Bill Summary – FastDemocracy

Fiscal Note
                                        Fiscal Services Division
SF 530 – Credit Union Acquisition of Bank Assets (LSB2079SV)
Staff Contact: Angel Banks-Adams (515.281.6301) angel.banks-adams@legis.iowa.gov
Fiscal Note Version – New
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.
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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
      Fiscal Year     FY 2016      FY 2017      FY 2018      FY 2019                      FY 2020
      Deposit         $ 826,541   $ 735,574    $ 960,956   $ 1,312,605                  $ 2,836,664
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
                                                                        /s/ Holly M. Lyons
                                                                          March 22, 2021
Doc ID 1216184
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
                                            www.legis.iowa.gov
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Statutes affected: 
Introduced: 524.1303