AN ACT Relating to banks and trust companies; amending RCW 30.04.232, 30.04.060, 30.04.075, and 30.04.410; adding new sections to chapter 30.04 RCW; providing an effective date; and declaring an emergency.

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

Sec. 1. Section 1, chapter 310, Laws of 1985 and RCW 30.04.232 are each amended to read as follows:

(1) In addition to an acquisition pursuant to RCW 30.04.230, an out-of-state bank holding company may, with the approval of the supervisor of banking, acquire more than five percent of the voting stock or all or substantially all of the assets of a bank, trust company, or national banking association, the principal operations of which are conducted within this state, if the following terms or conditions are fulfilled:

(a) The bank, trust company, or national banking association, the voting stock of which is to be acquired, shall have been conducting business for a period of not less than three years;

(b) The laws of the state in which the out-of-state bank holding company principally conducts its operations permit a domestic bank holding company to acquire more than five percent of the shares of the voting stock or all or substantially all of the assets of a bank, trust company, or national banking association, the principal operations of which are conducted within that state, and permit the operation of the acquired bank, trust company, or national banking association within that state on terms and conditions no less favorable than other banks, trust companies, or national banking associations doing a banking business within that state;

(c) The supervisor of banking, upon the request of any person, shall adopt a rule making a determination whether the law, of a particular state or states meets the qualifications of (b) of this subsection.

(2) As used in this section, sections 2 and 3 of this 1987 act, and RCW 30.04.060 and 30.04.075, the terms "bank holding company," "domestic bank holding company," and "out-of-state bank holding company" shall have the meanings provided in RCW 30.04.230. The terms "control" and "person" shall have the meanings provided in RCW 30.04.400.

NEW SECTION. Sec. 2. (1) An out-of-state bank holding company desiring to make an acquisition of stock or assets pursuant to RCW 30.04.232 shall submit an application to the supervisor of banking in the form required by RCW 30.04.405 with regard to a bank or trust company chartered by the state of Washington, or in the form of a copy of the application required by 12 U.S.C. Sec. 1842(3) or by 12 U.S.C. Sec. 1817(j) with regard to a national bank.

(2) No acquisition of stock or assets pursuant to RCW 30.04.232 shall be completed unless a complete application under subsection (1) of this section has been on file with the supervisor for a period of sixty days and within that time the supervisor has not issued a notice disapproving such proposed acquisition or extending for up to another thirty days the time within which such a disapproval may be issued. The period for disapproval may be further extended only if the supervisor determines that an acquiring party has not furnished all the information required under this section or that in the supervisor's judgment any material information submitted is substantially inaccurate. An acquisition may be made prior to expiration of the disapproval period if the supervisor issues written notice of intent not to disapprove the action.

(3) The supervisor may disapprove any proposed acquisition if:

(a) The acquisition does not comply with RCW 30.04.232(1) (a) and (b);

(b) The proposed acquisition would be detrimental to the safety and soundness of the applicant or of the bank, trust company, or national banking association that the applicant seeks to control or whose assets are to be acquired or of any other bank, trust company, or national banking association, the principal operations of which are conducted in this state;

(c) The proposed acquisition would be prejudicial to the interests of the depositors, creditors, or beneficiaries of fiduciary accounts of the applicant or of the bank, trust company, or national banking association that the applicant seeks to control or whose stock is to be acquired;

(d) The proposed acquisition is substantially detrimental to the financial institution structure of the state of Washington; or

(e) The proposed acquisition is an acquisition of control of a bank or trust company chartered by the state of Washington, and the applicant has failed to comply with RCW 30.04.405 or the time for the supervisor to disapprove the acquisition pursuant to RCW 30.04.410 has not passed or the supervisor has disapproved the proposed acquisition pursuant to RCW 30.04.410.

NEW SECTION. Sec. 3. A domestic bank holding company or out-of-state bank holding company controlling a bank, trust company, or national banking association the principal operations of which are conducted in this state shall file with the supervisor of banking a notice of its intent to acquire a banking institution outside Washington, in the form of a copy of the application required by 12 U.S.C. Sec. 1842(3) or by 12 U.S.C. Sec. 1817(j) or by an applicable change in the bank control act of the state in which the banking institution proposed to be acquired is located. The supervisor of banking may within thirty days or an extended period not exceeding an additional fifteen days disapprove the acquisition if the supervisor determines that the acquisition would detrimentally affect the safety or soundness of a bank, trust company, or national banking association the principal operations of which are conducted in this state and which is controlled by such bank holding company.

Sec. 4. Section 30.04.060, chapter 33, Laws of 1955 as last amended by section 3, chapter 305, Laws of 1985 and RCW 30.04.060 are each amended to read as follows:

(1) The supervisor, the deputy supervisor, or a bank examiner, without previous notice, shall visit each bank and each trust company at least once every eighteen months, and oftener if necessary, for the purpose of making a full investigation into the condition of such corporation, and for that purpose they are hereby empowered to administer oaths and to examine under oath any director, officer, employee, or agent of such corporation. The supervisor may make such other full or partial examinations as deemed necessary and may examine any bank holding company that owns any portion of a bank or trust company chartered by the state of Washington and obtain reports of condition for any bank holding company that owns any portion of a bank or trust company chartered by the state of Washington. The supervisor may visit and examine into the affairs of any nonpublicly held corporation in which the bank, trust company, or bank holding company has an investment or any publicly held corporation the capital stock of which is controlled by the bank, trust company, or bank holding company; may appraise and revalue such corporations' investments and securities; and shall have full access to all the books, records, papers, securities, correspondence, bank accounts, and other papers of such corporations for such purposes. The supervisor may, in his or her discretion, accept in lieu of the examinations required in this section the examinations conducted at the direction of the federal reserve board or the Federal Deposit Insurance Corporation. Any wilful false swearing in any examination is perjury in the second degree.

(2) The supervisor may enter into cooperative and reciprocal agreements with the bank regulatory authorities of the United States, any state, the District of Columbia, or any trust territory of the United States for the periodic examination of domestic bank holding companies owning banking institutions in other states, the District of Columbia, or trust territories, or of out-of-state bank holding companies owning a bank, trust company, or national banking association the principal operations of which are conducted in this state. The supervisor may accept reports of examination and other records from such authorities in lieu of conducting his or her own examinations. The supervisor may enter into joint actions with other regulatory bodies having concurrent jurisdiction or may enter into such actions independently to carry out his or her responsibilities under this title and assure compliance with the laws of this state.

Sec. 5. Section 1, chapter 245, Laws of 1977 ex. sess. as amended by section 2, chapter 279, Laws of 1986 and RCW 30.04.075 are each amended to read as follows:

(1) All examination reports and all information obtained by the supervisor and the supervisor's staff in conducting examinations of banks, trust companies, or alien banks 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 supervisor may furnish all or any part of examination reports prepared by the supervisor's office to:

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

(b) Bank regulatory authorities with whom the supervisor has entered into agreements pursuant to RCW 30.04.060(2);

(c) Officials empowered to investigate criminal charges subject to legal process, valid search warrant, or subpoena. If the supervisor furnishes any examination report to officials empowered to investigate criminal charges, the supervisor may only furnish that part of the report which is necessary and pertinent to the investigation, and the supervisor 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;

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

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

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

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

((~~(g)~~)) (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 division of banking, 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 division of banking is designed for use in the supervision of the bank, trust company, or alien bank. The report shall remain the property of the supervisor 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 supervisor and the supervisor's staff in conducting examinations 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 supervisor, 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 supervisor.

(7) This section shall not apply to investigation reports prepared by the supervisor and the supervisor'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 supervisor may adopt rules making confidential portions of the reports if in the supervisor's opinion the public disclosure of the portions of the report would impair the ability to obtain the information which the supervisor 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. 6. Section 3, chapter 246, Laws of 1977 ex. sess. and RCW 30.04.410 are each amended to read as follows:

(1) The supervisor may ((file an action in the superior court of the county in which the bank is located to restrain the pending acquisition or control of a bank if he finds after considering the application and within thirty days after its filing any of the following)) disapprove the acquisition of a bank or trust company within thirty days after the filing of a complete application pursuant to RCW 30.04.405 or an extended period not exceeding an additional fifteen days if:

((~~(1)~~)) (a) The poor financial condition of any acquiring party might jeopardize the financial stability of the bank or might prejudice the interests of the bank depositors, borrowers, or shareholders;

((~~(2)~~)) (b) The plan or proposal of the acquiring party to liquidate the bank, to sell its assets, to merge it with any person, or to make any other major change in its business or corporate structure or management is not fair and reasonable to the bank's depositors, borrowers, or stockholders or is not in the public interest;

((~~(3)~~)) (c) The banking and business experience and integrity of any acquiring party who would control the operation of the bank indicates that approval would not be in the interest of the bank's depositors, borrowers, or shareholders;

((~~(4)~~)) (d) The information provided by the application is insufficient for the supervisor to make a determination or there has been insufficient time to verify the information provided and conduct an examination of the qualification of the acquiring party; or

((~~(5)~~)) (e) The acquisition would not be in the public interest.

(2) An acquisition may be made prior to expiration of the disapproval period if the supervisor issues written notice of intent not to disapprove the action.

(3) Whenever such a change in control occurs, each party to the transaction shall report promptly to the supervisor any changes or replacement of its chief executive officer or of any director occurring in the next twelve-month period, including in its report a statement of the past and current business and professional affiliations of the new chief executive officer or directors.

NEW SECTION. Sec. 7. Sections 2 and 3 of this act are each added to chapter 30.04 RCW.

NEW SECTION. Sec. 8. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect May 2, 1987.