Union Calendar No. 248

103D CONGRESS

2D SESSION H. R. 3841

[Report No. 103–448]

A BILL

To amend the Bank Holding Company Act of 1956,

interstate banking and branching.the Federal Deposit Insurance Act to provide forthe Revised Statutes of the United States, and

MARCH 22, 1994

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 248

103D CONGRESS

2D SESSION H. R. 3841

[Report No. 103–448]

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.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 10, 1994

Mr. NEAL of North Carolina (for himself, Mr. MCCOLLUM, Mr. LAFALCE, Mr.

VENTO, Mr. SCHUMER, Mr. FRANK of Massachusetts, Mr. KANJORSKI,

Mr. KENNEDY, Mr. FLAKE, Mr. MFUME, Mr. LAROCCO, Mr. ORTON, Mr.

KLEIN, Mrs. MALONEY, Ms. PRYCE of Ohio, Mr. LINDER, Mr. LAZIO,

Mr. BACHUS of Alabama, Mrs. ROUKEMA, Mr. MCCANDLESS, and Mr.

KING) introduced the following bill; which was referred to the Committee

on Banking, Finance and Urban Affairs

MARCH 22, 1994

Additional sponsor: Mr. HINCHEY

MARCH 22, 1994

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on February 10, 1994]

A BILL

To amend the Bank Holding Company Act of 1956, the

Revised Statutes of the United States, and the Federal
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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.

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.

7 TITLE I—INTERSTATE BANKING

8 AND BRANCHING

9 SEC. 101. INTERSTATE BANKING.

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

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

12 is amended to read as follows:

13 ‘‘(d) INTERSTATE ACQUISITIONS.—

14 ‘‘(1) APPROVALS AUTHORIZED.—
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1 ‘‘(A) IN GENERAL.—Subject to paragraph

2 (2), the Board may approve an application

3 under this section by a bank holding company to

4 acquire, directly or indirectly, any voting shares

5 of, interest in, or all or substantially all of the

6 assets of any additional bank or any bank hold7 ing company located in any State other than the

8 home State of the applicant bank holding com9 pany.

10 ‘‘(B) CONCENTRATION LIMITS.—

11 ‘‘(i) IN GENERAL.—The Board may

12 not approve an application under subpara13 graph (A) if—

14 ‘‘(I) the applicant (including all

15 insured depository institutions which

16 are affiliates of the applicant) controls,

17 or upon completion of the acquisition

18 would control, more than 10 percent of

19 the total amount of insured depository

20 institution deposits in the United

21 States; or

22 ‘‘(II) the applicant (including all

23 insured depository institutions which

24 are affiliates of the applicant) controls,

25 or upon completion of the acquisition
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1 would control, 30 percent or more of

2 the total amount of insured depository

3 institution deposits in the State in

4 which the bank to be acquired is lo5 cated.

6 ‘‘(ii) WAIVER BY STATE.—A State may

7 waive the application of clause (i)(II) to an

8 acquisition in such State.

9 ‘‘(2) APPLICABILITY OF STATE LAW TO ACQUISI10 TIONS.—

11 ‘‘(A) INAPPLICABILITY OF CERTAIN STATE

12 LAWS TO ACQUISITIONS.—Subject to paragraph

13 (3), any acquisition described in paragraph

14 (1)(A) which has been approved under this sec15 tion may be consummated notwithstanding any

16 law of any State that would prohibit or other17 wise limit such acquisition on the basis of—

18 ‘‘(i) the location or size of the acquir19 ing company or any subsidiary of such

20 company;

21 ‘‘(ii) the number of bank subsidiaries

22 of such company; or

23 ‘‘(iii) any other factor that—

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

25 effect of prohibiting or limiting the ac-
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1 quisition of shares or control of a bank

2 or bank holding company located in

3 such State by an out-of-State bank

4 holding company; and

5 ‘‘(II) is not applied with similar

6 effect with respect to acquisitions of

7 banks or bank holding companies lo8 cated in such State by bank holding

9 companies located in the State.

10 ‘‘(B) APPLICABILITY OF STATE LAW ON THE

11 FORM OF ACQUISITION.—

12 ‘‘(i) IN GENERAL.—Notwithstanding

13 any other provision of this subsection and

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

15 State which—

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

17 the enactment of the Interstate Bank18 ing Efficiency Act of 1994 or is en19 acted after such date; and

20 ‘‘(II) allows an out-of-State bank

21 or bank holding company to establish a

22 bank in the host State only by acquir23 ing an existing bank in the host State,
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1 shall apply with respect to the establishment

2 or acquisition of a bank in the host State

3 under this subsection.

4 ‘‘(ii) APPLICABILITY OF PROVISIONS

5 RELATING TO MINIMUM PERIOD OF EXIST6 ENCE OF ACQUIRED BANK.—In the case of

7 any State law referred to in clause (i)

8 which is enacted after the date of the enact9 ment of the Interstate Banking Efficiency

10 Act of 1994 and requires the bank to be ac11 quired to have been in existence (as of the

12 date of the transaction) for a period of time

13 greater than 5 years, such law shall be ap14 plied under clause (i) by substituting ‘5-

15 year period’ for such greater period.

16 ‘‘(3) APPLICABILITY OF STATE LAW TO INTER17 STATE BANKING OPERATIONS.—

18 ‘‘(A) STATE TAXATION AUTHORITY NOT AF19 FECTED.—No provision of this subsection shall

20 be construed as affecting the authority of any

21 State or political subdivision of any State to

22 apply and administer any tax or method of tax23 ation to any bank, bank holding company, or

24 foreign bank, or any affiliate of any bank or

25 bank holding company, to the extent such tax or
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1 tax method is otherwise permissible by or under

2 the Constitution of the United States of America

3 or other Federal law.

4 ‘‘(B) APPLICABILITY OF DEPOSIT CAPS AND

5 ANTITRUST LAWS.—No provision of this sub6 section shall be construed as affecting—

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

8 the percentage of the total amount of in9 sured depository institution deposits in the

10 State which may be held or controlled by

11 any bank to the extent the application of

12 such limitation does not discriminate

13 against out-of-State banks or bank holding

14 companies; or

15 ‘‘(ii) the applicability of the antitrust

16 laws or any State law which is similar to

17 the antitrust laws.

18 ‘‘(4) DEFINITIONS.—For purposes of this sub19 section, the following definitions shall apply:

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

22 ‘‘(i) has the same meaning as in sub23 section (a) of the 1st section of the Clayton

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

6 the same meaning as in section 3(l) of the Fed7 eral Deposit Insurance Act.

8 ‘‘(C) HOME STATE.—The term ‘home State’

9 means, with respect to a bank holding company,

10 the State in which the total deposits of all bank11 ing subsidiaries of such company were the larg12 est on the later of July 1, 1966, or the date on

13 which the company becomes a bank holding com14 pany.

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

16 means, with respect to a bank holding company

17 acquiring or establishing a bank in a State other

18 than such company’s home State, the State in

19 which the bank being acquired or established is

20 located.

21 ‘‘(E) INSURED DEPOSITORY INSTITUTION.—

22 The term ‘insured depository institution’ has the

23 same meaning as in section 3 of the Federal De24 posit Insurance Act.
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1 ‘‘(F) OUT-OF-STATE BANK HOLDING COM2 PANY.—The term ‘out-of State bank holding com3 pany’ means, with respect to any State, a bank

4 holding company the home State of which is an5 other State.’’.

6 (b) SUBSIDIARY DEPOSITORY INSTITUTIONS AS

7 AGENTS.—Section 18 of the Federal Deposit Insurance Act

8 (12 U.S.C. 1828) by adding at the end the following new

9 subsection:

10 ‘‘(q) SUBSIDIARY DEPOSITORY INSTITUTIONS AS

11 AGENTS FOR CERTAIN AFFILIATES.—

12 ‘‘(1) IN GENERAL.—Any depository institution

13 subsidiary of a depository institution holding com14 pany may receive deposits, renew time deposits, close

15 loans, disburse proceeds of loans, and receive pay16 ments on loans and other obligations as agent for a

17 depository institution affiliate located in another

18 State.

19 ‘‘(2) DEPOSITORY INSTITUTION ACTING AS AGENT

20 IS NOT A BRANCH.—Notwithstanding any other provi21 sion of law, a depository institution acting as agent

22 in accordance with paragraph (1) for a depository in23 stitution affiliate shall not be considered to be a

24 branch of the affiliate.
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1 ‘‘(3) ACTIVITIES AS AGENT.—Paragraph (1)

2 shall not be construed as authorizing a State deposi3 tory institution to engage in activities as an agent in

4 which such institution is not authorized to engage as

5 principal under the laws of the State in which such

6 institution acts as agent.

7 ‘‘(4) PLAN ON MEETING LOCAL CREDIT NEEDS.—

8 ‘‘(A) IN GENERAL.—If a depository institu9 tion holding company controls any depository

10 institution which acts as agent for another de11 pository institution subsidiary of such company

12 pursuant to paragraph (1), the depository insti13 tution holding company shall file a local credit

14 needs plan with the appropriate Federal banking

15 agency for the subsidiary which acts as agent be16 fore the date on which the subsidiary begins act17 ing as agent.

18 ‘‘(B) LOCAL CREDIT NEEDS PLAN DE19 FINED.—The term ‘local credit needs plan’

20 means a plan for meeting local credit needs in

21 the communities served by any depository insti22 tution subsidiary (of a bank holding company)

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

24 which includes an estimate of the extent to which

25 the amount of the anticipated savings attrib-
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1 utable to the use of depository institution sub2 sidiaries as agents under this subsection will be

3 available to meet such local credit needs.’’.

4 (c) EFFECTIVE DATE.—The amendment made by this

5 section shall apply after the end of the 12-month period be6 ginning on the date of the enactment of this Act.

7 SEC. 102. INTERSTATE BRANCHING BY NATIONAL BANKS.

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

9 is amended—

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

11 as subsections (g) through (k), respectively;

12 (2) by inserting after subsection (c) the following

13 new subsections:

14 ‘‘(d) INTERSTATE BRANCHING BY NATIONAL BANKS.—

15 ‘‘(1) APPROVALS OF ACQUISITION OF EXISTING

16 BRANCHES AUTHORIZED.—Subject to paragraphs (3)

17 and (4) and subsections (e) and (f), after the end of

18 the 3-year period beginning on the date of the enact19 ment of the Interstate Banking Efficiency Act of

20 1994, the Comptroller of the Currency may approve

21 an application to allow a national bank to—

22 ‘‘(A) acquire a bank or branch located out23 side the home State of such bank in a State in

24 which the bank does not maintain a branch; and
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1 ‘‘(B) operate such bank or branch (includ2 ing any branch of such bank) as a branch,

3 if the conditions established in paragraph (6) are

4 met.

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

6 INTERSTATE BRANCHING THROUGH DE NOVO

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

8 Comptroller of the Currency may approve an applica9 tion by a national bank to establish and operate a de

10 novo branch outside the home State of such bank in

11 a State in which the bank does not maintain a

12 branch if—

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

14 law that—

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

16 banks to establish de novo branches in such

17 State; and

18 ‘‘(ii) applies equally to national and

19 State banks; and

20 ‘‘(B) the conditions established in para21 graph (6) are met.

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

23 INTERSTATE BRANCHING BY ACQUISITION OF EXIST24 ING BANKS.—
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1 ‘‘(A) IN GENERAL.—An application by a

2 national bank to establish a branch in a State

3 other than the home State of such bank through

4 the acquisition of an existing bank or branch in

5 the host State may not be approved by the

6 Comptroller of the Currency if there is in effect

7 in the host State a law which—

8 ‘‘(i) expressly prohibits all out-of-State

9 banks from acquiring a branch located in

10 such State through the acquisition of an ex11 isting bank or branch in the host State;

12 ‘‘(ii) was enacted during the period be13 ginning on January 1, 1990, and ending 3

14 years after the date of the enactment of the

15 Interstate Banking Efficiency Act of 1994;

16 and

17 ‘‘(iii) applies equally to national and

18 State banks.

19 ‘‘(B) EFFECT OF PROHIBITION.—A national

20 bank whose home State has in effect a prohibi21 tion described in subparagraph (A) may not ac22 quire or establish, under this subsection, a

23 branch located in any other State.
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1 ‘‘(4) STATE LAWS REQUIRING MINIMUM PERIOD

2 OF EXISTENCE FOR ACQUISITIONS BY OUT-OF-STATE

3 BANKS.—

4 ‘‘(A) LAWS ENACTED BEFORE INTERSTATE

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

6 a law is in effect which—

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

8 bank holding company to establish a bank

9 in the host State only by acquiring a bank

10 or branch (in the host State) which has been

11 in existence for not less than the minimum

12 time period specified in such law; and

13 ‘‘(ii) took effect on or before the date of

14 the enactment of the Interstate Banking Ef15 ficiency Act of 1994,

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

17 branch in such State may establish a branch in

18 the State under this subsection only by acquiring

19 a bank or branch which has been in existence for

20 not less than the minimum time period specified

21 in such law.

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

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

24 which—
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1 ‘‘(i) allows an out-of-State bank or

2 bank holding company to establish a branch

3 in the host State only by acquiring a bank

4 or branch (in the host State) which has been

5 in existence for not less than the minimum

6 time period specified in such law; and

7 ‘‘(ii) took effect after the date of the en8 actment of the Interstate Banking Effi9 ciency Act of 1994,

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

11 branch in such State may establish a branch in

12 the State under this subsection only by acquiring

13 a bank or branch which has been in existence for

14 not less than the lesser of the minimum time pe15 riod specified in such law or 5 years.

16 ‘‘(5) EARLY APPROVAL AUTHORIZED IF STATE

17 LAW PERMITS.—The Comptroller of the Currency may

18 approve an application under paragraph (1) before

19 the expiration of the 3-year period described in such

20 paragraph if the State in which the branch is or will

21 be located has in effect a law which expressly permits

22 interstate branching by all national and State banks.

23 ‘‘(6) CONDITIONS APPLICABLE TO THE ESTAB24 LISHMENT OR ACQUISITION OF INTERSTATE

25 BRANCHES.—The Comptroller of the Currency may
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1 approve an application under paragraph (1) or (2)

2 by a national bank to acquire or establish a branch

3 only if—

4 ‘‘(A) the national bank is adequately cap5 italized (as defined under section 38 of the Fed6 eral Deposit Insurance Act) as of the date the

7 application is filed; and

8 ‘‘(B) the Comptroller of the Currency deter9 mines that—

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

11 be adequately capitalized upon the con12 summation of the acquisition or establish13 ment of the branch; and

14 ‘‘(ii) on the basis of an evaluation con15 ducted by the Comptroller, the management

16 of the bank has the necessary management

17 skills to manage the operations of the bank

18 upon the consummation of the acquisition

19 or establishment of the branch.

20 ‘‘(e) PROVISIONS APPLICABLE TO APPLICATION AND

21 APPROVAL PROCESS.—

22 ‘‘(1) CONSULTATION WITH STATE BANK SUPER23 VISOR.—In determining whether to grant approval of

24 an application under subsection (d), the Comptroller

25 of the Currency shall consider the views of any appro-
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1 priate State bank supervisor of the bank which sub2 mits the application regarding the bank’s compliance

3 with applicable State community reinvestment laws.

4 ‘‘(2) COMPLIANCE WITH STATE FILING REQUIRE5 MENTS.—

6 ‘‘(A) IN GENERAL.—An out-of-State na7 tional bank that files an application under sub8 section (d) to acquire or establish a branch with9 in a host State shall—

10 ‘‘(i) comply with any filing require11 ment of the host State that—

12 ‘‘(I) is not discriminatory in na13 ture; and

14 ‘‘(II) is similar in effect to any

15 requirement imposed by the host State

16 on a nonbanking corporation from an17 other State that seeks to engage in

18 business in the host State; and

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

20 to the State bank supervisor of the host

21 State.

22 ‘‘(B) PENALTY FOR FAILURE TO COMPLY.—

23 The Comptroller of the Currency may not ap24 prove an application under subsection (d) by an

25 out-of-State national bank which materially fails
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1 to comply with subparagraph (A) with respect to

2 such application.

3 ‘‘(3) CONCENTRATION LIMITS.—

4 ‘‘(A) IN GENERAL.—The Comptroller of the

5 Currency may not approve an application by a

6 bank under subsection (d) if—

7 ‘‘(i) the bank (including all insured de8 pository institutions which are affiliates of

9 the bank) controls, or upon completion of

10 the acquisition would control, more than 10

11 percent of the total amount of insured de12 pository institution deposits in the United

13 States; or

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

15 depository institutions which are affiliates

16 of the bank) controls, or upon completion of

17 the acquisition would control, 30 percent or

18 more of the total amount of insured deposi19 tory institution deposits in the State in

20 which the proposed branch would be located.

21 ‘‘(B) NOT APPLICABLE TO DE NOVO OUT-OF22 STATE BRANCHES.—Subparagraph (A) shall not

23 apply to the establishment of a de novo branch

24 outside the home State of a national bank.
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1 ‘‘(C) WAIVER BY STATE.—A State may

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

3 the acquisition of banks or branches in such

4 State.

5 ‘‘(4) CONSIDERATION OF BANK AFFILIATES.—In

6 determining whether to grant approval of an applica7 tion under subsection (d) with respect to a proposed

8 branch by a national bank which, as of the date of

9 the application, does not have a branch in the host

10 State (of the proposed branch), the Comptroller of the

11 Currency shall take into account the most recent writ12 ten evaluation under section 807 of the Community

13 Reinvestment Act of 1977 of each bank affiliate of the

14 bank which submits the application.

15 ‘‘(5) DEFINITIONS.—For purposes of this sub16 section and subsections (d) and (f) the following defi17 nitions shall apply:

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

19 the same meaning as in section 2(k) of the Bank

20 Holding Company Act of 1956.

21 ‘‘(B) ANTITRUST LAWS.—The term ‘anti22 trust laws’—

23 ‘‘(i) has the same meaning as in sub24 section (a) of the 1st section of the Clayton

25 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 novo

6 branch’ means a branch of a national bank

7 which—

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

10 ‘‘(ii) does not become a branch of such

11 bank as a result of—

12 ‘‘(I) the acquisition by the bank of

13 an insured depository institution or a

14 branch of an insured depository insti15 tution; 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 State’

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

24 in which the main office of the bank 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 INSTITUTION.—

6 The term ‘insured depository institution’ has the

7 same meaning as in section 3(c)(2) of the Fed8 eral Deposit Insurance Act.

9 ‘‘(H) OUT-OF-STATE BANK.—The term ‘out10 of-State bank’ means, with respect to any State,

11 a bank whose home State is another State.

12 ‘‘(I) OUT-OF-STATE BANK HOLDING COM13 PANY.—The term ‘out-of-State bank holding com14 pany’ means, with respect to any State, a bank

15 holding company whose home State (as defined

16 in section 3(d)(4)(D) of the Bank Holding Com17 pany Act of 1956) is another State.

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

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

20 the Federal Deposit Insurance Act.

21 ‘‘(K) STATE BANK SUPERVISOR.—The term

22 ‘State bank supervisor’ has the same meaning as

23 in section 3(r) of the Federal Deposit Insurance

24 Act.
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1 ‘‘(f) APPLICABILITY OF STATE AND FEDERAL LAW TO

2 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 State,

11 except to the extent any such State law is pre12 empted by Federal law regarding the same sub13 ject.

14 ‘‘(B) PROHIBITION ON DISCRIMINATORY EF15 FECT.—Notwithstanding subparagraph (A), a

16 branch of an out-of-State national bank shall not

17 be subject to a State law described in such sub18 paragraph to the extent the Comptroller of the

19 Currency determines that the application of the

20 law has, or would have, a discriminatory effect

21 on the branch in comparison with the effect the

22 application of such law has with respect to

23 branches of a bank chartered by the State.

24 ‘‘(C) ENFORCEMENT OF APPLICABLE STATE

25 LAWS.—The provisions of any State law to
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1 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 in

7 paragraph (1) or laws pertaining to the application

8 or administration of any tax or method of taxation,

9 shall apply to a branch (in such State) of an out-of10 State national bank in the same manner and to the

11 same extent such laws would apply if the branch were

12 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 tax

22 or tax method is otherwise permissible by or under

23 the Constitution of the United States of America or

24 other Federal law.
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1 ‘‘(4) STATE-IMPOSED NOTICE REQUIREMENTS.—

2 A host State may impose any notification or report3 ing requirement on a branch established or acquired

4 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 ANTI10 TRUST LAWS.—No provision of this subsection or sub11 section (d) or (e) shall be construed as affecting—

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

13 percentage of the total amount of insured deposi14 tory institution deposits in the State which may

15 be held or controlled by any bank (including all

16 insured depository institutions which are affili17 ates of the bank) to the extent the application of

18 such limitation does not discriminate against

19 out-of-State banks or bank holding companies; or

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

21 or any State law which is similar to the anti22 trust laws.’’; and

23 (3) in subsection (i) (as so redesignated by the

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

25 by striking ‘‘The term’’ and inserting ‘‘BRANCH.—
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1 Except as provided in section 18(q) of the Federal De2 posit Insurance Act, the term’’.

3 SEC. 103. INTERSTATE BRANCHING BY STATE BANKS.

4 (a) IN GENERAL.—The Federal Deposit Insurance Act

5 (12 U.S.C. 1811 et seq.) is amended by adding at the end

6 the following new section:

7 ‘‘SEC. 44. STATE BANK BRANCHES.

8 ‘‘(a) CONSENT OF CORPORATION.—

9 ‘‘(1) ESTABLISHMENT OF BRANCHES.—No State

10 nonmember insured bank (except a District bank)

11 may establish and operate any new domestic branch

12 without the prior written consent of the Corporation.

13 ‘‘(2) CHANGE OF LOCATION OF STATE BANK OF14 FICES AND BRANCHES.—No State nonmember insured

15 bank (except a District bank) may move the main of16 fice or any domestic branch of such bank from 1 loca17 tion to another without the prior written consent of

18 the Corporation.

19 ‘‘(3) CHANGE OF LOCATION OF INSURED BRANCH

20 OF FOREIGN BANK.—No foreign bank may move any

21 insured branch from 1 location to another without the

22 prior written consent of the Corporation.

23 ‘‘(4) FACTORS TO BE CONSIDERED.—The Cor24 poration shall consider the factors enumerated in sec-
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1 tion 6 in making any determination under this sub2 section.

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

4 ‘‘(1) IN GENERAL.—No State nonmember insured

5 bank shall establish or operate any foreign branch

6 without the prior written consent of the Corporation.

7 ‘‘(2) CONDITIONS AND REGULATIONS.—The Cor8 poration may establish such conditions and prescribe

9 such regulations for the establishment and operation

10 of foreign branches of State nonmember banks as the

11 Corporation may determine to be appropriate.

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

13 ‘‘(1) APPROVALS OF ACQUISITION OF EXISTING

14 BRANCHES AUTHORIZED.—Subject to paragraphs (3)

15 and (4) and subsections (d) and (e), after the end of

16 the 3-year period beginning on the date of the enact17 ment of the Interstate Banking Efficiency Act of

18 1994, the appropriate Federal banking agency may

19 approve an application under this section to allow an

20 insured State bank to—

21 ‘‘(A) acquire a bank or branch located out22 side the home State of such bank in a State in

23 which the bank does not maintain a branch; and

24 ‘‘(B) operate such bank or branch (includ25 ing any branch of such bank) as a branch,
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1 if the conditions established in paragraph (6) are

2 met.

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

4 INTERSTATE BRANCHING THROUGH DE NOVO

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

6 appropriate Federal banking agency may approve an

7 application by a State bank to establish and operate

8 a de novo branch outside the home State of such bank

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

10 branch if—

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

12 law that—

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

14 banks to establish de novo branches in such

15 State; and

16 ‘‘(ii) applies equally to national and

17 State banks; and

18 ‘‘(B) the conditions established in para19 graph (6) are met.

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

21 INTERSTATE BRANCHING BY ACQUISITION OF EXIST22 ING BANKS.—

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

24 insured State bank to establish a branch in a

25 State other than the home State of such bank
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1 through the acquisition of an existing bank or

2 branch in the host State may not be approved by

3 the appropriate Federal banking agency if there

4 is in effect in the host State a law which—

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

6 banks from acquiring a branch located in

7 such State through the acquisition of an ex8 isting bank or branch in the host State;

9 ‘‘(ii) was enacted during the period be10 ginning on January 1, 1990, and ending 3

11 years after the date of the enactment of the

12 Interstate Banking Efficiency Act of 1994;

13 and

14 ‘‘(iii) applies equally to national and

15 State banks.

16 ‘‘(B) EFFECT OF PROHIBITION.—An in17 sured State bank whose home State has in effect

18 a prohibition described in subparagraph (A)

19 may not acquire or establish, under subsection

20 (c), a branch located in any other State.

21 ‘‘(4) STATE LAWS REQUIRING MINIMUM PERIOD

22 OF EXISTENCE FOR ACQUISITIONS BY OUT-OF-STATE

23 BANKS.—
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1 ‘‘(A) LAWS ENACTED BEFORE INTERSTATE

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

3 a law is in effect which—

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

5 bank holding company to establish a bank

6 in the host State only by acquiring a bank

7 or branch (in the host State) which has been

8 in existence for not less than the minimum

9 time period specified in such law; and

10 ‘‘(ii) took effect on or before the date of

11 the enactment of the Interstate Banking Ef12 ficiency Act of 1994,

13 an out-of-State insured State bank which has no

14 branch in such State may establish a branch in

15 the State under this subsection only by acquiring

16 a bank or branch which has been in existence for

17 not less than the minimum time period specified

18 in such law.

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

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

21 which—

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

23 bank holding company to establish a branch

24 in the host State only by acquiring a bank

25 or branch (in the host State) which has been
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1 in existence for not less than the minimum

2 time period specified in such law; and

3 ‘‘(ii) took effect after the date of the en4 actment of the Interstate Banking Effi5 ciency Act of 1994,

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

7 branch in such State may establish a branch in

8 the State under this subsection only by acquiring

9 a bank or branch which has been in existence for

10 not less than the lesser of the minimum time pe11 riod specified in such law or 5 years.

12 ‘‘(5) EARLY APPROVAL AUTHORIZED IF STATE

13 LAW PERMITS.—The appropriate Federal banking

14 agency may approve an application under paragraph

15 (1) before the expiration of the 3-year period described

16 in such paragraph if the State in which the branch

17 is or will be located has in effect a law which ex18 pressly permits interstate branching by all national

19 and State banks.

20 ‘‘(6) CONDITIONS APPLICABLE TO THE ESTAB21 LISHMENT OR ACQUISITION OF INTERSTATE

22 BRANCHES.—The appropriate Federal banking agen23 cy may approve an application under paragraph (1)

24 or (2) by an insured State bank to acquire or estab25 lish a branch only if—
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1 ‘‘(A) the bank is adequately capitalized (as

2 defined under section 38) as of the date the ap3 plication is filed;

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

5 branches in other States under the law of the

6 home State of the bank; and

7 ‘‘(C) the appropriate Federal banking agen8 cy determines that—

9 ‘‘(i) the bank will continue to be ade10 quately capitalized upon the consummation

11 of the acquisition or establishment of the

12 branch; and

13 ‘‘(ii) on the basis of an evaluation con14 ducted by the agency, the management of

15 the bank has the necessary management

16 skills to manage the operations of the bank

17 upon the consummation of the acquisition

18 or establishment of the branch.

19 ‘‘(d) PROVISIONS APPLICABLE TO APPLICATION AND

20 APPROVAL PROCESS.—

21 ‘‘(1) CONSULTATION WITH STATE BANK SUPER22 VISOR.—In determining whether to grant approval of

23 an application under subsection (c), the appropriate

24 Federal banking agency shall consider the views of

25 any appropriate State bank supervisor of the bank
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1 which submits the application regarding the bank’s

2 compliance with applicable State community rein3 vestment laws.

4 ‘‘(2) COMPLIANCE WITH STATE FILING REQUIRE5 MENTS.—

6 ‘‘(A) IN GENERAL.—An out-of-State insured

7 State bank that files an application under sub8 section (c) to acquire or establish a branch with9 in a host State shall—

10 ‘‘(i) comply with any filing require11 ment of the host State that—

12 ‘‘(I) is not discriminatory in na13 ture; and

14 ‘‘(II) is similar in effect to a re15 quirement imposed by the host State

16 on a nonbanking corporation from an17 other State that seeks to engage in

18 business in the host State; and

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

20 to the State bank supervisor of the host

21 State.

22 ‘‘(B) PENALTY FOR FAILURE TO COMPLY.—

23 The appropriate Federal banking agency may

24 not approve an application under subsection (c)

25 by an insured State bank which materially fails
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1 to comply with subparagraph (A) with respect to

2 such application.

3 ‘‘(3) CONCENTRATION LIMITS.—

4 ‘‘(A) IN GENERAL.—The appropriate Fed5 eral banking agency may not approve an appli6 cation by a bank under subsection (c) if—

7 ‘‘(i) the bank (including all insured de8 pository institutions which are affiliates of

9 the bank) controls, or upon completion of

10 the acquisition would control, more than 10

11 percent of the total amount of insured de12 pository institution deposits in the United

13 States; or

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

15 depository institutions which are affiliates

16 of the bank) controls, or upon completion of

17 the acquisition would control, 30 percent or

18 more of the total amount of insured deposi19 tory institution deposits in the State in

20 which the proposed branch would be located.

21 ‘‘(B) NOT APPLICABLE TO DE NOVO OUT-OF22 STATE BRANCHES.—Subparagraph (A) shall not

23 apply to the establishment of a de novo branch

24 outside the home State of an insured State bank.
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1 ‘‘(C) WAIVER BY STATE.—A State may

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

3 the acquisition of banks or branches in such

4 State.

5 ‘‘(4) CONSIDERATION OF BANK AFFILIATES.—In

6 determining whether to grant approval of an applica7 tion under subsection (c) with respect to a proposed

8 branch by an insured State bank which, as of the date

9 of the application, does not have a branch in the host

10 State (of the proposed branch), the appropriate Fed11 eral banking agency shall take into account the most

12 recent written evaluation under section 807 of the

13 Community Reinvestment Act of 1977 of each bank

14 affiliate of the bank which submits the application.

15 ‘‘(e) APPLICABILITY OF STATE AND FEDERAL LAW TO

16 INTERSTATE BRANCHING OPERATIONS.—

17 ‘‘(1) STATE LAWS APPLICABLE TO BRANCHES OF

18 OUT-OF-STATE BANKS.—

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

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

21 bank shall be subject to the laws of the host State

22 as if such branch were a branch of a bank char23 tered by that State.

24 ‘‘(B) ACTIVITIES OF BRANCHES.—An in25 sured State bank that establishes a branch in a
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1 host State may not conduct any activity at such

2 branch that is not permissible for a bank char3 tered by the host State.

4 ‘‘(C) RESERVATION OF CERTAIN RIGHTS TO

5 STATES.—No provision of this subsection or sub6 section (c) or (d) shall be construed as limiting

7 in any way the right of a State to—

8 ‘‘(i) determine the authority of State

9 banks chartered in that State to establish

10 and maintain branches; or

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

12 State banks chartered by that State.

13 ‘‘(2) STATE TAXATION AUTHORITY NOT AF14 FECTED.—No provision of this subsection or sub15 section (c) or (d) 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 State bank, including any branch of

19 a State bank, any bank holding company which con20 trols any State bank, or any affiliate of any such

21 bank or bank holding company to the extent such tax

22 or tax method is otherwise permissible by or under

23 the Constitution of the United States of America or

24 other Federal law.
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1 ‘‘(3) STATE-IMPOSED NOTICE REQUIREMENTS.—

2 A host State may impose any notification or report3 ing requirement on a branch established or acquired

4 under subsection (c) 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 ‘‘(4) APPLICABILITY OF DEPOSIT CAPS AND ANTI10 TRUST LAWS.—No provision of this subsection or sub11 section (c) or (d) shall be construed as affecting—

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

13 percentage of the total amount of insured deposi14 tory institution deposits in the State which may

15 be held or controlled by any bank (including all

16 insured depository institutions which are affili17 ates of the bank) to the extent the application of

18 such limitation does not discriminate against

19 out-of-State banks or bank holding companies; or

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

21 or any State law which is similar to the anti22 trust laws.

23 ‘‘(f) COORDINATION OF EXAMINATION AUTHORITY.—
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1 ‘‘(1) IN GENERAL.—A host State bank supervisor

2 may examine a branch operated in the host State by

3 an out-of-State insured State bank to—

4 ‘‘(A) determine compliance with host State

5 laws regarding banking, community reinvest6 ment, fair lending, consumer protection, and

7 permissible activities; and

8 ‘‘(B) ensure that the activities of the branch

9 do not constitute a significant risk to the safe

10 and sound operation of the branch.

11 ‘‘(2) ENFORCEMENT.—If the State bank super12 visor of a host State described in paragraph (1) deter13 mines that there is a violation of host State law con14 cerning the activities being conducted by a branch op15 erated in such State by an out-of-State insured State

16 bank or that the branch is being operated in an un17 safe and unsound manner, such host State bank su18 pervisor or, to the extent authorized by the law of the

19 host State, a State law enforcement officer may un20 dertake such enforcement actions or proceedings as

21 would be permitted under host State law if the branch

22 were a bank chartered by the host State.

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

24 bank supervisors of 1 or more States may enter into

25 cooperative agreements to facilitate State regulatory
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1 supervision of State banks and branches, including

2 cooperative agreements relating to the coordination of

3 examinations and joint participation in examina4 tions.

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

6 provision of this section shall be construed as limiting

7 the authority of any Federal banking agency to exam8 ine any bank or branch of a bank for which the agen9 cy is the appropriate Federal banking agency.

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

11 following definitions shall apply:

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

13 laws’—

14 ‘‘(A) has the same meaning as in subsection

15 (a) of the 1st section of the Clayton Act; and

16 ‘‘(B) includes section 5 of the Federal Trade

17 Commission Act to the extent such section 5 re18 lates to unfair methods of competition.

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

20 branch’ means a branch of a bank which—

21 ‘‘(A) is originally established by the bank as

22 a branch; and

23 ‘‘(B) does not become a branch of such bank

24 as a result of—
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1 ‘‘(i) the acquisition by the bank of an

2 insured depository institution or a branch

3 of an insured depository institution; or

4 ‘‘(ii) the conversion, merger, or consoli5 dation of any such institution or branch.

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

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

8 whom the bank is chartered.

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

10 the State in which a bank establishes or maintains a

11 branch other than the home State of the bank.

12 ‘‘(5) OUT-OF-STATE BANK.—The term ‘out-of13 State bank’ means, with respect to any State, a bank

14 whose home State is another State.

15 ‘‘(6) OUT-OF-STATE BANK HOLDING COMPANY.—

16 The term ‘out-of-State bank’ means, with respect to

17 any State, a bank holding company whose home State

18 (as defined in section 3(d)(4)(D) of the Bank Holding

19 Company Act of 1956) is another State.’’.

20 (b) TECHNICAL AND CONFORMING AMENDMENT.—Sec21 tion 3(o) of the Federal Deposit Insurance Act (12 U.S.C.

22 1813(o)) is amended to read as follows:

23 ‘‘(o) DEFINITIONS RELATING TO DOMESTIC AND FOR24 EIGN BRANCHES.—
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1 ‘‘(1) BRANCH.—The term ‘branch’ means a do2 mestic branch or a foreign branch, except when such

3 term is used in connection with the term ‘Federal

4 branch’ or ‘insured branch’.

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

6 branch’ includes any branch bank, branch office,

7 branch agency, additional office, or any branch lo8 cated in any State at which deposits are received,

9 checks are paid, or money is lent.

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

11 branch’ means any office or place at which banking

12 operations are conducted and which is not located in

13 any State.’’.

14 SEC. 104. BRANCHING BY FOREIGN BANKS.

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

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

17 read as follows:

18 ‘‘(a) INTERSTATE BRANCHING AND AGENCY OPER19 ATIONS.—

20 ‘‘(1) FEDERAL BRANCH OR AGENCY.—Subject to

21 the provisions of this Act and with the prior written

22 approval by the Board and the Comptroller of the

23 Currency of an application, a foreign bank may es24 tablish and operate a Federal branch or agency in

25 any State outside the home State of such foreign bank
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1 to the extent that the establishment and operation of

2 such branch would be permitted under section 5155 of

3 the Revised Statutes if the foreign bank were a na4 tional bank whose home State (as defined in sub5 section (e)(5) of such section) is the same State as the

6 home State of the foreign bank.

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

8 provisions of this Act and with the prior written ap9 proval by the Board and the appropriate State bank

10 supervisor of an application, a foreign bank may es11 tablish and operate a State branch or agency in any

12 State outside the home State of such foreign bank to

13 the extent that such establishment and operation

14 would be permitted under section 44 of the Federal

15 Deposit Insurance Act if the foreign bank were a

16 State bank whose home State (as defined in subsection

17 (g) of such section) is the same State as the home

18 State of the foreign bank.

19 ‘‘(3) CRITERIA FOR DETERMINATION.—In ap20 proving an application under paragraph (1) or (2),

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

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

23 ‘‘(A) shall apply the standards applicable to

24 the establishment of a foreign bank office in the

25 United States under section 7(d); and
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1 ‘‘(B) may not approve an application un2 less the Board and (in the case of an application

3 under paragraph (1)) the Comptroller of the

4 Currency—

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

6 financial resources, including the capital

7 level of the bank, are equivalent to those re8 quired for a domestic bank to be approved

9 for branching under section 5155 of the Re10 vised Statutes and section 44 of the Federal

11 Deposit Insurance Act; and

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

13 Treasury regarding capital equivalency.

14 ‘‘(4) REQUIREMENT FOR A SEPARATE SUBSIDI15 ARY.—If the Board or the Comptroller of the Cur16 rency, taking into account differing regulatory or ac17 counting standards, finds that adherence by a foreign

18 bank to capital requirements equivalent to those im19 posed under section 5155 of the Revised Statutes and

20 section 44 of the Federal Deposit Insurance Act could

21 be verified only if the banking activities of such bank

22 in the United States are carried out in a domestic

23 banking subsidiary within the United States, the

24 Board and the Comptroller of the Currency may ap25 prove an application under paragraph (1) subject to
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1 a requirement that the foreign bank or company con2 trolling the foreign bank establish a domestic banking

3 subsidiary in the United States.

4 ‘‘(5) ADDITIONAL AUTHORITY FOR INTERSTATE

5 BRANCHES AND AGENCIES OF FOREIGN BANKS.—Not6 withstanding paragraphs (1) and (2), a foreign bank

7 may, with the approval of the Comptroller of the Cur8 rency, establish and operate a Federal branch or Fed9 eral agency or, with the approval of the Board and

10 the appropriate State bank supervisor, a State branch

11 or State agency in any State outside the foreign

12 bank’s home State if—

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

14 branch or agency is expressly permitted by the

15 State in which the branch or agency is to be es16 tablished; and

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

18 branch, the branch receives only such deposits as

19 would be permissible for a corporation organized

20 under section 25A of the Federal Reserve Act.’’.

21 (b) CONTINUED AUTHORITY FOR LIMITED BRANCHES,

22 AGENCIES, OR COMMERCIAL LENDING COMPANIES.—Sec23 tion 5(b) of the International Banking Act of 1978 (12

24 U.S.C. 3103(b)) is amended by adding at the end the follow25 ing new sentence: ‘‘Notwithstanding subsection (a), a for-
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1 eign bank may continue to operate, after the enactment of

2 the Interstate Banking Efficiency Act of 1994, any Federal

3 branch, State branch, Federal agency, State agency, or com4 mercial lending company subsidiary which such bank was

5 operating on the day before the date of the enactment of

6 such Act to the extent the branch, agency, or subsidiary con7 tinues, after the enactment of such Act, to engage in oper8 ations which were lawful under the laws in effect on the

9 day before such date.’’.

10 (c) CLARIFICATION OF BRANCHING RULES IN THE

11 CASE OF A FOREIGN BANK WITH A DOMESTIC BANK SUB12 SIDIARY.—Section 5 of the International Banking Act of

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

14 the following new subsection:

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

16 CASE OF A FOREIGN BANK WITH A DOMESTIC BANK SUB17 SIDIARY.—In the case of a foreign bank that has a domestic

18 bank subsidiary within the United States—

19 ‘‘(1) the fact that such bank controls a domestic

20 bank shall not affect the authority of the foreign bank

21 to establish Federal and State branches or agencies to

22 the extent permitted under subsection (a); and

23 ‘‘(2) the fact that the domestic bank is controlled

24 by a foreign bank which has Federal or State

25 branches or agencies in States other than the home
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1 State of such domestic bank shall not affect the au2 thority of the domestic bank to establish branches out3 side the home State of the domestic bank to the extent

4 permitted under section 5155(d) of the Revised Stat5 utes or section 44 of the Federal Deposit Insurance

6 Act, as the case may be.’’.

7 (d) HOME STATE DETERMINATIONS.—Section 5(c) of

8 the International Banking Act of 1978 (12 U.S.C. 3103(c))

9 is amended to read as follows:

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

11 BANK.—For the purposes of this section—

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

13 branch, agency, subsidiary commercial lending com14 pany, or subsidiary bank in more than 1 State, the

15 home State of the foreign bank is the 1 State of such

16 States which is selected by the foreign bank or, in de17 fault of any such selection, by the Board; and

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

19 have a branch, agency, subsidiary commercial lending

20 company, or subsidiary bank in more than 1 State,

21 the home State of the foreign bank is the State in

22 which the foreign bank has a branch, agency, subsidi23 ary commercial lending company, or subsidiary

24 bank.’’.
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1 SEC. 105. INTERSTATE CONSOLIDATIONS.

2 Section 18(d) of the Federal Deposit Insurance Act (12

3 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 other

9 provision of Federal law or any provision of

10 State law (other than a law referred to in sub11 paragraph (B)), a bank holding company which

12 has bank subsidiaries in more than 1 State may,

13 with the prior written approval by the respon14 sible agency (as determined in accordance with

15 section 18(c)(2) of the Federal Deposit Insurance

16 Act) of an application and subject to the require17 ments of subsection (c), combine 2 or more of

18 such banks into a single bank by means of merg19 er, consolidation, or other similar transaction in

20 accordance with such subsection after the end of

21 the 18-month period beginning on the date of the

22 enactment of the Interstate Banking Efficiency

23 Act of 1994.

24 ‘‘(B) EXCEPTION FOR STATES WHICH PRO25 HIBIT THE ACQUISITION OF A BRANCH BY ANY

26 OUT-OF-STATE BANK.—No bank which is located
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1 in a State in which a law described in section

2 5155(d)(3)(A) of the Revised Statutes of the

3 United States or section 44(c)(3)(A) is in effect

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

5 other similar transaction under subparagraph

6 (A) with any other bank affiliate of such bank.

7 ‘‘(C) EXCEPTION FOR CERTAIN BANKS AC8 QUIRED DURING TRANSITION PERIOD.—No bank

9 subsidiary of a bank holding company, or any

10 branch of any such bank—

11 ‘‘(i) control of which was acquired, di12 rectly or indirectly, by such company after

13 the end of the 18-month period beginning on

14 the date of the enactment of the Interstate

15 Banking Efficiency Act of 1994; and

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

17 which the company did not control any

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

19 month period,

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

21 other similar transaction under subparagraph

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

23 before the end of the 3-year period beginning on

24 such date of enactment, unless the State in which

25 the bank or branch is located is a State referred
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1 to in section 5155(d)(5) of the Revised Statutes

2 of the United States or section 44(c)(5).

3 ‘‘(2) EFFECT OF STATE PROHIBITION ON

4 BRANCHING.—If a branch which results from a trans5 action under paragraph (1) is located in a State in

6 which a law—

7 ‘‘(A) takes effect after the consummation of

8 the transaction;

9 ‘‘(B) is enacted during the period beginning

10 on January 1, 1990, and ending 3 years after

11 the date of the enactment of the Interstate Bank12 ing Efficiency Act of 1994;

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

14 banks from acquiring a branch located in such

15 State through the acquisition of an existing bank

16 in the host State; and

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

18 banks,

19 the branch shall be promptly converted back into a

20 bank as the bank existed before such transaction, in

21 accordance with regulations of the Federal banking

22 agency or State bank supervisor which had jurisdic23 tion over the bank which was converted into a branch.

24 ‘‘(3) APPLICABILITY OF STATE AND FEDERAL

25 LAW TO INTERSTATE BRANCHING OPERATIONS.—If a
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1 branch which results from a transaction under para2 graph (1) is the branch of a national bank, section

3 5155(f) of the Revised Statutes of the United States

4 shall apply with respect to such branch.

5 ‘‘(4) STATE TAXATION AUTHORITY NOT AF6 FECTED.—No provision of this subsection shall be

7 construed as affecting the authority of any State or

8 political subdivision of any State to apply and ad9 minister any tax or method of taxation to any bank

10 subsidiary or additional branch resulting from a con11 solidation or other transaction under paragraph (1)

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

13 bank or branch resulting from any such consolidation

14 or other transaction, or any affiliate of any such bank

15 or company to the extent such tax or tax method is

16 otherwise permissible by or under the Constitution of

17 the United States of America or other Federal law.

18 ‘‘(5) PLAN ON MEETING LOCAL CREDIT NEEDS.—

19 The responsible agency (as determined under sub20 section (c)(2)) may not approve any application for

21 any consolidation or other transaction under this sub22 section unless the responsible agency has considered a

23 plan submitted by the applicant bank holding com24 pany for meeting local credit needs in the commu25 nities served by any bank subsidiary of the company
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1 which is involved in the proposed consolidation or

2 transaction, including the extent to which the amount

3 of the anticipated savings attributable to the proposed

4 consolidation or other transaction will be available to

5 meet such local credit needs.’’.

6 SEC. 106. BRANCH CLOSURES.

7 Section 42 of the Federal Deposit Insurance Act (12

8 U.S.C. 1831r–1) is amended by adding at the end the fol9 lowing new subsection:

10 ‘‘(d) BRANCH CLOSURES IN INTERSTATE BANKING OR

11 BRANCHING OPERATIONS.—

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

13 interstate bank which proposes to close any branch in

14 a low- or moderate-income area, the notice required

15 under subsection (b)(2) shall contain the mailing ad16 dress of the appropriate Federal banking agency and

17 a statement that comments on the proposed closing of

18 such branch may be mailed to such agency.

19 ‘‘(2) ACTION REQUIRED BY APPROPRIATE FED20 ERAL BANKING AGENCY.—If, in the case of a branch

21 referred to in paragraph (1)—

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

23 branch is located—
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1 ‘‘(i) submits a written request relating

2 to the closing of such branch to the appro3 priate Federal banking agency; and

4 ‘‘(ii) includes a statement of specific

5 reasons for the request, including a discus6 sion of the adverse effect of such closing on

7 the availability of banking services in the

8 area affected by the closing of the branch;

9 and

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

11 is not frivolous,

12 the agency shall consult with community leaders in

13 the affected area and convene a meeting of representa14 tives of the agency with community leaders in the af15 fected area and such other individuals, organizations,

16 and depository institutions (as defined in section

17 19(b)(1)(A) of the Federal Reserve Act) as the agency

18 may determine to be appropriate, to explore the fea19 sibility of obtaining adequate alternative facilities

20 and services for the affected area, including the estab21 lishment of a new branch by another depository insti22 tution, the chartering of a new depository institution,

23 or the establishment of a community development

24 credit union, following the closing of the branch.
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1 ‘‘(3) NO AFFECT ON CLOSING.—No action by the

2 appropriate Federal banking agency under paragraph

3 (2) shall affect the authority of an interstate bank to

4 close a branch (including the timing of such closing)

5 if the requirements of subsections (a) and (b) have

6 been met by such bank with respect to the branch

7 being closed.

8 ‘‘(4) DEFINITIONS.—For purposes of this sub9 section, the following definitions shall apply:

10 ‘‘(A) INTERSTATE BANK DEFINED.—The

11 term ‘interstate bank’ means a bank which

12 maintains branches in more than 1 State.

13 ‘‘(B) LOW- OR MODERATE-INCOME AREA.—

14 The term ‘low- or moderate-income area’ means

15 a census tract for which the median family in16 come is—

17 ‘‘(i) less than 80 percent of the median

18 family income for the metropolitan statis19 tical area (as designated by the Director of

20 the Office of Management and Budget) in

21 which the census tract is located; or

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

23 which is not located in a metropolitan sta24 tistical area, less than 80 percent of the me25 dian family income for the State in which
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1 the census tract is located, as determined

2 without taking into account family income

3 in metropolitan statistical areas in such

4 State.’’.

5 SEC. 107. PROHIBITION AGAINST DEPOSIT PRODUCTION

6 OFFICES.

7 (a) REGULATIONS.—Before the end of the 120-day pe8 riod beginning on the date of the enactment of the Interstate

9 Banking Efficiency Act of 1994, each appropriate Federal

10 banking agency shall prescribe regulations which prohibit

11 any person from using any authority to engage in interstate

12 branching pursuant to this title, or any amendment made

13 by this title to any other provision of law, primarily for

14 the purpose of deposit production.

15 (b) GUIDELINES FOR MEETING CREDIT NEEDS.—Reg16 ulations issued under subsection (a) shall include guidelines

17 to ensure that each interstate branch meets the credit needs

18 of the community and market area in which the branch

19 operates.

20 (c) LIMITATION ON OUT-OF-STATE LOANS.—

21 (1) LIMITATION.—Regulations issued under sub22 section (a) shall require that if the percentage of out23 standing loans made by an interstate branch to bor24 rowers located in the host State of, or market area

25 served by, the branch is less than half the average of
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1 such percentage for all Federal depository institutions

2 and State depository institutions having their prin3 cipal place of operations in the host State or that

4 market area—

5 (A) the appropriate Federal banking agency

6 for the branch shall review the loan portfolio of

7 the branch and determine whether the branch is

8 reasonably meeting the credit needs of the com9 munity and market area in which the branch

10 operates; and

11 (B) if the agency determines that the branch

12 is not reasonably meeting those needs—

13 (i) the branch shall be closed, and

14 (ii) the person which established the

15 branch may not open a new branch in that

16 State unless the person provides reasonable

17 assurances to the satisfaction of the appro18 priate Federal banking agency that the new

19 branch will reasonably meet the credit needs

20 of the community and market area in which

21 the new branch will operate.

22 (2) CONSIDERATIONS.—In making a determina23 tion under paragraph (1)(A) regarding an interstate

24 branch, the appropriate Federal banking agency shall

25 consider—
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1 (A) whether the branch was acquired as

2 part of the purchase of a failed or failing deposi3 tory institution;

4 (B) whether the branch has a higher con5 centration of commercial and credit card lend6 ing; and

7 (C) the ratings received by the branch in

8 evaluations under the Community Reinvestment

9 Act of 1977.

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

11 interstate branch acquired before January 1, 1992, as part

12 of any consolidation or merger of depository institutions.

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

14 following definitions shall apply:

15 (1) APPROPRIATE FEDERAL BANKING AGENCY.—

16 The term ‘‘appropriate Federal banking agency’’ has

17 the same meaning as in section 3 of the Federal De18 posit Insurance Act.

19 (2) BRANCH.—The term ‘‘branch’’ means any of20 fice, agency, or other place of business located in any

21 State at which deposits are received, checks paid, or

22 money lent.

23 (3) FEDERAL DEPOSITORY INSTITUTION AND

24 STATE DEPOSITORY INSTITUTION.—The terms ‘‘Fed25 eral depository institution’’ and ‘‘State depository in-
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1 stitution’’ have the same meanings as in section 3 of

2 the Federal Deposit Insurance Act.

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

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

5 or maintains a branch, other than—

6 (A) in the case of an insured State bank,

7 the State in which the bank is chartered;

8 (B) in the case of a national bank, the State

9 in which the main office of the bank is located;

10 and

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

12 the State in which the total deposits of all bank

13 subsidiaries of such company is the greatest.

14 (5) INTERSTATE BRANCH.—The term ‘‘interstate

15 branch’’ means a branch established pursuant to the

16 authority referred to in subsection (a).

17 (6) PRINCIPAL PLACE OF OPERATIONS.—The

18 term ‘‘principal place of operations’’ means the State

19 in which the total deposits of all bank subsidiaries of

20 a person are greatest.

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

22 same meaning as in section 3 of the Federal Deposit

23 Insurance Act.
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1 SEC. 108. FEDERAL RESERVE BOARD STUDY ON BANK FEES.

2 (a) IN GENERAL.—Section 1002 of the Financial In3 stitutions Reform, Recovery, and Enforcement Act of 1989

4 (12 U.S.C. 1811 note) is amended to read as follows:

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

6 ‘‘(a) ANNUAL SURVEY REQUIRED.—The Board of Gov7 ernors of the Federal Reserve System shall obtain a sample,

8 which is representative by geographic location and size of

9 the institution, of—

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

11 insured depository institutions; and

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

13 institutions for providing such service, including fees

14 imposed for not sufficient funds, deposit items re15 turned, and automated teller machines.

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

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

18 the Federal Reserve System shall prepare a report of

19 the results of each survey conducted pursuant to sub20 section (a).

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

22 prepared pursuant to paragraph (1) shall include—

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

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

25 the cost and availability of retail banking serv26 ices which delineates differences on the basis of
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1 size of the institution and engagement in

2 multistate activity; and

3 ‘‘(B) a description of the correlation, if any,

4 among the following factors:

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

6 amount of any deposit insurance premium

7 assessed by the Federal Deposit Insurance

8 Corporation against insured depository in9 stitutions.

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

11 amount of the fees imposed by such institu12 tions for providing retail banking services.

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

14 such services.

15 ‘‘(3) SUBMISSION TO CONGRESS.—The Board of

16 Governors of the Federal Reserve System shall submit

17 each annual report to the Congress not later than

18 June 1 of each calendar year.’’.

19 (b) SUNSET.—The requirements of subsection (a) shall

20 not apply after the end of the 7-year period beginning on

21 the date of enactment of this Act.

22 SEC. 109. RESTATEMENT OF EXISTING LAW.

23 No provision of this title and no amendment made by

24 this title to any other provision of law shall be construed

25 as affecting in any way the right of any State, or any polit-
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1 ical subdivision of any State, to impose or maintain a non2 discriminatory franchise tax or other nonproperty tax in3 stead of a franchise tax in accordance with section 3124

4 of title 31, United States Code.

5 TITLE II—CRA EVALUATIONS

6 SEC. 201. STATE-BY-STATE CRA EVALUATIONS OF DEPOSI7 TORY INSTITUTIONS WITH INTERSTATE

8 BRANCHES.

9 Section 807 of the Community Reinvestment Act of

10 1977 (12 U.S.C. 2906) is amended by adding at the end

11 the following new subsection:

12 ‘‘(d) INSTITUTIONS WITH INTERSTATE BRANCHES.—

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

14 of a regulated financial institution which maintains

15 1 or more domestic branches located outside the State

16 in which the institution’s principal place of business

17 is located (hereafter in this subsection referred to as

18 the ‘home State’), the appropriate Federal financial

19 supervisory agency shall prepare—

20 ‘‘(A) a written evaluation of the entire in21 stitution’s record of performance under this Act,

22 as required by subsections (a), (b), and (c) of

23 this section; and

24 ‘‘(B) for each State in which the institution

25 maintains 1 or more domestic branches (includ-
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1 ing the institution’s home State), a separate

2 written evaluation of the institution’s record of

3 performance within such State under this Act, as

4 required by subparagraphs (A) and (B) of sub5 section (b)(1) of this section.

6 ‘‘(2) CONTENT OF STATE LEVEL EVALUATION.—

7 A written evaluation prepared pursuant to paragraph

8 (1)(B) of this subsection shall report the information

9 required by such paragraph separately for each met10 ropolitan area (as defined by the appropriate Federal

11 financial supervisory agency) in which the regulated

12 financial institution maintains 1 or more domestic

13 branch offices and separately for the nonmetropolitan

14 portion of the State if the institution maintains 1 or

15 more domestic branch offices in such nonmetropolitan

16 area.’’.

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