S.F. _____ H.F. _____ Section 1. Section 12C.1, subsection 2, paragraph a, Code 1 2009, is amended to read as follows: 2 a. “Bank” means a corporation or limited liability 3 company engaged in the business of banking authorized by law 4 to receive deposits and whose deposits are insured by the bank 5 insurance fund or the savings association insurance fund of the 6 federal deposit insurance corporation and includes any office 7 of a bank and organized under the laws of this state, another 8 state, or the United States . “Bank” also means a savings and 9 loan , or savings association , or savings bank organized under 10 the laws of this state, another state, or the United States . 11 Sec. 2. Section 12C.1, subsection 2, Code 2009, is amended 12 by adding the following new paragraph: 13 NEW PARAGRAPH . Oh. “Superintendent" means the 14 superintendent of banking of this state when the depository is 15 a bank, and the superintendent of credit unions of this state 16 when the depository is a credit union. 17 Sec. 3. Section 12C.23A, subsection 1, Code 2009, is amended 18 by adding the following new paragraph: 19 NEW PARAGRAPH . e. Consent to the jurisdiction and authority 20 of the superintendent as provided under section 12C.29. 21 Sec. 4. Section 12C.28, Code 2009, is amended to read as 22 follows: 23 12C.28 Electronic reporting. 24 Any notice, information, report, or other communication 25 required by this chapter shall be deemed effective and in 26 compliance with this chapter if sent or given electronically 27 as provided in rules adopted pursuant to chapter 17A by the 28 appropriate superintendent or the treasurer of state. 29 Sec. 5. NEW SECTION . 12C.29 Authority of superintendent to 30 issue orders. 31 1. If it appears to the superintendent that a bank is 32 violating or has violated, or the superintendent has reasonable 33 cause to believe that a bank is about to violate, any provision 34 of this chapter or any rules adopted pursuant thereto, or if 35 -1- LSB 5394DP (8) 83 rn/sc 1/ 11

S.F. _____ H.F. _____ a bank is less than well capitalized as defined in 12 U.S.C. 1 § 1831o(b)(1)(A), or if a bank is subject to a final order or 2 written agreement subject to the public disclosure requirements 3 of 12 U.S.C. § 1818(u), the superintendent may issue an order 4 requiring the bank to do one or more of the following: 5 a. Not accept uninsured public funds deposits. 6 b. Reduce the amount of uninsured public funds accepted. 7 c. Return to the depositors some or all uninsured public 8 funds held in demand deposits and, when deposit instruments 9 or agreements mature, return to the depositors some or all 10 uninsured deposits representing proceeds of such instruments 11 or agreements. 12 d. Pledge collateral to the treasurer of state, with such 13 collateral having a value at all times up to one hundred ten 14 percent of the public funds held by the bank. 15 e. Comply with such other requirements as the superintendent 16 may impose. 17 2. An order issued pursuant to this section shall become 18 effective upon service of the order on the bank and shall 19 remain effective except to such extent modified, terminated, or 20 set aside by action of the superintendent or of the district 21 court of Polk county as provided in subsection 3. 22 3. An order issued pursuant to this section shall contain a 23 concise statement of the facts forming the basis for issuing 24 the order and shall provide the bank an opportunity to appeal 25 the order by requesting a hearing. If the bank requests a 26 hearing, the hearing shall be fixed for a date not later than 27 thirty days after the service of the order unless a later date 28 is set at the request of the bank. If upon the record made 29 at the hearing, the superintendent finds that the grounds 30 for the order have been established, the superintendent may 31 issue and serve upon the bank an order upholding the original 32 order. If the superintendent finds the grounds for the order 33 have not been established, the superintendent shall set aside 34 the original order or modify the order, as the superintendent 35 -2- LSB 5394DP (8) 83 rn/sc 2/ 11

S.F. _____ H.F. _____ deems appropriate. An administrative law judge may assist 1 the superintendent at the hearing or, at the superintendent’s 2 request, preside over the hearing. The hearing shall not be 3 open to the public. The superintendent’s decision shall be 4 subject to judicial review in Polk county district court in 5 accordance with the provisions of chapter 17A. 6 4. An order issued pursuant to this section shall be 7 confidential, and the Polk county district court shall review 8 the record in camera and shall maintain filings of any judicial 9 review filed pursuant to section 3 under seal. 10 5. This section is intended to provide the superintendent 11 additional authority and regulatory flexibility in regulating 12 a bank that accepts public funds deposits and whose financial 13 condition, level of public funds, or level of collateral may 14 pose a greater than normal risk of loss coverage from the state 15 sinking fund applicable for uninsured and unsecured public 16 funds. 17 6. An act or omission by the superintendent pursuant to this 18 section shall not subject the state to liability. 19 Sec. 6. Section 524.213, Code 2009, is amended to read as 20 follows: 21 524.213 Duties and powers of superintendent. 22 The superintendent shall have general control, supervision 23 and regulation of all state banks and shall be charged with 24 the administration , interpretation, and execution of the laws , 25 rules, and regulations of this state relating to banks and 26 banking and with such other duties and responsibilities as are 27 imposed upon the superintendent by the laws of this state. The 28 superintendent shall have power to adopt and promulgate such 29 rules and regulations as necessary to carry out and enforce, 30 properly and effectively, the provisions of this chapter and 31 chapter 12C applicable to banks. 32 Sec. 7. Section 524.215A, Code 2009, is amended by adding 33 the following new subsection: 34 NEW SUBSECTION . 4. The division of banking may adopt a 35 -3- LSB 5394DP (8) 83 rn/sc 3/ 11

S.F. _____ H.F. _____ record retention policy authorizing the division to destroy 1 communications received by electronic mail that are more than 2 six months old. 3 Sec. 8. Section 524.310, Code 2009, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 5. A state bank using a fictitious name to 6 transact business in this state may file its fictitious name 7 with the secretary of state by delivering to the superintendent 8 for filing with the secretary of state a copy of the resolution 9 of its board of directors certified by its secretary, adopting 10 the fictitious name. A state bank using a fictitious name 11 shall comply with the requirements of section 524.1206 and with 12 any other regulatory requirements governing use of its name. 13 The fictitious name must be distinguishable upon the record of 14 the secretary of state from all of the following: 15 a. The corporate name of a business or nonprofit corporation 16 incorporated or authorized to transact business in this state. 17 b. A corporate name reserved, registered, or protected as 18 provided in section 490.402, 490.403, 504.402, or 504.403. 19 c. The fictitious name of another foreign business or 20 nonprofit corporation authorized to transact business in this 21 state. 22 Sec. 9. Section 524.602, Code 2009, is amended to read as 23 follows: 24 524.602 Board of directors —— election. 25 1. At Except as provided in subsection 2, at the first 26 annual meeting of shareholders and at each annual meeting 27 thereafter the shareholders shall elect directors to hold 28 office until the next succeeding annual meeting. Directors 29 shall hold office for one year or until their successors have 30 been elected and qualified, unless removed in accordance with 31 provisions of section 524.606. When the shareholders determine 32 the number of directors at an annual meeting or at a special 33 meeting, they shall, at the same meeting, elect a director to 34 fill each directorship. 35 -4- LSB 5394DP (8) 83 rn/sc 4/ 11

S.F. _____ H.F. _____ 2. The articles of incorporation of a state bank may 1 authorize directors to be elected to staggered terms of three 2 years. At the first meeting of shareholders or at an annual 3 or special meeting where the shareholders adopt staggered 4 terms for directors, and at each annual meeting thereafter, 5 the shareholders shall elect directors to hold office for 6 any vacant position. A director shall hold office until the 7 director’s term expires or until the director’s successor has 8 been elected and qualified, unless the director is removed in 9 accordance with the provisions of section 524.606. 10 Sec. 10. Section 524.814, subsection 1, Code 2009, is 11 amended to read as follows: 12 1. To secure deposits of the state bank or a bank that is 13 an affiliate of the state bank when a customer is required 14 to obtain such security, or a bank is required to provide 15 security, by the laws of the United States, by any agency or 16 instrumentality of the United States, by the laws of the state 17 of Iowa or another state , by the state board of regents, by a 18 resolution or ordinance relating to the issuance of bonds, by 19 the terms of any interstate compact or by order of any court 20 of competent jurisdiction. The lending of securities to a 21 bank that is an affiliate, or the pledging of securities for 22 the account of a bank that is an affiliate, shall be on terms 23 and conditions that are consistent with safe and sound banking 24 practices. 25 Sec. 11. Section 524.901, subsection 2, Code 2009, is 26 amended to read as follows: 27 2. A state bank shall not invest for its own account more 28 than fifteen percent of its aggregate capital in investment 29 securities of any one obligor. Any The par value of the 30 investment securities shall be used to determine the amount 31 that may be invested under this subsection, and any premium 32 paid by a state bank for any investment securities shall not be 33 included in determining the amount that may be invested under 34 this subsection. 35 -5- LSB 5394DP (8) 83 rn/sc 5/ 11

S.F. _____ H.F. _____ Sec. 12. Section 536.13, subsection 7, paragraph d, Code 1 2009, is amended by striking the paragraph and inserting in 2 lieu thereof the following: 3 d. Except as provided in this subsection, the provisions 4 of the Iowa consumer credit code, chapter 537, apply to loans 5 regulated by this chapter and supersede conflicting provisions 6 of this chapter. Section 537.2402, subsection 1, does not 7 apply to loans regulated by this chapter. 8 Sec. 13. Section 536A.23, subsection 1, Code 2009, is 9 amended to read as follows: 10 1. No industrial loan company licensed under the provisions 11 of this chapter shall have the power and authority to: 12 a. (1) Charge, receive, or collect interest at a rate 13 exceeding ten cents on the hundred by the year, except that 14 the interest may be computed when the note is made on the 15 full amount of the cash advanced on the loan from the date 16 of the note to the date of the final installment thereof, 17 and the interest so computed may be included in the note, 18 notwithstanding any agreement to pay the entire amount in 19 installments; or the interest may be computed on the amount of 20 the note and discounted or collected in advance when the loan 21 is made, notwithstanding any agreement to pay the entire amount 22 in installments. If the note is repayable in other than equal 23 monthly installments, the interest may be an amount computed on 24 the basis of the effective rates permitted as provided above; 25 provided, however, there shall be no compounding of interest 26 and when an interest rate as authorized herein is advertised, 27 or negotiated for with a prospective borrower, with intent that 28 it be computed by either of the two methods authorized herein, 29 they being the “add on” method or the “discount” method, in 30 such case such rate shall be further described as to the method 31 of computation to be used, but interest computed by either 32 method shall be stated to the borrower as provided in section 33 537.3210 . 34 (2) If a borrower elects to repay a loan secured by a 35 -6- LSB 5394DP (8) 83 rn/sc 6/ 11

S.F. _____ H.F. _____ mortgage or deed of trust upon real property which is a 1 single-family or two-family dwelling or agricultural land at 2 a date earlier than is required by the terms of the loan, the 3 licensee shall be governed by section 535.9 . 4 (3) The limitation on interest rate which is contained in 5 this paragraph “a” shall not apply to any loan in which the 6 borrower is a corporation or investment trust or any other 7 person who is referred to in section 535.2, subsection 2 . 8 b. Charge, receive, or collect in advance, a service charge 9 in excess of one dollar for each fifty dollars of the amount of 10 the note, not to exceed a total of one hundred twenty dollars. 11 a. Charge, receive, or collect interest at a rate exceeding 12 the maximum rate of interest allowable for regulated loan 13 companies and fixed by the superintendent in accordance with 14 the provisions of section 536.13. 15 c. b. Require any borrower to purchase insurance from 16 the lender as a condition for obtaining a loan. However, 17 an industrial loan company may collect from the borrower, at 18 the option of the borrower, and transmit the premiums charged 19 for insuring real or personal property used by the borrower 20 as security for a loan and provided that such insurance is 21 obtained from a licensed insurance producer for an insurance 22 company authorized to do business in Iowa; and the premiums 23 charged for insuring the life of one party on the loan in an 24 amount not to exceed the total amount of the note or contract, 25 including cash advance, interest and service charge, provided 26 that no licensee shall require that the contract of life 27 insurance be outstanding for more than the unpaid balance of 28 the indebtedness and provided that such insurance is obtained 29 from a licensed insurance producer for an insurance company 30 authorized to do business in Iowa; and an industrial loan 31 company may receive and transmit the premiums charged for 32 accident and health insurance on the borrower, provided such 33 insurance bears a reasonable relationship to the existing 34 hazards or risk of loss, and the aggregate benefits of which 35 -7- LSB 5394DP (8) 83 rn/sc 7/ 11

S.F. _____ H.F. _____ shall not exceed the approximate amount of the contractual 1 payments on the loan outstanding at the time of loss, and 2 provided that such insurance is obtained from a licensed 3 producer for an insurance company authorized to do business in 4 Iowa. However, all life insurance rates in connection with 5 industrial loans shall be subject to the rules and regulations 6 of the insurance commissioner of the state of Iowa. 7 d. c. Engage in commercial activities or have an affiliate 8 that engages in commercial activities. This paragraph shall 9 not apply to an industrial loan company with an affiliate that 10 is engaged in commercial activities prior to January 1, 2006, 11 if control of the industrial loan company is not thereafter 12 transferred to an entity that engages in commercial activities 13 directly or through an affiliate. 14 e. d. Obtain or arrange a residential mortgage loan for a 15 potential borrower from a third person, unless the industrial 16 loan company also has a mortgage broker license and complies 17 with all provisions of chapter 535B. 18 Sec. 14. Section 536A.31, subsection 3, Code 2009, is 19 amended by striking the subsection and inserting in lieu 20 thereof the following: 21 3. Except as provided in this subsection, the provisions 22 of the Iowa consumer credit code, chapter 537, apply to loans 23 regulated by this chapter and supersede conflicting provisions 24 of this chapter. Section 537.2402, subsection 1, does not 25 apply to loans regulated by this chapter. 26 Sec. 15. EFFECTIVE UPON ENACTMENT. The sections of this 27 Act amending sections 12C.1, 12C.23A, and 12C.28 and enacting 28 section 12C.29, being deemed of immediate importance, take 29 effect upon enactment. 30 EXPLANATION 31 This bill makes changes regarding provisions governing the 32 administration and regulation of banks. 33 The definition of “bank” contained in Code section 12C.1 34 currently refers to a corporation authorized by law to 35 -8- LSB 5394DP (8) 83 rn/sc 8/ 11

S.F. _____ H.F. _____ receive deposits insured by the bank insurance fund or savings 1 association insurance fund of the federal deposit insurance 2 fund of the federal deposit insurance corporation. The 3 bill adds a limited liability company to the definition and 4 substitutes the reference to insured deposits to organization 5 under the laws of Iowa, another state, or the United States. 6 The bill also adds a savings bank organized under the laws of 7 Iowa, another state, or the United States to the definition 8 of “bank”. The bill also amends Code section 12C.1 to add a 9 definition of “superintendent”. “Superintendent” is defined to 10 refer to either the superintendent of banking in Iowa when the 11 depository is a bank and the superintendent of credit unions in 12 Iowa when the depository is a credit union. The bill makes a 13 corresponding amendment to Code section 12C.28. 14 The bill adds new Code section 12C.29, giving the 15 superintendent authority to issue orders in the event it 16 appears a bank is, has, or is about to violate any provision 17 of Code chapter 12C or any rules adopted pursuant thereto, if 18 a bank is less than well capitalized as defined in a provided 19 reference to the United States Code, or if a bank is subject 20 to a final order or written agreement subject to the public 21 disclosure requirements of another provided reference to 22 the United States Code. If such authority exists, the bill 23 provides that the superintendent may issue an order requiring 24 the bank not to accept uninsured public funds deposits, to 25 reduce the amount of uninsured public funds accepted, to return 26 to depositors some or all deposits as specified, to pledge 27 collateral to the treasurer of state up to 110 percent of 28 the public funds held by the bank, and to comply with such 29 other requirements as the superintendent may impose. The bill 30 additionally establishes procedures regarding the issuance 31 of an order and resulting hearings, states that these are 32 intended to provide the superintendent additional authority and 33 regulatory flexibility, and provides that an act or omission 34 by the superintendent pursuant to this section shall not 35 -9- LSB 5394DP (8) 83 rn/sc 9/ 11

S.F. _____ H.F. _____ subject the state to liability. The bill provides that the 1 acceptance of public funds by a bank constitutes consent to the 2 jurisdiction and authority of the superintendent of banking. 3 Further, the bill specifies that the duties and powers of the 4 superintendent shall include administration, interpretation, 5 and execution of the laws, rules, and regulations of Iowa 6 relating to banks and banking. This authorization would 7 facilitate the establishment of policy for the implementation 8 and administration of the Code chapter. The bill authorizes 9 the division of banking to adopt a record retention policy 10 authorizing the division to destroy e-mails more than six 11 months old, adds provisions regarding state bank utilization of 12 a fictitious name, establishes election procedures regarding 13 the election of directors by bank shareholders, and requires 14 that the par value of investment securities be used in 15 determining the amount of aggregate capital that a state bank 16 may invest in investment securities of any one obligor. 17 The bill amends Code section 524.814 to authorize the 18 lending or pledging of state bank assets when a customer is 19 required to obtain security or a bank is required to provide 20 security pursuant to the laws of another state. Violation of 21 this section is a serious misdemeanor punishable by confinement 22 for no more than one year and a fine of at least $315 but not 23 more than $1,875. 24 The bill provides, with respect to regulated loans under 25 Code chapter 536 and industrial loans under Code section 26 536A.31, that unless otherwise provided the provisions of the 27 Iowa consumer credit code contained in Code chapter 537 are 28 applicable and supersede conflicting provisions of Code chapter 29 536 and Code section 536A.31. The bill states, however, that 30 the provisions of Code section 537.2402, subsection 1, relating 31 to creditors authorized to make supervised loans contracting 32 for and receiving a finance charge without limitation as to 33 amount or rate with respect to a loan pursuant to open-end 34 credit, do not apply to loans regulated under Code chapter 536 35 -10- LSB 5394DP (8) 83 rn/sc 10/ 11

S.F. _____ H.F. _____ or Code section 536A.31. 1 Additionally, the bill deletes provisions currently 2 applicable to industrial loan companies in Code section 536A.23 3 regarding the charging, receiving or collection of interest, 4 prepayment of loans secured by specified mortgages or deeds 5 of trust, and imposition in advance of service charges. The 6 bill substitutes in their place the statement that a licensed 7 industrial loan company may not charge, receive, or collect 8 interest at a rate exceeding the maximum rate of interest 9 allowable for regulated loan companies and fixed by the 10 superintendent in accordance with the provisions of Code 11 section 536.13. 12 The sections of the bill amending Code chapter 12C take 13 effect upon enactment, and the sections of the bill amending 14 Code chapters 524, 536, and 536A take effect July 1, 2010. 15 -11- LSB 5394DP (8) 83 rn/sc 11/ 11