BILL ANALYSIS


                                                         H.B. 889
                                            By: Marchant (Turner)
                                                    State Affairs
                                                          4-10-95
                                Senate Committee Report (Amended)
BACKGROUND

The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 authorizes interstate banking throughout the U.S. within one
year of enactment.  At the same time, however, it creates
interstate branching unless a state chooses to opt out before June
1, 1997.

Under Texas law, out-of-state holding companies may acquire banks
in Texas.  Thus, interstate banking is already present in Texas. 
However, the current law ensures that a Texas bank charter is
maintained and managed under a Texas board.  Any banking
organization choosing to come to Texas may do so providing that
they maintain a Texas charter.  Under interstate branching, those
same out-of-state bank holding companies could simply convert their
operations in Texas to branches of their operations elsewhere. 
This may eliminate local boards of directors and reduce local
input.

If permitted, branches could be acquired in a variety of ways: 
merger with existing banks, purchase of existing facilities, or de
novo chartering. 

PURPOSE

As engrossed, H.B. 889 prohibits merger transactions involving out-of-state banks and sets forth prohibitions on interstate branches.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. DEFINITIONS.  Defines "branch," "domestic bank," and
"out-of-state bank."

SECTION 2. INTERSTATE MERGERS AND BRANCHES PROHIBITED.  Prohibits
a domestic bank from engaging in a merger transaction involving an
out-of-state bank pursuant to Section 44(a)(2), Federal Deposit
Insurance Act; an out-of-state bank from establishing a de novo
branch in this state or acquiring a branch in this state by
purchase or other means; and a domestic bank from establishing a de
novo branch in a state other than this state or acquire a branch in
a state other than this state by purchase or other means.

SECTION 3. Requires this Act to expire September 2, 1999.

SECTION 4. Emergency clause.
           Effective date: upon passage.