February 27, 1992
Superintendent of Banking Interpretive Bulletin #8
TO THE CHIEF EXECUTIVE OFFICER OF THE STATE CHARTERED BANK ADDRESSED:
RE: Trust Production Facilities
The Office of the Superintendent of Banking has recently received inquiries asking whether the Superintendent has the discretion under his supervisory powers to authorize state chartered banks to establish and operate trust production facilities (TPF) at any geographic location in the state of Iowa. Such trust production facilities would be performing limited functions which would not include performing any core banking functions (deposit taking, paying checks, or lending money).
As you were previously informed by Superintendent of Banking Interpretive Bulletin #3 of April 7, 1988, the Superintendent of Banking has the discretion under his supervisory powers to authorize state chartered banks to establish loan production facilities at any geographic location in the state of Iowa. Such loan production offices were neither explicitly authorized or prohibited under the Iowa banking law.
Trust production facilities also are neither explicitly authorized or prohibited under Iowa banking law. However, Iowa Code Sections 524.1007(1) and 524.1008(1) require that a continuing servicing facility be maintained for transferred fiduciary accounts on the premises of the transferring bank which could be interpreted as indirect statutory authority for establishment of trust production facilities.
Therefore, seeing no basic difference from the establishment of limited trust production facilities from previously authorized limited loan production facilities, such trust production facilities are authorized for state chartered banks as long as they only perform the following limited activities:
1) Development of new and enhancement of existing trust relationships.
2) Interviewing, counseling, and providing information to potential applicants, on establishment of a trust.
3) Preparation of trust correspondence.
4) Retrieving customer account information through an on-line personal computer.
5) Advertising which discloses the nature and limitations of the trust production facility.
A trust production facility is prohibited from engaging in core banking functions and conducting the following activities, including, but not limited to, the following:
1) Taking deposits, making loans, paying checks or drafts, or conducting general banking services.
2) Approving or drafting documents establishing a trust.
3) Disbursing trust funds.
4) Accepting trust payments.
5) Providing forms or counseling customers on opening new banking services accounts.
6) Advertising which states or implies that trust production facilities provide more than the limited trust services authorized herein.
7) Purchase or sale of assets in trust accounts.
All processing of trust activities, handling of securities, disbursement of funds, and related activities normally performed by a trust department for its customers are to be handled through the main banking facility or authorized bank office and not at the trust production facility. Original trust recordkeeping functions shall not be located at the trust production facility.
A trust production facility that complies with the requirements of this interpretive bulletin will not be considered an authorized bank office under Iowa Code 524.1201 (1991) and, therefore, will not be subject to its restrictions on location or number. Upon 30-day prior notification to this office, a state chartered bank may establish such a facility. The Office of the Superintendent reserves the right to prohibit the establishment of such a facility by a state chartered bank on a case-by-case basis if such establishment would constitute an unsafe and unsound banking practice.
Sincerely yours,
R. H. Buenneke
Superintendent of Banking
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