On July 1, the most significant change in the Iowa banking legal landscape in a generation occurred when new amendments to Iowa Code Chapter 524 went into effect. Over the next few weeks, Dickinson Law will cover some of the most significant changes and how they affect Iowa banks.
In the 2022 Iowa legislative session, Senate Docket 586 passed. It provides for a comprehensive review and modernization of the Iowa Banking Law (the “Law”), Chapter 524 of the Iowa Code. The provisions of the bill entered into force on July 1, 2022.
This blog is part of an ongoing series of blog posts from our firm that will dig deeper into some of the notable changes to the law. This series correlates with the Iowa Division of Banking (“IDOB”) letter sent to interested parties outlining some of the key changes.
The law contains many substantial revisions, including changes that reduce the regulatory burden on Iowa banks. Fortunately, the amendment discussed in this blog will not only make life for Iowa bankers a little easier, but will contribute to the continued success of Iowa’s banking industry.
AMENDMENTS PROVIDING REGULATORY RELIEF
The law has always included various regulatory reporting obligations for Iowa banks, but under the revised law, the regulatory burden on banks is now expected to be reduced.
For example, state banks are now only required to submit a call report to federal regulators and will not be required to provide a separate call report to the IDOB or complete the report signature page. IDOB call on request. Because of this change, the superintendent may rely on a condition statement that a state bank submits to the FDIC or the Federal Reserve System.
In order to provide regulatory relief, the requirement for state banks to provide the Superintendent with a summary of significant audit findings after the state bank has conducted its annual internal audit has been removed. The obligation for banks to perform and retain this audit remains and banks should be prepared to provide the report to IDOB examiners if the examiners deem it necessary to do so.
Iowa banks can now enter into contracts or arrangements with shareholders or any other affiliates to pay for management or financial services without the superintendent’s prior approval. However, the law inserts a new provision that specifies that fees paid to the shareholder or affiliates must comply with Sections 23A and 23B of the Federal Reserve Act, which impose restrictions on lending by a bank, asset purchases and certain other transactions with , affiliates. The Superintendent still has the authority to review fees paid to affiliated banks to determine if they are reasonable.
Some of the regulatory burdens on a bank’s operations are now also reduced. The enacted legislation reflects the modern ability of bank officers to effectively monitor remote offices by removing the requirement that a bank officer or office manager be physically present at each bank office during the majority of its working hours. opening. Due to modern technology and changes in data processing and record keeping, the Act also removes the requirement that the functions of central executive and official business and the keeping of principal records should only be exercised only at the principal place of business of the state bank or at another office of the bank authorized by the superintendent. . You should anticipate more advice in the area of remote work in the future.
The bill also removes the requirement to have the principal establishment of a state bank within a municipal corporation due to the understanding and encouragement of banks seeking to maintain a physical presence in smaller towns and rural communities in Iowa. In a related change, a state bank is no longer required to issue a notice of a proposed change in the location of the principal establishment and the Superintendent now has a shortened time limit from 180 days to 90 days to approve or disapprove the location move request.
Overall, these revisions are intended to modernize Iowa’s banking law, which had not been thoroughly reviewed since the mid-1990s. In the next installment of the blog series, our cabinet will discuss some key changes to IDOB’s regulatory authority.
