Certified Regulatory Compliance Manager (CRCM) — Question 265

First National Bankshares, Inc., a bank holding company, held substantially all of the voting stock of an equipment manufacturing corporation as collateral for a loan to the owner. On May 15 the borrower defaulted and on September 1, after proper notice was given, the bank foreclosed its security interest on the stock and exercised its rights to vote the stock at appropriate times. On December 31 the bank transferred the stock to a subsidiary corporation, FNB, Inc., to market the stock for sale more effectively. What is the longest time period that FNB, Inc., can possibly hold the stock?

Answer options

• A. Up to two years from September 1
• B. Up to five years from September 1
• C. Up to two years from December 31
• D. Up to five years from December 31

Correct answer: B

Explanation

The correct answer is B, as FNB, Inc. can hold the stock for up to five years from the date of foreclosure on September 1. The two-year period from September 1 does not apply because the holdings are managed through a subsidiary, and the two-year duration from December 31 is too short given the five-year rule for such transactions.