Regulatory Alerts2011-03-16
Trust Preferred Securities and Unsecured Debt Investment Securities
The Alabama State Banking Department issued a memorandum to state-chartered banks outlining the conditions under which they may purchase trust preferred securities and unsecured debt investment securities. Banks must conduct appropriate underwriting, perform annual credit evaluations, and adhere to specific lending limits treating these holdings as unsecured extensions of credit. Additionally, issuers that are state-chartered banks must have obtained prior written approval from the Superintendent of Banks, while examiners will evaluate these holdings similarly to other unsecured credit.
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