By: Brimer H.B. No. 120
73R1564 LJD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a requirement that a bank provide services within its
1-3 local area.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter V, The Texas Banking Code (Article
1-6 342-501 et seq., Vernon's Texas Civil Statutes), is amended by
1-7 adding Article 14 to read as follows:
1-8 Art. 14. SERVICES IN LOCAL AREA. (a) A state bank or
1-9 national bank domiciled in this state shall loan at least 90
1-10 percent of the money that it loans to:
1-11 (1) individuals residing in the bank's local area;
1-12 (2) businesses having their principal places of
1-13 business in the bank's local area; and
1-14 (3) other entities conducting the majority of their
1-15 affairs in the bank's local area.
1-16 (b) A state bank or national bank domiciled in this state
1-17 shall make full banking services reasonably available within the
1-18 bank's local area. For the purposes of this section, banking
1-19 services include accepting time and demand deposits, making loans,
1-20 acting as a fiscal agent or transfer agent, and acting as a trustee
1-21 or other fiduciary. This section does not require a bank to
1-22 provide a service that it has never provided. The Banking
1-23 Commissioner, on complaint of any person, shall hold a hearing to
1-24 determine whether the bank is violating this section. On a
2-1 determination that a bank is violating this section, the Banking
2-2 Commissioner shall order the bank ineligible to act as a state
2-3 depository. The bank subject to the order becomes eligible to act
2-4 as a state depository only when it establishes to the Banking
2-5 Commissioner's satisfaction that it complies with this section and
2-6 the Banking Commissioner rescinds the order.
2-7 (c) A bank's local area is its local community, as
2-8 delineated under federal regulations adopted under the Community
2-9 Reinvestment Act of 1977 (12 U.S.C. Sec. 2901 et seq.), except that
2-10 if the bank is not subject to those regulations or if the bank's
2-11 local community is determined by its effective lending territory,
2-12 the bank's local area for the purposes of this article is the area
2-13 that would be the bank's local community under those regulations
2-14 excluding the regulations relating to effective lending territory.
2-15 Each bank shall file with the Banking Commissioner a statement of
2-16 its local area in the manner and form prescribed by the Banking
2-17 Commissioner.
2-18 (d) If a bank cannot find sufficient satisfactory borrowers
2-19 in its local area to comply with Section (a) of this article, the
2-20 bank may apply to the Banking Section for an exception. The
2-21 application must be in the form prescribed by the Banking Section
2-22 and must be accompanied by evidence establishing the need for the
2-23 exception. If the Banking Section determines that the exception is
2-24 warranted, the Banking Section shall grant the exception and
2-25 specify the amount of money subject to the exception. The bank may
2-26 invest the money subject to the exception only in obligations of,
2-27 or guaranteed by, the United States, this state, or an agency of
3-1 the United States or this state. The obligations must mature not
3-2 more than one year after the date of their issuance. The Banking
3-3 Section shall report each exception to the lieutenant governor and
3-4 speaker of the house of representatives within 30 days after the
3-5 date it grants the exception.
3-6 (e) During January of each year, each state bank and each
3-7 national bank domiciled in this state shall submit to the Banking
3-8 Commissioner a report, in a form prescribed by the Banking
3-9 Commissioner, on its compliance with this article during the
3-10 preceding calendar year. Before March 1 the Banking Commissioner
3-11 shall prepare a general summary of the reports and submit the
3-12 summary and copies of the reports to the lieutenant governor and
3-13 speaker of the house of representatives.
3-14 (f) Article 12, Chapter IV, of this code applies to a
3-15 national bank domiciled in this state that violates this article,
3-16 or an officer, director, or employee of such a bank who violates
3-17 this article, as if the bank were a state bank.
3-18 SECTION 2. Section 404.021, Government Code, is amended by
3-19 adding Subsection (d) to read as follows:
3-20 (d) A bank is not eligible to be a state depository if an
3-21 order of the banking commissioner under Section (b), Article 14,
3-22 Chapter V, The Texas Banking Code (Article 342-514, Vernon's Texas
3-23 Civil Statutes), is in effect against a bank. If such an order is
3-24 issued against a bank that has been previously designated as a
3-25 state depository, the treasurer shall withdraw state funds from the
3-26 bank, except that the treasurer is not required to withdraw funds
3-27 at a time or in a manner that will result in loss to the state.
4-1 The treasurer may maintain state funds on deposit in a bank subject
4-2 to such an order if the banking commissioner informs the treasurer
4-3 that the bank is making a bona fide effort to correct the situation
4-4 on which the order is grounded.
4-5 SECTION 3. This Act applies only to a loan made or service
4-6 provided on or after the effective date of this Act. A loan made
4-7 or service provided before the effective date of this Act is
4-8 governed by the law in effect when the loan was made or service was
4-9 provided, and that law is continued in effect for that purpose.
4-10 SECTION 4. The first report required under Section (e),
4-11 Article 14, Chapter V, The Texas Banking Code (Article 342-514,
4-12 Vernon's Texas Civil Statutes), as added by this Act, is due during
4-13 January 1995.
4-14 SECTION 5. This Act takes effect January 1, 1994.
4-15 SECTION 6. The importance of this legislation and the
4-16 crowded condition of the calendars in both houses create an
4-17 emergency and an imperative public necessity that the
4-18 constitutional rule requiring bills to be read on three several
4-19 days in each house be suspended, and this rule is hereby suspended.