Committee hears bill to update Kansas banking code, ease trust-service rules and align with federal law

The Kansas Senate Committee on Financial Institutions and Insurance opened a hearing on Senate Bill 139 at a committee meeting, considering multiple changes to the state banking code that would affect banks and trust companies operating in Kansas.

The bill’s sponsor and reviser described the measure as a package of technical updates and targeted changes to the Kansas statutes that govern bank holding companies, board reporting requirements, trust-service contracting, relocation rules for trust offices and administrative-hearing procedures. The changes also would mirror federal law on out-of-state, federally insured institutions, the Office of State Bank Commissioner testified.

Eileen (Reviser) told the committee the bill would amend multiple K.S.A. sections and make several procedural changes. She summarized key provisions, saying the bill would require a banker or trust company to file an oath for any newly elected officer or director within 15 days; require notice to the commissioner before a newly appointed CEO, president or director begins duties; and require notice to the commissioner within five business days when such an officer leaves or is removed. She also described an exception to some application requirements when an originating trustee transfers fiduciary accounts, and a provision allowing the commissioner to apply the greater of Kansas requirements or a nonresident trust company’s home-state rules when an out-of-state entity seeks to do business in Kansas.

Brock Ritter, general counsel for the Office of the State Bank Commissioner, said the most consequential requests are toward the end of the bill. He told the committee Section 7 would let an originating trustee transfer fiduciary assets to a contracting trustee without the originating trustee’s board providing a certified written action or proof of publication, except where the transfer involves more than 50% of the institution’s fiduciary accounts. Ritter said that change responded to reluctance by some large, publicly traded banks to provide those documents, and that one top-10 bank by fiduciary assets would consider transferring assets to a Kansas trust company if the change were enacted.

Ritter also described a proposed expansion of the relocation exemption for trust-service offices from less than 1 mile to less than 10 miles, intended to ease logistics when trust offices are rented and landlords dictate available locations. He said the bill would make certain administrative hearings subject to the Kansas Administrative Procedure Act and would reconcile timing around a bank charter becoming void after a merger so the charter status is consistent with FDIC depository-insurance actions.

On federal preemption, Ritter said the bill would mirror the Riegle-Neal Interstate Banking and Branching Efficiency Act by clarifying that federally insured banks with charters from other states or the federal government may operate in Kansas without the Kansas commissioner’s separate approval.

Kelly Van Zwol, vice president of government relations for the Kansas Bankers Association, testified in support and called the Office of State Bank Commissioner’s updates “streamlined” and timely, while noting that customer behavior is shifting toward online banking and that many banks already try to accommodate customers’ scheduling needs outside normal hours.

Senators asked questions about practical effects. Senator Warren asked whether regulators or the industry are discussing shifting branch operating hours to better serve customers who cannot bank during a typical 9 a.m.–5 p.m. weekday window. Brock Ritter said operating hours are ultimately a business decision for banks, though the regulator favors face-to-face access. Senator Haley asked why the trust-office relocation exemption was raised to 10 miles; Ritter said that change was requested by a trust company because available rented office space within 1 mile is often not feasible and that, in practice, only one trust-office move in the last three years would have been affected by the change.

No opponents or neutral testimony were recorded. The committee closed the hearing on Senate Bill 139 without taking final action on the bill; committee leadership said the bill will be worked at a future meeting along with other bills.

Votes and formal motions recorded in this meeting (separate from the bill hearing): early in the meeting a senator moved to approve the minutes for specified dates; the motion was seconded by Senator Fagg, a voice vote was taken and the chair stated the motion passed.

The committee chair announced the schedule for upcoming hearings and work sessions, noting a WebEx hearing planned for another bill and that the committee will reconvene to work several bills at a later date.