BP BHEAD INT S

AN ACT Relating to regulation of bank branching; amending RCW 30.40.020; adding a new chapter to Title 30 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The purpose of this act is to establish a legal and regulatory framework for interstate state bank branching that will:

(1) Permit Washington state banks to establish branches in other states, and permit banks chartered in certain other states to establish branches in Washington; and

(2) Contribute to a well-regulated and supervised financial system.

Sec. 2. RCW 30.40.020 and 1986 c 279 s 39 are each amended to read as follows:

A bank or trust company may, with the approval of the supervisor, establish and operate branches anywhere within the state or in any state other than this state, subject to the laws of that state. A bank having a paid-in capital of not less than one million dollars may, with the approval of the supervisor, establish and operate branches in any foreign country. The supervisor's approval of a branch within this state shall be conditioned on a finding that the resources in the neighborhood of the proposed location and in the surrounding country offer a reasonable promise of adequate support for the proposed branch and that the proposed branch is not being formed for other than the legitimate objects covered by this title. The supervisor's approval of a branch in another state or in a foreign country shall be conditioned on a finding that the proposed location offers a reasonable promise of adequate support for the proposed branch, ((~~[and]~~)) and that the proposed branch is not being formed for other than the legitimate objects covered by this title. A bank or trust company that establishes and operates one or more branches outside this state may exercise such powers at such branch or branches as would be permitted at such place or places to the institution with the type of charter that most nearly corresponds to the charter of the institution, unless the supervisor determines that the exercise of any such powers would be contrary to the public interest or would endanger the institution.

NEW SECTION. Sec. 3. The definitions set forth in this section apply throughout this chapter.

(1) "Acquisition transaction" means a merger, consolidation, or purchase of assets and assumption of liabilities.

(2) "Appropriate state supervisor" means the home state supervisor with supervisory and regulatory jurisdiction over a non-Washington depository institution in its home state.

(3) "Bank" has the meaning defined in RCW 30.04.010 and includes a trust company that has the power to accept deposits.

(4) "Home state" means, with respect to a non-Washington depository institution, the state under the laws of which it is incorporated or otherwise organized.

(5) "Non-Washington depository institution" means a state bank as that term is defined in Section 3(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1813(a)(2)) and the state bank is organized under the laws of the state of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, or Wyoming. The term does not include a bank chartered in Washington.

NEW SECTION. Sec. 4. (1) Subject to this chapter, a non-Washington depository institution may engage in an acquisition transaction with a bank if the transaction is permitted by the laws of the home state of the non-Washington depository institution. The non-Washington depository institution may maintain and operate the branch or branches that it has received as a result of an acquisition transaction.

(2) A bank shall comply with chapter 30.49 RCW as applied to a merger to a resulting state bank, in the case of a merger, or chapter 30.44 RCW, in the case of a sale of assets, and a non-Washington financial institution shall comply with the applicable provisions of the law of its home state.

(3) Notwithstanding subsection (1) of this section, a non-Washington depository institution may not engage in an acquisition transaction with a bank and thereafter maintain as a branch of the non-Washington depository institution a former office or branch of the bank unless:

(a) The bank has been operating for not less than three years; and

(b) If the non-Washington depository institution is owned by an out-of-state bank holding company, the terms and conditions of RCW 30.04.230 or 30.04.232 are fulfilled; and

(i) Authorize a bank to engage in an acquisition transaction of the same type with the non-Washington depository institution and then to maintain the former offices and branches of the non-Washington depository institution in the home state of the non-Washington depository institution as branches of the bank; and

(ii) Do not impose conditions on the powers or privileges that may be exercised at a branch of a bank in the home state of the non-Washington depository institution that are materially more restrictive than those imposed on the powers or privileges that may be exercised by such non-Washington depository institution in its home state; and

(d) The appropriate state supervisor has agreed with the supervisor as to the matters described in section 6 of this act; and

(e) The non-Washington depository institution has filed with the supervisor such other information as may be required by rule adopted by the supervisor.

NEW SECTION. Sec. 5. The resulting corporation of a merger permitted under this chapter shall be the same business and corporate entity as each merging institution with all property, rights, powers, and duties of each merging institution, except as affected by state law and by the charter and bylaws of the resulting corporation.

The resulting corporation may use the name of any merging institution whenever it can do any act under that name more conveniently.

A reference to a merging institution in a writing, whether executed or taking effect before or after the merger, is deemed a reference to the resulting corporation if not inconsistent with the other provisions of the writing.

NEW SECTION. Sec. 6. (1) A non-Washington depository institution that is operating one or more branches in Washington under an acquisition transaction under this chapter may thereafter establish and operate one or more additional de novo branches in this state with the prior approval of the supervisor. An application for approval submitted under this section must contain such information as required by the supervisor. The supervisor shall approve or disapprove the application in accordance with the standards of RCW 30.40.020 as applied to a bank.

(2) Notwithstanding subsection (1) of this section, a non-Washington depository institution may not establish or operate an additional branch or branches under subsection (1) of this section unless the supervisor finds that the laws of the home state of the non-Washington depository institution authorize a bank that operates one or more branches in that state, either under a merger or a purchase and assumption transaction, to thereafter establish and operate one or more additional de novo branches in that state, with no more restrictive limitations on the location of the additional branch or branches than would be applicable to the non-Washington depository institution.

NEW SECTION. Sec. 7. Notwithstanding any provision of RCW 30.04.290, a non-Washington depository institution that operates a branch in accordance with the requirements of this chapter has in this state the same powers as a bank.

NEW SECTION. Sec. 8. (1) The supervisor may examine every branch located in this state of a non-Washington depository institution for the same purposes and to the same extent as provided under this title for banks and may collect the estimated actual cost of the examinations. The supervisor shall, to the fullest extent possible, coordinate with the appropriate state supervisor as to the examination or the sharing of information in lieu thereof.

The supervisor may enter into cooperative and reciprocal agreements with the appropriate state supervisor for the purpose of sharing or obtaining examination reports, reports of condition, personnel, and costs for carrying out the supervisor's responsibilities under this chapter and the responsibilities of the appropriate state supervisor. Without limiting the generality of this authorization, the supervisor may obtain such examination reports and reports of condition as the supervisor deems sufficient to allow the supervisor to ascertain on a current basis the financial condition of the non-Washington depository institution.

(2) The supervisor may, upon notice and an opportunity to be heard, suspend or revoke the authority of a non-Washington depository institution to establish or operate a branch or branches in this state if the supervisor finds that the non-Washington depository institution:

(a) Has violated any law;

(b) Is conducting its business in an unauthorized or unsafe manner;

(d) Cannot with safety and expediency continue business;

(e) Has neglected or refused to comply with the terms of an order issued by the supervisor;

(f) Has refused, upon proper demand, to submit its records and affairs for inspection to an examiner for the division;

(g) Has refused to be examined upon oath regarding its affairs; or

(h) Has as its home state a state the laws of which no longer permit a bank to establish and maintain a branch in that state under the circumstances under which the non-Washington depository institution was permitted to open, occupy, or maintain a branch or branches in this state.

NEW SECTION. Sec. 9. No branch of a non-Washington depository institution established under this chapter may be converted to a branch of a national bank until the earlier of (1) five years after the effective date of the acquisition transaction that established the first branch of the non-Washington depository institution in this state or (2) the date on which federal law permits a national bank, other than a state bank that converts to national bank, to establish or maintain branches in a state other than the state in which its head office is located.

NEW SECTION. Sec. 10. The supervisor may adopt rules consistent with the purposes of this chapter, including but not limited to rules necessary or appropriate to interpret, implement, or enforce this chapter.

NEW SECTION. Sec. 11. Sections 3 through 10 of this act constitute a new chapter in Title 30 RCW.

NEW SECTION. Sec. 12. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.