Opinion ID: 1929184
Heading Depth: 1
Heading Rank: 5

Heading: Banking Superintendent's Approval of Book-Value Payment.

Text: We address one additional issue before we turn to the parties' challenges to the trial court's appraisal of the dissenters' stock. The banks criticize the trial court's refusal to give any weight to the banking superintendent's approval of the banks' proposal to pay the dissenters the book value of their shares. The trial court had two reasons for ignoring the superintendent's decision: (1) the superintendent was given limited documentation from the banks prior to his review and approval; and (2) the superintendent was required to satisfy himself that the payment was reasonable, not that it represented the fair value of the stock. Under Iowa law, the banking superintendent must review and approve the proposed reverse stock split before the majority can effect its action. Iowa Code § 524.106; Iowa Admin. Code r. 187-2.7. The Code requires the superintendent to review the proposed action to make certain it will not prejudice the interests of the depositors. See Iowa Code § 524.1505(1). Consequently, the superintendent's purpose is to ensure the corporation does not pay too much for the dissenter's shares, not too little. In addition, the standard factors to be considered in the reasonableness determination are considerably fewer than in the standard appraisal action. Compare Iowa Admin. Code r. 187-2.7(3)(c) with Sieg, 512 N.W.2d at 279. More importantly, the superintendent's regulations allow him to consider the total number of shares to be surrendered in evaluating the reasonableness of the proposed payment. Iowa Admin. Code r. 187-2.7(3)(c)(5). As noted above, this factor cannot be considered in a fair value determination. Under chapter 490, the district court's jurisdiction to determine fair value is plenary and exclusive. Iowa Code § 490.1330(4). The appraisal action bears little relationship to the administrative action that precedes it; the appraisal action is not a review of the agency determination of reasonableness. We agree with the trial court that the banking superintendent's determination that the proposed price to be paid to dissenting shareholders is reasonable is irrelevant to a determination of fair value. See Iowa R. Evid. 401. Whether a price is reasonable from the perspective of the depositors of an institution is not the same as whether the price represents a fair value which will protect the interests of the dissenting shareholders. Not only do the focuses of the superintendent and the court differ, the factors they consider and the amount of information presented to them differ as well. Therefore, the trial court correctly gave the superintendent's approval of the price no weight in its appraisal of fair value.