Magazine article American Banker

Mo. Acts to End Deposit Cap Loophole Involving S&Ls

Magazine article American Banker

Mo. Acts to End Deposit Cap Loophole Involving S&Ls

Article excerpt

A Missouri law that prohibits banks from holding more than 13% of the state's deposits wasn't meant to exempt thrift acquisitions.

At least that's what Missouri's General Assembly has decided by voting to close a loophole in the law that had allowed banks to buy thrifts even when that would put them over the 13% limit. The General Assembly last month sent the measure to Gov. Mel Carnahan, who is expected to sign it.

Missouri's two largest banking companies, NationsBank Corp. and Mercantile Bancorp., exceed the state limit on deposits but in ways permitted under the law. They are prohibited, however, from acquiring within Missouri.

Boatmen's Bancshares, acquired in January by NationsBank, hit the cap years ago, then grew to $12.6 billion of deposits, or about 17% of the state's total. (Banks that reach the limit are allowed to continue increasing deposits through internal growth but not through acquisitions.)

Mercantile would exceed the cap through its planned purchase of Roosevelt Financial Group Inc., a $9 billion-asset St. Louis thrift, which would give it more than 23% of the state's deposits.

State Commissioner of Finance Earl Manning said he told Mercantile it could acquire Roosevelt, since the deal was announced under current law. Although it isn't scheduled to close until the third quarter, the deal won't be affected by the new legislation.

"The cow was already out of the barn before the door was shut," said Jerry Sage, executive director of the Missouri Independent Bankers. …

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