Memo RM1997-3
Office of the State Bank Commissioner
All Bank Mailing
To: All State Chartered Banks and Trust Companies
From: W. Newton Male, Bank Commissioner
Date: July 17, 1997
A. Revocation of Special Order 1990-1.
Enclosed you will find a Notice of Revocation for Special Order 1990-1. It has been determined that state chartered banks have authority under the incidental powers provision in K.S.A. 9-1101 to sell both fixed and variable rate annuities. Therefore, the Special Order is no longer necessary.
B. Approval of Officer Compensation by an Institution's Board of Directors.
Enclosed is a memorandum concerning proper documentation and approval of officers' compensation.
C. Comprehensive Other Real Estate Policy and Guidelines.
Enclosed is a memorandum outlining the guidelines and policies of this office concerning other real estate ("ORE"). Please note this policy supercedes some previous issuances which should be discarded to avoid confusion.
D. Record Retention.
It has come to our attention that a provision of this office's record retention regulation, K.A.R. 17-15-1, should be clarified in light of current banking practices. Under the heading "Checking Accounts-Individuals and Firms", the following retention period is listed:
"Checks paid (microfilm copy-front and back)............................5 years"
This 5-year retention period is sufficient if a bank is still returning canceled checks to its customers. However, if a bank is no longer sending canceled checks back to its customers, the bank should retain copies of checks paid for seven years, rather than five years, to comply with the requirements in K.S.A. 84-4-406. This statute, which is part of the Uniform Commercial Code, states that a bank must either return items paid to the customer or provide a statement of the account sufficiently identifying the items. If the bank chooses not to return the items to the customer, subsection (b) of the statute requires the bank to retain the items, or if the items are destroyed, to maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt. A copy of the statute is attached for your review.
