362.170. Unimpaired capital, defined--restrictions on loans, and total liability to any one person.
Unimpaired capital, defined--restrictions on loans, and totalliability to any one person.
362.170. 1. As used in this section, the term "unimpaired capital"includes common and preferred stock, capital notes, the surplus fund,undivided profits and any reserves, not subject to known charges as shownon the next preceding published report of the bank or trust company to thedirector of finance or obtained by the director pursuant to subsection 3 ofsection 361.130, RSMo. For purposes of lending limitations, goodwill maycomprise no more than ten percent of unimpaired capital.
2. No bank or trust company subject to the provisions of this chaptershall:
(1) Directly or indirectly, lend to any individual, partnership,corporation, limited liability company or body politic, either by means ofletters of credit, by acceptance of drafts, or by discount or purchase ofnotes, bills of exchange, or other obligations of the individual,partnership, corporation, limited liability company or body politic anamount or amounts in the aggregate which will exceed the greater of: (i)twenty-five percent of the unimpaired capital of the bank or trust company,provided such bank or trust company has a composite rating of 1 or 2 underthe Capital, Assets, Management, Earnings, Liquidity and Sensitivity(CAMELS) rating system of the Federal Financial Institute ExaminationCounsel (FFIEC); (ii) fifteen percent of the unimpaired capital of the bankor trust company if located in a city having a population of one hundredthousand or over; twenty percent of the unimpaired capital of the bank ortrust company if located in a city having a population of less than onehundred thousand and over seven thousand; and twenty-five percent of theunimpaired capital of the bank or trust company if located elsewhere in thestate, with the following exceptions:
(a) The restrictions in this subdivision shall not apply to:
a. Bonds or other evidences of debt of the government of the UnitedStates or its territorial and insular possessions, or of the state ofMissouri, or of any city, county, town, village, or political subdivisionof this state;
b. Bonds or other evidences of debt, the issuance of which isauthorized under the laws of the United States, and as to which thegovernment of the United States has guaranteed or contracted to providefunds to pay both principal and interest;
c. Bonds or other evidences of debt of any state of the United Statesother than the state of Missouri, or of any county, city or school districtof the foreign state, which county, city, or school district shall have apopulation of fifty thousand or more inhabitants, and which shall not havedefaulted for more than one hundred twenty days in the payment of any ofits general obligation bonds or other evidences of debt, either principalor interest, for a period of ten years prior to the time of purchase of theinvestment and provided that the bonds or other evidences of debt shall bea direct general obligation of the county, city, or school district;
d. Loans to the extent that they are insured or covered by guarantiesor by commitments or agreements to take over or purchase made by anydepartment, bureau, board, commission, or establishment of the UnitedStates or of the state of Missouri, including any corporation, whollyowned, directly or indirectly, by the United States or of the state ofMissouri, pursuant to the authority of any act of Congress or the Missourigeneral assembly heretofore or hereafter adopted or amended or pursuant tothe authority of any executive order of the President of the United Statesor the governor of Missouri heretofore or hereafter made or amended underthe authority of any act of Congress heretofore or hereafter adopted oramended, and the part of the loan not so agreed to be purchased ordiscounted is within the restrictive provisions of this section;
e. Obligations to any bank or trust company in the form of notes ofany person, copartnership, association, corporation or limited liabilitycompany, secured by not less than a like amount of direct obligations ofthe United States which will mature in not exceeding five years from thedate the obligations to the bank are entered into;
f. Loans to the extent they are secured by a segregated depositaccount in the lending bank if the lending bank has obtained a perfectedsecurity interest in such account;
g. Evidences of debt which are direct obligations of, or which areguaranteed by, the Government National Mortgage Association, the FederalNational Mortgage Association, the Student Loan Marketing Association, theFederal Home Loan Banks, the Federal Farm Credit Bank or the Federal HomeLoan Mortgage Corporation, or evidences of debt which are fullycollateralized by direct obligations of, and which are issued by, theGovernment National Mortgage Association, the Federal National MortgageAssociation, the Student Loan Marketing Association, a Federal Home LoanBank, the Federal Farm Credit Bank or the Federal Home Loan MortgageCorporation;
(b) The total liabilities to the bank or trust company of anyindividual, partnership, corporation or limited liability company may equalbut not exceed thirty-five percent of the unimpaired capital of the bank ortrust company; provided, that all of the total liabilities in excess of thelegal loan limit of the bank or trust company as defined in thissubdivision are upon paper based upon the collateral security of warehousereceipts covering agricultural products or the manufactured or processedderivatives of agricultural products in public elevators and publicwarehouses subject to state supervision and regulation in this state or inany other state of the United States, under the following conditions:first, that the actual market value of the property held in store andcovered by the receipt shall at all times exceed by at least fifteenpercent the amount loaned upon it; and second, that the property covered bythe receipts shall be insured to the full market value thereof against lossby fire and lightning, the insurance policies to be issued by corporationsor individuals licensed to do business by the state in which the propertyis located, and when the insurance has been used to the limit that it canbe secured, then in corporations or with individuals licensed to do aninsurance business by the state or country of their incorporation orresidence; and all policies covering property on which the loan is madeshall have endorsed thereon, "loss, if any, payable to the holder of thewarehouse receipts"; and provided further, that in arriving at the amountthat may be loaned by any bank or trust company to any individual,partnership, corporation or limited liability company on elevator orwarehouse receipts there shall be deducted from the thirty-five percent ofits unimpaired capital the total of all other liabilities of theindividual, partnership, corporation or limited liability company to thebank or trust company;
(c) In computing the total liabilities of any individual to a bank ortrust company there shall be included all liabilities to the bank or trustcompany of any partnership of which the individual is a member, and anyloans made for the individual's benefit or for the benefit of thepartnership; of any partnership to a bank or trust company there shall beincluded all liabilities of and all loans made for the benefit of thepartnership; of any corporation to a bank or trust company there shall beincluded all loans made for the benefit of the corporation and of anylimited liability company to a bank or trust company there shall beincluded all loans made for the benefit of the limited liability company;
(d) The purchase or discount of drafts, or bills of exchange drawn ingood faith against actually existing values, shall not be considered asmoney borrowed within the meaning of this section; and the purchase ordiscount of negotiable or nonnegotiable paper which carries the fullrecourse endorsements or guaranty or agreement to repurchase of the person,copartnership, association, corporation or limited liability companynegotiating the same shall not be considered as money borrowed by theendorser or guarantor or the repurchaser within the meaning of thissection, provided that the files of the bank or trust company acquiring thepaper contain the written certification by an officer designated for thispurpose by its board of directors that the responsibility of the makers hasbeen evaluated and the acquiring bank or trust company is relying primarilyupon the makers thereof for the payment of the paper;
(e) For the purpose of this section, a loan guaranteed by anindividual who does not receive the proceeds of the loan shall not beconsidered a loan to the guarantor;
(f) Investments in mortgage-related securities, as described in theSecondary Mortgage Market Enhancement Act of 1984, P.L. 98-440, excludingthose described in subparagraph g. of paragraph (a) of subdivision (1) ofthis subsection, shall be subject to the restrictions of this section,provided that a bank or trust company may invest up to two times its legalloan limit in any such securities that are rated in one of the two highestrating categories by at least one nationally recognized statistical ratingorganization;
(2) Nor shall any of its directors, officers, agents, or employees,directly or indirectly purchase or be interested in the purchase of anycertificate of deposit, pass book, promissory note, or other evidence ofdebt issued by it, for less than the principal amount of the debt, withoutinterest, for which it was issued. Every bank or trust company or personviolating the provisions of this subdivision shall forfeit to the state theface value of the note or other evidence of debt so purchased;
(3) Make any loan or discount on the security of the shares of itsown capital stock, or be the purchaser or holder of these shares, unlessthe security or purchase shall be necessary to prevent loss upon a debtpreviously contracted in good faith, and stock so purchased or acquiredshall be sold at public or private sale, or otherwise disposed of, withinsix months from the time of its purchase or acquisition unless the time isextended by the finance director. Any bank or trust company violating anyof the provisions of this subdivision shall forfeit to the state the amountof the loan or purchase;
(4) Knowingly lend, directly or indirectly, any money or property forthe purpose of enabling any person to pay for or hold shares of its stock,unless the loan is made upon security having an ascertained or market valueof at least fifteen percent more than the amount of the loan. Any bank ortrust company violating the provision of this subdivision shall forfeit tothe state the amount of the loan;
(5) Loans or other extensions of credit to officers and directorsshall be in accordance with Federal Reserve Board Regulation O (12 CFR215.1, et seq.). Every bank or trust company or officer thereof knowinglyviolating the provisions of this subdivision shall, for each offense,forfeit to the state the amount of the loan or extension of credit;
(6) Invest or keep invested in the stock of any private corporation,provided however, a bank or trust company may invest in equity stock in theFederal Home Loan Bank up to twice the limit described in subdivision (1)of this subsection and except as otherwise provided in this chapter.
3. Provided, that the provisions in this section shall not be soconstrued as in any way to interfere with the rules and regulations of anyclearinghouse association in this state in reference to the daily balances;and provided, that this section shall not apply to balances due from anycorrespondent subject to draft.
4. Provided, that a trust company which does not accept demanddeposits shall be permitted to make loans secured by a first mortgage ordeed of trust on real estate to any individual, partnership, corporation orlimited liability company, and to deal and invest in the interest-bearingobligations of any state, or any city, county, town, village, or politicalsubdivision thereof, in an amount not to exceed its unimpaired capital, theloans on real estate not to exceed sixty-six and two-thirds percent of theappraised value of the real estate.
5. Any officer, director, agent, clerk, or employee of any bank ortrust company who willfully and knowingly makes or concurs in making anyloan, either directly or indirectly, to any individual, partnership,corporation or limited liability company or by means of letters of credit,by acceptance of drafts, or by discount or purchase of notes, bills ofexchange or other obligation of any person, partnership, corporation orlimited liability company, in excess of the amounts set out in thissection, shall be deemed guilty of a class C felony.
6. A trust company in existence on October 15, 1967, or a trustcompany incorporated thereafter which does not accept demand deposits, mayinvest in but shall not invest or keep invested in the stock of any privatecorporation an amount in excess of fifteen percent of the capital andsurplus fund of the trust company; provided, however, that this limitationshall not apply to the ownership of the capital stock of a safe depositcompany as provided in section 362.105; nor to the ownership by a trustcompany in existence on October 15, 1967, or its stockholders of a part orall of the capital stock of one bank organized under the laws of the UnitedStates or of this state, nor to the ownership of a part or all of thecapital of one corporation organized under the laws of this state for theprincipal purpose of receiving savings deposits or issuing debentures orloaning money on real estate or dealing in or guaranteeing the payment ofreal estate securities, or investing in other securities in which trustcompanies may invest under this chapter; nor to the continued ownership ofstocks lawfully acquired prior to January 1, 1915, and the prohibition forinvestments in this subsection shall not apply to investments otherwiseprovided by law other than subdivision (4) of subsection 3 of section362.105.
7. Any bank or trust company to which the provisions of subsection 2of this section apply may continue to make loans pursuant to the provisionsof subsection 2 of this section for up to five years after the appropriatedecennial census indicates that the population of the city in which suchbank or trust company is located has exceeded the limits provided insubsection 2 of this section.
(RSMo 1939 § 7952, A.L. 1941 p. 679, A.L. 1943 p. 944, A.L. 1945 p. 919, A.L. 1959 H.B. 287, A.L. 1963 p. 450, A.L. 1967 p. 445, A.L. 1977 S.B. 420, A.L. 1981 S.B. 28, A.L. 1983 S.B. 331, A.L. 1985 H.B. 408, A.L. 1989 H.B. 346, A.L. 1993 H.B. 566, A.L. 1994 S.B. 701, A.L. 1995 S.B. 215, A.L. 2000 S.B. 896, A.L. 2001 H.B. 738 merged with S.B. 186, A.L. 2002 S.B. 895, A.L. 2003 H.B. 221 merged with S.B. 346, A.L. 2005 H.B. 707)Prior revisions: 1929 § 5357; 1919 § 11740
CROSS REFERENCES:
Loans guaranteed under Federal Servicemen's Readjustment Act, RSMo 442.120
Ownership of stock or securities of development finance corporation, RSMo 371.250
Urban redevelopment corporation bonds, RSMo 353.150
(1975) Borrower who has no knowledge that his contract for a loan with a bank exceeds the loan limit of the bank may maintain an action for breach of contract against the bank. Labor Discount Ct. v. State Bank and Trust Co. of Wellston (A.), 526 S.W.2d 407.