Bill Text: IL HB5342 | 2013-2014 | 98th General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Illinois Credit Union Act. Defines "charitable donation account" and provides that a credit union may establish one or more charitable donation accounts that must comply with the requirements of the Act. Further provides that the investments and purchases to fund a charitable donation account are not subject to the investment limitations of the Act and that the aggregate book value of the investments in all charitable donation accounts shall not exceed 5% of the credit union's net worth. Adds provisions establishing the procedural requirements of the Department of Financial and Professional Regulation's examination process and prescribes the requirements of the Department's examination reports. Provides that each member of the board of directors of a credit union shall have a working familiarity with basic finance and accounting practices consistent with the size and complexity of the credit union they serve. Further provides that members of the supervisory committee of a credit union shall receive training related to their duties under the Act and establishes the acceptable forms of such training. Provides that, for a renewal, refinancing, or restructuring of an existing loan that is secured by an interest in real estate, a new appraisal of the collateral shall not be required under certain circumstances. Additionally provides that a credit union may act as a representative of and enter into an agreement with other credit unions or organizations for certain purposes. Generally effective immediately, but some provisions take effect on January 1, 2015.

Spectrum: Bipartisan Bill

Status: (Passed) 2014-07-24 - Public Act . . . . . . . . . 98-0784 [HB5342 Detail]

Download: Illinois-2013-HB5342-Amended.html

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Sen. Linda Holmes

Filed: 5/26/2014

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AMENDMENT TO HOUSE BILL 5342
AMENDMENT NO. ______. Amend House Bill 5342 by inserting
the following immediately above Section 5:
"Section 3. The Illinois Banking Act is amended by changing
Section 48 as follows:
(205 ILCS 5/48)
Sec. 48. Secretary's powers; duties. The Secretary shall
have the powers and authority, and is charged with the duties
and responsibilities designated in this Act, and a State bank
shall not be subject to any other visitorial power other than
as authorized by this Act, except those vested in the courts,
or upon prior consultation with the Secretary, a foreign bank
regulator with an appropriate supervisory interest in the
parent or affiliate of a state bank. In the performance of the
Secretary's duties:
(1) The Commissioner shall call for statements from all

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State banks as provided in Section 47 at least one time during
each calendar quarter.
(2) (a) The Commissioner, as often as the Commissioner
shall deem necessary or proper, and no less frequently than 18
months following the preceding examination, shall appoint a
suitable person or persons to make an examination of the
affairs of every State bank, except that for every eligible
State bank, as defined by regulation, the Commissioner in lieu
of the examination may accept on an alternating basis the
examination made by the eligible State bank's appropriate
federal banking agency pursuant to Section 111 of the Federal
Deposit Insurance Corporation Improvement Act of 1991,
provided the appropriate federal banking agency has made such
an examination. A person so appointed shall not be a
stockholder or officer or employee of any bank which that
person may be directed to examine, and shall have powers to
make a thorough examination into all the affairs of the bank
and in so doing to examine any of the officers or agents or
employees thereof on oath and shall make a full and detailed
report of the condition of the bank to the Commissioner. In
making the examination the examiners shall include an
examination of the affairs of all the affiliates of the bank,
as defined in subsection (b) of Section 35.2 of this Act, or
subsidiaries of the bank as shall be necessary to disclose
fully the conditions of the subsidiaries or affiliates, the
relations between the bank and the subsidiaries or affiliates

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and the effect of those relations upon the affairs of the bank,
and in connection therewith shall have power to examine any of
the officers, directors, agents, or employees of the
subsidiaries or affiliates on oath. After May 31, 1997, the
Commissioner may enter into cooperative agreements with state
regulatory authorities of other states to provide for
examination of State bank branches in those states, and the
Commissioner may accept reports of examinations of State bank
branches from those state regulatory authorities. These
cooperative agreements may set forth the manner in which the
other state regulatory authorities may be compensated for
examinations prepared for and submitted to the Commissioner.
(b) After May 31, 1997, the Commissioner is authorized to
examine, as often as the Commissioner shall deem necessary or
proper, branches of out-of-state banks. The Commissioner may
establish and may assess fees to be paid to the Commissioner
for examinations under this subsection (b). The fees shall be
borne by the out-of-state bank, unless the fees are borne by
the state regulatory authority that chartered the out-of-state
bank, as determined by a cooperative agreement between the
Commissioner and the state regulatory authority that chartered
the out-of-state bank.
(2.1) Pursuant to paragraph (a) of subsection (6) of this
Section, the Secretary shall adopt rules that ensure
consistency and due process in the examination process. The
Secretary may also establish guidelines that (i) define the

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scope of the examination process and (ii) clarify examination
items to be resolved. The rules, formal guidance, interpretive
letters, or opinions furnished to State banks by the Secretary
may be relied upon by the State banks.
(2.5) Whenever any State bank, any subsidiary or affiliate
of a State bank, or after May 31, 1997, any branch of an
out-of-state bank causes to be performed, by contract or
otherwise, any bank services for itself, whether on or off its
premises:
(a) that performance shall be subject to examination by
the Commissioner to the same extent as if services were
being performed by the bank or, after May 31, 1997, branch
of the out-of-state bank itself on its own premises; and
(b) the bank or, after May 31, 1997, branch of the
out-of-state bank shall notify the Commissioner of the
existence of a service relationship. The notification
shall be submitted with the first statement of condition
(as required by Section 47 of this Act) due after the
making of the service contract or the performance of the
service, whichever occurs first. The Commissioner shall be
notified of each subsequent contract in the same manner.
For purposes of this subsection (2.5), the term "bank
services" means services such as sorting and posting of checks
and deposits, computation and posting of interest and other
credits and charges, preparation and mailing of checks,
statements, notices, and similar items, or any other clerical,

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bookkeeping, accounting, statistical, or similar functions
performed for a State bank, including but not limited to
electronic data processing related to those bank services.
(3) The expense of administering this Act, including the
expense of the examinations of State banks as provided in this
Act, shall to the extent of the amounts resulting from the fees
provided for in paragraphs (a), (a-2), and (b) of this
subsection (3) be assessed against and borne by the State
banks:
(a) Each bank shall pay to the Secretary a Call Report
Fee which shall be paid in quarterly installments equal to
one-fourth of the sum of the annual fixed fee of $800, plus
a variable fee based on the assets shown on the quarterly
statement of condition delivered to the Secretary in
accordance with Section 47 for the preceding quarter
according to the following schedule: 16¢ per $1,000 of the
first $5,000,000 of total assets, 15¢ per $1,000 of the
next $20,000,000 of total assets, 13¢ per $1,000 of the
next $75,000,000 of total assets, 9¢ per $1,000 of the next
$400,000,000 of total assets, 7¢ per $1,000 of the next
$500,000,000 of total assets, and 5¢ per $1,000 of all
assets in excess of $1,000,000,000, of the State bank. The
Call Report Fee shall be calculated by the Secretary and
billed to the banks for remittance at the time of the
quarterly statements of condition provided for in Section
47. The Secretary may require payment of the fees provided

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in this Section by an electronic transfer of funds or an
automatic debit of an account of each of the State banks.
In case more than one examination of any bank is deemed by
the Secretary to be necessary in any examination frequency
cycle specified in subsection 2(a) of this Section, and is
performed at his direction, the Secretary may assess a
reasonable additional fee to recover the cost of the
additional examination; provided, however, that an
examination conducted at the request of the State Treasurer
pursuant to the Uniform Disposition of Unclaimed Property
Act shall not be deemed to be an additional examination
under this Section. In lieu of the method and amounts set
forth in this paragraph (a) for the calculation of the Call
Report Fee, the Secretary may specify by rule that the Call
Report Fees provided by this Section may be assessed
semiannually or some other period and may provide in the
rule the formula to be used for calculating and assessing
the periodic Call Report Fees to be paid by State banks.
(a-1) If in the opinion of the Commissioner an
emergency exists or appears likely, the Commissioner may
assign an examiner or examiners to monitor the affairs of a
State bank with whatever frequency he deems appropriate,
including but not limited to a daily basis. The reasonable
and necessary expenses of the Commissioner during the
period of the monitoring shall be borne by the subject
bank. The Commissioner shall furnish the State bank a

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statement of time and expenses if requested to do so within
30 days of the conclusion of the monitoring period.
(a-2) On and after January 1, 1990, the reasonable and
necessary expenses of the Commissioner during examination
of the performance of electronic data processing services
under subsection (2.5) shall be borne by the banks for
which the services are provided. An amount, based upon a
fee structure prescribed by the Commissioner, shall be paid
by the banks or, after May 31, 1997, branches of
out-of-state banks receiving the electronic data
processing services along with the Call Report Fee assessed
under paragraph (a) of this subsection (3).
(a-3) After May 31, 1997, the reasonable and necessary
expenses of the Commissioner during examination of the
performance of electronic data processing services under
subsection (2.5) at or on behalf of branches of
out-of-state banks shall be borne by the out-of-state
banks, unless those expenses are borne by the state
regulatory authorities that chartered the out-of-state
banks, as determined by cooperative agreements between the
Commissioner and the state regulatory authorities that
chartered the out-of-state banks.
(b) "Fiscal year" for purposes of this Section 48 is
defined as a period beginning July 1 of any year and ending
June 30 of the next year. The Commissioner shall receive
for each fiscal year, commencing with the fiscal year

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ending June 30, 1987, a contingent fee equal to the lesser
of the aggregate of the fees paid by all State banks under
paragraph (a) of subsection (3) for that year, or the
amount, if any, whereby the aggregate of the administration
expenses, as defined in paragraph (c), for that fiscal year
exceeds the sum of the aggregate of the fees payable by all
State banks for that year under paragraph (a) of subsection
(3), plus any amounts transferred into the Bank and Trust
Company Fund from the State Pensions Fund for that year,
plus all other amounts collected by the Commissioner for
that year under any other provision of this Act, plus the
aggregate of all fees collected for that year by the
Commissioner under the Corporate Fiduciary Act, excluding
the receivership fees provided for in Section 5-10 of the
Corporate Fiduciary Act, and the Foreign Banking Office
Act. The aggregate amount of the contingent fee thus
arrived at for any fiscal year shall be apportioned
amongst, assessed upon, and paid by the State banks and
foreign banking corporations, respectively, in the same
proportion that the fee of each under paragraph (a) of
subsection (3), respectively, for that year bears to the
aggregate for that year of the fees collected under
paragraph (a) of subsection (3). The aggregate amount of
the contingent fee, and the portion thereof to be assessed
upon each State bank and foreign banking corporation,
respectively, shall be determined by the Commissioner and

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shall be paid by each, respectively, within 120 days of the
close of the period for which the contingent fee is
computed and is payable, and the Commissioner shall give 20
days advance notice of the amount of the contingent fee
payable by the State bank and of the date fixed by the
Commissioner for payment of the fee.
(c) The "administration expenses" for any fiscal year
shall mean the ordinary and contingent expenses for that
year incident to making the examinations provided for by,
and for otherwise administering, this Act, the Corporate
Fiduciary Act, excluding the expenses paid from the
Corporate Fiduciary Receivership account in the Bank and
Trust Company Fund, the Foreign Banking Office Act, the
Electronic Fund Transfer Act, and the Illinois Bank
Examiners' Education Foundation Act, including all
salaries and other compensation paid for personal services
rendered for the State by officers or employees of the
State, including the Commissioner and the Deputy
Commissioners, communication equipment and services,
office furnishings, surety bond premiums, and travel
expenses of those officers and employees, employees,
expenditures or charges for the acquisition, enlargement
or improvement of, or for the use of, any office space,
building, or structure, or expenditures for the
maintenance thereof or for furnishing heat, light, or power
with respect thereto, all to the extent that those

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expenditures are directly incidental to such examinations
or administration. The Commissioner shall not be required
by paragraphs (c) or (d-1) of this subsection (3) to
maintain in any fiscal year's budget appropriated reserves
for accrued vacation and accrued sick leave that is
required to be paid to employees of the Commissioner upon
termination of their service with the Commissioner in an
amount that is more than is reasonably anticipated to be
necessary for any anticipated turnover in employees,
whether due to normal attrition or due to layoffs,
terminations, or resignations.
(d) The aggregate of all fees collected by the
Secretary under this Act, the Corporate Fiduciary Act, or
the Foreign Banking Office Act on and after July 1, 1979,
shall be paid promptly after receipt of the same,
accompanied by a detailed statement thereof, into the State
treasury and shall be set apart in a special fund to be
known as the "Bank and Trust Company Fund", except as
provided in paragraph (c) of subsection (11) of this
Section. All earnings received from investments of funds in
the Bank and Trust Company Fund shall be deposited in the
Bank and Trust Company Fund and may be used for the same
purposes as fees deposited in that Fund. The amount from
time to time deposited into the Bank and Trust Company Fund
shall be used: (i) to offset the ordinary administrative
expenses of the Secretary as defined in this Section or

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(ii) as a credit against fees under paragraph (d-1) of this
subsection (3). Nothing in this amendatory Act of 1979
shall prevent continuing the practice of paying expenses
involving salaries, retirement, social security, and
State-paid insurance premiums of State officers by
appropriations from the General Revenue Fund. However, the
General Revenue Fund shall be reimbursed for those payments
made on and after July 1, 1979, by an annual transfer of
funds from the Bank and Trust Company Fund. Moneys in the
Bank and Trust Company Fund may be transferred to the
Professions Indirect Cost Fund, as authorized under
Section 2105-300 of the Department of Professional
Regulation Law of the Civil Administrative Code of
Illinois.
Notwithstanding provisions in the State Finance Act,
as now or hereafter amended, or any other law to the
contrary, the sum of $18,788,847 shall be transferred from
the Bank and Trust Company Fund to the Financial
Institutions Settlement of 2008 Fund on the effective date
of this amendatory Act of the 95th General Assembly, or as
soon thereafter as practical.
Notwithstanding provisions in the State Finance Act,
as now or hereafter amended, or any other law to the
contrary, the Governor may, during any fiscal year through
January 10, 2011, from time to time direct the State
Treasurer and Comptroller to transfer a specified sum not

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exceeding 10% of the revenues to be deposited into the Bank
and Trust Company Fund during that fiscal year from that
Fund to the General Revenue Fund in order to help defray
the State's operating costs for the fiscal year.
Notwithstanding provisions in the State Finance Act, as now
or hereafter amended, or any other law to the contrary, the
total sum transferred during any fiscal year through
January 10, 2011, from the Bank and Trust Company Fund to
the General Revenue Fund pursuant to this provision shall
not exceed during any fiscal year 10% of the revenues to be
deposited into the Bank and Trust Company Fund during that
fiscal year. The State Treasurer and Comptroller shall
transfer the amounts designated under this Section as soon
as may be practicable after receiving the direction to
transfer from the Governor.
(d-1) Adequate funds shall be available in the Bank and
Trust Company Fund to permit the timely payment of
administration expenses. In each fiscal year the total
administration expenses shall be deducted from the total
fees collected by the Commissioner and the remainder
transferred into the Cash Flow Reserve Account, unless the
balance of the Cash Flow Reserve Account prior to the
transfer equals or exceeds one-fourth of the total initial
appropriations from the Bank and Trust Company Fund for the
subsequent year, in which case the remainder shall be
credited to State banks and foreign banking corporations

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and applied against their fees for the subsequent year. The
amount credited to each State bank and foreign banking
corporation shall be in the same proportion as the Call
Report Fees paid by each for the year bear to the total
Call Report Fees collected for the year. If, after a
transfer to the Cash Flow Reserve Account is made or if no
remainder is available for transfer, the balance of the
Cash Flow Reserve Account is less than one-fourth of the
total initial appropriations for the subsequent year and
the amount transferred is less than 5% of the total Call
Report Fees for the year, additional amounts needed to make
the transfer equal to 5% of the total Call Report Fees for
the year shall be apportioned amongst, assessed upon, and
paid by the State banks and foreign banking corporations in
the same proportion that the Call Report Fees of each,
respectively, for the year bear to the total Call Report
Fees collected for the year. The additional amounts
assessed shall be transferred into the Cash Flow Reserve
Account. For purposes of this paragraph (d-1), the
calculation of the fees collected by the Commissioner shall
exclude the receivership fees provided for in Section 5-10
of the Corporate Fiduciary Act.
(e) The Commissioner may upon request certify to any
public record in his keeping and shall have authority to
levy a reasonable charge for issuing certifications of any
public record in his keeping.

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(f) In addition to fees authorized elsewhere in this
Act, the Commissioner may, in connection with a review,
approval, or provision of a service, levy a reasonable
charge to recover the cost of the review, approval, or
service.
(4) Nothing contained in this Act shall be construed to
limit the obligation relative to examinations and reports of
any State bank, deposits in which are to any extent insured by
the United States or any agency thereof, nor to limit in any
way the powers of the Commissioner with reference to
examinations and reports of that bank.
(5) The nature and condition of the assets in or investment
of any bonus, pension, or profit sharing plan for officers or
employees of every State bank or, after May 31, 1997, branch of
an out-of-state bank shall be deemed to be included in the
affairs of that State bank or branch of an out-of-state bank
subject to examination by the Commissioner under the provisions
of subsection (2) of this Section, and if the Commissioner
shall find from an examination that the condition of or
operation of the investments or assets of the plan is unlawful,
fraudulent, or unsafe, or that any trustee has abused his
trust, the Commissioner shall, if the situation so found by the
Commissioner shall not be corrected to his satisfaction within
60 days after the Commissioner has given notice to the board of
directors of the State bank or out-of-state bank of his
findings, report the facts to the Attorney General who shall

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thereupon institute proceedings against the State bank or
out-of-state bank, the board of directors thereof, or the
trustees under such plan as the nature of the case may require.
(6) The Commissioner shall have the power:
(a) To promulgate reasonable rules for the purpose of
administering the provisions of this Act.
(a-5) To impose conditions on any approval issued by
the Commissioner if he determines that the conditions are
necessary or appropriate. These conditions shall be
imposed in writing and shall continue in effect for the
period prescribed by the Commissioner.
(b) To issue orders against any person, if the
Commissioner has reasonable cause to believe that an unsafe
or unsound banking practice has occurred, is occurring, or
is about to occur, if any person has violated, is
violating, or is about to violate any law, rule, or written
agreement with the Commissioner, or for the purpose of
administering the provisions of this Act and any rule
promulgated in accordance with this Act.
(b-1) To enter into agreements with a bank establishing
a program to correct the condition of the bank or its
practices.
(c) To appoint hearing officers to execute any of the
powers granted to the Commissioner under this Section for
the purpose of administering this Act and any rule
promulgated in accordance with this Act and otherwise to

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authorize, in writing, an officer or employee of the Office
of Banks and Real Estate to exercise his powers under this
Act.
(d) To subpoena witnesses, to compel their attendance,
to administer an oath, to examine any person under oath,
and to require the production of any relevant books,
papers, accounts, and documents in the course of and
pursuant to any investigation being conducted, or any
action being taken, by the Commissioner in respect of any
matter relating to the duties imposed upon, or the powers
vested in, the Commissioner under the provisions of this
Act or any rule promulgated in accordance with this Act.
(e) To conduct hearings.
(7) Whenever, in the opinion of the Secretary, any
director, officer, employee, or agent of a State bank or any
subsidiary or bank holding company of the bank or, after May
31, 1997, of any branch of an out-of-state bank or any
subsidiary or bank holding company of the bank shall have
violated any law, rule, or order relating to that bank or any
subsidiary or bank holding company of the bank, shall have
obstructed or impeded any examination or investigation by the
Secretary, shall have engaged in an unsafe or unsound practice
in conducting the business of that bank or any subsidiary or
bank holding company of the bank, or shall have violated any
law or engaged or participated in any unsafe or unsound
practice in connection with any financial institution or other

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business entity such that the character and fitness of the
director, officer, employee, or agent does not assure
reasonable promise of safe and sound operation of the State
bank, the Secretary may issue an order of removal. If, in the
opinion of the Secretary, any former director, officer,
employee, or agent of a State bank or any subsidiary or bank
holding company of the bank, prior to the termination of his or
her service with that bank or any subsidiary or bank holding
company of the bank, violated any law, rule, or order relating
to that State bank or any subsidiary or bank holding company of
the bank, obstructed or impeded any examination or
investigation by the Secretary, engaged in an unsafe or unsound
practice in conducting the business of that bank or any
subsidiary or bank holding company of the bank, or violated any
law or engaged or participated in any unsafe or unsound
practice in connection with any financial institution or other
business entity such that the character and fitness of the
director, officer, employee, or agent would not have assured
reasonable promise of safe and sound operation of the State
bank, the Secretary may issue an order prohibiting that person
from further service with a bank or any subsidiary or bank
holding company of the bank as a director, officer, employee,
or agent. An order issued pursuant to this subsection shall be
served upon the director, officer, employee, or agent. A copy
of the order shall be sent to each director of the bank
affected by registered mail. A copy of the order shall also be

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served upon the bank of which he is a director, officer,
employee, or agent, whereupon he shall cease to be a director,
officer, employee, or agent of that bank. The Secretary may
institute a civil action against the director, officer, or
agent of the State bank or, after May 31, 1997, of the branch
of the out-of-state bank against whom any order provided for by
this subsection (7) of this Section 48 has been issued, and
against the State bank or, after May 31, 1997, out-of-state
bank, to enforce compliance with or to enjoin any violation of
the terms of the order. Any person who has been the subject of
an order of removal or an order of prohibition issued by the
Secretary under this subsection or Section 5-6 of the Corporate
Fiduciary Act may not thereafter serve as director, officer,
employee, or agent of any State bank or of any branch of any
out-of-state bank, or of any corporate fiduciary, as defined in
Section 1-5.05 of the Corporate Fiduciary Act, or of any other
entity that is subject to licensure or regulation by the
Division of Banking unless the Secretary has granted prior
approval in writing.
For purposes of this paragraph (7), "bank holding company"
has the meaning prescribed in Section 2 of the Illinois Bank
Holding Company Act of 1957.
(8) The Commissioner may impose civil penalties of up to
$100,000 against any person for each violation of any provision
of this Act, any rule promulgated in accordance with this Act,
any order of the Commissioner, or any other action which in the

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Commissioner's discretion is an unsafe or unsound banking
practice.
(9) The Commissioner may impose civil penalties of up to
$100 against any person for the first failure to comply with
reporting requirements set forth in the report of examination
of the bank and up to $200 for the second and subsequent
failures to comply with those reporting requirements.
(10) All final administrative decisions of the
Commissioner hereunder shall be subject to judicial review
pursuant to the provisions of the Administrative Review Law.
For matters involving administrative review, venue shall be in
either Sangamon County or Cook County.
(11) The endowment fund for the Illinois Bank Examiners'
Education Foundation shall be administered as follows:
(a) (Blank).
(b) The Foundation is empowered to receive voluntary
contributions, gifts, grants, bequests, and donations on
behalf of the Illinois Bank Examiners' Education
Foundation from national banks and other persons for the
purpose of funding the endowment of the Illinois Bank
Examiners' Education Foundation.
(c) The aggregate of all special educational fees
collected by the Secretary and property received by the
Secretary on behalf of the Illinois Bank Examiners'
Education Foundation under this subsection (11) on or after
June 30, 1986, shall be either (i) promptly paid after

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receipt of the same, accompanied by a detailed statement
thereof, into the State Treasury and shall be set apart in
a special fund to be known as "The Illinois Bank Examiners'
Education Fund" to be invested by either the Treasurer of
the State of Illinois in the Public Treasurers' Investment
Pool or in any other investment he is authorized to make or
by the Illinois State Board of Investment as the State
Banking Board of Illinois may direct or (ii) deposited into
an account maintained in a commercial bank or corporate
fiduciary in the name of the Illinois Bank Examiners'
Education Foundation pursuant to the order and direction of
the Board of Trustees of the Illinois Bank Examiners'
Education Foundation.
(12) (Blank).
(13) The Secretary may borrow funds from the General
Revenue Fund on behalf of the Bank and Trust Company Fund if
the Director of Banking certifies to the Governor that there is
an economic emergency affecting banking that requires a
borrowing to provide additional funds to the Bank and Trust
Company Fund. The borrowed funds shall be paid back within 3
years and shall not exceed the total funding appropriated to
the Agency in the previous year.
(Source: P.A. 96-1163, eff. 1-1-11; 96-1365, eff. 7-28-10;
97-333, eff. 8-12-11.)
Section 4. The Savings Bank Act is amended by changing

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Section 9004 as follows:
(205 ILCS 205/9004) (from Ch. 17, par. 7309-4)
Sec. 9004. Examination.
(a) At least once every 18 months or more often if it is
deemed necessary or expedient, the Secretary shall examine the
books, records, operations, and affairs of each savings bank
operating under this Act. In the course of the examination, the
Secretary may also examine in the same manner all entities,
companies, and individuals which or whom the Secretary
determines may have a relationship with the savings bank or any
subsidiary or entity affiliated with it, if the relationship
may adversely affect the affairs, activities, and safety and
soundness of the savings bank, including: (i) companies
controlled by the savings bank; (ii) entities, including
companies controlled by the company, individual, or
individuals that control the savings bank; and (iii) the
company or other entity which controls or owns the savings
bank. Notwithstanding any other provision of this Act, every
savings bank, as defined by rule, or, if not defined, to the
same extent as would be permitted in the case of a State bank,
the Secretary, in lieu of the examination, may accept on an
alternating basis the examination made by the eligible savings
bank's appropriate federal banking agency pursuant to Section
111 of the Federal Deposit Insurance Corporation Improvement
Act of 1991, provided the appropriate federal banking agency

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has made an examination.
(b) The Secretary shall examine to determine:
(1) Quality of financial condition, including safety
and soundness and investment and loan quality.
(2) Compliance with this Act and other applicable
statutes and regulations.
(3) Quality of management policies.
(4) Overall safety and soundness of the savings bank,
its parent, subsidiaries, and affiliates.
(5) Remedial actions required to correct and to restore
compliance with applicable statutes, regulations, and
proper business policies.
(c) The Secretary may promulgate regulations to implement
and administer this Section.
(d) If a savings bank, its holding company, or any of its
corporate subsidiaries has not been audited at least once in
the 12 months prior to the Secretary's examination, the
Secretary may cause an audit of the savings bank's books and
records to be made by an independent licensed public
accountant. The cost of the audit shall be paid for by the
entity being audited.
(e) The Secretary or his or her examiners or other formally
designated agents are authorized to administer oaths and to
examine and to take and preserve testimony under oath as to
anything in the affairs or ownership of any savings bank or
institution or affiliate thereof.

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(f) Pursuant to subsection (c) of this Section, the
Secretary shall adopt rules that ensure consistency and due
process in the examination process. The Secretary may also
establish guidelines that (i) define the scope of the
examination process and (ii) clarify examination items to be
resolved. The rules, formal guidance, interpretive letters, or
opinions furnished to savings banks by the Secretary may be
relied upon by the savings banks.
(Source: P.A. 96-1365, eff. 7-28-10; 97-492, eff. 1-1-12.)".