Senate Study Bill 1021 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF COMMERCE/BANKING DIVISION BILL) A BILL FOR An Act relating to matters under the purview of the banking 1 division of the department of commerce, including 2 permissible investments, notice requirements, and 3 requirements for a person obtaining control of a state bank. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1189XD (6) 90 es/rn

S.F. _____ H.F. _____ Section 1. Section 524.533, subsection 1, Code 2023, is 1 amended to read as follows: 2 1. Written notice stating the place, day, and hour of a 3 meeting of the shareholders and, in case of a special meeting, 4 the purpose or purposes for which the meeting is called, shall 5 be delivered not less than ten nor more than sixty days before 6 the date of the meeting, either personally or by mail, by or 7 at the direction of the president, the cashier, or the officer 8 or persons calling the meeting, to each shareholder of record 9 entitled to vote at the meeting. If mailed, the notice is 10 deemed to be delivered when deposited in the United States mail 11 addressed to the shareholder at the shareholder’s address as 12 it appears on the stock transfer books of the state bank with 13 postage prepaid. As used in this section , the term “notice” 14 means as defined in section 490.141 . The written notice 15 required by this section may be given by any method of delivery 16 that is permitted in section 490.141, and the notice shall 17 be deemed to be delivered when the notice becomes effective 18 pursuant to section 490.141, subsection 9. 19 Sec. 2. Section 524.544, subsection 1, Code 2023, is amended 20 to read as follows: 21 1. Whenever any person proposes to purchase or otherwise 22 acquire directly or indirectly any of the outstanding shares 23 of a state bank, and the proposed purchase or acquisition 24 would result in control or in a change in control of the 25 state bank, the person proposing to purchase or acquire the 26 shares shall first apply in writing to the superintendent 27 for a certificate of approval for the proposed change of 28 control. The superintendent shall grant the certificate if 29 the superintendent is satisfied that the person who proposes 30 to obtain control of the state bank is qualified by character, 31 experience, and financial responsibility to control and operate 32 the state bank in a sound and legal manner, and that the 33 interests of the depositors, creditors, and shareholders of 34 the state bank, and of the public generally , particularly the 35 -1- LSB 1189XD (6) 90 es/rn 1/ 4

S.F. _____ H.F. _____ state bank’s plans to accept deposits from, lend money in, and 1 process payments in the area the state bank primarily serves , 2 will not be jeopardized by the proposed change of control. A 3 person which will become a bank holding company upon completion 4 of an acquisition shall make application to the superintendent 5 for a certificate of approval as provided in this section . 6 Any other bank holding company shall comply with section 7 524.1804 in lieu of seeking a certificate of approval under 8 this section . In any situation where the president or cashier 9 of a state bank has reason to believe any of the foregoing 10 requirements have not been complied with, it shall be the duty 11 of the president or cashier to promptly report in writing such 12 facts to the superintendent upon obtaining knowledge thereof. 13 Sec. 3. Section 524.607, subsection 2, Code 2023, is amended 14 to read as follows: 15 2. A special meeting may be called by any executive officer 16 or a director. Notice of a meeting shall be given to each 17 director , either personally or by mail, at least two days in 18 advance of the meeting. Notice of a regular meeting shall 19 not be required if the articles of incorporation, bylaws, or 20 a resolution of the board of directors provide for a regular 21 monthly meeting date. As used in this section , the term 22 “notice” means as defined in section 490.141 . The written 23 notice required by this section may be given by any method of 24 delivery that is permitted in section 490.141, and the notice 25 is deemed to be delivered when the notice becomes effective 26 pursuant to section 490.141, subsection 9. 27 Sec. 4. Section 524.901, subsection 7, paragraph a, Code 28 2023, is amended by adding the following new subparagraph: 29 NEW SUBPARAGRAPH . (6) Tax equity financing transactions in 30 which a state bank provides equity financing to fund a project 31 or projects that generate tax credits or other tax benefits 32 and the equity-based structure of the transaction permits the 33 transfer of such tax credits or other tax benefits to the state 34 bank. A state bank may take a majority financial position in 35 -2- LSB 1189XD (6) 90 es/rn 2/ 4

S.F. _____ H.F. _____ a project, but shall be a passive investor and shall not take 1 a management position. The investment of state bank funds in 2 a tax credit-generating project are subject to the following 3 restrictions: 4 (a) The state bank shall not participate in the operation of 5 any project or facility resulting from such a transaction or 6 the sale of energy, if any, derived from the project. 7 (b) The state bank shall obtain a legal opinion or otherwise 8 demonstrate a good-faith determination that the tax credits 9 or other tax benefits are available before engaging in a tax 10 equity financing transaction. 11 (c) The tax credits, tax benefits, or other payments the 12 state bank receives from the transaction shall repay the state 13 bank’s investment and provide the expected rate of return at 14 the time of the investment. 15 (d) Except as provided under subparagraph division (c), 16 the state bank shall not share in any appreciation in value of 17 its interests in the project or in any of the real or personal 18 assets associated with the project. 19 Sec. 5. Section 524.901, subsection 7, paragraph b, Code 20 2023, is amended to read as follows: 21 b. A state bank’s total investment in any combination of 22 the shares or equity interests of the entities identified in 23 paragraph “a” , subparagraphs (1) through (5) (6) shall be 24 limited to fifteen twenty percent of its aggregate capital. 25 Sec. 6. Section 524.1308A, subsection 5, Code 2023, is 26 amended to read as follows: 27 5. As used in this section , the term “notice” means as 28 defined in section 490.141 . The written notice required by 29 subsection 2 may be given by any method of delivery that is 30 permitted in section 490.141, and the notice is deemed to be 31 delivered when the notice becomes effective pursuant to section 32 490.141, subsection 9. 33 Sec. 7. REPEAL. Section 524.901, subsection 11, Code 2023, 34 is repealed. 35 -3- LSB 1189XD (6) 90 es/rn 3/ 4

S.F. _____ H.F. _____ EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill relates to matters under the purview of the banking 4 division of the department of commerce, including permissible 5 investments, notice requirements, and requirements for a person 6 obtaining control of a state bank. 7 The bill deletes requirements for notice to be delivered 8 personally or by mail for specified meetings and dissolution 9 proceedings and instead provides that notice may be given by 10 any method allowed, and shall be deemed effective as provided 11 in Code section 490.141. 12 The bill provides that a person obtaining control of a state 13 bank shall not jeopardize the interests of the bank, including 14 the state bank’s plans to accept deposits, lend money, and 15 process payments in the area that the state bank primarily 16 serves. 17 The bill provides that a state bank may invest up to 5 18 percent of its aggregate capital in tax equity financing 19 transactions that fund projects that generate tax credits. The 20 state bank shall be a passive investor in the project but may 21 take a majority financial position. The investment in a tax 22 credit project is subject to certain restrictions, including 23 that the state bank shall repay the bank’s investment and 24 provide the expected rate of return. 25 The bill provides that the state bank’s total investment 26 in investment options provided in Code section 524.901(7)(a) 27 shall be limited to 20 percent of the bank’s aggregate capital. 28 Current law provides that a bank is limited to 15 percent of 29 the bank’s aggregate capital. 30 The bill repeals Code section 524.901(11), which allows a 31 state bank to invest up to 5 percent of its aggregate capital 32 in innovative financial technology products or services. 33 -4- LSB 1189XD (6) 90 es/rn 4/ 4