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U.S. Code as of:
01/19/04
Section 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.
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