§ 1831u. — Interstate bank mergers.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1831u]
TITLE 12--BANKS AND BANKING
CHAPTER 16--FEDERAL DEPOSIT INSURANCE CORPORATION
Sec. 1831u. 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 1828(c) of this title 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
September 29, 1994, and before June 1, 1997, that--
(i) applies equally to all out-of-State banks; and
(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 5 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 at 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, or 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) of this
section 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 2903 of this title;
(B) take into account the most recent written evaluation
under section 2903 of this title 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) of this
section 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 and 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 location 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 September 29, 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) of this section 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 1823(c) of this title, the responsible
agency may approve such application without regard to subsection (b) of
this section, or paragraph (2), (4), or (5) of subsection (a) of this
section.
(f) Applicable rate and other charge limitations
(1) In general
In the case of any State that has a constitutional provision
that sets a maximum lawful annual percentage rate of interest on any
contract at not more than 5 percent above the discount rate for 90-
day commercial paper in effect at the Federal reserve bank for the
Federal reserve district in which such State is located, except as
provided in paragraph (2), upon the establishment in such State of a
branch of any out-of-State insured depository institution in such
State under this section, the maximum interest rate or amount of
interest, discount points, finance charges, or other similar charges
that may be charged, taken, received, or reserved from time to time
in any loan or discount made or upon any note, bill of exchange,
financing transaction, or other evidence of debt by any insured
depository institution whose home State is such State shall be equal
to not more than the greater of--
(A) the maximum interest rate or amount of interest,
discount points, finance charges, or other similar charges that
may be charged, taken, received, or reserved in a similar
transaction under the constitution or any statute or other law
of the home State of the out-of-State insured depository
institution establishing any such branch, without reference to
this section, as such maximum interest rate or amount of
interest may change from time to time; or
(B) the maximum rate or amount of interest, discount points,
finance charges, or other similar charges that may be charged,
taken, received, or reserved in a similar transaction by a State
insured depository institution chartered under the laws of such
State or a national bank or Federal savings association whose
main office is located in such State without reference to this
section.
(2) Rule of construction
No provision of this subsection shall be construed as
superseding or affecting--
(A) the authority of any insured depository institution to
take, receive, reserve, and charge interest on any loan made in
any State other than the State referred to in paragraph (1); or
(B) the applicability of section 1735f-7a of this title,
section 85 of this title, or section 1831d of this title.
(g) 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 1831o of this title.
(2) Antitrust laws
The term ``antitrust laws''--
(A) has the same meaning as in subsection (a) of section 12
of title 15; and
(B) includes section 45 of title 15 to the extent such
section 45 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 1841(o)(4) of this title.
(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) of this section.
(7) Merger transaction
The term ``merger transaction'' has the meaning determined under
section 1828(c)(3) of this title.
(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 1828(c)(2) of this title 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.
(Sept. 21, 1950, ch. 967, Sec. 2[44], as added Pub. L. 103-328, title I,
Sec. 102(a), Sept. 29, 1994, 108 Stat. 2343; amended Pub. L. 106-102,
title VII, Sec. 731, Nov. 12, 1999, 113 Stat. 1477.)
Amendments
1999--Subsecs. (f), (g). Pub. L. 106-102 added subsec. (f) and
redesignated former subsec. (f) as (g).
Section Referred to in Other Sections
This section is referred to in sections 36, 215a-1, 1820, 1828,
1831a, 3103 of this title.
