17:9A-180.5. Investment in corporate stock

A savings bank may, in addition to other investments, presently or from time to time hereafter authorized by law, invest in (1) stocks, preferred or common, issued or guaranteed by a corporation created or existing under the laws of the United States or any state, district or territory thereof, provided

(a) that for a period of five fiscal years for which the necessary statistical data are available next preceding the date of investment by such savings bank such corporation as disclosed by its published annual fiscal statements shall have had an average annual net income plus its average annual fixed charges (as herein used, fixed charges shall mean interest on funded or unfunded debt, contingent interest charges, amortization of debt discount and expense and rentals for leased property and, in the case of consolidated earnings statements of parent and subsidiary corporations (which must be used if available) shall include all such fixed charges and the preferred dividend requirement, if any, of such subsidiaries) at least equal to 1 1/2 times the sum of its average annual dividend requirement for preferred stock and its average annual fixed charges for the same period; and

(b) during neither of the last two years of such period shall the sum of its annual net income and its annual fixed charges have been less than 1 1/2 times the sum of its dividend requirement for preferred stock and its fixed charges for the same period; and

(c) such corporation shall have no arrears of dividends on its preferred stock; and

(d) as to the common stock of any corporation that

i. such common stock is registered on a national securities exchange as provided in an Act of Congress of the United States entitled "Securities Exchange Act of 1934," 48 Stat. 881 (15 U.S.C. s. 78a et seq.), as amended or for which quotations are available through the National Association of Securities Dealers Automated Quotation System (NASDAQ); and

ii. such corporation shall have paid a cash dividend on its common stock in each year of the 10-year period next preceding the date of investment by such savings bank and the aggregate net earnings available for dividends on the common stock of such corporation for the whole of such period shall have been at least equal to the amount of such dividends paid.

(e) in applying the earnings test under this act to any issuing, assuming or guaranteeing corporation, where such corporation shall have acquired its property or any substantial part thereof within such five-year period immediately preceding the date of investment by consolidation or merger, or by the purchase of all or a substantial portion of the property of any other corporation or corporations, or shall have acquired the assets of any unincorporated business enterprise by purchase or otherwise, net income, fixed charges and preferred dividends of the several predecessor or constituent corporations or enterprises shall be consolidated and adjusted so as to ascertain whether or not the applicable requirements of this act have been complied with;

(2) stock or shares of a corporation which is an investment company as defined by, and which is registered under, an Act of Congress entitled "Investment Company Act of 1940," 54 Stat. 847 (15 U.S.C. s. 80a-1 et seq.), as amended; provided

(a) all the stock and shares of such investment company are or are to be owned by savings banks of this State; and

(b) such company may invest only in such investments as are eligible for savings banks of this State including investments made eligible for savings banks by this act; and

(c) the amount of stock of any corporation which may be held by such investment company shall not exceed at the time of investment by such company, 5% of the number of shares of stock of such corporation then outstanding or 3% of the assets of such investment company, whichever amount is the lesser;

(3) common stock of a national banking association or trust company doing business anywhere within the United States which is a member of the Federal Reserve System and which, at the date of its last published statement preceding the date of investment, had a combined total of capital stock, surplus, reserve for contingencies and undivided profits equal to at least $40,000,000.00 and also equal to at least 6% of its aggregate deposit liability and which, in each of the five fiscal years preceding the date of investment, paid dividends in cash of not less than 4% on its common stock without having reduced the aggregate par value thereof within such five-year period;

(4) common stock of an insurance company, authorized to transact business in New Jersey, which has combined capital stock, surplus and special surplus funds (based on consolidated statements of parent and subsidiary companies, if any) at least equal to $20,000,000.00 and which has paid cash dividends on its common stock in each of its five fiscal years next preceding the date of investment.

L. 1953, c. 78, s. 1. Amended by L. 1966, c. 275; 1987, c. 201, s. 32.