Text: SSB02222 Text: SSB02224 Text: SSB02200 - SSB02299 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 524.103, subsection 8, Code Supplement 1 2 1995, is amended to read as follows: 1 3 8. "Bank" means a corporation organized under this chapter 1 4 orTitle 12 of the United States Code12 U.S.C. } 21. 1 5 Sec. 2. Section 524.107, subsection 3, Code Supplement 1 6 1995, is amended to read as follows: 1 7 3. Notwithstanding subsections 1 and 2, an organization 1 8 formed for educational purposes in association with an 1 9 accredited elementary or secondary school which engages in the 1 10 receipt of depositsof no more than twenty dollars per1 11depositor,may use the words "educational bank", the use of 1 12 which is otherwise restricted in subsection 2, and such an 1 13 educational bank is not a bank within the meaning or scope of 1 14 regulation of this chapter. 1 15 Sec. 3. Section 524.211, subsections 2, 3, and 4, Code 1 16 Supplement 1995, are amended to read as follows: 1 17 2. The superintendent, deputy superintendent, finance 1 18 company bureau chief, general counsel, and all examiners 1 19 assigned to the finance company bureau are prohibited from 1 20 obtaining a loan of money or property from afinance company1 21licensed by the banking divisionperson or entity licensed 1 22 pursuant to chapter 533A, 533D, 536, or 536A, or a person or 1 23 entity affiliated with such licensee. 1 24 3. The superintendent, deputy superintendent, an assistant 1 25 to the superintendent, a bank examination analyst, finance 1 26 company bureau chief, general counsel, or an examiner of the 1 27 banking division, who has credit relations with amortgage1 28banking company or credit card company licensed by the banking1 29divisionperson or entity licensed or registered pursuant to 1 30 chapter 535B or 536C, is prohibited from participating in 1 31 decisions, oversight, and official review of matters 1 32 concerning the regulation of themortgage banking company or1 33credit card company with which such person has credit1 34relationslicensee or registrant. 1 35 4. An assistant to the superintendent, a bank examination 2 1 analyst,general counsel,or an examiner assigned to the bank 2 2 bureau of the banking division who has credit relations with a 2 3finance company licensed by the banking divisionperson or 2 4 entity licensed pursuant to chapter 533A, 533D, 536, or 536A, 2 5 or with a person or entity affiliated with such licensee, is 2 6 prohibited from participating in decisions, oversight, and 2 7 official review of matters concerning the regulation of the 2 8finance company with which such person has credit relations2 9 licensee. 2 10 Sec. 4. Section 524.215, subsection 5, Code Supplement 2 11 1995, is amended to read as follows: 2 12 5. Inanyan action brought to recover moneysthefor a 2 13 lossofin connection with an indemnity bond which was a 2 14 result of embezzlement, misappropriation, or misuse of state 2 15 bank funds by a director, officer, or employee of the state 2 16 bank. 2 17 Sec. 5. Section 524.220, subsections 1 and 2, Code 2 18 Supplement 1995, are amended to read as follows: 2 19 1. A state bank shall render a full, clear, and accurate 2 20 statement of its condition to the superintendent,on forms to2 21be suppliedin a format prescribed by the superintendent, 2 22 verified by the oath of an officer and attested by the 2 23 signatures of at least three of the directors, or verified by 2 24 the oath of two of its officers and attested by two of the 2 25 directors. The superintendent may, in the superintendent's 2 26 discretion, use any form of statement of condition that is 2 27 used by the federal deposit insurance corporation or the 2 28 federal reserve system. 2 29 2. The statement shall be transmitted to the 2 30 superintendent or the superintendent's designee within thirty 2 31 days after the end of each calendar quarter. 2 32 Sec. 6. Section 524.302, subsection 3, Code Supplement 2 33 1995, is amended to read as follows: 2 34 3. The articles of incorporation need not set forth any of 2 35 the corporate powers enumerated in this chapter. The articles 3 1 of incorporation shall be signed by all of the incorporators 3 2and acknowledged before an officer authorized to take3 3acknowledgments of deeds. 3 4 Sec. 7. Section 524.401, subsections 1 and 2, Code 3 5 Supplement 1995, are amended to read as follows: 3 6 1. The minimum capital structure of a state bank existing 3 7 and operating on July 1, 1995, shall not beas follows:less 3 8 than the amount required by law prior to that date. 3 9a. The amount required by subsection 2.3 10b. An amount less than that provided for under paragraph3 11"a" which the state bank had on July 1, 1995, but not less3 12than the minimum amount required by law prior to that date.3 13 2. The minimum capital structure of a state bank 3 14originallyincorporated after July 1, 1995, pursuant to the 3 15 provisions of this chapter shall not be less than the amount 3 16 required by the federal deposit insurance corporation, or its 3 17 successor, or a greater amount which the superintendent may 3 18 deem necessary in view of the deposit potential of the state 3 19 bank and current banking standards relating to total capital 3 20 requirements. 3 21 2A. A state bank incorporated on or after July 1, 1995, 3 22 pursuant to this chapter, prior to receiving authorization to 3 23 do business from the superintendent, shall establish paid-in 3 24 surplus and undivided profits as required by the 3 25 superintendent. 3 26 Sec. 8. Section 524.608, unnumbered paragraph 1, Code 3 27 Supplement 1995, is amended to read as follows: 3 28 In addition to any examination made by the banking division 3 29 or other supervisory agency, the board of directors shall 3 30 review the adequacy of the bank's internal controls and cause 3 31 to be made no less frequently thanannuallyonce each calendar 3 32 year additional auditing procedures that the board deems to be 3 33 appropriate. The board shall determine the bank's audit needs 3 34 and record in the board's minutes the extent to which audit 3 35 procedures are to be employed. A report which summarizes 4 1 significant audit findings shall be delivered to the 4 2 superintendent as soon as practical upon completion. 4 3 Sec. 9. Section 524.706, subsection 1, Code Supplement 4 4 1995, is amended to read as follows: 4 5 1. a. An executive officer of a state bank may receive 4 6 loansorand extensions of credit, as defined in section 4 7 524.904, subsection 1, from a state bank of which the person 4 8 is an executive officernot exceeding, in the aggregate, the4 9following, as follows: 4 10 (1)An amountFor amounts secured by a lien on a dwelling 4 11 which is expected, after the obligation is incurred, to be 4 12 owned by the executive officer and used as the officer's 4 13 principal residence. 4 14 (2)An amountFor amounts to finance the education of a 4 15 child or children of the executive officer. 4 16 (3)Any other loans or extensions of creditFor amounts 4 17 which in the aggregate do not at any one time exceed the 4 18 higher of twenty-five thousand dollars or two and one-half 4 19 percent of the bank's aggregate capital, but in no event more 4 20 than one hundred thousand dollars. 4 21 (4)OtherFor amounts which do not, in the aggregate, 4 22 exceed the principal amounts of segregated deposit accounts 4 23 which the bank may lawfully set off. An interest in or 4 24 portion of a segregated deposit account does not satisfy the 4 25 requirements of this subparagraph if that interest or portion 4 26 is also pledged to secure the payment of a debt or obligation 4 27 of any person other than the executive officer. If the 4 28 deposit is eligible for withdrawal before the secured loan 4 29 matures, the bank shall establish internal procedures to 4 30 prevent the release of the security without the bank's prior 4 31 consent. 4 32 (5) For amounts secured by bonds, notes, certificates of 4 33 indebtedness, or treasury bills of the United States or by 4 34 other such obligations fully guaranteed by the United States 4 35 as to principal and interest. 5 1 (6) For amounts secured by unconditional takeout 5 2 commitments or guarantees of any department, agency, bureau, 5 3 board, commission, or establishment of the United States or 5 4 any corporation wholly owned directly or indirectly by the 5 5 United States. 5 6 b. A state bank shall not loan money or extend credit to 5 7 an executive officer of the state bank, and an executive 5 8 officer of a state bank shall not receive a loan or extension 5 9 of credit from the state bank, exceeding the limitations 5 10 imposed by this section or for a purpose other than that 5 11 authorized by this section. Such loansorand extensions of 5 12 credit shall not exceed an amount totaling more than fifteen 5 13 percent of the aggregate capital of the state bankand any, 5 14 except for loans and extensions of credit identified in 5 15 paragraph "a", subparagraphs (4), (5), and (6). Any such loan 5 16 on real property shall comply with section 524.905. A 5 17 majority of the board of directors, voting in the absence of 5 18 the applying executive officer, whether or not the executive 5 19 officer is also a director, shall give its prior approval to 5 20 any obligation of an executive officer to the state bank of 5 21 which the person is an executive officer. Approval shall be 5 22 recorded in the minutes. 5 23 Sec. 10. Section 524.904, subsections 2, 3, 4, and 5, Code 5 24 Supplement 1995, are amended to read as follows: 5 25 2. A statebank's total outstandingbank may grant loans 5 26 and extensions of credit to one borrowershallin an amount 5 27 not to exceed fifteen percent of the state bank's aggregate 5 28 capital as defined in section 524.103, unless the additional 5 29 lending provisions described in subsections 3,and 4, and 55 30 apply. 5 31 3. A state bank may grant loansorand extensions of 5 32 credit to one borrowerupin an amount not to exceed twenty- 5 33 five percent of the state bank's aggregate capital iftheany 5 34 amount that exceedsfifteen percent of the state bank's5 35aggregate capitalthe lending limitation described in 6 1 subsection 2 is fully secured by one or any combination of the 6 2 following: 6 3 a. Nonnegotiable bills of lading, warehouse receipts, or 6 4 other documents transferring or securing title covering 6 5 readily marketable nonperishable staples when such goods are 6 6 covered by insurance to the extent that insuring the goods is 6 7 customary, and when the market value of the goods is not at 6 8 any time less than one hundred twenty percent of the amount of 6 9 the loans and extensions of credit. 6 10 b. Nonnegotiable bills of lading, warehouse receipts, or 6 11 other documents transferring or securing title covering 6 12 readily marketable refrigerated or frozen staples when such 6 13 goods are fully covered by insurance and when the market value 6 14 of the goods is not at any time less than one hundred twenty 6 15 percent of the amount of the loans and extensions of credit. 6 16 c. Shipping documents or instruments that secure title to 6 17 or give a first lien on livestock. At inception, the current 6 18 value of the livestock securing the loans must equal at least 6 19 one hundred percent of the amount of the outstanding loans and 6 20 extensions of credit. For purposes of this section, 6 21 "livestock" includes dairy and beef cattle, hogs, sheep, and 6 22 poultry, whether or not held for resale. For livestock held 6 23 for resale, current value means the price listed for livestock 6 24 in a regularly published listing or actual purchase price 6 25 established by invoice. For livestock not held for resale, 6 26 the value shall be determined by the local slaughter price. 6 27 The bank must maintain in its files evidence of purchase or an 6 28 inspection and valuation for the livestock pledged that is 6 29 reasonably current, taking into account the nature and 6 30 frequency of turnover of the livestock to which the documents 6 31 relate. 6 32 d. Mortgages, deeds of trust, or similar instruments 6 33 granting a first lien on farmland or on single-family or two- 6 34 family residences, subject to the provisions of section 6 35 524.905, provided the amount loaned shall not exceed fifty 7 1 percent of the appraised value of such real property. 7 2 e. With the prior approval of the superintendent, other 7 3 readily marketable collateral. The market value of the 7 4 collateral securing the loans must at all times equal at least 7 5 one hundred percent of the outstanding loans and extensions of 7 6 credit. 7 7 4. A state bank may grant loans and extensions of credit 7 8 toa corporate group, including the lending provisions of7 9subsection 3, in an amount not to exceed twenty-five percent7 10of the state bank's aggregate capital. A corporate group7 11includes a person and all corporations in which the person7 12owns or controls fifty percent or more of the shares entitled7 13to voteone borrower not to exceed thirty-five percent of the 7 14 state bank's aggregate capital if any amount that exceeds the 7 15 lending limitations described in subsections 2 and 3 consists 7 16 of obligations as endorser of negotiable chattel paper 7 17 negotiated by endorsement with recourse, or as unconditional 7 18 guarantor of nonnegotiable chattel paper, or as transferor of 7 19 chattel paper endorsed without recourse subject to a 7 20 repurchase agreement. 7 21 5. A state bank may grant loansorand extensions of 7 22 credit toone borrower not to exceed thirty-five percent of7 23the state bank's aggregate capital if the amount that exceeds7 24the lending provisions provided in subsections 2, 3, and 47 25consists of obligations as endorser of negotiable chattel7 26paper negotiated by endorsement with recourse, or as7 27unconditional guarantor of nonnegotiable chattel paper, or as7 28transferor of chattel paper endorsed without recourse subject7 29to a repurchase agreementa corporate group in an amount not 7 30 to exceed twenty-five percent of the state bank's aggregate 7 31 capital if all loans and extensions of credit to any one 7 32 borrower within a corporate group conform to subsections 2 and 7 33 3, and the financial strength, assets, guarantee, or 7 34 endorsement of any one corporate group member is not relied 7 35 upon as a basis for loans and extensions of credit to any 8 1 other corporate group member. A state bank may grant loans 8 2 and extensions of credit to a corporate group in an amount not 8 3 to exceed thirty-five percent of aggregate capital if all 8 4 loans and extensions of credit to any one borrower within a 8 5 corporate group conform to subsections 2, 3, and 4, and the 8 6 financial strength, assets, guarantee, or endorsement of any 8 7 one corporate group member is not relied upon as a basis for 8 8 loans and extensions of credit to any other corporate group 8 9 member. A corporate group includes a person and all 8 10 corporations in which the person owns or controls fifty 8 11 percent or more of the shares entitled to vote. 8 12 Sec. 11. Section 524.1007, subsection 3, Code 1995, is 8 13 amended to read as follows: 8 14 3. For purposes of subsection 1, "affiliate" meansanother8 15 a trust company subsidiary authorized by the superintendent 8 16 pursuant to section 524.802, subsection 12, paragraph "b", and 8 17 located in this state, a state bank located in this state, or 8 18 a national bank located in this state and organized under 12 8 19 U.S.C.secs.} 21,et seq. to engage generally in the banking8 20business. A state bank and another bank shall not be deemed8 21"affiliates" unless boththat are under the common ownership 8 22 of a bank holding company as defined in section 524.1801that8 23owns at least eighty percent of the voting shares of each of8 24the two banks. 8 25 Sec. 12. Section 524.1008, subsections 1, 3, and 4, Code 8 26 1995, are amended to read as follows: 8 27 1. A state bank authorized to act in a fiduciary capacity 8 28 may enter into an agreement for the succession of fiduciary 8 29 accounts with a trust company subsidiary authorized by the 8 30 superintendent pursuant to section 524.802, subsection 12, 8 31 paragraph "b", or one or more other state or national banks 8 32 that are located in this state and authorized to act in a 8 33 fiduciary capacity. In the agreement, the succeeding bank or 8 34 trust company subsidiary may agree to succeed the 8 35 relinquishing bank as a fiduciary with respect to those 9 1 fiduciary accounts which are designated in the agreement. The 9 2 designation of accounts may be by general class or description 9 3 and may include fiduciary accounts subject and not subject to 9 4 court administration and fiduciary accounts to arise in the 9 5 future under wills, trusts, court orders, or other documents 9 6 under which the relinquishing bank is named as a fiduciary or 9 7 is named to become a fiduciary upon the death of a testator or 9 8 settlor or upon the happening of any other subsequent event. 9 9 The agreement shall provide either (a) that the succeeding 9 10 bank or trust company subsidiary maintain one or more 9 11 employees or agents at the office of the relinquishing bank in 9 12 order to facilitate the continued servicing of the designated 9 13 fiduciary accounts, or (b) that the relinquishing bank act as 9 14 an agent of the succeeding bank or trust company subsidiary 9 15 with respect to the fiduciary accounts that are subject to the 9 16 agreement, and the relinquishing bank as an agent may perform 9 17 services other than fiduciary services with respect to those 9 18 accounts. If the relinquishing bank is an agent under 9 19 alternative (b) above, then the relinquishing bank shall 9 20 disclose to its customers that it is acting as an agent of the 9 21 succeeding bank or trust company subsidiary. The 9 22 relinquishing bank shall mail a notice of the succession to 9 23 all persons having an interest in a fiduciary account at their 9 24 last known address, and shall publish a notice of the 9 25 succession to fiduciary accounts in a newspaper published in 9 26 the county of the principal place of business of the 9 27 relinquishing bank. After the publication, the succeeding 9 28 bank or trust company subsidiary shall, without further 9 29 notice, approval or authorization succeed the relinquishing 9 30 bank as to the fiduciary accounts and the fiduciary powers, 9 31 rights, privileges, duties, and liabilities for the fiduciary 9 32 accounts. On the effective date of the succession to 9 33 fiduciary accounts, the relinquishing bank is released from 9 34 fiduciary duties under the fiduciary accounts and shall 9 35 discontinue its exercise of trust powers to the fiduciary 10 1 accounts. This subsection does not absolve a relinquishing 10 2 bank from liabilities arising out of a breach of fiduciary 10 3 duty occurring prior to the succession of fiduciary accounts. 10 4 3.A state bank or national bank that is owned or10 5controlled by a bank holding company as defined in section10 6524.1801 shall not be a party to an agreement authorized by10 7subsection 1.A bank shall not agree to relinquish fiduciary 10 8 accounts to or act as an agent of more than one succeeding 10 9bankfiduciary at any one time. 10 10 4. The privilege of succeeding to fiduciary accounts that 10 11 is extended to a state bank or trust company subsidiary by 10 12 subsection 1 is also extended on the same terms and conditions 10 13 to a national bank located in this state and organized under 10 14 12 U.S.C.secs.} 21et seq. to engage generally in the10 15banking business. 10 16 Sec. 13. Section 524.1201, Code Supplement 1995, is 10 17 amended by adding the following new subsection: 10 18 NEW SUBSECTION. 2A. Notwithstanding any of the other 10 19 provisions of this section, original loan documentation 10 20 recordkeeping functions may be located at an authorized bank 10 21 office or at any other location approved by the 10 22 superintendent. 10 23 Sec. 14. Section 524.1201, subsection 3, Code Supplement 10 24 1995, is amended to read as follows: 10 25 3. Notwithstanding any of the other provisions of this 10 26 section, original trust recordkeeping functions may be 10 27centrallylocated at an authorized bank office, and original10 28loan documentation recordkeeping functions may be located at10 29an authorized bank office or at the office of the holding10 30company of a state bank, subject to the approval ofor at any 10 31 other location approved by the superintendent. 10 32 Sec. 15. NEW SECTION. 524.1205 ESTABLISHMENT OF BRANCH 10 33 OR OFFICE IN OTHER STATE – SUPERINTENDENT'S AUTHORITY TO 10 34 REGULATE. 10 35 Notwithstanding section 524.1201, subsection 1, and section 11 1 524.1202, subsection 2, paragraph "b", upon application to and 11 2 approval by the superintendent, a state bank may acquire in 11 3 any manner, establish, maintain, operate, retain, or relocate 11 4 a branch or office in a state other than this state. Subject 11 5 to the approval of the superintendent, such branch or office 11 6 may engage in any activity authorized for a branch or office 11 7 of a bank organized under the laws of that other state. The 11 8 superintendent shall supervise and regulate all out-of-state 11 9 branches and offices of a state bank. Sections 524.1201 and 11 10 524.1203 apply to an out-of-state branch or office of a state 11 11 bank except as otherwise provided by the laws of the state in 11 12 which a branch or office is located or by the superintendent 11 13 pursuant to this section. This section does not authorize or 11 14 permit a state-chartered bank located outside of this state or 11 15 a national bank located outside of this state to establish a 11 16 de novo branch or office in this state. This section does not 11 17 authorize or permit, before June 1, 1997, an interstate merger 11 18 transaction within the meaning of 12 U.S.C. } 1831u(a). 11 19 Sec. 16. Section 524.1213, Code 1995, is amended by adding 11 20 the following new subsections: 11 21 NEW SUBSECTION. 4A. For purposes of subsection 3, a bank 11 22 that results from the conversion of a state savings 11 23 association or federal savings association, as defined in 12 11 24 U.S.C. } 1813, is deemed to have been in continuous existence 11 25 and operation as a bank for the combined periods of continuous 11 26 existence and operation of the bank and the association from 11 27 which it was converted. 11 28 NEW SUBSECTION. 4B. For purposes of subsection 3, a bank 11 29 that has been chartered solely for the purpose of, and does 11 30 not open for business prior to, acquiring control of, or 11 31 acquiring all or substantially all of the assets of, a bank 11 32 located in this state is deemed to have been in existence and 11 33 operation for the same period of time as the bank which is 11 34 acquired. 11 35 Sec. 17. Section 524.1801, Code 1995, is amended by 12 1 striking the section and inserting in lieu thereof the 12 2 following: 12 3 524.1801 DEFINITIONS. 12 4 As used in this chapter unless the context otherwise 12 5 requires: 12 6 1. "Bank holding company" means bank holding company as 12 7 defined in 12 U.S.C. } 1841(a), and also includes a company 12 8 that would become a bank holding company upon completion of an 12 9 acquisition. 12 10 2. "Company" means company as defined in 12 U.S.C. } 12 11 1841(b). 12 12 3. "Control" means control as provided in 12 U.S.C. } 12 13 1841(a). 12 14 4. "Location" means, for purposes of determining where a 12 15 bank or bank holding company is located, the following: 12 16 a. A bank is located in the state in which its principal 12 17 place of business or main office is physically located. 12 18 b. A bank holding company is located in the state which is 12 19 its home state as determined under 12 U.S.C. } 1841(o)(4). 12 20 5. "Out-of-state bank holding company" means out-of-state 12 21 bank holding company as defined in 12 U.S.C. } 1841(o). 12 22 Sec. 18. Section 524.1804, Code 1995, is amended to read 12 23 as follows: 12 24 524.1804MORE THAN ONE-FOURTH OF STOCK BYNOTICE OF 12 25 ACQUISITION– EFFECT. 12 26AnyA bank holding company, or firm which would thereby12 27become a bank holding company,which proposes to directly or 12 28 indirectly acquireownership orcontrol ofthe voting shares12 29of any bank, and which upon such acquisition would own or12 30control more than twenty-five percent of the voting shares of12 31the bank, or directly or indirectly acquire all or 12 32 substantially all of the assets of, a state bank or national 12 33 bank, shall provide to the superintendent a copy ofany12 34originalthe application and any modifications or amendments 12 35 to the application submitted to theboard of governors of the13 1 federal reservesystemboard for permission to take such 13 2 action, and a copy of any subsequent amendment thereto,at the 13 3 same time the applicationor amendmentis transmitted to the 13 4 federal reservesystemboard. The superintendent may conduct 13 5 such investigation into and evaluation of the proposed action 13 6 as the superintendent deems necessary and appropriate, and may 13 7 submit to the federal reserve board any information so 13 8 obtained together with the superintendent's own comments or 13 9 recommendations regarding the proposed acquisition. 13 10 Sec. 19. Section 524.1805, Code 1995, is amended by 13 11 striking the section and inserting in lieu thereof the 13 12 following: 13 13 524.1805 RESTRICTIONS ON ACQUISITIONS AND MERGERS. 13 14 1. An out-of-state bank or out-of-state bank holding 13 15 company shall not directly or indirectly acquire control of, 13 16 or directly or indirectly acquire all or substantially all of 13 17 the assets of, a bank located in this state unless the bank 13 18 has been in continuous existence and operation for at least 13 19 five years. 13 20 2. For purposes of subsection 1, a bank that has been 13 21 chartered solely for the purpose of, and does not open for 13 22 business prior to, acquiring control of, or acquiring all or 13 23 substantially all of the assets of, a bank located in this 13 24 state is deemed to have been in existence for the same period 13 25 of time as the bank to be acquired. 13 26 3. For purposes of subsection 1, the period of existence 13 27 and operation of a bank is deemed to be continuous, 13 28 notwithstanding any of the following: 13 29 a. Any direct or indirect change in the name, ownership, 13 30 or control of the bank. 13 31 b. Any rechartering or merger of the bank. 13 32 4. For purposes of subsection 1, a bank that resulted from 13 33 the conversion of a state savings association or federal 13 34 savings association, as defined in 12 U.S.C. } 1813, is deemed 13 35 to have been in continuous existence and operation as a bank 14 1 for the combined periods of continuous existence and operation 14 2 of the bank and the association from which it was converted. 14 3 5. An out-of-state bank or out-of-state bank holding 14 4 company that is organized under laws other than those of this 14 5 state is subject to and shall comply with the provisions of 14 6 chapter 490, division XV, relating to foreign corporations, 14 7 and shall immediately provide the superintendent of banking 14 8 with a copy of each filing submitted to the secretary of state 14 9 under that division. 14 10 Sec. 20. Section 524.1912, subsection 2, Code 1995, is 14 11 amended to read as follows: 14 12 2. An authorization for a state bank to engage in 14 13 activities regulated under title XIII, subtitle 1, if any, 14 14 does not granta regional bank holding companyan out-of-state 14 15 bank holding company that acquires a state bankunder section14 16524.1903or any state bank owned or controlled bythatsuch 14 17 bank holding company or any subsidiary or affiliate the 14 18 ability or right to engage in such activities outside of this 14 19 state. 14 20 Sec. 21. Section 524.1912, Code 1995, as amended by 14 21 section 20 of this Act, shall be recodified by the Code editor 14 22 as section 524.1808 of the Code. 14 23 Sec. 22. 14 24 1. Sections 524.1901 through 524.1904 and 524.1906 through 14 25 524.1911, Code 1995, are repealed. 14 26 2. Section 524.1905, Code Supplement 1995, is repealed. 14 27 EXPLANATION 14 28 This bill amends provisions in chapter 524 relating to the 14 29 regulation and operation of banks. 14 30 The definition of a bank in section 524.103 is amended to 14 31 exclude federally chartered entities, other than a national 14 32 bank, from the definition. 14 33 Section 524.107 is amended to eliminate the $20 maximum on 14 34 receipts which may be accepted by an educational bank. The 14 35 section is also amended to clearly indicate that an accredited 15 1 school which is permitted to participate in an educational 15 2 bank must be an elementary or secondary school. 15 3 Section 524.211 is amended to prohibit certain banking 15 4 division personnel from obtaining a loan from affiliates of 15 5 certain entities regulated by the division. The section is 15 6 amended to prohibit certain banking division personnel from 15 7 participating in decisions or other regulatory actions related 15 8 to affiliates of regulated entities if such personnel have 15 9 credit relations with the affiliate. The section is also 15 10 amended to prohibit the general counsel from borrowing from 15 11 certain regulated entities and their affiliates. 15 12 Section 524.215 is amended to provide that an in action to 15 13 recover state bank moneys which are lost as a result of 15 14 embezzlement, misappropriation, misuse by a director, officer, 15 15 or employee of a state bank, recovery must be sought under the 15 16 bank's indemnity bond. 15 17 Section 524.220 is amended to provide that the annual 15 18 statement to be provided to the superintendent by a state bank 15 19 concerning the bank's condition must be submitted in the 15 20 format prescribed by the superintendent, rather than on the 15 21 forms to be supplied by the superintendent. 15 22 Section 524.302 is amended to strike the requirement that 15 23 the articles of incorporation be acknowledged. 15 24 Section 524.401 is amended to provide that the minimum 15 25 capital requirements of a state bank apply to the total 15 26 capital structure of the bank. The section is also amended to 15 27 provide that a state bank incorporated on or after July 1, 15 28 1995, is to establish paid-in surplus and undivided profits as 15 29 required by the superintendent. 15 30 Section 524.608 is amended to provide that the board of a 15 31 state bank is to require additional auditing procedures deemed 15 32 necessary by the board no less than once each calendar year. 15 33 Currently, the section requires such procedures no less than 15 34 annually. The section is also amended to provide that a state 15 35 bank incorporated after July 1, 1995, is to establish paid in 16 1 surplus and undivided profits as required by the 16 2 superintendent. 16 3 Section 524.706 is amended to permit an executive officer 16 4 of a state bank to obtain loans and extensions of credit for 16 5 amounts secured by bonds, notes, certificates of indebtedness, 16 6 or treasury bills of the United States or by other such 16 7 obligations fully guaranteed by the United States as to 16 8 principal and interest, and for amounts secured by 16 9 unconditional takeout commitments or guarantees of the federal 16 10 government or a corporation wholly owned by the federal 16 11 government. 16 12 Section 524.904 is amended to provide that a loan or 16 13 extension of credit to a corporate group must comply with 16 14 additional existing requirements in addition to aggregate 16 15 capital maximums. These other requirements currently apply to 16 16 single individuals borrowing from the state bank. 16 17 Sections 524.1007 and 524.1008 are amended to include a 16 18 trust company subsidiary in the definition of a state bank's 16 19 "affiliates" for purposes of the succession of fiduciary 16 20 accounts, and to permit the succession of those accounts to 16 21 such trust company affiliates. 16 22 Section 524.1201 is amended to permit original loan 16 23 documentation recordkeeping functions to be located at a 16 24 location other than a state bank's authorized bank office with 16 25 the approval of the superintendent. 16 26 New section 524.1205 is created and provides that a state 16 27 bank may acquire, establish, maintain, operate, retain, or 16 28 relocate a branch or an office in a state other than Iowa upon 16 29 application to and approval by the superintendent. The 16 30 superintendent is to supervise and regulate all out-of-state 16 31 branches and offices of a state bank. However, this section 16 32 does not authorize or permit a state-chartered bank located 16 33 outside this state or a national bank located outside this 16 34 state to establish a de novo branch or office in this state. 16 35 This section also does not authorize or permit an interstate 17 1 merger transaction as defined in federal statute before June 17 2 1, 1997. 17 3 Section 524.1213, relating to united community bank 17 4 offices, is amended to to provide a bank which results from 17 5 the conversion of a state or federal savings association, or 17 6 which is chartered solely for the purpose of acquiring control 17 7 of a bank located in this state, is deemed to have been in 17 8 existence and operation as a bank for the combined periods of 17 9 existence and operation of the bank and the association from 17 10 which it was converted or for the same period of time as the 17 11 bank which is acquired. 17 12 Section 524.1801, which currently defines "bank holding 17 13 company", is rewritten to include definitions for "bank 17 14 holding company", "company", "control", "location", and "out- 17 15 of-state bank holding company". 17 16 Section 524.1804 is amended to require a bank holding 17 17 company that proposes to acquire a state or federal bank to 17 18 provide a copy of the application submitted to the federal 17 19 reserve board for permission to take such action. 17 20 Section 524.1805 is rewritten to provide that an out-of- 17 21 state bank or out-of-state bank holding company is prohibited 17 22 from acquiring control of, or acquiring all or substantially 17 23 all of the assets of, a bank located in this state unless the 17 24 bank has been in continuous existence and operation for at 17 25 least five years. Section 524.1805 currently provides that a 17 26 bank holding company is not authorized to acquire any voting 17 27 shares, substantially all of the assets of, or control of a 17 28 state bank unless the bank holding company was registered with 17 29 the federal reserve as a bank holding company on January 1, 17 30 1971. 17 31 Section 524.1912 is amended to provide that an 17 32 authorization for a state bank to engage in insurance sales 17 33 does not grant an out-of-state bank holding company that 17 34 acquires a state bank the authority to engage in the sale of 17 35 insurance outside of this state. The bill also provides that 18 1 section 524.1912 is to be recodified as section 524.1808. 18 2 Sections 524.1901 through 524.1911, which relate to 18 3 regional banking, are repealed. 18 4 BACKGROUND STATEMENT 18 5 SUBMITTED BY THE AGENCY 18 6 During the 1995 legislative session, the general assembly 18 7 amended various sections of Iowa Code chapter 524, as 18 8 recommended by the division of banking. A few of those 18 9 changes are in need of further clarification. The proposed 18 10 amendments to Iowa Code chapter 524 which relate to those 18 11 clarifications are as follows: 18 12 1. Section 524.103, subsection 8, is amended to exclude 18 13 from the definition of "bank" all other federal entities 18 14 chartered by the federal government, except a national bank 18 15 found in 12 U.S.C. } 21. Attorneys had attempted to use the 18 16 broad U.S.C. title 12 language to allow the inclusion of 18 17 savings associations and savings and loans under the 18 18 definition of "bank". The proposed amendment should clarify 18 19 the intent of the legislative change made during the 1995 18 20 session. 18 21 2. Section 524.211, subsections 2, 3, and 4, are amended 18 22 to prohibit certain banking division personnel who are 18 23 presently restricted from borrowing from licensed entities 18 24 from also borrowing from affiliates of licensed entities. The 18 25 language also prohibits the division's general counsel from 18 26 borrowing from licensed entities or their affiliates. 18 27 3. Section 524.215, subsection 5, is amended to add 18 28 language inadvertently removed during the last session 18 29 concerning the fact that an action to recover moneys must be 18 30 tied to the state bank's indemnity bond. 18 31 4. Section 524.302 is amended by striking language which 18 32 requires an acknowledgment of the articles of incorporation. 18 33 The secretary of state no longer requires an acknowledgment. 18 34 5. Section 524.401, subsections 1 and 2, are amended to 18 35 clarify that the minimum capital requirements relate to the 19 1 entire capital structure of a state bank and not just the 19 2 capital stock account. 19 3 6. Section 524.608 is amended to clarify the board of 19 4 directors' responsibility to review the adequacy of auditing 19 5 procedures on a calendar-year basis. 19 6 7. Section 524.904, subsections 2, 3, 4, and 5, are 19 7 amended to clarify the lending limits for state banks. The 19 8 proposed amendments in subsections 2 and 3 merely reflect 19 9 language style changes and the elimination of the reference to 19 10 subsection 5 presently found in subsection 2. The contents in 19 11 subsections 4 and 5 have been reversed to reflect continuity 19 12 with the "one borrower" concept. The only change in the 19 13 language moved from subsection 5 to subsection 4 is the 19 14 elimination of the reference to subsection 4. Subsection 5 19 15 now deals with corporate borrowing groups. The proposed 19 16 amendment in subsection 5 now clearly requires the members of 19 17 a corporate group to comply with subsection 2 and subsections 19 18 3 and 4, if applicable. That was clearly the intent of the 19 19 division in proposing last session's amendments. 19 20 The division of banking's 1996 legislative initiatives 19 21 include proposed amendments, which the division believes to be 19 22 noncontroversial, as follows: 19 23 1. Section 524.107, subsection 3, is amended to remove 19 24 language which limits receipts of deposit to no more than $20 19 25 per depositor by an educational bank. The language is unclear 19 26 as to its intent. The proposed language would then allow the 19 27 accredited school and sponsor to establish the appropriate 19 28 limits for each educational bank. 19 29 2. Section 524.220, subsections 1 and 2, are amended to 19 30 allow state banks the flexibility to submit the quarterly 19 31 reports of condition to the superintendent on disk or via 19 32 phone lines as soon as practical. 19 33 3. Section 524.706, subsection 1, is amended to allow an 19 34 executive officer of a state bank to borrow for a purpose and 19 35 in amounts similar to that permitted under federal 20 1 regulations. 20 2 4. Section 524.1007, subsection 3, and section 524.1008, 20 3 subsections 1, 3, and 4, are amended to allow for the 20 4 succession of fiduciary accounts to trust companies located in 20 5 this state, in addition to state or national banks. 20 6 5. Section 524.1201, subsections 3 and 4, are amended to 20 7 allow state banks, with the superintendent's approval, to keep 20 8 original records at a location other than the principal place 20 9 of business of the state bank. 20 10 The division's 1996 legislative initiatives include 20 11 provisions establishing the regulatory framework for 20 12 interstate branching without making a determination to either 20 13 "opt in" or "opt out" under the federal legislation. These 20 14 initiatives include the following: 20 15 1. Establishes a new section which authorizes a state bank 20 16 to acquire in any manner, establish, maintain, operate, 20 17 retain, and relocate branches or offices in a state other than 20 18 Iowa subject to application to and approval by the 20 19 superintendent. 20 20 This new section does not authorize a state-chartered bank 20 21 or national bank located outside of the state of Iowa to 20 22 establish de novo branches or offices in Iowa. Nor does it 20 23 authorize before June 1, 1997, any interstate merger 20 24 transaction within the meaning of the Riegle-Neal Interstate 20 25 Banking and Branching Efficiency Act of 1994. 20 26 If the Iowa legislature does not "opt out" or "early opt 20 27 in" to Riegle-Neal interstate merger transactions, this 20 28 amendment places Iowa state-chartered banks on a level playing 20 29 field with Iowa national banks to engage in interstate merger 20 30 transactions on June 1, 1997, the trigger date automatically 20 31 allowing such transactions by federal legislation. 20 32 2. Amends the section 524.1801 definition section 20 33 concerning bank holding companies to revamp old definitions to 20 34 be compatible with definitions in new federal Riegle-Neal 20 35 legislation which preempted former Iowa law. 21 1 3. Amends section 524.1804 to require that notice of any 21 2 acquisition by a bank holding company shall be given to the 21 3 superintendent so that the superintendent may comment thereon. 21 4 4. Amends section 524.1805 to provide that an out-of-state 21 5 bank or out-of-state bank holding company shall not directly 21 6 or indirectly acquire control of a bank located in Iowa unless 21 7 the bank has been in continuous existence and operation for a 21 8 period of five years. 21 9 5. Repeals the provisions of 524 Division XIX, the former 21 10 Regional Bank Holding Company Act, due to being preempted by 21 11 federal Riegle-Neal legislation. 21 12 LSB 3373DP 76 21 13 mj/sc/14.3
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