BILL ANALYSIS



H.B. 3006
By: Giddings
04-06-95
Committee Report (Amended)


BACKGROUND

The Interim Special House Committee on Small business Access to
capital recommended several changes to the banking laws in Texas in
its interim report.  One recommendation was to "require out-of-state banks to maintain locally controlled boards of directors in
branch operations in order to retain local input regarding credit
and other community investment banking needs as those local
directors would individually have direct contact with the State
Banking Commissioner."

PURPOSE

This bill defines banks' local lending areas and requires state
banks to seat a majority of directors who are residents of the
banks' local lending areas.  Out-of-state bank holding companies
are required to make agreements that a majority of directors who
are seated are residents of the banks' local lending areas.


RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1.  Chapter I, The Texas Banking Code, is amended by adding
Article 2A as follows:

     Article 2A.  LOCAL AREA.  Defined as a bank's local community
     in the Community Reinvestment Act of 1977 (12 U.S.C. sec. 2901
     et seq.). If the bank is not subject to the regulations or its
     local community is determined by its effective lending
     territory, the bank's local area is the area that would be its
     local community under the regulations and excludes regulations
     relating to effective lending territory. Each bank is required
     to file a statement of its local area with the banking
     commissioner.

SECTION 2.  Sections 1 and 2, Article 4, Chapter IV, Banking Code,
(Article 342-404, V.T.C.S.), are amended as follows:

     Sec. 1.  Adds "bank's local area" and deletes "State of
     Texas".

     Sec. 2.  Adds "bank's local area" and deletes "State of
     Texas".

SECTION 3.  Section 4(3), Article 12, Chapter IX, Banking Code,
(Article 342-912, V.T.C.S.), is amended as follows:

                             Sec. 4(3).  Adds "bank's local area" and deletes "State of
                             Texas".

SECTION 4.  Transition section - required before September 1, 1996.

                             (1) All out-of-state bank holding companies required to submit
                             an agreement under
                             Sec. 4(3), Article 12, Chapter IX, Banking Code, (Article 342-912, V.T.C.S.) must:

                                                           (A) submit an amended agreement to the banking
                                                           commissioner.

                                                           (B) comply with the amended agreement.

                             (2) Bank board to meet requirements of Article 4, Chapter IV,
                             Banking Code, (Art. 342-404, V.T.C.S.).

SECTION 5.   Effective date.

SECTION 6.   Emergency clause.


EXPLANATION OF AMENDMENTS

Amends SECTION 5 of the bill and states that if a federal regulatory agency determines that a
provision of this bill does not apply to a federally chartered bank in this state, the provision then does
not apply to a state chartered state bank or a private bank in this state.

SUMMARY OF COMMITTEE ACTION

The committee considered HB 3006 in a public hearing on April 10, 1995.

The following person testified in favor of the bill:
Mae Beth Palone representing the Independent Bankers Association of Texas.

The following person testified neutrally on the bill:
Randall James representing the Texas Department of Banking.

The following person testified against the bill:
John Heasley representing the Texas Bankers Association.

The bill was left pending.

The committee considered HB 3006 in a public hearing on April 19, 1995.

The committee considered an amendment to the bill which was adopted without objection.

The bill was reported favorably as amended, with the recommendation that it do pass and be printed,
by a record vote of:  5 Ayes, 0 Nays, 0 PNV, 4 Absent.