PFC has proposed to restrict its investment in the stock of any one issuer to the lesser of 10 percent of Tier 1 capital or the amount permitted by state law. PFC has also proposed to restrict its aggregate investment in all listed and nonlisted bank and bank holding company stock to the lesser of 100 percent of Tier 1 capital or the amount permitted by state law. PFC will hold its nonlisted bank holding company stock in the same subsidiary. The purchase of any equity stock entails risks related to the loss of investment, price volatility, and market liquidity. In the case of nonlisted bank holding company stock, there are several factors intrinsic to a bank holding company that lessens the risk of holding its stock.
Bank holding companies are subject to a comprehensive and stringent regulatory structure.
As such, they are required to obtain government approval to operate and are required to maintain regulatory minimum capitalization. They are also subject to periodic supervisory examination and are subject to enforcement jurisdiction. The primary and frequently only asset of a single or multiple-bank holding company is its subsidiary banks. In such cases the risk inherent in investing in the bank holding company stock is directly related to the financial condition of the subsidiary bank. However, bank holding companies may invest in entities other than banks, which are authorized to engage in activities not permissible for a bank.