Deposits by Financial Institutions

1. Law
2. Georgia Code
3. Banking and Finance
4. Financial Institutions
5. Banks and Trust Companies
6. Banking Depositories, Reserves, and Remissions
7. Deposits by Financial Institutions

1. Subject to the restrictions of subsection (b) of this Code section and of Code Section 7-1-371 in regard to reserve funds, a financial institution may deposit its funds in any depository which is:
   1. Selected by, or in any manner authorized by, its directors;
   2. Authorized by law to receive deposits; and
   3. In the case of a depository located in the United States, one which has deposit insurance issued by a federal public body to depositories of the type involved.
2. If a director of the financial institution has a relationship to a depository as either:
   1. An officer or director; or
   2. An owner of 5 percent or more of the shares of the depository,

      the depository shall be approved by a majority of the directors other than the director who has such relationship.

(Code 1933, § 41A-1701, enacted by Ga. L. 1974, p. 705, § 1; Ga. L. 1981, p. 1366, § 10; Ga. L. 1997, p. 485, § 14; Ga. L. 2016, p. 390, § 2-4/HB 811.)

OPINIONS OF THE ATTORNEY GENERAL

This section is broad enough to cover a savings and loan account as a deposit.

- Former Code 1933, § 41A-1309 (see now O.C.G.A. § 7-1-288) was directed at a bank's long-term investment in capital stocks and securities in the bank's own name, while former Code 1933, § 41A-1701 (see now O.C.G.A. § 7-1-370) was directed at a bank's short-term deposits in other financial institutions. The language of former Code 1933, § 41A-1701 was broad enough to cover a savings and loan account as a deposit, therefore, former Code 1933, § 41A-1309 was inapplicable to deposits in mutual savings and loan associations and former Code 1933, § 41A-1701 permitted banks to deposit the bank's funds in these associations. Since the Georgia Supreme Court has not ruled on the question of whether such a deposit was equivalent to the purchase of shares in a corporation, federal law will not permit a state bank member of the federal reserve to make deposits in a Georgia building and loan association; however, there was no reason why a state bank which is not a member of the federal reserve cannot deposit the bank's funds in a state association. 1978 Op. Att'y Gen. No. 78-66.

RESEARCH REFERENCES

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, §§ 45, 53, 54.

11 Am. Jur. 2d, Banks and Financial Institutions, §§ 1086, 1087.

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