1. For the purpose of this section:
a. The term "obligations" means the amounts for the payment of which a customer is obligated, whether directly or indirectly, primarily or secondarily, to a state bank as a result of the exercise by the state bank of the powers conferred by section 524.902.
b. Obligations of a customer include obligations of others to a state bank arising out of loans made by such state bank for the benefit of such customer.
c. Obligations of a customer who is a partner include the obligations of a partnership or other unincorporated association for which obligations the customer is liable.
d. Obligations of a customer which is a partnership or other unincorporated association include the obligations of its partners who are liable for its obligations.
e. Obligations of a customer include the obligations of any and all corporations in which such customer owns or controls more than fifty percent of the shares entitled to vote.
f. Obligations of a customer which is a corporation include obligations of a person, who is also a customer, and who owns or controls more than fifty percent of the shares entitled to vote of such corporation.
g. Obligations of a customer which is a corporation include the obligations of any other corporation when a person owns or controls more than fifty percent of the shares entitled to vote, of such corporations.
h. If the superintendent shall determine at any time that the interests of a group of more than one customer, or any combination thereof, are so interrelated that they should be considered as a unit for the purpose of applying the limitations of this section, the total obligations of that group of customers existing at any time shall be combined and deemed obligations of one customer. A state bank shall not be deemed to have violated this section solely by reason of the fact that the obligations of a group exceed the limitations of this section at the time of a determination by the superintendent that the indebtedness of that group must be combined, but the state bank shall, if required by the superintendent, dispose of the obligations of the group in the amount in excess of the limitations of this section within such reasonable time as shall be fixed by the superintendent.
2. The total obligations of any one customer to a state bank at any one time, secured and unsecured, shall not exceed twenty percent of the capital and surplus of the state bank except that:
a. The total obligations of any one customer to a state bank at any one time, shall not exceed forty percent of the capital and surplus of the state bank if at least all of the amount by which such obligations exceed twenty percent of the capital and surplus of the state bank shall consist of any of the following or any combination of the following:
(1) Obligations in the form of notes or drafts, secured by nonnegotiable bills of lading, warehouse receipts or other documents transferring or securing title covering readily marketable nonperishable staples when such goods are covered by insurance to the extent that insuring such goods is customary, and when the market value of such goods is not at any time less than one hundred twenty percent of the face amount of such obligations.
(2) Obligations in the form of notes or drafts secured by nonnegotiable bills of lading, warehouse receipts or other documents transferring or securing title covering readily marketable refrigerated or frozen staples when such goods are fully covered by insurance and when the market value of such goods is not at any time less than one hundred twenty percent of the face amount of such obligations.
(3) Obligations in the form of notes or drafts secured by bills of lading, bills of sale or security agreements covering feeder livestock or female animals purchased and held for resale, or raised and held for sale prior to giving birth to their first offspring or after giving birth to but prior to weaning of their first offspring. Such livestock loans, including renewals or extensions thereof, made under the foregoing provisions shall not be made for a period in excess of eighteen months. In the case of purchase price livestock, the proceeds of such obligations shall have been given as purchase money for all or part of the purchase price of such livestock, but not to exceed the purchase price thereof. In the case of nonpurchase livestock, the proceeds of such obligations shall not be in an amount in excess of the prevailing local market price at the time of the loan, and the bank shall maintain proof of this fact.
(4) Obligations of the customer as endorser, guarantor or accommodation party for others, other than obligations as endorser of chattel paper described in paragraph "b" of this subsection.
(5) Such other obligations to a state bank as may be prescribed by the superintendent by regulations of general application to all state banks, or
b. The total obligations of any one customer to a state bank at any one time shall not exceed sixty percent of the capital and surplus of the state bank if at least all of the amount by which such obligations exceed twenty percent of the capital and surplus of the state bank shall consist of obligations as endorser of negotiable chattel paper negotiated by endorsement with recourse, or as unconditional guarantor of nonnegotiable chattel paper, or as transferor of chattel paper endorsed without recourse subject to a repurchase agreement, or
c. The total obligations of any one customer to a state bank at any one time shall not exceed the sum of twenty percent of the capital and surplus and fifty percent of the capital of the state bank, if at least all of the amount by which such obligations exceed twenty percent of the capital and surplus of a state bank shall consist of obligations secured by a first lien on farmland, or on single family or two family residences, subject to the provisions of section 524.905, except that the amount so loaned shall not exceed fifty percent of the appraised value of such real property, or
d. The total obligations of any one customer, which is an individual or a corporation, to a state bank at any one time shall not exceed forty percent of the capital and surplus of the state bank if all of the amount by which such obligations exceed twenty percent of the capital and surplus of the state bank consists of amounts owed by one or more corporations of which the customer owns or controls more than fifty percent of the shares entitled to vote, or, if the customer is a corporation, of amounts owed by another corporation which owns or controls more than fifty percent of the shares of the customer entitled to vote, or of amounts owed by one or more other corporations more than fifty percent of the voting shares of each of which are owned or controlled by a person which also owns or controls more than fifty percent of the shares of the customer entitled to vote, provided however, when this paragraph applies:
(1) The amounts owed by such customer shall not exceed twenty percent of the capital and surplus of the state bank.
(2) The amounts owed by any one or all of the corporations other than the customer shall not exceed twenty percent of the capital and surplus of the state bank.
(3) The shares, assets and any liabilities of any such corporation other than the customer shall not be included in the financial statement of such customer or otherwise relied upon as a basis for a loan to such customer.
(4) The assets or guarantee of such customer shall not be relied upon as a basis for a loan to any such corporation.
(5) The proceeds of the amounts owed by the customer shall not be intermingled with or used for a common purpose with the proceeds of the amounts owed by the corporation or corporations other than the customer.
For the purposes of this paragraph, the term "amounts owed" means the amounts for the payment of which such customer or any one or all such corporations are obligated, whether directly or indirectly, primarily or secondarily, to a state bank as a result of the exercise by the state bank of the powers conferred by section 524.902, but determined without reference to paragraphs "e", "f" and "g" of subsection 1 of this section.
3. The total obligations of any one customer to a state bank at any one time for the purpose of applying the limitations of subsection 2 of this section shall include:
a. The aggregate rentals payable by the customer under leases of personal property by the state bank as lessor, except obligations secured by a lease on property in situations described in the second sentence of paragraph "h" of subsection 4 of this section.
b. Obligations secured by real property pursuant to section 524.905 and installment obligations, except to the extent any such obligations are secured, guaranteed, insured or covered by unconditional commitments or agreements to purchase by the United States, veterans administration, federal housing administration, small business administration, farmers home administration, a federal reserve bank, or other department, bureau, board, commission, agency, or establishment of the United States, or any corporation owned directly or indirectly by the United States.
c. Obligations of the customer by reason of acceptance by the state bank of drafts of a type not described in subsection 1 of section 524.903, to the extent that the state bank has acquired such acceptances.
d. Obligations of the customer consisting of bonds and securities in which the state bank has invested pursuant to section 524.901, subsection 2.
e. Amounts invested by a state bank for its own account pursuant to section 524.901, subsection 3, paragraphs "c" and "f", in the shares and obligations of a corporation which is a customer of the state bank.
f. Obligations of the customer as obligor pursuant to evidences of indebtedness and agreements for the payment of money acquired by purchase or discount by the state bank.
g. All other obligations of the customer of the state bank, not otherwise excluded by subsection 4 of this section, whether direct or indirect, primary or secondary, including overdrafts and liability for items paid by the state bank against uncollected deposits of the customer.
4. The total obligations of any one customer to a state bank at any one time for the purpose of applying the limitations of subsection 2 of this section shall not include:
a. Obligations of such customer as the drawer of drafts drawn in good faith against actually existing values in connection with a sale of goods which have been endorsed by such customer with recourse or which have been accepted.
b. Obligations arising out of the discount of commercial paper actually owned by the customer negotiating the same and endorsed by the customer without recourse and which is not subject to repurchase by the customer.
c. Obligations drawn by the customer in good faith against actually existing values and secured by nonnegotiable bills of lading for goods in process of shipment.
d. Obligations in the form of acceptances of other banks of the kind described in section 524.903, subsection 3.
e. Obligations of the customer by reason of acceptances by the state bank for the account of the customer pursuant to section 524.903, subsection 1.
f. Obligations of the customer which are fully secured by bonds and securities of the kind in which a state bank is authorized to invest for its own account without limitation under section 524.901, subsection 1.
g. Obligations of a customer which is a bank to the extent the obligations are repayable on demand or on the first business day following demand for repayment.
h. Obligations of a federal reserve bank or of the United States, or of any department, bureau, board, commission, agency, or establishment of the United States, or of any corporation owned directly or indirectly by the United States, or obligations of a customer to the extent that such obligations are secured or guaranteed or covered by unconditional commitments or agreements to purchase by a federal reserve bank or by the United States, or any department, bureau, board, commission, agency, or establishment of the United States, or any corporation owned directly or indirectly by the United States. An obligation of a customer secured by a lease on property under the terms of which the United States, or any department, bureau, board, commission, agency, or establishment of the United States, or any corporation owned directly or indirectly by the United States, or the state of Iowa, or any political subdivision thereof, is lessee and under the terms of which the aggregate rentals payable to the customer will be sufficient to satisfy the amount loaned shall be considered to be an obligation secured or guaranteed in the manner provided for in this paragraph.
i. Obligations of a customer as endorser or guarantor for a corporation in which that customer owns or controls more than fifty percent of the shares entitled to vote, provided that under rules promulgated by the superintendent the customer and the corporation qualify as separate customers because the assets and the demonstrated ability to generate income of the corporation and the customer taken together are adequate to secure and fund all outstanding and contemplated debt of the corporation and the customer.
j. Obligations of the customer equal in dollar amount to the amount of time certificates of deposit in the state bank, held in the name of that customer, which the state bank may lawfully offset against the obligations of that customer in the event of default. For the purpose of this paragraph an amount held in a time certificate of deposit in the name of more than one customer shall be counted only once with respect to all such customers, allocated as the customers may determine.
[C97, § 1870; SS15, § 1870; C24, 27, 31, 35, 39, § 9223; C46, 50, 54, 58, 62, 66, § 528.14, 528.15; C71, 73, 75, 77, 79, 81, § 524.904; 81 Acts, ch 173, § 4]
89 Acts, ch 257, §16
Referred to in § 524.605, 524.612, 524.613, 524.706, 524.710, 524.901, 524.907, 524.1602
Iowa General Assembly
Search: Iowa Code 1995
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