1. (a)

   1. (1) Common stock is not generally determined to be an investment security.
   2. (2) The State Banking Board and Bank Commissioner rule that in some instances the purchase by a bank of common stock may facilitate the exercise of a true banking function and be incidental to the business of banking.
   3. (3) A bank could not purchase and hold common stock solely for the purpose of collecting dividends thereon, but if the acquisition of the common stock is merely incidental to the exercise of some valid banking power, it is permitted.
   4. (4) Banks that are active in student loan operations may purchase and hold common stock of the Student Loan Marketing Association (“Sallie Mae”).
   5. (5) Banks that participate in the secondary market for agricultural and rural housing real estate mortgages under the direction of the Federal Agricultural Mortgage Corporation (“Farmer Mac”) may purchase and hold stock in the corporation (adopted by the State Banking Board April 19, 1988).

2. (b)

   1. (1) Trust preferred securities are investments also called “trust preferred stock” that possess characteristics similar to debt obligations.
   2. (2) Trust preferred securities are authorized investments for a state bank provided the preferred stock meets the investment quality and marketability requirements applicable to investment securities in accordance with the Federal Deposit Insurance Corporation, Financial Institution Letter, FIL-16-99, February 19, 1999, and any amendments thereof.
   3. (3) Investments in trust preferred securities will be subject to the bank’s legal loan limitation.

Codification Notes: This section was promulgated as Section 47-401.1 of the State Bank Department Rules prior to codification into the Code of Arkansas Rules. This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "(Reference A.C.A. § 23-47-401)"