524.901 Investments. 1. For purposes of this section, unless the context otherwise requires:a. 'Investment securities' means marketable obligations in the form of bonds, notes, or debentures which have been publicly offered, are of sound value, or are secured so asto be readily marketable at a fair value, and are within the four highest grades accordingto a reputable rating service or represent unrated issues of equivalent value. 'Investmentsecurities' does not include investments which are predominately speculative in nature. b. 'Shares' means proprietary units of ownership of a corporation.2. A state bank shall not invest for its own account more than fifteen percent of its aggregate capital in investment securities of any one obligor. The par value of the investmentsecurities shall be used to determine the amount that may be invested under this subsection,and any premium paid by a state bank for any investment securities shall not be included indetermining the amount that may be invested under this subsection. 3. Subject only to the exercise of prudent banking judgment, a state bank may invest for its own account without regard to the limitation provided in subsection 2 in any vested under this subsection. 3. Subject only to the exercise of prudent banking judgment, a state bank may invest for its own account without regard to the limitation provided in subsection 2 in any of the following: a. Investment securities of the United States of which the payment of principal and interest is fully and unconditionally guaranteed by the United States. b. Investment securities issued, insured, or guaranteed by a department or an agency of the United States government, provided that the securities, insurance, or guarantee commitsthe full faith and credit of the United States for the repayment of the securities. c. Investment securities of the federal national mortgage association or the association’s successor. d. Investment securities of the federal home loan mortgage corporation or the corporation’s successor. e. Investment securities of the student loan marketing association or the association’s successor. f. Investment securities of a federal home loan bank. g. Investment securities of a farm credit bank.h. Investment securities representing general obligations of the state of Iowa or of political subdivisions of the state. 4. f a federal home loan bank. g. Investment securities of a farm credit bank.h. Investment securities representing general obligations of the state of Iowa or of political subdivisions of the state. 4. A state bank may invest without limit in the shares or units of investment companies or investment trusts registered under the federal Investment Company Act of 1940, 15U.S.C. §80a-1 et seq., the portfolio of which is limited to United States investment securitiesdescribed in subsection 3 or repurchase agreements fully collateralized by United Statesinvestment securities described in subsection 3, if delivery of the collateral is taken eitherdirectly or through an authorized custodian and the dollar-weighted average maturity ofthe portfolio is not more than five years. All other investments by a state bank in theshares or units of investment companies or investment trusts registered under the federalInvestment Company Act of 1940, 15 U.S.C. §80a-1 et seq., whose portfolios exclusivelycontain investment securities permissible pursuant to subsections 2 and 3, shall not exceedfifteen percent of the state bank’s aggregate capital. 5. U.S.C. §80a-1 et seq., whose portfolios exclusivelycontain investment securities permissible pursuant to subsections 2 and 3, shall not exceedfifteen percent of the state bank’s aggregate capital. 5. To the extent necessary to meet minimum membership or participation criteria, a state bank may invest for its own account in the shares of the appropriate federal reservebank, the appropriate federal home loan bank, the federal national agricultural mortgagecorporation or corporations engaged solely in the pooling of agricultural loans for federalagricultural mortgage corporation guarantees, and other similar investments acceptable tothe superintendent and approved in writing by the superintendent. The bank’s investmentin the shares of each of the organizations is limited to fifteen percent of its aggregatecapital or a higher amount as approved by the superintendent. Notwithstanding the specificrequirements of this section, any shares of government-sponsored entities held by a statebank on or before July 1, 1995, shall be authorized. 6. A state bank, upon the approval of the superintendent, may acquire and hold the shares of any corporation which a state bank is authorized to acquire n or before July 1, 1995, shall be authorized. 6. A state bank, upon the approval of the superintendent, may acquire and hold the shares of any corporation which a state bank is authorized to acquire and hold pursuant to thischapter. Sat Dec 23 01:18:02 2023 Iowa Code 2024, Section 524.901 (33, 2) §524.901, BANKS 2 7. a. A state bank, upon the approval of the superintendent, may invest up to five percent of its aggregate capital in the shares or equity interests of any of the following: (1) Economic development corporations organized under chapter 496B to the extent authorized by and subject to the limitations of that chapter. (2) Public welfare investments to the same extent a national bank may invest in such corporations or projects pursuant to 12 U.S.C. §24 and its implementing regulations. (3) Venture capital funds which invest an amount equal to at least fifty percent of a state bank’s investment in small businesses having their principal offices within this state andhaving either more than one-half of their assets within this state or more than one-half oftheir employees employed within this state. l businesses having their principal offices within this state andhaving either more than one-half of their assets within this state or more than one-half oftheir employees employed within this state. (4) Small businesses having a principal office within this state and having either more than one-half of their assets within this state or more than one-half of their employees employedwithin this state. An investment by a state bank in a small business under this subparagraphshall be included with the obligations of the small business to the state bank that are incurredas a result of the exercise by the state bank of the powers conferred in section 524.902 for thepurpose of determining the total obligations of the small business pursuant to section 524.904.A state bank’s equity interest investment in a small business, pursuant to this subparagraph,shall not exceed a twenty percent ownership interest in the small business. (5) Other entities, acceptable to the superintendent, whose sole purpose is to promote economic or civic developments within a community or this state. (6) Tax equity financing transactions in which a state bank provides equity financing to fund a project or sole purpose is to promote economic or civic developments within a community or this state. (6) Tax equity financing transactions in which a state bank provides equity financing to fund a project or projects that generate tax credits or other tax benefits and the equity-basedstructure of the transaction permits the transfer of such tax credits or other tax benefits tothe state bank. A state bank may take a majority financial position in a project, but shall bea passive investor and shall not take a management position. The investment of state bankfunds in a tax credit-generating project are subject to the following restrictions: (a) The state bank shall not participate in the operation of any project or facility resulting from such a transaction or the sale of energy, if any, derived from the project. (b) The state bank shall obtain a legal opinion or otherwise demonstrate a good-faith determination that the tax credits or other tax benefits are available before engaging in a taxequity financing transaction. (c) The tax credits, tax benefits, or other payments the state bank receives from the transaction shall repay the state bank’s investment and provide the expected rate of quity financing transaction. (c) The tax credits, tax benefits, or other payments the state bank receives from the transaction shall repay the state bank’s investment and provide the expected rate of returnat the time of the investment. (d) Except as provided under subparagraph division (c), the state bank shall not share in any appreciation in value of its interests in the project or in any of the real or personal assetsassociated with the project. b. A state bank’s total investment in any combination of the shares or equity interests of the entities identified in paragraph 'a', subparagraphs (1) through (6) shall be limited totwenty percent of its aggregate capital. c. For purposes of this subsection:(1) The term 'equity interests' means limited partnership interests and other equity interests in which liability is limited to the amount of the investment, but does not meangeneral partnership interests or other interests involving general liability. (2) The term 'public welfare investment' means an investment that primarily benefits low and moderate-income individuals, low and moderate-income areas, or other areas targeted bya governmental entity for redevelopment. welfare investment' means an investment that primarily benefits low and moderate-income individuals, low and moderate-income areas, or other areas targeted bya governmental entity for redevelopment. 'Public welfare investment' includes investmentsthat primarily support any of the types of activities identified in 12 C.F.R. §24.6. 'Publicwelfare investment' includes an investment that would receive consideration under 12 C.F.R.pt. 25 as a qualified investment. 'Public welfare investment' includes an investment in anyof the following areas: (a) A targeted service area as defined in section 8B.1, subsection 13.(b) A small city as defined in section 15.352, subsection 10.(c) An area of the state that is not part of a federally designated standard metropolitan statistical area. (3) The term 'small business' means a corporation, partnership, proprietorship, or other Sat Dec 23 01:18:02 2023 Iowa Code 2024, Section 524.901 (33, 2) entity which meets the appropriate United States small business administration definitionof small business and which is principally engaged in the development or exploitation ofinventions, technological improvements, new processes, or other products not business administration definitionof small business and which is principally engaged in the development or exploitation ofinventions, technological improvements, new processes, or other products not previouslygenerally available in this state, or other investments which provide an economic benefit tothe state. (4) The term 'venture capital fund' means a corporation, partnership, proprietorship, or other entity whose principal business is or will be the making of investments in, and theproviding of significant managerial assistance to, small businesses. 8. A state bank, in the exercise of the powers granted in this chapter, may purchase cash value life insurance contracts which may include provisions for the lump sum payment ofpremiums and which may include insurance against the loss of the lump sum payment. Statebanks may only purchase cash value life insurance contracts if the contract is tied to anemployee benefit the state bank is obligated to pay. The cash value life insurance contracts,together with the investment in annuity contracts authorized in subsection 9, purchased fromany one company shall not exceed fifteen percent of aggregate capital of the state bank,and in the ontracts,together with the investment in annuity contracts authorized in subsection 9, purchased fromany one company shall not exceed fifteen percent of aggregate capital of the state bank,and in the aggregate from all companies, together with the investment in annuity contractsauthorized in subsection 9, shall not exceed twenty-five percent of aggregate capital of thestate bank unless the state bank has obtained the approval of the superintendent prior tothe purchase of any cash value life insurance contract in excess of this limitation. Purchaseand sale of such contracts shall be conducted in accordance with safe and sound bankingpractices. 9. A state bank, in the exercise of the powers granted in this chapter, may purchase annuity contracts so long as the annuity contract is tied to an employee benefit the statebank is obligated to pay. The total investment in annuity contracts purchased from any onecompany, together with the cash value of life insurance contracts authorized in subsection 8,shall not exceed fifteen percent of aggregate capital of the state bank, and in the aggregatefrom all companies, together with the cash value of life insurance contracts authorized ed in subsection 8,shall not exceed fifteen percent of aggregate capital of the state bank, and in the aggregatefrom all companies, together with the cash value of life insurance contracts authorized insubsection 8, shall not exceed twenty-five percent of aggregate capital of the state bankunless the state bank has obtained the approval of the superintendent prior to the purchaseof any cash value life insurance contract in excess of this limitation. Purchase and sale ofsuch contracts shall be conducted in accordance with safe and sound banking practices. 10. A state bank may invest without limitation for its own account in futures, forward, and standby contracts to purchase and sell any of the instruments a state bank is authorizedto purchase and sell, subject to the prior approval of the superintendent and pursuant toapplicable federal laws and regulations governing such contracts. Purchase and sale ofsuch contracts shall be conducted in accordance with safe and sound banking practices andwith the level of the activity being reasonably related to the state bank’s business needs andcapacity to fulfill its obligations under the contracts. 11. nce with safe and sound banking practices andwith the level of the activity being reasonably related to the state bank’s business needs andcapacity to fulfill its obligations under the contracts. 11. A state bank, upon the approval of the superintendent, may invest in the shares or equity interests of any corporation or other entity which develops or utilizes new or innovativetechnologies that are or may be applicable to the provision of banking or other financialproducts or services, including the covered services identified in section 524.218, subsection2. A state bank’s total investment in any combination of shares or equity interests of theentities identified in this paragraph shall not exceed five percent of its aggregate capital. [C97, §1844, 1850; S13, §1850; SS15, §1889-o; C24, 27, 31, 35, 39, §9162, 9183, 9269, 9271; C46, 50, 54, 58, 62, 66, §526.7, 526.25, 528.15, 528.67, 528.70; C71, 73, 75, 77, 79, 81, §524.901;81 Acts, ch 173, §10; 82 Acts, ch 1017, §1, 2] 83 Acts, ch 124, §14, 15; 83 Acts, ch 152, §1; 85 Acts, ch 136, §3; 85 Acts, ch 252, §35; 87 Acts, ch 171, §15 – 19; 88 Acts, ch 1075, §1; 89 Acts, ch 49, §1; 89 Acts, ch 257, §10 – 15; 91 Acts, ch220, §5, 6; 94 124, §14, 15; 83 Acts, ch 152, §1; 85 Acts, ch 136, §3; 85 Acts, ch 252, §35; 87 Acts, ch 171, §15 – 19; 88 Acts, ch 1075, §1; 89 Acts, ch 49, §1; 89 Acts, ch 257, §10 – 15; 91 Acts, ch220, §5, 6; 94 Acts, ch 1140, §1, 2; 95 Acts, ch 148, §88; 2010 Acts, ch 1028, §11; 2012 Acts, ch1023, §135; 2014 Acts, ch 1092, §188; 2022 Acts, ch 1062, §80 – 84; 2023 Acts, ch 29, §4 – 6 Referred to in §12C.22, 524.802, 524.904, 524.907, 524.1002, 524.1602, 536A.25Subsection 7, paragraph a, NEW subparagraph (6)Subsection 7, paragraph b amendedSubsection 12 stricken Sat Dec 23 01:18:02 2023 Iowa Code 2024, Section 524.901 (33, 2)
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