2005 - 2006 LEGISLATURE
February 10, 2006 - Introduced by Representatives Vos, Molepske, Albers,
Gunderson, Fields, Hahn, Jensen, Jeskewitz, Kreibich, Krawczyk, F. Lasee,
Moulton, Musser, Nischke, Petrowski
and J. Fitzgerald, cosponsored by
Senators Stepp, Grothman, Brown and Erpenbach. Referred to Committee on
Financial Institutions.
AB1009,1,6 1An Act to renumber 221.0903 (1) (a); to amend 221.0302 (3), 221.0302 (4) and
2221.0901 (8) (a); and to create 221.0901 (2) (jm), 221.0901 (2) (Lm), 221.0901
3(2) (mm), 221.0901 (8) (d) and (e), 221.0903 (1) (ag), 221.0904 and 227.01 (13)
4(zw) of the statutes; relating to: regulation of bank branches, mergers and
5acquisitions of banks, providing an exemption from rule-making procedures,
6and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Under current law, an out-of-state bank may operate a branch in this state
only if the out-of-state bank has acquired a Wisconsin bank. (A Wisconsin bank is
a bank chartered under the laws of Wisconsin. An out-of-state bank is a bank
chartered under the laws of another state or a bank chartered under federal law that
has its principal place of business in another state.) An out-of-state bank may
acquire a Wisconsin bank by merging or consolidating with a Wisconsin bank or
holding company or acquiring the shares or assets of a Wisconsin bank or holding
company. With certain exceptions, such acquisitions are subject to the prior approval
of the Division of Banking (division) in the Department of Financial Institutions.
This bill allows an out-of-state bank to establish a branch in this state without
acquiring a Wisconsin bank, but only if all of the following conditions are satisfied:
1) the laws of the home state of the out-of-state bank allow the out-of-state bank
to establish a branch in this state; 2) the division determines that the laws of the

home state are reciprocal to Wisconsin law with respect to establishing branches;
and 3) the out-of-state bank gives prior notice to the division as specified in rules
promulgated by the division.
Regarding the second condition, the bill prohibits the division from
determining that a home state's laws are reciprocal unless the division finds that the
home state's laws allow a Wisconsin bank to establish a branch in that state under
terms and conditions that are substantially similar to Wisconsin law. In making this
determination, the division must consider, at a minimum, whether the laws of the
home state discriminate against Wisconsin banks or impose regulatory burdens that
are substantially more restrictive than Wisconsin law. The bill requires the division
to periodically publish a list of states that the division determines are reciprocal. If
the division has not determined whether the laws of an out-of-state bank's home
state are reciprocal, the bill allows the out-of-state bank to request that the division
make such a determination.
If an out-of-state bank establishes a branch in this state as provided under the
bill, the bill allows the out-of-state bank to establish additional branches in this
state to the same extent as current law allows a Wisconsin bank to establish
branches. Also, the out-of-state bank is not required to provide notice to the division
before establishing any additional branches.
The bill also changes the requirements under current law that apply to an
out-of-state bank's acquisition of a Wisconsin bank. Under current law, with certain
exceptions, an out-of-state bank may acquire a Wisconsin bank only if the Wisconsin
bank has been in existence and in continuous operation for at least five years.
The bill creates a new exception to this requirement. Under the bill, an
out-of-state bank may acquire a Wisconsin bank that has been in existence and in
continuous operation for less than five years if all of the following conditions are
satisfied: 1) the laws of the home state of the out-of-state bank allow a Wisconsin
bank to acquire a bank in the home state; and 2) the division determines that the laws
of the home state are reciprocal to Wisconsin law with respect to mergers and
acquisitions. The bill also allows a holding company of an out-of-state bank to
acquire a Wisconsin bank or holding company of a Wisconsin bank under the same
conditions.
Regarding the second condition, the bill prohibits the division from
determining that a home state's laws are reciprocal unless the division finds that the
home state's laws allows a Wisconsin bank to merge or acquire a bank in that state
under terms and conditions that are substantially similar to Wisconsin law. (Under
the bill, the home state of a holding company of an out-of-state bank is the state in
which the total deposits of all banking subsidiaries of the holding company are the
largest.) In making the determination regarding reciprocity, the division must
consider, at a minimum, whether the laws of the home state discriminate against
Wisconsin banks or impose regulatory burdens that are substantially more
restrictive than Wisconsin law. The bill requires the division to periodically publish
a list of states that the division determines are reciprocal. If the division has not
determined whether the laws of an out-of-state bank's home state are reciprocal, the

bill allows the out-of-state bank to request that the division make such a
determination.
The bill makes other changes, including the following:
1. The bill allows the division to make the determinations described above
regarding reciprocity without promulgating rules.
2. The bill allows a Wisconsin bank to transfer an existing branch to a bank
located in another state only if the division has determined, as described above, that
the other state's laws are reciprocal with respect to establishing branches.
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:
AB1009, s. 1 1Section 1. 221.0302 (3) of the statutes is amended to read:
AB1009,3,52 221.0302 (3) Transfer. A bank may transfer a branch bank to any other bank
3located in this state with the approval of the division. A bank may transfer a branch
4bank to a bank located in another state only if the division has determined under s.
5221.0904 (3) (b) that the state's laws are reciprocal regarding establishing branches.
AB1009, s. 2 6Section 2. 221.0302 (4) of the statutes is amended to read:
AB1009,3,97 221.0302 (4) Out-of-state branches. A bank may establish a branch bank in
8another state with the approval of the division and the appropriate bank regulator
9in the state where the branch is to be established
.
AB1009, s. 3 10Section 3. 221.0901 (2) (jm) of the statutes is created to read:
AB1009,3,1411 221.0901 (2) (jm) "Home state" means, with respect to an out-of-state bank,
12the state in which the bank is chartered and, with respect to an out-of-state bank
13holding company, the state in which the total deposits of all banking subsidiaries of
14the company are the largest.
AB1009, s. 4 15Section 4. 221.0901 (2) (Lm) of the statutes is created to read:
AB1009,3,1716 221.0901 (2) (Lm) "Out-of-state bank" means a bank that is not an in-state
17bank.
AB1009, s. 5
1Section 5. 221.0901 (2) (mm) of the statutes is created to read:
AB1009,4,32 221.0901 (2) (mm) "Out-of-state banking organization" means an
3out-of-state bank or out-of-state bank holding company.
AB1009, s. 6 4Section 6. 221.0901 (8) (a) of the statutes is amended to read:
AB1009,4,105 221.0901 (8) (a) Except as provided in pars. (b) and, (c), and (d), the division
6may not approve an application under sub. (3) (a), other than an application by an
7in-state bank holding company or in-state bank, unless the in-state bank to be
8acquired, or all in-state bank subsidiaries of the in-state bank holding company to
9be acquired, have as of the proposed date of acquisition been in existence and in
10continuous operation for at least 5 years.
AB1009, s. 7 11Section 7. 221.0901 (8) (d) and (e) of the statutes are created to read:
AB1009,4,1512 221.0901 (8) (d) Paragraph (a) does not apply to the merger or acquisition by
13an out-of-state banking organization of all or substantially all of the assets of an
14in-state bank, or of an in-state bank holding company that owns one or more
15in-state banks, if all of the following apply:
AB1009,4,1816 1. The laws of the home state of the out-of-state banking organization allow
17an in-state bank or in-state bank holding company to acquire an out-of-state
18banking organization in the home state.
AB1009,4,2119 2. The division determines under par. (e) that the laws of the home state of the
20out-of-state banking organization are reciprocal with respect to mergers and
21acquisitions.
AB1009,5,222 (e) 1. The division shall periodically publish a list of states that the division has
23found have laws that are reciprocal for purposes of par. (d) 2. An out-of-state
24banking organization with a home state for which the division has made no such

1determination may request, on a form prescribed by the division, that the division
2make a determination regarding the home state.
AB1009,5,143 2. The division shall make determinations under subd. 1. in writing. The
4division may not determine that the laws of a state are reciprocal under subd. 1.
5unless the division finds that the laws of that state allow an in-state bank or in-state
6bank holding company to merge with or acquire an out-of-state banking
7organization under terms and conditions that are substantially similar to the terms
8and conditions under this section. In making such a finding, the division shall
9consider, at a minimum, whether the laws of that state discriminate in any way
10against an in-state bank or in-state bank holding company and whether the laws
11of that state impose regulatory burdens that are substantially more restrictive than
12the requirements under this section that apply to an out-of-state banking
13organization seeking to merge or acquire an in-state bank or in-state bank holding
14company.
AB1009, s. 8 15Section 8. 221.0903 (1) (a) of the statutes is renumbered 221.0903 (1) (ar).
AB1009, s. 9 16Section 9. 221.0903 (1) (ag) of the statutes is created to read:
AB1009,5,1717 221.0903 (1) (ag) "Bank" has the meaning given in 12 USC 1841 (c).
AB1009, s. 10 18Section 10. 221.0904 of the statutes is created to read:
AB1009,5,20 19221.0904 Out-of-state banks establishing branches. (1) Definitions. In
20this section:
AB1009,5,2121 (a) "Home state" has the meaning given in s. 221.0903 (1) (b).
AB1009,5,2222 (b) "Out-of-state bank" has the meaning given in s. 221.0903 (1) (d).
AB1009,5,2323 (c) "State bank" has the meaning given in s. 221.0903 (1) (e).
AB1009,5,25 24(2) In general. No out-of-state bank may establish a branch in this state
25unless all of the following apply:
AB1009,6,2
1(a) The laws of the home state of the out-of-state bank allow the out-of-state
2bank to establish a branch in this state.
AB1009,6,53 (b) The division determines under sub. (3) (b) that the laws of the home state
4of the out-of-state bank are reciprocal with respect to a state bank establishing a
5branch in that state.
AB1009,6,66 (c) The out-of-state bank complies with the notice requirements under sub. (4).
AB1009,6,11 7(3) Reciprocity. (a) The division shall periodically publish a list of states that
8the division has found have laws that are reciprocal for purposes of sub. (2) (b). An
9out-of-state bank with a home state for which the division has made no such
10determination may request, on a form prescribed by the division, that the division
11make a determination regarding the home state.
AB1009,6,2012 (b) The division shall make determinations under par. (a) in writing. The
13division may not determine that the laws of a state are reciprocal under par. (a)
14unless the division finds that the laws of that state allow a state bank to establish
15a branch in the state under terms and conditions that are substantially similar to the
16terms and conditions under this section. In making such a finding, the division shall
17consider, at a minimum, whether the laws of that state discriminate in any way
18against a state bank and whether the laws of that state impose regulatory burdens
19that are substantially more restrictive than the requirements under this section that
20apply to an out-of-state bank seeking to establish a branch in this state.
AB1009,7,2 21(4) Notice. (a) Except as provided in par. (b), an out-of-state bank may not
22establish a branch in this state without providing prior notice to the division. The
23division shall promulgate rules specifying the requirements and procedures for
24making such notice. The rules shall allow an out-of-state bank to provide notice by
25submitting to the division a copy of any notice or application regarding the proposed

1branch that the out-of-state bank submits to the regulatory authority of its home
2state or the appropriate federal regulatory authority.
AB1009,7,53 (b) If an out-of-state bank establishes a branch in this state pursuant to this
4section, the out-of-state bank is not required to provide notice for any subsequent
5branches established in this state.
AB1009,7,8 6(5) Additional branching authority. An out-of-state bank that establishes
7a branch in this state pursuant to this section may establish additional branches in
8this state to the same extent as a state bank.
AB1009, s. 11 9Section 11. 227.01 (13) (zw) of the statutes is created to read:
AB1009,7,1110 227.01 (13) (zw) Determines whether a state law is reciprocal under s.
11221.0901 (8) (e) 2. or 221.0904 (3) (b).
AB1009,7,1212 (End)
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