(1) The bank's board of directors shall adopt an investment policy adequate for its bank. The policy shall include, at a minimum, circumstances relevant to those securities and investments the bank customarily owns or trades.

(a) With an emphasis on quality, the policy should describe those securities preferred by the bank's board of directors, and how the securities will be managed to incur a minimum risk to the bank.

(b) The bank's board of directors should formally approve those securities dealers with whom the bank does business. The bank's management should be familiar with the dealer's financial condition, abilities, and reputation in relation to the bank's needs.

(c) The board of directors should conduct a periodic review of its bank's investment portfolio, to determine adherence to previously established investment goals and policies, and to value all of its bank's investments, including investments in mutual funds. The board of directors should closely observe its bank's activity in "repurchase agreements" and "reverse repurchase agreements" for any adverse effects upon the bank.

(d) Information should be available in the bank's own credit files, or otherwise be readily accessible to bank management and examiners in sufficient detail to support a judgment that each issue in the portfolio is suitable for investment purposes.

(2) Banks are permitted to underwrite issues of investment securities if the following conditions are met:

(a) No banks having unimpaired capital and surplus of less than $5,000,000 shall underwrite or otherwise participate as principal in the marketing of securities, except for the account of and upon specific instructions from its customer.

(b) Banks that qualify to underwrite or participate by having unimpaired capital and surplus of $5,000,000 or greater, may do so with any securities that such banks could purchase for their own account.

(c) Accounting and other records of trading in such securities must be separately maintained from accounting and other records relating to purchases of securities for the bank's own account.