Bill Text: IL SB1861 | 2015-2016 | 99th General Assembly | Enrolled

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

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Bill Title: Amends the Illinois Banking Act. Provides that, for the purpose of declaring dividends pursuant specified provisions, upon prior written approval of the Secretary of Financial and Professional Regulation, and without undergoing a quasi-reorganization, a State bank may restate its capital accounts to remove a deficit in its undivided profit account by eliminating such deficit into its surplus account so that the undivided profit account is restated to zero. Provides that nothing in provisions concerning general corporate powers shall be construed to require the filing of a notice or application for approval with the United States Office of the Comptroller of the Currency or a bank supervisor of another state as a condition to the right of a State bank to exercise any of the powers conferred in this State. Provides that the Secretary shall adopt rules under specified provisions. Effective immediately.

Spectrum: Moderate Partisan Bill (Democrat 10-3)

Status: (Passed) 2015-08-13 - Public Act . . . . . . . . . 99-0362 [SB1861 Detail]

Download: Illinois-2015-SB1861-Enrolled.html

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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 5 and 14.1 as follows:
(205 ILCS 5/5) (from Ch. 17, par. 311)
Sec. 5. General corporate powers. A bank organized under
this Act or subject hereto shall be a body corporate and
politic and shall, without specific mention thereof in the
charter, have all the powers conferred by this Act and the
following additional general corporate powers:
(1) To sue and be sued, complain, and defend in its
corporate name.
(2) To have a corporate seal, which may be altered at
pleasure, and to use the same by causing it or a facsimile
thereof to be impressed or affixed or in any manner
reproduced, provided that the affixing of a corporate seal
to an instrument shall not give the instrument additional
force or effect, or change the construction thereof, and
the use of a corporate seal is not mandatory.
(3) To make, alter, amend, and repeal bylaws, not
inconsistent with its charter or with law, for the
administration of the affairs of the bank. If this Act does

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not provide specific guidance in matters of corporate
governance, the provisions of the Business Corporation Act
of 1983 may be used if so provided in the bylaws, and if
the bank is a limited liability company, the provisions of
the Limited Liability Company Act shall be used.
(4) To elect or appoint and remove officers and agents
of the bank and define their duties and fix their
compensation.
(5) To adopt and operate reasonable bonus plans,
profit-sharing plans, stock-bonus plans, stock-option
plans, pension plans and similar incentive plans for its
directors, officers and employees.
(5.1) To manage, operate and administer a fund for the
investment of funds by a public agency or agencies,
including any unit of local government or school district,
or any person. The fund for a public agency shall invest in
the same type of investments and be subject to the same
limitations provided for the investment of public funds.
The fund for public agencies shall maintain a separate
ledger showing the amount of investment for each public
agency in the fund. "Public funds" and "public agency" as
used in this Section shall have the meanings ascribed to
them in Section 1 of the Public Funds Investment Act.
(6) To make reasonable donations for the public welfare
or for charitable, scientific, religious or educational
purposes.

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(7) To borrow or incur an obligation; and to pledge its
assets:
(a) to secure its borrowings, its lease of personal
or real property or its other nondeposit obligations;
(b) to enable it to act as agent for the sale of
obligations of the United States;
(c) to secure deposits of public money of the
United States, whenever required by the laws of the
United States, including without being limited to,
revenues and funds the deposit of which is subject to
the control or regulation of the United States or any
of its officers, agents, or employees and Postal
Savings funds;
(d) to secure deposits of public money of any state
or of any political corporation or subdivision thereof
including, without being limited to, revenues and
funds the deposit of which is subject to the control or
regulation of any state or of any political corporation
or subdivisions thereof or of any of their officers,
agents, or employees;
(e) to secure deposits of money whenever required
by the National Bankruptcy Act;
(f) (blank); and
(g) to secure trust funds commingled with the
bank's funds, whether deposited by the bank or an
affiliate of the bank, pursuant to Section 2-8 of the

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Corporate Fiduciary Act.
(8) To own, possess, and carry as assets all or part of
the real estate necessary in or with which to do its
banking business, either directly or indirectly through
the ownership of all or part of the capital stock, shares
or interests in any corporation, association, trust
engaged in holding any part or parts or all of the bank
premises, engaged in such business and in conducting a safe
deposit business in the premises or part of them, or
engaged in any activity that the bank is permitted to
conduct in a subsidiary pursuant to paragraph (12) of this
Section 5.
(9) To own, possess, and carry as assets other real
estate to which it may obtain title in the collection of
its debts or that was formerly used as a part of the bank
premises, but title to any real estate except as herein
permitted shall not be retained by the bank, either
directly or by or through a subsidiary, as permitted by
subsection (12) of this Section for a total period of more
than 10 years after acquiring title, either directly or
indirectly.
(10) To do any act, including the acquisition of stock,
necessary to obtain insurance of its deposits, or part
thereof, and any act necessary to obtain a guaranty, in
whole or in part, of any of its loans or investments by the
United States or any agency thereof, and any act necessary

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to sell or otherwise dispose of any of its loans or
investments to the United States or any agency thereof, and
to acquire and hold membership in the Federal Reserve
System.
(11) Notwithstanding any other provisions of this Act
or any other law, to do any act and to own, possess, and
carry as assets property of the character, including stock,
that is at the time authorized or permitted to national
banks by an Act of Congress, but subject always to the same
limitations and restrictions as are applicable to national
banks by the pertinent federal law and subject to
applicable provisions of the Financial Institutions
Insurance Sales Law.
(12) To own, possess, and carry as assets stock of one
or more corporations that is, or are, engaged in one or
more of the following businesses:
(a) holding title to and administering assets
acquired as a result of the collection or liquidating
of loans, investments, or discounts; or
(b) holding title to and administering personal
property acquired by the bank, directly or indirectly
through a subsidiary, for the purpose of leasing to
others, provided the lease or leases and the investment
of the bank, directly or through a subsidiary, in that
personal property otherwise comply with Section 35.1
of this Act; or

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(c) carrying on or administering any of the
activities excepting the receipt of deposits or the
payment of checks or other orders for the payment of
money in which a bank may engage in carrying on its
general banking business; provided, however, that
nothing contained in this paragraph (c) shall be deemed
to permit a bank organized under this Act or subject
hereto to do, either directly or indirectly through any
subsidiary, any act, including the making of any loan
or investment, or to own, possess, or carry as assets
any property that if done by or owned, possessed, or
carried by the State bank would be in violation of or
prohibited by any provision of this Act.
The provisions of this subsection (12) shall not apply
to and shall not be deemed to limit the powers of a State
bank with respect to the ownership, possession, and
carrying of stock that a State bank is permitted to own,
possess, or carry under this Act.
Any bank intending to establish a subsidiary under this
subsection (12) shall give written notice to the
Commissioner 60 days prior to the subsidiary's commencing
of business or, as the case may be, prior to acquiring
stock in a corporation that has already commenced business.
After receiving the notice, the Commissioner may waive or
reduce the balance of the 60 day notice period. The
Commissioner may specify the form of the notice, may

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designate the types of subsidiaries not subject to this
notice requirement, and may promulgate rules and
regulations to administer this subsection (12).
(13) To accept for payment at a future date not
exceeding one year from the date of acceptance, drafts
drawn upon it by its customers; and to issue, advise, or
confirm letters of credit authorizing the holders thereof
to draw drafts upon it or its correspondents.
(14) To own and lease personal property acquired by the
bank at the request of a prospective lessee and upon the
agreement of that person to lease the personal property
provided that the lease, the agreement with respect
thereto, and the amount of the investment of the bank in
the property comply with Section 35.1 of this Act.
(15)(a) To establish and maintain, in addition to the
main banking premises, branches offering any banking
services permitted at the main banking premises of a State
bank.
(b) To establish and maintain, after May 31, 1997,
branches in another state that may conduct any activity in
that state that is authorized or permitted for any bank
that has a banking charter issued by that state, subject to
the same limitations and restrictions that are applicable
to banks chartered by that state.
(16) (Blank).
(17) To establish and maintain terminals, as

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authorized by the Electronic Fund Transfer Act.
(18) To establish and maintain temporary service
booths at any International Fair held in this State which
is approved by the United States Department of Commerce,
for the duration of the international fair for the sole
purpose of providing a convenient place for foreign trade
customers at the fair to exchange their home countries'
currency into United States currency or the converse. This
power shall not be construed as establishing a new place or
change of location for the bank providing the service
booth.
(19) To indemnify its officers, directors, employees,
and agents, as authorized for corporations under Section
8.75 of the Business Corporation Act of 1983.
(20) To own, possess, and carry as assets stock of, or
be or become a member of, any corporation, mutual company,
association, trust, or other entity formed exclusively for
the purpose of providing directors' and officers'
liability and bankers' blanket bond insurance or
reinsurance to and for the benefit of the stockholders,
members, or beneficiaries, or their assets or businesses,
or their officers, directors, employees, or agents, and not
to or for the benefit of any other person or entity or the
public generally.
(21) To make debt or equity investments in corporations
or projects, whether for profit or not for profit, designed

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to promote the development of the community and its
welfare, provided that the aggregate investment in all of
these corporations and in all of these projects does not
exceed 10% of the unimpaired capital and unimpaired surplus
of the bank and provided that this limitation shall not
apply to creditworthy loans by the bank to those
corporations or projects. Upon written application to the
Commissioner, a bank may make an investment that would,
when aggregated with all other such investments, exceed 10%
of the unimpaired capital and unimpaired surplus of the
bank. The Commissioner may approve the investment if he is
of the opinion and finds that the proposed investment will
not have a material adverse effect on the safety and
soundness of the bank.
(22) To own, possess, and carry as assets the stock of
a corporation engaged in the ownership or operation of a
travel agency or to operate a travel agency as a part of
its business.
(23) With respect to affiliate facilities:
(a) to conduct at affiliate facilities for and on
behalf of another commonly owned bank, if so authorized
by the other bank, all transactions that the other bank
is authorized or permitted to perform; and
(b) to authorize a commonly owned bank to conduct
for and on behalf of it any of the transactions it is
authorized or permitted to perform at one or more

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affiliate facilities.
Any bank intending to conduct or to authorize a
commonly owned bank to conduct at an affiliate facility any
of the transactions specified in this paragraph (23) shall
give written notice to the Commissioner at least 30 days
before any such transaction is conducted at the affiliate
facility.
(24) To act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums
on policies issued by such company; and to receive for
services so rendered such fees or commissions as may be
agreed upon between the bank and the insurance company for
which it may act as agent; provided, however, that no such
bank shall in any case assume or guarantee the payment of
any premium on insurance policies issued through its agency
by its principal; and provided further, that the bank shall
not guarantee the truth of any statement made by an assured
in filing his application for insurance.
(25) Notwithstanding any other provisions of this Act
or any other law, to offer any product or service that is
at the time authorized or permitted to any insured savings
association or out-of-state bank by applicable law,
provided that powers conferred only by this subsection
(25):
(a) shall always be subject to the same limitations

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and restrictions that are applicable to the insured
savings association or out-of-state bank for the
product or service by such applicable law;
(b) shall be subject to applicable provisions of
the Financial Institutions Insurance Sales Law;
(c) shall not include the right to own or conduct a
real estate brokerage business for which a license
would be required under the laws of this State; and
(d) shall not be construed to include the
establishment or maintenance of a branch, nor shall
they be construed to limit the establishment or
maintenance of a branch pursuant to subsection (11).
Not less than 30 days before engaging in any activity
under the authority of this subsection, a bank shall
provide written notice to the Commissioner of its intent to
engage in the activity. The notice shall indicate the
specific federal or state law, rule, regulation, or
interpretation the bank intends to use as authority to
engage in the activity.
(26) Nothing in this Section shall be construed to
require the filing of a notice or application for approval
with the United States Office of the Comptroller of the
Currency or a bank supervisor of another state as a
condition to the right of a State bank to exercise any of
the powers conferred by this Section in this State.
(Source: P.A. 98-44, eff. 6-28-13.)

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(205 ILCS 5/14.1) (from Ch. 17, par. 321.1)
Sec. 14.1. Quasi-Reorganization of Capital Upon a Change in
Control.
(a) For the purposes of declaring dividends pursuant to
Section 14(8)(b) of this Act upon a change in control, if a
bank:
(1) incurs a change in ownership of more than 50% of its
voting stock; and
(2) has a deficit in its net profits then on hand at the
time of such change in ownership; and
(3) receives the prior written approval of the Secretary
Commissioner; such bank may restate its asset and liability
accounts to fair value for the purpose of reorganizing the
capital accounts of the bank so that net profits then on hand
are restated to zero; provided that in no event may total
capital be increased as a result of a capital reorganization
made pursuant to this Section.
(b) A bank may reorganize its capital accounts pursuant to
item (3) of subsection (a) of this Section without a change in
control to the same extent and in the same manner authorized
for national banks, subject to the same limitations and
restrictions as are applicable to national banks, upon
receiving the prior written approval of the Secretary.
(Source: P.A. 87-841.)
Section 99. Effective date. This Act takes effect upon

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becoming law.