IIA
103D CONGRESS
2D SESSION
H. R. 3841
IN THE SENATE OF THE UNITED STATES
MARCH 23 (legislative day, FEBRUARY 22), 1994
Received; read twice and referred to the Committee on Banking, Housing, and
Urban Affairs
AN ACT
To amend the Bank Holding Company Act of 1956, the
Revised Statutes of the United States, and the Federal
Deposit Insurance Act to provide for interstate banking
and branching.
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.—
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 inter-
state branches.
TITLE I—INTERSTATE BANKING
AND BRANCHING
SEC. 101. INTERSTATE BANKING.
(a) INTERSTATE ACQUISITIONS.—Section 3(d) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1842(d))
is amended to read as follows:
‘‘(d) INTERSTATE ACQUISITIONS.—
‘‘(1) APPROVALS AUTHORIZED.—
‘‘(A) IN GENERAL.—Subject to paragraph
(2), the Board may approve an application
under this section by a bank holding company
to acquire, directly or indirectly, any voting
shares of, interest in, or all or substantially all
of the assets of any additional bank or any
bank holding company located in any State
other than the home State of the applicant
bank holding company.
‘‘(B) CONCENTRATION LIMITS.—
‘‘(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; 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.
‘‘(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) which 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, bank holding company, or
foreign bank, or any affiliate of any bank or
bank holding company, 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.
‘‘(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 the antitrust
laws or any State law which is similar to
the antitrust laws.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) ANTITRUST LAWS.—The term ‘anti-
trust laws’—
‘‘(i) has the same meaning as in sub-
section (a) of the 1st section of the Clay-
ton Act; and
‘‘(ii) includes section 5 of the Federal
Trade Commission Act to the extent such
section 5 relates to unfair methods of com-
petition.
‘‘(B) DEPOSITS.—The term ‘deposits’ has
the same meaning as in section 3(l) of the Fed-
eral Deposit Insurance Act.
‘‘(C) 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.
‘‘(D) 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.
‘‘(E) 
INSURED
DEPOSITORY
INSTITU-
TION.—The term ‘insured depository institu-
tion’ has the same meaning as in section 3 of
the Federal Deposit Insurance Act.
‘‘(F) 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) SUBSIDIARY
DEPOSITORY
INSTITUTIONS
AS
AGENTS.—Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) by adding at the end the following
new subsection:
‘‘(q) SUBSIDIARY DEPOSITORY INSTITUTIONS
AS
AGENTS FOR CERTAIN AFFILIATES.—
‘‘(1) IN GENERAL.—Any depository institution
subsidiary of a depository institution holding com-
pany may receive deposits, renew time deposits, close
loans, disburse proceeds of loans, and receive pay-
ments on loans and other obligations as agent for a
depository institution affiliate located in another
State.
‘‘(2) DEPOSITORY
INSTITUTION
ACTING
AS
AGENT
IS
NOT
A
BRANCH.—Notwithstanding any
other provision of law, a depository institution acting
as agent in accordance with paragraph (1) for a de-
pository institution affiliate shall not be considered
to be a branch of the affiliate.
‘‘(3) ACTIVITIES
AS
AGENT.—Paragraph (1)
shall not be construed as authorizing a State deposi-
tory institution to engage in activities as an agent
in which such institution is not authorized to engage
as principal under the laws of the State in which
such institution acts as agent.
‘‘(4) 
PLAN
ON
MEETING
LOCAL
CREDIT
NEEDS.—
‘‘(A) IN GENERAL.—If a depository insti-
tution holding company controls any depository
institution which acts as agent for another de-
pository institution subsidiary of such company
pursuant to paragraph (1), the depository insti-
tution holding company shall file a local credit
needs plan with the appropriate Federal bank-
ing agency for the subsidiary which acts as
agent before the date on which the subsidiary
begins acting as agent.
‘‘(B) LOCAL
CREDIT
NEEDS
PLAN
DE-
FINED.—The term ‘local credit needs plan’
means a plan for meeting local credit needs in
the communities served by any depository insti-
tution subsidiary (of a bank holding company)
which acts as agent pursuant to paragraph (1),
which includes an estimate of the extent to
which the amount of the anticipated savings at-
tributable to the use of depository institution
subsidiaries as agents under this subsection will
be available to meet such local credit needs.’’.
(c) 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;
(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 paragraphs
(3) and (4) 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 ap-
prove an application to allow a national bank to—
‘‘(A) acquire a bank or branch located out-
side the home State of such bank in a State in
which the bank does not maintain a branch;
and
‘‘(B) operate such bank or branch (includ-
ing any branch of such bank) as a branch,
if the conditions established in paragraph (6) 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 and operate
a de novo branch outside the home State of such
bank in a State in which the bank does not maintain
a branch 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 (6) 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 which—
‘‘(i) expressly prohibits all out-of-
State banks from acquiring a branch lo-
cated in such State through the acquisition
of an existing bank or branch in the host
State;
‘‘(ii) was enacted during the period
beginning on January 1, 1990, and ending
3 years after the date of the enactment of
the Interstate Banking Efficiency Act of
1994; and
‘‘(iii) applies equally to national and
State banks.
‘‘(B) EFFECT
OF
PROHIBITION.—A na-
tional bank whose home State has in effect a
prohibition described in subparagraph (A) may
not acquire or establish, under this subsection,
a branch located in any other State.
‘‘(4) STATE LAWS REQUIRING MINIMUM PERIOD
OF EXISTENCE FOR ACQUISITIONS BY OUT-OF-STATE
BANKS.—
‘‘(A) LAWS ENACTED BEFORE INTERSTATE
BANKING ACT.—In the case of a State in which
a law is in effect which—
‘‘(i) allows an out-of-State bank or
bank holding company to establish a bank
in the host State only by acquiring a bank
or branch (in the host State) which has
been in existence for not less than the min-
imum time period specified in such law;
and
‘‘(ii) took effect on or before the date
of the enactment of the Interstate Banking
Efficiency Act of 1994,
an out-of-State national bank which has no
branch in such State may establish a branch in
the State under this subsection only by acquir-
ing a bank or branch which has been in exist-
ence for not less than the minimum time period
specified in such law.
‘‘(B) SUBSEQUENT ENACTMENTS.—In the
case of a State in which a law is in effect
which—
‘‘(i) allows an out-of-State bank or
bank holding company to establish a
branch in the host State only by acquiring
a bank or branch (in the host State) which
has been in existence for not less than the
minimum time period specified in such law;
and
‘‘(ii) took effect after the date of the
enactment of the Interstate Banking Effi-
ciency Act of 1994,
an out-of-State national bank which has no
branch in such State may establish a branch in
the State under this subsection only by acquir-
ing a bank or branch which has been in exist-
ence for not less than the lesser of the mini-
mum time period specified in such law or 5
years.
‘‘(5) 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.
‘‘(6) 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 upon the con-
summation of the acquisition or establish-
ment 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 operations of
the bank upon the 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 subparagraph (A) with
respect to such application.
‘‘(3) CONCENTRATION LIMITS.—
‘‘(A) IN
GENERAL.—The Comptroller of
the Currency may not approve an application
by a bank under subsection (d) 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
United States; 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 proposed branch would be lo-
cated.
‘‘(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 banks or branches in such
State.
‘‘(4) CONSIDERATION OF BANK AFFILIATES.—
In determining whether to grant approval of an ap-
plication under subsection (d) with respect to a pro-
posed branch by a national bank which, as of the
date of the application, does not have a branch in
the host State (of the proposed branch), the Comp-
troller of the Currency shall take into account the
most recent written evaluation under section 807 of
the Community Reinvestment Act of 1977 of each
bank affiliate of the bank which submits the applica-
tion.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section and subsections (d) and (f) the following
definitions shall apply:
‘‘(A) AFFILIATE.—The term ‘affiliate’ has
the same meaning as in section 2(k) of the
Bank Holding Company Act of 1956.
‘‘(B) ANTITRUST LAWS.—The term ‘anti-
trust laws’—
‘‘(i) has the same meaning as in sub-
section (a) of the 1st section of the Clay-
ton Act; and
‘‘(ii) includes section 5 of the Federal
Trade Commission Act to the extent such
section 5 relates to unfair methods of com-
petition.
‘‘(C) 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.
‘‘(D) DEPOSITS.—The term ‘deposits’ has
the same meaning as in section 3(l) of the Fed-
eral Deposit Insurance Act.
‘‘(E) 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.
‘‘(F) 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.
‘‘(G) 
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.
‘‘(H) OUT-OF-STATE
BANK.—The term
‘out-of-State bank’ means, with respect to any
State, a bank whose home State is another
State.
‘‘(I) OUT-OF-STATE BANK HOLDING COM-
PANY.—The term ‘out-of-State bank’ means,
with respect to any State, a bank holding com-
pany whose home State (as defined in section
3(d)(4)(D) of the Bank Holding Company Act
of 1956) is another State.
‘‘(J) STATE BANK.—The term ‘State bank’
has the same meaning as in section 3(a)(2) of
the Federal Deposit Insurance Act.
‘‘(K) STATE
BANK
SUPERVISOR.—The
term ‘State bank supervisor’ has the same
meaning as in section 3(r) of the Federal
Deposit 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 an out-
of-State national bank 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 an out-of-State national bank shall
not be subject to a State law described in such
subparagraph to the extent the Comptroller of
the Currency determines that the application of
the law has, or would have, a discriminatory ef-
fect 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 paragraph shall be enforced, with re-
spect 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, any bank holding company which
controls a national bank, or any affiliate of any such
bank or bank holding company 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
NOTICE
REQUIRE-
MENTS.—A host State may impose any notification
or reporting requirement on a branch established or
acquired under subsection (d) 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 the antitrust laws
or any State law which is similar to the anti-
trust laws.’’; and
(3) in subsection (i) (as so redesignated by the
amendment made by paragraph (1) of this section),
by striking ‘‘The term’’ and inserting ‘‘BRANCH.—
Except as provided in section 18(q) of the Federal
Deposit Insurance Act, the term’’.
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. 44. 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 paragraphs
(3) and (4) 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, the appropriate Federal banking agency
may approve an application under this section to
allow an insured State bank to—
‘‘(A) acquire a bank or branch located out-
side the home State of such bank in a State in
which the bank does not maintain a branch;
and
‘‘(B) operate such bank or branch (includ-
ing any branch of such bank) as a branch,
if the conditions established in paragraph (6) 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 and operate
a de novo branch outside the home State of such
bank in a State in which the bank does not maintain
a branch 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 (6) 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
which—
‘‘(i) expressly prohibits all out-of-
State banks from acquiring a branch lo-
cated in such State through the acquisition
of an existing bank or branch in the host
State;
‘‘(ii) was enacted during the period
beginning on January 1, 1990, and ending
3 years after the date of the enactment of
the Interstate Banking Efficiency Act of
1994; and
‘‘(iii) applies equally to national and
State banks.
‘‘(B) EFFECT
OF
PROHIBITION.—An in-
sured State bank whose home State has in ef-
fect a prohibition described in subparagraph
(A) may not acquire or establish, under sub-
section (c), a branch located in any other State.
‘‘(4) STATE LAWS REQUIRING MINIMUM PERIOD
OF EXISTENCE FOR ACQUISITIONS BY OUT-OF-STATE
BANKS.—
‘‘(A) LAWS ENACTED BEFORE INTERSTATE
BANKING ACT.—In the case of a State in which
a law is in effect which—
‘‘(i) allows an out-of-State bank or
bank holding company to establish a bank
in the host State only by acquiring a bank
or branch (in the host State) which has
been in existence for not less than the min-
imum time period specified in such law;
and
‘‘(ii) took effect on or before the date
of the enactment of the Interstate Banking
Efficiency Act of 1994,
an out-of-State insured State bank which has
no branch in such State may establish a branch
in the State under this subsection only by ac-
quiring a bank or branch which has been in ex-
istence for not less than the minimum time pe-
riod specified in such law.
‘‘(B) SUBSEQUENT ENACTMENTS.—In the
case of a State in which a law is in effect
which—
‘‘(i) allows an out-of-State bank or
bank holding company to establish a
branch in the host State only by acquiring
a bank or branch (in the host State) which
has been in existence for not less than the
minimum time period specified in such law;
and
‘‘(ii) took effect after the date of the
enactment of the Interstate Banking Effi-
ciency Act of 1994,
an out-of-State insured State bank which has
no branch in such State may establish a branch
in the State under this subsection only by ac-
quiring a bank or branch which has been in ex-
istence for not less than the lesser of the mini-
mum time period specified in such law or 5
years.
‘‘(5) 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.
‘‘(6) 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 upon the consummation
of the acquisition or establishment 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 operations of the bank
upon the consummation 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 subparagraph (A)
with respect to such application.
‘‘(3) CONCENTRATION LIMITS.—
‘‘(A) IN GENERAL.—The appropriate Fed-
eral banking agency may not approve an appli-
cation by a bank under subsection (c) 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
United States; 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 proposed branch would be lo-
cated.
‘‘(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 banks or branches in such
State.
‘‘(4) CONSIDERATION OF BANK AFFILIATES.—
In determining whether to grant approval of an ap-
plication under subsection (c) with respect to a pro-
posed branch by an insured State bank which, as of
the date of the application, does not have a branch
in the host State (of the proposed branch), the ap-
propriate Federal banking agency shall take into ac-
count the most recent written evaluation under sec-
tion 807 of the Community Reinvestment Act of
1977 of each bank affiliate of the bank which sub-
mits the application.
‘‘(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), 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, any bank holding company which con-
trols any State bank, or any affiliate of any such
bank or bank holding company 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
NOTICE
REQUIRE-
MENTS.—A host State may impose any notification
or reporting requirement on a branch established or
acquired 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 the antitrust laws
or any State law which is similar to the anti-
trust laws.
‘‘(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 significant 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 or, to the extent authorized by
the law of the host State, a State law enforcement
officer may undertake such enforcement actions or
proceedings as would be permitted under host State
law if the 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 and branches, including
cooperative agreements relating to the coordination
of examinations and joint participation in examina-
tions.
‘‘(4) FEDERAL REGULATORY AUTHORITY.—No
provision of this section shall be construed as limit-
ing the authority of any Federal banking agency to
examine any bank or branch of a bank for which the
agency is the appropriate Federal banking agency.
‘‘(g) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
‘‘(1) ANTITRUST
LAWS.—The term ‘antitrust
laws’—
‘‘(A) has the same meaning as in sub-
section (a) of the 1st section of the Clayton
Act; and
‘‘(B) includes section 5 of the Federal
Trade Commission Act to the extent such sec-
tion 5 relates to unfair methods of competition.
‘‘(2) 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 an
insured depository institution or a branch
of an insured depository institution; or
‘‘(ii) the conversion, merger, or con-
solidation of any such institution or
branch.
‘‘(3) HOME
STATE.—The term ‘home State’
means, with respect to a State bank, the State by
whom the bank is chartered.
‘‘(4) 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.
‘‘(5) OUT-OF-STATE BANK.—The term ‘out-of-
State bank holding company’ means, with respect to
any State, a bank whose home State is another
State.
‘‘(6) OUT-OF-STATE
BANK
HOLDING
COM-
PANY.—The term ‘out-of-State bank’ means, with
respect to any State, a bank holding company whose
home State (as defined in section 3(d)(4)(D) of the
Bank Holding Company Act of 1956) is another
State.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 3(o) of the Federal Deposit Insurance Act (12
U.S.C. 1813(o)) is amended to read as follows:
‘‘(o) DEFINITIONS RELATING
TO DOMESTIC
AND
FOREIGN BRANCHES.—
‘‘(1) BRANCH.—The term ‘branch’ means a do-
mestic branch or a foreign branch, except when such
term is used in connection with the term ‘Federal
branch’ or ‘insured branch’.
‘‘(2) DOMESTIC BRANCH.—The term ‘domestic
branch’ includes any branch bank, branch office,
branch agency, additional office, or any branch lo-
cated in any State at which deposits are received,
checks are paid, or money is lent.
‘‘(3) FOREIGN
BRANCH.—The term ‘foreign
branch’ means any office or place at which banking
operations are conducted and which is not located in
any 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 BRANCHING AND AGENCY OPER-
ATIONS.—
‘‘(1) FEDERAL BRANCH OR AGENCY.—Subject
to the provisions of this Act and with the prior writ-
ten approval by the Board and the Comptroller of
the Currency of an application, a foreign bank may
establish and operate a Federal branch or agency in
any State outside the home State of such foreign
bank to the extent that the establishment and oper-
ation of such branch would be permitted under sec-
tion 5155 of the Revised Statutes if the foreign bank
were a national bank whose home State (as defined
in subsection (e)(5) 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 by the Board and the appropriate State
bank supervisor of an application, a foreign bank
may establish and operate a State branch or agency
in any State outside the home State of such foreign
bank to the extent that such establishment and oper-
ation would be permitted under section 44 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 44 of the
Federal Deposit Insurance Act; and
‘‘(ii) 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 44 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), 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 approval of
the Board and the appropriate State bank super-
visor, 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
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)(B) of the Bank Holding Com-
pany Act of 1956 and notwithstanding any
other provision of Federal law or any provision
of State law (other than a law referred to in
subparagraph (B)), a bank holding company
which has bank subsidiaries in more than 1
State may, with the prior written approval by
the responsible agency (as determined in ac-
cordance with section 18(c)(2) of the Federal
Deposit Insurance Act) of an application 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 after the end of the 18-month
period beginning on the date of the enactment
of the Interstate Banking Efficiency Act of
1994.
‘‘(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 44(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)(5) of the Revised
Statutes of the United States or section
44(c)(5).
‘‘(2) 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.
‘‘(3) 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.
‘‘(4) 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), any bank holding company which controls
any bank or branch resulting from any such consoli-
dation or other transaction, or any affiliate of any
such bank or company 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.
‘‘(5) 
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. BRANCH CLOSURES.
Section 42 of the Federal Deposit Insurance Act (12
U.S.C. 1831r-1) is amended by adding at the end the fol-
lowing new subsection:
‘‘(d) BRANCH CLOSURES IN INTERSTATE BANKING
OR BRANCHING OPERATIONS.—
‘‘(1) NOTICE REQUIREMENTS.—In the case of
an interstate bank which proposes to close any
branch in a low- or moderate income area, the notice
required under subsection (b)(2) shall contain the
mailing address of the appropriate Federal banking
agency and a statement that comments on the pro-
posed closing of such branch may be mailed to such
agency.