HB 726 — AN ACT relating to the regulation of financial institutions.

CHAPTER 152 11 (4) All amendments to the articles of incorporation of any financial institution mentioned in KRS 286.3-040 shall be approved by the commissioner before filing with the Secretary of State.] Section 15.

2.[(b)]2.[(b)]That That he or she will faithfully discharge the duties of the[his] office and administer the affairs of the institution, so far as the duties of the[his] office require;

(2)[(3)] (a) The oath of office required under subsection (1) of this section shall Page 22 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN be executed or reexecuted, as applicable, upon the election of any subsequent director[,] or reelection of any director.[, the oath shall be taken and shall be] (b) Any oath of office executed by a subsequent or reelected director shall be:

Page 23 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (b) The commissioner shall not approve a reduction in capital stock unless he or she finds that:

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY a.

Page 24 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN SECTION 17.

(a) The terms of the acquisition are not in accordance with the laws of this state;[ or] Page 25 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (b) The financial condition, or the competence, experience, and integrity, of the acquiring party or parties are such as will jeopardize the financial stability of the bank, trust company, or bank holding company;

CHAPTER 152 13 (b) A change in ownership of voting stock which would result in direct or indirect ownership by a stockholder or an affiliated group of stockholders of less than twenty-five percent (25%) of the outstanding voting stock shall not be considered a change of control.

Page 26 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (b) The names of the sellers [(]or transferors[)];

Page 27 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (b)[(2)] Acquire and hold title to real estate if[, provided]:

and 2.[(b)]2.[(b)]Except Except with prior written approval of the commissioner, the cost of the real estate, including furniture and fixtures, less accumulated depreciation does[shall] not exceed forty percent (40%) of the bank's total paid-in capital, unimpaired surplus, and undivided profits [(]determined on accrual basis[).

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 1.

(e)[(6)] Invest, subject to the approval of the commissioner, in the capital stock or bonds or both of any domestic realty corporation organized or existing for the sole purpose of acquiring and holding title to real property used by the bank, through lease or otherwise, for the transaction of the bank's legitimate Page 28 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN business;

2.[(b)]2.[(b)]Stocks, Stocks, bonds, or other interest-bearing or dividend-yielding obligations issued or guaranteed as to the payment of principal and interest or dividends[dividend] by any instrumentality presently or hereafter incorporated by authority of an Act of Congress;

or 4.[(d)]4.[(d)]Any Any other obligations in which national banks[banking associations organized under the laws of the United States] are permitted to invest in directly;

For the payment of the principal and interest on which the faith Page 29 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN and credit of the United States is pledged;

3.[(b)]3.[(b)]Stocks, Stocks, bonds, or other interest-bearing or dividend-yielding obligations issued or guaranteed as to the payment of principal and interest or dividends[dividend] by any instrumentality presently or hereafter incorporated by authority of an Act of Congress;

CHAPTER 152 15 2.

[and] (j)[(b)] Invest[Investment] in other real estate[ not to exceed ten percent (10%) of the bank's actual paid-inpaid- in capital and surplus, calculated at the time the investment is made, for each real estate investment, if the bank has] acquired[ the real estate] in satisfaction of a debt previously contracted by the bank if:[ and ] 1.

Page 30 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN and[.

(2) Investments made in accordance with subsection (1)(f) or (1)(h)2., 3., or 4.[subsections (7) and (9)] of this section are subject to KRS 286.3-280 and 286.3-286.3-290. Page 31 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 290.

(3)[(2)] (a) Any bank and[or] trust company may consolidate into a resulting combined bank and trust company.[ and ] Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (b) The consolidated corporation shall issue stock for an equivalent amount in value of the stock of the constituent corporations.

Page 32 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (4)[(3)] (a) Upon written approval of the commissioner, a bank or trust company may transfer one (1) or more fiduciary accounts under its administration to an affiliate of the trust company or bank, as defined in KRS 286.3-230(6), located in this state[the Commonwealth], if the transferring bank or trust company[ shall also]:

and (b) Shall[May] not, at its trust representative office or offices in Kentucky or any Page 33 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN other state or foreign country, act as a fiduciary, but it may[ otherwise] engage in other trust business at the office or offices as permitted by Kentucky law or the applicable law of the state or foreign country[fiduciary related activities], including but not limited to marketing, soliciting, and operations[operating through the trust representative office as permitted by this section].

a.[1.]Thea.[1.] The name of the[ Kentucky state] trust company;

Pageb.[2.] 34The of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN b.[2.]The location of the proposed office or offices;[ and] c.[3.]Thec.[3.] The designation of the additional office or offices as trust offices or trust representative offices;

and CHAPTER 152 17 d.

2.[(b)]2.[(b)]Furnish Furnish the commissioner with a copy of the resolution adopted by the board of directors authorizing the additional office or offices;

If the[ period of] review period is extended, the[ Kentucky state] trust company shall not be authorized to commence business at the proposed office or offices until the trust company receives[may establish or acquire and maintain the additional office only on prior] Page 35 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN written approval from[by] the commissioner.

The Page 36 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN thirty (30) day period of review may be extended by the commissioner if he or she determines the notice raises issues that require additional information or additional time for analysis.

or Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 3.

or (b) Establish, or acquire and maintain, a trust office or a trust representative office Page 37 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN in this state[ only if trust companies chartered under the laws of Kentucky are permitted to establish or acquire and maintain offices, and engage in substantially similar activities permissible for out-of-state trust companies as established in KRS 286.3-145, in the state where the out-of-state trust company has its principal office].

A trust company organized under the laws of this state is permitted under the laws of the out-of-stateout- of-state trust company's home state to conduct a substantially similar activity in that state;

and[that establishes or acquires and maintains a trust office or Page 38 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN trust representative office in Kentucky pursuant to this section may conduct any activity in Kentucky that would be authorized under the laws of this state for a Kentucky state trust company] c.

and CHAPTER 152 19 (b) Shall[May] not, at its trust representative office or offices in Kentucky, act as a fiduciary, but it may[ otherwise] engage in other trust business at the office or offices,[fiduciary related activities] including but not limited to marketing, soliciting, and operations, to the extent the activities are authorized for a trust company organized under the laws of this state[operating through the trust representative office, but only to the extent the home state of the out-of-out-of-state state trust company permits trust companies chartered in Kentucky to engage in similar activities in the other state].

[(3) An out-of-state trust company shall have and continuously maintain a trust office or trust representative office in this state.] Page 39 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (4) (a) An out-of-state trust company desiring to establish, or acquire and maintain, an office or offices[a trust office] in this state shall:

Pay the filing fee, if any, prescribed by the commissioner.[;] (b) 1.[4.]An1.[4.] An application made under paragraph (a) of this subsection shall be deemed approved on the sixty-first day[Commence business at the trust office no sooner than sixty-one (61) days] after the date the commissioner receives the application[notice specified by this subsection], unless the commissioner:

of this Page 40 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN paragraph.

1.[a.]TheLegislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 1.[a.] The out-of-state trust company lacks sufficient financial resources to undertake the proposed expansion without adversely affecting its safety or soundness;

Page2.[b.] 41The of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 2.[b.]The proposed office or offices are[is] contrary to the public interest;

or 3.[c.]The3.[c.] The proposed expansion is not authorized under applicable law.

a.[1.][Requirementsa.[1.] [Requirements ]Of the trust company's home state regulator and home state law for establishing, or acquiring and maintaining, the office;

and b.[2.]For[requirementsb.[2.] For[requirements to qualify as a] foreign corporations[corporation] under KRS Chapter 271B;

and 2.[(b)]2.[(b)]Provide Provide evidence to the commissioner that all fiduciary obligations and liabilities of any[the] trust company being acquired have been properly discharged or assumed.

(6) An out-of-state trust company that conducts trust business, establishes an office, or acquires and maintains an office in this state shall confirm[ in writing] to the Page 42 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN commissioner, prior to commencing[ to do] business in this state[,] and at least annually thereafter, that for so long as it conducts trust business, or maintains a trust office or trust representative office, in this state, it will comply with all applicable laws of this state.

A certificate of the president, secretary, or cashier of the national banking association certifying that all steps have been taken which are necessary under federal law for[to the consummation of] the Page 43 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN conversion;[.] (c) The commissioner shall approve or disapprove a conversion[such] plan[ of conversion] within sixty (60) days of the plan's submission;[ thereof to him.] (d) In considering the approval or disapproval of a[the] conversion plan, the commissioner shall take into account:

CHAPTER 152 21 1.[(a)] Whether there are any significant supervisory or compliance concerns that exist with respect to the national banking association[pending administrative or judicial action to which the bank] or any officer or director of the association[bank is a party];

2.[(b)]2.[(b)]The The performance of the converting national banking association[bank] for the five (5) years preceding the application for conversion as compared to similarly situated state[-chartered] banks;

[If the commissioner shall disapprove the conversion plan, he shall state his Page 44 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN reasons for such disapproval in writing to which the converting national bank shall have the right of appeal as permitted by law.] (3) In the case of each merger or consolidation:[, ] (a) A written plan of merger or consolidation shall be submitted[, in duplicate,] to the commissioner;[.] (b) The merger or consolidation[Such] plan shall:

With Page 45 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN such plan of merger there shall be submitted, in duplicate, to the commissioner the following] 5.

and b.[(b)]b.[(b)]By By the state bank, a certificate of the president, secretary, or cashier of the bank certifying that the plan:

[such plan of merger ]Has been approved by the board of directors of the state bank Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY by a majority vote of all the members thereof;[, that such ] ii.

[plan of merger ]Has been approved[ at such meeting] by the vote of at least two-thirdstwo- thirds (2/3) of the stockholders[ owning at least two-thirds (2/3) in amount of the stock] of the state bank;[.] (c) The first board of directors of the state bank after the merger or consolidation shall be in accordance with the provisions of this subtitle relating to the number and qualifications of directors of a state bank;

(d)[(4)] The commissioner shall approve or disapprove a[such] plan of merger Page 46 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN or consolidation:

(b) All of the property, rights, and powers and franchises of the national banking association shall vest in the resulting state bank and the resulting state bank shall be subject to and deemed to have assumed all of the debts, liabilities, obligations, and duties of the national banking association and to have succeeded to all of its relationships, fiduciary or otherwise, as fully and to the Page 47 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN same extent as if the national banking association's[such] property, rights, powers, franchises, debts, liabilities, obligations, duties, and relationships had been originally acquired, incurred, or entered into by the resulting state bank, except[;

CHAPTER 152 23 Section 24.

(1) Except as provided in KRS 286.3-820, state banks may[authorized under the laws of this state may, except as provided in subsections (2) or (3) of this section,] exercise[, only at their principal office,] the following powers necessary to carry on Page 48 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN the business of banking at their principal office or a branch:[by] (a) Discounting and negotiating notes, drafts, bills of exchange, and other evidences of debt;[, and by ] (b) Purchasing bonds, receiving deposits, and allowing interest on these items;[, ] (c) Buying and selling exchange, coin, and bullion;[,] and (d) Lending money on personal or real security.

1.[(a)] [The ]Permission to open a branch shall lapse one (1) year after the commissioner has rendered a final order, as defined in KRS 13B.010, approving the application[unless it shall have been opened and business Page 49 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN actually begun in good faith].

and 2.[(b)]2.[(b)]An An application to establish or acquire a branch[ office] shall be approved or disapproved by the commissioner based upon the facts existing on[at] the date[ of filing of] the application is filed, except for the financial condition of the bank proposing to establish a branch[ office], which condition shall be subject to review until a final[an] order ruling on the application is made.

(6)[(5)] Any national banking association[ or any state bank member of the Federal Page 50 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN Reserve system] whose principal office is located in this state may do all things and perform all acts that[which] state banks are permitted to do or perform under this section, subject to the conditions and restrictions provided for state banks as to exercise of these powers.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (a) The bank provides at least[until after] ninety (90) days' notice of the branch's discontinuance or closure in writing to the commissioner;

(9) (a) The commissioner may exempt a bank from compliance with subsection (7) or (8) of this section, or both, through the promulgation of administrative Page 51 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN regulations.

(10) (a) Except as provided in paragraph (b) of this subsection, a state bank, out-of-out-of-state state bank, or national bank shall use at all times the same name for all of its branches in Kentucky.

May, at its option, either close or remain open for business on any day or during any hours of the week if[provided] the days of the week and the hours during which an office of the bank will remain open are Page 52 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN conspicuously posted in each[that] office;

and[.] 2.[(3)]2.[(3)]Except Except as provided in paragraph (b) of this subsection, shall not close during any hours or days for which the bank or office has posted that it will be open.

CHAPTER 152 25 (c) Any[The] payment made in accordance with paragraph (b) of this subsection shall be deemed made and the condition performed with the same force and effect as if made in accordance with the terms of the contract, and no liability or loss of rights shall result from the delay.

Page 53 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (1) Except as provided in subsection (2) of this section:

(a) The liability of any partnership in which the person acts as a general partner, and any obligation entered into for the benefit of a person, partnership, or association, shall be included in the total liabilities of the person, partnership, Page 54 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN or association;

(c) Any stock purchased or acquired under paragraph (b) of this subsection that exceeds the amount permitted under paragraph (a) of this subsection Page 55 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN shall, within six (6) months from the time of purchase or acquisition, be sold or disposed of at public or private sale.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (d) This subsection shall not be construed to affect or modify KRS 386.025.

(b) The net profits referenced in paragraph (a) of this subsection shall be computed by deducting all expenses, losses, and interest and taxes accrued or Page 56 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN due from the bank.

(3) If the parties consent, or if upon the record made at the hearing the commissioner Page 57 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN finds[shall find] that any violation or unsafe or unsound practice specified in the notice of charges has been established, the commissioner may issue and serve upon the bank, trust company, director, officer, employee, agent, or other person an order to cease and desist from any violation or practice and, further, to take affirmative action to correct the conditions resulting from any violation or practice.

CHAPTER 152 27 (5) (a) A cease and desist order or an emergency cease and desist order shall become effective upon service upon the bank or trust company.

(7) In the case of violation or threatened violation of, or failure to obey, an emergency cease and desist order or a cease and desist order issued pursuant to this section, the Page 58 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN commissioner may apply to the Circuit Court for the county in which the bank or trust company is located, or the Franklin Circuit Court[ of Franklin County], for an injunction to enforce the order, and it shall be the duty of the court to issue the injunction.

of this Page 59 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN subsection shall be one (1):

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (9) A notice of intention to remove an officer,[ or] director, or employee from office shall contain a:

(11) [The bank, trust company, or person assessed shall be afforded an opportunity for Page 60 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN an administrative hearing upon request made to the commissioner within ten (10) days after issuance of the assessment notice.

and (4) "Insolvent" means that appearing upon examination of any bank its liabilities exceed its assets or it cannot meet its obligations in the usual and ordinary course of Page 61 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN business for any reason.

or CHAPTER 152 29 2.

Page 62 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (e)[(c)] "Deposit":

(3) (a) The limitations set forth in this section or any other provision of this subtitle Page 63 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN or any administrative regulation promulgated thereunder[, as now in effect or amended after July 13, 1984,] shall not apply to the acquisition of a bank if:[, in his or her discretion, the commissioner, if the bank is organized under the laws of this state, or the comptroller of the currency, if the bank is a national bank, determines that] 1.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (1) Notwithstanding any other provision of Subtitle 1, 2, or 3 of KRS Chapter 286:

(a) An individual or bank holding company that controls two (2) or more banks[ Page 64 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN having their principal offices] in this state[Commonwealth] may, from time to time:[, ] 1.

(b) The surviving bank shall maintain a record of the deposits in each of its Page 65 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN offices resulting from such combination or thereafter established as provided in paragraph (a) of this subsection;

2.[(b)]2.[(b)]An An individual or bank holding company "controls" a bank if that individual or company, directly or indirectly, owns, controls, or has the power to vote at least eighty percent (80%) of the issued and outstanding voting securities of the bank;

4.[(d)]4.[(d)]"Surviving "Surviving bank" means a bank into which a combined bank has been combined;

and 6.[(f)] "Individual[,]" and "bank holding company[,]"[ and "deposit" shall] have the same meanings as[attributed to them] in KRS 286.3-286.3-900[(1)]. 900[(1)].

The merger or consolidation of state banks having their principal Page 66 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN offices in the same county and the operation by the merged or consolidated corporation of the banks;

CHAPTER 152 31 (1) As used in this section[, unless the context requires otherwise]:

If the other state permits, acquire[by acquisition of] a bank's branch or branches in a[the other] state other than Kentucky in accordance with an interstate merger transaction in which the Kentucky state bank Page 67 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN does not acquire the bank.

Comply with the applicable provisions of KRS 286.3-180(3) for the establishment or acquisition of branches by Kentucky state banks.[ (2) and] (c) The commissioner shall base his or her approval or disapproval of the interstate merger transaction on the requirements of this subtitle and the factors[in the same manner as] prescribed in KRS 286.3-180(3)(b)[(2)].286.3- 180(3)(b)[(2)].

(c) Not later than the date on which the required application for the interstate merger transaction is filed with the responsible federal bank supervisory Page 68 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN agency, the applicant shall:

Comply with the applicable provisions of KRS 286.3-180(3) for the establishment or acquisition of branches by Kentucky state banks.[(2) and] Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (d) The commissioner shall base his or her approval or disapproval of the interstate merger transaction on the requirements of this subtitle and the factors[in the same manner as] prescribed in KRS 286.3-180(3)(b)[(2)].286.3- 180(3)(b)[(2)].

(a) Any activities in this state, other than fiduciary activities, that are authorized under the laws of this state for Kentucky state banks;[.] (b) Fiduciary activities in this state that are authorized under the laws of this Page 69 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN state for Kentucky state banks if a branch of a Kentucky state bank located in the out-of-state bank's home state is permitted to engage in substantially similar activities under the laws of the out-of-state bank's home state;

and (c) [Additionally, the branch of an out-of-state state bank is authorized to conduct ]Any activities in this state relating to the administration of trusts that are authorized under, and conducted in conformity with, the laws of the out-of-out-of-state state bank's[its] home state for the bank[, if the activities are conducted in conformity with the laws of its home state].

(b) The civil penalty levied under paragraph (a) of this subsection shall[be fined] not be less than[ five hundred dollars ($500) nor more than] one thousand dollars ($1,000) nor more than five thousand dollars ($5,000) for each violation, plus the state's costs and expenses for examination, investigation, and prosecution of the matter, including reasonable Page 70 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN attorney's fees and court costs[ for each day he or she is engaged in the private banking business].

(2) [Any institution that fails to make the report required by KRS 286.3-420 to the commissioner within five (5) days after the report is due or demanded, or that fails to have the report published as required by KRS 286.3-420,286.3- 420, may be assessed and, if assessed, shall pay a penalty of two hundred dollars ($200).

CHAPTER 152 33 (b) If the loss or damage is not made good within a reasonable time, the commissioner, with the consent of the Attorney General, shall institute proceedings to revoke the corporate powers of the bank.

and[ shall ] (b) Pay a civil penalty of[Be fined] not less than one hundred ($100) nor more Page 71 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN than two thousand dollars ($2,000) for each violation[offense].

Page 72 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (7)[(9)] (a) The commissioner may levy a civil penalty against:

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY [(12) Any person who willfully makes charges in excess of those permitted by KRS 286.3-720 to 286.3-770 shall be guilty of a misdemeanor and upon conviction shall be punished by a fine not exceeding five hundred dollars ($500) or by imprisonment for not more than six (6) months, or both.

(13) Any bank which violates any provision of KRS 286.3-720 to 286.3-770, except as a Page 73 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN result of an accidental or bona fide error, shall be barred from the recovery of any finance charges permitted by KRS 286.3-740 and 286.3-750, and the debtor, or the debtor's legal representatives, may recover back, in an action against the bank, any amounts paid to the bank on account of such finance charge;

(d) In determining the amount of the civil penalty,[fine] the commissioner shall Page 74 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN consider:

Page 75 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (a) The commissioner shall provide written notice of any civil penalty assessed under this subtitle;

and CHAPTER 152 35 (b) Whenever any civil penalty imposed under this subtitle is not paid, the commissioner may institute an action in Franklin Circuit Court or the Circuit Court of the county in which the violation was committed to recover the civil penalty.

(2) In addition to all other banking activities permitted by this subtitle, a state bank receiving a CAMELS rating of 1 or 2 at its most recent state or federal bank regulatory examination may engage in any banking activity in which the bank could engage and is exempted from any statutes or administrative regulations which would be preempted if:

(3) Before a state bank may engage in any of the banking activities permitted by Page 76 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN subsection (2) of this section, the state bank shall obtain a legal opinion specifying the statutory or regulatory provisions that permit the activity in which the state bank intends to engage and the conditions under which such activity is allowed.

(g) "Material fact" means a fact that a reasonable person knows, or should know, Page 77 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN that could reasonably be expected to influence any decision or action taken by the commissioner under this subtitle;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 2.

Page 78 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN Section 37.

110-110-227, 227, and is presently owned by the United States;

Page 79 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (3) The following shall be exempt from the provisions of this subtitle:

CHAPTER 152 37 (f) The United States, or any state, district, territory, commonwealth, or possession of the United States;

Page 80 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (c) Comply with this subtitle, with the exception of KRS 286.12-030;

(1) The following mortgage loan companies and mortgage loan brokers shall be subject to KRS 286.8-046, 286.8-180,286.8- 180, 286.8-220(1), and subsections (12), (13), and (14) of this section, but shall be exempt from all other provisions of this subtitle:

856, an institution of the farm credit system organized under the Farm Credit Act of 1971 as amended, or any wholly owned subsidiary of any such person if the subsidiary is subject to regular examination at least once every two (2) years by a state or federal financial institution regulatory agency;

(c) Any natural person who makes a mortgage loan to an immediate family Page 81 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN member of the natural person unless the natural person is compensated in connection with that transaction by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (h) A consumer loan[ or finance] company[ or an industrial loan company] licensed under Subtitle 4[ or 7] of this chapter whose primary business is originating consumer[ or industrial] loans as provided under Subtitle 4[ or 7] of this chapter or any wholly owned subsidiary of such a consumer loan[ or finance] company[ or an industrial loan company], except that they shall be subject to the prohibited acts of KRS 286.8-220(2)(e) and (f) and 286.8-286.8-110(4); Page 82 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 110(4);

Page 83 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (4) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon an exemption under subsection (2)(a) or (b) of this section shall fund or broker a minimum of twelve (12) Federal Housing Administration-insured loans on Kentucky residential real properties each year in order to maintain its exemption.

(8) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon an exemption under subsection (2)(a) or (b) of this section shall provide a list of Page 84 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN funded or brokered Federal Housing Administration-insured loans from December 1 of the previous calendar year to November 30 of the current calendar year to the commissioner by December 31 of each year on a form prescribed by the commissioner.

CHAPTER 152 39 (9) Any mortgage loan company, mortgage loan broker, or branch thereof applying for an exemption under subsection (2)(a) or (b) of this section shall not be approved for an exemption under subsection (2)(a) or (b) of this section unless the mortgage loan company, mortgage loan broker, or branch thereof has:

(11) No person shall hold both a claim of exemption and a license granted under this Page 85 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN subtitle.

Page 86 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 1.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (b) The following persons shall not be considered loan brokers under paragraph (a):

A person extending or arranging credit, or offering to extend or arrange Page 87 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN credit, to a partnership or corporation exclusively for commercial or business purposes;

and Page 88 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN (5)[(3)] Any nonresident of legal age who is as to the decedent, ward, or incompetent, related by consanguinity, marriage, adoption or the spouse of such person so related.

CHAPTER 152 41 (b) A license issued between October 1 and December 31 of the same calendar year shall expire on December 31 of the following calendar year.

Be determined by applying a factor of one hundred twenty-five ten-thousandths percent (0.0125%) to the volume of loans Page 89 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN originated and the volume of loans serviced in Kentucky;

Page 90 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 1.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (7)[(6)] (a) The renewal application, fees, and any required information shall be received by the commissioner on or before November 30 prior to the December 31 expiration date.

Page 91 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.1-012 Appointment of commissioner -- Qualifications.

Page 92 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.3-710 Definitions for KRS 286.3-720 to 286.3-770.

CHAPTER 152 43 286.3-765 "Credit card guaranty" defined -- Requirement to insure validity.

Page 93 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.5-131 Annual report of association.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 286.5-321 Redemption of savings accounts -- Limitation on claims.

Page 94 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.5-371 Dividends paid, when.

Page 95 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.5-561 Federal savings and loan association, consolidation with or conversion into.

CHAPTER 152 45 286.5-702 Commissioner's power to make administrative regulations and orders.

Page 96 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.5-800 Advertising as insured institution restricted -- Penalty -- Injunction.

Page 97 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.7-540 When certificate required.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 286.7-600 Certification of corporations qualifying on June 14, 1962.

Page 98 of 99 HB072620.100 - 47 - XXXX 3/28/2024 11:03 PM Engrossed UNOFFICIAL COPY 24 RS HB 726/EN 286.10-280 Change in title of repossessed property.

PageSigned 99by ofGovernor 99April HB072620.1009, -2024. 47 - XXXX 3/28/2024 11:03 PM Engrossed