§ 34a.3. Commercial paper and corporate debt securities.
(a) An association may invest in, sell, or hold commercial paper and corporate debt securities, including corporate debt securities convertible into stock, subject to the limitations set forth in subsection (b); however, at any one time, the total investment made under this section and § 34a.2 (relating to consumer loans) added together shall not exceed 20% of an association’s assets. An investment under this section includes the investing in, redeeming, or holding of shares in any open-end management investment company which is registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and whose portfolio is restricted by such management company’s investment policy, changeable only if authorized by shareholder vote, solely to the investments that an association is authorized to invest in under other regulations or statute.
(b) The following are the limitations for investing in, selling, or holding corporate debt securities, including corporate debt securities convertible into stock:
(1) As of the date of purchase, as shown by the most recently published rating made of such investments by at least one nationally recognized investment rating service: the commercial paper must be rated in either one of the two highest grades, and the corporate debt securities must be rated in one of the four highest grades.
(2) The commercial paper or corporate debt securities shall be denominated in dollars, and the issuer shall be domiciled in the United States.
(3) At any one time, an association’s total investment in the commercial paper and corporate debt securities of any one issuer or issued by any person or entity affiliated with such issuer shall not exceed 1% of the association’s assets; however, this provision shall not apply to investments in the shares of an open-end management investment company. In such cases, an association’s total investment in the shares of any one such company shall not exceed 5.0% of the association’s assets.
(4) Investments in corporate debt securities convertible into stock are subject to the following additional limitations:
(i) Purchase of securities convertible into stock at the option of the issuer is prohibited.
(ii) At the time of purchase, the cost of such securities shall be written down to an amount which represents the investment value of the securities considered independently of the conversion feature.
(iii) Such securities must be treated on a national securities exchange.
(iv) Associations are prohibited from exercising the conversion feature.
(5) At any one time, the average maturity of an association’s portfolio of corporate debt securities may not exceed 6 years.
(6) An association shall maintain information in its files adequate to demonstrate that it has exercised prudent judgment in making investments under this section.
Cross References This section cited in 10 Pa. Code § 34a.2 (relating to consumer loans).
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