AGO Opinion 97007
Nebraska Bank Holding Company Act of 1995; De Novo Formation of a National Bank by an Out-of-State Bank Holding Company
DATE: January 13, 1997
SUBJECT: Nebraska Bank Holding Company Act of 1995; De Novo Formation of a National Bank by an Out-of-State Bank Holding Company
REQUESTED BY: James A. Hansen, Director
Department of Banking and Finance
WRITTEN BY: Don Stenberg, Attorney General
Fredrick F. Neid, Assistant Attorney General
This is in response to the request of the Department of
Banking and Finance for an opinion of the Attorney General
regarding application of provisions of the Nebraska Bank Holding
Company Act of 1995, Neb. Rev. Stat. §§ 8-908 - 8-917 (Cum. Supp.
1996) ("Nebraska Act") to formation and acquisition of banks by
out-of-state bank holding companies. Two specific questions are
asked. First, whether the Nebraska Act prohibits an out-of-state
bank holding company from forming and acquiring a new bank in this
state. The second question consists of a request for a "ruling"
that prior informal opinions issued by this Office "are no longer
applicable as a result of the repeal of the laws" which were
addressed by the opinions.
It is our opinion that the "charter age requirements" of Neb.
Rev. Stat. § 8-911 (Cum. Supp. 1996) do not prohibit the formation
of a de novo national bank in Nebraska by an out-of-state bank
holding company. We further conclude that the application of prior
opinions of this Office, Op. Att'y General No. 87102 (October 7,
1987) and Inf. Op. Att'y General (September 12, 1988) is limited to
the provisions of the Nebraska Banking Holding Company Act of
You have related that an out-of-state bank holding company has
made application to federal banking authorities, the Comptroller of
the Currency and the Board of Governors of the Federal Reserve
System, to establish a newly chartered national bank in Nebraska.
The Federal Reserve Board is the approving authority for expansion
by bank holding companies into another state under the Bank Holding
Act of 1956, §§ 2-105, 12 U.S.C.A. §§ 1841-1850 ("Federal Act").
The Federal Act, administered by the Federal Reserve Board,
requires a bank holding company to apply for approval for certain
expansion activities across state lines. 12 U.S.C.A. §§ 1842
(d)(1)(A) and (B) and 1842 (d)(2)(A) and (B).
The question whether provisions of the Nebraska Bank Holding
Act of 1963 prohibited out-of-state bank holding companies from
forming or establishing a newly chartered national bank was
previously addressed by this Office. In Op. Att'y General, No.
87102 (October 7, 1987) and Inf. Op. Att'y General (September 12,
1988) this Office concluded that charter age requirements set forth
in Neb. Rev. Stat. § 8-903 applied only to the acquisition of an
existing bank and did not prohibit the formation of a new bank by
an out-of-state bank holding company. Section 8-903 prohibited
a bank holding company from acquiring any bank which has been
chartered for less than five years. The requests for the opinions
were in part due to application by Norwest Corporation, an out-of-
state bank holding company, to establish a de novo bank in
Nebraska. The application of Norwest Corporation was approved by
the Federal Reserve Board in 1988. Reportedly, other de novo banks
have been formed by bank holding companies under the Nebraska Bank
Holding Company Act of 1963 prior to its appeal.
The Federal Act was amended by passage of the Riegle-Neal
Banking and Branching Efficiency Act of 1994. (Pub. L. No. 103-
328, 108 Stat. 2338 (1994) (effective date Sept. 29, 1995).
Following amendment, the Federal Act authorizes the Federal Reserve
Board to approve an application by a bank holding company to expand
into another state without regard to whether the transaction is
prohibited by state law. 12 U.S.C.A. § 1842(d)(1)(A) (1996).
However, the Federal Act as amended further provides:
Notwithstanding subparagraph (A), the Board may not
approve an application pursuant to such sub-paragraph
that would have the effect of permitting an out-of-State
bank holding company to acquire a bank in a host State
that has not been in existence for the minimum period of
time, if any, specified in the statutory law of the host
12 U.S.C. A § 1842(d)(1)(D)(i). (emphasis added).
The Nebraska Act was enacted in 1995 by passage of LB 384 in
response to amendment of the Federal Act by the Riegle-Neal Act of
1994. Provisions of the new Nebraska Act establish "charter age
requirements" for acquisition of banks in this state by an out-of-
state bank holding company. Neb. Rev. Stat. § 8-910 (Cum. Supp.
1996) in pertinent part states:
(1) It shall be unlawful, except as provided in this
(a) Any action to be taken that causes any company
to become a bank holding company;
(b) Any action to be taken that causes a bank to
become a subsidiary of a bank holding company;
(c) Any bank holding company to acquire direct or
indirect ownership or control of any voting shares
of any bank if, after such acquisition, such
company will directly or indirectly own or control
more than twenty-five percent of the voting shares
of such bank;
(d) Any bank holding company or subsidiary thereof,
other than a bank, to acquire all or substantially
all of the assets of a bank; or
(e) Any bank holding company to merge or
consolidate with any other bank holding company.
(2) The prohibition set forth in subsection (1) of this
section shall not apply if:
(f) The bank holding company, if an out-of-state
bank holding company, complies with the limitations
of section 8-911. . . .
(Emphasis added). Neb. Rev. Stat. § 8-911 (Cum. Supp. 1996)
Upon compliance with all other provisions of the Nebraska
Bank Holding Company Act of 1995 and any other applicable
law, an out-of-state bank holding company may acquire a
bank or banks under the act only if the bank or banks to
be acquired have been chartered for five years or more.
In determining whether a bank has been chartered for five
years or more, a bank that has been chartered solely for
the purpose of, and does not open for business prior to,
acquiring all or substantially all the assets of an
existing bank shall be deemed to have been in existence
for the same period of time as the bank to be acquired.
At the outset, it is important to acknowledge that the de novo
bank to be formed by the out-of-state bank holding company is a
national bank. National Banks are quasi-public institutions
established by, and subject to, regulatory laws of Congress.
Anderson v. Cronkleton, 32 F.2d 170 (8th Cir. 1929). And, national
banks are subject to the paramount authority of the United States.
Dovey v. State, 116 Neb. 533, 218 N.W. 390 (1928). The parameters
of state action or authority over national banks have been
described by the U.S. Supreme Court. In Mercantile Nat. Bank v.
Langdeau, 371 U.S. 551, 83 S.Ct. 520, 9 L.Ed.2d 523 (1962), the
Supreme Court stated:
National banks are federal instrumentalities, and the
power of Congress over them is extensive. National Banks
are quasi-public institutions, and for the purposes for
which they are instituted are national in their
character, and, within constitutional limits, are subject
to the control of Congress and are not to be interfered
by state legislative or judicial action, except so far as
the law-making power of the Government may permit. Van
Reed v. People's Nat. Bank, 198 U.S. 554, 557, 25 S.Ct.
775, 49 L.Ed. 1161, 1162.
Id. 83 S.Ct. at 558-559, 83 S.Ct. at 522 (emphasis added).
Further, it is well established that the Board of Governors of
the Federal Reserve System has exclusive jurisdiction to interpret
and apply the Federal Act. American Ins. Ass'n v. Clarke, 865 F.2d
278 (D.C. Cir. 1988). See generally Whitney Nat'l Bank v. Bank of
New Orleans & Trust Co., 379 U.S. 411, 419, 85 S.Ct. 551, 556-57,
13 L.Ed.2d 386 (1965). Thus, State law has application to
formation of a de novo national bank by an out-of-state bank
holding company only to the extent deference is accorded by the
Federal Act. The Federal Act defers to state laws that require
that an acquired institution be in existence for a specified period
of time before an out-of-state bank holding company may acquire it.
12 U.S.C.A. § 1842(d) (as amended). Accordingly, the charter age
requirements of the Nebraska Act are appropriately looked to in
acquisition transactions by out-of-state bank holding companies.
There is sufficient similarity between the provisions of the
repealed statutes and the new provisions of the Nebraska Act that
our conclusion remains the same. That is, that "charter age
requirements" of section 8-911 prohibit the acquisition of a bank
that has been in existence for a period of less than five years but
do not include any specific or express prohibition that prevents a
bank holding company from forming a new bank unless the new bank is
formed only for the purpose of acquiring all the assets of an
The similarity of the repealed and new provisions is reflected
in the statutory provisions set forth below:
1. Act of 1963: A bank holding company, including an
out-of-state bank holding company,
may not acquire any bank which has
been chartered by this state or the
Comptroller of the Currency of the
United States for less than five
years . . . .Section 8-903.
2. Act of 1995: [a]n out-of-state bank holding company
may acquire a bank or banks under the act
only if the bank or banks to be acquired
have been chartered for five years or
more. Section 8-911.
3. Act of 1963: A bank holding company acquires an
institution or which forms a bank which
acquires an institution. . . . Section 8-
4. Act of 1995: A bank holding company which acquired an
institution or which formed a bank which
acquired an institution. . . . Section 8-
As we previously pointed out, the statutory language reflects
that the Legislature recognized the difference between the
formation and acquisition of a bank. Accordingly, the meaning of
the term acquisition is limited to the act of acquiring an existing
bank rather than also to the formation of a new bank to accord
legislative deference to the distinction between formation and
acquisition. Further, Neb. Rev. Stat. § 8-910(5) (Cum. Supp. 1996)
provides that a bank holding company which acquired an institution
or which formed a bank which acquired an institution shall not have
the acquisition count against deposit limitations set forth in the
statute. This statutory language is further indicia that the
terms, acquisition and formation or variations thereof, are not
Further, it is clear that the charter age requirements of
section 8-911 are applicable to the formation of a de novo bank if
the new bank is established only for the purpose of acquiring the
assets of an existing bank. In relevant part, section 8-911
. . . In determining whether a bank has been chartered
for five years or more, a bank that has been chartered
solely for the purpose, and does not open for business
prior to, acquiring all or substantially all of the
assets of an existing bank shall have been deemed to have
been in existence for the same period of time as the bank
to be acquired.
It is a well established tenet of statutory construction that
it is not within the province of a court to read a meaning into a
statute that is not warranted by the statutory language. Wendt v.
Cavalier Ins. Corp., 197 Neb. 622, 250 N.W.2d 243 (1977); Ledwith
v. Bankers Life Ins. Co., 156 Neb. 107, 54 N.W.2d 409 (1952).
Further, a court may not add language to plain terms of statutes to
restrict or extend their meaning. Wittler v. Baumgartner, 180 Neb.
446, 144 N.W.2d 62 (1966). In application of these principles, we
believe the charter age restrictions of section 8-911 have limited
application to de novo bank formations only if the new bank is
chartered for the purpose of acquiring all the assets of an
To the extent there is any ambiguity or lack of clarity in the
provisions of an act, legislative history may be resorted to for
purposes of ascertaining legislative intent. Legislative intent is
the cardinal rule in statutory construction to ascertain the
meaning of the provisions of an act. County of Lancaster v. Maser,
224 Neb. 566, 400 N.W.2d 238 (1987); Iske v. Papio Nat. Resources
Dist., 218 Neb. 39, 352 N.W.2d 172 (1984). And, a statute is open
to construction where the language used requires interpretation or
may reasonably be considered ambiguous. Omaha P.P. Dist. v.
Nebraska State Tax Commissioner, 210 Neb. 309, 314 N.W.2d 246
The legislative history of the Riegle-Neal Act of 1994
reflects that its purposes include reducing interstate banking
barriers to loosen geographical constraints on banking. By
mandating that all states allow interstate banking, the Riegle-Neal
[g]ive banks an opportunity to structure themselves more
efficiently, eliminate duplicative functions and reduce
purposes. Second, it will tend to promote a safer and
sounder banking system. Third, it will promote customer
convenience. Fourth, it will encourage competition by
making it easier for institutions to enter markets that
are not now fully competitive.
H.R. 448, 103rd Cong., 2nd Sess. (1994).
Another important aspect of the Riegle-Neal Act is its intent
to preempt any state laws which have the effect of discriminating
against out-of-state bank, out-of-state bank holding companies, or
their subsidiaries. While the applicability of state anti-trust
law is preserved, the legislative history indicates that other
state laws which discriminate against out-of-state bank holding
companies are overridden. Id.
The legislative history of LB 384 reflects that the Nebraska
Act was enacted as a direct response to passage of the Riegle-Neal
Act and to conform Nebraska law with provisions of the Federal Act
as amended by Riegle-Neal. The Committee Report reflects that the
charter age requirements of existing law were to be retained. The
Summary of purpose and/or changes of LB 615 includes the following
LB 615 would (with section numbers in parentheses): . .
.(4) provide that an out-of-state BHC may acquire a bank
or banks only if the bank or banks to be acquired have
been chartered for at least five years (similar to
current provisions in section 8-903).
Committee Statement, p. 2, LB 615 (Hr'g Date February 6, 1995)
Further, the testimony and statements of record at the
committee hearing generally reflect that a purpose of the bill is
to retain existing structure requirements except those
discriminatory to out-of-state bank holding companies. Committee
Hearing on LB 615, 94 Session Legis. 1995, (Feb. 6, 1995)
(Statements of Senator David Landis, Principal Introducer, and
James A. Hansen, Director of the Department of Banking and
It is noted that the legislative history of the Nebraska Act
includes information and comment that the charter age restrictions
are intended to preclude de novo entry by out-of-state bank holding
companies. However, this effect is not clearly reflected in the
legislative record nor expressly stated in the provisions of the
Nebraska Act. We believe the legislative intent expressed in the
legislative record is more supportive of the conclusion that the
charter age restrictions do not apply to de novo bank formations
unless the new bank is formed solely to acquire assets of existing
institutions. To conclude otherwise would be anomalous in view of
the fact that an important purpose of the Bill was to preserve
Fredrick F. Neid
Assistant Attorney General