February 25, 1998 - Introduced by Committee on Financial Institutions, by
request of Department of Financial Institutions. Referred to Committee on
Financial Institutions.
AB832,1,8 1An Act to repeal 221.0205 (1) (title) and 221.0205 (2); to renumber 221.0205
2(1); to renumber and amend 221.0901 (3) (c); to amend 220.04 (1) (a),
3221.0216 (5), 221.0302 (5) (c), 221.0513 (title) and 221.0609 (1) (title); and to
4create
221.06105, 221.0901 (3) (c) 2. and 221.0903 of the statutes; relating to:
5in-state branches of out-of-state banks; examination of state banks and trust
6company banks by the division of banking; action without a meeting by a bank's
7board of directors; dividend rights on capital stock; providing an exemption
8from emergency rule procedures; and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Interstate branching
Under the federal Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994, federal bank regulatory agencies may approve applications for
adequately capitalized and managed banks to consolidate their multistate
operations and branch interstate by acquiring banks outside their home state,
effective June 1, 1997, unless the state opts out no later than that date. This type
of interstate branching is often referred to as interstate branching by acquisition.
States have the option of allowing de novo interstate branching (interstate
branching by establishing new branches) by enacting nondiscriminatory legislation

permitting this branching. Wisconsin has enacted a law that allows banks to
establish branches out of state with appropriate regulatory approvals.
This bill creates a number of provisions authorizing the division of banking (the
division) to regulate out-of-state banks that maintain branches in this state. These
provisions take effect on June 1, 1997, or on the day after publication, whichever is
later. First, the bill requires out-of-state banks with an in-state branch to notify
the division regarding any change of control of the out-of-state bank. Second, the
bill grants the division rule-making authority to establish periodic reporting
requirements for out-of-state banks maintaining an in-state branch and to
establish assessments for out-of-state banks. Third, the bill authorizes the division
to examine in-state branches maintained by out-of-state banks, if the division
considers an examination necessary to determine whether an in-state branch is
being operated in compliance with the laws of this state and in accordance with safe
and sound banking practices. Fourth, if the division determines that an in-state
branch of an out-of-state bank is being operated in violation of the laws of this state
or is being operated in an unsafe or unsound manner, the division may take any
enforcement action against the in-state branch that it would be able to take if the
in-state branch were a state bank. The bill contains provisions allowing the division
to enter into joint examination and enforcement actions with other bank supervisory
agencies and allows the division to contract with other bank supervisory agencies to
receive and to provide bank examination services. The bill exempts these contracts
from state contracting requirements, including competitive bidding requirements.
This bill also creates certain notification requirements for mergers,
consolidations and other transactions that involve a Wisconsin bank and will result
in an out-of-state bank. The resulting out-of-state bank must give notice to the
division of the proposed merger, consolidation or other transaction no later than the
date on which it files an application for the proposed merger, consolidation or other
transaction with the federal bank supervisory agency. The notification must include:
1) a copy of the application submitted to the federal bank supervisory agency; 2)
evidence that the out-of-state bank has complied with requirements applicable to
foreign corporations under the state's corporate law; and 3) any filing fee required
by the division.
Other
Under current law, the division of banking is required to examine banks at least
once each year. This bill amends this provision to require an examination at least
once every 18 months. Current law provides that the division of banking shall
determine the required capital of a bank, subject to review by the banking review
board. It also specifies that the capital stock of the bank is unimpaired when its
capital notes and debentures or preferred stock, or both, exceed this capital
requirement. This bill repeals the provision specifying when a bank's capital stock
is unimpaired but retains the requirement that the division of banking set the
required capital of a bank.
This bill also makes a number of minor changes and corrections to language
enacted in 1995 Wisconsin Act 336, sometimes referred to as the Banking and
Regulatory Efficiency Act (BREA), which repealed and recreated chapter 221

governing state banks. As repealed and recreated, the chapter contains provisions
allowing shareholders of a bank to act without a meeting by unanimous written
consent. This bill adds a similar provision allowing a bank's board of directors to act
without a meeting by unanimous written consent. The bill also modifies the
requirements for payment of dividends on capital stock to provide these dividends
may not be paid until dividends on preferred stock has been paid in full.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB832, s. 1 1Section 1. 220.04 (1) (a) of the statutes is amended to read:
AB832,3,92 220.04 (1) (a) The division shall examine at least once in each year every 18
3months
the cash, bills, collaterals, securities, assets, books of account, condition and
4affairs of each bank and trust company bank doing business in this state, except
5national banks. For that purpose the division may examine on oath any of the
6officers, agents, directors, clerks, stockholders, customers or depositors thereof,
7touching the affairs and business of such institution. In making such examinations
8of banks, the division shall determine the fair valuation of all assets in accordance
9with the schedules, rules and regulations prescribed by the banking review board.
AB832, s. 2 10Section 2. 221.0205 (1) (title) of the statutes is repealed.
AB832, s. 3 11Section 3. 221.0205 (1) of the statutes is renumbered 221.0205.
AB832, s. 4 12Section 4. 221.0205 (2) of the statutes is repealed.
AB832, s. 5 13Section 5. 221.0216 (5) of the statutes is amended to read:
AB832,3,1814 221.0216 (5) Dividend rights. A dividend may not be declared or paid on
15capital stock if until the cumulative dividends on the preferred stock have been paid
16in full. If the bank is placed in liquidation, a payment may not be made to the holders
17of the capital stock if the holders of the preferred stock have not been paid in full the
18par value of the stock plus all cumulative dividends.
AB832, s. 6
1Section 6. 221.0302 (5) (c) of the statutes is amended to read:
AB832,4,32 221.0302 (5) (c) Acting as an agent, or having another bank act as agent, under
3a contract
under s. 221.0301 (8).
AB832, s. 7 4Section 7. 221.0513 (title) of the statutes is amended to read:
AB832,4,5 5221.0513 (title) Action Shareholder action without a meeting.
AB832, s. 8 6Section 8. 221.0609 (1) (title) of the statutes is amended to read:
AB832,4,77 221.0609 (1) (title) How filed filled.
AB832, s. 9 8Section 9. 221.06105 of the statutes is created to read:
AB832,4,14 9221.06105 Board action without a meeting. (1) When permitted. Unless
10the articles of incorporation or bylaws provide otherwise, action required or
11permitted under this chapter to be taken at a board of directors' meeting may be
12taken without a meeting if the action is taken by all members of the board. The action
13shall be evidenced by one or more written consents describing the action taken,
14signed by each director and retained by the bank.
AB832,4,16 15(2) Effective date. Action taken under this section is effective when the last
16director signs the consent, unless the consent specifies a different effective date.
AB832,4,19 17(3) Effect of action. A written consent signed under this section has the effect
18of a unanimous vote taken at a meeting at which all directors were present, and may
19be described as such in any document.
AB832, s. 10 20Section 10. 221.0901 (3) (c) of the statutes is renumbered 221.0901 (3) (c) 1.
21and amended to read:
AB832,4,2522 221.0901 (3) (c) 1. In a transaction under par. (b) in which the division's
23approval is not required under par. (b), the parties shall give written notice to the
24division at least 15 days before the effective date of the acquisition, unless a shorter
25period of notice is required under applicable federal law.
AB832, s. 11
1Section 11. 221.0901 (3) (c) 2. of the statutes is created to read:
AB832,5,82 221.0901 (3) (c) 2. In a transaction in which the division's approval is not
3required because the transaction is expressly permitted under federal law, an
4out-of-state bank that will result from a merger, consolidation or other transaction
5involving an in-state bank shall give notice to the division of the proposed merger,
6consolidation or other transaction no later than the date on which it files an
7application for the proposed merger, consolidation or other transaction with the
8federal bank supervisory agency. The notification shall include all of the following:
AB832,5,99 a. A copy of the application submitted to the federal bank supervisory agency.
AB832,5,1110 b. Evidence that the out-of-state bank has complied with any applicable
11requirements under subch. XV of ch. 180.
AB832,5,1212 c. Any filing fee required by the division.
AB832, s. 12 13Section 12. 221.0903 of the statutes is created to read:
AB832,5,15 14221.0903 In-state branches maintained by out-of-state banks. (1)
15Definitions. In this section:
AB832,5,1616 (a) "Bank supervisory agency" means any of the following:
AB832,5,1817 1. An agency of another state with primary responsibility for chartering and
18supervising banks.
AB832,5,1919 2. The U.S. office of the comptroller of the currency.
AB832,5,2020 3. The Federal Deposit Insurance Corporation.
AB832,5,2121 4. The board of governors of the federal reserve board.
AB832,5,2222 (b) "Home state" means:
AB832,5,2423 1. With respect to a state-chartered bank, the state in which the bank is
24chartered.
AB832,6,2
12. With respect to a national bank, the state in which the main office of the bank
2is located.
AB832,6,43 3. With respect to a foreign bank, the state determined to be the home state of
4the foreign bank under 12 USC 3103 (c).
AB832,6,55 (c) "In-state branch" means a branch under s. 221.0302 located in this state.
AB832,6,66 (d) "Out-of-state bank" means a bank with a home state other than this state.
AB832,6,77 (e) "State bank" means a bank chartered under this chapter.
AB832,6,15 8(2) Notice and filing requirements. Each out-of-state bank that has an
9in-state branch shall give the division notice of any merger, consolidation or other
10transaction that would cause a change of control with respect to the out-of-state
11bank or a bank holding company of the out-of-state bank, such that a filing would
12be required under 12 USC 1817 (j) or 12 USC 1841 to 1850. The notice required under
13this subsection shall be provided at least 30 days prior to date that the transaction
14is to become effective, unless the division determines that a transaction is an
15emergency transaction.
AB832,6,19 16(3) Reporting requirements. The division may promulgate rules establishing
17periodic reporting requirements for out-of-state banks maintaining an in-state
18branch. Any reporting requirements established by rules promulgated under this
19subsection shall be consistent with all of the following:
AB832,6,2020 (a) Reporting requirements applicable to state banks.
AB832,6,2221 (b) The division's regulatory responsibilities with respect to that out-of-state
22bank and its in-state branch.
AB832,7,4 23(4) Examinations. (a) Examination power of division. The division may
24examine an in-state branch maintained by an out-of-state bank, if the division
25considers the examination necessary to determine whether the in-state branch is

1being operated in compliance with the laws of this state and in accordance with safe
2and sound banking practices. The provisions of ch. 220, as they apply to
3examinations of state banks, apply to the examination of in-state branches of
4out-of-state banks.
AB832,7,115 (b) Contracts for examination services. The division may enter into contracts
6with any bank supervisory agency with concurrent jurisdiction over a state bank or
7an in-state branch of an out-of-state bank to engage the services of the agency's
8examiners at a reasonable rate of compensation, or to provide the services of the
9division's examiners to the agency at a reasonable rate of compensation. Contracts
10entered into under this paragraph are exempt from ss. 16.70 to 16.76 and 16.767 to
1116.82.
AB832,7,16 12(5) Enforcement. If the division determines that an in-state branch of an
13out-of-state bank is being operated in violation of the laws of this state or is being
14operated in an unsafe or unsound manner, the division may take any enforcement
15action against the in-state branch that it would be able to take if the in-state branch
16were a state bank.
AB832,7,23 17(6) Joint examination and enforcement actions. The division may enter into
18joint examinations and joint enforcement actions with other bank supervisory
19agencies having concurrent jurisdiction over a state bank with an out-of-state
20branch, or an in-state branch of an out-of-state bank. This subsection does not
21prevent the division from making examinations or taking enforcement actions
22independently, if the division considers it appropriate to carry out its responsibilities
23or to ensure compliance with the laws of this state.
AB832,7,25 24(7) Assessments. The division may promulgate rules establishing assessments
25for in-state branches of out-of-state banks.
AB832, s. 13
1Section 13. Nonstatutory provisions.
AB832,8,92 (1) Emergency rule-making authority. Using the procedure under section
3227.24 of the statutes, the division of banking shall promulgate rules required under
4section 221.0902 (3) and (7) of the statutes, as created by this act, for the period before
5permanent rules become effective, but not to exceed the period authorized under
6section 227.24 (1) (c) and (2) of the statutes. Notwithstanding section 227.24 (1) (a)
7and (2) (b) of the statutes, the division need not provide evidence of the necessity of
8preservation of the public peace, health, safety or welfare in promulgating rules
9under this subsection.
AB832,8,1010 (End)
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