§ 18 — Change in control

Illinois § 18

• Jurisdiction: Illinois
• Topic: REGULATION
• Ch. 205: FINANCIAL REGULATION
• Act 205 ILCS 5/: Illinois Banking Act.

Text

(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. (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.

Legislative History

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