Iowa agricultural bankers can boost their lending on some kinds of loans as part of a revamped Iowa banking code.
Among other things, the revised code, which was passed by the state Legislature last week, increases overall lending limits for state-chartered banks and expands agricultural lending opportunities.
Of the state's 440 state-chartered banks, 434 will have a higher general lending limit under the new code, according to the state banking department.
"What's happening in Iowa (is that) farming units are getting larger and larger," said Iowa Superintendent of Banking Richard H. Buenneke. "Just the cost of putting crops in is higher and higher. Banks need a larger lending limit."
The Iowa bank code revision follows on the heals of about 15 other states that have revised their code in the last five years, said James B. Watt, president of the Conference of State Bank Supervisors.
"It looks to us like it's going to be a continuing project," he said.
The Iowa revision - the first in 26 years - would allow state banks to lend up to 15% of their aggregate capital, defined as common and preferred stock, surplus, undivided profits, and loan-loss reserves.
Further, banks will be able use another 10% of aggregate capital to make loans on breeder livestock, on top of the 15% general lending limit. State banks already had expanded feeder livestock lending limits.
The new loan-limit rules for breeder livestock came about in part because many banks had already been violating the old loan limit anyway, Mr. Buenneke said.
The increase will help $80 million-asset Iowa State Bank & Trust Co., Fairfield, said Jon Simplot, senior vice president.
"We have a couple large cow-calf operators that do bump our lending limit," he said. "I can think of three loans we are currently participating out and we wouldn't have to participate those out anymore."
Although Troy Broers, ag loan officer at $145 million-asset American State Bank in Sioux Center, said the higher breeder livestock limit won't affect his bank much, he explained how similar increases have boosted business.
Because of a previous loan-limit increase in lending for feeder livestock, "On purchase price livestock, we've been able to retain more of the loans in our bank," Mr. Broers said.
The bank code revision awaits the governor's signature and would become effective on July 1.