IIA

103D CONGRESS

2D SESSION H. R. 3841

IN THE SENATE OF THE UNITED STATES

MARCH 23 (legislative day, FEBRUARY 22), 1994

Received; read twice and referred to the Committee on Banking, Housing, and

Urban Affairs

AN ACT

To amend the Bank Holding Company Act of 1956, the

Revised Statutes of the United States, and the Federal

Deposit Insurance Act to provide for interstate banking

and branching.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Interstate Banking Efficiency Act of 1994’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.
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TITLE I—INTERSTATE BANKING AND BRANCHING

Sec. 101. Interstate banking.

Sec. 102. Interstate branching by national banks.

Sec. 103. Interstate branching by State banks.

Sec. 104. Branching by foreign banks.

Sec. 105. Interstate consolidations.

Sec. 106. Branch closures.

Sec. 107. Prohibition against deposit production offices.

Sec. 108. Federal Reserve Board study on bank fees.

Sec. 109. Restatement of existing law.

TITLE II—CRA EVALUATIONS

Sec. 201. State-by-State CRA evaluations of depository institutions with interstate branches.

1 TITLE I—INTERSTATE BANKING

2 AND BRANCHING

3 SEC. 101. INTERSTATE BANKING.

4 (a) INTERSTATE ACQUISITIONS.—Section 3(d) of the

5 Bank Holding Company Act of 1956 (12 U.S.C. 1842(d))

6 is amended to read as follows:

7 ‘‘(d) INTERSTATE ACQUISITIONS.—

8 ‘‘(1) APPROVALS AUTHORIZED.—

9 ‘‘(A) IN GENERAL.—Subject to paragraph

10 (2), the Board may approve an application

11 under this section by a bank holding company

12 to acquire, directly or indirectly, any voting

13 shares of, interest in, or all or substantially all

14 of the assets of any additional bank or any

15 bank holding company located in any State

16 other than the home State of the applicant

17 bank holding company.

18 ‘‘(B) CONCENTRATION LIMITS.—
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1 ‘‘(i) IN GENERAL.—The Board may

2 not approve an application under subpara3 graph (A) if—

4 ‘‘(I) the applicant (including all

5 insured depository institutions which

6 are affiliates of the applicant) con7 trols, or upon completion of the acqui8 sition would control, more than 10

9 percent of the total amount of insured

10 depository institution deposits in the

11 United States; or

12 ‘‘(II) the applicant (including all

13 insured depository institutions which

14 are affiliates of the applicant) con15 trols, or upon completion of the acqui16 sition would control, 30 percent or

17 more of the total amount of insured

18 depository institution deposits in the

19 State in which the bank to be ac20 quired is located.

21 ‘‘(ii) WAIVER BY STATE.—A State

22 may waive the application of clause (i)(II)

23 to an acquisition in such State.

24 ‘‘(2) APPLICABILITY OF STATE LAW TO ACQUI25 SITIONS.—
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1 ‘‘(A) INAPPLICABILITY OF CERTAIN STATE

2 LAWS TO ACQUISITIONS.—Subject to paragraph

3 (3), any acquisition described in paragraph

4 (1)(A) which has been approved under this sec5 tion may be consummated notwithstanding any

6 law of any State that would prohibit or other7 wise limit such acquisition on the basis of—

8 ‘‘(i) the location or size of the acquir9 ing company or any subsidiary of such

10 company;

11 ‘‘(ii) the number of bank subsidiaries

12 of such company; or

13 ‘‘(iii) any other factor that—

14 ‘‘(I) directly or indirectly, has the

15 effect of prohibiting or limiting the

16 acquisition of shares or control of a

17 bank or bank holding company located

18 in such State by an out-of-State bank

19 holding company; and

20 ‘‘(II) is not applied with similar

21 effect with respect to acquisitions of

22 banks or bank holding companies lo23 cated in such State by bank holding

24 companies located in the State.
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1 ‘‘(B) APPLICABILITY OF STATE LAW ON

2 THE FORM OF ACQUISITION.—

3 ‘‘(i) IN GENERAL.—Notwithstanding

4 any other provision of this subsection and

5 subject to clause (ii), any law of a host

6 State which—

7 ‘‘(I) is in existence on the date of

8 the enactment of the Interstate Bank9 ing Efficiency Act of 1994 or is en10 acted after such date; and

11 ‘‘(II) allows an out-of-State bank

12 or bank holding company to establish

13 a bank in the host State only by ac14 quiring an existing bank in the host

15 State,

16 shall apply with respect to the establish17 ment or acquisition of a bank in the host

18 State under this subsection.

19 ‘‘(ii) APPLICABILITY OF PROVISIONS

20 RELATING TO MINIMUM PERIOD OF EXIST21 ENCE OF ACQUIRED BANK.—In the case of

22 any State law referred to in clause (i)

23 which is enacted after the date of the en24 actment of the Interstate Banking Effi25 ciency Act of 1994 and requires the bank
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1 to be acquired to have been in existence

2 (as of the date of the transaction) for a pe3 riod of time greater than 5 years, such law

4 shall be applied under clause (i) by sub5 stituting ‘5-year period’ for such greater

6 period.

7 ‘‘(3) APPLICABILITY OF STATE LAW TO INTER8 STATE BANKING OPERATIONS.—

9 ‘‘(A) STATE TAXATION AUTHORITY NOT

10 AFFECTED.—No provision of this subsection

11 shall be construed as affecting the authority of

12 any State or political subdivision of any State

13 to apply and administer any tax or method of

14 taxation to any bank, bank holding company, or

15 foreign bank, or any affiliate of any bank or

16 bank holding company, to the extent such tax

17 or tax method is otherwise permissible by or

18 under the Constitution of the United States of

19 America or other Federal law.

20 ‘‘(B) APPLICABILITY OF DEPOSIT CAPS

21 AND ANTITRUST LAWS.—No provision of this

22 subsection shall be construed as affecting—

23 ‘‘(i) the authority of any State to limit

24 the percentage of the total amount of in25 sured depository institution deposits in the
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1 State which may be held or controlled by

2 any bank to the extent the application of

3 such limitation does not discriminate

4 against out-of-State banks or bank holding

5 companies; or

6 ‘‘(ii) the applicability of the antitrust

7 laws or any State law which is similar to

8 the antitrust laws.

9 ‘‘(4) DEFINITIONS.—For purposes of this sub10 section, the following definitions shall apply:

11 ‘‘(A) ANTITRUST LAWS.—The term ‘anti12 trust laws’—

13 ‘‘(i) has the same meaning as in sub14 section (a) of the 1st section of the Clay15 ton Act; and

16 ‘‘(ii) includes section 5 of the Federal

17 Trade Commission Act to the extent such

18 section 5 relates to unfair methods of com19 petition.

20 ‘‘(B) DEPOSITS.—The term ‘deposits’ has

21 the same meaning as in section 3(l) of the Fed22 eral Deposit Insurance Act.

23 ‘‘(C) HOME STATE.—The term ‘home

24 State’ means, with respect to a bank holding

25 company, the State in which the total deposits
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1 of all banking subsidiaries of such company

2 were the largest on the later of July 1, 1966,

3 or the date on which the company becomes a

4 bank holding company.

5 ‘‘(D) HOST STATE.—The term ‘host State’

6 means, with respect to a bank holding company

7 acquiring or establishing a bank in a State

8 other than such company’s home State, the

9 State in which the bank being acquired or es10 tablished is located.

11 ‘‘(E) INSURED DEPOSITORY INSTITU12 TION.—The term ‘insured depository institu13 tion’ has the same meaning as in section 3 of

14 the Federal Deposit Insurance Act.

15 ‘‘(F) OUT-OF-STATE BANK HOLDING COM16 PANY.—The term ‘out-of State bank holding

17 company’ means, with respect to any State, a

18 bank holding company the home State of which

19 is another State.’’.

20 (b) SUBSIDIARY DEPOSITORY INSTITUTIONS AS

21 AGENTS.—Section 18 of the Federal Deposit Insurance

22 Act (12 U.S.C. 1828) by adding at the end the following

23 new subsection:

24 ‘‘(q) SUBSIDIARY DEPOSITORY INSTITUTIONS AS

25 AGENTS FOR CERTAIN AFFILIATES.—
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1 ‘‘(1) IN GENERAL.—Any depository institution

2 subsidiary of a depository institution holding com3 pany may receive deposits, renew time deposits, close

4 loans, disburse proceeds of loans, and receive pay5 ments on loans and other obligations as agent for a

6 depository institution affiliate located in another

7 State.

8 ‘‘(2) DEPOSITORY INSTITUTION ACTING AS

9 AGENT IS NOT A BRANCH.—Notwithstanding any

10 other provision of law, a depository institution acting

11 as agent in accordance with paragraph (1) for a de12 pository institution affiliate shall not be considered

13 to be a branch of the affiliate.

14 ‘‘(3) ACTIVITIES AS AGENT.—Paragraph (1)

15 shall not be construed as authorizing a State deposi16 tory institution to engage in activities as an agent

17 in which such institution is not authorized to engage

18 as principal under the laws of the State in which

19 such institution acts as agent.

20 ‘‘(4) PLAN ON MEETING LOCAL CREDIT

21 NEEDS.—

22 ‘‘(A) IN GENERAL.—If a depository insti23 tution holding company controls any depository

24 institution which acts as agent for another de25 pository institution subsidiary of such company
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1 pursuant to paragraph (1), the depository insti2 tution holding company shall file a local credit

3 needs plan with the appropriate Federal bank4 ing agency for the subsidiary which acts as

5 agent before the date on which the subsidiary

6 begins acting as agent.

7 ‘‘(B) LOCAL CREDIT NEEDS PLAN DE8 FINED.—The term ‘local credit needs plan’

9 means a plan for meeting local credit needs in

10 the communities served by any depository insti11 tution subsidiary (of a bank holding company)

12 which acts as agent pursuant to paragraph (1),

13 which includes an estimate of the extent to

14 which the amount of the anticipated savings at15 tributable to the use of depository institution

16 subsidiaries as agents under this subsection will

17 be available to meet such local credit needs.’’.

18 (c) EFFECTIVE DATE.—The amendment made by

19 this section shall apply after the end of the 12-month pe20 riod beginning on the date of the enactment of this Act.

21 SEC. 102. INTERSTATE BRANCHING BY NATIONAL BANKS.

22 Section 5155 of the Revised Statutes (12 U.S.C. 36)

23 is amended—

24 (1) by redesignating subsections (d) through (h)

25 as subsections (g) through (k), respectively;
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1 (2) by inserting after subsection (c) the follow2 ing new subsections:

3 ‘‘(d) INTERSTATE BRANCHING BY NATIONAL

4 BANKS.—

5 ‘‘(1) APPROVALS OF ACQUISITION OF EXISTING

6 BRANCHES AUTHORIZED.—Subject to paragraphs

7 (3) and (4) and subsections (e) and (f), after the

8 end of the 3-year period beginning on the date of the

9 enactment of the Interstate Banking Efficiency Act

10 of 1994, the Comptroller of the Currency may ap11 prove an application to allow a national bank to—

12 ‘‘(A) acquire a bank or branch located out13 side the home State of such bank in a State in

14 which the bank does not maintain a branch;

15 and

16 ‘‘(B) operate such bank or branch (includ17 ing any branch of such bank) as a branch,

18 if the conditions established in paragraph (6) are

19 met.

20 ‘‘(2) STATE ‘OPT-IN’ ELECTION TO PERMIT

21 INTERSTATE BRANCHING THROUGH DE NOVO

22 BRANCHES.—Subject to subsections (e) and (f), the

23 Comptroller of the Currency may approve an appli24 cation by a national bank to establish and operate

25 a de novo branch outside the home State of such
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1 bank in a State in which the bank does not maintain

2 a branch if—

3 ‘‘(A) there is in effect in the host State a

4 law that—

5 ‘‘(i) expressly permits all out-of-State

6 banks to establish de novo branches in

7 such State; and

8 ‘‘(ii) applies equally to national and

9 State banks; and

10 ‘‘(B) the conditions established in para11 graph (6) are met.

12 ‘‘(3) STATE ‘OPT-OUT’ ELECTION TO PROHIBIT

13 INTERSTATE BRANCHING BY ACQUISITION OF EXIST14 ING BANKS.—

15 ‘‘(A) IN GENERAL.—An application by a

16 national bank to establish a branch in a State

17 other than the home State of such bank

18 through the acquisition of an existing bank or

19 branch in the host State may not be approved

20 by the Comptroller of the Currency if there is

21 in effect in the host State a law which—

22 ‘‘(i) expressly prohibits all out-of23 State banks from acquiring a branch lo24 cated in such State through the acquisition
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1 of an existing bank or branch in the host

2 State;

3 ‘‘(ii) was enacted during the period

4 beginning on January 1, 1990, and ending

5 3 years after the date of the enactment of

6 the Interstate Banking Efficiency Act of

7 1994; and

8 ‘‘(iii) applies equally to national and

9 State banks.

10 ‘‘(B) EFFECT OF PROHIBITION.—A na11 tional bank whose home State has in effect a

12 prohibition described in subparagraph (A) may

13 not acquire or establish, under this subsection,

14 a branch located in any other State.

15 ‘‘(4) STATE LAWS REQUIRING MINIMUM PERIOD

16 OF EXISTENCE FOR ACQUISITIONS BY OUT-OF-STATE

17 BANKS.—

18 ‘‘(A) LAWS ENACTED BEFORE INTERSTATE

19 BANKING ACT.—In the case of a State in which

20 a law is in effect which—

21 ‘‘(i) allows an out-of-State bank or

22 bank holding company to establish a bank

23 in the host State only by acquiring a bank

24 or branch (in the host State) which has

25 been in existence for not less than the min-
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1 imum time period specified in such law;

2 and

3 ‘‘(ii) took effect on or before the date

4 of the enactment of the Interstate Banking

5 Efficiency Act of 1994,

6 an out-of-State national bank which has no

7 branch in such State may establish a branch in

8 the State under this subsection only by acquir9 ing a bank or branch which has been in exist10 ence for not less than the minimum time period

11 specified in such law.

12 ‘‘(B) SUBSEQUENT ENACTMENTS.—In the

13 case of a State in which a law is in effect

14 which—

15 ‘‘(i) allows an out-of-State bank or

16 bank holding company to establish a

17 branch in the host State only by acquiring

18 a bank or branch (in the host State) which

19 has been in existence for not less than the

20 minimum time period specified in such law;

21 and

22 ‘‘(ii) took effect after the date of the

23 enactment of the Interstate Banking Effi24 ciency Act of 1994,
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1 an out-of-State national bank which has no

2 branch in such State may establish a branch in

3 the State under this subsection only by acquir4 ing a bank or branch which has been in exist5 ence for not less than the lesser of the mini6 mum time period specified in such law or 5

7 years.

8 ‘‘(5) EARLY APPROVAL AUTHORIZED IF STATE

9 LAW PERMITS.—The Comptroller of the Currency

10 may approve an application under paragraph (1) be11 fore the expiration of the 3-year period described in

12 such paragraph if the State in which the branch is

13 or will be located has in effect a law which expressly

14 permits interstate branching by all national and

15 State banks.

16 ‘‘(6) CONDITIONS APPLICABLE TO THE ESTAB17 LISHMENT OR ACQUISITION OF INTERSTATE

18 BRANCHES.—The Comptroller of the Currency may

19 approve an application under paragraph (1) or (2)

20 by a national bank to acquire or establish a branch

21 only if—

22 ‘‘(A) the national bank is adequately cap23 italized (as defined under section 38 of the Fed24 eral Deposit Insurance Act) as of the date the

25 application is filed; and
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1 ‘‘(B) the Comptroller of the Currency de2 termines that—

3 ‘‘(i) the national bank will continue to

4 be adequately capitalized upon the con5 summation of the acquisition or establish6 ment of the branch; and

7 ‘‘(ii) on the basis of an evaluation

8 conducted by the Comptroller, the manage9 ment of the bank has the necessary man10 agement skills to manage the operations of

11 the bank upon the consummation of the

12 acquisition or establishment of the branch.

13 ‘‘(e) PROVISIONS APPLICABLE TO APPLICATION AND

14 APPROVAL PROCESS.—

15 ‘‘(1) CONSULTATION WITH STATE BANK SUPER16 VISOR.—In determining whether to grant approval

17 of an application under subsection (d), the Comp18 troller of the Currency shall consider the views of

19 any appropriate State bank supervisor of the bank

20 which submits the application regarding the bank’s

21 compliance with applicable State community rein22 vestment laws.

23 ‘‘(2) COMPLIANCE WITH STATE FILING RE24 QUIREMENTS.—
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1 ‘‘(A) IN GENERAL.—An out-of-State na2 tional bank that files an application under sub3 section (d) to acquire or establish a branch

4 within a host State shall—

5 ‘‘(i) comply with any filing require6 ment of the host State that—

7 ‘‘(I) is not discriminatory in na8 ture; and

9 ‘‘(II) is similar in effect to any

10 requirement imposed by the host

11 State on a nonbanking corporation

12 from another State that seeks to en13 gage in business in the host State;

14 and

15 ‘‘(ii) submit a copy of the application

16 to the State bank supervisor of the host

17 State.

18 ‘‘(B) PENALTY FOR FAILURE TO COM19 PLY.—The Comptroller of the Currency may

20 not approve an application under subsection (d)

21 by an out-of-State national bank which materi22 ally fails to comply with subparagraph (A) with

23 respect to such application.

24 ‘‘(3) CONCENTRATION LIMITS.—
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1 ‘‘(A) IN GENERAL.—The Comptroller of

2 the Currency may not approve an application

3 by a bank under subsection (d) if—

4 ‘‘(i) the bank (including all insured

5 depository institutions which are affiliates

6 of the bank) controls, or upon completion

7 of the acquisition would control, more than

8 10 percent of the total amount of insured

9 depository institution deposits in the

10 United States; or

11 ‘‘(ii) the bank (including all insured

12 depository institutions which are affiliates

13 of the bank) controls, or upon completion

14 of the acquisition would control, 30 percent

15 or more of the total amount of insured de16 pository institution deposits in the State in

17 which the proposed branch would be lo18 cated.

19 ‘‘(B) NOT APPLICABLE TO DE NOVO OUT20 OF-STATE BRANCHES.—Subparagraph (A) shall

21 not apply to the establishment of a de novo

22 branch outside the home State of a national

23 bank.

24 ‘‘(C) WAIVER BY STATE.—A State may

25 waive the application of subparagraph (A)(ii) to
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1 the acquisition of banks or branches in such

2 State.

3 ‘‘(4) CONSIDERATION OF BANK AFFILIATES.—

4 In determining whether to grant approval of an ap5 plication under subsection (d) with respect to a pro6 posed branch by a national bank which, as of the

7 date of the application, does not have a branch in

8 the host State (of the proposed branch), the Comp9 troller of the Currency shall take into account the

10 most recent written evaluation under section 807 of

11 the Community Reinvestment Act of 1977 of each

12 bank affiliate of the bank which submits the applica13 tion.

14 ‘‘(5) DEFINITIONS.—For purposes of this sub15 section and subsections (d) and (f) the following

16 definitions shall apply:

17 ‘‘(A) AFFILIATE.—The term ‘affiliate’ has

18 the same meaning as in section 2(k) of the

19 Bank Holding Company Act of 1956.

20 ‘‘(B) ANTITRUST LAWS.—The term ‘anti21 trust laws’—

22 ‘‘(i) has the same meaning as in sub23 section (a) of the 1st section of the Clay24 ton Act; and
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1 ‘‘(ii) includes section 5 of the Federal

2 Trade Commission Act to the extent such

3 section 5 relates to unfair methods of com4 petition.

5 ‘‘(C) DE NOVO BRANCH.—The term ‘de

6 novo branch’ means a branch of a national

7 bank which—

8 ‘‘(i) is originally established by the na9 tional bank as a branch; and

10 ‘‘(ii) does not become a branch of

11 such bank as a result of—

12 ‘‘(I) the acquisition by the bank

13 of an insured depository institution or

14 a branch of an insured depository in15 stitution; or

16 ‘‘(II) the conversion, merger, or

17 consolidation of any such institution

18 or branch.

19 ‘‘(D) DEPOSITS.—The term ‘deposits’ has

20 the same meaning as in section 3(l) of the Fed21 eral Deposit Insurance Act.

22 ‘‘(E) HOME STATE.—The term ‘home

23 State’ means, with respect to a national bank,

24 the State in which the main office of the bank

25 is located.
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1 ‘‘(F) HOST STATE.—The term ‘host State’

2 means any State in which a national bank es3 tablishes or maintains a branch other than the

4 home State of such bank.

5 ‘‘(G) INSURED DEPOSITORY INSTITU6 TION.—The term ‘insured depository institu7 tion’ has the same meaning as in section

8 3(c)(2) of the Federal Deposit Insurance Act.

9 ‘‘(H) OUT-OF-STATE BANK.—The term

10 ‘out-of-State bank’ means, with respect to any

11 State, a bank whose home State is another

12 State.

13 ‘‘(I) OUT-OF-STATE BANK HOLDING COM14 PANY.—The term ‘out-of-State bank’ means,

15 with respect to any State, a bank holding com16 pany whose home State (as defined in section

17 3(d)(4)(D) of the Bank Holding Company Act

18 of 1956) is another State.

19 ‘‘(J) STATE BANK.—The term ‘State bank’

20 has the same meaning as in section 3(a)(2) of

21 the Federal Deposit Insurance Act.

22 ‘‘(K) STATE BANK SUPERVISOR.—The

23 term ‘State bank supervisor’ has the same

24 meaning as in section 3(r) of the Federal

25 Deposit Insurance Act.
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1 ‘‘(f) APPLICABILITY OF STATE AND FEDERAL LAW

2 TO INTERSTATE BRANCHING OPERATIONS.—

3 ‘‘(1) CERTAIN STATE LAWS APPLICABLE TO NA4 TIONAL BANK BRANCHES.—

5 ‘‘(A) IN GENERAL.—Any branch of an out6 of-State national bank shall be subject to the

7 laws of the host State with respect to intrastate

8 branching, consumer protection, fair lending,

9 and community reinvestment as if the branch

10 were a branch of a bank chartered by that

11 State, except to the extent any such State law

12 is preempted by Federal law regarding the

13 same subject.

14 ‘‘(B) PROHIBITION ON DISCRIMINATORY

15 EFFECT.—Notwithstanding subparagraph (A),

16 a branch of an out-of-State national bank shall

17 not be subject to a State law described in such

18 subparagraph to the extent the Comptroller of

19 the Currency determines that the application of

20 the law has, or would have, a discriminatory ef21 fect on the branch in comparison with the effect

22 the application of such law has with respect to

23 branches of a bank chartered by the State.

24 ‘‘(C) ENFORCEMENT OF APPLICABLE

25 STATE LAWS.—The provisions of any State law
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1 to which a branch of a national bank is subject

2 under this paragraph shall be enforced, with re3 spect to such branch, by the Comptroller of the

4 Currency.

5 ‘‘(2) TREATMENT OF BRANCH AS BANK.—All

6 laws of a host State, other than the laws described

7 in paragraph (1) or laws pertaining to the applica8 tion or administration of any tax or method of tax9 ation, shall apply to a branch (in such State) of an

10 out-of-State national bank in the same manner and

11 to the same extent such laws would apply if the

12 branch were a national bank located in that State.

13 ‘‘(3) STATE TAXATION AUTHORITY NOT AF14 FECTED.—No provision of this subsection or sub15 section (d) or (e) shall be construed as affecting the

16 authority of any State or political subdivision of any

17 State to apply and administer any tax or method of

18 taxation to any national bank, including any branch

19 of a national bank, any bank holding company which

20 controls a national bank, or any affiliate of any such

21 bank or bank holding company to the extent such

22 tax or tax method is otherwise permissible by or

23 under the Constitution of the United States of

24 America or other Federal law.
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1 ‘‘(4) STATE-IMPOSED NOTICE REQUIRE2 MENTS.—A host State may impose any notification

3 or reporting requirement on a branch established or

4 acquired under subsection (d) if the requirement—

5 ‘‘(A) does not discriminate against out-of6 State banks or bank holding companies; and

7 ‘‘(B) is not preempted by any Federal law

8 regarding the same subject.

9 ‘‘(5) APPLICABILITY OF DEPOSIT CAPS AND

10 ANTITRUST LAWS.—No provision of this subsection

11 or subsection (d) or (e) shall be construed as affect12 ing—

13 ‘‘(A) the authority of any State to limit the

14 percentage of the total amount of insured de15 pository institution deposits in the State which

16 may be held or controlled by any bank (includ17 ing all insured depository institutions which are

18 affiliates of the bank) to the extent the applica19 tion of such limitation does not discriminate

20 against out-of-State banks or bank holding

21 companies; or

22 ‘‘(B) the applicability of the antitrust laws

23 or any State law which is similar to the anti24 trust laws.’’; and
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1 (3) in subsection (i) (as so redesignated by the

2 amendment made by paragraph (1) of this section),

3 by striking ‘‘The term’’ and inserting ‘‘BRANCH.—

4 Except as provided in section 18(q) of the Federal

5 Deposit Insurance Act, the term’’.

6 SEC. 103. INTERSTATE BRANCHING BY STATE BANKS.

7 (a) IN GENERAL.—The Federal Deposit Insurance

8 Act (12 U.S.C. 1811 et seq.) is amended by adding at

9 the end the following new section:

10 ‘‘SEC. 44. STATE BANK BRANCHES.

11 ‘‘(a) CONSENT OF CORPORATION.—

12 ‘‘(1) ESTABLISHMENT OF BRANCHES.—No

13 State nonmember insured bank (except a District

14 bank) may establish and operate any new domestic

15 branch without the prior written consent of the

16 Corporation.

17 ‘‘(2) CHANGE OF LOCATION OF STATE BANK

18 OFFICES AND BRANCHES.—No State nonmember in19 sured bank (except a District bank) may move the

20 main office or any domestic branch of such bank

21 from 1 location to another without the prior written

22 consent of the Corporation.

23 ‘‘(3) CHANGE OF LOCATION OF INSURED

24 BRANCH OF FOREIGN BANK.—No foreign bank may
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1 move any insured branch from 1 location to another

2 without the prior written consent of the Corporation.

3 ‘‘(4) FACTORS TO BE CONSIDERED.—The Cor4 poration shall consider the factors enumerated in

5 section 6 in making any determination under this

6 subsection.

7 ‘‘(b) ESTABLISHMENT OF FOREIGN BRANCHES.—

8 ‘‘(1) IN GENERAL.—No State nonmember in9 sured bank shall establish or operate any foreign

10 branch without the prior written consent of the

11 Corporation.

12 ‘‘(2) CONDITIONS AND REGULATIONS.—The

13 Corporation may establish such conditions and pre14 scribe such regulations for the establishment and op15 eration of foreign branches of State nonmember

16 banks as the Corporation may determine to be

17 appropriate.

18 ‘‘(c) INTERSTATE BRANCHING BY STATE BANKS.—

19 ‘‘(1) APPROVALS OF ACQUISITION OF EXISTING

20 BRANCHES AUTHORIZED.—Subject to paragraphs

21 (3) and (4) and subsections (d) and (e), after the

22 end of the 3-year period beginning on the date of the

23 enactment of the Interstate Banking Efficiency Act

24 of 1994, the appropriate Federal banking agency
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1 may approve an application under this section to

2 allow an insured State bank to—

3 ‘‘(A) acquire a bank or branch located out4 side the home State of such bank in a State in

5 which the bank does not maintain a branch;

6 and

7 ‘‘(B) operate such bank or branch (includ8 ing any branch of such bank) as a branch,

9 if the conditions established in paragraph (6) are

10 met.

11 ‘‘(2) STATE ‘OPT-IN’ ELECTION TO PERMIT

12 INTERSTATE BRANCHING THROUGH DE NOVO

13 BRANCHES.—Subject to subsections (d) and (e), the

14 appropriate Federal banking agency may approve an

15 application by a State bank to establish and operate

16 a de novo branch outside the home State of such

17 bank in a State in which the bank does not maintain

18 a branch if—

19 ‘‘(A) there is in effect in the host State a

20 law that—

21 ‘‘(i) expressly permits all out-of-State

22 banks to establish de novo branches in

23 such State; and

24 ‘‘(ii) applies equally to national and

25 State banks; and
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•HR 3841 RFS

1 ‘‘(B) the conditions established in para2 graph (6) are met.

3 ‘‘(3) STATE ‘OPT-OUT’ ELECTION TO PROHIBIT

4 INTERSTATE BRANCHING BY ACQUISITION OF EXIST5 ING BANKS.—

6 ‘‘(A) IN GENERAL.—An application by an

7 insured State bank to establish a branch in a

8 State other than the home State of such bank

9 through the acquisition of an existing bank or

10 branch in the host State may not be approved

11 by the appropriate Federal banking agency if

12 there is in effect in the host State a law

13 which—

14 ‘‘(i) expressly prohibits all out-of15 State banks from acquiring a branch lo16 cated in such State through the acquisition

17 of an existing bank or branch in the host

18 State;

19 ‘‘(ii) was enacted during the period

20 beginning on January 1, 1990, and ending

21 3 years after the date of the enactment of

22 the Interstate Banking Efficiency Act of

23 1994; and

24 ‘‘(iii) applies equally to national and

25 State banks.
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•HR 3841 RFS

1 ‘‘(B) EFFECT OF PROHIBITION.—An in2 sured State bank whose home State has in ef3 fect a prohibition described in subparagraph

4 (A) may not acquire or establish, under sub5 section (c), a branch located in any other State.

6 ‘‘(4) STATE LAWS REQUIRING MINIMUM PERIOD

7 OF EXISTENCE FOR ACQUISITIONS BY OUT-OF-STATE

8 BANKS.—

9 ‘‘(A) LAWS ENACTED BEFORE INTERSTATE

10 BANKING ACT.—In the case of a State in which

11 a law is in effect which—

12 ‘‘(i) allows an out-of-State bank or

13 bank holding company to establish a bank

14 in the host State only by acquiring a bank

15 or branch (in the host State) which has

16 been in existence for not less than the min17 imum time period specified in such law;

18 and

19 ‘‘(ii) took effect on or before the date

20 of the enactment of the Interstate Banking

21 Efficiency Act of 1994,

22 an out-of-State insured State bank which has

23 no branch in such State may establish a branch

24 in the State under this subsection only by ac25 quiring a bank or branch which has been in ex-
30

•HR 3841 RFS

1 istence for not less than the minimum time pe2 riod specified in such law.

3 ‘‘(B) SUBSEQUENT ENACTMENTS.—In the

4 case of a State in which a law is in effect

5 which—

6 ‘‘(i) allows an out-of-State bank or

7 bank holding company to establish a

8 branch in the host State only by acquiring

9 a bank or branch (in the host State) which

10 has been in existence for not less than the

11 minimum time period specified in such law;

12 and

13 ‘‘(ii) took effect after the date of the

14 enactment of the Interstate Banking Effi15 ciency Act of 1994,

16 an out-of-State insured State bank which has

17 no branch in such State may establish a branch

18 in the State under this subsection only by ac19 quiring a bank or branch which has been in ex20 istence for not less than the lesser of the mini21 mum time period specified in such law or 5

22 years.

23 ‘‘(5) EARLY APPROVAL AUTHORIZED IF STATE

24 LAW PERMITS.—The appropriate Federal banking

25 agency may approve an application under paragraph
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•HR 3841 RFS

1 (1) before the expiration of the 3-year period de2 scribed in such paragraph if the State in which the

3 branch is or will be located has in effect a law which

4 expressly permits interstate branching by all na5 tional and State banks.

6 ‘‘(6) CONDITIONS APPLICABLE TO THE ESTAB7 LISHMENT OR ACQUISITION OF INTERSTATE

8 BRANCHES.—The appropriate Federal banking agen9 cy may approve an application under paragraph (1)

10 or (2) by an insured State bank to acquire or estab11 lish a branch only if—

12 ‘‘(A) the bank is adequately capitalized (as

13 defined under section 38) as of the date the ap14 plication is filed;

15 ‘‘(B) the bank is authorized to establish

16 branches in other States under the law of the

17 home State of the bank; and

18 ‘‘(C) the appropriate Federal banking

19 agency determines that—

20 ‘‘(i) the bank will continue to be ade21 quately capitalized upon the consummation

22 of the acquisition or establishment of the

23 branch; and

24 ‘‘(ii) on the basis of an evaluation

25 conducted by the agency, the management
32

•HR 3841 RFS

1 of the bank has the necessary management

2 skills to manage the operations of the bank

3 upon the consummation of the acquisition

4 or establishment of the branch.

5 ‘‘(d) PROVISIONS APPLICABLE TO APPLICATION AND

6 APPROVAL PROCESS.—

7 ‘‘(1) CONSULTATION WITH STATE BANK SUPER8 VISOR.—In determining whether to grant approval

9 of an application under subsection (c), the appro10 priate Federal banking agency shall consider the

11 views of any appropriate State bank supervisor of

12 the bank which submits the application regarding

13 the bank’s compliance with applicable State commu14 nity reinvestment laws.

15 ‘‘(2) COMPLIANCE WITH STATE FILING RE16 QUIREMENTS.—

17 ‘‘(A) IN GENERAL.—An out-of-State in18 sured State bank that files an application under

19 subsection (c) to acquire or establish a branch

20 within a host State shall—

21 ‘‘(i) comply with any filing require22 ment of the host State that—

23 ‘‘(I) is not discriminatory in na24 ture; and
33

•HR 3841 RFS

1 ‘‘(II) is similar in effect to a re2 quirement imposed by the host State

3 on a nonbanking corporation from an4 other State that seeks to engage in

5 business in the host State; and

6 ‘‘(ii) submit a copy of the application

7 to the State bank supervisor of the host

8 State.

9 ‘‘(B) PENALTY FOR FAILURE TO COM10 PLY.—The appropriate Federal banking agency

11 may not approve an application under sub12 section (c) by an insured State bank which ma13 terially fails to comply with subparagraph (A)

14 with respect to such application.

15 ‘‘(3) CONCENTRATION LIMITS.—

16 ‘‘(A) IN GENERAL.—The appropriate Fed17 eral banking agency may not approve an appli18 cation by a bank under subsection (c) if—

19 ‘‘(i) the bank (including all insured

20 depository institutions which are affiliates

21 of the bank) controls, or upon completion

22 of the acquisition would control, more than

23 10 percent of the total amount of insured

24 depository institution deposits in the

25 United States; or
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•HR 3841 RFS

1 ‘‘(ii) the bank (including all insured

2 depository institutions which are affiliates

3 of the bank) controls, or upon completion

4 of the acquisition would control, 30 percent

5 or more of the total amount of insured de6 pository institution deposits in the State in

7 which the proposed branch would be lo8 cated.

9 ‘‘(B) NOT APPLICABLE TO DE NOVO OUT10 OF-STATE BRANCHES.—Subparagraph (A) shall

11 not apply to the establishment of a de novo

12 branch outside the home State of an insured

13 State bank.

14 ‘‘(C) WAIVER BY STATE.—A State may

15 waive the application of subparagraph (A)(ii) to

16 the acquisition of banks or branches in such

17 State.

18 ‘‘(4) CONSIDERATION OF BANK AFFILIATES.—

19 In determining whether to grant approval of an ap20 plication under subsection (c) with respect to a pro21 posed branch by an insured State bank which, as of

22 the date of the application, does not have a branch

23 in the host State (of the proposed branch), the ap24 propriate Federal banking agency shall take into ac25 count the most recent written evaluation under sec-
35

•HR 3841 RFS

1 tion 807 of the Community Reinvestment Act of

2 1977 of each bank affiliate of the bank which sub3 mits the application.

4 ‘‘(e) APPLICABILITY OF STATE AND FEDERAL LAW

5 TO INTERSTATE BRANCHING OPERATIONS.—

6 ‘‘(1) STATE LAWS APPLICABLE TO BRANCHES

7 OF OUT-OF-STATE BANKS.—

8 ‘‘(A) IN GENERAL.—Subject to subsection

9 (d), any branch of an out-of-State insured State

10 bank shall be subject to the laws of the host

11 State as if such branch were a branch of a

12 bank chartered by that State.

13 ‘‘(B) ACTIVITIES OF BRANCHES.—An in14 sured State bank that establishes a branch in

15 a host State may not conduct any activity at

16 such branch that is not permissible for a bank

17 chartered by the host State.

18 ‘‘(C) RESERVATION OF CERTAIN RIGHTS

19 TO STATES.—No provision of this subsection or

20 subsection (c) or (d) shall be construed as limit21 ing in any way the right of a State to—

22 ‘‘(i) determine the authority of State

23 banks chartered in that State to establish

24 and maintain branches; or
36

•HR 3841 RFS

1 ‘‘(ii) supervise, regulate, and examine

2 State banks chartered by that State.

3 ‘‘(2) STATE TAXATION AUTHORITY NOT AF4 FECTED.—No provision of this subsection or sub5 section (c) or (d) shall be construed as affecting the

6 authority of any State or political subdivision of any

7 State to apply and administer any tax or method of

8 taxation to any State bank, including any branch of

9 a State bank, any bank holding company which con10 trols any State bank, or any affiliate of any such

11 bank or bank holding company to the extent such

12 tax or tax method is otherwise permissible by or

13 under the Constitution of the United States of

14 America or other Federal law.

15 ‘‘(3) STATE-IMPOSED NOTICE REQUIRE16 MENTS.—A host State may impose any notification

17 or reporting requirement on a branch established or

18 acquired under subsection (c) if the requirement—

19 ‘‘(A) does not discriminate against out-of20 State banks or bank holding companies; and

21 ‘‘(B) is not preempted by any Federal law

22 regarding the same subject.

23 ‘‘(4) APPLICABILITY OF DEPOSIT CAPS AND

24 ANTITRUST LAWS.—No provision of this subsection
37

•HR 3841 RFS

1 or subsection (c) or (d) shall be construed as affect2 ing—

3 ‘‘(A) the authority of any State to limit the

4 percentage of the total amount of insured de5 pository institution deposits in the State which

6 may be held or controlled by any bank (includ7 ing all insured depository institutions which are

8 affiliates of the bank) to the extent the applica9 tion of such limitation does not discriminate

10 against out-of-State banks or bank holding

11 companies; or

12 ‘‘(B) the applicability of the antitrust laws

13 or any State law which is similar to the anti14 trust laws.

15 ‘‘(f) COORDINATION OF EXAMINATION AUTHOR16 ITY.—

17 ‘‘(1) IN GENERAL.—A host State bank super18 visor may examine a branch operated in the host

19 State by an out-of-State insured State bank to—

20 ‘‘(A) determine compliance with host State

21 laws regarding banking, community reinvest22 ment, fair lending, consumer protection, and

23 permissible activities; and
38

•HR 3841 RFS

1 ‘‘(B) ensure that the activities of the

2 branch do not constitute a significant risk to

3 the safe and sound operation of the branch.

4 ‘‘(2) ENFORCEMENT.—If the State bank super5 visor of a host State described in paragraph (1) de6 termines that there is a violation of host State law

7 concerning the activities being conducted by a

8 branch operated in such State by an out-of-State in9 sured State bank or that the branch is being oper10 ated in an unsafe and unsound manner, such host

11 State bank supervisor or, to the extent authorized by

12 the law of the host State, a State law enforcement

13 officer may undertake such enforcement actions or

14 proceedings as would be permitted under host State

15 law if the branch were a bank chartered by the host

16 State.

17 ‘‘(3) COOPERATIVE AGREEMENT.—The State

18 bank supervisors of 1 or more States may enter into

19 cooperative agreements to facilitate State regulatory

20 supervision of State banks and branches, including

21 cooperative agreements relating to the coordination

22 of examinations and joint participation in examina23 tions.

24 ‘‘(4) FEDERAL REGULATORY AUTHORITY.—No

25 provision of this section shall be construed as limit-
39

•HR 3841 RFS

1 ing the authority of any Federal banking agency to

2 examine any bank or branch of a bank for which the

3 agency is the appropriate Federal banking agency.

4 ‘‘(g) DEFINITIONS.—For purposes of this section, the

5 following definitions shall apply:

6 ‘‘(1) ANTITRUST LAWS.—The term ‘antitrust

7 laws’—

8 ‘‘(A) has the same meaning as in sub9 section (a) of the 1st section of the Clayton

10 Act; and

11 ‘‘(B) includes section 5 of the Federal

12 Trade Commission Act to the extent such sec13 tion 5 relates to unfair methods of competition.

14 ‘‘(2) DE NOVO BRANCH.—The term ‘de novo

15 branch’ means a branch of a bank which—

16 ‘‘(A) is originally established by the bank

17 as a branch; and

18 ‘‘(B) does not become a branch of such

19 bank as a result of—

20 ‘‘(i) the acquisition by the bank of an

21 insured depository institution or a branch

22 of an insured depository institution; or

23 ‘‘(ii) the conversion, merger, or con24 solidation of any such institution or

25 branch.
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•HR 3841 RFS

1 ‘‘(3) HOME STATE.—The term ‘home State’

2 means, with respect to a State bank, the State by

3 whom the bank is chartered.

4 ‘‘(4) HOST STATE.—The term ‘host State’

5 means the State in which a bank establishes or

6 maintains a branch other than the home State of the

7 bank.

8 ‘‘(5) OUT-OF-STATE BANK.—The term ‘out-of9 State bank holding company’ means, with respect to

10 any State, a bank whose home State is another

11 State.

12 ‘‘(6) OUT-OF-STATE BANK HOLDING COM13 PANY.—The term ‘out-of-State bank’ means, with

14 respect to any State, a bank holding company whose

15 home State (as defined in section 3(d)(4)(D) of the

16 Bank Holding Company Act of 1956) is another

17 State.’’.

18 (b) TECHNICAL AND CONFORMING AMENDMENT.—

19 Section 3(o) of the Federal Deposit Insurance Act (12

20 U.S.C. 1813(o)) is amended to read as follows:

21 ‘‘(o) DEFINITIONS RELATING TO DOMESTIC AND

22 FOREIGN BRANCHES.—

23 ‘‘(1) BRANCH.—The term ‘branch’ means a do24 mestic branch or a foreign branch, except when such
41

•HR 3841 RFS

1 term is used in connection with the term ‘Federal

2 branch’ or ‘insured branch’.

3 ‘‘(2) DOMESTIC BRANCH.—The term ‘domestic

4 branch’ includes any branch bank, branch office,

5 branch agency, additional office, or any branch lo6 cated in any State at which deposits are received,

7 checks are paid, or money is lent.

8 ‘‘(3) FOREIGN BRANCH.—The term ‘foreign

9 branch’ means any office or place at which banking

10 operations are conducted and which is not located in

11 any State.’’.

12 SEC. 104. BRANCHING BY FOREIGN BANKS.

13 (a) IN GENERAL.—Section 5(a) of the International

14 Banking Act of 1978 (12 U.S.C. 3103(a)) is amended to

15 read as follows:

16 ‘‘(a) INTERSTATE BRANCHING AND AGENCY OPER17 ATIONS.—

18 ‘‘(1) FEDERAL BRANCH OR AGENCY.—Subject

19 to the provisions of this Act and with the prior writ20 ten approval by the Board and the Comptroller of

21 the Currency of an application, a foreign bank may

22 establish and operate a Federal branch or agency in

23 any State outside the home State of such foreign

24 bank to the extent that the establishment and oper25 ation of such branch would be permitted under sec-
42

•HR 3841 RFS

1 tion 5155 of the Revised Statutes if the foreign bank

2 were a national bank whose home State (as defined

3 in subsection (e)(5) of such section) is the same

4 State as the home State of the foreign bank.

5 ‘‘(2) STATE BRANCH OR AGENCY.—Subject to

6 the provisions of this Act and with the prior written

7 approval by the Board and the appropriate State

8 bank supervisor of an application, a foreign bank

9 may establish and operate a State branch or agency

10 in any State outside the home State of such foreign

11 bank to the extent that such establishment and oper12 ation would be permitted under section 44 of the

13 Federal Deposit Insurance Act if the foreign bank

14 were a State bank whose home State (as defined in

15 subsection (g) of such section) is the same State as

16 the home State of the foreign bank.

17 ‘‘(3) CRITERIA FOR DETERMINATION.—In ap18 proving an application under paragraph (1) or (2),

19 the Board and (in the case of an application under

20 paragraph (1)) the Comptroller of the Currency—

21 ‘‘(A) shall apply the standards applicable

22 to the establishment of a foreign bank office in

23 the United States under section 7(d); and

24 ‘‘(B) may not approve an application un25 less the Board and (in the case of an applica-
43

•HR 3841 RFS

1 tion under paragraph (1)) the Comptroller of

2 the Currency—

3 ‘‘(i) determine that the foreign bank’s

4 financial resources, including the capital

5 level of the bank, are equivalent to those

6 required for a domestic bank to be ap7 proved for branching under section 5155 of

8 the Revised Statutes and section 44 of the

9 Federal Deposit Insurance Act; and

10 ‘‘(ii) consult with the Secretary of the

11 Treasury regarding capital equivalency.

12 ‘‘(4) REQUIREMENT FOR A SEPARATE SUBSIDI13 ARY.—If the Board or the Comptroller of the Cur14 rency, taking into account differing regulatory or ac15 counting standards, finds that adherence by a for16 eign bank to capital requirements equivalent to those

17 imposed under section 5155 of the Revised Statutes

18 and section 44 of the Federal Deposit Insurance Act

19 could be verified only if the banking activities of

20 such bank in the United States are carried out in a

21 domestic banking subsidiary within the United

22 States, the Board and the Comptroller of the Cur23 rency may approve an application under paragraph

24 (1) subject to a requirement that the foreign bank
44

•HR 3841 RFS

1 or company controlling the foreign bank establish a

2 domestic banking subsidiary in the United States.

3 ‘‘(5) ADDITIONAL AUTHORITY FOR INTERSTATE

4 BRANCHES AND AGENCIES OF FOREIGN BANKS.—

5 Notwithstanding paragraphs (1) and (2), a foreign

6 bank may, with the approval of the Comptroller of

7 the Currency, establish and operate a Federal

8 branch or Federal agency or, with the approval of

9 the Board and the appropriate State bank super10 visor, a State branch or State agency in any State

11 outside the foreign bank’s home State if—

12 ‘‘(A) the establishment and operation of a

13 branch or agency is expressly permitted by the

14 State in which the branch or agency is to be es15 tablished; and

16 ‘‘(B) in the case of a Federal or State

17 branch, the branch receives only such deposits

18 as would be permissible for a corporation orga19 nized under section 25A of the Federal Reserve

20 Act.’’.

21 (b) CONTINUED AUTHORITY FOR LIMITED

22 BRANCHES, AGENCIES, OR COMMERCIAL LENDING COM23 PANIES.—Section 5(b) of the International Banking Act

24 of 1978 (12 U.S.C. 3103(b)) is amended by adding at the

25 end the following new sentence: ‘‘Notwithstanding sub-
45

•HR 3841 RFS

1 section (a), a foreign bank may continue to operate, after

2 the enactment of the Interstate Banking Efficiency Act

3 of 1994, any Federal branch, State branch, Federal agen4 cy, State agency, or commercial lending company subsidi5 ary which such bank was operating on the day before the

6 date of the enactment of such Act to the extent the

7 branch, agency, or subsidiary continues, after the enact8 ment of such Act, to engage in operations which were law9 ful under the laws in effect on the day before such date.’’.

10 (c) CLARIFICATION OF BRANCHING RULES IN THE

11 CASE OF A FOREIGN BANK WITH A DOMESTIC BANK

12 SUBSIDIARY.—Section 5 of the International Banking Act

13 of 1978 (12 U.S.C. 3103) is amended by adding at the

14 end the following new subsection:

15 ‘‘(d) CLARIFICATION OF BRANCHING RULES IN THE

16 CASE OF A FOREIGN BANK WITH A DOMESTIC BANK

17 SUBSIDIARY.—In the case of a foreign bank that has a

18 domestic bank subsidiary within the United States—

19 ‘‘(1) the fact that such bank controls a domes20 tic bank shall not affect the authority of the foreign

21 bank to establish Federal and State branches or

22 agencies to the extent permitted under subsection

23 (a); and

24 ‘‘(2) the fact that the domestic bank is con25 trolled by a foreign bank which has Federal or State
46

•HR 3841 RFS

1 branches or agencies in States other than the home

2 State of such domestic bank shall not affect the au3 thority of the domestic bank to establish branches

4 outside the home State of the domestic bank to the

5 extent permitted under section 5155(d) of the Re6 vised Statutes or section 44 of the Federal Deposit

7 Insurance Act, as the case may be.’’.

8 (d) HOME STATE DETERMINATIONS.—Section 5(c)

9 of the International Banking Act of 1978 (12 U.S.C.

10 3103(c)) is amended to read as follows:

11 ‘‘(c) DETERMINATION OF HOME STATE OF FOREIGN

12 BANK.—For the purposes of this section—

13 ‘‘(1) in the case of a foreign bank that has any

14 branch, agency, subsidiary commercial lending com15 pany, or subsidiary bank in more than 1 State, the

16 home State of the foreign bank is the 1 State of

17 such States which is selected by the foreign bank or,

18 in default of any such selection, by the Board; and

19 ‘‘(2) in the case of a foreign bank that does not

20 have a branch, agency, subsidiary commercial lend21 ing company, or subsidiary bank in more than 1

22 State, the home State of the foreign bank is the

23 State in which the foreign bank has a branch, agen24 cy, subsidiary commercial lending company, or sub25 sidiary bank.’’.
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•HR 3841 RFS

1 SEC. 105. INTERSTATE CONSOLIDATIONS.

2 Section 18(d) of the Federal Deposit Insurance Act

3 (12 U.S.C. 1828(d)) is amended to read as follows:

4 ‘‘(d) INTERSTATE CONSOLIDATIONS.—

5 ‘‘(1) CONSOLIDATIONS AUTHORIZED.—

6 ‘‘(A) IN GENERAL.—Except as provided in

7 section 3(d)(1)(B) of the Bank Holding Com8 pany Act of 1956 and notwithstanding any

9 other provision of Federal law or any provision

10 of State law (other than a law referred to in

11 subparagraph (B)), a bank holding company

12 which has bank subsidiaries in more than 1

13 State may, with the prior written approval by

14 the responsible agency (as determined in ac15 cordance with section 18(c)(2) of the Federal

16 Deposit Insurance Act) of an application and

17 subject to the requirements of subsection (c),

18 combine 2 or more of such banks into a single

19 bank by means of merger, consolidation, or

20 other similar transaction in accordance with

21 such subsection after the end of the 18-month

22 period beginning on the date of the enactment

23 of the Interstate Banking Efficiency Act of

24 1994.

25 ‘‘(B) EXCEPTION FOR STATES WHICH PRO26 HIBIT THE ACQUISITION OF A BRANCH BY ANY
48

•HR 3841 RFS

1 OUT-OF-STATE BANK.—No bank which is lo2 cated in a State in which a law described in

3 section 5155(d)(3)(A) of the Revised Statutes

4 of the United States or section 44(c)(3)(A) is in

5 effect may be a party to a merger, consolida6 tion, or other similar transaction under sub7 paragraph (A) with any other bank affiliate of

8 such bank.

9 ‘‘(C) EXCEPTION FOR CERTAIN BANKS AC10 QUIRED DURING TRANSITION PERIOD.—No

11 bank subsidiary of a bank holding company, or

12 any branch of any such bank—

13 ‘‘(i) control of which was acquired, di14 rectly or indirectly, by such company after

15 the end of the 18-month period beginning

16 on the date of the enactment of the Inter17 state Banking Efficiency Act of 1994; and

18 ‘‘(ii) which is located in a State in

19 which the company did not control any

20 bank or branch as of the end of such 18-

21 month period,

22 may be a party to a merger, consolidation, or

23 other similar transaction under subparagraph

24 (A) with any other bank affiliate of such bank

25 before the end of the 3-year period beginning
49

•HR 3841 RFS

1 on such date of enactment, unless the State in

2 which the bank or branch is located is a State

3 referred to in section 5155(d)(5) of the Revised

4 Statutes of the United States or section

5 44(c)(5).

6 ‘‘(2) EFFECT OF STATE PROHIBITION ON

7 BRANCHING.—If a branch which results from a

8 transaction under paragraph (1) is located in a

9 State in which a law—

10 ‘‘(A) takes effect after the consummation

11 of the transaction;

12 ‘‘(B) is enacted during the period begin13 ning on January 1, 1990, and ending 3 years

14 after the date of the enactment of the Inter15 state Banking Efficiency Act of 1994;

16 ‘‘(C) expressly prohibits all out-of-State

17 banks from acquiring a branch located in such

18 State through the acquisition of an existing

19 bank in the host State; and

20 ‘‘(D) applies equally to national and State

21 banks,

22 the branch shall be promptly converted back into a

23 bank as the bank existed before such transaction, in

24 accordance with regulations of the Federal banking

25 agency or State bank supervisor which had jurisdic-
50

•HR 3841 RFS

1 tion over the bank which was converted into a

2 branch.

3 ‘‘(3) APPLICABILITY OF STATE AND FEDERAL

4 LAW TO INTERSTATE BRANCHING OPERATIONS.—If

5 a branch which results from a transaction under

6 paragraph (1) is the branch of a national bank, sec7 tion 5155(f) of the Revised Statutes of the United

8 States shall apply with respect to such branch.

9 ‘‘(4) STATE TAXATION AUTHORITY NOT AF10 FECTED.—No provision of this subsection shall be

11 construed as affecting the authority of any State or

12 political subdivision of any State to apply and ad13 minister any tax or method of taxation to any bank

14 subsidiary or additional branch resulting from a con15 solidation or other transaction under paragraph (1)

16 or (2), any bank holding company which controls

17 any bank or branch resulting from any such consoli18 dation or other transaction, or any affiliate of any

19 such bank or company to the extent such tax or tax

20 method is otherwise permissible by or under the

21 Constitution of the United States of America or

22 other Federal law.

23 ‘‘(5) PLAN ON MEETING LOCAL CREDIT

24 NEEDS.—The responsible agency (as determined

25 under subsection (c)(2)) may not approve any appli-
51

•HR 3841 RFS

1 cation for any consolidation or other transaction

2 under this subsection unless the responsible agency

3 has considered a plan submitted by the applicant

4 bank holding company for meeting local credit needs

5 in the communities served by any bank subsidiary of

6 the company which is involved in the proposed con7 solidation or transaction, including the extent to

8 which the amount of the anticipated savings attrib9 utable to the proposed consolidation or other trans10 action will be available to meet such local credit

11 needs.’’.

12 SEC. 106. BRANCH CLOSURES.

13 Section 42 of the Federal Deposit Insurance Act (12

14 U.S.C. 1831r-1) is amended by adding at the end the fol15 lowing new subsection:

16 ‘‘(d) BRANCH CLOSURES IN INTERSTATE BANKING

17 OR BRANCHING OPERATIONS.—

18 ‘‘(1) NOTICE REQUIREMENTS.—In the case of

19 an interstate bank which proposes to close any

20 branch in a low- or moderate income area, the notice

21 required under subsection (b)(2) shall contain the

22 mailing address of the appropriate Federal banking

23 agency and a statement that comments on the pro24 posed closing of such branch may be mailed to such

25 agency.
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•HR 3841 RFS

1 ‘‘(2) ACTION REQUIRED BY APPROPRIATE FED2 ERAL BANKING AGENCY.—If, in the case of a branch

3 referred to in paragraph (1)—

4 ‘‘(A) a person from the area in which such

5 branch is located—

6 ‘‘(i) submits a written request relating

7 to the closing of such branch to the appro8 priate Federal banking agency; and

9 ‘‘(ii) includes a statement of specific

10 reasons for the request, including a discus11 sion of the adverse effect of such closing

12 on the availability of banking services in

13 the area affected by the closing of the

14 branch; and

15 ‘‘(B) the agency concludes that the request

16 is not frivolous,

17 the agency shall consult with community leaders in

18 the affected area and convene a meeting of rep19 resentatives of the agency with community leaders in

20 the affected area and such other individuals, organi21 zations, and depository institutions (as defined in

22 section 19(b)(1)(A) of the Federal Reserve Act) as

23 the agency may determine to be appropriate, to ex24 plore the feasibility of obtaining adequate alternative

25 facilities and services for the affected area, including
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1 the establishment of a new branch by another depos2 itory institution, the chartering of a new depository

3 institution, or the establishment of a community de4 velopment credit union, following the closing of the

5 branch.

6 ‘‘(3) NO AFFECT ON CLOSING.—No action by

7 the appropriate Federal banking agency under para8 graph (2) shall affect the authority of an interstate

9 bank to close a branch (including the timing of such

10 closing) if the requirements of subsections (a) and

11 (b) have been met by such bank with respect to the

12 branch being closed.

13 ‘‘(4) DEFINITIONS.—For purposes of this sub14 section, the following definitions shall apply:

15 ‘‘(A) INTERSTATE BANK DEFINED.—The

16 term ‘interstate bank’ means a bank which

17 maintains branches in more than 1 State.

18 ‘‘(B) LOW- OR MODERATE-INCOME

19 AREA.—The term ‘low- or moderate-income

20 area’ means a census tract for which the me21 dian family income is—

22 ‘‘(i) less than 80 percent of the me23 dian family income for the metropolitan

24 statistical area (as designated by the Di25 rector of the Office of Management and
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1 Budget) in which the census tract is lo2 cated; or

3 ‘‘(ii) in the case of a census tract

4 which is not located in a metropolitan sta5 tistical area, less than 80 percent of the

6 median family income for the State in

7 which the census tract is located, as deter8 mined without taking into account family

9 income in metropolitan statistical areas in

10 such State.’’.

11 SEC. 107. PROHIBITION AGAINST DEPOSIT PRODUCTION

12 OFFICES.

13 (a) REGULATIONS.—Before the end of the 120-day

14 period beginning on the date of the enactment of the

15 Interstate Banking Efficiency Act of 1994, each appro16 priate Federal banking agency shall prescribe regulations

17 which prohibit any person from using any authority to en18 gage in interstate branching pursuant to this title, or any

19 amendment made by this title to any other provision of

20 law, primarily for the purpose of deposit production.

21 (b) GUIDELINES FOR MEETING CREDIT NEEDS.—

22 Regulations issued under subsection (a) shall include

23 guidelines to ensure that each interstate branch meets the

24 credit needs of the community and market area in which

25 the branch operates.
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1 (c) LIMITATION ON OUT-OF-STATE LOANS.—

2 (1) LIMITATION.—Regulations issued under

3 subsection (a) shall require that if the percentage of

4 outstanding loans made by an interstate branch to

5 borrowers located in the host State of, or market

6 area served by, the branch is less than half the aver7 age of such percentage for all Federal depository in8 stitutions and State depository institutions having

9 their principal place of operations in the host State

10 or that market area—

11 (A) the appropriate Federal banking agen12 cy for the branch shall review the loan portfolio

13 of the branch and determine whether the

14 branch is reasonably meeting the credit needs

15 of the community and market area in which the

16 branch operates; and

17 (B) if the agency determines that the

18 branch is not reasonably meeting those needs—

19 (i) the branch shall be closed, and

20 (ii) the person which established the

21 branch may not open a new branch in that

22 State unless the person provides reasonable

23 assurances to the satisfaction of the appro24 priate Federal banking agency that the

25 new branch will reasonably meet the credit
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1 needs of the community and market area

2 in which the new branch will operate.

3 (2) CONSIDERATIONS.—In making a determina4 tion under paragraph (1)(A) regarding an interstate

5 branch, the appropriate Federal banking agency

6 shall consider—

7 (A) whether the branch was acquired as

8 part of the purchase of a failed or failing depos9 itory institution;

10 (B) whether the branch has a higher con11 centration of commercial and credit card lend12 ing; and

13 (C) the ratings received by the branch in

14 evaluations under the Community Reinvestment

15 Act of 1977.

16 (d) APPLICATION.—This section shall not apply to

17 any interstate branch acquired before January 1, 1992,

18 as part of any consolidation or merger of depository insti19 tutions.

20 (e) DEFINITIONS.—For the purposes of this section,

21 the following definitions shall apply:

22 (1) APPROPRIATE FEDERAL BANKING AGEN23 CY.—The term ‘‘appropriate Federal banking agen24 cy’’ has the same meaning as in section 3 of the

25 Federal Deposit Insurance Act.
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1 (2) BRANCH.—The term ‘‘branch’’ means any

2 office, agency, or other place of business located in

3 any State at which deposits are received, checks

4 paid, or money lent.

5 (3) FEDERAL DEPOSITORY INSTITUTION AND

6 STATE DEPOSITORY INSTITUTION.—The terms

7 ‘‘Federal depository institution’’ and ‘‘State deposi8 tory institution’’ have the same meanings as in sec9 tion 3 of the Federal Deposit Insurance Act.

10 (4) HOST STATE DEFINED.—The term ‘‘host

11 State’’ means the State in which a bank establishes

12 or maintains a branch, other than—

13 (A) in the case of a insured State bank,

14 the State in which the bank is chartered;

15 (B) in the case of a national bank, the

16 State in which the main office of the bank is lo17 cated; and

18 (C) in the case of a bank holding company,

19 the State in which the total deposits of all bank

20 subsidiaries of such company is the greatest.

21 (5) INTERSTATE BRANCH.—The term ‘‘inter22 state branch’’ means a branch established pursuant

23 to the authority referred to in subsection (a).

24 (6) PRINCIPAL PLACE OF OPERATIONS.—The

25 term ‘‘principal place of operations’’ means the State
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1 in which the total deposits of all bank subsidiaries

2 of a person are greatest.

3 (7) STATE DEFINED.—The term ‘‘State’’ has

4 the same meaning as in section 3 of the Federal De5 posit Insurance Act.

6 SEC. 108. FEDERAL RESERVE BOARD STUDY ON BANK

7 FEES.

8 (a) IN GENERAL.—Section 1002 of the Financial In9 stitutions Reform, Recovery, and Enforcement Act of

10 1989 (12 U.S.C. 1811 note) is amended to read as follows:

11 ‘‘SEC. 1002. SURVEY OF BANK FEES AND SERVICES.

12 ‘‘(a) ANNUAL SURVEY REQUIRED.—The Board of

13 Governors of the Federal Reserve System shall obtain a

14 sample, which is representative by geographic location and

15 size of the institution, of—

16 ‘‘(1) certain retail banking services provided by

17 insured depository institutions; and

18 ‘‘(2) the fees, if any, which are imposed by such

19 institutions for providing such service, including fees

20 imposed for not sufficient funds, deposit items re21 turned, and automated teller machines.

22 ‘‘(b) ANNUAL REPORT TO CONGRESS REQUIRED.—

23 ‘‘(1) PREPARATION.—The Board of Governors

24 of the Federal Reserve System shall prepare a report
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1 of the results of each survey conducted pursuant to

2 subsection (a).

3 ‘‘(2) CONTENTS OF THE REPORT.—Each report

4 prepared pursuant to paragraph (1) shall include—

5 ‘‘(A) a description of any discernible trend,

6 in the Nation as a whole and in each State, in

7 the cost and availability of retail banking serv8 ices which delineates differences on the basis of

9 size of the institution and engagement in

10 multistate activity; and

11 ‘‘(B) a description of the correlation, if

12 any, among the following factors:

13 ‘‘(i) An increase or decrease in the

14 amount of any deposit insurance premium

15 assessed by the Federal Deposit Insurance

16 Corporation against insured depository in17 stitutions.

18 ‘‘(ii) An increase or decrease in the

19 amount of the fees imposed by such insti20 tutions for providing retail banking serv21 ices.

22 ‘‘(iii) A decrease in the availability of

23 such services.

24 ‘‘(3) SUBMISSION TO CONGRESS.—The Board

25 of Governors of the Federal Reserve System shall
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1 submit each annual report to the Congress not later

2 than June 1 of each calendar year.’’.

3 (b) SUNSET.—The requirements of subsection (a)

4 shall not apply after the end of the 7-year period begin5 ning on the date of enactment of this Act.

6 SEC. 109. RESTATEMENT OF EXISTING LAW.

7 No provision of this title and no amendment made

8 by this title to any other provision of law shall be con9 strued as affecting in any way the right of any State, or

10 any political subdivision of any State, to impose or main11 tain a nondiscriminatory franchise tax or other non12 property tax instead of a franchise tax in accordance with

13 section 3124 of title 31, United States Code.

14 TITLE II—CRA EVALUATIONS

15 SEC. 201. STATE-BY-STATE CRA EVALUATIONS OF DEPOSI16 TORY INSTITUTIONS WITH INTERSTATE

17 BRANCHES.

18 Section 807 of the Community Reinvestment Act of

19 1977 (12 U.S.C. 2906) is amended by adding at the end

20 the following new subsection:

21 ‘‘(d) INSTITUTIONS WITH INTERSTATE

22 BRANCHES.—

23 ‘‘(1) STATE-BY-STATE EVALUATION.—In the

24 case of a regulated financial institution which main25 tains 1 or more domestic branches located outside
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1 the State in which the institution’s principal place of

2 business is located (hereafter in this subsection re3 ferred to as the ‘home State’), the appropriate Fed4 eral financial supervisory agency shall prepare—

5 ‘‘(A) a written evaluation of the entire in6 stitution’s record of performance under this

7 Act, as required by subsections (a), (b), and (c)

8 of this section; and

9 ‘‘(B) for each State in which the institu10 tion maintains 1 or more domestic branches

11 (including the institution’s home State), a sepa12 rate written evaluation of the institution’s

13 record of performance within such State under

14 this Act, as required by subparagraphs (A) and

15 (B) of subsection (b)(1) of this section.

16 ‘‘(2) CONTENT OF STATE LEVEL EVALUA17 TION.—A written evaluation prepared pursuant to

18 paragraph (1)(B) of this subsection shall report the

19 information required by such paragraph separately

20 for each metropolitan area (as defined by the appro21 priate Federal financial supervisory agency) in which

22 the regulated financial institution maintains 1 or

23 more domestic branch offices and separately for the

24 nonmetropolitan portion of the State if the institu-
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1 tion maintains 1 or more domestic branch offices in

2 such nonmetropolitan area.’’.

Passed the House of Representatives March 22,

1994.

Attest: DONNALD K. ANDERSON,

Clerk.

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