INTERSTATE BANK MERGERS.

SEC. 102. INTERSTATE BANK MERGERS. (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. INTERSTATE BANK MERGERS. “(a) Approval of Interstate Merger Transactions Authorized.— “(1) In general.—Beginning on June 1, 1997, the responsible agency may approve a merger transaction under section 18(c) between insured banks with different home States, without regard to whether such transaction is prohibited under the law of any State. “(2) State election to prohibit interstate merger transactions.— “(A) In general.—Notwithstanding paragraph (1), a merger transaction may not be approved pursuant to paragraph (1) if the transaction involves a bank the home State of which has enacted a law after the date of enactment of the Riegle-Neal Interstate Banking and Branching Efficiency, Act of 1994 and before June 1, 1997, that— “(i) applies equally to all out-of-State banks; and 108 STAT. 2344 “(ii) expressly prohibits merger transactions involving out-of-State banks. “(B) No effect on prior approvals of merger transactions.—A law enacted by a State pursuant to subparagraph (A) shall have no effect on merger transactions that were approved before the effective date of such law. “(3) State election to permit early interstate merger transactions.— “(A) In general.—A merger transaction may be approved pursuant to paragraph (1) before June 1, 1997, if the home State of each bank involved in the transaction has in effect, as of the date of the approval of such transaction, a law that— “(i) applies equally to all out-of-State banks; and “(ii) expressly permits interstate merger transactions with all out-of-State banks. “(B) Certain conditions allowed.—A host State may impose conditions on a branch within such State of a bank resulting from an interstate merger transaction if— “(i) the conditions do not have the effect of discriminating against out-of-State banks, out-of-State bank holding companies, or any subsidiary of such bank or company (other than on the basis of a nationwide reciprocal treatment requirement); “(ii) the imposition of the conditions is not preempted by Federal law; and “(iii) the conditions do not apply or require performance after May 31, 1997. “(4) Interstate merger transactions involving acquisitions of branches.— “(A) In general.—An interstate merger transaction may involve the acquisition of a branch of an insured bank without the acquisition of the bank only if the law of the State in which the branch is located permits out-of-State banks to acquire a branch of a bank in such State without acquiring the bank. “(B) Treatment of branch for purposes of this section.—In the case of an interstate merger transaction which involves the acquisition of a branch of an insured bank without the acquisition of the bank, the branch shall be treated, for purposes of this section, as an insured bank the home State of which is the State in which the branch is located. “(5) Preservation of state age laws.— “(A) In general.—The responsible agency may not approve an application pursuant to paragraph (1) that would have the effect of permitting an out-of-State bank or out-of-State bank holding company to acquire a bank in a host State that has not been in existence for the minimum period of time, if any, specified in the statutory law of the host State. “(B) Special rule for state age laws specifying a period of more than 6 years.—Notwithstanding subparagraph (A), the responsible agency may approve a merger transaction pursuant to paragraph (1) involving the acquisition of a bank that has been in existence at108 STAT. 2345 least 5 years without regard to any longer minimum period of time specified in a statutory law of the host State. “(6) Shell banks.—For purposes of this subsection, a bank that has been chartered solely for the purpose of, and does not open for business prior to, acquiring control of, or acquiring all or substantially all of the assets of, an existing bank or branch shall be deemed to have been in existence for the same period of time as the bank or branch to be acquired. “(b) Provisions Relating To Application And Approval Process.— “(1) Compliance with state filing requirements.— “(A) In general.—Any bank which files an application for an interstate merger transaction shall— “(i) comply with the filing requirements of any host State of the bank which will result from such transaction to the extent that the requirement— “(I) does not have the effect of discriminating against out-of-State banks or out-of-State bank holding companies or subsidiaries of such banks or bank holding companies; and “(II) is similar in effect to any requirement imposed by the host State on a nonbanking corporation incorporated in another State that engages 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 comply.—The responsible agency may not approve an application for an interstate merger transaction if the applicant materially fails to comply with subparagraph (A). “(2) Concentration Limits.— “(A) Nationwide concentration limits.—The responsible agency may not approve an application for an interstate merger transaction if the resulting bank (including all insured depository institutions which are affiliates of the resulting bank), upon consummation of the transaction, would control more than 10 percent of the total amount of deposits of insured depository institutions in the United States. “(B) Statewide concentration limits other than with respect to initial entries.—The responsible agency may not approve an application for an interstate merger transaction if— “(i) any bank involved in the transaction (including all insured depository institutions which are affiliates of any such bank) has a branch in any State in which any other bank involved in the transaction has a branch; and “(ii) the resulting bank (including all insured depository institutions which would be affiliates of the resulting bank), upon consummation of the transaction, would control 30 percent or more of the total amount of deposits of insured depository institutions in any such State. “(C) Effectiveness of state deposit caps.—No provision of this subsection shall be construed as affecting the authority of any State to limit, by statute, regulation, or108 STAT. 2346 order, the percentage of the total amount of deposits of insured depository institutions in the State which may be held or controlled by any bank or bank holding company (including all insured depository institutions which are affiliates of the bank or bank holding company) to the extent the application of such limitation does not discriminate against out-of-State banks, out-of-State bank holding companies, or subsidiaries of such banks or holding companies. “(D) Exceptions to subparagraph (b).—The responsible agency may approve an application for an interstate merger transaction pursuant to subsection (a) without regard to the applicability of subparagraph (B) with respect to any State if— “(i) there is a limitation described in subparagraph (C) in a State statute, regulation, or order which has the effect of permitting a bank or bank holding company (including all insured depository institutions which are affiliates of the bank or bank holding company) to control a greater percentage of total deposits of all insured depository institutions in the State than the percentage permitted under subparagraph (B); or “(ii) the transaction is approved by the appropriate State bank supervisor of such State and the standard on which such approval is based does not have the effect of discriminating against out-of-State banks, out-of-State bank holding companies, or subsidiaries of such banks or holding companies. “(E) Exception for certain banks.—This paragraph shall not apply with respect to any interstate merger transaction involving only affiliated banks. “(3) Community reinvestment compliance.—In determining whether to approve an application for an interstate merger transaction in which the resulting bank would have a branch or bank affiliate immediately following the transaction in any State in which the bank submitting the application (as the acquiring bank) had no branch or bank affiliate immediately before the transaction, the responsible agency shall— “(A) comply with the responsibilities of the agency regarding such application under section 804 of the Community Reinvestment Act of 1977; “(B) take into account the most recent written evaluation under section 804 of the Community Reinvestment Act of 1977 of any bank which would be an affiliate of the resulting bank; and “(C) take into account the record of compliance of any applicant bank with applicable State community reinvestment laws. “(4) Adequacy of capital and management skills.—The responsible agency may approve an application for an interstate merger transaction pursuant to subsection (a) only if— “(A) each bank involved in the transaction is adequately capitalized as of the date the application is filed; and “(B) the responsible agency determines that the resulting bank will continue to be adequately capitalized and108 STAT. 2347 adequately managed upon the consummation of the transaction. “(5) Surrender of charter after merger transaction.—The charters of all banks involved in an interstate merger transaction, other than the charter of the resulting bank, shall be surrendered, upon request, to the Federal banking agency or State bank supervisor which issued the charter. “(c) Applicability of Certain Laws to Interstate Banking Operations.— “(1) State taxation authority not affected.— “(A) In general.—No provision of this section shall be construed as affecting the authority of any State or political subdivision of any State to adopt, apply, or administer any tax or method of taxation to any bank, bank holding company, or foreign bank, or any affiliate of any bank, bank holding company, or foreign bank, to the extent such tax or tax method is otherwise permissible by or under the Constitution of the United States or other Federal law. “(B) Imposition of shares tax by host states.—In the case of a branch of an out-of-State bank which results from an interstate merger transaction, a proportionate amount of the value of the shares of the out-of-State bank may be subject to any bank shares tax levied or imposed by the host State, or any political subdivision of such host State that imposes such tax based upon a method adopted by the host State, which may include allocation and apportionment. “(2) Applicability of antitrust laws.—No provision of this section shall be construed as affecting— “(A) the applicability of the antitrust laws; or “(B) the applicability, if any, of any State law which is similar to the antitrust laws. “(3) Reservation of certain rights to states.—No provision of this section shall be construed as limiting in any way the right of a State to— “(A) determine the authority of State banks chartered by that State to establish and maintain branches; or “(B) supervise, regulate, and examine State banks chartered by that State. “(4) State-imposed notice requirements.—A host State may impose any notification or reporting requirement on a branch of an out-of-State bank 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. “(d) Operations of the Resulting Bank.— “(1) Continued operations.—A resulting bank may, subject to the approval of the appropriate Federal banking agency, retain and operate, as a main office or a branch, any office that any bank involved in an interstate merger transaction was operating as a main office or a branch immediately before the merger transaction. “(2) Additional branches.—Following the consummation of any interstate merger transaction, the resulting bank may establish, acquire, or operate additional branches at any loca-108 STAT. 2348tion where any bank involved in the transaction could have established, acquired, or operated a branch under applicable Federal or State law if such bank had not been a party to the merger transaction. “(3) Certain conditions and commitments continued.—If, as a condition for the acquisition of a bank by an out-of-State bank holding company before the date of the enactment of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994— “(A) the home State of the acquired bank imposed conditions on such acquisition by such out-of-State bank holding company; or “(B) the bank holding company made commitments to such State in connection with the acquisition, the State may enforce such conditions and commitments with respect to such bank holding company or any affiliated successor company which controls a bank or branch in such State as a result of an interstate merger transaction to the same extent as the State could enforce such conditions or commitments against the bank holding company before the consummation of the merger transaction. “(e) Exception for Banks in Default or in Danger of Default.—If an application under subsection (a)(1) for approval of a merger transaction which involves 1 or more banks in default or in danger of default or with respect to which the Corporation provides assistance under section 13(c), the responsible agency may approve such application without regard to subsection (b), or paragraph (2),(4), or (5) of subsection (a). “(f) Definitions.—For purposes of this section, the following definitions shall apply: “(1) Adequately capitalized.—The term ‘adequately capitalized’ has the same meaning as in section 38. “(2) Antitrust laws.—The term ‘antitrust laws’— “(A) has the same meaning as in subsection (a) of the first section of the Clayton Act; and “(B) includes section 5 of the Federal Trade Commission Act to the extent such section 5 relates to unfair methods of competition. “(3) Branch.—The term ‘branch’ means any domestic branch. “(4) Home state.—The term ‘home State’— “(A) means— “(i) with respect to a national bank, the State in which the main office of the bank is located; and “(ii) with respect to a State bank, the State by which the bank is chartered; and “(B) with respect to a bank holding company, has the same meaning as in section 2(o)(4) of the Bank Holding Company Act of 1956. “(5) Host state.—The term ‘host State’ means, with respect to a bank, a State, other than the home State of the bank, in which the bank maintains, or seeks to establish and maintain, a branch. “(6) Interstate merger transaction.—The term ‘interstate merger transaction’ means any merger transaction approved pursuant to subsection (a)(1). 108 STAT. 2349 “(7) Merger transaction.—The term ‘merger transaction’ has the meaning determined under section 18(c)(3). “(8) Out-of-state bank.—The term ‘out-of-State bank’ means, with respect to any State, a bank whose home State is another State. “(9) Out-of-state bank holding company.—The term ‘out-of-State bank holding company’ means., with respect to any State, a bank holding company whose home State is another State. “(10) Responsible agency.—The term ‘responsible agency’ means the agency determined in accordance with section 18(c)(2) with respect to a merger transaction. “(11) Resulting bank.—The term ‘resulting bank’ means a bank that has resulted from an interstate merger transaction under this section.”. (b) Technical and Conforming Amendments.— (1) Revised statutes.—Section 5155 of the Revised Statutes (12 U.S.C. 36) is amended— (A) by redesignating subsections (d) through (h) as subsections (h) through (1), respectively; and (B) by inserting after subsection (c) the following new subsections: “(d) Branches Resulting From Interstate Merger Transactions.—A national bank resulting from an interstate merger transaction (as defined in section 44(f)(6) of the Federal Deposit Insurance Act) may maintain and operate a branch in a State other than the home State (as defined in subsection (g)(3)(B)) of such bank in accordance with section 44 of the Federal Deposit Insurance Act. “(e) Exclusive Authority for Additional Branches.— “(1) In general.—Effective June 1, 1997, a national bank may not acquire, establish, or operate a branch in any State other than the bank’s home State (as defined in subsection (g)(3)(B)) or a State in which the bank already has a branch unless the acquisition, establishment, or operation of such branch in such State by such national bank is authorized under this section or section 13(f), 13(k), or 44 of the Federal Deposit Insurance Act. “(2) Retention of branches.—In the case of a national bank which relocates the main office of such bank from I State to another State after May 31, 1997, the bank may retain and operate branches within the State which was the bank’s home State (as defined in subsection (g)(3)(B)) before the relocation of such office only to the extent the bank would be authorized, under this section or any other provision of law referred to in paragraph (1), to acquire, establish, or commence to operate a branch in such State if— “(A) the bank had no branches in such State; or “(B) the branch resulted from— “(i) an interstate merger transaction approved pursuant to section 44 of the Federal Deposit Insurance Act; or “(ii) a transaction after May 31, 1997, pursuant to which the bank received assistance from the Federal Deposit Insurance Corporation under section 13(c) of such Act. “(f) Law Applicable To Interstate Branching Operations.— 108 STAT. 2350 “(1) Law applicable to national bank branches.— “(A) In general.—The laws of the host State regarding community reinvestment, consumer protection, fair lending, and establishment of intrastate branches shall apply to any branch in the host State of an out-of-State national bank to the same extent as such State laws apply to a branch of a bank chartered by that State, except— “(i) when Federal law preempts the application of such State laws to a national bank; or “(ii) when the Comptroller of the Currency determines that the application of such State laws would have a discriminatory effect on the branch in comparison with the effect the application of such State laws would have with respect to branches of a bank chartered by the host State. “(B) 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 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 regarding community reinvestment, consumer protection, fair lending, establishment of intrastate branches, and the application or administration of any tax or method of taxation, shall apply to a branch (in such State) of an out-of-State national bank to the same extent as such laws would apply if the branch were a national bank the main office of which is in such State. “(3) Rule of construction.—No provision of this subsection may be construed as affecting the legal standards for preemption of the application of State law to national banks.”. (2) Act of may 1, 1886.—Section 2 of the Act entitled “An Act to enable national banking associations to increase their capital stock and to change their names and locations.” and approved May 1, 1886 (12 U.S.C. 30) is amended by adding at the end the following new subsection: “(c) Coordination With Revised Statutes.—In the case of a national bank which relocates the main office of such bank from 1 State to another State after May 31, 1997, the bank may retain and operate branches within the State from which the bank relocated such office only to the extent authorized in section 5155(e)(2) of the Revised Statutes.”. (3) Federal deposit insurance act.— (A) Exclusive authority for additional branches of state nonmember banks.—Section 18(d) of the Federal Deposit Insurance Act (12 U.S.C. 1828(d)) is amended by adding at the end the following new paragraph: “(3) Exclusive authority for additional branches.— “(A) In general.—Effective June 1, 1997, a State nonmember bank may not acquire, establish, or operate a branch in any State other than the bank’s home State (as defined in section 44(f)(4)) or a State in which the bank already has a branch unless the acquisition, establishment, or operation of a branch in such State by a State nonmember bank is authorized under this subsection or section 13(f), 13(k), or 44. 108 STAT. 2351 “(B) Retention of branches.—In the case of a State nonmember bank which relocates the main office of such bank from 1 State to another State after May 31, 1997, the bank may retain and operate branches within the State which was the bank’s home State (as defined in section 44(f)(4)) before the relocation of such office only to the extent the bank would be authorized, under this section or any other provision of law referred to in subparagraph (A), to acquire, establish, or commence to operate a branch in such State if— “(i) the bank had no branches in such State; or “(ii) the branch resulted from— “(I) an interstate merger transaction approved pursuant to section 44; or “(II) a transaction after May 31, 1997, pursuant to which the bank received assistance from the Corporation under section 13(c).”. (B) Activities of branches of state banks resulting from interstate merger transactions.—Section 24 of the Federal Deposit Insurance Act (12 U.S.C. 1831a) is amended by adding at the end the following new subsection: “(j) Activities Of Branches Of Out-Of-State Banks.— “(1) In general.—The laws of a host State, including laws regarding community reinvestment, consumer protection, fair lending, and establishment of intrastate branches, shall apply to any branch in the host State of an out-of-State State bank to the same extent as such State laws apply to a branch of a bank chartered by that State. “(2) Activities of branches.—An insured 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. “(3) Definitions.—The terms ‘host State’, ‘interstate merger transaction’, and ‘out-of-State bank’ have the same meanings as in section 44(f).”. (4) Act of november 7, 1918.—The Act entitled “An Act to provide for the consolidation of the national banking associations.” and approved November 7, 1918 (12 U.S.C. 215 et seq.) is amended— (A) by redesignating section 2 as section 3; (B) by redesignating section 3 as section 5; (C) in the 1st section, by striking “That (a) any national banking association” and inserting the following: “SECTION 1. SHORT TITLE. “This Act may be cited as the ‘National Bank Consolidation and Merger Act’. “SEC. 2. CONSOLIDATION OF BANKS WITHIN THE SAME STATE. “(a) In General.—Any national bank”; and (D) by inserting after section 3 (as so redesignated under subparagraph (A) of this paragraph) the following new section: “SEC. 4. INTERSTATE CONSOLIDATIONSAND MERGERS. “(a) In General.—A national bank may engage in a consolidation or merger under this Act with an out-of-State bank if the108 STAT. 2352 consolidation or merger is approved pursuant to section 44 of the Federal Deposit Insurance Act. “(b) Scope of Application.—Subsection (a) shall not apply with respect to any consolidation or merger before June 1, 1997, unless the home State of each bank involved in the transaction has in effect a law described in section 44(a)(3) of the Federal Deposit Insurance Act. “(c) Definitions.—The terms ‘home State’ and ‘out-of-State bank’ have the same meaning as in section 44(0 of the Federal Deposit Insurance Act.”. (5) Home owners’ loan act.—Section 3 of the Home Owners’ Loan Act (12 U.S.C. 1462a) is amended— (A) by redesignating subsections (f) through (i) as subsections (g) through (j), respectively; and (B) by inserting after subsection (e), the following new subsection: “(f) State Homestead Provisions.—No provision of this Act or any other provision of law administered by the Director shall be construed as superseding any homestead provision of any State constitution, including any implementing State statute, in effect on the date of enactment of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, or any subsequent amendment to such a State constitutional or statutory provision in effect on such date, that exempts the homestead of any person from foreclosure, or forced sale, for the payment of all debts, other than a purchase money obligation relating to the homestead, taxes due on the homestead, or an obligation arising from work and material used in constructing improvements on the homestead.”.