BP BHEAD INT H

AN ACT Relating to authorizing interstate bank branching; amending RCW 30.04.075 and 30.40.020; adding a new section to chapter 30.04 RCW; adding a new chapter to Title 30 RCW; and providing an effective date.

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

NEW SECTION. Sec. 1. (1) The legislature finds that the state of Washington's geographical location creates tremendous economic opportunities associated with regional and international commerce. The legislature further finds that the state's ability to fully realize these opportunities and bolster its position as an economic leader in this region require the state to:

(a) Promote and attract the efficient provision of financial services and credit availability in the communities of this state;

(b) Protect the interests of depositors, members, shareholders, and other customers of financial institutions operating in this state;

(c) Preserve the competitive equality of state chartered institutions as compared to federally chartered institutions; and

(d) Preserve the advantages of the dual banking system.

(2) The legislature recognizes that congress enacted the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, to modernize federal banking and branching laws. The legislature finds that section 102 of that act permits interstate merger transactions between in-state banks and out-of-state banks before June 1, 1997, if the home state of each bank involved in the transaction enacts a law that applies equally to all out-of-state banks and expressly permits interstate merger transactions with all out-of-state banks. The legislature finds that these transactions will further the state's policies and expressly declares that the purpose of this chapter is to exercise its option under section 44(a)(3) of the Federal Deposit Insurance Act, as enacted by section 102 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, to authorize interstate merger transactions before June 1, 1997.

NEW SECTION. Sec. 2. The definitions set forth in this section apply throughout this chapter, unless the context requires otherwise.

(1) "Bank" means a commercial bank chartered by this state, another state, or the federal government.

(2) "Domestic bank" means a bank that is chartered under the laws of this state or a federally chartered bank whose main office is located in this state.

(3) "Home state" means (a) the state that charters a state chartered bank and (b) the state where the bank's main office is located for federally chartered banks.

(4) "Host state" means a state, other than the bank's home state, where the bank maintains or seeks to establish a branch.

(5) "Merger transaction" means a merger, consolidation, or acquisition of all or substantially all of another bank's assets or liabilities.

(6) "Merging bank" means a bank that is a party to a merger transaction.

(7) "Out-of-state bank" means a bank that is chartered by another state or a bank that is federally chartered with its main office located in a state other than Washington.

(8) "Resulting bank" means the domestic or out-of-state bank resulting from a merger transaction.

NEW SECTION. Sec. 3. (1) A domestic bank may engage in a merger transaction with any out-of-state bank subject to this chapter. The director shall not approve a merger transaction between a domestic bank chartered by this state and an out-of-state bank unless the director finds:

(a) The domestic bank, whether by itself or together with a predecessor bank, has conducted business for a period of not less than three years before the effective date of the merger, except that this provision does not apply to a merger transaction that exclusively involves affiliate banks;

(b) The merger is permitted by the laws of the home state of the out-of-state bank and any applicable federal law;

(d) Any other applicable provisions of this title including, but not limited to, chapter 30.49 RCW are satisfied.

(2) After the completion of a merger transaction described in subsection (1) of this section, the resulting bank may operate, as a main office or branch, an office that a merging bank operated as a main office or a branch immediately before the merger. The resulting bank may establish, acquire, or operate additional branches at a location where a bank involved in a merger transaction could have established, acquired, or operated a branch under applicable federal or state law if the bank had not been a party to the merger transaction.

NEW SECTION. Sec. 4. (1) The director may examine every branch located in this state of an out-of-state bank chartered by another state for the same purposes and to the same extent as provided under this title for banks chartered by this state and may collect costs from such out-of-state banks on the same basis by which the director collects examination costs of banks chartered by this state.

(2) The director may enter into cooperative and reciprocal agreements with the appropriate bank regulators for the purpose of sharing or obtaining examination reports, reports of condition, personnel, and costs for carrying out the director's responsibilities under this chapter. The director also may enter into supervisory agreements with other appropriate bank regulatory authorities to prescribe the applicable laws governing powers and authorities, including but not limited to corporate governance and operational matters, of Washington branches of an out-of-state bank chartered by another state or out-of-state branches of a domestic bank chartered by this state if the home and host state laws conflict.

(3) If the director determines that there is a violation of the law of this state or another state concerning the activities being conducted by a branch of an out-of-state bank chartered by another state or a branch of a bank chartered by this state or that such branch is being operated in an unsafe or unsound manner, the director may undertake such enforcement actions or proceedings as would be permitted if the branch were a bank chartered by this state.

NEW SECTION. Sec. 5. A new section is added to chapter 30.04 RCW to read as follows:

Notwithstanding any restrictions, limitations, and requirements of law, in addition to all powers, express or implied, that a bank has under the laws of this state, a bank has the powers and authorities conferred as of December 31, 1994, upon a federally chartered bank doing business in this state. A bank may exercise the powers and authorities of a federally chartered bank granted after December 31, 1994, only if the director finds that the exercise of those powers and authorities:

(1) Serves the convenience and advantage of depositors, borrowers, or general public; and

(2) Maintains the fairness of competition and parity between state chartered banks and national banks.

As used in this section, "powers and authorities" include without limitation powers and authorities in corporate governance and operational matters.

The restrictions, limitations, and requirements applicable to specific powers or authorities of national banks apply to banks exercising those powers or authorities permitted under this section but only insofar as the restrictions, limitations, and requirements relate to exercising the powers or authorities granted banks solely under this section.

Sec. 6. RCW 30.04.075 and 1994 c 92 s 11 are each amended to read as follows:

(1) All examination reports and all information obtained by the director and the director's staff in conducting examinations of banks, trust companies, or alien banks, and information obtained by the director and the director's staff from other state or federal bank regulatory authorities with whom the director has entered into agreements pursuant to RCW 30.04.060(2) or section 4(2) of this act, and information obtained by the director and the director's staff relating to examination and supervision of bank holding companies owning a bank in this state or subsidiaries of such holding companies, is confidential and privileged information and shall not be made public or otherwise disclosed to any person, firm, corporation, agency, association, governmental body, or other entity.

(2) Subsection (1) of this section notwithstanding, the director may furnish all or any part of examination reports prepared by the director's office to:

(a) Federal agencies empowered to examine state banks, trust companies, or alien banks;

(b) Bank regulatory authorities with whom the director has entered into agreements pursuant to RCW 30.04.060(2) or section 4(2) of this act, and other bank regulatory authorities who are the primary regulatory authority or insurer of accounts for a bank holding company owning a bank, trust company, or national banking association the principal operations of which are conducted in this state or a subsidiary of such holding company; provided that the director shall first find that the reports of examination to be furnished shall receive protection from disclosure comparable to that accorded by this section;

(c) Officials empowered to investigate criminal charges subject to legal process, valid search warrant, or subpoena. If the director furnishes any examination report to officials empowered to investigate criminal charges, the director may only furnish that part of the report which is necessary and pertinent to the investigation, and the director may do this only after notifying the affected bank, trust company, or alien bank and any customer of the bank, trust company, or alien bank who is named in that part of the examination or report ordered to be furnished unless the officials requesting the report first obtain a waiver of the notice requirement from a court of competent jurisdiction for good cause;

(d) The examined bank, trust company, or alien bank, or holding company thereof;

(e) The attorney general in his or her role as legal advisor to the director;

(f) Liquidating agents of a distressed bank, trust company, or alien bank;

(g) A person or organization officially connected with the bank as officer, director, attorney, auditor, or independent attorney or independent auditor;

(h) The Washington public deposit protection commission as provided by RCW 39.58.105.

(3) All examination reports furnished under subsections (2) and (4) of this section shall remain the property of the department of financial institutions, and be confidential and no person, agency, or authority to whom reports are furnished or any officer, director, or employee thereof shall disclose or make public any of the reports or any information contained therein except in published statistical material that does not disclose the affairs of any individual or corporation: PROVIDED, That nothing herein shall prevent the use in a criminal prosecution of reports furnished under subsection (2) of this section.

(4) The examination report made by the department of financial institutions is designed for use in the supervision of the bank, trust company, or alien bank. The report shall remain the property of the director and will be furnished to the bank, trust company, or alien bank solely for its confidential use. Under no circumstances shall the bank, trust company, or alien bank or any of its directors, officers, or employees disclose or make public in any manner the report or any portion thereof, to any person or organization not connected with the bank as officer, director, employee, attorney, auditor, or candidate for executive office with the bank. The bank may also, after execution of an agreement not to disclose information in the report, disclose the report or relevant portions thereof to a party proposing to acquire or merge with the bank.

(5) Examination reports and information obtained by the director and the director's staff in conducting examinations, or obtained from other state and federal bank regulatory authorities with whom the director has entered into agreements pursuant to RCW 30.04.060(2) or section 4(2) of this act, or relating to examination and supervision of bank holding companies owning a bank, trust company, or national banking association the principal operations of which are conducted in this state or a subsidiary of such holding company, or information obtained as a result of applications or investigations pursuant to RCW 30.04.230, shall not be subject to public disclosure under chapter 42.17 RCW.

(6) In any civil action in which the reports are sought to be discovered or used as evidence, any party may, upon notice to the director, petition the court for an in camera review of the report. The court may permit discovery and introduction of only those portions of the report which are relevant and otherwise unobtainable by the requesting party. This subsection shall not apply to an action brought or defended by the director.

(7) This section shall not apply to investigation reports prepared by the director and the director's staff concerning an application for a new bank or trust company or an application for a branch of a bank, trust company, or alien bank: PROVIDED, That the director may adopt rules making confidential portions of the reports if in the director's opinion the public disclosure of the portions of the report would impair the ability to obtain the information which the director considers necessary to fully evaluate the application.

(8) Every person who violates any provision of this section shall be guilty of a gross misdemeanor.

Sec. 7. RCW 30.40.020 and 1994 c 92 s 79 are each amended to read as follows:

A bank or trust company may, with the approval of the director, establish and operate branches anywhere within the state or any other state. A bank having a paid-in capital of not less than one million dollars may, with the approval of the director, establish and operate branches in any foreign country. The director'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 director'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 that the proposed branch is not being formed for other than the legitimate objects covered by this title.

NEW SECTION. Sec. 8. Sections 1 through 4 of this act constitute a new chapter in Title 30 RCW.

NEW SECTION. Sec. 9. Sections 1 through 6 of this act take effect January 1, 1996, but the director shall take such steps and adopt such rules as are necessary to implement this act by that date.