State of Illinois
90th General Assembly
Legislation

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[ Introduced ][ Enrolled ][ Senate Amendment 001 ]

90_SB0690eng

      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 Engrossed                                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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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 Engrossed             -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.

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