a requirement that the foreign bank or company con-
trolling the foreign bank establish a domestic banking
subsidiary in the United States.
‘‘(5) ADDITIONAL AUTHORITY FOR INTERSTATE
BRANCHES AND AGENCIES OF FOREIGN BANKS.—Not-
withstanding paragraphs (1) and (2), a foreign bank
may, with the approval of the Comptroller of the Cur-
rency, establish and operate a Federal branch or Fed-
eral agency or, with the approval 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 organized
under section 25A of the Federal Reserve Act.’’.
(b) CONTINUED AUTHORITY FOR LIMITED BRANCHES,
AGENCIES, OR COMMERCIAL LENDING COMPANIES.—Sec-
tion 5(b) of the International Banking Act of 1978 (12
U.S.C. 3103(b)) is amended by adding at the end the follow-
ing new sentence: ‘‘Notwithstanding subsection (a), a for-
eign bank may continue to operate, after the enactment of
the Interstate Banking Efficiency Act of 1994, any Federal
branch, State branch, Federal agency, State agency, or com-
mercial lending company subsidiary 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 con-
tinues, after the enactment of such Act, to engage in oper-
ations which were lawful 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 SUB-
SIDIARY.—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 SUB-
SIDIARY.—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 domestic
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 controlled
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 out-
side the home State of the domestic bank to the extent
permitted under section 5155(d) of the Revised Stat-
utes or section 44 of the Federal Deposit Insurance
Act, as the case may be.’’.
(d) HOME 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 de-
fault 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 lending
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, agency, subsidi-
ary commercial lending company, or subsidiary
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)(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 sub-
paragraph (B)), a bank holding company which
has bank subsidiaries in more than 1 State may,
with the prior written approval by the respon-
sible agency (as determined in accordance with
section 18(c)(2) of the Federal Deposit Insurance
Act) of an application and subject to the require-
ments of subsection (c), combine 2 or more of
such banks into a single bank by means of merg-
er, 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 located
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, consolidation, or
other similar transaction under subparagraph
(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 Interstate
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 trans-
action 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 beginning
on January 1, 1990, and ending 3 years after
the date of the enactment of the Interstate Bank-
ing 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 para-
graph (1) is the branch of a national bank, section
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 consolidation
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 sub-
section (c)(2)) may not approve any application for
any consolidation or other transaction under this sub-
section unless the responsible agency has considered a
plan submitted by the applicant bank holding com-
pany for meeting local credit needs in the commu-
nities served by any bank subsidiary of the company
which is involved in the proposed consolidation or
transaction, including the extent to which the amount
of the anticipated savings attributable to the proposed
consolidation or other transaction 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 ad-
dress of the appropriate Federal banking agency and
a statement that comments on the proposed closing of
such branch may be mailed to such agency.
‘‘(2) ACTION REQUIRED BY APPROPRIATE FED-
ERAL BANKING AGENCY.—If, in the case of a branch
referred to in paragraph (1)—
‘‘(A) a person from the area in which such
branch is located—
‘‘(i) submits a written request relating
to the closing of such branch to the appro-
priate Federal banking agency; and
‘‘(ii) includes a statement of specific
reasons for the request, including a discus-
sion of the adverse effect of such closing on
the availability of banking services in the
area affected by the closing of the branch;
and
‘‘(B) the agency concludes that the request
is not frivolous,
the agency shall consult with community leaders in
the affected area and convene a meeting of representa-
tives of the agency with community leaders in the af-
fected area and such other individuals, organizations,
and depository institutions (as defined in section
19(b)(1)(A) of the Federal Reserve Act) as the agency
may determine to be appropriate, to explore the fea-
sibility of obtaining adequate alternative facilities
and services for the affected area, including the estab-
lishment of a new branch by another depository insti-
tution, the chartering of a new depository institution,
or the establishment of a community development
credit union, following the closing of the branch.
‘‘(3) NO AFFECT ON CLOSING.—No action by the
appropriate Federal banking agency under paragraph
(2) shall affect the authority of an interstate bank to
close a branch (including the timing of such closing)
if the requirements of subsections (a) and (b) have
been met by such bank with respect to the branch
being closed.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) INTERSTATE
BANK
DEFINED.—The
term ‘interstate bank’ means a bank which
maintains branches in more than 1 State.
‘‘(B) LOW- OR MODERATE-INCOME AREA.—
The term ‘low- or moderate-income area’ means
a census tract for which the median family in-
come is—
‘‘(i) less than 80 percent of the median
family income for the metropolitan statis-
tical area (as designated by the Director of
the Office of Management and Budget) in
which the census tract is located; or
‘‘(ii) in the case of a census tract
which is not located in a metropolitan sta-
tistical area, less than 80 percent of the me-
dian family income for the State in which
the census tract is located, as determined
without taking into account family income
in metropolitan statistical areas in such
State.’’.
SEC. 107. PROHIBITION AGAINST DEPOSIT PRODUCTION
OFFICES.
(a) REGULATIONS.—Before the end of the 120-day pe-
riod beginning on the date of the enactment of the Interstate
Banking Efficiency Act of 1994, each appropriate Federal
banking agency shall prescribe regulations which prohibit
any person from using any authority to engage 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.—Reg-
ulations 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 sub-
section (a) shall require that if the percentage of out-
standing loans made by an interstate branch to bor-
rowers located in the host State of, or market area
served by, the branch is less than half the average of