I
103D CONGRESS
2D SESSION
H. R. 3841
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
A BILL
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Interstate Banking Efficiency Act of 1994’’.
(b) TABLE OF CONTENTS.—
‘‘(i) IN
GENERAL.—The Board may
not approve an application under subpara-
graph (A) if—
‘‘(I) the applicant (including all
insured depository institutions which
are affiliates of the applicant) con-
trols, or upon completion of the acqui-
sition would control, more than 10
percent of the total amount of insured
depository institution deposits in the
United States, as determined under
regulations of the Board; or
‘‘(II) the applicant (including all
insured depository institutions which
are affiliates of the applicant) con-
trols, or upon completion of the acqui-
sition would control, 30 percent or
more of the total amount of insured
depository institution deposits in the
State in which the bank to be ac-
quired is located, as determined under
regulations of the Board.
‘‘(ii) WAIVER
BY
STATE.—A State
may waive the application of clause (i)(II)
to an acquisition in such State.
‘‘(2) APPLICABILITY OF STATE LAW TO ACQUI-
SITIONS.—
‘‘(A) INAPPLICABILITY OF CERTAIN STATE
LAWS TO ACQUISITIONS.—Subject to paragraph
(3), any acquisition described in paragraph
(1)(A) that has been approved under this sec-
tion may be consummated notwithstanding any
law of any State that would prohibit or other-
wise limit such acquisition on the basis of—
‘‘(i) the location or size of the acquir-
ing company or any subsidiary of such
company;
‘‘(ii) the number of bank subsidiaries
of such company; or
‘‘(iii) any other factor that—
‘‘(I) directly or indirectly, has the
effect of prohibiting or limiting the
acquisition of shares or control of a
bank or bank holding company located
in such State by an out-of-State bank
holding company; and
‘‘(II) is not applied with similar
effect with respect to acquisitions of
banks or bank holding companies lo-
cated in such State by bank holding
companies located in the State.
‘‘(B) APPLICABILITY
OF
STATE
LAW
ON
THE FORM OF ACQUISITION.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of this subsection and
subject to clause (ii), any law of a host
State which—
‘‘(I) is in existence on the date of
the enactment of the Interstate Bank-
ing Efficiency Act of 1994 or is en-
acted after such date; and
‘‘(II) allows an out-of-State bank
or bank holding company to establish
a bank in the host State only by ac-
quiring an existing bank in the host
State,
shall apply with respect to the establish-
ment or acquisition of a bank in the host
State under this subsection.
‘‘(ii) APPLICABILITY
OF
PROVISIONS
RELATING TO MINIMUM PERIOD OF EXIST-
ENCE OF ACQUIRED BANK.—In the case of
any State law referred to in clause (i)
which is enacted after the date of the en-
actment of the Interstate Banking Effi-
ciency Act of 1994 and requires the bank
to be acquired to have been in existence
(as of the date of the transaction) for a pe-
riod of time greater than 5 years, such law
shall be applied under clause (i) by sub-
stituting ‘5-year period’ for such greater
period.
‘‘(3) APPLICABILITY OF STATE LAW TO INTER-
STATE BANKING OPERATIONS.—
‘‘(A) STATE
TAXATION
AUTHORITY
NOT
AFFECTED.—No provision of this subsection
shall be construed as affecting the authority of
any State or political subdivision of any State
to apply and administer any tax or method of
taxation to any bank holding company or for-
eign bank, or any additional bank or bank hold-
ing company, when such tax or tax method is
otherwise permissible by or under the Constitu-
tion of the United States or other Federal law.
‘‘(B) APPLICABILITY
OF
DEPOSIT
CAPS
AND ANTITRUST LAWS.—No provision of this
subsection shall be construed as affecting—
‘‘(i) the authority of any State to limit
the percentage of the total amount of in-
sured depository institution deposits in the
State which may be held or controlled by
any bank to the extent the application of
such limitation does not discriminate
against out-of-State banks or bank holding
companies; or
‘‘(ii) the applicability of any Federal
antitrust law or any State antitrust law
that does not discriminate against out-of-
State banks or bank holding companies.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) HOME
STATE.—The term ‘home
State’ means, with respect to a bank holding
company, the State in which the total deposits
of all banking subsidiaries of such company
were the largest on the later of July 1, 1966,
or the date on which the company becomes a
bank holding company.
‘‘(B) HOST STATE.—The term ‘host State’
means, with respect to a bank holding company
acquiring or establishing a bank in a State
other than such company’s home State, the
State in which the bank being acquired or es-
tablished is located.
‘‘(C) 
INSURED
DEPOSITORY
INSTITU-
TION.—The term ‘insured depository institu-
tion’ has the same meaning as in section 3 of
the Federal Deposit Insurance Act.
‘‘(D) OUT-OF-STATE BANK HOLDING COM-
PANY.—The term ‘out-of State bank holding
company’ means, with respect to any State, a
bank holding company the home State of which
is another State.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply after the end of the 12-month pe-
riod beginning on the date of the enactment of this Act.
SEC. 102. INTERSTATE BRANCHING BY NATIONAL BANKS.
Section 5155 of the Revised Statutes (12 U.S.C. 36)
is amended—
(1) by redesignating subsections (d) through (h)
as subsections (g) through (k), respectively; and
(2) by inserting after subsection (c) the follow-
ing new subsections:
‘‘(d) 
INTERSTATE
BRANCHING
BY
NATIONAL
BANKS.—
‘‘(1) APPROVALS OF ACQUISITION OF EXISTING
BRANCHES AUTHORIZED.—Subject to paragraph (3)
and subsections (e) and (f), after the end of the 3-
year period beginning on the date of the enactment
of the Interstate Banking Efficiency Act of 1994,
the Comptroller of the Currency may approve an ap-
plication under this section to allow a national bank
to acquire and operate a branch located outside the
home State of such bank if the conditions estab-
lished in paragraph (5) are met.
‘‘(2) STATE ‘OPT-IN’ ELECTION
TO
PERMIT
INTERSTATE
BRANCHING
THROUGH
DE
NOVO
BRANCHES.—Subject to subsections (e) and (f), the
Comptroller of the Currency may approve an appli-
cation by a national bank to establish a de novo
branch in a State other than the home State of such
bank if—
‘‘(A) there is in effect in the host State a
law that—
‘‘(i) expressly permits all out-of-State
banks to establish de novo branches in
such State; and
‘‘(ii) applies equally to national and
State banks; and
‘‘(B) the conditions established in para-
graph (5) are met.
‘‘(3) STATE ‘OPT-OUT’ ELECTION TO PROHIBIT
INTERSTATE BRANCHING BY ACQUISITION OF EXIST-
ING BANKS.—
‘‘(A) IN GENERAL.—An application by a
national bank to establish a branch in a State
other than the home State of such bank
through the acquisition of an existing bank or
branch in the host State may not be approved
by the Comptroller of the Currency if there is
in effect in the host State a law that—
‘‘(i) was enacted during the period be-
ginning on January 1, 1990, and ending 3
years after the date of the enactment of
the Interstate Banking Efficiency Act of
1994;
‘‘(ii) expressly prohibits all out-of-
State banks from acquiring a branch lo-
cated in such State through the acquisition
of an existing bank in the host State; and
‘‘(iii) applies equally to national and
State banks.
‘‘(B) EFFECT
OF
PROHIBITION.—A na-
tional bank whose home State is a State that
has in effect a prohibition described in subpara-
graph (A) may not acquire or establish a
branch located in any other State under this
subsection.
‘‘(4) EARLY APPROVAL AUTHORIZED IF STATE
LAW PERMITS.—The Comptroller of the Currency
may approve an application under paragraph (1) be-
fore the expiration of the 3-year period described in
such paragraph if the State in which the branch is
or will be located has in effect a law which expressly
permits interstate branching by all national and
State banks.
‘‘(5) CONDITIONS APPLICABLE TO THE ESTAB-
LISHMENT
OR
ACQUISITION
OF
INTERSTATE
BRANCHES.—The Comptroller of the Currency may
approve an application under paragraph (1) or (2)
by a national bank to acquire or establish a branch
only if—
‘‘(A) the national bank is adequately cap-
italized (as defined under section 38 of the Fed-
eral Deposit Insurance Act) as of the date the
application is filed; and
‘‘(B) the Comptroller of the Currency de-
termines that—
‘‘(i) the national bank will continue to
be adequately capitalized (as so defined)
upon consummation of the acquisition or
establishment of the branch; and
‘‘(ii) on the basis of an evaluation
conducted by the Comptroller, the manage-
ment of the bank has the necessary man-
agement skills to manage the extended op-
erations of the bank upon consummation
of the acquisition or establishment of the
branch.
‘‘(e) PROVISIONS APPLICABLE TO APPLICATION AND
APPROVAL PROCESS.—
‘‘(1) CONSULTATION WITH STATE BANK SUPER-
VISOR.—In determining whether to grant approval
of an application under subsection (d), the Comp-
troller of the Currency shall consider the views of
any appropriate State bank supervisor of the bank
which submits the application regarding the bank’s
compliance with applicable State community rein-
vestment laws.
‘‘(2) COMPLIANCE
WITH
STATE
FILING
RE-
QUIREMENTS.—
‘‘(A) IN
GENERAL.—An out-of-State na-
tional bank that files an application under sub-
section (d) to acquire or establish a branch
within a host State shall—
‘‘(i) comply with any filing require-
ment of the host State that—
‘‘(I) is not discriminatory in na-
ture; and
‘‘(II) is similar in effect to any
requirement imposed by the host
State on a nonbanking corporation
from another State that seeks to en-
gage in business in the host State;
and
‘‘(ii) submit a copy of the application
to the State bank supervisor of the host
State.
‘‘(B) PENALTY
FOR
FAILURE
TO
COM-
PLY.—The Comptroller of the Currency may
not approve an application under subsection (d)
by an out-of-State national bank which materi-
ally fails to comply with clause (i) or (ii) of sub-
paragraph (A) with respect to such application.
‘‘(3) CONCENTRATION LIMITS.—
‘‘(A) IN
GENERAL.—The Comptroller of
the Currency may not approve an acquisition by
a bank under subsection (d) of a branch located
in a State other than the home State of such
bank if—
‘‘(i) the bank (including all insured
depository institutions which are affiliates
of the bank) controls, or upon completion
of the acquisition would control, more than
10 percent of the total amount of insured
depository institution deposits in the Unit-
ed States, as determined under regulations
which the Board of Governors of the Fed-
eral Reserve System shall prescribe; or
‘‘(ii) the bank (including all insured
depository institutions which are affiliates
of the bank) controls, or upon completion
of the acquisition would control, 30 percent
or more of the total amount of insured de-
pository institution deposits in the State in
which the branch to be acquired is located,
as determined under regulations which the
Board of Governors of the Federal Reserve
System shall prescribe.
‘‘(B) NOT APPLICABLE TO DE NOVO OUT-
OF-STATE BRANCHES.—Subparagraph (A) shall
not apply to the establishment of a de novo
branch outside the home State of a national
bank.
‘‘(C) WAIVER
BY
STATE.—A State may
waive the application of subparagraph (A)(ii) to
the acquisition of branches in such State.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section and subsections (d) and (f) the following
definitions shall apply:
‘‘(A) DE
NOVO
BRANCH.—The term ‘de
novo branch’ means a branch of a national
bank which—
‘‘(i) is originally established by the na-
tional bank as a branch; and
‘‘(ii) does not become a branch of
such bank as a result of—
‘‘(I) the acquisition by the bank
of an insured depository institution or
a branch of an insured depository in-
stitution; or
‘‘(II) the conversion, merger, or
consolidation of any such institution
or branch.
‘‘(B) HOME
STATE.—The term ‘home
State’ means, with respect to a national bank,
the State in which the main office of the bank
is located.
‘‘(C) HOST STATE.—The term ‘host State’
means any State in which a national bank es-
tablishes or maintains a branch other than the
home State of such bank.
‘‘(D) 
INSURED
DEPOSITORY
INSTITU-
TION.—The term ‘insured depository institu-
tion’ has the same meaning as in section
3(c)(2) of the Federal Deposit Insurance Act.
‘‘(E) OUT-OF-STATE
BANK.—The term
‘out-of-State bank’ means, with respect to any
State, a bank whose home State is another
State.
‘‘(F) STATE
BANK
SUPERVISOR.—The
term ‘State bank supervisor’ has the same
meaning as in section 3(r) of the Federal De-
posit Insurance Act.
‘‘(f) APPLICABILITY OF STATE AND FEDERAL LAW
TO INTERSTATE BRANCHING OPERATIONS.—
‘‘(1) CERTAIN STATE LAWS APPLICABLE TO NA-
TIONAL BANK BRANCHES.—
‘‘(A) IN GENERAL.—Any branch of a na-
tional bank which is established or acquired
under subsection (d) shall be subject to the laws
of the host State with respect to intrastate
branching, consumer protection, fair lending,
and community reinvestment as if the branch
were a branch of a bank chartered by that
State except to the extent any such State law
is preempted by Federal law regarding the
same subject.
‘‘(B) PROHIBITION
ON
DISCRIMINATORY
EFFECT.—Notwithstanding subparagraph (A),
a branch of a national bank which is established
or acquired under subsection (d) shall not be
subject to a State law described in such sub-
paragraph to the extent the Comptroller of the
Currency determines that the application of the
law has, or would have, a discriminatory effect
on the branch in comparison with the effect the
application of such law has with respect to
branches of a bank chartered by the State.
‘‘(C) 
ENFORCEMENT
OF
APPLICABLE
STATE LAWS.—The provisions of any State law
to which a branch of a national bank is subject
under this subparagraph shall be enforced, with
respect to such branch, by the Comptroller of
the Currency.
‘‘(2) TREATMENT OF BRANCH AS BANK.—All
laws of a host State, other than the laws described
in paragraph (1) or laws pertaining to the applica-
tion or administration of any tax or method of tax-
ation, shall apply to a branch (in such State) of an
out-of-State national bank in the same manner and
to the same extent such laws would apply if the
branch were a national bank located in that State.
‘‘(3) STATE
TAXATION
AUTHORITY
NOT
AF-
FECTED.—No provision of this subsection or sub-
section (d) or (e) shall be construed as affecting the
authority of any State or political subdivision of any
State to apply and administer any tax or method of
taxation to any national bank, including any branch
of a national bank, or any bank holding company
which controls a national bank, to the extent such
tax or tax method is otherwise permissible by or
under the Constitution of the United States of
America or other Federal law.
‘‘(4) STATE-IMPOSED
CONDITIONS
ON
INTER-
STATE BRANCHING.—Subject to paragraphs (3) and
(5), a host State may impose any notification or re-
porting requirement on a branch established or ac-
quired under subsection (d)(1) if the requirement—
‘‘(A) does not discriminate against out-of-
State banks or bank holding companies; and
‘‘(B) is not preempted by any Federal law
regarding the same subject.
‘‘(5) APPLICABILITY
OF
DEPOSIT
CAPS
AND
ANTITRUST LAWS.—No provision of this subsection
or subsection (d) or (e) shall be construed as affect-
ing—
‘‘(A) the authority of any State to limit the
percentage of the total amount of insured de-
pository institution deposits in the State which
may be held or controlled by any bank (includ-
ing all insured depository institutions which are
affiliates of the bank) to the extent the applica-
tion of such limitation does not discriminate
against out-of-State banks or bank holding
companies; or
‘‘(B) the applicability of any Federal anti-
trust law or any State antitrust law that does
not discriminate against out-of-State banks or
bank holding companies.’’.
SEC. 103. INTERSTATE BRANCHING BY STATE BANKS.
(a) IN GENERAL.—The Federal Deposit Insurance
Act (12 U.S.C. 1811 et seq.) is amended by adding at
the end the following new section:
‘‘SEC. 45. STATE BANK BRANCHES.
‘‘(a) CONSENT OF CORPORATION.—
‘‘(1) 
ESTABLISHMENT
OF
BRANCHES.—No
State nonmember insured bank (except a District
bank) may establish and operate any new domestic
branch without the prior written consent of the
Corporation.
‘‘(2) CHANGE OF LOCATION OF STATE BANK
OFFICES AND BRANCHES.—No State nonmember in-
sured bank (except a District bank) may move the
main office or any domestic branch of such bank
from 1 location to another without the prior written
consent of the Corporation.
‘‘(3) CHANGE
OF
LOCATION
OF
INSURED
BRANCH OF FOREIGN BANK.—No foreign bank may
move any insured branch from 1 location to another
without the prior written consent of the Corporation.
‘‘(4) FACTORS TO BE CONSIDERED.—The Cor-
poration shall consider the factors enumerated in
section 6 in making any determination under this
subsection.
‘‘(b) ESTABLISHMENT OF FOREIGN BRANCHES.—
‘‘(1) IN GENERAL.—No State nonmember in-
sured bank shall establish or operate any foreign
branch without the prior written consent of the
Corporation.
‘‘(2) CONDITIONS
AND
REGULATIONS.—The
Corporation may establish such conditions and pre-
scribe such regulations for the establishment and op-
eration of foreign branches of State nonmember
banks as the Corporation may determine to be
appropriate.
‘‘(c) INTERSTATE BRANCHING BY STATE BANKS.—
‘‘(1) APPROVALS OF ACQUISITION OF EXISTING
BRANCHES AUTHORIZED.—Subject to paragraph (3)
and subsections (d) and (e), after the end of the 3-
year period beginning on the date of the enactment
of the Interstate Banking Efficiency Act of 1994, an
insured State bank may acquire and operate a
branch located outside the home State of such bank
with the prior written approval of the appropriate
Federal banking agency of an application by such
bank if the conditions established in paragraph (5)
are met.
‘‘(2) STATE ‘OPT-IN’ ELECTION
TO
PERMIT
INTERSTATE
BRANCHING
THROUGH
DE
NOVO
BRANCHES.—Subject to subsections (d) and (e), the
appropriate Federal banking agency may approve an
application by a State bank to establish a de novo
branch in a State other than the home State of such
bank if—
‘‘(A) there is in effect in the host State a
law that—
‘‘(i) expressly permits all out-of-State
banks to establish de novo branches in
such State; and
‘‘(ii) applies equally to national and
State banks; and
‘‘(B) the conditions established in para-
graph (5) are met.
‘‘(3) STATE ‘OPT-OUT’ ELECTION TO PROHIBIT
INTERSTATE BRANCHING BY ACQUISITION OF EXIST-
ING BANKS.—
‘‘(A) IN GENERAL.—An application by an
insured State bank to establish a branch in a
State other than the home State of such bank
through the acquisition of an existing bank or
branch in the host State may not be approved
by the appropriate Federal banking agency if
there is in effect in the host State a law that—
‘‘(i) was enacted during the period be-
ginning on January 1, 1990, and ending 3
years after the date of the enactment of
the Interstate Banking Efficiency Act of
1994;
‘‘(ii) expressly prohibits all out-of-
State banks from acquiring a branch lo-
cated in such State through the acquisition
of an existing bank in the host State; and
‘‘(iii) applies equally to national and
State banks.
‘‘(B) EFFECT
OF
PROHIBITION.—An in-
sured State bank whose home State is a State
that has in effect a prohibition described in
subparagraph (A) may not acquire or establish
a branch located in any other State under sub-
section (c).
‘‘(4) EARLY APPROVAL AUTHORIZED IF STATE
LAW
PERMITS.—The appropriate Federal banking
agency may approve an application under paragraph
(1) before the expiration of the 3-year period de-
scribed in such paragraph if the State in which the
branch is or will be located has in effect a law which
expressly permits interstate branching by all na-
tional and State banks.
‘‘(5) CONDITIONS APPLICABLE TO THE ESTAB-
LISHMENT
OR
ACQUISITION
OF
INTERSTATE
BRANCHES.—The appropriate Federal banking agen-
cy may approve an application under paragraph (1)
or (2) by an insured State bank to acquire or estab-
lish a branch only if—
‘‘(A) the bank is adequately capitalized (as
defined under section 38) as of the date the ap-
plication is filed;
‘‘(B) the bank is authorized to establish
branches in other States under the law of the
home State of the bank; and
‘‘(C) the appropriate Federal banking
agency determines that—
‘‘(i) the bank will continue to be ade-
quately capitalized (as so defined) upon
consummation of the acquisition or estab-
lishment of the branch; and
‘‘(ii) on the basis of an evaluation
conducted by the agency, the management
of the bank has the necessary management
skills to manage the bank upon completion
of the acquisition or establishment of the
branch.
‘‘(d) PROVISIONS APPLICABLE TO APPLICATION AND
APPROVAL PROCESS.—
‘‘(1) CONSULTATION WITH STATE BANK SUPER-
VISOR.—In determining whether to grant approval
of an application under subsection (c), the appro-
priate Federal banking agency shall consider the
views of any appropriate State bank supervisor of
the bank which submits the application regarding
the bank’s compliance with applicable State commu-
nity reinvestment laws.
‘‘(2) COMPLIANCE
WITH
STATE
FILING
RE-
QUIREMENTS.—
‘‘(A) IN
GENERAL.—An out-of-State in-
sured State bank that files an application under
subsection (c) to acquire or establish a branch
within a host State shall—
‘‘(i) comply with any filing require-
ment of the host State that—
‘‘(I) is not discriminatory in na-
ture; and
‘‘(II) is similar in effect to a re-
quirement imposed by the host State
on a nonbanking corporation from an-
other State that seeks to engage in
business in the host State; and
‘‘(ii) submit a copy of the application
to the State bank supervisor of the host
State.
‘‘(B) PENALTY
FOR
FAILURE
TO
COM-
PLY.—The appropriate Federal banking agency
may not approve an application under sub-
section (c) by an insured State bank which ma-
terially fails to comply with clause (i) or (ii) of
subparagraph (A) with respect to such applica-
tion.
‘‘(3) CONCENTRATION LIMITS.—
‘‘(A) IN GENERAL.—The appropriate Fed-
eral banking agency may not approve an acqui-
sition by a bank under subsection (c) of a
branch located in a State other than the home
State of such bank if—
‘‘(i) the bank (including all insured
depository institutions which are affiliates
of the bank) controls, or upon completion
of the acquisition would control, more than
10 percent of the total amount of insured
depository institution deposits in the Unit-
ed States, as determined under regulations
which the Board of Governors of the Fed-
eral Reserve System shall prescribe; or
‘‘(ii) the bank (including all insured
depository institutions which are affiliates
of the bank) controls, or upon completion
of the acquisition would control, 30 percent
or more of the total amount of insured de-
pository institution deposits in the State in
which the branch to be acquired is located,
as determined under regulations which the
Board of Governors of the Federal Reserve
System shall prescribe.
‘‘(B) NOT APPLICABLE TO DE NOVO OUT-
OF-STATE BRANCHES.—Subparagraph (A) shall
not apply to the establishment of a de novo
branch outside the home State of an insured
State bank.
‘‘(C) WAIVER
BY
STATE.—A State may
waive the application of subparagraph (A)(ii) to
the acquisition of branches in such State.
‘‘(e) APPLICABILITY OF STATE AND FEDERAL LAW
TO INTERSTATE BRANCHING OPERATIONS.—
‘‘(1) STATE LAWS APPLICABLE TO BRANCHES
OF OUT-OF-STATE BANKS.—
‘‘(A) IN GENERAL.—Subject to subsection
(d) and paragraph (2), any branch of an out-
of-State insured State bank shall be subject to
the laws of the host State as if such branch
were a branch of a bank chartered by that
State.
‘‘(B) ACTIVITIES OF BRANCHES.—An in-
sured State bank that establishes a branch in
a host State may not conduct any activity at
such branch that is not permissible for a bank
chartered by the host State.
‘‘(C) RESERVATION
OF
CERTAIN
RIGHTS
TO STATES.—No provision of this subsection or
subsection (c) or (d) shall be construed as limit-
ing in any way the right of a State to—
‘‘(i) determine the authority of State
banks chartered in that State to establish
and maintain branches; or
‘‘(ii) supervise, regulate, and examine
State banks chartered by that State.
‘‘(2) STATE
TAXATION
AUTHORITY
NOT
AF-
FECTED.—No provision of this subsection or sub-
section (c) or (d) shall be construed as affecting the
authority of any State or political subdivision of any
State to apply and administer any tax or method of
taxation to any State bank, including any branch of
a State bank, or any bank holding company which
controls any State bank, to the extent such tax or
tax method is otherwise permissible by or under the
Constitution of the United States of America or
other Federal law.
‘‘(3) STATE IMPOSED CONDITIONS ON INTER-
STATE BRANCHING.—Subject to paragraphs (2) and
(4), a host State may impose any notification or re-
porting requirement on a branch established or ac-
quired under subsection (c) if the requirement—
‘‘(A) does not discriminate against out-of-
State banks or bank holding companies; and
‘‘(B) is not preempted by any Federal law
regarding the same subject.
‘‘(4) APPLICABILITY
OF
DEPOSIT
CAPS
AND
ANTITRUST LAWS.—No provision of this subsection
or subsection (c) or (d) shall be construed as affect-
ing—
‘‘(A) the authority of any State to limit the
percentage of the total amount of insured de-
pository institution deposits in the State which
may be held or controlled by any bank (includ-
ing all insured depository institutions which are
affiliates of the bank) to the extent the applica-
tion of such limitation does not discriminate
against out-of-State banks or bank holding
companies; or
‘‘(B) the applicability of any Federal anti-
trust law or any State antitrust law that does
not discriminate against out-of-State banks or
bank holding companies.
‘‘(f) COORDINATION
OF
EXAMINATION
AUTHOR-
ITY.—
‘‘(1) IN GENERAL.—A host State bank super-
visor may examine a branch operated in the host
State by an out-of-State insured State bank to—
‘‘(A) determine compliance with host State
laws regarding banking, community reinvest-
ment, fair lending, consumer protection, and
permissible activities; and
‘‘(B) ensure that the activities of the
branch do not constitute a serious risk to the
safe and sound operation of the branch.
‘‘(2) ENFORCEMENT.—If the State bank super-
visor of a host State described in paragraph (1) de-
termines that there is a violation of host State law
concerning the activities being conducted by a
branch operated in such State by an out-of-State in-
sured State bank or that the branch is being oper-
ated in an unsafe and unsound manner, such host
State bank supervisor may undertake such enforce-
ment actions or proceedings as would be permitted
under host State law if such branch were a bank
chartered by the host State.
‘‘(3) COOPERATIVE
AGREEMENT.—The State
bank supervisors of 1 or more States may enter into
cooperative agreements to facilitate State regulatory
supervision of State banks, including cooperative
agreements relating to the coordination of examina-
tions and joint participation in examinations.
‘‘(4) FEDERAL REGULATORY AUTHORITY.—
‘‘(A) IN GENERAL.—No provision of this
section shall be construed as limiting the au-
thority of any Federal banking agency to exam-
ine any bank or branch of a bank for which the
agency is the appropriate Federal banking
agency.
‘‘(B) REVIEW
OF
INTERSTATE
AGREE-
MENTS.—If the appropriate Federal banking
agency determines that the States have failed to
reach an agreement under paragraph (3), or
that such an agreement fails to adequately pro-
tect the appropriate deposit insurance fund, the
appropriate Federal banking agency shall not
defer to State examinations of the out-of-State
branches.
‘‘(g) DEFINITIONS.—For purposes of this section, the
following definitions apply:
‘‘(1) DE NOVO BRANCH.—The term ‘de novo
branch’ means a branch of a bank which—
‘‘(A) is originally established by the bank
as a branch; and
‘‘(B) does not become a branch of such
bank as a result of—
‘‘(i) the acquisition by the bank of a
bank or branch; or
‘‘(ii) the conversion, merger, or con-
solidation of any bank or branch.
‘‘(2) HOME
STATE.—The term ‘home State’
means, with respect to a State bank, the State by
whom the bank is chartered.
‘‘(3) HOST
STATE.—The term ‘host State’
means the State in which a bank establishes or
maintains a branch other than the home State of the
bank.
‘‘(4) OUT-OF-STATE BANK.—The term ‘out-of-
State bank’ means, with respect to any State, a
bank whose home State is another State.’’.
SEC. 104. BRANCHING BY FOREIGN BANKS.
(a) IN GENERAL.—Section 5(a) of the International
Banking Act of 1978 (12 U.S.C. 3103(a)) is amended to
read as follows:
‘‘(a) INTERSTATE BANKING OPERATIONS.—
‘‘(1) FEDERAL BRANCH OR AGENCY.—Subject
to the provisions of this Act and with the prior writ-
ten approval of the Board and the Comptroller of
the Currency, a foreign bank may establish and op-
erate a Federal branch or agency in any State out-
side the home State of such foreign bank to the ex-
tent that the establishment and operation of such
branch would be permitted under section 5155 of
the Revised Statutes if the foreign bank were a na-
tional bank whose home State (as defined in sub-
section (e)(4) of such section) is the same State as
the home State of the foreign bank.
‘‘(2) STATE BRANCH OR AGENCY.—Subject to
the provisions of this Act and with the prior written
approval of the Board and the appropriate State
bank supervisor, a foreign bank may establish and
operate a State branch or agency in any State out-
side the home State of such foreign bank to the ex-
tent that such establishment and operation would be
permitted under section 45 of the Federal Deposit
Insurance Act if the foreign bank were a State bank
whose home State (as defined in subsection (g) of
such section) is the same State as the home State
of the foreign bank.
‘‘(3) CRITERIA FOR DETERMINATION.—In ap-
proving an application under paragraph (1) or (2),
the Board and (in the case of an application under
paragraph (1)) the Comptroller of the Currency—
‘‘(A) shall apply the standards applicable
to the establishment of a foreign bank office in
the United States under section 7(d); and
‘‘(B) may not approve an application un-
less the Board and (in the case of an applica-
tion under paragraph (1)) the Comptroller of
the Currency—
‘‘(i) determine that the foreign bank’s
financial resources, including the capital
level of the bank, are equivalent to those
required for a domestic bank to be ap-
proved for branching under section 5155 of
the Revised Statutes and section 45 of the
Federal Deposit Insurance Act; and
‘‘(ii) in the case of the first applica-
tion by such foreign bank under paragraph
(1) or (2) after the date of the enactment
of the Interstate Banking Efficiency Act of
1994, consult with the Secretary of the
Treasury regarding capital equivalency.
‘‘(4) REQUIREMENT FOR A SEPARATE SUBSIDI-
ARY.—If the Board or the Comptroller of the Cur-
rency, taking into account differing regulatory or ac-
counting standards, finds that adherence by a for-
eign bank to capital requirements equivalent to those
imposed under section 5155 of the Revised Statutes
and section 45 of the Federal Deposit Insurance Act
could be verified only if the banking activities of
such bank in the United States are carried out in a
domestic banking subsidiary within the United
States, the Board and the Comptroller of the Cur-
rency may approve an application under paragraph
(1) subject to a requirement that the foreign bank
or company controlling the foreign bank establish a
domestic banking subsidiary in the United States.
‘‘(5) ADDITIONAL AUTHORITY FOR INTERSTATE
BRANCHES AND AGENCIES OF FOREIGN BANKS.—
Notwithstanding paragraphs (1) and (2) and section
4(h), a foreign bank may, with the approval of the
Comptroller of the Currency, establish and operate
a Federal branch or Federal agency or, with the ap-
proval of the Board and the appropriate State bank
supervisor, a State branch or State agency in any
State outside the foreign bank’s home State if—
‘‘(A) the establishment and operation of a
branch or agency is expressly permitted by the
State in which the branch or agency is to be es-
tablished; and
‘‘(B) in the case of a Federal or State
branch, the branch receives only such deposits
as would be permissible for a corporation orga-
nized under section 25A of the Federal Reserve
Act.’’.
(b) 
CONTINUED
AUTHORITY
FOR
LIMITED
BRANCHES, AGENCIES, OR COMMERCIAL LENDING COM-
PANIES.—Section 5(b) of the International Banking Act
of 1978 (12 U.S.C. 3103(b)) is amended by adding at the
end the following new sentence: ‘‘Notwithstanding sub-
section (a), a foreign bank may continue to operate, after
the enactment of the Interstate Banking Efficiency Act
of 1994, any Federal branch, State branch, Federal agen-
cy, State agency, or commercial lending company subsidi-
ary which such bank was operating on the day before the
date of the enactment of such Act to the extent the
branch, agency, or subsidiary continues, after the enact-
ment of such Act, to engage in operations which were law-
ful under the laws in effect on the day before such date.’’.
(c) CLARIFICATION OF BRANCHING RULES IN THE
CASE OF A FOREIGN BANK WITH A DOMESTIC BANK
SUBSIDIARY.—Section 5 of the International Banking Act
of 1978 (12 U.S.C. 3103) is amended by adding at the
end the following new subsection:
‘‘(d) CLARIFICATION OF BRANCHING RULES IN THE
CASE OF A FOREIGN BANK WITH A DOMESTIC BANK
SUBSIDIARY.—In the case of a foreign bank that has a
domestic bank subsidiary within the United States—
‘‘(1) the fact that such bank controls a domes-
tic bank shall not affect the authority of the foreign
bank to establish Federal and State branches or
agencies to the extent permitted under subsection
(a); and
‘‘(2) the fact that the domestic bank is con-
trolled by a foreign bank which has Federal or State
branches or agencies in States other than the home
State of such domestic bank shall not affect the au-
thority of the domestic bank to establish branches
outside the home State of the domestic bank to the
extent permitted under section 5155(d) of the Re-
vised Statutes or section 45 of the Federal Deposit
Insurance Act, as the case may be.’’.
(d) HOME STATE DETERMINATIONS.—
(1) METHOD OF DETERMINING.—Section 4(h)
of the International Banking Act of 1978 (12 U.S.C.
3102(h)) is amended—
(A) by striking ‘‘in the State in which such
branch or agency is located’’; and
(B) by adding at the end the following sen-
tence: ‘‘For the purposes of section 5155(c) of
the Revised Statutes, the home State of a for-
eign bank shall be the bank’s home State as de-
termined under section 5(c).’’.
(2) SINGLE STATE DETERMINATIONS.—Section
5(c) of the International Banking Act of 1978 (12
U.S.C. 3103(c)) is amended to read as follows:
‘‘(c) DETERMINATION OF HOME STATE OF FOREIGN
BANK.—For the purposes of this section—
‘‘(1) in the case of a foreign bank that has any
branch, agency, subsidiary commercial lending com-
pany, or subsidiary bank in more than 1 State, the
home State of the foreign bank is the 1 State of
such States which is selected by the foreign bank or,
in default of any such selection, by the Board; and
‘‘(2) in the case of a foreign bank that does not
have a branch, agency, subsidiary commercial lend-
ing company, or subsidiary bank in more than 1
State, the home State of the foreign bank is the
State in which the foreign bank has a branch, agen-
cy, subsidiary commercial lending company, or sub-
sidiary bank.’’.
SEC. 105. INTERSTATE CONSOLIDATIONS.
Section 18(d) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(d)) is amended to read as follows:
‘‘(d) INTERSTATE CONSOLIDATIONS.—
‘‘(1) CONSOLIDATIONS AUTHORIZED.—
‘‘(A) IN GENERAL.—Except as provided in
section 3(d)(1) of the Bank Holding Company
Act of 1956 and notwithstanding any other pro-
vision of Federal law or any provision of State
law (other than a law referred to in subpara-
graph (B)), a bank holding company which has
bank subsidiaries in more than 1 State may,
after the end of the 18-month period beginning
on the date of the enactment of the Interstate
Banking Efficiency Act of 1994 and subject to
the requirements of subsection (c), combine 2
or more of such banks into a single bank by
means of merger, consolidation, or other similar
transaction in accordance with such subsection.
‘‘(B) EXCEPTION FOR STATES WHICH PRO-
HIBIT THE ACQUISITION OF A BRANCH BY ANY
OUT-OF-STATE
BANK.—No bank which is lo-
cated in a State in which a law described in
section 5155(d)(3)(A) of the Revised Statutes
of the United States or section 45(c)(3)(A) is in
effect may be a party to a merger, consolida-
tion, or other similar transaction under sub-
paragraph (A) with any other bank affiliate of
such bank.
‘‘(C) EXCEPTION FOR CERTAIN BANKS AC-
QUIRED
DURING
TRANSITION
PERIOD.—No
bank subsidiary of a bank holding company, or
any branch of any such bank—
‘‘(i) control of which was acquired, di-
rectly or indirectly, by such company after
the end of the 18-month period beginning
on the date of the enactment of the Inter-
state Banking Efficiency Act of 1994; and
‘‘(ii) which is located in a State in
which the company did not control any
bank or branch as of the end of such 18-
month period,
may be a party to a merger, consolidation, or
other similar transaction under subparagraph
(A) with any other bank affiliate of such bank
before the end of the 3-year period beginning
on such date of enactment, unless the State in
which the bank or branch is located is a State
referred to in section 5155(d)(4) of the Revised
Statutes of the United States or section
45(c)(4).
‘‘(2) ADDITIONAL BRANCHES.—
‘‘(A) IN GENERAL.—The consolidated bank
which results from a transaction under para-
graph (1) may, subject to compliance with all
applicable Federal or State laws relating to the
establishment, acquisition, or operation of a
branch, establish or acquire, and operate, addi-
tional branches at any location where the con-
solidated bank, or any preexisting bank which
was part of such transaction, could have estab-
lished or acquired, and operated, a branch if
the consolidated or preexisting bank had not
been a party to the transaction.
‘‘(B) EXCEPTION FOR CERTAIN STATES.—
Subparagraph (A) shall not apply in any State
in which the establishment or acquisition, and
operation, of any additional branches of a con-
solidated bank is prohibited by any provision of
State law which was in existence on the date of
the enactment of the Interstate Banking Effi-
ciency Act of 1994.
‘‘(3) EFFECT
OF
STATE
PROHIBITION
ON
BRANCHING.—If a branch which results from a
transaction under paragraph (1) is located in a
State in which a law—
‘‘(A) takes effect after the consummation
of the transaction;
‘‘(B) is enacted during the period begin-
ning on January 1, 1990, and ending 3 years
after the date of the enactment of the Inter-
state Banking Efficiency Act of 1994;
‘‘(C) expressly prohibits all out-of-State
banks from acquiring a branch located in such
State through the acquisition of an existing
bank in the host State; and
‘‘(D) applies equally to national and State
banks,
the branch shall be promptly converted back into a
bank as the bank existed before such transaction, in
accordance with regulations of the Federal banking
agency or State bank supervisor which had jurisdic-
tion over the bank which was converted into a
branch.
‘‘(4) APPLICABILITY OF STATE AND FEDERAL
LAW TO INTERSTATE BRANCHING OPERATIONS.—If
a branch which results from a transaction under
paragraph (1) is the branch of a national bank, sec-
tion 5155(f) of the Revised Statutes of the United
States shall apply with respect to such branch.
‘‘(5) STATE
TAXATION
AUTHORITY
NOT
AF-
FECTED.—No provision of this subsection shall be
construed as affecting the authority of any State or
political subdivision of any State to apply and ad-
minister any tax or method of taxation to any bank
subsidiary or additional branch resulting from a con-
solidation or other transaction under paragraph (1)
or (2), or to any bank holding company which con-
trols any bank or branch resulting from any such
consolidation or other transaction, to the extent such
tax or tax method is otherwise permissible by or
under the Constitution of the United States of
America or other Federal law.
‘‘(6) 
PLAN
ON
MEETING
LOCAL
CREDIT
NEEDS.—The responsible agency (as determined
under subsection (c)(2)) may not approve any appli-
cation for any consolidation or other transaction
under this subsection unless the responsible agency
has considered a plan submitted by the applicant
bank holding company for meeting local credit needs
in the communities served by any bank subsidiary of
the company which is involved in the proposed con-
solidation or transaction, including the extent to
which the amount of the anticipated savings attrib-
utable to the proposed consolidation or other trans-
action will be available to meet such local credit
needs.’’.
SEC. 106. PROHIBITION AGAINST DEPOSIT PRODUCTION
OFFICES.
(a) REGULATIONS.—Before the end of the 120-day
period beginning on the date of the enactment of the
Interstate Banking Efficiency Act of 1994, the appro-
priate Federal banking agency shall prescribe regulations
which prohibit any person from using any authority to en-
gage in interstate branching pursuant to this title, or any
amendment made by this title to any other provision of
law, primarily for the purpose of deposit production.
(b) GUIDELINES FOR MEETING CREDIT NEEDS.—
Regulations issued under subsection (a) shall include
guidelines to ensure that each interstate branch meets the
credit needs of the community and market area in which
the branch operates.
(c) LIMITATION ON OUT-OF-STATE LOANS.—
(1) LIMITATION.—Regulations issued under
subsection (a) shall require that if the percentage of
outstanding loans made by an interstate branch to
borrowers located in the host State of, or market
area served by, the branch is less than half the aver-
age of such percentage for all Federal depository in-
stitutions and State depository institutions having
their principal place of operations in the host State
or that market area—