74(R) HB 1543 Senate Committee Report

BILL ANALYSIS

H.B. 1543
By: Marchant (Montford)
Economic Development
5-12-95
Senate Committee Report (Amended)
BACKGROUND

In 1993, the Texas Banking Commissioner, the Independent Bankers
Association of Texas, and the Texas Bankers Association, formed the
Texas Banking Code Revision Task Force.

The task force was charged with four main guidelines: (1) to
promote the dual banking system by ensuring that the proposed Texas
Banking Act possesses attributes that make being a state-chartered
bank in Texas at least as if not more attractive than a national
bank charter, (2) to preserve and enhance the competitive parity
between state banks and other forms of financial institutions in
Texas, (3) to reduce the regulatory burden on state banks to the
extent possible consistent with safety and sounding, and (4) to
provide the flexibility in the proposed Texas Banking Act that is
necessary to permit adaptability in the future in response to the
continuing evolution of federal law and modern banking practice.

The Texas Banking Code has been reorganized into the Texas Banking
Act with an emphasis on clarity, adaptability, convenience, and
continuity.

PURPOSE

As proposed, H.B. 1543 creates the Texas Banking Act which
regulates banking and entities under the jurisdiction of state
banking regulatory officials; providing administrative and criminal
penalties.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the Presiding Officer of the Finance Commission in SECTION 1
(Sections 1.010(1)) and SECTIONS 14 and 18 (Sections 5 and 22,
Article 350, V.T.C.S.) and to the Finance Commission in SECTIONS 1
and 2(j) (Sections 1.002(c), 1.012(a), 1.013(a) and (b), 1.014,
2.009(b), 3.007(b), 3.010(e), 3.201(b) and (c), 3.203, 5.101(i),
5.201(b), and 9.002(b)) of this Act.

SECTION BY SECTION ANALYSIS

SECTION 1. Enacts the Texas Banking Act, as follows:

CHAPTER 1. DEFINITIONS; FINANCE COMMISSION;
SAVINGS AND LOAN DEPARTMENT

SUBCHAPTER A. GENERAL PROVISIONS; FINANCE COMMISSION

Sec. 1.001. SHORT TITLE: Texas Banking Act.

Sec. 1.002. DEFINITIONS. (a) Defines "affiliate," "bank,"
"bank holding company," "banking," "banking association,"
"banking commissioner," "board," "branch," "capital,"
"certified surplus," "company," "conservator," "control,"
"department," "deposit," "depository institution," "discount,"
"drive-in facility," "electronic terminal," "equity capital,"
"equity security," "federal savings association," "federal
savings bank," "finance commission," "financial institution,"
"foreign bank agency," "foreign bank corporation," "full
liability participant," "hazardous condition," "home office,"
"insolvent," "investment security," "limited banking
association," "loans and extensions of credit," "manager,"
"managing participant," "national bank," "officer," "operating
subsidiary," "participant," "participant-transferee,"
"participation agreement," "participation shares," "person,"
"principal shareholder," "regulatory accounting principles,"
"savings association," "savings bank," "shareholder,"
"shares," "state bank," "state savings bank," "subsidiary,"
"supervisor," "surplus," "unauthorized activity," "undivided
profits," "voting security."

(b) Requires the definitions to be liberally construed to
accomplish the purposes of this act.

(c) Authorizes the finance commission, by rule, to adopt
other definitions to accomplish the purposes of this act.
Sec. 1.003. FINANCE COMMISSION. (a) Provides that the
Finance Commission of Texas (commission) is composed of nine
members appointed by the governor with the advice and consent
of the senate.

(b) Sets forth the tenure of the members of the commission
(members).

(d) Requires the members to take an oath of office.

Sec. 1.004. QUALIFICATIONS OF MEMBERS. (a) Requires a
member to be a resident and registered voter of this state.
Provides that not more than two members may be residents of
the same state senatorial district.

(b) Requires two members of the commission to be banking
executives and two members of the commission to be savings
executives.

(c) Requires the other five members to be selected by the
governor on the basis of recognized business ability.
Prohibits the members from holding certain executive banking
offices. Requires at least one member to be a certified
public accountant.

(d) Sets forth certain business relationships in which
members are prohibited from engaging.

(e) Defines "banking executive" and "savings executive."

(f) Establishes the experience requirements for Subsection
(e).

Sec. 1.005. REMOVAL OF MEMBERS; VACANCIES. (a) Establishes
criteria which are grounds for removal from the commission.

(b) Requires the governor to appoint a qualified person to
fill a vacancy on the commission.

(c) Requires the executive director of the commission to
notify the presiding officer of the commission of a ground
for removal if the director has knowledge that a potential
ground exists. Requires the officer to notify the governor
of the potential ground.

(d) Provides that the validity of an action of the
commission is not affected by the fact that it was taken
when a ground for removal of a member existed.
Sec. 1.006. EXPENSES AND COMPENSATION OF MEMBERS. Provides
that a member is entitled to reimbursement for reasonable and
necessary expenses incidental to travel incurred in connection
with the performance of official duties and per diem as set by
legislative appropriation for each day that the member engages
in the business of the commission.

Sec. 1.007. DISQUALIFICATION OF MEMBERS. Prohibits a member
from acting or participating in the portion of a commission
meeting during which the matter under consideration
specifically relates to an entity of which the member or
member's spouse is an officer, director, stockholder,
shareholder, manager, participant, participant-transferee,
owner, or otherwise financially interested.

Sec. 1.008. MEETINGS. (a) Requires the commission to hold
at least six regular public meetings during each calendar year
on dates set by the commission. Authorizes the presiding
officer or three members of the commission to call special
public meetings of the commission. Provides that a majority
of the members constitutes a quorum for the purpose of
transacting any business coming before the commission.

(b) Authorizes the commission to hold an open or closed
meeting by telephone conference call under certain
conditions.

Sec. 1.009. OPEN MEETINGS; ADMINISTRATIVE PROCEDURE. (a)
Provides that the commission is subject to Chapters 551 and
2001, Government Code.

(b) Provides that the commission is not required to conduct
an open meeting to deliberate a matter made confidential by
law.

Sec. 1.010. PRESIDING OFFICER. Requires the governor to
appoint a member of the commission as presiding officer.
Provides that the presiding officer serves at the will of the
governor. Requires the presiding officer to preside at all
public meetings of the commission and provide for the keeping
of minutes of the proceedings of those meetings and is
entitled to vote on all matters. Establishes the powers and
rulemaking authority granted to the presiding officer.

Sec. 1.011. FINANCE COMMISSION STAFF; EXPENSES. (a)
Authorizes the commission to designate the banking
commissioner (commissioner), the savings and loan commissioner
(S&L commissioner), the consumer credit commissioner (CC
commissioner), or another person to serve full- or part-time
as executive director of the commission to facilitate its
oversight of the departments. Provides that the executive
director serves at the pleasure of the commission, is
responsible for staff supervision, support, and coordination,
and may be separately compensated for those duties. Sets
forth the required duties of the executive director.

(b) Authorizes the commission to employ a hearings officer
and an internal auditor to provide services to and
facilitate commission oversight and control over the
departments. Provides that a hearings officer employed
under this section is considered to be an employee of each
agency for which hearing services are provided and whose
only duty is to preside over matters related to contested
cases before the agency.

(c) Provides that the executive director, the hearings
officer, the internal auditor, and any other staff employed
under this section are not subject to direction by the
departments.

(d) Requires the commission to reduce administrative costs
through the sharing of support staff, equipment, and
facilities among the departments to the extent that the
sharing contributes to cost efficiency without detracting
from the staff expertise needed for individual areas of
agency responsibility. Authorizes the commission to employ
staff and purchase equipment and facilities to meet these
objectives and fund its activities through appropriations or
as provided by Chapter 771, Government Code.

(e) Requires an interagency agreement regarding shared
staff to provide that the fully allocated cost of each
member of shared staff other than the executive director
will be charged to the departments in proportion to the
amount of time devoted to each agency's business. Requires
the cost of the executive director and the unallocated cost
of operation of the finance commission to be shared by the
departments in proportion to the amount of cash receipts of
each of those agencies.

Sec. 1.012. BANKING RULES. (a) Authorizes the commission to
adopt rules to accomplish the purposes of this Act.

(b) Requires the commission to make certain considerations
in adopting the rules.

(c) Provides that the presence or absence in this Act of a
specific reference to rules regarding a particular subject
does not enlarge or diminish the rulemaking authority
conferred by this section.

Sec. 1.013. SAVINGS ASSOCIATION AND SAVINGS BANK RULES AND
REGULATIONS. (a) Authorizes the commission to adopt rules
applicable to state savings associations or to savings banks
and to authorize state savings associations and savings banks
to invest their funds in any manner permitted for a federal
savings association or federal savings bank domiciled in the
state. Prohibits authority to be construed to confer
authority to abridge, diminish, or limit a right or power
specifically given to savings associations or savings banks by
state law.

(b) Sets forth subjects on which the commission is
authorized to adopt rules.

(c) Prohibits information regarding the financial condition
of a state savings association or savings bank obtained
through examination or otherwise from being disclosed to a
member of the commission, except that the S&L commissioner
may disclose to the commission a file or record pertinent to
a hearing or matter pending before the commission.

Sec. 1.014. CONSUMER CREDIT RULES AND REGULATIONS.
Authorizes the commission to adopt rules necessary for
supervising the consumer credit commissioner and for ensuring
compliance with Title 79, Article 5069-1.01 et seq., V.T.C.S.

Sec. 1.015. SUNSET PROVISION. Provides that the commission
is subject to Chapter 325, Government Code. Provides that
unless continued in existence as provided by that chapter, the
commission is abolished September 1, 2001.

SUBCHAPTER B. SAVINGS AND LOAN DEPARTMENT

Sec. 1.101. SAVINGS AND LOAN COMMISSIONER. Requires the
commission to appoint an S&L commissioner, who serves at the
pleasure of the commission, as an employee of the commission,
and subject to its orders and direction. Provides that the
S&L commissioner is the chief executive officer of the S&L
department. Requires the S&L commissioner to have not less
than seven years' experience in the executive management of a
savings association or savings bank or in savings association
or savings bank supervision. Requires the commission to set
the compensation of the S&L commissioner which shall be paid
from funds of the S&L department.

Sec. 1.102. DEPUTY COMMISSIONERS. Requires the S&L
commissioner to appoint one or more deputy S&L commissioners.
Requires one deputy S&L commissioner to have the
qualifications required of the S&L commissioner. Requires
the deputy S&L commissioner to perform the duties of the S&L
commissioner during the absence or inability of the S&L
commissioner. Requires the S&L commissioner to appoint
savings association and savings bank examiners.

Sec. 1.103. EMPLOYEES OF SAVINGS AND LOAN DEPARTMENT. (a)
Requires the compensation fixed by the commission for each
officer and employee of the S&L department to be paid from the
funds of the S&L department.

(b) Provides that Chapter 654, Government Code, applies to
a position of the S&L department only if it is classified in
salary groups 1-10 under the General Appropriations Act.
Authorizes the legislature to determine the total amount
appropriated to the S&L department, but may not determine
the number or salaries of employees other than the positions
specifically subject to Chapter 654, Government Code, as
provided by this section. Requires the commission to
otherwise determine the number of employees of the S&L
department and the salaries of those employees. Authorizes
the S&L department to use funds appropriated to it for any
purpose to pay the salaries determined by the commission.

Sec. 1.104. OATH OF OFFICE. Requires the S&L commissioner,
each deputy S&L commissioner, examiner, assistant examiner,
conservator, supervisor, and special agent, and each other
officer or employee specified by the S&L commissioner to take
an oath of office.

Sec. 1.105. POWERS AND DUTIES OF COMMISSIONER. Sets forth
the required duties of the S&L commissioner.

Sec. 1.106. FEES, REVENUES, AND EXPENSES; AUDIT. (a)
Requires the S&L commissioner and the commission to establish
reasonable and necessary fees for the administration of
Article 852a, V.T.C.S. (Texas Savings and Loan Act), and
Article 489e, V.T.C.S. (Texas Savings Bank Act) and for the
support of the commission as provided by Section 1.011 of this
Act.

(b) Requires the S&L commissioner to collect all fees,
charges, and revenues required to be paid by state and to
submit to the commissioner a full and complete report of the
receipts and expenditures of the S&L department.

(c) Requires the financial transactions of the S&L
department and the actual costs of any audit to be paid to
the state auditor from the funds of the S&L department.

(d) Requires all money paid to the S&L department to be
deposited in the state treasury to the credit of the S&L
department expense fund, which may be used only for the
expenses incurred by the S&L department and the commission.
Requires all expenses incurred by the S&L department to be
paid only from the fund.

Sec. 1.107. CONFLICTS OF LAW. Provides that if this chapter
conflicts with the Texas Savings and Loan Act or the Texas
Savings Bank Act, this subchapter controls.

Sec. 1.108. CONFLICTS OF INTEREST. (a) Prohibits an officer
or employee of the S&L department from being an officer,
employee, or paid consultant of a trade association in the
savings association industry or the savings bank industry.

(b) Prohibits an officer or employee of the S&L department
from being related within the second degree by affinity or
consanguinity to a person who is an officer, employee, or
paid consultant of a trade association in the savings
association industry or the savings bank industry.

Sec. 1.09. CONSUMER INFORMATION AND COMPLAINTS. (a)
Requires the S&L commissioner to prepare information of
consumer interest describing the regulatory functions of the
S&L department and describing the procedures by which consumer
complaints are filed with and resolved by the S&L department.
Requires the information to be made available to the general
public and appropriate state agencies.

(b) Requires the S&L department to keep an information file
about each complaint relating to a state savings association
or savings bank.

(c) Requires the S&L department to notify the parties to
the complaint of the status of the complaint unless the
notice would jeopardize an undercover investigation if a
written complaint is filed.

Sec. 1.110. SUNSET PROVISION. Subjects the office of the S&L
commissioner and the S&L department to Chapter 325, Government
Code, and unless continued in existence as provided by that
chapter, the office and the department are abolished September
1, 2001.

CHAPTER 2. THE TEXAS DEPARTMENT OF BANKING

SUBCHAPTER A. OPERATION OF THE DEPARTMENT

Sec. 2.001. BANKING COMMISSIONER. Requires the commission to
appoint a commissioner, who serves at the pleasure of the
commission, as an employee of the commission, and subject to
its orders and direction. Requires the commissioner to have
not less than seven years' experience in banking or bank
supervision and provides that the commissioner is the chief
executive officer of the Texas Department of Banking
(department). Requires the commission to set the compensation
of the S&L commissioner which shall be paid from funds of the
S&L department.

Sec. 2.002. EMPLOYEES OF THE BANKING DEPARTMENT. Provides
that Chapter 654, Government Code, applies to a position of
the department only if it is classified in salary groups 1-10
under the General Appropriations Act. Authorizes the
legislature to determine the total amount appropriated to the
department, but may not determine the number or salaries of
employees other than the positions specifically subject to
Chapter 654, Government Code, as provided by this section.
Requires the commission to otherwise determine the number of
employees of the department and the salaries of those
employees. Authorizes the department to use funds
appropriated to it for any purpose to pay the salaries
determined by the commission.

Sec. 2.003. DEPUTY BANKING COMMISSIONER. Requires the
commissioner to appoint a deputy commissioner who must have
the qualifications required of the commissioner. Requires the
deputy commissioner to perform the duties of the commissioner
during the absence or inability of the commissioner.

Sec. 2.004. OATH OF BANKING COMMISSIONER AND OTHERS.
Requires the commissioner, the deputy commissioner, examiner,
assistant examiner, conservator, supervisor, and special
agent, and each other officer or employee specified by the
commissioner to take an oath of office.

Sec. 2.005. DUTIES OF BANKING COMMISSIONER. Sets forth the
required duties of the commissioner.

Sec. 2.006. AUDITS; FEES AND REVENUES. (a) Requires the
actual costs of an audit of the department to be paid to the
state auditor from the funds of the department.

(b) Requires the commission to establish reasonable and
necessary fees for the administration of this Act.

(c) Requires all money paid to the department to be
deposited in the state treasury to the credit of the
department expense fund and may be used only for the
administration of the statutory duties of the department and
the commission under this Act. Requires the expenses
incurred by the department in administering this Act to be
paid only from the fund.

Sec. 2.007. INTERPRETIVE STATEMENTS AND OPINIONS. (a)
Authorizes the commissioner to issue interpretive statements
containing matters of general policy for the guidance of state
banks. Requires the commissioner to file the statements for
publication in the Texas Register. Authorizes the
commissioner to amend or repeal a published interpretive
statement by issuing an amended statement or notice of repeal
of a statement and filing the statement or notice for
publication in the Texas Register. Requires the secretary of
state to publish the filed statements and notices in the Texas
Register and in a designated chapter of Texas Administrative
Code.

(b) Authorizes the commission to issue opinions in response
to specific requests from members of the public or the
banking industry directly or through the deputy commissioner
or the department's attorneys. Establishes the procedures
for distribution of the opinions.

(c) Provides that an interpretive statement or opinion
issued under this section does not have the force of law and
is not a rule for the purposes of Chapter 2001, Government
Code, unless adopted by the commission. Provides that an
interpretive statement or opinion is an administrative
construction of this Act entitled to great weight if the
construction is reasonable and does not conflict with this
Act.

Sec. 2.008. EXAMINATION. (a) Requires the commissioner to
examine each state bank annually or more often as the
commissioner considers necessary to safeguard the interests of
depositors, creditors, shareholders, participants, and
participant-transferees and to enforce this Act. Authorizes
the commissioner to defer an examination for not more than six
months if the commissioner considers the deferment necessary
for the efficient enforcement of this Act. Authorizes the
commissioner to accept examinations of a state bank by a
federal or other governmental agency in lieu of an examination
under this section or to conduct examinations of state bank
jointly with a federal or other governmental agency.

(b) Requires each state bank to pay the cost of
examination, the equitable or proportionate cost of
maintenance and operation of the department, and the cost of
enforcement of this Act through the imposition and
collection of fees established by the commission under
Section 1.012(a)(4) of this Act.

(c) Provides that the performance of data processing,
electronic fund transfers, or other bank services on behalf
of a state bank by a third-party contractor, other than a
national bank, and the activities of a state bank affiliate
are subject to regulation and examination by the
commissioner to the same extent as if the services or
activities were performed by that state bank on its own
premises. Authorizes the commissioner to collect a fee from
an examined contractor or affiliate in connection with each
examination to cover the cost of the examination or to
collect that fee from the state banks using the third-party
contractor. Provides that a state bank affiliate does not
include a company in which ownership or membership is
limited to individuals and conditioned by law on the
existence and maintenance of professional licensing.

(d) Authorizes the commissioner to administer oaths and
examine persons under oath on any subject that the
commissioner considers pertinent to the financial condition
or safety and soundness of the activities of a state bank.

Sec. 2.009. CALL REPORTS. (a) Requires each state bank to
periodically file with the banking commissioner a copy of its
call report stating the bank's financial condition and results
of operation.

(b) Establishes the rules the commission is authorized to
impose.

(c) Provides that a state bank that fails to timely file
its call report as required by this section is subject to a
penalty not exceeding $500 a day to be collected by suit by
the attorney general on behalf of the commissioner.

Sec. 2.010. LIABILITIES. (a) Provides that the
commissioner, each member of the commission, the deputy
commissioner, or an examiner, assistant examiner, supervisor,
conservator, agent, or other officer or employee of the
department is not personally liable for damages arising from
the person's official act or omission, unless the act or
omission is corrupt or malicious.

(b) Requires the attorney general to defend an action
brought against a person because of an official act or
omission under Subsection (a) of this section, regardless of
whether the defendant has terminated service with the
department before the action commences.

Sec. 2.011. OFFENSES. (a) Sets forth the criteria which
constitute commission of an offense by the commissioner or an
officer or employee of the department.

(b) Provides that an offense under this section is a Class
A misdemeanor.

(d) Requires the commissioner to adopt a policy requiring
each employee of the department to notify the commissioner
in writing of an employment relationship described by
Subsection (c) of this section, and to be recused from all
matters affecting the employing bank until the employment
relationship is terminated or the spouse or related person
no longer owns equity securities issued by the bank.
Requires the spouse or related person to divest ownership of
equity securities issued by the bank within one year after
the date the employment relationship ends.

Sec. 2.012. CONFLICT OF INTEREST. (a) Prohibits an officer
or employee of the department from being an officer, employee,
or paid consultant of a trade association in an industry
regulated by the department.

(b) Prohibits an officer or employee of the department from
being related within the second degree by affinity or
consanguinity, as determined under Chapter 573, Government
Code, to a person who is an officer, employee, or paid
consultant of a trade association in an industry regulated
by the department.

(c) Requires an employee to read the conflict of interest
statutes applicable to employees of the department and sign
a notarized affidavit stating that the employee has read
those statutes.

Sec. 2.013. CONSUMER INFORMATION AND COMPLAINTS. (a)
Requires the commissioner to prepare information of consumer
interest describing the regulatory functions of the department
and describing the department's procedures by which consumer
complaints are filed with and resolved by the department.
Requires the commissioner to make the information available to
the general public and appropriate state agencies.

(b) Requires the commissioner to keep an information file
about each complaint filed with the commissioner relating to
any entity regulated by the department.

(c) Requires the commissioner to notify the parties to a
complaint of the status of the complaint unless the notice
would jeopardize an undercover investigation at least as
frequently as quarterly and until final disposition of the
complaint.

Sec. 2.014. SUNSET PROVISION. Makes conforming changes.

SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION

Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED. (a)
Prohibits information obtained directly or indirectly by the
department relative to the financial condition or business
affairs of an institution, a shareholder, affiliate of the
institution, or other portions of call reports and profit and
loss statements and all related files and records of the
department from being disclosed by the commissioner or
employee of the department except as expressly provided
otherwise by this Act or rules adopted under this Act, and the
above information is considered confidential.

(b) Prohibits information obtained by the department which
is considered confidential from being disclosed except as
provided by federal or state law.

Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Prohibits
confidential information from being disclosed to a member of
the commission, and a member of the commission is prohibited
from being given access to the files and records of the
department except that the commissioner may disclose to the
commission information, files, and records pertinent to a
hearing or matter pending before the commission.

Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) Authorizes
the commissioner to disclose to a federal banking regulatory
agency confidential information relative to a financial
institution within the agency's jurisdiction, or an affiliate
or service provider of the financial institution, and may
permit the agency access to files and records or reports
relating to relating to the financial institution or its
affiliate or service provider.

(b) Authorizes the commissioner to disclose or authorize
the release of confidential information to another
department of this state, another state, the United States,
a foreign sovereign state, or any related agency or
instrumentality.

Sec.2.104. OTHER DISCLOSURE PROHIBITED. Prohibits
confidential information released by the department from being
rereleased and doing so is a violation of Section 37.10, Penal
Code.

Sec. 2.105. CIVIL DISCOVERY. Requires discovery of
confidential information from a person subject to this
subchapter pursuant to subpoena or other legal process to
comply with rules adopted under this Act and other applicable
law. Authorizes the rules to restrict release of confidential
information to solely that portion directly relevant to the
legal dispute at issue and to require that a protective order,
in form and under circumstances specified by the rules, be
issued by a court of competent jurisdiction before release of
the confidential information.

Sec. 2.106. INVESTIGATIVE INFORMATION. Authorizes the
commissioner to refuse to release information or records in
the custody of the department, if, in the opinion of the
commissioner, release of the information or records might
jeopardize an ongoing investigation of potentially unlawful
activities.

Sec. 2.107. EMPLOYMENT INFORMATION. Authorizes a person to
provide employment information to a financial institution or
to a person providing employment information to a financial
institution concerning the known or suspected involvement of
a present or former employee, officer, or director in a
violation of any state or federal law, rule, or regulation
that has been reported to appropriate state or federal
authorities. Prohibits the person from being held liable for
providing that information unless the information provided is
false and the person provided the information with disregard
for the truth.

Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a) Sets forth
certain documents a shareholder is prohibited from examining.

CHAPTER 3. POWERS; ORGANIZATION AND
ORGANIZATIONAL CHANGES; CAPITAL AND SURPLUS

SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS

Sec. 3.001. ORGANIZATION AND POWERS OF STATE BANKS. (a)
Authorizes one or more persons to organize a state bank as a
banking association or a limited banking association.
Establishes actions which a state bank is authorized to
perform.

(b) Authorizes a state bank to exercise the powers of a
Texas business corporation reasonably necessary to enable
exercise of its specific powers under this Act.

(c) Authorizes a state bank to contribute to community or
charitable funds amounts that its board considers expedient
and in the interests of the bank.

(d) Authorizes a state bank to be organized or reorganized
as a community development financial institution, as defined
by the Riegle Community Development and Regulatory
Improvement Act of 1994.

Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE BANK. Requires
the articles of association to be signed and to contain
certain information.

Sec. 3.003. APPLICATION FOR STATE BANK CHARTER. (a)
Requires an application for a state bank charter to be made
under oath and in the form required by the commissioner, who
shall inquire fully into the identity and character of each
proposed director, manager, officer, managing participant, and
principal shareholder or participant. Requires the
application to be accompanied by all charter fees and deposits
required by law or regulation.

(b) Requires the commissioner to grant a state bank charter
only if the commissioner determines that certain criteria
have been met.

Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
(a) Requires the commissioner to notify the organizers when
the application is complete and accepted for filing and all
required fees and deposits have been paid. Requires the
organizers to publish notice of the application and solicit
comments and protests, in a newspaper of general circulation
in the county where the proposed state bank is to be located
promptly after notification.

(b) Requires the commissioner to thoroughly investigate the
application at the expense of the organizers. Requires the
commissioner to prepare a written report of the
investigation, and any person, other than a person
protesting under Section 3.005 of this Act, may request a
copy of the nonconfidential portions of the application and
written report. Authorizes rules under this Act to specify
the confidential or nonconfidential character of information
obtained by the department under this chapter. Provides
that the financial statement of a proposed officer,
director, manager, or managing participant is confidential
and not subject to public disclosure.

Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION. (a)
Authorizes any person to file a protest to an application.

(b) Authorizes the commissioner to immediately determine
whether the necessary conditions set forth in Section
3.003(b) of this Act have been established, based on the
application and investigation. Requires the commissioner to
approve the application for charter or set the charter
application for hearing.

(c) Requires the commissioner to conduct a public hearing
and one or more prehearing conferences and opportunities for
discovery as the commissioner considers advisable and
consistent with the application statutes and rules.
Provides that a person protesting the application is
entitled to the confidential portion of the application,
subject to a protective order that restricts the use of
confidential information to the charter proceedings.

(d) Requires the commissioner to determine whether the
application meets the requirements of this Act and to enter
an order granting or denying the charter.

(e) Authorizes the commissioner to make approval of an
application conditional. Requires the commissioner to
include any conditions in the order approving the
application.

(f) Provides that Chapter 2001, Government Code, does not
apply to a charter application filed for the purpose of
assuming the assets and liabilities of a financial
institution considered by the commissioner to be in
hazardous condition.

Sec. 3.006. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a)
Prohibits a state bank from engaging in the business of
banking until it receives a certificate of authority
(certificate) from the commissioner. Prohibits the
commissioner from delivering the certificate until the bank
has met certain criteria.

(b) Authorizes the commissioner to forfeit the charter or
cancel the conditional approval of application for charter
without judicial action if the state bank does not open and
engage in the business of banking within six months after
the date of the granting of its charter.

Sec. 3.007. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
CORPORATIONS. (a) Provides that Article 1302-1.01, V.T.C.S.
(Texas Business Corporation Act (TBCA) and the Texas
Miscellaneous Corporation Laws Act) apply to a state bank to
the extent not inconsistent with this Act or the proper
business of a state bank, except that a reference in those
Acts to the secretary of state means the commissioner unless
the context requires otherwise; and the right of shareholders
or participants to cumulative voting in the election of
directors or managers exists only if granted by the state
bank's articles of association.

(b) Authorizes the commission to adopt rules to limit or
refine the applicability of Subsection (a) of this section
to a state bank or to alter or supplement the procedures and
requirements of the TBCA applicable to an action taken under
this chapter.

(c) Prohibits a state bank from taking an action authorized
by the TBCA regarding its corporate status, capital
structure, or a matter of corporate governance, of the type
for which the TBCA would require a filing with the secretary
of state if the bank was a business corporation, without
submitting the filing to the commissioner and obtaining the
commissioner's prior written approval of the action.

Sec. 3.008. BANKING COMMISSIONER HEARINGS. (a) Provides
that this section does not grant a right to hearing to a
person that is not otherwise granted by governing law.

(b) Authorizes the commissioner to convene a hearing to
receive evidence and argument regarding any matter before
the commissioner for decision or review under this Act.
Requires a hearing to be conducted under Chapter 2001,
Government Code.

(c) Authorizes a hearing before the commissioner to be held
by a hearing officer on behalf of the commissioner.
Requires a matter made confidential by law to be considered
by the commissioner in a closed hearing.

Sec. 3.009. FINANCE COMMISSION HEARINGS; APPEALS. (a)
Authorizes a decision or order of the commissioner made under
this Act after hearing to be appealed directly to the District
Court of Travis County, or, at the option of the appellant, to
the commission for review.

(b) Requires the commission to consider the questions
raised by the application for review and the commission may
also consider additional matters pertinent to the appeal.
Provides that an order of the commissioner continues in
effect pending review unless the order is stayed by the
commission. Authorizes the commission to impose any
condition before granting a stay of the appealed order.
Prohibits the commission from being required to accept
additional evidence or hold an evidentiary hearing if a
hearing was held and record made before the commissioner.
Requires the commission to remand the proceeding to the
commissioner for the purpose of receiving any additional
evidence the commission chooses to consider. Authorizes a
hearing before the commission that is required or authorized
by law to be conducted by a hearing officer on behalf of the
commission. Requires a matter made confidential by law to
be considered by the commission in a closed hearing.

(c) Authorizes a person affected by a final order of the
commissioner that elects to appeal directly to district
court, or a person affected by a final order of the
commission under this section, to appeal the final order by
filing a petition for judicial review under the substantial
evidence rule in the District Court of Travis County as
provided by Chapter 2001, Government Code. Provides that a
petition for appeal filed in the district court does not
stay or vacate the appealed order unless the court, after
notice and hearing, expressly stays or vacates the order.

Sec. 3.010. PARITY BETWEEN STATE AND NATIONAL BANKS. (a)
Sets forth the findings of the legislature regarding Article
XVI, Texas Constitution, pertaining to state banks.

(b) Requires a state bank that intends to exercise a right
or privilege granted to national banks that is not
authorized for state banks under the statutes and rules of
this state to submit a letter to the commissioner describing
in detail the activity in which the state bank intents to
engage and the ground for claiming the authority to perform
the action. Authorizes the bank to perform the proposed
activity after the 30th day after the date the commissioner
specifies an earlier or later date or prohibits the
activity. Sets forth the findings the commissioner must
make in order to prohibit the state bank from performing the
requested activity.

(c) Authorizes the commissioner to extend the 30-day period
under Subsection (b) if the commissioner determines that the
bank's letter raises issues requiring additional information
or additional time for analysis. Authorizes the bank to
perform the proposed activity only on prior written approval
by the commissioner, except that the commissioner must
approve or prohibit the proposed activity only on prior
written approval by the commissioner, except that the
commissioner must approve or prohibit the proposed activity
or convene a hearing under Section 3.008 of this Act not
later than the 60th day after the date the commissioner
receives the bank's letter. Requires the commissioner to
approve or prohibit the proposed activity not later than the
30th day after the date the hearing is completed.

(d) Authorizes a state bank that is denied the requested
right or privilege to engage in an activity by the
commissioner to appeal as provided by Section 3.009 of this
Act or to resubmit a letter under this subsection with
additional information or authority relevant to the
commissioner's determination. Provides that a denial is
immediately final for purposes of appeal.

(e) Authorizes the commission to adopt rules implementing
the method or manner in which a state bank exercises
specific rights and privileges granted pursuant to Section
16(c), Article XVI, Texas Constitution, including rules
regarding the exercise of rights and privileges that would
be prohibited to state banks but for Section 16(c).
Prohibits the commission from adopting rules under this
subsection unless it considers the factors listed in Section
1.012(b) of this Act and finds that national banks domiciled
in this state possess the rights or privileges to perform
activities the rule would permit state banks to perform; and
the rules contain adequate safeguards and controls,
consistent with safety and soundness, to address the concern
of the legislature evidenced by the state law the rules
would impact.

(f) Provides that the exercise of rights and privileges by
a state bank in compliance with and in the manner authorized
by this section is not a violation of any statute of this
state.

SUBCHAPTER B. AMENDMENT OF ARTICLES;
CHANGES IN CAPITAL AND SURPLUS

Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE BANK ARTICLES
OF ASSOCIATION. (a) Authorizes a state bank that has been
granted a certificate of authority to amend or restate its
articles of association for any lawful purpose, including the
creation of authorized but unissued shares or participation
shares (shares) in one or more classes or series.

(b) Sets forth the contents of an amendment authorizing the
issuance of shares or shares in series.

(c) Prohibits a limited banking association from amending
its articles of association to extend its period of
existence for a perpetual period or for any period of years,
unless the period of existence is expressly contingent on
those events resulting in dissolution of the limited banking
association under Section 4.207 of this Act.

(d) Requires an amendment or restatement of the articles of
association of a state bank and approval of the board and
shareholders or participants to be made or obtained in
accordance with provisions of the TBCA for the amendment or
restatement of articles of incorporation except as otherwise
provided by this Act or rules adopted under this Act. Sets
forth the procedures for acceptance or rejection of the
amendments or restatement of the articles of association.
Requires the commissioner to endorse the face of the
original and copy of the amendment or restatement, file the
original, and deliver a certified copy to the state bank if
the commissioner finds that the amendment or restatement
conforms to law and any conditions imposed by the
commissioner, and any required filing fee has been paid.

(e) Provides that an amendment or restatement takes effect
on the date of approval, unless a different effective date
is provided.

Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
SHARES. (a) Provides that if the articles of association
expressly give the board authority to establish series and
determine the preferences, limitations, and relative rights of
each series, the board may do so only on compliance with this
section and any rules adopted under this Act.

(b) Authorizes the shares to be established in the manner
provided by the TBCA as if the state bank were a domestic
corporation, but the shares may not be issued and sold
without the prior written approval of the commissioner.
Requires the state bank to file the original and one copy of
the statement of action required by the TBCA with the
commissioner. Sets forth the actions of the commissioner
regarding approval or rejection of a proposed series of
shares.

Sec. 3.103. CHANGE IN OUTSTANDING CAPITAL AND SURPLUS. (a)
Prohibits a state bank from reducing or increasing its
outstanding capital and surplus through dividend, redemption,
issuance of shares without prior written approval of the
commissioner, except as permitted by this section or rules
adopted under this Act.

(b) Provides that prior written approval is not required
for an increase in capital and surplus accomplished through
issuance of shares of common stock or their equivalent in
participation shares for cash, declaration and payment of
pro rata share dividends as defined in the TBCA, or adoption
by the board of a resolution directing that all or part of
undivided profits be transferred to capital or surplus.

(c) Provides that prior approval is not required for a
decrease in capital or surplus caused by losses in excess of
undivided profits.

Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) Authorizes a
state bank, with the approval of the commissioner, to issue
and sell its capital notes or debentures (notes), which must
be subordinate to the claims of depositors and may be
subordinate to other claims including the claims of other
creditors or the shareholders or participants.

(b) Authorizes notes to be convertible into shares of any
class or series. Provides that the issuance and sale of
convertible notes are subject to satisfaction of preemptive
rights to the extent provided by law.

(c) Prohibits interest due or principal repayable on
outstanding notes, without the written approval of the
commissioner, from being paid by a state bank at a time when
the bank is in hazardous condition or is insolvent, or to
the extent that payment will cause the bank to be in
hazardous condition or insolvent, as determined by the
commissioner.

(d) Authorizes the amount of any outstanding notes that
meet the requirements of this section and that are
subordinated to unsecured creditors of the bank to be
included in equity capital of the bank for purposes of
determining hazardous condition or insolvency and for other
purposes provided by rules adopted under this Act.

SUBCHAPTER C. BANK OFFICES

Sec. 3.201. CONDUCT OF THE BUSINESS OF BANKING. (a)
Authorizes a state bank to engage in the banking business at
its home office, at an approved branch office location, and
through electronic terminals. Requires a drive-in facility to
be approved as a branch if it is more than 2,000 feet from the
nearest wall of the bank's home office or another approved
branch office.

(b) Authorizes a function of a state bank that does not
involve banking contact with the public to be conducted at
any location without prior written approval of the
commissioner. Authorizes the commission to adopt rules
further defining functions of a state bank that are not
required to be conducted at an approved location.

(c) Authorizes the commission, by rule, to authorize a new
form of banking facility. Authorizes the commissioner to
approve a new form of banking facility other than as
provided in this subchapter if the commissioner does not
have a significant supervisory or regulatory concern
regarding the proposed facility.

Sec. 3.202. HOME OFFICE. (a) Requires each state bank to
have and continuously maintain in this state a home office,
which must be a location at which the bank does business with
the public and keeps its corporate books and records.
Requires at least one officer of the bank to maintain an
office at the home office and each officer at the home office
is an agent for service of process for the bank.

(b) Authorizes a state bank to change its home office to
one of its previously established branch locations within
this state, if the location that is the home office before
the change is to remain as a branch of the bank, by filing
a written notice with the commissioner setting forth the
name of the state bank, the street address of its home
office before the change, the street address of the location
to which the home office is to be changed, and a copy of the
resolution adopted by the board authorizing the change.
Provides that the change of home office takes effect on the
31st day after the date the commissioner receives the notice
unless the commissioner consents to a different effective
date.

(c) Authorizes a state bank to change its home office to
any location within this state, on prior written approval of
the commission. Requires the commissioner to grant an
application under this subsection if the commissioner does
not have a significant supervisory or regulatory concern
regarding the proposed banking facility, the applicant, or
an affiliate of the applicant. Provides that any standard
by the commissioner or commission regarding the
establishment of a branch under Section 3.203 of this Act
applies to an application for a change of home office that
is subject to this subsection, except as otherwise provided
by rules adopted under this Act.

(d) Provides that if the proposed relocation of the bank's
home office would effect an abandonment of all or part of
the community served by the bank, the bank must also
establish to the satisfaction of the commissioner that the
abandonment is consistent with the original determination of
public necessity for the establish of a bank at that
location.

Sec. 3.203. BRANCH OFFICES. Authorizes a state bank to
establish and maintain branch offices at any location on prior
written approval of the commissioner. Requires the
commissioner to approval an application if the commissioner
does not have a significant supervisory or regulatory concern
regarding the proposed branch, the applicant, or an affiliate.
Authorizes the commission to adopt rules establishing
additional standards for the approval of branch offices.

Sec. 3.204. ELECTRONIC TERMINALS. (a) Authorizes a person
or group of persons to install, maintain, and operate one or
more electronic terminals at any location within this state.

(b) Authorizes the depository institutions to agree in
writing to share in the use of an electronic terminal on a
reasonable, nondiscriminatory basis on the condition that a
depository institution using one or more electronic
terminals and may be required to meet necessary and
reasonable technical standards and to pay charges for the
use of the electronic terminal. Requires the standards or
charges to be reasonable, fair, equitable, and
nondiscriminatory among the depository institutions. Sets
forth requirements for charges to be imposed.

(c) Provides that this section does not apply to an
electronic terminal located at the domicile or home office
or a branch of a depository institution or the use by a
person of an electronic terminal regardless of location,
solely to withdraw cash, make account balance inquiries, or
make transfers among the person's accounts within the same
depository institution.

Sec. 3.205. LOAN PRODUCTION OFFICES. (a) Authorizes a state
bank to establish one or more loan production offices solely
for the purpose of soliciting loans, accepting loan
applications, and performing ministerial duties related to
consummating a granted loan such as execution of loan
documents and dispensing of loan proceeds. Requires a credit
decision, commitment to make a loan, and preparation of a
check or draft to occur at the bank's home office or a branch
office and may not occur at a loan production office.

(b) Requires the bank to notify the commissioner in writing
before the 31st day preceding the date of establishment of
a loan production office, except that the commissioner may
waive or shorten the period if the commissioner does not
have a significant supervisory or regulatory concern
regarding the bank or its planned loan production office.

SUBCHAPTER D. MERGER

Sec. 3.301. MERGER AUTHORITY. (a) Authorizes two or more
financial institutions, corporations, or other entities with
all requisite legal authority to participate in a merger, at
least one of which is a state bank, to adopt and implement a
plan of merger in accordance with this section. Prohibits the
merger from being made without the prior written approval of
the commissioner if any surviving, new, or acquiring entity
that is a party to the merger or created by the terms of the
merger is a state bank or is not a financial institution.

(b) Requires implementation of the merger by the parties
and approval of the board, shareholders, participants, or
owners of the parties to be made or obtained in accordance
with the TBCA as if the state bank were a domestic
corporation and all other parties to the merger were foreign
corporations and other entities, except as may be otherwise
provided by applicable rules.

(c) Provides that a consummated merger has the effect
provided by the TBCA. Provides that a separate application
is not required to relocate the home office of a surviving
state bank or to grant authority to a surviving bank to
operate new branch offices that previously existed as part
of a merging financial institution if the intent of the
surviving bank is clearly stated as part of the plan of
merger.

(d) Provides that a merger under this subchapter does not
confer additional powers on a state bank beyond the powers
conferred by other provisions of this Act.

Sec. 3.302. APPROVAL OF BANKING COMMISSIONER. (a) Requires
the original articles of merger and a number of copies of the
articles equal to the number of surviving, new, and acquiring
entities to be filed with the commissioner. Requires the
commissioner to investigate the condition of the merging
parties. Authorizes the commissioner to require the
submission of additional information the commissioner
determines necessary to an informed decision to approve or
reject a merger under this subchapter.

(b) Requires the commissioner to approve the merger only
under certain circumstances.

(c) Sets forth the required actions of the commissioner if
the commissioner approves the merger and finds that all
required filing fees and investigative costs have been paid.

(d) Provides that an approved merger takes effect on the
date of approval, unless the merger agreement provides for
a different effective date.

Sec. 3.303. RIGHTS OF DISSENTERS TO MERGER. Authorizes a
shareholder, participant, or participant-transferee to dissent
from the merger to the extent and by following the procedure
provided by the TBCA or any rules adopted under this Act.

SUBCHAPTER E. PURCHASE OR SALE OF ASSETS

Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER FINANCIAL
INSTITUTION. Authorizes a state bank with the prior written
approval of the commissioner to purchase all or substantially
all of the assets of the selling institution. Provides that
the purchase of all or part of the assets of the selling
institution does not make the purchasing bank responsible for
any liability or obligation of the selling institution that
the purchasing bank does not expressly assume. Provides that
this subchapter does not govern or prohibit the purchase by a
state bank of all or part of the assets of a corporation or
other entity that is not a financial institution.

Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. Authorizes
the purchasing bank to hold the purchase price and any
additional funds delivered to it by the selling institution in
trust for, or as a deposit to the credit of, the selling
institution and to act as agent of the selling institution in
disbursing those funds in trust or on deposit by paying the
depositors and creditors of the selling institution. Provides
that if the purchasing bank acts under written contract of
agency approved by the commissioner that specifically names
each depositor and creditor and the amount to be paid to each,
and if the agency is limited to the purely ministerial act of
paying those depositors and creditors the amounts due them as
determined by the selling institution and reflected in the
contract of agency and does not involve discretionary duties
or authority other than the identification of the depositors
and creditors named, the purchasing bank may rely on the
contract of agency and the instructions included in it; and is
not responsible for any error made by the selling institution
in determining its liabilities, the depositors and creditors
to whom the liabilities are due, or the amounts due the
depositors and creditors; or any preference that results from
the payments made under the contract of agency and the
instructions included in it.

Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. Requires the
purchasing bank to pay to the receiver of the selling
institution the balance of the funds held by it in trust or on
deposit for the selling institution and not yet paid to the
depositors and creditors of the selling institution, if the
selling institution is at any time after the sale of assets
voluntarily or involuntarily closed for liquidation by a state
or federal regulatory agency. Provides that the purchasing
bank is discharged of all responsibilities.

Sec. 3.404. PAYMENT TO DEPOSITORS AND CREDITORS. Authorizes
payment to a depositor or creditor of the selling institution
of the amount to be paid the person under the terms of the
contract of agency to be made by the purchasing bank by
opening an account in the name of the depositor or creditor,
crediting the account with the amount to be paid the depositor
or creditor under the terms of the agency contract, and
mailing or personally delivering a duplicate deposit ticket
evidencing the credit to the depositor or creditor at the
person's address shown in the records of the selling
institution. Provides that the relationship between the
purchasing bank and the depositor or creditor is that of
debtor to creditor only to the extent of the credit reflected
by the deposit ticket.

Sec. 3.405. SALE OF ASSETS. (a) Authorizes the board of a
state bank, with approval of the commissioner to cause a bank
to sell all or substantially all of its assets without
shareholder or participant approval under certain
circumstances.

(b) Requires a sale under this section to include an
assumption and promise by the buyer to pay or otherwise
discharge certain liabilities and obligations.

(c) Provides that this section does not affect the
commissioner's right to take action under another law.
Provides that the sale by a state bank of all or
substantially all of its assets with shareholder or
participant approval is considered a voluntary dissolution
and liquidation and is governed by Chapter 7B of this Act.

SUBCHAPTER F. STATE BANK REGULATORY SYSTEM:
EXIT OF STATE BANK OR ENTRY OR ANOTHER FINANCIAL INSTITUTION

Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
BANK INTO NATIONAL BANK OR SAVINGS BANK OR SAVINGS
ASSOCIATION. (a) Authorizes a state bank to act as necessary
under the laws of the United States or this state to merge,
reorganize, or convert into a national bank, state or federal
savings bank, or state or federal savings association.

(b) Requires the merger, reorganization, or conversion by
the state bank to be made and approval of its board,
shareholders, or participants to be obtained in accordance
with the TBCA as if the state bank were a domestic
corporation and all other parties to the transaction were
foreign corporations and other entities. Provides that a
conversion is considered a merger into the successor form of
financial institution.

(c) Establishes the criteria in which a state bank ceases
to be a state bank subject to the supervision of the
commissioner.

Sec. 3.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
BANK. (a) Authorizes an institution to apply to the
commissioner for conversion into a state bank on a form
prescribed by the commissioner accompanied by any required
fee, if the institution follows the proper procedures
governing the exit of the institution for the purpose of
conversion into a state bank from the regulatory system
applicable before the conversion. Authorizes a banking
association or limited banking association to convert its
organizational form under this section.

(b) Authorizes an institution applying to convert into a
state bank to receive a certificate of authority to do
business as a state bank if the commissioner makes certain
findings.

(c) Authorizes the commissioner to request additional or
supplemental information considered necessary to an informed
decision, perform an examination of the converting
institution at the expense of the converting institution,
and require that examination fees be paid before a
certificate of authority is issued.

(d) Requires the converting institution to submit a
statement of the law governing the exit of the institution
from the regulatory system applicable before the conversion
and the terms of the transition into a state bank. Requires
the financial institution to demonstrate that all applicable
law has been fully satisfied.

CHAPTER 4. SHARES AND PARTICIPATION SHARES;
SHAREHOLDERS AND PARTICIPANTS; MANAGEMENT

SUBCHAPTER A. TRANSFER OF OWNERSHIP
INTERESTS IN STATE BANK

Sec. 4.001. ACQUISITION OF CONTROL. (a) Prohibits a person
from directly or indirectly acquiring a legal or beneficial
interest in voting securities of a state bank or a corporation
or other entity owning voting securities of a state bank if,
after the acquisition, the person would control the state
bank. Provides that the principal shareholder or principal
participant of a state bank that directly or indirectly owns
or has the power to vote a greater percentage of voting
securities of the bank than any other shareholder or
participant is considered to control the state bank.

(b) Provides that this subchapter does not prohibit a
person from negotiating to acquire, but not acquiring,
control of a state bank or a person that controls a state
bank.

Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
(a) Requires an application for approval to acquire control
of a state bank or a person that controls a state bank to be
filed under oath by the proposed transferee on a form
prescribed by the commissioner and accompanied by any filing
fee required by statute or rule. Requires the application to
contain all information required by rules adopted under this
Act or that the commissioner requires in a particular
application as necessary to an informed decision to approve or
reject the proposed acquisition.

(b) Provides that if a person or proposed transferee
proposing to acquire voting securities subject to this
section includes any group of individuals or entities acting
in concert, the information required by the commissioner may
be required of each member of the group.

(c) Provides that information obtained by the commissioner
is confidential and may not be disclosed except as provided
by Chapter 2B of this Act.

(d) Requires applicants to publish notice of the
application, its date of filing, and the identity of each
applicant, in the form specified by the commissioner, in a
newspaper of general circulation in the county where the
bank's home office is located, promptly after the applicants
are notified by the commissioner that the application is
complete and accepted for filing. Authorizes publication of
notice of an application filed in contemplation of a public
tender offer subject to the requirements of 15 U.S.C.
Section 78n(d)(1) to be deferred for not more than 34 days
after the date the application is filed under certain
circumstances.

(e) Authorizes the commissioner to waive the requirement
that a notice be published or permit delayed publication on
a determination that waiver or delay is in the public
interest. Provides that if publication of notice is waived,
the information that would be contained in a published
notice becomes public information on the 35th day after the
date the application is filed.

Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
(a) Requires the commissioner to approve the application or
set the application for hearing. Requires the department to
participate as the opposing party and the commissioner to
conduct a hearing and one or more prehearing conferences and
opportunities for discovery as the commissioner considers
advisable and consistent with governing statutes and rules.
Provides that a hearing held under this section is
confidential and closed to the public.

(b) Authorizes the commissioner to issue an order denying
an application under certain circumstances.

(c) Provides that if an application filed under this
section is approved by the commissioner, the transaction may
be consummated. Provides that any written commitment from
the proposed transferee offered to and accepted by the
commissioner as a condition that the application will be
approved is enforceable against the bank and the transferee
and is considered for all purposes an agreement under this
Act.

Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) Authorizes
the proposed transferee to appeal the final order by filing a
petition for judicial review under the substantial evidence
rule in the District Court of Travis County if a hearing has
been held and the commissioner has entered an order denying
the application.

(b) Provides that the filing of an appeal under this
section does not stay the order of the commissioner.

Sec. 4.005. EXEMPTIONS. Sets forth a list of acquisitions
which are exempt from Section 4.001 of this Act.

Sec. 4.006. OBJECTION TO OTHER TRANSFER. Prohibits this
subchapter from being construed to prevent the commissioner
from investigating, commenting on, or seeking to enjoin or set
aside a transfer of voting securities that evidence a direct
or indirect interest in a state bank, regardless of whether
the transfer is included within this subchapter, if the
commissioner considers the transfer to be against the public
interest.

Sec. 4.007. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a)
Authorizes the attorney general, on behalf of the
commissioner, to apply to the District Court of Travis County
for an order enjoining the violation and for other equitable
relief the nature of the case requires if the commissioner
believes that a person has committed or is about to commit a
violation of this subchapter or a rule or order of the
commissioner pertaining to this subchapter.

(b) Provides that a person who knowingly fails or refuses
to file the application required by Section 4.002 of this
Act commits a Class A misdemeanor.

SUBCHAPTER B. BOARD AND OFFICERS

Sec. 4.101. VOTING SECURITIES HELD BY BANK. Prohibits voting
securities of a state bank held by the state bank in a
fiduciary capacity under a will or trust, whether registered
in its own name or in the name of its nominee from being voted
in the election of directors or managers or on a matter
affecting the compensation of directors, managers, officers,
or employees of the bank in that capacity unless certain terms
or conditions apply.

(b) Provides that voting securities of a state bank that
cannot be voted under this section are considered to be
authorized but unissued for purposes of determining the
procedures for and results of the affected vote.

Sec. 4.102. BYLAWS. (a) Requires each state bank to adopt
bylaws and may amend its bylaws from time to time for the
purposes and in accordance with the procedures set forth in
the TBCA.

(b) Provides that a limited banking association in which
management is retained by the participants is not required
to adopt bylaws if provisions required by law to be
contained in the bylaws are contained in the articles of
association or the participation agreement.

Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
PARTICIPANTS. (a) Requires the board of a state bank to
consist of not fewer than five or more than 25 directors,
managers, or managing participants, the majority of whom must
be residents of this state. Provides that the principal
executive officer of the bank is a member of the board.
Provides that the principal executive officer acting in the
capacity of board member is the board's presiding officer
unless the board elects a different presiding officer to
perform the duties as designed by the board.

(b) Sets forth the conditions which prohibit a person from
serving as a director, manager, or managing participant of
a state bank.

(c) Authorizes the commissioner to appoint a conservator to
operate the bank and elect a board, as appropriate, if a
state bank other than a limited banking association operated
by managing participants does not elect a board before the
61st day after the date of its regular annual meeting.
Authorizes the commissioner to close the bank for
liquidation if the conservator is unable to locate or elect
persons willing to serve as a board.

(d) Requires a vacancy which reduces the number of a board
to fewer than five to be filled not later than the 30th day
after the date the vacancy occurs. Requires the managing
participants to add one or more new participants or elect a
board of managers of not fewer than five persons to resolve
the vacancy. Authorizes the commissioner to appoint a
conservator to operate the bank and elect a board of not
fewer than five persons to resolve the vacancy after 30
days. Authorizes the commissioner to close the bank for
liquidation if the conservator is unable to locate or elect
five persons willing to serve as a board.

(e) Sets forth the contents of an affidavit a person is
required to submit before each term, or annually as
applicable, as a board of a state bank.

(f) Sets forth the conditions in which an advisory director
or manager is not considered a director.

Sec. 4.104. REQUIRED MONTHLY BOARD MEETINGS. (a) Requires
the board of a state bank to hold at least one regular meeting
each month. Requires the board to review and approve the
minutes of the prior meeting and review the operations,
activities, and financial condition of the bank. Authorizes
the board to designate committees from among its members to
perform these duties and approve or disapprove the committees'
reports at each regular meeting. Requires all actions of the
board to be recorded in its minutes.

(b) Authorizes the board to periodically vote to designate
and record the amount of certified surplus in its minutes.
Prohibits certified surplus from being reduced without the
prior written approval of the commissioner.

Sec. 4.105. OFFICERS. (a) Requires the board to annually
appoint the officers of the bank, who serve at the pleasure of
the board. Requires the bank to have a principal executive
officer primarily responsible for the execution of board
policies and operation of the bank and an officer responsible
for the maintenance and storage of all corporate books and
records of the bank and for required attestation of
signatures. Prohibits these positions from being held by the
same person. Authorizes the board to appoint other officers
of the bank as the board considers necessary.

(b) Prohibits an officer or employee from creating or
disposing of a bank asset or creating or incurring a
liability on behalf of the bank unless expressly authorized
by a resolution of the board recorded in its minutes.

Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) Establishes
actions which constitute an offense if committed knowingly by
an officer, board, employee, shareholder or participant of a
state bank.

(b) Establishes actions which constitute an offense if
committed by an officer, board, employee, shareholder or
participant of a state bank.

Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES. (a)
Sets forth actions which a state bank is prohibited from
directly or indirectly engaging in without prior approval of
a disinterested majority of the board recorded in the minutes.

(b) Prohibits a lease transaction involving real property
from being consummated, renewed, or extended without the
prior written approval of the commissioner. Provides that
an affiliate of the bank does not include a subsidiary of
the bank.

(c) Provides that an officer, director, manager, or
managing participant of the bank who knowingly commits an
offense under this section commits a third degree felony.

SUBCHAPTER C. SPECIAL PROVISIONS
FOR LIMITED BANKING ASSOCIATIONS

Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a)
Requires a limited banking association to file with the
commissioner a copy of any participation agreement by which a
participant of the limited banking association agrees to
become a full liability participant and the name and address
of each full liability participant. Provides that the filed
copy is a public record.

(b) Authorizes the commissioner to require a complete copy
of the participation agreement to be filed with the
department regardless of whether the state bank has a full
liability participant, except that the provisions of the
participation agreement other than those by which a
participant of the limited banking association agrees to
become a full liability participant are confidential and
subject to release only as prescribed by Chapter 2B, of this
Act.

Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS. (a)
Prohibits the participants, participant-transferees, and
managers of a limited banking association from being held
liable for a debt, obligation, or liability of the limited
banking association, including a debt, obligation, or
liability under a judgment, decree, or order of the court.
Provides that a participant, other than a full liability
participant, or a manager of a limited banking association is
not a proper party to proceedings by or against a limited
banking association, unless the object of the proceeding is to
enforce a participant's or manager's right against or
liability to a limited banking association.

(b) Provides that a full liability participant of a limited
banking association is liable under a judgment, decree, or
order of court for a debt, obligation, or liability of the
limited banking association that accrued during the
participation of the full liability participant in the
limited banking association and before the full liability
participant or a successor in interest files a notice of
withdrawal as a full liability participant from the limited
banking association with the commissioner. Provides that
the filed notice of withdrawal is a public record.

Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Authorizes
debts, liabilities, and other obligations to be contracted for
or incurred on behalf of a limited banking association by a
majority of the managers, managing participants, or an officer
or other agent vested with actual or apparent authority to
contract for or incur the debt, liability, or obligation.

Sec. 4.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
Provides that management of a limited banking association is
vested in the participants in proportion to each participant's
contribution to capital, as adjusted periodically to properly
reflect any additional contribution. Provides that the
articles of association may provide that management of a
limited banking association is vested in a board of managers
to be elected annually by the participants as prescribed by
the bylaws.

(b) Sets forth the conditions which prohibit participants
of a limited banking association from retaining management
and require the participants to elect a board of managers.

(c) Authorizes the articles of association, bylaws, and
participation agreement of a limited banking association to
use the terms "director," and "board," instead of "manager"
and "board of managers," respectively.

Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
CONTRIBUTION TO CAPITAL. (a) Prohibits a participant from
receiving any part of the participant's contribution to
capital from a limited banking association until certain
criteria are met.

(b) Authorizes a participant to demand the return of the
participant's contribution to capital on the dissolution of
the association and the failure by the full liability
participants to exercise the right for the business of the
limited banking association to be carried on by the
remaining participants as provided by Section 4.207 of this
Act.

(c) Authorizes a participant to demand the return of the
participant's contribution to capital only in cash, unless
allowed by the articles of association or by the unanimous
consent of all participants.

Sec. 4.206. INTEREST IN LIMITED BANKING ASSOCIATION;
TRANSFERABILITY OF INTEREST. (a) Provides that the interest
of a participant or transferee in a limited banking
association is the personal estate of the person and may be
transferred as provided by the bylaws or the participation
agreement. Provides that a transferee of a participant's
interest has the status of a participant-transferee and does
not by the transfer become a participant or obtain a right to
participate in the management of the limited banking
association. Provides that a participant-transferee is
entitled to receive only a share of profits, return of
contribution, or other distributive benefit in respect to the
interest transferred to which the participant who transferred
the interest would have been entitled. Provides that a
transferee may become a participant only as provided by the
bylaws or the participation agreement.

(b) Authorizes a limited banking association to add
additional participants in the same manner as transferees
after payment in full of the capital contribution to the
limited banking association payable for the issuance of
additional participation interests.

Sec. 4.207. DISSOLUTION. Sets forth the conditions in which
a limited banking association is considered dissolved.

(b) Provides that a dissolution under this section is
considered to be the initiation of a voluntary liquidation
under Chapter 7B of this Act.

(c) Provides that a dissolution does not cancel or revoke
a contract to which the bank is a party, including a trust
indenture or agreement or voluntary dissolution until the
period for the remaining participants to continue the
business of the bank has expired without the remaining
participants having completed the necessary action to
continue the business of the bank.

Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. Authorizes the
profits and losses of a limited banking association to be
allocated among the participants and among classes of
participants as provided by the participation agreement.
Requires the profits and losses to be allocated based on
interests of the participants as reflected in the articles of
association and related documents filed with and approved by
the commissioner.

Sec. 4.209. DISTRIBUTIONS. Authorizes distributions of cash
or other assets of a limited banking association to be made to
the participants as provided by the participation agreement.
Requires distributions to be made to the participants based on
the relative interests of the participants as reflected in the
articles of association and related documents filed with and
approved by the commissioner.

Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED BANKING
ASSOCIATIONS. Provides that for the purposes of this Act
other than this subchapter, as the context requires, a manager
and the board of managers are considered to be a director and
the board of directors, respectively; if there is not a board
of managers, a participant is considered to be a director and
all of the participants are considered to the board of
directors; a participant or transferee is considered to be a
shareholder; a participation share is considered to be a share
of stock; and a distribution is considered to be a dividend.

CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS

SUBCHAPTER A. ACQUISITION AND OWNERSHIP
OF BANK FACILITIES AND OTHER REAL ESTATE

Sec. 5.001. INVESTMENT IN BANK FACILITIES. (a) Defines
"bank facility."

(b) Prohibits a state bank from directly or indirectly
investing an amount in excess of its capital and certified
surplus in bank facilities, furniture, fixtures, and
equipment. Establishes the procedures for computing the
limitation of a state bank.

(c) Provides that real estate acquired under Subsection
(a)(3) of this section and not improved and occupied by the
bank ceases to be a bank facility on the third anniversary
of the date of its acquisition, unless the commissioner on
application grants written approval to further delay in the
improvement and occupation of the property by the bank.

(d) Requires a bank to comply with regulatory accounting
principles in accounting for its investment in and
depreciation of bank facilities, furniture, fixtures, and
equipment.

Sec. 5.002. OTHER REAL ESTATE. Prohibits a state bank from
acquiring real estate except: as permitted by Section 5.001 of
this Act or as otherwise provided by this Act, including rules
adopted under this Act; with the prior written approval of the
commissioner; or if necessary to avoid or minimize a loss on
a loan or investment previously made in good faith.

(b) Authorizes a state bank to exchange real estate for
other real estate or personal property, invest additional
funds in or improve real estate acquired under this
subsection or Subsection (a) of this section, or acquire
additional real estate to avoid or minimize loss on real
estate acquired as permitted by Subsection (a) of this
section.

(d) Authorizes the commissioner on application to grant one
or more extensions of time for disposing of real estate if
the commissioner makes certain determinations.

SUBCHAPTER B. INVESTMENTS

Sec. 5.101. SECURITIES. (a) Authorizes a state bank to
purchase and sell equity and investment securities without
recourse, solely on the order and for the account of a
customer, and the bank may not underwrite an issue of
securities except as otherwise provided by this Act or rules
adopted under this Act.

(b) Prohibits a state bank form investing its funds in
equity securities except as necessary to avoid or minimize
a loss on a loan or investment previously made in good
faith.

(c) Authorizes a state bank to purchase investment
securities for its own account under limitations and
restrictions prescribed by rules adopted under this Act.
Prohibits the total amount of the investment securities of
any one obligor or maker, held by the bank for its own
account, from exceeding an amount equal to 15 percent of the
bank's capital and certified surplus.

(d) Establishes the securities a state bank is authorized
to deal in, underwrite or purchase for its own account.

(e) Sets forth the obligations to which Subsection (a) does
not apply.

(f) Provides that Subsection (c) of this section applies to
investments in small business related securities as defined
by 15 U.S.C. Section 78c(a).

(g) Prohibits a state bank from investing more than an
amount equal to 25 percent of its capital and certified
surplus in investment grade adjustable rate preferred stock
and money market preferred stock.

(h) Authorizes a state bank to deposit funds in a federally
insured financial institution, a federal reserve bank, or a
federal home loan bank without limitation.

(i) Authorizes the commission to adopt rules to administer
and carry out this section, including rules to define or
further define terms used by this section, establish limits,
requirements, or exemptions other than those specified by
this section for particular classes or categories of
investment securities, or limit or expand investment
authority for state banks for particular classes or
categories of investment securities.

Sec. 5.102. TRANSACTIONS IN BANK SHARES OR PARTICIPATION
SHARES. (a) Prohibits a state bank from acquiring a lien by
pledge or otherwise on its own shares or otherwise purchase or
acquire title to its own shares, except as necessary to avoid
or minimize a loss on a loan or investment previously made in
good faith.

(b) Authorizes a state bank to acquire title to its own
shares and hold those shares as treasury stock. Provides
that treasury stock acquired under this subsection is not
considered an equity investment.

(c) Prohibits a lien from extending for more than two years
by its original terms if a state bank acquires a lien on or
title to its own shares under this section. Prohibits the
bank from holding title to its own shares for more than one
year.

(d) Provides that equity securities in a bank holding
company that are not publicly held and traded on a national
securities exchange or automated quotation system are
considered to be shares of each bank holding company's
subsidiary state banks.

Sec. 5.103. BANK SUBSIDIARIES. (a) Authorizes a state bank
to conduct any activity or investment through an operating
subsidiary that a state bank or a bank holding company is
authorized to conduct under the laws of this state, if the
operating subsidiary is adequately empowered and appropriately
licensed to conduct its business.

(b) Prohibits a state bank from investing more than 10
percent of its capital and certified surplus in a single
subsidiary and from investing more than the amount of its
equity capital in all subsidiaries without prior written
approval of the commissioner. Provides that the amount of
a state bank's investment in a subsidiary is the total
amount of the bank's investment in equity or investment
securities issued by its subsidiary and any loans and
extensions of credit from the bank to its subsidiary.

(c) Authorizes a state bank to establish or acquire a
subsidiary as provided by 12 C.F.R. Section 337.4 to conduct
securities activities that the bank is prohibited from
conducting directly.

(d) Authorizes a state bank to make a minority investment
indirectly through an operating subsidiary in equity
securities of another bank, a company that engages solely in
an activity that is permissible for a bank service
corporation or a bank holding company subsidiary, or a
company that engages solely in activities as agent or
trustee or in a brokerage, custodial, advisory, or
administrative capacity.

(e) Requires a state bank that intends to acquire,
establish, or perform new activities through a subsidiary to
submit a letter to the commissioner describing in detail the
proposed activities of the subsidiary.

(f) Establishes the terms in which a bank is authorized to
acquire or establish a subsidiary or perform new activities
in an existing subsidiary.

(g) Provides that a subsidiary of a state bank is subject
to regulation by the commissioner to the extent provided by
this Act or rules adopted under this Act. Authorizes the
commissioner to regulate a subsidiary as if it were a state
bank.

Sec. 5.104. MUTUAL FUNDS. (a) Authorizes a state bank to
invest for its own account in equity securities of an
investment company registered under 15 U.S.C. Section 80a-1
(Investment Company Act of 1940) and 15 U.S.C. Section 77a
(Securities Act of 1933) if the portfolio of the investment
company consists wholly of investments in which the bank could
invest directly for its own account.

(b) Authorizes the bank to invest in an investment company
without limitation if the portfolio of the investment
company described by Subsection (a) of this section consists
wholly of investments in which the bank could invest
directly without limitation under Section 5.101(d) of this
Act.

(c) Authorizes the bank to invest in the investment company
not more than an amount equal to 15 percent of the bank's
capital and certified surplus, if the investment company's
portfolio contains an investment or obligation that is
subject to certain limits.

(d) Requires a state bank to periodically determine that
its pro rata share of any security in the portfolio of the
investment company is not in excess of applicable investment
and lending limits by reason of being combined with the
bank's pro rata share of that security held by all other
investment companies in which the bank has invested and with
the bank's own direct investment and loan holdings.

Sec. 5.105. OTHER DIRECT EQUITY INVESTMENTS. (a) Sets forth
the classes of equity securities issued by certain
organizations a state bank is authorized to purchase for its
own account.

(b) Authorizes the commissioner to authorize investments in
excess of the limitations of Subsection (a) in response to
a written application if the commissioner concludes excess
investment is not precluded by other applicable law, the
safety and soundness of the requesting bank would not be
adversely affected.

Sec. 5.106. INVESTMENTS FOR PUBLIC WELFARE. (a) Authorizes
a state bank to make investments of a predominantly civic,
community, or public nature, designed primarily to promote the
public welfare. Authorizes the state bank to make the
investments directly or by purchasing equity securities in an
entity primarily engaged in making those investments.
Prohibits the state bank from making the investment if it
would expose the bank to unlimited liability. Authorizes a
bank to serve as a community partner and make investments in
a community partnership, as those terms are defined by the
Riegle Community Development and Regulatory Improvement Act.

(b) Prohibits a bank's aggregate investments under this
section from exceeding an amount equal to 10 percent of the
bank's capital and certified surplus. Authorizes the
commissioner to authorize investments in excess of this
limitation in response to a written application if the
commissioner concludes the excess investment is not
precluded by other applicable law and the safety and
soundness of the requesting bank would not be adversely
affected.

Sec. 5.107. ENGAGING IN COMMERCE PROHIBITED. Prohibits a
state bank from investing its funds in trade or commerce by
buying, selling, or otherwise dealing in goods or by owning or
operating a business not part of the business of banking,
except as necessary to avoid or minimize on a loan or
investment previously made in good faith.

SUBCHAPTER C. LOANS

Sec. 5.201. LENDING LIMITS. (a) Prohibits the total loans
and extensions of credit by a state bank to a person
outstanding at one time from exceeding an amount equal to 25
percent of the bank's capital and certified surplus. Sets
forth the circumstances to which this limitation does not
apply.

(b) Authorizes the commission to adopt rules to administer
and carry out this section.

(c) Authorizes the commissioner to determine whether a loan
or extension of credit putatively made to a person will be
attributed to another person for purposes of this section.

(d) Provides that an officer, board, or employee of a state
bank who approves or participates in the approval of a loan
with actual knowledge that the loan violates this section is
jointly and severally liable to the bank for the lesser of
the amount by which the loan exceeded applicable lending
limits or the bank's actual loss, and remains liable for
that amount until the loan and all prior indebtedness of the
borrower to the bank have been fully repaid. Authorizes the
bank to initiate a proceeding to collect an amount due under
this subsection at any time before four years after the date
the borrower defaults on the subject loan or any prior
indebtedness. Provides that a person that is liable for and
pays amounts to the bank under this subsection is entitled
to an assignment of the bank's claim against the borrower to
the extent of the payments. Provides that an officer, board
member, or employee of a state bank is presumed to know the
amount of the bank's lending limit and the amount of the
borrower's aggregate outstanding indebtedness to the bank
immediately before a new loan or extension of credit to that
borrower.

Sec. 5.202. LOAN EXPENSES AND FEES. (a) Authorizes a bank
to require a borrower to pay all reasonable expenses and fees
incurred in connection with the making, closing, disbursing,
extending, readjusting, or renewing of a loan, regardless of
whether those expenses or fees are paid to third parties.
Prohibits a fee charged by the bank under this section from
exceeding the cost the bank reasonably expects to incur in
connection with the transaction to which the fee relates.
Authorizes payment for these expenses to be collected by the
bank from the borrower and retained by the bank or paid to a
person rendering services for which a charge has been made, or
the payments may be paid directly by the borrower to a third
party to whom they are payable. Provides that this section
does not authorize the bank to charge its borrower for payment
of fees and expenses to the board, or officer of the bank for
services rendered in the person's executive capacity.

(b) Authorizes a bank to charge a penalty for prepayment or
late payment. Authorizes only one penalty to be charged by
the bank on each past due payment. Requires the payment of
the principal to be applied on the final installment of the
note or other obligation until that installment is fully
paid, and further prepayments must be applied on
installments in the inverse order of their maturity.

(c) Provides that fees and expenses charged and collected
as provided by this section are not considered a part of the
interest or compensation charged by the bank for the use,
forbearance, or detention of money.

(d) Provides that to the extent of any conflict between
this section and a provision of Title 79(2), Article 5069-2.01 et seq., V.T.C.S., or Chapter 15, Article 5069-15.01 et
seq., V.T.C.S., the provision of Title 79, V.T.C.S.,
prevails.

Sec. 5.203. LEASE FINANCING TRANSACTIONS. (a) Authorizes a
state bank to purchase or construct a building or other
facility on the specific request and for the use of a customer
and, as holder of legal title, lease the builder or other
facility to a customer having sufficient resources to pay all
rentals as they become due. Requires a lease to provide that
legal title to the property transfers to the lessee on
consummation and expiration of the lease.

(b) Authorizes a state bank to become the owner and lessor
of tangible personal property for lease financing
transactions on a net lease basis on the specific request
and for the use of a customer. Prohibits the bank from
holding the property more than six months after the date of
expiration of the original or any extended or renewed lease
period agreed to by the customer for whom the property was
acquired or by a subsequent lessee.

(c) Provides that rental payments received by the bank in
a lease financing transaction under this section are
considered to be rent and not interest or compensation for
the use, forbearance, or detention of money. Provides that
a lease financing transaction is considered to be a loan or
extension of credit for purposes of Section 5.201.

SUBCHAPTER D. DEPOSITS

Sec. 5.301. NATURE OF DEPOSIT CONTRACT. (a) Provides that
a deposit contract between a bank and an account holder is
considered a contract in writing for all purposes and may be
evidenced by one or more agreements, deposit tickets,
signature cards, or notices as provided by Section 5.302 of
this Act, or by other documentation as provided by law.

(b) Provides that a cause of action for denial of deposit
liability on a deposit contract without a maturity date does
not accrue until the bank has denied liability and given
notice of the denial to the account holder. Provides that
a bank that provides an account statement or passbook to the
account holder is considered to have denied liability and
given the notice as to any amount not shown on the statement
or passbook.

Sec. 5.302. AMENDMENTS TO DEPOSIT CONTRACT. (a) Authorizes
a bank and its account holder to amend the deposit contract as
permitted by agreement, or as otherwise permitted by law.

(b) Authorizes a bank to amend a deposit contract by
mailing a written notice of the amendment to the account
holder, separately or as an enclosure with or part of the
account holder's statement of account or passbook. Requires
the notice to include the text and effective date of the
amendment. Provides that the bank is required to deliver
the notice to only one of the account holders of a deposit
account that has more than one account holder. Sets forth
the method of determination for the effective date.

(c) Sets forth the conditions to which a notice of
amendment is not required under Subsection (b) before
renewal of an account, except for a disclosure required to
be made under Section 5.303 of this Act or 12 U.S.C. Section
4301 (Truth in Savings Act) or other federal law.

(d) Authorizes an amendment under Subsection (b) of this
section to reduce the rate of interest or eliminate interest
on an account without a maturity date.

(e) Provides that amendment of a deposit contract made in
compliance with this section is not a violation of Section
17.41 et seq., Business & Commerce Code (Deceptive Trade
Practices-Consumer Protection Act).

Sec. 5.303. FEES; DISCLOSURES. (a) Authorizes a bank to
charge an account holder a fee, service charge, or penalty
relating to service or activity of a deposit account,
including a fee for an overdraft, insufficient fund (NSF)
check, or stop payment order.

(b) Requires a bank to disclose the amount of each fee,
charge, or penalty (charge) related to an account, or if the
amount of the charge cannot be stated, the method of
computing the charge by written notice delivered or mailed
to each customer opening an account not later than the 10th
business day after the account is opened. Requires a bank
that increases or adds a new charge to give notice of the
change to each affected account holder in the manner
provided by Section 5.302(b) of this Act for notice of an
amendment of a deposit contract.

Sec. 5.304. SECURING DEPOSITS. (a) Prohibits a state bank
from pledging or creating a lien on its assets or securing the
repayment of a deposit except as authorized or required by
this section, rules adopted under this Act, or other law.

(b) Authorizes a state bank to pledge its assets to secure
a deposit of this state, an agency or political subdivision
of this state, the United States, or an instrumentality of
the U.S.

(c) Provides that this section does not prohibit the pledge
of assets to secure the repayment of money borrowed or the
purchase of excess deposit insurance from a private
insurance company. Provides that an act, deed, conveyance,
pledge, or contract in violation of this section is void.

Sec. 5.305. DEPOSIT ACCOUNTS OF MINORS. (a) Authorizes a
bank lawfully doing business in this state to enter a deposit
account with a minor as the sole and absolute owner of the
account and to pay checks and withdrawals and otherwise act
with respect to the account on the order of the minor.
Provides that a payment or delivery of rights to a minor who
holds a deposit account evidenced by a receipt or acquittance
signed by the minor discharges the bank to the extent of the
payment made or rights delivered.

(b) Provides that the disabilities of minority are removed
for the limited purpose of enabling the minor to enter into
a depository contract with the bank; and the bank to enforce
the contract against the minor if the minor is the sole and
absolute owner of the deposit account.

(c) Authorizes a parent or legal guardian of a minor to
deny the minor's authority to control, transfer, draft on,
or make withdrawals from the minor's deposit account by
notifying the bank in writing. Prohibits the minor from
controlling the account in any way during minority except
with the joinder of a parent or legal guardian of the minor.

(d) Provides that if a minor with a deposit account dies,
the receipt or acquittance of the minor's parent or legal
guardian discharges the liability of the bank to the extent
of the receipt or acquittance, except that the aggregate
discharges under this subsection may not exceed $3,000.

(e) Provides that Subsection (a) of this section does not
authorize a loan to the minor by the bank, whether on pledge
of the minor's savings account or otherwise, or bind the
minor to repay a loan made except as provided by Subsection
(b) of this section or other law or unless the depository
institution has obtained the express consent and joinder of
a parent or legal guardian of the minor. Provides that this
subsection does not apply to an inadvertent extension of
credit because of an overdraft from NSF, returned checks or
deposits, or other shortages in a depository account
resulting from normal banking operations.

Sec. 5.306. TRUST ACCOUNTS WITH LIMITED DOCUMENTATION. (a)
Authorizes a bank to accept and administer the account if a
deposit account is opened with a bank by one or more persons
expressly as a trustee for one or more other named persons and
further notice of the existence and terms of a legal and valid
trust is not given in writing to the bank.

(b) Authorizes a trustee to provide the bank with a
certificate of trust to evidence the trust relationship if
a deposit account is opened with a bank by one or more
persons expressly as a trustee for one or more other named
persons pursuant to or purporting to be pursuant to a
written trust agreement. Requires the certificate to be an
affidavit of the trustee and to include the effective date
of the trust and certain specific information required by
the bank, and indemnification of the bank. Authorizes the
bank to accept and administer the account in accordance with
the certificate of trust without requiring a copy of the
trust agreement. Provides that the bank is not liable for
administering the account as provided by the certificate of
trust, even if the certificate of trust, is contrary to the
terms of the trust agreement, unless the bank has actual
knowledge of the terms of the trust agreement.

(c) Authorizes the bank, on the death of the trustee or the
survivor of two or more trustees, to pay all or part of the
withdrawal value of the account with interest as provided by
the certificate of trust. Provides that if the trustee did
not deliver a certificate of trust, the bank's right to
treat the account as owned by a trustee ceases on the death
of the trustee. Requires the bank to pay the withdrawal
value of the account with interest in equal shares to the
persons who survived the trustee, are named as beneficiaries
in the certificate, and can be located by the bank from its
own records. Requires payment of the withdrawal value and
interest to be made as provided by Chapter XI, Probate Code,
if there is no certificate of trust. Provides that any
payment made under this section discharges the bank from any
liability to the extent of the payment. Authorizes the bank
to pay all or part of the withdrawal value and interest in
the manner provided by this section, regardless of whether
it has knowledge of a competing claim, unless the bank
receives actual knowledge that payment has been restrained
by order of a court of competent jurisdiction.

(d) Provides that this section does not obligate a bank to
accept a deposit account from a trustee who does not furnish
a copy of the trust agreement or to search beyond its own
records for the location of a named beneficiary.

(e) Provides that this section does not affect a
contractual provision to the contrary that otherwise
complies with the laws of this state.

Sec. 5.307. RIGHT OF SET-OFF. (a) Provides that the bank
has a right of set-off, without further agreement or action,
against all accounts owned by a depositor to whom or on whose
behalf the bank has made an advance of money by loan,
overdraft, or otherwise, if the bank has previously disclosed
this right to the depositor. Authorizes the bank to set off
or cancel on its books all or part of the accounts owned by
the depositor and apply the value of the accounts in payment
of and to the extent of the obligation.

(b) Provides that a default occurs when an obligor has
failed to make a payment as provided by the terms of the
loan or other credit obligation and a grace period provided
for by the agreement or law has expired. Provides that an
obligation is not required to be accelerated or matured for
a default to authorize set-off of the depositor's obligation
against the defaulted payment.

(c) Prohibits a bank from exercising its right of set-off
under this section against an account unless the account is
due and owing to the depositor in the same capacity as the
defaulted credit obligation. Provides that a trust account
for which a depositor is trustee, including a trustee under
a certificate of trust, is not subject to the right of set-off under this section unless the trust relationship is
solely evidenced by the account card as provided by Chapter
XI, Probate Code.

(d) Provides that this section does not limit or prohibit
the exercise of another right of set-off, including a right
under contract or common law.

CHAPTER 6. ENFORCEMENT ACTIONS

SUBCHAPTER A. ENFORCEMENT ORDERS: BANKS AND MANAGEMENT

Sec. 6.001. DETERMINATION LETTER. (a) Authorizes the
commissioner to notify the bank in writing of a determination,
the requirements the bank must satisfy to abate the
determination, and the time in which the requirements must be
satisfied to avert further administrative action if the
commissioner determines from examination or other credible
evidence that a state bank is in a condition that may warrant
the issuance of an enforcement.

(b) Authorizes a the determination letter to be issued in
connection with the issuance of a cease and desist, removal,
or prohibition order under this subchapter or an order of
supervision or conservatorship under Subchapter B of this
chapter.

Sec. 6.002. CEASE AND DESIST ORDER. (a) Sets forth the
conditions to which the commissioner has grounds to issue a
cease and desist order to an officer, board, or employee of a
state bank, or the bank itself acting through an authorized
person.

(b) Authorizes the commissioner to serve a proposed cease
and desist order on the bank and each person who committed
or participated in a violation if the order appears to be
necessary and in the best interest of the bank and its
consumers. Establishes the grounds and provisions of the
order.

Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) Establishes
the necessary evidence in which the commissioner has grounds
to remove a present or former officer, board, or employee of
a state bank from office or employment, or participating in
the affairs of a state bank, trust company, or entity
chartered or licensed by the commissioner.

(b) Authorizes the commissioner to serve a proposed removal
or prohibition order on an officer, board, controlling
shareholder or participant, or other person alleged to have
committed or participated in a violation if the order
appears to be necessary and in the best interest of the bank
and its consumers. Establishes the language and provisions
of the order.

Sec. 6.004. HEARING ON PROPOSED ORDER. (a) Requires a
hearing on a proposed order to be held not later than the 30th
day after the date the first request for a hearing on the
order was received by the department unless the parties agree
to a later hearing date. Requires each party to be given
written notice by personal delivery or by registered or
certified mail, return receipt requested, of the date set by
the commissioner for the hearing not later than the 11th day
before that date. Requires the hearing to be conducted as
provided by Chapter 2001, Government Code. Provides that the
department has the burden of proof and each person against
whom the proposed order is directed may cross-examine and
present evidence to show why the proposed order should not be
issued.

(b) Requires the commissioner to issue or decline to issue
the proposed order. Authorizes the proposed order to be
modified as necessary to conform to the findings at the
hearing and to require the board to take necessary
affirmative action to correct the conditions cited in the
order.

(c) Provides that an order issued under this section is
immediately final for the purpose of enforcement and appeal.
Authorizes the order to be appealed.

Sec. 6.005. EMERGENCY ORDERS. (a) Authorizes the
commissioner to issue one or more cease and desist, removal,
or prohibition orders as emergency orders to become effective
immediately on service without prior notice or hearing if the
commissioner believes that immediate action is needed to
prevent immediate and irreparable harm to the bank and its
consumers. Establishes the method by which the order must be
served.

(b) Requires the commissioner to notify the bank and any
person against whom the emergency order is directed of the
specific conduct, activity, or omission requiring the order,
the citation of each statute or rule alleged to have been
violated, the immediate and irreparable harm alleged to be
threatened, and the right to a hearing. Authorizes a
hearing on the order to be requested in writing not later
than the 10th day after the date that the order is served.
Provides that unless a person against whom the emergency
order is directed requests a hearing in writing before the
11th day after the date it is served on the person, the
emergency order is final and nonappealable as to that
person.

(c) Requires a hearing on an emergency order to be given
priority over all other matters pending before the
commissioner and must be held not later than the 20th day
after the date that it is requested unless the parties agree
to a later hearing date.

(d) Provides that until the hearing, an emergency order
continues in effect unless the order is stayed by the
commissioner. Authorizes the commissioner to impose any
condition before granting a stay of the emergency order.

(e) Authorizes the commissioner to affirm, modify, or set
aside in whole or part the emergency order. Provides that
an order affirming or modifying the emergency order is
immediately final for purposes of enforcement and appeal.
Authorizes the order to be appealed.

Sec. 6.006. COPY OF LETTER OR ORDER IN BANK RECORDS.
Requires a copy of any determination letter, proposed order,
emergency order, or final order issued by the commissioner to
be immediately brought to the attention of the board of the
affected bank, regardless of whether the bank is a party, and
filed in the minutes of the board. Requires each board to
immediately certify to the commissioner in writing that the
certifying person has read and understood the determination
letter, proposed order, emergency order, or final order.
Prohibits the required certification from being considered an
admission of a person in a subsequent legal or administrative
proceeding.

Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
(a) Establishes the activities in which a person subject to
a final and enforceable removal or prohibition order is
prohibited from engaging without the prior written approval of
the commissioner.

(b) Provides that if voting securities of an entity
identified in Subsection (a)(1) of this section cannot be
voted under this section, the securities are considered to
be authorized but unissued for purposes of determining the
procedures for and results of the affected vote.

(c) Requires participants of a limited banking association
in which a participant has been finally removed or
prohibited from participation in the bank's affairs to elect
a board of managers.

(d) Provides that this section and Section 6.008 of this
Act do not prohibit a removal or prohibition order that has
indefinite duration or that by its terms is perpetual.

Sec. 6.008. LIMITATION ON ACTION. Prohibits the commissioner
from initiating an enforcement action under this subchapter
later than the fifth anniversary of the date the conduct or
acts involved were discovered or reasonably should have been
discovered by the commissioner.

Sec. 6.009. ENFORCEMENT OF FINAL ORDER. (a) Authorizes the
commissioner to initiate administrative penalty proceedings
against the bank, refer the matter to the attorney general for
enforcement by injunction or other available remedy, or pursue
any other action the commissioner considers appropriate if the
commissioner reasonably believes that a bank or person has
violated a final and enforceable order.

(b) Provides that if the attorney general prevails in an
action brought under Subsection (a)(2) of this section, the
attorney general is entitled to recover reasonable
attorney's fees from the bank or person violating the order.

Sec. 6.010. ADMINISTRATIVE PENALTIES. (a) Authorizes the
commissioner to initiate a proceeding for an administrative
penalty against a bank by serving on the bank notice of the
time and place of a hearing on the penalty. Prohibits the
hearing from being held earlier than the 20th day after the
date the notice is served and shall be conducted under Chapter
2001, Government Code. Requires the notice to contain a
statement of the acts or conduct alleged to be in violation of
the order.

(b) Requires the commissioner to consider the maintenance
of procedures reasonably adopted to ensure compliance with
the order.

(c) Authorizes the commissioner to impose an administrative
penalty against the bank in an amount not to exceed $500 for
each day the bank is in violation of the final order.

Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES.
(a) Requires the bank to pay the penalty or appeal by filing
a petition for judicial review under the substantial evidence
rule in the district court of Travis County when a penalty
becomes final.

(b) Provides that the petition for judicial review stays
the penalty order during the period preceding the decision
of the court. Requires the court to order the bank to pay
the full amount of the penalty or a lower amount determined
by the court. Provides that if the court does not sustain
the order, a penalty is not owed. Provides that if the
final judgment of the court requires payment of a penalty,
interest accrues on the penalty, at the rate charged on
loans to depository institutions by the New York Federal
Reserve Bank, beginning on the date the judgment is final
and ending on the date the penalty and interest are paid.

(c) Requires the commissioner to refer the matter to the
attorney general for enforcement if a bank does not pay a
final and nonappealable penalty order. Provides that the
attorney general is entitled to recover reasonable
attorney's fees from the bank if the attorney general
prevails in judicial action necessary for collection of the
penalty.

(d) Requires a penalty collected under this section to be
remitted to the comptroller for deposit to the credit of the
general revenue fund.

Sec. 6.012. CONFIDENTIALITY OF RECORDS. Provides that a copy
of any document in the records of the department relating to
an order issued under this subchapter is confidential and may
be released only as provided by Chapter 2B of this Act, except
that the commissioner shall publish all final removal and
prohibition orders on a periodic basis. Authorizes the
commissioner to publish a final cease and desist order or
information regarding the existence of the order to the public
if the commissioner concludes that effective enforcement of
the order would be enhanced by the release.

Sec. 6.013. COLLECTION OF FEES. Authorizes the department to
sue to enforce the collection of a fee owed to department
under a law administered by the department. Provides that in
the suit a certificate by the commissioner showing the
delinquency is prima facie evidence of the levy of the fee or
the delinquency of the stated fee amount and compliance by the
department with the law relating to the computation and levy
of the fee.

SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP

Sec. 6.101. ORDER OF SUPERVISION. Authorizes the
commissioner to issue an order appointing a supervisor over a
bank if the commissioner determines that a state bank is in
hazardous condition. Provides that the supervisor serves
until the earlier of the expiration of the period or the date
the commissioner determines that the requirements for
abatement of the order have been satisfied.

Sec. 6.102. ORDER OF CONSERVATORSHIP. Authorizes the
commissioner to issue an order appointing a conservator at any
time before, during, or after the period of supervision if the
commissioner determines from examination or other credible
evidence that a state bank is in hazardous condition and
immediate and irreparable harm is threatened to the bank or
its consumer.

Sec. 6.103. HEARING. (a) Requires an order issued under
Section 6.101 or 6.102 of this Act to contain or be
accompanied by a notice that a hearing before the commissioner
will be held at the request of the bank at which the bank may
cross-examine and present evidence to contest the order or
show that it has satisfied all requirements for abatement of
the order. Provides that the department has the burden of
proof for any continuation of the order or the issuance of a
new order.

(b) Requires a bank that seeks to contest or modify an
order or demonstrate that it has satisfied all requirements
for abatement of the order to submit a written request for
a hearing to the commissioner. Requires the request to
state the grounds for the request. Requires the
commissioner to serve notice by delivery or mail within 10
days of receipt of the request for a hearing.

(c) Authorizes the commissioner to delay a decision for a
prompt examination of the bank and to reopen the record as
necessary to allow presentation of the results of the
examination and appropriate opportunity for cross-examination and presentation of other relevant evidence.

Sec. 6.104. POST-HEARING ORDER. (a) Requires the
commissioner to release the bank from the order if the
commissioner finds that the bank has been rehabilitated, its
hazardous condition has been remedied, irreparable harm is no
longer threatened, or the bank should be released from the
order.

(b) Sets forth the required actions of the commissioner, by
order, if the commissioner finds that the bank has failed to
comply with the lawful requirements of the commissioner, has
not been rehabilitated, is insolvent, or otherwise continues
in hazardous condition.

(c) Provides that an order issued Subsection (b) of this
section is immediately final for purposes of appeal.
Authorizes the order to be appealed as provided by Section
3.009 of this Act.

(d) Provides that this subchapter does not prevent release
of the bank from supervision or conservatorship before a
hearing if the banking commissioner is satisfied that
requirements for abatement have been adequately satisfied.

Sec. 6.105. CONFIDENTIALITY OF RECORDS. Provides that an
order issued under this subject and any related documents of
the department are confidential and may be released only as
provided by Chapter 2B of this Act, except that the
commissioner may release an order or information regarding the
existence of an order to the public if the commissioner
concludes that the effective enforcement of the order would be
enhanced by the release.

Sec. 6.106. DUTIES OF BANK UNDER SUPERVISION. Prohibits the
bank, without prior approval of the commissioner or the
supervisor, from engaging in certain banking activities.

Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR. (a) Requires
a conservator to immediately take charge of the bank and all
of its property, books, records, and affairs on behalf and at
the direction and control of the commissioner.

(b) Requires the board, the officers, and the shareholders
or participants of the bank to conduct the business of the
bank and take all steps the conservator considers
appropriate to remove the cause and conditions that required
the appointment of a conservator. Prohibits the board from
directing or participating in the affairs of the bank during
the conservatorship.

(c) Provides that except as otherwise provided by this
subchapter, rules adopted under this Act, or Section 2.010
of this Act, the conservator has the rights, privileges and
is subject to the duties, restrictions, penalties,
conditions, and limitations of the directors, officers, and
employees of state banks.

Sec. 6.108. QUALIFICATIONS OF APPOINTEE. Authorizes the
commissioner to appoint any person as a supervisor or
conservator who in the sole judgment of the commissioner is
qualified to serve. Authorizes the commissioner to serve or
appoint an employee of the department to serve as supervisor
or conservator.

Sec. 6.109. EXPENSES. (a) Requires the commissioner to
determine and approve the reasonable expenses attributable to
the service of a supervisor or conservator, including costs
incurred by the department and the compensation and expenses
of the supervisor or conservator and any professional employee
appointed to represent or assist the supervisor or
conservator. Prohibits the commissioner or employee of the
department from receiving compensation in addition to salary
for serving as supervisor or conservator, but the department
may receive reimbursement for the fully allocated personnel
cost associated with service of the commissioner or an
employee as supervisor or conservator.

(b) Requires all approved expenses to be paid by the bank
as the commissioner determines. Provides that the
commissioner has a lien against the assets and funds of the
bank to secure payment of approved expenses. Provides that
the lien has a higher priority than any other lien against
the bank.

(c) Authorizes the bank to employ an attorney and other
persons the bank selects to assist the bank in contesting or
satisfying the requirements of an order of supervision or
conservatorship. Requires the commissioner to authorize
payment of reasonable fees and expenses from the bank for
the attorney or other persons as expenses of the supervision
or conservatorship.

(d) Authorizes the commissioner to defer collection of
assessment and examination fees by the department from the
bank during a period of supervision or conservatorship, if
deferral would appear to aid prospects for rehabilitation.
Authorizes the commissioner to require the rehabilitated
bank to pay or develop a reasonable plan for payment of
deferred fees.

Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS.
(a) Authorizes a majority of the bank's board to request in
writing that the commissioner review an action taken or
proposed by the supervisor or conservator. Requires the
request to specify why the action would not be in the best
interest of the bank. Requires the commissioner to
investigate to the extent necessary and make a prompt written
ruling on the request. Authorizes the commissioner to stay
the action on request pending review.

(b) Authorizes a majority of the bank's board to request a
hearing before the commissioner within 10 days after the
bank is notified of a ruling if the majority objects to the
ruling.

(c) Requires the commissioner to give the board notice of
the time and place of the hearing by personal delivery or by
registered or certified mail, return receipt requested.
Prohibits the hearing from being held later than the 10th
day after the date the commissioner receives the request for
a hearing unless the parties agree to a later hearing date.
Provides that at the hearing the board has the burden of
proof to demonstrate that the action is not in the best
interest of the bank.

(d) Authorizes the commissioner to affirm, modify, or set
aside in whole or part the prior ruling after the hearing.
Provides that an order supporting the action contested by
the board is immediately final for purposes of appeal.
Authorizes the order to be appealed. Authorizes the
commission to affirm, terminate, or modify the order,
continue or end supervision or conservatorship, and order
further relief as justice, equity, and protection of
depositors, creditors, and the public require, if the order
is appealed.

Sec. 6.111. VENUE. Establishes the venue of a suit filed
against a bank.

Sec. 6.112. DURATION. Requires a supervisor or conservator
to serve for the period necessary to accomplish the purposes
of the supervision or conservatorship as intended by this
subchapter. Requires a rehabilitated bank to be returned to
its former or new management under conditions reasonable and
necessary to prevent recurrence of the conditions causing the
supervision or conservatorship.

Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES. Authorizes
the commissioner to take any action authorized under Chapter
7 of this Act regardless of the existence of supervision or
conservatorship if the commissioner determines that a bank
should be closed. Provides that a period of supervision or
conservatorship is not required before a bank is closed for
liquidation or other remedial action is taken.

SUBCHAPTER C. UNAUTHORIZED ACTIVITY:
INVESTIGATION AND ENFORCEMENT

Sec. 6.201. INVESTIGATION OF UNAUTHORIZED ACTIVITY. (a)
Sets forth the actions the commissioner may take if the
commissioner has reason to believe that a person has engaged,
is engaging, or is likely to engage in an unauthorized
activity.

(b) Authorizes the commissioner to furnish any materials,
documents, reports, complaints, or other evidence the
commissioner has compiled in connection with the
unauthorized activity to a law enforcement agency on written
request and may assist the law enforcement agency or other
regulatory agency as requested.

(c) Provides that a person acting without malice,
fraudulent intent, or bad faith is not subject to liability,
including liability for libel, slander, or other relevant
tort. Provides that the person is entitled to attorney's
fees and court costs if the person prevails in an action for
libel, slander, or any other relevant tort based on the
report or other information the person furnished. Provides
that this chapter does not affect or modify a common law or
statutory privilege or immunity, preempt the authority or
relieve the duty of a law enforcement agency or other
regulatory agency with appropriate jurisdiction to
investigate and prosecute suspected criminal acts, prohibits
a person from voluntarily disclosing information to a law
enforcement agency, or limit a power or duty granted to the
commissioner under this Act or other law.

(d) Provides that this subchapter does not apply to a state
or national bank, a state or federal savings bank, a state
or federal savings association, or a state or federal credit
union.

Sec. 6.202. SUBPOENA AUTHORITY. (a) Provides that this
section applies only to an investigation of an unauthorized
activity as provided by Section 6.201 of this Act, and does
not affect the conduct of a contested case under Chapter 2001,
Government Code.

(b) Authorizes the commissioner to issue a subpoena to
compel the attendance and testimony of a witness and the
production of a book, account, record, paper, or
correspondence relating to a matter that the commissioner
has authority to consider or investigate at the department's
offices in Austin or at another place the commissioner
designates.

(d) Sets forth the fees and reimbursements a person is
entitled to receive if a person is required by subpoena to
attend a proceeding before the commissioner.

(e) Authorizes the commissioner to serve the subpoena or
have it served by an authorized agent of the commissioner,
a sheriff, or a constable. Requires the sheriff's or
constable's fee for serving the subpoena to be the same as
a fee paid the sheriff or constable for similar services.

(f) Sets forth the authorized actions of the commissioner
if a person possesses materials located outside this state
that are requested by the commissioner.

(g) Provides that a subpoena issued under this section to
a financial institution is not subject to Section 30.007,
Civil Practice and Remedies Code.

(h) Provides that the authority granted under this section
is in addition to other law authorizing the commissioner to
obtain or require information.

Sec. 6.203. ENFORCEMENT OF SUBPOENA. (a) Authorizes the
commissioner to apply to the district court of Travis County
or of the county in which the subpoena was served for
enforcement of the subpoena and the court may issue an order
compelling compliance.

(b) Authorizes the commissioner or the attorney general to
recover reasonable court costs, attorney's fees, and
investigative costs incurred in a proceeding if the court
orders compliance with the subpoena or finds the person in
contempt for failure to obey an order.

Sec. 6.204. CONFIDENTIALITY OF SUBPOENAED RECORDS. (a)
Provides that any subpoenaed document produced under this
section is confidential and remains privileged or confidential
unless admitted into evidence at an administrative hearing in
court. Authorizes the commissioner to issue an order
protecting the confidentiality or privilege of the document
and restricting its use or distribution by any person or in
any proceeding, other than a proceeding before the
commissioner.

(b) Provides that information or material acquired under
this section under a subpoena is not a public record for the
period the commissioner considers reasonably necessary to
complete the investigation, protect the person being
investigated from unwarranted injury, or serve the public
interest. Provides that the information or material is not
subject to a subpoena, except from a valid grand jury, until
released by the commissioner or a district court determines
that a public interest and any investigation by the
commissioner would not be jeopardized by obeying the
subpoena. Establishes the documents to which a district
court order is prohibited from applying.

Sec. 6.205. EVIDENCE. (a) Provides that, on certification
by the commissioner, a book, record, paper, or document
produced or testimony taken and held by the department is
admissible in any case without prior proof of its correctness
and without other proof. Provides that the certified document
is prima facie evidence of the facts it contains.

(b) Provides that this section does not limit another
provision of this Act or a law that provides for the
admission of evidence or its evidentiary value.

Sec. 6.206. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED
ACTIVITY. (a) Makes conforming changes.

(b) Sets forth the provisions of a hearing on a proposed
order.

(c) Requires the commissioner to issue or decline to issue
a cease and desist order after the hearing. Authorizes the
proposed order to be modified as necessary to conform to the
findings at the hearing. Provides that an order issued
under this section is immediately final for purposes of
enforcement and appeal must require the person to
immediately cease and desist from the unauthorized activity.

Sec. 6.207. EMERGENCY CEASE AND DESIST ORDER REGARDING
UNAUTHORIZED ACTIVITY. (a) Authorizes the commissioner to
issue an emergency cease and desist order if the commissioner
reasonably believes a person is engaging in a continuing
unauthorized activity that is fraudulent or threatens
immediate and irreparable public harm.

(b) Requires the commissioner to serve on each person
affected by an emergency cease and desist order to the
person's last known address an order that states the
specific charges and requires the person immediately to
cease and desist from the unauthorized activity. Requires
the order to contain a notice that a request for hearing may
be filed under this section.

(c) Authorizes a person affected by an emergency cease and
desist order to request a hearing before the commissioner.
Sets forth the provisions of the hearing.

(d) Makes conforming changes.

(e) Provides that an emergency cease and desist order
continues in effect unless the order is stayed by the
commissioner until the hearing. Authorizes the commissioner
to impose any condition before granting a stay of the order.

(f) Requires the commissioner to affirm, modify, or set
aside in whole or part the emergency cease and desist order.
Provides that an order affirming or modifying the emergency
cease and desist order is immediately final for purposes of
enforcement and appeal.

Sec. 6.208. APPEAL OF CEASE AND DESIST ORDER REGARDING
UNAUTHORIZED ACTIVITY. (a) Authorizes a person affected by
a cease and desist order to file a petition for judicial
review in the district court of Travis County under the
substantial evidence rule as provided by Chapter 2001,
Government Code.

(b) Provides that a filed petition for judicial review does
not stay or vacate the order unless the court, after
hearing, specifically stays or vacates the order.

Sec. 6.209. VIOLATION OF FINAL CEASE AND DESIST ORDER
REGARDING UNAUTHORIZED ACTIVITY. (a) Authorizes the
commissioner to initiate administrative penalty proceedings
under Section 6.210 of this Act, refer the matter to the
attorney general for enforcement by injunction and any other
available remedy, or pursue any other action the commissioner
considers appropriate under applicable law if the commissioner
reasonably believes that a person has violated a final and
enforceable cease and desist order.

(b) Provides that if the attorney general prevails in an
action brought under Subsection (a)(2) of this section, the
attorney general is entitled to reasonable attorney's fees.

Sec. 6.210. PENALTY ORDER FOR UNAUTHORIZED ACTIVITY. (a)
Authorizes the commissioner to initiate an action for an
administrative penalty against a person under Section
6.209(a)(1) of this Act by serving on the person, by personal
delivery or certified mail, return receipt requested, to the
person's last known address, notice of the time and place of
a hearing on the penalty. Prohibits the hearing from being
held earlier than the 20th day after the date the notice is
served and shall be conducted under Chapter 2001, Government
Code. Requires the notice to contain a statement of the facts
or conduct alleged to be in violation of the cease and desist
order.

(b) Requires the commissioner to consider the maintenance
of procedures reasonably adopted to ensure compliance with
the order.

(c) Sets forth the penalties the commissioner is authorized
to impose upon a person who has violated a cease and desist
order.

(d) Sets forth the considerations the commissioner is
required to make in determining the amount of the penalty
and whether to impose restitution.

Sec. 6.211. PAYMENT AND APPEAL OF PENALTY ORDER. (a) Sets
forth the required actions of a person affected by an order
within the time permitted by law for appeal after the order
becomes final.

(b) Sets forth the authorized actions of a person who acts
under Subsection (a)(3) within the time permitted by law for
appeal.

(c) Authorizes the commissioner to file with the court a
contest to the affidavit. Requires the court to hold a
hearing on the facts alleged in the affidavit as soon as
practicable and to stay the enforcement of the penalty on
finding that the alleged facts are true. Provides that the
person who files an affidavit has the burden of proving that
the person is financially unable to pay the amount of the
penalty and to give a supersedeas bond.

(d) Authorizes the commissioner, if a person does not pay
the amount of the penalty and the enforcement of the penalty
is not stayed, to refer the matter to the attorney general
for collection of the amount of the penalty.

Sec. 6.212. JUDICIAL REVIEW OF PENALTY ORDER. (a) Provides
that judicial review of a penalty order of the commissioner is
instituted by filing a petition and is under the substantial
evidence rule.

(b) Requires the court to order the person to pay the full
amount of the penalty or a lower amount determined by the
court. Provides that if the court does not sustain the
order, the penalty is not owed.

(c) Requires the court to order that the appropriate amount
plus accrued interest be remitted to the department when the
judgment of the court becomes final. Sets forth the
provisions regarding the interest payment due. Requires the
court to order the release of the bond if the person gave a
supersedeas bond and if the amount of the penalty is not
upheld by the court. Requires the court to order the
release of the bond after the person pays the amount if the
person gave a supersedeas bond and if the amount of the
penalty is reduced.

(d) Provides that if the judgment of the court requires
payment of a penalty that has not previously been paid, the
court shall order 10 percent interest to be paid in addition
to the penalty.

Sec. 6.213. DEPOSIT TO GENERAL REVENUE FUND. Requires a
penalty collected under this subchapter to be remitted to the
comptroller for deposit to the credit of the general revenue
fund.

CHAPTER 7. DISSOLUTION AND RECEIVERSHIP

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 7.001. DEFINITION. Defines "administrative expense."

Sec. 7.002. REMEDIES EXCLUSIVE. (a) Prohibits a court from
ordering the closing or suspension of operation of any state
bank or appointing for a state bank a receiver, supervisor,
conservator, or liquidator, or other manager or overseer with
similar responsibility unless the commissioner requests such
action.

(b) Prohibits a person from being designated receiver,
supervisor, conservator, or liquidator without the voluntary
approval and concurrence of the commissioner.

Sec. 7.003. FEDERAL DEPOSIT INSURANCE CORPORATION AS
LIQUIDATOR. Authorizes the commissioner without court action
to tender a state bank that has been closed for liquidation to
the Federal Deposit Insurance Corporation (FDIC) or its
successor as receiver and liquidating agent if the deposits of
the bank were insured by the FDIC or its successor on the date
of closing. Requires the FDIC or its successor to perform the
acts and duties as receiver of the bank that it considers
necessary or desirable and that are permitted or required by
federal law or this chapter. Requires the commissioner to act
as receiver if the FDIC or its successor refuses to accept
tender of the bank.

Sec. 7.004. APPOINTMENT OF INDEPENDENT RECEIVER. (a)
Authorizes the court to appoint an independent receiver and to
require a suitable bond of the independent receiver on request
of the commissioner.

(b) Requires the commissioner to remain a party to the
liquidation proceeding with the standing to initiate or
contest any motion if an independent receiver is appointed.
Provides that the views of the commissioner are entitled to
deference if not contrary to the plain meaning of this
chapter.

Sec. 7.005. SUCCESSION OF TRUST POWERS. (a) Authorizes the
commissioner to authorize the sale of the bank's
administration of fiduciary accounts to a successor entity
with fiduciary powers if any state bank in the process of
voluntary or involuntary dissolution and liquidation is acting
as trustee, guardian, executor, administrator, or escrow
agent, or in another fiduciary or custodial capacity.

(b) Requires the successor entity to continue the office,
trust, or fiduciary relationship and to perform all the
duties and exercise all the powers connected with or
incidental to the fiduciary relationship in the same manner
as if the successor entity had been originally designated as
the fiduciary.

(c) Provides that this section applies to all fiduciary
relationships, including a trust establishment for the
benefit of a minor by court order. Provides that this
section does not affect any right of a court or party to the
instrument governing the fiduciary relationship to
subsequently designate another trustee as the successor
fiduciary.

SUBCHAPTER B. VOLUNTARY DISSOLUTION

Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION.
(a) Authorizes a state bank to initiate voluntary dissolution
and surrender its charter as provided by the subchapter with
the approval of the commissioner, after complying with the
provisions of the TBCA regarding board and shareholder
approval for voluntary dissolution, and by filing the notice
of dissolution as provided by Section 7.102(a) of this Act.

(b) Requires the home office and all branch offices of the
bank to remain open for business during normal business
hours until the last date specified in published notices for
presentation of claims, withdrawal of accounts, and
redemption of property.

(c) Requires the shareholders or participants of a state
bank initiating voluntary dissolution to by resolution
appoint one or more persons to act as liquidating agent or
committee who shall conduct the liquidation as provided by
law and under the supervision of the board. Requires the
board to require the liquidating agent or committee to give
suitable bond.

Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION. (a) Requires
a majority of the board to verify and file duplicate certified
copies of certain documents with the commissioner after
resolutions to dissolve and liquidate the bank have been
adopted by the board and shareholders or participants.

(b) Requires the commissioner to review the submitted
documentation and conduct any necessary investigation or
examination. Requires the commissioner to consent to
dissolution and direct the bank to publish notice of its
pending dissolution if the proceedings appear to have been
properly conducted and the bond to be given by the
liquidating agent or committee is adequate for its purposes.

(c) Requires the bank to publish notice in a newspaper of
general circulation in each community where its home office
or a branch is located at least once each week for eight
consecutive weeks or at other times specified by the
commissioner or rules adopted under this Act. Requires the
notice to state that the bank is liquidating, that
depositors and creditors must present their claims for
payment on or before a specified date, and that all safe
deposit box holders and bailors of property left with the
bank should remove their property on or before a specified
date. Establishes the procedures for notification and
repayment of claims for a liquidation.

(d) Requires the bank to mail to each of the bank's known
depositors, creditors, safe deposit box holders, and bailors
of property left with the bank, at the mailing address shown
on the bank's records, an individual notice containing the
information required in a notice under Subsection (c) of
this section and specific information pertinent to the
account or property of the addressee.

(e) Requires a notice under this section to be in the form
and include the information required by the commissioner.

Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS. (a) Provides
that a contract between the bank and a person for bailment, or
of deposit for hire, or for the lease of a safe, vault, or
box, ceases on the date specified as the date for removal of
property in the notices or a later date approved by the
commissioner. Provides that a person who has paid rental or
storage charges for a period extending beyond the date
designated for removal of property has an unsecured claim
against the bank for a refund of any unearned amount paid.

(b) Requires an officer of the bank to inventory the
property and may open a safe, vault, or box or any package,
parcel, or receptacle, in the custody or possession of the
bank, to make the inventory. Requires the property to be
marked to identify its owner or the person who left it with
the bank. Requires the a master list certified by the bank
officer and the notary public to be furnished to the
commissioner after all property belonging to others that is
in the bank's custody and control has been inventoried.
Requires the master list to be kept in a place and dealt
with in a manner the commissioner specifies pending delivery
of the property to its owner or to the state treasurer as
unclaimed property.

Sec. 7.104. FIDUCIARY ACTIVITIES. (a) Requires the bank to
terminate all fiduciary positions it holds, surrender all
property held by it as a fiduciary, and settle its fiduciary
accounts.

(b) Requires the bank to mail individual notices to each
trustor and beneficiary of any remaining trust, escrow
arrangement, or other fiduciary relationship advising the
person of an office location open during normal business
hours and a telephone number at that location where
administration of the remaining fiduciary accounts will
continue until settled or transferred.

Sec. 7.105. FINAL LIQUIDATION. (a) Requires the bank to
make a list from its books of the names of each depositor,
creditor, owner of personal property in the bank's possession
or custody, or lessee of any safe, vault, or box, who has not
claimed or has not received a deposit, debt, dividend,
interest, balance, or other amount or property due to the
person after the bank has taken all of the necessary actions
and has paid all its debts and obligations and transferred all
property for which a legal claimant has been found.

(b) Requires the list to be filed with the commissioner.
Requires the bank to pay any unclaimed funds and deliver any
unclaimed property to the state treasurer as provided by
Chapter 74, Property Code, and certify to the commissioner
that the unclaimed funds and property have been paid or
delivered.

(c) Requires the commissioner to allow the bank to
distribute the bank's remaining assets among its
shareholders, participants, or participant-transferees as
their ownership interests appear.

(d) Requires the bank to file and tender certain documents
with the department after distribution of all remaining
assets.

(e) Requires the commissioner to issue a certificate
cancelling the charter of the bank after verifying the
submitted information and documents.

Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES.
(a) Requires the bank to furnish reports required by the
commissioner.

(b) Authorizes the commissioner to authorize a deviation
from the procedures for voluntary dissolution in this
subchapter if the commissioner determines that the interests
of claimants are not jeopardized by the deviation.

(c) Authorizes the commissioner to close the bank for
involuntary dissolution and liquidation if the commissioner
determines that the voluntary liquidation is being conducted
in an improper or illegal manner or is not in the best
interests of the bank's depositors and creditors or that the
bank is insolvent or imminently insolvent.

(d) Prohibits the bank from resuming business or reopening
except on application for and approval of a new charter
after a charter has been voluntarily surrendered and
cancelled.

SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION

Sec. 7.201. ACTION TO CLOSE STATE BANK. (a) Authorizes the
commissioner to close and liquidate a state bank upon certain
findings.

(b) Authorizes a majority of the bank's board to
voluntarily close the bank and place it with the
commissioner for liquidation.

Sec. 7.202. INVOLUNTARY CLOSING. (a) Sets forth the
required actions of the commissioner after the closing of a
bank. Prohibits a correspondent of the closed bank from
paying an item drawn on the account of the closed bank that is
presented for payment after the correspondent has received
actual notice of closing unless it previously certified the
item.

(b) Requires the commissioner to tender the bank to the
FDIC as provided by Section 7.003 of this Act or initiate a
receivership proceeding by filing a copy of the notice
contained on the sign in a district court in the county
where the bank's home office is located. Sets forth the
required language regarding the docket which the court must
file. Provides that as soon as the notice is filed, the
court has constructive custody of all the bank's assets and
any action to affect the bank assets is considered
intervention.

Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP. (a)
Prohibits the court from requiring a bond from the
commissioner as receiver. Provides that any reference to the
receiver in this chapter is a reference to the commissioner as
receiver and any successors in office, the FDIC, or an
independent receiver appointed at the request of the
commissioner. Provides that the receiver and all employees
and agents acting on behalf of the receiver are acting in an
official capacity and subject to the protection of Section
2.010 of this Act. Prohibits the acts of the non-liable
receiver and acts of the bank in liquidation and this state
and its political subdivisions from being held accountable for
any debt or obligation of the state bank in receivership.

(b) Provides that the receiver has all the powers of the
board, officers, and shareholders or participants of the
bank as necessary to support an action taken on behalf of
the bank.

(c) Provides that Section 64.072, Civil Practice and
Remedies Code, applies to the receivership of a bank except
as provided by this subsection. Requires a receivership to
be administered continuously for the length of time
necessary to complete its purposes, and a period prescribed
by other law limiting the time for the administration of
receiverships or of corporate affairs generally does not
apply.

Sec. 7.204. CONTEST OF LIQUIDATION. (a) Authorizes a state
bank, acting through a majority of its board to intervene in
the action filed by the commissioner to challenge the
commissioner's closing of the bank and to enjoin the
commissioner or other receiver from liquidating its assets.
Requires the intervenors to file the intervention not later
than the second business day after the closing of the bank.
Authorizes the court to issue an ex parte order restraining
the receiver from liquidating bank assets pending a hearing on
the injunction. Requires the receiver to comply with the
restraining order but may petition the court for permission to
liquidate an asset as necessary to prevent its loss or
diminution pending the outcome of the injunction.

(b) Requires the court to hear this action as quickly as
possible and to give it priority over other business.

(c) Authorizes the bank or receiver to appeal the court's
judgment as in other civil cases, except that the receiver
shall retain all bank assets pending a final appellate court
order even if the commissioner does not prevail in the trial
court. Authorizes the liquidation of the bank to proceed
unless the trial court or appellate court orders otherwise.
Provides that if liquidation is enjoined or stayed pending
appeal, the trial court retains jurisdiction to permit
liquidation of an asset as necessary to prevent its loss or
diminution pending the outcome of the appeal.

Sec. 7.205. NOTICE OF BANK CLOSING. (a) Sets forth the
requirements of a notice of a bank closing for liquidation.

(b) Requires the receiver to mail to each of the bank's
known depositors, creditors, safe deposit box holders, and
bailors of property left with the bank an individual notice
and specific information pertinent to the account or
property of the addressee.

Sec. 7.206. INVENTORY. Requires the receiver to prepare a
comprehensive inventory of the bank's assets for filing with
the court. Requires the inventory to be open to inspection.

Sec. 7.207. TITLE IN RECEIVER. (a) Provides that the
receiver has the title to all the bank's property, contracts,
and rights of action, wherever located, beginning on the date
the bank is closed for liquidation.

(b) Provides that the rights of the receiver have priority
over a contractual lien or statutory landlord's lien,
judgment lien, attachment lien, or voluntary lien that
arises after the date of the closing of the bank for
liquidation.

(c) Provided that the filing or recording of a receivership
order in a record office of this state gives the same notice
that would be given by a deed, bill of sale, or other
evidence of title duly filed or recorded by the bank in
liquidation. Requires the recording clerk to index a
recorded receivership order in the records to which the
order relates.

Sec. 7.208. RIGHTS FIXED. Provides that the rights and
liabilities of the bank in liquidation and of anyone
associated or interested in the bank's estate are fixed on the
date of closing of the bank for liquidation except as
otherwise directed by the court or as expressly provided
otherwise by this chapter.

Sec. 7.209. DEPOSITORIES. (a) Sets forth the authorized
deposits a receiver may make from funds collected on behalf of
the bank estate.

(b) Requires the receiver to require the excess deposit to
be adequately secured through pledge of securities or
otherwise, without approval of the court. Authorizes the
depository bank to secure the deposits of the bank in
liquidation on behalf of the receiver, notwithstanding any
other provision of this Act.

Sec. 7.210. PENDING LAWSUITS. (a) Provides that a judgment
or order of a court in an action pending by or against the
bank, rendered after the date the bank was closed for
liquidation, is not binding after the date the bank was closed
for liquidation, is not binding on the receiver unless the
receiver was made a party to the suit.

(b) Prohibits the receiver from being required to plead to
any suit pending against the bank in a court in this state
on the date the bank was closed for liquidation and in which
the receiver is a proper plaintiff or defendant.

(c) Provides that Sections 64.052, 64.053, and 64.056,
Civil Practice and Remedies Code, do not apply to a bank
estate being administered under this chapter.

Sec. 7.211. NEW LAWSUITS. (a) Provides that the court in
which the receivership proceeding is pending under this
subchapter has exclusive jurisdiction to hear and determine
all actions or proceedings instituted by or against the bank
or receiver after the receivership proceeding starts.

(b) Authorizes the receiver to file in any jurisdiction an
ancillary suit that may be helpful to obtain jurisdiction or
venue over a person or property.

(c) Sets forth the exclusive venue of an action or
proceeding instituted against the receiver or the receiver's
employee.

Sec. 7.212. RECORDS WITH THIRD PARTIES. (a) Requires anyone
associated with a bank to immediately deliver to the receiver
any information regarding the bank or that relates to the
business of the bank without cost to the receiver.

(b) Requires a copy of any book, record, account, or
document which can be copied to be delivered to the
receiver, and the original to be retained by the owner until
notification by the receiver that it is no longer required
in the administration of the bank's estate or at another
time the court, after notice, and hearing directs. Provides
that a copy is considered to be a record of the bank in
liquidation under Section 7.226 of this Act.

Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION. (a)
Establishes the injunctions a court may issue with or without
notice.

(b) Establishes the subsequent injunctions a court may
issue during a proceeding.

Sec. 7.214. SUBPOENA. (a) Authorizes the receiver to
request the court ex parte to issue a subpoena to compel the
attendance and testimony of a witness before the receiver and
the production of a book, account, record, paper, or
correspondence or other record relating to the receivership
estate in addition to the authority granted by law to the
receiver relating to the taking of a deposition of a witness.
Authorizes the receiver or the receiver's designated
representative to administer an oath or affirmation, examine
a witness, or receive evidence. Authorizes the court to
compel attendance and production of a record before the
receiver at the bank, the office of the receiver, or another
location.

(b) Authorizes a person served with a subpoena to file a
motion with the court for a protective order. Authorizes
the receiver to request and the court may issue an order
requiring the person subpoenaed to obey the subpoena, give
evidence, or produce a book, account, record, paper, or
correspondence or other record relating to the matter in
question.

(d) Provides that all disbursements made in the payment of
fees under Subsection (c) of this section are administrative
expenses of liquidation.

(e) Authorizes the receiver to serve the subpoena or have
it served by the receiver's authorized agent, a sheriff, or
a constable. Requires the sheriff's or constable's fee for
serving a subpoena to be the same as the fee paid the
sheriff or constable for similar services.

(f) Provides that a subpoena issued under this section to
a financial institution is not subject to Section 30.007,
Civil Practice and Remedies Code.

(g) Provides that on certification by the receiver under
official seal, any document or testimony taken by the
receiver is admissible in evidence in any case without proof
of its correctness and without other proof except the
certificate of the receiver that the document or testimony
was received from the person producing the material or
testifying. Provides that the document is prima facie
evidence of the facts it contains. Provides that this
section does not limit another provision of this subchapter,
Subchapter D of this chapter, or another law that provides
for the admission of evidence or its evidentiary value.

Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS. (a)
Authorizes the receiver to terminate any executory contract to
which the bank is a party or any obligation of the bank as a
lessee within six months after the date the receivership
proceeding begins. Provides that a lessor who receives notice
of the receiver's election to terminate the lease is not
entitled to rent or damages for termination, other than rent
accrued to the date of termination.

(b) Sets forth the criteria in which an agreement that
tends to diminish or defeat the interest of the estate in a
bank asset is valid against the receiver.

Sec. 7.216. PREFERENCES. (a) Sets forth the circumstances
in which any transfer of or lien on the property or assets of
a state bank is voidable by the receiver.

(b) Provides that any person acting on behalf of the bank,
who has participated in implementing a voidable transfer or
lien, and each person receiving property or the benefit of
property of the bank as a result of the voidable transfer or
lien, is personally liable for the property or benefit
received and shall account to the receiver for a benefit of
the depositors and creditors of the bank.

(c) Authorizes the receiver to avoid a transfer of or lien
on the property or assets of a bank that a depositor,
creditor, shareholder, participant, or transferee of the
bank could have avoided and to recover the property
transferred or its value from the person who has received
it, unless the transferee or recipient was a bona fide
holder for value before the date the bank was closed for
liquidation.

Sec. 7.217. OTHER POWERS OF THE RECEIVER; ADMINISTRATIVE
EXPENSES. Authorizes the receiver to employ any personnel the
receiver considers necessary to assist in the performance of
the receiver's duties. Authorizes the receiver to use
personnel of the department if the receiver considers the use
to be advantageous or desirable. Provides that the expense of
employing these persons is an administrative expense of
liquidation.

Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS. (a)
Authorizes the receiver on order of the court entered with or
without hearing to sell all or part of the real and personal
property of the bank, borrow money and pledge all or part of
the assets of the bank to secure the debt created, except that
the receiver may not be held personally liable to repay the
funds, compromise or compound a doubtful or uncollectible debt
or claim owed by or owing to the bank, and enter another
agreement on behalf of the bank that the receiver considers
necessary or proper to the management, conservation, or
liquidation of its assets.

(b) Authorizes the receiver to compromise or compound the
debt or claim or sell the property on terms the receiver
considers to be in the best interests of the bank estate
without obtaining the approval of the court if the amount of
a debt or claim owed by or owing to the bank or the value
of an item of property of the bank does not exceed $20,000,
excluding interest.

(c) Authorizes the receiver to sell or offer to sell an
asset of the bank, other than fiduciary assets, to a
depositor or creditor of the bank. Authorizes payment to be
in whole or in part out of distributions payable to the
purchasing creditor or depositor on account of an approved
claim against the bank's estate. Authorizes the court to
designate one or more representatives to act for certain
depositors or creditors as a class under this section, and
the receiver may with the approval of the court advance the
expenses of the appointed representative against the
security of the claims of the class.

Sec. 7.219. DISCRETION OF THE COURT. Requires the court to
fix the time and place of the hearing and prescribe whether
the notice is to be given by the service on specific parties,
by publication, or by a combination of these methods.
Prohibits the court from entering an order requested by a
person other than the receiver without notice to the receiver
and opportunity for the receiver to be heard.

Sec. 7.220. FILING REPORTS; EXPENSES. (a) Requires the
receiver to file quarterly reports with the court showing the
operation, receipts, expenditures, and general condition of
the bank in liquidation. Requires the receiver to file a
final report regarding a liquidated bank showing all receipts
and expenditures and giving a full explanation and a statement
of the deposition of all assets of the bank.

(b) Requires the receiver to pay all administrative
expenses out of funds or assets of the bank. Requires the
receiver to submit an itemized report of those expenses,
sworn to by the receiver. Requires the court to approve the
report unless an objection is filed before the 11th day
after the date of submission of the account. Authorizes an
objection to be made only by a party in interest and must
specify each item objected to and the ground for the
objection. Requires the court to set the objection for
hearing and notify the parties of this action. Provides
that the objecting party has the burden of proof to show
that the item objected to is improper, unnecessary, or
excessive.

(c) Authorizes the court to prescribe whether the notice of
the receiver's report is to be given by service on specific
parties, by publication, or by combination of these methods.

Sec. 7.221. COURT-ORDERED AUDIT. Authorizes the court in
which the receivership proceeding is pending to order an audit
of the books and records of the receiver that relate to the
receivership. Requires a report of an audit ordered under
this section to be filed with the court. Requires the
receiver to make the books and records relating to the
receivership available to the auditor as required by the court
order. Requires the receiver to pay the expenses of an audit
ordered under this section as an administrative expense.

Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS. (a) Provides
that a contract between the bank and another person for
bailment, of deposit for hire, or for the lease of a safe,
vault, or box ceases on the date specified for removal of
property in the notices that were published and mailed or a
later date approved by the receiver or the court. Requires a
person who has paid rental or storage charges for a period
extending beyond the date designated as the date for removal
of property to have a claim against the bank estate for a
refund of any unearned amount paid.

(b) Requires the receiver to inventory the property and may
open a safe, vault, or box, or any package in the custody or
possession of the receiver, to make inventory. Requires the
property to be marked to identify, to the extent possible,
its owner or the person who left it with the bank. Requires
the receiver to compile a master list that is divided for
each office of the bank that received property that remains
unclaimed. Sets forth contents and provisions of a notice
of the list the receiver is required to publish.

Sec. 7.223. FIDUCIARY ACTIVITIES. (a) Requires the receiver
to terminate all fiduciary positions it holds, surrender all
property held by it as a fiduciary, and settle the bank's
fiduciary accounts. Requires the receiver to release all
segregated and identifiable fiduciary property held by the
bank to successor fiduciaries.

(b) Authorizes the receiver to sell the administration of
all or substantially all remaining fiduciary accounts to one
or more successor fiduciaries on terms that appear to be in
the best interests of the bank's estate and the persons
interested in the best interests of the bank's estate and
the person interested in the fiduciary accounts.

(c) Requires the receiver to distribute commingled funds
pro rata to all fiduciary claimants of commingled funds
based on their proportionate interests after payment of
administrative expenses related solely to the fiduciary
claims. Provides that the fictional tracing rule does not
apply. Provides that to the extent of any unsatisfied
fiduciary claim to commingled funds, claimants to commingled
trust funds are entitled to the same priority as depositors
of the bank.

(d) Provides that subject to Subsection (c) of this
section, if the bank has lost fiduciary funds or property
through misappropriation or otherwise, claimants to missing
fiduciary funds or property are entitled to the same
priority as depositors of the bank.

(e) Authorizes the receiver to require certain fiduciary
claimants to file proofs of claim if the records of the bank
are insufficient to identify their respective interests.

Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS. (a)
Authorizes the receiver to require certain fiduciary claimants
to file proofs of claim if the records of the bank are
insufficient to identify their respective interests.

(b) Authorizes the receiver to devise a method for the
effective, efficient, and economical maintenance of the
records of the bank and of the receiver's office, including
maintaining those records on any medium approved by the
records management division of the Texas State Library.

(c) Authorizes the receiver to reserve assets of an estate,
deposit them in an account, and use them for maintenance,
storage, and disposal of records in closed receivership
estates.

(d) Requires records of a liquidated bank to be preserved
and disposed of as if they were records of the department.
Provides that the records are confidential.

Sec. 7.225. RECORDS ADMITTED. (a) Requires a certified copy
of a record under the official seal of the receiver to be
received from the custody of the bank or found among its
effects.

(b) Authorizes the receiver to certify the correctness of
a paper, document, or record of the receiver's office, and
to certify any fact contained in the paper, document or
record. Requires the document to be received in evidence in
all cases in which the original would be evidence.

(c) Provides that the original document or a certified copy
of such a document is prima facie evidence of the facts it
contains.

(d) Provides that a copy of an original record or another
that is maintained on a medium approved by the records
management division of the Texas State Library, within the
scope of this section, and produced by the receiver or the
receiver's authorized representative under this section has
the same force and effect as the original record and may be
used the same as the original record in a judicial or
administrative proceeding in this state.

Sec. 7.226. RESUMPTION OF BUSINESS. (a) Prohibits a state
bank from being reopened without the approval of the
commissioner unless a contest of liquidation is finally
resolved adversely to the commissioner and the court
authorizes its reopening.

(b) Authorizes the commissioner to place temporary limits
on the right of withdrawals by or payments to, individual
depositors and creditors. Sets forth the provisions of the
limits under this section.

(c) Authorizes a depositor or creditor of this state to
agree to temporary limits that the commissioner places on
payments or withdrawals.

Sec. 7.227. AFTER-DISCOVERED ASSETS. (a) Requires the
commissioner to report a discovery to the court if the
commissioner discovers assets that have value and were
abandoned as worthless or unknown during receivership.
Authorizes the court to reopen the receivership proceeding for
continued liquidation if the value of the after-discovered
assets justifies the reopening.

(b) Requires the commissioner to notify appropriate civil
and criminal authorities to determine what penalties, if
any, may be available if the commissioner suspects that the
information may have been intentionally or fraudulently
concealed.

SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE

Sec. 7.301. FILING CLAIMS. (a) Authorizes a person other
than a shareholder, participant, or transferee acting in that
capacity who has a claim against the bank in liquidation to
assert the claim by presenting proof of the claim to the
receiver at a place specified by the receiver within the
period specified by the receiver. Prohibits a claim that is
not filed within the period specified by the court from
participating in a distribution of the assets by the receiver.
Provides that interest does not accrue on a claim after the
date the bank is closed for liquidation.

(b) Authorizes the receiver to accept a claim filed after
the date specified if the claim is filed with the receiver
not later than the 180th day after the date notice of the
claimant's right to file a proof of claim is mailed to the
claimant. Provides that the claim is subordinate to an
approved claim of a general creditor.

Sec. 7.302. PROOF OF CLAIM. (a) Sets forth the required
contents of a written statement for a proof of claim.

(b) Authorizes the receiver to designate the form of the
proof of claim. Requires a proof of claim to be filed under
oath unless the oath is waived by the receiver. Provides
that a proof of claim filed with the receiver is considered
filed in an official proceeding.

(c) Requires the original claim to be filed with the proof
of claim unless lost or destroyed. Authorizes the receiver
to permit the claimant to substitute a copy of the
instrument until the final disposition of the claim.
Requires a statement of fact and of the circumstances of the
loss or destruction of an instrument to be filed under oath
with a claim if applicable.

Sec. 7.303. JUDGMENT AS PROOF OF CLAIM. Prohibits a judgment
entered against the bank before the date the bank was closed
from being given higher priority than an unsecured creditor
unless the judgment creditor in a proof of claim proves the
allegations supporting the judgment to the receiver's
satisfaction. Prohibits a judgment from being considered as
evidence of liability or of the amount of damages. Prohibits
a judgment from being considered as conclusive evidence of the
liability of the bank to the judgment creditor or of the
amount of damages to which the judgment creditor is entitled.

Sec. 7.304. SECURED CLAIMS. (a) Authorizes the owner of a
secured claim against a bank in liquidation to surrender the
security and file a claim as a general creditor or apply the
security and discharge the claim. Requires any deficiency of
an owner who applies the security to be treated as a claim
against the general assets of the bank on the same basis as a
claim of an unsecured creditor. Requires the amount of the
deficiency to be determined, except that if the amount of the
deficiency has been adjudicated by a court of competent
jurisdiction in a proceeding in which the receiver has had
notice and an opportunity to be heard, the court's decision is
conclusive as to the amount.

(b) Sets forth the method of determining the value of a
security.

Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS. (a)
Requires a claim based on a unliquidated or undetermined
demand to be filed within a specified period. Prohibits the
claim from sharing in any distribution to claimants until the
claim is definitely liquidated, determined, and allowed.
Provides that after such action, the claim shares ratability
with the claims of the same classes in all subsequent
distributions.

(b) Provides that a demand is considered unliquidated or
undetermined if the right of action on the demand accrued
while the bank was closed for liquidation and the liability
on the demand has not been determined or the amount of the
demand has not been liquidated.

(c) Provides that if the receiver in all other respects is
in a position to close the receivership proceeding, the
proposed closing is sufficient grounds for the rejection of
any remaining claim based on an unliquidated or undetermined
demand. Requires the receiver to notify the claimant of the
intention to close the proceeding. Authorizes the receiver
to reject a claim if the demand is not liquidated or
determined before the 61st day after the date of the notice.

Sec. 7.306. SET-OFF. (a) Requires mutual credits and mutual
debts to be set off and only the balance allowed or paid,
except that a set-off may not be allowed in favor of a person
under certain circumstances.

(b) Requires the receiver to provide a person with an
accounting statement identifying each debt that is due and
payable. Requires a person to promptly pay to the receiver
the amount due and payable. Requires the receiver to
promptly refund, to the extent of the person's prior
payment, mutual credits that become due and payable to the
person by the bank in liquidation.

Sec. 7.307. ACTION ON CLAIMS. (a) Requires the receiver to
accept or reject each filed claim in whole or in part within
a specified period. Authorizes the receiver to approve or
reject a claim filed against the bank in liquidation, and to
reject a claim if the receiver doubts its validity.

(b) Requires the receiver to mail written notice to each
claimant specifying the disposition of the person's claim.
Requires the receiver in the notice to specify the basis for
rejection and advise the claimant of the procedures and
deadline for appeal.

(c) Requires the receiver to send each claimant a summary
schedule of approved and rejected claims by a priority class
and notify the claimant of certain procedures.

(d) Prohibits the receiver and the receiver's agents and
employees including employees of the department from having
a cause of action brought against them for an action taken
or not taken relating to the adjustment, negotiation, or
settlement of claims.

Sec. 7.308. OBJECTION TO APPROVED CLAIM. Authorizes a
depositor, creditor, claimant, shareholder, participant, or
transferee of the bank to file an objection to an approved
claim. Requires the objection to be heard and determined by
the court. Requires the court to direct an appropriate
modification of the schedule.

Sec. 7.309. APPEAL OF REJECTED CLAIM. Provides that if an
action on a rejected claim is not brought in the court within
a specified period, the action of the receiver is final and
not subject to review. Provides that if an action which is
timely brought, review is de novo as if originally filed in
the court and subject to the rules of procedure and appeal
applicable to civil cases. Provides that this action is
separate from the receivership proceeding and is not initiated
by a claimant's attempt to appeal the action of the receiver
by intervening in the receivership proceeding.

Sec. 7.310. PAYMENT OF CLAIMS. (a) Prohibits the receiver
from making a payment on a claim, other than a claim for an
obligation incurred by the receiver for administrative
expenses.

(b) Authorizes the receiver to periodically make partial
distribution to the holders of approved claims if a proper
reserve is established for the pro rata payment of rejected
claims that have been appealed and any claims based on
unliquidated or undetermined demands governed by Section
7.305 of this Act.

(c) Requires the receiver to distribute the assets of the
bank in satisfaction of approved claims other than claims
asserted in a person's capacity as a shareholder,
participant, or transferee.

Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED BANK.
Requires the distribution of assets from the estate of a bank
the deposits of which are insured by the FDIC or its successor
to be made in the same order of priority as assets should be
distributed on liquidation or purchase of assets and
assumption of liabilities of a national bank under federal
law.

Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED BANK. (a)
Requires the priority of distribution of assets from the
estate of a bank the deposits of which are not insured by the
FDIC or its successor to be in accordance with the order of
each class as provided by this section. Requires every claim
in each class to be paid in full or adequate funds to be
retained for that payment, before the members of the next
class receive any payment.

(b) Sets forth the order of distribution of assets.

Sec. 7.313. EXCESS ASSETS. (a) Requires the receiver to
distribute the remaining assets to the shareholders or
participants of the bank if bank assets remain after the
receiver has provided for unclaimed distributions and of all
of the liabilities of the bank in liquidation. Authorizes the
receiver to call a meeting of the shareholders or participants
and transferees of the bank if the remaining assets are not
liquid or otherwise require continuing administration.

(b) Requires the shareholders or participants to appoint
one or more agents to take over the affairs to continue the
liquidation for the benefit of the shareholders or
participants and transferees. Provides that voting
privileges are governed by the bank's bylaws and articles of
association. Requires the commissioner to appoint an agent
if a quorum cannot be obtained at the meeting.

(c) Requires an appointed agent to execute and file with
the court a bond approved by the court, conditioned on the
faithful performance of all the duties of the trust.
Requires the receiver to transfer and deliver to the agent
or agents all assets of the bank remaining in the receiver's
hands and the court to discharge the receiver from further
liability to the bank and its consumers. Prohibits the bank
from resuming business and the charter of the bank is void
on the date the court issues the order directing the
receiver to transfer and deliver the remaining assets of the
bank to the agent or agents.

Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY. Requires any
unclaimed property remaining in the receiver's hands to be
tendered to the state treasurer as provided by Chapter 74,
Property Code, after completion of the liquidation.

CHAPTER 8. PROVISIONS APPLICABLE TO
BANKS AND OTHER DEPOSITORY INSTITUTIONS;
BANK HOLDING COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION OF
CORPORATE OFFICIALS. (a) Provides that the provisions of the
TBCA regarding liability, defenses, and indemnification of
certain officials apply to certain officials of a depository
institution. Prohibits a disinterested board, officer or
employee of a depository institution from being held
personally liable in an action seeking monetary damages
arising from the conduct of the depository institution's
affairs unless the damages resulted from the gross negligence
or wilful or intentional misconduct of the person during the
person's term of the office with the depository institution.

(b) Provides that an official or employee of a depository
institution is disinterested with respect to a decision or
transaction if the person fully discloses any interest in
the decision or transaction and does not participate in the
decision or transaction, or if the decision or transaction
does not involve certain actions.

(c) Provides that an official who acts in good faith in
performing the person's duties and functions and reasonably
believes that reliance is warranted is entitled to rely on
information or an opinion, report, statement, including a
financial statement prepared by a committee, prepared,
presented, made, or rendered by certain persons.

(d) Defines "family member."

Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION. (a)
Prohibits an attachment, injunction, or execution for the
purpose of collecting a money judgment or securing a
prospective money judgment against a financial institution
from being issued against a financial institution located in
this state before the judgment is final and all appeals have
been exhausted or foreclosed by law.

(b) Provides that this section affects an attachment,
injunction, execution, or writ of garnishment issued to or
served on a financial institution for the purposes of
collecting a money judgment or securing a prospective money
judgment against a depositor of or deposit account in the
financial institution.

Sec. 8.003. OFFICES OF OUT-OF-STATE BANKS. (a) Authorizes
a bank that is not domiciled or primarily located in the state
to establish one or more offices in this state for any lawful
purpose. Requires the bank to file certain documents with the
secretary of state.

(b) Requires the secretary of state to collect specified
fees for the use of the state.

(c) Requires the secretary of state to promptly forward a
notice or process by registered or certified mail, return
receipt requested, to the officer, agent, or other person
designated. Provides that failure of the bank to maintain
a designated person does not affect the validity of service
mailed to the last designated person at the last designated
address. Provides that service of notice or process on the
secretary of state as agent for a bank described in the
section has the same effect as personal service would have
if made in this state on the depository institution.

(d) Provides that a bank transacting business in this state
in compliance with this section is not doing business in
this state for the purposes of Part Eight, TBCA.

(e) Prohibits a bank from using any form of advertising,
including a sign or printed or broadcast material, that
implies or tends to imply that the bank is engaged in
banking business that the bank is not legally authorized to
transact.

Sec. 8.004. UNAUTHORIZED BANKING. (a) Prohibits a person
other than a depository institution authorized to conduct
business in this state from conducting the business of banking
or representing to the public that it is conducting the
business of banking.

(b) Prohibits a person from using the term "bank" or "bank
and trust" in any way shape or form to imply to the public
that the person is engaged in the business of banking in
this state.

(d) Provides that a person violating this section is
subject to an enforcement action initiated by the
commissioner under Chapter 6C, except that the maximum
administrative penalty for a violation involving only
Subsection (b) of this section is $500 for each day the
violation continues.

Sec. 8.005. SLANDER OR LIBEL OF A BANK. (a) Sets forth the
actions which constitute an offense.

(b) Provides that an offense under this section is a state
jail felony.

Sec. 8.006. AUTHORITY TO ACT AS NOTARY PUBLIC. Provides that
a notary public is not disqualified from taking an
acknowledgment or proof of a written instrument as provided by
Section 406.016, Government Code, solely because of the
person's ownership of stock or participation interest in or
employment by a bank that is an interested party in the
underlying transaction.

Sec. 8.007. EXEMPTION FROM SECURITIES LAW. (a) Provides
that a board, or employee of a bank located in this state
which meets certain criteria is exempt from the registration
and licensing provisions of Article 581-1, V.T.C.S.
(Securities Act) with respect to that person's participation
in a sale or other transaction involving securities issued by
certain banks.

(b) Prohibits a person from being compensated for services
performed under the exemption provided by this section.

Sec 8.008. SUCCESSION OF TRUST POWERS. Provides that if a
reorganizing or selling financial institution at the time of
a merger, reorganization, conversation, or sale of
substantially all of its assets under Chapter 3 of this Act or
other applicable law is acting as trustee, guardian, executor,
or administrator, or in another fiduciary capacity, the
successor entity with fiduciary powers may, without the
necessity of judicial action or action by the creator of the
trust, continue the office, trust, or fiduciary relationship.
Authorizes the financial institution to perform all the duties
and exercise all the powers connected with or incidental to
the fiduciary relationship in the same manner as if the
successor entity had been originally designated as the
fiduciary.

Sec. 8.009. AFFILIATES AS AGENTS. (a) Authorizes a bank
subsidiary of a holding company to receive deposits, renew
time deposits, close loans, service loans, and receive
payments on loans and other obligations as an agent for a
depository institution affiliate. Provides that a bank acting
as an agent for a depository institution affiliate as provided
by this section is not considered to be a branch of the
affiliate.

(b) Sets forth the activities which a depository
institution is prohibited from doing.

(c) Provides that this section does not affect the
authority of an institution to act as an agent on behalf of
another depository institution under another law; or whether
an institution that conducts activity as an agent of anther
institution under another law is considered to be a branch
of the other institution.

(d) Requires an agency relationship between depository
institutions to be on terms that are consistent with safe
and sound banking practices and all applicable rules.

Sec. 8.010. DISCOVERY OF CUSTOMER RECORDS. Provides that
civil discovery of a customer record maintained by a financial
institution is governed by Section 30.007, Civil Practice and
Remedies Code.

Sec. 8.011. COMPLIANCE REVIEW COMMITTEE. (a) Defines "civil
action" and "compliance review document."

(b) Authorizes a financial institution or an affiliate of
a financial institution, including its holding company, to
establish a compliance review committee to test, review, or
evaluate the institution's conduct, transactions, or
potential transactions for the purpose of monitoring and
improving or enforcing compliance with certain requirements.

(c) Provides that a compliance review document is
confidential and is not discoverable or admissible in
evidence in a civil action; an individual serving on a
compliance review committee or acting under the direction of
a compliance review committee may not be required to testify
in a civil action as to the contents or conclusions of a
compliance review committee; and a compliance review
document or an action taken or discussion conducted by or
for a compliance review committee that is disclosed to a
governmental agency remains confidential and is not
discoverable or admissible in a civil action.

(d) Provides that Subsection (c)(2) of this section does
not apply to an individual that has management
responsibility for the operations, records, employees, or
activities being examined or evaluated by the compliance
review committee.

(e) Provides that this section does not limit the discovery
or admissibility in a civil action of a document that is not
a compliance review document.

SUBCHAPTER B. SAFE DEPOSIT BOXES

Sec. 8.101. DEFINITION. Defines "safe deposit company."

Sec. 8.102. AUTHORITY FOR SAFE DEPOSIT BOXES. (a)
Authorizes any person to be a safe deposit company. Provides
that in safe deposit transactions the relationship of the safe
deposit company and the renter is that of lessor and lessee
and landlord and tenant, and the rights and liabilities of the
safe deposit company are governed accordingly in the absence
of a contract or statute to the contrary. Provides that the
lessee is considered for all purposes to be in possession of
the box and its contents.

(b) Requires a notice required by this subchapter to be in
writing and delivered to each lessee.

(c) Provides that this subchapter does not affect Sections
36B-36F, Texas Probate Code, or another statute of this
state governing safe deposit boxes (box).

Sec. 8.103. ACCESS BY MULTIPLE PARTIES. Provides that if a
box is leased in the name of two or more persons jointly or if
a person other than the lessee is designated in the lease
agreement as having a right of access to the box, each of
those persons is entitled to access to the box and to remove
its contents in the absence of a contract to the contrary.
Provides that this right of access and removal is not affected
by the death or incapacity of another person that is a lessee
or otherwise entitled to access to the box. Provides that the
safe deposit company is not responsible for damage arising
from access to the box or removal of any its contents by a
person with a right of access to the box.

Sec. 8.104. NONEMERGENCY OPENING AND RELOCATION. (a)
Prohibits a safe deposit company from relocating a box rented
for a term of six months or longer if the box rental is not
delinquent or from opening the box to relocate its contents to
another box or location except in the presence of the lessee
or with the lessee's written authorization. Prohibits a box
from being relocated under this section unless the storage
conditions at the new location are at least as secure as the
conditions at the original box location. Provides that this
section and Section 8.105 of this Act do not apply to a
relocation of a box within the same building.

(b) Requires a safe deposit company to give notice of
relocation and its scheduled date and time to the lessee or
to each joint lessee within a specified period. Requires
the notice to state whether the box will be opened during
the relocation. Authorizes a lessee to personally supervise
the relocation or authorize the relocation in writing if
notice is given to all joint lessees.

(c) Requires two employees, at least one of whom is an
officer or manager of the safe deposit company and one of
whom is a notary public, to inventory the contents of the
box in detail. Requires the safe deposit company notify
each lessee of the new box number or location not later than
the 30th day after the date of the relocation and to include
a signed and notarized copy of the inventory report.
Authorizes the cost of a certified mailing other than the
first notice sent in connection with each relocation to be
treated as box rental due and payable at the expiration of
the rental term.

Sec. 8.105. EMERGENCY OPENING AND RELOCATION. Authorizes a
safe deposit company to relocate a box or open the box to
relocate its contents to another or location without complying
with Sections 8.104(a) and (b) of this Act if the security of
the original box is threatened or destroyed by natural
disaster or any unforeseeable circumstances beyond the control
of the safe deposit company. Requires the safe deposit
company to follow the procedure of Section 8.104(c) of this
Act, except that the notice of the new box number or location
must be given within a specified period.

Sec. 8.106. EXERCISE OF LIEN AND SALE OF CONTENTS. (a)
Authorizes a safe deposit company to send notice to each
lessee that the company will remove the contents of the box if
the rent is not paid before the date specified in the notice.
Authorizes a safe deposit company to open the box in the
presence of certain employees. Requires the safe deposit
company to inventory the contents of the box in detail as
provided by state treasury reporting instructions and place
the contents of the box in a sealed envelope or container
bearing the name of the lessee.

(b) Provides that the safe deposit company has a lien on
the contents of the box for an amount equal to the rental of
the box and the cost of opening the box and may retain
possession of the contents. Authorizes the safe deposit
company to sell all or part of the contents at public
auction in the manner and with the notice prescribed for the
sale of real property under deed of trust. Requires any
unsold contents of the box and any excess proceeds from a
sale of contents to be remitted to the state treasury as
provided by Chapters 72-75, Property Code.

Sec. 8.107. IDENTIFICATION NUMBER FOR KEYS. (a) Requires a
depository institution that rents or permits access to a box
to imprint each key to the box with its routing number.
Provides that the requirement of this subsection begins to
apply to a key issued under a lease in effect on September 1,
1992, on the date the term of that lease expires, without
regard to any extension of the lease term.

(b) Requires the depository institution to notify the
Department of Public Safety on a form designated by the
commissioner within 10 days after an altered or defaced key
is used to open the box.

(c) Provides that this section does not require a
depository institution to inspect the routing number
imprinted on a key or an attached tag to determine if the
number has been altered or defaced. Provides that a
depository institution that has imprinted a key to a box and
that follows applicable law and the depository institution's
established security procedures in permitting access to the
box is not liable for any damage arising because of access
to or removal of the contents of the box.

SUBCHAPTER C. EMERGENCIES

Sec. 8.201. DEFINITIONS. Defines "emergency."

Sec. 8.202. EFFECT OF CLOSING. Provides that a day on which
a bank, or any one or more of its operations, is closed during
all or part of its normal banking hours as provided by this
subchapter is a legal holiday for all purposes with respect to
any banking business affected by the closed bank or bank
operations. Provides that no liability or loss of rights of
any kind on the part of any bank or a board, officer, or
employee arises because of a closing authorized by this
subchapter.

Sec. 8.203. EFFECT OF OTHER PROVISIONS. Provides that this
subchapter is in addition to any other provision of law that
authorizes the closing of a bank or that excuses a delay by a
bank in the performance of its duties and obligations.

Sec. 8.204. LIMITATIONS ON WITHDRAWALS FROM A STATE BANK.
(a) Authorizes the commissioner to issue an order limiting
the right of withdrawal by or payment to depositors,
creditors, and other persons to whom the bank is liable.

(b) Provides that an order under this section must expire
within 10 days of issuance, must be uniform in application
to each class of liability, and is not subject to judicial
review.

Sec. 8.205. FINANCIAL MORATORIUM. (a) Authorizes the
commissioner to proclaim a financial moratorium for, and
invoke a uniform limitation on, withdrawal of deposits of
every character from all banks within this state. Sets forth
the consequences of a bank which refuses to comply with a
written proclamation of the commissioner, signed by a majority
of the members of the finance commission and the governor.

(b) Requires all public funds to be immediately withdrawn
by the depositor from the national bank on order of the
commissioner and may not be redeposited in the national bank
without prior written approval of the commissioner if a
national bank refuses to comply with a proclamation.

Sec. 8.206. EMERGENCY SUSPENSION OF OPERATIONS BY BANK. (a)
Authorizes the officers of a bank to chose not to open the
bank's offices or conduct the particular bank operations if
the officers believe that an emergency exists or is impending
that affects or may affect the bank's offices or operations.
Authorizes the officers to close bank offices or suspend and
close the particular bank operations during the emergency,
even if the commissioner has not issued a proclamation of
emergency.

(b) Authorizes the office or operations closed to remain
closed until the officers determine that the emergency has
ended, and for additional time reasonably required to reopen
not exceeding three consecutive days without the approval of
the commissioner. Requires a bank closing an office or
operations under this section to give notice of its actions
to the commissioner as promptly as possible and by any means
available.

Sec. 8.207. EMERGENCY SUSPENSION OF OPERATIONS BY BANKING
COMMISSIONER. (a) Authorizes the commissioner to authorize
banks located in the affected area to close or suspend all or
part of their offices or operations.

(b) Authorizes the commissioner to authorize a particular
bank to close or to suspend and close a particular bank
operation if the commissioner believes that an emergency
exists or is impending.

(c) Authorizes a bank office or operation closed or
suspended to remain closed until the officers determine that
the emergency has ended, or until an earlier time that the
officers of the bank determine that the offices or bank
operations should reopen except that the affected offices
and operations may remain closed for an additional time
reasonably required to reopen.

SUBCHAPTER D. BANK HOLDING COMPANIES

Sec. 8.301. ACQUISITION OF BANK OR BANK HOLDING COMPANY. (a)
Requires a bank or bank holding company that seeks to directly
or indirectly acquire or acquires control of a bank located in
this state to submit a copy of the application and any
additional information required under Section 8.303 of this
Act to the commissioner when the application is submitted to
the board of governors.

(b) Requires the commissioner to state in writing within
the period prescribed by that subsection the commissioner's
view, recommendations, and opinions regarding the
application.

(c) Requires the commissioner, if the commissioner
disapproves a proposed acquisition application, to appear at
a hearing held as provided by Section 3(b), 12 U.S.C.
Section 1842(b) (Bank Holding Company Act of 1956), and
present evidence at the hearing regarding the reasons the
application should be denied.

(d) Requires the commissioner to request that a hearing be
held if the proposed acquisition is of a national bank or a
bank holding company controlling a national bank and the
commissioner opposes the application in the response.
Requires the commissioner to appear and present evidence at
the hearing regarding the reasons the application should be
denied if the board of governors grants the request.

(e) Authorizes the commissioner to accept the decision or
seek to overturn the decision on appeal, with the assistance
of the attorney general if the board of governors approves
an application that the commissioner opposed.

Sec. 8.302. OTHER APPLICABLE REQUIREMENTS. Prohibits a bank
or bank holding company from acquiring control of or acquiring
all or substantially all of the assets of a bank located in
this state to any degree if after consummation of an
acquisition would control more than 20 percent of the total
amounts of deposits of insured depository institutions located
in this state. Defines "deposit" and "insured depository
institution."

Sec. 8.303. ADDITIONAL REQUIREMENTS APPLICABLE TO OUT-OF-STATE BANK HOLDING COMPANIES. (a) Prohibits an out-of-state
holding company from making an acquisition specified by
Section 8.301(a) of this Act unless each bank in this state
that would on consummation of the acquisition be directly or
indirectly controlled by the out-of-state bank holding company
has existed and continuously operated as a bank at least five
years.

(b) Sets forth the considerations of banks and bank holding
companies as amended as a result of mergers and acquisitions
for the purposes of this section.

Sec. 8.304. ACQUISITION OF NONBANKING INSTITUTION BY A BANK
HOLDING COMPANY. (a) Requires a bank holding company doing
business in this state that submits an application or notice
to the board of governors of the federal reserve system
regarding an acquisition to submit a copy of the application
or notice to the commissioner when the application or notice
is submitted to the board of governors. Requires the bank
holding company to submit other information reasonably
requested by the commissioner to determine the manner in which
the acquisition or activity will directly or indirectly affect
residents of this state.

(b) Authorizes the commissioner to hold a public hearing
regarding the application and its effect on this state to
assist in determining whether to oppose the application.
Requires the commissioner to convene a hearing if the bank
holding company requests a hearing in writing when it
submits the application or notice to the commissioner.
Requires the commissioner to oppose the application if the
commissioner determines the acquisition would be detrimental
to the public interest as a result of probable adverse
effects.

(c) Authorizes the commissioner to prepare and file a
response to the application with the board of governors and
request that a hearing be held. Requires the commissioner
to appear and present evidence at the hearing regarding the
reasons the application should be denied.

(d) Authorizes the commissioner to accept the decision or
seek to overturn the decision on appeal, with the assistance
of the attorney general if the board of governors approves
an application that the commissioner opposed.

Sec. 8.305. ENFORCEMENT. Authorizes the commissioner to
bring an enforcement proceeding under Chapter 6 of this Act
against a bank holding company that violates or participates
in the violation of this Act, an agreement filed with the
commissioner, or a rule or order issued by the commissioner or
the commission as if the bank holding company were a state
bank.

CHAPTER 9. FOREIGN BANK CORPORATIONS
AND REPRESENTATIVE OFFICES

Sec. 9.001. PURPOSES. Authorizes a foreign bank corporation
with equity capital equivalent to at least $100 million in
U.S. currency to establish a foreign bank agency in a standard
metropolitan statistical area in this state having a
population in excess of 500,000. Authorizes a foreign bank
agency to perform only the functions permitted by this
chapter. Provides that a license issued under this chapter is
not transferable or assignable.

Sec. 9.002. APPLICABILITY OF ACT. (a) Provides that a
foreign bank agency is subject to this Act and other laws of
this state applicable to banks as if the foreign bank agency
were a state bank.

(b) Authorizes the commission to adopt rules specifically
applicable to foreign bank corporations, including rules
that provide for proportionate recovery of the cost of
maintenance and operation of the department and of
enforcement of this chapter through ratable and equitable
fees established for notices, applications, and
examinations.

Sec. 9.003. REQUIREMENTS FOR MAINTAINING A FOREIGN BANK
AGENCY. Prohibits a foreign bank corporation from maintaining
a foreign bank agency in this state or an office in this state
for carrying on functions permitted for a foreign bank agency
unless the corporation has complied with Section 9.007 of this
Act and holds a license for a foreign bank agency issued by
the commissioner.

Sec. 9.004. APPLICATION FOR LICENSE. (a) Requires a foreign
bank corporation to submit a complete application to the
commissioner. Sets forth the requirements of a complete
application.

(b) Requires the commissioner to approve an application if
the commissioner finds after reasonable inquiry that the
foreign bank corporation meets certain criteria.

Sec. 9.005. HEARING AND DECISION ON APPLICATION. (a)
Requires the commissioner to determine whether the conditions
set forth by Section 9.004(b) of this Act have been
established, based on the application and the initial
investigation. Requires the commissioner to approve the
application or set the application for a hearing. Requires
the commissioner to notify the board of governors that the
application has been set for hearing.

(b) Requires the department to participate as the opposing
party, and the commissioner to conduct a hearing and one or
more prehearing conferences and opportunities for a
discovery as the commissioner considers advisable and
consistent with applicable statutes and rules. Prohibits
information relating to the financial condition and business
affairs of a foreign bank corporation from being released to
the public or considered in the public portion of the
hearing. Requires the commissioner to make a finding on
each condition listed in Section 9.004(b) of this Act and
enter an order granting or denying the license. Requires
the commissioner to inform the board of governors of the
federal reserve system of the order and the reasons the
federal application should be denied if the commissioner
denied the application under this section.

(c) Authorizes the commissioner to make approval of any
application conditional. Requires the commissioner to
include any conditions in the order granting the license,
but may not issue the license until the agency has received
approval of the board of governors of the federal reserve
system. Provides that a written commitment from the
applicant offered to and accepted by the commissioner as a
condition on approval of the application is enforceable
against the applicant and is considered for all purposes an
agreement under this Act.

(d) Authorizes an applicant to appeal a denied application.

Sec. 9.006. REPRESENTATIVE OFFICES OF FOREIGN BANK
CORPORATIONS. (a) Authorizes a foreign bank corporation that
does not possess a license to operate a foreign bank agency to
establish one or more representative offices in this state for
any lawful purpose by filing with the commissioner a verified
statement of registration accompanied by all registration fees
and deposits required by rule. Sets forth the required
provisions and contents of a statement of registration.

(b) Requires a foreign bank corporation to comply with
Section 9.007 of this Act before transacting business in
this state.

(c) Sets forth the authorized actions of a representative
of a foreign bank corporation established or maintained in
this state.

(d) Prohibits a representative office from soliciting or
accepting credit balances or deposits or making final credit
decisions.

(e) Authorizes a representative office to engage in the
business authorized by this section at the places of
business registered with the commissioner. Authorizes a
representative office to change its location in this state
by filing a notice with the commissioner containing the
street and post office mailing address and county of the new
location.

(f) Authorizes the commissioner to examine a representative
office of a foreign bank corporation to determine compliance
with this section.

Sec. 9.007. DESIGNATED AGENT FOR SERVICE OF PROCESS. (a)
Requires a foreign bank corporation to file certain documents
with the secretary of state before transacting business
through a foreign bank agency or representative office.

(b) Requires the secretary of state to collect certain fees
for the use of the state.

(c) Requires the secretary of state to promptly forward a
notice to the officer, agent, or other person designated.
Provides that failure of the foreign bank corporation to
maintain a designated person does not affect the validity of
service mailed to the last designated person at the last
designated address. Provides that service of notice or
process on the secretary of state as agent for a foreign
bank corporation has the same effect as personal service
made in the state on the foreign bank corporation.

(d) Provides that a foreign bank corporation is not
considered to be doing business in this state solely because
it transacts business in this state through a foreign bank
agency or representative office as provided by this Act.

Sec. 9.008. LOCATION OF PLACE OF BUSINESS. (a) Authorizes
a foreign bank corporation to engage in business through a
foreign bank agency as authorized by this Act only at the
place of business specified in its license or another location
permitted by rule or approval of the commissioner. Requires
the license to be conspicuously displayed in the authorized
place of business.

(b) Authorizes a foreign bank agency to change the location
of its place of business to another location in an area
where a foreign bank agency is authorized to be established
under Section 9.001 of this Act. Prohibits a foreign bank
agency from maintaining more than one place of business in
this state.

(c) Provides that a place where loans or extensions of
credit or other permissible services are solicited is not an
impermissible place of business of the foreign bank agency
if the loans or extensions of credit are approved and made
or other permissible services are conducted at the
authorized place of business of the foreign bank agency.
Provides that this section does not apply to a
representative office of the foreign bank corporation
registered with the commissioner.

Sec. 9.009. REVOCATION OF LICENSE OR REGISTRATION. (a)
Authorizes the commissioner to initiate a proceeding to revoke
a license or cancel a registration if the commissioner makes
certain findings regarding the activities of a foreign bank
corporation.

(b) Sets forth the required method of service of a notice
of a proceeding under Subsection (a) of this section on a
foreign bank corporation. Provides that unless the foreign
bank corporation requests a hearing in writing on or before
the effective date of the proposed order, the order takes
effect as proposed and is final and nonappealable.

(d) Authorizes a foreign bank corporation to appeal a
hearing if the commissioner has entered an order adverse to
the foreign bank corporation.

Sec. 9.010. EFFECT OF REVOKED REGISTRATION. Requires a
foreign bank corporation that has had its registration revoked
to cease all activities in this state. Provides that
continued activity of an unregistered foreign bank corporation
is subject to Chapter 6C of this Act.

Sec. 9.011. STATUS OF REVOKED LICENSEE. Provides that unless
stayed by the commissioner or district court that has
jurisdiction over an appeal, a final revocation order of the
commissioner is effective and the foreign bank corporation
must immediately cease all licensed activity in this state.
Requires all licensed functions to be transferred to a branch,
affiliate, or agency of a foreign bank corporation located
outside the state and, the foreign bank agency reverts to the
status of a representative office.

Sec. 9.012. POWERS AND PERMITTED ACTIVITIES. (a) Authorizes
a foreign bank corporation licensed to transact business in
this state through a foreign bank agency to exercise certain
powers of a state bank.

(b) Prohibits a foreign bank corporation from receiving
deposits or exercising fiduciary powers in this state, other
than through the performance of duties as an indenture
trustee or as a registrar, paying agent, or transfer agent,
on behalf of the issuer, for equity or investment
securities. Provides that the exercise of the powers and
activities permitted by this section by a foreign bank
agency is not considered the exercise of banking or
discounting privileges in this state by the foreign bank
corporation.

(c) Authorizes a foreign bank corporation licensed to
transact business through a foreign bank agency with another
authorized office of the foreign bank corporation or a
direct or indirect subsidiary of the foreign bank
corporation if the books and records of the foreign agency
are kept separately from the books and records of the other
office.

Sec. 9.013. REPORTS. (a) Requires a foreign bank
corporation to annually furnish the commissioner with a copy
of its annual financial statement, expressed in the currency
of the country of its incorporation or organization before
opening a foreign bank agency in this state.

(b) Requires a foreign bank corporation to make written
reports in English to the commissioner under oath of one of
its board members as required by the commissioner. Requires
the report to show the amount of the foreign bank
corporation's assets and liabilities and contain other
information that the commissioner requires. Provides that
failing to make the report or knowingly making a false
statement in the report is grounds for revocation of the
license or registration of the foreign bank corporation.

Sec. 9.014. TAXATION. Provides that a foreign bank
corporation is subject to the franchise tax to the extent
provided by Chapter 171, Tax Code.

Sec. 9.015. DISSOLUTION. (a) Sets forth the documents the
board of a foreign bank corporation is required to deliver to
the commissioner if the foreign bank corporation has its
authority or existence terminated or canceled in the
jurisdiction of its incorporation, or has its authority to
maintain an agency in this state terminated by the board of
governors of the federal reserve system.

(b) Provides that the filing of the certificate, order, or
decree has the same effect provided by Section 9.012 of this
Act as if the license issued under this chapter were revoked
by the commissioner.

SECTION 2. (a) Amends Sections 1 and 2, Article 342-1101,
V.T.C.S., as follows:

Sec. 1. (a) Requires a trust company to incorporate in
accordance with this chapter and the Texas Banking Act
(TBA).

(b) Requires the commissioner, rather than the state
banking board, to hear and determine applications for
state trust company charters. Authorizes a final order of
the commissioner on a charter application to be appealed
as provided by Section 3.009, TBA.

Sec. 2. (a) Requires every trust company with a capital of
not less than $1 million, rather than $500,000, to have
certain powers.

(b) Makes conforming changes.

(b) Amends Article 2, Article 342-1102, V.T.C.S., as follows:

Art. 2. APPLICABILITY OF STATE BANKING CODE; VENUE
Sec. 1. Provides that a trust company is subject to
Chapters 1-4, 6-8, and Chapters 5A and 5B, TBA, as if the
trust company were a state bank; provided that Section 3.001
of that Act, and Section 8.008, shall not apply. Makes
conforming changes.

Sec. 2. Makes a conforming change.

Sec. 1. Requires each trust company to make and publish
statements of its financial conditions as provided by
Section 2.009, TBA, rather than Article 9, Chapter II of
this code.

Sec. 5. Provides that the confidentiality provisions of
Chapter 2B, TBA, rather than Article 10, Chapter II of this
code, apply to all information obtained by the department
relative to trust companies.

(d) Amends Article 342-1104, V.T.C.S., as follows:

Art. 4. ACTION BY BANKING COMMISSIONER; OFFICERS AND
DIRECTORS; CEASE AND DESIST ORDERS; REMOVAL; REVIEW.
Authorizes the commissioner to take action in accordance
with Chapter 6A and 6B, TBA, rather than Article 12, Chapter
IV, and Article 1a, Chapter VIII, of this code. Makes
conforming and nonsubstantive changes.

(e) Amends Sections (a) and (b), Article 342-1105, V.T.C.S.,
to make conforming changes.

(f) Amends Section (a), Article 342-1106, V.T.C.S., to make
a conforming change.

(g) Amends Article 8, Article 342-1108, V.T.C.S., to make a
conforming change.

Art. 8. PAID-IN CAPITAL. (a) Makes a conforming change.

(b) Requires the proposed effective date of an order
requiring a trust company to increase its capital to be
stated in the order as on or after the 21st day after the
date the proposed order is mailed or delivered. Provides
that unless the trust company requests a hearing before
the commissioner in writing before the effective date of
the proposed order, the order becomes effective and is
final and nonappealable. Makes a conforming change.

(c) Authorizes the commissioner on application to
authorize a trust company to have and maintain capital of
less than the amount required by Subsection (a) of this
section if the commissioner finds that the safety and
soundness of the trust company will be adequately
protected by the lower capital requirement.
(h) Amends Article 13, Article 342-1113, V.T.C.S., to
prohibit the provisions of this chapter from affecting or
applying to a public, private, or independent institution of
higher education or a university system acting as a trustee as
provided by the Education Code or a corporation serving as a
trustee of a charitable trust as provided by Article 2.31,
Article 1396-2.31, V.T.C.S.

(i) Amends Section 2, Article 342-1114, V.T.C.S., as follows:

Sec. 2. Provides that the commissioner may make a ratable
distribution to approved claimants under the provisions of
Sections 7.310 and 7.313, TBA, rather than Articles 14 and
15 of Chapter VIII of this Act.

(j) Requires a trust company that possesses a charter on
September 1, 1995, and that has capital and surplus of less
than the amount required by Article 8, Chapter XI, Texas
Banking Code (TBC), as amended by this section, to increase
its capital and surplus to the amount required by that article
before September 1, 2000. Authorizes the commission to adopt
rules specifying procedures for ratable increases in capital
and surplus under this section and for deferrals and
extensions of time for a trust company acting in good faith to
achieve minimum required capital and surplus.

(k) Provides that this section does not take affect if
another enactment of the 74th Legislature repeals Chapter XI,
TBC.

SECTION 3. Amends Chapter 30, Civil Practice and Remedies Code, by
adding Section 30.007, as follows:

Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
(a) Defines "customer," "financial institution," "record,"
"record request," and "tribunal."

(b) Provides that this section provides the exclusive
method for compelled discovery of a record of a financial
institution relating to one or more customers, does not
create a right of privacy in a record and sets forth the
inquiries to which this section does not apply.

(c) Sets forth the conditions to which a financial
institution is required to produce a record in response to
a record request.

(d) Sets forth the actions of a requesting party if the
affected customer is not a party to the proceeding in which
the record request was issued, in addition to serving the
financial institution with a record request.

(e) Authorizes the requesting party to seek an in-camera
inspection of the requested record as its sole means of
obtaining access to the requested record if the customer
refuses to execute the written consent or fails to respond
to the requesting party's request. Authorizes a tribunal to
inspect the requested record to determine its relevance to
the matter before the tribunal. Authorizes the tribunal to
order redaction of portions of the records that the tribunal
determines should not be produced and shall enter a
protective order preventing the record that it orders
produced from being disclosed to a person who is not a party
to the proceeding before the tribunal and used by a person
for any purpose other than resolving the dispute before the
tribunal.

(f) Provides that the customer bears the burden of
preventing or limiting the financial institution's
compliance with a record request subject to this section by
seeking an appropriate remedy. Requires any motion filed to
be served on the financial institution and the requesting
party before the date that compliance with the request is
required. Provides that a financial institution is not
liable to its customer or another person for disclosure of
a record in compliance with this section.

(g) Prohibits a financial institution from being required
to produce a record under certain conditions.

(h) Provides that an order to quash or for protection or
other remedy entered or denied by the tribunal is not a
final order and an interlocutory appeal may not be taken.

SECTION 4. Amends Section 2001.223, Government Code, to make
conforming and nonsubstantive changes.

SECTION 5. Amends Sections 2257.002(1) and (3), Government Code,
to redefine "bank holding company" and "control."

SECTION 6. Amends Section 712.042(b), Health and Safety Code, to
require the department to receive and disburse revenues collected
under this chapter in accordance with Section 2.006, TBA, rather
than Article 342-12, V.T.C.S.

SECTION 7. Amends Section 1(c), Article 1.19-1, Insurance Code, to
provide that a subpoena issued to a bank or other financial
institution as part of a criminal investigation is not subject to
Section 30.007, Civil Practice and Remedies Code, rather than
Article 342-705, V.T.C.S.

SECTION 8. Amends Section 1, Article 9.05, Insurance Code, to make
a conforming change.

SECTION 9. Amends Section 105.001(13), Local Government Code, to
redefine "state bank."

SECTION 10. Amends Sections 105A(c) and (d), Texas Probate Code,
as follows:

(d) Deletes the application of Article 342-902, TBC, to this
subsection.

SECTION 11. Amends Section 73.003(c), Property Code, to provide
that this section does not affect the provisions of Chapter 8B,
TBA, rather than Article 342-906, V.T.C.S.

SECTION 12. Amends Section 171.001(b)(1), Tax Code, to redefine
"banking corporation."

SECTION 13. Amends Section 171.1031(c), Tax Code, to provide
that to the extent that this subsection is not preempted by federal
law, the department is required to appoint a conservator under
Chapter 6B, TBA, to pay the franchise tax of any banking
corporation certified by the comptroller as being delinquent in the
payment of its franchise tax.

SECTION 14. Amends Section 2.13, Article 489e, V.T.C.S., to make
a conforming change.

SECTION 15. Amends Section 4.07, Article 489e, V.T.C.S., to
provide that the rulemaking power delegated by Section 1.106, TBA,
rather than Article 342-205, V.T.C.S., authorizes the commissioner
and the commission to set fees under this section.

SECTION 16. Amends Section 12.07, Article 489e, V.T.C.S., to
require the commissioner to initiate rulemaking proceedings under
Chapter 2001, Government Code, rather than Article 342-205,
V.T.C.S., if 20 percent or more of the savings banks subject to
this Act petition the commissioner in writing requesting the
adoption, amendment, or repeal of a rule.

SECTION 17. Amends Section 12.12(b), Article 489e, V.T.C.S., to
make a conforming change.

SECTION 18. Amends Section 11.05, Article 852a, V.T.C.S., to
make conforming changes.

SECTION 19. Amends Section 11.20(l), Article 852a, V.T.C.S., to
make a conforming change.

SECTION 20. Amends Section A(2), Article 1302-7.06, V.T.C.S., to
redefine "corporation."

SECTION 21. Amends Article 1396-1.01 et seq., V.T.C.S., by
adding Article 2.31, as follows:

Art. 2.31. POWER TO SERVE AS TRUSTEE. Authorizes a
corporation described by Section 501(c)(3) or 170(c), Internal
Revenue Code of 1986, or a corresponding provision of a
subsequent federal tax law, to serve as the trustee of a trust
of which the corporation is a beneficiary; or benefiting
another organization described by one of those sections of the
Internal Revenue Code of 1986, if the service as trustee is in
furtherance of the purposes for which the corporation was
formed.
SECTION 22. Amends Subsections (d) and (k), Article 5069-2.01,
V.T.C.S., to make conforming and nonsubstantive changes.

SECTION 23. Amends Section (1), Article 5069-2.02B, V.T.C.S., to
authorize money in the Office of Consumer Credit Commissioner
expense fund to be used only for the administration of this Act and
support of the commission as provided by Section 1.011, TBA, rather
than Article 342-111C, V.T.C.S.

SECTION 24. Amends Subsection (d), Article 5069-15.01, V.T.C.S.,
to make a conforming change.

SECTION 25. Amends Section 6, Article 5069-50.04, V.T.C.S., to
make a conforming change.

SECTION 26. Repealer: (1) Chapters I-X, Article 342-101 et
seq., V.T.C.S. (Scope of Act, Definitions, Finance Commission and
State Banking Board-The Banking Department of Texas-Incorporation,
Merger, Reorganization, Purchase of Assets of Another Bank,
Disbursing Agent, Amendment of Articles of Association of State
Banks, and Conversion-Stock, Stockholders, By-laws, Directors,
Officers, Employees-Loans and Investments-Surplus, Dividends,
Liabilities, Uninvested Trust Funds, Preferences, Reserves,
Debentures, and Withdrawals-Depository Contracts-Liquidation-General Provisions-Foreign Bank Agencies).

(2) Chapter 183, Article 489b, V.T.C.S. (Federal Deposit
Insurance).

(3) Article 3921, V.T.C.S. (Banking Commissioner).

SECTION 27. Provides that a change in law made by this Act does
not affect the validity of any action taken by the commission,
commissioner, S&L commissioner, or State Banking Board before the
effective date of this Act or a civil, criminal, or administrative
proceeding completed before the effective date of this Act.

SECTION 28. Provides that a state bank or private bank that
exists on the effective date of this Act retains the powers
provided by its charter and is subject to the jurisdiction and
control of the commissioner as if it were a state bank chartered
under the TBA, as added by this Act.

SECTION 29. Makes application of this Act prospective.

SECTION 30. Makes application of Articles 342-306, 342-307, 342-309, 342-310, 342-311, 342-331, 342-332, 342-363, 342-368, 342-401a, 342-912, and 342-1006 of this Act prospective.

SECTION 31. (a) Provides that a principal shareholder or
participant that is considered to control a state bank is not
required to file a change of control application until the person
acquires one or more additional shares or participation shares of
the state bank on or after the effective date of this Act.

(b) Provides that with respect to an office of an out-of-state bank that exists on the effective date of this Act, an
out-of-state bank must file the required documentation and
information before September 1, 1996.

(c) Provides that with respect to a representative office of
a foreign bank corporation in this state that exists as of the
effective date of this Act, the foreign bank corporation must
file before September 1, 1996 certain registration documents
and fees.

SECTION 32. Makes application of Chapter 6, TBA, of this Act
prospective.

SECTION 33. Provides that Article 13(3), Article 342-1113,
V.T.C.S., as added by Section 2(h) of this Act, and Article 2.31,
Article 1396-1.01 et seq., V.T.C.S., as added by Section 26 of this
Act, are clarification of the law existing before the effective
date of this Act.

SECTION 34. (a) Provides that if this Act conflicts with
another Act of the 74th Legislature, the change in law made in the
other Act prevails and the substance of the change is given effect
as part of the TBA adopted unless this Act or the conflicting Act
expressly provides otherwise or it is not possible to give the
conflicting law effect within the context of the TBA, in which
event the TBA prevails, and the text of a law that is reenacted in
the other Act only because of the constitutional requirement that
the amended law be reenacted at length is superseded by this Act.

(b) Provides that this Act prevails regardless of the
relative dates of enactment if this Act and another Act of the
74th Legislature make the same substantive change from current
law but differ in text.

SECTION 35. Effective date: September 1, 1995, except that
Section 2(h), Section 26, Section 33, and Chapter 9, of this Act
take effect upon passage.

SECTION 36. Emergency clause.