Bills › 89th General Assembly
Where it is now
- Done: IntroducedFebruary 23, 2021
- Done: SubcommitteeFebruary 24, 2021
- Done: Senate committeeMarch 3, 2021
- Skipped: Passes the SenateContinued as SF 530
- Next: House committee
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Became SF 530 → Its progress continues under the new number. Go to SF 530 What’s a funnel?
What’s in it
AI summary State banks and credit unions will have new rules for how they merge or trade assets like property and loans. Under these changes, a state bank won't automatically close just because a credit union takes over its assets or debts. The superintendent of banking will also have more authority to approve certain sales and transfers between these financial institutions.1
Read the official explanation
This bill relates to financial institutions, including the assets, liabilities, and merger of state banks and state credit unions. Current law provides that a state bank that has commenced business may propose to voluntarily dissolve upon the adoption of a plan of dissolution that includes provisions for the acquisition of its assets and assumption of its liabilities and for the continuance of its business if acquisition is not effected. The bill provides that a state bank’s adoption of a plan involving the acquisition of its assets or the payment or assumption of its liabilities by a credit union shall not be deemed sufficient to cause voluntary dissolution of a state bank. _____ ceasing to carry on the business of banking. Current law provides that a state bank that has commenced business may propose to cease carrying on the business of banking and become a corporation subject to Code chapter 490 upon the adoption of a plan that includes provisions for the acquisition of its assets and assumption of its liabilities and for the continuance of its business if acquisition is not effected. The bill provides that a state bank’s adoption of a plan involving the acquisition of its assets or the payment or assumption of its liabilities by a credit union shall not be deemed sufficient to cause a state bank to cease to carry on the business of banking and become a corporation subject to Code chapter 490. The bill authorizes one or more state banks, out-of-state banks, national banks, federal savings associations, and corporations, pursuant to a plan of merger and with the approval of the superintendent, to merge into a state bank.907, to sell or transfer participations. The bill requires a state bank to provide a written notice and application for approval to the superintendent of banking not less than days prior to completion of the proposed sale or transfer if the state bank proposes to sell or transfer greater than or equal to percent of the total value of its participations to a credit union chartered under state or federal law. The bill also requires a state bank to provide a written notice and application for approval to the superintendent not less than days prior to completion of a proposed sale or transfer of its real property assets if the state bank proposes to sell or transfer greater than or equal to percent of its real property assets to a credit union chartered under state or federal law or real property containing a bank office or any other physical location of the state bank. _____ or transfer of a state bank’s participations or real property assets if the superintendent makes certain determinations enumerated in the bill.1423.
Senate subcommittee
Named February 24, 2021. On March 1, 2021 it recommended passage.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary This bill limits how state banks and credit unions can merge or sell assets to one another. The full fiscal impact to the Commerce Revolving Fund cannot be determined, but the revenue decrease to that fund is estimated to be at least $280,000 due to one identified credit union converting to a federal charter. The decrease to the General Fund, cities, and counties from lost tax payments cannot be determined.3
Read the fiscal note
Description
Senate File 530 relates to financial institutions, including the assets, liabilities, and merger of State banks and State credit unions. The Bill makes the following changes:
- Prohibits a State bank from selling assets or liabilities to a State-chartered or federally chartered credit union as part of a plan for voluntary dissolution or transition to an Iowa Code chapter 490 corporation.
- Prohibits a bank from merging with a State-chartered or federally chartered credit union.
- Prohibits a State bank from selling assets and liabilities to a State-chartered or federally chartered credit union, or an associated organization, except for loan participations and real property.
- Authorizes a State bank to sell a portion of its assets and liabilities to a bank or other entity.
- Limits the authority of a State bank to sell loan participations or real property equal to or exceeding 25.0% of the value of the categorical assets to a State-chartered or federally chartered credit union. If the sale constitutes 25.0% of the value of the bank’s loan participations or any of the bank’s real property, and the sale is to a State-chartered or federally chartered credit union, the bank is required to submit an application to the Superintendent of Banking no less than 30 days prior to the sale.
- Limits the ability of a State-chartered credit union to merge with or purchase any assets or liabilities of a federally chartered, State-chartered, or out-of-state bank, except where authorized.
- Establishes a new prohibition on any sales other than loan participations and real property to State-chartered or federally chartered credit unions.
Background
At the end of FY 2020, one State-chartered credit union converted to a federally chartered credit union. In FY 2020, this credit union paid $127,000 in assessments to the Iowa Credit Union Division (5.7% of all Credit Union Division fees collected in FY 2020). These fees were deposited into the Commerce Revolving Fund. State-chartered credit unions converting to federally chartered credit unions are not required to pay assessments to the Iowa Credit Union Division or to remit moneys and credits tax payments to the State of Iowa. The moneys and credits tax on State credit unions is assessed at a rate of 0.5% on each dollar of the legal and special reserves that credit unions are required to maintain under Iowa Code section 533.303. Each State credit union receives an exemption in the amount of $40,000. The State share of moneys and credits tax payments remitted by credit unions is collected by the Iowa Department of Revenue and is deposited into the General Fund. Cities and counties also receive a percentage (30.0% and 20.0%, respectively) of the moneys and credits tax payments collected.
The table below shows the State share of moneys and credits tax payments remitted by credit unions for the past five fiscal years.
Moneys and Credits Tax Payments
Deposited into General Fund
FY 2016 – FY 2020
Assumptions
- At least one State-chartered credit union has been identified that will convert to a federally chartered credit union. This credit union paid $282,000 in assessments to the Iowa Credit Union Division (12.7% of all Credit Union Division fees collected in FY 2020).
- A State-chartered credit union can convert to a federally chartered credit union in one fiscal year. If a credit union does not convert until the end of a fiscal year, the Credit Union Division can collect the full assessment owed to the Division.
Fiscal Impact
The full fiscal impact to the Commerce Revolving Fund cannot be determined as it is not possible to estimate how many State-chartered credit unions will convert to federally chartered credit unions as a result of the Bill. The revenue decrease to the Fund is estimated to be at least $280,000 due to the one identified State-chartered credit union that will convert to a federally chartered credit union. Additionally, the decrease to the General Fund, cities, and counties due to the loss in moneys and credits tax payments cannot be determined as legal and special reserves required to be maintained by State credit unions vary by credit union.
Sources
- I/3 State Accounting System
- LSA Fee Project
- Iowa Credit Union Division, Department of Commerce
- Credit Union Acquisition of Bank Assets · March 22, 2021 · $280,000
Iowa Code it changes
Creates§524.1423
Lobbying
3 for · 4 against · 3 undecided · Who →
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89th General Assembly