Missouri Code of State Regulations
Title 20 - DEPARTMENT OF COMMERCE AND INSURANCE
Division 1140 - Division of Finance
Chapter 2 - Banks and Trust Companies
Section 20 CSR 1140-2.065 - Bank Investment in Real Estate Development Corporations

Universal Citation: 20 MO Code of State Regs 1140-2.065

Current through Register Vol. 49, No. 6, March 15, 2024

PURPOSE: Senate Bill 52 was approved by the governor and took effect on September 28, 1985. The bill amended section 362.106, RSMo to permit banks and trust companies to make certain investments in real estate development corporations. This rule establishes guidelines under section 362.106, RSMo which permit banks and trust companies to make certain investments in real estate development corporations and clarifies unclear provisions of the law.

PUBLISHER'S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. Therefore, the material which is so incorporated is on file with the agency who filed this rule, and with the Office of the Secretary of State. Any interested person may view this material at either agency's headquarters or the same will be made available at the Office of the Secretary of State at a cost not to exceed actual cost of copy reproduction. The entire text of the rule is printed here. This note refers only to the incorporated by reference material.

(1) For purposes of this rule, a real estate development corporation (REDC) shall mean any corporation whose activities are limited to managing or owning agricultural property, subdividing and developing real property and building residential housing or commercial improvements on that property and owning, renting, leasing, managing, operating for income and selling property which the REDC has developed and improved.

(2) A bank may invest in the stock of an REDC; provided-

(A) Within thirty (30) days of investing, the bank advises the office of the commissioner of finance of the name of the REDC, the amount of this investment and related loans, lines of credit and guarantees and the location and general description of the principal projects of the REDC;

(B) The REDC shall not engage in a joint venture with any executive officer or principal shareholder of the bank or any related interest of the bank as those terms are defined in Regulation O of the Federal Reserve Board ( 12 CFR 215 );

(C) The bank's total of investments and extensions of credit in all REDCs shall not exceed five percent (5%) of the bank's assets;

(D) The bank's total equity investment in any one (1) real estate project shall not exceed twenty percent (20%) of its unimpaired capital; for purposes of this subsection, the investments in all REDC joint ventures on a given project shall be aggregated;

(E) The real estate owned by the REDC shall be located-1) in the same county or a county adjoining that county where the main banking house of the bank is located or 2) in the bank's local community as defined by the Community Reinvestment Act ( 12 U.S.C. 2901 ); provided, however, that this real estate may be located anywhere in Missouri or in any state adjoining Missouri with the prior approval of the director of the Division of Finance; and

(F) The REDC shall obtain proper documentation and perfected security interests on all projects.

(3) Subject to the provisions of section (4) of this rule, a bank may extend credit up to its legal loan limit to each REDC in which it has invested.

(4) Extensions of credit by a bank to an REDC shall be subject to the attribution and aggregation rules contained in 4 CSR 140-2.080.

(5) A bank's investment in an REDC will be subject to the same review standards as any other investment. Examiners will be reviewing for solvency of the corporation and all other factors which might be pertinent to determining the value of the investment.

*Original authority: 361.105, RSMo 1967; 362.106, RSMo 1981, amended 1985, 1990; and 362.170, RSMo 1939, amended 1941, 1943, 1945, 1959, 1963, 1967, 1977, 1983, 1985, 1986, 1989.

Disclaimer: These regulations may not be the most recent version. Missouri may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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