Ohio Revised Code
Chapter 1109 | State Banks - Powers
Section 1109.53 | Transactions With Affiliates Definitions.

Effective: January 1, 2018
Latest Legislation: House Bill 49 - 132nd General Assembly
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 state bank and any other company controlled by the company that controls the state bank;
(b) A bank subsidiary of the state 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 state bank or any company that controls the state bank;
(d) A company in which a majority of the directors or trustees constitute a majority of the directors or trustees of the state bank or any company that controls the state bank;
(e) A company, including a real estate investment trust, that is sponsored and advised on a contractual basis by the state bank or a subsidiary of the state bank;
(f) An investment company to which the state 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 state bank or one of its subsidiaries or affiliates such that covered transactions by the state bank or its subsidiary with that company may be affected by the relationship to the detriment of the state 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 state 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 state 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, limited liability company, 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 state 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 state 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 state 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 state bank or its subsidiaries;
(iv) Liquidating assets acquired from a company that controls the state 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 state 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 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 state 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.

Structure Ohio Revised Code

Ohio Revised Code

Title 11 | Banks-Savings and Loan Associations

Chapter 1109 | State Banks - Powers

Section 1109.01 | Bank Powers, Rights and Privileges Generally.

Section 1109.02 | Additional and Incidental Powers.

Section 1109.021 | Election to Operate as a Savings and Loan Association.

Section 1109.03 | Federal Deposit Insurance Corporation and Federal Reserve Requirements.

Section 1109.04 | Good Faith Reliance; Electronic Statements and Notice.

Section 1109.05 | Deposit Contracts.

Section 1109.06 | Designating on Signature Card Deposit Is in Trust for Another.

Section 1109.07 | Deposits Payable to Survivor - Deposits Payable on Death.

Section 1109.08 | Safes, Vaults, Safe Deposit Boxes, Night Depositories.

Section 1109.09 | Accounts and Safe Deposit Box Rentals for Minors.

Section 1109.10 | Claims Adverse to Deposits or Property.

Section 1109.11 | Deposits Entered as u.s. Money.

Section 1109.15 | Permitted Transactions.

Section 1109.151 | No Fiduciary Relationship Created.

Section 1109.16 | Standards for Extensions of Credit.

Section 1109.17 | Accepting Drafts or Bills of Exchange.

Section 1109.18 | Extending Credit Pursuant to Revolving Credit Agreement.

Section 1109.181 | Charges Under Revolving Credit Agreement.

Section 1109.20 | Interest and Finance Charge Rates.

Section 1109.22 | Total Loans and Extensions of Credit to Person Outstanding at Any One Time.

Section 1109.23 | Extending Credit to Executive Officers, Directors, Principal Shareholders or to Related Interests.

Section 1109.24 | Extending Credit to Executive Officer - Reports.

Section 1109.25 | Bank's Own Stock as Security or Payment.

Section 1109.26 | Owning or Holding Real Estate or Stock Acquired in Satisfaction of Debt.

Section 1109.31 | Real Estate Investments.

Section 1109.32 | Bonds, Notes and Other Debt Securities as Investments.

Section 1109.33 | Investing in Stock of Federally Chartered Banks.

Section 1109.34 | Investing in Securities of Domestic Insurance Company.

Section 1109.35 | Investing in Venture Capital Firms, Small Businesses and Economic Development Corporations.

Section 1109.36 | Underwriting and Dealing in Guaranteed and Acceptable Debt Securities.

Section 1109.39 | Additional Stock Investments.

Section 1109.40 | Additional Authority for Loans and Investments.

Section 1109.43 | Investing in Bankers' Bank or Holding Company.

Section 1109.44 | Investing in Bank Subsidiary Corporations and Bank Service Corporations.

Section 1109.441 | Additional Investment Authority.

Section 1109.45 | Investing in Clearing Corporation.

Section 1109.47 | Limiting Investing in One Issuer.

Section 1109.48 | Investing in Firms Owned and Controlled by Minorities or Women.

Section 1109.49 | Furnishing Financial Information to Superintendent.

Section 1109.53 | Transactions With Affiliates Definitions.

Section 1109.54 | Conditions for Engage in Covered Transaction With Affiliate.

Section 1109.55 | Permitted Transactions With Affiliate.

Section 1109.56 | Rules for Transactions With Affiliates.

Section 1109.59 | Authority to Borrow.

Section 1109.61 | Paying Management and Consulting Fees.

Section 1109.62 | Selling Insurance.

Section 1109.63 | Coin and Bullion.

Section 1109.64 | Travel Services.

Section 1109.65 | Tax Certificate Purchase.

Section 1109.68 | Using Copying or Reproduction Processes.

Section 1109.69 | Record Retention.

Section 1109.73 | Proceeding for Partition.

Section 1109.75 | Securitization.