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90_SB0690enr 30 ILCS 235/1 from Ch. 85, par. 901 30 ILCS 235/2 from Ch. 85, par. 902 205 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 Public Funds Investment Act to require that public funds must be invested in banks or savings associations whose main banking premises are located in Illinois. 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 immediately. LRB9002795JScc SB690 Enrolled LRB9002795JScc 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 10. 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 SB690 Enrolled -2- LRB9002795JScc 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 SB690 Enrolled -3- LRB9002795JScc 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 SB690 Enrolled -4- LRB9002795JScc 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 SB690 Enrolled -5- LRB9002795JScc 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, SB690 Enrolled -6- LRB9002795JScc 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 SB690 Enrolled -7- LRB9002795JScc 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 SB690 Enrolled -8- LRB9002795JScc 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 15. 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 SB690 Enrolled -9- LRB9002795JScc 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. SB690 Enrolled -10- LRB9002795JScc 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 SB690 Enrolled -11- LRB9002795JScc 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.