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Senate Study Bill 1224 - IntroducedA Bill ForAn Act 1relating to financial institutions, including the
2assets, liabilities, and merger of state banks and state
3credit unions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 524.1303, subsection 1, Code 2021, is
2amended to read as follows:
31. A state bank which has commenced business may propose to
4voluntarily dissolve upon the affirmative vote of the holders
5of at least a majority of the shares entitled to vote on the
6voluntary dissolution, adopting a plan of dissolution involving
7both a provision for acquisition of its assets and assumption
8of its liabilities by another state bank, national bank, or
9other financial institution insured by the federal deposit
10insurance corporation and a provision for continuance of its
11business if acquisition of its assets and assumption of its
12liabilities is not effected, or any other plan of dissolution
13providing for full payment of its liabilities. A state bank’s
14adoption of a plan involving the acquisition of its assets
15or the payment or assumption of its liabilities by a credit
16union chartered under state or federal law shall not be deemed
17sufficient to cause voluntary dissolution of a state bank under
18this subsection.
19 Sec. 2. Section 524.1309, Code 2021, is amended to read as
20follows:
21524.1309 Becoming subject to chapter 489 or 490.
22In lieu of the dissolution procedure prescribed in sections
23524.1303 through 524.1306, a state bank may cease to carry
24on the business of banking and, after compliance with this
25section, continue as a corporation subject to chapter 490; or
26if the state bank is organized as a limited liability company
27under this chapter, continue as a limited liability company
28subject to chapter 489.
291. A state bank that has commenced business may propose
30to voluntarily cease to carry on the business of banking and
31become a corporation subject to chapter 490, or a limited
32liability company subject to chapter 489, upon the affirmative
33vote of the holders of at least a majority of the shares
34entitled to vote on such proposal, adopting a plan involving
35both a provision for acquisition of its assets and assumption
-1-1of its liabilities by another state bank, national bank, or
2other financial institution insured by the federal deposit
3insurance corporation, and a provision for continuance of
4its business if acquisition of its assets and assumption of
5its liabilities is not effected, or any other plan providing
6for the cessation of banking business and the payment of its
7liabilities. A state bank’s adoption of a plan involving the
8acquisition of its assets or the payment or assumption of
9its liabilities by a credit union chartered under state or
10federal law shall not be deemed sufficient to cause a state
11bank to cease to carry on the business of banking and become a
12corporation subject to chapter 490.
132. The application to the superintendent for approval
14of a plan described in subsection 1 shall be treated by
15the superintendent in the same manner as an application for
16approval of a plan of dissolution under section 524.1303,
17subsection 2, and shall be subject to section 524.1303,
18subsection 3.
193. Immediately upon adoption and approval of a plan to
20voluntarily cease to carry on the business of banking and
21become a corporation subject to chapter 490, or a limited
22liability company subject to chapter 489, the state bank shall
23deliver to the superintendent a plan to cease the business of
24banking and become a corporation subject to chapter 490, or a
25limited liability company subject to chapter 489, which shall
26be signed by two of its duly authorized officers and shall
27contain the name of the state bank, the post office address of
28its principal place of business, the name and address of its
29officers and directors, the number of shares entitled to vote
30on the plan and the number of shares voted for or against the
31plan, respectively, the nature of the business to be conducted
32by the corporation under chapter 490, or by the limited
33liability company subject to chapter 489, and the general
34nature of the assets to be held by the corporation or company.
354. Upon approval of the plan by the superintendent, the
-2-1state bank shall immediately surrender to the superintendent
2its authorization to do business as a bank and shall cease
3to accept deposits and carry on the banking business except
4insofar as may be necessary for it to complete the settlement
5of its affairs as a state bank in accordance with subsection 5.
65. The board of directors has full power to complete the
7settlement of the affairs of the state bank. Within thirty
8days after approval by the superintendent of the plan to cease
9the business of banking and become a corporation subject
10to chapter 490, or a limited liability company subject to
11chapter 489, the state bank shall give notice of its intent
12to persons identified in section 524.1305, subsection 3, in
13the manner provided for in that subsection. In completing
14the settlement of its affairs as a state bank, the state bank
15shall also follow the procedure prescribed in section 524.1305,
16subsections 4, 5, and 6.
176. Upon completion of all the requirements of this section,
18the state bank shall deliver to the superintendent articles of
19intent to be subject to chapter 490 or 489, together with the
20applicable filing and recording fees, which shall set forth
21that the state bank has complied with this section, that it has
22ceased to carry on the business of banking, and the information
23required by section 490.202 relative to the contents of
24articles of incorporation under chapter 490, or articles of
25organization under chapter 489. If the superintendent finds
26that the state bank has complied with this section and that
27the articles of intent to be subject to chapter 490 or 489
28 satisfy the requirements of this section, the superintendent
29shall deliver them to the secretary of state for filing
30and recording in the secretary of state’s office, and the
31superintendent shall file and record them in the office of the
32county recorder.
337. Upon the filing of the articles of intent to be subject
34to chapter 490 or 489, the state bank shall cease to be a state
35bank subject to this chapter, and shall cease to have the
-3-1powers of a state bank subject to this chapter and shall become
2a corporation subject to chapter 490 or a limited liability
3company subject to chapter 489. The secretary of state
4shall issue a certificate as to the filing of the articles
5of intent to be subject to chapter 490 or 489 and send the
6certificate to the corporation or limited liability company or
7its representative. The articles of intent to be subject to
8chapter 490 or 489 shall be the articles of incorporation of
9the corporation or a limited liability company. The provisions
10of chapter 490 or 489 becoming applicable to a corporation or
11limited liability company formerly doing business as a state
12bank shall not affect any right accrued or established, or
13liability or penalty incurred under this chapter prior to the
14filing with the secretary of state of the articles of intent to
15be subject to chapter 490 or 489.
168. A shareholder of a state bank who objects to adoption
17by the state bank of a plan to cease to carry on the business
18of banking and to continue as a corporation subject to chapter
19490, or a limited liability company subject to chapter 489,
20 is entitled to appraisal rights provided for in chapter 490,
21subchapter XIII, or in chapter 489, section 489.604.
229. A state bank, at any time prior to the approval of the
23articles of intent to become subject to chapter 490 or 489,
24may revoke the proceedings in the manner prescribed by section
25524.1306.
26 Sec. 3. Section 524.1401, subsection 1, Code 2021, is
27amended to read as follows:
281. Upon compliance with the requirements of this chapter,
29one or more state banks, one or more out-of-state banks, one or
30more national banks, one or more federal savings associations,
31one or more corporations, or any combination of these entities,
32with the approval of the superintendent, may merge into a
33state bank pursuant to a plan of merger. For purposes of
34this section, “corporation” does not include a credit union,
35industrial bank, or trust company.
-4-1 Sec. 4. NEW SECTION. 524.1423 Authority to sell
2participations or real property assets.
31. a. Subject to section 524.907, a state bank may sell
4or transfer participations. If a state bank proposes to sell
5or transfer greater than or equal to twenty-five percent
6of the total value of its participations to a credit union
7chartered under state or federal law, the state bank shall
8provide a written notice and application for approval to the
9superintendent not less than thirty days prior to completion of
10the proposed sale or transfer.
11b. A state bank may sell or transfer a portion of its real
12property assets, subject to all of the following:
13(1) If a state bank proposes to sell or transfer greater
14than or equal to twenty-five percent of its real property
15assets to a credit union chartered under state or federal law,
16the state bank shall provide a written notice and application
17for approval to the superintendent not less than thirty days
18prior to completion of the proposed sale or transfer.
19(2) If a state bank proposes to sell or transfer
20real property containing a bank office or any other
21physical location of the state bank, the state bank shall
22provide written notice and application for approval to
23the superintendent not less than thirty days prior to the
24completion of the proposed sale or transfer.
252. The superintendent may approve a sale or transfer under
26subsection 1 if the superintendent determines all of the
27following:
28a. The sale has been approved by a majority of the state
29bank’s directors and shareholders.
30b. The sale adequately protects the interests of the state
31bank’s depositors, creditors, and shareholders.
32c. The sale is consistent with safe and sound banking
33practices.
34d. The sale is in the public interest based on the financial
35history and condition of the parties to the sale, including
-5-1the composition of the state bank’s balance sheet after the
2sale, the potential effect of the sale on competition, and the
3convenience and needs of the area served by the parties to the
4sale.
5 Sec. 5. Section 533.406, Code 2021, is amended to read as
6follows:
7533.406 State credit union merger, conversion, or
8dissolution.
91. Notwithstanding section 533.301, subsection 25, a state
10credit union shall comply with the state law requirements for
11merger, conversion, or dissolution of a state credit union.
122. Except as provided in section 524.1423, a state credit
13union shall not merge with, purchase the assets of, or assume
14the liabilities of a bank, a federally chartered savings bank,
15or a federally chartered savings association. For purposes of
16this subsection, “bank” means the same as defined in section
17524.103.
18EXPLANATION
19The inclusion of this explanation does not constitute agreement with
20the explanation’s substance by the members of the general assembly.
21This bill relates to financial institutions, including the
22assets, liabilities, and merger of state banks and state credit
23unions.
24Current law provides that a state bank that has commenced
25business may propose to voluntarily dissolve upon the adoption
26of a plan of dissolution that includes provisions for the
27acquisition of its assets and assumption of its liabilities
28and for the continuance of its business if acquisition is not
29effected. The bill provides that a state bank’s adoption of
30a plan involving the acquisition of its assets or the payment
31or assumption of its liabilities by a credit union shall not
32be deemed sufficient to cause voluntary dissolution of a state
33bank.
34The bill modifies Code section 524.1309 to strike references
35to a state bank continuing as a limited liability company after
-6-1ceasing to carry on the business of banking.
2Current law provides that a state bank that has commenced
3business may propose to cease carrying on the business of
4banking and become a corporation subject to Code chapter 490
5upon the adoption of a plan that includes provisions for the
6acquisition of its assets and assumption of its liabilities
7and for the continuance of its business if acquisition is not
8effected. The bill provides that a state bank’s adoption of
9a plan involving the acquisition of its assets or the payment
10or assumption of its liabilities by a credit union shall not
11be deemed sufficient to cause a state bank to cease to carry
12on the business of banking and become a corporation subject to
13Code chapter 490.
14The bill authorizes one or more state banks, out-of-state
15banks, national banks, federal savings associations, and
16corporations, pursuant to a plan of merger and with the
17approval of the superintendent, to merge into a state bank.
18The bill creates new Code section 524.1423, which authorizes
19a state bank, subject to the provisions of Code section
20524.907, to sell or transfer participations. The bill requires
21a state bank to provide a written notice and application for
22approval to the superintendent of banking not less than 30
23days prior to completion of the proposed sale or transfer if
24the state bank proposes to sell or transfer greater than or
25equal to 25 percent of the total value of its participations
26to a credit union chartered under state or federal law. The
27bill also requires a state bank to provide a written notice and
28application for approval to the superintendent not less than
2930 days prior to completion of a proposed sale or transfer of
30its real property assets if the state bank proposes to sell
31or transfer greater than or equal to 25 percent of its real
32property assets to a credit union chartered under state or
33federal law or real property containing a bank office or any
34other physical location of the state bank.
35The bill authorizes the superintendent to approve a sale
-7-1or transfer of a state bank’s participations or real property
2assets if the superintendent makes certain determinations
3enumerated in the bill.
4The bill prohibits a state credit union from merging with,
5purchasing the assets of, or assuming the liabilities of a
6bank, a federally chartered savings bank, or a federally
7chartered savings association, except as provided in new Code
8section 524.1423.
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2assets, liabilities, and merger of state banks and state
3credit unions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 524.1303, subsection 1, Code 2021, is
2amended to read as follows:
31. A state bank which has commenced business may propose to
4voluntarily dissolve upon the affirmative vote of the holders
5of at least a majority of the shares entitled to vote on the
6voluntary dissolution, adopting a plan of dissolution involving
7both a provision for acquisition of its assets and assumption
8of its liabilities by another state bank, national bank, or
9other financial institution insured by the federal deposit
10insurance corporation and a provision for continuance of its
11business if acquisition of its assets and assumption of its
12liabilities is not effected, or any other plan of dissolution
13providing for full payment of its liabilities. A state bank’s
14adoption of a plan involving the acquisition of its assets
15or the payment or assumption of its liabilities by a credit
16union chartered under state or federal law shall not be deemed
17sufficient to cause voluntary dissolution of a state bank under
18this subsection.
19 Sec. 2. Section 524.1309, Code 2021, is amended to read as
20follows:
21524.1309 Becoming subject to chapter 489 or 490.
22In lieu of the dissolution procedure prescribed in sections
23524.1303 through 524.1306, a state bank may cease to carry
24on the business of banking and, after compliance with this
25section, continue as a corporation subject to chapter 490; or
26if the state bank is organized as a limited liability company
27under this chapter, continue as a limited liability company
28subject to chapter 489.
291. A state bank that has commenced business may propose
30to voluntarily cease to carry on the business of banking and
31become a corporation subject to chapter 490, or a limited
32liability company subject to chapter 489, upon the affirmative
33vote of the holders of at least a majority of the shares
34entitled to vote on such proposal, adopting a plan involving
35both a provision for acquisition of its assets and assumption
-1-1of its liabilities by another state bank, national bank, or
2other financial institution insured by the federal deposit
3insurance corporation, and a provision for continuance of
4its business if acquisition of its assets and assumption of
5its liabilities is not effected, or any other plan providing
6for the cessation of banking business and the payment of its
7liabilities. A state bank’s adoption of a plan involving the
8acquisition of its assets or the payment or assumption of
9its liabilities by a credit union chartered under state or
10federal law shall not be deemed sufficient to cause a state
11bank to cease to carry on the business of banking and become a
12corporation subject to chapter 490.
132. The application to the superintendent for approval
14of a plan described in subsection 1 shall be treated by
15the superintendent in the same manner as an application for
16approval of a plan of dissolution under section 524.1303,
17subsection 2, and shall be subject to section 524.1303,
18subsection 3.
193. Immediately upon adoption and approval of a plan to
20voluntarily cease to carry on the business of banking and
21become a corporation subject to chapter 490, or a limited
22liability company subject to chapter 489, the state bank shall
23deliver to the superintendent a plan to cease the business of
24banking and become a corporation subject to chapter 490, or a
25limited liability company subject to chapter 489, which shall
26be signed by two of its duly authorized officers and shall
27contain the name of the state bank, the post office address of
28its principal place of business, the name and address of its
29officers and directors, the number of shares entitled to vote
30on the plan and the number of shares voted for or against the
31plan, respectively, the nature of the business to be conducted
32by the corporation under chapter 490, or by the limited
33liability company subject to chapter 489, and the general
34nature of the assets to be held by the corporation or company.
354. Upon approval of the plan by the superintendent, the
-2-1state bank shall immediately surrender to the superintendent
2its authorization to do business as a bank and shall cease
3to accept deposits and carry on the banking business except
4insofar as may be necessary for it to complete the settlement
5of its affairs as a state bank in accordance with subsection 5.
65. The board of directors has full power to complete the
7settlement of the affairs of the state bank. Within thirty
8days after approval by the superintendent of the plan to cease
9the business of banking and become a corporation subject
10to chapter 490, or a limited liability company subject to
11chapter 489, the state bank shall give notice of its intent
12to persons identified in section 524.1305, subsection 3, in
13the manner provided for in that subsection. In completing
14the settlement of its affairs as a state bank, the state bank
15shall also follow the procedure prescribed in section 524.1305,
16subsections 4, 5, and 6.
176. Upon completion of all the requirements of this section,
18the state bank shall deliver to the superintendent articles of
19intent to be subject to chapter 490 or 489, together with the
20applicable filing and recording fees, which shall set forth
21that the state bank has complied with this section, that it has
22ceased to carry on the business of banking, and the information
23required by section 490.202 relative to the contents of
24articles of incorporation under chapter 490, or articles of
25organization under chapter 489. If the superintendent finds
26that the state bank has complied with this section and that
27the articles of intent to be subject to chapter 490 or 489
28 satisfy the requirements of this section, the superintendent
29shall deliver them to the secretary of state for filing
30and recording in the secretary of state’s office, and the
31superintendent shall file and record them in the office of the
32county recorder.
337. Upon the filing of the articles of intent to be subject
34to chapter 490 or 489, the state bank shall cease to be a state
35bank subject to this chapter, and shall cease to have the
-3-1powers of a state bank subject to this chapter and shall become
2a corporation subject to chapter 490 or a limited liability
3company subject to chapter 489. The secretary of state
4shall issue a certificate as to the filing of the articles
5of intent to be subject to chapter 490 or 489 and send the
6certificate to the corporation or limited liability company or
7its representative. The articles of intent to be subject to
8chapter 490 or 489 shall be the articles of incorporation of
9the corporation or a limited liability company. The provisions
10of chapter 490 or 489 becoming applicable to a corporation or
11limited liability company formerly doing business as a state
12bank shall not affect any right accrued or established, or
13liability or penalty incurred under this chapter prior to the
14filing with the secretary of state of the articles of intent to
15be subject to chapter 490 or 489.
168. A shareholder of a state bank who objects to adoption
17by the state bank of a plan to cease to carry on the business
18of banking and to continue as a corporation subject to chapter
19490, or a limited liability company subject to chapter 489,
20 is entitled to appraisal rights provided for in chapter 490,
21subchapter XIII, or in chapter 489, section 489.604.
229. A state bank, at any time prior to the approval of the
23articles of intent to become subject to chapter 490 or 489,
24may revoke the proceedings in the manner prescribed by section
25524.1306.
26 Sec. 3. Section 524.1401, subsection 1, Code 2021, is
27amended to read as follows:
281. Upon compliance with the requirements of this chapter,
29one or more state banks, one or more out-of-state banks, one or
30more national banks, one or more federal savings associations,
31one or more corporations, or any combination of these entities,
32with the approval of the superintendent, may merge into a
33state bank pursuant to a plan of merger. For purposes of
34this section, “corporation” does not include a credit union,
35industrial bank, or trust company.
-4-1 Sec. 4. NEW SECTION. 524.1423 Authority to sell
2participations or real property assets.
31. a. Subject to section 524.907, a state bank may sell
4or transfer participations. If a state bank proposes to sell
5or transfer greater than or equal to twenty-five percent
6of the total value of its participations to a credit union
7chartered under state or federal law, the state bank shall
8provide a written notice and application for approval to the
9superintendent not less than thirty days prior to completion of
10the proposed sale or transfer.
11b. A state bank may sell or transfer a portion of its real
12property assets, subject to all of the following:
13(1) If a state bank proposes to sell or transfer greater
14than or equal to twenty-five percent of its real property
15assets to a credit union chartered under state or federal law,
16the state bank shall provide a written notice and application
17for approval to the superintendent not less than thirty days
18prior to completion of the proposed sale or transfer.
19(2) If a state bank proposes to sell or transfer
20real property containing a bank office or any other
21physical location of the state bank, the state bank shall
22provide written notice and application for approval to
23the superintendent not less than thirty days prior to the
24completion of the proposed sale or transfer.
252. The superintendent may approve a sale or transfer under
26subsection 1 if the superintendent determines all of the
27following:
28a. The sale has been approved by a majority of the state
29bank’s directors and shareholders.
30b. The sale adequately protects the interests of the state
31bank’s depositors, creditors, and shareholders.
32c. The sale is consistent with safe and sound banking
33practices.
34d. The sale is in the public interest based on the financial
35history and condition of the parties to the sale, including
-5-1the composition of the state bank’s balance sheet after the
2sale, the potential effect of the sale on competition, and the
3convenience and needs of the area served by the parties to the
4sale.
5 Sec. 5. Section 533.406, Code 2021, is amended to read as
6follows:
7533.406 State credit union merger, conversion, or
8dissolution.
91. Notwithstanding section 533.301, subsection 25, a state
10credit union shall comply with the state law requirements for
11merger, conversion, or dissolution of a state credit union.
122. Except as provided in section 524.1423, a state credit
13union shall not merge with, purchase the assets of, or assume
14the liabilities of a bank, a federally chartered savings bank,
15or a federally chartered savings association. For purposes of
16this subsection, “bank” means the same as defined in section
17524.103.
18EXPLANATION
19The inclusion of this explanation does not constitute agreement with
20the explanation’s substance by the members of the general assembly.
21This bill relates to financial institutions, including the
22assets, liabilities, and merger of state banks and state credit
23unions.
24Current law provides that a state bank that has commenced
25business may propose to voluntarily dissolve upon the adoption
26of a plan of dissolution that includes provisions for the
27acquisition of its assets and assumption of its liabilities
28and for the continuance of its business if acquisition is not
29effected. The bill provides that a state bank’s adoption of
30a plan involving the acquisition of its assets or the payment
31or assumption of its liabilities by a credit union shall not
32be deemed sufficient to cause voluntary dissolution of a state
33bank.
34The bill modifies Code section 524.1309 to strike references
35to a state bank continuing as a limited liability company after
-6-1ceasing to carry on the business of banking.
2Current law provides that a state bank that has commenced
3business may propose to cease carrying on the business of
4banking and become a corporation subject to Code chapter 490
5upon the adoption of a plan that includes provisions for the
6acquisition of its assets and assumption of its liabilities
7and for the continuance of its business if acquisition is not
8effected. The bill provides that a state bank’s adoption of
9a plan involving the acquisition of its assets or the payment
10or assumption of its liabilities by a credit union shall not
11be deemed sufficient to cause a state bank to cease to carry
12on the business of banking and become a corporation subject to
13Code chapter 490.
14The bill authorizes one or more state banks, out-of-state
15banks, national banks, federal savings associations, and
16corporations, pursuant to a plan of merger and with the
17approval of the superintendent, to merge into a state bank.
18The bill creates new Code section 524.1423, which authorizes
19a state bank, subject to the provisions of Code section
20524.907, to sell or transfer participations. The bill requires
21a state bank to provide a written notice and application for
22approval to the superintendent of banking not less than 30
23days prior to completion of the proposed sale or transfer if
24the state bank proposes to sell or transfer greater than or
25equal to 25 percent of the total value of its participations
26to a credit union chartered under state or federal law. The
27bill also requires a state bank to provide a written notice and
28application for approval to the superintendent not less than
2930 days prior to completion of a proposed sale or transfer of
30its real property assets if the state bank proposes to sell
31or transfer greater than or equal to 25 percent of its real
32property assets to a credit union chartered under state or
33federal law or real property containing a bank office or any
34other physical location of the state bank.
35The bill authorizes the superintendent to approve a sale
-7-1or transfer of a state bank’s participations or real property
2assets if the superintendent makes certain determinations
3enumerated in the bill.
4The bill prohibits a state credit union from merging with,
5purchasing the assets of, or assuming the liabilities of a
6bank, a federally chartered savings bank, or a federally
7chartered savings association, except as provided in new Code
8section 524.1423.
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