that was legal at the time it was made. The superintendent may, upon application by a bank, grant the bank the power to hold the stock for a longer time.

(2) The superintendent may, at any time, require a bank to obtain an independent qualified appraisal of the stock the bank owns or holds in accordance with this division.

Cite as R.C. § 1109.26

Effective Date: 01-01-1997

1109.27 to 1109.30 [Repealed].

Cite as R.C. § 1109.27 to 1109.30

Effective Date: 01-01-1997

1109.31 Real estate investments.

(A) A bank may purchase, acquire by lease, or otherwise invest in the real estate and interests in real estate the board of directors considers necessary or convenient for transaction of the bank's business, including by ownership of stock of a wholly owned subsidiary corporation having as its exclusive authority the ownership and management of the bank's real estate interests.

(B) A bank may invest an amount equal to the greater of the bank's capital or ten per cent of its total assets in any other real estate. This limitation does not apply, however, to real estate acquired by foreclosure, conveyance in lieu of foreclosure, or other legal proceedings relating to loan security interests or otherwise in satisfaction of a debt previously contracted.

Cite as R.C. § 1109.31

Effective Date: 01-01-1997

1109.32 Bonds, notes and other debt securities as investments.

(A) A bank may invest in any of the following:

(1) Bonds, bills, notes, or other debt securities of the United States or for which the full faith and credit of the United States is pledged for payment of principal and interest;

(2) Bonds, notes, or other debt securities issued by this state, or any state of the United States, that are the direct obligation of the issuer and for which the full faith and credit of the issuer is pledged to provide payment of the principal and interest;

(3) Bonds, notes, or other debt securities of any county, municipal corporation, township, school district, improvement district, sewer district, or other subdivision of this state or any other state of the United States, that are the direct obligation of the county or the subdivision issuing them and for which the full faith and credit of the issuing county or subdivision is pledged to provide payment of principal and interest;

(4) Bonds or other debt obligations issued or guaranteed by agencies or instrumentalities of the United States, regardless of the guarantee of payment of principal and interest by the United States;

(5) Subject to conditions and restrictions the superintendent of financial institutions may prescribe, bonds, debentures, and other debt securities issued by any country or multinational organization that are the direct obligation of the issuing country or multinational organization and for which the full faith and credit of the issuing country or multinational organization is pledged to provide payment of principal and interest;

(6) Bankers' acceptances of the kinds described in divisions (B) and (C) of section 1109.17 of the Revised Code;

(7) Subject to conditions and restrictions the superintendent may prescribe, bonds, debentures, and other debt securities and obligations of any state or political subdivision of a state, a public corporation, or governmental agency that are payable solely out of anticipated revenues, commonly referred to as revenue bonds;

(8) As defined and restricted by the superintendent, marketable obligations evidencing the indebtedness of any corporation in the form of bonds, notes, debentures, or equipment trust certificates, commonly referred to as investment securities.

(B) In addition to any other provision of this chapter authorizing banks to invest in bonds, debentures, or other debt securities, the superintendent may approve banks' investment in bonds, debentures, and other debt securities and obligations in which national banks are permitted to invest.

Cite as R.C. § 1109.32

Effective Date: 01-01-1997

1109.33 Investing in stock of federally chartered banks.

A bank may apply to the superintendent of financial institutions for permission to invest, subject to the conditions and requirements prescribed by the superintendent, an amount, in the aggregate, not exceeding ten per cent of the bank's paid-in capital and surplus in the stock of banks or corporations chartered or incorporated under the laws of the United States, including section 25a of the "Federal Reserve Act of 1913," 12 U.S.C. 611 , as amended, and principally engaged in international or foreign banking, or in banking in a dependency or insular possession of the United States, either directly or through the agency, ownership, or control of local institutions in foreign countries, dependencies, or insular possessions.

Cite as R.C. § 1109.33

Effective Date: 01-01-1997

1109.34 Investing in securities of domestic insurance company.

(A) A bank may invest in the securities of a domestic insurance company organized under Chapter 3907. or 3925. of the Revised Code, regulated by the superintendent of insurance under Title XXXIX [39] of the Revised Code and engaged exclusively in the business of reinsuring risks, to the extent permitted by and subject to limitations and restrictions imposed by the superintendent of financial institutions by rules adopted in accordance with Chapter 119. of the Revised Code.

(B)

(1) The total amount any bank may invest in the common and preferred stock, obligations, and other securities of domestic insurance companies pursuant to division (A) of this section shall not exceed ten per cent of the bank's assets.

(2) A bank may file an application with the superintendent of financial institutions for permission to invest, subject to the conditions and requirements prescribed by the superintendent of financial institutions, an amount in excess of ten per cent of the bank's capital in the common and preferred stock, bonds, debentures, and other obligations of one domestic insurance company pursuant to division (A) of this section.

(C) A bank making investments pursuant to division (A) of this section shall report the investments annually on the first day of March to the superintendent of financial institutions and the superintendent of insurance. The report shall include, for each reinsurer in which the bank has made an investment, information as to the amount of reinsurance written in this state by each line of insurance designated by the superintendent of insurance.

Cite as R.C. § 1109.34

Effective Date: 01-01-1997

1109.35 Investing in venture capital firms, small businesses and economic development corporations.

(A)

(1) As used in this division:

(a) "Venture capital firm" means any corporation, partnership, proprietorship, limited liability company, or other entity, the principal business of which is or will be the making of investments in small businesses.

(b) "Small business" means any corporation, partnership, proprietorship, limited liability company, or other entity that either does not have more than four hundred employees, or would qualify as a small business for the purpose of receiving financial assistance from small business investment companies licensed under the "Small Business Investment Act of 1958," 72 Stat. 689, 15 U.S.C. 661 , as amended, and rules of the small business administration.

(c) "Shares" means any equity interest, including a limited partnership interest and other equity interest in which liability is limited to the amount of the investment, but does not include a general partnership interest or other interests involving general liability.

(2) A bank may invest, in the aggregate, five per cent of its paid-in capital and surplus in shares issued by the following:

(a) Venture capital firms organized under the laws of the United States or of this state and having an office within this state, if, as a condition of a bank making an investment in a venture capital firm, the firm agrees to use its best efforts to make investments, in an aggregate amount at least equal to the investment to be made by the bank in that venture capital firm, in small businesses having their principal office within this state and having either more than one-half of their assets within this state or more than one-half of their employees employed within this state;

(b) Small businesses having more than half of their assets or employees within this state.

(B)

(1) A bank may invest in the following:

(a) The stocks, bonds, debentures, notes, or other evidences of indebtedness of any of the following:

(i) A community improvement corporation, organized under Chapters 1702. and 1724. of the Revised Code for the sole purpose of advancing, encouraging, and promoting the industrial, economic, commercial, and civic development of a community or area;

(ii) A development corporation, organized under Chapter 1726. of the Revised Code to promote agricultural, industrial, and business developments within the state;

(iii) A community urban redevelopment corporation, organized under Chapter 1701. or 1702. of the Revised Code and qualified to operate under Chapter 1728. of the Revised Code to initiate and conduct projects for the clearance, replanning, development, and redevelopment of blighted areas within municipal corporations.

(b) Other investments similar to the investments described in division (B)(1)(a) of this section and acceptable to the superintendent of financial institutions.

(2) A bank's investment in any one corporation or other entity pursuant to division (B)(1) of this section shall not exceed five per cent of the bank's capital, unless the superintendent determines additional investment does not pose significant risk to the bank. A bank's investments pursuant to division (B)(1) of this section shall not in the aggregate exceed ten per cent of the bank's capital.

Cite as R.C. § 1109.35

Effective Date: 01-01-1997

1109.36 Underwriting and dealing in guaranteed and acceptable debt securities.

To the extent permitted by and subject to any limitations and restrictions the superintendent of financial institutions may impose, a bank may underwrite and deal in investments in the form of bonds, notes, debentures, or other debt securities that are any of the following:

(A) The direct obligation of or guaranteed by the United States;

(B) The direct obligation of or guaranteed by any state of the United States or any political subdivision of any state of the United States;

(C) Acceptable to the superintendent.

Cite as R.C. § 1109.36

Effective Date: 01-01-1997

1109.37, 1109.38 [Repealed].

Cite as R.C. § 1109.37, 1109.38

Effective Date: 01-01-1997

1109.39 Additional stock investments.

In addition to the specific investments authorized in this chapter, a bank may also invest, in the aggregate, no more than ten per cent of its assets in the common or preferred stock, obligations, or other securities of any corporations, as authorized by the bank's board of directors.

Cite as R.C. § 1109.39

Effective Date: 01-01-1997

1109.40 Additional authority for loans and investments.

(A) In addition to the other loan and investment authority provided for banks in Chapter 1109. of the Revised Code, but subject to all other provisions of the Revised Code, a bank may invest up to fifteen per cent of its total assets in loans or investments authorized by the bank's board of directors.

(B) If a loan or other investment is authorized under more than one section of Chapter 1109. of the Revised Code, a bank may designate under which section the loan or investment has been or will be made. The loan or investment may be apportioned among appropriate categories, and may be moved in whole or in part from one category to another.

Cite as R.C. § 1109.40

Effective Date: 01-01-1997

1109.41, 1109.42 [Repealed].

Cite as R.C. § 1109.41, 1109.42

Effective Date: 01-01-1997

1109.43 Investing in bankers' bank or holding company.

(A) For purposes of this section:

(1) "Bankers' bank" means a bank organized to engage exclusively in providing services to other depository institutions and depository institution holding companies and their officers, directors, and employees.

(2) "Bankers' bank holding company" means a corporation that owns or controls, directly or indirectly, a majority of the shares of the capital stock of a bankers' bank, or controls in any manner the election of a majority of the directors of a bankers' bank.

(3) "Depository institution" means a bank, savings and loan association, savings bank, or credit union.

(B) A bank may invest, in the aggregate, up to ten per cent of its capital in shares of a bankers' bank or a bankers' bank holding company, or both.

(C)

(1) The voting shares of a bankers' bank shall be owned by twenty or more depository institutions or depository institution holding companies, and no depository institution or depository institution holding company shall own, directly or indirectly, more than fifteen per cent of the voting shares of a bankers' bank.

(2) The voting shares of a bankers' bank shall be owned, directly or indirectly, exclusively by depository institutions, depository institution holding companies, and persons who hold the shares under, or initially acquired them through, a plan for the benefit of the bankers' bank's officers and employees.

(D) No bank or affiliate of a bank shall, directly, indirectly, or acting through one or more other persons, own or control or have the power to vote shares of any of the following:

(1) More than one bankers' bank;

(2) More than one bankers' bank holding company;

(3) Both a bankers' bank and a bankers' bank holding company, unless the bankers' bank is an affiliate of that bankers' bank holding company.

Cite as R.C. § 1109.43

Effective Date: 01-01-1997; 04-06-2007

1109.44 Investing in bank subsidiary corporations and bank service corporations.

(A) A bank may invest, in the aggregate, twenty-five per cent of its assets in the stock, obligations, and other securities of bank subsidiary corporations and bank service corporations.

(B) A bank shall obtain the approval of the superintendent of financial institutions prior to investing in, acquiring, or establishing a bank subsidiary corporation or bank service corporation, or performing any new activities in a bank subsidiary corporation or bank service corporation.

(C)

(1) A bank subsidiary corporation may engage in any activities, except taking deposits, that are a part or an extension of the business of banking.

(2) A bank service corporation shall be owned solely by one or more depository institutions, and may, at any location, do any of the following:

(a) Provide clerical, bookkeeping, accounting, statistical, or similar services;

(b) Engage in any activities, except taking deposits, that all of its owner depository institutions are authorized to engage in;

(c) Engage in any activity, except taking deposits, the board of governors of the federal reserve system has determined to be permissible for a bank holding company under section 4(c)(8) of the "Bank Holding Company Act of 1956," as amended, 70 Stat. 133, 12 U.S.C.A. 1843(c)(8) .

(D) Bank subsidiary corporations and bank service corporations are subject to examination and regulation by the superintendent.

(E) Only if the company in which the investment is to be made qualifies as either a bank subsidiary corporation or a bank service corporation under this section may a bank invest in securities pursuant to section 1109.39 of the Revised Code or make investments pursuant to section 1109.40 of the Revised Code that result in any of the following:

(1) The bank, directly or indirectly, or acting through one or more other persons, owns, controls, or has the power to vote twenty-five per cent or more of any class of voting securities of the company in which the investment is being made.

(2) The bank controls in any manner the election of a majority of the directors or trustees of the company in which the investment is being made.

(3) As determined by the superintendent after notice and opportunity for a hearing, the bank directly or indirectly exercises a controlling influence over the management or policies of the company in which the investment is being made.

Cite as R.C. § 1109.44

Effective Date: 01-01-1997

1109.45 Investing in clearing corporation.

A bank may invest in the shares of a clearing corporation as defined by section 1308.01 of the Revised Code.

Cite as R.C. § 1109.45

Effective Date: 01-01-1997

1109.47 Limiting investing in one issuer.

(A) Except as provided in division (B) of this section, a bank shall not invest more than fifteen per cent of its capital in the stock, obligations, or other securities of any one issuer.

(B) Division (A) of this section does not apply to any of the following:

(1) Bonds or other obligations enumerated in divisions (A)(1) to (6) of section 1109.32 of the Revised Code;

(2) Investment in a bank subsidiary corporation engaged solely in the business of holding title to real estate described in division (A) of section 1109.31 of the Revised Code;

(3) Obligations or securities of the federal national mortgage association, the student loan marketing association, the government national mortgage association, or the federal home loan mortgage corporation, or their successors;

(4) Common and preferred stock, obligations, and other securities of one domestic reinsurance company with the written permission of the superintendent of financial institutions as required by division (B) of section 1109.34 of the Revised Code.

(C) For purposes of this section, no purchase by a bank of stock in a federal reserve bank or federal home loan bank is an investment.

(D) If a state or political subdivision of a state issues securities, acting solely as a conduit for the transmission of the proceeds of the sale of the securities to one or more private entities for economic development purposes and to be repaid solely by the private entity or entities that received the proceeds of the sale of the securities, then both of the following apply for purposes of determining the amount a bank may invest in accordance with division (A) of this section:

(1) The securities are obligations of the private entity or entities in proportion to their receipt of the proceeds.

(2) The securities are not obligations of the issuing state or political subdivision.

Cite as R.C. § 1109.47

Effective Date: 01-01-1997

1109.48 Investing in firms owned and controlled by minorities or women.

In exercising its investment authority, a bank shall give equal consideration to investments that involve firms owned and controlled by minorities and firms owned and controlled by women, either alone or in joint venture with other firms, where the investments offer quality, return, and safety comparable to other investments currently available to the bank.

Cite as R.C. § 1109.48

Effective Date: 01-01-1997

1109.49 Furnishing financial information to superintendent.

A bank investing in the securities of a bank or corporation pursuant to this chapter shall furnish information concerning the financial condition of the bank or corporation to the superintendent of financial institutions upon the superintendent's demand.

Cite as R.C. § 1109.49

Effective Date: 01-01-1997

1109.53 Transactions with affiliates definitions.

For purposes of this section and sections 1109.54 , 1109.55 , and 1109.56 of the Revised Code:

(A)

(1) "Affiliate" means any of the following:

(a) A company that controls the bank and any other company controlled by the company that controls the bank;

(b) A bank subsidiary of the bank;

(c) A company that is controlled directly or indirectly, by a trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the bank or any company that controls the bank;

(d) A company in which a majority of the directors or trustees constitute a majority of the directors or trustees of the bank or any company that controls the bank;

(e) A company, including a real estate investment trust, that is sponsored and advised on a contractual basis by the bank or a subsidiary of the bank;

(f) An investment company to which the bank or one of its affiliates is an investment advisor as defined in section 2(a)(20) of the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a - 2(a) (20 ), as amended;

(g) A company the superintendent of financial institutions determines by rule or order to have a relationship with the bank or one of its subsidiaries or affiliates such that covered transactions by the bank or its subsidiary with that company may be affected by the relationship to the detriment of the bank or its subsidiary.

(2) "Affiliate" does not include any of the following:

(a) A company, other than a bank, that is a subsidiary of a bank, unless a determination is made under division (A)(1)(g) of this section not to exclude the subsidiary company from the definition of affiliate;

(b) A company engaged solely in holding the premises of the bank;

(c) A company engaged solely in conducting a safe-deposit business;

(d) A company engaged solely in holding obligations of the United States or its agencies or instrumentalities or obligations fully guaranteed as to principal and interest by the United States or its agencies or instrumentalities;

(e) A company where control results from the exercise of rights arising out of a bona fide debt previously contracted, but only for a period of two years from the date the rights are exercised, subject to extensions granted by the superintendent of not more than one year at a time nor three years in the aggregate.

(B) "Aggregate covered transactions" means the amount of the covered transactions about to be engaged in added to the current amount of all outstanding covered transactions.

(C) "Company" means a corporation, partnership, business, trust, association, or similar organization and, unless specifically excluded by this section or section 1109.54 , 1109.55 , or 1109.56 of the Revised Code, a bank.

(D)

(1) "Covered transaction" means, with respect to an affiliate of a bank, any of the following:

(a) A loan or extension of credit to the affiliate;

(b) A purchase of or an investment in securities issued by the affiliate;

(c) A purchase of assets, including assets subject to an agreement to repurchase, from the affiliate, except the purchase of real or personal property as specifically exempted by the superintendent by rule or order;

(d) The acceptance of securities issued by the affiliate as collateral security for a loan or extension of credit to any person or company;

(e) The issuance of a guarantee, acceptance, or letter of credit, including an endorsement or standby letter of credit to any person or company.

(2) "Covered transaction" does not include any of the following:

(a) A transaction with another bank if either of the following apply:

(i) One of the banks controls eighty per cent or more of the voting shares of the other bank.

(ii) The same company controls eighty per cent or more of the voting shares of both banks.

(b) Making deposits in an affiliated bank or affiliated foreign bank in the ordinary course of correspondent business, subject to any restrictions the superintendent may prescribe by rule or order;

(c) Giving immediate credit to an affiliate for uncollected items received in the ordinary course of business;

(d) Making a loan or extension of credit to, or issuing a guarantee, acceptance, or letter of credit on behalf of, an affiliate that is fully secured by one of the following:

(i) Obligations of the United States or its agencies or instrumentalities;

(ii) Obligations fully guaranteed as to principal and interest by the United States or its agencies or instrumentalities;

(iii) A segregated, earmarked deposit account with the bank.

(e) Purchasing securities issued by a company engaged solely in one or more of the following activities:

(i) Holding or operating properties used or to be used wholly or substantially by any bank subsidiary of a company that controls the bank in the operations of the bank subsidiary;

(ii) Conducting a safe-deposit business;

(iii) Furnishing services to or performing services for a company that controls the bank or its subsidiaries;

(iv) Liquidating assets acquired from a company that controls the bank or its banking subsidiaries.

(f) Purchasing assets having a readily identifiable and publicly available market quotation and purchased at that market quotation or purchasing loans on a nonrecourse basis from affiliated banks;

(g) Purchasing from an affiliate a loan or extension of credit that was originated by the bank and sold to the affiliate subject to a repurchase agreement or with recourse.

(E) "Low quality asset" means an asset that is one or more of the following:

(1) An asset classified as "substandard," "doubtful," or "loss," or treated as "other loans especially mentioned" in the most recent report of examination or inspection of an affiliate prepared by any of the federal deposit insurance corporation, the federal reserve, the office of the comptroller of the currency, the office of thrift supervision, the division of financial institutions, or the financial institution regulators of other states of the United States;

(2) An asset in a nonaccrual status;

(3) An asset on which principal or interest payments are more than thirty days past due;

(4) An asset whose terms have been renegotiated or compromised due to the deteriorating financial condition of the obligor.

(F) "Securities" means, except as provided in section 1109.55 of the Revised Code, stocks, bonds, debentures, notes, or other similar obligations.

(G) "Subsidiary" means, with respect to a specified company, a company that is controlled by the specified company.

(H)

(1) Subject to division (H)(2) of this section, a company or shareholder is deemed to have control over another company, if any of the following apply:

(a) The company or shareholder, directly or indirectly, or acting through one or more other persons, owns, controls, or has the power to vote twenty-five per cent or more of any class of voting securities of the other company.

(b) The company or shareholder controls in any manner the election of a majority of the directors or trustees of the other company.

(c) The superintendent determines, after notice and opportunity for a hearing, the company or shareholder, directly or indirectly, exercises a controlling influence over the management or policies of the other company.

(2) No company shall be found to own or control another company by virtue of the ownership or control of securities in a fiduciary capacity, except either as provided in divisions (A)(1)(c) and (d) of this section or if the company owning or controlling the securities is a business trust.

(I) Any transaction by a bank with any person shall be considered a transaction with an affiliate to the extent the proceeds of the transaction are used for the benefit of, or transferred to, an affiliate.

Cite as R.C. § 1109.53

Effective Date: 01-01-1997

1109.54 Conditions for engage in covered transaction with affiliate.

(A) A bank and its subsidiaries may engage in a covered transaction with an affiliate only if both of the following apply:

(1) The aggregate amount of covered transactions by the bank and its subsidiaries with the particular affiliate will not exceed ten per cent of the bank's capital.

(2) The aggregate amount of all covered transactions by the bank and its subsidiaries with all of the bank's affiliates will not exceed twenty per cent of the bank's capital.

(B) A bank and its subsidiaries may not purchase a low quality asset from an affiliate unless the bank or its subsidiary, pursuant to an independent credit evaluation, committed itself to purchase the asset prior to the time the asset was acquired by the affiliate.

(C) Any covered transactions and any transactions between a bank and an affiliate shall be on terms and conditions that are consistent with safe and sound banking practices.

(D) Except as provided in division (E)(4) of this section, any loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, an affiliate by a bank or its subsidiary shall be secured at the time of the transaction by collateral having a market value equal to any of the following:

(1) One hundred per cent of the amount of the loan or extension of credit, guarantee, acceptance, or letter of credit, if the collateral is composed of any of the following:

(a) Obligations of the United States or its agencies or instrumentalities;

(b) Obligations fully guaranteed as to principal and interest by the United States or its agencies or instrumentalities;

(c) Notes, drafts, bills of exchange, or bankers' acceptances described in division (B) or (C) of section 1109.17 of the Revised Code;

(d) A segregated, earmarked deposit account with the bank.

(2) One hundred ten per cent of the amount of the loan or extension of credit, guarantee, acceptance, or letter of credit, if the collateral is composed of obligations of any state or political subdivision of any state;

(3) One hundred twenty per cent of the amount of the loan or extension of credit, guarantee, acceptance, or letter of credit, if the collateral is composed of other debt instruments, including receivables;

(4) One hundred thirty per cent of the amount of the loan or extension of credit, guarantee, acceptance, or letter of credit, if the collateral is composed of stock, leases, or other real or personal property.

(E) For purposes of division (D) of this section:

(1) Any collateral that is subsequently retired or amortized shall be replaced by additional eligible collateral as needed to keep the percentage of the collateral value relative to the amount of the outstanding loan or extension of credit, guarantee, acceptance, or letter of credit equal to the minimum percentage required at the inception of the transaction.

(2) A low quality asset is not acceptable as collateral for a loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, an affiliate.

(3) The securities issued by an affiliate of the bank are not acceptable as collateral for a loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, that affiliate or any other affiliate of the bank.

(4) The collateral requirements set forth in divisions (D) and (E)(1) of this section do not apply to any acceptance that is fully secured by either attached documents or other property that is involved in the transaction and that has an ascertainable market value.

Cite as R.C. § 1109.54

Effective Date: 01-01-1997

1109.55 Permitted transactions with affiliate.

(A) A bank and its subsidiaries may engage in any of the transactions described in division (B) of this section only if one of the following applies:

(1) The transaction is on terms and under circumstances, including credit standards, that are substantially the same, or at least as favorable to the bank or its subsidiary, as those prevailing at the time for comparable transactions with or involving other nonaffiliated companies.

(2) In the absence of comparable transactions, the transaction is on terms and under circumstances, including credit standards, that in good faith would be offered to, or would apply to, nonaffiliated companies.

(B) Division (A) of this section applies to all of the following:

(1) A covered transaction with an affiliate;

(2) The sale of securities or other assets to an affiliate, including assets subject to an agreement to repurchase;

(3) The payment of money or the furnishing of services to an affiliate under contract, lease, or otherwise;

(4) Any transaction in which an affiliate acts as an agent or broker or receives a fee for its services to the bank or to any other person.

(C) No bank or its subsidiary shall do either of the following:

(1) Purchase as fiduciary any securities or other assets from an affiliate unless the purchase is permitted by one of the following:

(a) The instrument creating the fiduciary relationship;

(b) A court order;

(c) The law of the jurisdiction governing the fiduciary relationship.

(2) Whether acting as principal or fiduciary, knowingly purchase or otherwise acquire, during the existence of any underwriting or selling syndicate, any security if a principal underwriter of the security is an affiliate.

Division (C)(2) of this section does not apply if the purchase or acquisition of the securities has been approved, before the securities are initially offered for sale to the public, by a majority of the directors of the bank who are not officers or employees of the bank or any of its affiliates.

(D) No bank or affiliate or subsidiary of a bank shall publish any advertisement or enter into any agreement stating or suggesting the bank shall in any way be responsible for the obligations of its affiliates.

(E) For purposes of division (C) of this section:

(1) "Principal underwriter" means any underwriter, in connection with a primary distribution of securities, that is any of the following:

(a) In privity of contract with the issuer or an affiliated person of the issuer;

(b) Acting alone or in concert with one or more other persons, initiates or directs the formation of an underwriting syndicate;

(c) Allowed a rate of gross commission, spread, or other profit greater than the rate allowed another underwriter participating in the distribution.

(2) "Security" has the same meaning as in section 3(a)(10) of the "Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78c(a)(10) , as amended.

Cite as R.C. § 1109.55

Effective Date: 01-01-1997

1109.56 Rules for transactions with affiliates.

Pursuant to the authority of section 1121.03 of the Revised Code, the superintendent of financial institutions may adopt rules to administer and carry out the purposes of sections 1109.53 , 1109.54 , and 1109.55 of the Revised Code, including rules that do any of the following:

(A) Further define terms used in sections 1109.53 , 1109.54 , and 1109.55 of the Revised Code;

(B) If the superintendent finds them to be in the public interest and consistent with the purposes of sections 1109.53 , 1109.54 , and 1109.55 of the Revised Code:

(1) Exempt transactions or relationships from the requirements of sections 1109.53 , 1109.54 , and 1109.55 of the Revised Code;

(2) Exclude any subsidiary of a bank holding company from the definition of affiliate for purposes of sections 1109.53 , 1109.54 , and 1109.55 of the Revised Code.

Cite as R.C. § 1109.56

Effective Date: 01-01-1997

1109.59 Authority to borrow.

A bank may borrow money in any sum consistent with safety and soundness. Borrowing by means of the issuance of debt securities is subject to the approval of the superintendent of financial institutions in accordance with section 1107.05 of the Revised Code.

Cite as R.C. § 1109.59

Effective Date: 01-01-1997

1109.60 Authority to transmit money.

(A) A bank shall have the power, directly or through its agents or as an agent of another authorized money transmitter, to transmit money or its equivalent on behalf of any person by any means, including transmissions by wire, check, draft, facsimile, courier, terminal, telephone, computer, or other device.

(B) A bank may transmit money from locations other than its banking offices. The bank shall give written notice to the superintendent of financial institutions of the establishment, relocation, or closing of any location from which the bank transmits money.

(C) A bank that authorizes others to transmit money as its agent shall annually report to the superintendent each person the bank has authorized as its agent for transmitting money.

Cite as R.C. § 1109.60

Effective Date: 01-01-1997

1109.61 Paying management and consulting fees.

No bank shall contract to pay, or pay to any person, any fees for management or consulting services, including fees for legal, accounting, brokerage, or other similar professional services, that do not have a direct relationship to the value of the services rendered or to be rendered, based on reasonable costs consistent with current market values for services of the kind contracted for.

Cite as R.C. § 1109.61

Effective Date: 01-01-1997

1109.62 [Repealed].

Cite as R.C. § 1109.62

Effective Date: 12-02-1996

1109.63 Coin and bullion.

A bank may buy, sell, and exchange coin and bullion.

Cite as R.C. § 1109.63

Effective Date: 01-01-1997

1109.64 Travel services.

Subject to the limitations and restrictions of Chapters 1101. to 1127. of the Revised Code, a bank shall have the power to do both of the following:

(A) Operate travel agencies;

(B) Engage in the sale of tickets for passage on common carriers, such as airlines, railroads, ships, and buses, to points within and outside the United States.

Cite as R.C. § 1109.64

Effective Date: 01-01-1997

1109.65 Tax certificate purchase.

In order to protect its interest in a property, a bank may purchase a tax certificate under section 5721.32 or 5721.33 of the Revised Code.

Cite as R.C. § 1109.65

Effective Date: 02-25-1998

1109.68 Using copying or reproduction processes.

(A) A bank may, for any business purpose, retain a document, paper, or other instrument or record by use of a process to record, copy, photograph, or store a representation of the original document, paper, or other instrument or record, if all of the following apply:

(1) The process correctly and accurately copies or reproduces, or provides a means for correctly and accurately copying or reproducing, the original document, paper, or other instrument or record with regard to both its substance and appearance, except the copy or reproduction need not reflect the original paper or other medium, size, or color, unless the medium, size, or color is necessary to establish the authenticity of the original.

(2) The process does not permit the recording, copy, photographic image, or stored representation of the original document, paper, or other instrument or record to be altered or manipulated.

(3) Any medium the process uses to record, copy, photograph, or store a representation of the original document, paper, or other instrument or record is a durable medium for retaining and reproducing records.

(B) The superintendent of financial institutions shall identify and publish a list of processes that satisfy the conditions of division (A) of this section.

(C) Each bank that uses a process authorized by this section to preserve any of its records shall also provide for safekeeping and for examining, viewing, or projecting the records preserved, and for producing reproductions of the original records.

(D) Recordings, copies, photographic images, or stored representations of original documents, papers, or other instruments or records made in accordance with this section, or reproductions of original documents, papers, or other instruments or records produced from recordings, copies, photographic images, or stored representations made in accordance with this section, when properly identified by the officer by whom or under whose supervision they were made or who has custody of them, have the same effect at law as the original records or records made by any other legally authorized means. They may be offered in the same manner and shall be received in evidence in any court where the original records, or records made by other legally authorized means, could have been introduced and received. Certified or authenticated duplicates of recordings, copies, photographic images, or stored representations of original documents, papers, or other instruments or records made in accordance with this section, or of reproductions of original documents, papers, or other instruments or records produced from recordings, copies, photographic images, or stored representations made in accordance with this section, shall be admitted in evidence in the same manner as the original documents, papers, or other instruments or records.

Cite as R.C. § 1109.68

Effective Date: 01-01-1997

1109.69 Record retention.

(A) Every bank shall retain or preserve the following bank records and supporting documents for only the following periods of time:

(1) For one year:

(a) Broker's confirmations, invoices, and statements relating to security transactions of the bank or for or with its customers, after date of transaction;

(b) Corporate resolutions, partnership authorizations, and similar authorizations relating to closed accounts, loans that have been paid, or other completed transactions, after date of closing, payment, or completion;

(c) Ledger records of safe deposit accounts, after date of last entry on the ledger;

(d) Night depository records, after their date;

(e) Records relating to closed Christmas club or similar limited duration special purpose accounts, after date of closing;

(f) Records relating to customer collection accounts, after date of transaction;

(g) Stop payment orders, after their date;

(h) All records relating to closed consumer credit loans and discounts, after date of closing;

(i) Deposit tickets relating to demand deposit accounts, after their date;

(2) For six years:

(a) Deposit and withdrawal tickets relating to open or closed savings accounts, after their date;

(b) Individual ledger sheets or other records serving the same purpose that show a zero balance and that relate to demand, time, or savings deposit accounts, and safekeeping accounts, after date of last entry, or, where the ledger sheets or other records show an open balance, after date of transfer of the amount of the balance to another ledger sheet or record;

(c) Official checks, drafts, money orders, and other instruments for the payment of money issued by the bank and that have been canceled, after date of issue;

(d) Records relating to closed escrow accounts, after date of closing;

(e) Records, other than corporate resolutions, partnership authorizations, and similar authorizations relating to closed loans and discounts other than consumer credit loans and discounts, after date of closing;

(f) Safe deposit access tickets and correspondence or documents relating to access, after their date;

(g) Lease or contract records relating to closed safe deposit accounts, after date of closing;

(h) Signature cards relating to closed demand, savings, or time accounts, closed safe deposit accounts, and closed safekeeping accounts, after date of closing;

(i) Undelivered statements for demand deposit, negotiable order of withdrawal, savings, agency, brokerage, or other accounts for which customer statements are prepared, and canceled checks or other items, after date of statement, provided the bank has attempted to send the statements and checks or other items to its customer, has held them pursuant to the instructions of or an agreement with its customer, or has made them available to its customer.

(B) The superintendent of financial institutions may designate a retention period of either one year or six years for any record maintained by a bank but not listed in division (A) of this section. Records that are not listed in division (A) of this section and for which the superintendent has not designated a retention period shall be retained or preserved for six years from the date of completion of the transaction to which the record relates or, if the last entry has been transferred to a new record showing the continuation of a transaction not yet completed, from the date of the last entry.

(C) The requirements of divisions (A) and (B) of this section may be complied with by the preservation of records in the manner prescribed in section 1109.68 of the Revised Code.

(D) In construing the terms set forth in division (A) of this section, reference may be made to general banking usage.

(E) A bank may dispose of any records that have been retained or preserved for the period set forth in divisions (A) and (B) of this section.

(F) Any action by or against a bank based on, or the determination of which would depend on, the contents of records for which a period of retention or preservation is set forth in divisions (A) and (B) of this section shall be brought within the time for which the record must be retained or preserved.

(G) Where a record may be classified under either division (A)(1) or (2) of this section, the record shall be retained or preserved for the period set forth in division (A)(2) of this section.

(H) The provisions of this section do not apply to those records maintained by a bank in its capacity as a trust company.

Cite as R.C. § 1109.69

Effective Date: 01-01-1997

1109.73 Proceeding for partition.

The interests of any tenants in common, survivorship tenants, or coparceners of any tangible or intangible personal property may be partitioned under this section pursuant to a partition proceeding. A proceeding for partition under this section may be filed in the court of common pleas of any county in which any co-owner resides. If a partition proceeding is filed and the court finds that partition of the interests in question should be made, the court shall order the sale of the property and division of the proceeds among the co-owners or shall partition the property among the co-owners. The division of the proceeds or partitioning of the property shall be either in proportion to the net contributions by each co-owner to the total property or as the court finds to be equitable and practicable.

Cite as R.C. § 1109.73

Effective Date: 01-01-1997

1109.75 Securitization.

(A) Notwithstanding any other provision of law, to the extent set forth in the transaction documents relating to a securitization:

(1) Any property, assets, or rights purported to be transferred, in whole or in part, in a securitization shall be deemed to no longer be the property, assets, or rights of the transferor.

(2) A transferor in a securitization, the transferor's creditors, or a bankruptcy trustee, receiver, or similar person in an insolvency proceeding involving the transferor shall have no rights whatsoever to reacquire, reclaim, recover, redeem, or recharacterize as property of the transferor any property, assets, or rights purported to be transferred, in whole or in part, by the transferor.

(3) In the event of the transferor's bankruptcy, receivership, or other insolvency proceedings, the property, assets, or rights purported to have been transferred by the transferor, in whole or in part, in a securitization shall not be deemed to be part of the transferor's property, assets, rights, or estate.

(B) Nothing contained in this section shall be deemed to require any securitization transaction to be treated as a sale for federal or state tax purposes or to preclude the treatment of any securitization transaction as a debt for federal or state tax purposes.

(C) As used in this section, "securitization" means a transfer of financial assets by a financial institution insured by the federal deposit insurance corporation (FDIC) to a special purpose entity established to issue securities supported by the financial assets to investors.

Cite as R.C. § 1109.75

Effective Date: 07-01-2001