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90_HB2169eng
205 ILCS 5/18 from Ch. 17, par. 325
205 ILCS 5/21.2 new
205 ILCS 5/21.3 new
205 ILCS 10/3.071 from Ch. 17, par. 2510.01
205 ILCS 10/3.09 new
Amends the Illinois Banking Act to prohibit a change in
control if the persons seeking control would, after obtaining
control, control 30% or more of the deposits located in this
State. Provides that no state or national bank whose main
banking premises are located in another state may merge into
or acquire an Illinois bank that has operated as a bank for 5
years or less. Amends the Illinois Bank Holding Company Act
of 1957 to restrict mergers with Illinois banks that have
operated for 5 years or less and are controlled by an out of
State bank. Prohibits combinations that would result in
control of 30% or more of the deposits in Illinois. Effective
June 1, 1997.
LRB9005184JSgc
HB2169 Engrossed LRB9005184JSgc
1 AN ACT concerning certain financial institutions,
2 amending named Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Banking Act is amended by
6 changing Section 18 and adding Sections 21.2 and 21.3 as
7 follows:
8 (205 ILCS 5/18) (from Ch. 17, par. 325)
9 Sec. 18. Change in control.
10 (a) Before a change may occur in the ownership of
11 outstanding stock of any State bank, whether by sale and
12 purchase, gift, bequest or inheritance, or any other means,
13 including the acquisition of stock of the State bank by any
14 bank holding company, which will result in control or a
15 change in the control of the bank or before a change in the
16 control of a holding company having control of the
17 outstanding stock of a State bank whether by sale and
18 purchase, gift, bequest or inheritance, or any other means,
19 including the acquisition of stock of such holding company by
20 any other bank holding company, which will result in control
21 or a change in control of the bank or holding company, or
22 before a transfer of substantially all the assets or
23 liabilities of the State bank, the Commissioner shall be of
24 the opinion and find:
25 (1) that the general character of its proposed
26 management, after the change in control, is such as to
27 assure reasonable promise of successful, safe and sound
28 operation;
29 (1.1) that depositors' interests will not be
30 jeopardized by the purchase or assumption and that
31 adequate provision has been made for all liabilities as
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1 required for a voluntary liquidation under Section 68 of
2 this Act;
3 (2) that the future earnings prospects, after the
4 proposed change in control, are favorable;
5 (3) that any prior involvement by the persons
6 proposing to obtain control, to purchase substantially
7 all the assets, or to assume substantially all the
8 liabilities of the State bank or by the proposed
9 management personnel with any other financial
10 institution, whether as stockholder, director, officer or
11 customer, was conducted in a safe and sound manner; and
12 (4) that if the acquisition is being made by a bank
13 holding company, the acquisition is authorized under the
14 Illinois Bank Holding Company Act of 1957.
15 (b) Persons desiring to purchase control of an existing
16 state bank, to purchase substantially all the assets, or to
17 assume substantially all the liabilities of the State bank
18 shall, prior to that purchase, submit to the Commissioner:
19 (1) a statement of financial worth;
20 (2) satisfactory evidence that any prior
21 involvement by the persons and the proposed management
22 personnel with any other financial institution, whether
23 as stockholder, director, officer or customer, was
24 conducted in a safe and sound manner; and
25 (3) such other relevant information as the
26 Commissioner may request to substantiate the findings
27 under subsection (a) of this Section.
28 As used in this Section, the term "control" means the
29 ownership of such amount of stock or ability to direct the
30 voting of such stock as to give power to, directly or
31 indirectly, direct or cause the direction of the management
32 or policies of the bank. A change in ownership of stock
33 which would result in direct or indirect ownership by a
34 stockholder, an affiliated group of stockholders or a holding
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1 company of less than 10 percent of the outstanding stock
2 shall not be considered a change of control. A change in
3 ownership of stock which would result in direct or indirect
4 ownership by a stockholder, an affiliated group of
5 stockholders or a holding company of 20 percent or such
6 lesser amount which would entitle the holder by applying
7 cumulative voting to elect one director shall be presumed to
8 constitute a change of control for purposes of this Section
9 18. If there is any doubt as to whether a change in the
10 ownership or control of the outstanding stock is sufficient
11 to result in obtaining control thereof or to effect a change
12 in the control thereof, such doubt shall be resolved in favor
13 of reporting the facts to the Commissioner.
14 As used in this Section, "substantially all" the assets
15 or liabilities of a State bank means that portion of the
16 assets or liabilities of a State bank such that their
17 purchase or transfer will materially impair the ability of
18 the State bank to continue successful, safe, and sound
19 operations or to continue as a going concern or would cause
20 the bank to lose its federal deposit insurance.
21 (b-1) Any person who obtains ownership of stock of an
22 existing State bank or stock of a holding company that
23 controls the State bank by gift, bequest, or inheritance such
24 that ownership of the stock would constitute control of the
25 State bank or holding company may obtain title and ownership
26 of the stock, but may not exercise management or control of
27 the business and affairs of the bank or vote his or her
28 shares so as to exercise management or control unless and
29 until the Commissioner approves an application for the change
30 of control as provided in subsection (b) of this Section.
31 (c) Whenever a state bank makes a loan or loans,
32 secured, or to be secured, by 25% or more of the outstanding
33 stock of a state bank, the president or other chief executive
34 officer of the lending bank shall promptly report such fact
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1 to the Commissioner upon obtaining knowledge of such loan or
2 loans, except that no report need be made in those cases
3 where the borrower has been the owner of record of the stock
4 for a period of one year or more, or the stock is that of a
5 newly organized bank prior to its opening.
6 (d) The reports required by subsections (b) and (c) of
7 this Section 18, other than those relating to a transfer of
8 assets or assumption of liabilities, shall contain the
9 following information to the extent that it is known by the
10 person making the report: (1) the number of shares involved;
11 (2) the names of the sellers (or transferors); (3) the names
12 of the purchasers (or transferees); (4) the names of the
13 beneficial owners if the shares are registered in another
14 name: (5) the purchase price, if applicable; (6) the total
15 number of shares owned by the sellers (or transferors), the
16 purchasers (or transferees) and the beneficial owners both
17 immediately before and after the transaction; and, (7) in the
18 case of a loan, the name of the borrower, the amount of the
19 loan, the name of the bank issuing the stock securing the
20 loan and the number of shares securing the loan. In addition
21 to the foregoing, such reports shall contain such other
22 information which is requested by the Commissioner to inform
23 the Commissioner of the effect of the transaction upon
24 control of the bank whose stock is involved.
25 (d-1) The reports required by subsection (b) of this
26 Section 18 that relate to purchase of assets and assumption
27 of liabilities shall contain the following information to the
28 extent that it is known by the person making the report: (1)
29 the value, amount, and description of the assets transferred;
30 (2) the amount, type, and to whom each type of liabilities
31 are owed; (3) the names of the purchasers (or transferees);
32 (4) the names of the beneficial owners if the shares of a
33 purchaser or transferee are registered in another name; (5)
34 the purchase price, if applicable; and, (6) in the case of a
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1 loan obtained to effect a purchase, the name of the borrower,
2 the amount and terms of the loan, and the description of the
3 assets securing the loan. In addition to the foregoing,
4 these reports shall contain any other information that is
5 requested by the Commissioner to inform the Commissioner of
6 the effect of the transaction upon the bank from which assets
7 are purchased or liabilities are transferred.
8 (e) Whenever such a change as described in subsection
9 (a) of this Section 18 occurs, each state bank shall report
10 promptly to the Commissioner any changes or replacement of
11 its chief executive officer or of any director occurring in
12 the next 12 month period, including in its report a statement
13 of the past and current business and professional
14 affiliations of the new chief executive officer or directors.
15 (f) (Blank).
16 (g) (1) Except as otherwise expressly provided in this
17 subsection (g), the Commissioners shall not approve an
18 application for a change in control if upon consummation
19 of the change in control the persons applying for the
20 change in control, including any affiliates of the
21 persons applying, would control 30% or more of the total
22 amount of deposits which are located in this State at
23 insured depository institutions. For purposes of this
24 subsection (g), the words "insured depository
25 institution" shall mean State banks, national banks, and
26 insured savings associations. For purposes of this
27 subsection (g), the word "deposits" shall have the
28 meaning ascribed to that word in Section 3(1) of the
29 Federal Deposit Insurance Act. For purposes of this
30 subsection (g), the total amount of deposits which are
31 considered to be located in this State at insured
32 depository institutions shall equal the sum of all
33 deposits held at the main banking premises and branches
34 in the State of Illinois of State banks, national banks,
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1 or insured savings associations. For purposes of this
2 subsection (g), the word "affiliates" shall have the
3 meaning ascribed to that word in Section 35.2 of this
4 Act.
5 (2) Notwithstanding the provisions of subsection
6 (g)(1) of this Section, the Commissioner may approve an
7 application for a change in control for a bank that is in
8 default or in danger of default. Except in those
9 instances in which an application for a change in control
10 is for a bank that is in default or in danger of default,
11 the Commissioner may not approve a change in control
12 which does not meet the requirements of subsection (g)(1)
13 of this Section. The Commissioner may not waive the
14 provisions of subsection (g)(1) of this Section, whether
15 pursuant to Section 3(d) of the federal Bank Holding
16 Company Act of 1956 or Section 44(d) of the Federal
17 Deposit Insurance Act, except as expressly provided in
18 this subsection (g)(2).
19 (Source: P.A. 88-546; 89-567, eff. 7-26-96.)
20 (205 ILCS 5/21.2 new)
21 Sec. 21.2. Interstate mergers; minimum age requirement.
22 (a) No out of state bank and no national bank whose main
23 banking premises is located in a state other than Illinois
24 shall merge with or into, or shall acquire all or
25 substantially all of the assets of an Illinois bank that has
26 existed and continuously operated as a bank for 5 years or
27 less.
28 (b) For purposes of subsection (a) of this Section, an
29 Illinois bank that is the resulting bank following a merger
30 involving an Illinois interim bank shall be considered to
31 have been in existence and continuously operated during the
32 existence and continuous operation of the Illinois merged
33 bank. As used in this subsection (b), the words "interim
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1 bank" shall mean a bank which shall not accept deposits, make
2 loans, pay checks, or engage in the general business of
3 banking or any part thereof, and is chartered solely for the
4 purpose of merging with or acquiring control of, or acquiring
5 all or substantially all of the assets of an existing
6 Illinois bank.
7 (c) The provisions of subsection (a) of the Section
8 shall not apply to the merger or acquisition of all or
9 substantially all of the assets of an Illinois bank:
10 (1) if the merger or acquisition is part of a
11 purchase or acquisition with respect to which the Federal
12 Deposit Insurance Corporation provides assistance under
13 Section 13(c) of the Federal Deposit Insurance Act; or
14 (2) if the Illinois bank is in default or in danger
15 of default.
16 (205 ILCS 5/21.3 new)
17 Sec. 21.3. Mergers; deposit concentration limits.
18 (a) Except as otherwise expressly provided in this
19 Section, no bank shall merge with or into or acquire control
20 of, or acquire all or substantially all of the assets of, a
21 State bank or a national bank whose main banking premises is
22 located in Illinois if, upon consummation of the merger or
23 acquisition, the bank, including any affiliates of the bank,
24 would control 30% or more of the total amount of deposits
25 which are located in this State at insured depository
26 institutions. For purposes of this subsection (a) the words
27 "insured depository institution" shall mean State banks,
28 national banks, and insured savings associations. For
29 purposes of this subsection (a), the word "deposits" shall
30 have the meaning ascribed to that word in Section (3)(1) of
31 the Federal Deposit Insurance Act. For purposes of this
32 subsection (a), the total amount of deposits which are
33 considered to be located in this State at insured depository
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1 institutions shall equal the sum of all deposits held at the
2 main banking premises and branches in the State of Illinois
3 of State banks, national banks, and insured savings
4 associations. For purposes of this Section, the word
5 "affiliates" shall have the meaning ascribed to that word in
6 Section 35.2 of this Act.
7 (b) Notwithstanding the provisions of subsection (a) of
8 this Section, the Commissioner or the appropriate federal
9 banking agency may approve a merger or acquisition of a bank
10 that is in default or in danger of default. The provisions of
11 subsection (a) of this Section may not be waived, whether
12 pursuant to Section 3(d) of the federal Bank Holding Company
13 Act of 1956 or Section 44(d) of the federal Deposit Insurance
14 Act, except as expressly provided in this subsection (b).
15 Section 10. The Illinois Bank Holding Company Act of 1957
16 is amended by changing Section 3.071 and adding Section 3.09
17 as follows:
18 (205 ILCS 10/3.071) (from Ch. 17, par. 2510.01)
19 Sec. 3.071. Out of state bank holding companies.
20 (a) An out of state bank holding company may acquire
21 ownership of more than 5% of the voting shares of or control
22 of one or more Illinois banks or Illinois bank holding
23 companies pursuant to a transaction, occurrence or event that
24 is described in paragraphs (1) through (5) of subsection (a)
25 of Section 3.02, provided the acquisition is made in
26 accordance with Sections 3.02 and 3.07 of this Act in
27 accordance with subsection (i) of this Section and provided
28 the following conditions are met:
29 (1) (Blank).
30 (2) An out of state bank holding company seeking to
31 acquire an Illinois bank or Illinois bank holding company
32 pursuant to subsection (a) of Section 3.071 shall, if
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1 change in control of the bank is governed by Section 18
2 of the Illinois Banking Act, file with the Commissioner
3 the application required by that Section containing
4 information satisfactory to the Commissioner.
5 (b) (Blank).
6 (c) (Blank).
7 (d) (Blank).
8 (e) (Blank).
9 (f) (Blank).
10 (g) (Blank).
11 (h) (Blank).
12 (i) (1) An out of state bank holding company which
13 directly or indirectly controls or has control over an
14 Illinois bank that has existed and continuously operated
15 as a bank for 5 years or less, may not cause the Illinois
16 bank to merge with or into, or to have all or
17 substantially all of the assets acquired by a bank that
18 is an out of state bank.
19 (2) For purposes of subsection (i)(1) of this
20 Section, an Illinois bank that is the resulting bank
21 following a merger involving an Illinois interim bank
22 shall be considered to have been in existence and
23 continuously operated during the existence and continuous
24 operation of the Illinois merged bank. As used in this
25 subsection (i)(2), the words "resulting bank" and "merged
26 bank" shall have the meanings ascribed to those words in
27 Section 2 of the Illinois Banking Act. As used in this
28 subsection (i)(2), the words "interim bank" shall mean a
29 bank which shall not accept deposits, make loans, pay
30 checks, or engage in the general business of banking or
31 any part thereof, and is chartered solely for the purpose
32 of merging with or acquiring control of, or acquiring all
33 or substantially all of the assets of an existing
34 Illinois bank.
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1 (3) The provisions of subsection (i)(1) of this
2 Section shall not apply to the merger or acquisition of
3 all or substantially all of the assets of an Illinois
4 bank:
5 (i) if the merger or acquisition is part of a
6 purchase or acquisition with respect to which the
7 Federal Deposit Insurance Corporation provides
8 assistance under Section 13(c) of the Federal
9 Deposit Insurance Act; or
10 (ii) if the Illinois bank is in default or in
11 danger of default. As used in this subsection
12 (i)(3), (ii) the words "in default" and "in danger
13 of default" shall have the meaning ascribed to those
14 words in Section 2 of the Illinois Banking Act.
15 (Source: P.A. 88-546; 89-208, eff. 9-29-95; 89-567, eff.
16 7-26-96.)
17 (205 ILCS 10/3.09 new)
18 Sec. 3.09. Acquisition; deposit concentration limits.
19 (a) Except as otherwise expressly provided in this
20 Section, no bank holding company shall acquire control of, or
21 acquire all or substantially all of the assets of a State
22 bank or a national bank whose main banking premises is
23 located in Illinois if, upon consummation of acquisition, the
24 bank holding company, including affiliates of the bank
25 holding company, would control 30% or more of the total
26 amount of deposits which are located in this State at insured
27 depository institutions. For purposes of this Section the
28 words "insured depository institutions" shall mean State
29 banks, national banks, and insured savings associations. For
30 purposes of this Section, the word "deposits" shall have the
31 meaning ascribed to that word in Section 3(1) of the Federal
32 Deposit Insurance Act. For purposes of this Section, the
33 total amount of deposits which are considered to be located
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1 in this State at insured depository institutions shall equal
2 the sum of all deposits held at the main banking premises and
3 branches in the State of Illinois of State banks, national
4 banks, and insured savings associations. For purposes of this
5 Section the word "affiliates" shall have the meaning ascribed
6 to that word in Section 35.2 of the Illinois Banking Act.
7 (b) Notwithstanding the provisions of subsection (a) of
8 this Section, the Commissioner or the appropriate federal
9 banking agency may approve an acquisition of a bank that is
10 in default or in danger of default. The provisions of
11 subsection (a) of this Section may not be waived, whether
12 pursuant to Section 3(d) of the federal Bank Holding Company
13 Act of 1956 or Section 44(d) of the Federal Deposit Insurance
14 Act, except as expressly provided in this subsection (b).
15 Section 99. Effective date. This Act takes effect June
16 1, 1997.