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Question 272

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?

    Correct Answer: D

    FNB, Inc., can hold the stock for up to five years from December 31. This standard time period accounts for the transfer to the subsidiary corporation, providing ample time for effective marketing and sale of the stock after it has been transferred from the parent company.

Discussion
Cam22Option: D

When a bank holding company, like First National Bankshares, Inc., transfers stock to a subsidiary corporation for marketing and sale, the subsidiary has up to five years to dispose of the stock. This time period typically begins from the date of transfer to the subsidiary corporation. Therefore, FNB, Inc., can hold the stock for up to five years from December 31, allowing ample time for marketing and sale efforts.