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 1140-2.070 - Accounting for Other Real Estate
Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: For years this division has required banks and trust companies to charge off other real estate over a period of six years. The policy was based on an incorrect interpretation of section 362.165, RSMo. This rule replaces that policy with one requiring banks and trust companies to account for other real estate in a manner which conforms to generally accepted accounting principles.
(1) For the purposes of this rule, other real estate shall include real property which is purchased by the bank under judicial or non-judicial foreclosure where the real property was security for debts previously contracted, which is purchased by the bank to protect its interest in debts previously contracted, which is acquired by the bank in partial or complete satisfaction of debts previously contracted, or which is owned by the bank and which has been, but is no longer, used or intended to be used as bank premises.
(2) Other real estate should be booked or accounted for at the lower of-a) the book value of the real estate (or the loan to which it is attributable, plus allowable expenses and less any previous direct write-down unearned interest) or b) the fair market value of the real property at the date of the transfer to that category. Where the other real estate is attributable to debts previously contracted, any excess of the bank's investment in the loan over the fair market value of the real property must be charged against the reserve for loan losses. Additional charge-offs after foreclosure should be charged to other operating expenses. Examiners may classify any portion of the other real estate carried on the bank's books.
(3) At the time real property is transferred to the other real estate category, if the recorded value of the real estate exceeds two hundred fifty thousand dollars ($250,000), the bank shall obtain a current appraisal prepared by an independent qualified appraiser to substantiate the fair market value of the real property; provided that if such property has a recorded value of two hundred fifty thousand dollars ($250,000) or less, an evaluation shall be performed and placed in file. For purposes of this section, the evaluation must:
*Original authority: 361.105, RSMo 1967 amended 1993, 1994, 1995; 362.105, RSMo 1939, amended 1949, 1963, 1965, 1967, 1977, 1983, 1986, 1990, 1991, 1992, 1995, 2000, 2001; and 362.165, RSMo 1939, amended 1967, 1983, 1995.