SENATE BILL NO. 108
AS AMENDED BY SENATE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 8, TITLE 5, DELAWARE CODE TO PROVIDE FOR THE ACQUISITION OF EXISTING DELAWARE BANKS AND BANK HOLDING COMPANIES BY OUT-OF-STATE BANK HOLDING COMPANIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (three-fifths of all members elected to each House thereof concurring therein):
Section 1. Amend Chapter B, Title 5, Delaware Code by adding thereto a new Subchapter IV entitled "Acquisition of Stock in Existing Delaware Banks and Bank Holding Companies in Delaware", which said Subchapter IV shall read as follows:
"Subchapter IV. Acquisition of Stock in Existing Delaware Banks and Bank Holding Companies in Delaware.
§841. Title The provisions of this subchapter may be cited as The Delaware Interstate
Banking Act of 1987'.
For purposes of this Subchapter, the following words and phrases shall have the meanings ascribed to them herein:
(a) 'Bank' shall mean:
(1) a bank organized and existing under the laws of this State; or
(1) a national bank organized and existing as a national banking association pursuant to the National Bank Act, 12 U.S.C. §21, et seq., and maintaining its principal office in Delaware; or
(2) where the context clearly provides, a state-chartered bank organized and located in, or a national bank principally located in, either any state or group of states other than Delaware; or any state or states including Delaware.
(b) 'Out-of-state bank holding company', 'Commissioner', 'divest', and
'subsidiary' shall have the meanings ascribed to them in §801 of this title;
(c) 'Existing bank' means a bank whose intitial Delaware charter (whether or not
subsequently amended or converted to a national charter) or authorization to conduct a banking business in Delaware pursuant to the National Bank Act bears an effective date not less than five years prior to the effective date of the acquisition of such bank;
(d) 'Location' or 'located' when referring to the state of domicile of a bank
holding company means the state in which the amount of aggregate deposits in the United States offices of all of its directly or indirectly owned or controlled bank or non-bank subsidiaries (as well as all of the bank or non-bank subsidiaries of any bank holding company which owns or controls that bank holding company) is greatest;
(e) 'Reciprocal legislation' means statutory law of an eligible state which
authorizes a bank holding company located in Delaware to acquire banks or bank holding companies in such eligible state on substantially the same terms and conditions as a bank holding company located in such eligible state may acquire banks or bank holding companies within that state. A statute of an eligible state shall be deemed to 'authorize' the acquisition of banks or bank holding companies in that state by a bank holding company located in Delaware if such statute either expressly so provides, or if such statute either expressly so provides, or if such statute otherwise provides that such acquisition is authorized if a bank holding company of that state is authorized to acquire a bank or bank holding company located in Delaware.
(f) 'Acquisition' means
(I) the merger or consolidation of one bank holding company with another bank
holding company; or
(2) the assumption by a bank holding company of direct or indirect ownership
or control of the voting shares of another bank holding company or a bank if, after the effective date thereof, the bank holding company making the acquisition will
directly or indirectly own or control more than five percent of any class of voting shares of the other bank holding company or bank; or
(3) the assumption of ownership or control of all or substantially all of the assets of a bank holding company or bank.
(g) 'Control' shall have the same meaning as set forth in §2(a)(2) of the federal Bank Holding Company Act of 1956 as amended, 12 U.S.C. §1841(a)(2).
(a) 'Eligible state' means, prior to June 30, 1990, the states of Maryland, New Jersey, Ohio, Pennsylvania, the District of Columbia, and Virginia provided that each such state shall maintain in effect reciprocal legislation. (For purposes of this subchapter, each of the named jurisdictions other than the District of Columbia and Virginia shall be deemed as having in effect as of January 1, 1987 reciprocal legislation). On and after June 30, 1990, 'eligible state' shall mean any state of the United States and the District of Columbia which maintains in effect reciprocal legislation.
(a) 'Deposit' shall be as defined in §204.2(a) of Regulation D of the Federal Reserve Board (12 CFR §204.2(a).
§843 Acquisition Authority
(a) Except as provided in Section 1842 of Title 12 of the United States Code, Subchapters I and II of this Chapter, and Chapters 7 and 10 of this Title, no out-of-state bank holding company or subsidiary thereof may acquire or retain ownership or control of a bank or a bank holding company located in Delaware.
Notwithstanding the foregoing, an out-of-state bank holding company located in an eligible state may acquire and retain either an existing bank, or a bank holding company located in Delaware or in an eligible state which owns or control an existing bank, provided that
(1) as of the date of the application, and at all times thereafter, the out-of-state bank holding company is located in an eligible state; and
(2) as of the date of the application, and at all times thereafter, until June 30, 1990, the aggregate deposits of the out-of-state bank holding company which are located in all eligible states exceed the aggregate deposits of such out-of-state bank holding company which are located in states which are not eligible states; and
(3) the out-of-state bank holding company makes application under, and at all times complies with all regulations, decrees, cooperative agreements and orders duly promulgated by the Commissioner with respect to both the implementation of this subchapter generally, and the operations of such bank holding company and the existing bank which it acquires specifically;
(b) Nothing in the subchapter or in any other law of this State shall be deemed to prohibit or limit an out-of-state bank holding company or a bank holding company located in an eligible state or in this State from acquiring a bank or bank holding company located in any jurisdiction other than an eligible state, which acquisition is otherwise permitted by applicable law of the United States and any state; provided that, if an out-of-state bank holding company by virtue of such an acquisition becomes a bank holding company not located in an eligible state it must comply with the divestiture provisions of this subchapter.
(c) Nothing in this subchapter or in any other law of this State shall be deemed to permit branching or merging of banks across state lines.
§844 Application Proceli
(a) An out-of-state bank holding company shall make application to acquire an
existing bank or bank holding company located in this State which owns or controls an existing bank upon such forms and in accordance with such regulations and rulings as are promulgated from time to time by the Commissioner. Such application shall designate a resident of this State as applicant's agent for the service of any paper, notice or legal process upon applicant in connection with matters arising out of this subchapter and shall be accompanied by a non-refundable filing fee in the amount of Five Thousand Dollars ($5,000.00) for the use of the State, and a non-refundable processing fee in such amount as the Commissioner shall from time to time fix by regulation, payable to and for the use of the Office of the Bank Commissioner.
(b) Following publication, notice and hearing in the manner prescribed by the Commissioner, the Commissioner shall approve or disapprove an application by an out-of-state bank holding company to own or control an existing bank or a bank holding company located in this State upon a determination of whether such an acquisition will serve the public convenience and advantage. As part of such determination, but not by way of limitation, the Commissioner shall consider the following criteria:
(1) whether the acquisition will, based upon the managerial and financial resources, financial history and business plan of the applicant, adversely affect the safe and sound operation of the existing bank or any other bank located in this State which is owned or controlled by the bank holding company;
(2) whether the acquisition will adversely affect the quantity or quality of banking services available to one or more communities served by the existing bank prior to the acquisition;
(3) whether, as a result of a prior or simultaneous acquisition of another existing bank, the acquisition of the existing bank will result in an undue concentration of resources or a substantial lessening of competition in this State; and
(1) whether the acquisition will foster economic development and the financing of business enterprises to the end that employment opportunities will either be increased or, where there is a prospect for a reduction, retained.
(c) In conjunction with the approval of any application filed under this Section,
the Commissioner may require as a condition of such approval that the out-of-state bank holding company enter into a cooperative agreement binding it to such special terms and conditions regarding its operations and its maintenance and preservation of the capital and assets in Delaware of the existing bank as the Commissioner shall deem to be necessary to assure that the acquisition serves the public convenience and advantage.
§845. Duties and Powers of the Commissioner
In order to effectuate the provisions of this subchapter, the Commissioner shall, in addition to exercising the authority provided in Sections 844 and 846 of this subchapter:
(a) adopt and issue such regulations, decrees, orders, rulings, and forms, and enter into such cooperative agreements with out-of-state bank holding companies, as he deems to be necessary and proper;
(b) require by negotiation, administrative order, or cooperative agreement the maintenance and production of such documents and reports, the periodic conduct of such examinations, and otherwise supervise and govern the activities of the out-of-state bank holding companies as he deems necessary and proper;
(a) determine by findings and order as required whether a state or the District of Columbia has reciprocal legislation in effect;
(a) have the authority to examine any out-of-state bank holding company owning a bank. The Commissioner may require reports of each out-of-state bank holding company
subject to this subchapter. Such report shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this subchapter and the safety and soundness of the bank;
(a) prior to approving the acquisition of the bank or bank holding company located in Delaware by an out-of-state bank holding company, the Commissioner may enter into cooperative agreements with the appropriate regulatory authorities for the periodic examination of any out-of-state bank holding company that has a bank subsidiary or bank holding company located in Delaware or any subsidiary of such holding company. and may accept reports of examination and other records from such authorities in lieu of conducting his own examination. The Commissioner may enter into joint actions with
other regulatory authorities having concurrent jurisdiction over any out-of-state bank holding company that owns or controls a bank or bank holding company subsidiary or may take such actions independently to carry out his responsibilities under this subchapter to assure the safety and soundness of any bank and to assure compliance with the provisions of this subchapter and applicable Delaware banking laws.
Upon his determination that an out-of-state bank holding company is:
(a) not located in a state which is an eligible state;
(a) in violation of the requirements of this subchapter, or any order,
regulation, ruling, cooperative agreement or decree issued or entered into by the Commissioner, or any order of a court of competent jurisdiction thereunder; or
(b) otherwise operating an existing bank in an unsafe and unsound manner, the Commissioner shall have the authority to order such out-of-state bank holding company or subsidiary thereof to remedy such violation by a date certain, or to cease and desist from operating in an unsafe and unsound manner, in default of which the Commissioner shall have the authority to order such out-of-state bank holding company or subsidiary thereof to divest itself of any shares or assets of an existing bank which it has acquired under this subchapter. The procedure governing such divestiture, and the authority of the Commissioner to enforce an order directing the same shall be the same as provided in Subsection (c) and (d) of Section 807 of this Chapter 8.
§847. Powers_of_a_n_Acquired. Existing Bank
(a) Except as to Section 843(c) and Subchapter I of this Chapter 8, nothing contained in this Chapter 8 shall be construed as abridging the rights, powers and authorities granted to any existing bank acquired under any subchapter of this Chapter by its charter, the provisions of this Title, or any other current, former or future law of the State of Delaware governing the formation, conversion, merger, corporate powers, branching, operation or dissolution of a bank.
(a) The stockholders of any existing bank owning a majority of the voting stock of such bank may, prior to or following the effective date of the reciprocal banking provisions of this subchapter, elect to be exempt from the provisions of §843 of this subchapter. Once such existing bank shall have submitted adequate proof to the Commissioner of its election to be exempt from the provisions of this subchapter, the Commissioner shall give public notice in a manner he deems to be appropriate that such institution is no longer an existing bank for purposes of this subchapter. An existing bank may at any time withdraw its election to be exempt in the same manner."
Section 2. If any provisions of this Act or the application thereof to any person or
circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Act if this Act can be given effect without the invalid provision or application, and to that end the provisions of this Act are declared severable; provided, that if a Delaware or Federal court of competent jurisdiction should declare by final order or decree that this subchapter:
(a) permits the acquisition of banks or bank holding companies located in
Delaware by bank holding companies not located in eligible states; or
(b) permits the acquisition of banks or bank holding companies located in
Delaware prior to June 30, 1990 by bank holding companies located within a state which is not an eligible state prior to June 30, 1990 under the provisions of
§842(h) of this subchapter, then, in either event, such declaration or
interpretation shall cause this entire subchapter to be invalid.
Section 3. With the exception of §847 of this subchapter, which Section shall be
effective upon adoption, the provisions of this Act shall be effective on January 1, 1988.
Approved May 14, 1987.