State of Illinois
92nd General Assembly
Legislation

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92_HB4952

 
                                               LRB9214703JSpc

 1        AN ACT concerning banks.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.  The  Illinois  Banking  Act  is  amended  by
 5    changing Sections 32 and 35.1 as follows:

 6        (205 ILCS 5/32) (from Ch. 17, par. 339)
 7        Sec.   32.   Basic   loaning   limits.   The  liabilities
 8    outstanding at one time to a state bank of a person for money
 9    borrowed, including the liabilities of a partnership or joint
10    venture in the liabilities of the  several  members  thereof,
11    shall  not exceed 25% of the amount of the unimpaired capital
12    and unimpaired surplus of the bank.
13        The liabilities to any state bank of a person may  exceed
14    25%  of  the unimpaired capital and unimpaired surplus of the
15    bank, provided that (i) the excess amount from time  to  time
16    outstanding is fully secured by readily marketable collateral
17    having   a  market  value,  as  determined  by  reliable  and
18    continuously available quotations,  at  least  equal  to  the
19    excess  amount  outstanding;  and  (ii) the total liabilities
20    shall not exceed 30% of the unimpaired capital and unimpaired
21    surplus of the bank.
22        The following shall not be considered as  money  borrowed
23    within the meaning of this Section:
24             (1)  The  purchase  or discount of bills of exchange
25        drawn in good faith against actually existing values.
26             (2)  The  purchase  or  discount  of  commercial  or
27        business paper actually owned by the  person  negotiating
28        the same.
29             (3)  The  purchase  of  or loaning money in exchange
30        for evidences of indebtedness which shall be  secured  by
31        mortgage  or  trust  deed upon productive real estate the
 
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 1        value of which, as ascertained by the oath of 2 qualified
 2        appraisers,  neither  of  whom  shall  be   an   officer,
 3        director, or employee of the bank or of any subsidiary or
 4        affiliate  of  the  bank,  is  double  the  amount of the
 5        principal debt  secured  at  the  time  of  the  original
 6        purchase of evidence of indebtedness or loan of money and
 7        which  is  still  double the amount of the principal debt
 8        secured at the time of any renewal of the indebtedness or
 9        loan, and which mortgage or trust deed is  shown,  either
10        by a guaranty policy of a title guaranty company approved
11        by  the  Commissioner  or by a registrar's certificate of
12        title in any county having adopted the provisions of  the
13        Registered  Titles (Torrens) Act, or by the opinion of an
14        attorney-at-law, to be a first lien upon the real  estate
15        therein described, and real estate shall not be deemed to
16        be  encumbered  within the meaning of this subsection (3)
17        by reason  of  the  existence  of  instruments  reserving
18        rights-of-way, sewer rights and rights in wells, building
19        restrictions  or  other  restrictive  covenants,  nor  by
20        reason  of  the  fact  it is subject to lease under which
21        rents or profits are reserved by the owners.
22             (4)  The   purchase   of    marketable    investment
23        securities.
24             (5)  The  liability  to a state bank of a person who
25        is an accommodation party to,  or  guarantor  of  payment
26        for,  any  evidence of indebtedness of another person who
27        obtains a loan from or  discounts  paper  with  or  sells
28        paper  to  the  state  bank; but the total liability to a
29        state bank of a  person  as  an  accommodation  party  or
30        guarantor  of  payment  in  respect  of such evidences of
31        indebtedness shall not exceed 25% 20% of  the  amount  of
32        the  unimpaired  capital  and  unimpaired  surplus of the
33        bank;  provided  however  that  the   liability   of   an
34        accommodation  party to paper excepted under subsection 2
 
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 1        of this Section shall not be included in the  computation
 2        of this limitation.
 3             (6)  The  liability to a state bank of a person, who
 4        as a guarantor, guarantees collection of  the  obligation
 5        or indebtedness of another person.
 6        The  total  liabilities  of  any  one  person,  for money
 7    borrowed, or otherwise, shall not exceed 25% of the  deposits
 8    of  the  bank,  and  those total liabilities shall at no time
 9    exceed 50% of  the  amount  of  the  unimpaired  capital  and
10    unimpaired  surplus  of the bank. Absent an actual unremedied
11    breach,  the  obligation  or  responsibility  for  breach  of
12    warranties or  representations,  express  or  implied,  of  a
13    person  transferring  negotiable or non-negotiable paper to a
14    bank without recourse and without guaranty of payment,  shall
15    not  be  included in determining the amount of liabilities of
16    the person to the bank for borrowed money or  otherwise;  and
17    in  the  event  of and to the extent of an unremedied breach,
18    the amount remaining unpaid for principal and interest on the
19    paper in respect of which the unremedied breach exists  shall
20    thereafter  for the purpose of determining whether subsequent
21    transactions giving  rise  to  additional  liability  of  the
22    person  to the state bank for borrowed money or otherwise are
23    within the limitations of Sections 32 through 34 of this Act,
24    be included in computing the amount  of  liabilities  of  the
25    person for borrowed money or otherwise.
26        The  liability  of a person to a state bank on account of
27    acceptances made or issued by the state bank on behalf of the
28    person shall be included in  the  computation  of  the  total
29    liabilities  of  the  person for money borrowed except to the
30    extent the  acceptances  grow  out  of  transactions  of  the
31    character  described  in subsection (6) of Section 34 of this
32    Act  and  are  otherwise  within  the  limitations  of   that
33    subsection;  provided  nevertheless  that  any  such excepted
34    acceptances acquired by the state  bank  which  accepted  the
 
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 1    same  shall be included in the computation of the liabilities
 2    of the person to the state bank for money borrowed.
 3    (Source: P.A. 92-336, eff. 8-10-01.)

 4        (205 ILCS 5/35.1) (from Ch. 17, par. 344)
 5        Sec. 35.1. Lease limitations. In exercise  of  the  power
 6    conferred  by  paragraph (14) of Section 5 of this Act to own
 7    and lease personal property, a state bank shall be subject to
 8    the following limitations and  restrictions  in  addition  to
 9    those contained in that paragraph:
10        (a)  The  unamortized  investment of the bank in personal
11    property subject to any lease or series of leases which is or
12    are the responsibility of a person shall not, when  added  to
13    any  liability  of such person for money borrowed, exceed 25%
14    20% of the unimpaired capital and unimpaired surplus  of  the
15    bank.  The term "unamortized investment" means the total cost
16    of such property to the bank less so  much  of  the  payments
17    theretofore  received  by  the bank from the lessee and other
18    sources,  which  under  generally  accepted   principles   of
19    accounting are applicable to amortization of the investment.
20        (b)  The  amount of unamortized investment of the bank in
21    personal property subject to a lease or leases which are  the
22    responsibility of a person shall for the purpose of computing
23    the total permitted amount of liability of such person to the
24    bank for money borrowed or otherwise under Section 32 of this
25    Act be treated as the liability of such person.
26        (c)  No  such  lease  or related agreement shall obligate
27    the  bank  to  maintain,  repair  or  service  the   personal
28    property,  or unconditionally obligate the bank to restore or
29    replace the same, or in effect unconditionally place  on  the
30    bank  the  risk  of  such  restoration or replacement, in the
31    event of loss, theft or destruction  of  or  damage  to  such
32    property from any cause other than a wilful act of the bank.
33        The  limitations and restrictions set forth in paragraphs
 
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 1    (a), (b) and (c) above shall apply and be complied with  even
 2    though  such owning and leasing is carried on by the bank, in
 3    whole or in part, through  the  medium  of  a  subsidiary  as
 4    permitted by paragraph (12) of Section 5 of this Act.
 5        In  the  event  a  state  bank  acquires  by  purchase or
 6    discount  a  lease,  or  the  sums  due  and  to  become  due
 7    thereunder, of personal property made by a lessor other  than
 8    the  bank or such a subsidiary, paragraph (b) of this Section
 9    35.1 shall also apply to the obligation of the  lessee  under
10    such lease.
11    (Source: P.A. 88-546.)

12        Section  99.  Effective date.  This Act takes effect upon
13    becoming law.

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