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.