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91_HB2204eng HB2204 Engrossed LRB9105133JSpcA 1 AN ACT concerning the regulation of financial 2 institutions, amending a named Act. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 1. Short title. This Act may be cited as the 6 Banking on Illinois Act. 7 Section 5. Findings and declarations of policy. The 8 General Assembly hereby finds and declares: 9 (1) that the economic strength and general welfare 10 of Illinois depends on a strong, profitable, and 11 competitive banking industry in this State that preserves 12 and creates employment, increases credit availability, 13 attracts capital, and expands the savings base for the 14 citizens of this State; 15 (2) that the removal of geographic restrictions in 16 the federal banking laws and in the laws of the 50 states 17 has given rise to a substantial number of newly created 18 community banks and interstate bank mergers requiring the 19 selection of main office locations and relocations; 20 (3) that by ensuring a favorable environment for 21 banks to commence and operate their businesses from this 22 State, more newly created community banks and merging 23 banks will choose to maintain or retain their 24 headquarters in and relocate their main banking offices 25 to Illinois; and 26 (4) that preserving and increasing the number of 27 bank headquarters and main banking offices within 28 Illinois will substantially increase employment 29 opportunities, credit availability, and capital 30 investment in this State, while strengthening the savings 31 base of this State, thereby providing significant HB2204 Engrossed -2- LRB9105133JSpcA 1 benefits to all Illinois citizens, to commercial and 2 agricultural businesses of all sizes in this State, and 3 to all local governments and political subdivisions of 4 this State. 5 Section 10. Purpose. The purpose of this Act is to 6 encourage and provide a favorable environment in Illinois for 7 the chartering and operating of banks that locate and 8 maintain main banking offices in this State. 9 Section 15. Application of Illinois law. 10 (a) To further the purpose and policies of this Act, the 11 provisions of the following Acts shall be liberally 12 construed: 13 (1) the Illinois Banking Act; and 14 (2) the Foreign Banking Office Act. 15 (b) Subsection (a) of this Section shall not be applied 16 in a manner that will adversely affect the safety and 17 soundness of a bank. 18 Section 95. The Illinois Banking Act is amended by 19 changing Sections 5, 5e, and 48.1 as follows: 20 (205 ILCS 5/5) (from Ch. 17, par. 311) 21 Sec. 5. General corporate powers. A bank organized 22 under this Act or subject hereto shall be a body corporate 23 and politic and shall, without specific mention thereof in 24 the charter, have all the powers conferred by this Act and 25 the following additional general corporate powers: 26 (1) To sue and be sued, complain, and defend in its 27 corporate name. 28 (2) To have a corporate seal, which may be altered at 29 pleasure, and to use the same by causing it or a facsimile 30 thereof to be impressed or affixed or in any manner HB2204 Engrossed -3- LRB9105133JSpcA 1 reproduced, provided that the affixing of a corporate seal to 2 an instrument shall not give the instrument additional force 3 or effect, or change the construction thereof, and the use of 4 a corporate seal is not mandatory. 5 (3) To make, alter, amend, and repeal bylaws, not 6 inconsistent with its charter or with law, for the 7 administration of the affairs of the bank. If this Act does 8 not provide specific guidance in matters of corporate 9 governance, the provisions of the Business Corporation Act of 10 1983 may be used if so provided in the bylaws. 11 (4) To elect or appoint and remove officers and agents 12 of the bank and define their duties and fix their 13 compensation. 14 (5) To adopt and operate reasonable bonus plans, 15 profit-sharing plans, stock-bonus plans, stock-option plans, 16 pension plans and similar incentive plans for its directors, 17 officers and employees. 18 (5.1) To manage, operate and administer a fund for the 19 investment of funds by a public agency or agencies, including 20 any unit of local government or school district, or any 21 person. The fund for a public agency shall invest in the 22 same type of investments and be subject to the same 23 limitations provided for the investment of public funds. The 24 fund for public agencies shall maintain a separate ledger 25 showing the amount of investment for each public agency in 26 the fund. "Public funds" and "public agency" as used in this 27 Section shall have the meanings ascribed to them in Section 1 28 of the Public Funds Investment Act. 29 (6) To make reasonable donations for the public welfare 30 or for charitable, scientific, religious or educational 31 purposes. 32 (7) To borrow or incur an obligation; and to pledge its 33 assets: 34 (a) to secure its borrowings, its lease of personal HB2204 Engrossed -4- LRB9105133JSpcA 1 or real property or its other nondeposit obligations; 2 (b) to enable it to act as agent for the sale of 3 obligations of the United States; 4 (c) to secure deposits of public money of the 5 United States, whenever required by the laws of the 6 United States, including without being limited to, 7 revenues and funds the deposit of which is subject to the 8 control or regulation of the United States or any of its 9 officers, agents, or employees and Postal Savings funds; 10 (d) to secure deposits of public money of any state 11 or of any political corporation or subdivision thereof 12 including, without being limited to, revenues and funds 13 the deposit of which is subject to the control or 14 regulation of any state or of any political corporation 15 or subdivisions thereof or of any of their officers, 16 agents, or employees; 17 (e) to secure deposits of money whenever required 18 by the National Bankruptcy Act; 19 (f) (blank); and 20 (g) to secure trust funds commingled with the 21 bank's funds, whether deposited by the bank or an 22 affiliate of the bank, pursuant to Section 2-8 of the 23 Corporate Fiduciary Act. 24 (8) To own, possess, and carry as assets all or part of 25 the real estate necessary in or with which to do its banking 26 business, either directly or indirectly through the ownership 27 of all or part of the capital stock, shares or interests in 28 any corporation, association, trust engaged in holding any 29 part or parts or all of the bank premises, engaged in such 30 business and in conducting a safe deposit business in the 31 premises or part of them, or engaged in any activity that the 32 bank is permitted to conduct in a subsidiary pursuant to 33 paragraph (12) of this Section 5. 34 (9) To own, possess, and carry as assets other real HB2204 Engrossed -5- LRB9105133JSpcA 1 estate to which it may obtain title in the collection of its 2 debts or that was formerly used as a part of the bank 3 premises, but title to any real estate except as herein 4 permitted shall not be retained by the bank, either directly 5 or by or through a subsidiary, as permitted by subsection 6 (12) of this Section for a total period of more than 10 years 7 after acquiring title, either directly or indirectly. 8 (10) To do any act, including the acquisition of stock, 9 necessary to obtain insurance of its deposits, or part 10 thereof, and any act necessary to obtain a guaranty, in whole 11 or in part, of any of its loans or investments by the United 12 States or any agency thereof, and any act necessary to sell 13 or otherwise dispose of any of its loans or investments to 14 the United States or any agency thereof, and to acquire and 15 hold membership in the Federal Reserve System. 16 (11) Notwithstanding any other provisions of this Act or 17 any other law, to do any act and to own, possess, and carry 18 as assets property of the character, including stock, that is 19 at the time authorized or permitted to national banks by an 20 Act of Congress, but subject always to the same limitations 21 and restrictions as are applicable to national banks by the 22 pertinent federal law and subject to applicable provisions of 23 the Financial Institutions Insurance Sales Law. 24 (12) To own, possess, and carry as assets stock of one 25 or more corporations that is, or are, engaged in one or more 26 of the following businesses: 27 (a) holding title to and administering assets 28 acquired as a result of the collection or liquidating of 29 loans, investments, or discounts; or 30 (b) holding title to and administering personal 31 property acquired by the bank, directly or indirectly 32 through a subsidiary, for the purpose of leasing to 33 others, provided the lease or leases and the investment 34 of the bank, directly or through a subsidiary, in that HB2204 Engrossed -6- LRB9105133JSpcA 1 personal property otherwise comply with Section 35.1 of 2 this Act; or 3 (c) carrying on or administering any of the 4 activities excepting the receipt of deposits or the 5 payment of checks or other orders for the payment of 6 money in which a bank may engage in carrying on its 7 general banking business; provided, however, that nothing 8 contained in this paragraph (c) shall be deemed to permit 9 a bank organized under this Act or subject hereto to do, 10 either directly or indirectly through any subsidiary, any 11 act, including the making of any loan or investment, or 12 to own, possess, or carry as assets any property that if 13 done by or owned, possessed, or carried by the State bank 14 would be in violation of or prohibited by any provision 15 of this Act. 16 The provisions of this subsection (12) shall not apply to 17 and shall not be deemed to limit the powers of a State bank 18 with respect to the ownership, possession, and carrying of 19 stock that a State bank is permitted to own, possess, or 20 carry under this Act. 21 Any bank intending to establish a subsidiary under this 22 subsection (12) shall give written notice to the Commissioner 23 60 days prior to the subsidiary's commencing of business or, 24 as the case may be, prior to acquiring stock in a corporation 25 that has already commenced business. After receiving the 26 notice, the Commissioner may waive or reduce the balance of 27 the 60 day notice period. The Commissioner may specify the 28 form of the notice and may promulgate rules and regulations 29 to administer this subsection (12). 30 (13) To accept for payment at a future date not 31 exceeding one year from the date of acceptance, drafts drawn 32 upon it by its customers; and to issue, advise, or confirm 33 letters of credit authorizing the holders thereof to draw 34 drafts upon it or its correspondents. HB2204 Engrossed -7- LRB9105133JSpcA 1 (14) To own and lease personal property acquired by the 2 bank at the request of a prospective lessee and upon the 3 agreement of that person to lease the personal property 4 provided that the lease, the agreement with respect thereto, 5 and the amount of the investment of the bank in the property 6 comply with Section 35.1 of this Act. 7 (15) (a) To establish and maintain, in addition to the 8 main banking premises, branches offering any banking services 9 permitted at the main banking premises of a State bank. 10 (b) To establish and maintain, after May 31, 1997, 11 branches in another state that may conduct any activity in 12 that state that is authorized or permitted for any bank that 13 has a banking charter issued by that state, subject to the 14 same limitations and restrictions that are applicable to 15 banks chartered by that state. 16 (16) (Blank). 17 (17) To establish and maintain terminals, as authorized 18 by the Electronic Fund Transfer Act. 19 (18) To establish and maintain temporary service booths 20 at any International Fair held in this State which is 21 approved by the United States Department of Commerce, for the 22 duration of the international fair for the sole purpose of 23 providing a convenient place for foreign trade customers at 24 the fair to exchange their home countries' currency into 25 United States currency or the converse. This power shall not 26 be construed as establishing a new place or change of 27 location for the bank providing the service booth. 28 (19) To indemnify its officers, directors, employees, 29 and agents, as authorized for corporations under Section 8.75 30 of the Business Corporation Act of 1983. 31 (20) To own, possess, and carry as assets stock of, or 32 be or become a member of, any corporation, mutual company, 33 association, trust, or other entity formed exclusively for 34 the purpose of providing directors' and officers' liability HB2204 Engrossed -8- LRB9105133JSpcA 1 and bankers' blanket bond insurance or reinsurance to and for 2 the benefit of the stockholders, members, or beneficiaries, 3 or their assets or businesses, or their officers, directors, 4 employees, or agents, and not to or for the benefit of any 5 other person or entity or the public generally. 6 (21) To make debt or equity investments in corporations 7 or projects, whether for profit or not for profit, designed 8 to promote the development of the community and its welfare, 9 provided that the aggregate investment in all of these 10 corporations and in all of these projects does not exceed 10% 11 of the unimpaired capital and unimpaired surplus of the bank 12 and provided that this limitation shall not apply to 13 creditworthy loans by the bank to those corporations or 14 projects. Upon written application to the Commissioner, a 15 bank may make an investment that would, when aggregated with 16 all other such investments, exceed 10% of the unimpaired 17 capital and unimpaired surplus of the bank. The Commissioner 18 may approve the investment if he is of the opinion and finds 19 that the proposed investment will not have a material adverse 20 effect on the safety and soundness of the bank. 21 (22) To own, possess, and carry as assets the stock of a 22 corporation engaged in the ownership or operation of a travel 23 agency or to operate a travel agency as a part of its 24 business, provided that the bank either owned, possessed, and 25 carried as assets the stock of such a corporation or operated 26 a travel agency as part of its business before July 1, 1991. 27 (23) With respect to affiliate facilities: 28 (a) to conduct at affiliate facilities any of the 29 following transactions for and on behalf of another 30 commonly owned bank, if so authorized by the other bank: 31 receiving deposits; cashing and issuing checks, drafts, 32 and money orders; changing money; and receiving payments 33 on existing indebtedness; and 34 (b) to authorize a commonly owned bank to conduct HB2204 Engrossed -9- LRB9105133JSpcA 1 for and on behalf of it any of the transactions listed in 2 this paragraph (23) at one or more affiliate facilities. 3 Any bank intending to conduct or to authorize a commonly 4 owned bank to conduct at an affiliate facility any of the 5 transactions specified in this paragraph (23) shall give 6 written notice to the Commissioner at least 30 days before 7 any such transaction is conducted at the affiliate facility. 8 (24) To act as the agent for any fire, life, or other 9 insurance company authorized by the State of Illinois, by 10 soliciting and selling insurance and collecting premiums on 11 policies issued by such company; and to receive for services 12 so rendered such fees or commissions as may be agreed upon 13 between the bank and the insurance company for which it may 14 act as agent; provided, however, that no such bank shall in 15 any case assume or guarantee the payment of any premium on 16 insurance policies issued through its agency by its 17 principal; and provided further, that the bank shall not 18 guarantee the truth of any statement made by an assured in 19 filing his application for insurance. 20 (25) Notwithstanding any other provisions of this Act or 21 any other law, to offer any product or service that is at the 22 time authorized or permitted to any insured savings 23 association or out-of-state bank by applicable law, provided 24 that powers conferred only by this subsection (25): 25 (a) shall always be subject to the same limitations 26 and restrictions that are applicable to the insured 27 savings association or out-of-state bank for the product 28 or service by such applicable law; 29 (b) shall be subject to applicable provisions of 30 the Financial Institutions Insurance Sales Law; 31 (c) shall not include the right to own or conduct a 32 real estate brokerage business for which a license would 33 be required under the laws of this State; and 34 (d) shall not be construed to include the HB2204 Engrossed -10- LRB9105133JSpcA 1 establishment or maintenance of a branch, nor shall they 2 be construed to limit the establishment or maintenance of 3 a branch pursuant to subsection (11). 4 (Source: P.A. 89-208, eff. 9-29-95; 89-310, eff. 1-1-96; 5 89-364, eff. 8-18-95; 89-626, eff. 8-9-96; 90-41, eff. 6 10-1-97; 90-301, eff. 8-1-97; 90-655, eff. 7-30-98; 90-665, 7 eff. 7-30-98.) 8 (205 ILCS 5/5e) 9 Sec. 5e. Lending and account authority. 10 (a) Notwithstanding the provisions of any other law in 11 connection with extensions of credit, a State bank may elect 12 to contract for and receive interest, fees, and other charges 13 for extensions of credit subject only to the provisions of 14 subsection (1) of Section 4 of the Interest Act, except for 15 extensions of credit secured by residential real estate, 16 which shall be subject to the laws applicable thereto. 17 (b) The establishment of account service charges and the 18 amounts of the charges not otherwise limited or prescribed by 19 law is a business decision to be made by a bank according to 20 prudent business judgment and safe and sound operating 21 standards. In establishing account service charges, the bank 22 may consider, but is not limited to considering, the costs 23 incurred by the bank, plus a profit margin, for providing the 24 service, the deterrence of misuse of the bank's services, the 25 establishment of the competitive position of the bank in 26 accordance with the bank's marketing strategy, and the 27 maintenance of the safety and soundness of the bank. 28 (Source: P.A. 89-603, eff. 8-2-96.) 29 (205 ILCS 5/48.1) (from Ch. 17, par. 360) 30 Sec. 48.1. Customer financial records; confidentiality. 31 (a) For the purpose of this Section, the term "financial 32 records" means any original, any copy, or any summary of: HB2204 Engrossed -11- LRB9105133JSpcA 1 (1) a document granting signature authority over a 2 deposit or account;,3 (2) a statement, ledger card or other record on any 4 deposit or account, which shows each transaction in or 5 with respect to that account;,6 (3) a check, draft or money order drawn on a bank 7 or issued and payable by a bank;,or 8 (4) any other item containing information 9 pertaining to any relationship established in the 10 ordinary course of a bank's business between a bank and 11 its customer, including financial statements or other 12 financial information provided by the customer. 13 (b) This Section does not prohibit: 14 (1) The preparation, examination, handling or 15 maintenance of any financial records by any officer, 16 employee or agent of a bank having custody of the 17 records, or the examination of the records by a certified 18 public accountant engaged by the bank to perform an 19 independent audit. 20 (2) The examination of any financial records by, or 21 the furnishing of financial records by a bank to, any 22 officer, employee or agent of (i) the Commissioner of 23 Banks and Real Estate, (ii) after May 31, 1997, a state 24 regulatory authority authorized to examine a branch of a 25 State bank located in another state, (iii) the 26 Comptroller of the Currency, (iv) the Federal Reserve 27 Board, or (v) the Federal Deposit Insurance Corporation 28 for use solely in the exercise of his duties as an 29 officer, employee, or agent. 30 (3) The publication of data furnished from 31 financial records relating to customers where the data 32 cannot be identified to any particular customer or 33 account. 34 (4) The making of reports or returns required under HB2204 Engrossed -12- LRB9105133JSpcA 1 Chapter 61 of the Internal Revenue Code of 1986. 2 (5) Furnishing information concerning the dishonor 3 of any negotiable instrument permitted to be disclosed 4 under the Uniform Commercial Code. 5 (6) The exchange in the regular course of business 6 of (i) credit information between a bank and other banks 7 or financial institutions or commercial enterprises, 8 directly or through a consumer reporting agency or (ii) 9 financial records or information derived from financial 10 records between a bank and other banks or financial 11 institutions or commercial enterprises for the purpose of 12 conducting due diligence pursuant to a purchase or sale 13 involving the bank or assets or liabilities of the bank. 14 (7) The furnishing of information to the 15 appropriate law enforcement authorities where the bank 16 reasonably believes it has been the victim of a crime. 17 (8) The furnishing of information under the Uniform 18 Disposition of Unclaimed Property Act. 19 (9) The furnishing of information under the 20 Illinois Income Tax Act and the Illinois Estate and 21 Generation-Skipping Transfer Tax Act. 22 (10) The furnishing of information under the 23 federal Currency and Foreign Transactions Reporting Act 24 Title 31, United States Code, Section 1051 et seq. 25 (11) The furnishing of information under any other 26 statute that by its terms or by regulations promulgated 27 thereunder requires the disclosure of financial records 28 other than by subpoena, summons, warrant, or court order. 29 (12) The furnishing of information about the 30 existence of an account of a person to a judgment 31 creditor of that person who has made a written request 32 for that information. 33 (13) The exchange in the regular course of business 34 of information between commonly owned banks in connection HB2204 Engrossed -13- LRB9105133JSpcA 1 with a transaction authorized under paragraph (23) of 2 Section 5 and conducted at an affiliate facility. 3 (14) The furnishing of information in accordance 4 with the federal Personal Responsibility and Work 5 Opportunity Reconciliation Act of 1996. Any bank governed 6 by this Act shall enter into an agreement for data 7 exchanges with a State agency provided the State agency 8 pays to the bank a reasonable fee not to exceed its 9 actual cost incurred. A bank providing information in 10 accordance with this item shall not be liable to any 11 account holder or other person for any disclosure of 12 information to a State agency, for encumbering or 13 surrendering any assets held by the bank in response to a 14 lien or order to withhold and deliver issued by a State 15 agency, or for any other action taken pursuant to this 16 item, including individual or mechanical errors, provided 17 the action does not constitute gross negligence or 18 willful misconduct. A bank shall have no obligation to 19 hold, encumber, or surrender assets until it has been 20 served with a subpoena, summons, warrant, court or 21 administrative order, lien, or levy. 22 (15) The exchange in the regular course of business 23 of information between a bank and any commonly owned 24 affiliate of the bank, subject to the provisions of the 25 Financial Institutions Insurance Sales Law. 26 (c) Except as otherwise provided by this Act, a bank may 27 not disclose to any person, except to the customer or his 28 duly authorized agent, any financial records or financial 29 information obtained from financial records relating to that 30 customer of that bank unless: 31 (1) the customer has authorized disclosure to the 32 person; 33 (2) the financial records are disclosed in response 34 to a lawful subpoena, summons, warrant or court order HB2204 Engrossed -14- LRB9105133JSpcA 1 which meets the requirements of subsection (d) of this 2 Section; or 3 (3) the bank is attempting to collect an obligation 4 owed to the bank and the bank complies with the 5 provisions of Section 2I of the Consumer Fraud and 6 Deceptive Business Practices Act. 7 (d) A bank shall disclose financial records under 8 paragraph (2) of subsection (c) of this Section under a 9 lawful subpoena, summons, warrant, or court order only after 10 the bank mails a copy of the subpoena, summons, warrant, or 11 court order to the person establishing the relationship with 12 the bank, if living, and, otherwise his personal 13 representative, if known, at his last known address by first 14 class mail, postage prepaid, unless the bank is specifically 15 prohibited from notifying the person by order of court or by 16 applicable State or federal law. A bank shall not mail a 17 copy of a subpoena to any person pursuant to this subsection 18 if the subpoena was issued by a grand jury under the 19 Statewide Grand Jury Act. 20 (e) Any officer or employee of a bank who knowingly and 21 willfully furnishes financial records in violation of this 22 Section is guilty of a business offense and, upon conviction, 23 shall be fined not more than $1,000. 24 (f) Any person who knowingly and willfully induces or 25 attempts to induce any officer or employee of a bank to 26 disclose financial records in violation of this Section is 27 guilty of a business offense and, upon conviction, shall be 28 fined not more than $1,000. 29 (g) A bank shall be reimbursed for costs that are 30 reasonably necessary and that have been directly incurred in 31 searching for, reproducing, or transporting books, papers, 32 records, or other data of a customer required or requested to 33 be produced pursuant to a lawful subpoena, summons, warrant, 34 or court order. The Commissioner shall determine the rates HB2204 Engrossed -15- LRB9105133JSpcA 1 and conditions under which payment may be made. 2 (Source: P.A. 89-208, eff. 9-29-95; 89-364, eff. 8-18-95; 3 89-508, eff. 7-3-96; 89-626, eff. 8-9-96; 90-18, eff. 7-1-97; 4 90-665, eff. 7-30-98.) 5 Section 99. Effective date. This Act takes effect upon 6 becoming law.