2023 Connecticut General Statutes › Title 36a - The Banking Law of Connecticut › Chapter 665 - Powers, Loans and Investments › Section 36a-275. - Investments in debt securities and debt mutual funds.

(a) As used in this section, the term “debt securities” means (1) any marketable obligation evidencing indebtedness of any person in the form of direct, assumed or guaranteed bonds, notes or debentures or any security that has attributes similar to such marketable obligations; (2) any obligation identified by certificates of participation in investments described in subdivision (1) of this subsection in which a Connecticut bank could invest directly; or (3) repurchase agreements, and the term “debt mutual fund” means a partnership interest in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, provided the portfolios of such investment companies consist solely of investments described in subdivision (1) of this subsection.
(b) In addition to other investments authorized by this part, any Connecticut bank may purchase or hold for its own account debt securities and debt mutual funds without regard to any other liability to the Connecticut bank of the maker, obligor, guarantor or issuer of such debt securities and debt mutual funds, provided: (1) The debt securities and debt mutual funds are rated in the three highest rating categories by a rating service of such securities recognized by the commissioner or, if not so rated, are determined by the bank's governing board to be a prudent investment; (2) unless the bank obtains the prior approval of the commissioner, the total amount of the debt securities and debt mutual funds of any one maker, obligor or issuer purchased or held by a Connecticut bank or for a Connecticut bank's account may not exceed, at any time, twenty-five per cent of its total equity capital and reserves for loan and lease losses; and (3) the total amount of any debt securities and debt mutual funds purchased or held by a Connecticut bank or for a Connecticut bank's account pursuant to this subsection may not exceed at any time twenty-five per cent of its assets.
(c) In addition to other investments authorized by this part, any Connecticut bank may purchase or hold for its own account the following debt securities and debt mutual funds without regard to any other liability to the Connecticut bank of the maker, obligor, guarantor or issuer of such debt securities and debt mutual funds, provided (1) the debt securities and debt mutual funds are rated in the three highest rating categories by a rating service recognized by the commissioner, or, if not so rated, determined by the bank's governing board to be a prudent investment; (2) unless the bank obtains the prior approval of the commissioner, the total amount of the debt securities and debt mutual funds of any one maker, obligor or issuer purchased or held by a Connecticut bank or for a Connecticut bank's account may not exceed, at any time, seventy-five per cent of its total equity capital and reserves for loan and lease losses; and (3) the total amount of any debt securities and debt mutual funds purchased or held by a Connecticut bank or for a Connecticut bank's account pursuant to this subsection may not exceed at any time fifty per cent of its assets:
(A) General obligations of any agency of the United States, including government sponsored enterprises, which are not guaranteed fully as to principal and interest by the United States or for which the full faith and credit of the United States is not pledged for the payment of principal and interest;
(B) Residential mortgage pass-through securities and other residential mortgage-backed securities, including collateralized mortgage obligations and real estate investment conduits that are issued or guaranteed by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, provided said association or corporation is operating at the time of issuance or guarantee under the conservatorship or receivership of the Federal Housing Finance Agency; and
(C) Debt mutual funds, provided the portfolios of the investment companies consist solely of investments described in subparagraphs (A) and (B) of this subdivision.
(d) In addition to other investments authorized by this part, any Connecticut bank may purchase or hold for its own account the following debt securities and debt mutual funds without regard to any other liability to the Connecticut bank of the maker, obligor, guarantor or issuer of such debt securities and debt mutual funds, provided the debt securities and debt mutual funds are rated in the three highest rating categories by a rating service recognized by the commissioner or, if not so rated, determined by the bank's governing board to be a prudent investment:
(1) The general obligations of the United States or this state;
(2) Securities which are guaranteed fully as to principal and interest by the United States or this state or for which the full faith and credit of the United States or this state is pledged for the payment of principal and interest;
(3) Securities, including repurchase agreements, the principal and interest of which are irrevocably secured by securities described in subdivisions (1) and (2) of this subsection; and
(4) Debt mutual funds, provided the portfolios of the investment companies consist solely of investments described in subdivisions (1) to (3), inclusive, of this subsection.
(P.A. 94-122, S. 124, 340; P.A. 95-70, S. 3, 8; P.A. 96-44, S. 4; 96-271, S. 206, 254; P.A. 97-35, S. 1; P.A. 98-177, S. 1; 98-178, S. 2; P.A. 13-135, S. 17.)
History: P.A. 94-122 effective January 1, 1995; P.A. 95-70 amended Subsec. (b) to delete the references re the designation of debt securities and to make the 15% maximum applicable to the entire subsection, deleted Subsec. (c) re a security or portfolio that ceases to meet the restrictions of Subsec. (b), added a new Subsec. (c)(1) excluding debt securities specified in Subparas. (A), (B) and (C) from restrictions in Subsec. (b), renumbered former Subsec. (d) as Subsec. (c)(2), amended Subsec. (c)(2) to delete Subdivs. (1), (2) and (3) re exclusions from certain investment restrictions and to substitute as exclusions certain general obligations of federal and specified federally-related organizations, to delete reference to Subsec. (b)(2), to add references to Subsec. (b)(3) and (4), and to renumber Subsec. (d)(4) as Subsec. (c)(3), and added a new Subsec. (d) re requirements on governing board re investments under this section, effective May 31, 1995; P.A. 96-44 made numerous changes re investments in debt securities and added provisions re debt mutual funds, amended Subsec. (a) to substitute “any obligation” for “obligations” and to define “debt mutual fund”, and amended Subdiv. (c)(4) to include “government sponsored enterprises”; P.A. 96-271 amended Subsec. (c) to add provision in Subdiv. (3) specifically defining “state” and delete provision that referred to Sec. 33-284(v) for definition of “state”, effective January 1, 1997, but failed to take effect, Subdiv. (3) having been deleted in its entirety by P.A. 96-44; P.A. 97-35 redefined “debt securities” to include repurchase agreements; P.A. 98-177 made technical changes in Subsec. (a); P.A. 98-178 amended Subsec. (a) by deleting phrase “commonly known as investment securities”, adding language re attributes similar to marketable obligations and making technical changes; P.A. 13-135 added new Subsec. (c) re additional debt securities and debt mutual funds, redesignated existing Subsec. (c) as Subsec. (d), and amended same to delete former Subdiv. (4) re general obligations of U.S. agencies, redesignate existing Subdiv. (5) as Subdiv. (4), and make a technical change.