BILL ANALYSIS
C.S.H.B. 1020
By: Oliveira (Sponsor)
Economic Development
05-22-95
Senate Committee Report (Substituted)
BACKGROUND
The Texas Savings Bank Act (Article 489e, V.T.C.S.) was passed
during the 73rd Legislature. The bill created a new type of
financial institution, the state-chartered savings bank. The new
institution is required to invest at least 15 percent in local
community loans as well as local-service-area deposits in
residential mortgage loans, home improvement loans, interim
residential construction loans, home improvement loans, and
mortgage-backed securities secured by loans from the savings bank's
local service area. There has been some difficulty in implementing
the Act due to difficulties in interpreting the Act in conjunction
with other statutes like the Savings and Loan Act.
PURPOSE
As proposed, C.S.H.B. 1020 provides technical and clarifying
amendments to the Texas Savings Bank Act which was passed during
the 73rd Legislature. These revisions are aimed at clarifying
hearings, appeals, and confidentiality procedures, the definition
of a financial institution, and the roles local supervision and the
Finance Commission of Texas play in regulating financial
institutions. The bill also amends other sections of the Texas
Savings Bank Act to alleviate confusion between other statutes and
the Texas Savings Bank Act.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill grants rulemaking
authority to the Finance Commission of Texas under SECTION 9
(Section 7.01(b), Article 489e, V.T.C.S.) and to the savings and
loan commissioner under SECTION 16 of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 1.03(1), Article 489e, V.T.C.S. (Texas
Savings Bank Act), to redefine "administrative procedure act."
SECTION 2. Amends Section 2.05(a), Article 489e, V.T.C.S., to
require an application to incorporate a savings bank (application)
to include, in part, financial information about the officers
required by the rules of the savings and loan commissioner
(commissioner) and the Finance Commission of Texas (finance
commission).
SECTION 3. Amends Section 2.10, Article 489e, V.T.C.S., by amending
Subsection (a) and adding Subsection (c), as follows:
(a) Sets forth the conditions under which a hearing on an
application to incorporate is not required.
(c) Requires the commissioner, not later than the 30th day
after the date of the completion of the hearing, to enter a
final order approving or denying the application. Authorizes
an applicant to appeal a final order, and sets forth
requirements for an appeal. Provides that filing an appeal
under this section does not stay an order of the commissioner.
SECTION 4. Amends Chapter 2, Article 489e, V.T.C.S., by adding
Section 2.15, as follows:
Sec. 2.15. PREFERENCE FOR LOCAL CONTROL. Authorizes the
commissioner, if more than one application to incorporate a
new savings bank or establish an additional office of an
existing savings bank in the same community is before the
commissioner at the same time, to give additional weight to
the application having the greater degree of control vested in
or held by residents of the community.
SECTION 5. Amends Sections 3.07(c) and (g), Article 489e, V.T.C.S.,
as follows:
(c) Authorizes the commissioner to waive the requirement that
a notice of an application be published or permit delay of the
publication if the commissioner determines that the waiver or
delay is in the public interest. Provides that the
information that would have been contained in a published
notice that the commissioner waived becomes public information
under Chapter 552, Government Code, on the 34th day after the
date the application is filed.
(g) Requires the commissioner, not later than the 60th day
after the date the application is filed, to approve the
application without a hearing or notify the proposed
transferee in writing of the commissioner's intent to deny the
application based on the requirements of this section and the
grounds for denial. Authorizes the proposed transferee to
file a written request for a hearing on the application before
the 31st day after the date the notice of intent is mailed to
the proposed transferee. Authorizes the commissioner to enter
an order, to be final and nonappealable, denying the
application if a hearing is not timely requested. Requires
the commissioner to issue public notice of the application if
the proposed transferee requests a hearing, rather than when
an application is complete. Requires the commissioner, after
the hearing, to enter a final order approving or denying the
application. Deletes a provision relating to a hearing that
is not required.
SECTION 6. Amends Section 4.02, Article 489e, V.T.C.S., as follows:
(a) Created from existing text.
(b) Provides that an audit under this section is not required
if the savings bank received at its most recent examination a
composite rating of 1 or 2 on the CAMEL financial institution
rating scale, or had at the beginning of its current fiscal
year consolidated assets of $500 million or less.
SECTION 7. Amends Section 4.08, Article 489e, V.T.C.S., as
follows:
(a) Requires the commissioner and any other employee of the
Savings and Loan Department of Texas (department) appointed or
acting under this Act, except as provided by this Act or rules
under this Act, to keep confidential any information regarding
a financial institution or a shareholder, participant,
officer, director, manager, affiliate, or service provider of
a financial institution, other than a public statement or a
public portion of a call report or profit and loss statement.
Provides that all related files and records of the department
are confidential and not to be disclosed. Requires a person
who wilfully makes a false official report on the condition of
a financial institution, rather than a savings bank, to be
removed from office or further employment with the department.
Deletes language regarding information obtained through an
examination or an individual's position.
(b)-(e) Created from existing text.
(f) Requires confidential information provided to a financial
institution or an affiliate or service provider of the
institution, to be the confidential property of the
department. Prohibits the information from being disclosed by
the recipient, or by an officer, director, manager, employee,
or agent of the recipient, to a person not officially
connected to the recipient through certain relationships,
unless approved in writing by the commissioner or authorized
by rules under this section.
(g) Requires the discovery of confidential information under
legal process from a person subject to this section to comply
with rules under this Act. Authorizes the rules to restrict
release of confidential information and to require that a
protective order be issued before release of confidential
information.
(h) Authorizes the commissioner to refuse the release any
information or record in the custody of the department, if the
commissioner believes release of the information or record
might jeopardize an investigation of possibly unlawful
activities.
SECTION 8. Amends Section 6.03(a), Article 489e, V.T.C.S., to
delete a person who is not a United States citizen from the list of
persons exempted from the membership of the board of directors of
a savings bank.
SECTION 9. Amends Section 7.01, Article 489e, V.T.C.S., as follows:
(a) Created from existing text.
(b) Authorizes the finance commission, by rule, to expand
savings bank powers to accommodate or take advantage of
changing technology and to enable state savings banks to
respond to the needs of and convenience demanded by consumers
and businesses through on-premises and off-premises
operations, with a specific exception. Requires the finance
commission, in adopting rules under this subsection, to
consider the need to promote a stable financial institution
environment; provide the public with convenient, safe, and
competitive financial services; and allow for economic
development within the state.
SECTION 10. Amends Section 7.05, Article 489e, V.T.C.S., as
follows:
(a) Authorizes a savings bank, without prior approval of the
commissioner, to invest not more than an amount equal to its
regulatory capital in real estate, buildings, related
facilities, and in leasehold improvements for rented
facilities for use by the savings bank and its banking
premises.
(b) Authorizes the finance commission by rule adopted under
Section 7.01(b) of this Act to approve a new form of savings
bank facility, or authorize the commissioner to approve such
a facility if the commissioner does not have a significant
supervisory or regulatory concern regarding the proposed
facility.
SECTION 11. Amends Section 7.09, Article 489e, V.T.C.S., to
authorize a savings bank to lend and invest not more than 40,
rather than 15, percent of its total assets in commercial loans.
SECTION 12. Amends Section 7.10(b), Article 489e, V.T.C.S., to
exclude, from the prohibition against the investment of a savings
bank in a subsidiary corporation if its aggregate investments in
subsidiaries would exceed 10 percent of its total assets, amounts
invested in a subsidiary corporation the activities of which are
limited to activities that could be conducted directly by the
parent savings bank.
SECTION 13. Amends Section 8.02, Article 489e, V.T.C.S., to
require a savings bank to maintain a minimum of 10 percent of an
amount equal to its average daily deposits for the most recently
completed calendar quarter in cash, or other readily marketable
investments as allowed by rules adopted by the commissioner and the
finance commission.
SECTION 14. Amends Section 11.07, Article 489e, V.T.C.S., by
adding Subsection (f), to authorize a foreign savings and loan
association to merge with a domestic savings bank under this
section as if the foreign savings and loan association were a
foreign savings bank. Requires the commissioner, if the surviving
institution is the foreign savings and loan association, to issue
and deliver to the foreign savings and loan association a
certificate of authority under Subsection (e) of this section to do
business in this state. Defines "foreign savings and loan
association."
SECTION 15. Amends Section 12.12(a), Article 489e, V.T.C.S., to
provide that a reference in statutes of this state to a
corporation, association, or other organization incorporated or
organized under Article 852a, V.T.C.S. (Texas Savings and Loan
Act), is also a reference to a savings bank, as defined in this
Act.
SECTION 16. (a) Makes application of this Act prospective.
(b) Requires the savings and loan commissioner, by rule, to
prescribe the manner and period in which a savings bank shall
come into compliance with Section 7.05 or 8.02, Article 489e,
V.T.C.S., as amended by this Act.
SECTION 17. Emergency clause.
Effective date: upon passage.