HB 736 -- BANKING

SPONSOR:  Liese

COMMITTEE ACTION:  Voted "do pass" by the Committee on Banks and
Financial Institutions by a vote of 19 to 0.

This bill amends various provisions relating to banking law.  In
its main provisions, the bill:

(1)  Allows banking S corporations to take a tax credit for all
of their allowed tax returns, as opposed to allowing only a
credit on the tax on bank income;

(2)  Redefines "tax credit" for purposes of banking S
corporations to include all income taxes and corporate franchise
taxes;

(3)  Allows resident shareholders of nonresident S corporations
to take the tax credits that are allowed to resident S
corporations, but only for the amount of tax paid in the foreign
state and not to exceed 6% of the corporation's net income;

(4)  States that, if the corporate franchise tax is repealed for
Missouri corporations other than financial institutions, then
(a) financial institutions will be granted a tax credit, in lieu
of the existing tax credit, of 1.5% of net income.  S
corporations can pass this tax credit through to their
shareholders; and (b) all taxes and tax credits on S
corporations will be passed through to the shareholders, with
certain exceptions;

(5)  Allows not-for-profit corporations with civil, charitable,
or educational purposes to be chartered or branched in Missouri
as banks insured by the Federal Deposit Insurance Corporation;

(6)  Modifies bank stockholders' meetings laws to allow
transaction of business by written consent if one bank holding
company owns all of that bank's stock;

(7)  Allows state bank and trust companies to (a) be passive
investors in business entities owned by other financial
institutions; and (b) lend money on real estate and handle real
estate closings and escrows;

(8)  Allows certain bank and trust companies in communities with
sufficiently small populations, as established by rule of the
Division of Finance, to keep the additional powers granted to
them for 5 years after they exceed the allowable population;

(9)  Allows state bank and trust companies to offer any product
or service that a national bank can offer, as long as the state
bank follows federal law while conducting these practices;

(10)  Expands the capital investment allowances granted to state
banks to include holding companies authorized to do business in
this state;

(11)  Clarifies that certain investment prohibitions in the bill
are limited only to other allowable investments;

(12)  Allows bank and trust stockholders to appoint a chief
executive officer or a president.  Current law only allows
presidents to be appointed;

(13)  Allows bona fide fees to be collected on residential real
estate loans for any actual and necessary services associated
with the loan;

(14)  Allows late payment charges not to exceed 5% of the
payment due or $50, whichever is less, on small loans overdue
for 15 days or more; and

(15)  Prohibits any regulation regarding the charging of
insurance commissions on credit insurance from being more
restrictive on financial institutions than regulations are on
insurance agents.

FISCAL NOTE:  Loss to General Revenue Fund of Unknown in FY
2002, FY 2003, and FY 2004.

PROPONENTS:  Supporters say that the bill would equalize the tax
burden on Missouri state banks so that they are taxed in the
same amount as out-of-state banks.  The bill would also give
state banks the ability to perform the same services that
national banks have been given the authority to perform under
federal law.  The bill would correct some technical problems
with banking law and would allow certain rural banks to continue
to perform certain vital services despite an anticipated
population increase based on pending census results.

Testifying for the bill were Representative Liese; Missouri
Bankers Association; Missouri Independent Bankers; and Missouri
League of Financial Institutions.

OPPONENTS:  There was no opposition voiced to the committee.

Greg Linhares, Legislative Analyst

Missouri House of Representatives
Last Updated November 26, 2001 at 11:45 am