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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1990 

                        CHAPTER 491-S.F.No. 2430 
           An act relating to financial institutions; 
          establishing a system for the evaluation and rating of 
          community reinvestment by depository financial 
          institutions owned by interstate holding companies; 
          providing uniformity with federal financial 
          institutions regulatory practices; regulating public 
          disclosure of uniform rating; requiring notice to the 
          commissioner of proposed acquisitions of control; 
          regulating Minnesota transmission facilities; allowing 
          equal access by other transmission facilities; 
          permitting interstate banking with an additional 
          reciprocating state; amending Minnesota Statutes 1988, 
          sections 47.61, by adding a subdivision; 47.65, by 
          adding subdivisions; 48.92, subdivision 7; and 48.93, 
          subdivision 3; proposing coding for new law in 
          Minnesota Statutes, chapters 46 and 47.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                     COMMUNITY REINVESTMENT RATING
    Section 1.  [47.80] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] For purposes of sections 1 to 7, 
the terms defined in this section have the meanings given them. 
    Subd. 2.  [FINANCIAL INSTITUTION.] "Financial institution" 
means banks, savings associations, savings banks, and trust 
companies with banking powers that are owned by interstate 
holding companies. 
    Subd. 3.  [REINVESTMENT.] "Reinvestment" includes 
activities consistent with the purposes of the Community 
Reinvestment Act of 1977, United States Code, title 12, parts 
2901 et. seq., and the reciprocal interstate banking act in 
sections 48.90 to 48.991.  
    Sec. 2.  [47.81] [WRITTEN COMMUNITY REINVESTMENT EVALUATION 
REQUIRED.] 
    Subdivision 1.  [EXAMINATION.] Upon the conclusion of each 
examination of a financial institution pursuant to section 
46.04, the commissioner shall prepare a written evaluation of 
the financial institution's record of meeting the needs of its 
entire community, including low- and moderate-income 
neighborhoods and developmental loans and developmental 
investments. 
     Subd. 2.  [PUBLIC AND CONFIDENTIAL SECTIONS.] Each written 
evaluation required under subdivision 1 must have a public 
section and a confidential section.  
     Sec. 3.  [47.82] [EVALUATION RATING SYSTEM.] 
    The public section of the written evaluation required by 
section 2 must:  
     (1) state the commissioner's conclusions for each 
assessment factor; 
    (2) discuss the facts supporting the conclusions; and 
     (3) contain the financial institution's rating and a 
statement describing the basis for the rating.  
     Sec. 4.  [47.83] [FOUR-TIERED DESCRIPTIVE RATING SYSTEM.] 
     Subdivision 1.  [ASSIGNED RATING.] The financial 
institution's rating referred to in section 47.82, clause (3), 
must be one of the following:  
    (1) outstanding record of meeting community credit needs; 
    (2) satisfactory record of meeting community credit needs; 
    (3) needs to improve record of meeting community credit 
needs; or 
    (4) substantial noncompliance in meeting community credit 
needs.  
    Subd. 2.  [PUBLIC RATING DISCLOSED.] The ratings based on 
examinations on and after July 1, 1990, must be disclosed to the 
public. 
     Sec. 5.  [47.84] [CONFIDENTIAL SECTION OF WRITTEN 
EVALUATION REPORT.] 
     Subdivision 1.  [PRIVACY OF NAMED INDIVIDUALS.] The 
confidential section of the written evaluation must contain all 
references that identify a customer of the financial 
institution, an employee or officer of the financial 
institution, or a person or organization that has provided 
information in confidence to a federal depository institution's 
regulatory agency or the department of commerce.  
     Subd. 2.  [TOPICS NOT SUITABLE FOR DISCLOSURE.] The 
confidential section must also contain all statements obtained 
or made by the federal depository institution's regulatory 
agency or department of commerce in the course of an examination 
which, in the judgment of the commissioner, are too sensitive or 
speculative in nature to be disclosed to the public. 
    Subd. 3.  [DISCLOSURE TO FINANCIAL INSTITUTION.] The entire 
confidential section must be disclosed to the financial 
institution. 
    Subd. 4.  [EXEMPTION.] Treatment of information as 
confidential or public for purposes of this section is exempt 
from section 46.07, subdivision 2, to the extent that section 
conflicts with this act. 
    Sec. 6.  [47.85] [APPLICATION TO RECIPROCAL INTERSTATE 
BANKING ACT.] 
    The system of evaluation and uniform rating of financial 
institutions provided for in this act supersedes the reporting 
and rating system required by section 48.97, subdivisions 2, 3, 
and 4. 
    Sec. 7.  Minnesota Statutes 1988, section 48.93, 
subdivision 3, is amended to read: 
    Subd. 3.  [CRITERIA FOR APPROVAL.] Except as otherwise 
provided by rule of the department, an application filed 
pursuant to subdivision 1 must contain the following information:
    (1) the identity, personal history, business background, 
and experience of each person by whom or on whose behalf the 
acquisition is to be made, including the person's material 
business activities and affiliations during the past five years, 
and a description of any material pending legal or 
administrative proceedings in which the person is a party and 
any criminal indictment or conviction of that person by a state 
or federal court; 
    (2) a statement of the assets and liabilities of each 
person by whom or on whose behalf the acquisition is to be made, 
as of the end of the fiscal year for each of the five years 
immediately preceding the date of the notice, together with 
related statements of income, sources, and application of funds 
for each of the fiscal years then concluded, all prepared in 
accordance with generally accepted accounting principles 
consistently applied, and an interim statement of the assets and 
liabilities for each person, together with related statements of 
income, source, and application of funds as of a date not more 
than 90 days prior to the date of the filing of the notice; 
     (3) the terms and conditions of the proposed acquisition 
and the manner in which the acquisition is to be made; 
     (4) the identity, source, and amount of the funds or other 
consideration to be used in making the acquisition, and if any 
part of these funds or other consideration has been or is to be 
borrowed or otherwise obtained for the purpose of making the 
acquisition, a description of the transaction, the names of the 
parties, and any arrangements, agreements, or understandings 
with those persons; 
    (5) any plans or proposals which an acquiring party making 
the acquisition may have to liquidate the bank, to sell its 
assets or merge it, or make any other major change in its 
business or corporate structure or management; 
    (6) the identification of any person employed, retained, or 
to be compensated by the acquiring party, or by any person on 
the acquiring party's behalf, to make solicitations or 
recommendations to stockholders for the purpose of assisting in 
the acquisition, and a brief description of the terms of the 
employment, retainer, or arrangement for compensation; 
    (7) copies of all invitations, tenders, or advertisements 
making tender offers to stockholders for purchase of their stock 
to be used in connection with the proposed acquisition; 
    (8) a statement of how the acquisition will bring "net new 
funds" to Minnesota.  The description of net new funds must be 
filed with the application and annually thereafter stating the 
amount of capital funds, including the increase in equity 
capital that will result from the acquisition or establishment 
of a bank.  The level of total equity capital must exceed 
$3,000,000 for a new chartered bank and $1,000,000 for an 
acquired bank.  The description must state the net increase in 
loanable funds expressed as an increase in the total loan to 
asset ratio of Minnesota loans and assets.  The statement must 
also include a discussion of initial capital investments, loan 
policy, investment policy, dividend policy, and the general plan 
of business, including the full range of consumer and business 
services which will be offered; and 
    (9) any additional relevant information in the form the 
commissioner requires by rule or by specific request in 
connection with any particular notice.  
    Sec. 8.  [APPLICATION.] 
    Sections 1 to 7 apply to examinations of financial 
institutions begun on and after July 1, 1990. 

                                ARTICLE 2

                            BANK ACQUISITION
    Section 1.  [46.047] [DEFINITIONS.] 
    Subdivision 1.  [WORDS, TERMS, AND PHRASES.] For the 
purposes of sections 1 and 2, the terms defined in this section 
have the meanings given them, unless the language or context 
clearly indicates that a different meaning is intended.  
    Subd. 2.  [BANKING INSTITUTION.] The term "banking 
institution" means a bank, trust company, bank and trust 
company, mutual savings bank, or thrift institution, that is 
organized under the laws of this state. 
    Sec. 2.  [46.048] [NOTICE OF PROPOSED ACQUISITION.] 
    Subdivision 1.  [REQUIREMENT.] Whenever a change in the 
outstanding voting stock of a banking institution will result in 
control or in a change in the control of the banking 
institution, the person acquiring control of the banking 
institution shall file notice of the proposed acquisition of 
control with the commissioner of commerce at least 60 days 

before the actual effective date of the change.  As used in this 
section, the term "control" means the power to directly or 
indirectly direct or cause the direction of the management or 
policies of the banking institution.  A change in ownership of 
capital stock that would result in direct or indirect ownership 
by a stockholder or an affiliated group of stockholders of less 
than 25 percent of the outstanding capital stock is not 
considered a change of control.  If there is any doubt as to 
whether a change in the outstanding voting stock is sufficient 
to result in control or to effect a change in the control, the 
doubt shall be resolved in favor of reporting the facts to the 
commissioner.  The commissioner shall use the criteria 
established by the Financial Institution Regulatory and Interest 
Rate Control Act of 1987, United States Code, title 12, section 
1817(j), and the regulations adopted under it, when reviewing 
the acquisition. 
    Subd. 2.  [CONTENTS.] The notice required by subdivision 1 
must contain the following information to the extent that it is 
known by the person making the notice:  (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; 
and (5) 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.  In 
addition, the notice must contain other information as may be 
available to inform the commissioner of the effect of the 
transaction upon control of the banking institution whose stock 
is involved. 
    Subd. 3.  [BACKGROUND CHECKS.] In addition to any other 
information the commissioner may be able to obtain pursuant to 
section 13.82, the Minnesota bureau of criminal apprehension 
shall, upon the commissioner's request, provide fingerprint and 
background checks on all persons named in the notice required by 
subdivision 2.  

                               ARTICLE 3

                    MINNESOTA TRANSMISSION FACILITY
    Section 1.  Minnesota Statutes 1988, section 47.61, is 
amended by adding a subdivision to read: 
    Subd. 4a.  "Minnesota transmission facility" means (1) a 
transmission facility which is owned or controlled by financial 
institutions located in Minnesota; (2) a transmission facility 
owned or controlled by a bank holding company or savings and 
loan holding company if domiciled or headquartered in Minnesota; 
or (3) a transmission facility established in Minnesota and 
approved by the commissioner under section 47.65, subdivision 1, 
as of the effective date of this act. 
    Sec. 2.  Minnesota Statutes 1988, section 47.65, is amended 
by adding a subdivision to read: 
    Subd. 1a.  A Minnesota transmission facility which is used 
by, or made available to, any other Minnesota transmission 
facility must be made available on fair, equitable, and 
nondiscriminatory terms to all other Minnesota transmission 
facilities upon request of such Minnesota transmission 
facility.  Such person requesting use of a Minnesota 
transmission facility shall be permitted its use only if the 
person conforms to reasonable technical operating standards 
which have been established by the Minnesota transmission 
facility. 
    The charges required to be paid to any Minnesota 
transmission facility shall be related to the costs of 
establishing, operating, and maintaining such facility plus a 
reasonable return on those costs to the owner of the facility 
and may provide for amortization of development costs and 
capital expenditures over a reasonable period of time; provided 
such charges as may be separately determined and established 
from time to time by each Minnesota transmission facility are 
fair, equitable, and nondiscriminatory. 
    Sec. 3.  Minnesota Statutes 1988, section 47.65, is amended 
by adding a subdivision to read: 
    Subd. 1b.  Nothing in subdivision 1a shall prevent a 
corporation contracting with Minnesota state and local 
governmental units to provide electronic benefits transfer or 
electronic fund transfer services from utilizing their point of 
service terminals, networks, or attendant support systems for 
commercial purposes. 

                               ARTICLE 4

                           INTERSTATE BANKING
    Section 1.  Minnesota Statutes 1988, section 48.92, 
subdivision 7, is amended to read: 
    Subd. 7.  [RECIPROCATING STATE.] "Reciprocating state" is: 
(1) a state that authorizes the acquisition, directly or 
indirectly, or control of, banks in that state by a bank or bank 
holding company located in this state under conditions 
substantially similar to those imposed by the laws of Minnesota 
as determined by the commissioner; and (2) limited to the states 
of Iowa, North Dakota, South Dakota, Wisconsin, Colorado, Idaho, 
Illinois, Indiana, Kansas, Missouri, Montana, Nebraska, 
Washington, and Wyoming. 
    Presented to the governor April 24, 1990 
    Signed by the governor April 24, 1990, 9:35 p.m.