Blog Series: New Law Impacts Requirements for Bank Mergers and Dissolutions
Posted on 07/20/2022 at 11:54 AM by Amy Plummer
On July 1, the most significant change to the legal landscape for Iowa banks in a generation occurred when new amendments to Iowa Code Chapter 524 became effective. For the next several weeks, Dickinson Law will cover some of the most significant changes and how they affect Iowa banks.
Earlier this year the Iowa legislature passed SF 586 to modernize the Iowa Banking Act. The provisions, which became effective July 1, 2022, have numerous implications for banks across Iowa and of significance are the changes surrounding bank mergers and dissolutions.
One goal of the bill was to update law surrounding interstate banking. The legislature accomplished this through changes regarding mergers with out-of-state banks. Chapter 524 now grants explicit approval to out-of-state banks to be party to Iowa mergers and vice versa. Similarly, the bill now states out-of-state banks and federally charted credit unions are among the entities that may convert into a state bank. An additional change is the inclusion of out-of-state banks to the requirement that banks must identify their legal name on customer interfaces. Moreover, the bill removes distinctions between the process of creating a new bank office in state and creating one out of state. By removing some of the prior red-tape on mergers with out-of-state banks, the law now more clearly reflects the growing trend of inter-state banking.
Another notable change affects the criteria for approval of bank mergers by the Superintendent of Banking. Section 524.1403 has always required the Superintendent of Banking to consider “the convenience and needs of the area primarily to be served by the resulting state bank.” Now, however, its importance is emphasized by the addition of specific criteria, including, “the resulting state bank’s plans to accept deposits from, lend money in, and process payments in the area primarily to be served by the resulting state bank.”
Additionally, both mergers and voluntary dissolution no longer require newspaper publication. With this change, the legislature acknowledges banks’ increasingly popular digital presence—realistically, people are now much more likely to find the information online than they are to read it in a newspaper notice. There are also some other instances where the new bill either removed the notice requirement altogether or lessened the number of publications required.
The bill also provides that banks no longer need to file their corporate filings with their county recorder. Instead, the only required filing location is the Iowa Secretary of State. And lastly, the process of voluntary dissolution and conversion to a business corporation was clarified to specifically state that a bank must provide the Superintendent of Banking with articles of intent to be subject to chapter 490 immediately upon the adoption of a plan to do so, and that the entity immediately ceases to be a bank once the Superintendent of Banking files of the articles of intent.
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