SB2346 104TH GENERAL ASSEMBLY

LRB104 10308 BAB 20382 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB2346

Introduced 2/7/2025, by Sen. Christopher Belt

SYNOPSIS AS INTRODUCED:

205 ILCS 5/18	from Ch. 17, par. 325
205 ILCS 5/22	from Ch. 17, par. 329
205 ILCS 205/8004	from Ch. 17, par. 7308-4
205 ILCS 205/8010	from Ch. 17, par. 7308-10
205 ILCS 205/8015	from Ch. 17, par. 7308-15

Amends the Illinois Banking Act and the Savings Bank Act. Requires specified financial institutions to be insured by the Federal Deposit Insurance Corporation and agree to operate subject to 2 U.S.C. 2901 et seq. following a change in control, a purchase of substantially all assets, the assumption of substantially all liabilities of a State bank, or a merger.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Banking Act is amended by changing Sections 18 and 22 as follows:

(205 ILCS 5/18) (from Ch. 17, par. 325)

Sec. 18. Change in control.

(a) Before any person, whether acting directly or indirectly or through or in concert with one or more persons, may cause (i) a change to occur in the ownership of outstanding stock of any State bank, whether by sale and purchase, gift, bequest or inheritance, or any other means, including the acquisition of stock of the State bank by any bank holding company, which will result in control or a change in the control of the bank, or (ii) a change to occur in the control of a holding company having control of the outstanding stock of a State bank whether by sale and purchase, gift, bequest or inheritance, or any other means, including the acquisition of stock of such holding company by any other bank holding company, which will result in control or a change in control of the bank or holding company, or (iii) a transfer of substantially all the assets or liabilities of the State bank, the Secretary shall be of the opinion and find:

(1) that the general character of proposed management or of the person desiring to purchase substantially all the assets or to assume substantially all the liabilities of the State bank, after the change in control, is such as to assure reasonable promise of successful, safe and sound operation;

(1.1) that depositors' interests will not be jeopardized by the purchase or assumption and that adequate provision has been made for all liabilities as required for a voluntary liquidation under Section 68 of this Act;

(2) that the future earnings prospects of the person desiring to purchase substantially all assets or to assume substantially all the liabilities of the State bank, after the proposed change in control, are favorable;

(2.5) that the future prospects of the institution will not jeopardize the financial stability of the bank or prejudice the interests of the depositors of the bank;

(3) that any prior involvement by the persons proposing to obtain control, to purchase substantially all the assets, or to assume substantially all the liabilities of the State bank or by the proposed management personnel with any other financial institution, whether as stockholder, director, officer or customer, was conducted in a safe and sound manner; and

(4) that if the acquisition is being made by a bank holding company, the acquisition is authorized under the Illinois Bank Holding Company Act of 1957; and .

(5) that the resulting financial institution after a change in control, a purchase of substantially all assets, or the assumption of substantially all the liabilities of a State bank is insured by the Federal Deposit Insurance Corporation and agrees to be subject to 2 U.S.C. 2901 et seq.

(b) Any person desiring to purchase control of an existing State bank, to purchase substantially all the assets, or to assume substantially all the liabilities of the State bank shall, prior to that purchase, submit to the Secretary:

(1) a statement of financial worth;

(2) satisfactory evidence that any prior involvement by the persons and the proposed management personnel with any other financial institution, whether as stockholder, director, officer or customer, was conducted in a safe and sound manner; and

(3) such other relevant information as the Secretary may request to substantiate the findings under subsection (a) of this Section.

A person who has submitted information to the Secretary pursuant to this subsection (b) is under a continuing obligation until the Secretary takes action on the application to immediately supplement that information if there are any material changes in the information previously furnished or if there are any material changes in any circumstances that may affect the Secretary's opinion and findings. In addition, a person submitting information under this subsection shall notify the Secretary of the date when the change in control is finally effected.

The Secretary may impose such terms and conditions on the approval of the change in control application as he deems necessary or appropriate.

If an applicant, whose application for a change in control has been approved pursuant to subsection (a) of this Section, fails to effect the change in control within 180 days after the date of the Secretary's approval, the Secretary shall revoke that approval unless a request has been submitted, in writing, to the Secretary for an extension and the request has been approved.

(b-1) Any person, whether acting directly or indirectly or through or in concert with one or more persons, who obtains ownership of stock of an existing State bank or stock of a holding company that controls the State bank by gift, bequest, or inheritance such that ownership of the stock would constitute control of the State bank or holding company may obtain title and ownership of the stock, but may not exercise management or control of the business and affairs of the bank or vote his or her shares so as to exercise management or control unless and until the Secretary approves an application for the change of control as provided in subsection (b) of this Section.

(b-3) The provisions of this Section do not apply to an established holding company acquiring control of a State bank if the transaction is subject to approval under Section 3 of the federal Bank Holding Company Act, the Federal Deposit Insurance Act, or the federal Home Owners' Loan Act.

(c) Whenever a State bank makes a loan or loans, secured, or to be secured, by 25% or more of the outstanding stock of a State bank, the president or other chief executive officer of the lending bank shall promptly report such fact to the Secretary upon obtaining knowledge of such loan or loans, except that no report need be made in those cases where the borrower has been the owner of record of the stock for a period of one year or more, or the stock is that of a newly organized bank prior to its opening.

(d) The reports required by subsection (b) of this Section 18, other than those relating to a transfer of assets or assumption of liabilities, shall contain the following information to the extent that it is known by the person making the report: (1) the number of shares involved; (2) the names of the sellers (or transferors); (3) the names of the purchasers (or transferees); (4) the names of the beneficial owners if the shares are registered in another name: (5) the purchase price, if applicable; (6) the total number of shares owned by the sellers (or transferors), the purchasers (or transferees) and the beneficial owners both immediately before and after the transaction; and, (7) in the case of a loan, the name of the borrower, the amount of the loan, the name of the bank issuing the stock securing the loan and the number of shares securing the loan. In addition to the foregoing, such reports shall contain such other information which is requested by the Secretary to inform the Secretary of the effect of the transaction upon control of the bank whose stock is involved.

(d-1) The reports required by subsection (b) of this Section 18 that relate to purchase of assets and assumption of liabilities shall contain the following information to the extent that it is known by the person making the report: (1) the value, amount, and description of the assets transferred; (2) the amount, type, and to whom each type of liabilities are owed; (3) the names of the purchasers (or transferees); (4) the names of the beneficial owners if the shares of a purchaser or transferee are registered in another name; (5) the purchase price, if applicable; and, (6) in the case of a loan obtained to effect a purchase, the name of the borrower, the amount and terms of the loan, and the description of the assets securing the loan. In addition to the foregoing, these reports shall contain any other information that is requested by the Secretary to inform the Secretary of the effect of the transaction upon the bank from which assets are purchased or liabilities are transferred.

(e) Whenever such a change as described in subsection (a) of this Section 18 occurs, each State bank shall report promptly to the Secretary any changes or replacement of its chief executive officer or of any director occurring in the next 12 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.

(f) (Blank).

(g)(1) Except as otherwise expressly provided in this subsection (g), the Secretary shall not approve an application for a change in control if upon consummation of the change in control the persons applying for the change in control, including any affiliates of the persons applying, would control 30% or more of the total amount of deposits which are located in this State at insured depository institutions. For purposes of this subsection (g), the words "insured depository institution" shall mean State banks, national banks, and insured savings associations. For purposes of this subsection (g), the word "deposits" shall have the meaning ascribed to that word in Section 3(l) of the Federal Deposit Insurance Act. For purposes of this subsection (g), the total amount of deposits which are considered to be located in this State at insured depository institutions shall equal the sum of all deposits held at the main banking premises and branches in the State of Illinois of State banks, national banks, or insured savings associations. For purposes of this subsection (g), the word "affiliates" shall have the meaning ascribed to that word in Section 35.2 of this Act.

(2) Notwithstanding the provisions of paragraph (1) of this subsection, the Secretary may approve an application for a change in control for a bank that is in default or in danger of default. Except in those instances in which an application for a change in control is for a bank that is in default or in danger of default, the Secretary may not approve a change in control which does not meet the requirements of paragraph (1) of this subsection. The Secretary may not waive the provisions of paragraph (1) of this subsection, whether pursuant to Section 3(d) of the federal Bank Holding Company Act of 1956 or Section 44(d) of the Federal Deposit Insurance Act, except as expressly provided in this paragraph (2) of this subsection.

(h) As used in this Section:

"Control" means the power, directly or indirectly, to direct the management or policies of the bank or to vote 25% or more of the outstanding stock of the bank. If there is any question as to whether a change in control application should be filed, the question shall be resolved in favor of filing the application with the Secretary.

"Substantially all" the assets or liabilities of a State bank means that portion of the assets or liabilities of a State bank such that their purchase or transfer will materially impair the ability of the State bank to continue successful, safe, and sound operations or to continue as a going concern or would cause the bank to lose its federal deposit insurance.

"Purchase" includes a transfer by gift, bequest, inheritance, or any other means.

As used in this Section, a person is acting in concert if that person is acting in concert under federal laws or regulations.

(Source: P.A. 100-888, eff. 8-14-18; 101-81, eff. 7-12-19.)

(205 ILCS 5/22) (from Ch. 17, par. 329)

Sec. 22. Merger procedure; resulting State bank. The merger procedure required of a State bank where there is to be a resulting State bank by consolidation or merger shall be:

(1) The board of directors of each merging bank or insured savings association shall, by a majority of the entire board, approve a merger agreement that shall contain:

(a) The name of each merging bank or insured savings association and its location and a list of each merging bank's or insured savings association's stockholders as of the date of the merger agreement;

(b) With respect to the resulting bank (i) its name and place of business; (ii) the amount of Tier 1 capital; (iii) the classes and the number of shares of stock and the par value of each share; (iv) the designation of the continuing bank and the charter which is to be the charter of the resulting bank, together with the amendments to the continuing charter and to the continuing by-laws; and (v) a detailed financial statement showing the assets and liabilities after the proposed merger or consolidation;

(c) Provisions stating the method, terms and conditions of carrying the merger into effect, including the manner of converting the shares of the merging banks or insured savings association into the cash, shares of stock or other securities of any corporation or other property, or any combination of the foregoing, stated in the merger agreement as to be received by the stockholders of each merging bank or insured savings association;

(d) A statement that the agreement is subject to approval by the Commissioner and by the stockholders of each merging bank or insured savings association and that whether approved or disapproved the merging banks or insured savings association will pay the Commissioner's expenses of examination;

(e) Provisions governing the manner of disposing of the shares of the resulting bank not taken by the dissenting stockholders of the merging banks or insured savings association; and

(f) Such other provisions as the Commissioner may reasonably require to enable him to discharge his duties with respect to the merger.

(2) After approval by the board of directors of each bank or insured savings association, the merger agreement shall be submitted to the Commissioner for approval, together with certified copies of the authorizing resolutions of each board of directors showing approval by a majority of the entire board of each bank or insured savings association.

(3) After receipt by the Commissioner of the papers specified in paragraph (2), he shall approve or disapprove the merger agreement. The Commissioner shall not approve the merger agreement unless he shall be of the opinion and shall find that:

(a) That the resulting bank meets the requirements of this Act for the formation of a new bank at the proposed main banking premises of the resulting bank;

(b) That the same matters exist with respect to the resulting bank which would have been required under Section 10 of this Act for the organization of a new bank;

(c) That the merger agreement is fair to all persons affected; and

(d) That the resulting bank will be operated in a safe and sound manner; and .

(e) the resulting bank is insured by the Federal Deposit Insurance Corporation and agrees to operate subject to 2 U.S.C. 2901 et seq.

If the Commissioner disapproves an agreement he shall state his objections and give an opportunity to the merging banks to amend the merger agreement to obviate such objections.

(4) The Commissioner may impose such terms and conditions on the approval of the merger agreement as he deems necessary or appropriate.

(5) If the Commissioner approves a merger agreement, he may revoke that approval if the merger has not been approved by the shareholders in accordance with Section 23 within 180 days after the date of the Commissioner's approval, unless a request has been submitted, in writing, to the Commissioner for an extension and the request has been approved.

(6) The board of directors of a bank or insured savings association is under a continuing obligation until the Commissioner takes action on the application to furnish additional information if there are any material changes in circumstances after the merger agreement has been submitted which may affect the Commissioner's opinions and findings.

(Source: P.A. 92-483, eff. 8-23-01.)

Section 10. The Savings Bank Act is amended by changing Sections 8004, 8010, and 8015 as follows:

(205 ILCS 205/8004) (from Ch. 17, par. 7308-4)

Sec. 8004. Merger; adoption of plan.

(a) Any depository institution may merge into a savings bank operating under this Act, and a savings bank operating under this Act may merge into a depository institution. The board of directors of each merging depository institution, by resolution adopted by a majority vote of all members of the board, must approve the plan of merger.

(b) The plan of merger must include the following:

(1) The name of each of the merging depository institutions, the name of the continuing savings bank or resulting depository institution, the location of the business office, and the location of the branch offices.

(2) With respect to the resulting savings bank or resulting depository institution, the amount of capital, surplus, and reserve for operating expenses; the classes and the number of shares of stock and the par value of each share; the charter and bylaws of the resulting depository institution or savings bank; and a detailed financial Statement showing the assets and liabilities after the proposed merger.

(3) Provisions stating the method, terms, and conditions of carrying the merger into effect, including the manner of converting the shares of the merging depository institutions into the cash, shares of stock, or other securities or properties Stated in the merger agreement to be received by the stockholders of each merging depository institution.

(4) Provisions governing the manner of disposing of any shares of stock of the resulting savings bank or resulting depository institution that are not taken by the dissenting stockholders of each merging depository institution.

(5) Other provisions that appear necessary or desirable or that the Secretary may reasonably require to enable him to discharge his duties with respect to the merger.

(c) After approval by the board of directors of each depository institution, the merger agreement shall be submitted to the Secretary for approval, together with the certified copies of the authorizing resolutions of each board of directors showing approval by a majority of the entire board of each merging depository institution. After receipt of the items specified herein, the Secretary may make or cause to be made an examination of the affairs of each of the merging depository institutions and their affiliates and subsidiaries, the expense of which is to be paid by the merging depository institutions.

(d) The Secretary may then approve or disapprove the proposed merger agreement. The Secretary shall not approve a merger agreement unless he finds that:

(1) The resulting savings bank meets the requirements of this Act for the formation of a new savings bank at the proposed main office of the resulting savings bank.

(2) The same conditions exist with respect to the resulting savings bank that would be required under this Act for the organization of a new savings bank.

(3) The merger agreement is fair to all persons affected.

(4) The resulting savings bank will be operated in a safe and sound manner.

(5) The resulting savings bank is insured by the Federal Deposit Insurance Corporation and agrees to operate subject to 2 U.S.C. 2901 et seq.

(e) If the Secretary disapproves of the proposed merger, he shall State his objections in writing and give the merging depository institutions a Stated period of time in which to amend the plan of merger to address the objections.

(Source: P.A. 97-492, eff. 1-1-12.)

(205 ILCS 205/8010) (from Ch. 17, par. 7308-10)

Sec. 8010. Procedure to effect sale of all assets.

(a) The procedure to effect a sale authorized by Section 8009 of this Act shall be as follows:

(1) The board of directors shall adopt a resolution setting forth the terms of the proposed sale and shall submit the plan to the Secretary for his preliminary approval. Upon receipt of approval by the Secretary, the plan shall be submitted to a vote of the members at a special or annual meeting.

(2) The terms shall be set forth in the notice of the meeting as prescribed in subsection (b) of Section 4003 of this Act.

(3) The proposed sale will be approved by the members or stockholders upon receiving in the affirmative two-thirds or more of the total number of votes that all members or stockholders of the savings bank are entitled to cast. A proposal for the voluntary liquidation of the savings bank may be submitted to the members or stockholders at the same meeting or at any later meeting called for that purpose in accordance with Article 4 of this Act. A report of proceedings, certified by the president or vice president and attested by the secretary of the savings bank, setting forth the terms of the proposed sale, the notice given and the time of its mailing, the vote on the proposal, and the total number of votes that all members or stockholders of the savings bank are entitled to cast, shall be filed with the Secretary.

(b) If the Secretary finds that the proposed sale is fair to all holders of capital, creditors, and other persons concerned and provision has been made for the disposition of the remaining assets, if any, of the savings bank, as provided in this Act for voluntary liquidation, he shall issue to the savings bank a certificate of authorization for the sale with a copy of the filed report of proceedings attached to the certificate.

(b-5) A proposed sale shall not be approved by the Secretary unless the resulting savings bank is insured by the Federal Deposit Insurance Corporation and agrees to operate subject to 2 U.S.C. 2901 et seq.

(c) When the Secretary's certificate is issued, the savings bank may complete the sale so authorized; except that the savings bank must also have the approval of the Federal Deposit Insurance Corporation.

(d) If the sale includes the name of the savings bank, the purchaser shall have the exclusive right to that name for a period of 5 years.

(Source: P.A. 97-492, eff. 1-1-12.)

(205 ILCS 205/8015) (from Ch. 17, par. 7308-15)

Sec. 8015. Change in control.

(a) No person, whether acting directly or indirectly or through or in concert with one or more persons, may acquire control of a savings bank operating under this Act without prior approval of the Secretary. The provisions of this Section do not apply to an established holding company acquiring control of a State savings bank if the transaction is subject to approval under the Federal Deposit Insurance Act, the federal Home Owners' Loan Act, or Section 3 of the federal Bank Holding Company Act.

(b) Any person seeking to acquire control of a savings bank or subsidiary of a savings bank operating under this Act shall submit an application in the form required by the Secretary.

(c) The Secretary may examine the books and records of the applicant and related persons, investigate any matter relevant to the application, and require the applicant to submit additional information and documents.

(d) The Secretary shall not approve an acquisition of control unless the application and related examination and investigation permit the Secretary to find positively on all of the following matters:

(1) The applicant has filed a complete application, has cooperated with all examinations and investigations of the Secretary, and has submitted all information and documents requested by the Secretary.

(2) The applicant and proposed management have the necessary competence, experience, integrity, and financial ability.

(3) The business plans of the applicant are consistent with the safe and sound operation of the savings bank and the purposes of this Act.

(4) The acquisition of control would not be inequitable to members, borrowers or creditors of the savings bank.

(5) The applicant and proposed management have complied with subsection (f) of this Section.

(6) The future prospects of the institution will not jeopardize the financial stability of the savings bank or prejudice the interests of the members of the savings bank.

(7) The savings bank is or will be insured by the Federal Deposit Insurance Corporation and agrees to operate subject to 2 U.S.C. 2901 et seq.

(e) Shares of stock or mutual members shares acquired in violation of subsection (a) of this Section shall not be voted and shall not be counted in calculating the total number of shares eligible to vote. In addition to any other action authorized under this Act, the Secretary may require divestment of shares of stock acquired in violation of this Section and may require retirement of the withdrawal value of accounts providing mutual member voting shares acquired in violation of this Section, in which case the savings bank shall pay accrued interest on the retired withdrawal value and shall not assess any penalty for early withdrawal.

(f) An individual, whether acting directly or indirectly or through or in concert with one or more persons, shall file written notice to the Secretary within 10 days of the occurrence of either of the following events:

(1) becoming, directly or indirectly, the beneficial owner of more than five percent of the voting shares of a savings bank or savings bank holding company; or

(2) obtaining, directly or indirectly, the power to cast more than five percent of the member votes of a savings bank or savings bank holding company.

The requirements of this subsection (f) are separate and in addition to the requirements of subsection (a) of this Section.

(g) The Secretary may promulgate rules to implement this provision, including definitions, form and content of application or notice, procedures, exemptions, and requirements for approval.

(h) As used in this Section, a person is acting in concert if that person is acting in concert under federal laws or regulations.

(Source: P.A. 100-888, eff. 8-14-18.)