04 NCAC 03D .0302. ADMINISTRATION OF FIDUCIARY POWERS

(a)  The trust department shall be separate and apart from every other department of the bank.  The trust department may utilize personnel and facilities of other departments of the bank and other departments of the bank may utilize the personnel and facilities of the trust department only to the extent not prohibited by law.

(b)  Board of Directors

(1)           The Board of directors is responsible for the proper exercise of fiduciary powers by the bank.  All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in a fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the bank in the exercise of its fiduciary powers, are the responsibility of the Board.  In discharging this responsibility, the Board of directors may assign, by action duly entered in the minutes, the administration of such of the bank's fiduciary powers as it may consider proper to assign to such director(s), officers(s), or employee(s), who are qualified and competent to administer fiduciary duties and responsibilities, as it may designate and may appoint such committees of director(s) and/or officer(s) as it deems advisable to supervise the trust department.

(2)           No fiduciary account shall be accepted without the prior approval of the Board, or of the director(s), officer(s), or committee(s) to whom the Board may have designated the performance of that responsibility.  A written record shall be made of such acceptances and of the relinquishment or closing out of all fiduciary accounts.  Upon the acceptance of an account for which the bank has investment responsibility, a prompt review of the assets shall be made.  The Board shall also ensure that at least once during every calendar year thereafter, and within 15 months of the last review, all the assets held in or for each fiduciary account where the bank has investment responsibilities are reviewed to determine the advisability of retaining or disposing of such assets.

(c)  All officers and employees taking part in the operation of the trust department shall be adequately bonded.

(d)  Every bank exercising fiduciary powers shall designate, employ, or retain competent legal counsel who shall be readily available to pass upon fiduciary matters and to advise the bank and its trust department.

(e)  Trust assets of a negotiable nature held by the bank in its own vaults shall be placed in the joint custody of at least two or more bonded officers or employees designated by the Board of directors.

(f)  Funds received or held by a bank as fiduciary awaiting investment or distribution shall be promptly invested, pursuant to the provisions of G.S. 36A‑63 and G.S. 53‑43(6).

(g)  Investments by a bank as fiduciary in a savings account or accounts or in its certificate or certificates of deposit shall be secured by the pledge of securities in the same manner and to the same extent as required by Subsection (f) of this Rule for demand deposits.

(h)  Agency accounts shall not be overdrawn nor advances made thereto unless the instrument establishing the agency specifically authorizes the bank as agent to borrow money.  Advances, or overdrafts, to trusts or agencies shall not be made from funds belonging to other trusts or agencies.  Where it is deemed necessary in the proper administration of a trust to make temporary advances, such advances shall be made from funds belonging to the bank and shall at no time exceed 50 percent of the estimated income of that trust for a six months' period.  Any advance exceeding this amount shall be made in the form of a loan from the bank or otherwise, and such loan shall be expressly authorized by the trust instrument or properly approved by the courts.

(i)  Funds received or held by a bank as fiduciary shall not be invested by it in stock or obligation of, or property acquired from, the bank or its directors, officers, or employees, or their interests, or in stock or obligations of, or property acquired from, affiliates of the bank.  This requirement contemplates that the bank will not invest trust funds in the obligations of any organizations in which officers, directors, or employees of the bank have such an interest as might affect the exercise of the best judgment of the management of the bank in investing trust funds.

(j)  Unless expressly approved by the Court, a trustee, pursuant to G.S. 36A‑66, may not purchase or sell property from a trust from or to itself.

(k)  Transactions between fiduciary accounts held by a trustee may occur to the extent permitted by G.S. 36A‑68.

(l)  A committee of at least three directors or stockholders shall be appointed annually to examine, or to superintend the examination of the assets and liabilities of the trust department of each bank engaging in trust business, and to report to the Board of directors the result of such examination.  The committee, with the approval of the board of directors, may provide for such examination by a certified public accountant, or by the auditing department of the bank.  A copy of such report of examination, which is herein required to be made, attested, and verified under oath by the signatures of at least three members of such committee, shall forthwith be filed with the Commissioner of Banks.

(m)  Funds received or held by a bank as fiduciary shall not be invested collectively except as provided in Rule .0304 of this Subchapter.

 

History Note:        Authority G.S. 36A‑63; 36A‑66; 36A‑68; 53‑43(6); 53‑92; 53‑104;

Eff. February 1, 1976;

Amended Eff. May 1, 1992; September 26, 1979.